EX-99.1 2 q32023earningsreleaseandsu.htm EX-99.1 Document

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CONTACT:7550 Wisconsin Ave, Suite 900
Amy HopkinsBethesda, MD 20814
Vice President, Investor RelationsTel 202-774-3198
E-Mail: ahopkins@elmecommunities.comFax 301-984-9610
www.elmecommunities.com
October 26, 2023
Elme Communities Announces Third Quarter 2023 Results
Elme Communities (the “Company”) (NYSE: ELME), a multifamily REIT with communities in the Washington DC metro area and the Atlanta metro area, reported financial and operating results today for the quarter ended September 30, 2023:
Financial Results
•Net loss was $43.6 million, or $0.50 per diluted share, including a $41.9 million non-cash impairment charge as described below
•NAREIT FFO was $20.1 million, or $0.23 per diluted share
•Core FFO was $21.4 million, or $0.24 per diluted share, up over 4% from the prior year period primarily driven by rental rate growth
•Net Operating Income (NOI) was $36.9 million, up over 5% from the prior year period primarily driven by rental rate growth
Operational Highlights
•Same-store multifamily NOI increased by 7.3% compared to the prior year period
•Effective blended Lease Rate Growth was 3.0% during the quarter for our Same-store Portfolio, comprised of effective new Lease Rate Growth of 0.1% and effective renewal Lease Rate Growth of 5.1%
•Average Effective Monthly Rent per home increased 4.9% compared to the prior year period for our Same-store Portfolio
•Same-store Retention was 61% while achieving strong renewal lease rate growth
•Same-store multifamily Average Occupancy was 95.6% during the quarter, up 0.2% compared to the prior year period
•Same-store multifamily Ending Occupancy was 95.7% as of September 30, 2023, up 0.4% compared to the prior year period
Acquisitions
•Completed the acquisition of Elme Druid Hills in Atlanta, GA for $108.0 million on September 29, 2023
•Elme Druid Hills is a high-quality value-add community with extensive renovation potential in a submarket that is expected to continue to benefit from growing demand as a result of recent healthcare and medical facility investments. This acquisition brings our total home count in the Atlanta metropolitan area to approximately 2,300 homes, allowing us to capitalize on our new operating platform and further optimize our regional operating costs.
•Transitioned Elme Druid Hills to our operating platform and retained 100% of the community team, providing continuity for existing residents
Liquidity Position
•Available liquidity was approximately $560 million as of September 30, 2023, consisting of availability under the Company's revolving credit facility and cash on hand
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•Annualized third quarter net debt to adjusted EBITDA was 5.7x, due to the acquisition of Elme Druid Hills, which occurred at the end of the quarter. Annualized net debt to adjusted EBITDA ratio is expected to trend to the mid-5's by year end.
•The Company has no debt maturities until 2025 and no secured debt
Other Updates
•Our net loss during the quarter ended September 30, 2023 includes a $41.9 million non-cash impairment charge to reduce the carrying value of Watergate 600 to its estimated fair value, reflecting changes in market conditions in the Washington DC metro region office market.

"We are pleased to announce the acquisition of Elme Druid Hills, which aligns with our Class B value-add strategy and strengthens our Atlanta footprint," said Paul T. McDermott, President and CEO. "This property offers renovation potential for all 500 homes and sits on nearly 50 acres of land, which is a rare find in an affluent inside-the-perimeter location in Atlanta. At a price that represents a discount to replacement cost of over 30%, we believe that this acquisition will perform very well and drive long-term shareholder value."

Third Quarter Operating Results
•Multifamily same-store NOI - Same-store NOI increased 7.3% compared to the corresponding prior year period driven primarily by higher base rent. Average occupancy for the quarter increased 20 basis points from the prior year period to 95.6%.
•Other same-store NOI - The Other same-store portfolio is comprised of one asset, Watergate 600. Other same-store NOI decreased by 3.9% compared to the corresponding prior year period due to lower occupancy. Watergate 600 was 87.8% occupied and leased at quarter end and we expect occupancy to remain flat through year end.

2023 Guidance
"We reported a solid third quarter and our results and forward-looking trends align with our current Core FFO outlook for the year," said Steven Freishtat, Executive Vice President and CFO. "We remain confident in our outlook for high single digit same-store multifamily NOI growth this year, which represents very strong performance during a year of transition. With the execution risk related to our transition to Elme management fully behind us, we are focused on realizing the full benefits of our new multifamily platform and delivering operational upside through 2025 and beyond."

Management is tightening the range of its 2023 Core FFO guidance and maintaining its midpoint at $0.98 per fully diluted share. Core FFO for 2023 is now expected to range from $0.97 to $0.99 per fully diluted share. The following assumptions are included in the Core FFO guidance for 2023:

Full Year 2023 Outlook on Key Assumptions and Metrics
•Same-store multifamily NOI growth is expected to range from 8.0% to 9.0%
•Non-same-store multifamily NOI is now expected to range from $13.0 million to $13.75 million, adjusted to include the acquisition of Elme Druid Hills
•Other same-store NOI is now expected to range from $12.75 million to $13.25 million
•Interest expense is now expected to range from $30.25 million to $30.75 million, adjusted to include the acquisition of Elme Druid Hills
•Reflects internal transformation costs for 2023 ($6.3 million). The internalization of community-level operations are now complete and no additional transformation costs are expected.
•No additional acquisitions are assumed in 2023.
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Full Year 2023PriorCurrent
Core FFO per diluted share$0.96 - $1.00$0.97 - $0.99
Net Operating Income Assumptions
  Same-store multifamily NOI growth8.0% - 9.0%8.0% - 9.0%
  Non-same-store multifamily NOI (a)
$12.0 million - $12.75 million$13.0 million - $13.75 million
  Non-residential NOI (b)
~$0.8 million~$0.8 million
  Other same-store NOI (c)
$12.5 million - $13.25 million$12.75 million - $13.25 million
Expense Assumptions
   Property management expense$8.0 million - $8.5 million$8.0 million - $8.25 million
   G&A, net of core adjustments$24.5 million - $25.5 million$24.75 million - $25.25 million
   Interest expense$28.0 million - $28.75 million$30.25 million - $30.75 million
(a) Includes Elme Sandy Springs, Elme Cumberland, Elme Marietta, Elme Druid Hills and Riverside Development. Guidance does not contemplate any additional acquisitions or dispositions.
(b) Includes revenues and expenses from retail operations at multifamily communities
(c) Consists of Watergate 600

Elme Communities' 2023 Core FFO guidance and outlook are based on a number of factors, many of which are outside the Company's control and all of which are subject to change. Elme Communities may change the guidance provided during the year as actual and anticipated results vary from these assumptions, but Elme Communities undertakes no obligation to do so.

2023 Guidance Reconciliation Table

A reconciliation of projected net loss per diluted share to projected Core FFO per diluted share for the full year ending December 31, 2023 is as follows:
LowHigh
Net loss per diluted share                                     
$(0.15)$(0.13)
Real estate depreciation and amortization1.031.03
NAREIT FFO per diluted share 0.880.90
Core adjustments0.090.09
Core FFO per diluted share                                                                           $0.97$0.99

Dividends

On October 4, 2023, Elme Communities paid a quarterly dividend of $0.18 per share.

Elme Communities announced today that its Board of Trustees has declared a quarterly dividend of $0.18 per share to be paid on January 4, 2024 to shareholders of record on December 21, 2023.

