Mainstreet Terms & Definitions
To help you understand how Mainstreet operates, we have defined some of language we use to describe our strategies:
Clustering
One of Mainstreet’s strategies to mitigate costs is to acquire buildings generally within a five-block radius of buildings we already own. This clustering technique allows us to achieve economies of scale and efficiencies that many of our mid-market competitors cannot, including lower superintendent and maintenance costs, reduced advertising expenses, efficient technology-based head office administration, and efficient marketing and rental processes.
Core Markets
Mainstreet concentrates its business in the Vancouver/Lower Mainland, Calgary, Edmonton, Saskatoon and Greater Toronto Area where we have identified growth potential.
Mainstreet Brand
Our brand symbolizes an unusually high standard in the mid-market rental apartment sector – attractive, quality interior finishings, improved and well-maintained exteriors and common areas, security systems, energy efficient technology and competent management. The higher standard created by Mainstreet tends to attract better quality tenants with stronger credit.
Mid-market
Mainstreet’s goal is to be the leading mid-market consolidator. We define a “mid-market” multi-family property according to size, location, condition and state of management. Typically, mid-market properties have less than 100 units, making them less attractive to institutional investors. These buildings are often owned by “moms and pops” who may not have the time, resources or expertise to manage the properties effectively. As a result, these properties fall into a state of disrepair and become attractive candidates for Mainstreet’s value creation process.
Operational Efficiencies
Operational upgrades implemented during renovations, and designed to lower Mainstreet’s costs, include: energy efficient appliances, ultra-low flush toilets, taps and shower heads that reduce water consumption, high-efficiency lighting, heat conserving windows, automatic rent withdrawal system, information management systems, and one property manager, leasing manager, groundskeeper, maintenance person and marketing manager assigned to a cluster of buildings.
Refinancing Strategy
Mainstreet frequently refinances properties prior to mortgage maturity and following stabilization in order to take advantage of lower interest rates. Mortgages are refinanced under Canada Mortgage and Housing Corporation (CMHC) insured, long-term loans. This process also allows Mainstreet to extract capital to internally fund our continued growth.
Repositioning
This term is used to describe the final stage of our stabilization process, in which a distressed property that has been renovated and upgraded operationally is reintroduced to the market and at higher rental rates.
Stabilization
The stabilization process typically is completed within 12-18 months of acquiring an under-performing property. At the time of acquisition, the property is referred to as “non-stabilized”. The stabilization process involved renovating the property to meet the Mainstreet specifications, which include upgrades such as hardwood laminate flooring, ceramic tile, new bathroom fixtures, electrical upgrades, fresh paint, new countertops, energy efficient appliances and often the exterior and common areas of a building. During the stabilization process, vacancy is necessarily higher and cash flow is temporarily reduced. Once 90% of the units in a property have been renovated, the property is considered to be stabilized, Mainstreet signage is installed on the outside of the building, and the renovated units are rented.
Value Chain
Our business model, and the driver of our success, is our proven business model. It’s called the Mainstreet Value Chain.
