MacKenzie Realty Capital, Inc.

Previous wording

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

Current wording

In addition to our investment securities, we currently own and manage nine commercial real estate properties: Satellite Place Office Building located in Duluth, GA, 1300 Main Office Building, First & Main Office Building and Main Street West Office Building located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane Office Building, Green Valley Medical Center and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and four residential apartments: Commodore Apartments and The Park View Apartments, located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments in Concord, CA.

Previous wording

1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical Center are owned through our subsidiary, the Operating Partnership; the Commodore Apartments are owned through our subsidiary Madison; the Park View (f/k/a as Pon De Leo Apartments) is owned through our subsidiary PVT and Satellite Place Office Building is owned through our subsidiary MacKenzie Satellite Place Corp. In August 2024, we listed Hollywood Apartments for sale; however, as of February 1, 2025, management decided to discontinue marketing Hollywood Apartments and terminated the listing.

Current wording

1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical Center are owned through our subsidiary, the Operating Partnership; the Commodore Apartments are owned through our subsidiary Madison; The Park View Apartments is owned through our subsidiary PVT and Satellite Place Office Building is owned through our subsidiary MacKenzie Satellite Place Corp. In August 2024, the Company listed Hollywood Apartments for sale. However, as of February 1, 2025, we discontinued marketing the property for sale and opted to retain ownership and continue operations. As a result, it no longer qualifies as held for sale.

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, 2024, the property is 89% occupied by 8 tenants. AUL Corporation has elected to terminate its lease as of February 3, 2025. During the six months ended December 31, 2024, 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 ongoing foreclosure proceedings due to maturity default of the debt secured by the property. The following table shows the largest tenants and square footage occupied:

Current wording

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, 2025, the property is 53% occupied by 8 tenants. AUL Corporation has elected to terminate its lease as of February 3, 2025. During the nine months ended March 31, 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 Lender. As part of the Forbearance Agreement, the Company paid down $5 million on the loan and took control of the property from the receiver. Subject to performance by the Company, the Lender agreed to forbear until the forbearance termination date of September 30, 2025, from taking any further foreclosure actions. 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, 2024, the property is approximately 71% occupied by 4 tenants. OS National, LLC has elected to terminate its lease early as of December 31, 2024 from its original lease expiration of December 31, 2029. 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, 2025, the property is approximately 29% occupied by 4 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

The following information pertains to lease expirations at Woodland Corporate Center Office Building:

Current wording

The following information pertains to lease expirations at Woodland Corporate Center:

Previous wording

Green Valley Executive Center contains 46,101 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space. As of December 31, 2024, the property is 96% occupied by 16 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

Green Valley Executive Center contains 46,101 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space. As of March 31, 2025, the property is 100% occupied by 16 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

The following information pertains to lease expirations at Green Valley Executive Center Office Building:

Current wording

The following information pertains to lease expirations at Green Valley Executive Center:

Previous wording

One Harbor Center contains 49,569 square feet, all of which is office space. As of December 31, 2024, the property is 90% occupied by 12 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

One Harbor Center contains 49,569 square feet, all of which is office space. As of March 31, 2025, the property is 74% occupied by 11 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

Green Valley Medical Center contains 31,590 square feet of which approximately 19,000 square feet is office space, approximately 8,300 square feet is health care space, and the remainder is designated as retail space. As of December 31, 2024, the property is 80% occupied by 12 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

Green Valley Medical Center contains 31,590 square feet of which approximately 19,000 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, 2025, the property is 94% 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, 2024, Commodore Apartments is approximately 93.8% occupied. The Park View (f/k/a as Pon De Leo Apartments) is also a mid-rise apartment building built in 1929 and has 39 units. As of December 31, 2024, The Park View (f/k/a as Pon De Leo Apartments) is approximately 92.3% occupied. Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54 units. The property contains approximately 37,000 square feet of net rentable apartment area and 8,910 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. The Hollywood Apartments units are 81.5% occupied as of December 31, 2024. Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of December 31, 2024, Shoreline Apartments building is approximately 89.3% occupied.

