Veris Residential, Inc. Reports Fourth Quarter and Full Year 2023 Results
- Strong Core FFO growth of 20% to $0.53 per share.
- 17.6% annual NOI growth exceeding guidance.
- Completion of transformation to a pure-play multifamily REIT.
- Reduction of Core G&A by 13% and reinstatement of dividends.
- Recognition for sustainability and DEI efforts.
- Available liquidity of $95 million with virtually all debt hedged or fixed.
- None.
Insights
The recent financial results from Veris Residential, Inc. indicate a notable improvement in Core Funds From Operations (FFO) per share, with a 20% increase year-over-year. This metric is critical as it provides a clearer picture of the operating performance of a Real Estate Investment Trust (REIT) by excluding the effects of depreciation and other non-cash charges. The company's strategy of asset divestiture, focusing on multifamily properties, appears to be yielding positive financial results. The reduction in Core General & Administrative expenses by 13% demonstrates effective cost control measures. However, a slight decrease in physical occupancy rates could signal a need for closer monitoring of tenant retention strategies.
Veris Residential's debt refinancing and the reduction of overall indebtedness by $50 million contribute to a healthier balance sheet. This financial maneuvering, combined with a conservative Net-Debt-to-Adjusted EBITDA ratio, suggests a strategic approach to managing leverage. The interest coverage ratio remaining stable at 1.5x is a positive sign of the company's ability to service its debt. Investors should note the company's proactive steps in liquidity management, including the establishment of an ATM program, which could provide flexibility in capital allocation.
Veris Residential's strategic pivot to a pure-play multifamily REIT is significant in the context of the broader real estate market. As urbanization and housing demand patterns shift, specialization in Class A multifamily properties could position Veris advantageously. The reported Same Store Net Operating Income (NOI) growth of 17.6% surpasses the industry norm, reflecting strong operational efficiency and revenue growth. However, the Same Store Blended Rental Growth Rate's decline from the previous year's 11.7% to 5.0% may raise concerns about the sustainability of rental income growth rates in a potentially cooling market.
The company's recognition in sustainability and Diversity, Equity, & Inclusion (DEI) efforts aligns with increasing investor interest in Environmental, Social and Governance (ESG) factors, which could enhance its appeal to socially conscious investors. As ESG considerations become more integrated into investment decisions, Veris Residential's leadership in these areas could positively influence its market perception and stock valuation.
Veris Residential's transformation and focus on Class A multifamily properties reflect a strategic alignment with industry trends favoring quality assets in prime locations. The 10.8% increase in operating units year-over-year indicates expansion, which is critical in a competitive market. However, the slight dip in physical occupancy year-over-year, although minimal, warrants attention to ensure that growth in operating units translates into sustained revenue. The company's asset sales, including the divestiture of non-strategic assets such as hotel and office properties, are consistent with a trend among REITs to streamline operations and focus on core competencies.
The addition of properties like Haus25 and The James to the Same Store pool and their contribution to NOI underscore the importance of strategic property acquisitions and development in driving growth. Veris Residential's forward-looking guidance suggests a cautious optimism, with projected Same Store NOI growth lower than the actual growth achieved in 2023, which may reflect a conservative approach in a potentially fluctuating real estate market.
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||
2023 | 2022 | 2023 | 2022 | ||
Net Income (Loss) per Diluted Share | |||||
Core FFO per Diluted Share | |||||
Dividends Declared per Share | $— | $— | |||
ANOTHER YEAR OF OPERATIONAL OUTPERFORMANCE
- Grew Core FFO per share to
$0.53 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% from62% in 2022 and57% in 2021. - Same Store multifamily Blended Net Rental Growth Rate of
5.0% for the quarter and9.3% 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 - Signed a binding contract to sell Harborside 5, our last office property, for
$85 million - Negotiated the early redemption of Rockpoint's preferred interest for
$520 million - Refinanced
$400 million $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 | 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 | Adjusted Guidance | |
Same Store Revenue Growth | 11.0 % | 4 | 9 |
Same Store Expense Growth | 0.4 % | 4 | 2 |
Same Store NOI Growth | 17.6 % | 4 | 14 |
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 | 7.6 % | 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 | 15.7 % | 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
TRANSACTION ACTIVITY
In 2023, the Company closed over
Quarter | Gross Price (000s) |
1Q | |
2Q | |
3Q | |
4Q |
In October 2023, the Company closed on the sales of Harborside 4, 3 Campus and 23 Main for a combined gross price of
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
Currently,
FINANCE AND LIQUIDITY
As of February 20, 2024, available liquidity is approximately
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
The
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
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 | — | ||
Add back: Depreciation per Share | — | ||
Core FFO per Share | — |
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,
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 | ||||
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 | ||||
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 | ||||
Total Equity | ||||
Total Liabilities and Equity | ||||
_____________________________________________ |
1 Includes mark-to-market lease intangible net assets of |
2 Includes Prepaid Expenses and Other Assets attributable to Multifamily of |
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 | |||||
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 | |||||
Basic earnings per common share: | |||||
Net loss available to common shareholders | |||||
Diluted earnings per common share: | |||||
Net loss available to common shareholders | |||||
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 | |||||
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) | |||||
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 | |||||
Diluted weighted average shares/units outstanding(6) | 100,936 | 100,417 | 100,812 | 100,265 | |
Funds from operations per share-diluted | |||||
Core Funds from Operations per share/unit-diluted | |||||
Dividends declared per common share | — | — | |||
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) | |||||
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) | |||||
Core FFO (calculated on previous page) | |||||
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 | |||||
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 | ||
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 | (4,700) | (69,380) |
Discontinued operations: Gain on sale from unconsolidated joint ventures | — | (7,677) |
Equity in (earnings) loss of unconsolidated joint ventures | (260) | 647 |
Add: | ||
Property impairments | 32,516 | 10,302 |
Company's share of property NOI's in unconsolidated joint ventures(1) | 7,768 | 6,694 |
EBITDAre | ||
Add: | ||
Loss from extinguishment of debt, net | 1,903 | 1,014 |
Severance and compensation-related costs | 129 | 1,836 |
Transaction-related costs | 576 | 2,119 |
Land and other impairments, net | 5,928 | — |
Gain on disposition of developable land | (46,361) | 486 |
Amortization of derivative premium | 902 | 500 |
Adjusted EBITDAre | ||
(a) Noncontrolling interests in consolidated joint ventures: | ||
BLVD 425 | 72 | 6 |
BLVD 401 | (568) | (600) |
Port Imperial Garage South | (12) | — |
Port Imperial Retail South | 29 | 16 |
Other consolidated joint ventures | (25) | (17) |
Net losses in noncontrolling interests | ||
Depreciation in noncontrolling interest in consolidated joint ventures | 712 | 708 |
Funds from operations - noncontrolling interest in consolidated joint ventures | ||
Interest expense in noncontrolling interest in consolidated joint ventures | 789 | 791 |
Net operating income before debt service in consolidated joint ventures | ||
See Consolidated Statements of Operations Footnotes.
