Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 27, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-6622 | |
Entity Registrant Name | ELME COMMUNITIES | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 53-0261100 | |
Entity Address, Address Line One | 1775 EYE STREET, NW | |
Entity Address, Address Line Two | SUITE 1000 | |
Entity Address, City or Town | WASHINGTON | |
Entity Address, State or Province | DC | |
Entity Address, Postal Zip Code | 20006 | |
City Area Code | 202 | |
Local Phone Number | 774-3200 | |
Title of 12(b) Security | Shares of Beneficial Interest | |
Trading Symbol | ELME | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 87,823,464 | |
Entity Central Index Key | 0000104894 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Land | $ 373,113 | $ 373,171 |
Income producing property | 1,911,381 | 1,897,835 |
Net income producing property, at cost | 2,284,494 | 2,271,006 |
Accumulated depreciation and amortization | (523,153) | (481,588) |
Net income producing property | 1,761,341 | 1,789,418 |
Properties under development or held for future development | 31,260 | 31,260 |
Total real estate held for investment, net | 1,792,601 | 1,820,678 |
Cash and cash equivalents | 5,554 | 8,389 |
Restricted cash | 1,887 | 1,463 |
Rents and other receivables | 15,746 | 16,346 |
Prepaid expenses and other assets | 22,711 | 25,730 |
Total assets | 1,838,499 | 1,872,606 |
Liabilities | ||
Notes payable, net | 521,955 | 497,359 |
Line of credit | 24,000 | 55,000 |
Accounts payable and other liabilities | 36,920 | 34,386 |
Dividend payable | 15,834 | 14,934 |
Advance rents | 2,949 | 1,578 |
Tenant security deposits | 5,913 | 5,563 |
Total liabilities | 607,571 | 608,820 |
Shareholders’ equity | ||
Preferred shares; $0.01 par value; 10,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Shares of beneficial interest, $0.01 par value; 150,000 shares authorized; 87,809 and 87,534 shares issued and outstanding, as of June 30, 2023 and December 31, 2022, respectively | 878 | 875 |
Additional paid in capital | 1,733,388 | 1,729,854 |
Distributions in excess of net income | (490,939) | (453,008) |
Accumulated other comprehensive loss | (12,693) | (14,233) |
Total shareholders’ equity | 1,230,634 | 1,263,488 |
Noncontrolling interests in subsidiaries | 294 | 298 |
Total equity | 1,230,928 | 1,263,786 |
Total liabilities and equity | $ 1,838,499 | $ 1,872,606 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred shares, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred shares, issued (in shares) | 0 | 0 |
Preferred shares, outstanding (in shares) | 0 | 0 |
Shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Shares of beneficial interest, authorized (in shares) | 150,000,000 | |
Shares of beneficial interest, issued (in shares) | 87,809,000 | 87,534,000 |
Shares of beneficial interest, outstanding (in shares) | 87,809,000 | 87,534,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue | ||||
Revenue, type [Extensible Enumeration] | Real Estate [Member] | Real Estate [Member] | ||
Real estate rental revenue | $ 56,599 | $ 51,380 | $ 112,408 | $ 99,184 |
Expenses | ||||
Property operating and maintenance | 13,364 | 11,747 | 25,763 | 22,312 |
Real estate taxes and insurance | 6,894 | 6,837 | 14,016 | 13,424 |
Property management | 2,178 | 1,796 | 3,947 | 3,546 |
General and administrative | 6,680 | 7,656 | 13,521 | 14,595 |
Transformation costs | 2,454 | 2,023 | 5,354 | 4,246 |
Depreciation and amortization | 21,415 | 24,039 | 42,951 | 46,239 |
Expenses | 52,985 | 54,098 | 105,552 | 104,362 |
Real estate operating gain (loss) | 3,614 | (2,718) | 6,856 | (5,178) |
Other income (expense) | ||||
Interest expense | (6,794) | (6,156) | (13,625) | (11,806) |
Loss on extinguishment of debt | 0 | 0 | (54) | 0 |
Other income | 569 | 0 | 569 | 386 |
Total other income (expense) | (6,225) | (6,156) | (13,110) | (11,420) |
Net loss | $ (2,611) | $ (8,874) | $ (6,254) | $ (16,598) |
Basic net income (loss) per common share (in dollars per share) | $ (0.03) | $ (0.10) | $ (0.07) | $ (0.19) |
Diluted net income (loss) per common share (in dollars per share) | $ (0.03) | $ (0.10) | $ (0.07) | $ (0.19) |
Weighted average shares outstanding - basic (in shares) | 87,741 | 87,392 | 87,695 | 87,303 |
Weighted average shares outstanding - diluted (in shares) | 87,741 | 87,392 | 87,695 | 87,303 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (2,611) | $ (8,874) | $ (6,254) | $ (16,598) |
Other comprehensive income: | ||||
Unrealized gain on interest rate hedges | 854 | 917 | 521 | 2,842 |
Reclassification of unrealized loss on interest rate derivatives to earnings | 509 | 510 | 1,019 | 1,020 |
Comprehensive loss | $ (1,248) | $ (7,447) | $ (4,714) | $ (12,736) |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Total Shareholders’ Equity | Common Stock | Additional Paid in Capital | Distributions in Excess of Net Income | Accumulated Other Comprehensive Loss | Noncontrolling Interests in Subsidiaries |
Beginning balance (in shares) at Dec. 31, 2021 | 86,261 | ||||||
Beginning balance at Dec. 31, 2021 | $ 1,317,062 | $ 1,316,755 | $ 863 | $ 1,697,477 | $ (362,494) | $ (19,091) | $ 307 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (16,598) | (16,598) | (16,598) | ||||
Unrealized gain on interest rate hedges | 2,842 | 2,842 | 2,842 | ||||
Amortization of swap settlements | 1,020 | 1,020 | 1,020 | ||||
Distributions to noncontrolling interests | (5) | (5) | |||||
Dividends | (29,790) | (29,790) | (29,790) | ||||
Equity issuances, net of issuance costs (in shares) | 1,032 | ||||||
Equity issuances, net of issuance costs | $ 26,851 | 26,851 | $ 10 | 26,841 | |||
Shares issued under Dividend Reinvestment Program (in shares) | 20 | 20 | |||||
Shares issued under Dividend Reinvestment Program | $ 518 | 518 | 518 | ||||
Share grants, net of forfeitures and tax withholdings (in shares) | 79 | ||||||
Share grants, net of forfeitures and tax withholdings | 2,196 | 2,196 | $ 1 | 2,195 | |||
Ending balance (in shares) at Jun. 30, 2022 | 87,392 | ||||||
Ending balance at Jun. 30, 2022 | 1,304,096 | 1,303,794 | $ 874 | 1,727,031 | (408,882) | (15,229) | 302 |
Beginning balance (in shares) at Mar. 31, 2022 | 87,414 | ||||||
Beginning balance at Mar. 31, 2022 | 1,325,243 | 1,324,938 | $ 874 | 1,725,828 | (385,108) | (16,656) | 305 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (8,874) | (8,874) | (8,874) | ||||
Unrealized gain on interest rate hedges | 917 | 917 | 917 | ||||
Amortization of swap settlements | 510 | 510 | 510 | ||||
Distributions to noncontrolling interests | (3) | (3) | |||||
Dividends | $ (14,900) | (14,900) | (14,900) | ||||
Shares issued under Dividend Reinvestment Program (in shares) | 10 | 10 | |||||
Shares issued under Dividend Reinvestment Program | $ 254 | 254 | 254 | ||||
Share grants, net of forfeitures and tax withholdings (in shares) | (32) | ||||||
Share grants, net of forfeitures and tax withholdings | 949 | 949 | 949 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 87,392 | ||||||
Ending balance at Jun. 30, 2022 | 1,304,096 | 1,303,794 | $ 874 | 1,727,031 | (408,882) | (15,229) | 302 |
Beginning balance (in shares) at Dec. 31, 2022 | 87,534 | ||||||
Beginning balance at Dec. 31, 2022 | 1,263,786 | 1,263,488 | $ 875 | 1,729,854 | (453,008) | (14,233) | 298 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (6,254) | (6,254) | (6,254) | ||||
Unrealized gain on interest rate hedges | 521 | 521 | 521 | ||||
Amortization of swap settlements | 1,019 | 1,019 | 1,019 | ||||
Distributions to noncontrolling interests | (4) | (4) | |||||
Dividends | $ (31,677) | (31,677) | (31,677) | ||||
