Flagship Communities Real Estate Investment Trust Announces Fourth Quarter and Full Year 2024 Results

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TORONTO, March 12, 2025 (GLOBE NEWSWIRE) -- Flagship Communities Real Estate Investment Trust ("Flagship” or the "REIT”) (TSX: MHC.U; MHC.UN) today released its fourth quarter and full year 2024 results. The financial results of the REIT are prepared in accordance with International Financial Reporting Standards ("IFRS”) as issued by the International Accounting Standards Board (the "IASB”). Results are shown in U.S. dollars, unless otherwise noted.

Fourth Quarter 2024 Results

Compared to Fourth Quarter 2023 Results

Rental revenue was $23.8 million, an increase of 26.6% compared to $18.8 million
Same Community Revenue¹ was $20.4 million, up 15.5% compared to $17.7 million
Net income (loss) and comprehensive income (loss) was $25.2 million compared to $(1.5) million
Net Operating Income ("NOI”) was $16.0 million, up 28.1% compared to $12.4 million
Same Community NOI¹ was $14.0 million, an increase of 17.7%, compared to $11.9 million
NOI Margin¹ was 67.1% compared to 66.3%
Same Community NOI Margin¹ was 68.8% compared to 67.5%
Funds from operations ("FFO”) per unit (diluted)² was $0.384 compared to $0.294, which was an increase of $0.090 per unit, or 30.6%
FFO adjusted per unit (diluted)² was $0.310 compared to $0.294 which was an increase of $0.016 per unit, or 5.4%
Adjusted funds from operations ("AFFO”) per unit (diluted)² was $0.375 compared to $0.258, which was an increase of $0.117 per unit, or 45.3%
AFFO adjusted per unit (diluted)² was $0.301 compared to $0.258 which was an increase of $0.043 per unit, or 16.7%
Rent Collections¹ were 98.9%, a decrease from 99.6%

Full Year 2024 Results

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Compared to Full Year 2023 Results

Rental revenue was $88.1 million, an increase of 24.0% compared to $71.1 million
Same Community Revenue¹ was $78.1 million, up 13.3% compared to $69.0 million
Net income and comprehensive income was $103.5 million, a 59.0% increase from $65.1 million
NOI was $58.4 million, an increase of 24.6% compared to $46.9 million
Same Community NOI¹ was $52.6 million, an increase of $6.7 million or 14.6% compared to $45.9 million
NOI Margin¹ was 66.3% compared to 66.0%
Same Community NOI Margin¹ was 67.3%, an increase of 0.8% compared to 66.5%
FFO per unit (diluted)² was $1.290 compared to $1.185, which was an increase of $0.105 per unit, or 8.9%
FFO adjusted per unit (diluted)² was $1.265 compared to $1.185 which was an increase of $0.080 per unit, or 6.8%
AFFO per unit (diluted)² was $1.167 compared to $1.038 which was an increase of $0.129 per unit, or 12.4%
AFFO adjusted per unit (diluted)² was $1.142 compared to $1.038 which was an increase of $0.104 per unit, or 10.0%
Rent Collections¹ were 99.0%, which was a decrease from 99.4%

As at December 31, 2024

NAV¹ and NAV per Unit¹ was $670.8 million and $26.71, respectively, compared to $525.2 million and $24.89 as at December 31, 2023, respectively
Debt to Gross Book Value¹ was 38.1% compared to 40.3% as at December 31, 2023
Total portfolio Occupancy was 83.5%, which is comparable to total portfolio Occupancy as at December 31, 2023, which was 83.6%
Same Community¹ Occupancy was 84.8%, comparable to Same Community Occupancy as at December 31, 2023, which was 84.7%

Subsequent to Year-End

Flagship borrowed $27.1 million as a supplemental borrowing on its Fannie Mae credit facility with an interest rate of 6.03% for 10 years with all payments being interest only for the full term. Also subsequent to year-end, Flagship borrowed $22.7 million with an interest rate of 5.76% for 10 years with all payments being interest only for the full term. The proceeds from these borrowings enabled Flagship to repay the $45 million outstanding on the May 2024 Bridge Note, which had an interest rate of 6.82% at the time of payoff

¹See "Other Real Estate Industry Metrics”

²See "Non-IFRS Financial Measures”

"2024 was a record year for Flagship, which included the largest acquisition in our REIT's history, the successful refinancing of our debt and notable improvements in many of our Same Community metrics,” said Kurt Keeney, President and CEO. "As we enter 2025, we are optimistic about the future of our business. We continue to make significant progress advancing our lot expansion strategy and integrating the newly acquired Tennessee and West Virginia assets. Manufactured homes remain a viable option for many Americans, given persistently limited new housing supply, coupled with rising home ownership costs that continue to be a burden for many homeowners.”

