Veris Residential, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Real Estate Transactions (Tables)

Real Estate Transactions (Tables)

12 Months Ended

Dec. 31, 2014



		Andover
		Place
Land	$	8,535
Buildings and improvements		27,609
Furniture, fixtures and equipment		459
In-place lease values (1)		1,118
		37,721

Less: Below market lease values (1)		(25)

Net cash paid at acquisition	$	37,696

(1)In-place lease values and below market lease values will be amortized over one year or less.

Schedule Of Property Sales

2014

The Company sold the following office properties during the year ended December 31, 2014 (dollars in thousands):



				Rentable		Net		Net
Sale			# of	Square		Sales		Book		Realized
Date	Property/Address	Location	Bldgs.	Feet		Proceeds		Value		Gain
04/23/14	22 Sylvan Way	Parsippany, New Jersey	1	249,409	$	94,897	$	60,244	$	34,653
06/23/14	30 Knightsbridge Road (a)	Piscataway, New Jersey	4	680,350		54,641		52,361		2,280
06/23/14	470 Chestnut Ridge Road (a) (b)	Woodcliff Lake, New Jersey	1	52,500		7,195		7,109		86
06/23/14	530 Chestnut Ridge Road (a) (b)	Woodcliff Lake, New Jersey	1	57,204		6,299		6,235		64
06/27/14	400 Rella Boulevard	Suffern, New York	1	180,000		27,539		10,938		16,601
06/30/14	412 Mount Kemble Avenue (a)	Morris Township, New Jersey	1	475,100		44,751		43,851		900
07/29/14	17-17 Route 208 North (a) (b)	Fair Lawn, New Jersey	1	143,000		11,835		11,731		104
08/20/14	555, 565, 570 Taxter Road (a)	Elmsford, New York	3	416,108		41,057		41,057		-
08/20/14	200, 220 White Plains Road (a)	Tarrytown, New York	2	178,000		12,619		12,619		-
08/20/14	1266 East Main Street (a) (b)	Stamford, Connecticut	1	179,260		18,406		18,246		160

Totals			16	2,610,931	$	319,239	$	264,391	$	54,848

(a)The Company completed the sale of these properties for approximately $221 million, comprised of: $192.5 million in cash from a combination of affiliates of Keystone Property Group’s (“Keystone Entities”) senior and pari-passu equity and mortgage financing; Company subordinated equity interests in each of the properties sold with capital accounts aggregating $21.2 million; and Company pari-passu equity interests in five of the properties sold aggregating $7.3 million. Net sale proceeds from the sale aggregated $196.8 million which was comprised of the $221 million gross sales price less the subordinated equity interests of $21.2 million and $3 million in closing costs. The purchasers of these properties are unconsolidated joint ventures formed between the Company and the Keystone Entities. The senior and pari-passu equity will receive a 15 percent internal rate of return (“IRR”) after which the subordinated equity will receive a 10 percent IRR and then all distributable cash flow will be split equally between the Keystone Entities and the Company. See Note 4: Investments in Unconsolidated Joint Ventures. In connection with certain of these partial sale transactions, because the buyer received a preferential return on certain of the ventures for which the Company received subordinated equity interests, the Company only recognized profit to the extent that they received net proceeds in excess of their entire carrying value of the properties, effectively reflecting their retained subordinated equity interest at zero.

(b)The Company recorded an impairment charge of $20.8 million on these properties at December 31, 2013 as it estimated that the carrying value of the properties may not be recoverable over their anticipated holding periods.

2013

The Company sold the following office properties during the year ended December 31, 2013, which were classified as discontinued operations – See Note 7: Discontinued Operations (dollars in thousands):



				Rentable		Net			Net
Sale			# of	Square		Sales			Book		Realized
Date	Property/Address	Location	Bldgs.	Feet		Proceeds			Value		Gain (loss)
04/10/13	19 Skyline Drive (a)	Hawthorne, New York	1	248,400	$	16,131		$	16,005	$	126
04/26/13	55 Corporate Drive	Bridgewater, New Jersey	1	204,057		70,967			51,308		19,659
05/02/13	200 Riser Road	Little Ferry, New Jersey	1	286,628		31,775			14,852		16,923
05/13/13	777 Passaic Avenue	Clifton, New Jersey	1	75,000		5,640			3,713		1,927
05/30/13	16 and 18 Sentry Parkway West (b)	Blue Bell, Pennsylvania	2	188,103		19,041			19,721		(680)
05/31/13	51 Imclone Drive (c)	Branchburg, New Jersey	1	63,213		6,101			5,278		823
06/28/13	40 Richards Avenue	Norwalk, Connecticut	1	145,487		15,858			17,027		(1,169)
07/10/13	106 Allen Road	Bernards Township, New Jersey	1	132,010		17,677			15,081		2,596
08/27/13	Pennsylvania office portfolio (d) (e)	Suburban Philadelphia, Pennsylvania	15	1,663,511		207,425			164,259		43,166

Totals			24	3,006,409	$	390,615	(f)	$	307,244	$	83,371	(g)

(a)

The Company recognized a valuation allowance of $7.1 million on this property identified as held for sale at December 31, 2012. In connection with the sale, the Company provided an interest-free note receivable to the buyer of $5 million (with a net present value of $3.7 million at closing) which matures in 2023 and requires monthly payments of principal. See Note 5: Deferred charges, goodwill and other assets.