Shares issued under Dividend Reinvestment Program (in shares) | 28 | 28 | |||||
Shares issued under Dividend Reinvestment Program | $ 497 | 497 | 497 | ||||
Share grants, net of forfeitures and tax withholdings (in shares) | 247 | ||||||
Share grants, net of forfeitures and tax withholdings | 3,040 | 3,040 | $ 3 | 3,037 | |||
Ending balance (in shares) at Jun. 30, 2023 | 87,809 | ||||||
Ending balance at Jun. 30, 2023 | 1,230,928 | 1,230,634 | $ 878 | 1,733,388 | (490,939) | (12,693) | 294 |
Beginning balance (in shares) at Mar. 31, 2023 | 87,709 | ||||||
Beginning balance at Mar. 31, 2023 | 1,246,315 | 1,246,019 | $ 877 | 1,731,701 | (472,503) | (14,056) | 296 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (2,611) | (2,611) | (2,611) | ||||
Unrealized gain on interest rate hedges | 854 | 854 | 854 | ||||
Amortization of swap settlements | 509 | 509 | 509 | ||||
Distributions to noncontrolling interests | (2) | (2) | |||||
Dividends | $ (15,825) | (15,825) | (15,825) | ||||
Shares issued under Dividend Reinvestment Program (in shares) | 14 | 14 | |||||
Shares issued under Dividend Reinvestment Program | $ 249 | 249 | 249 | ||||
Share grants, net of forfeitures and tax withholdings (in shares) | 86 | ||||||
Share grants, net of forfeitures and tax withholdings | 1,439 | 1,439 | $ 1 | 1,438 | |||
Ending balance (in shares) at Jun. 30, 2023 | 87,809 | ||||||
Ending balance at Jun. 30, 2023 | $ 1,230,928 | $ 1,230,634 | $ 878 | $ 1,733,388 | $ (490,939) | $ (12,693) | $ 294 |
Consolidated Statements of Eq_2
Consolidated Statements of Equity (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared per share (in dollars per share) | $ 0.18 | $ 0.17 | $ 0.36 | $ 0.34 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities | ||||
Net loss | $ (2,611) | $ (8,874) | $ (6,254) | $ (16,598) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
Depreciation and amortization | 42,951 | 46,239 | ||
Credit losses on lease related receivables | 1,512 | 1,344 | ||
Share-based compensation expense | 2,599 | 4,240 | ||
Net amortization of debt premiums, discounts and related financing costs | 2,101 | 2,006 | ||
Loss on extinguishment of debt | 0 | 0 | 54 | 0 |
Changes in operating other assets | 119 | (2,469) | ||
Changes in operating other liabilities | 3,168 | (783) | ||
Net cash provided by operating activities | 46,250 | 33,979 | ||
Cash flows from investing activities | ||||
Real estate acquisitions, net | 0 | (204,433) | ||
Capital improvements to real estate | (9,890) | (11,395) | ||
Development in progress | 0 | (659) | ||
Non-real estate capital improvements | (293) | (642) | ||
Net cash used in investing activities | (10,183) | (217,129) | ||
Cash flows from financing activities | ||||
Line of credit repayments, net | (31,000) | 0 | ||
Dividends paid | (30,777) | (29,524) | ||
Repayments of unsecured term loan debt | (100,000) | 0 | ||
Proceeds from term loan | 125,000 | 0 | ||
Payment of financing costs | (844) | (39) | ||
Distributions to noncontrolling interests | (4) | (5) | ||
Proceeds from dividend reinvestment program | 249 | 254 | 497 | 518 |
Net proceeds from equity issuances | 0 | 26,851 | ||
Payment of tax withholdings for restricted share awards | (1,350) | (2,100) | ||
Net cash used in financing activities | (38,478) | (4,299) | ||
Net decrease in cash, cash equivalents and restricted cash | (2,411) | (187,449) | ||
Cash, cash equivalents and restricted cash at beginning of period | 9,852 | 234,220 | ||
Cash, cash equivalents and restricted cash at end of period | 7,441 | 46,771 | 7,441 | 46,771 |
Supplemental disclosure of cash flow information: | ||||
Cash paid for interest, net of amounts capitalized | 10,495 | 9,597 | ||
Change in accrued capital improvements and development costs | 3,395 | 1,209 | ||
Dividend payable | 15,834 | 14,916 | 15,834 | 14,916 |
Mortgage notes payable assumed in connection with the acquisition of real estate | 0 | 76,554 | ||
Reconciliation of cash, cash equivalents and restricted cash: | ||||
Cash and cash equivalents | 5,554 | 44,787 | 5,554 | 44,787 |
Restricted cash | 1,887 | 1,984 | 1,887 | 1,984 |
Cash, cash equivalents and restricted cash | $ 7,441 | $ 46,771 | $ 7,441 | $ 46,771 |
Nature of Business
Nature of Business | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | NATURE OF BUSINESS Elme Communities, a Maryland real estate investment trust, is a self-administered equity real estate investment trust (“REIT”), 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. Within these notes to the financial statements, we refer to the three months ended June 30, 2023 and June 30, 2022 as the “2023 Quarter” and the “2022 Quarter,” respectively, and the six months ended June 30, 2023 and June 30, 2022 as the “2023 Period” and the “2022 Period,” respectively. Federal Income Taxes We believe that we qualify as a REIT under Sections 856-860 of the Internal Revenue Code of 1986, as amended (the “Code”), and intend to continue to qualify as such. 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 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Basis of Presentations | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies and Basis of Presentations | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATIONS Significant Accounting Policies We have prepared our consolidated financial statements using the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2022. Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform ("Topic 848"), which was amended in December 2022 by ASU 2022-06, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected through December 31, 2024 as reference rate reform activities occur. During the first quarter of 2023, we executed an amendment to the $700.0 million unsecured revolving credit facility (“Revolving Credit Facility”) to convert the benchmark interest rate from LIBOR to an adjusted SOFR ("Secured Overnight Financing Rate"). We elected to apply the optional expedients in Topic 848 to (i) assert that the hedged interest payments remain probable regardless of any expected modification in terms related to reference rate reform, and (ii) continue the method of assessing effectiveness as documented in the original hedge documentation so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The impact of this guidance did not have a material impact on our consolidated financial statements. Principles of Consolidation and Basis of Presentation The accompanying unaudited consolidated financial statements include the consolidated accounts of Elme Communities and our subsidiaries and entities in which Elme Communities has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. We have prepared the accompanying unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. In addition, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. These unaudited financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. Lessee Accounting For leases where we are the lessee, primarily our corporate office operating lease, we recognize a right-of-use asset and a lease liability in accordance with Accounting Standards Codification (“ASC”) Topic 842. The right-of-use asset and associated liability is equal to the present value of the minimum lease payments, applying our incremental borrowing rate. Our borrowing rate is computed based on observable borrowing rates taking into consideration our credit quality and adjusting to a secured borrowing rate for similar assets and term. Lease expense for the operating lease is recognized on a straight-line basis over the expected lease term and is included in “General and administrative expense.” Restricted Cash Restricted cash includes funds held in escrow for tenant security deposits. Transformation Costs Transformation costs include costs related to the strategic shift away from the commercial sector to the residential sector, including the allocation of internal costs, consulting, advisory and termination benefits. Use of Estimates in the Financial Statements The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Real Estate
