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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Mackenzie Realty Capital Inc (QX) | USOTC:MKZR | OTCMarkets | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.5175 | 3.50 | 3.57 | 0.00 | 00:00:00 |
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There is no assurance that we will be able to successfully achieve our investment objectives.
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Investors will not have the opportunity to evaluate or approve any Investments prior to our acquisition or financing thereof.
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Investors will rely solely on the Adviser to manage us and our Investments. The Adviser will have broad discretion to invest our capital and make decisions regarding Investments.
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We may not be able to invest the net proceeds of this offering on terms acceptable to investors, or at all.
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Investors will have limited control over changes in our policies and day-to-day operations, which increases the uncertainty and risks you face as an investor. In addition, our Board of Directors may
approve changes to our policies, including our policies with respect to distributions and redemption of shares without prior notice or your approval.
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An investor could lose all or a substantial portion of any investment made in us.
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There is no public trading market for our preferred shares, and we are not obligated to effectuate a liquidity event or a listing of our preferred shares on any nationally recognized stock exchange by
a certain date or at all. It will thus be difficult for an investor to sell shares purchased from us.
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We may fail to maintain our qualification as a REIT for federal income tax purposes. We would then be subject to corporate level taxation and regulation as an investment company and we would not be
required to pay any distributions to our stockholders.
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The offering price of our shares was not established based upon any appraisals of assets we own or may own. Thus, the initial offering price may not accurately reflect the value of our assets at the
time an investor’s investment is made.
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Substantial actual and potential conflicts of interest exist between our investors and our interests or the interests of our Adviser, and our respective affiliates, including conflicts arising out of
(a) allocation of personnel to our activities, (b) allocation of investment opportunities between us, and (c) potential conflicts arising out of transactions between us, on the one hand, and our Adviser and its affiliates, on the
other hand, involving compensation and incentive fees payable to our Adviser or dealings in real estate transactions between us and the Adviser and its affiliates.
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There are substantial risks associated with owning, financing, operating, leasing, and managing real estate.
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The amount of distributions we make is uncertain. We may fund distributions from offering proceeds, borrowings, and the sale of assets, to the extent distributions exceed our earnings or cash flows
from our operations if we are unable to make distributions from our cash flows from operations. There is no limit on the amount of offering proceeds we may use to fund distributions. Distributions paid from sources other than cash
flow or funds from operations may constitute a return of capital to our stockholders. Rates of distributions may not be indicative of our actual operating results. For example, on March 31, 2020, after assessing the impacts of
the COVID-19 pandemic, our Board of Directors unanimously approved the suspension of regular quarterly dividends to our common stockholders. On May 10, 2021, the Board of Directors reinstated the quarterly dividend at the rate of
$0.05 per common share, which was increased to $0.06, $0.07, $0.08, $0.09, $0.10, $0.11, $0.115, $0.12, and $0.125 cents per common share in the nine quarters thereafter, respectively. While the Series A Preferred Stock will accrue
a 6% dividend, payment of this dividend is not guaranteed, only that it will be paid before any cash dividend may be paid to the holders of common shares. While the Series B Preferred Stock will accrue a 3% dividend, payment of
this dividend is not guaranteed, only that it will be paid before any cash dividend may be paid to the holders of common shares, and the additional accrued 9% dividends on the Series B Preferred Stock will start being paid at the
same time and in the same amount per share with distributions paid on the Common Stock once the holders of common stock have initially received distributions equal to 10% per annum from and after December 31, 2022 on the $7.38 per
share net asset value per share for the common stock as of such date, and the remaining amounts (if any) will be paid no later than at redemption, liquidation or conversion.
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Per Share
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Total Maximum
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Offering Price (1)
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$25.00
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$53,985,049.87 (2)
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Underwriting Discounts and Commissions (3)
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$2.50
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$5,398,504.99
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Proceeds to Us from this Offering (Before Expenses) (4)
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$22.50
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$48,586,544.88
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Asset Management Fee:
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The asset management fee is calculated based on our “Invested Capital.” The asset management fee is payable monthly at an annual rate of 3% of the first $20 million in Invested Capital, 2% of the next
$80 million in Invested Capital and 1.5% of Invested Capital over $100 million. “Invested Capital” is calculated by multiplying the total net number of Shares, Preferred Shares, and Partnership Units (units in our operating
partnership issued by persons other than us) by the price paid for each or the value ascribed to each in connection with their issuance and is not derived from the value of our assets from time to time. There are currently82,042.23
common Partnership Units outstanding not owned by us and 1,061,250.25 Series A and 43,212.86 Series B Preferred Partnership Units not owned by us.
The Asset Management Fee compensates our Adviser for managing all of our assets. The Real Estate Adviser and the Investment Adviser will allocate this fee between themselves.
In the fiscal year ending June 30, 2025, we expect to pay our Adviser approximately $3,600,000 in Asset Management Fees.
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Acquisition Fees:
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The Acquisition Fees are equal to 2.5% of the cost of the asset acquired. These are paid on acquisition of non-securities to our Adviser. Purchases of securities do not incur this fee. However, to the
extent that such asset is not held for at least 5 years, any acquisition fee for subsequent purchases using proceeds from the sale of such asset will be reduced proportionally.
These fees compensate our Adviser for traveling to and researching properties that are suitable for investment.
In the fiscal year ending June 30, 2025, we expect to pay our Adviser approximately $1,400,000 in Acquisition Fees.
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Debt Financing Fee, Disposition Fee, Property Management Fee
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We do not pay any such fees to our Adviser, but do anticipate paying debt financing and property management fees to unaffiliated third parties. We expect to pay property management fees based upon
prevailing market rates, but most such fees will be paid by the entities that own a property. PVT-Madison Partners, LLC and Madison-PVT Partners, LLC pay their third-party property management firm a fee equal to 6% of gross collected
revenue from such properties. Hillview Hollywood pays its third-party property manager 4% of gross revenue, subject to a minimum $2,500 monthly fee. MacKenzie Shoreline pays its third-party property management firm 4% of gross
collected revenue. We pay an affiliate of our adviser, Wiseman Commercial, Inc., property management fees equal to 5% of gross collected revenue for the Wiseman Properties (as defined below). We have not yet paid any debt financing
fees, but our understanding of the market rates for such services lead us to believe that such fees would usually be in the range of 0.5% to 1% of the amount of the loan, depending upon the size of the loan.
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Incentive Management Fee:
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Once common stockholders have received distributions equal to 6% per annum on their Invested Capital, from and after January 1, 2021, the Real Estate Adviser will be entitled to receive an incentive
management fee equal to an amount that would result in the Adviser having received 15% of all distributions not attributable to the securities we own or to any return of capital. Because common stockholders will not receive
distributions before certain distributions are paid on preferred shares, no such fee can be paid to the Adviser unless all required distributions have been paid on the preferred shares.
The Incentive Management Fee compensates our Adviser based upon the performance of the assets in which we invest.
It is impracticable to determine the amount of Incentive Management Fees that will be paid in the next year, although we estimate than none will be paid.
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Expense Reimbursements
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In addition to the compensation paid to the Adviser above, we shall reimburse the Adviser and/or its Affiliates for all of the costs and expenses paid or incurred by the Adviser that are in any way
related to our operations or our business or the services the Adviser provides to us pursuant to the Advisory Agreement, including, but not limited to: organization and offering expenses; expenses of managing and operating Assets
owned by us, whether payable to an Affiliate of us or a non-Affiliated Person; expenses connected with payments of distributions in cash or otherwise made or caused to be made by us to the stockholders; expenses of organizing,
reorganizing, liquidating, or dissolving us and the expenses of filing or amending the Articles of Incorporation or Articles Supplementary establishing the terms of any preferred stock; transfer agent expenses, and related software
development costs, for the shares and of maintaining communications with stockholders, including the cost of preparation, printing, and mailing annual reports and other stockholder reports, proxy statements and other reports required
by governmental entities; administrative service expenses (including salary, benefits, and overhead costs of Affiliates and certain of the executive officers of us, based upon the amount of time they spend on Company business other
than providing investment advice, as approved by Board); and audit, accounting, and legal fees.
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acquisition fees upon any acquisition, regardless of whether the property will be profitable in the future;
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asset management fees based on the Invested Capital, and not based on performance of our properties; and
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subordinated incentive management fee equal to 15% of profits, payable only after the 6% return to stockholders.
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the continuation, renewal or enforcement of our agreements with our Advisers and affiliates, including the advisory agreement;
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subsequent offerings of equity securities by us, which may entitle our Advisers to additional asset management fees;
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property sales, which may entitle our Advisers to possible success-based share of net sale proceeds;
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property acquisitions from other programs sponsored by affiliates of our Advisers which may entitle such affiliates to disposition fees and possible
success-based sale fees in connection with its services for the seller, as well as acquisition fees for our Advisers;
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property sales to other programs sponsored by affiliates of our Advisers which may entitle such affiliates to acquisition fees and expenses for its services to
the buyer, as well as subordinated share of net sale proceeds to our Advisers;
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whether and when we seek to sell our assets and liquidate, which sale may entitle our Advisers to a success-based distribution but could also adversely affect its sales efforts for other programs
depending upon the sales price.
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We will not purchase or lease properties in which our sponsor, our Advisers, any of our directors or any of their respective affiliates has an interest without a
determination by a majority of our directors, including a majority of the independent directors, not otherwise interested in such transaction that such transaction is fair and reasonable to us and at a price to us no greater than
the cost of the property to the seller or lessor, unless there is substantial justification for any amount that exceeds such cost and such excess amount is determined to be reasonable. In no event will we acquire any such property
at an amount in excess of its appraised value. We will not sell or lease properties to our sponsor, our Advisers, any of our directors or any of their respective affiliates unless a majority of our directors, including a majority of
our independent directors, not otherwise interested in the transaction determines that the transaction is fair and reasonable to us.
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We will not make any loans to our sponsor, our Advisers, any of our directors or any of their respective affiliates. In addition, our sponsor, our Advisers, any
of our directors and any of their respective affiliates will not make loans to us or to joint ventures in which we are a joint venture partner unless approved by a majority of our directors, including a majority of the independent
directors, not otherwise interested in the transaction as fair, competitive and commercially reasonable, and no less favorable to us than comparable loans between unaffiliated parties.
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Our Advisers and affiliates will be entitled to reimbursement, at cost, for actual expenses incurred by them on behalf of us or joint ventures in which we are a
joint venture partner.
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Our directors, including our independent directors, have a duty to ensure that the method used by our Advisers for the allocation of the acquisition of properties by two or more
affiliated programs seeking to acquire similar types of properties (summarized below) is applied fairly to us.
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the investment objectives of each program;
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the amount of funds available to each program;
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the financial and investment characteristics of each program, including investment size, potential leverage, transaction structure and anticipated cash flows;
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the strategic location of the investment in relationship to existing properties owned by each program;
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the effect of the investment on the diversification of each program’s investments; and
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the impact of the financial metrics of the investment on each program.
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The address of all of these entities is 89 Davis Road, Suite 100, Orinda, CA 94563.
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To acquire real estate assets at substantial discounts to fair market value;
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To grow net cash from operations so that an increasing amount of cash flow is available for distributions to investors over the long term;
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To pay attractive and consistent cash distributions;
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To preserve and protect shareholder value; and
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To realize growth in the value of our investment by timing their sale to maximize value.
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Value-Add. We invest in well-located institutional-quality properties with strong and stable cash flows in demographically attractive
knowledge economy growth markets where we believe there exists significant potential for medium-term capital appreciation through renovation or redevelopment, to reposition the asset and drive future rental growth.
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Opportunistic. We invest in properties available at opportunistic prices (i.e., at prices we believe are below those available in an
otherwise efficient market) that exhibit some characteristics of distress, such as operational inefficiencies, significant deferred capital maintenance, or broken capital structures providing an opportunity for a substantial portion
of total return attributable to appreciation in value.
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Invest-to-Own. We selectively invest in development of quality properties in target markets where we believe we can capture significant
premiums upon completion. We intend to use either tender offers, a convertible loan, or convertible preferred equity structure to provide income during the early stage and/or the ability to capture premiums at completion by either
acquiring controlling positions or exercising our conversion rights to take ownership.
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Investors will not have the opportunity to evaluate or approve any Investments prior to our acquisition or financing thereof.
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Investors will rely solely on the Adviser to manage us and our Investments. The Adviser will have broad discretion to invest our capital and make decisions
regarding Investments.
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We may not be able to invest the net proceeds of this Offering on terms acceptable to investors, or at all.
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We may change our targeted investment and operational policies, including our policies with respect to distributions and redemption of shares, without prior
notice or your approval.
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An investor could lose all or a substantial portion of the investment in us.
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There is no public trading market for our preferred shares, and we are not obligated to effectuate a liquidity event or a listing of our preferred shares on any
nationally recognized stock exchange by a certain date or at all. It will thus be difficult for an investor to sell shares owned by the investor in us.
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We may fail to qualify or maintain our qualification as a REIT for federal income tax purposes. We would then be subject to corporate level taxation and
regulation as an investment company and we would not be required to pay any distributions to our stockholders.
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The offering price of our shares was not established based upon any appraisals of assets we own or may own. Thus, the initial offering price may not accurately
reflect the value of our assets at the time an investor’s investment is made.
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Substantial actual and potential conflicts of interest exist between our investors and our interests or the interests of our Adviser, and our respective
affiliates, including conflicts arising out of (a) allocation of personnel to our activities, (b) allocation of investment opportunities between us, and (c) potential conflicts arising out of transactions between us, on the one
hand, and our Adviser and its affiliates, on the other hand, involving compensation and incentive fees payable to our Adviser or dealings in real estate transactions between us and the Adviser and its affiliates.
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There are substantial risks associated with owning, financing, operating, leasing and managing real estate.
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The amount of distributions we make is uncertain. We may fund distributions from offering proceeds, borrowings, and the sale of assets, to the extent
distributions exceed our earnings or cash flows from our operations if we are unable to make distributions from our cash flows from operations. There is no limit on the amount of offering proceeds we may use to fund distributions.
Distributions paid from sources other than cash flow or funds from operations may constitute a return of capital to our stockholders. Rates of distributions may not be indicative of our actual operating results.
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Accrued dividends with respect to the Series B Preferred Stock might be treated as taxable dividends even though holders do not receive any current cash.
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Preferred stock offered by us
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3,000,000 shares of either Series A or Series B preferred stock, referred to herein as the “preferred shares.”
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Preferred stock to be outstanding after this Offering (assuming the maximum offering amount is sold)
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3,000,000 preferred shares, in a combination of Series A and Series B.
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Ranking
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The preferred shares will rank, with respect to dividend rights and rights upon liquidation, winding-up, or dissolution (i) senior to all classes of our common stock, and to any other class or series
of our capital stock issued in the future unless the terms of that capital stock expressly provide that it ranks senior to, or on parity with, the preferred shares, and (ii) junior to any other class or series of our capital stock,
the terms of which expressly provide that it will rank senior to the preferred shares.
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Stated Value
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Each share of Series A Preferred Stock or Series B Preferred Stock will have an initial “Stated Value” of $25.00, subject to appropriate adjustment in relation to certain events as set forth in the
Articles Supplementary for each such Series.
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Liquidation Preference
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Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of our preferred stock will be entitled to receive the following payments (in each case,
the “Liquidation Preference” applicable to such series):
Holders of Series A Preferred Stock will be entitled to be paid, as the Liquidation Preference applicable to such shares, an amount equal to the Stated Value of $25 per share, plus an amount equal to
any accrued and unpaid dividends thereon.
Holders of Series B Preferred Stock will be entitled to be paid the Liquidation Preference applicable to the Series B Preferred Stock, which is dependent on the Accrued Preference Value for each share
of such stock. The “Accrued Preference Value” for each outstanding share of Series B Preferred Stock is equal to (i) the Stated Value of $25.00 per share of Series B Preferred Stock plus (ii) an amount equal to any accrued and
unpaid dividends (whether or not authorized or declared) thereon to and including the date of payment of such amount, but without interest.
The Liquidation Preference for each outstanding share of Series B Preferred Stock will be calculated as follows: (i) from the Acquisition Date applicable to such share until the third anniversary of
such date, the dollar value of the Accrued Preference Value applicable to such share as of the date such Liquidation Preference is calculated and (ii) from and after the third anniversary of the Acquisition Date applicable to such
share, an amount equal to the greater of (A) the dollar value of the Accrued Preference Value applicable to such share as of the date the Liquidation Preference is calculated or (B) an amount equal to the dollar value of the amount
of common stock the holder of such share of Series B Preferred Stock would be entitled to receive as of the date the Liquidation Preference is calculated, pursuant to the provisions described below in this summary under the heading
“Series B Preferred Repurchase/Additional Conversion Rights.”
