Flagship Communities REIT Acquires Manufactured Housing Communities and Lots for US$6.05 Million

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TORONTO, Feb. 9, 2021 /CNW/ - Flagship Communities Real Estate Investment Trust ("Flagship" or the "REIT") (TSX: MHC.U) announced today that it has completed the acquisition of two new manufactured housing communities and additional manufactured housing lots adjacent to a current community (collectively, the "Acquisitions"), for a purchase price of approximately US$6.05 million. The Acquisitions are expected to be immediately accretive to the REIT's adjusted funds from operations ("AFFO") on a per unit basis.

The purchase price of US$6.05 million will be funded with cash on the REIT's balance sheet. The REIT's pro forma Debt to Gross Book Value (see "Non-IFRS Financial Measures" below) following the Acquisitions is expected to be 47.8%.

"Following our recent announcement in December of seven new communities, these Acquisitions will provide further depth to our portfolio in our core markets along with the addition of one new Kentucky market in Bowling Green," said Kurt Keeney, President and Chief Executive Officer. "We believe there is notable NOI upside organically through both active management and value enhancing initiatives. In line with our stated acquisition strategy, the Acquisitions provide synergistic opportunities within our existing markets and are immediately accretive to our AFFO per unit with additional above market growth over time."

The Acquisition Portfolio is 93.1% leased as of February 1, 2021. The Acquisitions expand the REIT's presence within its existing operational footprint, providing the opportunity for continued growth and management operating synergies as the REIT consolidates communities in its core geographic markets within the Midwest.

"We are excited to source and execute these off-market acquisitions through our long-standing industry relationships," commented Nathan Smith, Chief Investment Officer. "The Shepherdsville community expands our Louisville base and by entering the Bowling Green market in Kentucky, it opens up a strategic area for us, strengthening our presence in southwestern Kentucky."

Overview of the Acquisitions

• Shepherdsville, Kentucky: The Shepherdsville community includes 77 lots and expands the REIT's local market inventory by nearly 4%. Shepherdsville Pointe is 100% occupied and is located within the Louisville market in Bullitt County Kentucky and is close to a Walmart Supercenter, Bullitt County schools and an Amazon fulfillment center which provides jobs and services for the community. Shepherdsville is the county seat in Bullitt County, which is considered the gateway to Kentucky's famous Bourbon Trail and top-ranked Bullitt County schools.
  
  
• Bowling Green, Kentucky: The Bowling Green community includes 74 lots and is the first Flagship REIT entry into the Bowling Green area. 96% occupied, Hamilton Pointe is approximately two hours from Paducah to the southwest and from Louisville to the north, which is home to many current Flagship REIT communities. Located 60 miles north of Nashville and 110 miles south of Louisville off Interstate 65, Bowling Green is the third-most populous city in the state of Kentucky after Louisville and Lexington. Significant companies in Bowling Green include the GM Corvette Assembly Plant, Fruit of the Loom/ Russell Athletics, Houchens Industries, Holley Performance Products, Bowling Green Metalforming, Camping World and the third largest Kentucky public university, Western Kentucky University.
  
  
• Carrollton, Kentucky: The Northern Kentucky community of Oakview Pointe has been expanded with the acquisition of eight new lots, bringing the entire community to 149 home sites. Oakview Pointe is minutes from I-71 and 40 minutes from the Cincinnati/Northern Kentucky International Airport, Amazon's CVG Air Hub and fulfillment center.

Acquisition Portfolio as at February 1, 2021

The Acquisitions are a targeted and strategic expansion of the REIT's portfolio, increasing the number of manufactured housing communities from 52 to 54 and the number of manufactured housing lots from 8,634 to 8,793. The table below provides a summary of the Acquisition Portfolio as of February 1, 2021.

		Acquisition Portfolio
# of Lots	(#)	159
Lot Occupancy	(%)	93.1%
Lot AMR	(US$)	$243
Forecast NOI – Year 1	(US$ mm)	$0.4

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 and Tennessee, including a fleet of manufactured homes for lease to residents of such housing communities.

Non-IFRS Financial Measures:

Certain financial measures disclosed in this press release do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and are therefore a non-IFRS financial measures. The REIT's method of calculating such non-IFRS financial measures may differ from other issuers' methods and, accordingly, may not be comparable to such non-IFRS financial measures reported by other issuers.

AFFO is defined by the REIT as Funds From Operations (being 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 of the REIT's subsidiary, Flagship Operating, LLC), unrealized fair value adjustments to investment properties, loss on extinguishment of mortgages payable, gain on disposition of investment properties and depreciation) adjusted for items such as maintenance capital expenditures, and certain non-cash items such as amortization of intangible assets, deferred financing costs that were incurred prior to the formation of the REIT, premiums and discounts on debt and investments. The REIT's method of calculating AFFO is substantially in accordance with the recommendations of the Real Property Association of Canada. The REIT regards AFFO as a key measure of operating performance.

Debt to Gross Book Value Ratio does not have any standardized meaning prescribed by IFRS and is therefore a non-IFRS financial measure. Debt to Gross Book Value Ratio is calculated as Indebtedness (as defined in the declaration of trust governing the REIT, which is available under the REIT's profile on SEDAR at www.sedar.com) divided by Gross Book Value (being, at any time, the greater of: (a) the value of the assets of the REIT and its consolidated subsidiaries, as shown on its then most recent consolidated balance sheet prepared in accordance with IFRS, less the amount of any receivable reflecting interest rate subsidies on any debt assumed by the REIT; and (b) the historical cost of the investment properties, plus (i) the carrying value of cash and cash equivalents, (ii) the carrying value of mortgages receivable; and (iii) the historical cost of other assets and investments used in operations).

Net Operating Income ("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. NOI should not be construed as an alternative to net income determined in accordance with IFRS. The REIT regards NOI as an important measure of the income generated from the income producing properties and uses NOI in evaluating the performance of the REIT's properties. It is also a key input in determining the value of the REIT's properties.

Forward-Looking Statements:

This press release contains statements that include forward-looking information within the meaning of Canadian securities laws, including with respect to the terms of, timing for completion of and source of funding for the pending Acquisitions, the expected synergies and AFFO from the Acquisitions and timing thereof, and the expected impact of the Acquisitions on the REIT's NOI and Debt to Gross Book Value ratio. 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.

These forward-looking statements reflect the current expectations of the REIT regarding future events. The REIT has based these forward-looking statements on certain assumptions about future events and trends, including that: occupancy levels at the REIT's properties stay consistent with recent past experience with very modest growth in the first year for much of the Acquisition Portfolio; rent collections for the Acquisition Portfolio are consistent with the trend generally experienced for the REIT's portfolio. The REIT cautions that this list of assumptions is not exhaustive; inflation remains relatively low; interest rates remain relatively stable; and tax laws remain unchanged. 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 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

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