25 Organic Growth
Discipline
Focus
YEARS of
IFRS value | Year-over-year | Revenue | Year-over-year | Stock price | Year-over-year | |
($ million) | % change | ($ million) | % change | ($) | % change | |
2000 | 90 | n/a | 7.7 | n/a | 4.9 | n/a |
2001 | 105 | 17% | 11.1 | 44% | 5.4 | 10% |
2002 | 145 | 38% | 15.2 | 37% | 3.1 | (43%) |
2003 | 170 | 17% | 17.0 | 12% | 3.9 | 25% |
2004 | 178 | 5% | 19.7 | 16% | 6.1 | 57% |
2005 | 309 | 74% | 23.5 | 19% | 5.2 | (14%) |
2006 | 520 | 68% | 30.9 | 31% | 9.9 | 89% |
2007 | 710 | 37% | 40.4 | 31% | 16.1 | 62% |
2008 | 625 | (12%) | 46.3 | 15% | 12.1 | (25%) |
2009 | 679 | 9% | 50.8 | 10% | 7.9 | (34%) |
2010 | 752 | 11% | 53.1 | 5% | 11.4 | 44% |
2011 | 911 | 21% | 56.9 | 7% | 17.2 | 50% |
2012 | 1,052 | 15% | 66.9 | 18% | 31.5 | 83% |
2013 | 1,149 | 9% | 78.2 | 17% | 30.2 | (4%) |
2014 | 1,259 | 10% | 90.6 | 16% | 40.7 | 35% |
2015 | 1,386 | 10% | 100.4 | 11% | 31.4 | (23%) |
2016 | 1,460 | 5% | 100.3 | 0% | 31.1 | (1%) |
2017 | 1,632 | 12% | 104.7 | 4% | 37.0 | 19% |
2018 | 1,866 | 14% | 115.7 | 11% | 48.0 | 30% |
2019 | 2,040 | 9% | 137.6 | 19% | 63.6 | 33% |
2020 | 2,183 | 7% | 149.8 | 9% | 71.9 | 13% |
2021 | 2,616 | 20% | 159.9 | 7% | 104.25 | 45% |
2022 | 2,818 | 8% | 180.6 | 13% | 106 | 2% |
2023 | 3,052 | 8% | 210 | 16% | 133 | 25% |
2024 | 3,407 | 12% | 249.8 | 19% | 191.1 | 44% |
16% | 16% | 16% | ||||
NOI | Year-over-year | FFO | Year-over-year | FFO per share | Year-over-year | |
($ million) | % change | ($ million) | % change | ($) | % change | |
2000 | 5.7 | n/a | 1.5 | n/a | 0.18 | n/a |
2001 | 7.9 | 39% | 2.1 | 40% | 0.22 | 22% |
2002 | 11.1 | 41% | 3.0 | 43% | 0.24 | 9% |
2003 | 10.9 | (2%) | 2.3 | (23%) | 0.33 | 38% |
2004 | 11.6 | 6% | 2.2 | (4%) | 0.26 | (21%) |
2005 | 13.8 | 19% | 1.0 | (55%) | 0.11 | (58%) |
2006 | 18.3 | 33% | 1.3 | 30% | 0.14 | 27% |
2007 | 24.7 | 35% | 5.0 | 285% | 0.46 | 229% |
2008 | 26.6 | 8% | 3.8 | (24%) | 0.20 | (57%) |
2009 | 31.3 | 18% | 5.5 | 45% | 0.46 | 130% |
2010 | 33.2 | 6% | 7.7 | 40% | 0.75 | 63% |
2011 | 37.3 | 12% | 11.4 | 48% | 1.08 | 44% |
2012 | 44.9 | 20% | 15.2 | 33% | 1.45 | 34% |
2013 | 52.0 | 16% | 19.1 | 26% | 1.83 | 26% |
2014 | 60.0 | 15% | 25.6 | 34% | 2.45 | 34% |
2015 | 67.3 | 12% | 30.0 | 17% | 3.06 | 25% |
2016 | 64.0 | (5%) | 26.2 | (13%) | 2.74 | (11%) |
2017 | 64.4 | 1% | 25.6 | (2%) | 2.91 | 6% |
2018 | 72.2 | 12% | 29.6 | 16% | 3.35 | 15% |
2019 | 86.3 | 20% | 39.3 | 33% | 4.27 | 27% |
2020 | 93.0 | 8% | 43.7 | 11% | 4.66 | 9% |
2021 | 97.8 | 5% | 47.5 | 9% | 5.08 | 9% |
2022 | 109.7 | 12% | 52.8 | 11% | 5.65 | 11% |
2023 | 131.3 | 20% | 68.7 | 30% | 7.37 | 30% |
2024 | 160.4 | 22% | 84.7 | 23% | 9.09 | 23% |
13th Consecutive Quarter of
DOUBLE-DIGIT
year-over-year growth
Q1 2025 vs. Q1 2024
16%
RENTAL
REVENUE
18%
NOI
19%
FFO
Q1 2025
For the periods ended
December 31, 2024 and 2023
15% | 18% | 18% |
Diversified Portfolio | 1 | Interim Condensed Consolidated Statements | |
Key Metrics: Q1 2025 Performance Highlights | 2 | of Net Profit and Total Comprehensive Income | 55 |
Cluster Strategy | 3 | Interim Condensed Consolidated Statements | |
Message from the President & CEO | 6 | of Changes in Equity | 55 |
A Decade of Dedication | 13 | Interim Condensed Consolidated Statements | |
Management's Discussion and Analysis | 15 | of Cashflows | 56 |
