Elme Communities · NYSE:ELME
Elme Communities — Washington Real Estate Investment Trust — Merger or Acquisition (April 2019)
21 slides from Elme Communities's merger presentation, Apr 3, 2019
Slide 1: Growing Value-Add Multifamily
1 Growing Value-Add Multifamily Expanding Class B, value- add multifamily in the Washington region April 02, 2019
Slide 2: Forward-Looking Statements and Use of Non-GAAP Financial Measures
2 FORWARD-LOOKING STATEMENTS AND USE OF NON-GAAP FINANCIAL MEASURES 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, beli
Slide 3: Transaction Summary
3 TRANSACTION SUMMARY STRATEGIC RATIONALE Expand Class B Multifamily Portfolio To address the fast-growing cohort of 35 – 44 year olds who can’t afford homeownership or urban-infill rents and are drawn to well-located Class B suburban multifamily with its larger living spaces and excellent community
Slide 4: Acquisition Portfolio Overview
4 ACQUISITION PORTFOLIO OVERVIEW Well-located, accessible portfolio LOCATION MD 20% UNITS VA 80% VINTAGE 2000s 15% 1990s 49% 1970s UNITS 10% 1980s 26%
Slide 5: Acquisition Portfolio Overview (cont'd)
5 ACQUISITION PORTFOLIO OVERVIEW (cont’d) Seven high-quality assets with 2,113 units – 95% occupied 205 CENTURY PLACE, 13690 LEGACY CIRCLE, 2511 FARMCREST DRIVE, ALEXANDRIA, VA HERNDON, VA HERNDON, VA 532 UNITS 328 UNITS 283 UNITS 10519 LARIAT LANE, 86 HERITAGE WAY NE, 2 OBSERVATION MANASSAS, VA LEE
Slide 6: Strategic Multifamily Growth
6 STRATEGIC MULTIFAMILY GROWTH Multifamily Growth Strategy To grow our Class B multifamily portfolio Urban In-fill Suburban TARGET TARGET Strategically address Renters who can’t afford Class A the need for quality Renters who can’t afford urban in-fill multifamily affordable housing homeownership or
Slide 7: Strategic Capital Allocation
7 STRATEGIC CAPITAL ALLOCATION Capital Allocation Strategy To continue to allocate capital out of commercial and into multifamily (2013 - 2018) (2019) Acquired Plan to Acquire Improve cash flow stability $533 million & $461 million FAD growth OF MULTIFAMILY ASSETS OF MULTIFAMILY ASSETS Sold De-Risk
Slide 8: Multifamily Demand: DC Metro's Largest Renter Cohort Needs Class B Apartments
8 MULTIFAMILY DEMAND DC METRO’S LARGEST RENTER COHORT NEEDS CLASS B APARTMENTS DC Metro region’s largest renter cohort, comprising 35% of all market renters, earns $50,000 – $80,000 per annum. This creates strong demand for units with average monthly rents between $1,250 and $2,000 that is largely m
Slide 9: Multifamily: Existing and New Supply Remains Unaffordable
9 MULTIFAMILY EXISTING AND NEW SUPPLY REMAINS UNAFFORDABLE FOR THE MAJORITY OF MARKET RATE RENTERS There is a significant dearth of quality, affordable multifamily supply in the DC Metro region. Particularly for households earning $50,000 to $80,000 per annum who comprise the largest pool of market
Slide 10: Growth in Regional Multifamily Demand to Be Led by Older Millennial Renters
10 GROWTH IN REGIONAL MULTIFAMILY DEMAND TO BE LED BY OLDER MILLENNIAL RENTERS We expect the population of 35 – 44 year old renters to grow strongly as: 1 2 MILLENNIALS HOME OWNERSHIP REMAINS AGE UNAFFORDABLE POPULATION GROWTH BY AGE COHORT WASHINGTON METRO 400% growth 20,000 18,098 per annum over $
Slide 11: Growth in Regional Multifamily Demand (cont'd)
11 GROWTH IN REGIONAL MULTIFAMILY DEMAND (cont’d) TO BE LED BY OLDER MILLENNIAL RENTERS As millennials age, it’s becoming evident that they are renting for much longer than the generations that preceded them: Source: NMHC tabulations of Current Population Survey microdata, Annual Social and Economic
