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

Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

9 Months Ended

Sep. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

As of September 30, 2024, the Company had an aggregate investment of approximately $114 million in its equity method joint ventures. The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage properties, or to acquire land in anticipation of possible development of rental properties. As of September 30, 2024, the unconsolidated joint ventures owned: six multifamily properties totaling 2,087 apartment units, a retail property aggregating approximately 51,000 square feet and interests and/or rights to developable land parcels able to accommodate up to 829 apartment units. The Company’s unconsolidated interests range from 20 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.

The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures. The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture. The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed.

The debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.

The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures, related parties to the Company, and recognized $0.9 million and $1.1 million for such services in the three months ended September 30, 2024 and 2023, respectively, and $2.5 million in each of the nine months ended September 30, 2024 and 2023. The Company had $0.3 million and $0.7 million in accounts receivable due from its unconsolidated joint ventures as of September 30, 2024 and December 31, 2023, respectively.

As of September 30, 2024, the Company does not have any investments in unconsolidated joint ventures that are considered VIEs.

The following is a summary of the Company's unconsolidated joint ventures as of September 30, 2024 and December 31, 2023 (dollars in thousands):


									Property Debt
Entity / Property Name	Number of Apartment Units		Company's Effective Ownership % (a)		Carrying Value				As of September, 30, 2024

					September 30, 2024		December 31, 2023		Balance		Maturity Date		Interest Rate
Multifamily
Metropolitan and Lofts at 40 Park (b) (c)	130	units	(c)		$	1,135	$	908	$	40,110	(d)		(d)
RiverTrace at Port Imperial	316	units	22.50	%	4,176		4,506		82,000		11/10/26		3.21	%
The Capstone at Port Imperial	360	units	40.00	%	20,402		21,361		135,000		12/22/24	SOFR+	1.20	%
Riverpark at Harrison	141	units	45.00	%	—		—		30,192		07/01/35		3.19	%
Station House	378	units	50.00	%	31,635		32,022		87,883		07/01/33		4.82	%
Urby at Harborside (e)	762	units	85.00	%	54,150		57,060		183,362		08/01/29		5.20	%
PI North - Land (b) (f)	829	potential units	20.00	%	1,678		1,678		—		—		—



Other (g)					419		419		—		—		—
Totals:					$	113,595	$	117,954	$	558,547

(a)Company's effective ownership % represents the Company's entitlement to residual distributions after payments of priority returns, where applicable.

(b)The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the Company is not expected to meaningfully participate in the venture's cash flows in the near term.

(c)Through the joint venture, the Company owns a 25 percent interest in a 130-unit multifamily rental property ("The Metropolitan at 40 Park") and also owns a 25 percent interest in a 50,973 square feet retail building ("Shops at 40 Park"). In January 2024, the joint venture sold the 59-unit, five story multifamily rental property ("Lofts at 40 Park") for $30.3 million and the Company recorded a gain on the sale for its interest of approximately $7.1 million. In October 2024, the Company's joint venture sold Shops at 40 Park retail property for $15.7 million.

(d)Property debt balance as of September 30, 2024 consists of: (i) an interest only loan, collateralized by The Metropolitan at 40 Park, with a balance of $34.1 million, bears interest at SOFR +2.85%, matures on October 10, 2024; and (ii) an interest only loan, collateralized by the Shops at 40 Park, with a balance of $6.0 million, bears interest at SOFR +2.00% and matures on January 9, 2025. Proceeds from the sale of Lofts at 40 Park were used to repay an interest-only loan with a balance of $17.2 million in January 2024. In October 2024, the loan collateralized by The Metropolitan at 40 Park was extended to October 10, 2025. Proceeds from the sale of Shops at 40 Park were used to repay the $6.0 million loan in October 2024.

(e)The Company owns an 85 percent interest with shared control over major decisions such as, approval of budgets, property financings and leasing guidelines.

(f)The Company owns a 20 percent residual interest in undeveloped land parcels: parcel 6 and parcel I that can accommodate the development of 829 apartment units.

(g)The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses are related to its core operations. These ventures are not expected to significantly impact the Company's operations in the near term.

The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the three and nine months ended September 30, 2024 and 2023, respectively (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
Entity / Property Name	2024		2023		2024		2023
Multifamily
Metropolitan and Lofts at 40 Park (a)	$	(378)	$	(357)	$	(852)	$	(965)
RiverTrace at Port Imperial	304		125		595		407
Capstone at Port Imperial	104		38		148		(275)
Riverpark at Harrison	68		68		204		473
Station House	(92)		(198)		(263)		(205)
Urby at Harborside	(574)		615		3,013		3,588
PI North - Land	—		(80)		(226)		(176)
Liberty Landing	—		(1)		—		(4)
Other
Other	300		—		300		—

Company's equity in earnings (loss) of unconsolidated joint ventures (b)	$	(268)	$	210	$	2,919	$	2,843

(a)In January 2024, the joint venture sold the Lofts at 40 Park multifamily rental property for $30.3 million and the Company recorded a gain on the sale for its interest of approximately $7.1 million.

(b)Amounts are net of amortization of basis differences of $154 thousand for each of the three months ended September 30, 2024 and 2023 and $463 thousand for each of the nine months ended September 30, 2024 and 2023.