Dive Brief:

• Elme Communities announced a mutual separation with senior vice president and chief information officer Susan Gerock as part of a broader restructuring for the Bethesda, Maryland-based REIT, according to a filing with the Securities and Exchange Commission last week. Gerock’s resignation was effective on Nov. 14.
• In addition, Elme announced the closing of the sale of 19 properties to an affiliate of Atlanta-based investor, developer and manager Cortland Partners for $1.6 billion in cash, according to a press release. It aims to sell all of its assets by June 2026.
• As a result of the closing of the Cortland sale, the company will downsize its workforce, “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 company’s remaining assets and completion of the wind-down activities,” according to the SEC filing.

Dive Insight:

Elme’s downsizing will affect both officers and other employees. As of Nov. 14, the REIT had approximately 117 employees, including approximately 73 persons engaged in community management functions.

After initiating a “formal evaluation of strategic alternatives” earlier this year, Elme took the first step to liquidating the company by selling the 19-asset portfolio to Cortland Partners in August. 

In conjunction with the August sale announcement, the REIT’s board of trustees approved a plan of sale and liquidation under which the company would market its remaining nine multifamily assets, as well as Watergate 600 — an office asset — with the goal of a sale in the next 12 months. 

Following the closing of the Cortland sale, Elme and certain subsidiaries entered into a loan agreement with Goldman Sachs Bank USA, as lender, for a senior secured term loan with a principal amount of $520 million and a maturity date of Nov. 9, 2026. The REIT has the option to extend for an additional year. The term loan is intended to be repaid with the net proceeds from sales of the properties securing the term loan.

Elme intends to return net proceeds from the portfolio sale, and a portion of the proceeds from the new term loan, to shareholders through an initial special liquidating distribution, which is expected to be between $14.50 and $14.82 per common share. This should happen after taking into account repayment of all existing corporate indebtedness, payment of costs and expenses related to the transactions and establishment of reserves in connection with the new term loan. 

Elme expects the initial special liquidating distribution to be declared later this year and paid in January 2026, subject to approval by the REIT’s board of trustees. 

“With the completion of the portfolio sale to Cortland, our focus is on monetizing the company’s remaining assets and maximizing value for shareholders,” Paul McDermott, president and CEO, said in last week’s press release. “We launched the sale process in the third quarter of this year and are aiming to complete all remaining sales by June 2026. Our goal remains to sell all of Elme’s assets as soon as practicable to accelerate the return of capital to shareholders.”

Over the past several years, Elme, formerly known as WashREIT until 2022, has expanded its presence outside the Washington, D.C., metro area by acquiring properties in Atlanta. Still, its stock continued to trade at a discount to values in the private market, forcing the REIT to explore alternatives.

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