ELMEHIGH SIGNALMANAGEMENT10-K

ELME has executed a major portfolio liquidation, selling a substantial portion of its real estate assets while simultaneously taking on $520 million in new secured debt.

The company has fundamentally transformed from operating 28 apartment communities to just nine, representing a strategic shift toward liquidation rather than growth. This dramatic asset sale coupled with significant new borrowing suggests either financial distress or a planned wind-down of operations, creating substantial uncertainty about the company's future direction and business model.

Comparing 2026-02-27 vs 2025-02-14View on EDGAR →
FINANCIAL ANALYSIS

Despite the major asset disposal, total assets grew to $2.1 billion while operating cash flow improved modestly to $95.2 million. Net losses were meaningfully reduced from the prior year, though the company remains unprofitable. The $520 million secured loan against the remaining properties and 22% increase in interest expense indicate a leveraged financial structure that may constrain future operational flexibility.

FINANCIAL STATEMENT CHANGES
Net Income
P&L
+75.3%
-$53.0M-$13.1M

Net income grew 75.3% — bottom-line growth signals improving overall business health.

Interest Expense
P&L
+22%
$24.9M$30.4M

Interest costs rose 22% — monitor debt levels and coverage ratio in rising rate environment.

Total Assets
Balance Sheet
+14.5%
$1.8B$2.1B

Asset base grew 14.5% — expansion through organic growth, acquisitions, or capital deployment.

Operating Cash Flow
Cash Flow
+12.5%
$84.7M$95.2M

Operating cash flow grew 12.5% — strong conversion of earnings to cash, healthy business fundamentals.

LANGUAGE CHANGES
NEW — 2026-02-27
PRIOR — 2025-02-14
ADDED
As of February 24, 2026, 88,857,883 common shares were outstanding.
As of December 31, 2025, we owned nine apartment communities and one office property.
Plan of Liquidation On February 13, 2025, the Company announced that its Board of Trustees (the Board ) had initiated a formal review to evaluate strategic alternatives.
On October 30, 2025, our shareholders approved the Portfolio Sale Transaction and the Plan of Sale and Liquidation, and on November 12, 2025, Elme completed the Portfolio Sale Transaction.
Also on November 12, 2025, certain indirect subsidiaries of the Company, as borrowers (collectively, the Borrowers ), and Goldman Sachs Bank USA, as lender (the Lender ), entered into that certain Loan Agreement (the Loan Agreement ) pursuant to which the Lender has made a senior secured term loan of $520.0 million (the Secured Term Loan ) to the Borrowers.
Pursuant to the Loan Agreement, the Secured Term Loan was secured by first priority mortgages and security interests on all ten properties that remained under the Company following the closing of the Portfolio Sale Transaction (which are directly owned by the Borrowers) and included: Riverside Apartments, Elme Bethesda, Elme Germantown, Elme Watkins Mill, 3801 Connecticut Avenue, Kenmore Apartments, Elme Conyers, Elme Marietta, Elme Sandy Springs, and Watergate 600 (the Remaining Company Properties and Loan Collateral ).
In addition, the Secured Term Loan was secured by pledges of all equity interests in the Borrowers, along with all other personal property of the Borrowers.
Subsequent to December 31, 2025, we completed the sale of two of the Remaining Company Properties, Elme Sandy Springs and Elme Marietta, which comprise approximately 800 residential apartment homes for gross proceeds of approximately $112.75 million, a portion of which was used to partially repay the Secured Term Loan, and those properties were released from the mortgages securing the Secured Term Loan.
The marketing and sale process with respect to the other five Remaining Company Properties remains ongoing.
In January 2026, we began a formal marketing process for Riverside Apartments and continued the marketing and sale process with respect to Kenmore, 3801 Connecticut, Elme Bethesda and Elme Germantown (the Other Remaining Properties ).
REMOVED
As of February 11, 2025, 88,029,292 common shares were outstanding.
As of December 31, 2024, we owned 28 apartment communities and one office property.
Business and Investment Strategy Our mission is to elevate the value living experience and create a place our residents are proud to call home by continuously focusing on service, efficiency, and innovation.
We are focused on creating shareholder value by providing quality, affordably priced housing to a deep, solid, and growing base of mid-market demand.
Our research indicates that affordability is a pressing rental issue at multiple price points across the mid-market rent spectrum.
We believe that rents can be consistently grown if a portfolio s price point does not compete directly with new product price points and wages for mid-market renters are growing.
Furthermore, as the cost of homeownership continues to rise above affordable levels for median income earners, we expect to benefit from sustained demand for quality, affordably priced rental housing.
Our research-focused approach enables us to craft optimal strategies to provide the best combination of value, quality, and resident experience in our apartment communities.
We categorize our apartment communities among broader asset classes, as determined by a variety of factors, including the age of our buildings, rent growth drivers and rent relative to the market: Class A Class A communities are recently developed and command rental rates above market median rents.
Class A- communities have been developed within the past twenty years and feature operational improvements and unit upgrades and command rents at or above median market rents.
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