Tensions between the U.S. and China are on the rise. Our neighbor to the south is seeing a massive rise in COVID-19 cases. Companies on the TSX are getting hit, as the economy is grappling with low demand and rising unemployment rates. It’s tough to find companies that could make the most out of a bad market, but I believe real estate player Mainstreet Equity (TSX:MEQ) is up to the challenge.
Mainstreet operates in a rather unique way. It buys real estate (apartments), fixes it up, and then rents it out. Once the apartments have been renovated, the company refinances the property. This cash is then used to buy newer properties. It has been doing this since 2000, when it had 272 units. Today, it has 13,375 apartments, clearly proving that the strategy has worked very well.
The company reported its numbers for the second quarter of 2020. Mainstreet refinanced five matured mortgages for $75.8 million at an average rate of 2.32%. Around 95% of its tenants paid rent, which is pretty much the company average. Funds from operations (FFO) increased by 10%, net operating income saw a growth of 8%, and ad revenue grew 11%. This is the eighth consecutive quarter for double-digit growth in revenues and FFO.
What’s next for this TSX real estate player?
While Q2 numbers are good, the pandemic is expected to have an impact on Mainstreet revenues for the second half of the year. As the CERB (Canada Emergency Response Benefit) begins to taper off, there could be an increase in rent defaults and bad debts.
Social distancing has reduced employee productivity, while maintenance costs, including additional cleaning, sanitizing, and PPE (persona protective equipment) suits have soared. Mainstreet continues to renovate the existing property, as it gears up for the high rental season. The company believes that there will be a pushback to the season, and it will start in August.
That said, Mainstreet believes that the pandemic provides opportunities to organically expand its portfolio. The company is targeting aggressive expansion, as it expects a lack of buyers and panic-driven selling in the real estate market, which is likely to create a favourable buying environment.
Bob Dhillon, founder and chief executive officer of Mainstreet, said, “Despite economic turmoil, however, we now see unparalleled opportunities for organic growth in the second half of fiscal 2020.”
Fellow Fool contributor Nelson Smith had pointed out in April that Mainstreet is a very cheap stock, trading 35% below its fair value of $86. The company was trading at $57 levels then. Today, it is up to $68. That still leaves room for a rise of over 26% from current levels.
One key point to note with Mainstreet is that it doesn’t pay a dividend. All money is invested right back into the company. And with Canada’s population on the rise, and as the number of foreign students coming to Canadian shores keeps increasing, demand for rental properties will only go up.
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Real estate listings up in June 2020 over last year, housing report says | CTV News – CTV News
While more homes were sold last month, total sales figures are still off from last year and COVID-19 has a lot to do with it, again.
The Calgary Real Estate Board (CREB) says monthly sales were down by two per cent in June compared to 2019.
Experts say price declines, easing mortgage rates and fewer social restrictions have helped.
“However, the market remains far from normal. Challenges, such as double-digit unemployment rates, will continue to weigh on the market for months to come,” said Anne-Marie Lurie, chief economist for CREB.
The report shows six per cent more homes were listed last month over June 2019, but the benchmark price of a home in Calgary is still down from last year.
The benchmark price is $411,300 while the average home price in the city of Calgary is $460,442.
Sales in other regions outside of Calgary weren’t much better, CREB says. Airdrie’s sales activity was eight per cent lower than last year and sales in Okotoks are well below the 2019 levels and long-term trends.
The housing market in the town of Cochrane fared a bit better, but the increased sales (76) did little to offset inventory, considering 136 new listings were added in the month.
Mississauga man accused of using real estate transactions to commit sexual assaults in Hamilton – Global News
Hamilton police have made an arrest in what they say is a string of sexual assaults that were allegedly committed under a ruse involving real estate transactions.
Detectives say the investigation started last November after reports of two sexual assaults at homes in the area of Pearl and Peter streets.
On Monday, there was a similar complaint about an incident in the same area.
No one was physically injured in any of the incidents.
The investigation led to a Mississauga man being identified and arrested without incident at his home.
Mordecai Berlad, 58, has been charged with three counts of sexual assault and one count of forcible confinement.
Officers think there may be other victims and are urging anyone with more information to contact Det. Const. Buszkowski of the HPS sexual assault unit at 905-540-5543 or anonymously contact Crime Stoppers online or by calling 1-800-222-8477 (TIPS).
© 2020 Global News, a division of Corus Entertainment Inc.
Guelph, Ont., is the best place to buy real estate in Canada: MoneySense – Globalnews.ca
Guelph, Ont., has been named the best place to buy real estate in Canada by MoneySense magazine.
The southwestern Ontario city has topped MoneySense’s Where to Buy Top 35 ranking after coming in second place last year.
MoneySense says current Royal City residents won’t be surprised at this victory, as the average price of a house is listed below $530,000, but added that the real reason is because of strong economic fundamentals.
Some of those fundamentals include Guelph’s 2.1 per cent unemployment rate before the novel coronavirus pandemic and its GDP of 1.9 per cent, higher than the national average of 1.7 per cent in 2019.
“Strong employment and decent average annual incomes give Guelph residents a chance to pay off their mortgage faster,” MoneySense said.
It added that Guelph’s home-to-income ratio is significantly lower than Toronto and Vancouver, where it takes much more time to pay off a mortgage debt.
COVID-19 impacts Canada’s real estate markets
MoneySense also said Guelph’s high buyer demand and strong employment heading into the pandemic will mean the market should eventually rebound once life returns to normal.
According to the magazine, housing prices dropped five per cent between February and March.
The article also noted Guelph’s proximity to Toronto, which is less than an hour’s drive.
London, Ont., came in second place, while Victoria, B.C., Ottawa and Kingston, Ont., rounded out the top five. Waterloo Region came in eighth place.
© 2020 Global News, a division of Corus Entertainment Inc.
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