What changed in this filing

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Item 9A. Controls and Procedures

2021-09-28 compared with 2020-09-21 · 1472 added, 941 removed, 758 unchanged (76% of the section changed)

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disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed by us in the reports we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time

periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required

required disclosure.

Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

As defined in Exchange Act Rules 13a-15(f) and 15d-15(f), internal control over financial reporting is

a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management and other personnel, to

As defined in Exchange Act Rules 13a-15(f) and 15d-15(f), internal control over financial reporting

is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's Board of Directors, management and other personnel, to

provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP.

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Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and the dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of

our management and board of directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or

detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or

procedures may deteriorate.

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance

with authorizations of our management and Board of Directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management's assessment of the effectiveness of our internal control system as of June 30, 2021, was based on the framework for effective internal control over financial reporting described in Internal Control-

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This annual report does not include an attestation report of the Company's independent registered public accounting firm regarding control over financial reporting.

Management's report was not subject to attestation by

the Company's independent registered public accounting firm pursuant to Section 989G of the Dodd-Frank Wall Street and Consumer Protection Act, which exempts non-accelerated filers from the auditor attestation requirement of section 404 (b) of the

Sarbanes-Oxley Act.

Management's report was not subject to attestation

by the Company's independent registered public accounting firm pursuant to Section 989G of the Dodd-Frank Wall Street and Consumer Protection Act, which exempts non-accelerated filers from the auditor attestation requirement of section 404 (b) of

the Sarbanes-Oxley Act.

Changes in Internal Control over Financial Reporting

There were no changes to the Company’s internal control over financial reporting (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that occurred during the year ended June 30, 2020, that have

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Due to the Company’s withdrawal of its BDC status and the consolidation of subsidiaries which own real estate assets, the Company has added new controls and procedures relating to variable interest entities analysis,

business combination/asset acquisition accounting and asset impairment analysis after the BDC withdrawal effective date of December 31, 2020.

There have been no additional changes to the Company’s internal control over financial reporting (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that occurred during the year ended June 30, 2021,

that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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Certain employees of MacKenzie are responsible for our day-to-day operations.

The names, ages and addresses of our Directors and specified executive officers, together with their principal occupations and other affiliations during the past

five years, are set forth below.

The names, ages and addresses of our Directors and specified executive officers, together with their principal occupations and other affiliations during the

past five years, are set forth below.

Each Director and officer holds office for a one-year term to which he or she is elected and until his successor is duly elected and qualifies, or until he resigns or is removed in the manner provided by law.

Board consists of a majority of Independent Directors.

The Director who is an "interested person" (as defined in the 1940 Act) is referred to as an " Interested Director ," a director who is not an Interested Director is referred to herein as an

"Independent Director." The address for all officers and Directors is 89 Davis Road, Suite 100, Orinda CA 94563.

None of our Directors or officers serves as a director for any other company which (i) has a class of securities registered under section

12 of the 1934 Act, (ii) is subject to section 15(d) of the 1934 Act, or (iii) is registered as an investment company under the 1940 Act, and we only have one investment portfolio.

Our Board consists of a majority of “Independent Directors” under the New York Stock Exchange independence standards.

The address for all officers and Directors is 89 Davis Road, Suite 100, Orinda CA 94563.

None of our Directors or officers serves

as a director for any other company which (i) has a class of securities registered under section 12 of the 1934 Act, (ii) is subject to section 15(d) of the 1934 Act, or (iii) is registered as an investment company under the 1940 Act, and we only

have one investment portfolio.

There are no understandings or arrangements between the Company and any officer or director pursuant to which they attained their position, there are no family relationships

between any officers or directors other than as set forth below.

Board of Directors

Position(s) Held with the Company

Term of Office and Length of Time Served

Principal Occupation(s) During Past 5 Years

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Chairman of the Board,

Interested Director

Chip Patterson, an MRC Executive Officer since May of 2012, is managing director, general counsel, and senior vice president of MCMA and the Manager, and a director of their general partner, and a

beneficial owner of all three companies, all since 2005.

Patterson graduated magna cum laude from the University of Michigan Law School with a J.D.

degree and with high distinction and Phi Beta Kappa from the University of California at Berkeley with a B.A.

Patterson graduated magna cum laude from the University of Michigan Law School with a J.

degree and with high distinction and Phi Beta Kappa from the University of California

at Berkeley with a B.

degree in Political Science.

Prior to joining the Manager in July 2003, he was a securities and corporate finance attorney with the national law firm of Davis Wright Tremaine LLP.

Prior to law school, Chip Patterson taught physics, chemistry,

and math at the high school level for three years.

Prior to law school, Chip Patterson

taught physics, chemistry, and math at the high school level for three years.

He also has prior experience in sales, retail, and banking, and is a licensed California Real Estate Broker.

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From January 1996 until March of 2010, Mr.

Dozois was an equity partner of Davis Wright Tremaine LLP, a Seattle-based national law firm, where he specialized in private securities work and structured financings,

with an emphasis on the acquisition, financing and management of real property assets.

He has nearly 30 years of experience supporting leading corporations in securities law compliance, mergers, acquisitions, and real estate acquisition,

financing, and management.

Dozois received his B.S.

in Financial Management from Oregon State University and his J.D.

Dozois was an equity partner of Davis Wright Tremaine LLP, a Seattle-based national law firm, where he specialized in private securities work and structured

financings, with an emphasis on the acquisition, financing and management of real property assets.

He has nearly 30 years of experience supporting leading corporations in securities law compliance, mergers, acquisitions, and real estate

acquisition, financing, and management.

Dozois received his B.

in Financial Management from Oregon State University and his J.

from the University of Oregon School of Law, where he was Order of the Coif.

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Frame was a co-founder of TransCentury Property Management and solely founded Paradigm Investment Corporation.

TransCentury began in May of 1973 and has syndicated and managed over 10,000 residential units.

TransCentury began in May of 1973 and has syndicated and managed over 10,000 residential

During the last 35 years, Mr.

Frame has been a principal in the acquisition, financing, restoration, and sale of over $500,000,000 in residential and commercial real estate.

Paradigm was founded in June 1986 to sponsor and manage private,

closed end "mutual funds." The last of the funds successfully liquidated in December of 2000.

Frame received a BA degree from the University of Kansas in Mathematics in June 1964, a Juris Doctor degree from the San Francisco Law School in

June 1975, and an MBA with honors from Pepperdine University in April 1986.

Paradigm was founded in June 1986 to sponsor and manage

private, closed end "mutual funds." The last of the funds successfully liquidated in December of 2000.

Frame received a BA degree from the University of Kansas in Mathematics in June 1964, a Juris Doctor degree from the San Francisco

Law School in June 1975, and an MBA with honors from Pepperdine University in April 1986.

Frame is currently managing his own investments which include residential units, commercial property, and a portfolio of securities.

As a principal of both MacKenzie and the Adviser, Mr.

Patterson is an Interested Director.

Patterson is not an Independent Director.

Executive Officers

Our current officers are listed in the chart below.

As affiliated persons of MacKenzie and/or the Adviser, the officers are "interested persons," as that term is defined in Section 2(a)(19) of the 1940 Act.

for all officers is 89 Davis Road, Suite 100, Orinda, CA 94563.

Position(s) Held with the Company

Term of Office and Length of Time Served

The address for all officers is 89 Davis Road, Suite 100, Orinda, CA 94563.

Principal Occupation(s) During Past 5 Years

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Chief Executive Officer and President

Dixon has been the senior vice president and co-chief investment officer of MacKenzie and the Adviser since 2005, and a director of their general partner, and a beneficial owner of all three companies

Dixon has been the senior vice president and co-chief investment officer of MacKenzie and the Adviser since 2005, and a director of their general partner, and a beneficial owner of all three

companies since 2005.

Robert Dixon served as an officer and director of Sutter Holding Company, Inc.

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Dixon has been president of Sutter Capital Management since its founding.

Dixon received his Master of Business

Administration degree from Cornell University in 1998 and has held the Chartered Financial Analyst® designation since 1996.

Dixon received his Master of

Business Administration degree from Cornell University in 1998 and has held the Chartered Financial Analyst® designation since 1996.

Dixon received his bachelor's degree in economics from the University of California at Los Angeles in

Angche Sherpa, 40

Chief Financial Officer

Sherpa was appointed to Chief Financial Officer in July 2021 after the retirement of the predecessor officer Mr.

Paul Koslosky.

Chief Financial Officer and Treasurer

Koslosky has been the chief financial officer and treasurer for the Adviser and MacKenzie since 2004.

He owns a beneficial interest in each MacKenzie, the Adviser and their general partner.

responsible for accounting and reporting for MacKenzie, the funds it manages, and other related business interests.

Koslosky graduated from California State University, Hayward in 1983 with a Bachelor of Science degree in Business

Administration.

Prior to joining MacKenzie in 1997, he spent five years with Zellerbach Paper Company, a billion-dollar paper distributor, as staff accountant and, eventually, financial reporting manager.

He worked for Doric Development, an

Alameda, California real estate developer with numerous related business interests.

At Doric he served as accounting manager responsible for the accounting and reporting for commercial development and construction.

From 1995 to 1997 he served

as controller at Doric.

He has been employed by the Company’s administrator, MacKenzie, since 2012.

Prior to his appointment, he was Director of Accounting and Financial Reporting of MacKenzie.

Sherpa graduated from San Francisco State University in 2006 with a Bachelor of Science degree in Business Administration (Accounting) with

He obtained his CPA license from California Board of Accountancy in January 2011.

Prior to joining MacKenzie, he worked as staff auditor from 2007 through 2008 and senior auditor from 2009 through 2012 at a national public

accounting firm Moss Adams LLP.

During his career at Moss Adams, he led various audit teams involved in auditing financial services companies including private equity, asset management and real estate investment companies.

Glen Fuller, 48

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Prior to joining MacKenzie, Mr.

Fuller spent two years running the over the counter trading desk for North

Coast Securities Corp.

Fuller spent two years running the over the counter trading desk for

North Coast Securities Corp.

(previously Morgan Fuller Capital Group) with responsibility for both the proprietary and retail trading desks.

Fuller was also the registered options principal and registered municipal bond principal for North

Coast Securities Corp., a registered broker-dealer.

Fuller was also the registered options principal and registered municipal bond principal for

North Coast Securities Corp.

, a registered broker-dealer.

Fuller previously held his NASD Series 7, general securities registration.

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Patterson is a managing director and general counsel of MCMA and our Manager, where he has been employed since 2003.

He is a director of their general partner and a beneficial owner of all three companies.

Chip Patterson graduated magna cum laude from the University of Michigan Law School with a J.D.

degree and with high distinction and Phi Beta Kappa from the University of California at Berkeley with a B.A.

degree in Political Science.

He is a director of their general partner and a beneficial owner of all three

Chip Patterson graduated magna cum laude from the University of Michigan Law School with a J.

degree and with high distinction and Phi Beta Kappa from the University of California at Berkeley with a B.

degree in Political

Prior to joining the Manager in July 2003, he was a securities and corporate finance attorney with the national law firm of Davis Wright Tremaine LLP.

Prior to law school, Chip Patterson taught physics,

chemistry, and math at the high school level for three years.

Prior to law school, Chip Patterson taught physics, chemistry, and math at the

high school level for three years.

He also has prior experience in sales, retail, and banking, and is a licensed California Real Estate Broker.

Jeri Bluth, 45

Chief Compliance Officer

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with a Bachelor of Arts degree in Business Management from St.

Mary's College of California in October 2004 (with honors),

with a Master of Science degree in Financial Analysis and Investment Management in September 2006, and a Master’s in Business Administration in June 2008.

Section 16(a) Beneficial Ownership Reporting Compliance

Under the federal securities laws, our directors, executive (and certain other) officers and any persons holding more than 10% of our common stock are required to report their ownership of our common stock and any

changes in that ownership to us and the SEC.

Specific due dates for these reports have been established by regulation, and we are required to report any failure to file by these dates in Fiscal 2020.

To our knowledge, based solely on a review of the

copies of beneficial ownership reports furnished to us and written representations that no other reports were required, during Fiscal 2020, all of our directors, officers and more than 10% beneficial owners complied with all applicable 1934 Act

§16(a) filing requirements.

Mary's College of California in October 2004 (with

honors), with a Master of Science degree in Financial Analysis and Investment Management in September 2006, and a Master’s in Business Administration in June 2008.

Code of Ethics

We have adopted a Code of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer, as well as all of our officers, directors and employees.

of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individual's personal interests and our interests.

Code of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individual's personal interests and our interests.

