Q4 2022 Veris Residential Inc Earnings Call
Good morning, and welcome to the various residential Inc. Fourth quarter 2022 earnings conference call all participants will be in listen only mode.
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Please note. This event is being recorded I would now like to turn the conference over to Karen Fielder General Counsel. Please go ahead.
Good morning, everyone and welcome to the various residential fourth quarter 2022 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 laws.
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 annual and quarterly reports filed in the SEC for risk factors that impact the company.
With that I would like to hand, the call over to my Botnia embarrassed President Chief Executive Officer My Bad.
Thank you Karen good morning, and welcome to our fourth quarter 2022 earnings call I'm joined today by our CFO Amanda Lombok.
Before I turn to our financial results I'd like to thank them I want to acknowledge the tremendous progress our team made during 2022, when our path to becoming a pure play multifamily company.
Despite the significant market volatility and resulting slowdown in transaction activity we.
We successfully executed on $1 $4 billion of non strategic asset sales.
$925 million of which has closed since the beginning of 2020 to Cigna.
Significantly, reducing our office exposure and fully exiting the hotel segment.
We also completed and stabilized our newest ground up multifamily development Cal 'twenty five and completed the acquisition of the James together, adding almost 1000 units to our portfolio, reflecting approximately 15% growth for the second consecutive year.
As a result, we increased the share of our multifamily business from 56% of NOI at the beginning of 'twenty to 'twenty two.
So broke I mean, 98% by year end pro forma for sales under binding contract and the stabilized NOI from our 25 massive concessions that we expect to burn off during the next 12 months.
This progress has also allowed us to further strengthen our balance sheet, reducing net indebtedness by nearly $570 million.
Amanda will discuss this thought.
Our 6931 unit operating multifamily portfolio and our 5825 unit same store operating portfolio, well 95, 3% and 95, 5% occupied respectively as of December 31st.
This is consistent with our strategy of optimizing rents and growing NOI during the year.
We continue to capture upside in our portfolio and have seen sustained growth of headline rents with loss to lease reducing to put our cheaper at the end of the quarter.
The same store portfolio achieved a blended rental growth rate of 17% for the year and 11, 7% for the fourth quarter.
Our key markets of New Jersey, and Boston achieved above average market rental growth compared to the national average during 2022.
Market rents across the class a multifamily segment in Jersey City grew by 8% during 2022 by contrast rents in our portfolio significantly outperformed the market growing by 15%, reflecting the high quality of our properties and the strength of our operational platform.
This was despite record new deliveries in the Jersey City market last year, almost 2000, new units three times the historic average.
However, near term supply is limited with a mere 500 units expected to be delivered over the next 18 months, while demand remains robust.
Full year same store NOI increased by 21% compared to 2021, driven by higher revenues and slightly lower controllable expenses, despite significant and ongoing inflationary pressures.
Turning to 'twenty to 'twenty three we have seen an increase in occupancy at the beginning of the year. Following a typically slow in December driven by seasonal trends.
I'm still portfolio, which going forward will include the Upton Capstone and River House nine was 96% occupied as of February 14th with the blended rental growth rate of 11% recorded since the beginning of this year.
As previously noted how is 25 750 unit apartment tower in Jersey City, which commenced leasing in April with 95% leased as of February start well ahead of schedule and underwritten rents demonstrating the strong demand for this property consistent without seeing across all premium class a multifamily portfolio.
Achieving this milestone is a testament to various potential has experienced leasing and marketing teams as well as our investment in environmentally friendly design features and responsible living concepts that meet the lifestyle preferences its residents.
During 2022, we closed on over $800 million of sales, including two waterfront office properties 111 River Street, and 101 Hudson Street.
<unk> of non strategic land parcels in the Hyatt Hotel.
Earlier. This month, we also competes at the site of the Port Imperial Hotel for $97 million, releasing approximately $13 million in equity and removing a $14 million of corporate guarantee.
An additional $437 million of office properties are under binding contract proceeds from which upon closing are expected to provide the company with increased liquidity and valuable optionality in the year ahead.
