Veris Residential, Inc. Stockholders’ Equity And Veris Residential, L.P.’s Partners’ Capital |
12 Months Ended |
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Dec. 31, 2021 | |
| Stockholders Equity [Line Items] | |
| Veris Residential, Inc. Stockholders’ Equity And Veris Residential, L.P.’s Partners’ Capital | 16. VERIS RESIDENTIAL, INC. STOCKHOLDERS’ EQUITY AND VERIS RESIDENTIAL, L.P.’S PARTNERS’ CAPITAL To maintain its qualification as a REIT, not more than 50 percent in value of the outstanding shares of the General Partner may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any taxable year of the General Partner, other than its initial taxable year (defined to include certain entities), applying certain constructive ownership rules. To help ensure that the General Partner will not fail this test, the General Partner’s Charter provides, among other things, certain restrictions on the transfer of common stock to prevent further concentration of stock ownership. Moreover, to evidence compliance with these requirements, the General Partner must maintain records that disclose the actual ownership of its outstanding common stock and demands written statements each year from the holders of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock. Partners’ Capital in the accompanying consolidated financial statements relates to (a) General Partners’ capital consisting of common units in the Operating Partnership held by the General Partner, and (b) Limited Partners’ capital consisting of common units and LTIP units held by the limited partners. See Note 17: Noncontrolling Interests in Subsidiaries. Any transactions resulting in the issuance of additional common and preferred stock of the General Partner result in a corresponding issuance by the Operating Partnership of an equivalent amount of common and preferred units to the General Partner. ATM PROGRAM On December 13, 2021, the Company entered into a distribution agreement (the “Distribution Agreement”) with J.P. Morgan Securities LLC, BofA Securities, Inc., BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Comerica Securities, Inc., Goldman Sachs & Co. LLC, R. Seelaus & Co., LLC and Samuel A. Ramirez & Company, Inc., as sales agents. Pursuant to the Distribution Agreement, the Company may issue and sell, from time to time, shares of common stock, par value $0.01 per share, having a combined aggregate offering price of up to $200 million. The Company will pay a commission that will not exceed, but may be lower than, 2% of the gross proceeds of all shares sold through the ATM Program. As of December 31, 2021, the Company had not sold any shares pursuant to the ATM Program. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The General Partner has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which approximately 5.5 million shares of the General Partner’s common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the General Partner’s shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the SEC for the approximately 5.5 million shares of the General Partner’s common stock reserved for issuance under the DRIP. INCENTIVE STOCK PLAN In May 2013, the General Partner established the 2013 Incentive Stock Plan (the “2013 Plan”) under which a total of 4,600,000 shares has been reserved for issuance. In June 2021, stockholders of the Company approved amendments to the 2013 Plan to increase the total shares reserved for issuance under the plan from 4,600,000 to 6,565,000 shares. Stock Options In addition to stock options issued in June 2021 under the 2013 Plan, in March 2021, the General Partner granted 950,000 stock options with an exercise price equal to the closing price of the Company’s common stock on the grant date of $15.79 per share to the chief executive officer as an employment “inducement award” that is intended to comply with New York Stock Exchange Rule 303A.08. The stock options will vest in one-third increments on each of the first three anniversaries of the date of grant, subject to earlier vesting on certain termination events. Information regarding the Company’s stock option plans is summarized below: Weighted Aggregate Average Intrinsic Shares Exercise Value Under Options Price $(000’s)Outstanding at January 1, 2019 ($17.31) 800,000 $ 17.31 $ 1,824Granted, Lapsed or Cancelled - - Outstanding at December 31, 2019 ($17.31) 800,000 $ 17.31 4,656Granted 172,495 14.39 Outstanding at December 31, 2020 ($14.39 - $17.31) 972,495 $ 16.79 -Granted 1,107,505 16.10 Outstanding at December 31, 2021 ($14.39 - $20.00) 2,080,000 $ 16.42 $ 4,072Options exercisable at December 31, 2021 1,130,000 Available for grant at December 31, 2021 1,633,689 The weighted average fair value of options granted during the year ended December 31, 2021 was $4.18 per option. The fair value of each option grant is estimated on the date of grant using the Black-Scholes model. The following weighted average assumptions are included in the Company’s fair value calculations of stock options granted during the year ended December 31, 2021: 2021 2021 2021 2020 March June regular June premium stock options Expected life (in years)4.5 4.6 5.3 5.3 Risk-free interest rate0.79%0.71%0.94%0.41%Volatility35.0%35.0%34.0%31.0%Dividend yield1.6%1.5%1.4%2.7% There were no stock options that were exercised under any stock option plans for the years ended December 31, 2021, 2020 and 2019. The Company has a policy of issuing new shares to satisfy stock option exercises. As of December 31, 2021 and 2020, the stock options outstanding had a weighted average remaining contractual life of approximately 5.5 years and 3.6 years, respectively. The Company recognized stock options expense