Veris Residential, Inc. Reports Fourth Quarter and Full Year 2022 Results
Veris Residential, Inc. (NYSE: VRE) reported its fourth quarter and full year 2022 results, revealing a net income of $0.35 per share and a loss of $(0.63) for the full year. The Core Funds from Operations (Core FFO) was $0.05 per share for Q4 and $0.44 for the year. The multifamily portfolio maintained occupancy rates of 95.3% and 95.6%. Same Store Net Operating Income (NOI) saw increases of 20.1% for the year, driven by higher revenues. The company successfully sold $1.4 billion in non-strategic assets, aiding in its transition to a multifamily REIT. Despite anticipated growth, the regular quarterly dividend remains suspended.
- Core FFO per share increased to $0.05 in Q4 2022 from $0.17 in Q4 2021.
- Multifamily Same Store NOI increased by 20.1% year-over-year, indicating strong operational performance.
- Portfolio occupancy rates remained high at 95.3% and 95.6%.
- Successful strategic asset sales totaling $1.4 billion since 2022, enhancing balance sheet strength.
- Net loss of $(0.63) per share for the full year 2022.
- Core FFO decreased significantly from $17.1 million in Q4 2021 to $5.3 million in Q4 2022.
- Same Store NOI decreased by (0.2)% quarter-over-quarter due to increased real estate taxes.
- Regular quarterly dividend remains suspended as the company transitions.
OPERATIONAL HIGHLIGHTS
- Net income (loss) of
$0.35 $(0.63) - Core Funds from Operations ("Core FFO") per share of
$0.05 $0.44 - Our 6,931-unit operating multifamily portfolio and Same Store 5,825-unit operating multifamily portfolio were
95.3% and95.6% occupied, respectively, as ofDecember 31, 2022 . - Full year and fourth quarter 2022 multifamily Same Store Net Operating Income ("NOI") increased by
20.1% and12.6% , compared to the same period last year, reflecting higher revenues, reduced concessions and stable controllable expenses offset by higher real estate taxes and insurance. - Same Store multifamily Blended Net Rental Growth Rate of
11.7% for the quarter and17.0% for the year. - Haus25, our 750-unit property located in
Jersey City, NJ , achieved stable occupancy in earlyFebruary 2023 , significantly ahead of schedule and initial underwriting. 96% of the Company's total pro forma debt portfolio (consolidated and unconsolidated) is hedged or fixed. The Company`s total pro forma debt portfolio has a weighted average rate of4.4% and weighted average maturity of 4.1 years.- Formed a strategic partnership with
Massachusetts Institute of Technology`sCenter for Real Estate .
CONTINUED PROGRESS OF TRANSFORMATION TO PURE-PLAY MULTIFAMILY REIT
$1.4 billion $437 million $420 million - Closed on the sale of the
Port Imperial Hotels , fully exiting the hotel segment, subsequent to quarter end.
FINANCIAL HIGHLIGHTS
Net income (loss) available to common shareholders for the quarter ended December 31, 2022 was
For the fourth quarter 2022, Core FFO was
3Q22 Core FFO per share | |
101 | ( |
G&A / Other Corporate | ( |
Office CAM / RE Tax Adjustments | ( |
Residential Operations | |
Interest Expense (excludes 101 Hudson sale impact) | ( |
4Q22 Core FFO per share |
For more information and a reconciliation of FFO, Core FFO, Adjusted EBITDA and NOI to net income (loss) attributable to common shareholders, please refer to the following pages and the Company's Supplemental Operating and Financial Data package for the fourth quarter 2022. Please note that all presented per share amounts are on a diluted basis.