See Non GAAP Financial Definitions.
Components of Net Asset Value | |||||
($ in thousands) | |||||
Real Estate Portfolio | Other Assets | ||||
Operating Multifamily NOI1 | Total | At Share | Cash and Cash Equivalents2 | ||
New Jersey Waterfront | Restricted Cash | 26,572 | |||
25,280 | 25,280 | Other Assets | 62,198 | ||
Other3 | 29,996 | 22,123 | Subtotal Other Assets | ||
Total Multifamily NOI | |||||
Commercial NOI4 | 6,396 | 5,174 | Liabilities and Other Considerations | ||
Total NOI | |||||
Operating - Consolidated Debt at Share | |||||
Non-Strategic Assets | Operating - Unconsolidated Debt at Share2 | 298,679 | |||
Other Liabilities | 82,597 | ||||
Non-Strategic Assets Under Binding Contract5 | Revolving Credit Facility6 | — | |||
Estimated Land Value7 | 214,659 | Term Loan6 | — | ||
Subtotal Non-Strategic Assets | Preferred Units8 | 19,299 | |||
Subtotal Liabilities and Other Considerations | |||||
Outstanding Shares9 | |||||
Diluted Weighted Average Shares Outstanding for 4Q 2023 | 100,936,000 | ||||
________________________________________________ |
1 See Multifamily Operating Portfolio page for more details. |
2 Pro forma for transaction activity completed subsequent to quarter end. |
3 Metropolitan Lofts was sold on January 12, 2024 and is not reflected in this line. |
4 See Commercial, Developable Land & Other Non-Strategic Assets page for more details. |
5 Represents the gross price of two assets, Harborside 5 and 107 Morgan. |
6 In July 2023, the Company entered into a transitional |
7 Based off 4,578 potential units, see Commercial, Developable Land & Other Non-Strategic Assets page for more details. |
8 In February 2024, |
9 Common Shares Outstanding as of December 31, 2023 were 92,229,424. |
See Non GAAP Financial Definitions.
Multifamily Operating Portfolio | |||||||||
(in thousands, except Revenue per home) | |||||||||
Operating Highlights | |||||||||
Percentage Occupied | Average Revenue per Home | NOI | Debt Balance | ||||||
Ownership | Apartments | 4Q 2023 | 3Q 2023 | 4Q 2023 | 3Q 2023 | 4Q 2023 | 3Q 2023 | ||
NJ Waterfront | |||||||||
Haus25 | 100.0 % | 750 | 94.1 % | 94.8 % | |||||
Liberty Towers | 100.0 % | 648 | 93.2 % | 95.2 % | 4,220 | 4,124 | 4,930 | 4,727 | 265,000 |
BLVD 401 | 74.3 % | 311 | 97.4 % | 96.8 % | 4,138 | 4,077 | 2,427 | 2,372 | 117,000 |
BLVD 425 | 74.3 % | 412 | 95.6 % | 97.3 % | 3,987 | 4,012 | 3,038 | 3,026 | 131,000 |
BLVD 475 | 100.0 % | 523 | 96.5 % | 98.2 % | 4,078 | 4,021 | 4,180 | 3,799 | 165,000 |
Soho Lofts | 100.0 % | 377 | 94.4 % | 92.0 % | 4,627 | 4,648 | 2,616 | 2,753 | 158,777 |
Urby Harborside | 85.0 % | 762 | 92.3 % | 95.3 % | 4,014 | 3,946 | 5,370 | 5,490 | 185,742 |
RiverHouse 9 | 100.0 % | 313 | 96.2 % | 97.8 % | 4,148 | 4,027 | 2,358 | 2,450 | 110,000 |
RiverHouse 11 | 100.0 % | 295 | 94.6 % | 96.3 % | 4,177 | 4,123 | 2,140 | 2,422 | 100,000 |
RiverTrace | 22.5 % | 316 | 95.6 % | 96.5 % | 3,711 | 3,682 | 2,184 | 2,120 | 82,000 |
Capstone | 40.0 % | 360 | 95.0 % | 96.4 % | 4,379 | 4,354 | 2,973 | 3,086 | 135,000 |
NJ Waterfront Subtotal | 85.0 % | 5,067 | 94.6 % | 95.9 % | |||||
Portside at East Pier | 100.0 % | 181 | 94.9 % | 92.6 % | |||||
Portside 2 at East Pier | 100.0 % | 296 | 96.2 % | 95.8 % | 3,384 | 3,268 | 2,034 | 2,024 | 97,000 |
145 Front at City Square | 100.0 % | 365 | 92.9 % | 93.7 % | 2,576 | 2,671 | 1,608 | 1,711 | 63,000 |
The Emery | 100.0 % | 326 | 92.3 % | 93.9 % | 2,760 | 2,711 | 1,515 | 1,565 | 72,000 |
Massachusetts Subtotal | 100.0 % | 1,168 | 93.9 % | 94.1 % | |||||
Other | |||||||||
The | 100.0 % | 193 | 91.7 % | 92.7 % | |||||
The James | 100.0 % | 240 | 96.3 % | 95.0 % | 3,052 | 3,026 | 1,330 | 1,461 | — |
Signature Place | 100.0 % | 197 | 97.5 % | 94.4 % | 3,174 | 3,195 | 974 | 1,081 | 43,000 |
Quarry Place at Tuckahoe | 100.0 % | 108 | 93.5 % | 93.5 % | 4,321 | 4,293 | 709 | 714 | 41,000 |
Riverpark at | 45.0 % | 141 | 92.2 % | 94.0 % | 2,885 | 2,772 | 577 | 526 | 30,192 |
Metropolitan at 40 Park1 | 25.0 % | 130 | 95.4 % | 93.8 % | 3,613 | 3,568 | 721 | 784 | 34,100 |
Metropolitan Lofts2 | 50.0 % | 59 | 94.4 % | 94.9 % | 3,725 | 3,610 | 319 | 303 | 17,200 |
Station House | 50.0 % | 378 | 92.1 % | 94.7 % | 2,562 | 2,757 | 1,713 | 1,513 | 89,440 |
Other Subtotal | 72.8 % | 1,446 | 94.0 % | 94.2 % | |||||
Operating Portfolio34 | 85.0 % | 7,681 | 94.4 % | 95.3 % | |||||
_________________________________________________ |
1 As of December 31, 2023, Priority Capital included Metropolitan at |
2 On January 12, 2024, the joint venture was sold for a gross valuation of approximately |
3 Operating Portfolio includes properties that have achieved over |
4 See Unconsolidated Joint Ventures and Multifamily Property Information pages for more details. |
See Non GAAP Financial Definitions.
