EDGAR 10-K Filing

Company CIK: 1067063
Filing Year: 2024
Filename: 1067063_10-K_2024_0000924901-24-000006.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
GENERAL
Veris Residential, Inc., a Maryland corporation, together with its subsidiaries (collectively the “General Partner”), is a fully-integrated, self-administered and self-managed real estate investment trust (“REIT”).
The Company owns, operates and develops multifamily rental properties located primarily in the Northeast, as well as a portfolio of non-strategic land and commercial assets. The Company is focused on conducting business in a socially, ethically, and environmentally responsible manner, while seeking to maximize value for all stakeholders. Veris Residential, Inc. was incorporated on May 24, 1994.
The General Partner controls Veris Residential, L.P., a Delaware limited partnership, together with its subsidiaries (collectively, the “Operating Partnership”), as its sole general partner and owned a 91.4 percent and 90.7 percent common unit interest in the Operating Partnership as of December 31, 2023 and 2022, respectively.
As of December 31, 2023, the Company owned or had interests in 24 multifamily rental properties as well as non-strategic assets comprised of one office property and four parking/retail properties, plus developable land (collectively, the "Properties"). The Properties are comprised of: (a) 21 wholly-owned or Company-controlled properties, comprised of 17 multifamily properties and four non-core assets, and (b) eight properties owned by unconsolidated joint ventures in which the Company has investment interests, including seven multifamily properties and one non-core asset. The Properties are located in three states in the Northeast, plus the District of Columbia. For more information on the Properties, refer to Item 2.
THE COMPANY
During 2023, the Company substantially completed its multi-year transformation to a pure-play multifamily REIT. As part of this strategic initiative, the Company sought to unlock shareholder value by simplifying its business, strengthening its balance sheet, enhancing its operational platform and aligning the Company with its corporate values and the sustainability-conscious lifestyle preferences of its residents.
The Company seeks to own a portfolio comprised primarily of Class A multifamily properties with premium amenities and offerings that reflect our commitment to sustainability. This includes facilities such as clubrooms and lounges, state-of-the-art fitness centers, dog parks and rooftop swimming pools, as well as sustainability-driven features like electric vehicle (EV) charging stations, bee hives, hydroponic gardens and green roofs. The Company believes that amenities such as the ones offered at our multifamily properties drive resident satisfaction, command higher monthly rents, and generate additional revenues through amenity fees. When coupled with our commitment to providing premium resident services, such as concierges and professionally-curated events, the Company seeks to offer a multifamily experience that will maximize resident satisfaction and optimize rental revenue.
The Company’s multifamily properties have an average age of seven years, typically requiring lower maintenance capital expenditures than a more mature portfolio. The Company believes that this factor provides it with a competitive advantage as it can retain more capital and generate a higher yield than an older portfolio.
The Company has a fully integrated real estate platform with operational, investment, development, financial and management services provided in-house. The platform is underpinned by a commitment to technological enhancement and innovations which allow the Company to improve efficiency, optimize net operating income, and augment the resident experience, while eliminating costly manual processes that are time consuming and prone to human error. These technological enhancements combined with our experienced team have created a platform that is nimble and scalable, positioning the Company for growth.
Investment Strategy
The Company seeks to grow its portfolio of Class A multifamily assets through a combination of acquisitions, value-add redevelopments and developments. The Company expects to generate internal growth through organic optimization of its existing portfolio by recycling capital from non-strategic asset dispositions into debt repayments, value-add redevelopments, share buybacks, new developments, and acquisitions. These investments will convert low- to no-yielding
assets into cash-flowing, high quality assets with strong growth prospects. The Company may also seek to grow by raising capital through other sources such as through follow-on equity offerings, equity method investments and additional debt.
The Company believes it has strong relationships and networks to source off-market acquisition opportunities and seeks to add value to newly acquired properties by integrating them into its sustainability and technology-focused platform. The Company has a robust and disciplined underwriting process, and experienced investments and capital markets teams. The Company has extensive experience acquiring residential assets nationally as well as in its core focus area of the Northeast, and has the capabilities to generate additional value by acquiring assets through 1031 programs, issuing OP Units, and recycling capital through dispositions of non-strategic assets. When considering acquisitions, the Company may seek opportunities that improve the geographic diversity, asset quality, and product offering of its portfolio.
Sustainability Strategy
The Company aims to conduct its business, development, and operations of new and existing buildings in a manner that contributes to positive environmental, social and economic outcomes for all its stakeholders. The Company’s dedicated in-house team initiates and applies sustainable practices throughout all aspects of its business including property operations and resident experience. The Company’s multifamily portfolio has environmental considerations - particularly focused on energy consumption, water consumption and greenhouse gas emissions - integrated into many existing properties. The Company has also invested in energy-saving technology, such as those for irrigation, lighting, and HVAC to positively impact resident experience and asset value over the long-term. As a result of these efforts 80% of our multifamily portfolio is green certified (LEED®, ENERGY STAR® or equivalent). The Company believes that its focus on sustainability also enhances value for the Company in the short-term, through savings in utility expenses and higher interest from sustainability conscious residents.
Equally important is the Company’s focus on supporting the health and well-being of its employees, residents and tenants, which the Company has enhanced through the inclusion of on-site amenity offerings, including hydroponics gardens, fitness centers and on-demand fitness programs, as well as health and safety considerations across the portfolio and within its corporate offices. The Company’s efforts led to the achievement of WELL® Health-Safety rating across all of its managed locations.
A significant part of the Company’s commitment to sustainable development and operations is its commitment to transparent reporting of ESG performance indicators, as it recognizes the importance of this information to investors, lenders, and other stakeholders. The Company publishes an annual ESG Report that is aligned with the Global Reporting Initiative reporting framework and United Nations Sustainable Development Goals, and includes the Company’s strategy, key performance indicators, annual like-for-like comparisons, and year-over-year achievements.
Climate Resilience
As a long-term owner and active manager of real estate assets in operation and under development, the Company recognizes that climate change is no longer just a potential threat but today’s reality. As a result, the Company is taking action to mitigate its carbon footprint by assessing risks and adapting its business to ensure it is well positioned over the long-term. Event-driven (acute) and longer-term (chronic) physical risks that may result from climate change could have a material adverse effect on the Company’s properties, operations, and business. Responsibility for assessing and managing these climate-related risks and initiatives is owned by every team throughout the Company, with oversight by the management team's ESG Task Force and the Board's Nominating, Environmental, Social and Governance Committee. The Company views its proactive assessment of risks related to climate change as an opportunity to protect asset value, and as such, is implementing measures, planning and decision-making processes to protect its investments by improving resilience. Since 2022 the Company has met its target validated by the Science Based Target initiative to reduce its like-for-like Scope 1 and 2 greenhouse gas emissions by 50%.
HUMAN CAPITAL RESOURCES
As of December 31, 2023, the Company had approximately 197 employees, and 30% of its employees have been with the Company for at least 10 years.
The Company embraces the diverse and all-inclusive communities it serves and has taken focused efforts to support employees. Such efforts have included establishing employee affinity groups and introducing company wide diversity training. The Company is a signatory of the CEO Action for Diversity & Inclusion Pledge and the UN Women
Empowerment Principles and is included in the Bloomberg GEI index since 2023. Currently, five of the nine members (or 56 percent) of the Company’s Board of Directors are female and/or racially diverse.
Workforce diversity as of December 31, 2023 (excluding three employees that did non self-identify):
•56 percent of the Company’s employees identified as male, 43 percent as female and below one percent as non-binary
•52 percent of the Company’s employees were persons of color or other minority groups, down from 53 percent a year earlier.
Employee Incentives
The Company strives to provide career opportunities in an energized, inclusive, and collaborative environment tailored to retain, attract and reward highly performing employees. The Company provides a comprehensive benefits package intended to meet and exceed the needs of its employees and their families. The Company’s competitive offerings help its employees stay healthy, balance their work and personal lives, and meet their financial and retirement goals. The Company is also committed to ensuring that these benefits are attainable and affordable to its employees by limiting health insurance premiums and providing life insurance and short-term and long-term disability insurance at no cost to the employee.
In addition to flexible working arrangements, the Company offers the following enrichment opportunities and benefits to all eligible employees:
•A 401(k) plan with a history of annual discretionary Company employee match or profit sharing contributions;
•Minimum paid time off of 20 days in addition to public holidays, sick leave and other leaves offered by the company;
•Ability to rollover or donate certain paid time off;
•A 12-week fully paid parental leave;
•A legal aid program; and
•In house training and tuition reimbursement for select education costs.
The Company also promotes the philanthropic efforts of its employees by providing 24 hours of paid time off toward volunteerism and matching employee charitable contributions dollar for dollar (up to $1,000 per employee per year).
More information regarding the Company’s human capital policies, programs and initiatives is available in the "ESG" tab under the “Investors” section of its public website and the Company’s ESG Report. Information contained on or accessed through the Company’s website is not considered part of this Annual Report nor any registration statement that incorporates this Annual Report by reference.
COMPETITION
We face competition from other real estate companies to acquire, develop and manage multifamily properties. As an owner and operator of multifamily properties, we also face competition for prospective residents from other operators whose properties may be perceived to offer a better location or better amenities or whose pricing may be perceived as a better value given the quality, location, terms and amenities that the prospective resident seeks. We also compete against condominiums and single-family homes that are for sale or rent, including those offered through online platforms. Although we often compete against large, sophisticated developers and operators for development opportunities and for prospective residents, real estate developers and operators of any size can provide effective competition for both real estate assets and potential residents.
GOVERNMENT REGULATIONS
In the ordinary course of business, the development, maintenance and management of commercial and multifamily properties is subject to various laws, ordinances, and regulations, including those concerning entitlement, building, health and safety, site and building design, environment, zoning, sales, and similar matters which apply to or affect the real estate industry. Multifamily properties and their owners are subject to various laws, ordinances, and regulations, including those related to real estate broker licensing and regulations relating to recreational facilities such as swimming pools, activity centers, and other common areas. As an owner and operator of multifamily properties, we also may be subject to rent or rent stabilization laws. In addition, various federal, state, and local laws subject real estate owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials that may be present.
These materials may include lead-based paint, asbestos, polychlorinated biphenyls, and petroleum-based fuels. Such laws often impose liability without regard to fault or whether the owner or operator knew of, or was responsible for, the release or presence of such materials. In connection with the ownership of real estate, we could potentially be liable for environmental liabilities or costs associated with our real estate, whether currently owned, acquired in the future, or owned in the past. The risks related to government regulation, including health, safety and environmental matters, are described in more detail in Item 1A. Risk Factors - Operating Risks.
INDUSTRY SEGMENTS
The Company operates in two industry segments: (i) multifamily real estate and services and (ii) commercial and other real estate. As of December 31, 2023, the Company does not have any foreign revenues and its business is not seasonal. Please see our financial statements attached hereto and incorporated by reference herein for financial information relating to our industry segments.
SIGNIFICANT TENANTS
As of December 31, 2023, no tenant accounted for more than 10 percent of the Company’s consolidated revenues.
RECENT DEVELOPMENTS
In 2023, the Company accomplished a number of important milestones in substantially completing its transformation to a pure play multifamily REIT.
The Company continued to streamline the portfolio by disposing of non-strategic office and hotel assets and selectively culling the land portfolio to right-size the Company’s equity allocated to its development pipeline and speculative land bank by:
•Closing on the sale of the Port Imperial Hotels, resulting in the Company's full exit from the hotel segment
•Consummating the sale of Harborside 1, 2, & 3 for an aggregate price of $420 million, releasing approximately $360 million of net proceeds.
•Sold over $700 million of non-strategic assets since the beginning of 2023, comprised of eight properties and four land parcels.
As of February 21, 2024, approximately $139 million of non-strategic assets are under binding contract for sale, including our last office property, Harborside 5.
The Company also thoughtfully redeployed proceeds from its disposition activities, strengthened its balance sheet, and enhanced its portfolio by:
•Negotiating the early redemption of Rockpoint's interest in VRT for $520 million. Refer to Note 14: Redeemable Noncontrolling Interests for more details and defined terms.
•Entering into a $115 million term loan and $60 million revolving credit facility. The full proceeds of the term loan and $52 million of the revolving credit facility were drawn in July 2023 to fund the early redemption of Rockpoint's interest in VRT. The full balances were repaid as of December 31, 2023 using proceeds from non-strategic sales, cash flow from operations, and proceeds from the refinancing of Haus25.
•Refinancing the Haus25 construction loan well ahead of its December 2024 maturity at an interest rate of 5.46%, realizing a 124 basis point coupon saving relative to the prior construction loan while improving the term and distribution of the Company's overall debt maturity profile.
As of December 31, 2023, 99.9% of the Company's total debt portfolio (consolidated and unconsolidated) was hedged or fixed at a weighted average interest rate of 4.5%. The debt portfolio has a weighted average maturity of 3.7 years.