of $844 thousand, $446 thousand and zero for the years ended December 31, 2021, 2020 and 2019, respectively. Appreciation-Only LTIP Units In March 2019, the Company granted 625,000 Appreciation-Only LTIP Units (“AO LTIP Units”) which are a class of partnership interests in the Operating Partnership that are intended to qualify as “profits interests” for federal income tax purposes. The value of vested AO LTIP Units is realized through conversion of the AO LTIP Units into common units of limited partnership interests of the Operating Partnership (the “Common Units”). The AO LTIP Units allow the former executive to earn zero to 100% of the AO LTIP Units granted on a graduated basis of 250,000, 250,000 and 125,000 AO LTIP Units if the fair market value of the Company’s common stock exceeds the threshold levels of $25.00, $28.00 and $31.00 for 30 consecutive days prior to March 13, 2023. Upon conversion of AO LTIP Units to Common Units, a special cash distribution will be granted equal to 10% (or such other percentage specified in the applicable award agreement) of the distributions received by a holder of an equivalent number of Common Units during the period from the grant date of the AO LTIP Units through the date of conversion in respect of each such AO LTIP Unit, on a per unit basis. The weighted average fair value of the AO LTIP Units granted during the year ended December 31, 2019 was $3.98 per AO LTIP Unit. The fair value of each AO LTIP Unit grant is estimated on the date of grant using the Monte Carlo method. The following weighted average assumptions were included in the Company’s fair value calculations of AO LTIP Units granted during the year ended December 31, 2019: AO LTIP Units Expected life (in years)5.5 - 6.0 Risk-free interest rate2.6%Volatility29.0%Dividend yield3.5% As of December 31, 2021, the Company had $0.7 million of total unrecognized compensation cost related to unvested AO LTIP Units granted under the Company’s stock compensation plans. That cost is expected to be recognized over a remaining weighted average period of 1.2 years. The Company recognized AO LTIP unit expense of $622 thousand, $622 thousand and $498 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. Time-based Restricted Stock Awards and Restricted Stock Units The Company has issued restricted stock units and common stock (“Restricted Stock Awards”) to officers, certain other employees and non-employee members of the Board of Directors of the General Partner, which allow the holders to each receive a certain amount of shares of the General Partner’s common stock generally over a one-year to three-year vesting period. On June 9, 2021, the Company issued Restricted Stock Awards to non-employee members of the Board of Directors of the General Partner which vest within one year, of which 39,529 unvested Restricted Stock Awards were outstanding at December 31, 2021. From July to September, 2021, the Company granted restricted stock units to certain non-executive employees of the Company, which vest after three years, of which 203,663 were outstanding at December 31, 2021. Restricted Stock Awards allow holders to receive shares of the Company’s common stock upon vesting. Vesting of the Restricted Stock Awards issued is based on time and service. All currently outstanding and unvested Restricted Stock Awards provided to the officers, certain other employees, and members of the Board of Directors of the General Partner were issued under the 2013 Plan. Information regarding the Restricted Stock Awards grant activity is summarized below: Weighted-Average Grant – Date Shares Fair ValueOutstanding at January 1, 2019 67,289 $ 22.43Granted 42,690 21.08Vested (65,353) 22.34Forfeited (1,936) 25.83Outstanding at December 31, 2019 42,690 $ 21.08Granted 52,974 15.29Vested (42,690) 21.08Forfeited - -Outstanding at December 31, 2020 52,974 $ 15.29Granted 39,529 17.71Vested (52,974) 15.29Forfeited - - Outstanding at December 31, 2021 39,529 $ 17.71 As of December 31, 2021, the Company had $0.3 million of total unrecognized compensation cost related to unvested Restricted Stock Awards granted under the Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 0.4 years. Long-Term Incentive Plan Awards The Company has granted long-term incentive plans awards (“LTIP Awards”) to senior management of the Company, including the General Partner’s executive officers. LTIP Awards generally are granted in the form of LTIP Units, except for awards granted in 2021 which were in the form of restricted stock units (each, an “RSU” and collectively, the “RSU LTIP Awards”) and constitute awards under the 2013 Plan. LTIP Awards are typically issued from the Company’s Outperformance Plan adopted by the General Partner’s Board of Directors. For LTIP Awards granted in 2018, 2019, and 2020, approximately 25 percent to 100 percent of the grant date fair value of the LTIP Awards were in the form of time-based awards that vest after three years and the remaining portion of the grant date fair value of those awards consist of multi-year, market-based awards. Participants of performance-based awards will only earn the full awards if, over the three year performance period, the Company achieves a 36 percent absolute total stockholder return (“TSR”) and if the Company’s TSR is in the 75th percentile of performance as compared to the office REITs in the NAREIT index for awards granted in 2018 and 2019 and as compared to the REITs in the NAREIT index for awards granted in 2020. The performance period for the 2018 performance-based awards ended in 2021 and 31.25 percent of LTIP Units vested while the remaining awards were forfeited. In January 2021, the Company granted LTIP