MacKenzie Realty Capital, Inc.

What they do

The company was incorporated in Maryland on January 27, 2012, commenced operations February 28, 2013, and elected REIT status under Subchapter M of the Internal Revenue Code, with a June 30 fiscal year-end. It pursues a strategy focused on real estate assets and, to a lesser extent (intended to be less than 20% of the portfolio), illiquid or non-traded debt and equity securities of U.S. companies that generally own commercial real estate, such as non-traded REITs, small-cap publicly traded REITs, and public and private real estate partnerships and LLCs. It is externally managed by MacKenzie Capital Management, LP under a turnkey administration agreement effective January 1, 2021, with MCM Advisers, LP and MacKenzie Real Estate Advisers, LP as advisers. Real estate is held through MacKenzie Realty Operating Partnership, LP, in which the company owns all units except 81,909.89 Class A units, 1,063,504.34 Series A preferred units, and 43,212.86 Series B preferred units as of June 30, 2025.

Revenue drivers

• Real estate assets — The primary stated focus of the investment plan, with the company intending to invest at least 80% of total assets in equity or debt in real estate assets, held through the Operating Partnership formed May 20, 2020 for acquiring and operating real estate.
• Real estate securities portfolio — Up to 20% of total assets may be invested in debt and equity securities of real estate companies, defined as companies deriving at least 50% of revenue from, or with at least 50% of assets in, real estate ownership, construction, financing, management or sale. The company favors issuers that have completed their initial offering, operated at least two years (typically more than five), and fully invested capital in real properties or real estate-related investments.
• Investment objective — The company states its objective is to generate both current income and capital appreciation through real estate-related investments, following withdrawal of its BDC election on December 31, 2020.

Recent performance

For the twelve months ended June 30, 2025, revenue was $22.1 million, up from $15.7 million in fiscal 2024 and $15.1 million in fiscal 2023. Net income for fiscal 2025 was negative $24.0 million, with diluted EPS of negative $18.66, compared with fiscal 2024 net loss of $11.2 million and diluted EPS of negative $9.95. Operating cash flow was negative $1.7 million in fiscal 2025, following negative $595,517 in fiscal 2024 and negative $6.6 million in fiscal 2023. Quarterly revenue was $4.8 million for the quarter ended June 30, 2025, $4.5 million for September 30, 2025, $4.6 million for December 31, 2025, and $5.4 million for March 31, 2026. At March 31, 2026, total assets were $239.4 million, total liabilities $154.2 million, shareholders' equity $50.8 million, cash and equivalents $4.0 million, and long-term debt $146.7 million.

Strategy

The company states it generally seeks to invest in real estate assets and intends to invest at least 80% of total assets in equity or debt in real estate assets, with up to 20% in investment securities of real estate companies. When purchasing securities, it favors issuers that have completed their initial offering, operated for at least two years (typically more than five) since completion of the offering, and fully invested capital in real properties or other real estate-related investments. The company will not invest in general partnerships, joint ventures, or other entities that do not afford limited liability to security holders, though limited liability entities it invests in may hold interests in such entities. Its independent directors review investment policies periodically, at least annually, to confirm they are in the best interests of stockholders. The company has completed multiple public offerings of common stock, became eligible for OTCQX trading on April 29, 2024, and began trading on the Nasdaq Capital Market on November 11, 2024.

Risks

• Real estate investment risk — Real property investments are subject to various risks, many beyond the company's control, which could cause declines in operating revenues or the underlying value of one or more properties.
• Competition and speculation — The market for real estate investments is highly competitive, and investments in real estate-related assets can be speculative.
• Illiquidity — Illiquidity of real estate investments could significantly affect the company's ability to respond to adverse changes in the performance of its properties and harm its financial condition.
• Environmental liabilities — The company could be exposed to environmental liabilities, which could impact the value of real properties it may acquire or underlying its investments.

Outlook

The company states its objective remains to generate both current income and capital appreciation through real estate-related investments, and it is managed by the Advisers with MacKenzie providing non-investment management and administrative services. Because it elected REIT status, it is not subject to federal income taxes on amounts distributed to stockholders, provided it annually distributes at least 90% of REIT taxable income (determined without regard to the dividends paid deduction and excluding net capital gain) and meets other conditions. To the extent it distributes less than 100% of REIT taxable income, it will be subject to U.S. federal corporate income tax on undistributed REIT taxable income, and it will be subject to a 4% nondeductible excise tax if the actual amount paid to stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Its wholly owned subsidiary, MacKenzie NY 2, is subject to corporate federal and state income tax on its taxable income at regular statutory rates.