Elme Communities DEFM14A, filed Sep 24, 2025

Elme Communities (ELME)

DEFM14A 2025-09-24

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	Date:			October 30, 2025.
	Time:			8:30 a.m., Eastern Time.
	Place:			The Special Meeting will be held in virtual-only format via live webcast at meetnow.global/M9FJR5R. There is no physical location for the Special Meeting.
	Record Date:			The Board of Trustees of the Company (the “Board”) has fixed the close of business on September 10, 2025, as the record date for determining holders of common shares of beneficial interest, par value $0.01 per share (the “common shares”) entitled to notice of, and to vote at, the Special Meeting or at any adjournment or postponement thereof.
	Items of Business:			1. To consider and vote on a proposal to approve the sale of 19 multifamily properties of the Company to an affiliate of Cortland Partners, LLC (“Cortland”), subject to and in accordance with the terms of the Purchase and Sale Agreement (the “Purchase Agreement”), dated as of August 1, 2025, by and among the Company, WashREIT OP LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Seller”), Echo Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Seller, CEVF VI Capitol Holdings, LLC, a Delaware limited liability company and an affiliate of Cortland and CEVF VI Co-Invest I Venture, LLC, a Delaware limited liability company and an affiliate of Cortland (the “Portfolio Sale Transaction”), and the other transactions contemplated by the Purchase Agreement (the “Portfolio Sale Proposal”); 2. To consider and vote on a proposal to approve the Plan of Sale and Liquidation of the Company (the “Plan of Sale and Liquidation”) providing for the sale or disposition of all the Company’s assets (whether or not the Portfolio Sale Proposal is approved or the Portfolio Sale Transaction closes), winding down the Company’s business and affairs and terminating the Company’s existence by voluntary dissolution (the “Liquidation Proposal”); 3. To consider and vote on a proposal to approve, on a non-binding, advisory basis, the specified compensation that may be paid or become payable to our named executive officers in connection with the Portfolio Sale Transaction and the Plan of Sale and Liquidation (the “Compensation Proposal”); and 4. To consider and vote on a proposal to approve one or more adjournments of the Special Meeting, solely with respect to the proposals for which insufficient votes to approve such proposals were cast, to a later date or dates, if necessary, appropriate or advisable to solicit additional proxies (the “Adjournment Proposal”).

	Recommendations of the Board:			After careful consideration, the Board, based in part upon the unanimous recommendation of the Transaction Committee of the Board, has unanimously determined that the Purchase Agreement and the transactions contemplated by the Purchase Agreement, including the Portfolio Sale Transaction, and the Plan of Sale and Liquidation are approved, advisable and in the best interests of our shareholders. The Board has directed that the Portfolio Sale Proposal, the Liquidation Proposal, the Compensation Proposal and the Adjournment Proposal be submitted for consideration at the Special Meeting. The Board unanimously recommends that you vote “FOR” approval of the Portfolio Sale Proposal, “FOR” approval of the Liquidation Proposal, “FOR” approval of the Compensation Proposal and “FOR” approval of the Adjournment Proposal.
	Voting:			Your vote is very important, regardless of the number of common shares you own. Whether or not you plan to attend the virtual Special Meeting, please submit a proxy or, if you hold your shares in “street name”, submit voting instructions to have your common shares voted as promptly as possible to make sure that your common shares are represented at the Special Meeting. Properly executed proxy cards with no instructions indicated on the proxy card with respect to any proposal listed on the proxy card will be voted “FOR” approval of the Portfolio Sale Proposal, “FOR” approval of the Liquidation Proposal, “FOR” approval of the Compensation Proposal and “FOR” approval of the Adjournment Proposal, as applicable. If you do not vote on the Portfolio Sale Proposal or the Liquidation Proposal, this will have the same effect as a vote by you “AGAINST” the approval of these proposals, but will have no effect on the Compensation Proposal or the Adjournment Proposal, other than in connection with determining whether a quorum is present. We encourage you to cast your vote as soon as possible. If you have any questions or require any assistance voting your shares, please contact our proxy solicitor, Sodali & Co at +1 (800) 662-5200 (toll-free in North America) or at +1 (203) 658-9400.

	QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE PROPOSED TRANSACTIONS					1
	Certain Defined Terms					1
	SUMMARY					16
	The Company					16
	The Proposed Transactions					16
	The Purchase Agreement					16
	Plan of Sale and Liquidation					19
	Risk Factors					22
	Special Meeting					22
	Record Date, Notice and Quorum					22
	Required Vote					22
	Virtual Attendance					23
	Authorizing a Proxy and Voting					23
	Revocation of Proxies and Voting Instructions					24
	Board Recommendation and Reasons for the Proposed Transactions					24
	Opinion of Goldman Sachs & Co. LLC					25
	Interests of Our Trustees and Executive Officers					25
	Financing Arrangements					25
	Regulatory Matters					26
	Material U.S. Federal Income Tax Consequences					26
	No Appraisal or Dissenters’ Rights					26
	RISK FACTORS					27
	Risks Related to the Proposed Transactions Generally					27
	Additional Risks Related to the Portfolio Sale Transaction					30
	Additional Risks Related to the Plan of Sale and Liquidation					32
	Risks Related to Taxes and our Status as a REIT					36
	CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS					39
	THE SPECIAL MEETING					41
	Date, Time and Place of the Special Meeting					41
	Purpose					41
	Record Date, Notice and Quorum					41
	Required Vote					41
	Virtual Attendance					42
	Authorizing a Proxy and Voting					42
	Shares Held in “Street Name”; Broker Non-Votes					43
	Revocation of Proxies and Voting Instructions					43
	Adjournment and Postponement; Other Procedural Matters					44
	Solicitation of Proxies					44
	Assistance					45
	THE PROPOSED TRANSACTIONS					46
	General					46

	Background of the Proposed Transactions					46
	Board Recommendation and Reasons for the Proposed Transactions					57
	Opinion of Goldman Sachs & Co. LLC					63
	Certain Unaudited Prospective Financial Information					68
	Material U.S. Federal Income Tax Consequences					71
	Interests of Our Trustees and Executive Officers					79
	Golden Parachute Compensation					83
	Regulatory Matters					86
	Financing Arrangements					86
	Marketing and Sale Process for the Remaining Company Assets					87
	THE PURCHASE AGREEMENT					88
	The Portfolio Sale Transaction					88
	Parties to the Purchase Agreement					89
	Purchase Price					89
	Closing					91
	Representations and Warranties of the Company Parties					91
	Representations and Warranties of the Buyer Parties					92
	Conduct and Transaction of Business Prior to Closing					92
	Conditions to Closing					98
	Termination of the Purchase Agreement					100
	Buyer Financing Commitments; Limited Guarantee					102
	Specific Performance					102
	No Appraisal or Dissenters’ Rights					102
	THE PLAN OF SALE AND LIQUIDATION					103
	Overview					103
	Implementation of the Plan of Sale and Liquidation					104
	Liquidating Trust					104
	Amount and Timing of Distributions to our Shareholders as a Result of the Liquidation					105
	Delisting of Common Shares					109
	Termination of the Registration of Common Shares					110
	Cancellation of Common Shares					110
	Termination of Existence of the Company					110
	Abandonment or Modification of Plan of Sale and Liquidation					110
	Accounting Treatment of Liquidation					110
	No Appraisal or Dissenters’ Rights					110
	PROPOSAL ONE: PORTFOLIO SALE PROPOSAL					111
	General					111
	Recommendation of the Board					111
	PROPOSAL TWO: LIQUIDATION PROPOSAL					112
	General					112
	Recommendation of the Board					112
	PROPOSAL THREE: COMPENSATION PROPOSAL					113
	General					113
	Recommendation of the Board					113

	PROPOSAL FOUR: ADJOURNMENT PROPOSAL					114
	General					114
	Recommendation of the Board					114
	SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT					115
	SHAREHOLDER PROPOSALS					117
	HOUSEHOLDING					117
	NO OTHER MATTERS					117
	WHERE YOU CAN FIND MORE INFORMATION					117
	APPENDIX A — Purchase Agreement					A-1
	APPENDIX B — Plan of Sale and Liquidation					B-1
	APPENDIX C — Opinion of Goldman Sachs & Co. LLC					C-1

Sale Portfolio	2025E			2026E			2027E			2028E			2029E
Real Estate Rental Revenue		$	152.8		$	159.1		$	166.2		$	174.4		$	181.3
Direct Real Estate Operating Expenses			54.6			57.3			60.2			62.6			64.9
Net Operating Income (“NOI”)(1)			98.1			101.7			106.0			111.8			116.4
Property Management Expenses(2)			5.8			6.0			6.3			6.6			6.9
General and Administrative Expense (Allocated)(3)			17.4			15.5			15.0			15.5			15.9
Unlevered Free Cash Flow(4)			44.4			57.6			59.0			67.1			71.2