Current wording

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of March 31, 2025, Commodore Apartments is approximately 91.7% occupied. The Park View Apartments is also a mid-rise apartment building built in 1929 and has 39 units. As of March 31, 2025, The Park View Apartments is approximately 89.7% occupied. Hollywood Apartments, 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 8,610 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. The apartments units are 94.4% occupied as of March 31, 2025. Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of March 31, 2025, Shoreline Apartments building is approximately 92.9% 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, 2024, six tenants are leasing space totaling 12,264 square feet or 28.4% of the building. The annualized base rent for these tenants is $393,292.

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, 2025, 7 tenants are leasing space totaling 12,404 square feet or 28.7% of the building. The annualized base rent for these tenants is $412,300.

Previous wording

We are actively constructing a multi-family residential community on this land which will include 72 units in three buildings, and a club house. The city’s planning commission approved our development project in September 2023, and we obtained all necessary building permits in August 2024 and the building construction phase commenced in September 2024. Construction is progressing on schedule and on budget. In February 2024, we commenced selling preferred units in MRC Aurora with the goal of raising $10 million in preferred capital and closed on a construction loan of $17.15 million. We have raised $4.36 million in preferred capital from outside investors as of the date of this report.

Current wording

We are actively constructing a multi-family residential community on this land which will include 72 units in three buildings, and a club house. The city’s planning commission approved our development project in September 2023, and we obtained all necessary building permits in August 2024 and the building construction phase commenced in September 2024. Construction is progressing on schedule and on budget. The clubhouse is scheduled to open in mid-June 2025 for pre-leasing activities. The first of the three residential buildings should be completed with certificate of occupancy issued by mid to late July 2025, with each of the remaining two residential buildings scheduled to open shortly thereafter. In February 2024, we commenced selling preferred units in MRC Aurora with the goal of raising $10 million in preferred capital to fund the construction of the project and we have raised $6.58 million in preferred capital from outside investors as of the date of this report. In addition, we closed on a construction loan of $17.15 million with Valley Strong Credit Union in February 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 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.

Current wording

We currently do not have plans for any major renovation or development of any properties except for our 220 Campus Lane Office Building, Aurora at Green Valley and 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.

Previous wording

Our consolidated office properties, 1300 Main Office Building, First and 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, which also must compete with every other office property in the market.

Current wording

Our consolidated office properties, 1300 Main Office Building, First and 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.

Previous wording

Recently, the broader economy began experiencing increased levels of inflation, higher interest rates and tightening monetary and fiscal policies, although inflation has now moderated and interest rates have begun to come back down some. The Federal Reserve increased the federal funds rate multiple times in 2022 and 2023 then paused hikes in earlier part of 2024 before implementing rate cuts in the fourth quarter. 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.

Current wording

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. 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.

Previous wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the three months ended December 31, 2024, we generated $8.03 million in rental and reimbursements revenues, of which $6.57 million was generated from our nine commercial properties and $1.46 million was generated from our four residential 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, and $1.48 million was generated from our four residential properties. The total increase in rental revenues was mainly due to the acquisition of three office buildings (Green Valley Executive Center, One Harbor Center and Green Valley Medical Center) since December 31, 2023 and an early lease termination income of $3.0 million received from one of the tenants at our Satellite Place Office Building in December 2024.

Current wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the three months ended March 31, 2025, we generated $4.27 million in rental and reimbursements revenues, of which $2.81 million was generated from our nine commercial properties and $1.46 million was generated from our four residential 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, and $1.48 million was generated from our four residential properties. The total increase in rental revenues was mainly due to the acquisition of two office buildings (One Harbor Center and Green Valley Medical Center) since March 31, 2024.

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, 2024 and 2023 was $0.02 million and $0.26 million, respectively. During the three months ended December 31, 2024, we received minimal distributions from operations, sales, and liquidations as compared to $0.10 million during the three months ended December 31, 2023. The decrease was mainly due to the decrease in distributions received from investments. During the three months ended December 31, 2024, we received dividends, interest, and other investment income of $0.02 million as compared to $0.16 million received during the three months ended December 31, 2023. This decrease was mainly due to decrease in interest income from our cash deposits in money market funds during the three months ended December 31, 2024.

