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What changed in MacKenzie Realty Capital, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of MacKenzie Realty Capital, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+355 added−280 removedSource: 10-K (2025-09-29) vs 10-K (2024-09-27)

Top changes in MacKenzie Realty Capital, Inc.'s 2025 10-K

355 paragraphs added · 280 removed · 243 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

49 edited+29 added−4 removed47 unchanged
Biggest changeWe evaluate the broader market, the property’s position in the market, the needs our capital can address, and the track record of the sponsor or operator bringing the opportunity to us. We do not generally engage brokers to search for or acquire properties, and the majority of our properties were acquired in “off market” transactions.
Biggest changeWhen evaluating opportunities to buy properties, we look for opportunistic and value-add situations similar to our approach to targeting real estate securities, including unique situations and value-added opportunities. We evaluate the broader market, the property’s position in the market, the needs our capital can address, and the track record of the sponsor or operator bringing the opportunity to us.
On April 13, 2021, we filed a preliminary offering circular (the “Offering Circular”) pursuant to Regulation A with the SEC to sell up to $50 million of shares of our Series A preferred stock at an initial offering price of $25.00 per share.
On April 13, 2021, we filed a preliminary offering circular (the “Offering Circular”) pursuant to Regulation A with the SEC to sell up to $50 million of shares of our Series A preferred stock at an initial offering price of $25 per share.
The acquisition price was determined based on the price paid for the building by the affiliate in August 2022 adjusted for the company’s other current assets and liabilities as of the acquisition date. The acquisition of GVEC was approved by our Independent Directors.
The net acquisition price was determined based on the price paid for the building by the affiliate in August 2022 adjusted for the company’s other current assets and liabilities as of the acquisition date. The acquisition of GVEC was approved by our Independent Directors.
As part of the purchase agreement, $4,650,000 of the purchase price was paid through the issuance of 206,666.67 Series A Preferred Units of the Operating Partnership and $750,000 of the land purchase price was paid through the issuance of 77,881.62 Class A units of the Operating Partnership.
As part of the purchase agreement, $4,650,000 of the purchase price was paid through the issuance of 206,666.67 Preferred Units of the Operating Partnership and $750,000 of the land purchase price was paid through the issuance of 77,881.62 Class A units of the Operating Partnership.
Concurrently with acquiring the Management Companies and land from Wiseman, the Operating Partnership also negotiated the right to acquire the limited partnership interest in each Wiseman Partnership at pre-determined prices over a two-year period that expired in May 2024.
Concurrently with acquiring the Management Companies and land from Wiseman, the Operating Partnership also negotiated the right to acquire the limited partnership interests in each Wiseman Partnership at pre-determined prices over a two-year period that expired in May 2024.
On August 26, 2024, the Company entered into a letter agreement with Maxim Group LLC (“Maxim”) to provide general financial advisory and investment banking services to the Company in connection with, among other things, strategic planning, potential uplisting to a U.S. exchange (NASDAQ, New York Stock Exchange), and potential rights offering, equity issuance or other mechanisms to enhance corporate and shareholder value.
On August 26, 2024, the Company entered into a letter agreement with Maxim to provide general financial advisory and investment banking services to the Company in connection with, among other things, strategic planning, potential uplisting to a U.S. exchange (Nasdaq, New York Stock Exchange), and potential rights offering, equity issuance or other mechanisms to enhance corporate and shareholder value.
In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such property as collateral for future borrowings. 6 Table of Contents Some of these laws and regulations have been amended to require compliance with new or more stringent standards as of future dates.
In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such property as collateral for future borrowings. Some of these laws and regulations have been amended to require compliance with new or more stringent standards as of future dates.
MacKenzie NY Real Estate 2 Corp., (“MacKenzie NY 2”), a wholly owned subsidiary of TRS, was formed for the purpose of making certain limited investments in New York companies. We terminated TRS effective December 31, 2022, after the sale of its sole investment, and transferred the ownership of MacKenzie NY 2 to the Parent Company.
(“MacKenzie NY 2”), a wholly owned subsidiary of TRS, was formed for the purpose of making certain limited investments in New York companies. We terminated TRS effective December 31, 2022, after the sale of its sole investment and transferred the ownership of MacKenzie NY 2 to the Parent Company.
Determination of fair value involves subjective judgments and estimates, and is reviewed by the Board of Directors. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements. Staffing We do not currently have any employees.
Determination of fair value involves subjective judgments and estimates, and is reviewed by the Board of Directors. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements. 7 Table of Contents Staffing We do not currently have any employees.
These companies are likely to be non-traded REITs, small-capitalization publicly traded REITs, public and private real estate limited partnerships, and limited liability companies. Our wholly owned subsidiary, MRC TRS, Inc., (“TRS”) was incorporated under the general corporation laws of the State of California on February 22, 2016 and operated as a taxable REIT subsidiary.
These companies are likely to be non-traded REITs, small-capitalization publicly traded REITs, public and private real estate limited partnerships, and limited liability companies. Our wholly owned subsidiary, MRC TRS, Inc. (“TRS”), was incorporated under the general corporation laws of the State of California on February 22, 2016, and operated as a taxable REIT subsidiary. MacKenzie NY Real Estate 2 Corp.
We filed a second post-effective amendment to the Offering Circular on November 1, 2023, which amended the offering to sell an aggregate of up to $75 million of shares of either our Series A preferred stock or our Series B preferred stock.
We filed a second post-effective amendment to the Offering Circular on November 1, 2023, which amended the offering to sell an aggregate of up to $75 million of shares of either our Series A preferred stock or our Series B preferred stock. This post-effective amendment to the Offering Circular terminated on November 1, 2024.
Of the total shares issued by us as of June 30, 2024, approximately $14.28 million and $0.11 million, respectively, worth of common and Series A preferred shares have been repurchased under our share repurchase program.
Of the total shares issued by us as of June 30, 2025, approximately $14.28 million and $0.11 million, respectively, worth of shares of common stock and Series A preferred stock have been repurchased under our share repurchase program.
We remain registered under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”), and we will continue to file periodic reports on Form 10-K, Form 10-Q, and Form 8-K, as well as file proxy statements and other reports required under the Exchange Act.
We are registered under Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and we will continue to file periodic reports on Form 10-K, Form 10-Q, and Form 8-K, as well as file proxy statements and other reports required under the Exchange Act.
Management believed this transaction was strategically important as it focuses the portfolio on our desired geographic area (Western United States) and created a captive pipeline of properties. We completed the acquisition of all of the limited partnership interests in five of the eight partnerships prior to the expiration of the two-year window.
Management believed this transaction was strategically important as it focuses the portfolio on our desired geographic area (Western United States) and created a captive pipeline of properties. We completed the acquisition of all of the limited partnership interests in five of the eight partnerships prior to the expiration of the two-year window, and one shortly thereafter via a separate agreement.
We may purchase non-controlling interests, but we intend that such investments will constitute less than 20% of our portfolio. We do not invest in general partnerships or other entities that do not afford limited liability to their security owners.
We may purchase non-controlling interests, but we intend that such investments will constitute less than 20% of our portfolio. We do not invest in general partnerships or other entities that do not afford limited liability to their security owners. However, limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities.
On January 1, 2024, the Operating Partnership acquired 100% membership interest in GV Executive Center, LLC (“GVEC”), which owns an office building located in Fairfield, California known as “Green Valley Executive Center” from an affiliate of our Advisers for a total purchase price of $8,703,127, which was paid through issuance of 386,805.64 Series A Preferred Units of the Operating Partnership.
On January 1, 2024, the Operating Partnership acquired 100% membership interest in GV Executive Center, LLC (“GVEC”), which owns an office building located in Fairfield, California known as “Green Valley Executive Center” from Patterson Real Estate Services LP (“PRES”), an affiliate of our Advisers, for a net purchase price of $8,703,127, which was paid through issuance of 386,805.64 Series A preferred units of the Operating Partnership.
We acquired all the limited partnership interests in, and therefore all the equity in, the following partnership on the following dates: First & Main, LP (“First and Main”) in July 2022, 1300 Main, LP (“1300 Main”) in October 2022, Woodland Corporate Center Two, LP (“Woodland Corporate Center Two”) in January 2023, Main Street West, LP (“Main Street West”) in February 2023, and One Harbor Center, LP (“One Harbor Center”) in May 2024.
We acquired all the limited partnership interests in, and therefore all the equity in, the following partnerships on the following dates: First & Main, LP (“First & Main”) in July 2022, 1300 Main, LP (“1300 Main”) in October 2022, Woodland Corporate Center Two, LP (“Woodland Corporate Center Two”) in January 2023, Main Street West, LP (“Main Street West”) in February 2023, One Harbor Center, LP in May 2024 and Green Valley Medical Center, LP in August 2024.
On February 6, 2023, we formed a new entity, MRC Aurora, LLC (the “MRC Aurora”) for the purpose of owning, developing, renovating, leasing, managing, renting, and potentially selling certain real property and building and improvements located at 5000 Wiseman Way, Fairfield, California (the “Aurora Project”).
On February 6, 2023, we formed a new entity, MRC Aurora, LLC (“MRC Aurora”) for the purpose of owning, developing, and renovating certain real property and building and improvements located at 5000 Wiseman Way, Fairfield, California (the “Aurora Land”), and thereafter leasing, managing, renting, and potentially selling the completed project (the “Aurora at Green Valley”).
We filed a post-effective amendment to the Offering Circular on October 14, 2022, and increased the offering to sell up to $75 million of shares of our Series A preferred stock. The post-effective amendment to this Offering Circular was declared effective on November 13, 2022.
We filed a post-effective amendment to the Offering Circular on October 14, 2022, and increased the offering to sell up to $75 million of shares of our Series A preferred stock.
Our internet address is www.mackenzierealty.com 7 Table of Contents
Our internet address is www.mackenzierealty.com 8 Table of Contents
The joint venture partners own the remaining 1.55% and 1.25% equity units of Madison and PVT, respectively, and also hold a carried interest in both companies. We are the controlling majority owner of both companies.
We own 98.45% and 98.75% of equity units of Madison and PVT, respectively. The joint venture partners own the remaining 1.55% and 1.25% of equity units of Madison and PVT, respectively, and also hold a carried interest in both companies.
Our Advisers have several methods of evaluating and monitoring the performance and value of the assets in which we invest, which include the following: • Assessment of success in adhering to business plans and compliance with covenants; • Periodic and regular contact with property management to discuss financial position, requirements, and accomplishments; • Comparisons to other properties in the geographic area or sector; • Attendance at and participation in our board meetings; and • Review of monthly and quarterly consolidated financial statements and financial projections for properties. 5 Table of Contents Valuation of Investments Securities for which market quotations are readily available on an exchange will be valued at the closing price on the day closest to the valuation date.
Our Advisers have several methods of evaluating and monitoring the performance and value of the assets in which we invest, which include the following: • Assessment of success in adhering to business plans and compliance with covenants; • Periodic and regular contact with property management to discuss financial position, requirements, and accomplishments; • Comparisons to other properties in the geographic area or sector; • Attendance at and participation in our board meetings; and • Review of monthly and quarterly consolidated financial statements and financial projections for properties.
As of June 30, 2024, we have issued common and Series A and Series B preferred shares with gross proceeds of $15.56 million and $0.25 million, respectively, under our dividend reinvestment program (“DRIP”).
As of June 30, 2025, we have issued shares of common stock, Series A preferred stock and Series B preferred stock with gross proceeds of $15.56 million, $0.44 million and $0.01 million, respectively, under our dividend reinvestment plans (each a “DRIP” and together the “DRIPs”).
On January 25, 2022, through the Operating Partnership, we acquired a 98% limited liability company interest in MacKenzie BAA IG Shoreline LLC (“MacKenzie Shoreline”), formed to acquire, renovate, and own the 84-unit multifamily building located at 1841 Laguna Street, Concord, CA.
We are the controlling majority owner of Hollywood Hillview; therefore, effective December 31, 2021, we have consolidated the financial statements of Hollywood Hillview. 2 Table of Contents On January 25, 2022, through the Operating Partnership, we acquired a 98% limited liability company interest in MacKenzie-BAA IG Shoreline LLC (“MacKenzie Shoreline”), formed to acquire, renovate, and own the 84-unit multifamily building located at 1841 Laguna Street, Concord, CA.
We acquire mid-market properties that may be too small to attract most institutions, and where we believe we can create long-term value for our stockholders utilizing the following investment strategies. • Value-Add .
We do not generally engage brokers to search for or acquire properties, and the majority of our properties were acquired in “off market” transactions. We acquire mid-market properties that may be too small to attract most institutions, and where we believe we can create long-term value for our stockholders utilizing the following investment strategies. • Value-Add .
Our Advisers’ due diligence typically includes: • review of operating history, appraisals, market reports, vacancies, deferred maintenance; • review of historical and prospective financial information and regulatory disclosures; • research relating to the property’s management, industry, markets, products and services and competitors; • verification of collateral; and • appraisals or opinions of value by third party advisers.
Our Advisers’ due diligence typically includes: • review of operating history, appraisals, market reports, vacancies, deferred maintenance; • review of historical and prospective financial information and regulatory disclosures; • research relating to the property’s management, industry, markets, products and services and competitors; • verification of collateral; and • appraisals or opinions of value by third party advisers. 6 Table of Contents Upon the completion of due diligence and a decision to proceed with an investment, the investment professionals leading the investment present the investment opportunity to the Advisers’ investment team, which then determines whether to pursue the potential investment.
On April 29, 2024, our common stock became eligible for trading on the OTCQX Best Market under the ticker symbol MKZR. We are externally managed by MacKenzie Capital Management, LP (“MacKenzie”) under a turnkey administration agreement dated and effective as of January 1, 2021 (the “Administration Agreement”).
Subsequently, on November 6, 2024, The Nasdaq Stock Market (“Nasdaq”) approved the listing of our common stock, and trading commenced on the Nasdaq Capital Market on November 11, 2024. We are externally managed by MacKenzie Capital Management, LP (“MacKenzie”) under a turnkey administration agreement dated and effective as of January 1, 2021 (the “Administration Agreement”).
We generally seek to acquire assets that produce ongoing distributable income for investors, yet with a primary focus on purchasing such assets at a discount from what the Advisers estimate to be the actual or potential value of the real estate. 3 Table of Contents When evaluating opportunities to buy properties, we look for opportunistic and value-add situations similar to our approach to targeting real estate securities, including unique situations and value-added opportunities.
We generally seek to acquire assets that produce ongoing distributable income for investors, yet with a primary focus on purchasing such assets at a discount from what the Advisers estimate to be the actual or potential value of the real estate.
In connection with the agreement, the Company has issued in a private placement an aggregate amount of 133,000 shares of common stock to Maxim’s affiliate, approximately 1% of the Company’s outstanding stock. The common stock does not have any conversion rights.
In connection with the agreement, the Company issued to Maxim’s affiliate in a private placement 13,300 shares of common stock, representing approximately 1% of the Company’s outstanding stock. The common stock does not have any conversion rights. On January 30, 2025, the Company entered into a letter agreement with Outside The Box Capital Inc.
This post-effective amendment to the Offering Circular was qualified by the SEC on November 14, 2023. 1 Table of Contents On October 4, 2021, through the Operating Partnership, we acquired a 90% economic interest in Hollywood Hillview Owner, LLC (“Hollywood Hillview”), a Delaware limited liability company, to acquire and operate a multifamily building (“Hollywood Apartments”) located in Los Angeles, California.
On October 4, 2021, through the Operating Partnership, we acquired a 90% economic interest in Hollywood Hillview Owner, LLC (“Hollywood Hillview”), a Delaware limited liability company, to acquire and operate a multifamily building (“Hollywood Apartments”) located in Los Angeles, California. The remaining 10% economic interest in Hollywood Hillview is owned by an unaffiliated third party, True USA, LLC (“True USA”).
The joint venture partners own the remaining 2% of the limited liability company interest as well as a carried interest. On April 1, 2022, we, and our newly formed, wholly owned subsidiary, FSP Merger Sub, Inc. (“Merger Sub”) entered into a reverse triangular merger agreement with FSP Satellite Place Corp.
The joint venture partners own the remaining 2% of the limited liability company interest as well as a carried interest. We are the controlling majority owner of the MacKenzie Shoreline; therefore, effective June 30, 2022, we have consolidated the financial statements of MacKenzie Shoreline. On April 1, 2022, we, and our newly formed, wholly owned subsidiary, FSP Merger Sub, Inc.
On June 1, 2022, the merger closed, and MacKenzie Satellite became our wholly owned subsidiary, which owns the Satellite Place Office Building, a six-story Class “A” suburban office building containing approximately 134,785 rentable square feet of space located on approximately 10 acres of land in Duluth, GA.
