CALGARY, May 10 /CNW/ - Mainstreet Equity Corp. ("Mainstreet" or "the
Corporation") delivered consistent strong performance again in Q2 2007(1),
despite increased costs, higher vacancy rates and other challenges associated
with aggressive growth. The quarter marked progress in the stabilization
process, increased rental revenues and funds from operations, reduced mortgage
costs, and additional funds for new investment. Mainstreet's common share
price increased by 28% from $14.48 per share at the beginning of Q2 to $18.48
at the end of the quarter.
    "We're excited to have achieved a total portfolio size of over 5,000
units, including acquisitions subsequent to the second quarter of 2007," says
Bob Dhillon, president and CEO. "This strong growth is the result of
Mainstreet's ability to be in the right market at the right time, and buy at
the right price."Second Quarter Highlights

    1.  Total revenues up 35% in Q2

        -  Total revenues from continuing operations were $10.1 million in Q2
           2007 compared to $7.5 million in Q2 2006.
        -  "Same assets" rental revenues increased by 21% to $8.4 million in
           Q2 2007 from $6.9 million in Q2 2006.

    2.  Funds from operations

        -  FFO from continued operations in Q2 2007 reached $1.3 million
           ($0.13 per share), an increase of 2,658% compared to ($50,000)
           ($0.01 per share) in Q2 of 2006.
        -  FFO for stabilized properties in Q2 2007 was $2.1 million
           ($0.21 per share).
        -  This improvement is due mainly to added value achieved through
           Mainstreet's stabilization efforts, which increased rental rates
           for renovated units, and to an overall increase in rental rates,
           especially in Alberta.

    3.  Acquired 286 units in Q2 2007

        -  Mainstreet continued to grow its Saskatchewan portfolio with the
           addition of 54 units in the prime east end location of Saskatoon
           at an average price of $53,000 per unit. Saskatoon represents the
           Corporation's fifth, and newest, core market area, chosen because
           of its lower rental rates and ample opportunities to acquire
           undervalued, mid-market properties with high potential to add
           value through Mainstreet's Value Chain model.
        -  The Corporation also closed on 232 units in Abbotsford, B.C.,
           including 163 residential apartment units at a cost of $70,000 per
           unit, and 69 condominium units at a cost of $103,000 per unit.
        -  Subsequent to Q2 2007, Mainstreet has committed to acquire a
           further 235 units, including:
           -  131 units in Saskatoon at an average price of $35,000 per unit,
              which will increase the total units owned to 350 units creating
              a strong base in the Saskatoon rental market;
           -  22 units in Calgary at $89,000 per unit, which is well below
              the current market value in what the management considers to be
              the hottest real estate market in Canada; and
           -  82 units in Mississauga at $71,000 per unit, which will
              increase Mainstreet's Ontario portfolio by 14%.

    4.  Lowered costs through refinancing

        -  In Q2 2007, Mainstreet obtained approval from Canada Mortgage and
           Housing Corporation (CMHC) to refinance about $15 million of
           short-term debt and matured mortgages with an average interest
           rate of 7.04% under 10-year, long-term debt with an expected
           average interest rate of 4.6%.
        -  This is expected to reduce the Corporation's cost of these
           mortgages by 2.44% and produce annual savings of $365,000 over the
           next 10 years.
        -  In addition, Mainstreet was able to extract $13 million of
           additional capital from refinancing stabilized properties to help
           grow its portfolio.To help manage cost-effectiveness, flexibility of capital and interest
risk exposure, Mainstreet will continually monitor short-term and long-term
interest rates. Where appropriate, the Corporation looks for opportunities to
convert short-term floating rate debt to long-term, CMHC-insured fixed debt.

    Key challenges

    The third and fourth quarters of 2007 will be particularly challenging
for Mainstreet, because of:1. higher cost of renovations due to the rising cost of materials and
           workers;
        2. severe shortage of labour, especially in Alberta; and
        3. resultant longer cycle time for renovationsOutlook

    Recently, the Alberta government announced changes in tenancy legislation
which include limiting rental increases to once a year instead of every six
months. While details of the new legislation need to be clarified, management
believes that these changes will not have a material impact on Mainstreet's
operations, but the changes may delay the stabilization process for future
acquisitions in Alberta.
    In the remaining of the fiscal year 2007, Mainstreet will focus on
accelerating the stabilization process, and plans to complete the
stabilization process in Edmonton in the next six to nine months.
    Saskatoon will continue to play an increasingly larger role in the
Corporation's acquisition program. Mainstreet sees tremendous opportunity for
growth in Saskatoon. Vacancy rates in the city are expected to decline
somewhat in 2007 compared to 2006, while year-over-year rental rates are
expected to increase.(2) At the same time, Mainstreet will continue to look
for opportunities to expand its portfolio in existing markets in British
Columbia, Alberta and Toronto.

    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, Saskatoon and Greater
Toronto Area. Mainstreet's common shares are listed on the Toronto Stock
Exchange under the symbol MEQ. There are currently 10,721,853 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.(1) This second quarter report is for the three AND SIX months ending
        March 2007. Mainstreet's current fiscal year ends September 30, 2007.
    (2) Canada Mortgage and Housing Corporation (CMHC) Housing Market
        Outlook.