The Company continued to further enhance its ESG and operational platform by:
•Ending the year with over 80 percent of the Company’s wholly-owned multifamily portfolio Green Certified (LEED®, ENERGY STAR®, or equivalent), up from 43 percent at the end of 2022.
•Exceeding its goal to reduce Scope 1 and 2 emissions by 50 percent by 2030, validated by the Science Based Targets initiative, and reducing like-for-like emissions by 54 percent compared to the 2019 baseline.
•Surpassing its goal of reducing energy consumption by 20 percent by 2030 well ahead of schedule, cutting consumption by 24 percent over the last three years.
•Earning a 5-Star ESG rating from GRESB (the highest rating offered for distinguished ESG leadership and performance) for the second year in a row.
•Expanding disclosure with respect to Scope 3 emissions, covering more than 90 percent of our operational carbon footprint in our 2022 ESG Report.
•Reaching its target of sustainability addenda in more than 99 percent of residential leases.
•Continuing its focus on resident satisfaction and experience, translating into an 83.16 J Turner ORA Ranking as of December 2023, compared to a national average of 63.63.
AVAILABLE INFORMATION
The Company’s corporate offices are located at Harborside 3, 210 Hudson Street, Suite 400, Jersey City, New Jersey 07311, and its telephone number is (732) 590-1010. The Company’s internet website is www.verisresidential.com. Information contained on or accessed through the Company's website is not considered part of this Annual Report nor any registration statement that incorporates this Annual Report by reference. The Company makes available free of charge on or through its website the annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished by the Company pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission. In addition, the Company’s internet website includes other items related to corporate governance matters, including, among other things, the Company’s corporate governance principles, charters of the standing committees of the Board of Directors, the code of business conduct and ethics applicable to all employees, officers and directors, the Dodd-Frank clawback policy and insider trading policy. The General Partner intends to disclose on the Company’s internet website any amendments to or waivers from its code of business conduct and ethics as well as any amendments to its other governance documents, including without limitation the corporate governance principles, Dodd-Frank clawback policy, insider trading policy or the charters of the standing committees of the Board of Directors. Copies of these documents may be obtained, free of charge, from our internet website. Any shareholder also may obtain copies of these documents, free of charge, by sending a request in writing to: Veris Residential, Inc. Investor Relations Department, Harborside 3, 210 Hudson St., Ste. 400, Jersey City, NJ 07311 or to investorrelations@verisresidential.com.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We consider portions of this report, including the documents incorporated by reference, to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of such act. Such forward-looking statements relate to, without limitation, our future economic performance, plans and objectives for future operations and projections of revenue and other financial items. Forward-looking statements can be identified by the use of words such as “may,” “will,” “plan,” “potential,” “projected,” “should,” “expect,” “anticipate,” “estimate,” “target,” “continue,” or comparable terminology. Forward-looking statements are inherently subject to certain risks, trends and uncertainties, many of which we cannot predict with accuracy and some of which we might not even anticipate. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions at the time made, we can give no assurance that such expectations will be achieved. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.
Among the factors about which we have made assumptions are:
•risks and uncertainties affecting the general economic climate and conditions, which in turn may have a negative effect on the fundamentals of our business and the financial condition of our residents and tenants;
•the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;
•changes in the supply of and demand for our properties, as well as demand for services or amenities at our properties;
•our ability to attract, hire and retain qualified personnel;
•forward-looking financial and operational information, including information relating to future development projects, potential acquisitions or dispositions, leasing activities, capitalization rates, and projected revenue and income;
•changes in operating costs;
•our ability to complete construction and development activities on time and within budget, including without limitation obtaining regulatory permits and the availability and cost of materials, labor and equipment;
•our ability to obtain adequate insurance, including coverage for losses resulting from catastrophes, natural disasters, pandemics and terrorist acts;
•our credit worthiness and the availability of financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and refinance existing debt and our future interest expense;
•the extent of any tenant bankruptcies or of any early lease terminations;
•our ability to lease or re-lease space at current or anticipated rents;
•changes in governmental regulation, tax rates and similar matters, including rent stabilization laws or other housing laws and regulations; and
•other risks associated with the development and acquisition of properties, including risks that the development may not be completed on schedule, that the residents or tenants will not take occupancy or pay rent, or that development or operating costs may be greater than anticipated.
For further information on factors which could impact us and the statements contained herein, see Item 1A: Risk Factors. We assume no obligation to update and supplement forward-looking statements that become untrue because of subsequent events, new information or otherwise.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
Our results from operations and ability to make distributions on our equity and debt service on our indebtedness may be affected by the risk factors set forth below. All investors should consider the following risk factors before deciding to purchase securities of the Company. The Company refers to itself as “Veris,” “we” or “our” in the following risk factors.
OPERATING RISKS
Our performance is subject to risks associated with the operation of multifamily properties.
General: Our business and our ability to make distributions or payments to our investors depend on the ability of our properties to generate funds in excess of operating expenses (including scheduled principal payments on debt and capital expenditures). Events or conditions that are beyond our control may adversely affect our operations and the value of our multifamily properties. Such events or conditions could include:
•an oversupply of or reduced demand for multifamily properties caused by a decline in household formation or employment, a lack of employment growth or otherwise;
•corporate restructurings and/or layoffs, and industry slowdowns;
•decreases in the demand for services or amenities, the convenience and attractiveness of the communities or neighborhoods in which our multifamily rental properties are located or the quality of local schools;
•development by competitors of competing multifamily communities;
•the inability or unwillingness of residents to pay rent or rent increases;
•changes in the financial condition of Fannie Mae or Freddie Mac which provide a major source of financing to the multifamily rental sector;
•rent control or rent stabilization laws, or other housing laws and regulations that could prevent us from raising multifamily rents to offset increases in operating costs;
•our inability to provide adequate maintenance;
•increased operating costs, including insurance premiums, utilities and real estate taxes, due to inflation and other factors which may not necessarily be offset by increased rents;
•changes in laws and regulations (including tax, environmental, zoning and building codes, landlord/tenant and other housing laws and regulations) and agency or court interpretations of such laws and regulations and the related costs of compliance;
•civil unrest, earthquakes, pandemics, acts of terrorism and other natural disasters or acts of God that may result in uninsured losses.
Competition could limit our ability to lease multifamily properties or increase or maintain rents: Our multifamily properties compete with other multifamily property operators as well as rental housing alternatives, such as single-family homes for rent and short term furnished offerings such as those available from extended stay hotels or through online listing services. In addition, our multifamily residents and prospective residents also consider, as an alternative to renting, the purchase of a new or existing condominium or single-family home. Competitive residential housing could adversely affect our ability to lease multifamily units and to increase or maintain rental rates.
Short-term leases expose us to the effects of declining market rents: Our multifamily leases are for an average term of 13 months. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.
We may suffer adverse consequences if our revenues decline since our operating costs do not necessarily decline in proportion to our revenue: We earn a significant portion of our income from renting our multifamily properties. Our operating costs, however, do not necessarily fluctuate in relation to changes in our rental revenue. This means that our costs will not necessarily decline even if our revenues do. Our operating costs also could increase while our revenues do not. If our operating costs increase significantly to the point that they exceed our rental revenues, we may be forced to borrow to cover our costs and we may incur losses. Such losses may adversely affect our ability to make distributions or payments to our investors.
We face risks associated with the operation of our commercial office properties.
Financially distressed commercial office tenants may be unable to pay rent: If a commercial office tenant defaults, we may experience delays and incur substantial costs in enforcing our rights as landlord and protecting our investments. If a tenant files for bankruptcy, we cannot evict the tenant solely because of the bankruptcy and a potential court judgment rejecting and terminating such tenant’s lease (which would subject all future unpaid rent to a statutory cap) could adversely affect our ability to make distributions or payments to our investors as we may be unable to replace the defaulting tenant with a new tenant at a comparable rental rate without incurring significant expenses or a reduction in rental income.
Renewing commercial office leases or re-letting commercial office space could be costly: If a commercial office tenant does not renew its lease upon expiration or terminates its lease early, we may not be able to re-lease the space on favorable terms or at all. If a tenant does renew its lease or we re-lease the space, the terms of the renewal or new lease, including the cost of required renovations or concessions to the tenant, may be less favorable than the current lease terms, which could adversely affect our ability to make distributions or payments to our investors.
We may not be able to dispose of remaining non-core assets within our anticipated timeframe or at favorable prices: The Company has determined to sell over time properties deemed non-core assets. While we intend to dispose of these properties opportunistically over time, there can be no assurance that these dispositions will be completed during the period of our strategic initiative. In addition, market conditions will impact our ability to dispose of these properties, and there can be no assurance that we will be successful in disposing of these properties for their estimated sales prices. A failure to dispose of these properties for their estimated market values as planned, or unfavorable tax consequences of the disposition of these properties could have a material adverse effect on our ability to finance our acquisition and development plans and could adversely affect our ability to make distributions or payments to our investors.
We face general market and operational risks associated with the real estate industry.
Our insurance coverage on our properties may be inadequate or our insurance providers may default on their obligations to pay claims: We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire and flood. We cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our properties. We cannot guarantee that we will be able to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, while our current insurance policies insure us against loss from catastrophic loss, natural disasters, terrorist acts and toxic mold, in the future, insurance companies may no longer offer coverage against these types of losses, or, if offered, these types of insurance may be prohibitively expensive. If any or all of the foregoing should occur, we may not have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available. Should an uninsured loss or a loss in excess of our insured limits occur, we could lose all or a portion of the capital we have invested in a property or properties, as well as the anticipated future revenue from the property or properties. Nevertheless, we might remain obligated for any mortgage debt or other financial obligations related to the property or properties. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Such events could adversely affect our ability to make distributions or payments to our investors. In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or canceled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices. In such case, we could experience a lapse in any or adequate insurance coverage with respect to one or more properties and be exposed to potential losses relating to any claims that may arise during such period of lapsed or inadequate coverage. We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future.
Illiquidity of real estate limits our ability to act quickly: Real estate investments are relatively illiquid. Such illiquidity may limit our ability to react quickly in response to changes in economic and other conditions. If we want to sell an investment, we might not be able to dispose of that investment in the time period we desire, and the sales price of that investment may not be recouped or may exceed the amount of our investment. The prohibition in the Internal Revenue Code of 1986, as
amended (the “IRS Code”), and related regulations on a real estate investment trust holding property for sale also may restrict our ability to sell property. The above limitations on our ability to sell our investments could adversely affect our ability to make distributions or payments to our investors.
Some of our costs, such as operating and general and administrative expenses, interest expense, and real estate acquisition and construction costs, are subject to inflation: A portion of our operating expenses is sensitive to inflation. These include expenses for property-related contracted services such as janitorial and engineering services, utilities, repairs and maintenance, and insurance. Property taxes are also impacted by inflationary changes as taxes are regularly reassessed based on changes in the fair value of our properties. We also have ground lease expenses in certain of our properties. Ground lease costs are contractual, but in some cases, lease payments reset every few years based on changes of consumer price indexes.
Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our resident’s ability to pay rents or our results of operations. Our multifamily leases are for an average term of 13 months, which we believe mitigates our exposure to inflation, by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance). Inflation could outpace any increases in rent and adversely affect us. We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any related adverse effects on our results of operations and financial condition, are unknown at this time. Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so.
Additionally, inflationary pricing may have a negative effect on the real estate acquisitions and construction costs necessary to complete our development and redevelopment projects, including, but not limited to, costs of construction materials, labor, and services from third-party contractors and suppliers. Higher acquisition and construction costs could adversely impact our net investments in real estate and expected yields on our development and redevelopment projects, which may make otherwise lucrative investment opportunities less profitable to us. Our commercial leases have fixed rent increases which may not increase in line with inflation, this causing our net operating income to decrease. As a result, our financial condition, results of operations, and cash flows, as well as our ability to pay dividends, could be adversely affected over time.
We face risks associated with property acquisitions: We intend to and may acquire new properties, primarily in the multifamily rental sector, assuming that we are able to obtain capital on favorable terms. Such newly acquired properties may not perform as expected and may subject us to unknown liability with respect to liabilities relating to such properties for clean-up of undisclosed environmental contamination or claims by tenants, residents, vendors or other persons against the former owners of the properties. Inaccurate assumptions regarding future rental or occupancy rates could result in overly optimistic estimates of future revenues. In addition, future operating expenses or the costs necessary to bring an acquired property up to standards established for its intended market position may be underestimated. The search for and process of acquiring such properties will also require a substantial amount of management’s time and attention. In addition, developers and other real estate companies may compete with us in seeking properties for acquisition, land for development and prospective tenants. Such competition may adversely affect our ability to make distributions or payments to our investors by:
•reducing the number of suitable investment opportunities offered to us;
•increasing the bargaining power of property owners;
•interfering with our ability to attract and retain tenants; and
•adversely affecting our ability to minimize expenses of operation.
Our acquisition activities and their success are subject to the following risks:
•adequate financing to complete acquisitions may not be available on favorable terms or at all as a result of the continuing volatility in the financial and credit markets;
•even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition and risk the loss of certain non-refundable deposits and incurring certain other acquisition-related costs; and
•any acquisition agreement will likely contain conditions to closing, including completion of due diligence investigations to our satisfaction or other conditions that are not within our control, which may not be satisfied.