Financial Summary

($000s except per unit amounts)
	For the three months ended Dec. 31, 2024	For the three months ended Dec. 31, 2023	Variance	For the Year Ended Dec. 31, 2024	For the Year Ended Dec. 31, 2023	Variance
Rental revenue and related income	23,750	18,761	26.6%	88,130	71,052	24.0%
Same Community Revenue¹	20,388	17,656	15.5%	78,138	68,978	13.3%
Acquisitions Revenue¹	3,362	1,105	204.3%	9,992	2,074	381.8%
Net income (loss) and comprehensive income (loss)	25,151	(1,488)	1,790.3%	103,518	65,098	59.0%
NOI, total portfolio	15,939	12,439	28.1%	58,438	46,917	24.6%
Same Community NOI¹	14,017	11,914	17.7%	52,580	45,878	14.6%
Acquisitions NOI¹	1,922	525	266.1%	5,858	1,039	463.8%
NOI Margin¹, total portfolio	67.1%	66.3%	1.2%	66.3%	66.0%	0.5%
Same Community NOI Margin¹	68.8%	67.5%	1.9%	67.3%	66.5%	1.2%
Acquisitions NOI Margin¹	57.2%	47.5%	20.4%	58.6%	50.1%	17.0%
FFO²	9,649	6,224	55.0%	30,771	24,627	24.9%
FFO per unit²	0.384	0.294	30.6%	1.290	1.185	8.9%
FFO adjusted²	7,794	6,224	25.2%	30,176	24,627	22.5%
FFO adjusted per unit²	0.310	0.294	5.4%	1.265	1.185	6.8%
AFFO²	9,424	5,450	72.9%	27,831	21,561	29.1%
AFFO per unit²	0.375	0.258	45.3%	1.167	1.038	12.4%
AFFO Payout Ratio²	40.4%	55.2%	(26.8)%	50.7%	54.1%	(6.3)%
AFFO adjusted²	7,569	5,450	38.9%	27,236	21,561	26.3%
AFFO adjusted per unit²	0.301	0.258	16.7%	1.142	1.038	10.0%
AFFO adjusted Payout Ratio²	50.3%	55.2%	(8.9)%	51.8%	54.1%	(4.3)%
Weighted average units (diluted)	25,111,335	21,144,151	3,967,184	23,850,671	20,779,060	3,071,611
1. See "Other Real Estate Industry Metrics” 2. See "Non-IFRS Financial Measures”

Financial Overview

Rental revenue and related income in the fourth quarter of 2024 was $23.8 million, up 26.6% compared to the same period last year. This increase was primarily driven by Acquisitions as well as lot rent increases and Occupancy increases across the REIT's portfolio. Rental revenue and related income for the year ended December 31, 2024 was $88.1 million, or a 24.0% increases compared to the prior year, driven by the same factors.

Same Community Revenue for the fourth quarter and year ended December 31, 2024 was $20.4 million and $78.1 million, respectively, exceeding those for the fourth quarter and year ended December 31, 2023 by approximately $2.7 million and $9.2 million or 15.5% and 13.3%, respectively. The increase in Same Community Revenue was a result of increasing monthly lot rent year over year, growth in Same Community Occupancy, and increased utility reimbursements. Ancillary revenues, which is comprised of amenity fees including cable and internet fees, also contributed.

Net income (loss) and comprehensive income (loss) for the three months ended December 31, 2024 was approximately $26.6 million more than the same period last year, as a result of the fair value adjustments on investment properties and Class B Units being $23.2 million more than in the same period in 2023. Net income and comprehensive income for the year ended December 31, 2024 was $103.5 million, an increase of $38.4 million from the prior period as a result of the fair value adjustments on investment properties.

NOI and NOI Margin for the fourth quarter of 2024 were $15.9 million and 67.1%, respectively, compared to $12.4 million and 66.3% during the fourth quarter of 2023. NOI and NOI Margin for the year ended December 31, 2024 were $58.4 million and 66.3%, respectively, compared to $46.9 million and 66.0% for the year ended December 31, 2023.

Same Community NOI Margins for the fourth quarter and year ended December 31, 2024 were 68.8% and 67.3% respectively, which increased 1.3% and 0.8%, respectively, over the same periods of time last year.

While NOI and Same Community NOI saw an increase from ancillary services, NOI Margins and Same Community NOI Margins were negatively impacted due to these ancillary services having a lower margin than what has historically been achieved by the REIT.

Same Community Occupancy was 84.8% as at December 31, 2024, comparable to the prior year, which was 84.7%.

FFO for the fourth quarter of 2024 was $9.6 million, an increase of 55.0% from the fourth quarter of 2023. FFO per unit (diluted) for the three months ended December 31, 2024 and 2023 was $0.384 and $0.294, respectively, resulting in an increase of 30.6%. FFO and FFO per unit for the year ended December 31, 2024 were $30.8 million and $1.290, a 24.9% and 8.9% increase, respectively, compared to the year ended December 31, 2023.

