Veris Residential(VRE) - 2024 Q2 - Quarterly Results

Earnings Release Key Financial Data & Highlights The company reported strong Q2 2024 results with improved profitability, FFO growth, and raised guidance Q2 2024 Key Financial Metrics per Diluted Share | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $0.03 | $(0.30) | $(0.01) | $(0.56) | | Core FFO | $0.18 | $0.16 | $0.32 | $0.30 | | Core AFFO | $0.21 | $0.19 | $0.40 | $0.33 | | Dividend | $0.06 | $— | $0.1125 | $— | Operational Highlights Comparison | Metric | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Same Store Occupancy | 95.1% | 94.1% | | Same Store Blended Rental Growth Rate (Quarter) | 5.4% | 4.6% | | Average Rent per Home | $3,923 | $3,899 | - Management raised guidance due to strong operational and financial results, highlighting a new $500 million credit facility and a $168 million reduction in overall debt from non-strategic asset sales[7][8] Same Store Portfolio Performance The Same Store portfolio demonstrated strong rental growth and a year-over-year increase in normalized NOI - Key performance metrics for the Same Store portfolio include a 5.4% blended net rental growth rate for the quarter and a 100 basis point sequential increase in occupancy to 95.1%[10] Same Store Performance (Three Months Ended June 30) | Metric | 2024 ($ in thousands) | 2023 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Property Revenue | $74,745 | $71,215 | 5.0% | | Total Property Expenses | $25,794 | $21,578 | 19.5% | | Same Store NOI | $48,951 | $49,637 | (1.4)% | | Normalized Same Store NOI | $48,951 | $47,458 | 3.1% | Transaction, Finance, and Other Activities The company executed strategic asset sales, secured a new credit facility, and advanced its ESG goals - Completed the sale of 107 Morgan for $54 million and two land parcels for $28 million, generating significant net proceeds[12] - Secured a new $500 million facility package, comprising a $300 million revolving credit facility and a $200 million delayed-draw term loan[14] - The company's debt is 99.9% hedged or fixed, with a weighted average interest rate of 4.5% and maturity of 3.1 years[13][14] - The quarterly dividend was increased by 14.3% to $0.06 per share[16] - Advanced ESG targets by reducing Scope 1 & 2 emissions by 66% and Scope 3 emissions by 22% compared to a 2019 baseline[17] 2024 Guidance Veris Residential raised its full-year 2024 guidance for Same Store NOI growth and Core FFO per share Updated 2024 Same Store Guidance | Metric | Current Guidance | Initial Guidance | | :--- | :--- | :--- | | Revenue Growth | 4.0% – 5.0% | 4.0% – 5.0% | | Expense Growth | 4.5% – 5.5% | 5.0% – 6.0% | | NOI Growth | 3.0% – 5.0% | 2.5% – 5.0% | Updated 2024 Core FFO per Share Guidance | Metric | Low | High | | :--- | :--- | :--- | | Net Loss per Share | $(0.21) | $(0.17) | | Core FFO per Share | $0.52 | $0.56 | Financial Statements Consolidated Balance Sheet Total assets and liabilities decreased as of June 30, 2024, primarily due to asset sales and debt reduction Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Net investment in rental property | $2,823,270 | $3,006,315 | | Cash and cash equivalents | $18,398 | $28,007 | | Total Assets | $3,037,925 | $3,241,046 | | Liabilities & Equity | | | | Mortgages, loans payable and other obligations, net | $1,632,765 | $1,853,897 | | Total Liabilities | $1,757,559 | $1,936,494 | | Total Equity | $1,271,072 | $1,279,553 | Consolidated Statement of Operations The company reported net income of $2.7 million in Q2 2024, a significant turnaround from a net loss in Q2 2023 Statement of Operations Summary (Three Months Ended June 30, in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total revenues | $67,476 | $64,206 | | Total expenses | $58,473 | $59,402 | | Gain (loss) on disposition of developable land | $10,731 | $— | | Net Income (loss) | $2,735 | $(30,135) | | Net loss available to common shareholders | $2,922 | $(27,434) | | Diluted EPS | $0.03 | $(0.30) | Non-GAAP Reconciliations FFO, Core FFO and Core AFFO Core FFO and Core AFFO per diluted share both increased year-over-year for the second quarter of 2024 FFO and Core FFO Reconciliation (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net income (loss) available to common shareholders | $2,922 | $(27,434) | | Real estate-related depreciation and amortization | $22,514 | $26,339 | | FFO | $25,711 | $(289) | | Adjustments (e.g., gain on land disposition, transaction costs) | $(7,096) | $(15,475) | | Core FFO | $18,615 | $15,764 | | Core AFFO | $21,634 | $18,810 | Adjusted EBITDA and EBITDAre Adjusted EBITDA decreased slightly, while EBITDAre saw a significant increase in Q2 2024 compared to the prior-year period EBITDA Metrics (Three Months Ended June 30, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Adjusted EBITDA | $37,889 | $40,778 | | EBITDAre | $52,205 | $32,291 | | Adjusted EBITDAre | $45,109 | $40,703 | Portfolio Information Operating Portfolio The company's operating portfolio consists of 7,621 multifamily units with 95.1% occupancy as of Q2 2024 Multifamily Operating Portfolio Summary (Q2 2024) | Region | Apartments | Occupancy | Average Revenue per Home | | :--- | :--- | :--- | :--- | | NJ Waterfront | 5,067 | 95.7% | $4,291 | | Massachusetts | 1,167 | 94.7% | $2,931 | | Other | 1,387 | 93.1% | $3,411 | | Total | 7,621 | 95.1% | $3,923 | - The commercial portfolio includes over 732,000 rentable square feet of garage and retail space, with a total occupancy of 78.4% in Q2 2024[46] - The company holds developable land parcels with potential for a total of 4,139 units, concentrated in the NJ Waterfront, Massachusetts, and other areas[46] Same Store Performance The Same Store portfolio saw sequential occupancy gains and strong blended lease rate growth of 5.4% in Q2 2024 Same Store Sequential Quarter Comparison (Q2 2024 vs Q1 2024) | Metric | Q2 2024 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | NOI at Share | $48,951k | $49,387k | (0.9)% | | Occupancy | 95.1% | 94.1% | 1.0% | | Blended Lease Rate | 5.4% | 4.6% | 0.8% | Same Store Year-over-Year Comparison (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Property Revenues | $74,745k | $71,215k | 5.0% | | Total Property Expenses | $25,794k | $21,578k | 19.5% | | Same Store GAAP NOI | $48,951k | $49,637k | (1.4)% | | Normalized Same Store NOI | $48,951k | $47,458k | 3.1% | Debt Debt Profile, Summary and Maturity The company reduced its total consolidated debt to $1.69 billion while maintaining a heavily hedged portfolio - Total consolidated debt outstanding was $1.69 billion as of June 30, 2024, with the largest single loan being $343 million for Haus25, maturing in 2028[55] Pro Rata Debt Portfolio Summary | Metric | Value | | :--- | :--- | | Total Pro Rata Debt | $1.92 billion | | % Fixed Rate & Hedged | 99.9% | | Weighted Average Interest Rate | 4.51% | | Weighted Average Maturity | 3.1 years | - The company repaid loans on Soho Lofts ($158.8M) and 145 Front at City Square ($63.0M) during the quarter[55][72] Reconciliations and Additional Details (Annexes) Annex 1: Transaction Activity Year-to-date dispositions totaled $206.9 million, reflecting the company's strategy of divesting non-core assets 2024 Dispositions to Date Summary | Asset Type | Gross Asset Value | | :--- | :--- | | Land | $91,600,000 | | Multifamily | $30,300,000 | | Office | $85,000,000 | | Total | $206,900,000 | Annex 4: Unconsolidated Joint Ventures The company's share of unconsolidated joint ventures includes 2,087 multifamily units and $296.9 million in debt Unconsolidated Joint Ventures Summary (VRE Share) | Metric | Value | | :--- | :--- | | Total Multifamily Units | 2,087 | | VRE Share of Q2 NOI | $7.64 million | | VRE Share of Debt | $296.9 million |