Form 10-Q MacKenzie Realty Capital For: Mar 31
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2026
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _________ to __________
Commission file number 000-55006
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | |
| (Address of principal executive offices) | (Zip Code) |
(925 ) 631-9100
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of class | Trading symbol (s) | Name of exchange on which registered |
| | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | | Smaller reporting company |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The number of the shares of issuer’s Common Stock outstanding as of May 15, 2026 was 2,255,114 .
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Page
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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1 |
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1
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2
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3
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4
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5
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7
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Item 2.
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44
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Item 3.
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65
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Item 4.
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65
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PART II.
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OTHER INFORMATION
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Item 1.
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66
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Item 1A.
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66
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Item 2.
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66
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Item 3.
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66
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Item 4.
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66
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Item 5.
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66
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Item 6.
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67
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| Part I. |
FINANCIAL INFORMATION
|
| Item 1. |
Consolidated Financial Statements
|
MacKenzie Realty Capital, Inc.
(Unaudited)
|
March 31, 2026
|
June 30, 2025
|
|||||||
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Assets
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||||||||
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Real estate assets
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||||||||
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Land
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$
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$
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|
||||
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Building, fixtures and improvements
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||||||
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Intangible lease assets
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||||||
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Less: accumulated depreciation and amortization
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( |
)
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( |
)
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||||
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Total real estate assets, net
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Cash and cash equivalents
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Restricted cash
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Investments, at fair value
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Equity method investments, at fair value
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Investments income, rents and other receivables
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Prepaid expenses and other assets
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Assets held for sale, net
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Total assets
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$
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$
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||||
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Liabilities
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||||||||
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Mortgage notes payable, net
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$
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$
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||||
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Line of credit and notes payable, net
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||||||
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Deferred rent and other liabilities
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Finance lease liabilities
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Dividend payable
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Accounts payable and accrued liabilities
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Below-market lease liabilities, net
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Due to related entities
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Capital pending acceptance
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Liabilities held for sale
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Total liabilities
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Equity
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||||||||
| Common stock, $ |
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||||||
| Preferred stock, $ |
||||||||
| Series A Preferred stock, |
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| Series B Preferred stock, |
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||||||
| Series C Preferred stock, |
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||||||
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Additional paid-in capital
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||||||
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Accumulated deficit
|
( |
)
|
( |
)
|
||||
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Total stockholders’ equity
|
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||||||
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Non-controlling interests
|
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||||||
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Total equity
|
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|
||||||
|
Total liabilities and equity
|
$
|
|
$
|
|
||||
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
MacKenzie Realty Capital, Inc.
(Unaudited)
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
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2026
|
2025
|
2026
|
2025
|
|||||||||||||
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Revenue
|
||||||||||||||||
|
Rental, reimbursements and other property income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Expenses
|
||||||||||||||||
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Depreciation and amortization
|
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||||||||||||
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Interest expense
|
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Property operating and maintenance
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Asset management fees to related party (Note 8)
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General and administrative
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||||||||||||
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Professional fees
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Administrative cost reimbursements to related party (Note 8)
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Directors’ fees
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Transfer agent cost reimbursements to related party (Note 8)
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Impairment loss
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||||||||||||
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Total operating expenses
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||||||||||||
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Operating loss
|
( |
)
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( |
)
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( |
)
|
( |
)
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||||||||
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Other income (loss)
|
||||||||||||||||
|
Dividend and distribution income from equity securities at fair value
|
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|
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|
||||||||||||
|
Dividend expense from securities sold, not yet purchased, at fair value
|
|
|
( |
)
|
|
|||||||||||
|
Net unrealized gain (loss) on equity securities at fair value
|
|
|
|
( |
)
|
|||||||||||
|
Net income (loss) from equity method investments at fair value
|
|
( |
)
|
|
( |
)
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||||||||||
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Net realized income (loss) from investments
|
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( |
)
|
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|||||||||||
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Net loss
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
|
Net income attributable to non-controlling interests
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
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Net income attributable to preferred stockholders Series A, B and C
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||
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Net loss attributable to common stockholders
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||
|
Basic and diluted net loss per share attributable to common stockholders *
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||
|
Basic and diluted weighted average common shares outstanding *
|
|
|
|
|
||||||||||||
| * | |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
MacKenzie Realty Capital, Inc.
(Unaudited)
|
|
Common Stock
|
Series A Preferred Stock
|
Series B Preferred Stock
|
Series C Preferred Stock
|
Total
|
Total Equity
|
||||||||||||||||||||||||||||||||||||||||||||||
|
|
Number of
|
Par
|
Number of
|
Par
|
Number of
|
Par
|
Number of
|
Par
|
Additional Paid-
|
Accumulated
|
Stockholders’
|
Non-controlling
|
||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended March 31, 2026
|
Shares
|
Value
|
Shares
|
Value
|
Shares
|
Value
|
Shares
|
Value
|
in Capital
|
Deficit
|
Equity
|
Interests
|
||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2025
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||||||||||||||
|
Distributions to non-controlling interest holders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
( |
)
|
( |
)
|
|||||||||||||||||||||||||||||||||||||
|
Dividends to Series A preferred stockholders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Dividends to Series B preferred stockholders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Dividends to Series C preferred stockholders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Preferred Series A conversion to common stock
|
|
|
( |
)
|
( |
)
|
-
|
-
|
-
|
-
|
( |
)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Preferred Series B conversion to common stock
|
|
|
-
|
-
|
( |
)
|
( |
)
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
|
Issuance of common stock
|
|
|
*
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock through reinvestment of dividends
|
-
|
|
|
|
*
|
-
|
|
-
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock through reinvestment of dividends
|
-
|
|
-
|
|
|
|
*
|
-
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series C preferred stock through reinvestment of dividends
|
-
|
|
-
|
|
-
|
|
|
|
*
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock
|
-
|
|
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock
|
-
|
|
-
|
-
|
|
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Series C preferred stock
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Increase in liquidation preference - Series B preferred stock
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Increase in liquidation preference of Operating Partnership Series B Preferred Units
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Payment of selling commissions and fees
|
-
|
|
-
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Redemptions of Series A preferred stock
|
-
|
|
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Redemptions of Series B preferred stock
|
-
|
|
-
|
|
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2026
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||||||||||||||
|
|
Common Stock
|
Series A Preferred Stock
|
Series B Preferred Stock
|
Series C Preferred Stock
|
Total
|
Total Equity
|
||||||||||||||||||||||||||||||||||||||||||||||
|
|
Number of
|
Par
|
Number of
|
Par
|
Number of
|
Par
|
Number of
|
Par
|
Additional Paid-
|
Accumulated
|
Stockholders’
|
Non-controlling
|
||||||||||||||||||||||||||||||||||||||||
|
Nine Months Ended March 31, 2026
|
Shares **
|
Value **
|
Shares
|
Value
|
Shares
|
Value
|
Shares
|
Value
|
in Capital **
|
Deficit
|
Equity
|
Interests
|
||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2025
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||||||||||||||
|
Distributions to non-controlling interest holders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
( |
)
|
( |
)
|
|||||||||||||||||||||||||||||||||||||
|
Dividends to Series A preferred stockholders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Dividends to Series B preferred stockholders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Dividends to Series C preferred stockholders
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Preferred Series A conversion to common stock
|
|
|
( |
)
|
( |
)
|
-
|
-
|
-
|
-
|
( |
)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Preferred Series B conversion to common stock
|
|
|
-
|
-
|
( |
)
|
( |
)
|
-
|
-
|
( |
)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
|
Pre-funded warrants conversion to common stock
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of common stock
|
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock through reinvestment of dividends
|
-
|
|
|
|
*
|
-
|
|
-
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock through reinvestment of dividends
|
-
|
|
-
|
|
|
|
*
|
-
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series C preferred stock through reinvestment of dividends
|
-
|
|
-
|
|
-
|
|
|
|
*
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock
|
-
|
|
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock
|
-
|
|
-
|
-
|
|
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Series C preferred stock
|
-
|
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Increase in liquidation preference - Series B preferred stock
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Increase in liquidation preference of Operating Partnership Series B Preferred Units
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||
|
Payment of selling commissions and fees
|
-
|
|
-
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Redemptions of common stock
|
( |
)
|
|
*
|
-
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||
|
Redemptions of Series A preferred stock
|
-
|
|
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
Redemptions of Series B preferred stock
|
-
|
|
-
|
|
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2026
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
|||||||||||||||||||||||||||||
| * | |
| ** | |
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
MacKenzie Realty Capital, Inc.
(Unaudited)
|
|
Common Stock
|
Series A Preferred Stock
|
Series B Preferred Stock
|
Total
|
Total Equity
|
|||||||||||||||||||||||||||||||||||||||
|
|
Number of
|
Par
|
Number of
|
Par
|
Number of
|
Par
|
Additional Paid-
|
Accumulated
|
Stockholders’
|
Non-controlling
|
||||||||||||||||||||||||||||||||||
|
Three Months Ended March 31, 2025
|
Shares **
|
Value **
|
Shares
|
Value
|
Shares
|
Value
|
in Capital **
|
Deficit
|
Equity
|
Interests
|
||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance, December 31, 2024
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||||||
|
Contributions by non-controlling interest holders
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Distributions to non-controlling interest holders
|
-
|
|
-
|
|
-
|
|
|
|
|
( |
)
|
( |
)
|
|||||||||||||||||||||||||||||||
|
Dividends to common stockholders
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Dividends to Series A preferred stockholders
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Dividends to Series B preferred stockholders
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Preferred Series A conversion to common stock
|
|
|
( |
)
|
( |
)
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
Issuance of common stock
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of pre-funded warrants
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series A common stock warrants
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B common stock warrants
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Stock-based compensation
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock through reinvestment of dividends
|
-
|
|
|
|
*
|
-
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock through reinvestment of dividends
|
-
|
|
-
|
|
|
|
*
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock
|
-
|
|
|
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Increase in liquidation preference - Series B preferred stock
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Increase in liquidation preference of Operating Partnership Series B Preferred Units
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Payment of selling commissions and fees
|
-
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
( |
)
|
( |
)
|
|||||||||||||||||||||||||||||
|
Redemptions of common stock
|
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2025
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||||||
|
|
Common Stock
|
Series A Preferred Stock
|
Series B Preferred Stock
|
Total
|
Total Equity
|
|||||||||||||||||||||||||||||||||||||||
|
|
Number of
|
Par
|
Number of
|
Par
|
Number of
|
Par
|
Additional Paid-
|
Accumulated
|
Stockholders’
|
Non-controlling
|
||||||||||||||||||||||||||||||||||
|
Nine Months Ended March 31, 2025
|
Shares **
|
Value **
|
Shares
|
Value
|
Shares
|
Value
|
in Capital **
|
Deficit
|
Equity
|
Interests
|
||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2024
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||||||
|
Contributions by non-controlling interest holders
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Distributions to non-controlling interest holders
|
-
|
|
-
|
|
-
|
|
|
|
|
( |
)
|
( |
)
|
|||||||||||||||||||||||||||||||
|
Dividends to common stockholders
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Dividends to Series A preferred stockholders
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Dividends to Series B preferred stockholders
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
|
-
|
|
-
|
|
|
( |
)
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
Operating Partnership Class A conversion to common
stock
|
|
|
*
|
-
|
|
-
|
|
|
|
|
( |
)
|
|
|||||||||||||||||||||||||||||||
|
Preferred Series A conversion to common stock
|
|
|
( |
)
|
( |
)
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
Issuance of common stock
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of pre-funded warrants
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series A common stock warrants
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B common stock warrants
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Stock-based compensation
|
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock through reinvestment of dividends
|
-
|
|
|
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock through reinvestment of dividends
|
-
|
|
-
|
-
|
|
|
*
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock
|
-
|
|
|
|
-
|
-
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Increase in liquidation preference - Series B preferred
stock
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Operating Partnership Series A Preferred Units issued
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Increase in liquidation preference of Operating Partnership Series B Preferred Units
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
Payment of selling commissions and fees
|
-
|
|
-
|
|
-
|
|
( |
)
|
|
( |
)
|
( |
)
|
( |
)
|
|||||||||||||||||||||||||||||
|
Redemptions of common stock
|
|
|
-
|
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
|||||||||||||||||||||||||||||||
|
Redemptions of Series A preferred stock
|
-
|
|
|
|
-
|
|
( |
)
|
|
( |
)
|
|
( |
)
|
||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance, March 31, 2025
|
|
$
|
|
|
$
|
|
|
$
|
|
$
|
|
$
|
( |
)
|
$
|
|
$
|
|
$
|
|
||||||||||||||||||||||||
|
*
|
Amount is less than $1.
|
|
**
|
After giving effect to the 1-for-10 Reverse Stock Split that was effective August 4, 2025.
|
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
MacKenzie Realty Capital, Inc.
(Unaudited)
|
Nine Months Ended March 31,
|
||||||||
|
2026
|
2025
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net loss
|
$
|
( |
)
|
$
|
( |
)
|
||
|
Adjustments to reconcile net loss to net cash from operating activities:
|
||||||||
|
Net unrealized (gain) loss on equity securities at fair value
|
( |
)
|
|
|||||
|
Net income (loss) from equity method investments at fair value
|
( |
)
|
|
|||||
|
Net realized (gain) loss on investments
|
|
( |
)
|
|||||
|
Impairment loss
|
|
|
||||||
|
Straight-line rent
|
( |
)
|
( |
)
|
||||
|
Depreciation and amortization
|
|
|
||||||
|
Amortization of deferred financing costs and debt mark-to-market
|
|
|
||||||
|
Accretion of above (below) market lease, net
|
( |
)
|
( |
)
|
||||
|
Stock-based compensation
|
( |
)
|
|
|||||
|
Changes in assets and liabilities:
|
||||||||
|
Investments income, rents and other receivables
|
( |
)
|
( |
)
|
||||
|
Due from related entities
|
( |
)
|
|
|||||
|
Prepaid expenses and other assets
|
|
( |
)
|
|||||
|
Deferred rent and other liabilities
|
|
( |
)
|
|||||
|
Accounts payable and accrued liabilities
|
|
|
||||||
|
Due to related entities
|
|
|
||||||
|
Net cash from operating activities
|
( |
)
|
( |
)
|
||||
|
Cash flows from investing activities:
|
||||||||
|
Proceeds from sale of investments
|
|
|
||||||
|
Investments in real estate assets
|
( |
)
|
( |
)
|
||||
|
Purchase of investments
|
( |
)
|
( |
)
|
||||
|
Net cash from investing activities
|
( |
)
|
( |
)
|
||||
|
Cash flows from financing activities:
|
||||||||
|
Borrowing under mortgage notes payable
|
|
|
||||||
|
Payments on mortgage notes payable
|
( |
)
|
( |
)
|
||||
|
Borrowing under line of credit
|
|
|
||||||
|
Proceeds from notes payable
|
|
|
||||||
|
Payments on notes payable
|
( |
)
|
( |
)
|
||||
|
Payment of financing fees
|
( |
)
|
( |
)
|
||||
|
Dividends to common stockholders
|
|
( |
)
|
|||||
|
Dividends to Series A preferred stockholders
|
( |
)
|
( |
)
|
||||
|
Dividends to Series B preferred stockholders
|
( |
)
|
( |
)
|
||||
|
Dividends to Series C preferred stockholders
|
( |
)
|
|
|||||
|
Proceeds from issuance of Series A preferred stock
|
|
|
||||||
|
Proceeds from issuance of Series B preferred stock
|
|
|
||||||
|
Proceeds from issuance of Series C preferred stock
|
|
|
||||||
|
Proceeds from issuance of common stock
|
|
|
||||||
|
Proceeds from issuance of pre-funded warrants
|
|
|
||||||
|
Proceeds from issuance of Series A common stock warrants
|
|
|
||||||
|
Proceeds from issuance of Series B common stock warrants
|
|
|
||||||
|
Payment on finance lease liabilities
|
( |
)
|
( |
)
|
||||
|
Payment of selling commissions and fees
|
( |
)
|
( |
)
|
||||
|
Contributions by non-controlling interests holders
|
|
|
||||||
|
Distributions to non-controlling interests holders
|
( |
)
|
( |
)
|
||||
|
Redemptions of common stock
|
( |
)
|
( |
)
|
||||
|
Redemptions of Series A preferred stock
|
( |
)
|
( |
)
|
||||
|
Redemptions of Series B preferred stock
|
( |
)
|
|
|||||
|
Capital pending acceptance
|
|
|
||||||
|
Net cash from financing activities
|
|
|
||||||
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
MacKenzie Realty Capital, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
|
$
|
( |
)
|
|||
|
Cash, cash equivalents and restricted cash at beginning of the period
|
|
|
||||||
|
Cash, cash equivalents and restricted cash at end of the period
|
$
|
|
$
|
|
||||
|
Cash and cash equivalents at end of the period
|
$
|
|
$
|
|
||||
|
Restricted cash at end of the period
|
|
|
||||||
|
Cash at end of the period classified as assets held for sale
|
|
|
||||||
|
Total cash, cash equivalents, restricted cash and cash classified as held for sale at end of the period
|
$
|
|
$
|
|
||||
|
Supplemental disclosure of non-cash financing activities and other cash flow information:
|
||||||||
|
Issuance of Series A preferred stock through reinvestment of dividends
|
$
|
|
$
|
|
||||
|
Issuance of Series B preferred stock through reinvestment of dividends
|
$
|
|
$
|
|
||||
|
Increase in liquidation preference of Series B preferred stock
|
$
|
|
$
|
|
||||
|
Issuance Operating Partnership Preferred Units - Series A through reinvestment of dividends
|
$
|
|
$
|
|
||||
|
Cash paid for interest
|
$
|
|
$
|
|
||||
|
Increase in liquidation preference of Operating Partnership Preferred Units - Series B
|
$
|
|
$
|
|
||||
|
Preferred Series A conversion to common stock
|
$
|
|
$
|
|
||||
|
Preferred Series B conversion to common stock
|
$
|
|
$
|
|
||||
| Conversion of Series B preferred stock liquidation preference ( |
$ |
|
$ |
|
||||
|
Reclassification of prepaid expenses and other assets to mortgage notes payable, net
|
$
|
|
$
|
|
||||
|
Capitalized construction in progress outstanding as accounts payable and accrued expenses
|
$
|
|
$
|
|
||||
|
Issuance of the Operating Partnership Preferred Units for the purchase of Green Valley Medical Center, LP (Note 1)
|
$
|
|
$
|
|
||||
|
Fair value of assets acquired from consolidation of Green Valley Medical Center, LP
|
$
|
|
$
|
|
||||
|
Fair value of liabilities assumed from consolidation of Green Valley Medical Center, LP
|
$
|
|
$
|
|
||||
|
Stock-based compensation
|
$
|
|
$
|
|
||||
|
Operating Partnership Class A conversion to common stock
|
$
|
|
$
|
|
The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.
MacKenzie Realty Capital, Inc.
March 31, 2026
(Unaudited)
NOTE 1 – PRINCIPAL BUSINESS AND ORGANIZATION
MacKenzie Realty Capital, Inc. (the “Parent Company” together with its subsidiaries as discussed below, collectively, the “Company,” “we,” “us,” or “our”) was incorporated under the general corporation laws of the State of Maryland on January 27, 2012. We have elected to be treated as a real estate investment trust (“REIT”) as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). We are authorized to issue 100,000,000 shares, of which (i) 80,000,000 are designated as common stock, with a $0.0001 par value per share; and (ii) 20,000,000 are designated as preferred stock, with a $0.0001 par value per share. We commenced our operations on February 28, 2013, and our fiscal year-end is June 30.
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.
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 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”). MCM Advisers, LP (the “Investment Adviser”), an affiliate of MacKenzie, advises us in our assessment, acquisition, and divestiture of securities under the advisory agreement amended and restated effective January 1, 2021 (the “Amended and Restated Investment Advisory Agreement”). Another affiliate of MacKenzie, MacKenzie Real Estate Advisers, LP (the “Real Estate Adviser”; together, the “Investment Adviser” and the “Real Estate Adviser” may be referred to as “Adviser” or “Advisers” as appropriate) advises us in our assessment, acquisition, and divestiture of real estate assets. We pursue a strategy focused on investing primarily in real estate assets, and to a lesser extent (intended to be less than 20 % of our portfolio) in illiquid or non-traded debt and equity securities issued by U.S. companies generally owning commercial real estate. 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.
The Company conducts substantially all of its real estate operations through MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”), which was formed in May 2020. As of March 31, 2026, we own all limited partnership units of the Operating Partnership except for 81,909.89 Class A Limited Partnership units, 1,067,028.35 Series A preferred units and 43,212.86 Series B preferred units. 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 common stock on a 10: basis or, at the Company’s election, for cash based upon the 10 -day average trading price of the Company’s stock, also on a 10: basis (as a result of the Company’s common stock reverse stock split (the “Reverse Stock Split”) on August 4, 2025; previously the units were convertible on a 1:1 basis). 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 1,067,028.35 Series A preferred units are entitled to a liquidation preference of $26,675,709 (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). The Parent Company has contributed net capital of $73,650,033 to the Operating Partnership since inception; thus, the Class A, Series A and Series B preferred units represent approximately 27.97
The consolidated financial statements include the accounts of the Parent Company, the Operating Partnership, MacKenzie NY Real Estate 2 Corp. (“MacKenzie NY 2”), a taxable REIT
subsidiary, and their majority-owned and controlled subsidiaries, including joint ventures and property-owning entities acquired or formed to own, operate, develop, or manage multifamily, office, and mixed-use real estate properties. The
consolidated entities include Madison-PVT Partners LLC (“Madison”), PVT-Madison Partners LLC (“PVT”), Hollywood Hillview Owner, LLC (“Hollywood Hillview”), MacKenzie-BAA IG Shoreline LLC (“MacKenzie Shoreline”), MacKenzie Satellite Place Corp.
