Mainstreet Equity Posts Double-Digit Year-Over-Year Growth in FY2025

CALGARY, Alberta--(BUSINESS WIRE)--Mainstreet Equity Corp. (TSX:MEQ) announced its double-digit year-over-year growth across main key operating metrics in FY 2025. Even in a year of economic, political and policy uncertainty and a temporary strategic pause in acquisitions during the year, funds from operations (FFO) increased 13%, net operating income (NOI) from operations rose 14%, same asset NOI increased by 10% and rental revenue from operations was up 11%. The FY overall operating margin from operations sits at 66%, up from 64% in FY 2024, or 200 bps. We also achieved our 16th consecutive quarter of double-digit year-over-year growth with FFO up 10% and NOI from same assets properties up 8%. Of particular note is our posted operating margins rose to 71% for Q4.

“The broader environment remains unpredictable in Canada, whether due to disruptions in global trade or ongoing policy shifts, but Mainstreet has continued to perform well and grow over the past year. Our disciplined focus on identifying and upgrading mid-market rental properties that are overlooked or underutilized has consistently enabled us to grow without dilution,” says Bob Dhillon, Founder and CEO of Mainstreet Equities Corp. "After taking a measured approach in 2025, MEQ is now prepared to put more than $900 million in available liquidity to work, setting the stage for a new cycle of countercyclical expansion in 2026, and beyond.”

The Mainstreet Mission remains clear: We are passionately committed to our role as a crucial provider of quality, affordable homes for Canadians, offering renovated apartments and customer services at a mid-market rental rate averaging $1,250.

Key metrics | FY 2025 Performance Highlights

Rental Revenue
From Operations	Up 11% to $276.3M (vs. $249.8M in FY 2024)
From same asset properties	Up 6% to $255.2M (vs. $240.0M in FY 2024)
Net Operating Income (NOI)
From Operations	Up 14% to $183.4M (vs. $160.4M in FY 2024)
From same Asset Properties	Up 10% to $169.9M (vs. $154.7M in FY 2024)
Funds from Operations (FFO)^1
FFO-before current income tax	Up 16% to $106.6M (vs. $91.6M in FY 2024)
FFO-per basic share-before current income tax	Up 16% to $11.43 (vs. $9.83 in FY 2024)
FFO-after current income tax	Up 13% to $96.1M (vs. $84.7M in FY 2024)
FFO-per basic share-after current income tax	Up 13% to $10.31 (vs. $9.09 in FY 2024)
Operating Margin
From Operations	66% (vs. 64% in FY 2024)
From same asset properties	67% (vs. 64% in FY 2024)
Net Profit
Net Profit Per Basic Income	Net profit of $287.0M (vs. profit of $199.9M in FY2024) including changes in fair value of $234.4M in FY 2025 vs $144.9M in FY 2024 and future income tax expense of $43.6M in FY 2025 vs $31.0M in FY 2024
Total Capital Expenditure	$36.2M (vs. $31.1M in FY 2024)
Total Capital Expenditure (unstablized assets)	$4.2M (vs. $3.7M in FY 2024)
Total Capital Expenditure (stablized assets)	$32.0M (vs. $27.4M in FY 2024)
Stablized units	441 Properties (16,496 units) out of 487 properties (18,749 units)
Vacancy rate
From operations	4.7% (vs. 3.2% in FY 2024)
From same asset properties	4.7% (vs. 3.2% in FY 2024)
Vacancy rate as of December 15^th, 2025	5.1% excluding unrentable units
Total Acquisition
During FY 2025	$53M 415 units (vs. $178M 1,296 units in FY 2024)
Subsequent to FY 2025	348 units ($68M) in Calgary, Edmonton, and Surrey
Total YTD Acquisition	763 units ($121M)
Total Units
As of September 30, 2025,	18,799 units^2
As of December 15^th, 2025,	19,147 units
Fair Market Value	Up 9.5% to $3.73B (vs. $3.41B in 2024)
Liquidity Position	$ 900M^3
Key metrics | Q4 2025 Performance Highlights
Rental Revenue
From Operations	Up 5% to $70.5M (vs. $66.9M in Q4 2024)
From same asset properties	Up 3% to $64.6M (vs. $62.5M in Q4 2024)
Net Operating Income (NOI)
From Operations	Up 9% to $49.9M (vs. $45.7M in Q4 2024)
From same Asset Properties	Up 8% to $46.0M (vs. $42.7M in Q4 2024)
Funds from Operations (FFO)1
FFO - before current income tax	Up 12% to $30.0M (vs. $26.8M in Q4 2024)
FFO - per basic share-before current income tax	Up 12% to $3.22 (vs. $2.88 in Q4 2024)
FFO - after current income tax	Up 10% to $26.7M (vs. $24.2M in Q4 2024)
FFO - per basic share-after current income tax	Up 10% to $2.87 (vs. $2.60 in Q4 2024)
Operating Margin
From Operations	71% (vs. 68% in Q4 2024)
From same asset properties	71% (vs. 68% in Q4 2024)
Vacancy rate
From operations	5.0% (vs. 3.4% in Q4 2024)
From same asset properties	4.9% (vs. 3.4% in Q4 2024)

