Wolfe Research has started-off Multi-family Residential REIT Elme Communities (ELME, Financial) with a Peer Perform rating. In line with peer estimates in the apartment space, the company expects low single-digit increase in both 2025 and 2026.
2025 presents difficulties for the apartment sector mostly related to an increased supply pipeline, which could weigh down sector expansion. Wolfe Research, however, projects that as supply pressures relax, lease spreads would rise in 2026. Having said that, Elme might need several quarters for this development to show significant same-store revenue increase.
The apartment portfolio of Elme Communities is primarily focused in the D.C. Metro area and is among one of the top-performing markets with a robust rent increase for 2024. The corporation struggles in Atlanta, though, where bad debt and overabundance have made operations more challenging.
Although Elme's exposure to the high-performance D.C. market shows some promise, the sector-wide supply headwinds expected over the next two years cast a generally wary view. As the market starts to steady, investors will be looking to explore conditions for recovery in 2026.
