CALGARY, Feb. 12 /CNW/ - In the first quarter of 2009(1) Mainstreet
Equity Corp. worked to position itself for the next market cycle. The company
focused on two things. First, it raised approximately $48 million by
refinancing $25 million of short-term and matured debt. Second, through a
substantial issuer bid, it acquired approximately 3.3 million Mainstreet
common shares at $6.25 per common share - well below what management believes
is the net asset value. This common share buy-back reduced the number of
issued and outstanding common shares of the Corporation by approximately 24%
to 10.6 million common shares.
In addition to these activities, management is pleased to report overall
positive results in Q1.
FIRST QUARTER HIGHLIGHTS
1. Portfolio grew by 84 units to a total of 5,646 units
- With a strategy of slower, disciplined growth in 2009, Mainstreet
acquired 84 units in Q1. This includes 60 units in Abbotsford and
24 units in Saskatoon.
2009 focus on stabilization and increased cash flow as newly renovated
rental units are reintroduced to the market at higher rental rates....
2. Stabilization progressing
At the end of Q1 2009, 8 properties (3,984 units) out of 120
properties (5,646 units) were stabilized. Almost all of the remaining
properties in Edmonton and Saskatoon have completed renovations and
are ready to lease in the spring/summer peak rental season. When this
happens, management expects cash flow will increase substantially.
3. Rental revenues up 17%
Mainstreet's rental revenues rose to $13.1 million from $11.1 million
in Q1 of 2008.
4. Same assets rental revenue rose by 12%
This increased to $12.4 million from $11.1 million in Q1 of 2008.
5. Net operating income up by 18%
NOI from continuing operations increased to $7.6 million in Q1 2009
compared to $6.5 million for the same period in 2008.
6. Same assets NOI increased by 11%
This rose to $7.3 million from $6.6 million in Q1 2008.
7. Funds from operations rose by 33%
Not including financing costs, FFO from continuing operations
increased to $2.4 million ($0.17 per basic share) in Q1 2009 compared
to $1.8 million ($0.13 per basic share) for the same period in 2008.
Edmonton leasing. Mainstreet's key challenge is leasing the newly
renovated suites in Edmonton. Currently the company has a large supply of 482
suites on, or entering, the market and is now experiencing the slow rental
season. Rental activity is expected to pick up during the peak period in the
spring and summer.
Conventional financing. Non-CMHC, conventional financing will be more
difficult to obtain while the current credit challenges continue.
Management's focus in 2009 includes:
- increasing cash flow as renovations in Edmonton and Saskatoon are
completed. The expectation is that these suites will be leased in the
high rental season.
- streamlining costs in all areas of our business. Management is
working aggressively to reduce renovation costs, and renegotiate
arrangements with all suppliers.
- mitigating risk by refinancing the company's remaining floating debt.
As of December 31, 2008, through refinancing, Mainstreet has reduced
the balance of its floating debt to about $40 million or 11% of the
total mortgage loans.
- disciplined growth at the right time for the right opportunities.
Management will be monitoring market conditions closely and looking
for good buys that fit with the company's Value Chain business model.
- expanding the management team in this stronger recruiting market to
support the larger company and growth plans for the future.
Management is concerned about the economic recession and the uncertainty
of how long it will last, but the company has the advantage of strong
fundamentals. Mainstreet is in a positive cash position with approximately $25
million of cash on hand (after the share buy-back) and a debt to market value
ratio of 56%.
As well, management believes that multi-family rental housing is one of
the safest investments in recessionary times. CMHC is forecasting immigration
to Canada in 2009 will remain steady following the historical high levels in
2008. This is positive for Mainstreet because immigrants tend to rent
multi-family homes rather than buy.
Management believes Mainstreet is in the right business at the right time
and the right market cycle, with cash to grow. And the majority of the
company's assets are in Western Canada, which is expected to weather the
recession better than the rest of the country. Because of these advantages,
the company remains optimistic about its ability to continue adding value.
(1) This first quarter report is for the three-month period ended
December 31, 2008. Mainstreet's current fiscal year ends September
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
Greater Toronto Area. Mainstreet's common shares are listed on the Toronto
Stock Exchange under the symbol MEQ. There are currently 10,569,279 common
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, 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.
For further information:
For further information: Bob Dhillon, President and CEO, (403) 215-6063;
Additional information is available at: www.mainst.biz, www.sedar.com