JERSEY CITY, N.J., Feb. 21, 2024 /PRNewswire/ — Veris Residential, Inc. (NYSE:VRE) (the “Company”), a forward-thinking, environmentally and socially conscious multifamily REIT, today reported results for the fourth quarter and full year 2023.
Three Months Ended December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Net Income (Loss) per Diluted Share
$(0.06)
$0.34
$(1.22)
$(0.63)
Core FFO per Diluted Share
$0.12
$0.05
$0.53
$0.44
Dividends Declared per Share
$0.0525
$—
$0.1025
$—
ANOTHER YEAR OF OPERATIONAL OUTPERFORMANCE
Grew Core FFO per share to $0.53, an increase of 20% compared to last year.
Exceeded upper end of NOI guidance, achieving 17.6% annual growth, driven by strong revenue growth and effective expense mitigation measures.
Further improved NOI margin to 64% from 62% in 2022 and 57% in 2021.
Same Store multifamily Blended Net Rental Growth Rate of 5.0% for the quarter and 9.3% for the year.
Reduced Core G&A by 13% compared to 2022.
Reinstated quarterly dividend, subsequently raising it by 5% in the fourth quarter.
Recognized by Nareit for leadership in sustainability and DEI efforts.
COMPLETED TRANSFORMATION TO A PURE-PLAY MULTIFAMILY REIT
Sold over $700 million of non-strategic assets since the beginning of 2023, comprising eight properties and four land parcels.
Signed a binding contract to sell Harborside 5, our last office property, for $85 million in January 2024.
Negotiated the early redemption of Rockpoint’s preferred interest for $520 million.
Refinanced $400 million of debt and reduced overall indebtedness by $50 million.
December 31, 2023
December 31, 2022
% Change
Operating Units
7,681
6,931
10.8 %
% Physical Occupancy
94.4 %
95.3 %
(1.0) %
Same Store Units
6,691
5,825
14.9 %
Same Store Occupancy
94.4 %
95.6 %
(1.3) %
Same Store Blended Rental Growth Rate
5.0 %
11.7 %
(57.3) %
Average Rent per Home
$3,792
$3,482
8.9 %
Mahbod Nia, Chief Executive Officer, commented: “Over the past three years, we have successfully transformed Veris Residential from a complex company to a pure-play multifamily REIT underpinned by a high-quality portfolio of Class A properties and a vertically integrated, best-in-class operating platform. While we have built a strong foundation to date, the potential for continued value creation and relative outperformance as we mature as a multifamily company is tremendous. We look forward to this next phase, during which we will work to further optimize our operations, capital and balance sheet to the benefit of our stakeholders.”
SAME STORE PORTFOLIO PERFORMANCE
2023 Actual Growth
Original Guidance
Range for 2023
Adjusted Guidance
Range from Previous
Quarter
Same Store Revenue Growth
11.0 %
4-6%
9-10%
Same Store Expense Growth
0.4 %
4-6%
2-3%
Same Store NOI Growth
17.6 %
4-6%
14-15%
The following table presents a more detailed breakout of Same Store performance:
Three Months Ended December 31,
Twelve Months Ended December 31,
2023
2022
%
2023
2022
%
Total Property Revenue
$61,497
$57,133
7.6 %
$241,078
$217,284
11.0 %
Controllable Expenses
11,729
11,191
4.8 %
44,558
42,773
4.2 %
Non-Controllable Expenses
10,693
12,169
(12.1) %
40,260
41,669
(3.4) %
Total Property Expenses
22,422
23,360
(4.0) %
84,818
84,442
0.4 %
Same Store NOI
$39,075
$33,773
15.7 %
$156,260
$132,842
17.6 %
Haus25 and The James will be added to the Same Store pool in the first quarter of this year. These properties contributed over $8 million to NOI in the fourth quarter.
TRANSACTION ACTIVITY
In 2023, the Company closed over $660 million of non-strategic sales, including two hotel properties, five office properties and three land plots.
