Veris sells hotel portfolio as shift to multifamily continues
REIT parts with trio of North Jersey properties for $214M
Veris Residential has checked out of the North Jersey hotel market.
The REIT sold off its remaining hotel investments for $214 million, the Jersey City-based firm disclosed in its fourth-quarter earnings report, as it continues to focus its portfolio on multifamily properties.
Veris, led by CEO Mahbod Nia and formerly known as Mack-Cali Realty, sold the 351-key Hyatt Regency hotel in Jersey City for $117 million in November to a joint venture of Taconic Capital Advisors and HEI Hotels & Resorts affiliates.
The net proceeds of the two transactions were more than $22 million, according to Veris.
The deals come as the firm continues to wring office and hotel assets out of its commercial portfolio to own solely residential properties in North Jersey, Westchester County and the greater Boston area.
The REIT has completed $1.4 billion of non-strategic asset sales since the start of 2022, of which about $831 million closed during the year. The firm used about $301 million to repay debt and acquire the five-story, 240-unit residential complex known as The James in Park Ridge, Bergen County last year.
Veris sold the 14-story, 566,000-square-foot office building at 111 River Street in Hoboken last January for $210 million to SJP Properties and David Werner Real Estate Investments.
It also sold the 40-story, 1.3-million-square-foot office building at 101 Hudson Street in Jersey City last October for $346 million to Jersey City-based investor Mark Meisner’s Birch Group. The deal made $90 million of net proceeds available to pay down its revolving credit facility, according to the company.
About $437 million in non-core asset sales are under contract to sell. Nearly all of that is from 601W Companies’ $420 million deal for Veris’ Harborside 1, 2 and 3, three office buildings in a Jersey City complex. The deal is still on track to close by the end of this quarter and is expected to net about $350 million, according to the REIT.
But questions have been raised about whether 601W, the Manhattan-based investment firm led by founder Mark Karasick and fellow managing members Michael Silberberg and Victor Gerstein, can secure financing to close the deal in the first quarter as planned.
“Nothing is done until it’s done. It’s a tricky transaction environment,” Nia said on the firm’s earnings call Wednesday. “Based on everything we know, we feel confident today that it will still close within the time frame we had originally indicated.
The sale of Harborside 1, 2, and 3 would leave Veris with two office buildings: Harborside 5 and 6. Nia reported “continued interest” from buyers in both properties, but said Veris is evaluating its options and would not lay out a specific time frame for when they would be sold.
Multifamily assets now account for 98 percent of Veris’ net operating income. The REIT hasn’t decided if it will acquire more residential properties this year, Nia said, adding that he doesn’t believe acquisitions and development are a near-term priority.