Slide 12: Acquisition Portfolio Serves Older, Value-Conscious Millennial Renters
12 ACQUISITION PORTFOLIO SERVES OLDER, VALUE-CONSCIOUS MILLENNIAL RENTERS AVERAGE LESSEE AGE REFLECTS FAST-GROWING RENTAL PRICE POINT MATCHES LARGEST POOL OF 35- 44 YEAR OLD DEMOGRAPHIC POTENTIAL RENTERS IN THE REGION EARNING $50,000 - $80,000 PER ANNUM 140 Market Rate Rental Housing ACQUISITION ASS
Slide 13: Acquisition Portfolio Possesses Key Attributes That Appeal to Millennial Renters
13 ACQUISITION PORTFOLIO POSSESSES KEY ATTRIBUTES THAT APPEAL TO OLDER, VALUE-CONSCIOUS MILLENNIAL RENTERS We believe the fast-growing 35 – 44 year old, value-conscious renter cohort is drawn to the acquisition portfolio’s mature suburban locations for the following reasons: ACCESS TO: LARGER UNIT S
Slide 14: Acquisition Portfolio Has Excellent Access to Jobs
14 ACQUISITION PORTFOLIO HAS EXCELLENT ACCESS TO JOBS The acquisition portfolio is well located and in close proximity to some of the largest employment concentrations in the region including: Downtown Washington, DC; Crystal City; Tysons; Reston; Route 28 South and the I-270 Corridor. ACQUISITION P
Slide 15: Acquisition Portfolio Is Insulated from New Supply
15 ACQUISITION PORTFOLIO IS INSULATED FROM NEW SUPPLY The acquisition portfolio is relatively insulated from recent multifamily supply increases that have been concentrated in the District. Even within Northern Virginia, the acquisition portfolio doesn’t directly compete with the supply pipeline in
Slide 16: Acquisition Portfolio Is Located in Submarkets with Strong Fundamentals
16 ACQUISITION PORTFOLIO IS LOCATED IN SUBMARKETS WITH STRONG FUNDAMENTALS The acquisition portfolio’s submarkets have stronger Class B rent growth than the Washington Metro Class B average: YEAR OVER YEAR EFFECTIVE RENT CHANGE AND EFFECTIVE RENT CLASS B APARTMENTS | WASHINGTON METRO & ACQUISITION P
Slide 17: Submarkets with Strong Fundamentals (cont'd)
17 ACQUISITION PORTFOLIO IS LOCATED IN SUBMARKETS WITH STRONG FUNDAMENTALS (cont’d) The acquisition portfolio’s submarkets have a better supply outlook than the Washington Metro region as a whole: UNDER CONSTRUCTION INVENTORY CHANGE % ALL APARTMENT CLASSES | WASHINGTON METRO & ACQUISITION PORTFOLIO’
Slide 18: WashREIT Has a Strong Multifamily Track Record
18 WASHREIT HAS A STRONG MULTIFAMILY TRACK RECORD WashREIT’s value-oriented, Northern Virginia centric portfolio combined with it’s research-led ‘affordability gap’ strategy has significantly improved its same-store NOI growth trajectory despite elevated levels of multifamily supply. WASHREIT FULL Y
Slide 19: WashREIT Offers Excellent Exposure to DC Metro Class B Multifamily
19 WASHREIT OFFERS EXCELLENT EXPOSURE TO DC METRO CLASS B MULTIFAMILY PRO- FORMA UNIT COUNT PRO- FORMA UNIT SPLIT Class A, 7000 6381 Growing multifamily 10% 6000 portfolio by 50% to 5000 4268 ~6,400 units 4000 3000 2000 Growing Class B 1000 multifamily by 60% to Class B, 0 ~5,700 units 90% Existing
Slide 20: Net Operating Income
20 NET OPERATING INCOME The following table contains reconciliations of net operating income to net income attributable to the controlling interests for the periods presented (in thousands): Year Ended December 31, 2013 2014 2015 2016 2017 2018 Real estate rental reveue $ 263,024 $ 288,637 $ 306,427
Slide 21: WashREIT Contacts
21 WASHREIT CONTACTS For further information, please contact: PRESS / MEDIA INVESTOR / ANALYST Deanna Schmidt Tejal Engman Senior Director, Marketing and Vice President, Investor Relations Corporate Communications (202) 774-3131 (202) 774-3253 dschmidt@washreit.com tengman@washreit.com
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