MacKenzie Realty Capital, Inc.

Previous wording

Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the Investment Company Act of 1940 (the “1940 Act”), but we withdrew our election to be treated as a BDC on December 31, 2020. Our objective remains to generate both current income and capital appreciation through real estate-related investments. We have elected to be treated as a REIT under the Code and, as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meet certain other conditions. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Our wholly owned subsidiary, MacKenzie NY Real Estate 2 Corp. (“MacKenzie NY 2”), is subject to corporate federal and state income tax on its taxable income at regular statutory rates.

Current wording

Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the Investment Company Act of 1940 (the “1940 Act”), but we withdrew our election to be treated as a BDC on December 31, 2020. Our objective remains to generate both current income and capital appreciation through real estate-related investments. We have elected to be treated as a REIT under the Code and, as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meet certain other conditions. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Our wholly owned subsidiary, MacKenzie NY 2, is subject to corporate federal and state income tax on its taxable income at regular statutory rates.

Previous wording

Aurora at Green Valley is owned through our subsidiary MRC Aurora, LLC. 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical Center are owned through our subsidiary, the Operating Partnership; Commodore Apartments are owned through our subsidiary, Madison; The Park View Apartments is owned through our subsidiary, PVT and Satellite Place Office Building is owned through our subsidiary, MacKenzie Satellite Place Corp. In October 2025, we listed Woodland Corporate Center Two for sale.

Current wording

Aurora at Green Valley is owned through our subsidiary MRC Aurora. 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical Center are owned through our subsidiary, the Operating Partnership; Commodore Apartments are owned through our subsidiary, Madison; The Park View Apartments is owned through our subsidiary, PVT and Satellite Place Office Building is owned through our subsidiary, MacKenzie Satellite. In October 2025, we listed Woodland Corporate Center Two for sale.

Previous wording

We believe the market values office properties differently than the market values multi-family properties. More specifically, the market discounts office properties because of recent, widespread vacancies in office buildings. We believe the market views those vacancies as pervasive even though most of our office properties have high occupancy levels, as disclosed below. The market does not similarly discount multi-family properties. Therefore, effective January 1, 2026, we have contributed our multi-family portfolio into a newly formed entity, MacKenzie Apartment Communities (“MAC”), so that investors can evaluate the two portfolios separately. On January 8, 2026, the Board of Directors of MAC approved an estimated net asset value of the common stock of MAC equal to $18.10 per share on a fully diluted basis as of the contribution date. To estimate MAC's per share value, the MAC board utilized the net asset value or “NAV” method which is based on the fair value of real estate, and all other assets, less the fair value of total liabilities.

Current wording

We believe the market values office properties differently than the market values multi-family properties. More specifically, the market discounts office properties because of recent, widespread vacancies in office buildings. We believe the market views those vacancies as pervasive even though most of our office properties have high occupancy levels, as disclosed below. The market does not similarly discount multi-family properties. Therefore, effective January 1, 2026, we have contributed our multi-family residential portfolio into a newly formed entity, MAC, so that investors can evaluate the two portfolios separately. On January 8, 2026, the Board of Directors of MAC approved an estimated net asset value of the common stock of MAC equal to $18.10 per share on a fully diluted basis as of the contribution date. To estimate MAC’s per share value, the MAC board utilized the net asset value or “NAV” method which is based on the fair value of real estate, and all other assets, less the fair value of total liabilities. MAC is a wholly owned consolidated subsidiary of the Parent Company, and MAC’s assets, liabilities, revenues, and expenses are included in the Company’s consolidated financial statements. Shares of the Parent Company’s common stock and preferred stock represent indirect interests in MAC through the Parent Company’s ownership of MAC. The estimated NAV of $18.10 per MAC share was determined by MAC’s Board of Directors for purposes of allowing investors to evaluate the two portfolios separately and does not represent the NAV per share of MacKenzie Realty Capital, Inc. common or preferred stock.