Stock Repurchase Program

On October 26, 2023, the Board authorized and approved a share repurchase program of up to $50 million of the Company’s common shares of beneficial interest, which runs through October 25, 2025, unless extended by the Board. Under the share repurchase program, the Company can repurchase shares through open market purchases, including through Rule 10b5-1 trading programs, in privately negotiated transactions, or in such other manner that would comply with applicable securities laws and subject to compliance with existing debt agreements. The Company will evaluate the timing of share repurchases and the number of shares to be repurchased based on opportunities to enhance shareholder value by purchasing shares at times when the Company believes its shares are trading at a discount to net asset value per share as part of its broader capital allocation strategy, which includes preserving the strength of the balance sheet, and continuing to scale its portfolio.

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Presentation Webcast and Conference Call Information

The Third Quarter 2023 Earnings Call is scheduled for Friday, October 27, 2023 at 10:00 A.M. Eastern Time. Conference Call access information is as follows:

USA Toll Free Number:            1-888-506-0062
International Toll Number:        1-973-528-0011
Conference ID:                592356

The instant replay of the Earnings Call will be available until Friday, November 10, 2023. Instant replay access information is as follows:

USA Toll Free Number:            1-877-481-4010
International Toll Number:        1-919-882-2331
Conference ID:                49067

The live on-demand webcast of the Conference Call with presentation slides will be available on the Investor section of Elme Communities' website at www.elmecommunities.com. Online playback of the webcast and presentation slides will be available following the Conference Call.
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About Elme Communities
Elme Communities is committed to elevating what home can be for middle-income renters by providing a higher level of quality, service, and experience. The Company is a multifamily real estate investment trust that owns and operates approximately 9,400 apartment homes in the Washington, DC metro and the Sunbelt, and owns approximately 300,000 square feet of commercial space. Focused on providing quality, affordable homes to a deep, solid, and underserved base of mid-market demand, Elme Communities is building long-term value for shareholders.
Note: Elme Communities' press releases and supplemental financial information are available on the Company website at www.elmecommunities.com or by contacting Investor Relations at (202) 774-3200.

Forward Looking Statements
Certain statements in our earnings release and on our conference call are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Elme Communities to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. 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: 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; the risks associated with ownership of real estate in general and our real estate assets in particular; the economic health of the areas in which our properties are located, particularly with respect to greater Washington, DC metro region and the larger Sunbelt region; the risk of failure to enter into and/or complete contemplated acquisitions and dispositions, within the price ranges anticipated and on the terms and timing anticipated, or at all; changes in the composition of our portfolio; risks related to changes in interest rates; reductions in or actual or threatened changes to the timing of federal government spending; the risks related to use of third-party providers; the economic health of our residents; the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdown or a recession and geopolitical conflicts); compliance with applicable laws and corporate social responsibility goals, including those concerning the environment and access by persons with disabilities; the risks related to not having adequate insurance to cover potential losses; changes in the market value of securities; terrorist attacks or actions and/or cyber-attacks; whether we will succeed in the day-to-day property management and leasing activities that we have previously outsourced; the availability and terms of financing and capital and the general volatility of securities markets; the risks related to our organizational structure and limitations of share ownership; failure to qualify and maintain our qualification as a REIT and the risks of changes in laws affecting REITs; whether our estimated transformation costs for 2023 will be correct; whether we will achieve the expected operational upside of our multifamily platform through 2025 and beyond; whether we achieve our targeted range of net debt to adjusted EBITDA; and other risks and uncertainties detailed from time to time in our filings with the SEC, including our 2022 Form 10-K filed on February 17, 2023. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events, or otherwise.

This Earnings Release also includes certain forward-looking non-GAAP information. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Please see the following pages for the corresponding definitions and reconciliations of such non-GAAP financial measures.

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 ELME COMMUNITIES AND SUBSIDIARIES
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
OPERATING RESULTS2023202220232022
Revenue
Real estate rental revenue$56,651 $54,603 $169,059 $153,787 
Expenses
Property operating and maintenance12,747 13,092 38,510 35,404 
Real estate taxes and insurance7,050 6,469 21,066 19,893 
Property management1,935 1,916 5,882 5,462 
General and administrative6,370 6,403 19,891 20,998 
Transformation costs985 2,399 6,339 6,645 
Depreciation and amortization21,904 23,632 64,855 69,871 
Real estate impairment 41,860 — 41,860 — 
92,851 53,911 198,403 158,273 
Real estate operating income (loss)(36,200)692 (29,344)(4,486)
Other income (expense)
Interest expense(7,418)(6,582)(21,043)(18,388)
Loss on extinguishment of debt— (4,917)(54)(4,917)
Other income— 68 569 454 
(7,418)(11,431)(20,528)(22,851)
Net loss$(43,618)$(10,739)$(49,872)$(27,337)
Net loss$(43,618)$(10,739)$(49,872)$(27,337)
Depreciation and amortization21,904 23,632 64,855 69,871 
Real estate impairment41,860 — 41,860 — 
NAREIT funds from operations$20,146 $12,893 $56,843 $42,534 
Non-cash loss on extinguishment of debt$— $4,873 $54 $4,873 
Tenant improvements and incentives, net of reimbursements— — (10)(1,025)
Leasing commissions capitalized— — (56)— 
Recurring capital improvements(1,490)(2,404)(5,950)(5,026)
Straight-line rents, net(74)(112)(160)(437)
Non-cash fair value interest expense— 105 — 210 
Non-real estate depreciation & amortization of debt costs1,348 1,158 3,891 3,517 
Amortization of lease intangibles, net(155)(227)(570)(608)
Amortization and expensing of restricted share and unit compensation1,432 1,917 3,966 6,157 
Adjusted funds from operations$21,207 $18,203 $58,008 $50,195 
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Three Months Ended September 30,Nine Months Ended September 30,
Per share data:2023202220232022
Net loss(Basic)$(0.50)$(0.12)$(0.57)$(0.32)
(Diluted)$(0.50)$(0.12)$(0.57)$(0.32)
NAREIT FFO(Basic)$0.23 $0.15 $0.65 $0.48 
(Diluted)$0.23 $0.15 $0.64 $0.48 
Dividends paid$0.18 $0.17 $0.54 $0.51 
Weighted average shares outstanding - basic87,759 87,453 87,717 87,354 
Weighted average shares outstanding - diluted87,759 87,453 87,717 87,354 
Weighted average shares outstanding - diluted (for NAREIT FFO)87,799 87,564 87,809 87,447 
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ELME COMMUNITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
September 30, 2023December 31, 2022
Assets
Land$384,097 $373,171 
Income producing property1,941,663 1,897,835 
2,325,760 2,271,006 
Accumulated depreciation and amortization(506,298)(481,588)
Net income producing property1,819,462 1,789,418 
Properties under development or held for future development31,095 31,260 
Total real estate held for investment, net1,850,557 1,820,678 
Cash and cash equivalents8,079 8,389 
Restricted cash2,104 1,463 
Rents and other receivables15,300 16,346 
Prepaid expenses and other assets34,233 25,730 
Total assets$1,910,273 $1,872,606 
Liabilities
Notes payable, net$522,150 $497,359 
Line of credit149,000 55,000 
Accounts payable and other liabilities40,666 34,386 
Dividend payable15,868 14,934 
Advance rents3,365 1,578 
Tenant security deposits6,171 5,563 
Total liabilities737,220 608,820 
Equity
Shareholders' equity
Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding— — 
Shares of beneficial interest, $0.01 par value; 150,000 shares authorized: 87,832 and 87,534 shares issued and outstanding, as of September 30, 2023 and December 31, 2022, respectively
878 875 
Additional paid in capital1,734,657 1,729,854 
Distributions in excess of net income(550,442)(453,008)
Accumulated other comprehensive loss(12,332)(14,233)
Total shareholders' equity1,172,761 1,263,488 
Noncontrolling interests in subsidiaries292 298 
Total equity1,173,053 1,263,786 
Total liabilities and equity$1,910,273 $1,872,606 

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The following tables contain reconciliations of net loss to NOI and same-store NOI for the periods presented (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss$(43,618)$(10,739)$(49,872)$(27,337)
Adjustments:
Property management expense1,935 1,916 5,882 5,462 
General and administrative expense6,370 6,403 19,891 20,998 
Transformation costs985 2,399 6,339 6,645 
Real estate depreciation and amortization21,904 23,632 64,855 69,871 
Real estate impairment41,860 — 41,860 — 
Interest expense7,418 6,582 21,043 18,388 
Loss on extinguishment of debt, net— 4,917 54 4,917 
Other income— (68)(569)(454)
Total Net Operating Income (NOI)$36,854 $35,042 $109,483 $98,490 
Multifamily NOI:
Same-store Portfolio$30,336 $28,264 $89,903 $82,012 
Acquisitions3,1653,291 9,172 5,924 
Development(56)(52)(168)(71)
Non-residential189188 620 593 
Total33,634 31,691 99,527 88,458 
Other NOI (Watergate 600)3,220 3,351 9,956 10,032 
Total NOI$36,854 $35,042 $109,483 $98,490 


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The following table contains a reconciliation of net loss to core funds from operations for the periods presented (in thousands, except per share data):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss $(43,618)$(10,739)$(49,872)$(27,337)
Add:
Real estate depreciation and amortization21,904 23,632 64,855 69,871 
Real estate impairment41,860 — 41,860 — 
NAREIT funds from operations20,146 12,893 56,843 42,534 
Add:
Structuring expenses— 121 60 1,101 
Loss on extinguishment of debt, net— 4,917 54 4,917 
Severance expense— — 394 474 
Transformation costs985 2,399 6,339 6,645 
Write-off of pursuit costs— 174 49 174 
Relocation expense306 — 626 — 
Core funds from operations$21,437 $20,504 $64,365 $55,845 
Three Months Ended September 30,Nine Months Ended September 30,
Per share data:2023202220232022
NAREIT FFO(Basic)$0.23 $0.15 $0.65 $0.48 
(Diluted)$0.23 $0.15 $0.64 $0.48 
Core FFO(Basic)$0.24 $0.23 $0.73 $0.64 
(Diluted)$0.24 $0.23 $0.73 $0.64 
Weighted average shares outstanding - basic87,759 87,453 87,717 87,354 
Weighted average shares outstanding - diluted
(for NAREIT and Core FFO)		87,799 87,564 87,809 87,447 

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Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net loss$(43,618)$(10,739)$(49,872)$(27,337)
Add/(deduct):
Interest expense7,4186,58221,04318,388
Real estate depreciation and amortization21,90423,63264,85569,871
Real estate impairment41,860—41,860—
Non-real estate depreciation291189728644
Severance expense——394474
Transformation costs9852,3996,3396,645
Relocation expense306—626—
Structuring expenses—121601,101
Loss on extinguishment of debt—4,917544,917
Adjusted EBITDA $29,146$27,101$86,087$74,703


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Non-GAAP Financial Measures
Adjusted EBITDA is earnings before interest expense, taxes, depreciation, amortization, gain/loss on sale of real estate, casualty gain/loss, real estate impairment, gain/loss on extinguishment of debt, gain/loss on interest rate derivatives, severance expense, acquisition expenses and gain from non-disposal activities and transformation costs. Adjusted EBITDA is included herein because we believe it helps investors and lenders understand our ability to incur and service debt and to make capital expenditures. Adjusted EBITDA is a non-GAAP and non-standardized measure and may be calculated differently by other REITs.
Adjusted Funds From Operations (“AFFO”) is a non-GAAP measure. It is calculated by subtracting from FFO (1) recurring improvements, tenant improvements and leasing costs, that are capitalized and amortized and are necessary to maintain our properties and revenue stream (excluding items contemplated prior to acquisition or associated with development / redevelopment of a property) and (2) straight line rents, then adding (3) non-real estate depreciation and amortization, (4) non-cash fair value interest expense and (5) amortization of restricted share compensation, then adding or subtracting the (6) amortization of lease intangibles, (7) real estate impairment and (8) non-cash gain/loss on extinguishment of debt, as appropriate. AFFO is included herein, because we consider it to be a performance measure of a REIT’s ability to incur and service debt and to distribute dividends to its shareholders. AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
Core Adjusted Funds From Operations ("Core AFFO") is calculated by adjusting AFFO for the following items (which we believe are not indicative of the performance of Elme Communities' operating portfolio and affect the comparative measurement of Elme Communities' operating performance over time): (1) gains or losses on extinguishment of debt and gains or losses on interest rate derivatives, (2) expenses related to acquisition and structuring activities, (3) non-share-based executive transition costs, severance expenses and other expenses related to corporate restructuring and executive retirements or resignations, (4) property impairments, casualty gains and losses, and gains or losses on sale not already excluded from Core AFFO, as appropriate, (5) relocation expense, (6) transformation costs and (7) write-off of pursuit costs. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core AFFO serves as a useful, supplementary performance measure of Elme Communities' ability to incur and service debt, and distribute dividends to its shareholders. Core AFFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
Core Funds From Operations (“Core FFO”) is calculated by adjusting NAREIT FFO for the following items (which we believe are not indicative of the performance of Elme Communities' operating portfolio and affect the comparative measurement of Elme Communities' operating performance over time): (1) gains or losses on extinguishment of debt and gains or losses on interest rate derivatives, (2) expenses related to acquisition and structuring activities, (3) executive transition costs, severance expenses and other expenses related to corporate restructuring and executive retirements or resignations, (4) property impairments, casualty gains and losses, and gains or losses on sale not already excluded from NAREIT FFO, as appropriate, (5) relocation expense, (6) transformation costs and (7) write-off of pursuit costs. These items can vary greatly from period to period, depending upon the volume of our acquisition activity and debt retirements, among other factors. We believe that by excluding these items, Core FFO serves as a useful, supplementary measure of Elme Communities' ability to incur and service debt, and distribute dividends to its shareholders. Core FFO is a non-GAAP and non-standardized measure, and may be calculated differently by other REITs.
NAREIT Funds From Operations (“FFO”) is defined by the 2018 National Association of Real Estate Investment Trusts, Inc. (“NAREIT”) FFO White Paper Restatement, as net income (computed in accordance with generally accepted accounting principles (“GAAP”) excluding gains (or losses) associated with sales of properties, impairments of depreciable real estate and real estate depreciation and amortization. We consider NAREIT FFO to be a standard supplemental measure for equity real estate investment trusts (“REITs”) because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which historically assumes that the value of real estate assets diminishes predictably over time. Since real estate values have instead historically risen or fallen with market conditions, we believe that NAREIT FFO more accurately provides investors an indication of our ability to incur and service debt, make capital expenditures and fund other needs. Our NAREIT FFO may not be comparable to FFO reported by other REITs. These other REITs may not define the term in accordance with the current NAREIT definition or may interpret the current NAREIT definition differently. NAREIT FFO is a non-GAAP measure.
Net Debt to Adjusted EBITDA represents net debt as of period end divided by adjusted EBITDA for the period, as annualized (i.e. three months periods are multiplied by four) or on a trailing 12 month basis. We define net debt as the total outstanding debt reported as per our consolidated balance sheets less cash and cash equivalents at the end of the period.