Looking forward to FY 2026, Mainstreet’s capital structure and strong liquidity position of approximately $900 million allows us to be flexible, nimble and more opportunistic with countercyclical acquisitions. As a corporation, we are positioned to be opportunistic despite uncertain economic factors. At the beginning of the FY 2025, we strategically held off significant acquisitions to assess the changing market, however, we believe that we are now ready to resume our opportunistic growth in 2026. Subsequent to year-end, we have already acquired 348 units for $68 million as compared to the total acquisition of 415 units for $53 million for the whole FY 2025, bringing the total number of units to 19,147 across Western Canada.

The Mainstreet Advantage

Mainstreet’s mid-market add-value model has proven itself across Western Canada for the last 26 years, creating significant returns to the shareholders. Along with nondilutive growth, our model has created liquidity to take the company to the next phase. Key strengths of our platform include:

• Affordable rents: With an average monthly rent of around $1,250, Mainstreet offers quality rental options that support affordability for middle-class Canadians.
• Diverse portfolio: With more than 19,100 units clustered across major inner city urban centres in Western Canada, our geographic diversification helps mitigate exposure to volatility in any single market. While the headquarters is in Alberta, 44% of our net asset value based on IFRS value is in British Columbia.

Positive Market Fundamentals

In addition to Mainstreet’s business performance, our team expects to continue benefitting from external tailwinds as we enter the new fiscal year. Despite periods of economic and policy uncertainty over the past year, underlying favourable macroeconomic trends are expected to contribute to Mainstreet’s continued growth. These trends include:

Population growth: According to Statistics Canada, the national population grew by 389,324 between July 2024 and June 2025 of which 355,095 was international migration from permanent residents, international students and temporary foreign workers. While the population growth is lower than the previous two years of 1,098,956 and 1,213,241 respectively, we do not expect this to have any significant impact on the demand for affordable housing in our market; the total population growth is still significantly higher than the total rental apartment supply growth. There remains a significant supply/demand imbalance and continued demand for affordable rental housing.

• Canada has approximately 2.4 million purpose-built rental units according to CMHC data
• From July 2022 to June 2025, Canada’s population grew by 2,701,521
• From July 2022 to June 2025, purpose-built rental supply grew by 188,472

Supply vs Demand: Canada’s long-standing housing shortage continues to support strong rental fundamentals despite the increase in purpose-built rental starts. This uptick in new supply predominantly focuses on premium, higher-end products, that necessitate elevated rental rates to offset higher construction and land costs. This focus leaves a gap in the mid-market rental space that offers affordable yet quality options. This imbalance is critical, as approximately 60% of all Canadians earn less than $50,000 a year, so this new high-priced supply is out of their reach; new supply entering the market generally commands rents well above our average thus insulating our segment.

