Jordan ZinbergMainstreet Equity CorpMEQ.TOBUYMay 05, 2025

Remains a large holding. Low immigration has hurt the apartment REITs, but MEQ hadn't seen a decrease in rents. They're focused on affordable rentals; they're average Toronto rents are nearly half the norm. Rents have risen 2.5%. They have $800 million cash to invest in rundown apartments, which they fix it, then rent again which is far cheaper than building entirely new apartments (which is what the government is doing). Growth looks good.

One of only 2 REITs he owns. It's actually a corporation and doesn't pay out all its earnings as a distribution. Instead, focuses on doing counter-cyclical acquisitions. Regional footprint is more in Western Canada. Mid-market, multi-family rentals -- the Goldilocks sweet spot (too small for traditional REITs, too big for mom-and-pop).

Very strong results and growth reported yesterday. Increased capital set aside for acquisitions. Very attractive valuation. A Buy today.

Unique in the REIT sector. Not a significant dividend, which is a bit frustrating for a long-term holder. If there's no capital appreciation, he at least wants the cashflow. From the chart, doesn't seem to be much excitement -- lower highs and lower lows. Not what you want to see.

He's not familiar enough with the company, but can't see what the catalyst might be. If you're going to be a long-term investor, at least try to get some yield out of your investment.

Still loves it. Such an exceptional compounder; over time, that will continue. Will be more volatile than almost anything, as the CEO owns a massive amount (north of 40%). The other owners are larger-cap mutual fund managers, which from time to time are "forced sellers" due to redemptions. Have to use the volatility in your favour, and buy when it's down -- close your eyes and plug your nose.

Reported this week. Back to acquiring units at attractive prices, which will enhance the return on capital. It's structured as a corporation, not a REIT, so not forced to pay out cashflow (instead, can retain it and invest at high rates of return). Trades ~17x FFO, reasonable.

Rentals need immigration, which Canada is not seeing. However, they are not building more apartment buildings. So, rents continue to go higher. Can't explain why shares are down. Their numbers are good and continue to buy companies. The CEO still owns half the company. This is the lowest PE in many years, a 25% discount to NAV.

Likes it. Is not a REIT, so they can grow without paying cash flow to unit holders. They do well investing shareholder capital by buying companies and executing well. A long-term compounder.

(Note the short timeframe.)  Rents have come down across Canada this year. Because this name is not subject to rent controls, it's been more sensitive to that. Lots of dry capital to put to use. Great growth story. One of his top 3 holdings.

Unique business model as a corporation, retaining cashflow and hunting for acquisitions. One of the best compounders out there, and definitely the best real estate compounder. Targets mid-market, where there's little (or no) competition. 

Trades ~15x PE. Be cautious on the entry and exit. Buy and sell with limit orders, as it's a small-cap with over half of shares owned by insiders. Yield is 0.09%.

Is the only real estate name he owns. An exceptional compounder. They face little competition. Trades at a reasonable 17x funds from operations. There is massive demand for houses and apartments. Is a countercyclical name. Is the historic top name in Canadian real estate.

Apartment buildings mostly in Alberta, a few in BC. Founder is one of the most remarkable entrepreneurs John's ever met. Good assets and Alberta is thriving. Tends to be more volatile than BEI.UN, but has strong fundamentals. Perhaps some pressure from immigration reform as it's more exposed to student housing, but that would be a short-term hiccup.

MEQ has been a solid performer over the years, with a 21% five-year CAGR, and an 18% 10-year annualized return. It has a strong track record of earnings expansion and beating earnings estimates. It is fairly small ($1.8B market cap), and it is also fairly illiquid. It does have certain risks such as a high leverage profile, and it operates in a cyclical rental market, but it generates steady free cash flows, has tailwinds from demand for the urban rental market, and it has delivered strong growth with little to no share dilution. We think it has many qualities of a long-term compounder, but we would be mindful of its small size, high debt profile, and exposure to a cyclical market.
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Absolutely exceptional compounder in the space. Competes in a really inefficient part of the market and does exceptionally well. Still a buy today.

Great little company. In certain markets, huge market share. Its markets are non-regulated, so it's easier to capture upside than in rent-controlled markets. Model is buy-fix-rent-repeat. Alberta is more affordable with higher population growth than national average.

Excellent company that is founder led (lots of skin in the game). Expecting shortage of affordable housing to be very good for business. Ability o acquire new properties, and fix them up is very good. Rising population without rent control is good for profit margins. Zero equity raises since original IPO is incredible track record.