Mainstreet Equity Corp. · TSX:MEQ
Mainstreet Equity — Q4 2023 Earnings Presentation
46 slides from Mainstreet Equity's earnings presentation, 2023
Slide 1: Q4 2023 Investor Presentation
Q4 2023 Investor Presentation © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 1
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: Why Invest in Mainstreet?
Why Invest in Mainstreet? 24 YEARS BEST PERFORMING RESULTS SINCE INCEPTION ON TSX All economic ACQUISITION metrics VALUE LAND BANK & CONDO Mid-market CONVERSION best value across Western Canada Density potential (Value-add case studies pg. 31-35) THE MAINSTREET WELL OPPORTUNITY ACCELERATED ESTABLISH
Slide 4: Mainstreet Equity Corp.
Mainstreet Equity Corp. Q3 Investor Pitchbook A solid performer, continued organic non-dilutive growth since inception Aligned shareholder interest: director and management ownership around 49% We acquire underperforming mid-market apartment properties and reposition them in the market with a missio
Slide 5: A proven solid performer since listing on TSX in 2000
A proven solid performer since listing on TSX in 2000 24 YEARS OF ORGANIC DOUBLE-DIGIT GROWTH WITH LIMITED EQUITY DILUTION (Annual Growth 2000 – 2023) 17% FFO/SHARE ($0.18 - $7.37) 1,370 (2000) to 16% IFRS VALUE ($90M - $3.05B) 17,462 (2023 YTD) 15% REVENUE ($8M - $210M) Apartment unit count *Compou
Slide 6: Our Value Chain Business Model
Our Value Chain Business Model How does Mainstreet achieve its solid performance? 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
Slide 7: Apartment Business Driver
Apartment Business Driver 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 continue to create favourable rental market conditions Mainstreet’s
Slide 8: Apartment Demand
Apartment Demand Population Growth: 36,560 (2022) [42% of total rental universe] EDMONTON Rental Universe: 87,827 (2022) [Mid-market: 62,527 (71%) (2022) Vacancy Rate: 4.1% (2022) Population Growth: 49,754 (2022) [95% of total rental universe] CALGARY Rental Universe: 52,643 (2022) [Mid-market: 30,9
Slide 9: Apartment Demand
Apartment Demand Population Growth: 2,581 (2022) [67% of total rental universe] CHILLIWACK Rental Universe: 3,869 (2022) [Mid-market: 3,869 (100%) (2022) Vacancy Rate: 1.3% (2022) Population Growth: 3,127 (2022) [63% of total rental universe] ABBOTSFORD Rental Universe: 4,956 (2022) [Mid-market: 4,4
Slide 10: Market Growth Potential
Market Growth Potential Target Markets Rental Apartment Universe Mainstreet's strategy benefits from a large target <100 Units/ Total Rental % Mid-Market market with less competition building Universe Edmonton 62,527 87,827 71% Calgary 30,967 52,643 59% Regina 13,679 14,846 92% Saskatoon 14,230 16,9
Slide 11: Potential Target Market Growth
Potential Target Market Growth 45,000 39,591 40,000 37,611 35,632 35,000 33,652 31,672 29,693 30,000 27,713 25,734 25,000 Units 20,000 17,462* 15,000 10,000 5,000 0 8.8% 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 fro
Slide 12: 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 $17M to 17,004 units (YTD) with market value of $3.0B and limited equity dilution ▪ As at September 30, 2021 there we
Slide 13: Growing The Portfolio
Growing The Portfolio ASSET GROWTH ($M) $3,500 # of outstanding shares Billions 0.01 $3,051 $3,000 $2,818 0 $2,616 $2,500 -0.01 Gross Book Value $2,183 Gross Book/Appraised Value $2,000 Appraised Value 23% CAGR (up to Q4 2023 IFRS value) $2,020 $1,906 -0.02 1,866 # of outstanding shares $1,743 # of
Slide 14: Diversified Portfolio
Diversified Portfolio Alberta Portfolio British Columbia Portfolio 9,636 Units 3,676 Units $1,583M IFRS IFRS $210K per suite in Calgary $981M $326K per suite in Surrey $144K per suite in Edmonton $280K per suite in Abbotsford $3.05B IFRS Value $34M Q4 2023 $453M Winnipeg, Manitoba Portfolio Saskatch
Slide 15: 2024 Drivers: Optimum Potential NOI
2024 Drivers: Optimum Potential NOI (in 000s) ▪ Stabilization of existing non-stabilized portfolio which equates to 13% of the total portfolio ▪ Achieve Optimum Potential Net Operating Income ▪ Estimated $430M liquidity in FY2023 Runway Left $52 M (Before rent increases) Vacancy Rate (inclusive of u
Slide 16: 2023 Drivers – Mark to Market and Occupancy Potential
2023 Drivers – Mark to Market and Occupancy Potential (in 000s, except vacancy and suite counts) Stabilized Asset – Mark to Market Potential Unstabilized Asset – Mark to Market Potential Stabilized Suites Unstabilized Suites Mark to Market Mark to Market (including incentive (including incentive Num
Slide 17: Risk Management
Risk Management CMHC INSURED MORTGAGES 2023 Mortgage Maturity as at Sept 30, 2023 ▪ As at September 30, 2023, Mainstreet’s outstanding $ millions mortgage balance was $1,604M, of which $1,589M (99%) is CMHC insured (fixed) at an average interest rate of 2.79%. 300 The balance, $15M, are conventional
Slide 18: Mainstreet Machine
Mainstreet Machine © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 18
Slide 19: 5 Pillar Competitive Advantage
5 Pillar Competitive Advantage Q3 Investor Pitchbook © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 19
Slide 20: The Mainstreet 'Spec'
The Mainstreet ‘Spec’ p © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 20
Slide 21: 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 22: Mainstreet: Adding Value
