MacKenzie Realty Shifts to Residential, Nasdaq Listing Post-Split

TL;DR

**MKZR's aggressive shift to residential development and Nasdaq listing post-reverse split signals a bullish long-term play, but watch for execution risks on new projects.**

AI Summary

MacKenzie Realty Capital, Inc. (MKZR) reported a significant strategic shift in its real estate portfolio for the fiscal year ended June 30, 2025, focusing on Western U.S. properties and residential developments. The company completed a 1-for-10 reverse stock split on August 4, 2025, impacting its outstanding shares, which stood at 1,769,284 as of September 29, 2025. MKZR's common stock began trading on the Nasdaq Capital Market on November 11, 2024, following its eligibility on the OTCQX Best Market in April 2024. The company raised capital through various offerings, including a Regulation A offering for Series A/B/C preferred stock, aiming for up to $72.90 million, and a Form S-3 shelf registration for $75 million. A registered direct offering on February 28, 2025, sold 153,403.40 common shares and pre-funded warrants for 129,226.50 shares at $17.10 per share, alongside private placement warrants for 423,944.85 shares. Key acquisitions included a 90% economic interest in Hollywood Hillview Owner, LLC in October 2021, a 98% interest in MacKenzie-BAA IG Shoreline LLC in January 2022, and the full acquisition of six Wiseman Partnerships by August 2024. The Aurora at Green Valley residential project, financed with $10 million in preferred capital and a $17.15 million construction loan, saw its clubhouse open in June 2025 and first residential building completed in July 2025.

Why It Matters

MacKenzie Realty Capital's strategic pivot towards residential real estate, particularly in the Western U.S., and its Nasdaq listing could significantly alter its risk profile and growth trajectory for investors. The 1-for-10 reverse stock split and subsequent capital raises, including a $75 million shelf registration and a $17.10 per share registered direct offering, aim to improve liquidity and attract institutional investment, potentially increasing shareholder value. This move positions MKZR to compete more directly with established residential REITs, while its focus on development projects like Aurora at Green Valley and Blue Ridge at Suisun Valley indicates a long-term growth strategy that could benefit local economies and create jobs. Employees and customers in these regions may see increased housing options and development activity.

Risk Assessment

Risk Level: medium — The company's risk level is medium due to its significant investment in new residential development projects like Aurora at Green Valley and Blue Ridge at Suisun Valley, which inherently carry construction, entitlement, and market absorption risks. For instance, the Blue Ridge project's construction is contingent on city approval of its development application submitted in April 2024 and securing necessary financial resources, introducing uncertainty. Additionally, the company's reliance on various capital raises, including preferred stock offerings up to $72.90 million and a $75 million shelf registration, indicates ongoing capital needs that could dilute existing shareholders or be subject to market conditions.

Analyst Insight

Investors should closely monitor MKZR's progress on its residential development projects, particularly the Aurora at Green Valley and Blue Ridge, for timely completion and successful leasing. Evaluate the impact of future capital raises on dilution and the company's ability to secure financing for its ambitious growth plans, especially given the recent 1-for-10 reverse stock split.

Key Numbers

• $42,323,788 — Aggregate market value of voting stock held by non-affiliates (As of December 31, 2024, indicating public float)
• 1,769,284 — Shares of Common Stock outstanding (As of September 29, 2025, after 1-for-10 reverse stock split)
• $50 million — Initial Regulation A offering size (Increased to $75 million, then to $72.90 million for Series A/B/C preferred stock)
• $75 million — Aggregate amount for Form S-3 shelf registration (For common and preferred stock, warrants, rights and units)
• 153,403.40 — Shares of common stock sold in Registered Offering (On February 28, 2025, at $17.10 per share)
• $17.10 — Purchase price per share/warrant exercise price (For Registered Offering and concurrent private placement on February 28, 2025)
• 1-for-10 — Reverse stock split ratio (Effected on August 4, 2025)
• $18,333,000 — Purchase price for Management Companies (Paid to The Wiseman Company, LLC on May 6, 2022)
• $10 million — Preferred capital for Aurora at Green Valley ($7.23 million from outside investors, $2.77 million from Operating Partnership)
• $17.15 million — Construction loan for Aurora at Green Valley (From Valley Strong Credit Union)