Name	Number of Common Shares(1)		Estimated Total Distribution for Common Shares
Executive Officers
Paul T. McDermott		669,760		$	11,961,914
Steve M. Freishtat		51,000		$	910,860
Tiffany M. Butcher		57,527		$	1,027,432
Susan L. Gerock		73,729		$	1,316,800
W. Drew Hammond		60,444		$	1,079,530
Trustees
Jennifer S. Banner		31,135		$	556,071
Benjamin S. Butcher		93,570		$	1,671,160
Susan Carras		11,136		$	198,889
Ellen M. Goitia		44,968		$	803,128
Thomas H. Nolan, Jr.		56,887		$	1,016,002
Ron D. Sturzenegger		1,494		$	26,683
Vice Adm. Anthony L. Winns (RET.)		70,252		$	1,254,701

Name	Cash ($)(1)			Equity ($)(2)			Pension/ NQDC ($)(3)			Perquisites/ benefits ($)(4)			Total ($)
Paul McDermott		$	5,774,705		$	9,976,951		$	2,590,872		$	53,138		$	18,395,666
Steve Freishtat			1,357,029			1,638,064			137,022			53,138			3,185,253
Tiffany Butcher			1,989,293			2,925,485			154,800			18,324			5,087,902
Susan Gerock			1,248,250			1,637,474			181,563			37,563			3,104,850
W. Drew Hammond			1,177,434			1,179,313			125,179			18,403			2,500,329

Name	Cash Severance Amount ($)			Pro-rated STIP Amount ($)			Total Cash ($)
Paul McDermott		$	4,997,250		$	777,455		$	5,774,705
Steve Freishtat			1,137,500			219,529			1,357,029
Tiffany Butcher			1,640,500			348,793			1,989,293
Susan Gerock			1,063,860			184,390			1,248,250
W. Drew Hammond			1,008,000			169,434			1,177,434

Name	Time-Vesting Restricted Stock Acceleration (outside of LTIP)			Time-Vesting Restricted Stock Acceleration pursuant to LTIP			2023 Performance LTIP Award(5)			2024 Performance LTIP Award(5)			2025 Performance LTIP Award(5)
Paul McDermott		$	1,786,000		$	1,926,594		$	1,094,389		$	2,584,984		$	2,584,984
Steve Freishtat			—			448,465			225,589			482,005			482,005
Tiffany Butcher			36,095			735,440			342,912			905,519			905,519
Susan Gerock			—			419,281			231,215			493,489			493,489
W. Drew Hammond			—			339,429			148,988			345,448			345,448

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Class
BlackRock, Inc. 50 Hudson Yards New York, NY 10001		15,983,403(1)		18.1%
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355		14,163,157(2)		16.1%
State Street Corporation 1 Congress Street, Suite 1 Boston, MA 02114		5,725,414(3)		6.5%

	PAGE
ARTICLE 1 DEFINITIONS		A-1
Section 1.1 Definitions		A-1
Section 1.2 Interpretation and Rules of Construction		A-9
ARTICLE 2 PURCHASE AND SALE; CLOSING		A-10
Section 2.1 Purchase and Sale		A-10
Section 2.2 Purchase Price		A-10
Section 2.3 Closing Date		A-11
Section 2.4 Documents to be Delivered at Closing		A-11
ARTICLE 3 CLOSING ADJUSTMENTS		A-12
Section 3.1 Prorations Generally		A-12
Section 3.2 Real Estate Taxes and Assessments		A-12
Section 3.3 Utilities		A-13
Section 3.4 Rents		A-13
Section 3.5 Estimates		A-13
Section 3.6 Closing Statements; Year-End Reconciliations; Percentage Rent Reconciliations		A-14
Section 3.7 Survival		A-14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY		A-14
Section 4.1 Organization and Qualification; Subsidiaries		A-15
Section 4.2 Organizational Documents		A-15
Section 4.3 Capital Structure		A-16
Section 4.4 Authority		A-16
Section 4.5 No Conflict; Required Filings and Consents		A-17
Section 4.6 Permits; Compliance with Law		A-18
Section 4.7 SEC Documents; Financial Statements		A-19
Section 4.8 Absence of Certain Changes or Events		A-20
Section 4.9 No Undisclosed Liabilities		A-20
Section 4.10 No Default		A-20
Section 4.11 Litigation		A-20
Section 4.12 Taxes		A-20
Section 4.13 Information Supplied		A-22
Section 4.14 Environmental Matters		A-22
Section 4.15 Properties		A-22
Section 4.16 Material Contracts		A-24
Section 4.17 Data Protection		A-25
Section 4.18 Insurance		A-25
Section 4.19 Opinion of Financial Advisor		A-26
Section 4.20 Approval Required		A-26
Section 4.21 Brokers		A-26
Section 4.22 Investment Company Act		A-26
Section 4.23 Takeover Statutes		A-26
Section 4.24 Labor and Employment		A-26

