Financial Results
Three months ended September 30,
2025
2024
Net loss per diluted share
$
(1.40
)
$
(0.03
)
Core FFO per diluted share
0.22
0.23
Operational Highlights
Same-store multifamily NOI decreased by 1.8% compared to the prior year quarter
Same-store Average Effective Monthly Rent Per Home increased 1.1% compared to the prior year quarter
Effective blended Lease Rate Growth was 0.7% for our Same-Store Portfolio during the quarter, comprised of effective new Lease Rate Growth of (4.7)% and effective renewal Lease Rate Growth of 4.3%
Retention was 65% during the quarter, in line with expectations
Same-store multifamily Average Occupancy was 94.4% during the quarter, down 0.8% compared to the prior year quarter
Balance Sheet
Available liquidity was $321 million as of September 30, 2025, consisting of availability under the Company's revolving credit facility and cash on hand
Year-to-date Net Debt to Adjusted EBITDA ratio was 5.7x
The Company has only $125 million of debt maturing before 2028 and no secured debt
"Our third-quarter operational performance aligned with our expectations and was consistent with typical seasonal patterns across our portfolio," said Paul T. McDermott, President and CEO. "Our performance highlights not only the overall stability and quality of our portfolio but also the results of executing our operational platform initiatives and the effectiveness of our team's efforts as we continue our focus on maximizing value for shareholders."
Pending Portfolio Sale Transaction and Plan of Sale and Liquidation
As previously announced, Elme has entered into a Purchase and Sale Agreement with an affiliate of Cortland Partners, LLC (the "Purchase Agreement"), providing for the sale of 19 multifamily communities for approximately $1.6 billion (the "Portfolio Sale Transaction"), and the Board of Trustees of Elme announced that it has approved a voluntary plan of sale and liquidation providing for the sale of Elme's remaining assets and the liquidation and dissolution of Elme (the "Plan of Sale and Liquidation"). The Portfolio Sale Transaction is subject to customary closing conditions and both the Portfolio Sale Transaction and the Plan of Sale and Liquidation are subject to approval by Elme's shareholders at a special meeting to be held on October 30, 2025.
Third Quarter Operating Results
Multifamily same-store NOI - Same-store NOI decreased 1.8% compared to the corresponding prior year period driven primarily by higher operating expenses. Average occupancy for the quarter decreased 0.8% from the prior year period to 94.4%.
Other same-store NOI - The Other same-store portfolio is comprised of one asset, Watergate 600. Other same-store NOI decreased by 6.5% compared to the corresponding prior year period due to lower occupancy. Watergate 600 was 82.3% occupied and leased at quarter end.
Real Estate Impairments
During the quarter ended September 30, 2025, the Company recognized an aggregate impairment charge of $111.7 million related to several properties not included as part of the Portfolio Sale Transaction. The estimated cash flows for those certain properties were less than their respective carrying values primarily due to a revision of their estimated holding periods.
Regular Quarterly Dividends
On October 3, 2025, Elme Communities paid a quarterly dividend of $0.18 per share to shareholders of record on September 17, 2025. As previously announced, the Company does not intend to declare and pay future regular quarterly dividends if the Plan of Sale and Liquidation is approved by the Company's shareholders.
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.
