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Veris Residential’s board unanimously knocked back Kushner Cos.' acquisition offer, saying the proposed price undervalues the firm, and that it doesn't consider Charles Kushner's firm an "appropriate partner."
Veris, a publicly traded REIT that changed its name from Mack-Cali Realty Corp. in December, said Thursday it has evaluated the offer and determined it wasn't in the best interests of shareholders.
The offer of $16 per share, putting the company’s value at roughly $4.3B, including debt, would be "grossly" undervaluing it, the board wrote. In Veris’ prior experience with Kushner, the board said it found the firm was unable to substantiate its equity or debt financing sources.
Kushner, who has been leading the firm since his son, Jared, went to work in the White House for his father-in-law, former President Donald Trump, said in his public takeover offer that Veris' board had "ignored" his overtures. The board noted its “surprise” at Kushner's claim — pointing to multiple meetings and phone calls.
Veris’ board said it spoke to equity partners that Kushner had referred it to, and wrote that it wasn't possible to confirm that debt or equity was ready to be deployed for Kushner to make the transaction. It pointed to offers Kushner had made this year on properties Veris has listed for sale that were quickly withdrawn.
“This inability to substantiate your capital casts serious doubt on Kushner Companies' ability to complete any meaningful transaction with the Company,” the board wrote in its letter to Kushner.
“Kushner Companies lacks third-party management expertise, has a well-documented history of questionable management practices, and is in direct competition with Veris Residential, creating inherent conflicts of interest. It is therefore highly unlikely that we would consider Kushner Companies as an appropriate partner.”
It concluded the board would be happy to consider any further offers that would result in “meaningful” value for shareholders — if it was “substantiated by credible and verifiable equity and debt financing sources.”
Charles Kushner, in response, told Reuters the company is fully capitalized and committed” and added the Veris "leadership team has no clear long term plan to maximize the value of the portfolio, nor are they the right team to execute."
He didn't address Veris’ contention the price was too low. The deal would've added about 7,700 apartments to Kushner's 21,000-unit portfolio. Kushner already owns 5% of Veris’ shares.
The Kushner offer was approximately 28.8% higher than Veris' $12.42 price when markets closed Oct. 20, the day the offer was received, per Marketplace. Its shares have since risen to $15.33 as of midday Thursday. Analysts told Reuters that a more appropriate sale price would be between $21.50 and $26 a share.
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