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What changed in Elme Communities's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Elme Communities's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+252 added−248 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in Elme Communities's 2024 10-K

252 paragraphs added · 248 removed · 198 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe RealPage Market Analytics apartment market outlook points to a heavy construction pipeline with 29,400 units currently under construction, of which 18,200 are planned for delivery over the next year. Given the projected pipeline, rent and occupancy performance are expected to vary across submarkets, with market-level readings that roughly match the national average in the coming two to three-year window.
Biggest changeGiven the projected pipeline, rent and occupancy performance are expected to vary across submarkets, with market-level readings that roughly match the national average in the coming two to three-year window. Atlanta metro region (6 apartment communities) In the fourth quarter of 2024, the Atlanta metro region absorbed 7,600 units (the sixth highest rate nationally), as 5,100 units delivered concurrently.
In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which property may be used or 9 businesses may be operated, and these restrictions may require substantial expenditures.
In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which property 9 may be used or businesses may be operated, and these restrictions may require substantial expenditures.
Governance At Elme, we hold ourselves, our suppliers, and the Board of Trustees (the "Board") to high ethical standards as we seek to increase shareholder value and foster a collaborative, innovative corporate culture. Our team is required to read and certify their knowledge on our Code of Ethics, in addition to receiving ethics training throughout the year.
Governance At Elme, we hold ourselves, our suppliers, and the Board of Trustees (the “Board”) to high ethical standards as we seek to increase shareholder value and foster a collaborative, innovative corporate culture. Our team is required to read and certify their knowledge on our Code of Ethics, in addition to receiving ethics training throughout the year.
Americans with Disabilities Act ("ADA") The properties in our portfolio must comply with Title III of the ADA, to the extent that such properties are “public accommodations” as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
Americans with Disabilities Act (“ADA”) The properties in our portfolio must comply with Title III of the ADA, to the extent that such properties are “public accommodations” as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or bodily injury or property damage or materially adversely affect our ability to sell, lease or develop our properties or to borrow using the properties as collateral.
In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or bodily injury or property damage or materially adversely affect our ability to sell, lease, operate or develop our properties or to borrow using the properties as collateral.
The obligation to make readily accessible accommodations is an ongoing one, and we will continue to assess our properties and make alterations as appropriate in this respect. Fair Housing Act ("FHA") The FHA, its state law counterparts and the regulations promulgated by the U.S.
The obligation to make readily accessible accommodations is an ongoing one, and we will continue to assess our properties and make alterations as appropriate in this respect. Fair Housing Act (“FHA”) The FHA, its state law counterparts and the regulations promulgated by the U.S.
Atlanta offers a range of diverse, innovative industries which we believe are poised to benefit from substantial job creation, rising wages, and continued migration in the coming years. As of December 31, 2023, we have acquired six apartment communities in the Atlanta metro region and we remain optimistic about the near and longer-term demand drivers in the Atlanta metro region.
Atlanta offers a range of diverse, innovative industries which we believe are poised to benefit from substantial job creation, rising wages, and continued migration in the coming years. As of December 31, 2024, we have acquired six apartment communities in the Atlanta metro region and we remain optimistic about the near and longer-term demand drivers in the Atlanta metro region.
Major improvements and/or renovations to the properties during the three years ended December 31, 2023 are discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading “Capital Improvements and Development Costs.” Further description of the properties is contained in Item 2, Properties, and note 14 to the consolidated financial statements, Segment Information, and in Schedule III.
Major improvements and/or renovations to the properties during the three years ended December 31, 2024 are discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading “Capital Improvements and Development Costs.” Further description of the properties is contained in Item 2, Properties, and note 14 to the consolidated financial statements, Segment Information, and in Schedule III.
We intend to continue providing an annual ESG report that includes disclosures aligned with Global Reporting Initiative Standards 2016, the United Nations Sustainable Development Goals, the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures. This report can be found online at https://www.elmecommunities.com/esg/.
We intend to continue providing an annual ESG report that includes disclosures aligned with Global Reporting Initiative Standards 2021, the United Nations Sustainable Development Goals, the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures. This report can be found online at https://www.elmecommunities.com/esg/.
The Securities and Exchange Commission maintains a website ( http://www.sec.gov ) that contains reports, proxy statements, information statements, and other information regarding issuers that file electronically with Securities and Exchange Commission. 10
The Securities and Exchange Commission maintains a website ( https://www.sec.gov ) that contains reports, proxy statements, information statements, and other information regarding issuers that file electronically with Securities and Exchange Commission. 10
Health, Safety and Well-being We support our employees with a robust and competitive employee benefits program, including a flexible vacation policy, parental leave, 401(k) matching, tuition reimbursement, an Employee Assistance Program, and other programs. Additionally, we have a wellness program that provides fun, engaging challenges to encourage employees to continuously improve their physical, mental, and financial well-being.
Health, Safety and Well-being We support our employees with a robust and competitive employee benefits program, including flexible paid leave policies, parental leave, 401(k) matching, tuition reimbursement, an Employee Assistance Program, and other programs. Additionally, we have a wellness program that provides fun and engaging challenges to encourage employees to continuously improve their physical, mental, and financial well-being.
Some of our ESG policies, including our Human Rights Policy, Vendor Code of Conduct, and Environmental Sustainability Policy, can be found on our website at elmecommunities.com/esg/governance/. We are made up of growth-oriented, hardworking individuals dedicated to transforming creative ideas into decisive action.
Some of our ESG policies, including our Human Rights Statement, Code of Business Conduct and Ethics, Vendor Code of Conduct, and Environmental Policy, can be found on our website at elmecommunities.com/esg/governance/. We are made up of growth-oriented, hardworking individuals dedicated to transforming creative ideas into decisive action.
Diversity, Equity, Inclusion and Accessibility Our Diversity, Equity, Inclusion, and Accessibility Initiative ("DEIA") is a long-term commitment to promoting an environment where each individual feels comfortable being their most authentic selves. We believe diversity of backgrounds, experiences, cultures, ethnicities, and interests leads to new ways of thinking and drives engagement and organizational success.
Diversity, Equity, Inclusion and Accessibility Our Diversity, Equity, Inclusion, and Accessibility Initiative (“DEIA”) is a long-term commitment to promoting an environment where everyone feels comfortable being their most authentic selves. We believe diversity of backgrounds, experiences, cultures, ethnicities, and interests leads to new ways of thinking and drives engagement and organizational success.
In 2023, we certified our first five communities to Fitwel Health and Wellness. The certification is awarded to buildings that promote occupant health and well-being by incorporating a number of evidence-based design and operations strategies that support the physical, mental, and social health of occupants.
Five of our communities are certified to Fitwel Health and Wellness. The certification is awarded to buildings that promote occupant health and well-being by incorporating a number of evidence-based design and operations strategies that support the physical, mental, and social health of occupants.
Whether volunteering at a food bank, running a toy drive, walking for a cause, or participating in our company-wide community service day, we are proud to foster a culture of giving back. 8 Regulation REIT Tax Status We believe that we qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the "Code"), and intend to continue to qualify as such.
Whether volunteering at a food bank, running a toy drive, walking for a cause, or participating in our company-wide community service day, we are proud to foster a culture of giving back. 8 Regulation REIT Tax Status We believe that we qualify as a REIT under the Code, and intend to continue to qualify as such.
Of the 175 persons engaged in community management functions, 44 are employed in the Atlanta metro region at six different communities, with the remainder in the Washington, DC metro region.
Of the 188 persons engaged in community management functions, 49 are employed in the Atlanta metro region at six different communities, with the remainder in the Washington, DC metro region.
We trust, encourage, and support one another, driving our pursuit of excellence. 7 Human Capital Employees, Training and Development On February 13, 2024, we had 243 employees, including 175 persons engaged in community management functions who were hired in connection with the internalization of our community management functions, and 68 persons engaged in corporate, financial, asset management and other functions.
We trust, encourage, and support one another, driving our pursuit of excellence. 7 Human Capital Employees, Training and Development On February 11, 2025, we had 255 employees, including 188 persons engaged in community management functions who were hired in connection with the internalization of our community management functions, and 67 persons engaged in corporate, financial, asset management and other functions.
In the short term, rent change and occupancy are expected to remain muted and are expected to move closer to national norms in 2025, once the current supply wave moderates. ______________________________ (1) The source of all regional market numerical data in this section is RealPage Market Analytics 5 Our Portfolio As of December 31, 2023, we owned approximately 9,400 residential apartment homes in the Washington, DC metro and Sunbelt regions.
In the short term, rent change and occupancy are expected to remain muted, as the market continues to work its way through the large but shrinking delivery pipeline, and are expected to move closer to national norms in late 2025 into 2026, once the current supply wave moderates. ______________________________ (1) The source of all regional market numerical data in this section is RealPage Market Analytics. 5 Our Portfolio As of December 31, 2024, we owned approximately 9,400 residential apartment homes in the Washington, DC metro and Sunbelt regions.
The percentage of total real estate rental revenue from continuing operations by property type for the three years ended December 31, 2023, and the average occupancy for the year ended December 31, 2023, were as follows: Average Occupancy, year ended December 31, 2023 % of Total Real Estate Rental Revenue 2023 2022 2021 95% Residential 92 % 91 % 89 % 90% Other 8 % 9 % 11 % 100 % 100 % 100 % Total real estate rental revenue from continuing operations for each of the three years ended December 31, 2023, was $227.9 million, $209.4 million and $169.2 million, respectively.
The percentage of total real estate rental revenue by property type for the three years ended December 31, 2024, and the average occupancy for the year ended December 31, 2024, were as follows: Average Occupancy, year ended December 31, 2024 % of Total Real Estate Rental Revenue 2024 2023 2022 95% Residential 92 % 92 % 91 % 87% Other 8 % 8 % 9 % 100 % 100 % 100 % Total real estate rental revenue for each of the three years ended December 31, 2024, was $241.9 million, $227.9 million and $209.4 million, respectively.
Annual rent change, as of the fourth quarter of 2023, was highest among Class B multifamily properties at 3.7% with Class A multifamily properties trailing behind at 2.4%. Generally, rents grew most in low supply submarkets, whereas rent cuts were most common in higher supply areas. Occupancy remained strongest in Class B multifamily properties at 95.2%.
Annual rent change, as of the fourth quarter of 2024, was highest among Class A multifamily properties at 4.2% with Class B multifamily properties trailing behind at 3.8%. Generally, rents grew more in low supply submarkets, whereas more modest rent growth occurred in higher supply areas. Occupancy remained strongest in Class B multifamily properties at 96.4%.
In our corporate office, we offer two wellness rooms for employees to take a break to decompress. Our technological capabilities allow our corporate-level employees the flexibility to work from anywhere at any time. This allows us to easily meet our residents’ needs as well as those of our employees.
We also partner with our 401(k) administrator to host financial wellness seminars. In our corporate office, we offer two wellness rooms for employee use. Our technological capabilities allow our corporate-level employees the flexibility to work from anywhere at any time. This allows us to easily meet our residents’ needs as well as those of our employees.
Class C multifamily properties saw the steepest rent decline of 6.6% on average, followed by Class B multifamily properties with rent cuts of 4.3% on average, and Class A multifamily properties with rent cuts of 3.6% on average. All but one of Atlanta’s 39 submarkets posted rent cuts on an annual basis.
Class C multifamily properties saw the steepest rent decline of 6.2% on average, followed by Class B and Class A multifamily properties with rent cuts of 3.5% and 3.0%, respectively.
Annual job growth for the Atlanta metro region as reported by the U.S. Bureau of Labor Statistics was 2.5%, or 76,500 jobs added as of November 2023, year-over-year. The RealPage Market Analytics apartment market outlook has 34,300 units currently under construction, of which 23,100 are planned for delivery over the next year.
Annual job growth for the Washington, DC metro region, as reported by the U.S. Bureau of Labor Statistics was 1.1%, or 36,600 jobs as of November 2024, year-over-year. The RealPage Market Analytics apartment market outlook points to a moderate construction pipeline with 19,000 units currently under construction, of which 13,600 are planned for delivery over the next year.
Despite healthy absorption, supply and demand remained imbalanced. As a result, occupancy ticked down 40 basis points over the year to 94.7%. Effective asking rents declined 0.4% in the fourth quarter of 2023 compared to the third quarter of 2023, averaging $2,110 per month, or $2.39 per square foot, pushing annual rent growth down to 2.5%.
Due to this healthy absorption and restrained supply, occupancy ticked up 130 basis points year-over-year to 96.0%. Effective asking rents declined 0.6% in the fourth quarter of 2024 compared to the third quarter of 2024, averaging $2,206 per month, or $2.49 per square foot, while annual rent growth reached 3.4%.
As of December 31, 2023, we owned 28 apartment communities and one office property. Business and Investment Strategy Our mission is to elevate the value living experience and create a place our residents are proud to call home by continuously focusing on service, efficiency, and innovation.
Business and Investment Strategy Our mission is to elevate the value living experience and create a place our residents are proud to call home by continuously focusing on service, efficiency, and innovation. We are focused on creating shareholder value by providing quality, affordably priced housing to a deep, solid, and growing base of mid-market demand.
Washington, DC metro region (22 apartment communities) In the fourth quarter of 2023, the Washington, DC metro region absorbed 1,600 units (the third highest 4th quarter performance on record for the Washington, DC metro region), as 4,000 units delivered concurrently. The rebound in demand in 2023 brought annual demand to 10,800 units, a top five performance nationwide.
Washington, DC metro region (22 apartment communities) In the fourth quarter of 2024, the Washington, DC metro region absorbed 8,200 units (the fifth highest rate nationally), as 4,300 units delivered concurrently. Strong demand in 2024 brought annual demand to 22,000 units, the sixth highest demand performance nationwide.
ITEM 1: BUSINESS Elme Communities Overview Elme Communities, a Maryland real estate investment trust, formerly known as Washington Real Estate Investment Trust (the "Company"), is a self-administered equity real estate investment trust ("REIT") and successor to a trust organized in 1960. Our business primarily consists of the ownership of apartment communities in the greater Washington, DC metro and Sunbelt regions.
ITEM 1: BUSINESS Elme Communities Overview Elme Communities, a Maryland real estate investment trust, formerly known as Washington Real Estate Investment Trust (the “Company”), is a self-administered equity real estate investment trust (“REIT”) within the meaning of Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”) and successor to a trust organized in 1960.
During unit renovations, we replace end-of-life appliances with ENERGY STAR rated equipment; heating, ventilation, and air conditioning systems with more efficient models; as well as update water fixtures to low-flow options. Additionally, we continue to expand our electric vehicle charging stations across our portfolio to support the transition of our residents to electric transportation.
