Mainstreet Equity Corp. · TSX:MEQ
Mainstreet Equity — Q4 2024 Earnings Presentation
48 slides from Mainstreet Equity's earnings presentation, 2024
Slide 1: Q4 2024 Investor Presentation
Q4 2024 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? 25 Years of organic double-digit growth with limited equity dilution (Annual growth 2000 – 2024) Since being listed on TSX The Mainstreet Opportunity Accelerated Organic Growth • Acquisition pipeline & $52M NOI gap 18% FFO/Share ($0.18 - $9.09) 18,455 Strong Balance Sheet (
Slide 4: Mainstreet Growth
Mainstreet Growth Exploring zoning and density relaxations to potentially build new capacity within existing land footprints Turning unused or Subdividing residual residual space within lands for future existing buildings developments into new units Accelerated Strong Organic Land Bank Balance Sheet
Slide 5: Mainstreet Fundamentals
Mainstreet Fundamentals A solid performer, continued organic non-dilutive growth since inception 18,455 - Total Units YTD Abbotsford • Aligned shareholder interest: director and management ownership around 49% 1,001 Units BC Chilliwack 284 Units • We acquire under-performing mid-market apartment pro
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. Acquisitions Capital improvements Identify and buy under-performing rental units at prices well below Increase the ass
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 favorable rental market conditions Canadians
Slide 8: Apartment Demand
Apartment Demand Population Growth: 63,215 (2023) [69% of total rental universe] Rental Universe: 91,185 (2023) Edmonton Mid-market: 63,812 (70%) (2023) Vacancy Rate: 2.3% (2023) Population Growth: 95,784 (2023) [171% of total rental universe] Rental Universe: 55,859 (2023) Calgary Mid-market: 32,03
Slide 9: Apartment Demand
Apartment Demand Population Growth: 2,661 (2023) [65% of total rental universe] Chilliwack Rental Universe: 4,068 (2023) Mid-market: 4,068 (100%) (2023) Vacancy Rate: 1.4% (2023) Population Growth: 6,347 (2023) [126% of total rental universe] Abbotsford Rental Universe: 5,038 (2023) Mid-market: 4,56
Slide 10: Our Value Chain Business Model
Our Value Chain Business Model Target Markets Rental Apartment Universe 18,455 - Total Units YTD Total Rental Abbotsford City <100 Units/building Universe % Mid-Market 1,001 Units Chilliwack 284 Units BC Penticton AB British Columbia SK MB 77 Units Edmonton 63,812 91,185 70% Vernon 47 Units 4,207 un
Slide 11: Potential Target Market Growth
Potential Target Market Growth 18,455 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% Estimated Potential Rental Apartment Total Mid-Market Share Numbers obtained from CMHC, the potential target markets include Edmonton, Calgary, Regina, Saskatoon, Winnipeg, Chilliwack, Abbotsford, Surrey, Kamloop
Slide 12: A 'Value Creation' Company
A ‘Value Creation’ Company Significant growth with limited equity dilution (YTD) Since being listed on TSX • Listed on the TSX in 2000, Mainstreet has grown its portfolio from 272 units with a market value of $17M to 18,398 units (YTD) with market value of $3.3B and limited equity dilution • As at S
Slide 13: Growing The Portfolio
Growing The Portfolio ASSET GROWTH ($M) Since being listed on TSX tanding shares $3,339 $3,407 $3,051 $2,818 Gross Book Value $2,616 Appraised Value 23% CAGR (up to Q4 16% Q3 2024 IFRS value) 12 years – $1 Billion Gross Book/Appraised Value $2,183 $2,020 2,095 $$2,115 # of Outstanding Shares 1,866 $
Slide 14: Diversified Portfolio
Diversified Portfolio BC AB SK MB British Columbia Alberta Saskatchewan Manitoba 4,182 Units 10,124 Units 3,634 Units 405 Units $1,109M $1,755M $510M $35M 33% 51% 15% 1% $3.41B IFRS Value Q4 2024 BC NAV is 43% mainst.biz TSX:MEQ Page 13
Slide 15: 2024 Drivers: NOI Catch Up
2024 Drivers: NOI Catch Up Annualized 5% Inflationary Stabilization of existing non-stabilized portfolio which equates to 14% of Additional NOI Current Mark-to- Rate Adjustment Annualized the total portfolio at 95% Market Gap on Operating Optimum Potential Occupancy Rate Costs Achieve Optimum Potent
Slide 16: Apartment Business Driver
Apartment Business Driver (in 000s, except vacancy and suite counts) Stabilized Assets - Mark-to-Market Potential Un-stabilized Assets - Mark-to-Market Potential Un-Stabilized suites Mark- Stabilized suites Mark-to- to-Market (including Vacancy Rate Market (including incentive Number of Un-Stabilize
Slide 17: Debt Management
Debt Management CMHC insured mortgages 2024 Mortgage Maturity as at Sept 30, 2024 $ millions (Annual growth 2000 – 2024) As at June 30, 2024, Mainstreet’s outstanding mortgage balance was $1,687m, of which $1,683m (99%) is cmhc insured (fixed) at an average interest rate of 2.97%. The balance, $4m,
Slide 18: Mainstreet Machine
Mainstreet Machine mainst.biz TSX:MEQ Page 17
Slide 19: Pillar Competitive Advantage Statement
