Key facts
- Elme Communities, a multifamily REIT, has withdrawn its shareholder payout estimate.
- A deal for Elme's Riverside Apartments property, valued at $280 million, was terminated by Beitel Group.
- The REIT has a $251 million term loan from Goldman Sachs that needs to be repaid with property sale proceeds.
- Elme's stock was down 35% as of Thursday morning.
- Elme plans to provide an updated payout estimate after securing a new purchase agreement for Riverside Apartments.
Elme Communities, a multifamily real estate investment trust (REIT) in the process of dissolving, has withdrawn its shareholder payout estimate following the collapse of a deal to sell its largest remaining property, Riverside Apartments. A subsidiary of Beitel Group terminated an agreement on June 17 to purchase the 1,222-unit community in Alexandria, Virginia, for $280 million.
The terminated contract, which includes adjacent undeveloped land, has created uncertainty about when Elme will be able to sell the property, the proceeds it will receive, and when it can fully repay a $520 million term loan from Goldman Sachs, which currently has a balance of $251 million.
Elme's stock fell 35% as of Thursday morning, representing a market value loss of approximately $63.5 million. The REIT, formerly known as Washington REIT, had announced its liquidation plans in August after selling two-thirds of its portfolio to Cortland in November. The sale of Riverside Apartments is crucial for repaying the term loan.
In a Wednesday SEC filing, Elme stated that the term loan cannot be fully repaid without sufficient proceeds from property sales, including Riverside Apartments. The REIT also disclosed the completion of the sale of Elme Watkins Mill on June 10 and that it is in the process of selling three other properties. Elme has previously lowered its shareholder payout estimates twice this year due to sluggish market conditions in the D.C. area. Additionally, the sale price for Elme Bethesda, a 193-unit building, was reduced from $59 million to $58 million during the inspection period.
Elme withdrew its previous payout estimate due to the uncertainty surrounding the timing and anticipated proceeds from the sale of Riverside Apartments. The company has recommenced marketing efforts for the property and expects to provide an updated estimate after entering into a new purchase agreement.