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, 2025 and 2024 was $0.01 million and $0.22 million, respectively. During the three months ended March 31, 2025, we received minimal distributions from operations, sales, and liquidations as compared to $0.08 million during the three months ended March 31, 2024. The decrease was mainly due to the decrease in distributions received from investments. During the three months ended March 31, 2025, we received dividends, interest, and other investment income of $0.01 million as compared to $0.14 million received during the three months ended March 31, 2024. This decrease was mainly due to decrease in interest income from our cash deposits in money market funds during the three months ended March 31, 2025 as we withdrew all of the deposits during 2024.

Previous wording

The asset management fees for the three months ended December 31, 2024 and 2023 were $0.86 million and $0.79 million, respectively. The slight increase was due to total increase of $17.92 million in total invested capital from $164.74 million as of December 31, 2023 to $182.66 million as of December 31, 2024.

Current wording

The asset management fees for the three months ended March 31, 2025 and 2024 were $0.86 million and $0.81 million, respectively. The slight increase was due to total increase of $10.58 million in total invested capital from $174.24 million as of March 31, 2024 to $184.82 million as of March 31, 2025.

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, 2024, we incurred operating and maintenance expenses of $1.71 million, of which $1.07 million were incurred in the operation of our nine commercial properties and $0.64 million were incurred in the operation of our four residential properties. 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 and $0.66 million from our four residential properties. The increase in the operating expenses was mainly due to the acquisitions of three new office buildings (Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023.

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, 2025, we incurred operating and maintenance expenses of $1.89 million, of which $1.19 million were incurred in the operation of our nine commercial properties and $0.70 million were incurred in the operation of our four residential properties. 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 and $0.72 million from our four residential properties. The increase in the operating expenses was mainly due to the acquisitions of two new office buildings (One Harbor Center and Green Valley Medical Center) since March 31, 2024.

Previous wording

During the three months ended December 31, 2024, we recorded depreciation and amortization of $2.18 million, of which $1.79 million was attributable to the depreciation and amortization of real estate and intangible assets of our nine commercial properties and $0.39 million was attributable to our four residential properties. 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 and $0.54 million was attributable to our four residential properties. The increase in total depreciation and amortization of $0.62 million during the three months ended December 31, 2024 was due to the acquisitions of three new office buildings (Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023.

Current wording

During the three months ended March 31, 2025, we recorded depreciation and amortization of $2.63 million, of which $1.89 million was attributable to the depreciation and amortization of real estate and intangible assets of our nine commercial properties and $0.74 million was attributable to our four residential properties. 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 and $0.54 million was attributable to our four residential properties. The increase in total depreciation and amortization of $0.72 million during the three months ended March 31, 2025, was due to the acquisitions of two new office buildings (One Harbor Center and Green Valley Medical Center) since March 31, 2024.

Previous wording

Interest expense for the three months ended December 31, 2024 was $1.97 million, of which $1.38 million was incurred on the mortgage notes payable associated with our nine commercial properties and $0.59 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential. 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, which exclude Satellite Place Office Building since there was no debt on the property during the three months ended December 31, 2023, and $0.82 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential. The total increase of $0.52 million in interest expense during the three months ended December 31, 2024, was primarily due to the additional mortgage notes payable of four office buildings (Satellite Place Office Building, Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023.

Current wording

Interest expense for the three months ended March 31, 2025 was $2.66 million, of which $1.27 million was incurred on the mortgage notes payable associated with our nine commercial properties, $1.29 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential, and $0.10 million was incurred on the line of credit agreement of the Company. 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, which exclude Satellite Place Office Building since there was no debt on the property during the three months ended March 31, 2024, and $0.80 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential. The total increase of $1.06 million in interest expense during the three months ended March 31, 2025, was primarily due to the additional mortgage notes payable of three office buildings (Satellite Place Office Building, One Harbor Center and Green Valley Medical Center) since March 31, 2024, Main Street West loan accruing at a default rate of 8% since the maturity date of November 2024 as compared to 4% prior to the maturity date, and Hollywood Apartments incurring loan maturity extension fees and loan refinancing fees in 2025. A small increase was attributed to the Parent Company borrowing under the new line of credit.

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, 2024 and 2023, were $0.61 million and $0.42 million, respectively. The increase in other operating expenses was mainly due to the acquisition of three commercial properties (Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023, resulting in a higher amount of general and administrative operating expenses during the three months ended December 31, 2024.