• Falling interest rates: As mortgage interest is our largest expense line, lower borrowing costs improve cash flow plus FFO and increase our capacity to pursue acquisition opportunities.
  • Bank of Canada interest rates started the year at 3.25%
  • Rates dropped four times throughout the year bringing it to 2.25% in November 2025
  • Five-year CMHC-insured mortgage rates dropped from a peak of 4.57% at the beginning of FY2024 to 3.42% at the end of FY2025

CHALLENGES

Economic Challenges

The Bank of Canada’s business outlook survey indicates speculation that Canada’s sluggish economy may develop into a recession in 2026. After hovering below 2% for several months, CPI inflation rose to 2.4% and inflation excluding taxes rose to 2.9% in September 2025, despite a temporary drop after removing the carbon tax. In contrast, GDP growth averaged about 0.75% over the last two quarters of 2025.

Inflation increases material, labour/wages, utility, supply chain and renovation/repair costs, which can compress margins or necessitate rental rate adjustments. However, in slower economic environments, more households delay homeownership in favour of affordable rental options, reinforcing demand for Mainstreet’s properties.

Taxes and Tariffs

The economy is still adjusting to steep US tariffs on a number of industries leading to ongoing economic uncertainty and a drop in demand for Canadian goods. Volatile trade relationships in North America have contributed to supply chain challenges and elevated construction costs. Mainstreet mitigates this exposure through a diversified sourcing platform in Asia, enabling efficient procurement of standardized materials for renovations. Rising tariff-related costs may further constrain new rental supply, intensifying the existing supply-demand imbalance and supporting continued growth in our core markets.

The elimination of the federal consumer carbon tax provided some cost relief, but anticipated hikes in property taxes in Mainstreet markets like Vancouver/Lower Mainland, Calgary, Edmonton, Regina and Saskatoon will exert additional pressure on operating margins.

Contracted Immigration

The federal government announced immigration measures aimed at returning to sustainable levels in Canada. The new policy restricts international students, temporary foreign workers and temporary resident immigration to less than 5% of the total population by the end of 2027. Planned annual limits suggest a reduction of approximately 43% in these categories by 2028 (the 2026 target for temporary workers and international students is 385,000).

Newcomers and non-permanent residents historically represent a large portion of long-term renters, so lower immigration levels softens rental demand. TD Economics estimates that rental growth could be about 2% lower than under prior immigration trends. Despite the reduction, new immigration numbers continue to be significant, and we expect any related vacancy impact on Mainstreet to be marginal. We expect demand for affordable mid-market rental apartments to remain strong.

Increased supply: Developers have accelerated purpose-built rental starts, with CMHC-backed construction financing programs jumping from 5%, or roughly 315 units, in 2017 to around 88%, or approximately 107,360 units, in 2024. This contributed to modest upward pressure on rental rates across the industry, and modestly affected our growth rate in revenue, FFO and NOI for 2025. We expect this to be a short-term effect and will not affect the strong market fundamentals of the inherent supply/demand imbalance across the country.

While vacancy rates have edged upward with the introduction of new supply coupled with moderating population growth, conditions remain tight. Mainstreet’s portfolio continues to perform well, with Q4 operational vacancy at 5.0% and 4.7% on a same-asset basis despite around 12% of Mainstreet’s being unstabilized. We expect that demand for Mainstreet’s attainable mid-market units to remain stable even as overall supply increases.

OUTLOOK

Putting the S in ESG

Canada’s ongoing housing shortage underscores the importance of affordable rental options. Mainstreet remains committed to delivering quality, attainable housing to middle-income Canadians, supporting social well-being while offering affordable rental alternative as homeownership becomes increasingly out of reach for many people.

Strength Across the West

Mainstreet’s diverse portfolio continues to deliver strong performance across all markets. We expanded our regional footprint in FY 2025, adding 436 units in assets across Western Canada. Nearly one third of our acquisitions were in British Columbia, an area that accounts for 44% of our estimated net asset value based on IFRS value and remains a key contributor to future NOI growth. Vacancy rates in the province remain among the lowest in the country, creating meaningful mark-to-market opportunity.

In 2024, Alberta's population grew by approximately 168,221 people. Continuing into in the first half of 2025, Alberta remains the leading destination for interprovincial migrants, recording a net gain of 12,800 residents. This trend reflects an estimated annual growth rate of 2.5%, according to the Government of Alberta. Although slower than in 2024, Alberta continues to see the strongest population inflows in Canada supported by favourable affordability and employment opportunities. Alberta also gained 18,896 people from other countries in the first half of 2025, which contributed to the provincial population reaching 5 million people. British Columbia, Saskatchewan and Manitoba experienced small net outflow to other provinces through the first two quarters of 2025. Overall, Western Canada remains an attractive destination for Canadians and newcomers, with affordability, employment opportunities and quality of life driving sustained population growth.

Energy Corridor

Canada’s natural resource sector is poised for expansion, supported by positive federal policy signals toward major energy infrastructure, especially across British Columbia; the government announced the first phase of nation-building mega projects including an MOU for a new bitumen pipeline from Alberta to the BC coast, LNG projects, a new nuclear project and copper, zinc and gold mining investments. Growth in the energy corridor will drive job creation, population inflows and economic activity across Western Canada, directly benefiting demand for rental housing. With a well-established presence across 23 urban platforms in the region, Mainstreet is strategically positioned to capture this growth.

Countercyclical Opportunity

Where other companies see economic contraction and pull back on investment, we see vast growth opportunity for Mainstreet. Mainstreet has a history of pursuing a countercyclical, value-add growth strategy that involves investing in response to opportunistic sell-offs. Economic uncertainty and easing interest rates create favourable conditions to acquire and renovate assets at compelling values while securing lower-cost financing. Mid-market rental housing remains stable through cycles, and as a corporation (not a REIT), Mainstreet maintains liquidity and flexibility to capitalize on these acquisition opportunities.

Nominal Dividends⁴

With strong free cash flow, beginning in 2024, Mainstreet introduced a nominal dividend to broaden our shareholder base, enhance trading liquidity and support market capitalization while preserving capital for future non-dilutive growth. Dividends were set at $0.11 per share annually and after a positive response from shareholders, we raised the dividend in 2025 by 45% to $0.16 per share annually. This program will continue into 2026, with a targeted dividend growth of 100%, or $0.32 per share starting Q1 2026, underscoring our commitment to delivering shareholder value while maintaining financial flexibility to support strategic organic expansion and non-dilutive growth of our asset base.

RUNWAY ON EXISTING PORTFOLIO/NON-DILUTIVE GROWTH

1. Expanding our portfolio: With approximately $900 million in liquidity, Mainstreet has significant capacity to acquire underperforming assets at attractive valuations without equity dilution, thus supporting long-term asset growth.
2. Closing the NOI gap: About 12% of our assets are in active repositioning at any time. Once stabilized, these units are expected to generate approximately $43 million in incremental annualized NOI, representing substantial embedded value and demonstrating the earnings potential within the existing portfolio.
3. Rezoning for Growth: Ongoing housing shortages are driving municipalities to support rezoning for density increases. We plan to hire a full-time internal land planner to advance rezoning and land-optimization initiatives including subdividing underutilized lands, converting unused space into rental suites and pursuing density relaxations. These initiatives position the portfolio for long-term value creation with minimal incremental cost.
4. Buying Back Shares: Demonstrating confidence in our long-term fundamentals, in Q4 2025, Mainstreet repurchased 9,100 shares under its normal course issuer bid program. Management will continue to buy back shares on an opportunistic basis under the corporation’s normal course issuer bid when MEQ shares trade below their intrinsic NAV.

Forward-Looking Information

Certain statements contained herein constitute “forward-looking statements” as such term is used in applicable Canadian securities laws. These statements relate to analysis and other information based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning: estimates related to the effect of rising interest rates on the Corporation, the effect that inflation will have on: (i) the Corporation’s tenants and the effect on credit risk; and (ii) the cost of renovations and other expenses, disruptions effecting the global supply chain and energy and agricultural markets (including as a result of geopolitical turmoil), future acquisitions, dispositions and capital expenditures, future vacancy rates, increase of rental rates and rental revenue, future revenue, income and profitability, timing of refinancing of debt, access to low-cost long-term Canada Mortgage and Housing Corporation (“CMHC”) insured mortgage loans, benefits from shorter term mortgages in the short term, the amount of liquidity the Corporation will have access to in the current and subsequent fiscal years, including the amount of funds to be raised through up-financing of maturing mortgages and financing of clear titled assets after stabilization, the potential changes in interest and mortgage rates, completion timing and costs of renovations, benefits of renovations, funds to be expended on renovations in fiscal year 2026 and the sources thereof, increased funds from operations and cash flow, access to capital, minimization of operating costs, the Corporation’s liquidity and financial capacity, the Corporation’s intention and ability to make distributions to shareholders in fiscal 2026, rental conditions and vacancy rates, rates of international immigration and population growth in areas where Mainstreet operates, the period of time required to stabilize a property, future climate change impact, the Corporation’s strategy and goals and the steps it will take to achieve them, changes in zoning laws and potential benefits to Mainstreet as a result of the same, the Corporation’s anticipated funding sources to meet various operating and capital obligations, key accounting estimates and assumptions used by the Corporation, the attraction and hiring of additional personnel, the effect of changes in legislation on the rental market, expected cyclical changes in cash flow, net operating income and operating margins, the effect of environmental regulations on financial results, the effect of income taxes on the Corporation, the handling of any future conflicts of interests of directors or officers, the effects of cyber incidents on the Corporation (including the effect of the cybersecurity incident which occurred on May 2, 2024), the benefits in trading volume from the Corporation’s new dividend policy, and other factors and events described in this document should be viewed as forward-looking statements to the extent that they involve estimates thereof. The estimates, beliefs and assumptions of the Corporation are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions of future events or performance (often, but not always, using such words or phrases as “seeks”, “believe”, “foresee”, “projects”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might”, “will”, or are “likely” to be taken, occur or be achieved, or similar expressions) are not statements of historical fact and should be viewed as forward-looking statements.

Such forward-looking statements are not guarantees of future events or performance and by their nature involve known and unknown risks, uncertainties and other factors, including those risks described in the Corporation’s AIF, dated December 15, 2025 under the heading “Risk Factors”, that may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the effect of inflation on consumers and tenants, the effect of rising mortgage and interest rates on the Corporation, including its financing costs, challenges related to up-financing maturing mortgages or financing of clear titled assets after stabilization, disruptions in global supply chains, labour shortages, the length and severity of geopolitical conflict and the occurrence of additional global turmoil and its effects on global markets and supply chains, changes in government policies regarding immigration and international students, cyber-incidents Corporation (including the effect of the cybersecurity incident which occurred on May 2, 2024), costs and timing of the development or renovation of existing properties, availability of capital to fund stabilization programs, other issues associated with the real estate industry including availability of labour and costs of renovations, supply chain issues, fluctuations in vacancy rates, general economic conditions, trade policies and tensions, including changes in, or the imposition of tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, competition for tenants, unoccupied units during renovations, rent control, fluctuations in utility and energy costs, carbon tax increases, environmental and other liabilities, effects of climate change, credit risks of tenants, availability of capital, changes in legislation and regulatory regime applicable to the corporation, loss of key personnel, a failure to realise the benefit of acquisitions and/or renovations, the effects of severe weather events on the Corporation’s properties, climate change, public health measures (including travel and post-secondary restrictions), uninsured losses, fluctuations in the capital markets and the trading price of the Common Shares, conflicts of interest of the Corporation’s directors and officers, and other such business risks as discussed herein. This is not an exhaustive list of the factors that may affect Mainstreet’s forward-looking statements. Other risks and uncertainties not presently known to the Corporation could also cause actual results or events to differ materially from those expressed in its forward-looking statements.

Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include, among others, the impact of economic conditions in Canada and globally including as a result of inflation, interest rate increases, supply shortages, trade policies and tensions, including changes in, or the imposition of tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and geopolitical turmoil, the Corporation’s future growth potential, prospects and opportunities, the direction of the residential rental environment, trends in interest and mortgage costs, access to capital markets to fund (at acceptable costs), the future growth program to enable the Corporation to refinance debts as they mature, changes in tax laws, mortgage rules and other temporary legislative changes in respect of pandemics or otherwise, and the availability of purchase opportunities for growth in Canada.

Although the forward-looking information contained in this MD&A is based upon what management believes are reasonable assumptions, there can be no assurance actual results will be consistent with these forward-looking statements and no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur at all, or if any of them do so, what benefits that Mainstreet will derive from them. As such, undue reliance should not be placed on forward-looking statements. Certain statements included in this MD&A may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this MD&A. Readers are urged to consider these risks, as well as other uncertainties, factors and assumptions carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements, which are based only on information available to us as of the date of this MD&A and such other date specified herein. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements, whether written or oral, that may be as a result of new information, future events or otherwise.

Forward-looking statements are based on management’s beliefs, estimates and opinions on the date the statements are made, and the Corporation undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions should change except as required by applicable securities laws.

Management closely monitors factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements and will update those forward-looking statements where appropriate in its annual and quarterly financial reports.

Past performance is not indicative of or a guarantee of future results. There can be no assurance that comparable results will be achieved in the future, that targeted returns, growth objectives, diversification, or asset allocations will be met or that an investment strategy or investment objectives will be achieved (because of economic conditions, the availability of appropriate opportunities or otherwise). Due to various risks, uncertainties and changes (including changes in economic, operational, political or other circumstances) beyond the Corporation’s control, the actual performance of the business could differ materially from the target returns and growth objectives set forth herein.

In addition, industry experts may disagree with the assumptions used in presenting the target returns and growth objectives. No assurance, representation or warranty is made by any person that the target returns, or growth objectives will be achieved, and undue reliance should not be put on them.

This MD&A includes forward-looking information about prospective results of operations, financial position or cash flows, based on assumptions about future economic conditions and courses of action and that is not presented in the format of a historical balance sheet, income statement or cash flow statement (“Financial Outlook”). Actual results may vary from the Financial Outlook summarized in this MD&A. Management of the Corporation has approved the Financial Outlook as of December 15, 2025. The Financial Outlook has been included in this MD&A to provide readers with disclosure regarding the Corporation’s reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the Financial Outlook may not be appropriate for other purposes.

Certain of the information contained herein is based on or derived from information provided by independent third-party sources. While the Corporation believes that such information is accurate as of the date it was produced and that the sources from which such information has been obtained are reliable, the Corporation makes no representation or warranty, express or implied, with respect to the accuracy, reasonableness or completeness of any of the information or the assumptions on which such information is based, contained herein, including but not limited to, information obtained from third parties.

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^1 See “Non-IFRS Measures” and Note (1) in MANAGEMENT’S DISCUSSION AND ANALYSIS to the table titled “Summary of Financial Results” for additional information regarding FFO and a reconciliation of FFO to net profit, the most directly comparable IFRS measurement.

^2 Include 50 units held for sale.

^3 Including $143 million cash-on-hand, $622 million estimated funds that may be available through financing of clear-titled assets after stabilization, and a $135 million line of credit. The $143 million cash-on-hand represents a total of $315 million cash-on-hand, less $172 million that will be used to pay off maturing mortgages in the short-term.

^4We note that any decision to pay dividend, and the amount of any such dividends on the shares, will be made by the Board of Directors at the relevant time, on the basis of Mainstreet’s earning, financial requirements and other conditions existing at such future time. The dividend policy of Mainstreet is established by the Directors and is subject to change at the discretion of the Directors.