FLAGSHIP COMMUNITIES REAL ESTATE INVESTMENT TRUST ANNOUNCES FIRST QUARTER RESULTS

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

TORONTO, May 9, 2022 /CNW/ - Flagship Communities Real Estate Investment Trust ("Flagship" or the "REIT") (TSX: MHC.U) today released its results for the three months ended March 31, 2022 ("Q1"). The financial results of the REIT are presented below in accordance with International Financial Reporting Standards ("IFRS"), except where otherwise noted. Results are shown in U.S. dollars unless otherwise noted.

Summary of First Quarter 2022 Results:

Financial Highlights

• Revenue was $13.7 million, approximately $4.0 million higher than Q1 2021
• Same Community Revenue[1] was $10.1 million, an increase of $0.6 million from Q1 2021
• Net Income and Comprehensive Income was $2.4 million, a $4.2 million decrease from Q1 2021
• Net Operating Income ("NOI") was $9.3 million, an increase of $2.8 million from Q1 2021
• Same Community NOI¹ was $6.9 million, an increase of $0.5 million from Q1 2021
• NOI Margin¹ increased to 67.6%, compared to 66.7% for Q1 2021
• Funds from Operations[2] ("FFO") were $5.6 million or $0.284 per unit, compared to $3.5 million and $0.276 per unit in Q1 2021
• Adjusted Funds from Operations² ("AFFO") were $4.9 million or $0.248 per unit, compared to $3.0 million and $0.239 per unit in Q1 2021
• Same Community Occupancy¹ was 81.3% as of March 31, 2022, compared to 80.8% as of December 31, 2021
• Rent Collections¹ for the three months ended March 31, 2022, were 99.0%, up slightly compared to 98.8% for the three months ended March 31, 2021, and consistent with prior periods

Operating Highlights

• On February 15, 2022, the REIT acquired a 13-acre manufactured housing resort community in northern Ohio, through its strategic relationship with Empower Park LLC. The community consists of 100 lots with 99% occupancy and a 141 boat slip marina.
• On April 27, 2022, subsequent to quarter-end, the REIT acquired a manufactured housing community in southern Illinois. The community consists of 103 lots and is 89% occupied.
• On April 11, 2022, the REIT's Waterford Pointe community in Evansville, Indiana, was named Land-Lease Community of the Year by the Manufactured Housing Institute.

Financial Summary

($000s except per share amounts)
	For the three months ended March 31, 2022	For the three months ended March 31, 2021	Variance
Revenue, Total Portfolio	13,693	9,649	4,044
Revenue, Same Community^1	10,074	9,454	620
Revenue, Acquisitions^1	3,619	195	3,424
Net Income and Comprehensive Income, Total Portfolio	2,433	6,631	(4,198)
NOI, Total Portfolio	9,258	6,440	2,818
NOI, Same Community^1	6,854	6,406	448
NOI, Acquisitions^1	2,404	34	2,370
NOI Margin^1, Total Portfolio	67.6%	66.7%	0.9%
NOI Margin^1, Same Community^1	68.0%	67.8%	0.2%
NOI Margin^1, Acquisitions^1	66.4%	17.7%	48.7%
FFO^2	5,563	3,498	2,065
FFO Per Unit^2	0.284	0.276	0.008
AFFO^2	4,854	3,028	1,826
AFFO Per Unit^2	0.248	0.239	0.008
AFFO Payout Ratio^2	54.0%	53.3%	0.7%
1.        See "Other Real Estate Industry Metrics" for more information. 2.        A non-IFRS financial measure.  See "Non-IFRS Financial Measures" for more information.

"The results of the first quarter of 2022 reflect the continuing success of our strategy to leverage our expertise and optimize the operating performance of the portfolio while adding accretive acquisitions," said Kurt Keeney, President and CEO of the REIT. "Going forward, we see multiple opportunities to increase our concentration in our core states while building a presence in adjacent regions to increase our diversity."

Financial Performance Overview

Revenue of $13.7 million in the first quarter of 2022 was approximately $4.0 million higher than the prior period, primarily driven by acquisitions and lot rent increases and occupancy increases across the portfolio.