Units (the “J Series 2021 LTIP Awards”) under the 2013 Plan. The J Series 2021 LTIP Awards are subject to the achievement of certain sales performance milestones with respect to commercial asset dispositions by the Company over a performance period from August 1, 2020 through December 31, 2022. These sales milestones will be based on the aggregate gross sales prices of the assets, provided that the asset will only be included in the milestone if it is sold for not less than 85% of its estimated net asset value, as defined in the agreement. In 2021, the Company also granted LTIP Units in the form of restricted stock units (each, an “RSU”). Each RSU entitles the holder to one share of the General Partner’s common stock upon settlement. Approximately 292,000 of the RSUs are subject to time-based vesting conditions and will vest in three equal, annual installments over a three year period ending in April 2024. Approximately 453,000 of the RSUs are subject to market-based vesting conditions. Recipients will only earn the full amount of the market-based RSUs if, over the three year performance period, the General Partner achieves a thirty-six percent absolute TSR and if the General Partner’s TSR is in the 75th percentile of performance as compared to a group of 24 peer REITs. Up to an additional approximately 292,000 RSUs were granted subject to the achievement of adjusted funds from operations of $0.60 per share in the fiscal year ending December 31, 2023. The 2021 RSU LTIP Awards are designed to align the interests of senior management to relative and absolute performance of the Company over a three year performance period. LTIP Awards are subject to forfeiture depending on the extent that awards vest. The number of market-based and performance-based LTIP Units that actually vest for each award recipient will be determined at the end of the related measurement period. Prior to vesting, recipients of LTIP Units will generally be entitled to receive per unit distributions equal to one-tenth of the regular quarterly distributions payable on a common share but will not be entitled to receive any special distributions. Distributions with respect to the other nine-tenths of regular quarterly distributions payable on a common share will accrue but shall only become payable upon vesting of the LTIP Unit. As of December 31, 2021, the Company had $4.9 million of total unrecognized compensation cost related to unvested LTIP awards granted under the Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 1.5 years. Deferred Stock Compensation Plan For Directors The Amended and Restated Deferred Compensation Plan for Directors, which commenced January 1, 1999, allows non-employee directors of the Company to elect to defer up to 100 percent of their annual retainer fee into deferred stock units. The deferred stock units are convertible into an equal number of shares of common stock upon the directors’ termination of service from the Board of Directors or a change in control of the Company, as defined in the plan. Deferred stock units are credited to each director quarterly using the closing price of the Company’s common stock on the applicable dividend record date for the respective quarter. Each participating director’s account is also credited for an equivalent amount of deferred stock units based on the dividend rate for each quarter. During the years ended December 31, 2021, 2020 and 2019, 17,894, 22,086 and 14,337 deferred stock units were earned, respectively. The Company converted 193,949 and 61,277 deferred stock units into shares of common stock during the years ended December 31, 2019 and December 31, 2020, respectively. As of December 31, 2021 and 2020, there were 37,603 and 17,854 deferred stock units outstanding, respectively. EARNINGS PER SHARE/UNIT Basic EPS or EPU excludes dilution and is computed by dividing net income available to common shareholders or unitholders by the weighted average number of shares or units outstanding for the period. Diluted EPS or EPU reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In the calculation of basic and diluted EPS and EPU, a redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders or unitholders is included in the calculation to arrive at the numerator of net income (loss) available to common shareholders or unitholders. The following information presents the Company’s results for the years ended December 31, 2021, 2020 and 2019 in accordance with ASC 260, Earnings Per Share (dollars in thousands, except per share amounts): Veris Residential, Inc.: Year Ended December 31,Computation of Basic EPS 2021 2020 2019Income (loss) from continuing operations$ (149,021) $ (115,499) $ 252,852Add (deduct): Noncontrolling interests in consolidated joint ventures 4,595 2,695 3,904Add (deduct): Noncontrolling interests in Operating Partnership 15,469 13,277 (23,724)Add (deduct): Redeemable noncontrolling interests (25,977) (25,883) (22,615)Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders (7,290) (11,814) (25,885)Income (loss) from continuing operations available to common shareholders (162,224) (137,224) 184,532Income (loss) from discontinued operations available to common shareholders 35,892 74,023 (98,556)Net income (loss) available to common shareholders for basic earnings per share$ (126,332) $ (63,201) $ 85,976 Weighted average common shares 90,839 90,648 90,557 Basic EPS: Income (loss) from continuing operations available to common shareholders$ (1.79) $ (1.51) $ 2.04Income (loss) from discontinued operations available to common shareholders 0.40 0.81 (1.09)Net income (loss) available to common shareholders$ (1.39) $ (0.70) $ 0.95 Year Ended December 31,Computation