Americans with Disabilities Act compliance could be costly: Under the Americans with Disabilities Act of 1990 (“ADA”), all public accommodations and commercial facilities must meet certain federal requirements related to access and use by disabled persons. Compliance with the ADA requirements could involve removal of structural barriers from certain
disabled persons’ entrances. Other federal, state and local laws may require modifications to or restrict further renovations of our properties with respect to such accesses.
Although we believe that our properties are substantially in compliance with present requirements, noncompliance with the ADA or related laws or regulations could result in the United States government imposing fines or private litigants being awarded damages against us. Such costs may adversely affect our ability to make distributions or payments to our investors.
Environmental problems are possible and may be costly: Various federal, state and local laws and regulations subject property owners or operators to liability for the costs of removal or remediation of certain hazardous or toxic substances located on or in the property. These laws often impose liability without regard to whether the owner or operator was responsible for or even knew of the presence of such substances. The presence of or failure to properly remediate hazardous or toxic substances (such as toxic mold, lead paint and asbestos) may adversely affect our ability to rent, sell or borrow against contaminated property and may impose liability upon us for personal injury to persons exposed to such substances. Various laws and regulations also impose liability on persons who arrange for the disposal or treatment of hazardous or toxic substances at another location for the costs of removal or remediation of such substances at the disposal or treatment facility. These laws often impose liability whether or not the person arranging for such disposal ever owned or operated the disposal facility. Certain other environmental laws and regulations impose liability on owners or operators of property for injuries relating to the release of asbestos-containing or other materials into the air, water or otherwise into the environment. As owners and operators of property and as potential arrangers for hazardous substance disposal, we may be liable under such laws and regulations for removal or remediation costs, governmental penalties, property damage, personal injuries and related expenses. Payment of such costs and expenses could adversely affect our ability to make distributions or payments to our investors.
Environmental, Social and Governance factors may impose additional costs and/or expose us to new risks: Certain investors, customers, regulators and other stakeholders have focused more on corporate responsibility, specifically related to environmental, social and governance (“ESG”) factors. Additionally, there is increased attention on these matters by various regulatory authorities, including the SEC, and the expense and activities necessary to comply with new regulations or standards may be significant. Third-party providers of corporate responsibility ratings and reports on companies have also increased in number, resulting in varied, and in some cases, inconsistent standards. Some investors use these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to ESG are inadequate or objectionable.
The regulations and criteria for assessing corporate responsibility practices are evolving, which could result in our undertaking costly initiatives and activities to meet any new regulations or criteria. Additionally, if we are unable to or elect not to satisfy any new regulation or criteria, or do not meet the criteria of a specific third-party provider, some investors may conclude our policies with respect to ESG are inadequate, and we may face reputational damage.
We have communicated certain initiatives and goals regarding ESG matters in our 2022 ESG Report on our website, and we may communicate revised or additional initiatives or goals in the future. We could be unsuccessful or perceived to be unsuccessful in the achievement of our ESG initiatives or goals, or we could be criticized for the scope of our initiatives or goals. If we fail to meet the expectations of investors, customers, regulators, and other stakeholders; our initiatives are not executed as planned; or we do not achieve our goals, our reputation and financial results could be adversely impacted.
Development of real estate, including the development of multifamily rental real estate could be costly: As part of our operating strategy, we may acquire land for development or construct on owned land, under certain conditions. Included among the risks of the real estate development business are the following, which may adversely affect our ability to make distributions or payments to our investors:
•financing for development projects may not be available on favorable terms;
•long-term financing may not be available upon completion of construction;
•failure to complete construction and lease-up on schedule or within budget may increase debt service expense and construction and other costs; and
•failure to rent the development at all or at rent levels originally contemplated.
Property ownership through joint ventures could subject us to the contrary business objectives of our co-venturers: We invest in joint ventures or partnerships in which we do not hold a controlling interest in the assets underlying the entities in which we invest, including joint ventures in which (i) we own a direct interest in an entity which controls such assets, or (ii) we own a direct interest in an entity which owns indirect interests, through one or more intermediaries, of such assets. These investments involve risks that do not exist with properties in which we own a controlling interest with respect to the
underlying assets, including the possibility that (i)our co-venturers or partners may control the joint venture and we may not be able to prevent them from taking certain actions; (ii) we may have limited rights to terminate or liquidate our investment; (iii) the distribution preferences of our co-venturers or partners may limit operating, liquidating and disposition distributions to us; (iv) our co-venturers or partners may, at any time, become insolvent or otherwise refuse to make capital contributions when due, (v) we may be responsible to our co-venturers or partners for indemnifiable losses, (vi) we may become liable with respect to guarantees of payment or performance by the joint ventures, (vii) we may become subject to buy-sell arrangements which could cause us to sell our interests or acquire our co-venturer’s or partner’s interests in a joint venture, or (viii) our co-venturers or partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives. Because we lack a controlling interest, our co-venturers or partners may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives. While we seek protective rights against such contrary actions, there can be no assurance that we will be successful in procuring any such protective rights, or if procured, that the rights will be sufficient to fully protect us against contrary actions. Our organizational documents do not limit the amount of available funds that we may invest in joint ventures or partnerships. If the objectives of our co-venturers or partners are inconsistent with ours, it may adversely affect our ability to make distributions or payments to our investors.
We may face increased risks and costs associated with volatility in commodity and labor prices or as a result of supply chain or procurement disruptions, which may adversely affect the status of our construction projects: The price of commodities and skilled labor for our construction projects may increase unpredictably due to external factors, including, but not limited to, performance of third-party suppliers and contractors; overall market supply and demand; government regulation; international trade; and changes in general business, economic, or political conditions. As a result, the costs of raw construction materials and skilled labor required for the completion of our development and redevelopment projects may fluctuate significantly from time to time.
We rely on a number of third-party suppliers and contractors to supply raw materials and skilled labor for our construction projects. While we do not rely on any single supplier or vendor for the majority of our materials and skilled labor, we may experience difficulties obtaining necessary materials from suppliers or vendors whose supply chains might become impacted by economic or political changes, or difficulties obtaining adequate skilled labor from third-party contractors in a tightening labor market. It is uncertain whether we would be able to source the essential commodities, supplies, materials, and skilled labor timely or at all without incurring significant costs or delays, particularly during times of economic uncertainty resulting from events outside of our control. We may be forced to purchase supplies and materials in larger quantities or in advance of when we would typically purchase them. This may cause us to require use of capital sooner than anticipated. Alternatively, we may also be forced to seek new third-party suppliers or contractors, whom we have not worked with in the past, and it is uncertain whether these new suppliers will be able to adequately meet our materials or labor needs. Our dependence on unfamiliar supply chains or relatively small supply partners may adversely affect the cost and timely completion of our construction projects. In addition, we may be unable to compete with entities that may have more favorable relationships with their suppliers and contractors or greater access to the required construction materials and skilled labor.
CAPITAL AND FINANCING RISKS
We are subject to financial and credit risks associated with general economic and market conditions.
Our business may be affected by volatility in the financial and credit markets, the general global economic conditions and other market or economic challenges experienced by the U.S. economy or the real estate industry as a whole or in the Northeast where our properties are located. Our results of operations, financial condition and ability to service current debt and to pay distributions to our shareholders may be adversely affected by the following, among other potential conditions:
•our ability to borrow on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from both our existing operations and our acquisition and development activities and increase our future interest expense;
•reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans;
•the value and liquidity of our short-term investments and cash deposits could be reduced as a result of a deterioration of the financial condition of the institutions that hold our cash deposits or the institutions or assets in which we have made short-term investments, the dislocation of the markets for our short-term investments, increased volatility in market rates for such investments or other factors;
•reduced liquidity in debt markets and increased credit risk premiums for certain market participants may impair our ability to access capital; and
•one or more lenders under our line of credit could refuse or be unable to fund their financing commitment to us and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
Our performance is subject to risks associated with the anticipated completion of our repositioning of the Company’s portfolio from diversified asset classes to exclusively multifamily rental properties.
Repositioning the Company’s office portfolio may result in less than expected returns on office properties and could adversely affect our ability to make distributions or payments to our investors: There can be no assurance that the Company, as it seeks to complete the repositioning of a portion of its portfolio from office to the multifamily rental sector, will be able to sell office properties and purchase multifamily rental properties at prices that in the aggregate are profitable for the Company or are efficient uses of its capital or that would not result in a reduction of the Company’s cash flow, and such transactions could adversely affect our ability to make distributions or payments to our investors. Because real estate investments are relatively illiquid, it also may be difficult for the Company to promptly sell its office properties that are held or may be designated for sale promptly or on favorable terms, which could have a material adverse effect on the Company’s financial condition. Moreover, as the Company seeks to complete the repositioning of a portion of its portfolio from office to the multifamily rental sector, the Company may be subject to a Federal income tax on gain from sales of properties due to limitations in the IRS Code and related regulations on a real estate investment trust’s ability to sell properties. The Company intends to structure its property dispositions in a tax-efficient manner and avoid the prohibition in the IRS Code against a real estate investment trust holding properties for sale. There is no guaranty, however, that such dispositions can be achieved without the imposition of federal income tax on any gain recognized.
Changes in applicable laws, or noncompliance with applicable laws, could adversely affect our operations or expose us to liability: We must develop, construct and operate our communities in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, landlord tenant laws and other laws generally applicable to business operations. Noncompliance with applicable laws could expose us to liability. Lower revenue growth or significant unanticipated expenditures may result from our need to comply with changes in (i) laws imposing remediation requirements and the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, (ii) rent control or rent stabilization laws or other residential landlord/tenant laws, or (iii) other governmental rules and regulations or enforcement policies affecting the development, use and operation of our communities, including changes to building codes and fire and life-safety codes.
Debt financing could adversely affect our economic performance.
Scheduled debt payments and refinancing could adversely affect our financial condition: We are subject to the risks normally associated with debt financing. These risks, including the following, may adversely affect our ability to make distributions or payments to our investors:
•market interest rates on loans to refinance indebtedness on our properties at maturity may be significantly higher than the interest rates on that existing indebtedness;
•our cash flow may be insufficient to meet required payments of principal and interest;
•payments of principal and interest on borrowings may leave us with insufficient cash resources to pay operating expenses;
•we may not be able to refinance indebtedness on our properties at maturity; and
•if refinanced, the terms of refinancing may not be as favorable as the original terms of the related indebtedness.
As of December 31, 2023, we had total outstanding indebtedness of $1.9 billion, comprised of no outstanding borrowings under our revolving credit facility and approximately $1.9 billion of mortgages, loans payable and other obligations. We may have to refinance the principal due on our current or future indebtedness at maturity, and we may not be able to do so.
If we are unable to refinance our indebtedness on acceptable terms, or at all, events or conditions that may adversely affect our ability to make distributions or payments to our investors include the following:
•we may need to dispose of one or more of our properties upon disadvantageous terms or adjust our capital expenditures in general or with respect to our strategy of acquiring multifamily residential properties and development opportunities in particular;
•prevailing interest rates or other factors at the time of refinancing could increase interest rates and, therefore, our interest expense;
•we may be subject to an event of default pursuant to covenants for our indebtedness;
•if we mortgage property to secure payment of indebtedness and are unable to meet mortgage payments, the mortgagee could foreclose upon such property or appoint a receiver to receive an assignment of our rents and leases; and
•foreclosures upon mortgaged property could create taxable income 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. Due to this cross-collateralization, a failure or default with respect to certain debt instruments or properties could have an adverse impact on us or our properties that are subject to the cross-collateralization under the applicable debt instrument. 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, 2023, we have no outstanding borrowings under our revolving credit facility and approximately $304.5 million of our hedged mortgage indebtedness bears interest at variable rates. 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 fund acquisition opportunities and development partially through short-term borrowings (including our revolving credit facility), as well as from proceeds from property sales and undistributed cash. We expect to refinance projects purchased with short-term debt either with long-term indebtedness 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. The Board of Directors could alter or eliminate its current policy on borrowing at any time at its discretion. If this policy were changed, we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our cash flow and our ability to make distributions or payments to our investors and/or could cause an increased risk of default on our obligations.
We are dependent on external sources of capital for future growth: To qualify as a real estate investment trust under the IRS Code, the General Partner must distribute to its shareholders each year at least 90 percent of its net taxable income, excluding any net capital gain. Because of this distribution requirement, it is not likely that we will be able to fund all future capital needs, including for acquisitions and developments, from income from operations. Therefore, we will have to rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of things, including the market’s perception of our growth potential and our current and potential future earnings. Moreover, additional equity offerings, including sales of the General Partner’s common stock pursuant to its $100 million At-The-Market equity offering commenced in November 2023, may result in substantial dilution of our shareholders’ interests, and additional debt financing may substantially increase our leverage.