Mainstreet: Adding Value Saskatoon 1310, Saskatoon Bow River Townhomes, Calgary Avenue Tower, Calgary Queen’s Park Townhomes, Calgary © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 22
Slide 23: 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 24: 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 repairs to, heating or maintenance of underground parking garage ▪ Amenities Lower realty taxes versus larg
Slide 25: Clustering Strategy
Clustering Strategy Abbotsford Calgary Edmonton By clustering assets, Mainstreet maximizes 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 resident m
Slide 26: Edmonton ICE District Strategy
Edmonton ICE District Strategy CONTINUED EXPANSION OF INNER-CITY EDMONTON 164 Properties 5,835 Units * Includes Fort Saskatchewan © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 26
Slide 27: Property & Equipment Conversion Value
Property & Equipment Conversion Value RESIDUAL LAND ▪ Surrey Residual Land ▪ Ashley Court - Surrey, BC High Density Residential Land ▪ Greenwood Gardens - Surrey, BC High Density Residential Land ▪ Imperial Court - Surrey, BC High Density Residential Land ▪ 33263 Bourquin Cres. - Abbotsford, BC Deve
Slide 28: Townhouse & Condo Conversion Value
Townhouse & Condo Conversion Value Alberta British Columbia (Abbotsford) Townhouses ▪ Hanna Estates ▪ Pinetree complex CONDOMINIUM CONVERSION ▪ Queen’s Park – Calgary ▪ Sunshine complex ▪ Trevella Park – Calgary ▪ Villa Christina The opportunity exists to convert the existing portfolio ▪ Bannerman T
Slide 29: ESG
ESG ENVIRONMENTAL SOCIAL GOVERNANCE ▪ Environmental Consultation ▪ Health & Safety ▪ Risk Management Committed to implementing best environmental • Competitive employee health benefits • Audit Committee practices suggested by independent • Enhanced Covid protocols for employees and • Whistle Blower
Slide 30: Appendix
Appendix CONTENTS Value-Add Case studies: page 31 – 35 Acquisitions: page 36 - 43 © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 30
Slide 31: Value-Add Case Studies
Value-Add Case Studies Vancouver Lower Mainland (Surrey), BC ▪ Mainstreet Estates Edmonton, AB ▪ Mainstreet Park Calgary, AB ▪ Huntsville Saskatoon, SK ▪ West Meadow © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 31
Slide 32: 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; we financed the property in November 2016. Financial results for the property before and after s
Slide 33: 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; we financed the property in November 2017. Financial results for the property before and after stabilization and f
Slide 34: 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; we financed the property in September 2014. Financial results for the property before and after stabilization and financin
Slide 35: Value-Add Model: West Meadow, Saskatoon, SK
Value-Add Model: West Meadow, Saskatoon, SK Mainstreet purchased the above property (240 units) in June 2019. It took approximately 16 months to complete the stabilization process; we financed the property in September 2020. Financial results for the property before and after stabilization and finan
Slide 36: 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 37: 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 38: 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 39: 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 40: 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 41: 2022 Acquisitions
2022 Acquisitions Q1 2022 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Edmonton Multiple 232 $20,000,000 TBD $78,261* Edmonton 10245 & 10255 Alex Taylor Rd 27 $2,500,000 TBD $92,593 Calgary 316 18th Ave SW 10 $1,460,000 TBD $146,000 TOTAL Q1 2022 269 $23,960,000
Slide 42: 2022 Acquisitions
2022 Acquisitions Q2 2022 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Lethbridge 125 Columbia Blvd W 20 $2,400,000 TBD $120,000 Calgary 234 21 Ave SW 16 $2,500,000 TBD $156,250 Calgary 111 & 117 24 Ave SW 32 $5,120,000 TBD $160,000 Edmonton 16316 106A Ave 46 $5
Slide 43: 2022 Acquisitions
2022 Acquisitions Q3 2022 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Prince George 1601 & 1617 Queensway 42 $4,300,000 TBD $102,381 Prince George 1588 Juniper St 24 $2,870,000 TBD $119,583 Calgary 1838 14 St SW 20 $3,230,000 TBD $161,500 Winnipeg 280 & 286 Riv
Slide 44: 2023 Acquisitions
2023 Acquisitions Q1 2023 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Calgary 1737 26 Ave SW 12 $1,820,000 TBD $151,666 Calgary 1711 10 St SW 16 $2,364,000 TBD $147,750 Calgary 1608 16 St SW 22 $3,125,000 TBD $142,045 Calgary 603 13 Ave SW 13 $1,807,000 TBD $13
Slide 45: 2023 Acquisitions
2023 Acquisitions Q3 2023 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Edmonton 10532 & 10534 115 St NW 2 ( commercial ) $1,260,000 TBD $630,000 Prince George 3820 15 Ave 48 $6,000,000 TBD $125,000 Prince George 3030 10 Ave 30 $2,850,000 TBD $95,000 Penticton 22
Slide 46: 2023 Subsequent Acquisitions
2023 Subsequent Acquisitions Q3 2023 Acquisitions City Address # of Units Purchase Price Appraised Value Price per door Maple Ridge 12151 224 Street 89 $18,050,000 TBD $202,809 Saskatoon 238 Fairmont Drive 222 $21,644,000 TBD $97,495 Edmonton 11920 101 St NW 21 $1,995,000 TBD $95,000 Edmonton 11908