UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Maryland 53-0261100 (State of incorporation) (IRS Employer Identification Number) 7550 WISCONSIN AVE, SUITE 900, BETHESDA, MD 20814 (Address of principa ...

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)

Financial Results - Elme Communities reported a net loss per diluted share of $(0.04) for the quarter ended June 30, 2025, consistent with the same period in 2024 [1] - Core Funds From Operations (FFO) per diluted share increased to $0.24 from $0.23 year-over-year [1] Operational Highlights - Same-store multifamily Net Operating Income (NOI) increased by 4.5% compared to the prior year quarter, driven by higher rental revenue and fee income [8][9] - Average occupancy for the same-store multifamily portfolio was 94.7%, up 0.2% from the prior year [8][9] - Retention rate for leases was 62%, aligning with expectations [8] Strategic Review Update - Elme announced a Purchase and Sale Agreement with Cortland Partners 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 for the remaining assets of Elme Communities [4] Balance Sheet - As of June 30, 2025, Elme had available liquidity of $330 million, consisting of cash and availability under its revolving credit facility [8] - The annualized Net Debt to Adjusted EBITDA ratio was 5.6x, indicating a strong balance sheet with only $125 million of debt maturing before 2028 [8] Dividends - Elme Communities paid a quarterly dividend of $0.18 per share on July 3, 2025, and declared another dividend of $0.18 per share to be paid on October 3, 2025 [10]

Core Viewpoint - Elme Communities has entered into a Purchase and Sale Agreement with Cortland Partners to sell a 19-asset portfolio for $1.6 billion, initiating a plan for voluntary liquidation and asset sales to maximize shareholder value [1][2][3] Financial Distributions - The company plans to make total upfront distributions to shareholders of approximately $14.68 to $15.00 per share, assuming the completion of the Cortland Portfolio Transaction [1][6] - Additional liquidating distributions are estimated to be approximately $2.90 to $3.50 per share from the sale of remaining assets [1][6] Transaction Details - The Portfolio Sale Transaction is expected to close in the fourth quarter of 2025, pending shareholder approval and customary closing conditions [1][11] - The company will market its remaining nine multifamily assets and Watergate 600 for sale within the next 12 months [2][11] Strategic Review Process - The decision to proceed with the sale and liquidation followed a comprehensive evaluation of strategic alternatives, including engagement with over 80 potential counterparties [3][11] - The Board of Trustees unanimously determined that the sale to Cortland and subsequent asset sales would yield the highest value for shareholders compared to other options [3][11] Future Operations - Following the completion of the Portfolio Sale Transaction, the company expects to suspend regular quarterly distributions and focus on liquidating distributions from future asset sales [10][11] - The company has received a debt commitment of $520 million from Goldman Sachs Bank USA to finance assets not included in the Portfolio Sale Transaction [9] Market Presence - The transaction marks Cortland's significant expansion in the greater Washington, D.C. area and Georgia, enhancing its portfolio and operational capabilities [3][4]

Group 1 - Elme Communities will release its second quarter earnings results on August 5, 2025, after market close [1] - A conference call to discuss the earnings results is scheduled for August 6, 2025, at 10:00 am ET [1] - Instant replay of the conference call will be available until August 20, 2025, at 11:59 pm ET [1] Group 2 - Elme Communities is a multifamily real estate investment trust focused on providing quality, affordable homes in the Washington, DC metro and the Sunbelt [2] - The company aims to serve a deep, solid, and underserved base of mid-market demand, building long-term value for shareholders [2]

Industry Overview - The Zacks REIT and Equity Trust - Residential industry includes companies that own, develop, and manage various residential properties, generating revenues by renting spaces to tenants [3] - The demand for student housing is closely tied to enrollment growth at educational institutions, making it a key driver for this market segment [3] Current Market Dynamics - Strong rental demand is supported by a resilient labor market, demographic trends driving household formation, and rising homeownership costs making renting more attractive [1][4] - Residential REITs are leveraging technology to enhance tenant experience and improve operational efficiency [5] - Economic uncertainty and regional oversupply of apartments are creating challenges, potentially dampening consumer confidence and affecting renter affordability [2][6][7] Performance Metrics - The REIT and Equity Trust - Residential industry has underperformed the broader Zacks Finance sector and the S&P 500 over the past year, returning 0.5% compared to the S&P 500's increase of 9.6% [11] - The industry is currently trading at a forward 12-month price-to-FFO ratio of 16.46, above the Finance sector's forward P/E of 16.11 but below the S&P 500's forward P/E of 21.89 [14] Future Outlook - The industry is positioned in the top 38% of around 250 Zacks industries, indicating robust near-term prospects [8][9] - Analysts are gaining confidence in the growth potential of the industry, as reflected in upward revisions of funds from operations (FFO) per share estimates [10] Investment Opportunities - Veris Residential focuses on Class A multifamily properties in high-demand Northeast markets, with upward revisions in FFO per share estimates suggesting growth potential [19][21] - Elme Communities targets value-oriented multifamily assets in supply-constrained markets, with a projected net operating income upside in 2025 [23][24][25] - NexPoint Residential Trust offers exposure to middle-income multifamily assets in high-growth Sunbelt markets, with upward revisions in FFO per share estimates indicating strong performance [26][27][28]