Pursuant to our Code of Ethics, each employee and director must disclose any

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Our Audit Committee is charged with approving any waivers under our Code of Ethics.

The Codes of Ethics can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.

Information on the operation of the Public Reference Room may be obtained by calling the SEC at (202) 942-8090.

Codes of Ethics are also available on the EDGAR database on the SEC's internet site at www.sec.gov, and, upon payment of a duplicating fee, by electronic request at the following e-mail address:

publicinfo@sec.gov or by writing the SEC's Public

Reference Section, Washington, D.C.

A copy of the Code, as amended from time to

time, has been posted to the “Corporate Documents” section of the Company's web site at http://www.mackenziecapital.com/sec-filings.

Audit Committee

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The Audit Committee's responsibilities include establishing guidelines and making recommendations to our Board of Directors regarding the valuation of our loans and investments, selecting our independent registered public

accounting firm, reviewing with such independent registered public accounting firm the planning, scope and results of their audit of our consolidated financial statements, pre‑approving the fees for services performed, reviewing with the independent

registered public accounting firm the adequacy of internal control systems, reviewing our annual consolidated financial statements and periodic filings and receiving our audit reports and consolidated financial statements.

The audit committee is

currently composed of Messrs.

Dozois and Frame, neither of whom is an "interested person" of ours as that term is defined in Section 2(a)(19) of the 1940 Act.

independent registered public accounting firm the adequacy of internal control systems, reviewing our annual consolidated financial statements and periodic filings and receiving our audit reports and consolidated financial statements.

committee is currently composed of Messrs.

Dozois and Frame, both of whom are Independent Directors as described under Item 13 below.

Dozois serves as chairman of the audit committee.

The Company has determined that Mr.

Dozois is a “financial

expert” as defined by SEC rules.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee operates under a charter approved by our Board of Directors.

The members of the nominating and corporate governance committee are Messrs.

and Frame, both of whom are Independent Directors.

Frame serves as chairman of the nominating and corporate governance committee.

The nominating and corporate governance committee is responsible for selecting, researching and nominating

directors for election by our stockholders, selecting nominees to fill vacancies on the Board of Directors or a committee thereof, developing and recommending to the Board of Directors a set of corporate governance principles and overseeing the

evaluation of the Board of Directors and our management.

The nominating and corporate governance committee currently does not consider nominees recommended by our stockholders.

The nominating and corporate governance committee seeks candidates who possess the background, skills and expertise to make a significant contribution to the Board of Directors, our operations,

and our stockholders.

In considering possible candidates for election as a director, the nominating committee takes into account, in addition to such other factors as it deems relevant, the desirability of selecting directors who:

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;

are selected such that the Board of Directors represents a range of backgrounds and experience.

The nominating and corporate governance committee has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees.

In determining whether to

recommend a director nominee, the nominating and corporate governance committee considers and discusses diversity, among other factors, with a view toward the needs of the Board of Directors as a whole.

The nominating and corporate governance

committee generally conceptualizes diversity expansively to include, without limitation, concepts such as race, gender, national origin, differences of viewpoint, professional experience, education, skill and other qualities that contribute to the

Board of Directors, when identifying and recommending director nominees.

The nominating and corporate governance committee believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with

the nominating and corporate governance committee’s goal of creating a Board of Directors that best serves our needs and the interests of our stockholders.

Compensation Committee

We do not have a compensation committee because our executive officers do not receive any direct compensation from us.

EXECUTIVE COMPENSATION

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$1,000 and each chairman of any other committee receives an annual fee of $1,000 for their additional services, if any, in these capacities.

No compensation is expected to be paid to directors who are "interested persons" as that term is defined in

1940 Act §2(a)(19).

No compensation is expected to be paid to directors who are non-independent directors.

The following table details the compensation accrued to Directors fees during Fiscal 2021.

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We do not have a separate compensation committee utilized to determine the appropriate compensation payable to our executive officers and Directors.

The Audit Committee, however, is responsible for, among other things,

annually reviewing and approving the compensation policies for our Directors.

The Audit Committee, however, is responsible for, among other

things, annually reviewing and approving the compensation policies for our Directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table shows the amount of our common stock beneficially owned and based on a total of 12,852,386.91 shares of our common stock outstanding on September 21, 2020, as of that date, by (1) each of our

directors and nominees for director, (2) our executive officers and (3) all directors and executive officers as a group.

As of September 28, 2021, to our knowledge, there were no persons that beneficially owned more than five percent of our voting securities.

The following table shows the amount of our common stock beneficially owned and based on a total of 13,342,821.24 shares of our common stock outstanding on September 28,

2021, as of that date, by (1) each of our directors and nominees for director, (2) our executive officers and (3) all directors and executive officers as a group.

To our knowledge, no other person owns more than 5% of our common stock.

The number of shares beneficially owned by each

entity, person, director or executive officer is determined under the rules of the Securities and Exchange Commission (the “ SEC ”) and the information is not necessarily indicative of beneficial ownership for any other purpose.

rules, beneficial ownership includes any shares as to which the individual has the sole or shared voting power or investment power and also any shares that the individual has the right to acquire within 60 days of September 21, 2020, through the

exercise of any instrument.

number of shares beneficially owned by each entity, person, director or executive officer is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose.

the exercise of any instrument.

Unless otherwise indicated, each person has the sole investment and voting power, or shares such powers with his spouse, with respect to the shares set forth in the table.

Unless known otherwise by us, the beneficial

ownership information is based on each beneficial owner’s most recent Form 3, Form 4, Form 5, Schedule 13D or Schedule 13G, as applicable.

With respect to the Executive Officers listed below, they are limited partners of MPF Successors, LP, as

well as officers of its general partner, which owns 47,262.23 shares in us.

Patterson and his spouse are the sole beneficial owners of 9,222.29 shares owned in a personal holdings limited partnership, and the executive officers

below are also in control of its general partner.

Thus, they are all deemed to have voting and dispositive control over such shares and the number of shares owned below is the number of shares owned by MPF Successors, LP and the personal holding

Unless known otherwise by us, the

beneficial ownership information is based on each beneficial owner’s most recent Form 3, Form 4, Form 5, Schedule 13D or Schedule 13G, as applicable.

With respect to the Executive Officers listed below, they are limited partners of MPF

Successors, LP, as well as officers of its general partner, which owns 50,307.27 shares in us, and Mr.

Sherpa owns 1,414.11 shares directly.

Patterson and his spouse are the sole beneficial owners of 9,816.47 shares owned in a

personal holdings limited partnership, and the executive officers below are also in control of its general partner.

Thus, they are all deemed to have voting and dispositive control over such shares and the number of shares owned below is the

number of shares owned by MPF Successors, LP and the personal holding partnership.

The address of each beneficial owner is 89 Davis Road, Orinda, CA 94563.

Name and address of Beneficial Owner

Nature of Beneficial Ownership

Number of Shares Owned

Nature of Beneficial

Number of Shares

Percent of Class

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Indirectly held

Paul Koslosky

Indirectly held

Angche Sherpa

Directly and Indirectly held

Directors and Officers as a group (6 person)

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We are managed by MacKenzie, which is owned by three sub-partnerships that are owned in varying percentages by MacKenzie and the Adviser employees and the extended family of Messrs.

Patterson, Chip Patterson, Glen

Fuller and Robert Dixon.

Patterson, Chip Patterson,

Glen Fuller and Robert Dixon.

The general partner of MacKenzie is MCM-GP, Inc., a California corporation owned by the same individuals.

The majority of the beneficial interests of MacKenzie are owned by C.E.

The majority of the beneficial interests of MacKenzie are owned by C.

Patterson, Berniece A.

Patterson, Robert Dixon,

Glen Fuller, and Chip Patterson, in addition to other family members.

Certain non-family employees of MacKenzie own minority interests in MacKenzie that represent in the aggregate less than 10% of the equity in MacKenzie.

MacKenzie manages all of our

affairs except for providing investment advice.

Robert Dixon, Glen Fuller, and Chip Patterson, in addition to other family members.

Certain non-family employees of MacKenzie own non-controlling interests in MacKenzie that represent in the aggregate less than 10% of the equity in MacKenzie.

MacKenzie manages all of our affairs except for providing investment advice.

We are advised by the Adviser, whose investment team members have an average of nearly 20 years of experience investing in real estate-related securities.

The Adviser is registered with the SEC and is owned by the same

beneficial owners and in the same proportions as MacKenzie.

The Adviser is registered with the SEC and is owned by the

same beneficial owners and in the same proportions as MacKenzie.

The Adviser is led by its investment team:

Patterson, Founder and Managing Director of the General Partner of MacKenzie and the Adviser;

Fuller, who serves as Chief Operating

Officer and Managing Director of the General Partner of MacKenzie and the Adviser;

Fuller, who serves as Chief

Operating Officer and Managing Director of the General Partner of MacKenzie and the Adviser;

Chip Patterson, who serves as Managing Director and General Counsel, and Director of the General Partner of MacKenzie and the Adviser;

Dixon, who serves as

Chief Investment Officer and Managing Director of the General Partner of MacKenzie and the Adviser;

Koslosky, who serves as Chief Financial Officer and Treasurer of the General Partner of MacKenzie and the Adviser;

serves as Chief Investment Officer and Managing Director of the General Partner of MacKenzie and the Adviser;

Angche Sherpa, who serves as Chief Financial Officer and Treasurer of the General Partner of MacKenzie and the Adviser;

and Christine E.

who serves as Chief Portfolio Manager and Senior Vice President of Research for the General Partner of MacKenzie and the Adviser.

Simpson, who serves as Chief Portfolio Manager and Senior Vice President of Research for the General Partner of MacKenzie and the Adviser.

We have entered into two affiliated contracts—the Advisory Agreement, under which the Adviser serves as our investment adviser, and the Administration Agreement, under which MacKenzie furnishes us with certain

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Payments under the Investment Advisory Agreement in future

periods (after the up-front payment of the Portfolio Structuring Fee) are (i) a percentage of the value of our Gross Invested Capital;

and (ii) incentive fees based on our income and our performance above specified hurdles (except in the year of

liquidation).

periods (after the up-front payment of the Portfolio Structuring Fee) are (i) a percentage of the value of our Invested Capital;

and (ii) incentive fees based on our income and our performance above specified hurdles (except in the year of liquidation).

In Fiscal 2021, 2020 and 2019, Management fees accrued to the Adviser under the Advisory Agreement were $2,689,699, $2,549,076 and $3,996,097 respectively.

Administration fees accrued and payable under the Administration Agreement for

Fiscal 2020, 2019 and 2018, were $680,000, $570,667 and $432,000, respectively.

Administration fees accrued and payable under

the Administration Agreement for Fiscal 2021, 2020 and 2019, were $620,800 and $680,000, $570,667, respectively.

Administration Agreement fees occur on an ongoing basis as expenses are incurred on our behalf by MacKenzie.

However, if MacKenzie withdraws as our administrator, it is

liable for any expenses we incur as a result of such withdrawal.

The 1940 Act extensively regulates conflicts of interests between BDCs, their directors, investment advisers and their affiliates.

For example, the 1940 Act and rules thereunder generally prohibit a BDC's employees,

officers, directors, investment adviser and their affiliates from (i) selling securities or property to the BDC, (ii) buying securities or property from the BDC, (iii) borrowing money or property from the BDC, or (iv) entering into joint transactions

with the BDC or a company controlled by it.

The 1940 Act further prohibits a wider group of persons affiliated with a BDC from entering into such transactions with a BDC unless approved by the BDC's stockholders.

In order to ensure that we do not engage in any transactions with any persons affiliated with us that are prohibited by the 1940 Act, we have implemented certain written policies and procedures whereby our executive

MacKenzie withdraws as our administrator, it is liable for any expenses we incur as a result of such withdrawal.

Related Party Transaction Approval

The 1940 Act extensively regulates conflicts of interests between BDCs, their directors, investment advisers and their affiliates, which has governed while we were registered as a BDC.

For example, the 1940 Act and

rules thereunder generally prohibit a BDC's employees, officers, directors, investment adviser and their affiliates from (i) selling securities or property to the BDC, (ii) buying securities or property from the BDC, (iii) borrowing money or

property from the BDC, or (iv) entering into joint transactions with the BDC or a company controlled by it.

The 1940 Act further prohibits a wider group of persons affiliated with a BDC from entering into such transactions with a BDC unless

approved by the BDC's stockholders.

In order to ensure that we did not engage in any transactions with any persons affiliated with us that are prohibited by the 1940 Act, we implemented certain written policies and procedures whereby our executive

officers screen each of our transactions for any possible affiliations between the issuer in which we invest, us, companies controlled by us and our executive officers and directors.

