345 added · 331 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
As a result, the balance sheet as of December 31, 2024, the statements of operations, the statements of comprehensive income, the statements of equity and the statements of cash flow for the ten months ended October 31, 2025 and the years ended December 31, 2024 and 2023 are presented using the going concern basis of accounting.
NOTE 5: NET ASSETS IN LIQUIDATION The increase from total equity under the going concern basis of accounting as of October 31, 2025 to net assets in liquidation under the liquidation basis of accounting as of November 1, 2025 is primarily due to the increase in estimated net realizable value of the income producing property, partially offset by an increase in the liability for estimated costs in excess of estimated receipts during liquidation (see note 4) and the write-off of assets and liabilities.
We acquired one property during the year ended December 31, 2023 as follows: Acquisition Date Property Type # of Homes (unaudited) Ending Occupancy Contract Purchase Price (in thousands) September 29, 2023 Elme Druid Hills Residential 500 96.0 % $ 108,000 The results of operations from acquired operating properties are included in the consolidated statements of operations as of their acquisition dates. 61 The revenue and earnings of our acquisition during its year of acquisition for the year ended December 31, 2023 is as follows (in thousands): Year Ended December 31, 2023 Real estate rental revenue $ 2,549 Net loss ( 1,511 ) As discussed in note 3, we record the acquired physical assets (land and building) and in-place leases (absorption costs) and any other assumed liabilities by allocating the total cost of the acquisitions on a relative fair value basis.
We recorded the total cost of the above acquisition as follows (in thousands): 2023 Land $ 25,249 Building 79,281 Absorption costs 3,660 Total acquisition cost and carrying amounts recorded $ 108,190 The difference in the total acquisition cost of $ 108.2 million for the 2023 acquisition and the cash paid for the 2023 acquisition per the consolidated statements of cash flows of $ 107.6 million is due to net credits received at settlement totaling $ 0.6 million.
Fair Value of In-place Leases Balances, net of accumulated depreciation or amortization, as appropriate, of the components of the fair value of in-place leases at December 31, 2024 were as follows (in thousands): December 31, 2024 Gross Carrying Value Accumulated Amortization Net Tenant origination costs $ 2,230 $ 804 $ 1,426 Leasing commissions/absorption costs 67,345 63,809 3,536 Net lease intangible liabilities 13,055 11,208 1,847 Amortization of these combined components during the ten months ended October 31, 2025 and two years ended December 31, 2024, was as follows (in thousands): Ten Months Ended October 31, Year Ended December 31, 2025 2024 2023 Depreciation and amortization expense $ 1,225 $ 3,894 $ 4,530 Real estate rental revenue increase, net ( 682 ) ( 766 ) ( 806 ) $ 543 $ 3,128 $ 3,724 Properties Sold and Held for Sale Under the going concern basis, when we classify properties as held for sale, we discontinue the recording of depreciation expense and estimate their fair value less costs to sell.
If we determine that the carrying value for these properties exceed their estimated fair value less costs to sell, we record a loss on asset impairment. 62 We sold our interests in the following properties in the Portfolio Sale Transaction, which closed on November 12, 2025.
The losses on the effective swaps are recognized in other comprehensive income, as follows (in thousands): Ten Months Ended October 31, Year Ended December 31, 2025 2024 2023 Unrealized gain (loss) on interest rate hedges $ 598 $ ( 2,147 ) $ ( 764 ) The losses reclassified from Accumulated other comprehensive income into interest expense for the ten months ended October 31, 2025 and two years ended December 31, 2024, were as follows (in thousands): Ten Months Ended October 31, Year Ended December 31, 2025 2024 2023 Loss reclassified from accumulated other comprehensive income (loss) into interest expense $ 1,698 $ 2,039 $ 2,039 NOTE 11: FAIR VALUE DISCLOSURES Assets and Liabilities Measured at Fair Value (Going Concern Basis) For assets and liabilities measured at fair value on a recurring basis, quantitative disclosures about the fair value measurements are required to be disclosed separately for each major category of assets and liabilities, as follows: Level 1: Quoted prices in active markets for identical assets Level 2: Significant other observable inputs Level 3: Significant unobservable inputs The only assets or liabilities we had at December 31, 2024 that are recorded at fair value on a recurring basis are the assets held in the Supplemental Executive Retirement Plan ("SERP"), which primarily consists of investments in mutual funds, and the interest rate swaps (see note 10).
The fair values of these assets and liabilities at December 31, 2024 were as follows (in thousands): December 31, 2024 Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: SERP $ 2,648 $ 2,648 $ — $ — Interest rate swaps 23 — 23 — Liabilities: Interest rate swaps ( 936 ) — ( 936 ) — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Going Concern Basis) Certain assets not measured at fair value on an ongoing basis but subject to fair value adjustments only in certain circumstances, such as when there is evidence of impairment, are measured at fair value on a nonrecurring basis.