Real Estate | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate [Abstract] | |
Real Estate | REAL ESTATE Development/Redevelopment We have properties under development/redevelopment and held for current or future development. As of June 30, 2023, we have invested $30.4 million, including the cost of acquired land, in a residential development adjacent to Riverside Apartments. During the 2022 Quarter, we paused development activities at the aforementioned property and ceased associated capitalization of interest on spending and real estate taxes. However, we continue to capitalize qualifying costs on several other projects with minor development activity necessary to ready each project for its intended use. Properties Sold and Held for Sale We intend to hold our properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning our properties and to make occasional sales of properties that no longer meet our long-term strategy or return objectives and where market conditions for sale are favorable. The proceeds from the sales may be reinvested into other properties, used to fund development operations or to support other corporate needs or distributed to our shareholders. Depreciation on these properties is discontinued at the time they are classified as held for sale, but operating revenues, operating expenses and interest expense continue to be recognized until the date of sale. We did not sell or classify any properties as held for sale during the 2023 Period or in 2022. As of June 30, 2023, we assessed our properties, including assets held for development, for impairment and did not recognize any impairment charges during the 2023 Quarter. We applied reasonable estimates and judgments in evaluating each of the properties as of June 30, 2023. Should external or internal circumstances change requiring the need to shorten holding periods or adjust future estimated cash flows from our properties, we could be required to record impairment charges in the future. |
Unsecured Line of Credit Payabl
Unsecured Line of Credit Payable | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Unsecured Line of Credit Payable | UNSECURED LINE OF CREDIT PAYABLE During the third quarter of 2021, we entered into an amended and restated credit agreement (“Credit Agreement”) which provides for the Revolving Credit Facility and the continuation of an existing $250.0 million unsecured term loan (“2018 Term Loan”). The Revolving Credit Facility has a four-year term ending in August 2025, with two six-month extension options. The Credit Agreement has an accordion feature that allows us to increase the aggregate facility to $1.5 billion, subject to the lenders’ agreement to provide additional revolving loan commitments or term loans. During the first quarter of 2023, we executed an amendment to the Revolving Credit Facility to convert the benchmark interest rate from LIBOR to an adjusted SOFR, with no change in the applicable interest rate margins. The Revolving Credit Facility bears interest at a rate of daily SOFR plus 0.10% plus a margin ranging from 0.70% to 1.40%. In addition, the Revolving Credit Facility requires the payment of a facility fee ranging from 0.10% to 0.30% (depending on Elme Communities’ credit rating) on the $700.0 million committed revolving loan capacity, without regard to usage. As of June 30, 2023, the interest rate on the Revolving Credit Facility is adjusted SOFR (inclusive of the 0.10% credit spread adjustment) plus 0.85%, the daily SOFR is 5.09% and the facility fee is 0.20%. All outstanding advances for the Revolving Credit Facility are due and payable upon maturity in August 2025, unless extended pursuant to one or both of the two six-month extension options. Interest only payments are due and payable generally on a monthly basis. The amount of the Revolving Credit Facility’s unsecured line of credit unused and available at June 30, 2023 was as follows (in thousands): Committed capacity $ 700,000 Borrowings outstanding (24,000) Unused and available $ 676,000 We executed borrowings and repayments on the Revolving Credit Facility during the 2023 Period as follows (in thousands): Balance, December 31, 2022 $ 55,000 Borrowings 142,000 Repayments (173,000) Balance, June 30, 2023 $ 24,000 |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTES PAYABLE During the first quarter of 2023, we entered into a $125.0 million unsecured term loan ("2023 Term Loan") with an interest rate of SOFR (subject to a credit spread adjustment of 10 basis points) plus a margin of 95 basis points (subject to adjustment depending on Elme Communities’ credit rating). The 2023 Term Loan has a two-year term ending in January 2025, with two one-year extension options. We used the proceeds to prepay the $100.0 million 2018 Term Loan in full and a portion of our borrowings under our unsecured credit facility. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS We have an interest rate swap arrangement with a notional amount of $100.0 million that had effectively fixed the remaining $100.0 million portion of the 2018 Term Loan prior to the prepayment. During the first quarter of 2023, we prepaid the 2018 Term Loan using proceeds from the $125.0 million 2023 Term Loan (see note 5). Subsequent to this transaction, the interest swap arrangement effectively fixes the interest rate on a $100.0 million portion of the 2023 Term Loan through the interest rate swap arrangement’s expiration date of July 21, 2023. During the first quarter of 2023, we entered into two interest rate swap arrangements with an aggregate notional amount of $125.0 million that will effectively fix the interest at 4.73% for the 2023 Term Loan beginning on July 21, 2023 through the 2023 Term Loan’s maturity date of January 10, 2025. The interest rate swap arrangements are recorded at fair value in accordance with GAAP, based on discounted cash flow methodologies and observable inputs. We record the effective portion of changes in fair value of the cash flow hedges in Other comprehensive income (loss). We assess the effectiveness of a cash flow hedge both at inception and on an ongoing basis. If a cash flow hedge is no longer expected to be effective, hedge accounting is discontinued. Hedge ineffectiveness of our cash flow hedges is recorded in earnings. The fair values of the interest rate swaps as of June 30, 2023 and December 31, 2022, were as follows (in thousands): Fair Value Derivative Assets Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date June 30, 2023 December 31, 2022 Interest rate swap $ 100,000 March 31, 2017 July 21, 2023 $ 219 $ 1,998 Interest rate swap 75,000 July 21, 2023 January 10, 2025 1,383 — Interest rate swap 50,000 July 21, 2023 January 10, 2025 922 — $ 2,524 $ 1,998 We record interest rate swaps on our consolidated balance sheets within Prepaid expenses and other assets when in a net asset position and within Accounts payable and other liabilities when in a net liability position. The net unrealized gains on the effective swaps were recognized in Other comprehensive income (loss), as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Unrealized gain on interest rate hedges $ 854 $ 917 $ 521 $ 2,842 Amounts reported in Accumulated other comprehensive