Tag: Veris Residential

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. 

Moving on

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. 

Veris Residential Inc.’s assertions that Kushner Cos.’ unsolicited $16-per-share offer to acquire the Jersey City target is too low haven’t fallen on deaf ears, with that New York-based suitor upping its bid by $2.50 per share in December.

Two increased proposals were revealed in a public correspondence sent from the Veris board of directors to Kushner Cos. Chairman Charles Kushner dated Dec. 12, which again indicated a unanimous rejection of the most-recent, $18.50 per share offer. The email also laid the groundwork for future efforts on the matter, in an attempt to facilitate a “constructive dialogue” between the two parties.

“While we continue to believe that your most recent proposal undervalues Veris Residential, as we have consistently communicated, the Board remains open to working constructively with you – or any interested party – to maximize value for all Company shareholders,” the letter reads.

Since Kushner Cos.’ attempts to take control of Veris were made public in October, the companies have cycled through offers, rejections and barbs. Veris dismissed a proposal from the end of November that came with the expressed backing of Fortress Investment Group.

As indicated by this latest correspondence, a $17.50 per share offer was later received Dec. 1. Eight days after that, Kushner submitted another proposal offering $18.50 per share, according to the letter — a bid that was rejected unanimously during a Dec. 11 board meeting including Veris financial advisors Goldman Sachs & Co. LLC and J.P. Morgan and legal counsel Cadwalader, Wickersham & Taft LLP.

As of 12:00 p.m. EST on Dec. 12, Veris – the owner operator, developer and acquirer of primarily multifamily properties that rebranded from the former Mack-Cali Realty Corp. a year ago this month – was trading at $16.52.

Aside from its unwavering stance that offers from Kushner do not take into account the “substantial, long-term” value that is expected to result from Veris’ transformation, the most-recent and increased offers were highlighted for their lack of updated financial support, like what was seen with the attempt made at the end of November.

“While the Board shares your hope of engaging in ‘serious, constructive, and direct negotiations,’ we remind you that the Board has requested that any proposal, in addition to fully compensating shareholders for the intrinsic value of their shares, be supported by information regarding certainty of financing sources and further assurances from them that they are prepared to transact at the revised valuation,” the Dec. 12 correspondence reads. “The Board notes that your latest two proposals, beyond undervaluing the Company, were not qualified given they lacked financing support at your revised valuations.”

To move forward in good faith, Veris offered a potential meeting between the parties’ legal and financial advisors and Kushner Cos.’ financing partner “to better understand the financing sources and uses for a potential transaction, financing work completed to date, plans to backstop the pending non-strategic assets sales, and any additional requirements your financing partner needs to provide a full equity and debt commitment to support a potential transaction.”

After that, the board said it would be ready to offer a standard non-disclosure agreement and, upon execution, be able to engage more openly and better convey the value potential of the company.

In 2021, Kushner Cos. said it acquired more than 7,000 apartments as it extended its reach across the nation, particularly in the Southeast. The company did not immediately respond to a request for comment.

Veris Residential Inc. again rejected Kushner Cos.’ attempt to acquire the company – this time with the backing of Fortress Investment Group. 

In a Nov. 25 filing with the U.S. Securities and Exchange Commission, Veris described a $16-per-share offer from the parties as “grossly” undervaluing the company and denying shareholders long-term value expected from the REIT’s transformation to a pure-play multifamily-focused entity. 

“Thank you for sharing a copy of a letter from Fortress Investment Group, which indicates its willingness to finance Kushner Cos.’ unsolicited offer to acquire Veris Residential for $16.00 per share,” the Veris board wrote to Kushner Cos. Chairman Charles Kushner via email Nov. 25. “It was surprising, however, that this letter reiterated your initial proposal to purchase Veris Residential’s outstanding shares at a price rejected by the board in a public statement issued earlier this month.” 

The correspondence with Fortress as participant follows previous exchanges regarding Kushner Cos.’ pursuit of Veris, in which the target had called into question the putative buyer’s readiness for such a purchase, valued at $4.3 billion.

The Wall Street Journal was the first to report the commitment from Fortress Investment Group.

In the latest rejection, the Veris board again cited consultations with its financial advisors and legal counsel, Goldman Sachs & Co. LLC and J.P. Morgan serving as the former and Cadwalader, Wickersham & Taft LLP as the latter, as supporting its position that the company is worth more than Kushner Cos. is offering. 

Veris Residential (VRE) – the former Mack-Cali Realty Corp. – closed trading on the New York Stock Exchange at $16.05 Nov. 30. 

In its filing, the company reiterated that it “remains open to evaluating any proposals to maximize value for all shareholders.” 

As of the third quarter of 2022, Jersey City-based Veris Residential’s multifamily portfolio included 6,931 units with an occupancy of 95.8%.

Veris Residential declined to comment beyond its SEC filing. Kushner Cos. did not immediately respond to a request for comment.

In a letter from its chairman, Kushner Cos. doubled down on its position regarding its play for Veris Residential Inc., writing that the company’s “leadership team has no clear long term plan to maximize the value of the portfolio, nor are they the right team to execute.”

The Nov. 3 correspondence comes in response to a rejection sent by the Jersey City-based REIT earlier the same day to Chairman Charles Kushner regarding his company’s unsolicited offer to either acquire or externally manage Veris.

Kushner Cos. is a shareholder of Veris and, according to its Oct. 20 communication to the board of directors, one of the six largest, having accumulated 4.5 million shares over five months.

Addressing the board of directors Thursday, Kushner wrote, “I received your letter which I found to be uninformed at best and disingenuous at worst.”

The chairman goes on to rebut points from Veris’ note, including that company’s alleged inability to substantiate Kushner Cos. available capital. “Kushner’s bid is fully capitalized and committed, which Kushner is happy to substantiate and disclose to the Board if the Board is actually interested in engaging with us,” he wrote.

“Lip service does not qualify as engagement,” Kushner added.

In the same vein, and mirroring a similar argument by the would-be target regarding transparency, Kushner said Veris has mischaracterized past experiences between the organizations and that the board of directors has “consistently misled Kushner,” which it says, again, casts doubt on the the capabilities of Veris’ leadership.

Explaining its “abruptly withdrawn bid,” as Veris described it, for Harborside 1/2/3 in Jersey City, Kushner said the company never wanted the properties on their own — and that the Veris board was aware. “After being misled for a month, we withdrew an offer for Harborside we were told by the Board to make, left with the unmistakable impression the Board doesn’t know what they’re doing,” Kushner wrote.

Veris’ earlier response called into question Kushner Cos.’ analysis of its performance and said its offer to acquire the company for $16 per share undervalued the REIT’s current state in addition to its potential value as the company transitions to a pure-play multifamily focus. According to Reuters, analysts have pegged a more appropriate price at between $21.50 and $26 per share.

“With respect to performance, the proof is in the pudding,” Kushner hit back. “We’ve distributed hundreds of millions of dollars to our partners over the past 2 years and Veris has distributed zero. The market clearly believes in Kushner more than Veris’ management team given recent stock performance. Veris announced the effective completion of their ‘strategic transformation’ and the only people who bought the stock were insiders in receipt of Kushner’s overtures. Kushner announced their proposals to the public and the market drove the stock price to levels 50% above last month’s all time lows.”

As of 2:25 p.m. EDT on Nov. 3, Veris stock was trading at $15.45.

Over the past few months, Veris said it has received four proposals from Kushner Cos., leading it to disclose its prior communications.

Kushner Cos. has now followed suit.

“We will be making our proposal public since this Board and management team are more focused on enriching themselves than shareholders,” Kushner wrote.