Veris Residential, Inc. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2025

Commitments and Contingencies Disclosure [Abstract]

PILOT AGREEMENTS

Pursuant to agreements with certain municipalities, the Company is required to make payments in lieu of property taxes (“PILOT”) on certain of its properties as follows:


				PILOT Payments				PILOT Payments
Property Name	Location	Asset Type	PILOT Expiration Dates	Three Months Ended June 30,				Six Months Ended June 30,
				2025		2024		2025		2024
				(Dollars in Thousands)				(Dollars in Thousands)



BLVD 401 (a)	Jersey City, NJ	Multifamily	4/2026	$	574	$	701	$	1,111	$	1,143
Sable (b)	Jersey City, NJ	Multifamily	2/2027	1,259		(b)		1,259		(b)
RiverHouse 11 at Port Imperial (c)	Weehawken, NJ	Multifamily	7/2033	428		492		911		949

RiverHouse 9 at Port Imperial (d)	Weehawken, NJ	Multifamily	6/2046	404		451		851		858
Haus25 (e)	Jersey City, NJ	Multifamily	3/2047	745		717		1,510		1,414
The James (f)	Park Ridge, NJ	Multifamily	6/2051	230		210		457		416

Total PILOT taxes				$	3,640	$	2,571	$	6,099	$	4,780

(a)The annual PILOT is equal to 10 percent of Gross Revenues for years 1-4, 12 percent for years 5-8 and 14 percent for years 9-10, as defined.

(b)The annual PILOT is equal to 10 percent of Gross Revenues for years 1-4, 12 percent for years 5-8 and 14 percent for years 9-10, as defined. The Company consolidated its interest in Sable on April 21, 2025 as a result of the Sable JV Interest Acquisition. See Note 3: Investments in Rental Properties - Acquisition of Controlling Interest in Unconsolidated Joint Venture for more information.

(c)The annual PILOT is equal to 12 percent of Gross Revenues for years 1-5, 13 percent for years 6-10 and 14 percent for years 11-15, as defined.

(d)The annual PILOT is equal to 11 percent of Gross Revenues for years 1-10, 12.5 percent for years 11-18 and 14 percent for years 19-25, as defined.

(e)The annual PILOT is equal to seven percent of Gross Revenues, as defined, for a term of 25 years.

(f)The annual PILOT is equal to 10 percent of Gross Revenues for years 1-10, 11.5 percent for years 11-21 and 12.5 percent for years 22-30, as defined.

At the conclusion of the above-referenced agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.

LITIGATION

The Company is a defendant in litigation arising in the normal course of its business activities. Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Company’s financial condition taken as whole.

In 2024, the Company identified potential contingent liabilities related to reverse real estate tax appeals for certain previously-sold land parcels located in Jersey City, NJ. In accordance with ASC 450, the Company evaluated the estimability and probability of these potential obligations and recorded a contingent liability of $2.1 million, inclusive of associated legal costs, in Accounts payable, accrued expenses and other liabilities on the Company's Consolidated Balance Sheets. The ultimate resolution of these matters may result in recognition of amounts different from the accrued amount, and the timing of the ultimate resolution of these contingent liabilities is uncertain. The Company will continue to monitor developments and adjust the estimated liability as new information becomes available.

As previously reported, on April 23, 2025, the Company was named as a defendant in a complaint brought by the Attorney General of the State of New Jersey alleging antitrust violations by RealPage, Inc., a seller of revenue management software and owners and/or operators of multifamily housing, including us, which utilize this software. The Company was formally served with the complaint on April 30, 2025. The complaint alleges violation of the Sherman Act, the New Jersey Antitrust Act, and the New Jersey Consumer Fraud Act. We believe this lawsuit is without merit and we intend to vigorously defend against it. As this proceeding is in the early stages, it is not possible for the Company to predict the outcome nor is it possible to estimate the amount of loss, if any, which may be associated with an adverse decision in any of this matter.

OFFICE AND GROUND LEASE AGREEMENTS

Future minimum rental payments under the terms of all non-cancelable office and ground leases under which the Company is the lessee, as of June 30, 2025 and December 31, 2024, are as follows (dollars in thousands):


Year	As of June 30, 2025 Amount
July 1 through December 31, 2025	$	640
2026	1,279
2027	1,280
2028	494
2029	222
2030 through 2101	31,226
Total lease payments	35,141
Less: imputed interest	(29,022)

Total	$	6,119


Year	As of December 31, 2024 Amount
2025	$	1,279
2026	1,279
2027	1,280
2028	494
2029	222
2030 through 2101	31,225
Total lease payments	35,779
Less: imputed interest	(29,235)

Total	$	6,544

Office and ground lease expenses incurred by the Company amounted to $0.7 million and $0.6 million for the three months ended June 30, 2025 and 2024, respectively, and $1.3 million for the six months ended June 30, 2025 and 2024.

The Company had capitalized operating leases for one office and two ground leases, which had balances of $2.8 million and $1.9 million, respectively, at June 30, 2025. Such amounts represent the net present value (“NPV”) of future payments detailed above. The one office and two ground leases used incremental borrowing rates of 6.0 percent and 7.6 percent, respectively, to arrive at the NPV and have weighted average remaining lease terms of 2.8 years and 76.1 years, respectively. These rates were arrived at by adjusting the fixed rates of the Company’s mortgage debt with debt having terms approximating the remaining lease term of the Company’s office and ground leases and calculating notional rates for fully-collateralized loans.

OTHER

During the first quarter of 2024, the Company determined that the applicable conditions required to earn the stay-on award agreements with 20 employees were satisfied, and as a result, the corresponding cash and stock awards were deemed earned and payable. The total cost of such awards was approximately $2.6 million, including the issuance of 42,095 shares of the Company’s common stock, of which $1.3 million was recorded in each General and administrative and Property management expenses, on the Company's Consolidated Statements of Operations during the six months ended June 30, 2024.

As a result of the Sable JV Interest Acquisition, disclosed in Note 3: Investments in Rental Properties - Acquisition of Controlling Interest In Unconsolidated Joint Venture, the Company assumed an agreement for the annual sale of an economic tax credit certificate issued by the State of New Jersey ("Sable Tax Credit"). Under the terms of the agreement, the Company is obligated to transfer $3.1 million of Sable Tax Credits per year, subject to annual qualification criteria as determined by the state. Recognition of the Sable Tax Credit is reported in Other (expense) income, net on the Company's Consolidated Statement of Operations and is contingent upon (i) the Company’s eligibility each year, and (ii) the buyer’s ability to utilize the credits. The agreement is expected to expire in 2027.

As of June 30, 2025, the Company had outstanding letters of credits totaling $3.7 million issued in connection with

insurance requirements and for environmental financial assurance, collateralized by the available balance on the 2024

Credit Agreement.