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Dividend rights
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Holders of our preferred shares are entitled to receive, when and as authorized by our Board of Directors and declared by us out of legally available funds, cumulative cash dividends on each preferred
share at an annual rate of 6% for Series A Preferred Stock and at an annual rate of 3% for Series B Preferred Stock. This is a preference, not a guarantee, but is a term contained in the Company’s Charter; however, the Board could
suspend the dividend at any time, although it would continue to accrue. The dividend must be paid before the common shares can be paid a dividend, and before the Adviser can receive any incentive management fee. Further, the
Series B Preferred Stock will also accrue dividends at the rate of 9% per annum on the Stated Value, which will begin to be paid at the same time and in the same amounts per share with distributions paid to the holders of common
stock, once holders of common stock have initially received distributions from and after December 31, 2022 equal to 10% per annum on the $7.38 per share NAV of the common stock as of such date, and the remainder of which will be
paid no later than at redemption, liquidation or conversion. For additional information, see “Description of Securities – Preferred Stock – Preferred Dividend” herein.
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Company Special Redemption Right
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If at any time the Company’s shares of common stock are traded on a national securities exchange with at least three market makers or a New York Stock Exchange Specialist, the Company will have the
right to redeem the preferred shares at any time at a redemption price equal to (i) the Liquidation Preference for each share of Series A Preferred Stock and (ii) the Accrued Preference Value for each share of Series B Preferred
Stock, in each case as of the Special Redemption Date selected by the Company. For additional information, see “Description of Securities – Preferred Stock – Special Redemption Rights” herein.
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Company Optional Early Redemption Right
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In addition to the Special Redemption Right described above, we also may redeem preferred shares for cash, in whole or in part from time to time, during an Early Redemption Period which began January
1, 2023 for the Series A Preferred Stock and will begin January 1, 2025 for the Series B Preferred Stock. The price per preferred share applicable to any such Optional Early Redemption will be equal to (i) the Liquidation Preference
for each share of Series A Preferred Stock and (ii) the Accrued Preference Value for each share of Series B Preferred Stock, in each case as of the applicable Early Redemption Date selected by the Company. For additional
information, see “Description of Securities – Preferred Stock – Optional Early Redemption” herein.
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Holders’ Conversion Right
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Upon receipt of notice from us that we intend to redeem the preferred shares pursuant to the Optional Early Redemption Right, any holder thereof is entitled to elect instead to receive shares of our
common stock as follows with respect to either the Series A Preferred shares or Series B Preferred shares, and holders of the Series B Preferred shares also will have the conversion election in the event we exercise the Company’s
Special Redemption Right:
(i) Series A Preferred Conversion Right: Each holder of Series A Preferred shares
shall be entitled to elect to receive, in lieu of the aggregate Liquidation Preference for the applicable number of preferred shares, the number of shares of common stock equal to the value of such aggregate Liquidation Preference
divided by $10.25.
(ii) Series B Preferred Conversion Right: Each holder of Series B Preferred shares shall be entitled to elect to receive, in lieu of the aggregate Accrued Preference Value for the applicable
number of preferred shares, the number of shares of common stock equal to such aggregate Accrued Liquidation Preference divided by (i) the lower of $10.25 or the Board’s most recent estimated net asset value per share of common
stock, if the common stock is not then listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc. or another similar organization or (ii) if the common stock is then listed on a
national securities exchange or an over-the-counter market as described above, the lower of $10.25 or the volume weighted average of the Last Reported Sale Price per share of common stock as reported on such market for the twenty
(20) trading days prior to the Conversion Date (defined as the date of the giving of notice of an exercise of conversion rights and surrender of the underlying shares of Series B Preferred Stock to be converted). For purposes of
this calculation, the “Last Reported Sale Price” for the common stock means, at any time that the common stock is listed on a national securities exchange or an over-the-counter market as described above, the closing sale price per
share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions
for the principal U.S. national or regional securities exchange on which the common stock is traded. For additional information, see “Description of Securities – Preferred Stock – Conversion Right” herein.
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Series A Preferred Repurchase Rights
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Upon the request of a holder of Series A Preferred Stock, we may, at the sole discretion of the Company’s Board, repurchase the Series A Preferred shares held by such holder for (i) $22 per share from
the day the stockholder acquired such shares (the “Series A Acquisition Date”) until one year thereafter; (ii) $22.75 per share from the first anniversary until the second anniversary of the Series A Acquisition Date; (iii) $23.50
per share from the second anniversary until the third anniversary of the Series A Acquisition Date; (iv) $24.25 per share from the third anniversary until the fourth anniversary of the Series A Acquisition Date; and (v) $25.00 per
share beginning on the fourth anniversary of the Series A Acquisition Date and thereafter, subject to Board discretion, in the case of the death or complete disability of a stockholder, payment of $25.00 per share for such a
repurchase from and after the second anniversary of the Series A Acquisition Date. Subject to the availability of an exemption from registration or an effective registration statement, a holder of Series A Preferred Shares may
request that any such repurchase may be funded through the issuance of shares of common stock. For additional information, see “Description of Securities – Preferred Stock – Series A Preferred Share Repurchase Program; Repurchase
Rights” herein.
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Series B Preferred Repurchase/Additional
Conversion Rights
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Shares of Series B Preferred Stock will not be considered for repurchase by the Company prior to the third anniversary of the date each such share was issued to the initial holder thereof (the “Series
B Acquisition Date”). Thereafter, upon the request of a holder of Series B Preferred Stock, we may, at the sole discretion of the Company’s Board, repurchase the Series B Preferred shares held by such holder for (i) beginning on the
third anniversary of the Acquisition Date and continuing for a one-year period, 97% of the Accrued Preference Value and (ii) beginning on the fourth anniversary of the Acquisition Date and thereafter, 100% of the Accrued Preference
Value. At the option of the holder of any shares of Series B Preferred Stock as to which the Board approves such a repurchase request (or at the option of the Board if the common stock is then listed on a national securities
exchange or an over-the-counter market as reported by OTC Markets Group, Inc.), the applicable repurchase consideration may be paid – subject to the availability of an exemption from registration or an effective registration
statement – by issuing a number of shares of common stock determined by dividing such amount (A) by the lower of a price of $10.25 per share of common stock or at the Board’s most recent estimated net asset value per share of common
stock, if the common stock is not then listed as described above or (B) by the lower of $10.25 per share or a 20-day volume weighted average trading price, if the common stock is then so listed.
Additionally – and again subject to the availability of an exemption from registration or an effective registration statement – a holder of Series B Preferred shares shall also have the right from and after the third anniversary of
the applicable Acquisition Date, in the event the Board declines such a requested cash redemption, to require the Company to exchange such shares of Series B Preferred Stock for shares of common stock in accordance with the timing
and valuation criteria described above. For additional information, see “Description of Securities – Preferred Stock – Series B Preferred Share Repurchase Program; Additional Repurchase and Conversion Rights” herein.
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Voting rights
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Our preferred shares will not be entitled to vote except on limited matters affecting preferred shares.
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Use of Proceeds
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If the maximum number of preferred shares are sold, we estimate that the net proceeds of this Offering will be approximately $48,600,000 after deducting organizational and offering expenses and
working capital reserves. See “Use of Proceeds”. Net proceeds from this Offering will be used to acquire Investments, to pay for expenses incurred by us from continued operations, and for any other proper Company purpose.
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(i)
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an annual report with the SEC on Form 10-K;
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(ii)
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quarterly reports with the SEC on Form 10-Q; and
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(iii)
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current reports with the SEC on Form 8-K.
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Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in our operating revenues and/or the underlying value of one
or more of our properties.
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The market for real estate investments is highly competitive and investments in real estate-related assets can be speculative.
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Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
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We could be exposed to environmental liabilities, which could impact the value of real properties that we may acquire or underlying our investments.
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We will likely receive limited representations and warranties from sellers, and may not obtain audited results of prior operations for certain properties in which we have invested
in.
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We may not obtain independent third-party appraisals or valuation reports on all of our investments.
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We may be adversely affected by unfavorable economic conditions, particularly in the specific geographic areas where our investments are concentrated.
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Inflation may adversely affect our financial condition and results of operations.
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Our success is materially dependent on attracting qualified tenants and, when vacancies occur, we may not be able to re-lease or renew leases at the investments held by us on terms
favorable to us, or at all.
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The bankruptcy, insolvency or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating
results and financial condition.
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Significant restrictions on transfer and encumbrance of investments subject to mortgage or other debt financing are expected, and we may experience delays in the sale of an
investment.
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We face possible risks associated with climate change.
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Future debt or capital stock issuances by the Company could dilute the ownership interest of current stockholders, and could subject us to covenants restricting our future financial and operating flexibility.
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We do not have guaranteed cash flow, and if we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and our stockholders’ overall return will be reduced.
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While we are subject to minimum distribution requirements to maintain our status as a REIT, such distributions are not guaranteed and the availability and timing of cash distributions is uncertain.
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We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
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We may change our targeted investment and operational policies without stockholder consent.
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Our Board of Directors can revoke our REIT qualification without stockholder approval.
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Our future growth will depend on our ability to acquire real estate investments in several competitive real estate markets, and lack of diversification in numbers or types of
investments increases our dependence on individual investments.
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We may experience difficulty in ultimately selling any property or groups of properties which no longer fit our investment criteria or are impractical to lease and maintain, which
could force us to sell a property at a price that reduces the return to our investors.
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Subject to broad investment guidelines approved by our Board of Directors, we are dependent on the investment analysis and management services provided by our Advisers and their
key personnel for our success.
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Our investments will be carried at estimated fair value as determined by our Investment Adviser and there may be uncertainty as to the value of these investments.
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We, through our Advisers, are often required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these
policies could result in changes to our reporting of financial condition and results of operations.
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The occurrence of cyber incidents, or a deficiency in our cybersecurity, could cause a disruption to our operations, a compromise or corruption of our confidential information,
and/or damage to our business relationships, all of which could negatively impact our financial results.
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Our Charter permits our Board of Directors to issue stock with terms that may subordinate the rights of common stockholders or preferred shareholders or discourage a third party
from acquiring us in a manner that might result in a premium price to our stockholders.
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Our rights and the rights of our shareholders to recover claims against our officers, directors and our Advisers are limited.
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The Advisory Agreements with our Advisers were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third
party.
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We may have conflicts of interest with our Adviser and other affiliates, which may result in investment decisions that are not in the best interest of our stockholders.
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Our Adviser, its officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of real estate investments, and such conflicts may
not be resolved in our favor.
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We have not adopted any specific conflicts of interest policies, and, therefore, other than in respect of the restrictions placed on our Advisers in the Advisory Agreements, we
will be reliant upon the good faith of our Adviser, officers and directors in the resolution of any conflict.
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We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which could subject us to the risk of
losing properties in foreclosure if our cash flow is insufficient to make loan payments and reduce the cash available for distribution to stockholders.
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High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.
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High mortgage rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and
the amount of cash distributions we can make.
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If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial
results could be materially adversely affected.
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Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.
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•
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Rising interest rates could increase our borrowing costs, adversely affecting our cash flows and reducing the amounts available for distributions to our stockholders.
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We may use floating rate, interest-only or short-term loans to acquire investments.
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Failure to remain qualified as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders.
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•
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Complying with minimum required distributions and other REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
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•
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Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flows.
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•
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The stock ownership limit imposed by the Internal Revenue Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination
opportunities.
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Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, and a failure to make required distributions would subject us to U.S. federal
corporate income tax.
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The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.
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We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise,
diminishing our ability and to pay distributions to our stockholders.
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We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
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There is no trading market for our preferred shares. Your ability to sell your preferred shares, pursuant to our preferred share repurchase program or otherwise, will be limited
and you could lose your entire investment in this offering.
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Shares of our preferred stock have limited voting rights.
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Shares of our preferred stock have no participation in Company profits, while it is anticipated that the shares of Series B Preferred Stock will participate in Company growth to a
significant extent.
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Accrued dividends with respect to the Series B Preferred Stock might be treated as taxable dividends even though holders do not receive any current cash.
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Your interest in us will be diluted if we issue additional shares, which could reduce the overall value of your investment.
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COVID-19, or the future outbreak of other highly infectious or contagious diseases, has and could continue to materially and adversely impact or disrupt our financial condition,
results of operations, cash flows and performance, as well as adversely affect our and our tenants’ financial condition and results of operations.
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Adverse changes in national and local economic and market conditions, including the credit and securitization markets;
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Impacts from governmental laws and regulations, fiscal policies and zoning ordinances, including the impact of environmental laws and regulations, and related compliance costs,
including costs to comply with future changes;
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Takings by condemnation or eminent domain;
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Real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area, which could adversely affect market rental rates;
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The perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties;
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Competition from comparable properties;
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The occupancy rate of our properties;
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The ability to collect all rent from tenants on a timely basis;
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The effects of any bankruptcies or insolvencies of major tenants;
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The expense of re-leasing space;
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Changes in interest rates and in the availability, cost and terms of mortgage funding;
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Economic or physical decline of the areas where our investments are located;
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Deterioration in the physical condition of our investments and resulting maintenance expenses;
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•
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Acts of war or terrorism, including the consequences of terrorist attacks;
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Acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses; and
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Cost of compliance with the Americans with Disabilities Act.
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any future downturn in the U.S. economy and the related reduction in spending, reduced home prices and high unemployment could result in tenant defaults under
leases, vacancies at our office, industrial, retail or multifamily properties, and concessions or reduced rental rates under new leases due to reduced demand;
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the rate of household formation or population growth in our target markets or a continued or exacerbated economic slow-down experienced by the local economies
where our properties are located or by the real estate industry generally may result in changes in the supply of or demand for apartment units in our target markets; and
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the failure of the real estate market to attract the same level of capital investment in the future that it attracts at the time of our purchases or a
reduction in the number of companies seeking to acquire properties may result in the value of our investments not appreciating or decreasing significantly below the amount we pay for these investments.
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Competition for the time and services of personnel that work for us and our affiliates;
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Compensation payable by us to our Advisers and their affiliates for their various services, which may not be on market terms and is payable, in some cases,
whether or not our stockholders receive distributions;
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The possibility that our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of
properties and other investments, and that such conflicts may not be resolved in our favor, thus potentially limiting our investment opportunities, impairing our ability to make distributions and adversely affecting the trading
price of our stock;
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•
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The possibility that if we acquire properties from investment entities affiliated with our Advisers or their affiliates, the price may be higher than we would
pay if the transaction were the result of arm’s-length negotiations with a third party;
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•
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The possibility that our Advisers will face conflicts of interest, since some of their officers are also our officers and two serve as directors of ours,
resulting in actions that may not be in the long-term best interests of our stockholders;
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•
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Our Advisers have considerable discretion with respect to the terms and timing of our acquisition, disposition and leasing transactions;
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•
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The possibility that we may acquire or merge with our Advisers, resulting in an internalization of our management functions; and
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The possibility that the competing demands for the time of our Advisers, their affiliates and our officers may result in them spending insufficient time on our
business, which may result in our missing investment opportunities or having less efficient operations, which could reduce our profitability and result in lower distributions to stockholders.
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•
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we would be taxed as a regular domestic corporation, which under current law, among other things, means being unable to deduct distributions paid to
stockholders in computing our taxable income and being subject to U.S. federal income tax on our taxable income at corporate income tax rates;
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•
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we could be subject to the federal alternative minimum tax and possibly increased state and local taxes;
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•
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we would be required to pay taxes and, therefore, our cash available for distribution to stockholders would be reduced for each of the years during which we
did not qualify as a REIT and for which we had taxable income; and
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•
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unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in
which we failed to qualify as a REIT.
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your investment will be consistent with your fiduciary obligations under ERISA and the Code;
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•
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your investment will be made in accordance with the documents and instruments governing the Benefit Plan, including the Plan’s investment policy;
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•
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your investment will satisfy the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA, if applicable, and other
applicable provisions of ERISA and the Code;
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•
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your investment will impair the liquidity of the Benefit Plan;
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your investment will produce “unrelated business taxable income” for the Benefit Plan;
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•
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you will be able to satisfy plan liquidity requirements as there may be only a limited market to sell or otherwise dispose of our stock; and
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your investment will constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
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•
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under certain circumstances, part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as
unrelated business taxable income if our stock is predominately held by qualified employee pension trusts, such that we are a “pension-held” REIT (which we do not expect to be the case);
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•
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part of the income and gain recognized by a tax exempt investor with respect to our stock would constitute unrelated business taxable income if such investor
incurs debt in order to acquire our preferred shares; and
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•
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part or all of the income or gain recognized with respect to our stock held by social clubs, voluntary employee benefit associations, supplemental unemployment
benefit trusts and qualified group legal services plans which are exempt from federal income taxation under Sections 501(c)(7), (9), (17) or (20) of the Code may be treated as unrelated business taxable income.
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•
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Sales Comparison
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•
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Income Production
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•
|
Cost to Rebuild
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|
Dollar Amount of preferred shares Purchased
|
Purchase Price per
Incremental Unit
in Volume
Discount Range(1)
|
|||||||||
|
Reduced Commission Rate
|
||||||||||
|
$
|
1 – $ 250,000
|
$
|
25.00
|
7.0%
|
||||||
|
$
|
250,001 – 500,000
|
24.75
|
6.0%
|
|||||||
|
$
|
500,001 – 750,000
|
24.50
|
5.0%
|
|||||||
|
$
|
750,001 – 1,000,000
|
24.25
|
4.0%
|
|||||||
|
$
|
1,000,001 –1,500,000
|
24.00
|
3.0%
|
|||||||
|
$ 1,500,001 and up
|
23.75
|
2.0%
|
||||||||
|
(1)
|
Assumes a $25.00 per Share offering price. Discounts will be adjusted appropriately for changes in the offering price.
