Elme Communities has found a new buyer for its Alexandria, Virginia, apartment complex after a previous deal fell through, putting the REIT back on track in its liquidation process.
Elme Communities’ 1,222-unit Riverside Apartments at 5860 Cameron Run Terrace in Alexandria
FPA Multifamily LLC has entered into an agreement to buy Riverside Apartments, a 1,222-unit community, and related undeveloped land for $250M, $30M less than the collapsed deal, Elme said in a Securities and Exchange Commission filing. The contract is subject to an inspection period and closing conditions and is expected to close no later than Sept. 14.
The new contract restores some certainty about when Elme will be able to fully repay a $520M term loan from Goldman Sachs, which it planned to do with the proceeds of selling its remaining properties. It also allowed the REIT to update its payout estimate for shareholders, after having withdrawn its previous estimate in June.
Elme and FPA didn’t immediately respond to requests for comment.
Elme, formerly known as WashREIT, announced its plans to liquidate last August. It said at the time that it agreed to sell 19 properties to Atlanta-based Cortland and would put the 10 other assets in its portfolio on the market. Elme completed the sale with Cortland in November.
In June, a subsidiary of Beitel Group pulled out of its contract to buy Riverside Apartments for $280M. Elme said then that it would not be able to fully repay its term loan without sufficient proceeds from its remaining properties, including from Riverside.
Elme said in its latest SEC filing it has sold six of its remaining properties to date for total gross proceeds of roughly $294M. Three other properties are under contract and past the inspection period and are expected to provide gross proceeds of $168M, the REIT said in a July 24 press release.
The outstanding balance on the term loan was $251M as of July 23, Elme said in the release. It said it plans to return net proceeds from the sales to Elme shareholders “when appropriate and in the Board’s discretion.”
Elme’s updated payout estimate is now between $16.41 and $16.61 per common share, marking the third time this year the REIT has lowered its estimate. In May, Elme said it expected to pay out between $16.74 and $17.02 per share. The previous estimate was in part based on the price of the now-terminated contract for Riverside.
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