We may originate mezzanine loans or make preferred equity investments in the future that may subject the Company to a greater risk of loss than traditional mortgage loans.
We may in the future originate mezzanine loans, which take the form of subordinated loans secured by second mortgages on the underlying property or subordinated loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. Mezzanine loans may involve a higher degree of risk than a senior mortgage secured by real property, because the security for the loan may lose all or substantially all of its value as a result of foreclosure by the senior lender and because it is in second position and there may not be adequate equity in the property. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some of or all our investment. In addition, mezzanine loans typically have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal.
We may in the future make preferred equity investments in corporations, limited partnerships, limited liability companies or other entities that have been formed for the purpose of directly or indirectly acquiring, developing or managing real property. Generally, we will not have the ability to control the daily operations of the entity, and we will not have the ability to select or remove a majority of the members of the board of directors, managers, general partner or partners or similar governing body of the entity or otherwise control its operations. Although we would seek to maintain sufficient influence over the entity to achieve our objectives, our partners may have interests that differ from ours and may be in a position to take actions without our consent that are inconsistent with our interests. Further, if our partners were to fail to invest additional capital in the entity when required, we may have to invest additional capital to protect our investment. Our partners have in the past failed, and may in the future fail, to develop or operate the real property, operate the entity, refinance property indebtedness or sell the real property in the manner intended and as a result the entity may not be able to redeem our investment or pay the return expected to us in a timely manner if at all. In addition, we may not be able to dispose of our investment in the entity in a timely manner or at the price at which we would want to divest. In the event that such an entity fails to meet expectations or becomes insolvent, we may lose our entire investment in the entity.
MANAGEMENT RISKS
We may not be able to attract, integrate, manage and retain personnel to execute our business strategy, and competition for skilled personnel could increase our labor costs.
Our success depends upon our ability to attract, integrate, manage and retain personnel who possess the skills and experience necessary to execute our acquisition, development, management and leasing strategies. We compete with various other companies in attracting and retaining qualified and skilled personnel. Our ability to hire and retain qualified personnel could be impaired by a lack of qualified candidates in the available labor force, any diminution of our reputation, decrease in compensation levels relative to our competitors or modifications to our total compensation philosophy or competitor hiring programs. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. We may not be able to offset such added costs by increasing the rates we charge our residents. If we cannot attract, hire and retain qualified personnel, our business, financial condition and results of operations would be negatively impacted. Our future success also depends upon our ability to manage the performance of our personnel. Failure to successfully manage the performance of our personnel could affect our profitability by causing operating inefficiencies that could increase operating expenses and reduce operating income.
We are dependent on our key personnel whose continued service is not guaranteed.
We are dependent upon key personnel for strategic business direction and real estate experience, including our chief executive officer, chief operating officer, chief financial officer, chief investments officer and general counsel. While we believe that we could find replacements for these key personnel, loss of their services could adversely affect our operations. We do not have key man life insurance for our key personnel. In addition, as the Company seeks to complete the repositioning of a portion of its portfolio from office to the multifamily rental sector, the Company may become increasingly dependent on non-executive personnel with residential development and leasing expertise to effectively execute the Company’s long-term strategy.
The terms of the Operating Partnership’s Agreement of Limited Partnership may limit our ability to take certain actions without the consent of some of the limited partners.
As of February 15, 2024, the General Partner owned approximately 91.4 percent of the Operating Partnership’s outstanding common partnership units. The consent of the holders of at least 85 percent of the Operating Partnership’s partnership units is required: (i) to merge (or permit the merger of) the Operating Partnership with another unrelated person, pursuant to a transaction in which the Operating Partnership is not the surviving entity; (ii) to dissolve, liquidate or wind up the Operating Partnership; or (iii) to convey or otherwise transfer all or substantially all of the Operating Partnership’s assets. If the General Partner’s ownership interest in the Operating Partnership were to drop below 85 percent as the result of future issuances of partnership units, then the General Partner’s inability to take any of the foregoing actions without the consent of some of the limited partners could have a material adverse effect on the Company’s ability to complete any of those transactions and negatively impact the Company’s business and operations.
INVESTMENT RISKS
Certain provisions of Maryland law and the General Partner’s charter and bylaws could hinder, delay or prevent changes in control.
Certain provisions of Maryland law and General Partner's charter and bylaws have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control. These provisions include the following:
Removal of Directors: Under the General Partner’s charter, as amended, subject to the rights of one or more classes or series of preferred stock to elect one or more directors, a director may be removed from office at any time, with or without cause, by the affirmative vote of a majority of the votes entitled to be cast by our stockholders generally in the election of directors.
Number of Directors, Board Vacancies, Terms of Office: The General Partner has, in its bylaws, elected to be subject to a certain provision of Maryland law which vest in the Board of Directors the exclusive right to determine the number of directors. This provision of Maryland law is applicable even if other provisions of Maryland law, the charter or the bylaws provide to the contrary. The General Partner revoked its election to be subject to a certain other provision of Maryland law which vests in the Board of Directors the exclusive right, by the affirmative vote of a majority of the remaining directors, to fill vacancies on the board. Thus under the General Partner’s bylaws, as amended, and Maryland law, any vacancy on the Board of Directors for any cause other than an increase in the number of directors may be filled by a majority of the remaining directors except that the stockholders have right to fill any vacancy resulting from removal of a director; and any vacancy on the Board of Directors created by an increase in the number of directors may be filled by a majority of the entire Board of Directors. Any director elected by the Board of Directors to fill a vacancy serves until the next annual meeting of stockholders and until such director’s successor is elected and qualifies, and any director elected by the stockholders to fill a vacancy resulting from removal of a director serves for the balance of the term of the removed director. The General Partner has, in its corporate governance principles, adopted a mandatory retirement age of 80 years for directors.
Stockholder Requested Special Meetings: The General Partner’s bylaws, as amended, provide that its stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than 25% of all votes entitled to be cast at such meeting, provided that unless requested by the stockholders entitled to cast a majority of all votes entitled to be cast at such meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of stockholders held during the preceding 12 months.
Advance Notice Provisions for Stockholder Nominations and Proposals: The General Partner's bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders. This bylaw provision limits the ability of stockholders to make nominations of persons for election as directors or to introduce other proposals unless we are notified in a timely manner prior to the meeting.
Preferred Stock: Under the General Partner's charter, its Board of Directors has authority to issue preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of its stockholders. As a result, its Board of Directors may establish a series of preferred stock that could delay or prevent a transaction or a change in control.
Duties of Directors with Respect to Unsolicited Takeovers: Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (a) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (b) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (c) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (d) act or fail to act solely because of the effect the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law.
Ownership Limit: In order to preserve the General Partner's status as a real estate investment trust under the IRS Code, its charter generally prohibits any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8 percent of its outstanding capital stock unless its Board of Directors waives or modifies this ownership limit.
Maryland Business Combination Act: The Maryland Business Combination Act provides that unless exempted, a Maryland corporation may not engage in certain business combinations, including mergers, consolidations, share exchanges or, in
circumstances specified in the statute, asset transfers, issuances or reclassifications of shares of stock and other specified transactions, with an “interested stockholder” or an affiliate of an interested stockholder, for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10 percent or more of the voting power of the outstanding stock of the Maryland corporation. The General Partner's board of directors has exempted from this statute business combinations between the Company and certain affiliated individuals and entities. However, unless its board adopts other exemptions, the provisions of the Maryland Business Combination Act will be applicable to business combinations with other persons.
Maryland Control Share Acquisition Act: Maryland law provides that holders of “control shares” of a corporation acquired in a “control share acquisition” shall have no voting rights with respect to the control shares except to the extent approved by a vote of two-thirds of the votes eligible to cast on the matter under the Maryland Control Share Acquisition Act. “Control shares” means shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power: one-tenth or more but less than one-third, one-third or more but less than a majority or a majority or more of all voting power. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.
If voting rights of control shares acquired in a control share acquisition are not approved at a stockholder’s meeting, then subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholder’s meeting and the acquirer becomes entitled to vote a majority of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights. In 2018, the General Partner's bylaws were amended to exempt any acquisition of the General Partner’s shares from the Maryland Control Share Acquisition Act. If the General Partner’s bylaws are amended to repeal or limit the exemption from the Maryland Control Share Acquisition Act, it may make it more difficult for a third party to obtain control of us and increase the difficulty of consummating a change in control.
Changes in market conditions could adversely affect the market price of the Company’s common stock.
As with other publicly traded equity securities, the value of the Company's common stock depends on various market conditions, which may change from time to time. The market price of the Company's common stock could change in ways that may or may not be related to our business, the Company's industry or our operating performance and financial condition. Among the market conditions that may affect the value of the Company's common stock are the following:
•the general reputation of REITs and the attractiveness of the Company's equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;
•our financial performance; and
•general stock and bond market conditions.
The market value of the Company's common stock is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash dividends. Consequently, the Company's common stock may trade at prices that are higher or lower than its net asset value per share of common stock.
REIT STATUS RISKS
Consequences of the General Partner's failure to qualify as a real estate investment trust could adversely affect our financial condition.
Failure to maintain ownership limits could cause the General Partner to lose its qualification as a real estate investment trust: In order for the General Partner to maintain its qualification as a real estate investment trust under the IRS Code, not more than 50 percent in value of its outstanding stock may be actually and/or constructively owned by five or fewer individuals (as defined in the IRS Code to include certain entities). The General Partner has limited the ownership of its outstanding shares of common stock by any single stockholder to 9.8 percent of the outstanding shares of its common stock. Its Board of Directors could waive this restriction if it was satisfied, based upon the advice of tax counsel or otherwise, that such action would be in the best interests of the General Partner and its stockholders and would not affect its qualification as a real estate investment trust under the IRS Code. Common stock acquired or transferred in breach of the limitation may be redeemed by us for the lesser of the price paid and the average closing price for the 10 trading days immediately preceding redemption or sold at the direction of the General Partner. The General Partner may elect to redeem such shares of common stock for Units, which are nontransferable except in very limited circumstances. Any transfer of shares of common stock which, as a result of such transfer, causes the General Partner to be in violation of any ownership limit, will be deemed void. Although the General Partner currently intends to continue to operate in a manner which will
enable it to continue to qualify as a real estate investment trust under the IRS Code, it is possible that future economic, market, legal, tax or other considerations may cause its Board of Directors to revoke the election for the General Partner's to qualify as a real estate investment trust. Under the General Partner's organizational documents, its Board of Directors can make such revocation without the consent of its stockholders.
Tax liabilities as a consequence of failure to qualify as a real estate investment trust: The General Partner has elected to be treated and has operated so as to qualify as a real estate investment trust for federal income tax purposes since the General Partner's taxable year ended December 31, 1994. Although the General Partner believes it will continue to operate in such manner, it cannot guarantee that it will do so. Qualification as a real estate investment trust involves the satisfaction of various requirements (some on an annual and some on a quarterly basis) established under highly technical and complex tax provisions of the IRS Code. Because few judicial or administrative interpretations of such provisions exist and qualification determinations are fact sensitive, the General Partner cannot assure you that it will qualify as a real estate investment trust for any taxable year.
If the General Partner fails to qualify as a real estate investment trust in any taxable year, it will be subject to the following:
•it will not be allowed a deduction for dividends paid to shareholders;
•it will be subject to federal income tax at regular corporate rates, including any alternative minimum tax, if applicable; and
•unless it is entitled to relief under certain statutory provisions, it will not be permitted to qualify as a real estate investment trust for the four taxable years following the year during which was disqualified.
A loss of the General Partner's status as a real estate investment trust could have an adverse effect on us. Failure to qualify as a real estate investment trust also would eliminate the requirement that the General Partner pay dividends to its stockholders. In addition, any such dividends that the General Partner does pay to its stockholders would not constitute qualified REIT dividends and would accordingly not qualify for a deduction of up to 20 percent.
Other tax liabilities: Even if the General Partner qualifies as a real estate investment trust under the IRS Code, its subject to certain federal, state and local taxes on our income and property and, in some circumstances, certain other state and local taxes. From time to time changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and amount of such increase. These actions could adversely affect our financial condition and results of operations. In addition, our taxable REIT subsidiaries will be subject to federal, state and local income tax for income received in connection with certain non-customary services performed for tenants and/or third parties.
Risk of changes in the tax law applicable to real estate investment trusts: Since the Internal Revenue Service, the United States Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any such legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us, and/or our investors.
