Elme Communities
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 27, 2026
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-K
Period ended 2024-12-31; filed 2025-02-14.
0000104894-25-000020
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-27.
0000104894-26-000011
Item 7. 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 164 previous paragraphs and 97 current paragraphs.
21 unchanged; 18 reworded; 58 added; 123 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 4 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 (58)
Current report
On February 13, 2025, the Company announced that its Board had initiated a formal review to evaluate strategic alternatives. On August 4, 2025, the Company announced that its Board had completed its review, that Elme had entered into a Purchase and Sale Agreement, dated as of August 1, 2025, for the Portfolio Sale Transaction, and that the Board had also approved the Plan of Sale and Liquidation, which contemplates the sale or disposition of all the Company’s assets, the wind-down of the Company’s business and affairs and the termination of the Company’s existence by voluntary dissolution. The Plan of Sale and Liquidation includes a plan of liquidation that provides for the Company’s complete liquidation and dissolution in accordance with Section 331, Section 336 and Section 346(a) of the Code.
Current report
On October 30, 2025, our shareholders approved the Portfolio Sale Transaction and the Plan of Sale and Liquidation, and on November 12, 2025, Elme completed the Portfolio Sale Transaction. Also on November 12, 2025, certain indirect subsidiaries of the Company, as Borrowers, and Goldman Sachs Bank USA, as Lender, entered into the Loan Agreement pursuant to which the Lender has made the Secured Term Loan of $520.0 million to the Borrowers. Pursuant to the Loan Agreement, as of on November 12, 2025, the Secured Term Loan was secured by first priority mortgages and security interests on the ten Remaining Company Properties (which are directly owned by the Borrowers) and included: Riverside Apartments, Elme Bethesda, Elme Germantown, Elme Watkins Mill, 3801 Connecticut Avenue, Kenmore Apartments, Elme Conyers, Elme Marietta, Elme Sandy Springs, and Watergate 600. In addition, the Secured Term Loan was secured by pledges of all equity interests in the Borrowers, along with all other personal property of the Borrowers. Subsequent to December 31, 2025, we completed the sale of two of the Remaining Company Properties, Elme Sandy Springs and Elme Marietta, for gross proceeds of approximately $112.75 million, a portion of which was used to partially repay the Secured Term Loan, and those properties were released from the mortgages securing the Secured Term Loan.
Current report
Given the Plan of Sale and Liquidation, our efforts are focused on selling the remaining properties, winding down the Company’s affairs and, when appropriate and in the Board’s discretion, distributing the net proceeds to our shareholders subject to the creation of necessary reserves for, and payment or other satisfaction of, the Company’s expenses and other liabilities and obligations.
Current report
Elme is aiming to complete the sales of the Remaining Company Properties by mid-year 2026. Because the sales of our remaining properties are subject to, among other things, completion of the marketing and sale process and the negotiation of terms and completion of the sales, as applicable, the exact timing of completing the remaining property sales cannot be determined at this time and the Company cannot predict how long it will take to sell all of its remaining properties.
Current report
If we have not sold all of our remaining properties and paid all of our liabilities within 24 months after shareholder approval of the Plan of Sale and Liquidation, which was received on October 30, 2025, or if the Board otherwise determines that it is advantageous to do so earlier, we may transfer our remaining assets and liabilities to a liquidating trust and distribute interests in the liquidating trust to our shareholders or otherwise convert Elme to a liquidating limited liability company, partnership, or trust. We cannot predict the exact amount to be distributed or the timing of the completion of the liquidation and termination of the Elme’s existence.
Current report
As of December 31, 2025, our portfolio consisted of the following assets, seven of which are located in the Washington, DC metro region and three of which are located in the Atlanta metro region.
Current report
(1)Includes an undeveloped land parcel held for development adjacent to the Riverside Apartments.
Current report
(2)Sold subsequent to year end.
Current report
Washington, DC metro region (6 apartment communities)
Current report
Per research by CBRE, a global leader in commercial real estate services and investment, macroeconomic conditions in the Washington, DC metro region, where the majority of our remaining assets are located, will continue to be impacted in 2026, with federal government employment expected to decrease by 6,000 jobs, following a decrease of over 22,000 jobs in 2025. For our remaining multifamily assets in the in the Washington, DC metro region, we experienced lower occupancy and lower new lease rates caused by a reduction in demand during the fourth quarter of 2025. We believe this market softness is primarily due to the effects of the federal government shutdown during the fourth quarter of 2025, together with federal government and other workforce reductions in the region. While we anticipate the softness in the Washington, DC metro region area to continue during the first half of 2026, we expect seasonal improvement in leasing fundamentals during the spring and summer season.
