Economy ‘coming back,’ says Mainstreet CEO
Calgary Mainstreet Equity Corp. registered one of the biggest yearover-year improvements in financial performance in the company’s history during the first quarter of 2019 — a sign the Alberta economy is “coming back,” according to the company’s CEO.
Mainstreet — which owns and manages rental apartment buildings, primarily in Western Canada — saw its rental revenues in the first quarter increased 21 per cent to $32.6 million, compared with $27.1 million in the first quarter of 2018. Funds from operations and net operating income rose 51 per cent and 27 per cent respectively, while overall vacancy rate decreased to 6.7 per cent, down from 11.1 per cent in the first quarter of 2018.
In an interview, CEO Bob Dhillon said the results reflect a gradually improving economy in the company’s core markets, particularly Alberta. Higher levels of in-migration, alongside an uptick in employment figures, have helped return the rental market closer to balance, Dhillon said.
“We are on the front line of the Alberta economy,” Dhillon said. “Our business model is the first indicator of the economy coming back.”
Dhillon said in addition, rising interest rates and the new federal “mortgage stress test” have made it more difficult for prospective buyers to purchase homes, pushing them into the rental market instead. He said Mainstreet’s mid-market rental price point — between $900 and $1,100 per month — tends to be favoured by renters during times of economic uncertainty as they defer major investments like new homes.
Mainstreet — which pursued an aggressive strategy of acquisition, repositioning, and refinancing during the oil price-driven economic downturn — said its latest financial results are proof that strategy is paying off.
“We played offence instead of defence, and that’s the time you can really make some strategic moves to expand your company’s base,” Dhillon said. “It’s all translating to bottom line numbers right now.”