Commercial, Developable Land and Other Non-Strategic Assets | ||||||||
($ in thousands) | ||||||||
Commercial | Location | Ownership | Rentable SF | Percentage Leased 4Q 2023 | Percentage Leased 3Q 2023 | NOI 4Q 2023 | NOI 3Q 2023 | Debt Balance |
Port Imperial Garage South | 70.0 % | 320,426 | N/A | N/A | ||||
Port Imperial Garage North | 100.0 % | 304,617 | N/A | N/A | 36 | (33) | — | |
Port Imperial Retail South | 70.0 % | 18,064 | 100.0 % | 100.0 % | 185 | 173 | — | |
Port Imperial Retail North | 100.0 % | 8,400 | 100.0 % | 100.0 % | 373 | 90 | — | |
Riverwalk at Port Imperial | 100.0 % | 30,426 | 59.2 % | 65.0 % | 221 | 158 | — | |
Shops at 40 Park | 25.0 % | 50,973 | 69.0 % | 69.0 % | 267 | 281 | 6,067 | |
Commercial Total | 80.9 % | 732,906 | 73.8 % | 75.5 % | ||||
Developable Land Parcels1 | |
NJ Waterfront | 3,134 |
849 | |
Other | 1,378 |
Developable Land Parcels Total | 5,361 |
Under Binding Contract for Sale | 783 |
Total Less Under Binding Contract | 4,578 |
One in-service office asset remains in the portfolio:
Avg. Base Rent + Escalations | |||||
Building | Location | Total SF | Leased SF | % Leased2 | |
Harborside 53 | 977,225 | 338,109 | 34.6 % | ||
Total Office Portfolio | 977,225 | 338,109 | 34.6 % |
_____________________________________________ |
1 The Company has an additional 13,775 SF of potential retail space within land developments that is not represented in this table. |
2 Harborside 5 has 42,964 SF of leased space expiring in 2024 and 28,856 SF expiring in 2025. |
3 Harborside 5 is currently under binding contract for sale. |
See Non GAAP Financial Definitions.
Same Store Market Information1 | |||||||||
Sequential Quarter Comparison | |||||||||
(NOI in thousands) | |||||||||
NOI | Occupancy | Blended Lease Rate | |||||||
Apartments | 4Q 2023 | 3Q 2023 | Change | 4Q 2023 | 3Q 2023 | Change | 4Q 2023 | 3Q 2023 | |
New Jersey Waterfront | 4,317 | (0.1) % | 94.7 % | 96.1 % | (1.4) % | 6.3 % | 10.3 % | ||
1,168 | 6,320 | 6,566 | (3.7) % | 93.9 % | 94.1 % | (0.3) % | 0.5 % | 7.8 % | |
Other2 | 1,206 | 6,488 | 6,499 | (0.2) % | 93.5 % | 94.1 % | (0.6) % | 3.5 % | 7.9 % |
Total | 6,691 | 45,024 | 45,310 | (0.6) % | 94.4 % | 95.4 % | (1.1) % | 5.0 % | 9.4 % |
Year-over-Year Fourth Quarter Comparison | |||||||||
(NOI in thousands) | |||||||||
NOI | Occupancy | Blended Lease Rate | |||||||
Apartments | 4Q 2023 | 4Q 2022 | Change | 4Q 2023 | 4Q 2022 | Change | 4Q 2023 | 4Q 2022 | |
New Jersey Waterfront | 4,317 | 17.5 % | 94.7 % | 95.7 % | (1.0) % | 6.3 % | 18.7 % | ||
1,168 | 6,320 | 5,676 | 11.3 % | 93.9 % | 94.9 % | (1.1) % | 0.5 % | 3.7 % | |
Other2 | 1,206 | 6,488 | 6,255 | 3.7 % | 93.5 % | 94.2 % | (0.7) % | 3.5 % | 10.1 % |
Total | 6,691 | 45,024 | 39,340 | 14.4 % | 94.4 % | 95.3 % | (0.9) % | 5.0 % | 14.4 % |
Average Revenue per Home (based on 6,691 units) | ||||||
4Q 2023 | 3Q 2023 | 2Q 2023 | 1Q 2023 | 4Q 2022 | 4Q 2021 | |
New Jersey Waterfront | ||||||
2,925 | 2,918 | 2,836 | 2,812 | 2,769 | 2,444 | |
Other2 | 3,378 | 3,427 | 3,453 | 3,326 | 3,275 | 2,795 |
Total | ||||||
________________________________________________ |
1 All statistics are based off the current 6,691 unit Same Store pool. Same Store 4Q22 and 4Q21 were actually 5,825 units when initially reported. |
2 "Other" includes properties in Suburban NJ, |
See Non GAAP Financial Definitions.
