CALGARY, May 8, 2012 /CNW/ - Chief Executive Officer and President Bob
Dhillon of Mainstreet Equity Corp. is pleased to report the Q2 2012
results, stating that, "The Q2 results demonstrate that the
Corporation's business model continues to deliver and create
shareholder value." Mr. Dhillon added that, "The numbers tell the
story."
Results:
Funds from operations ("FFO") were up 53% to $3.2 million (before
disposition of an investment property and stock option cash settlement
expense), versus $2.1 million in Q2 2011, while operating margins were
at 61% versus 58% in Q2 2011.
Overall net operating income ("NOI") was up 22% to $11.1 million, while
same asset NOI was up 9% versus Q2 2011. Rental revenues were up 17%
year-over-year, at $17.9 million in Q2 2012 versus $15.3 million in Q2
2011. Finally, in Q2 2012, same asset revenues were up 4%.
The vacancy rate continued to trend downwards. As of May 1, 2012 the
overall vacancy rate was down to 6.7% (inclusive of all unstabilized
acquisitions), while the average vacancy rate for Q2 2012 was at 8.2%
compared to 11.8% a year earlier.
Growth:
Mainstreet continues to grow its portfolio of properties. Since the
beginning of the financial year, Mainstreet has acquired an additional
607 units for a total consideration of $59 million. After the closing
of all acquisitions subsequent to Q2 2012, Mainstreet's portfolio will
increase to 7,969 units, which represents an 8.2% expansion in the size
of the portfolio. Mainstreet is presently working to absorb these
unstabilized units into the portfolio as per the Mainstreet value
chain, and looking for additional opportunities to make accretive
additions. Once again, this growth was achieved organically with no
equity dilution (except for stock option dilution).
Financing:
Mainstreet continued to capitalize on low interest rates on CMHC insured
financing in Q2 2012 financing $19 million long-term, ten-year
CMHC-insured mortgages at an average interest rate of 3.11%. In the
process, the Corporation unlocked $17.5 million in funds that can now
be deployed towards growth-oriented opportunities going forward.
Subsequent to Q2 2012, Mainstreet refinanced an additional $23 million
in debt into long-term, ten-year CMHC insured mortgage at an average
interest rate of 3.30% unlocking a further $4.2 million in capital for
growth.
Outlook:
The west is where Canada's economic growth is happening, and the
Management believes Mainstreet is perfectly positioned to grow
alongside it.
In the recent federal budget, Finance Minister Jim Flaherty stated that
the majority of Canada's near-term economic growth would take place in
the west in general and in Alberta in particular. The macro trends
support this view, with continued positive net in-migration, strong oil
prices and a political culture that's favourable to business.
The management believes Mainstreet is Canada's most concentrated
real-estate play on western Canada's growing prosperity, and it will
continue to press this local advantage to expand its portfolio of
holdings.
But Mainstreet will not depend on macro-trends alone. It remains
committed to driving costs down, and has pioneered a global supply
chain of people, products and services. In addition to its proactive
work in securing foreign workers, Mainstreet also continues to build
out its pipeline of high-quality, low-cost materials and supplies
direct from manufacturers in China. This has already yielded
considerable cost savings on everything from kitchen cabinets to
laminate flooring and ceramic tiles, and Mainstreet believes that these
relationships will be expanded to include other necessary materials
going forward.
Mainstreet is also developing a relationship with India (a global leader
in low-cost IT solutions), one that was fleshed out during a recent
trip to the country by the Corporation's senior executives. With its
new website and database currently under development in India,
Mainstreet is now looking to the development of multifaceted
operations-side software, and in the future opening a backroom office,
all at substantially lower costs than are available in Canada.
Over the past twelve months Mainstreet has been examining the
possibility of applying its add-value business model to distressed
markets in the U.S., and believes it's time to make its move. The
Corporation has been assessing the risk-reward proposition associated
with the U.S. market, and believes that it is a favourable one. The
U.S. economy appears to be turning the corner, while valuations in the
real-estate market remain intriguing. As always, Mainstreet remains
committed to creating value for its shareholders, as it has since its
inception in 1997.
About Mainstreet:
Mainstreet is a Calgary-based, growth-oriented real estate corporation
focused on the acquisition, redevelopment, repositioning, and asset and
property management of mid-market apartment buildings. The Corporation
currently owns and operates residential rental units, including
apartments and townhouses, in Vancouver/Lower Mainland, Calgary,
Edmonton, Saskatoon and the Greater Toronto Area. Mainstreet's common
shares are listed on the Toronto Stock Exchange under the symbol MEQ.
As of March 31, 2012 there were 10,465,281 common shares outstanding.
Mainstreet's stock was among the top ten gainers on the TSX in 2011.
The above disclosure may contain forward-looking statements that involve
substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and
uncertainties, some of which are beyond the Corporation's control,
including: the impact of general economic conditions in Canada,
industry conditions, increased competition, the lack of available
qualified personnel or management, equipment failures, stock market
volatility, expansion into the United States and fluctuations in rental
prices, energy costs and foreign exchange or interest rates. The
Corporation's actual results, performance or achievements could differ
materially from those expressed in, or implied by, these
forward-looking statements and, accordingly, no assurances can be given
that any of the events anticipated by the forward-looking statements
will transpire or occur, or, if any of them do so, what benefits the
Corporation will derive from them
