Mainstreet Equity Corp. · TSX:MEQ
Mainstreet Equity — Investor Presentation (2021)
40 slides from Mainstreet Equity's investor presentation, 2021
Slide 1: Annual 2021 Investor Presentation
Annual 2021 Investor Presentation
Slide 2: Cautionary Statement
Cautionary Statement Forward-Looking Information Certain statements contained herein constitute “forward-looking statements” as such term is used in applicable Canadian securities laws. These statements relate to analysis and other information based on forecasts of future results, estimates of amoun
Slide 3: Mainstreet Equity Corp.
Mainstreet Equity Corp. Q3 Investor Pitchbook Achieved organic non-dilutive growth since inception We are a Corporation not a REIT We are an add-value consolidator of mid-market multi-family apartment buildings Mid-Market Characteristics ▪ Typically less than 100 units ▪ Fragmented Mom & Pop ownersh
Slide 4: Apartment Business Driver
Apartment Business Driver The #1 Driver in the Apartment Business Q3 Investor Pitchbook Existing rental apartments trading significantly below replacement cost. Management believes: Current market rents do not justify new construction due to high costs Increasing demand and limited supply will conti
Slide 5: Apartment Demand
Apartment Demand Population Growth: 26,121 (2020) [32% of total rental universe] EDMONTON Rental Universe: 80,933 (2020) [Mid-market: 59,727 (74%)] (2020) Vacancy Rate: 6.8% (Oct 2020) Population Growth: 29,254 (2020) [64% of total rental universe] CALGARY Rental Universe: 45,882 (2020) [Mid-market:
Slide 6: Apartment Demand
Apartment Demand Population Growth: 2,071 (2020) [61% of total rental universe] CHILLIWACK Rental Universe: 3,412 (2020) [Mid-market: 3,412 (100%)] (2020) Vacancy Rate: 1.5% (Oct 2020) Population Growth: 1,833 (2020) [42% of total rental universe] ABBOTSFORD Rental Universe: 4,398 (2020) [Mid-market
Slide 7: Our Value Creation
Our Value Creation ACQUISITIONS Identify and buy under-performing rental units at prices well below replacement costs. CAPITAL IMPROVEMENTS Increase the asset value of Mainstreet’s portfolio by renovating acquired properties. OPERATIONAL EFFICIENCIES Minimize operating costs through professional man
Slide 8: 5 Pillar Competitive Advantage
5 Pillar Competitive Advantage Q3 Investor Pitchbook © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 8
Slide 9: The Mainstreet 'Spec'
The Mainstreet ‘Spec’ © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 9
Slide 10: Mainstreet: Adding Value
Mainstreet: Adding Value Mainstreet Tower, Edmonton Mainstreet Estates, Surrey Improve NOI from Improve NOI from $1,543K to $3,493K $69K to $2,340K Sunalta 1913, Calgary Mainstreet 1310 & 1320, Saskatoon Improve NOI from Improve NOI from (-$135K) to $224K (-$223K) to $327K © All Rights Reserved - MA
Slide 11: Mainstreet: Adding Value
Mainstreet: Adding Value Saskatoon 1310, Saskatoon Bow River Townhomes, Calgary Mainstreet Place, Calgary Queen’s Park Townhomes, Calgary © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 11
Slide 12: Operating Efficiencies
Operating Efficiencies EXPENSE REDUCTION 1. Mainstreet’s aggressive renovation program has resulted in significant expense reductions in key areas such as: ▪ Electrical (install compact fluorescent bulbs: LED bulbs for emergency exit signs) ▪ Water (‘Ultra-high efficiency’ toilets; low-flow aerators
Slide 13: Mid-Market Efficiencies
Mid-Market Efficiencies Higher operating margins versus larger concrete complexes Low rise properties have relatively less operating expenses such as: ▪ Limited or no elevator maintenance ▪ No repair heat or maintenance of underground parking garage ▪ Amenities Lower realty taxes versus larger struc
Slide 14: Clustering Strategy
Clustering Strategy Abbotsford Calgary Edmonton Through clustering assets Mainstreet has maximized efficiencies and growth, transforming a single asset into a network of apartment complexes. Saskatoon Regina Surrey We achieved this through: Clustering assets within a 5 block radius Requiring fewer r