Management's Report | 53 | Notes to the Interim Condensed Consolidated | |
Interim Condensed Consolidated Statements | Financial Statements | 57 | |
of Financial Position | 54 | Corporate Information | 68 |
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 amounts not yet determinable and assumptions of management. In particular, statements concerning: estimates related to the effect of rising interest rates on the Corporation, the effect that inflation will have on: (i) the Corporation's tenants and the effect on credit risk; and (ii) the cost of renovations and other expenses, disruptions effecting the global supply chain and energy and agricultural markets (including as a result of geopolitical turmoil), future acquisitions, dispositions and capital expenditures, future vacancy rates, increase of rental rates and rental revenue, future revenue, income and profitability, timing of refinancing of debt, access to low-cost long-term Canada Mortgage and Housing Corporation ("CMHC") insured mortgage loans, benefits from shorter term mortgages in the short term, the amount of liquidity the Corporation will have access to in the current and subsequent fiscal years, including the amount of funds to be raised through up-financing of maturing mortgages and financing of clear titled assets after stabilization, the potential changes in interest and mortgage rates, completion timing and costs of renovations, benefits of renovations, funds to be expended on renovations in fiscal year 2025 and the sources thereof, increased funds from operations and cash flow, access to capital, minimization of operating costs, the Corporation's liquidity and financial capacity,
the Corporation's intention and ability to make distributions to shareholders in fiscal 2025, rental conditions and vacancy rates, rates of international immigration and population growth in areas where Mainstreet operates, the period of time required to stabilize a property, future climate change impact, the Corporation's strategy and goals and the steps it will take to achieve them, changes in zoning laws and potential benefits to Mainstreet as a result of the same, the Corporation's anticipated funding sources to meet various operating and capital obligations, key accounting estimates and assumptions used by the Corporation, the attraction and hiring of additional personnel, the effect of changes in legislation on the rental market, expected cyclical changes in cash flow, net operating income and operating margins, the effect of environmental regulations on financial results, the effect of income taxes on the Corporation, the handling of any future conflicts of interests of directors or officers, the effects of cyber incidents on the Corporation (including the effect of the cybersecurity incident which occurred on May 2, 2024), the benefits in trading volume from the Corporation's new dividend policy, and other factors and events described in this document should be viewed as forward-looking statements to the extent that they involve estimates thereof. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions of future events or performance (often, but not always, using such words or phrases as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as forward-looking statements.