(“MacKenzie Satellite”), MRC Aurora, LLC (“MRC Aurora”), 220 Campus Lane, LLC (“220 Campus Lane”), Campus Lane Residential, LLC (“Campus Lane Residential”), GV Executive Center, LLC (“GVEC”), Innovate Napa, LLC (“Innovate Napa”), MRC QRS, Inc.
(“MRC QRS”), and various limited partnerships (each a “Wiseman Partnership”) acquired in connection with the Wiseman transaction, including First & Main, LP (“First & Main”), 1300 Main, LP (“1300 Main”), Woodland Corporate Center Two, LP
(“Woodland Corporate Center Two”), Main Street West, LP (“Main Street West”), One Harbor Center, LP (“One Harbor Center”), and Green Valley Medical Center, LP (“Green Valley Medical Center”). Each Wiseman Partnership owns a Class A or B
office property in Napa, Fairfield, Suisun, or Woodland, California (the “Wiseman Properties”). Intercompany balances and transactions are eliminated in consolidation.
On January 1, 2026, the Company contributed all of its multi-family residential properties (Commodore, The Park View, Hollywood and Shoreline Apartments and Aurora at Green Valley) and Blue Ridge development project to a newly formed entity MacKenzie Apartment Communities, Inc. (“MAC”) in exchange for 1,906,580 shares of MAC (on a 1 :1 basis with the Parent Company’s outstanding shares). MAC is focused on developing and owning multi-family properties on the West Coast. The Parent Company is the sole shareholder of MAC as of March 31, 2026.
In connection with the formation of MAC, MAC Operating Partnership, LP (“MAC OP”) was established as an operating partnership through which all of MAC’s business is conducted. The contributed
properties and development project are held by MAC OP, which directly or indirectly owns and operates a portfolio of six residential properties. MAC owns all the limited partnership units and is the sole general partner of MAC OP.
We are conducting a Regulation A offering of our preferred stock pursuant to an offering circular qualified by the SEC on January 29, 2025 and amended in June 2025 (as amended, the “Offering Circular”) which permits the offer and 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
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. 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”) , subject to maintaining compliance with General Instruction I.B.6 of Form S-3 Registration Statement 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.
On January 7, 2026, in connection with the at the market offering program (the “ATM Offering”) through which the Company may sell up to $20,000,000 of shares of the Company’s common stock at $0.0001 par value per share, the Company entered into an amendment to the ATM Sales Agreement with Maxim.
In accordance with the terms of the amendment, the ATM Sales Agreement will now terminate upon the earlier of (i) the issuance and sale of all of the common stock subject to the ATM Sales Agreement, (ii) termination of the ATM Sales Agreement by the Company or the Sales Agent with 15 days written notice, or (iii) July 15, 2027 .
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 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 August 4, 2025, the Company effected a Reverse Stock Split of its common stock, increasing the par value from $0.0001 per share to $0.001 per share. 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. 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. 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. All common share and per-share information in the accompanying consolidated financial statements and notes have been retroactively adjusted to reflect the Reverse Stock Split.
As of March 31, 2026, we have raised approximately $125.76 million from our common stock public offerings (including $4.80 million from our Registered Offering and the concurrent private placement, and $1.80 million from the ATM offering), $19.58 million from our Series A preferred stock offering, $3.64 million from our Series B preferred stock offering and $1.32 million from our Series C preferred stock offering pursuant to the Offering Circular. As of March 31, 2026, we have issued shares of common stock, Series A preferred stock, Series B preferred stock, and Series C preferred stock with gross proceeds of $15.56 million, $0.58 million, $0.03 million, and a minimal worth of shares, respectively, under our dividend reinvestment plans (each a “DRIP” and together the “DRIPs”). Of the total shares issued by us as of March 31, 2026, approximately $14.28 million, $0.11 million and a minimal worth of shares of common stock, Series A preferred stock and Series B and Series C preferred stock have been repurchased under our share repurchase program, respectively. As of March 31, 2026, we have 2,164,158.00 shares of common stock, 747,753.79 shares of Series A preferred stock, 124,363.67 shares of Series B preferred stock, and 52,656.67 shares of Series C preferred stock outstanding.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation Policy
The accompanying consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X. We follow the accounting principles
generally accepted in the United States of America (“GAAP”) and include the accounts of our wholly owned consolidated subsidiaries and majority-owned controlled subsidiaries. All intercompany accounts and transactions have been eliminated in
consolidation. The unaudited consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of our results for the interim periods presented. The results of
operations for interim periods are not necessarily indicative of results to be expected for the full year.
The assets and liabilities of each of the consolidated subsidiaries are separate from those of the Parent Company and the Operating Partnership. Consequently, the assets of the consolidated
subsidiaries are not available to settle the obligations of the Parent Company or the Operating Partnership, and the obligations of the subsidiaries does not constitute obligations of the Parent Company or the Operating Partnership.
These unaudited consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2025, included in our annual report on Form 10-K
filed with the SEC.
There have been no changes in the significant accounting policies from those disclosed in the audited financial statements for the year ended June 30, 2025.
Certain prior period information has been reclassified to conform to the current year end presentation. The reclassification has no effect on our consolidated balance sheet or the consolidated
statement of operations as previously reported.
Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported asset values, liabilities, revenues, expenses and unrealized gains
(losses) on investments during the reporting period. Material estimates are susceptible to change, and actual results could differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
Our cash and cash equivalents represent current bank accounts and other bank deposits free of encumbrances and having maturity dates of three months or less from the respective dates of deposit.
We limit cash investments to financial institutions with high credit standing; therefore, we believe our cash investments are not exposed to any significant credit risk. The restricted cash includes escrow accounts for real property taxes,
insurance, capital expenditures and tenant improvements, and debt service and leasing costs held by lenders. These balances are insured by the Federal Deposit Insurance Corporation up to certain limits. Often, the cash balances held in financial
institutions by us may exceed these insured limits.
Restricted cash is subject to legal or contractual restrictions as to withdrawal or use, including restrictions that require the funds to be used for a specified purpose and restrictions that
limit the purpose for which the funds can be used.
Investment Income Receivable
Investment income receivable represents dividends, distributions, and sales proceeds recognized in accordance with our revenue recognition policy but not yet received as of the date of the
consolidated financial statements. We monitor and adjust our receivables, and those deemed to be uncollectible are written-off only after all reasonable collection efforts are exhausted. We believe, based on the credit worthiness of the obligors,
that all investment income receivable balances outstanding as of March 31, 2026 and June 30, 2025, are collectible and do not require recording any uncollectible allowance.
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.
Rents and Other Receivables
We will periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. We exercise judgment in establishing these allowances and consider payment history and current credit status of tenants in developing these estimates. As of March 31, 2026 and June 30, 2025, we recognized an allowance for doubtful accounts of $137,285 and $259,590 , respectively.
Capital Pending Acceptance
We conduct closings for new issuance of our Series A, Series B and Series C preferred stock and MRC Aurora preferred units twice per month and admit new stockholders effective beginning the first day of each month. Subscriptions are effective only upon our acceptance. Any gross proceeds received from subscriptions which are not accepted as of the period-end are classified as capital pending acceptance in the consolidated balance sheets. We close our common stock ATM sales on a daily basis. As of March 31, 2026, capital pending acceptance related to our Series A preferred stock, Series B preferred stock and Series C preferred stock was $131,350 13,411 .
Income Taxes and Deferred Tax Liability
The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders, provided that, on an annual basis, it generally distributes at least 90 % of its 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. To the extent it satisfies the annual distribution requirement but distribute less than 100 % of its REIT taxable income, it will be subject to U.S. federal corporate income tax on their undistributed taxable income. In addition, it will be subject to a 4 % nondeductible 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, 2025. Therefore, it did not incur any tax expense or excise tax on its
income from operations during the quarterly periods within the tax year 2025. In addition, for the tax year 2026, 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 2026.
MacKenzie NY 2 is subject to corporate federal and state income tax on their taxable income at regular statutory rates. As of March 31, 2026, it did no no no
The Operating Partnership is a limited partnership. 220 Campus Lane, GVEC and Innovate Napa are limited liability companies. 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 ultimately flow through to the
Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these entities.
MAC OP is a limited partnership. Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, Campus Lane Residential and MRC Aurora are
limited liability companies. Accordingly, all income tax liabilities of these entities ultimately flow through to the Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these
entities.
We follow ASC 740, Income Taxes (“ASC 740”), to account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax liabilities attributable to the net unrealized investment gain (losses) on existing investments. In estimating future tax consequences, we consider all future events, other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period of enactment. In addition, ASC 740 provides guidance for recognizing, measuring, presenting, and disclosing uncertain tax positions in the financial statements. As of March 31, 2026 and June 30, 2025, there were no
Subsequent Events
Subsequent events are events or transactions that occur after the date of the consolidated balance sheets but before the date the consolidated financial statements are issued. Subsequent events
that provide additional evidence about conditions that existed at the date of the consolidated balance sheets are considered in the preparation of the consolidated financial statements presented herein. Subsequent events that occur after the date
of the consolidated balance sheets that do not provide evidence about the conditions that existed as of the date of the consolidated statements of changes in equity are considered for disclosure based upon their significance in relation to our
consolidated financial statements taken as a whole.
Fair Value of Financial Instruments
Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment
and, therefore, cannot be determined with precision. We believe that the carrying amounts of our financial instruments, consisting of cash, restricted cash, investments income, rents and other receivables, prepaid expenses and other assets,
mortgage notes payable, net, line of credit and notes payable, net, accounts payable and accrued liabilities, below-market lease liabilities, net, deferred rent and other liabilities and due to related entities, approximate the fair values of such
items based on their nature, terms, and interest rates.
Equity Securities
We have minority and non-controlling equity investments in various limited partnerships and non-traded entities, which do not have readily determinable fair values. We do not have controlling
interests in these entities. Thus, these investments have been recorded as investments in equity securities in accordance with ASC Topic 321, Investments – Equity Securities, and measured at fair value. The
changes in the fair value of these investments are recorded in the consolidated statements of operations.
Equity Method Investments with Fair Value Option Election
We elected the fair value option of accounting for the investments listed below that would have otherwise been recorded under the equity method of accounting. The primary purpose of electing the fair value option was to enhance the transparency of our financial condition. Changes in the fair value of these investments, which are inclusive of equity in income, are recorded in the consolidated statements of operations during the period such changes occur. The below investments would have been accounted for under the equity method if the fair value method had not been elected as of March 31, 2026 and June 30, 2025:
|
Investee
|
Legal Form
|
Asset Type
|
% Ownership
|
Fair Value as of
March 31, 2026
|
||||||
|
Lakemont Partners, LLC
|
Limited Liability Company
|
LP Interest
|
|
%
|
$
|
|
||||
|
Martin Plaza Associates, LP
|
Limited Partnership
|
GP and LP Interest
|
|
%
|
|
|||||
|
Westside Professional Center I, LP
|
Limited Partnership
|
GP Interest
|
|
%
|
* | |
||||
|
Total
|
|
|
$
|
|
||||||
|
Investee
|
Legal Form
|
Asset Type
|
% Ownership
|
Fair Value as of
June 30, 2025
|
||||||
|
Lakemont Partners, LLC
|
Limited Liability Company
|
LP Interest
|
|
%
|
$
|
|
||||
|
Martin Plaza Associates, LP
|
Limited Partnership
|
GP and LP Interest
|
|
%
|
|
|||||
|
Westside Professional Center I, LP
|
Limited Partnership
|
GP Interest
|
|
%
|
* | |
||||
|
Total
|
|
|
$
|
|
||||||
| * | |
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. The price at which a long-lived asset (disposal group) is being marketed is
indicative of whether the entity currently has the intent and ability to sell the asset (disposal group). A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available for immediate sale,
whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale; and
|
| • |
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
|
On the day that these criteria are met, we suspend depreciation on the investment properties held for sale, including depreciation for tenant improvements and additions, as well as on the
amortization of acquired in-place leases. Assets and liabilities of the disposal group are presented separately on the consolidated balance sheets and measured at the lower of carrying value or fair value less costs to sell. Prior period balances
have been reclassified as assets and liabilities held for sale for comparative purposes on the consolidated balance sheet as of June 30, 2025. Woodland Corporate Center Two was listed for sale as discussed in Note 5.
Leases
Six of our properties, 1300 Main, Main Street West, Woodland Corporate Center, Green Valley Executive Center, One Harbor Center and Green Valley Medical Center had solar equipment leases in place
at the time of our acquisition. Therefore, these existing solar leases were reassessed at the acquisition date and were recorded as finance leases in accordance with ASC 842. We record leases on the consolidated balance sheets in the form of a
lease liability for the present value of future minimum payments under the lease terms and a right-of-use asset equal to the lease liability adjusted for items such as deferred or prepaid rent, lease incentives, and any impairment of the
right-of-use asset. The discount rate used in determining the lease liability is based upon incremental borrowing rates that we could obtain for similar loans as of the date of commencement or renewal. We do not record leases on the consolidated
balance sheets that are classified as short term (less than one year).
At lease inception, we determine the lease term by considering the minimum lease term and all optional renewal periods that are reasonably certain to be exercised. The lease term is also used to
calculate straight-line rent expense. The depreciable life of leasehold improvements is limited by the estimated lease term, including renewals if they are reasonably certain to be exercised. Our leases do not contain residual value guarantees or
material variable lease payments that will impact our ability to pay dividends or cause us to incur additional expenses.
The amortization of the right-of-use asset arising from finance leases is expensed through depreciation and amortization expense and the interest on the related lease liability is expensed
through interest expense on our consolidated statements of operations.
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 indicators of
potential impairment emerge, we assess whether we will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition. 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.
During the three and nine months ended March 31, 2026, we did no 9,500,167 , of which none and $9,500,167 were recognized during the three and nine months ended March 31, 2025, respectively. We utilized a third-party appraisal to estimate the fair value of the property and determine the impairment amount. We consider these inputs as Level III measurements within the fair value hierarchy.
Stock-based Compensation
ASC 718, Stock-based Compensation, requires generally that all equity awards granted to employees and consultants be accounted for at fair value. This fair value is measured at grant date for stock settled awards, and at subsequent exercise or settlement for cash-settled awards. Under this method, we recorded the 13,300 shares of common stock issued to Maxim discussed in Note 1 at fair value as compensation for services rendered to the Company. The fair value is computed based on the trading price of the common stock on the OTCQX capital market at the grant date of August 26, 2024. Additionally, we recorded the 8,583.70 shares of common stock issued to OTB Capital discussed in Note 1 at fair value in consideration for their marketing and distribution services. The fair value is computed based on the public trading price of the common stock at the grant date of February 3, 2025.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax, to enhance the transparency and decision usefulness of income
tax disclosures, primarily related to rate reconciliation and income taxes paid information. The amendment is effective for annual periods beginning after December 15, 2024, and should be applied on a prospective basis, with the option to apply
retrospectively. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The adoption of these amendments did not have any impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The ASU’s purpose is to improve the disclosures about a
public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly
presented expense captions (such as cost of sales, SG&A, and research and development). This ASU is effective for the Company’s annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December
15, 2027, with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.
NOTE 3 – INVESTMENTS IN REAL ESTATE
The following tables provide summary information regarding our operating properties, which are owned through our subsidiaries. The ownership interest shown below is the percentage of the property owned by the subsidiary, not the percentage of the subsidiary owned by the Company.
Consolidated Operating Properties
| Property Name: | | | | |
| Property Owner: | | | | |
| Location: | | | | |
| Number of Tenants: | | | | |
| Year Built: | | | | |
| Ownership Interest: | | | | |
| | | | | |
| Property Name: | | | | |
| Property Owner: | | | | |
| Location: | | | | |
| Number of Tenants: | | | | |
| Year Built: | | | | |
| Ownership Interest: | | | | |
| | | | | |
| Property Name: | | | | |
| Property Owner: | | | | |
| Location: | | | | |
| Number of Tenants: | | | | |
| Year Built: | | | | |
| Ownership Interest: | | | | |
| | | | | |
| Property Name: | | | | |
| Property Owner: | | | | |
| Location: | | | | |
| Number of Tenants: | | | | |
| Year Built: | | | | |
| Ownership Interest: | | | | |
In addition to our commercial and residential real estate properties, we own a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California. We
acquired the vacant land in September 2023 with the long-term objective of developing it into a multi-family residential community. This project, known as Blue Ridge, is expected to consist of 84 luxury multi-family units in Solano County, one of
the fastest-growing counties in California. The entitlement process for the vacant land is on-going. Our goal is to commence construction in fall 2027; 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 Company is currently evaluating potential development and financing structures for the project, including discussions with a third-party
developer pursuant to which the Company may contribute the land and the third party may arrange construction financing and development capital for the project.
The total depreciation expense of our operating properties for the three and nine months ended March 31, 2026 were $1,719,022 and $5,468,353 , respectively. The total depreciation expense of our operating properties for the three and nine months ended March 31, 2025 were $1,860,548 and $4,967,727 , respectively.
Operating Leases:
Our real estate assets are leased to tenants under operating leases that contain varying terms and expirations. The leases may have provisions to extend the lease agreements, options for early
termination after paying a specified penalty and other terms and conditions as negotiated. We retain substantially all the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, we do
not require a security deposit from tenants on our commercial real estate properties, depending upon the terms of the respective leases and the creditworthiness of the tenants. Even when required, security deposits generally are not significant
amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of the security deposit. Security deposits received in cash related to tenant leases are included in other accrued liabilities in
the accompanying consolidated balance sheets and were immaterial as of March 31, 2026 and June 30, 2025.
The following table presents the components of income from real estate operations for the three and nine months ended March 31, 2026:
|
|
Three Months Ended
|
Nine Months Ended
|
||||||
|
|
March 31, 2026
|
March 31, 2026
|
||||||
|
Lease income - Operating leases
|
$
|
|
$
|
|
||||
|
Variable lease income (1)
|
|
|
||||||
|
|
$
|
|
$
|
|
||||
| (1) | |
The following table presents the components of income from real estate operations for the three and nine months ended March 31, 2025:
|
|
Three Months Ended
|
Nine Months Ended
|
||||||
|
|
March 31, 2025
|
March 31, 2025
|
||||||
|
Lease income - Operating leases
|
$
|
|
$
|
|
||||
|
Variable lease income (1)
|
|
|
||||||
|
|
$
|
|
$
|
|
||||
|
(1)
|
Primarily includes tenant reimbursements for utilities and common area maintenance.
|
As of March 31, 2026, the future minimum rental income from our real estate properties under non-cancelable operating leases are as follows:
|
Year ended June 30, :
|
Rental Income
|
|||
|
2026 (remainder)
|
$
|
|
||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030
|
|
|||
|
Thereafter
|
|
|||
|
Total
|
$
|
|
||
Lease Intangibles, Above-Market Lease Assets and Below-Market Lease Liabilities, Net
As of March 31, 2026 and June 30, 2025, our acquired lease intangibles, above-market lease assets, and below-market lease liabilities were as follows:
| | As of March 31, 2026 | |||||||||||
| | Lease Intangibles | Above-Market Lease Assets | Below-Market Lease Liabilities | |||||||||
| Cost | $ | | $ | | $ | | ||||||
| Accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated impairment loss | ( | ) | ( | ) | ( | ) | ||||||
| Total | $ | | $ | | $ | | ||||||
| | ||||||||||||
| Weighted average amortization period (years) | | | | |||||||||
| | As of June 30, 2025 | |||||||||||
| | Lease Intangibles | Above-Market Lease Assets | Below-Market Lease Liabilities | |||||||||
| Cost | $ | | $ | | $ | | ||||||
| Accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated impairment loss | ( | ) | ( | ) | ( | ) | ||||||
| Total | $ | | $ | | $ | | ||||||
| | ||||||||||||
| Weighted average amortization period (years) | | | | |||||||||
Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the three and nine months ended March 31, 2026, were as follows:
|
|
Three Months Ended March 31, 2026
|
|||||||||||
|
|
Lease Intangibles
|
Above-Market
Lease Assets
|
Below-Market
Lease Liabilities
|
|||||||||
|
Amortization
|
$
|
|
$
|
|
$
|
( |
)
|
|||||
|
|
Nine Months Ended March 31, 2026
|
|||||||||||
|
|
Lease Intangibles
|
Above-Market
Lease Assets
|
Below-Market
Lease Liabilities
|
|||||||||
|
Amortization
|
$
|
|
$
|
|
$
|
( |
)
|
|||||
Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the three and nine months ended March 31, 2025, were as follows:
|
|
Three Months Ended March 31, 2025
|
|||||||||||
|
|
Lease Intangibles
|
Above-Market
Lease Assets
|
Below-Market
Lease Liabilities
|
|||||||||
|
Amortization
|
$
|
|
$
|
|
$
|
( |
)
|
|||||
|
|
Nine Months Ended March 31, 2025
|
|||||||||||
|
|
Lease Intangibles
|
Above-Market
Lease Assets
|
Below-Market
Lease Liabilities
|
|||||||||
|
Amortization
|
$
|
|
$
|
|
$
|
( |
)
|
|||||
The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:
|
|
Year Ended June 30,
|
|||||||||||||||||||||||
|
|
2026 (remainder)
|
2027
|
2028
|
2029
|
2030
|
Thereafter
|
||||||||||||||||||
|
In-place leases, to be included in amortization
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Above-market lease intangibles
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
Below-market lease liabilities
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||||||
|
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
|
$
|
( |
)
|
|||||||
NOTE 4 – INVESTMENTS
The following table summarizes the composition of our equity method investments with fair value option election and other equity securities at fair value as of March 31, 2026 and June 30, 2025. On the consolidated balance sheets, these investments are reflected in two separate lines: (i) investments at fair value, which are classified as equity securities under ASC Topic 321, and (ii) equity method investments with fair value option election.
|
|
Fair Value
|
Fair Value
|
||||||
|
Asset Type
|
March 31, 2026
|
June 30, 2025
|
||||||
|
Non Traded Companies
|
$
|
|
$
|
|
||||
|
GP Interests (Equity method investment with fair value option election)
|
|
|
||||||
|
LP Interests (Equity method investment with fair value option election)
|
|
|
||||||
|
Publicly Traded Company
|
|
|
||||||
|
Total
|
$
|
|
$
|
|
||||
During the three and nine months ended March 31, 2026, we realized a total net gain of $621,080 and net loss of $764 , respectively, from nine investment liquidations and disposals (Highlands REIT, Inc., Starwood Real Estate Income Trust, Inc. – Class S, Starwood Real Estate Income Trust, Inc. – Class I, SmartStop Self Storage REIT, Inc. – Class A, SmartStop Self Storage REIT, Inc. – Class A sold short, SmartStop Self Storage REIT, Inc. – Class T, National Healthcare Properties, Inc., CNL Healthcare Properties, Inc. and Sonida Senior Living, Inc.).
