Calgary-based Mainstreet Equity, which owns and manages rental units across Western Canada, registered in its first quarter one of it best year-over-year financial improvements in the company’s history.
The company reported on Thursday that funds from operations rose by 51 per cent while net operating income was up 27 per cent. Rental revenue also climbed by 21 per cent.
“Our first quarter of 2019 provides a promising window into the success of Mainstreet’s value-add growth strategy, which has continued to create real value for our shareholders,” said Bob Dhillon, founder and chief executive officer of Mainstreet.
“This Q1 provides us substantial momentum to build upon our model of acquiring new assets at low cost, and expanding our portfolio in a non-dilutive manner as we enter a new year.”
Mainstreet attributed the results to a gradually improving economy in its core markets as well as the company’s long-term, “countercyclical” strategy it undertook four years ago as it anticipated an economic downturn.
“This strategy included aggressively acquiring underperforming properties during the period of economic slowdown in some of our core markets; strengthening our internal resources to more rapidly convert residential units; and locking in the majority of our debt at low interest rates, which both reduces interest expenses (Mainstreet’s single-largest expense), and provides sufficient low-cost capital to fund future growth,” it said.
In the quarter, Mainstreet acquired 421 residential units for about $50 million and it improved its occupancy rate to 93.3 per cent, up from the 88.9 per cent one year earlier.
Rental revenues in the first quarter of 2019 increased 21 per cent to $32.6 million, compared with $27.1 million in the same quarter in 2018; this came alongside an eight per cent increase in same-asset rental revenues to $29 million, from $26.7 million in quarter one 2018.
Net operating income increased 27 per cent to $20.8 million, and increased 15 per cent to $18.6 million on a same-asset basis. Funds from operations including one-time item of $292,000 increased 51 per cent to $9.6 million, compared with $6.3 million in quarter one 2018. Funds from operations per basic share also increased 51 per cent to $1.09, compared with $0.72 in 2018.
Mainstreet has just over 12,200 suites in 10 cities.
– Mario Toneguzzi for Calgary’s Business