In 2024, we completed recertification of eight properties using the BREEAM In-Use Assessment. During unit renovations, we replace end-of-life appliances with ENERGY STAR rated equipment; heating, ventilation, and air conditioning systems with more efficient models and water fixtures to low-flow options.
Prior to the completion of our management internalization, Bozzuto Management Company ("Bozzuto") and Greystar Real Estate Partners ("Greystar") provided community management and leasing services at the majority of our residential communities. Bozzuto and Greystar provided such services under individual community management agreements for each residential community, each of which was separately terminable by us or Bozzuto/Greystar, as applicable.
Bozzuto and Greystar provided such services under individual community management agreements for each residential community, each of which was separately terminable by us or Bozzuto/Greystar, as applicable. Although they varied by community, on average, the fees charged by Bozzuto/Greystar under each agreement were approximately 3% of revenues at each residential community.
We believe that rents can be consistently grown if a portfolio’s price point does not compete directly with new product price points and wages for mid-market renters are growing. Furthermore, as the cost of homeownership continues to rise above affordable levels for median income earners, we expect to benefit from sustained demand for quality, affordably priced rental housing.
Furthermore, as the cost of homeownership continues to rise above affordable levels for median income earners, we expect to benefit from sustained demand for quality, affordably priced rental housing.
We make capital improvements to our properties on an ongoing basis for the purpose of maintaining and increasing their value and income.
All of our residential communities are currently under Elme management and Stream Realty Partners (“Stream”) provides property management and leasing services at our sole office property, Watergate 600. We make capital improvements to our properties on an ongoing basis for the purpose of maintaining and increasing their value and income.
During the three years ended December 31, 2023, we acquired six residential properties and placed one residential development project into service. During that same period, we sold twelve office properties and eight retail properties. See note 14 to the consolidated financial statements for further discussion of our operating results by segment.
During the three years ended December 31, 2024, we acquired four residential properties. See note 14 to the consolidated financial statements for further discussion of our operating results by segment. No single tenant accounted for more than 5% of real estate rental revenue in any of the three years ended December 31, 2024.
The reference to our website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered part of this document. Environmental In 2021, we announced our commitment to net zero carbon operation in alignment with the Urban Land Institute’s Greenprint Net Zero by 2050 Goal.
The reference to our website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered part of this document. Environmental We implement sustainable policies and practices at all of our properties, for purposes of ensuring occupants and residents work and live in efficient, healthy spaces.
We are focused on creating shareholder value by providing quality, affordably priced housing to a deep, solid, and growing base of mid-market demand. Our research indicates that affordability is a pressing rental issue at multiple price points across the mid-market rent spectrum.
Our research indicates that affordability is a pressing rental issue at multiple price points across the mid-market rent spectrum. We believe that rents can be consistently grown if a portfolio’s price point does not compete directly with new product price points and wages for mid-market renters are growing.
Annual demand rose to 9,700 units, a significant improvement from the annual net move-outs of 7,000 units recorded in the first quarter of 2023. The Atlanta metro region recorded an annual rent cut of 4.7%, with effective asking rents averaging $1,628 per month, or $1.60 per square foot.
Occupancy in the market expanded 50 basis points year-over-year to 92.8%. Annual demand accelerated to 24,600 units, while 24,100 units delivered, ranking Atlanta fifth in completion volume nationally. The Atlanta metro region recorded an annual rent cut of 4.1%, with effective asking rents averaging $1,577 per month, or $1.55 per square foot.
No single tenant accounted for more than 5% of real estate rental revenue from continuing operations in any of the three years ended December 31, 2023. In October 2022, we began a process to internalize our management operations, and this process was completed in July 2023.
In October 2022, we began a process to internalize our management operations, and this process was completed in July 2023. Prior to the completion of our management internalization, Bozzuto Management Company (“Bozzuto”) and Greystar Real Estate Partners (“Greystar”) provided community management and leasing services at the majority of our residential communities.
Meeting this goal requires that we fully integrate a focus on carbon reductions into our strategic approach and at all levels of our organization throughout our portfolio. 6 We implement sustainable policies and practices at all of our properties, for purposes of ensuring occupants and residents work and live in efficient, healthy spaces.
Department of Energy Better Climate Challenge, further aligning greenhouse gas emission reduction goals with industry leaders. Meeting these goals require that we fully integrate a focus on carbon reductions into our strategic approach, at all levels of our organization and throughout our portfolio.
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Looking forward, we plan to continue to expand our footprint outside of the Washington, DC metro region. We intend to target markets with skilled labor development and in-migration, diverse economies with innovative industries, strong productivity and wage growth for middle income residents, and demand for affordable mid-market housing.
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Our business primarily consists of the ownership of apartment communities in the greater Washington, DC metro and Sunbelt regions. As of December 31, 2024, we owned 28 apartment communities and one office property.
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The Washington, DC metro economy is considered to be recession-resistant due to a high concentration of government and government-affiliated jobs. Annual job growth for the Washington, DC metro region, as reported by the U.S. Bureau of Labor Statistics was 1.4% or, 48,400 jobs as of November 2023, year-over-year.
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All but two of Atlanta’s 39 submarkets posted rent cuts on an annual basis, ranging from rent growth of 2.7% in West Marietta to the steepest rent cut of 6.9% in the Sandy Springs and Far East Atlanta submarkets. Annual job growth for the Atlanta metro region as reported by the U.S.
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Atlanta metro region (6 apartment communities) In the fourth quarter of 2023, the Atlanta metro region absorbed 2,900 units (the fourth highest 4th quarter performance on record for the Atlanta metro region), as 5,400 units delivered concurrently. Quarterly occupancy in the market contracted 40 basis points year-over-year to about 92.3%.
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Bureau of Labor Statistics was 0.4%, or 12,900 jobs added as of November 2024, year-over-year. The RealPage Market Analytics apartment market outlook has 24,350 units currently under construction, of which 17,600 are planned for delivery over the next year.
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Although they varied by community, on average, the fees charged by Bozzuto/Greystar under each agreement were approximately 3% of revenues at each residential community. As of December 31, 2023, we have transitioned all of our residential communities to Elme management. Stream Realty Partners ("Stream") provides property management and leasing services at our sole office property, Watergate 600.
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Additionally, we continue to expand our electric vehicle charging stations across our portfolio to support the transition of our residents to electric 6 transportation. We are committed to assessing and evaluating climate-related risks and opportunities that may affect our assets and overall business.
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In 2023, we joined the U.S. Department of Energy (DOE) Better Climate Challenge, further aligning greenhouse gas emission reduction with industry leaders.
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Climate risk management is integrated into our annual Enterprise Risk Management (“ERM”) process, which seeks to identify and prioritize responses to potential risks to our company, people and financial performance. In 2021, we announced our commitment to net zero carbon operation in alignment with the Urban Land Institute’s Greenprint Net Zero by 2050 Goal. In 2023, we joined the U.S.
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Our diverse Cultural Advisory Board ("CAB") is overseen by our senior leadership team and our Board. The CAB tracks and monitors our diversity metrics and facilitates learning and training opportunities, including a diversity speaker series, targeted recruitment and relationship development with diverse industry groups for internships and employment opportunities and partnering with community-based non-profits for volunteer activities.
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Our Cultural Advisory Board (“CAB”) is a byproduct of the DEIA initiative. Sponsored by our senior leadership team, the CAB has responsibilities that include finding new initiatives to increase employee engagement, developing community service opportunities to engage with our communities, listening to the concerns of our team members, and supporting key initiatives like diversity, equity, inclusion, and accessibility.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis could result in an overall decrease in the demand for such markets generally, which could increase vacancies or impact rental rates in our properties. In addition, future acts of violence or terrorist attacks could directly or indirectly damage our properties, both physically and financially, or cause losses that materially exceed our insurance coverage.
Biggest changeIn addition, future acts of violence or terrorist attacks could directly or indirectly damage our properties, both physically and financially, or cause losses that materially exceed our insurance coverage. As a result of the foregoing, our ability to generate revenues and the value of our properties could decline materially which would negatively affect our results of operations.
In addition to these risks, we will not possess the same level of familiarity with the dynamics and market conditions of any new markets that we have entered or that we may enter as we do with the Washington, DC market, which could adversely affect our ability to expand and success in expanding into those markets.
In addition to these risks, we will not possess the same level of familiarity with the dynamics and market conditions of any new markets that we have entered or that we may enter as we do with the Washington, DC market, which could adversely affect our ability to expand and our success in expanding into those markets.
A downturn or slowdown in the demand for multifamily housing may have more pronounced effects on our results of operations or on the value of our assets than when we had investments in more than one asset class. 11 Additionally, the multifamily industry is also highly competitive.
A downturn or slowdown in the demand for multifamily housing 11 may have more pronounced effects on our results of operations or on the value of our assets than when we had investments in more than one asset class. Additionally, the multifamily industry is also highly competitive.
We are dependent on our information technology networks and systems to access, as well as those of third parties, to process, transmit and store proprietary and confidential information, including personal information of residents, employees, and vendors.
We are dependent on our information technology networks and systems, as well as those of third parties, to access, process, transmit and store proprietary and confidential information, including personal information of residents, employees, and vendors.
Any such cybersecurity incident, including those impacting personal information, may result in disruption of our operations, material harm to our financial condition, cash flows and the market price of our common shares, misappropriation of assets, compromise or corruption of confidential information collected in the course of conducting our business, liability for impacted information or assets, increased cybersecurity protection and insurance costs, regulatory scrutiny or enforcement, litigation and damage to our stakeholder relationships.
Any such cybersecurity incident, including those impacting personal information, may result in disruption of our operations, material harm to our financial condition, cash flows and the market price of our common shares, misappropriation of assets, compromise or corruption of confidential information (including personal information) collected in the course of conducting our business, liability for impacted information or assets, increased cybersecurity protection and insurance costs, regulatory scrutiny or enforcement, litigation and damage to our stakeholder relationships.
In addition, our acquisition activities and results may be exposed to the following risks: • we may have difficulty finding properties that are consistent with our strategies and meet our standards; • we may be unable to finance acquisitions on favorable terms or at all; • the occupancy levels, lease-up timing and rental rates of acquired properties may not meet our expectations; 14 • even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs; • we may be unable to acquire a desired property at all or at the desired purchase price because of competition from other real estate investors, including publicly traded real estate investment trusts, institutional investment funds and private investors; • the timing of property acquisitions may lag the timing of property dispositions, leading to periods of time where projects’ proceeds are not invested as profitably as we desire; • we may fail to secure required zoning, occupancy or other governmental permits and authorizations or applicable zoning and land use laws may change; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • new acquisitions and developments may fail to perform as expected or we may underestimate costs necessary to bring an acquired property up to our standards; • we may assume liabilities for undisclosed environmental contamination; • our estimates of capital expenditures required for an acquired property, including the costs of repositioning or redeveloping, may be inaccurate and the acquired properties may fail to perform as we expected in analyzing our investments; and • we could experience a decline in value of the acquired assets after acquisition.
In addition, our acquisition activities and results may be exposed to the following risks: • we may have difficulty finding properties that are consistent with our strategies and meet our standards; • we may be unable to finance acquisitions on favorable terms or at all; • the occupancy levels, lease-up timing and rental rates of acquired properties may not meet our expectations; • even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs; • we may be unable to acquire a desired property at all or at the desired purchase price because of competition from other real estate investors, including publicly traded real estate investment trusts, institutional investment funds and private investors; • the timing of property acquisitions may lag the timing of property dispositions, leading to periods of time where projects’ proceeds are not invested as profitably as we desire; • we may fail to secure required zoning, occupancy or other governmental permits and authorizations or applicable zoning and land use laws may change; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • new acquisitions and developments may fail to perform as expected or we may underestimate costs necessary to bring an acquired property up to our standards; • we may assume liabilities for undisclosed environmental contamination; • our estimates of capital expenditures required for an acquired property, including the costs of repositioning or redeveloping, may be inaccurate and the acquired properties may fail to perform as we expected in analyzing our investments; and • we could experience a decline in value of the acquired assets after acquisition.
These factors include: • level of institutional interest in us; • perceived attractiveness of investment in us, in comparison to other REITs; • perceived attractiveness of the Washington, DC metro and Sunbelt regions; • attractiveness of securities of REITs in comparison to other asset classes taking into account, among other things, that a substantial portion of REITs’ dividends may be taxed as ordinary income; • our financial condition and performance; • the market’s perception of our growth potential and potential future cash dividends; • investor confidence in the stock and bond markets generally; • national economic conditions and general stock and bond market conditions; • government uncertainty, action or regulation; 21 • increases in market interest rates, which may lead investors to expect a higher annual yield from our distributions in relation to the price of our shares; • uncertainty around and changes in U.S. federal tax laws; • changes in our credit ratings; and • any negative change in the level of our dividend or the partial payment thereof in common shares.
These factors include: • level of institutional interest in us; • perceived attractiveness of investment in us, in comparison to other REITs; • perceived attractiveness of the Washington, DC metro and Sunbelt regions; • attractiveness of securities of REITs in comparison to other asset classes taking into account, among other things, that a substantial portion of REITs’ dividends may be taxed as ordinary income; • our financial condition and performance; • the market’s perception of our growth potential and potential future cash dividends; • investor confidence in the stock and bond markets generally; • national economic conditions and general stock and bond market conditions; • government uncertainty, action or regulation; • increases in market interest rates, which may lead investors to expect a higher annual yield from our distributions in relation to the price of our shares; • uncertainty around and changes in U.S. federal tax laws; • changes in our credit ratings; and • any negative change in the level of our dividend or the partial payment thereof in common shares.
Although the reduced rates applicable to dividend income from non-REIT C corporations do not adversely affect the taxation of REITs or dividends payable by REITs, these reduced rates could cause investors who are non-corporate taxpayers to perceive 22 investments in REITs to be relatively less attractive than investments in the shares of non-REIT C corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common shares.
Although the reduced rates applicable to dividend income from non-REIT C corporations do not adversely affect the taxation of REITs or dividends payable by REITs, these reduced rates could cause investors who are non-corporate taxpayers to perceive investments in REITs to be relatively less attractive than investments in the shares of non-REIT C corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common shares.
We face cybersecurity threats, including system, network or internet failures, cyber-attacks, ransomware and other malware, social engineering, phishing schemes and workforce member error, negligence, or fraud. The risk of a cyber-attack, including by computer hackers, nation-state affiliated actors and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks around the world have increased.
We face cybersecurity threats, including system, network or internet failures, cyber-attacks, ransomware and other malware, social engineering, phishing schemes and workforce member error, negligence, or fraud. The risk of a cyber-attack, including by hackers, nation-state affiliated actors and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks around the world have increased.
Certain organizations that provide corporate risk and corporate governance advisory services to investors have developed scores and ratings to evaluate companies based upon ESG metrics. Many investors focus on ESG-related business practices and scores when choosing where to allocate their investments and may consider a company’s score as a factor in making an investment decision.