During the three and nine months ended March 31, 2025, we realized a total net gain of $18,430 and $232,645 , respectively, from three investment liquidations and disposals (Blackstone Real Estate Income Trust, Inc., Highlands REIT, Inc., and 5210 Fountaingate, LP).
The following table presents fair value measurements of our investments as of March 31, 2026 and June 30, 2025, according to the fair value hierarchy that is described in our annual report on Form 10-K:
|
|
As of March 31, 2026
|
|||||||||||||||
|
Asset Type
|
Total
|
Level I
|
Level II
|
Level III
|
||||||||||||
|
Non Traded Companies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
GP Interests
|
|
|
|
|
||||||||||||
|
LP Interests
|
|
|
|
|
||||||||||||
|
Publicly Traded Company
|
|
|
|
|
||||||||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
|
As of June 30, 2025
|
|||||||||||||||
|
Asset Type
|
Total
|
Level I
|
Level II
|
Level III
|
||||||||||||
|
Non Traded Companies
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
GP Interests
|
|
|
|
|
||||||||||||
|
LP Interests
|
|
|
|
|
||||||||||||
|
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair value hierarchy) for the nine months ended March 31, 2026:
|
Balance at July 1, 2025
|
$
|
|
||
|
Purchases of investments
|
|
|||
|
Transfers to Level I
|
( |
)
|
||
|
Proceeds from sales of investments
|
( |
)
|
||
|
Net realized loss from investments
|
( |
)
|
||
|
Net unrealized gain from investments
|
|
|||
|
Ending balance at March 31, 2026
|
$
|
|
The transfers of $1,081,429 from Level III to Level I category during the nine months ended March 31, 2026 resulted from one of the Company’s investments converting from a non-traded company to a publicly traded company and one of the Company's investments merging with a publicly-traded company, survived by the latter. Transfers are assumed to have occurred at the beginning of the period.
For the nine months ended March 31, 2026, net included in earnings relating to Level III investments still held at March 31, 2026 was $2,004,259 .
The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair value hierarchy) for the nine months ended March 31, 2025:
|
Balance at July 1, 2024
|
$
|
|
||
|
Purchases of investments
|
|
|||
|
Transfer to Investments in Real Estate
|
( |
)
|
||
|
Proceeds from sales of investments
|
( |
)
|
||
|
Net realized gain from investments
|
|
|||
|
Net unrealized gain from investments
|
|
|||
|
Ending balance at March 31, 2025
|
$
|
|
For the nine months ended March 31, 2025, net included in earnings relating to Level III investments still held at March 31, 2025 was $416,178 .
The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at March 31, 2026:
| Asset Type | Fair Value | Primary Valuation Techniques | Unobservable Inputs Used | Range | Weighted Average | ||||||||||
| Non Traded Companies | $ | | Market Activity | Acquisition cost | |||||||||||
| | | Security sales | |||||||||||||
| | | Secondary market industry publication | |||||||||||||
| | Estimated Liquidation Value | Sponsor provided value | |||||||||||||
| | | | |||||||||||||
| GP Interests | | Direct Capitalization Method | Capitalization rate | | % | | % | ||||||||
| | | Discount rate | | % | | % | |||||||||
| | | | |||||||||||||
| LP Interests | | Discounted Cash Flow | Discount rate | | % | | % | ||||||||
| LP Interests | | Market Activity | Acquisition cost | ||||||||||||
| | $ | | | | |||||||||||
The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2025:
| Asset Type | Fair Value | Primary Valuation Techniques | Unobservable Inputs Used | Range | Weighted Average | ||||||||||
| Non Traded Companies | $ | | Market Activity | Acquisition cost | |||||||||||
| | | Security sales | |||||||||||||
| | | Secondary market industry publication | |||||||||||||
| | Estimated Liquidation Value | Sponsor provided value | |||||||||||||
| | | | |||||||||||||
| GP Interests | | Direct Capitalization Method | Capitalization rate | | % | | % | ||||||||
| | | Discount rate | | % | | % | |||||||||
| | | | |||||||||||||
| LP Interests | | Discounted Cash Flow | Discount rate | | % | | % | ||||||||
| LP Interests | | Market Activity | Acquisition cost | ||||||||||||
| | $ | | | | |||||||||||
Summarized Financial Statements for Equity Method Investments (Fair Value Option)
Our investments in securities are generally in small and mid-sized companies in a variety of industries. In accordance with the Rule 8-03(b)(3) of Regulation S-X applicable for smaller reporting
companies, we must determine which of our equity method investments measured at fair value under the Fair Value Option are considered “significant”, if any. Regulation S-X mandates the use of three different tests to determine if any of our
investments are considered significant investments: the investment test, the asset test, and the income test. The rule requires summarized financial statements for any significant equity method investments in an annual and interim report if any of
the three tests exceed 20%.
In addition to the SEC rules, ASC 323-10-50-3(c) requires summarized financial statements of our equity method investments, including those reported under the fair value option, if they are
material individually or in aggregate.
None of our equity method investments accounted under the fair value option were determined to be individually significant under any of the tests as of March 31, 2026. Furthermore, our equity
method investments accounted under the fair value option in aggregate were not material as of March 31, 2026.
Unconsolidated Significant Subsidiaries
In accordance with SEC Rules 3-09 and 4-08(g) of Regulation S-X, we must determine which of our investments in securities are considered “significant subsidiaries”, if any. Regulation S-X
mandates the use of three different tests to determine if any of our controlled investments are significant subsidiaries: the investment test, the asset test, and the income test. Rule 3-09 of Regulation S-X requires separate audited financial
statements for any unconsolidated majority-owned subsidiary in an annual report if any of the three tests exceed 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information in an annual report if any of the three tests exceeds
10%.
As of March 31, 2026 and June 30, 2025, none of our investments in securities were considered unconsolidated significant subsidiaries under the SEC rules described above.
NOTE 5 – HELD FOR SALE
Assets and Liabilities Held for Sale
In October 2025, we listed Woodland Corporate Center Two for sale and met the criteria to be classified as held for sale, which requires us to present the related assets and liabilities as separate line items in our consolidated balance sheets. We recorded these assets and liabilities at the lesser of the carrying value or fair value less costs to sell. As of March 31, 2026, we did not record any impairment loss allowance on Woodland Corporate Center, which is our only asset held for sale.
The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in our consolidation balance sheets:
|
March 31, 2026
|
June 30, 2025
|
|||||||
|
Assets
|
||||||||
|
Real estate assets
|
||||||||
|
Land
|
$
|
|
$
|
|
||||
|
Building, fixtures and improvements
|
|
|
||||||
|
Intangible lease assets
|
|
|
||||||
|
Less: accumulated depreciation
|
( |
)
|
( |
)
|
||||
|
accumulated amortization
|
( |
)
|
( |
)
|
||||
|
Total real estate assets, net
|
|
|
||||||
|
Cash and cash equivalents
|
|
|
||||||
|
Investments income, rents and other receivables
|
|
|
||||||
|
Prepaid expenses and other assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
|
Liabilities
|
||||||||
|
Deferred rent and other liabilities
|
$
|
|
$
|
|
||||
|
Finance lease liabilities
|
|
|
||||||
|
Accounts payable and accrued liabilities
|
|
|
||||||
|
Below-market lease liabilities, net
|
|
|
||||||
|
Total liabilities
|
$
|
|
$
|
|
||||
NOTE 6 – LEASES
Lessee Arrangements
As discussed in Note 2, we acquired six partnerships which had solar equipment leases in place. We reassessed the leases as of the acquisition date and recorded them as finance leases in accordance with ASC 842. Our leases have remaining terms of 2.42 to 7.00 years. Right-of-use assets and lease liabilities by lease type, and the associated balance sheet classifications, are as follows:
|
Balance Sheet Classification
|
March 31, 2026
|
June 30, 2025
|
|||||||
|
Right-of-use assets:
|
|
||||||||
|
Finance leases
|
|
$
|
|
$
|
|
||||
|
|
|
||||||||
|
Lease liabilities:
|
|
||||||||
|
Finance leases
|
Finance lease liabilities
|
$
|
|
$
|
|
||||
We have included these leases in as follows:
|
|
March 31, 2026
|
June 30, 2025
|
||||||
|
Building, fixtures and improvements
|
$
|
|
$
|
|
||||
|
Accumulated depreciation
|
( |
)
|
( |
)
|
||||
|
Real estate assets, net
|
$
|
|
$
|
|
||||
Lease Expense
The components of total lease cost were as follows for the three and nine months ended March 31, 2026:
|
|
Three Months Ended
|
Nine Months Ended
|
||||||
|
|
March 31, 2026
|
March 31, 2026
|
||||||
|
Finance lease cost
|
||||||||
|
Right-of-use asset amortization
|
$
|
|
$
|
|
||||
|
Interest expense
|
|
|
||||||
|
Total lease cost
|
$
|
|
$
|
|
||||
The components of total lease cost were as follows for the three and nine months ended March 31, 2025:
|
|
Three Months Ended
|
Nine Months Ended
|
||||||
|
|
March 31, 2025
|
March 31, 2025
|
||||||
|
Finance lease cost
|
||||||||
|
Right-of-use asset amortization
|
$
|
|
$
|
|
||||
|
Interest expense
|
|
|
||||||
|
Total lease cost
|
$
|
|
$
|
|
||||
Lease Obligations
Future undiscounted lease payments for finance leases with initial terms of one year or more are as follows:
|
Fiscal Year Ending June 30, :
|
Finance Leases
|
|||
|
2026 (remainder)
|
$
|
|
||
|
2027
|
|
|||
|
2028
|
|
|||
|
2029
|
|
|||
|
2030
|
|
|||
|
Thereafter
|
|
|||
|
Total undiscounted lease payments
|
|
|||
|
Less: Imputed interest
|
( |
)
|
||
|
Net lease liabilities
|
$
|
|
||
Supplemental Lease Information
| | March 31, 2026 | June 30, 2025 | ||||||
| Finance lease weighted average remaining lease term (years) | | | ||||||
| Finance lease weighted average discount rate | | % | | % | ||||
| | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Financing cash flows from finance leases | $ | | $ | | ||||
| | ||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | | $ | | ||||
NOTE 7 – VARIABLE INTEREST ENTITIES
A variable interest in a variable interest entity (“VIE”) is an investment or other interest that will absorb portions of the VIE’s expected losses and/or receive portions of the VIE’s expected
residual returns. Our variable interests in VIEs include limited partnership interests. VIEs sometimes finance the purchase of assets by issuing limited partnership interests that are either collateralized by or indexed to the assets held by the
VIE.
The enterprise with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE. We determine whether we are the primary beneficiary of a VIE by
performing an analysis that principally considers: (a) which variable interest holder has the power to direct activities of the VIE that most significantly impact the VIE’s economic performance; (b) which variable interest holder has the obligation
to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE; (c) the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders;
(d) the VIE’s capital structure; (e) the terms between the VIE and its variable interest holders and other parties involved with the VIE; and (f) related-party relationships. We reassess our evaluation of whether an entity is a VIE when certain
reconsideration events occur. We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances.
Nonconsolidated VIEs
As of March 31, 2026 and June 30, 2025, we had one
The table below presents a summary of the nonconsolidated VIE in which we hold variable interests:
|
Total Nonconsolidated VIEs
|
As of March 31, 2026
|
As of June 30, 2025
|
||||||
|
Fair value of investments in VIEs
|
$
|
|
$
|
|
||||
|
Carrying value of variable interests - assets
|
$
|
|
$
|
|
||||
|
Maximum Exposure to Loss:
|
||||||||
|
Limited Partnership Interest
|
$
|
|
$
|
|
||||
Our exposure to the obligations of VIEs is generally limited to the carrying value of the limited partnership interests in these entities.
NOTE 8 – RELATED PARTY TRANSACTIONS
Advisory Agreements Effective January 1, 2021:
As discussed in Note 1, on January 26, 2021, our Board of Directors approved, effective January 1, 2021, two advisory agreements, an Advisory Management Agreement with the Real Estate Adviser and the Amended and Restated Investment Advisory Agreement with the Investment Adviser.
The terms of the Advisory Management Agreement with the Real Estate Adviser provide that we will continue to pay an Asset Management Fee on essentially the same terms as we were paying the Investment Adviser prior to 2021, namely based upon a percentage of invested capital (3 % of the first $20 million, 2 % of the next $80 million, and 1.50 % over $100 million). Invested capital is equal to the amount calculated by multiplying the total number of outstanding shares of common stock, shares of preferred stock, and the partnership units (units in our operating partnership issued by us and held by persons other than us) issued by us by the price paid for each or the value ascribed to each in connection with their issuance. The Advisory Management Agreement also provides for a 2.50 % Acquisition Fee on new (non-security) purchases, subject to certain limitations designed to eliminate incentives to “churn” our assets. The new Advisory Management Agreement also provides for an incentive management fee that is equal to 15 % of all distributions once shareholders have received cumulative distributions equal to 6 % from the effective date of the Agreement.
The Investment Adviser will receive an annual fee equal to $100 for providing the investment advice to us as to our securities portfolio under the Amended and Restated Investment Advisory Agreement.
Advisory Agreements Effective January 1, 2026:
On December 29, 2025, the Board of Directors of the Company unanimously approved, effective January 1, 2026, an amendment to the Advisory Management Agreement with the Real Estate Adviser.
The amended Advisory Management Agreement requires the Company to pay a base management fee equal to 1.25 % per annum of its gross assets under management, not including depreciation and amortization. The base management fee is paid monthly based on the assets under management for the quarter ending as reported in the most recently filed quarterly report. The amended Advisory Management Agreement also calls for a bonus management fee equal to 5 % of adjusted funds from operations each quarter. The bonus fee replaces any incentive fee, acquisition fee, financing fee, or disposition fee. The amended agreement contains a rolling renewal provision that reinstates a five-year term at the beginning of each calendar year unless the Company provides notice of non-renewal. If the Company terminates the agreement prior to expiration for other than cause, the Company must pay a substantial early termination fee.
During the three and nine months ended March 31, 2026, we incurred asset management fees of $807,830 and $2,584,957 , respectively. During the three and nine months ended March 31, 2025, we incurred asset management fees of $863,824 and $2,570,860 , respectively.
The asset management fees as of December 31, 2025 under the agreement effective January 1, 2021 were calculated based on quarter-end invested capital, segregated into the three categories presented below. The asset management fee for the three months ended March 31, 2026 was calculated based on gross assets under management, excluding depreciation and amortization, of approximately $258.51 million as of December 31, 2025.
|
Asset Management Fee Annual %
|
3.00%
|
|
2.00%
|
|
1.50%
|
|
Total Invested
Capital
|
|||||||||
|
|
||||||||||||||||
|
Quarter ended:
|
||||||||||||||||
|
September 30, 2025
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
December 31, 2025
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Quarter ended:
|
||||||||||||||||
|
September 30, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
December 31, 2024
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
March 31, 2025
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
During the three and nine months ended March 31, 2026 and 2025, we did no
Property Management and Leasing Services:
When we acquired the Wiseman Properties on May 6, 2022, our Real Estate Adviser’s newly formed wholly owned subsidiary—Wiseman Company Management, LLC, which is now known as
Wiseman Commercial, Inc. (“Wiseman Commercial”)—purchased the property management and leasing services rights from Wiseman. As a result, effective as of the acquisition date, Wiseman Commercial has been providing property management and leasing
services to the Wiseman Partnerships under the pre-existing agreements. Since the acquisition of these service rights, there have been no changes to the terms of the management services agreements with these limited partnerships. In addition,
Wiseman Commercial also provides the property management and leasing services to 220 Campus Lane under a similar term as the Wiseman Partnerships.
During the three and nine months ended March 31, 2026, these Wiseman Commercial managed limited partnerships paid total property management fees of $173,295 and $507,687 , respectively, and total leasing commissions of $113,235 and $779,691 , respectively, to Wiseman Commercial. In addition, during the three and nine months ended March 31, 2026, eleven of the limited partnerships also paid $810,417 and $1,237,509 , respectively, to Wiseman Commercial for direct operating costs and construction of tenant improvements.
During the three and nine months ended March 31, 2025, these Wiseman Commercial managed limited partnerships paid total property management fees of $268,719 and $608,003 , respectively, and total leasing commissions of $62,055 and $456,238 , respectively, to Wiseman Commercial. In addition, during the three and nine months ended March 31, 2025, ten of the limited partnerships also paid $360,282 and $1,248,620 , respectively, to Wiseman Commercial for direct operating costs and construction of tenant improvements.
Organization and Offering Costs Reimbursement:
Under our Offering Circular, which the SEC qualified on January 29, 2025, offering costs incurred and paid by us in excess of $825,000 (excluding legal fees) in connection with the preferred stock offering are reimbursable by the Advisers. If broker fees of 10 % are not incurred during the issuance of the preferred stocks, the resulting savings may be applied to marketing expenses or other non-cash compensation. In such cases, the broker fee savings increase the reimbursement threshold from the Advisers. As of March 31, 2026, we had incurred total offering costs of $384,142 (excluding legal fees), of which $350,142 was paid by MacKenzie on our behalf in connection with the preferred stock offering. As of June 30, 2025, we had incurred total offering costs of $61,023 (excluding legal fees), of which $44,023 was paid by MacKenzie on our behalf in connection with the preferred stock offering. The total offering costs incurred were below the reimbursable threshold as of March 31, 2026 and June 30, 2025.
Administration Agreement:
Under the Administration Agreement, we reimburse MacKenzie for its allocable portion of overhead and other expenses it incurs in performing its obligations under the Administration Agreement,
including furnishing us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing us with other administrative services, subject to the independent directors’ approval. In
addition, we reimburse MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of our Chief Financial Officer, Chief Compliance Officer, Director of Accounting and Financial
Reporting, and any administrative support staff.
Since November 1, 2018, MacKenzie has provided transfer agent services, with the out-of-pocket costs incurred by MacKenzie being reimbursed by us. No fee (only cost reimbursement) is paid to
MacKenzie for this service. Effective March 5, 2024, to comply with Nasdaq listing requirements, we hired Securities Transfer Corporation, a third-party transfer agent, to provide these services for our common and Series B preferred stock. However,
effective September 30, 2024, Computershare Inc., another third-party transfer agent, took over as transfer agent for our common stock.
The administrative cost reimbursements for the three and nine months ended March 31, 2026 were $220,250 and $660,750 , respectively. The administrative cost reimbursements for the three and nine months ended March 31, 2025 were $167,463 and $502,391 , respectively. During the three and nine months ended March 31, 2026, we did no 1,537 and $4,609 , respectively.
The table below outlines the related party expenses incurred for the nine months ended March 31, 2026 and 2025, and unpaid as of March 31, 2026, and June 30, 2025.
|
|
Nine Months Ended March 31,
|
Unpaid as of
|
||||||||||||||
|
Types and Recipient
|
2026
|
2025
|
March 31, 2026
|
June 30, 2025
|
||||||||||||
|
Asset management fees - the Real Estate Adviser
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Administrative cost reimbursements - MacKenzie
|
|
|
|
|
||||||||||||
|
Asset acquisition fees - the Real Estate Adviser (1)
|
|
|
|
|
||||||||||||
|
Transfer agent cost reimbursements - MacKenzie
|
|
|
|
|
||||||||||||
|
Organization & Offering Cost (2) - MacKenzie
|
|
|
|
|
||||||||||||
|
Other expenses (3) - MacKenzie and Subsidiary’s GPs
|
|
|
|
|
||||||||||||
|
Due to related entities
|
$
|
|
$
|
|
||||||||||||
(1)Asset acquisition fees paid to the Real Estate Adviser were capitalized as a part of the real estate basis in accordance with our policy. The acquisition fee paid during the nine months ended March 31, 2025 was for the acquisition of Green Valley Medical Center in August 2024.
(2)Offering costs paid by MacKenzie - discussed in this Note under organization and offering costs reimbursements.
(3)Expenses paid by MacKenzie and General Partner of a subsidiary on behalf of us and subsidiary.
