Q4 2025 Flagship Communities Real Estate Investment Trust Earnings Call

March 10, 2026

Speaker #1: Hello, ladies and gentlemen. Thank you for standing by. Welcome to the Flagship Communities REIT fourth quarter 2025 earnings call. I would like to remind everyone that this conference call is being recorded.

Operator: Hello, ladies and gentlemen. Thank you for standing by. Welcome to the Flagship Communities REIT Q4 2025 Earnings Call. 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 risks 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 SEDAR. These documents are also available on Flagship's website at flagshipcommunities.com. Flagship has also prepared a corresponding PowerPoint presentation, which I encourage you to follow along with during this call. Now I'll pass the call over to Kurt Keeney.

Speaker #1: Today's presenters are Kurt Keeney, Flagships 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.

Speaker #1: 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 SEDAR.

Speaker #1: These documents are also available on Flagship's website at flagshipcommunities.com. Flagship has also prepared a corresponding PowerPoint presentation which encourages you to follow along with during this call.

Speaker #1: And now I'll pass the call over to Kurt Keeney.

Speaker #2: Thank you, Operator. Good morning, everyone. Thank you for joining us today. 2025 was a milestone year for Flagship. We celebrated our fifth year 30th anniversary for Nathan and me and the MHC industry.

Kurt Keeney: Thank you, operator. Good morning, everyone. Thank you for joining us today. 2025 was a milestone year for Flagship. We celebrated our fifth year as a publicly traded REIT and the 30th anniversary for Nathan and me in the MHC industry. Throughout 2025, we continued to execute on the disciplined strategy that has defined Flagship since our IPO, delivering growth while maintaining strength in our balance sheet. We saw notable increases in rental revenues, NOI, FFO adjusted, and AFFO adjusted, all of which have grown steadily over the past few years, which you can see on the slides 4 and 5 of the accompanying presentation. We also continue to see strong year-over-year same-community metric performance, which remains the clearest indicator of the underlying health of our business.

Speaker #2: Throughout 2025, we continue to execute on the disciplined strategy that has defined Flagship since our IPO, delivering growth while maintaining strength in our balance sheet.

Speaker #2: We saw notable increases in rental revenues, NOI, FFO adjusted, and FFO adjusted. All of which have grown steadily over the past few years. What you can see on slides four and five of the accompanying presentation.

Speaker #2: We also continue to see strong year-over-year same community metric performance, which remains the clearest indicator of the underlying health of our business. Same community revenue grew 10.9% over 2024 and 8.2% over Q4 of last year.

Kurt Keeney: Same-community revenue grew 10.9% over 2024 and 8.2% over Q4 of last year. Same-community NOI grew 11% over 2024 and 5.9% over Q4 of last year. Same-community NOI margin remained stable at 66.2% for the year. Our solid results enabled us to announce a 5% increase to our monthly cash distribution for the fifth consecutive year. Since our IPO, we have delivered one of the strongest distribution growth records among Canadian REITs, all while reducing leverage and maintaining a disciplined AFFO payout ratio. In addition to our strong financial performance, we continue to remain active on the acquisition front. During the quarter, we expanded our presence in both Indiana and Ohio with two strategic acquisitions.

Speaker #2: Same community NOI grew 11% over 2024 and 5.9% over Q4 of last year. And same community NOI margin remained stable at 66.2% for the year.

Speaker #2: Our solid results enabled us to announce a 5% increase to our monthly cash distribution for the fifth consecutive year. Since our IPO, we have delivered one of the strongest distribution growth records among Canadian REITs, all while reducing leverage and maintaining a disciplined AFFO payout ratio.

Speaker #2: In addition to our strong financial performance, we continue to remain active on the acquisition front. During the quarter, we expanded our presence in both Indiana and Ohio with two strategic acquisitions.

Kurt Keeney: This acquisition and the others we completed over the past year have provided us with enough vacancy to continue adding value through occupancy growth and lot expansion for the next few years. Given our balance sheet capacity and access to attractively priced debt, we did not renew our at-the-market equity program in mid-2025. We remain focused on accretive growth using leverage on our balance sheet as the primary funding source. I will now turn it over to Nathan to provide more detail on our operating regions and growth strategy. Nathan.

Speaker #2: This acquisition, and the others we completed over the past year, have provided us with enough vacancy to continue adding value through occupancy growth and lot expansion for the next few years.

Speaker #2: Given our balance sheet capacity and access to attractively priced debt, we did not renew our at-the-market equity program in mid-2025. We remain focused on accretive growth, using leverage on our balance sheet as the primary funding source.

Speaker #2: I will now turn it over to Nathan to provide more detail on our operating regions and growth strategy. Nathan?

Nathan Smith: Thanks, Kurt. Good morning, everyone. A large part of what made this past year successful was our ability to complete strategic acquisitions. In Q4, we completed an acquisition of a new community in Seymour, Indiana, which is over 90% occupied. The property also includes 85 lots for future expansion. We also completed the acquisition of a portfolio in Greater Cincinnati area. It includes 500 lots across three separate MHC communities. When it comes to acquisitions, location matters. Each of these communities are located in major metropolitan areas with diverse employment opportunities where we already do business. Beyond location, the quality of the community is equally important. Our goal as operators is also to improve our existing communities, and we do that through continuous investment, both in amenities, and in safety.

Speaker #3: Thanks, Kurt. Good morning, everyone. A large part of what made this past year successful was our ability to complete strategic acquisitions. In the fourth quarter, we completed an acquisition of a new community in Seymour, Indiana, which is over 90% occupied.

Speaker #3: The property also includes 85 lots for future expansion. We also completed the acquisition of a portfolio in Greater Cincinnati area, and it includes 500 lots across three separate MHC communities.

Speaker #3: When it comes to acquisitions, location matters. Each of these communities are located in major metropolitan areas with diverse employment opportunities where we already do business.

Speaker #3: Beyond location, the quality of the community is equally important. Our goal as operators is also to improve our existing communities, and we do that through continuous investment, both in amenities and in safety.

Nathan Smith: In 2025, we added amenities across the portfolio and expanded our Flock Safety camera security system to nearly one-quarter of our communities. In the 5 years since our IPO, acquisitions have been a key part of our success, and we expect them to continue to be a key part of our growth. Our ability to leverage the 31+ years of industry relations to source off-market opportunities speaks to the experience of our team and our strong reputation in the marketplace. Our approach helps ensure that we deliver measured growth for our unitholders. We look for opportunities that will be accretive to our AFFO per unit. We also seek opportunities that will enable us to streamline our operations and generate economies of scale. Finally, we target acquisitions within our existing markets and adjacent US states with related regulatory framework, and characteristics.

Speaker #3: In 2025, we added amenities across the portfolio and expanded our flock camera security system to nearly one quarter of our communities. In the five years since our IPO, acquisitions have been a key part of our success, and we expect them to continue to be a key part of our growth.

Speaker #3: Our ability to leverage the 31-plus years of industry relations to source off-market opportunities speaks to the experience of our team and our strong reputation in the marketplace.