We do not enter into any agreements unless and until we are

satisfied that doing so does not violate our Charter or raise concerns under the 1940 Act or, if such concerns exist, we have taken appropriate actions to seek board review and exemptive or other relief for such transaction.

satisfied that doing so does not violate our Charter or raise concerns under the 1940 Act or, if such concerns existed, we took appropriate actions to seek board review and exemptive or other relief for such transaction.

Our Board of Directors

review these procedures on an annual basis.

There are no plans to eliminate or amend these procedures, regardless of whether we remain a BDC.

Our directors have been divided into two groups — interested directors and Independent Directors.

An interested director is an "interested person" as defined in 1940 Act §2(a)(19).

Our only interested director is

Charles “Chip” Patterson.

Our independent directors are Tim Dozois and Tom Frame.

There are no plans to eliminate or amend these procedures, regardless of the fact that we are no longer a BDC.

We have also adopted a Code of Ethics which applies to, among others, our senior officers, including our Chief Executive Officer and Chief Financial Officer, as well as all of our officers,

directors and employees.

Our Code of Ethics requires that all employees and directors avoid any conflict, or the appearance of a conflict, between an individual’s personal interests and our interests.

Pursuant to our Code of Ethics, each employee

and director must disclose any conflicts of interest, or actions or relationships that might give rise to a conflict, to our Chief Compliance Officer.

Our Audit Committee is charged with approving any waivers under our Code of Ethics.

Director Independence

We have determined that both Messrs.

Dozois and Frame are Independent Directors.

In addition, although our shares are not listed for trading on any national securities exchange,

a majority of our directors, and all of the members of the audit committee and the conflicts committee, are “independent” as defined by the New York Stock Exchange.

The New York Stock Exchange standards provide that to qualify as an independent

director, in addition to satisfying certain bright-line criteria, our board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization

that has a relationship with us).

Our board of directors has affirmatively determined that Messrs.

Dozois and Frame each satisfies the New York Stock Exchange independence standards.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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statements and are not reported under “Audit Fees.” These services include accounting consultations in connection with acquisitions, consultations concerning financial accounting and reporting standards.

Tax Fees were for professional services for federal, state and international tax compliance, tax advice and tax planning and include preparation of federal and state income tax

returns, and other tax research, consultation, correspondence and advice.

Tax Fees were for professional services for federal, state and international tax compliance, tax advice and tax planning and include preparation of federal and state income

tax returns, and other tax research, consultation, correspondence and advice.

All Other Fees are for services other than the services reported above.

These fees were incurred for their review of our registration statements.

The amounts incurred during

Fiscal 2018 were reimbursed by the Adviser under the Advisory Agreement.

The Audit Committee has concluded the provision of the non-audit services listed above is compatible with maintaining the independence of Moss Adams LLP.

Moss Adams LLP did not bill the Adviser or MacKenzie, for any

non-audit services in Fiscal 2020, 2019 or 2018.

non-audit services in Fiscal 2021, 2020, and 2019.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

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management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date.

The Audit Committee may

also pre-approve particular services on a case-by-case basis.

The Audit Committee

may also pre-approve particular services on a case-by-case basis.

EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

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The Consolidated Financial Statements listed in the Index to Consolidated Financial Statements on Page F-1.

Consolidated Financial Statement Schedule:

Schedule III- Real Estate Operating Properties and Accumulated Depreciation is set forth beginning on page S-1 hereof.

The Exhibits listed in the Exhibit Index below.

Description of Document

Contribution Agreement by and between MacKenzie Realty Operating Partnership, LP and the Addison Group, Dated June 8,

Contribution Agreement by and between MacKenzie Realty Operating Partnership, LP and the Addison Group, dated June 8, 2020 (incorporated by reference to the Registrant's Form 8-K (File No.

814-00961 filed on

June 9, 2020)

Articles of Amendment and Restatement (incorporated by reference to Registrant's Post-Effective Amendment No.

Registrant's Registration Statement on Form N-2 (File No.

3 to Registrant's Registration Statement on Form N-2 (File No.

333-181853), filed on May 14, 2014)

First Amended and Restated Bylaws (incorporated by reference to Registrant's Pre-Effective Amendment No.

the Registration Statement on Form N-2 (File No.

333-181853), filed on July 19, 2013)

Amended and Restated Investment Advisory Agreement with MCM Advisers, LP dated as of October 1, 2017

(incorporated by reference to Registrant's Post-Effective Amendment No.

3 to the Registration Statement on Form N-2 (File No.

Series A Preferred Articles Supplementary (incorporated by reference to Registrant's Form 1-A (File No.

000-55006), filed on April 12, 2021)

Second Amended & Restated Bylaws (incorporated by reference to Registrant's Form 8-K (File No.

000-55006), filed on January 12, 2021)

Amended and Restated Investment Advisory Agreement with MCM Advisers, LP dated as of October 1, 2017 (incorporated by reference to Registrant's Post-Effective Amendment No.

3 to the Registration Statement on

Form N-2 (File No.

333-212804), filed on November 9, 2017)

Amendment to the Amended and Restated Investment Advisory Agreement dated as October 1, 2018 (incorporated by

reference to Registrant’s Post-Effective Amendment No.

5 to the Registration Statement on Form N-2 (File No.

Amendment to the Amended and Restated Investment Advisory Agreement dated as of October 1, 2018 (incorporated by reference to Registrant’s Post-Effective Amendment No.

5 to the Registration Statement on Form

N-2 (File No.

333-212804), filed on October 29, 2018)

Agreement of Limited Partnership of MacKenzie Realty Operating Partnership, LP, Dated May 20, 2020

Form of Investment Adviser Introducing Agreement (pre-December 2016) (incorporated by reference to the Registration

Statement on Form N-2(File No.

333-212804) filed on August 1, 2016)

Form of Amendment to Pre-December 2016 Investment Adviser Introducing Agreement (incorporated by reference to

Registrant's Pre-Effective Amendment No.

2 to Registration Statement on Form N-2 (File No.

333-212804) filed on December 19, 2016)

Form of Investment Adviser Introducing Agreement (beginning December 2016) (incorporated by reference to

Registrant's Pre-Effective Amendment No.

2 to Registration Statement on Form N-2 (File No.

333-212804) filed on December 19, 2016)

Marketing Services Agreement with Arete Wealth Management, LLC dated December 20, 2016 (incorporated by

reference to Registrant's Post-Effective Amendment No.

1 to the Registration Statement on Form N-2 (File No.

333-212804) filed on December 22, 2016)

Form of Sales Agent Agreement (pre August 6, 2014) (incorporated by reference to Registrant's Post-Effective

Amendment No.

2 to the Registration Statement on Form N-2 (File No.

333-181853) filed on September 5, 2013)

Form of Amendment to Sales Agent Agreement (incorporated by reference to Registrant's Post-Effective Amendment No.

to the Registration Statement on Form N-2 (File No.

333-181853) filed on August 6, 2014)

Form of Sales Agent Agreement (for use after August 6, 2014) (incorporated by reference to Registrant's

Post-Effective Amendment No.

4 to the Registration Statement on Form N-2 (File No.

Operating Agreement of PVT-Madison Partners LLC (incorporated by reference to Registrant’s Form 8K (File No.

000-55006), filed on March 11, 2021

Operating Agreement of Madison-PVT Partners LLC (incorporated by reference to Registrant’s Form 8K (File No.

000-55006), filed on March 11, 2021

Form of Investment Adviser Introducing Agreement (pre-December 2016) (incorporated by reference to the Registration Statement on Form N-2(File No.

333-212804) filed on August 1, 2016)

Form of Amendment to Sales Agent Agreement (for agreements entered before December 20, 2016) (incorporated by

reference to Registrant’s Pre-Effective Amendment No.

2 to the Registration Statement on Form N-2 (File No.

333-212804) filed on December 19, 2016)

Form of Sales Agent Agreement (beginning December 20, 2016) (incorporated by reference to Registrant's

Pre-Effective Amendment No.

1 to the Registrant’s Registration Statement on Form N-2(File No.

333-212804) filed on October 6, 2016)

Form of Investor Services Agreement with ACS Securities Services, Inc.

(incorporated by reference to Registrant's

Pre-Effective Amendment No.

1 to the Registration Statement on Form N-2 (File No.

333-181853) filed on May 30, 2013)

Form of Administration Agreement with MacKenzie Capital Management, LP (incorporated by reference to Registrant's Pre-Effective Amendment

1 to the Registration Statement on Form N-2 (File No.

333-181853), filed on May 30, 2013)

Form of Investor Services Agreement with MacKenzie Capital Management, LP dated November 1, 2018

(incorporated by reference to Post-Effective Amendment No.

6 t o the Registration Statement on Form N-2 ( File No.

333-212804 ), filed on May 10, 2019)

Code of Ethics for Principal Executive Officer and Principal Financial Officer ("Officer Code") (incorporated by

referenced to Registrant's Pre-Effective Amendment No.

1 to the Registration Statement on Form N-2 (File No.

Amended Administration Agreement with MacKenzie Capital Management, LP

Form of Investor Services Agreement with MacKenzie Capital Management, LP dated November 1, 2018 (incorporated by reference to Post-Effective Amendment No.

6 to the Registration Statement on Form N-2 (File

333-212804), filed on May 10, 2019)

Advisory Management Agreement (incorporated by reference to Registrant's Form 8K (File No.

000-55006), filed on January 27, 2021)

Amended And Restated Investment Advisory Agreement (incorporated by reference to Registrant's Form 8K (File No.

000-55006), filed on January 27, 2021)

Section 302 Certification of Robert Dixon (President and Chief Executive Officer)

Section 302 Certification of Paul Koslosky (Treasurer and Chief Financial Officer)

Section 302 Certification of Angche Sherpa (Treasurer and Chief Financial Officer)

Section 1350 Certification of Robert Dixon (President and Chief Executive Officer)

Section 1350 Certification of Paul Koslosky (Treasurer and Chief Financial Officer)

All other exhibits for which provision is made in the applicable regulations of the Securities and Exchange Commission are not required under the related instruction or are inapplicable and therefore have been omitted.

Section 1350 Certification of Angche Sherpa (Treasurer and Chief Financial Officer)

XBRL INSTANCE DOCUMENT*

XBRL TAXONOMY EXTENSION SCHEMA*

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE*

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE*

XBRL TAXONOMY EXTENSION LABEL LINKBASE*

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE*

FORM 10-K SUMMARY

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Report of Independent Registered Public Accounting Firm

Consolidated Statements of Assets and Liabilities as of June 30, 2020 and 2019

Consolidated Schedule of Investments as of June 30, 2020

Consolidated Schedule of Investments as of June 30, 2019

Consolidated Statements of Operations for the Years Ended June 30, 2020, 2019, and 2018

Consolidated Statements of Changes in Net Assets for the Years Ended June 30, 2020, 2019, and 2018

Consolidated Statements of Cash Flows for the Years Ended June 30, 2020, 2019, and 2018

Consolidated Balance Sheet (Successor Basis) as of June 30, 2021

Consolidated Statement of Assets and Liabilities (Predecessor Basis) as of June 30, 2020

Consolidated Schedule of Investments (Predecessor Basis) as of June 30, 2020

Consolidated Statement of Operations (Successor Basis) for the six months ended June 30, 2021

Consolidated Statement of Operations (Predecessor Basis) for the six months ended December 31, 2020

Consolidated Statements of Operations (Predecessor Basis) for the years ended June 30, 2020 and 2019

Consolidated Statement of Changes in Equity (Successor Basis) for the six months ended June 30, 2021

Consolidated Statement of Changes in Net Assets (Predecessor Basis) for the six months ended December 31,

Consolidated Statements of Changes in Net Assets (Predecessor Basis) for the years ended June 30,

2020 and 2019

Consolidated Statement of Cash Flows (Successor Basis) for the six months ended June 30, 2021

Consolidated Statement of Cash Flows (Predecessor Basis) for the six months ended December 31, 2020

Consolidated Statements of Cash Flows (Predecessor Basis) for the years ended June 30, 2020 and 2019

Notes to Consolidated Financial Statements

Index to Audited Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

To the Shareholders and the Board of Directors

MacKenzie Realty Capital, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities of MacKenzie Realty Capital, Inc.

