/NOT FOR DISTRIBUTION TO
The financial results of the REIT are presented below in accordance with International Financial Reporting Standards ("IFRS"), except where otherwise noted. The financial performance and financial condition of the REIT for the year ended
Summary of Fourth Quarter 2021 Results:
Financial Highlights
- Revenue was
$12.2 million , approximately$3.9 million higher than the period ofOctober 7, 2020 –December 31, 2020 - Same Community Revenue (see "Other Real Estate Industry Metrics" below) was
$9.5 million , an increase of$1.2 million from the period ofOctober 7, 2020 –December 31, 2020 - Net Income and Comprehensive Income was
$53.5 million , which was$6.1 million more than the periodOctober 7, 2020 –December 31, 2020 - Net Operating Income ("NOI", a non-IFRS financial measure, see "Non-IFRS Financial Measures" below) was
$8.2 million , compared to$5.5 million for the period ofOctober 7, 2020 –December 31, 2020 - Same Community NOI (a non-IFRS financial measure, see "Non-IFRS Financial Measures" below) was
$6.3 million , compared to$5.5 million for the period ofOctober 7, 2020 –December 31, 2020 - NOI Margin (a non-IFRS financial measure, see "Non-IFRS Financial Measures" below) increased to 67.2%, compared to 66.2% for the period of
October 7, 2020 –December 31, 2020 - Same Community Occupancy (see "Other Real Estate Industry Metrics" below) of 80.6% increased by 1.4% as of
December 31, 2021 , compared toDecember 31, 2020 - Rent Collections (see "Other Real Estate Industry Metrics" below) for the three months ended were 98.6%, which was a slight increase from 98.5% for the period of
October 7, 2020 –December 31, 2020 and consistent with prior periods
Operating Highlights
- Acquired three high-quality manufactured housing communities ("MHCs"), comprising 957 lots in the REIT's core markets of
Kentucky andArkansas for an aggregate purchase price of approximately$56.8 million - Acquired two
RV Resort communities inNorthern Kentucky andCentral Ohio for an aggregate purchase price of$8.35 million - Subsequent to quarter-end, acquired a 13-acre, high quality resort community in
Northern Ohio that includes 100 MHC homesites and a 141-boat slip marina for approximately$8.2 million
Capital Markets Highlights
- Completed equity offering of trust units at a price of
$19.25 per unit for total gross proceeds of$46.5 million - Increased monthly distributions to unitholders by 5% to
$0.0446 per REIT unit or$0.5355 per REIT unit on an annual basis
($000s except per share amounts) | |||
For the three | For the period | Variance | |
Revenue, Total Portfolio | 12,192 | 8,304 | 3,888 |
Revenue, | 9,507 | 8,262 | 1,245 |
Revenue, Acquisitions2 | 2,685 | 42 | 2,643 |
Net Income and Comprehensive Income, Total Portfolio | 53,451 | 47,338 | 6,113 |
NOI, Total Portfolio1 | 8,199 | 5,497 | 2,702 |
NOI, | 6,300 | 5,472 | 828 |
NOI, Acquisitions2 | 1,899 | 25 | 1,874 |
NOI Margin, Total Portfolio1 | 67.2% | 66.2% | 1.0% |
NOI Margin, | 66.3% | 66.2% | 0.1% |
NOI Margin, Acquisitions2 | 70.7% | 58.5% | 12.2% |
Funds from Operations ("FFO")1 | 4,614 | 2,697 | 1,917 |
FFO Per Unit1 | 0.263 | 0.220 | 0.043 |
Adjusted Funds from Operations ("AFFO")1 | 3,920 | 2,227 | 1,693 |
AFFO Per Unit1 | 0.223 | 0.182 | 0.041 |
AFFO Payout Ratio1 | 59.8% | 67.0% | (7.2%) |
1 A non-IFRS financial measure. See "Non-IFRS Financial Measures" for more information. 2 See "Other Real Estate Industry Metrics" for more information. |
"Our first full year as a publicly traded REIT was highly successful as we demonstrated our operating expertise, our ability to enter new
Financial Performance Overview
Revenue of
Net Income and Comprehensive Income was
NOI and NOI Margin for the fourth quarter 2021 was
AFFO and AFFO per Unit was
Same Community Occupancy of 80.6% increased by 1.4% as of
Rent Collections for the third quarter 2021 were 98.6%, which was a slight increase from 98.5% for the period of
As of
Operations Overview
During the fourth quarter 2021, Flagship REIT continued to grow its presence in existing markets.
