VRE - NYSE

Ladies and gentlemen, good morning. And welcome to the Veris Residential, Inc. Fourth Quarter and Full Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Taryn Fielder, General Counsel and Secretary. Please go ahead.

Good morning, everyone. And welcome to Veris Residential’s fourth quarter and full year 2024 earnings conference call. I would like to remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the federal securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to the company’s press release and annual and quarterly reports filed with the SEC for risk factors that impact the company. With that, I would like to hand the call over to Mahbod Nia, Veris Residential’s Chief Executive Officer, who is joined by Amanda Lombard, Chief Financial Officer; and Anna Malhari, Chief Operating Officer. Mahbod?

Thank you, Taryn, and good morning, everyone. To begin, I’d like to take a moment to reflect on Veris Residential’s evolution since the reconstitution of our Board and establishment of the Strategic Review Committee or SRC over four years ago. We successfully pivoted away from our office exposure, proactively executing large-scale asset sales at advantageous pricing and challenging market conditions, preserving significant value for our shareholders while accelerating Veris Residential’s successful transformation into a consistently top-performing pure-play multifamily REIT with core Class A properties concentrated in one of the top performing residential markets in the U.S. Concurrently, management has worked closely with the Board, the SRC and the company’s advisors to stay abreast of the state of the transaction market and related capital flows, as well as capital markets, as we evaluate all available avenues to maximize value for Veris Residential shareholders. We recognize that despite our successful transformation, intrinsic value of our company is not accurately reflected in our share price today. Both management and the Board are keenly focused on closing this gap to intrinsic value through measures including, but not limited to, the crystallization of assets at or close to the intrinsic value where opportunities exist to do so. Consistent with this approach, the company, in close coordination with the Board, has developed Veris Residential’s 2025 corporate plan, central to which is the proposed sale of approximately $300 million to $500 million of select assets, which we believe we can achieve strong pricing at or near to their intrinsic value over the next 12 months to 24 months, given their size, location and buyer interest, despite the broader challenges in the investment market today. These assets comprise the majority of our remaining land bank, whose sale will be the primary catalyst for earnings accretion. The balance is a number of smaller multifamily assets that are generally less efficient to operate and will be largely earnings neutral. We plan to use the proceeds from these dispositions to buy back up to $100 million of stock, taking advantage of the dislocations exist between our public trading value and intrinsic value on behalf of our shareholders. With the remainder of the proceeds being used to pay down debt, positioning the company to reduce its leverage to below 9 times. Importantly, as we monetize these assets, we will maintain our ability to be nimble and to continue exploring any and all paths to further crystallize value for shareholders, should opportunities arise to do so. Coming back to the year in review, 2024 marked another year of strong operational and financial results for Veris Residential, as we continue to execute on our three-pronged approach for value creation, focused on ongoing operational outperformance through a number of platform and portfolio optimization strategies, capital allocation initiatives that deliver earnings accretion and create value, and the further strengthening of our balance sheet. For the full year, we delivered NOI growth of 6.9% and blended net rental growth of 4%, which contributed to a 13% increase in core FFO compared to 2023 and 38% compared to 2022. The solid performance supported our ability to raise our dividend meaningfully year-over-year by approximately 60%. We also refinanced over $526 million of mortgages in 2024, utilizing the corporate facilities secured earlier in the year and proceeds from select asset sales, reducing indebtedness by over $180 million, further strengthening our balance sheet and leaving the company with no consolidated debt maturities until 2026. These results are a testament to our ongoing pursuit of strategic operational and financial excellence and the hard work and commitment of the Veris Residential team to whom I’m extremely grateful. Looking ahead, we remain focused on continuing to upgrade, enhance and find efficiencies in our operating platform, solidifying Veris