(the “Company”), including the consolidated schedules of investments, as of June 30, 2020 and 2019,

the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended June 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2020 and 2019, and the consolidated results of its operations and its cash flows for each

of the three years in the period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet (successor basis) as of June 30, 2021, and the consolidated statement of assets and liabilities

(predecessor basis), including the consolidated schedule of investments (predecessor basis) as of June 30, 2020, of Mackenzie Realty Capital, Inc., (the “Company”), the related consolidated statements of operations (successor basis),

changes in equity (successor basis), and cash flows (successor basis) for the six months ended June 30, 2021, the related consolidated statements of operations (predecessor basis), changes in net assets (predecessor basis), and cash flows

(predecessor basis) for the six months ended December 31, 2020, and the years ended June 30, 2020 and 2019, and the related notes and financial statement schedule (collectively referred to as the “consolidated financial statements”).

opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2021 and 2020, and the consolidated results of its operations (successor basis) and

its cash flows (successor basis) for the six months ended June 30, 2021, the consolidated results of its operations (predecessor basis) and its cash flows (predecessor basis) for the six months ended December 31, 2020, and the years ended

June 30, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are

free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial

statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an

understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management,

as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and

performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit

committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts

or disclosures to which it relates.

Evaluation and Consolidation of Variable Interest Entities

As disclosed in Notes 2 and 5 to the consolidated financial statements, the Company invests in various types of variable interest entities (“VIEs”) including limited partnership interests, limited liability

companies and corporations.

In determining whether the Company has a controlling interest in a variable interest entity and meets the requirement to consolidate the accounts of that entity, the Company considers factors such as ownership

interest, authority to make decisions and contractual and substantive participating rights of the partners/members, as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary.

We identified the Company’s evaluation of VIEs for consolidation as a critical audit matter.

The guidance for applying variable interest determination is complex and focuses on identifying the reporting

entity with power to make decisions that most significantly impact the economic performance of the entity being evaluated for consolidation and whether the entity with power has the rights to receive benefits that could be significant.

Identifying variable interests generally requires a qualitative assessment that focuses on the purpose and design of an entity and auditing managements determination involves significant auditor judgment due to the nature and extent of

audit evidence and effort required to address these matters.

The primary procedures we performed to address this critical audit matter included:

Evaluating the reasonableness and appropriateness of management’s evaluation of each VIE and determination of primary beneficiary of the VIE through a decision-making workflow.

Reading pertinent supporting organizational documents and agreements associated with each VIE to agree key terms with those used in management’s evaluation of each VIE.

Consulting with our internal specialists on the conclusions reached for each VIE originated during the year.

Purchase Price Allocation for Acquisitions

As described in Notes 2 and 3 to the consolidated financial statements, the Company acquired certain real estate properties during the year ended June 30, 2021, that were accounted for as asset acquisitions.

For each asset acquisition, the Company assesses the acquisition-date fair values of all tangible assets, identifiable intangible assets, and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted

cash flow analysis) which utilize appropriate discount and/or capitalization rates and other available market information to allocate the purchase price to land, buildings and identified intangible assets and liabilities.

Estimates of the

fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, carrying costs during lease-up periods, discount rates, market absorption

periods, prevailing interest rates, and the number of years the property will be held for investment.

The principal consideration for our determination that measurement of the fair value used in the purchase price allocation of real estate acquisitions is a critical audit matter are (i) the significant judgment

by management to determine the fair value measurements of tangible, intangible assets and liabilities to allocate the purchase price;

(ii) significant auditor judgment, subjectivity and effort in evaluating audit evidence related to the

significant assumptions used in the fair value measurement;

(iii) the sensitivity of the respective fair values to the significant underlying assumptions.

and (iv) use of professionals with specialized skill and knowledge to assist in

performing the procedures and evaluating the audit evidence obtained.

The primary procedures we performed to address this critical audit matter included:

With the assistance of our fair value specialists, we evaluated the reasonableness of the purchase price allocation reports and valuation methodology and critical inputs such as market lease rates, carrying costs during lease-up

periods, capitalization rates, discount rates, market absorption periods and prevailing interest rates.

The evaluation included comparison of Company assumptions to independently developed ranges using market data from industry

transaction databases and published industry reports.

Our overall assessment also included consideration of whether such information was consistent with evidence obtained in other areas of the audit.

We evaluated the mathematical accuracy of the valuation models and performed procedures over the completeness and accuracy of the data provided by management.

Fair Value Measurement of Level III Investments

As disclosed in Note 2 and 4 to the consolidated financial statements, the real estate securities and non- securities in which the Company invests are, due to the absence of an efficient market, generally

illiquid and have been classified as Level III investments.

Establishing fair values for illiquid investments is inherently subjective and is often dependent upon significant estimates and modeling assumptions that are unobservable and

generally requires the Company to establish the use of internal assumptions about future cash flows, including the cash flows of underlying real property, and appropriate risk-adjusted discount rates.

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 and local market conditions.

The inputs into

the determination of fair value require significant judgment by management.

The principal consideration for our determination that measurement of the fair value of Level III investments is a critical audit matter are (i) the significant judgment by management to determine the fair

value measurements of Level III investments;

(ii) significant auditor judgment, subjectivity and effort in evaluating audit evidence related to the significant assumptions used in the fair value measurement;

(iii) the sensitivity of the

respective fair values to the significant underlying assumptions and (iv) use of professionals with specialized skill and knowledge to assist in performing the procedures and evaluating the audit evidence obtained.

The primary procedures we performed to address this critical audit matter included:

With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions used in the valuation models such as future cash flows, including the cash flows of

underlying real property, risk-adjusted discount rates, nature of the investment and local market conditions.

The evaluation included comparison of Company’s assumptions to independently developed ranges using market data from

industry transaction databases and published industry reports.

Our overall assessment of these assumptions also included consideration of whether such information was consistent with evidence obtained in other areas of the audit.

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.

/s/ Moss Adams LLP

San Francisco, California

Campbell, California

September 28, 2021

We have served as the Company’s auditor since 2012.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Statements of Assets and Liabilities

Consolidated Balance Sheet (Successor Basis)

June 30, 2021

Real estate assets

Building, fixtures and improvements

Intangible lease assets

accumulated depreciation and amortization

Total real estate assets, net

Restricted cash

Investments, at fair value

Unconsolidated investments (non-securities), at fair value

Investments income, rent and other receivables

Prepaid expenses and other assets

Mortgage notes payable

Accounts payable and accrued liabilities

Below-market lease liabilities, net

Deferred rent and other liabilities

Due to related entities

Total liabilities

Common stock, $0.0001 par value, 80,000,000 shares authorized;

13,316,426.79 shares issued and outstanding

Capital in excess of par value

Accumulated deficit

Total stockholders' equity

Non-controlling interests

Total liabilities and equity

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

MacKenzie Realty Capital, Inc.

Consolidated Statement of Assets and Liabilities (Predecessor Basis)

June 30, 2020

Investments, at fair value

Non-controlled/non-affiliated investments (cost of $48,895,786 and $46,997,608, respectively)

Affiliated investments (cost of $12,426,110 and $14,699,474, respectively)

Controlled investments (cost of $43,370,752 and $35,541,173, respectively)

Total investments, at fair value (cost of $104,692,648 and $97,238,255, respectively)

Cash and cash equivalents

Non-controlled/non-affiliated investments (cost of $48,895,786)

Affiliated investments (cost of $12,426,110)

Controlled investments (cost of $43,370,752)

Total investments, at fair value (cost of $104,692,648)

Accounts receivable

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Accounts payable and accrued liabilities

Dividend payable

Capital pending acceptance

2 unchanged sentences

Common stock, $0.0001 par value, 80,000,000 shares authorized;

12,836,608.02 and 10,926,319.99 shares issued and outstanding, respectively

12,836,608.02 shares issued and outstanding)

Capital in excess of par value

Total distributable earnings (distributions in excess of earnings)

Total distributions in excess of earnings

Total net assets

2 unchanged sentences

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Schedule of Investments

Consolidated Schedule of Investments (Predecessor Basis)

June 30, 2020

% of Net Assets

American Finance Trust 7.5% PFD

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Total Investments

$ 104,692,648

* amount is below 0.01%

(1) Investments primarily in non-traded public REITs or their successors.

(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is

deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company.

As of June 30, 2020, the Company

is deemed to be either “affiliated” with, or in “control” of, these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies.

See additional

disclosures in Note 5.

(3) Under the 1940 Act, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise

control over the management or policies of such portfolio company.

(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns between 5% and 25% of the portfolio company’s voting securities.

As of June 30, 2020, the

Company is deemed to be “affiliated” with these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies.

See additional disclosures in Note

(3) Under the 1940 Act, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over

the management or policies of such portfolio company.

As of June 30, 2020, the Company is deemed to be in “control” of these portfolio companies despite that fact that the Company does not have the power to exercise control over

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(4) Non-qualifying assets under Section 55(a) of the 1940 Act.

As of June 30, 2020, the total percentage of non-qualifying assets is 6.95%, and as a business development company non-qualifying

assets may not exceed 30% of our total assets.

As of June 30, 2020, the total percentage of non-qualifying assets is 6.95%, and as a business development company non-qualifying assets may not

exceed 30% of our total assets.

(5) Investments in illiquid securities, or securities that are not traded on a national exchange.

3 unchanged sentences

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Schedule of Investments

Consolidated Statement of Operations (Successor Basis)

For the Period from January 1, 2021 through June 30, 2021

Six Months Ended

June 30, 2021

American Finance Trust Inc., Class A

Publicly Traded Company

Total Publicly Traded Company

Benefit Street Partners Realty Trust, Inc.

Non Traded Company

BRE Select Hotels Corp.

- Preferred A

Non Traded Company

Carter Validus Mission Critical REIT

Non Traded Company

Cole Credit Property Trust IV, Inc.

Non Traded Company

Cole Credit Property Trust V, Inc.

Non Traded Company

Cole Credit Property Trust V, Inc.

Non Traded Company

CNL Healthcare Properties, Inc.

Non Traded Company

Hines Global REIT, Inc.

Non Traded Company

Corporate Property Associates 18 Global A Inc.

Non Traded Company

First Capital Real Estate Trust, Inc.

Non Traded Company

FSP 1441 Main Street

Non Traded Company

FSP 303 East Wacker Drive Corp.

Liquidating Trust

Non Traded Company

FSP Energy Tower I Corp.

Liquidating Trust

Non Traded Company

FSP Grand Boulevard Liquidating Trust

Non Traded Company

FSP Satellite Place

Non Traded Company

Griffin-American Healthcare REIT III, Inc.

Non Traded Company

Griffin Capital Essential Asset REIT, Inc.

Non Traded Company

GTJ REIT, Inc.

Non Traded Company

Healthcare Trust, Inc.

Non Traded Company

Highlands REIT Inc.

Non Traded Company

21,255,526.80

Hospitality Investors Trust, Inc.

Non Traded Company

InvenTrust Properties Corp.

Non Traded Company

KBS Real Estate Investment Trust II, Inc.

Non Traded Company

KBS Real Estate Investment Trust III, Inc.

Non Traded Company

New York City REIT, Inc.

Non Traded Company

NorthStar Healthcare Income, Inc.

Non Traded Company

Phillips Edison & Company, Inc

Non Traded Company

Steadfast Apartment REIT

Non Traded Company

Steadfast Income REIT

Non Traded Company

Strategic Realty Trust, Inc.

Non Traded Company

Summit Healthcare REIT, Inc.

Non Traded Company

The Parking REIT Inc.

Non Traded Company

Total Non Traded Company (1)

3100 Airport Way South LP

5210 Fountaingate, LP

Addison NC, LLC

Addison Property Member, LLC

Arrowpoint Burlington LLC

Bishop Berkeley, LLC

BP3 Affiliate, LLC

BR Cabrillo LLC

BR Desota Investment Co, LLC

BR Quinn35 Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

Britannia Preferred Members, LLC -Class 2

Capitol Hill Partners, LLC

CRP I Roll Up, LLC

CRP III Roll Up, LLC

Dimensions28 LLP

Lakemont Partners, LLC

MPF Pacific Gateway - Class B

Redwood Mortgage Investors VIII

Satellite Investment Holdings, LLC - Class A

Secured Income, LP

The Weatherly Building, LLC

The Weatherly, LTD

Total LP Interest

Coastal Realty Business Trust, REEP, Inc.

Investment Trust

Total Investment Trust

Total Investments

$ 103,245,148

(1) Investments primarily in non-traded public REITs or their successors.

(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is

As of June 30, 2019, the Company

See additional

disclosures in Note 5.

(3) Under the 1940 Act, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise

control over the management or policies of such portfolio company.

As of June 30, 2019, the Company is deemed to be in “control” of these portfolio companies despite that fact that the Company does not have the power to exercise control over

the management or policies of such portfolio companies.