NOTE 9 – MARGIN LOANS
We have a brokerage account through which we buy and sell publicly traded securities. The provisions of the account allow us to borrow on certain securities held in the account and to purchase additional securities based on the account equity (including cash). Amounts borrowed are collateralized by the securities held in the account and bear interest at a negotiated rate payable monthly. Securities pledged to secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account are used as collateral. As of March 31, 2026 and June 30, 2025, we had no no
NOTE 10 – MORTGAGE NOTES PAYABLE, NOTES PAYABLE AND DEBT GUARANTY
Madison and PVT Notes Payable
On February 26, 2021, Madison and PVT obtained mortgage loans from First Republic Bank in the amounts of $6,737,500 and $8,387,500 , respectively, both at a fixed interest rate of 3 twelve one year 2.75 April 1, 2031 360 months of amortization period. The remaining unpaid principal balance is due at maturity date. Accordingly, as of both March 31, 2026 and June 30, 2025, the outstanding balances of the loans were $6,737,500 8,387,500
The following table provides the projected principal payments on Madison’s loan for the next five years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Thereafter
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
The following table provides the projected principal payments on PVT’s loan for the next five years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Thereafter
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
PT Hillview Notes Payable
On October 4, 2021, PT Hillview entered into a loan agreement with Ladder Capital Finance in the amount of $17,500,000 . The annual interest rate was equal to the greater of (i) a floating rate of interest equal to 5.50 % plus LIBOR, and (ii) 5.75 %. The loan was obtained to finance the acquisition of Hollywood Apartments. The loan was secured by Hollywood Apartments and has an initial maturity date of October 6, 2023 , which could be extended for two successive 12 -month terms. On August 14, 2023, PT Hillview exercised the first extension option to extend the term of the loan to October 6, 2024 . The loan required interest-only monthly payments with the principal balance due at maturity date. Interest was due based on a 360 -day amortization period. PT Hillview also entered into an interest rate cap agreement on October 4, 2021, as required by the lender. The interest rate cap agreement was revised on September 29, 2023 and it matured on February 2, 2025. We did not record the fair value and the changes in the fair value of the contract in our consolidated financial statements because the amounts were insignificant to our consolidated financial statements.
On October 3, 2024, the loan agreement was amended to include extension options with principal paydowns. PT Hillview exercised the extension options pursuant to the amended agreement and the maturity date was extended until April 6, 2025 with total principal paydown of $3,975,000 .
On March 28, 2025, PT Hillview entered into a loan agreement with Wells Fargo Bank, National Association, in the amount of $11,660,000 at a fixed annual interest rate of 5.87 %. The loan was obtained to refinance the prior loan with Ladder Capital Finance which matured on April 6, 2025 . The new loan matures in , is secured by Hollywood Apartments, and requires interest-only monthly payments with the principal balance due at maturity. The outstanding balance of the loan as of March 31, 2026 and June 30, 2025 was $11,660,000
In connection with the refinancing, the contributed $5,683,503 to PT Hillview to fund the principal paydown, replenish reserves, and pay loan fees. Of this amount, $568,350 (10 %) represented the share of the non-controlling interest holder, True USA. Accordingly, as of March 31, 2026 and June 30, 2025, this amount has been recorded as a note receivable from True USA and is included in investments, income, rents, and other receivables in the consolidated balance sheet.
We (along with three other principals of True USA) guaranteed the “Recourse Obligations” as defined in the loan agreement, which are triggered only if the borrower of the loan engages in “Bad Boy
Acts” (such as fraud, intentional misrepresentation, willful misconduct, waste, conversion, intentional failure to pay taxes or maintain insurance, filing for bankruptcy, ADA noncompliance, and environmental contamination, etc.). As of March 31,
2026, we have not recorded any guaranty obligations.
MacKenzie Shoreline Mortgage Notes Payable
On May 6, 2021, MacKenzie Shoreline entered into a loan agreement with Pacific Premier Bank, in the amount of $17,650,000 . The annual interest rate under the agreement is 3.65 % for the first 60 months, and a variable interest rate based on a 6 -month CME Term Secured Overnight Financing Rate (“SOFR”) plus a margin of 3.00 percentage points, for months thereafter until maturity. The loan was obtained to finance the acquisition of Shoreline Apartments. The loan matures on June 1, 2032 , and is secured by Shoreline Apartments. The loan requires interest-only monthly payments through June 30, 2027, and beginning July 1, 2027, monthly payments of principal and interests are due based on 360 months of amortization period. Accordingly, the outstanding balance of the loan as of March 31, 2026 and June 30, 2025, was $17,650,000
The following table provides the projected principal payments on the loan for the next five years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Thereafter
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
First & Main Mortgage Notes Payable
The Company assumed a $12,000,000 loan agreement with Exchange Bank at the acquisition of First & Main, carrying a fixed annual interest rate of 3.75 %. The loan is secured by the First & Main Office Building and requires monthly principal and interest payments based on a 25 -year amortization schedule. The loan had an initial maturity date of February 1, 2026
On April 6, 2026, the Company entered into a loan agreement with Meriwest Credit Union, in the amount of $12,240,000 at a fixed annual interest rate of 6.25 %. The loan was obtained to refinance the prior loan with Exchange Bank. The new loan matures on April 1, 2031 , and is secured by First & Main Office Building. The loan requires monthly payments of principal and interest of $75,340 over a period of 59 months, with the initial payment due on May 1, 2026. The final payment amounting to $11,429,491 will be due upon maturity. The loan is guaranteed by the Parent Company and the Operating Partnership.
The outstanding balances of the loan as of March 31, 2026 and June 30, 2025, were $10,372,969 and $10,626,226 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
The following table provides the projected principal payment on the loan for the remainder of the year:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
Total
|
$
|
|
||
First & Main Other Note Payables:
Junior Debt
As of the acquisition date, First & Main had $1,000,000 in interest-only junior promissory notes outstanding, which the Company assumed. The notes were issued in 2018 and 2019 with an original maturity date of December 31, 2023 , and included no prepayment penalty for early retirement. Of the total promissory notes, notes with a total principal balance of $350,000 and $100,000 were paid off as of December 31, 2023 and April 8, 2026, respectively. The maturity dates of the remaining promissory notes were extended to: December 31, 2026 100,000 , and December 31, 2028 , for the remaining notes with a total principal balance of $450,000 . Interest on the notes is payable on the first day of each month at 7 % per annum. The promissory notes are disclosed as part of line of credit and notes payable, net in the consolidated balance sheets.
In March 2024, the partnership obtained an additional loan with the principal amount of $200,000 in an interest-only junior promissory note. The note was issued on March 8, 2024 with a maturity date of March 31, 2025 . Interest on the note is payable on the first day of each month at 8.50 % per annum. The $200,000 note was repaid in full as of March 31, 2025 .
Small Business Administration (“SBA”) Loan
As of the acquisition date, First & Main had an outstanding $151,000 loan from the SBA under the Economic Injury Disaster Loan program, which the Company assumed. The loan will be paid back over 30 years at an annual interest rate of 3.75 % starting on December 20, 2022. Monthly payments will be $731 . The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $153,510 and $150,000 , respectively, which are disclosed as part of the line of credit and notes payable, net in the consolidated balance sheets.
Solar System Loan (First & Main)
As of the acquisition date, First & Main had an outstanding $220,000 loan from The Wiseman Family Trust, which the Company assumed. The loan was used to finance the installation of a solar power system at the First & Main Office Building. The loan will be paid back over a period of 10 years at an annual interest rate of 5 %. Monthly payments of principal and interest will be $1,486 . The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $127,697 and $143,384 , respectively, which are disclosed as part of line of credit and notes payable, net in the consolidated balance sheets.
1300 Main Mortgage Notes Payable
On November 4, 2024, 1300 Main entered into a loan agreement with Valley Strong Credit Union, in the amount of $8,000,000 at a fixed annual interest rate of 6.85 %. The loan was obtained to refinance the prior loan from Suncrest Bank, which was originally obtained by 1300 Main under its previous ownership. The new loan matures on November 15, 2029 , and is secured by a real property and the assignment of all its rental revenue. The loan requires monthly payments of principal and interest of $52,534 through maturity. The remaining unpaid principal balance is due at maturity. The note is guaranteed by the Parent Company. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $7,895,868 and $7,972,744 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
The following table provides the projected principal payments on the loan for the next five years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
1300 Main Other Notes Payable:
SBA Loan
As of the acquisition date, 1300 Main had an outstanding $150,000 loan from the SBA under the Economic Injury Disaster Loan program, which the Company assumed. The loan will be paid back over 30 years at an annual interest rate of 3.75 % starting on July 11, 2023. Monthly payments will be $731 . The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $154,834 and $157,191 , respectively, which are disclosed as part of the line of credit and notes payable, net in the consolidated balance sheets.
Woodland Corporate Center Two Mortgage Notes Payable
As of the acquisition date, Woodland Corporate Center Two had a loan agreement with Western Alliance Bank, in the amount of $7,500,000 at a fixed annual interest rate of 4.15 %, which the Company assumed. The loan matured on October 7, 2024 and was secured by Woodland Corporate Center. The loan was guaranteed by Wiseman, but Wiseman was subsequently indemnified by the Operating Partnership on July 1, 2022.
On October 4, 2024, Woodland Corporate Center Two entered into a loan agreement with Summit Bank, in the amount of $6,000,000 at a fixed annual interest rate of 6.50 %. The loan was obtained to refinance the prior loan from Western Alliance Bank which matured on October 7, 2024. The loan matures on October 5, 2027 , and is secured by the real property and the assignment of all its rental revenue. The loan requires monthly payments of principal and interest of $40,873 through October 5, 2027. The remaining unpaid principal balance is due at maturity. The loan is guaranteed by the Parent Company (and Wiseman is no longer a guarantor). The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $5,855,763 and $5,932,794 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
In October 2025, we listed the underlying property for sale as discussed in Note 5.
The following table provides the projected principal payments on the loan for the next three years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
Main Street West Mortgage Notes Payable
On June 6, 2025, the Company refinanced its mortgage on the Main Street West Office Building with EverTrust Bank. The loan is secured by the Main Street West Office Building and has a principal amount of $9,500,000 . It bears interest at the Wall Street Journal Prime Rate, currently 6.75 % per annum, with a floor of 6.50 %. Monthly payments of principal and interest are required based on a 300 ‑month amortization schedule, with the remaining unpaid principal balance due at maturity. The loan matures on May 30, 2028 and is guaranteed by the Parent Company.
The Company also formed a wholly owned subsidiary, Innovate Napa, to enter into a master lease covering approximately 36.2 % (13,806 square feet) of the rentable square feet of the Main Street West Office Building. Innovate Napa does not occupy the space; rather, the arrangement was established in connection with the refinancing of the Main Street West loan to satisfy the lender’s occupancy requirements. Lease payments from Innovate Napa to Main Street West are intercompany in nature and eliminated in consolidation. This related-party arrangement is temporary and is expected to remain in place until the space is leased to third-party tenants. In October 2025, the Company executed leases with third-party tenants for this space, and the leases commenced in December 2025 and January 2026. For the nine months ended March 31, 2026, rental revenue of $310,635 from Innovate Napa was eliminated in consolidation.
The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $9,386,670 and $9,500,000 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets. Total accrued interest on the loan as of March 31, 2026, and June 30, 2025, was $54,576 and $51,239 , respectively.
The following table provides the projected principal payments on the loan for the next three years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
Main Street West Other Notes Payable:
SBA Loan
As of the acquisition date, Main Street West had an outstanding $150,000 loan from the SBA under the Economic Injury Disaster Loan program, which the Company assumed. The loan will be paid back over 30 years at an annual interest rate of 3.75 % starting on September 4, 2023. Monthly payments will be $731 . The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $155,644 and $161,300 , respectively, which are disclosed as a part of the line of credit and notes payable, net in the consolidated balance sheets.
220 Campus Lane Mortgage Notes Payable
On September 8, 2023, 220 Campus Lane borrowed $2,145,000 from Northern California Laborers Pension Fund at a fixed annual interest rate of 5 %. The loan was obtained to finance the acquisition of 220 Campus Lane Office Building and the underlying parcel of land. The loan matures on September 30, 2028 , and is secured by the vacant office building and the underlying parcel of land. The loan requires interest-only monthly payments of $8,938 through September 30, 2028. The remaining unpaid principal balance is due at maturity date. Accordingly, the outstanding balance of the loan as of March 31, 2026 and June 30, 2025 was $2,145,000
Consistent with asset acquisition accounting, this debt was measured at fair value. The interest rate on the debt was below the current market rates, as a result, $223,000 of the acquisition cost was allocated to debt mark-to-market. The debt mark-to-market value is amortized over the remaining loan term. The debt mark-to-market value, net of accumulated amortization as of March 31, 2026 and June 30, 2025, amounted to $109,146 and $142,596 , respectively, and was netted against the total debt balance in the consolidated balance sheets.
Campus Lane Residential Mortgage Notes Payable
On September 8, 2023, Campus Lane Residential borrowed $1,155,000 from Northern California Laborers Pension Fund at a fixed annual interest rate of 5 %. The loan was obtained to finance the acquisition of a vacant parcel of land. The loan matures on September 30, 2028 , and is secured by the vacant parcel of land. The loan requires interest-only monthly payments of $4,813 through September 30, 2028. The remaining unpaid principal balance is due at maturity date. The outstanding balance of the loan as of March 31, 2026 and June 30, 2025 was $1,155,000
Consistent with asset acquisition accounting, the debt acquired from the acquisition of the Campus Lane Land was measured at fair value. The interest rate on the debt was below the current market rates, as a result, $120,000 of the acquisition cost was allocated to debt mark-to-market. The debt mark-to-market value is amortized over the remaining loan term. The debt mark-to-market value, net of accumulated amortization as of March 31, 2026 and June 30, 2025, amounted to $58,733 and $76,733 , respectively, and was netted against the total debt balance in the consolidated balance sheets.
GVEC Mortgage Notes Payable
As of the acquisition date, GVEC had a $14,000,000 fixed-rate loan agreement with Columbia State Bank, which the Company assumed on January 1, 2024 from the predecessor owner. The initial interest rate is 4.25 % until October 1, 2027, increasing to 5.46 % thereafter. The loan matures on September 1, 2032 and is secured by the Green Valley Executive Center. The loan requires monthly payments of principal and interest based on a 30 -year amortization period with the remaining principal balance due at maturity. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $13,148,147 and $13,346,323 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
Consistent with asset acquisition accounting, the debt assumed from the acquisition of Green Valley Executive Center was measured at fair value. The interest rate on the debt was below the current market rates, as a result, $993,000 of the acquisition cost was allocated to debt mark-to-market. The debt mark-to-market value is amortized over the remaining loan term. The debt mark-to-market value, net of accumulated amortization as of March 31, 2026 and June 30, 2025, amounted to $769,575 and $844,050 , respectively, and was netted against the total debt balance in the consolidated balance sheets.
The following table provides the projected principal payments on the loan for the next five years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Thereafter
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
One Harbor Center, LP Mortgage Notes Payable
As of the acquisition date, One Harbor Center, LP had an $8,378,825 loan from Travis Credit Union, which the Company assumed. The loan bears interest at a fixed rate of 4.96 % per annum, matures on June 1, 2028 , and is secured by the property and the assignment of all rental revenue. Monthly principal and interest payments of $46,092 are required through maturity, with the remaining unpaid principal balance due at the maturity date. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $7,587,282 and $7,704,950 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
Consistent with asset acquisition accounting, the debt assumed from the acquisition of One Harbor Center was measured at fair value. The interest rate on the debt was below the current market rates, as a result, $334,000 of the acquisition cost was allocated to debt mark-to-market. The debt mark-to-market value is amortized over the remaining loan term. The debt mark-to-market value, net of accumulated amortization as of March 31, 2026 and June 30, 2025, amounted to $181,579 and $241,222 , respectively, and was netted against the total debt balance in the consolidated balance sheets.
The following table provides the projected principal payments on the loan for the next three years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
One Harbor Center, LP Other Notes Payable:
SBA Loan
As of the acquisition date, One Harbor Center, LP had a $150,000 loan from the SBA under the Economic Injury Disaster Loan program, which the Company assumed. The loan will be paid back over 30 years at an annual interest rate of 3.75 % starting on February 10, 2023. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $153,635 and $150,000 , respectively, which are disclosed as a part of the line of credit and notes payable, net in the consolidated balance sheets.
MRC Aurora Construction Loan
On February 21, 2024, the Company closed on a $17.15 million construction loan with Valley Strong Credit Union, headquartered in Bakersfield, California, to fund the development of the Aurora at Green Valley. The loan bears interest at a variable rate equal to the Prime Rate plus 0.25 % and had an initial maturity date of March 1, 2026 . The Company has the option to extend the construction loan for an additional six-month period or to convert it to a conventional permanent loan. In January 2026, the loan maturity has been extended to July 31, 2026 . The monthly accrued interest is added on the outstanding loan balance. The outstanding balances of the loan as of March 31, 2026, and June 30, 2025, were $16,928,232 and $6,597,850 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
The following table provides the projected principal payment on the loan for the next two years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
MacKenzie Satellite Mortgage Notes Payable
On August 21, 2024, MacKenzie Satellite entered into a loan agreement with Summit Bank, in the amount of $6,000,000 at a fixed annual interest rate of 6.50 %. The loan matures on August 21, 2027 , and is secured by MacKenzie Satellite’s real property and the assignment of all its rental revenue. The Parent Company has guaranteed the loan. The loan requires monthly payments of principal and interest of $40,867 through August 21, 2027. The remaining unpaid principal balance is due at maturity date. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $5,831,470 and $5,909,606 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
The following table provides the projected principal payments on the loan for the next three years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
Green Valley Medical Center, LP Mortgage Notes Payable
On July 15, 2024, Green Valley Medical Center, LP entered into a loan agreement with Valley Strong Credit Union, in the amount of $7,800,000 at a fixed annual interest rate of 7.12 %. The loan matures on August 1, 2029 , and is secured by the real property and the assignment of all its rental revenue. The Parent Company provided a guaranty of the note. The loan requires monthly payments of principal and interest of $52,628 through December 1, 2028. The remaining unpaid principal balance is due at maturity date. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $7,682,640 and $7,747,998 , respectively, which are disclosed as part of the mortgage notes payable, net in the consolidated balance sheets.
The following table provides the projected principal payments on the loan for the next five years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
Green Valley Medical Center, LP Other Notes Payable:
SBA Loan
As of the acquisition date, Green Valley Medical Center, LP had a $150,000 loan from the SBA under the Economic Injury Disaster Loan program, which the Company assumed. The loan bears interest at 3.75 % per annum and is repayable over a 30 -year term. While the Company has been making interest payments, the Federal Government has not yet commenced amortization of the principal. The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $154,312 and $150,000 , respectively, which are disclosed as a part of the line of credit and notes payable, net in the consolidated balance sheets.
Line of Credit Agreement
On January 22, 2025, we entered into a revolving line of credit agreement with Patterson Real Estate Services LP (“PRES”), an affiliate of the Adviser, of up to $10,000,000 . Interest will accrue on any unpaid principal balance on the note at a fixed annual interest rate of 10 %. In addition, an origination fee of 2 % will be charged on each advance and the sum will be added to the principal balance. The loan matures on June 1, 2026 . The loan requires monthly interest payments beginning on March 1, 2025 , with the remaining principal balance due at maturity. The outstanding balances of the loan as of March 31, 2026, and June 30, 2025, were $10,000,000 and $9,588,000 , respectively, which include $196,078 and $188,000 of loan origination fees, respectively, and are disclosed as part of line of credit and notes payable, net in the consolidated balance sheets. The loan origination fee is capitalized and amortized over the life of the loan. The remaining unamortized balance as of March 31, 2026, and June 30, 2025, amounted to $27,068 and $138,611 , respectively, and were netted against the total debt balance in the consolidated balance sheets.
On September 24, 2025, the line of credit agreement with PRES was amended to extend the maturity date to December 31, 2027.
For the three and nine months ended March 31, 2026, we incurred interest expense of $250,000 and $760,310 on the line of credit, respectively. Interest payable of $1,045,003 and $284,693 remained outstanding as of March 31, 2026 and June 30, 2025, respectively, and were disclosed as part of accounts payable and accrued liabilities in the consolidated balance sheet.
The following table provides the projected principal payments on the loan for the next two years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
Secured Promissory Note Agreement
On June 11, 2025, the Company entered into a note purchase agreement with Streeterville Capital, LLC (the “Investor”) providing for the issuance of up to $3,270,000 in secured promissory notes to fund the REIT share purchases in MRC QRS. On that date, the Investor funded $1,000,000 in cash, and the Company issued the first secured promissory note in the principal amount of $1,115,000 (“Note #1”), which included an original issue discount of $90,000 and transaction expenses of $25,000 . The note matures 18 months after the funding date, or on December 11, 2026 . On August 1, 2025, the Investor funded $500,000 (“Note #2”) in cash, and the Company issued the second secured promissory note in the principal amount of $545,000 , which included an original issue discount of $45,000 . The note matures 18 months after the funding date, or on February 28, 2027 .
On January 15, 2026, the Company issued the third secured promissory note (“Note #3”) to the Investor under the note purchase agreement in the aggregate principal amount of $1,635,000 , which included an original issue discount of $135,000 . Note #3 matures on July 15, 2027 .
On March 6, 2026, the Company entered into another note purchase agreement with the Investor providing for the issuance of up to $1,095,000 in secured promissory notes to fund the REIT share purchases in MRC QRS. On that date, the Investor funded $1,000,000 in cash, and the Company issued the fourth secured promissory note in the principal amount of $1,095,000 (“Note #4”), which included an original issue discount of $90,000 and transaction expenses of $5,000 . The note matures 18 months after the funding date, or on September 6, 2027 .
