Core Points - The special meeting of Elme Communities was called to order by the Lead Independent Trustee, Benjamin Butcher [1] - The meeting's rules and technical support information were provided to participants [2] - All members of the Board of Trustees and executive officers were present, highlighting the leadership strength of Elme Communities [3]

Financial Performance - For the three months ended September 30, 2025, the net loss was $123.5 million, a significant increase of 4,058.7% compared to a net loss of $3.0 million in the same period of 2024[100] - Net operating income (NOI) decreased by 2.1% to $38.0 million in the 2025 Quarter from $38.8 million in the 2024 Quarter[100] - NAREIT Funds From Operations (FFO) dropped by 50.1% to $10.2 million in the 2025 Quarter compared to $20.5 million in the 2024 Quarter[100] - Net loss for the 2025 Quarter was $123.5 million, a significant increase of 4,058.7% compared to a net loss of $3.0 million in the 2024 Quarter[109] - Total net operating income (NOI) for the 2025 Quarter decreased by $0.8 million, or 2.1%, to $38.0 million from $38.8 million in the 2024 Quarter[109] - Residential revenue from same-store properties increased by $1.3 million, or 2.2%, to $57.7 million in the 2025 Quarter compared to $56.4 million in the 2024 Quarter[110] - Net cash provided by operating activities decreased by 12.4% to $61,935,000 in 2025 from $70,739,000 in 2024[154] - For the nine months ended September 30, 2025, NAREIT FFO was $48.796 million, down 21.5% from $62.224 million in 2024[160] - The company reported real estate impairment of $109.981 million for the nine months ended September 30, 2025, with no impairment reported in 2024[160] Occupancy and Revenue - The average occupancy for residential same-store properties decreased to 94.4% in the 2025 Quarter from 95.2% in the 2024 Quarter[101] - Average occupancy for same-store residential properties decreased to 94.4% in the 2025 Quarter from 95.2% in the 2024 Quarter, a decline of 0.8%[111] - Residential expenses as a percentage of residential revenue increased to 39.4% in the 2025 Quarter from 36.9% in the 2024 Quarter[112] - Residential revenue from same-store properties for the 2025 Period increased by $5.6 million, or 3.3%, to $172.4 million compared to $166.8 million in the 2024 Period[122] - Real estate expenses from same-store properties increased by $2.8 million, or 4.5%, to $64.4 million for the 2025 Period compared to $61.6 million in the 2024 Period[126] Debt and Financing - The company entered into a Purchase Agreement for a Portfolio Sale Transaction valued at approximately $1.61 billion[94] - The company plans to repay all outstanding amounts under its credit facilities and notes concurrently with the consummation of the Portfolio Sale Transaction[98] - A commitment for debt financing of $520 million has been secured, contingent on the closing of the Portfolio Sale Transaction[99] - The company has no debt maturities scheduled until 2026, indicating a stable capital structure in the near term[104] - The company has no debt maturities until 2026 and only $361 million of scheduled debt maturities prior to 2029[135] - The total unsecured fixed-rate debt outstanding as of September 30, 2025, was $525 million, with a weighted average interest rate of 4.9%[163] - The company has a variable rate debt of $186 million, with a variable interest rate of 5.3%[163] - Interest payments for the unsecured fixed-rate debt for 2025 are projected to be $1.803 million, increasing to $18.189 million in 2026[163] - The company has entered into interest rate swap arrangements to hedge against interest rate fluctuations, with a total notional amount of $225 million as of September 30, 2025[165] - The fair value of interest rate swap contracts as of September 30, 2025, was $(315,000), indicating a liability position[165] Expenses and Impairments - General and administrative expenses rose by $7.7 million, or 121.3%, primarily due to higher professional fees related to proposed transactions[115] - Real estate impairment charge of $111.7 million was recorded in the 2025 Quarter, compared to no impairment in the 2024 Quarter[121] - The company incurred a real estate impairment charge of $111.7 million during the 2025 Period[132] Compliance and Governance - As of September 30, 2025, the company was in compliance with the covenants related to its Amended Credit Agreement, 2023 Term Loan, and unsecured notes[147] - The company has authorized the issuance of 150 million common shares, with 88.2 million shares outstanding as of September 30, 2025[148] - The company suspended its dividend reinvestment program in September 2025, meaning dividends will not be automatically reinvested during the suspension period[151] Liquidity - As of September 30, 2025, the company had cash and cash equivalents of $2.2 million and a borrowing capacity of $300 million, resulting in a total liquidity position of $302.2 million[135] - The weighted average interest rate for the line of credit decreased to 5.4% in 2025 from 6.3% in 2024, despite higher average borrowings of $183.1 million in 2025 compared to $166.2 million in 2024[133] Tax Legislation - Recent tax legislation may impact the company, including a permanent extension of the 20% deduction for qualified REIT dividends[105] Investment Activity - There were no significant investment transactions during the 2025 Period[103] - The company expects to invest approximately $28.0 - $33.0 million in its existing portfolio of operating assets, including $14.0 - $18.0 million for major capital expenditures[138]

CONTACT: 7550 Wisconsin Ave, Suite 900 Amy Hopkins Bethesda, MD 20814 Vice President, Investor Relations Tel 202-774-3253 E-Mail: ahopkins@elmecommunities.com Fax 301-984-9610 www.elmecommunities.com October 23, 2025 Elme Communities Announces Third Quarter 2025 Results Elme Communities (the "Company" or "Elme") (NYSE: ELME), a multifamily REIT, reported financial and operating results today for the quarter ended September 30, 2025: Financial Results | | Three months ended September 30, | | | | | --- | --- ...