Speaker #3: Our approach helps ensure that we deliver measured growth for our unitholders. We look for opportunities that will be accretive to our AFFO per unit.

Speaker #3: We also seek opportunities that will enable us to streamline our operations and generate economies of scale and, finally, we target acquisitions within our existing markets and adjacent U.S.

Speaker #3: States with related regulatory framework and characteristics. Our acquisitions in the fourth quarter are perfect examples of our growth strategy in action. We have existing operations in Indiana and in the Greater Cincinnati area, where we maximize efficiencies and leverage economies of scale.

Nathan Smith: Our acquisitions in Q4 are perfect examples of our growth strategy in action. We have existing operations in Indiana and in Greater Cincinnati area, where we maximize efficiencies and leverage economies of scale. We now turn it over to Eddie, our CFO, to talk about our financial performance. Eddie.

Speaker #3: We now turn it over to Eddie, our CFO, to talk about our financial performance. Eddie?

Eddie Carlisle: Thanks, Nathan. Good morning, everyone. We generated revenue of $27.5 million during Q4, which was up 15.6% over the same period last year, primarily due to acquisitions as well as lot rent increases across the portfolio. Revenue for the year was $103.4 million, which was an increase of 17.3% for the same reasons. Same community revenues for Q4 and full year of 2025 grew by 8.2% and 10.9% respectively over the comparable periods last year. These increases were driven by higher monthly lot rents as well as increased utility reimbursements. Ancillary revenues, which is comprised of amenity fees including cable and internet reimbursements, also contributed.

Speaker #4: Thanks, Nathan. Good morning, everyone. We generated revenue of $27.5 million during 15.6% over the same period last year, primarily due to acquisitions as well as lot rent increases across the portfolio.

Speaker #4: Revenue for the year was $103.4 million, which was an increase in the fourth quarter, which was up 17.3% for the same reasons. Same community revenues for the fourth quarter and full year 2025 grew by 8.2% and 10.9%, respectively, over the comparable periods last year.

Speaker #4: These increases were driven by higher monthly lot rents as well as increased utility reimbursements. Ancillary revenues, which is comprised of amenity fees including cable and internet reimbursements, also contributed.

Eddie Carlisle: Net operating income and NOI margin were $18.4 million and 67% respectively, compared to $15.9 million and 67% during Q4 of 2024. NOI and NOI margin for the year ended 31 December 2024 were $68.4 million and 66.2% respectively, compared to $58.4 million and 66.3% last year. Same community NOI margins for Q4 and full year 2025 were 66.6% and 66.2% respectively. While NOI saw an increase from ancillary services, NOI margins were negatively impacted due to these ancillary services having a lower margin than what historically has been achieved by the REIT.

Speaker #4: Net operating income and NOI margin were $18.4 million and 67%, respectively, compared to $15.9 million and 67% during the fourth quarter of 2024. NOI and NOI margin for the year ended December 31, 2024, were $68.4 million and 66.2%, respectively, compared to $58.4 million and 66.3% last year.

Speaker #4: Same community NOI margins for the fourth quarter and full year 2025 were 66.6% and 66.2% respectively. While NOI saw an increase from ancillary services, NOI margins were negatively impacted due to these ancillary services having a lower margin than what historically has been achieved by the REIT.

Eddie Carlisle: FFO-adjusted was $9.4 million for Q4 2025, a 20.3% increase compared to the same period last year. FFO adjusted per unit for Q4 2025 was $0.37, a 20% increase compared to the same period in 2024. FFO adjusted and FFO adjusted per unit for the year ended were $36.1 million and $1.44, respectively, a 19.7% and 13.4% increase, respectively, compared to 2024. AFFO adjusted was $8.5 million for Q4 2025, a 12.4% increase compared to the same period last year. AFFO adjusted per unit for Q4 2025 was $0.34, a 12.3% increase compared to the same period in 2024.

Speaker #4: FFO adjusted was $9.4 million for the fourth quarter of 2025, a 20.3% increase compared to the same period last year. FFO adjusted per unit for the fourth quarter of 2025 was $0.37, a 20% increase compared to the same period in 2024.

Speaker #4: FFO adjusted and FFO adjusted per unit for the year ended were 36.1 million and $1.44 respectively, a 19.7% and 13.4% increase respectively compared to 2024.

Speaker #4: AFFO adjusted was $8.5 million for the fourth quarter of 2025, a 12.4% increase compared to the same period last year. AFFO adjusted per unit for the fourth quarter of 2025 was $0.34, a 12.3% increase compared to the same period in 2024.

Eddie Carlisle: AFFO adjusted and AFFO adjusted per unit for the year were $32.9 million and $1.31, a 20.7% and 14.4% increase, respectively, compared to 2024. Same community occupancy of 83.9% decreased by 0.2% relative to last year. This modest decline was attributable to the addition of expansion lots and some modest weather impacts during December. Excluding these impacts, same community occupancy would have been in line with 2024 levels. As with prior expansions, we expect these lots to be occupied in the normal course of business. Rent collections for the Q4 and year ended 2025 were 99% and 99.2% respectively, representing slight increases over the comparable periods last year. This once again demonstrates the strength and predictability of the MHC sector.

Speaker #4: Units for the year were 32.9 million and $1.31, a 20.7% and 14.4% increase, respectively, compared to 2024. Same community occupancy of 83.9% decreased by 0.2% relative to last year.

Speaker #4: This modest decline was attributable to the addition of expansion lots and some modest weather impacts during December. Excluding these impacts, same community occupancy would have been in line with 2024 levels.

Speaker #4: As with prior expansions, we expect these lots to be occupied in the normal course of business. Rent collections for the fourth quarter and year ended 2025 were 99 and 99.2% respectively, representing slight increases over the comparable periods last year.

Speaker #4: This once again demonstrates the strength and predictability of the MHC sector. As at December 31, our total lot occupancy was 82.9% and our average monthly lot rent was $483.

Eddie Carlisle: As of December 31, our total lot occupancy was 82.9%, and our average monthly lot rent was $483. Both of these metrics were within our expectations. Our weighted average mortgage and note interest rate was 4.54%, and our weighted average mortgage and note term to maturity was 8.2 years. We had total liquidity, which comprises of cash equivalents, and available capacity on our lines of credit of approximately $19.7 million. The REIT currently has 20 uncovered investment properties with a total fair value of $123.1 million as at December 31, 2025. With that, I'll now turn it back over to Kurt for some final remarks. Kurt?

Speaker #4: Both of these metrics were within our expectations. Our weighted average mortgage and note interest rate was 4.54% and our weighted average mortgage and note term to maturity was 8.2 years.

Speaker #4: We had total liquidity, which comprises cash, cash equivalents, and available capacity on our lines of credit, of approximately $19.7 million. The REIT currently has 20 uncovered investment properties, with a total fair value of $123.1 million as at December 31, 2025.

