Elme Communities

Good day and welcome to the Elm Community's first quarter 2025 earnings conference call. As a reminder, today's call is being recorded and 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 first quarter earnings call. Today's call will be available for replay on the investors section of our websites. Statements made during this call may constitute 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 Investors 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. Welcome, everyone, and thank you for joining us this morning. We kicked off the year with strong momentum as both same-store revenue and NOI came in ahead of our expectations, and the trends we are seeing as we enter peak leasing season are encouraging. I'll start today's call by highlighting what we're seeing on the ground here in the DMV and how we're positioned as regional employment trends evolve. Tiffany will provide a more detailed update on our operating trends, and Steve will discuss our outlook for 2025. While the new administration continues to work to streamline the federal workforce, the fundamentals that we are seeing across our Washington Metro portfolio remain solid and in line with seasonal norms. Looking forward, apartment tour volumes and renewal lease negotiations for June and July expirations remain strong and in line with our expectations. While we acknowledge that the region could be impacted by employment losses and a slowdown in economic growth, our mid-market rent levels and geographic focus on Northern Virginia put us in a better position than higher-end rentals and the broader regional housing market overall. Mid-market rent levels are widely recognized for offering relative resilience during periods of economic volatility. Looking back at performance during sequestration in 2013 and 2014, Class B apartments outperformed Class A in effective rent growth by over 1.8%, according to data collected by RealPage. And with regard to our geographic focus, Nearly 75% of Elm's Washington Metro homes are located in Northern Virginia, which is known for having the strongest private sector employment growth in the Washington Metro region. Over the past four years, Northern Virginia's private sector job growth was two and a half times the private sector job gains in the Washington Metro region, according to BLS data. Although Northern Virginia is known As a major hub for federal contractors, we believe ELM's exposure to government contractors is very low at approximately 5% of our Washington Metro resident base as of April. More details about our exposure to federal workforce reductions can be found on slide 11 of our latest investor presentation. Additionally, most federal employees fall outside the typical age range of apartment renters. As of September 2024, over 70% of federal government employees were over 40 per OPM data. In contrast, only 30% of Elm residents fall into that age group, suggesting a lower impact on apartments compared to the broader housing market overall. Looking at supply, conditions are shaping up for a very positive trajectory in the Washington metro. According to RealPage, annual supply peaked in Q1 2025 at 2.2% annual net inventory growth, below the national average of 2.9%. New construction starts in the Washington Metro are down over 70% from their peak, and supply is projected to decline steeply from here to 1.8% annual net inventory growth by the fourth quarter of this year. and still further to nearly half at 1.1% by the fourth quarter of 2026, which would be the lowest level reported since 2012. Beyond 2026, supply could drop even further depending on the effects of tariffs and increased construction costs, paving the way for additional favorable competitive dynamics in the region. Turning to our strategic review, As announced on February 13th, 2025, our board of trustees is overseeing a formal evaluation of strategic alternatives to maximize shareholder value. This process was initiated from a position of strength and having transformed Elm into a multifamily REIT while improving performance and profitability and underscores our commitment to acting in the best interest of Elm and its shareholders. Despite the current volatility, an uncertain capital markets environment, this evaluation remains ongoing. The Board is working with independent financial and legal advisors to assess alternatives and determine the best path forward for ELM. As we said when we announced this formal evaluation, there can be no assurance that this process will result in ELM pursuing a transaction or any other strategic outcome, and we do not intend to provide further details on the process in connection with the discussion of our first quarter earnings results today. Thank you for your understanding and keeping your questions focused on our results and outlook. And with that, I'll turn it over to Tiffany to discuss our operations.