MacKenzie Realty Capital Inc

Previous wording

In addition to our investment securities, we currently own and manage six commercial real estate properties: Satellite Place located in Duluth, GA, 1300 Main, First & Main and Main Street West located in Napa, CA, Woodland Corporate Center Two located in Woodland, CA, and 220 Campus Lane located in Fairfield, CA and four residential apartments: Commodore Apartments and The Park View (f/k/a as Pon De Leo Apartments), located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA and the Shoreline Apartments located in Concord, CA. 1300 Main, First & Main, Main Street West, Woodland Corporate Center and the Hollywood Apartments are owned through our subsidiary, the Operating Partnership as noted below. The Commodore Apartments are owned through our subsidiary Madison; The Park View is owned through our subsidiary PVT; and the Shoreline Apartments are owned through our subsidiary BAA-Shoreline.

Current wording

In addition to our investment securities, we currently own and manage seven commercial real estate properties: Satellite Place located in Duluth, GA, 1300 Main, First & Main and Main Street West located in Napa, CA, Woodland Corporate Center Two located in Woodland, CA, 220 Campus Lane and Green Valley Executive Center located in Fairfield, CA and four residential apartments: Commodore Apartments and The Park View (f/k/a as Pon De Leo Apartments), located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA and the Shoreline Apartments located in Concord, CA.

Previous wording

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 December 31, 2023, the property is 88% occupied by 7 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

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, 2024, the property is 95% occupied by 7 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

First and Main Office Building contains 27,396 square feet, of which approximately 19,000 square feet is office space and the remainder is designated as retail space. As of December 31, 2023, the property is 98% occupied by 8 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

First and Main Office Building contains 27,396 square feet, of which approximately 19.000 square feet is office space and the remainder is designated as retail space. As of March 31, 2024, the property is 100% occupied by 9 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

Main Street West Office Building contains 38,136 square feet, of which approximately 32,700 square feet is office space and the remainder is designated as retail space. As of December 31, 2023, the property is 84% occupied by 7 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

Main Street West Office Building contains 38,153 square feet, of which approximately 32,700 square feet is office space and the remainder is designated as retail space. As of March 31, 2024, the property is 89% occupied by 8 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

Satellite Place Office Building contains 134,785 square feet, all of which is office space. As of December 31, 2023, the property is approximately 64% occupied by 3 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

Satellite Place Office Building contains 134,785 square feet, all of which is office space. As of March 31, 2024, the property is approximately 71% occupied by 4 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

Woodland Corporate Center Office Building contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space. All of the laboratories space is occupied by Agtech Innovation. As of December 31, 2023, the property is 97% occupied by 14 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

Woodland Corporate Center Office Building contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space. All of the laboratories space is occupied by Agtech Innovation. As of March 31, 2024, the property is 100% occupied by 14 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of December 31, 2023, Commodore Apartment building is approximately 97.9% occupied. The Park View is also a mid-rise apartment building built in 1929 and has 39 units. As of December 31, 2023, The Park View building is approximately 92.3% occupied. Hollywood Hillview Apartments (“Hollywood Property”), located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 53 units. The property contains approximately 37,000 square feet of net rentable apartment area and 8,560 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. The apartment units are 81.5% occupied as of December 31, 2023. Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of December 31, 2023, Shoreline Apartments building is approximately 90.5% occupied.

Current wording

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of March 31, 2024, Commodore Apartment building is approximately 93.8% occupied. The Park View is also a mid-rise apartment building built in 1929 and has 39 units. As of March 31, 2024, The Park View building is approximately 94.9% occupied. Hollywood Hillview Apartments (“Hollywood Property”), located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54 units. The property contains approximately 37,000 square feet of net rentable apartment area and 8,560 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. The apartment units are 88.9% occupied as of March 31, 2024. Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of March 31, 2024, Shoreline Apartments building is approximately 90.5% occupied.

Previous wording

Our 220 Campus Lane Office building was purchased in September 2023. The office building was vacant at the time of our purchase. Currently we are in the process of renovating the building and marketing it for lease. As of December 31, 2023, we have one tenant on a month-to-month basis occupying 5,015 sq. feet of space.

Current wording

Our 220 Campus Lane Office building was purchased in September 2023. The office building was vacant at the time of our purchase. Currently we are in the process of renovating the building and marketing it for lease. As of March 31, 2024, the building had no tenants. One tenant is scheduled to occupy 7,166 square feet beginning in June 2024.