Speaker #4: With that, I'll now turn it back over to Kurt for some final remarks. Kurt?

Kurt Keeney: Thanks, Eddie. As we enter 2026, we remain confident in the outlook for manufactured housing. There are two significant factors that support this view, both of which are unique to our industry. First, our homes are more cost-effective option for many Americans. Our homes are more affordable than multi-family apartment rentals. Our customers enjoy homes that are detached structures that do not share walls, utilities, air conditioning, or heating with any other homes. These homes include 2, 3, and 4 bedrooms, typically with 2 bathrooms. They also have a deck, yard, driveway, and in-home laundry facilities. Unlike multi-family apartments, there is persistently limited new manufactured housing community supply. There are various layers of regulatory restrictions, competing land uses, and scarcity of zoned land, which has created high barriers for both new manufactured housing supply and new market entrants in our space.

Speaker #5: Thanks, Eddie. As we entered 2026, we remain confident in the outlook for manufactured housing. There are two significant factors that support this view. Both of which are unique to our industry.

Speaker #5: First, our homes are more cost-effective option for many of Americans. Our homes are more affordable than multifamily apartment rentals. Our customers enjoy homes that are detached structures that do not share walls, utilities, air conditioning, or heating with any other homes.

Speaker #5: These homes include two-, three-, and four-bedroom options, typically with two bathrooms. They also have a deck, yard, driveway, and in-home laundry facilities. And unlike multifamily apartments, there is persistently limited new manufactured housing community supply.

Speaker #5: There are various layers of regulatory restrictions, competing land uses, and scarcity of zoned land, which has created high barriers for both new manufactured housing supply and new market entrance in our space.

Kurt Keeney: That is why we have a competitive advantage in our industry. We are one of the Midwest region's largest MHC operators, and we continue to be well-positioned within the MHC industry. The industry remains quite fragmented with the top 50 MHC investors estimated to control approximately 17% of the 4.3 million manufactured housing lots in the United States. Flagship offers investors exposures to a resilient asset class with internal growth and a disciplined acquisition strategy. We certainly thank you for your time today, and I will now open up the line for questions.

Speaker #5: And that is why we have a competitive advantage in our industry. We are one of the Midwest region's largest MHC operators, and we continue to be well positioned within the MHC industry.

Speaker #5: The industry remains quite fragmented with the top 50 MHC investors estimated to control approximately 17% of the $4.3 million manufactured housing lots in the United States.

Speaker #5: Flagship offers investors exposures to a resilient asset class with internal growth and a disciplined acquisition strategy. We certainly thank you for your time today and I will now open up the line for questions.

Operator: 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. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mark Rothschild with Canaccord Genuity. Your line is now open.

Speaker #1: Thank you. To your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Speaker #1: Our first question comes from the line of Mark Rothschild with Canaccord. Your line is now open.

Mark Rothschild: Thanks. Good morning, guys.

Speaker #5: Thanks, thanks. Good morning, guys.

Kurt Keeney: Good morning, Mark.

Mark Rothschild: Hey. This first question, maybe it's for Nathan, I'm not sure. Looking at the cost of debt that you're getting now and that you put on the recent acquisition, can you just talk a little bit more about the cap rates you're willing to pay and that you're seeing in the market, excuse me, for deals? Then maybe how do you think about the going-in returns with the more expensive cost of debt?

Speaker #6: Good morning, Mark.

Speaker #5: Hey, this first question—maybe it's Nathan, I'm not sure—but looking at the cost of debt that you're getting now and that you put on the recent acquisition, can you just talk a little bit more about the cap rates you're willing to pay, and that you're seeing in the market, excuse me, for deals?

Speaker #5: And then ask a question, please press star 11 on maybe how do you think about the going-in returns with the more expensive cost of debt?

Kurt Keeney: Well, I'll start with that, Mark. You know, we have always, you know, and now being public over 5 years and being in the business 31 years, Kurt and I and Eddie, you know, we have always seen most manufactured housing communities have traded between a 5 and 7 cap, and they continue to be right there. I mean, nothing has changed. When families exit because there's such a small supply of them coming for sale, they sell somewhere between a 5 and 7 cap. We continue to see that. That hasn't changed for 31 years. Have we bought 9 caps? Yeah, we have. But, you know, a 9 cap is a lot of work. And while we're used to working a lot, you can only take so many of those in.

Speaker #6: Well, I'll start with that, Mark. We have always now being public over five years, and being in the business 31 years, Kurt and I and Eddie, we have always seen most manufactured housing communities have traded between a 5 and 7 cap.

Speaker #6: And they continue to be right there. I mean, nothing has changed. When families exit, because there's such a small supply of them coming for sale, they sell somewhere between a 5 and 7 cap.

Speaker #6: And we continue to see that. That hasn't changed for 31 years. Have we bought 9 caps? Yeah, we have. But a 9 cap is a lot of work.

Speaker #6: And while we're used to working a lot, you can only take some money off those in. We also don't buy 3.5 caps in Florida.

Kurt Keeney: We also don't buy 3.5 caps in Florida. It's just a total different kind of. In the Midwest and the Upper South, we live between a 5 and 7 cap and haven't seen it change even when the debt structure's done. You know, our last acquisitions that we did about 18 months ago really turned out well, and you're starting to see some real positives. I'll let Eddie talk about the debt a little bit more.

Speaker #6: So it's just a total different kind in the Midwest and the Upper South. We live between a 5 and 7 cap and haven't seen it change even when the debt structure's done.

Speaker #6: But our last acquisitions that we did about 18 months ago, that really turned out well. And you're starting to see some real positives.

Speaker #6: I'll let Eddie talk about the debt a little bit more.

Operator: Yeah. The only thing I'll say is, when we're looking at these acquisitions, Mark, what the key is really to think about, you know, what levers are there to be able to get the returns. Maybe the in-place cap rate is, you know, 5-6%. What opportunities are there? Are there opportunities for us to implement our sub-meter utility strategy, which has really, you know, been beneficial to us when we go into these acquisitions? What's the lot rent at the current portfolio that you're looking at versus the market? You know, are there opportunities there? And then, of course, the occupancy. Last year, you know, the one thing that we were able to do is buy vacancies for the next couple of years, right?

Eddie Carlisle: Yeah. The only thing I'll say is, when we're looking at these acquisitions, Mark, what the key is really to think about, you know, what levers are there to be able to get the returns. Maybe the in-place cap rate is, you know, 5-6%. What opportunities are there? Are there opportunities for us to implement our sub-meter utility strategy, which has really, you know, been beneficial to us when we go into these acquisitions? What's the lot rent at the current portfolio that you're looking at versus the market? You know, are there opportunities there? And then, of course, the occupancy. Last year, you know, the one thing that we were able to do is buy vacancies for the next couple of years, right?

Speaker #4: Yeah, the only thing I'll say is when we're looking at these acquisitions, Mark, the key is really to think about what levers are there to be able to get the returns, maybe the in-place cap rate is 5, 6 percent.