Same Store Performance | ||||||||||||||
($ in thousands) | ||||||||||||||
Multifamily Same Store1 | ||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | Sequential | ||||||||||||
2023 | 2022 | Change | % | 2023 | 2022 | Change | % | 4Q 2023 | 3Q 2023 | Change | % | |||
Apartment Rental Income | 8.2 % | 11.1 % | 0.3 % | |||||||||||
Parking/Other Income | 6,041 | 5,858 | 183 | 3.1 % | 24,205 | 22,017 | 2,188 | 9.9 % | 6,041 | 6,182 | (141) | (2.3) % | ||
Total Property Revenues2 | 7.6 % | 11.0 % | — % | |||||||||||
Marketing & Administration | 2,100 | 2,237 | (137) | (6.1) | 7,862 | 7,638 | 224 | 2.9 % | 2,100 | 2,076 | 24 | 1.2 % | ||
Utilities | 1,917 | 1,790 | 127 | 7.1 % | 7,765 | 7,626 | 139 | 1.8 % | 1,917 | 2,020 | (103) | (5.1) % | ||
Payroll | 4,026 | 3,852 | 174 | 4.5 % | 15,600 | 14,945 | 655 | 4.4 % | 4,026 | 4,074 | (48) | (1.2) % | ||
Repairs & Maintenance | 3,686 | 3,312 | 374 | 11.3 % | 13,331 | 12,564 | 767 | 6.1 % | 3,686 | 3,417 | 269 | 7.9 % | ||
Controllable Expenses | 4.8 % | 4.2 % | 1.2 % | |||||||||||
Other Fixed Fees | 738 | 531 | 207 | 39.0 % | 2,957 | 2,556 | 401 | 15.7 % | 738 | 764 | (26) | (3.4) % | ||
Insurance | 1,469 | 1,513 | (44) | (2.9) % | 5,386 | 5,249 | 137 | 2.6 % | 1,469 | 945 | 524 | 55.4 % | ||
Real Estate Taxes | 8,486 | 10,125 | (1,639) | (16.2) % | 31,917 | 33,864 | (1,947) | (5.7) % | 8,486 | 8,764 | (278) | (3.2) % | ||
Non-Controllable Expenses | (12.1) % | (3.4) % | 2.1 % | |||||||||||
Total Property Expenses | (4.0) % | 0.4 % | 1.6 % | |||||||||||
Same Store GAAP NOI | 15.7 % | 17.6 % | (0.9) % | |||||||||||
Real Estate Tax Adjustments3 | — | (1,456) | 1,456 | 1,689 | (1,170) | 2,859 | — | 20 | (20) | |||||
Normalized Same Store NOI | 10.9 % | 15.3 % | (0.9) % | |||||||||||
Total Units | 6,691 | 6,691 | 6,691 | 6,691 | 6,691 | 6,691 | ||||||||
% Ownership | 82.7 % | 82.7 % | 82.7 % | 82.7 % | 82.7 % | 82.7 % | ||||||||
% Occupied - Quarter End | 94.4 % | 95.3 % | (0.9) % | 94.4 % | 95.3 % | (0.9) % | 94.4 % | 95.4 % | (1.0) % | |||||
____________________________________________ |
1 Values represent the Company`s pro rata ownership of the operating portfolio. |
2 Revenues reported based on Generally Accepted Accounting Principals or "GAAP". |
3 Represents tax settlements and final tax rate adjustments recognized that are applicable to prior periods. |
See Non GAAP Financial Definitions.
Debt Profile | |||||
($ in thousands) | |||||
Lender | Effective Interest Rate(1) | December 31, 2023 | December 31, 2022 | Date of Maturity | |
Secured Permanent Loans | |||||
Port Imperial Hotels(2) | Fifth Third Bank | N/A | $— | N/A | |
Signature Place | Nationwide Life Insurance Company | 3.74 % | 43,000 | 43,000 | 08/01/24 |
Liberty Towers | American General Life Insurance Company | 3.37 % | 265,000 | 265,000 | 10/01/24 |
Portside 2 at East Pier | New York Life Insurance Co. | 4.56 % | 97,000 | 97,000 | 03/10/26 |
BLVD 425 | New York Life Insurance Co. | 4.17 % | 131,000 | 131,000 | 08/10/26 |
BLVD 401 | New York Life Insurance Co. | 4.29 % | 117,000 | 117,000 | 08/10/26 |
Portside at East Pier(3) | KKR | SOFR + | 56,500 | 58,998 | 09/07/26 |
The | Bank of New York Mellon | SOFR + | 75,000 | 75,000 | 10/27/26 |
145 Front at City Square(5) | US Bank | SOFR + | 63,000 | 63,000 | 12/10/26 |
RiverHouse 9(6) | JP Morgan | SOFR + | 110,000 | 110,000 | 06/21/27 |
Quarry Place at Tuckahoe | Natixis Real Estate Capital, LLC | 4.48 % | 41,000 | 41,000 | 08/05/27 |
BLVD 475 | The Northwestern Mutual Life Insurance Co. | 2.91 % | 165,000 | 165,000 | 11/10/27 |
Haus25(7) | Freddie Mac | 6.04 % | 343,061 | 297,324 | 09/01/28 |
RiverHouse 11 | The Northwestern Mutual Life Insurance Co. | 4.52 % | 100,000 | 100,000 | 01/10/29 |
Soho Lofts | New York Community Bank | 3.77 % | 158,777 | 160,000 | 07/01/29 |
Port Imperial Garage South | American General Life & A/G PC | 4.85 % | 31,645 | 32,166 | 12/01/29 |
The Emery | New York Community Bank | 3.21 % | 72,000 | 72,000 | 01/01/31 |
Principal Balance Outstanding | |||||
Unamortized Deferred Financing Costs | (15,086) | (7,511) | |||
Total Secured Permanent Loans | |||||
Secured RCF & Term Loans: | |||||
Revolving Credit Facility(8) | JP Morgan & Goldman Sachs | SOFR + | $— | $— | 07/25/24 |
Term Loan(8) | JP Morgan & Goldman Sachs | SOFR + | — | — | 07/25/24 |
Total RCF & Term Loan Debt | $— | $— | |||
Total Debt | |||||
See Debt Profile Footnotes.