	PAGE
Section 4.25 Related Party Transactions		A-27
Section 4.26 No Other Representations and Warranties		A-27
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER PARTIES		A-28
Section 5.1 Organization and Qualification		A-28
Section 5.2 Authority		A-28
Section 5.3 No Conflict; Required Filings and Consents		A-29
Section 5.4 Litigation		A-29
Section 5.5 Information Supplied		A-29
Section 5.6 Brokers		A-29
Section 5.7 Sufficient Funds; Guarantee		A-30
Section 5.8 Solvency		A-31
Section 5.9 Absence of Certain Arrangements		A-31
Section 5.10 No Vote of Buyer Parent Equityholders		A-31
Section 5.11 Ownership of Company Common Shares		A-31
Section 5.12 Accredited Investor		A-31
Section 5.13 Interested Stockholder		A-32
Section 5.14 No Foreign Persons		A-32
Section 5.15 Acknowledgement of No Other Representations and Warranties		A-32
ARTICLE 6 COVENANTS RELATING TO CONDUCT OF BUSINESS		A-33
Section 6.1 Conduct of Business by Company		A-33
Section 6.2 Other Actions		A-36
Section 6.3 No Control of Business		A-36
ARTICLE 7 ADDITIONAL COVENANTS		A-37
Section 7.1 Preparation of the Proxy Statement; Shareholders Meeting		A-37
Section 7.2 Access to Information; Confidentiality		A-38
Section 7.3 No Solicitation; Competing Acquisition Proposals		A-39
Section 7.4 Public Announcements		A-43
Section 7.5 Appropriate Action; Consents; Filings		A-43
Section 7.6 Notification of Certain Matters		A-46
Section 7.7 Voting of Shares		A-47
Section 7.8 Takeover Statutes		A-47
Section 7.9 Subsidiaries		A-47
Section 7.10 Tax Matters		A-47
Section 7.11 Buyer Parent Financing		A-47
Section 7.12 Seller Parent Name and Marks		A-51
Section 7.13 Employee Matters		A-52
Section 7.14 Pre-Closing Reorganization Transactions		A-54
Section 7.15 Condominium Estoppels		A-55
Section 7.16 Casualty and Condemnation		A-55
Section 7.17 Seller Parent Indebtedness		A-55

	PAGE
ARTICLE 8 CONDITIONS		A-56
Section 8.1 Conditions to Each Party’s Obligations		A-56
Section 8.2 Conditions to Obligations of Buyer Parties		A-56
Section 8.3 Conditions to Obligations of the Company and Seller Parties		A-56
ARTICLE 9 TERMINATION AND FEES		A-57
Section 9.1 Termination		A-57
Section 9.2 Notice of Termination; Effect of Termination		A-58
Section 9.3 Fees and Expenses		A-59
Section 9.4 Payment of Amount or Expense		A-61
ARTICLE 10 GENERAL PROVISIONS		A-62
Section 10.1 Nonsurvival of Representations and Warranties and Certain Covenants		A-62
Section 10.2 Release		A-62
Section 10.3 Notices		A-62
Section 10.4 Severability		A-63
Section 10.5 Counterparts		A-63
Section 10.6 Entire Agreement; No Third-Party Beneficiaries		A-63
Section 10.7 Amendment		A-64
Section 10.8 Extension; Waiver		A-64
Section 10.9 Governing Law		A-64
Section 10.10 Consent to Jurisdiction		A-64
Section 10.11 Waiver of Jury Trial		A-65
Section 10.12 Assignment		A-65
Section 10.13 Specific Performance		A-65
Section 10.14 Authorship		A-67

