Company: VRE
Filing Date: 2025-10-22
Form Type: 10-Q
Source: 0001628280-25-045884
Chunk: 120

Company: Veris Residential, Inc.
Filing Date: 2025-10-22
Form: 10-Q
Item: Part I, Item 8
Chunk 120
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b)This amount has a corresponding liability of $5.9 million and $6.5 million as of September 30, 2025 and December 31, 2024, respectively, which is included in Accounts payable, accrued expense and other liabilities. See Note 12: Commitments and Contingencies – Office and Ground Lease agreements for further details.DERIVATIVE FINANCIAL INSTRUMENTSCash Flow Hedges of Interest Rate RiskThe Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate caps as part of its interest rate risk management strategy.  Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months, the Company estimates $0.9 million will be reclassified as an increase to interest expense.As of September 30, 2025, the Company had two interest rate caps outstanding and in effect with a notional amount of $185.0 million designated as cash flow hedges of interest rate risk, and two undesignated interest rate caps outstanding and in effect with a notional amount of $145.0 million. During the third quarter, the Company dedesignated the interest rate caps previously designated as hedging instruments in connection with the repayment of the 2024 Term Loan.  Additionally, the Company terminated two interest rate caps previously designated as a hedging instrument in connection with the repayment of debt.  As a result of these transactions, $0.5 million of deferred losses were recognized immediately within interest expense for the three and nine months ended September 30, 2025.The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2025 and December 31, 2024 (dollars in thousands):Derivative Instruments Fair ValueBalance sheet locationSeptember 30,2025December 31,2024Interest rate caps designated as hedging instruments$499 $