Flagship Communities Real Estate Investment Trust

Hello, ladies and gentlemen. Thank you for standing by. Welcome to the Flagship Communities REIT first quarter 2025 earnings call. At this time, all participants are in listening mode. Following the presentation, we will hold a brief question and answer session for analysts and institutional investors. I would like to remind everyone that this conference call is being recorded. Today's presenters are Kurt Keeney, Flagship's President and Chief Executive Officer, Nathan Smith, Chief Investment Officer, and Eddie Carlisle, Chief Financial Officer. Please note that comments made on today's call may contain forward-looking information, and this information by its nature is subject to risk and uncertainties. Actual results may differ materially from the views expressed today. For further information on these risk and uncertainties, please consult the company's relevant filings on CDAR. These documents are also available on Flagship's website at FlagshipCommunities.com. Flagship has also prepared a corresponding PowerPoint presentation, which it encourages you to follow along with during this call. And now I'll pass the call over to Curt Keeney. Kurt?

Thank you, operator. Good morning, everyone. Thank you for joining us today. After what was a record year for Flagship in 2024, we are pleased to have picked up right where we left off in the first quarter of 2025. Early in the year, we got to work on refinancing our near-term debt at a low fixed interest rate, resetting our interest rates for another 10 years. Refinancing our debt at more attractive terms speaks to the confidence our lenders have in both Flagship and the MHC industry, while helping us solidify our balance sheet. We continue to have a conservative, low-debt profile financial position and continue to generate strong financial results. We were pleased with our first quarter 2025 results, which showed strong progress in many of our key metrics. Our rental revenue increased by 24% over the same period last year. Our NOI improved by 23% over the last year. And our FFO adjusted per unit and AFFO adjusted per unit increased by 5.2% and 8.8% respectively over last year. We also continued to see double-digit growth in our certain same-store community metrics in the first quarter of 2025. Our community revenue and same community NOI each grew by almost 13% over last year, while same community NOI margin remained at 67% unchanged relative to last year. Our financial results provide a good sense of the current state of our business and of our growth plan, but ultimately, we are in the business of affordable home ownership, and Nathan and I have been in that business for 30 years, which I will speak to more in my closing remarks. By being in the affordable housing business, sustainability is at our core. From resident wellbeing to ethical corporate governance, we have increasingly built a strong sustainability track record that complements our strong financial and operational results. We've highlighted these initiatives in our fifth annual ESG report, which is available on our website. We are proud of the progress we have made in ESG, especially in the area of resident safety, where we unveiled two new initiatives this past year. The first are flocked security camera systems. We deployed flocked security camera systems in approximately 25% of our community. Our goal is for all of our communities to have these systems within the next three years. These cameras are connected to local police departments to work in concert with city and county police operations. And in partnership with a local municipality, We established a storm shelter to support the local emergency management system. In order to build the storm shelter, we decommissioned two lots so that both our residents and the general public can access the shelter in case of emergency. We hope to replicate this model with other municipalities going forward. With that, I will now turn it over to Nathan for his remarks. Nathan?

Thanks, Kurt. Good morning, everyone. After completing the largest acquisition in our history, our focus for this year is to continue integrating these assets and executing on our home sales strategy in those markets. This business model is the same one that Kurt and I used on our existing portfolio for the past 30 years. While we would always consider external opportunities that adhere to our discipline criteria, Our focus is always on optimizing our existing portfolio and being the best operators we can be for the MHCs that we own. Typically, we have done this through maintaining stable occupancy rates. Our total portfolio occupancy and same community occupancy for the first quarter both grew compared to last year. Our ability to grow occupancy rates coupled with predictable rent collections enable us to grow our existing business while allowing us to focus on being strong operators. Being a strong operator also entails making sure that our customers take pride in their homes and enjoy living in our communities. we are always looking to improve the living experience of our residents. One of the ways that we do this is by adding amenities such as pickleball courts, municipal grade playgrounds, shuffleboard, and basketball courts. We are always providing extensive holiday and seasonal events such as our back to school program, that our residents look forward to and enjoy as a community. Over the past year, we have been successful in growing our existing portfolio in other ways, which we expect to continue in 2025. The first is through ancillary revenue and the cost containment initiatives. Through bulk purchasing, we provide certain amenities that allow our residents to save money while providing us with a means for additional revenue. We've also been successful implementing submetering technology and water recapturing programs across our MHCs that allow us to detect water leaks in real time. And the second is through our lot expansion strategy. Lot expansion enables us to add more housing opportunities within certain existing communities for a modest capital investment. Last year, we added 112 lots to our portfolio, and we have begun our land clearing for our lot expansion in Ellesmere, Kentucky, which will include a new amenities package that we believe will benefit all of our residents in the community. I'll now turn over to Eddie, our CFO, to talk about our financial performance for the quarter. Eddie?