Quarter
Gross Price (000s)
1Q
$105,000
2Q
$420,000
3Q
$46,000
4Q
$89,000
In October 2023, the Company closed on the sales of Harborside 4, 3 Campus and 23 Main for a combined gross price of $89 million, releasing approximately $82 million in net proceeds.
Subsequent to year end, the Company closed on the sales of 2 Campus and The Metropolitan Lofts joint venture for a combined gross price of $40 million, releasing approximately $16 million in net proceeds.
Currently, $139 million of non-strategic assets remain under binding contract, including our last office property, Harborside 5.
FINANCE AND LIQUIDITY
As of February 20, 2024, available liquidity is approximately $95 million, taking into account cash on hand and the capacity of the Revolving Credit Facility (“Revolver”). Virtually all (99.9%) of the Company`s debt is hedged or fixed. The Company`s total debt portfolio has a weighted average rate of 4.5% and weighted average maturity of 3.7 years.
Three Months Ended December 31,
Balance Sheet Metric
2023
2022
Weighted Average Interest Rate
4.5 %
4.4 %
Weighted Average Years to Maturity
3.7 years
4.1 years
Net-Debt-to-Adjusted EBITDA
13.8x
13.5x
Annualized Adjusted EBITDA
129,992
137,892
Interest Coverage Ratio
1.5x
1.5x
In the fourth quarter, the Company reestablished an “ATM” (At-the-Market) program, through which the Company may issue and sell, from time to time, up to $100 million of shares of its common stock. The Company intends to use net proceeds from any sales of these shares under the ATM program for general corporate purposes.
The $60 million Revolver remains undrawn as of February 20, 2024.
ESG
Throughout the fourth quarter, the Company earned recognition from top real estate and business organizations for leadership in ESG, DEI and corporate stewardship. Most significantly, the Company was named a Leader in the Light by Nareit for superior sustainability efforts in the residential sector. The achievement partially reflects the results of the GRESB Annual Survey, through which the Company was honored as a Global Listed and Regional Sector Leader with a second-consecutive 5 Star rating. The Company was also awarded Nareit’s Bronze Diversity, Equity & Inclusion Recognition.
DIVIDEND POLICY
As previously announced, the Company`s Board of Directors declared a quarterly dividend on its common stock for the fourth quarter 2023 in the amount of $0.0525 per share, an increase of 5% from the previous dividend. The dividend was paid on January 10th.
OPERATIONAL GUIDANCE
Recognizing the tremendous operational outperformance realized in 2023 while also considering the state of the current market and potential for Veris to achieve continued positive growth, the Company is establishing its 2024 guidance ranges in accordance with the following table:
2024 Guidance Ranges
Low
High
Same Store Revenue Growth
4.0 %
—
5.0 %
Same Store Expense Growth
5.0 %
—
6.0 %
Same Store NOI Growth
2.5 %
—
5.0 %
Core FFO per Share Guidance
Low
High
Net Loss per Share
$(0.40)
—
$(0.35)
Add back: Depreciation per Share
$0.88
—
$0.88
Core FFO per Share
$0.48
—
$0.53
CONFERENCE CALL/SUPPLEMENTAL INFORMATION
An earnings conference call with management is scheduled for Thursday, February 22, 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 fourth quarter 2023 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, February 22, 2024.
A replay of the call will also be accessible Thursday, February 22, 2024, through Friday, March 22, 2024, by calling (844) 512-2921 (domestic) or (412) 317-6671 (international) and using the passcode, 13743562.
Copies of Veris Residential, Inc.’s 2023 Form 10-K and fourth quarter 2023 Supplemental Operating and Financial Data are available on Veris Residential, Inc.’s website: 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 principle; a best-in-class and 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-K (the “10-K”) 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-K, the footnotes thereto and the limitations set forth therein. Investors may not rely on the press release without reference to the 10-K 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.
See additional details on Company Information.
