Elme Communities

Good day, and welcome to the Elm Community's fourth quarter 2024 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 fourth 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 certain of these risks in our SEC filings. Reconciliations of the GAAP and non-GAAP financial measures discussed on 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. Presenting on the call today will be Paul McDermott, our CEO, Tiffany Butcher, our COO, and Steve Freistadt, our CFO. And with that, I will turn the call over to Paul.

Thanks, Amy. And thank you for joining us today to discuss our fourth quarter 2023 results and outlook for 2024. I'll start by covering apartment fundamentals in each of our markets. Tiffany will cover our operating trends and growth initiatives, and Steve will discuss our 2024 financial outlook. The Washington Metro, which drives over 80% of our multifamily NOI, is positioned well with healthy demand trends and an outlook for rent growth that is above the US average for a second year in a row. Furthermore, employment trends remain positive, with a favorable 2024 job growth outlook of 1.3%. Northern Virginia, which comprises over 80% of our Washington Metro footprint, continues to be the largest driver of job growth for the Washington Metro region. And if the job growth outlook were to shift, the presence of the federal government and federal government contractors should provide continued stability and employment. In terms of the supply picture, we have no exposure to Capital South or Northeast DC, which are the highest supplied submarkets in the district, and only two of our Washington Metro submarkets are projected to see increasing net inventory growth rates this year. Furthermore, our rent levels do not compete directly with new supply as the rent differential is $640, or 30% below recent deliveries. Overall, our Washington Metro portfolio is in a favorable and defensive position at this stage in the year, and we expect it to be our primary NOI growth driver this year. Turning to Atlanta, the long-term outlook for population growth household formation, and job growth are strong, and we remain optimistic about the longer-term value creation potential of our Atlanta portfolio. Employment is projected to grow by 1.2 percent during 2024, in line with the U.S. average, and the sectors that are driving job growth in Atlanta are strong generators of demand for mid-market apartment homes in our submarkets. Suburban employment growth is being powered by strong performance in the education and health, leisure and hospitality, and finance industries, which together employ more than a third of our Atlanta residents. These sectors have registered annual growth rates in the range of 5 to 7% over the past year. While employment trends remain favorable, Our Atlanta submarkets continue to experience pricing pressure due to both the normalization and rent growth following exceptional post-pandemic growth and the impact of elevated deliveries. While only two of our Atlanta submarkets or about a third of our Atlanta homes are experiencing supply that is elevated above the U.S. average, we are experiencing a more widespread impact of new supply throughout the region relative to the Washington Metro, where the impacts of supply are more contained within each submarket. We do not anticipate supply elevating materially above the current levels in any of our Atlanta submarkets. However, we do expect the impact of new supply on our Atlanta portfolio to be felt throughout the year. Moving on to resident credit, Wage growth relative to total rent growth across the Washington Metro and Atlanta Metro areas continues to trend positively, and our residents' financial status remains solid. The average rent-to-income ratio for new leases signed in the fourth quarter was 24%, representing a slight improvement compared to the 2023 average. This reaffirms that our rental rates remain affordable for our new residents. And with that, I'll turn it over to Tiffany to discuss our operating trends and growth initiatives.