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Item 1. Business

2026-02-27 compared with 2025-02-14 · 56 added, 145 removed, 43 unchanged (82% of the section changed)

Elme Communities Overview

Elme Communities, a Maryland real estate investment trust, formerly known as Washington Real Estate Investment Trust (the “Company”), is a self-administered equity real estate investment trust (“REIT”) within the meaning of Sections 856-860 of the

Internal Revenue Code of 1986, as amended (the “Code”) and successor to a trust organized in 1960.

Elme Communities, a Maryland real estate investment trust, formerly known as Washington Real Estate Investment Trust (“Elme” or the “Company”), is a self-administered equity real estate investment trust (“REIT”) within the meaning of Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”) and successor to a trust organized in 1960.

Our business primarily consists of the ownership of apartment communities in the greater Washington, DC metro and Sunbelt regions.

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.

We acquire, develop, and renovate apartment communities that align with our research-led investment strategy, which is focused on the following:

• targeting markets that have economies with diverse, innovative industries that drive outsized job creation, wage growth and in-migration, which we believe will benefit from these trends in the years to come;

• targeting middle-income renters who make up the largest share of apartment demand in each of our current and target markets but for whom new apartment supply and the cost of owning a home is unaffordable;

• executing value-add renovations that are tailored to each submarket, target renter group and individual community to provide an improved yet affordable living experience while enhancing shareholder value;

• targeting investment opportunities that provide the potential for significant appreciation in value and that have operating upside through community management strategies.

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 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.

– Class B Value-Add communities feature operational improvements and strong potential for unit renovations.

These communities, which are generally over twenty years old, command average rental rates below median market rents for units that have not been renovated.

– Class B communities feature operational improvements and command average rental rates below median market rents.

Near-term rent growth is driven by operational improvements and market rent growth without unit renovations.

These communities are over twenty years old and can become Class B Value-Add depending on future market rents and renovation opportunities.

Regional Real Estate Markets (1)

While we have historically focused our investments in the greater Washington, DC metro region, we expanded our footprint to the Atlanta metro region in 2021.

Atlanta offers a range of diverse, innovative industries which we believe are poised to benefit from substantial job creation, rising wages, and continued migration in the coming years.

As of December 31, 2024, we have acquired six apartment communities in the Atlanta metro region and we remain optimistic about the near and longer-term demand drivers in the Atlanta metro region.

We believe our portfolio's allocation in the Atlanta and Washington, DC metro regions, and our focus on value-oriented price points, will help enable our future growth, while also providing relative insulation during economic downturns.

Over the past five and 10-year periods, Class B rent growth has outperformed Class A in both of our operating markets.

Additionally, our mid-market price points generally do not compete with new supply, as our average monthly rent is generally several hundred dollars below the asking rent for new deliveries.

Moreover, the national cost of owning a home compared to renting a single-family starter home is the highest it’s been in over 20 years.

As housing remains undersupplied, interest rates remain high and the cost of homeownership remains unaffordable for many median-income households, we expect to benefit from sustained demand for quality, affordable rental options.

Washington, DC metro region (22 apartment communities)

In the fourth quarter of 2024, the Washington, DC metro region absorbed 8,200 units (the fifth highest rate nationally), as 4,300 units delivered concurrently.

Strong demand in 2024 brought annual demand to 22,000 units, the sixth highest demand performance nationwide.

Due to this healthy absorption and restrained supply, occupancy ticked up 130 basis points year-over-year to 96.0%.

Effective asking rents declined 0.6% in the fourth quarter of 2024 compared to the third quarter of 2024, averaging $2,206 per month, or $2.49 per square foot, while annual rent growth reached 3.4%.

Annual rent change, as of the fourth quarter of 2024, was highest among Class A multifamily properties at 4.2% with Class B multifamily properties trailing behind at 3.8%.

Generally, rents grew more in low supply submarkets, whereas more modest rent growth occurred in higher supply areas.

Occupancy remained strongest in Class B multifamily properties at 96.4%.

Annual job growth for the Washington, DC metro region, as reported by the U.S.

Bureau of Labor Statistics was 1.1%, or 36,600 jobs as of November 2024, year-over-year.

