Elme Communities · NYSE:ELME
Elme Communities — Q4 2024 Earnings Presentation
55 slides from Elme Communities's earnings presentation, February 2025
Slide 1: Investor Presentation
Investor Presentation February 2025
Slide 2: Forward-Looking Statements
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of Elme Communities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification of su
Slide 3: Table of Contents
Table of Contents About Us 04 Q4 Update 10 Current Market Dynamics 18 Research-Led Capital Allocation 22 Multifamily Strategies and Target Market 32 Environmental, Social, Governance 36 Appendix 42 3
Slide 4: About Us
About Us
Slide 5: Elme at a Glance
Washington Metro Stability ~3K Home Renovation Pipeline Allocation to Washington Metro Opportunity to renovate and should provide stability across generate solid cash-on-cash returns business cycles Elme at a Glance Operational Upside Affordable Rents We are a research-led multifamily owner and Infr
Slide 6: Apartment Portfolio Overview
Apartment Portfolio Overview REGION LOCATION DENSITY CLASS A 4% DC 9% B 10% A- 7% Atlanta Metro MD 25% 7% Suburban Urban 49% 51% Northern Virginia 59% B Value-Add 79% Washington Metro 75% ~9,400 ~3,000 $2.1 - 2.4M Apartment Homes 5 Year Renovation Pipeline Anticipated Operational Upside (homes) (202
Slide 7: Washington Metro
Washington Metro Elme Communities Yale West ~23% Median Rent to Income New Residents / Q1 2024 – Q4 2024 Avg. 1.66 Elme Manassas Average Household Size as of December 2024 36.6 Average Resident Age Bennett Park as of December 2024 ~75% of our Washington Metro apartment homes are situated in northern
Slide 8: Atlanta Metro
Atlanta Metro Elme Communities Elme Marietta ~22% Median Rent to Income New Residents / Q1 2024 – Q4 2024 Avg. 1.63 Elme Sandy Springs Average Household Size as of December 2024 36.4 Average Resident Age Elme Druid Hills as of December 2024 Source: Elme Communities December 2024 demographic data Elm
Slide 9: Watergate 600
Watergate 600 • Watergate 600 has a high-quality institutional tenant base and a weighted average lease term of approximately 5.2 years • As our sole remaining commercial asset, Watergate 600 is an iconic building with high quality institutional tenant base • 2025 assumption: NOI is expected to rang
Slide 10: Q4 Update
Q4 Update
Slide 11: Direct exposure to federal employment is limited
Elme Bethesda 9% 1% Map shows communities Direct exposure to NIH with highest exposure to federal employment federal employment Share of Elme Community residents with federal agency jobs (excl. DoD) Share of Elme Community residents with federal is limited contractor jobs Kenmore 5% 1% Ashby at McLe
Slide 12: Occupancy and bad debt improved year-over-year and pricing increased sequentially in January
Occupancy and bad debt improved year-over-year and pricing increased sequentially in January Average Occupancy Effective Blended Lease Rate Growth Quarterly Bad Debt to Revenue1 2025 Same-store portfolio 2025 Same-store portfolio 2025 Same-store portfolio 96.0% 4.5% 4.0% 4.0% 3.5% 95.5% 3.5% 3.0% 95
Slide 13: Operational improvements driving better performance and profitability
Operational improvements are driving better Operationaland performance improvements driving profitability better from ourperformance portfolio and profitability Optimized New Fee Managed WiFi (Phase I, 7 Occupancy Streams communities) Occupancy gains due to faster Fee income from renter $300K - $600
Slide 14: Renovations driving above-market growth
Renovations driving above- Before After market growth Our renovation pipeline of ~3,000 units represents more than enough runway to deliver renovation-led value creation for the foreseeable future. Cost Per Unit: $5,000 (partial) - $17,000 (full renovation) ELME PROGRAM STRENGTHS: Total 2025 Expecte