Current report
In accordance with the Plan of Sale and Liquidation, the Board approved a special liquidating distribution of $14.67 per share to its shareholders of record as of the close of business on December 22, 2025. The special liquidating distribution was paid on January 7, 2026.
Current report
On November 12, 2025, we sold a portfolio of 19 multifamily communities for $1.6 billion. The communities included in the portfolio are as follows:
Current report
Subsequent to December 31, 2025, we completed the sale of two of the Remaining Company Properties, Elme Sandy Springs and Elme Marietta, which comprise approximately 800 residential apartment homes – for gross proceeds of approximately $112.75 million, a portion of which was used to partially repay the Secured Term Loan, and those properties were released from the mortgages securing the Secured Term Loan. As of February 27, 2026, we have also entered into purchase and sale agreements, which are no longer subject to ongoing inspection periods, pursuant to which we expect to sell three of the Remaining Company Properties: Elme Watkins Mill, Elme Conyers and Watergate 600, to various buyers for aggregate gross proceeds of approximately $128.78 million, which are expected to close in the first or second quarter of 2026, subject to satisfaction of customary closing conditions, including, in the case of Elme Watkins Mill, regulatory requirements related to the sale of multifamily properties in Montgomery County, Maryland. The marketing and sale process with respect to the other five Remaining Company Properties remains ongoing. In January 2026, we began a formal marketing process for Riverside Apartments and continued the marketing and sale process with respect to Kenmore, 3801 Connecticut, Elme Bethesda and Elme Germantown. The Company currently expects to finalize the sale of Elme Germantown in the second quarter of 2026 and the sale of Elme Bethesda by mid-year 2026. The Company also expects to continue the marketing process for the DC and Virginia properties with a goal to have these three properties under contract by mid-May. The Company continues to target completion of the sales of all Remaining Company Properties by mid-year 2026.
Current report
On November 12, 2025, in connection with the closing of the Portfolio Sale Transaction, the Company caused the repayment in full of all indebtedness, liabilities and other obligations under, and terminated, each of (i) the Third Amended and Restated Credit Agreement, dated July 10, 2024, by and among the Company, as borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent, (ii) the Term Loan Agreement, dated January 10, 2023, with Truist Bank, as administrative agent, and the lenders party thereto, as amended, and (iii) the Note Purchase Agreement, dated September 29, 2020, by and among the Company and other parties named therein as purchasers. The Company did not incur any material early termination penalties as a result of such terminations.
Current report
On November 12, 2025, in connection with the Portfolio Sale Transaction, the Company provided notice to the holders of its 7.25% senior notes due 2028 (the “Senior Notes”) of its intention to redeem on December 12, 2025 all of the outstanding $50 million aggregate principal amount of Senior Notes at the applicable redemption price and on the terms set forth in the indenture, dated as of August 1, 1996 (as amended or supplemented as of the date hereof, the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as successor to The First National Bank of Chicago, as trustee. In connection with the redemption of the Senior Notes, on November 12, 2025, the Company caused funds sufficient to pay and discharge the entire indebtedness on the Senior Notes and all other sums payable by the Company under the Indenture to be irrevocably deposited with the trustee and, accordingly, the Indenture with respect to the Senior Notes was satisfied and discharged, except with respect to those obligations under the Indenture that expressly survive satisfaction and discharge. The Senior Notes were redeemed on December 12, 2025.
Current report
On November 12, 2025, the Borrowers and Lender entered into the Loan Agreement pursuant to which the Lender has made the Secured Term Loan to the Borrowers as described above. The Company has provided a customary non-recourse carveout guaranty. The Loan Agreement contains certain affirmative and negative covenants with which Borrowers must comply, including maintenance of insurance, single-purpose bankruptcy, remote entity requirements, reporting requirements and restrictions on property and equity transfers and the granting of liens. Customary events of default are included in the Loan Agreement, including nonpayment of principal and other amounts when due, nonperformance of covenants, breach of representations and warranties, certain bankruptcy or insolvency events and changes in control, the occurrence of which give Lender the right to accelerate repayment of the Secured Term Loan.
Current report
The Secured Term Loan matures on November 9, 2026, subject to a one-year Borrowers’ extension option, which is subject to satisfaction of certain specified conditions, including the payment of an extension fee equal to 0.25% of the then outstanding principal amount of the Secured Term Loan and the requirement that no more than $312 million of the Secured Term Loan may be outstanding on the first day of the extended term. The Secured Term Loan bears interest at a per annum rate equal to the one-month term SOFR (subject to a term SOFR floor of 3.00%) plus the spread. The spread is 2.25%, and will increase in June 2026 to 2.75% and further increase to 4.00% in June 2027 (if extended). The Company has purchased an interest rate cap that effectively caps term SOFR at 5.00% per annum. On February 9, 2026, a duration fee equal to 0.20% of the then outstanding principal amount of the Secured Term Loan was paid to the Lender.