of Diluted EPS 2021 2020 2019Net income (loss) from continuing operations available to common shareholders$ (162,224) $ (137,224) $ 184,532Add (deduct): Noncontrolling interests in Operating Partnership (15,469) (13,277) 23,724Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to the Operating Partnership unitholders (726) (1,254) (2,855)Income (loss) from continuing operations for diluted earnings per share (178,419) (151,755) 205,401Income (loss) from discontinued operations for diluted earnings per share 39,482 81,901 (109,016)Net income (loss) available for diluted earnings per share$ (138,937) $ (69,854) $ 96,385 Weighted average common shares 99,893 100,260 100,689 Diluted EPS: Income (loss) from continuing operations available to common shareholders$ (1.79) $ (1.51) $ 2.04Income (loss) from discontinued operations available to common shareholders 0.40 0.81 (1.09)Net (income) loss available to common shareholders$ (1.39) $ (0.70) $ 0.95 The following schedule reconciles the weighted average shares used in the basic EPS calculation to the shares used in the diluted EPS calculation (in thousands): Year Ended December 31, 2021 2020 2019Basic EPS shares 90,839 90,648 90,557 Add: Operating Partnership – common and vested LTIP units 9,054 9,612 9,963 Stock Options - - 169 Diluted EPS Shares 99,893 100,260 100,689 Contingently issuable shares under Restricted Stock Awards were excluded from the denominator during all periods presented as such securities were anti-dilutive during the periods. Shares issuable under all outstanding stock options were excluded from the denominator in the years ended December 31, 2021 and 2020 as such securities were anti-dilutive during the period. Also not included in the computations of diluted EPS were the unvested LTIP Units and unvested AO LTIP Units as such securities were anti-dilutive during all periods presented. Unvested LTIP Units outstanding as of December 31, 2021, 2020 and 2019 were 1,246,752, 1,722,929 and 1,826,331, respectively. Unvested restricted stock outstanding as of December 31, 2021, 2020 and 2019 were 39,529, 52,974 and 42,690 shares, respectively. Unvested AO LTIP Units outstanding as of each of December 31, 2021, 2020 and 2019 were 625,000. Dividends declared per common share for the years ended December 31, 2021, 2020 and 2019 were zero, $0.40 and $0.80 per share, respectively. Veris Residential, L.P.: Year Ended December 31,Computation of Basic EPU 2021 2020 2019Income (loss) from continuing operations $ (149,021) $ (115,499) $ 252,852Add (deduct): Noncontrolling interests in consolidated joint ventures 4,595 2,695 3,904Add (deduct): Redeemable noncontrolling interests (25,977) (25,883) (22,615)Add (deduct): Redemption value adjustment of redeemable noncontrolling interests (8,016) (13,068) (28,740)Income (loss) from continuing operations available to unitholders (178,419) (151,755) 205,401Income (loss) from discontinued operations available to unitholders 39,482 81,901 (109,016)Net income (loss) available to common unitholders for basic earnings per unit $ (138,937) $ (69,854) $ 96,385 Weighted average common units 99,893 100,260 100,520 Basic EPU: Income (loss) from continuing operations available to unitholders $(1.79) $(1.51) $2.04Income (loss) from discontinued operations available to unitholders 0.40 0.81 (1.09)Net income (loss) available to common unitholders for basic earnings per unit $(1.39) $(0.70) $ 0.95 Year Ended December 31,Computation of Diluted EPU 2021 2020 2019Net income (loss) from continuing operations available to common unitholders $ (178,419) $ (151,755) $ 205,401Income (loss) from discontinued operations for diluted earnings per unit 39,482 81,901 (109,016)Net income (loss) available to common unitholders for diluted earnings per unit $ (138,937) $(69,854) $ 96,385 Weighted average common unit 99,893 100,260 100,689 Diluted EPU: Income (loss) from continuing operations available to common unitholders $(1.79) $(1.51) $2.04Income (loss) from discontinued operations available to common unitholders 0.40 0.81 (1.09)Net income (loss) available to common unitholders $(1.39) $(0.70) $ 0.95 The following schedule reconciles the weighted average units used in the basic EPU calculation to the units used in the diluted EPU calculation (in thousands): Year Ended December 31, 2021 2020 2019Basic EPU units 99,893 100,260 100,520 Add: Stock Options - - 169 Diluted EPU Units 99,893 100,260 100,689 Contingently issuable shares under Restricted Stock Awards were excluded from the denominator during all periods presented as such securities were anti-dilutive during the periods. Shares issuable under all outstanding stock options were excluded from the denominator in the years ended December 31, 2021 and 2020 as such securities were anti-dilutive during the period. Also not included in the computations of diluted EPU were the unvested LTIP Units and unvested AO LTIP Units as such securities were anti-dilutive during all periods presented. Unvested LTIP Units outstanding as of December 31, 2021, 2020 and 2019 were 1,246,752, 1,722,929 and 1,826,331, respectively. Unvested restricted stock outstanding as of December 31, 2021, 2020 and 2019 were 39,529, 52,974 and 42,690 shares, respectively. Unvested AO LTIP Units outstanding as of each of December 31, 2021, 2020 and 2019 were 625,000. Distributions declared per common unit for the years ended December 31, 2021, 2020 and 2019 were zero, $0.40 and $0.80 per unit, respectively. |
| VERIS RESIDENTIAL, L.P. [Member] | |
| Stockholders Equity [Line Items] | |
