Core Viewpoint - MacKenzie Realty Capital, Inc. successfully refinanced the Main Street West property in Napa, CA, with a loan of approximately $9.5 million at a 7.5% interest rate for a term of 3 years, indicating strong lender interest in well-located commercial properties despite market challenges [1][2]. Company Overview - MacKenzie Realty Capital, founded in 2013, is a West Coast-focused REIT that aims to invest at least 80% of its total assets in real property, with a portfolio split of approximately 50% multifamily and 50% boutique class A office properties [3]. - The company has consistently paid dividends every year since its inception and currently holds interests in 4 multifamily properties and 8 office properties, along with 2 multifamily developments [3]. Financing and Market Position - The refinancing of the Main Street West property highlights the importance of long-term lending relationships and the proactive management of the company's balance sheet [2]. - The CEO emphasized that there remains lender appetite for well-located properties in solid markets, showcasing the company's ability to navigate complex financing transactions [2].

Core Viewpoint - MacKenzie Realty Capital, Inc. has announced the suspension of its cash dividend to common stockholders as part of a strategy to strengthen its balance sheet and improve free cash flow amid economic uncertainties [2][3]. Financial Performance - For the three months ended March 31, 2025, net revenues were $4.3 million, reflecting a 5% increase from $4.1 million in the same period of 2024 [6]. - The company reported a net operating loss of $5.8 million, compared to a net operating loss of $2.7 million in the same period of 2024 [6]. - The net loss for the quarter was $6.1 million, an increase from a $2.9 million loss in the same period of 2024 [6]. - Funds from operations (FFO) were negative $3.1 million for the quarter [6]. Capital Allocation and Debt Management - The suspension of the cash dividend is part of a broader capital allocation policy aimed at reducing debt and enhancing financial stability [2][3]. - The company successfully raised $4.8 million from an institutional investor to support refinancing efforts within its portfolio [3]. - MacKenzie has paid down over $5.8 million in debt since completing renovations on the Hillview Hollywood property and has refinanced it into a permanent 5-year loan [6]. Portfolio and Development Updates - The current portfolio includes interests in 4 multifamily properties and 8 office properties, with ongoing developments in 2 multifamily projects [4]. - Construction of the Aurora at Green Valley project is on schedule and on budget, with the clubhouse expected to open in mid-June 2025 [6].

Investment Overview - As of September 30, 2024, total investments at fair value amounted to $1,763,318, a decrease from $2,138,104 on June 30, 2024[213]. - Unconsolidated investments at fair value totaled $1,784,470 as of September 30, 2024, down from $3,906,326 on June 30, 2024[213]. - The company intends to invest at least 80% of total assets in equity or debt in real estate assets, with up to 20% in investment securities of real estate companies[201]. - The investment strategy includes acquiring distressed real properties to extract unrealized value[204]. - The investment objective is to generate current income and capital appreciation through real estate-related investments[202]. Rental Revenue and Occupancy - Rental revenue is generated from leasing office space and apartment units, recognized on a straight-line basis over lease terms[207]. - As of September 30, 2024, the 1300 Main Office Building is 95% occupied, with annual base rent of $398,292 from the largest tenant[216]. - The First and Main Office Building is fully occupied, generating an annual base rent of $508,362 from its largest tenant[216]. - The Park View residential property has a 97.4% occupancy rate with an annual base rent of $1,107,628, averaging $2,429 per occupied unit[222]. - Woodland Corporate Center Office Building is fully occupied with 14 tenants, including Agtech Innovation, which occupies 12,940 sq ft with an annual base rent of $341,680[219]. - Green Valley Executive Center Office Building is also fully occupied with 17 tenants, with the largest tenant, Community Housing Opportunities, occupying 8,510 sq ft and paying an annual base rent of $349,819[219]. Lease Expirations - First & Main Office Building has lease expirations in 2025 with 2 leases expiring, totaling 5,648 sq ft and an annual base rent of $315,999, representing 21% of gross rent[218]. - Main Street West Office Building has a significant lease expiration in 2025 with 1 lease expiring, totaling 13,806 sq ft and an annual base rent of $822,692, accounting for 44% of gross rent[218]. - Satellite Place Office Building has 2 leases expiring in 2029, totaling 75,468 sq ft with an annual base rent of $1,494,707, which is 78% of gross rent[218]. - One Harbor Center Office Building has a lease expiration in 2024 for 1 lease totaling 7,993 sq ft with an annual base rent of $256,860, representing 16% of gross rent[220]. - Green Valley Medical Center Office Building has 2 leases expiring in 2024, totaling 6,750 sq ft with an annual base rent of $293,187, which is 25% of gross rent[220]. Financial Performance - Rental and reimbursement revenues for the three months ended September 30, 2024, were $4.95 million, a 39% increase from $3.56 million in the same period of 2023, primarily due to the acquisition of three office buildings[231]. - Investment income decreased to $0.02 million for the three months ended September 30, 2024, down from $0.32 million in the same period of 2023, mainly due to reduced