Veris Residential(VRE)2024-07-24 20:43Revenue Performance - Revenue from leases increased by $2.7 million, or 4.7%, to $60.9 million in Q2 2024 compared to Q2 2023, driven by higher market rental rates and reduced concessions[35] - Total revenues from rental operations rose by $3.0 million, or 4.8%, to $66.6 million in Q2 2024 compared to Q2 2023[32] - Revenue from leases increased by $7.3 million, or 6.4%, in 2024 compared to 2023, primarily due to higher market rental rates and reduced concessions[63] - The company's total non-property revenues increased by 35.5% to $871,000 for the three months ended June 30, 2024, compared to $643,000 in the prior year[131] Profitability - Operating profit surged by $9.4 million, or 157.7%, to $15.4 million in Q2 2024 compared to Q2 2023[39] - Operating profit for the three months ended June 30, 2024, was $9.0 million, an increase of 87.4% from $4.8 million in the same period of 2023[131] - Net loss decreased significantly by $44.6 million, or 96.3%, to $(1.7) million in Q2 2024 compared to $(46.4) million in Q2 2023[39] - Funds from operations (FFO) available to common stock and Operating Partnership unitholders for the three months ended June 30, 2024, was $25.7 million, a significant increase from a loss of $0.3 million in the same period of 2023[109] Expenses - Total property expenses increased by $4.6 million, or 10.7%, to $47.9 million in Q2 2024 compared to Q2 2023[39] - General and administrative expenses increased by $0.2 million, or 1.1%, due to new office lease expenses and satisfaction of stay-on award conditions[42] - Real estate services expense increased by $3.3 million, or 51.7%, due to the satisfaction of stay-on award conditions and reorganization of the multifamily management structure[65] - Real estate taxes rose by $2.8 million, or 17.8%, mainly due to prior period tax appeal refunds and increased PILOT taxes based on higher revenues in 2024[64] Depreciation and Amortization - Depreciation and amortization decreased by $1.5 million, or 6.9%, primarily due to lease intangibles acquired in 2022 being fully amortized prior to 2024[36] - Depreciation and amortization decreased by $3.2 million, or 7.3%, primarily due to lease intangibles acquired in 2022 being fully amortized prior to 2024[66] Interest Income and Debt - Interest income decreased by $2.4 million, primarily due to lower interest earned on higher cash balances from sales proceeds received in 2023[37] - Interest income decreased by $2.0 million, or 48.7%, related to interest earned on larger cash balances from sales proceeds received in 2023[67] - The company's total debt as of June 30, 2024, was $1.7 billion, with an estimated fair value of $1.6 billion[112] - As of June 30, 2024, the company has approximately $1.4 billion in long-term debt with a weighted average coupon of 4.35%[141] Discontinued Operations - Income from discontinued operations was $1.7 million in Q2 2024, compared to $0.6 million in Q2 2023, reflecting a 164.8% increase[39] - The company experienced a significant increase in income from discontinued operations, reporting $1.4 million for the three months ended June 30, 2024, compared to a loss of $1.2 million in the same period of 2023[131] Transaction Costs - Transaction related costs decreased by $2.4 million, or 73.2%, due to fewer transactions in Q2 2024 compared to Q2 2023[58] - Transaction-related costs decreased by $2.9 million, or 67.7%, compared to 2023, primarily related to the sale of the former Office Portfolio[86] Joint Ventures and Dividends - Equity in earnings of unconsolidated joint ventures increased by $0.6 million, or 21.0%, due to improved operating performance from higher rental rates[88] - The company declared a $0.06 dividend per common share, paid on July 16, 2024[76] Risk Factors - The company has not experienced significant credit losses, but rising interest rates could increase tenant vacancies or defaults, adversely affecting operating results and liquidity[114] - If market interest rates increase or decrease by 100 basis points, the fair value of the company's fixed rate debt would change by approximately $34.4 million[141] - The company has placed an interest rate cap on the 2024 Term Loan with a notional amount of $55 million, with a strike rate of 3.50% expiring in July 2026[143] Other Financial Metrics - The company reported a loss from extinguishment of debt, netting $(785,000) for the three months ended June 30, 2024, compared to $(2.7 million) in the same period of 2023, a decrease of 70.5%[131] - The company had $14.5 million of total unrecognized compensation cost related to unvested LTIP Awards, expected to be recognized over a remaining weighted average period of 2.2 years[126] - As of June 30, 2024, the company had three unencumbered properties with a carrying value of $264.9 million[104]