Previous wording

In addition to our commercial and residential real estate properties, we also own two parcels of land: a vacant parcel adjacent to our 220 Campus Lane Office Building in Fairfield, California (“Campus Lane Land”), and a vacant parcel located at 5000 Wiseman Way, Fairfield, California (“Aurora Land”). We acquired the Campus Lane Land in September 2023 with the long-term objective of developing it into a multi-family residential community. The entitlement process for the vacant land is commencing now but the financial resources to realize our goal of commencing construction in late 2025 has not been secured and will be dependent upon the City’s response to our development application to be submitted in April 2024. The development of Aurora Land is discussed below. Both parcels of land are owned by the Operating Partnership through its subsidiaries: Campus Lane Residential, LLC, and MRC Aurora, LLC.

Current wording

In addition to our commercial and residential real estate properties, we also own two parcels of land: a vacant parcel adjacent to our 220 Campus Lane Office Building in Fairfield, California (“Campus Lane Land”), and a vacant parcel located at 5000 Wiseman Way, Fairfield, California (“Aurora Land”). We acquired the Campus Lane Land in September 2023 with the long-term objective of developing it into a multi-family residential community. The entitlement process for the vacant land has not commenced, and we are uncertain about the duration and financial resources required to realize our goal. The development of Aurora Land is discussed below. Both parcels of land are owned by the Operating Partnership through its subsidiaries: Campus Lane Residential, LLC, and MRC Aurora, LLC.

Previous wording

We plan to build a multi-family residential community on this land which will include 72 units and a club house. The city’s planning commission approved our development project last September and the building department is currently reviewing our building permit submittals. In order to fund construction of the project, we are closing a $17.15 million construction loan in February 2024 and will be raising $10 million in preferred capital. We plan to commence construction in early March 2024.

Current wording

We plan to build a multi-family residential community on this land which will include 72 units and a club house. The city’s planning commission approved our development project last September and the building department is currently reviewing our building permit submittals. In order to fund the construction of the project, we plan to raise $10 million in preferred capital and in addition obtain a construction loan. Accordingly, we commenced selling the preferred units in February 2024 and in addition closed on a construction loan of $17.15 million on February 21, 2024. We commenced the construction preparation and grading work on April 1, 2024.

Previous wording

There are no present plans for any major renovation or development of any property except for our 220 Campus Lane Office Building, Aurora Land and Campus Lane Land as discussed above. Each property is being held for income production and increased occupancy and/or rental rates. We have property and liability insurance policies on all properties which we believe are adequate.

Current wording

There are no present plans for any major renovation or development of any property except for our 220 Campus Lane Office Building, Aurora at Green Valley and Campus Lane Land as discussed above. Each property is being held for income production and increased occupancy and/or rental rates. We have property and liability insurance policies on all properties which we believe are adequate.

Previous wording

Our consolidated office properties, 1300 Main, First and Main, Main Street West, Satellite Place, Woodland Corporate Center Two, and 220 Campus Lane are all Class A suburban office properties and are located in Napa, California, Napa, California, Napa, California, Duluth, Georgia, Woodland, California, and Fairfield, California, respectively. All properties must compete with every other office property in the market, as well as facing the uncertainty of workers returning to the office after COVID-19.

Current wording

Our consolidated office properties, 1300 Main, First and Main, Main Street West, Satellite Place, Woodland Corporate Center Two, 220 Campus Lane, and Green Valley Executive Center are all Class A suburban office properties and are located in Napa, Woodland and Fairfield, California and Duluth, Georgia. All properties must compete with every other office property in the market, as well as facing the uncertainty of workers returning to the office after COVID-19.

Previous wording

Our unconsolidated investment in a hotel property, Citrus Park Hotel, is a Courtyard by Marriott located in the Tampa/St. Petersburg market that competes for business and leisure travel.

Current wording

Our unconsolidated investment in a hotel property held through a holding company, Citrus Park Hotel, LLC, is a Courtyard by Marriott located in the Tampa/St. Petersburg market that competes for business and leisure travel. In March 2024, Citrus Park Hotel sold the hotel property and liquidated the company.

Previous wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the three months ended December 31, 2023, we generated $3.58 million in rental and reimbursements revenues, of which $2.10 million was generated from our six commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building, Woodland Corporate Center Office Building and 220 Campus Lane Office Building), and $1.48 million was generated from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments and Shoreline Apartments). During the three months ended December 31, 2022, we generated $3.67 million in rental and reimbursements revenues, of which $2.20 million was generated from our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $1.47 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.09 million in rental revenues during the three months ended December 31, 2023 was mainly due to the sale of Addison Corporate Center building in June 2023.

Current wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the three months ended March 31, 2024, we generated $4.08 million in rental and reimbursements revenues, of which $2.60 million was generated from our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building, Woodland Corporate Center Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building), and $1.48 million was generated from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments and Shoreline Apartments). During the three months ended March 31, 2023, we generated $4.47 million in rental and reimbursements revenues, of which $2.87 million was generated from our six commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building and Woodland Corporate Center Office Building) and $1.60 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.39 million in rental revenues during the three months ended March 31, 2024 was mainly due to the sale of Addison Corporate Center building in June 2023 partly offset by acquisition of two commercial properties: 220 Campus Lane and Green Valley Executive Center since March 2023.

Previous wording

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income for the six months ended December 31, 2023 and 2022 was $0.58 million and $0.76 million, respectively. During the six months ended December 31, 2023, we received $0.20 million of distributions from operations, sales, and liquidations as compared to $0.56 million during the six months ended December 31, 2022. The decrease was mainly due to liquidation of Dimension 28, LP in December 2022. During the six months ended December 31, 2023, we received dividends, interest, and other investment income of $0.38 million as compared to $0.20 million received during the six months ended December 31, 2022. This increase was mainly due to increase in interest income from our cash deposits in money market funds during the six months ended December 31, 2023.

Current wording

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income for the three months ended March 31, 2024 and 2023 was $0.22 million and $10.23 million, respectively. During the three months ended March 31, 2024, we received $0.08 million of distributions from operations, sales, and liquidations as compared to $10.15 million during the three months ended March 31, 2023. The decrease was mainly because during the three months ended March 31, 2023, we had received the proceeds from liquidation of Dimension 28, LP. During the three months ended March 31, 2024, we received dividends, interest, and other investment income of $0.14 million as compared to $0.08 million received during the three months ended March 31, 2023. This increase was mainly due to increase in interest income from our cash deposits in money market funds during the three months ended March 31, 2024.

Previous wording

The asset management fees for the three months ended December 31, 2023 and 2022 were $0.79 million and $0.74 million, respectively. The slight increase was due to total increase of $12.27 in total invested capital from $152.47 million as of December 30, 2022 to $164.74 million as of December 31, 2023.

Current wording

The asset management fees for the three months ended March 31, 2024 and 2023 were $0.81 million and $0.77 million, respectively. The slight increase was due to total increase of $14.09 million in total invested capital from $160.15 million as of March 31, 2023 to $174.24 million as of March 31, 2024.

Previous wording

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 and residential real estate assets. During the three months ended December 31, 2023, we incurred operating and maintenance expenses of $1.51 million, of which $0.85 million were incurred in the operation of our six commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building and 220 Campus Lane Office Building) and $0.66 million were incurred in the operation of our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the three months ended December 31, 2022, we incurred operating and maintenance expenses of $2.29 million, of which $1.67 million were incurred in the operation of our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $0.62 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The decrease in the operating expenses was mainly due to the sale of Addison Property in June 2023 partly offset by the acquisitions of three new office buildings (Main Street West, Woodland Corporate Center and 220 Campus Lane Office Building) since December 31, 2022.

Current wording

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 and residential real estate assets. During the three months ended March 31, 2024, we incurred operating and maintenance expenses of $1.81 million, of which $1.09 million were incurred in the operation of our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building) and $0.72 million were incurred in the operation of our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the three months ended March 31, 2023, we incurred operating and maintenance expenses of $2.54 million, of which $1.87 million were incurred in the operation of our six commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building and Main Street West Office Building) and $0.67 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The decrease in the operating expenses was mainly due to the sale of Addison Property in June 2023 partly offset by the acquisitions of two new office buildings (220 Campus Lane Office Building and Green Valley Executive Center Office Building) since March 31, 2023.

Previous wording

During the three months ended December 31, 2023, we recorded depreciation and amortization of $1.56 million, of which $1.02 million was attributable to the depreciation and amortization of real estate and intangible assets of our six commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building and 220 Campus Lane Office Building) and $0.54 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the three months ended December 31, 2022, we recorded depreciation and amortization of $1.16 million, of which $0.57 million was attributable to the depreciation and amortization of real estate and intangible assets of our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $0.59 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The increase in total depreciation and amortization of $0.40 million during the three months ended December 31, 2023 was due to the acquisitions of three new office buildings (Main Street West, Woodland Corporate Center and 220 Campus Lane Office Building) since December 31, 2022.