MacKenzie Satellite owns the Satellite Place Office Building, a six-story Class “A” suburban office building containing approximately 134,785 rentable square feet of space located on approximately 10 acres of land in Duluth, GA. The former shareholders of FSP Satellite received cash or shares of the Company, based upon their election.
Some of these acquisitions were paid in all cash, and some were purchased through issuance of 339,078.39 and 43,212.86 of the Operating Partnership’s Series A and Series B preferred units, respectively.
Some of these acquisitions were paid in all cash, and some were purchased through issuance of 459,620.35 and 43,212.86 of the Operating Partnership’s Series A and Series B preferred units, respectively. We consolidated the financial statements of these six limited partnerships after we completed the acquisition of the limited partnership interests in each of these Wiseman Partnerships.
As of June 30, 2024, we have raised approximately $119.10 million from our three common stock public offerings, $18.51 million from our Series A preferred stock offering and $1.26 million from our Series B preferred stock offering pursuant to the Offering Circular.
As of June 30, 2025, we have raised approximately $125.44 million from our common stock public offerings (including $4.80 million from our Registered Offering and the concurrent private placement, and $1.50 million from the ATM offering), $18.74 million from our Series A preferred stock offering and $3.11 million from our Series B preferred stock offering pursuant to the Second Offering Circular.
The former shareholders of FSP Satellite received cash or shares of the Company, based upon their election. All former shareholders of FSP Satellite holders elected to be paid in cash with the exception of two shareholders who elected to receive common and preferred stocks in the amount of $27,503 and $13,752, respectively.
All former shareholders of FSP Satellite holders elected to be paid in cash with the exception of two shareholders who elected to receive common and preferred stock in the amount of $27,503 and $13,752, respectively. Subsequent to the completion of the merger, we have consolidated the financial statements of MacKenzie Satellite effective June 30, 2022.
We intend to continue our historical activities related to tender offers for shares of non-traded REITs to boost our short-term cash flow and to support our distributions, subject to the constraint that such securities will not exceed 20% of our portfolio.
We generally use a mezzanine loan or convertible preferred equity structure which provides income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership. 5 Table of Contents We intend to continue our historical activities related to tender offers for shares of non-traded REITs to boost our short-term cash flow and to support our distributions, subject to the constraint that such securities will not exceed 20% of our portfolio.
The Parent Company is the manager and the Operating Partnership is the sole common member of MRC Aurora. The Operating Partnership contributed the entitled land located at 5000 Wiseman Way, Fairfield, California to MRC Aurora in exchange for the common membership interest in MRC Aurora.
The Parent Company is the manager and the Operating Partnership is the sole common member of MRC Aurora. The Operating Partnership contributed the Aurora Land to MRC Aurora in exchange for the common membership interest in MRC Aurora. Construction of the Aurora at Green Valley, which consists of three residential buildings and a clubhouse, began in September 2024.
MRC Aurora commenced selling its preferred units in February 2024 with the goal of raising $10 million in preferred capital and closed on a construction loan of $17.15 million on February 21, 2024 to fund the development of the Aurora Project. 2 Table of Contents On September 1, 2023, we formed 220 Campus Lane, LLC (“220 Campus Lane”) to acquire, lease and operate a vacant office building located at 220 Campus Lane, Fairfield, CA (“220 Campus Lane Office Building”) and Campus Lane Residential, LLC (“Campus Lane Residential”) to acquire and develop a parcel of vacant land adjacent to 220 Campus Lane Office Building into a multi-family residential community. 220 Campus Lane acquired the 220 Campus Lane Office Building and Campus Lane Residential acquired the vacant land in September 2023.
As of June 30, 2025, the Operating Partnership has contributed $4.60 million (including the value of the Aurora Land) in exchange for common units and $2.77 million in exchange for preferred units in MRC Aurora and we have raised $7.23 million in exchange for preferred units from outside investors. 3 Table of Contents On September 1, 2023, we formed 220 Campus Lane, LLC (“220 Campus Lane”) to acquire, lease and operate a vacant office building located at 220 Campus Lane, Fairfield, CA (“220 Campus Lane Office Building”) and Campus Lane Residential, LLC (“Campus Lane Residential”) to acquire and develop a parcel of vacant land adjacent to 220 Campus Lane Office Building into a multi-family residential community. 220 Campus Lane acquired the 220 Campus Lane Office Building, and Campus Lane Residential acquired the vacant land in September 2023.
Where a security is traded but in limited volume, we may instead utilize the weighted average closing price of the security over the prior 10 trading days. To value securities that do not trade on a national exchange, we may use published secondary market trading information.
Valuation of Investments Securities for which market quotations are readily available on an exchange will be valued at the closing price on the day closest to the valuation date. Where a security is traded but in limited volume, we may instead utilize the weighted average closing price of the security over the prior 10 trading days.
The remaining 10% economic interest in Hollywood Hillview is owned by an unaffiliated third party, True USA, LLC. Hollywood Hillview owns 100% of the membership interests in PT Hillview GP, LLC (the “PT Hillview”).
Hollywood Hillview owns 100% of the membership interests in PT Hillview GP, LLC (the “PT Hillview”).
In March 2021, we, together with our joint venture partners, formed two operating companies: Madison-PVT Partners LLC (“Madison”) and PVT-Madison Partners LLC (“PVT”), to acquire and operate two residential apartment buildings located in Oakland, California. We own 98.45% and 98.75% of equity units of Madison and PVT, respectively.
The Parent Company has contributed $98,692,635 in capital to the Operating Partnership since inception; thus, the Class A, Series A and Series B preferred units represent approximately 22.41% of all capital contributions. 1 Table of Contents In March 2021, we, together with our joint venture partners, formed two operating companies: Madison-PVT Partners LLC (“Madison”) and PVT-Madison Partners LLC (“PVT”), to acquire and operate two residential apartment buildings located in Oakland, California.
(“FSP Satellite”), pursuant to which the Merger Sub would be merged with and into FSP Satellite with FSP Satellite as the surviving entity, but renamed MacKenzie Satellite Place, Inc. (“MacKenzie Satellite”).
(“Merger Sub”) entered into a reverse triangular merger agreement with FSP Satellite Place Corp. (“FSP Satellite”), pursuant to which the Merger Sub merged with and into FSP Satellite with FSP Satellite as the surviving entity, but renamed MacKenzie Satellite Place Corp. (“MacKenzie Satellite”), effective June 1, 2022, at which time MacKenzie Satellite became our wholly owned subsidiary.
On May 20, 2020, we formed an operating partnership, MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”) for the purpose of acquiring and consolidating our wholly owned and majority-owned subsidiaries within an entity that is able to offer tax-advantaged solutions to certain sellers.
On May 20, 2020, we formed an operating partnership, MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”) for the purpose of acquiring and operating real estate assets.
However, limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities. 4 Table of Contents Investment Selection Our Advisers’ investment team is responsible for all aspects of our investment process. The current members of the investment team are Glen Fuller, Chip Patterson, Robert Dixon, Angche Sherpa, and Christine Simpson.
Investment Selection Our Advisers’ investment team is responsible for all aspects of our investment process. The current members of the investment team are Glen Fuller, Chip Patterson, Robert Dixon, Angche Sherpa, and Christine Simpson. The investment strategy involves a team approach, whereby potential transactions are screened by various members of the investment team.
Investment Objective Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.
As of June 30, 2025, we have 1,578,192.98 shares of common stock 766,176.57 shares of Series A preferred stock and 116,112.32 shares of Series B preferred stock outstanding. 4 Table of Contents Investment Objective Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.
We may invest in the development of properties in target markets where we believe we can capture significant development premiums upon completion. We generally use a mezzanine loan or convertible preferred equity structure which provides income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership.
We may invest in the development of properties in target markets where we believe we can capture significant development premiums upon completion.
The entitlement process for the vacant land is currently underway, but our goal of commencing construction in late 2025 will be dependent upon the City’s response to our development application that was submitted in April 2024 and securing the necessary financial resources. We own 100% of both of these companies.
The entitlement process for the vacant land is currently underway. Our goal is to commence construction in spring 2026; however, this is subject to the city’s approval of our development application submitted in April 2024 and to securing the necessary financial resources. The Campus Lane Residential development project is now known as Blue Ridge at Suisun Valley (“Blue Ridge”).
The Series A Preferred Units of the Operating Partnership are meant to mimic our Series A Preferred Shares, and the terms of such Units are described in the Partnership Unit Designation of the Series A Preferred Limited Partnership Units. Wiseman is a full-service real estate syndicator, developer, broker, and property manager founded in 1979.
We have consolidated the financial statements of the eight limited liability companies, which hold the general partnership interests in the limited partnerships, effective June 30, 2022. Wiseman is a full-service real estate syndicator, developer, broker, and property manager founded in 1979.
We filed our initial registration statement in June 2012 with the Securities and Exchange Commission (“SEC”) to register the initial public offering of 5,000,000 shares of our common stock. The initial public offering commenced in January 2014 and concluded in October 2016.
We filed our initial registration statement with the Securities and Exchange Commission (“SEC”) in 2012 and have since completed multiple public offerings of our common stock. On April 29, 2024, our common stock became eligible for trading on the OTCQX Best Market under the ticker symbol “MKZR”.
Removed
We filed a second registration statement with the SEC to register a subsequent public offering of 15,000,000 shares of our common stock. The second offering commenced in December 2016 and concluded on October 28, 2019.
Added
As of June 30, 2025, we own all limited partnership units of the Operating Partnership except for 81,909.89 Class A Limited Partnership units, 1,063,504.34 Series A preferred units and 43,212.86 Series B preferred units.
Removed
We filed a third registration statement with the SEC to register a public offering of 15,000,000 shares of our common stock that was declared effective by the SEC on October 31, 2019. The third offering commenced shortly thereafter and expired on October 31, 2020.
Added
Upon a limited partner’s request for redemption or upon liquidation of the Operating Partnership, the 81,909.89 Class A Limited Partnership units are convertible into the Company’s shares of common stock on a 1:1 conversion ratio or, at the Company’s election, for cash based upon the 10-day average trading price of the Company’s common stock on a 1:1 basis.
Removed
The investment strategy involves a team approach, whereby potential transactions are screened by various members of the investment team.
Added
As a result of the Company’s 1-for-10 common stock reverse stock split (the “Reverse Stock Split”) on August 4, 2025, discussed below, the Class A Limited Partnership units are convertible into the Company’s common stock on a 10:1 basis subsequent to the Reverse Stock Split.
Removed
Upon the completion of due diligence and a decision to proceed with an investment, the investment professionals leading the investment present the investment opportunity to the Advisers’ investment team, which then determines whether to pursue the potential investment.
Added
Upon a request of a holder of Series A or Series B preferred units, the Company may elect to repurchase such units with the Company’s common stock based upon the volume weighted average price per share of common stock for the twenty (20) trading days prior to the repurchase date, or at the Company’s election or upon liquidation, the 1,063,504.34 Series A preferred units are entitled to a liquidation preference of $26,587,609 (based on the stated value of $25 per share for the Series A preferred units) and the 43,212.86 Series B preferred units are entitled to a liquidation preference of $1,080,322 (based on the stated value of $25 per share for the Series B preferred units).
Added
We are the controlling majority owner of both companies; therefore, effective March 31, 2021, we have consolidated the financial statements of these companies.
Added
We filed a new offering circular (the “Second Offering Circular”) in December 2024 to sell an aggregate of up to approximately $71.30 million of shares of either our Series A preferred stock or our Series B preferred stock at an offering price of $25 per share. The Second Offering Circular was qualified by the SEC on January 29, 2025.
Added
In June 2025, we filed a post-effective amendment to the Second Offering Circular to permit the sale of up to $72.90 million of Series A, Series B, and Series C preferred stock, at an offering price of $22.50 per Series A share and $25.00 per Series B or Series C share.
Added
In November 2024, we filed a new shelf registration statement on Form S-3 (the “Form S-3 Registration Statement”) to sell our common and preferred stock, warrants, rights and units up to an aggregate of $75 million. The Form S-3 Registration Statement was declared effective by the SEC on January 15, 2025.
Added
Also on January 15, 2025, we entered into an Equity Distribution Agreement (the “ATM Sales Agreement”) with Maxim Group LLC (the “Sales Agent” or “Maxim”) pursuant to which we may issue and sell shares of our common stock, covered by the prospectus supplement filed with the SEC on January 15, 2025 and accompanying base prospectus dated January 15, 2025 (together, the “ATM Prospectus”) from time to time through or to the Sales Agent, acting as our agent or principal (subject to compliance with Regulation M).
Added
Sales of shares of our common stock under the ATM Prospectus may be made in negotiated transactions (including block transactions) or transactions that are deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”), including sales made directly on Nasdaq or sales made to or through a market maker other than on an exchange, subject to maintaining compliance with General Instruction I.B.6 of Form S-3 which requires that in no event will we sell securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75 million.
Added
Under the terms of the ATM Sales Agreement, we also may sell shares, our common stock, to the Sales Agent, as principal for its own account (subject to compliance with Regulation M), at a price to be agreed upon at the time of sale.
Added
If we sell shares to the Sales Agent, as principal (subject to compliance with Regulation M), we will enter into a separate agreement with the Sales Agent and we will describe the agreement in a separate prospectus supplement or pricing supplement. On February 28, 2025, we entered into a securities purchase agreement with a single institutional investor.
Added
Under the agreement, the Company offered and sold in a registered direct offering (the “Registered Offering”), 153,403.40 shares of the Company’s common stock, $0.0001 par value per share, and pre-funded warrants to purchase up to 129,226.50 shares of common stock; and, in a concurrent private placement and together with the Registered Offering, warrants to purchase up to an aggregate of 423,944.85 shares of common stock.
Added
The purchase price for each share and the exercise price for each warrant was $17.10 per share, and the purchase price for each pre-funded warrant was $17.099 per share. The common stock warrants consist of Series A common stock warrants and Series B common stock warrants.
Added
The Series A common stock warrants to purchase up to 141,314.95 shares of common stock became exercisable six months after the closing date of the offering and expire 18 months from the date of issuance.
Added
The Series B common stock warrants to purchase up to 282,629.90 shares of common stock became exercisable six months after the date of issuance and expire five years from the date of issuance. The Company and the single institutional investor have no other material relationships.
Added
All share and warrant amounts described have been adjusted to give effect to the Reverse Stock Split that became effective on August 4, 2025.
Added
The clubhouse opened in June 2025 for pre-leasing activities and the first residential building was completed in July 2025, with leasing commencing in August 2025. The remaining two buildings were completed in September 2025, with leasing expected to commence shortly thereafter.
Added
The construction of Aurora at Green Valley was financed through $10 million of preferred capital ($7.23 million from outside investors and $2.77 million from the Operating Partnership) and a $17.15 million construction loan from Valley Strong Credit Union.
Added
The Operating Partnership holds 100% of the voting rights, and we, as the manager, have the managing and operating rights of MRC Aurora. Therefore, we consolidate the financial statements of MRC Aurora.
Added
We own 100% of 220 Campus Lane and Campus Lane Residential; therefore, we consolidated the financial statements of these companies after the acquisitions were completed on September 8, 2023.
Added
(“OTB Capital”) to provide marketing and distribution services to communicate information about the Company. In connection with the agreement, the Company issued 8,583.70 shares of common stock to OTB Capital in a private placement. The common stock issued to OTB Capital does not have any conversion rights.
Added
On May 8, 2025, we formed a new wholly owned subsidiary, Innovate Napa, LLC (“Innovate Napa”), to enter into a master lease of a portion of the Main Street West Office Building in connection with the refinancing of the Main Street West loan. Our wholly owned subsidiary, MRC QRS, Inc.
Added
(“MRC QRS”), a qualified REIT subsidiary incorporated in Delaware on May 22, 2025, was formed to acquire and hold non-traded REIT shares. On August 4, 2025, the Company effected a 1-for-10 Reverse Stock Split of its common stock, increasing the par value from $0.0001 per share to $0.001 per share.
Added
However, on the same date, the Company amended its charter to decrease the par value back to $0.0001. The Reverse Stock Split did not change the number of authorized shares of common stock. Prior to the Reverse Stock Split, the Company had 16,760,978 shares of common stock outstanding.
Added
Immediately following the Reverse Stock Split (and after giving effect to the payment of cash in lieu of fractional shares), the Company had 1,675,776 shares of common stock outstanding. No fractional shares were issued as a result of the Reverse Stock Split.
