In the 25 years Bob Dhillon spent building a real estate company compounding wealth for his shareholders, he has been a lot of things: entrepreneur of the year, a philanthropic leader, an author, an Order of Canada recipient, King Charles III Coronation Medal and Queen Elizabeth II Platinum Jubilee Medal. His generosity is also recognized through the Dhillon School of Business at the University of Lethbridge, which proudly carries his name. Today, the Mainstreet Equity Corp founder gladly transitions from being the disruptor who shook up the industry to being a crucial part of the team that is breathing energy into city centres across the West.
“We don’t have a partnership with the City or any Chambers of Commerce, but still we are partnering in this evolutionary stage in Calgary. We allocated 110 buildings and we are renovating and branding them to contribute to the transformation of inner-city Calgary,” says Bob Dhillon, founder, president and CEO of Mainstreet Equity Corp.
This transformation is critical to keeping cities vibrant. Without companies like Mainstreet taking over aging, distressed buildings, inner city areas could quickly become neglected and derelict. The company has a vast Alberta footprint particularly in its flagship location of Calgary inner city, but it has also applied its unique business model to almost 19,000 units in 24 cities across the West. Of all the geographic markets Mainstreet serves, Dhillon is especially bullish about Calgary and he feels the city only needs to attract another 300,000 people, ideally international students, highly skilled immigrants and entrepreneurs, to become a young global centre not unlike Austin, Texas.
It’s not quite there yet, but the city is already seeing movement in the right direction. Tech companies are crawling out from the shadow of the oil and gas sector, giving Calgary’s downtown some much needed energy and revitalization. Entrepreneurs are innovating, which draws younger professionals and students to the area. Mainstreet’s properties have what millennial and GenZ renters want: proximity to schools, transit, entertainment and nightlife venues. And they get it all in Calgary’s historic Beltline communities, whether that’s the bustle of 17 Avenue, the beauty of Bridgeland, the urban flair of the East Village, the character of Marda Loop, the rolling hills of Bankview or any of the other iconic central communities that Mainstreet is building back up.
“I think Calgary has got the best inner city in North America,” he says. “The demographic is changing as it becomes gentrified, and density brings more people, more people create more funky service industries, and more service industries create a buzz that makes young people want to live there. People equal energy and the unique fabric of Calgary is creating this vibrancy.”
For people to want to live there, there has to be attractive accommodations for them to rent. That’s where Mainstreet Equity shines. To make the most impact, the company focuses on boutique mid-market apartment buildings. These smaller buildings, most of which date back to the 1970s, make up 80 per cent of all apartment buildings in the city but are largely ignored by institutional investors. In the past, such properties were left mismanaged as developers opted for big new revenue-generating complexes. The problem, Dhillon explains, is that the cost to build new is around $350,000 per door. For developers to make a project financially viable, that translates to monthly rents of between $2,500 and $2,700 – pricing that is out of reach for many renters and highlights the growing gap between housing supply and affordability. The reality is 60 per cent of Canadians make less than $50,000 a year and hit their rental threshold at around $1,500. Mainstreet’s solution: give old buildings new life for a fraction of the cost of building new, offer housing for an average $1,300 a month, and give millennial Canadians a much-needed assist.
Bob Dhillon started flipping houses when he was barely out of his teens so he had the experience to recognize the potential in and the importance of catering to this underserved rental demographic. He wanted to ensure this huge segment of the population could find a modern, beautiful, affordable place to live. When he started Mainstreet Equity and joined the TSX in 2000, Dhillon found himself largely on his own in this slice of the industry, and in the 25 years since, he has made an incredible impact in Calgary communities because of it.
Singlehandedly consolidating the mid-market base and being structured as a corporation rather than a REIT allows Mainstreet to reinvest cash flow into the company to facilitate growth. And it makes great use of that cash flow; the company has nearly 19,000 units and spends more money per capita on assets than any other real estate company in Western Canada. The company targets assets in dire need of repositioning like foreclosures, distressed sales and properties with significant deferred maintenance, and Dhillon has cultivated a supply chain logistics platform to add value and efficiencies to the renovation process. He connected with factory manufacturers in remote parts of Asia to ensure he received the best possible pricing. This platform presents a permanent pipeline to Asia for cost-effective home renovation products ranging from kitchen cabinets to laminate floors to plumbing fixtures. This keeps their buildings affordable and the balance sheet robust.
“It took 15 years to develop this elaborate supply chain. We go to Asia every couple of years and renegotiate all the contracts with manufacturers, not wholesalers. It gives us a huge competitive edge over everybody else in the renovation business,” Dhillon says. “Everybody will say they’ve created a platform, but we really have. And because we are a corporation not a REIT, we can invest heavily in branding tools, technology and supply chain logistics, all of which equals higher margins.”
Mainstreet’s margins are astronomical, even when factoring in the drag on the bottom line that large renovation projects have. About 12 per cent of Mainstreet’s assets are being renovated at any time, but profit margins on the remaining 88 per cent of the portfolio pick up the slack; it’s no surprise that Mainstreet Equity has been one of the best performing companies on the TSX and S&P Index for 25 years. At the end of Q3, the company posted organic double-digit, non-dilutive growth year-over-year across major key operating metrics for the 15th consecutive quarter, making it the number one growth company in the space.
There’s no question that Mainstreet Equity Corp is an unequivocal success story for the ages, both on the stock exchange and in the community. Investors see amazing returns while middle class Canadians reap the benefits of quality affordable housing in the areas where they work, study and play. Despite his success, Bob Dhillon stays true to his humble roots, remains grounded and rededicates himself to helping victims of natural disasters, refugees and immigrants find housing and work so they can start Canadian success stories of their own.
Bob Dhillon’s vision for Mainstreet Equity Corp came out of years of experience and the centering, calming benefits of yoga, and the company’s success extends beyond real estate; true success comes with elevating the standard of affordable living for middle-class Canadians and reshaping the inner-city communities in which they live, one door at a time.
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