Net Operating Income (“NOI”), defined as real estate rental revenue less direct real estate operating expenses, is a non-GAAP measure. NOI is calculated as net income, less non-real estate revenue and the results of discontinued operations (including the gain or loss on sale, if any), plus interest expense, depreciation and amortization, lease origination expenses, general and administrative expenses, acquisition costs, real estate impairment, casualty gain and losses and gain or loss on extinguishment of debt. NOI does not include management expenses, which consist of corporate property management costs and property management fees paid to third parties. NOI is the primary performance measure we use to assess the results of our operations at the property level. We believe that NOI is a useful performance measure
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because, when compared across periods, it reflects the impact on operations of trends in occupancy rates, rental rates and operating costs on an unleveraged basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. As a result of the foregoing, we provide NOI as a supplement to net income, calculated in accordance with GAAP. NOI does not represent net income or income from continuing operations calculated in accordance with GAAP. As such, NOI should not be considered an alternative to these measures as an indication of our operating performance.

Other Definitions
Average Effective Monthly Rent Per Home represents the average of effective rent (net of concessions) for in-place leases plus the market rent for vacant homes, divided by the total number of homes. We believe Average Effective Monthly Rent Per Home is a useful metric in evaluating the average pricing of our homes. It is a component of Residential Revenue, which is used to calculate our NOI. It does not represent actual rental revenue collected per unit.
Average Occupancy is based on average daily occupied apartment homes as a percentage of total apartment homes.
Current Strategy represents the class of each community in our portfolio based on a set of criteria. Our strategies consist of the following subcategories: Class A, Class A-, Class B Value-Add and Class B. A community's class is dependent on a variety of factors, including its vintage, site location, amenities and services, rent growth drivers and rent relative to the market.
•Class A communities are recently-developed, well-located, have competitive amenities and services and command average rental rates well above market median rents.
•Class A- communities have been developed within the past 20 years and feature operational improvements and unit upgrades and command rents at or above median market rents.
•Class B Value-Add communities are over 20 years old but feature operational improvements and strong potential for unit renovations. These communities command average rental rates below median market rents for units that have not been renovated.
•Class B communities are over 20 years old, feature operational improvements and command average rental rates below median market rents.
Debt Service Coverage Ratio is computed by dividing earnings attributable to the controlling interest before interest expense, taxes, depreciation, amortization, real estate impairment, gain on sale of real estate, gain/loss on extinguishment of debt, severance expense, relocation expense, acquisition and structuring expenses and gain/loss from non-disposal activities by interest expense (including interest expense from discontinued operations) and principal amortization.
Debt to Total Market Capitalization is total debt divided by the sum of total debt plus the market value of shares outstanding at the end of the period.
Earnings to Fixed Charges Ratio is computed by dividing earnings attributable to the controlling interest by fixed charges. For this purpose, earnings consist of income from continuing operations (or net income if there are no discontinued operations) plus fixed charges, less capitalized interest. Fixed charges consist of interest expense (excluding interest expense from discontinued operations), including amortized costs of debt issuance, plus interest costs capitalized.
Ending Occupancy is calculated as occupied homes as a percentage of total homes as of the last day of that period.
Lease Rate Growth is defined as the average percentage change in either gross (excluding the impact of concessions) or effective rent (net of concessions) for a new or renewed multifamily lease compared to the prior lease based on the move-in date. The "blended" rate represents the weighted average of new and renewal lease rate growth achieved.
Recurring Capital Improvements represent non-accretive building improvements required to maintain a property's income and value. Recurring capital improvements do not include acquisition capital that was taken into consideration when underwriting the purchase of a building or which are incurred to bring a building up to "operating standard". This category includes improvements made as needed upon vacancy of an apartment. 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.

Retention represents the percentage of multifamily leases renewed that were set to expire in the period presented.
Relocation expenses represent costs associated with the relocation of the corporate headquarters to a new location in the DC metro region.
Same-store Portfolio includes properties that were owned for the entirety of the years being compared, and exclude properties under redevelopment or development and properties acquired, sold or classified as held for sale during the years being compared. We categorize our properties as "same-store" or "non-same-store" for purposes of evaluating
13
Elme Communities

comparative operating performance. We define development properties as those for which we have planned or ongoing major construction activities on existing or acquired land pursuant to an authorized development plan. Development properties are categorized as same-store when they have reached stabilized occupancy (90%) before the start of the prior year. We define redevelopment properties as those for which we have planned or ongoing significant development and construction activities on existing or acquired buildings pursuant to an authorized plan, which has an impact on current operating results, occupancy and the ability to lease space with the intended result of a higher economic return on the property. We categorize a redevelopment property as same-store when redevelopment activities have been complete for the majority of each year being compared. We currently have two same-store portfolios: "Same-store multifamily" which is comprised of our same-store apartment communities and "Other same-store" which is comprised of our Watergate 600 commercial property.
Transformation Costs include costs related to the strategic shift away from the commercial sector to the residential sector, including the allocation of internal costs, consulting, advisory and termination benefits.
14

Table of Contents
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September 30, 2023


SchedulePage
Key Financial Data
Portfolio Analysis
Net Operating Income (NOI) - Multifamily
Same-Store Operating Results - Multifamily
Same-Store Operating Expenses - Multifamily
Growth and Strategy
Acquisition Summary
Schedule of Communities
Capital Analysis
Reconciliations
15

Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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Nine Months EndedThree Months Ended
OPERATING RESULTSSeptember 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Revenues
Real estate rental revenue$169,059 $153,787 $56,651 $56,599 $55,809 $55,593 $54,603 
Expenses
Property operating and maintenance(38,510)(35,404)(12,747)(13,364)(12,399)(12,126)(13,092)
Real estate taxes and insurance(21,066)(19,893)(7,050)(6,894)(7,122)(6,578)(6,469)
Property management(5,882)(5,462)(1,935)(2,178)(1,769)(1,974)(1,916)
General and administrative(19,891)(20,998)(6,370)(6,680)(6,841)(7,260)(6,403)
Transformation costs(6,339)(6,645)(985)(2,454)(2,900)(3,041)(2,399)
Depreciation and amortization(64,855)(69,871)(21,904)(21,415)(21,536)(21,851)(23,632)
Real estate impairment(41,860)— (41,860)— — — — 
(198,403)(158,273)(92,851)(52,985)(52,567)(52,830)(53,911)
Real estate operating (loss) income(29,344)(4,486)(36,200)3,614 3,242 2,763 692 
Other income (expense)
Interest expense(21,043)(18,388)(7,418)(6,794)(6,831)(6,552)(6,582)
Loss on extinguishment of debt(54)(4,917)— — (54)— (4,917)
Other income569 454 — 569 — 258 68 
Net loss$(49,872)$(27,337)$(43,618)$(2,611)$(3,643)$(3,531)$(10,739)
Per Share Data:
Net loss$(0.57)$(0.32)$(0.50)$(0.03)$(0.04)$(0.04)$(0.12)
Fully diluted weighted average shares outstanding87,717 87,354 87,759 87,741 87,649 87,491 87,453 
Percentage of Revenues:
General and administrative expenses11.8 %13.7 %11.2 %11.8 %12.3 %13.1 %11.7 %
Net loss(29.5)%(17.8)%(77.0)%(4.6)%(6.5)%(6.4)%(19.7)%
Ratios:
Adjusted EBITDA(1) / Interest expense
4.1 x4.1 x3.9 x4.2 x4.2 x4.3 x4.1 x
______________________________
(1) Adjusted EBITDA is a non-GAAP measure. See "Definitions" on page 12 for the definition of Adjusted EBITDA and page 26 for a reconciliation of Net loss to Adjusted EBITDA.
16

Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
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September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Assets
Land$384,097 $373,113 $373,171 $373,171 $373,171 
Income producing property1,941,663 1,911,381 1,903,648 1,897,835 1,882,235 
2,325,760 2,284,494 2,276,819 2,271,006 2,255,406 
Accumulated depreciation and amortization(506,298)(523,153)(502,104)(481,588)(461,293)
Net income producing property1,819,462 1,761,341 1,774,715 1,789,418 1,794,113 
Properties under development or held for future development31,095 31,260 31,260 31,260 31,232 
Total real estate held for investment, net1,850,557 1,792,601 1,805,975 1,820,678 1,825,345 
Cash and cash equivalents8,079 5,554 7,044 8,389 8,436 
Restricted cash2,104 1,887 1,487 1,463 1,437 
Rents and other receivables15,300 15,746 16,095 16,346 16,088 
Prepaid expenses and other assets34,233 22,711 24,398 25,730 28,228 
Total assets$1,910,273 $1,838,499 $1,854,999 $1,872,606 $1,879,534 
Liabilities
Notes payable, net$522,150 $521,955 $521,761 $497,359 $497,247 
Line of credit149,000 24,000 35,000 55,000 43,000 
Accounts payable and other liabilities40,666 36,920 28,583 34,386 36,219 
Dividend payable15,868 15,834 15,869 14,934 14,919 
Advance rents3,365 2,949 1,800 1,578 1,489 
Tenant security deposits6,171 5,913 5,671 5,563 5,461 
Total liabilities737,220 607,571 608,684 608,820 598,335 
Equity
Preferred shares; $0.01 par value; 10,000 shares authorized— — — — — 
Shares of beneficial interest, $0.01 par value; 150,000 shares authorized878 878 877 875 875 
Additional paid-in capital1,734,657 1,733,388 1,731,701 1,729,854 1,728,840 
Distributions in excess of net income(550,442)(490,939)(472,503)(453,008)(434,539)
Accumulated other comprehensive loss (12,332)(12,693)(14,056)(14,233)(14,278)
Total shareholders' equity1,172,761 1,230,634 1,246,019 1,263,488 1,280,898 
Noncontrolling interests in subsidiaries292 294 296 298 301 
Total equity1,173,053 1,230,928 1,246,315 1,263,786 1,281,199 
Total liabilities and equity$1,910,273 $1,838,499 $1,854,999 $1,872,606 $1,879,534 
17

NAREIT Funds from Operations/ Adjusted Funds From Operations
(In thousands, except per share data)
(Unaudited)

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Nine Months EndedThree Months Ended
September 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Funds from operations (FFO)
Net loss$(49,872)$(27,337)$(43,618)$(2,611)$(3,643)$(3,531)$(10,739)
Real estate depreciation and amortization64,85569,87121,90421,41521,53621,85123,632
Real estate impairment41,860—41,860————
NAREIT funds from operations (FFO)(1)
56,84342,53420,14618,80417,89318,32012,893
Loss on extinguishment of debt544,917——54—4,917
Severance expense394474——394——
Transformation costs6,3396,6459852,4542,9003,0412,399
Relocation expense626—30613418674—
Structuring expenses601,101——6060121
Write-off of pursuit costs49174—940—174
Core FFO(1)
$64,365$55,845$21,437$21,401$21,527$21,495$20,504
Allocation to participating securities(2)
(209)(191)(71)(68)(70)(41)(68)
NAREIT FFO per share - basic$0.65$0.48$0.23$0.21$0.20$0.21$0.15
NAREIT FFO per share - fully diluted$0.64$0.48$0.23$0.21$0.20$0.21$0.15
Core FFO per share - fully diluted$0.73$0.64$0.24$0.24$0.24$0.24$0.23
Common dividend per share$0.54$0.51$0.18$0.18$0.18$0.17$0.17
Average shares - basic87,71787,35487,75987,74187,64987,49187,453
Average shares - fully diluted (for NAREIT FFO and Core FFO)87,80987,44787,79987,78587,84087,62287,564
18

NAREIT Funds from Operations/ Adjusted Funds From Operations (continued)
(In thousands, except per share data)
(Unaudited)

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Nine Months EndedThree Months Ended
September 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Adjusted funds from operations (AFFO) (1)
NAREIT FFO(1)
$56,843$42,534$20,146$18,804$17,893$18,320$12,893
Non-cash loss on extinguishment of debt544,873——54—4,873
Tenant improvements and incentives, net of reimbursements(10)(1,025)——(10)——
Leasing commissions capitalized(56)———(56)(16)—
Recurring capital improvements(5,950)(5,026)(1,490)(2,456)(2,004)(2,656)(2,404)
Straight-line rent, net(160)(437)(74)(57)(29)(55)(112)
Non-cash fair value interest expense—210————105
Non-real estate depreciation and amortization of debt costs3,8913,5171,3481,2761,2671,1471,158
Amortization of lease intangibles, net(570)(608)(155)(178)(237)(337)(227)
Amortization and expensing of restricted share and unit compensation(3)
3,9666,1571,4321,3461,1881,8311,917
AFFO(1)
58,00850,19521,20718,73518,06618,23418,203
Cash loss on extinguishment of debt—44————44
Non-share-based severance expense340202—340——
Relocation expense626—30613418674—
Structuring expenses601,101——6060121
Transformation costs(4)
6,3396,3379852,4542,9003,0412,399
Write-off of pursuit costs49174—940—174
Core AFFO(1)
$65,422$58,053$22,498$21,332$21,592$21,409$20,941
______________________________
(1) See "Definitions" on page 12 for the definitions of non-GAAP measures: NAREIT FFO, Core FFO, AFFO, and Core AFFO.
(2) Adjustment to the numerators for FFO and Core FFO per share calculations when applying the two-class method for calculating EPS.
(3) Includes share award modifications related to transformation costs.
(4) Excludes share award modifications related to transformation costs.

