Mainstreet Equity Corp. · TSX:MEQ
Mainstreet Equity — Q4 2022 Earnings Presentation
44 slides from Mainstreet Equity's earnings presentation, December 2022
Slide 1: Q4 2022 Investor Presentation
© All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 1 Q4 2022 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: Why Invest in Mainstreet?
Why Invest in Mainstreet? The mid-market multi-family apartment sector 22 YEARS BEST is one of the most resilient PERFORMING RESULTS SINCE and safe asset classes INCEPTION ON TSX All economic ACQUISITION metrics VALUE LAND BANK & CONDO Mid-market CONVERSION best value across Western Canada Density p
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
A proven solid performer since listing on TSX in 2000 23 YEARS OF ORGANIC DOUBLE-DIGIT GROWTH WITH LIMITED EQUITY DILUTION (Annual Growth 2000 – 2022) 16% FFO/SHARE ($0.18 - $5.65) 1,370 (2000) to 16% IFRS VALUE ($90M - $2.8B) 16,512 (2022 YTD) 15% REVENUE ($8M - $181M) Apartment unit count *Compoun
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 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 contin
Slide 8: Apartment Demand
Apartment Demand Population Growth: 12,611 (2021) [15% of total rental universe] EDMONTON Rental Universe: 84,621 (2021) [Mid-market: 60,996 (72%) (2021) Vacancy Rate: 6.9% (Oct 2021) Population Growth: 14,467 (2021) [30% of total rental universe] CALGARY Rental Universe: 49,037 (2021) [Mid-market:
Slide 9: Apartment Demand
Apartment Demand Population Growth: 2,727 (2021) [72% of total rental universe] CHILLIWACK Rental Universe: 3,775 (2021) [Mid-market: 3,775 (100%) (2021) Vacancy Rate: 1.3% (Oct 2021) Population Growth: 1,888 (2021) [40% of total rental universe] ABBOTSFORD Rental Universe: 4,777 (2021) [Mid-market:
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 building Universe market with less competition Edmonton 60,996 84,621 72% Calgary 30,067 49,037 61% Regina 13,602 14,765 92% Saskatoon 13,794 16,1
Slide 11: Potential Target Market Growth
Potential Target Market Growth 45,000 40,000 38,636 36,705 34,773 35,000 32,841 30,909 28,977 30,000 27,045 25,114 25,000 Units 20,000 16,512* 15,000 10,000 5,000 0 8.5% 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 $17 million to 15,893 units (YTD) with a market value of $2.7B and limited equity dilution ▪ As at September 30, 2021
Slide 13: Growing The Portfolio
Growing The Portfolio ASSET GROWTH ($M) $3,000 # of outstanding shares Billions $2,818 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 2022 IFRS value) $1,632 $1,637 $1,743 -0.02 # of outstanding shares $1,500 # of
Slide 14: Diversified Portfolio
Diversified Portfolio Alberta Portfolio British Columbia Portfolio 9,033 Units 3,424 Units $1,438M IFRS Contribut $926M IFRS $194K per suite in Calgary ed Contribut 51% $319K per suite in Surrey $137K per suite in Edmonton ed 33% $273K per suite in Abbotsford $2.82B IFRS Value $10M as of Contribut e
Slide 15: 2023 Drivers: Optimum Potential NOI
2023 Drivers: Optimum Potential NOI (in 000s) 5% Annualized Annualized Annualized Annualized inflationary Annualized ▪ Stabilization of existing non-stabilized NOI based Additional NOI Additional Additional adjustment Optimum portfolio which equates to 14% of the on Q4 2022 at 95% NOI without NOI at
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 Mortgage Maturity as at September 30, 2022 CMHC INSURED MORTGAGES 2022 $ millions 300 ▪ As at September 30, 2022, Mainstreet’s outstanding mortgage balance was $1,472M, of which $1,456M 250 (99%) is CMHC insured (fixed) at an average interest rate of 2.56%. The balance, $16M, are con
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 156 Properties 5,694 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: 2022 Subsequent Acquisitions
2022 Subsequent Acquisitions Q4 2022 Subsequent 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