Veris Residential, Inc. Reports Third Quarter 2024 Results
Raises Full-Year 2024 Guidance
JERSEY CITY, N.J., Oct. 30, 2024 /PRNewswire/ -- Veris Residential, Inc. (NYSE:VRE) (the "Company"), a forward-thinking, environmentally and socially conscious multifamily REIT, today reported results for the third quarter 2024.
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net Income (Loss) per Diluted Share
$(0.10)
$(0.60)
$(0.12)
$(1.16)
Core FFO per Diluted Share
$0.17
$0.12
$0.49
$0.42
Core AFFO per Diluted Share
$0.19
$0.15
$0.58
$0.48
Dividend per Diluted Share
$0.07
$0.05
$0.18
$0.05
YEAR-TO-DATE HIGHLIGHTS
Same Store multifamily Blended Net Rental growth rate of 4.6% for the quarter and 4.8% year to date.
Year-over-year Normalized Same Store NOI growth of 8.4% for the third quarter and 8.0% year to date.
Year-to-date Normalized Same Store NOI margin of 66.8%, a 130 basis point improvement from the same period last year.
Reduced net debt by approximately $227 million since September 30, 2023, and refinanced $531 million of mortgage debt, leaving no remaining consolidated debt maturities until 2026.
Raised guidance as a result of the favorable resolutions of certain non-controllable expenses and better-than-expected revenue growth.
Core FFO guidance raised by over 13% at the low end and 7% at the high end, resulting in a revised range of $0.59 - $0.60.
Same Store NOI guidance raised by 240 basis points at the low end and 120 basis points at the high end, resulting in a revised range of 5.4% - 6.2%.
Named 2024 Regional Listed Sector Leader by GRESB for distinguished ESG leadership and performance, with the highest listed residential score in the U.S. and the third-best listed residential score worldwide.
September 30, 2024
June 30, 2024
Change
Same Store Units
7,621
7,621
— %
Same Store Occupancy
95.1 %
95.1 %
— %
Same Store Blended Rental Growth Rate (Quarter)
4.6 %
5.4 %
(0.8) %
Average Rent per Home
$3,980
$3,923
1.5 %
Mahbod Nia, Chief Executive Officer, commented, "Our portfolio continues to exhibit strong revenue growth, underpinned by robust demand for our premium properties and limited new supply in our key markets. I am extremely proud of the work our teams have done to mitigate controllable expense growth during a period of elevated inflation. These efforts, combined with a better than expected resolution of our non-controllable expenses last quarter, drove a substantial 17% year-over-year increase in Core FFO per share during the first nine months of the year, further improving our operating margin to 66.8% and allowing us to once again raise guidance."
SAME STORE PORTFOLIO PERFORMANCE
The following table shows Same Store performance:
($ in 000s)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
%
2024
2023
%
Total Property Revenue
$75,843
$72,948
4.0 %
$224,680
$212,227
5.9 %
Controllable Expenses
13,452
13,543
(0.7) %
39,499
38,421
2.8 %
Non-Controllable Expenses
10,572
11,596
(8.8) %
35,023
33,130
5.7 %
Total Property Expenses
24,024
25,139
(4.4) %
74,522
71,551
4.2 %
Same Store NOI
$51,819
$47,809
8.4 %
$150,158
$140,676
6.7 %
Less: Real Estate Tax Adjustments
—
20
—
1,689
Normalized Same Store NOI
$51,819
$47,789
8.4 %
$150,158
$138,987
8.0 %
In the third quarter, the Company renewed its property insurance program and finalized property taxes for its Jersey City assets, reducing Same Store non-controllable expenses by 8.8% for the quarter.
FINANCE AND LIQUIDITY
Approximately all of the Company's debt is hedged or fixed. The Company's total debt portfolio has a weighted average effective interest rate of 4.96% and weighted average maturity of 3.3 years.
