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TORONTO, April 27,
2022 /CNW/ - Flagship Communities Real Estate
Investment Trust ("Flagship" or the "REIT") (TSX: MHC.U) announced
today that it will add a second Illinois community to its portfolio with the
acquisition of a Riverton Illinois
manufactured housing community, located in suburban Springfield Illinois, (the "Acquisition") for
a purchase price of approximately US$6.25
million. The Acquisition is 89% occupied and is expected to
be immediately accretive to the REIT's adjusted funds from
operations ("AFFO") on a per unit basis. The Acquisition is subject
to customary closing conditions and is expected to close on or
about May 29, 2022.
"This acquisition is aligned with our disciplined business
strategy to increase our presence in core states and branch out
into adjacent regions with attractive acquisitions that enhance our
portfolio," said Kurt Keeney,
President and Chief Executive Officer. "This well-located
property is our second in the Springfield, Illinois market and will be
immediately accretive to our AFFO per unit with above-market growth
over time."
The purchase price of US$6.25
million will be funded with cash on the REIT's balance
sheet.
"We are continuing to leverage our regional management structure
and proven operating model to support another acquisition in the
Illinois market," said
Nathan Smith, Chief Investment
Officer. "This community is currently 89% occupied with
potential for further growth – as we have achieved with our
other acquisitions to date."
Overview of the
Acquisition
Riverton
Illinois
Near the geographic center of Illinois, Springfield, the state capital, is a quiet
agricultural center with a strong government presence. This quiet
town with a well-educated population has a substantial heritage
built around Abraham Lincoln's
residence and activities. It is altogether fitting that the
Lincoln's history should be blended into such a traditional,
mid-American city.
Workforce: The State of
Illinois is the area's largest employer along with
Springfield Public Schools,
City of Springfield, University of Illinois Springfield as well as many
private companies.
Education: As well as elementary and secondary schools,
Springfield is served by two
post-secondary institutions.
Pro Forma Portfolio
The Acquisition is a targeted and strategic expansion of the
REIT's portfolio, increasing the number of manufactured housing
communities from 64 to 65 and the number of manufactured housing
lots from 11,428 to 11,531. The table below provides a summary of
the pending Acquisition as of May 29,
2022.
|
Acquisition
Portfolio
|
# of Lots
|
(#)
|
103
|
Lot
Occupancy
|
(%)
|
89
|
Lot AMR
|
(US$)
|
$260
|
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, Illinois 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 March 31, 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