Added
Stockholders entitled to receive a fractional share instead received a cash payment equal to the fraction of a share multiplied by the closing price of the Company’s common stock on The Nasdaq Capital Market on August 1, 2025, as adjusted for the Reverse Stock Split, without interest.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Investing in Real Estate Real estate investments are subject to risks particular to real property, including: • Adverse changes in national and local economic and market conditions, including the credit and securitization markets; • Impacts from governmental laws and regulations, fiscal policies and zoning ordinances, including the impact of environmental laws and regulations, and related compliance costs, including costs to comply with future changes; • Takings by condemnation or eminent domain; • Real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area, which could adversely affect market rental rates; • The perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties; • Competition from comparable properties; • The occupancy rate of our properties; • The ability to collect all rent from tenants on a timely basis; • The effects of any bankruptcies or insolvencies of major tenants; • The expense of re-leasing space; • Changes in interest rates and in the availability, cost and terms of mortgage funding; • Economic or physical decline of the areas where our investments are located; • Deterioration in the physical condition of our investments and resulting maintenance expenses; • Acts of war or terrorism, including the consequences of terrorist attacks; • Acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses; and • Cost of compliance with the Americans with Disabilities Act.
Biggest changeRisks Related to Our Taxation as a REIT • Failure to remain qualified as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders. • Complying with minimum required distributions and other REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments. • The stock ownership limit imposed by the Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities. • Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, and a failure to make required distributions would subject us to U.S. federal corporate income tax. • The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties. • We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares. 10 Table of Contents Risks Related to Investing in Real Estate Real estate investments are subject to risks particular to real property, including: • Adverse changes in national and local economic and market conditions, including the credit and securitization markets; • Impacts from governmental laws and regulations, fiscal policies and zoning ordinances, including the impact of environmental laws and regulations, and related compliance costs, including costs to comply with future changes; • Takings by condemnation or eminent domain; • Real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area, which could adversely affect market rental rates; • The perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties; • Competition from comparable properties; • The occupancy rate of our properties; • The ability to collect all rent from tenants on a timely basis; • The effects of any bankruptcies or insolvencies of major tenants; • The expense of re-leasing space; • Changes in interest rates and in the availability, cost and terms of mortgage funding; • Economic or physical decline of the areas where our investments are located; • Deterioration in the physical condition of our investments and resulting maintenance expenses; • Acts of war or terrorism, including the consequences of terrorist attacks; • Acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses; and • Cost of compliance with the Americans with Disabilities Act.
Examples of these potential conflicts of interest include, but are not limited to : • Competition for the time and services of personnel that work for us and our affiliates; • Compensation payable by us to our Advisers and their affiliates for their various services, which may not be on market terms and is payable, in some cases, whether or not our stockholders receive distributions; • The possibility that our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of properties and other investments, and that such conflicts may not be resolved in our favor, thus potentially limiting our investment opportunities, impairing our ability to make distributions and adversely affecting the trading price of our stock; 19 Table of Contents • The possibility that if we acquire properties from investment entities affiliated with our Advisers or their affiliates, the price may be higher than we would pay if the transaction were the result of arm’s-length negotiations with a third party; • The possibility that our Advisers will face conflicts of interest, since some of their officers are also our officers and two serve as directors of ours, resulting in actions that may not be in the long-term best interests of our stockholders; • Our Advisers have considerable discretion with respect to the terms and timing of our acquisition, disposition and leasing transactions; • The possibility that we may acquire or merge with our Advisers, resulting in an internalization of our management functions; and • The possibility that the competing demands for the time of our Advisers, their affiliates and our officers may result in them spending insufficient time on our business, which may result in our missing investment opportunities or having less efficient operations, which could reduce our profitability and result in lower distributions to stockholders.
Examples of these potential conflicts of interest include, but are not limited to : • Competition for the time and services of personnel that work for us and our affiliates; • Compensation payable by us to our Advisers and their affiliates for their various services, which may not be on market terms and is payable, in some cases, whether or not our stockholders receive distributions; • The possibility that our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of properties and other investments, and that such conflicts may not be resolved in our favor, thus potentially limiting our investment opportunities, impairing our ability to make distributions and adversely affecting the trading price of our stock; • The possibility that if we acquire properties from investment entities affiliated with our Advisers or their affiliates, the price may be higher than we would pay if the transaction were the result of arm’s-length negotiations with a third party; • The possibility that our Advisers will face conflicts of interest, since some of their officers are also our officers and two serve as directors of ours, resulting in actions that may not be in the long-term best interests of our stockholders; • Our Advisers have considerable discretion with respect to the terms and timing of our acquisition, disposition and leasing transactions; • The possibility that we may acquire or merge with our Advisers, resulting in an internalization of our management functions; and • The possibility that the competing demands for the time of our Advisers, their affiliates and our officers may result in them spending insufficient time on our business, which may result in our missing investment opportunities or having less efficient operations, which could reduce our profitability and result in lower distributions to stockholders.
Furthermore, the historical performance of a particular property or market is not a guarantee or prediction of the property’s or market’s future performance. There can be no assurance that we will be able to locate suitable acquisition opportunities in our target markets, achieve our investment goal and objectives, or fully deploy for our cash.
Furthermore, the historical performance of a particular property or market is not a guarantee or prediction of the property’s or market’s future performance. There can be no assurance that we will be able to locate suitable acquisition opportunities in our target markets, achieve our investment goal and objectives, or fully deploy our cash.
We may recover substantially less than the full value of any unsecured claims, which would harm our financial condition. We may not obtain audited results of prior operations for certain properties in which we investment. In some cases, we will not obtain audited operating statements regarding the prior operations of an investment.
We may recover substantially less than the full value of any unsecured claims, which would harm our financial condition. We may not obtain audited results of prior operations for certain properties in which we invest. In some cases, we will not obtain audited operating statements regarding the prior operations of an investment.
The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders. 11 Table of Contents Discovery of previously undetected environmentally hazardous conditions, including mold or asbestos, may lead to liability for adverse health effects and costs of remediating the problem could adversely affect our operating results.
The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders. 12 Table of Contents Discovery of previously undetected environmentally hazardous conditions, including mold or asbestos, may lead to liability for adverse health effects and costs of remediating the problem could adversely affect our operating results.
If we were forced to immediately liquidate some or all of our investments, the proceeds are likely to result in a significant loss, if such a liquidation is possible at all. 13 Table of Contents We may not obtain independent third-party appraisals or valuation reports on all of our investments.
If we were forced to immediately liquidate some or all of our investments, the proceeds are likely to result in a significant loss, if such a liquidation is possible at all. 14 Table of Contents We may not obtain independent third-party appraisals or valuation reports on all of our investments.
The Board of Directors may not grant such an exemption to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares or more than 9.8% in value or in number of shares, whichever is more restrictive, would result in the termination of our status as a REIT.
The Board of Directors may not grant such an exemption to any proposed transferee whose ownership in excess of 9.80% of the value of our outstanding shares or more than 9.80% in value or in number of shares, whichever is more restrictive, would result in the termination of our status as a REIT.
You are urged to consult with your tax advisor regarding the effect of this change on your effective tax rate with respect to REIT dividends. The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.
You are urged to consult with your tax advisor regarding the effect of this rule on your effective tax rate with respect to REIT dividends. The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.
If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments would reduce the funds available for distribution to our stockholders. 21 Table of Contents We may use floating rate, interest-only or short-term loans to acquire investments.
If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments would reduce the funds available for distribution to our stockholders. We may use floating rate, interest-only or short-term loans to acquire investments.
Unless exempted by the Board of Directors, no person may own more than 9.8% of the aggregate value of the outstanding shares of our stock or more than 9.8% in value or in number of shares, whichever is more restrictive, of the aggregate outstanding common or preferred shares of the Company.
Unless exempted by the Board of Directors, no person may own more than 9.80% of the aggregate value of the outstanding shares of our stock or more than 9.80% in value or in number of shares, whichever is more restrictive, of the aggregate outstanding common or preferred shares of the Company.
If we fail to obtain debt or equity capital in the future, it could limit our ability to grow, which could have a material adverse effect on the value of our preferred shares. Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
If we fail to obtain debt or equity capital in the future, it could limit our ability to grow, which could have a material adverse effect on the value of our preferred shares. 24 Table of Contents Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
To qualify as a REIT for federal income tax purposes, we must continually satisfy various tests, including tests regarding the nature of our assets which could restrict our disposition strategy. 16 Table of Contents Lack of diversification in numbers or types of investments increases our dependence on individual investments.
To qualify as a REIT for federal income tax purposes, we must continually satisfy various tests, including tests regarding the nature of our assets which could restrict our disposition strategy. Lack of diversification in numbers or types of investments increases our dependence on individual investments.
Numerous state, local, federal, and industry-initiated efforts may also affect property owners’ ability to collect rent or enforce remedies for the failure to pay rent. This may lead to reduction or cancellation of distributions, which will in turn effect our ability to pay our expenses and to pay distributions to our shareholders. 25 Table of Contents
Numerous state, local, federal, and industry-initiated efforts may also affect property owners’ ability to collect rent or enforce remedies for the failure to pay rent. This may lead to reduction or cancellation of distributions, which will in turn effect our ability to pay our expenses and to pay distributions to our shareholders.
Currently, our investments are concentrated in eight commercial real estate properties and four multi-family residential apartment properties, located primarily in the Oakland-San Francisco Bay area in California.
Currently, our investments are concentrated in nine commercial real estate properties and four multi-family residential apartment properties, located primarily in the Oakland-San Francisco Bay area in California.
In the event such a claim were made against us under a “bad boy” carve-out guaranty following foreclosure on mortgages or related loan, and such claim were successful, our business and financial results could be materially adversely affected. Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
In the event such claims were made against us under a “bad boy” carve-out guaranty following foreclosure on mortgages or related loans, and such claims were successful, our business and financial results could be materially adversely affected. Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
Consequently, we may not receive the level of support and assistance that we otherwise might receive if we were internally managed. In addition, we offer no assurance that our Advisers will remain our Advisers or that we will continue to have access to our Advisers’ principals and professionals.
Consequently, we may not receive the level of support and assistance that we otherwise might receive if we were internally managed. 18 Table of Contents In addition, we offer no assurance that our Advisers will remain our Advisers or that we will continue to have access to our Advisers’ principals and professionals.
Additionally, substantial inflationary pressures and increased costs may have an adverse impact on our tenants, which may adversely affect the ability of our tenants to pay rent. 12 Table of Contents Our Hollywood Apartment building has variable interest rate debt but has an interest rate cap which has mitigated and we believe will continue to mitigate the effect of rising interest rates.
Additionally, substantial inflationary pressures and increased costs may have an adverse impact on our tenants, which may adversely affect the ability of our tenants to pay rent. 13 Table of Contents Our Hollywood Apartments building has variable interest rate debt but has an interest rate cap which has mitigated and we believe will continue to mitigate the effect of rising interest rates.
The market and economic challenges created by the COVID-19 pandemic, and measures implemented to prevent its spread, may adversely affect our operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our investments.
The market and economic challenges created by the COVID-19 pandemic, and measures implemented to prevent its spread, adversely affected our operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our investments.
Risks Related to Investing in Real Estate • Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in our operating revenues and/or the underlying value of one or more of our properties. • The market for real estate investments is highly competitive and investments in real estate-related assets can be speculative. • Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our properties and harm our financial condition. • We could be exposed to environmental liabilities, which could impact the value of real properties that we may acquire or underlying our investments. • We will likely receive limited representations and warranties from sellers, and may not obtain audited results of prior operations for certain properties in which we have invested. • We may not obtain independent third-party appraisals or valuation reports on all of our investments. • We may be adversely affected by unfavorable economic conditions, particularly in the specific geographic areas where our investments are concentrated. • Inflation may adversely affect our financial condition and results of operations. • Our success is materially dependent on attracting qualified tenants and, when vacancies occur, we may not be able to re-lease or renew leases at the properties held by us on terms favorable to us, or at all. • The bankruptcy, insolvency, or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition. • Significant restrictions on transfer and encumbrance of investments subject to mortgage or other debt financing are expected, and we may experience delays in the sale of an investment. • We face possible risks associated with climate change.
Risks Related to Investing in Real Estate • Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in our operating revenues and/or the underlying value of one or more of our properties. • The market for real estate investments is highly competitive and investments in real estate-related assets can be speculative. • Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our properties and harm our financial condition. • We could be exposed to environmental liabilities, which could impact the value of real properties that we may acquire or underlying our investments. • We may not obtain independent third-party appraisals or valuation reports on all of our investments. • We may be adversely affected by unfavorable economic conditions, particularly in the specific geographic areas where our investments are concentrated. • Inflation may adversely affect our financial condition and results of operations. • Our success is materially dependent on attracting qualified tenants and, when vacancies occur, we may not be able to re-lease or renew leases at the properties held by us on terms favorable to us, or at all. • The bankruptcy, insolvency, or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition. • Significant restrictions on transfer and encumbrance of investments subject to mortgage or other debt financing are expected, and we may experience delays in the sale of an investment. • We face possible risks associated with climate change.
In order to maintain our REIT status and to meet the REIT distribution requirements, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not favorable for these borrowings or sales.
REIT distribution requirements could adversely affect our liquidity. In order to maintain our REIT status and to meet the REIT distribution requirements, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not favorable for these borrowings or sales.
No assurance can be given that our stockholders will realize a substantial return (if any) on their investment or that they will not lose their entire investment in us. We will likely receive limited representations and warranties from sellers.
No assurance can be given that our stockholders will realize a substantial return (if any) on their investment or that they will not lose their entire investment in us. 11 Table of Contents We will likely receive limited representations and warranties from sellers.
Risks Related to Our Business Operations and Strategy • We may change our targeted investment and operational policies without stockholder consent. • Our Board of Directors can revoke our REIT qualification without stockholder approval. • Our future growth will depend on our ability to acquire real estate investments in several competitive real estate markets, and lack of diversification in numbers or types of investments increases our dependence on individual investments. 8 Table of Contents • We may experience difficulty in ultimately selling properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors. • Subject to broad investment guidelines approved by our Board of Directors, we are dependent on the investment analysis and management services provided by our Advisers and their key personnel for our success. • Our investments will be carried at estimated fair value as determined by our Advisers and there may be uncertainty as to the value of these investments. • We, through our Advisers, are often required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations. • The occurrence of cyber incidents, or a deficiency in our cybersecurity, could cause a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
Risks Related to Our Business Operations and Strategy • We may change our targeted investment and operational policies without stockholder consent. • Our Board of Directors can revoke our REIT qualification without stockholder approval. • Our future growth will depend on our ability to acquire real estate investments in several competitive real estate markets, and lack of diversification in numbers or types of investments increases our dependence on individual investments. • We may experience difficulty in ultimately selling properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors. • Subject to broad investment guidelines approved by our Board of Directors, we are dependent on the investment analysis and management services provided by our Advisers and their key personnel for our success. 9 Table of Contents • Our investments will be carried at estimated fair value as determined by our Advisers and there may be uncertainty as to the value of these investments. • We, through our Advisers, are often required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations.
Risks Associated with Debt Financing • We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments and reduce the cash available for distribution to stockholders. • High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders. • High mortgage rates may make it difficult for us to finance or refinance properties, may require us to pay down loans with investment capital, which could reduce the number of properties we can acquire, our cash flow from operations, and the amount of cash distributions we can make. • If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected. • Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders. • Rising interest rates could increase our borrowing costs, adversely affecting our cash flows and reducing the amounts available for distributions to our stockholders. • We may use floating rate, interest-only or short-term loans to acquire investments.
Risks Associated with Debt Financing • We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments and reduce the cash available for distribution to stockholders. • High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders. • High mortgage rates may make it difficult for us to finance or refinance properties, may require us to pay down loans with investment capital, which could reduce the number of properties we can acquire, our cash flow from operations, and the amount of cash distributions we can make. • If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.
Risks Related to Our Financial Position • Future debt or capital stock issuances by the Company could dilute the ownership interest of current stockholders and could subject us to covenants restricting our future financial and operating flexibility. • We do not have guaranteed cash flow, and if we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and our stockholders’ overall return will be reduced. • While we are subject to minimum distribution requirements to maintain our status as a REIT, such distributions are not guaranteed and the availability and timing of cash distributions is uncertain. • We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
Risks Related to Our Financial Position • Future debt or capital stock issuances by the Company could dilute the ownership interest of current stockholders and could subject us to covenants restricting our future financial and operating flexibility. • We do not have guaranteed cash flow, and if we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and our stockholders’ overall return will be reduced. • We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
Interest we pay reduces cash available for distribution to stockholders. Additionally, with respect to our variable rate debt, increases in interest rates increase our interest costs, which reduces our cash flow and our ability to make distributions to you.
Additionally, with respect to our variable-rate debt, increases in interest rates increase our interest costs, which reduces our cash flow and our ability to make distributions to you.