Financial Results - Elme Communities reported a net loss per diluted share of $1.40 for the quarter ended September 30, 2025, compared to a loss of $0.03 in the same quarter of 2024 [1] - Core Funds From Operations (FFO) per diluted share was $0.22, slightly down from $0.23 in the prior year [1] Operational Highlights - Same-store multifamily Net Operating Income (NOI) decreased by 1.8% year-over-year, primarily due to higher operating expenses [7][8] - Average occupancy for the same-store multifamily portfolio was 94.4%, down 0.8% compared to the prior year [7][8] - The average effective monthly rent per home increased by 1.1% compared to the prior year [7] Balance Sheet - As of September 30, 2025, available liquidity was $321 million, consisting of cash on hand and availability under the revolving credit facility [7] - The year-to-date Net Debt to Adjusted EBITDA ratio was 5.7x, with only $125 million of debt maturing before 2028 [7] Portfolio Sale and Liquidation Plan - Elme has entered into a Purchase and Sale Agreement for the sale of 19 multifamily communities for approximately $1.6 billion [4] - The Board of Trustees approved a voluntary plan of sale and liquidation, subject to shareholder approval at a special meeting on October 30, 2025 [4] Impairments - The company recognized an impairment charge of $111.7 million related to several properties not included in the Portfolio Sale Transaction, due to estimated cash flows being less than their carrying values [9] Dividends - On October 3, 2025, Elme paid a quarterly dividend of $0.18 per share, but does not intend to declare future dividends if the Plan of Sale and Liquidation is approved [10]

Core Insights - Elme Communities will release its third quarter earnings results on October 23rd, 2025, after market close [1] - The company will not hold a conference call following the earnings release [1] Company Overview - Elme Communities is a multifamily real estate investment trust (REIT) focused on owning and operating apartment homes in the Washington, DC metro and Atlanta metro areas [2] - The company aims to enhance the quality, service, and experience of home living [2]

Core Thesis - Elme Communities has opted for full liquidation after years of disappointing shareholder returns, selling 19 properties to Cortland for $1.6 billion, with remaining assets to be marketed separately [2][4] Financial Overview - As of September 18, Elme Communities' share was trading at $16.93, with a trailing P/E of 38.57 [1] - Shareholders will receive an initial special distribution of $14.50 to $14.82 per share, along with a $0.18 quarterly dividend payable on October 3, 2025 [2] - Future distributions are projected at $2.90 to $3.50 per share, indicating a total payout that implies a 7% to 12.6% upside from current levels [3] Investment Potential - Based on the September 19 closing price of $16.46, investors are expected to recoup approximately 89% to 91% of value via the initial distribution by year-end [3] - Conservative assumptions suggest potential IRRs of 14% to 26%, making the liquidation attractive for event-driven and special situation investors [3][4] Market Position - Elme's apartment portfolio is concentrated in the Washington, D.C. and Atlanta markets, primarily consisting of older assets included in the Cortland deal [4] - The primary $1.6 billion transaction appears low risk due to Cortland's credible track record, although risks include potential delays in liquidation or lower-than-expected proceeds from remaining asset sales [4]

[Part I: Financial Information](index=4&type=section&id=Part%20I%3A%20Financial%20Information) [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Details Elme Communities' unaudited consolidated financial statements, including balance sheets, income, equity, and cash flows, with notes on strategic developments [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Presents a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | % Change | | :----------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Total assets | $1,845,762 | $1,810,204 | $(35,558) | -1.93% | | Total liabilities | $763,684 | $763,734 | $50 | 0.01% | | Total equity | $1,082,078 | $1,046,470 | $(35,608) | -3.29% | | Net income producing property | $1,765,034 | $1,735,430 | $(29,604) | -1.68% | | Cash and cash equivalents | $6,144 | $4,786 | $(1,358) | -22.10% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Summarizes the company's revenues, expenses, and net loss over specific reporting periods | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change | % Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | :-------------------------- | :-------------------------- | :----- | :------- | | Real estate rental revenue | $62,099 | $60,103 | $1,996 | 3.32% | $123,592 | $119,616 | $3,976 | 3.32% | | Total expenses | $56,167 | $54,190 | $1,977 | 3.65% | $112,875 | $109,266 | $3,609 | 3.30% | | Net loss | $(3,566) | $(3,471) | $(95) | 2.74% | $(8,241) | $(7,118) | $(1,123) | 15.78% | | Basic net loss per common share | $(0.04) | $(0.04) | $0.00 | 0.00% | $(0.10) | $(0.08) | $(0.02) | 25.00% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Details the company's net loss and other comprehensive income items, such as unrealized gains or losses on hedges | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | Change | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :-------------------------- | :-------------------------- | :----- | | Net loss | $(3,566) | $(3,471) | $(95) | $(8,241) | $(7,118) | $(1,123) | | Unrealized gain (loss) on interest rate hedges | $334 | $(796) | $1,130 | $423 | $(713) | $1,136 | | Reclassification of unrealized loss on interest rate derivatives to earnings | $509 | $510 | $(1) | $1,019 | $1,020 | $(1) | | Comprehensive loss | $(2,723) | $(3,757) | $1,034 | $(6,799) | $(6,811) | $12 | [Consolidated Statements of Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Equity) Outlines changes in the company's total equity, including net loss, dividends, and share grants | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Equity | $1,082,078 | $1,046,470 | $(35,608) | | Net loss (6 months) | N/A | $(8,241) | N/A | | Dividends paid (6 months) | N/A | $(31,890) | N/A | | Share grants, net (6 months) | N/A | $3,085 | N/A | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Reports the cash generated and used by operating, investing, and financing activities over specific periods | Metric (in thousands) | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :----- | :------- | | Net cash provided by operating activities | $46,023 | $50,073 | $(4,050) | -8.1% | | Net cash used in investing activities | $(14,451) | $(17,684) | $3,233 | -18.3% | | Net cash used in financing activities | $(33,088) | $(33,035) | $(53) | 0.2% | | Net decrease in cash, cash equivalents and