Thanks, Nathan. Good morning, everyone. We generated revenue of $24.8 million during the first quarter, which was up 24.4% over the same period last year, primarily due to acquisitions, as well as lot rate increases and occupancy increases across the portfolio. Same community revenue of $22.5 million for the first quarter grew by approximately $2.6 million over the comparable period last year. This increase was driven by higher monthly lot rents, as well as growth in same-community occupancy and increased utility revenues. Ancillary revenues, which are comprised of amenity fees, including cable and internet fees, also contributed. Net operating income and NOI margin were $16.4 million and 66.2% respectively, compared to $13.3 million and 67% during the first quarter of 2024. Same community NOI margin for the first quarter was 67%, which was the same compared to last year. FFO adjusted and FFO adjusted per unit for the quarter were $8.4 million and 34.2 cents respectively, a 24.8% and 5.2% increase respectively compared to 2024. AFFO adjusted and AFFO adjusted per unit for the quarter were $7.8 million and 31 cents a 29.6% and 8.8% increase respectively compared to 2024. Plain community occupancy of 84.9% increased 1% over the same period last year, which continues to reflect our commitment to resident satisfaction and ensuring our communities are desirable locations. Rent collections for the quarter were 99.7%, which demonstrates the strength and predictability of the MHC sector and was within our expectations. As at March 31, our total lot occupancy was 84.4%, and our average monthly lot rent was $484. Both of these metrics were within our expectations. We remained committed to preserving a conservative debt profile. Our weighted average mortgage and note interest rate was 4.26%, and our weighted average mortgage and note term to maturity was 9.8 years. We had total liquidity of approximately $15.6 million. The REIT currently has 18 unencumbered investment properties with a total fair value of $55.8 million as at March 31, 2025. With that, I'll now turn it back over to Kurt for some final remarks. Kurt?

Thanks, Eddie. While we are pleased with our first quarter performance and the progress we have made with our community and environmental initiatives, we are especially grateful when our work and our contributions are recognized by our industry. We were recently honored with the 2025 National Community Operator of the Year Award by the Manufactured Housing Institute, our industry's national association. This is an amazing honor and speaks to our ability to provide a positive living experience and amenities to our residents through our home ownership model. We were also awarded the Community Impact Project of the Year for our suburban Point community in Lexington, Kentucky. We are pleased to see all the wonderful changes in the community and are grateful that these efforts have helped strengthen the sense of community at Suburban Point. These awards would not be possible without our amazing employees who routinely go the extra mile for our residents. Whether it's through our annual holiday traditions or by our community meal programs, our employees are helping bring the families and our communities together. The ongoing integration of our acquisitions, our lot expansion strategy, and our strong balance sheet have helped us get off to a great start in 2025, which is a very special year for us. This year is the 30th anniversary for Nathan and I in the MHC business. We started our business in 1995 with one community and 152 lots. At the time, our goal was to provide sustainable and affordable housing that benefits families and the environment. Fast forward to today, and that is still our goal. We still want to help families realize their dreams of affordable homeownership and make sure they can enjoy a full array of amenities, such as clubhouses, playgrounds, basketball courts, pickleball, and much more. We are fortunate to be able to do that on a much wider scale today that includes 82 communities with over 15,000 lots across eight U.S. states. We certainly thank you for your time today, and I will now open up the line for questions.

Thank you. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Mark Rothschild with Canaccord. Your line is now open.

Hey, thanks. Good morning, guys. Hey, just in regards to the rent increase I saw in your MD&A, the average went from $448 to $484, which is an increase of about 8%. Is that all from just the annual pass-throughs that you passed on to your tenants? I thought I was expecting a little bit less than that, and maybe there's something else mixed in there.

Yeah, that's just our regular rent increase that took place on January 1st. We had a few areas where we had some increases in the op-ex where we had to push the rents a little bit more. We've talked about before being able to separate out some – property taxes and be able to pass that through. So we ended up being a little higher than that in total.