Residential’s position as a leader at the forefront of innovation in the multifamily sector, reimagining how multifamily properties are managed and how elevated resident experiences are curated. In parallel, we continue to invest in our properties, including Liberty Towers, and now also Portside, where we see tremendous potential to generate compelling risk-adjusted returns on our invested capital while accreting future earnings. Before discussing our performance in more detail, a few comments on the broader market. Certain measures from the new federal administration, such as proposed fiscal policies, including potential tax cuts and deregulation, aim to stimulate economic growth and could establish the foundations for further rental growth supported by higher disposable incomes. In addition, tariffs are expected to create inflationary pressure on construction materials, resulting in high construction costs. This, combined with more restrictive immigration policies that could reduce the available construction labor force, may further increase overall development costs and timelines, potentially hindering new multifamily developments and exacerbating the existing housing shortage. Ongoing economic uncertainty and inflationary pressures have resulted in the expectation of a higher-for-longer rate environment, which continues to weigh on the multifamily investment market, with 2024 investment volumes 35% below the historical average, albeit higher than 2023, during which the figure was 44% below the historical average. Certain supply-constrained markets are beginning to show improved liquidity for transactions under $200 million, while larger transactions are seeing more limited interest, with prospective buyers, primarily value-add and opportunistic investors, and their resulting return expectations weighing on pricing. Core investors, who typically have lower risk tolerance and return expectations, continue to remain largely on the sidelines at this time, although there are some early signs that this may be beginning to change. Our key regions exhibit contrasting transaction market dynamics at this time, with Massachusetts maintaining relatively strong liquidity and cap rates hovering around 5%, while Jersey City continues to see relatively low liquidity, especially for larger transactions. Multifamily fundamentals remain intact, driven by the long-term structural housing shortage, elevated home ownership costs, favorable household formation trends and limited near-term supply in select markets, including the Northeast. New York City and New Jersey led rental growth nationally in 2024, with 5% and 3.8% year-over-year growth, respectively, well above the national average of 0.6%. In the last decade, Jersey City multifamily completions have outpaced the broader New York Metro area, yet vacancy has steadily declined, demonstrating the robust demand that has consistently absorbed new supply. With renters comprising 74% of the population and the population projected to grow by 8% to 15% over the next seven years, the market faces a potential housing shortage projected to be between 27,000 and 36,000 units. Currently, there are 10,000 units under construction in Jersey City, with the majority of supply concentrated in the Journal Square area and only three Waterfront Class A projects totaling 2,800 units expected to deliver between 2026 and 2027, and only a single project of 385 units delivered in 2024. Our Jersey City and Port Imperial assets continue to benefit from their proximity to Manhattan, and an increase in back to office mandates, with New York City office occupancy approaching pre-pandemic levels. This shift is reflected in our portfolio’s out-of-state move-ins, which increased over 55% in the fourth quarter, including approximately 30% from New York, where residents are attracted by the quality of our assets and amenity offering, and the compelling relative value proposition that they represent. Turning to operations, 2024 marked the third consecutive year that Veris Residential achieved sector-leading same-store NOI growth. For the full year, our Class A portfolio recorded NOI growth of 6.9% compared to an average of 1.6% for our peer group, blended net rental growth of 4% and a further 160-base-point improvement in our operating margin. For the first time since COVID, we began to see a return to ordinary seasonal trends in our portfolio, leading to a slight decline in occupancy compared to the previous quarter. As of year-end, our portfolio was 94.6% occupied, excluding Liberty Towers, in line with Q4 2023 and 93.9% occupied, including Liberty Towers, where we are undertaking a value-add project that has resulted in an expected impact on occupancy. Our annualized blended net rental growth rate remained strong at 4% for the year. While this rate slowed as anticipated to 0.5% for the quarter and