Balance Sheet Metric ($ in 000s)
September 30, 2024
June 30, 2024
Weighted Average Interest Rate
4.96 %
4.51 %
Weighted Average Years to Maturity
3.3
3.1
Interest Coverage Ratio
1.7x
1.7x
Net Debt
$1,645,447
$1,646,023
TTM EBITDA
$140,682
$139,654
TTM Net Debt to EBITDA
11.7x
11.8x
During the third quarter, the Company repaid the $43 million mortgage on Signature Place and the $265 million mortgage on Liberty Towers using a combination of cash on hand, $145 million of additional draws on the Term Loan and a $157 million draw on the Secured Revolving Credit Facility. At quarter end, the Company had liquidity of approximately $170 million.
The $200 million Term Loan balance and $150 million of the Revolver were hedged with interest rate caps at a strike rate of 3.5%. The nine-month interest rate cap on the Revolver has not been designated as an effective accounting hedge to allow for flexibility should the Company repay a portion of the Revolver balance before the interest rate cap expires.
At the beginning of the third quarter, the Company successfully met Sustainable KPI provisions that resulted in a 5-basis-point spread reduction for all borrowings on the Term Loan and Revolver.
ESG
The Company has again been recognized by global and national real estate organizations for its accomplishments in ESG and DEI. Most significantly, GRESB designated the Company as a Regional Listed Sector Leader in the Residential category, a recognition highlighting the top GRESB assessment performers in the Americas. The Company achieved the highest listed residential score in the U.S. and third-best listed residential score worldwide, earning its third-consecutive 5 Star rating.
The Company was also recognized by Nareit with the Mid Cap Diversity Impact Award for its social responsibility policies.
DIVIDEND
The Company paid a dividend of $0.07 per share on October 16, 2024, for shareholders of record as of September 30, 2024.
GUIDANCE
The Company has raised its 2024 guidance ranges to reflect the favorable outcome of certain non-controllable expenses that were finalized in the third quarter and continued multifamily outperformance.
Revised Guidance
Previous Guidance (July)
2024 Guidance Ranges
Low
High
Low
High
Same Store Revenue Growth
4.6 %
—
5.0 %
4.0 %
—
5.0 %
Same Store Expense Growth
2.5 %
—
3.0 %
4.5 %
—
5.5 %
Same Store NOI Growth
5.4 %
—
6.2 %
3.0 %
—
5.0 %
Core FFO per Share Guidance
Low
High
Net Loss per Share
$(0.15)
—
$(0.14)
Other FFO adjustments per share
$(0.16)
—
$(0.16)
Depreciation per Share
$0.90
—
$0.90
Core FFO per Share
$0.59
—
$0.60
CONFERENCE CALL/SUPPLEMENTAL INFORMATION
An earnings conference call with management is scheduled for Thursday, October 31, 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 third 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, October 31, 2024.
A replay of the call will also be accessible Thursday, October 31, 2024, through Sunday, December 1, 2024, by calling (844) 512-2921 (domestic) or +1(412) 317-6671 (international) and using the passcode, 13747452.
Copies of Veris Residential, Inc.'s third quarter 2024 Form 10-Q and third 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 DepartmentHarborside 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, 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, available at https://investors.verisresidential.com/financial-information.
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 may not 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.
Additional details in Company Information.
