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].
MacKenzie Realty Capital Inc(MKZR) - 2024 Q3 - Quarterly Report