was driven by renewals of 4.7%, offset by negative new lease growth, it outperformed the broader market, which saw average growth of zero percent during the period. As we move into 2025, we have observed what we believe to be the beginning of a seasonal uplift in our net blended rental growth rate to 1.6% year-to-date through February 20th, and 3% in February, with new leases turning positive. The average rent per home across our portfolio is now above $4,000, reflecting a 4.6% year-over-year increase and a 35% premium to our public peers, up from 30% at the beginning of 2021. Over the last four years, we have seen an 8.4% compounded growth rate of our average rents, compared to 4.5% for the peer group. This sustained outperformance in rents across our portfolio demonstrates the quality of our highly sought-after properties. The affordability ratio across our portfolio stands at 12.9%, underpinned by move-ins with an average income of $180,000 per person or $388,000 per home, a 17% increase from the fourth quarter of 2023. As we continue to optimize our portfolio, we remain focused on value creation through targeted investment across our properties. As noted earlier, last year we commenced an extensive renovation of Liberty Towers in Jersey City and in January we began leasing newly refurbished units, realizing over 20% gross blended rental growth in line with our projections for these early units. We anticipate $0.06 accretion to core FFO once the renovations are complete and the property is fully stabilized and a meaningful uplift in the value of the property. In addition to renovations at Liberty Towers, we have identified an accretive value-add opportunity at one of our Boston assets, Portside 1, where we intend to invest $2.5 million including unit renovations alongside an upgrade to corridors and select common areas. This investment is projected to generate a mid-teens return over a three-year period. Turning to our platform optimization efforts, we remain focused on continuing to achieve operational excellence as reflected in our operating margin, which has further improved to 66.8% from 65.2% a year ago and 57% at the beginning of 2021 and is now in line with our peers. Our platform enhancements including operational improvements, the adoption of new technologies and changes to our organizational structure and processes continues to have a positive impact on our results. This is evident in our Jersey City portfolio that has achieved over 40% rental growth since the beginning of 2022, compared to 13% across competing properties in the Jersey City Waterfront market. Similarly, rents across our Boston portfolio outpaced their respective markets over the same period, most notably in 2024 when our rents increased by nearly 6%, compared to an average negative 3% trade-out in the broader East Boston market. In parallel, our teams have done a phenomenal job of containing expense growth, which has remained below the peer group average during the past two years despite ongoing inflationary pressures. Turning to our technology initiatives, we are excited to introduce PRISM, our overarching approach to strategic technology implementation. Our strategy aims to enhance operational efficiency across the company by identifying precise opportunities for innovation, ensuring technology reduces friction for our stakeholders including our employees, residents and prospects. Using this approach, we evaluate and implement solutions that drive measurable returns from AI-powered tools to process automation, all while maintaining an elevated customer experience that prioritizes human interaction supported by technological solutions. For this end, in 2024, we introduced a hugely successful area leasing model to further leverage the proximity of our assets and have recently expanded this initiative to our Jersey City maintenance teams. Additionally, building off the success of our virtual community and leasing assistant, Quinn, we’ve introduced a new AI team member, Taylor, who focuses on delinquency matters, providing reminders to residents about upcoming rent payments, late payments and unpaid balances. These initiatives contributed to a 2% reduction in payroll expense in 2024, aiding our efforts to contain controllable expenses. Overall, through the combination of our dedicated high-performing teams and strategic technology deployment, we were able to further reduce our controllable expenses as a percentage of revenue to 17.7%, then 18.3% in 2024 and 20% in 2022. As we start the new year, Veris Residential does so from a position of strength, maintaining the flexibility to respond to evolving market conditions and opportunities that may arise with shareholders’ best interests in mind. With that, I’m going to hand it over to Amanda, who will discuss our financial performance and provide an update on guidance.

