Veris Residential, Inc. Reports Second Quarter 2024 Results

By Veris Residential, Inc.
JERSEY CITY, N.J., July 24, 2024 /PRNewswire/ — Veris Residential, Inc. (NYSE: VRE) (the “Company”), a forward-thinking, environmentally and socially conscious multifamily REIT, today reported results for the second quarter 2024.

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

2024

2023

Net Income (Loss) per Diluted Share

$0.03

$(0.30)

$(0.01)

$(0.56)

Core FFO per Diluted Share

$0.18

$0.16

$0.32

$0.30

Core AFFO per Diluted Share

$0.21

$0.19

$0.40

$0.33

Dividend per Diluted Share

$0.06

$—

$0.1125

$—

YEAR-TO-DATE HIGHLIGHTS

Same Store multifamily Blended Net Rental Growth Rate of 5.4% for the quarter and 5.0% year to date.

Same Store NOI growth of 7.9% year over year and 3.1% quarter over quarter, normalized for the impact of successful real estate tax appeals recognized in the prior year.

Expanded occupancy 100 basis points sequentially to 95.1%.

Completed the previously announced sales of three assets for $82 million, bringing the total gross proceeds from non-strategic asset sales this year to over $200 million.

Secured a new $500 million revolver and delayed-draw term loan with a three-plus-one-year term.

Repaid two mortgages, totaling approximately $220 million, utilizing cash on hand and $55 million of the aforementioned term loan.

Raised Core FFO guidance range by approximately 4%, or $0.02, and tightened Same Store NOI guidance range by 50 basis points.

June 30, 2024

March 31, 2024

Same Store Units

7,621

7,621

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

Mahbod Nia, Chief Executive Officer, commented: “We are pleased to report another quarter of strong operational and financial results, leading to our decision to raise guidance once again.

“In April we secured a new $500 million credit facility and term loan, signaling a renewed, strategic approach to managing our balance sheet and providing us with substantial liquidity and financial flexibility going forward. We also reduced our overall debt by a further $168 million, primarily utilizing proceeds from non-strategic asset sales. Looking ahead, we remain well-positioned to execute our three-pronged approach to value creation as we seek to maximize value on behalf of our shareholders.”

SAME STORE PORTFOLIO PERFORMANCE

The following table shows Same Store performance as well as the benefit of successful real estate tax appeals recognized in the second quarter of last year.

Three Months Ended June 30,

Six Months Ended June 30,

2024

2023

%

2024

2023

%

Total Property Revenue

$74,745

$71,215

5.0 %

$148,837

$139,279

6.9 %

Controllable Expenses

13,424

12,361

8.6 %

26,045

24,878

4.7 %

Non-Controllable Expenses

12,370

9,217

34.2 %

24,451

21,534

13.5 %

Total Property Expenses

25,794

21,578

19.5 %

50,496

46,412

8.8 %

Same Store NOI

$48,951

$49,637

(1.4) %

$98,341

$92,867

5.9 %

Real Estate Tax Adjustments

—

2,179

—

1,689

Normalized Same Store NOI

$48,951

$47,458

3.1 %

$98,341

$91,178

7.9 %

Q2 2024 TRANSACTION ACTIVITY

As previously announced, the Company closed on the sale of 107 Morgan for $54 million, releasing approximately $50 million in net proceeds.

In addition, the Company closed on the sale of two land parcels, 6 Becker Farm and 85 Livingston, in April for $28 million, releasing approximately $28 million in net proceeds inclusive of a $500K reimbursement. 

FINANCE AND LIQUIDITY

Virtually all (99.9%) of the Company’s debt is hedged or fixed. The Company’s total debt portfolio has a weighted average effective interest rate of 4.5% and weighted average maturity of 3.1 years.

Balance Sheet Metric ($ in 000s)

June 30, 2024

March 31, 2024

Weighted Average Interest Rate

4.5 %

4.4 %

Weighted Average Years to Maturity

3.1

3.5

Interest Coverage Ratio

1.7x

1.5x

Net Debt

$1,646,023

$1,714,800

TTM EBITDA

$139,654

$142,543

TTM Net Debt to EBITDA

11.8x

12.0x

On April 22, 2024, the Company successfully replaced its existing revolving credit facility and term loan package with a new $500 million secured facility package, comprising a $200 million delayed-draw term loan and $300 million revolving credit facility. Both the revolving credit facility and term loan have a three-year term and a one-year extension option. The facility package includes sustainability KPI provisions and a $200 million accordion feature.