Current report
The Secured Term Loan requires that the Company enter into cash management arrangements set forth in the certain cash management agreements pursuant to which the Company maintains a restricted account into which all revenue from the Loan Collateral is deposited during the term of the Secured Term Loan. Amounts on deposit in the restricted account will be transferred: weekly to an account under the sole control of the lender, and provided an event of default is not continuing under the Secured Term Loan, funds deposited in the account controlled by the lender will be applied to pay items such as real estate taxes, insurance premiums, debt service obligations, the lender required reserves for budgeted capital expenditures and operating expenses, with excess funds deposited available to pay general and administrative expenses subject to certain limitations.
Current report
Excess cash remaining after the sale of Loan Collateral and the payment of a release price paid to the lender to release the lien of its mortgages shall be deposited with the Lender as additional cash collateral unless certain conditions, including a minimum balance of $10 million in the shortfall account, certain debt yield requirements, and no events of default, are met, in which case such excess cash may be disbursed to the Company for distribution. The cash management agreement contains provisions for the cure of certain of these events.
Current report
The Secured Term Loan is intended to be repaid with the net proceeds from one or more sales of the properties securing the Secured Term Loan, and such properties shall be released from the mortgages securing the Term Loan as they are sold, upon satisfaction of certain conditions and payment of a minimum release price applied to the prepayment of the Secured Term Loan. An exit fee equal to 0.50% of the principal amount of the Secured Term Loan repaid is payable with any prepayment or repayment of the Secured Term Loan, including at maturity, provided, that no exit fee is payable (i) if the Secured Term Loan is refinanced by the lender or its affiliates or (ii) if the Secured Term Loan is repaid with the proceeds of an arm’s length sale of one or more of the properties securing the Secured Term Loan.
Current report
As of December 31, 2025, the interest rate on the Secured Term Loan is 6.00%, which is based on the one-month term SOFR plus 2.25% applicable margin. As of February 27, 2026, after giving effect to the sales of Elme Sandy Springs and Elme Marietta and corresponding partial paydown of the Secured Term Loan, $415.2 million of the principal under the Secured Term Loan remains outstanding at the current interest rate of 5.91%.
Current report
Our revenues are derived primarily from the ownership and operation of income producing property. While we discuss certain financial metrics below, in light of the approval of the Plan of Sale and Liquidation on October 30, 2025 and the adoption of the liquidation basis of accounting as of November 1, 2025 and sale of 19 assets in the Portfolio Sale Transaction, the results of operations for the current year are not comparable to the prior year. The information provided below compares the ten months ended October 31, 2025 to the year ended December 31, 2024.
Current report
Real estate operating loss for the ten months ended October 31, 2025 is primarily due to real estate impairment and an increase in general and administrative expenses. During the third quarter of 2025, the Company recognized an aggregate impairment charge of $111.7 million related to several properties not included as part of the Portfolio Sale Transaction. The estimated cash flows for those certain properties were less than their respective carrying values primarily due to a revision of their estimated holding periods. The increase in general and administrative expenses primarily includes accrued severance and professional fees incurred in association with our Plan of Sale and Liquidation and the Portfolio Sale Transaction.
Current report
Operating Metrics
Current report
Average Occupancy and Ending Occupancy for our nine remaining residential properties for the year ended December 31, 2025 was 93.2% and 91.8%, respectively, compared to 94.0% and 94.4%, respectively, for the same nine properties for the year ended December 31, 2024. Watergate 600 was 81.6% leased and had an ending occupancy of 81.6% for the year ended December 31, 2025, compared to 84.7% and 84.7%, respectively, for the year ended December 31, 2024.
Current report
As described in the “Overview” section, our Board and our shareholders approved the Plan of Sale and Liquidation. In accordance with the Plan of Sale and Liquidation, our objectives are to pursue an orderly liquidation of our company by selling or otherwise disposing of our remaining assets, paying or otherwise settling our debts and our known liabilities, providing for the payment of unknown or contingent liabilities, when appropriate and in the Board’s discretion, distributing the net proceeds to our shareholders, subject to the creation of necessary reserves for, and payment or other satisfaction of, the Company’s expenses and other liabilities and obligations and winding up our operations and dissolving our company. On November 25, 2025, we announced a special liquidating distribution of $14.67 per share which was paid on January 7, 2026 to shareholders of record at the close of business on December 22, 2025. We may pay one or more additional liquidating distribution(s) to our shareholders during the remainder of the liquidation process. We expect to pay the final liquidating distribution after we sell all of our assets, pay or provide for all of our known liabilities and obligations and provide for unknown liabilities and obligations. We expect to complete these activities within 24 months of October 30, 2025, the day we received shareholder approval of the Plan of Sale and Liquidation. A final liquidating distribution to our shareholders may not be paid until all of our liabilities have been satisfied.