Furthermore, with our exit from the hotels segment complete it will be only two office properties away from becoming a pure play multifamily REIT once these transactions close.
These remaining non strategic properties unlevered and as such are expected to release significant equity upon that sale.
Since launching embraced by various residential a formal approach to environmental social and governance initiatives just over a year ago, we have significantly enhanced our company's efforts to support properties people and the planet and are continuing to fulfill our stated commitments of creating communities was purpose bothering diversity equity and inclusion and implementing some.
Stable best practices, all through an approach that seeks to prioritize the creation of value for shareholders.
Most recently various residential was named a member of the 2023, Bloomberg gender equality index. The modified market capitalization weighted index developed to gauge the performance of public companies dedicated to reporting gender related data.
We also joined pledge, 1% global movement to inspire educate and empower companies to leverage their resources the positive social impact and formed a strategic partnership with the center for real estate one of the world's foremost Institute for the study of greatest Nathan technology to jointly explore innovative solutions that will help our industry effectively.
Inefficiently evolve for the future.
During the past two years, we have successfully reduced complexity across the company strengthened and simplified our balance sheet and streamline to enhance the operational platform, resulting in a fifth consecutive quarter affected eating performance across our multifamily portfolio.
We begin 2023 in a strong position and well equipped to weather potential economic challenges that lie ahead, as we near the anticipated completion of our transformation and seek to unlock the substantial value created for shareholders.
With that I'm going to hand, it over to Amanda who will update you on our financial performance during the quarter.
Thanks, Matt.
For the full year 'twenty by your net.
Net loss available to common shareholders was 63 cents per diluted share versus $1.39 fully diluted share in the prior year.
Net income available to common shareholders was higher in 2022 as a result of the ongoing transition to a pure play multifamily REIT and higher gains recorded in 2022 on sales of nonstrategic assets.
Oh, I hope all with five and.
44.
Fourth quarter and full year 2022, respectively.
As communicated previously the transition to a pure play multifamily company continues to drive near term variability in our earnings.
And we are focused on driving long term value and earnings growth rather than short term profit.
But they all are highly levered asset with high capital requirement was often depressed earnings in the short term. Despite these asset generating little cashflow for distribution to shareholders.
The good news is that as we conclude the transformation and reallocate the significant equity whether you think you could fail.
There has been quite significant earnings growth over the next 24 months.
Given this backdrop, we have added a reconciliation in our earnings release of the variances from the third quarter to the fourth quarter.
Ignoring all the noise fourth quarter core <unk> would've been 7% excluding.
One time items related to catch up some property level expenses in Jersey City real estate access.
We believe that earnings will grow from this base due to the house 25 leased that continued improvement in our overhead cost structure and further strengthening of the balance sheet.
As Bob mentioned, how 25 achieve stabilized leased occupancy in February however, the GAAP NOI and have 25 doesn't reflect the fully stabilized NOI or there are concessions that will burn off over the next year.
In addition, the fully stabilized NOI of $30 million presented in our supplemental is expected to be achieved by the end of 2023 and includes retail NOI, which is still under lease up.
Annual year over year same store NOI was up 21%. However, despite strong rental growth same store NOI sequentially with relatively flat as we get anticipated is this a catch up and higher real estate taxes, primarily in Derby City.
In addition, leasing activity due to a return to more normalized seasonal trend.
Sequentially, we saw an increase in same store rental revenue of $2, one with that and believe that we will continue to capture some of our lawfully onthe market rent growth.
As Matt mentioned, our 2023 same store pool will include three additional properties comprising 866 units that together contributed around $15 million NOI during the last year.
But the last two quarter, we have seen elevated real estate taxes in Jersey City.
We have little control over our future tax rate changes you're doing all that we can do appeal real estate taxes.
Pilot agreements in place at many of our newer property.
As we near the completion of our transition to a pure play multifamily company, we have decided to align our reporting with that of other multifamily company.
Take out property level costs, among controllable and non controllable expenses.
We believe this breakout is important as it illustrates that year over year same store controllable expenses are almost flat despite the current inflationary environment.