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|
•
|
$250,000 at $25.00 per Share (total: 10,000 preferred shares) and a 7.0% commission;
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•
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$250,000 at $24.75 per Share (total: 10,101 preferred shares) and a 6.0% commission
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•
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an individual, his spouse, their children under the age of 21 and all pension or trust funds established by each such individual;
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•
|
a corporation, partnership, association, joint‑stock company, trust fund or any organized group of persons, whether incorporated or not;
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|
•
|
an employees’ trust, pension, profit‑sharing or other employee benefit plan qualified under Section 401(a) of the Internal Revenue Code; and
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•
|
all commingled trust funds maintained by a given bank.
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•
|
Any holder of preferred shares may elect to participate in the DRIP.
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•
|
Preferred shares are issued at a 10% discount or at $22.50 per share with a Stated Value of $25 per Share.
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•
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Shares purchased will be maintained in your name in book-entry form at no charge to you.
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•
|
Detailed recordkeeping and reporting will be provided at no charge to you.
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•
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You may opt-out of the DRIP at any time.
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•
|
Series A preferred shareholders in the DRIP will be issued Series A Preferred Shares.
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•
|
Series B preferred shareholders in the DRIP will be issued Series B Preferred Shares, each purchased at the discounted price above, but with a new Stated Value
of $25 per Share.
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•
|
review of operating history, appraisals, market reports, vacancies, deferred maintenance;
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•
|
review of historical and prospective financial information and regulatory disclosures;
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•
|
research relating to the property’s management, industry, markets, products and services, and competitors;
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•
|
verification of collateral; and
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|
•
|
appraisals or opinions of value by third party advisers.
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•
|
Assessment of success in adhering to business plans and compliance with covenants;
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•
|
Periodic and regular contact with property management to discuss financial position, requirements, and accomplishments;
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•
|
Comparisons to other properties in the geographic area or sector, if any;
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•
|
Attendance at and participation in our board meetings; and
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|
•
|
Review of monthly and quarterly consolidated financial statements and financial projections for properties.
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•
|
to borrow money to help with the purchase of property;
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|
•
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to borrow money to help with the rehabilitation of already purchased property;
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•
|
to borrow money against (leverage) already owned properties to help with the purchase and rehabilitation of other properties; and
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•
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to borrow money to facilitate our daily operation.
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|
•
|
if a large number of investors invest through this Offering close in time to each other, it will take time for us to identify appropriate real estate
investments;
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|
•
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We may continue to invest up to 20% of our total assets in real estate securities; or
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|
•
|
if we have capital not in use, we may invest the capital for a short or long period of time in something other than real estate.
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|
•
|
An annual report substantially on the SEC’s Form 10-K, which will include our financials audited by our auditor;
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|
•
|
A quarterly report after quarters 1, 2, and 3, in the form of the SEC’s Form 10-Q, which will include financials for the subject quarter, but the financials
will not be audited by our auditor.
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|
•
|
limitations on capital structure;
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•
|
restrictions on specified investments;
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•
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restrictions on leverage or senior securities;
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•
|
restrictions on unsecured borrowings;
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•
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prohibitions on transactions with affiliates; and
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•
|
compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.
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|
•
|
the Code;
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•
|
current, temporary and proposed Treasury regulations promulgated under the Code;
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•
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the legislative history of the Code;
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•
|
current administrative interpretations and practices of the IRS; and
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•
|
court decisions;
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•
|
the acquisition, ownership and sale or other disposition of our securities, including the United States federal, state, local, foreign and other tax
consequences;
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|
•
|
our election to be taxed as a REIT for United States federal income tax purposes; and
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|
•
|
potential changes in the applicable tax laws.
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•
|
First, we will be taxed at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains, provided, however,
that properly designated undistributed capital gains will effectively avoid taxation at the stockholder level.
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|
•
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Second, if we have (i) net income from the sale or other disposition of “foreclosure property” (which is, in general, property acquired by foreclosure or
otherwise on default of a loan secured by the property) that is held primarily for sale to customers in the ordinary course of business or (ii) other nonqualifying income from foreclosure property, we will be subject to tax at
the highest corporate rate on such income.
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•
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Third, if we have net income from prohibited transactions (which are, in general, certain sales or other dispositions of property (other than foreclosure
property) held primarily for sale to customers in the ordinary course of business), such income will be subject to a 100.0% tax on prohibited transactions.
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•
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Fourth, if we should fail to satisfy the 75.0% gross income test or the 95.0% gross income test (as discussed below), and have nonetheless maintained our
qualification as a REIT because certain other requirements have been met, we will be subject to a tax in an amount equal to the greater of either (i) the amount by which 75.0% of our gross income exceeds the amount qualifying
under the 75.0% test for the taxable year or (ii) the amount by which 95.0% of our gross income exceeds the amount of our income qualifying under the 95.0% test for the taxable year, multiplied in either case by a fraction
intended to reflect our profitability.
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|
•
|
Fifth, if we should fail to satisfy any of the asset tests (as discussed below) for a particular quarter and do not qualify for certain de minimis
exceptions but have nonetheless maintained our qualification as a REIT because certain other requirements are met, we will be subject to a tax equal to the greater of (i) $50,000 or (ii) the amount determined by multiplying
the highest corporate tax rate by the net income generated by the nonqualifying assets that caused us to fail such test.
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•
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Sixth, if we fail to satisfy REIT requirements (other than the income or asset tests) and the violation is due to reasonable cause and not due to willful
neglect, we will maintain our REIT status but we must pay a penalty of $50,000 for each such failure.
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|
•
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Seventh, if we should fail to distribute during each calendar year at least the sum of (i) 85.0% of our REIT ordinary income for such year; (ii) 95.0% of
our REIT capital gain net income for such year (for this purpose such term includes capital gains which we elect to retain but which we report as distributed to our stockholders; see “Annual Distribution Requirements” below);
and (iii) any undistributed taxable income from prior years, we would be subject to a 4.0% excise tax on the excess of such required distribution over the amounts actually distributed.
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|
•
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Eighth, we would be subject to a 100.0% penalty tax with respect to amounts received (or on certain expenses deducted by a taxable REIT subsidiary) if
arrangements among us, our tenants and a taxable REIT subsidiary were not comparable to similar arrangements among unrelated parties.
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|
•
|
Ninth, if we sell property subject to the built-in gains tax, we will be subject to a corporate level tax on such built-in gains if such assets are sold
during the five-year period following the acquisition of such property. Built-in gain assets are assets whose fair market value exceeds the REIT’s adjusted tax basis at the time the asset was acquired from a C corporation and
our initial tax basis in the asset is less than the fair market value of that asset. The results described in this paragraph with respect to the recognition of gain assume that the C corporation will refrain from making an
election to receive different treatment under applicable Treasury Regulations on its tax return for the year in which we acquire the asset from the C corporation. Treasury Regulations exclude from the application of this
built-in gains tax any gain from the sale of property we acquire in an exchange under Section 1031 (a like-kind exchange) or 1033 (an involuntary conversion) of the Code.
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|
•
|
Tenth, our subsidiaries that are C corporations, including our “taxable REIT subsidiaries,” generally will be required to pay federal corporate income tax
on their earnings.
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|
•
|
Eleventh, we may elect to retain and pay income tax on our net capital gain. In that case, a stockholder would include its proportionate share of our
undistributed net capital gain (to the extent we make a timely designation of such gain to the stockholder) in its income, would be deemed to have paid the tax that we paid on such gain, and would be allowed a credit for its
proportionate share of the tax deemed to have been paid, and an adjustment would be made to increase the basis of the stockholder in our capital stock.
|
|
(i)
|
that is managed by one or more trustees or directors;
|
|
(ii)
|
that issues transferable shares or transferable certificates of beneficial interest to evidence its beneficial ownership;
|
|
(iii)
|
that would be taxable as a domestic corporation but for Code Sections 856 through 860;
|
|
(iv)
|
that is not a financial institution or an insurance company within the meaning of the Code;
|
|
(v)
|
that is beneficially owned by 100 or more persons;
|
|
(vi)
|
not more than 50.0% in value of the outstanding capital stock of which is owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during
the last half of each taxable year after applying certain attribution rules;
|
|
(vii)
|
that makes an election to be treated as a REIT for the current taxable year or has made an election for a previous taxable year which has not been terminated or revoked; and
|
|
(viii)
|
which meets certain other tests, described below, regarding the nature of its income and assets.
|
|
1.
|
At least 75.0% of the value of our total assets must be represented by “real estate assets,” cash, cash items and government securities. Our real estate assets include, for this purpose, our
allocable share of real estate assets held by the partnerships in which we own an interest, and the non‑corporate subsidiaries of these partnerships, as well as stock or debt instruments held for less than one year purchased
with the proceeds of an offering of shares or long term debt. Real estate assets are defined to include debt instruments issued by publicly offered REITs that are not secured by a real estate asset (a “nonqualified publicly
offered REIT debt instrument”). Although treated as a real estate asset, the gain on the sale of a nonqualified publicly offered REIT debt instrument does not qualify for purposes of the 75.0% gross income test and not more than
25.0% of the value of our total assets may be represented by nonqualified publicly offered REIT debt instruments.
|
|
2.
|
Not more than 25.0% of the value of our total assets may be represented by securities, other than those in the 75.0% asset class.
|
|
3.
|
Except for certain investments in REITs, qualified REIT subsidiaries, and taxable REIT subsidiaries, the value of any one issuer’s securities owned by us may not exceed 5.0% of the value of our
total assets.
|
|
4.
|
Except for certain investments in REITs, qualified REIT subsidiaries and taxable REIT subsidiaries, we may not own more than 10.0% of the total voting power of any one issuer’s outstanding
securities.
|
|
5.
|
Except for certain investments in REITs, qualified REIT subsidiaries and taxable REIT subsidiaries, we may not own more than 10.0% of the total value of the outstanding securities of any one
issuer, other than securities that qualify for the debt safe harbors discussed below. As described further below, solely for purposes the 10.0% value test, the determination of our interest in the assets of an entity treated as
a partnership for federal income tax purposes in which we own an interest will be based on our proportionate interest in any securities issued by the partnership, excluding for this purpose certain securities described in the
Code.
|
|
6.
|
Not more than 20.0% of our total assets may be represented by the securities of one or more taxable REIT subsidiaries.
|
|
•
|
90.0% of our REIT taxable income; and
|
|
•
|
90.0% of the net income (after tax), if any, from foreclosure property, minus
|
|
•
|
the sum of certain items of noncash income.
|
|
•
|
a citizen or resident of the United States;
|
|
•
|
a corporation, partnership or other entity created in or organized under the laws of the United States or any political subdivision thereof;
|
|
•
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
|
•
|
a trust that (i) is subject to the supervision of a court within the United States and the control of a United States person or (ii) has a valid election
in effect under applicable Treasury Regulations to be treated as a U.S. person.
|
|
•
|
the amount of cash and the fair market value of any property received on such disposition; and
|
|
•
|
the U.S. stockholder’s adjusted basis in such stock for tax purposes.
|
|
•
|
is “not essentially equivalent to a dividend” with respect to a U.S. holder under Section 302(b)(1) of the Code;
|
|
•
|
is a “substantially disproportionate” redemption with respect to a U.S. holder under Section 302(b)(2) of the Code;
|
|
•
|
results in a “complete redemption” of a U.S. holder’s stock interest in the Company under Section 302(b)(3) of the Code; or
|
|
•
|
is a redemption of stock held by a non-corporate shareholder, which results in a partial liquidation of the Company under Section 302(b)(4) of the Code.
|
|
•
|
a lower treaty rate applies and the Non‑U.S. stockholder files with us an IRS Form W‑8BEN evidencing eligibility for that reduced rate or
|
|
•
|
the Non‑U.S. stockholder files an IRS Form W‑8ECI with us claiming that the distribution is income treated as effectively connected to a U.S. trade or
business.
|
|
•
|
the gain is effectively connected with the non‑U.S. stockholder’s United States trade or business, in which case the non‑U.S. stockholder generally will be
subject to the same treatment as U.S. stockholders with respect to such gain; or
|
|
•
|
the non‑U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax
home” in the United States, in which case the non‑U.S. stockholder generally will incur a 30.0% tax on his or her capital gains derived from sources within the United States.
|
|
•
|
fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number;
|
|
•
|
furnishes an incorrect taxpayer identification number;
|
|
•
|
is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or
|
|
•
|
fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder
is subject to backup withholding.
|
|
(1)
Title of Class |
(2)
Amount Authorized |
(3)
Amount Held by Us or for Our Account |
(4)
Amount Outstanding Exclusive of Amounts Shown Under Column (3) |
|||||||||
|
Common stock
|
80,000,000
|
-
|
13,302,572.99
|
|||||||||
|
Preferred Stock: Series A and B
|
20,000,000
|
810,935.02
|
||||||||||
|
(i)
|
Series A Preferred Conversion Right: Each holder of Series A Preferred shares shall be entitled to elect to receive, in lieu of the aggregate
Liquidation Preference for the applicable number of preferred shares, the number of shares of common stock equal to the value of such aggregate Liquidation Preference divided by $10.25.
|
|
(ii)
|
Series B Preferred Conversion Right: Each holder of Series B Preferred shares shall be entitled to elect to receive, in lieu of the aggregate
Accrued Preference Value for the applicable number of preferred shares, the number of shares of common stock equal to such aggregate Accrued Liquidation Preference divided by (i) the lower of $10.25 or the Board’s most
recent estimated net asset value per share of common stock, if the common stock is not then listed on a national securities exchange or an over-the-counter market as reported by OTC Markets Group, Inc. or another similar
organization or (ii) if the common stock is then listed on a national securities exchange or an over-the-counter market as described above, the lower of $10.25 or the volume weighted average of the Last Reported Sale Price
per share of common stock as reported on such market for the twenty (20) trading days prior to the Conversion Date (defined as the date of the giving of notice of an exercise of conversion rights and surrender of the
underlying shares of Series B Preferred Stock to be converted). For purposes of this calculation, the “Last Reported Sale Price” for the common stock means, at any time that the common stock is listed on a national
securities exchange or an over-the-counter market as described above, the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case,
the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the common stock is traded.
|
|
(i)
|
Beginning on the day a stockholder acquires their preferred shares (the “Series A Acquisition Date”) and continuing for a one-year period, the purchase
price for the repurchased preferred shares will be equal to 88% of the Purchase Price for the preferred shares (or $22 per Preferred Share);
|
|
(ii)
|
Beginning on the first anniversary of the Series A Acquisition Date and continuing for a one-year period, the purchase price for the repurchased
preferred shares will be equal to 91% of the Purchase Price for the preferred shares (or $22.75 per Preferred Share);
|
|
(iii)
|
Beginning on the second anniversary of the Series A Acquisition Date and continuing for a one-year period, the purchase price for
the repurchased preferred shares will be equal to 94% of the Purchase Price for the preferred shares (or $23.50 per Preferred Share);
|
|
(iv)
|
Beginning on the third anniversary of the Series A Acquisition Date and continuing for a one-year period, the purchase price for the
repurchased preferred shares will be equal to 97% of the Purchase Price for the preferred shares (or $24.25 per Preferred Share); and
|
|
(v)
|
Beginning on the fourth anniversary of the Series A Acquisition Date and thereafter, the purchase price for the repurchased preferred shares will be
equal to 100% of the Purchase Price for the preferred shares (or $25.00 per Preferred Share).
|
|
(i)
|
Beginning on the third anniversary of the Series B Acquisition Date and continuing for a one-year period, the purchase price for the repurchased Series
B preferred shares will be equal to 97% of the Accrued Preference Value for such Series B preferred shares; and
|
|
(ii)
|
Beginning on the fourth anniversary of the Series B Acquisition Date and thereafter, the purchase price for the repurchased Series B preferred shares
will be equal to 100% of the Accrued Preference Value for such Series B preferred shares.
|
|
•
|
9.8% of our common stock by value or by number of shares, whichever is more restrictive (the “Common Stock Ownership Limit”); or
|
|
•
|
9.8% of our preferred stock by value or by number of shares, whichever is more restrictive (the “Preferred Stock Ownership Limit”).
|
|
•
|
beneficially or constructively owning shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code or
otherwise failing to qualify as a REIT; and
|
|
•
|
making any transfer of shares of our capital stock that, if effective, would result in our being beneficially owned by fewer than 100 persons (as determined under Section
856(a)(5) of the Code).
|
|
•
|
no person’s beneficial or constructive ownership of Company stock will result in us being “closely held” under Section 856(h) of the Code (without
regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a real estate investment trust under the Code;
|
|
•
|
no individual will own shares in excess of the Preferred Stock Ownership Limit or the Common Stock Ownership Limit; and
|
|
•
|
such stockholder does not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity owned or controlled
by us) that would cause us to own, actually or constructively, more than a 9.8% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (or the Board determines that revenue derived from such tenant will
not affect our ability to qualify as a real estate investment trust under the Code).