Speaker #4: But what opportunities are there? Are there opportunities for us to implement our submeter utility strategy, which is really been beneficial to us when we go into these acquisitions?

Speaker #4: What's the lot rent at the current portfolio that you're looking at versus the market? Are there opportunities there? And then, of course, the occupancy.

Speaker #4: So last year, the one thing that we were able to do is buy vacancies for the next couple of years, right? The acquisitions that we did around the Cincinnati area, that were only about 70% occupied.

Operator: The acquisitions that we did around the Cincinnati area that were only about 70% occupied. Certainly, when you're looking at the cap rate and year-one kind of accretion, it's still gonna be tight. We'll just have to, you know, implement our strategy and really make sure that there are other opportunities within those communities and acquisitions we're buying to be able to grow it, to be an accretive acquisition.

Eddie Carlisle: The acquisitions that we did around the Cincinnati area that were only about 70% occupied. Certainly, when you're looking at the cap rate and year-one kind of accretion, it's still gonna be tight. We'll just have to, you know, implement our strategy and really make sure that there are other opportunities within those communities and acquisitions we're buying to be able to grow it, to be an accretive acquisition.

Speaker #4: So certainly when you're looking at the cap rate and year one kind of accretion, it's still going to be tight. And we'll just have to implement our strategy and really make sure that there are other opportunities within those communities and acquisitions we're buying to be able to grow it to be an accretive acquisition.

Mark Rothschild: Okay, great. Thanks. Maybe just one more from me. For a few years, you're having some really good occupancy growth. The same-property occupancy growth just wasn't there this quarter. Is this more just maybe a seasonal thing or just a temporary thing or do you feel like in the same property portfolio, it's gonna be harder to squeeze out more of the occupancy improvement?

Speaker #5: Okay, great. Thanks. And maybe just one more from me. For a few years, we're having some really good occupancy growth just wasn't there this quarter.

Speaker #5: Growth—the same property occupancy. Is this more just maybe a seasonal thing, or just a temporary thing? And do you feel like, from the same property portfolio, it's going to be harder to squeeze out more of the occupancy improvements?

Kurt Keeney: No, I think you're on point. You know, we absolutely had a little seasonality catch up with us in December in particular. We had a little weather issue. They really started the first week of December. We had snow in most of our markets the first week of December. That's off by about a month. That really stopped us from re-leasing because, you know, we had snow right before the holiday. We've actually already seen the same-community metrics kind of rebound in February. That was really it. It was just a little bit of weather, you know, and we had some rentals that went vacant. You know, it's tough to get people in around the holidays to renew, and that.

Speaker #4: No, I think you're on point. We absolutely had a little seasonality catch up with us in December in particular. And we had a little weather issue.

Speaker #4: They really started the first week of December. We had snow in most of our markets the first week of December. That's off by about a month.

Speaker #4: And that really stopped us from releasing because we had snow right before the holidays. So we've actually already seen the same community metrics kind of rebound in February.

Speaker #4: And that was really it. It was just a little bit of weather. And we had some rentals that went vacant. It was it's tough to get people in around the holidays to renew.

Kurt Keeney: We came in January and got hit pretty hard with weather again. It looks like we've come through that. I don't think same-community metrics are matured out at all. I still think you'll see 1% to 2% occupancy growth through homeownership. Yeah, you're right. We got caught with a little seasonality and a little bit of weather in December, but nothing that we're staying up at night about.

Speaker #4: And then we came in January and got hit pretty hard with weather again. But it looks like we've come through that. And so I don't think the same community metrics are matured out at all.

Speaker #4: I still think you'll see 1% to 2% occupancy growth through home ownership. But yeah, you're right. We got caught with a little seasonality and a little bit of weather in December, but nothing that we're staying up at night about.

Mark Rothschild: Okay, great. Thanks so much.

Speaker #5: Okay, great. Thanks so much.

Operator: Thank you. Our next question comes from the line of Jonathan Kelcher with TD Cowen. Your line is now open.

Speaker #1: Thank you. Our next question comes from the line of Jonathan Kelcher with TD Cowan. Your line is now open.

Jonathan Kelcher: Thanks. Good morning.

Speaker #4: Thanks. Good morning.

Kurt Keeney: Morning, John.

Jonathan Kelcher: First question, just on the lower margin in ancillary services that kind of hit same-property operating margins in the quarter. Have those rolled out to the whole portfolio yet?

Speaker #6: Good morning, John.

Jonathan Kelcher: First question, just on the lower margin in ancillary services that kind of hit same-property operating margins in the quarter. Have those rolled out to the whole portfolio yet?

Speaker #4: First question just on the lower margin and utility services that kind of hit the same property operating margins in the quarter. Have those rolled out to the whole portfolio yet?

Kurt Keeney: No, they haven't yet.

Operator: Eddie, you wanna jump in there?

Kurt Keeney: Eddie, you wanna jump in there?

Speaker #6: No, they haven't. Yeah, absolutely. No, we certainly haven't rolled them out across the entire portfolio. The ancillary revenues right now are about 75% of the lots that we have.

Kurt Keeney: Yeah, absolutely. We certainly haven't rolled them out across the entire portfolio. The ancillary revenues right now are about 75% of the lots that we have. We're gonna get that to 100%. There's some just locations where it's not feasible. We still have a little bit of runway there. Certainly, I think at least another year's worth. What we're seeing, though, is, you know, to your point, the rollout that we did in Q3 of 2025 was a smaller group of lots and communities than we did in the prior year. Certainly, when you look at that same-community NOI growth year-over-year, that has been a piece of the depression that you saw in Q4.

Eddie Carlisle: Yeah, absolutely. We certainly haven't rolled them out across the entire portfolio. The ancillary revenues right now are about 75% of the lots that we have. We're gonna get that to 100%. There's some just locations where it's not feasible. We still have a little bit of runway there. Certainly, I think at least another year's worth. What we're seeing, though, is, you know, to your point, the rollout that we did in Q3 of 2025 was a smaller group of lots and communities than we did in the prior year. Certainly, when you look at that same-community NOI growth year-over-year, that has been a piece of the depression that you saw in Q4.

Speaker #6: You're going to get that to 100%. There are just locations where it's not feasible. But we still have a little bit of runway there. Certainly, I think at least another year's worth.

Speaker #6: What we're seeing, though, is, to your point, the rollout that we did in Q3 of 2025 was a smaller group of lots and communities than we did in the prior year.

Speaker #6: So certainly, when you look at that same community NOI growth year over year, that has been a piece of the depression that you saw in Q4.

Kurt Keeney: You know, where that growth has been kind of 1.5 to 2% on a same-community basis, that slowed to, call it, you know, 0.75% in Q4.

Eddie Carlisle: You know, where that growth has been kind of 1.5 to 2% on a same-community basis, that slowed to, call it, you know, 0.75% in Q4.

Speaker #6: Where that growth has been kind of one and a half to 2 percent on a same community basis, that slowed the, call it, three-quarters of a percent in Q4.

