Mainstreet Equity Corp. Achieves Moderate Growth Amid Economic Uncertainty

CALGARY, Alberta--(BUSINESS WIRE)--In the face of economic uncertainty, geopolitical tensions and a domestic immigration reset, Mainstreet has continued to perform well, reporting moderate growth across major operating metrics in Q2. The company achieved a 9% increase in net operating income (NOI), 5% increase in funds from operations (FFO) and same asset property net operating income (NOI) growth of 5%.

Bob Dhillon, Founder and Chief Executive Officer of Mainstreet, said, “Amidst the volatility in the market are some positive signs of improvement in our mid-market space. With migration continuing in the West, lower interest rates, the energy corridor opening up and new rental supply builds dropping off, our operating platform with average rents of $1250 presents us with the opportunity for growth into 2027.”

Trend Lines

Flattened new supply for 2027/2028
+ Attractive interest rates
+ Continued positive migration to the West
+ Large liquidity store for opportunistic acquisitions
+ Potential opening of the energy corridor
+ A proven operating platform backed by margins
= setting the stage for the opportunistic economic growth of Mainstreet¹

Key Metrics | Q2 2026 Performance Highlights

Rental Revenue
From operations	|	Up 5.4% to $72.2 million (vs. $68.6 million in Q2 2025)
From same asset properties	|	Up 2.0% to $69.3 million (vs. $67.9 million in Q2 2025)
Net Operating Income (NOI)
From operations	|	Up 8.9% to $46.5 million (vs. $42.7 million in Q2 2025)
From same asset properties	|	Up 5.4% to $44.6 million (vs. $42.3 million in Q2 2025)
Funds from operations (FFO)^1
FFO	|	Up 5.4% to $23.2 million (vs. $22.0 million in Q2 2025)
FFO per basic share	|	Up 5.5% to $2.49 (vs. $2.36 in Q2 2025)
Operating Margin
From operations	|	64.4% (vs. 62.3% in Q2 2025)
From same asset properties	|	64.4% (vs. 62.3% in Q2 2025)
Unstabilization rate	|	9% (providing potential for future NOI growth)
Stabilized Units	|	451 properties (17,473 units, 9%) out of 502 properties (19,203 units)
Net (Loss) Profit
Net profit (Loss) per basic share	|	Net profit of $0.1 million (vs. profit of $91.5 million in Q2 2025, including fair value loss of $20.3 million in Q2 2026 vs. fair value gain of $84.4 million in Q2 2025)
Total Capital Expenditures	|	$9.7 million (vs. $8.3 million in Q2 2025)
Total Capital Expenditures (unstabilized assets)	|	$2.2M (vs. $1.4M in Q2 2025)
Total Capital Expenditures (stabilized assets)	|	$7.5M (vs. $6.9M in Q2 2025)
Vacancy rate
From operations	|	5.7% (vs. 4.6% in Q2 2025)
From same asset properties	|	5.8% (vs. 4.6% in Q2 2025)
Vacancy rate as of May 12, 2026	|	4.3% excluding unrentable units
Total Acquisitions
During Q2 2026	|	$12.1 million 106 units in Alberta (vs. $0.9 million 1 commercial building in Q2 2025)
Subsequent to Q2 2026	|	39 unit ($6.2 million) in British Columbia
Total YTD Acquisition 2026	|	493 units ($86.5 million)
Total Units
As of March 31, 2026	|	19,253 units^2 (vs. 18,799 units in 2025)
As of May 12, 2026	|	19,292 units^2
Fair Market Value	|	Up 3% to $3.8 billion (vs. $3.7 billion in 2025)
Liquidity	|	$855 million^3

We identified three key Q2 trends that illustrate Mainstreet’s position and growth in the market.

• Vacancy: Vacancy levels remained broadly consistent with Q1 and continue to trend above Q2 2025. Despite seasonal softness and approximately 10% of the portfolio remaining unstabilized, vacancy increased year-over-year but showed modest improvement subsequent to quarter-end, declining from 5.7% in Q2 to 4.3% excluding unrentable units by May 12, 2026. While this reflects operational progress, the modest change shouldn’t be interpreted as a sustained downward trend. Our position in the mid-market space continues to provide some insulation from the more pronounced volatility seen elsewhere in the market.
• Acquisitions: Due to the occupancy rebound in the market and our pause on acquisitions in FY2025, Mainstreet has an estimated $855 million in available liquidity in FY2026. In Q2, we are reporting acquisitions totaling $12 million (includes 106 units), with YTD acquisitions of $86 million (493 units).
• Supply: The market saw an increase in purpose-built supply in 2024 and 2025 of 300,000 units across Canada while the population grew by 3.5 million people, according to CMHC. This supplemental supply would likely be delivered in 2026 to 2027 followed by a drop-off of new purpose-built apartments. Ballooning construction costs drive rents higher to achieve acceptable returns, so new development adds little affordable supply; with 60% of Canadians earning under $50,000 a year, the market can’t support those elevated rents.

Capital Allocation 2026/2027

While some companies cut investment during slowdowns, Mainstreet treats them as opportunities to grow by making decisive moves at pivotal moments. Our countercyclical, value-add strategy focuses on investing during market dislocation, including opportunistic asset purchases. As conditions continued to stabilize this quarter, our Q2 acquisition-driven growth strategy will carry through to 2027.

The Mainstreet Advantage

Mainstreet’s value-add strategy in the mid-market segment has consistently performed well across Western Canada, generating returns reflective of its value-add strategy. Supported by disciplined, non-dilutive growth, this approach has also built the liquidity needed for our next phase. Our platform is anchored by several key strengths:

• Affordable rents: With average monthly rents of approximately $1,250, Mainstreet offers quality, renovated suites that remain accessible to middle-income Canadians. As sector-wide revenue growth moderates, rent increases are beginning to ease in certain markets. Newer purpose-built rental supply is seeing more pronounced rate adjustments but we expect the impact on our affordable portfolio to be minimal.
• Diverse portfolio: Our portfolio of 19,292 units is concentrated in major inner-city centres across Western Canada, which limits our exposure to volatility in any single market. Although headquartered in Calgary, we continue to focus on acquisitions in Vancouver and the Lower Mainland: 43% of our IFRS-based net asset value is derived from BC.

Market Fundamentals

Despite a year of economic and policy uncertainty, several macroeconomic trends continue to support Mainstreet’s growth. These trends include:

• Supply vs Demand: Canada’s housing shortage continues to underpin rental demand. With the disparity between population growth and new supply to accommodate it, there are millions of shadow market renters in Canada: people in non-traditional housing like multigenerational households, basement suites and multiple occupants in one unit. With rental rates softening, these people are being enticed to move into their own apartment in our mid-market space. This serves to reinforce demand for Mainstreet’s product.
• Favourable Rates: As mortgage interest is our largest expense, lower borrowing costs enhance cash flow and FFO while expanding acquisition capacity. As at the end of Q2, rates were approximately 3.8% for a five-year term. Slower economic growth is expected to keep rates at or below current levels.
• Tariff Opportunity: Rising tariff-related costs are likely to further constrain new supply, intensifying the supply-demand imbalance. As replacement costs increase, we believe our strategy of acquiring assets below replacement value will become more advantageous, strengthening our competitive mid-market position.
• Draw to Western Canada: Federal immigration policy is reducing temporary resident volumes, with 2026 targets at 385,000 temporary residents and 380,000 permanent residents, according to Statistics Canada. These levels still exceed available rental supply. While growth has slowed, Alberta was the only province to post a notable population increase with 0.14% net population growth in Q4 2025. Continued investment in energy, particularly LNG, is expected to drive inflows to Alberta, Saskatchewan and British Columbia. Overall, Western Canada remains attractive due to affordability, employment opportunities and quality of life.

Management believes these factors may support future growth; however, actual results are subject to the risks and uncertainties described in the MD&A.

CHALLENGES

Uncertain Times

There are a number of wildcards at play in the domestic and global economic landscape. The compounding uncertainty of a prolonged conflict in the Middle East, unpredictable tariffs that raise costs, a concerning downward trend of the Canadian economy and rising inflation that tightens margins all put upward pressure on interest rates or force them to remain higher for longer despite a sluggish economy. While inflation has shown signs of cooling, high energy prices and trade tensions are locking inflation in place and reducing the likelihood of rate cuts.

During a slower economy, more households delay homeownership in favour of affordable rental options, which we believe will create more demand for Mainstreet properties.

Immigration and Migration Slowdown

Across Canada, all provinces except Alberta are experiencing population declines driven by immigration policy changes and reduced interprovincial migration; the cuts translate to a 49% reduction in international students and a 37% reduction in foreign workers, according to Statistic Canada. The impact of these policies became evident in late 2025 when Canada recorded its largest population decline since 1946. Population growth is expected to remain flat through the rest of 2026. Lower immigration may also tighten labour supply, as the rental housing sector relies heavily on international workers and newcomers to fill lower-skilled roles.

Vacancy Rates

According to CMHC, Canada’s national vacancy rate for rental apartments increased to 3.1% in Q4 2025, up from 2.2% in 2024, reflecting recent additions to supply. New inventory is expected to be absorbed through 2026/2027, particularly in stronger markets like Calgary, Edmonton, Regina and Saskatoon. Vacancy rates for the most affordable units have seen slight easing, though demand for these units remains consistently strong.

OUTLOOK

Opening the Energy Corridor

In response to evolving trade dynamics with the United States, Canada continues to advance efforts to diversify its trade relationships while also announcing large-scale infrastructure initiatives. At the same time, geopolitical tensions have reinforced the importance of energy security, thus supporting investment in expanded energy infrastructure and production capacity at home.

These developments are expected to support economic activity across Western Canada, contributing to job creation and population growth and boosting demand for rental housing. With an established presence across the region, Mainstreet is well positioned to capitalize on this growth.

Putting the S in ESG

Canada’s ongoing housing supply imbalance underscores the need for affordable rental options. Mainstreet remains focused on providing quality, attainable housing for middle-income Canadians, supporting positive social outcomes while offering a practical alternative as homeownership becomes increasingly out of reach.

Nominal Dividends⁵

Supported by strong free cash flow, Mainstreet introduced a nominal dividend in 2024 to broaden our shareholder base, improve trading liquidity and support market capitalization while retaining capital for non-dilutive growth. In 2026, we increased the dividend to $0.32 per share annually ($0.08 per quarter); this reflects our continued focus on delivering shareholder returns as well as maintaining financial flexibility to fund organic growth and strategic acquisitions.

Runway on Existing Portfolio/Non-Dilutive Growth

1. Trading at a Discount: We believe MEQ shares continue to trade significantly below net asset value (NAV), a dynamic influenced by broader macroeconomic volatility. The resulting pressure on market capitalization creates an opportunity to deploy our Normal Course Issuer Bid (NCIB). In Q2, we purchased 14,700 shares (YTD – 20,100 shares) and intend to continue doing so to enhance value for long-term shareholders. On April 30, 2026, Mainstreet also announced that it had entered into an automatic share purchase plan (“ASPP”) with its designated broker, which will terminate upon the expiry of the NCIB unless terminated earlier in accordance with the terms of the ASPP. The ASPP is intended to allow for the purchase of Shares under the NCIB during predetermined times when Mainstreet would ordinarily not be permitted to purchase Shares due to customary blackout periods.
2. Portfolio Expansion: Following $86 million in YTD acquisitions, Mainstreet’s large liquidity reserves allow us to acquire underperforming assets at attractive valuations without issuing new equity, thereby supporting non-dilutive growth. It is our expectation that the balance of the year will see accelerated acquisition activity.
3. Closing the NOI gap: Approximately 9% of the portfolio is in active repositioning at any time. As these assets stabilize, management expects them to contribute roughly $46 million in incremental annualized NOI after closing the mark-to-market gap, reflecting meaningful embedded value within the existing portfolio. Such expectations are based on current assumptions regarding stabilization timelines, subject to the risks and assumptions disclosed in the MD&A.
4. Rezoning for growth: Ongoing housing shortages are prompting municipalities to enable higher density through rezoning. Our dedicated in-house land planning team continues to advance optimization strategies including subdividing parcels, converting underutilized space into additional rental units and pursuing density relaxations. These initiatives drive long-term value with limited incremental capital.

Forward-Looking Information

This contains forward‑looking statements within the meaning of applicable Canadian securities laws. Forward‑looking statements include information about future financial or operating performance, business strategies, plans, and expectations, and often use words such 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.

Forward‑looking statements in this message include, but are not limited to, statements regarding:

• the expected effects of interest rates, inflation, and economic conditions on the Corporation’s operations, tenants, financing costs and renovation programs;
• future acquisitions, dispositions, capital expenditures, rental rates, vacancy levels, income, liquidity, access to mortgage and other financing, including Canada Mortgage and Housing Corporation (“CMHC”) insured loans, and refinancing plans;
• expected costs, timing and benefits of renovation or development projects;
• projected funds from operations, cash flow, and the Corporation’s intention to make distributions;
• the availability of labour, materials, and capital;
• the Corporation’s strategy, objectives, and expected operating environment, including immigration trends, regulatory and legislative developments (including zoning), the effect of income taxes, climate‑related risks, environmental requirements, cyber‑security risks, and other operational risks; and
• assumptions underlying the Corporation’s financial outlook disclosed in this MD&A.

Forward‑looking statements are not guarantees of future performance and involve inherent risks and uncertainties. Actual results may differ materially due to factors including, but not limited to, those described under “Risk Factors” in the Corporation’s AIF dated December 15, 2025, such as: inflationary pressures, changes in interest and mortgage rates, access to capital and financing, supply chain disruptions, labour shortages, geopolitical conflicts and related market volatility, changes in government policies regarding immigration and international students, regulatory changes, environmental and climate‑related risks, cyber‑security incidents, vacancy and tenant credit risk, loss of key personnel, renovation and development risks, competition, utility and energy cost fluctuations, losses from extreme weather events or public health measures, and general economic conditions, including fluctuations in the capital markets. Additional risks and uncertainties not presently known to the Corporation may also cause actual results to differ materially.

Material assumptions underlying the forward‑looking statements include assumptions regarding economic and market conditions in Canada, interest and mortgage rate trends, availability of capital on reasonable terms, access to acquisition opportunities, tenant demand, and the stability of the residential rental market.

Although management believes the assumptions underlying the forward‑looking statements are reasonable, there can be no assurance that actual results will be consistent with such statements. Readers should not place undue reliance on forward‑looking statements and the Corporation undertakes no obligation to update them except as required by law. Past performance is not indicative of or a guarantee of future results.

This disclosure also includes “financial outlook” (as defined in applicable securities laws), to provide readers with management’s expectations regarding anticipated results of operations. Actual results may vary from the Financial Outlook summarized in the MD&A. Management of the Corporation has approved the financial outlook as of May 12, 2026. Such information may not be appropriate for purposes other than this MD&A and actual results may differ materially.

Some information herein is derived from third‑party sources believed to be reliable as of the date provided; however, the Corporation makes no representation as to its accuracy or completeness.

¹ Based on current liquidity and acquisition capacity, may support future growth, subject to market conditions described in the MD&A.

² 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.

³ Include 50 units held for sale

⁴ Including $138 million net cash-on-hand, $582 million estimated funds that may be available through financing of maturing mortgages in 2026 and clear-titled assets after stabilization, and a $135 million line of credit.

⁵ We note that any decision to pay dividends, and the amount of any such dividends on the shares, will be made by the Board Directors at the relevant time, on the basis of Mainstreet’s earnings, financial requirements and the 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.