MKZR Narrows Q3 Loss to $3M, Boosted by Reduced Expenses

TL;DR

MKZR's Q3 loss narrowed significantly due to lower expenses, but negative operating cash flow and rising debt are red flags for this REIT.

AI Summary

MacKenzie Realty Capital, Inc. (MKZR) reported a net loss of $3,046,894 for the three months ended September 30, 2025, a significant improvement from the $7,408,269 net loss in the same period of 2024. Revenue from rental, reimbursements, and other property income decreased to $4,539,062 in Q3 2025 from $4,952,229 in Q3 2024. The reduction in net loss was primarily driven by a substantial decrease in total operating expenses, which fell from $12,393,205 in Q3 2024 to $8,026,947 in Q3 2025, largely due to the absence of a $4,406,249 impairment loss recorded in the prior year. The company's total assets increased to $241,693,594 as of September 30, 2025, from $235,992,178 as of June 30, 2025, with real estate assets, net, growing by over $4.4 million. Total liabilities also rose to $151,009,272 from $142,450,735 over the same period, driven by increases in mortgage notes payable and line of credit. Net cash from operating activities remained negative at $(2,019,554) for Q3 2025, though an improvement from $(644,359) in Q3 2024. The company completed a 1-for-10 reverse stock split effective August 4, 2025, and its common stock began trading on the Nasdaq Capital Market on November 11, 2024.

Why It Matters

This 10-Q reveals MacKenzie Realty Capital's continued efforts to stabilize its financial performance, evidenced by the significantly reduced net loss. For investors, the shift to Nasdaq and the reverse stock split aim to enhance liquidity and appeal, but the persistent negative operating cash flow and increasing debt levels, with mortgage notes payable rising by over $6.4 million, warrant close attention. The competitive real estate market demands efficient asset management, and MKZR's ability to generate positive cash flow from operations will be crucial for long-term sustainability and dividend capacity. Employees and customers are less directly impacted by these financial shifts, but a stronger, more stable company benefits all stakeholders.

Risk Assessment

Risk Level: medium — The company reported a net loss of $(3,046,894) for the quarter and negative cash flow from operating activities of $(2,019,554). While an improvement from the prior year, these figures indicate ongoing operational challenges. Total liabilities increased by over $8.5 million to $151,009,272, with mortgage notes payable rising to $126,907,758, suggesting increased leverage.

Analyst Insight

Investors should exercise caution and closely monitor MKZR's ability to generate positive cash flow from operations in future quarters. While the reduced net loss is a positive sign, the increasing debt and continued operational cash burn suggest underlying challenges. Consider waiting for sustained profitability and positive operating cash flow before making significant investments.

Financial Highlights

debt To Equity

1.66

revenue

$4,539,062

operating Margin

N/A

total Assets

$241,693,594

total Debt

$139,893,761

net Income

-$3,046,894

eps

-$2.20

gross Margin

N/A

cash Position

$4,853,998

revenue Growth

-8.4%

Revenue Breakdown

Key Numbers

• $3.05M — Net Loss (Reduced from $7.41M in Q3 2024, a 58.8% improvement.)
• $4.54M — Rental Revenue (Decreased from $4.95M in Q3 2024, a 8.4% decline.)
• $8.03M — Total Operating Expenses (Significantly down from $12.39M in Q3 2024, a 35.2% reduction.)
• $241.69M — Total Assets (Increased from $235.99M as of June 30, 2025, a 2.4% growth.)
• $151.01M — Total Liabilities (Increased from $142.45M as of June 30, 2025, a 6.0% rise.)
• $126.91M — Mortgage Notes Payable, net (Increased from $120.42M as of June 30, 2025, a 5.4% increase.)
• $(2.02M) — Net Cash from Operating Activities (Still negative, but improved from $(0.64M) in Q3 2024.)
• 1,856,160 — Weighted Average Common Shares Outstanding (Increased from 1,334,597 in Q3 2024, reflecting share issuance after reverse split.)
• $2.20 — Basic and Diluted Net Loss Per Share (Improved from $6.10 in Q3 2024, after 1-for-10 reverse stock split.)

Key Players & Entities

• MacKenzie Realty Capital, Inc. (company) — registrant
• Nasdaq Capital Market (regulator) — exchange for common stock
• MacKenzie Capital Management, LP (company) — external manager
• MCM Advisers, LP (company) — investment adviser
• MacKenzie Real Estate Advisers, LP (company) — real estate adviser
• MacKenzie Realty Operating Partnership, LP (company) — operating partnership
• $3,046,894 (dollar_amount) — net loss for Q3 2025
• $7,408,269 (dollar_amount) — net loss for Q3 2024
• $4,406,249 (dollar_amount) — impairment loss in Q3 2024
• $2,019,554 (dollar_amount) — net cash used in operating activities for Q3 2025

FAQ

Risk Factors

• Increased Debt Levels [medium — financial]: Total liabilities increased by 6.0% to $151,009,272 from $142,450,735 as of June 30, 2025. This rise was primarily driven by increases in mortgage notes payable ($126,907,758) and line of credit ($12,986,003), indicating a growing reliance on debt financing.
• Negative Operating Cash Flow [high — financial]: The company continues to experience negative net cash from operating activities, reporting $(2,019,554) for Q3 2025. While an improvement from $(644,359) in Q3 2024, this persistent negative cash flow from core operations poses a risk to ongoing liquidity and financial stability.
• Dependence on External Management [medium — operational]: The company is externally managed by MacKenzie Capital Management, LP under an administration agreement and advised by affiliates for investment and real estate strategies. This reliance on third-party managers introduces potential risks related to alignment of interests, management performance, and continuity of service.
• Real Estate Market Volatility [medium — market]: As a REIT focused on real estate assets, the company is subject to the inherent risks and cyclical nature of the real estate market. Fluctuations in property values, rental income, and occupancy rates can significantly impact financial performance.
• REIT Compliance [medium — regulatory]: The company has elected to be treated as a REIT. Failure to maintain REIT status by complying with the complex requirements of the Internal Revenue Code could result in significant tax liabilities and negatively impact the company's financial condition.
• Reduced Revenue [medium — financial]: Revenue from rental, reimbursements and other property income decreased by 8.4% to $4,539,062 in Q3 2025 from $4,952,229 in Q3 2024. This decline in top-line revenue, despite a reduction in net loss, warrants attention.

Industry Context

MacKenzie Realty Capital, Inc. operates within the real estate investment trust (REIT) sector, which is characterized by its reliance on property income and capital appreciation. The industry is sensitive to interest rate changes, economic cycles, and real estate market conditions. As a REIT, MKZR focuses on commercial real estate assets, facing competition from other REITs and private real estate investors.

Regulatory Implications

As a publicly traded company and a REIT, MacKenzie Realty Capital, Inc. is subject to SEC regulations and specific IRS rules for REITs. Compliance with these regulations is crucial to maintain its tax-advantaged status and avoid penalties. The recent listing on the Nasdaq Capital Market also brings increased scrutiny and reporting requirements.

What Investors Should Do

1. [object Object]
2. [object Object]
3. [object Object]
4. [object Object]

Key Dates

• 2025-11-11: Common stock began trading on Nasdaq Capital Market — Increased visibility and potential for broader investor access.
• 2025-08-04: Completed a 1-for-10 reverse stock split — Aimed at increasing the per-share market price of common stock, potentially making it more attractive to institutional investors and meeting exchange listing requirements.
• 2024-11-06: Nasdaq approved the listing of common stock — Paved the way for trading on a major exchange.
• 2024-04-29: Common stock became eligible for trading on the OTCQX Best Market — Provided a more liquid trading venue compared to previous over-the-counter markets.
• 2013-02-28: Commenced operations — The start of the company's business activities.
• 2012-01-27: Incorporated under the laws of the State of Maryland — The legal establishment of the company.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. REITs provide a way for individual investors to earn money from real estate investments without having to buy, manage, or finance properties themselves. (MacKenzie Realty Capital, Inc. has elected to be treated as a REIT, which impacts its tax obligations and operational requirements.)

Accumulated deficit

The cumulative net losses of a company that have not been offset by net income. It represents the total losses incurred since the company's inception. (The company has an accumulated deficit of $(89,277,899) as of September 30, 2025, indicating it has historically incurred more losses than profits.)

Non-controlling interests

The portion of equity in a subsidiary that is not attributable to the parent company. It represents the ownership interest of outside shareholders in the consolidated financial statements. (The company reports non-controlling interests of $33,957,853 as of September 30, 2025, indicating that a portion of its consolidated assets and earnings belong to other shareholders.)

Turnkey administration agreement

An agreement where one party provides a complete and ready-to-use service or system to another party. In this context, MacKenzie Capital Management, LP provides comprehensive administrative services. (The company is externally managed under such an agreement, highlighting its reliance on a third-party administrator for its operations.)

Impairment loss

A reduction in the carrying value of an asset when its fair value is less than its book value. This often occurs when an asset's future economic benefits are no longer expected to be realized. (The significant reduction in operating expenses was largely due to the absence of a $4,406,249 impairment loss recorded in the prior year's Q3.)

Year-Over-Year Comparison

Compared to the prior year's third quarter, MacKenzie Realty Capital, Inc. has significantly reduced its net loss by 58.8%, from $7,408,269 to $3,046,894. This improvement was primarily driven by a substantial 35.2% decrease in total operating expenses, largely due to the absence of a significant impairment loss recorded in the prior year. However, revenue from rental and property income saw a slight decline of 8.4%. The company's balance sheet shows growth in total assets and liabilities, with increased debt financing. Operating cash flow remains negative, though it has shown some improvement.

Key Financial Figures

• $0.0001 — ange on which registered Common Stock, $0.0001 par value per share MKZR Nasdaq Capit
• $1 — $ 102,034,149 * Amount is less than $1. ** After giving effect to the 1-for-
• $75 million — long as our public float remains below $75 million. Under the terms of the ATM Sales Agree

Filing Documents

• ef20056748_10q.htm (10-Q) — 2473KB
• ef20056748_ex31-1.htm (EX-31.1) — 13KB
• ef20056748_ex31-2.htm (EX-31.2) — 13KB
• ef20056748_ex32-1.htm (EX-32.1) — 5KB
• ef20056748_ex32-2.htm (EX-32.2) — 5KB
• 0001140361-25-042280.txt ( ) — 12873KB
• mrc-20250930.xsd (EX-101.SCH) — 109KB
• mrc-20250930_def.xml (EX-101.DEF) — 547KB
• mrc-20250930_lab.xml (EX-101.LAB) — 853KB
• mrc-20250930_pre.xml (EX-101.PRE) — 557KB
• mrc-20250930_cal.xml (EX-101.CAL) — 91KB
• ef20056748_10q_htm.xml (XML) — 2115KB

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 5 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 38 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 54 Item 4.

Controls and Procedures

Controls and Procedures 54 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 55 Item 1A.

Risk Factors

Risk Factors 55 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55 Item 3. Defaults Upon Senior Securities 55 Item 4. Mine Safety Disclosures 55 Item 5. Other Information 55 Item 6. Exhibits 56 Table of Contents

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements MacKenzie Realty Capital, Inc. Consolidated Balance Sheets (Unaudited) September 30, 2025 June 30, 2025 Assets Real estate assets Land $ 44,406,724 $ 44,406,724 Building, fixtures and improvements 197,513,523 193,170,429 Intangible lease assets 11,742,042 13,015,058 Less: accumulated depreciation and amortization ( 24,703,662 ) ( 26,058,639 ) Total real estate assets, net 228,958,627 224,533,572 Cash and cash equivalents 4,853,998 3,788,082 Restricted cash 427,194 328,239 Investments, at fair value 1,953,717 1,749,528 Equity method investments, at fair value 2,098,365 2,125,451 Investments income, rents and other receivables 2,181,811 2,273,527 Prepaid expenses and other assets 1,219,882 1,193,779 Total assets $ 241,693,594 $ 235,992,178 Liabilities Securities sold, not yet purchased, at fair value $ 301,120 $ - Mortgage notes payable, net 126,907,758 120,417,074 Line of credit and notes payable, net 12,986,003 12,016,507 Deferred rent and other liabilities 1,372,992 1,600,585 Finance lease liabilities 2,187,455 2,253,875 Dividend payable 721,792 715,498 Accounts payable and accrued liabilities 5,719,906 4,562,376 Below-market lease liabilities, net 603,228 703,645 Due to related entities 206,318 167,764 Capital pending acceptance 2,700 13,411 Total liabilities 151,009,272 142,450,735 Equity Common stock, $ 0.0001 par value, 80,000,000 shares authorized; 1,772,024.00 and 1,578,192.98 shares issued and outstanding as of September 30, 2025 and June 30, 2025, respectively. 177 158 Preferred stock, $ 0.0001 par value, 20,000,000 shares authorized: Series A Preferred stock, 762,883.15 and 766,176.57 shares issued and outstanding as of September 30, 2025 and June 30, 2025, respectively. 77 77 Series B Preferred stock, 120,494.05 and 116,112.32 shares issued

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 30, 2025 (Unaudited) NOTE 1 – PRINCIPAL BUSINESS AND 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