Florence MHP Webinar - Q&As | Titan Impact Group

Foreign.

What if the sale doesn't happen at the end of year five?

Yeah, if the sale doesn't happen at the end of year five, remember we are doing a refinance at year three or maybe at year two, so we will have a longer loan in place so that we can go past the five year period. So if the market's weird and wacky and it doesn't make sense to sell at the end of year five, then we will already have an agency loan in place so that we could hold this for much longer. And we are projecting to sell this at the end of year five. But we're always working to do what's best for investors and the overall investment. So we have a little bit of flexibility in there to just check out on what's happening with the market. Are we in a really crazy recession? Is it a bad time to sell? Is it a good time to sell? We're projecting to do this in five years, but if someone writes us a insanely awesome check in year four, then it's something we would consider as well.

Who do you anticipate want to buy this portfolio in year five?

Yeah, I mean we're talking about a decent size property. So there's a lot of different buyers we could have. There's a lot of larger buyers that would be interested in buying these parks. Once you get over 200 spaces, we're talking about kind of the top guys in the industry, especially parks that qualify for agency or have agency. Another thing is agency is usually assumable as well. So if the market, if at the time of sale, the terms of the agency financing is still attractive in that market, which it very well could be, then that could also be appealing and there could be assumable financing in there as well. But once we get over 200 spaces, we're usually talking about the big guys, the big guys going out there. Most of those got buyers want to buy a property that is stabilized that's 90% to 100% occupied, maybe 80% worst case. But we're looking to have this thing at 100% occupied. So there's a lot of buyers to pull from in at that, at that point. And also the resale values that we get in South Carolina, in the Southeast, well, we've been very, very impressed.

You kind of briefly touched on it. But after the refinance, if you're refinancing into an agency loan or will that agency loan have a prepayment penalty when it comes time to sell the property?

So sometimes the agency has a Prepayment penalty. Usually it's pretty minimal. Usually it's only just for the first.

Couple of years in the underwriting you project, leasing, renovating and leasing all of the vacant parkland homes by the end of year one. How does the management team expect and anticipate to accomplish this?

Yeah, that's a cool question. So we've got our own in house construction crews. We do leverage some local contractors as well. And we actually like to work on these properties like it's a production line. So we have a whole bunch of crews going doing floors, we have crews that do windows and roofs and we just get everybody in there and we go bananas. We really hit it hard straight out of the gate. Most other operators remodel mobile homes at a cadence of one home per month per community. We typically have been doing it historically at at least seven homes per community per. So we typically work and operate seven times quicker than other guys. And that's because we take massive action. We send way more crews in there. We want to get everything done in a compressed timeframe. We do that for a couple of reasons. Number one, we want to get to these homes to occupied and paying lot rent and get that cash flow cranking and get the occupancy up and the noi up much quicker. It makes the, it makes the investment drive better. So why wouldn't we do that? Number two, when we're dealing with construction, I am always wanting to be really recession resistant and conservative on my approach. So I want to get my construction done as soon as possible to reduce the supply chain issues, to reduce any understaffing issues that could be happening in any third parties or local contractors or cities or anything like that. So we're always looking to get our construction done as soon as possible. So our crews will move in there, they'll knock out the remodels. Likely at a cadence of seven homes per park per month. They sometimes the first first month takes a little bit to build up some momentum because we've got to move in our dumpsters. We move in a whole bunch of dumpsters, we have a whole community cleanup. We throw empty all the vacant homes. And so sometimes it takes the first first month takes a little bit to build momentum. But once we get rocking and rolling, yeah, we're, we're confident we can do it. And we just did this at another portfolio in Florence just down the road. So we already know the cadence we can move at. So we're really excited about keeping that momentum going.

What do you foresee as the greatest Risks associated with this investment that I.