distributions from investments[232]. - Asset management fees increased to $0.85 million for the three months ended September 30, 2024, compared to $0.79 million in 2023, attributed to a total invested capital increase of $17.70 million[235]. - Operating and maintenance expenses rose to $1.88 million for the three months ended September 30, 2024, up from $1.39 million in 2023, driven by the acquisition of three new office buildings[239]. - Interest expense increased to $1.89 million for the three months ended September 30, 2024, from $1.32 million in 2023, primarily due to additional mortgage notes payable from four office buildings acquired since September 2023[241]. - Other operating expenses for the three months ended September 30, 2024, were $0.92 million, an increase from $0.55 million in 2023, mainly due to the acquisition of three commercial properties[243]. - A net realized gain of $0.15 million was recorded during the three months ended September 30, 2024, compared to no realized gain in the same period of 2023[244]. Capital Raising and Cash Flow - The company raised total gross proceeds of $119.10 million from public offerings, with $42.46 million from the first offering, $67.99 million from the second, and $8.65 million from the third[251]. - As of September 30, 2024, the company raised $18.56 million from Series A preferred stock and $1.65 million from Series B preferred stock under the amended Offering Circular[251]. - The company plans to fund future investments through net proceeds from preferred equity offerings and cash flows from operations, but rising interest rates may impact fundraising efforts[252]. - As of September 30, 2024, the company had cash and cash equivalents of approximately $11.97 million[257]. - For the three months ended September 30, 2024, the company experienced a net decrease in cash of $1.11 million, with cash generated from operating activities amounting to $1.32 million[258]. - The net cash inflow from operating activities was driven by $4.62 million in rental revenues, offset by $3.33 million in operating expenses[259]. - The company reported a net cash outflow of $6.00 million from investing activities, primarily due to $6.50 million in real estate acquisitions[261]. - Financing activities generated a net cash inflow of $3.57 million, including $5.89 million from additional mortgage borrowings[262]. - For the three months ended September 30, 2023, the company had a net decrease in cash of $3.46 million, with cash generated from operating activities of $0.52 million[263]. Tax and Regulatory Considerations - The company is subject to a 4% nondeductible excise tax if distributions fall below a specified minimum amount under U.S. federal tax laws[199]. - The company pays quarterly distributions to stockholders, with a declared dividend of $0.125 per share for common stock during the quarter ended September 30, 2024[275]. - The company is exposed to interest rate risk with $17.5 million in variable-rate indebtedness indexed to SOFR, with an interest rate cap in place to mitigate risks[278]. Future Commitments - The company has entered into contracts with material future commitments, including the Advisory Management Agreement and the Administration Agreement[267]. - As of September 30, 2024, the total loans outstanding at the underlying companies amounted to $130.85 million, with significant maturities in fiscal year 2025[270]. Development Projects - Aurora Land Development is constructing a multi-family residential community with 72 units, having raised $3.17 million in preferred capital as of the report date[224]. - The company is currently renovating the 220 Campus Lane Office Building, which is 27.7% leased with an annualized base rent of $371,640[223].

[Part I](index=3&type=section&id=PART%20I) [Business](index=3&type=section&id=Item%201.%20Business) The company operates as an externally managed REIT focusing on real estate assets, with its common stock recently listed on the OTCQX market - The company was incorporated in Maryland in 2012, has elected to be treated as a **REIT**, and is externally managed by MacKenzie Capital Management, LP and its affiliates[8](index=8&type=chunk)[11](index=11&type=chunk) - On April 29, 2024, the company's common stock began trading on the **OTCQX Best Market** under the ticker **MKZR**, and it is exploring a potential uplisting to a national exchange[10](index=10&type=chunk)[26](index=26&type=chunk) - The investment strategy focuses on investing at least **80% of assets in real estate** and less than 20% in real estate-related securities, utilizing value-add and opportunistic approaches[31](index=31&type=chunk)[32](index=32&type=chunk)[35](index=35&type=chunk) Capital Raised and Share Repurchases (as of June 30, 2024) | Category | Amount Raised/Repurchased | | :--- | :--- | | **Capital Raised** | | | Common Stock Public Offerings | ~$119.10 million | | Series A Preferred Stock Offering | ~$18.51 million | | Series B Preferred Stock Offering | ~$1.26 million | | Dividend Reinvestment Program (DRIP) - Common | ~$15.56 million | | Dividend Reinvestment Program (DRIP) - Preferred | ~$0.25 million | | **Share Repurchases** | | | Common Stock Repurchased | ~$14.28 million | | Series A Preferred Stock Repurchased | ~$0.11 million | [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks related to real estate investments, financial stability, operational dependencies, and REIT compliance [Risks Related to Investing in Real Estate](index=12&type=section&id=Risks%20Related%20to%20Investing%20in%20Real%20Estate) The company is exposed to inherent real estate risks, including market downturns, tenant defaults, and geographic concentration in California and Georgia - Real estate investments are subject to risks beyond the company's control, such as economic conditions and illiquidity, which could reduce revenue and property values[60](index=60&type=chunk)[64](index=64&type=chunk) - Investment concentration in **California and Georgia** makes the company vulnerable to adverse local economic conditions or industry slowdowns[81](index=81&type=chunk) - The **bankruptcy or insolvency of tenants** poses a significant threat to operating results, as collecting pre-bankruptcy debts is difficult[87](index=87&type=chunk) [Risks Related to Our Financial Position](index=16&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position) Financial risks include potential shareholder dilution from future equity issuances and uncertainty regarding cash flow for distributions - Future equity or debt issuances could **dilute the ownership interest** of current stockholders and impose restrictive covenants[94](index=94&type=chunk)[95](index=95&type=chunk) - **Distributions are not guaranteed** and paying them from non-operational sources like borrowings would reduce funds available for investment[96](index=96&type=chunk)[99](index=99&type=chunk) [Risks Related to Our Business Operations and Strategy](index=17&type=section&id=Risks%20Related%20to%20Our%20Business%20Operations%20and%20Strategy) Operational success depends heavily on external advisers, while the portfolio's concentration and cybersecurity threats present further risks - The company is **dependent on its external Advisers** and their key personnel for success, with advisory agreements extending to December 31, 2024[118](index=118&type=chunk)[120](index=120&type=chunk) - The investment portfolio is **concentrated in eight commercial and four residential properties**, increasing risk if any single property underperforms[113](index=113&type=chunk)[114](index=114&type=chunk) - **Cyber incidents** could disrupt operations and compromise confidential information, with the company relying on its Advisers' cybersecurity measures[129](index=129&type=chunk) [Risks Related to Conflicts of Interest](index=21&type=section&id=Risks%20Related%20to%20Conflicts%20of%20Interest) Significant conflicts of interest exist due to related-party advisory agreements and the allocation of resources by the Advisers - Advisory agreements were **not negotiated on an arm's-length basis**, as the company's executive officers are also executives of the Advisers[135](index=135&type=chunk) - The Advisers and their affiliates face conflicts in allocating personnel time and investment opportunities among the company and other clients[136](index=136&type=chunk)[137](index=137&type=chunk)[139](index=139&type=chunk) [Risks Associated with Debt Financing](index=22&type=section&id=Risks%20Associated%20with%20Debt%20Financing) The use of debt financing increases foreclosure risk, and rising interest rates could reduce cash available for distributions - Using mortgage and other debt financing increases the **risk of foreclosure** if cash flow is insufficient to service the debt[142](index=142&type=chunk)[143](index=143&type=chunk) - **Rising interest rates** could increase borrowing costs on variable-rate debt and make it difficult to refinance properties on favorable terms[146](index=146&type=chunk)[147](index=147&type=chunk) [Risks Related to Our Taxation as a REIT](index=24&type=section&id=Risks%20Related%20to%20Our%20Taxation%20as%20a%20REIT) Failure to maintain REIT status would result in corporate taxation, and the 90% distribution requirement could strain liquidity - If the company **fails to qualify as a REIT**, it would be subject to federal income tax, significantly reducing cash available for stockholders[153](index=153&type=chunk)[154](index=154&type=chunk)[158](index=158&type=chunk) - The requirement to **distribute at least 90% of REIT taxable income** could force the company to borrow funds or sell assets in unfavorable conditions[160](index=160&type=chunk)[177](index=177&type=chunk) - Compliance with REIT asset and income tests may cause the company to forgo attractive investments or liquidate assets prematurely[164](index=164&type=chunk)[166](index=166&type=chunk) [Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[187](index=187&type=chunk) [Cyber Security](index=28&type=section&id=Item%201C.%20Cyber%20Security) Cybersecurity risk is managed by external Advisers through a third-party provider following the NIST framework, with board oversight - Cybersecurity and IT functions are **outsourced to a third-party Managed Service Provider (MSP)** specializing in these services[189](index=189&type=chunk) - The MSP's program follows the **NIST Cybersecurity Framework** and includes employee training, phishing simulations, and annual penetration testing[189](index=189&type=chunk)[190](index=190&type=chunk) - The **board of directors oversees cybersecurity risk**, with the Chief Operating Officer responsible for managing mitigation strategies[192](index=192&type=chunk)[194](index=194&type=chunk) - The company is not aware of any cybersecurity risks or incidents that have **materially affected** its business, operations, or financial condition[191](index=191&type=chunk) [Properties](index=29&type=section&id=Item%202.