Such forward-looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties and other factors, including those risks described in the Corporation's AIF, dated December 5, 2024 under the heading "Risk Factors", that may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the effect of inflation on consumers and tenants, the effect of rising mortgage and interest rates on the Corporation, including its financing costs, challenges related to up-financing maturing mortgages or financing of clear titled assets after stabilization, disruptions in global supply chains, labour shortages, the length and severity of geopolitical conflict and the occurrence of additional global turmoil and its effects on global markets and supply chains, changes in government policies regarding immigration and international students, cyber-incidents Corporation (including the effect of the cybersecurity incident which occurred on May 2, 2024), costs and timing of the development or renovation of existing properties, availability of capital to fund stabilization programs, other issues associated with the real estate industry including availability of labour and costs of renovations, supply chain issues, fluctuations in vacancy rates, general economic conditions, competition for tenants, unoccupied units during renovations, rent control, fluctuations in utility and energy costs, carbon tax increases, environmental and other liabilities, effects of climate change, credit risks of tenants, availability of capital, changes in legislation and regulatory regime applicable to
the corporation, loss of key personnel, a failure to realise the benefit of acquisitions and/or renovations, the effects of severe weather events on the Corporation's properties, climate change, public health meausres (including travel and post-secondary restrictions), uninsured losses, fluctuations in the capital markets and the trading price of the Common Shares, conflicts of interest of the Corporation's directors and officers, and other such business risks as discussed herein. This is not an exhaustive list of the factors that may affect Mainstreet's forward-looking statements. Other risks and uncertainties not presently known to the Corporation could also cause actual results or events to differ materially from those expressed in its forward-looking statements.
Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include, among others, the impact of economic conditions in Canada and globally including as a result of inflation, interest rate increases, supply shortages and geopolitical turmoil, the Corporation's future growth potential, prospects and opportunities, the direction of the residential rental environment, trends in interest and mortgage costs, access to capital markets to fund (at acceptable costs), the future growth program to enable the Corporation to refinance debts as they mature, changes in tax laws, mortgage rules and other temporary legislative changes in respect of pandemics or otherwise, and the availability of purchase opportunities for growth in Canada.
Although the forward-looking information contained in this MD&A is based upon what management believes are reasonable assumptions, there can be no assurance actual results will be consistent with these forward-looking statements and no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur at all, or if any of them do so, what benefits that Mainstreet will derive from them. As such, undue reliance should not be placed on forward-looking statements. Certain statements included in this MD&A may be considered "financial outlook" for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this MD&A.
Forward-looking statements are based on management's beliefs, estimates and opinions on the date the statements are made, and the Corporation undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions should change except as required by applicable securities laws.
Management closely monitors factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements and will update those forward-looking statements where appropriate in its annual and quarterly financial reports.
This MD&A includes forward-looking information about prospective results of operations, financial position or cash flows, based on assumptions about future economic conditions and courses of action and that is not presented in the format of a historical balance sheet, income statement or cash flow statement ("Financial Outlook"). Actual results may vary from the Financial Outlook summarized in this MD&A. Management of the Corporation has approved the Financial Outlook as of February 4, 2025. The Financial Outlook has been included in this MD&A to provide readers with disclosure regarding the Corporation's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the Financial Outlook may not be appropriate for other purposes.
DIVERSIFIED PORTFOLIO YTD
BRITISH COLUMBIA | ALBERTA |
4,255 units | 10,209 units |
SASKATCHEWAN | MANITOBA |
3,634 units | 405 units |
Kamloops | Prince George | ||
463 Units | |||
66 Units | Vernon | ||
Nelson | (Okanagan) | ||
47 Units | |||
61 Units | |||
Penticton | |||
Maple Ridge | |||
Courtenay | (Okanagan) | ||
(Vancouver | 115 Units | 77 Units | |
Island) | Surrey | Chilliwack | |
1,691 Units | |||
179 Units | |||
Victoria | (Okanagan) | ||
Abbotsford | |||
154 Units | 284 Units | ||
New Westminster | 1,001 Units | ||
117 Units |
Edmonton
6,207 Units
Calgary
3,747 Units included acquired for sale
52 units
Lethbridge
255 Units
Saskatoon
2,643 Units
Regina | Winnipeg |
991 Units | |
405 Units |
23 | 55 | 20 | 1 |
26 | 56 | 17 | 1 |
32 | 52 | 15 | 1 |
BC | AB | SK | MB |
Q1 2025 Unit Count (%)
Q1 2025 Contribution (%)
Q1 2025 IFRS Value (%)
18,503 TOTAL UNITS YTD
Including 52 condo suites acquired for resale.