Believe is the best question that any investor could ever ask. And I love this question. So here's the way we look at risks. I think there's two different sections of main risk. The first main section of risk is the economy. Things that are essentially out of our control. We don't control interest rates, we don't control cap rates, we don't control supply chain issues or if property tax taxes go up or if rent controls come in. All of these things that we've built into our underwriting I think are possibilities and probabilities that could or may happen throughout the whole period. Highly likely that all of them won't happen at once. But if all of them happened at once, we would be able to handle it. So we've combated against all of the potential things that could happen in the economy by having conservative underwriting. And even our probable case underwriting, we feel it's very conservative. So that's the way we've hedged against the risks of the economy. Now the other main risks I see would be performance based and that is how, how quickly are we going to get all of the construction done and how quickly are we going to get to that refinance? Because once we get to the refinance, return original to capital to investors, essentially risk is out of the deal because investors are in with a zero capital balance and everything's cooking and cream thereafter. So the way that we've structured that is that for us to get to the refinance, the general partnership, we don't get paid anything until we get to that refinance. So we are very highly motivated to get that done quickly. Not only do we want to get that done quickly because we want to increase the occupancy, increase the noi, get to that refinance quickly, return out cash, we also get paid after that. So we want to get to that quickly and to help us get there quickly. I've got a 25 year background in construction and construction management. Got in house construction company, we've got in house property management, we've got in house asset management, we've got in house mobile home financing. And all of these things together give us maximum control over the outcome of everything that's going to take for us to get for us to that refi and us to the exit as well. Nobody's going to manage our property as well as we are. Nobody's going to be as motivated of knocking out those remodels as quick as we are. So we like to do all of that in house, which keeps the costs costs down. It keeps the momentum going and this is what we do. We specialize in doing this. So this is one of our bread and butter style deals that we love doing and it's cookie cutter for us.

Excellent. Is the $2,500,000 loan an assumed loan or is it a new loan?

You run that one by me again.

Yeah. The senior debt that you spoke about earlier in the investment summary, it is $2.5 million loan amount. Is that an assumed loan or a new loan?

It's a new loan, yeah. So we get a new loan with self financing on top of that. So two loans. First position is a new loan at 2.5 million and then seller financing. Second at about, I think it's 1.7 million.

If a refinance does not happen, do you know what the returns would look like if there's just an exit in year five?

Well, here's the thing. We underwrote with a three year refinance. Our track record says we are going to get to the refinance in year two. We have such ultra conservative underwriting that we can handle a whole bunch of interest rates going up, cap rates going up, timelines taken double, etc. Etc. That we've gone over the, the likelihood of us not refinancing is near impossible. Add on top of that the fact that we don't get paid anything of significance until we get to the refinance. You can bet your bottom dollar we're getting to that refinance. So we've projected this with a three year refinance and our track record says that we're actually doing this in, in about two years. That's what our track record says, that we're probably going to hit that refi somewhere around about 18 months to two years. And if something insane happened and like Armageddon happened and we didn't refinance by the three year mark, we actually have five year financing. So that's fine. So we're covered for that kind of scenario. But that's so highly unlikely that we didn't have an underwriting assumption for that. Because look at our underwriting assumptions. Try and find me somebody who is in the multifamily mobile home park or self storage space that has as conservative underwriting as usual. This is why so far we have 100% track record and we anticipate keeping up to that.

Excellent. I know we've got a lot of investors on this college. Want to give them a brief idea of who all else is attending this call as a panelist. We've got Rachel Richards on here, Katherine Bell, Jeff Greenberg. We've got Danny on here, we've got Terry Kipp, Chris Larson. So we have a ton of capital partners and, and the people who, you know, who would have brought you to this call are also in here as well.

Yeah. So if any of those names that you heard, if you came in through them to be on this call, make sure to reach out to them for next steps. But I'm here right now if you want to ask me any questions. Just shoot it in the Q and A and Nolan will read them out to me.

Excellent. Bryce, you showed the park owned home and tenant owned home rent as 452. Should the tenant owned home rent be paying a higher amount for the tenant.

Owned homes paying a higher amount than the park owned home rent?

That is the question here.

Yeah. So typically tenant, the lot rent and the home rent are about equal. Typically, as a generalization, in the mobile home park space, tenant owned homes, all they do is pay the lot rent. They don't pay any home rent portion because they already own their home. But when we have a park owned home, they pay the lot rent and then they pay the additional home rent on top of that. And then when you join both of those together, the lot rent and the home rent, we call that the park owned home rent or the collective park owned home rent. So typically a park owned home renter would be paying more because they're paying for the home rent and the lot rent. But as a general rule of thumb, whatever the lot rent is, typically the home rent is around about the same, except for when we get into the new homes, it actually the home rent portion becomes larger than the lot rent portion because we're talking about a much more expensive home and, you know, larger loans.

What is your current analysis for why the parkland home occupancy is so low?

