What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-02-14 compared with 2024-02-16 · 180 added, 262 removed, 2070 unchanged (18% of the section changed)

33 unchanged sentences

• regulated investment companies (“RICs”),

• REITs, financial institutions,

• financial institutions,

• insurance companies,

49 unchanged sentences

In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than foreclosure property.

If we fail to satisfy either the 75% gross income test or the 95% gross income test, as discussed below, but our failure is due to reasonable cause and not due to willful neglect and we nonetheless maintain our qualification as a REIT because we satisfy specified cure provisions, we will be subject to a 100% tax on an amount equal to (a) the greater of (1) the amount by which we fail the 75% gross income test or (2) the amount by which we fail the 95% gross income test, as the case may be, multiplied by (b) a fraction intended to reflect our profitability.

test, as the case may be, multiplied by (b) a fraction intended to reflect our profitability.

We will be subject to a 4% nondeductible excise tax on the excess of the required calendar year distribution over the sum of the amounts actually distributed, excess distributions from the preceding tax year and amounts retained for which U.S.

54 unchanged sentences

Reasonable Cause

The Code provides relief from violations of the REIT gross income requirements, as described below under “—Requirements for Qualification as a REIT—Gross Income Tests,” in cases where a violation is due to reasonable cause and not to willful neglect, and other requirements are met, including the payment of a penalty tax that is based upon the magnitude of the violation.

In addition, certain provisions of the Code extend similar relief in the case of certain violations of the REIT asset

requirements (see “—Requirements for Qualification as a REIT—Asset Tests” below) and other REIT requirements, again provided that the violation is due to reasonable cause and not willful neglect, and other conditions are met, including the payment of a penalty tax.

neglect, and other requirements are met, including the payment of a penalty tax that is based upon the magnitude of the violation.

In addition, certain provisions of the Code extend similar relief in the case of certain violations of the REIT asset requirements (see “—Requirements for Qualification as a REIT—Asset Tests” below) and other REIT requirements, again provided that the violation is due to reasonable cause and not willful neglect, and other conditions are met, including the payment of a penalty tax.

If we did not have reasonable cause for a failure, we would fail to qualify as a REIT.

27 unchanged sentences

If a partnership or limited liability company in which we own an interest takes or expects to take actions that could jeopardize our status as a REIT or requires us to pay tax, we may be forced to dispose of our interest in such entity.

In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis.

In that case, we could fail to qualify as a REIT unless we

were entitled to relief, as described below.

In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a gross income or

asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis.

In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

Ownership of Disregarded Subsidiaries .

955 unchanged sentences

10-Q 001-06622 10.54 10/30/2014

10.20* Offer Letter to Stephen E.

10-K 001-06622 10.55 3/2/2015

10.21* Change in control agreement dated February 27, 2015 with Stephen E.

10-K 001-06622 10.56 3/2/2015

10.19* Change in control agreement dated February 2, 2022 with Susan L.

3 unchanged sentences

10-K 001-06622 10.18 2/17/2023

10.24* Agreement and General Release between Stephen E.

Riffee and Elme Communities

10-K 001-06622 10.27 2/17/2023

Form of Change in Control Agreement

10 unchanged sentences

10-Q 001-06622 10.1 8/1/2023

10.27 Third Amended and Restated Credit Agreement, dated July 10, 2024, by and among Elme Communities, as borrower, the financial institutions party thereto as lenders, and Wells Fargo Bank, National Association, as administrative agent

10-Q 001-06622 10.1 8/2/2024

10.28 Elme Communities 2016 Omnibus Incentive Plan (as amended and restated effective as of May 30, 2024)

001-06622 10.1 6/4/2024

10.29 Elme Communities Compensation Recovery Policy

001-06622 97 2/16/2024

19 Elme Communities Policy on Inside Information and Insider Trading

21 Subsidiaries of Registrant

6 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97 Elme Communities Compensation Recovery Policy

101 INS-XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

7 unchanged sentences

In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of Elme Communities or its subsidiaries are not filed herewith.

Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.

Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon

FORM 10-K SUMMARY

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Banner* Trustee February 14, 2025

Carras* Trustee February 16, 2024

/s/ Susan Carras*

Trustee February 14, 2025

Goitia* Trustee February 14, 2025

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Critical Audit Matter

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Acquisition of Real Estate

Description of the Matter

During the year ended December 31, 2023, the Company acquired one real estate property for an aggregate purchase price of $108.0 million as disclosed in Note 3 to the consolidated financial statements.

This transaction was accounted for as asset acquisition.

Auditing the Company's accounting for this acquisition involves a higher degree of auditor judgment due to management’s use of estimates in determining the relative fair values of the tangible and identified intangible assets acquired.

The significant assumptions used to estimate the values of the tangible and intangible assets included the replacement cost of the acquired real estate assets, estimated future cash flows and other valuation assumptions, which are based on internal analyses and other market data.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for estimating the relative fair value of acquired assets and allocating purchase price to the various components, including controls over management’s determination and review of the significant assumptions used in the analyses described above.

To test the relative fair values of acquired tangible and intangible assets used in the purchase price allocation, we involved our valuation specialists and performed audit procedures that included, among others, evaluating the Company’s valuation methodologies, testing the significant assumptions described above and testing the completeness and accuracy of the underlying data.

For example, we compared the significant assumptions used and the Company’s estimated relative fair values of acquired assets to observable market data, including other properties within the same submarkets.

Impairment of Watergate 600

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of income producing property

Description of the Matter

During the year ended December 31, 2023, the Company recognized an impairment charge of $41.9 million on its single office property, Watergate 600, as described in Note 3 to the consolidated financial statements.

As discussed in Note 2 to the consolidated financial statements, the Company assesses real estate assets for impairment whenever events or changes in circumstances indicate that the carrying value of a real estate asset may not be recoverable.

Impairment is recognized when indicators of impairment are present and the future undiscounted cash flows for a real estate asset are less than its carrying amount, at which time the real estate asset is written down to its estimated fair value, should the carrying value exceed the fair value.

Auditing the Company’s accounting for impairment of Watergate 600 was complex and involved a high degree of subjectivity in evaluating management’s assessment of recoverability and the resulting measurement of impairment when the asset is not deemed recoverable.

Management’s use of assumptions and estimates is inherent in the determination of estimated future cash flows expected to result from the property’s use and eventual disposition and the estimated fair value of the property.

In particular, management’s assumptions and estimates included estimated future revenue and expenses and capitalization rates, which were sensitive to expectations about market or economic conditions.

At December 31, 2024, the Company’s income producing property, net of accumulated depreciation, totaled $1.8 billion.

As discussed in Note 2 of the financial statements, the Company reviews long-lived assets for impairment.

Real estate is evaluated for recoverability based on estimated cash flows if there are indicators of potential impairment.

The Company did not identify any assets that were impaired as of December 31, 2024.

Auditing management’s assessment of impairment is challenging due to the high degree of auditor judgment necessary in evaluating management’s identification of indicators of potential impairment and the related uncertainty around the Company’s estimated cash flows used in the impairment assessment.

Estimated future cash flows are based on assumptions, that are forward looking and could be affected by future economic and market conditions, including capitalization rates, the projected annual cash flows associated with each property, and the estimated holding period for individual properties.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s real estate asset impairment assessment process.

For example, we tested controls over management’s process and assumptions for assessing recoverability and evaluating the assumptions used to determine fair value when the asset’s carrying value is deemed not recoverable.

To test the Company's accounting for impairment of Watergate 600, we performed audit procedures that included, among others, evaluating the methodologies applied and testing the significant assumptions discussed above in the recoverability assessment and valuation analysis.

We involved our valuation specialists to assist in performing these procedures.