Current report
Our expectations about the amount of liquidating distributions that we will pay and when we will pay them are based on many estimates and assumptions, one or more of which may prove to be incorrect. As a result, the actual amount of the remaining liquidating distributions we pay to our shareholders may be more or less than we estimate and the remaining liquidating distributions may be paid later than we predict. We intend to maintain adequate cash reserves for liquidity, debt repayments and other future capital needs.
Current report
As of December 31, 2025, our cash and cash equivalents were approximately $1.3 billion and we had $17.3 million of restricted cash (funds held by the Lender in lender-controlled reserve accounts under the Secured Term Loan, including reserves for property taxes and insurance premiums, capital expenditures and certain other approved operating expenses and capital items). The cash and cash equivalents included approximately $1.3 billion paid as the special liquidating distribution on January 7, 2026.
Current report
Liquidating Distributions
Current report
On January 23, 2026, the Company announced that its current estimate of the total amount of remaining liquidating distributions to be funded from the net proceeds of sales of the Remaining Company Properties was estimated to be between $2.35 and $2.80 per share. Based on this updated estimate, the total amount of liquidating distributions (including the initial $14.67 per share liquidating distribution paid in January 2026) was estimated to be between $17.02 and $17.47 per share. The Company’s estimate of the ranges of liquidating distributions were derived from a number of assumptions and estimates, including the estimated range of gross asset sales proceeds for the Remaining Company Properties, many of which are outside the Company’s control and may not prove to be accurate, which could cause actual liquidating distributions, to be less or more than the estimated ranges. For more information regarding the estimates and assumptions, and various risks associated with such estimates and assumptions, see the risk factor titled “We cannot determine at this time the amount or timing of the remaining liquidating distributions, if any, to our shareholders in connection with the Plan of Sale and Liquidation because there are many factors that could affect the amount or timing of any such liquidating distributions, if any, some of which are not within our control”.
Current report
Aside from the Secured Term Loan described in the “Overview” section, the Company does not have any other outstanding debt obligations as of December 31, 2025.
Current report
As of December 31, 2025, we owed $520.0 million on our Secured Term Loan. Subsequent to December 31, 2025, and after giving effect to the sales of Elme Sandy Springs and Elme Marietta and corresponding partial paydown of the Secured Term Loan, $415.2 million of the principal amount remains outstanding under our Secured Term Loan.
Current report
We currently lease and occupy office space for our corporate headquarters. The corporate office lease has an expiration date of September 30, 2033 and we would expect to incur approximately $3.2 million in prepayment penalties if we terminate the lease during 2026. We are actively exploring alternatives to reduce the total cost of our corporate headquarters.
Current report
We have and will continue to incur severance, retention and benefit obligations in association with our Plan of Sale and Liquidation. We estimate that payments related to such obligations in 2026 will total approximately $17.3 million.
Current report
Cash provided by operating activities was $62.2 million for the ten months ended October 31, 2025.
Current report
Cash used in investing activities was $27.0 million for the ten months ended October 31, 2025, primarily due to capital improvement expenditures at our residential communities.
Current report
Cash used in financing activities was $35.0 million for the ten months ended October 31, 2025, primarily due to the payment of quarterly dividends partially offset by net borrowings on the Amended and Restated Revolving Credit Facility.
Current report
(a)changes in the amount and timing of the additional liquidating distributions, including as a result of unexpected levels of transaction costs, delayed or terminated closings, liquidation costs or unpaid or additional liabilities and obligations;
Current report
(b)the possibility of converting to a liquidating trust or other liquidating entity;
Current report
(c)the ability of our Board to terminate the Plan of Sale and Liquidation;
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Removed paragraphs (123)
Previous report
•Overview. Discussion of our business outlook, operating results, investment activity, financing activity and capital requirements to provide context for the remainder of MD&A.
Previous report
•Results of Operations. Discussion of our financial results comparing 2024 to 2023.
Previous report
•Liquidity and Capital Resources. Discussion of our financial condition and analysis of changes in our capital structure and cash flows.
Previous report
•Funds From Operations. Calculation of NAREIT Funds From Operations (“NAREIT FFO”), a non-GAAP supplemental measure to net income.
