CALGARY, Dec. 11, 2013 /CNW/ - Mainstreet Equity Corp. ("Mainstreet or
"Corporation") (TSX: MEQ) is pleased to report that it has completed
its 12th consecutive quarter of double-digit, year-over-year growth in
funds from operations ("FFO"), rental revenue and net operating income
("NOI"). In fiscal year 2013, Mainstreet achieved substantial gains in
a series of key financial benchmarks, including portfolio size and same
asset revenue and vacancy.
"Our growth hasn't just yielded a lengthy streak of strong financial
results. It has also enabled us to lay what we believe will be an
outstanding foundation for the year ahead," says Bob Dhillon, Chief
Executive Officer and Founder. "We see no fewer than four engines for
growth, most notably our ability to use our property stabilization
process and substantial liquidity to power further NOI increases, both
organically and through acquisitions. We continue to find ways to add
value to residential rental property in Western Canada, which we
believe remains the country's best place to operate for a corporation
with our well-proven business model."
RESULTS FROM CONTINUING OPERATIONS
In fiscal year 2013, Mainstreet's rental revenue from continuing
operations rose 17% to $77 million, up from $65.9 million in fiscal
year 2012. Same-asset rental revenues climbed 9% to $67.8 million, from
$62.4 million in fiscal year 2012. NOI from continuing operations
increased 16% to $52 million, while growing 8% to $45.5 million at same
asset properties. Funds from continuing operations were up 28% to $19.1
million, an increase over $14.9 million in fiscal year 2012. The same
asset vacancy rate fell to 7.3% from 8.1% in fiscal year 2012.
Excluding 205 units under complete re-construction, Mainstreet's
vacancy rate as of December 1, 2013 stood at 5.5%. The Corporation's
stable of stabilized units has grown to 143 properties, with 6,431
units, out of a total of 193 properties or 8,218 units. The market
value of the Corporation's portfolio reached $1.15 billion.
Mainstreet acquired 702 residential apartment units for approximately
$70 million, representing a 9% growth in Mainstreet's portfolio. The
Corporation spent approximately $11 million on capital improvement.
In 2013, Mainstreet financed five clear title properties after
stabilization in British Columbia for $23.7 million, and refinanced
$67.5 million in matured mortgages into 10-year long-term CMHC insured
mortgage loans for $80.7 million. The new loans resulted in an
annualized savings in interest expenses of approximately $390,000,
while raising an additional $36.9 million for future growth.
Mainstreet has witnessed a 100-basis point interest rate increase over
the past six months. Such change impacts the savings the Corporation
can achieve by refinancing mortgage rates, as well as its ability to
liberate additional capital through this process. Relative to norms in
recent decades, however, mortgage rates remain at advantageous levels,
and the CMHC expects them to "remain historically low."
Mainstreet's management believes that there are few better places in
Canada to own residential rental property than British Columbia,
Alberta and Saskatchewan, the places Mainstreet calls home. In 2013,
Alberta experienced record in-migration, with its population growing at
a faster rate even than Ontario, a much larger province. Based on CMHC
marketing reports, Alberta GDP growth of 2.7% in 2012 is expected to be
followed by a 2.8% economic expansion in 2013 and a further 2.3% in
2014. The growth in people and the economy are expected to push
increases in rent, revenue and NOI.
At fiscal year-end 2013, only approximately 78% of Mainstreet's existing
portfolio had been stabilized. The difference between the financial
performance of stabilized and unstabilized properties is significant.
This is the major factor underlying Mainstreet's belief that there is
strong potential for future organic growth in NOI and FFO.
Mainstreet has approximately $178 million in debt maturing in 2014 and
2015, with an average current interest rate of 4.35%. Relative to the
current CMHC 10-year mortgage rate of approximately 3.8%, the
Corporation expects to achieve a substantial savings in interest
expenses through refinancing.
The Corporation believes that its substantial liquidity positions it for
continued portfolio growth. At year-end, Mainstreet owned 30 clear
title properties with a combined market value of approximately $95
million, a source for substantial funds that can be raised through
refinancing. Following Mainstreet's expected refinancing of $178
million in debt maturing in 2014 and 2015, Mainstreet anticipates that
substantial additional funds can be raised. Mainstreet believes that
its strong liquidity position will once again allow it to continue to
expand without diluting shareholder equity.
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 the British Columbia 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 December 11, 2013 there were 10,465,281 common shares outstanding.
The above disclosure may contain forward-looking statements that involve
substantial known and unknown risks and uncertainties. In particular
statements concerning future interest rates, anticipated economic
growth, increases in rents, rental revenue and NOI, interest savings,
the Corporation's future liquidity, financial capacity and possible
expansion in Western Canada should be viewed as forward looking
statements to the extent they represent estimates thereof. These
forward-looking statements involve unknown risks, uncertainties and
other unknown factors, 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, costs and timing of
developing existing properties, availability of capital, unoccupied
units during stabilization, stock market volatility and fluctuations in
rental prices, energy costs, 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. Readers should not place undue
reliance on such forward looking statements contained herein.
SOURCE: Mainstreet Equity Corporation
For further information:
President and Chief Executive Officer
Additional information is available at: