Calling Veris Residential “mismanaged” by its overseas-based leadership, Kushner has made a hostile acquisition bid of $16 per share, according to a published letter.
In turn, Veris acknowledged receipt of the letter and said its board is evaluating the proposals and will respond “in due course.”
Kushner, a New Jersey-based operator of 20,000 multifamily apartments, 10,000 units under development, and a commercial portfolio, is one of the six largest shareholders of Veris (formerly Mack-Cali Realty Corp.), assembling a stake of 4.5 million shares over the last five months “in the belief that Veris owns a high-quality real estate portfolio with substantial long-term potential which is, unfortunately, being mismanaged,” the letter said.
The proposal cited $57 million in G&A costs run up by the REIT in 2021, which it claimed is 10 times the average G&A per unit of similar companies.
“The CEO [Mahbod Nia] of this small residential REIT lives in the U.K.,” the letter continued. “His previous experience, along with that of the COO, was oversight of an investment vehicle for European office buildings. Veris’ senior management team, along with the vast majority of the Board, frankly, has no operators, no developers, not even anyone with any recent management experience in multi-family residential.”
The stock price has declined from $18.74 per share on January 3, 2022 to $12.32 per share on October 19, 2022, the letter continued. It also criticized Veris’ just-announced sale of office complexes Harborside 1, 2 and 3 in Jersey City, New Jersey for $420 million, saying “The lengthy endeavor to sell these properties stretched into the worst investment sales environment in decades and culminated in a low contract price. “
Kushner claims to have approached Veris’ board more than three months ago to help address operational issues, offering its own operating platform at no cost and proposing other cost-cutting measures, but received “what amounts to form letter responses rejecting our proposal out of hand,” the letter said.
“The board can choose to help its shareholders achieve an immediate return on their investment at $16 per share, a price not likely to be seen again any time soon based on the current trajectory of Veris operations, or the Board can try to engage with a major shareholder and best-in-class operator in Veris’ core markets to finally turn things around and create real tangible value for Veris shareholders over the longer term.”
At press time, Veris’ stock had risen to 14.74 per share.