Key Players & Entities

• MacKenzie Realty Capital, Inc. (company) — Registrant and REIT
• Nasdaq Capital Market (regulator) — Exchange where MKZR common stock trades
• MacKenzie Capital Management, LP (company) — External manager of MKZR
• MCM Advisers, LP (company) — Investment Adviser to MKZR
• MacKenzie Real Estate Advisers, LP (company) — Real Estate Adviser to MKZR
• MacKenzie Realty Operating Partnership, LP (company) — Operating Partnership for real estate acquisitions
• Maxim Group LLC (company) — Sales Agent for ATM Sales Agreement
• Hollywood Hillview Owner, LLC (company) — Acquired 90% economic interest by MKZR
• The Wiseman Company, LLC (company) — Seller of Management Companies and land to MKZR
• Valley Strong Credit Union (company) — Provided $17.15 million construction loan for Aurora at Green Valley

FAQ

Risk Factors

• REIT Status Dependence [high — market]: The Company has elected to be treated as a real estate investment trust (REIT). Failure to maintain REIT status could result in significant adverse tax consequences, including the imposition of corporate income tax and potential disqualification from REIT status for future years. This could materially and adversely affect the Company's financial condition and results of operations.
• External Management Reliance [medium — operational]: The Company is externally managed by MacKenzie Capital Management, LP and its affiliates. The Company's success depends on the performance and services of these external managers. Any disputes, disagreements, or termination of these management agreements could disrupt operations and negatively impact the Company.
• Capital Raising and Dilution [medium — financial]: The Company has engaged in multiple capital raising activities, including Regulation A offerings and a Form S-3 shelf registration, and a registered direct offering. These activities, while necessary for growth, can lead to significant dilution of existing shareholders' equity. The aggregate amount for the Form S-3 shelf registration was $75 million.
• Real Estate Market Volatility [high — market]: The Company's strategy focuses on real estate assets, particularly in Western U.S. properties and residential developments. The real estate market is subject to cyclical fluctuations, interest rate changes, and economic downturns, which can impact property values, rental income, and development project profitability.
• SEC Reporting Compliance [medium — regulatory]: As a company registered under Section 12(b) of the Exchange Act, MKZR is required to file periodic reports (10-K, 10-Q, 8-K) and other filings with the SEC. Failure to comply with these reporting requirements can lead to penalties, delisting, and reputational damage.
• Cybersecurity Threats [medium — operational]: The Company is exposed to cybersecurity risks, as detailed in Item 1C. A breach could compromise sensitive data, disrupt operations, and lead to financial losses and reputational damage. The Company's reliance on technology for its operations makes it vulnerable to such threats.

Industry Context

MacKenzie Realty Capital, Inc. operates within the real estate investment trust (REIT) sector, with a strategic focus on Western U.S. properties and residential developments. The broader real estate market is influenced by interest rates, economic growth, and local supply/demand dynamics. The residential development segment, in particular, is sensitive to housing demand, construction costs, and financing availability.

Regulatory Implications

As a publicly traded company and a REIT, MKZR is subject to stringent SEC reporting requirements and specific tax regulations governing REITs. Maintaining REIT status is critical to avoid corporate-level taxation. The company's capital-raising activities also fall under various securities regulations, requiring careful compliance.

What Investors Should Do

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Key Dates

• 2024-04-29: Common stock became eligible for trading on the OTCQX Best Market — Increased liquidity and visibility for the company's shares.
• 2024-11-06: Nasdaq approved the listing of common stock — Paved the way for trading on a major exchange, enhancing credibility and investor access.
• 2024-11-11: Common stock began trading on the Nasdaq Capital Market — Marked a significant milestone in the company's transition to a major stock exchange.
• 2025-02-28: Registered direct offering completed — Raised capital by selling common stock and pre-funded warrants, impacting share structure.
• 2025-06-30: Fiscal year end — Marks the end of the reporting period for the 10-K filing.
• 2025-08-04: 1-for-10 reverse stock split effected — Reduced the number of outstanding shares to 1,769,284, potentially impacting share price and perception.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. REITs are required to distribute at least 90% of their taxable income to shareholders annually in the form of dividends. (MacKenzie Realty Capital, Inc. has elected to be treated as a REIT, which has significant tax implications and operational requirements.)

Form S-3 shelf registration

A registration statement that allows an issuer to register securities that it plans to offer and sell over a period of time (up to three years). It permits the company to 'take down' portions of the registered securities as needed. (MKZR utilized this to register up to $75 million in securities, indicating a strategy for future capital raising.)

Regulation A

A U.S. Securities and Exchange Commission (SEC) regulation that exempts certain securities offerings from registration requirements, allowing smaller companies to raise capital more easily. (MKZR conducted a Regulation A offering for Series A/B/C preferred stock, aiming to raise significant capital.)

Registered direct offering

A type of offering where a company sells securities directly to a small group of institutional investors or accredited investors, often at a discount to the market price. (MKZR used this method on February 28, 2025, to raise capital by selling common stock and warrants.)

Reverse stock split

A corporate action in which a company reduces the number of its outstanding shares by consolidating them. For example, a 1-for-10 reverse split means every 10 old shares become 1 new share. (MKZR executed a 1-for-10 reverse stock split on August 4, 2025, significantly reducing its outstanding shares.)

Taxable REIT Subsidiary (TRS)

A subsidiary of a REIT that can engage in activities that a REIT itself cannot, such as providing services to tenants or operating lodging facilities. The TRS pays corporate income tax on its earnings. (MKZR has a TRS, MRC TRS, Inc., indicating a structure to manage certain business operations while maintaining REIT status.)

Year-Over-Year Comparison

The provided text focuses on the fiscal year ended June 30, 2025, and does not contain direct comparative data from a prior filing. However, the narrative indicates a significant strategic shift towards Western U.S. properties and residential developments. Key events like the Nasdaq listing (November 2024) and the reverse stock split (August 2025) suggest a period of transition and restructuring compared to previous periods.

Key Financial Figures

• $0.0001 — ange on which registered Common Stock, $0.0001 par value per share MKZR Nasdaq Cap
• $26,587,609 — entitled to a liquidation preference of $26,587,609 (based on the stated value of $25 per s
• $25 — 6,587,609 (based on the stated value of $25 per share for the Series A preferred un
• $1,080,322 — entitled to a liquidation preference of $1,080,322 (based on the stated value of $25 per s
• $98,692,635 — ts). The Parent Company has contributed $98,692,635 in capital to the Operating Partnership
• $50 million — Regulation A with the SEC to sell up to $50 million of shares of our Series A preferred sto
• $75 million — nd increased the offering to sell up to $75 million of shares of our Series A preferred sto
• $71.30 million — ell an aggregate of up to approximately $71.30 million of shares of either our Series A prefer
• $72.90 million — ng Circular to permit the sale of up to $72.90 million of Series A, Series B, and Series C pre
• $22.50 — referred stock, at an offering price of $22.50 per Series A share and $25.00 per Serie
• $25.00 — price of $22.50 per Series A share and $25.00 per Series B or Series C share. In Nov
• $17.10 — the exercise price for each warrant was $17.10 per share, and the purchase price for e
• $17.099 — e price for each pre-funded warrant was $17.099 per share. The common stock warrants co
• $27,503 — on and preferred stock in the amount of $27,503 and $13,752, respectively. Subsequent t
• $13,752 — rred stock in the amount of $27,503 and $13,752, respectively. Subsequent to the comple

Filing Documents

• ef20050374_10k.htm (10-K) — 4263KB
• ef20050374_ex19.htm (EX-19) — 51KB
• ef20050374_ex21-1.htm (EX-21.1) — 15KB
• ef20050374_ex23-1.htm (EX-23.1) — 2KB
• ef20050374_ex31-1.htm (EX-31.1) — 12KB
• ef20050374_ex31-2.htm (EX-31.2) — 12KB
• ef20050374_ex32-1.htm (EX-32.1) — 5KB
• ef20050374_ex32-2.htm (EX-32.2) — 5KB
• ef20050374_ex97-1.htm (EX-97.1) — 4KB
• 0001140361-25-036540.txt ( ) — 18946KB
• mrc-20250630.xsd (EX-101.SCH) — 127KB
• mrc-20250630_cal.xml (EX-101.CAL) — 76KB
• mrc-20250630_def.xml (EX-101.DEF) — 607KB
• mrc-20250630_lab.xml (EX-101.LAB) — 1405KB
• mrc-20250630_pre.xml (EX-101.PRE) — 799KB
• ef20050374_10k_htm.xml (XML) — 3724KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 9 Item 1B. Unresolved Staff Comments 28 Item 1C. Cyber Security 29 Item 2.

Properties

Properties 31 Item 3.

Legal Proceedings

Legal Proceedings 31 Item 4. Mine Safety Disclosures 31 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6.

Selected Financial Data

Selected Financial Data 35 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 54 Item 8. Consolidated Financial Statements and Supplementary Data 54 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 54 Item 9A.

Controls and Procedures

Controls and Procedures 55 Item 9B. Other Information 56 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 56 PART III Item 10. Directors, Executive Officers and Corporate Governance 57 Item 11.

Executive Compensation

Executive Compensation 57 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 57 Item 13. Certain Relationships and Related Transactions, and Director Independence 57 Item 14. Principal Accountant Fees and Services 57 PART IV Item 15. Exhibits and Consolidated Financial Statement Schedules 58 Item 16. Form 10-K Summary 61

Signatures

Signatures Table of Contents PART I Item 1.

BUSINESS

BUSINESS Organization MacKenzie Realty Capital, Inc. (the "Parent Company" together with its subsidiaries as discussed below, collectively, the "Company," "we," "us," or "our") was incorporated under the general corporation laws of the State of Maryland on January 27, 2012. We have elected to be treated as a real estate investment trust ("REIT") as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). We are authorized to issue 100,000,000 shares, of which (i) 80,000,000 are designated as common stock, with a $0.0001 par value per share; and (ii) 20,000,000 are designated as preferred stock, with a $0.0001 par value per share. We commenced our operations on February 28, 2013, and our fiscal year-end is June 30. We are registered under Section 12(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), and we will continue to file periodic reports on Form 10-K, Form 10-Q, and Form 8-K, as well as file proxy statements and other reports required under the Exchange Act. We filed our initial registration statement with the Securities and Exchange Commission ("SEC") in 2012 and have since completed multiple public offerings of our common stock. On April 29, 2024, our common stock became eligible for trading on the OTCQX Best Market under the ticker symbol "MKZR". Subsequently, on November 6, 2024, The Nasdaq Stock Market ("Nasdaq") approved the listing of our common stock, and trading commenced on the Nasdaq Capital Market on November 11, 2024. We are externally managed by MacKenzie Capital Management, LP ("MacKenzie") under a turnkey administration agreement dated and effective as of January 1, 2021 (the "Administration Agreement"). MCM Advisers, LP (the "Investment Adviser"), an affiliate of MacKenzie, advises us in our assessment, acquisition, and divestiture of securities under the advisory agreement amended and restated effective January 1, 2021 (the "Amended and Restated Investment Advisory Agreement"). Another affili