Slide 15: 2025 Guidance and Assumptions
2025 Guidance and Assumptions1,4 Core FFO per diluted share 2 $0.91 - $0.97 Same-store Multifamily Revenue Growth 2.1% - 3.6% Same-store Multifamily Expense Growth 2.75% - 4.25% Same-store Multifamily NOI Growth 1.5% - 3.5% Other same-store NOI 3 $11.5 million - $12.25 million Property Management Ex
Slide 16: 2025 Growth Drivers
2025 Growth Drivers Components of 2025 SS Revenue Growth Midpoint1 Components of 2025 Core FFO per Share Midpoint1 (Guidance Range: 2.1% to 3.6%) (Guidance Range: $0.91 to $0.97) Occupancy 3.0% Bad Debt Growth Same-Store Watergate G&A, Improvement 0.20% Multifamily 600 NOI net of core Other Income 0
Slide 17: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet Our investment grade balance sheet provides optionality and ample liquidity BBB / Baa2 100% 5.7x ~65% Investment Grade Unsecured Debt Net Debt to Adjusted Capacity under the Ratings Annualized EBITDA1 amended credit facility1 $400 Debt Maturity Schedule ($ in millio
Slide 18: Current Market Dynamics
Current Market Dynamics
Slide 19: Annual Net Inventory Growth
Annual Net Annual Net Inventory Growth Inventory Growth Elme Submarkets, US, Sunbelt1 6.0% 5.2% Relative to the US and Sunbelt 5.0% 4.6% Markets, Elme submarkets are 4.0% expected to have lower supply 3.0% 2.8% pressure with a projected average 3.0% 2.0% 2.2% of 2.2% annual net inventory 2.0% growth
Slide 20: Absorption Outlook
Annual Demand Absorption Outlook 12,000 Elme Washington Submarkets Projected 10,000 8,000 6,000 4,000 Annual Demand 2,000 Washington and Atlanta Metros 0 -2,000 30,000 Projected 25,000 20,000 Elme WSH Submarkets Annual Demand Total Elme WSH Submarkets Annual Demand - 2010-2020 Avg. 15,000 Annual Dem
Slide 21: Construction Activity Outlook
Units Under Construction Annual Unit Starts Construction Activity Outlook WSH Metro change since -47% peak in Q3 ‘22 -68% change since peak in Q3 ‘22 Units under construction declined by 47% and 45% in the Washington and Atlanta metros respectively, relative to change since change since their recent
Slide 22: Research-Led Capital Allocation
Research-Led Capital Allocation 22
Slide 23: Competitive Differentiation
Competitive Differentiation We have a disciplined strategy targeting the deepest part of the demand curve, in economically dynamic markets and submarkets. These generators of strong demand coupled with price point supply insulation result in a track record of rent growth outperformance in our target
Slide 24: Long-Term Residents Drawn by Relative Affordability
Long-Term Residents Drawn by Relative Affordability Median HH Median Rent Avg. Avg. Median Home Cost to Own Move Outs to Income1 to Income1 Age2 Tenure2 Price in Elme Entry-Level Purchase a New New Current Current Zip Codes3,4 Home vs. Rent at Home3 Residents Residents Residents Residents Elme3,4 Wa
Slide 25: Elme Residents: Stable Employment Near Our Communities
Elme Residents: Stable Employment Near Our Communities Our residents are employed in stable to high-growth industries and enjoy the convenience of living strategically near their workplaces. Top Industries Industry Legend of New Residents at Elme as of December 2024 Government Professional, Scientif
Slide 26: Key Desirable Strengths in Northern Virginia
Key Desirable Strengths in Northern Virginia ~18% ~15% ~11% ~9% ~7% Top Industries1,3 Approximately 60% of Elme’s multifamily homes are in Northern Virginia. Our NoVa communities have a weighted net inventory growth rate of just 1.4% projected over the next four quarters.2 ~23.4% / ~$97K NoVa’s dyna
Slide 27: Price Point Insulation from New Supply
Price Point Insulation from New Supply Total Market Rent Distribution vs. New Product (2021+) Deliveries WSH Metro – Q4 2024 14.0% Peer REITs at 110% Median 95% Median 12.0% Less than 7% of new product By targeting Class B rents priced 10.0% delivered falls below 95% below 95% of market median, mark