Certain 14 organizations that provide corporate risk and corporate governance advisory services to investors have developed scores and ratings to evaluate companies based upon ESG metrics. Many investors focus on ESG-related business practices and scores when choosing where to allocate their investments and may consider a company’s score as a factor in making an investment decision.
Moreover, while we will attempt to ensure that our dealings with our taxable REIT subsidiary (and any taxable REIT subsidiary formed in the future) do not adversely affect our REIT qualification, we cannot provide assurances that we will successfully achieve that result. 23 Partnership tax audit rules could have a material adverse effect on us.
Moreover, while we will attempt to ensure that our dealings with our taxable REIT subsidiary (and any taxable REIT subsidiary formed in the future) do not adversely affect our REIT qualification, we cannot provide assurances that we will successfully achieve that result. Partnership tax audit rules could have a material adverse effect on us.
Furthermore, we may be unable to build a significant market presence or achieve a desired return on our investments in communities in new markets. The occurrence of any of the foregoing risks could have a material adverse effect on us, the trading price of our shares and our ability to make distributions to our shareholders.
Furthermore, we may be unable to build a significant market presence or achieve a desired return on our investments in communities in new markets. The occurrence of any of the foregoing risks could have a material adverse effect on us, the trading price of our common shares and our ability to make distributions to our shareholders.
A cybersecurity incident could also interfere with our ability to comply with financial reporting requirements. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and threats, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
A cybersecurity incident could also interfere with our ability to comply with financial reporting requirements. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and threats, as our systems or business activities could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
From time to time, we may be required to investigate and clean-up hazardous substances or petroleum products or remove, abate or manage asbestos, mold, radon gas, lead or other hazardous conditions at our properties, and the costs of those effort may be substantial and could exceed the value of the property and/or our aggregate assets.
From time to time, we may be required to investigate and clean-up hazardous substances or petroleum products or remove, abate or manage asbestos, mold, radon gas, lead or other hazardous conditions at 16 our properties, and the costs of those effort may be substantial and could exceed the value of the property and/or our aggregate assets.
While such agreements are intended to lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would not perform, and that the hedging arrangements may not be effective in reducing our exposure to interest rate changes.
Additionally, while such agreements are intended to lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would not perform, and that the hedging arrangements may not be effective in reducing our exposure to interest rate changes.
Our ability to borrow under our credit facility is subject to compliance with our financial and other covenants. 19 Failure to comply with any of the covenants under our unsecured credit facility or other debt instruments (including our indenture, term loan agreement and our notes purchase agreement) could result in a default under one or more of our debt instruments.
Our ability to borrow under our credit facility is subject to compliance with our financial and other covenants. Failure to comply with any of the covenants under our unsecured credit facility or other debt instruments (including our indenture, term loan agreement and our notes purchase agreement) could result in a default under one or more of our debt instruments.
Our business and reputation depend on providing our residents with quality housing including a wide variety of amenities such 13 as covered parking, swimming pools, fitness facilities and similar features, highly reliable services, including water and electric power and the consistent operation of our communities.
Our business and reputation depend on providing our residents with quality housing including a wide variety of amenities such as covered parking, swimming pools, fitness facilities and similar features, highly reliable services, including water and electric power and the consistent operation of our communities.
Changes in U.S. federal and state legislation and regulations on climate change could result in utility expenses and/or capital expenditures to improve the energy efficiency of our existing properties or other related aspects of our properties in order to comply with such regulations or otherwise adapt to climate change.
Changes in U.S. federal and state legislation and regulations on climate change could result in utility expenses and/or capital expenditures to improve the energy efficiency of our existing properties or other related aspects of our properties in order to 15 comply with such regulations or otherwise adapt to climate change.
However, the share ownership limits on our shares and our enforcement of them might delay, defer, prevent, or otherwise inhibit a transaction or a 20 change in control of Elme Communities, including a transaction that might involve a premium price for our common shares or that might otherwise be in the best interest of our shareholders.
However, the share ownership limits on our shares and our enforcement of them might delay, defer, prevent, or otherwise inhibit a transaction or a change in control of Elme Communities, including a transaction that might involve a premium price for our common shares or that might otherwise be in the best interest of our shareholders.
It is our policy to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys prior to our acquisition of properties. However, there is a risk that these 16 assessments will not identify all potential environmental issues at a given property.
It is our policy to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys prior to our acquisition of properties. However, there is a risk that these assessments will not identify all potential environmental issues at a given property.
While we intend to continue expansion of our platform in the Sunbelt region, our current concentration in just two geographic metro regions may expose us to a greater amount of market-dependent risk than if we were more geographically diverse.
While we intend to 12 continue expansion of our platform in the Sunbelt region, our current concentration in just two geographic metro regions may expose us to a greater amount of market-dependent risk than if we were more geographically diverse.
In the event that we elect to settle a forward sale agreement for cash and the settlement price is below the forward sale price, we would be entitled to receive a cash payment from the applicable forward purchaser(s).
In the event that we elect to settle a forward sale agreement for cash and the settlement price is below the forward sale price, we would be 23 entitled to receive a cash payment from the applicable forward purchaser(s).
Dividends payable by REITs, however, generally are not eligible for the maximum 20% reduced rate and are taxed at applicable ordinary income tax rates, except to the extent that certain holding requirements have been met and a REIT’s dividends are attributable to dividends received by a REIT from taxable corporations (such as a taxable REIT subsidiary), to income that was subject to tax at the REIT/corporate level, or to dividends properly designated by the REIT as “capital gain dividends.” For taxable years beginning before January 1, 2026, U.S. shareholders that are individuals, trusts or estates may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends).
Dividends payable by REITs, however, generally are not eligible for the maximum 20% reduced rate and are taxed at applicable ordinary income tax rates, except to the extent that certain holding requirements have been met and a REIT’s dividends are attributable to (i) dividends received by a REIT from taxable corporations (such as a taxable REIT subsidiary), (ii) income that was subject to tax at the REIT/corporate level, or (iii) dividends properly designated by the REIT as “capital gain dividends.” For taxable years beginning before January 1, 2026, U.S. shareholders that are individuals, trusts or estates may deduct 20% of their dividends from REITs (excluding qualified dividend income and capital gains dividends).
If our cash flows from operations were to decline significantly, we may have to borrow on our lines of credit to sustain the dividend rate or reduce our dividend.
If our cash flows from operations were to decline significantly, we may have to borrow on our lines of credit to sustain the dividend rate or 21 reduce our dividend.
Also, if prevailing interest rates or other factors, such as the reluctance of lenders to make commercial real estate loans or the loss of the benefits of hedging arrangements, results in higher interest rates on our indebtedness, the increased interest expenses would adversely affect our cash flow, financial condition, and results of operation.
Also, if prevailing interest rates or other factors, such as the reluctance of lenders to make commercial real 18 estate loans or the loss of the benefits of hedging arrangements, result in higher interest rates on our indebtedness, the increased interest expenses would adversely affect our cash flow, financial condition, and results of operation.
Any of the following factors, among others, may adversely affect the cash flow generated by our apartment communities and ability to make distributions to our shareholders: • a decrease in demand for rental properties over home ownership resulting from, among other reasons, resident preferences, decreases in housing prices and mortgage interest rates, and government programs to promote home ownership or subsidize rental housing, slow or negative employment growth and household formation; • competition with other housing alternatives, including owner occupied single and residential apartment homes; • a return of the availability of low-interest mortgages or the availability of mortgages requiring little or no down payment for single family home buyers; • declines in the financial condition of our residents; • significant job losses in the regions in which we operate; • changes in interest rates and availability of financing; • economic and market conditions including: migration to areas outside of major metropolitan areas where our portfolio is concentrated, new construction and excess inventory of residential and owned housing/condominiums, increasing portions of owned housing/condominium stock being converted to rental use; • the effects of government regulation in the real estate industry; • our ability to integrate new technological innovations into our properties to attract residents; • our ability to attract and retain qualified personnel with knowledge of the market; and • political conditions, civil disturbances, earthquakes and other natural disasters, terrorist acts or acts of war and actual or anticipated geopolitical instability.
Any of the following factors, among others, may adversely affect the cash flow generated by our apartment communities and our ability to make distributions to our shareholders: • a decrease in demand for rental properties over home ownership resulting from, among other reasons, resident preferences, decreases in housing prices and mortgage interest rates, government programs to promote home ownership or subsidize rental housing, employment growth and household formation; • competition with other housing alternatives, including owner occupied single and residential apartment homes; • a return of the availability of low-interest mortgages or the availability of mortgages requiring little or no down payment for single family home buyers; • declines in the financial condition of our residents and their ability to pay rent; • significant job losses in the regions in which we operate; • changes in interest rates and availability of financing; • economic and market conditions including: migration to areas outside of major metropolitan areas where our portfolio is concentrated, new construction and excess inventory of residential and owned housing/condominiums, increasing portions of owned housing/condominium stock being converted to rental use; • the effects of government regulation in the real estate industry; • our ability to integrate new technological innovations (including artificial intelligence) into our marketing and properties to attract residents; • our ability to attract and retain qualified personnel with knowledge of the market; and • political conditions, civil disturbances, earthquakes and other natural disasters, terrorist acts or acts of war and actual or anticipated geopolitical instability.
However, there can be no assurance that we will be able to maintain this rating, and in the event our senior debt is downgraded from its current rating, we would likely incur higher borrowing costs and/or difficulty in obtaining additional financing. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.
However, there can be no assurance that we will be able to maintain these ratings, and in the event our senior debt is downgraded from its current rating, we would likely incur higher borrowing costs and/or difficulty in obtaining additional financing. Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally.
As a result, if revenues drop, we may not be able to reduce our expenses accordingly. Loan payments are an example of a cost that will not be reduced if our revenues decrease.
As a result, if revenues decline, we may not be able to reduce our expenses accordingly. Loan payments are an example of a cost that will not be reduced if our revenues decrease.
As of December 31, 2023, substantially all of our investments are concentrated in the multifamily industry, and we are subject to risks inherent in investments in a single type of property.
As of December 31, 2024, substantially all of our investments are concentrated in the multifamily industry, and we are subject to risks inherent in investments in a single type of property.
Additionally, if the terms of a renewal or reletting are less favorable than current terms, then our results of operations and financial condition could be negatively affected. For each of the three years ended December 31, 2023, the same-store residential resident retention rate for each year's respective same-store community portfolio, was 63%, 63%, and 60%, respectively.
Additionally, if the terms of a renewal or reletting are less favorable than current terms, then our results of operations and financial condition could be negatively affected. For each of the three years ended December 31, 2024, the same-store residential resident retention rate for each year's respective same-store community portfolio, was 66%, 63%, and 63%, respectively.
Macroeconomic trends, including inflation and rising interest rates, may adversely affect our cash flow, financial condition and results of operations. Macroeconomic trends, including increases in inflation and rising interest rates, may adversely impact our business, financial condition and results of operations.
Macroeconomic trends, including inflation and high interest rates, may adversely affect our cash flow, financial condition and results of operations. Macroeconomic trends, including increases in inflation and high interest rates, may adversely impact our business, financial condition and results of operations.
We have and may continue to incur indebtedness that bears interest at variable rates. As a result, an increase in interest rates will increase our interest expense, which could adversely affect our cash flow and our ability to service debt.
We have and may continue to incur indebtedness that bears interest at variable rates. As a result, high interest rates will increase our interest expense, which could adversely affect our cash flow and our ability to service debt.
Although we are primarily in the residential rental business, we also own ancillary commercial space, primarily within our apartment communities, and own one office building that we lease to third parties. Gross rental revenue provided by leased commercial space in our portfolio represented 8% of our real estate rental revenue from continuing operations in 2023.
Although we are primarily in the residential rental business, we also own ancillary commercial space, primarily within our apartment communities, and own one office building that we lease to third parties. Gross rental revenue provided by leased commercial space in our portfolio represented 8% of our real estate rental revenue in 2024.
As of December 31, 2023, 75% of our residential apartment homes were located in the Washington, DC metro region and 25% of our residential apartment homes were located in the Atlanta, Georgia metro region.
As of December 31, 2024, approximately 75% of our residential apartment homes were located in the Washington, DC metro region and 25% of our residential apartment homes were located in the Atlanta, Georgia metro region.
Our degree of leverage could limit our ability to obtain additional financing , affect the market price of our common shares or debt securities or otherwise adversely affect our financial condition. 18 On February 13, 2024, our total consolidated debt was approximately $0.7 billion.
Our degree of leverage could limit our ability to obtain additional financing , affect the market price of our common shares or debt securities or otherwise adversely affect our financial condition. On February 11, 2025, our total consolidated debt was approximately $0.7 billion.
We may from time to time invest in joint ventures in which we are not the exclusive investor or the only decision maker.
We currently, and may from time to time in the future, invest in joint ventures in which we are not the exclusive investor or the only decision maker.
Due to these factors, we may be unable to sell a property at an advantageous time or on the terms anticipated which could negatively impact our profitability. Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our residents.
Due to these factors, we may be unable to sell a property at an advantageous time or on the terms anticipated which could negatively impact our profitability. 13 Rent control, rent stabilization legislation and other regulatory restrictions may impact the manner in which we make rent decisions, including our ability to increase rents and pass through new or increased operating costs to our residents.
If we fail to qualify as a REIT, we could face serious tax consequences that could substantially reduce our funds available for payment of dividends for each of the years involved because: (i) we would be subject to U.S. federal income tax at the regular corporate rate, without any deduction for dividends paid to shareholders in computing our taxable income, and possibly increased state and local taxes; and (ii) unless we are entitled to relief under statutory provisions, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost.
If we fail to qualify as a REIT, we could face serious tax consequences that could substantially reduce our funds available for payment of dividends for each of the years involved because: • we would be subject to U.S. federal income tax at the regular corporate rate, without any deduction for dividends paid to shareholders in computing our taxable income, and possibly increased state and local taxes; and • unless we are entitled to relief under statutory provisions, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost. 22 This treatment would reduce net earnings available for investment or distribution to shareholders because of the additional tax liability for the year (or years) involved.
In addition, such low- and moderate-income housing regulations often require us to rent a certain number of homes at below-market rents, which has a negative impact on our ability to increase cash flows from our residential properties subject to such regulations. Furthermore, such regulations may negatively impact our ability to attract higher-paying residents to such properties.
In addition, such low- and moderate-income housing regulations often require us to rent a certain number of homes at below-market rents, which has a negative impact on our ability to increase cash flows from our residential properties subject to such regulations.
Substantially all of our apartment leases are for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents sooner than if our apartment leases were for longer terms.
Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues are impacted by declines in market rents sooner than if our apartment leases were for longer terms.