Slide 15: Edmonton ICE District Strategy
Edmonton ICE District Strategy 120 Properties [3,355 units] © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 15
Slide 16: Market Growth Potential
Market Growth Potential Mainstreet's strategy benefits from a large target Target Markets Rental Apartment Universe market with less competition. <100 Units/ Total Rental % Mid-Market building Universe Abbotsford 4,026 4,398 92% Surrey 5,299 6,232 85% Chilliwack 3,412 3,412 100% Kamloops 4,185 4,295
Slide 17: Potential Target Market Growth
Potential Target Market Growth 40,000 36,009 34,209 35,000 32,408 30,608 30,000 28,807 27,007 25,206 25,000 23,406 Units 20,000 15,465* 15,000 10,000 5,000 0 8.6% 13.0% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% Estimated Potential Rental Apartment Total Mid-Market Share * Numbers obtained from CMHC,
Slide 18: A 'Value Creation' Company
A ‘Value Creation’ Company SIGNIFICANT GROWTH WITH LIMITED EQUITY DILUTION (YTD) ▪ Listed on the TSX in 2000, Mainstreet has grown its portfolio from 272 units with a market value of $17 million to 15,465 units (YTD) with a market value of $2.6 billion with limited equity dilution. ▪ As of September
Slide 19: Value-Add Case Studies
Value-Add Case Studies Edmonton, AB ▪ Mainstreet Park Vancouver Lower Mainland ▪ Mainstreet Estates (Surrey) Calgary, AB ▪ Huntsville Saskatoon, SK ▪ West Meadow © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 19
Slide 20: Value-Add Model: Mainstreet Park, Edmonton, AB
Value-Add Model: Mainstreet Park, Edmonton, AB Mainstreet purchased the above property (178 units) in August 2016. It took approximately 12 months to complete the stabilization process and we financed the property in November 2017. Financial results for the property before and after stabilization an
Slide 21: Value-Add Model: Mainstreet Estates, Surrey, BC
Value-Add Model: Mainstreet Estates, Surrey, BC Mainstreet purchased the above property (331 units with 5 buildings) in January 2015. It took approximately 6 months to complete the stabilization process and we financed the property in November 2016. Financial results for the property before and afte
Slide 22: Value-Add Model: Huntsville, Calgary, AB
Value-Add Model: Huntsville, Calgary, AB Mainstreet purchased the above property (52 units) in April 2012. It took approximately 29 months to complete the stabilization process and we financed the property in September 2014. Financial results for the property before and after stabilization and refin
Slide 23: Queen's Park Case Study
Queen’s Park Case Study Mainstreet purchased the above property (188 units – 41 buildings) in July 2020. It took approximately 12 months to complete the stabilization process and we financed the property in December 2021. Financial results for the property before and after stabilization are summariz
Slide 24: Value-Add Model: West Meadow, Saskatoon
Value-Add Model: West Meadow, Saskatoon Mainstreet purchased the above property (240 units) in June 2019. It took approximately 16 months to complete the stabilization process and we financed the property in September 2020. Financial results for the property before and after stabilization and refina
Slide 25: Growing The Portfolio
Growing The Portfolio ASSET GROWTH ($MM) $3,000 # of outstanding shares Billions 0.01 $2,616 $2,500 0 $2,183 $2,020 -0.01 $2,000 Gross Book Value 1,866 Gross Book/Appraised Value Appraised Value 23% CAGR (up to Q4 IFRS value) $1,632 $1,637 -0.02 # of outstanding shares $1,500 # of Outstanding Shares
Slide 26: Diversified Portfolio
Diversified Portfolio 20% increase in IFRS since 2020 © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 26
Slide 27: Risk Management
Risk Management CMHC INSURED MORTGAGES 2021 Mortgage Maturity ▪ As of Sep 30, 2021, Mainstreet has $1,395M of as of Sep 30, 2021 mortgages, of which $1,375M (99%) are CMHC Cost Saving $1.6 million per annual insured (fixed) at an average interest rate of 2.50% based on 100 basis points saving and th
Slide 28: 2021 Drivers – Optimum Potential NOI