Current wording

During the three months ended March 31, 2024, we recorded depreciation and amortization of $1.91 million, of which $1.37 million was attributable to the depreciation and amortization of real estate and intangible assets of our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building) and $0.54 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the three months ended March 31, 2023, we recorded depreciation and amortization of $1.66 million, of which $1.09 million was attributable to the depreciation and amortization of real estate and intangible assets of our five commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building and Main Street West Office Building) and $0.57 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The increase in total depreciation and amortization of $0.25 million during the three months ended March 31, 2024 was due to the acquisitions of two new office buildings (220 Campus Lane Office Building and Green Valley Executive Center Office Building) since March 31, 2023. The sale of Addison Corporate Center in June 2023, which was previously held for sale and not depreciated, did not contribute to the overall increase.

Previous wording

Interest expense for the three months ended December 31, 2023 was $1.45 million, of which $0.63 million was incurred on the mortgage notes payable associated with our five commercial properties (First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building and 220 Campus Lane Building) and $0.82 million was incurred on the mortgage notes payable associated with our five residential properties (Commodore Apartments, The Park View, Hollywood Apartments, Shoreline Apartments and Campus Lane Residential). Interest expense for the three months ended December 31, 2022 was $1.68 million, of which $1.01 million was incurred on the notes payable associated with our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $0.67 million was incurred on the mortgage notes payable associated with our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.23 million in interest expense during the three months ended December 31, 2023, was primarily due to the settlement of the Addison Property Owner debt after the sale of Addison Corporate Center in June 2023.

Current wording

Interest expense for the three months ended March 31, 2024 was $1.60 million, of which $0.80 million was incurred on the mortgage notes payable associated with our six commercial properties (First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building) and $0.80 million was incurred on the mortgage notes payable associated with our five residential properties (Commodore Apartments, The Park View, Hollywood Apartments, Shoreline Apartments and Campus Lane Residential). Interest expense for the three months ended March 31, 2023 was $1.91 million, of which $1.23 million was incurred on the notes payable associated with our five commercial properties (Addison Corporate Center, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building and Main Street West Office Building) and $0.68 million was incurred on the mortgage notes payable associated with our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.31 million in interest expense during the three months ended March 31, 2024, was primarily due to the settlement of the Addison Property Owner debt after the sale of Addison Corporate Center in June 2023.

Previous wording

Other 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 December 31, 2023 and 2022, were $0.42 million and $0.38 million, respectively. The increase in other operating expenses was mainly due to the acquisition of three commercial properties (Main Street West, Woodland Corporate Center and 220 Campus Lande Office Building) since December 31, 2022 resulting in higher amount of general and administrative operating expenses during the three months ended December 31, 2023.

Current wording

Other 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, 2024 and 2023, were $0.42 million and $0.42 million, respectively.

Previous wording

During the three months ended December 31, 2023, we recorded a net unrealized gain of $1.83 million, which was net of $2.31 million of unrealized losses reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period that are realized during the current period. Accordingly, the net unrealized losses excluding the reclassification adjustment for the three months ended December 31, 2023 were $0.48 million, which resulted from fair value depreciations of $0.02 million from limited partnership interests, $0.08 million from general partnership interests and $0.38 million from non-traded REIT securities.

Current wording

During the three months ended March 31, 2024, we recorded a net unrealized loss of $0.22 million, which was net of $0.13 million of unrealized losses reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of 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, 2024 were $0.35 million, which resulted from fair value depreciations of $.01 million from limited partnership interests, $0.14 million from general partnership interests and $0.20 million from non-traded REIT securities.

Previous wording

During the three months ended December 31, 2022, we recorded net unrealized loss of $0.83 million, which were net of $0.19 million of unrealized gains reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period that are realized during the current period. Accordingly, the net unrealized loss excluding the reclassification adjustmentfor the three months ended December 31, 2022 were $0.64 million, which resulted from fair value depreciations $0.18 million from limited partnership interests, $0.03 million from general partnership interests, $0.40 million from non-traded REIT securities and $0.03 million from investment trust.

Current wording

During the three months ended March 31, 2023, we recorded net unrealized loss of $11.23 million, which was net of $7.76 million of unrealized gains reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of prior period that are realized during the current period. Accordingly, the net unrealized loss excluding the reclassification adjustmentfor the three months ended March 31, 2023 was $3.47 million, which resulted from fair value depreciations $3.11 million from limited partnership interests, $0.20 million from general partnership interests, and $0.16 million from non-traded REIT securities.