Slide 28: Price Point Insulation from New Supply
Price Point Insulation from New Supply Total Market Rent Distribution vs. New Product (2021+) Deliveries Atlanta Metro – Q4 2024 16.0% Peer REITs at 108% Median 95% Median 14.0% 12.0% ~12% of new product By targeting Class B rents priced delivered falls below below 95% of market median, 10.0% 95% ma
Slide 29: Affordability and Target Vintage Rent Growth Outperformance
Affordability and Target Vintage Rent Growth Outperformance Housing affordability is under pressure – especially for our target residents. Additionally, Class B product is insulated from new supply, with affordability gap between 20% to ~60% in additional monthly rent to move to new product. Mid-Mar
Slide 30: Affordability Gap in the Atlanta Market
Affordability Gap in the Atlanta Market Rent Gap and Quarterly Effective Rent Class B Vintage vs. Class A Vintage1 Q1 2020 through Q4 2024 $550 $2,200 $2,000 $500 $451 $1,800 Effective Rent Market Rent Gap $450 $1,600 $395 $400 $1,400 $350 $1,200 $300 $1,000 Market Rent Gap (Class A Vintage vs. Clas
Slide 31: Elme Rent Vs. Cost to Own
Elme Rent Vs. Cost to Own Affordability Gap Between Renting and Owning Monthly Mortgage Payment1 and Elme In-Place Rent Atlanta and Washington – Q4 2024 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 ATL Metro / Elme ATL 30013 Zipcode / Elme 30281 Zicode / Elme 30350 Zipcode / Elme 30080 Z
Slide 32: Multifamily Strategies & Target Market
Multifamily Strategies & Target Market 32
Slide 33: Portfolio Strategies
CLASS A- VINTAGE: 2000s PRICE POINT: 100% – 110% of market median rent RENT GROWTH DRIVERS: Operational improvements, unit upgrades, prop-tech, submarket rent growth, future renovations Portfolio Strategies CLASS B VALUE-ADD VINTAGE: 1980s, 1990s, 2000s PRICE POINT: 80% – 95% of market median, We ta
Slide 34: Primary Resident Segmenting and Strategy
CLASS A- • Mix of single householders and married couples in their Renters are partial to city living and mid-20s to late-30s. convenience — our Class A- strategy • Environmentally, health, and image conscientious — all impacting their focuses on urban and suburban purchasing decisions. Primary Resi
Slide 35: Execution Track Record Continues
Execution Track $1.6 Billion of Value-Oriented Multifamily Investments since 2015 Record Continues Since 2013, we completed ~$5.1 billion of strategic portfolio transactions to significantly reduce concentrations of non-core retail and office assets, while becoming a value-oriented multifamily Elme
Slide 36: Environmental, Social, Governance
Environmental, Social, Governance 36
Slide 37: 2023 Elme Communities ESG Report
2023 Elme Communities ESG Report ESG Report Highlights • Five new Fitwel Certifications achieved reflecting our commitment to health and wellness for our residents. • Solar arrays in DC produced enough power to avoid over 419 Tons of CO2 emissions. • Continued progress towards our efficiency goals,
Slide 38: Demonstrating Leadership in ESG
Demonstrating Leadership in ESG We believe that sustainable and healthy buildings should be available to all price points, including the value living sector. 1.1M SF of communities certified In Q3 of 2024, Elme became an EPA to Fitwel Health & Wellness Standards ENERGY STAR® Partner, affirming our c
Slide 39: Our Commitment to the Environment
Solar Panels at 3801 Connecticut Our Commitment to the Environment We are delivering on opportunities to bring clean energy to the value living sector. Solar Now Online 1,043,162 kWh Solar Production in 2023 + 2024* 1,405,000 10,544 Equivalent Number of Lbs. of GHG Trees in Sequestered Emissions Avo
Slide 40: Location-Specific Transitional Risk