We are also susceptible to adverse developments in the regulatory environment of any of the markets in which we operate, particularly Washington, D.C., such as increases in real estate and other taxes, the costs of complying with governmental regulations or increased regulations, including zoning and tax laws, and actual or threatened reductions in government spending and/or changes to the timing of government spending, as has occurred during federal government shutdowns.
We are also susceptible to adverse developments in the regulatory environment of any of the markets in which we operate, particularly Washington, D.C., such as increases in real estate and other taxes, the costs of complying with governmental regulations or increased regulations, including zoning and tax laws, and actual or threatened reductions in government operations and/or spending potentially driven by actions, decisions or initiatives of the federal government (including the advisory committee, Department of Government Efficiency) and/or changes to the timing of government spending, as has occurred during federal government shutdowns.
Such laws and regulations limit our ability to charge market rents, increase rents or evict residents at our apartment communities and could make it more difficult for us to dispose of properties in certain circumstances.
Laws and regulations that restrict the timing and amount of rent increases limit our ability to charge market rents, increase rents or evict residents at our apartment communities and could make it more difficult for us to dispose of properties in certain circumstances.
If we fail to comply with the requirements of the ADA or other federal, state and local regulations, we could be subject to fines, penalties, injunctive action, reputational harm and other business effects which could materially and negatively affect our performance and results of operations.
If we fail to comply with the requirements of the ADA or other federal, state and local regulations, we could be subject to fines, penalties, injunctive action, damages to private litigations, reputational harm and other business effects, such as mandated capital expenditures to remedy noncompliance, which could materially and negatively affect our performance and results of operations.
Additionally, the market value of our securities can be adversely affected by many factors, including certain factors related to our REIT status. The market value of our securities can be adversely affected by many factors. As with any public company, a number of factors may adversely influence the public market price of our common shares.
The market value of our securities can be adversely affected by many factors. As with any public company, a number of factors may adversely influence the public market price of our common shares.
Releases of hazardous substances or petroleum products at our currently or formerly owned or leased properties could result in third-party claims for bodily injury, property or natural resource damages, or other losses, including liens in favor of the government for costs the government incurs in cleaning up contamination.
Releases of hazardous substances or petroleum products at our currently or formerly owned or leased properties could result in tort claims by tenants, occupational health and safety violations or workers compensation claims by our employees, or other third-party claims for bodily injury, property or natural resource damages, or other losses, including liens in favor of the government for costs the government incurs in cleaning up contamination.
As a protection against rising interest rates, we may enter into agreements such as interest rate swaps, caps, floors and other interest rate exchange contracts. These agreements, however, increase our risks including other parties to the agreements not performing or that the agreements may be unenforceable. We face risks associated with the use of debt, including refinancing risk.
As a protection against high interest rates, we may enter into agreements such as interest rate swaps, caps, floors and other interest rate exchange contracts. These agreements, however, increase our risks, including other parties to the agreements not performing or that the agreements may be unenforceable.
Unanticipated costs and operating expenses and decreased anticipated and actual revenue related to compliance with regulations could negatively impact our future compliance with financial covenants of debt agreements and our ability to satisfy certain REIT-related requirements. Risks Related to Financing Rising interest rates would increase our interest costs and negatively impact our cash flow.
Unanticipated costs and operating expenses and decreased anticipated and actual revenue related to compliance with regulations could negatively impact our future compliance with financial covenants of debt agreements and our ability to satisfy certain REIT-related requirements.
Using the closing share price of $14.13 per share of our common shares on February 13, 2024, multiplied by the number of our common shares, our consolidated debt to total consolidated market capitalization ratio was approximately 36% as of February 13, 2024.
Using the closing share price of $15.51 per share of our common shares on February 11, 2025, multiplied by the number of our common shares, our consolidated debt to total consolidated market capitalization ratio was approximately 34% as of February 11, 2025.
Risks Related to our Business and Operations We may be unable to successfully expand our operations into new markets and submarkets, which could have a material adverse effect on us, the trading price of our shares and our ability to make distributions to our shareholders. We intend to further expand our residential platform through acquisitions in Sunbelt markets.
We may be unable to successfully expand our operations into new markets and submarkets, which could have a material adverse effect on us, the trading price of our common shares and our ability to make distributions to our shareholders.
We rely on borrowings under our credit facility, term loan, mortgage notes, and debt securities to finance acquisitions and development activities and for general corporate purposes.
We face risks associated with the use of debt, including refinancing risk. We rely on borrowings under our credit facility, term loan, mortgage notes, and debt securities to finance acquisitions and development activities and for general corporate purposes.
In addition to uninsured losses, various government authorities may condemn all or parts of operating properties. Such condemnations could adversely affect the viability of such projects. Any such uninsured loss could adversely affect our financial condition or cash flow.
Furthermore, losses related to other types of risk, such as cybersecurity incidents or climate change may not be fully insured. In addition to uninsured losses, various government authorities may condemn all or parts of operating properties. Such condemnations could adversely affect the viability of such projects. Any such uninsured loss could adversely affect our financial condition or cash flow.
As a result of these and other regulations, our financial condition, results of operations, cash flows, per share market price of our common shares and our ability to satisfy our principal and interest obligations and to make distributions to our shareholders could be adversely affected. 15 Actual or threatened acts of violence, including terrorist attacks, may adversely affect our ability to generate revenues and the value of our properties.
As a result of these and other regulations, our financial condition, results of operations, cash flows, per share market price of our common shares and our ability to satisfy our principal and interest obligations and to make distributions to our shareholders could be adversely affected.
In addition, increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm the Company.
In addition, increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm the Company. 17 We also rely on third-party service providers in our conduct of our business, and we can provide no assurance that the security measures of those providers will be effective.
Actual or threatened acts of violence, including terrorist attacks and increased crime rates, resulting in more safety and security incidents, could occur in the localities in which we conduct business. As a result, some residents in our markets may choose to relocate to other markets.
Actual or threatened acts of violence, including terrorist attacks, may adversely affect our ability to generate revenues and the value of our properties. Actual or threatened acts of violence, including terrorist attacks and increased crime rates, resulting in more safety and security incidents, could occur in the localities in which we conduct business.
To the extent our joint venture partners do not meet their obligations to us or they act inconsistent with our interests in the joint venture, we may be adversely affected.
To the extent our joint venture partners do not meet their obligations to us or they act inconsistent with our interests in the joint venture, we may be adversely affected. Risks Related to Financing High interest rates would increase our interest costs and negatively impact our cash flow.
Circumstances could again arise in which we may not be able to obtain debt financing in the future on favorable terms, or at all. If we are unable to borrow under our credit facility, obtain new debt financing or to refinance existing debt, our financial condition and results of operations would likely be adversely affected.
If we are unable to borrow under our credit facility, obtain new debt financing or to refinance existing debt, our financial condition and results of operations would likely be adversely affected.
To the extent that these markets become less desirable to operate in, our results of operations could be more negatively impacted than if we were more geographically diversified.
To the extent that these markets become less desirable to operate in, our results of operations could be more negatively impacted than if we were more geographically diversified. In the event of negative economic and/or regulatory changes in the regions in which we operate, we may experience a negative impact to our financial condition and results of operations.
Any legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect our taxation or taxation of our shareholders. We urge you to consult with your tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our common shares.
We urge you to consult with your tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our common shares. ITEM 1B: UNRESOLVED STAFF COMMENTS None.
Additionally, as a result of the internalization of community management services for our properties, which was completed in 2023, we collect and retain greater amounts of personal information, both from employees and current and potential residents, which increases the risks and potential effects of such a cybersecurity incident. 17 We have identified and expect to continue to identify cyberattacks and cybersecurity incidents on our systems and those of third parties, but none of the cyberattacks and incidents we have identified to date has had a material impact on our business or operations.
Additionally, as a result of the internalization of community management services for our properties, which was completed in 2023, we collect and retain greater amounts of personal information, both from employees and current and potential residents, which increases the risks and potential effects of such a cybersecurity incident.
This volatility resulted in investors decreasing the availability of debt financing as well as increasing the cost of debt financing. These conditions, which increase the cost and reduce availability of debt, may continue to worsen in the future.
This volatility resulted in investors decreasing the availability of debt financing as well as increasing the cost of debt financing. These conditions, which increase the cost and reduce availability of debt, may worsen in the future. Circumstances could again arise in which we may not be able to obtain debt financing in the future on favorable terms, or at all.
As of December 31, 2023, four of our residential properties, each located within the Washington, DC metro region, were subject to such regulations. Our business and reputation depend on our ability to continue to provide high quality housing and consistent operation of our communities, the failure of which could adversely affect our business, financial condition and results of operations.
Our business and reputation depend on our ability to continue to provide high quality housing and consistent operation of our communities, the failure of which could adversely affect our business, financial condition and results of operations.
Failure to effectively hedge against interest rate changes may adversely affect our financial condition, results of operations, cash flow, per share market price of our common shares and ability to make distributions to our shareholders and agreements we enter into to protect us from rising interest rates expose us to counterparty risk.
Additionally, payments of principal and interest on borrowings may leave us with insufficient cash resources to operate our properties, fully implement our capital expenditure, acquisition and redevelopment activities, or meet the REIT distribution requirements imposed by the Code. 19 Failure to effectively hedge against interest rate changes may adversely affect our financial condition, results of operations, cash flow, per share market price of our common shares and ability to make distributions to our shareholders and agreements we enter into to protect us from rising interest rates expose us to counterparty risk.
Covenants in our debt agreements could adversely affect our financial condition. Our credit facility and other debt instruments contain customary restrictions, requirements and other limitations on our ability to incur indebtedness.
Should we desire to terminate a hedging agreement, there could be significant costs and cash requirements involved to fulfill our obligation under the hedging agreement. Covenants in our debt agreements could adversely affect our financial condition. Our credit facility and other debt instruments contain customary restrictions, requirements and other limitations on our ability to incur indebtedness.
In the event of negative economic and/or regulatory changes in the regions in which we operate, we may experience a negative impact to our financial condition and results of operations. 12 Short-term leases expose us to the effects of declining market rents sooner than long-term leases, which could adversely affect our cash flow, results of operations and financial condition.
Short-term leases expose us to the effects of declining market rents sooner than long-term leases, which could adversely affect our cash flow, results of operations and financial condition. Substantially all of our apartment leases are for a term of one year or less.
Additionally, Title 8, Subtitle 3 of the MGCL permits our Board, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement certain takeover defenses.
There can be no assurance that this provision will not be amended or eliminated at any time in the future by our Board and may be amended or eliminated with retroactive effect. 20 Additionally, Title 8, Subtitle 3 of the MGCL permits our Board, without shareholder approval and regardless of what is currently provided in our declaration of trust or bylaws, to implement certain takeover defenses.
We are currently dependent upon the economic and regulatory climate of the Washington, DC and Atlanta metro regions, which may impact financial condition and results of operations.
For example, we recognized an impairment in the third quarter of 2023 on our sole remaining office property, Watergate 600. We are currently dependent upon the economic and regulatory climate of the Washington, DC and Atlanta metro regions, which may impact financial condition and results of operations.
The property insurance that we maintain for our properties has historically been on an “all risk” basis, which is in full force and effect until renewal in August 2024. There are other types of losses, such as from wars or catastrophic events, for which we cannot obtain insurance at all or at a reasonable cost.
Some potential losses are not covered by insurance, which could adversely affect our financial condition or cash flow. The property insurance that we maintain for our properties has historically been on an “all risk” basis, which is in full force and effect until renewal in August 2025.
Property ownership also involves potential liability to third parties for such matters as personal injuries occurring on the property. Such losses may not be fully insured. Furthermore, losses related to other types of risk, such as cybersecurity incidents or climate change may not be fully insured.
Our financial condition and results of operations are subject to the risks associated with acts of terrorism and the potential for uninsured losses as the result of any such acts. Property ownership also involves potential liability to third parties for such matters as personal injuries occurring on the property. Such losses may not be fully insured.
Any imposition of injunctive relief, fines, damage awards or capital expenditures could adversely impact our business or results of operations. Our properties are subject to various other federal, state and local regulatory requirements, such as state and local fair housing, rent control and fire and life safety requirements.
We may also incur significant costs complying with other regulations. Our properties are subject to various federal, state and local regulatory requirements, such as the ADA, state and local fair housing, rent control and fire and life safety requirements.
Our insurance does not cover terrorist related activities except certain non-certified nuclear, chemical and biological acts of terrorism. Our financial condition and results of operations are subject to the risks associated with acts of terrorism and the potential for uninsured losses as the result of any such acts.
There are other types of losses, such as from wars or catastrophic events, for which we cannot obtain insurance at all or at a reasonable cost. Our insurance does not cover terrorist related activities except certain non-certified nuclear, chemical and biological acts of terrorism.
We cannot predict whether, when or to what extent new U.S. federal tax laws, regulations, interpretations or rulings will be adopted. Further, from time to time, changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability.
Further, from time to time, changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. Any legislative action may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect our taxation or taxation of our shareholders.
Our current targeted expansion markets include Atlanta, Georgia, Raleigh/Durham, North Carolina, Charlotte, North Carolina and Dallas-Fort Worth, Texas. Between 2021 and 2023, we acquired six apartment communities in the Atlanta metro region and plan to continue to invest in the Sunbelt region in 2024 and beyond.
We intend to look for additional opportunities to expand our residential platform through acquisitions in Sunbelt markets, to the extent they meet our investment criteria and are consistent with our growth strategy. Between 2021 and 2023, we acquired six apartment communities in the Atlanta metro region and plan to continue to invest in the Sunbelt region in 2025 and beyond.
Removed
For example, we recognized an impairment in the third quarter of 2023 on our sole remaining office property, Watergate 600.
Added
Risks Related to our Business and Operations We cannot assure you that our evaluation of strategic alternatives will result in any particular outcome, and the process of reviewing strategic alternatives or the conclusion of the process could adversely affect our business and our stockholders.
Removed
As a result of the foregoing, our ability to generate revenues and the value of our properties could decline materially which would negatively affect our results of operations. Some potential losses are not covered by insurance, which could adversely affect our financial condition or cash flow.
Added
On February 13, 2025, we announced that the Board has initiated a formal review to evaluate strategic alternatives for the Company . Our Board has not set a deadline or definitive timetable for the completion of this strategic review process, nor have any decisions been made relating to any strategic alternatives at this time.
Removed
We may also incur significant costs complying with other regulations. In addition, failure of our properties to comply with the ADA could result in injunctive relief, fines, an award of damages to private litigants or mandated capital expenditures to remedy such noncompliance.
Added
There can be no assurance that this process will result in the Company pursuing a transaction or any other strategic outcome.
Removed
In addition, existing laws could be interpreted in a manner that restricts our ability to use systems that we currently use in our operations and we may face litigation or regulatory risk in connection with such laws.
