Elme Communities
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
ELME$1.77+0.6%Stored close · as of Oct 22, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0000104894-24-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0000104894-24-000077
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 129 current paragraphs.
62 unchanged; 39 reworded; 20 added; 2 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 8 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
In June 2024, as part of our previously announced centralization initiatives, we launched our shared services department, known as Elme Resident Services, which focuses on providing elevated customer service to our residents and onsite teams by streamlining community operations across our multifamily portfolio and enhancing process efficiencies across resident account management, collections and renewals.
Current report
(1)Acquisition:
Current report
Real estate expenses from acquisition increased $1.1 million due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Current report
•Notes payable: Increase primarily due to a higher effective interest rate on the $125.0 million 2023 Term Loan executed in January 2023.
Current report
Other income: Income of $0.6 million during the 2023 Quarter consists of tax refunds received for office properties sold in prior years.
Current report
2024 Period Compared to 2023 Period
Current report
(1)Acquisition:
Current report
2023: Elme Druid Hills
Current report
(2)Other: Watergate 600
Current report
Real Estate Rental Revenue
Current report
Real estate rental revenue from same-store residential properties increased $2.3 million, or 2.2%, to $105.4 million for the 2024 Period, compared to $103.1 million for the 2023 Period, primarily due to higher rental income ($3.2 million) and higher recoveries ($0.8 million), partially offset by higher credit losses ($0.9 million) and higher vacancy loss ($0.9 million).
Current report
Real estate rental revenue from acquisition increased $5.0 million due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Current report
Real Estate Expenses
Current report
Real estate expenses from same-store residential properties increased by $1.8 million, or 4.8%, to $38.9 million for the 2024 Period, compared to $37.1 million for the six months ended June 30, 2023, primarily due to higher insurance ($0.6 million), higher real estate taxes ($0.5 million), higher utilities ($0.5 million), higher administrative ($0.5 million) and higher contract maintenance ($0.2 million) expenses. The increase is partially offset by lower personnel ($0.5 million) expenses.
Current report
Other NOI decreased ($0.2 million) due to higher operating expenses at Watergate 600.
Current report
Other Income and Expenses
Current report
Property management expenses: Increase of $0.4 million primarily due to higher internal management fee expenses at same-store properties ($0.2 million) and the acquisition of Elme Druid Hills during the third quarter of 2023 ($0.2 million).
Current report
General and administrative expenses: Decrease of $1.2 million primarily due to higher internal management fee offset ($2.0 million), lower rent for our corporate office ($0.4 million), lower severance ($0.3 million) and corporate office moving ($0.3 million) expenses. These were partially offset by higher payroll ($1.1 million), higher employee benefits ($0.4 million) and higher software expenses ($0.3 million).
Current report
Real estate depreciation and amortization: Increase of $5.9 million primarily due to higher depreciation and amortization at Elme Druid Hills ($4.3 million) and at same-store residential properties ($3.2 million). The increase was partially offset by lower depreciation and amortization at Watergate 600 ($1.6 million).
Current report
(2) As of June 30, 2024, the credit facility had an August 2025 maturity date, with two six-month extension options. On July 10, 2024, we executed the Amended Credit Agreement that provides for a revolving credit facility of $500.0 million that matures in July 2028, with two six-month extension options.
Removed paragraphs (2)
Previous report
(1)Acquisitions:
Previous report
Other NOI decreased due to lower revenue at Watergate 600 ($0.2 million).
Reworded paragraphs (39)
Previous wording
We refer to the three months ended March 31, 2024 and March 31, 2023 as the “2024 Quarter” and the “2023 Quarter,” respectively.
Current wording
We refer to the three months ended June 30, 2024 and June 30, 2023 as the “2024 Quarter” and the “2023 Quarter,” respectively and the six months ended June 30, 2024 and June 30, 2023 as the “2024 Period” and “2023 Period,” respectively.
Previous wording
•Results of Operations. Discussion of our financial results comparing the 2024 Quarter to the 2023 Quarter.
Current wording
•Results of Operations. Discussion of our financial results comparing the 2024 Quarter to the 2023 Quarter and the 2024 Period to the 2023 Period.