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, 2025 and 2024, were $1.89 million and $0.42 million, respectively. The increase in other operating expenses was due to the acquisition of two commercial properties (One Harbor Center and Green Valley Medical Center) since March 31, 2024, resulting in a higher amount of general and administrative operating expenses, and new consulting and marketing services expenses incurred by the Company during the three months ended March 31, 2025.

Previous wording

During the three months ended December 31, 2024, we recorded a realized gain of $0.06 million as compared to $1.29 million net realized loss during the three months ended December 31, 2023. Total realized gain for three months ended December 31, 2024, was realized from the sale of two non-traded REIT securities. Total net realized loss for the three months ended December 31, 2023, resulted from a realized gain on the sale of one non-traded REIT security, offset by a realized loss from the write-off of a limited partnership interest.

Current wording

During the three months ended March 31, 2025, we recorded a realized gain of $0.02 million as compared to $0.26 million net realized loss during the three months ended March 31, 2024. Total realized gain for three months ended March 31, 2025, was realized from the sale of a non-traded REIT security and a limited partnership interest. Total net realized loss for the three months ended March 31, 2024, was realized from sales of three non-traded REIT securities.

Previous wording

During the six months ended December 31, 2024, we recorded a net unrealized loss of $0.12 million, which was net of $0.14 million of unrealized gain 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 gain excluding the reclassification adjustment for the six months ended December 31, 2024, were $0.02 million, which resulted from fair value depreciations of $0.11 million from general partnership interests, fair value appreciations of $0.12 million from non-traded REIT securities and $0.01 million from limited partnership interests.

Current wording

During the three months ended March 31, 2025, we recorded a net unrealized loss of $0.29 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 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.

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 adjustments. 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 adjustments 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 adjustments. 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 adjustments for the three months ended March 31, 2024, were $0.35 million, which resulted from fair value depreciations of $0.01 million from limited partnership interests, $0.14 million from general partnership interests and $0.20 million from non-traded REIT securities.

Previous wording

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2023. Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2023. Similarly, for the tax year 2024, the Parent Company paid the requisite amounts of dividends during the year and met 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 2024.

Current wording

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2024. Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2024. In addition, for the tax year 2025, the Parent Company intends to pay the requisite amounts of dividends during the year and meet other REIT requirements such that the Parent Company will not owe any income taxes. Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2025.

Previous wording

MacKenzie NY 2 is subject to corporate federal and state income tax on its taxable income at regular statutory rates. As of December 31, 2024, it did not have any taxable income for tax year 2024. Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2024. MacKenzie Satellite is a qualified REIT subsidiary of the Parent Company. Therefore, it does not file a separate tax return.

Current wording

MacKenzie NY 2 is subject to corporate federal and state income tax on its taxable income at regular statutory rates. As of March 31, 2025, it did not have any taxable income for tax year 2024 and 2025. Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2024 and 2025. MacKenzie Satellite is a qualified REIT subsidiary of the Parent Company. Therefore, it does not file a separate tax return.

Previous wording

The commercial and residential properties owned by us during the six months ended December 2024 and 2023 are as follows:

Current wording

The commercial and residential properties owned by us during the nine months ended March 2025 and 2024 are as follows:

Previous wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the six months ended December 31, 2024, we generated $12.98 million in rental and reimbursements revenues, of which $10.03 million was generated from our nine commercial properties and $2.95 million was generated from our four residential 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, and $2.97 million was generated from our four residential properties. The total increase in rental revenues was mainly due to the acquisition of three office buildings (Green Valley Executive Center, One Harbor Center and Green Valley Medical Center) since December 31, 2023, and an early lease termination income of $3 million received from one of the tenants at our Satellite Place Office Building in December 2024.

Current wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the nine months ended March 31, 2025, we generated $17.26 million in rental and reimbursements revenues, of which $12.84 million was generated from our nine commercial properties and $4.42 million was generated from our four residential 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, and $4.45 million was generated from our four residential properties. The total increase in rental revenues was mainly due to the acquisition of two office buildings (One Harbor Center and Green Valley Medical Center) since March 31, 2024, and an early lease termination income of $3 million received from one of the tenants at our Satellite Place Office Building in December 2024.

