Elme Communities Announces Third Quarter 2024 Results
BETHESDA, Md., Nov. 04, 2024 (GLOBE NEWSWIRE) -- Elme Communities (the "Company") (NYSE:ELME), a multifamily REIT with communities in the Washington, DC metro area and the Atlanta metro area, reported financial and operating results today for the quarter ended September 30, 2024:
Financial Results
Net loss was $3.0 million, or $0.03 per diluted share
NAREIT FFO was $20.5 million, or $0.23 per diluted share
Core FFO was $20.7 million, or $0.23 per diluted share
Net Operating Income (NOI) was $38.8 million
Operational Highlights
Same-store multifamily NOI increased by 2.3% compared to the prior year quarter
Effective blended Lease Rate Growth was 2.1% for our Same-Store Portfolio during the quarter, comprised of effective new Lease Rate Growth of (1.5)% and effective renewal Lease Rate Growth of 4.5%
Average Effective Monthly Rent Per Home increased 2.4% compared to the prior year quarter for our Same-Store Portfolio
Same-store Retention was 66%, up 5% compared to the prior year quarter
Same-store multifamily Average Occupancy was 95.2% during the quarter, down 0.2% compared to the prior year quarter and up 0.6% compared to the prior quarter.
Same-store multifamily Ending Occupancy was 94.8%, down 0.4% compared to the prior year quarter and down 0.7% compared to the prior quarter.
Liquidity Position
Available liquidity was approximately $337 million as of September 30, 2024, consisting of availability under the Company's revolving credit facility and cash on hand
Annualized third quarter Net Debt to Adjusted EBITDA ratio was 5.6x
The Company has a strong balance sheet with only $125 million of debt maturing before 2028 and no secured debt
"We continue to experience solid demand across our Washington Metro portfolio, resulting in a 0.6% sequential improvement in same-store occupancy," said Paul T. McDermott, President and CEO. "In Atlanta, while we are achieving strong retention and renewal rates, our third quarter performance reflects the combined impacts of elevated supply and slower than expected improvement in bad debt. Looking ahead to 2025, we expect to deliver meaningful improvement in our Atlanta performance due to lower bad debt and we anticipate increasingly favorable supply/demand dynamics thereafter."
Third Quarter Operating Results
Multifamily same-store NOI - Same-store NOI increased 2.3% compared to the corresponding prior year period driven primarily by higher base rent. Average Occupancy for the quarter decreased 20 basis points from the prior year period to 95.2%.
Other same-store NOI - The Other same-store portfolio is comprised of one asset, Watergate 600. Other same-store NOI decreased by 0.9% compared to the corresponding prior year period due to higher operating expenses. Watergate 600 was 86.0% occupied and leased at quarter end.
Guidance
"We are pleased with the strong performance from our Washington Metro portfolio and how our teams have effectively managed operating expenses," said Steven Freishtat, Executive Vice President and CFO. "However, progress on reducing bad debt across our Atlanta portfolio was slower than anticipated for the quarter. As a result, we are tightening our guidance range while reiterating the midpoint of Core FFO guidance."
The Company is tightening its Core FFO guidance range for 2024 to $0.92 to $0.94 per fully diluted share. The following assumptions are included in the Core FFO guidance for 2024:
Full Year 2024 Outlook on Key Assumptions and Metrics
Same-store multifamily NOI growth is now expected to range from 1.0% to 1.5%
Non-same-store multifamily NOI is now expected to range from $5.35 million to $5.75 million
Other same-store NOI, which consists solely of Watergate 600, is now expected to range from $12.5 million to $12.75 million
Property management expense is expected to range from $8.5 million to $9.0 million
G&A, net of core adjustments, is now expected to range from $24.4 million to $25.1 million
Interest expense is now expected to range from $37.5 million to $38.0 million
Does not consider any potential future acquisitions or dispositions in 2024
Full Year 2024
Core FFO per diluted share
$0.92 - $0.94
Net Operating Income Assumptions
Same-store multifamily NOI growth (a)
1.0% - 1.5%
Non-same-store multifamily NOI (b)
$5.35 million - $5.75 million
Other same-store NOI (c)
$12.5 million - $12.75 million
Expense Assumptions
Property management expense
$8.5 million - $9.0 million
G&A, net of core adjustments
$24.4 million - $25.1 million
Interest expense
$37.5 million - $38.0 million
(a) Includes revenue and expenses from retail operations at multifamily communities
(b) Includes Elme Druid Hills and Riverside Development
(c) Consists of Watergate 600
Elme Communities' 2024 Core FFO guidance and outlook are based on a number of factors, many of which are outside the Company's control, including economic factors such as inflation and interest rate changes, and all of which are subject to change. Elme Communities may change the guidance provided during the year as actual and anticipated results vary from these assumptions, but Elme Communities undertakes no obligation to do so.
2024 Guidance Reconciliation Table
A reconciliation of projected net loss per diluted share to projected Core FFO per diluted share for the full year ending December 31, 2024 is as follows:
Low
High
Net loss per diluted share
$(0.16)
$(0.14)
Real estate depreciation and amortization
1.09
1.09
NAREIT FFO per diluted share
0.93
0.95
Core adjustments
(0.01)
(0.01)
Core FFO per diluted share
$0.92
$0.94
Dividends
On October 3, 2024, Elme Communities paid a quarterly dividend of $0.18 per share.