For example, we evaluated the significant assumptions used to estimate future cash flows for reasonableness by comparing them to the Company’s historical accounting records or to available market data.

We held discussions with management about judgments used to understand the probability of future leasing events that could affect cash flow assumptions for the property.

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for assessing impairment of income producing properties.

For example, we tested controls over management’s review of qualitative and quantitative indicators of impairment and properties’ expected future cash flows used in the recoverability evaluation, if applicable, and we tested management’s review of the significant assumptions used in their impairment assessment.

Our testing of the Company’s impairment assessment included, among other procedures, evaluating the significant assumptions and testing the completeness and accuracy of the underlying data used by the Company to develop its estimated future cash flows for individual income producing properties.

We held discussions with management about the current status of potential transactions and about management’s judgments to understand the probability of future events that could affect the holding period and other cash flow assumptions for the properties.

We also compared the significant assumptions to current industry, market and economic trends and to the historical results of the properties.

/s/ Ernst & Young LLP

81 unchanged sentences

218,466 250,974 211,103

Real estate operating loss ( 23,063 ) ( 1,723 ) ( 4,593 )

Real estate operating income (loss)

23,469 ( 23,063 ) ( 1,723 )

Other income (expense)

1 unchanged sentence

( 37,835 ) ( 30,429 ) ( 24,940 )

Loss on interest rate derivatives — — ( 5,866 )

Loss on extinguishment of debt, net ( 147 ) ( 54 ) ( 4,917 )

1 unchanged sentence

( 36,572 ) ( 29,914 ) ( 29,145 )

Loss from continuing operations ( 52,977 ) ( 30,868 ) ( 53,140 )

Discontinued operations:

Income from operations of properties sold or held for sale

Gain on sale of real estate, net — — 46,441

Income from discontinued operations

Net (loss) income $ ( 52,977 ) $ ( 30,868 ) $ 16,384

Basic net (loss) income per share

Continuing operations

$ ( 13,103 ) $ ( 52,977 ) $ ( 30,868 )

Discontinued operations — — 0.82

Basic net (loss) income per share (1)

$ ( 0.61 ) $ ( 0.36 ) $ 0.19

Diluted net (loss) income per share

Continuing operations

Basic net loss per share

$ ( 0.15 ) $ ( 0.61 ) $ ( 0.36 )

Discontinued operations — — 0.82

Diluted net (loss) income per share (1)

Diluted net loss per share

$ ( 0.15 ) $ ( 0.61 ) $ ( 0.36 )

1 unchanged sentence

Weighted average shares outstanding – diluted 87,920 87,735 87,388

______________________________

(1) Earnings per share may not sum due to rounding

See accompanying notes to the consolidated financial statements.

4 unchanged sentences

2024 2023 2022

Net (loss) income $ ( 52,977 ) $ ( 30,868 ) $ 16,384

Other comprehensive income (loss):

$ ( 13,103 ) $ ( 52,977 ) $ ( 30,868 )

Other comprehensive loss:

Unrealized (loss) gain on interest rate derivatives

( 2,147 ) ( 764 ) 2,819

Reclassification of unrealized loss on interest rate derivatives to earnings 2,039 2,039 2,039

Comprehensive (loss) income $ ( 51,702 ) $ ( 26,010 ) $ 27,856

Comprehensive loss

$ ( 13,211 ) $ ( 51,702 ) $ ( 26,010 )

See accompanying notes to the consolidated financial statements.

12 unchanged sentences

Balance, December 31, 2021 86,261 $ 863 $ 1,697,477 $ ( 362,494 ) $ ( 19,091 ) $ 1,316,755 $ 307 $ 1,317,062

Net income — — — 16,384 — 16,384 — 16,384

— — — ( 30,868 ) — ( 30,868 ) — ( 30,868 )

Unrealized gain on interest rate hedges — — — — 2,819 2,819 — 2,819

Loss on interest rate derivatives — — — — 5,760 5,760 — 5,760

Amortization of swap settlements — — — — 2,039 2,039 — 2,039

7 unchanged sentences

Net loss — — — ( 52,977 ) — ( 52,977 ) — ( 52,977 )

Unrealized gain on interest rate hedges — — — — 2,819 2,819 — 2,819

Unrealized loss on interest rate hedges

— — — — ( 764 ) ( 764 ) — ( 764 )

Amortization of swap settlements — — — — 2,039 2,039 — 2,039

2 unchanged sentences

— — — ( 63,406 ) — ( 63,406 ) — ( 63,406 )

Equity offerings, net of issuance costs 1,032 10 26,839 — — 26,849 — 26,849

Shares issued under Dividend Reinvestment Program 28 — 497 — — 497 — 497

2 unchanged sentences

Net loss — — — ( 13,103 ) — ( 13,103 ) — ( 13,103 )

Unrealized gain on interest rate hedges — — — — ( 764 ) ( 764 ) — ( 764 )

Unrealized loss on interest rate hedges

— — — — ( 2,147 ) ( 2,147 ) — ( 2,147 )

Amortization of swap settlements — — — — 2,039 2,039 — 2,039

2 unchanged sentences

— — — ( 63,601 ) — ( 63,601 ) — ( 63,601 )

Shares issued under Dividend Reinvestment Program 28 — 497 — — 497 — 497

Share grants, net of forfeitures and tax withholdings 162 1 4,548 — — 4,549 — 4,549

7 unchanged sentences

Cash flows from operating activities

Net (loss) income $ ( 52,977 ) $ ( 30,868 ) $ 16,384

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

$ ( 13,103 ) $ ( 52,977 ) $ ( 30,868 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 95,935 88,950 91,722

1 unchanged sentence

Real estate impairment — 41,860 —

Gain on sale of real estate — — ( 46,441 )

Share-based compensation expense 5,218 5,538 7,988

Amortization of debt premiums, discounts and related financing costs 4,421 4,218 4,052

Loss on interest rate derivatives — — 5,866

Loss on extinguishment of debt, net 147 54 4,917

Gain on land easements ( 1,410 ) — —

Changes in other assets ( 6,894 ) ( 11,294 ) ( 1,602 )

3 unchanged sentences

Real estate acquisitions, net — ( 107,595 ) ( 204,433 )

Net cash received from sale of real estate — — 897,783

Capital improvements to real estate ( 47,390 ) ( 38,218 ) ( 36,513 )

2 unchanged sentences

Insurance proceeds — — 2,224

Real estate deposits — — ( 1,000 )

Net cash (used in) provided by investing activities ( 146,221 ) ( 241,163 ) 702,170

Payments received for land easements 3,862 — —

Net cash used in investing activities

( 43,740 ) ( 146,221 ) ( 241,163 )

Cash flows from financing activities

Line of credit borrowings (repayments), net 102,000 55,000 ( 42,000 )

Line of credit borrowings, net

19,000 102,000 55,000

Dividends paid ( 63,636 ) ( 64,335 ) ( 59,363 )

Principal payments – mortgage notes payable — — ( 76,598 )

Repayments of notes payable — — ( 311,894 )

Repayments of unsecured term loan debt — ( 100,000 ) —

Proceeds from term loan — 125,000 —

Settlement of interest rate derivatives — — ( 5,866 )

Payment of financing costs ( 5,676 ) ( 844 ) ( 39 )

3 unchanged sentences

Payment of tax withholdings for restricted share awards ( 1,111 ) ( 2,072 ) ( 3,286 )

Net cash provided by (used in) financing activities 60,238 ( 56,416 ) ( 565,396 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 1,314 ) ( 224,368 ) 225,930

Net cash (used in) provided by financing activities

( 51,432 ) 60,238 ( 56,416 )

Net increase (decrease) in cash, cash equivalents and restricted cash

71 ( 1,314 ) ( 224,368 )

Cash, cash equivalents and restricted cash at beginning of year 8,538 9,852 234,220

Cash, cash equivalents and restricted cash at end of year $ 8,609 $ 8,538 $ 9,852

Supplemental disclosure of cash flow information:

Cash paid for interest, net of capitalized interest expense $ 32,220 $ 23,502 $ 20,842

Change in accrued capital improvements and development costs ( 7,864 ) 9,556 609

Dividend payable 15,898 15,863 14,934

ELME COMMUNITIES AND SUBSIDIARIES

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2024 2023 2022

Supplemental disclosure of cash flow information:

Cash paid for interest, net of capitalized interest expense $ 23,502 $ 20,842 $ 27,166

Change in accrued capital improvements and development costs 9,556 609 ( 6,949 )

Dividend payable 15,863 14,934 14,650

Reconciliation of cash, cash equivalents and restricted cash:

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We sold no properties in 2024, 2023 or 2022.