Flagship REIT acquired three high-quality MHCs, comprising 957 lots in
The
The
The
During the quarter, the REIT also acquired two
Subsequent to quarter-end, the REIT continued to strengthen its
As of
As of | As of | |||
Total communities | (#) | 63 | 52 | |
Total lots | (#) | 11,328 | 8,634 | |
Weighted Average Lot Rent1 | (US$) | 369 | 352 | |
Occupancy1 | (%) | 82.8 | 79.6 | |
1See "Other Real Estate Industry Metrics" below |
Outlook
Flagship REIT was formed to provide investors with the opportunity to invest in the MHC industry in
The REIT believes the MHC sector to be a prudent investment strategy that will create long-term value for a number of 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.
Flagship REIT believes that macro characteristics and trends in
- Increasing household formations;
- Lower housing affordability;
- Declining single-family residential home ownership rates;
- Lack of new manufactured housing supply.
Flagship REIT believes it is well positioned to benefit from these dynamics in the residential real estate and housing industry.
Non-IFRS Financial Measures
The REIT uses certain non-IFRS financial measures, including FFO, FFO Per Unit, AFFO, AFFO Per Unit, AFFO Payout Ratio, NOI and NOI Margin 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 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 of
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
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 Margin is calculated as NOI divided by Revenue. Refer to section "Reconciliation of Non-IFRS Financial Measures" for a reconciliation of NOI to Net Income and Comprehensive Income.
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:
- "Occupancy" is calculated as total occupied lots divided by total lots.
- "Rent Collections" is defined as the total cash collected in a period divided by total revenue charged in that same period.
- "
Same Community financial measures are the results of the MHCs owned throughout the applicable period. - "Acquisitions" financial measures are the results of the MHCs acquired by the REIT following the commencement of the applicable 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
For the three months | For the period | ||
Net income and comprehensive income | |||
Adjustments to arrive at FFO | |||
Depreciation | |||
Fair value adjustment - Class B units | |||
Distributions on Class B units | |||
Fair value adjustment - investment properties | |||
Transaction costs | $- | ||
Bargain purchase gain | |||
FFO | |||
FFO Per Unit* (diluted) | |||
Adjustments to arrive at AFFO | |||
Accretion of mark-to-market adjustment on mortgage payable | |||
Capital Expenditure Reserves | |||
AFFO | |||
AFFO Per Unit* (diluted) |
For the three months | For the period | ||
Net income and comprehensive income | |||
Adjustments to arrive at NOI | |||
General and administrative | |||
Finance costs from operations | |||
Accretion of mark-to-market adjustment on mortgage payable | |||
Depreciation | |||
Other (income) | |||
Fair value adjustment - Class B units | |||
Distributions on Class B units | |||
Fair value adjustment - investment properties | |||
Fair value adjustment - unit based compensation | $- | ||
Transaction costs | $- | ||
Bargain purchase gain | |||
NOI |
For the three months | For the period October | ||
Rental revenue and related income | |||
Property operating expenses | |||
NOI | |||
NOI Margin | 67.2% | 66.2% |
Forward Looking Statements
This news release contains statements that include forward-looking information (within the meaning of applicable Canadian securities laws). Forward-looking statements are identified by words such as "believe", "anticipate", "project", "expect", "intend", "plan", "will", "may", "can", "could", "would", "must", "estimate", "target", "objective" and other similar expressions, or negative versions thereof, and include statements herein concerning: the REIT's investment and growth strategy, the statements under the heading "Outlook" and the expected performance of acquired properties. These statements are based on the REIT's expectations, estimates, forecasts and projections, as well as assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies that could cause actual results to differ materially from those that are disclosed in such forward-looking statements. While considered reasonable by management of the REIT as at the date of this news release, any of these expectations, estimates, forecasts, projections or assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those expectations, estimates, forecasts, projections or assumptions could be incorrect. Material factors and assumptions used by management of the REIT to develop the forward-looking information in this news release include, but are not limited to, the REIT's current expectations about: vacancy and rental growth rates in MHCs and the continued receipt of rental payments in line with historical collections; demographic trends in areas where the MHCs are located; the impact of COVID-19 on the MHCs; further MHC acquisitions by the REIT; the applicability of any government regulation concerning MHCs and other residential accommodations, including as a result of COVID-19; the availability of debt financing and future interest rates; expenditures and fees in connection with the ownership of MHCs; and tax laws. When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as they are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the heading "Risks and Uncertainties" in the REIT's Management Discussion and Analysis for the year ended
Fourth Quarter and Year-End 2021 Results Conference Call and Webcast
DATE: | |
TIME: | |
DIAL-IN NUMBER: | 416-764-8650 or 1-888-664-6383 |
CONFERENCE ID: | 11083758 |
LIVE WEBCAST: | https://flagshipcommunities.com/investor-relations/presentations-and-events/ |
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