OTHER RISKS
Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners, including personally identifiable information of our tenants and employees, in our data centers and on our networks and our business is at risk from and may be impacted by cybersecurity attacks. These attacks could include attempts to gain unauthorized access to our data and computer systems. Attacks can be both individual and/or highly organized attempts organized by very sophisticated hacking organizations. We employ a number of measures to prevent, detect and mitigate these threats, which include data encryption, frequent password change events, firewall detection systems, anti-virus software and frequent backups; however, there is no guarantee such efforts will be successful in preventing a cyber-attack, and we consult with outside cybersecurity firms to advise on our cybersecurity measures. We also have implemented internal controls around our treasury function, including enhanced payment authorization procedures, verification requirements for new vendor setup and vendor information changes, and bolstered outgoing payment notification process and account reconciliation procedures. We have policies and procedures in place in order to identify cybersecurity incidents and elevate such incidents to senior management in order to appropriately address and remediate any cyber-attack. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions,
and there can be no assurance that our actions, security measures, and controls designed to prevent, detect, or respond to intrusion; to limit access to data; to prevent loss, destruction, alteration, or exfiltration of business information; or to limit the negative impact from such attacks can provide absolute security against a cybersecurity incident. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, increased cybersecurity insurance premiums and damage our reputation, which could adversely affect our business.
We face possible risks associated with the physical effects of climate change.
We cannot predict with certainty whether climate change is occurring and, if so, at what rate. However, the physical effects of climate change could have a material adverse effect on our properties, operations, and business. To the extent climate change causes changes in weather patterns or severity, our markets could experience increase in storm intensity (including floods, tornadoes, hurricanes, or snow and ice storms), rising sea-levels, and changes in precipitation, temperature, air quality, and quality and availability of water. Over time, these conditions could result in physical damage to, or declining demand for, our properties or our inability to operate the buildings efficiently or at all. Climate change may also indirectly affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of required resources, including energy, other fuel sources, water, and waste and snow removal services, and increasing the risk and severity of flood and earthquakes at our properties. Should the impact of climate change be severe or occur for lengthy periods of time, our financial condition or results of operations could be adversely impacted. In addition, compliance with new or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditure by us. For example, various federal, state, and local laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Among other things, "green" building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management. Such codes could require us to make improvements to our existing properties, increase the costs of maintaining or improving our existing properties or developing new properties, or increase taxes and fees assessed on us or our properties. Expenditures required for compliance with such codes may affect our cash flow and results of operations.
We may be subject to risks associated with the use of social media.
The use of social media could cause us to suffer brand damage or unintended information disclosure. Negative posts or communications about us or one of our properties on a social networking website could damage our reputation. Further, employees or others may disclose non-public information regarding us or our business or otherwise make negative comments regarding us on social networking or other websites, which could adversely affect our business and results of operations. As social media evolves, we will be presented with new risks and challenges.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
PROPERTY LIST
Consolidated Properties
As of December 31, 2023, the Company’s Consolidated Properties consisted of 17 multifamily properties, four in-service commercial properties, and several developable land parcels. The Consolidated Properties are located in the Northeast. The Consolidated Properties contain a total of approximately 5,535 apartment units and 1.0 million square feet of commercial space.
Multifamily Properties
Property Location Year
Built
Apartment Units
% Occupied
12/31/23
(%)
Average
Revenue
Per Home
($) (b)
NEW JERSEY WATERFRONT
Haus25 Jersey City, NJ 2022 750 94.1 4,396
Liberty Towers Jersey City, NJ 2003 648 93.2 4,058
BLVD 401 Jersey City, NJ 2016 311 97.4 4,025
BLVD 425 Jersey City, NJ 2003 412 95.6 3,921
BLVD 475 S Jersey City, NJ 2011 280 96.8 3,853
BLVD 475 N Jersey City, NJ 2011 243 96.3 4,200
Soho Lofts Jersey City, NJ 2017 377 94.4 4,557
RiverHouse 9 at Port Imperial Weehawken, NJ 2021 313 96.2 4,064
RiverHouse 11 at Port Imperial Weehawken, NJ 2018 295 94.6 4,044
Total New Jersey Waterfront Multifamily 3,629 95.0 4,154
MASSACHUSETTS
Portside at East Pier East Boston, MA 2015 181 94.9 3,132
Portside 2 at East Pier East Boston, MA 2018 296 96.2 3,243
145 Front at City Square Worcester, MA 2018 365 92.9 2,601
The Emery at Overlook Ridge Revere, MA 2020 326 92.3 2,684
Total Massachusetts Multifamily 1,168 93.9 2,869
OTHER
The Upton Short Hills, NJ 2021 193 91.7 4,693
The James Park Ridge, NJ 2021 240 96.3 2,947
Signature Place Morris Plains, NJ 2018 197 97.5 3,110
Quarry Place at Tuckahoe Eastchester, NY 2016 108 93.5 4,203
Total Other Multifamily 738 95.0 3,631
TOTAL MULTIFAMILY PROPERTIES 5,535 94.8 3,813
Office Properties
Property Location Year
Built
Net
Rentable Area
(SF)
% Leased
12/31/23
(%) (a)
Base Rent
($000’s)
(c)
Average
Base Rent
Per Sq. Ft.
($) (c) (d)
Average
Effective Rent
Per Sq. Ft.
($) (c) (e)
Harborside Plaza 5 Jersey City, NJ 2002 977,225 34.6 17,027 45.93 49.23
TOTAL OFFICE PROPERTIES 977,225 34.6 17,027 45.93 49.23
Retail/Garage Properties
Property Location Year
Built
Net
Rentable Area
(Retail SF)
% Leased
12/31/23
(%) (a)
2023 Total
Rental Revenue
($000’s) (f)
100 Avenue at Port Imperial Weehawken, NJ 2016 8,400 100.0 4,431
500 Avenue at Port Imperial Weehawken, NJ 2013 18,064 100.0 1,767
Riverwalk at Port Imperial West New York, NJ 2008 30,426 59.2 1,102
TOTAL RETAIL/GARAGE PROPERTIES 56,890 78.1 7,300
Developable Land
Property Location Ownership Percentage
Potential Units
NEW JERSEY WATERFRONT
107 Morgan Jersey City, NJ 100% 783
Plaza 8 Jersey City, NJ 100% 680
Plaza 9 Jersey City, NJ 100% 597
PI South - Building 2 Weehawken, NJ 50% 245
Total New Jersey Waterfront Developable Land 2,305
MASSACHUSETTS
Overlook Site 15 Revere, MA 100% 310
Overlook Site 1 (Retail) Revere, MA 100% (g)
Overlook Site 13 Malden, MA 100% 307
Overlook Site 14 (Retail) Malden, MA 100% (g)
Overlook Site 14 (Hotel) Malden, MA 100% 112
Overlook Site 14 Malden, MA 100% 120
Total Massachusetts Developable Land 849
OTHER
Wall Land Wall Township, NJ 100% 228
Short Hills (Hotel) Short Hills, NJ 100% 160 keys
1633 Littleton Parsippany, NJ 100% (h)
65 Livingston Roseland, NJ 100% 252
6 Becker Farm / 85 Livingston Roseland, NJ 100% 439
1 Water Street White Plains, NY 100% 299
Total Other Developable Land 1,378
TOTAL DEVELOPABLE LAND 4,532
Unconsolidated Joint Venture Properties
As of December 31, 2023, the Company’s Unconsolidated Joint Venture Properties consisted of seven multifamily rental properties, an in-service commercial property, and a developable land parcel. The Unconsolidated Joint Venture Properties are located in the Northeast and Washington, D.C. The Unconsolidated Joint Venture Properties contain a total of approximately 2,146 apartment units and 51.0 thousand square feet of commercial space. The Company’s unconsolidated interests range from 20 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.
Unconsolidated Joint Ventures - Multifamily Properties
Property Location Year
Built
Ownership Percentage Apartment Units
% Occupied
12/31/23
(%)
Average
Revenue
Per Home
($) (b)
NEW JERSEY WATERFRONT
Urby at Harborside Jersey City, NJ 2017 85.00% 762 92.3 3,844
RiverTrace at Port Imperial West New York, NJ 2014 22.50% 316 95.6 3,641
The Capstone at Port Imperial West New York, NJ 2021 40.00% 360 95.0 4,272
Total New Jersey Waterfront Multifamily Properties 1,438 93.7 3,907
OTHER
Riverpark at Harrison Harrison, NJ 2014 45.00% 141 92.2 2,746
The Metropolitan at 40 Park Morristown, NJ 2010 25.00% 130 95.4 3,577
Metropolitan Lofts Morristown, NJ 2018 50.00% 59 94.4 3,591
Station House Washington, DC 2015 50.00% 378 92.1 2,529
Total Other Multifamily Properties 708 92.9 2,853
TOTAL MULTIFAMILY PROPERTIES 2,146 93.4 3,559
Unconsolidated Joint Ventures - Retail Properties
Property Location Year
Built
Ownership Percentage Net
Rentable Area
(Retail SF)
% Leased
12/31/23
(%) (a)
2023 Total
Rental Revenue
($000’s) (f)
Shops at 40 Park Morristown, NJ 2010 25.00% 50,973 69.0 1,369
TOTAL RETAIL PROPERTIES 50,973 69.0 1,369
Unconsolidated Joint Ventures - Developable Land
Property Location Ownership Percentage
Potential Units
PI North - Land West New York, NJ 20.00% 829
TOTAL DEVELOPABLE LAND 829
Footnotes to Property List (dollars in thousands, except per square foot amounts):
(a)Percentage leased includes all leases in effect as of the period end date, some of which have commencement dates in the future.
(b)Average Revenue per Home is calculated as total apartment revenue for the year divided by the average percent occupied for the year, divided by the number of apartments.
(c)Total base rent for the year ended December 31, 2023, determined in accordance with generally accepted accounting principles (“GAAP”). Substantially all of the commercial leases provide for annual base rents plus recoveries and escalation charges based upon the tenant’s proportionate share of and/or increases in real estate taxes and certain operating costs, as defined, and the pass through of charges for electrical usage. For the year ended December 31, 2023, total escalations and recoveries from tenants were: $3.3 million, or $8.89 per leased square foot, for office properties.
(d)Base rent for the year ended December 31, 2023 divided by net rentable commercial square feet leased at December 31, 2023.
(e)Total base rent, determined in accordance with GAAP, for 2023 minus 2023 amortization of tenant improvements, leasing commissions and other concessions and costs, determined in accordance with GAAP, divided by net rentable square feet leased at December 31, 2023.
(f)Total Rental Revenue for the year ended December 31, 2023 is calculated by adding base rent and parking income.
(g)The Company has an additional 13,775 square feet of potential retail space within land developments that is not represented in this table.
(h)Property is approved for office zoning consisting of 5.19 acres.
OCCUPANCY
The following table sets forth the year-end occupancy of the Company’s Consolidated Multifamily Portfolio for the last five years:
December 31, Percent Occupied (%)
2023 94.8
2022 94.4
2021 96.4
2020 85.4
2019 92.1
MARKET DIVERSIFICATION
The following table lists the Company’s markets, based on annualized contractual base rent of the Company's Consolidated Multifamily Portfolio:
Market Annualized Base
Rental Revenue
($ in thousands) (a) (b) Percentage Of
Annualized
Base Rental
Revenue (%)
New Jersey Waterfront 174,822 72.2
Massachusetts 37,768 15.6
Other 29,500 12.2
Totals 242,090 100.0
(a)Annualized base rental revenue is based on actual December 2023 billings times 12. For leases whose rent commences after January 1, 2024, annualized base rental revenue is based on the first full month’s billing times 12. As annualized base rental revenue is not derived from historical GAAP results, historical results may differ from those set forth above.
(b)Includes leases in effect as of the period end date, some of which have commencement dates in the future.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or to which any of the Properties is subject.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
The shares of the General Partner's common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “VRE.” The Company's common stock previously traded on the NYSE under the symbol "CLI" prior to its name change. There is no established public trading market for the Operating Partnership's common units.
On August 8, 2023, the General Partner filed with the NYSE its annual CEO Certification and Annual Written Affirmation pursuant to Section 303A.12 of the NYSE Listed Company Manual, each certifying that the General Partner was in compliance with all of the listing standards of the NYSE.
GRAPH
The following graph compares total stockholder returns from the last five fiscal years to the Standard & Poor’s 500 Index (“S&P 500”) and to the National Association of Real Estate Investment Trusts, Inc.’s FTSE NAREIT Equity REIT Index (“NAREIT”). The graph assumes that the value of the investment in the General Partner's Common Stock and in the S&P 500 and NAREIT indices was $100 at December 31, 2018 and that all dividends were reinvested. The price of the General Partner's Common Stock on December 31, 2018 (on which the graph is based) was $19.59. The past stockholder return shown on the following graph is not necessarily indicative of future performance.
Comparison of Five-Year Cumulative Total Return
DIVIDENDS AND DISTRIBUTIONS
As a result of the Company substantially completing its transformation to a pure-play multifamily REIT, as well as the Company’s current estimates of taxable income, the Board of Directors of the General Partner (the "Board of Directors") reinstated a quarterly dividend beginning with the third quarter of 2023.
The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors of the General Partner in light of conditions then existing, including the Company’s earnings, cash flows, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and general overall economic conditions and other factors.
On December 18, 2023, the Company declared a $0.0525 distribution per common share to be payable on January 10, 2024 to shareholders of record as of the close of business on December 29, 2023. At December 31, 2023, the balance of the distributions payable was $5.5 million. The $0.0525 distribution per common share will be reported to shareholders for the year ending December 31, 2024.