We sold twelve office and eight retail properties for an aggregate gain of $ 46.4 million during the year ended December 31, 2021.

Generally, and subject to our ongoing qualification as a REIT, no provisions for income taxes are necessary except for taxes on undistributed taxable income and taxes on the income generated by our taxable REIT subsidiaries (“TRSs”).

Our TRSs are subject to corporate federal and state income tax on their taxable income at regular statutory rates.

As of both December 31, 2023 and 2022, our TRSs had a deferred tax asset of $ 1.4 million that was fully reserved.

As of December 31, 2024, 2023 and 2022 our TRSs had a deferred tax asset of $ 1.4 million that was fully reserved.

Beginning in 2018, ordinary taxable income per share is equal to the Section 199A dividend that was created by the Tax Cuts and Jobs Act.

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Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform ("Topic 848"), which was amended in December 2022 by ASU 2022-06, Reference Rate Reform (Topic 848).

Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in Topic 848 is optional and may be elected through December 31, 2024 as reference rate reform activities occur.

During the first quarter of 2023, we executed an amendment to the $ 700.0 million unsecured revolving credit facility (“Revolving Credit Facility”) to convert the benchmark interest rate from LIBOR to an adjusted SOFR ("Secured Overnight Financing Rate").

We elected to apply the optional expedients in Topic 848 to (i) assert that the hedged interest payments remain probable regardless of any expected modification in terms related to reference rate reform, and (ii) continue the method of assessing effectiveness as documented in the original hedge documentation so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

The impact of this guidance did not have a material impact on our consolidated financial statements.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting - Improvements to Reportable Segments Disclosures”, which enhances disclosures of significant segment expenses and other segment items regularly provided to the chief operating decision maker (“CODM”).

The new standard is effective in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

We adopted the new standard on our consolidated financial statements and related disclosures for the year ended December 31, 2024.

In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Disaggregation of Income Statement Expenses (“DISE”), which will require additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses.

The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The new standard will be effective for public companies for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

The requirements will be applied prospectively with the option for retrospective application.

Early adoption is permitted.

The Company is currently evaluating the impact of this accounting standard update on our consolidated financial statements .

Principles of Consolidation and Basis of Presentation

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We depreciate buildings on a straight-line basis over an estimated useful life of 26 to 40 years.

We capitalize all capital improvements associated with replacements, improvements or major repairs to real property that extend its useful life and depreciate them using the straight-line method over their estimated useful lives ranging from 3 to 40 years.

We also capitalize

costs incurred in connection with our development projects, including interest incurred on borrowing obligations and other internal costs during periods in which qualifying expenditures have been made and activities necessary to get the development projects ready for their intended use are in progress.

We capitalize all capital

improvements associated with replacements, improvements or major repairs to real property that extend its useful life and depreciate them using the straight-line method over their estimated useful lives ranging from 3 to 40 years.

We also capitalize costs incurred in connection with our development projects, including interest incurred on borrowing obligations and other internal costs during periods in which qualifying expenditures have been made and activities necessary to get the development projects ready for their intended use are in progress.

Capitalization of these costs begins when the activities and related expenditures commence and ceases when the project is substantially complete and ready for its intended use, at which time the project is placed into service and depreciation commences.

Real estate depreciation expense from continuing operations was $ 82.7 million, $ 77.2 million and $ 66.2 million during the years ended December 31, 2023, 2022 and 2021, respectively.

Real estate depreciation expense was $ 89.7 million, $ 82.7 million and $ 77.2 million during the years ended December 31, 2024, 2023 and 2022, respectively.

We charge maintenance and repair costs that do not extend an asset’s useful life to expense as incurred.

Interest expense from continuing operations and interest capitalized to real estate assets related to development and major renovation activities for the three years ended December 31, 2023 were as follows (in thousands):

Interest expense and interest capitalized to real estate assets related to development and major renovation activities for the three years ended December 31, 2024 were as follows (in thousands):

Year Ended December 31,

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The costs of software developed for internal use that qualify for capitalization are included with Prepaid expenses and other assets on our consolidated balance sheets.

These capitalized costs include external direct costs utilized in developing or obtaining the applications and expenses for employees who are directly associated with the development of the applications.

Capitalization of such costs begins when the preliminary project stage is complete and continues until the project is

substantially complete and is ready for its intended purpose.

These capitalized costs include external direct costs utilized in developing or

obtaining the applications and expenses for employees who are directly associated with the development of the applications.

Capitalization of such costs begins when the preliminary project stage is complete and continues until the project is substantially complete and is ready for its intended purpose.

Completed projects are amortized on a straight-line basis over their estimated useful lives.

14 unchanged sentences

GAAP requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing segments’ performance.

Net operating income is a key measurement of our segment profit and loss.

Net operating income is a key measurement of our segment profit and loss and real estate expenses are a key significant expense.

Net operating income is defined as segment real estate rental revenue less segment real estate expenses.

49 unchanged sentences

From time to time, we have properties under development/redevelopment and held for current or future development.

The cost of our real estate portfolio under development or held for future development as of December 31, 2023 and 2022 was $ 31.0 million and $ 31.3 million, respectively.

The cost of our real estate portfolio under development or held for future development as of each of December 31, 2024 and 2023 was $ 31.0 million.

As of December 31, 2024, we have invested $ 30.4 million, including the cost of acquired land, in a residential development adjacent to Riverside Apartments.

During the second quarter of 2022, we paused development activities at the aforementioned property and ceased associated capitalization of interest on spending and real estate taxes, though we still consider the future completion of this development to be probable.

In 2022, we paused development activities at the aforementioned property and ceased associated capitalization of interest on spending and real estate taxes, though we still consider the future completion of this development to be probable.

We also continue to capitalize qualifying costs on several other projects with minor development activity necessary to ready each project for its intended use.

Properties and land for development acquired during the three years ended December 31, 2023 were as follows:

There were no acquisitions during 2024.

Properties acquired during the two years ended December 31, 2023 were as follows:

Acquisition Date Property Type # of Homes (unaudited) Ending Occupancy Contract

7 unchanged sentences

1,079 $ 283,236

August 10, 2021 Elme Conyers Residential 240 93.3 % $ 48,000

November 19, 2021 Elme Eagles Landing Residential 490 89.0 % 106,000

730 $ 154,000

The results of operations from acquired operating properties are included in the consolidated statements of operations as of their acquisition dates.

The revenue and earnings of our acquisitions during their year of acquisition for the three years ended December 31, 2023 are as follows (in thousands):

The revenue and earnings of our acquisitions during their year of acquisition for the two years ended December 31, 2023 are as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Real estate rental revenue $ 2,549 $ 14,937

2 unchanged sentences

We recorded the total cost of the above acquisitions as follows (in thousands):

2023 2022 2021

Land $ 25,249 $ 50,547

5 unchanged sentences

Total carrying amounts recorded $ 108,190 $ 207,160

The weighted average remaining life for the absorption costs is four months .

The difference in the total acquisition cost of $ 108.2 million for the 2023 acquisition and the cash paid for the 2023 acquisition per the consolidated statements of cash flows of $ 107.6 million is due to net credits received at settlement totaling $ 0.6 million.

1 unchanged sentence

In September 2022, we extinguished the liabilities associated with the two mortgage notes though defeasance arrangements.

The difference in the total cost of the 2021 acquisitions of $ 154.2 million and the cash paid for the 2021 acquisitions per the consolidated statements of cash flows of $ 153.7 million is primarily due to credits received at settlement totaling $ 0.5 million.

Fair Value of In-place Leases

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$ 3,128 $ 3,724 $ 11,660

Amortization of these combined components over the next four years is projected to be as follows (in thousands):

Amortization of these combined components over the next five years is projected to be as follows (in thousands):

Depreciation and amortization expense Real estate rental revenue, net increase Total

2 unchanged sentences

2027 1,020 ( 476 ) 544

2027 1,019 ( 476 ) 543

Properties Sold and Held for Sale

2 unchanged sentences

Depreciation on these properties is discontinued when classified as held for sale, but operating revenues, other operating expenses and interest continue to be recognized through the date of sale.

We sold no properties in 2023 and 2022.

We sold twelve office and eight retail properties for an aggregate gain of $ 46.4 million during the year ended December 31, 2021.

The dispositions of the office and retail properties in 2021 represented a strategic shift that had a major effect on our financial results, and we accordingly reported them as discontinued operations.

We have fully transferred control of the assets associated with these disposed properties and do not have continuing involvement in the operations of these properties.

We sold no properties in 2024, 2023 or 2022.

Real Estate Impairment

No properties, including assets held for development, had any recognized impairment charges during 2024.

Should external or internal circumstances change requiring the need to shorten holding periods or adjust future estimated cash flows from our properties, we could be required to record additional impairment charges in the future.

During 2023, we recognized an impairment charge of $ 41.9 million on Watergate 600 in order to reduce its carrying value to its estimated fair value, which declined due to changes in market conditions in the Washington, DC metro region office market.

2 unchanged sentences

In accordance with ASC 820, we estimated the fair value using a discounted cash flow model which required certain significant assumptions, including a discounted cash flow term of 5 years, an average economic occupancy of 80.5 %, and a terminal capitalization rate of 7.5 %.

No other properties, including assets held for development, had any recognized impairment charges during 2023.

Discontinued Operations

The results of the twelve office and eight retail properties sold in 2021 are classified as discontinued operations and are summarized as follows (amounts in thousands, except for share data):

Year Ended December 31, 2021

Real estate rental revenue $ 70,519

Property operating and maintenance ( 11,201 )

Real estate taxes and insurance ( 11,136 )

Property management ( 2,195 )

Depreciation and amortization ( 22,904 )

Gain on sale of real estate, net 46,441

Income from discontinued operations $ 69,524

Basic net income per share $ 0.82

Diluted net income per share $ 0.82

Capital expenditures $ 3,316

All assets and liabilities related to the twelve office properties (the “Office Portfolio”) and eight retail properties (the “Retail Portfolio”) were sold as of December 31, 2021.

LEASE ACCOUNTING

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Future Minimum Rental Income

As of December 31, 2023, non-cancelable commercial operating leases provide for future minimum rental income from continuing operations as follows (in thousands):

As of December 31, 2024, non-cancelable commercial operating leases provide for future minimum rental income as follows (in thousands):

2025 $ 15,677

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We recorded the mortgage note at its estimated fair value of $ 40.0 million.

Principal and interest were payable monthly until May 1, 2030, at which time all unpaid principal and interest were payable in full.

Principal and interest were payable monthly until May 1, 2030, at which time all unpaid principal and interest would have been payable in full.

In May 2022, we assumed a $ 33.7 million mortgage note in connection with the acquisition of Elme Cumberland.

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We recorded the mortgage note at its estimated fair value of $ 31.5 million.

Principal and interest were payable monthly until May 1, 2030, at which time all unpaid principal and interest were payable in full.

Principal and interest were payable monthly until May 1, 2030, at which time all unpaid principal and interest would have been payable in full.

In September 2022, we extinguished the liabilities associated with both of the mortgage notes through defeasance arrangements, recognizing aggregate losses on extinguishment of debt of $ 4.9 million.

UNSECURED LINES OF CREDIT PAYABLE

During the third quarter of 2021, we entered into an amended and restated credit agreement (“Credit Agreement”) which provides for a $ 700 million unsecured revolving credit facility (the “Revolving Credit Facility”) and the continuation of an existing $ 250.0 million unsecured term loan (“2018 Term Loan”).

The Revolving Credit Facility has a four-year term ending in August 2025, with two six-month extension options.

The Credit Agreement has an accordion feature that allows us to increase the aggregate facility to $ 1.5 billion, subject to the lenders’ agreement to provide additional revolving loan commitments or term loans.

As a result of the transaction, we recognized a loss on extinguishment of debt of $ 0.2 million related to the write off of unamortized loan origination costs.

We incurred $ 4.8 million of additional loan origination costs which are amortized as interest expense over the term of the Revolving Credit Facility.

On September 27, 2021, we prepaid a $ 150.0 million portion of the 2018 Term Loan using proceeds from the sale of the Office Portfolio and Retail Portfolio (see note 3).

As a result of the prepayment, we recognized a loss on extinguishment of debt of $ 0.3 million related to the write-off of unamortized loan origination costs.

Simultaneous with the prepayment, we terminated five interest rate swap arrangements.

During the first quarter of 2023, we prepaid the remaining $ 100.0 million portion of the 2018 Term Loan and executed an amendment to the Revolving Credit Facility to convert the benchmark interest rate from LIBOR to an adjusted SOFR, with no change in the applicable interest rate margins.

The Revolving Credit Facility bears interest at a rate of daily SOFR plus 0.10 % plus a margin ranging from 0.70 % to 1.40 %.

In addition, the Revolving Credit Facility requires the payment of a facility fee ranging from 0.10 % to 0.30 % (in each case, depending on Elme Communities’ credit rating) on the $ 700.0 million committed revolving loan capacity, without regard to usage.

As of December 31, 2023, the interest rate on the Revolving Credit Facility is based on an adjusted daily SOFR (inclusive of the 0.10 % credit spread adjustment) plus 0.85 % applicable margin, the daily SOFR is 5.38% and the facility fee is 0.20 %.

The amount of the Revolving Credit Facility unused and available at December 31, 2023 was as follows (in thousands):

During 2023, we prepaid the remaining $ 100.0 million portion of an existing $ 250.0 million unsecured term loan (the “2018 Term Loan”) and executed an amendment to the Revolving Credit Facility to convert the benchmark interest rate from LIBOR to an adjusted SOFR, with no change in the applicable interest rate margins.

The Revolving Credit Facility bore interest at a rate of daily SOFR plus 0.10 % plus a margin ranging from 0.70 % to 1.40 %.

In addition, the Revolving Credit Facility required the payment of a facility fee ranging from 0.10 % to 0.30 % (in each case, depending on Elme Communities’ credit rating) on the $ 700.0 million committed revolving loan capacity, without regard to usage.

During 2024, we entered into a third amended and restated credit agreement (the “Amended Credit Agreement”) which provides for aggregate revolving loan commitments of $ 500.0 million (the “Amended and Restated Revolving Credit Facility”) with an accordion feature that allows us to increase the aggregate revolving loan commitments or add term loans of up to $ 1.0 billion, subject to the lenders’ agreement to provide additional revolving commitments or term loans.