On May 22, 2024, the Company repaid the $63 million loan on 145 Front Street using cash on hand. In June, the property was added to the collateral pool of the new facility.

On June 28, 2024, the Company repaid the $158 million loan on Soho Lofts using a combination of cash on hand and a $55 million draw on the term loan. Subsequent to quarter end, the drawn balance of the term loan was hedged using a two-year interest rate cap with a strike rate of 3.5%.

DIVIDEND

The Company paid a dividend of $0.06 per share on July 14, 2024, a 14.3% sequential increase from $0.0525 per share.

ESG

During the quarter, the Company updated its progress towards ESG targets with new data from 2023. Compared to 2019 baseline measurements, the Company recorded a 66% reduction in Scope 1 & 2 emissions and a 22% reduction in Scope 3 emissions. Concurrently, it increased the share of Green-Certified properties in its portfolio to 78% by year-end 2023.

GUIDANCE

The Company is raising the low end of its Same Store NOI guidance range by 50 basis points, and is maintaining the high end of the NOI guidance range, reflecting favorable initial indications for insurance and real estate taxes.

Current Guidance

Initial Guidance

2024 Guidance Ranges

Low

High

Low

High

Same Store Revenue Growth

4.0 %

—

5.0 %

4.0 %

—

5.0 %

Same Store Expense Growth

4.5 %

—

5.5 %

5.0 %

—

6.0 %

Same Store NOI Growth

3.0 %

—

5.0 %

2.5 %

—

5.0 %

In addition, the Company is raising its Core FFO per share guidance range by $0.02 due to $0.01 of higher than projected deposit income, as a result of higher interest rates and average cash balances in the second quarter as asset sales closed sooner than expected, and $0.01 from the recognition of successful real estate tax appeals, net of recoveries, related to sold Harborside office properties.

Core FFO per Share Guidance

Low

High

Net Loss per Share

$(0.21)

—

$(0.17)

Other FFO adjustments per share

$(0.16)

—

$(0.16)

Depreciation per Share

$0.89

—

$0.89

Core FFO per Share

$0.52

—

$0.56

CONFERENCE CALL/SUPPLEMENTAL INFORMATION 

An earnings conference call with management is scheduled for Thursday, July 25, 2024, at 8:30 a.m. Eastern Time and will be broadcast live via the Internet at: http://investors.verisresidential.com.

The live conference call is also accessible by dialing (877) 451-6152 (domestic) or (201) 389-0879 (international) and requesting the Veris Residential second quarter 2024 earnings conference call.

The conference call will be rebroadcast on Veris Residential, Inc.’s website at:

http://investors.verisresidential.com beginning at 8:30 a.m. Eastern Time on Thursday, July 25, 2024.

A replay of the call will also be accessible Thursday, July 25, 2024, through Sunday, August 25, 2024, by calling (844) 512-2921 (domestic) or (412) 317-6671 (international) and using the passcode, 13747451.

Copies of Veris Residential, Inc.’s second quarter 2024 Form 10-Q and second quarter 2024 Supplemental Operating and Financial Data are available on Veris Residential, Inc.’s website under Financial Results.

In addition, once filed, these items will be available upon request from:

Veris Residential, Inc. Investor Relations Department

Harborside 3, 210 Hudson St., Ste. 400, Jersey City, New Jersey 07311

ABOUT THE COMPANY 

Veris Residential, Inc. is a forward-thinking, environmentally and socially conscious real estate investment trust (REIT) that primarily owns, operates, acquires and develops holistically inspired, Class A multifamily properties that meet the sustainability-conscious lifestyle needs of today’s residents while seeking to positively impact the communities it serves and the planet at large. The Company is guided by an experienced management team and Board of Directors and is underpinned by leading corporate governance principles; a best-in-class, sustainable approach to operations; and an inclusive culture based on equality and meritocratic empowerment.