Location-Specific Transitional Risk We monitor legislation by market to ensure compliance with local + regional building performance standards, GHG emissions requirements, or other potentially impactful regulations. State / Region Location-Specific Transitional Risk (as of 12/31/24) None Virginia No
Slide 41: Reporting and Ratings
Reporting and Ratings Improving our ESG Ratings1 • MSCI: In 2024, we received a BBB rating within MSCI’s ESG Ratings Program, demonstrating our continued efforts and success deploying a holistic ESG program. • ISS: In 2024, we achieved a “Prime” status within the ISS Corporate ESG Performance progra
Slide 42: Appendix
Appendix 42
Slide 43: Renovation Case Study: Elme Manassas
Renovation Case Study: Elme Manassas Creating value through renovations that impact resident experience and margin expansion Acquired (2019) 10/31/2024 Change Before After Revenue (T12) $6.8M $8.8M 29.5% NOI (T12) $4.4M $6.0M 37.7% NOI Margin 64.0% 68.1% + 406 bps Avg. Eff. Monthly Rent $1,402 $1,80
Slide 44: Strategic Transformation
Strategic Transformation 2021 2022 2023 2024 & Beyond • Transformed into a multifamily- • Initiated the execution of a major • Transitioned to a best-in-class technology platform • Execute on advancing operational focused REIT by selling our office and one-year infrastructure and • Implemented a hum
Slide 45: Community Details
Community Details NRSF Properties Location Class Homes (000s) Strategy Diversification Cascade at Landmark Alexandria, VA B Value-Add 277 273 Percentage of NRSF Clayborne Alexandria, VA A- 74 60 Elme Alexandria Alexandria, VA B Value-Add 532 437 Riverside Apartments Alexandria, VA B Value-Add 1,222
Slide 46: Financials from Q4 2024 Supplement
Financials from Q4 2024 Supplement (1) Certain immaterial amounts in prior periods have been reclassified to conform with the current period presentation (2) Adjusted EBITDA is a non-GAAP measure. See “Definitions” for the definition of Adjusted EBITDA. See page 51 for a reconciliation of Net loss t
Slide 47: Financials from Q4 2024 Supplement
Financials from Q4 2024 Supplement (1) Adjusted EBITDA is a non-GAAP measure. See “Definitions” for the definition of Adjusted EBITDA. (2) Adjusted EBITDA in prior periods has been updated to conform with the current period presentation and definition to include write-off of pursuit costs. 47
Slide 48: Financials from Q4 2024 Supplement
Financials from Q4 2024 Supplement 48
Slide 49: Financials from Q4 2024 Supplement
Financials from Q4 2024 Supplement (1) See “Definitions” for the definitions of non-GAAP measures: NAREIT FFO and Core FFO. (2) Adjustment to the numerators for FFO and Core FFO per share calculations when applying the two-class method for calculating EPS 49
Slide 50: Financials from Q4 2024 Supplement
Financials from Q4 2024 Supplement (1) See “Definitions” for the definitions of non-GAAP measures: NAREIT FFO, Core FFO, AFFO and Core AFFO (3) Includes share award modifications related to transformation costs (4) Excludes share award modifications related to transformation costs 50
Slide 51: Financials from Q4 2024 Supplement
Financials from Q4 2024 Supplement (1) Utility costs reimbursed by residents are included in real estate rental revenue on our consolidated statements of operations. Utility reimbursements totaled $9.0 million and $8.0 million for the twelve months ended December 31, 2024 and 2023 respectively, and
Slide 52: Financials from Q4 2024 Supplement + Guidance Reconciliation
Financials from Q4 2024 Supplement + Guidance Reconciliation 52
Slide 53: Definitions
Definitions 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, gain
Slide 54: Definitions
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 a
Slide 55: Elme Communities "elevating home"
Elme Communities “elevating home” Investor Relations Amy Hopkins ahopkins@elmecommunities.com www.elmecommunities.com