(b)

The Company recorded an $8.4 million impairment charge on these properties at December 31, 2012. The Company has retained a subordinated interest in these properties.

(c)

The property was encumbered by a mortgage loan which was satisfied by the Company at the time of the sale. The Company incurred $0.7 million in costs for the debt satisfaction, which was included in discontinued operations: loss from early extinguishment of debt for the year ended December 31, 2013.

(d)

In order to reduce the carrying value of five of the properties to their estimated fair market values, the Company recorded impairment charges of $23,851,000 at June 30, 2013. The fair value used in the impairment charges was based on the purchase and sale agreement for the properties ultimately sold.

(e)

The Company completed the sale of this office portfolio and three developable land parcels for approximately $233 million: $201 million in cash ($55.3 million of which was held by a qualified intermediary until such funds were used in acquisitions), a $10 million mortgage on one of the properties ($8 million of which was funded at closing) and subordinated equity interests in each of the properties being sold with capital accounts aggregating $22 million. Net sale proceeds from the sale aggregated $207 million which was comprised of the $233 million gross sales price less the subordinated equity interests of $22 million and $4 million in closing costs. The purchasers of the Pennsylvania office portfolio are joint ventures formed between the Company and affiliates of the Keystone Property Group (the “Keystone Affiliates”). The mortgage loan has a term of two years with a one year extension option and bears interest at LIBOR plus six percent. The Company's equity interests in the joint ventures will be subordinated to Keystone Affiliates receiving a 15 percent internal rate of return (“IRR”) after which the Company will receive a ten percent IRR on its subordinated equity and then all profit will be split equally. In connection with these partial sale transactions, because the buyer receives a preferential return, the Company only recognized profit to the extent that they received net proceeds in excess of their entire carrying value of the properties, effectively reflecting their retained subordinate equity interest at zero. As part of the transaction, the Company has rights to own, after zoning-approval-subdivision, land at the 150 Monument Road property located in Bala Cynwyd, Pennsylvania, for a contemplated multi-family residential development.

(f)

This amount excludes approximately $535,000 of net closing prorations and related adjustments received from sellers at closing.

(g)

This amount, net of impairment charges recorded in 2013 of $23,851,000 on certain of the properties prior to their sale (per Note [d] above), comprises the $59,520,000 of realized gains (losses) and unrealized losses on disposition of rental property and impairments, net, for the year ended December 31, 2013. See Note 7: Discontinued Operations.

Summary Of Income From Property Held For Sale



		Alterra		Alterra
		at Overlook		at Overlook		Park		Richmond		Riverwatch		Total
		Ridge 1A		Ridge 1B		Square		Court		Commons		Acquisitions
Land	$	9,042	$	12,055	$	4,000	$	2,992	$	4,169	$	32,258
Buildings and improvements		50,671		71,409		40,670		13,534		18,974		195,258
Furniture, fixtures and equipment		801		1,474		610		177		228		3,290
Above market leases (1)		-		-		24		-		-		24
In-place lease values (1)		931		3,148		1,249		356		638		6,322
		61,445		88,086		46,553		17,059		24,009		237,152

Less: Below market lease values (1)		195		136		177		36		49		593
		195		136		177		36		49		593

Net cash paid at acquisition	$	61,250	$	87,950	$	46,376	$	17,023	$	23,960	$	236,559

(1)In-place lease values and above/below market lease values will be amortized over one year or less.

Summary Of Income From Properties Sold



	Year Ended December 31,
		2013		2012
Total revenues	$	33,601	$	66,882
Operating and other expenses		(13,454)		(26,484)
Depreciation and amortization		(8,218)		(17,765)
Interest expense		(118)		(755)

Income from discontinued operations		11,811		21,878

Loss from early extinguishment of debt		(703)		-
Impairments (1)		(23,851)		(8,400)

Unrealized losses on disposition of rental property (2)		-		(9,213)
Realized gains on disposition of rental property		83,371		4,438
Realized gains (losses) and unrealized losses on
disposition of rental property and impairments, net		59,520		(13,175)

Total discontinued operations, net	$	70,628	$	8,703

(1)Represents impairment charges recorded on certain properties prior to their sale.

(2)Represents valuation allowances on properties identified as held for sale in 2012, as follows:

(i)

At March 31, 2012, the Company identified as held for sale its 47,700 square foot office building located at 95 Chestnut Ridge Road in Montvale, New Jersey. The Company determined that the carrying amount of this property was not expected to be recovered from estimated net sales proceeds and, accordingly, recognized a valuation allowance of $0.5 million at March 31, 2012. On July 25, 2012, the Company sold the building for approximately $4.0 million (with no gain from the sale).

