Company: VRE
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0000924901-25-000011
Chunk: 129

Company: Veris Residential, Inc.
Filing Date: 2025-02-24
Form: 10-K
Item: Item 1A
Chunk 129
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 without accompanying cash proceeds and, therefore, hinder our ability to meet the real estate investment trust distribution requirements of the IRS Code. 

We are obligated to comply with financial covenants in our indebtedness that could restrict our range of operating activities: Some of the mortgages on our properties contain customary negative covenants, including limitations on our ability, without the prior consent of the lender, to further mortgage the property, to enter into new leases outside of stipulated guidelines or to materially modify existing leases. In addition, our revolving credit and term loan facilities contain customary requirements, including restrictions and other limitations on our ability to incur debt, debt to assets ratios and interest coverage ratios. These revolving credit and term loan covenants may limit our flexibility in conducting our operations and create a risk of default on our indebtedness if we cannot continue to satisfy them. Some of our debt instruments contain cross default provisions with other debt instruments.  Failure to comply with these covenants could cause a default under the agreements and, in certain circumstances, our lenders may be entitled to accelerate our debt obligations. Defaults under our debt agreements could materially and adversely affect our financial condition and results of operations. 

Rising interest rates may adversely affect our cash flow: As of December 31, 2024, we have $200 million of outstanding borrowings under the Term Loan and $152 million of outstanding borrowings under the Revolving Credit Facility, and approximately $241.5 million of our mortgage indebtedness bears interest at variable rates, of which we have hedged $591.5 million. We may incur additional indebtedness in the future that bears interest at variable rates. Variable rate debt creates higher debt service requirements if market interest rates increase. Higher debt service requirements could adversely affect our ability to make distributions or payments to our investors and/or cause us to default under certain debt covenants.

Our degree of leverage could adversely affect our cash flow: We may fund acquisition opportunities and development partially through short-term borrowings (including our revolving credit facility), as well as from proceeds from property sales, follow-on equity offerings and undistributed cash. We expect to refinance projects purchased with short-term debt either with long-term indebtedness, proceeds from property sales or equity financing depending upon the economic conditions at the time of refinancing. However, we have entered into certain financial agreements which contain financial and operating covenants that limit our ability under certain circumstances to incur additional secured and unsecured indebtedness. 

We are dependent on external sources of capital for future growth: To qualify as a