On July 24, 2023, the Company declared a $0.05 distribution per common share with a payment date of October 10, 2023, to shareholders of record as of the close of business on September 30, 2023. The Company has determined that the total distribution of $0.05 per common share paid during the year ended December 31, 2023 represented 100% return of capital distributions.
HOLDERS
On February 15, 2024, the General Partner had 218 common shareholders of record (this does not include beneficial owners for whom Cede & Co. or others act as nominee) and the Operating Partnership had 69 owners of limited partnership units and one owner of General Partnership Units.
RECENT SALES OF UNREGISTERED SECURITIES; USES OF PROCEEDS FROM REGISTERED SECURITIES
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated Financial Statements of Veris Residential, Inc. and Veris Residential, L.P. and the notes thereto (collectively, the “Financial Statements”). Certain defined terms used herein have the meaning ascribed to them in the Financial Statements.
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Note 2: Significant Accounting Policies - to the Consolidated Financial Statements. Certain of these accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation of our consolidated financial statements. On a quarterly basis, we evaluate these estimates and judgments based on historical experience as well as other factors that we believe to be reasonable under the circumstances. These estimates are subject to change in the future if underlying assumptions or factors change. Certain accounting policies, while significant, may not require the use of estimates. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Impairment
On a periodic basis, management assesses whether there are any indicators, including property operating performance, changes in anticipated holding period, and general market conditions, that the value of the Company’s rental properties held for use may be impaired. A property’s value is considered impaired when the expected undiscounted cash flows for a property are less than its carrying value. If there are different potential outcomes for a property, the Company will take a probability weighted approach to estimating future cash flows. To the extent impairment has occurred, the impairment loss is measured as the excess of the carrying value of the property over the estimated fair value of the property. Estimated fair values which are based on discounted cash flow models include all estimated cash inflows and outflows over a specified holding period. Capitalization rates and discount rates utilized in these models are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates. In addition, such cash flow models consider factors such as expected future operating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extent impairment has occurred, the carrying value of the property would be adjusted to an amount to reflect the estimated fair value of the property.
The Company generally considers assets (as identified by their disposal groups) to be held for sale when the transaction has received appropriate corporate authority, it is probable that the disposition will occur within one year and there are no significant contingencies relating to a sale. When assets are identified by management as held for sale, the Company discontinues depreciating the assets and estimates the fair value. If the fair value of the assets, less estimated cost to sell, is less than the carrying value of the assets, an adjustment to the carrying value would be recognized and recorded within the Unrealized gains (losses) on disposition of rental property to reflect the estimated fair value of the assets. The Company will continue to review the property for subsequent changes in the fair value, and may recognize an additional impairment charge, if warranted.
In addition, on a periodic basis, management assesses whether there are any indicators, including the underlying investment property operating performance and general market conditions, that the value of the Company’s investments in unconsolidated joint ventures may be impaired. An investment is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment, and such decline in value is deemed to be other than temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying value of the
investment over the estimated fair value of the investment. Estimated fair values which are based on discounted cash flow models include all estimated cash inflows and outflows over a specified holding period. Capitalization rates and discount rates utilized in these models are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates.
Results From Operations
The following comparisons for the year ended December 31, 2023 (“2023”), as compared to the year ended December 31, 2022 (“2022”), and for 2022 as compared to the year ended December 31, 2021 (“2021”) make reference to the following:
(i)“Same-Store Properties,” which represent all in-service properties owned by the Company at December 31, 2021, (for the 2023 versus 2022 comparisons), and which represent all in-service properties owned by the Company at December 31, 2020 (for the 2022 versus 2021 comparisons), excluding properties sold, disposed of, removed from service, or being redeveloped or repositioned from January 1, 2021 through December 31, 2023;
(ii)“Acquired and Developed Properties,” which represent all properties acquired by the Company or commencing initial operation from January 1, 2022 through December 31, 2023 (for the 2023 versus 2022 comparisons), and which represents all properties acquired by the Company or commencing initial operations from January 1, 2021 through December 31, 2022 (for the 2022 versus 2021 comparisons); and
(iii)“Properties Sold” which represent properties sold, disposed of, or removed from service (including properties being redeveloped or repositioned) by the Company from January 1, 2021 through December 31, 2023.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Years Ended
December 31, Dollar
Change Percent
Change
(dollars in thousands) 2023 2022
Revenue from rental operations and other:
Revenue from leases $ 252,144 $ 206,052 $ 46,092 22.4 %
Parking income 18,036 15,819 2,217 14.0
Other income 5,811 7,996 (2,185) (27.3)
Total revenues from rental operations 275,991 229,867 46,124 20.1
Property expenses:
Real estate taxes $ 40,810 39,112 1,698 4.3
Utilities 9,922 8,921 1,001 11.2
Operating services 57,925 52,797 5,128 9.7
Total property expenses 108,657 100,830 7,827 7.8
Non-property revenues:
Real estate services 3,868 3,581 287 8.0
Total non-property revenues 3,868 3,581 287 8.0
Non-property expenses:
Real estate services expenses 14,188 10,549 3,639 34.5
General and administrative 44,472 56,014 (11,542) (20.6)
Transaction-related costs 7,627 3,468 4,159 119.9
Depreciation and amortization 93,589 85,434 8,155 9.5
Property impairments 32,516 - 32,516 100.0
Land and other impairments, net 9,324 9,368 (44) (0.5)
Total non-property expenses 201,716 164,833 36,883 22.4
Operating loss (30,514) (32,215) 1,701 (5.3)
Other (expense) income:
Interest expense (89,355) (66,381) (22,974) 34.6
Interest cost of mandatorily redeemable noncontrolling interests (49,782) - (49,782) 100.0
Interest and other investment income (loss) 5,515 729 4,786 656.5
Equity in earnings (loss) of unconsolidated joint ventures 3,102 1,200 1,902 158.5
Gain on disposition of developable land 7,068 57,262 (50,194) (87.7)
Loss from extinguishment of debt, net (5,606) (129) (5,477) 4,245.7
Other income, net 2,871 - 2,871 100.0
Total other (expense) income (126,187) (7,319) (118,868) 1624.1
Loss from continuing operations before income tax expenses (156,701) (39,534) (117,167) 296.4
Provision for income taxes (492) - (492) 100.0
Loss from continuing operations after income tax (157,193) (39,534) (117,659) 297.6
Discontinued operations:
Income (Loss) from discontinued operations 3,150 (64,704) 67,854 (104.9)
Realized gains (losses) and unrealized gains (losses) on disposition of rental property and impairments, net 41,682 69,353 (27,671) (39.9)
Total discontinued operations 44,832 4,649 40,183 864.3
Net loss $ (112,361) $ (34,885) $ (77,476) 222.1 %
The following is a summary of the changes in revenue from rental operations and other, and property expenses, in 2023 as compared to 2022 divided into Same-Store Properties, Acquired and Developed Properties and Properties Sold in 2022 and 2023 (excluding properties classified as discontinued operations):
Total
Company Same-Store
Properties Acquired and Developed
Properties Properties
Sold in 2022 and 2023
(dollars in thousands)
Dollar
Change Percent
Change Dollar
Change Percent
Change Dollar
Change Percent
Change Dollar
Change Percent
Change
Revenue from rental operations and other:
Revenue from leases $ 46,092 22.4 % $ 18,523 9.8 % $ 27,569 164.7 % $ - - %
Parking income 2,217 14.0 1,404 9.1 813 211.7 - -
Other income (2,185) (27.3) (2,320) (30.0) 135 50.9 - -
Total $ 46,124 20.1 % $ 17,607 8.3 % $ 28,517 164.0 % $ - - %
Property expenses:
Real estate taxes $ 1,698 4.3 % $ (1,050) (2.8) % $ 2,748 181.7 % $ - - %
Utilities 1,001 11.2 383 4.7 618 84.5 - -
Operating services 5,128 9.7 82 0.2 5,046 127.2 - -
Total $ 7,827 7.8 % $ (585) (0.6) % $ 8,412 135.5 % $ - - %
OTHER DATA:
Number of Consolidated Properties 21 19 2 -
Commercial Square feet (in thousands)
1,034 1,034 - -
Multifamily portfolio (number of units)
5,535 4,545 990 -
Revenue from leases. Revenue from leases for the Same-Store Properties increased $18.5 million, or 9.8 percent, for 2023 as compared to 2022, due primarily to an increase in market rental rates and a reduction in concessions at the multifamily rental properties. Revenue from leases at the Acquired and Developed Properties increased $27.6 million, or 164.7 percent, in 2023 as compared to 2022, due to an increase in market rental rates and the commencement of operations at a multifamily property as well as the acquisition of one multifamily property during mid-2022.
Parking income. Parking income for the Same-Store Properties increased $1.4 million, or 9.1 percent for 2023 as compared to 2022 due primarily to an increase in usage at the parking garages.
Other income. Other income for the Same-Store Properties decreased $2.3 million, or 30.0 percent for 2023 as compared to 2022 due primarily to the return of escrow on a previous transaction and post sales items received in 2022.
Real estate taxes. Real estate taxes on the Same-Store Properties decreased $1.1 million, or 2.8 percent, for 2023 as compared to 2022 due primarily to prior period tax appeal refunds received in 2023 on several properties offset by increased tax rates primarily related to properties located in Jersey City, New Jersey. Real estate taxes at the Acquired and Developed Properties increased $2.7 million, or 181.7 percent, in 2023 as compared to 2022, due to the commencement of operations at a multifamily property as well as the acquisition of one multifamily property during mid-2022.
Utilities. Utilities for the Same-Store Properties remained relatively unchanged.
Operating services. Operating services for the Same-Store properties remained relatively unchanged. Operating services expenses at the Acquired and Developed Properties increased $5.0 million, or 127.2 percent, in 2023 as compared to 2022, due to the commencement of operations at a multifamily property as well as the acquisition of one multifamily property during mid-2022.
Real estate services revenue. Real estate services revenue, which is primarily related to management fees and reimbursement of property personnel costs from the Company's third party/ joint ventures management businesses, remained relatively unchanged.
Real estate services expenses. Real Estate services expenses include off-site expenses associated with the self-management of the Company's properties as well as operating and personnel expenses for the Company's third-party/joint venture management businesses. Real estate services expenses increased $3.6 million, or 34.5 percent, for 2023 as compared to 2022, due primarily to increased personnel expenses and management activity in multifamily services.
General and administrative. General and administrative expenses decreased $11.5 million, or 20.6 percent, for 2023 compared to 2022 due to decrease in severance and related costs and cost reductions in 2023, offset by higher stock compensation expense in 2023 as a result of the $2.9 million adjustment in the third quarter of 2023.
Transaction related costs. The Company incurred costs of $7.6 million in 2023 primarily associated with the purchase of Rockpoint's interests (See Note 14: Redeemable Noncontrolling Interests - Rockpoint Transactions - to the Financial Statements), and $3.5 million in 2022 in connection with transactions that were not consummated.
Depreciation and amortization. Depreciation and amortization increased $8.2 million, or 9.5 percent, for 2023 as compared to 2022, primarily due to additional depreciation and amortization in the Acquired and Developed Properties.
Property impairments. In 2023, the Company recorded impairment charges of $32.5 million on one held and used office property in Jersey City, New Jersey. No such impairments were recorded in 2022.
Land and other impairments. In 2023 and 2022, the Company recorded net $9.3 million and $9.4 million of impairment charges on developable land parcels, respectively.
Interest expense. Interest expense increased $23.0 million, or 34.6 percent, for 2023 as compared to 2022. The increase is primarily related to increases in LIBOR and SOFR rates as well as a reduction in capitalized interest in 2023 compared to 2022 due to one multifamily property being placed in service during 2022.
Interest cost of mandatorily redeemable noncontrolling interests. During 2023, the Company recognized $49.8 million in interest cost of mandatorily redeemable noncontrolling interests related to the Company's redemption of Rockpoint's interests.
Interest and other investment income. Interest and other investment income increased $4.8 million, or 656.5 percent, for 2023 compared to 2022. The increase is primarily related to interest income for sales proceeds deposits.
Equity in earnings (loss) of unconsolidated joint ventures. Equity in earnings of unconsolidated joint ventures increased $1.9 million or 158.5 percent, for 2023 as compared to 2022, due primarily to higher revenues resulting from lower concessions and higher market rents at various multifamily unconsolidated joint ventures in 2023 as compared to 2022.
Gain on disposition of developable land. In 2023, the Company recognized a gain of $7.1 million on the sale of a developable land parcel in Parsippany-Troy Hills, New Jersey, as well as reversals of estimated accrued expenses from previously sold developable land holdings. In 2022, the Company recorded a gain of $57.3 million on the sale of land holdings in West Windsor, Weehawken, and Jersey City, New Jersey. See Note 3: Investment in Rental Property - Dispositions of Rental Properties and Developable Land - to the Financial Statements.
