Elme Communities

Hello and welcome to the Elm Community's Third Quarter 2023 Earnings Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the call over to Amy Hopkins, Vice President, Investor Relations. Amy, please go ahead.

Good morning and thank you for joining our Third Quarter Earnings Call. Today's event is being webcast with a slide presentation that is available on the Investors section of our website and will also be available on our webcast replay. Before we begin our prepared remarks, I would like to remind everyone that this conference call contains forward-looking statements that involve known and unknown risks and uncertainties, which may cause actual results to differ materially, and we undertake no duty to update them as actual events unfold. We refer to statements of these risks in our SEC filings. Reconciliations of the GAAP and non-GAAP financial measures discussed in this call are available in our most recent earnings press release and financial supplement, which was distributed yesterday and can be found on the investor's page of our website. And with that, I'd like to turn the call over to our CEO, Paul McDermott.

Thanks, Amy. We delivered solid third quarter operating performance, and the operating trends that we are seeing today align with our expectations and guidance for the remainder of the year. Therefore, we are maintaining the midpoint and tightening our FFO guidance. In terms of our recent company updates, we closed on the acquisition of a 500 home apartment complex in the inner suburbs of Atlanta for $108 million on September 29th. This acquisition rounds out our Atlanta footprint and improves our future growth profile. I'll talk more about this acquisition in a minute. Additionally, we welcomed a new member to our board of trustees. Susan Karras is an accomplished leader in the real estate industry who brings extensive multifamily transaction experience and a deep network of relationships. We look forward to the valuable insights that she will bring to our board. I'll focus my prepared remarks today on our recent acquisition and future external growth expectations. Tiffany will cover our operating trends and growth initiatives and Steve will discuss our balance sheet and guidance updates. Bearing to our recent acquisition, we have collared Elm-Durwood Hills at a forward yield above 6%, including the impact of leveraging our existing expense base. We were awarded the deal through a competitive bidding process where our ability to provide certainty of execution as an all-cash buyer worked to our advantage. We expect the acquisition to become accretive over the next 12 months. This is an attractive real estate deal for Elm for the following reasons. First, it fits squarely into our class B value add strategy, which targets communities with rent levels that are 85 to 95% of the market median with renovation potential. This provides the opportunity to grow rents and create value over time without directly competing with new supply. Elm Druid Hills offers the opportunity to renovate all 500 homes as Class A homes in the surrounding area are priced about at a 21% premium above our in-place rents, leaving more than enough room to renovate and capture our targeted return. Furthermore, the area is somewhat insulated by new supply with only one new delivery since 2021 and limited new supply under construction within a three-mile radius. Second, it's located in an affluent area with a growing job base. North Druid Hills offers seamless accessibility to over 550,000 jobs within a three-mile radius and is close to Atlanta's most important new medical developments. Children's Healthcare of Atlanta and Emory Healthcare's Executive Park expansion which has generated over 3 billion in investments. Employment in our targeted income band grew more than 17% over the past five years in the Briarcliff sub market where average household income is $98,000, supporting an average rent to income ratio for Elm Druid Hill residents of 20%. Third, Rent growth at Elm Druid Hills has outperformed the submarket and broader Atlanta market average on a trailing five-year and 10-year basis. Fourth, it is an expansive property that sits on nearly 50 acres. Elm Druid Hills is the second largest multifamily property acreage within a three-mile radius, yielding a ratio of approximately 10 homes per acre, which is significantly more land per unit than the average for new deliveries over the past five years and offers longer-term redevelopment options. This community is a rare find in a mature fluid inside the perimeter location. Finally, this is an exceptional price representing a deep discount to replacement cost of over 30%. And we believe that this acquisition will perform very well over time and drive long-term shareholder value. We onboarded Elm Druid Hills onto our operating platform and retained the entire community team, providing continuity for existing residents. The Elm Druid Hills team joins us with extensive local community management and leasing experience, and we could not be more pleased to welcome them to our company. And with that, I'll turn it to Tiffany to discuss our operating trends and growth initiatives.