Quarterly report pursuant to Section 13 or 15(d)

VERIS RESIDENTIAL, INC. STOCKHOLDERS??? EQUITY AND VERIS RESIDENTIAL, L.P.???S PARTNERS??? CAPITAL

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VERIS RESIDENTIAL, INC. STOCKHOLDERS’ EQUITY AND VERIS RESIDENTIAL, L.P.’S PARTNERS’ CAPITAL
 3 Months Ended
Mar. 31, 2024
Stockholders' Equity Note [Abstract]  
VERIS RESIDENTIAL, INC. STOCKHOLDERS’ EQUITY AND VERIS RESIDENTIAL, L.P.’S PARTNERS’ CAPITAL 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 15: Noncontrolling Interests in Subsidiaries.
The following table reflects the activity of the General Partner capital for the three months ended March 31, 2024 and 2023, respectively (dollars in thousands):
Three Months Ended
March 31,
2024 2023
Opening Balance $ 1,137,478 $ 1,235,685
Net loss available to common shareholders (3,903) (19,973)
Shares issued under ATM Program, net (55) — 
Common stock distributions (4,984) — 
Redeemable noncontrolling interests —  (4,516)
Redemption of common units for common stock —  4,859 
Shares issued under Dividend Reinvestment and Stock Purchase Plan 1 1
Directors' deferred compensation plan 99 110
Stock Compensation 4,200 3,471
Cancellation of common stock (1,534) (247)
Other comprehensive (loss) income 998 (858)
Rebalancing of ownership percent between parent and subsidiaries (69) (2,002)
Balance at March 31 $ 1,132,231 $ 1,216,530
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 November 15, 2023, we reestablished a continuous “at-the-market” offering program (“ATM Program”) with a syndicate of banks, pursuant to which shares of our common stock having an aggregate gross sales price of up to $100 million may be sold (i) directly through or to the banks acting as sales agents or as principal for their own accounts or (ii) through or to participating banks or their affiliates acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement (“ATM Forwards”). Effective as of that date, the Company terminated a prior ATM Program that was established on December 13, 2021, under which we were able to offer and sell shares of our common stock from time to time, up to an aggregate gross sales price of $200 million, with a syndicate of banks. As of March 31, 2024, 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 5.4 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 5.4 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 under which a total of 4,600,000 shares has been reserved for issuance. In June 2021, stockholders of the Company approved the Amended and Restated 2013 Incentive Stock Plan (as so amended and restated, 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. In April 2022, the General Partner granted 250,000 stock options with an exercise price equal to the closing price of the Company’s common stock on the grant date of $16.33 per share to the Chief Investment Officer as an employment “inducement award” that is intended to comply with New York Stock Exchange Rule 303A.08. Both of the these inducement awards have a three-year vesting period.
There were no stock options that were exercised under any stock option plans for the three months ended March 31, 2024 and 2023, respectively. The Company has a policy of issuing new shares to satisfy stock option exercises.
As of March 31, 2024 and December 31, 2023, the stock options outstanding had a weighted average remaining contractual life of approximately 3.3 years and 3.6 years, respectively.
The Company recognized stock compensation expense related to stock options of $338 thousand and $322 thousand for the three months ended March 31, 2024 and 2023, respectively.
Restricted Stock Awards
The Company has issued Restricted Stock Awards ("RSAs") in the form of restricted stock units to non-employee members of the Board of Directors, which allow the holders to each receive shares of the Company’s common stock following a one-year vesting period. Vesting of the RSAs issued is based on time and service. On June 14, 2023, the Company issued RSAs to non-employee members of the Board of Directors, of which 54,184 unvested RSAs were outstanding at March 31, 2024.
The Company recognized stock compensation expense related to RSAs of $230 thousand and $175 thousand for the three months ended March 31, 2024 and 2023, respectively.
As of March 31, 2024, the Company had $189 thousand of total unrecognized compensation cost related to unvested RSAs granted under the Company’s stock compensation plans. That cost is expected to be recognized over a remaining weighted average period of 0.2 years.
All currently outstanding and unvested RSAs provided to the non-employee members of the Board of Directors were issued under the 2013 Plan.
Long-Term Incentive Plan Awards
The Company has granted long-term incentive plans awards (“LTIP Awards”) to executive officers, senior management, and certain other employees of the Company. LTIP Awards generally are granted in the form of restricted stock units (each, an “RSU” and collectively, the “RSU LTIP Awards”) and constitute awards under the 2013 Plan.
A portion of the RSUs are subject to time-based vesting conditions and will vest over a three-year period ("TRSUs"). As of March 31, 2024, there are 965,546 TRSUs outstanding and unvested.
Additionally, in April 2022, the General Partner granted 59,707 TRSUs subject to time-vesting conditions, vesting over three years, to three executive officers as “inducement awards” intended to comply with New York Stock Exchange Rule 303A.08. As of March 31, 2024, there are 24,036 TRSUs classified as inducement awards outstanding and unvested.