10 developable lots and 6 commercial buildings.
ALBERTA PORTFOLIO 10,209 Units
IFRS
$227K per suite in Calgary $150K per suite in Edmonton
BRITISH COLUMBIA PORTFOLIO 4,255 Units
IFRS
$340K per suite in Surrey $298K per suite in Abbotsford
(Newly acquired BC properties are mainly valued at cost.)
$1,800M
contributed
52%
$35M
contributed
1%
WINNIPEG, MANITOBA PORTFOLIO 405 Units
IFRS
$84K per suite (at cost)
$3.47B
IFRS value
Q1 2025
$1,125M
contributed
32%
$513M
contributed
15%
SASKATCHEWAN PORTFOLIO 3,634 Units
IFRS
$145K per suite in Saskatoon $149K per suite in Regina
1 Q1 2025
KEY METRICS | Q1 2025 PERFORMANCE HIGHLIGHTS
Rental Revenue | ||
From operations | | | Up 16% to $67.6 million (vs. $58.3 million in Q1 2024) |
From same asset properties | | | Up 10% to $62.9 million (vs. $57.4 million in Q1 2024) |
Net Operating Income (NOI) | ||
From operations | | | Up 18% to $43.7 million (vs. $37.0 million in Q1 2024) |
From same asset properties | | | Up 11% to $40.7 million (vs. $36.6 million in Q1 2024) |
Funds from operations (FFO)¹ | ||
FFO-before current income tax | | | Up 23% to $25.4 million (vs. $20.7 million in Q1 2024) |
FFO per basic share-before current income tax | | | Up 23% to $2.72 (vs. $2.22 in Q1 2024) |
FFO-after current income tax | | | Up 19% to $23.0 million (vs. $19.3 million in Q1 2024) |
FFO per basic share-after current income tax | | | Up 19% to $2.47 (vs. $2.07 in Q1 2024) |
Operating Margin | ||
From operations | | | 64.7% (vs. 63.5% in Q1 2024) |
From same asset properties | | | 64.7% (vs. 63.7% in Q1 2024) |
Unstabilization rate | | | 14% (providing potential for future NOI growth) |
Stabilized Units | | | 422 properties (15,947 units, 14%) out of 480 properties (18,450 units) |
Net Profit | ||
| | Net profit of $56.2 million (vs. profit of $68.5 million in Q1 2024, | |
including change in fair value of $40.2 million in Q1 2025 vs. $56.4 | ||
million in Q1 2024) | ||
Net profit per basic and fully diluted share | | | $6.03 (vs $7.36 in Q1 2024) |
Total Capital Expenditures | | | $7.3 million (vs. $7.4 million in Q1 2024) |
Total Capital Expenditure (unstablized assets) | | | $0.9M (vs. $1.0M in Q1 2024) |
Total Capital Expenditure (stablized assets) | | | $6.4M (vs. $6.4M in Q1 2024) |
Vacancy rate | ||
From operations | | | 4.2% (vs. 3.3% in Q1 2024) |
From same asset properties | | | 4.2% (vs. 3.3% in Q1 2024) |
Vacancy rate as of February 4, 2025 | | | 4.3% excluding unrentable units |
Total Acquisition | ||
During Q1 2025 | | | $17.8 million 116 units (vs. $45.3 million 361 units in Q1 2024) |
Subsequent to Q1 2025 | | | 1 commercial unit ($0.96 million) in Edmonton |
TotalYTD Acquisition 2025 | | | 117 units ($18.8 million) |
Total Units | ||
As of December 31, 2024 | | | 18,503 units² (vs. 18,455 units in 2024) |
As of February 4, 2025 | | | 18,503 units³ |
Fair Market Value | | | Up 2% to $3.5 billion (vs. $3.4 billion in 2024) |
*1 See "Non-IFRS Measures" and Note (1) in MANAGEMENT'S DISCUSSION AND ANALYSIS to the table titled "Summary of Financial Results" for additional information regarding FFO and a reconciliation of FFO to net profit, the most directly comparable IFRS measurement.
*2 Include 53 units held for sale
*3 Include 52 units held for sale after disposal of 1 unit subsequent to Q1 2025.
Mainstreet Equity Corp. ("Mainstreet" or the "Corporation") is a Canadian real estate company focused on acquiring and managing mid-market rental apartment buildings primarily in Western Canada. Listed on the TSX since 2000, Mainstreet creates value by purchasing under-performing properties, renovating them to a branded standard, improving operating efficiencies and repositioning them in the market for greater returns. And, improving the lives of Canadians through affordable housing.
For additional information about Mainstreet Equity Corp., see the Corporation's profile at SEDAR+ (www.sedarplus.ca).
MAINSTREET EQUITY CORP. | 2 |
CLUSTER STRATEGY
Edmonton // ICE DISTRICT
This map displays Mainstreet's Edmonton holdings, the largest in Mainstreet's portfolio. Strategically concentrated in the most popular areas of inner-city Edmonton, our clusters include properties in the city's famous ICE District and the Arts District, high-density student housing by the University of Alberta and student housing near NAIT, MacEwan University, and NorQuest College, and every other part of the inner city where millennials want to be. Property clusters are also on major transit routes and along the LRT lines.
6,207
YTD TOTAL UNITS
EDMONTON*
* Includes Fort Saskatchewan
MAINSTREET EQUITY CORP. | 3 |
CLUSTER STRATEGY
Calgary // INNER-CITY
Looking at this map of Mainstreet's Calgary properties, the strategic value of clustering is clear. Our holdings are concentrated in the areas of the city that our customers care most about: the city core where all of the nightlife and dining is; close to schools where students need` to be; and throughout central communities where our customer's lives are taking place, from work to school. Properties are on major transit routes, LRT lines, and on Calgary's extensive bike paths.
3,747
YTD TOTAL UNITS
CALGARY*
*Includes 52 condo units acquired for resale.
4 Q1 2025
CLUSTER STRATEGY
Regina // GOLDEN MILE
Map of Mainstreet's Regina portfolio. Mainstreet's Regina holdings are concentrated in the city center, specifically in the popular Golden Mile area near great shopping and amenities, and within a short trip to post-secondary institutions. These are very walkable and cyclable areas where customers can park their cars and forget about them.
991
YTD TOTAL UNITS
REGINA
5 | Q1 2025 | MAINSTREET EQUITY CORP. | 5 |
MESSAGE TO SHAREHOLDERS | For the periods ended December 31, 2024 and 2023
The Mainstreet Mission: We believe the current operating environment, including an ongoing trade dispute with the U.S., presents the opportunity for accelerated acquisitions in fiscal 2025, potentially paving the way for a new phase of countercyclical growth at Mainstreet. As always, we remain passionately committed to our role as a crucial provider of quality, affordable homes for Canadians, offering renovated apartments and customer services at an average mid-market rental rate of $1,200.
In Q1 2025, Mainstreet posted our 13th consecutive quarter of double-digit, year-over-year growth across all key operating metrics. Despite Q1 being a typically slower winter rental season, funds from operations ("FFO") increased 19%, net operating income ("NOI") rose 18% and rental revenues grew 16%. Same-asset NOI rose 11% while revenues on a same-asset basis grew 10%. Operating margins increased from 63.5% to 64.7%, and from 63.7% to 64.7% on a same-asset basis.
A business strategy built on resilience
These financial achievements yet again demonstrate the success of Mainstreet's value-add business model and nimble management style. Ever since we started trading on the TSX in 2000, Mainstreet has continued to expand our portfolio by consistently adding value and re-investing low-cost capital to aggressively acquire apartment units at opportunistic prices, then repeating the formula. Once acquired, we upgrade units to a consistent standard and return them to the rental market to derive additional value. Combined with an agile management team that adeptly prepares for and responds to changing market conditions, this strategy has helped fortify Mainstreet against outside volatility, allowing us to deliver compounding shareholder returns no matter where we are in the economic cycle. These efforts have provided Mainstreet with a solid foundation for future growth, based on a multitude of inherent advantages that include:
13th Consecutive Quarterly | ||||
Double-Digit Growth | 16% | 18% | 19% | 23% |
Q1 2025 vs. Q1 2024 | Before | |||
current | ||||
income tax |
- Highly affordable rents: With an average mid-market rental rate of just $1,200, Mainstreet offers quality rental options at a time of rapid inflation, making us a crucial provider of affordable living for middle-class Canadians.
