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 on the 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 risks 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 Kurt 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 .2% and .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 compliments 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 flock security camera systems. We deployed flock 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 the 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 use 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 community. 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 court. 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 initiative. 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 some metering 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 .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. Antelay 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 .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 .8% and .2% increase respectively, compared to 2024. A FFO adjusted and FFO adjusted per unit for the quarter were $7.8 million and 31 cents, a .6% and .8% increase respectively compared to 2024. Same community occupancy of .9% increased 1% over the same period last year, which continues to reflect our commitment to resident satisfaction and ensuring our communities are desirable location. 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 .4% and our average monthly lot rent was $484. Both of these metrics were within our expectations. We remain committed to preserving a conservative debt profile, our weighted average mortgage and note interest rate was .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 home ownership 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 US 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 one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of Mark Rothschild with the Canter Court. Your line is now open.

Thanks, good morning guys. Hey, just in regards to the rent increase, I saw in your MTA that the average went from 448 to 484 which is 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 than maybe 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 off-ex where we had to push the rent 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 one more from 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 kind of at what I call full staffing. And prior to our quarter, 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 get some where we're a lot closer to full staffing when we operate some side. So that's the part of it. That'll be on the long. Although getting people to have a decent amount of weather events in our area, it's been a very long period where we were low-frequency and pictures causing water leaks and then in turn required maintenance work to go out and cover residents to ensure they have water. So we had a decent amount of additional costs related to that. And we had pretty severe wind and hail events early on in March that caused a decent amount of cleanup, both between our labor costs, income repairs and maintenance, as we had to hire groups to kind of clean up down to green and those kinds of things. So I'd say with the combination, probably half of it is not occurring type things. And then the other half would be, you know, that they just getting up to speed and getting to a full

staff. OK, great. Thank you so much. Thanks,

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

Thanks. Morning, guys. Morning, Nene. Just want to talk a little on the occupancy metrics. I think, you know, we've kind of got a nice, quiet, clean quarter here. We'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 percent range or is it something higher? Or how should we be thinking about that?

Good question. You know, we we 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 older 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 know, you do start seeing some of that, you know, 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 the, you know, Nathan's done a really good job of buying vacancy for us. Yeah. So if I if I if I let you if we show up and we're 95 percent, I expect you to criticize us for not actually buying vacancy and growing the portfolio.

Yeah, no, that's where 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 more, your margin actually starts to expand?

Yeah, I think I think there's a couple of things that are needed. 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 goes flow 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 percent occupied. So just to give you some of the ones that we've held for a while with lobbies with full occupancy are over 90 percent. When you look at that group, you're you're running real close to 70 percent margins. And so kind of when you get that, you know, 85 to 90 percent, 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 as kind of where that occupancy is of what who owns what parts of that community and what kind of there's a main type work we have

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

Yeah, I think the other thing that the stability of it is, you know, we are rental home fleet is is about 10 percent. 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 is it does have better margins. And that's perfect. That's great.

Awesome. That's it for me. I'll have 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 your or going through your busy season here for new home sales. It's clear to see if there's what trends you're seeing and if there's any incremental changes that you've seen from from years past.

I'm sorry, Brad, we missed the first part of your question. Can you please ask that again? And good morning.

Just on new home sales, just 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 today.

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

I think also what we're seeing is the increase in the sale. To Nathan's point, new homes are getting a little more pricey. We're starting to sell more of you stones. 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 in a less expensive place. And in that so we could really start seeing hopefully some some movement in the sale of 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 national portfolios. I think there would have been a little bit of higher turnover, I guess, in Nashville. How are things trending year to date in Nashville? Have you seen occupancy stabilize or even certain recover?

Yeah, we were thrilled. West Virginia houses are all there. We're expecting another positive trend in the upcoming quarter in West Virginia. And a wide budgets are being made. Very, very happy with that. Tennessee even even better. We were able to 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 to being able to showcase those later in the year. Great. I'll turn it back. Thank you.

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

Thanks. Morning,

guys. Morning, Kyle.