%20Properties) The company owns a portfolio of twelve properties, comprising eight commercial and four residential buildings in Georgia and California - The company owns **eight commercial real estate properties and four residential apartments** located in Georgia and California[195](index=195&type=chunk) [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings - We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us[197](index=197&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[198](index=198&type=chunk) [Part II](index=30&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock began trading on the OTCQX in April 2024, while its common stock DRIP and repurchase programs were suspended - The company's common stock began trading on the **OTCQX Best Market** on April 29, 2024, under the ticker **MKZR**, with a potential uplisting being explored[200](index=200&type=chunk) - As of September 27, 2024, the company had **1,857 common stockholders**, 403 Series A preferred stockholders, and 35 Series B preferred stockholders[201](index=201&type=chunk) - The Board of Directors **suspended the common stock share repurchase program and the DRIP** on March 4, 2024, in connection with the OTCQX listing[204](index=204&type=chunk) Dividends Declared Per Share (Fiscal Year 2024 vs. 2023) | Stock Type | FY 2024 Total Dividend/Share | FY 2023 Total Dividend/Share | | :--- | :--- | :--- | | Common Stock | $0.500 | $0.450 | | Series A Preferred Stock | $1.500 | $1.500 | | Series B Preferred Stock | $2.250* | N/A | Issuer Purchases of Equity Securities (Fiscal Year 2024) | Security | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Common Stock | 129,538.06 | $7.38 / $5.50 | | Series A Preferred Stock | 3,399.50 | $22.00 - $22.75 | [Selected Financial Data](index=33&type=section&id=Item%206.%20%5BRESERVED%5D) This item is reserved and no information is provided - Item 6 is marked as [RESERVED][214](index=214&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting increased rental revenue from acquisitions, decreased investment income, and upcoming debt maturities [Portfolio and Properties](index=35&type=section&id=Portfolio%20and%20Properties) The portfolio consists of investment securities and twelve properties, with development underway on the 'Aurora at Green Valley' project Investment Portfolio Fair Value | Investment Type | Fair Value (June 30, 2024) | Fair Value (June 30, 2023) | | :--- | :--- | :--- | | Investments, at fair value | $2,138,104 | $13,432,480 | | Unconsolidated investments (non-securities) | $3,906,326 | $8,716,500 | - The company owns and manages **eight commercial properties and four residential apartment buildings**, with the Hollywood Apartments property listed for sale in August 2024[230](index=230&type=chunk) - Development is underway for the **'Aurora at Green Valley' project**, a 72-unit multi-family community, with a **$17.15 million construction loan** secured[240](index=240&type=chunk) - The company is pursuing development of a multi-family community on its **'Campus Lane Land'** and aims to commence construction in late 2025[239](index=239&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) The company reported a net loss of $11.2 million in FY2024, driven by a sharp decline in investment income compared to the prior year Comparison of Operations (Fiscal Years 2024 vs. 2023) | Metric | FY 2024 | FY 2023 | Key Driver of Change | | :--- | :--- | :--- | :--- | | **Revenues** | | | | | Rental and reimbursements | $15.74M | $15.11M | Increase from acquisition of three office buildings. | | Investment income | $0.85M | $11.31M | Decrease due to a large one-time liquidation in FY2023. | | Other income (Gain on debt extinguishment) | $0 | $14.49M | One-time gain in FY2023 from Addison property sale. | | **Expenses** | | | | | Property operating and maintenance | $6.52M | $9.03M | Decrease from sale of Addison property in June 2023. | | Depreciation and amortization | $7.15M | $5.27M | Increase from acquisitions of three new office buildings. | | Interest expense | $6.12M | $7.10M | Decrease from settlement of Addison property debt. | | **Net Realized/Unrealized** | | | | | Net realized gain (loss) on investments | ($3.02M) | $0.66M | Write-off of two LP interests in FY2024. | [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended FY2024 with $13.08 million in cash and is actively managing $40.2 million in debt maturing in fiscal 2025 - The company finished fiscal year 2024 with approximately **$13.08 million in cash**, cash equivalents, and restricted cash[273](index=273&type=chunk) Cash Flow Summary (Fiscal Years 2024 vs. 2023) | Cash Flow Activity | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | ($0.59M) | ($6.62M) | | Net Cash from Investing Activities | ($1.30M) | $15.31M | | Net Cash from Financing Activities | ($3.17M) | $0.45M | | **Net (Decrease) Increase in Cash** | **($5.06M)** | **$9.14M** | - The company has significant debt maturing in fiscal year 2025, totaling **$40.2 million**, and is actively negotiating extensions and refinancing[282](index=282&type=chunk) [Critical Accounting Policies and Estimates](index=46&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies real estate purchase price allocations and fair value measurements of Level III investments as critical accounting policies - **Real estate purchase price allocations** require significant assumptions to estimate the fair values of tangible assets and identifiable intangibles[284](index=284&type=chunk) - The valuation of investments relies on a three-level fair value hierarchy, with most investments classified as **Level III**, requiring significant management judgment[287](index=287&type=chunk)[289](index=289&type=chunk) - For directly owned real property, valuation is determined using an **Argus model** with inputs such as rent rolls, expenses, and cap rates[294](index=294&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks are its illiquid real estate investments and interest rate risk from its variable-rate debt - The company's portfolio primarily consists of **illiquid or non-listed equity and debt investments** in U.S. real estate companies, carrying high