restricted cash | $(1,516) | $(646) | $(870) | 134.67% | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the consolidated financial statements [NOTE 1: NATURE OF BUSINESS](index=11&type=section&id=NOTE%201%3A%20NATURE%20OF%20BUSINESS) Describes the company's primary operations as an equity REIT and outlines significant strategic transactions - Elme Communities is a self-administered equity REIT, primarily owning apartment communities in the greater Washington, DC metro and Sunbelt regions[27](index=27&type=chunk) - The company entered into a Purchase Agreement on August 1, 2025, to sell 19 multifamily properties for an aggregate purchase price of **$1.6 billion**, subject to customary adjustments[30](index=30&type=chunk) - A Plan of Sale and Liquidation has been approved by the board of trustees, providing for the company's complete liquidation and dissolution, both subject to shareholder approval[31](index=31&type=chunk)[32](index=32&type=chunk) - A commitment letter for **$520 million** in debt financing (or **$565 million** if one property is excluded) has been obtained from Goldman Sachs Bank USA, secured by remaining real estate assets, contingent on the Portfolio Sale Transaction closing[33](index=33&type=chunk)[34](index=34&type=chunk) [NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATIONS](index=12&type=section&id=NOTE%202%3A%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20BASIS%20OF%20PRESENTATIONS) Outlines the key accounting policies and principles used in preparing the consolidated financial statements - The company adopted ASU 2023-07, 'Segment Reporting - Improvements to Reportable Segments Disclosures,' in fiscal year 2024[36](index=36&type=chunk) - The company is currently evaluating the impact of ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for public companies for fiscal years beginning after December 15, 2026[37](index=37&type=chunk) - Consolidated financial statements include Elme Communities and its subsidiaries, with all intercompany balances and transactions eliminated[38](index=38&type=chunk) [NOTE 3: REAL ESTATE](index=13&type=section&id=NOTE%203%3A%20REAL%20ESTATE) Details the company's real estate investments, including development projects and property sales - Investment in residential development adjacent to Riverside Apartments: **$30.4 million** as of June 30, 2025, with development activities paused since Q2 2022[43](index=43&type=chunk) - No properties were sold or classified as held for sale during the 2025 Period or in 2024[45](index=45&type=chunk) - No impairment charges were recognized during the 2025 Quarter[46](index=46&type=chunk) [NOTE 4: UNSECURED LINE OF CREDIT PAYABLE](index=13&type=section&id=NOTE%204%3A%20UNSECURED%20LINE%20OF%20CREDIT%20PAYABLE) Provides details on the company's revolving credit facility, including capacity, outstanding borrowings, and interest rates - Amended and Restated Revolving Credit Facility: **$500.0 million** committed capacity, maturing July 2028[47](index=47&type=chunk) - Borrowings outstanding as of June 30, 2025: **$175.0 million**[50](index=50&type=chunk) - Unused and available capacity as of June 30, 2025: **$325.0 million**[50](index=50&type=chunk) - Interest rate as of June 30, 2025: Adjusted Daily Simple SOFR (**4.45%**) + **0.85%** margin + **0.10%** credit spread adjustment[48](index=48&type=chunk) [NOTE 5: NOTES PAYABLE](index=14&type=section&id=NOTE%205%3A%20NOTES%20PAYABLE) Details the company's unsecured term loan, including its principal amount, maturity, and effective interest rate - The 2023 Term Loan is a **$125.0 million** unsecured term loan[51](index=51&type=chunk) - Maturity extended to January 10, 2026, using a one-year extension option[53](index=53&type=chunk) - Interest rate effectively fixed at **5.77%** through interest rate swap arrangements until maturity[53](index=53&type=chunk) [NOTE 6: DERIVATIVE INSTRUMENTS](index=14&type=section&id=NOTE%206%3A%20DERIVATIVE%20INSTRUMENTS) Explains the company's use of interest rate swap arrangements to manage variable rate debt exposure - Two forward interest rate swap arrangements with an aggregate notional amount of **$150.0 million** became effective January 10, 2025, and expire January 10, 2026[55](index=55&type=chunk) - These swaps effectively fix a portion of variable rate debt at **4.72%** and the 2023 Term Loan's interest rate at **5.77%**[55](index=55&type=chunk) - Fair value of interest rate swaps as of June 30, 2025: **$(490) thousand** (net liability)[57](index=57&type=chunk) - Estimated reclassification to interest expense in the next twelve months: **$0.5 million** from outstanding swaps and **$2.0 million** from previously settled swaps[57](index=57&type=chunk)[58](index=58&type=chunk) [NOTE 7: FAIR VALUE DISCLOSURES](index=15&type=section&id=NOTE%207%3A%20FAIR%20VALUE%20DISCLOSURES) Provides information on assets and liabilities measured at fair value, categorized by valuation input levels - Assets measured at fair value on a recurring basis: SERP investments (Level 1) and interest rate derivatives (Level 2)[62](index=62&type=chunk)[63](index=63&type=chunk) Fair Value of Assets and Liabilities (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------- | :-------------------------- | :-------------------------- | | SERP assets | $3,008 | $2,648 | | Interest rate swaps (net liability) | $(490) | $(913) | - Financial assets and liabilities not measured at fair value: Cash and cash equivalents, restricted cash (Level 1), Line of credit, Notes payable (Level 3)[66](index=66&type=chunk)[67](index=67&type=chunk) [NOTE 8: SHARE-BASED COMPENSATION](index=17&type=section&id=NOTE%208%3A%20SHARE-BASED%20COMPENSATION) Details the compensation expense related to share-based awards and information on unvested restricted shares Share-Based Compensation Expense (in thousands) | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total compensation expense | $1,700 | $1,000 | $3,100 | $2,100 | - Unvested restricted share awards at June 30, 2025: **490,833 shares**, with a weighted average grant date fair value of **$15.81 per share**[70](index=70&type=chunk) - Total compensation cost related to unvested awards: **$5.1 million**, expected to be recognized over a weighted average period of **21 months**[70](index=70&type=chunk) [NOTE 9: EARNINGS PER COMMON SHARE](index=17&type=section&id=NOTE%209%3A%20EARNINGS%20PER%20COMMON%20SHARE) Presents basic and diluted net loss per common share, along with dividends declared per common share Earnings Per Common Share | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic net loss per common share | $(0.04) | $(0.04) | $(0.10) | $(0.08) | | Diluted net loss per common share | $(0.04) | $(0.04) | $(0.10) | $(0.08) | | Dividends declared per common share | $0.18 | $0.18 | $0.36 | $0.36 | [NOTE 10: SEGMENT