Typically that comes down to two things. A lot of people buy mobile home parks and they either don't have the experience to do the remodel or they don't have the money to do the remodeling. And a lot of people have been coming into the mobile home park space, especially in the last kind of two to five years, coming from self storage, multifamily, they're like mobile home parks. Awesome. I want in. Then they buy these properties, they see the upside, but then they underestimate the amount of management that's actually involved in doing it. Another thing is, is a lot of people don't actually have the capital to do these remodels. What we do is we raise the capital for the down payment for the loan, for the closing costs and all the capital expenditures of everything that we will need to get us to the refinance. And we raise all of that money up front so that way we can get in there, we can knock everything out, we can go for it. We like to do it at a really quick speed. But I'll. I'll be honest, there is a healthy level of complexity to remodeling all of these homes. Managing contractors, like I said, most other operators, even some of the top operators, top operators, top five operators in the US Are only remodeling and filling one home per community per month. A lot of them. That's the cadence that they're going at. So what we do personally here on our. On our properties is it's very rare. You actually see people taking massive action like we do, and a lot of people just aren't up for it. So we get a lot of awesome discounted properties because people either don't want to handle it and. Or they don't have the money for it and don't want to handle it. Comes down to like, I don't know any other mobile home park operators that have their own in house construction. So that means that most other operators would be leveraging local contractors, and that's even more challenging. I mean, we work with local contractors too. We don't have all in house. We leverage some local contractors. But I think that just scares people off. Contractors, hiring contractors and working with contractors. There's turnover, man, and you got to keep rocking and rolling and you got to. It's. It's very emotionally depleting. If you don't understand the game, and I think a lot of people don't understand the game. We bought our last property in Florence off some guys who owned a carpet company. And they. They also had some kind of law firm or something like that as well. And so they came in and they were just, oh, my God, like, it's way too much to manage contractors. We don't want to do it. And then they sold the property to us and we got an awesome discount. So that's usually why this happens.

Excellent. This next question here, I can answer. We have a couple questions here about what happens if a hurricane hits the park or some kind of natural disaster or there's a major loss of home or occupancy in the case of really a natural disaster. And to mitigate that on the spot deal we will be having business loss of income insurance. And so if you know, hurricane, tornado, whatever comes in and wipes out all the homes in the park, the loss of income insurance will come in and make us hole there.

And for those of you who can't see his face, the man who's speaking behind the curtain right now is Nolan Freeland, my business partner, co founder of Cultivate Collective and he's also our chief operating officer. Any other questions we've got coming in?

Yeah. What are the current occupancy rates at your other Florence parks?

We're at 100%. We bought that portfolio at 50% and in about 12 months or less we've got it at 100% and we're at a refinance. So we're going to be refinancing on that property at the in Q1 well ahead of schedule.

Is there a sample operating agreement?

Our operating agreement is going to be available very soon. Where the thing is, this particular deal has been moving very quickly because where. Where just the whole team's doing everything humanly possible to get this closed before year's end. So in claim on that bonus depreciation. So we are currently reviewing our PPM and operating agreement and that's going to be available for you guys in the next couple of days. In fact, by the time we have this recording out, likely all of the documents will be ready.

Are your current investors investing in this project?

Yes, our current investors are investing in this project. Absolutely. We have a lot of re. Repeat investors coming in on this investment.

Do you have a metric in place to make sure that interest is aligned with the investors in terms of the time frame for refinancing? Since the profit split starts right after the refinance, is there a guarantee of capital return before profit splitting?

Gotcha. Yeah. So I think here's the thing there, right? I think the sooner investors get their their capital back, the better that's going to crank up on the irr. That means the investor is in a position where they have a zero capital balance, their risk is diminished in the investment. They can also go and redeploy that capital. Like I said earlier in this presentation, if for some reason we don't return 100% of invested capital, then whatever we don't return will be as remaining as a capital balance. A preferred return will apply to that capital balance and then the splits would happen thereafter. So if someone invested a hundred thousand dollars, if at the refinance we could only return $98,000, that investor would be left with a $2,000 capital balance. So after the refinance the preferred return would be paid on the $2,000 capital balance and then the splits would happen thereafter. And one could ask, and I think this was kind of something that may have been hinted to in that question is well, what if you're significantly below returning 100% of capital? And I'll give you a real life example. Anchor Mobile Home community in Spartanburg, South Carolina. We projected to do our refinance at year three. Then we actually found that we, we did double the pace. We were ready to do a refinance at the 18 month mark. We applied for our refinance. We found out that without any why, we would be able to get about 75% return of investor capital, which we could have done that. We could have easily done that. We could have returned 75,000 75% of capital to investors and I'm sure they would have been happy. But we weren't happy with that. We wanted to return more capital to investors. So since then we cranked up on the NOI and we've actually exceeded our NOI target and we're now in a position now where we are going back to refinance. It's about the 24 month mark and so by the time we're done with the refinance there, it'll be at around about a little bit, just over the 24 month mark, still one year ahead of our projections and at or extremely close to that 100% return on capital. I hope that answered the question.