Debt Summary and Maturity Schedule
($ in thousands) | ||||
Balance | % of Total | Weighted Average Interest Rate | Weighted Average Maturity in Years | |
Fixed Rate & Hedged Debt | ||||
Fixed Rate & Hedged Secured Debt | 100.0 % | 4.34 % | 3.5 | |
Variable Rate Debt1 | ||||
Variable Rate Debt | — | — % | — % | — |
Totals / Weighted Average | 100.0 % | 4.34 % | 3.5 | |
Unamortized Deferred Financing Costs | (15,086) | |||
Total Consolidated Debt, net | ||||
Partners' Share | (73,316) | |||
VRE Share of Total Consolidated Debt, net2 | ||||
Unconsolidated Secured Debt | ||||
VRE Share | 53.0 % | 4.83 % | 4.6 | |
Partners' Share | 272,462 | 47.0 % | 4.83 % | 4.6 |
Total Unconsolidated Secured Debt | 100.0 % | 4.83 % | 4.6 | |
Pro Rata Debt Portfolio | ||||
Fixed Rate & Hedged Secured Debt | 99.9 % | 4.46 % | 3.7 | |
Variable Rate Secured Debt | 1,517 | 0.1 % | 7.31 % | 1.0 |
Total Pro Rata Debt Portfolio | 100.0 % | 4.47 % | 3.7 | |
_____________________________________________ |
1 Variable rate debt includes the Revolver and reflects the balances on the Revolver and Term Loan. |
2 Minority interest share of consolidated debt is comprised of |
Pro Forma Debt Portfolio Reconciliation | |
4Q 2023 | |
Total Consolidated Debt, net on 12/31 | |
Partners Share of Consolidated Debt on 12/31 | (73,316) |
VRE Share of Consolidated Debt on 12/31 | |
VRE Share of Total Unconsolidated Debt on 12/31 | 307,279 |
Metropolitan Lofts Sale (VRE Share of Debt Extinguishment) | (8,601) |
VRE Share of Unconsolidated Secured Debt | |
Total Pro Rata Debt Portfolio | |
Annex 1: Transaction Activity | |||||
2023 | |||||
$ in thousands except per SF | |||||
Location | Transaction Date | Number of Buildings | SF | Gross Asset Value | |
Hotels | |||||
Port Imperial Hotels | 2/10/2023 | 2 | N/A | ||
Subtotal Hotels | 2 | ||||
Office | |||||
Harborside 1, 2, & 3 | 4/04/2023 | 3 | 1,886,800 | ||
Harborside 6 | 9/13/2023 | 1 | 231,856 | 46,000 | |
23 Main Street | 10/13/2023 | 1 | 350,000 | 17,500 | |
Subtotal Office | 5 | 2,468,656 | |||
Land | |||||
101 Columbia Rd. | 3/17/2023 | N/A | N/A | ||
Harborside 4 | 10/05/2023 | N/A | N/A | 58,000 | |
3 Campus Drive | 10/12/2023 | N/A | N/A | 13,500 | |
Subtotal Land | |||||
2023 Total Dispositions | |||||
2024 Dispositions to Date | |||||
$ in thousands except per SF | |||||
Location | Transaction Date | Number of | SF | Gross Asset Value | |
Land | |||||
2 Campus Drive | 1/3/2024 | N/A | N/A | ||
Subtotal Land | |||||
Multifamily | |||||
Metropolitan Lofts1 | 1/12/2024 | 1 | 54,683 | ||
Subtotal Multifamily | 1 | 54,683 | |||
2024 Dispositions to Date | |||||
______________________________________________ |
1 The joint venture sold releasing approximately |
Annex 2: Reconciliation of Net Income (Loss) to NOI (three months ended) | ||||||||
4Q 2023 | 3Q 2023 | |||||||
Multifamily | Office / Corp | Disc. Ops | Total | Multifamily | Office / Corp | Total | ||
Net loss | $— | |||||||
Deduct: | ||||||||
Real estate services income | (1,084) | — | — | (1,084) | (1,230) | — | (1,230) | |
Interest and other investment loss (income) | (1) | (231) | — | (232) | (1) | (1,239) | (1,240) | |
Equity in (earnings) loss of unconsolidated joint ventures | (260) | — | — | (260) | (210) | — | (210) | |
Realized and unrealized (gains) losses on dispositions | — | (4,697) | 4,700 | 3 | — | — | — | |
(Gain) loss on disposition of developable land | (1,690) | (44,671) | 39,271 | (7,090) | — | — | — | |
Loss from early extinguishment of debt, net | — | 1,903 | — | 1,903 | 1,046 | — | 1,046 | |
Other Income | — | (77) | — | (77) | — | 57 | 57 | |
Add: | ||||||||
Real estate services expenses | 3,025 | 1,298 | — | 4,323 | 2,106 | 1,427 | 3,533 | |
General and administrative | 437 | 9,555 | — | 9,992 | 327 | 14,293 | 14,620 | |
Transaction-related costs | 132 | 444 | — | 576 | — | 2,704 | 2,704 | |
Depreciation and amortization | 20,943 | 2,103 | 23,046 | 21,115 | 2,097 | 23,212 | ||
Interest expense | 21,568 | 365 | — | 21,933 | 57,664 | 2,443 | 60,107 | |
Provision for income taxes | 11 | 188 | — | 199 | 45 | 248 | 293 | |
Property impairments | — | 32,516 | — | 32,516 | — | — | — | |
Land and other impairments, net | 5,928 | — | — | 5,928 | — | — | — | |
Net operating income (NOI) | ||||||||
Summary of Consolidated Multifamily NOI by Type (unaudited): | 4Q 2023 | 3Q 2023 |
Total Consolidated Multifamily - Operating Portfolio | ||
Total Consolidated Commercial | ||
Total NOI from Consolidated Properties (excl. unconsolidated JVs/subordinated interests) | ||
NOI (loss) from services, land/development/repurposing & other assets | ||
Total Consolidated Multifamily NOI |
See Consolidated Statement of Operations.