The RealPage Market Analytics apartment market outlook points to a moderate construction pipeline with 19,000 units currently under construction, of which 13,600 are planned for delivery over the next year.

Given the projected pipeline, rent and occupancy performance are expected to vary across submarkets, with market-level readings that roughly match the national average in the coming two to three-year window.

Atlanta metro region (6 apartment communities)

In the fourth quarter of 2024, the Atlanta metro region absorbed 7,600 units (the sixth highest rate nationally), as 5,100 units delivered concurrently.

Occupancy in the market expanded 50 basis points year-over-year to 92.8%.

Annual demand accelerated to 24,600 units, while 24,100 units delivered, ranking Atlanta fifth in completion volume nationally.

The Atlanta metro region recorded an annual rent cut of 4.1%, with effective asking rents averaging $1,577 per month, or $1.55 per square foot.

Class C multifamily properties saw the steepest rent decline of 6.2% on average, followed by Class B and Class A multifamily properties with rent cuts of 3.5% and 3.0%, respectively.

All but two of Atlanta’s 39 submarkets posted rent cuts on an annual basis, ranging from rent growth of 2.7% in West Marietta to the steepest rent cut of 6.9% in the Sandy Springs and Far East Atlanta submarkets.

Annual job growth for the Atlanta metro region as reported by the U.S.

Bureau of Labor Statistics was 0.4%, or 12,900 jobs added as of November 2024, year-over-year.

The RealPage Market Analytics apartment market outlook has 24,350 units currently under construction, of which 17,600 are planned for delivery over the next year.

In the short term, rent change and occupancy are expected to remain muted, as the market continues to work its way through the large but shrinking delivery pipeline, and are expected to move closer to national norms in late 2025 into 2026, once the current supply wave moderates.

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(1) The source of all regional market numerical data in this section is RealPage Market Analytics.

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 August 4, 2025, the Company announced that its Board had completed its review, that Elme had entered into a Purchase and Sale Agreement, dated as of August 1, 2025, for the sale of 19 multifamily properties from Elme for approximately $1.6 billion in cash, subject to certain adjustments and prorations (the “Portfolio Sale Transaction”), and that the Board had also approved a plan of sale and liquidation (the “Plan of Sale and Liquidation”), which contemplates the sale or disposition of all the Company’s assets, the wind-down of the Company’s business and affairs and the termination of the Company’s existence by voluntary dissolution.

The Plan of Sale and Liquidation includes a plan of liquidation that provides for the Company’s complete liquidation and dissolution in accordance with Section 331, Section 336 and Section 346(a) of the Code.

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.

As of February 27, 2026, we have also entered into purchase and sale agreements, which are no longer subject to ongoing inspection periods, pursuant to which we expect to sell three of the Remaining Company Properties:

Elme Watkins Mill, Elme Conyers and Watergate 600 (the “Properties Under Contract”), to various buyers for aggregate gross proceeds of approximately $128.78 million, which are expected to close in the first or second quarter of 2026, subject to satisfaction of customary closing conditions, including, in the case of Elme Watkins Mill, regulatory requirements related to the sale of multifamily properties in Montgomery County, Maryland.

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”).

The Company currently expects to finalize the sale of Elme Germantown in the second quarter of 2026 and the sale of Elme Bethesda by mid-year 2026.

The Company also expects to continue the marketing process for the DC and Virginia properties with a goal to have these three properties under contract by mid-May.

The Company continues to target completion of the sales of all Remaining Company Properties by mid-year 2026.

Given the Plan of Sale and Liquidation, our efforts are focused on selling the remaining properties, winding down the Company’s affairs and, when appropriate and in the Board’s discretion, distributing the net proceeds to our shareholders, subject to the creation of necessary reserves for, and payment or other satisfaction of, the Company’s expenses and other liabilities and obligations.

We do not intend to continue or to engage in the conduct of a trade or business, except as necessary for the orderly liquidation of our assets.

Elme is not required to obtain any further shareholder approval with respect to its liquidation and dissolution.

Under the Plan of Sale and Liquidation, the Board may modify, amend or terminate the Plan of Sale and Liquidation (and authorize us to seek to dispose of all our assets through a merger, business combination or similar transaction) without approval by the shareholders if it determines that such action would be advisable and in the best interests of Elme.