|
|
•
|
if a transfer to a charitable trust, as described above, would be ineffective for any reason to prevent a violation of the restrictions described
above, the transfer that would have resulted in such violation will be void ab initio, and the proposed transferee shall acquire no rights in such shares; and
|
|
•
|
any transfer that results in the violation of the restriction relating to our shares of capital stock being beneficially owned by fewer than 100
persons will be void ab initio, and the intended transferee shall acquire no rights in such shares.
|
|
•
|
rescind as void any vote cast by a Prohibited Owner prior to our discovery that such shares have been transferred to the trustee; and
|
|
•
|
recast such vote in accordance with the desires of the trustee acting for the benefit of the trust’s beneficiary.
|
|
•
|
the price paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not give value for the shares in connection with the event causing the shares to be
held in the charitable trust (for example, in the case of a gift or devise), the market price of the shares on the day of the event causing the shares to be held in the charitable trust; and
|
|
•
|
the price per share received by the trustee from the sale or other disposition of the shares held in the charitable trust (less any commission and other expenses of a
sale).
|
|
•
|
such shares will be deemed to have been sold on behalf of the charitable trust; and
|
|
•
|
to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that the Prohibited Owner was entitled to receive as described above, the
excess must be paid to the trustee upon demand.
|
|
•
|
the price per share in the transaction that resulted in such transfer to the charitable trust (or, in the case of a gift or devise, the market price at the time of the gift
or devise); and
|
|
•
|
the market price on the date we, or our designee, accept such offer.
|
|
•
|
the cost of operating and maintaining real estate properties
|
|
•
|
the cost of effecting sales and repurchases of our shares and other securities;
|
|
•
|
interest payable on debt, if any, to finance our investments;
|
|
•
|
fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence
reviews of prospective investments and third-party advisory fees;
|
|
•
|
transfer agent and safekeeping fees;
|
|
•
|
fees and expenses associated with marketing efforts;
|
|
•
|
federal and state registration fees, and any stock exchange listing fees in the future;
|
|
•
|
federal, state, and local taxes, if any;
|
|
•
|
independent directors' fees and expenses;
|
|
•
|
brokerage commissions;
|
|
•
|
insurance premiums;
|
|
•
|
direct costs and expenses of administration, including printing, mailing, and staff;
|
|
•
|
fees and expenses associated with independent audits and outside legal costs;
|
|
•
|
costs associated with our reporting and compliance obligations under the 1934 Act, and applicable federal and state securities laws; and
|
|
•
|
all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration
Agreement that will be based upon our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses
associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer, our Chief Financial Officer, Director of Accounting and
Financial Reporting, General Counsel, and any administrative support staff.
|
| Fair Value | ||||||||
|
Investments, at fair value
|
June 30, 2024
|
June 30, 2023
|
||||||
|
5210 Fountaingate, LP
|
$
|
4,950
|
$
|
6,820
|
||||
|
Blackstone Real Estate Income Trust, Inc. - Class S
|
330,828
|
-
|
||||||
|
Capitol Hill Partners, LLC
|
-
|
1,107,795
|
||||||
|
Citrus Park Hotel Holdings, LLC
|
-
|
4,100,000
|
||||||
|
Healthcare Trust, Inc.
|
856,285
|
1,554,693
|
||||||
|
Highlands REIT, Inc.
|
69,322
|
2,794,926
|
||||||
|
Lakemont Partners, LLC
|
791,990
|
829,381
|
||||||
|
Moody National REIT II, Inc.
|
18,759
|
13,853
|
||||||
|
SmartStop Self Storage REIT, Inc. - Class A
|
41,149
|
1,878,092
|
||||||
|
Starwood Real Estate Income Trust, Inc. - Class S
|
24,821
|
-
|
||||||
|
Strategic Realty Trust, Inc.
|
-
|
216,068
|
||||||
|
Summit Healthcare REIT, Inc.
|
-
|
930,852
|
||||||
|
Total
|
$
|
2,138,104
|
$
|
13,432,480
|
||||
|
|
Fair Value
|
|||||||
|
Unconsolidated investments (non-securities), at fair value
|
June 30, 2024
|
June 30, 2023
|
||||||
|
Green Valley Medical Center, LP
|
$
|
2,005,102
|
$
|
2,363,000
|
||||
|
Martin Plaza Associates, LP
|
465,053
|
493,000
|
||||||
|
One Harbor Center, LP
|
-
|
4,076,500
|
||||||
|
Westside Professional Center I, LP
|
1,436,171
|
1,784,000
|
||||||
|
Total
|
$
|
3,906,326
|
$
|
8,716,500
|
||||
|
Property:
|
Property Owners
|
|
Commodore Apartments
|
Madison-PVT Partners LLC
|
|
The Park View (fka as Pon De Leo Apartments)
|
PVT-Madison Partners LLC
|
|
Hollywood Apartments
|
PT Hillview GP, LLC
|
|
Shoreline Apartments
|
MacKenzie BAA IG Shoreline LLC
|
|
Satellite Place Office Building
|
MacKenzie Satellite Place Corp.
|
|
First & Main Office Building
|
First & Main, LP
|
|
1300 Main Office Building
|
1300 Main, LP
|
|
Woodland Corporate Center
|
Woodland Corporate Center Two, LP
|
|
Main Street West Office Building
|
Main Street West, LP
|
|
220 Campus Lane Office Building
|
220 Campus Lane, LLC
|
|
Green Valley Executive Center
|
GV Executive Center, LLC
|
|
One Harbor Center Office Building
|
One Harbor Center, LP
|
|
Largest Tenants
Business
|
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease Expiration
|
Renewal
options
|
||||||
|
Wilson Daniels
|
Wine Wholesaler
|
6,712
|
$
|
431,676
|
03/15/2025
|
1, 5 years
|
|||||
|
NorCal Gold
|
Real Estate
|
2,896
|
$
|
177,336
|
03/31/2026
|
No
|
|||||
|
Bao Ling Li
|
Restaurant
|
3,212
|
$
|
164,960
|
11/30/2030
|
No
|
|||||
|
Whole Health
|
Medical
|
2,186
|
$
|
136,940
|
07/31/2025
|
No
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2025
|
2
|
8,898
|
$
|
568,616
|
51%
|
|
||||||||||
|
2026
|
1
|
2,896
|
$
|
177,336
|
16%
|
|||||||||||
|
2029
|
1
|
1,059
|
$
|
67,649
|
6%
|
|||||||||||
|
Thereafter
|
3
|
6,204
|
$
|
299,846
|
27%
|
|||||||||||
|
Largest Tenants
Business
|
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||||
|
GVM Law
|
Legal Services
|
9,470
|
$
|
499,982
|
09/20/2026
|
2, 5 years
|
|||||
|
Brotlemarkle
|
Accounting Services
|
4,366
|
$
|
242,736
|
07/31/2030
|
2, 5 years
|
|||||
|
Napa Palisades
|
Restaurant
|
3,462
|
$
|
192,446
|
08/31/2040
|
No
|
|||||
|
Moss Adams
|
Accounting Services
|
3,428
|
$
|
164,544
|
06/30/2025
|
No
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2024
|
1
|
1,135
|
$
|
71,280
|
5%
|
|
||||||||||
|
2025
|
2
|
5,648
|
$
|
309,986
|
21%
|
|||||||||||
|
2026
|
1
|
9,470
|
$
|
499,982
|
33%
|
|||||||||||
|
Thereafter
|
5
|
11,122
|
$
|
614,094
|
41%
|
|||||||||||
|
Largest Tenants
Business
|
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||||
|
AUL Corporation
|
Insurance
|
13,806
|
$
|
818,603
|
02/03/2026
|
No
|
|||||
|
State of California
|
Medical
|
4,697
|
$
|
259,721
|
04/30/2028
|
No
|
|||||
|
Strategies To Empower People
|
Medical
|
4,875
|
$
|
219,396
|
12/31/2027
|
No
|
|||||
|
Azzurro Pizzeria
|
Restaurant
|
2,735
|
$
|
144,000
|
03/31/2029
|
1, 5 years
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2024
|
2
|
3,678
|
$
|
171,080
|
9%
|
|||||||||||
|
2026
|
1
|
13,806
|
$
|
818,603
|
44%
|
|||||||||||
|
2027
|
2
|
7,010
|
$
|
341,417
|
19%
|
|||||||||||
|
Thereafter
|
3
|
9,373
|
$
|
512,699
|
28%
|
|
||||||||||
|
Largest Tenants
Business |
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||||
|
OS National, LLC
|
Title Services
|
71,085
|
$
|
1,390,423
|
12/31/2029
|
2, 5 years
|
|||||
|
Polytron
|
Title Services
|
10,737
|
$
|
210,955
|
04/30/2031
|
2, 5 years
|
|||||
|
Ampirical
|
Engineering Consulting
|
9,790
|
$
|
202,522
|
09/30/2030
|
2, 5 years
|
|||||
|
Sun Taiyang
|
Consumer Products
|
4,383
|
$
|
95,042
|
11/30/2029
|
1, 5 years
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2029
|
2
|
75,468
|
$
|
1,485,464
|
78%
|
|||||||||||
|
2030
|
1
|
9,790
|
$
|
202,522
|
11%
|
|||||||||||
|
2031
|
1
|
10,737
|
$
|
210,955
|
11%
|
|||||||||||
|
Largest Tenants
Business
|
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||||
|
Agtech Innovation
|
Research and Development
|
12,940
|
$
|
423,144
|
08/31/2032
|
No
|
|||||
|
Children’s Home Society
|
Non-Profit Education
|
4,042
|
$
|
148,320
|
06/30/2028
|
No
|
|||||
|
Johnston, Martin & Montgomery
|
Accounting
|
3,388
|
$
|
133,668
|
11/02/2024
|
2, 5 years
|
|||||
|
Burger Rehab
|
Physical Therapy
|
4,013
|
$
|
120,050
|
09/22/2028
|
No
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2024
|
2
|
4,459
|
$
|
171,478
|
14%
|
|
||||||||||
|
2025
|
4
|
5,539
|
$
|
177,382
|
14%
|
|||||||||||
|
2027
|
2
|
2,160
|
$
|
82,706
|
6%
|
|||||||||||
|
2028
|
3
|
9,777
|
$
|
322,732
|
26%
|
|||||||||||
|
Thereafter
|
3
|
15,099
|
$
|
497,292
|
40%
|
|||||||||||
|
Largest Tenants
Business
|
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||||
|
Community Housing Opportunities
|
Real Estate
|
8,510
|
$
|
341,095
|
08/31/2026
|
No
|
|||||
|
Arkshire Financial, LLC
|
Financial Services
|
7,016
|
$
|
301,092
|
02/28/2027
|
No
|
|||||
|
Sticky Rice
|
Restaurant
|
4,511
|
$
|
187,077
|
08/17/2034
|
No
|
|||||
|
Larsen & Toubro Limited, Inc.
|
Multinational Conglomerate
|
3,312
|
$
|
178,896
|
02/13/2025
|
2, 5 years
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2024
|
1
|
1,634
|
$
|
65,244
|
3%
|
|
||||||||||
|
2025
|
5
|
7,455
|
$
|
382,183
|
19%
|
|||||||||||
|
2026
|
3
|
13,567
|
$
|
558,583
|
28%
|
|||||||||||
|
Thereafter
|
8
|
23,445
|
$
|
1,017,787
|
50%
|
|||||||||||
|
Largest Tenants
Business
|
Business
|
Square Ft. Occupied
|
Annual Base Rent
|
Lease
Expiration
|
Renewal
options
|
||||||
|
Shimmick Construction Company, Inc.
|
Construction
|
10,221
|
$
|
340,380
|
05/15/2027
|
No
|
|||||
|
Richmond American Homes
|
Home Builder
|
7,993
|
$
|
260,712
|
12/31/2026
|
No
|
|||||
|
Equiventure
|
Health Care
|
6,446
|
$
|
212,724
|
11/16/2033
|
4, 5 years
|
|||||
|
Wiseman Company Mgt.
|
Real Estate
|
4,883
|
$
|
167,064
|
05/31/2026
|
No
|
|||||
|
Year
|
Number of Leases Expiring
|
Total Area
|
Annual Base Rent
|
Percentage of Gross Rent
|
||||||||||||
|
2025
|
5
|
9,220
|
$
|
343,363
|
22%
|
|
||||||||||
|
2026
|
6
|
20,078
|
$
|
687,810
|
43%
|
|||||||||||
|
2027
|
1
|
10,221
|
$
|
340,380
|
22%
|
|||||||||||
|
Thereafter
|
1
|
6,446
|
$
|
212,724
|
13%
|
|||||||||||
|
Property Name
|
Sector
|
Location
|
Square
Feet
|
Units
|
Percentage Leased
|
Annual
Base Rent
|
Monthly Base Rent/Occupied
Unit
|
|||||||||||||||
|
The Park View
|
Multi-Family Residential
|
Oakland, CA
|
36,654
|
39
|
92.3
|
%
|
$
|
1,043,488
|
$
|
2,415
|
||||||||||||
|
Commodore
|
Multi-Family Residential
|
Oakland, CA
|
31,156
|
48
|
87.5
|
%
|
$
|
801,379
|
$
|
1,590
|
||||||||||||
|
Hollywood Apartments
|
Multi-Family Residential
|
Los Angeles, CA
|
36,991
|
54
|
88.9
|
%
|
$
|
1,285,300
|
$
|
2,231
|
||||||||||||
|
Shoreline Apartments
|
Multi-Family Residential
|
Concord, CA
|
67,925
|
84
|
88.1
|
%
|
$
|
1,882,926
|
$
|
2,120
|
||||||||||||
|
Property Name
|
Sector
|
Location
|
Square
Feet
|
Units
|
Percentage
Leased
|
Annual
Base Rent
|
Monthly Base
Rent/Occupied
Unit
|
|||||||||||||||
|
Hollywood Apartments
|
Retail
|
Los Angeles, CA
|
8,610
|
1
|
100.0
|
%
|
$
|
333,356
|
$
|
27,780
|
|
|||||||||||
|
Fiscal 2024
|
|
Fiscal 2023
|
|
|
|
|
|
Commercial properties
|
|
Commercial properties
|
|
Satellite Place Office Building
|
|
Addison Corporate Center (sold in June 2023)
|
|
First & Main Office Building
|
|
Satellite Place Office Building
|
|
1300 Main Office Building
|
|
First & Main Office Building
|
|
Main Street West Office Building
|
|
1300 Main Office Building
|
|
Woodland Corporate Center
|
|
Main Street West Office Building
|
|
220 Campus Lane Office Building (Acquired in September 2023)
|
|
Woodland Corporate Center
|
|
Green Valley Executive Center (Acquired in January 2024)
|
|
|
|
One Harbor Center Office Building (Acquired in May 2024)
|
|
|
|
|
|
|
|
Residential properties
|
|
Residential properties
|
|
Commodore Apartments
|
|
Commodore Apartments
|
|
The Park View
|
|
The Park View
|
|
Hollywood Apartments
|
|
Hollywood Apartments
|
|
Shoreline Apartments
|
|
Shoreline Apartments
|
|
Fiscal Year Ending June 30, :
|
|
Principal
|
|
|
|
2025
|
|
$
|
40,163,288
|
|
|
|
|
|
|
|
|
2026
|
|
|
11,739,585
|
|
|
|
|
|
|
|
|
2027
|
|
|
953,935
|
|
|
|
|
|
|
|
|
2028
|
|
|
8,075,914
|
|
|
|
|
|
|
|
|
2029
|
|
|
10,622,103
|
|
|
|
|
|
|
|
|
Thereafter
|
|
|
45,753,549
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
117,308,374
|
|
| • |
the nature and realizable value of any collateral;
|
| • |
the portfolio company’s ability to make payments;
|
| • |
the portfolio company’s earnings and discounted cash flow;
|
| • |
the markets in which the issuer does business; and
|
| • |
comparisons to publicly traded securities.
|
| • |
private placements and restricted securities that do not have an active trading market;
|
| • |
securities whose trading has been suspended or for which market quotes are no longer available;
|
| • |
debt securities that have recently gone into default and for which there is no current market;
|
| • |
securities whose prices are stale;
|
| • |
securities affected by significant events; and
|
| • |
securities that the Investment Adviser believes were priced incorrectly.
|
| • |
whether the lease stipulates how a tenant improvement allowance may be spent;
|
| • |
whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
|
| • |
whether the amount of a tenant improvement allowance is in excess of market rates;
|
| • |
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
|
| • |
whether the tenant improvements are unique to the tenant or general purpose in nature; and
|
| • |
whether the tenant improvements are expected to have any residual value at the end of the lease.