The Amended and Restated Revolving Credit Facility has a four-year term ending in July 2028, with two six-month extension options.

Borrowings under the Amended and Restated Revolving Credit Facility will bear interest, at our option, at a rate of either (a)(i) daily SOFR plus 0.10 % (the “Adjusted Daily Simple SOFR”) or (ii) term SOFR plus 0.10 %, plus, in each case, a margin ranging from 0.70 % to 1.40 % (depending on our credit rating) or (b) the base rate plus a margin ranging from 0.00 % to 0.40 % (based upon our credit rating).

The base rate is the highest of the administrative agent’s prime rate, the federal funds rate plus 0.50 % and Adjusted Daily Simple SOFR plus 1.0 %.

In addition, the Amended Credit Agreement requires the payment of a facility fee equal to 0.10 % to 0.30 % (depending on our credit rating) on the $ 500.0 million committed capacity in respect of the Amended and Restated Revolving Credit Facility, without regard to usage.

The initial interest rate is based on Adjusted Daily Simple SOFR plus a margin of 0.85 % and the initial facility fee equals 0.20 %.

As of December 31, 2024, the interest rate on the Amended and Restated Revolving Credit Facility is based on an adjusted daily SOFR (inclusive of the 0.10 % credit spread adjustment) plus 0.85 % applicable margin, the daily SOFR is 4.49% and the facility fee is 0.20 %.

The amount of the Amended and Restated Revolving Credit Facility unused and available at December 31, 2024 was as follows (in thousands):

Committed capacity $ 500,000

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Unused and available $ 324,000

We executed borrowings and repayments on the Revolving Credit Facility during 2023 as follows (in thousands):

We executed borrowings and repayments on the Revolving Credit Facility and Amended and Restated Revolving Credit Facility during 2024 as follows (in thousands):

Balance, December 31, 2023 $ 157,000

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Balance, December 31, 2024 $ 176,000

All outstanding advances for the Revolving Credit Facility are due and payable upon maturity in August 2025, unless extended

pursuant to one or both of the two six-month extension options.

All outstanding advances for the Amended and Restated Revolving Credit Facility are due and payable upon maturity in July 2028, unless extended pursuant to one or both of the two six-month extension options.

Interest only payments are due and payable generally on a monthly basis.

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Facility fees 1,229 1,454 1,454

The Revolving Credit Facility contains and the prior unsecured credit facility that it replaced contained certain financial and non-financial covenants, all of which we have met as of December 31, 2023 and 2022.

The Amended and Restated Revolving Credit Facility contains and the prior unsecured credit facility that it replaced contained certain financial and non-financial covenants, all of which we have met as of December 31, 2024 and 2023.

Included in these covenants are limits on our total indebtedness, secured and unsecured indebtedness and required debt service payments.

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Weighted average interest rate on borrowings outstanding at December 31 5.26 % 6.26 % 5.20 %

The covenants under our Credit Agreement require us to insure our properties against loss or damage in amounts customarily maintained by similar businesses or as they may be required by applicable law.

The covenants under our Amended Credit Agreement require us to insure our properties against loss or damage in amounts customarily maintained by similar businesses or as they may be required by applicable law.

The covenants for the notes require us to keep all of our insurable properties insured against loss or damage at least equal to their then full insurable value.

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2024 2023 Maturity Date (2)

2018 Term Loan 1 Month LIBOR + 110 basis points

2.31 % $ — $ 100,000 1/10/2023

2023 Term Loan 1 Month SOFR + 95 basis points

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(2) No principal amounts are due prior to maturity.

In the fourth quarter of 2024, we exercised one of two one-year extension options on the 2023 Term Loan to extend the maturity of the loan to January 10, 2026.

During 2023, we executed a $ 125.0 million unsecured term loan (“2023 Term Loan”) with an interest rate of SOFR (subject to a credit spread adjustment of 10 basis points) plus a margin of 95 basis points (subject to adjustment depending on Elme Communities’ credit rating).

The 2023 Term Loan has a two-year term ending in January 2025, with two one year extension options.

We used the proceeds to prepay the 2018 Term Loan in full and a portion of our borrowings under our unsecured credit facility.

In August 2021, we redeemed $ 300.0 million of our existing unsecured notes that were scheduled to mature in 2022.

As a result of the prepayment, we recognized a loss on extinguishment of debt of $ 12.3 million comprised of a prepayment penalty of $ 11.9 million and the write-off of unamortized loan origination costs of $ 0.4 million.

The 2023 Term Loan had a two-year term ending in January 2025, with two one year extension options.

We used the proceeds to prepay the remaining $ 100.0 million portion of the 2018 Term Loan in full and a portion of our borrowings under our Revolving Credit Facility.

During 2024, we entered into a first amendment of the 2023 Term Loan (the “Term Loan Amendment”).

The Term Loan Amendment implements various covenant and technical amendments to make the 2023 Term Loan consistent with corresponding provisions in the Amended Credit Agreement.

The Term Loan Amendment does not change the maturity or any of the pricing terms of the term loan outstanding under the 2023 Term Loan.

In the fourth quarter of 2024, we exercised one of two one-year extension options on the 2023 Term Loan to extend the maturity of the loan to January 10, 2026.

On September 29, 2020, we entered into a note purchase agreement to issue $ 350.0 million aggregate principal amount of 3.44 % senior unsecured 10-year notes payable (the “Green Bonds”).

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The note purchase agreement also contains restrictive covenants that, among other things, restrict the ability of Elme Communities and its subsidiaries to enter into transactions with affiliates, consolidate or merge or transfer or lease all or substantially all of its assets, create liens, make dividends and distributions if an event of default exists, or substantially change the general nature of our business.

Such financial and restrictive covenants are substantially similar to the corresponding covenants contained in our Credit Agreement.

Such financial and restrictive covenants are substantially similar to the corresponding covenants contained in our Amended Credit Agreement.

The note purchase agreement also contains customary events of default, including payment defaults, cross defaults with certain other indebtedness, breaches of certain covenants and bankruptcy events.

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DERIVATIVE INSTRUMENTS

We had one interest rate swap arrangement with a notional amount of $ 100.0 million that had effectively fixed the remaining $ 100.0 million portion of the 2018 Term Loan prior to the prepayment.

During the first quarter of 2023, we prepaid the 2018 Term Loan using proceeds from the $ 125.0 million 2023 Term Loan (see note 7).

Subsequent to this transaction, our interest rate swap arrangement effectively fixed the interest rate on a $ 100.0 million portion of the 2023 Term Loan through the interest rate swap arrangement’s expiration date of July 21, 2023.

During the first quarter of 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $ 125.0 million that effectively fixed the interest at 4.73 % for the 2023 Term Loan beginning on July 21, 2023 through the 2023 Term Loan’s maturity date of January 10, 2025.

During the second quarter of 2024, we entered into two forward interest rate swap arrangements for the 2023 Term Loan with an aggregate notional amount of $ 150.0 million beginning on January 10, 2025 through January 10, 2026.

These forward interest rate swap arrangements effectively fix a portion of our variable rate debt based on an adjusted daily SOFR at 4.72 % (subject to applicable interest rate margins).

The interest rate swap arrangement is recorded at fair value in accordance with GAAP, based on discounted cash flow methodologies and observable inputs.

