One of Canada’s largest residential landlords is on an acquisition binge and its counterintuitive call on the Alberta economy is paying dividends.
As others ran for cover, Mainstreet Equity Corp. continued to buy apartment buildings through 2018 and the decision paid off.
“Mainstreet managed to not only survive but thrive in 2018, producing our best annual results since the recession began in 2014. This included a return to double-digit growth across all of our key real estate metrics. NOI [net operating income] grew 12 per cent compared with 2017 while FFO [funds from operation] per share grew 18 per cent and rental revenues increased 11 per cent,” the company reported.
Mainstreet’s same-asset vacancy rate dropped to 6.3 per cent in Q4 2018 compared with 9.6 per cent in Q4 2017, while same-asset revenues increased 5.2 per cent to $27 million, up from $25.7 million in Q4 2017.
And this was accomplished despite rising interest rates – the company’s biggest operating expense – and the introduction of Alberta’s carbon tax and higher property taxes.
The buying spree has been impressive. In the fourth quarter of 2018 alone, Mainstreet spent $35.7 million buying seven apartment buildings, including five in Calgary. The per-door cost of Calgary apartment blocks, all low-level, mid-market properties, ranged from $126,700 to $162,500, the company reports.
Mainstreet owns or manages more than 12,000 rental apartments, 55 per cent of them in Alberta, including 2,182 units in Calgary and 4,284 units in Edmonton