Elme has no present plans or intentions to modify, amend or abandon the Plan of Sale and Liquidation.

Elme is aiming to complete the sales of the Remaining Company Properties by mid-year 2026.

Because the sales of our remaining properties are subject to, among other things, completion of the marketing and sale process and the negotiation of terms and completion of the sales, as applicable, the exact timing of completing the remaining property sales cannot be determined at this time and the Company cannot predict how long it will take to sell all of its remaining properties.

If we have not sold all of our remaining properties and paid all of our liabilities within 24 months after shareholder approval of the Plan of Sale and Liquidation, which was received on October 30, 2025, or if the Board otherwise determines that it is advantageous to do so earlier, we may transfer our remaining assets and liabilities to a liquidating trust and distribute interests in the liquidating trust to our shareholders or otherwise convert Elme to a liquidating limited liability company, partnership, or trust.

We cannot predict the exact amount to be distributed or the timing of the completion of the liquidation and termination of the Elme’s existence.

As a result of the approval of the Plan of Sale and Liquidation by our shareholders on October 30, 2025, we adopted the liquidation basis of accounting on November 1, 2025, as described further in Note 3.

Initial Liquidating Distribution

In accordance with the Plan of Sale and Liquidation, following completion of the Portfolio Sale Transaction in November 2025, the Board approved a special liquidating distribution of $14.67 per share to our shareholders of record as of the close of business on December 22, 2025.

The special liquidating distribution was paid on January 7, 2026.

Our Portfolio

As of December 31, 2024, we owned approximately 9,400 residential apartment homes in the Washington, DC metro and Sunbelt regions.

As of December 31, 2025, we owned approximately 3,570 residential apartment homes in the Washington, DC metro and Atlanta metro regions.

We also owned approximately 300,000 square feet of commercial space in the Washington, DC metro region.

The percentage of total real estate rental revenue by property type for the three years ended December 31, 2024, and the average occupancy for the year ended December 31, 2024, were as follows:

Average Occupancy, year ended December 31, 2024

% of Total Real Estate Rental Revenue

2024 2023 2022

95% Residential 92 % 92 % 91 %

87% Other 8 % 8 % 9 %

100 % 100 % 100 %

Total real estate rental revenue for each of the three years ended December 31, 2024, was $241.9 million, $227.9 million and $209.4 million, respectively.

During the three years ended December 31, 2024, we acquired four residential properties.

See note 14 to the consolidated financial statements for further discussion of our operating results by segment.

No single tenant accounted for more than 5% of real estate rental revenue in any of the three years ended December 31, 2024.

In October 2022, we began a process to internalize our management operations, and this process was completed in July 2023.

Prior to the completion of our management internalization, Bozzuto Management Company (“Bozzuto”) and Greystar Real Estate Partners (“Greystar”) provided community management and leasing services at the majority of our residential communities.

Bozzuto and Greystar provided such services under individual community management agreements for each residential community, each of which was separately terminable by us or Bozzuto/Greystar, as applicable.

Although they varied by community, on average, the fees charged by Bozzuto/Greystar under each agreement were approximately 3% of revenues at each residential community.

All of our residential communities are currently under Elme management and Stream Realty Partners (“Stream”) provides property management and leasing services at our sole office property, Watergate 600.

We make capital improvements to our properties on an ongoing basis for the purpose of maintaining and increasing their value and income.

Major improvements and/or renovations to the properties during the three years ended December 31, 2024 are discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading “Capital Improvements and Development Costs.”

As of February 27, 2026, we owned approximately 2,500 residential apartment homes and approximately 300,000 square feet of commercial space in the Washington, DC metro region and approximately 200 residential apartment homes in the Atlanta metro region.

All of our residential communities are under Elme management and Stream Realty Partners (“Stream”) provides property management and leasing services at our sole office property, Watergate 600.

Further description of the properties is contained in Item 2, Properties, and note 16 to the consolidated financial statements, Segment Information, and in Schedule III.

