Elme munities(US:ELME)2022-07-28 16:00Financial Performance - For the three months ended June 30, 2022, the net loss was $8.874 million, an increase of 26.9% compared to a net loss of $6.992 million for the same period in 2021[111]. - Net operating income (NOI) for the 2022 Quarter was $32.796 million, representing a 23.5% increase from $26.553 million in the 2021 Quarter[111]. - NAREIT Funds From Operations (FFO) decreased to $15.165 million in the 2022 Quarter, down 26.2% from $20.559 million in the 2021 Quarter[111]. - Total revenue increased by $9.8 million, or 26.5%, to $46.6 million for the 2022 Quarter compared to $36.9 million for the 2021 Quarter[1]. - Total residential expenses increased by $3.8 million, or 28.5%, to $17.3 million for the 2022 Quarter compared to $13.5 million for the 2021 Quarter[1]. - Net loss increased by $1.9 million, or 26.9%, to $8.9 million for the 2022 Quarter compared to $7.0 million for the 2021 Quarter[1]. - General and administrative expenses increased by $1.3 million, or 21.0%, to $7.7 million for the 2022 Quarter compared to $6.3 million for the 2021 Quarter[133]. - The company reported a net cash provided by operating activities of $33.979 million for the six months ended June 30, 2022, a decrease of 47.4% compared to $64.622 million for the same period in 2021[182]. - The company’s NAREIT FFO for the six months ended June 30, 2022, was $29.641 million, down from $49.055 million for the same period in 2021[187]. Occupancy and Revenue - The average occupancy rate for residential same-store properties increased to 95.8% as of June 30, 2022, up from 95.1% as of June 30, 2021[112]. - Residential revenue from same-store portfolio increased by $1.9 million, or 5.3%, to $37.2 million for the 2022 Quarter compared to $35.3 million for the 2021 Quarter[125]. - Same-store portfolio revenue rose by $3.7 million, or 5.3%, to $73.93 million, primarily due to higher rental income and lower rent abatements[4]. - Residential revenue increased by $16.9 million, or 23.2%, to $89.98 million for the 2022 period compared to $73.03 million for 2021, driven by acquisitions and development[1]. Expenses and Costs - Total residential expenses increased by $5.92 million, or 21.7%, to $33.21 million, with expenses from acquisitions contributing $4.89 million[1]. - Transformation costs recognized during the 2022 Quarter were $2.0 million, with an anticipated additional $6.3 - $7.3 million in transformation costs for the remainder of 2022[108]. - Transformation costs decreased by $1.8 million, or 46.5%, during the 2022 Quarter compared to the previous year[134]. - Interest expense decreased by $4.0 million, or 39.4%, to $6.2 million for the 2022 Quarter compared to $10.2 million for the 2021 Quarter[136]. - Interest expense decreased by $8.48 million, or 41.8%, to $11.81 million, primarily due to the prepayment of unsecured notes[157]. Financing and Debt - Significant financing activity included the issuance of 1.0 million common shares at a weighted average price of $26.27, resulting in net proceeds of $26.9 million[115]. - As of June 30, 2022, the company had no outstanding balance on its $700.0 million unsecured revolving credit facility and $31.4 million in cash on hand[116]. - The company expects to have no debt maturities until the third quarter of 2023, indicating a stable capital structure[117]. - As of June 30, 2022, the company has total debt scheduled principal payments of $576.554 million, with $100,000 due in 2023 and $476.554 million due thereafter[170]. - The weighted average maturity for the company's debt is 6.9 years, indicating potential refinancing risks if cash flow is insufficient[171]. - The company has authorized the issuance of 150.0 million common shares, with 87.4 million shares outstanding as of June 30, 2022[177]. - The company did not issue common shares under its equity distribution agreements during the 2022 Quarter or 2021 Quarter, maintaining a focus on existing capital[178]. Strategic Transformation - The strategic transformation involved a shift from commercial to residential properties, simplifying the portfolio to focus on residential operations[107]. - The company expects to realize significant operational benefits from its redesigned operating model, with full implementation anticipated in 2023[162]. - The company plans to invest approximately $32.5 million to $37.5 million in its existing portfolio and $0.8 million to $1.0 million in development projects throughout 2022[165]. Risk Management - The company actively manages credit risk by dealing with major financial institutions and monitoring counterparty credit ratings[191]. - The company utilizes both fixed and variable rate debt, employing derivative financial instruments to manage interest rate risk effectively[167]. - The company has implemented interest rate swap arrangements to mitigate exposure to cash flow variability due to interest rate changes[191]. - The majority of the company's outstanding debt is long-term, fixed-rate debt, indicating stable interest rate risk[193]. - The company utilizes debt obligations primarily for general corporate purposes, including real estate acquisitions and working capital needs[192]. - The company has no off-balance sheet arrangements that could materially affect its financial condition as of June 30, 2022[184]. - As of June 30, 2022, the company was in compliance with all covenants related to its debt instruments, ensuring operational stability[176].