Net Income and Comprehensive Income was $2.4 million, a $4.2 million decrease from the prior period as a result of the significantly larger fair value gain on investment properties for the three months ended March 31, 2021, compared to the same period in 2022. In addition, the fair value loss on class B units of the REIT's subsidiary, Flagship Operating, LLC ("Class B Units"), was larger in Q1 2022 compared to the prior period. These variances were somewhat offset by NOI being $2.8 million higher in 2022.

NOI and NOI Margin for the first quarter of 2022 was $9.3 million and 67.6%, respectively, which is $2.8 million and 0.9% higher than the prior period. These increases were primarily driven by the REIT's accretive acquisition strategy during 2021, as well as lot rent growth and occupancy growth.

AFFO and AFFO per Unit were $4.9 million and $0.248 per unit, a 60.3% and 3.8% increase, respectively, from the prior period. The increase was primarily driven by the REIT's accretive acquisition strategy during 2021 and continued Same Community NOI growth. Same Community Revenues in Q1 2022 exceeded Q1 2021 by $0.6 million. This increase was driven by lot rent increases implemented during the period and occupancy growth throughout the year. Cost containment efforts also helped contribute to the positive results. Continued focus on labor efficiencies throughout the communities and water and sewer savings positively impacted property operating expenses.

Same Community Occupancy of 81.3% increased by 0.5% as of March 31, 2022, compared to December 31, 2021. The consistent and growing occupancy rate reflects the REIT's commitment to resident satisfaction and ensuring its communities are desirable locations.

Rent Collections for Q1 2022 were 99.0%, which was a slight increase from 98.8% in Q1 2021 and consistent with prior periods, further demonstrating the strength and predictability of the MHC sector.

On March 24, 2022, the REIT borrowed $9.3 million, for which one MHC was the collateral. The interest rate on the note is 4.37%, fixed for 30 years, with the first 180 monthly payments being interest only. 

On April 13, 2022, subsequent to quarter end, the REIT borrowed $18.0 million, for which one MHC was the collateral. The interest rate on the note is 3.80%, fixed for 20 years, with the first 60 monthly payments being interest only. These funds will be used to fund future acquisitions and for general business purposes.  

As of December 31, 2021, Flagship REIT's total cash and cash equivalents were $15.1 million with no near-term debt obligations.

Operations Overview

In the first quarter of 2022, the REIT added a 13-acre high-quality resort community in Northern Ohio that includes 100 MHC homesites with a 99% occupancy rate and a 141-boat slip marina for approximately $8.2 million.

Subsequent to quarter-end, the REIT added a second Illinois community in suburban Springfield, Illinois, for a purchase price of approximately $6.25 million. The community has 103 lots and 74 rental homes with 89% occupancy.

As at March 31, 2022, the REIT owned a 100% interest in a portfolio of 64 MHCs with 11,454 lots. The table below provides a summary of the REIT's portfolio for the three months ended March 31, 2022, compared to the period of March 31, 2021:

		As of March 31, 2022	As of March 31, 2021
Total communities	(#)	64	54
Total lots	(#)	11,454	8,793
Weighted Average Lot Rent^1	(US$)	385	361
Occupancy	(%)	83.1	80.2
1.   See "Other Real Estate Industry Metrics" below

Outlook

The REIT was formed to provide investors with the opportunity to invest in the MHC industry in the United States while benefiting from the investment and operational expertise of the REIT's vertically integrated management platform.

The REIT believes the MHC sector to be a prudent investment strategy that will create long-term value for the following reasons:

• Defensive investment characteristics relative to other real estate asset classes;
• Consistent track record of outperformance irrespective of economic cycles;
• High barriers to entry for any competitors and new supply;
• Stable occupancy and growing rents;
• Lower capital expenditure requirements than many other real estate asset classes;
• Growing public sentiment toward a detached home relative to a multi-family apartment.

The REIT believes that macro characteristics and trends in the United States real estate and housing industry and the MHC industry specifically offer investors significant upside potential. These characteristics and trends include:

• Increasing household formations;
• Lower housing affordability;
• Declining single-family residential homeownership rates;
• Lack of new manufactured housing supply.
• The REIT believes it is well-positioned to benefit from these residential real estate and housing industry dynamics.

