Elme Communities 8-K

What Happened

• Elme Communities (ELME) filed an 8‑K on Jan 23, 2026 announcing board changes, executive retention packages and an update on its wind‑down under the shareholder‑approved Plan of Sale and Liquidation. Trustees Ellen M. Goitia and Ron D. Sturzenegger notified the Board on Jan 21, 2026 that they will resign after the Trust files its Form 10‑K for year ended Dec 31, 2025.
• The Board approved retention agreements (entered Jan 22, 2026) for four executives — Paul McDermott (CEO), Tiffany Butcher, W. Drew Hammond and Steven Freishtat — to cover the period through completion of remaining asset sales. The filing also notes that Mr. Freishtat will step down as CFO when the Form 10‑K is filed and Mr. Hammond will be appointed Executive VP & CFO thereafter.
• Elme provided a liquidation update (press release dated Jan 23, 2026): it has signed two purchase-and-sale agreements (no longer subject to inspection) expected to sell 3 of 10 remaining properties for aggregate gross proceeds of about $155 million and refreshed estimates of additional liquidating distributions to shareholders.

Key Details

• Retention Payments if officers remain through their retention dates: Paul McDermott $5,062,631; Steven Freishtat $1,202,639; W. Drew Hammond $1,029,484; Tiffany Butcher $1,661,939. McDermott’s payment will be paid in 36 monthly installments; others in lump sum.
• New Short‑Term Incentive Plan (New STIP), effective Nov 13, 2025, ties awards to (i) additional liquidating distributions (40%), (ii) timing of remaining asset sales (40%) and (iii) operational/implementation metrics (20%). Target additional distribution per share = $3.20; timing target = July 31, 2026. Award opportunities expressed as % of base salary (CEO target 90% of base, EVP 75%, SVP 60%).
• CFO change: Steven Freishtat will leave at the 10‑K filing date; W. Drew Hammond (age 52) will become Executive VP & CFO and receive a base salary increase to $350,000 on the appointment date.
• Liquidation assumptions: estimated additional liquidating distributions based on updated sale price expectations, transaction and debt costs (Term Loan = $520M), reserves, operating and wind‑down costs, and ~88.9 million fully diluted shares as of Dec 31, 2025. Sales of the remaining ten properties are assumed completed by mid‑2026; estimates are forward‑looking and may change.

Why It Matters

• For investors, the filing clarifies management continuity and costs tied to winding down the Trust: significant, pre‑agreed retention payouts and a new incentive plan increase near‑term cash obligations and are factored into Elme’s estimated liquidating distributions.
• The sale update (3 properties for ~$155M, two contracts signed) and the refreshed distribution ranges give the Board’s current view of proceeds and timing, but Elme warns these are estimates subject to market conditions, loan covenants, transaction costs and other risks. Actual additional liquidating distributions and timing remain uncertain and will be determined by the Board.