Consolidated Balance Sheet
(in thousands) (unaudited)
September 30, 2024
December 31, 2023
ASSETS
Rental property
Land and leasehold interests
$462,531
$474,499
Buildings and improvements
2,635,580
2,782,468
Tenant improvements
12,946
30,908
Furniture, fixtures and equipment
106,901
103,613
3,217,958
3,391,488
Less, accumulated depreciation and amortization
(411,537)
(443,781)
2,806,421
2,947,707
Real estate held for sale, net
—
58,608
Net investment in rental property
2,806,421
3,006,315
Cash and cash equivalents
12,782
28,007
Restricted cash
19,687
26,572
Investments in unconsolidated joint ventures
113,595
117,954
Unbilled rents receivable, net
2,204
5,500
Deferred charges and other assets, net
49,110
53,956
Accounts receivable
2,041
2,742
Total Assets
$3,005,840
$3,241,046
LIABILITIES & EQUITY
Revolving credit facility and term loans
353,580
—
Mortgages, loans payable and other obligations, net
1,324,336
1,853,897
Dividends and distributions payable
7,467
5,540
Accounts payable, accrued expenses and other liabilities
45,509
55,492
Rents received in advance and security deposits
10,993
14,985
Accrued interest payable
4,816
6,580
Total Liabilities
1,746,701
1,936,494
Redeemable noncontrolling interests
9,294
24,999
Total Stockholders' Equity
1,116,337
1,137,478
Noncontrolling interests in subsidiaries:
Operating Partnership
104,092
107,206
Consolidated joint ventures
31,811
34,869
Total Noncontrolling Interests in Subsidiaries
$135,903
$142,075
Total Equity
$1,249,845
$1,279,553
Total Liabilities and Equity
$3,005,840
$3,241,046
Consolidated Statement of Operations
(In thousands, except per share amounts) (unaudited) 1
Three Months Ended September 30,
Nine Months Ended September 30,
REVENUES
2024
2023
2024
2023
Revenue from leases
$62,227
$59,935
$183,786
$174,223
Management fees
794
1,230
2,587
2,785
Parking income
3,903
3,947
11,570
11,673
Other income
1,251
1,361
5,048
4,596
Total revenues
68,175
66,473
202,991
193,277
EXPENSES
Real estate taxes
8,572
9,301
27,251
25,158
Utilities
2,129
2,039
6,196
5,863
Operating services
10,156
13,583
35,354
37,195
Property management
3,762
3,533
13,370
9,864
General and administrative
8,956
14,604
29,019
34,460
Transaction related costs
—
2,704
1,406
7,051
Depreciation and amortization
21,159
21,390
61,592
65,008
Land and other impairments, net
2,619
—
2,619
3,396
Total expenses
57,353
67,154
176,807
187,995
OTHER (EXPENSE) INCOME
Interest expense
(21,507)
(23,715)
(64,683)
(67,422)
Interest cost of mandatorily redeemable noncontrolling interests
—
(36,392)
—
(49,782)
Interest and other investment income
181
1,240
2,255
5,283
Equity in earnings (loss) of unconsolidated joint ventures
(268)
210
2,919
2,843
Gain (loss) on disposition of developable land
—
—
11,515
(23)
Gain on sale of unconsolidated joint venture interests
—
—
7,100
—
Gain (loss) from extinguishment of debt, net
8
(1,046)
(777)
(3,702)
Other income (expense), net
(310)
(57)
(305)
2,794
Total other (expense) income, net
(21,896)
(59,760)
(41,976)
(110,009)
Loss from continuing operations before income tax expense
(11,074)
(60,441)
(15,792)
(104,727)
Provision for income taxes
(39)
(293)
(274)
(293)
Loss from continuing operations after income tax expense
(11,113)
(60,734)
(16,066)
(105,020)
Income from discontinued operations
206
61
1,877
691
Realized gains (losses) and unrealized gains (losses) on disposition of rental property and impairments, net
—
423
1,548
(2,286)
Total discontinued operations, net
206
484
3,425
(1,595)
Net loss
(10,907)
(60,250)
(12,641)
(106,615)
Noncontrolling interest in consolidated joint ventures
391
592
1,429
1,815
Noncontrolling interests in Operating Partnership of income from continuing operations
923
5,243
1,293
9,785
Noncontrolling interests in Operating Partnership in discontinued operations
(18)
(42)
(295)
134
Redeemable noncontrolling interests
(81)
(350)
(459)
(7,333)
Net loss available to common shareholders
$(9,692)
$(54,807)
$(10,673)
$(102,214)
Basic earnings per common share:
Net loss available to common shareholders
$(0.10)
$(0.60)
$(0.12)
$(1.16)
Diluted earnings per common share:
Net loss available to common shareholders
$(0.10)
$(0.60)
$(0.12)
$(1.16)
Basic weighted average shares outstanding
92,903
92,177
92,615
91,762
Diluted weighted average shares outstanding(6)