Added
Any potential transaction may be dependent on a number of factors that are beyond our control, for example, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of any necessary financing on reasonable terms. The process of exploring strategic alternatives could adversely impact our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+5 added−5 removed7 unchanged
Biggest changeShe is a member of the Real Estate Cyber Consortium, the National Multi Housing Council Data Privacy, Security, and Information Management Committee, and the RE-ISAC Cybersecurity Working Group. The Board is responsible for review and oversight of Elme’s cybersecurity risks and the programs and steps implemented by management to assess, manage and mitigate such risks.
Biggest changeOur CIO has been responsible for the development, enhancement, and oversight of cybersecurity programs in her role as a CIO for over a decade at two publicly traded real estate companies. She is a member of the Real Estate Cyber Consortium, the 25 National Multi Housing Council Data Privacy, Security, and Information Management Committee, and the RE-ISAC Cybersecurity Working Group.
In addition to regularly refining our protection methodology, we focus on identification of, response to, and recovery from a cyber-attack. Our program employs the strengths of people, processes, and technology to protect resident, employee, and organization data.
In addition to regularly refining our protection methodology, we focus on identification of, response to, and recovery from a cyber-attack. Our program employs 24 the strengths of people, processes, and technology to protect resident, employee, and organization data.
Regularly benchmarking our cybersecurity measures against the NIST framework helps ensure that our protocols remain robust and current in the face of evolving cyber threats. Our Cybersecurity Risk Management (“CRM”) processes are ingrained in our overall Enterprise Risk Management (“ERM”) process.
Regularly benchmarking our cybersecurity measures against the NIST framework helps ensure that our protocols remain robust and current in the face of evolving cyber threats. Our Cybersecurity Risk Management (“CRM”) processes are ingrained in our overall ERM process.
To manage these risks, we take various actions, including the following: • Require an annual user awareness and education program in which new and existing employees complete assessments to benchmark their awareness of cybersecurity threats and leading practices, • conduct regular email phishing tests with additional training provided to employees who fail the tests, • perform in-house vulnerability management and third-party network penetration testing, • secure insurance coverage for cybersecurity incidents, • routinely benchmark our cybersecurity practices against industry leading frameworks, • conduct incident response tabletop exercises to test our security countermeasures and incident response program, • engage a third-party firm to audit our cybersecurity procedures, • engage a third-party Managed Security Service Provider to perform network and endpoints monitoring, These actions help us identify opportunities for improvement in our incident preparedness and response processes.
To manage these risks, we take various actions, including the following: • Require an annual user awareness and education program in which new and existing employees complete assessments to benchmark their awareness of cybersecurity threats and leading practices, • conduct regular email phishing tests with additional training provided to employees who fail the tests, • perform in-house vulnerability management and third-party network penetration testing, • secure insurance coverage for cybersecurity incidents, • routinely benchmark our cybersecurity practices against well-recognized frameworks, • conduct incident response tabletop exercises to test our security countermeasures and incident response program, • engage a third-party firm to audit our cybersecurity procedures, and • engage a third-party Managed Security Service Provider to perform network and endpoints monitoring.
In the event of a cybersecurity incident, the Board is informed and updated by the incident response team as appropriate. Executive management provides regular updates during board meetings to help ensure that our trustees are informed about the evolving threat landscape and our risk management strategies. The Board 25 receives a cyber update from the CIO on an annual basis.
Executive management provides regular updates during board meetings to help ensure that our trustees are informed about the evolving threat landscape and our risk management strategies. The Board receives a cyber update from the CIO on an annual basis. The Board receives communications via email from the CIO on topics of interest throughout the year.
Cybersecurity Risk Management Processes In managing cybersecurity risks, we follow a structured framework informed by the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework. This framework provides a comprehensive set of guidelines and leading practices, enabling us to identify, protect, detect, respond, and recover from cyber threats and potential cybersecurity incidents.
Cybersecurity Risk Management Processes Our cybersecurity policies, processes and practices are informed by well-recognized security frameworks such as the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework. The NIST framework and others provide a robust set of guidelines and leading practices, enabling us to identify, protect, detect, respond, and recover from cyber threats and potential cybersecurity incidents.
Governance Elme’s leadership is committed to maintaining a secure environment that upholds high standards of privacy and data protection. The executive team reviews industry specific cybersecurity statistics and updates monthly from the IT team. We have documented control procedures that govern access to sensitive data and changes made to critical business systems.
We also consider cybersecurity incidents at our third-party providers in our business continuity and disaster recovery planning. Governance Elme’s leadership is committed to maintaining a secure environment that upholds high standards of privacy and data protection. The executive team reviews industry specific cybersecurity statistics and updates monthly from the IT team.
We mitigate these risks by assessing cybersecurity practices of new providers, continually reviewing and monitoring the cybersecurity practices of our major service providers and conducting periodic reviews of the cybersecurity strategy and posture of our other significant providers. We also consider cybersecurity incidents at our third-party providers in our business continuity and disaster recovery planning.
We mitigate potential risks from third parties by assessing cybersecurity practices of new providers, continually reviewing and monitoring the cybersecurity practices of our major service providers, conducting periodic reviews of the cybersecurity strategy and posture of our other significant providers, and including security terms in our contracts where applicable.
In the event of a cybersecurity incident, we maintain a regularly tested incident response program.
These actions help us identify opportunities for improvement in our incident preparedness and response processes. In the event of a cybersecurity incident, we maintain a regularly tested cybersecurity incident response program (“CIRP”).
Removed
Some of our key risks concerning cybersecurity that are included in our CRM processes include the following: • Data loss and/or damages to systems resulting from malicious or accidental actions of an internal employee, • external parties committing social engineering (e.g., phishing) or business email compromise attacks, • third-party software service providers suffering a cybersecurity incident that has a significant impact on our business, data or ability to operate, and • a ransomware attack resulting in encrypted data and release of confidential company and/or resident information. 24 The Company’s Board of Trustees does not believe that there are currently any risks from cybersecurity threats that are reasonably likely to materially affect the Company or its business strategy, financial condition, results of operations, or cash flows.
Added
We have documented control procedures that govern access to sensitive data and changes made to critical business systems. Our CIRP helps ensure timely notification of cybersecurity incidents to management and the Board.
Removed
The use of third parties exposes us to risks that cybersecurity incidents at a third-party provider would impact Elme’s operations and data security. We identify these risks with our robust evaluation program for our third-party partners, in which we assess third-party cybersecurity controls through a questionnaire and include security terms in our contracts where applicable.
Added
The Board is responsible for review and oversight of Elme’s cybersecurity risks and the programs and steps implemented by management to assess, manage and mitigate such risks. In the event of a cybersecurity incident, the Board is informed and updated by the incident response team as appropriate.
Removed
We have not experienced any material cybersecurity incidents to date. Notwithstanding the extensive approach we take to address cybersecurity, we may not be successful in preventing or mitigating all cybersecurity incidents or threats. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks.
Added
Risks, Threats, and Material Incidents As of December 31, 2024, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and we believe are not reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Removed
Our Cybersecurity Incident Response Plan (“CIRP”) helps ensure timely notification of cybersecurity incidents to management and the Board. Our CIO, has been responsible for the development, enhancement, and oversight of cybersecurity programs in her role as CIO for over a decade at two publicly traded real estate companies.
Added
However, we and our third-party providers have been the target of cybersecurity threats and expect them to continue. Notwithstanding the extensive approach we take to address cybersecurity, there can be no assurance that our cybersecurity efforts and measures will be effective or that attempted cybersecurity incidents or disruptions would not be successful or damaging. See Item 1A.
Removed
The Board receives communications via email from the CIO on topics of interest throughout the year. 26
Added
“Risk Factors” for further discussion of cybersecurity risks. 26

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeSchedule of Properties Properties Location Year Acquired Year Constructed/Renovated # of Homes Average Occupancy, year ended December 31, 2023 Ending Occupancy, as of December 31, 2023 Residential Communities Elme Alexandria Alexandria, VA 2019 1990 532 94.6 % 95.7 % Cascade at Landmark Alexandria, VA 2019 1988 277 96.2 % 97.5 % Clayborne Alexandria, VA N/A 2008 74 96.3 % 95.9 % Riverside Apartments Alexandria, VA 2016 1971 1,222 96.1 % 97.1 % Bennett Park Arlington, VA N/A 2007 224 95.7 % 96.4 % Park Adams Arlington, VA 1969 1959 200 96.4 % 96.0 % The Maxwell Arlington, VA N/A 2014 163 97.0 % 96.9 % The Paramount Arlington, VA 2013 1984 135 96.8 % 97.8 % The Wellington Arlington, VA 2015 1960 710 95.9 % 96.9 % Trove Arlington, VA N/A 2020 401 95.9 % 95.5 % Roosevelt Towers Falls Church, VA 1965 1964 191 96.0 % 97.9 % Elme Dulles Herndon, VA 2019 2000 328 96.0 % 97.3 % Elme Herndon Herndon, VA 2019 1991 283 96.0 % 96.5 % Elme Leesburg Leesburg, VA 2019 1986 134 95.7 % 97.0 % Elme Manassas Manassas, VA 2019 1986 408 94.2 % 93.1 % The Ashby at McLean McLean, VA 1996 1982 268 95.9 % 95.5 % 3801 Connecticut Avenue Washington, DC 1963 1951 307 96.5 % 96.4 % Kenmore Apartments Washington, DC 2008 1948 371 95.8 % 95.7 % Yale West Washington, DC 2014 2011 216 95.6 % 97.2 % Elme Bethesda Bethesda, MD 1997 1986 193 96.8 % 98.4 % Elme Watkins Mill Gaithersburg, MD 2019 1975 210 95.6 % 96.2 % Elme Germantown Germantown, MD 2019 1990 218 96.0 % 95.9 % Elme Conyers Conyers, GA 2021 1999 240 93.8 % 93.3 % Elme Eagles Landing Stockbridge, GA 2021 2000 490 92.4 % 89.0 % Elme Marietta Marietta, GA 2022 1975 420 92.4 % 90.7 % Elme Sandy Springs Sandy Springs, GA 2022 1972 389 93.4 % 91.3 % Elme Cumberland Smyrna, GA 2022 1982 270 93.3 % 91.1 % Elme Druid Hills Atlanta, GA 2023 1987 500 93.4 % 93.8 % Subtotal Residential Communities 9,374 95.2 % 95.2 % Property Location Year Acquired Year Constructed/Renovated Net Rentable Square Feet Percent Leased, as of December 31, 2023 (1) Ending Occupancy, as of December 31, 2023 (1) Office Building Watergate 600 Washington, DC 2017 1972/1997 300,000 87.8 % 87.8 % ______________________________ 27 (1) Percent leased and ending occupancy calculations are based on square feet and includes temporary lease agreements for Watergate 600.
Biggest changeSchedule of Properties Properties Location Year Acquired Year Constructed/Renovated # of Homes Average Occupancy, year ended December 31, 2024 Ending Occupancy, as of December 31, 2024 Residential Communities Elme Alexandria Alexandria, VA 2019 1990 532 95.7 % 97.0 % Cascade at Landmark Alexandria, VA 2019 1988 277 96.4 % 96.4 % Clayborne Alexandria, VA N/A 2008 74 96.3 % 94.6 % Riverside Apartments (1) Alexandria, VA 2016 1971 1,222 96.5 % 96.2 % Bennett Park Arlington, VA N/A 2007 224 96.1 % 96.9 % Park Adams Arlington, VA 1969 1959 200 94.9 % 96.5 % The Maxwell Arlington, VA N/A 2014 163 96.4 % 98.2 % The Paramount Arlington, VA 2013 1984 135 97.5 % 98.5 % The Wellington Arlington, VA 2015 1960 710 96.7 % 96.9 % Trove Arlington, VA N/A 2020 401 96.3 % 96.0 % Roosevelt Towers Falls Church, VA 1965 1964 191 95.9 % 96.9 % Elme Dulles Herndon, VA 2019 2000 328 96.8 % 95.4 % Elme Herndon Herndon, VA 2019 1991 283 96.5 % 97.2 % Elme Leesburg Leesburg, VA 2019 1986 134 97.1 % 97.8 % Elme Manassas Manassas, VA 2019 1986 408 96.1 % 96.1 % The Ashby at McLean McLean, VA 1996 1982 268 96.4 % 98.5 % 3801 Connecticut Avenue Washington, DC 1963 1951 307 95.7 % 95.8 % Kenmore Apartments Washington, DC 2008 1948 371 94.7 % 94.6 % Yale West Washington, DC 2014 2011 216 95.2 % 95.8 % Elme Bethesda Bethesda, MD 1997 1986 193 96.7 % 96.9 % Elme Watkins Mill Gaithersburg, MD 2019 1975 210 95.5 % 95.2 % Elme Germantown Germantown, MD 2019 1990 218 95.8 % 96.3 % Elme Conyers Conyers, GA 2021 1999 240 93.3 % 91.7 % Elme Eagles Landing Stockbridge, GA 2021 2000 490 87.7 % 90.0 % Elme Marietta Marietta, GA 2022 1975 420 86.8 % 90.2 % Elme Sandy Springs Sandy Springs, GA 2022 1972 389 89.5 % 90.7 % Elme Cumberland Smyrna, GA 2022 1982 270 92.9 % 95.9 % Elme Druid Hills Atlanta, GA 2023 1987 500 93.4 % 96.0 % Subtotal Residential Communities 9,374 94.7 % 95.4 % Property Location Year Acquired Year Constructed/Renovated Net Rentable Square Feet Percent Leased, as of December 31, 2024 (2) Ending Occupancy, as of December 31, 2024 (2) Office Building Watergate 600 Washington, DC 2017 1972/1997 300,000 84.7 % 84.7 % ______________________________ 27 (1) Includes an undeveloped land parcel held for development adjacent to the Riverside Apartments.
ITEM 2: PROPERTIES The schedule on the following pages lists our real estate investment portfolio as of December 31, 2023, which consisted of 28 residential communities, one office building and land held for development. Cost information is included in Schedule III to our financial statements included in this Annual Report on Form 10-K.
ITEM 2: PROPERTIES The schedule on the following pages lists our real estate investment portfolio as of December 31, 2024, which consisted of 28 residential communities, one office building and land held for development. Cost information is included in Schedule III to our financial statements included in this Annual Report on Form 10-K.
Percent leased is the percentage of net rentable area for which fully executed leases exist and may include signed leases for space not yet occupied by the tenant. ITEM 3: LEGAL PROCEEDINGS None.