INFORMATION](index=18&type=section&id=NOTE%2010%3A%20SEGMENT%20INFORMATION) Identifies the company's primary reportable segment and the key performance measure used by management - The company operates primarily in a single reportable segment: Residential (apartment communities)[75](index=75&type=chunk) - Watergate 600, an office property, is classified within 'Other' and does not meet reportable segment criteria[76](index=76&type=chunk) - Net Operating Income (NOI) is the key performance measure used by the Chief Operating Decision Maker (CODM)[77](index=77&type=chunk) Residential and Total NOI (in thousands) | Period | Residential NOI 2025 | Residential NOI 2024 | Residential NOI Change | Residential NOI % Change | Total NOI 2025 | Total NOI 2024 | Total NOI Change | Total NOI % Change | | :----- | :------------------- | :------------------- | :--------------------- | :----------------------- | :------------- | :------------- | :--------------- | :--------------- | | Q2 | $36,422 | $34,870 | $1,552 | 4.5% | $39,437 | $38,121 | $1,316 | 3.5% | | 6 Months | $72,820 | $69,383 | $3,437 | 5.0% | $78,936 | $75,915 | $3,021 | 4.0% | [NOTE 11: SHAREHOLDERS' EQUITY](index=20&type=section&id=NOTE%2011%3A%20SHAREHOLDERS%27%20EQUITY) Details the company's equity distribution agreements and share issuance activities - The company has an Equity Distribution Agreement allowing for the sale of up to **$350.0 million** of common shares[81](index=81&type=chunk) - No common shares were issued under the Equity Distribution Agreement or any prior equity distribution agreements during the 2025 Period or 2024 Period[82](index=82&type=chunk) - No common shares were issued under the dividend reinvestment program during the 2025 Period or 2024 Period[83](index=83&type=chunk) [NOTE 12: SUBSEQUENT EVENTS](index=20&type=section&id=NOTE%2012%3A%20SUBSEQUENT%20EVENTS) Reports significant events occurring after the reporting period, including a major property sale and liquidation plan - Subsequent to quarter-end, the company entered into a Purchase Agreement on August 1, 2025, to sell 19 multifamily properties for an aggregate purchase price of **$1.6 billion**[84](index=84&type=chunk) - In connection with the Purchase Agreement, the board of trustees approved a Plan of Sale and Liquidation, providing for the company's complete liquidation and dissolution, both subject to shareholder approval[85](index=85&type=chunk)[86](index=86&type=chunk) - A commitment letter for **$520 million** in debt financing was secured from Goldman Sachs Bank USA, contingent on the Portfolio Sale Transaction closing, to be secured by remaining real estate assets[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operational results, focusing on the proposed Portfolio Sale and Liquidation, liquidity, capital, and FFO [General](index=22&type=section&id=General) Provides an overview of the company's property portfolio and outlines recent strategic developments and tax legislation impacts - The company owns approximately **9,400 residential apartment homes** in the Washington, DC and Atlanta metro regions, and **300,000 square feet of commercial space** in the Washington, DC metro region[92](index=92&type=chunk) - Subsequent to quarter end, the company entered into a Purchase Agreement to sell 19 multifamily properties for **$1.6 billion**, subject to shareholder approval and customary closing conditions[93](index=93&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk) - The board of trustees approved a Plan of Sale and Liquidation, providing for the company's complete liquidation and dissolution, also subject to shareholder approval[96](index=96&type=chunk)[97](index=97&type=chunk) - A commitment for **$520 million** (or **$565 million**) in debt financing was obtained from Goldman Sachs Bank USA, secured by remaining real estate assets, contingent on the Portfolio Sale Transaction closing[99](index=99&type=chunk) - No significant investment transactions occurred during the 2025 Period[104](index=104&type=chunk) - Recent tax legislation includes a permanent extension of the **20% deduction** for 'qualified REIT dividends,' an increase in the TRS asset test limit to **25%**, and a change in the interest deduction limit calculation (based on EBITDA rather than EBIT)[106](index=106&type=chunk) [Operating Results Summary](index=23&type=section&id=Operating%20Results%20Summary) Summarizes key financial metrics including net loss, NOI, and NAREIT FFO, highlighting factors influencing changes Operating Results Summary (in thousands) | Metric (in thousands) | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | $ Change | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Net loss | $(3,566) | $(3,471) | $(95) | 2.7% | | NOI | $39,437 | $38,121 | $1,316 | 3.5% | | NAREIT FFO | $19,994 | $20,424 | $(430) | (2.1)% | - Increase in net loss primarily due to higher general and administrative expenses (**$1.6 million**) and interest expense (**$0.1 million**), partially offset by lower depreciation and amortization (**$0.3 million**) and higher NOI (**$1.3 million**)[100](index=100&type=chunk) - Increase in NOI primarily due to higher NOI from same-store properties (**$1.6 million**), driven by higher rental rates. Residential same-store average occupancy increased to **94.7%** from **94.5%**[101](index=101&type=chunk) - Decrease in NAREIT FFO primarily due to higher general and administrative expenses (**$1.6 million**) and property management expenses (**$0.1 million**), partially offset by higher NOI (**$1.3 million**)[102](index=102&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, focusing on Net Operating Income and period-over-period comparisons [Net Operating Income (NOI)](index=25&type=section&id=Net%20Operating%20Income) Defines Net Operating Income (NOI) as a non-GAAP measure and its significance in assessing property-level performance - NOI is a non-GAAP measure, defined as real estate rental revenue less direct real estate operating expenses[109](index=109&type=chunk) - It is the primary performance measure for property-level operations, reflecting trends in occupancy, rental rates, and operating costs on an unleveraged basis[109](index=109&type=chunk) [2025 Quarter Compared to 2024 Quarter](index=25&type=section&id=2025%20Quarter%20Compared%20to%202024%20Quarter) Compares the company's financial performance for the three months ended June 30, 2025, against the prior year Quarterly Performance Comparison (in thousands) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | $ Change | % Change | | :----- | :-------------------------- | :-------------------------- | :------- | :------- | | Net loss | $(3,566) | $(3,471) | $(95) | 2.7% | | Total NOI | $39,437 | $38,121 | $1,316 | 3.5% | - Residential revenue from same-store properties increased by **$2.2 million** (**3.9%**) to **$57.7 million**, driven by higher rental income (**$0.8 million**), lower vacancy loss (**$0.6 million**), and higher recoveries (**$0.3 million**)[112](index=112&type=chunk) - Residential expenses from same-store properties increased by **$0.6 million** (**3.1%**) to **$21.2 million**, primarily due to higher repairs and maintenance (**$0.2 million**) and utilities (**$0.2 million**)[115](index=115&type=chunk) - Residential NOI from same-store properties increased by **$1.6 million** (**4.5%**) to **$36.5 million**[111](index=111&type=chunk) - Same-store average occupancy increased to **94.7%** as of June 30, 2025, from **94.5%** as of June 30, 2024[113](index=113&type=chunk) - General and administrative expenses increased by **$1.6 million** (**25.3%**) to **$7.7 million**, mainly due to higher professional fees (**$0.8 million**) and incentive compensation (**$1.0 million**)[117](index=117&type=chunk) - Interest expense increased by **$0.1 million** (**1.2%**) to **$9.5 million**, with notes payable interest up **$0.3 million** (**4.4%**) and line of credit interest down **$0.2 million** (**4.8%**) due to a lower weighted average interest rate[118](index=118&type=chunk)[119](index=119&type=chunk) [2025 Period Compared to 2024 Period](index=28&type=section&id=2025%20Period%20Compared%20to%202024%20Period) Compares the company's financial performance for the six months ended June 30, 2025, against the prior year Six-Month Performance Comparison (in thousands) | Metric | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | $ Change | % Change | | :----- | :-------------------------- | :-------------------------- | :------- | :------- | | Net loss | $(8,241) | $(7,118) | $(1,123) | 15.8% | | Total NOI | $78,936 | $75,915 | $3,021 | 4.0% | - Real estate rental revenue from same-store residential properties increased by **$4.3 million** (**3.9%**) to **$114.7 million**, primarily due to higher rental income (**$1.7 million**), lower vacancy loss (**$1.0 million**), and higher ancillary income (**$0.5 million**)[122](index=122&type=chunk) - Real estate expenses from same-store residential properties increased by **$0.9 million** (**2.2%**) to **$41.7 million**, mainly due to higher repairs and maintenance (**$0.4 million**) and utilities (**$0.3 million**), partially offset by lower real estate taxes (**$0.4 million**)[126](index=126&type=chunk) - Residential NOI from same-store properties increased by **$3.4 million** (**5.0%**) to **$72.9 million**[121](index=121&type=chunk) - Same-store average occupancy increased to **94.7%** from **94.4%**[123](index=123&type=chunk) - General and administrative expenses increased by **$4.6 million** (**37.2%**) to **$16.9 million**, primarily due to higher professional fees (**$3.2 million**) related to strategic alternatives review and higher incentive compensation (**$1.5 million**)[129](index=129&type=chunk) - Interest expense increased by **$0.1 million** (**0.4%**) to **$19.0 million**, with notes payable interest up **$0.5 million** (**4.0%**) and line of credit interest down **$0.4 million** (**6.1%**) due to a lower weighted average interest rate[131](index=131&type=chunk)[132](index=132&type=chunk) - Other income decreased by **$1.4 million** (**100%**) due to the absence of payments received for land easements in 2025[131](index=131&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet short-term and long-term financial obligations and fund operations - As of August 1, 2025, if the Proposed Transactions are not approved, the company's total liquidity position is **$312.2 million**, comprising **$6.2 million** in cash and cash equivalents and **$306.0 million** in available borrowing capacity on its revolving credit facility[134](index=134&type=chunk) - Full-year 2025 capital requirements include funding dividends (regular quarterly distributions expected to be suspended post-sale) and approximately **$29.0 - $34.0 million** for existing portfolio capital improvements[137](index=137&type=chunk) Debt Maturities as of June 30, 2025 (in thousands) | Year | Unsecured Debt | Amended and Restated Revolving Credit Facility | Total Debt | Average Interest Rate | | :--- | :------------- | :--------------------------------------------- | :--------- | :-------------------- | | 2025 | $— | $— | $— | —% | | 2026 | $125,000 | $— | $125,000 | 5.8% | | 2027 | $— | $— | $— | —% | | 2028 | $50,000 | $175,000 | $225,000 | 5.8% | | 2029 | $— | $— | $— | —% | | Thereafter | $350,000 | $— | $350,000 | 4.1% | | **Total Scheduled Principal Payments** | **$525,000** | **$175,000** | **$700,000** | **4.9%** | - The weighted average maturity for the company's debt is **3.8 years** as of June 30, 2025[140](index=140&type=chunk) - The company was in compliance with all debt covenants related to its Amended Credit Agreement, 2023 Term Loan, and unsecured notes as of June 30, 2025[146](index=146&type=chunk) - Net cash provided by operating activities decreased by **8.1%** for the six months ended June 30, 2025, to **$46.0 million**, primarily due to a higher net loss[153](index=153&type=chunk) - No off-balance sheet arrangements as of June 30, 2025[156](index=156&type=chunk) [Funds From Operations](index=34&type=section&id=Funds%20From%20Operations) Defines NAREIT FFO as a non-GAAP measure and its role in evaluating the company's operating performance and financial capacity - NAREIT FFO is a non-GAAP measure used to assess operating performance by excluding real estate depreciation and amortization, providing an indication of the company's ability to incur and service debt, make capital expenditures, and fund other needs[158](index=158&type=chunk) NAREIT FFO (in thousands) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2025 | 6 Months Ended Jun 30, 2024 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(3,566) | $(3,471) | $(8,241) | $(7,118) | | Depreciation and amortization | $23,560 | $23,895 | $46,799 | $48,838 | | **NAREIT FFO** | **$19,994** | **$20,424** | **$38,558** | **$41,720** | [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) Confirms that no changes were made to critical accounting policies or estimates during the reporting period - No changes were made by management to the critical accounting policies or estimates during the three and six months ended June 30, 2025[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details the company's primary market risk as interest rate risk, managed through fixed-rate debt and interest rate swaps - The principal material financial market risk to which the company is exposed is interest rate risk, primarily related to refinancing long-term fixed-rate obligations and its variable rate line of credit[162](index=162&type=chunk) Debt Outstanding as of June 30, 2025 (in thousands) | Debt Type | Principal | Interest Payments (2025-Thereafter) | Weighted Average Interest Rate | | :-------------------- | :-------- | :---------------------------------- | :----------------------------- | | Unsecured fixed rate debt | $525,000 | $93,574 | 4.9% | | Unsecured variable rate debt | $175,000 | N/A | 5.3% | | **Total** | **$700,000** | **N/A** | **4.9%** | - The company uses interest rate swap arrangements, designated as cash flow hedges, to reduce exposure to variability in future cash flows attributable to changes in interest rates[164](index=164&type=chunk) - The fair value of interest rate swap contracts in place as of June 30, 2025, was a net liability of **$(490) thousand**[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed the effectiveness of disclosure controls and procedures, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[168](index=168&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the period[169](index=169&type=chunk) [Part II: Other Information](index=37&type=section&id=Part%20II%3A%20Other%20Information) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings were reported by the company during the period - No legal proceedings were reported[172](index=172&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, focusing on the proposed Portfolio Sale and Liquidation, including completion risks, expenses, distribution uncertainty, and REIT status impacts - The proposed Portfolio Sale Transaction and Plan of Sale and Liquidation present certain risks to the company's current business and operations[174](index=174&type=chunk) - Key risks include: failure to complete the Portfolio Sale Transaction, substantial expenses (whether or not completed), adverse effects on business operations due to pendency, and potential shareholder litigation[175](index=175&type=chunk)[178](index=178&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - There is uncertainty regarding the amount or timing of distributions to shareholders due to factors such as operational costs, liquidation time, financial obligations, and transaction costs[177](index=177&type=chunk)[179](index=179&type=chunk) - The Purchase Agreement significantly limits the company's ability to pursue alternatives to the Portfolio Sale Transaction and includes a potential termination fee of up to **$37.5 million**[186](index=186&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - The sale of properties may cause the company to incur penalty taxes or fail to maintain its REIT status, which would reduce the amount available for distribution to shareholders[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the authorized share repurchase program of **$50.0 million**, noting no shares were repurchased during the second quarter of 2025 - A share repurchase program of up to **$50.0 million** of common shares was authorized, scheduled to expire on October 25, 2025[199](index=199&type=chunk) - No shares were repurchased under the program during the 2025 Quarter[199](index=199&type=chunk) [Item 3. Defaults upon Senior Securities](index=40&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) No defaults upon senior securities were reported by the company - No defaults upon senior securities[200](index=200&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported by the company - No mine safety disclosures[201](index=201&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No trustee or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No trustee or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[202](index=202&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including key agreements for the proposed Portfolio Sale and Liquidation, and various certifications - Key exhibits include the Purchase and Sale Agreement (Exhibit 2.1), Plan of Sale and Liquidation (Exhibit 2.2), Commitment Letter (Exhibit 10.1), and Certifications of the Chief Executive Officer, Chief Financial Officer, and Chief Administrative Officer (Exhibits 31.1, 31.2, 31.3, and 32)[204](index=204&type=chunk) [Signatures](index=42&type=section&id=Signatures) The report is signed by Elme Communities' President and CEO, EVP and CFO, and SVP, Chief Administrative Officer and Treasurer - The report is signed by Paul T. McDermott (President and Chief Executive Officer), Steven M. Freishtat (Executive Vice President and Chief Financial Officer), and W. Drew Hammond (Senior Vice President, Chief Administrative Officer and Treasurer)[206](index=206&type=chunk)

Financial Data and Key Metrics Changes - The company reported a year-over-year multifamily NOI growth of 4.5%, primarily driven by higher rental revenue and strong growth in fee income from operational initiatives [13][15] - The estimated initial special distribution to shareholders from the Cortland transaction is projected to be between $14.5 and $14.82 per share, with additional distributions expected to be between $2.9 and $3.5 per share from the sale of remaining assets [10][11] Business Line Data and Key Metrics Changes - The company has entered into a definitive agreement to sell a portfolio of 19 assets to Cortland for $1,600,000,000 in cash, with plans to sell remaining multifamily assets and Watergate 600 [5][6] - The marketing process for the remaining assets is expected to begin in the third quarter, with a goal to complete sales over the next twelve months [9][48] Market Data and Key Metrics Changes - The Washington Metro Area continues to experience monthly effective rent growth that outpaces the national average, ranking sixth in the nation for transaction volume during the second quarter [15][61] - Defense spending in the region is projected to exceed prior estimates, which may offset broader federal workforce reductions [15][61] Company Strategy and Development Direction - The company has undergone a strategic transformation over the past decade, focusing on multifamily operations and reducing its cost of capital to maximize shareholder value [6][7] - The Board of Trustees has unanimously determined that the sale of assets to Cortland and the plan for liquidation are in the best interest of shareholders [8][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the portfolio and the ability to achieve favorable outcomes as remaining assets are sold [15][61] - The company anticipates a seamless transition of ownership to Cortland, ensuring continuity of operations for residents and team members [8][9] Other Important Information - The company plans to file a preliminary proxy to describe the proposed Cortland sale transaction and the plan of sale and liquidation [8][12] - The tax treatment of distributions following asset sales may vary based on individual shareholder situations, with distributions generally treated as a return of capital [11][12] Q&A Session Summary Question: Can you provide more details on the expected distributions from the sale of the remaining portfolio? - The company will provide more detailed estimates and assumptions in the upcoming