loss related to effective cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $2.0 million related to our three outstanding interest rate swap arrangements will be reclassified as a decrease to interest expense. The losses reclassified from Accumulated other comprehensive loss into interest expense for the three and six months ended June 30, 2023 and 2022, were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Loss reclassified from accumulated other comprehensive loss into interest expense $ 509 $ 510 $ 1,019 $ 1,020 During the next twelve months, we estimate that an additional $2.0 million related to the previously settled interest rate swap arrangements will be reclassified as an increase to interest expense. We have agreements with each of our derivative counterparties that contain a provision whereby we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of June 30, 2023, the fair value of derivative assets, including accrued interest, was $2.5 million and we did not have any derivatives in a liability position. As of June 30, 2023, we have not posted any collateral related to these agreements. Derivative instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate hedge agreements. We believe that we minimize our credit risk on these transactions by dealing with major, creditworthy financial institutions. We monitor the credit ratings of counterparties and our exposure to any single entity, thus minimizing our credit risk concentration. |
Fair Value Disclosures
Fair Value Disclosures | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | FAIR VALUE DISCLOSURES Assets and Liabilities Measured at Fair Value For assets and liabilities measured at fair value on a recurring basis, quantitative disclosures about the fair value measurements are required to be disclosed separately for each major category of assets and liabilities, as follows: Level 1: Quoted prices in active markets for identical assets Level 2: Significant other observable inputs Level 3: Significant unobservable inputs The only assets or liabilities we had at June 30, 2023 and December 31, 2022 that are recorded at fair value on a recurring basis are the assets held in the Supplemental Executive Retirement Plan (“SERP”), which primarily consist of investments in mutual funds, and the interest rate derivatives (see note 6). We base the valuations related to the SERP on assumptions derived from significant other observable inputs and accordingly these valuations fall into Level 2 in the fair value hierarchy. The valuation of the interest rate derivatives is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each interest rate derivative. This analysis reflects the contractual terms of the interest rate derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate derivatives are determined using the market standard methodology of netting the discounted future fixed cash payments (or receipts) and the discounted expected variable cash receipts (or payments). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply with the provisions of ASC 820, Fair Value Measurement , we incorporate credit valuation adjustments in the fair value measurements to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. These credit valuation adjustments were concluded to not be significant inputs for the fair value calculations for the periods presented. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as the posting of collateral, thresholds, mutual puts and guarantees. The valuation of interest rate derivatives fall into Level 2 in the fair value hierarchy. The fair values of these assets at June 30, 2023 and December 31, 2022 were as follows (in thousands): June 30, 2023 December 31, 2022 Fair Level 1 Level 2 Level 3 Fair Level 1 Level 2 Level 3 Assets: SERP $ 2,485 $ — $ 2,485 $ — $ 2,142 $ — $ 2,142 $ — Interest rate derivatives 2,524 — 2,524 — 1,998 — 1,998 — Financial Assets and Liabilities Not Measured at Fair Value The following disclosures of estimated fair value were determined by management using available market information and established valuation methodologies, including discounted cash flow models. Many of these estimates involve significant judgment. The estimated fair value disclosed may not necessarily be indicative of the amounts we could realize on disposition of the financial instruments. The use of different market assumptions or estimation methodologies could have an effect on the estimated fair value amounts. In addition, fair value estimates are made at a point in time and thus, estimates of fair value subsequent to June 30, 2023 may differ significantly from the amounts presented. The valuations of cash and cash equivalents and restricted cash fall into Level 1 in the fair value hierarchy and the valuations of debt instruments fall into Level 3 in the fair value hierarchy. As of June 30, 2023 and December 31, 2022, the carrying values and estimated fair values of our financial instruments were as follows (in thousands): June 30, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents $ 5,554 $ 5,554 $ 8,389 $ 8,389 Restricted cash 1,887 1,887 1,463 1,463 Line of credit 24,000 24,000 55,000 55,000 Notes payable, net 521,955 471,463 497,359 454,564 |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION Elme Communities maintains short-term (“STIP”) and long-term (“LTIP”) incentive plans that allow for stock-based awards to officers and non-officer employees. Stock based awards are provided to officers and non-officer employees, as well as trustees, under the Washington Real Estate Investment Trust 2016 Omnibus Incentive Plan which allows for awards in the form of restricted shares, restricted share units, options and other awards up to an aggregate of 2,400,000 shares over the ten-year period in which the plan will be in effect. Restricted share units are converted into shares of our stock upon full vesting through the issuance of new shares. Total Compensation Expense Total compensation expense recognized in the consolidated financial statements for all outstanding share-based awards was $1.4 million and $2.1 million for the 2023 Quarter and 2022 Quarter, respectively, and $2.6 million and $4.2 million for the 2023 and 2022 Period, respectively. Restricted Share Awards The total fair values of restricted share awards vested was $4.0 million and $4.8 million for the 2023 Period and 2022 Period, respectively. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | EARNINGS PER COMMON SHARE We determine “Basic earnings per share” using the two-class method as our unvested restricted share awards and units have non-forfeitable rights to dividends, and are therefore considered participating securities. We compute basic earnings per share by dividing net income less the allocation of undistributed earnings to unvested restricted share awards and units by the weighted-average number of common shares outstanding for the period. We also determine “Diluted earnings per share” as the more dilutive of the two-class method or the treasury stock method with respect to the unvested restricted share awards. We further evaluate any other potentially dilutive securities at the end of the period and adjust the basic earnings per share calculation for the impact of those securities that are dilutive. Our dilutive earnings per share calculation includes the dilutive impact of operating partnership units under the if-converted method and our share based awards with performance conditions prior to the grant date and all market condition awards under the contingently issuable method. The computations of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss $ (2,611) $ (8,874) $ (6,254) $ (16,598) Allocation of earnings to unvested restricted share awards (68) (51) (138) (123) Adjusted net loss $ (2,679) $ (8,925) $ (6,392) $ (16,721) Denominator: Weighted average shares outstanding – basic and diluted 87,741 87,392 87,695 87,303 Basic net loss per common share $ (0.03) $ (0.10) $ (0.07) $ (0.19) Diluted net loss per common share $ (0.03) $ (0.10) $ (0.07) $ (0.19) Dividends declared per common share $ 0.18 $ 0.17 $ 0.36 $ 0.34 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION We operate in a single reportable segment which includes the ownership, development, redevelopment and acquisition of apartment communities. None of our operating properties meet the criteria to be considered separate operating segments on a stand-alone basis. Within the residential segment, we do not distinguish or group our consolidated operations based on size (only one community, Riverside Apartments, comprises more than 10% of consolidated revenues), type (all assets in the segment are residential) or geography (all but five communities are within the Washington, DC metro region). Further, our apartment communities have similar long-term economic characteristics and provide similar products and services to our residents. As a result, our operating properties are aggregated into a single reportable segment: residential. We have one remaining office property, Watergate 600, which does not meet the criteria for a reportable segment, and has been classified within “Other” on our segment disclosure tables. We evaluate performance based upon net operating income (“NOI”) of the combined properties in the segment. Our reportable operating segment consolidates similar properties. GAAP requires that segment disclosures present the measure(s) used by the chief operating decision maker for purposes of assessing each segment’s performance. NOI is a key measurement of our segment profit and loss and is defined as real estate rental revenue less real estate expenses. The following tables present revenues, NOI, capital expenditures and total assets for the three and six months ended June 30, 2023 and 2022 from our Residential segment as well as Other, and reconcile NOI to net loss as reported (in thousands): Three Months Ended June 30, 2023 Residential Other (1) Consolidated Real estate rental revenue $ 52,100 $ 4,499 $ 56,599 Real estate expenses 19,054 1,204 20,258 Net operating income $ 33,046 $ 3,295 $ 36,341 Other income (expense): Property management expenses (2,178) General and administrative expenses (6,680) Transformation costs (2,454) Depreciation and amortization (21,415) Interest expense (6,794) Other income 569 Net loss $ (2,611) Capital expenditures $ 4,130 $ 262 $ 4,392 Total assets $ 1,664,947 $ 173,552 $ 1,838,499 Three Months Ended June 30, 2022 Residential Other (1) Consolidated Real estate rental revenue $ 46,646 $ 4,734 $ 51,380 Real estate expenses 17,312 1,272 18,584 Net operating income $ 29,334 $ 3,462 $ 32,796 Other income (expense): Property management expenses (1,796) General and administrative expenses (7,656) Transformation costs (2,023) Depreciation and amortization (24,039) Interest expense (6,156) Net loss $ (8,874) Capital expenditures $ 6,429 $ 1,582 $ 8,011 Total assets $ 1,706,088 $ 228,785 $ 1,934,873 Six Months Ended June 30, 2023 Residential Other (1) Consolidated Real estate rental revenue $ 103,091 9,317 $ 112,408 Real estate expenses 37,198 2,581 39,779 Net operating income $ 65,893 $ 6,736 $ 72,629 Other income (expense): Property management expenses (3,947) General and administrative expenses (13,521) Transformation costs (5,354) Depreciation and amortization (42,951) Interest expense (13,625) Loss on extinguishment of debt (54) Other income 569 Net loss $ (6,254) Capital expenditures $ 9,547 $ 636 $ 10,183 Six Months Ended June 30, 2022 Residential Other (1) Consolidated Real estate rental revenue 89,980 9,204 $ 99,184 Real estate expenses 33,213 2,523 35,736 Net operating income $ 56,767 $ 6,681 $ 63,448 Other income (expense): Property management expenses (3,546) General and administrative expenses (14,595) Transformation costs (4,246) Depreciation and amortization (46,239) Interest expense (11,806) Other income 386 Net loss $ (16,598) Capital expenditures $ 9,859 $ 2,178 $ 12,037 ______________________________ (1) Other represents Watergate 600, an office property that does not meet the qualitative or quantitative criteria for a reportable segment. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Shareholders' Equity | SHAREHOLDERS' EQUITY On February 17, 2021, we entered into separate amendments to each of our existing equity distribution agreements (“Original Equity Distribution Agreements”) with each of Wells Fargo Securities, LLC, BNY Mellon Capital Markets, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc. and Truist Securities, Inc. (f/k/a SunTrust Robinson Humphrey, Inc.), each dated May 4, 2018 (collectively, as amended, the “Equity Distribution Agreements”) for our at-the-market program. Also on February 17, 2021, we entered into a separate equity distribution agreement with BTIG, LLC on the same terms as the Amended Equity Distribution Agreements (the “BTIG Equity Distribution Agreement”). On September 22, 2021, BTIG, LLC notified us that it was terminating the BTIG Equity Distribution Agreement, effective as of September 27, 2021. Pursuant to the Equity Distribution Agreements, we may sell, from time to time, up to an aggregate price of $550.0 million of our common shares of beneficial interest, $0.01 par value per share. Issuances of our common shares are made at market prices prevailing at the time of issuance. We may use net proceeds from the issuance of common shares under this program for general business purposes, including, without limitation, working capital, the acquisition, renovation, expansion, improvement, development or redevelopment of income producing property or the repayment of debt. We did not issue common shares under the Equity Distribution Agreements during the 2023 Period and 2022 Quarter. Our issuances and net proceeds on the Equity Distribution Agreements for the 2022 Period were as follows ($ in thousands, except per share data): Six Months Ended June 30, 2022 Issuance of common shares 1,032 Weighted average price per share $ 26.27 Net proceeds $ 26,851 We have a dividend reinvestment program whereby shareholders may use their dividends and optional cash payments to purchase common shares. The shares sold under this program may either be common shares issued by us or common shares purchased in the open market. Net proceeds under this program are used for general corporate purposes. Our issuances and net proceeds on the dividend reinvestment program for the three and six months ended June 30, 2023 and 2022 were as follows ($ in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Issuance of common shares 14 10 28 20 Weighted average price per share $ 17.62 $ 24.82 $ 17.64 $ 25.44 Net proceeds $ 249 $ 254 $ 497 $ 518 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net loss | $ (2,611) | $ (8,874) | $ (6,254) | $ (16,598) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies and Basis of Presentations (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform ("Topic 848"), which was amended in December 2022 by ASU 2022-06, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected through December 31, 2024 as reference rate reform activities occur. During the first quarter of 2023, we executed an amendment to the $700.0 million unsecured revolving credit facility (“Revolving Credit Facility”) to convert the benchmark interest rate from LIBOR to an adjusted SOFR ("Secured Overnight Financing Rate"). We elected to apply the optional expedients in Topic 848 to (i) assert that the hedged interest payments remain probable regardless of any expected modification in terms related to reference rate reform, and (ii) continue the method of assessing effectiveness as documented in the original hedge documentation so that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The impact of this guidance did not have a material impact on our consolidated financial statements. |