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, 2024 and 2023, was $0.04 million and $0.58 million, respectively. During the six months ended December 31, 2024, we received minimal distributions from operations, sales, and liquidations as compared to $0.20 million during the six months ended December 31, 2023. The decrease was mainly due to the decrease in distributions received from investments. During the six months ended December 31, 2024, we received dividends, interest, and other investment income of $0.04 million as compared to $0.38 million received during the six months ended December 31, 2023. This decrease was mainly due to decrease in interest income from our cash deposits in money market funds during the six months ended December 31, 2024.

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, 2025 and 2024, was $0.05 million and $0.80 million, respectively. During the nine months ended March 31, 2025, we received minimal distributions from operations, sales, and liquidations as compared to $0.28 million during the nine months ended March 31, 2024. The decrease was mainly due to the decrease in distributions received from investments. During the nine months ended March 31, 2025, we received dividends, interest, and other investment income of $0.05 million as compared to $0.52 million received during the nine months ended March 31, 2024. This decrease was mainly due to decrease in interest income from our cash deposits in money market funds during the nine months ended March 31, 2025.

Previous wording

The asset management fees for the six months ended December 31, 2024 and 2023, were $1.71 million and $1.58 million, respectively. The slight increase was due to total increase of $17.92 million in total invested capital from $164.74 million as of December 31, 2023 to $182.66 million as of December 31, 2024.

Current wording

The asset management fees for the nine months ended March 31, 2025 and 2024, were $2.57 million and $2.39 million, respectively. The slight increase was due to total increase of $10.58 million in total invested capital from $174.24 million as of March 31, 2024 to $184.82 million as of March 31, 2025.

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, 2024 and 2023.

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, 2025 and 2024.

Previous wording

Costs reimbursed to MacKenzie for the six months ended December 31, 2024 were $0.33 million as compared to $0.38 million for the six months ended December 31, 2023. The slight decrease was due to a decrease in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to December 31, 2023, mainly due to hiring of a third party transfer service agent since December 31, 2023.

Current wording

Costs reimbursed to MacKenzie for the nine months ended March 31, 2025 were $0.50 million as compared to $0.57 million for the nine months ended March 31, 2024. The slight decrease was due to a decrease in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to March 31, 2024, mainly due to hiring of a third party transfer service agent since March 31, 2024.

Previous wording

There were minimal transfer agent cost reimbursements paid to MacKenzie for the six months ended December 31, 2024. Transfer agent cost reimbursements paid to MacKenzie for the six months ended December 31, 2023 was $0.03 million.

Current wording

There were minimal transfer agent cost reimbursements paid to MacKenzie for the nine months ended March 31, 2025. Transfer agent cost reimbursements paid to MacKenzie for the nine months ended March 31, 2024 was $0.05 million.

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 six months ended December 31, 2024, we incurred operating and maintenance expenses of $3.59 million, of which $2.27 million were incurred in the operation of our nine commercial properties and $1.32 million were incurred in the operation of our four residential properties. During the six months ended December 31, 2023, we incurred operating and maintenance expenses of $2.90 million, of which $1.55 million were incurred in the operation of our six commercial properties and $1.35 million from our four residential properties. The increase in the operating expenses was mainly due to the acquisitions of three new office buildings (Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023.

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 nine months ended March 31, 2025, we incurred operating and maintenance expenses of $5.48 million, of which $3.46 million were incurred in the operation of our nine commercial properties and $2.02 million were incurred in the operation of our four residential properties. During the nine months ended March 31, 2024, we incurred operating and maintenance expenses of $4.70 million, of which $2.63 million were incurred in the operation of our seven commercial properties and $2.07 million from our four residential properties. The increase in the operating expenses was mainly due to the acquisitions of two new office buildings (One Harbor Center and Green Valley Medical Center) since March 31, 2024.

Previous wording

During the six months ended December 31, 2024, we recorded depreciation and amortization of $4.46 million, of which $3.57 million was attributable to the depreciation and amortization of real estate and intangible assets of our nine commercial properties and $0.89 million was attributable to our four residential properties. 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 and $1.09 million was attributable to our four residential properties. The increase in total depreciation and amortization of $1.34 million during the six months ended December 31, 2024, was due to the acquisitions of three new office buildings (Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023.

