Elme Communities (ELME) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw sequential improvement in pricing and occupancy, led by strong demand in Washington Metro and stabilized supply/demand in Atlanta, with average occupancy at 94.6% and rising to 95.3% in July.

• Value-add renovations generated a 17% ROI YTD, with $9M expected 2024 spend and over 3,300 units in the pipeline.

• Launched Elme Resident Services in Q2 2024, streamlining operations and reducing payroll expenses.

• Strategic transformation completed, focusing on multifamily operations and Sunbelt expansion.

• Net loss for Q2 2024 was $3.5M, up from $2.6M in Q2 2023, mainly due to higher interest and depreciation expenses.

Financial highlights

• Q2 2024 real estate rental revenue was $60.1M, up from $56.6M in Q2 2023.

• Net operating income (NOI) for Q2 was $38.1M, up from $36.3M a year ago; same-store multifamily NOI rose 1.3% year-over-year.

• Core FFO per diluted share was $0.23, up from $0.21 in Q2 2023; NAREIT FFO per diluted share was $0.23.

• Adjusted EBITDA for Q2 2024 was $30.1M, up from $28.4M in Q2 2023.

• Quarterly dividend of $0.18 per share declared and paid.

Outlook and guidance

• 2024 Core FFO per share guidance tightened to $0.91–$0.95, with NOI growth expected at 0.75%–1.75% for 2024.

• FY 2024 blended lease rate growth guidance: 1.5%–2.75%; average occupancy: 94.25%–95%.

• Interest expense for 2024 projected at $37.5M–$38.25M; property management and G&A expenses guided at $8.5M–$9.0M and $24.25M–$25.25M, respectively.

• No debt maturities until Q1 2025; liquidity position of $328.1M as of July 29, 2024.

• Management expects sufficient cash flow and capital resources to meet obligations and fund growth for the remainder of 2024.