Principles of Consolidation | The accompanying unaudited consolidated financial statements include the consolidated accounts of Elme Communities and our subsidiaries and entities in which Elme Communities has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. |
Basis of Presentation | We have prepared the accompanying unaudited financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information presented not misleading. In addition, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. These unaudited financial statements should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. |
Lessee Accounting | Lessee Accounting For leases where we are the lessee, primarily our corporate office operating lease, we recognize a right-of-use asset and a lease liability in accordance with Accounting Standards Codification (“ASC”) Topic 842. The right-of-use asset and associated liability is equal to the present value of the minimum lease payments, applying our incremental borrowing rate. Our borrowing rate is computed based on observable borrowing rates taking into consideration our credit quality and adjusting to a secured borrowing rate for similar assets and term. Lease expense for the operating lease is recognized on a straight-line basis over the expected lease term and is included in “General and administrative expense.” |
Restricted Cash | Restricted Cash Restricted cash includes funds held in escrow for tenant security deposits. |
Transformation Costs | Transformation Costs Transformation costs include costs related to the strategic shift away from the commercial sector to the residential sector, including the allocation of internal costs, consulting, advisory and termination benefits. |
Use of Estimates in the Financial Statements | Use of Estimates in the Financial Statements The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Unsecured Line of Credit Paya_2
Unsecured Line of Credit Payable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Revolving Credit Facility | The amount of the Revolving Credit Facility’s unsecured line of credit unused and available at June 30, 2023 was as follows (in thousands): Committed capacity $ 700,000 Borrowings outstanding (24,000) Unused and available $ 676,000 We executed borrowings and repayments on the Revolving Credit Facility during the 2023 Period as follows (in thousands): Balance, December 31, 2022 $ 55,000 Borrowings 142,000 Repayments (173,000) Balance, June 30, 2023 $ 24,000 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of Interest Rate Swaps | The fair values of the interest rate swaps as of June 30, 2023 and December 31, 2022, were as follows (in thousands): Fair Value Derivative Assets Derivative Instrument Aggregate Notional Amount Effective Date Maturity Date June 30, 2023 December 31, 2022 Interest rate swap $ 100,000 March 31, 2017 July 21, 2023 $ 219 $ 1,998 Interest rate swap 75,000 July 21, 2023 January 10, 2025 1,383 — Interest rate swap 50,000 July 21, 2023 January 10, 2025 922 — $ 2,524 $ 1,998 |
Schedule of Unrealized Gain (Loss) and Reclassification of Interest Rate Swap | The net unrealized gains on the effective swaps were recognized in Other comprehensive income (loss), as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Unrealized gain on interest rate hedges $ 854 $ 917 $ 521 $ 2,842 Amounts reported in Accumulated other comprehensive loss related to effective cash flow hedges will be reclassified to interest expense as interest payments are made on our variable-rate debt. During the next twelve months, we estimate that an additional $2.0 million related to our three outstanding interest rate swap arrangements will be reclassified as a decrease to interest expense. The losses reclassified from Accumulated other comprehensive loss into interest expense for the three and six months ended June 30, 2023 and 2022, were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Loss reclassified from accumulated other comprehensive loss into interest expense $ 509 $ 510 $ 1,019 $ 1,020 |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets and Liabilities | The fair values of these assets at June 30, 2023 and December 31, 2022 were as follows (in thousands): June 30, 2023 December 31, 2022 Fair Level 1 Level 2 Level 3 Fair Level 1 Level 2 Level 3 Assets: SERP $ 2,485 $ — $ 2,485 $ — $ 2,142 $ — $ 2,142 $ — Interest rate derivatives 2,524 — 2,524 — 1,998 — 1,998 — |
Schedule of Carrying Values and Estimated Fair Values of Financial Instruments | As of June 30, 2023 and December 31, 2022, the carrying values and estimated fair values of our financial instruments were as follows (in thousands): June 30, 2023 December 31, 2022 Carrying Value Fair Value Carrying Value Fair Value Cash and cash equivalents $ 5,554 $ 5,554 $ 8,389 $ 8,389 Restricted cash 1,887 1,887 1,463 1,463 Line of credit 24,000 24,000 55,000 55,000 Notes payable, net 521,955 471,463 497,359 454,564 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of the Computation of Basic and Diluted Earnings per Share | The computations of basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Numerator: Net loss $ (2,611) $ (8,874) $ (6,254) $ (16,598) Allocation of earnings to unvested restricted share awards (68) (51) (138) (123) Adjusted net loss $ (2,679) $ (8,925) $ (6,392) $ (16,721) Denominator: Weighted average shares outstanding – basic and diluted 87,741 87,392 87,695 87,303 Basic net loss per common share $ (0.03) $ (0.10) $ (0.07) $ (0.19) Diluted net loss per common share $ (0.03) $ (0.10) $ (0.07) $ (0.19) Dividends declared per common share $ 0.18 $ 0.17 $ 0.36 $ 0.34 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Reconciliation of Net Operating Income of Reportable Segments | The following tables present revenues, NOI, capital expenditures and total assets for the three and six months ended June 30, 2023 and 2022 from our Residential segment as well as Other, and reconcile NOI to net loss as reported (in thousands): Three Months Ended June 30, 2023 Residential Other (1) Consolidated Real estate rental revenue $ 52,100 $ 4,499 $ 56,599 Real estate expenses 19,054 1,204 20,258 Net operating income $ 33,046 $ 3,295 $ 36,341 Other income (expense): Property management expenses (2,178) General and administrative expenses (6,680) Transformation costs (2,454) Depreciation and amortization (21,415) Interest expense (6,794) Other income 569 Net loss $ (2,611) Capital expenditures $ 4,130 $ 262 $ 4,392 Total assets $ 1,664,947 $ 173,552 $ 1,838,499 Three Months Ended June 30, 2022 Residential Other (1) Consolidated Real estate rental revenue $ 46,646 $ 4,734 $ 51,380 Real estate expenses 17,312 1,272 18,584 Net operating income $ 29,334 $ 3,462 $ 32,796 Other income (expense): Property management expenses (1,796) General and administrative expenses (7,656) Transformation costs (2,023) Depreciation and amortization (24,039) Interest expense (6,156) Net loss $ (8,874) Capital expenditures $ 6,429 $ 1,582 $ 8,011 Total assets $ 1,706,088 $ 228,785 $ 1,934,873 Six Months Ended June 30, 2023 Residential Other (1) Consolidated Real