If the investments do not generate the anticipated amount of cash flow, we may not be able to pay the anticipated distributions to our stockholders without making such distributions from the net proceeds of any offerings of capital stock or from reserves.
There can be no assurance that cash flow or profits will be generated by our investments. If the investments do not generate the anticipated amount of cash flow, we may not be able to pay the anticipated distributions to our stockholders without making such distributions from the net proceeds of any offerings of capital stock or from reserves.
Such indebtedness could result in important consequences to holders of our common and preferred shares, including subjecting us to covenants restricting our operating flexibility, increasing our vulnerability to general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures, distributions to our stockholders and general corporate requirements, and limiting our flexibility in planning for, or reacting to, changes in our business and our industry.
Such indebtedness could result in important consequences to holders of our common and preferred shares, including subjecting us to covenants restricting our operating flexibility, increasing our vulnerability to general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures, distributions to our stockholders and general corporate requirements, and limiting our flexibility in planning for, or reacting to, changes in our business and our industry. 15 Table of Contents If we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and stockholders’ overall return will be reduced.
The initial term of our Agreements with our Advisers only extends until December 31, 2024, with automatic one-year renewals thereafter, and may be terminated earlier under certain circumstances.
The term of our Agreements with our Advisers only extends until the end of each calendar year, with automatic one-year renewals, and may be terminated earlier under certain circumstances.
If this situation occurs with a particular investment, our return on that investment is likely to be less than the return we could have achieved if we had invested at a time of less investor competition for the investment.
If this situation occurs with a particular investment, our return on that investment is likely to be less than the return we could have achieved if we had invested at a time of less investor competition for the investment. For this and other reasons, the Real Estate Adviser is under no restrictions concerning the timing of investments.
We may experience difficulty in ultimately selling any property or groups of properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors.
There can be no assurance that our Advisers’ due diligence process will uncover all relevant facts or that any investment will be successful. 17 Table of Contents We may experience difficulty in ultimately selling any property or groups of properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors.
Moreover, our qualification and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the federal tax laws. Tax counsel will not review our compliance with those tests on a continuing basis.
However, we cannot assure the stockholders that we will remain qualified as a REIT. Moreover, our qualification and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the federal tax laws.
If we mortgage a property and have insufficient cash flow to service the debt, we risk an event of default which may result in our lenders foreclosing on the properties securing the mortgage and the loss of our interests in such properties if we are unable to repay or refinance. 20 Table of Contents High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.
If we mortgage a property and have insufficient cash flow to service the debt, we risk an event of default which may result in our lenders foreclosing on the properties securing the mortgage and the loss of our interests in such properties if we are unable to repay or refinance.
Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.
Tax counsel will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.
Risks Associated with Debt Financing We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which increases our expenses and could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments.
This may mean that our ability to access the best investments may be curtailed, which could result in greater than expected operating expense, losses and reduced distributions to our shareholders. 21 Table of Contents Risks Associated with Debt Financing We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which increases our expenses and could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments.
Even if we remain qualified as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. 23 Table of Contents The stock ownership limit imposed by the Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities.
Even if we remain qualified as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes.
Because stockholders will be unable to evaluate the merits of these operational and investment guidelines, they will have to rely entirely on the ability of our Advisers and Board of Directors to formulate and follow these operational and investment guidelines. 17 Table of Contents Because we are dependent upon our Advisers and its affiliates to conduct our operations, any adverse changes in the financial or operational condition of our Advisers or its affiliates, or our relationship with them, could hinder our operating performance and the return on your investment.
Because we are dependent upon our Advisers and its affiliates to conduct our operations, any adverse changes in the financial or operational condition of our Advisers or its affiliates, or our relationship with them, could hinder our operating performance and the return on your investment.
In addition, no assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock distributions, including on a retroactive basis, or assert that the requirements for such taxable cash/stock distributions have not been met.
In addition, no assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock distributions, including on a retroactive basis, or assert that the requirements for such taxable cash/stock distributions have not been met. 16 Table of Contents Risks Related to Our Business Operations and Strategy We may change our targeted investment and operational policies without stockholder consent.
In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the Advisory Agreements because of our desire to maintain our ongoing relationship with the Advisers and its affiliates.
In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the Advisory Agreements because of our desire to maintain our ongoing relationship with the Advisers and its affiliates. 20 Table of Contents We may have conflicts of interest with our Advisers and other affiliates, which could result in investment decisions that are not in the best interests of our stockholders.
If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected. In obtaining certain nonrecourse loans, we may provide standard carve-out guaranties.
Investment returns on our assets and our ability to make acquisitions could be adversely affected by our inability to secure financing on reasonable terms, if at all. 22 Table of Contents If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.
Any such changes may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect our ability to make distributions.
Any such changes may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect our ability to make distributions. Furthermore, a change in our asset allocation could result in our making investments in asset categories different from those described in this annual report.
In making such assessments and otherwise conducting customary due diligence, our Advisers relies on resources available to them and, in some cases, an investigation by third parties. There can be no assurance that our Advisers’ due diligence process will uncover all relevant facts or that any investment will be successful.
In making such assessments and otherwise conducting customary due diligence, our Advisers relies on resources available to them and, in some cases, an investigation by third parties.
While we have identified those accounting policies that are considered critical and have procedures in place to facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our consolidated financial condition and results of operations.
While we have identified those accounting policies that are considered critical and have procedures in place to facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our consolidated financial condition and results of operations. 19 Table of Contents The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our securities. 22 Table of Contents REIT distribution requirements could adversely affect our liquidity.
As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our securities. 23 Table of Contents Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.
Risk Related to COVID-19 and Other Infectious Diseases • COVID-19, or the future outbreak of other highly infectious or contagious diseases, has and could continue to materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as well as adversely affect our and our tenants’ financial condition and results of operations.
Risk Related to Outbreaks of Infectious Diseases Any future pandemic or similar threat, and governmental responses thereto, could once again materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as well as adversely affect our and our tenants’ financial condition and results of operations.
We believe that we have and will continue to operate in a manner qualifying us as a REIT for our taxable year ended December 31, 2024 and intend to continue to so operate. However, we cannot assure the stockholders that we will remain qualified as a REIT.
We have elected to be taxed as a REIT under the federal income tax laws commencing with our taxable year ended December 31, 2014. We believe that we have and will continue to operate in a manner qualifying us as a REIT for our taxable year ended December 31, 2025, and intend to continue to so operate.
For this and other reasons, the Real Estate Adviser is under no restrictions concerning the timing of investments. 10 Table of Contents Real estate investments are not as liquid as other types of assets, which may reduce economic returns to our stockholders. Real estate investments are not as liquid as some other types of investments.
Real estate investments are not as liquid as other types of assets, which may reduce economic returns to our stockholders. Real estate investments are not as liquid as some other types of investments.
The Inflation Reduction Act of 2022 (the “IRA”) includes numerous tax provisions that impact corporations, including the implementation of a corporate alternative minimum tax as well as a 1% excise tax on certain stock repurchases and economically similar transactions.
We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations. 26 Table of Contents The Inflation Reduction Act of 2022 (the “IRA”) includes numerous tax provisions that impact corporations, including the implementation of a corporate alternative minimum tax as well as a 1% excise tax on certain stock repurchases and economically similar transactions.
Consequently, there is greater uncertainty regarding our ability to access the credit market in order to attract financing on reasonable terms. Investment returns on our assets and our ability to make acquisitions could be adversely affected by our inability to secure financing on reasonable terms, if at all.
Consequently, there is greater uncertainty regarding our ability to access the credit market in order to attract financing on reasonable terms.
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our preferred shares.
The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our preferred shares. 25 Table of Contents However, under current law, individual taxpayers are entitled to claim a deduction in determining their taxable income of 20% of ordinary REIT dividends (dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us), which reduces the effective tax rate on such dividends.
We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident. 18 Table of Contents Risks Related to Our Organization and Corporate Structure Our Charter permits our Board of Directors to issue stock with terms that may subordinate the rights of common stockholders or preferred shareholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Risks Related to Our Organization and Corporate Structure Our Charter permits our Board of Directors to issue stock with terms that may subordinate the rights of common stockholders or preferred shareholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under the Code. 24 Table of Contents We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise, diminishing our ability and to pay distributions to our stockholders.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under the Code.
If we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and stockholders’ overall return will be reduced. Although our distribution policy is to use our cash flow from operations to make distributions, we are permitted to pay distributions from any source, including offering proceeds, borrowings, or sales of assets.
Although our distribution policy is to use our cash flow from operations to make distributions, we are permitted to pay distributions from any source, including offering proceeds, borrowings, or sales of assets. We have not placed a cap on the use of proceeds to fund distributions. We do not have guaranteed cash flow.
Furthermore, a change in our asset allocation could result in our making investments in asset categories different from those described in this annual report. 15 Table of Contents The ability of our Board of Directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
The ability of our Board of Directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
Our policies do not limit us from incurring debt. For purposes of calculating our leverage, we assume full consolidation of all of our real estate investments, whether or not they would be consolidated under GAAP. High debt levels will cause us to incur higher interest charges, resulting in higher debt service payments, and may be accompanied by restrictive covenants.
High debt levels will cause us to incur higher interest charges, resulting in higher debt service payments, and may be accompanied by restrictive covenants. Interest we pay reduces cash available for distribution to stockholders.
Removed
Risks Related to Our Taxation as a REIT • Failure to remain qualified as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders. • Complying with minimum required distributions and other REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments. • Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flows. 9 Table of Contents • The stock ownership limit imposed by the Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities. • Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, and a failure to make required distributions would subject us to U.S. federal corporate income tax. • The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties. • We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise, diminishing our ability and to pay distributions to our stockholders. • We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
Added
Because stockholders will be unable to evaluate the merits of these operational and investment guidelines, they will have to rely entirely on the ability of our Advisers and Board of Directors to formulate and follow these operational and investment guidelines.
Removed
We have not placed a cap on the use of proceeds to fund distributions. 14 Table of Contents We do not have guaranteed cash flow. There can be no assurance that cash flow or profits will be generated by our investments.
Added
We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.
Removed
Risks Related to Our Business Operations and Strategy We may change our targeted investment and operational policies without stockholder consent.
Added
High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders. Our policies do not limit us from incurring debt.
Removed
The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
Added
For purposes of calculating our leverage, we assume full consolidation of all of our real estate investments, whether or not they would be consolidated under the accounting principles generally accepted in the United States of America (“GAAP”).
Removed
We may have conflicts of interest with our Advisers and other affiliates, which could result in investment decisions that are not in the best interests of our stockholders.
Added
In obtaining certain nonrecourse loans, we may provide standard carve-out guaranties.
Removed
This may mean that our ability to access the best investments may be curtailed, which could result in greater than expected operating expense, losses and reduced distributions to our shareholders.
Added
The stock ownership limit imposed by the Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities.
Removed
Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders. We have elected to be taxed as a REIT under the federal income tax laws commencing with our taxable year ended December 31, 2014.
Added
We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise, diminishing our ability and to pay distributions to our stockholders.
Removed
However, under current law, continuing through 2025, individual taxpayers may be entitled to claim a deduction in determining their taxable income of 20% of ordinary REIT dividends (dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us), which temporarily reduces the effective tax rate on such dividends.
Added
Risks Relating to Potential Rescission Claims Previous issuances of common shares under our dividend reinvestment program may have violated certain federal and/or state securities laws, and shareholders could file suit to seek rescission of such securities.
Removed
We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.
Added
During the period beginning June 2021 and ending December 2021, in an offering pursuant to our registration statement on Form N-2, we made sales of securities under our dividend reinvestment program pursuant to a deficient registration statement (which registrant statement became deficient by virtue of our inadvertently failing to amend the registration statement to include the then-current audit report of our auditors).
Removed
Risk Related to COVID-19 and Other Infectious Diseases COVID-19, or the future outbreak of other highly infectious or contagious diseases, has and could continue to materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as well as adversely affect our and our tenants’ financial condition and results of operations.
Added
Consequently, the offer and sale of securities pursuant to the Form N-2 may have failed to comply fully with Section 5 of the Securities Act which may trigger a right of rescission under the Securities Act for investors that purchased shares of our common stock during this period under our dividend reinvestment program.
Added
Accordingly, we may have liability to purchasers of such securities if they were to file suit against us; the remedy could be to repurchase such securities at their purchase price plus statutory interest, less the amount of any income received with respect to such shares.
Added
There may be claims relating to our possible non-compliance with federal and/or state securities laws relating to the deficient Form N-2 referenced above, and we may continue to be contingently liable for rescission or damages of an indeterminate amount.
Added
It is possible that regulators could pursue enforcement actions or impose penalties and fines against us with respect to any violations of securities laws relating to the issuance of dividend reinvestment program shares under the deficient Form N-2 referenced above. If we have to repurchase shares as discussed above, it may affect our cash balances.
Added
If we have to repurchase shares of our common stock issued under the deficient registration statement referenced above, such rescission payments will be funded from our existing cash balances. Any rescission payments would reduce funds available to us for our operations.
Added
If all persons issued shares without registration were to successfully file suit and force rescission, we could need to pay a total of approximately $865,000 and our results of operations, cash balances or financial condition will be negatively affected. 27 Table of Contents Risks Relating to Issuance of Warrants There are unresolved issues related to rights of the warrant holder.
Added
In February 2025, we issued pre-funded and unfunded warrants to a single institutional investor pursuant to warrant agreements that granted the investor the right to share in dividends.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe board of directors administers its risk oversight function by receiving regular reports from our executive officers on areas of material risk to us, which reports include any updates regarding cybersecurity incidents or other developments. 26 Table of Contents As discussed above, we engage the MSP to assist us with the identification, monitoring and management of cybersecurity risks and rely on the expertise and knowledge of the MSP with respect to supporting our information technology network.
Biggest changeThe Board of Directors administers its risk oversight function by receiving regular reports from our executive officers on areas of material risk to us, which reports include any updates regarding cybersecurity incidents or other developments.
These systems may fail to operate properly or become disabled as a result of events wholly or partially beyond our control, including disruptions of electrical or communications services, natural disasters, political instability, terrorist attacks, sabotage, computer viruses, deliberate attempts to disrupt our computer systems through "hacking," "phishing," or other forms of both deliberate or unintentional cyber-attack, or our inability to occupy our office location.
These systems may fail to operate properly or become disabled as a result of events wholly or partially beyond our control, including disruptions of electrical or communications services, natural disasters, political instability, terrorist attacks, sabotage, computer viruses, deliberate attempts to disrupt our computer systems through “hacking”, “phishing”, or other forms of both deliberate or unintentional cyber-attack, or our inability to occupy our office location.
Our Chief Operating Officer is responsible for managing our cybersecurity risk and developing mitigation strategies and implementing controls to reduce the likelihood of a cybersecurity incident occurring and to reduce the impact of such an incident should this occur.
Our Chief Operating Officer is responsible for managing our cybersecurity risk and developing mitigation strategies and implementing controls to reduce the likelihood of a cybersecurity incident occurring and to reduce the impact of such an incident should this occur. 30 Table of Contents
The MPS reports periodically to our management team as necessary, including our Chief Executive Officer and Chief Financial Officer. These senior executive officers then brief our board of directors on security matters as required and no less frequently than annually.
These senior executive officers then brief our Board of Directors on security matters as required and no less frequently than annually.
As of the date of this annual report, we are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Our Advisers maintain third-party cyber insurance and upon identification of a significant cyber incident involving the Advisers managed IT environment, our Advisers would notify their cyber insurance carrier. 29 Table of Contents As of the date of this annual report, we are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Although we confirm third party software platforms maintain a SOC report, we rely on third parties for managing their cybersecurity risk. Our Advisers maintain third-party cyber insurance and upon identification of a significant cyber incident involving the Advisers managed IT environment, our Advisers would notify their cyber insurance carrier.
Although we confirm third party software platforms maintain a SOC report, we rely on third parties for managing their cybersecurity risk.
Added
As discussed above, we engage the MSP to assist us with the identification, monitoring and management of cybersecurity risks and rely on the expertise and knowledge of the MSP with respect to supporting our information technology network. The MPS reports periodically to our management team as necessary, including our Chief Executive Officer and Chief Financial Officer.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−1 removed0 unchanged
Biggest changeItem 2. PROPERTIES We currently own and manage eight commercial real estate properties: Satellite Place located in Duluth, GA, 1300 Main, First & Main and Main Street West located in Napa, CA, Woodland Corporate Center Two located in Woodland, CA, 220 Campus Lane and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA.
Biggest changePROPERTIES We currently own and manage nine commercial real estate properties: Satellite Place Office Building located in Duluth, GA, 1300 Main Office Building, First & Main Office Building and Main Street West Office Building located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane Office Building, Green Valley Medical Center and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and four residential apartments: Commodore Apartments and The Park View Apartments, located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments located in Concord, CA.