Jonathan Kelcher: Okay. Once it is all rolled out, how should we think about revenue growth? Like, would it be the same pace as overall rental rate growth?

Speaker #6: Okay. And then once it's it is all rolled out, how should we think about revenue growth? Would it be the same pace as overall rental rate growth?

Operator: We, you know, we do have governors in the contracts with the cable company, so they should stay pretty steady. It probably grows at a bit slower rate, right? It generally that you're gonna see kind of CPI on those services specifically.

Speaker #4: It probably grows at a—we do have governors in the contracts with the cable company, so they should stay pretty steady. And it probably grows at a bit slower rate, right?

Eddie Carlisle: We, you know, we do have governors in the contracts with the cable company, so they should stay pretty steady. It probably grows at a bit slower rate, right? It generally that you're gonna see kind of CPI on those services specifically.

Speaker #4: Generally, you're going to see kind of CPI on those services specifically.

Jonathan Kelcher: Okay. That's helpful. Secondly, there's a big single-family rental bill that is working its way through Congress right now. Do you guys expect any impact on the MHC business from that?

Speaker #6: Okay, that's helpful. And then, secondly, there's a big single-family rental bill that is working its way through Congress right now. Do you guys expect any impact on the MHC business from that?

Nathan Smith: I'll answer that. You know, originally we were not in. There was no mention of manufactured housing in that bill. Suddenly the White House threw out a letter which was kind of awkward. They normally don't do that, make public comments on bills. When it came to the Senate, manufactured housing was put in the bill saying it is excluded. It's written in the bill that MH is excluded, and we feel pretty comfortable about that. Interestingly enough, we were not near as worked up as many other people because we just don't have that many rentals. That's not our model. Our model is home sales.

Speaker #1: I'll answer that. So originally, we were not in. There was no mention of manufactured housing in that bill. Then suddenly, the White House threw out a letter which was kind of awkward.

Speaker #1: They normally don't do that. Make public comments on bills. And but then when the Senate when it came to the Senate, manufactured housing was put in the bill saying it is excluded.

Speaker #1: So MH, it's written in the bill that MH is excluded. And we feel pretty comfortable about that. So, interestingly enough, we were not nearly as worked up as many other people because we just don't have that many rentals.

Speaker #1: That's not our model. Our model is home sales. But if you have a rental model where your model is that you're renting the home to the customer, that could have been really, really I mean, we only have 1,600, 1,800 right around in there.

Nathan Smith: If you have a rental model where your model is that you're renting the home to the customer, that could have been really, really problematic. It just wasn't as problematic with us. I mean, we only have, you know, 1,600, 1,800 right around in there. Last year we sold 111 and put 115 homes in, 160 in, I believe. That's just not our model. Again, while it was concerning to the industry when it came out, it was less concerning to us because of our home ownership model.

Speaker #1: It just wasn’t as problematic with us. Industry, when it came out, it was less concerning to us because of our home ownership model.

Speaker #1: And last year, we sold 111 and put 150-some in, 156 in, I believe. And so we just that's just not our model. So again, while it was concerning to the problematic.

Jonathan Kelcher: Very good. Thanks for that, and I'll turn it back.

Speaker #4: Very good. Thanks for that. And I'll turn it back.

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

Speaker #1: Thank you. Our next question comes from the line of Kyle Stanley with Day Jardine. Your line is now open.

Kyle Stanley: Thanks. Morning, guys.

Speaker #6: Thanks. Morning, guys. Good morning, Kyle. Just wanted to look into some of the inputs and drivers to the 14-basis-point cap rate compression this quarter.

Operator: Morning, Kyle.

Kurt Keeney: Morning, Kyle.

Nathan Smith: Morning, Kyle.

Kyle Stanley: Just wanted to look into, you know, some of the inputs and drivers to the fourteen basis points to cap rate compression this quarter. You know, obviously you've been quite active on the acquisition front. I think, Nathan, you gave some good commentary earlier about, you know, cap rates being in the 5% to 7% over the last, you know, several decades. Just curious, you know, what drove the compression there.

Speaker #6: Obviously, you've been quite active on the acquisition front. I think, Nathan, you gave some good commentary earlier about cap rates being in the 5 to 7 percent over the last several decades.

Speaker #6: Just curious, what drove the compression there?

Operator: Eddie Carlisle, maybe you wanna jump in.

Nathan Smith: Eddie Carlisle, maybe you wanna jump in.

Speaker #4: Kyle, maybe you want to jump in?

Nathan Smith: Yeah.

Eddie Carlisle: Yeah.

Operator: Yeah, absolutely.

Eddie Carlisle: Yeah, absolutely.

Nathan Smith: Yeah.

Eddie Carlisle: Yeah.

Operator: Our methodology for reviewing cap rates, you know, kind of IFRS values across the portfolios, we have a third-party appraisal that's done. We usually do about a third of a portfolio annually. We have that done. Management also is reviewing, and we take that into a holistic approach, right? We're looking at what our acquisition is doing in the markets, what are we seeing as we continue to do, you know, do our strategy, and then what do the third-party experts say. With all of that, those data points, you know, what we really saw is some of the acquisitions that we had done in prior periods saw some cap rate compression.

Speaker #6: Yeah, absolutely. So our methodology for reviewing cap rates, kind of IFRS values across the portfolios, we have a third-party appraisal that's done we usually do about a third of a portfolio annually.

Eddie Carlisle: Our methodology for reviewing cap rates, you know, kind of IFRS values across the portfolios, we have a third-party appraisal that's done. We usually do about a third of a portfolio annually. We have that done. Management also is reviewing, and we take that into a holistic approach, right? We're looking at what our acquisition is doing in the markets, what are we seeing as we continue to do, you know, do our strategy, and then what do the third-party experts say. With all of that, those data points, you know, what we really saw is some of the acquisitions that we had done in prior periods saw some cap rate compression.

Speaker #6: We had that done and then management also is reviewing and we take that into a holistic approach, right? We're looking at what our acquisition is doing in the markets.

Speaker #6: What are we seeing as we continue to do our strategy? And then what do the third-party experts say? So with all of that, those data points, what we really saw is some of the acquisitions that we had done in prior periods saw some cap rate compression.

Operator: That's from increasing occupancy, the good work that we've done by adding amenities in the communities and repaving roads, and those things. You know, those, that work that was done really helped with the cap rates in some of the communities. It's all validated through the third-party appraisal as well. You know, we have industry experts that are doing these appraisals. Those are kind of the drivers that changed the cap rate.

Eddie Carlisle: That's from increasing occupancy, the good work that we've done by adding amenities in the communities and repaving roads, and those things. You know, those, that work that was done really helped with the cap rates in some of the communities. It's all validated through the third-party appraisal as well. You know, we have industry experts that are doing these appraisals. Those are kind of the drivers that changed the cap rate.

Speaker #6: That's from increasing occupancy—the good work that we've done by adding amenities in the communities, repaving roads, and those things. So, that work that was done really helped with the cap rates in some of the communities.