Previous wording
The increase in net loss is primarily due to higher depreciation and amortization expenses ($3.4 million), interest expense ($2.7 million) and property management expense ($0.4 million) in the 2024 Quarter. These were partially offset by lower transformation costs (as described in Note 2 to the consolidated financial statements) ($2.9 million), higher NOI ($1.5 million), higher other income ($1.4 million) and lower general and administrative expenses ($0.6 million).
Current wording
The increase in net loss is primarily due to higher interest expense ($2.6 million), higher depreciation and amortization expenses ($2.5 million), and lower other income ($0.6 million) in the 2024 Quarter. These were partially offset by lower transformation costs (as described in Note 2 to the consolidated financial statements) ($2.5 million), higher NOI ($1.8 million) and lower general and administrative expenses ($0.5 million).
Previous wording
The increase in NOI is primarily due to the acquisition of Elme Druid Hills ($1.6 million) in the third quarter of 2023 and higher NOI from same-store properties ($0.1 million), partially offset by lower NOI at Watergate 600 ($0.2 million). The higher same-store NOI was primarily due to higher rental rates. Residential same-store average occupancy for our portfolio decreased to 94.4% as of March 31, 2024 from 95.3% as of March 31, 2023.
Current wording
The increase in NOI is primarily due to the acquisition of Elme Druid Hills ($1.4 million) in the third quarter of 2023 and higher NOI from same-store properties ($0.4 million). The higher same-store NOI was primarily due to higher rental rates. Residential same-store average occupancy for our portfolio decreased to 94.6% as of June 30, 2024 from 95.4% as of June 30, 2023.
Previous wording
The higher NAREIT FFO is primarily due to lower transformation costs ($2.9 million), higher NOI ($1.5 million), higher other income ($1.4 million) and lower general and administrative expenses ($0.6 million). These were partially offset by higher interest ($2.7 million) and higher property management ($0.4 million) expenses.
Current wording
The higher NAREIT FFO is primarily due to lower transformation costs ($2.5 million), higher NOI ($1.8 million) and lower general and administrative expenses ($0.5 million). These were partially offset by higher interest expense ($2.6 million) and lower other income ($0.6 million).
Previous wording
There were no significant investment transactions during the 2024 Quarter.
Current wording
There were no significant investment transactions during the 2024 Period.
Previous wording
As of March 31, 2024, the interest rate on the Revolving Credit Facility is based on an adjusted daily SOFR (inclusive of the 0.10% credit spread adjustment) plus 0.85% applicable margin, the daily SOFR is 5.34% and the facility fee is 0.20%. As of April 29, 2024, our Revolving Credit Facility has a borrowing capacity of $532.0 million.
Current wording
As of June 30, 2024, the interest rate on the Revolving Credit Facility is based on an adjusted daily SOFR (inclusive of the 0.10% credit spread adjustment) plus 0.85% applicable margin, the daily SOFR is 5.33% and the facility fee is 0.20%.
Previous wording
Subsequent to the end of the 2024 Quarter, we entered into two forward interest rate swap arrangements with an aggregate notional amount of $150.0 million beginning on January 10, 2025 through January 10, 2026. These forward interest rate swap arrangements will effectively fix a portion of our variable rate debt based on an adjusted daily SOFR at 4.72% (subject to applicable interest rate margins)
Current wording
During the 2024 Quarter, we entered into two forward interest rate swap arrangements with an aggregate notional amount of $150.0 million beginning on January 10, 2025 through January 10, 2026. These forward interest rate swap arrangements will effectively fix a portion of our variable rate debt based on an adjusted daily SOFR at 4.72% (subject to applicable interest rate margins).
Previous wording
(2) The credit facility's term ends in August 2025, with two six-month extension options.
