Elme Communities to Dissolve After $1.6B Multifamily Sale to Cortland

A DMV-area real estate investment trust is closing down and unloading the rest of its portfolio of multifamily properties.

Bethesda, Md.-based Elme Communities will sell 19 properties — 16 of which are in the DMV — to Cortland for $1.6 billion in a deal expected to close within the final quarter of this year. The REIT will subsequently sell or dispose of the remainder of its assets and formally dissolve within the next 12 months, the REIT announced on Monday. 

Elme, previously known as WashREIT, had at one time focused on office and retail properties before transitioning to multifamily assets in the mid-2010s. The company in 2021 sold off most of its remaining office assets to Brookfield for $766 million, and its retail assets to an undisclosed buyer for about $170 million. Yet market conditions have still apparently proven too arduous for Elme.

“Following a thorough board-led process, and despite our successful transformation into a focused multifamily platform with strong operating capabilities, market conditions have not allowed us to lower our cost of capital in a way that supports accretive growth,” Paul McDermott, Elme president and CEO, said in a statement. 

The 16 DMV-area assets included in the latest sale are Cascade at Landmark at 300 Yoakum Parkway in Alexandria, Va.; Clayborne at 820 South Columbus Street in Alexandria; Elme Alexandria at 205 Century Place in Alexandria; Bennett Park at 1601 Clarendon Boulevard in Arlington; Park Adams at 2000 North Adams Street in Arlington; The Maxwell at 4200 North Carlin Springs Road in Arlington; The Paramount at 1425 South Eads Street in Arlington; The Wellington at 1850 Columbia Pike in Arlington; Trove at 1201 South Ross Street in Arlington; Roosevelt Towers at 500 North Roosevelt Boulevard in Falls Church, Va.; Elme Dulles at 13690 Legacy Circle in Herndon, Va.; Elme Herndon at 2511 Farmcrest Drive in Herndon; Elme Leesburg at 86 Heritage Way NE in Leesburg, Va.; Elme Manassas at 10519 Lariat Lane in Manassas, Va.; The Ashby at McLean at 1350 Beverly Road in McLean, Va.; and Yale West at 443 New York Avenue NW in D.C.

The three other assets are in the Atlanta metro area: Elme Druid Hills at 2696 North Druid Hills Road in Atlanta; Elme Cumberland at 8 Cumberland Way SE in Smyrna; and Elme Eagles Landing at 860 Rock Quarry Road in Stockbridge.

The most notable of Elme’s remaining properties is Watergate 600, the 12-floor office component of D.C.’s infamous Watergate complex. The building is Elme’s sole office asset, and will be marketed for sale alongside nine other DMV and Georgia properties, separate from the Cortland deal, as part of Elme’s dissolution. 

News of the most recent sale is meanwhile just the latest major acquisition for Atlanta-based Cortland, which has become one of the largest owners of multifamily properties in the U.S. since its founding in 2005. Cortland in 2019, for example, became the largest apartment owner in Dallas with its $1.2 billion purchase of Pure Multifamily REIT and its 22 apartment buildings. The firm as of March owned and/or managed approximately 80,000 units across the U.S., according to CoStar. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.