For the first five months following issuance of each secured promissory note, the Company is required to make monthly payments equal to the accrued interest. Beginning in the sixth month and continuing until maturity, the Company must make monthly payments of $93,000 , $45,500 , $136,250 and $91,250 on Note #1, Note #2, Note #3 and Note #4, respectively, plus accrued interest.
In the event the notes above are outstanding on the 90 -day anniversary of the purchase price date, the Company will be charged a one-time fee to cover the Investor’s accounting, legal and other costs incurred in monitoring the notes equal to the outstanding balance divided by 0.93 less the outstanding balance. The monitoring fee will be automatically added to the outstanding balance on that date. During the nine months ended March 31, 2026 the Company paid $84,514 , $41,310 , $123,991 and $82,977 in monitoring fees related to Note #1, Note #2, Note #3 and Note #4, respectively.
The notes are guaranteed by MRC QRS through a security agreement entered into by MRC QRS in favor of the Investor. MRC QRS granted the Investor a first-position security interest in the assets of
MRC QRS.
The Company also entered into a stock pledge agreement with the Investor, where the Company pledged to the Investor as collateral and security for the secured obligations, and granted the
Investor a first-position security interest in the common stock of MRC QRS. The Investor shall have the right to exercise the rights and remedies set forth in the stock pledge agreement and in the transaction documents if an event of default has
occurred.
The secured note is subject to certain trigger events, which provide the Investor with the option to increase the outstanding balance by 5 % to 15 % depending on the severity of the trigger event. Failure of the Company to cure the trigger event may result in an event of default, which would cause the outstanding balance to become immediately due and demandable.
Note #1 and Note #2 were repaid in full as of March 31, 2026.
The outstanding balances of the loan as of March 31, 2026 and June 30, 2025 were $2,730,000 and $1,115,000 , respectively, which are disclosed as part of the line of credit and notes payable, net in the consolidated balance sheets.
The following table provides the projected principal payments on the loan for the next three years:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
The table below presents the total loan outstanding at the underlying companies as of March 31, 2026, and the fiscal years those loans mature:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
|
||
|
|
||||
|
2027
|
|
|||
|
|
||||
|
2028
|
|
|||
|
|
||||
|
2029
|
|
|||
|
|
||||
|
2030
|
|
|||
|
|
||||
|
Thereafter
|
|
|||
|
|
||||
|
Total
|
$
|
|
||
Debt Guaranty
The Wiseman Partnerships had mortgage loans and solar leases with various banks, all of which were guaranteed by The Wiseman Company, LLC (“Wiseman”) and its owner, Doyle Wiseman and his trust,
as of May 6, 2022, the date the Operating Partnership acquired the management companies. The mortgage loans of 1300 Main, One Harbor Center, LP, Martin Plaza Associates, LP, and Main Street West are also guaranteed by the Wiseman Partnerships’
general partner as the co-guarantor.
On July 1, 2022, the Operating Partnership agreed to indemnify Doyle Wiseman for any losses he may suffer from a Wiseman Partnership default on its mortgage or solar lease obligations. Each of the Wiseman Partnerships remains adequately capitalized and has sufficient cash flow to service its mortgage notes; accordingly, no liability has been recorded under these guaranties as of March 31, 2026.
The Main Street West mortgage was refinanced on June 6, 2025, with EverTrust Bank. The loan is secured by the Main Street West Office Building and is guaranteed by the Parent Company. As of March 31, 2026, the outstanding principal balance was $9,386,670 , and accrued interest was $54,576 . No liability under the guaranty is recorded, as the property’s appraised value exceeds the loan balance.
As of March 31, 2026, refinancings have resulted in removal of Wiseman as guarantor at Westside Professional Center, Green Valley Medical Center, Woodland Corporate Center Two, 1300 Main, Main
Street West and First & Main. The Parent Company now guarantees the mortgage note at each of these properties, with the exception of Westside Professional Center which is guaranteed by its sole limited partner.
The mortgage loan of GVEC is guaranteed by PRES (an affiliate of the Adviser) and by its owner, Berniece A. Patterson, and her trust. As part of the GVEC contribution agreement, the Operating
Partnership indemnified Berniece Patterson and her trust for any losses suffered by her through the default by GVEC on the mortgage loan. The mortgage loans for MacKenzie Satellite, obtained in August 2024, and the construction loan for MRC Aurora
are also guaranteed by the Parent Company. The note purchase agreement and secured note entered into in June 2025 and March 2026 are guaranteed by MRC QRS.
Management has evaluated all such guaranties and indemnities and determined that no liability is required to be recorded as of March 31, 2026.
NOTE 11 – EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributed to potentially diluted securities. The following table sets forth the computation of basic and diluted earnings per share for three months ended March 31, 2026 and 2025:
|
|
Nine Months Ended March 31,
|
|||||||
|
|
2026
|
2025
|
||||||
|
Net loss attributable to common stockholders
|
$
|
( |
)
|
$
|
( |
)
|
||
|
|
||||||||
|
Basic and diluted weighted average common shares outstanding
|
|
|
||||||
|
|
||||||||
|
Basic and diluted earnings per share
|
$
|
( |
)
|
$
|
( |
)
|
||
The Company incurred a net loss for the three and nine months ended March 31, 2026. As a result, the dilutive securities, the common stock series A and B warrants, were considered anti-dilutive and excluded from the calculation of diluted net loss per share. As of March 31, 2026, 423,944.85 shares underlying these instruments were excluded.
In accordance with ASC Topic 260, Earnings Per Share, shares issuable for little to no consideration should be included in the number of outstanding shares used for basic earnings per share. The FASB proposed that warrants or options exercisable for little to no cost be included in the denominator of basic earnings per share (and therefore diluted earnings per share) once there were no further vesting conditions or contingencies associated with them. As of March 31, 2026, there were no outstanding pre-funded warrants. As of March 31, 2025, no warrants have been issued.
NOTE 12 – SHARE OFFERINGS AND FEES
During the nine months ended March 31, 2026, we issued 365,351 and 36,969 shares of common stock to the Series A and Series B preferred stock holders, respectively, who exercised their option to convert their shares of Series A and Series B preferred stock to shares of our common stock at prices per share ranging from $3.51 to $5.47 and $3.27 to $3.92 , respectively.
During the nine months ended March 31, 2026, we issued 37,374.89 shares of Series A preferred stock with total gross proceeds of $840,935 , 13,440.15 shares of Series B preferred stock with total gross proceeds of $329,411 , and 52,640 shares of Series C preferred stock with total gross proceeds of $1,316,000 under the Offering Circular; and we incurred syndication costs of $629,005 in relation to common and preferred stock offerings. For the nine months ended March 31, 2026, we issued 6,409.45 shares of Series A preferred stock with total gross proceeds of $144,214 under the preferred stock DRIP, 878.30 shares of Series B preferred stock with total gross proceeds of $19,761 under the preferred stock DRIP, and 16.67 shares of Series C preferred stock with total gross proceeds of $375 under the preferred stock DRIP.
During the nine months ended March 31, 2026, 62,207.12 shares of Series A preferred stock with an aggregate stated value of $2,144,562 were converted into 365,351 shares of our common stock. Additionally, 6,067.10 shares of Series B preferred stock with an aggregate stated value of $233,717 , together with $8,804 of accrued liquidation preference representing 9 % non-cash dividends, were converted into 36,969 shares of our common stock.
During the nine months ended March 31, 2025, no shares of common stock were issued under the common stock DRIP. Additionally, in March 2025, we issued 32.18 shares of common stock at $102.50 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 share, and 11,327.60 shares of common stock to the Series A preferred stock holders who exercised their option to convert their shares of Series A preferred stock to shares of our common stock at prices per share ranging from $17.10 to $40.20 .
During the nine months ended March 31, 2025, we issued 9,044.00 shares of Series A preferred stock with total gross proceeds of $226,103 and 58,513.56 shares of Series B preferred stock with total gross proceeds of $1,462,839 under the Offering Circular; and incurred syndication costs of $1,205,828 in relation to preferred stock offering. For the nine months ended March 31, 2025, we issued 6,226.14 shares of Series A preferred stock with total gross proceeds of $140,091 under the preferred stock DRIP and 414.81 shares of Series B preferred stock with total gross proceeds of $9,333 under the preferred stock DRIP.
During the nine months ended March 31, 2025, 10,805.38 shares of Series A preferred stock with an aggregate stated value of $268,162 were converted into 11,327.60 shares of our common stock.
NOTE 13 – SHARE REPURCHASE PLAN
On March 4, 2024, the Board of Directors suspended the common stock share repurchase program and common stock DRIP in connection with its pursuit of the listing of its common stock
on a securities exchange. When 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.
During the nine months ended March 31, 2026, we did no t repurchase any shares. During the nine months ended March 31, 2025, we repurchased shares of our common stock through our Share Repurchase Program and through third-party auctions as noted in the below table.
|
Period
|
Total Number
of Shares Repurchased
|
Average Repurchase
Price
Per Share
|
Total Repurchase
Consideration
|
|||||||||
|
During the nine months ended March 31, 2025
|
||||||||||||
|
Series A Preferred stock
|
||||||||||||
|
September 1, 2024 through December 31, 2024
|
|
$
|
|
$
|
|
* | ||||||
| * | |
NOTE 14 – STOCKHOLDER DIVIDENDS AND DRIP
The following table reflects the dividends per share that we have declared on our preferred stock during the nine months ended March 31, 2026:
|
|
Dividends |
|||||||||||||||||||||||
|
|
Series A Preferred Stock |
Series B Preferred Stock |
Series C Preferred Stock |
|||||||||||||||||||||
| During the Quarter Ended |
Per Share |
Amount |
Per Share |
Amount |
Per Share |
Amount |
||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
*
|
$
|
|
$
|
|
|||||||||||
*Of the total dividends declared for Series B during the nine months ended March 31, 2026, $203,479 was an increase in liquidation preference and $67,827 was the cash dividend.
During the nine months ended March 31, 2026, we did no t issue any common shares under our common stock DRIP since the plan was suspended in March 2024. During the nine months ended March 31, 2026, $144,214 of Series A preferred dividends, $19,761 of Series B preferred dividends and $375 of Series C preferred dividends were reinvested under the preferred stock DRIP.
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. 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.
On February 9, 2026 , we declared the Series A preferred stock quarterly dividend of $0.375 per share payable at the rate of $0.125 per month for holders of record as of April 30, 2026 , May 31, 2026 , and June 30, 2026 . This Series A preferred stock dividend will be paid in July . On May 12, 2026 , we declared the Series A preferred stock quarterly dividend of $0.375 per share payable at the rate of $0.125 per month for holders of record as of July 31, 2026 , August 31, 2026 , and September 30, 2026 . This Series A preferred stock dividend will be paid in October .
On February 9, 2026 , we declared the Series B preferred stock quarterly 3 % dividend of $0.1875 per share payable at the rate of $0.0625 per month for holders of record as of April 30, 2026 , May 31, 2026 , and June 30, 2026 . This Series B preferred stock dividend will be paid in July . On May 12, 2026 , we declared the Series B preferred stock quarterly 3 % dividend of $0.1875 per share payable at the rate of $0.0625 per month for holders of record as of July 31, 2026 , August 31, 2026 , and September 30, 2026 . This Series B preferred stock dividend will be paid in October . In addition, the Series B preferred stock will accrue dividends at the rate of 9 % per annum on the stated value as an increase in liquidation preference.
On February 9, 2026 , we declared the Series C preferred stock quarterly dividend of $0.5625 per share payable at the rate of $0.1875 per month for holders of record as of April 30, 2026 , May 31, 2026 , and June 30, 2026 . This Series C preferred stock dividend will be paid in July . On May 12, 2026 , we declared the Series C preferred stock quarterly dividend of $0.5625 per share payable at the rate of $0.1875 per month for holders of record as of July 31, 2026 , August 31, 2026 , and September 30, 2026 . This Series C preferred stock dividend will be paid in July .
The following table reflects the distributions declared by the Operating Partnership for the preferred unit holders during the nine months ended March 31, 2026:
| Distributions |
||||||||||||||||
| Series A Preferred Units |
Series B Preferred Units |
|||||||||||||||
| During the Quarter Ended |
Per Share |
Amount |
Per Share |
Amount |
||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
|||||||||
| |
|
|
|
|||||||||||||
| |
|
|
|
|||||||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
*
|
||||||||
*Of the total distributions declared for Series B during the nine months ended March 31, 2026, $72,921 was an increase in liquidation preference and $24,308 was the cash dividend.
During the nine months ended March 31, 2026, the Operating Partnership paid Series A preferred distributions of $1,197,749 , of which $79,290 have been reinvested under the preferred stock DRIP. During the nine months ended March 31, 2026, the Operating Partnership paid Series B preferred distributions of $97,229 , none of which was reinvested.
The following table reflects the dividends per share that we have declared on our common stock and preferred stock during the nine months ended March 31, 2025:
|
|
Dividends |
|||||||||||||||||||||||
|
|
Common Stock |
Series A Preferred Stock |
Series B Preferred Stock |
|||||||||||||||||||||
| During the Quarter Ended |
Per Share |
Amount |
Per Share |
Amount |
Per Share |
Amount |
||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
*
|
|||||||||||
*Of the total dividends declared for Series B during the nine months ended March 31, 2025, $141,096 was an increase in liquidation preference and $47,027 was the cash dividend.
During the nine months ended March 31, 2025, we paid common dividends of $4,015,938 , none of which has been reinvested under our common stock DRIP. During the nine months ended March 31, 2025, we paid Series A preferred dividends of $858,456 and Series B preferred dividends of $176,258 , of which $140,091 and $9,333 have been reinvested under our preferred stock DRIP, respectively.
The above dividends declared were recorded as dividends payable in the consolidated balance sheets as of March 31, 2025, and were subsequently paid in .
The following table reflects the distributions declared by the Operating Partnership for the Class A and preferred unit holders during the nine months ended March 31, 2025:
|
|
Distributions |
|||||||||||||||||||||||
|
|
Class A Units |
Series A Preferred Units |
Series B Preferred Units |
|||||||||||||||||||||
| During the Quarter Ended |
Per Share |
Amount |
Per Share |
Amount |
Per Share |
Amount |
||||||||||||||||||
| $ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
| |
|
|
|
|
|
|||||||||||||||||||
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
*
|
|||||||||||
*Of the total distributions declared for Series B during the nine months ended March 31, 2025, $72,922 was an increase in liquidation preference and $24,307 was the cash dividend.
During the nine months ended March 31, 2025, the Operating Partnership paid Class A preferred distributions of $24,643 , none of which has been reinvested under our preferred stock DRIP. During the nine months ended March 31, 2025, the Operating Partnership paid Series A preferred distributions of $1,123,112 and Series B preferred distributions of $94,528 , of which $73,400 of Series A preferred distributions have been reinvested under our preferred stock DRIP. Preferred (Series A and B) and common dividends declared during the quarter ended March 31, 2025, were paid in .
NOTE 15 – WARRANTS
On February 28, 2025, the Company entered into a securities purchase agreement with a single institutional investor pursuant to which the company offered and sold 153,403.40 shares of the Company’s common stock, $0.0001 par value per share, pre-funded warrants to purchase up to 129,226.50 shares of common stock, and warrants to purchase up to an aggregate of 423,944.85 shares of common stock. The purchase price for each share and the exercise price for each common stock warrant to purchase one share of common stock was $17.10 per share, and the purchase price for each pre-funded warrant to purchase one share of common stock was $17.099 . The common stock warrants consist of Series A common stock warrants and Series B common stock warrants. The Series A common stock warrants to purchase up to 141,314.95 shares of common stock are exercisable following the six-month anniversary of the closing date of the offering and expire 18 months from the date of issuance. The Series B common stock warrants to purchase up to 282,629.90 shares of common stock are exercisable following the six-month anniversary of the closing date of the offering and expire five years from the date of issuance.
The gross proceeds to the Company from this offering were $2.62 million from the sale of the common stock and $2.62 million from the sale of the pre-funded warrants. Because the Series A and B warrants were issued in conjunction with the sale of the common stock and the pre-funded warrants, the total gross proceeds of $4.80 million from the sale of the common stock and pre-funded warrants were proportionally allocated between the common stock, prefunded warrants, and the Series A and B warrants based on the estimated fair values of the stock and the warrants at the time of the issuance in accordance with ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity. The total fair value allocation was: $2.30 million to common stock, $1.94 million to the pre-funded warrants, $0.38 million to Series A warrants and $0.22 million to Series B warrants.
As of March 31, 2026, there were 141,314.95 and 282,629.90 in Series A common stock warrants and Series B common stock warrants, respectively, issued and outstanding. The exercise price for the Series A and B warrants is $17.10 129,226.50 prefunded warrants were exercised at an exercise price of $0.001 per share in July and August 2025.
The Company evaluated the terms of the warrants under ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and determined that they
qualify for equity classification. This conclusion was based on the fact that:
| • |
The warrants are indexed to the Company’s own stock;
|
| • |
The contracts require physical or net share settlement;
|
| • |
The Company has sufficient authorized and unissued shares to settle the contracts;
|
| • | There are |
| • |
There are no variables or conditions that could cause the warrants to be reclassified as liabilities.
|
Accordingly, the warrants are classified as a component of stockholders’ equity, and no subsequent remeasurement is required. The proceeds from the issuance of the warrants were allocated to
additional paid-in capital upon issuance.
The following table summarizes warrant activity for the nine months ended March 31, 2026:
|
|
Number of Warrants
|
Weighted average exercise price
|
||||||||||||||||||
|
Description
|
Prefunded
|
Series A
|
Series B
|
Total
|
||||||||||||||||
|
Outstanding as of July 1, 2025
|
|
|
|
|
|
|||||||||||||||
|
Issued during the period
|
|
|
|
|
-
|
|||||||||||||||
|
Exercised during the period
|
( |
)
|
|
|
( |
)
|
|
|||||||||||||
|
Expired during the period
|
|
|
|
|
-
|
|||||||||||||||
|
Oustanding as of March 31, 2026
|
|
|
|
|
|
|||||||||||||||
All Series A and Series B common stock warrants became exercisable on September 3, 2025, and remained exercisable as of March 31, 2026.
NOTE 16 – SEGMENT REPORTING
ASC 280, Segment Reporting (“ASC 280”), establishes standards for reporting financial and descriptive information about an enterprise’s reportable
segments.
We operate as two primary operating and reportable segments: (i) commercial and (ii) residential. These segments include activities related to acquiring, owning, developing, and managing income-producing real estate properties. Although our properties are geographically diversified throughout the United States, we do not distinguish or group our operations on a geographical basis for purposes of allocating resources or measuring performance. Our business is managed based on these two segments for internal reporting purposes. The investment committee led by the Chief Executive Officer serves as the CODM and evaluates performance and makes resource allocation decisions on this basis. The CODM evaluates operating performance primarily based on the Company’s net income (loss). Effective January 1, 2026, the CODM began separately evaluating the performance of the Company’s commercial real estate portfolio and residential real estate portfolio following the January 2026 Portfolio Reorganization and the formation of MAC. As a result, the Company changed its segment reporting structure and now presents two reportable segments: (i) commercial and (ii) residential. Prior period financial information has been recast to reflect this change in segment reporting. Expenses that are significant are the same as those presented in our consolidated statements of operations. Additionally, the CODM reviews the asset information and capital expenditures on a consolidated basis that are the same as shown on the accompanying consolidated balance sheets and statements of cash flows.
Our customers in the United States accounted for 100 % of our revenues and we do not have any property or equipment outside of the United States.
We also have a real estate-related debt and equity securities investment portfolio; however, this portfolio does not constitute a reportable segment under ASC 280.
Segment net loss includes the direct costs of the reportable segment. Certain costs, including asset management fees to related party, administrative cost reimbursements to related party,
directors’ fees, and transfer agent cost reimbursements to related party, and various other general corporate costs that are not specifically allocable to the segments, are included in the corporate/other columns below.
