Kushner Cos. has made a hostile $4.3 billion bid for Veris Residential, once called Mack-Cali Realty, charging that the company has been "mismanaged" and that the value of its real estate portfolio has been "appreciably damaged" under its current leadership.

Veris, a real estate investment trust based in Jersey City, New Jersey, on Friday acknowledged it had received a letter from Kushner, the New York-based family company once led by former President Donald Trump's son-in-law, Jared Kushner. Veris said its board is evaluating Kushner's unsolicted proposal, in consultation with its financial and legal advisers.

Kushner, which said it is one of Veris' six-largest stockholders as it criticized the company's management, is offering $16 a share in its bid, which is valued at $4.3 billion including debt, according to The Wall Street Journal, which first reported the offer. That offer was 30% more than the REIT's last closing price, Kushner said in its letter Thursday.

The real estate firm, which has been expanding its suburban New Jersey apartment portfolio and touted its experience in the Garden State, has offered to either manage Veris' properties in a joint-venture arrangement or acquire the REIT outright.

Veris declined to comment beyond confirming it had received Kushner's letter.

The REIT has been the target of several unsolicited bids in the past few years, including one from activist investor group Bow Street in 2019, and engaged in several proxy fights. The criticism during that period was been similar to the issues that Kushner raised: that Veris is under-performing its peers, that its stock price has lagged and that its holdings are undervalued. In July 2020, then-CEO Michael DeMarco was ousted. He was temporarily replaced by MaryAnne Gilmartin, who was succeeded by Mahbod Nia, the current CEO.

Veris, as Mack-Cali, was once the biggest office landlord in New Jersey, at a pre-pandemic time when that sector was suffering. But it has been divesting its office properties to evolve into a pure-play multifamily REIT. Kushner, which said it met with Veris' board in September to voice its concerns and offered to manage the company, was critical of the REIT's efforts and performance.

"We have amassed a stake of 4.5 million shares in Veris over the past five months in the belief that Veris owns a high-quality real estate portfolio with substantial long-term potential which is, unfortunately, being mismanaged," Kushner said in its letter. "It is our belief that the intrinsic value of Veris' portfolio of real estate assets has been appreciably damaged over the last several years — to the tune of several hundred million dollars of shareholder value."

Even after the installation of a new board in June 2020 and a new management team in March last year, "Veris continues to be one of the worst-performing REITs in the country," according to Kushner.

The company was also critical of several sales that Veris recently closed on or has pending as it sheds its remaining office buildings. Earlier this month, Veris completed divesting its office tower at 101 Hudson St. in Jersey City to The Birch Group for $346 million, a deal that's been in the works for more than a year. The REIT also said it had struck an agreement to sell its Harborside 1, 2 and 3 office complex along the Jersey City waterfront for an aggregate price of $420 million.

"Most recently, Veris announced the sale of three properties at substantial discounts," Kushner said in its letter. "The lengthy endeavor to sell these properties stretched into the worst investment sales environment in decades and culminated in a low contract price for [Harborside 1, 2 and 3]. Similarly, Veris allowed the buyer of 101 Hudson to string them out for a year, giving away tens of millions to close the deal."

At least one Wall Street analyst didn't agree with Kushner's take on Veris.

"We are unsure how outsourced property and asset management would work for an internally managed residential REIT (it sounds like a de facto corporate takeover without the time, cost, and challenge of a proxy battle)," BTIG wrote in a note. "Veris is at the tail end of its 7-year transition from an owner of suburban office assets to an owner of luxury multifamily properties in urban and transit-oriented suburban markets, and its cost structure and earnings profile still reflect this ongoing shift (the company's current $45 million [general and administrative] run rate — not $57 million as stated in the letter — reflects a material improvement compared to $73.7 million in 2020).”

As for the Harborside deal, BTIG said, "Did Veris sell [Harborside 1, 2 and 3] at a 'substantial discount' compared to pre-COVID values, yes, compared to current market values of under-leased assets in secondary markets, absolutely no."

And Green Street has lauded Veris for its recent deals.

"Management deserves credit for executing on the transactions during volatile credit market conditions and a generally challenging backdrop for the office business," Green Street said in an Oct. 10 note. "The transactions also represent good progress towards a cleaner portfolio and healthier balance sheet for Veris."

Veris owns or has interests in 36 properties and developable land, according to a note from Morgan Stanley on Friday. The portfolio includes 23 multifamily rental properties with 7,441 apartment units, as well as noncore assets that include six office properties, four parking-retail properties and three hotels as of June 30, Morgan Stanley said. The properties are located in three Northeast states plus Washington, D.C.

The report said it viewed Kushner's bid "as a positive for the rest of the apartment group, especially the [approximately] 10 smaller apartment REITs, as it suggests the take-private bid still exists which should provide a floor for valuations."

Jared Kushner, the husband of Trump's daughter Ivanka, once led Kushner Cos., which was founded by his father, Charles Kushner, who is the firm's chairman. The younger Kushner stepped down from his role at the family company after he became a key adviser to the president.

In its letter, Kushner also pointed out that Veris' CEO Nia lives in the United Kingdom.

"The bulk of Veris' core assets are in New Jersey," the letter said. "As has been presented to the Veris board, Kushner, unlike Veris' management team and board, are born-and-bred New Jersey multifamily real estate operators and developers. We have nearly 40 years of experience investing, managing and developing in this competitive arena, generating billions of dollars in profits for our stakeholders."

Kushner currently operates 20,000 multifamily apartments, has 10,000 units under development and owns a commercial portfolio, according to its letter to Veris. The company has been an active developer in Veris' turf, the Hudson waterfront. This summer Kushner broke ground on One Journal Square, a two-tower project set to have more than 2 million square feet of residential, retail, amenities, parking and open space in the heart of the historic 100-year-old neighborhood of Jersey City.

In its letter, Kushner accused Veris of having a "bloated" cost structure.

"Among other things, Kushner executives 'blind shopped' each Veris residential asset during August of 2022 and found obvious shortcomings in leasing and management efforts," the letter said. "Leasing offices were closed or short-staffed, phone calls and messages went unreturned, Roseland branding remained throughout, and technological capabilities fell far short of current best practices. ... The status quo is unacceptable."

BTIG predicted that Kushner's offer may spur other potential buyers for Veris to step forward.

"While now is not the ideal time to try and sell a company, we suspect that there is enough 'dry powder' waiting for deployment into multifamily assets that Kushner's offer could bring others out of the woodwork, as it were," according to BTIG.