Flagship Communities Real Estate Investment Trust (MHCUN) Earnings Call Transcript & Summary

Hello, ladies and gentlemen. Thank you for standing by. Welcome to the Flagship Communities REIT Fourth Quarter 2024 Earnings Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. Today's presentation 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 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. 2024 was a record year for Flagship. This year, the REIT achieved many significant milestones. In April, we completed the largest acquisition in our history with the addition of 7 MHCs to our portfolio. We've strengthened our existing footprint in Tennessee by entering 2 locations in Nashville, one of the fastest-growing markets in the U.S. and entered a new market, West Virginia, with 5 distinct locations. The integration of these assets is underway and home expansion plans are in progress. We've also made significant progress preserving our conservative debt structure and strengthening our balance sheet. Earlier this year, we refinanced our near-term debt at a lower fixed interest rate, resetting our interest rates for another 10 years. The cash proceeds were used to pay off existing debt, leaving us with no substantial debt maturities until 2030. And in early 2025, we completed 2 financings at an average weighted interest rate of 5.91% to repay the $45 million outstanding on the bridge loan from the acquisition, which was 6.82% at the time of payoff. The ability to refinance our debt at better terms helps us solidify our balance sheet as we look to continue to grow the REIT. We also made tremendous inroads in our lot expansion strategy in 2024. We added 112 lots to our portfolio earlier this year with the ability to add an additional 638 lots over approximately 300 acres over the next few years. In addition to these incredible achievements, Flagship also generated strong financial results in 2024, which speaks to the consistency of our business and the solid fundamentals of the manufactured housing industry. We saw notable increases in rental revenue, NOI, FFO and AFFO, all of which have grown steadily over the last 3 years. We also continue to see double-digit growth in certain Same Community metrics for both the fourth quarter and the full year of 2024. These include Same Community revenue, which grew 15.5% over Q4 of 2023 and 13.3% over the previous year, and Same Community NOI, which grew 17.7% over Q4 of 2023 and over 14.5% over the previous year. Same Community NOI margin also grew 1.3% over Q4 of 2023 and 0.8% over the full year. Our strong 2024 results enabled us to announce a 5% increase to our monthly cash distribution for the fourth consecutive year, which we implemented earlier than our prior year. We have raised distributions every year since our IPO in 2020. I will now turn it over to Nathan to provide more detail on our operating regions and growth strategy. Nathan?

Thanks, Kurt. Good morning, everyone. As Kurt mentioned, we were pleased with our performance this past year. Every year, we look for ways to optimize our existing portfolio and to add external opportunities that adhere to our strict criteria. And in 2024, we succeeded in both areas. In our short time as a publicly traded REIT, we have demonstrated a track record of steady and consistent financial and operational performance, which has led to our overall growth. We have grown our existing portfolio in a few key areas. The first is through maintaining stable occupancy rates. Our total portfolio occupancy and the Same Community occupancy were similarly compared to our last year. Our ability to maintain steady occupancy, coupled with our strong rent collections enable us to generate predictable results for our existing business. This predictability, coupled with our 6% average monthly rent increase that we implemented across the portfolio earlier this year has set us up nicely for another strong 2025. The second is through auxiliary revenue and cost containment initiatives. Through our 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 successfully implementing some metering technology and water recapture programs across our MHCs that allows us to detect water leaks in real-time. These measures have resulted in a 25% to 35% reduction in water consumption, which benefits our communities and the environments where we operate. The third is through our lot expansion strategy. Lot expansion enables us to add more housing opportunities within our certain existing communities for a modest capital investment. And the final area is our commitment to ensure our customers take pride in their homes and enjoy living in our communities. We continue to add desirable amenities such as pickleball courts, municipal-grade playgrounds, shuffle ball courts and basketball courts for our residents each year. They actively look forward to our holiday and seasonal programming initiatives as well. Acquisitions have also been a key part of our growth and success. Our ability to quickly make deals as they become available speaks to the experience of our team and our strong reputation in the marketplace. We take a disciplined approach to our acquisitions while focusing on delivering measured growth for our unitholders. Our approach entails the following: First, we look for opportunities that will be accretive to our AFFO per unit. Secondly, we 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. states with related regulatory frameworks and characteristics. Our acquisitions in Tennessee and West Virginia this year are great examples of our growth strategy in action. We already have operations in Tennessee and West Virginia is adjacent U.S. states to our existing platform in the Midwest. I'll now turn it over to Eddie, our CFO, to talk about our financial performance for the quarter. Eddie?

