Elme Communities — financial distress indicators
Financial-health summary
Elme Communities's reported numbers place it in the 'Weak' financial-health band (distress score 57/100). The main indicators are losses in each of the last 3 years, distress language in recent news and material debt with no ebitda. Independently, the Ohlson accounting model puts its 1-year failure probability at 85% and the market-implied (Merton) default probability is 14.1%. In its favour: operating cash flow is positive over the latest 12 months.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
4 severe and 0 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Debt is 55% of assets while EBITDA is not positive.
With no operating earnings, repayment depends entirely on asset sales or fresh capital.
O-score 1.77 → model probability 85%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Merton distance-to-default 1.07 σ → PD 14.1%.
Investment-grade issuers typically have 1-year PD well below 1%.
Operating margin fell from -10% to -59% in two years.
Sharp margin compression signals loss of pricing power or cost control.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Operating cash flow is positive over the latest 12 months.
- Strong current ratio (8.32).
📰 Recent news scan
- liquidationElme Communities Wraps Liquidation With 3 D.C.-Area SalesYahoo Finance · 2026-10-01
- liquidationElme completes liquidationYahoo Finance · 2026-09-30
- delist, liquidationElme Communities Provides Update On Liquidation ActivitiesYahoo Finance · 2026-09-29
- liquidationElme Communities shares climb after updating liquidation payout outlookYahoo Finance · 2026-07-27
- Elme Finishes Liquidating With 3 D.C.-Area SalesYahoo Finance · 2026-09-30
- Elme reaches deal to sell last property for $250MYahoo Finance · 2026-07-27
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Elme Communities's financial-health indicators show?
As of 2026-10-08, Elme Communities's public financial data places it in the 'Weak' band with a distress score of 57/100, driven by losses in each of the last 3 years, distress language in recent news and material debt with no ebitda. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Elme Communities's financial distress score?
57/100 ('Weak'). Ohlson O-score 1.77 (model 1-year failure probability 85%). Merton distance-to-default 1.07 σ (model default probability 14.1%).
What works in Elme Communities's favour?
Operating cash flow is positive over the latest 12 months. Strong current ratio (8.32).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.