MULTIFAMILY PORTFOLIO HIGHLIGHTS
The Company's 6,931-unit operating multifamily portfolio and Same Store 5,825-unit operating multifamily portfolio were
Same Store multifamily Blended Net Rental Growth Rate was
Full year Same Store NOI for the operating multifamily portfolio increased year-over-year by
The three lease-up properties that stabilized in the fourth quarter 2021, the Upton in
Haus25, a 750-unit property located at 25 Christopher Columbus in
TRANSACTION ACTIVITY
In 2022, the Company closed on
On
Furthermore, the Company fully exited the hotels segment.
Approximately
BALANCE SHEET/CAPITAL MARKETS
As of
During the fourth quarter 2022, the Company purchased a 1-year LIBOR cap for the Haus25 loan of
OPERATIONAL GUIDANCE
The Company expects growth projection ranges for 2023 shown below (compared to the full year 2022 Same Store NOI).
Operational Guidance | Low | High | |
Same Store Revenue Growth | 4.0 % | — | 6.0 % |
Same Store Expense Growth | 4.0 % | — | 6.0 % |
Same Store NOI Growth | 4.0 % | — | 6.0 % |
DIVIDEND POLICY
The Company anticipates its regular quarterly common dividend to remain suspended while it seeks to conclude the final stage of its transition into a pure-play multifamily REIT.
CONFERENCE CALL/SUPPLEMENTAL INFORMATION
An earnings conference call with management is scheduled for
The live conference call is also accessible by dialing (844) 825-9789 (domestic) or (412) 317-5180 (international) and requesting the
The conference call will be rebroadcast on
http://investors.verisresidential.com/corporate-overview beginning at
A replay of the call will also be accessible
Copies of
Fourth Quarter 2022 Form 10-K:
http://investors.verisresidential.com/sec-filings
Fourth Quarter 2022 Supplemental Operating and Financial Data:
http://investors.verisresidential.com/quarterly-supplementals
In addition, once filed, these items will be available upon request from:
Harborside 3,
NON-GAAP FINANCIAL MEASURES
Included in this press release are Funds from Operations, or FFO, Core Funds from Operations, or Core FFO, net operating income, or NOI and Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization, or Adjusted EBITDA, each a "non-GAAP financial measure," measuring
For reconciliation of FFO and Core FFO to Net Income (Loss), please refer to the following pages. For reconciliation of NOI, and Adjusted EBITDA to Net Income (Loss), please refer to the Company's disclosure in the Quarterly Financial and Operating Data package for the fourth quarter 2022.
FFO
FFO is defined as net income (loss) before noncontrolling interests in
FFO per share should not be considered as an alternative to net income available to common shareholders per share as an indication of the Company's performance or to cash flows as a measure of liquidity. FFO per share presented herein is not necessarily comparable to FFO per share presented by other real estate companies due to the fact that not all real estate companies use the same definition. However, the Company's FFO per share is comparable to the FFO per share of real estate companies that use the current definition of the
Core FFO
Core FFO is defined as FFO, as adjusted for certain items to facilitate comparative measurement of the Company's performance over time. Core FFO is presented solely as supplemental disclosure that the Company's management believes provides useful information to investors and analysts of its results, after adjusting for certain items to facilitate comparability of its performance from period to period. Core FFO is a non-GAAP financial measure that is not intended to represent cash flow and is not indicative of cash flows provided by operating activities as determined in accordance with GAAP. As there is not a generally accepted definition established for Core FFO, the Company's measures of Core FFO may not be comparable to the Core FFO reported by other REITs. A reconciliation of net income per share to Core FFO in dollars and per share is included in the financial tables accompanying this press release.
NOI and Same Store NOI
NOI represents total revenues less total operating expenses, as reconciled to net income above. The Company considers NOI to be a meaningful non-GAAP financial measure for making decisions and assessing unlevered performance of its property types and markets, as it relates to total return on assets, as opposed to levered return on equity. As properties are considered for sale and acquisition based on NOI estimates and projections, the Company utilizes this measure to make investment decisions, as well as compare the performance of its assets to those of its peers. NOI should not be considered a substitute for net income, and the Company's use of NOI may not be comparable to similarly titled measures used by other companies. The Company calculates NOI before any allocations to noncontrolling interests, as those interests do not affect the overall performance of the individual assets being measured and assessed.
Same Store NOI is presented for the same store portfolio, which comprises all properties that were owned by the Company throughout both of the reporting periods.
Blended Net Rental Growth Rate
Weighted average of the net effective change in rent (inclusive of concessions) for a lease with a new resident or for a renewed lease compared to the rent for the prior lease of the identical apartment unit.
ABOUT THE COMPANY
For additional information on
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
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
Anna Malhari
Chief Operating Officer
investors@verisresidential.com
Media
212-257-4170
veris-residential@gasthalter.com
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Three Months Ended | Twelve Months Ended | ||||||
REVENUES | 2022 | 2021 | 2022 | 2021 | |||
Revenue from leases | $ 73,464 | $ 74,593 | $ 284,062 | $ 276,864 | |||
Real estate services | 888 | 1,848 | 3,581 | 9,596 | |||
Parking income | 4,753 | 4,483 | 18,557 | 15,003 | |||
Hotel income | 5,063 | 3,834 | 15,505 | 10,618 | |||
Other income | 2,034 | 2,228 | 33,313 | 11,310 | |||
Total revenues | 86,202 | 86,986 | 355,017 | 323,390 | |||
EXPENSES | |||||||
Real estate taxes | 19,153 | 11,713 | 58,585 | 47,106 | |||
Utilities | 2,979 | 3,986 | 14,344 | 14,802 | |||
Operating services | 20,184 | 19,846 | 77,855 | 71,246 | |||
Real estate services expenses | 2,514 | 3,019 | 10,549 | 12,857 | |||
General and administrative | 12,250 | 13,849 | 56,169 | 57,190 | |||
Transaction related costs | 2,119 | 5,805 | 3,467 | 12,221 | |||
Depreciation and amortization | 28,706 | 24,814 | 111,518 | 110,038 | |||
Property impairments | 10,302 | 7,426 | 94,811 | 13,467 | |||
Land and other impairments, net | — | 12,386 | 9,368 | 23,719 | |||
Total expenses | 98,207 | 102,844 | 436,666 | 362,646 | |||
OTHER (EXPENSE) INCOME | |||||||
Interest expense | (23,171) | (15,828) | (78,040) | (65,192) | |||
Interest and other investment income (loss) | 102 | 5,144 | 729 | 524 | |||
Equity in earnings (loss) of unconsolidated joint ventures | (647) | (1,420) | 1,200 | (4,251) | |||
Realized gains (losses) and unrealized gains (losses) on disposition of rental | 69,380 | 2,501 | 66,115 | 3,022 | |||
Gain on disposition of developable land | (486) | 2,004 | 57,262 | 2,115 | |||
Loss on sale of unconsolidated joint venture interests | 7,677 | — | 7,677 | (1,886) | |||
Loss from extinguishment of debt, net | (1,014) | (343) | (7,432) | (47,078) | |||
Total other income (expense) | 51,841 | (7,942) | 47,511 | (112,746) | |||
Loss from continuing operations | 39,836 | (23,800) | (34,137) | (152,002) | |||
Discontinued operations: | |||||||
Income from discontinued operations | 1,058 | 480 | 3,692 | 16,911 | |||
Realized gains (losses) and unrealized gains (losses) on disposition of rental | — | 83 | (4,440) | 25,552 | |||
Total discontinued operations, net | 1,058 | 563 | (748) | 42,463 | |||
Net income (loss) | 40,894 | (23,237) | (34,885) | (109,539) | |||
Noncontrolling interests in consolidated joint ventures | 595 | 925 | 3,079 | 4,595 | |||
Noncontrolling interests in | (3,154) | 2,656 | 5,202 | 15,739 | |||
Noncontrolling interests in | (98) | (52) | 72 | (3,860) | |||
Redeemable noncontrolling interests | (6,365) | (6,564) | (25,534) | (25,977) | |||
Net income (loss) available to common shareholders | $ 31,872 | $ (26,272) | $ (52,066) | $ (119,042) | |||
Basic earnings per common share: | |||||||
Income (loss) from continuing operations | $ 0.34 | $ (0.32) | $ (0.62) | $ (1.82) | |||
Discontinued operations | 0.01 | — | (0.01) | 0.43 | |||
Net income (loss) available to common shareholders | $ 0.35 | $ (0.32) | $ (0.63) | $ (1.39) | |||
Diluted earnings per common share: | |||||||
Income (loss) from continuing operations | $ 0.34 | $ (0.32) | $ (0.62) | $ (1.82) | |||
Discontinued operations | 0.01 | — | (0.01) | 0.43 | |||
Net income (loss) available to common shareholders | $ 0.35 | $ (0.32) | $ (0.63) | $ (1.39) | |||
Basic weighted average shares outstanding | 91,296 | 90,946 | 91,046 | 90,839 | |||
Diluted weighted average shares outstanding | 100,417 | 99,963 | 100,265 | 99,893 | |||
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Three Months Ended | Twelve Months Ended | |||||
2022 | 2021 | 2022 | 2021 | |||
Net income (loss) available to common shareholders | $ 31,872 | $ (26,272) | $ (52.066) | $ (119,042) | ||
Add (deduct): Noncontrolling interests in | 3,154 | (2,656) | (5,202) | (15,740) | ||
Noncontrolling interests in discontinued operations | 98 | 52 | (72) | 3,861 | ||
Real estate-related depreciation and amortization on continuing operations (a) | 30,886 | 27,179 | 120,584 | 118,835 | ||
Real estate-related depreciation and amortization on discontinued operations | 99 | 404 | 889 | 2,555 | ||
Property impairments on continuing operations | 10,302 | 7,426 | 94,811 | 13,467 | ||
Impairment of unconsolidated joint venture investment (included in Equity in earnings) | — | — | — | (2) | ||
Gain on sale from unconsolidated joint ventures | (7,677) | — | (7,677) | 1,886 | ||
Continuing operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net | (69,380) | (2,501) | (66,116) | (3,022) | ||
Discontinued operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net | — | (83) | 4,440 | (25,552) | ||
Funds from operations (b) | $ (646) | $ 3,549 | $ 89,591 | $ (22,754) | ||
Add (Deduct): | ||||||
(Gain) loss from early extinguishment of debt, net | 1,014 | 343 | 7,432 | 47,078 | ||
Dead deal and post sales items in Other Income/expense | — | — | — | (2,957) | ||
Dead deal and transaction-related costs | 2,119 | 5,805 | 3,467 | 12,221 | ||
Land and other impairments | — | 12,386 | 9,368 | 23,719 | ||
Loan receivable loss allowance | — | (4,906) | — | 246 | ||
(Gain) on disposition of developable land | 486 | (2,004) | (57,262) | (2,115) | ||
CEO and related management change costs | — | — | — | 2,089 | ||
Severance/Rebranding costs | 1,836 | 1,938 | 14,080 | 10,634 | ||
Lease breakage fee, net | — | — | (22,664) | — | ||
Non-cash derivative expense | 500 | — | 287 | — | ||
Core FFO | $ 5,308 | $ 17,111 | $ 44,299 | $ 68,161 | ||
Diluted weighted average shares/units outstanding (c) | 100,416,881 | 99,962,745 | 100,264,845 | 99,893,491 | ||
Funds from operations per share/unit-diluted | $ (0.01) | $ 0.04 | $ 0.89 | $ (0.23) | ||
Core funds from operations per share/unit diluted | $ 0.05 | $ 0.17 | $ 0.44 | $ 0.68 | ||
Dividends declared per common share | $ — | $ — | $ — | $ — | ||
Supplemental Information: | ||||||
Non-incremental revenue generating capital expenditures: | ||||||
Building improvements | $ (3,748) | $ (2,295) | $ (14,992) | $ (13,301) | ||