Are there a 3% increase in controllable expenses sequentially in the function of the timing and what the expenses were incurred we believe that we will be able to continue mitigating anticipated inflationary pressure and maintain moderate expense growth in 2023.
Yes.
Turning to our general and administrative costs after adjusting for one time severance charge at.
Core DNA for 2022 let's call it $2 million in real term, representing the lowest level.
Over two decades.
Where a year ago, we set a target to reduce cash expenses by $5 million, which we exceeded.
And for Q2 'twenty one.
So some of our coordinate and real estate services expenses was $14 9 million dollar.
<unk> 22.
That sounded like $12 $9 million, implying a $2 million reduction on a quarterly basis or $8 million on an annualized basis.
These savings were even greater including capitalized.
Over the last two years.
Our focus on enhancing our operations and optimizing our cost structure, and a thoughtful and orderly manner to ensure limited business disruption.
We began this effort with a focus on people removing implications across the organization, adding talent to deepen our bench and right sizing the team.
That's it for me as well as we enter the final stages of our transformation into a multi family company.
To date, we have eliminated over 40.
Well I think substantial payroll, stating our G&A as a percentage of gross asset is currently in line with mid cap rate here and with the right people policies and processes now in place we expect to realize further cost savings that will help ensure our G&A continues to be commensurate with the size of our business.
We anticipate these savings to stem from internalization of certain services previously outdoor and consolidation of our corporate headquarters into a single location among other effort.
Okay.
Onto our balance sheet today, the primary use of proceeds from the sale of nonstrategic asset has been to pay down debt, reducing leverage and strengthening the balance sheet.
As a result over the course of the year net debt to EBITDA improved from 15, three times to $13 three times.
While our debt to unappreciated asset ratio also improved from 47% to 42%.
We have repaid nearly $1 billion of debt since the beginning of 2021 inclusive of an $84 million loan secured by the Port Imperial Hotel maturing in 2023 that was repaid at the fail in February .
As a result, the only outstanding maturity. This year is at $59 million mortgage on one of our stabilized Boston property.
Furthermore, our multifamily that it's 100% senior secured primarily nonrecourse and none of it is cross collateralized.
We believe that the company is well positioned in the current interest rate environment with 96% of our total debt fixed and are hedged inclusive of the hedge on 145 front Street, which has entered into subsequent to year end and the sale of the Port Imperial Hotel.
As a result, our current total debt portfolio has a weighted average maturity of four one year at a weighted average interest rate of four point for that.
Finally in relation to our recently announced transaction activity importantly on Hyatt Hotel contributed less than one time, a core at about in the fourth quarter and a very small losses expected for the period one during the first quarter.
As we continue to advance our transformation into a pure play multifamily company our earnings will remain unpredictable and variable as we put the last pieces of the puzzle into play and.
And so we still believe that it is appropriate to delay providing company level earnings guidance.
However, as we have greater clarity over our core multifamily operation we feel it is the appropriate time to provide guidance on this part of the business.
For 2023, we anticipate the same store NOI will grow between four and six part that we are projecting that same store revenue and expense it will grow by a similar quantum as well.
Before opening the line for question.
I'd like to briefly recap the results of our work over the last two years.
We have simplified and focused our business completing over $2 billion of nonstrategic property sale.
Developed in stabilized over 1600 unit.
Our multifamily portfolio by 32% and increase the share of NOI from multifamily from 38% at the end of 2020% to 98% at the end of 2022 pro forma for the sale of Harborside, one two and three and stabilized NOI from half 'twenty five.
We also strengthened our balance sheet, we're paying nearly $1 billion of debt, including $575 million of recourse corporate bonds that were due to mature in 2020 three and 'twenty four.
There's presidential both the best in class multifamily portfolio with an average age of six years.
Sensors amenity offering and the highest average revenue and lower capex per unit compared to our publicly traded multifamily peer.
As we approached the anticipated completion of our transformation the management team and board of directors continue to work closely together and remain highly focused on the creation of value for all shareholders.
Okay.
That concludes our remarks, and operator now I think we're ready for questions.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
The first question comes from Steve Southwell with Evercore ISI. Please go ahead.
