Veris Residential(US:VRE)2025-07-23 20:28Part I Financial Information Financial Statements This section presents the unaudited consolidated financial statements for Veris Residential, Inc. and Veris Residential, L.P. for the quarterly period ended June 30, 2025, including balance sheets, statements of operations, comprehensive income, changes in equity, and cash flows, along with detailed notes explaining the accounting policies and financial activities during the period Veris Residential, Inc. Consolidated Financial Statements Veris Residential, Inc. reported a net income of $11.8 million for Q2 2025, a significant increase from $2.7 million in Q2 2024, primarily driven by a $36.6 million gain on the disposition of developable land, resulting in a net loss of $1.9 million for the six months ended June 30, 2025, with total assets increasing to $3.13 billion and total liabilities rising to $1.90 billion | Financial Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $75,928 | $67,476 | $143,684 | $134,816 | | Net Income (Loss) | $11,843 | $2,735 | $(1,887) | $(1,734) | | Net Income (Loss) to Common Shareholders | $10,904 | $2,922 | $205 | $(981) | | Diluted EPS | $0.12 | $0.03 | $0.00 | $(0.01) | | Balance Sheet Item | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $3,126,980 | $2,982,727 | | Net Investment in Rental Property | $2,995,913 | $2,795,012 | | Real estate held for sale, net | $288,575 | $7,291 | | Total Liabilities | $1,903,121 | $1,740,364 | | Total Equity | $1,214,565 | $1,233,069 | | Cash Flow Activity (YTD 2025) | Amount (in thousands) | | :--- | :--- | | Net Cash from Operating Activities | $36,983 | | Net Cash from Investing Activities | $20,822 | | Net Cash from Financing Activities | $(52,096) | | Net Increase in Cash | $5,709 | Veris Residential, L.P. Consolidated Financial Statements Veris Residential, L.P. reported financial results nearly identical to its General Partner, Veris Residential, Inc., with a net income of $11.8 million for Q2 2025 and a net loss of $1.9 million for the first six months of 2025, mirroring the parent company's total assets and liabilities, with the primary difference being the equity section presented as Partners' Capital, totaling $1.19 billion for the Operating Partnership | Financial Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YTD 2025 (in thousands) | YTD 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $75,928 | $67,476 | $143,684 | $134,816 | | Net Income (Loss) | $11,843 | $2,735 | $(1,887) | $(1,734) | | Net Income (Loss) to Common Unitholders | $11,911 | $3,197 | $225 | $(1,074) | | Balance Sheet Item | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $3,126,980 | $2,982,727 | | Total Liabilities | $1,903,121 | $1,740,364 | | Total Veris Residential, L.P. partners' capital | $1,186,278 | $1,201,979 | Notes to Consolidated Financial Statements The notes provide detailed explanations of the company's accounting policies and activities, including the disposition of developable land for a $36.4 million gain, the acquisition of the remaining 15% interest in the Sable joint venture, the classification of four multifamily properties as held for sale, and details on its debt structure, commitments, contingencies, and stock-based compensation plans - The company operates as a single business segment focused on owning, operating, and developing its multifamily real estate portfolio after selling its last non-strategic office asset in Q1 2024177 | Disposition of Developable Land (YTD 2025) | Net Sales Proceeds (in thousands) | Gain (Loss) (in thousands) | | :--- | :--- | :--- | | 65 Livingston | $7,139 | $(156) | | Wall Land | $30,152 | $26,036 | | 1 Water Street | $15,563 | $10,530 | | Total | $52,854 | $36,410 | - On April 21, 2025, the company acquired the remaining 15% controlling interest in the Sable joint venture for $38.5 million and assumed the $181.8 million mortgage, leading to the consolidation of the property6465 - As of June 30, 2025, four multifamily properties were classified as held for sale, with two subsequently sold in July 2025 for gross proceeds of $207.2 million67 - The company is a defendant in an antitrust lawsuit brought by the New Jersey Attorney General concerning the use of RealPage, Inc. revenue management software, which the company believes is without merit128 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) The MD&A section provides management's perspective on the financial results and condition of the company, highlighting that the Q2 2025 net income increase was primarily due to a $36.6 million gain on land sales, offsetting higher interest expenses and a $12.5 million land impairment charge, with same-store revenue from leases growing 2.8% and strong liquidity supported by operations, asset sales, and a $300 million revolving credit facility, alongside a reconciliation of net income to Funds from Operations (FFO) of $36.9 million for Q2 2025 Results of Operations For the three months ended June 30, 2025, total revenues increased by 12.8% to $75.9 million compared to the same period in 2024, driven by a 13.8% increase in revenue from leases and a 2.8% growth in same-store lease revenue, with net income rising to $11.8 million from $2.7 million year-over-year, mainly due to a $25.8 million increase in gains on land sales, offsetting impairment charges | Metric (Q2 2025 vs Q2 2024) | Total Company Change (in thousands) | Same-Store Change (in