proxy statement [20] Question: What is the status of specific assets like Watergate and Riverside in the sale process? - The company has not formally initiated a sales process for Watergate and is focused on operations and leasing, while Riverside is expected to attract interest due to its development potential [21][23] Question: How does policy risk in Maryland affect asset sales? - Rent control in Montgomery County has been factored into investor underwriting, but transaction volume remains strong [25][26] Question: What was the liquidity situation during the sales process? - The Board conducted a thorough evaluation of strategic alternatives, and the process did not yield a viable offer that exceeded the proposed asset sale to Cortland [30][33] Question: Will distributions be made incrementally as assets are sold? - Future liquidating distributions will be at the Board's discretion following asset sales, with the quarterly distribution suspended after the upcoming payment [41] Question: Are the estimated distributions net of all expected costs? - Yes, the estimates provided include anticipated expenses and payments of liabilities [44][45] Question: What is the expected timeline for selling the remaining multifamily assets? - The company aims to complete all asset sales within the next twelve months, taking into account various regulatory processes [48][50]

分组1 - Elme reported quarterly funds from operations (FFO) of $0.24 per share, exceeding the Zacks Consensus Estimate of $0.23 per share, and showing an increase from $0.23 per share a year ago, resulting in an FFO surprise of +4.35% [1] - The company achieved revenues of $62.1 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.91%, and an increase from $60.1 million year-over-year [2] - Elme has surpassed consensus revenue estimates four times over the last four quarters, indicating consistent performance [2] 分组2 - The stock's immediate price movement will depend on management's commentary during the earnings call and future FFO expectations [3] - Elme shares have gained approximately 7.6% since the beginning of the year, aligning with the S&P 500's gain of 7.6% [3] - The current consensus FFO estimate for the upcoming quarter is $0.24 on revenues of $62.58 million, and for the current fiscal year, it is $0.95 on revenues of $248.7 million [7] 分组3 - The Zacks Industry Rank places the REIT and Equity Trust - Residential sector in the bottom 41% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - The estimate revisions trend for Elme was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6]

[Q2 2025 Highlights](index=2&type=section&id=Q2%202025%20Highlights) Elme Communities reported stable Q2 2025 results, consistent net loss per share, increased Core FFO, and a strategic plan to liquidate 19 communities for $1.6 billion Q2 2025 Financial Results Highlights | | Three months ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | | **Net loss per diluted share** | $ (0.04) | $ (0.04) | | **Core FFO per diluted share** | $ 0.24 | $ 0.23 | - Same-store multifamily NOI increased by **4.5%** year-over-year[7](index=7&type=chunk) - Same-store Average Occupancy rose by **0.2%** to **94.7%**[7](index=7&type=chunk) - Effective blended Lease Rate Growth was **1.3%**, driven by a **4.9%** increase in renewals, offsetting a **(3.3)%** decline in new lease rates[7](index=7&type=chunk) - Entered into a Purchase and Sale Agreement to sell 19 multifamily communities for approximately **$1.6 billion**[6](index=6&type=chunk) - The Board of Trustees approved a voluntary plan of sale and liquidation for all remaining assets[6](index=6&type=chunk) - Maintains a strong balance sheet with **$330 million** in available liquidity and an annualized Net Debt to Adjusted EBITDA ratio of **5.6x**[7](index=7&type=chunk) - Only **$125 million** of debt matures before 2028, with no secured debt[7](index=7&type=chunk) - Withdrew previous 2025 guidance and will not issue new guidance due to portfolio sale and liquidation plan[8](index=8&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) Consolidated financial statements show a Q2 2025 net loss of **$3.6 million**, total assets decreased to **$1.81 billion**, and liabilities remained stable [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q2 2025 real estate rental revenue increased to **$62.1 million**, but higher expenses resulted in a net loss of **$3.6 million** or **($0.04)** per share Q2 2025 vs Q2 2024 Operating Results (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Real estate rental revenue | $ 62,099 | $ 60,103 | | Total Expenses | $ 56,167 | $ 54,190 | | Real estate operating income | $ 5,932 | $ 5,913 | | Interest expense | $ (9,498) | $ (9,384) | | **Net loss** | **$ (3,566)** | **$ (3,471)** | Per Share Data (Diluted) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss per share | $ (0.04) | $ (0.04) | | NAREIT FFO per share | $ 0.23 | $ 0.23 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$1.81 billion** as of June 30, 2025, with stable total liabilities of **$763.7 million** and **$698.2 million** in debt Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate held for investment, net | $ 1,766,410 | $ 1,796,014 | | Cash and cash equivalents | $ 4,786 | $ 6,144 | | **Total assets** | **$ 1,810,204** | **$ 1,845,762** | | Notes payable, net | $ 523,196 | $ 522,953 | | Line of credit | $ 175,000 | $ 176,000 | | **Total liabilities** | **$ 763,734** | **$ 763,684** | | **Total equity** | **$ 1,046,470** | **$ 1,082,078** | [Funds From Operations (FFO) & Non-GAAP Reconciliations](index=8&type=section&id=Funds%20From%20Operations%20(FFO)%20%26%20Non-GAAP%20Reconciliations) Q2 2025 NAREIT FFO was **$20.0 million**, Core FFO increased to **$21.5 million**, and Total NOI grew to **$39.4 million** [Net Loss to FFO and Core FFO Reconciliation](index=9&type=section&id=Net%20Loss%20to%20FFO%20and%20Core%20FFO%20Reconciliation) Q2 2025 net loss of **$3.6 million** reconciled to NAREIT FFO of **$20.0 million** and Core FFO of **$21.5 million** or **$0.24** per share Q2 FFO Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | $ (3,566) | $ (3,471) | | Real estate depreciation and amortization | 23,560 | 23,895 | | **NAREIT funds from operations** | **19,994** | **20,424** | | Other non-operating expenses | 1,503 | 60 | | Severance expense | — | 64 | | **Core funds from operations** | **$ 21,497** | **$ 20,548** | Core FFO Per Diluted Share | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Core FFO per diluted share | $ 0.24 | $ 0.23 | [Net Loss to NOI Reconciliation](index=8&type=section&id=Net%20Loss%20to%20NOI%20Reconciliation) Total NOI for Q2 2025 increased to **$39.4 million**, driven by a **4.5%** rise in same-store multifamily NOI to **$36.5 million** Q2 NOI Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | $ (3,566) | $ (3,471) | | *Adjustments (G&A, D&A, Interest, etc.)