Previous report
•Critical Accounting Estimates. Descriptions of accounting policies that reflect significant judgments and estimates used in the preparation of our consolidated financial statements.
Previous report
When evaluating our financial condition and operating performance, we focus on the following financial and non-financial indicators:
Previous report
•Net operating income (“NOI”), calculated as set forth below under the caption "Results of Operations - Net Operating Income." NOI is a non-GAAP supplemental measure to net income.
Previous report
•Funds From Operations (“NAREIT FFO”), calculated as set forth below under the caption “Funds from Operations.” NAREIT FFO is a non-GAAP supplemental measure to net income.
Previous report
•Average occupancy, calculated as average daily occupied apartment homes as a percentage of total apartment homes.
Previous report
During 2023, we completed the acquisition of Elme Druid Hills, a 500-unit apartment community in Atlanta, Georgia for a contract purchase price of $108.0 million.
Previous report
In connection with our strategic transformation, which shifted our business away from the commercial sector to the residential sector, we redesigned our operating model for purposes of more efficiently and effectively supporting residential operations. This operating model redesign included insourcing the property-level management activities at our multifamily properties previously performed by third-party management companies. Community onboarding began in October 2022, and we have transitioned all of our residential communities to Elme management as of July 2023. Costs related to the strategic transformation, including the allocation of internal costs, consulting, advisory and termination benefits, are included in transformation costs on our consolidated statements of operations. We recognized $6.3 million of transformation costs, net of amounts capitalized, on the consolidated statements of operations during 2023. We did not incur transformation costs in 2024 and do not anticipate incurring any additional transformation costs in the future. We continue to realize significant operational benefits from this operating model redesign.
Previous report
In the second quarter of 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.
Previous report
On February 13, 2025, the Company announced that its Board has initiated a formal review to evaluate strategic alternatives for the Company in an effort to maximize shareholder value. There is no deadline or definitive timetable set for completion of this review and there can be no assurance that this process will result in the Company pursuing a transaction or any other strategic outcome.
Previous report
Operating Results
Previous report
The discussion that follows is based on our Operating Results. The ability to compare one period to another is affected by the acquisition completed in 2023 (see note 3 to the consolidated financial statements).
Previous report
Net loss, NOI and NAREIT FFO for the years ended December 31, 2024 and 2023 were as follows (in thousands, except percentage amounts):
Previous report
The decrease in net loss is primarily due to real estate impairment in our office property ($41.9 million) and transformation costs ($6.3 million) during 2023, and higher NOI ($5.2 million) and lower general and administrative expenses ($0.9 million) during 2024. These were partially offset by higher interest expense ($7.4 million) and higher depreciation and amortization expenses ($7.0 million).
Previous report
The increase in NOI is primarily due to the acquisition of Elme Druid Hills ($3.9 million) in 2023 and higher NOI from same-store properties ($1.9 million), partially offset by lower NOI at Watergate 600 ($0.6 million). The higher same-store NOI was primarily due to higher rental rates. Residential same-store average occupancy for our portfolio decreased to 94.8% as of December 31, 2024 from 95.2% as of December 31, 2023.
Previous report
The higher NAREIT FFO is primarily due to higher NOI ($5.2 million), lower transformation costs ($6.3 million) and lower general and administrative expenses ($0.9 million). These were partially offset by higher interest expense ($7.4 million).
Previous report
There were no significant investment transactions during 2024.
Previous report
In July 2024, 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 our 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 our credit rating) or (b) the base rate plus a margin ranging from 0.00% to 0.40% (based upon our 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 our credit rating) on the $500.0 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 February 11, 2025, our Amended and Restated Revolving Credit Facility has a borrowing capacity of $320.0 million.
Previous report
As of December 31, 2024, the interest rate on the Amended and Restated Revolving Credit Facility is based on the Adjusted Daily Simple SOFR (inclusive of the 0.10% credit spread adjustment) plus 0.85% applicable margin, the daily SOFR is 4.49% and the facility fee is 0.20%.
Previous report
During 2024, we entered into a first amendment (the “Term Loan Amendment”) to our $125.0 million unsecured term executed in 2023 (“2023 Term Loan”). The 2023 Term Loan has an interest rate of SOFR (subject to a credit spread adjustment of 10 basis points) plus a margin of 95 basis points (subject to adjustment depending on our credit rating).
Previous report
The Term Loan Amendment implements various covenant and technical amendments to make the 2023 Term Loan consistent with corresponding provisions in the Amended Credit Agreement. The Term Loan Amendment does not change the maturity or any of the pricing terms of the term loan outstanding under the 2023 Term Loan.
Previous report
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 report
In the fourth quarter of 2024, we exercised one of two one-year extension options on the 2023 Term Loan (as defined below) to extend the maturity of the loan to January 10, 2026.
