CALGARY, May 12 /CNW/ - In the second quarter of 2008(1), Mainstreet
Equity Corp. ("Mainstreet or "the Corporation") focused on setting the stage
for the next level of growth. The Corporation achieved this by increasing its
cash position in two ways. First, it secured a new acquisition line of credit
and is in the process of raising capital by refinancing its stabilized
properties. Second, Mainstreet was successful in substantially completing its
Edmonton renovations as planned, which is expected to translate into a
substantial increase in occupancy rates and, in turn, higher anticipated
rental revenues and cash flow in the future.
    In Q1 and Q2, the Corporation slowed the pace of acquisitions due to the
U.S. led real estate recession and credit crunch. Going forward, management
will monitor market conditions and take opportunistic, but cautious, steps
toward the next round of acquisitions.
    Bob Dhillon, President and CEO of Mainstreet, said, "We accomplished
these objectives under challenging market conditions and with 37% of our
portfolio undergoing stabilization. Even with these significant challenges, we
were able to deliver some positive financial results and the stage is now set
for future growth."(1) This second quarter report is for the three-month period ended
        March 31, 2008. Mainstreet's current fiscal year ends
        September 30, 2008.


    1.  Mainstreet secures $55 million credit facility
        -  During the quarter, Mainstreet entered into an agreement to obtain
           a $55 million syndicated, secured, acquisition line of credit,
           which is expected to take effect in May 2008. It is anticipated
           that this line of credit will be used to finance future growth.

    2.  Edmonton renovations substantially completed on schedule
        -  Mainstreet met its Q2 target of substantially completing
           renovations of Edmonton properties that were acquired in the past
           9-24 months, and the marketing process to lease up these buildings
           has begun.

    3.  Rental revenues up 10% in Q2, despite high vacancy
        -  Even with 37% of Mainstreet's properties vacant while undergoing
           renovations, total rental revenues from continuing operations were
           $11.0 million in Q2 2008 compared to $10.0 million in Q2 2007.
        -  This increase is due mainly to a moderate increase in the
           Corporation's portfolio and in rental rates, particularly in
           Alberta, and was offset by the increase in vacancy rates in
           Alberta and Saskatoon.
        -  After the stabilized Edmonton properties are marketed and leased,
           rental revenues are expected to increase significantly by the
           Corporation's fiscal year-end.
        -  Same assets rental revenues were virtually unchanged from Q2 2007,
           also due to the increase in vacancy rates in Alberta and

    4.  Net operating income 2% gain
        -  Net operating income ("NOI") in Q2 2008 reached $5.9 million,
           compared to $5.8 million in Q2 2007 - a 2% increase.
        -  Same assets NOI also remained virtually unchanged compared to
           Q2 2007.
        -  This was the expected result of high vacancy rates and operating
           costs due mainly to stabilization activities in Edmonton.

    5.  Portfolio grew by 12%
        -  As of March 31, 2008, Mainstreet's portfolio of properties had
           grown to 5,367 rental units  compared to 4,801 units at the end of
           Q2 2007.

        Saskatchewan acquisition
        -  Mainstreet acquired an additional 17 units in Saskatoon for an
           average cost per door of $31,000 - well below estimated market
           value and replacement cost.
        -  This new property is clustered with existing Mainstreet
           properties, so it provides operational efficiencies.
        -  This acquisition brings the Saskatchewan portfolio to a total of
           423 rental units at the end of Q2 2008, a 171% increase since the
           end of Q2 2007.

        B.C. acquisition
        -  Mainstreet acquired an additional 89 units in Abbotsford,
           clustered next door with a property the Corporation already owns,
           for an average cost per door of $106,000, which is well below
           estimated market value and replacement cost.
        -  The Abbotsford property has separate utilities (heat and hydro),
           which are paid by tenants, reducing price risk for Mainstreet, and
           also has condominium title, which indicates the relative high
           value of the property.

    6.  Low vacancy rates maintained in Alberta
        -  Subsequent to Q2 the Corporation has achieved a 6% net gain on
           Edmonton vacancy bringing its vacancy down to 31%. As well, the
           Corporation has brought Calgary's vacancy close to 5%, even after
           implementing aggressive rent increases.CHALLENGES

    Having a substantial number of properties undergoing renovations
simultaneously poses a number of significant, but expected, challenges for
Mainstreet. The Edmonton stabilization process had a downward effect on funds
from operations ("FFO"), and an upward effect on vacancy, capital costs, and
general and administrative costs ("G&A"). Despite these challenges and the
current flat market conditions in North America's real estate industry,
management is pleased that Mainstreet was able to deliver modest growth and
maintain or improve its financial performance in many areas.


    Management is happy with the current position of the Corporation. The
most significant challenges related to renovation of the Edmonton properties
are almost behind Mainstreet, and the Corporation believes that it is well
positioned as it heads into the high rental activity season. This timing will
be an advantage in marketing and leasing the newly stabilized suites.
Mainstreet has already begun this process, with a goal of achieving 95%
occupancy on these properties by the end of December 2008, which will
substantially lower the Corporation's vacancy rate and increase revenues.
Completing this phase of stabilization will be the key focus for the balance
of the fiscal year.
    In this flat real estate market, and with the influence of the U.S. led
real estate recession and credit crunch, management will continue to watch the
markets carefully and endeavour to make the right acquisition decisions at the
right times. Management feels this is a favorable time to seize acquisition
opportunities, and will continue to focus on growing the portfolio in Western
Canada, where 90% of Mainstreet's current assets are based. Management is
pleased with its decision to establish and grow an asset base in Saskatoon,
and the Corporation is now experiencing the rewards of that decision.
    With its increased capital strength, Mainstreet is in an excellent cash
position to support continued growth. As well, the Corporation has
$50.7 million of short-term financing on non-stabilized assets, which it will
have an opportunity to convert to long-term, CMHC-insured financing by the end
of the fiscal year at lower interest rates. This will allow the Corporation to
extract more capital to support growth activities.
    Because management believes that the trading value of the common shares
of Mainstreet are highly undervalued, it will continue with the normal course
issuer bid, which began July 3, 2007 and will end July 2, 2008.
    Having set the stage for future strong growth, management is optimistic
about the continued success of Mainstreet. The Corporation believes it is in
the right markets, has the cash to support continued growth, and is on the
verge of increasing cash flow as a high proportion of its renovated properties
are leased.

    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, 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 14,702,073 common shares

    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.