Elme Communities (ELME) Earnings Call Transcript & Summary

Welcome to the Washington Real Estate Investment Trust's Annual Meeting of Shareholders. Please note that today's meeting is being recorded. [Operator Instructions] It is now my pleasure to turn today's meeting over to Ed Civera, the company's Lead Independent Trustee. Mr. Civera, the floor is yours.

Thank you. Good morning, and welcome to the 2021 Annual Meeting of Shareholders for Washington Real Estate Investment Trust. I am Ed Civera, the company's Lead Independent Trustee, and I will act as the Chairman of this meeting. I now call to order the 2021 Annual Meeting. Today's virtual-only meeting is a live video webcast. We hope that this virtual meeting will maximize the participation of our shareholders regardless of their location. This technology enables us to reach a larger audience while containing our costs. Thank you for your participation. I call your attention to the Rules of Conduct which are available in the Files section of the lower left-hand of the screen. If you need a copy of the annual report or the proxy statement, the links are provided online. Taryn Fielder, WashREIT's General Counsel and Corporate Secretary, will act as Inspector of Election. She has already taken the oath as Inspector of Election which will be filed with the minutes of the meeting. If at any time you experience technical issues related to the participation in this meeting, please call Computershare's support team at 1 (888) 724-2416. This contact information is also available on the virtual meeting website and in the rules of the meeting. As a reminder, this meeting is for shareholders and invitees only. I'd like to take a few minutes to recognize the members of our Board of Trustees. Ben Butcher is the CEO, President and Chairman of the Board of STAG Industrial, Inc, a publicly traded REIT specializing in industrial properties. Bill Byrnes is the retired Chairman of the Board of Directors of CapitalSource Inc. a former -- and a former Managing Director and Head of the financial institution's investment banking Group with Alex, Brown & Sons. Ellen Goitia is a CPA and the former partner in charge of KPMG's Chesapeake Business Unit audit practice. Ellen is also the Chair of our Audit Committee. Paul McDermott is the Chairman of the Board and CEO of WashREIT. We will hear more from Paul later in the meeting and attendees will have an opportunity to ask him questions. Tom Nolan is the former Chairman and CEO and President of Spirit Realty Capital, Inc. Tom is also the Chair of our Compensation Committee. Andy Winns is the President, Latin America, Africa region at Lockheed Martin Corporation and a retired Vice Admiral in the United States Navy. Andy is also the Chair of our Corporate Governance and Nominating Committee. And as for myself, I am the retired Chairman of the Board of Catalyst Health Solutions, Inc. and the former Chief Operating Officer and Co-Chief Executive Officer of United Payors & Providers. Each of the current trustees, including myself, have been nominated for another year-long term on the Board of Trustees. Finally, I'd like to acknowledge the participation of WashREIT's Chief Financial Officer, Steve Riffee, as well as Jim Sexton of Ernst & Young LLP, the auditor that the Audit Committee has appointed to serve as the company's independent registered public accounting firm for the year ending December 31, 2021. Each of Steve and Jim are available to answer any appropriate questions. Taryn is acting as Secretary for this meeting and will start with some initial matters. Taryn, please confirm that a quorum is present, in person or by proxy, before proceeding to the introductory matters and commencement of voting. Ms. Fielder.

Thank you, Ed. At least a majority of all of the votes entitled to be cast are represented at this virtual meeting, either in person or by proxy. And therefore, a quorum is present. Our presentation today will contain financial measures, such as core FFO and NOI, that are non-GAAP measures, and we have provided reconciliations to those measures in our materials on our website at www.washreit.com. Today's presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act that involve risks, uncertainties and other factors that are detailed from time to time in our 10-K and other filings with the SEC. We assume no obligation to update forward-looking statements. I will now describe the proposals to be voted upon. Proposal 1 is the election of Ben Butcher, Bill Byrnes, Ed Civera, Ellen Goitia, Paul McDermott, Tom Nolan and Andy Winns as continuing members of the Board of Trustees, and each of the foregoing nominees will serve until the 2022 Annual Meeting of Shareholders. Proposal 2 is to approve by advisory and nonbinding vote our executive compensation. Proposal 3 is the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021. A copy of the notice, proxy statement with these proposals and related annual report are submitted to this meeting and available for review. Now before shareholders vote on these proposals, we will answer any questions submitted prior to or during today's meeting that relate to the proposals described in the proxy statement. There will be a Q&A opportunity later with regard to company matters. Ed, I can confirm that there have not been any questions submitted with respect to the proposals. We now call for the vote on proposals 1, 2 and 3, each as described in the proxy statement. All persons acting as proxies or shareholders who have not already voted should submit their proxies or ballots at this time. Shareholders who have already voted by proxy need not cast ballots in the voting today unless they wish to change the vote on their proxies. The polls are now open. If you properly registered to attend this virtual meeting and have not already voted or wish to change any of your votes, you may do so now by clicking on the link provided. If you have already voted and do not want to change your vote, no further action is necessary. We will hold the polls open during the CEO's remarks. You may submit questions online by clicking on the dialogue icon in the upper right corner of your meeting center screen. Paul, you have the floor.