Yeah. Thanks, Good morning, My Budd.
A couple of questions here look I understand you you greatly simplified the company there's not much left on the noncore side, but you still got you know a couple of of lowly leased office buildings and there is some land I guess, both inside the rock point JV and outside so.
Can you maybe just talk about kind of the timing and maybe the appetite from investors today for both the office buildings and and maybe the land assuming that you're not planning to put that land into development service anytime soon.
Good morning, Steve and thank you for the question.
It's a very relevant one.
I would start by saying development at this time is not a priority for the company given what that entails and the niche.
In terms of capital requirements leverage implications et cetera.
The fact that the that it would take minimum three to four years to begin.
Yielding income, which is a focus of the company. So that is not a priority.
Time.
As for the remaining non strategic assets and as you correctly point out that is.
The two remaining office buildings once publicized one two and three closed all the slide five and six.
And potentially some further rationalization of the land.
Seeing continued intra.
Interest from buyers.
Both were evaluating our options.
Both on the office side and the residential side, we may seek to further rationalize the land to some extent.
On the office assets have been designated as non strategic.
It doesn't mean, we will fly sell them at any price tomorrow, but it does mean that as we have done with the balance of the non strategic assets to date, we will have a thoughtful and.
A balanced measured way exit those in due course.
Okay, and maybe a second question I realize you haven't officially designated you know what you'll do with the proceeds but I think the the market expectation is that you would look to you know try and simplify the company and.
Pay down or pay off the rock point joint venture.
I guess my question is to the extent that you do close the harborside sales and in bringing the cash that you've talked about along with the suburban asset.
Are there any restrictions that you have either via the line of credit or other other debt that would sort of preclude that or kind of would hamstring you and sort of paying off the rock point venture whenever you know that you've kind of crossed that mark.
Well I'm showing no there are certain.
It says all framework within which a repayment.
Would occur under the joint venture so there's a bias that agreement that can be triggered by the policy could be deferred.
Up to 12 months, so within that framework to the extent the board determined that to be the highest and best use for the equity this release.
We will look to obviously do what we can to efficiently reallocate the capital.
If it does happen that that that is the path we should go down.
Consistent with the framework or otherwise negotiate it.
I'm sorry, what was the other part of your question.
Well I was just trying to understand are there any limitations.
Absolutely, yes, the only other limitation is the credit line you should assume.
Given the proceeds for.
Repayment of raw point would have to come from the sale of Harborside and Hopper side.
Really represents the collateral part of the collateral for the current revolving credit facility you should assume that there would be some sort of.
Amendment or replacement of that revolving credit facility, but nothing that would hamper us there or restrict our ability to be able to move forward in that direction under the framework.
With that but at what point.
Okay, Great and then just last question for me as you look out to I guess kind of March April and potentially even may how are you thinking about the renewal increases that you are sending out to existing residents on the multifamily side like what where are those notices going out and.
How might that have compared to the renewables that you got in maybe December January and February .
Well, we're still looking quite strong we have tried to temper expectations, we do think that.
Ultimately they will normalize.
Lower level, when we provided some guidance around.
Around that which I hope that you and others will find helpful. At this stage, but what I can tell you is for the next.
Couple of months going forward, we're still looking at double digit renewal notices across the portfolio.
Great. Thanks, that's it for me thank.
Thank you Steve.
The next question comes from Tom Catherwood with E. G. I G. Please go ahead.
Thank you and good morning, everyone.
Following up on Steve's question on the sales Oh about where are we sitting with harborside, one two and three I know the expectation was for that to close I think in the first quarter of this year, how are we kind of looking in the process.
Good morning, Tom.
Sitting here today, our expectation is still very much that.
That transaction closes within that timeframe.
Nothing is done until it's done.
It is a tricky transaction market.
Put timing slip, possibly but actually we're in regular dialogue with that buy and based on everything we know where we feel confident today that that will still closed within the timeframe that we had originally indicated.
Got it got it.
Back on the the January 18th press release, you put out.
Talking about the negotiations and then the offer that had come in from Kushner.