Previous report
Capital Requirements
Previous report
We exercised one of two one-year extension options on the 2023 Term Loan which results in no current debt maturities scheduled for 2025. We expect to have additional capital requirements as set forth on page 37 (Liquidity and Capital Resources - Capital Requirements).
Previous report
The discussion that follows is based on our consolidated results of operations for the two years ended December 31, 2024. The ability to compare one period to another is affected by the acquisition completed during 2023 (see note 3 to the consolidated financial statements).
Previous report
Net Operating Income
Previous report
NOI, defined as real estate rental revenue less direct real estate operating expenses, is a non-GAAP measure. NOI is calculated as net income, less non-real estate revenue and the results of discontinued operations (including the gain or loss on sale, if any), plus interest expense, depreciation and amortization, lease origination expenses, general and administrative expenses, acquisition costs, real estate impairment, casualty gain and losses and gain or loss on extinguishment of debt. NOI does not include management expenses, which consist of corporate property management costs and property management fees paid to third parties. NOI is the primary performance measure we use to assess the results of our operations at the property level. We believe that NOI is a useful performance measure because, when compared across periods, it reflects the impact on operations of trends in occupancy rates, rental rates and operating costs on an unleveraged basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. As a result of the foregoing, we provide NOI as a supplement to net income, calculated in accordance with GAAP. NOI does not represent net income or income from continuing operations calculated in accordance with GAAP. As such, NOI should not be considered an alternative to these measures as an indication of our operating performance. A reconciliation of NOI to net income follows.
Previous report
The following tables reconcile net income to NOI and provide the basis for our discussion of our consolidated results of operations and NOI in 2024 compared to 2023. All amounts are in thousands except percentage amounts.
Previous report
(1)2023 Acquisition: Elme Druid Hills
Previous report
(2)Other: Watergate 600
Previous report
Real Estate Rental Revenue
Previous report
Real estate rental revenue from our apartment communities is comprised of (a) rent from operating leases of 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.
Previous report
Real estate rental revenue from same-store residential properties increased $6.9 million, or 3.3%, to $213.7 million for 2024, compared to $206.8 million for 2023, primarily due to higher rental income ($5.8 million), higher recoveries ($1.6 million), higher ancillary income ($0.6 million) and higher other rental and fee income ($0.5 million), partially offset by higher concessions ($0.7 million), higher vacancy loss ($0.7 million) and higher credit losses ($0.2 million).
Previous report
Real estate rental revenue from acquisitions increased $7.4 million or 291.1% to $10.0 million for 2024, compared to $2.5 million for 2023, primarily due to the acquisition of Elme Druid Hills during the third quarter of 2023.
Previous report
Average occupancy for residential properties for 2024 and 2023 was as follows:
Previous report
The decrease in same-store average occupancy was primarily due to lower average occupancy at Elme Marietta, Elme Eagles Landing, Elme Sandy Springs and Park Adams, partially offset by higher average occupancy at Elme Manassas, Elme Leesburg and Elme Alexandria.
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Reworded paragraphs (18)
Previous wording
We provide Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations and financial condition. We organize the MD&A as follows:
Current wording
We provide Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations and financial condition.
Previous wording
For purposes of evaluating comparative operating performance, we categorize our properties as “same-store” or “non-same-store”. Same-store portfolio properties include properties that were owned for the entirety of the years being compared and exclude properties under redevelopment or development and properties acquired, sold or classified as held for sale during the years being compared. We define development properties as those for which we have planned or ongoing major construction activities on existing or acquired land pursuant to an authorized development plan. Development properties are categorized as same-store when they have reached stabilized occupancy (90%) before the start of the prior year. We define redevelopment properties as those for which we have planned or ongoing significant development and construction activities on existing or acquired buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. We categorize a redevelopment property as same-store when redevelopment activities have been complete for the majority of each year being compared.
Current wording
Prior to adoption of the Plan of Sale and Liquidation, for purposes of evaluating comparative operating performance, we categorized our properties as “same-store” or “non-same-store.” Same-store portfolio properties included properties that were owned for the entirety of the years being compared and excluded properties under redevelopment or development and properties acquired, sold or classified as held for sale during the years being compared. Following our adoption of a liquidation basis of accounting, our properties are no longer categorized in this manner and therefore we have not provided operating metrics on a same-store/non same-store basis.
Previous wording
Our revenues are derived primarily from the ownership and operation of income producing property. As of December 31, 2024, we owned approximately 9,400 residential apartment homes in the Washington, DC and Atlanta metro regions. We also own and operate approximately 300,000 square feet of commercial space in the Washington, DC metro region.