| Veris Residential, Inc. Stockholders’ Equity And Veris Residential, L.P.’s Partners’ Capital | 16. VERIS RESIDENTIAL, INC. STOCKHOLDERS’ EQUITY AND VERIS RESIDENTIAL, L.P.’S PARTNERS’ CAPITAL To maintain its qualification as a REIT, not more than 50 percent in value of the outstanding shares of the General Partner may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any taxable year of the General Partner, other than its initial taxable year (defined to include certain entities), applying certain constructive ownership rules. To help ensure that the General Partner will not fail this test, the General Partner’s Charter provides, among other things, certain restrictions on the transfer of common stock to prevent further concentration of stock ownership. Moreover, to evidence compliance with these requirements, the General Partner must maintain records that disclose the actual ownership of its outstanding common stock and demands written statements each year from the holders of record of designated percentages of its common stock requesting the disclosure of the beneficial owners of such common stock. Partners’ Capital in the accompanying consolidated financial statements relates to (a) General Partners’ capital consisting of common units in the Operating Partnership held by the General Partner, and (b) Limited Partners’ capital consisting of common units and LTIP units held by the limited partners. See Note 17: Noncontrolling Interests in Subsidiaries. Any transactions resulting in the issuance of additional common and preferred stock of the General Partner result in a corresponding issuance by the Operating Partnership of an equivalent amount of common and preferred units to the General Partner. ATM PROGRAM On December 13, 2021, the Company entered into a distribution agreement (the “Distribution Agreement”) with J.P. Morgan Securities LLC, BofA Securities, Inc., BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Comerica Securities, Inc., Goldman Sachs & Co. LLC, R. Seelaus & Co., LLC and Samuel A. Ramirez & Company, Inc., as sales agents. Pursuant to the Distribution Agreement, the Company may issue and sell, from time to time, shares of common stock, par value $0.01 per share, having a combined aggregate offering price of up to $200 million. The Company will pay a commission that will not exceed, but may be lower than, 2% of the gross proceeds of all shares sold through the ATM Program. As of December 31, 2021, the Company had not sold any shares pursuant to the ATM Program. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The General Partner has a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) which commenced in March 1999 under which approximately 5.5 million shares of the General Partner’s common stock have been reserved for future issuance. The DRIP provides for automatic reinvestment of all or a portion of a participant’s dividends from the General Partner’s shares of common stock. The DRIP also permits participants to make optional cash investments up to $5,000 a month without restriction and, if the Company waives this limit, for additional amounts subject to certain restrictions and other conditions set forth in the DRIP prospectus filed as part of the Company’s effective registration statement on Form S-3 filed with the SEC for the approximately 5.5 million shares of the General Partner’s common stock reserved for issuance under the DRIP. INCENTIVE STOCK PLAN In May 2013, the General Partner established the 2013 Incentive Stock Plan (the “2013 Plan”) under which a total of 4,600,000 shares has been reserved for issuance. In June 2021, stockholders of the Company approved amendments to the 2013 Plan to increase the total shares reserved for issuance under the plan from 4,600,000 to 6,565,000 shares. Stock Options In addition to stock options issued in June 2021 under the 2013 Plan, in March 2021, the General Partner granted 950,000 stock options with an exercise price equal to the closing price of the Company’s common stock on the grant date of $15.79 per share to the chief executive officer as an employment “inducement award” that is intended to comply with New York Stock Exchange Rule 303A.08. The stock options will vest in one-third increments on each of the first three anniversaries of the date of grant, subject to earlier vesting on certain termination events. Information regarding the Company’s stock option plans is summarized below: Weighted Aggregate Average Intrinsic Shares Exercise Value Under Options Price $(000’s)Outstanding at January 1, 2019 ($17.31) 800,000 $ 17.31 $ 1,824Granted, Lapsed or Cancelled - - Outstanding at December 31, 2019 ($17.31) 800,000 $ 17.31 4,656Granted 172,495 14.39 Outstanding at December 31, 2020 ($14.39 - $17.31) 972,495 $ 16.79 -Granted 1,107,505 16.10 Outstanding at December 31, 2021 ($14.39 - $20.00) 2,080,000 $ 16.42 $ 4,072Options exercisable at December 31, 2021 1,130,000 Available for grant at December 31, 2021 1,633,689 The weighted average fair value of options granted during the year ended December 31, 2021 was $4.18 per option. The fair value of each option grant is estimated on the date of grant using the Black-Scholes model. The following weighted average assumptions are included in the Company’s fair value calculations of stock options granted during the year ended December 31, 2021: 2021 2021 2021 2020 March June regular June premium stock options Expected life (in years)4.5 4.6 5.3 5.3 Risk-free interest rate0.79%0.71%0.94%0.41%Volatility35.0%35.0%34.0%31.0%Dividend yield1.6%1.5%1.4%2.7% There were no stock options that were exercised under any stock option plans for the years ended December 31, 2021, 2020 and 2019. The Company has a policy of issuing new shares to satisfy stock option exercises. As of December 31, 2021 and 2020, the stock options