Previous 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 December 31, 2025, the property is 53% occupied by 8 tenants. AUL Corporation elected to terminate its lease as of February 3, 2025. During the year ended June 30, 2025, we recorded an impairment loss of $9,500,167 on Main Street West Office Building due to the early lease termination of AUL Corporation, and the foreclosure proceedings due to maturity default of the debt secured by the property. On March 25, 2025, the Company entered into the Forbearance Agreement with the Prior Lender and as part of the Forbearance Agreement, the Company paid down $5 million on the loan and took control of the property from the receiver in April 2025. The loan from the Prior Lender was paid off on June 6, 2025, with the proceeds from a new loan from EverTrust Bank. The following table shows the largest tenants and square footage occupied:

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, 2026, the property is 97% occupied by 9 tenants. AUL Corporation elected to terminate its lease as of February 3, 2025. During the year ended June 30, 2025, we recorded an impairment loss of $9,500,167 on Main Street West Office Building due to the early lease termination of AUL Corporation, and the foreclosure proceedings due to maturity default of the debt secured by the property. On March 25, 2025, the Company entered into the Forbearance Agreement with the Prior Lender and as part of the Forbearance Agreement, the Company paid down $5 million on the loan and took control of the property from the receiver in April 2025. The loan from the Prior Lender was paid off on June 6, 2025, with the proceeds from a new loan from EverTrust Bank. The following table shows the largest tenants and square footage occupied:

Previous wording

Green Valley Executive Center contains 46,100 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space. As of December 31, 2025, the property is 98% occupied by 15 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

Green Valley Executive Center contains 46,100 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space. As of March 31, 2026, the property is 96% occupied by 15 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

One Harbor Center contains 49,569 square feet, all of which is office space. As of December 31, 2025, the property is 74% occupied by 12 tenants. The following table shows the largest tenants and square footage occupied:

Current wording

One Harbor Center contains 49,573 square feet, all of which is office space. As of March 31, 2026, the property is 81% occupied by 12 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

Green Valley Medical Center contains 31,590 square feet, of which approximately 20,100 square feet is office space, approximately 8,300 square feet is health care space, and the remainder is designated as retail space. As of December 31, 2025, the property is 94% occupied by 14 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 20,100 square feet is office space, approximately 8,300 square feet is health care space, and the remainder is designated as retail space. As of March 31, 2026, the property is 91% occupied by 13 tenants. The following table shows the largest tenants and square footage occupied:

Previous wording

220 Campus Lane Office Building was purchased in September 2023. The property was vacant at the time of acquisition. Following the acquisition, we renovated the building and commenced leasing activities. As of December 31, 2025, the building was approximately 29% leased, with six tenants occupying an aggregate of 12,510 square feet. The annualized base rent from these tenants totals approximately $408,948.

Current wording

220 Campus Lane Office Building was purchased in September 2023. The property was vacant at the time of acquisition. Following the acquisition, we renovated the building and commenced leasing activities. As of March 31, 2026, the building was approximately 28% leased, with six tenants occupying an aggregate of 12,126 square feet. The annualized base rent from these tenants totals approximately $409,248.

Previous wording

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of December 31, 2025, Commodore Apartments is approximately 95.8% occupied.

Current wording

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of March 31, 2026, Commodore Apartments is approximately 89.6% occupied.

Previous wording

Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of December 31, 2025, Shoreline Apartments building is approximately 90.5% occupied.

Current wording

Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units. As of March 31, 2026, Shoreline Apartments building is approximately 89.3% occupied.

Previous wording

Aurora at Green Valley is a newly constructed multi-family residential community consisting of 72 units across three buildings, along with a clubhouse. The project was financed through $10.0 million of preferred equity capital (including $7.23 million from outside investors) and a $17.15 million construction loan from Valley Strong Credit Union. The clubhouse opened in mid-June 2025 for pre-leasing activity. The first residential building was completed in July 2025, with leasing commencing in August 2025. The remaining two buildings were completed in August and September 2025, with leasing commencing shortly thereafter. As of December 31, 2025, the property was approximately 47.20% occupied. As of the date of this report, the property is 72.22% leased.

Current wording

Aurora at Green Valley is a newly constructed multi-family residential community consisting of 72 units across three buildings, along with a clubhouse. The project was financed through $10 million of preferred equity capital (including $7.23 million from outside investors) and a $17.15 million construction loan from Valley Strong Credit Union. The clubhouse opened in mid-June 2025 for pre-leasing activity. The first residential building was completed in July 2025, with leasing commencing in August 2025. The remaining two buildings were completed in August and September 2025, with leasing commencing shortly thereafter. As of March 31, 2026, the property was approximately 75% occupied. As of the date of this report, the property is 88.9% leased.

Previous wording

The following table provides information regarding each of the residential properties:

Current wording

The following table provides information regarding each of the residential properties as of March 31, 2026:

Previous wording

In addition to our commercial and residential real estate properties, we own a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California (the “Campus Lane Land”). This parcel of land was acquired with the objective of developing multi-family residential community and is owned by the Operating Partnership through its subsidiary, Campus Lane Residential, LLC (“Campus Lane Residential”).