5 Pillar Competitive Advantage Statement 1. Acquire under-performing assets at attractive prices 2. Limited to no competition from REITs and Pension Funds in the mid-market sector 3. Internalized construction capabilities = Margins 4. Internalized operations platform / systems are scalable 5. Intern
Slide 20: Mainstreet 'Spec'
Mainstreet ‘Spec’ mainst.biz TSX:MEQ Page 19
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 - Saskatoon Improve NOI from Improve NOI from (-$135k) to $224k (-$223k) to $327k mainst.biz TSX:MEQ Page 20
Slide 22: Mainstreet: Adding Value
Mainstreet: Adding Value Saskatoon 1310, Saskatoon Bow River Townhomes, Calgary Avenue Tower, Calgary Queen’s Park Townhomes, Calgary mainst.biz TSX:MEQ Page 21
Slide 23: 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 24: 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 25: Clustering Strategy
Clustering Strategy By clustering assets, Mainstreet maximizes efficiencies and growth, transforming a single asset into a network of apartment complexes Abbotsford Calgary Edmonton We achieved this through: • Clustering assets within a 5 block radius • Requiring fewer resident managers leading to r
Slide 26: Edmonton ICE District Strategy
Edmonton ICE District Strategy NAIT 169 Properties Roxy Theatre 6,206 Brewery District Oliver Square Valley West LRT Line MacEwan University Roger’s Arena Mainstreet Tower Apartments NorQuest College Art Gallery of Alberta Stantec Tower Shaw Convention Centre LRT Metro Line ICE District Continued Ex
Slide 27: Property & Equipment Conversion Value
Property & Equipment Conversion Value 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 Development Lot • Edmonton
Slide 28: Townhouse & Condo Conversion Value
Townhouse & Condo Conversion Value Condominium conversion Alberta Condo Spec British Columbia The opportunity exists to convert the existing portfolio into condominiums, in particular for the following Townhouses • Crescent Heights View – (Abbotsford) townhouse complexes in Alberta and condo-titled
Slide 29: ESG
ESG Environmental Consultation Health & Safety Risk Management • Committed to implementing best environmental practices • Competitive employee health benefits • Audit Committee suggested by independent environmental consultants • Enhanced Covid protocols for employees and tenants • Whistle Blower Po
Slide 30: Coming Up
Coming Up Value-Add Case Studies: Pg – 30-34 Acquisitions: Pg – 35-46
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 mainst.biz TSX:MEQ Page 30
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: 2024 Q4 Acquisitions
2024 Q4 Acquisitions Q4 2024 Acquisition City Address # of Units Purchase Price Appraised Value Price per door Victoria 1023 Esquimalt Road 48 $9,175,000 TBD $191,146 Total Q4 2024 48 TBD Q4 2024 Subsequent Acquisition City Address # of Units Purchase Price Appraised Value Price per door Abbotsford
Slide 37: 2024 Q3 Acquisitions
2024 Q3 Acquisitions Q3 2024 Acquisition City Address # of Units Purchase Price Appraised Value Price per door Prince George 2080 20th Ave, Prince George, BC V2L 5C9 29 $3,103,000 TBD $107,000 Edmonton 11850 101 St NW, Edmonton AB T5G 2B7 21 $2,058,000 TBD $98,000 Maple Ridge 22422 North Ave, Maple
Slide 38: 2024 Acquisitions
2024 Acquisitions Q1 2024 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) Maple Ridge, BC 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 1
Slide 39: 2023 Acquisitions
2023 Acquisitions Q1 2023 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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,
Slide 40: 2023 Acquisitions
2023 Acquisitions Q3 2023 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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 Pe
Slide 41: 2022 Acquisitions
2022 Acquisitions Q1 2022 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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
Slide 42: 2022 Acquisitions
2022 Acquisitions Q2 2022 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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 10
Slide 43: 2022 Acquisitions
2022 Acquisitions Q3 2022 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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 2
Slide 44: 2021 Acquisitions
2021 Acquisitions Q1 2021 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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
Slide 45: 2021 Acquisitions
2021 Acquisitions Q3 2021 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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
Slide 46: 2021 Acquisitions
2021 Acquisitions Q4 2021 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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
Slide 47: 2020 Acquisitions
2020 Acquisitions Q1 2020 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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
Slide 48: 2020 Acquisitions
2020 Acquisitions Q3 2020 Acquisitions Purchase Price Appraised Value Price per Door City Address # of Units (CAD) (CAD) (CAD) 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 Purchase Price Appraised Val