Thanks, Nathan. Good morning, everyone. We generated revenue of $23.8 million during the fourth quarter, which was up 26.6% over the same period last year, primarily due to acquisitions as well as lot rent increases and occupancy increases across the portfolio. Revenue for the year was $88.1 million, which was an increase of 24% for the same reason. Same Community revenues for the fourth quarter and full year 2024 grew by 15.5% and 13.3%, respectively, over the comparable period last year. These increases were driven by higher monthly lot rents as well as growth in Same Community occupancy and increases in utility reimbursements. Ancillary revenues, which is comprised of amenity fees, including cable and Internet fees that Nathan mentioned earlier, also contributed. Net operating income and NOI margin were $15.9 million and 67.1%, respectively compared to $12.4 million and 66.3% during the fourth quarter of 2023. NOI and NOI margin for the year-ended December 31, 2024, were $58.4 million and 66.3%, respectively, compared to $46.9 million and 66% last year. Same Community NOI margins for the fourth quarter and full year 2024 were 68.8% and 67.3%, respectively, which increased 1.3% and 0.8%, respectively, over the same period last year. These increases demonstrated Flagship's ability to develop operational efficiencies the longer communities are owned by the REIT. FFO for the fourth quarter of 2024 was $9.6 million, an increase of 55% from the fourth quarter of 2023. FFO per unit in Q4 was $0.384, an increase of 30.6% over last year. FFO and FFO per unit for the year were $30.8 million and $1.29, a 24.9% and 8.9% increase, respectively, compared to 2023. FFO adjusted was $7.8 million for the fourth quarter of 2024, a 25.2% increase compared to the same period last year. FFO adjusted per unit for the fourth quarter of 2024 was $0.31, a 5.4% increase compared to the same period in 2023. FFO adjusted and FFO adjusted per unit for the year-ended were $30.2 million and $1.265, respectively, a 22.5% and 6.8% increase, respectively, compared to 2023. AFFO for the fourth quarter of 2024 was $9.4 million, an increase of almost 73% from the fourth quarter of 2023. AFFO per unit for Q4 was $0.375, resulting in an increase of 45.3% over last year. AFFO and AFFO per unit for 2024 were $27.8 million and $1.167, a 29.1% and 12.4% increase, respectively, compared to 2023. AFFO adjusted was $7.6 million for the fourth quarter of 2024, a 38.9% increase compared to the same period last year. AFFO adjusted per unit for the fourth quarter of 2024 was $0.301, a 16.7% increase compared to the same period in 2023. AFFO adjusted and AFFO adjusted per unit for the year were $27.2 million and $1.42, a 26.3% and 10% increase, respectively, compared to 2023. Same Community occupancy of 84.8% was comparable to the prior year, reflecting our commitment to resident satisfaction and ensuring our communities are desirable locations. Rent collections for the fourth quarter were 98.9%, continuing to demonstrate the strength and predictability of the MHC sector. As at December 31, our total lot occupancy was 83.5%, and our average monthly lot rent was $448. Both of these metrics were within our expectations. Our weighted average mortgage and note interest rate was 4.41% and our weighted average mortgage and note term to maturity was 9 years. We had total liquidity, which comprises of cash, cash equivalents and available capacity on our lines of credit of approximately $14.3 million. The REIT currently has 18 unencumbered investment properties with a total fair value of $52.1 million as at December 31, 2024. With that, I'll now turn it back over to Kurt for some final remarks. Kurt?