Current wording
As of December 31, 2025, we owned approximately 3,570 residential apartment homes in the Washington, DC and Atlanta metro regions compared to 9,400 residential apartment homes in the Washington, DC and Atlanta metro regions as of December 31, 2024. We also owned and operated approximately 300,000 square feet of commercial space in the Washington, DC metro region as of both December 31, 2025 and 2024. Subsequent to December 31, 2025, we completed the sale of two of the Remaining Company Properties, Elme Sandy Springs and Elme Marietta. As of February 27, 2026, we owned approximately 2,500 residential apartment homes and approximately 300,000 square feet of commercial space in the Washington, DC metro region and approximately 200 residential apartment homes in the Atlanta metro region.
Previous wording
•Net proceeds from the sale of assets.
Current wording
We expect our principle demands for funds during the liquidation period are and will be for the payment of operating expenses, principal and interest payments on our Secured Term Loan, general and administrative expenses, including expenses in connection with the Plan of Sale and Liquidation, transaction costs related to asset sales and payments of distributions to shareholders pursuant to the Plan of Sale and Liquidation. We expect to use our cash on hand and net sales proceeds from the sale of our assets as our primary source of liquidity. To the extent available, we also intend to use cash flow generated by our real estate assets; however, asset sales will further reduce cash flow from these sources.
Previous wording
As of December 31, 2024, we were in compliance with the covenants related to our Amended Credit Agreement, 2023 Term Loan, and unsecured notes.
Current wording
As of December 31, 2025, we were in compliance with the covenants related to the Secured Term Loan, including those covenants with respect to maintenance of insurance, single-purpose bankruptcy, remote entity requirements, reporting requirements and restrictions on property and equity transfers and the granting of liens.
Previous wording
We have authorized for issuance 150.0 million common shares, of which approximately 88.0 million shares were outstanding at December 31, 2024.
Current wording
We have authorized for issuance 150.0 million common shares, of which approximately 88.6 million shares were outstanding at December 31, 2025.
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 $350.0 million 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.
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 $350.0 million 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. No common shares have been issued under the Equity Distribution Agreement, and subsequent to year-end, we terminated the Equity Distribution Agreement.
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 were able to use their dividends and optional cash payments to purchase common shares. The common shares sold under this program were either be common shares issued by us or common shares purchased in the open market. In September 2025, the Company suspended its dividend reinvestment program. During the suspension period, dividend payments are not automatically reinvested in additional shares of our common shares of beneficial interest and participants in the dividend reinvestment program are not able to purchase shares of our common shares of beneficial interest through optional cash investments under the dividend reinvestment program. We do not intend to restart the dividend reinvestment program.
Previous wording
We did not issue common shares under the dividend reinvestment program during 2024. Our issuances and net proceeds on the dividend reinvestment program for 2023 and 2022 were as follows (in thousands; except per share data):
Current wording
We did not issue common shares under the dividend reinvestment program during 2025 or 2024. In 2023 we issued approximately 28,000 shares at a weighted average price per share of $17.64 for net proceeds of $0.5 million.
Previous wording
On October 26, 2023, the Board authorized and approved a share repurchase program of up to $50.0 million of the Company’s common shares of beneficial interest over a period of two years, subject to any applicable limitations or restrictions set forth in our existing credit facility and other debt agreements. The share repurchase program is scheduled to expire on October 25, 2025, unless extended by the Board.
Current wording
On October 26, 2023, the Board authorized and approved a share repurchase program of up to $50.0 million of the Company’s common shares of beneficial interest over a period of two years, subject to any applicable limitations or restrictions set forth in our existing credit facility and other debt agreements. The share repurchase program expired on October 25, 2025.
Previous wording
Our Board can, at its discretion, authorize the issuance of up to 10.0 million preferred shares. The ability to issue preferred equity provides Elme Communities an additional financing tool that may be used to raise capital for future acquisitions or other business purposes. As of December 31, 2024, no preferred shares were issued and outstanding.
Current wording
Our Board can, at its discretion, authorize the issuance of up to 10.0 million preferred shares. The ability to issue preferred equity provides Elme Communities an additional financing tool that may be used to raise capital for business purposes. As of December 31, 2025, no preferred shares were issued and outstanding.
Previous wording
In addition to our long-term debt, we have committed building capital expenditures of $2.0 million in 2025 based on contracts in place as of December 31, 2024, along with other various standing or renewable contracts with vendors. The majority of these contracts can be canceled with immaterial or no cancellation penalties, with the exception of our elevator maintenance agreements and our electricity and gas purchase agreements. Contract terms on leases that can be canceled are generally one year or less.
