Mainstreet Equity Corp. · TSX:MEQ

Mainstreet Equity — Q3 2021 Earnings Presentation

37 slides from Mainstreet Equity's earnings presentation, July 2021

  1. Slide 1: Q3 2021 Investor Presentation

    MAINSTREE Q3 2021 Investor Presentation 99) ]SUIBIN

  2. Slide 2: Forward-looking statements

    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 amounts not yet determinable and assumptions of manage

  3. Slide 3: We are a Corporation not a REIT

    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 ownership ▪ Owner neglect and mismanagement ▪ Greater deferred maintenance ▪ Owners have limited access to

  4. Slide 4: Management believes:

    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 Purchase Price Market Value Replacement Cost* (Build cost of comparable new apartments) © All Righ

  5. Slide 5: Rental universe by market

    Population Growth: 26,121 (2020) [32% of total rental universe] Rental Universe: 80,933 (2020) Calculation of ownership Premium = Principal & Interest for Avg. Resale Home minus [Mid-market: 59,727 (74%)] (2020) Avg. 2-bedroom Apt. Rent: $831 (Fall 2019) Vacancy Rate: 6.8% (Oct 2020) Calculation of

  6. Slide 6: Rental universe by market (continued)

    Population Growth: 2,071 (2020) [61% of total rental universe] Rental Universe: 3,412 (2020) Calculation of ownership Premium NA [Mid-market: 3,412 (100%)] (2020) Avg. 2-bedroom Apt. Rent: NA Vacancy Rate: 1.5% (Oct 2020) Population Growth: 1,833 (2020) [42% of total rental universe] Rental Universe

  7. Slide 7: Q3 2021, 12,954 units are stabilized out of the portfolio

    Identify and buy under-performing rental units at prices well below replacement costs. Increase the asset value of Mainstreet’s portfolio by renovating acquired properties. Minimize operating costs through professional management, efficient technology and energy-saving equipment. Reposition renovate

  8. Slide 8: © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ

    © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 8

  9. Slide 9: © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ

    © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 9

  10. Slide 10: Improve NOI from $1,543K to $3,493K

    Improve NOI from Improve NOI from $1,543K to $3,493K $69K to $2,340K Improve NOI from Improve NOI from (-$135K) to $224K $1,175K to $1,952K © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 10

  11. Slide 11: © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ

    © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 11

  12. Slide 12: Renovation program expense reductions

    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 installed on showers and all taps) ▪ Ins

  13. Slide 13: Higher operating margins versus larger concrete complexes

    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 structures Lower hydro cost r

  14. Slide 14: Through clustering assets Mainstreet has maximized efficiencies and growth

    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 resident managers lea

  15. Slide 15: 107 Properties [3,125 units]

    107 Properties [3,125 units] © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 15

  16. Slide 16: Target Markets Rental Apartment Universe

    Target Markets Rental Apartment Universe <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 97% Vernon 2,032 2,032 100% Penticton 2,546 2,546 100% Courtenay 1,587 1,818 87% Calgary 28,635 45,882 6

  17. Slide 17: Estimated Potential Rental Apartment Total Mid-Market Share

    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 14,956* 15,000 10,000 5,000 0 8.3% 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, the potential target markets i

  18. Slide 18: Number of outstanding shares

    ▪ Listed on the TSX in 2000, Mainstreet has grown its portfolio from 272 units with a market value of $17 million to 14,209 units (YTD) with a market value of $2.2 billion with limited equity dilution. ▪ As of September 30, 2020 the number of common shares (9,349,830) as compared to 8,883,333 common

  19. Slide 19: © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ

    ▪ ▪ ▪ ▪ © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 19

  20. Slide 20: Property purchased August 2016 (178 units)

    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 and financing are summarized as follows: Purchase

  21. Slide 21: Property purchased January 2015 (331 units)

    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 after stabilization and refinancing are summarized a

  22. Slide 22: Property purchased April 2012 (52 units)

    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 refinancing are summarized as follows: (000’s)

  23. Slide 23: Property purchased June 2019 (240 units)

    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 refinancing are summarized as follows: (000’s)

  24. Slide 24: Gross Book/Appraised Value

    $3,000 # of outstanding shares Billions 0.01 $2,525 $2,500 0 $2,183 $2,020 -0.01 $2,000 Gross Book Value 1,866 Gross Book/Appraised Value -0.02 Appraised Value $1,632 $1,565 $1,500 $1,406 # of outstanding shares $1,386 $1,400 # of Outstanding Shares $1,259 $1,293 -0.03 $1,150 $1,148 $1,051 $976 -0.0

  25. Slide 25: © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ

    51% 33% 0.3% 16% © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 25

  26. Slide 26: Mortgage Maturity

    Mortgage Maturity ▪ As of June 30, 2021, Mainstreet has $1,327M of as of June 30, 2021 mortgages, of which $1,307M (98%) are CMHC Cost Saving insured (fixed) at an average interest rate of 2.54% 100 basis points and the balance of $21M are fixed conventional on $185M maturing mortgages mortgages wit

  27. Slide 27: Every 1% drop in vacancy rate equals $1.9M increase in NOI

    (in 000s, except vacancy and suite counts) Stabilized Suites Un-stabilized Suites Mark to Market Mark to Market (including incentive Vacancy Rate (including incentive Number of Vacancy Rate reduction opportunity) Number of un-stabilized reduction opportunity) City Stabilized Suites Stabilized Portfo

  28. Slide 28: Stabilization of existing non-stabilized portfolio

    (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 non-stabilized portfolio which equates

  29. Slide 29: Q1 and Q2 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 $146,400 Regina 1424 Vict

  30. Slide 30: Q3 and Q4 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 Ave SW 29 $4,814,000

  31. Slide 31: Q1 and Q2 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 $40,000 Edmonton 10

  32. Slide 32: Q3 and Q4 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 Appraised Value Pric

  33. Slide 33: Q1 and Q2 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 Street 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 TBD $84,253 TOT

  34. Slide 34: Q3 2021 Acquisitions and Subsequent

    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 $3,400,000 TBD $141,667

  35. Slide 35: Development land holdings

    ▪ 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 Residential Land ▪ Ashley Court - Surrey, BC Hi

  36. Slide 36: Condo conversion opportunity

    Alberta British Columbia ▪ Trevella Park – Calgary, AB ▪ Sunshine complex, BC ▪ Highland Park – Lethbridge, AB ▪ Pinetree complex, BC ▪ Wedgewood – Edmonton, AB ▪ Hanna Estates, Abbotsford, BC The opportunity exists to convert the existing portfolio ▪ Lauderdale – Edmonton, AB ▪ Villa Christina, Abb

  37. Slide 37: Environmental Social Governance

    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 envi

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