MAINSTREET REPORTS 7th. CONSECUTIVE QUARTER OF DOUBLE-DIGIT GROWTH IN
FFO AND NOI AS PORTFOLIO EXCEEDS $1-BILLION
CALGARY, July 17, 2012 /CNW/ - A seventh consecutive quarter of
double-digit year-over-year growth in funds from operations and net
operating income highlight Mainstreet Equity Corp. (TSX: MEQ) results
for the third quarter of fiscal year 2012.
"I'm very proud of these results" says Mainstreet CEO Bob Dhillon. "They
demonstrate that Mainstreet's model continues to create value for our
Funds from operations were up 54% to $5.2 million versus $3.4 million in
Q3 2011, while operating margins were at 69% versus 65% in Q3 2011.
Overall net operating income was up 23% to $13.1 million, while same
asset NOI was up 10% versus Q3 2011. Rental revenues were up 16%
year-over-year, at $18.7 million in Q3 2012 versus $16.2 million in Q3
2011. In Q3 2012, same asset revenues were up 5%.
The vacancy rate continues to trend downwards. The average vacancy rate
for Q3 2012 was at 7.8% compared to 11.3% a year earlier. This
continued trend of improving vacancy rates quarter-over-quarter and
year-over-year is, in our view, all the more impressive since the rates
include the addition of 294 unstabilized units in Q3 2012. These newly
acquired units are typically characterized by high vacancy rates and
Mainstreet continued to capitalize on low interest rates and CMHC
financing in Q3 2012. In Q3 2012, Mainstreet refinanced $23 million of
short-term debt into long-term, ten-year CMHC-insured mortgages at an
average interest rate of 3.30%. In the process, it has unlocked $4.2
million in capital that can be put towards future growth.
Mainstreet continues to grow its portfolio of properties. Since the
beginning of the financial year, Mainstreet has acquired an additional
749 units for a total consideration of $72 million. After the closing
of all acquisitions subsequent to Q3 2012, Mainstreet's portfolio will
increase to 8,180 units, which represents a 11% expansion in the size
of the portfolio. Once again, this growth was achieved organically with
no equity dilution (except for stock option dilution).
Mainstreet has enjoyed considerable success over the last two years,
posting seven consecutive quarters of year-over-year double-digit
increases in FFO and NOI, but the best may be yet to come. There's
every reason to believe that these trends can be continued going
forward into the future - the following are six such reasons:
First, Mainstreet still has room to lower its vacancy rate across its
portfolio of properties, and as that happens, it believes the benefits
will accrue directly to the Corporation's bottom line. Second, the
concessions that are still recorded on the books will continue to be
eliminated as the economy slowly finds its feet. Third, the Corporation
continues to have an inventory of unstabilized properties -
approximately 20 per cent of the total portfolio - that is anticipated
to be renovated and re-rented at higher rates. Fourth, potential rent
increases are expected to take place due to the strong net migration
numbers. Fifth, Mainstreet continues to add properties to its portfolio
through non-dilutive, organic acquisitions. And sixth, Mainstreet
believes it has a first-rate operational management team which is a
direct result of deliberate investments that the Corporation has made
in its people and in their development.
But perhaps Mainstreet's biggest asset, and the factor that gives it the
most room to run, is one that is familiar to anyone who's ever invested
in real-estate: location, location, location. With 93 per cent of
Mainstreet's properties situated in Western Canada, and almost all of
them situated in what Mainstreet believes are Western Canada's
strongest local economies, the Corporation is poised to benefit
directly from Western Canada's growing economic prosperity. There may
be even better times ahead, too, since despite its relative strength
the Western Canadian economy continues to be weighed down by global
uncertainty and a tepid North American recovery if that recovery gains
traction, Mainstreet believes it is perfectly positioned to capitalize
on this recovery.
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 June 30, 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.
SOURCE Mainstreet Equity Corporation
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