Elme Communities (ELME) Q3 2024 Earnings Call Highlights: Navigating Challenges and ...

In This Article:

  • Core FFO per Share Guidance: $0.92 to $0.94 per share, maintaining midpoint of $0.93 per share.

  • Same-Store Multifamily NOI Growth Assumption: 1% to 1.5%.

  • Non-Same-Store Multifamily NOI: $5.35 million to $5.75 million.

  • Interest Expense: $37.5 million to $38 million.

  • Annualized Net Debt to Adjusted EBITDA: 5.6 times at quarter-end.

  • Liquidity Position: Over $330 million available on revolving credit facility.

  • Same-Store Average Occupancy: Increased 60 basis points to 95.2%.

  • Effective Blended Lease Rate Growth: 2.1% for same-store portfolio.

  • Renovations Completed: 188 units with an average ROI of approximately 17%.

  • Same-Store Retention Rate: 66% during the quarter.

Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Strong demand in Washington and Atlanta Metro regions driven by wage growth, stable employment, and in-migration.

  • Resident retention rates remain high, with an average tenure of 2.7 years, contributing to stable occupancy.

  • Washington Metro communities face low competition from new supply, supporting stable occupancy and rent growth.

  • Renovation initiatives are yielding a 17% ROI, with a robust pipeline of 3,000 homes for future renovations.

  • Elme Communities maintains a strong liquidity position with over $330 million available on its revolving credit facility.

Negative Points

  • Atlanta communities are experiencing slower-than-expected improvement due to elevated supply and rent compression.

  • Higher-than-anticipated bad debt in Atlanta, driven by longer eviction timelines and new delinquencies.

  • Negative new lease rate growth in Atlanta, with concessions offered on 58% of new leases.

  • Operational expenses in Atlanta increased due to higher taxes, insurance costs, and legal fees related to evictions.

  • Overall portfolio new lease rates are expected to remain negative through 2024, impacting revenue growth.

Q & A Highlights

Q: Could you provide an update on the bad debt situation in Atlanta and the rest of the portfolio, and what tailwinds are expected going into 2025? A: Tiffany Butcher, COO, explained that bad debt was approximately 2% of revenue in October, with Washington, D.C. showing normalized levels below 1%. Atlanta faced higher-than-expected bad debt due to longer eviction timelines and new delinquencies. Improvements have been seen recently with faster eviction processing and proactive resident moves. However, significant improvement in bad debt is not expected in Q4, with stabilization anticipated in 2025.

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