(ii)

At March 31, 2012, the Company identified as held for sale three office buildings totaling 222,258 square feet in Moorestown, New Jersey. The Company determined that the aggregate carrying amount of these properties was not expected to be recovered from estimated net sales proceeds and, accordingly, recognized a valuation allowance of $1.6 million at June 30, 2012. On November 7, 2012, the Company sold the buildings for approximately $19.4 million and recognized a loss of approximately $0.1 million from the sale.

(iii)

At December 31, 2012, the Company identified as held for sale its 248,400 square foot office building located at 19 Skyline Drive in Hawthorne, New York. The Company determined that the carrying amount of this property was not expected to be recovered from estimated sales proceeds and accordingly recognized a valuation allowance of $7.1 million at December 31, 2012. Also at December 31, 2012, the Company identified as held for sale its 204,057 square foot office building located at 55 Corporate Drive in Bridgewater, New Jersey. The two properties held for sale at December 31, 2012 carried an aggregate book value of $60.9 million, net of accumulated depreciation of $16.8 million and a valuation allowance of $7.1 million. As of April 10, 2013, the Company sold 19 Skyline Drive for approximately $16.1 million and recognized a gain of approximately $0.1 million. As of April 26, 2013, the Company sold 55 Corporate Drive for approximately $71 million and recognized a gain of approximately $19.7 million.

Schedule Of Properties Acquired



Acquisition			# of	# of		Acquisition
Date	Property	Location	Properties	Apartment Units		Cost
01/18/13	Alterra at Overlook Ridge 1A	Revere, Massachusetts	1	310	$	61,250	(a)
04/04/13	Alterra at Overlook Ridge 1B	Revere, Massachusetts	1	412		87,950	(a)
11/20/13	Park Square	Rahway, New Jersey	1	159		46,376	(b)
12/19/13	Richmond Ct / Riverwatch Commons	New Brunswick, New Jersey	2	200		40,983	(c)

Total Acquisitions			5	1,081	$	236,559

(a)The acquisition cost was funded primarily through borrowings under the Company’s unsecured revolving credit facility.

(b)The acquisition cost consisted of $43,421,000 in cash consideration and future purchase price earn out payment obligations, subsequent to conditions related to a real estate tax appeal, recorded at fair value of $2,955,000 at closing. $42,613,355 of the cash consideration was funded from funds held by a qualified intermediary, which were proceeds from the Company’s prior property sales. The remaining cash consideration was funded primarily from available cash on hand. $2,550,000 of the earn-out obligation amount was paid in January 2014, with the remaining balance of $405,000 still potentially payable in the future.

(c)$12,701,925 of the acquisition cost was funded from funds held by a qualified intermediary, which were proceeds from the Company’s prior property sales. The remaining acquisition cost was funded primarily from available cash on hand.

Schedule Of Net Assets Recorded Upon Consolidation



Land	$	5,585
Construction in progress		3,387
		8,972
Cash and cash equivalents		79
Other assets		47
Accounts payable		(325)
		(199)

Noncontrolling interest recorded upon consolidation		(1,252)

Net assets recorded upon consolidation	$	7,521

Schedule Of Properties Which Commenced Initial Operations

Garage

Development

# of

Rentable

Parking

Costs Incurred

Costs Per

Date

Property/Address

Location

Type

Bldgs.

Square Feet

Spaces

by Company

Square Foot

06/05/13

14 Sylvan Way

Parsippany, New Jersey

Office

203,506

51,611

(a)

254

08/01/13

Port Imperial South 4/5

Weehawken, New Jersey

Parking/Retail

16,736

850

50,656

(b)

N/A

Totals

220,242

850

102,267

(a)Development costs included approximately $13.0 million in land costs and $4.3 million in leasing costs. Amounts are as of December 31, 2013.

(b)Development costs included approximately $13.1 million in land costs. Amounts are as of December 31, 2013.

Properties Sold, Year To Date [Member]

Real Estate Properties [Line Items]

Summary Of Income From Properties Sold



	Year Ended December 31,
		2014		2013		2012
Total revenues	$	28,823	$	55,677	$	54,753
Operating and other expenses		(17,248)		(27,993)		(25,142)
Depreciation and amortization		(6,371)		(15,061)		(14,522)
Interest income		4		-		(615)

Income from properties sold	$	5,208	$	12,623	$	14,474

Impairments		-		(20,761)		-
Realized gains (losses) on sales, net		54,848		-		-

Total income (loss) from properties sold	$	60,056	$	(8,138)	$	14,474

- Definition

Tabular disclosure of disposal groups, which may include the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the classification and carrying value of the assets and liabilities comprising the disposal group, and the segment in which the disposal group was reported. Also may include the amount of adjustments to amounts previously reported in discontinued operations such as resolution of contingencies arising from the disposal transaction or the operations of the component prior to disposal.

+ References + Details