See additional disclosures in Note 5.

(4) Non-qualifying assets under Section 55(a) of the 1940 Act.

As of June 30, 2019, the total percentage of non-qualifying assets is 1.99%, and as a business development company non-qualifying

assets may not exceed 30% of our total assets.

(5) Investments in illiquid securities, or securities that are not traded on a national exchange.

As of June 30, 2019, 93.30% of the Company's total assets are in illiquid securities.

(6) Investments in non-income producing securities.

As of June 30, 2019, 37.23% of the Company's total assets are in non-income producing securities.

Rental and reimbursements

Property operating and maintenance

Depreciation and amortization

Asset management fees to related party (note 6)

Interest expense

Administrative cost reimbursements to related party (note 6)

General and administrative

Professional fees

Transfer agent cost reimbursements to related party (note 6)

Directors' fees

Total operating expenses

Operating loss

Dividend and distribution income from equity securities at fair value

Net unrealized gain on equity securities at fair value

Net income from equity method investments at fair value

Net realized gain from investments

Net loss attributable to non-controlling interests

Net income attributable to common stockholders

Net income per share attributable to common stockholders

Weighted average common shares outstanding

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Statements of Operations

Consolidated Statement of Operations (Predecessor Basis)

For the Period from July 1, 2020 through December 31, 2020

Six Months Ended

December 31, 2020

Investment income

Non-controlled/non-affiliated investments:

Dividend and operational/sales distributions

Interest and other income

Affiliated investments:

Dividend and operational/sales distributions

Controlled investments:

Dividend and operational/sales distributions

Total investment income

Operating expenses

Base management fee (note 6)

Amortization of deferred offering costs

Administrative cost reimbursements (note 6)

Professional fees

Printing and mailing

Transfer agent cost reimbursements (note 6)

Directors' fees

Portfolio structuring fee (note 6)

Other general and administrative

Total operating expenses

Net investment loss

Realized and unrealized gain (loss) on investments

Net realized gain (loss)

Non-controlled/non-affiliated investments

Affiliated investments:

Total net realized gain

Net unrealized gain (loss)

Non-controlled/non-affiliated investments

Affiliated investments

Controlled investments

Total net unrealized loss

Total net realized and unrealized loss on investments

Net decrease in net assets resulting from operations

Net decrease in net assets resulting from operations per share

Weighted average common shares outstanding

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

MacKenzie Realty Capital, Inc.

Consolidated Sta tements of Operations (Predecessor Basis)

Year Ended June 30,

28 unchanged sentences

Controlled investments

Total net realized gain (loss)

Total net realized gain

Net unrealized gain (loss)

2 unchanged sentences

Controlled investments

Total net unrealized gain (loss)

Total net realized and unrealized gain (loss) on investments

Total net unrealized loss

Total net realized and unrealized loss on investments

Net increase (decrease) in net assets resulting from operations

2 unchanged sentences

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Statements of Changes in Net Assets

Consolidated Statement of Changes in Equity (Successor Basis)

Six Months Ended June 30, 2021

Stockholders’

Non-controlling

Balance, December 31, 2020

13,362,419.23

Capital contributions by non-controlling interest holders

Dividends to stockholders

Net income (loss)

Issuance of common stock through

reinvestment of dividends

Repurchase of common stock

Balance, June 30, 2021

13,316,426.79

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

MacKenzie Realty Capital, Inc.

Consolidated Statement of Changes in Net Assets (Predecessor Basis)

Six Months Ended

December 31, 2020

Net investment loss

Net realized gain

Net unrealized loss

Net decrease in net assets resulting from operations

Capital share transactions

Issuance of common stock

Issuance of common stock to redeem subsidiary's non-controlling interest

Selling commissions and fees

Non-controlling interest in consolidated subsidary

Net increase in net assets resulting from capital share transactions

Total decrease in net assets

Net assets at beginning of the period

Net assets at end of the period

MacKenzie Realty Capital, Inc.

Consolidated Statements of Changes in Net Assets (Predecessor Basis)

Year Ended June 30,

1 unchanged sentence

Net realized gain

Net unrealized gain (loss)

Net unrealized loss

Net increase (decrease) in net assets resulting from operations

7 unchanged sentences

Total increase in net assets

Net assets at beginning of the period

Net assets at end of the period

Net assets at beginning of the year

Net assets at end of the year

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Statements of Cash Flows

Consolidated Statement of Cash Flows (Successor Basis)

Six Months Ended

June 30, 2021

Cash flows from operating activities:

Adjustments to reconcile net income to net cash from operating activities:

Net unrealized gain on equity securities

Net income from equity method investments at fair value

Net realized gain on investments

Depreciation and amortization

Accretion of market lease and other intangibles, net

Changes in assets and liabilities:

Investment income, rent and other receivables

Prepaid expenses and other assets

Accounts payable and accrued liabilities

Deferred rent and other liabilities

Due to related entities

Net cash from operating activities

Cash flows from investing activities:

Proceeds from sale of investments

Investments in real estate assets

Purchase of investments

Return of capital distributions

Net cash from investing activities

Cash flows from financing activities:

Proceeds from mortgage notes payable

Payments on mortgage notes payable

Dividend to stockholders

Repurchase of common stock

Capital contributions by non-controlling interest holders

Net cash from financing activities

Net decrease in cash

Cash and restricted cash at beginning of the period

Cash and restricted cash at end of the period

Cash at end of the period

Restricted cash at end of the period

Total cash and restricted cash at end of the period

Supplemental disclosure of non-cash financing activities and other cash flow information

Issuance of common stock through reinvestment of dividends

Cash paid for interest

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

MacKenzie Realty Capital, Inc.

Consolidated Statement of Cash Flows (Predecessor Basis)

Six Months Ended

December 31, 2020

Cash flows from operating activities:

Net decrease in net assets resulting from operations

Adjustments to reconcile net decrease in net assets resulting from operations to net cash from operating activities:

Proceeds from sale of investments, net

Return of capital

Purchase of investments

Net realized gains on investments

Net unrealized loss on investments

Amortization of deferred offering costs

Changes in assets and liabilities:

Investment income, rent and other receivable

Due from related entities

Payment of deferred offering costs

Accounts payable and accrued liabilities

Due to related entities

Net cash from operating activities

Cash flows from investing activities:

Cash acquired through consolidation of subsidiary

Net cash from investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock

Payment of selling commissions and fees

Change in capital pending acceptance

Net cash from financing activities

Net increase in cash

Cash and restricted cash at beginning of the period

Cash and restricted cash at end of the period

Cash at end of the period

Restricted cash at end of the period

Total cash and restricted cash at end of the period

Non-cash investing and financing activities:

Issuance of the Company's common stocks to redeem subsidiary's non-controlling interests

Supplemental Disclosures:

Carrying value of a subsidary's consolidated assets, liabilities and net assets:

Real estate assets

Cash and restricted cash

Rents and other receivable

Mortgage note payable

Accounts payable and accrued liabilities

Due to affiliates

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

MacKenzie Realty Capital, Inc.

Consolidated Statement of Cash Flows (Predecessor Basis)

Year Ended June 30,

1 unchanged sentence

Net increase (decrease) in net assets resulting from operations

Adjustments to reconcile net increase (decrease) in net assets resulting from

operations to net cash from operating activities:

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash from operating activities:

Proceeds from sale of investments, net

1 unchanged sentence

Purchase of investments

(107,876,237)

Net realized gain on investments

10 unchanged sentences

Cash flows from financing activities:

Borrowings on margin loan

Payments on margin loan

Proceeds from issuance of common stock

4 unchanged sentences

Net cash from financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of the period

Cash and cash equivalents at end of the period

Net increase (decrease) in cash

Cash at beginning of the year

Cash at end of the year

Non-cash financing activities:

1 unchanged sentence

The accompanying notes to consolidated financial statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

3 unchanged sentences

MacKenzie Realty Capital, Inc.

(the "Parent Company," together with its subsidiary as discussed below, the "Company") was incorporated under the general corporation laws of the State of Maryland on January 25, 2012.

It is a non-diversified, closed-end investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended ("1940 Act").

MacKenzie Realty Capital, Inc.

The Parent Company

has elected to be treated as a real estate investment trust ("REIT") as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").

The Company is authorized to issue 100,000,000 shares, of which (i) 80,000,000 are

designated as Common Stock, with a $0.0001 par value per share;

and (ii) 20,000,000 are designated as Preferred Stock, with a $0.0001 par value per share.

The Company commenced its operations on February 28, 2013, and its fiscal year-end is June

The Parent Company filed its initial registration statement in June 2012 with the Securities and Exchange Commission ("SEC") to register the initial public offering (“IPO”) of 5,000,000 shares of the its common stock.

(the “Parent Company” together with its subsidiaries as discussed below, the “Company” ) was incorporated

under the general corporation laws of the State of Maryland on January 25, 2012.

The Parent Company was formerly a non-diversified, closed-end investment company that elected to be regulated as a business development company ("BDC") under the

Investment Company Act of 1940, as amended (“1940 Act”).

The Parent Company withdrew its election to be treated as a BDC on December 31, 2020.

The Parent Company has elected to be treated as a real estate investment trust (“REIT”) as defined

under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

The Parent Company is authorized to issue 100,000,000 shares, of which (i) 80,000,000 are designated as common stock, with a $0.0001 par value per share;

(ii) 20,000,000 are designated as preferred stock, with a $0.0001 par value per share.

The Parent Company commenced its operations on February 28, 2013, and its fiscal year-end is June 30.

The Parent Company filed its initial registration statement in June 2012 with the Securities and Exchange Commission (“SEC”) to register the initial public offering (“IPO”) of 5,000,000

shares of its common stock.

The IPO commenced in January 2014 and concluded in October 2016.

The Parent Company filed a second registration statement with the SEC to register a subsequent public offering of 15,000,000 shares of its common stock.

The second offering commenced in

December 2016 and concluded on October 28, 2019.

The Parent Company filed a third registration statement with the SEC to register a public offering of 15,000,000 shares of its common stock that was declared effective by the SEC on October 31, 2019.

The third offering commenced shortly thereafter and is continuing.

The Parent Company’s wholly owned subsidiary, MRC TRS, Inc., (“TRS”) was incorporated under the general corporation laws of the State of California on February 22, 2016, and operates as a taxable REIT subsidiary.

started its operation on January 1, 2017, and the financial statements of TRS have been consolidated with the Parent Company beginning with the year ended June 30, 2017.

On December 20, 2017, a wholly owned subsidiary of TRS, MacKenzie NY Real Estate

2 Corp., (“MacKenzie NY 2”), was formed for the purpose of making certain limited investments in New York companies.

The financial statements of MacKenzie NY 2 have been consolidated with the Company beginning with the quarter ended March 31, 2018.

The Company is externally managed by MacKenzie Capital Management, LP ("MacKenzie") under the administration agreement dated and effective as of February 28, 2013 (the "Administration Agreement").

MacKenzie manages all

of the Company's affairs except for providing investment advice.

The Company is advised by MCM Advisers, LP (the "Adviser") under the advisory agreement amended and restated effective October 1, 2017, and subsequently amended October 23, 2018 (the

"Amended and Restated Investment Advisory Agreement”).

The Company pursues a strategy focused on investing primarily in illiquid or non-traded debt and equity securities issued by U.S.

The Parent Company filed a second registration statement with the SEC to register a subsequent public offering of 15,000,000 shares of its common

The second offering commenced in December 2016 and concluded on October 28, 2019.

The Parent Company filed a third registration statement with the SEC to register a public offering of 15,000,000 shares of its common stock that was

declared effective by the SEC on October 31, 2019.

The third offering commenced shortly thereafter and expired on October 31, 2020.

On October 23, 2020, holders of a majority of the outstanding common stock of the Company approved the authorization of the Company’s Board of Directors to withdraw the Company’s election to

be regulated as a BDC under the Investment Company Act of 1940, effective when the Company files the appropriate form with the SEC.

The Company submitted the withdrawal to be effective with the SEC on December 31, 2020.

The Parent Company’s wholly owned subsidiary, MRC TRS, Inc., (“TRS”) was incorporated under the general corporation laws of the State of California on February 22, 2016, and operates as a

taxable REIT subsidiary.

MacKenzie NY Real Estate 2 Corp., (“MacKenzie NY 2”), a wholly owned subsidiary of TRS, was formed for the purpose of making certain limited investments in New York companies.

The financial statements of TRS and

MacKenzie NY 2 have been consolidated with the Parent Company.