|
|
Buildings
|
16 – 45 years
|
|
|
|
|
Building improvements
|
1 – 15 years
|
|
|
|
|
Land improvements
|
5 – 15 years
|
|
|
|
|
Furniture, fixtures and equipment
|
3 – 11 years
|
|
|
|
|
In-place leases
|
1 – 10 years
|
| • |
Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group);
|
| • |
The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups);
|
| • |
An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated;
|
| • |
The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control
extend the period of time required to sell the asset or disposal group beyond one year;
|
| • |
The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The price at which a long-lived asset (disposal group) is being marketed is indicative of
whether the entity currently has the intent and ability to sell the asset (disposal group). A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available for immediate sale,
whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale; and
|
| • |
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
|
|
|
|
Dividends
|
|
|||||||||||||||||||||
|
|
|
Common Stock
|
|
|
Series A Preferred Stock
|
|
|
Series B Preferred Stock
|
|
|||||||||||||||
|
During the Quarter Ended
|
|
Per Share
|
|
|
Amount
|
|
|
Per Share
|
|
|
Amount
|
|
|
Per Share
|
|
|
Amount
|
|
||||||
|
September 30, 2023
|
|
$
|
0.125
|
|
|
$
|
1,652,688
|
|
|
$
|
0.375
|
|
|
$
|
268,383
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
December 31, 2023
|
|
|
0.125
|
|
|
|
1,652,367
|
|
|
|
0.375
|
|
|
|
276,600
|
|
|
|
0.750
|
|
|
|
2,222
|
|
|
March 31, 2024
|
|
|
0.125
|
|
|
|
1,660,225
|
|
|
|
0.375
|
|
|
|
281,770
|
|
|
|
0.750
|
|
|
|
8,078
|
|
|
June 30, 2024
|
|
|
0.125
|
|
|
|
1,662,826
|
|
|
|
0.375
|
|
|
|
284,737
|
|
|
|
0.750
|
|
|
|
31,696
|
|
|
|
|
$
|
0.500
|
|
|
$
|
6,628,106
|
|
|
$
|
1.500
|
|
|
$
|
1,111,490
|
|
|
$
|
2.250
|
|
|
$
|
41,996
|
*
|
|
|
|
Dividends
|
|
|||||||||||||
|
|
|
Common Stock
|
|
|
Series A Preferred Stock
|
|
||||||||||
|
During the Quarter Ended
|
|
Per Share
|
|
|
Amount
|
|
|
Per Share
|
|
|
Amount
|
|
||||
|
September 30, 2022
|
|
$
|
0.105
|
|
|
$
|
1,390,290
|
|
|
$
|
0.375
|
|
|
$
|
87,884
|
|
|
December 31, 2022
|
|
|
0.110
|
|
|
|
1,456,391
|
|
|
|
0.375
|
|
|
|
155,909
|
|
|
March 31, 2023
|
|
|
0.115
|
|
|
|
1,520,985
|
|
|
|
0.375
|
|
|
|
209,620
|
|
|
June 30, 2023
|
|
|
0.120
|
|
|
|
1,586,863
|
|
|
|
0.375
|
|
|
|
242,188
|
|
|
|
|
$
|
0.450
|
|
|
$
|
5,954,529
|
|
|
$
|
1.500
|
|
|
$
|
695,601
|
|
|
Name and address of Beneficial Owner
|
|
Nature of Beneficial Ownership
|
Number of Common Shares
Beneficially Owned
|
Percent of Class
|
Number of Series
A Preferred
Shares Owned
|
Percent of Class
|
Number of Series
B Preferred
Shares Owned
|
Percent of Class
|
|
Independent Directors:
|
|
|
|
|
|
|
|
|
|
Tim Dozois
|
|
Directly held
|
5,086.00
|
*
|
5,100.96
|
*
|
4,444.44
|
7.0%
|
|
Tom Frame
|
|
Directly held
|
5,975.00
|
*
|
501.74
|
*
|
|
|
|
Interested Director:
|
|
|
|
|
|
|
|
|
|
Charles “Chip” Patterson
|
|
Indirectly held
|
66,810.00
|
*
|
|
|
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
Robert Dixon
|
|
Directly and Indirectly held
|
66,810.00
|
*
|
4,417.05
|
*
|
|
|
|
Glen Fuller
|
|
Indirectly held
|
66,810.00
|
*
|
|
|
|
|
|
Chip Patterson
|
|
Indirectly held
|
66,810.00
|
*
|
|
|
|
|
|
Angche Sherpa
|
|
|
68,411.00
|
*
|
|
|
|
|
|
Directors and Officers as a group (6 persons)
|
|
Indirectly held
|
79,472.00
|
*
|
|
|
|
|
| * |
Represents less than 1% of the number of shares outstanding.
|
|
Name
|
Age
|
Position
|
Director
Since |
||||
|
Interested Director
|
|||||||
|
Chip Patterson
|
53
|
Chairman of the Board of Directors, Secretary, and General Counsel
|
2019
|
||||
|
Independent Directors
|
|||||||
|
Tim Dozois
|
62
|
Director
|
2012
|
||||
|
Tom Frame
|
82
|
Director
|
2012
|
||||
|
Kjerstin Hatch
|
51
|
Director
|
2024
|
|
Name
|
Age
|
Position
|
||
|
Robert Dixon
|
53
|
Chief Executive Officer and President
|
||
|
Angche Sherpa
|
44
|
Chief Financial Officer and Treasurer
|
||
|
Glen Fuller
|
51
|
Chief Operating Officer
|
||
|
Christine Simpson
|
57
|
Chief Portfolio Manager
|
||
|
Jeri Bluth
|
49
|
Chief Compliance Officer
|
|
•
|
are of high character and integrity;
|
|
•
|
are accomplished in their respective fields, with superior credentials and recognition;
|
|
•
|
have relevant expertise and experience upon which to be able to offer advice and guidance to management;
|
|
•
|
have sufficient time available to devote to our affairs;
|
|
•
|
are able to work with the other members of the Board of Directors and contribute to our success;
|
|
•
|
can represent the long‑term interests of our stockholders as a whole; and
|
|
•
|
are selected such that the Board of Directors represents a range of backgrounds and experience.
|
|
•
|
the selection, purchase and sale of our portfolio investments;
|
|
•
|
our financing activities;
|
|
•
|
leasing of our Investment to tenants;
|
|
•
|
sales of our assets in order to provide liquidity;
|
|
•
|
maintenance and risk mitigation (including insurances acquisition)
|
|
•
|
providing us with real estate advisory services.
|
|
Index to Audited Consolidated Financial Statements
|
|
|
|
|
|
Consolidated Financial Statements
|
|
|
|
|
|
F-2
|
|
|
|
|
|
F-5
|
|
|
|
|
|
F-6
|
|
|
|
|
|
F-7
|
|
|
|
|
|
F-8
|
|
|
|
|
|
F-9
|
| • |
With the assistance of our valuation specialists, we evaluated the reasonableness of certain significant fair value inputs used in the purchase price allocations related
to acquired real estate properties such as market lease rates, carrying costs during lease-up periods, capitalization rates, discount rates, and market absorption periods. The evaluation included comparison of Company
assumptions to independently developed ranges using market data from industry transaction databases and published industry reports.
|
| • |
We evaluated the mathematical accuracy of the valuation models and performed procedures over the completeness and accuracy of the data provided by management.
|
| • |
With the assistance of valuation specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions used in management’s valuation
models such as future cash flows, including the cash flows of underlying real property, risk-adjusted discount rates, cap rates, nature of the investment and local market conditions. The evaluation included comparison of the
Company’s assumptions to market data from industry transaction databases and published industry reports.
|
| • |
For investments sold during the year or subsequent to year end, we evaluated management’s ability to reasonably estimate fair value by comparing management’s historical
estimates to actual results from those sales.
|
| • |
We evaluated the mathematical accuracy of the valuation models and performed procedures over the completeness and accuracy of the data provided by management.
|
| June 30, 2024 | June 30, 2023 | |||||||
|
Assets
|
||||||||
|
Real estate assets
|
||||||||
|
Land
|
$
|
42,758,142
|
$ | 37,163,127 | ||||
|
Building, fixtures and improvements
|
171,487,907
|
132,484,670 | ||||||
|
Intangible lease assets
|
11,440,998
|
8,180,089 | ||||||
|
Less: accumulated depreciation and amortization
|
(14,421,966
|
)
|
(7,112,574 | ) | ||||
|
Total real estate assets, net
|
211,265,081
|
170,715,312 | ||||||
|
Cash and cash equivalents
|
11,854,946
|
17,242,781 | ||||||
|
Restricted cash
|
1,222,393
|
898,238 | ||||||
|
Investments, at fair value
|
2,138,104
|
13,432,480 | ||||||
|
Unconsolidated investment (non-security), at fair value
|
3,906,326
|
8,716,500 | ||||||
|
Investments income, rents and other receivables
|
1,415,943
|
1,205,858 | ||||||
|
Investment acquisition advance
|
- | 100,000 | ||||||
|
Prepaid expenses and other assets
|
1,284,975
|
846,424 | ||||||
|
Total assets
|
$
|
233,087,768
|
$ | 213,157,593 | ||||
|
Liabilities
|
||||||||
|
Mortgage notes payable, net
|
$
|
113,687,699
|
$ | 91,247,384 | ||||
| Notes payable | 1,635,773 | 1,653,937 | ||||||
| Deferred rent and other liabilities | 1,434,476 | 1,158,809 | ||||||
|
Finance lease liabilities
|
1,887,984 | 628,420 | ||||||
| Dividend payable | 2,313,822 | 2,016,855 | ||||||
| Accounts payable and accrued liabilities | 2,425,471 | 1,387,129 | ||||||
| Stock redemption payable | - | 444,999 | ||||||
|
Below-market lease liabilities, net
|
1,284,832
|
1,410,090 | ||||||
|
Due to related entities
|
171,619
|
156,364 | ||||||
|
Contingent liability
|
-
|
1,503,000 | ||||||
| Capital pending acceptance | 297,000 | 538,600 | ||||||
|
Total liabilities
|
125,138,676
|
102,145,587 | ||||||
|
Equity
|
||||||||
|
Common stock, $0.0001 par value, 80,000,000 shares authorized; 13,302,572.99 and 13,243,279.96 shares
issued and outstanding as of June 30, 2024 and June 30, 2023, respectively.
|
1,330
|
1,324 | ||||||
|
Preferred stock, $0.0001 par value, 20,000,000 shares authorized:
|
||||||||
|
Series A Preferred stock, 761,370.46 and 671,340.45 shares issued and outstanding as of June 30, 2024 and June 30, 2023, respectively.
|
76 | 67 | ||||||
|
Series B Preferred stock, 49,564.56 shares
issued and outstanding as of June 30, 2024.
|
5 | - | ||||||
|
Capital in excess of par value
|
137,072,283
|
133,762,999 | ||||||
|
Accumulated deficit
|
(54,715,347
|
)
|
(34,856,258 | ) | ||||
|
Total stockholders’ equity
|
82,358,347
|
98,908,132 | ||||||
|
Non-controlling interests
|
25,590,745
|
12,103,874 | ||||||
|
Total equity
|
107,949,092
|
111,012,006 | ||||||
|
Total liabilities and equity
|
$
|
233,087,768
|
$ | 213,157,593 | ||||
|
Year Ended June 30,
|
||||||||
|
2024
|
2023
|
|||||||
|
Revenue
|
||||||||
|
Rental and reimbursements
|
$ | 15,736,103 | $ | 15,107,219 | ||||
|
Expenses
|
||||||||
|
Depreciation and amortization
|
7,153,411
|
5,273,793
|
||||||
|
Property operating and maintenance
|
6,523,406
|
9,028,493
|
||||||
|
Interest expense
|
6,124,395
|
7,099,968
|
||||||
|
Asset management fees to related party (Note 8)
|
3,224,834
|
3,004,725
|
||||||
|
General and administrative
|
1,060,039
|
913,258
|
||||||
|
Administrative cost reimbursements to related party (Note 8)
|
756,733
|
726,000
|
||||||
|
Professional fees
|
639,696
|
615,132
|
||||||
|
Directors’ fees
|
105,000
|
106,000
|
||||||
|
Transfer agent cost reimbursements to related party (Note 8)
|
66,267
|
92,000
|
||||||
|
Impairment loss on assets held for sale
|
-
|
8,121,090
|
||||||
|
Total operating expenses
|
25,653,781
|
34,980,459
|
||||||
|
Operating loss
|
(9,917,678
|
)
|
(19,873,240
|
)
|
||||
|
Other income (loss)
|
||||||||
|
Dividend and distribution income from equity securities at fair value
|
581,030
|
535,199
|
||||||
|
Net unrealized loss on equity securities at fair value
|
(697,644
|
)
|
(2,079,093
|
)
|
||||
|
Net income from equity method investments at fair value
|
1,827,232
|
2,580,035
|
||||||
|
Net realized gain (loss) from investments
|
(3,016,772
|
)
|
656,984
|
|||||
|
Net loss on disposal of real estate
|
-
|
(352,540
|
)
|
|||||
|
Gain on extinguishment of debt
|
-
|
14,840,728
|
||||||
|
Net loss
|
(11,223,832
|
)
|
(3,691,927
|
)
|
||||
|
Net income attributable to non-controlling interests
|
(853,665
|
)
|
(405,478
|
)
|
||||
|
Net income attributable to preferred stockholders Series A and B
|
(1,153,486
|
)
|
(695,601
|
)
|
||||
|
Net loss attributable to common stockholders
|
$
|
(13,230,983
|
)
|
$
|
(4,793,006
|
)
|
||
|
Net loss per share attributable to common stockholders
|
$
|
(1.00
|
)
|
$
|
(0.36
|
)
|
||
|
Weighted average common shares outstanding
|
13,293,222
|
13,282,928
|
||||||
|
Common Stock
|
Series A Preferred Stock
|
Series B Preferred Stock
|
Total
Stockholders’
Equity
|
Non-controlling
Interests
|
Total Equity
|
|||||||||||||||||||||||||||||||||||||||
|
Number of
Shares
|
Par
Value
|
Number of
Shares
|
Par
Value
|
Number of
Shares
|
Par
Value
|
Additional Paid-
in Capital
|
Accumulated
Deficit
|
|||||||||||||||||||||||||||||||||||||
|
Year Ended June 30, 2024
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2023
|
13,243,279.96
|
$
|
1,324
|
671,340.45
|
$
|
67
|
-
|
$
|
-
|
$
|
133,762,999
|
$
|
(34,856,258
|
)
|
$
|
98,908,132
|
$
|
12,103,874
|
$
|
111,012,006
|
||||||||||||||||||||||||
|
Contributions by non-controlling interest holders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,532,429
|
2,532,429
|
|||||||||||||||||||||||||||||||||
|
Distributions to non-controlling interest holders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,105,408
|
)
|
(1,105,408
|
)
|
|||||||||||||||||||||||||||||||
|
Dividends to common stockholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,628,106
|
)
|
(6,628,106
|
)
|
-
|
(6,628,106
|
)
|
||||||||||||||||||||||||||||||
|
Dividends to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,111,490
|
)
|
(1,111,490
|
)
|
-
|
(1,111,490
|
)
|
||||||||||||||||||||||||||||||
|
Dividends to Series B preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(41,996
|
)
|
(41,996
|
)
|
-
|
(41,996
|
)
|
||||||||||||||||||||||||||||||
|
Net income (loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(12,077,497
|
)
|
(12,077,497
|
)
|
853,665
|
(11,223,832
|
)
|
||||||||||||||||||||||||||||||
|
Operating Partnership Class A conversion to
common stock
|
3,011.35
|
-
|
*
|
-
|
-
|
-
|
-
|
30,866
|
-
|
30,866
|
(30,866
|
)
|
-
|
|||||||||||||||||||||||||||||||
|
Issuance of common stock through reinvestment
of dividends
|
185,819.74
|
19
|
-
|
-
|
-
|
-
|
1,371,332
|
-
|
1,371,351
|
-
|
1,371,351
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock through
reinvestment of dividends
|
-
|
-
|
7,741.20
|
1
|
-
|
-
|
174,178
|
-
|
174,179
|
-
|
174,179
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock through
reinvestment of dividends
|
-
|
-
|
-
|
-
|
2.11
|
-
|
*
|
48
|
-
|
48
|
-
|
48
|
||||||||||||||||||||||||||||||||
|
Issuance of Series A preferred stock
|
-
|
-
|
85,688.31
|
8
|
-
|
-
|
2,140,941
|
-
|
2,140,949
|
-
|
2,140,949
|
|||||||||||||||||||||||||||||||||
|
Issuance of Series B preferred stock
|
-
|
-
|
-
|
-
|
49,562.45
|
5
|
1,227,945
|
-
|
1,227,950
|
-
|
1,227,950
|
|||||||||||||||||||||||||||||||||
|
Increase in liquidation preference - Series B preferred
stock
|
-
|
-
|
-
|
-
|
-
|
-
|
31,497
|
-
|
31,497
|
-
|
31,497
|
|||||||||||||||||||||||||||||||||
|
Operating Partnership Series A Preferred Units issued
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
10,378,457
|
10,378,457
|
|||||||||||||||||||||||||||||||||
|
Operating Partnership Series B Preferred Units issued
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
972,290
|
972,290
|
|||||||||||||||||||||||||||||||||
|
Issuance Operating Partnership Series A Preferred Units
through reinvestment of dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
83,883
|
83,883
|
|||||||||||||||||||||||||||||||||
|
Increase liquidation preference of Operating Partnership
Series B Preferred Units
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
16,205
|
16,205
|
|||||||||||||||||||||||||||||||||
|
Payment of selling commissions and fees
|
-
|
-
|
-
|
-
|
-
|
-
|
(637,490
|
)
|
-
|
(637,490
|
)
|
(213,784
|
)
|
(851,274
|
)
|
|||||||||||||||||||||||||||||
|
Redemptions of common stock
|
(129,538.06
|
)
|
(13
|
)
|
-
|
-
|
-
|
-
|
(954,194
|
)
|
-
|
(954,207
|
)
|
-
|
(954,207
|
)
|
||||||||||||||||||||||||||||
|
Redemptions of Series A preferred stock
|
-
|
-
|
(3,399.50
|
)
|
-
|
*
|
-
|
-
|
(75,839
|
)
|
-
|
(75,839
|
)
|
-
|
(75,839
|
)
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2024
|
13,302,572.99
|
$
|
1,330
|
761,370.46
|
$
|
76
|
49,564.56
|
$
|
5
|
$
|
137,072,283
|
$
|
(54,715,347
|
