Financial Data and Key Metrics Changes - The company announced a formal review to evaluate strategic alternatives due to shares trading at a discount to the estimated private market value [7][9] - Same-store blended lease rate growth averaged 1.3% in Q4 2024 and 1.8% in January 2025 [18] - Same-store occupancy averaged 95% during Q4 2024, up 20 basis points sequentially [19] Business Line Data and Key Metrics Changes - The company completed about 500 full renovations in 2024 at an average cost of $17,000 per unit, achieving an average renovation ROI of approximately 17% [20] - In 2025, the company expects to complete another 500 full renovations at similar costs, targeting a 17% ROI [20][21] Market Data and Key Metrics Changes - The Washington Metro area was a top-performing market in 2024, with solid demand trends and low net inventory ratios [14] - Elme submarkets are projected to face less supply pressure than the U.S. and Sunbelt markets, with average annual net inventory growth of 2.2% [16] Company Strategy and Development Direction - The company is focused on maximizing shareholder value through strategic reviews and operational initiatives [6][9] - The company aims to capture additional NOI growth from managed Wi-Fi initiatives, expecting $300,000 to $600,000 in 2025 from Phase 1 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth prospects of the Washington Metro portfolio, citing a highly skilled workforce and advanced technology infrastructure [15] - The company anticipates same-store multifamily revenue growth to range from 2.1% to 3.6% in 2025 [23] Other Important Information - The company has no debt maturing before 2028 and maintains a strong balance sheet with an annualized adjusted net debt to EBITDA of 5.7 times [27] - Non-controllable expenses are projected to grow by 2% to 3%, while controllable expenses are expected to grow between 4% and 5% [25] Q&A Session Summary Question: Impact of new administration on leasing or rents - Management noted that past government changes had significant impacts, but current growth is driven by the private sector, particularly in Northern Virginia [35][37] Question: Market cap rates for typical assets - Management indicated that core deals are seeing cap rates between 4.5% to 5%, with value-add deals around 5% to 5.5% [42][43] Question: Seasonal growth outlook - Management expects normal seasonal growth in the Washington D.C. area, with peak leasing during spring and summer [53] Question: Update on Watergate leasing prospects - Management is optimistic about leasing activity at Watergate and is in discussions with tenants for renewals [61][63] Question: Indicators of leasing decisions amid uncertainty - Management reported normal seasonal leasing trends without atypical impacts on traffic or leasing metrics [79] Question: Sequential growth rate in Atlanta - Management confirmed that half of the sequential growth in Atlanta was due to bad debt improvement, with the other half from business interruption insurance proceeds [82]

Capital Improvements and Sustainability - The company is committed to ongoing capital improvements to maintain and increase property value and income, with major renovations discussed in the Management's Discussion and Analysis section[30]. - In 2024, the company completed recertification of eight properties using the BREEAM In-Use Assessment, demonstrating its commitment to sustainable practices[32]. - The company aims for net zero carbon operation by 2050 and joined the U.S. Department of Energy Better Climate Challenge in 2023 to align greenhouse gas emission reduction goals[33]. Employee Development and Well-being - The company employs 255 individuals, with 188 in community management functions, reflecting its focus on internalizing management operations[41]. - The company supports employee growth through ongoing training and development opportunities, including financial support for industry-specific training[42]. - The company has implemented a wellness program that encourages employees to improve their physical, mental, and financial well-being[45]. - The company is committed to diversity, equity, inclusion, and accessibility, promoting an environment where all employees feel comfortable being their authentic selves[47]. Financial Risk Management - The principal financial market risk faced by the company is interest rate risk, primarily related to refinancing long-term fixed-rate obligations[247]. - The company uses interest rate swap arrangements to mitigate exposure to variability in future cash flows due to changes in interest rates[247]. - The company has a total unsecured fixed rate debt principal of $525 million, with interest payments totaling $104.842 million over the debt maturities[249]. - The interest rate on the unsecured fixed rate debt ranges from 4.1% to 5.7%, with an average rate of 4.7%[249]. - The company has $176 million in unsecured variable rate debt, with a variable interest rate of 5.3%[249]. - The company entered into interest rate swap arrangements to hedge against interest rate fluctuations, with a notional amount of $75 million at a fixed rate of 3.677%[250]. - As of December 31, 2024, the fair value of the interest rate swap contracts was $(913,000), compared to $1.234 million as of December 31, 2023[250]. - The company exercised a one-year extension option on a $125 million term loan, extending its maturity to January 10, 2026[249]. - The company aims to minimize credit risk by dealing with major, creditworthy financial institutions for its derivative instruments[249]. - The company’s debt obligations primarily support general corporate purposes, including real estate acquisitions and working capital needs[250]. - The company has two interest rate swaps effective from January 10, 2025, with fixed rates of 4.719% and 4.720%[250]. - The company monitors the credit ratings of counterparties to minimize credit risk concentration[249].