The Company’s segments derive revenue primarily from rental and other property income. The following financial metrics are regularly reviewed by the CODM:
|
|
Commercial
|
Residential
|
Corporate/Other*
|
|||||||||||||||||||||
|
|
Three Months Ended March 31,
|
Three Months Ended March 31,
|
Three Months Ended March 31,
|
|||||||||||||||||||||
|
|
2026
|
2025
|
2026
|
2025
|
2026
|
2025
|
||||||||||||||||||
|
Segment revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Expenses:
|
||||||||||||||||||||||||
|
Depreciation and amortization
|
|
|
|
|
|
|
||||||||||||||||||
|
Interest expense
|
|
|
|
|
|
|
||||||||||||||||||
|
Property operating and maintenance
|
|
|
|
|
|
|
||||||||||||||||||
|
Asset management fees to related party
|
|
|
|
|
|
|
||||||||||||||||||
|
General and administrative
|
|
|
|
|
|
|
||||||||||||||||||
|
Professional fees
|
|
|
|
|
|
|
||||||||||||||||||
|
Administrative cost reimbursements to related party
|
|
|
|
|
|
|
||||||||||||||||||
|
Directors’ fees
|
|
|
|
|
|
|
||||||||||||||||||
|
Transfer agent cost reimbursements to related party
|
|
|
|
|
|
|
||||||||||||||||||
|
Segment net loss
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Reconciliation of loss:
|
||||||||||||||||||||||||
|
Other income (loss), net
|
|
|
|
|
|
( |
)
|
|||||||||||||||||
|
Loss before income tax
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||||
|
|
Commercial
|
Residential
|
Corporate/Other*
|
|||||||||||||||||||||
|
|
Nine Months Ended March 31,
|
Nine Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||||||||
|
|
2026
|
2025
|
2026
|
2025
|
2026
|
2025
|
||||||||||||||||||
|
Segment revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Expenses:
|
||||||||||||||||||||||||
|
Depreciation and amortization
|
|
|
|
|
|
|
||||||||||||||||||
|
Interest expense
|
|
|
|
|
|
|
||||||||||||||||||
|
Property operating and maintenance
|
|
|
|
|
|
|
||||||||||||||||||
|
Asset management fees to related party
|
|
|
|
|
|
|
||||||||||||||||||
|
General and administrative
|
|
|
|
|
|
|
||||||||||||||||||
|
Professional fees
|
|
|
|
|
|
|
||||||||||||||||||
|
Administrative cost reimbursements to related party
|
|
|
|
|
|
|
||||||||||||||||||
|
Directors’ fees
|
|
|
|
|
|
|
||||||||||||||||||
|
Transfer agent cost reimbursements to related party
|
|
|
|
|
|
|
||||||||||||||||||
|
Impairment loss
|
||||||||||||||||||||||||
|
Segment net loss
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
( |
)
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Reconciliation of loss:
|
||||||||||||||||||||||||
|
Other income (loss), net
|
|
|
|
|
|
( |
)
|
|||||||||||||||||
|
Loss before income tax
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
$
|
( |
)
|
||||||
| * | |
The CODM does not review disaggregated expense information beyond the categories listed above.
Entity-wide disclosures:
Commercial:
Nine months ended March 31, 2026:
| • |
Revenue by geographic area:
|
| • | United States: |
| • |
Major customers: There is one customer accounted for with more than 10% of total revenue.
|
Three months ended March 31, 2026:
| • |
Revenue by geographic area:
|
| • | United States: |
| • |
Major customers: There is no one customer accounted for with more than 10% of total revenue.
|
Residential:
Nine months ended March 31, 2026:
| • |
Revenue by geographic area:
|
| • | United States: |
| • |
Major customers: There is no one customer accounted for with more than 10% of total revenue.
|
Three months ended March 31, 2026:
| • |
Revenue by geographic area:
|
| • | United States: |
| • |
Major customers: There is no one customer accounted for with more than 10% of total revenue.
|
Our segment assets primarily consist of real estate assets, cash and cash equivalents, restricted cash, investments income, rents and other receivables and prepaid expenses and other assets. The following table sets forth our segment assets as of March 31, 2026, and June 30, 2025:
|
|
Commercial
|
Residential
|
Corporate/Other
|
|||||||||||||||||||||
|
|
March 31, 2026
|
June 30, 2025
|
March 31, 2026
|
June 30, 2025
|
March 31, 2026
|
June 30, 2025
|
||||||||||||||||||
|
Total assets
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
Our segment liabilities primarily consist of mortgage notes payable, net, deferred rent and other liabilities, accounts payable and accrued liabilities and due to related entities. The following table sets forth our segment liabilities as of March 31, 2026, and June 30, 2025:
|
|
Commercial
|
Residential
|
Corporate/Other
|
|||||||||||||||||||||
|
|
March 31, 2026
|
June 30, 2025
|
March 31, 2026
|
June 30, 2025
|
March 31, 2026
|
June 30, 2025
|
||||||||||||||||||
|
Total liabilities
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||
NOTE 17 – COMMITMENTS
We commenced the Aurora at Green Valley construction in September 2024. MRC Aurora entered into several contracts with third parties for the construction of the project. These contracts represented MRC Aurora’s commitment to incur future expenditures for the development of the project. The construction was completed in September 2025. Therefore, as of March 31, 2026, MRC Aurora had no outstanding commitments with third parties. As of June 30, 2025, the total commitments amounted to $5.91 million.
NOTE 18 – FORMATION OF MAC AND SUMMARIZED FINANCIAL INFORMATION
As discussed in Note 1, on January 1, 2026, the Company contributed all of its multi-family residential properties (Commodore, The Park View, Hollywood and Shoreline Apartments and Aurora at Green Valley) and the Blue Ridge development project to a newly formed entity, MAC, in exchange for 1,906,580 shares of MAC (on a 1 :1 basis with the Parent Company’s outstanding shares). MAC is focused on developing and owning multi-family properties on the West Coast. The Parent Company is the sole shareholder of MAC as of March 31, 2026.
In connection with the formation of MAC, MAC OP was established as the operating partnership through which substantially all of MAC’s business is conducted. The contributed properties and development project are held by MAC OP, which owns and operates a portfolio of six residential properties. MAC is the sole general and limited partner of MAC OP.
The following summarized financial information presents the combined financial position and results of operations of MAC and its subsidiaries (collectively, the “MAC Group”), including MAC OP
and its consolidated real estate entities.
Basis of Presentation
The summarized financial information has been derived from the Company’s consolidated financial statements and reflects the financial position and results of operations of the MAC Group.
Intercompany transactions within the MAC Group have been eliminated; however, transactions between the MAC Group and the Company have not been eliminated. This information is not intended to present the MAC Group as if it were a standalone
independent entity.
Condensed Balance Sheet — MAC Group
|
March 31, 2026
|
||||
|
Assets
|
||||
|
Real estate assets, net
|
$
|
|
||
|
Cash, cash equivalents and restricted cash
|
|
|||
|
Other assets
|
|
|||
|
Total assets
|
$
|
|
||
|
Liabilities
|
||||
|
Mortgage notes payable and other notes payable, net
|
$
|
|
||
|
Accounts payable and accrued liabilities
|
|
|||
|
Due to related entities
|
|
|||
|
Other liabilities
|
|
|||
|
Total liabilities
|
|
|||
|
Equity
|
||||
|
Stockholders’ equity
|
|
|||
|
Non-controlling interests
|
|
|||
|
Total equity
|
|
|||
|
Total liabilities and equity
|
$
|
|
||
Condensed Statement of Operations — MAC Group
|
Three Months
Ended
|
||||
|
March 31, 2026
|
||||
|
Rental, reimbursements and other property income
|
$
|
|
||
|
Expenses
|
||||
|
Depreciation and amortization
|
|
|||
|
Interest expense
|
|
|||
|
Property operating and maintenance
|
|
|||
|
General and administrative
|
|
|||
|
Total operating expenses
|
|
|||
|
|
||||
|
Operating loss
|
( |
)
|
||
|
Other income
|
|
|||
|
Net loss
|
( |
)
|
||
|
Net loss attributable to non-controlling interests
|
( |
)
|
||
|
Net loss attributable to common stockholders
|
$
|
( |
)
|
|
| Item 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Statements by MacKenzie Realty Capital, Inc., together with its subsidiaries as discussed in Note 1 of the financial statements included in this report (collectively, the
“Company,” “we,” or “us”) contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, future events or our future performance or financial condition. In some
cases, stockholders can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,”
“possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. An economic downturn could impair our
ability to continue to operate, which could lead to the loss of some or all of our investments, a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities, and
interest rate volatility could adversely affect our results, particularly if we elect to use leverage as a part of our investment strategy. For a discussion of factors that could cause our actual results to differ from forward-looking
statements contained herein, please see the discussion under the heading “Risk Factors” in our annual report on Form 10-K, as updated by the Company’s subsequent filings with the SEC under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).
Further, we may experience fluctuations in our operating results due to a number of factors, including the effect of the return on our equity investments, the interest rates
payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our
markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.
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. 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. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our
REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income. 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 U.S. federal tax laws. Our wholly owned subsidiary, 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 intend to invest at least 80% of our total assets in equity or debt in real estate assets. We can invest up to 20% of our total assets in
investment securities of real estate companies. A real estate company is one that (i) derives at least 50% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or residential real estate and
land; or (ii) has at least 50% of its assets invested in such real estate. We will not invest in general partnerships, joint ventures, or other entities that do not afford limited liability to their security holders. However, limited
liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities. 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.
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. Our independent
directors review our investment policies periodically, at least annually, to confirm that our policies are in the best interests of our stockholders. Each such determination and the basis thereof are contained in the minutes of our Board of
Directors meetings.
We seek to accomplish our objective by rigorously analyzing the value of and risks associated with potential acquisitions, and, for up to 20% of our total assets, by acquiring real estate
securities at significant discounts to their net asset value.
We intend to expand our investment strategy to include acquisition of distressed real properties. Like our other investments, we would expect to hold distressed properties and infuse funds as
necessary to extract unrealized value.
We will engage in various investment strategies to achieve our overall investment objectives. The strategy we select depends upon, among other things, market opportunities, the skills and
experience of the Advisers’ investment team and our overall portfolio composition. 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.
We intend to continue our historical activities related to launching tender offers to purchase shares of non-traded REITs in order 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 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, 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 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.
Investment Income
We generate revenues in the form of operating income, capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any
debt investments that we hold. Further, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and
performance-based fees. Any such fees are generated in connection with our investments and recognized as earned.
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. Our investment advisory fees
compensate our Investment Adviser and Real Estate Adviser for their work in identifying, evaluating, negotiating, closing, monitoring and servicing our investments. Our expenses must be billed to and paid by us, except that MacKenzie may be
reimbursed for actual cost of goods and services used by us and certain necessary administrative expenses. 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;
|
| • |
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.
|
Portfolio Investment Composition
As of March 31, 2026, we owned interests in various real estate limited partnerships and REITs. In addition, we held investments in entities that own real estate where we have sufficient control
for the investments to be considered non-securities for purposes of the Investment Company Act of 1940, but not enough control to require consolidation of their financial statements with ours. These investments are reported as “Equity method
investments, at fair value.” The following table summarizes the composition of our investments at fair value as of March 31, 2026, and June 30, 2025:
|
|
Fair Value
|
|||||||
|
Investments, at fair value
|
March 31, 2026
|
June 30, 2025
|
||||||
|
Highlands REIT, Inc.
|
$
|
3,045
|
$
|
37,403
|
||||
|
Moody National REIT II, Inc.
|
-
|
2,963
|
||||||
|
National Healthcare Properties, Inc.
|
140,621
|
740,894
|
||||||
|
SmartStop Self Storage REIT, Inc. - Class A
|
-
|
29,154
|
||||||
|
Sonida Senior Living, Inc.
|
9,288
|
-
|
||||||
|
Starwood Real Estate Income Trust, Inc. - Class I
|
100,457
|
-
|
||||||
|
Starwood Real Estate Income Trust, Inc. - Class S
|
3,155,138
|
939,114
|
||||||
|
Strategic Storage Trust VI, Inc. Class P
|
18,778
|
-
|
||||||
|
Total
|
$
|
3,427,327
|
$
|
1,749,528
|
||||
|
|
||||||||
|
|
Fair Value
|
|||||||
|
Equity method investments, at fair value
|
March 31, 2026
|
June 30, 2025
|
||||||
|
Lakemont Partners, LLC
|
$
|
708,780
|
$
|
711,740
|
||||
|
Martin Plaza Associates, LP
|
596,258
|
531,544
|
||||||
|
Westside Professional Center I, LP
|
1,182,116
|
882,167
|
||||||
|
Total
|
$
|
2,487,154
|
$
|
2,125,451
|
||||
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 five residential apartments: Aurora at Green Valley located in Fairfield, CA, 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.
Aurora at Green Valley is owned through our subsidiary MRC Aurora. 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; 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. In October 2025, we listed Woodland Corporate Center Two for sale.
We own our properties through our subsidiaries, which are listed in the table below.
|
Property:
|
Property Owners
|
|
Commodore Apartments
|
Madison-PVT Partners LLC
|
|
The Park View Apartments
|
PVT-Madison Partners LLC
|
|
Hollywood Apartments
|
PT Hillview GP, LLC
|
|
Shoreline Apartments
|
MacKenzie-BAA IG Shoreline LLC
|
|
Aurora at Green Valley
|
MRC Aurora, LLC
|
|
Satellite Place Office Building
|
MacKenzie Satellite Place Corp.
|
|
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
|
One Harbor Center, LP
|
|
Green Valley Medical Center
|
Green Valley Medical Center, LP
|
We use occupancy rate as a key performance indicator to evaluate the performance of our real estate properties. Occupancy rate on our commercial and residential properties are calculated as 66%
and 88%, respectively, as of the measurement date. We believe occupancy rate provides investors with a useful measure of the revenue-generating capacity of our portfolio. Management uses occupancy rate to monitor leasing progress, identify
re-leasing risk, and compare portfolio performance across periods.
January 2026 Portfolio Reorganization
We believe the market values office properties differently than the market values multi-family properties. More specifically, the market discounts office properties because of
recent, widespread vacancies in office buildings. We believe the market views those vacancies as pervasive even though most of our office properties have high occupancy levels, as disclosed below. The market does not similarly discount
multi-family properties. Therefore, effective January 1, 2026, we have contributed our multi-family residential portfolio into a newly formed entity, MAC, so that investors can evaluate the two portfolios separately. On January 8, 2026, the Board of Directors of MAC approved an estimated net asset value of the common stock of MAC equal to $18.10 per share on a fully diluted basis as of the
contribution date. To estimate MAC’s per share value, the MAC board utilized the net asset value or “NAV” method which is based on the fair value of real estate, and all other assets, less the fair value of total liabilities. MAC is a
wholly owned consolidated subsidiary of the Parent Company, and MAC’s assets, liabilities, revenues, and expenses are included in the Company’s consolidated financial statements. Shares of the Parent Company’s common stock and preferred
stock represent indirect interests in MAC through the Parent Company’s ownership of MAC. The estimated NAV of $18.10 per MAC share was determined by MAC’s Board of Directors for purposes of allowing investors to evaluate the two portfolios
separately and does not represent the NAV per share of MacKenzie Realty Capital, Inc. common or preferred stock.
In connection with the formation of MAC, MAC Operating Partnership, LP (“MAC OP”) was established as the operating partnership through which substantially all of MAC’s business is conducted. The
contributed properties and development project are held through subsidiaries of MAC OP, which directly or indirectly owns and operates a portfolio of six residential properties. MAC owns all of the limited partnership units and is the sole
general partner of MAC OP.
Commercial Properties:
The following commercial properties are owned through subsidiaries of the Operating Partnership:
1300 Main Office Building
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. As of March 31, 2026, the
property is 85% occupied by 7 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
|
||||
|
Wilson Daniels
|
Wine Wholesaler
|
6,712
|
$
|
380,171
|
6/15/2031
|
1, 5 years
|
|||
|
Norcal Gold
|
Real Estate
|
2,896
|
$
|
181,297
|
3/31/2026
|
No
|
|||
|
Bao Long Li
|
Restaurant
|
3,212
|
$
|
179,340
|
11/30/2030
|
No
|
|||
|
Catered With Class
|
Restaurant
|
2,409
|
$
|
106,168
|
3/2/2031
|
1, 3 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
|
||||||
|
2026
|
1
|
2,896
|
$
|
181,297
|
19%
|
|||||
|
2028
|
1
|
225
|
$
|
6,000
|
1%
|
|||||
|
2029
|
1
|
1,059
|
$
|
71,535
|
7%
|
|||||
|
Thereafter
|
4
|
12,916
|
$
|
701,958
|
73%
|
|||||
First & Main Office Building
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. As of March 31, 2026, the
property is 87% occupied by 8 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
|
||||
|
GVM Law
|
Legal Services
|
9,470
|
$
|
523,712
|
9/20/2036
|
2, 5 years
|
|||
|
Brotlemarkle
|
Accounting Services
|
4,366
|
$
|
254,986
|
7/31/2030
|
2, 5 years
|
|||
|
Napa Palisades
|
Restaurant
|
3,462
|
$
|
202,672
|
8/31/2040
|
No
|
|||
|
Phoenix Ultra Lounge
|
Restaurant
|
2,220
|
$
|
130,320
|
9/30/2037
|
No
|
|||
The following information pertains to lease expirations at First & Main Office Building:
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||
|
2027
|
1
|
1,135
|
$
|
76,503
|
6%
|
|||||
|
2029
|
1
|
1,307
|
$
|
73,228
|
5%
|
|||||
|
Thereafter
|
6
|
21,505
|
$ |
1,222,916
|
89%
|
|||||
Main Street West Office Building
Main Street West Office Building contains 38,135 square feet, of which approximately 32,700 square feet is office space and the remainder is designated as retail space. As of March 31, 2026, the
property is 97% occupied by 9 tenants. AUL Corporation elected to terminate its lease as of February 3, 2025. During the year ended June 30, 2025, we recorded an impairment loss of $9,500,167 on Main Street West Office Building due to the
early lease termination of AUL Corporation, and the foreclosure proceedings due to maturity default of the debt secured by the property. On March 25, 2025, the Company entered into the Forbearance Agreement with the Prior Lender and as part
of the Forbearance Agreement, the Company paid down $5 million on the loan and took control of the property from the receiver in April 2025. The loan from the Prior Lender was paid off on June 6, 2025, with the proceeds from a new loan from
EverTrust Bank. 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
|
||||
|
Napa County
|
District Attorney Offices
|
13,806
|
$
|
1,292,643
|
12/31/2027
|
No
|
|||
|
State of California
|
Health Care
|
4,697
|
$
|
261,885
|
10/31/2028
|
No
|
|||
|
Strategies To Empower People
|
Health Care
|
4,875
|
$
|
231,021
|
1/28/2028
|
No
|
|||
|
Descor Inc.
|
Construction
|
4,066
|
$
|
216,000
|
12/29/2030
|
No
|
|||
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
|
||||||
|
2026
|
2
|
2,940
|
$
|
122,000
|
5%
|
|||||
|
2027
|
2
|
15,941
|
$
|
1,420,671
|
56%
|
|||||
|
2028
|
2
|
9,572
|
$
|
492,906
|
20%
|
|||||
|
Thereafter
|
3
|
8,725
|
$
|
475,776
|
19%
|
|||||
Satellite Place Office Building
Satellite Place Office Building contains 134,785 square feet, all of which is office space. As of March 31, 2026, the property is approximately 33% occupied by 5 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
|
||||
|
Codoxo
|
Healthcare Software
|
13,956
|
$
|
302,537
|
6/30/2030
|
No
|
|||
|
Polytron
|
Title Services
|
10,737
|
$
|
222,153
|
4/30/2031
|
2, 5 years
|
|||
|
Ampirical
|
Engineering Consulting
|
9,790
|
$
|
212,345
|
9/30/2030
|
2, 5 years
|
|||
|
OS National LLC
|
Title Services
|
6,188
|
$
|
124,567
|
11/30/2028
|
1, 3 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
|
||||||
|
2028
|
1
|
6,188
|
$
|
124,567
|
13%
|
|||||
|
2029
|
1
|
4,383
|
$
|
100,100
|
10%
|
|||||
|
2030
|
2
|
23,746
|
$
|
514,882
|
54%
|
|||||
|
Thereafter
|
1
|
10,737
|
$
|
222,153
|
23%
|
|||||
Woodland Corporate Center
Woodland Corporate Center contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space. All of the laboratory space is occupied by Agtech Innovation.
Effective October 2025, the property has been marketed for sale. Accordingly, Woodland Corporate Center is classified as an asset held for sale as of March 31, 2026. As of March 31, 2026, the property is 91% 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
|
||||
|
Agtech Innovation
|
Research and Development
|
12,940
|
$
|
342,914
|
4/9/2031
8/31/2032 12/21/2032 |
No
|
|||
|
Children’s Home Society
|
Non-Profit Education
|
4,042
|
$
|
154,497
|
10/31/2028
|
No
|
|||
|
Burger Rehab
|
Physical Therapy
|
4,013
|
$
|
126,503
|
9/22/2028
|
No
|
|||
|
California Dept of Rehabilitation
|
Rehabilitation Services
|
3,057
|
$
|
120,763
|
3/31/2036
|
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
|
||||||
|
2026
|
1
|
1,433
|
$
|
46,068
|
4%
|
|||||
|
2027
|
2
|
2,160
|
$
|
87,017
|
8%
|
|||||
|
2028
|
5
|
10,826
|
$
|
381,032
|
35%
|
|||||
|
Thereafter
|
5
|
19,227
|
$
|
580,144
|
53%
|
|||||
Green Valley Executive Center
Green Valley Executive Center contains 46,100 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space. As of March 31, 2026, the property is 96%
occupied by 15 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
|
||||
|
Community Housing Opportunities
|
Real Estate
|
8,510
|
$
|
352,596
|
8/31/2026
|
No
|
|||
|
Arkshire Financial, LLC
|
Insurance
|
7,016
|
$
|
311,928
|
2/28/2027
|
No
|
|||
|
Larsen & Toubro Limited, Inc.
|
Multinational Conglomerate
|
5,130
|
$
|
285,324
|
2/13/2028
|
No
|
|||
|
Sticky Rice
|
Restaurant
|
4,388
|
$
|
191,836
|
8/17/2034
|
No
|
|||
The following information pertains to lease expirations at Green Valley Executive Center:
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||
|
2026
|
2
|
11,491
|
$
|
482,256
|
24%
|
|||||
|
2027
|
3
|
9,147
|
$
|
420,132
|
21%
|
|||||
|
2028
|
2
|
6,098
|
$
|
331,524
|
16%
|
|||||
|
Thereafter
|
8
|
17,396
|
$
|
782,066
|
39%
|
|||||
One Harbor Center
One Harbor Center contains 49,573 square feet, all of which is office space. As of March 31, 2026, the property is 81% 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.
|
Construction
|
10,221
|
$
|
346,332
|
5/15/2027
|
No
|
|||
|
Equiventure
|
Health Care
|
6,446
|
$
|
238,008
|
11/16/2033
|
4, 5 years
|
|||
|
Wiseman Company Mgt.
|
Real Estate
|
4,883
|
$
|
172,008
|
6/1/2028
|
No
|
|||
|
Connections for Life
|
Health Care
|
3,443
|
$
|
109,218
|
3/29/2036
|
No
|
|||
The following information pertains to lease expirations at One Harbor Center:
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||
|
2026
|
5
|
9,500
|
$
|
347,693
|
24%
|
|||||
|
2027
|
1
|
10,221
|
$
|
346,332
|
24%
|
|||||
|
2028
|
4
|
10,394
|
$
|
394,985
|
28%
|
|||||
|
Thereafter
|
2
|
9,889
|
$
|
347,226
|
24%
|
|||||
Green Valley Medical Center
Green Valley Medical Center contains 31,590 square feet, of which approximately 20,100 square feet is office space, approximately 8,300 square feet is
health care space, and the remainder is designated as retail space. As of March 31, 2026, 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. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||
|
Cal OES
|
State Emergency Services
|
7,605
|
$ |
299,154
|
8/31/2031
|
No
|
|||
|
California Forever
|
Real Estate
|
3,341
|
$ |
208,216
|
9/17/2029
|
No
|
|||
|
Jethro Nicolas et al
|
Health Care
|
3,409
|
$ |
147,288
|
4/14/2035
|
No
|
|||
|
Green Valley Oral Surgery
|
Health Care
|
2,179
|
$ |
104,050
|
5/7/2029
|
2, 10 years
|
The following information pertains to lease expirations at Green Valley Medical Center:
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||
|
2026
|
1
|
1,332
|
$
|
69,490
|
6%
|
|||||
|
2027
|
2
|
2,624
|
$
|
102,696
|
8%
|
|||||
|
2028
|
1
|
2,179
|
$
|
104,050
|
8%
|
|||||
|
Thereafter
|
9
|
22,610
|
$
|
966,980
|
78%
|
|||||
220 Campus Lane Office Building
220 Campus Lane Office Building was purchased in September 2023. The property was vacant at the time of acquisition. Following the acquisition, we renovated the building and commenced leasing
activities. As of March 31, 2026, the building was approximately 28% leased, with six tenants occupying an aggregate of 12,126 square feet. The annualized base rent from these tenants totals approximately $409,248.