Okay, great. And then just maybe one more for me on the expense side. The expenses were up a decent amount also. Was that mostly, would you say, just along with inflation? Was there anything that maybe was a little unusual in there? And Should we expect the expense growth to maybe moderate going forward?

Yeah, so I'd say there's a couple of things there. Number one is we're now in what I call full staffing. And prior to your report, being able to hire those people, as we've talked about for a while, it's been a little more difficult. We've now been able to, I think, kind of do some work where we're a lot closer to full staffing when the operation starts. So that's a part of it. That'll be on the wall. But we did accumulate a decent amount of weather events in our areas. We had a very long period where we were low freezing temperatures causing water leaks. Water leaks in turn required a lot of maintenance work to go out and cover residents to ensure they had water. So we had a decent amount of additional costs related to that. And we had some pretty severe wind and hail events early on Again, in the month of March, that caused a decent amount of cleanup, both between our labor costs and kind of repairs and maintenance that's been agreed to, you know, down three, those kind of things. So, I think it was a combination of probably half of it is not recurring type things, and then the other half would be, you know, that they just getting up to speed and getting to a full set.

Okay, great. Thank you so much. Thanks, Mark.

Thank you. Our next question comes from the line of Dean Wilkinson with CIBC. Your line is now open.

Thanks. Morning, guys. Morning. I just want to talk a little on the occupancy metrics. We've kind of got a nice, quiet, clean quarter here. You've seen the occupancy come up. You look at, say, some of your peers and recognizing that the product is somewhat different. Where do you think a stabilized sort of full occupancy level in the portfolio as you own it today would be? Like, is that in the 90%, 92% range, or is it something higher? How should we be thinking about that?

That's a good question. You know, we think occupancy, when you hit the mid-90s, is probably full occupancy because, you know, we do have units in some of the communities that are open. And they do, some of those units have a life expectancy that's shorter because the quality of the home, if you go back 30 years, wasn't as high as the quality of the home is today. So you do start seeing some of that old inventory needing to be moved out at that point. So we think, again, I think the short answer to your question is probably 95%.

95% would be where you pick it.

Yeah, that's the short answer to your question. I think Nathan's done a really good job of buying vacancy for it. So if I let you, if we show up and we're 95%, I expect you to criticize us for not actually buying vacancy and growing the portfolio.

Yeah, we're all expecting you to buy that and then take it up to that level. Maybe the second question to that is, Given, you know, the high component of fixed costs in the OPEX, where does that occupancy level tip so that you, as you gain, you know, more, your margin actually starts to expand?

Yeah, I think there's a couple of things there, Dean. It depends on the characteristics of the community, right? When we all have a community that is, that city-owned streets, city-owned water and sewer line, you know, every lot, it kind of flows straight to the bottom line. And those are, so to kind of to Kurt's point a little bit, as we talked about the occupancy, about half, a little over half of our communities today are over 90% occupied. So just to give you some, the ones that we've held for a while and the ones we've bought with full occupancy are over 90%. When you look at that group, you're running real close to 70%. And so kind of when you get that, you know, 85% to 90%, you're not cutting grass, right, because everybody's cutting their own grass. We have that. But really, it is the characteristics of the community are just as important. It's kind of where that occupancy is of who owns what parts of that community and what kind of repairs and maintenance type work we have to do.

Okay, that's great. So you're basically kind of in the ballpark of us seeing that going forward then.

Agreed. Absolutely. I think the other kind of stability of it is, you know, our rental home fleet is about 10%. It's got lower margins. So as we sell those units off, you know, we have a home ownership model. And as long as we continue that strategy, it does have better margins. Perfect. Awesome.

That's it for me. I'll hand it back. Thanks, guys.

Thank you. Our next question comes from the line of Brad Sturgis with Raymond James. Your line is now open.