Additional details concerning the properties are discussed under the heading Properties in Item 7 – Management’s Discussion and Analysis Of Financial Condition And Results Of Operations in this report .
Additional details concerning the properties are discussed under the heading Properties in Item 7 in this report .
Removed
We also own and manage four residential apartments: Commodore Apartments and The Park View Apartments (f/k/a as Pon De Leo Apartments), located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and Shoreline Apartment Homes located in Concord, CA.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

14 edited+16 added−7 removed5 unchanged
Biggest changeSince our common stock became eligible for trading on OTC Markets in April 2024, the share repurchase program automatically terminated, and the Board of Directors will decide whether, and when, to reinstate the DRIP. 28 Table of Contents The following tables reflect the dividends per share that we have declared during the years ended June 30, 2024 and 2023: Dividends Common Stock Series A Preferred Stock Series B Preferred Stock During the Quarter Ended Per Share Amount Per Share Amount Per Share Amount September 30, 2023 $ 0.125 $ 1,652,688 $ 0.375 $ 268,383 $ - $ - December 31, 2023 0.125 1,652,367 0.375 276,600 0.750 2,222 March 31, 2024 0.125 1,660,225 0.375 281,770 0.750 8,078 June 30, 2024 0.125 1,662,826 0.375 284,737 0.750 31,696 $ 0.500 $ 6,628,106 $ 1.500 $ 1,111,490 $ 2.250 $ 41,996 * * Of the total dividends declared for Series B during the year ended June 30, 2024, $31,497 was an increase in liquidation preference and $10,451 was the cash dividend.
Biggest changeWhen our common stock became eligible for trading on OTC Markets in April 2024, the share repurchase program automatically terminated, and the Board of Directors will decide whether, and when, to reinstate the common stock DRIP. 32 Table of Contents The following tables reflect the dividends per share that we have declared during the years ended June 30, 2025 and 2024: Dividends Common Stock Series A Preferred Stock Series B Preferred Stock During the Quarter Ended Per Share Amount Per Share Amount Per Share Amount September 30, 2024 $ 1.250 $ 1,679,460 $ 0.375 $ 287,036 $ 0.750 $ 45,378 December 31, 2024 0.500 673,655 0.375 286,686 0.750 63,593 March 31, 2025 0.500 786,925 0.375 286,981 0.750 79,152 June 30, 2025 - - 0.375 287,316 0.750 85,058 $ 2.250 $ 3,140,040 $ 1.500 $ 1,148,019 $ 3.000 $ 273,181 * Dividends Common Stock Series A Preferred Stock Series B Preferred Stock During the Quarter Ended Per Share Amount Per Share Amount Per Share Amount September 30, 2023 $ 1.250 $ 1,652,688 $ 0.375 $ 268,383 $ - $ - December 31, 2023 1.250 1,652,367 0.375 276,600 0.750 2,222 March 31, 2024 1.250 1,660,225 0.375 281,770 0.750 8,078 June 30, 2024 1.250 1,662,826 0.375 284,737 0.750 31,696 $ 5.000 $ 6,628,106 $ 1.500 $ 1,111,490 $ 2.250 $ 41,996 * *Of the total dividends declared for Series B during the year ended June 30, 2025 and 2024, $204,889 and $31,497 were increases in liquidation preference and $68,292 and $10,451 were the cash dividends, respectively.
Any distributions to our stockholders will be declared out of assets legally available for distribution. In no event are we permitted to borrow money to make distributions if the amount of such distribution would exceed our annual accrued and received revenues, less operating costs. Distributions in kind are not permitted, except as provided in our Charter.
Any distributions to our stockholders will be declared out of assets legally available for distribution. In no event are we permitted to borrow money to make distributions if the amount of such distributions would exceed our annual accrued and received revenues, less operating costs. Distributions in kind are not permitted, except as provided in our charter.
We can offer no assurance that we will achieve results that will permit the payment of any cash distributions. On March 4, 2024, the Board of Directors suspended the common stock share repurchase program and DRIP in connection with trading of its common stock on the OTCQX Best Market.
We can offer no assurance that we will achieve results that will permit the payment of any cash distributions. On March 4, 2024, the Board of Directors suspended the common stock share repurchase program and common stock DRIP in connection with trading of its common stock on the OTCQX Best Market.
We have a DRIP that provides for reinvestment of our dividends and other distributions on behalf of stockholders for any individual stockholder who elects to participate in the DRIP, provided that the DRIP is permitted by the state in which the stockholders reside.
We have DRIPs that provide for reinvestment of our dividends and other distributions on behalf of stockholders for any individual stockholder who elects to participate in the DRIPs, provided that the applicable DRIP is permitted by the state in which the stockholders reside.
In addition, on August 26, 2024, we entered into a letter agreement with Maxim to provide general financial advisory and investment banking services to the Company in connection with, among other things, strategic planning, potential uplisting to a U.S. exchange (NASDAQ, New York Stock Exchange), and potential rights offering, equity issuance or other mechanisms to enhance corporate and shareholder value.
In addition, on August 26, 2024, we entered into a letter agreement with Maxim to provide general financial advisory and investment banking services to the Company in connection with, among other things, strategic planning, and potential rights offering, equity issuance or other mechanisms to enhance corporate and shareholder value.
During the years ended June 30, 2024 and 2023, we issued 7,741.20 and 3,350.16 shares of our Series A preferred stock, respectively, in connection with the DRIP. During the year ended June 30, 2024, we issued 2.11 shares of our Series B preferred stock, in connection with the DRIP.
During the years ended June 30, 2025 and 2024, we issued 8,567.49 and 7,741.20 shares of our Series A preferred stock, respectively, in connection with the DRIP. During the year ended June 30, 2025 and 2024, we issued 644.60 and 2.11 shares of our Series B preferred stock, respectively, in connection with the DRIP.
The Company is relying, in part, upon representations of the Maxim that it is an accredited investor as defined in Regulation D under the Securities Act.
The Company is relying, in part, upon representations of OTB Capital that it is an accredited investor as defined in Regulation D under the Securities Act. The common stock does not have any conversion rights.
On August 26, 2024, in connection with our agreement with Maxim, the Company has issued in a private placement an aggregate amount of 133,000 shares of common stock to Maxim’s affiliate, approximately of 1% of the Company’s outstanding stock. The private placement is exempt from registration under the Section 4(a)(2) of the Securities Act, and Regulation D thereunder.
These private placements of our common and preferred shares were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 3(b)(2) and Regulation A thereunder (in the case of our Regulation A offering of preferred shares) or Section 4(a)(2) and Regulation D thereunder (in the case of Operating Partnership unit conversions). 33 Table of Contents On August 26, 2024, in connection with our agreement with Maxim, the Company has issued in a private placement an aggregate amount of 13,300 shares of common stock to Maxim’s affiliate, approximately of 1% of the Company’s outstanding stock.
Recent Sale of Unregistered Securities During the year ended June 30, 2024, we issued 3,011.35 common shares at $10.25 per share to the Class A unit holders of the Operating Partnership who exercised their option to convert their Class A units to our common shares.
During the year ended June 30, 2025, we issued 32.18 shares of common stock at $102.5 per share to the Class A unit holders of the Operating Partnership who exercised their option to convert their Class A units to shares of our common stock on a 10:1 conversion ratio.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information On April 29, 2024, our common stock became eligible for trading on the OTCQX Best Market under the ticker symbol MKZR. The OTCQX Best Market is the highest market tier of OTC Markets on which 10,000 U.S. and global securities trade.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information On April 29, 2024, our common stock became eligible for trading on the OTCQX Best Market under the ticker symbol MKZR. We have also secured Depository Trust Company (“DTC”) eligibility for our common shares.
During the year ended June 30, 2024, we issued 85,688.31 of Series A preferred shares with total gross proceeds of $2,140,949, 49,562.45 of Series B preferred shares with total gross proceeds of $1,227,950.
During the year ended June 30, 2025, we issued 9,044 shares of Series A preferred stock with total gross proceeds of $226,100, and 65,903.16 shares of Series B preferred stock with total gross proceeds of $1,647,579.
Trading on OTCQX will enhance the visibility and accessibility of our common stock to U.S. investors. We have also secured Depository Trust Company (“DTC”) eligibility for our common shares. Trading through DTC allows for cost-effective clearing and guaranteed settlement, simplifying and accelerating the settlement process of daily trades.
Trading through DTC allows for cost-effective clearing and guaranteed settlement, simplifying and accelerating the settlement process of daily trades.
All such issuances were pursuant to our Regulation A Series A and Series B preferred stock offering.
We also issued 8,567.49 shares of Series A preferred stock with total gross proceeds of $192,770 under the preferred stock DRIP and 644.60 shares of Series B preferred stock with total gross proceeds of $14,503 under the preferred stock DRIP. All such issuances were pursuant to our Regulation A Series A and Series B preferred stock offering.
Holders As of September 27, 2024, we had 13,435,656.80 shares of our common stock, 765,429.60 shares of our Series A preferred stock, 63,909.52 shares of our Series B preferred stock outstanding, held by a total of 1,857 common stockholders, 403 Series A preferred stockholders and 35 Series B preferred stockholders, respectively.
Holders As of September 29, 2025, we had 1,769,284 shares of our common stock (after giving effect to the Reverse Stock Split), 763,483.15 shares of our Series A preferred stock, 120,494.05 shares of our Series B preferred stock, 27,520 shares of our Series C preferred stock outstanding, held by a total of 1,008 common stockholders, 389 Series A preferred stockholders, 75 Series B preferred stockholders and 7 Series C preferred stockholders, respectively.
Removed
The timing of any up-list process will be dependent on a multitude of factors including, but not limited to, overall market conditions.
Added
On November 11, 2024, our common stock commenced trading on the Nasdaq Capital Market under the ticker symbol MKZR. Trading on Nasdaq enhances the visibility and accessibility of MacKenzie to U.S. investors.
Removed
Dividends Common Stock Series A Preferred Stock During the Quarter Ended Per Share Amount Per Share Amount September 30, 2022 $ 0.105 $ 1,390,290 $ 0.375 $ 87,884 December 31, 2022 0.110 1,456,391 0.375 155,909 March 31, 2023 0.115 1,520,985 0.375 209,620 June 30, 2023 0.120 1,586,863 0.375 242,188 $ 0.450 $ 5,954,529 $ 1.500 $ 695,601 During the years ended June 30, 2024 and 2023, we issued 185,819.74 and 189,289.44 shares of our common stock, respectively, in connection with the DRIP.
Added
The 1,008 common stockholders of record include Cede & Co., which holds shares as nominee for the DTC, which itself holds shares on behalf of the beneficial owners of our common stock. Such information was obtained through our registrar and transfer agent.
Removed
We also issued 7,741.20 Series A preferred shares with total gross proceeds of $174,179 under the DRIP related to the Series A preferred, and 2.11 Series B preferred shares with total gross proceeds of $48 under the DRIP related to the Series B preferred.
Added
During the year ended June 30, 2025, we did not issue any shares of common stock in connection with the DRIP. During the year ended June 30, 2024, we issued 18,581.97 shares of common stock in connection with the DRIP.
Removed
During the year ended June 30, 2023, we issued 549,973.38 Series A preferred shares with total gross proceeds of $13,408,089, as well as 3,350.16 Series A preferred shares with total gross proceeds of $75,379 under the DRIP related to the Series A preferred, pursuant to the Company’s Regulation A Series A preferred stock offering.
Added
On May 19, 2025, following a review of the Company’s financials, the current economic climate, the potential impact of new tariffs on demand for office and retail space, and the increased likelihood of a near-term recession, the Board of Directors approved the suspension of the regular quarterly dividend on the Company’s common stock effective immediately.
Removed
These private placements of our common and preferred shares were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 3(b)(2) and Regulation A thereunder (in the case of our Regulation A offering of preferred shares) or Section 4(a)(2) and Regulation D thereunder (in the case of Operating Partnership unit conversions).
Added
This decision was made to preserve liquidity, enable the Company to make further investments in its own properties and developments where prudent, and to provide financial flexibility as to near-term commitments; the suspension will remain in effect until further notice.
Removed
The common stock does not have any conversion rights. 29 Table of Contents Issuer Purchases of Equity Securities The following table presents information with respect to our purchases of our common stock and preferred stock during the years ended June 30, 2024 and 2023: Execution Date Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans Maximum Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans During the year ended June 30, 2024 Common stock September 1, 2023 through September 30, 2023 64,092.00 $ 7.38 64,092.00 - December 1, 2023 through December 31, 2023 64,497.30 7.38 64,497.30 - June 1, 2024 through June 30, 2024 948.76 5.50 948.76 * - 129,538.06 129,538.06 - Series A Preferred stock December 1, 2023 through December 31, 2023 400.00 $ 22.75 400.00 - March 1, 2024 through March 31, 2024 2,000.00 22.00 2,000.00 - June 1, 2024 through June 30, 2024 999.50 22.75 999.50 - 3,399.50 3,399.50 - *Cash in-lieu of fractional shares payout.
Added
Recent Sale of Unregistered Securities Below common shares and per share prices are after giving effect to the Reverse Stock Split that was effective on August 4, 2025.
Removed
During the year ended June 30, 2023 Common stock September 1, 2022 through September 30, 2022 40,817.06 $ 9.47 40,817.06 - December 1, 2022 through December 31, 2022 44,048.79 9.44 44,048.79 - March 1, 2023 through March 31, 2023 58,896.00 7.38 58,896.00 - June 1, 2023 through June 30, 2023 60,298.00 60,298.00 - 204,059.85 204,059.85 - - Series A Preferred stock - April 1, 2023 through April 30, 2023 1,400.00 $ 22.75 1,400.00 - 30 Table of Contents Item 6. [RESERVED]
Added
Effective December 1, 2024, we issued 3,718.10 shares of common stock, at a stated value of $30 per share, to Series A unit holders of the Operating Partnership who exercised their option to convert their Series A units to shares of our common stock.
Added
Additionally, on February 1, 2025, we issued 1,017.40 shares of common stock, at a stated value of $40 per share, to Series A unit holders of the Operating Partnership who exercised their option to convert their Series A units to shares of our common stock.
Added
Effective March 1, 2025, we issued 6,592.10 shares of common stock, at a stated value of $20 per share, to Series A unit holders of the Operating Partnership who exercised their option to convert their Series A units to shares of our common stock.
Added
Effective April 1, 2025, we issued 4,340.50 shares of common stock, at a stated value of $10 per share, to Series A unit holders of the Operating Partnership who exercised their option to convert their Series A units to shares of our common stock.
Added
The private placement is exempt from registration under the Section 4(a)(2) of the Securities Act, and Regulation D thereunder. The Company is relying, in part, upon representations of the Maxim that it is an accredited investor as defined in Regulation D under the Securities Act. The common stock does not have any conversion rights.
Added
On January 30, 2025, in connection with our agreement with OTB Capital, the Company issued in a private placement an aggregate amount of 8,583.70 shares of common stock to OTB Capital, approximately $0.20 million worth of shares. The private placement is exempt from registration under the Section 4(a)(2) of the Securities Act, and Regulation D thereunder.
Added
On March 3, 2025, in connection with our agreement with an institutional investor, the Company issued an aggregate amount of 153,403.40 shares of common stock, pre-funded warrants to purchase 129,226.50 shares of common stock, Series A common stock warrants to purchase 141,314.95 shares of common stock, and Series B common stock warrants to purchase 282,629.90 shares of common stock.
Added
The common stock warrants described above were offered and sold by the Company in a transaction not involving a public offering exclusively to an accredited investor under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder and, along with the shares of common stock underlying such common stock warrants, have not been registered under the Securities Act or applicable state securities law.
Added
Accordingly, the unregistered common stock warrants and the underlying shares of common stock may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.
Added
Issuer Purchases of Equity Securities There were no purchases of our common stock and preferred stock during the year ended June 30, 2025. 34 Table of Contents Item 6. [RESERVED]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

3 edited+0 added−0 removed0 unchanged
Biggest changeControls and Procedures 49 Item 9B. Other Information 50 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 50 PART III Item 10. Directors, Executive Officers and Corporate Governance 51 Item 11. Executive Compensation 54 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 55 Item 13.
Biggest changeControls and Procedures 55 Item 9B. Other Information 56 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 56 PART III Item 10. Directors, Executive Officers and Corporate Governance 57 Item 11. Executive Compensation 57 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 57 Item 13.