thousands) | | :--- | :--- | :--- | | Revenue from leases | +$8,400 (+13.8%) | +$1,700 (+2.8%) | | Total property expenses | +$1,200 (+4.9%) | -$1,300 (-5.5%) | | Land and other impairments, net | +$12,500 | N/A | | Gain on disposition of developable land | +$25,800 (+240.8%) | N/A | | Interest expense | +$2,900 (+13.5%) | N/A | - The increase in total revenue was primarily driven by Acquired and Developed Properties, specifically the consolidation of Sable in Q2 2025190194 - Same-store property expenses decreased by 5.5%, mainly due to lower operating services costs from reduced insurance and renovation-related expenses at Liberty Towers190191 Liquidity and Capital Resources The company's liquidity is supported by cash on hand, cash flow from operations, proceeds from asset sales, and a $300 million revolving credit facility, with cash and cash equivalents increasing by $5.7 million since year-end 2024, total debt at $1.8 billion with a weighted average interest rate of 5.11%, and the full repayment of its $200 million term loan in July 2025 using property sales proceeds - Primary sources of liquidity include cash from operations, borrowings under the revolving credit facility, and proceeds from real estate sales221 | Debt Summary (as of June 30, 2025) | Balance (in thousands) | % of Total | Weighted Avg. Interest Rate | | :--- | :--- | :--- | :--- | | Fixed Rate & Hedged Debt | $1,710,903 | 93.1% | 4.96% | | Unhedged Variable Rate Debt | $127,000 | 6.9% | 7.06% | | Total Debt | $1,837,903 | 100.0% | 5.11% | - The company has a $100 million share repurchase program approved in February 2025, but no shares were repurchased during the quarter238 Funds from Operations (FFO) Funds from Operations (FFO), a non-GAAP measure, is presented as a supplement to net income, with FFO available to common stock and unit holders increasing to $36.9 million for Q2 2025 from $25.7 million in the prior year, and to $48.7 million for the six-month period in 2025 compared to $36.1 million in 2024, adjusted for real estate depreciation, amortization, and gains or losses from property sales | FFO Reconciliation (in thousands) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) available to common shareholders | $10,904 | $2,922 | $205 | $(981) | | Adjustments (Depreciation, Gains/Losses, etc.) | $25,993 | $22,789 | $48,451 | $37,073 | | Funds from operations (FFO) | $36,897 | $25,711 | $48,656 | $36,092 | - FFO calculation includes charges related to non-depreciable assets, such as $12.5 million in land impairment charges and a $36.6 million gain on the disposition of developable land for Q2 2025247 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is to interest rate changes affecting its $1.8 billion total indebtedness as of June 30, 2025, which it manages through fixed-rate debt or hedging floating-rate debt, with a hypothetical 100 basis point change in interest rates impacting the fair value of its fixed-rate debt by approximately $33.2 million and annual interest costs on variable-rate debt by approximately $5.7 million - The company manages interest rate risk by utilizing fixed-rate debt or hedging the majority of its floating-rate debt with interest rate swaps or caps251 - A 100 basis point increase/decrease in market interest rates would change the fair value of the company's fixed-rate debt by approximately $33.2 million252 - A 100 basis point increase/decrease in market rates would change annual interest costs on the company's variable-rate debt by approximately $5.7 million253 Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures for both Veris Residential, Inc. and Veris Residential, L.P. as of June 30, 2025, concluding that these controls were effective with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the disclosure controls and procedures for both Veris Residential, Inc. and Veris Residential, L.P. were effective as of the end of the reporting period258260 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls259261 Part II Other Information Legal Proceedings This section refers to Note 12 of the financial statements for details on legal proceedings, specifically mentioning the antitrust lawsuit filed by the New Jersey Attorney General regarding the use of RealPage revenue management software - The company is engaged in certain legal proceedings arising in the normal course of business, with details provided in Note 12 of the financial statements264 Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in risk factors from those disclosed in the 2024 Annual Report on Form 10-K265 Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company issued 2,580 shares of common stock to redeem an equal number of common units from the Operating Partnership in a private offering, and no shares were repurchased under its $100 million share repurchase program during the quarter - In Q2 2025, 2,580 shares of common stock were issued to redeem common units of the Operating Partnership in an unregistered private offering266 - No shares were repurchased under the company's $100 million share repurchase program during the three months ended June 30, 2025268 Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, CEO and CFO certifications as required by the Sarbanes-Oxley Act, and financial statements formatted in Inline XBRL - The Exhibit Index lists all documents filed with the report, including certifications from the CEO and CFO and financial data in XBRL format270273