Current wording
In addition to our Secured Term Loan, office lease and severance obligations, we have various standing or renewable contracts with vendors. The majority of these contracts can be canceled with immaterial or no cancellation penalties, with the exception of our elevator maintenance agreements and our electricity and gas purchase agreements. Contract terms on leases that can be canceled are generally one year or less.
Previous wording
Cash flows from operations are an important factor in our ability to sustain our dividend at its current rate. If our cash flows from operations were to decline significantly from current levels, we may have to reduce our dividend. Consolidated cash flows for the three years ended December 31, 2024 are summarized as follows (in thousands):
Current wording
Consolidated cash flows for the two years ended December 31, 2024 are summarized as follows (in thousands):
Previous wording
Net cash used in financing activities increased in 2024 primarily due to executing the $125.0 million 2023 Term Loan during 2023, partially offset by the prepayment of a $100.0 million portion of the 2018 Term Loan during 2023 and higher net borrowings on the Amended and Restated Revolving Credit Facility during 2024. Net cash provided by (used in) financing activities increased in 2023 compared to 2022 primarily due to executing the $125.0 million 2023 Term Loan and net borrowings on the Revolving Credit Facility during 2023 and the repayment of mortgage notes during 2022. These were partially offset by the repayment of the $100.0 million 2018 Term Loan during 2023 and proceeds from equity issuances during 2022.
Current wording
Net cash provided by operating activities increased in 2024 as compared to 2023 was primarily due to higher rental revenue from the acquisition of Elme Druid Hills in 2023 and from same-store communities. Net cash used in investing activities decreased in 2024 as compared to 2023 primarily due to the acquisition of Elme Druid Hills during 2023. Net cash used in financing activities increased in 2024 primarily due to executing the $125.0 million 2023 Term Loan during 2023, partially offset by the prepayment of a $100.0 million portion of an existing $250.0 million unsecured term loan during 2023 and higher net borrowings on the Amended and Restated Revolving Credit Facility during 2024.
Previous wording
(n)changes in the market value of securities;
Current wording
(h)risks relating to the market value of Elme’s common shares;
Previous wording
(b)the risks associated with ownership of real estate in general and our real estate assets in particular;
Current wording
(n)the risks associated with ownership of real estate in general and our real estate assets in particular;
Previous wording
(t)other factors discussed under the caption “Risk Factors.”
Current wording
(q)other factors discussed under the caption “Risk Factors.”
Previous wording
We recognize impairment losses on long-lived assets used in operations, development assets or land held for future development, if indicators of impairment are present and the net undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Estimates of undiscounted cash flows are based on forward-looking assumptions, including annual and residual cash flows and our estimated holding period for each property. Such assumptions involve a high degree of judgment and could be affected by future economic and market conditions. When determining if a property has indicators of impairment, we evaluate the property's occupancy, our expected holding period for the property, strategic decisions regarding the property's future operations or development and other market factors. If such carrying amount is in excess of the estimated undiscounted cash flows from the operation and disposal of the property, we would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its estimated fair value, calculated in accordance with current GAAP fair value provisions. Assets held for sale are recorded at the lower of cost or fair value less costs to sell.
Current wording
We recognize impairment losses on long-lived assets used in operations or land held for future development, if indicators of impairment are present and the net undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. Estimates of undiscounted cash flows are based on forward-looking assumptions, including annual and residual cash flows and our estimated holding period for each property. Such assumptions involve a high degree of judgment and could be affected by future economic and market conditions. When determining if a property has indicators of impairment, we evaluate the property's occupancy, our expected holding period for the property, strategic decisions regarding the property's future operations or development and other market factors. If such carrying amount is in excess of the estimated undiscounted cash flows from the operation and disposal of the property, we would recognize an impairment loss equivalent to an amount required to adjust the carrying amount to its estimated fair value, calculated in accordance with current GAAP fair value provisions. Assets held for sale are recorded at the lower of cost or fair value less costs to sell.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Net cash provided by operating activities increased in 2024 as compared to 2023 primarily due to higher rental revenue from the acquisition of Elme Druid Hills in 2023 and from same-store communities. Net cash provided by operating activities increased in 2023 as compared to 2022 primarily due to the acquisitions of Elme Sandy Springs, Elme Marietta and Elme Cumberland in 2022.
Previous report — wording carried elsewhere
Net cash used in investing activities decreased in 2024 as compared to 2023 primarily due to the acquisition of Elme Druid Hills during 2023. Net cash used in investing activities decreased in 2023 as compared to 2022 primarily due to the acquisitions of Elme Sandy Springs, Elme Marietta and Elme Cumberland during 2022, partially offset by the acquisition of Elme Druid Hills during 2023.