outstanding had a weighted average remaining contractual life of approximately 5.5 years and 3.6 years, respectively. The Company recognized stock options expense of $844 thousand, $446 thousand and zero for the years ended December 31, 2021, 2020 and 2019, respectively. Appreciation-Only LTIP Units In March 2019, the Company granted 625,000 Appreciation-Only LTIP Units (“AO LTIP Units”) which are a class of partnership interests in the Operating Partnership that are intended to qualify as “profits interests” for federal income tax purposes. The value of vested AO LTIP Units is realized through conversion of the AO LTIP Units into common units of limited partnership interests of the Operating Partnership (the “Common Units”). The AO LTIP Units allow the former executive to earn zero to 100% of the AO LTIP Units granted on a graduated basis of 250,000, 250,000 and 125,000 AO LTIP Units if the fair market value of the Company’s common stock exceeds the threshold levels of $25.00, $28.00 and $31.00 for 30 consecutive days prior to March 13, 2023. Upon conversion of AO LTIP Units to Common Units, a special cash distribution will be granted equal to 10% (or such other percentage specified in the applicable award agreement) of the distributions received by a holder of an equivalent number of Common Units during the period from the grant date of the AO LTIP Units through the date of conversion in respect of each such AO LTIP Unit, on a per unit basis. The weighted average fair value of the AO LTIP Units granted during the year ended December 31, 2019 was $3.98 per AO LTIP Unit. The fair value of each AO LTIP Unit grant is estimated on the date of grant using the Monte Carlo method. The following weighted average assumptions were included in the Company’s fair value calculations of AO LTIP Units granted during the year ended December 31, 2019: AO LTIP Units Expected life (in years)5.5 - 6.0 Risk-free interest rate2.6%Volatility29.0%Dividend yield3.5% As of December 31, 2021, the Company had $0.7 million of total unrecognized compensation cost related to unvested AO LTIP Units granted under the Company’s stock compensation plans. That cost is expected to be recognized over a remaining weighted average period of 1.2 years. The Company recognized AO LTIP unit expense of $622 thousand, $622 thousand and $498 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. Time-based Restricted Stock Awards and Restricted Stock Units The Company has issued restricted stock units and common stock (“Restricted Stock Awards”) to officers, certain other employees and non-employee members of the Board of Directors of the General Partner, which allow the holders to each receive a certain amount of shares of the General Partner’s common stock generally over a one-year to three-year vesting period. On June 9, 2021, the Company issued Restricted Stock Awards to non-employee members of the Board of Directors of the General Partner which vest within one year, of which 39,529 unvested Restricted Stock Awards were outstanding at December 31, 2021. From July to September, 2021, the Company granted restricted stock units to certain non-executive employees of the Company, which vest after three years, of which 203,663 were outstanding at December 31, 2021. Restricted Stock Awards allow holders to receive shares of the Company’s common stock upon vesting. Vesting of the Restricted Stock Awards issued is based on time and service. All currently outstanding and unvested Restricted Stock Awards provided to the officers, certain other employees, and members of the Board of Directors of the General Partner were issued under the 2013 Plan. Information regarding the Restricted Stock Awards grant activity is summarized below: Weighted-Average Grant – Date Shares Fair ValueOutstanding at January 1, 2019 67,289 $ 22.43Granted 42,690 21.08Vested (65,353) 22.34Forfeited (1,936) 25.83Outstanding at December 31, 2019 42,690 $ 21.08Granted 52,974 15.29Vested (42,690) 21.08Forfeited - -Outstanding at December 31, 2020 52,974 $ 15.29Granted 39,529 17.71Vested (52,974) 15.29Forfeited - - Outstanding at December 31, 2021 39,529 $ 17.71 As of December 31, 2021, the Company had $0.3 million of total unrecognized compensation cost related to unvested Restricted Stock Awards granted under the Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 0.4 years. Long-Term Incentive Plan Awards The Company has granted long-term incentive plans awards (“LTIP Awards”) to senior management of the Company, including the General Partner’s executive officers. LTIP Awards generally are granted in the form of LTIP Units, except for awards granted in 2021 which were in the form of restricted stock units (each, an “RSU” and collectively, the “RSU LTIP Awards”) and constitute awards under the 2013 Plan. LTIP Awards are typically issued from the Company’s Outperformance Plan adopted by the General Partner’s Board of Directors. For LTIP Awards granted in 2018, 2019, and 2020, approximately 25 percent to 100 percent of the grant date fair value of the LTIP Awards were in the form of time-based awards that vest after three years and the remaining portion of the grant date fair value of those awards consist of multi-year, market-based awards. Participants of performance-based awards will only earn the full awards if, over the three year performance period, the Company achieves a 36 percent absolute total stockholder return (“TSR”) and if the Company’s TSR is in the 75th percentile of performance as compared to the office REITs in the NAREIT index for awards granted in 2018 and 2019 and as compared to the REITs in the NAREIT index for awards granted in 2020. The performance period for the 2018 performance-based awards ended in 2021 and 31.25 percent of LTIP Units vested while the remaining awards were forfeited. In January 2021, the Company granted LTIP Units (the “J Series 2021 LTIP Awards”) under the 2013 Plan. The J Series 2021 LTIP Awards are subject to the achievement of certain sales performance milestones with respect to commercial asset dispositions by the Company over a performance period from August 1, 2020 through December 31, 2022. These sales milestones will be based on the aggregate gross sales prices of the assets, provided that the asset will only be included in the milestone if it is sold for not less than 85% of its estimated net asset value, as defined in the agreement. In 2021, the Company also granted LTIP Units in the form of restricted stock units (each, an “RSU”). Each RSU entitles the holder to one share of the General Partner’s common stock upon settlement. Approximately 292,000 of the RSUs are subject to time-based vesting conditions and will vest in three equal, annual installments over a three year period ending in April 2024. Approximately 453,000 of the RSUs are subject to market-based vesting conditions. Recipients will only earn the full amount of the market-based RSUs if, over the three year performance period, the General Partner achieves a thirty-six percent absolute TSR and if the General Partner’s TSR is in the 75th percentile of performance as compared to a group of 24 peer REITs. Up to an additional approximately 292,000 RSUs were granted subject to the achievement of adjusted funds from operations of $0.60 per share in the fiscal year ending December 31, 2023. The 2021 RSU LTIP Awards are designed to align the interests of senior management to relative and absolute performance of the Company over a three year performance period. LTIP Awards are subject to forfeiture depending on the extent that awards vest. The number of market-based and performance-based LTIP Units that actually vest for each award recipient will be determined at the end of the related measurement period. Prior to vesting, recipients of LTIP Units will generally be entitled to receive per unit distributions equal to one-tenth of the regular quarterly distributions payable on a common share but will not be entitled to receive any special distributions. Distributions with respect to the other nine-tenths of regular quarterly distributions payable on a common share will accrue but shall only become payable upon vesting of the LTIP Unit. As of December 31, 2021, the Company had $4.9 million of total unrecognized compensation cost related to unvested LTIP awards granted under the Company’s stock compensation plans. That cost is expected to be recognized over a weighted average period of 1.5 years. Deferred Stock Compensation Plan For Directors The Amended and Restated Deferred Compensation Plan for Directors, which commenced January 1, 1999, allows non-employee directors of the Company to elect to defer up to 100 percent of their annual retainer fee into deferred stock units. The deferred stock units are convertible into an equal number of shares of common stock upon the directors’ termination of service from the Board of Directors or a change in control of the Company, as defined in the plan. Deferred stock units are credited to each director quarterly using the closing price of the Company’s common stock on the applicable dividend record date for the respective quarter. Each participating director’s account is also credited for an equivalent amount of deferred stock units based on the dividend rate for each quarter. During the years ended December 31, 2021, 2020 and 2019, 17,894, 22,086 and 14,337 deferred stock units were earned, respectively. The Company converted 193,949 and 61,277 deferred stock units into shares of common stock during the years ended December 31, 2019 and December 31, 2020, respectively. As of December 31, 2021 and 2020, there were 37,603 and 17,854 deferred stock units outstanding, respectively. EARNINGS PER SHARE/UNIT Basic EPS or EPU excludes dilution and is computed by dividing net income available to common shareholders or unitholders by the weighted average number of shares or units outstanding for the period. Diluted EPS or EPU reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In the calculation of basic and diluted EPS and EPU, a redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders or unitholders is included in the calculation to arrive at the numerator of net income (loss) available to common shareholders or unitholders. The following information presents the Company’s results for the years ended December 31, 2021, 2020 and 2019 in accordance with ASC 260, Earnings Per Share (dollars in thousands, except per share amounts): Veris Residential, Inc.: Year Ended December 31,Computation of Basic EPS 2021 2020 2019Income (loss) from continuing operations$ (149,021) $ (115,499) $ 252,852Add (deduct): Noncontrolling interests in consolidated joint ventures 4,595 2,695 3,904Add (deduct): Noncontrolling interests in Operating Partnership 15,469 13,277 (23,724)Add (deduct): Redeemable noncontrolling interests (25,977) (25,883) (22,615)Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders (7,290) (11,814) (25,885)Income (loss) from continuing operations available to common shareholders (162,224) (137,224) 184,532Income (loss) from discontinued operations available to common shareholders 35,892 74,023 (98,556)Net income (loss) available to common shareholders for basic earnings per share$ (126,332) $ (63,201) $ 85,976 Weighted average common shares 90,839 90,648 90,557 Basic EPS: Income (loss) from continuing operations available to common shareholders$ (1.79) $ (1.51) $ 2.04Income (loss) from discontinued operations available to common shareholders 0.40 0.81 (1.09)Net income (loss) available to common shareholders$ (1.39) $ (0.70) $ 0.95 Year Ended December 31,Computation of Diluted EPS 2021 2020 2019Net income (loss) from continuing operations available to common shareholders$ (162,224) $ (137,224) $ 184,532Add (deduct): Noncontrolling interests in Operating Partnership (15,469) (13,277) 23,724Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to the Operating Partnership unitholders (726) (1,254) (2,855)Income (loss) from continuing operations for diluted earnings per share (178,419) (151,755) 205,401Income (loss) from discontinued operations for diluted earnings per share 39,482 81,901 (109,016)Net income (loss) available for diluted earnings per share$ (138,937) $ (69,854) $ 96,385 Weighted average common shares 99,893 100,260 100,689 Diluted EPS: Income (loss) from continuing operations available to common shareholders$ (1.79) $ (1.51) $ 2.04Income (loss) from discontinued operations available to common shareholders 0.40 0.81 (1.09)Net (income) loss available to common shareholders$ (1.39) $ (0.70) $ 0.95 The following schedule reconciles the weighted average shares used in the basic EPS calculation to the shares used in the diluted EPS calculation (in thousands): Year Ended December 31, 2021 2020 2019Basic EPS shares 90,839 90,648 90,557 Add: Operating Partnership – common and vested LTIP units 9,054 9,612 9,963 Stock Options - - 169 Diluted EPS Shares 99,893 100,260 100,689 Contingently issuable shares under Restricted Stock Awards were excluded from the denominator during all periods presented as such securities were anti-dilutive during the periods. Shares issuable under all outstanding stock options were excluded from the denominator in the years ended December 31, 2021 and 2020 as such securities were anti-dilutive during the period. Also not included in the computations of diluted EPS were the unvested LTIP Units and unvested AO LTIP Units as such securities were anti-dilutive during all periods presented. Unvested LTIP Units outstanding as of December 31, 2021, 2020 and 2019 were 1,246,752, 1,722,929 and 1,826,331, respectively. Unvested restricted stock outstanding as of December 31, 2021, 2020 and 2019 were 39,529, 52,974 and 42,690 shares, respectively. Unvested AO LTIP Units outstanding as of each of December 31, 2021, 2020 and 2019 were 625,000. Dividends declared per common share for the years ended December 31, 2021, 2020 and 2019 were zero, $0.40 and $0.80 per share, respectively. Veris Residential, L.P.: Year Ended December 31,Computation of Basic EPU 2021 2020 2019Income (loss) from continuing operations $ (149,021) $ (115,499) $ 252,852Add (deduct): Noncontrolling interests in consolidated joint ventures 4,595 2,695 3,904Add (deduct): Redeemable noncontrolling interests (25,977) (25,883) (22,615)Add (deduct): Redemption value adjustment of redeemable noncontrolling interests (8,016) (13,068) (28,740)Income (loss) from continuing operations available to unitholders (178,419) (151,755) 205,401Income (loss) from discontinued operations available to unitholders 39,482 81,901 (109,016)Net income (loss) available to common unitholders for basic earnings per unit $ (138,937) $ (69,854) $ 96,385 Weighted average common units 99,893 100,260 100,520 Basic EPU: Income (loss) from continuing operations available to unitholders $(1.79) $(1.51) $2.04Income (loss) from discontinued operations available to unitholders 0.40 0.81 (1.09)Net income (loss) available to common unitholders for basic earnings per unit $(1.39) $(0.70) $ 0.95 Year Ended December 31,Computation of Diluted EPU 2021 2020 2019Net income (loss) from continuing operations available to common unitholders $ (178,419) $ (151,755) $ 205,401Income (loss) from discontinued operations for diluted earnings per unit 39,482 81,901 (109,016)Net income (loss) available to common unitholders for diluted earnings per unit $ (138,937) $(69,854) $ 96,385 Weighted average common unit 99,893 100,260 100,689 Diluted EPU: Income (loss) from continuing operations available to common unitholders $(1.79) $(1.51) $2.04Income (loss) from discontinued operations available to common unitholders 0.40 0.81 (1.09)Net income (loss) available to common unitholders $(1.39) $(0.70) $ 0.95 The following schedule reconciles the weighted average units used in the basic EPU calculation to the units used in the diluted EPU calculation (in thousands): Year Ended December 31, 2021 2020 2019Basic EPU units 99,893 100,260 100,520 Add: Stock Options - - 169 Diluted EPU Units 99,893 100,260 100,689 Contingently issuable shares under Restricted Stock Awards were excluded from the denominator during all periods presented as such securities were anti-dilutive during the periods. Shares issuable under all outstanding stock options were excluded from the denominator in the years ended December 31, 2021 and 2020 as such securities were anti-dilutive during the period. Also not included in the computations of diluted EPU were the unvested LTIP Units and unvested AO LTIP Units as such securities were anti-dilutive during all periods presented. Unvested LTIP Units outstanding as of December 31, 2021, 2020 and 2019 were 1,246,752, 1,722,929 and 1,826,331, respectively. Unvested restricted stock outstanding as of December 31, 2021, 2020 and 2019 were 39,529, 52,974 and 42,690 shares, respectively. Unvested AO LTIP Units outstanding as of each of December 31, 2021, 2020 and 2019 were 625,000. Distributions declared per common unit for the years ended December 31, 2021, 2020 and 2019 were zero, $0.40 and $0.80 per unit, respectively. |