Flagship Communities REIT Enters Seventh U.S. State With Acquisition of Illinois - Manufactured Housing Community for US$16.3 Million

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TORONTO, Aug. 16, 2021 /CNW/ - Flagship Communities Real Estate Investment Trust ("Flagship" or the "REIT") (TSX: MHC.U) announced today that it will enter its seventh U.S. state with the acquisition of a manufactured housing community in Springfield, Illinois (the "Acquisition") for a purchase price of approximately US$16.3 million. The Acquisition is 94% leased currently and is expected to be immediately accretive to the REIT's adjusted funds from operations ("AFFO") on a per unit basis. The Acquisition is expected to close on or about August 23, 2021. 

"We are continuing to grow our geographic footprint near current communities, applying our successful business model to new operating regions with high-quality acquisitions such as this Springfield community, our first in the state of Illinois." said Kurt Keeney, President and Chief Executive Officer. "This acquisition and the acquisitions we have made to date adhere to our disciplined strategy for growth. Springfield, Illinois is an attractive market and this Acquisition will be immediately accretive to our AFFO per unit with additional above market growth over time."

The purchase price of US$16.3 million will be funded with cash on the REIT's balance sheet.

"The acquisition of this community will provide us with another new market opportunity that can leverage our management structure for the Indianapolis and St. Louis communities," said Nathan Smith, Chief Investment Officer. "With 94% occupancy, this stable community is an excellent addition to our portfolio."

Overview of the Acquisition

Woodlyn Acres Pointe

Conveniently located near I-55 in Springfield, the state capital of Illinois, Woodlyn Acres Pointe is in close proximity to major employers and shopping, including a Walmart Supercenter. The State of Illinois is the area's largest employer along with Springfield Public Schools, City of Springfield, University of Illinois Springfield as well as many private companies. Recreational areas include the beautiful Lake Springfield and acres of farmlands and forests. The 51-acre Woodlyn Pointe community is surrounded by a historic city center that includes the State Capitol, Abraham Lincoln's home and presidential library and museum.

Woodlyn Acres Pointe is a residential community where residents pride themselves on their beautiful gardens and friendly, safe neighborhoods. Local schools include Lanphier High School, Washington Middle School and Wilcox Elementary that are all within the Springfield School District.

Pro Forma Portfolio

The Acquisition is a targeted and strategic expansion of the REIT's portfolio, increasing the number of manufactured housing communities from 57 to 58 and the number of manufactured housing lots from 9,637 to 9,868. The table below provides a summary of the pending Acquisition as of August 16,2021.

About Flagship Communities Real Estate Investment Trust

Flagship Communities Real Estate Investment Trust is a newly created, internally managed, unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been formed to own and operate a portfolio of income-producing manufactured housing communities located in Kentucky, Indiana, Ohio, Tennessee, Arkansas and Missouri, including a fleet of manufactured homes for lease to residents of such housing communities.

Non-IFRS Financial Measures

The REIT uses certain non-IFRS financial measures, including certain real estate industry metrics such as FFO, FFO Per Unit, AFFO, AFFO Per Unit and Same Community, to measure, compare and explain the operating results, financial performance and financial condition of the REIT. The REIT also uses AFFO in assessing its distribution paying capacity and NOI is a key input in determining the value of the REIT's properties. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance. However, they do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other publicly traded entities. These measures should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS.

FFO is defined as IFRS consolidated net income adjusted for items such as distributions on redeemable or exchangeable units recorded as finance cost under IFRS (including distributions on the Class B Units, unrealized fair value adjustments to investment properties, loss on extinguishment of acquired mortgages payable, gain on disposition of investment properties and depreciation. The REIT's method of calculating FFO is substantially in accordance with the recommendations of the Real Property Association of Canada ("REALPAC").

AFFO is defined as FFO adjusted for items such as maintenance capital expenditures, and certain non-cash items such as amortization of intangible assets, premiums and discounts on debt and investments. The REIT's method of calculating AFFO is substantially in accordance with REALPAC's recommendations.  The REIT uses a capital expenditure reserve of $60 (dollars/annual) per lot and $1,000 (dollars/annual) per rental home in the AFFO calculation.  This reserve is based on management's best estimate of the cost that the REIT may incur, related to maintaining the investment properties.

NOI is defined as total revenue from properties (i.e., rental revenue and other property income) less direct property operating expenses in accordance with IFRS.

Same Community results are the results of the MHCs owned throughout the applicable period and such measure is used by management to evaluate period-over-period performance of investment properties. These results remove the impact of dispositions or acquisitions of investment properties.

Please refer to the REIT's Management Discussion and Analysis for the period ended June 30, 2021 for further detail on non-IFRS financial measures, including reconciliations of these measures to standardized IFRS measures.

Forward-Looking Statements

This press release contains statements that include forward-looking information within the meaning of Canadian securities laws. These forward-looking statements reflect the current expectations of the REIT regarding future events, including statements concerning the intended monthly distributions of the REIT. In some cases, forward-looking statements can be identified by terms such as "may", "will", "could", "occur", "expect", "anticipate", "believe", "intend", "estimate", "target", "project", "predict", "forecast", "continue", or the negative thereof or other similar expressions concerning matters that are not historical facts. Material factors and assumptions used by management of the REIT to develop the forward-looking information include, but are not limited to, the REIT having sufficient cash to pay its distributions. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.

Although management believes the expectations reflected in such forward-looking statements are reasonable and represent the REIT's internal expectations and beliefs at this time, such statements involve known and unknown risks and uncertainties and may not prove to be accurate and certain objectives and strategic goals may not be achieved. A variety of factors, many of which are beyond the REIT's control, could cause actual results in future periods to differ materially from current expectations of events or results expressed or implied by such forward-looking statements, such as the risks identified in the REIT's final prospectus available under the REIT's profile at www.sedar.com, including under the heading "Risk Factors" therein. Readers are cautioned against placing undue reliance on forward-looking statements. Except as required by applicable Canadian securities laws, the REIT undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made.

SOURCE Flagship Communities Real Estate Investment Trust