Current wording

In addition to our commercial and residential real estate properties, we own a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California (the “Campus Lane Land”). This parcel of land was acquired with the objective of developing multi-family residential community and is owned by the MAC OP through its subsidiary, Campus Lane Residential, LLC (“Campus Lane Residential”).

Previous wording

We acquired the Campus Lane Land in September 2023 with the long-term objective of developing it into a multi-family residential community. We are preparing to launch this project, known as Blue Ridge, which will consist of 84 luxury multi-family units in Solano County, one of the fastest-growing counties in California. The entitlement process for the vacant land is currently underway. Our goal is to commence construction in spring 2026; however, this is subject to the city’s approval of our development application submitted in April 2024 and to securing the necessary financial resources. The Company recently signed a joint venture agreement with a third-party developer, under which the Company would contribute the land and the third party would raise the capital necessary to fund construction of the project.

Current wording

This project, known as Blue Ridge, is expected to consist of 84 luxury multi-family units in Solano County, one of the fastest-growing counties in California. The entitlement process for the vacant land is on-going. Our goal is to commence construction in fall 2027; however, this is subject to the city’s approval of our development application submitted in April 2024 and to securing the necessary financial resources. The Company is currently evaluating potential development and financing structures for the project, including discussions with a third-party developer pursuant to which the Company may contribute the land and the third party may arrange construction financing and development capital for the project.

Previous wording

We currently do not have plans for any other major renovation or development of any properties except for our 220 Campus Lane Office Building 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.

Current wording

We currently do not have plans for any other major renovation or development of any properties except for Blue Ridge, as discussed above. Each property is being held for income generation and potential value appreciation through increased occupancy and/or rental rates. We maintain property and liability insurance policies on all properties, which we believe are adequate and in line with industry standards.

Previous wording

During the six months ended December 31, 2025, total real estate assets, net decreased by $9.26 million. The decrease was primarily attributable to the reclassification of $11.64 million of net real estate assets related to Woodland Corporate Center Two to assets held for sale as of December 31, 2025, and to $4.98 million of additional depreciation and amortization. These decreases were partially offset by $7.36 million of real estate additions, including $6.28 million related to the capitalization of additional construction costs at Aurora at Green Valley.

Current wording

During the nine months ended March 31, 2026, total real estate assets, net decreased by $10.52 million. The decrease was primarily attributable to the reclassification of $11.65 million of net real estate assets related to Woodland Corporate Center Two to assets held for sale as of March 31, 2026, and to $7.09 million of additional depreciation and amortization. These decreases were partially offset by $8.25 million of real estate additions, including $6.29 million related to the capitalization of additional construction costs at Aurora at Green Valley.

Previous wording

During the six months ended December 31, 2025, the Company borrowed an additional $9.94 million on the MRC Aurora construction loan from Valley Strong Credit Union, which was primarily due to fund building expenditures associated with the completion of Aurora at Green Valley.

Current wording

During the nine months ended March 31, 2026, the Company borrowed an additional $10.33 million on the MRC Aurora construction loan from Valley Strong Credit Union, which was primarily due to fund building expenditures associated with the completion of Aurora at Green Valley.

Previous wording

Comparison of the Three Months Ended December 31, 2025 and 2024. The commercial and residential properties owned by us during the three months ended December 2025 and 2024 are as follows:

Current wording

Comparison of the three months ended March 31, 2026 and 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 six months ended December 31, 2025, we incurred operating and maintenance expenses of $4.15 million, of which $2.60 million were incurred in the operation of our nine commercial properties and $1.55 million were incurred in the operation of our five residential properties. 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. The increase in the operating expenses was mainly due to the completion of the Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.

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 real estate assets. During the three months ended March 31, 2026, we incurred operating and maintenance expenses of $1.10 million in the operation of our nine commercial properties, compared to $1.19 million during the three months ended March 31, 2025. The slight decrease in the operating expenses was mainly due to the property tax refund from our Satellite Place Office Building.

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, 2025, we incurred operating and maintenance expenses of $2.27 million, of which $1.43 million were incurred in the operation of our nine commercial properties and $0.84 million were incurred in the operation of our five residential properties. 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. The increase in the operating expenses was mainly due to the completion of the Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.