Hey, good morning, guys. Just on new home sales, I guess you've gone through or are going through your busy season here for new home sales. Just curious to see what trends you're seeing and if there's any incremental changes that you've seen from years past. i'm sorry brad we missed the first part of your question can you please ask that again and good morning uh just on new home sales uh just uh home selling activity just kind of curious to see what what trends you're seeing i guess you know you would have been going through you know your busy season on on that front just curious to see if there's any incremental changes in trend uh today yeah brad um nathan

We are seeing the tick up a little bit in the price of the homes. So, of course, all of our residents need to have at least a 10% down payment. So that is becoming a little bit more difficult as that number creeps up. But we have had good home sales in the first quarter. I would say it was regular with other years. But, you know, we are starting to see pressure put on people to buy homes that are having a tougher time. There's no doubt. And so, but interesting enough, you know, when we are the cheapest alternative, then basically free, you know, as we say, living with family, that's a positive. We have not seen rents come down in apartments yet in the United States. So that's actually helping us in our width between what a two bedroom, two bath apartment costs and our home plus our lot rent. It's still a very affordable factor. But to the end of the question, we are seeing home sales slow a little bit in the United States, no doubt.

I think also what we're seeing is the increase in the sales. To Nathan's point, new homes are getting a little more pricey. We're starting to sell more used homes, right? So we start selling more. This is where the rental fleet becomes more attractive to people. We're able to sell those pre-owned homes at a less expensive price. place in that. So we could really start seeing hopefully some movement in the sale of rental homes within the communities as well.

I mean, that's great color. Just I guess my other question would be just on the integration of West Virginia and Nashville portfolios. I think there would have been a little bit of higher turnover, I guess, in Nashville. Just how are things trending year-to-date in Nashville? Have you seen occupancy stabilize or even start to recover?

Yeah, we're thrilled. West Virginia, houses are all there. We're expecting another positive trend in the upcoming quarter in West Virginia. NOI budgets are being made. Very, very happy with that. Tennessee is even better. We were able to actually get rid of some older units faster. but we are selling every house that we pull in, basically. And so we're really thrilled at the progress that we're making in Nashville in particular. Look forward to being able to showcase those later this year. Great. I'll turn it back. Thank you.

Thank you. Our next question comes from the line of Kyle Stanley with the Jardins. Your line is now open.

Thanks. Morning, guys. Morning, Kyle. Morning, Kyle. Just as we think about the state of the MHC market for the private operators today, has anything changed in the last six to 12 months? Maybe refinancing for some of the legacy owners is less of an issue, meaning there's less product in the market. I'm just trying to think about how the market is unfolding today and how that maybe impacts your external growth outlook.

Well, Kyle, you're seeing you start to see we just had last week our National Association meetings in Orlando. And you are starting to see pressure on folks that did not permanently finance their property. And that, you know, as the interest rate, they keep wanting it to come down and it's not come down. And if you're on floating rate debt and a property that's problematic for you. um also i think there is um for people who are in the rental home business where they're taking over a property and the property has 200 lots in it and they want to put 100 rentals in that that is a very difficult place to go find money to purchase those rentals and also those rentals have gone up in to set that the cost of them has gone up the cost of the house has gone up so they're having a little bit more difficult um problem um so we're starting to see a little bit of um I would say folks thinking, I need to sell these four properties to use the money on my other eight properties. We're seeing a little bit of that action starting in the United States.

Okay. Nope. Thank you for that. That's very helpful. Maybe just my second question. Your CapEx this quarter was down. I assume this is largely seasonal. I'm just wondering, where do you see your kind of annual CapEx number trending this year versus 2024, especially just given some of the stabilization efforts underway?

Yeah, so as we think about it in different buckets, Kyle, as we think about what we've called maintenance capex, obviously last year we were a little higher than what we would normally expect. We got $75 a lot and $1,100 per rental home. Last year was a little higher. Last year was a little higher because of some of the refinancing we did early in the year. So we had a significant amount of spend that had to be done as part of the refinancing And that was basically roads, repaving some of the roads in the communities. We don't expect that to come back and get us again this year. So in the maintenance bucket, I think we'll be down kind of back below $75 a lot for this year. As you look at what I would call growth, and growth for us, it really is the purchase of rental homes is a big piece of it. And then the work that we're doing to, you know, Rich D' integrate the assets that we purchased last year, so that there's still a decent amount of capex to be spent there. Rich D' For the amenities that we are working on in those locations, and so I would still expect that to be on a very similar trajectory to. Rich D' What we did last year, both from a real home standpoint, as well as spending on the the amenity side of the playground of the basketball courts and clubhouses. that we'll put into the new acquisitions and will be put into the new acquisitions this year.

Okay. Well, thank you for that. I did lie. Just going back to the first question, Nathan, you know, in the past you've put out, you know, a rough acquisition target. You know, maybe in the past it's been 30 to 50. Last year, obviously, you exceeded that. Do you have a rough target for this year?

