Veris Residential (VRE), mcap=$1.5bn, price $14.96 vs $12.40

$VRE pitch:
– Multi-family REIT is almost done selling its office properties and owns apartment buildings mostly in NY and Boston.
– Class A buildings in areas with barriers to supply.
– At 50% of replacement cost and 1/3 of NAV.
– Portfolios should benefit substantially from inflation, high mortgage rates, and immigration.
– Expect the shares to re-rate in the next 12-18 months as a substantial dividend is reinstated.
– Potential acquisition target.

$VRE valuation:
– Trades at a 7.5% cap rate based on 2023 forecasts when all properties will have stabilized.
– Class A properties are selling at 4.5% cap rates in these markets.
– At 50% of replacement cost and 1/3 of NAV, with nearly a 13% FCFE yield.

Exp. gain: +200% to $35/share.

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