Thanks, Eddie. Our performance this past year, our fourth as a public REIT, demonstrates our proven capabilities as operators, the stability of our resident base and the strength of the MHC industry. As we enter 2025, our 30th year anniversary, we are optimistic about the prospects of our business. Manufactured homes remain a viable option for many Americans, given persistently limited new housing supply, coupled with rising homeownership costs that continue to be a burden for many homeowners. These factors may lead more people towards manufactured housing. And as one of the Midwest region's largest MHC operators, we continue to be well positioned within the MHC industry, which is still quite fragmented. The top 50 MHC investors are estimated to control approximately 17% of the 4.3 million manufactured housing lots in the United States. We are the only pure-play manufactured housing investment in the Canadian capital markets, and our REIT offers investors an opportunity to participate in a niche and stable market with significant growth potential. We certainly thank you for your time today, and I will now open up the line for questions.

[Operator Instructions] Our first question comes from the line of Mark Rothschild with Canaccord.

Obviously had a very strong organic growth in 2024. Looking forward, you seem to be having success passing through the rent increases. How much of the growth in operating expenses do you expect to be at the same level? And what's a reasonable expectation for same property NOI growth in '25?

Eddie, you want to tackle the expense part of that question?

Yes, sure. So as far as the inflationary concerns go around operating expense increases, the nice thing about how we've structured the business and the rents is that many of our -- the inflationary items are actually being passed through. So the first place that you'd expect to see inflation would be in utilities. Well, in our communities, we pass through all of our water, sewer, electricity, the resident pays that themselves. Same thing with property taxes. We're able to effectuate a rent increase that has property taxes as a separate line. So to the extent we get those property tax increases, which is another place you'd expect to potentially see some increases, that will be passed through as well. So concerns would still be around wages somewhat which right now in our markets, we are still pretty much at full employment. But we haven't seen significant increases kind of after that first wave effort post-COVID. So I don't expect to see significant increases there. So my guess is we're going to see kind of the 3% to 4% increase in operating expenses. And as far as Same Community NOI, I don't see any reason why we wouldn't continue to run at those high single-digit, low double-digit Same Community NOI gains for 2025.

And now with the debt fixed, maybe this is for -- I'm not sure if this is for Eddie again, but the capital markets are not being too kind to you guys right now. So how do you look at your acquisition capacity? And how much would you be comfortable doing with the current balance sheet?

Again, I think right now, our guidance has always been that we would be comfortable going up to about 50% debt-to-GBV. And the interesting thing is the T-bills are falling. So if the 10-year is falling, it probably gives us some opportunity at some point to continue to leverage a little bit and get a little more proceeds. But I think the kind of -- the guidance we've given is 50% of debt-to-GBV is kind of where we're comfortable as long as we're getting fixed rates. Eddie did a great job in getting the only bridge money that we had outstanding completely on 10-year money now. So we feel really good about it actually.

Our next question comes from the line of Tom Calligan with BMO Capital Markets.

Maybe just first one for me. Another very strong quarter recapture-wise on the utility side. And I know you've mentioned the amenity fees there in the prepared remarks. But can you maybe just expand on that and frame a bit in terms of where you're at today and potentially the opportunity kind of still to come over the next 12 months or so?

Yes, absolutely.

Eddie, go ahead and jump in on that.

Sure. Yes. So I mean, the biggest opportunity as far as the amenity fees go continues to be the cable and Internet where, as I think Nathan spoke to it, when we said it's an opportunity for us to save the residents' money, but also make some ancillary revenue from that as well. So currently, we've got about 6,000 to 7,000 of our lots that have been integrated into this program. We've got another probably 2,000 lots that we're going to be able to do kind of as we move throughout 2025, probably won't start before Q2 or early Q3 is more likely and to start that implementation. But you can't take on too much of it at onetime. It is operationally a bit of a challenge. So we'll continue to integrate those probably 2,000 lots throughout 2025 that will come online. Then from there, we'll start looking at -- you can't do it everywhere because you don't have contracts with the providers everywhere. So I'd say we'll end up getting close to 80% coverage within our portfolio over the next 2 years.

That's helpful. Maybe second one is maybe more of a macro question, but lots of talk around tariffs today, and it's tough to keep up whether they're on or off day-to-day. But just stepping back, wondering if you can provide a little bit of color on how you think about the resiliency of the portfolio in the face of these kind of potential headwinds, particularly as it relates to maybe some of the communities in the vicinity of auto manufacturing plants there in Kentucky.

Nathan, do you want to jump in on the house?