Financial Data and Key Metrics Changes - The company reported same store revenue growth of 3.9% and NOI growth of 5.5% year over year, driven by stronger rent growth in the Washington Metro portfolio and favorable real estate tax appeals in Atlanta [15] - The annualized net debt to adjusted EBITDA was 5.6 times during the first quarter, with over 60% of total capacity available on the line of credit and no secured debt [16] Business Line Data and Key Metrics Changes - Same store multifamily occupancy averaged 94.8% during the first quarter, up 50 basis points year over year [11] - The company achieved 1.9% same store blended lease rate growth during the quarter, with an initial estimated blended rate growth for April at 2.6% [11] Market Data and Key Metrics Changes - In the Washington Metro area, annual supply peaked at 2.2% annual net inventory growth, below the national average of 2.9%, with new construction starts down over 70% from their peak [8] - Northern Virginia's private sector job growth was two and a half times that of the broader Washington Metro Region over the past four years [6] Company Strategy and Development Direction - The company is undergoing a formal evaluation of strategic alternatives to maximize shareholder value, initiated from a position of strength [9] - The managed WiFi program is expected to generate additional NOI of $600,000 to $800,000 in 2025, with potential for $1,500,000 to $2,000,000 annually once fully integrated [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the portfolio and business, despite a volatile macro environment [16] - The company anticipates improvement in bad debt to contribute more significantly to revenue growth in 2025 than initially expected [15] Other Important Information - The company completed 88 renovations during the quarter with an ROI of approximately 18% and plans to complete over 500 full renovations in 2025 [13] - Eviction delays in Atlanta are decreasing, supported by improved processing efficiency and legislative changes [12] Q&A Session Summary Question: Insights on the multifamily transaction market in DC - Management noted that the living sector is performing well with continued capital flows and active lenders, observing cap rates ranging from 4.25% to 5.25% depending on buyer profiles [20][22] Question: Addition of Ron to the Board and its timing - The strategic review was initiated last year, and Ron was seen as an appropriate candidate for the Board due to his skills and operating history [24][25] Question: Acceleration of the WiFi initiative income - The rollout of the Managed WiFi initiative has progressed faster than anticipated, allowing for quicker income generation [30] - There will be associated expenses, but they are expected to be less significant compared to the income generated [31] Question: Shift in revenue composition and guidance - Management confirmed that while the first quarter exceeded expectations, guidance remains unchanged as the busy leasing season approaches [34]

Financial Data and Key Metrics Changes - The company reported same store revenue growth of 3.9% and NOI growth of 5.5% year over year, driven by stronger rent growth in the Washington Metro portfolio and favorable real estate tax appeals in Atlanta [15] - The annualized net debt to adjusted EBITDA was 5.6 times during the first quarter, with over 60% of total capacity available on the line of credit and no secured debt [16] Business Line Data and Key Metrics Changes - Same store multifamily occupancy averaged 94.8% during the first quarter, up 50 basis points year over year, with a 1.9% same store blended lease rate growth [11] - The managed WiFi program is expected to generate an additional NOI of $600,000 to $800,000 in 2025 from the initial seven communities, with potential to reach $1,500,000 to $2,000,000 annually once fully integrated by mid-2026 [13][14] Market Data and Key Metrics Changes - In the Washington Metro area, annual supply peaked at 2.2% annual net inventory growth, below the national average of 2.9%, with projections to decline to 1.1% by Q4 2026, the lowest level since 2012 [8] - Northern Virginia's private sector job growth was two and a half times that of the broader Washington Metro Region over the past four years, indicating strong employment fundamentals [6] Company Strategy and Development Direction - The company is undergoing a formal evaluation of strategic alternatives to maximize shareholder value, initiated from a position of strength as a multifamily REIT [9][10] - The company is focused on enhancing its value-add renovation pipeline and platform initiatives to ensure resilient performance despite macroeconomic fluctuations [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong fundamentals of the portfolio and business, despite potential economic slowdowns and employment losses [5][16] - The company anticipates that improvements in bad debt recovery will contribute more significantly to revenue growth in 2025 than initially expected [15] Other Important Information - The company completed 88 renovations during the quarter with an ROI of approximately 18%, and plans to complete over 500 full renovations in 2025 [13] - The company is closely monitoring forward-looking demand indicators and plans to adjust pricing strategies accordingly [12] Q&A Session Summary Question: Insights on the multifamily transaction market in DC - Management noted that the living sector is performing well with continued capital flows and active lenders, indicating a competitive market with cap rates ranging from 4.25% to 5.25% depending on buyer profiles [19][22] Question: Addition of Ron to the Board and its timing - Management explained that the decision for a strategic review was made last year, and Ron's addition to the Board was part of an ongoing refreshment process to maximize shareholder value [24][25] Question: Acceleration of the WiFi initiative income - Management indicated that the rollout of the Managed WiFi initiative is progressing faster than anticipated, allowing for quicker income generation, although there will be associated expenses [29][31] Question: Shift in revenue composition and guidance - Management confirmed that while there is a strong first quarter performance, guidance remains unchanged as the busy leasing season is just beginning, with more leases to be turned over [32][34]