Elme munities(ELME) - 2025 Q3 - Quarterly Report

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]