Another portion of the annual LTIP Awards have market-based vesting conditions ("PRSUs"), and recipients will only earn the full amount of the PRSUs if, over the three-year performance period, the General Partner achieves an absolute Total Shareholder Return ("TSR") target and if the General Partner’s relative TSR as compared to a group of peer REITs exceeds certain thresholds. The market-based award targets are determined annually by the compensation committee of the Board of Directors. As of March 31, 2024, there are 1,034,499 PRSUs outstanding and unvested.
In addition, the Company has granted RSUs with a three-year cliff vest subject to the achievement of adjusted funds from operations targets ("OPRSUs"). As of March 31, 2024, there are 950,018 OPRSUs outstanding and unvested.
The Company recognized stock compensation expense related to LTIP awards of $3.6 million and $3.2 million for the three months ended March 31, 2024 and 2023, respectively.
As of March 31, 2024, the Company had $17.4 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 remaining weighted average period of 2.4 years.
All currently outstanding and unvested RSU LTIP Awards provided to the executive officers, senior management, and certain other employees were issued under the 2013 Plan or as inducement awards.
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 three months ended March 31, 2024 and 2023, deferred stock units earned were 7,109 and 7,571, respectively. As of March 31, 2024 and December 31, 2023, there were 85,084 and 77,975 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 three months ended March 31, 2024 and 2023 in accordance with ASC 260, Earnings Per Share (dollars in thousands, except per share amounts):
Veris Residential, Inc.:
Three Months Ended
March 31,
Computation of Basic EPS 2024 2023
Loss from continuing operations after income tax expense $ (6,269) $ (18,832)
Add (deduct): Noncontrolling interests in consolidated joint ventures 495  587 
Add (deduct): Noncontrolling interests in Operating Partnership 523  2,277 
Add (deduct): Redeemable noncontrolling interests (297) (6,366)
Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders —  (4,516)
Loss from continuing operations available to common shareholders (5,548) (26,850)
Income from discontinued operations available to common shareholders 1,645  2,361 
Net loss available to common shareholders for basic earnings per share $ (3,903) $ (24,489)
Weighted average common shares 92,275  91,226 
Basic EPS:
Loss from continuing operations available to common shareholders $ (0.06) $ (0.29)
Income from discontinued operations available to common shareholders 0.02  0.02 
Net loss available to common shareholders $ (0.04) $ (0.27)
Three Months Ended
March 31,
Computation of Diluted EPS 2024 2023
Net loss from continuing operations available to common shareholders $ (5,548) $ (26,850)
Add (deduct): Noncontrolling interests in Operating Partnership (523) (2,277)
Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to the Operating Partnership unitholders —  (461)
Loss from continuing operations for diluted earnings per share (6,071) (29,588)
Income from discontinued operations for diluted earnings per share 1,800  2,602 
Net loss available for diluted earnings per share $ (4,271) $ (26,986)
Weighted average common shares 100,968  100,526 
Diluted EPS:
Loss from continuing operations available to common shareholders $ (0.06) $ (0.29)
Income from discontinued operations available to common shareholders 0.02  0.02 
Net loss available to common shareholders $ (0.04) $ (0.27)
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):
Three Months Ended
March 31,
2024 2023
Basic EPS shares 92,275  91,226 
Add: Operating Partnership – common and vested LTIP units 8,693  9,300 
Diluted EPS Shares 100,968  100,526 
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 during all periods presented as such securities were anti-dilutive during the periods. Also not included in the computations of diluted EPS were the unvested LTIP Units as such securities were anti-dilutive during all periods presented.
Veris Residential, L.P.:
Three Months Ended
March 31,
Computation of Basic EPU 2024 2023
Loss from continuing operations after income tax expense $ (6,269) $ (18,832)
Add (deduct): Noncontrolling interests in consolidated joint ventures 495  587 
Add (deduct): Redeemable noncontrolling interests (297) (6,366)
Add (deduct): Redemption value adjustment of redeemable noncontrolling interests —  (4,977)
Loss from continuing operations available to unitholders (6,071) (29,588)
Income from discontinued operations available to unitholders 1,800  2,602 
Net loss available to common unitholders for basic earnings per unit $ (4,271) $ (26,986)
Weighted average common units 100,968  100,526 
Basic EPU:
Loss from continuing operations available to unitholders $ (0.06) $ (0.29)
Income from discontinued operations available to unitholders 0.02  0.02 
Net loss available to common unitholders for basic earnings per unit $ (0.04) $ (0.27)
Three Months Ended
March 31,
Computation of Diluted EPU 2024 2023
Loss from continuing operations available to common unitholders $ (6,071) $ (29,588)
Income from discontinued operations for diluted earnings per unit 1,800  2,602 
Net loss available to common unitholders for diluted earnings per unit $ (4,271) $ (26,986)
Weighted average common unit 100,968  100,526 
Diluted EPU:
Loss from continuing operations available to common unitholders $ (0.06) $ (0.29)
Income from discontinued operations available to common unitholders 0.02  0.02 
Net loss available to common unitholders $ (0.04) $ (0.27)
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):
Three Months Ended
March 31,
2024 2023
Basic EPU units 100,968  100,526 
Diluted EPU Units 100,968  100,526 
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 during all periods presented as such securities were anti-dilutive during the periods. Also not included in the computations of diluted EPU were the unvested LTIP Units as such securities were anti-dilutive during all periods presented.