Well, Kyle, I'm out there looking every day. And, you know, there's always families that are needing to exit and different people need to exit. So I feel comfortable that I will always be looking for great deals for this company, always. Okay. Thank you. I will turn it back.

Thank you. Our next question comes from the line of Matt Kornack with National Bank. Your line is now open.

Good morning, guys. I just wanted to... I just wanted to quickly go back to the margin discussion and the outlook for the balance of the year. I think the build-up to revenue is pretty clear, given your rent increases, plus maybe a little bit of occupancy gains. But what kind of growth and costs should we anticipate for this year?

What I'll say is we have... I'm seeing the labor cost kind of level off. But as you're comparing, and I say labor cost, labor rates level off. We're seeing a whole lot more inflation for wages that we're having to pay. But as you compare it to prior year, we have been able, again, to go back and actually be closer to our full growth. full staffing level. So we anticipate that's gonna be kind of three to 5% over prior year for labor. The area that I'm looking at closely is property taxes. We have a number of reassessment of property taxes that we expect to see this year. Now with that, we've talked about it before, but we have set up our rent to our residents to split out property taxes so that we're able to pass that through, very similar to the way we would pass through water, sewer, garbage-type fees. But there's still, from a cost standpoint, if we're just looking at cost in a standalone basis, we anticipate we'll see some increases there around our property taxes that could be somewhat substantial. Now, I would say we'd probably be able to offset that with the additional revenue, But from a cost standpoint, an absolute cost, we're certainly going to see some cost increases there. I anticipate, again, another 3% to 5% on property taxes across the board. Seems like the other big lever that we've always talked about has been insurance. I don't expect anything different on insurance other than it's going to increase. Last year, we saw about a 6% increase in our package. Again, that renewed in October. So that's going to carry us through the majority of the year. But I would expect in Q4 we'll see another 5%, 6% increase in our insurance rates. Okay.

So, as I'm hearing, even with those notwithstanding the flat margins year over year in Q1, revenue should outstrip cost growth and you should see some margin expansion for 2025. Yes, potentially. And then I don't know if it's my keying this in, a typo, or you did really well, but was there anything in Morgantown? The lot rent looked like it was up pretty substantially sequentially.

No, that was just as we forecasted. Okay.

Thanks, guys.

Thank you. As a reminder, if you have a question at this time, please press star 11 on your touchtone telephone. Our next question comes from the line of Jimmy Shan with the RBC Capital Markets. Your line is now open.

Thank you. So I might have missed your comment about the transaction market. Could you talk about the pricing that you've seen today?

Yes, Jimmy. It's Nathan. Actually, we were... Last week I said we were at our annual, what I would call the MHI Congress. And I asked that question to several brokers. And their quote was, well, we have lots of deals out there. And I said, great. I said, how many did you close? Well, we have lots of deals out there. So that tells me they haven't been closing a lot of deals. There's actually very few deals transacting. And that's what you're seeing out in the market. I think right now it's almost like a standoff. you know, the rates have not moved down and the cap rate has not moved up. So you see that. But in the manufactured housing space, as a general rule, most of the quality manufactured home communities have sold historically for our 30 years somewhere between a five and seven cap. And that's where they continue to kind of lay right now. But there is not a lot of deals out there on either way. The only deals you're seeing in transaction are those deals that have to transact. And those that have transacted because families have to exit.

Okay. Then maybe just a general question. You guys have seen obviously many cycles. How does your lot rent growth typically track with multifamily rent growth in comparable markets? Like if I look at the last two years, You know, your lot rent growth has significantly outperformed the multifamily sector. And then with the prior two, it was lower. So now there's expectation that the multifamily rent growth is going to return to some sort of a more normal, healthy growth. How do you think you'll perform in that type of environment?

Yeah, we do have some paradigm after 30 years of this. So the reason that we don't raise rents aggressively when the markets are red hot is that we really, again, about 40% of our residents are on fixed income. So you need to be thoughtful about that. So I would anticipate that we would be in the same guidance that we've given, you know, 5%-ish on rent increases. The gap between multifamily and expense, and that's where our customers predominantly come from, and our communities is still in dollar terms somewhere between three and five hundred dollars a month gap difference so we can we can even if uh you know apartments uh multi-family in our markets are going up three percent a year there's still such a substantial gap it should leave plenty of runway for us to be reasonable uh with our rent increases uh going forward And I think, you know, if you're asking me a number to model, it's five.