Sure. Yes. I mean I think you'll see the inflation issue will really just resonate itself in the houses. We are anticipating, I'm hearing from manufacturers 10% to 15%, which would be about $3,000 on a single section as much as $3,000 and $6,000 on a multi-section house. But the thing you're also going to see when that happens to us on our houses, you're going to see a stick build that's even going to be a bigger move on housing because they have more wood involved and they have more steel involved and other components that we don't always have as much. So you're going to see inflation, and it's going to -- it will be most likely on the houses, but we'll probably see our houses will have less on them, and it will actually make the affordability gap between us and stock built housing even further is what I anticipate.

Our next question comes from the line of Brad Sturges with Raymond James.

Just following on Tom's question there, but I guess switch back to occupancy and your discussion around organic growth. It sounds like high single digits, low double digits, you're still expecting to see that sort of similar kind of occupancy growth this year that you've seen in historical years and what you're targeting. And I guess that would imply that whether it's noise around tariffs or potential recession, you're not expecting any material impact from an occupancy point of view?

No. Again, this is our 30th year of anniversary of being in the industry. When you go through periods of economic weakness, recession or not, if it's just economically softening, what typically happens is people get directionally pushed towards us because the other alternatives get challenged. So we kind of anticipate that kind of moment. We don't really think occupancy, we don't see any headwinds to occupancy at this point. The homeownership strategy, we still stick with our guidance of 1% to 2%. And I think that's a comfortable range for modeling. We bought some vacancy. And that's one of the things that's contributing, right, to the NOI growth is that we bought vacancy over the last couple of years and really look forward to kind of just filling that up right now. Again, all the rent increases, probably 98% of them went effective January 1, and that was about 6%. So yes, I think we're in good shape.

And maybe just getting the latest update on Nashville and West Virginia. I did notice, I think your rental home fleet did tick up a bit quarter-over-quarter. Is that related to that portfolio? Or where would the incremental rental home fleet been located?

Yes. So it was related to that acquisition. Again, we -- first of all, to answer your question directly, Nashville and West Virginia are going very well. We absolutely moved some rental homes into the West Virginia market as planned. We've got those set up right now. And for example, in one market last weekend, we had 114 rental and sales leads just at 2 locations in Morgantown. So I mean, that's tremendous. That should get us right where we need to go. We've got to be selective about who we let them in. But down in Nashville, what's great about it is we're seeing a lot of sales demand. So we're real happy with the progress on turning that one location that had the vacancy around. It's now cleaned up. The curb appeal is looking pretty good. We still got about another year's worth of work but we're already selling new homes there. So we actually don't know if we'll have to do any rental homes down there or not, which would help the accretion model, right? If you could just do homeownership, you get there faster because you don't spend as much capital. The NOI on both of those transactions or both of those states that we added is actually above our expectations right now.

Last question, just on the expansion program. I think last quarter, you talked about it being more front-end loaded. Do you have a sense or a budget in terms of what might be done this year in terms of expansion completions?

I'm working on about 75 lots right now. I think it will take me -- again, the ones I'm working on right now that we're fully entitled to, the first 20 are pretty straightforward. The next 55 may take me the rest of the year to kind of get up and running. So we're just going to keep chipping away at it. It's kind of -- we feel really good about what we did last year, and we're filling those lots up. So that's -- I wouldn't think much more over that this year. I think 75% is probably a good number.

Our next question comes from the line of Kyle Stanley with Desjardins.

Just kind of sticking along with the integration of last year's acquisition in Tennessee and West Virginia. Are you able to disclose where occupancy would sit today versus maybe where it was when you acquired the portfolio? And I think you put out a target of expanding the yield by 150 to 250 basis points over a 3-year period. I'm just wondering where might you be in that process today in terms of that yield expansion?

