ELME provided an update on their liquidation along with filing their 10-Q.

The bad:

• They reduced their range for estimated liquidation distribution proceeds to $2.07 - $2.35 per share from $2.35 - $2.80 per share (-14% at the midpoint)

• Net assets in liquidation declined to $2.29 per share from $2.69 per share (-15%)

• The biggest driver of the delta looks like deep underperformance of 3801 Connecticut Ave & Kenmore - their two old, DC proper assets - vs. their fair value estimates (and also my valuation estimates). The contract price looks to reflect ~$160k per unit and a mid-8% cap rate. I imagine in addition to a weaker DC market, there’s some deferred maintenance issues here affecting pricing - always a risk with these old, 1950s vintage apartment buildings.

• They also saw a small $1.8m increase in their estimated liquidation costs in excess of income. A reminder that these cost estimates always go one way - up!

The good:

• They sold an additional property (Germantown) and placed three more under contract (Riverside, 3801 Connecticut Ave, and Kenmore), which combined with Elme Watkins Mill, which remains under contract from Q4 2025, leaves just one property still in its sales process - Elme Bethesda.

• Pricing on Germantown and Riverside were actually pretty good - $245k and $230 per unit respectively, within 5% of management’s 2025 Q4 fair value estimate.

• Germantown actually beat my NAV estimate by ~12% and appears to reflect a ~6% cap rate, which provides a useful comparable for the one remaining property in Bethesda

More on the RIverside Apartments sale contract:

• Riverside is under contract to the Beitel Group, which is the family office of a family that’s made their money in multifamily real estate.

• The inspection period is through June 4th with target closing date of July 6th with $1.5m earnest money deposit due 2 days after contract was signed (May 8th) and $3.0m due at the end of the inspection period.

• Given the small earnest money deposit, the fact that we’re still early in the inspection period, and that the buyer is a savvy multifamily operator who will rely on debt financing to close, this isn’t yet a done deal but they will have done their due diligence and hopefully know what they are getting into.

With all but one property now under contract (albeit at prices that underperformed management and my NLV estimates) investors are left with significantly less upside to NLV but also uncertainty around that estimate.

I estimate NLV of $2.25 - $2.30 per share based on the contract prices for the five assets sold or U/C and $250k - $300k per unit for Elme Bethesda (a ~5.5% - 5.5% cap rate and 5% - 15% discount to managements fair value estimate at 2025 Q4).

This is roughly in-line with the top-half of management’s estimated liquidation range and below current net assets in liquidation of ~$2.30 per share.

Management continue to target getting the remaining properties under contract and sold by early Q3 2026. They are incentivized to liquidate by the end of July by their incentive payment targets.

This investment will definitely underperform my initial underwriting as the discount / margin of safety has been eaten up by the DC apartment underperformance.

The big remaining risk to watch is if the Riverside Apartments contract falls out. I think selling Elme Bethesda should be fairly straightforward around a 6% cap (famous last words).

Barring any additional surprises, at the current share price of ~$2.05, a 5% - 10% discount to NLV, this liquidation should yield a very mediocre total return but decent annualized return (~12% - ~24%).