On May 20, 2020, the Parent Company formed an operating partnership, MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”) for the purpose of entering into a Contribution

Agreement with a group of entities referred to as the Addison Group, owners of Addison Property Owner, LLC (“Property Owner”).

The Parent Company owns 100% of the Class B Limited Partnership units of the Operating Partnership.

Property Owner

owns a property known as the Addison Corporate Center.

On June 8, 2020, Addison Group exchanged its ownership in Property Owner for Class A Limited Partnership units of the Operating Partnership.

Subsequent to the acquisition date, the Parent

Company redeemed substantially all of the remaining Class A Limited Partnership units by issuing to each such Class A Limited Partner one share of the Company’s common stock for each Class A Unit.

As a result, as of December 31, 2020, the

Company owns substantially all of the Operating Partnership.

Therefore, effective December 31, 2020, the financial statements of the Operating Partnership have been consolidated with the Parent Company.

The operating activities of the Operating

Partnership for the period of June 8, 2020, through December 31, 2020, have not been consolidated with the activities of the Company since the consolidation was effective December 31, 2020.

As of June 30, 2021, there are 12,052.85 Class A units

In March 2021, the Company together with its joint venture partners formed two operating companies:

Madison-PVT Partners LLC (“Madison”) and PVT-Madison Partners LLC (“PVT”), to acquire and operate two

residential apartment buildings located in Oakland, California.

The Company owns 98.45% and 98.75% of equity units of Madison and PVT, respectively.

The joint venture partners own the remaining 1.55% and 1.25% equity units of Madison and PVT,

respectively, and also hold a carried interest in both companies.

The Company is the controlling majority owner of both companies;

therefore, effective March 31, 2021, the Company has consolidated the financial statements of these companies.

On April 13, 2021, the Company filed a preliminary offering circular pursuant to Regulation A with the SEC to sell up to $50,000,000 of shares of the Company’s Series A preferred stock at an

initial offering price of $25.00 per share.

The sale of shares pursuant to this offering will begin after the Offering Circular has been qualified by the SEC.

The Company is externally managed by MacKenzie Capital Management, LP (“MacKenzie”) under the administration agreement dated and effective as of February 28, 2013 (the “Administration

MacKenzie manages all Company affairs except for providing investment advice.

MCM Advisers, LP (the “Investment Adviser”) advises the Company in the Company’s assessment, acquisition and divestiture of securities under the advisory

agreement amended and restated effective January 1, 2021 (the “Amended and Restated Investment Advisory Agreement”).

MacKenzie Real Estate Advisers, LP (the “Real Estate Adviser”;

together, the “Investment Adviser” and the “Real Estate Adviser”

may be referred to as “Adviser” or “Advisers” as appropriate) advises the Company in the Company’s assessment, acquisition and divestiture of real estate assets.

The Company pursues a strategy focused on investing primarily in real estate

assets, and to a smaller extent (intended to be less than 20% of our portfolio) in illiquid or non-traded debt and equity securities issued by U.S.

companies generally owning commercial real estate.

companies are likely to be non-traded REITs, small-capitalization publicly traded REITs, public and private real estate limited partnerships, limited liability companies, and tenancies-in-common.

As of June 30, 2020, the Company has raised approximately $130.04 million from the public offerings, including proceeds from the Company’s dividend reinvestment plan ("DRIP") of approximately $11.16 million.

total capital raised as of June 30, 2020, approximately $9.46 million has been redeemed under the Company’s share repurchase program.

These companies are likely to be non-traded

REITs, small-capitalization publicly traded REITs, public and private real estate limited partnerships and limited liability companies.

As of June 30, 2021, the Company has raised approximately $130.46 million from the public offerings, including proceeds from the Company’s dividend reinvestment plan (“DRIP”) of approximately

$11.36 million.

Of the shares issued by the Company in exchange for the total capital raised as of June 30, 2021, approximately $9.87 million worth of shares have been repurchased under the Company’s share repurchase program.

CHANGE IN STATUS

Prior to the December 31, 2020 termination of the Company’s status as a BDC, the Company recorded its investment in real estate securities at fair value and recorded the changes

in the fair value as an unrealized gain or loss.

As a result of the termination of the Company’s status as a BDC, the Company is no longer subject to fair value accounting requirements.

Nonetheless, the Company:

will continue to recognize and

measure its investments in non-publicly traded corporations and certain limited partnerships at fair value;

will continue to recognize and measure its investments in publicly traded securities at fair value, using Level 1 fair value inputs

with changes in fair value recorded in the statement of operations;

and has elected the fair value option (see Note 2) to recognize and measure its investments in certain limited partnerships that

otherwise would have been required to be recognized and measured using the equity method of accounting.

As a result of the change in the Company’s status and applying the new basis of accounting as discussed in Note 2, on the effective date of the termination of the Company’s status as a BDC,

the Company recorded the fair value of the investments as the new carrying value of the investments and recorded a carrying value adjustment as follows:

December 31, 2020

Investment Type

Carrying Value

New Carrying Value

Publicly Traded Companies

Non Traded Companies

Investment Trust

Total non-consolidated investments

The Operating Partnership (Consolidated)

The Company also began presenting, on a consolidated basis, the underlying assets and liabilities of the Operating Partnership.

The fair value of the Operating Partnership on the effective

date of the termination of the Company’s status as a BDC was $8,027,584.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 unchanged sentence

The accompanying consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-K and Regulation S-X.

The Company follows the accounting principles generally accepted

in the United States of America (“GAAP”) and include the accounts of the Company’s wholly owned consolidated subsidiary.

The Company follows the accounting

principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company’s wholly owned consolidated subsidiary.

All intercompany accounts and transactions have been eliminated in consolidation.

Under the 1940 Act rules, regulations pursuant

to Article 6 of Regulation S-X and Topic 946 of the Accounting Standards Codification, as amended (the "ASC"), of the Financial Accounting Standards Board ("FASB"), the Company is precluded from consolidating portfolio company investments, including

those in which the Company has a controlling interest, unless the portfolio company is an investment company.

An exception to this general principle occurs if the Company owns a controlled operating company whose purpose is to provide services to the

Company such as an investment adviser or transfer agent.

Prior to the termination of its status as a BDC, the Company was an investment company under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946

Under the 1940 Act rules, regulations pursuant to Article 6 of Regulation S-X and ASC 946, the Company is precluded from consolidating portfolio company investments, including those in which the Company has a controlling interest,

unless the portfolio company is an investment company.

An exception to this general principle occurs if the Company owns a controlled operating company whose purpose is to provide services to the Company such as an investment adviser or

transfer agent.

None of the Company’s investments qualifies for this exception.

Therefore, the Company’s portfolio company investments, including those in which the Company has a controlling interest, are

carried on the consolidated statements of assets and liabilities at fair value with changes to fair value recognized as “Net Unrealized gain (loss)” on the Consolidated Statements of Operations until the investment is realized, usually upon exit,

resulting in any gain or loss on exit being recognized as a realized gain or loss.

However, in the event that any controlled subsidiary exceeds the tests of significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, the Company will include

required financial information for such subsidiary in the notes or as an attachment to its consolidated financial statements.

Index to Audited Consolidated Financial Statements

Therefore, the Company’s portfolio company investments, including those in which the Company has a controlling interest, are carried on the consolidated statements

of assets and liabilities at fair value with changes to fair value recognized as “Net unrealized gain (loss)” on the Consolidated Statements of Operations until the investment is realized, usually upon exit, resulting in any gain or loss on

exit being recognized as a realized gain or loss.

However, in the event that any controlled subsidiary exceeds the tests of significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, the Company will include required financial

information for such subsidiary in the notes or as an attachment to its consolidated financial statements.

As a result of the termination of the Company’s status as a BDC, the Company is no longer an investment company under ASC 946.

The Company discontinued applying the guidance in ASC 946 and

began to account for the change in status prospectively by accounting for its investments in accordance with other GAAP topics as of the date of the change in status.

The Company’s consolidated financial statements for the period subsequent to the termination of its BDC status are prepared on a consolidated basis to include the financial position, results

of operations, and cash flows of the Company and its wholly owned and majority-owned subsidiaries, rather than by the investment company fair valuation approach.

This change in status and the application of new basis of accounting affect the

comparability of the consolidated financial statements for directly presenting corresponding items for 2021 and 2020.

As such, for the year ended June 30, 2021, the consolidated statements of operations, changes in net assets (referred as

“equity” effective June 30, 2021) and cash flows have been presented in two separate statements:

for the six months ended December 31, 2020 as they would be for an investment company (on a “predecessor basis”) and for the six months ended June

30, 2021 as it would be for a REIT (on a “successor basis”).

For the years ended June 30, 2020 and 2019, the consolidated statements of operations, changes in net assets, and cash flows have been presented on the predecessor basis.

consolidated statement of assets and liabilities (referred as “balance sheet” effective June 30, 2021) at June 30, 2020 has been presented on the predecessor basis and the consolidated balance sheet at June 30, 2021, has been presented on the

successor basis.

Certain interim period information has been reclassified to conform to the current year end presentation.

The reclassification has no

effect on the Company's consolidated balance sheet or the consolidated statement of operations as previously reported.

Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported asset values, liabilities, revenues, expenses and unrealized gains (losses) on

investments during the reporting period.

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported asset values, liabilities, revenues, expenses and unrealized

gains (losses) on investments during the reporting period.

Material estimates that are susceptible to change, and actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

These balances are insured by the Federal Deposit Insurance Corporation ("FDIC") up to

certain limits.

At times the cash balances held in financial institutions by the Company may exceed these insured limits.

Cash and cash equivalents are carried at cost which approximates fair value.

There were no cash equivalents held as of June 30,

2020, and 2019.

Variable Interest Entities

The Company evaluates the need to consolidate its investments in securities in accordance with ASC Topic 810, Consolidation (“ASC 810”).

determining whether the Company has a controlling interest in a variable interest entity and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and

contractual and substantive participating rights of the partners/members, as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary.

Refer to Note 5 for additional information.

Cash and Restricted Cash

The Company’s cash represent balances held in current bank accounts and restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant

improvements, debt service and leasing costs held by lenders.

These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to certain limits.

At times the cash balances held in financial institutions by the Company may

exceed these insured limits.

Investments Income Receivable

Investments income receivable represent dividends, distributions, and sales proceeds recognized in accordance with our revenue recognition policy but not yet received as of the date of the

consolidated financial statements.

The amounts are generally fully collectible as they are recognized based on completed transactions.

The Company monitors and adjusts its receivables, and those deemed to be uncollectible are written-off only

after all reasonable collection efforts are exhausted.

The Company has determined that all investments income receivable balances outstanding as of June 30, 2021 and 2020, are collectible and do not require recording any uncollectible

Rents and Other Receivables

The Company will periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of

tenants to make required payments under lease agreements.

The Company exercises judgment in establishing these allowances and considers payment history and current credit status of tenants in developing these estimates.

Capital Pending Acceptance

The Company conducts closings for new purchases of the Company’s common stock twice per month and admits new stockholders effective beginning the first of each month.

Subscriptions are

effective only upon the Company's acceptance.

Any gross proceeds received from subscriptions which are not accepted as of the period-end are classified as capital pending acceptance in the consolidated statements of assets and liabilities.

of June 30, 2021, there was no capital pending acceptance.

As of June 30, 2020, capital pending acceptance was $87,739.

Organization and Deferred Offering Costs

Organization costs include, among other things, the cost of legal services pertaining to the organization and incorporation of the business, incorporation fees and audit fees relating to the IPO and the initial

statement of assets and liabilities.

Organization costs include, among other things, the cost of legal services pertaining to the organization and incorporation of the business, incorporation fees, and

audit fees relating to public offerings and the initial statement of assets and liabilities.

These costs are expensed as incurred.

Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the registration statements and pre- and post-effective amendments.

Offering costs are capitalized as deferred offering costs as incurred by the Company and subsequently amortized to expense over a twelve-month period.

Any deferred offering costs that have not been amortized upon the expiration or earlier termination

of an offering will be accelerated and expensed upon such expiration or termination.

The offering costs incurred by the Company on the second and third public offering are each limited to $1,650,000 plus the savings realized by the Company to the extent that

broker fees incurred are less than 10%.

Offering costs incurred in excess of these amounts will be reimbursed by the Adviser as discussed in Note 5.

The offering costs incurred in connection with the second public offering through December 31, 2019

and June 30, 2019 were $1,843,071 and $1,685,426, respectively.

There were no additional offering costs incurred on the second offering after December 31, 2019 since the offering terminated in October 2019.

The offering costs incurred in connection

with the third public offering through June 30, 2020 were $560,194.