(2) Percent leased and ending occupancy calculations are based on square feet and includes temporary lease agreements for Watergate 600. Percent leased is the percentage of net rentable area for which fully executed leases exist and may include signed leases for space not yet occupied by the tenant. ITEM 3: LEGAL PROCEEDINGS None.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed3 unchanged
Biggest changeIssuer Repurchases; Unregistered Sales of Securities: A summary of our repurchases of our common shares of beneficial interest for the three months ended December 31, 2023 was as follows: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased October 1 - October 31, 2023 — $ — 0 $50,000,000 November 1 - November 30, 2023 — — 0 50,000,000 December 1 - December 31, 2023 24,049 14.49 0 50,000,000 Total 24,049 $ 14.49 0 ______________________________ (1) Represents restricted shares surrendered by employees to Elme Communities to satisfy such employees' applicable statutory minimum tax withholding obligations in connection with the vesting of restricted shares.
Biggest changeIssuer Repurchases; Unregistered Sales of Securities: A summary of our repurchases of our common shares of beneficial interest for the three months ended December 31, 2024 was as follows: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased October 1 - October 31, 2024 — $ — 0 $50,000,000 November 1 - November 30, 2024 — — 0 50,000,000 December 1 - December 31, 2024 32,876 16.34 0 50,000,000 Total 32,876 $ 16.34 0 ______________________________ (1) Represents restricted shares surrendered by employees to Elme Communities to satisfy such employees' applicable statutory minimum tax withholding obligations in connection with the vesting of restricted shares.
This performance graph shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing by us under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. 29 ITEM 6: RESERVED
This performance graph shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing by us under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. 29 ITEM 6: RESERVED
The graph assumes that $100 was invested on December 31, 2018, in shares of our common shares and each of the aforementioned indices and that all dividends were reinvested without the payment of any commissions.
The graph assumes that $100 was invested on December 31, 2019, in shares of our common shares and each of the aforementioned indices and that all dividends were reinvested without the payment of any commissions.
Performance Graph: The following line graph sets forth, for the period from December 31, 2018, through December 31, 2023, a comparison of the percentage change in the cumulative total shareholder return on our common shares compared to the cumulative total return of the Standard & Poor's 500 Stock Index and the MSCI US REIT Index.
Performance Graph: The following line graph sets forth, for the period from December 31, 2019, through December 31, 2024, a comparison of the percentage change in the cumulative total shareholder return on our common shares compared to the cumulative total return of the Standard & Poor's 500 Stock Index and the MSCI US REIT Index.
ITEM 5: MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market and Shareholder Information: Our shares trade on the New York Stock Exchange under the symbol ELME. As of February 13, 2024, there were 2,651 shareholders of record.
ITEM 5: MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market and Shareholder Information: Our shares trade on the New York Stock Exchange under the symbol ELME. As of February 11, 2025, there were 2,476 shareholders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+25 added−25 removed45 unchanged
Biggest changeThe decrease is partially offset by higher depreciation and amortization at Elme Druid Hills ($3.1 million). 34 Interest Expense : Interest expense by debt type for the years ended December 31, 2023 and 2022 was as follows (in thousands): Year Ended December 31, Debt Type 2023 2022 $ Change % Change Notes payable $ 23,152 $ 20,458 $ 2,694 13.2 % Mortgage notes payable — 1,014 (1,014) 100.0 % Line of credit 7,277 3,751 3,526 94.0 % Capitalized interest — (283) 283 100.0 % Total $ 30,429 $ 24,940 $ 5,489 22.0 % • Notes payable : Increase primarily due to the $125.0 million 2023 Term Loan executed in January 2023, partially offset by prepayment of a $100.0 million portion of the 2018 Term Loan in January 2023. • Mortgage notes payable : Decrease due to the mortgages of $42.8 million and $33.7 million assumed in the acquisitions of Elme Marietta and Elme Cumberland, respectively, in the second quarter of 2022 and the extinguishment, in September 2022, of the liabilities associated with these mortgages though defeasance arrangements. • Line of credit : Increase primarily due to a weighted average interest rate of 6.2% and weighted average borrowings of $70.6 million in 2023, as compared to a weighted average interest rate of 4.2% and weighted average borrowings of $21.6 million in 2022. • Capitalized interest : Decrease primarily due to ceasing capitalization of interest on spending related to the multifamily development adjacent to Riverside Apartments due to a pause in development activities resulting from macroeconomic uncertainty.
Biggest changeInterest Expense : Interest expense by debt type for the years ended December 31, 2024 and 2023 was as follows (in thousands): Year Ended December 31, Debt Type 2024 2023 $ Change % Change Notes payable $ 24,497 $ 23,152 $ 1,345 5.8 % Line of credit 13,338 7,277 6,061 83.3 % Total $ 37,835 $ 30,429 $ 7,406 24.3 % 34 • Notes payable : Increase primarily due to the $125.0 million 2023 Term Loan executed in January 2023, partially offset by prepayment of a $100.0 million portion of a $250.0 million unsecured term loan (the “2018 Term Loan”) in January 2023. • Line of credit : Increase primarily due to higher weighted average borrowings of $169.3 million and a weighted average interest rate of 6.1% in 2024, as compared to a weighted average borrowings of $70.6 million and weighted average interest rate of 6.2% in 2023.
Factors considered in the fair value analysis include the estimated cost to replace the leases, including foregone rents and expense reimbursements during hypothetical expected lease-up periods (referred to as “absorption cost”), consideration of current market conditions and costs to execute similar leases.
Factors considered in the fair value analysis include the estimated cost to replace the leases, including foregone rents and expense reimbursements during hypothetical expected lease-up periods (referred to as “absorption cost”), consideration of current market conditions and 43 costs to execute similar leases.
We currently expect that our potential sources of liquidity for acquisitions, development, redevelopment, expansion and renovation of properties, and operating and administrative expenses, may include: • Cash flow from operations; • Borrowings under our Revolving Credit Facility or other new short-term facilities; • Issuances of our equity securities and/or common units in operating partnerships; • Issuances of preferred shares; • Proceeds from long-term secured or unsecured debt financings, including construction loans and term loans, or the issuance of debt securities; • Investment from joint venture partners; and • Net proceeds from the sale of assets.
We currently expect that our potential sources of liquidity for acquisitions, development, redevelopment, expansion and renovation of properties, and operating and administrative expenses, may include: • Cash flow from operations; • Borrowings under our Amended and Restated Revolving Credit Facility or other new short-term facilities; • Issuances of our equity securities and/or common units in operating partnerships; • Issuances of preferred shares; • Proceeds from long-term secured or unsecured debt financings, including construction loans and term loans, or the issuance of debt securities; • Investment from joint venture partners; and • Net proceeds from the sale of assets.
We determine the fair value of land 43 acquired based on comparisons to similar properties that have been recently marketed for sale or sold. The fair value of in-place leases is based upon our evaluation of the specific characteristics of the leases.
We determine the fair value of land acquired based on comparisons to similar properties that have been recently marketed for sale or sold. The fair value of in-place leases is based upon our evaluation of the specific characteristics of the leases.
Net cash (used in) provided by 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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022. 35 Liquidity and Capital Resources We believe 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 and contractual obligations, as well as the payment of dividends, and funding possible growth opportunities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023. 35 Liquidity and Capital Resources We believe 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 and contractual obligations, as well as the payment of dividends, and funding possible growth opportunities.
We categorize a redevelopment property as same-store when redevelopment activities have been complete for the majority of each year being compared. Overview Our revenues are derived primarily from the ownership and operation of income producing property. As of December 31, 2023, we owned approximately 9,400 residential apartment homes in the Washington, DC and Atlanta metro regions.
We categorize a redevelopment property as same-store when redevelopment activities have been complete for the majority of each year being compared. Overview 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.
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, 2023, no preferred shares were issued and outstanding. Capital Commitments We will require capital for development and redevelopment projects currently underway and in the future.
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. Capital Commitments We will require capital for development and redevelopment projects currently underway and in the future.
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.
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 Amended and Restated Revolving Credit Facility or incur other unsecured debt in the future could be restricted by the debt covenants.
Amounts include principal, interest and facility fees. In addition to our long-term debt, we have committed building capital expenditures of $2.0 million in 2024 based on contracts in place as of December 31, 2023, along with other various standing or renewable contracts with vendors.
Amounts include principal, interest and facility fees. 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.
There can be no assurance that our capital requirements will not be materially higher or lower than the above expectations. We currently believe that we will generate sufficient cash flow from operations and potential property sales and have access to the capital resources necessary to fund our requirements in 2024.
There can be no assurance that our capital requirements will not be materially higher or lower than the above expectations. We currently believe that we will generate sufficient cash flow from operations and potential property sales and have access to the capital resources necessary to fund our requirements in 2025.
Off Balance Sheet Arrangements We have no off-balance sheet arrangements as of December 31, 2023 that are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off Balance Sheet Arrangements We have no off-balance sheet arrangements as of December 31, 2024 that are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
A reconciliation of NOI to net income follows. 32 2023 Compared to 2022 The following tables reconcile net income to NOI and provide the basis for our discussion of our consolidated results of operations and NOI in 2023 compared to 2022. All amounts are in thousands except percentage amounts.
A reconciliation of NOI to net income follows. 32 2024 Compared to 2023 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.
Discussion of our business outlook, operating results, investment activity, financing activity and capital requirements to provide context for the remainder of MD&A. • Results of Operations. Discussion of our financial results comparing 2023 to 2022. • Liquidity and Capital Resources.
Discussion of our business outlook, operating results, investment activity, financing activity and capital requirements to provide context for the remainder of MD&A. • Results of Operations. Discussion of our financial results comparing 2024 to 2023. • Liquidity and Capital Resources.
Additional factors which may cause the actual results, performance or achievements of Elme Communities to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements include, but are not limited to: (a) the risks associated with ownership of real estate in general and our real estate assets in particular; (b) the economic health of the areas in which our properties are located, particularly with respect to the greater Washington, DC metro and Sunbelt regions; (c) risks associated with our ability to execute on our strategies, including new strategies with respect to our operations and our portfolio, including the acquisition of apartment homes in the Sunbelt markets and our ability to realize any anticipated operational benefits from our internalization of community management functions; (d) the risk of failure to enter into and/or complete acquisitions and dispositions; (e) changes in the composition of our portfolio; (f) reductions in or actual or threatened changes to the timing of federal government spending; (g) the economic health of our residents; (h) the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdowns or recessions and geopolitical conflicts); (i) risks related to our ability to control our expenses if revenues decrease; (j) compliance with applicable laws and corporate social responsibility goals, including those concerning the environment and access by persons with disabilities; (k) risks related to not having adequate insurance to cover potential losses; (l) changes in the market value of securities; (m) terrorist attacks or actions and/or cyber-attacks; (n) whether we will succeed in the day-to-day property management and leasing activities that we have previously outsourced; (o) the availability and terms of financing and capital and the general volatility of securities markets; (p) the risks related to our organizational structure and limitations of share ownership; (q) failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; and (r) other factors discussed under the caption “Risk Factors.” 42 While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance.
Additional factors which may cause the actual results, performance or achievements of Elme Communities to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements include, but are not limited to: (a) the risks associated with the outcome, objectives and timing of the strategic alternatives review, including the incurrence of costs and expenses and diversion of management’s time in connection with such review; (b) the risks associated with ownership of real estate in general and our real estate assets in particular; (c) the economic health of the areas in which our properties are located, particularly with respect to the greater Washington, DC metro and Sunbelt regions; (d) risks associated with our ability to execute on our strategies, including new strategies with respect to our operations and our portfolio, including the acquisition of apartment homes in the Sunbelt markets and our ability to realize any anticipated operational benefits from our internalization of community management functions; (e) the risk of failure to enter into and/or complete acquisitions and dispositions; (f) changes in the composition of our portfolio; (g) reductions in or actual or threatened changes to the timing of federal government spending; (h) the economic health of our residents; (i) the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdowns or recessions and geopolitical conflicts); (j) risks related to our ability to control our expenses if revenues decrease; (k) compliance with applicable laws and corporate social responsibility goals, including those concerning the environment and access by persons with disabilities; (l) risks related to legal proceedings; (m) risks related to not having adequate insurance to cover potential losses; (n) changes in the market value of securities; (o) terrorist attacks or actions and/or cyber-attacks; (p) whether we will succeed in the day-to-day property management and leasing activities that we have previously outsourced; (q) the availability and terms of financing and capital and the general volatility of securities markets; (r) the risks related to our organizational structure and limitations of share ownership; (s) failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; and (t) other factors discussed under the caption “Risk Factors.” 42 While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance.
Our issuances and net proceeds on the dividend reinvestment program for the three years ended December 31, 2023 were as follows (in thousands; except per share data): Year Ended December 31, 2023 2022 2021 Issuance of common shares 28 47 75 Weighted average price per share $ 17.64 $ 22.40 $ 23.37 Net proceeds $ 497 $ 1,030 $ 1,744 39 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.
Our issuances and net proceeds on the dividend reinvestment program for 2023 and 2022 were as follows (in thousands; except per share data): Year Ended December 31, 2024 2023 2022 Issuance of common shares — 28 47 Weighted average price per share $ — $ 17.64 $ 22.40 Net proceeds $ — $ 497 $ 1,030 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 39 our existing credit facility and other debt agreements.
We expect to fund these projects using cash generated by our real estate operations, through borrowings on our Revolving Credit Facility, or raising additional debt or equity capital in the public market.
We expect to fund these projects using cash generated by our real estate operations, through borrowings on our Amended and Restated Revolving Credit Facility, or raising additional debt or equity capital in the public market.
Included in the capital improvement and development costs listed above are capitalized employee compensation in the amount of $2.3 million, $1.1 million and $1.6 million for the three years ended December 31, 2023, respectively, and while none for the year ended December 31, 2023, capitalized interest in the amount of $0.3 million and $0.8 million for the two years ended December 31, 2022, respectively.
Included in the capital improvement and development costs listed above are capitalized employee compensation in the amount of $2.0 million, $2.3 million and $1.1 million for the three years ended December 31, 2024, respectively, and while none for the two years ended December 31, 2024, capitalized interest in the amount of $0.3 million for the year ended December 31, 2022.
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.
Failure to comply with any of the covenants under 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.
We will continue to assess the payment of our dividends on a quarterly basis. Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our Board which considers, among other factors, trends in our levels of funds from operations and ongoing capital requirements to achieve a targeted payout ratio.
Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our Board which considers, among other factors, trends in our levels of funds from operations and ongoing capital requirements to achieve a targeted payout ratio.
The ability to compare one period to another is significantly affected by the acquisitions completed during those years (see note 3 to the consolidated financial statements). Net Operating Income NOI, defined as real estate rental revenue less direct real estate operating expenses, is a non-GAAP measure.
The ability to compare one period to another is affected by the acquisition completed during 2023 (see note 3 to the consolidated financial statements). Net Operating Income NOI, defined as real estate rental revenue less direct real estate operating expenses, is a non-GAAP measure.