19

Net Operating Income (NOI) - Multifamily
(Dollars In thousands)

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Apartment Homes as of 9/30/2023Nine Months EndedThree Months Ended
September 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Rental and other property revenues
Same-store7,790$139,182 $129,440 $46,610 $46,786 $45,786 $45,051 $44,735 
Acquisitions1,57915,269 9,622 5,233 5,079 4,957 5,314 4,897 
Development—— — — — — — — 
Non-residential(1)
N/A705 807 222 235 248 266 257 
Total rental and other property revenues(2)
9,369155,156 139,869 52,065 52,100 50,991 50,631 49,889 
Property operating expenses
Same-store49,279 47,428 16,274 16,765 16,240 15,390 16,471 
Acquisitions6,097 3,698 2,068 2,203 1,826 1,810 1,606 
Development168 71 56 54 58 57 52 
Non-residential85 214 33 32 20 67 69 
Total property operating expenses55,629 51,411 18,431 19,054 18,144 17,324 18,198 
Net Operating Income (NOI)(3)
Same-store89,903 82,012 30,336 30,021 29,546 29,661 28,264 
Acquisitions9,172 5,924 3,165 2,876 3,131 3,504 3,291 
Development(168)(71)(56)(54)(58)(57)(52)
Non-residential620 593 189 203 228 199 188 
Total NOI$99,527 $88,458 $33,634 $33,046 $32,847 $33,307 $31,691 
Same-store metrics
Operating margin(4)
65%63%65%64%65%66%63%
Retention63%63%61%63%64%60%60%
Same-store effective lease rate growth
    New0.3%11.3%0.1%0.4%0.7%1.5%11.2%
    Renewal6.2%11.3%5.1%6.4%8.0%10.5%11.6%
    Blended3.6%11.3%3.0%3.7%4.5%5.9%11.4%
______________________________
(1) Includes revenues and expenses from retail operations at multifamily properties.
(2) Utility costs reimbursed by residents are included in real estate rental revenue on our consolidated statements of operations. Utility reimbursements totaled $6.1 million and $5.4 million for the nine months ended September 30, 2023 and 2022 respectively, and $1.9 million, $2.2 million, $2.1 million,$1.9 million and $1.9 million for the three months ended September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.
(3) NOI is a non-GAAP measure. See "Definitions" on page 12 for the definition of NOI and reconciliation of Net loss to NOI on page 31.
(4) Operating margin is calculated by dividing the same-store NOI (non-GAAP) by same-store rental and other property revenues.
20

Same-Store Operating Results - Multifamily
(Dollars in thousands, except Average Effective Monthly Rent per Home)
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Rental and Other Property RevenueProperty Operating Expenses
Net Operating Income (1)
Average OccupancyAverage Effective Monthly Rent per Home
Quarter-to-Date ComparisonApt HomesQ3 2023Q3 2022% ChgQ3 2023Q3 2022% ChgQ3 2023Q3 2022% ChgQ3 2023Q3 2022% ChgQ3 2023Q3 2022% Chg
Virginia5,545$34,507 $33,165 4.0 %$11,599 $11,730 (1.1)%$22,908 $21,435 6.9 %95.9 %95.3 %0.6 %$1,963 $1,879 4.5 %
DC / Maryland1,5158,987 8,317 8.1 %3,092 3,191 (3.1)%5,895 5,126 15.0 %96.5 %96.5 %— %1,935 1,801 7.4 %
Georgia7303,116 3,253 (4.2)%$1,583 $1,550 2.1 %1,533 1,703 (10.0)%92.0 %94.2 %(2.2)%1,451 1,410 2.9 %
Total 7,790$46,610 $44,735 4.2 %$16,274 $16,471 (1.2)%$30,336 $28,264 7.3 %95.6 %95.4 %0.2 %$1,910 $1,820 4.9 %
Sequential ComparisonApt HomesQ3 2023Q2 2023% ChgQ3 2023Q2 2023% ChgQ3 2023Q2 2023% ChgQ3 2023Q2 2023% ChgQ3 2023Q2 2023% Chg
Virginia5,545$34,507 $34,687 (0.5)%$11,599 $12,074 (3.9)%$22,908 $22,613 1.3 %95.9 %95.8 %0.1 %$1,963 $1,942 1.1 %
DC / Maryland1,5158,987 8,741 2.8 %3,092 3,268 (5.4)%5,895 5,473 7.7 %96.5 %95.8 %0.7 %1,935 1,900 1.8 %
Georgia7303,116 3,358 (7.2)%$1,583 $1,423 11.2 %1,533 1,935 (20.8)%92.0 %93.9 %(1.9)%1,451 1,474 (1.6)%
Total7,790$46,610 $46,786 (0.4)%$16,274 $16,765 (2.9)%$30,336 $30,021 1.0 %95.6 %95.6 %— %$1,910 $1,890 1.1 %
Year-to-Date ComparisonApt HomesYTD 2023YTD 2022% ChgYTD 2023YTD 2022% ChgYTD 2023YTD 2022% ChgYTD 2023YTD 2022% ChgYTD 2023YTD 2022% Chg
Virginia5,545$102,953 $95,886 7.4 %$35,197 $33,966 3.6 %$67,756 $61,920 9.4 %95.7 %95.5 %0.2 %$1,941 $1,812 7.1 %
DC / Maryland1,51526,391 24,458 7.9 %9,537 9,112 4.7 %16,854 15,346 9.8 %96.0 %96.3 %(0.3)%1,901 1,759 8.1 %
Georgia7309,838 9,096 8.2 %$4,545 $4,350 4.5 %5,293 4,746 11.5 %93.6 %94.6 %(1.0)%$1,463 $1,335 9.6 %
Total7,790$139,182 $129,440 7.5 %$49,279 $47,428 3.9 %$89,903 $82,012 9.6 %95.6 %95.6 %— %$1,889 $1,757 7.5 %
______________________________
(1) NOI is a non-GAAP measure. See "Definitions" on page 12 for the definition of NOI and reconciliation of Net loss to NOI on page 31.

21

Same-Store Operating Expenses - Multifamily
(In thousands)
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Quarter-to-Date ComparisonQ3 2023Q3 2022$ Change% Change% of Q3 2023 Total
Controllable operating expenses(1)
$7,998 $8,678 $(680)(7.8)%49.2 %
Real estate taxes4,824 4,678 146 3.1 %29.6 %
Utilities2,619 2,389 230 9.6 %16.1 %
Insurance833 726 107 14.7 %5.1 %
Total same-store operating expenses16,274 16,471 (197)(1.2)%100.0 %
Utility reimbursements(1,520)(1,630)110 (6.7)%
Total same-store operating expenses, net of utility reimbursements$14,754 $14,841 $(87)(0.6)%
Sequential ComparisonQ3 2023Q2 2023$ Change% Change% of Q3 2023 Total
Controllable operating expenses$7,998 $8,937 $(939)(10.5)%49.2 %
Real estate taxes4,824 4,750 74 1.6 %29.6 %
Utilities2,619 2,337 282 12.1 %16.1 %
Insurance833 741 92 12.4 %5.1 %
Total same-store operating expenses16,274 16,765 (491)(2.9)%100.0 %
Utility reimbursements(1,520)(1,923)403 (21.0)%
Total same-store operating expenses, net of utility reimbursements$14,754 $14,842 $(88)(0.6)%
Year-to-Date ComparisonYTD 2023YTD 2022$ Change% Change% of YTD 2023 Total
Controllable operating expenses$24,562 $23,990 $572 2.4 %49.8 %
Real estate taxes14,575 14,384 191 1.3 %29.6 %
Utilities7,843 6,895 948 13.7 %15.9 %
Insurance2,299 2,159 140 6.5 %4.7 %
Total same-store operating expenses49,279 47,428 1,851 3.9 %100.0 %
Utility reimbursements(5,264)(4,977)(287)5.8 %
Total same-store operating expenses, net of utility reimbursements$44,015 $42,451 $1,564 3.7 %
______________________________
(1) Controllable operating expenses consist of:
     Payroll, Repairs & Maintenance, Marketing, Administrative and other
22

Acquisition Summary
(Dollars in thousands)
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Acquisitions
LocationAcquisition DateNumber of Homes
Ending Occupancy (as of September 30, 2023)
Contract Purchase Price
Elme Druid HillsAtlanta, GASeptember 29, 202350093.4%$108,000 


