Press release from CNW Group
Mainstreet Continues to Expand Its Portfolio, Increase Its Revenue and Net Operating Income, and Improve Its Operating Margins and Occupancy Rates
Monday, July 18, 2011
Mainstreet Continues to Expand Its Portfolio, Increase Its Revenue and Net Operating Income, and Improve Its Operating Margins and Occupancy Rates20:50 EDT Monday, July 18, 2011CALGARY, July 18, 2011 /CNW/ - (TSX: MEQ) In the third quarter of 2011(1), Mainstreet Equity Corp. made significant strides forward in its goals of growth, increased revenue and cash flow, and improved margins and occupancy rates. The Corporation's success is evident in its key performance metrics for the quarter:KEY METRICS | Q3 Performance HighlightsRental Revenue|Up 25% to $16.4 million (vs. $13.1 million in Q3 2010)Rental Revenue - Same Assets Properties|Up 10% to $14.0 million (vs. $12.8 million in Q3 2010)Net Operating Income (NOI) From operations|Up 28% to $10.7 million (vs. $8.3 million in Q3 2010) Same Assets Properties|Up 13% to $ 9.2 million (vs. $8.1 million in Q3 2010) Funds from operations Including financing cost|Up 101% to $3.2 million (vs. $1.6 million in Q3 2010) Excluding financing cost|Up 39% to $3.8 million (vs. $2.7 million in Q3 2010) Operating Margin From operations|65% (vs. 64% in Q3 2010) Same Assets Properties|65% (vs. 64% in Q3 2010)Total Acquisition & Capital Expenditures|$85 million year to date (vs. $47 million in 2010)Stabilized Units|123 properties (5,700 units) out of 150 properties(7,330 units)Acquisitions|302 units and a multi-family development lot for $22 million($74,000 per unit) representing a 4% increase in portfolio Acquisitions - fiscal year to date|911 units and a multi-family development lot for $73 million($80,000 per unit) representing a 14% increase in portfolioand an office building for $4 million. Financing|$ 10.8 millionFinancing - subsequent to Q3 2011|$ 13.7 millionVacancy rate|11.3% (vs. 15.0% in Q3 2010) Vacancy rate - stabilized properties|9.1%Q3 in Review The strength of Mainstreet's business model was evidenced once again by the Corporation's solid results during the third quarter of financial year 2011:Grew the Corporation's portfolio of properties by 4% over the past quarter and by 14% since the previous financial year-end (September 30, 2010) by acquiring 911 units for a total consideration of $73 million.Substantially increased overall rental revenue and same-assets rental revenue by 25% and 10% respectively.Achieved a 28% increase in net operating income over the same quarter last year and improved the overall operating margin to 65% from 64%.Increased funds from operations by 101% including financing cost and by 39% excluding financing cost.Raised an additional $10 million by refinancing $0.9 million of matured mortgages and four stabilized properties.Reduced the overall average vacancy rate to 11.3% compared to 15.0% in Q3 2010 and 11.8% last quarter.CHALLENGES Managing interest risk in the face of anticipated interest rate hikes will continue to be a challenge for Mainstreet, particularly in financial years 2013 and 2014 when approximately $120 million of the Corporation's mortgages mature. Management continues to closely monitor conditions and, wherever possible, refinance mortgages as early as possible while interest rates are still relatively low.As a result of the difficult economic conditions that have prevailed during the past few years, Mainstreet has had to contend with high vacancy rates by offering rental incentives to attract and retain tenants. As the economy begins to show signs of stable long-term recovery, Mainstreet will remain focused on the challenge of reducing its overall vacancy rate to a normal level and reducing rental concessions (especially in Western Canada).OUTLOOKMainstreet will continue to focus on growth through the strategic acquisition of add-value mid-market properties, primarily in Western Canada. Mainstreet will also persist in its efforts to build its management team and improve net operating income, cash flow, operational efficiencies and its operating margin.Management is confident that the Corporation will continue to grow its net operating income and funds from operations in the final quarter of the current financial year. The Corporation is moving in the right direction, continually reducing its vacancy rate since the previous financial year-end and gradually reducing rent concessions.With the adoption of International Financial Reporting Standards (IFRS) effective October 1, 2011, Mainstreet will be reporting its real estate properties at full market values. This will provide shareholders and investors with a better understanding and more accurate measure of the value created through Mainstreet's business model by reporting the true market values of the Corporation's real estateproperties on its balance sheets.Mainstreet continues to monitor the depressed US real estate market and evaluate whether there is a fit with the Corporation's add-value business model.Mainstreet is continually seeking sources of funds, internally and externally, to finance its future grow and ensure continued improvements in share value for its shareholders.(1) This third quarter report is for the three-month period ended June 30, 2011. Mainstreet's current fiscal year ends September 30, 2011.About MainstreetMainstreet 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. As of June 30, 2011, there were 10,401,281 common shares outstanding.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: Bob Dhillon, President and CEO - (403) 215-6063. Additional information is available at www.mainst.biz and www.sedar.com.