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Amount Effective Date Fair Value

Derivative Liabilities

Derivative Assets (Liabilities)

Derivative Instrument Maturity Date 2024 2023

Interest rate swap $ 100,000 March 31, 2017 July 21, 2023 $ — $ 1,998

Interest rate swap $ 75,000 July 21, 2023 January 10, 2025 $ 14 $ 740

Interest rate swap 50,000 July 21, 2023 January 10, 2025 9 494

Interest rate swap 100,000 January 10, 2025 January 10, 2026 ( 624 ) —

Interest rate swap 50,000 January 10, 2025 January 10, 2026 ( 312 ) —

$ ( 913 ) $ 1,234

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2024 2023 2022

Unrealized (gain) loss on interest rate hedges $ ( 764 ) $ 2,819 $ 3,673

Unrealized (loss) gain on interest rate hedges

$ ( 2,147 ) $ ( 764 ) $ 2,819

Amounts reported in Accumulated other comprehensive loss related to effective cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt.

During the next twelve months, we estimate that an additional $ 1.2 million related to our two outstanding interest rate swap arrangements will be reclassified as a decrease to interest expense.

During the next twelve months, we estimate that an additional

$ 0.9 million related to our four outstanding interest rate swap arrangements will be reclassified as a decrease to interest expense.

The losses reclassified from Accumulated other comprehensive income into interest expense for the three years ended December 31, 2024, were as follows (in thousands):

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We have agreements with each of our derivative counterparties that contain a provision whereby we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness.

As of December 31, 2023, the fair value of derivative assets, including accrued interest, was $ 1.2 million and we did no t have any derivatives in a liability position.

As of December 31, 2024, the fair value of derivative assets, including accrued interest, was $ 23,000 and the fair value of the derivative liabilities, including accrued interest, was $ 0.9 million.

As of December 31, 2024, we have not posted any collateral related to these agreements.

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The only assets or liabilities we had at December 31, 2024 and 2023 that are recorded at fair value on a recurring basis are the assets held in the Supplemental Executive Retirement Plan ("SERP"), which primarily consists of investments in mutual funds, and the interest rate swaps (see note 8).

We base the valuations related to the SERP on assumptions derived from significant other observable inputs and accordingly these valuations fall into Level 2 in the fair value hierarchy.

We base the valuations related to the SERP on quoted prices in active markets and accordingly these valuations fall into Level 1 in the fair value hierarchy.

The valuation of the interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each interest rate swap.

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The valuation of interest rate swaps falls into Level 2 in the fair value hierarchy.

The fair values of these assets at December 31, 2023 and 2022 were as follows (in thousands):

The fair values of these assets and liabilities at December 31, 2024 and 2023 were as follows (in thousands):

December 31, 2024 December 31, 2023

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Interest rate swaps 23 — 23 — 1,234 — 1,234 —

Interest rate swaps ( 936 ) — ( 936 ) — — — — —

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets not measured at fair value on an ongoing basis but subject to fair value adjustments only in certain circumstances, such as when there is evidence of impairment, are measured at fair value on a nonrecurring basis.

The Company did no t have any assets or liabilities measured at fair value on a nonrecurring basis in 2024.

In the third quarter of 2023, we measured the fair value of Watergate 600 using Level 3 inputs as there was evidence of impairment (see note 3).

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SHARE-BASED COMPENSATION

Elme Communities maintains short-term and long-term incentive plans that allow for share-based awards to officers and non-officer employees.

Share-based awards are provided to officers and non-officer employees, as well as trustees, under the Washington Real Estate Investment Trust 2016 Omnibus Incentive Plan which allows for awards in the form of restricted shares, restricted share units, options, and other awards up to an aggregate of 2,400,000 shares over the ten-year period in which the plan will be in effect.

Elme Communities maintains short-term (“STIP”) and long-term (“LTIP”) incentive plans that allow for share-based awards to officers (“Officer STIP” and “Officer LTIP”) and non-officer employees.

Share-based awards are provided to officers and non-officer employees, as well as trustees, under the Elme Communities 2016 Omnibus Incentive Plan, as amended and restated effective May 30, 2024 (the “Omnibus Incentive Plan”).

An amendment and restatement of the Omnibus Incentive Plan was approved by our board of trustees (the “Board”) in April 2024 and approved by our shareholders in May 2024 to, among other changes, increase the number of shares available to be issued by 2,900,000 , from 2,400,000 shares to 5,300,000 shares (including shares issued pursuant to awards made under the Omnibus Incentive Plan prior to its amendment).

The Omnibus Incentive Plan, as amended, allows for awards in the form of restricted shares, restricted share units, options and other awards up to an aggregate of 5,300,000 shares over the ten-year period in which the plan is in effect.

Restricted share units are converted into shares of our stock upon full vesting through the issuance of new shares.

There were no options issued or outstanding as of December 31, 2024 and 2023.

On February 14, 2020, the board of trustees adopted an Amended and Restated Executive Officer Short-Term Incentive Plan (the “Officer STIP”) and an Amended and Restated Executive Officer Long-Term Incentive Plan (the “Officer LTIP”).

Upon adoption by the board of trustees, both plans became effective for the performance periods beginning January 1, 2020.

Under the Officer STIP, as revised, all named executive officers will have the opportunity to receive an annual cash bonus based on the achievement of certain performance measures that will be established for each performance period.

Under the Officer STIP all named executive officers will have the opportunity to receive an annual cash bonus based on the achievement of certain performance measures that will be established for each performance period.

Each year, the Compensation Committee will establish the threshold, target and high performance goals for each performance measure, as well as the weighting attributable to each such performance measure, with the aggregate weighting for all such performance measures to total 100 %.

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President and Chief Executive Officer 63 % 125 % 188 %

Chief Financial Officer 41 % 75 % 133 %

Chief Operating Officer

47 % 93 % 158 %

Chief Financial Officer 41 % 75 % 133 %

Chief Information Officer 35 % 65 % 115 %

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30 % 60 % 105 %

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(1) For both the Chief Operating Officer and the Chief Administrative Officer, the percentages include the effects of prorations for the amount of time in 2023 that they were in their respective positions.

If a Change in Control (as defined in the Officer STIP) occurs during a performance period while the participant is employed, the participant will receive a prorated award under the Officer STIP calculated based on the actual levels of achievement of the prorated performance goals as of the date of the Change in Control.

Bonuses payable under the short-term incentive plans for non-executive officers and staff are payable 100 % in cash.

Under the Officer LTIP, as revised, all named executive officers will have the opportunity to receive awards based on (i) the achievement of performance measures, which will be established for each performance period, and (ii) continued employment with the Company.

Under the Officer LTIP all named executive officers will have the opportunity to receive awards based on (i) the achievement of performance measures, which will be established for each performance period, and (ii) continued employment with the Company.

The aggregate weighting for the performance measures and the time-based measures, as determined by the Compensation Committee, will total 100 %.

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President and Chief Executive Officer 198 % 275 % 440 %

Chief Financial Officer 95 % 135 % 196 %

Chief Operating Officer

133 % 190 % 280 %

Chief Financial Officer 95 % 135 % 196 %

Chief Information Officer 100 % 143 % 207 %

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70 % 100 % 145 %

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Any time-based awards under the Officer LTIP will be subject to a three-year vesting schedule, with any award vesting in one-third increments on December 15 of each year of the applicable performance period if the participant remains employed by the Company on each of such dates.

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For three-year performance periods commencing on or after January 1, 2024, the market performance condition is based on total shareholder return relative to the FTSE Nareit Residential Index ( 60 % weighting) and a defined population of peer companies ( 40 % weighting).

For three-year performance period commencing on January 1, 2023, the market performance condition is based on total shareholder return relative to the FTSE Nareit Residential Index ( 60 % weighting) and a defined population of peer companies ( 40 % weighting).

For three-year performance period commencing on January 1, 2022, the market condition performance measurement is based on total shareholder return relative to a defined population of peer companies ( 100 % weighting).

For three-year performance period commencing on January 1, 2021, the market condition performance measurement is based on total shareholder return relative to a defined population of peer companies ( 50 % weighting), relative to the FTSE Nareit Residential Index ( 42.5 % weighting) and the FTSE Office Index ( 7.5 % weighting).