Yeah. An investor here is asking if you can talk a little bit about unexpected capital calls.

Unexpected capital calls. So we've never had to do a capital call. I think this is an increasing question because of a lot of the stuff that's happened in the multi family apartment space. But do remember the people that have been doing capital calls have been in a position where they've been typically over leveraged and under liquidated as far as like liquidity. So what we do is we bring in all of the money for our closing, our down payment for our loans and our all of our capital expenditures, which is an increased budget. We typically have a healthy chunk left over of our capital expenditures after we do all of our improvements, which means that we go out there and we typically buy a small mobile home community in the market. What else we do is we like to keep three months of revenue as reserves post refi. So we have a healthy position there as well. So straight out of the gate we're looking at a 50% occupied property that has cash flow straight out of the gate. Once we increase the rents and increase the occupancy, we're in a very, very highly cash flowing position with agency financing at the refinance, with no adjustable interest rates or anything like that. So the likelihood of a capital call is extremely unlikely. One thing you'll actually see when you look at our operating agreement is that there's a bunch of different steps that we can take should some kind of crazy Armageddon scenario happen where there was a need for more capital and before we would even get to a capital call. There's other steps, like we could go out there and get a loan. We could do a bunch of variety of things before we even go to do a capital call. And if something got as bad as going to a capital call, the typical protocol that is in our operating agreements. Although I'd like to disclose we've never ever had to go and do a capital call, we've never even become anywhere close to it. We have 100% track record of exceeding all of our projections. But if we ever did get to that, then typically if a capital call happens, then if everybody invested a amount equal to their pro rata investment that already exists in the investment, then the, the percentage of ownership would stay the same. But if some people invested on a capital call and some people didn't, then that would actually dilute some of the shares for the people who didn't invest and it would increase the shares for those who did invest. So hopefully that answers that question.

Yeah, thank you for that. Is seller financing in a deal like this typical? Have you worked with the current lender before? And then why would this deal not qualify for agency now? Three parts there.

Yeah. Cool. Okay. First part is, I think the first part was, is seller financing typical for these kinds of deals? Seller financing is extremely typical in the mobile home park space. Even if we're talking back into 2015 and beyond, it's been very common in the mobile home park space that seller, that a seller financing, second is in place at like 10% LTV, 20%, 30% LTV, Super, Super, super common. Also because of where we're at in the market, with all of the way that loans are working, seller financing has been a very huge thing. We have bought properties, we've bought lots of properties recently with seller financing. So that's really with 100% seller financing. So that's super exciting. The reason that seller financing is in place on this particular loan is, is because we have our first position Debt and we have our interest rate there. I think it's 8.7. Then we have a seller financing second that has, I think it's a 6.5% interest rate. And that increases the LTV and that increases the LTV, meaning that we bring in less invested capital because investor capital is actually more expensive than debt. And so that increasing the LTV increases the overall returns for investors and it makes it much more appealing for everybody involved. It also shows that the sellers have confidence of their property in this market because they wouldn't be doing seller financing if they thought this investment was not going to perform. So they're putting their money where their mouth is and they're putting it on the line, which shows a little bit of extra confidence as well. The reason that we haven't qualified for agency financing out of the gate is because agency requires that a property be stabilized, which is typically 70 or 80% or more in occupancy and 30% or less of the overall home portfolio being park owned homes. So because this is 50% occupied property or project right now, it doesn't yet qualify for agency. But as soon as we crank up the occupancy, it will. I think I just answered all three of those questions.

Yeah. Thank you. Cool. How much do you anticipate the rent increases will result in decreased occupancy or turnover?

