CALGARY, Feb. 12 /CNW/ - In the first quarter of 2009(1) Mainstreet Equity Corp. worked to position itself for the next market cycle. The company focused on two things. First, it raised approximately $48 million by refinancing $25 million of short-term and matured debt. Second, through a substantial issuer bid, it acquired approximately 3.3 million Mainstreet common shares at $6.25 per common share - well below what management believes is the net asset value. This common share buy-back reduced the number of issued and outstanding common shares of the Corporation by approximately 24% to 10.6 million common shares. In addition to these activities, management is pleased to report overall positive results in Q1.FIRST QUARTER HIGHLIGHTS 1. Portfolio grew by 84 units to a total of 5,646 units - With a strategy of slower, disciplined growth in 2009, Mainstreet acquired 84 units in Q1. This includes 60 units in Abbotsford and 24 units in Saskatoon. 2009 focus on stabilization and increased cash flow as newly renovated rental units are reintroduced to the market at higher rental rates.... 2. Stabilization progressing At the end of Q1 2009, 8 properties (3,984 units) out of 120 properties (5,646 units) were stabilized. Almost all of the remaining properties in Edmonton and Saskatoon have completed renovations and are ready to lease in the spring/summer peak rental season. When this happens, management expects cash flow will increase substantially. 3. Rental revenues up 17% Mainstreet's rental revenues rose to $13.1 million from $11.1 million in Q1 of 2008. 4. Same assets rental revenue rose by 12% This increased to $12.4 million from $11.1 million in Q1 of 2008. 5. Net operating income up by 18% NOI from continuing operations increased to $7.6 million in Q1 2009 compared to $6.5 million for the same period in 2008. 6. Same assets NOI increased by 11% This rose to $7.3 million from $6.6 million in Q1 2008. 7. Funds from operations rose by 33% Not including financing costs, FFO from continuing operations increased to $2.4 million ($0.17 per basic share) in Q1 2009 compared to $1.8 million ($0.13 per basic share) for the same period in 2008.CHALLENGES Edmonton leasing. Mainstreet's key challenge is leasing the newly renovated suites in Edmonton. Currently the company has a large supply of 482 suites on, or entering, the market and is now experiencing the slow rental season. Rental activity is expected to pick up during the peak period in the spring and summer. Conventional financing. Non-CMHC, conventional financing will be more difficult to obtain while the current credit challenges continue.OUTLOOK Management's focus in 2009 includes: - increasing cash flow as renovations in Edmonton and Saskatoon are completed. The expectation is that these suites will be leased in the high rental season. - streamlining costs in all areas of our business. Management is working aggressively to reduce renovation costs, and renegotiate arrangements with all suppliers. - mitigating risk by refinancing the company's remaining floating debt. As of December 31, 2008, through refinancing, Mainstreet has reduced the balance of its floating debt to about $40 million or 11% of the total mortgage loans. - disciplined growth at the right time for the right opportunities. Management will be monitoring market conditions closely and looking for good buys that fit with the company's Value Chain business model. - expanding the management team in this stronger recruiting market to support the larger company and growth plans for the future.Management is concerned about the economic recession and the uncertainty of how long it will last, but the company has the advantage of strong fundamentals. Mainstreet is in a positive cash position with approximately $25 million of cash on hand (after the share buy-back) and a debt to market value ratio of 56%. As well, management believes that multi-family rental housing is one of the safest investments in recessionary times. CMHC is forecasting immigration to Canada in 2009 will remain steady following the historical high levels in 2008. This is positive for Mainstreet because immigrants tend to rent multi-family homes rather than buy. Management believes Mainstreet is in the right business at the right time and the right market cycle, with cash to grow. And the majority of the company's assets are in Western Canada, which is expected to weather the recession better than the rest of the country. Because of these advantages, the company remains optimistic about its ability to continue adding value. (1) This first quarter report is for the three-month period ended December 31, 2008. Mainstreet's current fiscal year ends September 30, 2009. About Mainstreet Mainstreet is a Calgary-based, growth-oriented real estate corporation focused on the acquisition, redevelopment, repositioning, and 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, Calgary, Edmonton, Saskatoon and Greater Toronto Area. Mainstreet's common shares are listed on the Toronto Stock Exchange under the symbol MEQ. There are currently 10,569,279 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.