Elme Communities ("Elme" or the "Company") has just concluded a strategic alternatives review process and has entered into an agreement to sell 19 properties to Cortland Partners, LLC for $1.6 billion in cash. The transaction is expected to close in the fourth quarter of 2025, subject to customary closing conditions and shareholder approval.
The company's board of trustees has approved a plan of sale and liquidation, which involves the voluntary dissolution of the company by selling or disposing of all remaining assets. Elme intends to market its remaining nine multifamily assets, as well as Watergate 600, for sale within the next 12 months.
Upon the completion of the portfolio sale transaction, Elme intends to seek shareholder approval for the plan of sale and liquidation. The company estimates total upfront distributions to shareholders of approximately $14.68 to $15.00 per share following the consummation of the Cortland portfolio transaction. Additionally, the estimated additional liquidating distributions to shareholders is approximately $2.90 to $3.50 per share in the aggregate.
The board's decision to sell assets to Cortland and subsequently liquidate the company was the result of a robust evaluation process, which involved engagement with more than 80 potential counterparties. The board unanimously determined that this course of action is likely to result in the greatest value for shareholders compared to other strategic alternatives.
Elme President and CEO, Paul McDermott, stated that despite the company's successful transformation into a multifamily platform with strong operating capabilities, market conditions have not allowed for a reduction in the cost of capital to support accretive growth. The agreement with Cortland is seen as a recognition of the greater value of Elme's communities and their potential when combined with Cortland's economies of scale.
Cortland's CEO, Steven DeFrancis, expressed excitement about the transaction, which marks the company's second large-scale transaction with a publicly traded REIT. Cortland intends to invest significant capital into the portfolio to enhance the resident experience.
In terms of estimated distributions, Elme expects to provide shareholders with initial special distributions between $14.50 and $14.82 per share, with additional potential special distributions from the sale of remaining assets estimated to be between $2.90 and $3.50 per share. The company also announced a regular quarterly distribution of $0.18 per share to be paid on October 3, 2025.
The properties being acquired by Cortland under the purchase and sale agreement include various assets in Virginia, Maryland, and Georgia, while the remaining properties are set to be marketed for sale. Financial advisors and legal counsel have been engaged to facilitate the transaction.
Elme will release its second-quarter earnings results on August 5, 2025, and will conduct a conference call on August 6, 2025, to discuss its results, as well as the portfolio sale transaction and plan of sale and liquidation. The company has withdrawn its prior 2025 guidance and assumptions in light of the recent announcement.
The press release also details the process for obtaining shareholder approval and provides information about the proposed transactions. Shareholders are urged to read the proxy statement and other relevant documents for important information about the proposed transactions. As a result of these announcements, the company's shares have moved 0.2% on the market, and are now trading at a price of $15.11. For the full picture, make sure to review Elme Communities's 8-K report.
