Quarterly report pursuant to Section 13 or 15(d)

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

v3.24.3
VERIS RESIDENTIAL, INC. STOCKHOLDERS’ EQUITY AND VERIS RESIDENTIAL, L.P.’S PARTNERS’ CAPITAL
 9 Months Ended
Sep. 30, 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 and nine months ended September 30, 2024 and 2023, respectively (dollars in thousands):
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2024 2023 2024 2023
Opening Balance $ 1,132,424 $ 1,196,953 $ 1,137,478 $ 1,235,685
Net loss available to common shareholders (9,692) (54,807) (10,673) (102,214)
Shares issued under ATM Program, net (66) —  1,765 —
Common stock distributions (6,628) (4,714) (17,222) (4,714)
Redeemable noncontrolling interests —  —  —  (4,516)
Redemption of common units for common stock 22  2,297  135  11,348 
Shares issued under Dividend Reinvestment and Stock Purchase Plan 2 1 6 3
Directors' deferred compensation plan 98 99 296 295
Stock Compensation 2,926 9,366 10,325 16,218
Cancellation of common stock (657) (31) (3,998) (497)
Other comprehensive loss (4,404) (652) (4,172) (111)
Rebalancing of ownership percent between parent and subsidiaries (83) (902) 2 (3,887)
Balance at September 30 $ 1,113,942 $ 1,147,610 $ 1,113,942 $ 1,147,610
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, the Company 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. During the nine months ended
September 30, 2024, the Company sold 133,759 shares pursuant to the ATM Program, generating net proceeds of $1.8 million.
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.
In June 2024, stockholders of the Company approved the termination of the 2013 Plan and the establishment of the 2024 Incentive Stock Plan (the "2024 Plan"), under which a total of 2,885,207 shares has been reserved for issuance. No new awards will be granted under the 2013 Plan.
Stock Options
As of September 30, 2024, the Company has 2,330,000 options granted and outstanding, of which 2,246,666 are vested.
There were no stock options exercised under any stock option plans for the nine months ended September 30, 2024 and 2023, respectively. The Company has a policy of issuing new shares to satisfy stock option exercises.
As of September 30, 2024 and December 31, 2023, the stock options outstanding had a weighted average remaining contractual life of approximately 2.8 years and 3.6 years, respectively.
The Company recognized stock compensation expense related to stock options of $92 thousand and $414 thousand for the three months ended September 30, 2024 and 2023, respectively and $521 thousand and $1.2 million for the nine months ended September 30, 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 26, 2024, the Company issued RSAs to non-employee members of the Board of Directors, of which 71,232 unvested RSAs were outstanding at September 30, 2024.
The Company recognized stock compensation expense related to RSAs of $260 thousand and $230 thousand for the three months ended September 30, 2024 and 2023, respectively and $691 thousand and $592 thousand for the nine months ended September 30, 2024 and 2023, respectively.
As of September 30, 2024, the Company had $0.8 million 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 0.8 years.
All currently outstanding and unvested RSAs provided to the non-employee members of the Board of Directors were issued under the 2024 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 and 2024 Plan.
A portion of the RSUs are subject to time-based vesting conditions and will vest over a three-year period ("TRSUs"). As of September 30, 2024, there are 762,983 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 September 30, 2024, there are 14,467 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 September 30, 2024, there are 807,964 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 September 30, 2024, there are 759,154 OPRSUs outstanding and unvested.
The Company recognized stock compensation expense related to LTIP awards of $2.6 million and $5.1 million for the three months ended September 30, 2024 and 2023, respectively and $9.1 million and $11.3 million for the nine months ended September 30, 2024 and 2023, respectively.
