Mainstreet Equity Corp. · TSX:MEQ
Mainstreet Equity — Q1 2022 Earnings Presentation
43 slides from Mainstreet Equity's earnings presentation, April 2022
Slide 1: Q1 2022 Investor Presentation
© All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 1 Q1 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: Mainstreet Equity Corp.
Mainstreet Equity Corp. Q3 Investor Pitchbook A solid performer achieved 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 mission
Slide 4: A proven solid performer
A proven solid performer - since listed in TSX in 2000 22 YEARS OF ORGANIC DOUBLE-DIGIT GROWTH WITH LIMITED EQUITY DILUTION (Annual Growth 2000 – 2021) 16% FFO/SHARE ($0.18 - $5.08) 1,370 (2000) to 17% IFRS VALUE ($90M - $2.6B) 15,821 (2022 YTD) 15% REVENUE ($8M - $160M) Apartment unit count *Compou
Slide 5: Why Invest in Mainstreet
Why Invest in Mainstreet The mid-market multifamily apartment sector is one of the most resilient and safe asset classes. ESTABLISHED OPERATION PLATFORM Leading to high operating margin ACQUISITION LAND BANK VALUE & CONDO Mid-market CONVERSION best value Density potential (refer to appendix pg. 30)
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 conti
Slide 8: Apartment Demand
Apartment Demand Population Growth: 12,611 (2021) [16% of total rental universe] EDMONTON Rental Universe: 80,933 (2020) [Mid-market: 59,727 (74%)] (2020) Vacancy Rate: 6.8% (Oct 2020) Population Growth: 14,467 (2021) [32% of total rental universe] CALGARY Rental Universe: 45,882 (2020) [Mid-market:
Slide 9: Apartment Demand
Apartment Demand Population Growth: 2,727 (2021) [80% of total rental universe] CHILLIWACK Rental Universe: 3,412 (2020) [Mid-market: 3,412 (100%)] (2020) Vacancy Rate: 1.5% (Oct 2020) Population Growth: 1,888 (2021) [43% of total rental universe] ABBOTSFORD Rental Universe: 4,398 (2020) [Mid-market
Slide 10: 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 Edmonton 59,727 80,933 74% Calgary 28,635 45,882 62% Regina 13,639 14,808 92% Saskatoon 13,309 15,
Slide 11: 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 15,821* 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 from CMHC,
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 15,465 units (YTD) with a market value of $2.6 billion with limited equity dilution. ▪ As of September
Slide 13: Growing The Portfolio
Growing The Portfolio ASSET GROWTH ($MM) $3,000 # of outstanding shares Billions $2,647 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 Q1 2022 IFRS value) $1,632 $1,637 $1,666 -0.02 $1,500 $1,406 # of outstanding shar
Slide 14: Diversified Portfolio
Diversified Portfolio © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 14
Slide 15: Mainstreet Machine
Mainstreet Machine © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 15
Slide 16: 5 Pillar Competitive Advantage
5 Pillar Competitive Advantage Q3 Investor Pitchbook © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 16
Slide 17: The Mainstreet 'Spec'
The Mainstreet ‘Spec’ © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 17
Slide 18: 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 19: 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 19
Slide 20: 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 21: 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 22: 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 23: Edmonton ICE District Strategy
Edmonton ICE District Strategy Expansion of Inner-City Edmonton 150 Edmonton Properties 5, 386 Edmonton Units © All Rights Reserved - MAINSTREET EQUITY CORP. TSX:MEQ 23
Slide 24: 2022 Drivers – Optimum Potential NOI
2022 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 Q1 2022 results occupancy rate concession market rent potential NOI Difference ▪ Stabilization of existing no
Slide 25: 2022 Drivers – Mark to Market and Occupancy Potential
2022 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 26: Risk Management
Risk Management Mortgage Maturity CMHC INSURED MORTGAGES 2021 as of Dec 31, 2021 ▪ As of Dec 31, 2021, Mainstreet has $1,427M of mortgages, of which $1,407M (99%) are CMHC insured (fixed) at an average interest rate of 2.51% and the balance of $20M are fixed conventional mortgages with an average in
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 Committees practices suggested by independent Enhanced Covid protocols for employees and Whistle Blower Policy
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 ▪ Mainstreet Estates (Surrey) 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 and we financed the property in November 2016. Financial results for the property before and afte
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 and we financed the property in November 2017. Financial results for the property before and after stabilization an
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 and we financed the property in September 2014. Financial results for the property before and after stabilization and refin
Slide 35: 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 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: Q2 Subsequent 2022 Acquisitions
Q2 Subsequent 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 River Ave