risk[311](index=311&type=chunk)[312](index=312&type=chunk) - As of June 30, 2024, the company had **$17.5 million of variable-rate debt** indexed to SOFR, with risk managed through an interest rate cap[313](index=313&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's consolidated financial statements and supplementary data by reference to page F-1 of the report - The company's consolidated financial statements and notes are located starting on **page F-1** of the report[314](index=314&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=51&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[315](index=315&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of June 30, 2024 - Management concluded that the company's **disclosure controls and procedures were effective** as of June 30, 2024[316](index=316&type=chunk) - Based on the COSO framework, management assessed **internal control over financial reporting as effective** as of June 30, 2024[320](index=320&type=chunk)[321](index=321&type=chunk) [Other Information](index=52&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[323](index=323&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=52&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[324](index=324&type=chunk) [Part III](index=53&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=53&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company is managed by a three-member board with two independent directors and has established key governance committees and a Code of Ethics - The Board of Directors consists of three members: Charles "Chip" Patterson (Chairman, not independent), Tim Dozois (Independent), and Tom Frame (Independent)[328](index=328&type=chunk) - Key executive officers include **Robert Dixon (CEO & President)**, Angche Sherpa (CFO), and Glen Fuller (COO)[331](index=331&type=chunk) - The **Audit Committee** and the **Nominating and Corporate Governance Committee** are both composed of the two independent directors[335](index=335&type=chunk)[336](index=336&type=chunk) - The company has adopted a **Code of Ethics**, and a copy is available on its website[334](index=334&type=chunk) [Executive Compensation](index=56&type=section&id=Item%2011.%20Executive%20Compensation) Executive officers receive no direct compensation from the company, while independent directors received total fees of $105,000 in fiscal 2024 - Executive officers receive **no direct compensation** from the company; their compensation is paid by MacKenzie or the Advisers[345](index=345&type=chunk) Director Compensation (Fiscal 2024) | Name | Fees Earned or Paid in Cash | | :--- | :--- | | Chip Patterson (Chairman) | $0 | | Tim Dozois (Independent Director) | $52,500 | | Tom Frame (Independent Director) | $52,500 | | **Total Fees** | **$105,000** | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=57&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) No person is known to own more than 5% of voting securities, and directors and officers as a group beneficially own less than 1% - As of September 27, 2024, no person is known to beneficially own **more than 5%** of the company's voting securities[347](index=347&type=chunk) Security Ownership of Directors and Officers (as of Sept 27, 2024) | Name/Group | Common Shares Beneficially Owned | Percent of Class | | :--- | :--- | :--- | | Tim Dozois (Independent Director) | 5,086 | < 1% | | Tom Frame (Independent Director) | 5,975 | < 1% | | Charles "Chip" Patterson (Interested Director) | 66,810 | < 1% | | Robert Dixon (CEO) | 66,810 | < 1% | | Directors and Officers as a group (6 persons) | 79,472 | < 1% | [Certain Relationships and Related Transactions, and Director Independence](index=58&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company has significant related-party transactions with its external manager, paying $3.22 million in management fees in fiscal 2024 - The company is managed by MacKenzie and advised by its affiliates, which are owned by the company's executive officers and their families[350](index=350&type=chunk)[351](index=351&type=chunk)[352](index=352&type=chunk) Fees Paid to Related Parties (Fiscal 2024 vs. 2023) | Fee Type | Recipient | Fiscal 2024 | Fiscal 2023 | | :--- | :--- | :--- | :--- | | Management Fees | Real Estate Adviser | $3,224,834 | $3,004,725 | | Administration Fees | MacKenzie | $756,733 | $726,000 | | Transfer Agent Costs | MacKenzie | $66,267 | $92,000 | - The Board of Directors has determined that **two of its three members are independent** according to New York Stock Exchange standards[357](index=357&type=chunk) [Principal Accountant Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Total fees paid to the independent auditor, Moss Adams LLP, were $264,500 in fiscal 2024, primarily for audit services Accountant Fees (Moss Adams LLP) | Fee Category | Fiscal 2024 | Fiscal 2023 | | :--- | :--- | :--- | | Audit Fees | $259,500 | $268,608 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $0 | $0 | | All Other Fees | $5,000 | $8,000 | | **Total Fees** | **$264,500** | **$276,608** | - The **Audit Committee pre-approves all audit** and permissible non-audit services provided by the independent accounting firm[362](index=362&type=chunk) [Part IV](index=60&type=section&id=PART%20IV) [Exhibits and Consolidated Financial Statement Schedules](index=60&type=section&id=Item%2015.