Defined Terms			Location of Definition
Acceptable Confidentiality Agreement			Section 7.3(b)
Acquired Interests			Recitals
Agreement			Preamble
Allocation			Section 2.4(d)
Alternate Financing			Section 7.11(d)
Alternative Acquisition Agreement			Section 7.3(a)
Arlington COs			Section 7.5(d)
Assignment and Assumption of Company Interests			Section 2.4(a)(i)
Buyer			Preamble
Buyer Expenses			Section 9.3(c)
Buyer Parent			Preamble
Buyer Parties			Preamble
Buyer Terminating Breach			Section 9.1(d)(i)
Buyer Termination Fee			Section 9.3(d)
Chosen Courts			Section 10.10
Closing			Section 2.3
Closing Date			Section 2.3
Closing Statement			Section 2.4(a)(iii)
Company			Preamble

Defined Terms			Location of Definition
Company Disclosure Letter			Article 4
Company Insurance Policies			Section 4.18
Company Material Contract			Section 4.16(b)
Company Permits			Section 4.6(a)
Company Third Party			Section 4.15(g)
Company Title Insurance Policy(ies)			Section 4.15(h)
Competing Acquisition Proposal			Section 7.3(h)(i)
Condominium Estoppel			Section 7.15
Debt Commitment Letter			Section 5.7(b)
Debt Financing			Section 5.7(b)
Employee			Section 4.24(a)
Employee List			Section 7.13(a)
Employee List Criteria			Section 4.24(a)
Equity Funding			Section 5.7(b)
Equity Funding Letter			Section 5.7(b)
Equity Funding Source			Section 5.7(b)
Escrow Agent			Section 2.3
Existing Loan			Section 4.10
Financing Agreements			Section 7.11(a)
Financing Commitments			Section 5.7(b)
Financing Lenders			Section 5.7(b)
Financing Notice Event			Section 7.11(d)
Financing Sources			Section 5.7(b)
Financings			Section 5.7(b)
Guarantee			Recitals
Guarantor			Recitals
Hired Employee			Section 7.13(a)
Initial Termination Period			Section 9.3(b)
Inquiry			Section 7.3(a)
Interim Period			Section 6.1(a)
Labor Agreement			Section 4.24(b)
Leave of Absence Employees			Section 7.13(a)
Material Company Leases			Section 4.15(f)
MGCL			Section 4.23
New Commitment Letter			Section 7.11(d)
Notice of Change Period			Section 7.3(e)
Notice of Change of Recommendation			Section 7.3(e)
NYSE			Section 4.5(b)
Outside Date			Section 9.1(b)(i)
Party(ies)			Preamble
Payoff Indebtedness			Section 7.17
Payoff Letters			Section 7.17
Permitted DC Property Lien			Section 7.5(c)(iii)

Defined Terms			Location of Definition
Pre-Closing Reorganization			Recitals
Purchase Price			Section 2.2
Qualifying Income			Section 9.4(a)
Reorganization Expenses			Section 7.14
Replacement Employees			Section 6.1(b)(xii)
Scheduled Employee			Section 7.13(a)
Scheduled Employee Severance			Section 7.13(b)
Section 9.3 Amount			Section 9.4(a)
Seller			Preamble
Seller Affiliate Parties			Section 9.3(b)
Seller Parent			Preamble
Seller Parent Adverse Recommendation Change			Section 7.3(d)
Seller Parent Board			Recitals
Seller Parent Board Recommendation			Section 4.4(b)
Seller Parent Common Shares			Recitals
Seller Parent SEC Documents			Section 4.7(a)
Seller Parent Shareholder Approval			Section 4.20
Seller Parties			Preamble
Seller Terminating Breach			Section 9.1(c)(i)
Seller Termination Fee			Section 9.3(b)
Specified Capital Expenditures			Section 6.1(c)
Subsequent Closing			Section 7.5(c)(ii)(B)
Subsequent Outside Date			Section 7.5(c)(ii)(B)
Superior Acquisition Proposal			Section 7.3(h)(ii)
Takeover Statutes			Section 4.23
TOPA Notice			Section 7.5(c)
Transfer Taxes			Section 7.10
willful and material breach			Section 9.2