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 residential real estate assets. During the three months ended March 31, 2026, we incurred operating and maintenance expenses of $0.82 million in the operation of our five residential properties, compared to $0.70 million in the operation of our four residential properties during the three months ended March 31, 2025, The slight increase in the operating expenses was mainly due to the completion of the Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.

Previous wording

Interest expense for the three months ended December 31, 2025 was $2.66 million, compared to $1.97 million for the three months ended December 31, 2024. For the three months ended December 31, 2025, $1.18 million of interest expense related to mortgage notes payable associated with the Company’s nine commercial properties, $1.11 million related to mortgage notes payable associated with the Company’s five residential properties and debt on the Campus Lane Land, and $0.37 million related to the Company’s line of credit agreement and note purchase agreement. For the three months ended December 31, 2024, $1.38 million of interest expense related to mortgage notes payable associated with the Company’s nine commercial properties, and $0.59 million related to mortgage notes payable associated with the Company’s four residential properties and debt on the Campus Lane Land.

Current wording

During the three months ended March 31, 2026, we recorded $0.82 million of interest expense related to mortgage notes payable associated with the Company’s five residential properties and debt on the Campus Lane Land. During the three months ended March 31, 2025, we recorded $1.29 million of interest expense related to mortgage notes payable associated with the Company’s four residential properties and debt on the Campus Lane Land.

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, 2025 and 2024, were $0.06 million and $0.02 million, respectively. During the three months ended December 31, 2025 and December 31, 2024, we received minimal distributions from operations, sales, and liquidations. During the three months ended December 31, 2025, we received dividends, interest, and other investment income of $0.06 million as compared to $0.02 million received during the three months ended December 31, 2024. The increase was mainly due to the increase in our investment portfolio since December 31, 2024. The remaining increase was due to the interest income on the note receivable from the non-controlling interest holder of PT Hillview, True USA.

Current wording

Investment income is made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income during the three months ended March 31, 2026, and 2025, were $0.07 million and $0.01 million, respectively. During the three months ended March 31, 2026, and March 31, 2025, we received minimal distributions from operations, sales, and liquidations. During the three months ended March 31, 2026, we received dividends, interest, and other investment income of $0.07 million as compared to $0.01 million received during the three months ended March 31, 2025. The increase was mainly due to the increase in our investment portfolio since March 31, 2025. The remaining increase was due to the interest income on the note receivable from the non-controlling interest holder of PT Hillview, True USA.

Previous wording

Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include interest expense, asset management fees to related party, general and administrative, professional fees, administrative cost reimbursements to related party, directors’ fees, and transfer agent cost reimbursements to related party.

Current wording

Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include asset management and incentive management fees, administrative costs and transfer agent reimbursements, and other corporate operating expenses.

Previous wording

Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021.

Current wording

Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021, and subsequently amended effective January 1, 2026.

Previous wording

During the three months ended December 31, 2025, there was no transfer agent cost reimbursement paid to MacKenzie as compared to minimal transfer agent cost reimbursement paid to MacKenzie during the three months ended December 31, 2024.

Current wording

During the three months ended March 31, 2026, no transfer agent cost reimbursements were paid to MacKenzie. During the three months ended March 31, 2025, there were minimal transfer agent cost reimbursements paid to MacKenzie.

Previous wording

Interest expense increased by $0.69 million during the three months ended December 31, 2025, primarily due to MRC Aurora recognizing $0.61 million of interest and loan fee amortization that had previously been capitalized following the completion of construction in September 2025. The increase was also attributable to additional borrowings by the Parent Company under a new line of credit with PRES and promissory notes issued to Streeterville Capital, LLC. These increases were partially offset by lower interest expense resulting from the refinancing of 1300 Main in November 2024, Hollywood Apartments in March 2025, and Main Street West in May 2025.

Current wording

The increase was attributable to additional borrowings by the Parent Company under a new line of credit with PRES and promissory notes issued to Streeterville Capital, LLC.

Previous wording

Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses. Other operating expenses for the three months ended December 31, 2025 and 2024, were $0.59 million and $0.61 million, respectively. The decrease in other operating expenses was mainly due to the decrease in transfer agent fees since December 31, 2024.

Current wording

Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses. Other operating expenses for the three months ended March 31, 2026 and 2025, were $0.41 million and $1.89 million, respectively. The decrease in other operating expenses was mainly due to the decrease in transfer agent fees since March 31, 2025.