See Non GAAP Financial Definitions.
Annex 3: Consolidated Statement of Operations Footnotes
FFO, Core FFO, AFFO, NOI, Adjusted EBITDA, & EBITDAre | |
(1) | Includes the Company's share from unconsolidated joint ventures, and adjustments for noncontrolling interest of |
(2) | Funds from operations is calculated in accordance with the definition of FFO of the National Association of Real Estate Investment Trusts (Nareit). See Non-GAAP Financial Definitions for information About FFO, Core FFO, AFFO, NOI, Adjusted EBITDA & EBITDAre. |
(3) | Includes free rent of |
(4) | Excludes expenditures for tenant spaces in properties that have not been owned by the Company for at least a year and excludes Collector`s Universe. |
(5) | Net Debt calculated by taking the sum of senior unsecured notes, unsecured revolving credit facility, and mortgages, loans payable and other obligations, and deducting cash and cash equivalents and restricted cash, all at period end. |
(6) | Calculated based on weighted average common shares outstanding, assuming redemption of Operating Partnership common units into common shares 8,420 and 8,656 shares for the three months ended December 31, 2023 and 2022, respectively, and 8,669 and 8,639 for the twelve months ended December 31, 2023 and 2022, respectively, plus dilutive Common Stock Equivalents (i.e. stock options). |
See Consolidated Statement of Operations.
Annex 4: Detailed Consolidated Statement of Operations (Year-End) | |||||||
Twelve Months Ended December 31, 2023 | Twelve Months Ended December 31, 2022 | ||||||
REVENUES | All Operations | Less: Disc. Ops | Total | All Operations | Less: Disc. Ops | Total | |
Revenue from leases | |||||||
Real estate services | 3,868 | — | 3,868 | 3,581 | — | 3,581 | |
Parking income | 18,942 | (906) | 18,036 | 18,556 | (2,737) | 15,819 | |
Hotel income | 594 | (594) | — | 15,506 | (15,506) | — | |
Other income | 5,668 | 143 | 5,811 | 33,314 | (25,318) | 7,996 | |
Total revenues | 300,945 | (21,086) | 279,859 | 360,990 | (127,542) | 233,448 | |
EXPENSES | |||||||
Real estate taxes | 45,531 | (4,721) | 40,810 | 59,235 | (20,123) | 39,112 | |
Utilities | 11,033 | (1,111) | 9,922 | 14,343 | (5,422) | 8,921 | |
Operating services | 63,693 | (5,768) | 57,925 | 78,589 | (25,792) | 52,797 | |
Real estate services expenses | 14,188 | — | 14,188 | 10,549 | — | 10,549 | |
General and administrative | 44,521 | (49) | 44,472 | 56,176 | (162) | 56,014 | |
Transaction-related costs | 7,627 | — | 7,627 | 3,468 | — | 3,468 | |
Depreciation and amortization | 99,075 | (5,486) | 93,589 | 112,408 | (26,974) | 85,434 | |
Property Impairments | 32,516 | — | 32,516 | 94,811 | (94,811) | — | |
Land and other impairments, net | 9,324 | — | 9,324 | 9,368 | — | 9,368 | |
Total expenses | 327,508 | (17,135) | 310,373 | 438,947 | (173,284) | 265,663 | |
Operating income (expense) | (26,563) | (3,951) | (30,514) | (77,957) | 45,742 | (32,215) | |
OTHER (EXPENSE) INCOME | |||||||
Interest expense | (90,177) | 822 | (89,355) | (78,040) | 11,659 | (66,381) | |
Interest cost of mandatorily redeemable noncontrolling interests | (49,782) | — | (49,782) | — | — | — | |
Interest and other investment income (loss) | 5,548 | (33) | 5,515 | 729 | — | 729 | |
Equity in earnings (loss) of unconsolidated joint ventures | 3,102 | — | 3,102 | 1,200 | — | 1,200 | |
Realized gains (losses) and unrealized gains (losses) on disposition of rental property, net | 2,411 | (2,411) | — | 61,676 | (61,676) | — | |
Gain (loss) on disposition of developable land | 46,339 | (39,271) | 7,068 | 57,262 | — | 57,262 | |
Gain (loss) on sale of unconsolidated joint venture interests | — | — | — | 7,677 | (7,677) | — | |
Gain (loss) from extinguishment of debt, net | (5,618) | 12 | (5,606) | (7,432) | 7,303 | (129) | |
Other Income, net | 2,871 | — | 2,871 | — | — | — | |
Total other income (expense), net | (85,306) | (40,881) | (126,187) | 43,072 | (50,391) | (7,319) | |
Loss from continuing operations before income tax expense | (111,869) | (44,832) | (156,701) | (34,885) | (4,649) | (39,534) | |
Provision for income taxes | (492) | — | (492) | — | — | — | |
Income from continuing operations after income tax expense | (112,361) | (44,832) | (157,193) | (34,885) | (4,649) | (39,534) | |
Income (loss) from discontinued operations | — | 3,150 | 3,150 | — | (64,704) | (64,704) | |
Realized gains (losses) and unrealized gains (losses) on disposition of rental property and impairments, net | — | 41,682 | 41,682 | — | 69,353 | 69,353 | |
Total discontinued operations | — | 44,832 | 44,832 | — | 4,649 | 4,649 | |
Net Loss | (112,361) | — | (112,361) | (34,885) | — | (34,885) | |
Noncontrolling interests in consolidated joint ventures | 2,319 | — | 2,319 | 3,079 | — | 3,079 | |
Noncontrolling interests in Operating Partnership of income from continuing operations | 14,267 | — | 14,267 | 5,652 | — | 5,652 | |
Noncontrolling interests in Operating Partnership in discontinued operations | (3,872) | — | (3,872) | (378) | — | (378) | |
Redeemable noncontrolling interests | (7,618) | — | (7,618) | (25,534) | — | (25,534) | |
Net loss available to common shareholders | $— | $— | |||||
See Consolidated Statement of Operations.
