Flagship Communities Real Estate Investment Trust Announces Second Quarter 2025 Results

Executive Summary

• Flagship Communities Real Estate Investment Trust released its second quarter 2025 financial results, reporting significant growth in rental revenue, Net Operating Income (NOI), and Funds from Operations (FFO) compared to the same period in 2024.
• The REIT reported a decline in net income due to fair value adjustments on investment properties and Class B Units, despite strong operational performance metrics including increased occupancy and lot rents.
• Portfolio metrics show continued improvement with total portfolio occupancy rising to 85.1% and NAV per unit increasing to $28.96, while the company maintains a positive outlook on the manufactured housing sector.

Key Details

• Revenue Growth: Rental revenue and related income reached $25.1 million for Q2 2025, an 18.1% increase from $21.2 million in Q2 2024. Same Community Revenue was $22.7 million, up 12.2% year-over-year.
• Profitability Metrics:
  • Net Operating Income (NOI) was $16.7 million, up 18.7% from $14.1 million in Q2 2024.
  • Same Community NOI was $15.0 million, an increase of 14.2%.
  • NOI Margin for the total portfolio was 66.6%, compared to 66.2% in Q2 2024.
• Earnings Per Unit:
  • FFO per unit (diluted) was $0.385, a 16.7% increase from $0.330.
  • AFFO per unit (diluted) was $0.353, a 20.9% increase from $0.292.
  • AFFO adjusted per unit (diluted) was $0.326, an 18.1% increase from $0.276.
• Net Income: Net income and comprehensive income was $35.1 million, down 19.2% from $43.5 million in Q2 2024, primarily due to $9.5 million less in fair value adjustments on investment properties and Class B Units.
• Portfolio Occupancy:
  • Total portfolio occupancy was 85.1% as of June 30, 2025, up from 83.5% at year-end 2024.
  • Same Community occupancy was 85.5%, up from 84.3% at year-end 2024.
  • Rent collections were 99.2%.
• Balance Sheet & Valuation:
  • Net Asset Value (NAV) was $727.9 million, with NAV per unit at $28.96 (up from $26.71 at Dec 31, 2024).
  • Debt to Gross Book Value decreased to 36.5% from 38.1%.
  • Weighted average mortgage and note interest rate was 4.26% with a weighted average term to maturity of 9.5 years.
  • Liquidity stood at approximately $13.4 million.
• Operational Updates:
  • Integration of seven Manufactured Housing Communities (MHCs) in Tennessee and West Virginia continues, with increasing occupancy in West Virginia and advancing new home sales in Nashville.
  • Added an amenities package and new clubhouse in one Nashville community.
  • Derby Hills Pointe in Alexandria, Kentucky, was named 2025 Community of the Year by the Kentucky Manufactured Housing Institute (KMHI), marking the fourth consecutive year Flagship has won this award.
• Portfolio Composition: As of June 30, 2025, the REIT owned 100% interest in 80 MHCs with 14,670 lots and two RV resort communities with 470 sites. Total lots across the portfolio were 15,140 with a weighted average lot rent of $484.

Notable Quotes

• “During the second quarter, our operations continued to perform according to plan, which has set us up nicely to have another great year in 2025,” said Kurt Keeney, President and CEO. “In addition to growing our top-line and Same Community metrics as well as occupancy levels, we continue to demonstrate the consistency and stability of the MHC sector, which for the past 25 years has outperformed all other real estate sectors.”