Reference is also made to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Environmental, Social and Governance

At Elme Communities, our Environmental, Social and Governance (“ESG”) strategy is to operate and grow in a sustainable, responsible manner that contributes to positive economic, social, and environmental outcomes for shareholders, employees, and the communities in which we serve.

We intend to continue providing an annual ESG report that includes disclosures aligned with Global Reporting Initiative Standards 2021, the United Nations Sustainable Development Goals, the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures.

This report can be found online at https://www.elmecommunities.com/esg/.

The reference to our website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered part of this document.

Environmental

We implement sustainable policies and practices at all of our properties, for purposes of ensuring occupants and residents work and live in efficient, healthy spaces.

Environmental Sustainability

We implement sustainable policies and practices at all of our properties, for purposes of ensuring occupants and residents work and live in efficient, healthy spaces and to drive value to shareholders.

We track annual asset-level performance of energy use, greenhouse gas emissions, and water consumption, utilizing ENERGY STAR Portfolio Manager as well as Measurabl ESG software.

We apply industry standard rating systems such as the Leadership in Energy and Environmental Design (“LEED”) and Building Research Establishment Environmental Assessment Method (“BREEAM”) to establish sustainable practices for building design, construction, operations, and maintenance.

In 2024, we completed recertification of eight properties using the BREEAM In-Use Assessment.

During unit renovations, we replace end-of-life appliances with ENERGY STAR rated equipment;

heating, ventilation, and air conditioning systems with more efficient models and water fixtures to low-flow options.

Additionally, we continue to expand our electric vehicle charging stations across our portfolio to support the transition of our residents to electric

transportation.

We are committed to assessing and evaluating climate-related risks and opportunities that may affect our assets and overall business.

Climate risk management is integrated into our annual Enterprise Risk Management (“ERM”) process, which seeks to identify and prioritize responses to potential risks to our company, people and financial performance.

In 2021, we announced our commitment to net zero carbon operation in alignment with the Urban Land Institute’s Greenprint Net Zero by 2050 Goal.

In 2023, we joined the U.S.

Department of Energy Better Climate Challenge, further aligning greenhouse gas emission reduction goals with industry leaders.

Meeting these goals require that we fully integrate a focus on carbon reductions into our strategic approach, at all levels of our organization and throughout our portfolio.

Among our social initiatives is a commitment to financial inclusion, pursuant to which we aim to increase the availability and equality of financial service opportunities, remove barriers to the financial sector, and enable individuals to improve their financial wellbeing.

Beyond credit history, life-altering events can interrupt a resident’s ability to pay rent, including job loss, medical emergencies, domestic violence, and other hardships.

This can lead to delinquencies, increased interest rate debt, potential eviction, and situational unhousing.

In 2022, we announced a partnership with a financial technology company to dismantle barriers to housing for working families.

Through this partnership, on-time rent payments are reported monthly to all three credit bureaus, providing an opportunity for residents to build their credit.

This no-cost amenity is available to 100% of our community residents.

This initiative follows a “do no harm” mindset.

Therefore, only on-time payments—not delinquencies—are reported.

In addition to credit reporting, our technology partner's platform offers housing stability loans for residents experiencing financial hardship.

These interest-free loans provide up to three months of rent relief, enabling residents to remain housed during difficult times.

Residents can then work with our technology partner to set up a 12-month repayment plan for the loan.

These programs support the short- and long-term financial well-being of our residents.

In addition to financial wellness, we support our residents physical and mental health and wellness through on-site amenities such as gymnasiums, pools, playgrounds, and community rooms, as well as close access to bike lanes, walking/running paths, parks, and other outdoor amenities.

Five of our communities are certified to Fitwel Health and Wellness.

The certification is awarded to buildings that promote occupant health and well-being by incorporating a number of evidence-based design and operations strategies that support the physical, mental, and social health of occupants.

At Elme, we hold ourselves, our suppliers, and the Board of Trustees (the “Board”) to high ethical standards as we seek to increase shareholder value and foster a collaborative, innovative corporate culture.

At Elme, we hold ourselves, our suppliers, and the Board to high ethical standards and seek to foster a collaborative, innovative corporate culture.

Our team is required to read and certify their knowledge on our Code of Ethics, in addition to receiving ethics training throughout the year.