Speaker #6: And again, it's all validated through the third-party appraisal as well. We have industry experts that are doing these appraisals. So those are kind of the drivers that change the cap rate.

Kyle Stanley: Okay. Thank you for that. You know, obviously there's been some commentary on seasonality, winter weather. How much of that, you know, contributed to the maybe more elevated OpEx inflation in the quarter? I think, Kurt, you mentioned, you know, January being impacted as well. Just curious, you know, how you see maybe OpEx trending in Q1 versus the balance of the year.

Speaker #6: Okay, thank you for that. Obviously, there’s been some commentary on seasonality, winter weather. How much of that contributed to the maybe more elevated OPEX inflation in the quarter?

Speaker #6: I think, Kurt, you mentioned January being impacted as well. So just curious how you see maybe OPEX trending in the first quarter versus the balance of the year?

Operator: Yeah, that's a good question. Yeah, I certainly Q1, you know, there's a little bit of an effect in Q4 as well, right? To Kurt's point, in December, we saw a little bit of that. We had some repairs and maintenance type work where the maintenance of the communities, plowing streets, and then some elevated payroll there as well. You know, look, to just be completely frank, Q1 is gonna have that as well. We saw some even more significant weather in January with both the snow and the temperatures that caused some of the water and sewer leaks.

Kurt Keeney: Yeah, that's a good question. Yeah, I certainly Q1, you know, there's a little bit of an effect in Q4 as well, right? To Kurt's point, in December, we saw a little bit of that. We had some repairs and maintenance type work where the maintenance of the communities, plowing streets, and then some elevated payroll there as well. You know, look, to just be completely frank, Q1 is gonna have that as well. We saw some even more significant weather in January with both the snow and the temperatures that caused some of the water and sewer leaks.

Speaker #4: Yeah, that's a good question. Yeah. So I certainly Q1 so there's a little bit of an effect in Q4 as well, right? So to Kurt's point, in December, we saw a little bit of that.

Speaker #4: So we had some repairs and maintenance-type work, where the maintenance of the community’s plowing streets. And then some elevated payroll there as well. But look, just to be completely frank, Q1 is going to have that as well.

Speaker #4: We saw some even more significant weather in January, with both the snow and the temperatures that caused some of the water sewer leaks. So, yeah, Q1, I would certainly expect some seasonality in spending around OPEX.

Operator: Yeah, Q1, I would certainly expect some seasonality and spending around OpEx, but that should, you know, level itself out as we move into the balance of the year.

Kurt Keeney: Yeah, Q1, I would certainly expect some seasonality and spending around OpEx, but that should, you know, level itself out as we move into the balance of the year.

Speaker #4: But that should level itself out as we move into the balance of the year.

Kyle Stanley: Okay, perfect. Just one last one. I know you've said in the past that, you know, sometimes your deal flow can come quite quickly as, you know, maybe a family looks to exit, rapidly. I'm just wondering, you know, has anything changed in the acquisition opportunity set since we spoke last quarter?

Speaker #6: Okay. Perfect. And now just one last one. I know you've said in the past that sometimes your deal flow can come quite quickly as maybe a family looks to exit rapidly.

Speaker #6: I'm just wondering, has anything changed in the acquisition opportunity set since we spoke last quarter?

Nathan Smith: No, we're still, you know, obviously still talking with folks. The deals do seem to be a little bit lighter than normal. You know, we are talking right now. We're in talks of several deals right now, so hopefully we'll have some announcements soon.

Speaker #4: No, we're still obviously still talking with folks. The deals do seem to be a little bit lighter than normal. But we were talking right now, we're in talk of several deals right now.

Speaker #4: So hopefully, we'll have some announcements soon.

Kyle Stanley: Okay, perfect. That's it for me. I'll turn it back. Thanks, guys.

Speaker #6: Okay. Perfect. That's it for me. I'll turn it back. Thanks, guys.

Operator: Thank you. Our next question comes from the line of Jimmy Shan with RBC Capital Markets. Your line is now open.

Speaker #1: Thank you. Our next question comes from the line of Jimmy Shand with RBC Capital Markets. Your line is now open.

Jimmy Shan: Thank you. Just following up on the Freddie Mac loan, $73 million loan. Did, like, have spreads widened out? Because when I look at some of the financing you've done earlier, early in 2025, the rates were a lot inside, were inside that 6.25 rate. Just curious you know, what are you seeing in terms of spreads?

Speaker #7: the Freddie McLuhan 73 million loan. Have spreads widened out? Because when I look at some of the financing you've done earlier in '25, they were the rates were a lot inside were inside that 6 and a quarter rate.

Speaker #7: I'm just curious what's what are you seeing in terms of spreads?

Kurt Keeney: Yeah. They had widened out a little bit. We're starting to see those come back in a bit now. Obviously, as the 10-year Treasury has decreased, we're starting to see spreads come back in as well. Yes. At the time that was completed, spreads had blown out a bit. You know, that was also supplemental financing, which carries a little bit wider spread as well. You know, the combination of those things. What we're seeing though is, you know, Life Cos have seemed to jump back in the game, and so that's actually providing some good, you know, competition for Fannie and Freddie. When we're looking at spreads today, I certainly see that, you know, that we should be sub six for anything that we're doing today, you know.

Speaker #4: Yeah. So they had widened out a little bit. We're starting to see those come back in a bit now. Obviously, as the tenure treasury has decreased, we're starting to see spreads come back in as well.

Speaker #4: So yes, at the time that that was completed, spreads had blown out a bit. That was also supplemental financing, which carries a little bit wider spread as well.

Speaker #4: So the combination of those things, what we're seeing though is Lifeco's have seemed to jump back in the game. And so that's actually providing some good competition for Fannie and Freddie.

Speaker #4: So, when we're looking at spreads today, I've certainly seen that we should be sub-6 for anything that we're doing today—so probably between 5.5 and 5.75.

Kurt Keeney: Probably between $5.50 and 5.75.

Jimmy Shan: Okay. For five-year terms.

Speaker #7: Okay. For five-year terms.

Kurt Keeney: Most of the stuff we're looking at would be 10.

Speaker #4: Most of the stuff we're looking at would be ten, but the five-year deal that we did was, again, it was just a supplemental on some existing assets.

Jimmy Shan: Thank you.

Kurt Keeney: You know, the five-year deal that we did was, again, it was just a supplemental on some existing assets.

Jimmy Shan: Okay. Okay, great. Maybe just generally, when you're thinking about, you know, your tenants' sort of financial health, I think you guys have implemented already a lot rent increase, and then you've got some of the utility costs going up, and then plus there's all these other big macro factors, higher gas prices. Do you anticipate at all, you know, in terms of your tenants being able to absorb some of these cost increases? Do you feel like, you know, we're gonna see a bit of pressure on the bad debt at some point? Maybe any thoughts there.

Speaker #7: Okay. Okay, great. And then maybe just generally, when you're thinking about your tenants' sort of financial health, I think you guys have implemented already the lot rate increase, and then you've got some of the utility costs going up.

