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While ELME’s update on liquidation activities covered the key commercial updates, a few updates from their quarterly report, which was released on July 31:
Net assets in liquidation at 2026 Q2 was $168m / $1.89 per share based on the contract prices for the 4 remaining properties ($418m) and liquidation costs in excess of receipts of $37m.
This is a couple cents ahead of the midpoint of their July 24th updated range of distributions per share of $1.74 - $1.94.
Assuming the contract prices for Riverside and the three other assets hold, their range of distributions per share imply net liquidation costs in excess of receipts of $50m at the low end and $32m at the high end.
This reflects a ~35% increase at the low end and ~12% decrease at the high end in net liquidation costs.
Management’s estimate for net liquidation costs in excess of receipts were revised up $5m in Q2.
Liquidation transaction costs were effectively unchanged.
Increase in G&A of $5.4m was largely offset by $4.8m of property income with the delta largely attributable to $1.2m of CAPEX and $3.2m of interest expense.
Overall the net liquidation cost estimate has increased by ~15% ($6.8m) to $50.4m compared to $43.6m in 2025 Q4.
Key remaining risks are:
Riverside contract - inspection period ends on August 20th with a September 14th target closing date
DC TOPA for Kenmore / 3801 Conn - current time line is end of 2026 but assumes no purchase rights are exercised or assigned to a party other than the contract buyer. ELME noted that the buyer of each DC property has commenced discussions with the property’s tenant association.
At $1.63, ELME trades at a ~11% discount to the midpoint of management’s distribution range of $1.84 and ~6% to the low end of $1.74. A slightly higher 14% discount to the $1.89 per share net assets in liquidation.
Worth a reminder that management have had to revise their range down three times already in this process…
That being said, a decent amount of risk is being priced in here and the midpoint of the range does not appear to require heroic assumptions. Achieving the midpoint would deliver a ~13% total return, 17% - 26% annualized based on a 6 - 9 month timeline.