)
|
$
|
82,358,347
|
$
|
25,590,745
|
$
|
107,949,092
|
||||||||||||||||||||||||
|
Common Stock
|
Series A Preferred Stock
|
Total
Stockholders’
Equity
|
Non-controlling
Interests
|
Total Equity
|
||||||||||||||||||||||||||||||||
|
Number of
Shares
|
Par
Value
|
Number of
Shares
|
Par
Value
|
Additional Paid-
in Capital
|
Accumulated
Deficit
|
|||||||||||||||||||||||||||||||
|
Year Ended June 30, 2023
|
||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2022
|
13,253,571.98
|
$
|
1,325
|
119,416.91
|
$
|
12
|
$
|
121,961,699
|
$
|
(24,108,723
|
)
|
$
|
97,854,313
|
$
|
6,367,904
|
$
|
104,222,217
|
|||||||||||||||||||
|
Contributions by non-controlling interest holders
|
-
|
-
|
-
|
- |
-
|
-
|
-
|
1,333
|
1,333
|
|||||||||||||||||||||||||||
|
Distributions to non-controlling interest holders
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(630,281
|
)
|
(630,281
|
)
|
|||||||||||||||||||||||||
|
Operating Partnership Series A Preferred Units issued
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
5,953,935
|
5,953,935
|
|||||||||||||||||||||||||||
|
Dividends to common stockholders
|
-
|
-
|
-
|
-
|
-
|
(5,954,529
|
)
|
(5,954,529
|
)
|
-
|
(5,954,529
|
)
|
||||||||||||||||||||||||
|
Dividends to Series A preferred stockholders
|
-
|
-
|
-
|
-
|
-
|
(695,601
|
)
|
(695,601
|
)
|
-
|
(695,601
|
)
|
||||||||||||||||||||||||
|
Net income (loss)
|
-
|
-
|
-
|
-
|
-
|
(4,097,405
|
)
|
(4,097,405
|
)
|
405,478
|
(3,691,927
|
)
|
||||||||||||||||||||||||
|
Operating Partnership Class A conversion to
common stock
|
4,478.84
|
-
|
*
|
-
|
-
|
45,908
|
-
|
45,908
|
(45,908
|
)
|
-
|
|||||||||||||||||||||||||
|
Issuance of Series A preferred stock
|
-
|
- |
549,973.38
|
55
|
13,408,034
|
-
|
13,408,089
|
-
|
13,408,089
|
|||||||||||||||||||||||||||
|
Issuance of common stock through reinvestment
of dividends
|
189,289.44
|
19
|
-
|
-
|
1,638,720
|
-
|
1,638,739
|
-
|
1,638,739
|
|||||||||||||||||||||||||||
|
Issuance of Series A preferred stock through
reinvestment of dividends
|
-
|
-
|
3,350.16
|
-
|
*
|
75,379
|
-
|
75,379
|
-
|
75,379
|
||||||||||||||||||||||||||
|
Issuance Operating Partnership Series A Preferred Units
through reinvestment of dividends
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
51,413
|
51,413
|
|||||||||||||||||||||||||||
|
Payment of selling commissions and fees
|
-
|
-
|
-
|
-
|
(1,652,903
|
)
|
-
|
(1,652,903
|
)
|
-
|
(1,652,903
|
)
|
||||||||||||||||||||||||
|
Redemptions of common stock
|
(204,060.30
|
)
|
(20
|
)
|
-
|
-
|
(1,681,988
|
)
|
-
|
(1,682,008
|
)
|
-
|
(1,682,008
|
)
|
||||||||||||||||||||||
|
Redemptions of Series A preferred stock
|
-
|
-
|
(1,400.00
|
)
|
-
|
*
|
(31,850
|
)
|
-
|
(31,850
|
)
|
-
|
(31,850
|
)
|
||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Balance, June 30, 2023
|
13,243,279.96
|
$
|
1,324
|
671,340.45
|
$
|
67
|
$
|
133,762,999
|
$
|
(34,856,258
|
)
|
$
|
98,908,132
|
$
|
12,103,874
|
$
|
111,012,006
|
|||||||||||||||||||
|
Year Ended June 30,
|
||||||||
|
2024
|
2023
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net loss
|
$
|
(11,223,832
|
)
|
$
|
(3,691,927
|
)
|
||
|
Adjustments to reconcile net loss to net cash from operating activities:
|
||||||||
|
Net unrealized loss on equity securities at fair value
|
697,644
|
2,079,093
|
||||||
|
Net income from equity method investments at fair value
|
(1,556,115
|
)
|
(1,216,922
|
)
|
||||
|
Net realized (gain) loss on investments
|
3,016,772
|
(656,984
|
)
|
|||||
|
Net loss on disposal of real estate
|
-
|
352,540
|
||||||
|
Impairment loss on assets held for sale
|
-
|
8,121,090
|
||||||
|
Gain on extinguishment of debt
|
-
|
(14,840,728
|
)
|
|||||
|
Straight-line rent
|
(132,635
|
)
|
(63,543
|
)
|
||||
|
Depreciation and amortization
|
7,153,411
|
5,273,793
|
||||||
|
Amortization of deferred financing costs and debt mark-to-market
|
1,427,349
|
948,554
|
||||||
|
Accretion of above (below) market lease, net
|
(339,767
|
)
|
(474,185
|
)
|
||||
|
Changes in assets and liabilities:
|
||||||||
|
Investments income, rents and other receivables
|
67,547
|
1,416,972
|
||||||
|
Due from related entities
|
17,000
|
401
|
||||||
|
Prepaid expenses and other assets
|
(401,222
|
)
|
(622,948
|
)
|
||||
|
Deferred rent and other liabilities
|
(49,924
|
)
|
(796,083
|
)
|
||||
|
Accounts payable and accrued liabilities
|
743,499
|
(1,945,377
|
)
|
|||||
|
Due to related entities
|
(15,244
|
)
|
(504,520
|
)
|
||||
|
Net cash from operating activities
|
(595,517
|
)
|
(6,620,774
|
)
|
||||
|
Cash flows from investing activities:
|
||||||||
|
Proceeds from sale of investments
|
10,564,732
|
15,236,124
|
||||||
|
Investment acquisition advance
|
-
|
(100,000
|
)
|
|||||
|
Net proceeds from sale of real estate
|
-
|
8,695,764
|
||||||
|
Investments in real estate assets
|
(10,237,605
|
)
|
(18,700,523
|
)
|
||||
|
Purchase of investments
|
(1,062,163
|
)
|
(1,621,948
|
)
|
||||
|
Return of capital distributions
|
938,296
|
12,957,338
|
||||||
|
Payment on contingent liability
|
(1,503,000
|
)
|
(1,154,125
|
)
|
||||
|
Net cash from investing activities
|
(1,299,740
|
)
|
15,312,630
|
|||||
|
Cash flows from financing activities:
|
||||||||
|
Proceeds from mortgage notes payable
|
3,288,715
|
3,221,375
|
||||||
|
Payments on mortgage notes payable
|
(1,337,498
|
)
|
(8,855,266
|
)
|
||||
|
Proceeds from notes payable
|
200,000
|
10,111
|
||||||
|
Payments on notes payable
|
(368,164
|
)
|
(17,005
|
)
|
||||
|
Payment of loan extension fee
|
(876,500 | ) | - | |||||
|
Acquisition cost of below market debt
|
(343,000 | ) | - | |||||
|
Dividend to common stockholders
|
(5,180,792 | ) | (3,848,624 | ) | ||||
|
Dividend to Series A preferred stockholders
|
(894,748 | ) | (620,222 | ) | ||||
|
Dividend to Series B preferred stockholders
|
(2,526 | ) | - | |||||
|
Proceeds from issuance of Series A preferred stock
|
2,140,949
|
13,408,089
|
||||||
|
Proceeds from issuance of Series B preferred stock
|
1,227,950 | - | ||||||
|
Payment on finance lease liabilities
|
(104,416
|
)
|
(30,276
|
)
|
||||
|
Payment of selling commissions and fees
|
(899,372
|
)
|
(1,206,115
|
)
|
||||
|
Contributions by non-controlling interests holders
|
2,532,427
|
1,333
|
||||||
|
Distributions to non-controlling interests holders
|
(834,804
|
)
|
(449,092
|
)
|
||||
|
Redemption of common stock, net of stock redemption payable
|
(1,399,205
|
)
|
(1,585,060
|
)
|
||||
|
Redemption of Series A preferred stock, net of stock redemption payable
|
(75,839 | ) | (31,850 | ) | ||||
|
Capital pending acceptance
|
(241,600
|
)
|
453,600
|
|||||
|
Net cash from financing activities
|
(3,168,423
|
)
|
450,998
|
|||||
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(5,063,680
|
)
|
9,142,854
|
|||||
|
Cash, cash equivalents and restricted cash at beginning of the year
|
18,141,019
|
8,998,165
|
||||||
|
Cash, cash equivalents and restricted cash at end of the year
|
$
|
13,077,339
|
$
|
18,141,019
|
||||
|
Cash and cash equivalents at end of the year
|
$ | 11,854,946 | $ | 17,242,781 | ||||
|
Restricted cash at end of the year
|
1,222,393 | 898,238 | ||||||
|
Total cash, cash equivalents and restricted cash at end of the year
|
$ | 13,077,339 | $ | 18,141,019 | ||||
|
Supplemental disclosure of non-cash financing activities and other cash flow information:
|
||||||||
|
Issuance of common stock through reinvestment of dividends
|
$ | 1,371,351 | $ | 1,638,739 | ||||
|
Issuance of Series A preferred stock through reinvestment of dividends
|
$ | 174,179 | $ | 75,379 | ||||
|
Issuance of Series B preferred stock through reinvestment of dividends
|
$ | 48 | $ | - | ||||
|
Increase in liquidation preference of Series B preferred stock
|
$ | 31,497 | $ | - | ||||
|
Issuance Operating Partnership Preferred Units - Series A through reinvestment of dividends
|
$ | 83,884 | $ | - | ||||
|
Cash paid for interest
|
$ | 4,577,961 | $ | 5,743,630 | ||||
|
Increase in liquidation preference of Operating Partnership Preferred Units - Series B
|
$ | 16,205 | $ | - | ||||
|
Issuance of the Operating Partnership Preferred Units for the purchase of GV Executive Center, LLC (Note 1)
|
$
|
8,703,127
|
$
|
-
|
||||
|
Issuance of the Operating Partnership Preferred Units for the purchase of One Harbor Center, LP (Note 1)
|
$
|
2,647,620
|
$
|
-
|
||||
|
Fair value of assets acquired from consolidation of GV Executive Center, LLC
|
$
|
22,765,656
|
$
|
-
|
||||
|
Fair value of liabilities assumed from consolidation of GV Executive Center, LLC
|
$
|
14,062,529
|
$
|
-
|
||||
|
Fair value of assets acquired from consolidation of One Harbor Center, LP
|
$
|
14,950,638
|
$
|
-
|
||||
|
Fair value of liabilities assumed from consolidation of One Harbor Center, LP
|
$
|
8,797,634
|
$
|
-
|
||||
|
Issuance of the Operating Partnership Preferred Units for the purchase of First & Main, LP (Note 1)
|
$ | - | $ | 2,711,378 | ||||
|
Issuance of the Operating Partnership Preferred Units for the purchase of Main Street West, LP (Note 1)
|
$ | - | $ | 3,242,557 | ||||
|
Fair value of assets acquired from consolidation of First & Main, LP
|
$
|
-
|
$
|
18,507,861
|
||||
|
Fair value of liabilities assumed from consolidation of First & Main, LP
|
$
|
-
|
$
|
13,559,483
|
||||
|
Fair value of assets acquired from consolidation of 1300 Main, LP
|
$
|
-
|
$
|
10,546,464
|
||||
|
Fair value of liabilities assumed from consolidation of 1300 Main, LP
|
$
|
-
|
$
|
8,753,242
|
||||
|
Fair value of assets acquired from consolidation of Main Street West, LP
|
$ | - | $ | 20,699,145 | ||||
|
Fair value of liabilities assumed from consolidation of Main Street West, LP
|
$ | - | $ | 16,119,679 | ||||
|
Fair value of assets acquired from consolidation of Woodland Corporate Center Two, LP
|
$ | - | $ | 11,538,400 | ||||
|
Fair value of liabilities assumed from consolidation of Woodland Corporate Center Two, LP
|
$ | - | $ | 8,295,843 | ||||
|
Reduction in contingent consideration estimate
|
$
|
-
|
$
|
57,875
|
||||
| • |
whether the lease stipulates how a tenant improvement allowance may be spent;
|
| • |
whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
|
| • |
whether the amount of a tenant improvement allowance is in excess of market rates;
|
| • |
whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
|
| • |
whether the tenant improvements are unique to the tenant or general purpose in nature; and
|
| • |
whether the tenant improvements are expected to have any residual value at the end of the lease.
|
| Level I – |
Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I are publicly traded equity securities.
We do not adjust the quoted price for these investments even in situations where we hold a large position and a sale could reasonably impact the quoted price.
|
| Level II – |
Price inputs are quoted prices for similar financial instruments in active markets; quoted prices for identical or similar financial instruments in markets that are not active; and
model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets. Investments which are generally included in this category are publicly traded equity securities with restrictions.
|
| Level III – |
Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. Fair values for these investments are estimated by
management using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public
exchanges for comparable securities, current and projected operating performance, financial condition, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require
significant judgment by management. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had an active market for these investments existed.
|
| • |
the nature and realizable value of any collateral;
|
| • |
the portfolio company’s ability to make payments;
|
| • |
the portfolio company’s earnings and discounted cash flow;
|
| • |
the markets in which the issuer does business; and
|
| • |
comparisons to publicly traded securities.
|
| • |
private placements and restricted securities that do not have an active trading market;
|
| • |
securities whose trading has been suspended or for which market quotes are no longer available;
|
| • |
debt securities that have recently gone into default and for which there is no current market;
|
| • |
securities whose prices are stale;
|
| • |
securities affected by significant events; and
|
| • |
securities that the Investment Adviser believes were priced incorrectly.
|
|
Investee
|
Legal Form
|
Asset Type
|
% Ownership
|
Fair Value as of
June 30, 2024 |
|||||||
|
5210 Fountaingate, LP
|
Limited Partnership
|
LP Interest
|
9.92
|
%
|
$ | 4,950 | |||||
|
Lakemont Partners, LLC
|
Limited Liability Company
|
LP Interest
|
17.02
|
%
|
791,990 | ||||||
|
Green Valley Medical Center, LP
|
Limited Partnership | GP Interest |
1.00 | % | * | 2,005,102 | |||||
|
Martin Plaza Associates, LP
|
Limited Partnership | GP Interest | 1.00 | % | * | 465,053 | |||||
|
Westside Professional Center I, LP
|
Limited Partnership | GP Interest | 1.00 | % | * | 1,436,171 | |||||
|
Total
|
|
|
$
|
4,703,266
|
|||||||
|
Investee
|
Legal Form
|
Asset Type
|
% Ownership
|
Fair Value as of
June 30, 2023
|
|||||||
|
5210 Fountaingate, LP
|
Limited Partnership
|
LP Interest
|
9.92
|
%
|
$ |
6,820
|
|||||
|
Capitol Hill Partners, LLC
|
Limited Liability Company
|
LP Interest
|
23.33
|
%
|
|
1,107,795
|
|||||
|
Citrus Park Hotel Holdings, LLC
|
Limited Liability Company
|
LP Interest
|
35.27
|
%
|
|
4,100,000
|
|||||
|
Lakemont Partners, LLC
|
Limited Liability Company
|
LP Interest
|
17.10
|
%
|
|
829,381
|
|||||
|
Green Valley Medical Center, LP
|
Limited Partnership | GP Interest | 1.00 | % | * | |
2,363,000 | ||||
|
Martin Plaza Associates, LP
|
Limited Partnership | GP Interest | 1.00 | % | * | |
493,000 | ||||
|
One Harbor Center, LP
|
Limited Partnership | GP Interest | 1.00 | % | * | 4,076,500 | |||||
|
Westside Professional Center I, LP
|
Limited Partnership | GP Interest | 1.00 | % | * | |
1,784,000 | ||||
|
Total
|
$
|
14,760,496
|
|||||||||
|
Buildings
|
16 – 45 years
|
|
Building improvements
|
1 – 15 years
|
|
Land improvements
|
5 – 15 years
|
|
Furniture, fixtures and equipment
|
3 – 11 years
|
|
In-place leases
|
1 – 10 years
|
| • |
Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group);
|
| • |
The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups);
|
| • |
An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated;
|
| • |
The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if
events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year;
|
| • |
The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The price at which a long-lived asset (disposal
group) is being marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group). A market price that is reasonable in relation to fair value indicates that the asset (disposal
group) is available for immediate sale, whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale; and
|
| • |
Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
|
|
Property Name:
|
Commodore Apartments
|
Pon de Leo Apartments
|
Hollywood Apartments
|
Shoreline Apartments |
|
Property Owner:
|
Madison-PVT Partners LLC
|
PVT-Madison Partners LLC
|
PT Hillview GP, LLC
|
MacKenzie BAA IG Shoreline LLC |
|
Location:
|
Oakland, CA
|
Oakland, CA
|
Hollywood, CA
|
Concord, CA |
|
Number of Tenants:
|
42
|
36
|
48
|
74 |
|
Year Built:
|
1912
|
1929
|
1917
|
1968 |
|
Ownership Interest:
|
100%
|
100%
|
100%
|
100% |
|
|
|
|
|
|
|
Property Name:
|
Satellite Place Office Building
|
First & Main Office Building
|
1300 Main Office Building
|
Woodland Corporate Center |
|
Property Owner:
|
MacKenzie Satellite Place Corp.