Loss from extinguishment of debt, net. In 2023, the Company recognized a loss of $5.6 million on extinguishment of debt due to the write-off of unamortized deferred financing costs related to the termination of the 2021 Credit Facility, repayment of 2023 Term Loan, and refinancing of the construction loan for one multifamily property located in Jersey City, New Jersey.
Other income, net. In 2023, the Company received insurance proceeds of $2.9 million.
Discontinued operations. The Company recognized income from discontinued operations of $44.8 million for 2023 as compared to $4.6 million for 2022. See Note 7: Discontinued Operations to the Financial Statements for additional details.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Years Ended
December 31, Dollar
Change Percent
Change
(dollars in thousands) 2022 2021
Revenue from rental operations and other:
Revenue from leases $ 206,052 $ 162,082 $ 43,970 27.1 %
Parking income 15,819 12,274 3,545 28.9
Other income 7,996 10,693 (2,697) (25.2)
Total revenues from rental operations 229,867 185,049 44,818 24.2
Property expenses:
Real estate taxes 39,112 28,818 10,294 35.7
Utilities 8,921 8,307 614 7.4
Operating services 52,797 45,460 7,337 16.1
Total property expenses 100,830 82,585 18,245 22.1
Non-property revenues:
Real estate services 3,581 9,596 (6,015) (62.7)
Total non-property revenues 3,581 9,596 (6,015) (62.7)
Non-property expenses:
Real estate services expenses 10,549 12,858 (2,309) (18.0)
General and administrative 56,014 56,977 (963) (1.7)
Transaction-related costs 3,468 12,208 (8,740) (71.6)
Depreciation and amortization 85,434 68,506 16,928 24.7
Land and other impairments, net 9,368 23,719 (14,351) (60.5)
Total non-property expenses 164,833 174,268 (9,435) (5.4)
Operating income (loss) (32,215) (62,208) 29,993 (48.2)
Other (expense) income:
Interest expense (66,381) (47,505) (18,876) 39.7
Interest and other investment income (loss) 729 524 205 39.1
Equity in earnings (loss) of unconsolidated joint ventures 1,200 (4,250) 5,450 (128.2)
Realized gains (losses) and unrealized losses on disposition of rental property, net - 3,023 (3,023) (100.0)
Gain on disposition of developable land 57,262 2,115 55,147 2607.4
Loss on sale from unconsolidated joint ventures - (1,886) 1,886 (100.0)
Loss from extinguishment of debt, net (129) (47,078) 46,949 (99.7)
Total other (expense) income (7,319) (95,057) 87,738 (92.3)
Loss from continuing operations (39,534) (157,265) 117,731 (74.9)
Discontinued operations:
(Loss) income from discontinued operations (64,704) 22,174 (86,878) (391.8)
Realized gains (losses) and unrealized gains (losses) on disposition of rental property and impairments, net 69,353 25,552 43,801 171.4
Total discontinued operations 4,649 47,726 (43,077) (90.3)
Net loss $ (34,885) $ (109,539) $ 74,654 (68.2) %
The following is a summary of the changes in revenue from rental operations and other, and property expenses, in 2022 as compared to 2021 divided into Same-Store Properties, Acquired and Developed Properties and Properties Sold in 2021 and 2022:
Total
Company Same-Store
Properties Acquired and Developed
Properties Properties
Sold in 2021 and 2022
(dollars in thousands)
Dollar
Change Percent
Change Dollar
Change Percent
Change Dollar
Change Percent
Change Dollar
Change Percent
Change
Revenue from rental operations and other:
Revenue from leases $ 43,970 27.1 % $ 17,324 11.2 % $ 28,717 100.0 % $ (2,071) (100.0) %
Parking income 3,545 28.9 2,655 22.7 1,103 100.0 (213) (100.0)
Other income (2,697) (25.2) (3,191) (30.5) 472 100.0 22 (100.0)
Total $ 44,818 24.2 % $ 16,788 9.5 % $ 30,292 100.0 % $ (2,262) (100.0) %
Property expenses:
Real estate taxes $ 10,294 35.7 % $ 7,450 27.2 % $ 3,275 100.0 % $ (431) (100.0) %
Utilities 614 7.4 (332) (4.2) 1,004 100.0 (58) (100.0)
Operating services 7,337 16.1 1,235 2.9 6,784 100.0 (682) (100.0)
Total $ 18,245 22.1 % $ 8,353 10.7 % $ 11,063 100.0 % $ (1,171) (100.0) %
OTHER DATA:
Number of Consolidated Properties 27 23 4 2
Commercial Square feet (in thousands)
3,104 3,104 - -
Multifamily portfolio (number of units)
5,535 4,039 1,496 -
Revenue from leases. Revenue from leases for the Same-Store Properties increased $17.3 million, or 11.2 percent, for 2022 as compared to 2021, due primarily to an increase in occupancy and market rents of the multifamily rental properties. Revenue from leases at the Acquired and Developed Properties increased $28.7 million in 2022 as compared to 2021, due to the commencement of operations at three multifamily properties during the periods as well as the acquisition of one multifamily property in mid-2022.
Parking income. Parking income for the Same-Store Properties increased $2.7 million, or 22.7 percent for 2022 as compared to 2021 due primarily to an increase in usage at the parking garages.
Other income. Other income for the Same-Store Properties decreased 3.2 million, or 30.5 percent for 2022 as compared to 2021 due primarily to the recognition in 2021 of forfeited deposits received from potential buyers in disposition deals that were not completed, as well as post property sales items received in 2021.
Real estate taxes. Real estate taxes on the Same-Store Properties increased $7.5 million, or 27.2 percent, for 2022 as compared to 2021 due primarily to increased tax rates on properties located in Jersey City, New Jersey as well as the expiration in early 2022 of the PILOT agreements on two multifamily properties.
Utilities. Utilities for the Same-Store Properties remained relatively unchanged for 2022 compared to 2021.
Operating services. Operating services for the Same-Store properties increased $1.2 million, or 2.9 percent, for 2022 as compared to 2021, due primarily to an increase in insurance expenses in 2022.
Real estate services revenue. Real estate services revenue, which is primarily related to management fees and reimbursement of property personnel costs from the Company's third party/ joint ventures management businesses, decreased $6.0 million, or 62.7%, for 2022 as compared to 2021, due primarily to a reduction in third party development and management activity in 2022.
Real estate services expenses. Real Estate services expenses include off-site expenses associated with the self-management of the Company's properties as well as operating and personnel expenses for the Company's third party/joint venture management businesses. Real estate services expenses decreased $2.3 million, or 18.0 percent, for 2022 as compared to 2021, due primarily to lower salaries and related expenses from a reduction in third-party services activities in 2022 as compared to 2021.
General and administrative. General and administrative expenses remained relatively unchanged for 2022 compared to 2021 due to increases in severance and related costs in 2022 as compared to 2021, partially offset by cost saving reductions in 2022.
Transaction related costs. The Company incurred costs of $3.5 million in 2022 and $12.2 million in 2021 in connection with transactions that were not consummated.
Depreciation and amortization. Depreciation and amortization increased $16.9 million, or 24.7 percent for 2022 compared to 2021, primarily due to additional depreciation and amortization in the Acquired and Developed Properties.
Land and other impairments. In 2022, the Company recorded net $9.4 million of impairments on developable land parcels. In 2021, the Company recorded $20.8 million of impairments on developable land parcels and $2.9 million of goodwill impairment.
Interest expense. Interest expense increased $18.9 million, or 39.7 percent, for 2022 as compared to 2021. This increase was primarily the result of the cessation of the capitalization of mortgage interest related to a multifamily property which was placed in service in 2022 and higher interest rates on our floating rate indebtedness.
Interest and other investment income. Interest and other investment income remained relatively unchanged for 2022 as compared to 2021.
Equity in earnings (loss) of unconsolidated joint ventures. Equity in earnings of unconsolidated joint ventures increased $5.5 million, or 128.2 percent, for 2022 as compared to 2021, due primarily to higher revenues resulting from lower concessions and higher market rents at various unconsolidated multifamily joint ventures in 2022 as compared to 2021.
Realized gains (losses) and unrealized losses on disposition of rental property, net. The Company had no realized gains (unrealized losses) on disposition of rental property in 2022 and 3.0 million in 2021. See Note 3: Investment in Rental Property - Dispositions of Rental Properties and Developable Land - to the Financial Statements.
Gain on disposition of developable land. In 2022, the Company recognized a gain of $57.3 million on the sale of multiple developable land parcels. In 2021, the Company recorded a gain of $2.1 million on the sale of land holdings in Newark and Hamilton, New Jersey. See Note 3: Investment in Rental Property - Dispositions of Rental Properties and Developable Land - to the Financial Statements.
Gain on sale from unconsolidated joint ventures. In 2021, the Company recorded a $1.9 million loss for its share on the sale of the joint venture - owned property in Arlington, Virginia and land in Hillsborough, New Jersey. See Note 3: Investment in Rental Property - Dispositions of Unconsolidated Joint Venture - to the Financial Statements.
Loss from extinguishment of debt, net. In 2021, the Company recognized losses from early extinguishment of debt of $47.1 million which consists of $24.2 million in connection with the redemption of the Company’s Senior Unsecured Notes and $22.6 million in connection with the sale of Short Hills office portfolio and related defeasance of the mortgage loan.
Discontinued operations. The Company recognized income of $4.6 million in 2022 and $47.7 million in 2021. See Note 7: Discontinued Operations to the Financial Statements for additional details.
Liquidity and Capital Resources
Overview
Liquidity is a measurement of the Company's ability to meet cash requirements, including ongoing commitments to repay borrowings, pay dividends, fund acquisitions of real estate assets and other general business needs. In addition to cash on hand, the primary sources of funds for short-term and long-term liquidity requirements, including working capital,
distributions, debt service and additional investments, consist of: (i) borrowings under the revolving credit facility and term loan; (ii) proceeds from sales of real estate; and (iv) cash flow from operations. The Company believe these sources of financing will be sufficient to meet our short-term and long-term liquidity requirements.
The Company's cash flow from operations primarily consists of rental revenue which is the principal source of funds that is used to pay operating expenses, debt service, general and administrative expenses, operating capital expenditures, dividends, and transaction-related expenses. The Company expects to meet its short-term liquidity requirements generally through its working capital, which may include proceeds from the sales of rental properties and land, net cash provided by operating activities and draws from its revolving credit facility.
Cash Flows
Cash, cash equivalents and restricted cash increased by $6.9 million to $54.6 million at December 31, 2023, compared to $47.6 million at December 31, 2022. This increase is comprised of the following net cash flow items:
(1)$45.5 million provided by operating activities.
(2)$579.7 million provided by investing activities, consisting primarily of the following:
(a)$560.0 million received mainly from proceeds of rental properties included in discontinued operations; plus
(b)$23.0 million received from proceeds of the sales of rental property in continuing operations; plus
(c)$12.1 million received from distributions in excess of cumulative earnings from unconsolidated joint ventures; plus
(d)$3.8 million received from proceeds from insurance settlements; plus
(e)$1.3 million received from repayments of notes receivables; minus
(f)$12.5 million used for additions to rental property and improvements; minus
(g)$8.4 million used for the development of rental property, other related costs and deposits; minus
(h)$0.8 million used for investment in unconsolidated joint ventures.
(3)$618.3 million used in financing activities, consisting primarily of the following:
(a)$535.5 million used for the redemption of redeemable noncontrolling interests; plus
(b)$442.1 million used for repayments of mortgages, loans payable and other obligations; plus
(c)17.1 million used for distributions to redeemable noncontrolling interests; plus
(d)$16.2 million used for payments of financing costs; plus
(e)$5.1 million used for payment of common dividends and distributions; minus
(f)$399.6 million received from proceeds from mortgages and loans payable.
REIT Distribution Requirements
To maintain its qualification as a REIT under the IRS Code, the General Partner must make annual distributions to its stockholders of at least 90 percent of its REIT taxable income, determined without regard to the dividends paid deduction and by excluding net capital gains. However, any such distributions, whether for federal income tax purposes or otherwise, would be paid out of available cash, including borrowings and other sources, after meeting operating requirements, preferred stock dividends and distributions, and scheduled debt service on the Company’s debt. If and to the extent the Company retains and does not distribute any net capital gains, the General Partner will be required to pay federal, state and local taxes on such net capital gains at the rate applicable to capital gains of a corporation.
As a result of the Company substantially completing its transformation to a pure-play multifamily REIT, as well as the Company’s current estimates of taxable income, the Board of Directors of the General Partner (the "Board of Directors") reinstated a quarterly dividend beginning in the third quarter of 2023.
The declaration and payment of dividends and distributions will continue to be determined by the Board of Directors of the General Partner in light of conditions then existing, including the Company's earnings, cash flows, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions and general overall economic conditions and other factors.
On December 18, 2023, the Company declared a $0.0525 distribution per common share to be payable on January 10, 2024 to shareholders of record as of the close of business on December 29, 2023. At December 31, 2023, the balance of the
distributions payable was $5.5 million. The $0.0525 distribution per common share will be reported to shareholders for the year ending December 31, 2024.