Previous wording

During the three months ended December 31, 2025, we recorded a net realized gain of $0.08 million as compared to $0.06 million net realized gain during the three months ended December 31, 2024. Total net realized gain for the three months ended December 31, 2025, was realized from the sale of two publicly traded REIT securities and one non-traded REIT security. Total net realized gain for the three months ended December 31, 2024, was realized from sales of two non-traded REIT securities.

Current wording

During the three months ended March 31, 2026, we recorded a net realized gain of $0.62 million as compared to $0.02 million net realized gain during the three months ended March 31, 2025. Total net realized gain for the three months ended March 31, 2026, was realized from the sale of two publicly traded REIT securities and two non-traded REIT security. Total net realized gain for the three months ended March 31, 2025, was realized from the sale of one non-traded REIT security and one limited partnership interest.

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 three months ended March 31, 2026, we recorded a net unrealized gain of $0.84 million, which was net of $0.01 million of unrealized gain reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period. Accordingly, the net unrealized gains excluding the reclassification adjustment for the three months ended March 31, 2026, were $0.84 million, which resulted from fair value appreciations of $0.45 million from general partnership interests, $0.02 million from limited partnership interests and $0.37 million from non-traded REIT securities.

Previous wording

During the three months ended December 31, 2025, we recorded a net unrealized gain of $0.11 million, which was net of $0.12 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 losses excluding the reclassification adjustment for the three months ended December 31, 2025, were $0.01 million, which resulted from fair value depreciations of $0.06 million from general partnership interests and $0.02 million from limited partnership interests, offset by a fair value appreciation of $0.07 million from non-traded REIT securities.

Current wording

During the three months ended March 31, 2025, we recorded a net unrealized loss of $0.27 million, which was net of $0.02 million of unrealized gain reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period. Accordingly, the net unrealized losses excluding the reclassification adjustment for the three months ended March 31, 2025, were $0.27 million, which resulted from fair value depreciations of $0.24 million from general partnership interests, $0.06 million from limited partnership interests and fair value appreciations of $0.03 million from non-traded REIT securities.

Previous wording

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and, as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders, provided that, on an annual basis, it generally distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding any capital gain) to the stockholders and meets certain other conditions. To the extent that it satisfies the annual distribution requirement but distributes less than 100% of its REIT taxable income, it will be subject to U.S. federal corporate income tax on its undistributed taxable income. In addition, it will be subject to a 4% excise tax if the actual amount that it pays to its stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.

Current wording

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders, provided that, on an annual basis, it generally distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meet certain other conditions. To the extent it satisfies the annual distribution requirement but distribute less than 100% of its REIT taxable income, it will be subject to U.S. federal corporate income tax on their undistributed taxable income. In addition, it will be subject to a 4% nondeductible excise tax if the actual amount that it pays to its stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.

Previous 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 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 2025.

Current wording

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2025. Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2025. In addition, for the tax year 2026, the Parent Company intends to pay the requisite amounts of dividends during the year and meet other REIT requirements such that the Parent Company will not owe any income taxes. Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2026.

Previous wording

MacKenzie NY 2 and MRC QRS are subject to corporate federal and state income tax on their taxable income at regular statutory rates. As of December 31, 2025, they did not have any taxable income for tax year 2024 and 2025. Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2024 and 2025. MacKenzie Satellite and MRC QRS are qualified REIT subsidiaries of the Parent Company. Therefore, they do not file a separate tax return.

Current wording

MacKenzie NY 2 is subject to corporate federal and state income tax on their taxable income at regular statutory rates. As of March 31, 2026, it did not have any taxable income for tax year 2025 and 2026. Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2025 and 2026. MacKenzie Satellite, MRC QRS and MAC are qualified REIT subsidiaries of the Parent Company. Therefore, they do not file a separate tax return.

Previous wording

The Operating Partnership is a limited partnership. Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, 220 Campus Lane, Campus Lane Residential, GVEC and Innovate Napa are limited liability companies. First & Main, 1300 Main, Woodland Corporate Center Two, Main Street West, One Harbor Center, LP and Green Valley Medical Center, LP are limited partnerships. Accordingly, all income tax liabilities of these entities flow through to their partners, which, subject to the minority exceptions described in this document, ultimately is the Company. Therefore, no income tax provisions are recorded for these entities.