Previous wording

The Operating Partnership is a limited partnership. Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, 220 Campus Lane, and Campus Lane Residential are limited liability companies. First & Main, 1300 Main, Woodland Corporate Center Two, and Main Street West are limited partnerships. Accordingly, all income tax liabilities of these entities flow through to their partners, which ultimately is the Company. Therefore, no income tax provisions are recorded for these entities.

Current wording

The Operating Partnership is a limited partnership. Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, 220 Campus Lane, Campus Lane Residential and Green Valley Executive Center are limited liability companies. First & Main, 1300 Main, Woodland Corporate Center Two, and Main Street West are limited partnerships. Accordingly, all income tax liabilities of these entities flow through to their partners, which ultimately is the Company. Therefore, no income tax provisions are recorded for these entities.

Previous wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the six months ended December 31, 2023, we generated $7.14 million in rental and reimbursements revenues, of which $4.17 million was generated from our six commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building, Woodland Corporate Center Office Building and 220 Campus Lane Office Building), and $2.97 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments and Shoreline Apartments). During the six months ended December 31, 2022, we generated $6.74 million in rental and reimbursements revenues, of which $3.90 million was generated from our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building), and $2.84 million from our four residential apartments (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total increase of $0.40 million in rental revenues during the six months ended December 31, 2023 was mainly due to the acquisition of three commercial properties since December 2022 partly offset by the disposal of Addison Corporate Center in June 2023.

Current wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the nine months ended March 31, 2024, we generated $11.22 million in rental and reimbursements revenues, of which $6.77 million was generated from our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building, Woodland Corporate Center Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building), and $4.45 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments and Shoreline Apartments). During the nine months ended March 31, 2023, we generated $11.21 million in rental and reimbursements revenues, of which $6.78 million was generated from our six commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building and Woodland Corporate Center Two), and $4.43 million from our four residential apartments (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total increase of $0.01 million in rental revenues during the nine months ended March 31, 2024 was mainly due to the acquisition of two office buildings since March 2023 partly offset by the disposal of Addison Corporate Center in June 2023.

Previous wording

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income for the three months ended December 31, 2023 and 2022 was $0.26 million and $0.31 million, respectively. During the three months ended December 31, 2023 we received $0.10 million of distributions from operations, sales, and liquidations as compared to $0.24 million during the three months ended December 31, 2022. The decrease was mainly due to liquidation of Dimension 28, LP in December 2022. During the three months ended December 31, 2023, we received dividends, interest, and other investment income of $0.16 million as compared to $0.07 million received during the three months ended December 31, 2022. This increase was mainly due to increase in interest income from our cash deposits in money market funds during the three months ended December 31, 2023.

Current wording

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income for the nine months ended March 31, 2024 and 2023 was $0.80 million and $10.99 million, respectively. During the nine months ended March 31, 2024, we received $0.28 million of distributions from operations, sales, and liquidations as compared to $10.71 million during the nine months ended March 31, 2023. The decrease was mainly due to liquidation of Dimension 28, LP in December 2022. During the nine months ended March 31, 2024, we received dividends, interest, and other investment income of $0.52 million as compared to $0.28 million received during the nine months ended March 31, 2023. This increase was mainly due to increase in interest income from our cash deposits in money market funds during the nine months ended March 31, 2024.

Previous wording

The asset management fees for the six months ended December 31, 2023 and 2022 were $1.58 million and $1.46 million, respectively. The slight increase was due to total increase of $12.27 in total invested capital from $152.47 million as of December 30, 2022 to $164.74 million as of December 31, 2023.

Current wording

The asset management fees for the nine months ended March 31, 2024 and 2023 were $2.39 million and $2.23 million, respectively. The slight increase was due to total increase of $14.09 in total invested capital from $160.15 million as of March 31, 2023 to $174.24 million as of March 31, 2024.

Previous wording

Under the Advisory Management Agreement, we pay 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. We did not incur any incentive management fee for the six months ended December 31, 2023 and 2022.

Current wording

Under the Advisory Management Agreement, we pay 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. We did not incur any incentive management fee for the nine months ended March 31, 2024 and 2023.

Previous wording

Costs reimbursed to MacKenzie for the six months ended December 31, 2023, were $0.38 million as compared to $0.36 million for the six months ended December 31, 2022. The slight increase was due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to December 31, 2022, as a result of the increase in the number of real estate assets owned by us since December 2022.