- Growth without dilution: Our adherence to 100% organic, non-dilutive growth continues to generate financial returns without sacrificing value. In the last two decades, Mainstreet stock has increased exponentially from $3.6 per share to more than $200, while the number of shares in circulation has remained largely unchanged (9.3 million shares today, compared with 8.9 million when MEQ debuted).
- Portfolio diversity: Due to the strategic nature of our acquisitions, Mainstreet now enjoys a highly diversified portfolio across Western Canada, including a newly expanded footprint in Manitoba and parts of B.C. We have expanded our portfolio to more than 18,500 units-each clustered around key urban hubs-underscoring Mainstreet's uniquely tangible value proposition within the real estate space. Roughly 42% of our portfolio's NAV based on IFRS value is in BC, one of the country's most robust rental markets and a primary target for driving Mainstreet's future NOI growth.
2000
Listed on TSX
$0.9 million in cash 529 units
Fair market value of $90 million Share price: $4.9 as at Sep. 30, 2000
No
equity
dilution except exercised options
Q1
2025
$125 million in cash 18,503 units
Fair market value of $3.5 billion
Share price: $202.01 as at Dec. 31, 2024
6 Q1 2025
Positive market fundamentals continue in 2025
In addition to Mainstreet's internal achievements, our management team also expects plenty of external tailwinds as we begin the new fiscal year. Despite the potential for political uncertainty, we believe that highly favourable macroeconomic trends will persist given the deep and structural nature of those forces, which we identify as the following:
- Systemically undersupplied housing markets: The fundamental supply-demand imbalance in Canada's real estate market is the result of more than a decade of compounding shortages that will likely take as many years to unwind. In the last 10 years, Canada's population has grown by 5.85 million (Statistics Canada), while the number of new purpose-built rental apartment units over the same period totalled 390,917, illustrating the extent of the supply gap. Meanwhile, inflationary construction costs, regulatory red tape, municipal building code restrictions and other factors are likely to further hinder new supply, prolonging the current imbalance for years to come. Lastly, elevated construction costs combined with relatively low rental rates have driven replacement costs higher, rendering many new builds inherently uneconomic.
- Strong population growth: Canada's explosive population growth in recent years was largely a result of an influx of permanent residents, international students and temporary workers, the majority of whom tend to be renters. While the federal government has plans to curb immigration rates in coming years (by 21% for permanent residents and 10% for international students in 2025), overall intake levels will remain much higher than previous averages. Canada will still accept 395,000 permanent residents and 437,000 international students this year after accounting for the reductions, for example. Federal government officials have reiterated that immigration remains a cornerstone of Canada's economic growth. Furthermore, high immigration rates will add to Canada's residual newcomer population. As of 2023, there were 2.55 million international students and temporary workers living in Canada, according to the federal government. That alone is more than the country's entire rental universe of 2.3 million.
- Low vacancies: High population growth, combined with limited new housing supply, should continue to put downward pressure on rental vacancies, which are at a historic low of 1.5%, according to CMHC. As a result, rental rates in Mainstreet's core markets of Calgary, Edmonton, Vancouver/Lower Mainland, Regina and Saskatoon are projected to climb in 2025.
- Falling interest rates: The Bank of Canada has signalled possible interest rate cuts in 2025 as inflation levels return to normal. Debt remains our single-largest expense, and lower interest rates present savings opportunities. Mainstreet currently has over $500 million in clear-title assets that can be converted into lower-cost financing options should interest rates continue to fall. As ever, we maintain an agile approach to debt management that will adapt to changes in monetary policy (see Outlook section). Currently, 99% of Mainstreet debt is locked into CMHC-insured mortgages at an average interest rate of 3.01%, maturing in an average 4.8 years, to protect against future interest rate changes.