The model evaluates the awards for changing total shareholder return over the term of the vesting, relative to the peer companies and relative to the FTSE indexes, and uses random simulations that are based on past stock characteristics as well as dividend growth and other factors for Elme Communities and each of the peer companies.

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The calculated grant date fair value as a percentage of base salary for the officers for the three-year performance period that commenced in 2024 ranged from approximately 51 % to 155 % for the 60 % of the LTIP based on TSR relative to the FTSE Nareit Residential Index and from approximately 64 % to 195 % for the 40 % of the LTIP based on TSR relative to a defined population of peer companies.

The calculated grant date fair value as a percentage of base salary for the officers for the three-year performance period that commenced in 2023 ranged from approximately 27 % to 137 % for the 60 % of the LTIP based on TSR relative to the FTSE Nareit Residential Index and from approximately 32 % to 159 % for the 40 % of the LTIP based on TSR relative to a defined population of peer companies.

The calculated grant date fair value as a percentage of base salary for the officers for the three-year performance period that commenced in 2022 ranged from approximately 32 % to 248 % for the 100 % of the LTIP based on TSR relative to a defined population of peer companies.

The calculated grant date fair value as a percentage of base salary for the officers for the three-year performance period that commenced in 2021 ranged from approximately 37 % to 78 % for the 50 % of the LTIP based on TSR relative to a defined population of peer companies and from 38 % to 80 % for the 50 % of the LTIP based on TSR relative to the FTSE Nareit Diversified Index.

During 2022, our chief executive officer was granted a one-time equity award of 100,000 restricted shares.

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Trustee Awards

We award share based compensation to our trustees in the form of restricted shares which vest immediately and are restricted from sale for the period of the trustees' service.

The value of share-based compensation for each trustee was $ 100,000 for each of three years ended December 31, 2023.

We award share-based compensation to our trustees in the form of restricted shares which vest immediately.

The value of share-based compensation for each trustee was $ 100,000 for each of the three years ended December 31, 2024.

While a trustee serves on the board, until a trustee owns an aggregate number of common shares the value of which must equal at least five times the annual cash retainer at the time of their election to the board, the common shares received by trustees as compensation are restricted in transfer.

Total Compensation Expense

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Restricted Share Awards with Performance and Service Conditions

The activity for the three years ended December 31, 2023 related to our restricted share awards, excluding those subject to market conditions, was as follows:

The activity for the three years ended December 31, 2024 related to our restricted share awards, excluding those subject to market conditions and inclusive of trustee awards, was as follows:

Shares Weighted Average Grant Fair Value

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Absolute/Index TSR (2)

1,016 376 N/A

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(1) The 2023, 2022 and 2021 Awards were granted under the Officer LTIP, whereby all of the shares vest immediately at the end of the three-year performance period.

(2) The performance conditions for the 2023 awards were evaluated based on 60 % on TSR relative to the FTSE Nareit Residential Index and 40 % based on TSR relative to a defined populations of peer companies.

(1) The 2024, 2023 and 2022 Awards were granted under the Officer LTIP, whereby all of the shares vest immediately at the end of the 3-year performance period.

(2) The performance conditions for the 2024 and 2023 awards were evaluated based on 60 % on TSR relative to the FTSE Nareit Residential Index and 40 % based on TSR relative to a defined populations of peer companies.

The performance conditions for the 2022 awards were evaluated based on 100 % on TSR relative to a defined population of peer companies.

The performance conditions for the 2021 awards were evaluated based on 50 % on TSR relative to a defined population of peer companies and 50 % on TSR relative to the FTSE Multifamily and Office indexes.

OTHER BENEFIT PLANS

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For each of the three years ended December 31, 2024, we made contributions to the 401(k) plan of $ 0.7 million, $ 0.6 million and $ 0.3 million, respectively.

We have adopted non-qualified deferred compensation plans for the officers and members of the board of trustees.

We have adopted non-qualified deferred compensation plans for the officers and members of the Board.

The plans allow for a deferral of a percentage of annual cash compensation and trustee fees.

The plans are unfunded, and payments are to be made out of the general assets of Elme Communities.

The deferred compensation liability was $ 0.1 million and $ 0.2 million at December 31, 2023 and 2022, respectively.

In November 2005, the board of trustees approved the establishment of a SERP for the benefit of officers.

The deferred compensation liability was $ 0.1 million at each of December 31, 2024 and 2023.

In November 2005, the Board approved the establishment of a SERP for the benefit of officers.

This is a defined contribution plan under which, upon a participant's termination of employment from Elme Communities for any reason other than discharge for cause, the participant will be entitled to receive a benefit equal to the participant's accrued benefit times the participant's vested interest.

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2024 2023 2022

Loss from continuing operations $ ( 52,977 ) $ ( 30,868 ) $ ( 53,140 )

$ ( 13,103 ) $ ( 52,977 ) $ ( 30,868 )

Allocation of earnings to unvested restricted share awards ( 287 ) ( 255 ) ( 232 )

Adjusted loss from continuing operations ( 53,232 ) ( 31,100 ) ( 53,533 )

Income from discontinued operations, including gain on sale of real estate — — 69,524

Adjusted net (loss) income $ ( 53,232 ) $ ( 31,100 ) $ 15,991

Adjusted net loss

$ ( 13,390 ) $ ( 53,232 ) $ ( 31,100 )

Weighted average shares outstanding – basic and diluted 87,920 87,735 87,388

Earnings per common share, basic:

Continuing operations $ ( 0.61 ) $ ( 0.36 ) $ ( 0.63 )

Discontinued operations — — 0.82

Basic net (loss) income per common share (1)

Basic net loss per common share

$ ( 0.15 ) $ ( 0.61 ) $ ( 0.36 )

Earnings per common share, diluted:

Continuing operations $ ( 0.61 ) $ ( 0.36 ) $ ( 0.63 )

Discontinued operations — — 0.82

Diluted net (loss) income per common share (1)

Diluted net loss per common share

$ ( 0.15 ) $ ( 0.61 ) $ ( 0.36 )

Dividends declared per common share $ 0.72 $ 0.72 $ 0.68

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(1) Earnings per share may not sum due to rounding

COMMITMENTS AND CONTINGENCIES

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Further, our apartment communities have similar long-term economic characteristics and provide similar products and services to our residents.

As a result, our operating properties are aggregated into a single reportable segment:

Prior to the end of the second quarter of 2021, we had two reportable segments:

office and residential.

During the third quarter of 2021, we closed on the sales of the Office Portfolio and the Retail Portfolio (see note 3), and following such sales, we have one remaining office property, Watergate 600, which does not meet the criteria for a reportable segment and has been classified within “Other” on our segment disclosure tables.

We evaluate performance based upon net operating income ("NOI") of the combined properties in the segment.

Our reportable operating segment consolidates similar properties.

GAAP requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment’s performance.

NOI is a key measurement of our segment profit and loss and is defined as real estate rental revenue less real estate expenses.

Real estate rental revenue as a percentage of the total for each of the reportable operating segments for the three years ended December 31, 2023 was as follows:

We have one office property, Watergate 600, which does not meet the quantitative or qualitative criteria for a reportable segment and has been classified within “Other”, along with business activities that are not part of an operating segment, on our segment disclosure tables.

Our CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of assessing the performance and allocating resources to the operating segment.

The CODM uses net operating income (“NOI”), defined as real estate rental revenue less real estate expenses (the significant segment expense), as the key basis of measurement for the reported segment profit or loss.