Current wording

The Operating Partnership is a limited partnership.220 Campus Lane, GVEC and Innovate Napaare limited liability companies. First & Main, 1300 Main, Woodland Corporate Center Two, Main Street West, One Harbor Center, LP and Green Valley Medical Center, LP are limited partnerships. Accordingly, all income tax liabilities of these entities ultimately flow through to the Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these entities.

Previous wording

Rental and reimbursement revenues are generated from our commercial and residential real estate properties. During the three months ended December 31, 2025, we generated $4.59 million in rental and reimbursements revenues, of which $2.97 million was generated from our nine commercial properties and $1.62 million was generated from our five residential 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. The total decrease in rental revenues was mainly due to the early lease termination by one tenant at our Satellite Place Office Building in December 2024 and another tenant at our Main Street West property in February 2025.

Current wording

During the nine months ended March 31, 2026, we generated $9.56 million in rental and reimbursements revenues from our nine commercial properties, compared to $12.84 million generated from our nine commercial properties during the nine months ended March 31, 2025. The decrease in rental revenues was primarily attributable to early lease termination income recognized during the 2025 period related to one tenant at our Satellite Place Office Building in December 2024 and another tenant at our Main Street West property in February 2025.

Previous wording

During the three months ended December 31, 2025, we recorded depreciation and amortization of $2.67 million, of which $2.12 million was attributable to the depreciation and amortization of real estate and intangible assets of our nine commercial properties and $0.55 million was attributable to our five residential properties. 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. The increase in total depreciation and amortization of $0.49 million during the three months ended December 31, 2025, was mainly due to the completion of the Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.

Current wording

During the nine months ended March 31, 2026, we recorded depreciation and amortization of $2.26 million attributable to the depreciation and amortization of real estate and intangible assets of our five residential properties, compared to $1.64 million attributable to our four residential properties during the nine months ended March 31, 2025. The increase of $0.62 million was mainly due to the completion of Aurora at Green Valley in July 2025, which consists of three residential buildings and a clubhouse.

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, 2025 and 2024, were $0.12 million and $0.04 million, respectively. During the six months ended December 31, 2025 and December 31, 2024, we received minimal distributions from operations, sales, and liquidations. During the six months ended December 31, 2025, we received dividends, interest, and other investment income of $0.12 million as compared to $0.04 million received during the six months ended December 31, 2024. The increase was mainly due to the increase in our investment portfolio since December 31, 2024. The remaining increase was due to the interest income from the note receivable from the non-controlling interest holder of PT Hillview, True USA.

Current wording

Total investment income during the nine months ended March 31, 2026, and 2025, were $0.19 million and $0.05 million, respectively. During the nine months ended March 31, 2026, and March 31, 2025, we received minimal distributions from operations, sales, and liquidations. During the nine months ended March 31, 2026, we received dividends, interest, and other investment income of $0.18 million as compared to $0.05 million received during the nine months ended March 31, 2025. The increase was mainly due to the increase in our investment portfolio since March 31, 2025. The remaining increase was due to the interest income from the note receivable from the non-controlling interest holder of PT Hillview, True USA.

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 Advisory Management Agreement. We did not incur any incentive management fee for the three months ended December 31, 2025 and 2024.

Current wording

Under the Advisory Management Agreement, we previously paid an incentive management fee that was equal to 15% of all distributions once shareholders have received cumulative distributions equal to 6% from the effective date of the Advisory Management Agreement, and we currently pay a bonus management fee equal to 5% of adjusted funds from operations each quarter. We did not incur any incentive or bonus management fee for the nine months ended March 31, 2026, and 2025.

Previous wording

Costs reimbursed to MacKenzie for the six months ended December 31, 2025 were $0.44 million as compared to $0.33 million for the six months ended December 31, 2024. The increase was due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to December 31, 2024, as a result of the increase in the number of real estate assets owned by us since December 31, 2024.

Current wording

Costs reimbursed to MacKenzie for the nine months ended March 31, 2026 were $0.66 million as compared to $0.50 million for the nine months ended March 31, 2025. The increase was due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to March 31, 2025, as a result of the increase in the number of real estate assets owned by us since March 31, 2025.

Previous wording

Other corporate 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, 2025 and 2024, were $1.41 million and $1.53 million, respectively. The decrease in other operating expenses was mainly due to the decrease in transfer agent fees since December 31, 2024.

Current wording

Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses. Other operating expenses for the nine months ended March 31, 2026 and 2025, were $1.82 million and $3.41 million, respectively. The decrease in other operating expenses was mainly due to the decrease in transfer agent fees since March 31, 2025.