Current wording

Costs reimbursed to MacKenzie for the nine months ended March 31, 2024, were $0.57 million as compared to $0.54 million for the nine months ended March 31, 2024. The slight increase was due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to March 31, 2023, as a result of the increase in the number of real estate assets owned by us since March 2023.

Previous wording

Transfer agent cost reimbursements paid to MacKenzie for the six months ended December 31, 2023 and 2022 were $0.03 million and $0.05 million, respectively.

Current wording

Transfer agent cost reimbursements paid to MacKenzie for the nine months ended March 31, 2024 and 2023 were $0.05 million and $0.07 million, respectively.

Previous wording

Operating and maintenance expenses mainly consists 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 and residential real estate assets. During the six months ended December 31, 2023, we incurred operating and maintenance expenses of $2.90 million, of which $1.55 million mainly were incurred in the operation of our six commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building and 220 Campus Lane Office Building) and $1.35 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the six months ended December 31, 2022, we incurred operating and maintenance expenses of $4.12 million, of which $2.88 million mainly were incurred in the operation of our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $1.24 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The decrease in the operating expenses was mainly due to the sale of Addison Property in June 2023 partly offset by the acquisitions of three new office buildings (Main Street West, Woodland Corporate Center and 220 Campus Lane Office Building) since December 31, 2022.

Current wording

Operating and maintenance expenses mainly consists 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 and residential real estate assets. During the nine months ended March 31, 2024, we incurred operating and maintenance expenses of $4.70 million, of which $2.63 million mainly were incurred in the operation of our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building) and $2.07 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the nine months ended March 31, 2023, we incurred operating and maintenance expenses of $6.66 million, of which $4.75 million mainly were incurred in the operation of our six commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West and Woodland Corporate Center Two office buildings) and $1.91 million from our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The decrease in the operating expenses was mainly due to the sale of Addison Property in June 2023 partly offset by the acquisitions of two new office buildings (220 Campus Lane Office Building and Green Valley Executive Center Office Building) since March 31, 2023.

Previous wording

During the six months ended December 31, 2023, we recorded depreciation and amortization of $3.12 million, of which $2.03 million was attributable to the depreciation and amortization of real estate and intangible assets of our six commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building and 220 Campus Lane Office Building) and $1.09 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the six months ended December 31, 2022, we recorded depreciation and amortization of $2.08 million, of which $0.93 million was attributable to the depreciation and amortization of real estate and intangible assets of our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $1.15 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The increase in total depreciation and amortization of $0.40 million during the six months ended December 31, 2023 was due to the acquisitions of three new office buildings (Main Street West, Woodland Corporate Center and 220 Campus Lane) since December 31, 2022.

Current wording

During the nine months ended March 31, 2024, we recorded depreciation and amortization of $5.03 million, of which $3.40 million was attributable to the depreciation and amortization of real estate and intangible assets of our seven commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building) and $1.63 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). During the nine months ended March 31, 2023, we recorded depreciation and amortization of $3.74 million, of which $2.02 million was attributable to the depreciation and amortization of real estate and intangible assets of our five commercial properties (Satellite Place Office Building, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building and Woodland Corporate Center Office Building) and $1.72 million was attributable to our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The increase in total depreciation and amortization of $1.29 million during the nine months ended March 31, 2024 was due to the acquisitions of two new office buildings (220 Campus Lane Office Building and Green Valley Executive Center Office Building) since March 31, 2023. The sale of Addison Corporate Center in June 2023, which was previously held for sale and not depreciated, did not contribute to the overall increase.

Previous wording

Interest expense for the six months ended December 31, 2023 was $2.77 million, of which $1.27 million was incurred on the notes payable associated with our five commercial properties (First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building and 220 Campus Lane Building) and $1.50 million was incurred on the mortgage notes payable associated our five residential properties (Commodore Apartments, The Park View, Hollywood Apartments, Shoreline Apartments and Campus Lane Residential). Interest expense for the six months ended December 31, 2022 was $3.26 million, of which $1.67 million was incurred on the notes payable associated with our four commercial properties (Addison Corporate Center, Satellite Place Office Building, First & Main Office Building and 1300 Main Office Building) and $1.59 million was incurred on the mortgage notes payable associated our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.49 million in interest expense during the six months ended December 31, 2023, was primarily due to the settlement of the Addison Property Owner debt after the sale of Addison Corporate Center in June 2023.