Current wording
Subsequent to the 2024 Quarter, we entered into a third amended and restated credit agreement (the “Amended Credit Agreement”) which provides for aggregate revolving loan commitments of $500.0 million (the “Amended and Restated Revolving Credit Facility”) with an accordion feature that allows us to increase the aggregate revolving loan commitments or add term loans of up to $1.0 billion, subject to the lenders’ agreement to provide additional revolving commitments or term loans. The Amended and Restated Revolving Credit Facility has a four-year term ending in July 2028, with two six-month extension options. Borrowings under the Amended and Restated Revolving Credit Facility will bear interest, at Elme Communities’ option, at a rate of either (a)(i) daily SOFR plus 0.10% (the “Adjusted Daily Simple SOFR”) or (ii) term SOFR plus 0.10%, plus, in each case, a margin ranging from 0.70% to 1.40% (depending on Elme Communities’ credit rating) or (b) the base rate plus a margin ranging from 0.00% to 0.40% (based upon Elme Communities’ credit rating). The base rate is the highest of the administrative agent’s prime rate, the federal funds rate plus 0.50% and Adjusted Daily Simple SOFR plus 1.0%. In addition, the Amended Credit Agreement requires the payment of a facility fee equal to 0.10% to 0.30% (depending on Elme Communities’ credit rating) on the $500 million committed capacity in respect of the Amended and Restated Revolving Credit Facility, without regard to usage. The initial interest rate is based on Adjusted Daily Simple SOFR plus a margin of 0.85% and the initial facility fee equals 0.20%. As of July 29, 2024, our Amended and Restated Revolving Credit Facility has a borrowing capacity of $323.0 million.
Previous wording
The discussion that follows is based on our consolidated results of operations for the 2024 Quarter and 2023 Quarter.
Current wording
The discussion that follows is based on our consolidated results of operations for the 2024 Quarter and 2023 Quarter and the 2024 Period and 2023 Period.
Previous wording
Real estate rental revenue from same-store residential properties increased $1.4 million, or 2.7%, to $52.4 million for the 2024 Quarter, compared to $51.0 million for the 2023 Quarter, primarily due to higher rental income ($1.6 million), higher recoveries ($0.7 million) and higher other rental and fee income ($0.3 million), partially offset by higher credit losses ($0.7 million) and higher vacancy loss ($0.4 million).
Current wording
Real estate rental revenue from same-store residential properties increased $0.9 million, or 1.8%, to $53.0 million for the 2024 Quarter, compared to $52.1 million for the 2023 Quarter, primarily due to higher rental income ($1.5 million), partially offset by higher vacancy loss ($0.4 million) and higher credit losses ($0.2 million).
Previous wording
Real estate rental revenue from acquisitions increased $2.5 million due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Current wording
Real estate rental revenue from acquisition increased $2.5 million due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Previous wording
The decrease in same-store average occupancy was primarily due to lower average occupancy at Elme Eagles Landing, Elme Sandy Springs, Elme Marietta, Elme Cumberland, and The Kenmore, partially offset by higher average occupancy at Roosevelt Towers, Bennett Park, Elme Bethesda and Elme Leesburg.
Current wording
The decrease in same-store average occupancy was primarily due to lower average occupancy at Elme Marietta, Elme Eagles Landing, Elme Sandy Springs, Elme Cumberland, and Roosevelt Towers, partially offset by higher average occupancy at Elme Manassas and Elme Leesburg.
Previous wording
Residential real estate expenses as a percentage of residential revenue for the 2024 Quarter and the 2023 Quarter were 37.1% and 35.6%, respectively.
Current wording
Residential real estate expenses as a percentage of residential revenue for the 2024 Quarter and the 2023 Quarter were 37.2% and 36.6%, respectively.
Previous wording
Real estate expenses from same-store residential properties increased $1.3 million, or 7.0%, to $19.4 million for the 2024 Quarter, compared to $18.1 million for the 2023 Quarter, primarily due to higher contract maintenance ($0.3 million), higher real estate taxes ($0.3 million), higher insurance ($0.3 million), higher utilities ($0.2 million), and higher administrative ($0.2 million) expenses.
Current wording
Real estate expenses from same-store residential properties increased $0.5 million, or 2.7%, to $19.5 million for the 2024 Quarter, compared to $19.0 million for the 2023 Quarter, primarily due to higher utilities ($0.3 million), higher administrative ($0.3 million), higher insurance ($0.3 million) and higher real estate tax ($0.2 million) expenses. The increase is partially offset by lower turnover ($0.2 million), lower contract maintenance ($0.2 million) and lower personnel ($0.1 million) expenses.
Previous wording
General and administrative expense: Decrease of $0.6 million primarily due to higher management fee offset ($1.4 million), lower severance ($0.4 million), corporate office moving expenses in the 2023 Quarter ($0.2 million) and lower rent ($0.2 million) expenses. These were partially offset by higher payroll ($0.6 million), higher professional services ($0.4 million), higher incentive compensation ($0.2 million), higher computer software ($0.2 million) and higher employee benefits ($0.2 million) expenses.