For additional information on Veris Residential, Inc. and our properties available for lease, please visit http://www.verisresidential.com/.

The information in this press release must be read in conjunction with, and is modified in its entirety by, the Quarterly Report on Form 10-Q (the “10-Q”) filed by the Company for the same period with the Securities and Exchange Commission (the “SEC”) and all of the Company’s other public filings with the SEC (the “Public Filings”). In particular, the financial information contained herein is subject to and qualified by reference to the financial statements contained in the 10-Q, the footnotes thereto and the limitations set forth therein. Investors may not rely on the press release without reference to the 10-Q and the Public Filings.

We consider portions of this information, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “target,” “continue” or comparable terminology. Forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and are advised to consider the factors listed above together with the additional factors under the heading “Disclosure Regarding Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K, as may be supplemented or amended by the Company’s Quarterly Reports on Form 10-Q, which are incorporated herein by reference. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise, except as required under applicable law.

Investors

Media

Anna Malhari

Amanda Shpiner/Grace Cartwright

Chief Operating Officer

Gasthalter & Co.

[email protected] 

[email protected]

Additional details on Company Information

 

Consolidated Balance Sheet

(in thousands) (unaudited)  

June 30, 2024

December 31, 2023

ASSETS

Rental property

Land and leasehold interests

$463,826

$474,499

Buildings and improvements

2,635,611

2,782,468

Tenant improvements

8,682

30,908

Furniture, fixtures and equipment

105,707

103,613

3,213,826

3,391,488

Less – accumulated depreciation and amortization

(390,556)

(443,781)

2,823,270

2,947,707

Real estate held for sale, net

—

58,608

Net investment in rental property

2,823,270

3,006,315

Cash and cash equivalents

18,398

28,007

Restricted cash

22,533

26,572

Investments in unconsolidated joint ventures

120,392

117,954

Unbilled rents receivable, net

1,805

5,500

Deferred charges and other assets, net

49,529

53,956

Accounts receivable

1,998

2,742

Total Assets

$3,037,925

$3,241,046

LIABILITIES & EQUITY

Revolving credit facility and term loans

54,189

—

Mortgages, loans payable and other obligations, net

1,632,765

1,853,897

Dividends and distributions payable

6,375

5,540

Accounts payable, accrued expenses and other liabilities

47,117

55,492

Rents received in advance and security deposits

11,280

14,985

Accrued interest payable

5,833

6,580

Total Liabilities

1,757,559

1,936,494

Redeemable noncontrolling interests

9,294

24,999

Total Stockholders’ Equity

1,132,424

1,137,478

Noncontrolling interests in subsidiaries:

Operating Partnership

105,959

107,206

Consolidated joint ventures

32,689

34,869

Total Noncontrolling Interests in Subsidiaries

$138,648

$142,075

Total Equity

$1,271,072

$1,279,553

Total Liabilities and Equity

$3,037,925

$3,241,046

 

Consolidated Statement of Operations

(In thousands, except per share amounts) (unaudited)1

Three Months Ended June 30,

Six Months Ended June 30,

REVENUES

2024

2023

2024

2023

Revenue from leases

$60,917

$58,192

$121,559

$114,289

Real estate services

871

643

1,793

1,554

Parking income

3,922

3,998

7,667

7,726

Other income

1,766

1,373

3,797

3,235

Total revenues

67,476

64,206

134,816

126,804

EXPENSES

Real estate taxes

9,502

6,298

18,679

15,857

Utilities

1,796

1,761

4,067

3,824

Operating services

12,628

12,232

25,198

23,615

Real estate services expenses

4,366

4,389

9,608

6,332

General and administrative

8,975

9,572

20,063

19,853

Transaction related costs

890

3,319

1,406

4,347

Depreciation and amortization

20,316

21,831

40,433

43,619

Land and other impairments, net

—

—

—

3,396

Total expenses

58,473

59,402

119,454

120,843

OTHER (EXPENSE) INCOME

Interest expense

(21,676)

(21,692)

(43,176)

(43,706)

Interest cost of mandatorily redeemable noncontrolling interests