Oh, very minimal. Because look, we've built in minimal rent increases. Usually the largest amount of turnover that we see is in the beginning. It's like, hey, where the new guys in town, people know real quick two things. One, we, we do what we say we want to do. We've got a strict no pay, no stay policy and we've got a strict, we enforce park rules. So we make sure people keep their yards clean and that everybody's harmonious with each other and we do what we say we're going to do. And that gets around the park really quick and it whoops people into shape pretty quick too. The other thing that we do as soon as we take over a property is we start going in there and improving it straight way. We're improving all of these park owned homes and the landscaping and it inspires a lot of other people to start improving their homes too. And as we're improving ours, we see people painting the outside of their homes, fixing the skirting and it really helps things. But we are very sticky tenants in these communities. We are increasing the rents. The first year would be the biggest rent increase, but after that, even if we just did what we're doing in market, which is about a 10% increase each year. That's not going to move any tenants out. Maybe we would see a little bit of turnover in the first rent race, the rent increase. But here's the thing, we increase the rents, right? We go up to market. Let's say we go up to market, but we probably won't even go up to market. But let's say we did go up to market. Well, some people could move out, but where are they going to move to? Because everything else in the market is at market. So if they moved out, they would go and pay the same or more somewhere else and they'd have to pay for moving costs and all of that. So typically we see a little bit of turnover, but we've built in our capital expenditure budget for 100% turnover over the five year hold period, which means we can handle 20% each year and we typically only see about 5% each year.

What LP investor or return structures have you used previously and how does this differ, this particular deal difference from previous return structures and or sponsorship fees?

Yeah, so the fees that we're charging are the same. We've always, we've always charged a 2% acquisition fee, 1% loan signing at the acquisition, at the refinance, 5% of gross revenues, property management, 2% of gross revenues for asset management. That's just standard. We don't charge any other junk fees because we're performance based. Those haven't changed. Those are the same. We are actually buying more properties. We're buying more properties at a, at a higher cadence, a faster cadence. We're buying larger properties. We're really expanding. We have been sitting cautiously, not on the sidelines, but we've been moving cautiously and moving slowly for the last few years while a lot of other people have been acting like it's the Roaring twenties. And then this year, while people have started to realize that there's some recessionary or economic concerns and they've started to slow down. We're going deep because this is the whole environment that we've actually been preparing for and we've been planning for since way back in inception when we created what we're doing here. So we've been building up for this moment and this is our moment to shine. And we thrive in these recessionary and these economic downturns and we haven't even seen, I believe we haven't even seen a real economic downturn yet. But people are starting to see the early warning signs, so, so they're sitting on the sidelines and we're going deep. So because of this, we're bringing a lot of deals to the table. We have just massively expanded our team and we are really gearing up to bring a lot of parks to the table. So because of that, we started introducing a few new tiers of investments like the 500K minimum tier, the 1 million K minimum tier, and the, the, the 2 million minimum tier. And we didn't have those before, we just had the 50k minimum. So that's what's changed. We used to have just a 50k minimum and every investor gets the same thing. But we're actually rewarding investors in bringing us bigger checks. Because if we had 10 investors investing $50,000, then that's still $500,000. But we have to, that's 10 distribution pass, that's 10 tax returns, that's 10 investor communications. So we've got some different tiers in place so that we reward people who write us a 500k check or a $1,000,000 check or a 2,000,000 dollar check because it makes our life a lot easier and it also helps us build and grow. With all of the plans that we have going on here.

Can you speak to a little bit of why the storage facility is currently vacant? And then do you plan to rent these to the general public or the mobile home park tenants?

Yeah, so let me answer the first, the second part first. Both we plan to rent them to tenants in the community and also in the general public market. And so we actually have found that operators that have a self storage with a mobile home park facility usually focus on the mobile home park and neglect the self storage. And so they haven't even tried, they haven't even done anything. They've just let it sit there. And you can see this is a 50% occupied property. So they've done some to the actual property itself on the mobile home park side, but obviously they didn't, they didn't sufficiently infill the mobile home side and they just completely neglected the self storage. But like I said, we've already got our self storage blend. We've already been, we've done this in another community. Anchor Mobile Home Community was the first property that we bought that had self storage units in there as well. I think that self storage facility was like 65 units. And so, yeah, we already know what we're doing. We've already built some momentum and we're looking to fill these guys up through people who live in the community and also people that live outside the community. And looking at Anchor for Example, there's a much higher self storage unit per mobile home at that community. This is a 214 communities that we have in the, in the four parks that we have here. So we'll be advertising this to all of our four parks. So we have a lot more people in our communities that we actually own. Plus we've got the other two communities that we own in the market as well to bring to these self storage units.

You anticipate any difference between owning these parks within the city limits versus owning them in the county?

Yeah, we actually think that we'll get even more interest in the city. Most people like to live closer to the city for all of the conveniences. And so we're actually anticipating some, some really good growth here in the city. And you know, even though we're saying we're in the county in with our other communities, they're like only a couple of minutes from downtown anyway, so it's, everything's relatively close in this market. These just happen to additionally be in the city as well.