The comment was obviously that the board had planned to launch a strategic review process in due course.
Where are you in that kind of.
Early stages of the process and what are the triggers that can commence that strategic review.
So this is what you've seen is.
We have a recently reconstituted independent transparent board.
Highly focused on their fiduciary obligations on.
On the Max maximization of value for all shareholders and in the spirit of that transparency.
I was just making it be known to shareholders that we've had a number of inbounds from credible institutions.
Who expressed an interest in the multifamily side of the portfolio.
Given that now we are beginning to hopefully reached the conclusion of the transformation.
With the state of the non strategic assets, which are less interesting to those policies.
That freedom with.
Also consistent with.
Best corporate governance practices the board.
As it currently stands would contemplate running some sort of a process.
<unk> cost at the appropriate time, taking into consideration, where we are in the strategic transformation and market conditions and any other relevant factors to evaluate.
That interest and ultimately determine.
<unk>.
It would be in the best interest of shareholders to move forward on any path that.
So no specific definitive timeframe, given but I think those are the sorts of factors that the board would consider.
Got it I appreciate that color and then.
Last one for me.
This is kind of a couple of quarters in a row, where the net asset value that you are carrying for the rock point interest has declined I assume that that's you know with changes in the underwriting as youre looking at the ultimate IRR of that investment.
What has been that kind of underwriting change or or hurdle change as youre looking to value that investment.
Yeah, So Doug we obviously reassess the value.
Based on an equity value of the multifamily side of the business and where scrap a joint venture with what point and on a quarterly basis, we go through asset by asset.
Taken into consideration.
Cap rates in other relevant factors to determine where value sits and ultimately what that would imply in terms of the value.
Of that stake so that's what you're seeing if you're seeing some variability there. It's obviously, primarily driven by the movement in rates and the implications for the value.
<unk> assets.
As far as the cap rate moves does it how.
How material has that been as part of that underwriting.
So it's it's asset by asset.
I would say.
Overall as far as the markets are concerned it's too early to draw any conclusions.
In terms of where cap rates have moved to our values have moved to we're still in the period of price discovery transaction.
Volumes are extremely muted, especially.
Here in Jersey City, where we have a concentration of assets. So it is a little bit of an on off as opposed to a science there aren't too many comps.
We tried to triangulate to a value that ultimately we think would reflect the quality of these assets the scarcity of these assets.
We need a wall of capital that still seeking to acquire high quality multifamily assets.
Got it I appreciate the answers thanks, everyone. Thank.
Thank you Tom.
The next question comes from Joshua <unk> with Bank of America. Please go ahead.
Yeah, Hey, guys. Thanks for the time.
Just wanted to dig into your guidance assumptions a little bit more.
Maybe just the first one I guess what are you guys, assuming as far as market rent growth.
Lease rate growth.
Yeah.
Sorry, what are we assuming in terms of overall rent.
Growth for our.
Multifamily portfolio I know you talked earlier about up one or the renewal rates. So.
So for this coming year, we're assuming in the region of 3% rental growth.
3% Okay.
How does that compare to what you saw.
Last year across the portfolio market rent growth.
Well, it's obviously, it's obviously tempered down somewhat given the pace of growth that we saw last year.
And.
And <unk>.
Potentially economic headwinds ahead, so last year to put it into context Jersey City why we've got the highest concentration of assets as a market for Clos, they still around 8% rental growth, we achieved around 15% rental growth.
In the last 12 months.
Okay Awesome and then maybe.
Maybe on the non controllable expense side I guess, what are you seeing as far as real estate taxes.
Baked into your expense growth guidance.
Yeah.
Well look on the controllable side.
So would you say on the non controllable controllable.
Uh huh.
Non controllable I guess im just non controllable I mean, we saw a pretty significant increase.
One of the highest in the country really if that's a 2% increase in Jersey city taxes, and so the assumption would be that that small.
Sustainable in perpetuity, and so hopefully the magnitude of that would suggest that any future tax increases to the extent they come won't be.
Quite.
As we've seen so.
What we really sold to do it on the controllable side, where we do have.
