Flagship Communities REIT completes US$93.75 million initial public offering

October 07, 2020

Torys represented the syndicate of underwriters with a team that included Simon Knowling, Michael Zackheim, Michael Fortier, Brett Saulnier and Hongyi Geng-Dueck (corporate/securities), Corrado Cardarelli, Andrew Silverman and Andrew Wong (tax), Mirek Fajt, Alex Tanenbaum, Kevin Chan and Hasnaa El Rhermoul (US corporate/real estate), Darien Leung and Rachel Goodwin (US lending), Andy Beck (US securities), Scott Semer and Chris Saki (US tax) and Tom Stevenson and Zahava Blumenthal (employment).

On October 7, 2020, Flagship Communities Real Estate Investment Trust ("Flagship Communities" or "the REIT") announced that it completed its initial public offering of 6,250,000 trust units at a price of US$15.00 per unit. The offering raised gross proceeds of US$93,750,000. The units trade on the Toronto Stock Exchange under the symbol "MHC.U". This offering was particularly notable given that completing an IPO during uncertain times such as COVID-19 is a rare undertaking; this was the first conventional IPO for a real estate investment trust in over two years.

Flagship Communities has been formed to own and operate a portfolio of 45 income-producing manufactured housing communities comprising 8,255 lots and a fleet of approximately 600 manufactured homes for lease to residents of the communities, located in the four contiguous states of Kentucky, Indiana, Ohio and Tennessee. In connection with the closing of the offering, Flagship Communities acquired the portfolio other than two communities comprising 622 lots located in Louisville, which the REIT expects to acquire upon receipt of applicable necessary customary lender and servicer consents. A portion of the net proceeds of the offering will be used to fund the cash component of the acquisition, to repay certain secured indebtedness, for capital expenditure reserves, to fund transaction costs associated with the closing of the offering and for general business purposes. The consideration to be paid on closing of the deferred acquisition will be redeemable class B units in a subsidiary of the REIT, which class B units will be issued at the same per unit price as units issued in the offering.

The offering was underwritten by a syndicate of underwriters co-led by Canaccord Genuity Corp. and BMO Capital Markets and including CIBC World Markets Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc., TD Securities Inc., Echelon Wealth Partners Inc. and Industrial Alliance Securities Inc. Flagship Communities has granted the underwriters an over-allotment option, exercisable in whole or in part at any time for a period of 30 days following the closing of the offering, to purchase up to an additional 937,500 units at US$15.00 per unit which, if exercised in full, would increase the total gross proceeds of the offering to US$107,812,500. The net proceeds of the over-allotment option, to the extent exercised, will be used by the REIT to fund future acquisitions and for general business purposes.

Upon completion of the acquisition and deferred acquisition, the executive officers of Flagship Communities, Legacy Portfolio Holdings, LLC and certain other persons formerly owning an interest in the portfolio will own an aggregate approximate 46.7% direct and indirect ownership interest in the REIT and an aggregate approximate 43.2% direct and indirect ownership interest in the REIT if the over-allotment option is exercised in full.

Flagship Communities is one of the Midwest region's largest manufactured house community developers. Their 45 residential manufacturing housing communities are located throughout Kentucky, Indiana, Ohio and Tennessee.

Further information can be found on Canada Newswire's website.