Current wording

Interest expense for the nine months ended March 31, 2024 was $4.38 million, of which $2.06 million was incurred on the notes payable associated with our six commercial properties (First & Main Office Building, 1300 Main Office Building, Woodland Corporate Center Office Building, Main Street West Office Building, 220 Campus Lane Office Building and Green Valley Executive Center Office Building) and $2.32 million was incurred on the mortgage notes payable associated with our five residential properties (Commodore Apartments, The Park View, Hollywood Apartments, Shoreline Apartments and Campus Lane Residential). Interest expense for the nine months ended March 31, 2023 was $5.17 million, of which $2.90 million was incurred on the notes payable associated with our five commercial properties (Addison Corporate Center, First & Main Office Building, 1300 Main Office Building, Main Street West Office Building and Woodland Corporate Center Office Building) and $2.27 million was incurred on the mortgage notes payable associated our four residential properties (Commodore Apartments, The Park View, Hollywood Apartments, and Shoreline Apartments). The total decrease of $0.79 million in interest expense during the nine months ended March 31, 2024, was primarily due to the settlement of the Addison Property Owner debt after the sale of Addison Corporate Center in June 2023.

Previous wording

Other operating expenses include professional fees, directors’ fees, printing and mailing expenses, and other general and administrative expenses. Other operating expenses for the six months ended December 31, 2023 and 2022, were $0.97 million and $0.71 million, respectively. The increase in other operating expenses was mainly due to the acquisition of three commercial properties (Main Street West, Woodland Corporate Center and 220 Campus Lane Office Building) since December 31, 2022 resulting in higher amount of general and administrative operating expenses during the six months ended December 31, 2023.

Current wording

Other operating expenses include professional fees, directors’ fees, printing and mailing expenses, and other general and administrative expenses. Other operating expenses for the nine months ended March 31, 2024 and 2023, were $1.40 million and $1.13 million, respectively. The increase in other operating expenses was mainly due to the acquisition of two commercial properties (220 Campus Lane Office Building and Green Valley Executive Center Office Building ) since March 31, 2023 resulting in a higher amount of general and administrative operating expenses during the nine months ended March 31, 2024.

Previous wording

During the six months ended December 31, 2023, we recorded a net realized loss on investments of $1.29 million as compared to $0.83 million during the six months ended December 31, 2022. Total net realized loss for the six months ended December 31, 2023, was realized from a limited partnership interest write-off (BP 3 affiliates) with a realized loss of $1.67 million offset by a realized gain from sale of one non-traded REIT securities with a realized gain of $0.38 million. The total net realized gain for the six months ended December 31, 2022, was realized from sales of publicly traded REIT securities with realized gains of $0.01 million, six non-traded REIT securities with a total realized gain of $0.44 million, a limited partnership interest with realized gains of $0.33 million and investment trust of $0.05.

Current wording

During the nine months ended March 31, 2024, we recorded a net realized loss on investments of $1.55 million as compared to $0.83 million net realized gain during the nine months ended March 31, 2023. Total net realized loss for the nine months ended March 31, 2024, was realized from a limited partnership interest write-off (BP 3 affiliates) with a realized loss of $1.67 million offset by the sale of three non-traded REIT securities with a realized gain of $0.12 million. The total net realized gain for the nine months ended March 31, 2023, was realized from sale of a publicly traded REIT security with realized gain of $0.01 million, six non-traded REIT securities with a total realized gain of $0.44 million, a limited partnership interest with realized gains of $0.33 million and an investment trust of $0.05 million.

Previous wording

During the six months ended December 31, 2023, we recorded a net unrealized loss of $0.44 million, which was net of a $2.31 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 loss excluding the reclassification adjustment for the six months ended December 31, 2023 was $2.75 million, which resulted from fair value depreciations of $0.51 million from general partnership interests, $1.11 million from non-traded REIT securities and $1.13 million from limited partnership interests.

Current wording

During the nine months ended March 31, 2024, we recorded a net unrealized loss of $0.66 million, which was net of a $2.44 million 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 loss excluding the reclassification adjustment for the nine months ended March 31, 2024 was $3.10 million, which resulted from fair value depreciations of $0.65 million from general partnership interests, $1.31 million from non-traded REIT securities and $1.14 million from limited partnership interests.

Previous wording

During the six months ended December 31, 2022, we recorded a net unrealized gain of $2.01 million, which was net of a $0.68 million of unrealized gains 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 adjustmentfor the six months ended December 31, 2022, were $2.69 million, which resulted from fair value appreciations of $2.81 million from limited partnership interests, and $0.62 million from general partnership interests, and fair value depreciations of $0.74 million from non-traded REIT securities.