Residential Properties:
Effective January 1, 2026, the Company contributed all of its multi-family residential properties, consisting of Commodore Apartments, The Park View Apartments, Hollywood Apartments, Shoreline
Apartments and Aurora at Green Valley, as well as the Blue Ridge development project, to MAC. The contributed properties and development project are held through subsidiaries of MAC OP, through which substantially all of MAC’s business is
conducted. MAC owns all of the limited partnership units and is the sole general partner of MAC OP.
Commodore Apartments
Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of March 31, 2026, Commodore Apartments is approximately 89.6% occupied.
The Park View Apartments
The Park View Apartments is also a mid-rise apartment building built in 1929 and has 39 units. As of March 31, 2026, The Park View Apartments is approximately 94.9% occupied.
Hollywood Apartments
Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54 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. As of March 31, 2026, the apartments units are 94.4% occupied.
Shoreline Apartments
Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of March 31, 2026, Shoreline Apartments building is approximately 89.3% occupied.
Aurora at Green Valley
Aurora at Green Valley is a newly constructed multi-family residential community consisting of 72 units across three buildings, along with a clubhouse. The project was financed through $10
million of preferred equity capital (including $7.23 million from outside investors) and a $17.15 million construction loan from Valley Strong Credit Union. The clubhouse opened in mid-June 2025 for pre-leasing activity. The first residential
building was completed in July 2025, with leasing commencing in August 2025. The remaining two buildings were completed in August and September 2025, with leasing commencing shortly thereafter. As of March 31, 2026, the property was
approximately 75% occupied. As of the date of this report, the property is 88.9% leased.
The following table provides information regarding each of the residential properties as of March 31, 2026:
|
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
|
%
|
$
|
1,072,800
|
$
|
2,416
|
|||||||||
|
Commodore Apartment
|
Multi-Family Residential
|
Oakland, CA
|
26,635
|
48
|
89.6
|
%
|
$
|
830,799
|
$
|
1,610
|
|||||||||
|
Hollywood Apartments
|
Multi-Family Residential
|
Los Angeles, CA
|
37,971
|
54
|
94.4
|
%
|
$
|
1,310,141
|
$
|
2,141
|
|||||||||
|
Hollywood Apartments (Retail Space)
|
Retail |
Los Angeles, CA
|
8,610 |
1 |
100 |
% | $ | 353,657 |
$ | 29,471 |
|||||||||
|
Shoreline Apartments
|
Multi-Family Residential
|
Concord, CA
|
68,350
|
84
|
89.3
|
%
|
$
|
1,914,489
|
$
|
2,127
|
|||||||||
|
Aurora at Green Valley
|
Multi-Family Residential
|
Fairfield, CA
|
54,936
|
72
|
75.0
|
%
|
$
|
1,652,688
|
$
|
2,550
|
|||||||||
Campus Lane Land Development (known as Blue Ridge)
In addition to our commercial and residential real estate properties, we own a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California (the “Campus
Lane Land”). This parcel of land was acquired with the objective of developing multi-family residential community and is owned by the MAC OP through its subsidiary, Campus Lane Residential, LLC (“Campus Lane Residential”).
This project, known as Blue Ridge, is expected to consist of 84 luxury multi-family units in Solano County, one of the fastest-growing counties in California. The entitlement process for the vacant land is on-going. Our goal is to commence construction in fall 2027; 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 Company is currently evaluating potential development and financing structures for the project, including discussions with a third-party developer pursuant to which the Company may contribute the
land and the third party may arrange construction financing and development capital for the project.
We currently do not have plans for any other major renovation or development of any properties except for Blue Ridge, as discussed above. Each property is being held for income generation and
potential value appreciation through increased occupancy and/or rental rates. We maintain property and liability insurance policies on all properties, which we believe are adequate and in line with industry standards.
Material Changes in Financial Condition
Real estate assets
During the nine months ended March 31, 2026, total real estate assets, net decreased by $10.52 million. The decrease was primarily attributable to the reclassification of $11.65 million of net
real estate assets related to Woodland Corporate Center Two to assets held for sale as of March 31, 2026, and to $7.09 million of additional depreciation and amortization. These decreases were partially offset by $8.25 million of real estate
additions, including $6.29 million related to the capitalization of additional construction costs at Aurora at Green Valley.
Mortgage notes payable, net
During the nine months ended March 31, 2026, the Company borrowed an additional $10.33 million on the MRC Aurora construction loan from Valley Strong Credit Union, which was primarily due to
fund building expenditures associated with the completion of Aurora at Green Valley.
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. Our West coast
multi-family residential properties are generally restricted from raising rents significantly by local rent control laws. Rent control can result in average rents that are significantly below market, and this provides some buffer against
declining rents in a recession. However, in order to encourage development, rent control usually does not apply to newer properties. Since older properties may be unable to raise rents as needed, they may be unable to make improvements that
could allow them to compete with newer properties.
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. Available office
space is plentiful in each market in which our office properties are located, which magnifies the competitive challenges that we face in these markets.
The broader economy has been experiencing increased levels of inflation, higher interest rates and tightening monetary and fiscal policies. The Federal Reserve increased the federal funds rate
multiple times in 2022 and 2023 then paused hikes in the earlier part of 2024 before implementing rate cuts in the fourth quarter. While the Federal Reserve began implementing rate cuts in the fourth quarter of 2024, interest rates remain
elevated compared to recent historical levels, which continues to impact real estate valuations and financing costs. We currently have fixed and variable interest rates for our loans. The rise in overall interest rates caused an increase in
our variable-rate borrowing costs resulting in an increase in interest expense. The cumulative effect of the prior rate increases may adversely impact real estate asset values. In addition, a prolonged period of high and persistent inflation
could cause an increase in our expenses. The current market and economic conditions could have a material impact on our business, cash flow and results of operations. It could also impact our ability to find suitable acquisitions, sell
properties, and raise equity and debt capital.
Results of Operations:
Comparison of the three months ended March 31, 2026 and 2025
Commercial Properties
The commercial properties owned by us during the three months ended March 2026 and 2025 are as follows:
|
Three Months Ended March 31,
|
||
|
2026
|
|
2025
|
|
|
|
|
|
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
|
|
Green Valley Medical Center
|
Rental, reimbursements and other property income:
During the three months ended March 31, 2026, we generated $3.57 million in rental and reimbursements revenues from our nine commercial properties, compared to $2.81 million during the three
months ended March 31, 2025. The total increase in rental revenues was mainly due to higher occupancy at our Satellite Place Office Building and Main Street West Office Building.
Expenses:
Property operating and maintenance expenses:
Operating and maintenance expenses mainly consist of real estate taxes, utilities, repair and maintenance, cleaning, landscape, security, property management fees, insurance, and various other
administrative expenses incurred in the operation of our commercial real estate assets. During the three months ended March 31, 2026, we incurred operating and maintenance expenses of $1.10 million in the operation of our nine commercial
properties, compared to $1.19 million during the three months ended March 31, 2025. The slight decrease in the operating expenses was mainly due to the property tax refund from our Satellite Place Office Building.
Depreciation and amortization:
During the three months ended March 31, 2026, we recorded depreciation and amortization of $1.31 million attributable to the depreciation and amortization of real estate and intangible assets of
our nine commercial properties, compared to $1.89 million during the three months ended March 31, 2025. The decrease in total depreciation and amortization of $0.58 million was mainly due to the impairment of assets related to our Main Street
West Office Building and the write-off of tenant improvements, leasehold improvements, lease commissions, and in-place lease related to our Satellite Place Office Building due to an early lease termination of its anchor tenant in December
2024.
Interest expense:
During the three months ended March 31, 2026, we recorded $1.24 million of interest expense related to mortgage notes payable associated with the Company’s nine commercial properties, compared
to $1.27 million during the three months ended March 31, 2025.
The slight decrease of $0.03 million was primarily due to lower interest expense from Main Street West resulting from refinancing in May 2025. The decrease was partially offset by higher
interest expense resulting from the First & Main loan extension in March 2026.
Residential Properties
The residential properties owned by us during the three months ended March 2026 and 2025 are as follows:
|
Three Months Ended March 31,
|
||
|
2026
|
|
2025
|
|
|
|
|
|
Commodore Apartments
|
|
Commodore Apartments
|
|
The Park View Apartments
|
|
The Park View Apartments
|
|
Hollywood Apartments
|
|
Hollywood Apartments
|
|
Shoreline Apartments
|
|
Shoreline Apartments
|
|
Aurora at Green Valley
|
|
|
Rental, reimbursements and other property income:
During the three months ended March 31, 2026, we generated $1.87 million in rental and reimbursements revenues from our five residential properties, compared to $1.46 million from our four
residential properties during the three months ended March 31, 2025. The total increase in rental revenues was mainly due to the to the completion of the Aurora at Green Valley in July 2025, which commenced leasing in August 2025.
Expenses:
Property operating and maintenance expenses:
Operating and maintenance expenses mainly consist of real estate taxes, utilities, repair and maintenance, cleaning, landscape, security, property management fees, insurance, and various other
administrative expenses incurred in the operation of our residential real estate assets. During the three months ended March 31, 2026, we incurred operating and maintenance expenses of $0.82 million in the operation of our five residential
properties, compared to $0.70 million in the operation of our four residential properties during the three months ended March 31, 2025, The slight increase in the operating expenses was mainly due to the completion of the Aurora at Green
Valley in July 2025, which consists of three residential buildings and a clubhouse.
Depreciation and amortization:
During the three months ended March 31, 2026, we recorded depreciation and amortization of $0.80 million attributable to the depreciation and amortization of real estate and intangible assets of
our five residential properties, compared to $0.74 million on our four residential properties during the three months ended March 31, 2025. The slight increase in total depreciation and amortization of $0.06 million was mainly due to the
completion of the Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.
Interest expense:
During the three months ended March 31, 2026, we recorded $0.82 million of interest expense related to mortgage notes payable associated with the Company’s five residential properties and debt
on the Campus Lane Land. During the three months ended March 31, 2025, we recorded $1.29 million of interest expense related to mortgage notes payable associated with the Company’s four residential properties and debt on the Campus Lane Land.
The decrease of $0.47 million was primarily due to the lower interest expense resulting from the refinancing of Hollywood Apartments in March 2025. The decrease was partially offset by MRC
Aurora recognizing interest and loan fee amortization beginning after completion of construction in September 2025, amounting to $0.34 million.
Corporate and Other
The corporate and other operations during the three months ended March 2026 and 2025 are as follows:
Investment income:
Investment income is made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income during the
three months ended March 31, 2026, and 2025, were $0.07 million and $0.01 million, respectively. During the three months ended March 31, 2026, and March 31, 2025, we received minimal distributions from operations, sales, and liquidations.
During the three months ended March 31, 2026, we received dividends, interest, and other investment income of $0.07 million as compared to $0.01 million received during the three months ended March 31, 2025. The increase was mainly due to the
increase in our investment portfolio since March 31, 2025. The remaining increase was due to the interest income on the note receivable from the non-controlling interest holder of PT Hillview, True USA.
Unallocated corporate expenses:
Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include asset management and incentive management fees,
administrative costs and transfer agent reimbursements, and other corporate operating expenses.
Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021, and subsequently amended effective January 1, 2026.
Asset management fee:
The asset management fees for the three months ended March 31, 2026, and 2025, were $0.80 million and $0.86 million, respectively. The slight decrease was due to the lower rate under the amended
Advisory Management Agreement, which provides for a base management fee of 1.25% per annum of gross assets under management (excluding depreciation and amortization), compared to the prior agreement based on invested capital (3% of the first
$20 million, 2% of the next $80 million, and 1.50% over $100 million).
Bonus management fee:
Under the Advisory Management Agreement, we pay a bonus management fee equal to 5% of adjusted funds from operations each quarter. We did not incur any bonus management fees for the three months
ended March 31, 2026, and 2025.
Administrative cost and transfer agent reimbursements:
Costs reimbursed to MacKenzie for the three months ended March 31, 2026 were $0.22 million as compared to $0.17 million for the three months ended March 31, 2025. The increase was due to an
increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to March 31, 2025, as a result of the increase in the number of real estate assets owned by us since March 31, 2025.
During the three months ended March 31, 2026, no transfer agent cost reimbursements were paid to MacKenzie. During the three months ended March 31, 2025, there were minimal transfer agent cost reimbursements
paid to MacKenzie.
Interest expense:
During the three months ended March 31, 2026, we recorded $0.41 million of interest expense related to the Company’s line of credit agreement and note purchase agreement, compared to $0.10
million during the three months ended March 31, 2025.
The increase was attributable to additional borrowings by the Parent Company under a new line of credit with PRES and promissory notes issued to Streeterville Capital, LLC.
Other corporate operating expenses:
Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses. Other operating expenses for the three
months ended March 31, 2026 and 2025, were $0.41 million and $1.89 million, respectively. The decrease in other operating expenses was mainly due to the decrease in transfer agent fees since March 31, 2025.
Net realized gain (loss) on sale of investments:
During the three months ended March 31, 2026, we recorded a net realized gain of $0.62 million as compared to $0.02 million net realized gain during the three months ended March 31, 2025. Total
net realized gain for the three months ended March 31, 2026, was realized from the sale of two publicly traded REIT securities and two non-traded REIT security. Total net realized gain for the three months ended March 31, 2025, was realized
from the sale of one non-traded REIT security and one limited partnership interest.
Net unrealized gain (loss) on investments:
During the three months ended March 31, 2026, we recorded a net unrealized gain of $0.84 million, which was net of $0.01 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. Accordingly, the net unrealized gains excluding the reclassification adjustment for the
three months ended March 31, 2026, were $0.84 million, which resulted from fair value appreciations of $0.45 million from general partnership interests, $0.02 million from limited partnership interests and $0.37 million from non-traded REIT
securities.
During the three months ended March 31, 2025, we recorded a net unrealized loss of $0.27 million, which was net of $0.02 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. Accordingly, the net unrealized losses excluding the reclassification adjustment for
the three months ended March 31, 2025, were $0.27 million, which resulted from fair value depreciations of $0.24 million from general partnership interests, $0.06 million from limited partnership interests and fair value appreciations of
$0.03 million from non-traded REIT securities.
Income tax provision (benefit):
The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders,
provided that, on an annual basis, it generally distributes at least 90% of its 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. To the extent it satisfies the annual distribution requirement but distribute less than 100% of its REIT taxable income, it will be subject to U.S. federal corporate income tax on their undistributed taxable income. In addition,
it will be subject to a 4% nondeductible 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, 2025. Therefore, it did not incur any tax expense or excise tax on its
income from operations during the quarterly periods within the tax year 2025. In addition, for the tax year 2026, 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 2026.
MacKenzie NY 2 is subject to corporate federal and state income tax on their taxable income at regular statutory rates. As of March 31, 2026, it did not have any taxable income for tax year 2025
and 2026. Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2025 and 2026. MacKenzie Satellite, MRC QRS and MAC are qualified REIT subsidiaries of the Parent Company. Therefore, they do not file a
separate tax return.
The Operating Partnership is a limited partnership. 220 Campus Lane, GVEC and Innovate Napa are limited liability companies. 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 ultimately flow through to the
Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these entities.
MAC OP is a limited partnership. Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, Campus Lane Residential and MRC Aurora are limited
liability companies. Accordingly, all income tax liabilities of these entities ultimately flow through to the Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these entities.
Comparison of the nine months ended March 31, 2026 and 2025
Commercial Properties
The commercial properties owned by us during the nine months ended March 2026 and 2025 are as follows:
|
Nine Months Ended March 31,
|
||
|
2026
|
|
2025
|
|
|
|
|
|
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
|
|
Green Valley Medical Center
|
Rental, reimbursements and other property income:
During the nine months ended March 31, 2026, we generated $9.56 million in rental and reimbursements revenues from our nine commercial properties, compared to $12.84 million generated from our
nine commercial properties during the nine months ended March 31, 2025. The decrease in rental revenues was primarily attributable to early lease termination income recognized during the 2025 period related to one tenant at our Satellite
Place Office Building in December 2024 and another tenant at our Main Street West property in February 2025.
Expenses:
Property operating and maintenance expenses:
During the nine months ended March 31, 2026, we incurred operating and maintenance expenses of $3.70 million in the operation of our nine commercial properties, compared to $3.46 million during
the nine months ended March 31, 2025. The increase in the operating expenses was mainly due to higher real estate taxes at our Satellite Place Office Building.
Depreciation and amortization:
During the nine months ended March 31, 2026, we recorded depreciation and amortization of $4.72 million attributable to the depreciation and amortization of real estate and intangible assets of
our nine commercial properties, compared to $5.45 million during the nine months ended March 31, 2025. The decrease in total depreciation and amortization of $0.73 million was mainly due to the impairment of assets related to our Main Street
West Office Building and the write-off of tenant improvements, leasehold improvements, lease commissions, and in-place lease related to our Satellite Place Office Building due to an early lease termination of its anchor tenant in December
2024.
Interest expense:
During the nine months ended March 31, 2026, we recorded $3.57 million of interest expense related to mortgage notes payable associated with the Company’s nine commercial properties, compared to
$3.80 million during the nine months ended March 31, 2025.
The decrease of $0.23 million was primarily due to the lower interest expense resulting from Main Street West loan refinancing in May 2025. The decrease was partially offset by higher interest
expense resulting from the First & Main loan extension in March 2026.
Residential Properties
The residential properties owned by us during the nine months ended December 2025 and 2025 are as follows:
|
Nine Months Ended March 31,
|
||
|
2026
|
|
2025
|
|
|
|
|
|
Commodore Apartments
|
|
Commodore Apartments
|
|
The Park View Apartments
|
|
The Park View Apartments
|
|
Hollywood Apartments
|
|
Hollywood Apartments
|
|
Shoreline Apartments
|
|
Shoreline Apartments
|
|
Aurora at Green Valley
|
|
|
Rental, reimbursements and other property income:
During the nine months ended March 31, 2026, we generated $5.01 million in rental and reimbursements revenues from our five residential properties, compared to $4.42 million from our four
residential properties during the nine months ended March 31, 2025. The increase was mainly due to the to the completion of the Aurora at Green Valley in July 2025, with leasing commencing in August 2025.
Expenses:
Property operating and maintenance expenses:
During the nine months ended March 31, 2026, we incurred operating and maintenance expenses of $2.37 in the operation of our five residential properties, compared to $2.02 million in the
operation of our four residential properties during the nine months ended March 31, 2025. The increase was mainly due to the completion of Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.
Depreciation and amortization:
During the nine months ended March 31, 2026, we recorded depreciation and amortization of $2.26 million attributable to the depreciation and amortization of real estate and intangible assets of
our five residential properties, compared to $1.64 million attributable to our four residential properties during the nine months ended March 31, 2025. The increase of $0.62 million was mainly due to the completion of Aurora at Green Valley
in July 2025, which consists of three residential buildings and a clubhouse.
Interest expense:
During the nine months ended March 31, 2026, we recorded $2.43 million related to mortgage notes payable associated with the Company’s five residential properties and debt on the Campus Lane
Land, compared to $2.62 million related to the Company’s four residential properties and debt on the Campus Lane Land during the nine months ended March 31, 2025.