There were no offering costs incurred in connection with the third public offering as of June 30, 2019.

These offering costs are deferred and expensed over a twelve-month period

beginning from the date the registration was declared effective by the SEC.

Since the second public offering concluded in October 2019, $404,273 of the deferred offering costs that had not been amortized as of the conclusion date were fully expensed

as of December 31, 2019.

Amortization of these deferred costs for the year ended June 30, 2020, 2019 and 2018 were $880,138, $556,165 and $374,115, respectively.

Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the

registration statements and pre- and post-effective amendments.

While the Company was a BDC, offering costs were capitalized as deferred offering costs as incurred by the Company and subsequently amortized to expense over a twelve-month

Any deferred offering costs that had not been amortized upon the expiration or earlier termination of an offering were accelerated and expensed upon such expiration or termination.

Income Taxes and Deferred Tax Liability

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, the Parent Company is not subject to federal income taxes on amounts that it distributes to the stockholders,

provided that, on an annual basis, it distributes at least 90% of its REIT taxable income to the stockholders and meets certain other conditions.

To the extent that the Parent Company satisfies the annual distribution requirement but distributes less

than 100% of its taxable income, it is either subject to U.S.

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, is not subject to federal income taxes on amounts that it distributes to the

stockholders, provided that, on an annual basis, it distributes at least 90% of its REIT taxable income to the stockholders and meets certain other conditions.

To the extent that it satisfies the annual distribution requirement but distributes

less than 100% of its taxable income, it is either subject to U.S.

federal corporate income tax on its undistributed taxable income or 4% excise tax on catch-up distributions paid in the subsequent year.

The Parent Company is also subject to tax on

built-in gains it realizes during the first five years following REIT election.

TRS is a taxable REIT subsidiary of the Company.

Therefore, it is subject to federal and state income taxes.

Index to Audited Consolidated Financial Statements

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax years ended December 31, 2019, 2018 and 2017.

Therefore, the Parent Company did not incur any tax expense or excise tax

for those years.

In addition, for the tax year ended December 31, 2020, The Parent Company intends to pay the requisite dividends to stockholders such that The Parent Company would not pay any income taxes on its income.

Therefore, The Parent Company

did not record any income tax provisions during the years ended June 30, 2020, 2019, and 2018.

The income tax provision (benefit) amounts in the consolidated statements of operation for the years ended June 30, 2019 and 2018, relate to the Parent Company’s built-in gain tax adjustments and TRS’ income tax

provisions as follows:

June 30, 2020

June 30, 2019

June 30, 2018

MacKenzie Realty Capital, Inc - built-in gain tax adjustments

MRC TRS, Inc - income tax expenses

Total Income Tax Provision (Benefit)

The built-in gain tax adjustment amounts are the differences between the actual and the estimated tax liabilities on the built-in gains realized during the year.

Prior to the effective date of its REIT election, The

Parent Company had net unrealized built-in gains of $239,595, for which The Parent Company recorded an estimated tax liability of $95,431 as of December 31, 2013.

Accordingly, in each subsequent period, the Parent Company only recorded the difference

between the actual and estimated tax on the built-in gains it realized during the year as income tax expense or benefit.

All unrealized built-in gains after December 31, 2018 were not taxable as the five-year period following the REIT election date

ended on December 31, 2018.

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2020.

Therefore, the Parent Company did not incur any tax expense or

excise tax on its income from operations during the quarterly periods within the tax year 2020.

Similarly, for the tax year 2021, we believe the Parent Company paid the requisite amounts of dividends during the year and met other REIT

requirements such that it will not owe any income taxes.

Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2021.

The income tax benefit of $13,348 in the consolidated statements of operation for the year ended June 30, 2019, relate to the Parent Company’s built-in gain tax adjustments.

The built-in gain

tax adjustment amounts are the differences between the actual and the estimated tax liabilities on the built-in gains realized during the year.

Prior to the effective date of its REIT election, the Parent Company had net unrealized built-in

gains of $239,595, for which the Parent Company recorded an estimated tax liability of $95,431 as of December 31, 2013.

Accordingly, in each subsequent period, the Parent Company only recorded the difference between the actual and estimated tax

on the built-in gains it realized during the year as income tax expense or benefit.

All unrealized built-in gains after December 31, 2018 were not taxable as the five-year period following the REIT election date ended on December 31, 2018.

Therefore, the remaining deferred tax liabilities of $13,348 on the unrealized built-in gains were reversed as income tax benefit during the year ended June 30, 2019.

TRS is subject to corporate federal and state income tax on its taxable income at regular statutory rates.

However, for the year ended June 30, 2020 and 2019, TRS did not have any taxable income;

therefore, TRS did not

record any income tax provisions.

For the year ended June 30, 2018, it recorded an income tax provision of $6,723.

The Company follows ASC 740, Income Taxes, (“ASC 740”) to account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax consequences

attributable to the net unrealized investment gain (losses) on existing investments.

In estimating future tax consequences, the Company considers all future events, other than enactments of changes in tax laws or rates.

The effect on deferred tax

assets and liabilities of a change in tax rates will be recognized as income or expense in the period of enactment.

In addition, ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the

consolidated financial statements.

TRS and MacKenzie NY 2 are subject to corporate federal and state income tax on their taxable income at regular statutory rates.

However, as of June 30, 2021, they did not have any taxable

income for tax years 2020 or 2021.

Therefore, TRS and MacKenzie NY 2 did not record any income tax provisions during any fiscal period within the tax year 2020 and 2021.

The Operating Partnership is a limited partnership and its wholly owned subsidiary, the Property Owner, is a limited liability company and Madison and PVT are limited liability companies.

Accordingly, all income

tax liabilities of these entities flow through to their partners, which ultimately is the Company.

Therefore, no income tax provisions are recorded for these entities.

The Company and its subsidiaries follow ASC 740, Income Taxes, (“ASC 740”) to account for income taxes using the asset and liability method, under which deferred tax assets and liabilities

are recognized for the future tax consequences attributable to the net unrealized investment gain (losses) on existing investments.

In estimating future tax consequences, the Company considers all future events, other than enactments of changes

in tax laws or rates.

The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period of enactment.

In addition, ASC 740 provides guidance for recognizing, measuring, presenting,

and disclosing uncertain tax positions in the consolidated financial statements.

As of June 30, 2021 and 2020, there were no uncertain tax positions.

Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not

limited to, an on-going analysis of tax laws, regulations and interpretations thereof.

Per share Information

Net increase or decrease in net assets resulting from operations per common share is calculated using the weighted average number of common shares outstanding for the periods presented.

Management’s determinations regarding ASC 740 are subject to review and adjustment at a later

date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof.

Subsequent Events

Subsequent events are events or transactions that occur after the date of the consolidated statements of assets and liabilities but before the date the consolidated financial statements are available to be issued.

Subsequent events that provide additional evidence about conditions that existed at the date of the consolidated statements of assets and liabilities are considered in the preparation of the consolidated financial statements presented herein.

Subsequent events that occur after the date of the consolidated statements of assets and liabilities that do not provide evidence about the conditions that existed as of the date of the consolidated statements of net assets are considered for

disclosure based upon their significance in relation to the Company's consolidated financial statements taken as a whole.

Index to Audited Consolidated Financial Statements

Subsequent events are events or transactions that occur after the date of the consolidated statements of assets and liabilities but before the date the consolidated financial statements are

available to be issued.

statements presented herein.

net assets are considered for disclosure based upon their significance in relation to the Company's consolidated financial statements taken as a whole.

Fair Value of Financial Instruments

Fair value estimates are made at discrete points in time based on relevant information.

These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot

be determined with precision.

The Company believes that the carrying amounts of its financial instruments, consisting of cash, accounts receivable, due to affiliates, interest payable to affiliates and other accrued expenses and liabilities

approximate the fair values of such items.

These estimates may be subjective in nature and involve uncertainties and matters of significant

judgment and, therefore, cannot be determined with precision.

The Company believes that the carrying amounts of its financial instruments, consisting of cash, restricted cash, investments income, rent and other receivables, prepaid expenses and

other assets, mortgage notes payable, accounts payable and accrued liabilities, below-market lease liabilities, net, deferred rent and other liabilities and due to related entities, approximate the fair values of such items.

Revenue Recognition

Realized gains or losses on investments are recognized in the period of disposal, distribution, or exchange and are measured by the difference between the proceeds from the sale or distribution and the cost basis

(adjusted for return of capital, if any) of the investment.

Realized gains or losses on investments are recognized in the period of disposal, distribution, or exchange and are measured by the difference between the proceeds from the sale or

distribution and the cost basis (adjusted for return of capital, if any) of the investment.

Investments are disposed of on a first-in, first-out basis.

Operational dividends or distributions received from portfolio investments are recorded as investment income.

Distributions resulting from the sale or refinance of an investee’s underlying assets are evaluated by

management and recorded as either investment income or as a reduction of cost basis (return of capital).

Management determines the estimated fair value of the investment after the sale or refinance and compares this estimate to the adjusted cost

basis of the investment.

Distributions resulting from the sale or refinance of an investee’s underlying

assets are evaluated by management and recorded as either investment income or as a reduction of cost basis (return of capital).

Management determines the estimated fair value of the investment after the sale or refinance and compares this

estimate to the adjusted cost basis of the investment.

If the estimated fair value is higher than the adjusted cost basis, distributions are recorded as investment income.

If the estimated fair value is lower than the adjusted cost basis, distributions are first recorded as

return of capital to reduce the cost basis down to the estimated fair value.

If the estimated fair value is lower than the adjusted cost basis,

distributions are first recorded as return of capital to reduce the cost basis down to the estimated fair value.

Distributions in excess of those recorded as return of capital are recorded as investment income.

Interest Income

Interest income is derived from the investments in notes and recorded on the accrual basis, which approximates the effective interest method, to the extent amounts are expected to be collected.

Accrued interest is

evaluated for collectability.

When a debt security becomes 90 days or more past due and the Company does not expect the debtor to be able to service all of its debt or other obligations, the debt security will generally be placed on non-accrual

status and the Company will cease recognizing interest income on that debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due.

If a debt security's status significantly improves with respect to the

debtor's ability to service the debt or other obligations, or if a debt security is sold or written off, it will be removed from non-accrual status.

As of June 30, 2020 and 2019, the Company did not have any investments that were more than 90 days

past due or on non-accrual status.

Additionally, the Company is not aware of any material changes to the creditworthiness of the borrowers underlying its debt investments.

The Company recognizes minimum rent, including rental abatements, lease incentives, and contractual fixed increases attributable to operating leases on a straight-line basis over the term of

the related leases when collectability is probable.

The Company records amounts expected to be received in later years as deferred rent receivable.

If the lease provides for tenant improvements, the Company determines whether the tenant

improvements, for accounting purposes, are owned by the tenant or the Company.

When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the

leased asset until the tenant improvements are substantially completed.

When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the

tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term.

Tenant improvement ownership is determined based on various factors including, but not limited to:

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;

whether the tenant improvements are expected to have any residual value at the end of the lease.

The Company recognizes rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectability is determined to be probable.

In accordance with Topic 842, the Company determines whether collectability of lease payments in an operating lease is probable.

If the Company determines the lease payments are

not probable of collection, the Company fully reserves for rent and reimbursement receivables, including deferred rent receivable, and recognizes rental income on cash basis.

Dividends and Distributions

Dividends (and distributions, if any) to common stockholders are recorded on the ex-dividend date.

The amount, if any, to be paid as a quarterly dividend (or distribution, if any) is approved quarterly by the Board of

Directors and is generally based upon management's estimate of the Company's earnings for the quarter.

Accounts Receivable

Accounts receivable represent dividends, distributions and sales proceeds recognized in accordance with our revenue recognition policy but not yet received as of the date of the consolidated financial statements.

amounts are generally fully collectible as they are recognized based on completed transactions.

The Company monitors and adjusts its receivables and those deemed to be uncollectible are written-off only after all reasonable collection efforts are

All accounts receivable outstanding as of June 30, 2020, and 2019, are deemed fully collectible.

Capital Pending Acceptance

The Company admits new stockholders monthly and subscriptions are effective only upon the Company's acceptance.

Any gross proceeds received from subscriptions which are not accepted as of the period-end are classified

as capital pending acceptance in the consolidated statements of assets and liabilities.

As of June 30, 2020 and 2019, capital pending acceptance were $87,739 and $668,165, respectively.

Index to Audited Consolidated Financial Statements

Dividends (and distributions, if any) to common stockholders are recorded on the date of declaration.