Thank you, Mahbod. For the full year 2024, net loss available to common shareholders was $0.25 per fully diluted share versus a net loss of $1.22 for the prior year. Core FFO per share was $0.11 for the fourth quarter, at the high end of our guidance, compared to $0.12 in the fourth quarter of 2023 and $0.17 in the third quarter of 2024. For the full year, we reported core FFO of $0.60 per share, an increase of 13% over 2023. Same-store NOI growth was 7.3% for the quarter and 6.9% for the year. For the quarter, same-store revenues were up 4.1% as compared to last year, primarily driven by market rent growth. Revenues were up 5.4% during the year, driven by revenue growth of 3.8% approximately 60 basis points of other revenue earned in the first half of the year and the remainder primarily attributable to outsized year-over-year growth from House 25 as the asset left its stabilization. On the expense side, we realized expense savings of 1.8% for the quarter, with expenses only increasing 2.5% year-over-year in line with expectations. We have kept expense growth to a minimum through the favorable resolution of insurance and real estate taxes, in addition to realized cost savings from technological enhancements and portfolio efficiencies implemented. Moving on to overhead, core G&A, after adjustments for non-cash stock compensation and severance payments, ended the year up broadly flat at $37 million, reflecting the benefit of cost-cutting initiatives offset by inflationary pressures. Consistent with seasonal expense trends, the quarterly core G&A was elevated relative to the third quarter due to typical seasonal fluctuations in compensation and professional fees. Turning to the balance sheet, 2024 was a very successful year for the Veris team as we repaid approximately $526 million of mortgage debt and entered into a new corporate facility and term loans, reducing total debt by approximately $180 million. This refinancing strategy allowed us to extract the maximum benefit from our Old-World low interest rate mortgages by repaying them at maturity while credibly redeploying proceeds from low or no income producing land and office assets to leverage reduction, effectively saving the company approximately $0.06 a potential interest expense solution had we refinanced our mortgages at par. Net debt-to-EBITDA on a trailing 12-month basis continued to improve year-over-year, albeit marginally, reaching 11.7 times given the loss of NOI and sold office assets in the trailing 12 months. As of February 21st, all of our debt was fixed or hedged with a weighted average maturity of 3.1 years and a weighted average effective interest rate of 4.95% and we had liquidity of $158 million. As Mahbod mentioned, the leveraging with the aim of contributing to earnings growth while improving our cost of debt capital remains a priority for the Veris team. Now on to guidance. We have issued core FFO guidance of $0.61 per share to $0.63 per share, representing growth of 2% to 5% over 2024. Underpinning our 2025 core FFO projections is same-store NOI growth of 1.7% to 2.7%. On the revenue side, we are projecting revenue growth of 2.1% to 2.7%, reflecting continued moderation of rents to normalized levels after several years of strong sector leading rental revenue growth. Breaking this down further, we are expecting rental revenue growth of 3.3%. However, this is offset by 60 basis points from one-time other income we recognize in 2024 for the retail lease termination and other items. As has been the case, we expect our Jersey City and Port Imperial markets to continue their relative strength in our portfolio. On the expense side, we are projecting modest expense growth of 2.6% to 3%. This is driven by almost flat controllable expenses, primarily as a result of continued technology and portfolio optimization initiatives, which we anticipate will mitigate inflationary pressures. The majority of the projected expense growth comes from non-controllables. I would be remiss to not add the disclaimer that we have seen material positive and negative fluctuations in our non-controllable expenses since we took over at Veris and this could certainly be a factor again in 2025. Bringing this all together, our expected same-store NOI for 2025 shows a market and portfolio that is well-positioned for strength in the coming year with the highest rents and strong market dynamics supported by our innovative and nimble operations that continue to drive efficiencies and improvements. Rounding out our guidance, we are projecting G&A and property management expenses to remain largely flat year-over-year. At a time when others are noting overhead increases from sticky inflationary pressures, we are able to benefit from the impact of various simplification and technological initiatives in our cost structure. Throughout the year, core FFO will follow the typical seasonal trends we have observed in 2024. Notably, we expect the first quarter and last quarter of the year to have higher G&A than the second quarter and third quarter. In addition, we are expecting to recognize the Urby tax credit in the second quarter, although that timing can be pushed out to the third quarter for reasons out of our control. In addition, we expect that the multifamily portfolios NOI will remain strong throughout the year, albeit at a more moderated pace following several years of steady margin improvement and sector-leading revenue growth, during which our average rents rose to the highest of the multifamily peers at over $4,000. Additionally, in guidance, we assume that only the sales under binding contract or already closed are utilized to repay the revolver. However, as Mahbod mentioned, we have a pipeline of $300 million to $500 million of land and multifamily assets identified for sale over the next 12 months to 24 months. In addition to improving our leverage, these sales provide an opportunity for core FFO growth beyond the high end of our guidance range of 5%, further demonstrating Veris’ potential to continue driving outsized earnings growth by utilizing the multiple levers at our disposal. With that, Operator, please open the line for questions.