On July 24, 2023, the Company declared a $0.05 distribution per common share with a payment date of October 10, 2023, to shareholders of record as of the close of business on September 30, 2023. The Company has determined that the total distribution of $0.05 per common share paid during the year ended December 31, 2023 represented 100% return of capital distributions.
The dividends and distributions payable at December 31, 2022 represent amounts payable on unvested LTIP units.
Debt Financing
Debt Strategy
The Company has historically utilized a combination of corporate and property level indebtedness. The Company will seek to refinance or retire its debt obligations at maturity with available proceeds received from the Company’s planned non-strategic asset sales, as well as with new corporate or property level indebtedness on or before the applicable maturity dates.
Debt Summary
The following is a breakdown of the Company’s debt between fixed and variable-rate financing as of December 31, 2023:
Balance
($000’s)
% of Total
Weighted Average
Interest Rate Weighted Average
Maturity in Years
Fixed Rate & Hedged Secured (a) $ 1,868,983 100.00 % 4.34 % 3.46
Variable Rate Secured Debt - - % - % -
Totals/Weighted Average: $ 1,868,983 100.00 % 4.34 % 3.46
Unamortized deferred financing costs (15,086)
Total Debt, Net $ 1,853,897
(a)Includes debt with interest rate caps outstanding with a notional amount of $304.5 million.
Debt Maturities
Scheduled principal payments and related weighted average annual effective interest rates for the Company’s debt as of December 31, 2023 are as follows:
Period Scheduled
Amortization
($000’s)
Principal
Maturities
($000’s)
Total
($000’s)
Weighted Avg.
Effective Interest Rate of
Future Repayments
2024 $ 6,076 $ 308,000 $ 314,076 3.43 %
2025 9,487 - 9,487 3.67 %
2026 9,651 536,487 546,138 4.44 %
2027 8,158 305,320 313,478 3.66 %
2028 5,331 343,061 348,392 6.01 %
Thereafter 5,574 331,838 337,412 3.98 %
Sub-total 44,277 1,824,706 1,868,983 4.34 %
Unamortized deferred financing costs (15,086) - (15,086)
Totals/Weighted Average $ 29,191 $ 1,824,706 $ 1,853,897 4.34 %
Unencumbered Properties
As of December 31, 2023, the Company had three unencumbered properties, with a carrying value of $115.9 million.
Equity Financing and Registration Statements
Shelf Registration Statements
The General Partner has an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.0 billion in common stock, preferred stock, depositary shares, and/or warrants of the General Partner, under which $100 million of shares of common stock have been allocated for sale pursuant to the Company's ATM Program commenced in November 2023 and no securities have been sold as of February 15, 2024.
The General Partner and the Operating Partnership also have an effective shelf registration statement on Form S-3 filed with the SEC for an aggregate amount of $2.5 billion in common stock, preferred stock, depositary shares and guarantees of the General Partner and debt securities of the Operating Partnership, under which no securities have been sold as of February 15, 2024.
Dividend Reinvestment and Stock Purchase Plan
The Company 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 Securities and Exchange Commission (“SEC”) for the approximately 5.4 million shares of the General Partner’s common stock reserved for issuance under the DRIP.
Off-Balance Sheet Arrangements
Unconsolidated Joint Venture Debt
The debt of the Company’s unconsolidated joint ventures generally provides for recourse to the Company for customary matters such as intentional misuse of funds, environmental conditions and material misrepresentations. The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures. As of December 31, 2023, the outstanding balance of such debt totaled $17.2 million of which $1.5 million was guaranteed by the Company. In January 2024, the joint venture repaid the $17.2 million loan.
The Company’s off-balance sheet arrangements are further discussed in Note 4: Investments in Unconsolidated Joint Ventures to the Financial Statements.
Funds from Operations
Funds from operations (“FFO”) (available to common stock and unit holders) is defined as net income (loss) before noncontrolling interests in Operating Partnership, computed in accordance with GAAP, excluding gains or losses from depreciable rental property transactions (including both acquisitions and dispositions), and impairments related to depreciable rental property, plus real estate-related depreciation and amortization. The Company believes that FFO is helpful to investors as one of several measures of the performance of an equity REIT. The Company further believes that as FFO excludes the effect of depreciation, gains (or losses) from property transactions and impairments related to depreciable rental property (all of which are based on historical costs which may be of limited relevance in evaluating current performance), FFO can facilitate comparison of operating performance between equity REITs.
FFO should not be considered as an alternative to net income available to common shareholders as an indication of the Company’s performance or to cash flows as a measure of liquidity. FFO presented herein is not necessarily comparable to FFO presented by other real estate companies due to the fact that not all real estate companies use the same definition. However, the Company’s FFO is comparable to the FFO of real estate companies that use the current definition of the National Association of Real Estate Investment Trusts (“NAREIT”).
As the Company considers its primary earnings measure, net income available to common shareholders, as defined by GAAP, to be the most comparable earnings measure to FFO, the following table presents a reconciliation of net income
available to common shareholders to FFO, as calculated in accordance with NAREIT’s current definition, for the years ended December 31, 2023, 2022 and 2021 (in thousands):
Year Ended December 31,
2023 2022 2021
Net loss available to common shareholders $ (107,265) $ (52,066) $ (119,042)
Add (deduct): Noncontrolling interests in Operating Partnership (14,267) (5,652) (16,212)
Noncontrolling interests in discontinued operations 3,872 378 4,333
Real estate-related depreciation and amortization on continuing operations (a) 103,049 95,103 77,908
Real estate-related depreciation and amortization on discontinued operations 5,335 26,370 43,482
Property impairments on continuing operations 32,516 - -
Property impairments on discontinued operations - 94,811 13,467
Impairment of unconsolidated joint venture investment (included in Equity in earnings) - - (1)
Discontinued operations: Gain on sale from unconsolidated joint ventures - (7,677) 1,886
Continuing operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net - - (3,023)
Discontinued operations: Realized (gains) losses and unrealized (gains) losses on disposition of rental property, net (2,411) (61,676) (25,552)
Funds from operations available to common stock and Operating Partnership unitholders (b) (c) $ 20,829 $ 89,591 $ (22,754)
(a)Includes the Company’s share from unconsolidated joint ventures, and adjustments for noncontrolling interests, of $10.3 million, $10.4 million and $10.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. Excludes non-real estate-related depreciation and amortization of $1.0 million, $1.3 million and $1.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(b)Net loss available to common shareholders in 2023, 2022 and 2021 included $9.3 million, $9.4 million and $23.7 million, respectively, of land impairment charges and $46.3 million, $94.8 million and $2.1 million, respectively, from a gain on disposition of developable land, which are included in the calculation to arrive at funds from operations as such gains and charges relate to non-depreciable assets.
(c)Includes $49.8 million of interest cost related to the mandatorily redeemable noncontrolling interests for the year ended December 31, 2023, respectively.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from its indebtedness primarily from changes in market interest rates. The Company monitors interest rate risk as an integral part of its overall risk management. The Company manages its exposure to interest rate risk by utilizing fixed rate indebtedness or by hedging the majority of its floating rate indebtedness with interest rate swaps or caps, as appropriate.
As of December 31, 2023, the Company's indebtedness with an aggregate principal balance of $1.9 billion had an estimated aggregate fair value of $1.8 billion.
Changes in interest rates, impact the fair value of the Company's fixed rate debt instruments, computed using current market yields. Approximately $1.6 billion of the Company’s long-term debt as of December 31, 2023 bears interest at fixed rates with a weighted average coupon of 4.29% and therefore the fair value of these instruments is affected by changes in market interest rates. If market rates of interest increased or decreased by 100 basis points, the fair value of the Company’s fixed rate debt as of December 31, 2023 would be approximately $47.9 million higher or lower, respectively.
The effective interest rates on the Company’s variable rate debt, which are hedged by interest-rate caps, as of December 31, 2023 ranged from SOFR plus 141.0 basis points to SOFR plus 275.0 basis points. Assuming interest-rate caps are not in effect as of December 31, 2023, if market rates of interest on the Company’s variable rate debt increased or decreased by
100 basis points, then the increase or decrease in interest costs on the Company’s variable rate debt would be approximately $3.0 million annually.
The following table summarizes the principal cash flows (in thousands) based upon maturity dates of the debt obligations and the related weighted average interest rates by expected maturity dates.
December 31, 2023
Debt, including current portion ($ in thousands)
2024 2025 2026 2027 2028 Thereafter
Sub-total
Other (a)
Total
Fair
Value
Fixed Rate & Hedged Debt $ 314,076 $ 9,487 $ 546,138 $ 313,478 $ 348,392 $ 337,412 $ 1,868,983 $ (15,086) $ 1,853,897 $ 1,791,121
Average Interest Rate 3.43 % 3.67 % 4.44 % 3.66 % 6.01 % 3.98 % 4.34 %
(a) Adjustment for unamortized debt discount/premium, net, unamortized deferred financing costs, net, and unamortized mark-to-market, net, as of December 31, 2023.
While the Company has not experienced any significant credit losses, in a significant rising interest rate environment and/or economic downturn, tenant vacancies or defaults could increase and result in losses to the Company which could adversely affect its operating results and liquidity, including its ability to pay its debt obligations.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Company and the Report of PricewaterhouseCoopers LLP, together with the notes to the Consolidated Financial Statements of the Company, as set forth in the index in Item 15: Exhibits and Financial Statements, are filed under this Item 8: Financial Statements and Supplementary Data and are incorporated herein by reference.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Veris Residential, Inc.
Disclosure Controls and Procedures. The General Partner’s management, with the participation of the General Partner’s chief executive officer and chief financial officer, has evaluated the effectiveness of the General Partner’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the General Partner’s chief executive officer and chief financial officer have concluded that, as of the end of such period, the General Partner’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the General Partner in the reports that it files or submits under the Exchange Act.
Management’s Report on Internal Control Over Financial Reporting. Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, the General Partner’s chief executive officer and chief financial officer, or persons performing similar functions, and effected by the General Partner’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The General Partner’s management, with the participation of the General Partner’s chief executive officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the General Partner’s internal control over financial reporting, and includes those policies and procedures that:
(1)Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the General Partner;
(2)Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the General Partner are being made only in accordance with authorizations of management and directors of the General Partner; and
(3)Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the General Partner’s assets that could have a material effect on the financial statements.
The General Partner’s management has evaluated the effectiveness of the General Partner’s internal control over financial reporting as of December 31, 2023 based on the criteria established in a report entitled Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on our assessment and those criteria, the General Partner’s management has concluded that the General Partner’s internal control over financial reporting was effective as of December 31, 2023.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
The effectiveness of the General Partner’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Changes In Internal Control Over Financial Reporting. There have not been any changes in the General Partner’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the General Partner’s internal control over financial reporting.
Veris Residential, L.P.
Disclosure Controls and Procedures. The General Partner’s management, with the participation of the General Partner’s chief executive officer and chief financial officer, has evaluated the effectiveness of the Operating Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the General Partner’s chief executive officer and chief financial officer have concluded that, as of the end of such period, the Operating Partnership’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Operating Partnership in the reports that it files or submits under the Exchange Act.
Management’s Report on Internal Control Over Financial Reporting. Internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, is a process designed by, or under the supervision of, the General Partner’s chief executive officer and chief financial officer, or persons performing similar functions, and effected by the General Partner’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The General Partner’s management, with the participation of the General Partner’s chief executive officer and chief financial officer, has established and maintained policies and procedures designed to maintain the adequacy of the Operating Partnership’s internal control over financial reporting, and includes those policies and procedures that:
(1)Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Operating Partnership;
(2)Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Operating Partnership are being made only in accordance with authorizations of management and directors of the General Partner; and
(3)Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Operating Partnership’s assets that could have a material effect on the financial statements.
The General Partner’s management has evaluated the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2023 based on the criteria established in a report entitled Internal Control-
Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on our assessment and those criteria, the General Partner’s management has concluded that the Operating Partnership’s internal control over financial reporting was effective as of December 31, 2023.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.
The effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
Changes In Internal Control Over Financial Reporting. There have not been any changes in the Operating Partnership’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
(a) Not Applicable.
(b) Not Applicable.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 will be set forth in the General Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 12, 2024, and is incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 will be set forth in the General Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 12, 2024, and is incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 will be set forth in the General Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 12, 2024, and is incorporated herein by reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by Item 13 will be set forth in the General Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 12, 2024, and is incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 will be set forth in the General Partner’s definitive proxy statement for its annual meeting of shareholders expected to be held on June 12, 2024, and is incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1.All Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022, and 2021
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
(a) 2.Financial Statement Schedules
(i)Veris Residential, Inc. and Veris Residential, L.P.:
Schedule III - Real Estate Investments and Accumulated Depreciation as of December 31, 2023 with reconciliations for the years ended December 31, 2023, 2022 and 2021.
All other schedules are omitted because they are not required or the required information is shown in the financial statements or notes thereto.
(a) 3.Exhibits
The exhibits required by this item are set forth on the Exhibit Index attached hereto.