%20Exhibits%20and%20Consolidated%20Financial%20Statement%20Schedules) This section lists all documents filed with the report, including financial statements, advisory agreements, and officer certifications - The report includes a list of all filed exhibits, such as the **Amended and Restated Investment Advisory Agreement**, Administration Agreement, and officer certifications[367](index=367&type=chunk)[368](index=368&type=chunk) [Form 10-K Summary](index=62&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[371](index=371&type=chunk) [Consolidated Financial Statements](index=63&type=section&id=Consolidated%20Financial%20Statements) [Report of Independent Registered Public Accounting Firm](index=64&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion, identifying purchase price allocation and Level III investment valuation as Critical Audit Matters - The auditor, Moss Adams LLP, issued an **unqualified opinion**, stating the financial statements are presented fairly in all material respects[374](index=374&type=chunk) - A **Critical Audit Matter** was identified regarding the **purchase price allocation** for real estate acquisitions due to significant management judgment[380](index=380&type=chunk)[381](index=381&type=chunk) - A second **Critical Audit Matter** was the **fair value measurement of Level III investments**, which are inherently subjective and depend on unobservable inputs[383](index=383&type=chunk)[384](index=384&type=chunk) [Financial Statements](index=67&type=section&id=Financial%20Statements) The company reported total assets of $233.1 million and a net loss attributable to common stockholders of $13.2 million for fiscal 2024 Consolidated Balance Sheet Summary | Metric (in millions) | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Total Real Estate Assets, Net | $211.3 | $170.7 | | Total Assets | $233.1 | $213.2 | | Mortgage Notes Payable, Net | $113.7 | $91.2 | | Total Liabilities | $125.1 | $102.1 | | Total Stockholders' Equity | $82.4 | $98.9 | | Total Equity (incl. Non-controlling interests) | $107.9 | $111.0 | Consolidated Statement of Operations Summary | Metric (in millions) | Year Ended June 30, 2024 | Year Ended June 30, 2023 | | :--- | :--- | :--- | | Rental and Reimbursements | $15.74 | $15.11 | | Total Operating Expenses | $25.65 | $34.98 | | Operating Loss | ($9.92) | ($19.87) | | Net Loss | ($11.22) | ($3.69) | | Net Loss Attributable to Common Stockholders | ($13.23) | ($4.79) | | Net Loss Per Share | ($1.00) | ($0.36) | [Notes to Consolidated Financial Statements](index=73&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's UPREIT structure, accounting policies, property acquisitions, and significant debt maturities in fiscal 2025 - The company operates through a **UPREIT structure** with its Operating Partnership, which holds the real estate assets[405](index=405&type=chunk) - All of the company's financial investments are classified as **Level III** in the fair value hierarchy, valued using significant unobservable inputs[485](index=485&type=chunk) - The company **acquired three properties** during fiscal 2024 and provides detailed purchase price allocations for these acquisitions[495](index=495&type=chunk)[496](index=496&type=chunk)[497](index=497&type=chunk) - The company has significant debt maturities totaling $117.3 million, with **$40.2 million maturing in fiscal year 2025**[566](index=566&type=chunk) Future Minimum Rental Income (as of June 30, 2024) | Year Ending June 30, | Rental Income | | :--- | :--- | | 2025 | $12,015,210 | | 2026 | $9,258,288 | | 2027 | $6,589,707 | | 2028 | $5,415,188 | | 2029 | $4,500,143 | | Thereafter | $9,372,528 | | **Total** | **$47,151,064** |

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) Presents unaudited consolidated financial statements and comprehensive notes on business, accounting, investments, and debt [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Summarizes the company's financial position, including assets, liabilities, and equity at specific dates Consolidated Balance Sheet Highlights (Unaudited) | Metric | March 31, 2024 ($) | June 30, 2023 ($) | | :-------------------------------- | :------------- | :------------ | | Total real estate assets, net | $195,176,549 | $170,715,312 | | Cash and cash equivalents | $15,462,084 | $17,242,781 | | Investments, at fair value | $4,037,437 | $13,432,480 | | Unconsolidated investment (non-security), at fair value | $7,629,958 | $8,716,500 | | Total assets | $226,085,826 | $213,157,593 | | Mortgage notes payable, net | $106,137,059 | $91,247,384 | | Total liabilities | $118,371,717 | $102,145,587 | | Total stockholders' equity | $86,309,632 | $98,908,132 | | Non-controlling interests | $21,404,477 | $12,103,874 | | Total equity | $107,714,109 | $111,012,006 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net loss for the reported periods Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended March 31, 2024 ($) | Three Months Ended March 31, 2023 ($) | Nine Months Ended March 31, 2024 ($) | Nine Months Ended March 31, 2023 ($) | | :---------------------------------------- | :-------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | | Rental and reimbursements revenue | $4,079,036 | $4,469,869 | $11,216,503 | $11,212,624 | | Total operating expenses | $6,756,922 | $13,703,596 | $18,509,191 | $27,655,122 | | Operating loss | $(2,677,886) | $(9,233,727) | $(7,292,688) | $(16,442,498) | | Net loss | $(2,948,261) | $(10,238,617) | $(8,710,568) | $(13,851,187) | | Net loss attributable to common stockholders | $(3,496,899) | $(10,494,359) | $(10,033,020) | $(14,397,810) | | Net loss per share attributable to common stockholders | $(0.26) | $(0.79) | $(0.75) | $(1.08) | [Consolidated Statements of Changes in Equity (2024)](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20March%2031%2C%202024) Outlines changes in common stock, preferred stock, additional paid-in capital, and accumulated deficit for 2024 Changes in Equity (Three Months Ended March 31, 2024) | Metric | Common Stock (Shares) | Common Stock (Par Value) ($) | Series A Preferred