Speaker #7: And then plus, there’s all these other big macro factors—higher gas prices. Do you anticipate at all, in terms of your tenants being able to absorb some of these cost increases?

Speaker #7: And do you feel like we're going to see a bit of pressure on the bad debt at some point, maybe any thoughts there?

Kurt Keeney: Actually, you know, we think the best, you know, rent control is self-regulation, and I think we're a pretty good example of that. You know, again, we were very tempered at our rent increase that we put in effect 1 January, which has gone into effect across the portfolio. It's 5.7% on average, about $30. I don't see the tenants being overly stressed over that. Always concerned about oil prices. They've been steadily going down until recently, and that's important for our residents. It's just like inflation at the grocery store, right? It's universal. Our residents don't drive EVs. That's not my tenant base.

Speaker #4: I actually we think the best rent control is self-regulation. And I think we're a pretty good example of that. Again, we were very tempered at our rent increase that we put in effect January 1, which has gone to effect across the portfolio.

Speaker #4: It's 5.7% on average, about $30. And so I don't see the tenants being overly stressed over that. Always concerned about oil prices. They've been steadily going down until recently.

Speaker #4: And that's important for our residents. It's just like inflation at the grocery store, right? It's universal. Our residents don't drive EVs. That's not my tenant base.

Kurt Keeney: What we saw in the past is that if this oil price and gas price continues to be elevated, believe it or not, what we saw in the past is people actually re-urbanize. In our case, suburbanize, if that's a real word. They literally move closer into their work, and they move in from more rural areas, and it actually supports us. That, if it goes on longer than probably five or six months, it wouldn't surprise me to see that because people can't afford to drive out to go to work and drive home. I think that's probably good for us. But right now I don't see any stress that is going to push the bad debt in our communities as we speak.

Speaker #4: What we saw in the past is that if this oil price and gas pump continues to be elevated, believe it or not, what we saw in the past is people actually re-urbanize.

Speaker #4: In our case, suburbanize—that's a weird word. But they literally move closer into their work, and they move in from more rural areas. And it actually supports us.

Speaker #4: So that, if it goes on longer than probably five or six months, it wouldn't surprise me to see that, because people can't afford to drive out to go to work and drive home.

Speaker #4: So I think that's probably good for us. But right now, I don't see any stress that is going to push the bad debt. In our communities, as we speak, but again, I think it's because we're 3 to 5 hundred dollars cheaper than anything comparable.

Kurt Keeney: Again, I think it's because we're $300 to 500 cheaper than anything comparable, and I think people are going to make sure that their housing is taken care of.

Speaker #4: And I think people are going to make sure that their housing is taken care of.

Jimmy Shan: Okay. Okay, thank you.

Speaker #7: Okay. Okay. Thank you.

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

Speaker #1: Thank you. Our next question comes from the line of Matt Cornack with National Bank Capital Markets. Your line is now open.

Matt Kornack: Hey, good morning, guys.

Speaker #7: Okay. Good morning, guys.

Kurt Keeney: Good morning, Matt.

Matt Kornack: Notwithstanding the comments on preferring ownership versus rental, there was a bit of an uptick in the units that you have for rent. Was that a function of acquiring units that were for rent, or did you put more into the rental program?

Speaker #4: Good morning, Matt.

Speaker #7: Notwithstanding the comments on preferring ownership versus rental, there was a bit of an uptick in the units that you have for rent. Was that a function of acquiring units that were for rent, or did you put more into the rental program?

Kurt Keeney: We absolutely put 156 units into the program last year, and as Nathan said earlier, we sold 111. When we bought the portfolio in Cincinnati, Eddie, can you confirm how many rental homes were in that fleet?

Speaker #4: We absolutely put 156 units into the program last year. And as Nathan said earlier, we sold 111. But when we bought the portfolio in Cincinnati, Eddie, can you confirm how many rental homes were in that fleet?

Jimmy Shan: Yeah. There were 152 additional rental homes that came in that acquisition. Yeah, that was a pretty significant driver of that increase.

Eddie Carlisle: Yeah. There were 152 additional rental homes that came in that acquisition. Yeah, that was a pretty significant driver of that increase.

Speaker #8: Yeah, there were 152 additional rental homes that came in with that acquisition, so yeah, that was a pretty significant driver of that increase. Another 50 in the other acquisition.

Matt Kornack: Would you-

Kurt Keeney: I think there was another 50 in the other acquisition. Let's call it 200 units came in via acquisition in Q4.

Speaker #8: So let's call it 200 units. Came in via acquisition in the fourth quarter.

Matt Kornack: Okay. I guess the goal is to convert those to homeownership, I guess, in time? Or does it make sense?

Speaker #7: Okay. And I guess the goal is to convert those to homeownership, I guess, in time—or does that make sense?

Kurt Keeney: Every day.

Nathan Smith: Every day.

Matt Kornack: Okay.

Speaker #8: Every day. Every day. Every day.

Matt Kornack: Okay.

Kurt Keeney: Yeah. Every day.

Nathan Smith: Sold 11 of them last month. Couldn't be happier.

Speaker #4: So, 11 of them last month. But be happier. I love the income, but I like to see them go. They're like a bad family member.

Matt Kornack: Fair enough.

Nathan Smith: I love their income, but I like to see them go. They're like a bad family member, you know, on a holiday.

Speaker #4: On a holiday.

Matt Kornack: Okay. Makes sense. Switching gears, CapEx, it's come down actually fairly substantially. This quarter was a good quarter. Again, the seasonality, I'm sure, plays a part. Is this kind of where you expect to be for the next little while? Maybe I'll also join in because it's similar, on the margin front. I know you had said that you'd expect expense growth to kind of track revenue growth. Is that still how we should be thinking about things at this point?

Speaker #7: Okay. Makes sense. And then switching gears, CapEx, it's come down actually fairly substantially. This quarter was a good quarter. And again, it's seasonality, I'm sure, plays a part.

Speaker #7: But is this kind of where you expect to be for the next little while and maybe also join in because it's similar on the margin front?

Speaker #7: I know you had said that you expect expense growth to kind of track revenue growth. Is that still how we should be thinking about things at this point?

Kurt Keeney: Yeah.

Speaker #4: Yeah. So yeah, that's what I'm saying. So on the CapEx spend, yeah, I mean, I think what you saw in Q4 was somewhat to do with the seasonality, right?

Nathan Smith: Jump in.

Kurt Keeney: Jump in.

Kurt Keeney: Yeah. I was gonna say. On the CapEx spend, yeah, I mean, I think what you saw in Q4 was somewhat to do with,

Eddie Carlisle: Yeah. I was gonna say. On the CapEx spend, yeah, I mean, I think what you saw in Q4 was somewhat to do with,

Operator: With the seasonality, right? Just some of the weather. That certainly slowed it down a bit. But as well as what we saw, and, you know, Jimmy asked the question about the Freddie Mac debt. When we do these large refinancings, what generally happens is you pull forward a lot of the maintenance CapEx that, you know, happens over a 5 to maybe 10-year period, and you pull it all forward, and you get it done, as part of the required repairs by the lender, right? When some of these large financings that we did during 2025 really drove pulling forward some of the capital expenditures into a more compressed time frame. That was a piece of what you're seeing there, in the first, you know, 2 or 3 quarters of 2025.