|
First & Main, LP
|
1300 Main, LP
|
Woodland Corporate Center Two, LP |
|
Location:
|
Duluth, GA
|
Napa, CA
|
Napa, CA
|
Woodland, CA |
|
Number of Tenants:
|
4
|
9
|
7
|
14 |
|
Year Built:
|
2002
|
2001
|
2020
|
2004 |
|
Ownership Interest:
|
100%
|
100%
|
100%
|
100% |
| Property Name: | Main Street West Office Building | 220 Campus Lane Office Building | Green Valley Executive Center | One Harbor Center |
| Property Owner: | Main Street West, LP | 220 Campus Lane, LLC | GV Executive Center, LLC | One Harbor Center, LP |
| Location: | Napa, CA | Fairfield, CA | Fairfield, CA | Suisun, CA |
| Number of Tenants: | 8 | 1 | 17 | 13 |
| Year Built: | 2007 | 1990 | 2006 | 2001 |
| Ownership Interest: | 100% | 100% | 100% | 100% |
|
Property Name:
|
220 Campus Lane Office Building
|
|||
|
Acquisition Date:
|
September 8, 2023
|
|||
|
Purchase Price Allocation
|
||||
|
Land
|
$
|
1,357,288
|
||
|
Building
|
859,594
|
|||
| Parking
Lot |
410,116 | |||
| Debt
mark-to-market |
223,000 | |||
|
Total assets acquired
|
$
|
2,849,998
|
||
|
Property Name:
|
Campus Lane Residential Land
|
|||
|
Acquisition Date:
|
September 8, 2023
|
|||
|
Purchase Price Allocation
|
||||
|
Land
|
$
|
1,503,758
|
||
|
Debt mark-to-market
|
120,000
|
|||
|
Total assets acquired
|
$
|
1,623,758
|
||
|
Property Name:
|
Green Valley Executive Center
|
|||
|
Acquisition Date:
|
January 1, 2024
|
|||
|
Purchase Price Allocation
|
||||
|
Land
|
$
|
1,352,865
|
||
|
Building
|
18,193,191
|
|||
|
Site Improvements
|
705,843
|
|||
|
Tenant Improvements
|
617,514
|
|||
|
Lease In Place
|
1,012,044
|
|||
|
Leasing Commissions
|
296,001
|
|||
|
Legal & Marketing Lease Up Costs
|
78,999
|
|||
| Debt mark-to-market |
993,000 | |||
| Solar Finance Lease |
650,276 | |||
|
Total assets acquired
|
23,899,733
|
|||
|
Net leasehold liability
|
(117,611
|
)
|
||
|
Total assets acquired, net
|
$
|
23,782,122
|
||
|
Property Name:
|
One Harbor Center
|
|||
|
Acquisition Date:
|
May 1, 2024
|
|||
|
Purchase Price Allocation
|
||||
|
Land
|
$
|
1,364,866
|
||
|
Building
|
11,209,831
|
|||
|
Site Improvements
|
627,639
|
|||
|
Tenant Improvements
|
633,788
|
|||
|
Lease In Place
|
778,561
|
|||
|
Leasing Commissions
|
230,157
|
|||
|
Legal & Marketing Lease Up Costs
|
60,937
|
|||
|
Debt mark-to-market
|
334,000
|
|||
| Solar Finance Lease |
713,704 | |||
|
Total assets acquired
|
15,953,484
|
|||
|
Net leasehold asset
|
30,212
|
|
||
|
Total assets acquired
|
$
|
15,983,696
|
||
|
|
Year Ended June 30,
|
|||||||
|
|
2024
|
2023
|
||||||
|
|
||||||||
|
Lease income - Operating leases
|
$
|
14,755,307
|
$
|
13,531,788
|
||||
|
Variable lease income (1)
|
980,796
|
1,575,431
|
||||||
|
|
$
|
15,736,103
|
$
|
15,107,219
|
||||
| (1) |
Primarily includes tenant reimbursements for utilities and common area maintenance.
|
|
Year ended June 30, :
|
Rental Income
|
|||
|
2025
|
$
|
12,015,210
|
||
|
2026
|
9,258,288
|
|||
|
2027
|
6,589,707
|
|||
|
2028
|
5,415,188
|
|||
|
2029
|
4,500,143
|
|||
|
Thereafter
|
9,372,528
|
|||
|
Total
|
$
|
47,151,064
|
||
|
|
As of June 30, 2024
|
|||||||||||
|
|
Lease Intangibles
|
Above-Market
Lease Asset
|
Below-Market
Lease Liabilities
|
|||||||||
|
|
||||||||||||
|
Cost
|
$
|
10,738,744
|
$
|
702,254
|
$
|
2,717,150
|
||||||
|
Accumulated amortization
|
(4,168,692
|
)
|
(226,628
|
)
|
(1,432,318
|
)
|
||||||
|
Total
|
$
|
6,570,052
|
$
|
475,626
|
$
|
1,284,832
|
||||||
|
|
||||||||||||
|
Weighted average amortization period (years)
|
4.8
|
4.6
|
4.8
|
|||||||||
|
|
As of June 30, 2023
|
|||||||||||
|
|
Lease Intangibles
|
Above-Market
Lease Asset
|
Below-Market
Lease Liabilities
|
|||||||||
|
|
||||||||||||
|
Cost
|
$
|
7,760,923
|
$
|
419,166
|
$
|
2,346,666
|
||||||
|
Accumulated amortization
|
(2,124,799
|
)
|
(70,653
|
)
|
(936,576
|
)
|
||||||
|
Total
|
$
|
5,636,124
|
$
|
348,513
|
$
|
1,410,090
|
||||||
|
|
||||||||||||
|
Weighted average amortization period (years)
|
4.9
|
5.4
|
5.1
|
|||||||||
|
|
Lease
Intangibles
|
Above-Market
Lease Asset
|
Below-Market
Lease Liabilities
|
|||||||||
|
Amortization
|
$
|
2,043,893
|
$
|
155,975
|
$
|
(495,742
|
)
|
|||||
|
|
Lease
Intangibles
|
Above-Market
Lease Asset
|
Below-Market
Lease Liabilities |
|||||||||
|
Amortization
|
$
|
1,538,631
|
$
|
70,653
|
$
|
(544,838
|
)
|
|||||
|
|
Year Ended June 30,
|
|||||||||||||||||||||||
|
|
2025
|
2026
|
2027
|
2028
|
2029
|
Thereafter
|
||||||||||||||||||
|
In-place leases, to be included in amortization
|
$
|
2,267,974
|
$
|
1,606,267
|
$
|
903,769
|
$
|
620,809
|
$
|
481,998
|
$
|
689,235
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Above-market lease intangibles
|
$
|
174,083
|
$
|
104,811
|
$
|
76,908
|
$
|
39,087
|
$
|
29,089
|
$
|
51,648
|
||||||||||||
|
Below-market lease liabilities
|
(390,901
|
)
|
(300,443
|
)
|
(214,007
|
)
|
(160,000
|
)
|
(120,814
|
)
|
(98,667
|
)
|
||||||||||||
|
|
$
|
(216,818
|
)
|
$
|
(195,632
|
)
|
$
|
(137,099
|
)
|
$
|
(120,913
|
)
|
$
|
(91,725
|
)
|
$
|
(47,019
|
)
|
||||||
|
Fair Value
|
Fair Value | |||||||
|
Asset Type
|
June 30, 2024
|
June 30, 2023 | ||||||
|
Non Traded Companies
|
$
|
1,341,164
|
$ | 7,388,484 | ||||
| GP Interests (Equity method investment with fair value option election) | 3,906,326 |
8,716,500 |
||||||
| LP Interests (Equity method investment with fair value option election) |
796,940 |
6,043,996 |
||||||
|
Total
|
$
|
6,044,430
|
$ | 22,148,980 | ||||
| As of June 30,2024 | ||||||||||||||||
|
Asset Type
|
Total
|
Level I
|
Level II
|
Level III
|
||||||||||||
|
Non Traded Companies
|
$
|
1,341,164
|
$
|
-
|
$
|
-
|
$
|
1,341,164
|
||||||||
| GP Interests | 3,906,326 | - | - | 3,906,326 | ||||||||||||
|
LP Interests
|
796,940
|
-
|
-
|
796,940
|
||||||||||||
|
Total
|
$
|
6,044,430
|
$
|
-
|
$
|
-
|
$
|
6,044,430
|
||||||||
| As of June 30,2023 | ||||||||||||||||
|
Asset Type
|
Total
|
Level I
|
Level II
|
Level III
|
||||||||||||
|
Non Traded Companies
|
$
|
7,388,484
|
$
|
-
|
$
|
-
|
$
|
7,388,484
|
||||||||
| GP Interests | 8,716,500 | - | - | 8,716,500 | ||||||||||||
|
LP Interests
|
6,043,996
|
-
|
-
|
6,043,996
|
||||||||||||
|
Total
|
$
|
22,148,980
|
$
|
-
|
$
|
-
|
$
|
22,148,980
|
||||||||
|
Balance at July 1, 2023
|
$
|
22,148,980
|
||
|
Purchases of investments
|
1,062,163
|
|||
| Transfer to Investments in Real Estate |
(3,892,813 | ) | ||
|
Proceeds from sales, net
|
(10,564,732
|
)
|
||
|
Return of capital distributions
|
(938,296
|
)
|
||
|
Net realized loss
|
(3,016,772
|
)
|
||
|
Net unrealized gain
|
1,245,900
|
|||
|
Ending balance at June 30, 2024
|
$
|
6,044,430
|
|
Balance at July 1, 2022
|
$
|
57,593,244
|
||
|
Purchases of investments
|
1,621,948
|
|||
|
Transfers to Level I
|
(30,753
|
)
|
||
| Transfer to Investments in Real Estate |
(8,488,467 | ) | ||
|
Proceeds from sales, net
|
(5,149,058
|
)
|
||
|
Return of capital distributions
|
(12,973,337
|
)
|
||
| Written off contingent consideration |
(57,875 | ) | ||
|
Net realized gains
|
647,395
|
|||
|
Net unrealized loss
|
(11,014,117
|
)
|
||
|
Ending balance at June 30, 2023
|
$
|
22,148,980
|
|
Asset Type
|
Fair Value
|
Primary Valuation
Techniques
|
Unobservable Inputs Used
|
Range
|
Weighted Average
|
|||||||||
|
|
|
|
||||||||||||
|
Non Traded Companies
|
$
|
1,341,164
|
Market Activity
|
Secondary market industry publication
|
||||||||||
| Acquisition cost |
||||||||||||||
|
|
|
|
||||||||||||
|
GP Interests
|
3,906,326
|
Direct Capitalization Method
|
Capitalization rate
|
6.3% - 6.5%
|
|
6.3%
|
|
|||||||
|
|
Discount rate
|
6.8% - 7.0%
|
|
7.0%
|
|
|||||||||
|
LP Interests
|
791,990
|
Discounted Cash Flow
|
Discount rate
|
7.0%
|
|
7.0%
|
|
|||||||
|
LP Interests
|
4,950
|
Estimated Liquidation Value
|
Sponsor provided value
|
|
|
|
|
|||||||
|
|
$
|
6,044,430
|
|
|
||||||||||
|
Asset Type
|
Fair Value
|
Primary Valuation
Techniques
|
Unobservable Inputs Used
|
Range
|
Weighted Average |
||||||||||
|
Non Traded Companies
|
$ |
7,388,484
|
Market Activity
|
Secondary market industry publication
|
|||||||||||
|
|
|||||||||||||||
| GP Interests | 8,716,500 | Direct Capitalization Method | Capitalization rate | 6.3% - 6.5% | 6.4% |
||||||||||
|
|
|
|
Discount rate
|
6.8% - 7.0%
|
|
7.0%
|
|
||||||||
|
|
|
|
|||||||||||||
|
LP Interests
|
6,037,176
|
Discounted Cash Flow
|
Discount rate
|
0.0% - 9.0%
|
|
7.0%
|
|
||||||||
|
LP Interests
|
6,820
|
Estimated Liquidation Value
|
Sponsor provided value
|
12.0% |
|
12.0% |
|||||||||
|
$
|
22,148,980
|
||||||||||||||
|
Balance Sheet Classification
|
June 30, 2024
|
June 30, 2023
|
|||||||
|
Right-of-use assets:
|
|
||||||||
|
Finance leases
|
Real estate assets, net
|
$
|
1,799,962
|
$
|
644,616 |
||||
|
|
|||||||||
|
Lease liabilities:
|
|
||||||||
|
Finance leases
|
Finance lease liabilities
|
$
|
1,887,984
|
$
|
628,420
|
||||
|
June 30, 2024
|
June 30, 2023 | |||||||
|
Building, fixtures and improvements
|
$
|
2,022,675
|
$ | 658,695 | ||||
|
Accumulated depreciation
|
(222,713
|
)
|
(14,079 | ) | ||||
|
Real estate assets, net
|
$
|
1,799,962
|
$ | 644,616 | ||||
| Year ended June 30, |
||||||||
|
|
2024
|
2023 |
||||||
|
Finance lease cost
|
||||||||
|
Right-of-use asset amortization
|
$
|
180,659
|
$ | 14,079 | ||||
|
Interest expense
|
40,594
|
12,325 | ||||||
|
Total lease cost
|
$
|
221,253
|
$ | 26,404 | ||||
|
Fiscal Year Ending June 30, :
|
Finance Leases
|
|||
|
2025
|
$
|
286,748
|
||
|
2026
|
309,282
|
|||
|
2027
|
317,245
|
|||
|
2028
|
325,585
|
|||
|
2029
|
487,239
|
|||
|
Thereafter
|
495,035
|
|||
|
Total undiscounted lease payments
|
2,221,134
|
|||
|
Less: Imputed interest
|
(333,150
|
)
|
||
|
Net lease liabilities
|
$
|
1,887,984
|
||
|
June 30, 2024
|
June 30, 2023
|
|||||||
|
Finance lease weighted average remaining lease term (years)
|
5.83 years
|
7.53 years |
||||||
|
Finance lease weighted average discount rate
|
5.0
|
%
|
5.0 | % | ||||
|
Cash paid for amounts included in the measurement of lease liabilities
|
||||||||
|
Financing cash flows from finance leases
|
$
|
104,416
|
$ | 30,276 | ||||
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
$
|
1,363,980
|
$ | 658,695 | ||||
|
Total Nonconsolidated VIEs
|
As of June 30, 2024
|
As of June 30, 2023 | ||||||
|
Fair value of investments in VIEs
|
$ | 796,940 |
$
|
6,043,996
|
||||
|
Carrying value of variable interests - assets
|
$ | 867,358 |
$
|
8,037,475
|
||||
|
Maximum Exposure to Loss:
|
||||||||
|
Limited Partnership Interest
|
$ | 867,358 |
$
|
8,037,475
|
||||
|
Asset Management Fee Annual %
|
3.0% |
|
2.0%
|
|
1.5%
|
|
Total Invested
Capital
|
|||||||||
|
Quarter ended:
|
||||||||||||||||
|
September 30, 2023
|
$
|
20,000,000
|
$
|
80,000,000
|
$
|
64,229,944
|
$
|
164,229,944
|
||||||||
|
December 31, 2023
|
$ |
20,000,000
|
$ |
80,000,000
|
$ |
64,735,338
|
$ |
164,735,338
|
||||||||
|
March 31, 2024
|
$ |
20,000,000
|
$ |
80,000,000
|
$ |
74,236,629
|
$ |
174,236,629
|
||||||||
|
June 30, 2024
|
$ |
20,000,000
|
$ |
80,000,000
|
$ |
78,833,574
|
$ |
178,833,574
|
||||||||
|
Quarter ended:
|
||||||||||||||||
|
September 30, 2022
|
$
|
20,000,000
|
$
|
80,000,000
|
$
|
48,639,649
|
$
|
148,639,649
|
||||||||
|
December 31, 2022
|
$ |
20,000,000
|
$ |
80,000,000
|
$ |
52,470,792
|
$ |
152,470,792
|
||||||||
|
March 31, 2023
|
$ |
20,000,000
|
$ |
80,000,000
|
$ |
60,153,751
|
$ |
160,153,751
|
||||||||
|
June 30, 2023
|
$ |
20,000,000
|
$ |
80,000,000
|
$ |
62,313,487
|
$ |
162,313,487
|
||||||||
|
Year ended
|
Unpaid as of
|
|||||||||||||||
|
Types and Recipient
|
June 30, 2024
|
June 30, 2023
|
June 30, 2024
|
June 30, 2023
|
||||||||||||
|
Asset management fees- the Real Estate Adviser
|
$
|
3,224,834
|
$
|
3,004,725
|
$
|
-
|
$
|
-
|
||||||||
|
Administrative cost reimbursements- MacKenzie
|
756,733
|
726,000
|
-
|
-
|
||||||||||||
|
Asset acquisition fees- the Real Estate Adviser (1)
|
1,075,048
|
1,878,356
|
-
|
-
|
||||||||||||
|
Transfer agent cost reimbursements - MacKenzie
|
66,267
|
92,000
|
-
|
-
|
||||||||||||
|
Organization & Offering Cost (2) - MacKenzie
|
102,871
|
499,689
|
79,632
|
151,132
|
||||||||||||
|
Other expenses (3)- MacKenzie and Subsidiary’s GPs
|
-
|
-
|
91,987
|
5,232
|
||||||||||||
|
Due to related entities
|
$
|
171,619
|
$
|
156,364
|
||||||||||||
|
(1)
|
Asset acquisition fees paid to the Real Estate Adviser were capitalized as a part of the real estate basis in accordance with our policy. The acquisition fee paid during the year ended June 30,
2024 was for the acquisition of 220 Campus Lane and Campus Lane Residential in September 2023, Green Valley Executive Center in January 2024 and One Harbor Center in May 2024.
