Release Date: February 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How has the new administration's focus on government efficiency impacted Elme Communities, particularly in the Washington Metro area? A: Paul McDermott, CEO, explained that while past events like sequestration had significant impacts, the current situation is different. The federal government is no longer the primary economic driver in the region, with technology and private sector growth taking precedence. Elme's exposure to federal jobs is limited, with only 6.2% of residents working in non-Department of Defense federal agencies. The company remains confident in the private sector's growth and its impact on their residential base.
Q: Can you provide an update on market cap rates for assets typically in Elme's portfolio? A: Paul McDermott, CEO, noted that for core deals, buyers are seeking a 9% to 11% IRR, translating to a 4.5% to 5% cap rate. Core-plus deals range from 4.75% to 5.25%, and value-add deals are in the 5% to 5.5% range. Elme's portfolio is considered in the value-add space, and the company is optimistic about the strength of its portfolio due to liquidity in the debt markets and increased transaction volume.
Q: What is the outlook for lease rates and seasonality in the Washington D.C. and Atlanta markets? A: Tiffany Butcher, COO, stated that Washington D.C. is expected to experience normal seasonal growth, with peak leasing in spring and summer. In Atlanta, gradual improvement is anticipated throughout the year. Overall, new lease rate growth is projected between a decline of 2% and a positive 0.5%, with renewal lease rate growth between 3% to 5.25%.
Q: What are the current leasing prospects and strategic plans for the Watergate 600 property? A: Paul McDermott, CEO, mentioned that there is good leasing activity at Watergate 600, with ongoing discussions for renewals. The company remains opportunistic regarding the sale of the property, noting improved market conditions and liquidity in the debt markets. However, no specific pricing or sale plans were disclosed.
Q: Are there any leading indicators suggesting uncertainty around employment affecting leasing decisions in the D.C. market? A: Tiffany Butcher, COO, reported that year-to-date leasing trends are normal, with no atypical impacts on traffic or leasing metrics. The supply/demand dynamics in the DMV remain strong, and Elme's mid-market rent positions and Class B demand trends are expected to provide stability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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