Core Insights - Elme Communities is focused on strategic property management and redevelopment in the Washington Metro area, leveraging its experience to create value through diversified asset types and prime locations [1] - As of Wednesday, shares of Elme Communities were priced at $17.41, reflecting a 10% increase over the past year, although this performance lags behind the S&P 500's 12% increase during the same period [1] Investment Position - DSC Meridian Capital LP reported a new position in Elme Communities, acquiring 543,081 shares valued at $9.2 million as of September 30, representing about 1.9% of its overall assets under management [2] Operational Performance - Elme Communities is navigating a transition, with shares approximately 60% below mid-2000s levels, indicating years of underperformance [3] - The company's same-store multifamily occupancy averaged 94.4% in the third quarter, with average effective monthly rent per home increasing by 1.1% year over year [3] Financial Metrics - Core FFO for the quarter was $0.22 per diluted share, remaining flat from the previous year, highlighting stable cash flow despite rising expenses [4] - Elme Communities has $321 million in available liquidity and no secured debt, providing financial flexibility [4] Strategic Moves - The company sold 19 multifamily communities for approximately $1.6 billion in November, which may indicate a shift towards a liquidation value thesis rather than a traditional REIT investment approach [4] - The potential for patient investors lies in the bounded downside risk and the importance of execution over mere rent growth [4]

Core Viewpoint - Elme Communities has completed the sale of 19 multifamily communities to Cortland Partners for $1.6 billion, marking a significant step in its Plan of Sale and Liquidation approved by shareholders [1][2]. Group 1: Portfolio Sale Details - The portfolio sale was finalized after receiving shareholder approval on October 30, 2025 [1]. - The sale is part of a broader strategy to liquidate all of the Company's assets, including nine remaining multifamily properties and Watergate 600 [2]. Group 2: Financial Arrangements - Following the portfolio sale, Elme entered into a loan agreement with Goldman Sachs for a senior secured term loan of $520 million, maturing on November 9, 2026, with a possible one-year extension [3]. - The term loan will be repaid using the net proceeds from the sales of the properties securing the loan [3]. Group 3: Shareholder Returns - Elme plans to return net proceeds from the portfolio sale and part of the new term loan to shareholders through an initial special liquidating distribution estimated between $14.50 and $14.82 per common share [4]. - The initial distribution is expected to be declared later this year and paid in January 2026, pending Board approval [4]. - Additional distributions may occur at the Board's discretion following future asset sales [4]. Group 4: Management's Focus - The Company aims to maximize shareholder value by monetizing remaining assets and plans to complete all remaining sales by June 2026 [5].

Financial Data and Key Metrics Changes - FFO per diluted share for Q2 2025 was $0.52, with same store cash NOI approximately flat for the quarter and up 1.4% year to date compared to the prior year [5][15] - The office portfolio ended the quarter 82% leased, with the same store office portfolio at 87% leased [5] - Same store cash NOI for all sectors combined was approximately flat year over year in 2025 compared to the same period in 2024 [16] Business Line Data and Key Metrics Changes - Retail portfolio ended the quarter 98% leased, with same store cash NOI growth of 4.5% [8] - Executed over 220,000 square feet of new and renewal leases in Q2, with spreads increasing over 7% on a cash basis and 22% on a straight line basis [8] - Multifamily portfolio ended the quarter approximately 94% leased, with rent increases of 7% on renewals and 4% on new leases, resulting in a blended rent increase of 6% [10] Market Data and Key Metrics Changes - The San Diego market showed strong demand, with two major real estate firms choosing the company's properties for their new headquarters [7] - The hotel segment in Waikiki experienced a 15% decline in NOI due to lower paid occupancy and RevPAR amid ongoing softness in domestic leisure demand [12] - The Japanese yen remains around $1.47 to the US dollar, impacting tourism demand from Japan [19] Company Strategy and Development Direction - The company aims to maintain balance sheet strength and create long-term value for shareholders while navigating elevated interest rates and inflation [4] - Focus remains on driving occupancy, enhancing tenant experience, and positioning the portfolio to perform well under current utilization patterns [7] - The company is exploring opportunities in multifamily and retail sectors while avoiding office acquisitions for the time being [59][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strength of Hawaii's tourism market despite current challenges [19] - The company is optimistic about the potential recovery in tourism and expects improved performance at the Embassy Suites property [22] - Guidance for full year 2025 was increased to a range of $1.89 to $2.01 per FFO share, reflecting steady momentum across core sectors [20] Other Important Information - The Board approved a quarterly dividend of $0.34 per share for Q3, reflecting confidence in long-term stability and cash flows [13] - The company published its 2024 sustainability report, highlighting progress in environmental, social, and governance initiatives [13] Q&A Session Summary Question: Any changes to the same store NOI growth outlook for the various segments? - Management indicated they are still on track and hope to outperform current guidance, with some segments potentially outperforming while others may underperform [26][27] Question: Discuss the leasing pipeline and interest level for La Jolla Commons 3 and 1 Beach. - Increased touring activity and prospects were noted, with plans to develop parking and amenities to meet demand [28][29] Question: Commentary on the multifamily portfolio and new lease spreads. - Management acknowledged challenges in Portland due to excess supply but noted stability in San Diego, with expectations for growth later this year [44][45] Question: Demand drivers for the hotel in Hawaii and future expectations. - Management highlighted the impact of the Japanese yen on tourism demand and expressed cautious optimism for recovery next year [49][51] Question: Plans for utilizing cash on the balance sheet for acquisitions. - The company is actively looking for opportunities, particularly in multifamily and retail, while maintaining a cautious approach [58][59]