Our Board is responsible for corporate policy and management oversight to enhance long-term shareholder value.

In 2020, our Board formalized the oversight of ESG initiatives, recognizing that environmental and social matters—together with strong corporate governance—play a critical role in the execution of our ESG strategy.

Some of our ESG policies, including our Human Rights Statement, Code of Business Conduct and Ethics, Vendor Code of Conduct, and Environmental Policy, can be found on our website at elmecommunities.com/esg/governance/.

We are made up of growth-oriented, hardworking individuals dedicated to transforming creative ideas into decisive action.

Our flat organizational structure facilitates frequent, meaningful interactions with Company executives, and our commitment to teamwork and entrepreneurial spirit enables employees at every level to conceptualize ideas and make them happen.

We create an environment designed to encourage people to do what they do best, all while learning, growing, and contributing in meaningful ways to build a better company.

We trust, encourage, and support one another, driving our pursuit of excellence.

Some of our policies, including our Human Rights Statement, Code of Business Conduct and Ethics, Vendor Code of Conduct,

and Environmental Policy, can be found on our website at elmecommunities.com/esg/governance/.

The reference to our website address does not constitute incorporation by reference of the information contained in the website and such information should not be considered part of this document.

Human Capital

Employees, Training and Development

On February 11, 2025, we had 255 employees, including 188 persons engaged in community management functions who were hired in connection with the internalization of our community management functions, and 67 persons engaged in corporate, financial, asset management and other functions.

Of the 188 persons engaged in community management functions, 49 are employed in the Atlanta metro region at six different communities, with the remainder in the Washington, DC metro region.

On February 27, 2026, after giving effect to the sales of Elme Sandy Springs and Elme Marietta, we had 91 employees, including 55 persons engaged in community management functions, and 36 persons engaged in corporate, financial, asset management and other functions.

Of the 55 persons engaged in community management functions, 6 are employed in the Atlanta metro region at one community, with the remainder in the Washington, DC metro region.

All of our officers and substantially all of our corporate-level employees live and work in or near the greater Washington, DC metro region, and our community management employees live and work in or near their respective communities.

Our human capital resources objectives include identifying, recruiting, retaining, incentivizing and integrating our new and existing employees.

At Elme Communities, we place great value on employee growth through goals, feedback and professional and leadership development offerings.

Our human resources team provides ongoing training and development opportunities to all employees.

We financially support employees pursuing industry-specific training and certification programs and we encourage employees to join professional organizations that offer technical, soft skill and leadership development workshops.

Additionally, our compensation programs are designed to attract, retain and reward our workforce, with the goal of motivating employees to perform to the best of their abilities and achieve our objectives, including increasing shareholder value.

Following the closing of the Portfolio Sale Transaction and the approval of the Plan of Sale and Liquidation, the Company has and expects to continue, as appropriate, downsizing with a focus on retaining an appropriate level of personnel with the necessary skill set commensurate with the reduced size of the Company, including those executive officers and other key personnel necessary for the continued operation of the remaining assets and completion of the wind-down activities, which downsizing is expected to affect both officers and other employees.

Health, Safety and Well-being

We support our employees with a robust and competitive employee benefits program, including flexible paid leave policies, parental leave, 401(k) matching, tuition reimbursement, an Employee Assistance Program, and other programs.

Additionally, we have a wellness program that provides fun and engaging challenges to encourage employees to continuously improve their physical, mental, and financial well-being.

We also partner with our 401(k) administrator to host financial wellness seminars.

In our corporate office, we offer two wellness rooms for employee use.

Our technological capabilities allow our corporate-level employees the flexibility to work from anywhere at any time.

This allows us to easily meet our residents’ needs as well as those of our employees.

Diversity, Equity, Inclusion and Accessibility

Our Diversity, Equity, Inclusion, and Accessibility Initiative (“DEIA”) is a long-term commitment to promoting an environment where everyone feels comfortable being their most authentic selves.

We believe diversity of backgrounds, experiences, cultures, ethnicities, and interests leads to new ways of thinking and drives engagement and organizational success.

Our Cultural Advisory Board (“CAB”) is a byproduct of the DEIA initiative.