Thank you. [Operator Instructions] The first question comes from the line of Steve Sakwa from Evercore ISI. Please go ahead.

Yeah. Thanks. Good morning, Mahbod. I appreciate kind of all the comments you provided about the SRC and kind of the strategic plan. I guess what I’m really trying to get a better handle on is under what environment does the Board think pursuing something larger would be more favorable? Is it more about the economic outlook? Is it more about the rate environment? Do you have a certain sort of targeted interest rate environment that you think would make a larger sale more appealable to a larger buyer? I’m just trying to understand under what conditions does something larger make sense?

Good morning, Steve. Thank you for the question. No. It’s the right question. I think it’s important to remember that we’ve got a relatively newly reconstituted Board and Strategic Review Committee that was put in place four years ago that also includes our two largest non-passive shareholders. And so, yeah, we have a broad set of expertise and perspectives. We’re well advised through our advisors, and as I said in my script of remarks, have and continue to really stay abreast of all the evolving trends in the market that work together and it’s a combination of the things you mentioned and other things such as capital flows and the nature of buyers that are ready, willing and able to execute. And all of that gets factored into what is the best path to maximize value on behalf of shareholders? Because the job of the Board is consistent with their fiduciary obligations, the maximization of long-term value for shareholders. And so, at the moment, what we’re seeing in transaction markets and it’s reflective of the set of a number of the factors you described, is some dislocation, particularly for anything on the larger side that really can have implications or has implications for the viability of transactions and for pricing. So, it would have to be -- it’s not one thing. I think it’s just a continual evaluation of options available to the Board and SRC, and then ultimately deciding the best path forward in pursuit of maximization of value for all shareholders.

Okay. And maybe just as a second question, could you just provide a little more color on the $300 million to $500 million? I guess I’m just curious how you’re thinking about the land sales, and maybe more importantly, what are the buyers, which are presumably all developers, how are they thinking about the land value and the, I guess, the targeted yields that they might want to achieve on those new developments? And I guess, can you just give us any sense for kind of land values per unit that you might be able to achieve on that $300 million to $500 million?

Sure. So, within that $300 million to $500 million you have at the moment, so our land bank today is about $180 million is where we have it marked and I think that’s fair for today. Within the $300 million to $500 million you’ve got, call it, $100 million to $130 million of land of which $45 million is under binding contract now. The values per unit of those -- assumed values will vary depending on the specific sites and the nuances and not to mention how advanced they are in the process of becoming shovel ready. So that’s a bit of a range. And in terms of the buyer groups it’s a bit of a mixed bag actually, but that is one of the areas where we believe we’ve identified some capital that could allow us to be able to exit those at fair value, close to the intrinsic value as we’ve said and they’re highly accretive to earnings to the extent we monetize them and really are the catalyst behind the deleveraging alongside the multifamily sales.

Okay. Great. That’s it for me. Thank you.

Thank you, Steve.

Thank you. The next question comes from the line of Tom Catherwood from BTIG. Please go ahead.

Thanks, and good morning, everybody. Maybe following up on Steve’s question, how much of the land bank is in the market right now and are there properties where you’re updating entitlements to maximize value similar to what you did with Harborside 8 and 9 last year?

Good morning, Tom. Thank you for the question. So about $100 million to $130 million of the $300 million to $500 million is land. I wouldn’t comment specifically on which sites are currently being marketed or in the market, but you should assume that we would look to work through and get things done as expeditiously as is reasonable, while also seeking to preserve and maximize value. Then in terms of enhancing the value of our land where we can, that’s been a continuous process really for the four and a half years, four years that I’ve been here, that’s something that we always do. So regardless of whether we’ve made a decision on what to do with that land, if by progressing steps to enhance the value, by investing and spending the time to enhance the value, we can extract more value in a sale or just hold that asset at a high value, that’s something that we’ve pursued proactively and continue to do.

Understood. And then I know timing is obviously a very hard thing to predict, but in general as you think to that $300 million to $500 million of potential sales, can you bucket that in terms of kind of on an aggregate basis what you think internally as far as what are near-term opportunities, more medium-term and then what still have some more work before you think you can truly monetize those assets?

Yes. So it’s -- that’s an estimate. So that’s a product of an extensive review working with the Board and the Strategic Review Committee and our advisors and it’s an estimate today of what we believe could be monetized given a range of factors including the size of those assets, the operational efficiency, future return profile and very importantly the nature of the buyers for those types of assets and that ties in with current capital flows that could allow us to realize values that as I’ve said are at or close to the intrinsic value of those assets implying significantly below the current trading cap rate of the company. So that’s the best estimate today. The timing of 12 months to 24 months, I mean, hopefully, if you’ve followed and I know you have, Tom, everything we’ve done over the last four years we don’t tend to sit on our hands. I think we’re pretty thoughtful but also pragmatic when it comes to crystallization of value including with the office portfolio where we really proactively had to seek out small pockets of capital to be able to execute the levels that we did but ultimately moved forward. So we don’t tend to sit on our hands but we’re also thoughtful and very mindful of preserving and maximizing value for shareholders.

I appreciate those thoughts. And then last one for me Mahbod, you mentioned the uptick in blended net rental growth thus far in 2024 and really accelerating in February. Can you remind us how Veris handles its unit pricing strategy, and is that your own system or a third-party service?

Well, it’s a combination, so -- and there’s an element of it that’s proprietary, but we do obviously take into consideration what is happening in competing assets around the market and ultimately set pricing strategy in a way that seeks to not necessarily prioritize occupancy, as some may do or as you may do in certain market conditions, but really to maximize NOI.

Appreciate that. That’s it for me. Thanks, everybody.

Thanks, Tom.

Thank you. The next question comes from the line of Eric Wolfe from Citi. Please go ahead.

Hi. Good morning. It’s actually Nick Kerr on for Eric this morning. I guess the main question for me is, given you guys tried to raise equity somewhat recently in June, I think, what’s causing the sort of shift in rationale to or purchase 100 million shares and pay off debt with these asset sale proceeds?

Well, I think you’re talking -- good morning by the way, Nick. You’re talking about two different points in time and two very different rationales behind those two things. The asset that we’d identified back in June was highly strategic and highly accretive. Our NAV -- our consensus NAV at that time was 20% to 25% lower than it is today. So it was a very different time and an opportunity to acquire an asset that was not only accretive to the business, but also highly strategic. We didn’t move forward with that for reasons that you’re well aware of. Today, we’re at a different point where we’re seeing a significant dislocation between the trading price, the trading value of the company and the intrinsic value of the company. And we’re also seeing a shift in the dynamics and the transaction markets whereby there does seem to be some small pockets of liquidity that we believe may be available for smaller transactions. And so consistent with what we always said we would do in our pursuits of maximizing value, we’re seeking to exploit that arbitrage opportunity that we believe exists and crystallize values at or close to NAV for those assets and put that capital to a higher and better use, buying back our own stock at these discounts to intrinsic value and delevering the company in a more accelerated fashion.

Thanks. And then I guess the second one for me is if you could just kind of walk through high level some of the assumptions for the same-store revenue build, like revenue growth and occupancy?

Sure. Good morning, Nick. This is Amanda here. So for our same-store revenue, we are projecting revenue growth of approximately 3.3%. However, we’ve got it to a little bit lower number because last year, we had some one-time items, some termination income from a retail tenant and other items that’s driving a 60-basis-point reduction as we lap the recognition of that revenue. And then so that’s really driving where our revenue assumptions come from. On the expense side. Mahbod said earlier, on the controllable expenses, we’re predicting there that for them to be relatively flat. I think it’s like a 20-basis-point increase we’re seeing. There is a small amount of savings that we’re recognizing this year due to the Liberty Towers value-add where we’re not incurring make ready costs anymore, but that’s only about 70 basis points. So it’s still very low overall. And then on the non-controllable side, we are projecting that that is the bulk of our expense growth was coming from. And last year, we have the favorable resolutions on both the taxes and insurance side, which are helping to which are a factor in how we projected those growths.

And Nick, it’s Anna here again, chiming in on the occupancy. As Mahbod mentioned, we always look to find the right balance between rental growth and occupancy, really targeting somewhere around the 95%, which is what you have seen over the last few years and that’s where we’re as of now, as you’ve seen in the disclosures, excluding Liberty Towers, where we will continue to have reduced occupancy as we work through the value-add project.

Yeah. Great. Thank you for that.

Thank you.

Thank you. The next question comes from the line of Jana Galan from Bank of America. Please go ahead.

Hi. Thank you. Good morning. Maybe just following up a little bit deeper on Nick’s question, with the type of occupancy and blended rent spreads embedded in the guidance and kind of the seasonal cadence, I think, some of your peers are expecting a stronger second half 2025 versus first half. But just kind of given your portfolio focus, maybe if you could maybe talk to that.

Good morning, Jana. So two-thirds approximately of our leases roll between the second quarter and third quarter, which is where we expect the strongest lease growth. We typically see slowdown in the first quarter, as you have seen in 2024. And at the moment, we’re kind of recovering from that period, going into the stronger leasing season. So I would say the summer will be the peak on our side.

Thank you. And then maybe just when thinking about the revenue-enhancing redev opportunities, is the pace kind of measured just given the disruption to the portfolio? Is it any way to pull forward some of that or is the capital constraint? If you could just maybe talk to the decisions when looking at these opportunities?

So you mean in terms of Liberty Towers and Portside and any other value-add opportunities?

Yes.

Yeah. It’s a function of a few things. So, obviously, the units have to be available and so we’re constrained to some extent by the availability of units and waiting for them to turn. And then we do try to, as much as possible, minimize disruption within the building for existing residents as well. So I’d say your aim is to pace things along in a way that is expeditious, but also minimizes, to the extent possible, disturbance to existing tenants and candidly to our numbers as well. I mean, we wouldn’t make half the building vacant, for example, in one go [ph], even if we had the opportunity. So it’s a bit of a balancing act of just working through it steadily. But capital is not the constraint. We’ve got plenty of liquidity available.

Thank you.

Thank you.

Thank you. The next question comes from the line of David Segall from Green Street. Please go ahead.

Hi. Thank you. I think in your opening remarks, you mentioned that cap rates in the market are around 5%, but also the assets you’re planning to sell are smaller and less efficient. So I was curious how you’re thinking about pricing for those assets relative to the market.

Good morning. Great question actually. So the 5% was really a reference to general sort of cap rates in and around the Massachusetts market, not across our full asset base today. Having said that, the assumption should be that the operating assets in that $300 million to $500 million, our expectation is to sell them in the low 5s cap rates.

Great. Thank you. And maybe just to build on that, most of the smaller assets you own are outside of the New Jersey Waterfront bucket. So does that mean you would be looking to potentially exit some of the Massachusetts assets or market?

Could be. I think that we haven’t announced which assets yet, but it’s a bit of a combination. We also have some smaller assets, you will notice, that are in markets like Westchester and D.C. And then also joint ventures, which we’ve mentioned in the past that we would like to try to find a path to clean up to the extent that we can. And so I think the assumption should be that it captures, it goes back to what I said earlier, this is the product of an extensive review of our asset base working with the Board and the SRC and our advisors and taking into consideration a range of factors. But certainly from a market liquidity and pricing standpoint, size is one of the critical ones today.

Great. Thank you.

Thank you.

Thank you. As there are no further questions, I now hand the conference over to Mahbod Nia for his closing comments.

Thank you for joining us today. We’re very pleased to have reported another year of solid operating results and are excited about the future prospects of the company and look forward to updating you again next quarter.