Calgary rental company is betting big on Alberta
Mainstreet Equity believes year ahead will provide opportunity for growth
Calgary-based Mainstreet Equity has shrugged off the unprecedented challenges caused by the pandemic to post double-digit third-quarter growth.
The company, which was built from the ground up by CEO Bob Dhillon, saw a year-over-year increase of 17 per cent in funds from operations, a 10 per cent jump in operating income and an eight per cent hike in total revenue.
Dhillon said the results show the mid-market, multi-family apartment rental business remains one of the most resilient asset classes in the country, despite the challenges of COVID-19.
Mainstreet, which operates more than 13,500 rental properties mainly in Western Canada, is looking to further expand and believes the year ahead will provide an excellent opportunity for growth.
Dhillon said the ability to borrow capital at rates that have never been so low — Mainstreet is locking in 10-year funding at a mere 1.65 per cent — along with a softness in the price of potential rental acquisitions bodes well for the future.
He added the company is also confident of a rebound in the Alberta market where half of its rental units are located.
“I realize everyone is dismissing Alberta these days, but we intend to double-down on this province,” he said.
Mainstreet is targeting the millennials age group, by purchasing run-down rental units in areas close to inner-city entertainment areas, transit stops, bike paths and universities, and then refurbishing them before returning the properties onto the market. Such organic growth has been the Mainstreet strategy since Dhillon started the company on his own in 1997.
“Young people are not leaving Alberta,” he added. “They are saying Alberta is home and we are going to make it work.
“We still have the youngest educated population and the highest per capita GDP in Canada. Those are two of the greatest ingredients needed to make a comeback.”
Mainstreet did not see any drop in rent collections during the quarter despite the overall disruption the pandemic brought to the Canadian economy. Collections in June and July were at 98 and 97 per cent, respectively — almost identical to those in the previous year.
So far this year, the company has spent almost $90 million on adding properties to its rental pool and expects to have a further $240 million available for future acquisitions.
“We now see unparalleled opportunities for organic growth in the year ahead,” said Dhillon.