And that gap today, can you put that, you don't have to give specific numbers, but can you contextualize what that number looks like relative to over the last, let's say, decade? Yeah, a decade ago it was $100.

And we used to sell homes and we always, Nathan and I's mantra was, If we could save a customer's $100, they would move to our product because they got an extra bedroom, an extra bathroom, and a deck in the yard. Nobody above them, nobody below them. So when we're at $300 to $500, and frankly, when you get into a three-bedroom and four-bedroom options that are multi-sectional, it's even more than $500. So again, you just look at it and say, if we could win when we thought it was $100 differential, We certainly feel like we've got a strategic advantage when it's $500 a month. So it's a very good time for us to be in this business. And, you know, we shine when there's macroeconomic softness. We shine. And it's the nature of the business of affordable housing, and I think that's where we're at right now. You know, we have more headwinds when mortgage rates are 3%. And nobody's requiring down payments. That's where people leave the communities. Right now, I think everybody is what I call hunker down those, which is, you know, they just aren't going to do anything except stay, pay their bills, and live peacefully. And I think that's kind of where we're at.

Okay. Great. Thanks for that, Keller.

Sure. Thank you. Our next question comes from the line of Himanshu Gupta with Scotiabank. Your line is now open.

Thank you and good morning. Same community NOI of low double digits in Q1, pretty strong. And how's the outlook looking for the full year on same community NOI? And I know usually the lot trend is set. You have good visibility for the rest of the year. And by the way, I joined late, so not sure if this has already been covered. Thank you. Thank you.

Hey, Norris. Yeah, so state community, you know, I have a growth of 12.9%. That is the range, that low double-digit range is where I would expect us to be for the balance of the year. You know, we've continued to see our kind of isolated revenue programs drive some good growth there on the revenue side. You know, we've talked about this before, but unfortunately that's a little bit lower margin business. But as you look at isolated revenues and you look at the same community NOIs, It is certainly driving a portion of that that is keeping us up there in that low double-digit range. And I don't foresee that going away for the balance of the year. I'm sorry, you had a second question.

We couldn't quite understand your second question, Manjit.

No, I think that was the question. All I was saying was, I mean, since you have good visibility on the lot rent, I mean, you will have some visibility on the same community as well. And it looks like you answered, you know, no double digits.

Yes, correct.

That's right. Awesome. And maybe just a follow-up to kind of, you know, Jimmy's line of questioning there. How defensive is this asset class? So maybe can you remind us, you know, what happens to lock-end growth or seems to NOI growth in a recession scenario?

Yeah, again, after we – After 30 years of this and multiple recessions, every recession looks differently. We don't have a recession as we sit here today. We have what I would call economic softness. And what happens is, again, I alluded to it just a second ago, our residents will go into what I call a hunker down mode. And that means they stay in place. So the current resident base, again, mortgage rates are still around 7%. And there's a credit tightening. So when they leave, they would go to stick-built housing. They wouldn't go to condos in our markets. That's not the thing. They'd either go back to multifamily, which is $300 to $500 more expensive, or they would go to stick-built housing, which they probably can't get good credit for in the current environment, right? So you look at it and say, okay, so the current customer base is probably very, very stable and sticky. New customers, again, are going to have some difficulties obtaining stick-built housing because mortgage rates are 7% and the credit underwriting is tight in that market. So I think they're going to be directionally pushed towards us. So I think we should see some modest growth, again, 1% to 2% even through this period of time. And I think we'll see rent growth probably at 5%. I'd be more bearish on my rent growth if I didn't have a $500 monthly average runway in front of me. But we've left that on the table. Now, this isn't by accident. We left that on the table for the last three or four years. Since we've been public, we've always left a little meat on the bone. And that gives you the flexibility to really be thoughtful about about how you raise rents going forward. So, again, I think 5% is a good number on modeling on rent growth. I don't see anybody reducing multifamily rents. We don't have a supply issue in multifamily in our markets where a bunch of supply is coming online. And the folks that are there are probably going to raise their rents, I'd say, you know, 3%, 3 to 5, something like that.

And I'll tell you that. Thank you so much.

Thank you. I would now like to turn the call back over to Curt Keeney for closing remarks.

Thank you, Operator, and thank you, everyone, for participating. Please feel free to reach out to our investor relations team at irandflagshipcommunities.com if you have any further questions. Have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.