You mentioned rent control. Is that something that has been discussed in local politics?

So I am a macroeconomics geek and I geek out on it and I just, if there's a possibility that something's going to happen, I like to build it in. There isn't anything that has tangibly been spoken about that makes me think that rent control will come in in South Carolina that is actually on the cards per se. Although as a generalization in America, there is the potential for a lot of states that are not rent control states to potentially become rent control, rent control states. So we build this in on all of our deals, regardless of what state we're in. We actually like to just have that low rent increase just in case rent controls happen. And I'm talking about some kind of real strong economic madness and, and the government's just doing a whole bunch of, of weird and wacky things. If that does happen and rent controls kick in, we're covered. But we don't expect that that's actually going to happen. And there's nothing that's giving us signs that anyone's on their path to make that happen. In South Carolina.

The other parks that you have in Florence are those projects that would compete with this project or these parks.

That's a fair question. I would say not because we're 100% occupied. So there's no room for them to, to, to move into those communities because we're already at 100% occupancy. So I would say no they're not competition.

How is insurance handled for rent to own tenants and tenant owned mobile homes? Is this covered by the tenants?

I think you're better to cover the insurance questions there, Nolan.

Absolutely. So if it is a rent to own home, that means that we own the home and we would pay for insurance on that. However, we would likely recapture that in some sort of like escrow. Similar to like when you buy a house, if you're making loan payment, then part of your payment goes towards taxes and insurance. We would structure something like that. As far as tenant owned homes, insurance on 10 owned homes would be covered 100% by the tenants. Since virtual work is a decent slice of the population these days, do you happen to know if there is good Internet speed or service available?

That would be a. I think generally, yes, there would be. I haven't heard anything that there's any problems with Internet speed.

Yeah. And I believe as well that because these parks are in the city limits that there would be no shooting you making that happen.

Yeah. And even the parks that are in the county, I mean, they're very close to downtown. They're not far from downtown at all. So everything's very close here.

We have a question here, which is what is the performance of your prior projects in this area and outside of this area?

Yeah, so the projects in this area, we bought the first Florence portfolio about a year ago. We're already at 100 occupancy. We've increased the rents, build back the utilities, filled some self storage units, and we're ready to rock and roll. We're ready to refinance for our other properties. We have 100 track record of exceeding our projections on. On all of our projects that we've done so far. We actually have a case study document that we could share. So if you're part of the cultivate collective inner circle, we can share our case studies, document which. Which we projected and what actually has happened at our properties. And if you're working with any of the sponsors that Nolan mentioned earlier, we would be able to get that documentation over to your sponsors so you can ask them for it.

On the other Florence portfolio, outside of this particular deal, how many homes did you bring in or renovate in that project that was.

You might be better at refreshing me on the numbers on that one, Nolan. I know it was 50% occupied. How many homes did we remodel there?

Yeah, we remodeled 20 or 21 homes there.

Yeah, yeah. So that was. It was basically 40 space park. We remodeled 20 of the homes. We also remodeled Turnover homes as well.

Excellent. Last question here. Do you know how many lots would have to be filled in order to break even on this project?

I mean, so we're at 50% occupied right now and we're already like cash flowing straight out of the gate. So we're going to be paying distributions, you know, very soon here after the first full month of operations. So for us to actually the occupancy is basically based off the expense ratio. So year one, we have an expense ratio built in of 40%, although we expect that we'll probably operate better than that. That and then after the refinance, we have our expense ratios down at 30 to 35% in our underwriting, although we could potentially get that down as low as 25 to 30%. So what that means is, is for us to break even right now if we had only 40% occupancy. So we already have 50%, but if we went all the way down to 40%, we still break even. And once we're up to a hundred percent occupancy, then our expense ratios decrease. So, yeah, we could essentially get this anywhere between, you know, like 30 to 40% and still be cash flowing or breaking even at that point. Well, like I said. Well, first off, thank you very much for your time. I really appreciate you guys joining us on this one. We're super excited to have you join us and work with us on this investment. And if you are a cultivate collective inner circle member, please make sure to log into our investment portal, reserve your investment position before we over subscribe, and we're in full on this investment. And then you still have until 8 December to sign documents until 15 December to fund the investment. So we close before year's end. And if you were introduced to this investment through any of the sponsors that Nolan mentioned earlier, please reach out to those guys for next steps. And again, we're super excited to have you join us on this investment.