Current wording
General and administrative expenses: Decrease of $0.5 million primarily due to higher internal management fee offset ($0.6 million), lower incentive compensation ($0.3 million) and lower professional ($0.2 million) expenses. These were partially offset by higher payroll ($0.4 million) and higher employee benefits ($0.2 million) expenses.
Previous wording
Transformation costs: Decrease of $2.9 million during the 2024 Quarter due to completion of strategic transformation in 2023.
Current wording
Transformation costs: Decrease of $2.5 million during the 2024 Quarter due to completion of strategic transformation in 2023.
Previous wording
Real estate depreciation and amortization: Increase of $3.4 million primarily due to higher depreciation and amortization at Elme Druid Hills ($2.9 million) and same-store residential properties ($1.4 million). These increases were partially offset by lower depreciation and amortization at Watergate 600 ($0.9 million).
Current wording
Real estate depreciation and amortization: Increase of $2.5 million primarily due to higher depreciation and amortization at same-store residential properties ($1.8 million) and Elme Druid Hills ($1.4 million). These increases were partially offset by lower depreciation and amortization at Watergate 600 ($0.7 million).
Previous wording
•Line of credit: Increase primarily due to higher weighted average borrowings of $168.3 million and a weighted average interest rate of 6.3% in the 2024 Quarter, as compared to weighted average borrowings of $44.8 million and a weighted average interest rate of 6.1% in the 2023 Quarter.
Current wording
•Line of credit: Increase primarily due to higher weighted average borrowings of $161.5 million and a weighted average interest rate of 6.3% in the 2024 Quarter, as compared to weighted average borrowings of $36.6 million and a weighted average interest rate of 5.9% in the 2023 Quarter.
Previous wording
Real estate expenses from acquisitions increased $0.9 million due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Current wording
Real estate expenses from acquisitions increased $2.0 million due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Previous wording
Other Income: Other income during the 2024 Quarter consists of additional payments received with respect to easements previously conveyed at The Wellington and Takoma Park, a previously owned retail property.
Current wording
Other Income: Other income during the 2024 Period consists of additional payments received with respect to easements previously conveyed at The Wellington and Takoma Park, a previously owned retail property. Income of $0.6 million during the 2023 Period consists of tax refunds received for office properties sold in prior years.
Previous wording
Webelieve we will have adequate liquidity over the next twelve months to operate our business and to meet our cash requirements, including meeting our debt obligations, capital commitments, acquisitions and contractual obligations, as well as the payment of dividends, on-going transformational costs and funding possible growth opportunities. We executed strategic transactions that will allow us to continue pursuing residential expansion in Sunbelt markets, meet our debt obligations for the next twelve months, and pay a dividend on a quarterly basis.
Current wording
Webelieve we will have adequate liquidity over the next twelve months to operate our business and to meet our cash requirements, including meeting our debt obligations, capital commitments, acquisitions and contractual obligations, as well as the payment of dividends and funding possible growth opportunities. We executed strategic transactions that will allow us to continue pursuing residential expansion in Sunbelt markets, meet our debt obligations for the next twelve months, and pay a dividend on a quarterly basis.
Previous wording
We also believe we have adequate liquidity beyond 2024, with no debt maturities until 2025 and only $285.0 million of scheduled debt maturities prior to 2028, based on current amounts outstanding under our Revolving Credit Facility. As of April 29, 2024, we had cash and cash equivalents totaling $2.9 million and a borrowing capacity of $532.0 million on our Revolving Credit Facility, resulting in a total liquidity position of $534.9 million.
Current wording
We also believe we have adequate liquidity beyond 2024, with no debt maturities until 2025 and only $281.0 million of scheduled debt maturities prior to 2028, based on current amounts outstanding under our Revolving Credit Facility as of June 30, 2024. Following the execution of the Amended and Restated Revolving Credit Facility, we had only $125.0 million of scheduled debt maturities prior to 2028. As of July 29, 2024, we had cash and cash equivalents totaling $5.1 million and a borrowing capacity of $323.0 million on our Amended and Restated Revolving Credit Facility, resulting in a total liquidity position of $328.1 million.