Consolidated Balance Sheet
(in thousands) (unaudited)
December 31, 2023
December 31, 2022
ASSETS
Multifamily
Office/Corp.
Total
Rental property
Land and leasehold interests
$468,556
$5,943
$474,499
$492,204
Buildings and improvements
2,642,626
139,842
2,782,468
3,332,315
Tenant improvements
7,866
23,042
30,908
122,509
Furniture, fixtures and equipment
96,057
7,556
103,613
99,094
3,215,105
176,383
3,391,488
4,046,122
Less – accumulated depreciation and amortization
(345,386)
(98,395)
(443,781)
(631,910)
2,869,719
77,988
2,947,707
3,414,212
Real estate held for sale, net
58,608
—
58,608
193,933
Net investment in rental property
2,928,327
77,988
3,006,315
3,608,145
Cash and cash equivalents
6,685
21,322
28,007
26,782
Restricted cash
19,891
6,681
26,572
20,867
Investments in unconsolidated joint ventures
117,954
—
117,954
126,158
Unbilled rents receivable, net
1,558
3,942
5,500
39,734
Deferred charges and other assets, net12
43,392
10,564
53,956
96,162
Accounts receivable
1,796
946
2,742
2,920
Total Assets
$3,119,603
$121,443
$3,241,046
$3,920,768
LIABILITIES & EQUITY
Mortgages, loans payable and other obligations, net
1,853,897
—
1,853,897
1,903,977
Dividends and distributions payable
—
5,540
5,540
110
Accounts payable, accrued expenses and other liabilities
30,341
25,151
55,492
72,041
Rents received in advance and security deposits
11,590
3,395
14,985
22,941
Accrued interest payable
6,580
—
6,580
7,131
Total Liabilities
1,902,408
34,086
1,936,494
2,006,200
Redeemable noncontrolling interests
—
24,999
24,999
515,231
Total Stockholders’/Members Equity
1,182,056
(44,578)
1,137,478
1,235,685
Noncontrolling interests in subsidiaries:
Operating Partnership
—
107,206
107,206
126,109
Consolidated joint ventures
35,139
(270)
34,869
37,543
Total Noncontrolling Interests in Subsidiaries
$35,139
$106,936
$142,075
$163,652
Total Equity
$1,217,195
$62,358
$1,279,553
$1,399,337
Total Liabilities and Equity
$3,119,603
$121,443
$3,241,046
$3,920,768
_____________________________________________
1 Includes mark-to-market lease intangible net assets of $10,034 and mark-to-market lease intangible net liabilities of $298 as of 4Q 2023.
2 Includes Prepaid Expenses and Other Assets attributable to Multifamily of $29,481 as follows: (i) deposits of $4,819, (i) other receivables of $14,544, (iii) other prepaid/assets of $8,882, and (iv) prepaid taxes of $1,236.