Certain Relationships and Related Transactions, and Director Independence 56 Item 14. Principal Accountant Fees and Services 57 PART IV Item 15. Exhibits and Consolidated Financial Statement Schedules 58 Item 16. Form 10-K Summary 60 Signatures Table of Contents PART I
Certain Relationships and Related Transactions, and Director Independence 57 Item 14. Principal Accountant Fees and Services 57 PART IV Item 15. Exhibits and Consolidated Financial Statement Schedules 58 Item 16. Form 10-K Summary 61 Signatures Table of Contents PART I
Item 6. Selected Financial Data 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 49 Item 8. Consolidated Financial Statements and Supplementary Data 49 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 49 Item 9A.
Item 6. Selected Financial Data 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 54 Item 8. Consolidated Financial Statements and Supplementary Data 54 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 54 Item 9A.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

112 edited+43 added−14 removed64 unchanged
Biggest changeWe also owned various investments in entities that own real estate which gave us enough control such that the investments are not securities for 1940 Act purposes, but not enough to consolidate the financial statements of such entities with our own; these are listed below as “Unconsolidated investments (non-securities), at fair value.” The following table summarizes the composition of our investments at fair value as of June 30, 2024 and 2023: Fair Value Investments, at fair value June 30, 2024 June 30, 2023 5210 Fountaingate, LP $ 4,950 $ 6,820 Blackstone Real Estate Income Trust, Inc. - Class S 330,828 - Capitol Hill Partners, LLC - 1,107,795 Citrus Park Hotel Holdings, LLC - 4,100,000 Healthcare Trust, Inc. 856,285 1,554,693 Highlands REIT, Inc. 69,322 2,794,926 Lakemont Partners, LLC 791,990 829,381 Moody National REIT II, Inc. 18,759 13,853 SmartStop Self Storage REIT, Inc. - Class A 41,149 1,878,092 Starwood Real Estate Income Trust, Inc. - Class S 24,821 - Strategic Realty Trust, Inc. - 216,068 Summit Healthcare REIT, Inc. - 930,852 Total $ 2,138,104 $ 13,432,480 Fair Value Unconsolidated investments (non-securities), at fair value June 30, 2024 June 30, 2023 Green Valley Medical Center, LP $ 2,005,102 $ 2,363,000 Martin Plaza Associates, LP 465,053 493,000 One Harbor Center, LP - 4,076,500 Westside Professional Center I, LP 1,436,171 1,784,000 Total $ 3,906,326 $ 8,716,500 Properties In addition to our investment securities, we currently own and manage eight commercial real estate properties: Satellite Place located in Duluth, GA, 1300 Main, First & Main and Main Street West located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and four residential apartments: Commodore Apartments and The Park View (f/k/a as Pon De Leo Apartments), located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments in Concord, CA. 1300 Main, First & Main, Main Street West, Woodland Corporate Center, and the Hollywood Apartments are owned through our subsidiary, the Operating Partnership; the Commodore Apartments are owned through our subsidiary Madison; The Park View (f/k/a as Pon De Leo Apartments) are owned through our subsidiary PVT; and the Shoreline Apartments are owned through our subsidiary BAA-Shoreline.
Biggest changeThe following table summarizes the composition of our investments at fair value as of June 30, 2025 and 2024: Fair Value Investments, at fair value June 30, 2025 June 30, 2024 Blackstone Real Estate Income Trust, Inc. - Class S $ - $ 330,828 Highlands REIT, Inc. 37,403 69,322 Moody National REIT II, Inc. 2,963 18,759 National Healthcare Properties, Inc. 740,894 856,285 SmartStop Self Storage REIT, Inc. - Class A 29,154 41,149 Starwood Real Estate Income Trust, Inc. - Class S 939,114 24,821 Total $ 1,749,528 $ 1,341,164 Fair Value Equity method investments, at fair value June 30, 2025 June 30, 2024 5210 Fountaingate, LP $ - $ 4,950 Green Valley Medical Center, LP - 2,005,102 Lakemont Partners, LLC 711,740 791,990 Martin Plaza Associates, LP 531,544 465,053 Westside Professional Center I, LP 882,167 1,436,171 Total $ 2,125,451 $ 4,703,266 Properties In addition to our investment securities, we currently own and manage nine commercial real estate properties: Satellite Place Office Building located in Duluth, GA, 1300 Main Office Building, First & Main Office Building and Main Street West Office Building located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane Office Building, Green Valley Medical Center and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and four residential apartments: Commodore Apartments and The Park View Apartments, located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments located in Concord, CA. 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical Center are owned through our subsidiary, the Operating Partnership; the Commodore Apartments are owned through our subsidiary, Madison; The Park View Apartments is owned through our subsidiary, PVT and Satellite Place Office Building is owned through our subsidiary, MacKenzie Satellite Place Corp.
We have elected to be treated as a REIT under the Code and, as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to stockholders and meet certain other conditions.
We have elected to be treated as a REIT under the Code and, as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meet certain other conditions.
Depreciation and amortization: During the year ended June 30, 2024, we recorded depreciation and amortization of $7.15 million, of which $4.98 million was attributable to the depreciation and amortization of real estate and intangible assets of our eight commercial properties and $2.17 million was attributable to our four residential properties.
During the year ended June 30, 2024, we recorded depreciation and amortization of $7.15 million, of which $4.98 million was attributable to the depreciation and amortization of real estate and intangible assets of our eight commercial properties and $2.17 million was attributable to our four residential properties.
(“MacKenzie NY 2”), Inc. is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We are managed by the Advisers, and MacKenzie provides the non-investment management services and administrative services necessary for us to operate. Investment Plan We generally seek to invest in real estate assets.
(“MacKenzie NY 2”), is subject to corporate federal and state income tax on its taxable income at regular statutory rates. We are managed by the Advisers, and MacKenzie provides the non-investment management services and administrative services necessary for us to operate. Investment Plan We generally seek to invest in real estate assets.
We will bear all other expenses of our operations and transactions, including: • the cost of operating and maintaining real estate properties; • the cost of calculating our net asset value, including the cost of any third-party valuation services; • the cost of effecting sales and repurchases of our shares and other securities; • interest payable on debt, if any, to finance our investments; • fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and third-party advisory fees; • transfer agent and safekeeping fees; • fees and expenses associated with marketing efforts; • federal and state registration fees, any stock exchange listing fees in the future; • federal, state and local taxes; • independent directors’ fees and expenses; • brokerage commissions; • fidelity bond, directors and officers errors and omissions liability insurance, and other insurance premiums; • direct costs and expenses of administration and sub-administration, including printing, mailing, long distance telephone and staff; 32 Table of Contents • fees and expenses associated with independent audits and outside legal costs; • costs associated with our reporting and compliance obligations under the 1934 Act and applicable federal and state securities laws; and • all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that are based upon our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and any administrative support staff.
We will bear all other expenses of our operations and transactions, including: • the cost of operating and maintaining real estate properties; • the cost of calculating our net asset value, including the cost of any third-party valuation services; • the cost of effecting sales and repurchases of our shares and other securities; • interest payable on debt, if any, to finance our investments; • fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and third-party advisory fees; • transfer agent and safekeeping fees; • fees and expenses associated with marketing efforts; • federal and state registration fees, any stock exchange listing fees in the future; • federal, state and local taxes; • independent directors’ fees and expenses; • brokerage commissions; • fidelity bond, directors and officers errors and omissions liability insurance, and other insurance premiums; 36 Table of Contents • direct costs and expenses of administration and sub-administration, including printing, mailing, long distance telephone and staff; • fees and expenses associated with independent audits and outside legal costs; • costs associated with our reporting and compliance obligations under the Exchange Act and applicable federal and state securities laws; and • all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that are based upon our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and any administrative support staff.
Accordingly, the net unrealized loss excluding the reclassification adjustment for the year ended June 30, 2024 was $1.46 million, which resulted from fair value depreciations of $1.06 million from non-traded REIT securities, $0.36 million from general partnership interests and $0.04 million from limited partnership interest.
Accordingly, the net unrealized loss excluding the reclassification adjustment for the year ended June 30, 2024 was $1.46 million, which resulted from fair value of $1.06 million from non-traded REIT securities, $0.36 million from general partnership interests and $0.04 million from limited partnership interest.
Our consolidated office properties, 1300 Main, First and Main, Main Street West, One Harbor Center, Satellite Place, Woodland Corporate Center, 220 Campus Lane, and Green Valley Executive Center are all Class A suburban office properties and are located in Napa, Woodland, Suisun City and Fairfield, California and Duluth, Georgia.
Our consolidated office properties, 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, One Harbor Center, Satellite Place Office Building, Woodland Corporate Center, 220 Campus Lane Office Building and Green Valley Executive Center are all Class A suburban office properties and are located in Napa, Woodland, Suisun City and Fairfield, California and Duluth, Georgia.
We have raised total gross proceeds of $119.10 million from the issuance of common stock under the three public offerings, $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020.
We have raised total gross proceeds of $119.10 million from the issuance of common stock under the public offerings, $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020.
Cash Flows: Fiscal 2024: For the year ended June 30, 2024, we experienced a net decrease in cash of $5.06 million. During this year, we used cash of $0.59 million in our operating activities, $1.30 million in our investing activities and $3.17 million in our financing activities.
Fiscal 2024: For the year ended June 30, 2024, we experienced a net decrease in cash of $5.06 million. During this year, we used net cash of $0.59 million in our operating activities, $1.30 million in our investing activities and $3.17 million in our financing activities.
We consider the period of future benefit of an asset to determine its appropriate useful life and anticipate the estimated useful lives of assets by class to be generally as follows: Buildings 16 – 45 years Building improvements 1 – 15 years Land improvements 5 – 15 years Furniture, fixtures and equipment 3 – 11 years In-place leases 1 – 10 years Impairment of Real Estate Assets We continually monitor events and changes in circumstances that could indicate that the carrying value of our real estate and related intangible assets may not be recoverable.
We consider the period of future benefit of an asset to determine its appropriate useful life and anticipate the estimated useful lives of assets by class to be generally as follows: Buildings 16 – 45 years Buildings improvements 1 – 15 years Land improvent 5 – 15 years Furniture, fixtures and equipment 3 – 11 years In-place leases 1 – 10 years Impairment of Real Estate Assets We continually monitor events and changes in circumstances that could indicate that the carrying value of our real estate and related intangible assets may not be recoverable.
When purchasing securities, we generally favor purchasing securities issued by entities that have (i) completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real properties or other real estate related investments. 31 Table of Contents Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.
When purchasing securities, we generally favor purchasing securities issued by entities that have (i) completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real properties or other real estate related investments. 35 Table of Contents Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.
In November 2021, the SEC qualified our Offering Circular pursuant to Regulation A to sell up to $50,000,000 of shares of our Series A preferred stock at an initial offering price of $25.00 per share.
In November 2021, the SEC qualified our Offering Circular pursuant to Regulation A to sell up to $50,000,000 of shares of our Series A preferred stock at an initial offering price of $25 per share.
Interest expense: Interest expense for the year ended June 30, 2024 was $6.12 million, of which $3.12 million was incurred on the mortgage notes payable associated with our four residential properties and the loan on Campus Lane Residential and $3.00 million was incurred on the mortgage notes payable associated with our seven commercial properties, which exclude Satellite Place Office Building since there is no debt on the property.
Interest expense for the year ended June 30, 2024 was $6.12 million, of which $3.12 million was incurred on the mortgage notes payable associated with our four residential properties and the loan on Campus Lane Land and $3 million was incurred on the mortgage notes payable associated with our seven commercial properties, which exclude Satellite Place Office Building since there is no debt on the property.
Net unrealized gain (loss) on investments: During the year ended June 30, 2024, we recorded a net unrealized gain of $0.86 million, which was net of a $2.32 million unrealized loss reclassification adjustments. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period.
During the year ended June 30, 2024, we recorded a net unrealized gain of $0.86 million, which was net of a $2.32 million unrealized loss reclassification adjustments. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period.
Overview Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the 1940 Act, but we withdrew our election to be treated as a BDC on December 31, 2020. Our objective remains to generate both current income and capital appreciation through real estate-related investments.
Overview Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the Investment Company Act of 1940 (the “1940 Act”), but we withdrew our election to be treated as a BDC on December 31, 2020. Our objective remains to generate both current income and capital appreciation through real estate-related investments.
Portfolio Investment Composition As of June 30, 2024, we owned various real estate limited partnerships and REITs that are listed in the “Investments, at fair value” in the table below.
Portfolio Investment Composition As of June 30, 2025, we owned various real estate limited partnerships and REITs that are listed in the “Investments, at fair value” in the table below.
First & Main Office Building First & Main, LP 1300 Main Office Building 1300 Main, LP Woodland Corporate Center Woodland Corporate Center Two, LP Main Street West Office Building Main Street West, LP 220 Campus Lane Office Building 220 Campus Lane, LLC Green Valley Executive Center GV Executive Center, LLC One Harbor Center Office Building One Harbor Center, LP 1300 Main Office Building contains 20,145 square feet, of which approximately 13,900 square feet is office space and the remainder is designated as retail space.
First & Main Office Building First & Main, LP 1300 Main Office Building 300 Main, LP Woodland Corporate Center Woodland Corperate Center Two, LP Main Street West Office Building Main Street West, LP 220 Campus Lane Office Building 220 Campus Lane,LLC Green Valley Executive Center GV Executive Center, LLC One Harbor Center One Harbor Center, LP Green Valley Medical Center Green Valley Medical Center, LP 1300 Main Office Building contains 20,145 square feet, of which approximately 13,900 square feet is office space and the remainder is designated as retail space.
Therefore, no income tax provisions are recorded for these entities. 41 Table of Contents Liquidity and Capital Resources Capital Resources: We offered to sell up to 5 million shares of common stock in our first public offering and up to 15 million shares of common stock in each of our second and third public offerings.
Therefore, no income tax provisions are recorded for these entities. Liquidity and Capital Resources Capital Resources: We offered to sell up to 5 million shares of common stock in our first public offering and up to 15 million shares of common stock in each of our second and third public offerings.
The investment properties and liabilities associated with those investment properties that are held for sale are classified separately on the consolidated balance sheets for the most recent reporting period and recorded at the lesser of the carrying value or fair value less costs to sell. 48 Table of Contents
The investment properties and liabilities associated with those investment properties that are held for sale are classified separately on the consolidated balance sheets for the most recent reporting period and recorded at the lesser of the carrying value or fair value less costs to sell.
In addition to our commercial and residential real estate properties, we also own two parcels of land: a vacant parcel adjacent to our 220 Campus Lane Office Building in Fairfield, California (“Campus Lane Land”), and a vacant parcel located at 5000 Wiseman Way, Fairfield, California (“Aurora Land”).
In addition to our commercial and residential real estate properties, we own two parcels of land: a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California (“Campus Lane Land”) and a vacant parcel at 5000 Wiseman Way in Fairfield, California (“Aurora Land”).
On November 1, 2023, we further amended our Offering Circular to sell an aggregate of up to $75 million of shares of either our Series A preferred stock or our Series B preferred stock. This post-effective amendment to the Offering Circular was declared effective on November 14, 2023.
On November 1, 2023, we further amended our Offering Circular to sell an aggregate of up to $75 million of shares of either our Series A preferred stock or our Series B preferred stock. This post-effective amendment to the Offering Circular was declared effective on November 14, 2023, and terminated on November 1, 2024.
As of June 30, 2024, the property is 100% occupied by 9 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2025, the property is 100% occupied by 9 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
We expect to fund our material cash requirements over the next year through a combination of cash on hand, net cash provided by our property operations, new capital raised from our preferred series A and B stocks, and new borrowings at the underlying companies and at the Parent Company level under a new line of credit.
We expect to fund our material cash requirements over the next year through a combination of cash on hand, net cash provided by our property operations, new capital raised from our preferred Series A, B and C stock, and borrowings at the underlying companies and at the Parent Company level under lines of credit.
In addition, it will be subject to a 4% excise tax if the actual amount that it pays to its stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2023.
In addition, it will be subject to a 4% excise tax if the actual amount that it pays to its stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. 46 Table of Contents The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2024.
In addition, we have raised $15.56 million from the issuance of common shares under the DRIP as of June 30, 2024. Out of the total proceeds from DRIP, we have utilized a total of $14.28 million to repurchase common shares under the Share Repurchase Program.
In addition, we have raised $15.56 million from the issuance of shares of common stock under the common stock DRIP as of June 30, 2025. Out of the total proceeds from DRIPs, we have utilized a total of $14.28 million to repurchase shares of common stock under the share repurchase program.
Material Cash Obligations We have entered into two contracts under which we have material future commitments: (i) the Advisory Management Agreement, under which the Real Estate Adviser serves as our adviser, and (ii) the Administration Agreement, under which MacKenzie furnishes us with certain non-investment management services and administrative services necessary to conduct our day-to-day operations.