- Emerging acquisition opportunities backed by ample liquidity: The current potential for political turbulence and possible tariffs, while creating some challenges, also lends itself to Mainstreet's countercyclical growth strategy. While we always remain conservative in our approach to potential deals, we believe 2025 could offer substantial opportunity for Mainstreet to continue pursuing its 100% organic, non-dilutive growth model, funded in part by our sizable liquidity position-currently estimated at $413 million-which provides ample dry powder for expanding our asset base.
CHALLENGES
Political uncertainties
Despite our expectations of an overall favourable operating environment in fiscal 2025, external risks like a trade dispute with the U.S. could put significant strain on Canada's broader economy. Tit-for-tat import tariffs are generally inflationary and would raise costs on some building materials, which were already elevated following the pandemic. The spectre of import tariffs on Canadian oil exports in particular, while not currently realized, would significantly diminish Alberta's economic output.
Inflationary pressures
Inflation increases major operating expenses like labour, utilities and materials. Mainstreet works constantly and on multiple fronts to counteract rising expenses. By securing longer-term natural gas contracts, we substantially reduced energy costs across a large portion of Mainstreet buildings. We managed to reduce our insurance costs, a significant
MAINSTREET EQUITY CORP. | 7 |
Mainstreet expense, by more than 20% for fiscal 2025 by obtaining improved premium rates and coverage. Despite our best efforts to control costs where possible, inflationary pressures nonetheless introduce added financial burdens that will, in some cases, be passed onto tenants through soft rent increases over an extended period of time.
Taxes
Carbon taxes, which ultimately raise costs on landlords, increased to $80 per tonne this year, and are scheduled to rise to $95 per tonne in April 2025. Property taxes in Vancouver/Lower Mainland, Calgary, Edmonton, Regina and Saskatoon are all set to rise in coming years in line with municipal spending plans. Lastly, Mainstreet is now liable for corporate taxes for one of the first times in our history due to our sustained growth and solid financial performance in recent years. We view our performance as an unmitigated success, and do not expect corporate taxes to have a material impact on Mainstreet's overall growth and performance going forward.
OUTLOOK
Putting the S in ESG
We believe that the ongoing housing shortage emphasizes Mainstreet's position as an important provider of affordable housing in Canada. Due to our commitment to corporate social responsibility, Mainstreet is proud to offer a crucial service at a time when high costs have priced many middle-class Canadians out of the market.
Strong performance across Western Canada
British Columbia, due to government-imposed rental rate caps in the province, offers an especially large mark-to-market gap in BC, which can drive improvements in NOI (see Runway section below). Nearly half (48%) of our acquisitions last year were in BC, and we will continue to analyze further buying options in order to capitalize on the province's especially low vacancy rates.
Alberta leads the country in terms of population growth, economic output and employment. The province added 204,000 residents between mid-2023 and mid-2024 alone, and ATB Financial forecasts that international net migration into Alberta will reach 46,000 this year and 42,000 the next, well higher than the previous 2013 peak. The country contributed 46% of Canada's new jobs generated in Q4 2024, according
to Statistics Canada, despite accounting for only 12% of the nation's population. The provincial government is forecasting 2.7% GDP growth this year, the highest in the country, underpinned by rising output in Alberta's oil and gas, tourism, and tech sectors.
Saskatchewan's economic growth of 2.3% in 2023, the | |
latest available period, was the second-fastest among | |
provinces, and its net migration has remained solid at | 42% |
around 6,000 newcomers per quarter through 2024. | 32% |
Manitoba's net migration hit 4,500 in Q3 2024, as we | 26% |
expect growing populations and moderate economic | 23% |
growth in both provinces to keep downward pressure on | |
vacancy rates. |
Turning intangibles to tangibles
We expect that the housing crunch will continue driving municipal re-zoning efforts, as evidenced by the City of Calgary's recent proposal to extend building height limits to encourage density. Such moves align with Mainstreet's ongoing plans to leverage our portfolio of more than
NAV based on IFRS
IFRS Value
NOI Contribution % of Unit Count
8 Q1 2025