Powerhouse Calgary landlord awes analysts and gears for aggressive push into B.C. and the U.S.A.

BY FRANK O'BRIEN

Top Toronto stock analysts are discovering what western Canadian rental tenants and investors have known for years: street-wise Mainstreet Equity Corp. is a dominant player in Canada's rental apartment market. Recently, the Calgary-based landlord has grabbed one-third of the apartment market in Surrey and is mounting a U.S. invasion. Mainstreet went public (MEQ/TSX) in 1998 with 200 apartment units. It now has more than 7,000 apartments and it is the fourth-best-performing real estate company in Canada, only lagging InterRent REIT, Canmarc REIT and Morguard Corp., according to analysts from Canaccord Genuity, Dundee Capital Markets, TD Newcrest and GMP Securities.

Mainstreet has a simple formula: it buys older apartment buildings, mostly walk-ups, at below replacement value, fixes up the property, raises the rent and adds long-term value to the building. Mainstreet just does it on a bigger and smarter scale than most anyone else. It is credited with turning whole neighbourhoods around, such as in Edmonton's northern downtown where it upgraded some 70 old rental buildings.

Recent appraisals show Mainstreet's portfolio is valued at $911 million, with a 5.6 per cent capitalization rate.

Trading at press time around $22 per share, (it was at $14.75 at the end of 2010) projections are that Mainstreet shares will top $26 shortly as it pursues an aggressive acquisition and value-added strategy.

When it released results for 2011, Mainstreet confirmed it had bought $120 million of rental apartments over the past 18 months in Ontario, Alberta, Saskatchewan and B.C.