Elme Communities announced today that its Board of Trustees has declared a quarterly dividend of $0.18 per share to be paid on January 6, 2025 to shareholders of record on December 19, 2024.
Presentation Webcast and Conference Call Information
The Third Quarter 2024 Earnings Call is scheduled for Tuesday, November 5, 2024 at 10:00 A.M. Eastern Time. There will also be a webcast presentation with slides. Conference Call access information is as follows:
USA Toll Free Number:
1-888-506-0062
International Toll Number:
1-973-528-0011
Conference ID:
848746
The instant replay of the Earnings Call will be available until Tuesday, November 19, 2024. Instant replay access information is as follows:
USA Toll Free Number:
1-877-481-4010
International Toll Number:
1-919-882-2331
Conference ID:
51315
The live on-demand webcast of the Conference Call with presentation slides will be available on the Investor section of Elme Communities' website at www.elmecommunities.com. Online playback of the webcast and presentation slides will be available following the Conference Call.
About Elme Communities
Elme Communities is committed to elevating what home can be for middle-income renters by providing a higher level of quality, service, and experience. The Company is a multifamily real estate investment trust that owns and operates approximately 9,400 apartment homes in the Washington, DC metro and the Atlanta metro regions, and owns approximately 300,000 square feet of commercial space. Focused on providing quality, affordable homes to a deep, solid, and underserved base of mid-market demand, Elme Communities is building long-term value for shareholders.
Note: Elme Communities' press releases and supplemental financial information are available on the Company website at www.elmecommunities.com or by contacting Investor Relations at (202) 774-3200.
Forward Looking Statements
Certain statements in our earnings release and on our conference call are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Elme Communities to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Additional factors which may cause the actual results, performance, or achievements of Elme Communities to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements include, but are not limited to: the risks associated with ownership of real estate in general and our real estate assets in particular; our ability to work through elevated eviction backlogs; our ability to benefit from core growth drivers across our Washington Metro communities and end the year in a strong position; our ability to ramp up renovations over the course of this year; our ability to achieve above market growth after 2024 driven by renovations; the economic health of the areas in which our properties are located, particularly with respect to the greater Washington, DC metro and Sunbelt regions; risks associated with our ability to execute on our strategies, including new strategies with respect to our operations and our portfolio, including the acquisition of apartment homes in the Sunbelt markets and our ability to realize any anticipated operational benefits from our internalization of community management functions; the risk of failure to enter into and/or complete acquisitions and dispositions; changes in the composition of our portfolio; reductions in or actual or threatened changes to the timing of federal government spending; the economic health of our residents; the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdowns or recessions and geopolitical conflicts); risks related to our ability to control our expenses if revenues decrease; compliance with applicable laws and corporate social responsibility goals, including those concerning the environment and access by persons with disabilities; risks related to not having adequate insurance to cover potential losses; changes in the market value of securities; terrorist attacks or actions and/or cyber-attacks; whether we will succeed in the day-to-day property management and leasing activities that we have previously outsourced; the availability and terms of financing and capital and the general volatility of securities markets; our ability to capture the impacts from normalizing bad debt; the risks related to our organizational structure and limitations of share ownership; failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2023 Form 10-K filed on February 16, 2024. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events, or otherwise.
This Earnings Release also includes certain forward-looking non-GAAP information. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Please see the following pages for the corresponding definitions and reconciliations of such non-GAAP financial measures.
ELME COMMUNITIES AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
OPERATING RESULTS
2024
2023
2024
2023
Revenue
Real estate rental revenue
$
61,055
$
56,651
$
180,671
$
169,059
Expenses
Property operating and maintenance (1)
14,095
12,696
41,555
38,360
Real estate taxes and insurance (1)
8,163
7,101
24,404
21,216
Property management
2,235
1,935
6,628
5,882
General and administrative
6,354
6,370
18,688
19,891
Transformation costs
—
985
—
6,339
Depreciation and amortization
23,474
21,904
72,312
64,855
Real estate impairment
—
41,860
—
41,860
54,321
92,851
163,587
198,403
Real estate operating income (loss)
6,734
(36,200
)
17,084
(29,344
)
Other income (expense)
Interest expense
(9,557
)
(7,418
)
(28,435
)
(21,043
)
Loss on extinguishment of debt
(147
)
—
(147
)
(54
)
Other income
—
—
1,410
569
(9,704
)
(7,418
)
(27,172
)
(20,528
)
Net loss
$
(2,970
)
$
(43,618
)
$
(10,088
)
$
(49,872
)
Net loss
$
(2,970
)
$
(43,618
)
$
(10,088
)
$
(49,872
)
Depreciation and amortization
23,474
21,904
72,312
64,855
Real estate impairment
—
41,860
—
41,860
NAREIT funds from operations
$
20,504
$
20,146
$
62,224
$
56,843
Non-cash loss on extinguishment of debt
$
147
$
—
$
147
$
54
Tenant improvements and incentives, net of reimbursements
—
—
—
(10
)
Leasing commissions capitalized
(30
)
—
(30
)
(56
)
Recurring capital improvements
(2,284
)
(1,490
)
(7,199
)
(5,950
)
Straight-line rents, net
26
(74
)
66
(160
)
Non-real estate depreciation & amortization of debt costs
1,326
1,348
3,755
3,891
Amortization of lease intangibles, net
(201