Just as we think about the the state of the MHC market for the private operators today, I mean, has anything changed in the last six to 12 months? Like 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, you know, 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. If you're on floating rate debt and a property that's problematic for you. Also, I think there is 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 problem. So we're starting to see a little bit of, I would say, folks thinking, I need to sell these four properties to use the money on the other eight properties. We're seeing a little bit of that action starting in the United States.

OK, 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, you know, 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 $1100 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. That was basically roads, repaving some of the roads that we had. And then as you look at the growth, 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 integrate the assets that we purchased last year. So there's still a decent amount of cap ex to be spent there 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 what we did last year, both from a real home standpoint, as well as spending on the amenities side with the playgrounds, the basketball courts, the home houses that we're putting into the new acquisitions and will be put into the new acquisitions this year.

Okay, thank you for that. I did lie. Just going back to the first question, Nathan, in the past you've put out a rough acquisition target. 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 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 Kornak with National Bank. Your line is open.

Good morning, guys. I just wanted to quickly go back to the margin discussion and the outlook for the balance of the year. I think the buildup 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 sort of for this year?

So what I'll say is we have seen the labor cost kind of level off. But as you're comparing, I'm not saying labor cost, labor rates level off. We're not seeing a whole lot of more inflation for wages or whatever 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 staffing costs. 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 and sewer, garbage type fees. But they're 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 industrial revenue, but from a cost standpoint, an absolute cost, but then we're certainly gonna see some cost increases there. I'd anticipate, again, another three 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 be curious through the majority of the year, but I would expect in Q4 we'll see another 5%, 6% increase in our insurance rates.

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.

But 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, if that was just as we forecasted. Okay,

thanks guys.

Thank you. As a reminder to ask a question at this time, please press star one one 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'm gonna ask your comment about the transaction market. Could you talk about the pricing that you've seen today?

Yeah, 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 had 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 the rates have not moved down and the cap rate has not moved up. So you see that. But in the manufacturer housing space as a general rule, most of the quality manufactured homes, 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, your lot rent growth has significantly up-performed the multifamily sector. And then the prior to, it was lower. So now there's expectation that the multifamily rent growth is gonna 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, five percentage 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 $500 a month gap difference. So we can, even if apartments and multifamily in our markets are going up 3% a year, there's still such a substantial gap. It should leave plenty of runway for us to be reasonable with our rent increases going

forward.

And I think if you're asking me a number to model, it's fine.

And that gap today, can you put that, you have to give specific numbers, but can you contextualize what that number looks like relative to over the last, let's say decade? Is it, oh, we had a- Yeah,

a

decade ago

was $100. And we used to sell homes and we always, our day to day mantra was, if we could save customers $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. So when we're at three 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 can 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 we shine when there's macroeconomic softness, we shine. And that's the nature of the business of affordable housing. And I think that's where we're at right now. 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 a hunker down, which is, 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.

Yeah, great.

Thanks for that, Coler.

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

Thank you and good morning. Sorry, I'm on. Same community and why of low double digits in Q1, pretty strong. And how's the outlook looking for the full year on same community and why? And I know usually the lot of them said 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, no worries. Yeah, so same community, you know, I have the 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. We've continued to see our kind of insulated revenue programs drive some good growth there on the revenue side. We've talked about this before, but unfortunately that's a little bit lower margin business. But as you look at insulated revenues and you look at the same community NOIs, it is certainly driving a portion of that that should keep 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,

but I'm- We couldn't quite understand your second question, Manjun.

No, I think that was a 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 NOI as well. And it looks like you answered, low double digit. Yes, correct, that's right. Awesome. And maybe just a follow up to kind of Jimmy's line of questioning there, how defensive is this asset class? So maybe can you remind us, what happens to lot rent groups or same to NOI group in a recession scenario?

Yeah, again, 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 download. And that means they stay in place. Now, so the current resident base, again, mortgage rates are still low, they're still around seven, 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 three 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 gonna 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 gonna be directionally pushed towards us. So I think we should see some modest growth, again, one 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 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. So, and the folks that are there are probably gonna raise their rents, I'd say, 3%, 3% to 5%, something like that. Diane, do you have a

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

Thanks so much.

Thank you. I would now like to turn the call back over to Kurt 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 IR and flagshipcommunities.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.