Real estate rental revenue as a percentage of the total for the Residential reportable segment and Other for the three years ended December 31, 2024 was as follows:

Year Ended December 31,

2024 2023 2022

Multifamily 92 % 91 % 89 %

92 % 92 % 91 %

Other 8 % 8 % 9 %

The percentage of income producing real estate assets classified as held and used, at cost, for each of the reportable operating segments as of December 31, 2023 and 2022 was as follows:

Multifamily 96 % 92 %

The percentage of income producing real estate assets classified as held and used, at cost, for the Residential reportable segment and Other as of December 31, 2024 and 2023 was as follows:

Other 4 % 4 %

The following tables present revenues, net operating income, capital expenditures and total assets for the three years ended December 31, 2023 from these segments, and reconciles net operating income of reportable segments to net (loss) income as reported (in thousands):

The following tables present revenues, net operating income, capital expenditures and total assets for the three years ended December 31, 2024 from the Residential reportable segment and Other, and reconciles the consolidated net operating income to net loss as reported (in thousands):

Twelve Months Ended December 31, 2024

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General and administrative expenses ( 24,969 )

Transformation costs ( 6,339 )

Depreciation and amortization ( 95,935 )

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Other income 1,410

Real estate impairment ( 41,860 )

Net loss $ ( 13,103 )

Capital expenditures

$ 47,054 $ 548 $ 47,602

Total assets $ 1,719,087 $ 126,675 $ 1,845,762

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Other income 569

Real estate impairment ( 41,860 )

Net loss $ ( 52,977 )

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Interest expense ( 24,940 )

Loss on interest rate derivatives ( 5,866 )

Loss on extinguishment of debt ( 4,917 )

Other income 712

Discontinued operations:

Income from properties sold or held for sale 23,083

Gain on sale of real estate 46,441

Net income $ 16,384

Capital expenditures $ 35,081 $ 3,175 $ 38,256

Total assets $ 1,691,176 $ 181,430 $ 1,872,606

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(1) Other represents Watergate 600, an office property that does not meet the qualitative or quantitative criteria for a reportable segment.

(2) Total capital expenditures include office and retail properties classified as discontinued operations.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

While the Company previously owned a combination of commercial and residential assets, we disposed of all but one of our commercial assets in 2021.

These commercial assets are classified as discontinued operations as of December 31, 2023.

Unaudited financial data by quarter in each of the years ended December 31, 2024 and 2023 were as follows (in thousands, except for per share data):

1 unchanged sentence

Real estate rental revenue $ 59,513 $ 60,103 $ 61,055 $ 61,264

Loss from continuing operations $ ( 3,643 ) $ ( 2,611 ) $ ( 43,618 ) $ ( 3,105 )

Net loss $ ( 3,647 ) $ ( 3,471 ) $ ( 2,970 ) $ ( 3,015 )

Loss from continuing operations per share

Basic $ ( 0.04 ) $ ( 0.03 ) $ ( 0.50 ) $ ( 0.04 )

Diluted $ ( 0.04 ) $ ( 0.03 ) $ ( 0.50 ) $ ( 0.04 )

Net loss per share

2 unchanged sentences

Real estate rental revenue $ 55,809 $ 56,599 $ 56,651 $ 58,852

Loss from continuing operations $ ( 7,724 ) $ ( 8,874 ) $ ( 10,739 ) $ ( 3,531 )

Net loss $ ( 3,643 ) $ ( 2,611 ) $ ( 43,618 ) $ ( 3,105 )

Loss from continuing operations per share

Basic $ ( 0.09 ) $ ( 0.10 ) $ ( 0.12 ) $ ( 0.04 )

Diluted $ ( 0.09 ) $ ( 0.10 ) $ ( 0.12 ) $ ( 0.04 )

Net loss per share

6 unchanged sentences

The share repurchase program is scheduled to expire on October 25, 2025, unless extended by the Board.

On February 17, 2021, we entered into separate amendments to each of our existing equity distribution agreements (“Original Equity Distribution Agreements”) with each of Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co.

Morgan Securities LLC, KeyBanc Capital Markets Inc.

and Truist Securities, Inc.

(f/k/a SunTrust Robinson Humphrey, Inc.), each dated May 4, 2018 (collectively, as amended, the “Equity Distribution Agreements”).

Also on February 17, 2021, we entered into a separate equity distribution agreement with BTIG, LLC on the same terms as the Amended Equity Distribution Agreements (the “BTIG Equity Distribution Agreement”).

On September 22, 2021, BTIG, LLC notified us that it was terminating the BTIG Equity Distribution Agreement, effective as of September 27, 2021.

Pursuant to the Equity Distribution Agreements, we may sell, from time to time, up to an aggregate price of $ 550.0 million of our common shares of beneficial interest, $ 0.01 par value per share.

Issuances of our common shares are made at market prices prevailing at the time of issuance.

We may use net proceeds from the issuance of common shares under this program for general business purposes, including, without limitation, working capital, the acquisition, renovation, expansion, improvement, development or redevelopment of income producing properties or the repayment of debt.

Our issuances and net proceeds on the Equity Distribution Agreements in 2022 and 2021 and the Original Equity Distribution Agreements in 2021 for the three years ended December 31, 2023 were as follows (in thousands, except per share data):

On February 20, 2024, we entered into an equity distribution agreement (the “Equity Distribution Agreement”) with Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Citigroup Global Markets Inc., Goldman Sachs & Co.

LLC, KeyBanc Capital Markets Inc., TD Securities (USA) LLC and Truist Securities, Inc.

as agents and forward sellers, as applicable, (collectively, the “Agents” or “Forward Sellers”, as applicable), and Wells Fargo Bank, National Association, The Bank of New York Mellon, Citibank, N.A., Goldman Sachs & Co.

LLC, KeyBanc Capital Markets Inc., The Toronto-Dominion Bank and Truist Bank as forward purchasers pursuant to which up to an aggregate gross sales price of $ 350.0 million of Elme Communities’ common shares of beneficial interest, $ 0.01 par value per share, may be offered and sold from time to time through the Agents, acting as the Company’s sales agents or, if applicable, the Forward Sellers, or directly to the Agents as principals for their own accounts.

In connection with entry into the Equity Distribution Agreement, we terminated our prior at-the-market offering program.

At the time of such termination, approximately $ 340.0 million remained unsold under such prior program.

We did no t issue common shares under the Equity Distribution Agreement or any prior equity distribution agreements in 2024 or 2023.

Our issuances and net proceeds on the prior equity distribution agreement in 2022, were as follows (in thousands, except per share data):

Year Ended December 31,

6 unchanged sentences

Net proceeds under this program are used for general corporate purposes.

Our issuances and net proceeds on the dividend reinvestment program for the three years ended December 31, 2023 were as follows (in thousands, except per share data):

We did no t issue common shares under the dividend reinvestment program during 2024.

Our issuances and net proceeds on the dividend reinvestment program for 2023 and 2022 were as follows (in thousands;

except per share data):

Year Ended December 31,

23 unchanged sentences

2022 $ 1,392 $ 7 $ — $ 1,399

Initial Cost (a) Net Improvements (Retirement) since Acquisition Gross Amounts at Which Carried at December 31, 2023 Accumulated Depreciation at December 31, 2023

Initial Cost (a) Net Improvements (Retirement) since Acquisition Gross Amounts at Which Carried at December 31, 2024

Accumulated Depreciation at December 31, 2024

Properties Location Land Buildings and Improvements Land Buildings and Improvements Total (c) Year of Construction Date of Acquisition

58 unchanged sentences

Write-off of disposed assets — — ( 10 )

Property sales — — ( 1,213,395 )

Balance, end of period $ 2,414,313 $ 2,375,097 $ 2,299,712

4 unchanged sentences

Write-off of disposed assets — — ( 347 )

Property sales — — ( 433,460 )

Balance, end of period $ 618,299 $ 528,024 $ 479,846

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures