Veris Residential(VRE) - 2024 Q3 - Quarterly Report

Explanatory Note This section clarifies the combined reporting of Veris Residential, Inc. and Veris Residential, L.P., detailing the UPREIT structure and General Partner's control - The report combines filings for Veris Residential, Inc. (General Partner, REIT) and Veris Residential, L.P. (Operating Partnership), with the General Partner having exclusive control over the Operating Partnership's day-to-day management[4][5] - As of September 30, 2024, the General Partner owned approximately 91.5% common unit interest in the Operating Partnership, with limited partners holding the remaining ~8.5%[6] - The combined report aims to enhance investor understanding, eliminate duplicative disclosure, and create time and cost efficiencies by presenting the business as a whole[8] Part I – Financial Information This section introduces the unaudited consolidated financial statements, prepared in accordance with GAAP for interim financial information and SEC regulations - The accompanying unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and SEC rules and regulations[18] - The results for the three and nine-month periods ended September 30, 2024, are not necessarily indicative of the results to be expected for the entire fiscal year or any other period[20] Item 1. Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for both Veris Residential, Inc. and Veris Residential, L.P., including balance sheets, statements of operations, comprehensive income (loss), changes in equity, and cash flows, along with detailed notes explaining accounting policies, investments, debt, equity, and other financial disclosures Veris Residential, Inc. Consolidated Balance Sheets Consolidated Balance Sheets (in thousands) | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------- | :----------- | :----------- | | Total Assets | $3,005,840 | $3,241,046 | | Total Liabilities | $1,746,701 | $1,936,494 | | Total Equity | $1,249,845 | $1,279,553 | - Net investment in rental property decreased from $3.006 billion at December 31, 2023, to $2.806 billion at September 30, 2024[23] - Revolving credit facility and term loans increased from $0 at December 31, 2023, to $353.58 million at September 30, 2024, while mortgages, loans payable and other obligations, net, decreased from $1.854 billion to $1.324 billion[23] Veris Residential, Inc. Consolidated Statements of Operations Consolidated Statements of Operations (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $68,175 | $66,473 | $202,991 | $193,277 | | Total Expenses | $57,353 | $67,154 | $176,807 | $187,995 | | Net Loss | $(10,907) | $(60,250) | $(12,641) | $(106,615) | | Basic EPS | $(0.10) | $(0.60) | $(0.12) | $(1.16) | - Net loss significantly decreased for both the three-month (from $(60.25) million to $(10.91) million) and nine-month periods (from $(106.62) million to $(12.64) million) ended September 30, 2024, compared to 2023[24] - Loss from continuing operations after income tax expense decreased by 81.7% for the three months and 84.7% for the nine months ended September 30, 2024, compared to 2023[24] Veris Residential, Inc. Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | $(10,907) | $(60,250) | $(12,641) | $(106,615) | | Net unrealized loss on derivative instruments | $(4,815) | $(714) | $(4,561) | $(123) | | Comprehensive Loss | $(15,722) | $(60,964) | $(17,202) | $(106,738) | - Net unrealized loss on derivative instruments increased significantly to $(4.82) million for the three months and $(4.56) million for the nine months ended September 30, 2024, compared to $(0.71) million and $(0.12) million, respectively, in 2023[25] Veris Residential, Inc. Consolidated Statements of Changes in Equity Consolidated Statements of Changes in Equity (in thousands) | Metric (in thousands) | Sep 30, 2024 (3 Months) | Sep 30, 2023 (3 Months) | Sep 30, 2024 (9 Months) | Sep 30, 2023 (9 Months) | | :-------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Total Equity (End of Period) | $1,249,845 | $1,291,074 | $1,249,845 | $1,291,074 | | Net Loss | $(10,907) | $(60,250) | $(12,641) | $(106,615) | | Common Stock Dividends | $(6,628) | $(4,714) | $(17,222) | $(4,714) | | Stock Compensation | $2,926 | $9,366 | $10,325 | $16,705 | - Total equity decreased from $1.271 billion at July 1, 2024, to $1.250 billion at September 30, 2024[27] - Common stock dividends for the nine months ended September 30, 2024, were $17.22 million, a significant increase from $4.71 million in the prior year period[30][31] Veris Residential, Inc. Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | | Net Cash Provided by Operating Activities | $40,469 | $33,272 | | Net Cash Provided by Investing Activities | $165,044 | $494,571 | | Net Cash Used in Financing Activities | $(227,623) | $(534,615) | | Net Decrease in Cash and Cash Equivalents | $(22,110) | $(6,772) | | Cash, Cash Equivalents and Restricted Cash, End of Period | $32,469 | $40,877 | - Net cash provided by investing activities decreased significantly from $494.57 million in 2023 to $165.04 million in 2024, primarily due to lower proceeds from discontinued operations[34] - Net cash used in financing activities decreased from $(534.62) million in 2023 to $(227.62) million in 2024, driven by lower repayments of mortgages and redemptions of redeemable noncontrolling interests[34] Veris Residential, L.P. Consolidated Balance Sheets Consolidated Balance Sheets (in thousands) | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------- | :----------- | :----------- | | Total Assets | $3,005,840 | $3,241,046 | | Total Liabilities | $1,746,701 | $1,936,494 | | Total Equity | $1,249,845 | $1,279,553 | - The consolidated balance sheet figures for Veris Residential, L.P. are identical to those of Veris Residential, Inc., reflecting the consolidated financial reporting structure[36] Veris Residential, L.P. Consolidated Statements of Operations Consolidated Statements of Operations (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $68,175 | $66,473 | $202,991 | $193,277 | | Total Expenses | $57,353 | $67,154 | $176,807 | $187,995 | | Net Loss | $(10,907) | $(60,250) | $(12,641) | $(106,615) | | Basic EPU | $(0.10) | $(0.60) | $(0.12) | $(1.16) | - The consolidated statements of operations for Veris Residential, L.P. are identical to those of Veris Residential, Inc., reflecting the consolidated financial reporting structure[38] Veris Residential, L.P. Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | $(10,907) | $(60,250) | $(12,641) | $(106,615) | | Net unrealized loss on derivative instruments | $(4,815) | $(714) | $(4,561) | $(123) | | Comprehensive Loss | $(15,722) | $(60,964) | $(17,202) | $(106,738) | - The consolidated statements of comprehensive income (loss) for Veris Residential, L.P. are identical to those of Veris Residential, Inc., reflecting the consolidated financial reporting structure[41] Veris Residential, L.P. Consolidated Statements of Changes in Equity Consolidated Statements of Changes in Equity (in thousands) | Metric (in thousands) | Sep 30, 2024 (3 Months) | Sep 30, 2023 (3 Months) | Sep 30, 2024 (9 Months) | Sep 30, 2023 (9 Months) | | :-------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Total Equity (End of Period) | $1,249,845 | $1,291,074 | $1,249,845 | $1,291,074 | | Net Loss | $(10,907) | $(60,250) | $(12,641) | $(106,615) | | Unit Distributions | $(7,241) | $(5,149) | $(18,813) | $(5,149) | | Stock Compensation | $2,928 | $9,366 | $10,327 | $16,705 | - Total equity decreased from $1.271 billion at July 1, 2024, to $1.250 billion at September 30, 2024[43] - Unit distributions for the nine months ended September 30, 2024, were $18.81 million, a significant increase from $5.15 million in the prior year period[46][47] Veris Residential, L.P. Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | | Net Cash Provided by Operating Activities | $40,468 | $33,272 | | Net Cash Provided by Investing Activities | $165,044 | $494,571 | | Net Cash Used in Financing Activities | $(227,623) | $(534,615) | | Net Decrease in Cash and Cash Equivalents | $(22,111) | $(6,772) | | Cash, Cash Equivalents and Restricted Cash, End of Period | $32,468 | $40,877 | - The consolidated statements of cash flows for Veris Residential, L.P. are identical to those of Veris Residential, Inc., reflecting the consolidated financial reporting structure[50] Notes to Consolidated Financial Statements This section provides detailed notes on the Company's accounting policies, investments, debt, equity, and other financial disclosures Note 1. Organization and Basis of Presentation This note details the Company's structure as a REIT (Veris Residential, Inc.) and its operating entity (Veris Residential, L.P.), outlining the UPREIT model and the General Partner's controlling interest - Veris Residential, Inc. (General Partner, REIT) controls Veris Residential, L.P. (Operating Partnership) as its sole general partner, owning approximately 91.5% common unit interest as of September 30, 2024[52] - The Company's portfolio includes 22 multifamily rental properties and non-core assets (parking/retail, developable land) primarily in the Northeast[55] - Consolidated financial statements include controlled subsidiaries, principally the Operating Partnership and variable interest entities (VIEs) where the Company is the primary beneficiary[56][57] Note 2. Significant Accounting Policies This note refers to the Company's 2023 10-K for comprehensive accounting policies, highlights reclassification to a single reportable segment, details dividend declaration, and mentions ASU 2023-07 evaluation - The Company now operates as a single reportable segment for disclosure purposes, effective after the sale of its last non-strategic office asset in Q1 2024[63] - A dividend of $0.07 per common share was declared on August 5, 2024, and paid on October 16, 2024[65] - The Company is evaluating the impact of adopting ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures, which is effective for fiscal years beginning after December 15, 2023[66] Note 3. Investments in Rental Properties This note outlines the Company's dispositions of rental properties and developable land during the nine months ended September 30, 2024, and confirms no assets are classified as held for sale Property Dispositions (in thousands) | Disposition Type | Property | Net Sales Proceeds (in thousands) | Realized Gains (Losses) (in thousands) | | :--------------- | :------- | :-------------------------------- | :------------------------------------- | | Rental Property | Harborside 5 | $81,515 | $287 | | Developable Land | 2 Campus | $10,155 | $784 | | Developable Land | 107 Morgan | $50,630 | $(299) | | Developable Land | 6 Becker Farm / 85 Livingston | $27,985 | $11,030 | - The Company recorded a $7.1 million gain from the sale of its interest in the Lofts at 40 Park multifamily rental property in January 2024[70] - As of September 30, 2024, the Company did not have any assets classified as held for sale, a decrease from $58.61 million at December 31, 2023[72][73] Note 4. Investments in Unconsolidated Joint Ventures This note details the Company's $114 million aggregate investment in equity method joint ventures, management fees earned, and equity in their earnings - As of September 30, 2024, the Company had an aggregate investment of approximately $114 million in its equity method joint ventures, which own six multifamily properties, one retail property, and developable land for up to 829 apartment units[75] - The Company recognized $0.9 million in management fees for the three months ended September 30, 2024, and $2.5 million for the nine months ended September 30, 2024, from services provided to unconsolidated joint ventures[78] Company's Equity in Earnings (Loss) of Unconsolidated Joint Ventures (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Company's equity in earnings (loss) of unconsolidated joint ventures | $(268) | $210 | $2,919 | $2,843 | Note 5. Deferred Charges and Other Assets, Net This note provides a breakdown of deferred charges and other assets, net, highlighting a significant increase in deferred financing costs Deferred Charges and Other Assets, Net (in thousands) | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------- | :----------- | :----------- | | Deferred leasing costs | $4,667 | $8,324 | | Deferred financing costs | $6,228 | $771 | | Total deferred charges and other assets, net | $49,110 | $53,956 | - Deferred financing costs increased significantly from $771 thousand at December 31, 2023, to $6.23 million at September 30, 2024, primarily related to the revolving credit facility and undrawn term loan balances[86] Note 6. Restricted Cash This note details the composition of restricted cash, including resident and tenant security deposits, as well as escrow and other reserve funds Restricted Cash (in thousands) | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------- | :----------- | :----------- | | Security deposits | $9,599 | $9,996 | | Escrow and other reserve funds | $10,088 | $16,576 | | Total restricted cash | $19,687 | $26,572 | - Total restricted cash decreased from $26.57 million at December 31, 2023, to $19.69 million at September 30, 2024[99] Note 7. Discontinued Operations This note explains that the sale of the Company's former Office Portfolio is classified as discontinued operations due to a strategic shift, and summarizes related income and gains/losses - The sale of the Company's former Office Portfolio is classified as discontinued operations, representing a strategic shift[100] Total Discontinued Operations, Net (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income from discontinued operations | $206 | $61 | $1,877 | $691 | | Realized gain (loss) on disposition of rental property | $0 | $423 | $1,548 | $(2,286) | | Total discontinued operations, net | $206 | $484 | $3,425 | $(1,595) | - Total discontinued operations, net, significantly increased to $3.43 million for the nine months ended September 30, 2024, compared to a loss of $(1.60) million in the prior year, primarily due to realized gains on property dispositions[101] Note 8. Revolving Credit Facility and Term Loans This note details the new $300 million revolving credit facility and $200 million senior secured term loan agreement established in April 2024, including terms, interest rates, and compliance with covenants - The Company entered into a new $300 million senior secured revolving credit facility and a $200 million senior secured term loan facility on April 22, 2024, both with a three-year term ending in April 2027[102][103][104] - Sustainable KPI provisions were met in Q3 2024, leading to a 5 basis point spread reduction on borrowings and a 1 basis point reduction on the commitment fee[107] Revolving Credit Facility and Term Loans (in thousands) | Facility | Principal Balance (in thousands) as of Sep 30, 2024 | Effective Interest Rate as of Sep 30, 2024 | | :------- | :------------------------------------------------ | :----------------------------------------- | | 2024 Term Loan | $200,000 | 6.21% | | 2024 Revolving Credit Facility | $157,000 | 6.28% | Note 9. Mortgages, Loans Payable and Other Obligations This note summarizes the Company's mortgages, loans payable, and other obligations, detailing principal balances, interest rates, and compliance with debt covenants - As of September 30, 2024, 12 of the Company's properties, with a total carrying value of approximately $1.8 billion, are encumbered by mortgages and loans payable[113] Mortgages, Loans Payable and Other Obligations (in thousands) | Metric (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :-------------------- | :----------- | :----------- | | Principal balance outstanding | $1,335,665 | $1,868,983 | | Total mortgages, loans payable and other obligations, net | $1,324,336 | $1,853,897 | Debt Composition and Weighted Average Interest Rates (in thousands) | Metric (in thousands) | Sep 30, 2024 Balance | Sep 30, 2024 Weighted Average Interest Rate | Dec 31, 2023 Balance | Dec 31, 2023 Weighted Average Interest Rate | | :-------------------- | :------------------- | :---------------------------------------- | :------------------- | :---------------------------------------- | | Fixed Rate & Hedged Debt | $1,670,916 | 4.93% | $1,853,897 | 4.34% | | Unhedged portion of Revolving Credit Facility | $7,000 | 7.65% | $0 | 0% | | Totals/Weighted Average, net | $1,677,916 | 4.94% | $1,853,897 | 4.34% | Note 10. Employee Benefit 401(k) Plans This note describes the Company's 401(k) Savings/Retirement Plan, detailing employee eligibility, deferral options, and the Company's contributions Total Expense for 401(k) Plan (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total expense for 401(k) Plan | $84 | $102 | $374 | $378 | Note 11. Disclosure of Fair Value of Assets and Liabilities This note explains the Company's methodology for estimating the fair value of assets and liabilities, particularly long-term debt and derivative financial instruments, and reports impairment charges - The fair value of the Company's long-term debt was approximately $1.7 billion (book value $1.7 billion) as of September 30, 2024, valued using Level 3 inputs (discounted cash flow analysis)[124] - Derivative financial instruments are classified in Level 2 of the fair value hierarchy, as credit valuation adjustments (using Level 3 inputs) are not significant to the overall valuation[125][127] - The Company recognized impairment charges of $2.6 million during the three and nine months ended September 30, 2024, for a developable land parcel[130] Note 12. Commitments and Contingencies This note details the Company's various commitments and contingencies, including PILOT agreements, ongoing litigation, and future minimum rental payments Total PILOT Taxes (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total PILOT taxes | $2,557 | $2,069 | $7,337 | $6,124 | - Future minimum rental payments under non-cancelable office and ground leases total $36.10 million as of September 30, 2024, with a total present value of $6.75 million[135] - The Company determined that conditions for $2.6 million in stay-on award agreements (cash and stock) were satisfied in Q1 2024, with costs recorded in General and administrative and Property management expenses[139] Note 13. Redeemable Noncontrolling Interests This note describes the Rockpoint transactions, specifically the acquisition of Preferred Units, and details the terms of the remaining Series A-1 Preferred Units outstanding - In July 2023, the Company acquired all Preferred Units from Rockpoint for approximately $520 million, terminating the Original Investment Agreement and Add On Investment Agreement[141] - As of September 30, 2024, there are 9,213 Series A-1 Preferred Units outstanding, with a stated value of $1,000 per unit and quarterly dividends[142][143] Balance of Redeemable Noncontrolling Interests (in thousands) | Metric (in thousands) | Sep 30, 2024 | Jan 1, 2024 | | :-------------------- | :----------- | :---------- | | Balance of Redeemable Noncontrolling Interests | $9,294 | $24,999 | Note 14. Veris Residential, Inc. Stockholders' Equity and Veris Residential, L.P.'s Partners' Capital This note covers the General Partner's REIT qualification requirements and the composition of Partners' Capital, detailing activity under the ATM Program, DRIP, incentive stock plans, and EPS/EPU computation - The Company sold 133,759 shares under its ATM Program, generating net proceeds of $1.8 million during the nine months ended September 30, 2024[152] - The 2024 Incentive Stock Plan was established in June 2024, reserving 2,885,207 shares for issuance, replacing the 2013 Plan for new awards[155] Basic and Diluted EPS/EPU | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS (VRI) | $(0.10) | $(0.60) | $(0.12) | $(1.16) | | Diluted EPS (VRI) | $(0.10) | $(0.60) | $(0.12) | $(1.16) | | Basic EPU (VRLP) | $(0.10) | $(0.60) | $(0.12) | $(1.16) | | Diluted EPU (VRLP) | $(0.10) | $(0.60) | $(0.12) | $(1.16) | Note 15. Noncontrolling Interests in Subsidiaries This note details the noncontrolling interests in the Operating Partnership and consolidated joint ventures, reporting common unit redemptions and limited partner ownership - During the nine months ended September 30, 2024, the Company redeemed 11,074 common units for common shares, valued at $135 thousand[184] - As of September 30, 2024, there are no unvested LTIP Units, and limited partners owned 8.5% of the Operating Partnership (down from 8.6% at Dec 31, 2023)[186][187] Noncontrolling Interests in Subsidiaries (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Opening Balance | $138,648 | $151,065 | $142,075 | $163,652 | | Net loss | $(1,215) | $(5,443) | $(1,968) | $(4,401) | | Unit distributions | $(613) | $(435) | $(1,591) | $(435) | | Redemption of common units for common stock | $(22) | $(2,297) | $(135) | $(11,348) | | Balance at September 30 | $135,903 | $143,464 | $135,903 | $143,464 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, covering critical accounting policies, comparative financial performance, liquidity, capital resources, debt, equity financing, off-balance sheet arrangements, and Funds from Operations (FFO) Critical Accounting Policies and Estimates This section details management's critical accounting policies and estimates, including impairment assessments for rental properties and joint ventures - Management periodically assesses impairment for rental properties held for use, where value is impaired if expected undiscounted cash flows are less than carrying value, with impairment loss measured as the excess of carrying value over estimated fair value[191] - Assets identified as held for sale are no longer depreciated, and their fair value (less estimated cost to sell) is compared to carrying value, with adjustments recorded as unrealized gains/losses[192] - Investments in unconsolidated joint ventures are assessed for impairment if the estimated fair value is less than the carrying value and the decline is deemed 'other than temporary'[193] Results From Operations - Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023 This section compares the Company's financial performance for the three months ended September 30, 2024 and 2023 Results From Operations - Three Months Ended September 30 (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | Dollar Change | Percent Change | | :-------------------- | :-------------------------- | :-------------------------- | :------------ | :------------- | | Revenue from leases | $62,227 | $59,935 | $2,292 | 3.8% | | Total revenues from rental operations | $67,381 | $65,243 | $2,138 | 3.3% | | Total property expenses | $20,857 | $24,923 | $(4,066) | (16.3)% | | Operating profit | $10,822 | $(681) | $11,503 | (1689.1)% | | Net loss | $(10,907) | $(60,250) | $49,343 | (81.9)% | - Revenue from leases increased by 3.8% due to higher market rental rates[200] - Operating services decreased by 25.2% primarily due to reduced insurance renewal rates and a stock-based compensation adjustment in Q3 2023[201] Results From Operations - Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023 This section compares the Company's financial performance for the nine months ended September 30, 2024 and 2023 Results From Operations - Nine Months Ended September 30 (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | Dollar Change | Percent Change | | :-------------------- | :-------------------------- | :-------------------------- | :------------ | :------------- | | Revenue from leases | $183,786 | $174,223 | $9,563 | 5.5% | | Total revenues from rental operations | $200,404 | $190,492 | $9,912 | 5.2% | | Total property expenses | $68,801 | $68,216 | $585 | 0.9% | | Operating profit | $26,184 | $5,282 | $20,902 | 395.7% | | Net loss | $(12,641) | $(106,615) | $93,974 | (88.1)% | - Property management expenses increased by 35.5% due to the satisfaction of stay-on award conditions and reorganization of the Company's multifamily management structure[211] - Transaction related costs decreased by 80.1% due to significant costs incurred in 2023 related to credit facilities, the sale of the former Office Portfolio, and the Rockpoint transaction[213] Liquidity and Capital Resources This section discusses the Company's liquidity sources, cash flow, and capital resources, including debt and equity - The Company's primary sources of funds for liquidity include borrowings under the revolving credit facility, proceeds from real estate sales, and cash flow from operations[221] - Cash, cash equivalents, and restricted cash decreased by $22.1 million to $32.5 million at September 30, 2024, from $54.6 million at December 31, 2023[223] - For the nine months ended September 30, 2024, operating activities provided $40.5 million, investing activities provided $165.0 million (including $89.0 million from land sales and $77.2 million from discontinued operations), and financing activities used $227.6 million (including $533.3 million for debt repayments and $16.9 million for dividends)[224][225] Debt Financing This section outlines the Company's debt strategy, current debt structure, and future principal maturities - The Company's debt strategy involves refinancing or retiring debt obligations at maturity using proceeds from non-strategic asset sales and new corporate or property-level indebtedness[227] Debt Composition (in thousands) | Type of Debt | Balance (in thousands) | % of Total | Weighted Average Interest Rate | Weighted Average Maturity (Years) | | :----------- | :--------------------- | :--------- | :----------------------------- | :-------------------------------- | | Fixed Rate & Hedged Debt | $1,685,665 | 99.6% | 4.93% | 3.01 | | Unhedged portion of Revolving Credit Facility | $7,000 | 0.4% | 7.65% | 2.56 | | Total Debt, Net | $1,677,916 | 100.0% | 4.94% | 3.00 | Scheduled Amortization and Principal Maturities (in thousands) | Period | Scheduled Amortization (in thousands) | Principal Maturities (in thousands) | Total (in thousands) | Weighted Avg. Effective Interest Rate | | :----- | :------------------------------------ | :---------------------------------- | :------------------- | :------------------------------------ | | 2024 | $1,757 | $0 | $1,757 | 3.96% | | 2025 | $9,419 | $0 | $9,419 | 3.68% | | 2026 | $7,879 | $467,904 | $475,783 | 4.26% | | 2027 | $5,326 | $662,319 | $667,645 | 5.12% | | 2028 | $2,396 | $343,061 | $345,457 | 6.03% | | Thereafter | $4,060 | $188,544 | $192,604 | 4.13% | | Sub-total | $30,837 | $1,661,828 | $1,692,665 | 4.94% | Equity Financing and Registration Statements This section details the Company's equity financing activities, including ATM program and registration statements - The General Partner has an effective shelf registration statement on Form S-3 for $2.0 billion, with $100 million allocated to its ATM Program, under which 133,759 shares were sold as of September 30, 2024[233] - Another effective shelf registration statement on Form S-3 for $2.5 billion has no securities sold as of September 30, 2024[234] - The Company operates a Dividend Reinvestment and Stock Purchase Plan (DRIP) allowing automatic dividend reinvestment and optional cash investments[235] Off-Balance Sheet Arrangements This section describes the Company's off-balance sheet arrangements, primarily related to unconsolidated joint ventures - The debt of