By definition more control to really mitigate.
The impact of inflation, where you source actually.
Slightly reduced cost year over year, and that's where we're focusing our efforts going forward.
To continue to further optimize the cost structure that.
Great. Thanks, guys.
Thank you for the question.
The next question comes from Nicholas Joseph with Citi. Please go ahead.
Hey, good morning.
A bit of a follow up here, but how specifically or is the team and the board plenty on creating shareholder value beyond the current public offer out there right now.
Sorry, a BMD.
The current public offer from from Kushner, Oh, I see well so.
I wouldn't say that.
That's one path Nick I think you have.
Hey.
Recently reconstituted board that is independent that it's been very transparent highly focused on their fiduciary obligations and on the maximization of value for all shareholders.
And they have and will continue to evaluate any credible.
Inbound offers in parallel with.
The strategic transformation and the work that we're doing as a management team.
But any touch off is obviously must be fully funded must reflect the intrinsic value of bearish.
Paresh residential with regard to.
The offer that you're referring to but the board has made it clear that <unk>.
$150 fall short of our.
Adjusted New World view of where you sit.
And that does remain a significant question market, whether that is even a finance stuff up.
Nonetheless, the board has constructively engaged with Krishna companies with the aim of signing an NDA, which is quite normal in a logical first step in situations like this.
The way you're dealing with a competitor.
So that we can share nonpublic information.
And see if we can bridge the gap in value.
Two why we think Bobby you said.
But as it stands.
Having spent time in may concessions to get to agreement on that NDA.
We've not received assigned NDA.
The board remains very much willing and open to engaging with Krishna companies or anyone else.
Who has.
The ability to be able to move forward.
On a qualified basis. So the two are not mutually exclusive.
<unk> that we're focused on as a management team is continuing to simplify the business complete the transformation Ulta.
Ultimately, we believe that creates entity value.
To the extent the board just.
<unk> to crystallize that value mid process at the end of that process really at any time, that's a decision for the board and the SLC.
Great. Thanks for that color and then just a quick follow up so are you having any other conversations with.
Anyone beyond Kushner.
Yeah.
Would it be inappropriate for me to comment on any specifics, but as we did mentioned in the January 18th press release, we've had a number of credible inbound expressions of strategic interest.
For the multifamily portfolio given the progress that we're making on the strategic transformation.
Got it thank you very much.
Thanks, Nick.
The next question comes from John Pawlowski with Green Street Advisors. Please go ahead.
Hey, good morning.
Should we expect any multifamily acquisitions this year.
Good morning.
Ultimately between the.
If you think about the amount of equity that will be released from the remaining non strategic asset sale it's significant.
And as I mentioned that it would be a decision for the board to make.
At the appropriate time, what the highest and best uses for that capital.
Our acquisitions a priority.
So.
But ultimately should that'd be one of the you said that's considered.
I imagine it will be but no no decision has been made on the use of capital at this point.
Okay, and then just maybe.
Maybe a follow up to Steve's question, beginning it sounds like we should not expect any development starts. This year is that a fair interpretation.
Yeah look I don't want to rule that out that would be something that was discussed with the board, but it's not something that I would imagine being a priority given all focus.
On other metrics, namely cash flow generation.
To be able to replenish lost cash flow from the sale of highly Levered office asset.
And ultimately get to a position of timing the dividend back on and given that rich considerations.
But he is development will be a priority, but but ultimately that's a use of proceeds will be a decision made in conjunction with the board.
Okay last question for me just curious how far along.
In the marketing process are you on harborside, five and six and realistically when the when is the soonest.
We could sell these properties.
Yeah, we're not really looking to provide any guidance, but I think what I would say is.
Despite challenging transactional market that we're clearly in I would say we have been in for the law.
Two two and a half years with Colgate and it hasn't stopped us from making progress and are making progress in a thoughtful balanced measured way.
We are considering our options with regards to those two assets and ultimately you will update you in due course, but not looking for any kind of timeframe on.
When those get sold.
Okay. Thanks for the time.
<unk>.
The next question comes from Derek Johnston with Deutsche Bank. Please go ahead.