Investor Presentation February 2025 This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of Elme Communities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of such securities under the securities law of any such jurisdiction. If Elme Communities were to conduct an offering of securities in the future, it will be made under an effective ...

Group 1 - Elme (ELME) reported quarterly funds from operations (FFO) of $0.23 per share, missing the Zacks Consensus Estimate of $0.24 per share, and down from $0.24 per share a year ago, representing an FFO surprise of -4.17% [1] - Over the last four quarters, Elme has surpassed consensus FFO estimates just once, while it posted revenues of $61.26 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 1.13% compared to $58.85 million a year ago [2] - The current consensus FFO estimate for the coming quarter is $0.23 on $61.25 million in revenues, and for the current fiscal year, it is $0.95 on $247.64 million in revenues [7] Group 2 - The sustainability of Elme's stock price movement will depend on management's commentary on the earnings call and the trends in estimate revisions [3][4] - The estimate revisions trend for Elme is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The REIT and Equity Trust - Residential industry, to which Elme belongs, is currently in the bottom 22% of Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8]

Financial Performance - Net loss for Q4 2024 was $3.0 million, or $0.03 per diluted share, while full-year net loss was $13.1 million, or $0.15 per diluted share[4]. - Core FFO for Q4 2024 was $20.7 million, or $0.24 per diluted share, and for the full year 2024, it was $81.8 million, or $0.93 per diluted share[4]. - NAREIT funds from operations (FFO) for Q4 2024 were $20.608 million, compared to $20.990 million in Q4 2023, a decrease of 1.8%[22]. - The net loss for Q4 2024 was $3,015,000, an improvement from a net loss of $3,105,000 in Q4 2023, and the total net loss for the twelve months ended December 31, 2024, was $13,103,000 compared to $52,977,000 in 2023, showing a significant reduction in losses[31]. - Funds from operations (FFO) for the twelve months ended December 31, 2024, were $82,832,000, compared to $77,833,000 in 2023, reflecting an increase of 6.4%[58]. - The company reported a net loss of $13,103,000 for the twelve months ended December 31, 2024, an improvement from a net loss of $52,977,000 in the previous year[77]. Revenue and Income Metrics - Real estate rental revenue for Q4 2024 was $61.264 million, up from $58.852 million in Q4 2023, representing a 2.4% increase[22]. - Real estate rental revenue for the twelve months ended December 31, 2024, was $241,935,000, an increase from $227,911,000 for the same period in 2023, representing a growth of 6.9%[54]. - Total revenue for Q4 2024 was $54,326,000, representing a 5.2% increase compared to Q4 2023's $51,660,000[65]. - Total rental and other property revenues for the twelve months ended December 31, 2024, reached $223,638,000, up from $209,311,000 in 2023, indicating an increase of 6.8%[62]. Operational Metrics - Same-store multifamily NOI increased by 1.7% in Q4 2024 and by 1.4% for the full year 2024 compared to the prior year[4]. - Net operating income (NOI) for Q4 2024 was $38.522 million, slightly down from $38.598 million in Q4 2023[28]. - Net Operating Income (NOI) for the same-store properties for the twelve months ended December 31, 2024, was $135,200,000, compared to $133,331,000 in 2023, reflecting a year-over-year increase of 1.4%[62]. - The operating margin for same-store properties was 63% for the twelve months ended December 31, 2024, slightly down from 64% in 2023[62]. Occupancy and Retention - Same-store retention rate improved to 68% in Q4 2024, up 3% year-over-year, while the average occupancy was 95.0%[4]. - Average occupancy rate for the total portfolio was 94.8% in 2024, slightly down from 95.2% in 2023[67]. - The company’s