the Company's unconsolidated joint ventures is generally non-recourse to the Company, with no outstanding balance guaranteed by the Company as of September 30, 2024[238] Funds from Operations This section defines and presents the Company's Funds from Operations (FFO) for the reported periods - Funds from Operations (FFO) is defined as net income (loss) before noncontrolling interests in Operating Partnership, excluding gains or losses from depreciable rental property transactions and impairments, plus real estate-related depreciation and amortization[240] Funds from Operations (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss available to common shareholders | $(9,692) | $(54,807) | $(10,673) | $(102,214) | | Funds from operations available to common stock and Operating Partnership unitholders | $12,804 | $(34,759) | $48,896 | $(26,890) | - FFO significantly improved to $12.80 million for the three months and $48.90 million for the nine months ended September 30, 2024, compared to losses of $(34.76) million and $(26.89) million, respectively, in 2023[242] Item 3. Quantitative And Qualitative Disclosures About Market Risk This section addresses the Company's exposure to market risk, primarily from interest rate fluctuations, and outlines its hedging strategy - The Company manages its exposure to interest rate risk by utilizing fixed-rate indebtedness or hedging the majority of its floating-rate debt with interest rate swaps or caps[247][248] - As of September 30, 2024, the Company's indebtedness of $1.7 billion had an estimated aggregate fair value of $1.7 billion[248] - A 100 basis point increase or decrease in market interest rates would result in approximately $32.9 million higher or lower fair value for the Company's fixed-rate debt, and approximately $6.0 million annually for variable-rate debt (assuming no caps)[249][250] Item 4. Controls and Procedures This section confirms that management evaluated the effectiveness of disclosure controls and procedures for both Veris Residential, Inc. and Veris Residential, L.P. as of September 30, 2024, concluding they were effective - The disclosure controls and procedures for both Veris Residential, Inc. and Veris Residential, L.P. were evaluated and deemed effective as of September 30, 2024[255][257] - There have been no material changes in the internal control over financial reporting for either registrant during the fiscal quarter[256][258] Part II – Other Information This section covers various other information not included in the financial statements or management's discussion and analysis, addressing legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, and a list of exhibits filed with the report Item 1. Legal Proceedings This section reports on any material legal proceedings the Company is involved in - There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company is a party[260] Item 1A. Risk Factors This section updates on any material changes to the Company's risk factors previously disclosed - There have been no material changes in the assessment of risk factors from those set forth in the Annual Report on Form 10-K for the year ended December 31, 2023[261] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on any unregistered sales of equity securities and the use of their proceeds - No unregistered sales of equity securities or use of proceeds to report[261] Item 3. Defaults Upon Senior Securities This section addresses any defaults upon senior securities - Not Applicable[261] Item 4. Mine Safety Disclosures This section provides disclosures related to mine safety - Not Applicable[261] Item 5. Other Information This section includes any other material information not covered elsewhere - Not Applicable[261] Item 6. Exhibits This section lists all exhibits filed as part of the report - The exhibits include the Amended and Restated Executive Employment Agreement, Revolving Credit and Term Loan Agreement, Parent Guaranty, Subsidiary Guaranty, Pledge and Security Agreement, 2024 Incentive Stock Plan, and various certifications (Sarbanes-Oxley Act, Inline XBRL financial statements and cover page)[264][265] Signatures This section contains the official signatures of the Chief Executive Officer and Chief Financial Officer for both Veris Residential, Inc. and Veris Residential, L.P., certifying the accuracy and completeness of the Form 10-Q report - The report is signed by Mahbod Nia (Chief Executive Officer) and Amanda Lombard (Chief Financial Officer) for both Veris Residential, Inc. and Veris Residential, L.P. on October 30, 2024[267]