FFO adjusted was $7.8 million for the fourth quarter of 2024, a 25.2% increase compared to the same period last year. FFO adjusted per unit for the fourth quarter of 2024 was $0.310, a 5.4% increase compared to the same period in 2023. FFO adjusted and FFO adjusted per unit for the year ended December 31, 2024 were $30.2 million and $1.265, respectively, a 22.5% and 6.8% increase, respectively, compared to the same period last year.

AFFO for the fourth quarter of 2024 was $9.4 million, an increase of 72.9% from the fourth quarter of 2023. AFFO per unit for the three months ended December 31, 2024 and 2023 was $0.375 and $0.258, respectively, resulting in an increase of 45.3%. AFFO and AFFO per unit for the year ended December 31, 2024 were $27.8 million and $1.167, a 29.1% and 12.4% increase, respectively, compared to the year ended December 31, 2023.

AFFO adjusted was $7.6 million for the fourth quarter of 2024, a 38.9% increase compared to the same period last year. AFFO adjusted per unit for the fourth quarter of 2024 was $0.301, a 16.7% increase compared to the same period in 2023. AFFO adjusted and AFFO adjusted per unit for the year ended December 31, 2024 were $27.2 million and $1.142, a 26.3% and 10.0% increase, respectively, compared to the year ended December 31, 2023.

Rent Collections for the fourth quarter of 2024 were 98.9%, a decrease from the same period in 2023.

As at December 31, 2024 the REIT's Weighted Average Mortgage and Note Interest Rate (see "Other Real Estate Industry Metrics” for more information) was 4.41%. The REIT's Weighted Average Mortgage and Note Term (see "Other Real Estate Industry Metrics” for more information) to maturity was 9 years. Flagship has no substantial debt maturities until 2030.

Flagship's Liquidity (see "Other Real Estate Industry Metrics” for more information) as at December 31, 2024 was approximately $14.3 million consisting of cash, cash equivalents, and available capacity on lines of credit.

Subsequent to year-end, Flagship borrowed $27.1 million as a supplemental borrowing on its Fannie Mae credit facility. The interest rate on this note is 6.03% for 10 years with all payments being interest only for the full term. Also subsequent to year-end, Flagship borrowed $22.7 million with an interest rate of 5.76% for 10 years with all payments being interest only for the full term. The proceeds for these borrowings enabled Flagship to repay the $45 million outstanding on the May 2024 Bridge Note, which had an interest rate of 6.82% at the time of payoff. The REIT now has no substantial debt maturities until 2030.

Operations Overview

The REIT continues to advance the integration process and home expansion strategy for the seven new Manufactured Housing Communities ("MHC”) Flagship acquired in Tennessee and West Virginia, as well as its lot expansion strategy across the portfolio. During 2024, the lot expansion strategy resulted in the addition of 112 lots to Flagship's portfolio. The REIT has the ability to add 638 additional lots on approximately 300 acres over the next few years.

As at December 31, 2024, the REIT owned a 100% interest in a portfolio of 80 MHCs with 14,667 lots as well as two recreational vehicle ("RV”) resort communities with 470 sites, located in eight contiguous states. The table below provides a summary of the REIT's portfolio as of December 31, 2024, compared to December 31, 2023:


($000s except per unit and Weighted Average Lot Rent amounts)		As at December 31, 2024	As at December 31, 2023
Total communities	(#)	82	75
Total lots	(#)	15,137	13,780
Weighted Average Lot Rent¹	(US$)	448	414
Total portfolio occupancy	(%)	83.5	83.6
NAV¹	(US$)	670,784	526,166
NAV per unit¹	(US$)	26.71	24.89
Debt to Gross Book Value¹	(%)	38.1	40.3
Weighted Average Mortgage and Note Interest Rate¹	(%)	4.41	4.08
Weighted Average Mortgage and Note Term¹	(Years)	9	10.3
1. See "Other Real Estate Industry Metrics”

Outlook

Flagship maintains a positive outlook for the MHC industry and believes it offers significant upside potential to investors. This is primarily due to the MHC industry's consistent track record of historical outperformance relative to other real estate classes. Rising home ownership costs and limited new supply, have led to greater housing unaffordability for many Americans. Additionally, the lack of supply of new manufactured housing communities given the various layers of regulatory restrictions, competing land uses and scarcity of land zoned has created high barriers to entry for new market entrants.

Other macro and MHC industry-specific characteristics and trends that support Flagship's positive outlook include:

Increasing household formations;
Lower housing and rental affordability;
Declining single-family residential homeownership rates

Non-IFRS Financial Measures

In this news release, the REIT uses certain financial measures that are not defined under IFRS including certain non-IFRS ratios, to measure, compare and explain the operating results, financial performance and cash flows of the REIT. 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.

Funds from Operations and Adjusted Funds from Operations

Funds from operations ("FFO”) and adjusted funds from operations ("AFFO”) are calculated in accordance with the definition provided by the Real Property Association of Canada ("REALPAC”).