Annex 5: Core FFO per Diluted Share | |||||
Three Months Ended September 30, | Twelve Months Ended December 31, | ||||
2023 | 2022 | 2023 | 2022 | ||
Net income (loss) available to common shareholders | |||||
Add (deduct): Noncontrolling interests in Operating Partnership | (0.04) | (0.03) | (0.14) | (0.06) | |
Noncontrolling interests in discontinued operations | 0.04 | 0.06 | 0.04 | — | |
Real estate-related depreciation and amortization on continuing operations | 0.25 | 0.26 | 1.02 | 0.95 | |
Real estate-related depreciation and amortization on discontinued operations | — | 0.05 | 0.05 | 0.26 | |
Property impairments on continuing operations | 0.32 | — | 0.32 | — | |
Property impairments on discontinued operations | — | 0.10 | — | 0.95 | |
Discontinued operations: Gain on sale from unconsolidated joint ventures | — | (0.08) | — | (0.08) | |
Discontinued operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net | (0.05) | (0.69) | (0.02) | (0.61) | |
FFO | |||||
Add/(Deduct): | |||||
Loss from extinguishment of debt, net | 0.02 | 0.01 | 0.06 | 0.07 | |
Land and other impairments | 0.06 | — | 0.09 | 0.09 | |
Loss (gain) on disposition of developable land | (0.46) | — | (0.46) | (0.56) | |
Rebranding and Severance/Compensation related costs (G&A) | — | 0.02 | 0.07 | 0.14 | |
Rebranding and Severance/Compensation related costs (RE Services) | 0.01 | — | 0.01 | — | |
Rebranding and Severance/Compensation related costs (Operating Services) | — | — | 0.01 | — | |
Rockpoint buyout premium | — | — | 0.34 | — | |
Redemption value adjustment to mandatorily redeemable noncontrolling interests | — | — | 0.08 | — | |
Lease breakage fee, net | — | — | — | (0.23) | |
Amortization of derivative premium | 0.01 | — | 0.05 | — | |
Transaction related costs | 0.01 | 0.03 | 0.07 | 0.04 | |
Core FFO | |||||
See FFO and Core FFO.
See Non GAAP Financial Definitions.
Annex 6: Unconsolidated Joint Ventures | |||||||
($ in thousands) | |||||||
Property | Units | Physical Occupancy | VRE's Nominal Ownership1 | 4Q 2023 NOI2 | Total Debt | VRE Share of 4Q NOI | VRE Share of Debt |
Multifamily | |||||||
Urby Harborside | 762 | 92.3 % | 85.0 % | ||||
RiverTrace at Port Imperial | 316 | 95.6 % | 22.5 % | 2,184 | 82,000 | 491 | 18,450 |
Capstone at Port Imperial | 360 | 95.0 % | 40.0 % | 2,973 | 135,000 | 1,189 | 54,000 |
Riverpark at | 141 | 92.2 % | 45.0 % | 577 | 30,192 | 260 | 13,586 |
Metropolitan at 40 Park3 | 130 | 95.4 % | 25.0 % | 721 | 34,100 | 180 | 8,525 |
Metropolitan Lofts4 | 59 | 94.4 % | 50.0 % | 319 | 17,200 | 160 | 8,600 |
Station House | 378 | 92.1 % | 50.0 % | 1,713 | 89,440 | 857 | 44,720 |
Total Multifamily | 2,146 | 93.4 % | 54.9 % | ||||
Retail | |||||||
Shops at 40 Park | N/A | 69.0 % | 25.0 % | 6,067 | 67 | 1,517 | |
Total Retail | N/A | 69.0 % | 25.0 % | ||||
Total UJV | |||||||
_________________________________________________ | |
1 | Amounts represent the Company`s share based on ownership percentage. |
2 | The sum of property level revenue, straight line and ASC 805 adjustments; less: operating expenses, real estate taxes and utilities. |
3 | The Company paid down the loan balance |
4 | On January 12, 2024, the joint venture was sold for a gross valuation of approximately |
See Non GAAP Financial Definitions.
Annex 7: Debt Profile Footnotes
- Effective rate of debt, including deferred financing costs, comprised of the cost of terminated treasury lock agreements (if any), debt initiation costs, mark-to-market adjustment of acquired debt and other transaction costs, as applicable.
- Port Imperial Hotels sold on February 10, 2023.
- In August 2023, the fixed rate Freddie Mac loan on Portside at East Pier was refinanced and placed a 3- year SOFR cap at a strike rate of
3.5% . - The Upton loan has been capped at a strike rate of
1.0% , expiring in October 2024. - In September 2023, the Company placed a 9 month SOFR cap at a strike rate of
4.0% on the loan at 145 Front at City Square. - The loan on RiverHouse 9 is capped at a strike rate of
3.0% , expiring in June 2024. - In August 2023, the Company fully repaid its construction loan on Haus25 with a new permanent financing provided by Freddie Mac. The balance shown as of December 31, 2022 (
$297M - In July 2023, the Company purchased Rockpoint`s interest in the Company. Concurrently, the Company entered into a
$175 million $115 million $52 million
See Debt Profile.