Material Cash Obligations We have entered into two contracts under which we have material future commitments: (i) the Advisory Management Agreement and the Amended and Restated Investment Advisory Agreement, under which the Advisers serves as our advisers, and (ii) the Administration Agreement, under which MacKenzie furnishes us with certain non-investment management services and administrative services necessary to conduct our day-to-day operations.
Net realized gain (loss) on sale of investments: During the year ended June 30, 2024, we recorded a net realized loss of $3.02 million as compared to $0.66 million net realized gain during the year ended June 30, 2023.
Net realized gain (loss) on sale of investments: During the year ended June 30, 2025, we recorded a net realized gain of $0.13 million as compared to $3.02 million net realized loss during the year ended June 30, 2024.
During the year ended June 30, 2024, we incurred operating and maintenance expenses of $6.52 million, of which $3.78 million were incurred in the operation of our eight commercial properties and $2.74 million were incurred in the operation of our four residential properties.
During the year ended June 30, 2024, we incurred operating and maintenance expenses of $6.52 million, of which $3.78 million were incurred in the operation of our eight commercial properties, $2.73 million were incurred in the operation of our four residential properties and $0.01 million were incurred in the operation of the Operating Partnership.
The property contains approximately 37,000 square feet of net rentable apartment area and 8,610 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. The apartment units are 88.9% occupied as of June 30, 2024. Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units.
The property contains approximately 38,000 square feet of net rentable apartment area and 8,610 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. The apartment units are 87.0% occupied as of June 30, 2025. Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units.
It could also impact our ability to find suitable acquisitions, sell properties, and raise equity and debt capital. 38 Table of Contents Results of Operations Comparison of the Fiscal Years Ended June 30, 2024 (“Fiscal 2024”) and June 30, 2023 (“Fiscal 2023”).
It could also impact our ability to find suitable acquisitions, sell properties, and raise equity and debt capital. 43 Table of Contents Results of Operations Comparison of the Fiscal Years Ended June 30, 2025 (“Fiscal 2025”) and June 30, 2024 (“Fiscal 2024”).
As of June 30, 2024, the property is approximately 71% occupied by 4 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2025, the property is approximately 29% occupied by 4 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2024, the property is 89% occupied by 8 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2025, the property is 96% occupied by 8 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2024, the property is 100% occupied by 17 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2025, the property is 100% occupied by 16 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2024, the property is 93% occupied by 13 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft. Occupied Annual Base Rent Lease Expiration Renewal options Shimmick Construction Company, Inc.
As of June 30, 2025, the property is 74% occupied by 12 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft. Occupied Annual Base Rent Lease Expiration Renewal options Shimmick Construction Company, Inc.
We finished the year ended June 30, 2024, with cash and cash equivalents, and restricted cash of approximately $13.08 million. Our principal demands for cash are to fund operating and administrative expenses, debt service obligations, and dividends on our common and preferred Series A and B stocks. In addition, we may also use cash to purchase additional properties.
We finished the year ended June 30, 2025, with cash and cash equivalents, and restricted cash of approximately $4.12 million. Our principal demands for cash are to fund operating and administrative expenses, debt service obligations, and dividends on our common and preferred Series A, B and C stock. In addition, we may also use cash to purchase additional properties.
Based on this assessment, if we do not believe that we will recover the carrying value of the real estate and related intangible assets, we will record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets. 47 Table of Contents Assets and Liabilities Held for Sale We classify long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met: • Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group); • The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups); • An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; • The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year; • The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value.
Assets and Liabilities Held for Sale We classify long-lived assets to be sold as held for sale in the period in which all of the following criteria are met: • Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group); • The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups); 53 Table of Contents • An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; • The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year; • The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value.
The commercial and residential properties owned by us during Fiscal 2024 and 2023 are as follows: Fiscal 2024 Fiscal 2023 Commercial properties Commercial properties Satellite Place Office Building Addison Corporate Center (sold in June 2023) First & Main Office Building Satellite Place Office Building 1300 Main Office Building First & Main Office Building Main Street West Office Building 1300 Main Office Building Woodland Corporate Center Main Street West Office Building 220 Campus Lane Office Building (Acquired in September 2023) Woodland Corporate Center Green Valley Executive Center (Acquired in January 2024) One Harbor Center Office Building (Acquired in May 2024) Residential properties Residential properties Commodore Apartments Commodore Apartments The Park View The Park View Hollywood Apartments Hollywood Apartments Shoreline Apartments Shoreline Apartments Rental and reimbursements revenues: Rental and reimbursement revenues are generated from our commercial and residential real estate properties.
The commercial and residential properties owned by us during Fiscal 2025 and 2024 are as follows: Fiscal 2025 Fiscal 2024 Commercial properties Commercial properties Satellite Place Office Building Satellite Place Office Building First & Main Office Building First & Main Office Building 1300 Main Office Building 1300 Main Office Building Main Street West Office Building Main Street West Office Building Woodland Corporate Center Woodland Corporate Center 220 Campus Lane Office Building 220 Campus Lane Office Building Green Valley Executive Center Green Valley Executive Center One Harbor Center One Harbor Center Green Valley Medical Center (Acquired in August 2024) Residential properties Residential properties Commodore Apartments Commodore Apartments The Park View Apartments The Park View Apartments Hollywood Apartments Hollywood Apartments Shoreline Apartments Shoreline Apartments Rental, reimbursements and other property income: Rental and reimbursement revenues are generated from our commercial and residential real estate properties.
Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the lessee or lessor supervises the construction and bears the risk of cost overruns; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease. 46 Table of Contents In accordance with ASC Topic 842, we determine whether collectability of lease payments in an operating lease is probable.
Tenant improvement ownership is determined based on various factors including, but not limited to: • whether the lease stipulates how a tenant improvement allowance may be spent; • whether the lessee or lessor supervises the construction and bears the risk of cost overruns; • whether the amount of a tenant improvement allowance is in excess of market rates; • whether the tenant or landlord retains legal title to the improvements at the end of the lease term; • whether the tenant improvements are unique to the tenant or general purpose in nature; and • whether the tenant improvements are expected to have any residual value at the end of the lease.
As of June 30, 2024, Commodore Apartment building is approximately 87.5% occupied. The Park View is also a mid-rise apartment building built in 1929 and has 39 units. As of June 30, 2024, The Park View building is approximately 92.3% occupied. Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54 units.
As of June 30, 2025, Commodore Apartments is approximately 97.9% occupied. The Park View Apartments is also a mid-rise apartment building built in 1929 and has 39 units. As of June 30, 2025, The Park View Apartments is approximately 94.9% occupied. Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54 units.
Expenses: Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021. 39 Table of Contents Asset management fee: The asset management fees for the years ended June 30, 2024 and 2023 were $3.22 million and $3.00 million, respectively.
Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021. Asset management fee: The asset management fees for the years ended June 30, 2025 and 2024 were $3.45 million and $3.22 million, respectively.
Other operating expenses for the years ended June 30, 2024 and 2023, were $1.80 million and $1.63 million, respectively.
Other operating expenses for the years ended June 30, 2025 and 2024, were $4.55 million and $1.80 million, respectively.
We believe this niche strategy will allow us to pay distributions that are supported by cash flow rather than paying back investors’ capital, although there can be no assurance that some portion of any distribution is not a return of capital. Rental and Reimbursement We generate rental revenue by leasing office space and apartment units to a building’s tenants.
We believe this niche strategy will allow us to pay distributions that are supported by cash flow rather than paying back investors’ capital, although there can be no assurance that some portion of any distribution is not a return of capital.
As of June 30, 2024, the property is 95% occupied by 7 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
As of June 30, 2025, the property is 94% occupied by 14 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
The net cash outflow of $3.17 million from financing activities resulted from $5.18 million payments of dividends, $1.40 million redemption of common stock, $1.35 million payments on existing mortgage notes payables, $0.90 million payments of syndication costs, $0.89 million payments of dividends of Series A preferred stockholders, $0.88 million payment of loan extension fee, $0.83 million capital distribution to non-controlling interest holders, $0.37 million payment on note payable, $0.34 million acquisition of below market debt, $0.24 million capital pending acceptance, $0.10 million repayments of finance lease liabilities and $0.08 million redemption of Series A preferred stock, offset by $3.29 million additional mortgage borrowings, $2.53 million capital contributions by non-controlling interests holders, $2.14 million issuance of Series A preferred stock, $1.23 million issuance of Series B preferred stock and $0.20 million proceeds from notes payable.
The net cash outflow of $1.30 million from investing activities resulted from $10.23 million real estate acquisitions through our subsidiaries, $1.51 million payment on the contingent liability and $1.06 million purchases of equity investments, offset by $10.56 million sale of investments and $0.94 million distributions received from our investments that are considered return of capital. 48 Table of Contents The net cash outflow of $3.17 million from financing activities resulted from $5.18 million payments of dividends, $1.40 million redemption of common stock, $1.35 million payments on existing mortgage notes payables, $0.90 million payments of syndication costs, $0.89 million payments of dividends of Series A preferred stockholders, $0.88 million payment of loan extension fee, $0.83 million capital distribution to non-controlling interest holders, $0.37 million payment on note payable, $0.34 million acquisition of below market debt, $0.24 million capital pending acceptance, $0.10 million repayments of finance lease liabilities and $0.08 million redemption of Series A preferred stock, offset by $3.29 million additional mortgage borrowings, $2.53 million capital contributions by non-controlling interests holders, $2.14 million issuance of Series A preferred stock, $1.23 million issuance of Series B preferred stock and $0.20 million proceeds from notes payable.
Expenses Our primary operating expenses include the payment of: (i) advisory fees to our Advisers; (ii) our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement; and (iii) other operating expenses as detailed below.
Expenses Our primary operating expenses include the payment of: (i) advisory fees to our Advisers; (ii) our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement; and (iii) other real estate properties operating expenses, including interest expenses on debt obtained to finance our property acquisitions, as detailed below.
All of the laboratories space is occupied by Agtech Innovation. As of June 30, 2024, the property is 100% occupied by 14 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
All of the laboratory space is occupied by Agtech Innovation. As of June 30, 2025, the property is 91% occupied by 13 tenants. The following table shows the largest tenants and square footage occupied: Largest Tenants Business Business Square Ft.
During the year ended June 30, 2023, we recorded a net unrealized loss of $10.28 million, which was net of a $8.30 million unrealized gain reclassification adjustments. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period.
Net unrealized gain (loss) on investments: During the year ended June 30, 2025, we recorded a net unrealized loss of $0.72 million, which was net of $0.17 million of unrealized gain reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period.
We had raised $18.51 million through the sale of our Series A preferred stock and $1.26 million Series B preferred stock pursuant to the Offering Circular as of June 30, 2024. In addition, we have raised $0.25 million from the issuance of Series A and Series B preferred shares under the DRIP.
We have raised $18.74 million through the sale of our Series A preferred stock and $3.11 million Series B preferred stock pursuant to the Offering Circular as of June 30, 2025. In addition, we have raised $0.45 million from the issuance of shares of Series A and Series B preferred stock under the preferred stock DRIP.
Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2024. MacKenzie NY 2 is subject to corporate federal and state income tax on its taxable income at regular statutory rates. As of June 30, 2024, it did not have any taxable income for tax year 2023 and 2024.
MacKenzie NY 2 and MRC QRS are subject to corporate federal and state income tax on their taxable income at regular statutory rates. As of June 30, 2025, they did not have any taxable income for tax year 2024 and 2025. Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2024 and 2025.
Determination of fair value involves subjective judgments and estimates and is reviewed by the Board of Directors. Accordingly, the notes to our consolidated financial statements will express the uncertainty of such valuations, and any change in such valuations, on our consolidated financial statements. Below is a discussion of additional accounting policies and estimates.
Accordingly, the notes to our consolidated financial statements will express the uncertainty of such valuations, and any change in such valuations, on our consolidated financial statements. Below is a discussion of additional accounting policies and estimates.
Occupied Annual Base Rent Lease Expiration Renewal options Wilson Daniels Wine Wholesaler 6,712 $ 431,676 03/15/2025 1, 5 years NorCal Gold Real Estate 2,896 $ 177,336 03/31/2026 No Bao Ling Li Restaurant 3,212 $ 164,960 11/30/2030 No Whole Health Medical 2,186 $ 136,940 07/31/2025 No The following information pertains to lease expirations at 1300 Main Office Building: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2025 2 8,898 $ 568,616 51% 2026 1 2,896 $ 177,336 16% 2029 1 1,059 $ 67,649 6% Thereafter 3 6,204 $ 299,846 27% First and Main Office Building contains 27,396 square feet, of which approximately 19,000 square feet is office space and the remainder is designated as retail space.
Occupied Annual Base Rent Lease Expiration Renewal options Wilson Daniels Wine Wholesaler 6,712 $ 373,239 06/15/2031 1, 5 years Norcal Gold Real Estate 2,896 $ 181,297 03/31/2026 No Bao Ling Li Restaurant 3,212 $ 174,960 11/30/2030 No Whole Health Medical 2,186 $ 137,219 07/31/2025 2, 5 years The following information pertains to lease expirations at 1300 Main Office Building: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2025 1 2,186 $ 137,219 12% 2026 1 2,896 $ 181,297 17% 2028 1 266 $ 6,000 1% Thereafter 5 13,975 $ 757,250 70% First & Main Office Building contains 27,398 square feet, of which approximately 19,000 square feet is office space and the remainder is designated as retail space.
Each property is being held for income production and increased occupancy and/or rental rates. We have property and liability insurance policies on all properties which we believe are adequate. Current Market and Economic Conditions The markets in which our properties operate are highly competitive, and each property faces unique competitive challenges based upon local economic, political, and legal factors.
We maintain property and liability insurance policies on all properties, which we believe are adequate and in line with industry standards. Current Market and Economic Conditions The markets in which our properties operate are highly competitive, and each property faces unique competitive challenges based upon local economic, political, and legal factors.
These tenant leases fall under the scope of Accounting Standards Codification (“ASC”) Topic 842 and are classified as operating leases. Revenues from such leases are recognized on a straight-line basis over the terms of the lease agreements.
Rental, Reimbursement and Other Property Income We generate rental revenue by leasing office space and apartment units to a building’s tenants. These tenant leases fall under the scope of Accounting Standards Codification (“ASC”) Topic 842 and are classified as operating leases. Revenues from such leases are recognized on a straight-line basis over the terms of the lease agreements.
We estimate future leasing and costs associated, generally over a ten-year period, to determine the fair value of the property. Once the fair value is determined, and reviewed by the Board of Directors, a determination of whether any impairment is required is made and documented. In addition, we may obtain a third-party appraisal on directly owned properties.
Once the fair value is determined, and reviewed by the Board of Directors, a determination of whether any impairment is required is made and documented. In addition, we may obtain a third-party appraisal on directly owned properties. Determination of fair value involves subjective judgments and estimates and is reviewed by the Board of Directors.
Total investment income for the years ended June 30, 2024 and 2023 was $0.85 million and $11.31 million, respectively. During the year ended June 30, 2024, we received dividends, interest, and other investment income of $0.58 million as compared to $0.49 million received during the year ended June 30, 2023.
During the year ended June 30, 2025, we received dividends, interest, and other investment income of $0.07 million as compared to $0.58 million received during the year ended June 30, 2024.
Occupied Annual Base Rent Lease Expiration Renewal options OS National, LLC Title Services 71,085 $ 1,390,423 12/31/2029 2, 5 years Polytron Title Services 10,737 $ 210,955 04/30/2031 2, 5 years Ampirical Engineering Consulting 9,790 $ 202,522 09/30/2030 2, 5 years Sun Taiyang Consumer Products 4,383 $ 95,042 11/30/2029 1, 5 years The following information pertains to lease expirations at Satellite Place Office Building: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2029 2 75,468 $ 1,485,464 78% 2030 1 9,790 $ 202,522 11% 2031 1 10,737 $ 210,955 11% 35 Table of Contents Woodland Corporate Center contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space.
Occupied Annual Base Rent Lease Expiration Renewal options Codoxo Healthcare Software 13,956 $ 296,446 06/30/2030 No Polytron Title Services 10,737 $ 217,267 04/30/2031 2, 5 years Ampirical Engineering Consulting 9,790 $ 208,070 09/30/2030 2, 5 years Sun Taiyang Consumer Products 4,383 $ 97,898 11/30/2029 1, 5 years 39 Table of Contents The following information pertains to lease expirations at Satellite Place Office Building: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2029 1 4,383 $ 97,898 12% 2030 2 23,746 $ 504,516 62% 2031 1 10,737 $ 217,267 26% Woodland Corporate Center contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space.
Administrative cost and transfer agent reimbursements: Costs reimbursed to MacKenzie for the year ended June 30, 2024 were $0.76 million as compared to $0.73 million for the year ended June 30, 2023.