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 and Cautionary Statements
Certain statements in our earnings release 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 our actual results, performance, or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Additional factors which may cause our actual results, performance, or achievements 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 satisfaction or waiver of other conditions to closing the Portfolio Sale Transaction pursuant to the Purchase Agreement; the possibility that our shareholders do not approve the Portfolio Sale Transaction and/or Plan of Sale and Liquidation (together, the "Proposed Transactions") or that other conditions to the closing of the Portfolio Sale Transaction are not satisfied or waived at all or on the anticipated timeline; the possibility that our shareholders approve one but not both of the Portfolio Sale Transaction and the Plan of Sale and Liquidation; unanticipated difficulties or expenditures relating to the Proposed Transactions; changes in the amount and timing of the total liquidating distributions, including but not limited to as a result of unexpected levels of transaction costs, unexpected additional capital or financing requirements, delayed or terminated closings, defaults under future sale agreements pursuant to the Plan of Sale and Liquidation, liquidation costs or unpaid or additional liabilities and obligations, including but not limited to tax liabilities; the inability to close our proposed new debt financing on the terms or timeline or for the amount anticipated, including the anticipated fees associated with the repayment of our existing indebtedness; the possibility of converting to a liquidating trust or other liquidating entity; the ability of our board of trustees to terminate the Plan of Sale and Liquidation, whether or not approved by shareholders; the possibility that we do not reserve adequate funds to cover expenses and liabilities, and the possibility that our creditors, in that instance, could seek repayment from our shareholders up to the amount of the total liquidating distributions; the response of our residents, tenants and business partners to the announcement of the Proposed Transactions; potential difficulties in retaining our executive officers and other key personnel as a result of announcement of the Proposed Transactions; the occurrence of any event, change or other circumstances that could give rise to the termination of the Portfolio Sale Transaction; the outcome of legal proceedings that may be instituted against us, our trustees and others related to the Proposed Transactions; the risk that disruptions caused by or relating to the Proposed Transactions will harm our ongoing business, including current plans and operations; risks relating to the market value of our common shares, including following approval of the Proposed Transactions by our shareholders and any requirements that certain institutional shareholders sell their common shares; risks relating to the delisting of our common shares from the NYSE; risks relating to the expense of complying with public company reporting requirements; risks associated with the limitations set forth in the Purchase Agreement regarding our ability to pursue alternatives to the Portfolio Sale Transaction; risks associated with third party contracts containing consent and/or other provisions that may be triggered by the Proposed Transactions; restrictions during the pendency of the Portfolio Sale Transaction that may impact our ability to pursue certain business opportunities or strategic transactions; risks associated with any change in our basis of accounting; general risks affecting the real estate industry and local real estate markets, including, without limitation, the market value of our properties and potential illiquidity of our remaining real estate investments; the economic health of the areas in which our properties are located, particularly with respect to the greater Washington, DC metro and Sunbelt regions; 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, tariffs and trade barriers, supply chain disruptions 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 legal proceedings, including those proceedings related to the Proposed Transactions; risks related to not having adequate insurance to cover potential losses; changes in the market value of securities, including following approval of the Proposed Transactions by our shareholders; 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; the risks related to our organizational structure and limitations of share ownership; whether or not the sale of one or more of our properties may be considered a prohibited transaction under the Code; failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; the risks associated with ownership of real estate in general and our real estate assets in particular; and general economic and market developments and conditions.
The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect Elme's businesses in the "Risk Factors" section of Elme's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed by Elme from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. While forward-looking statements reflect Elme's good faith beliefs, they are not guarantees of future performance. Elme undertakes no obligation to update its 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
2025
2024
2025
2024
Revenue
Real estate rental revenue
$
62,103
$
61,055
$
185,695
$
180,671
Expenses
Property operating and maintenance
16,050
14,095
44,849
41,555
Real estate taxes and insurance
8,089
8,163
23,946
24,404
Property management
2,263
2,235
6,765
6,628
General and administrative
14,064
6,354
30,982
18,688
Depreciation and amortization
23,771
23,474
70,570
72,312
Real estate impairment
111,719
—
111,719
—
175,956
54,321
288,831
163,587
Real estate operating income
(113,853
)
6,734
(103,136
)
17,084
Other income (expense)
Interest expense
(9,661
)
(9,557
)
(28,619
)
(28,435
)
Loss on extinguishment of debt
—
(147
)
—
(147
)
Other income
—
—
—
1,410
(9,661
)
(9,704
)
(28,619
)
(27,172
)
Net loss
$
(123,514
)
$
(2,970
)
$
(131,755
)
$
(10,088
)
Net loss
$
(123,514
)
$
(2,970
)
$
(131,755
)
$
(10,088
)
Depreciation and amortization
23,771
23,474
70,570
72,312
Real estate impairment - depreciable assets
109,981
—
109,981
—
NAREIT funds from operations
$
10,238
$
20,504
$
48,796
$
62,224
Non-cash loss on extinguishment of debt
$
—
$
147
$
—
$
147
Leasing commissions capitalized
—
(30
)
(4
)
(30
)
Recurring capital improvements
(4,525
)
(2,284
)
(10,645
)
(7,199
)
Straight-line rents, net
93
26
259
66
Non-real estate depreciation & amortization of debt costs
1,270
1,326
3,810
3,755
Amortization of lease intangibles, net
(167
)
(201
)
(503
)
(526
)
Amortization and expensing of restricted share and unit compensation
1,642
1,578
4,755