Real estate rental revenue as a percentage of the total for the Residential reportable segment and Other for the ten months ended October 31, 2025 and for the years ended December 31, 2024 and 2023, respectively, was as follows: Ten Months Ended October 31, Year Ended December 31, 2025 2024 2023 Residential 93 % 92 % 92 % Other 7 % 8 % 8 % The percentage of income producing real estate assets classified as held and used, at cost, for the Residential reportable segment and Other as of December 31, 2024 was as follows: 2024 Residential 96 % Other 4 % The following tables present revenues, net operating income, capital expenditures and total assets for the ten months ended October 31, 2025 and years ended December 31, 2024 and 2023 from the Residential reportable segment and Other, and reconciles the consolidated net operating income to net loss as reported (in thousands): Ten Months Ended October 31, 2025 Residential Other Consolidated Real estate rental revenue $ 191,525 $ 14,835 $ 206,360 Real estate expenses 71,912 4,690 76,602 Net operating income $ 119,613 $ 10,145 $ 129,758 Property management expenses ( 7,494 ) General and administrative expenses ( 54,591 ) Depreciation and amortization ( 78,162 ) Interest expense ( 31,954 ) Real estate impairment ( 111,719 ) Net loss $ ( 154,162 ) Capital expenditures $ 26,904 $ 82 $ 26,986 74 Twelve Months Ended December 31, 2024 Residential Other Consolidated Real estate rental revenue $ 223,638 18,297 $ 241,935 Real estate expenses 83,066 5,635 88,701 Net operating income $ 140,572 $ 12,662 $ 153,234 Property management expenses ( 8,861 ) General and administrative expenses ( 24,969 ) Depreciation and amortization ( 95,935 ) Interest expense ( 37,835 ) Loss on extinguishment of debt ( 147 ) Other income 1,410 Net loss $ ( 13,103 ) Capital expenditures $ 47,054 $ 548 $ 47,602 Total assets $ 1,719,087 $ 126,675 $ 1,845,762 Twelve Months Ended December 31, 2023 Residential Other Consolidated Real estate rental revenue $ 209,311 $ 18,600 $ 227,911 Real estate expenses 74,535 5,295 79,830 Net operating income $ 134,776 $ 13,305 $ 148,081 Property management expenses ( 8,108 ) General and administrative expenses ( 25,887 ) Transformation costs ( 6,339 ) Depreciation and amortization ( 88,950 ) Real estate impairment ( 41,860 ) Interest expense ( 30,429 ) Loss on extinguishment of debt ( 54 ) Other income 569 Net loss $ ( 52,977 ) Capital expenditures $ 37,782 $ 844 $ 38,626 Total assets $ 1,768,426 $ 131,602 $ 1,900,028 75 NOTE 17: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Unaudited financial data by quarter for the period ended October 31, 2025 and the year ended December 31, 2024 were as follows (in thousands, except for per share data): Quarter (1) First Second Third Fourth (2) 2025 Real estate rental revenue $ 61,493 $ 62,099 $ 62,103 $ 20,665 Net loss $ ( 4,675 ) $ ( 3,566 ) $ ( 123,514 ) $ ( 22,407 ) Net loss per share Basic $ ( 0.05 ) $ ( 0.04 ) $ ( 1.40 ) $ ( 0.25 ) Diluted $ ( 0.05 ) $ ( 0.04 ) $ ( 1.40 ) $ ( 0.25 ) Quarter (1) First Second Third Fourth 2024 Real estate rental revenue $ 59,513 $ 60,103 $ 61,055 $ 61,264 Net loss $ ( 3,647 ) $ ( 3,471 ) $ ( 2,970 ) $ ( 3,015 ) Net loss per share Basic $ ( 0.04 ) $ ( 0.04 ) $ ( 0.03 ) $ ( 0.03 ) Diluted $ ( 0.04 ) $ ( 0.04 ) $ ( 0.03 ) $ ( 0.03 ) ______________________________ (1) With regard to per share calculations, the sum of the quarterly results may not equal full year results due to rounding.