We did not incur any incentive management fee for the years ended June 30, 2025 and 2024. Administrative cost and transfer agent reimbursements: Costs reimbursed to MacKenzie for the year ended June 30, 2025 were $0.67 million as compared to $0.76 million for the year ended June 30, 2024.
The net cash outflow of $6.62 million from operating activities resulted from $23.71 million of cash used in operating expenses offset by cash inflow of $15.19 million of rental revenues and $1.90 million of investment income.
The net cash outflow of $0.59 million from operating activities resulted from $16.73 million of cash used in operating expenses offset by cash inflow of $15.28 million of rental revenues and $0.86 million of investment income.
Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2023. In addition, for the tax year 2024, we intend to pay the requisite amounts of dividends during the year and meet other REIT requirements such that the Parent Company will not owe any income taxes.
In addition, for the tax year 2025, the Parent Company intends to pay the requisite amounts of dividends during the year and meet other REIT requirements such that the Parent Company will not owe any income taxes. Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2025.
As of June 30, 2024, Shoreline Apartments building is approximately 88.1% occupied.
As of June 30, 2025, Shoreline Apartments building is approximately 92.9% occupied.
Occupied Annual Base Rent Lease Expiration Renewal options Community Housing Opportunities Real Estate 8,510 $ 341,095 08/31/2026 No Arkshire Financial, LLC Financial Services 7,016 $ 301,092 02/28/2027 No Sticky Rice Restaurant 4,511 $ 187,077 08/17/2034 No Larsen & Toubro Limited, Inc.
Occupied Annual Base Rent Lease Expiration Renewal options Community Housing Opportunities Real Estate 8,510 $ 348,852 08/31/2026 No Arkshire Financial, LLC Insurance 7,016 $ 308,400 02/28/2027 No Larsen & Toubro Limited, Inc.
The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets, and assumed liabilities, which could impact the amount of our net income (loss).
The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets, and assumed liabilities, which could impact the amount of our net income (loss). Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based upon the assumptions made in calculating these estimates.
We intend to utilize leverage to enhance the total returns of our portfolio. Historically, we were only able to access leverage at attractive costs through a credit facility, but the termination of our BDC status effective December 31, 2020 has provided us with greater flexibility in choosing among different alternatives for raising debt capital going forward.
Historically, we were only able to access leverage at attractive costs through a credit facility, but the termination of our BDC status effective December 31, 2020 provided us with greater flexibility in choosing among different alternatives for raising capital through debt, equity participation features (such as warrants and convertible notes) and/or additional classes of stock (such as preferred) in order to facilitate capital formation.
Level III – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment.
Investments which are generally included in this category are publicly traded equity securities with restrictions. Level III – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment.
Accordingly, the net unrealized loss excluding the reclassification adjustment for the year ended June 30, 2023 was $1.98 million, which resulted from fair value depreciations of $1.80 million from non-traded REIT securities and $0.67 million from limited partnership interests, offset by a net fair value appreciation of $0.49 million from general partnership interests.
Accordingly, the net unrealized losses excluding the reclassification adjustment for the year ended June 30, 2025, were $0.55 million, which resulted from fair value depreciations of $0.69 million from general partnership interests, $0.08 million from limited partnership interests and fair value appreciations of $0.22 million from non-traded REIT securities.
The office building was vacant at the time of our purchase. Currently we are in the process of renovating the building and marketing it for lease. As of June 30, 2024, one tenant is occupying 7,166 square feet or 16.6% of the building. Annualized base rent for this tenant is $249,000.
The office building was vacant at the time of our purchase. Currently, we are in the process of renovating the building and marketing it for lease. As of June 30, 2025, 7 tenants are leasing space totaling 12,583 square feet or 29.1% of the building. The annualized base rent for these tenants is $416,546.
During the year ended June 30, 2023, we generated $15.11 million in rental and reimbursements revenues, of which $9.10 million was generated from our six commercial properties and $6.01 million was generated from our four residential properties.
During the year ended June 30, 2025, we generated $22.06 million in rental and reimbursements revenues, of which $16.17 million was generated from our nine commercial properties and $5.89 million was generated from our four residential properties.
The increase in other operating expenses was mainly due to the acquisition of three commercial properties (220 Campus Lane Office Building, Green Valley Executive Center and One Harbor Center Office Building) since June 30, 2023 resulting in a higher amount of general and administrative operating expenses during the year ended June 30, 2024.
The increase in other operating expenses was due to the acquisition of one commercial property (Green Valley Medical Center) since June 30, 2024, resulting in a higher amount of general and administrative operating expenses, and new consulting and marketing services expenses incurred by the Company during the year ended June 30, 2025.
During the year ended June 30, 2023, we incurred operating and maintenance expenses of $9.03 million, of which $6.51 million were incurred in the operation of our six commercial properties and $2.52 million were incurred in the operation of our four residential properties.
During the year ended June 30, 2025, we incurred operating and maintenance expenses of $7.39 million, of which $4.65 million were incurred in the operation of our nine commercial properties, $2.73 million were incurred in the operation of our four residential properties and $0.01 million were incurred in the operation of the Operating Partnership.
This increase was mainly due to increase in interest income from our cash deposits in money market funds during the year ended June 30, 2024. During the year ended June 30, 2024 we received $0.27 million of distributions from operations, sales, and liquidations as compared to $10.82 million during the year ended June 30, 2023.
During the year ended June 30, 2025, we received minimal distributions from operations, sales, and liquidations as compared to $0.27 million received during the year ended June 30, 2024. The decrease was mainly due to the decrease in distributions received from investments.
Valuation of Real Property: When property is owned directly, the valuation process includes a full review of the property financial information. An Argus model is created using all known data such as current rent rolls, escalators, expenses, market data in the area where the property is located, cap rates, discount rates, mortgages, interest rates, and other pertinent information.
An Argus model is created using all known data such as current rent rolls, escalators, expenses, market data in the area where the property is located, cap rates, discount rates, mortgages, interest rates, and other pertinent information. We estimate future leasing and costs associated, generally over a ten-year period, to determine the fair value of the property.
Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, 220 Campus Lane, Campus Lane Residential, GV Executive Center and One Harbor Center are limited liability companies. First & Main, 1300 Main, Woodland Corporate Center Two, and Main Street West are limited partnerships. Accordingly, all income tax liabilities of these entities flow through to their partners, which ultimately is the Company.
First & Main, 1300 Main, Woodland Corporate Center Two, Main Street West, One Harbor Center, LP and Green Valley Medical Center, LP are limited partnerships. Accordingly, all income tax liabilities of these entities flow through to their partners, which, subject to the minority exceptions described in this document, ultimately is the Company.
The following table provides information regarding each of the residential properties: Property Name Sector Location Square Feet Units Percentage Leased Annual Base Rent Monthly Base Rent/Occupied Unit The Park View Multi-Family Residential Oakland, CA 36,654 39 92.3 % $ 1,043,488 $ 2,415 Commodore Multi-Family Residential Oakland, CA 31,156 48 87.5 % $ 801,379 $ 1,590 Hollywood Apartments Multi-Family Residential Los Angeles, CA 36,991 54 88.9 % $ 1,285,300 $ 2,231 Shoreline Apartments Multi-Family Residential Concord, CA 67,925 84 88.1 % $ 1,882,926 $ 2,120 Property Name Sector Location Square Feet Units Percentage Leased Annual Base Rent Monthly Base Rent/Occupied Unit Hollywood Apartments Retail Los Angeles, CA 8,610 1 100.0 % $ 333,356 $ 27,780 37 Table of Contents Our 220 Campus Lane Office building was purchased in September 2023.
The following table provides information regarding each of the residential properties: Property Name Sector Location Square Feet Units Percentage Leased Annual Base Rent Monthly Base Rent/Occupied Unit The Park View Apartments Multi-Family Residential Oakland, CA 31,020 39 94.9 % $ 1,078,977 $ 2,430 Commodore Apartments Multi-Family Residential Oakland, CA 26,635 48 97.9 % $ 905,159 $ 1,605 Hollywood Apartments Multi-Family Residential Los Angeles, CA 37,971 54 87.0 % $ 1,230,422 $ 2,182 Shoreline Apartments Multi-Family Residential Concord, CA 68,200 84 92.9 % $ 1,988,671 $ 2,125 Property Name Sector Location Square Feet Units Percentage Leased Annual Base Rent Monthly Base Rent/Occupied Unit Hollywood Apartments Retail Los Angeles, CA 8,610 1 100.0 % $ 343,357 $ 28,613 Our 220 Campus Lane Office Building was purchased in September 2023.
The total net realized gain for the year ended June 30, 2023, was realized from the sale of three limited partnership interest with net realized gain of $0.43, nine non-traded REIT securities with net realized gain of $0.17 million, one investment trust with net realized gain of $0.05 million, and one publicly traded REIT securities with total realized gains of $0.01 million.
Total realized gain for year ended June 30, 2025, was realized from the sale of three non-traded REIT securities and a limited partnership interest.
The recommendation of fair value will generally be based on the following factors, as relevant: • the nature and realizable value of any collateral; • the portfolio company’s ability to make payments; • the portfolio company’s earnings and discounted cash flow; • the markets in which the issuer does business; and • comparisons to publicly traded securities. 45 Table of Contents Securities for which market data is not readily available or for which a pricing source is not sufficient may include the following: • private placements and restricted securities that do not have an active trading market; • securities whose trading has been suspended or for which market quotes are no longer available; • debt securities that have recently gone into default and for which there is no current market; • securities whose prices are stale; • securities affected by significant events; and • securities that the Investment Adviser believes were priced incorrectly.
Securities for which market data is not readily available or for which a pricing source is not sufficient may include the following: • private placements and restricted securities that do not have an active trading market; • securities whose trading has been suspended or for which market quotes are no longer available; • debt securities that have recently gone into default and for which there is no current market; • securities whose prices are stale; • securities affected by significant events; and • securities that the Investment Adviser believes were priced incorrectly. 51 Table of Contents Valuation of Real Property When property is owned directly, the valuation process includes a full review of the property financial information.
Operational dividends or distributions received from portfolio investments are recorded as investment income. Distributions resulting from the sale or refinance of an investee’s underlying assets are compared to the estimated value of the remaining assets and are recorded as a return of capital or as investment income as appropriate.
Distributions resulting from the sale or refinance of an investee’s underlying assets are compared to the estimated value of the remaining assets and are recorded as a return of capital or as investment income as appropriate. 52 Table of Contents Realized gains or losses on investments are recognized in the period of disposal, distribution, or exchange and are measured by the difference between the proceeds from the sale or distribution and the cost of the investment.
Occupied Annual Base Rent Lease Expiration Renewal options Agtech Innovation Research and Development 12,940 $ 423,144 08/31/2032 No Children’s Home Society Non-Profit Education 4,042 $ 148,320 06/30/2028 No Johnston, Martin & Montgomery Accounting 3,388 $ 133,668 11/02/2024 2, 5 years Burger Rehab Physical Therapy 4,013 $ 120,050 09/22/2028 No The following information pertains to lease expirations at Woodland Corporate Center: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2024 2 4,459 $ 171,478 14% 2025 4 5,539 $ 177,382 14% 2027 2 2,160 $ 82,706 6% 2028 3 9,777 $ 322,732 26% Thereafter 3 15,099 $ 497,292 40% Green Valley Executive Center contains 46,101 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space.
Occupied Annual Base Rent Lease Expiration Renewal options Agtech Innovation Research and Development 12,940 $ 337,053 04/09/2031 08/31/2032 12/21/2032 No Children’s Home Society Non-Profit Education 4,042 $ 151,286 10/31/2028 No Burger Rehab Physical Therapy 4,013 $ 123,725 09/22/2028 No California Dept of Rehabilitation Rehabilitation Services 3,057 $ 94,788 07/31/2025 No The following information pertains to lease expirations at Woodland Corporate Center: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2025 1 3,057 $ 94,788 9% 2026 1 1,433 $ 47,105 4% 2027 2 2,160 $ 85,265 8% Thereafter 9 26,996 $ 823,764 79% Green Valley Executive Center contains 46,101 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space.
Occupied Annual Base Rent Lease Expiration Renewal options AUL Corporation Insurance 13,806 $ 818,603 02/03/2026 No State of California Medical 4,697 $ 259,721 04/30/2028 No Strategies To Empower People Medical 4,875 $ 219,396 12/31/2027 No Azzurro Pizzeria Restaurant 2,735 $ 144,000 03/31/2029 1, 5 years The following information pertains to lease expirations at Main Street West Office Building: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2024 2 3,678 $ 171,080 9% 2026 1 13,806 $ 818,603 44% 2027 2 7,010 $ 341,417 19% Thereafter 3 9,373 $ 512,699 28% Satellite Place Office Building contains 134,785 square feet, all of which is office space.
Occupied Annual Base Rent Lease Expiration Renewal options State of California Health Care 4,697 $ 259,721 10/31/2028 No Strategies To Empower People Health Care 4,875 $ 224,859 01/28/2028 No Azzurro Pizzeria Restaurant 2,735 $ 147,888 03/31/2029 1, 5 years Bay Area Legal Aid Legal Services 2,135 $ 124,305 12/15/2027 1, 5 years The following information pertains to lease expirations at Main Street West Office Building: Year Number of Leases Expiring Total Area Annual Base Rent Percentage of Gross Rent 2025 1 938 $ 62,544 6% 2026 2 2,940 $ 122,000 11% 2027 1 2,135 $ 124,305 12% Thereafter 4 14,231 $ 744,356 71% Satellite Place Office Building contains 134,785 square feet, all of which is office space.
These estimates are susceptible to change, and actual results could differ materially from those estimates, which in turn could have material impacts on our reported financial results.
Material estimates are susceptible to change, and actual results could differ from those estimates.
Transfer agent cost reimbursements paid to MacKenzie for the years ended June 30, 2024 and 2023 were $0.07 million and $0.09 million, respectively.
Transfer agent cost reimbursements paid to MacKenzie for the years ended June 30, 2025 and 2024 were $0.01 million and $0.07 million, respectively. Other corporate operating expenses: Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+3 added−1 removed3 unchanged
Biggest changeWe seek to manage our exposure to interest rate risk by utilizing a mix of fixed and floating rate financing, and through interest rate hedging agreements to fix or cap our variable rate debt. As of June 30, 2024, the outstanding principal balance of our variable rate indebtedness was $17.5 million, which is the mortgage debt on Hollywood Apartments.
Biggest changeWe seek to manage our exposure to interest rate risk by utilizing a mix of fixed and floating rate financing, and through interest rate hedging agreements to fix or cap our variable-rate debt.
As discussed in Note 4 – Investments, to our consolidated financial statements, these investments primarily consist of securities in companies with no readily determinable market values and as such are valued in accordance with our fair value policies and procedures. Our investment portfolio sometimes also includes shares of publicly traded REITs, which are valued at recently quoted trading prices.
As discussed in Note 4, to our consolidated financial statements, these investments primarily consist of securities in companies with no readily determinable market values and as such are valued in accordance with our fair value policies and procedures. Our investment portfolio sometimes also includes shares of publicly traded REITs, which are valued at recently quoted trading prices.
As a result, we are subject to risk of loss which may prevent our stockholders from achieving price appreciation, dividend distributions and a return of their capital. At June 30, 2024, financial instruments that subjected us to concentrations of market risk consisted principally of equity investments, which represented approximately 10% of our total assets as of that date.
As a result, we are subject to risk of loss which may prevent our stockholders from achieving price appreciation, dividend distributions and a return of their capital. At June 30, 2025, financial instruments that subjected us to concentrations of market risk consisted principally of equity investments, which represented approximately 1.60% of our total assets as of that date.
Removed
The debt is indexed to Secured Overnight Financing Rate (“SOFR”). In order to mitigate the raising interest rate risk, we have executed an interest rate cap. For the year ended June 30, 2024, a 10% increase in SOFR would have resulted in no change in interest expense, net of the impact of our interest rate cap.
Added
As of June 30, 2025, $17.65 million, $14.99 million and $15.13 million of our total outstanding loan balance was under variable-rate debt indexed to the Secured Overnight Financing Rate (“SOFR”), Prime rate, and U.S Treasury yield, respectively.
Added
For the Prime rate, a hypothetical increase or decrease of 100 basis points would result in a corresponding increase or decrease in our annual interest expense of approximately $0.15 million. As of June 30, 2025, the applicable variable rates were 7.50% for the Prime rate, 4.15% for SOFR, and 3.96% for the U.S. Treasury yield.
Added
Variable interest under the SOFR and U.S. Treasury–indexed loans are not yet applicable as of June 30, 2025. These payments are scheduled to commence on May 1, 2027, and May 1, 2026, respectively.

Other MKZR 10-K year-over-year comparisons