same-store communities had an ending occupancy of 95.4%, contributing 88% to the total portfolio NOI[70]. Debt and Liquidity - Available liquidity as of December 31, 2024, was approximately $330 million, consisting of revolving credit facility availability and cash on hand[4]. - The annualized fourth quarter Net Debt to Adjusted EBITDA ratio was 5.7x, with only $125 million of debt maturing before 2028[10]. - Total long-term debt outstanding as of December 31, 2024, was $698,953,000, with a weighted average interest rate of 4.7%[79]. - The company has a $125,000,000 term loan maturing on January 10, 2026, which was extended in Q4 2024[79]. - The credit facility balance was $176,000,000 as of December 31, 2024, with an average interest rate of 5.7%[85]. Dividends - A quarterly dividend of $0.18 per share was declared to be paid on April 3, 2025[13]. - The company paid dividends of $0.18 per share for both Q4 2024 and Q4 2023[24]. - The company maintained a common dividend per share of $0.72 for the twelve months ended December 31, 2024, consistent with the previous year[58]. - Total dividends declared for the twelve months ended December 31, 2024, amount to $63,601,000, with a common dividend declared per share of $0.72[94]. Strategic Initiatives - The Board of Trustees has initiated a formal evaluation of strategic alternatives to maximize shareholder value[5]. - The company is undergoing a strategic transformation from the commercial sector to the residential sector, incurring Transformation Costs, which include internal costs and consulting fees[50]. - The company categorizes its properties into different classes (Class A, A-, B Value-Add, and B) based on various factors, which helps in evaluating the performance of its portfolio[41]. Asset Management - Total assets decreased to $1.845 billion as of December 31, 2024, from $1.900 billion as of December 31, 2023[27]. - Total liabilities increased to $763.684 million in 2024 from $745.678 million in 2023[27]. - The company reported a total of $1.796 billion in net real estate held for investment as of December 31, 2024, down from $1.847 billion in 2023[27]. - The company reported no real estate impairment in 2024, contrasting with a $41,860,000 impairment recorded in 2023, indicating a positive shift in asset valuation[31].

Core Insights - Elme Communities has initiated a formal evaluation of strategic alternatives to maximize shareholder value, working with independent financial and legal advisors [4][5][7] - The company has transformed into a multifamily REIT and expanded its footprint, yet its shares continue to trade at a discount compared to private market valuations [5][6] - Elme Communities reported a net loss of $3.0 million for Q4 2024, with Core FFO of $20.7 million, reflecting a focus on improving performance and profitability [6][19] Financial Highlights - For Q4 2024, same-store multifamily NOI increased by 1.7% year-over-year, while average effective monthly rent per home rose by 1.9% [6][19] - The company reported a full-year net loss of $13.1 million for 2024, with Core FFO of $81.8 million, indicating a year-over-year improvement in operational metrics [6][19] - Available liquidity was approximately $330 million as of December 31, 2024, with a strong balance sheet showing only $125 million of debt maturing before 2028 [6][19] 2025 Guidance - Elme expects Core FFO for 2025 to range from $0.91 to $0.97 per fully diluted share, with same-store multifamily revenue growth projected between 2.1% and 3.6% [8][9] - The company anticipates same-store multifamily expense growth of 2.75% to 4.25% and NOI growth of 1.5% to 3.5% for 2025 [9][10] - Key assumptions for 2025 include strong demand trends in the Washington Metro portfolio and improving credit trends in Atlanta [8][9] Dividend Information - Elme Communities declared a quarterly dividend of $0.18 per share, to be paid on April 3, 2025, to shareholders of record on March 19, 2025 [11]