Current wording

During the nine months ended March 31, 2023, we recorded a net unrealized loss of $9.22 million, which was net of a $8.44 million of unrealized gains 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 adjustmentfor the nine months ended March 31, 2023, were $0.78 million, which resulted from fair value appreciations of $0.42 million from general partnership interests and fair value depreciations of $0.90 million from non-traded REIT securities and $0.30 million from limited partnership interests.

Previous wording

Income tax provision for six months ended December 31, 2023, and 2022 are discussed above under the three months ended section.

Current wording

Income tax provision for nine months ended March 31, 2024, and 2023 are discussed above under the three months ended section.

Previous wording

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 three public offerings: $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020. In addition, we have raised $15.10 million from the issuance of common shares under the DRIP as of December 31, 2023. Out of the total proceeds from DRIP, we have utilized a total of $14.28 million to repurchase common stocks under the Share Repurchase Program. In November 2021, the SEC qualified our Offering Circular pursuant to Regulation A to sell up to $50,000,000 of shares of our Series A preferred stock at an initial offering price of $25.00 per share. On October 14, 2022, we amended our Offering Circular and increased the offering to sell up to $75 million of shares of our Series A preferred stock. On November 1, 2023, we further amended our Offering Circular to sell an aggregate of up to $3 million of shares of either our Series A preferred stock or our Series B preferred stock. This post-effective amendment to the Offering Circular was declared effective on November 14, 2023. We had raised $18.08 million through the sale of our Series A preferred stock and $0.10 million Series B preferred stock pursuant to the Offering Circular as of December 31, 2023. In addition, we have raised $0.16 million from the issuance of Series A preferred shares under the DRIP. 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. 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. In addition, from time to time, we may draw on the Company’s margin line of credit on a temporary basis to bridge our investment purchases and sales or capital raising. For additional information concerning our margin borrowing activity, please see Note 9 - Margin Loans in the financial statements included in this report.

Current wording

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 three public offerings: $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020. In addition, we have raised $15.56 million from the issuance of common shares under the DRIP as of March 31, 2024. Out of the total proceeds from DRIP, we have utilized a total of $14.28 million to repurchase common stocks under the Share Repurchase Program. In November 2021, the SEC qualified our Offering Circular pursuant to Regulation A to sell up to $50,000,000 of shares of our Series A preferred stock at an initial offering price of $25.00 per share. On October 14, 2022, we amended our Offering Circular and increased the offering to sell up to $75 million of shares of our Series A preferred stock. On November 1, 2023, we further amended our Offering Circular to sell an aggregate of up to $3 million of shares of either our Series A preferred stock or our Series B preferred stock. This post-effective amendment to the Offering Circular was declared effective on November 14, 2023. We had raised $18.37 million through the sale of our Series A preferred stock and $0.41 million Series B preferred stock pursuant to the Offering Circular as of March 31, 2024. In addition, we have raised $0.21 million from the issuance of Series A preferred shares under the DRIP. 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. 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. In addition, from time to time, we may draw on the Company’s margin line of credit on a temporary basis to bridge our investment purchases and sales or capital raising. For additional information concerning our margin borrowing activity, please see Note 9 - Margin Loans in the financial statements included in this report.

Previous wording

We finished the three months ended December 31, 2023, with cash and cash equivalents, restricted cash, and receivables of approximately $14.14 million and $3.78 million of current liabilities. Because of our strong liquidity and the liquidity preservation measures taken by the board, we are currently capable of meeting all of our obligations and continuing our operations for the foreseeable future. We intend to continue to qualify as a REIT and to meet the associated testing requirements, including paying out at least 90% of our taxable income.

Current wording

We finished the three months ended March 31, 2024, with cash and cash equivalents, restricted cash, and receivables of approximately $18.05 million and $4.59 million of current liabilities. Because of our strong liquidity and the liquidity preservation measures taken by the board, we are currently capable of meeting all of our obligations and continuing our operations for the foreseeable future. We intend to continue to qualify as a REIT and to meet the associated testing requirements, including paying out at least 90% of our taxable income.

Previous wording

For the six months ended December 31, 2023, we experienced a net decrease in cash of $5.10 million. During this period, we used cash of $2.57 million in our investing activities, $1.94 million in our financing activities and $0.59 million in our operating activities.

Current wording

For the nine months ended March 31, 2024, we experienced a net decrease in cash of $1.99 million. During this period, we used cash of $2.90 million in our financing activities and generated $0.75 million in our investing activities and $0.16 million in our operating activities.