CALGARY, Feb. 14 /CNW/ - Mainstreet Equity Corp. ("Mainstreet" or the
"Corporation") today announced its 2006 first quarter results for the three-
month period ended December 31, 2005. Highlights for the quarter include:
- completion on December 30, 2005 of the secondary offering (non-
treasury issue) announced in the first quarter; 2.7 million
Mainstreet common shares were sold privately, or through the
facilities of the TSX, at $5.00 per common share, which the
Corporation believes will help widen its distribution base, improve
the liquidity of shares and enhance their value in the future;
- acquisition of four rental apartment complexes (255 units) in
Edmonton, Alberta, and Surrey, B.C., for a total cost of
$14.9 million (average $58,000 per unit).
- 7% growth of portfolio in the first quarter, compared to year-end
2005; portfolio comprised 3,805 units, with an approximate market
value of $324 million compared to a book value of $204 million, as of
December 31, 2005;
- 289% improvement in funds from operations, to $106,000 in the first
quarter of 2006 compared with a negative value of $56,000 in the
first quarter of 2005, due to continued growth through acquisitions,
and increased revenues from stabilized properties (newly acquired
properties that have been renovated to Mainstreet's branded standard
and returned to the market at higher rents). For stabilized
properties, funds from operations improved by 36% to $832,000 in the
first quarter of 2006 compared with $605,000 in the first quarter of
2005;
- 36% increase in overall rental income (non-stabilized and stabilized
properties) for the first quarter, due to increased number of
stabilized properties and improved vacancy rates;
- marginal increase in overall vacancy rates to 10% in the first
quarter of 2006, compared to 9.3% in the same period of 2005, despite
the acquisition of 11 (1,072 units) non-stabilized properties since
the first quarter of 2005;
- drop in average vacancy rate for stabilized properties to 5.5% in the
first quarter of 2006, compared to 7.1% in the same period of 2005;
- low average vacancy rates for stabilized properties in Calgary and
Edmonton of 3.6% and 4.8%, respectively, for the first quarter, with
further declines to 0.9% and 3.2%, respectively, as of
February 1, 2006;
- increased rents on about 50% of properties, due to the increased
number of stabilized units, and upward market pressure on rental
rates; rent increases initiated in the first quarter of 2006 will not
be reflected in financial results until the second and third quarters
of 2006, due to the required 90-day notice period for rent increases.
"We are pleased with results for the first quarter, and are on track for
continued profitable growth in 2006," says Bob Dhillon, President and CEO of
Mainstreet. "Mainstreet has managed to continue its steady growth despite the
rising costs of utilities (especially natural gas) and renovations, dramatic
increases in property taxes for the past three years, and a strong trend of
renters buying their first homes. According to CMHC, housing starts are now
slowing down, suggesting an end to a six-year upward trend in new-home buying.
Because of this, we believe the rental market will remain strong, especially
in our mid-market segment."
As of this first quarter report, Mainstreet has begun to segment its
results for non-stabilized and stabilized properties to provide a clearer
understanding of its performance.
About Mainstreet
Mainstreet is a Calgary-based, growth-oriented real estate corporation
focused on the acquisition, redevelopment, repositioning, asset and property
management of mid-market apartment buildings. The Corporation currently owns
and operates residential rental units, including apartments and townhouses, in
Vancouver/Lower Mainland (Surrey), Calgary, Edmonton and Greater Toronto Area.
Mainstreet's common shares are listed on the Toronto Stock Exchange under
the symbol MEQ. There are currently 9,238,333 common shares outstanding.
The above disclosure may contain forward-looking statements that involve
substantial known and unknown risks and uncertainties. These forward-looking
statements are subject to numerous risks and uncertainties, some of which are
beyond the Corporation's control, including: the impact of general economic
conditions in Canada, industry conditions, increased competition, the lack of
available qualified personnel or management, equipment failures, stock market
volatility, and fluctuations in rental prices, energy costs and foreign
exchange or interest rates. The Corporation's actual results, performance or
achievements could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurances can be given
that any of the events anticipated by the forward-looking statements will
transpire or occur, or, if any of them do so, what benefits the Corporation
will derive from them.