Previous wording
As of the end of the 2024 Quarter, our full-year 2024 capital requirements are summarized below:
Current wording
As of the end of the 2024 Period, our full-year 2024 capital requirements are summarized below:
Previous wording
We generally use secured or unsecured, corporate-level debt, including unsecured notes, our Revolving Credit Facility, bank term loans and mortgages to meet our borrowing needs. Long-term, we generally use fixed rate debt instruments in order to match the returns from our real estate assets. If we issue unsecured debt in the future, we will seek to “ladder” the maturities of our debt to mitigate exposure to interest rate risk in any particular future year. We also utilize variable rate debt for short-term financing purposes. At times, our mix of variable and fixed rate debt may not suit our needs. At those times, we may use derivative financial instruments including interest rate swaps and caps, forward interest rate options or interest rate options in order to assist us in managing our debt mix. We may either hedge our variable rate debt to give it an effective fixed interest rate or hedge fixed rate debt to give it an effective variable interest rate.
Current wording
We generally use secured or unsecured, corporate-level debt, including unsecured notes, our Amended and Restated Revolving Credit Facility, bank term loans and mortgages to meet our borrowing needs. Long-term, we generally use fixed rate debt instruments in order to match the returns from our real estate assets. If we issue unsecured debt in the future, we will seek to “ladder” the maturities of our debt to mitigate exposure to interest rate risk in any particular future year. We also utilize variable rate debt for short-term financing purposes. At times, our mix of variable and fixed rate debt may not suit our needs. At those times, we may use derivative financial instruments including interest rate swaps and caps, forward interest rate options or interest rate options in order to assist us in managing our debt mix. We may either hedge our variable rate debt to give it an effective fixed interest rate or hedge fixed rate debt to give it an effective variable interest rate.
Previous wording
As of March 31, 2024, our future debt principal payments are scheduled as follows (in thousands):
Current wording
As of June 30, 2024, our future debt principal payments are scheduled as follows (in thousands), before giving effect to the Amended Credit Agreement entered into in July 2024:
Previous wording
(1) During the 2023 Quarter, we entered into the $125.0 million 2023 Term Loan with an interest rate of adjusted SOFR (subject to a credit spread adjustment of 10 basis points) plus a margin of 95 basis points (subject to adjustment depending on Elme Communities’ credit rating). The 2023 Term Loan has a two-year term ending in January 2025, with two one-year extension options. We used the proceeds to prepay the $100.0 million 2018 Term Loan in full and a portion of our borrowings under our Revolving Credit Facility. Elme Communities had previously entered into an interest rate swap to effectively fix the interest rate for the remaining $100.0 million portion of the 2018 Term Loan. Following the prepayment of the 2018 Term Loan, the interest rate swap effectively fixed a $100.0 million portion of the 2023 Term Loan at 2.16% through the interest rate swap's expiration date of July 21, 2023. In March 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that effectively fixed the 2023 Term Loan’s interest rate at 4.73% beginning on July 21, 2023 through the 2023 Term Loan’s maturity date of January 10, 2025.
Current wording
(1) During the first quarter of 2023, we entered into the $125.0 million 2023 Term Loan with an interest rate of adjusted SOFR (subject to a credit spread adjustment of 10 basis points) plus a margin of 95 basis points (subject to adjustment depending on Elme Communities’ credit rating). The 2023 Term Loan has a two-year term ending in January 2025, with two one-year extension options. We used the proceeds to prepay the $100.0 million 2018 Term Loan in full and a portion of our borrowings under our Revolving Credit Facility. Elme Communities had previously entered into an interest rate swap to effectively fix the interest rate for the remaining $100.0 million portion of the 2018 Term Loan. Following the prepayment of the 2018 Term Loan, the interest rate swap effectively fixed a $100.0 million portion of the 2023 Term Loan at 2.16% through the interest rate swap's expiration date of July 21, 2023. In March 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that effectively fixed the 2023 Term Loan’s interest rate at 4.73% beginning on July 21, 2023 through the 2023 Term Loan’s maturity date of January 10, 2025.
Previous wording
The weighted average maturity for our debt is 4.3 years. If principal amounts due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow may be insufficient to repay all maturing debt. Prevailing interest rates or other factors at the time of a refinancing, such as possible reluctance of lenders to make commercial real estate loans, may result in higher interest rates and increased interest expense or inhibit our ability to finance our obligations.