Our issuances and net proceeds on the dividend reinvestment program for 2023 were as follows (in thousands; except per share data): Year Ended December 31, 2025 2024 2023 Issuance of common shares — — 28 Weighted average price per share $ — $ — $ 17.64 Net proceeds $ — $ — $ 497 NOTE 19: DEFERRED COSTS As of December 31, 2024, deferred leasing costs and deferred leasing incentives were included in prepaid expenses and other assets as follows (in thousands): 2024 Gross Carrying Value Accumulated Amortization Net Deferred leasing costs $ 9,256 $ 5,902 $ 3,354 Amortization, including write-offs, of deferred leasing costs and deferred leasing incentives for the two years ended December 31, 2024 were as follows (in thousands): 2024 2023 Deferred leasing costs amortization $ 539 $ 351 77 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (IN THOUSANDS) Balance at Beginning of Year Additions Charged to Expenses Net Recoveries Balance at End of Year Valuation allowance for deferred tax assets 2024 $ 1,399 $ — $ — $ 1,399 2023 $ 1,399 $ — $ — $ 1,399 78 SCHEDULE III Initial Cost (a) Net Improvements (Retirement) since Acquisition Gross Amounts at Which Carried at December 31, 2025 Accumulated Depreciation at December 31, 2025 Properties (f) Location Land Buildings and Improvements Land Buildings and Improvements Total (c) Net Liquidation Adjustment Year of Construction Date of Acquisition Depreciation Life (d) Residential Properties 3801 Connecticut Avenue Washington, DC $ 420,000 $ 2,678,000 $ 24,047,000 $ 420,000 $ 26,725,000 $ 27,145,000 $ 20,127,000 $ 59,082,000 1951 Jan 1963 30 years Elme Bethesda Maryland 3,900,000 13,412,000 19,058,000 3,900,000 32,470,000 36,370,000 26,975,000 51,105,000 1986 Nov 1997 30 years Kenmore Apartments Washington, DC 28,222,000 33,955,000 24,124,000 28,222,000 58,079,000 86,301,000 31,047,000 9,546,000 1948 Sep 2008 30 years Riverside Apartments Virginia 38,924,000 184,854,000 62,533,000 38,864,000 247,447,000 286,311,000 90,282,000 88,471,000 1971 May 2016 30 years Riverside Apartments land parcel (e) Virginia 15,968,000 — 14,419,000 — 30,387,000 30,387,000 — ( 25,387,000 ) n/a May 2016 n/a Elme Germantown Maryland 7,609,000 34,431,000 5,560,000 7,609,000 39,991,000 47,600,000 10,764,000 17,164,000 1990 Jun 2019 30 years Elme Watkins Mill Maryland 7,151,000 30,851,000 3,726,000 7,151,000 34,577,000 41,728,000 9,629,000 10,426,000 1975 Jun 2019 30 years Elme Conyers (b) Georgia 4,798,000 42,122,000 ( 10,538,000 ) 4,001,000 32,381,000 36,382,000 222,000 ( 2,410,000 ) 1999 Aug 2021 30 years Elme Sandy Springs (b) Georgia 17,423,000 85,817,000 ( 44,915,000 ) 10,435,000 47,890,000 58,325,000 135,000 ( 3,690,000 ) 1972 Feb 2022 30 years Elme Marietta (b) Georgia 19,019,000 83,319,000 ( 41,271,000 ) 11,967,000 49,100,000 61,067,000 226,000 ( 2,591,000 ) 1975 May 2022 30 years $ 143,434,000 $ 511,439,000 $ 56,743,000 $ 112,569,000 $ 599,047,000 $ 711,616,000 $ 189,407,000 $ 201,716,000 Office Building Watergate 600 (b) Washington, DC $ 45,981,000 $ 78,325,000 $ ( 66,835,000 ) $ 20,873,000 $ 36,598,000 $ 57,471,000 $ 904,000 $( 4,067,000 ) 1972 Apr 2017 30 years Total $ 189,415,000 $ 589,764,000 $ ( 10,092,000 ) $ 133,442,000 $ 635,645,000 $ 769,087,000 $ 190,311,000 $ 197,649,000 ______________________________ a) The purchase cost of real estate investments has been divided between land and buildings and improvements on the basis of management’s determination of the fair values. b) During 2025, we recognized an aggregate impairment charge of $ 81.4 million and $ 28.6 million, respectively, within our Residential segment in Atlanta metro region and Watergate 600 in order to reduce its carrying values to its estimated fair values, primarily due to a revision of their estimated holding periods. c) At December 31, 2025, total land, buildings and improvements are carried at $ 0.7 billion for federal income tax purposes. d) The useful life shown is for the main structure.
Real Estate Impairment During the ten months-ended October 31, 2025, the Company recognized an aggregate impairment charge of $ 111.7 million related to several properties not included as part of the Portfolio Sale Transaction.
Excess cash remaining after the sale of Loan Collateral and the payment of a release price paid to the lender to release the lien of its mortgages shall be deposited with the Lender as additional cash collateral unless certain conditions, including a minimum balance of $ 10 million in the shortfall account, certain debt yield requirements, and no events of default, are met, in which case such excess cash may be disbursed to the Company for distribution.
No longer disclosed
For example, we recognized an impairment in the third quarter of 2023 on our sole remaining office property, Watergate 600.