101,587
100,925
101,304
100,770
1 For more details see Reconciliation to Net Income (Loss) to NOI.
FFO, Core FFO and Core AFFO
(in thousands, except per share/unit amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net loss available to common shareholders
$ (9,692)
$ (54,807)
$ (10,673)
$ (102,214)
Add (deduct): Noncontrolling interests in Operating Partnership
(923)
(5,243)
(1,293)
(9,785)
Noncontrolling interests in discontinued operations
18
42
295
(134)
Real estate-related depreciation and amortization on continuing operations(1)
23,401
23,746
68,547
72,087
Real estate-related depreciation and amortization on discontinued operations
—
1,926
668
10,870
Continuing operations: Gain on sale from unconsolidated joint ventures
—
—
(7,100)
—
Discontinued operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net
—
(423)
(1,548)
2,286
FFO(2)
$ 12,804
$ (34,759)
$ 48,896
$ (26,890)
Add/(Deduct):
Gain (Loss) from extinguishment of debt, net
(8)
1,046
777
3,714
Land and other impairments
2,619
—
2,619
3,396
(Gain) Loss on disposition of developable land
—
—
(11,515)
23
Rebranding and Severance/Compensation related costs (G&A)
206
5,904
2,079
7,869
Rebranding and Severance/Compensation related costs (Property Management)
26
288
2,390
288
Severance/Compensation related costs (Operating Expenses)
—
649
—
649
Rockpoint buyout premium
—
34,775
—
34,775
Redemption value adjustments to mandatorily redeemable noncontrolling interests
—
—
—
7,641
Amortization of derivative premium(7)
1,303
999
3,093
3,751
Derivative mark to market adjustment
16
—
16
—
Transaction related costs
—
2,704
1,406
7,051
Core FFO
$ 16,966
$ 11,606
$ 49,761
$ 42,267
Add (Deduct) Non-Cash Items:
Straight-line rent adjustments(3)
(341)
781
(683)
421
Amortization of market lease intangibles, net
(9)
—
(25)
(79)
Amortization of lease inducements
—
37
7
52
Amortization of stock compensation
3,005
3,234
9,979
9,725
Non-real estate depreciation and amortization
165
228
594
813
Amortization of deferred financing costs
1,675
1,353
4,486
3,185
Deduct:
Non-incremental revenue generating capital expenditures:
Building improvements
(2,288)
(2,247)
(4,890)
(6,678)
Tenant improvements and leasing commissions(4)
(55)
(125)
(142)
(1,106)
Core AFFO(2)
$ 19,118
$ 14,867
$ 59,087
$ 48,600
Funds from Operations per share/unit-diluted
$0.13
$(0.35)
$0.48
$(0.27)
Core Funds from Operations per share/unit-diluted
$0.17
$0.12
$0.49
$0.42
Core Adjusted Funds from Operations per share/unit-diluted
$0.19
$0.15
$0.58
$0.48
Dividends declared per common share
$0.07
$0.05
$0.1825
$0.05
See Non-GAAP Financial Definitions.
See Consolidated Statements of Operations.
Adjusted EBITDA
($ in thousands) (unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Core FFO (calculated on a previous page)
$ 16,966
$ 11,606
$ 49,761
$ 42,267
Deduct:
Equity in (earnings) loss of unconsolidated joint ventures
268
(210)
(3,181)
(2,843)
Equity in earnings share of depreciation and amortization
(2,407)
(2,584)
(7,549)
(7,740)
Add-back:
Interest expense
21,507
23,715
64,683
68,244
Amortization of derivative premium
(1,303)
(999)