Group 1 - Elme Communities will release its fourth quarter earnings results on February 13, 2025, after market close [1] - A conference call to discuss the earnings results is scheduled for February 14, 2025, at 10:00 am ET [1] - The company provides a toll-free number for the conference call and webcast access information [1] Group 2 - Elme Communities is a multifamily real estate investment trust focused on the Washington, DC metro and the Sunbelt regions [2] - The company aims to provide quality, affordable homes to a mid-market demand that is underserved [2] - Elme Communities is committed to building long-term value for its shareholders through enhanced quality and service [2]

Group 1 - Elme Communities announced the income tax treatment of its 2024 dividend distributions, encouraging shareholders to consult personal tax advisors for specific tax implications [1] - The total dividend distribution for 2024 is $0.72000 per share, with a breakdown of ordinary taxable income per share at $0.07644 and non-taxable return of capital at $0.56764 [2] - The company operates approximately 9,400 apartment homes and 300,000 square feet of commercial space, focusing on providing quality, affordable homes to mid-market demand [3] Group 2 - The ordinary taxable income per share for each dividend payment in 2024 is $0.01911, with a consistent gross dividend of $0.18000 per share across all payment dates [2] - Elme Communities aims to build long-term value for shareholders by enhancing the quality and service of its multifamily real estate offerings [3]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________ FORM 10-Q ___________________________________________________ Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended September 30, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECU ...

Financial Data and Key Metrics Changes - The company tightened its 2024 core FFO per share guidance range to $0.92 to $0.94, maintaining a midpoint of $0.93 [28] - Same-store multifamily NOI growth assumption was tightened to range from 1% to 1.5% [28] - Annualized net debt to adjusted EBITDA was 5.6x at quarter end, in line with targeted range [30] Business Line Data and Key Metrics Changes - The Washington Metro communities showed stronger than expected performance, with occupancy growth driven by Northern Virginia [17] - Atlanta experienced slower than expected improvement, with occupancy in the low-90s range [50][72] - Effective blended lease rate growth for the same-store portfolio was 2.1%, with renewal lease rate growth of 4.5% and new lease rate growth of negative 1.5% [19] Market Data and Key Metrics Changes - Demand remained strong in the Washington Metro and Atlanta Metro regions, with absorption at its highest since Q4 2021 [8] - In-migration in Atlanta is expected to increase by over 20% by year-end 2024 compared to 2023 [10] - Supply dynamics in Washington Metro are favorable, with low competition and annual net inventory growth of 1.8% [12] Company Strategy and Development Direction - The company is focusing on smart home technology, fee strategies, and payroll savings to achieve targeted NOI and FFO upside [25] - Expansion into Sunbelt markets is favored, with a focus on job creation, wage growth, and in-migration [62] - The company is rolling out managed Wi-Fi across its portfolio, expecting significant recurring NOI in the coming years [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Washington Metro portfolio's growth in 2025, anticipating improvement in Atlanta's performance due to favorable supply/demand dynamics [32][33] - Bad debt levels are expected to remain flat year-over-year for 2024, with improvements anticipated in 2025 [38][67] - The company is prioritizing occupancy over rate growth in the current market environment [71] Other Important Information - The company completed renovations on 188 units in Q3, generating an average ROI of approximately 17% [24] - The company published its ESG report, highlighting its commitment to efficiency goals and resident health and wellness [31] Q&A Session Summary Question: Current status of bad debts in Atlanta and expectations for 2025 - Bad debt was approximately 2% of revenue in October, with normalized levels in Washington D.C. below 1% [35] - Improvements in eviction processing and proactive resident engagement are expected to reduce bad debt moving into 2025 [36][38] Question: Factors affecting occupancy in Atlanta - Occupancy issues are attributed to both eviction timelines and elevated supply deliveries [39] - Concessions in Atlanta were offered on about 58% of new leases, averaging approximately 12 days [43] Question: Expectations for occupancy and lease rates in the DMV - Occupancy in Washington Metro is expected to trend down slightly but remain strong, averaging over 96% [48] - New lease rate growth in the DMV is expected to be between 0% and negative 3% [49] Question: Capital expenditures outlook - CapEx is expected to maintain or slightly increase due to ongoing renovation initiatives and managed Wi-Fi rollout [65] Question: Expansion into new markets - The company is looking to expand into Sunbelt markets, focusing on job creation and wage growth [62]