These provisions include: • a provision where a corporation is not permitted to engage in any business combination with any “interested stockholder,” defined as any holder or affiliate of any holder of 10% or more of the corporation’s stock, for a period of five years after that holder becomes an “interested stockholder,” and • a provision where the voting rights of “control shares” acquired in a “control share acquisition,” as defined in the MGCL, may be restricted, such that the “control shares” have no voting rights, except to the extent approved by a vote of holders of two-thirds of the common shares entitled to vote on the matter.
Any potential transaction may be dependent on a number of factors that are beyond our control, for example, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of any necessary financing on reasonable terms.
Investments in such entities may involve risks not present when a third party is not involved, including the possibility that the other parties to these investments may have business interest or goals that are inconsistent with our own, including for example, whether to sell or retain joint venture properties or interests, become bankrupt or fail to fund their share of required capital contributions.
For example, one of our vendors, RealPage, is currently involved in lawsuits alleging that RealPage and others conspired to artificially inflate the prices of multifamily residential real estate above competitive levels.
In addition, the process may be time consuming and disruptive to our business operations, could divert the attention of management and the Board from our business, could negatively impact our ability to attract, retain and motivate key employees, and could expose us to potential litigation in connection with this process or any resulting transaction.
Any of the following factors, among others, may adversely affect the cash flow generated by our apartment communities and our ability to make distributions to our shareholders: • a decrease in demand for rental properties over home ownership resulting from, among other reasons, resident preferences, decreases in housing prices and mortgage interest rates, government programs to promote home ownership or subsidize rental housing, employment growth and household formation; • competition with other housing alternatives, including owner occupied single and residential apartment homes; • a return of the availability of low-interest mortgages or the availability of mortgages requiring little or no down payment for single family home buyers; • declines in the financial condition of our residents and their ability to pay rent; • significant job losses in the regions in which we operate; • changes in interest rates and availability of financing; • economic and market conditions including: migration to areas outside of major metropolitan areas where our portfolio is concentrated, new construction and excess inventory of residential and owned housing/condominiums, increasing portions of owned housing/condominium stock being converted to rental use; • the effects of government regulation in the real estate industry; • our ability to integrate new technological innovations (including artificial intelligence) into our marketing and properties to attract residents; • our ability to attract and retain qualified personnel with knowledge of the market; and • political conditions, civil disturbances, earthquakes and other natural disasters, terrorist acts or acts of war and actual or anticipated geopolitical instability.
Additionally, a decline in the market value of real estate in the regions in which we operate may result in the carrying value of certain real estate assets exceeding their fair value, which has recently and in the future may require us to recognize an impairment to those assets.
In addition, our acquisition activities and results may be exposed to the following risks: • we may have difficulty finding properties that are consistent with our strategies and meet our standards; • we may be unable to finance acquisitions on favorable terms or at all; • the occupancy levels, lease-up timing and rental rates of acquired properties may not meet our expectations; • even if we enter into an acquisition agreement for a property, we may be unable to complete that acquisition after making a non-refundable deposit and incurring certain other acquisition-related costs; • we may be unable to acquire a desired property at all or at the desired purchase price because of competition from other real estate investors, including publicly traded real estate investment trusts, institutional investment funds and private investors; • the timing of property acquisitions may lag the timing of property dispositions, leading to periods of time where projects’ proceeds are not invested as profitably as we desire; • we may fail to secure required zoning, occupancy or other governmental permits and authorizations or applicable zoning and land use laws may change; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • new acquisitions and developments may fail to perform as expected or we may underestimate costs necessary to bring an acquired property up to our standards; • we may assume liabilities for undisclosed environmental contamination; • our estimates of capital expenditures required for an acquired property, including the costs of repositioning or redeveloping, may be inaccurate and the acquired properties may fail to perform as we expected in analyzing our investments; and • we could experience a decline in value of the acquired assets after acquisition.
Various environmental laws impose liability on a current or former owner or operator of real property for investigation or cleanup of hazardous substances or petroleum products at, on, under or migrating from our currently or formerly owned or leased real property, regardless of whether or not we knew of, or caused, the presence or release of such substances or products.
Any such cybersecurity incident, including those impacting personal information, may result in disruption of our operations, material harm to our financial condition, cash flows and the market price of our common shares, misappropriation of assets, compromise or corruption of confidential information (including personal information) collected in the course of conducting our business, liability for impacted information or assets, increased cybersecurity protection and insurance costs, regulatory scrutiny or enforcement, litigation and damage to our stakeholder relationships.
We have identified and expect to continue to identify cyber-attacks and cybersecurity incidents affecting our systems and those of third parties, but none of the cyber-attacks and incidents we have identified to date has had a material impact on our business or operations.