Consolidated Statement of Operations
(In thousands, except per share amounts) (unaudited) 12
Three Months Ended December 31,
Twelve Months Ended December 31,
REVENUES
2023
2022
2023
2022
Revenue from leases
$66,183
$60,032
$252,144
$206,052
Real estate services
1,084
888
3,868
3,581
Parking income
4,462
4,160
18,036
15,819
Other income
1,188
2,104
5,811
7,996
Total revenues
72,917
67,184
279,859
233,448
EXPENSES
Real estate taxes
11,077
12,447
40,810
39,112
Utilities
2,293
2,191
9,922
8,921
Operating services
16,364
13,443
57,925
52,797
Real estate services expenses
4,323
2,514
14,188
10,549
General and administrative
9,992
12,221
44,472
56,014
Transaction-related costs
576
2,119
7,627
3,468
Depreciation and amortization
23,046
23,619
93,589
85,434
Property impairments
32,516
—
32,516
—
Land and other impairments, net
5,928
—
9,324
9,368
Total expenses
106,115
68,554
310,373
265,663
OTHER (EXPENSE) INCOME
Interest expense
(21,933)
(21,215)
(89,355)
(66,381)
Interest cost of mandatorily redeemable noncontrolling interests
—
—
(49,782)
—
Interest and other investment income
232
102
5,515
729
Equity in earnings (loss) of unconsolidated joint ventures
260
(647)
3,102
1,200
Realized gains (losses) and unrealized gains (losses) on disposition of rental property, net
(3)
—
—
—
Gain (loss) on disposition of developable land
7,090
(486)
7,068
57,262
Loss from extinguishment of debt, net
(1,903)
—
(5,606)
(129)
Other income, net
77
—
2,871
—
Total other income (expense), net
(16,180)
(22,246)
(126,187)
(7,319)
Loss from continuing operations before income tax expense
(49,378)
(23,616)
(156,701)
(39,534)
Provision for income taxes
(199)
—
(492)
—
Loss from continuing operations after income tax expense
(49,577)
(23,616)
(157,193)
(39,534)
(Loss) income from discontinued operations
(140)
(12,547)
3,150
(64,704)
Realized gains (losses) and unrealized gains (losses) on disposition of rental property and impairments, net
43,971
77,057
41,682
69,353
Total discontinued operations, net
43,831
64,510
44,832
4,649
Net (loss) income
(5,746)
40,894
(112,361)
(34,885)
Noncontrolling interest in consolidated joint ventures
504
595
2,319
3,079
Noncontrolling interests in Operating Partnership of income from continuing operations
4,252
2,723
14,267
5,652
Noncontrolling interests in Operating Partnership in discontinued operations
(3,776)
(5,975)
(3,872)
(378)
Redeemable noncontrolling interests
(285)
(6,366)
(7,618)
(25,534)
Net (loss) income available to common shareholders
$(5,051)
$31,871
$(107,265)
$(52,066)
Basic earnings per common share:
Net loss available to common shareholders
$(0.06)
$0.34
$(1.22)
$(0.63)
Diluted earnings per common share:
Net loss available to common shareholders
$(0.06)
$0.34
$(1.22)
$(0.63)
Basic weighted average shares outstanding
92,240
91,115
91,883
91,046
Diluted weighted average shares outstanding
100,936
100,417
100,812
100,265
_______________________________________________
1 For more details see Reconciliation to Net Income (Loss) to NOI
2 For detailed contribution breakout see Consolidated Statement of Operations (Year-End)
FFO and Core FFO
(in thousands, except per share/unit amounts)
Three Months Ended December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Net income (loss) available to common shareholders
$(5,051)
$31,871
$(107,265)
$(52,066)
Add (deduct): Noncontrolling interests in Operating Partnership
(4,252)
(2,723)
(14,267)
(5,652)
Noncontrolling interests in discontinued operations
3,776
5,975
3,872
378
Real estate-related depreciation and amortization on continuing operations(1)
25,428
25,949
103,049
95,103
Real estate-related depreciation and amortization on discontinued operations
—
5,036
5,335
26,370
Property impairments on continuing operations
32,516
—
32,516
—
Property impairments on discontinued operations
—
10,302
—
94,811
Discontinued operations: Gain on sale from unconsolidated joint ventures
—
(7,677)
—
(7,677)
Continuing operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net
3
—
—
—
Discontinued operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net
(4,700)
(69,380)
(2,411)
(61,676)
FFO(2)
$47,720
$(647)
$20,829
$89,591
Add/(Deduct):
Loss from extinguishment of debt, net
1,903
1,014
5,618
7,432
Land and other impairments
5,928
—
9,324
9,368
Loss (gain) on disposition of developable land
(46,361)
486
(46,339)
(57,262)
Rebranding and Severance/Compensation related costs (G&A)
129
1,836
7,987
14,080
Rebranding and Severance/Compensation related costs (RE Services)
829
—
1,128
—
Rebranding and Severance/Compensation related costs (Operating Services)
—
—
649
—
Rockpoint buyout premium
—
—
34,775
—
Redemption value adjustment to mandatorily redeemable noncontrolling interests
—
—
7,641
—
Lease breakage fee, net
—
—
—
(22,664)
Amortization of derivative premium
902
500
4,654
287
Transaction related costs
576
2,119
7,627
3,468
Core FFO
$11,626
$5,308
$53,893
$44,300
Diluted weighted average shares/units outstanding(6)
100,936
100,417
100,812
100,265
Funds from operations per share-diluted
$0.47
$(0.01)
$0.21
$0.89
Core Funds from Operations per share/unit-diluted
$0.12
$0.05
$0.53
$0.44
Dividends declared per common share
$0.0525
—
$0.1025
—
See Core FFO per Diluted Share.
