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Veris Residential Inc. is based at the Harborside campus in Jersey City — Courtesy: Veris
By Joshua Burd
Veris Residential Inc. has completed its high-profile, $420 million sale of Harborside buildings 1, 2 and 3 in Jersey City, the real estate investment trust said Wednesday.
The company, which is based at the nearly 1.9 million-square-foot complex, said the deal leaves it with virtually no remaining office space in its portfolio, as it continues its rapid shift to a full-fledged apartment owner, developer and operator. Multifamily assets now account for about 98 percent of its net operating income, up from 39 percent at the end of the first quarter of 2021.
Veris announced in October that it was under contract to sell the buildings, which were once the centerpiece of its office portfolio during its long run as Mack-Cali Realty Corp. It did not disclose the buyer, but a source familiar with the deal identified the party as 601W Cos. LLC, a New York-based firm that is active in the Manhattan office sector.
“The sale of Harborside 1/2/3 represents a significant milestone and a critical step in the company’s transition to a pure-play multifamily company,” said Mahbod Nia, the companys CEO. “The closing of this transaction completes over $2 billion of non-strategic asset sales during the past two years. As we approach the final stages of our transformation, our focus will be on concluding the few remaining non-strategic asset sales and working with our board to unlock the substantial value embedded in the company for our shareholders.”
The trade follows a sweeping $75 million renovation of the overall Harborside campus, which includes other buildings and spans more than 4 million square feet along the Hudson waterfront. But it’s also the culmination of a pivot to luxury apartment buildings that is nearly a decade in the making, following the decline of the former Mack-Cali’s once-sprawling suburban office portfolio.
“The close of this transaction is a testament to the unwavering commitment and determination of the Veris Residential team,” said Jeff Turkanis, Veris’ chief investment officer. “We have proven our ability to navigate complex dispositions amidst challenging market conditions.”
The REIT on Wednesday noted that the deal released roughly $360 million of net proceeds. It said that, in connection with closing of the transaction, the company exercised its right to purchase and redeem the preferred units and certain other ownership interests from Rockpoint Group LLC and its affiliates in Veris Residential Trust.
Exercising the option triggers a repayment within 30 days unless Rockpoint exercises its right to defer repayment by up to 12 months, which it must do within 10 days, according to a news release. Veris also terminated its revolving credit and term loan agreement.
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