The occupancy in Tennessee actually one community, the smaller community is actually right where we thought it would be, which is running about 98%. In the Nashville location, the occupancy absolutely ticked down slightly. And it was a healthy moment. We probably took 18 homes out of the park because they were dilapidated, and we needed to clean up the curb appeal, which really was fantastic. So that's actually -- West Virginia is kind of the opposite. We didn't have to take a lot of houses out. We just had to pull the rental homes that we had planned in, and we've got those in. So that occupancy is pretty much as planned. So I think the big thing, again, is we can grow occupancy with homeownership, and we won't have to deploy as much capital as we thought. And then between that and Eddie getting the debt refinanced on the floating bridge loan that we had at better terms than the modeling, I think that's going to push the accretion forward. If that answers your question. It's going to -- I don't know exactly what that looks like yet. We're just a little too early. Haven't been there quite long enough. But we know it's really positive at this point. Very glad we purchased them, by the way.

Going back to just an earlier question, just on the utility cost recapture and obviously, the inclusion of maybe the ancillary income. Can you break out what the actual utility cost recapture rate was this quarter kind of excluding the ancillary income? Just curious how that continues to trend more for modeling purposes.

Eddie, you want to jump in?

Absolutely. So that's a good question, Kyle. When you look at utility recaptures, which for us, when we talk about is really water sewer and a very small component of electric. In Q4, we were about 98% effective. Now that's a little -- I won't say misleading, it's a little better than what I would normally expect. We have obviously a program within our company that our utility manager really helps with, and that's going back and getting credits where we've found water leaks, repaired water leaks, you get credit from the cemetery district. And there was about $125,000 worth of credits that we had during the period. And so that really drove the number to be so close to 100. For modeling purposes, I don't see any reason why we'll ever fall back below 90%, unless we -- you could for a quarter with a major leak, but 90% is where internally our bogey is and what I kind of expect us to continue to be able to accomplish.

That makes sense. And just last one, another modeling question. The accretion on the mark-to-market of mortgages slipped this quarter, I assume that's related to maybe repaying some mortgage debt. Just curious, is the 4Q number that you've disclosed, is that a good run rate for the time being?

Yes, that's correct.

Our next question comes from the line of Matt Kornack with National Bank.

Just a quick follow-up on that question. I think it was a pretty substantial swing from the amortization of the mark-to-market. I think it was $257,000 in one direction to $482,000 in the other. So, you're saying we should use the $482,000 in this quarter every quarter going forward?

No, no. Maybe I misunderstood that question. So the amount that -- there was a larger reversal there, you're correct. And that was related to the refinancing of the debt and CMBS debt that we had that we refinanced. So moving forward, the number is actually much smaller. That number is about $25,000 a month now. So $75,000 a quarter for the accretion moving forward.

No, that makes more sense.

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And then just on the homes for lease and maybe a clarification as to how they're accounted for. Are those in your occupancy from a lot standpoint? And then can you give us a sense as to what the actual occupancy would be on that portfolio of, I guess, 1,600 homes for rent?

Go ahead on the first part. The occupancy, I believe, is about 90% right now in the rental fleet of the homes that we have in there. But do you want to answer the first part, Eddie?

Yes, I think, if I'm understanding your question correctly, Matt, so when we talk about occupancy, we're talking about number of paying customers on a lot in our community. So that 1,600 number of homes are sitting on one of our 15,000 lots, right? So when we talk about occupancy, that rental home fleet itself, to Curt's point right now about 92% occupied. And that would be part of the greater occupancy when we talk about the global portfolio occupancy, that lot being occupied by one of those 1,600 rental homes.

That makes sense. And then just in terms of the other portfolio, and you made some commentary around severe weather impacts and kind of getting back to normal occupancy in that one property. But the other portfolio has been kind of bobbing up and down in terms of occupancy and was down sequentially, and I think it contributed to kind of this quarter's weakness in occupancy. Is there something to that? Is that temporary? How should we think about it?

No, I think the same community metrics was driven first off by Glacier Hill, which had the storm event. And we -- what's interesting is, again, we've got loss of revenue there that's helped us cover that moment, but we're still having some occupancy that we do expect to correct as the first quarter gets going here in April. So that's kind of our take on it is that, that was the headwind from a majority. We had a little seasonality at the end of the year and some vacant home rentals that popped up. But that was -- again, I don't see any problem there that's related to anything that's bigger.

Makes sense. And last one for me, just on the CapEx. Obviously, I think it's the integration of the acquisition that's kept it elevated for the last 3 quarters. How should we think about 2025 on that front and maybe the eventual kind of return to more normal CapEx figures?