See Consolidated Statements of Operations Footnotes.
See Non GAAP Financial Definitions.
AFFO and Adjusted EBITDA
($ in thousands, except per share amounts) (unaudited)
Three Months Ended December 31,
Twelve Months Ended December 31,
2023
2022
2023
2022
Core FFO (calculated on previous page)
$11,626
$5,308
$53,893
$44,300
Add (Deduct) Non-Cash Items:
Straight-line rent adjustments(3)
81
(1,273)
502
157
Amortization of market lease intangibles, net
—
(30)
(80)
(155)
Amortization of lease inducements
5
16
57
129
Amortization of stock compensation
3,270
2,829
12,995
11,339
Non-real estate depreciation and amortization
216
395
1,028
1,328
Amortization of deferred financing costs
1,255
1,219
4,440
4,821
Deduct:
Non-incremental revenue generating capital expenditures:
Building improvements
(1,670)
(3,748)
(8,348)
(14,992)
Tenant improvements and leasing commissions(4)
(229)
(255)
(789)
(10,773)
Tenant improvements and leasing commissions on space vacant for more than one year
(659)
(4,546)
(1,205)
(23,823)
Core AFFO(2)
$13,895
$(85)
$62,493
$12,331
Core FFO (calculated on previous page)
$11,626
$5,308
$53,893
$44,300
Deduct:
Equity in (earnings) loss of unconsolidated joint ventures
(260)
647
(3,102)
(1,200)
Equity in earnings share of depreciation and amortization
(2,597)
(2,574)
(10,337)
(10,392)
Add-back:
Interest expense
21,933
23,171
90,177
78,040
Amortization of derivative premium
(902)
(500)
(4,654)
(287)
Recurring joint venture distributions
2,718
2,471
11,700
12,000
Noncontrolling interests in consolidated joint ventures
(504)
(595)
(2,319)
(3,079)
Interest cost of mandatorily redeemable noncontrolling interests
—
—
7,366
—
Redeemable noncontrolling interests
285
6,366
7,618
25,534
Provision for income taxes
199
179
492
274
Adjusted EBITDA
$32,498
$34,473
$150,834
$145,190
Net debt at period end(5)
1,799,318
1,856,328
1,799,318
1,856,328
Net debt to Adjusted EBITDA
13.8x
13.5x
11.9x
12.8x
See Consolidated Statements of Operations Footnotes.
See Non GAAP Financial Definitions.
EBITDAre (Quarterly Comparison)
($ in thousands) (unaudited)
Three Months Ended December 31,
2023
2022
Net income (loss) available to common shareholders
$(5,051)
$31,871
Add/(Deduct):
Noncontrolling interests in Operating Partnership of income from continuing operations
(4,252)
(2,723)
Noncontrolling interests in Operating Partnership in discontinued operations
3,776
5,975
Noncontrolling interests in consolidated joint ventures(a)
(504)
(595)
Redeemable noncontrolling interests
285
6,366
Interest expense
21,933
23,171
Provision for income taxes
199
179
Depreciation and amortization
23,046
28,806
Deduct:
Continuing operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net
3
—
Discontinued operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net