Tenant improvements & leasing commissions (d) | (8,943) | (930) | (14,051) | (3,338) | ||
Tenant improvements & leasing commissions on space vacant for more than a year | (4,546) | (4,507) | (29,233) | (19,142) | ||
Straight-line rent adjustments (e) | (1,273) | 169 | 157 | (7,681) | ||
Amortization of (above)/below market lease intangibles, net | (30) | (525) | (155) | (2,712) | ||
Amortization of stock compensation | 2,829 | 3,167 | 11,339 | 11,160 | ||
Amortization of lease inducements | 16 | 17 | 129 | (10) | ||
Non real estate depreciation and amortization | 395 | 325 | 1,328 | 1,304 | ||
Amortization of debt discount/(premium) and mark-to-market, net | — | — | — | 231 | ||
Amortization of deferred financing costs | 1,219 | 1,199 | 4,821 | 4,569 | ||
(a) | Includes the Company's share from unconsolidated joint ventures, and adjustments for noncontrolling interest of |
(b) | Funds from operations is calculated in accordance with the definition of FFO of the |
(c) | Calculated based on weighted average common shares outstanding, assuming redemption of |
(d) | Excludes expenditures for tenant spaces that have not been owned for at least a year. |
(e) | Includes free rent of |
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ASSETS |
|
| |
Rental property | |||
Land and leasehold interests | $ 492,204 | $ 494,935 | |
Buildings and improvements | 3,332,315 | 3,375,266 | |
Tenant improvements | 122,509 | 106,654 | |
Furniture, fixtures and equipment | 99,094 | 100,011 | |
4,046,122 | 4,076,866 | ||
Less – accumulated depreciation and amortization | (631,910) | (583,416) | |
3,414,212 | 3,493,450 | ||
Real estate held for sale, net | 193,933 | 618,646 | |
Net investment in rental property | 3,608,145 | 4,112,096 | |
Cash and cash equivalents | 26,782 | 31,754 | |
Restricted cash | 20,867 | 19,701 | |
Investments in unconsolidated joint ventures | 126,158 | 137,772 | |
Unbilled rents receivable, net | 39,734 | 72,285 | |
Deferred charges and other assets, net | 96,162 | 151,347 | |
Accounts receivable | 2,920 | 2,363 | |
Total assets | $ 3,920,768 | $ 4,527,318 | |
LIABILITIES AND EQUITY | |||
Revolving credit facility and term loans | — | 148,000 | |
Mortgages, loans payable and other obligations, net | 1,903,977 | 2,241,070 | |
Dividends and distributions payable | 110 | 384 | |
Accounts payable, accrued expenses and other liabilities | 72,041 | 134,977 | |
Rents received in advance and security deposits | 22,941 | 26,396 | |
Accrued interest payable | 7,131 | 5,760 | |
Total liabilities | 2,006,200 | 2,556,587 | |
Commitments and contingencies | — | — | |
Redeemable noncontrolling interests | 515,231 | 521,313 | |
Equity: | |||
Common stock, | 911 | 909 | |
Additional paid-in capital | 2,532,182 | 2,530,383 | |
Dividends in excess of net earnings | (1,301,385) | (1,249,319) | |
Accumulated other comprehensive income (loss) | 3,977 | 9 | |
1,235,685 | 1,281,982 | ||
Noncontrolling interests in subsidiaries: | |||
Operating Partnership | 126,109 | 127,053 | |
Consolidated joint ventures | 37,543 | 40,383 | |
Total noncontrolling interests in subsidiaries | 163,652 | 167,436 | |
Total equity | 1,399,337 | 1,449,418 | |
Total liabilities and equity | $ 3,920,768 | $ 4,527,318 | |
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