Eddie, do you want to jump in on the CapEx budget?

Yes, sure. So we always give -- the $75 per lot and $1,100 per rental home budget or reserve is where we really see the actual, what we call the maintenance CapEx continue to trend at. This year was a little up. It was actually up because of the refinance. So we refinanced those 6 properties early in Q2. When you do those refinances, a lot of times, the lenders require that you do a significant amount of work that you would have done over a 4- or 5-year period, all to be done in a 6-month period. So that elevated the maintenance CapEx numbers a bit. The other CapEx, to your point, was mostly rental home purchases that were done throughout the year. There's about, call it, $14 million, $15 million of rental home purchases. And you'll continue to see us buy rental homes to some extent. What we are doing is we're kind of working on high-grading the fleet. So we put in, call it, 150 homes last year, sold 125 homes. So we'll continue to do that. We're selling the older homes, the ones that need work that cost money that we are spending a lot of money on from a flip standpoint. So you'll continue to see kind of spending. I think our budget right now for rental homes in 2025 is about $10 million.

Congrats on a strong quarter, guys.

[Operator Instructions] Our next question comes from the line of Jimmy Shan with RBC Capital Markets.

I just wanted to understand how easy it is for your tenants to absorb that lot increase that you've put forward in '25 that's averaging out to be 6%. Just in light of like, if I'm not mistaken, the social security benefit increase is 2.5%. And so if you could comment on that. And then relating to that, the social security benefit has been in the news lately. The DOGE is scrutinizing the payments. I just wondered if you have any general thoughts there in terms of what could come and what potential impact it could have.

Sure. So I think when we looked at our 6% increase this year, it ended up being somewhere between $25 and $28 on average. So you look at that. And the truth of it is we're in the affordable housing business. We're not in the government-subsidized housing business, and we're not in the free business. So we do try to keep things really relevant because -- but we don't think any customers are moving over a $25, $28 rent increase. But we're very sensitive to it and thoughtful about it. Again, we do have 30%, 40% of our customers are on fixed income of some nature, pensions and that type of -- and social security disability. So we're, again, very sensitive to it. But at the end of the day, a lot of times, there's multi folks living in the house and multigenerational. So that's the other -- I mean we're not fully seniors. We're full family communities in general. So I haven't seen anything on the social security side that's concerning to us on any type of DOGE efforts that I'm aware of right now. We get live data every third week of the month, and I get that personally. So in our markets right now, no one has -- in every single market as of 2 weeks ago, there were no rent discounting for multifamily, which is where we get most of our tenants from. There was no rent discounting at all and rents were still going up 4% to 5% in our markets. So again, we think in this environment, there will be more people pushed towards this. And that's kind of been our history during economic softness, regardless of what caused it actually.

In these economic softness in the past, would you even go as far as saying that you actually would see better growth?

Yes, it depends. It depends, right? Again, we've been around -- we've been doing this since 1995. So every softening period had a different characteristic and a different causation. So when you actually look at it, it depends on how it affects the retiree and the blue collar kind of workers because that's kind of -- that's really our bread and butter. It's blue-collar workers that are actively working or retired. That's kind of our general customer base. So again, I think you could because those folks that are working are not they're not probably getting any type of layoff. You're not going to lay off the person that's bowing the grass and maintaining the property. And so we think we're in good shape. We normally would see this. The question is we may sell more single section than multi-section. That could be a dynamic that we would deal with a little bit. So -- but again, it depends. Right now, like everything, there's uncertainty, but we know that directionally, we're positioned really well.

Did you also see yourself selling more -- sorry, buying more rental homes as opposed to selling them if it's more costly for the tenants?

You could. You could. We would prefer to not do that. But there is no credit crisis for our resident. Our resident's financing abilities are right there. And you could. We saw that back in 2000, 2002. I don't think that's what you're going to see this year.

And I'm currently showing no further questions at this time. I'd like to turn the call back over to Kurt Keeney for closing remarks.

Thank you, operator, and thanks, everyone, for participating today. Please feel free to reach out to our Investor Relations team at flagshipinvestorrelations.com. If you have any further questions, please feel free to get reach out to us. Thanks. Have a great day.

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