Non-IFRS Financial Measures

The REIT uses certain non-IFRS financial measures (including ratios), including FFO, FFO Per Unit, AFFO, AFFO Per Unit, AFFO Payout Ratio 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, 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 Net Income and Comprehensive 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"). FFO per Unit (diluted) is defined as FFO for the applicable period divided by the diluted weighted average Unit count (including Class B Units and Deferred Trust Units ("DTUs")) during the period. Refer to section "Reconciliation of FFO, FFO per Unit, AFFO and AFFO per Unit" for a reconciliation of FFO to AFFO to Net Income and Comprehensive Income.

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. This may differ from other issuers' methods and, accordingly, may not be comparable to AFFO reported by other issuers. Refer to section "Reconciliation of FFO, FFO per Unit, AFFO and AFFO per Unit" for a reconciliation of AFFO to net income (loss).

AFFO Payout Ratio is defined as total cash distributions of the REIT (including distributions on Class B Units) divided by AFFO. AFFO per Unit (diluted) is defined as AFFO for the applicable period divided by the diluted weighted average Unit count (including Class B Units and DTUs) during the period.

Other Real Estate Industry Metrics

Additionally, this news release contains several other real estate industry metrics that are not disclosed in the REIT's financial statements:

• "Acquisitions" means the REIT's properties, excluding Same Communities (as defined below) and such measures (i.e.: Revenue, Acquisitions; NOI, Acquisitions; and NOI Margin, Acquisitions) are used by management to evaluate period-over-period performance of such investment properties throughout both respective periods. These results reflect the impact of acquisitions of investment properties.
• "NOI margin" is defined as NOI divided by total revenue. Refer to section "Calculation of Other Real Estate Industry Metrics – NOI and NOI Margin".
• "Rent Collections" is defined as the total cash collected in a period divided by total revenue charged in that same period.
• "Same Community" means all properties which have been owned and operated continuously since January 1, 2021, by the REIT and such measures (i.e.: Same Community Revenue or Revenue, Same Community; Same Community NOI or NOI, Same Community; NOI Margin, Same Community; and Same Community Occupancy) are used by management to evaluate period-over-period.
• "Weighted Average Lot Rent" means the lot rent for each individual community multiplied by the total lots in that community summed for all communities divided by the total number of lots for all communities.

Reconciliation of Non-IFRS Financial Measures

FFO, FFO Per Unit, AFFO, AFFO per Unit

($000s, except per unit amounts)	For the three months ended March 31, 2022	For the three months ended March 31, 2021
Net income and comprehensive income	2,433	6,631
Adjustments to arrive at FFO
Depreciation	67	33
Fair value adjustments-Class B units	3,184	2,282
Distributions on Class B units	730	693
Fair value adjustment – investment properties	(851)	(6,193)
Transaction costs	-	52
FFO	5,563	3,498
FFO per Unit (diluted)	0.284	0.276
Adjustments to arrive at AFFO
Accretion of mark-to-market adjustments on    mortgage payable	(257)	(257)
Capital Expenditure Reserves	(452)	(213)
AFFO	4,854	3,028
AFFO per Unit (diluted)	0.248	0.239

Calculation of Other Real Estate Industry Metrics

NOI and NOI Margin

($000s)	For the three months ended March 31, 2022	For the three months ended March 31, 2021
Rental revenue and related income	13,693	9,649
Property operating expenses	4,435	3,209
NOI	9,258	6,440
NOI Margin	67.6%	66.7%

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 under "Outlook" and plans for acquisitions. 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 and that the items listed under "Outlook" continue to be true. 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 and management's discussion and analysis ("MD&A") for the year ended December 31, 2021 or any subsequently filed interim MD&A, in each case available under the REIT's profile at www.sedar.com, including under the heading "Risk Factors" or "Risk and Uncertainties" 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.

First Quarter 2022 Results Conference Call and Webcast

DATE:	Tuesday, May 10, 2022
TIME:	8:30 a.m. ET
DIAL-IN NUMBER:	647-427-7450 or 1-888-231-8191
CONFERENCE ID:	2976425
LIVE WEBCAST:	https://flagshipcommunities.com/investor-relations/presentations-and-events/

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.

_________________________

¹ See "Other Real Estate Industry Metrics" for more information.

² A non-IFRS financial measure.  See "Non-IFRS Financial Measures" for more information.

SOURCE Flagship Communities Real Estate Investment Trust

Eddie Carlisle, Chief Financial Officer, Flagship Communities Real Estate Investment Trust, Tel: [phone]