FLAGSHIP COMMUNITIES REAL ESTATE INVESTMENT TRUST ACQUIRES RESORT COMMUNITY, STRENGTHENING OHIO PRESENCE

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TORONTO, Feb. 15, 2022 /CNW/ - Flagship Communities Real Estate Investment Trust (the "REIT") (TSX: MHC.U) announced today it has acquired, from Empower Park, LLC ("Empower"), a 13-acre, high-quality manufactured housing resort community ("MHC") located in Northern Ohio (the "Acquisition"). The Acquisition includes 100 MHC homesites with a 99% occupancy rate and a 141-boat slip marina for the purchase price of approximately US$8.2 million, further strengthening the REIT's presence in Ohio.

"The acquisition of an MHC resort community within our existing footprint from our ROFO pipeline demonstrates our growth strategy as well as our ability to benefit from our relationship with Empower," said Kurt Keeney, President and Chief Executive Officer. "In addition to being located in a desirable area near the shores of Lake Erie, the community is age restricted to residents 55 and older, making it an ideal residence for empty nesters, veterans and retirees."

The Acquisition was approved by the independent members of the REIT's board of trustees and is the result of the REIT's exercise of its right of first refusal pursuant to an agreement dated October 7, 2020 (the "ROFO") with Empower, which is majority-owned by Kurtis Keeney (the REIT's President and Chief Executive Officer) and Nathaniel Smith (the REIT's Chief Investment Officer). The purchase price for the Acquisition was satisfied by approximately $7.5 million in cash and the issuance of Class B units ("Class B Units") by Flagship Operating, LLC, a subsidiary of the REIT, with an aggregate value of approximately $0.7 million, as determined using the ten-day volume-weighted average trading price of the REIT's trust units on the Toronto Stock Exchange, per the terms of the ROFO. The Acquisition is expected to be immediately accretive to the REIT's adjusted funds from operations ("AFFO") per Unit on a leverage neutral basis.

About Flagship Communities Real Estate Investment Trust

Flagship Communities Real Estate Investment Trust is an 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, Missouri, and Illinois, including a fleet of manufactured homes for lease to residents of such housing communities.

Non-IFRS Financial Measures

The REIT uses certain financial measures that do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS"), including certain real estate industry metrics such as funds from operations ("FFO"), FFO Per Unit, AFFO and AFFO Per Unit, 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. These measures are commonly used by entities in the real estate industry as useful metrics for measuring performance. However, such non-IFRS financial measures 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.

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 Acquisition being immediately accretive to the REIT's AFFO per Unit on a leverage neutral basis. 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, that occupancy rates are stable, rental rate changes and collections experiences are consistent with recent practice, and that currency exchange and interest rates are stable. 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 annual information form for the year ended December 31, 2020, including under the heading "Risk Factors" therein, and the REIT's most recent annual and interim management's discussion and analysis, in each case available under the REIT's profile at www.sedar.com. 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.

For further information, please contact:
Eddie Carlisle, Chief Financial Officer
Flagship Communities Real Estate Investment Trust
Tel: [phone]

SOURCE Flagship Communities Real Estate Investment Trust