estate rental revenue $ 103,091 9,317 $ 112,408 Real estate expenses 37,198 2,581 39,779 Net operating income $ 65,893 $ 6,736 $ 72,629 Other income (expense): Property management expenses (3,947) General and administrative expenses (13,521) Transformation costs (5,354) Depreciation and amortization (42,951) Interest expense (13,625) Loss on extinguishment of debt (54) Other income 569 Net loss $ (6,254) Capital expenditures $ 9,547 $ 636 $ 10,183 Six Months Ended June 30, 2022 Residential Other (1) Consolidated Real estate rental revenue 89,980 9,204 $ 99,184 Real estate expenses 33,213 2,523 35,736 Net operating income $ 56,767 $ 6,681 $ 63,448 Other income (expense): Property management expenses (3,546) General and administrative expenses (14,595) Transformation costs (4,246) Depreciation and amortization (46,239) Interest expense (11,806) Other income 386 Net loss $ (16,598) Capital expenditures $ 9,859 $ 2,178 $ 12,037 ______________________________ (1) Other represents Watergate 600, an office property that does not meet the qualitative or quantitative criteria for a reportable segment. |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Equity Distribution Agreement Activity | Our issuances and net proceeds on the Equity Distribution Agreements for the 2022 Period were as follows ($ in thousands, except per share data): Six Months Ended June 30, 2022 Issuance of common shares 1,032 Weighted average price per share $ 26.27 Net proceeds $ 26,851 |
Schedule of Dividend Reinvestment Program Activity | Our issuances and net proceeds on the dividend reinvestment program for the three and six months ended June 30, 2023 and 2022 were as follows ($ in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Issuance of common shares 14 10 28 20 Weighted average price per share $ 17.62 $ 24.82 $ 17.64 $ 25.44 Net proceeds $ 249 $ 254 $ 497 $ 518 |
Nature of Business (Details)
Nature of Business (Details) - TRSs - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Properties Sold and Held for Sale [Line Items] | ||
Deferred tax asset | $ 1.4 | $ 1.4 |
Deferred tax valuation allowance | $ 1.4 | $ 1.4 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies and Basis of Presentations (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 31, 2023 |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Committed capacity | $ 700,000 | $ 700,000 |
Real Estate - Narrative (Detail
Real Estate - Narrative (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Real Estate [Line Items] | ||
Properties under development or held for future development | $ 31,260,000 | $ 31,260,000 |
Real estate impairment | 0 | |
Riverside Developments | ||
Real Estate [Line Items] | ||
Properties under development or held for future development | $ 30,400,000 |
Unsecured Line of Credit Paya_3
Unsecured Line of Credit Payable - Narrative (Details) | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2023 USD ($) | Sep. 30, 2021 USD ($) extension_option | Jun. 30, 2023 USD ($) | |
Credit Agreement | |||
Line of Credit Facility [Line Items] | |||
Credit agreement, aggregate maximum borrowing capacity including accordion feature | $ 1,500,000,000 | ||
Term loan | 2018 Term Loan | |||
Line of Credit Facility [Line Items] | |||
Debt instrument face amount | $ 250,000,000 | ||
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Debt instrument term (in years) | 4 years | ||
Number of extensions allowed | extension_option | 2 | ||
Term of allowable extension (in months) | 6 months | ||
Revolving credit facility borrowing capacity | $ 700,000,000 | $ 700,000,000 | |
Revolving Credit Facility | Variable Rate Component Two | |||
Line of Credit Facility [Line Items] | |||
Facility fee (percent) | 0.20% | ||
Revolving Credit Facility | Minimum | |||
Line of Credit Facility [Line Items] | |||
Facility fee (percent) | 0.10% | ||
Revolving Credit Facility | Maximum | |||
Line of Credit Facility [Line Items] | |||
Facility fee (percent) | 0.30% | ||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (percent) | 0.10% | ||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Variable Rate Component One | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (percent) | 0.10% | ||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Variable Rate Component Two | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (percent) | 0.85% | ||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Minimum | Variable Rate Component One | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (percent) | 0.70% | ||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Maximum | Variable Rate Component One | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (percent) | 1.40% |
Unsecured Line of Credit Paya_4
Unsecured Line of Credit Payable - Revolving Credit Facility Unused and Available Credit (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Line of Credit Facility [Line Items] | |||
Borrowings outstanding | $ (24,000) | $ (55,000) | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Committed capacity | 700,000 | $ 700,000 | |
Borrowings outstanding | (24,000) | $ (55,000) | |
Unused and available | $ 676,000 |
Unsecured Line of Credit Paya_5
Unsecured Line of Credit Payable - Revolving Credit Facility Borrowings and Repayments (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Line of Credit [Roll Forward] | |
Beginning balance | $ 55,000 |
Ending balance | 24,000 |
Revolving Credit Facility | |
Line of Credit [Roll Forward] | |
Beginning balance | 55,000 |
Borrowings | 142,000 |
Repayments | (173,000) |
Ending balance | $ 24,000 |
Notes Payable - Narrative (Deta
Notes Payable - Narrative (Details) - Unsecured Debt $ in Millions | 3 Months Ended | |
Mar. 31, 2023 USD ($) extension_option | Jun. 30, 2023 USD ($) | |
2023 Term Loan | ||
Debt Instrument [Line Items] | ||
Debt instrument face amount | $ 125 | |
Debt instrument term (in years) | 2 years | |
Term loan, number of extensions allowed | extension_option | 2 | |
Term loan, extension, term | 1 year | |
2023 Term Loan | Variable Rate Component One | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 0.10% | |
2023 Term Loan | Variable Rate Component Two | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (percent) | 0.95% | |
2018 Term Loan | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | $ 100 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) | 6 Months Ended | ||
Jun. 30, 2023 USD ($) | Jul. 21, 2023 | Mar. 31, 2023 USD ($) arrangement | |
2023 Term Loan | Unsecured Debt | |||
Derivative [Line Items] | |||
Debt instrument face amount | $ 125,000,000 | ||
Interest rate derivatives | |||
Derivative [Line Items] | |||
Derivative notional amount | $ 125,000,000 | ||
Number of interest rate swap arrangements | arrangement | 2 | ||
Estimated amount to be reclassified within next twelve months as an increase to interest expense | $ 2,000,000 | ||
Fair value of derivative assets | 2,500,000 | ||
Fair value of derivative liabilities | 0 | ||
Interest rate derivatives | Subsequent event | |||
Derivative [Line Items] | |||
Fixed interest rate (percent) | 4.73% | ||
Interest rate derivatives | 2018 Term Loan B | |||
Derivative [Line Items] | |||
Derivative notional amount | $ 100,000,000 | ||
Interest rate derivatives | 2023 Term Loan | |||
Derivative [Line Items] | |||
Derivative notional amount | $ 100,000,000 |
Derivative Instruments - Fair V
Derivative Instruments - Fair Value of Interest Rate Swaps (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Interest rate derivatives | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate Notional Amount | $ 125,000 | ||
Derivative Assets | $ 2,524 | $ 1,998 | |