23

Multifamily Communities
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September 30, 2023
CommunityLocationApartment HomesCurrent StrategyYear AcquiredYear Built
Average Occupancy(1)
Ending Occupancy
% of Total Portfolio NOI(1,2)
Virginia
Elme AlexandriaAlexandria, VA532B Value-Add2019199094.5%95.3%5%
Cascade at LandmarkAlexandria, VA277B Value-Add2019198895.6%98.2%3%
Clayborne Alexandria, VA74A-N/A200896.3%95.9%1%
Riverside ApartmentsAlexandria, VA1,222B Value-Add2016197196.0%96.1%12%
Bennett ParkArlington, VA224A-N/A200795.4%97.8%4%
Park AdamsArlington, VA200B1969195996.6%95.5%2%
The MaxwellArlington, VA163A-N/A201497.2%95.1%2%
The ParamountArlington, VA135B2013198496.4%97.0%2%
The WellingtonArlington, VA710B Value-Add2015196095.9%97.5%7%
TroveArlington, VA401AN/A202096.0%96.0%5%
Roosevelt TowersFalls Church, VA191B1965196496.0%95.3%2%
Elme DullesHerndon, VA328B Value-Add2019200095.6%97.0%4%
Elme HerndonHerndon, VA283B Value-Add2019199196.0%97.5%3%
Elme LeesburgLeesburg, VA134B 2019198695.3%97.0%1%
Elme ManassasManassas, VA408B Value-Add2019198694.7%93.9%4%
The Ashby at McLeanMcLean, VA263B1996198295.9%96.6%4%
Washington, DC
3801 Connecticut AvenueWashington, DC307B Value-Add1963195196.7%95.8%3%
Kenmore ApartmentsWashington, DC371B Value-Add2008194895.9%96.0%3%
Yale WestWashington, DC216A-2014201195.5%95.8%3%
Maryland
Elme BethesdaBethesda, MD193B1997198696.5%97.4%3%
Elme Watkins MillGaithersburg, MD210B2019197595.4%96.2%2%
Elme GermantownGermantown, MD218B Value-Add2019199096.0%97.2%2%
Georgia
Elme ConyersConyers, GA240B 2021199994.0%91.3%2%
Elme Eagles LandingStockbridge, GA490B2021200093.4%89.4%3%
Total same-store communities7,79095.6%95.7%82%
24





Multifamily Communities (continued)
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September 30, 2023

CommunityLocationApartment HomesCurrent StrategyYear AcquiredYear Built
Average Occupancy(1,3)
Ending Occupancy (3)
% of Total Portfolio NOI(1,2)
Georgia
Elme MariettaMarietta, GA420B Value-Add2022197593.5%91.9%4%
Elme Sandy SpringsSandy Springs, GA389B Value-Add2022197294.0%92.3%3%
Elme CumberlandSmyrna, GA270B Value-Add2022198294.1%91.5%2%
Elme Druid HillsAtlanta, GA500B Value-Add2023198793.5%93.4%—%
Total non same-store communities1,57993.8%92.4%9%
Total multifamily communities9,36995.4%95.2%91%
______________________________
(1) For the nine months ended September 30, 2023.
(2) NOI is a non-GAAP measure. See "Definitions" on page 12 for the definition of NOI and reconciliation of Net loss to NOI on page 32.
(3) Includes results at Elme Druid Hills for periods prior to the Company's ownership. Results for periods prior to the Company's ownership have not been included in the Company's Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of the community and have not been audited or adjusted.


25

Office Property
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September 30, 2023

PropertyLocationYear AcquiredYear BuiltNet Rentable Square Feet
Leased %(1)
Ending Occupancy(1)
% of Total Portfolio NOI(2,3)
Washington, DC
Watergate 600Washington, DC20171972/1997300,00087.8%87.8%9%
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(1)     The leased and occupied square footage includes short-term lease agreements.
(2)     For the nine months ended September 30, 2023.
(3)     NOI is a non-GAAP measure. See "Definitions" on page 12 for the definition of NOI and reconciliation of Net loss to NOI on page 32.
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Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
(In thousands)
(Unaudited)
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Nine Months EndedThree Months Ended
September 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Adjusted EBITDA(1)
Net loss$(49,872)$(27,337)$(43,618)$(2,611)$(3,643)$(3,531)$(10,739)
Add/(deduct):
Interest expense21,04318,3887,4186,7946,8316,5526,582
Real estate depreciation and amortization64,85569,87121,90421,41521,53621,85123,632
Real estate impairment41,860—41,860————
Non-real estate depreciation728644291222215178189
Severance expense394474——394——
Transformation costs6,3396,6459852,4542,9003,0412,399
Relocation expense626—30613418674—
Structuring expenses601,101——6060121
Loss on extinguishment of debt544,917——54—4,917
Adjusted EBITDA $86,087$74,703$29,146$28,408$28,533$28,225$27,101
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(1) Adjusted EBITDA is a non-GAAP measure. See "Definitions" on page 12 for the definition of Adjusted EBITDA and reconciliation of Net loss to Adjusted EBITDA on the current page.

27

Long Term Debt Analysis
(Dollars in thousands)
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September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Balances Outstanding
Unsecured
Fixed rate bonds$397,679 $397,590 $397,502 $397,413 $397,324 
Term loan(1)
124,471 124,365 124,259 99,946 99,923 
Credit facility149,000 24,000 35,000 55,000 43,000 
Total$671,150 $545,955 $556,761 $552,359 $540,247 
Weighted Average Interest Rates
Unsecured
Fixed rate bonds4.5 %4.5 %4.5 %4.5 %4.5 %
Term loan(2)
4.7 %3.0 %3.0 %2.3 %2.3 %
Credit facility6.3 %6.0 %5.7 %5.2 %4.0 %
Weighted Average4.9 %4.2 %4.2 %4.2 %4.1 %
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(1) Elme Communities entered 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). 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 unsecured credit facility.
(2) Elme Communities had an interest rate swap that had effectively fixed the interest rate on a $100.0 million portion of its 2023 Term Loan outstanding through the interest rate swap arrangement's expiration date of July 21, 2023. In March 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that effectively fixed the interest at 4.73% for the 2023 Term Loan beginning on July 21, 2023 through the 2023 Term Loan’s maturity date of January 10, 2025 (see page 28).
Note: The current debt balances outstanding are shown net of discounts, premiums and unamortized debt costs (see page 29).