Sponsored by our senior leadership team, the CAB has responsibilities that include finding new initiatives to increase employee engagement, developing community service opportunities to engage with our communities, listening to the concerns of our team members, and supporting key initiatives like diversity, equity, inclusion, and accessibility.

Community Engagement

As a REIT, investing is at the core of what we do, but the most valuable investments we make are not in our buildings but in our people and our community.

We are passionate about making a difference in the regions we call home.

We are committed to improving the lives of those in need, and our employees participate in a wide variety of philanthropic activities throughout the year.

Whether volunteering at a food bank, running a toy drive, walking for a cause, or participating in our company-wide community service day, we are proud to foster a culture of giving back.

REIT Tax Status

We believe that we qualify as a REIT under the Code, and intend to continue to qualify as such.

We believe that we qualify as a REIT under the Code.

To maintain our status as a REIT, we are, among other things, required to distribute 90% of our REIT taxable income (determined before the deduction for dividends paid and excluding net capital gains), to our shareholders on an annual basis.

When selling a property, we generally have the option of (a) reinvesting the sales proceeds of property sold, in a way that allows us to defer recognition of some or all of the taxable gain realized on the sale, (b) distributing gains to the shareholders with no tax to us or (c) treating net long-term capital gains as having been distributed to our shareholders, paying the tax on the gain deemed distributed and allocating the tax paid as a credit to our shareholders.

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 subsidiary.

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federal, state and local income tax on its taxable income at regular statutory rates (see note 1 to the consolidated financial statements for further disclosure).

We expect to remain qualified as a REIT until the end of our final REIT tax year in accordance with the Plan of Sale and Liquidation, which we anticipate, but cannot be certain, will occur after most of the remaining assets have been sold.

Americans with Disabilities Act (“ADA”)

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The FHA, its state law counterparts and the regulations promulgated by the U.S.

Department of Housing and Urban Development and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under 18) or handicap (disability) and, in some states, financial capability or other bases.

Department of Housing and Urban

Development and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under 18) or handicap (disability) and, in some states, financial capability or other bases.

A failure to comply with these laws in our operations could result in litigation, fines, penalties or other adverse claims, or could result in limitations or restrictions on our ability to operate, any of which could materially and adversely affect us.

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In addition, under various federal, state and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under, or migrating from such property, including costs to investigate and remediate such contamination and liability for natural resources damage.

Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several.

In addition, we also may be liable for the costs of remediating contamination at off-site waste disposal facilities to which we have arranged for the disposal or treatment of hazardous substances, without regard to whether we complied with environmental laws in doing so.

These liabilities for remediation could be substantial and the cost of any required remediation, fines, or other costs could exceed the value of the property and/or our aggregate assets.

In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or bodily injury or property damage or materially adversely affect our ability to sell, lease, operate or develop our properties or to borrow using the properties as collateral.

Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several, meaning that we could be required to bear 100% of the liability even if other parties are also liable.

Further, from time to time, we may be required to investigate and clean-up hazardous substances or petroleum products or remove, abate or manage asbestos, mold, radon gas, lead or other hazardous conditions at our properties, and the costs of those efforts may be substantial and could exceed the value of the property and/or our aggregate assets.

It is our policy to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys prior to our acquisition of properties.

However, there is a risk that these assessments will not identify all potential environmental issues at a given property.

In addition, we also may be liable for the costs of investigating or remediating contamination at off-site waste disposal facilities to which we have arranged for the disposal or treatment of hazardous substances, without regard to whether we complied with environmental laws in doing so.

These liabilities for investigation and remediation could be substantial and the cost of any required remediation, fines, or other costs could exceed the value of the property and/or our aggregate assets.

In addition, the presence of hazardous substances or the failure to remediate contamination at our current or former properties may expose us to third-party liability for costs of remediation bodily injury claims, such as tort claims by tenants, or occupational health and safety or workers compensation claims by our employees, and/or property damage, or may materially adversely affect our ability to sell, lease, operate or develop our current properties or to borrow using the properties as collateral.

In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination.

Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which property

may be used or businesses may be operated, and these restrictions may require substantial expenditures.

Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures.

Availability of Reports

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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 1. Business