Stock (Shares) | Series A Preferred Stock (Par Value) ($) | Series B Preferred Stock (Shares) | Series B Preferred Stock (Par Value) ($) | Additional Paid-in Capital ($) | Accumulated Deficit ($) | Total Stockholders' Equity ($) | Non-controlling Interests ($) | Total Equity ($) | | :------------------------------------ | :-------------------- | :----------------------- | :-------------------------------- | :----------------------------------- | :-------------------------------- | :----------------------------------- | :------------------------- | :------------------ | :------------------------- | :------------------------ | :----------- | | Balance, Dec 31, 2023 | 13,239,849.36 | $1,324 | 743,462.31 | $75 | 4,444.44 | $0 | $135,164,330 | $(44,697,434) | $90,468,295 | $12,106,580 | $102,574,875 | | Net loss | - | - | - | - | - | - | - | $(3,207,051) | $(3,207,051) | $258,790 | $(2,948,261) | | Balance, March 31, 2024 | 13,302,775.40 | $1,331 | 754,939.83 | $75 | 16,612.44 | $2 | $136,162,782 | $(49,854,558) | $86,309,632 | $21,404,477 | $107,714,109 | Changes in Equity (Nine Months Ended March 31, 2024) | Metric | Common Stock (Shares) | Common Stock (Par Value) ($) | Series A Preferred Stock (Shares) | Series A Preferred Stock (Par Value) ($) | Series B Preferred Stock (Shares) | Series B Preferred Stock (Par Value) ($) | Additional Paid-in Capital ($) | Accumulated Deficit ($) | Total Stockholders' Equity ($) | Non-controlling Interests ($) | Total Equity ($) | | :------------------------------------ | :-------------------- | :----------------------- | :-------------------------------- | :----------------------------------- | :-------------------------------- | :----------------------------------- | :------------------------- | :------------------ | :------------------------- | :------------------------ | :----------- | | Balance, June 30, 2023 | 13,243,279.96 | $1,324 | 671,340.45 | $67 | - | $0 | $133,762,999 | $(34,856,258) | $98,908,132 | $12,103,874 | $111,012,006 | | Net loss | - | - | - | - | - | - | - | $(9,195,967) | $(9,195,967) | $485,399 | $(8,710,568) | | Balance, March 31, 2024 | 13,302,775.40 | $1,331 | 754,939.83 | $75 | 16,612.44 | $2 | $136,162,782 | $(49,854,558) | $86,309,632 | $21,404,477 | $107,714,109 | [Consolidated Statements of Changes in Equity (2023)](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20for%20the%20three%20and%20nine%20months%20ended%20March%2031%2C%202023) Outlines changes in common stock, preferred stock, additional paid-in capital, and accumulated deficit for 2023 Changes in Equity (Three Months Ended March 31, 2023) | Metric | Common Stock (Shares) | Common Stock (Par Value) ($) | Series A Preferred Stock (Shares) | Series A Preferred Stock (Par Value) ($) | Additional Paid-in Capital ($) | Accumulated Deficit ($) | Total Stockholders' Equity ($) | Non-controlling Interests ($) | | :------------------------------------ | :-------------------- | :----------------------- | :-------------------------------- | :----------------------------------- | :------------------------- | :------------------ | :------------------------- | :------------------------ | | Balance, Dec 31, 2022 | 13,254,497.43 | $1,325 | 505,115.06 | $51 | $130,274,766 | $(30,858,855) | $99,417,287 | $8,884,148 | | Net loss | - | - | - | - | - | $(10,284,739) | $(10,284,739) | $46,122 | | Balance, March 31, 2023 | 13,241,026.32 | $1,324 | 588,577.64 | $59 | $132,061,537 | $(42,874,199) | $89,188,721 | $12,003,000 | Changes in Equity (Nine Months Ended March 31, 2023) | Metric | Common Stock (Shares) | Common Stock (Par Value) ($) | Series A Preferred Stock (Shares) | Series A Preferred Stock (Par Value) ($) | Additional Paid-in Capital ($) | Accumulated Deficit ($

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company's Q3 2023 financials show decreased assets and equity, with a net loss driven by investment performance [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets and equity declined by September 30, 2023, due to lower cash and investment values **Consolidated Balance Sheet Highlights (Unaudited)** | Account | September 30, 2023 | June 30, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$210,912,522** | **$213,157,593** | | Total real estate assets, net | $174,281,506 | $170,715,312 | | Cash and cash equivalents | $13,981,263 | $17,242,781 | | Investments, at fair value | $11,986,262 | $13,432,480 | | **Total Liabilities** | **$104,972,352** | **$102,145,587** | | Mortgage notes payable, net | $94,146,609 | $91,247,384 | | **Total Equity** | **$105,940,170** | **$111,012,006** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a $4.2 million net loss for Q3 2023, a reversal from a profit in Q3 2022 **Statement of Operations Summary (Unaudited)** | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Rental and reimbursements | $3,559,981 | $3,068,503 | | Total operating expenses | $5,816,596 | $5,586,535 | | Operating loss | ($2,256,615) | ($2,518,032) | | Net income (loss) | **($4,208,702)** | **$1,286,454** | | Net income (loss) attributable to common stockholders | ($4,597,421) | $1,166,345 | | Net income (loss) per share | **($0.35)** | **$0.09** | [Consolidated Statements of Changes in Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased to $105.9 million, impacted by a net loss and dividend payments - Key changes in equity for the three months ended September 30, 2023 include a **net loss of $4.3 million**, common stock dividends of $1.7 million, and preferred stock dividends of $0.3 million[13](index=13&type=chunk) - The company issued **$1.4 million in preferred stock** and $0.4 million in common stock through dividend reinvestment, while repurchasing $0.5 million of common