Hi, everybody good morning.
My bad.
New field and coming interest that you mentioned for the multifamily portfolio.
Orange potential buyers keenly interested in the land bank.
Part of any transaction, which kind of limits your ability there if you can discuss that.
Land acquisition remains costly and development yields under pressure just thinking that that's probably part of par.
Part of the puzzle.
So to speak if you can expand.
Yeah.
Thank you, Doug that's a great observation because.
The inbound expressions of interest.
As expected.
Largely in the platform.
There is huge value in controlling <unk>.
A bowl multifamily land.
And so for some of those prospective buyers, yes. It is absolutely interesting.
Continue to.
Have some landed in the business question.
Question is.
It's all a bit of interest and.
And should we rationalize it to some further extent prior to a part of the transformation and that's a balancing act and something that we're working closely with advisors and the board to determine.
Okay. Thank you and I can just just a quick follow up can you remind us of.
You know, what the land bank and titles or the entitlements in it and the parcels.
So.
Value wise, just over 300 million on around 5000 units.
Yes.
What we believe can be.
Got it.
Okay.
Thanks for the time.
Thank you for the question.
And we have a follow up from Steve Sochua with Evercore ISI.
Please go ahead.
Great. Thanks, a lot, but just a one one follow up on page seven where you break out some of these nonstrategic assets you do put this estimated land value inside rock point J D.
That's roughly $240 million for roughly 5000 units I just wanted to be clear is that a 100% owned by various or if you were to say sell that either as the entity or individually does some of that I guess to some of those proceeds get shared with rock point.
No that's not our share value Steve.
Okay.
It's just all just trying to show there is what's inside the joint venture what was wrong with the investors as well as on the corporate side, but that's the answer.
Okay great.
Yeah.
I guess just going back to John's question on Harborside, five and six and I know leasing was you know a virtually nonexistent at 1500 square feet I guess I'm, just trying to understand a little bit better the assets don't have assumable debt, which if it did it might might make them more sellable for it for a buyer if they were.
At low rates.
And I guess, what I'm trying to figure out is with the lack of leasing how problematic is that to sell <unk>.
40% and 20% office buildings today.
With no debt assumable in today's environment.
I think it's a great question actually.
So you'll see the REIT leasing was muted, but not across our portfolio. It was actually meters in the fourth quarter across JV safety on across Manhattan, We had.
A significant decline in D, saying, what leasing did a car was.
Really driven by lease explorations not by growth for strategic initiatives. It was really renewals.
So there are some early signs in 2023.
Seem positive.
Potentially the same could see some sort of an uptick in <unk>.
Increased number of inquiries.
But actually it was real golf on slides five and six.
Beyond that office use buyer that we're speaking to are looking at alternative use.
What I would tell you.
Okay and one last for me I guess on page 13, where you kind of reconcile from episode of core F. O. There's a couple of add backs I just wanted to understand a little bit more theres, a dead deal and transaction costs of $2 1 million and then there were severance last rebranding I didn't know how much was severance how much was what.
Branding, but are are those severance slashed rebranding costs kind of over with at this point or do you expect any of that to be carried forward into 'twenty three.
Okay.
Hi, This is Amanda so in.
And the severance and rebranding costs for the fourth quarter, that's all severance related costs.
Yeah.
As far as what we would expect in the future, we're not giving guidance on that but the rebranding costs are done and we don't expect any more of that.
And they've been done for some time now the your question on that deal and transaction related costs. That's just some various professional fees from a transaction that didn't go through and.
Yeah.
I don't know.
I know what will happen and if we would have more or not in the future.
Great. Thanks, that's it for me.
Thank you Steve.
This concludes our question and answer session I would like to turn the conference back over to Mark.
Neil for any closing remarks.
Thank you for joining US today, we're pleased to report another quarter of progress in our strategic transformation on our fifth consecutive quarter of stellar operational performance I'd like to thank the team for their tireless efforts that have allowed us to achieve these results and we look forward to updating you again in due course, thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.
Okay.
[music].
Mhm.
[music].
Oh.