Elme munities(ELME) - 2024 Q1 - Quarterly Results

Executive Summary & Q1 2024 Highlights This section overviews Elme Communities' Q1 2024 financial and operational performance, management commentary, and full-year guidance Financial Results Overview Elme Communities reported a net loss of $3.6 million in Q1 2024, with NAREIT FFO up 20% and Core FFO down 4% year-over-year Financial Results Overview | Metric | Q1 2024 | Q1 2023 | YoY Change | YoY Change (%) | | :-------------------------- | :------ | :------ | :--------- | :------------- | | Net loss (in millions) | $(3.6) | $(3.6) | $0.0 | 0% | | Net loss per diluted share | $(0.04) | $(0.04) | $0.00 | 0% | | NAREIT FFO (in millions) | $21.3 | $17.8 | +$3.5 | +20% | | NAREIT FFO per diluted share| $0.24 | $0.20 | +$0.04 | +20% | | Core FFO (in millions) | $19.9 | $20.7 | -$0.8 | -4% | | Core FFO per diluted share | $0.23 | $0.24 | -$0.01 | -4% | | NOI (in millions) | $37.8 | $36.3 | +$1.5 | +4% | | Same-store multifamily NOI | +0.3% | N/A | N/A | +0.3% | Operational Highlights Same-Store Portfolio achieved 2.3% blended lease rate growth and 3.1% average effective monthly rent increase, despite a 0.9% occupancy decline - Effective blended Lease Rate Growth for the Same-Store Portfolio was 2.3% during the quarter, composed of effective new Lease Rate Growth of (2.1)% and effective renewal Lease Rate Growth of 6.2%[4] - Average Effective Monthly Rent Per Home for the Same-Store Portfolio increased 3.1% compared to the prior year period[4] - Same-store multifamily Average Occupancy was 94.4% during the quarter, down 0.9% compared to the prior year period and down 0.5% compared to the prior quarter, mainly due to eviction timing in Atlanta and supply impact[4] Liquidity and Debt Position The company maintained $545 million in liquidity as of Q1 2024, with no debt maturities until 2025 and no secured debt - Available liquidity was approximately $545 million as of March 31, 2024, comprising availability under the revolving credit facility and cash on hand[4] - The Company has no debt maturities until 2025 and no secured debt[4] - The annualized first quarter Net Debt to Adjusted EBITDA ratio was 5.7x[4] Management Commentary Management confirmed Q1 results met expectations, highlighting strong Washington Metro fundamentals and anticipated H2 2024 NOI growth - Paul T. McDermott, President and CEO, stated that Q1 results were in line with expectations and the portfolio is well-positioned for the busiest leasing months, focusing on maximizing revenue, progressing operational initiatives, and executing renovations[3] - Steven Freishtat, Executive Vice President and CFO, expressed satisfaction with strong fundamentals in the Washington Metro portfolio (85% of Q1 multifamily NOI) and expects improving bad debt trends in Atlanta and rent growth in Washington Metro to drive higher NOI growth in H2 2024[5] Full Year 2024 Guidance Elme reiterated full-year 2024 Core FFO guidance of $0.90-$0.96 per diluted share, with same-store multifamily NOI growth of 0.25%-2.0% - Elme is reiterating its guidance for 2024, expecting Core FFO for 2024 to range from $0.90 to $0.96 per fully diluted share[5] Full Year 2024 Outlook on Key Assumptions and Metrics | Metric | Full Year 2024 Range | | :-------------------------------- | :------------------- | | Core FFO per diluted share | $0.90 - $0.96 | | Same-store multifamily NOI growth | 0.25% - 2.0% | | Non-same-store multifamily NOI | $5.25 million - $6.25 million | | Other same-store NOI | $12.0 million - $13.0 million | | Property management expense | $8.5 million - $9.0 million | | G&A, net of core adjustments | $24.25 million - $25.25 million | | Interest expense | $37.25 million - $38.25 million | 2024 Guidance Reconciliation Table (per diluted share) | Metric | Low | High | | :----------------------------- | :---- | :--- | | Net loss per diluted share | $(0.17) | $(0.11) | | Real estate depreciation and amortization | 1.09 | 1.09 | | NAREIT FFO per diluted share | 0.92 | 0.98 | | Core adjustments | (0.02) | (0.02) | | Core FFO per diluted share | $0.90 | $0.96 | Dividends Elme Communities maintained a consistent quarterly dividend of $0.18 per share for Q1 and Q2 2024 - On April 3, 2024, Elme Communities paid a quarterly dividend of $0.18 per share[13] - The Board of Trustees declared a quarterly dividend of $0.18 per share to be paid on July 3, 2024, to shareholders of record on June 20, 2024[13] Company Information This section provides an overview of Elme Communities, including its business focus, cautionary statements regarding forward-looking information, and an introduction to non-GAAP financial measures About Elme Communities Elme Communities is a multifamily REIT owning 9,400 apartment homes and 300,000 sq ft commercial space in DC and Atlanta metros - Elme Communities is a multifamily real estate investment trust that owns and operates approximately 9,400 apartment homes in the Washington, DC metro and Atlanta metro regions[15] - The Company also owns approximately 300,000 square feet of commercial space[15] - Elme Communities is committed to elevating home experiences for middle-income renters and building long-term value for shareholders[15] Forward-Looking Statements Forward-looking statements involve inherent risks and uncertainties, and actual results may differ materially from projections - Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts[18] - Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Elme Communities to be materially different from future results[18] - The company undertakes no obligation to update its forward-looking statements or risk factors to reflect new information, future events, or otherwise[18] Non-GAAP Financial Measures Introduction This release includes forward-looking non-GAAP financial measures, supplementary to GAAP net income (loss) for performance assessment - This Earnings Release includes certain forward-looking non-GAAP information[19] - These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance[19] Key Financial Data This section presents Elme Communities' key financial statements, including consolidated statements of operations, balance sheets, and detailed FFO/AFFO reconciliations for Q1 2024 Consolidated Statements of Operations Q1 2024 saw a net loss of $3.6 million, with real estate rental revenue up 6.6% and a significant increase in interest expense Consolidated Statements of Operations (in thousands) | Metric | Q1 2024 | Q1 2023 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Real estate rental revenue | $59,513 | $55,809 | +$3,704 | | Total Expenses | $55,076 | $52,567 | +$2,509 | | Real estate operating income (loss) | $4,437 | $3,242 | +$1,195 | | Interest expense | $(9,494) | $(6,831) | -$2,663 | | Other income | $1,410