Elme Communities · NYSE:ELME
Elme Communities — Washington Real Estate Investment Trust — Investor Presentation (June 2019)
20 slides from Elme Communities's investor presentation, Jun 26, 2019
Slide 1: 2019 Strategic Capital Allocation Plan
1 2019 STRATEGIC CAPITAL ALLOCATION PLAN Investor Presentation – June 26, 2019
Slide 2: Disclosures: Forward-Looking Statements
2 DISCLOSURES Forward-Looking Statements Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticip
Slide 3: Basis of presentation
3 Basis of presentation This presentation assumes that a number of transactions have closed, including a number of transactions that are currently under contract or have not yet become under contract and remain to be determined. Except with respect to those transactions that have actually closed (th
Slide 4: 2019 Strategic Capital Allocation Plan: Four Key Themes
4 2019 STRATEGIC CAPITAL ALLOCATION PLAN: FOUR KEY THEMES 1. SIMPLIFYING 2 MAIN ASSET CLASSES – OFFICE & MULTIFAMILY 1 REGION – THE DC METRO 2. DE-RISKING GREATER CASH FLOW STABILITY AND STRENGTH RECYCLING MAJORITY OF LARGE CAPITAL GAINS EMBEDDED IN RETAIL PORTFOLIO 3. POSITIONING FOR OUTPER
Slide 5: Transforming by Simplifying
5 2019 STRATEGIC CAPITAL ALLOCATION: SIMPLIFYING TRANSFORMING BY SIMPLIFYING Q1 2011 Q1 2013 Q1 2015 Q1 2017 PF Q1 2019 (1) INDUSTRIAL MOB RETAIL OTHER RETAIL 6% 11% 14% MOB 25% 24% 14% 43% 47% NOI 21% NOI 49% NOI NOI NOI 49% 56% 45% 17% 19% RETAIL OFFICE RETAIL OFFICE 29% OFFICE 15% 16% OFFICE OFFI
Slide 6: De-Risking
6 2019 STRATEGIC CAPITAL ALLOCATION: DE-RISKING BEFORE AFTER Q1 2019 PRO FORMA Q1 2019 OTHER RETAIL 22% 6% DE-RISKING 50% OFFICE BY NOI NOI 49% OFFICE SOLVING FOR 45% 28% MULTIFAMILY MULTIFAMILY RETAIL NOI ‘AT RISK’(1) RETAIL NOI ‘AT RISK’(1) $6.5M CASH FLOW STABILITY $0.5M OVERALL CAPEX AS A % OF N
Slide 7: De-Risking: Seeking Cash Flow Stability
7 2019 STRATEGIC CAPITAL ALLOCATION: DE-RISKING SEEKING CASH FLOW STABILITY In addition to reducing 2019 and 2020 retail NOI ‘at risk’ by ~90%(1) , we are also significantly improving our near and medium term retail lease expiration schedule. RETAIL PORTFOLIO NEAR & MEDIUM TERM LEASE EXPIRATION SCHE
Slide 8: De-Risking: Seeking Cash Flow Strength
8 2019 STRATEGIC CAPITAL ALLOCATION: DE-RISKING SEEKING CASH FLOW STRENGTH 5-YR HISTORICAL AVG. LEASING + RECURRING CAPEX AS A % OF NOI MULTIFAMILY = ~7% RETAIL = ~10% OFFICE = ~26% (Retail capex as a % of NOI has risen to 13% in 2019 and is expected to BEFORE rise to 16% in 2020) AFTER 17.1% overal
Slide 9: Positioned to Outperform
9 2019 STRATEGIC CAPITAL ALLOCATION: POSITIONED TO OUTPERFORM BEFORE AFTER (2) Q1 2019 PRO FORMA Q1 2019 MORE MARYLAND MARYLAND NORTHERN 15% 7% VIRGINIA DC 32% CENTRIC 31% NOI DC NOI ~91% OF DC METRO JOB 53% GROWTH IS 62% NORTHERN CONCENTRATED IN NORTHERN VIRGINIA NORTHERN VIRGINIA(1) VIRGINIA PRO F
Slide 10: Positioning for Outperformance: Pro Forma Office Portfolio
10 2019 STRATEGIC CAPITAL ALLOCATION: POSITIONING FOR OUTPERFORMANCE PRO FORMA OFFICE PORTFOLIO (3) SQUARE FOOTAGE DISTRIBUTION ~5%: ALEXANDRIA Upcoming: $1bn Virginia Tech Campus ~11%: DC CLASS A ~49%: NORTHERN VIRGINIA TECH/DEFENSE CORRIDOR Iconic and irreplaceable assets 100% Metro-Served ~35%: D
Slide 11: Positioning for Outperformance: Pro Forma Multifamily Portfolio
11 2019 STRATEGIC CAPITAL ALLOCATION: POSITIONING FOR OUTPERFORMANCE PRO FORMA MULTIFAMILY PORTFOLIO (2) UNIT DISTRIBUTION ~3%: DC CLASS A 100% or 216 units within half a mile of Metro and a 5 mile radius of ~7%: NORTHERN VIRGINIA CLASS A Amazon HQ2 100% or 461 units within a 5 mile radius of Amazon
Slide 12: Visibility on Growth
12 2019 STRATEGIC CAPITAL ALLOCATION: VISIBILITY ON GROWTH KEY DRIVERS 2019 vs. 2018 2020 vs. 2019 2021 vs. 2020 OFFICE Large office lease expirations/known vacates across the office portfolio WATERGATE 600, WATERFRONT, DC ARLINGTON TOWER, ARLINGTON, VA + STREET VIEW OF DC Lease for the top two floo
Slide 13: Timeline of 2019 Completed, Under Contract and Potential Transactions
13 TIMELINE OF 2019 COMPLETED, UNDER CONTRACT AND POTENTIAL TRANSACTIONS Q1 2019 Q2 2019 Q3 2019 Q4 2019 Acquisition Acquisition Acquisition Assembly’s 5 Multifamily asset for N/A Acquisition $70M (under contract) N/A assets in Northern Virginia for $379M Disposition Disposition Commercial ass
Slide 14: Financials from Q1 2019 Supplemental
14 FINANCIALS FROM Q1 2019 SUPPLEMENTAL (1) See “Definitions” on slide 19 for the definitions of NAREIT FFO and Core FFO. (2) Restructuring expenses include severance, accelerated share-based compensation and other expenses related to a restructuring of corporate personnel. (3) Adjustments to the nu
Slide 15: Financials from Q1 2019 Supplemental
15 FINANCIALS FROM Q1 2019 SUPPLEMENTAL (1) See “Definitions” on slide 19 for the definitions of FAD and Core FAD.
Slide 16: Financials from Q1 2019 Supplemental
16 FINANCIALS FROM Q1 2019 SUPPLEMENTAL (1) For a list of non-same-store properties, see slide 18.
Slide 17: Financials from Q1 2019 Supplemental
17 FINANCIALS FROM Q1 2019 SUPPLEMENTAL (1) For a list of non-same-store properties, see slide 18.
Slide 18: Same-Store Portfolio from Q1 2019 Supplemental
18 SAME-STORE PORTFOLIO FROM Q1 2019 SUPPLEMENTAL
Slide 19: Definitions
19 DEFINITIONS Adjusted EBITDA (a non-GAAP measure) 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, restructuring expenses (which include severance, accelerated
Slide 20: Definitions
20 DEFINITIONS Net Operating Income (“NOI”) is a non-GAAP measure defined as real estate rental revenue less real estate expenses. 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 expe
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