As of December 31, 2023, we had no outstanding contractual commitments related to our development and redevelopment projects and do not expect to spend on our development and redevelopment projects during 2024. We anticipate funding approximately $23.0 - $28.0 million on several major renovation projects at our residential communities during 2024.
As of December 31, 2024, we had no outstanding contractual commitments related to our development and redevelopment projects and do not expect to spend on our development and redevelopment projects during 2025. We anticipate funding approximately $27.0 - $32.0 million on several major renovation projects at our residential communities during 2025.
The amounts involved may be material. 38 Debt Covenants 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.
The amounts involved may be material. 38 Debt Covenants Pursuant to the terms of the Amended Credit Agreement, 2023 Term Loan and unsecured notes, we are subject to customary operating covenants and maintenance of various financial ratios.
Real estate impairment : The real estate impairment charge of $41.9 million during 2023 reduced the carrying value of Watergate 600 to its estimated fair value (see note 3 to consolidated financial statements). 2022 Compared to 2021 For a discussion comparing the Company’s financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to subsection “Results of Operations - 2022 Compared to 2021” of Item 7.
Real estate impairment : The real estate impairment charge of $41.9 million during 2023 reduced the carrying value of Watergate 600 to its estimated fair value. 2023 Compared to 2022 For a discussion comparing the Company’s financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to subsection “Results of Operations - 2023 Compared to 2022” of Item 7.
During 2024, we expect that we will have significant capital requirements, including the following: • Funding dividends and distributions to our shareholders (which we intend to continue to pay at or about current levels); • Approximately $34.0 - $39.0 million to invest in our existing portfolio of operating assets inclusive of $23.0 - $28.0 million of major capital expenditures; and • Funding for potential property acquisitions throughout 2024, offset by proceeds from potential property dispositions.
During 2025, we expect that we will have significant capital requirements, including the following: • Funding dividends and distributions to our shareholders (which we intend to continue to pay at or about current levels); • Approximately $41.0 - $46.0 million to invest in our existing portfolio of operating assets inclusive of $27.0 - $32.0 million of major capital expenditures; and • Funding for potential property acquisitions throughout 2025, offset by proceeds from potential property dispositions.
Our issuances and net proceeds on the Equity Distribution Agreements in 2022 and 2021 and the Original Equity Distribution Agreements in 2021, were as follows (in thousands, except per share data): Year Ended December 31, 2023 2022 2021 Issuance of common shares — 1,032 1,636 Weighted average price per share $ — $ 26.27 $ 25.44 Net proceeds $ — 26,849 $ 40,462 We have a dividend reinvestment program, whereby shareholders may use their dividends and optional cash payments to purchase common shares.
Our issuances and net proceeds on the prior equity distribution agreement in 2022, were as follows (in thousands, except per share data): Year Ended December 31, 2024 2023 2022 Issuance of common shares — — 1,032 Weighted average price per share $ — $ — $ 26.27 Net proceeds $ — — $ 26,849 We have a dividend reinvestment program, whereby shareholders may use their dividends and optional cash payments to purchase common shares.
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.
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.
Accretive Capital Improvements Acquisition Related Improvements: Acquisition related improvements are capital improvements to properties acquired during the preceding three years which were anticipated at the time we acquired the properties. These types of improvements were made in 2023 to the Elme Cumberland, Elme Marietta, Elme Sandy Springs, Elme Eagles Landing and Elme Conyers.
Accretive Capital Improvements Acquisition Related Improvements: Acquisition related improvements are capital improvements to properties acquired during the preceding three years which were anticipated at the time we acquired the properties. These types of improvements were made in 2024 to Elme Druid Hills, Elme Cumberland, Elme Marietta and Elme Sandy Springs.
As of December 31, 2023, we were in compliance with the covenants related to our Revolving Credit Facility, 2023 Term Loan and unsecured notes. Common Equity We have authorized for issuance 150.0 million common shares, of which approximately 87.9 million shares were outstanding at December 31, 2023.
As of December 31, 2024, we were in compliance with the covenants related to our Amended Credit Agreement, 2023 Term Loan, and unsecured notes. Common Equity We have authorized for issuance 150.0 million common shares, of which approximately 88.0 million shares were outstanding at December 31, 2024.
Capital Requirements We do not currently have any debt maturities scheduled for 2024. We expect to have additional capital requirements as set forth on page 37 (Liquidity and Capital Resources - Capital Requirements). 31 Results of Operations The discussion that follows is based on our consolidated results of operations for the two years ended December 31, 2023.
We expect to have additional capital requirements as set forth on page 37 (Liquidity and Capital Resources - Capital Requirements). Results of Operations The discussion that follows is based on our consolidated results of operations for the two years ended December 31, 2024.
These projects include unit renovations, property technology initiatives, common area and mechanical upgrades, facade and retaining wall restorations and fire system upgrades. Not all of the anticipated spending had been committed via executed construction contracts at December 31, 2023.
These projects include unit renovations, property technology initiatives, common area and mechanical upgrades, facade restorations and roof replacements. Not all of the anticipated spending had been committed via executed construction contracts at December 31, 2024.
We analyze which source of capital we believe to be most advantageous to us at any particular point in time. As of February 13, 2024, we had cash and cash equivalents of approximately $5.8 million and availability under our Revolving Credit Facility of $535.0 million.
We analyze which source of capital we believe to be most advantageous to us at any particular point in time. As of February 11, 2025, we had cash and cash equivalents of approximately $5.9 million and availability under our Amended and Restated Revolving Credit Facility of $320.0 million.
Capital Improvements and Development Costs Our capital improvement, development and redevelopment costs for the three years ended December 31, 2023 were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Accretive capital improvements and development costs: Acquisition related improvements $ 6,379 $ 5,236 $ 7,218 Expansions and major renovations 22,340 21,476 17,096 Development/redevelopment — 698 8,406 Tenant improvements (including first generation leases) 17 1,337 2,427 Total accretive capital improvements (1) 28,736 28,747 35,147 Other capital improvements: 9,482 8,464 5,669 Total $ 38,218 $ 37,211 $ 40,816 ______________________________ (1) We consider these capital improvements to be accretive to revenue and not necessarily to net income.
Capital Improvements and Development Costs Our capital improvement, development and redevelopment costs for the three years ended December 31, 2024 were as follows (in thousands): Year Ended December 31, 2024 2023 2022 Accretive capital improvements and development costs: Acquisition related improvements $ 6,685 $ 6,379 $ 5,236 Expansions and major renovations 29,634 22,340 21,476 Development/redevelopment — — 698 Tenant improvements (including first generation leases) — 17 1,337 Total accretive capital improvements (1) 36,319 28,736 28,747 Other capital improvements: 11,071 9,482 8,464 Total $ 47,390 $ 38,218 $ 37,211 ______________________________ (1) We consider these capital improvements to be accretive to revenue and not necessarily to net income.
The ability to compare one period to another is significantly affected by the acquisitions completed 2023 and 2022 (see note 3 to the consolidated financial statements).
The ability to compare one period to another is affected by the acquisition completed in 2023 (see note 3 to the consolidated financial statements).
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. (2) The credit facility's term ends in August 2025, with two six-month extension options.
In the first quarter of 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 initial maturity date of January 10, 2025.
The weighted average maturity for our debt was 4.5 years as of December 31, 2023. 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.
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.
The following table provides the calculation of our NAREIT FFO and a reconciliation of NAREIT FFO to net income for the three years ended December 31, 2023 (in thousands): Year Ended December 31, 2023 2022 2021 Net (loss) income $ (52,977) $ (30,868) $ 16,384 Adjustments: Depreciation and amortization 88,950 91,722 72,656 Real estate impairment 41,860 — — Discontinued operations: Depreciation and amortization — — 22,904 Gain on sale of depreciable real estate, net — — (46,441) NAREIT FFO $ 77,833 $ 60,854 $ 65,503 Critical Accounting Estimates 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 GAAP.
The following table provides the calculation of our NAREIT FFO and a reconciliation of NAREIT FFO to net loss for the three years ended December 31, 2024 (in thousands): Year Ended December 31, 2024 2023 2022 Net loss $ (13,103) $ (52,977) $ (30,868) Adjustments: Depreciation and amortization 95,935 88,950 91,722 Real estate impairment — 41,860 — NAREIT FFO $ 82,832 $ 77,833 $ 60,854 Critical Accounting Estimates 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 GAAP.
As of December 31, 2023, 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 5.38% and the facility fee is 0.20%. As of February 13, 2024, our Revolving Credit Facility has a borrowing capacity of $535.0 million.
As of February 11, 2025, our Amended and Restated Revolving Credit Facility has a borrowing capacity of $320.0 million. 31 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%.
Real estate expenses from same-store residential properties increased $2.2 million, or 3.6%, to $65.1 million for 2023, compared to $62.8 million for 2022, primarily due to higher utilities ($0.9 million), contract services ($0.5 million), real estate taxes ($0.5 million), marketing ($0.4 million) and insurance ($0.4 million) expenses.
Real estate expenses from same-store residential properties increased $5.0 million, or 6.9%, to $78.5 million for 2024, compared to $73.4 million for 2023, primarily due to higher utilities ($1.4 million), higher administrative ($1.2 million), higher real estate taxes ($1.1 million), higher maintenance ($1.1 million) and higher insurance ($0.8 million) expenses.
The common shares sold under this program may either be common shares issued by us or common shares purchased in the open market.
The common shares sold under this program may either be common shares issued by us or common shares purchased in the open market. We did not issue common shares under the dividend reinvestment program during 2024.
(2) See page 43 of the MD&A for reconciliations of NAREIT FFO to net (loss) income. The increase in net loss is primarily due to a real estate impairment in our office property ($41.9 million), higher interest expense ($5.5 million) and higher property management expenses ($0.7 million) in 2023.
(2) See page 43 of the MD&A for reconciliations of NAREIT FFO to net loss. 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.
Contractual Obligations As of December 31, 2023, certain contractual obligations will require significant capital as follows (in thousands): Payments due by Period Total Less than 1 year 1-3 years 4-5 years After 5 years Long-term debt (1) $ 806,442 $ 25,308 $ 336,918 $ 80,470 $ 363,746 ______________________________ (1) See notes 6 and 7 of the consolidated financial statements.
Contractual Obligations As of December 31, 2024, certain contractual obligations will require significant capital as follows (in thousands): Payments due by Period Total Less than 1 year 1-3 years 4-5 years After 5 years Long-term debt (1) $ 809,425 $ 24,908 $ 405,887 $ 378,630 $ — ______________________________ (1) See notes 6 and 7 of the consolidated financial statements.
The higher NOI is primarily due to higher NOI from same-store properties ($9.2 million) and the acquisitions of Elme Marietta ($1.7 million) and Elme Cumberland ($1.0 million) in 2022 and Elme Druid Hills ($1.7 million) in 2023, partially offset by lower NOI at Watergate 600 ($0.3 million) and Elme Sandy Springs ($0.4 million).
These were partially offset by higher interest expense ($7.4 million) and higher depreciation and amortization expenses ($7.0 million). 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).
If capital were not available, we may be unable to satisfy the distribution requirement applicable to REITs, make required principal and interest payments, make strategic acquisitions or make necessary and/or routine capital improvements or undertake improvement/redevelopment 36 opportunities with respect to our existing portfolio of operating assets.
If capital were not available, we may be unable to satisfy the distribution requirement applicable to REITs, make required principal and interest payments, make strategic acquisitions or make necessary and/or routine capital improvements or undertake improvement/redevelopment opportunities with respect to our existing portfolio of operating assets. 36 Debt Financing 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.
Other Income and Expenses Property management expenses: Increase of $0.7 million primarily due to higher management fee expenses at same-store properties ($0.4 million) and due to the acquisitions of Elme Druid Hills ($0.1 million) during the third quarter of 2023 and Elme Marietta ($0.1 million) and Elme Cumberland ($0.1 million) during the second quarter of 2022.
Other Income and Expenses Property management expenses: Increase of $0.8 million primarily due to higher internal management fee expenses at same-store properties ($0.5 million) and the acquisition of Elme Druid Hills during the 2023 Quarter ($0.3 million).
Consolidated cash flows for the three years ended December 31, 2023 are summarized as follows (in thousands): Year ended December 31, Variance 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Cash provided by operating activities $ 84,669 $ 73,211 $ 89,156 $ 11,458 $ (15,945) Cash (used in) provided by investing activities (146,221) (241,163) 702,170 94,942 (943,333) Cash provided by (used in) financing activities 60,238 (56,416) (565,396) 116,654 508,980 40 Net cash provided by operating activities increased in 2023 as compared to 2022 primarily due to higher rental revenue from the acquisitions of Elme Druid Hills in 2023 and Elme Sandy Springs, Elme Marietta and Elme Cumberland during 2022.
Consolidated cash flows for the three years ended December 31, 2024 are summarized as follows (in thousands): Year ended December 31, Variance 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Cash provided by operating activities $ 95,243 $ 84,669 $ 73,211 $ 10,574 $ 11,458 Cash used in investing activities (43,740) (146,221) (241,163) 102,481 94,942 Cash (used in) provided by financing activities (51,432) 60,238 (56,416) (111,670) 116,654 40 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.
Real estate rental revenue from acquisitions increased $7.5 million or 50.2% to $22.4 million for 2023, compared to $14.9 million for 2022, primarily due to the acquisitions of Elme Druid Hills ($2.6 million) during the third quarter of 2023, Elme Marietta ($2.6 million) and Elme Cumberland ($1.7 million) during the second quarter of 2022, and Elme Sandy Springs ($0.6 million) during the first quarter of 2022.
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.
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.
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.
Financing Activity Significant financing activity during 2023 included entering into a $125.0 million unsecured term loan (“2023 Term Loan”) with 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 Elme Communities' credit rating).
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).
Net loss, NOI and NAREIT FFO for the years ended December 31, 2023 and 2022 were as follows (in thousands, except percentage amounts): Year Ended December 31, 2023 2022 Change % Change Net loss $ (52,977) $ (30,868) $ (22,109) 71.6 % NOI (1) $ 148,081 $ 135,379 $ 12,702 9.4 % NAREIT FFO (2) $ 77,833 $ 60,854 $ 16,979 27.9 % ______________________________ (1) See page 33 of the MD&A for reconciliations of NOI to net (loss) income.
Net loss, NOI and NAREIT FFO for the years ended December 31, 2024 and 2023 were as follows (in thousands, except percentage amounts): Year Ended December 31, 2024 2023 Change % Change Net loss $ (13,103) $ (52,977) $ 39,874 (75.3) % NOI (1) $ 153,234 $ 148,081 $ 5,153 3.5 % NAREIT FFO (2) $ 82,832 $ 77,833 $ 4,999 6.4 % ______________________________ (1) See page 33 of the MD&A for reconciliations of NOI to net loss.
