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TORONTO, May 18, 2022
/CNW/ - Flagship Communities Real Estate Investment Trust
("Flagship" or the "REIT") (TSX: MHC.U) announced today that it
will acquire two communities to its portfolio with the acquisition
of two properties in Florence
Kentucky, (the "Acquisition") for a purchase price of
approximately US$22.5 million. The
Acquisition is 70% occupied. The Acquisition is subject to
customary closing conditions and is expected to close on or about
May 18, 2022.
"This acquisition is located near our corporate headquarters in
Northern Kentucky and aligns with
our strategy to increase our concentration in our core states to
enhance efficiencies and achieve economies of scale," said
Kurt Keeney, President and Chief
Executive Officer. "These properties are located in highly
desirable, high growth areas and are expected to generate
above-market growth over time."
The purchase price of US$22.5
million will be funded with cash on the REIT's balance
sheet.
"This bolt-on acquisition of two adjacent properties in
Northern Kentucky will benefit
from our market connections and regional management structure,"
added Nathan Smith, Chief Investment
Officer. "With 70% occupancy rates at the outset, we have the
opportunity to grow and make improvements to the performance of
these communities."
Overview of the AcquisitionFlorence Kentucky
The two communities located in Florence Kentucky, are adjacent to each other
and occupy 70 acres. Florence is
the second-largest city in Northern
Kentucky, and part of the Greater
Cincinnati Metropolitan Area. Bordered by I‑75/71 and I‑275,
Florence is minutes from the
Greater Cincinnati/Northern Kentucky International Airport, and
just a stone's throw from downtown Cincinnati.
Workforce: The community is near Northern Kentucky Industrial
Park, home to dozens of international manufacturers. Major nearby
employers include Amazon, GE, St. Elizabeth Healthcare, DHL, UPS,
Schwan's, Fidelity and Boone
County School District. Northern
Kentucky offers a competitive business climate built on low
tax burdens, competitive incentive packages and below-average
utility costs.
Education: Including many public and private K-12 school
districts, the Acquisition is located near Northern Kentucky University, Thomas More
University, Gateway Technical College,
and 15 minutes from the University of
Cincinnati and Xavier
University.
Pro Forma Portfolio
The Acquisition is a targeted and strategic expansion of the
REIT's portfolio, increasing the number of manufactured housing
communities from 65 to 67 and the number of manufactured housing
lots from 11,531 to 11,876. The table below provides a summary of
the pending Acquisition as of May 18,
2022.
|
Acquisition
Portfolio
|
# of Lots
|
(#)
|
345
|
Lot Occupancy
|
(%)
|
70
|
Lot AMR
|
(US$)
|
$477
|
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, 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