Annex 8: Multifamily Property Information | ||||||
Location | Ownership | Apartments | Rentable SF | Average Size | Year Complete | |
NJ Waterfront | ||||||
Haus25 | 100.0 % | 750 | 617,787 | 824 | 2022 | |
Liberty Towers | 100.0 % | 648 | 602,210 | 929 | 2003 | |
BLVD 401 | 74.3 % | 311 | 273,132 | 878 | 2016 | |
BLVD 425 | 74.3 % | 412 | 369,515 | 897 | 2003 | |
BLVD 475 | 100.0 % | 523 | 475,459 | 909 | 2011 | |
Soho Lofts | 100.0 % | 377 | 449,067 | 1,191 | 2017 | |
Urby Harborside | 85.0 % | 762 | 474,476 | 623 | 2017 | |
RiverHouse 9 | 100.0 % | 313 | 245,127 | 783 | 2021 | |
RiverHouse 11 | 100.0 % | 295 | 250,591 | 849 | 2018 | |
RiverTrace | 22.5 % | 316 | 295,767 | 936 | 2014 | |
Capstone | 40.0 % | 360 | 337,991 | 939 | 2021 | |
NJ Waterfront Subtotal | 85.0 % | 5,067 | 4,391,122 | 867 | ||
Portside at East Pier | 100.0 % | 181 | 156,091 | 862 | 2015 | |
Portside 2 at East Pier | 100.0 % | 296 | 230,614 | 779 | 2018 | |
145 Front at City Square | 100.0 % | 365 | 304,936 | 835 | 2018 | |
The Emery | 100.0 % | 326 | 273,140 | 838 | 2020 | |
Massachusetts Subtotal | 100.0 % | 1,168 | 964,781 | 826 | ||
Other | ||||||
The | 100.0 % | 193 | 217,030 | 1,125 | 2021 | |
The James | 100.0 % | 240 | 215,283 | 897 | 2021 | |
Signature Place | 100.0 % | 197 | 203,716 | 1,034 | 2018 | |
Quarry Place at Tuckahoe | 100.0 % | 108 | 105,551 | 977 | 2016 | |
Riverpark at | 45.0 % | 141 | 124,774 | 885 | 2014 | |
Metropolitan at 40 Park | 25.0 % | 130 | 124,237 | 956 | 2010 | |
Metropolitan Lofts | 50.0 % | 59 | 54,683 | 927 | 2018 | |
Station House | 50.0 % | 378 | 290,348 | 768 | 2015 | |
Other Subtotal | 72.8 % | 1,446 | 1,335,622 | 924 | ||
Operating Portfolio | 85.0 % | 7,681 | 6,691,525 | 871 | ||
See Multifamily Operating Portfolio.
Non-GAAP Financial Definitions
NON-GAAP FINANCIAL MEASURES
Included in this financial package 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, and EBIDAre or Earnings Before Interest, Taxes, Depreciation, Amortization and Rent Costs, each a "non-GAAP financial measure," measuring Veris Residential, Inc.'s historical or future financial performance that is different from measures calculated and presented in accordance with generally accepted accounting principles ("
Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (Adjusted "EBITDA")
The Company defines Adjusted EBITDA as Core FFO, plus interest expense, plus income tax expense, plus income (loss) in noncontrolling interest in consolidated joint ventures, and plus adjustments to reflect the entity's share of Adjusted EBITDA of unconsolidated joint ventures. The Company presents Adjusted EBITDA because the Company believes that Adjusted EBITDA, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of the Company's ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company's financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company's liquidity.
Blended Net Rental Growth Rate or Blended Lease 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.
Core FFO and Adjusted FFO ("AFFO")
Core FFO is defined as FFO, as adjusted for certain items to facilitate comparative measurement of the Company's performance over time. Adjusted FFO ("AFFO") is defined as Core FFO less (i) recurring tenant improvements, leasing commissions, and capital expenditures, (ii) straight-line rents and amortization of acquired above/below market leases, net, and (iii) other non-cash income, plus (iv) other non-cash charges. Core FFO and Adjusted AFFO are 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 and Adjusted FFO are non-GAAP financial measures that are not intended to represent cash flow and are 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 and Adjusted FFO, the Company's measures of Core FFO may not be comparable to the Core FFO and Adjusted FFO reported by other REITs. A reconciliation of net income per share to Core FFO and Adjusted FFO in dollars and per share are included in the financial tables accompanying this press release.
Earnings Before Interest, Tax, Depreciation, Amortization, and Rent Costs ("EBITDAre")
The Company computes EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts, or Nareit, which may not be comparable to EBITDAre reported by other REITs that do not compute EBITDAre in accordance with the Nareit definition, or that interpret the Nareit definition differently than the Company does. The White Paper on EBITDAre approved by the Board of Governors of Nareit in September 2017 defines EBITDAre as net income (loss) (computed in accordance with Generally Accepted Accounting Principles, or GAAP), plus interest expense, plus income tax expense, plus depreciation and amortization, plus (minus) losses and gains on the disposition of depreciated property, plus impairment write-downs of depreciated property and investments in unconsolidated joint ventures, plus adjustments to reflect the entity's share of EBITDAre of unconsolidated joint ventures. The Company presents EBITDAre, because the Company believes that EBITDAre, along with cash flow from operating activities, investing activities and financing activities, provides investors with an additional indicator of the Company's ability to incur and service debt. EBITDAre should not be considered as an alternative to net income (determined in accordance with GAAP), as an indication of the Company's financial performance, as an alternative to net cash flows from operating activities (determined in accordance with GAAP), or as a measure of the Company's liquidity.
Funds From Operations ("FFO")
FFO is defined as net income (loss) before noncontrolling interests in Operating Partnership, computed in accordance with
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 National Association of Real Estate Investment Trusts ("Nareit"). A reconciliation of net income per share to FFO 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.
Company Information
Company Information | ||
Corporate Headquarters | Stock Exchange Listing | Contact Information |
Veris Residential, Inc. | New York Stock Exchange | Veris Residential, Inc. |
210 Hudson St., Suite 400 | Investor Relations Department | |
Trading Symbol | 210 Hudson St., Suite 400 | |
(732) 590-1010 | Common Shares: VRE | |
Anna Malhari | ||
Chief Operating Officer | ||
E-Mail: amalhari@verisresidential.com | ||
Web: www.verisresidential.com | ||
Executive Officers | ||
Mahbod Nia | Amanda Lombard | Taryn Fielder |
Chief Executive Officer | Chief Financial Officer | General Counsel and Secretary |
Anna Malhari | Jeff Turkanis | |
Chief Operating Officer | EVP & Chief Investment Officer | |
Equity Research Coverage | ||
Bank of America Merrill Lynch | BTIG, LLC | Citigroup |
Josh Dennerlein | Thomas Catherwood | Nicholas Joseph |
Evercore ISI | Green Street Advisors | JP Morgan |
Steve Sakwa | John Pawlowski | Anthony Paolone |
Truist | ||
Michael R. Lewis |
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SOURCE Veris Residential, Inc.
FAQ
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