Depreciation and amortization : Decrease of $2.8 million primarily due to lower depreciation and amortization at same-store residential properties ($2.0 million), the acquisitions of Elme Sandy Springs ($1.7 million), Elme Marietta ($1.5 million) and Elme Cumberland ($0.3 million) and lower depreciation and amortization at Watergate 600 ($0.4 million).
Depreciation and amortization : Increase of $7.0 million primarily due to higher depreciation and amortization at same-store residential properties ($5.7 million) and at Elme Druid Hills ($3.5 million). The increase was partially offset by lower depreciation and amortization at Watergate 600 ($2.3 million).
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. 37 As of December 31, 2023, our future debt principal payments are scheduled as follows (in thousands): Year Unsecured Notes Payable/Term Loans Revolving Credit Facility Total Debt Average Interest Rate 2024 — — $ — — % 2025 125,000 (1) 157,000 (2) 282,000 5.6 % 2026 — — — — % 2027 — — — — % 2028 50,000 — 50,000 7.4 % Thereafter 350,000 — 350,000 4.1 % Scheduled principal payments 525,000 157,000 682,000 4.9 % Premiums and discounts, net (94) — (94) Debt issuance costs, net (2,561) — (2,561) Total $ 522,345 $ 157,000 $ 679,345 4.9 % ______________________________ (1) During the first quarter of 2023, we entered into the $125.0 million 2023 Term Loan with 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 Elme Communities’ credit rating).
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. 37 As of December 31, 2024, our future debt principal payments are scheduled as follows (in thousands): Year Unsecured Notes Payable/Term Loans Amended and Restated Revolving Credit Facility Total Debt Average Interest Rate 2025 — — $ — — % 2026 125,000 (1) — 125,000 4.7 % 2027 — — — — % 2028 50,000 176,000 (2) 226,000 5.7 % 2029 — — — — % Thereafter 350,000 — 350,000 4.1 % Scheduled principal payments 525,000 176,000 701,000 4.7 % Premiums and discounts, net (71) — (71) Debt issuance costs, net (1,976) — (1,976) Total $ 522,953 $ 176,000 $ 698,953 4.7 % ______________________________ (1) During 2023, we entered into the 2023 Term Loan, which has an initial two-year term ending in January 2025, and provided for two one-year extension options.
Net cash (used in) provided by investing activities decreased in 2022 as compared to 2021 primarily due to the sales of the Office Portfolio and the Retail Portfolio during 2021. These were partially offset by the acquisitions of Elme Conyers and Elme Eagles Landing during 2021 and acquisitions of Elme Marietta, Elme Cumberland and Elme Sandy Springs during 2022.
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. Net cash used in investing activities decreased in 2024 as compared to 2023 primarily due to the acquisition of Elme Druid Hills during 2023.
We also own and operate approximately 300,000 square feet of commercial space in the Washington, DC metro region. During 2022, we completed acquisitions of three apartment communities in Georgia with a combined total of 1,079 apartment homes for a total contract purchase price of $283.2 million.
We also own and operate approximately 300,000 square feet of commercial space in the Washington, DC metro region. 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.
Redevelopment costs represent expenditures for improvements intended to reposition properties in their markets and generate more income than would be otherwise achievable. Development/redevelopment costs in 2022 and 2021 included predevelopment costs for a future residential development adjacent to Riverside Apartments, which is currently on hold.
Development/Redevelopment: Development costs represent expenditures for ground up development of new operating properties. Redevelopment costs represent expenditures for improvements intended to reposition properties in their markets and generate more income than would be otherwise achievable.
Other Capital Improvements Other capital improvements, also referred to as recurring capital improvements, are those not included in the above categories. Over time these costs will be recurring in nature to maintain a property's income and value. This category includes improvements made as needed upon vacancy of an apartment.
Development/redevelopment costs in 2022 included predevelopment costs for a future residential development adjacent to Riverside Apartments, which is currently on hold. 41 Other Capital Improvements Other capital improvements, also referred to as recurring capital improvements, are those not included in the above categories. Over time these costs will be recurring in nature to maintain a property's income and value.
The higher same-store NOI was primarily due to higher rental rates. Residential same-store average occupancy for our portfolio increased to 95.6% as of December 31, 2023 from 95.4% as of December 31, 2022.
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. 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).
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 and $9.7 million of transformation costs, net of amounts capitalized, on the consolidated statements of operations during 2023 and 2022, respectively.
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.
Average occupancy for residential properties for 2023 and 2022 was as follows: December 31, 2023 December 31, 2022 % Change Same-Store Non-Same-Store Total Same-Store Non-Same-Store Total Same-Store Non-Same-Store Total 95.6 % 93.1 % 95.2 % 95.4 % 94.2 % 95.3 % 0.2 % (1.1) % (0.1) % The increase in same-store average occupancy was primarily due to higher average occupancy at Elme Bethesda, The Paramount, Roosevelt Towers, Riverside Apartments and The Maxwell.
Average occupancy for residential properties for 2024 and 2023 was as follows: December 31, 2024 December 31, 2023 % Change Same-Store Non-Same-Store Total Same-Store Non-Same-Store Total Same-Store Non-Same-Store Total 94.8 % 93.4 % 94.7 % 95.2 % 93.4 % 95.2 % (0.4) % — % (0.5) % 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.
Such improvements totaled $8.3 million in 2023, averaging approximately $2,200 per unit for the 42% of units which turned over relative to our total portfolio of apartment homes. Aside from improvements related to apartment turnover, these improvements include facade repairs, installation of new heating and air conditioning equipment, asphalt replacement, permanent landscaping, new lighting and new finishes.
Aside from improvements related to apartment turnover, these improvements include facade repairs, installation of new heating and air conditioning equipment, asphalt replacement, permanent landscaping, new lighting and new finishes. In addition, we incurred repair and maintenance expense of $5.3 million during 2024 to maintain the quality of our buildings.
General and administrative expenses : Decrease of $2.4 million primarily due to higher management fee offset ($4.7 million), lower incentive compensation ($2.4 million) and an adjustment to deferred taxes ($0.5 million) in 2023.
General and administrative expenses : Decrease of $0.9 million primarily due to higher internal management fee offset ($2.3 million), corporate office moving expenses ($0.6 million) in 2023, lower rent for our corporate office ($0.6 million) and lower severance ($0.6 million) expenses in 2024.
The increase is partially offset by lower average occupancy at Elme Eagles Landing, Elme Manassas and Elme Conyers. Real Estate Expenses Residential real estate expenses as a percentage of residential revenue for 2023 and 2022 were 35.6% and 36.1%, respectively.
Real Estate Expenses Residential real estate expenses as a percentage of residential revenue for 2024 and 2023 were 37.1% and 35.6%, respectively.
W e expect to realize significant operational benefits from this operating model redesign. We also believe we have adequate liquidity beyond 2023, with no debt maturities until 2025 and only $282.0 million of scheduled debt maturities prior to 2028, based on current amounts outstanding under our Revolving Credit Facility.
We also believe we have adequate liquidity beyond 2024 and we have no debt maturities until 2026 and only $351 million of scheduled debt maturities prior to 2029, based on current amounts outstanding under our Amended and Restated Revolving Credit Facility. We will continue to assess the payment of our dividends on a quarterly basis.
On February 17, 2021, we entered into separate amendments to each of our existing equity distribution agreements (“Original Equity Distribution Agreements”) with each of Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc. and Truist Securities, Inc.
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.
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.
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.
Real estate expenses from acquisitions increased $3.5 million in 2023 due to the acquisitions of Elme Druid Hills ($0.9 million) during the third quarter of 2023, Elme Sandy Springs ($1.0 million) during the first quarter of 2022 and Elme Marietta ($0.9 million) and Elme Cumberland ($0.7 million) during the second quarter of 2022.
The increase was partially offset by lower personnel ($0.7 million) expenses. Real estate expenses from acquisitions increased $3.5 million in 2024 due to the acquisition of Elme Druid Hills during the third quarter of 2023. Other NOI Other NOI decreased primarily due to lower operating income ($0.3 million) and higher repairs and maintenance expense ($0.3 million) at Watergate 600.
In connection with our strategic transformation, we redesigned our operating model for purposes of more efficiently and effectively supporting residential operations. We recognized $6.3 million and $9.7 million and $6.6 million of transformation costs, net of amounts capitalized, on the consolidated statements of operations during 2023, 2022 and 2021, respectively.
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.
Transformation costs: Decrease of $3.3 million primarily due to lower consulting ($1.9 million), lower accelerated depreciation ($0.9 million), lower salary, benefit, and incentive compensation ($0.6 million), lower software implementation ($0.5 million), and lower third-party management transition ($0.3 million) costs. The decrease is partially offset by higher signing bonuses for new employees ($0.9 million).
These were partially offset by higher payroll ($1.3 million), higher software ($0.8 million), higher incentive compensation ($0.6 million) expenses and an adjustment to deferred taxes ($0.5 million) in 2023. Transformation costs: Decrease of $6.3 million due to completion of strategic transformation in 2023.
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.
The Amended and Restated Revolving Credit Facility has a four-year term ending in July 2028, with two six-month extension options.
Removed
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. 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.
Added
We continue to realize significant operational benefits from this operating model redesign. 30 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.
Removed
We do not anticipate incurring any additional transformation costs in the future. We expect to realize significant operational benefits from this operating model redesign. 30 Operating Results The discussion that follows is based on our Operating Results.
Added
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.
Removed
These were partially offset by higher NOI ($12.7 million), lower loss on extinguishment of debt ($4.9 million), lower transformation costs ($3.3 million), lower depreciation and amortization expenses ($2.8 million), and lower general and administrative expenses ($2.4 million).
Added
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. Operating Results The discussion that follows is based on our Operating Results.
Removed
The higher NAREIT FFO is primarily due to higher NOI ($12.7 million), lower loss on extinguishment of debt ($4.9 million), lower transformation costs ($3.3 million) and lower general and administrative expenses ($2.4 million). These were partially offset by higher interest expense ($5.5 million) and higher property management expenses ($0.7 million).
Added
These were partially offset by higher interest expense ($7.4 million). Investment Activity There were no significant investment transactions during 2024.
Removed
Investment Activity Significant investment activity during 2023 included the acquisition of Elme Druid Hills, a 500-unit apartment community in Atlanta, Georgia for a contract purchase price of $108.0 million during the third quarter of 2023. The acquisition was funded through cash and borrowings under the Company's $700 million unsecured revolving credit facility (“Revolving Credit Facility”).
Added
Financing Activity 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.
Removed
We used the proceeds from the 2023 Term Loan to prepay the $100.0 million 2018 Term Loan in full and a portion of our borrowings under our Revolving Credit Facility. The 2023 Term Loan has a two-year term ending in January 2025, with two one-year extension options.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+2 added−0 removed4 unchanged
Biggest changeThe following table sets forth information pertaining to interest rate swap contract in place as of December 31, 2023 and 2022 and its respective fair value (dollars in thousands): Notional Amount Floating Index Rate Termination/ Fair Value as of: Fixed Rate Effective Date Expiration Date December 31, 2023 December 31, 2022 $ 100,000 1.205% USD-SOFR 3/31/2017 7/21/2023 $ — $ 1,998 75,000 3.677% USD-SOFR 7/21/2023 1/10/2025 740 — 50,000 3.676% USD-SOFR 7/21/2023 1/10/2025 494 — $ 1,234 $ 1,998 We enter into debt obligations primarily to support general corporate purposes including acquisition of real estate properties, capital improvements and working capital needs. 45
Biggest changeThe following table sets forth information pertaining to interest rate swap contract in place as of December 31, 2024 and 2023 and its respective fair value (dollars in thousands): Notional Amount Floating Index Rate Termination/ Fair Value as of: Fixed Rate Effective Date Expiration Date December 31, 2024 December 31, 2023 $75,000 3.677% USD-SOFR July 21, 2023 January 10, 2025 $ 14 $ 740 50,000 3.676% USD-SOFR July 21, 2023 January 10, 2025 9 494 100,000 4.719% USD-SOFR January 10, 2025 January 10, 2026 (624) — 50,000 4.720% USD-SOFR January 10, 2025 January 10, 2026 (312) — $ (913) $ 1,234 We enter into debt obligations primarily to support general corporate purposes including acquisition of real estate properties, capital improvements and working capital needs. 45
The table below presents principal, interest and related weighted average interest rates by year of maturity, with respect to debt outstanding on December 31, 2023 (dollars in thousands). 2024 2025 2026 2027 2028 Thereafter Total Fair Value Unsecured fixed rate debt Principal — $ 125,000 (1) $ — $ — $ 50,000 $ 350,000 $ 525,000 $ 466,668 Interest payments $ 23,908 $ 17,995 $ 17,995 $ 17,995 $ 16,155 $ 28,061 $ 122,109 Interest rate on debt maturities — % 5.6 % — % — % 7.4 % 4.1 % 4.9 % Unsecured variable rate debt Principal — $ 157,000 $ — — — $ — $ 157,000 $ 157,000 Variable interest rate on debt maturities 6.3 % 6.3 % ______________________________ (1) Represents a $125.0 million term loan with a floating interest rate.
The table below presents principal, interest and related weighted average interest rates by year of maturity, with respect to debt outstanding on December 31, 2024 (dollars in thousands). 2025 2026 2027 2028 2029 Thereafter Total Fair Value Unsecured fixed rate debt Principal $ — $ 125,000 (1) $ — $ 50,000 $ — $ 350,000 $ 525,000 $ 472,412 Interest payments $ 23,908 $ 18,154 $ 17,995 $ 16,155 $ 14,315 $ 14,315 $ 104,842 Interest rate on debt maturities — % 4.7 % — % 5.7 % — % 4.1 % 4.7 % Unsecured variable rate debt Principal — $ — $ — $ 176,000 $ — $ — $ 176,000 $ 176,000 Variable interest rate on debt maturities 5.3 % 5.3 % ______________________________ (1) Represents a $125.0 million term loan with a floating interest rate.
A $100.0 million portion of the term loan was previously effectively fixed by an interest rate swap that expired on July 21, 2023. The full amount of the term loan is effectively fixed by two interest rate swaps that became effective on July 21, 2023 and expire on the loan’s maturity date of January 10, 2025.
The full amount of the term loan is effectively fixed by two interest rate swaps that became effective on July 21, 2023 and expire on the loan’s initial maturity date of January 10, 2025.
Added
In the fourth quarter of 2024, we exercised one of two one-year extension options on the 2023 Term Loan to extend the maturity of the loan to January 10, 2026.
Added
The full amount of the term loan is effectively fixed by two interest rate swaps that became effective on January 10, 2025 and expire on the loan maturity date of January 10, 2026.

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