* | *...* | *...* | | **Total Net Operating Income (NOI)** | **$ 39,437** | **$ 38,121** | | Same-store Multifamily NOI | $ 36,483 | $ 34,927 | | Other NOI (Watergate 600) | $ 3,015 | $ 3,251 | [Net Loss to Adjusted EBITDA Reconciliation](index=10&type=section&id=Net%20Loss%20to%20Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 increased to **$31.2 million**, reflecting higher operating income and adjustments for non-operating expenses Q2 Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss | $ (3,566) | $ (3,471) | | Interest expense | 9,498 | 9,384 | | Real estate depreciation and amortization | 23,560 | 23,895 | | Other non-operating expenses | 1,503 | 60 | | **Adjusted EBITDA** | **$ 31,193** | **$ 30,129** | [Portfolio Analysis](index=19&type=section&id=Portfolio%20Analysis) Portfolio includes 9,374 multifamily homes and one office property, with same-store multifamily NOI up **4.5%** and **94.7%** average occupancy [Same-Store Operating Results - Multifamily](index=20&type=section&id=Same-Store%20Operating%20Results%20-%20Multifamily) Q2 2025 same-store multifamily NOI increased **4.5%** to **$36.5 million**, driven by **3.9%** revenue growth, with **94.7%** average occupancy Q2 2025 vs Q2 2024 Same-Store Multifamily Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $ 57,683 | $ 55,492 | 3.9% | | Operating Expenses | $ 21,200 | $ 20,565 | 3.1% | | **Net Operating Income** | **$ 36,483** | **$ 34,927** | **4.5%** | | Average Occupancy | 94.7% | 94.5% | 0.2% | | Avg. Effective Rent/Home | $ 1,913 | $ 1,887 | 1.4% | - The Virginia portfolio was the primary driver of growth, with a **6.5%** increase in NOI[56](index=56&type=chunk) - The DC/Maryland portfolio saw a slight NOI decrease of **(0.2)%**, while the Georgia portfolio's NOI was nearly flat with **0.2%** growth[56](index=56&type=chunk) [Same-Store Operating Expenses - Multifamily](index=21&type=section&id=Same-Store%20Operating%20Expenses%20-%20Multifamily) Q2 2025 same-store operating expenses rose **3.1%** to **$21.2 million**, driven by increases in controllable expenses and utilities Q2 2025 Same-Store Operating Expense Breakdown (in thousands) | Expense Category | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Controllable operating expenses | $ 10,610 | $ 10,212 | 3.9% | | Real estate taxes | $ 6,099 | $ 6,060 | 0.6% | | Utilities | $ 3,255 | $ 3,102 | 4.9% | | Insurance | $ 1,236 | $ 1,191 | 3.8% | | **Total same-store operating expenses** | **$ 21,200** | **$ 20,565** | **3.1%** | [Schedule of Communities](index=22&type=section&id=Schedule%20of%20Communities) As of June 30, 2025, the portfolio comprised 9,374 multifamily homes with **94.7%** average occupancy and one office property **82.3%** leased - The total multifamily portfolio of **9,374** homes had an average occupancy of **94.7%** and an ending occupancy of **95.0%** as of June 30, 2025[61](index=61&type=chunk) - This portfolio accounts for **92%** of the total portfolio NOI[61](index=61&type=chunk) - The single office property, Watergate 600, has **300,000** net rentable square feet and was **82.3%** leased and occupied[66](index=66&type=chunk) - It contributes **8%** of the total portfolio NOI[66](index=66&type=chunk) [Capital Analysis](index=25&type=section&id=Capital%20Analysis) As of June 30, 2025, total debt was **$698.2 million** at **4.9%** weighted average interest, with **$125 million** maturing in 2026, and strong covenant compliance [Long Term Debt Analysis & Maturities](index=26&type=section&id=Long%20Term%20Debt%20Analysis%20%26%20Maturities) Total unsecured debt of **$698.2 million** as of June 30, 2025, has a **3.8-year** weighted average maturity, with **$125 million** due in 2026 Debt Balances Outstanding (in thousands) | Debt Type | June 30, 2025 | | :--- | :--- | | Fixed rate bonds | $ 398,301 | | Term loan | $ 124,895 | | Credit facility | $ 175,000 | | **Total** | **$ 698,196** | Debt Maturity Schedule (Principal Payments) (in thousands) | Year | Total Debt | | :--- | :--- | | 2025 | $ — | | 2026 | $ 125,000 | | 2027 | $ — | | 2028 | $ 225,000 | | Thereafter | $ 350,000 | | **Total** | **$ 700,000** | [Debt Covenant Compliance](index=28&type=section&id=Debt%20Covenant%20Compliance) As of June 30, 2025, the company was in compliance with all debt covenants, with key metrics well within thresholds Key Debt Covenant Metrics (as of June 30, 2025) | Covenant | Actual | Requirement | | :--- | :--- | :--- | | % of Total Indebtedness to Total Assets | 34.4% | ≤ 65.0% | | Ratio of Income Available for Debt Service to Annual Debt Service | 3.1x | ≥ 1.5x | | % of Secured Indebtedness to Total Assets | 0% | ≤ 40.0% | | Ratio of Consolidated Adjusted EBITDA to Consolidated Fixed Charges | 3.63x | ≥ 1.50x | [Capitalization and Dividend Payout Ratios](index=29&type=section&id=Capitalization%20and%20Dividend%20Payout%20Ratios) As of June 30, 2025, total market capitalization was **$2.1 billion**, with dividend payout ratios of **73.5%** (Core FFO) and **75.0%** (Core AFFO) Market Capitalization (as of June 30, 2025) (in thousands) | Metric | Value | | :--- | :--- | | Equity Market Capitalization | $ 1,401,776 | | Total Debt | $ 698,196 | | **Total Market Capitalization** | **$ 2,099,972** | | Total Debt to Market Capitalization | 0.33 : 1 | Dividend Payout Ratios (Six Months Ended June 30, 2025) | Basis | Payout Ratio | | :--- | :--- | | Core FFO basis | 73.5% | | Core AFFO basis | 75.0% | [Definitions of Non-GAAP Financial Measures](index=11&type=section&id=Definitions%20of%20Non-GAAP%20Financial%20Measures) This section defines key non-GAAP financial measures like NOI, FFO, Core FFO, AFFO, and Adjusted EBITDA, along with operational metrics - Key non-GAAP measures are defined to provide insight into operating performance and the ability to service debt and pay dividends[29](index=29&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) - **NOI (Net Operating Income):** Measures property-level performance before corporate-level expenses, interest, and depreciation[29](index=29&type=chunk) - **NAREIT FFO (Funds From Operations):** Standard REIT metric excluding real estate depreciation and gains/losses from property sales from net income[32](index=32&type=chunk) - **Core FFO:** Adjusts NAREIT FFO for non-recurring items like severance, strategic review costs, and debt extinguishment losses to show ongoing operational performance[33](index=33&type=chunk) - **Adjusted EBITDA:** Measures earnings before interest, taxes, depreciation, and amortization, adjusted for certain non-cash and non-recurring items[35](index=35&type=chunk) - The report defines the **Same-store Portfolio** as properties owned for the entirety of the compared periods, excluding those under development or redevelopment, ensuring consistent performance comparison[45](index=45&type=chunk)