The slight decrease of $0.19 million was primarily due to the lower interest expense resulting from the refinancing of Hollywood Apartments in March 2025. The decrease was partially offset by
MRC Aurora recognizing interest and loan fee amortization beginning after completion of construction in September 2025, amounting to $0.95 million.
Corporate and Other
The corporate and other operations during the nine months ended March 2026 and 2025 are as follows:
Investment income:
Total investment income during the nine months ended March 31, 2026, and 2025, were $0.19 million and $0.05 million, respectively. During the nine months ended March 31, 2026, and March 31,
2025, we received minimal distributions from operations, sales, and liquidations. During the nine months ended March 31, 2026, we received dividends, interest, and other investment income of $0.18 million as compared to $0.05 million received
during the nine months ended March 31, 2025. The increase was mainly due to the increase in our investment portfolio since March 31, 2025. The remaining increase was due to the interest income from the note receivable from the non-controlling
interest holder of PT Hillview, True USA.
Unallocated corporate expenses:
Asset management fee:
The asset management fees for the nine months ended March 31, 2026, and 2025, were $2.58 million and $2.57 million, respectively. There was a slight increase in asset management fees due to a
higher level of invested capital under the prior Advisory Management Agreement, which increased from $182.66 million as of December 31, 2024 to $191.41 million as of December 31, 2025, offset by the slight decrease due to the lower rate under
the amended Advisory Management Agreement, which provides for a base management fee of 1.25% per annum of gross assets under management (excluding depreciation and amortization), compared to the prior agreement based on invested capital (3%
of the first $20 million, 2% of the next $80 million, and 1.50% over $100 million).
Incentive or bonus management fee:
Under the Advisory Management Agreement, we previously paid an incentive management fee that was equal to 15% of all distributions once shareholders have received cumulative distributions equal
to 6% from the effective date of the Advisory Management Agreement, and we currently pay a bonus management fee equal to 5% of adjusted funds from operations each quarter. We did not incur any incentive or bonus management fee for the nine
months ended March 31, 2026, and 2025.
Administrative cost and transfer agent reimbursements:
Costs reimbursed to MacKenzie for the nine months ended March 31, 2026 were $0.66 million as compared to $0.50 million for the nine months ended March 31, 2025. The increase was due to an
increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to March 31, 2025, as a result of the increase in the number of real estate assets owned by us since March 31, 2025.
During the nine months ended March 31, 2026, no transfer agent cost reimbursements were paid to MacKenzie. During the nine months ended March 31, 2025, there were minimal transfer agent cost
reimbursements paid to MacKenzie.
Interest expense:
During the nine months ended March 31, 2026, we recorded $1.15 million of interest expense related to the Company’s line of credit agreement and note purchase agreement, compared to $0.10
million during the nine months ended March 31, 2025.
The increase was attributable to additional borrowings by the Parent Company under a new line of credit with PRES and promissory notes issued to Streeterville Capital, LLC.
Other corporate operating expenses:
Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses. Other operating expenses for the nine
months ended March 31, 2026 and 2025, were $1.82 million and $3.41 million, respectively. The decrease in other operating expenses was mainly due to the decrease in transfer agent fees since March 31, 2025.
Net realized gain (loss) on sale of investments:
During the nine months ended March 31, 2026, we recorded a minimal net realized loss as compared to $0.23 million net realized gain during the nine months ended March 31, 2025. Total net
realized loss for the nine months ended March 31, 2026, was realized from the sale of sale of four publicly traded REIT securities and five non-traded REIT securities. Total realized gain for nine months ended March 31, 2025, was realized
from the sale of two non-traded REIT securities and one limited partnership interest.
Net unrealized gain (loss) on investments:
During the nine months ended March 31, 2026, we recorded a net unrealized gain of $2.01 million, which was net of $1.33 million of unrealized loss 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. Accordingly, the net unrealized gain excluding the reclassification adjustment for the
nine months ended March 31, 2026, were $0.68 million, which resulted from fair value appreciations of $0.36 million from general partnership interests, $0.32 million from non-traded REIT securities, a minimal amount from publicly traded REIT
securities, and a minimal amount of fair value appreciations from limited partnership interests.
During the nine months ended March 31, 2025, we recorded a net unrealized loss of $0.41 million, which was net of $0.16 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. Accordingly, the net unrealized losses excluding the reclassification adjustment for
the nine months ended March 31, 2025, were $0.25 million, which resulted from fair value depreciations of $0.35 million from general partnership interests, $0.05 million from limited partnership interests and fair value appreciations of $0.15
million from non-traded REIT securities.
Income tax provision (benefit):
Income tax provision for nine months ended March 31, 2026 and 2025 are discussed above under the three months ended section.
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. 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. In addition, we have raised $15.56 million from the issuance of shares of common stock under the common stock DRIP as of March 31,
2026. 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. We have raised $19.58 million through the sale of our Series A preferred stock,
$3.64 million Series B preferred stock and $1.32 million Series C preferred stock pursuant to a Regulation A offering as of March 31, 2026. In addition, we have raised $0.61 million from the issuance of shares of Series A, Series B and Series
C preferred stock under the preferred stock DRIP. In January 2025, the Offering Circular was qualified by the SEC for the sale of 1,286,638.62 shares of Series A and 1,267,216.17 shares of Series B preferred stock. The Offering Circular was
amended in June 2025 to offer up to 647,991 shares of Series A Preferred Stock, 1,166,383 shares of Series B Preferred Stock, and 1,166,383 shares of Series C Preferred Stock. Of these amounts, 150,000 shares of each are reserved for the
preferred stock DRIP. On January 15, 2025, our shelf registration statement on Form S-3 for the sale of up to $75 million in common stock, preferred stock, warrants, and units was declared effective by the SEC, and we entered into an equity
distribution agreement with Maxim to issue and sell our common stock for an aggregate gross sales price of $20 million pursuant to the at-the-market offering described in the ATM Prospectus, subject to maintaining compliance with General
Instruction I.B.6 of Form S-3. As of March 31, 2026, under the ATM offering, we sold 134,021.30 shares with gross proceeds of approximately $1.80 million. In addition, on February 28, 2025, the Company offered and sold 153,403.40 shares of
the Company’s common stock, pre-funded warrants to purchase up to 129,226.50 shares of common stock and warrants to purchase up to an aggregate of 423,944.85 shares of common stock. The gross proceeds to the Company from this transaction were
approximately $4.80 million before deducting the placement agent’s fees and other offering expenses payable by the Company. In July and August 2025, 129,226.50 common shares were issued upon exercise of all of the pre-funded warrants. All
share amounts are presented after giving effect to the Reverse Stock Split.
We plan to fund future investments with the net proceeds raised from our preferred equity offering and any future offerings of securities and cash flows from operations, as well as interest
earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. However, we have not raised as much from our preferred equity offering in the past fiscal year
as we did in previous years, at least in part due to rising interest rates making the preferred return less attractive. Thus, there is no guarantee that we can raise sufficient funds to meet our goals in terms of growth, strategic or
necessary loan rebalancing, and additional investments. We also may fund a portion of our investments through borrowings from banks and issuances of senior securities. We also may borrow money within the underlying companies in which we have
majority ownership.
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 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.
Our aggregate borrowings (if any), secured and unsecured, are expected to be reasonable in relation to our net assets and will be reviewed by the Board of Directors at least quarterly.
We used the funds raised from our public offerings to invest in portfolio companies and to pay operating expenses.
We finished the nine months ended March 31, 2026, with cash and cash equivalents, and restricted cash of approximately $4.45 million. Our principal demands for cash are to fund operating and
administrative expenses, debt service obligations, and dividends on our common and Series A, B and C preferred stock. In addition, we may also use cash to purchase additional properties. 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 Series A, B and C preferred stock, and new borrowings at the underlying companies.
Cash Flows:
Nine months ended March 31, 2026:
For the nine months ended March 31, 2026, we experienced a net increase in cash of $0.33 million. During this period, we used net cash of $2.76 million in our operating activities and $8.25
million in our investing activities and generated net cash of $11.34 million in our financing activities.
The net cash outflow of $2.76 million from operating activities resulted from $16.92 million used in operating expenses, offset by cash inflow of $13.97 million of rental revenues and $0.19
million of investment income.
The net cash outflow of $8.25 million from investing activities resulted from $8.22 million of real estate acquisitions through our subsidiaries and $3.64 million purchases of equity
investments, offset by cash inflow of $3.61 million from sale of investments.
The net cash inflow of $11.34 million from financing activities resulted from $10.35 million of additional mortgage borrowings, $3.42 million of additional notes payable, $1.32 million of
issuance of Series C preferred stock, $0.84 million from issuance of Series A preferred stock, $0.41 million proceeds from borrowings under the affiliated party line of credit, $0.33 million from issuance of Series B preferred stock, $0.32
million from issuance of common stock and $0.12 million change in capital pending acceptance, offset by cash outflows of $1.82 million payment on existing notes, $1.15 million capital distributions to
non-controlling interests holders, $1.00 million payments on existing mortgage notes payables, $0.71 million payment of dividends to Series A preferred stockholders, $0.46 million payment of financing fees, $0.35 million payment of selling
commissions and fees, $0.20 million repayment of finance lease liabilities, $0.05 million payment of dividends to Series B preferred stockholders, and $0.03 million payment of dividends to Series C preferred stockholders.
Nine months ended March 31, 2025:
For the nine months ended March 31, 2025, we experienced a net decrease in cash of $7.62 million. During this period, we used net cash of $0.05 million in our operating activities, used net cash
of $14.27 million in our investing activities and generated net cash of $6.70 million in our financing activities.
The net cash outflow of $0.05 million from operating activities resulted from $16.74 million used in operating expenses, offset by cash inflow of $16.64 million of rental revenues and $0.05
million of investment income.
The net cash outflow of $14.27 million from investing activities resulted from $14.87 million of real estate acquisitions through our subsidiaries, and $0.23 million purchases of equity
investments, offset by cash inflow of $0.83 million from sale of investments.
The net cash inflow of $6.70 million from financing activities resulted from $35.33 million of additional mortgage borrowings, $8.16 million proceeds from borrowings under line of credit, $3.79
million of issuance of common stock, $2.59 million of capital contributions by non-controlling interests holders, $1.94 million of issuance of pre-funded warrants, $1.46 million of issuance of Series B preferred stock, $0.47 million change in
capital pending acceptance, $0.38 million of issuance of Series A common stock warrants, $0.23 million of issuance of Series A preferred stock and $0.22 million of issuance of Series B common stock warrants, offset by cash outflows of $38.15
million payment on existing mortgage notes payables, $4.02 million payment of dividends to common stockholders, $1.85 million payment of financing fees, $1.60 million payment of selling commissions and fees, $1.10 million capital
distributions to non-controlling interests holders, $0.72 million payment of dividends to Series A preferred stockholders, $0.22 million payment on existing notes payables, $0.17 million repayment of finance lease liabilities, $0.03 million
payment of dividends to Series B preferred stockholders and $0.01 million redemption of Series A preferred stock.
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. Each of
these agreements is terminable by either party upon proper notice. Payments under the Advisory Management Agreement, as amended effective January 1, 2026, will be (i) a base management fee equal to 1.25% per annum of gross assets under
management (excluding depreciation and amortization), paid monthly, and (ii) a bonus management fee equal to 5% of adjusted funds from operations each quarter. The bonus management fee replaces any incentive fee, acquisition fee, financing
fee, or disposition fee that was payable under the prior agreement. Payments under the Administration Agreement will occur on an ongoing basis as expenses are incurred on our behalf by MacKenzie. However, if MacKenzie withdraws as our
administrator, it will be liable for any expenses we incur as a result of such withdrawal. For additional information concerning the terms of these agreements and related fees paid, see Note 8 in the consolidated financial statements included
in this report.
Borrowings
On January 22, 2025, we entered into a revolving line of credit agreement with PRES, an affiliate of the Adviser, of up to $10,000,000. Interest will accrue
on any unpaid principal balance on the note at a fixed annual interest rate of 10%. In addition, an origination fee of 2% will be charged on each advance and the sum will be added to the principal balance. The original maturity date of the
loan was June 1, 2026. On September 24, 2025, the maturity date was extended to December 31, 2027. The loan requires monthly interest beginning on March 1, 2025, with the remaining principal balance due at maturity. As of March 31, 2026, the
Company has borrowed $10 million in entirety, which includes $196,078 of loan origination fees, under the line of credit.
We used the proceeds from this credit facility on a short-term basis to bridge the gap between our asset acquisition expenditures and debt refinancing. We expect to be subject to various
customary covenants and restrictions on our operations, such as covenants which would (i) require us to maintain certain financial ratios, including asset coverage, debt to equity and interest coverage, and a minimum net worth, and/or (ii)
restrict our ability to incur liens, additional debt, merge or sell assets, make certain investments and/or distributions or engage in transactions with affiliates. We also borrow money within the underlying companies in which we have
majority ownership.
The below table presents the total loans outstanding at the underlying companies as of March 31, 2026 and the fiscal years those loans mature:
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2026 (remainder)
|
$
|
10,745,004
|
||
|
|
||||
|
2027
|
30,966,138
|
|||
|
|
||||
|
2028
|
29,213,495
|
|||
|
|
||||
|
2029
|
4,812,054
|
|||
|
|
||||
|
2030
|
27,499,016
|
|||
|
|
||||
|
Thereafter
|
43,467,966
|
|||
|
|
||||
|
Total
|
$
|
146,703,673
|
||
Distributions to Stockholders
We pay quarterly distributions to stockholders to the extent that we have income from operations available. Our quarterly distributions, if any, will be determined by our Board of Directors
after a review and distributed pro-rata to holders of our shares; we declare distributions on a monthly basis, but pay each quarter. 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 have elected to be treated as a REIT under the Code. 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. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income. 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 U.S. federal tax laws.
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. 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. When 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.
During the nine months ended March 31, 2026, the Board of Directors approved the following quarterly dividends:
|
|
Dividends
|
|||||||||||||||||||||||
|
|
Series A Preferred Stock
|
Series B Preferred Stock
|
Series C Preferred Stock
|
|||||||||||||||||||||
|
During the Quarter Ended
|
Per Share
|
Amount
|
Per Share
|
Amount
|
Per Share
|
Amount
|
||||||||||||||||||
|
September 30, 2025
|
$
|
0.375
|
$
|
285,758
|
$
|
0.750
|
$
|
88,878
|
$
|
0.563
|
$
|
6,465
|
||||||||||||
|
December 31, 2025
|
0.375
|
280,892
|
0.938
|
90,198
|
0.563
|
18,915
|
||||||||||||||||||
|
March 31, 2026
|
0.375
|
276,780
|
0.750
|
92,230
|
0.563
|
27,189
|
||||||||||||||||||
|
|
$
|
1.125
|
$
|
843,430
|
$
|
2.438
|
$
|
271,306
|
*
|
$
|
1.688
|
$
|
52,569
|
|||||||||||
*Of the total dividends declared for Series B during the three months ended March 31, 2026, $203,479 was an increase in liquidation preference and $67,827 was the cash dividend.
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. 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. The Board of Directors will continue
to evaluate the dividend policy quarterly based on the Company’s financial performance, liquidity needs, and market conditions.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and
liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies
involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on
experience and on various other assumptions that are believed to be reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting estimates, are disclosed in our annual report on Form
10-K for the year ended June 30, 2025. We have not made any material changes to our critical accounting policies and estimates during the period covered by this report.
| Item 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Our portfolio primarily consists of equity and debt investments in smaller U.S. companies that primarily own commercial real estate that are either illiquid or not listed on any exchange, and
our investments are considered speculative in nature. 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 March 31, 2026, financial instruments that subjected us to concentrations of market risk consisted principally of equity investments, which represented approximately 2.49% of our total assets
as of that date. 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. Our investment strategy represents a high degree of business and financial
risk due primarily to the general illiquidity of our investments. We may make short-term investments in cash equivalents, U.S. government securities and other high-quality investments that mature in one year or less, pending investments in
portfolio companies made according to our principal investment strategy.
In addition, we are exposed to interest rate risk with respect to our variable-rate indebtedness; generally, an increase in interest rates would directly result in higher interest expense. We
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 March 31, 2026, $17.65 million, $26.31 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. 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 $0.26 million. As of March 31, 2026, the applicable variable rates were 6.75% to 7.25% for the Prime rate, 3.70%
for SOFR, and 3.68% for the U.S. Treasury yield.
Variable interest under the U.S. Treasury-indexed and SOFR loans are not yet applicable as of March 31, 2026. These payments are scheduled to commence on May 1, 2026, and May 1, 2027,
respectively.
| Item 4. |
CONTROLS AND PROCEDURES
|
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of the end of the period covered by this report as required by paragraph (b) of Rule 13a-15 or 15d-15 of the Exchange Act. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date and provided reasonable assurance that
information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and
forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
There have been no changes in our internal control over financial reporting (identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the
Exchange Act) during the fiscal quarter ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Item 1. |
LEGAL PROCEEDINGS
|
None.
| Item 1A. |
RISK FACTORS
|
There have been no material changes to our risk factors discussed in “Risk Factors” in our annual report Form 10-K for the year ended June 30, 2025.
| Item 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
During the nine months ended March 31, 2026, we issued 37,374.89 shares of Series A preferred stock with total gross proceeds of $840,935, 13,440.15 shares of Series B preferred stock with total
gross proceeds of $329,411 and 52,640 shares of Series C preferred stock with total gross proceeds of $1,316,000. We also issued 6,409.45 shares of Series A preferred stock with total gross proceeds of $144,214 under the preferred stock DRIP,
878.30 shares of Series B preferred stock with total gross proceeds of $19,761 under the preferred stock DRIP, and 16.67 shares of Series C preferred stock with total gross proceeds of $375 under the preferred stock DRIP. All such issuances
were pursuant to our Regulation A Series A, Series B and Series C preferred stock offering. In connection with the Regulation A preferred stock issuances described above, we paid broker-dealer fees of $242,572. The securities were sold to
members of the general public who invested through our Regulation A offering.
Issuer Purchases of Equity Securities
None.
| Item 3. |
DEFAULTS UPON SENIOR SECURITIES
|
| Item 4. |
MINE SAFETY DISCLOSURES
|
| Item 5. |
OTHER INFORMATION
|
During the quarterly period ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted terminated
|
Exhibit
|
Description
|
|
Contribution Agreement by and between MacKenzie Realty Capital, Inc., MacKenzie Realty Operating Partnership, LP and MacKenzie Apartment Communities, Inc., dated January 1, 2026
|
|
|
Advisory Management Agreement with MacKenzie Real Estate Advisers, LP (incorporated by reference to Exhibit 10.22 of the Company’s Form 8-K, filed on December 30, 2025)
|
|
|
Secured Promissory Note #3 dated January 15, 2026 issued by the Company in favor of Streeterville Capital, LLC (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K, filed
on January 21, 2026)
|
|
|
Amendment to the Equity Distribution Agreement, dated January 7, 2026, by and between MacKenzie Realty Capital, Inc. and Maxim Group LLC (incorporated by reference to Exhibit 1.1 of the
Company’s Form 8-K, filed on January 14, 2026)
|
|
|
Agreement of Limited Partnership of MAC Operating Partnership, LP, dated March 4, 2026
|
|
|
Note Purchase Agreement dated March 6, 2026 by and between the Company and Streeterville Capital, LLC (incorporated by reference to the Company’s Form 8-K, filed on March 6, 2026)
|
|
|
Secured Promissory Note dated March 6, 2026 issued by the Company in favor of Streeterville Capital, LLC (incorporated by reference to the Company’s Form 8-K, filed on March 6, 2026)
|
|
|
Security Agreement dated March 6, 2026 by MRC QRS, Inc. in favor of Streeterville Capital, LLC (incorporated by reference to the Company’s Form 8-K, filed on March 6, 2026)
|
|
|
Guaranty dated March 6, 2026 by MRC QRS, Inc. for the benefit of Streeterville Capital, LLC (incorporated by reference to the Company’s Form 8-K, filed on March 6, 2026)
|
|
|
Stock Pledge Agreement dated March 6, 2026 by and between the Company and Streeterville Capital, LLC (incorporated by reference to the Company’s Form 8-K, filed on March 6, 2026)
|
|
|
Section 302 Certification of Robert Dixon (President and Chief Executive Officer)
|
|
|
Section 302 Certification of Angche Sherpa (Treasurer and Chief Financial Officer)
|
|
|
Section 1350 Certification of Robert Dixon (President and Chief Executive Officer)
|
|
|
Section 1350 Certification of Angche Sherpa (Treasurer and Chief Financial Officer)
|
|
|
101.INS*
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
|
101.SCH*
|
Inline XBRL Taxonomy Extension Schema Documents.
|
|
101.CAL*
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF*
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB*
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE*
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
104*
|
Cover Page Interactive Data File (formatted as inline XBRL and contained Exhibit 101).
|
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
|
MACKENZIE REALTY CAPITAL, INC.
|
|||
|
Date: May 15, 2026
|
By:
|
/s/ Robert Dixon | |
|
President and Chief Executive Officer
|
|||
|
Date: May 15, 2026
|
By:
|
/s/ Angche Sherpa | |
|
Treasurer and Chief Financial Officer
|
|||
68
ATTACHMENTS / EXHIBITS
INLINE XBRL TAXONOMY EXTENSION - SCHEMA
INLINE XBRL TAXONOMY EXTENSION - DEFINITION LINKBASE
INLINE XBRL TAXONOMY EXTENSION - LABEL LINKBASE
INLINE XBRL TAXONOMY EXTENSION - PRESENTATION LINKBASE
INLINE XBRL TAXONOMY EXTENSION - CALCULATION LINKBASE DOCUMENT
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