Veris Residential, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

RECENT TRANSACTIONS

RECENT TRANSACTIONS

6 Months Ended

Jun. 30, 2022

Acquisition

On March 16, 2022, the Company agreed to acquire a 240-apartment unit multifamily property in Park Ridge, New Jersey, for a purchase price of $129.6 million. The transaction closed on July 21, 2022.

Properties Commencing Initial Operations

The following property commenced initial operations during the six months ended June 30, 2022 (dollars in thousands):

In Service Date

Property

Location

Property Type

# of
Apartment Units

Total
Development
Costs Incurred

04/01/22

Haus25 (a)

Jersey City

Multi-Family

750

347,918

Totals

750

347,918

(a) As of June 30, 2022, 631 apartment units are currently available for occupancy.

Real Estate Held for Sale/Discontinued Operations/Dispositions

The Company had discontinued operations related to its former suburban New Jersey office portfolio (collectively, the “Suburban Office Portfolio”) which represented a strategic shift in the Company’s operations in 2019. The Company has sold all but one of those assets and expects to dispose of this final suburban office asset in the fourth quarter of 2022. See Note 7: Discontinued Operations.

As of June 30, 2022, the Company identified as held for sale two office properties totaling approximately 1.6 million square feet and several developable land parcels, which are located in Jersey City, Holmdel, Parsippany, Morris Township, Wall and Weehawken, New Jersey. As a result of recent sales contracts in place, the Company determined that the carrying value of one of the remaining held for sale properties and two land parcels held for sale was not expected to be recovered from estimated net sales proceeds, and accordingly, during the three and six months ended June 30, 2022, recognized an unrealized held for sale loss allowance of $4.4 million (all of which is included in discontinued operations) and also recorded land and other impairments of $3.9 million.

As of June 30, 2022 two land parcels that were previously identified as held for sale were reclassified as held and used resulting in transaction costs of $0.1 million.

The total estimated sales proceeds of real estate held for sale, net of expected selling costs but before the extinguishment of $250 million of mortgages encumbering an office property and related costs, are expected to be approximately $516.2 million.

The following table summarizes the real estate held for sale, net, and other assets and liabilities (dollars in thousands):


	Suburban Office Portfolio		Other Assets Held for Sale		Total
Land	$	4,336	$	122,660	$	126,996
Building & Other	25,945		360,731		386,676
Less: Accumulated depreciation	(12,165)		(128,442)		(140,607)
Less: Cumulative unrealized losses on property held for sale	(4,440)		$	—	(4,440)
Real estate held for sale, net	$	13,676	$	354,949	$	368,625


Other assets and liabilities	Suburban Office Portfolio		Other Assets Held for Sale		Total
Unbilled rents receivable, net (a)	$	572	$	15,671	$	16,243
Deferred charges, net (a)	682		12,164		12,846

Mortgages & loans payable, net (a)	—		(249,155)		(249,155)
Accounts payable, accrued exp & other liability	(1,054)		(4,890)		(5,944)
Unearned rents/deferred rental income (a)	—		(3,778)		(3,778)

(a)Expected to be removed with the completion of the sales.

The Company disposed of the following rental property during the six months ended June 30, 2022 (dollars in thousands):


Disposition Date	Property/Address	Location	# of Bldgs.	Rentable Square Feet	Property Type	Net Sales Proceeds			Net Carrying Value		Realized Gains (Losses) Unrealized Losses, net		Discontinued Operations Realized Gains (Losses)/ Unrealized Losses, net
01/21/22	111 River Street	Hoboken, New Jersey	1	566,215	Office	$	208,268	(a)	$	206,432	$	1,836	$	—

Unrealized gains (losses) on real estate held for sale											—		(4,440)
Totals			1	566,215		$	208,268		$	206,432	$	1,836	$	(4,440)

(a)The mortgage loan encumbering the property was repaid at closing, for which the Company incurred costs of $6.3 million. These costs were expensed as loss from extinguishment of debt during the six months ended June 30, 2022.

The Company disposed of the following developable land holdings during the six months ended June 30, 2022 (dollars in thousands):


Disposition Date	Property Address	Location	Net Sales Proceeds		Net Carrying Value		Realized Gains (Losses)/ Unrealized Losses, net
03/22/22	Palladium residential land	West Windsor, New Jersey	$	23,908	$	24,182	$	(274)
03/22/22	Palladium commercial land	West Windsor, New Jersey	4,688		1,791		2,897
04/15/22	Port Imperial Park parcel (a)	Weehawken, New Jersey	29,331		29,744		(413)
04/21/22	Urby II/III (a)	Jersey City, New Jersey	68,854		13,316		55,538

Totals			$	126,781	$	69,033	$	57,748

(a)The net sale proceeds were held by a qualified intermediary, which is recorded in deferred charges and other assets as of June 30, 2022. See Note 5: Deferred Charges and Other Assets, Net.

Impairments on Properties and Land Held and Used

The Company determined that, due to the shortening of its expected hold period for several land parcels, it was necessary to reduce the carrying value of these assets to their estimated fair values. Accordingly, the Company recorded an impairment charge of $2.9 million on the land parcels in land and other impairments on the consolidated statement of operations for the six months ended June 30, 2022.