2018 Term Loan A | Interest rate derivatives | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate Notional Amount | 100,000 | ||
2018 Term Loan A | Interest rate derivatives | Accounts payable and other liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets | 219 | 1,998 | |
2018 Term Loan B | Interest rate derivatives | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate Notional Amount | 100,000 | ||
2018 Term Loan B | Interest rate derivatives | Accounts payable and other liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets | 1,383 | 0 | |
2018 Term Loan C | Interest rate derivatives | Accounts payable and other liabilities | |||
Derivatives, Fair Value [Line Items] | |||
Derivative Assets | 922 | $ 0 | |
2023 Term Loan | Interest rate derivatives | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate Notional Amount | $ 100,000 | ||
2023 Term Loan | Interest Rate Swap One | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate Notional Amount | 75,000 | ||
2023 Term Loan | Interest Rate Swap Two | |||
Derivatives, Fair Value [Line Items] | |||
Aggregate Notional Amount | $ 50,000 |
Derivative Instruments - Unreal
Derivative Instruments - Unrealized Gains and Losses and Reclassification (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Unrealized gain on interest rate hedges | $ 854 | $ 917 | $ 521 | $ 2,842 |
Loss reclassified from accumulated other comprehensive loss into interest expense | $ 509 | $ 510 | $ 1,019 | $ 1,020 |
Fair Value Disclosures - Assets
Fair Value Disclosures - Assets Measured at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Interest rate derivatives | ||
Assets: | ||
Interest rate derivatives | $ 2,500 | |
Recurring | Interest rate derivatives | ||
Assets: | ||
Interest rate derivatives | 2,524 | $ 1,998 |
Recurring | SERP | ||
Assets: | ||
SERP | 2,485 | 2,142 |
Recurring | Level 1 | Interest rate derivatives | ||
Assets: | ||
Interest rate derivatives | 0 | 0 |
Recurring | Level 1 | SERP | ||
Assets: | ||
SERP | 0 | 0 |
Recurring | Level 2 | Interest rate derivatives | ||
Assets: | ||
Interest rate derivatives | 2,524 | 1,998 |
Recurring | Level 2 | SERP | ||
Assets: | ||
SERP | 2,485 | 2,142 |
Recurring | Level 3 | Interest rate derivatives | ||
Assets: | ||
Interest rate derivatives | 0 | 0 |
Recurring | Level 3 | SERP | ||
Assets: | ||
SERP | $ 0 | $ 0 |
Fair Value Disclosures - Financ
Fair Value Disclosures - Financial Assets and Liabilities Not Measured at Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Carrying Value and Estimated Fair Values [Line Items] | ||
Cash and cash equivalents | $ 5,554 | $ 8,389 |
Restricted cash | 1,887 | 1,463 |
Line of credit | 24,000 | 55,000 |
Notes payable, net | 521,955 | 497,359 |
Fair Value | ||
Carrying Value and Estimated Fair Values [Line Items] | ||
Cash and cash equivalents | 5,554 | 8,389 |
Restricted cash | 1,887 | 1,463 |
Line of credit | 24,000 | 55,000 |
Notes payable, net | $ 471,463 | $ 454,564 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation expense | $ 1.4 | $ 2.1 | $ 2.6 | $ 4.2 |
Restricted share awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value of share awards vested | $ 4 | $ 4.8 | ||
Total unvested restricted share awards (in shares) | 377,725 | 377,725 | ||
Weighted average grant date fair value (in dollars per share) | $ 20.07 | $ 20.07 | ||
Compensation costs not yet recognized | $ 5.9 | $ 5.9 | ||
Recognition period for compensation expense | 28 months | |||
Washington Real Estate Investment Trust 2016 Omnibus Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Aggregate number of shares authorized for stock based awards (in shares) | 2,400,000 | 2,400,000 | ||
Incentive plan, period in effect (in years) | 10 years |
Earnings Per Common Share - Com
Earnings Per Common Share - Computations of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||
Net loss | $ (2,611) | $ (8,874) | $ (6,254) | $ (16,598) |
Allocation of earnings to unvested restricted share awards | (68) | (51) | (138) | (123) |
Adjusted net loss | (2,679) | (8,925) | (6,392) | (16,721) |
Adjusted net loss | $ (2,679) | $ (8,925) | $ (6,392) | $ (16,721) |
Denominator: | ||||
Weighted average shares outstanding - basic (in shares) | 87,741 | 87,392 | 87,695 | 87,303 |
Weighted average shares outstanding - diluted (in shares) | 87,741 | 87,392 | 87,695 | 87,303 |
Basic net income (loss) per common share (in dollars per share) | $ (0.03) | $ (0.10) | $ (0.07) | $ (0.19) |
Diluted net income (loss) per common share (in dollars per share) | (0.03) | (0.10) | (0.07) | (0.19) |
Dividends declared per common share (in dollars per share) | $ 0.18 | $ 0.17 | $ 0.36 | $ 0.34 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 6 Months Ended |
Jun. 30, 2023 property segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 1 |
Office | |
Segment Reporting Information [Line Items] | |
Number of properties that do not meet criteria for reportable segment | property | 1 |
Segment Information - Financial
Segment Information - Financial Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Real estate rental revenue | $ 56,599 | $ 51,380 | $ 112,408 | $ 99,184 | |
Real estate expenses | 20,258 | 18,584 | 39,779 | 35,736 | |
Net operating income | 36,341 | 32,796 | 72,629 | 63,448 | |
Other income (expense): | |||||
Property management expenses | (2,178) | (1,796) | (3,947) | (3,546) | |
General and administrative expenses | (6,680) | (7,656) | (13,521) | (14,595) | |
Transformation costs | (2,454) | (2,023) | (5,354) | (4,246) | |
Depreciation and amortization | (21,415) | (24,039) | (42,951) | (46,239) | |
Interest expense | (6,794) | (6,156) | (13,625) | (11,806) | |
Loss on extinguishment of debt | 0 | 0 | (54) | 0 | |
Other income | 569 | 0 | 569 | 386 | |
Net loss | (2,611) | (8,874) | (6,254) | (16,598) | |
Capital expenditures | 4,392 | 8,011 | 10,183 | 12,037 | |
Total assets | 1,838,499 | 1,934,873 | 1,838,499 | 1,934,873 | $ 1,872,606 |
Residential | |||||
Segment Reporting Information [Line Items] | |||||
Real estate rental revenue | 52,100 | 46,646 | 103,091 | 89,980 | |
Real estate expenses | 19,054 | 17,312 | 37,198 | 33,213 | |
Net operating income | 33,046 | 29,334 | 65,893 | 56,767 | |
Other income (expense): | |||||
Capital expenditures | 4,130 | 6,429 | 9,547 | 9,859 | |
Total assets | 1,664,947 | 1,706,088 | 1,664,947 | 1,706,088 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Real estate rental revenue | 4,499 | 4,734 | 9,317 | 9,204 | |
Real estate expenses | 1,204 | 1,272 | 2,581 | 2,523 | |
Net operating income | 3,295 | 3,462 | 6,736 | 6,681 | |
Other income (expense): | |||||
Capital expenditures | 262 | 1,582 | 636 | 2,178 | |
Total assets | $ 173,552 | $ 228,785 | $ 173,552 | $ 228,785 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Equity [Abstract] | ||
Common shares of beneficial interest reserved for future issuance | $ 550 | |
Shares of beneficial interest, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Shareholders' Equity - Equity D
Shareholders' Equity - Equity Distribution Agreements (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Jun. 30, 2022 USD ($) $ / shares | |
Equity Distribution Agreements | |
Weighted average price per share (in dollars per share) | $ / shares | $ 26.27 |
Net proceeds | $ | $ 26,851 |
Shareholders' Equity - Dividend
Shareholders' Equity - Dividend Reinvestment Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Dividend Reinvestment Program | ||||
Issuance of common shares (in shares) | 14 | 10 | 28 | 20 |
Weighted average price per share (in dollars per share) | $ 17.62 | $ 24.82 | $ 17.64 | $ 25.44 |
Net proceeds | $ 249 | $ 254 | $ 497 | $ 518 |