Veris Residential(US:VRE)2022-08-03 20:34Part I Financial Information Financial Statements This section presents unaudited consolidated financial statements for Veris Residential, Inc. and L.P., detailing balance sheets, operations, cash flows, and accounting notes Veris Residential, Inc. Financial Statements Veris Residential, Inc. reported net income of $17.3 million for H1 2022, reversing a $64.5 million net loss in H1 2021, with total assets at $4.31 billion Veris Residential, Inc. Balance Sheet Summary ($ thousands) | Metric | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $4,310,997 | $4,527,318 | | Real estate held for sale, net | $368,625 | $618,646 | | Total Liabilities | $2,327,499 | $2,556,587 | | Total Equity | $1,467,173 | $1,449,418 | Veris Residential, Inc. Statement of Operations Summary ($ thousands, except EPS) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Revenues | $177,459 | $154,220 | | Net Income (Loss) | $30,123 | $(60,510) | | Net Income (Loss) available to common shareholders | $17,281 | $(64,456) | | Diluted EPS | $0.12 | $(0.75) | Veris Residential, Inc. Cash Flow Summary ($ thousands) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $45,710 | $27,947 | | Net Cash from Investing Activities | $155,074 | $490,099 | | Net Cash from Financing Activities | $(198,810) | $(516,573) | Veris Residential, L.P. Financial Statements Veris Residential, L.P. reported net income of $19.1 million for H1 2022, reversing a $70.9 million net loss in H1 2021, with results similar to Veris Residential, Inc Veris Residential, L.P. Balance Sheet Summary ($ thousands) | Metric | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $4,310,997 | $4,527,318 | | Total Liabilities | $2,327,499 | $2,556,587 | | Total Partners' Capital | $1,428,530 | $1,409,035 | Veris Residential, L.P. Statement of Operations Summary ($ thousands, except EPU) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Total Revenues | $177,459 | $154,220 | | Net Income (Loss) | $30,123 | $(60,510) | | Net Income (Loss) available to common unitholders | $19,078 | $(70,919) | | Diluted EPU | $0.12 | $(0.75) | Notes to Consolidated Financial Statements The notes detail accounting policies and financial activities, covering organizational structure, property transactions, debt, segment performance, and noncontrolling interests - As of June 30, 2022, the company's portfolio consisted of 36 properties, including 23 multifamily rental properties, six office properties, four parking/retail properties, and three hotels50 - The company is in the process of selling its Suburban Office Portfolio, with results from these properties classified as discontinued operations. As of June 30, 2022, only one asset from this portfolio remained to be sold6795 - The company operates in two business segments: (i) multifamily real estate and services and (ii) commercial and other real estate. For the six months ended June 30, 2022, the multifamily segment generated $50.5 million in net operating income, while the commercial segment generated $48.2 million206209 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2022 financial performance, attributing net income growth to property sales and reduced debt extinguishment losses, covering liquidity, capital, debt, and FFO Results of Operations Net income significantly improved in Q2 and H1 2022, driven by a $57.7 million gain on land sales and reduced debt extinguishment losses, with same-store revenue from leases growing 5.2% Net Income (Loss) Comparison ($ thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30 | $34,650 | $(74,031) | | Six Months Ended June 30 | $30,123 | $(60,510) | - The increase in net income for the first six months of 2022 was primarily driven by a $57.7 million gain on the disposition of developable land and a significant reduction in losses from debt extinguishment compared to the prior year259260 - Same-Store Properties' revenue from leases increased by $3.5 million (5.2%) in Q2 2022 compared to Q2 2021, mainly due to higher occupancy, increased market rental rates, and reduced concessions in the multifamily portfolio229 Liquidity and Capital Resources The company expects to meet liquidity needs via property sales and credit facilities, with total debt at $2.23 billion as of June 30, 2022, and the common dividend suspended for strategic transition - The company's primary sources of liquidity are rental revenue, proceeds from property sales, and borrowings under its revolving credit facility264265 - The common stock dividend has been suspended since Q3 2020 and is expected to remain suspended through 2022 to provide financial flexibility during the company's strategic transition to a multifamily REIT268 Debt Summary as of June 30, 2022 ($ thousands, %) | Debt Type | Balance ($000's) | % of Total | Weighted Avg. Interest Rate | | :--- | :--- | :--- | :--- | | Fixed Rate Secured | $1,532,416 | 68.50% | 3.70% | | Variable Rate Secured | $704,672 | 31.50% | 3.72% | | Total | $2,237,088 | 100.00% | 3.70% | Funds from Operations (FFO) FFO available to common stock and OP unitholders was $63.8 million for Q2 2022 and $80.8 million for H1 2022, a significant improvement from prior-year losses, adjusted for real estate depreciation and property sales Funds from Operations (FFO) Reconciliation ($ thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net income (loss) available to common shareholders | $26,373 | $(72,079) | | Adjustments (Depreciation, Property Sales, etc.) | $37,411 | $24,562 | | FFO available to common stock and OP unitholders | $63,784 | $(47,517) | | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | Net income (loss) available to common shareholders | $17,281 | $(64,456) | | Adjustments (Depreciation, Property Sales, etc.) | $63,536 | $33,325 | | FFO available to common stock and OP unitholders | $80,817 | $(31,131) | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate changes, with $1.5 billion in fixed-rate debt; a 100 basis point rate change would impact variable-rate debt interest costs by $7.0 million annually - The company's main market risk is interest rate risk, which affects its cost of funds and the value of its fixed-rate debt305 - A 100 basis point increase or decrease in interest rates would change annual interest costs on variable-rate debt by approximately $7.0 million307 Controls and Procedures Management concluded that disclosure controls and procedures for Veris Residential, Inc. and L.P. were effective as of June 30, 2022, with no material changes to internal control over financial reporting - Management concluded that the disclosure controls and procedures for both the General Partner (Veris Residential, Inc.) and the Operating Partnership (Veris Residential, L.P.) were effective as of June 30, 2022310312 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls311313 Part II Other Information Legal Proceedings The company reports no material pending legal proceedings beyond ordinary routine litigation incidental to its business - There are no material pending legal proceedings against the company316 Risk Factors No material changes to risk factors were reported since the company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes to risk factors were reported since the last annual report317 Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2022, 11,508 shares of common stock were issued in private offerings in exchange for common units - In Q2 2022, 11,508 shares of common stock were issued in exchange for common units in private offerings under Section 4(a)(2) of the Securities Act321