Flagship Communities Real Estate Investment Trust Q2 Earnings Call Highlights

Flagship Communities Real Estate Investment Trust reported higher revenue, net operating income and occupancy in the second quarter of 2026, citing continued demand for affordable manufactured housing, rent increases and contributions from acquisitions. President and Chief Executive Officer Kurt Keeney said rental revenue increased 21.4% from the prior-year period, while net operating income, or NOI, rose 18.9%. Adjusted funds from operations increased 10.2%, and adjusted funds from operations after capital expenditures rose 8.3%, he said. The company’s same-community revenue increased 9% year over year and same-community NOI rose 6.3%. Same-community occupancy reached 85.4%, up 2% from the end of 2025. Keeney said the results reflect both resident demand and the company’s focus on operating improvements at the community level. Chief Financial Officer Eddie Carlisle said quarterly revenue rose 21.4% from a year earlier, driven by acquisitions and lot-rent increases. Same-community revenue totaled $27.3 million, reflecting higher monthly lot rents, ancillary revenue and increased occupancy. NOI was $19.8 million, compared with $16.7 million in the same quarter last year. However, NOI margin declined to 65.1% from 66.6%, while same-community NOI margin fell 1.7 percentage points to 64.9%. Carlisle attributed the lower margin partly to ancillary services, including amenity-related revenue, that carry lower margins than the company has historically achieved. He also cited seasonal weather effects, including water and sewer recapture issues and water leaks that began in the first quarter and continued into the second quarter. According to Carlisle, water and sewer recapture had been in a 95% to 97% range during the prior year but was below 90% for roughly the first four-and-a-half to five months of 2026. The company returned above the 90% threshold in late May and June. Excluding the water-and-sewer impacts and lower-margin ancillary revenue, Carlisle said margins would have been above 65% and closer to the company’s expected 65% to 65.5% range. Adjusted FFO was $9.9 million, or $0.389 per unit, up 10.2% and 9%, respectively, from a year earlier. Adjusted AFFO was $8.9 million, or $0.349 per unit, up 8.3% and 7.1%, respectively. Rate collections were 99% during the quarter. Total lot occupancy was 84.7% as of June 30, while average monthly lot rent was $516. Chief Investment Officer Nathan Smith said Flagship acquired a fully occupied, 28-lot manufactured housing community in Marblehead, Ohio, during the quarter. The community includes a private beach, fishing pier and boat slips, and is located near another Flagship property in northern Ohio. Smith said the acquisition is expected to be immediately accre.