|
|
(2)
|
Offering costs paid by MacKenzie - discussed in this Note under organization and offering costs reimbursements.
|
|
(3)
|
Expenses paid by MacKenzie and General Partner of a subsidiary on behalf of us and subsidiary.
|
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$ |
337,325
|
$ |
405,364
|
||||
|
|
||||||||
|
2026
|
10,626,030
|
230,553
|
||||||
|
|
||||||||
|
Total
|
$
|
10,963,355
|
$
|
635,917
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$
|
389,709
|
$
|
367,933
|
||||
|
|
||||||||
|
2026
|
377,129
|
350,963
|
||||||
|
|
||||||||
|
2027
|
394,900
|
333,192
|
||||||
|
|
||||||||
|
2028
|
412,646
|
315,446
|
||||||
|
|
||||||||
|
2029
|
6,593,966
|
247,220
|
||||||
|
|
||||||||
|
Total
|
$
|
8,168,350
|
$
|
1,614,754
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$ |
6,626,543
|
$ |
92,832
|
||||
|
|
||||||||
|
Total
|
$
|
6,626,543
|
$
|
92,832
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$
|
14,893,842
|
$
|
251,898
|
||||
|
|
||||||||
|
Total
|
$
|
14,893,842
|
$
|
251,898
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$
|
252,564
|
$
|
581,535
|
||||
|
|
||||||||
|
2026
|
263,665
|
570,434
|
||||||
|
|
||||||||
|
2027
|
275,253
|
558,846
|
||||||
|
|
||||||||
|
2028
|
250,402
|
665,438
|
||||||
|
|
||||||||
|
2029
|
253,672
|
689,415
|
||||||
|
|
||||||||
|
Thereafter
|
12,303,773
|
2,139,893
|
||||||
|
|
||||||||
|
Total
|
$
|
13,599,329
|
$
|
5,205,561
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$
|
143,245
|
$
|
495,287
|
||||
|
2026
|
151,701
|
485,957
|
||||||
|
2027
|
161,643
|
476,015
|
||||||
|
2028
|
7,389,593
|
465,422
|
||||||
|
Total
|
$
|
7,846,182
|
$
|
1,922,681
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
Interest
|
||||||
|
2025
|
$
|
81,300
|
$
|
327,367
|
||||
|
|
||||||||
|
2026
|
103,403
|
386,998
|
||||||
|
|
||||||||
|
2027
|
110,427
|
379,973
|
||||||
|
|
||||||||
|
2028
|
5,704,870
|
62,777
|
||||||
|
|
||||||||
|
Total
|
$
|
6,000,000
|
$
|
1,157,115
|
||||
|
Fiscal Year Ending June 30, :
|
Principal
|
|||
|
2025
|
$
|
40,163,288
|
||
|
|
||||
|
2026
|
11,739,585
|
|||
|
|
||||
|
2027
|
953,935
|
|||
|
|
||||
| 2028 |
8,075,914 | |||
| 2029 |
10,622,103 | |||
|
Thereafter
|
45,753,549
|
|||
|
|
||||
|
Total
|
$
|
117,308,374
|
||
|
Year Ended
|
Year Ended
|
|||||||
|
June 30, 2024
|
June 30, 2023
|
|||||||
|
Net loss attributable to common stockholders
|
$
|
(13,230,983
|
)
|
$
|
(4,793,006
|
)
|
||
|
Basic and diluted weighted average common shares outstanding
|
13,293,221.84
|
13,282,927.98
|
||||||
|
Basic and diluted earnings per share
|
$
|
(1.00
|
)
|
$
|
(0.36
|
)
|
||
|
Period
|
Total Number
of Shares Repurchased |
Average Repurchase
Price
Per Share
|
Total Repurchase
Consideration
|
|||||||||
|
During the year ended June 30, 2024
|
||||||||||||
|
Common stock
|
||||||||||||
|
September 1, 2023 through September 30, 2023
|
64,092.00
|
$
|
7.38
|
$
|
472,999
|
|||||||
|
December 1, 2023 through December 31, 2023
|
64,497.30
|
7.38
|
475,990
|
|||||||||
|
June 1, 2024 through June 30, 2024
|
948.76
|
5.50
|
5,218
|
*
|
||||||||
|
129,538.06
|
$
|
954,207
|
||||||||||
|
Series A Preferred stock
|
||||||||||||
|
December 1, 2023 through December 31, 2023
|
400.00
|
$
|
22.75
|
$
|
9,100
|
|||||||
|
March 1, 2024 through March 31, 2024
|
2,000.00
|
22.00
|
44,000
|
|||||||||
|
June 1, 2024 through June 30, 2024
|
999.50
|
22.75
|
22,739
|
|||||||||
|
3,399.50
|
$
|
75,839
|
||||||||||
|
Period
|
Total Number
of Shares Repurchased |
Average Repurchase
Price
Per Share
|
Total Repurchase
Consideration
|
|||||||||
|
During the year ended June 30, 2023
|
||||||||||||
|
Common stock
|
||||||||||||
|
September 1, 2022 through September 30, 2022
|
40,817.06
|
$
|
9.47
|
$
|
386,385
|
|||||||
|
December 1, 2022 through December 31, 2022
|
44,048.79
|
9.44
|
415,968
|
|||||||||
|
March 1, 2023 through March 31, 2023
|
58,896.45
|
7.38
|
434,656
|
|||||||||
|
June 1, 2023 through June 30, 2023
|
60,298.00
|
7.38
|
444,999
|
|||||||||
|
204,060.30
|
$
|
1,682,008
|
||||||||||
|
Series A Preferred stock
|
||||||||||||
|
April 1, 2023 through April 30, 2023
|
1,400.00
|
$ | 22.75 | $ | 31,850 | |||||||
|
Dividends
|
||||||||||||||||||||||||
|
Common Stock
|
Series A Preferred Stock
|
Series B Preferred Stock
|
||||||||||||||||||||||
|
During the Quarter Ended
|
Per Share
|
Amount
|
Per Share
|
Amount
|
Per Share
|
Amount
|
||||||||||||||||||
|
September 30, 2023
|
$
|
0.125
|
$
|
1,652,688
|
$
|
0.375
|
$
|
268,383
|
$
|
-
|
$
|
-
|
||||||||||||
|
December 31, 2023
|
0.125
|
1,652,367
|
0.375
|
276,600
|
0.750
|
2,222
|
||||||||||||||||||
|
March 31, 2024
|
0.125
|
1,660,225
|
0.375
|
281,770
|
0.750
|
8,078
|
||||||||||||||||||
|
June 30, 2024
|
0.125
|
1,662,826
|
0.375
|
284,737
|
0.750
|
31,696
|
||||||||||||||||||
|
$
|
0.500
|
$
|
6,628,106
|
$
|
1.500
|
$
|
1,111,490
|
$
|
2.250
|
$
|
41,996
|
*
|
||||||||||||
|
Distributions
|
||||||||||||||||||||||||
|
Class A Units
|
Series A Preferred Units
|
Series B Preferred Units
|
||||||||||||||||||||||
|
During the Quarter Ended
|
Per Share
|
Amount
|
Per Share
|
Amount
|
Per Share
|
Amount
|
||||||||||||||||||
|
September 30, 2023
|
$
|
0.125
|
$
|
10,372
|
$
|
0.375
|
$
|
177,930
|
$
|
-
|
$
|
-
|
||||||||||||
|
December 31, 2023
|
0.125
|
10,372
|
0.375
|
178,277
|
-
|
-
|
||||||||||||||||||
|
March 31, 2024
|
0.125
|
10,373
|
0.375
|
323,681
|
-
|
-
|
||||||||||||||||||
|
June 30, 2024
|
0.125
|
10,279
|
0.375
|
342,654
|
0.750
|
21,606
|
||||||||||||||||||
|
$
|
0.500
|
$
|
41,396
|
$
|
1.500
|
$
|
1,022,542
|
$
|
0.750
|
$
|
21,606 |
*
|
||||||||||||
|
Dividends
|
||||||||||||||||
|
Common Stock
|
Series A Preferred Stock
|
|||||||||||||||
|
During the Quarter Ended
|
Per Share
|
Amount
|
Per Share
|
Amount
|
||||||||||||
|
September 30, 2022
|
$
|
0.105
|
$
|
1,390,290
|
$
|
0.375
|
$
|
87,884
|
||||||||
|
December 31, 2022
|
0.110
|
1,456,391
|
0.375
|
155,909
|
||||||||||||
|
March 31, 2023
|
0.115
|
1,520,985
|
0.375
|
209,620
|
||||||||||||
|
June 30, 2023
|
0.120
|
1,586,863
|
0.375
|
242,188
|
||||||||||||
|
$
|
0.450
|
$
|
5,954,529
|
$
|
1.500
|
$
|
695,601
|
|||||||||
|
Distributions
|
||||||||||||||||
|
Class A Units
|
Preferred Units
|
|||||||||||||||
|
During the Quarter Ended
|
Per Share
|
Amount
|
Per Share
|
Amount
|
||||||||||||
|
September 30, 2022
|
$
|
0.105
|
$
|
9,403
|
$
|
0.375
|
$
|
107,626
|
||||||||
|
December 31, 2022
|
0.110
|
9,851
|
0.375
|
122,884
|
||||||||||||
|
March 31, 2023
|
0.115
|
10,299
|
0.375
|
177,222
|
||||||||||||
|
June 30, 2023
|
0.120
|
10,229
|
0.375
|
177,589
|
||||||||||||
|
$
|
0.450
|
$
|
39,782
|
$
|
1.500
|
$
|
585,321
|
|||||||||
|
|
|
Initial Costs
|
Subsequent Acquisition
|
Gross Amount Carried at
|
|||||||||||||||||||||||||
|
Property:
|
Acquisition Date
|
Encumbrances at
June 30, 2024 |
Land
|
Building &
Improvements |
Land
|
Building &
Improvements |
June 30, 2024
|
Accumulated
Depreciation |
|||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||
|
Commodore Apartment Building
|
March 5, 2021
|
$
|
6,737,500
|
$
|
5,519,963
|
$
|
7,626,909
|
$
|
-
|
$
|
43,366
|
$
|
13,190,238
|
$
|
(857,966
|
)
|
|||||||||||||
|
The Park View Building
|
March 5, 2021
|
8,387,500
|
4,317,013
|
11,927,323
|
-
|
81,285
|
16,325,621
|
(1,119,423
|
)
|
||||||||||||||||||||
|
Hollywood Apartments
|
October 4, 2021
|
17,280,875
|
8,704,577
|
14,200,645
|
-
|
36,250
|
22,941,472
|
(1,373,138
|
)
|
||||||||||||||||||||
|
Shoreline Apartments
|
May 16, 2022
|
17,608,676
|
7,559,390
|
20,429,810
|
-
|
197,173
|
28,186,373
|
(1,699,638
|
)
|
||||||||||||||||||||
|
Satellite Place
|
June 1, 2022
|
-
|
2,966,129
|
10,910,897
|
-
|
1,100,472
|
14,977,498
|
(1,467,706
|
)
|
||||||||||||||||||||
|
MRC Aurora
|
May 6, 2022
|
-
|
3,050,000
|
361,094
|
-
|
2,261,274
|
5,672,368
|
-
|
|||||||||||||||||||||
| First & Main Office Building | July 23, 2022 | 10,963,355 | 966,314 | 16,952,076 | - | 11,677 | 17,930,067 | (871,246 | ) | ||||||||||||||||||||
| 1300 Main Office Building | October 1, 2022 | 8,168,350 | 805,575 | 14,643,311 | - | 6,244 | 15,455,130 | (593,096 | ) | ||||||||||||||||||||
| Woodland Corporate Center | January 3, 2023 | 6,626,543 | 1,840,468 | 10,212,200 | - | 62,175 | 12,114,843 | (577,567 | ) | ||||||||||||||||||||
| Main Street West Office Building | February 1, 2023 | 14,730,887 | 1,433,698 | 25,220,403 | - | 67,134 | 26,721,235 | (927,368 | ) | ||||||||||||||||||||
| 220 Campus Lane Office Building |
September 1, 2023 | 1,952,292 | 1,357,288 | 1,269,710 | - | 152,069 | 2,779,067 | (30,002 | ) | ||||||||||||||||||||
| Campus Lane Residential |
September 1, 2023 | 1,050,306 | 1,503,758 | - | 16,239 | 267,451 | 1,787,448 | - | |||||||||||||||||||||
| Green Valley Executive Center |
January 1, 2024 | 12,655,979 | 1,352,864 | 20,239,581 | - | 22,417 | 21,614,862 | (388,845 | ) | ||||||||||||||||||||
| One Harbor Center |
May 1, 2024 | 7,525,436 | 1,364,866 | 13,184,961 | - | - | 14,549,827 | (120,651 | ) | ||||||||||||||||||||
|
|
|
$
|
113,687,699
|
$
|
42,741,903
|
$
|
167,178,920
|
$
|
16,239
|
$
|
4,308,987
|
$
|
214,246,049
|
$
|
(10,026,646
|
)
|
|||||||||||||
|
|
Year Ended June 30,
|
|||||||
|
Real Estate
|
2024
|
2023
|
||||||
|
Balance at the beginning of the year
|
$
|
169,647,797
|
$
|
96,299,620
|
||||
|
Additions - acquisitions
|
44,598,252
|
73,348,177
|
||||||
|
Balance at the end of the year
|
$
|
214,246,049
|
$
|
169,647,797
|
||||
|
|
||||||||
|
Accumulated Depreciation
|
||||||||
|
Balance at the beginning of the year
|
$
|
4,917,122
|
$
|
1,181,962
|
||||
|
Depreciation expense
|
5,109,524
|
3,735,160
|
||||||
|
Balance at end of the year
|
$
|
10,026,646
|
$
|
4,917,122
|
||||
| 2.1 |
| 2.2 |
| 2.3 |
| 2.4 |
| 2.5 |
| 2.6 |
| 4.1 |
| 4.2 |
| 4.3 |
| 4.4 |
| 6.1 |
| 6.2 |
| 6.3 |
| 6.4 |
| 6.5 |
| 6.6 |
| 6.7 |
| 6.8 |
| 6.9 |
| 6.10 |
| 6.11 |
| 6.12 |
| 6.13 |
| 6.14 |
| 11.1 |
Consent of Moss Adams LLP* |
| 11.2 |
Consent of Venable LLP (included in Exhibit 12.1) |
| 12.1 |
Opinion of Venable LLP as to the legality of the securities being qualified (incorporated by reference
to the Company's Form 1-A filed, on April 12, 2021) |
|
Signature
|
Title
|
Date
|
|
|
|
|
|
/s/ Robert Dixon
|
Chief Executive Officer
|
November 15, 2024
|
|
Robert Dixon
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Angche Sherpa
|
Chief Financial Officer
|
November 15, 2024
|
|
Angche Sherpa
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Chip Patterson
|
Director
|
November 15, 2024
|
|
Chip Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Tim Dozois
|
Director
|
November 15, 2024
|
|
Tim Dozois
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Tom Frame
|
Director
|
November 15, 2024 |
|
Tom Frame
|
|
|
| /s/ Kjerstin Hatch |
Director |
November 15, 2024 |
| Kjerstin Hatch |
1 Year Mackenzie Realty Capital (QX) Chart |
1 Month Mackenzie Realty Capital (QX) Chart |
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