2021 Drivers – Optimum Potential NOI (in 000s) Annualized Annualized Annualized Annualized NOI Additional NOI Additional Additional Annualized based on at 95% NOI without NOI at full Optimum Q3 2021 results occupancy rate concession market rent potential NOI Difference ▪ Stabilization of existing no
Slide 29: 2021 Drivers – Mark to Market and Occupancy Potential
2021 Drivers – Mark to Market and Occupancy Potential (in 000s, except vacancy and suite counts) Stabilized Suites Unstabilized Suites Mark to Market Mark to Market (including incentive (including incentive Number of Vacancy Rate reduction opportunity) Number of Vacancy Rate reduction opportunity) C
Slide 30: 2019 Acquisitions
2019 Acquisitions Q1 2019 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Saskatoon 4234 & 4238 DeGreer St E 64 $6,688,000.00 $7,200,000 $104,500 Edmonton 10735 107 St NW 24 $2,380,000.00 $2,620,000 $99,167 Calgary Vista Group 125 $18,300,000.00 $23,560,000 $146,40
Slide 31: 2019 Acquisitions
2019 Acquisitions Q3 2019 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Calgary 1937 11 Ave SW 8 $1,197,500 $1,800,000 $149,688 Saskatoon 402 Ave P S 31 $1,550,000 $2,750,000 $50,000 Calgary 6347 Bowview Rd NW 74 $13,000,000 $14,800,000 $175,676 Calgary 626 57 Av
Slide 32: 2020 Acquisitions
2020 Acquisitions Q1 2020 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Calgary 4311 75 St NW 8 $1,040,000 $1,130,000 $130,000 Saskatoon 1306 20 St W - $150,000 TBD N/A Saskatoon 1310 20 St W 44 $770,000 TBD $17,500 Saskatoon 1320 20 St W 10 $400,000 $1,620,000 $
Slide 33: 2020 Acquisitions
2020 Acquisitions Q3 2020 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Calgary 1624 16 Ave SW 28 $3,360,000 TBD $120,000 Edmonton 10730 102 St NW 33 $2,000,000 TBD $60,606 TOTAL Q3 2020 61 $5,360,000 Q4 2020 Acquisitions City Address # of Units Purchase Price Ap
Slide 34: 2021 Acquisitions
2021 Acquisitions Q1 2021 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Saskatoon #103, 529 Ave X S 1 $24,000 $132,353 $24,000 Kamloops 196 Yew St 18 $2,300,000 TBD $127,778 Regina 3525 Avonhurst Dr 72 $7,459,000 TBD $103,597 Winnipeg 314 Broadway 87 $7,330,000 T
Slide 35: 2021 Acquisitions
2021 Acquisitions Q3 2021 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Chilliwack 46180 Bole Ave 45 $6,717,000 TBD $149,267 Chilliwack 46155 Bole Ave 48 $7,114,000 TBD $148,208 Chilliwack 9275 Mary St 42 $6,469,000 TBD $154,024 Penticton 769 Winnipeg St 24 $3,40
Slide 36: 2021 Acquisitions
2021 Acquisitions Q4 2021 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door New Westminster 1205 - 1207 4 Ave 33 $6,600,000 TBD $200,000 Chilliwack 46109 Gore Ave 25 $3,750,000 TBD $150,000 Saskatoon #205, 529 Ave X S 1 $17,900 TBD $17,900 Calgary 832 4A St NE 12 $1,
Slide 37: Q4 Subsequent 2021 Acquisitions
2021 Acquisitions Q4 Subsequent 2021 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Edmonton Multiple 230 $20,000,000 TBD $78,261* Edmonton 10245 & 10255 Alex Taylor Rd 27 $2,500,000 TBD $92,593 TOTAL Q4 Subsequent 2021 257 $22,500,000 $87,548 *2 commercial buildi
Slide 38: Residual Land Conversion Value
Residual Land Conversion Value RESIDUAL LAND ▪ Trevella Park Townhomes - Calgary, AB (~14 acres of high density residential land) ▪ Highland Park Townhomes - Lethbridge, AB (13.1 acres of high density residential land) ▪ Dover - Calgary, AB Residual Land ▪ Imperial Court - Surrey, BC High Density Re
Slide 39: Condo Conversion Value
Condo Conversion Value Alberta British Columbia ▪ Trevella Park – Calgary, AB ▪ Sunshine complex, BC CONDOMINIUM CONVERSION ▪ Highland Park – Lethbridge, AB ▪ Pinetree complex, BC ▪ Wedgewood – Edmonton, AB ▪ Hanna Estates, Abbotsford, BC The opportunity exists to convert the existing portfolio ▪ La
Slide 40: ESG
ESG ENVIRONMENTAL SOCIAL GOVERNANCE ▪ Environmental Consultation ▪ Health & Safety ▪ Risk Management Committed to implementing best environmental Competitive employee health benefits Audit Committees practices suggested by independent Enhanced Covid protocols for employees and Whistle Blower Policy