As of September 30, 2024, the Company had $11.6 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 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 September 30, 2024 and 2023, deferred stock units earned were 5,876 and 6,193, respectively. During the nine months ended September 30, 2024, and 2023, 19,936 and 19,143 deferred stock units were earned, respectively. As of September 30, 2024 and December 31, 2023, there were 97,912 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 and nine months ended September 30, 2024 and 2023 in accordance with ASC 260, Earnings Per Share (dollars in thousands, except per share amounts):
Veris Residential, Inc.:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Computation of Basic EPS 2024 2023 2024 2023
Loss from continuing operations after income tax expense $ (11,113) $ (60,734) $ (16,066) $ (105,020)
Add (deduct): Noncontrolling interests in consolidated joint ventures 391  592  1,429  1,815 
Add (deduct): Noncontrolling interests in Operating Partnership 923  5,243  1,293  9,785 
Add (deduct): Redeemable noncontrolling interests (81) (350) (459) (7,333)
Add (deduct): Redemption value adjustment of redeemable noncontrolling interests attributable to common shareholders —  —  —  (4,516)
Loss from continuing operations available to common shareholders $ (9,880) $ (55,249) $ (13,803) $ (105,269)
Income (loss) from discontinued operations available to common shareholders 188  442  3,130  (1,461)
Net loss available to common shareholders for basic earnings per share $ (9,692) $ (54,807) $ (10,673) $ (106,730)
Weighted average common shares 92,903  92,177  92,615  91,762 
Basic EPS:
Loss from continuing operations available to common shareholders $ (0.10) $ (0.60) $ (0.15) $ (1.14)
Income (loss) from discontinued operations available to common shareholders —  —  0.03  (0.02)
Net loss available to common shareholders $ (0.10) $ (0.60) $ (0.12) $ (1.16)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Computation of Diluted EPS 2024 2023 2024 2023
Net loss from continuing operations available to common shareholders $ (9,880) $ (55,249) $ (13,803) $ (105,269)
Add (deduct): Noncontrolling interests in Operating Partnership (923) (5,243) (1,293) (9,785)
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 $ (10,803) $ (60,492) $ (15,096) $ (115,515)
Income (loss) from discontinued operations for diluted earnings per share 206  484  3,425  (1,595)
Net loss available for diluted earnings per share $ (10,597) $ (60,008) $ (11,671) $ (117,110)
Weighted average common shares 101,587  100,925  101,304  100,770 
Diluted EPS:
Loss from continuing operations available to common shareholders $ (0.10) $ (0.60) $ (0.15) $ (1.14)
Income (loss) from discontinued operations available to common shareholders —  —  0.03  (0.02)
Net loss available to common shareholders $ (0.10) $ (0.60) $ (0.12) $ (1.16)
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
September 30,		 Nine Months Ended
September 30,
2024 2023 2024 2023
Basic EPS shares 92,903  92,177  92,615  91,762 
Add: Operating Partnership – common and vested LTIP units 8,684  8,748  8,689  9,008 
Diluted EPS Shares 101,587  100,925  101,304  100,770 
Veris Residential, L.P.:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Computation of Basic EPU 2024 2023 2024 2023
Loss from continuing operations after income tax expense $ (11,113) $ (60,734) $ (16,066) $ (105,020)
Add (deduct): Noncontrolling interests in consolidated joint ventures 391  592  1,429  1,815 
Add (deduct): Redeemable noncontrolling interests (81) (350) (459) (7,333)
Add (deduct): Redemption value adjustment of redeemable noncontrolling interests —  —  —  (4,977)
Loss from continuing operations available to unitholders $ (10,803) $ (60,492) $ (15,096) $ (115,515)
Income (loss) from discontinued operations available to unitholders 206  484  3,425  (1,595)
Net loss available to common unitholders for basic earnings per unit $ (10,597) $ (60,008) $ (11,671) $ (117,110)
Weighted average common units 101,587  100,925  101,304  100,770 
Basic EPU:
Loss from continuing operations available to unitholders $ (0.10) $ (0.60) $ (0.15) $ (1.14)
Income (loss) from discontinued operations available to unitholders —  —  0.03  (0.02)
Net loss available to common unitholders for basic earnings per unit $ (0.10) $ (0.60) $ (0.12) $ (1.16)
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Computation of Diluted EPU 2024 2023 2024 2023
Loss from continuing operations available to common unitholders $ (10,803) $ (60,492) $ (15,096) $ (115,515)
Income (loss) from discontinued operations for diluted earnings per unit 206  484  3,425  (1,595)
Net loss available to common unitholders for diluted earnings per unit $ (10,597) $ (60,008) $ (11,671) $ (117,110)
Weighted average common unit 101,587  100,925  101,304  100,770 
Diluted EPU:
Loss from continuing operations available to common unitholders $ (0.10) $ (0.60) $ (0.15) $ (1.14)
Income (loss) from discontinued operations available to common unitholders —  —  0.03  (0.02)
Net loss available to common unitholders $ (0.10) $ (0.60) $ (0.12) $ (1.16)
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
September 30,		 Nine Months Ended
September 30,
2024 2023 2024 2023
Basic EPU units 101,587  100,925  101,304  100,770 
Diluted EPU Units 101,587  100,925  101,304  100,770