Current wording

During the nine months ended March 31, 2025, we recorded depreciation and amortization of $7.09 million, of which $5.45 million was attributable to the depreciation and amortization of real estate and intangible assets of our nine commercial properties and $1.64 million was attributable to our four residential properties. 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 and $1.63 million was attributable to our four residential properties. The increase in total depreciation and amortization of $2.06 million during the nine months ended March 31, 2025, was due to the acquisitions of two new office buildings (One Harbor Center and Green Valley Medical Center) since March 31, 2024.

Previous wording

Interest expense for the six months ended December 31, 2024, was $3.86 million, of which $2.54 million was incurred on the mortgage notes payable associated with our nine commercial properties and $1.32 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential. Interest expense for the six months ended December 31, 2023, was $2.77 million, of which $1.27 million was incurred on the mortgage notes payable associated with our five commercial properties, which exclude Satellite Place Office Building since there was no debt on the property during the six months ended December 31, 2023, and $1.50 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential. The total increase of $1.09 million in interest expense during the six months ended December 31, 2024, was primarily due to the additional mortgage notes payable of four office buildings (Satellite Place Office Building, Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023.

Current wording

Interest expense for the nine months ended March 31, 2025, was $6.52 million, of which $3.80 million was incurred on the mortgage notes payable associated with our nine commercial properties, $2.62 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential, and $0.10 million was incurred on the line of credit agreement of the Company. Interest expense for the nine months ended March 31, 2024, was $4.38 million, of which $2.06 million was incurred on the mortgage notes payable associated with our six commercial properties, which exclude Satellite Place Office Building since there was no debt on the property during the nine months ended March 31, 2024, and $2.32 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Residential. The total increase of $2.14 million in interest expense during the nine months ended March 31, 2025, was due to the additional mortgage notes payable of three office buildings (Satellite Place Office Building, One Harbor Center and Green Valley Medical Center) since March 2024, Main Street West loan accruing at a default rate of 8% since the debt maturity date of November 2024 as compared to 4% prior to the maturity date, and Hollywood Apartments incurring loan maturity extension fees and loan refinancing fees in 2025. A small increase was attributed to the Parent Company’s borrowing under the new line of credit.

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 six months ended December 31, 2024 and 2023, were $1.53 million and $0.97 million, respectively. The increase in other operating expenses was mainly due to the acquisition of three commercial properties (Green Valley Executive Center, One Harbor Center, and Green Valley Medical Center) since December 31, 2023, resulting in a higher amount of general and administrative operating expenses during the six months ended December 31, 2024.

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 nine months ended March 31, 2025 and 2024, were $3.41 million and $1.40 million, respectively. The increase in other operating expenses was mainly due to the acquisition of two commercial properties (One Harbor Center and Green Valley Medical Center) since March 2024, and new consulting and marketing services expenses incurred by the Company during the nine months ended March 31, 2024, resulting in a higher amount of general and administrative operating expenses during the nine months ended March 31, 2025.

Previous wording

During the six months ended December 31, 2024, we recorded a realized gain of $0.21 million as compared to $1.29 million net realized loss during the six months ended December 31, 2023. Total realized gain for six months ended December 31, 2024, was realized from the sale of two non-traded REIT securities. Total net realized loss for the six months ended December 31, 2023, resulted from a realized gain on the sale of one non-traded REIT security, offset by a realized loss from the write-off of a limited partnership interest.

Current wording

During the nine months ended March 31, 2025, we recorded a realized gain of $0.23 million as compared to $1.55 million net realized loss during the nine months ended March 31, 2024. Total realized gain for nine months ended March 31, 2025, was realized from the sale of two non-traded REIT securities and a limited partnership interest. Total net realized loss for the nine months ended March 31, 2024, was realized from a limited partnership interest write-off, offset by the sale of three non-traded REIT securities.

Previous wording

During the three months ended December 31, 2024, we recorded a net unrealized gain of $0.02 million, which was net of $0.03 million of unrealized gain 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 gains excluding the reclassification adjustment for the three months ended December 31, 2024, were $0.05 million, which resulted from fair value appreciations of $0.01 million from general partnership interests, $0.02 million from limited partnership interests and $0.02 million from non-traded REIT securities.

Current wording

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 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.