stock[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $3.5 million in Q3 2023, driven by significant investments in real estate assets **Cash Flow Summary (Unaudited)** | Activity | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $517,066 | ($850,176) | | Net cash from investing activities | ($5,427,818) | $553,133 | | Net cash from financing activities | $1,451,608 | $3,210,829 | | **Net increase (decrease) in cash** | **($3,459,144)** | **$2,913,786** | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's REIT structure, accounting policies, investments, debt, and related party transactions [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the REIT transition, Q3 2023 operational results, and market risks from inflation - The company's investment strategy is to invest at least **80% of total assets in equity or debt in real estate assets** and up to 20% in investment securities of real estate companies[156](index=156&type=chunk) - The company plans to develop a **72-unit multi-family residential community** in Fairfield, CA, with construction expected to begin in early Spring 2024[174](index=174&type=chunk) - Management acknowledges risks from **increased inflation and higher interest rates**, which have increased variable rate borrowing costs and could adversely impact real estate asset values[179](index=179&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Rental revenue grew due to acquisitions, but a significant unrealized investment loss drove a net loss for Q3 2023 **Key Operational Metrics Comparison (Q3 2023 vs Q3 2022)** | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Rental and reimbursements revenues | $3.56 million | $3.07 million | | Asset management fee | $0.79 million | $0.72 million | | Property operating and maintenance | $1.39 million | $1.83 million | | Depreciation and amortization | $1.56 million | $0.91 million | | Interest expense | $1.32 million | $1.59 million | | Net unrealized gain (loss) on investments | ($2.27 million) | $2.84 million | - The increase in rental revenue was mainly due to the **acquisition of three commercial properties** since September 2022[181](index=181&type=chunk) - The decrease in property operating expenses was mainly due to the **sale of the Addison Property** in June 2023, partially offset by acquisitions of new office buildings[189](index=189&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity from stock offerings and operations to meet its obligations - As of September 30, 2023, the company had raised **$17.72 million from its Series A preferred stock offering** and plans to fund future investments with these proceeds and cash from operations[200](index=200&type=chunk) - For the three months ended September 30, 2023, **cash decreased by $3.46 million**, driven by $5.43 million used in investing activities, primarily for real estate acquisitions[205](index=205&type=chunk) **Debt Maturity Schedule** | Fiscal Year Ending June 30, | Debt Maturing | | :--- | :--- | | 2024 (remainder) | $943,436 | | 2025 | $22,237,498 | | 2026 | $11,024,219 | | Thereafter | $62,570,297 | | **Total** | **$96,775,450** | [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are from illiquid real estate investments and variable-rate debt - The company's primary market risk stems from its **speculative and illiquid investments** in smaller U.S. real estate companies[219](index=219&type=chunk) - The company is exposed to interest rate risk on **$17.5 million of variable-rate debt** indexed to SOFR, managed through an interest rate cap agreement[220](index=220&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's **disclosure controls and procedures were effective** as of September 30, 2023[221](index=221&type=chunk) - **No changes occurred** during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[222](index=222&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - **None**[224](index=224&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the last annual report - There have been **no material changes** to risk factors from the annual report on Form 10-K for the fiscal year ended June 30, 2023[225](index=225&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued preferred and common shares and repurchased common stock during the quarter - In July 2023, **2,265 common shares were issued at $10.25 per share** upon conversion of Class A units of the Operating Partnership[226](index=226&type=chunk) - During the quarter, the company issued **54,394.20 Series A preferred shares for gross proceeds of $1,359,350**, plus an additional 1,771.45 shares via the DRIP[227](index=227&type=chunk) **Issuer Purchases of Equity Securities (Q3 2023)** | Security | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Common stocks | 64,092.00 | $7.38 | [Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **None**[230](index=230&type=chunk) [Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[231](index=231&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) The company reported no other information - **None**[232](index=232&type=chunk) [Exhibits](index=44&type=section&id=Item%206.%20Exhibits) The report includes required CEO and CFO certifications and Inline XBRL data files as exhibits - Key exhibits filed include **Section 302 and Section 1350 certifications** by the CEO and CFO[233](index=233&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 000-55006 MACKENZIE REALTY CAPITAL, INC. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Inc ...

For the transition period from _________ to __________ Commission file number 000-55006 MacKenzie Realty Capital, Inc. (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) ☑ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction o ...