Following a very public attempt to acquire Veris Residential that began last fall, Kushner Cos. is no longer interested in moving forward with such a deal at this time.
That’s according to Veris, which announced Jan. 18 that the New York-based would-be buyer recently informed the board of directors of its decision.
“We welcomed the opportunity to engage more openly and provide Kushner Cos. with critical information so that it could better understand Veris Residential’s intrinsic value. However, due to Kushner Cos.’ and its stated financing partners’ unwillingness to move forward (despite numerous attempts to engage while both sides were holding signature pages for delivery), we have been left with no choice other than to cease further discussions and focus our attention on the myriad current and emerging value-creative opportunities available to the Company.”
However, in a Jan. 18 statement posted to its website, Kushner Cos. responded to what it referred to as “Veris Residential’s blatantly false and misleading public statements.”
“For many months, Kushner Cos. has worked in good faith in pursuit of an acquisition of Veris Residential that would provide compelling value to Veris Residential shareholders,” that statement said. “Despite Veris’ repeated efforts to cast doubt on the credibility of our proposals, for the past several months Kushner has sought to work collaboratively with Veris.”
Over the transition into the new year, both parties said they participated in several conversations, culminating in a Jan. 13 video conference subsequent to which a previously negotiated and finalized non-disclosure agreement was to be exchanged. That same day, and according to Kushner following its conference with Veris, a Schedule 13D form was filed with the Securities and Exchange Commission disclosing Madison International Realty’s ownership in Veris.
According to the filing, over the course of several weeks New York-based Madison International Realty – which holds 6,107,661 shares of Veris stock, or a 6.7% stake in the company – met and had conversations with Veris “to discuss, in general, the Issuer’s business, portfolio, geographic markets, corporate governance, strategic direction and potential representation on the board of directors.
“[T]he Reporting Persons expressed … support for management and the Issuer’s strategic direction, as well as its belief that the expertise and experience of its principals would be beneficial to the Issuer and its shareholders,” the filing continued. The day prior, Madison International Realty founder and President Ronald Dickerman met with members of Veris’ nominating and corporate governance committee to discuss the potential for such representation on the board.
According to Kushner Cos., Veris had postponed a planned Jan. 12 video conference with the company resulting in their meeting Jan. 13, instead.
War of words
“We were disappointed that we learned of these discussions through an SEC filing rather than from Veris directly, particularly in view of the timing of the meeting with this shareholder,” Kushner Cos. said in its statement. “Since learning of that SEC filing, we have been evaluating the implications of this development. We have expressed to Veris on multiple occasions that we were continuing to assess the impact of this development before deciding on next steps.
“At no time did Kushner ‘inform [Veris] that it was not interested in proceeding at this time’,” the statement continued.
Kushner Cos. statement does not explicitly state whether or not it will still proceed in its efforts and the company did not immediately respond to a request for comment.
Once word was out that Kushner had, seemingly, changed its tune on that front, Veris’ (VRE) stock took a hit. The shares were trading at $15.68, down 3.63% as of 1:15 p.m. EST on Jan. 19.
“The actions taken by the Veris board today eroded shareholder value, with the stock plummeting to below $15.00 in after hours trading, and reinforced our longstanding concern that the Veris board is entrenched, and does not want to engage in good faith in discussions regarding a transaction that would result in a loss of its – and its chosen high-priced management team’s – perks,” Kushner Cos. said. “Meanwhile, the Veris board has permitted insider share purchases and made new equity grants, despite being engaged in M&A discussions.”
Throughout the saga, Veris has maintained that Kushner Cos.’ bid undervalues the company. Kushner rebuts that characterization in its statement.
“During this period, we have raised our offer price on multiple occasions, yet at no point has Veris provided any counterproposal, nor indicated a range of values at which it would be prepared to transact.”
Meanwhile, each party has accused the other of not negotiating in the best faith.
“Kushner Cos.’ sudden pivot is the latest in a pattern of erratic behavior that began with its abruptly withdrawn proposal to acquire the Company’s Harborside campus nine months ago,” Veris said in its statement. “That was followed by a series of proposals predicated solely on preliminary diligence and lacking written confirmation of credible financing. Further, during recent discussions, Kushner Cos. stipulated its need to approach other capital sources despite verbal assurances of a fully-funded offer (inclusive of debt and equity financing).
“While the Board has worked in good faith and welcomes any bona fide offers, in this instance we are left to conclude that Kushner Cos. is either not serious about consummating a transaction with Veris Residential or lacks the financing to execute a transaction with certainty,” the statement said.
Now, as Veris potentially closes the Kushner chapter, it also nears the completion of a strategic transformation that saw the former Mack-Cali Realty Corp. become Veris — the Jersey City-based environmentally and socially conscious real estate investment trust primarily operating, owning and developing Class A multifamily properties.
The board is looking forward, and so are other potential interested parties.
“Since the beginning of 2021, Veris Residential has taken meaningful steps to simplify and focus its business, strengthen its balance sheet, and enhance its operational platform in pursuit of a new strategic direction focused solely on multifamily residential assets,” the board said. “With our exit from the office sector expected to near completion, Veris Residential has received indications of strategic interest from several institutional operators and investors.”
Throughout the Kushner drama, Veris has insisted that it is open to such proposals, so long as they maximize value for all shareholders. Now, the board says it – with support from its financial advisors and legal counsel – will launch a strategic review process to understand its options.
At the same time, the board said it will continue to evaluate any proposals it receives – including from Kushner – in addition to monitoring prevailing market conditions.
“Of course, we remain open to Kushner Cos.’ execution of the non-disclosure agreement to which both parties previously agreed, to facilitate the sharing of non-public information,” Veris said. “As we start the new year, we believe Veris Residential does so from a position of strength and tremendous potential. We look forward to sharing more on our progress in the months ahead and continuing to advance the Company to the benefit of all stakeholders.”
For its part, Kushner Cos.’ final word packs a sting.
“Veris shareholders deserve a Board that recognizes its responsibilities, acts on its words, and engages in serious and transparent processes to achieve value for its shareholders. Unfortunately, Veris’ current Board has shown neither the ability nor the willingness to so engage,” the company said.
Madison International Realty did not immediately respond to a request for comment.