Speaker #4: Just some of the weather. So that certainly slowed it down a bit. But as well as what we've saw, and Jimmy asked the question about the Freddie Mac debt.

Speaker #4: When we do these large refinancings, what generally happens is you pull forward a lot of the maintenance CapEx that happens over a 5 to maybe 10-year period, and you pull it all forward and you get it done as part of the required repairs by the lender, right?

Speaker #4: So some of these large financings that we did during 2025 really drove pulling forward some of the capital expenditures into a more compressed timeframe.

Speaker #4: So, that was a piece of what you're seeing there in the first two or three quarters of 2025. So, what I would say with all that said is, yes, I would expect that the CapEx levels will kind of level off a bit.

Operator: What I would say with all that said is, yes, I would expect that the CapEx levels will kind of level off a bit and then be on that more sustainable level kind of going forward. From a margin standpoint, expenses are going to still kind of track revenues. The thing that we're really trying to make sure is, you know, one of the things that we've had in the past, and it's just been a function of the job market, is trying to make sure that our staffing is at the right levels. I think we've kind of found that level in Q4 and even into Q1. It's a higher expense a bit in payroll and benefits.

Speaker #4: And be on that more sustainable level kind of going forward. From a margin standpoint, yeah, I think margins are going to I'm sorry, the expenses are going to still kind of track revenues.

Speaker #4: The thing that we're really trying to make sure is—one of the things that we've had in the past, and it's just been a function of the job market—is trying to make sure that our staffing is at the right levels.

Speaker #4: I think we've kind of found that level in Q4 and even into Q1. It's a higher expense a bit in payroll and benefits. But what that's going to enable us to do is, I think, is going to help us drive some of those occupancy numbers, right?

Operator: What that's gonna enable us to do is I think it's gonna help us drive some of those occupancy numbers, right? We've got our leasing agents in place to help with leasing lots, selling houses, and so that should have some effect helping us there.

Speaker #4: We've got our leasing agents in place to help with leasing lots, selling houses. And so that should have some effect helping us there.

Operator: 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 Dean Wilkinson with CIBC. Your line is now open.

Speaker #1: Thank you. As a reminder, to ask a question at this time, please press *11 on your touch-tone telephone. Our next question comes from the line of Dean Wilkinson with CIBC. Your line is now open.

Dean Wilkinson: Thanks. Morning, guys.

Speaker #4: Thanks. Morning, guys.

Operator: Morning, Dean.

Speaker #8: Morning, Dean.

Dean Wilkinson: Eddie, just on acquisition capacity. I think last time we spoke, you said on balance sheet you could probably do, I think it was two hundred and fifty million. Looking at the acquisitions that you've made, sort of the fair value gains, could we assume that 2026 probably looks a little like 2025, 2024 in terms of an acquisition year?

Speaker #4: Eddie, just on acquisition capacity, I think last time we spoke, you said on balance sheet, you could probably do I think it was 2, 250 million so looking at the acquisitions that you've made, sort of the fair value gains, could we assume that 2026 probably looks a little like 2025, 2024 in terms of an acquisition year?

Operator: Yeah, I mean, as far as I'll let Nathan speak to how many he's gonna buy, but certainly from a capacity standpoint, I think we still have the ability on balance sheet to do another $100 to $150 million worth of acquisitions, which should sustain us through 2026. Look, as we continue to grow that fair value through NOI growth, and you know that should help us continue to add capacity as well. At this point, you know, I don't see any reason that we wouldn't be able to finance any kind of upcoming near-term acquisitions through debt financing.

Speaker #8: Yeah. I mean, as far as I'll let Nathan speak to how many he's going to buy. But from certainly from a capacity standpoint, I think we still have the ability on balance sheet to do another 100, 150 million dollars' worth of acquisitions.

Speaker #8: Which, yeah, should sustain us through 2026. And look, as we continue to grow the fair value through NOI growth, that should help us continue to add capacity as well.

Speaker #8: So at this point, I don't see any reason that we wouldn't be able to finance any kind of upcoming near-term acquisitions through debt financing.

Dean Wilkinson: Yep. Maybe for Nathan then.

Speaker #4: Yep. And then maybe for Nathan, then yeah, go ahead. Would that mix look similar to, say, what we saw in Q4 where maybe you've got 90-plus percent occupancy assets, and then maybe some that are in the lower?

Nathan Smith: Yeah, go ahead.

Dean Wilkinson: Would that mix look similar to, say, what we saw in Q4, where maybe, you know, you've got, you know, 90+% occupancy assets and then maybe some that are in the lower? Or are you gearing that more towards buying the opportunity to lease up, as you look forward now?

Speaker #4: Or are you gearing more towards buying the opportunity to lease up as you look forward now?

Nathan Smith: Well, Dean, we really wish that I had that ability to pick those, but I don't have that ability because what happens is what comes to us as people age out and mom and pop move on or whatever it may be. You know, it is what it is that day. Like sometimes it is a 98% occupied community, and sometimes it's a 70%, 75% that, you know, has 40 rentals in it. We just don't know. I wouldn't expect any new markets for us. I think that we are happy in the 8 states that we're doing business, and we should be able to grow between CAD 30 million and 50 million this year.

Speaker #9: Well, Dean, I really wish that I had that ability to pick those, but I don't have that ability, because what happens is what comes to us as people age out and mom-and-pop move on, or whatever it may be—it is what it is that day.

Speaker #9: Sometimes it is a 98% occupied community, and sometimes it's a 70%, 75% that has 40 rentals in it. We just don't know. But I wouldn't expect any new markets for us.

Speaker #9: I think that we are happy in the eight states that we're doing business, and we should be able to grow between 30 and a million and 50 million this year.

Nathan Smith: Hopefully more than that, but we'll see what the market gives us. That's kind of where I'm at today on it.

Speaker #9: Hopefully more than that, but we'll see what the market gives us. That's kind of where I'm at today on it.

Dean Wilkinson: That's just like the bad family member. Thanks, guys. I appreciate it.

Speaker #4: That's just like the bad family member. Thanks, guys. I appreciate it.

Operator: Thank you. I'm currently showing no further questions at this time. I'd like to hand the call back over to Kurt Keeney for closing remarks.

Speaker #1: Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Kurt Keeney for closing remarks.

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

Speaker #8: Thank you, operator. And thank everyone for participating today. Please feel free to reach out to our investor relations team at ir@flagshipcommunities.com if you have any further questions.

Speaker #8: Have a great day.

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

Q4 2025 Flagship Communities Real Estate Investment Trust Earnings Call

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