28

Long Term Debt Maturities
(in thousands, except average interest rates)
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September 30, 2023

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Future Maturities of Debt
YearUnsecured DebtCredit FacilityTotal DebtAvg Interest Rate
2023$— $— $— —%
2024— — — —%
2025125,000 
(1)
149,000 
(2)
274,000 5.6%
2026— — — —%
2027— — — —%
Thereafter400,000 — 400,000 4.5%
Scheduled principal payments$525,000 $149,000 $674,000 4.9%
Net discounts/premiums(99)— (99)
Loan costs, net of amortization(2,751)— (2,751)
Total maturities$522,150 $149,000 $671,150 4.9%
Weighted average maturity = 4.8 years
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(1) Elme Communities previously entered into an interest rate swap to effectively fix a LIBOR plus 110 basis points floating interest rate to a 2.31% all-in fixed rate for the remaining $100.0 million portion of the 2018 Term Loan. The interest rate was fixed through the term loan maturity of July 21, 2023. During the first quarter of 2023, we entered 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. 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 unsecured credit facility. Subsequent to this transaction, the interest rate swap effectively fixed a $100.0 million portion of the 2023 Term Loan at 2.16% through the interest rate swap's expiration date of July 21, 2023. In March 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that effectively fix the interest at 4.73% for the 2023 Term Loan 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.
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Debt Covenant Compliance
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Unsecured Public Debt CovenantsUnsecured Private Debt Covenants
Notes PayableLine of Credit
and Term Loans		Notes Payable
Quarter Ended September 30, 2023CovenantQuarter Ended September 30, 2023CovenantQuarter Ended September 30, 2023Covenant
% of Total Indebtedness to Total Assets(1)
32.9 %≤ 65.0% N/AN/AN/AN/A
Ratio of Income Available for Debt Service to Annual Debt Service3.7             ≥ 1.5 N/AN/AN/AN/A
% of Secured Indebtedness to Total Assets(1)
— %≤ 40.0% N/AN/AN/AN/A
Ratio of Total Unencumbered Assets(2) to Total Unsecured Indebtedness
3.0             ≥ 1.5 N/AN/AN/AN/A
% of Net Consolidated Total Indebtedness to Consolidated Total Asset Value(3)
 N/A N/A25.7 %≤ 60.0%25.7 %≤ 60.0%
Ratio of Consolidated Adjusted EBITDA(4) to Consolidated Fixed Charges(5)
 N/A N/A4.49           ≥ 1.504.49           ≥ 1.50
% of Consolidated Secured Indebtedness to Consolidated Total Asset Value(3)
 N/A N/A— %≤ 40.0%— %≤ 40.0%
% of Consolidated Unsecured Indebtedness to Unencumbered Pool Value(6)
 N/A N/A25.7 %≤ 60.0%25.7 %≤ 60.0%
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(1) Total Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties.
(2) Total Unencumbered Assets is calculated by applying a capitalization rate of 7.50% to the EBITDA(4) from unencumbered properties from the last four consecutive quarters, excluding EBITDA from acquired, disposed, and non-stabilized development properties.
(3) Consolidated Total Asset Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from the most recently ended quarter for each asset class, excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this amount, we add the purchase price of acquisitions during the past 6 quarters plus values for development, major redevelopment and low occupancy properties.
(4) Consolidated Adjusted EBITDA is defined as earnings before noncontrolling interests, depreciation, amortization, interest expense, income tax expense, acquisition costs, extraordinary, unusual or nonrecurring transactions including sale of assets, impairment, gains and losses on extinguishment of debt and other non-cash charges.
(5) Consolidated Fixed Charges consist of interest expense excluding capitalized interest and amortization of deferred financing costs, principal payments and preferred dividends, if any.
(6) Unencumbered Pool Value is the sum of unrestricted cash plus the quotient of applying a capitalization rate to the annualized NOI from unencumbered properties from the most recently ended quarter for each asset class excluding NOI from disposed properties, acquisitions during the past 6 quarters, development, major redevelopment and low occupancy properties. To this we add the purchase price of unencumbered acquisitions during the past 6 quarters and values for unencumbered development, major redevelopment and low occupancy properties.


30

Capital Analysis
(In thousands, except per share amounts)
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Three Months Ended
September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Market Data
Shares Outstanding87,832 87,809 87,709 87,534 87,504 
Market Price per Share$13.64 $16.44 $17.86 $17.80 $17.56 
Equity Market Capitalization$1,198,028 $1,443,580 $1,566,483 $1,558,105 $1,536,570 
Total Debt$671,150 $545,955 $556,761 $552,359 $540,247 
Total Market Capitalization$1,869,178 $1,989,535 $2,123,244 $2,110,464 $2,076,817 
Total Debt to Market Capitalization0.36 :10.27 :10.26 :10.26 :10.26 :1
Earnings to Fixed Charges(1)
-4.9x0.6x0.5x0.5x-0.6x
Debt Service Coverage Ratio(2)
3.9x4.2x4.2x4.3x4.1x
Dividend DataNine Months EndedThree Months Ended
September 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Total Dividends Declared$47,562 $44,708 $15,885 $15,825 $15,852 $14,938 $14,918 
Common Dividend Declared per Share$0.54 $0.51 $0.18 $0.18 $0.18 $0.17 $0.17 
Payout Ratio (Core FFO basis)(3)
74.0 %79.7 %75.0 %75.0 %75.0 %70.8 %73.9 %
Payout Ratio (Core AFFO basis)(4)
73.0 %77.3 %69.2 %70.8 %
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(1) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, earnings consist of income from continuing operations attributable to the controlling interests plus fixed charges, less capitalized interest. Fixed charges consist of interest expense, including amortized costs of debt issuance, plus interest costs capitalized. The earnings to fixed charges ratio includes real estate impairment of $41.9 million for the three months ended September 30, 2023 and loss on extinguishment of debt of $4.9 million for the three months ended September 30, 2022.
(2) Debt service coverage ratio is calculated by dividing Adjusted EBITDA by interest expense and principal amortization. Adjusted EBITDA is a non-GAAP measure. See "Definitions" on page 12 for the definition of Adjusted EBITDA.
(3) Payout Ratio (Core FFO basis) is calculated by dividing the common dividend per share by the Core FFO per share. Core FFO is a non-GAAP measure. See "Definitions" on page 12 for the definition of Core FFO.
(4) Payout Ratio (Core AFFO basis) is calculated by dividing the common dividend per share by the Core AFFO per share. Core AFFO is a non-GAAP measure. See "Definitions" on page 12 for the definition of Core AFFO.
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Net Loss to NOI Reconciliations
(In thousands)
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Nine Months EndedThree Months Ended
September 30, 2023September 30, 2022September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Net loss$(49,872)$(27,337)$(43,618)$(2,611)$(3,643)$(3,531)$(10,739)
Adjustments:
Property management expense5,882 5,462 1,935 2,178 1,769 1,974 1,916 
General and administrative expense19,891 20,998 6,370 6,680 6,841 7,260 6,403 
Transformation costs6,339 6,645 985 2,454 2,900 3,041 2,399 
Real estate depreciation and amortization64,855 69,871 21,904 21,415 21,536 21,851 23,632 
Real estate impairment41,860 — 41,860 — — — — 
Interest expense21,043 18,388 7,418 6,794 6,831 6,552 6,582 
Loss on extinguishment of debt, net54 4,917 — — 54 — 4,917 
Other income(569)(454)— (569)— (258)(68)
Total Net operating income (NOI)(1)
$109,483 $98,490 $36,854 $36,341 $36,288 $36,889 $35,042 
Multifamily NOI:
Same-store portfolio$89,903 $82,012 $30,336 $30,021 $29,546 $29,661 $28,264 
Acquisitions9,172 5,924 3,1652,8763,1313,5043,291 
Development(168)(71)(56)(54)(58)(57)(52)
Non-residential620 593 189203228199188 
Total99,527 88,458 33,634 33,046 32,847 33,307 31,691 
Other NOI (Watergate 600)9,956 10,032 3,220 3,295 3,441 3,582 3,351 
Total NOI$109,483 $98,490 $36,854 $36,341 $36,288 $36,889 $35,042 
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  (1) NOI is a non-GAAP measure. See "Definitions" on page 12 for the definition of NOI and reconciliation of Net loss to NOI on the current page.
32