Current wording
As of June 30, 2024, the weighted average maturity for our debt is 4.0 years. If principal amounts due at maturity cannot be refinanced, extended or paid with proceeds of other capital transactions, such as new equity capital, our cash flow may be insufficient to repay all maturing debt. Prevailing interest rates or other factors at the time of a refinancing, such as possible reluctance of lenders to make commercial real estate loans, may result in higher interest rates and increased interest expense or inhibit our ability to finance our obligations.
Previous wording
Pursuant to the terms of our Revolving Credit Facility, 2023 Term Loan and unsecured notes, we are subject to customary operating covenants and maintenance of various financial ratios.
Current wording
Pursuant to the terms of our 2021 Credit Agreement and, subsequent to June 30, 2024, the Amended Credit Agreement, 2023 Term Loan and unsecured notes, we are subject to customary operating covenants and maintenance of various financial ratios.
Previous wording
Failure to comply with any of the covenants under our Revolving Credit Facility, 2023 Term Loan, unsecured notes or other debt instruments could result in a default under one or more of our debt instruments. This could cause our lenders to accelerate the timing of payments and could therefore have a material adverse effect on our business, operations, financial condition and liquidity. In addition, our ability to draw on our Revolving Credit Facility or incur other unsecured debt in the future could be restricted by the debt covenants.
Current wording
Failure to comply with any of the covenants under our 2021 Credit Agreement, and, subsequent to June 30, 2024, the Amended Credit Agreement, 2023 Term Loan, unsecured notes or other debt instruments could result in a default under one or more of our debt instruments. This could cause our lenders to accelerate the timing of payments and could therefore have a material adverse effect on our business, operations, financial condition and liquidity. In addition, our ability to draw on our Revolving Credit Facility or incur other unsecured debt in the future could be restricted by the debt covenants.
Previous wording
As of March 31, 2024, we were in compliance with the covenants related to our Revolving Credit Facility, 2023 Term Loan, and unsecured notes.
Current wording
As of June 30, 2024, we were in compliance with the covenants related to our 2021 Credit Agreement, 2023 Term Loan, and unsecured notes.
Previous wording
On February 20, 2024, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, KeyBanc Capital Markets Inc., TD Securities (USA) LLC and Truist Securities, Inc. as agents and forward sellers, as applicable, (collectively, the “Agents” or “Forward Sellers”, as applicable), and Wells Fargo Bank, National Association, The Bank of New York Mellon, Citibank, N.A., Goldman Sachs & Co. LLC, KeyBanc Capital Markets Inc., The Toronto-Dominion Bank and Truist Bank as forward purchasers pursuant to which up to an aggregate gross sales price of $350,000,000 of Elme’s common shares of beneficial interest, $0.01 par value per share, may be offered and sold from time to time through the Agents, acting as the Company’s sales agents or, if applicable, the Forward Sellers, or directly to the Agents as principals for their own accounts. In connection with entry into the Equity Distribution Agreement, we terminated our prior at-the-market offering program. At the time of such termination, approximately $340.0 million remained unsold under such prior program
Current wording
On February 20, 2024, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, KeyBanc Capital Markets Inc., TD Securities (USA) LLC and Truist Securities, Inc. as agents and forward sellers, as applicable, (collectively, the “Agents” or “Forward Sellers”, as applicable), and Wells Fargo Bank, National Association, The Bank of New York Mellon, Citibank, N.A., Goldman Sachs & Co. LLC, KeyBanc Capital Markets Inc., The Toronto-Dominion Bank and Truist Bank as forward purchasers pursuant to which up to an aggregate gross sales price of $350,000,000 of Elme Communities’ common shares of beneficial interest, $0.01 par value per share, may be offered and sold from time to time through the Agents, acting as the Company’s sales agents or, if applicable, the Forward Sellers, or directly to the Agents as principals for their own accounts. In connection with entry into the Equity Distribution Agreement, we terminated our prior at-the-market offering program. At the time of such termination, approximately $340.0 million remained unsold under such prior program.
Previous wording
We did not issue common shares under the Equity Distribution Agreement or any prior equity distribution agreements during the 2024 Quarter or 2023 Quarter.
Current wording
We did not issue common shares under the Equity Distribution Agreement or any prior equity distribution agreements during the 2024 Period or 2023 Period.
Previous wording
We have a dividend reinvestment program, whereby shareholders may use their dividends and optional cash payments to purchase common shares. The common shares sold under this program may either be common shares issued by us or common shares purchased in the open market.
Current wording
We have a dividend reinvestment program whereby shareholders may use their dividends and optional cash payments to purchase common shares. The shares sold under this program may either be common shares issued by us or common shares purchased in the open market. We intend to use the proceeds of the sale of any newly issued common shares issued under this program, if any, for general corporate purposes.
Previous wording
We did not issue common shares under the dividend reinvestment program during the 2024 Quarter. Our issuances and net proceeds on the dividend reinvestment program for the three months ended March 31, 2023 were as follows ($ in thousands, except per share data):
Current wording
We did not issue common shares under the dividend reinvestment program during the 2024 Period. Our issuances and net proceeds on the dividend reinvestment program for the three and six months ended June 30, 2023 were as follows ($ in thousands, except per share data):
Previous wording
Net cash used in investing activities increased primarily due to higher expenditures on capital improvements to our communities during the 2024 Quarter.
Current wording
Net cash used in investing activities increased primarily due to higher expenditures on capital improvements to our communities during the 2024 Period.
Previous wording
Net cash used in financing activities increased primarily due to executing the $125.0 million 2023 Term Loan during the 2023 Quarter. This was partially offset by the repayment of the $100.0 million 2018 Term Loan during the 2023 Quarter and higher net borrowings on the Revolving Credit Facility during the 2024 Quarter.
Current wording
Net cash used in financing activities decreased primarily due to lower net repayments on the 2021 Credit Agreement during the 2024 Period and the repayment of the $100.0 million 2018 Term Loan during the 2023 Period, partially offset by executing the $125.0 million 2023 Term Loan during the 2023 Period.
Previous wording
The following table provides the calculation of our NAREIT FFO and a reconciliation of net loss to NAREIT FFO for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table provides the calculation of our NAREIT FFO and a reconciliation of net loss to NAREIT FFO for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
We base the discussion and analysis of our financial condition and results of operations upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There were no changes made by management to the critical accounting policies in the three months ended March 31, 2024. We discuss the most critical estimates in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024.
Current wording
We base the discussion and analysis of our financial condition and results of operations upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. There were no changes made by management to the critical accounting policies in the three and six months ended June 30, 2024. We discuss the most critical estimates in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The following tables reconcile net loss to NOI and provide the basis for our discussion of our consolidated results of operations and NOI in the 2024 Period compared to the 2023 Period. All amounts are in thousands, except percentage amounts.
Current report — wording carried from elsewhere
Real estate rental revenue from our apartment communities is comprised of (a) rent from operating leases of multifamily residential apartments with terms of approximately one year or less, recognized on a straight-line basis, (b) revenue from the recovery of operating expenses from our residents, (c) credit losses on lease related receivables, (d) revenue from leases of retail space at our apartment communities and (e) parking and other tenant charges.
Current report — wording carried from elsewhere
Average occupancy for residential properties for the 2024 Period and 2023 Period was as follows:
Current report — wording carried from elsewhere
The decrease in same-store average occupancy was primarily due to lower average occupancy at Elme Eagles Landing, Elme Marietta, Elme Sandy Springs and Elme Cumberland, partially offset by higher average occupancy at Elme Leesburg.
Current report — wording carried from elsewhere
Residential real estate expenses as a percentage of residential revenue for the 2024 Period and 2023 Period were 37.1% and 36.1%, respectively.
Current report — wording carried from elsewhere
Transformation costs: Decrease of $5.4 million due to completion of strategic transformation in 2023.
Current report — wording carried from elsewhere
Interest expense: Interest expense by debt type for the six months ended June 30, 2024 and 2023 was as follows (in thousands):
Current report — wording carried from elsewhere
•Line of credit: Increase primarily due to higher weighted average borrowings of $164.9 million and a weighted average interest rate of 6.3% in the 2024 Period, as compared to weighted average borrowings of $40.7 million and a weighted average interest rate of 6.0% in the 2023 Period.