Thank you, Taryn, and good morning, everyone. First and foremost, we hope that everyone is safe and healthy as we progress further into the recovery phase. Today, I will provide a recap of 2020 and an update on where we stand as the company continues to rebound from the global pandemic. Given that we are using a virtual meeting format with audio only, I encourage you to review our most recent investor presentation, which can be found on our website, www.washreit.com under the Investors tab. Here, you can find a detailed overview of our investment strategy as well as information about recent collections and COVID-19 management strategies. 2020 defined our strength as a company and reaffirmed our research-led investment strategy against the backdrop of one of the most challenging operating environments in recent history. We are proud of what we achieved, including stabilizing our operating fundamentals while maintaining and preserving future growth drivers, delivering our WashREIT-led multifamily development, executing our inaugural Green Bond and accelerating key environmental and social initiatives. Across 2020, we delivered the both phases of our WashREIT-led, ground-up multifamily development. Trove consists of 401 units constructed on-site at The Wellington, illustrating our succession -- successful execution of a covered land play in a submarket with limited supply. Trove continues to lease up with increasing momentum, reaching 63% leased this week and remains on track to stabilize in the first quarter of 2022. Amid the uncertainty that dominated the capital markets, we took several steps to further strengthen our balance sheet and increase our operational flexibility, putting us in a stronger position as we continue through the recovery phase of the pandemic. First, we ensured that we had ample liquidity at the onset of the pandemic by entering into a $150 million term loan with extension rights. Second, we paid off our bonds maturing in 2020 and closed a $350 million 10-year Green Bond, which we used to pay off outstanding term loans. These actions address all of our debt maturities through the fourth quarter of 2022 and extended our debt maturity ladder. Third, we fully unencumbered the balance sheet, allowing us optimal flexibility as we continue to allocate capital to multifamily. And finally, We increased our balance sheet flexibility heading into 2021 with our strategic office asset sales, which eliminated our single-tenant risk. We ended the year with nearly all of our $700 million line of credit undrawn and fully available as liquidity. As our local economy reopens, Our primary focus continues to center around the health and safety of our residents, tenants, employees and their families. Across 2020, WashREIT created and implemented a comprehensive reentry plan to mitigate the spread of COVID-19 at our properties. We work diligently with tenants and residents who have been financially impacted by COVID-19 to arrange deferral agreements that support their financial position and cash flow needs while meeting our long-term leasing holds. There is no doubt that 2020 was a difficult year. However, we adjusted to the new demands of today's operating environment and have taken swift and deliberate action to protect and support our residents and tenants. I could not be more proud of the dedication shown by the WashREIT team during this challenging period. Furthermore, these times have highlighted the importance of social fairness, equity and justice, and our company has responded with a refocused commitment to improving diversity, inclusion and belonging within our company and our community and creating long-lasting, positive change. As the pandemic and events of 2020 further shed light on social inequalities, WashREIT reaffirmed its efforts to create an inclusive culture where diversity and differences are valued. We mobilized and established the WashREIT Diversity, Equity and Inclusion Belonging Council to oversee our efforts. In its first year, the DEIB Council engaged an external D&I consultant to facilitate company-wide DEIB training and goal-setting, initiated targeted recruitment planning and created employee speaker and awareness programs. Additionally, we joined the CEO Action for Diversity & Inclusion Initiative to memorialize our commitment to create a more inclusive workplace. We will continue to promote a workplace that engages the full potential of all individuals and where equity is a core value. We are committed to advancing our environmental, social and corporate governance objectives in ways that best serve to protect our portfolio and our stakeholders as superior ESG performance and effective ESG risk management improve our long-term value proposition. During 2020, we enhanced our approach to climate risk management by conducting property-level climate risk assessments and aligned our disclosure of fiscal and transition climate risks and opportunities with the Task Force on Climate-Related Financial Disclosures' recommendations in our 2020 ESG Report. We improved our GRESB score nearly every year since we began responding to GRESB in 2014. We earned a Green Star rating for the fifth year in a row and earned the top disclosure score from GRESB in 2020. Additionally, we were honored to be named the Best Corporate Responsibility Program in D.C. and Maryland by NAIOP in 2020. This award recognized our robust ESG program, including a wide range of recently implemented sustainability projects and our demonstrated commitment of giving back to our local communities. Looking forward, we are focused on pursuing opportunities as part of the WashREIT transformation. We continue to believe that transformation towards multifamily is in the best long-term interest of WashREIT and our shareholders. This pandemic has reaffirmed our commitment to, and the direction of, our research-driven multifamily investment strategy. Our investment process includes an extensive evaluation of a wide range of ROI drivers, using a dynamic proprietary system to evaluate investment performance metrics at both the market level and submarket level. We plan to continue to enhance and broaden the scope of our research as we evaluate and pursue opportunities for further transformation. All in all, We are certain of the strength of our organization and confident in our ability to deliver long-term value creation through our research-driven strategies.

Thank you, Paul. We will now conclude the voting matters and announce the results. The polls are now closed. As to Proposal 1. Mr. Butcher, Mr. Byrnes, Mr. Civera, Ms. Goitia, Mr. McDermott, Mr. Nolan and Mr. Winns have each received the affirmative vote of more than 92% of the votes cast by shareholders on the matter. Therefore, each nominee has been duly elected to serve as a trustee until the 2022 Annual Meeting of Shareholders. Proposal 2, the advisory and nonbinding vote on our executive compensation, has received the favorable vote of more than 97% of the votes cast by shareholders on the matter. Therefore, this proposal has been approved. Proposal 3, ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, has received a favorable vote of more than 99% of the votes cast by shareholders on the matter. Therefore, this proposal has been approved. A final report of the tabulation of votes cast will be available online in the next few days. I can confirm that there have not been any questions submitted. So Ed, I'll turn the call back over to you.

Thank you, Taryn, and thank you, ladies and gentlemen. There being no further business to be addressed at this meeting, the meeting is hereby adjourned. I'd like to thank you all for attending.

This concludes the meeting, you may now disconnect.