CALGARY, Dec. 12, 2011 /CNW/ - Mainstreet Equity Corp. ( "Mainstreet" or the "Corporation" ) is pleased to release its year-end results for fiscal year 2011. Management believes it was a strong year for the Corporation. It increased its revenue, NOI, FFO and operating margins by focusing on accelerating its stabilization process and reducing the vacancy rate across its portfolio.
As a result, the total number of stabilized units increased by 19 per cent to 5,700 units from 4,795 units in 2010 whiles the overall average vacancy rate dropped from 14.1 per cent to 11.3 per cent. Subsequent to year end, the overall vacancy rate dropped further to 8.1 per cent as of December 1, 2011. The vacancy rate includes 136 un-rentable units in buildings that are undergoing reconstruction. Excluding those units, its vacancy rate stood at 6.5 per cent as of December 1, 2011.
Funds from operations (FFO) before financing were up 47 per cent from 2010. FFO including financing costs was up 44 per cent from 2010, Most importantly, net operating income (NOI) climbed 23 per cent from 2010 to $41 million, while same asset NOI increased by 11 per cent. NOI margins increased to 64 per cent in 2011 to 63 per cent in 2010.
Mainstreet's portfolio of assets continued to grow in 2011. It added 943 residential apartment units in its core geographic locations and an office building (Calgary head-office) for a total consideration of $81 million. The size of the portfolio increased by 15 per cent to 7,362 units. Subsequent to the year-end date Mainstreet purchased an additional 436 units for $42 million. As of December 8, 2011, Mainstreet's total portfolio included 7,797 residential apartment units and one office building (Calgary Head-office) with a total appraised value of over $950 million. It is very important to note that Mainstreet achieved this growth - over $120 million of acquisition in total - without any equity dilution. Instead, it funded this organic growth through refinancing matured mortgages and financing properties after stabilization.
In fiscal year 2011, Mainstreet refinanced $47.3 million in matured mortgages and financed four newly-stabilized properties for $97.8 million, mostly in long term (10 years) CMHC-insured mortgages at rates as low as 3.4 per cent. As a result, approximately $51 million of additional capital was generated for its growth. Subsequent to year-end, it refinanced further $5.9 million long term CMHC-insured mortgages at an average rate of 2.85 per cent and additional fund of$9.5 million was generated.
Mainstreet continues to be proactive in preparing for the challenges and opportunities that lie ahead. As the western Canadian economy continues to gain strength, the region - and Alberta in particular - may face another labour shortage. As a result, Mainstreet has been very proactive in pursuing initiatives that will provide the Corporation with a steady and secure source of foreign workers. Mainstreet is also wary of the possibility of cost inflation and working on securing a supply pipeline from China that will deliver high-quality materials such as cabinets, flooring and other renovation-related expenditures at a lower cost.
The Corporation is positive about the prospects for 2012, given the ongoing economic strength in its core western Canadian markets and the persistence of favourable macro-economic conditions like generation-low interest rates. Mainstreet has access to over $90 million in liquidity in the form of clear title assets worth approximately $73 million in appraised value as well as cash on hand and a line of credit that can be used to make strategic acquisitions should the opportunity arise. And it will continue to focus on bring down the cycle times of stabilization, improving its vacancy rate, reducing rental concession and continuing a longstanding trend of revenue, FFO, NOI and NOI margin growth.
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. As of September 30, 2011, there were 10,401,281 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.