Elme Communities Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Anthony Paolone - JPMorgan - Analyst : Great. Thank you. Good morning. I guess my first question revolves around just the potential impact of what's happening with the new administration in your market. You all have been effectively a pure-play in that market for a long, long time. And there have been changes in different agencies, moving people and doing things of that nature. What's been the experience in the past when there is, say, a big change in the government near a property? Is there a way to put some brackets around how that has affected leasing or rents? Any anecdotes there would be helpful.

Question: Anthony Paolone - JPMorgan - Analyst : Okay. Thank you for that. And then just my follow-up question, can you give us any update or thoughts on where market cap rates might be for the types of assets typically in your buy box?

Question: Anthony Paolone - JPMorgan - Analyst : Okay. Great context. Thank you.

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Great. Thank you and good morning. Just a couple of follow-ups from some of the comments you made on the call. I guess to start, you mentioned your lease rates through the year, can you talk about your your view on seasonality? I mean, it just seems like there's a lot of moving pieces in the D.C. market this year. Do you think you'll see, acceleration into 2Q-3Q and then drop off? Are you thinking things get better in 4Q? Can you maybe talk through your outlook for new leases and blends?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Okay. Thank you for that. And then I guess just thinking about your outlook for the year. Are you on hold now trying to sell assets? Moving to other markets, Watergate, is that on hold? Or are you guys just going to continue with the plan you have and the strategic review is more of a sideshow?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Okay. And then I guess thinking specifically about Watergate. I think we're getting a little more optimistic. You get some leasing done there. I think the Kennedy Center was out there as a potential option. Obviously, a lot of change going on there. Can you update us on conversations around the Kennedy Center specifically or just your leasing prospects there? And then I know you include a $0.01 drag in guidance for operating that for the full year. If you were to sell it, do you think that takes your numbers up or down further?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Okay. But I guess -- so if you were to sell it, do you think that's accretive or dilutive, the earnings?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Okay. And then, I know you said not to talk about the strategic review, but I guess this would have been a question even before you announced this. Can you talk about the frictional costs if you were to sell the company? Whether there's taxes that people need to factor in to NAVs or comps? Or just any other pieces? Because I think the market naturally goes to here's the NAV but then there's always a drag on that. Can you just talk through some of those moving pieces?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Okay. So you can't get into the frictional cost?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Got it. Okay. And then just final question then. You talked about your composition of jobs in the portfolio, I think you said for two-thirds. If you were to just take a guess at the remaining one-third, would the numbers be pretty similar or is there something different we should be thinking about in terms of the employers?

Question: James Feldman - Wells Fargo Securities, LLC - Analyst : Okay. All right. Great. Thanks and good luck with everything.

Question: John Pawlowski - Green Street Advisors - Analyst : Morning. Thanks for the time. Just a question with Tiffany. Your points are well taken on why D.C. is more insulated from potential shocks of federal employment. I'm just curious, on the ground and the considerable uncertainty, forget job losses and potential job losses, but the uncertainty swirling around the tenant base, pick your favorite leading indicator for traffic, your closing rates on tours. Are you seeing any kind of leading indicators to suggest that the uncertainty around employment's leading to a pause in leasing decisions and tenants in the market?

Question: John Pawlowski - Green Street Advisors - Analyst : Okay. Then last one for me, the Atlanta same story, the sequential growth rate was quite high. I know a few properties can really move the needle, but was this a function of bad debt improvement and volatility in bad debt? Well, I think there was about 6% sequential growth in Atlanta this quarter. Any color there would be helpful.

Question: John Pawlowski - Green Street Advisors - Analyst : Okay. Thank you for your time.

Question: Cole Bardawill - Wolfe Research, LLC - Analyst : Hey guys. Thank you very much for the time. I just had one question on occupancy in D.C. You mentioned it was going to be more of a normalized year. Are you expecting any occupancy erosion this year in '25 or you're kind of expecting it to hold relatively flat?

Question: Cole Bardawill - Wolfe Research, LLC - Analyst : Okay. Got it. And then just one more that I noticed in D.C., Maryland, you had some pretty high property operating expenses this quarter. I was just curious if there are any big drivers for that.

Question: Cole Bardawill - Wolfe Research, LLC - Analyst : Okay. Awesome. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 14, 2025 / 3:00PM, ELME.N - Q4 2024 Elme Communities Earnings Call