The amount, if any, to be paid as a quarterly dividend (or distribution, if any) is

approved quarterly by the Board of Directors and is generally based upon management's estimate of the Company's earnings for the quarter.

Recent Accounting Pronouncements:

In August 2018, the FASB issued guidance which changes the fair value disclosure requirements.

The new guidance includes new, eliminated and modified fair value disclosures.

other requirements, the guidance requires disclosure of the range and weighted average of the significant unobservable inputs for Level 3 fair value measurements and the way they are calculated.

The guidance also eliminated the following disclosures:

(1) amount and reason for transfers between Level I and Level II, (2) policy for timing of transfers between levels of the fair value hierarchy and (3) valuation processes for Level 3 fair value measurement.

The guidance is effective for all entities

for fiscal years commencing after December 15, 2019, and interim periods within those fiscal years.

Early adoption is permitted upon issuance of the guidance.

The adoption of this guidance is not expected to have a material effect on the Company’s

consolidated financial statements.

The new guidance includes new, eliminated and modified

fair value disclosures.

Among other requirements, the guidance requires disclosure of the range and weighted average of the significant unobservable inputs for Level 3 fair value measurements and the way they are calculated.

The guidance also

eliminated the following disclosures:

(1) amount and reason for transfers between Level I and Level II, (2) policy for timing of transfers between levels of the fair value hierarchy and (3) valuation processes for Level 3 fair value

The guidance was adopted and did not have a material effect on the Company’s consolidated financial statements.

In May 2020, the SEC adopted rules Release No.

33-10786 (the "SEC Release"), Amendments to Financial Disclosures about Acquired and Disposed Businesses , amending Rule 1-02(w)(2)

used in the determination of a significant subsidiary.

In part, the SEC Release eliminated the use of the asset test, and amended the income and investment tests for determining whether an unconsolidated subsidiary requires additional disclosure in

the footnotes of the financial statements.

The SEC Release is effective January 1, 2021, and early adoption is permitted.

The adoption of the SEC Release on the Company’s consolidated financial statements is not expected to be material.

33-10786 (the "SEC Release"), Amendments to Financial Disclosures

about Acquired and Disposed Businesses , amending Rule 1-02(w)(2) used in the determination of a significant subsidiary.

In part, the SEC Release eliminated the use of the asset test, and amended the income and investment tests for

determining whether an unconsolidated subsidiary requires additional disclosure in the footnotes of the financial statements.

The SEC Release was adopted and did not have a material effect on the Company’s consolidated financial statements.

Valuation of Investments

The Company's consolidated financial statements include investments that are measured at their estimated fair values in accordance with GAAP.

A fair value measurement represents the price at which an orderly

transaction would occur between willing market participants at the measurement date.

The Company develops fair values for investments based on available inputs which could include pricing that is observed in the marketplace.

A fair value measurement represents the price

at which an orderly transaction would occur between willing market participants at the measurement date.

The Company develops fair values for investments based on available inputs which could include pricing that is observed in the

Examples of market information that the Company attempts to obtain include the following:

4 unchanged sentences

Other relevant observable and unobservable inputs, including liquidity discounts.

After considering all available indications of the appropriate rate of return that market participants would require, the Company considers the reasonableness of the range indicated by the results to determine an

estimate that, in its opinion, is most representative of fair value.

After considering all available indications of the appropriate rate of return that market participants would require, the Company considers the reasonableness of the range indicated by the

results to determine an estimate that, in its opinion, is most representative of fair value.

The real estate securities in which the Company invests are, due to the absence of an efficient market, generally illiquid.

Establishing fair values for illiquid investments is inherently subjective and is often

dependent upon significant estimates and modeling assumptions.

If either the volume and/or level of trading activity for an investment has significantly changed from normal market conditions, or price quotations or observable inputs are not

associated with orderly transactions, the market inputs used might not be relevant.

For example, recently quoted trading prices might not be relevant if a ready market does not exist for the quantity of investments that the Company may wish to

Establishing fair values for illiquid investments is inherently

subjective and is often dependent upon significant estimates and modeling assumptions.

If either the volume and/or level of trading activity for an investment has significantly changed from normal market conditions, or price quotations or

observable inputs are not associated with orderly transactions, the market inputs used might not be relevant.

For example, recently quoted trading prices might not be relevant if a ready market does not exist for the quantity of investments

that the Company may wish to sell.

In circumstances where relevant market inputs cannot be obtained, increased analysis and management judgment are required to estimate fair value.

This generally requires the Company to establish the use of internal

assumptions about future cash flows, including the cash flows of underlying real property, and appropriate risk-adjusted discount rates.

Regardless of the valuation inputs used, the objective of fair value measurement is unchanged from what it

would be if markets were operating at normal activity levels and/or transactions were orderly;

This generally requires the Company to

establish the use of internal assumptions about future cash flows, including the cash flows of underlying real property, and appropriate risk-adjusted discount rates.

Regardless of the valuation inputs used, the objective of fair value

measurement is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly;

that is, to determine the current exit price.

The Company is under no compulsion to dispose of its investments, and expects to hold them for a substantial period of time.

Therefore, estimated values as determined above may not reflect amounts that could be

realized upon actual sale at a future date.

Index to Audited Consolidated Financial Statements

Therefore, estimated values as determined above may not reflect

amounts that could be realized upon actual sale at a future date.

Fair Value Measurements

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observables used in measuring investments at fair value.

Market price is impacted by a number of factors,

including the type of investment and the characteristics specific to the investment.

Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of

market price observables and a lesser degree of judgment used in measuring fair value.

Market price is impacted by

a number of factors, including the type of investment and the characteristics specific to the investment.

Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally

will have a higher degree of market price observables and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

1 unchanged sentence

The type of investments included in Level I are publicly traded equity securities.

The Company does not adjust the quoted price for these

investments even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

The Company does not

adjust the quoted price for these investments even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

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.

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.

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.

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

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.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, an investment's level within the fair value hierarchy is based on the lowest level of

input that is significant to the fair value measurement.

Management's assessment of the significance of a particular input to the fair value measurement, in its entirety, requires judgment and considers factors specific to the investment.

In such cases, an investment's level within the fair value hierarchy is

based on the lowest level of input that is significant to the fair value measurement.

Management's assessment of the significance of a particular input to the fair value measurement, in its entirety, requires judgment and considers factors

specific to the investment.

Equity Securities

The Company has equity investments in various limited partnerships and non-traded entities, which do not have readily determinable fair values.

The Company does not have controlling interests

in these entities.

Thus, these investments have been recorded as investments in equity securities in accordance with ASC Topic 321, Investments – Equity Securities , and measured at fair value.

investments are presented as a part of investments, at fair value in the consolidated balance sheet.

The changes in the fair value of these investments are recorded in the consolidated statement of operations.

Equity Method Investments with Fair Value Option Election

The Company elected the fair value option of accounting for the investments listed below that would have otherwise been recorded under the equity method of accounting.

The primary purpose of

electing the fair value option was to enhance the transparency of the Company’s financial condition.

Changes in the fair value of these investments, which are inclusive of equity in income, are recorded in the consolidated statement of

operations during the period such changes occur.

The below list of investments would have been accounted for under the equity method if the fair value method had not been elected and have been included in investments, at fair value and

unconsolidated investments (non-securities), at fair value in the consolidated balance sheet as of June 30, 2021:

Fair Value as of

June 30, 2021

FSP Satellite Place

Non Traded Company

5210 Fountaingate, LP

Limited Partnership

Bishop Berkeley, LLC

Limited Liability Company

BP3 Affiliate, LLC

Limited Liability Company

Britannia Preferred Members, LLC - Class 1

Limited Liability Company

Britannia Preferred Members, LLC - Class 2

Limited Liability Company

Capitol Hill Partners, LLC

Limited Liability Company

Citrus Park Hotel Holdings, LLC

Limited Liability Company

Dimensions 28, LLP

Limited Partnership

Lakemont Partners, LLC

Limited Liability Company

Secured Income L.P.

Limited Partnership

Unconsolidated investments (non-securities) at Fair Value

These are equity method investments that are majority owned subsidiaries of the Company, but do not meet the consolidation requirements under ASC topic 810.

Under the Investment Company Act

of 1940, as majority owned subsidiaries, these investments are considered “voting securities” as opposed to “investment securities.” Therefore, the Company listed these equity method investments at fair value separately from rest of the equity

method investments at fair value in the consolidated balance sheet.

As of June 30, 2021, the Company’s investments in Bishop Berkeley, LLC, Britannia Preferred Members, LLC - Class 1 and Class 2, and Dimensions 28, LLP were considered to be

voting securities under the 1940 Act and therefore, were shown as unconsolidated investments (non-securities), at fair value in the consolidated balance sheet.

For GAAP purposes, these investments have been recorded under the equity method

investments, for which the Company has elected the fair value option as discussed above.

Adoption of Lease Accounting Topic 842

In February 2016, the FASB issued ASU No.

2016-02 “Leases (Topic 842)” (“ASU 2016-02”).

Under ASU 2016-02, an entity is required to recognize right-of-use assets and lease liabilities on its

balance sheet and disclose key information about leasing.

ASU 2016-02 offers specific accounting guidance for a lessee, a lessor, and parties to sale and leaseback transactions.

Lessees and lessors are required to disclose qualitative and

quantitative information about leasing arrangements to facilitate assessment the amount, timing, and uncertainty of cash flows arising from leases.

In July 2018, the FASB issued ASU No.

2018-11, “Leases (Topic 842):

Targeted Improvements” (“ASU 2018-11”).

ASU 2018-11 provides lessors with a practical expedient to not separate lease and

non-lease components if both (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease.

Company adopted the practical expedient as of July 1, 2019, to account for lease and non-lease components as a single component in lease contracts where the Company or one of its subsidiaries is the lessor.

The Company’s current portfolio consists of commercial office properties and residential apartment buildings whereby the Company generates rental revenue by leasing office space and apartment

units to the building’s tenants.

These tenant leases fall under the scope of Topic 842, and are classified as operating leases.

Revenues from such leases are recognized on a straight-line basis over the terms of the lease agreements.

components of the Company’s leases are combined with the related lease components and accounted for as a single lease component under Topic 842.

The balances of net real estate investments and related depreciation on the Company’s consolidated

financial statements relate to assets for which the Company is the lessor.

Real Estate Assets, Capital Additions, Depreciation and Amortization

The Company capitalizes costs, including certain indirect costs, incurred for capital additions, including redevelopment, development, and construction projects.

The Company also allocates

certain department costs, including payroll, at the corporate levels as “indirect costs” of capital additions, if such costs clearly relate to capital additions.

The Company also capitalizes interest, property taxes and insurance during periods

in which redevelopment, development, and construction projects are in progress.

Cost capitalization begins once the development or construction activity commences and ceases when the asset is ready for its intended use.

Repair and maintenance

and tenant turnover costs are expensed as incurred.

Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset.

Depreciation and amortization expense are computed on the

straight-line method over the asset’s estimated useful life.

The Company considers the period of future benefit of an asset to determine its appropriate useful life and anticipates the estimated useful lives of assets by class to be generally

16 – 45 years

Building improvements

Land improvements

Furniture, fixtures and equipment

In-place leases

Real Estate Purchase Price Allocations

In accordance with the guidance for business combinations, upon the acquisition of real estate properties, the Company evaluates whether the transaction is a business combination or an asset

If the transaction does not meet the definition of a business combination, the Company records the assets acquired, the liabilities assumed, and any non-controlling interest as of the acquisition date, measured at their relative

Acquisition-related costs are capitalized in the period incurred and are added to the components of the real estate assets acquired.

The Company assesses the acquisition-date fair values of all tangible assets, identifiable

intangible assets, and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information.

Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions.

The fair value of tangible assets of an acquired property considers the value

of the property as if it was vacant.

Intangible assets include the value of in-place leases, which are classified as operating leases and represents the estimated fair value of the net cash flows of leases in place at the time of acquisition,

as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up.

The Company amortizes the value of in-place leases to expense over the remaining non-cancelable term of

the respective leases, which is on average five years.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates,

property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates, and the number of years the property will be held for investment.

The use of inappropriate assumptions

could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets, and assumed liabilities, which could impact the amount of the Company’s net income (loss).

Differences in the amount attributed to the fair

value estimate of the various assets acquired can be significant based upon the assumptions made in calculating these estimates.

Impairment of Real Estate Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying value of the Company’s real estate and related intangible assets may not be

When indicators of potential impairment emerge, the Company assesses whether the Company will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition.

Based on this

assessment, if the Company does not believe that it will recover the carrying value of the real estate and related intangible assets, the Company will record an impairment loss to the extent that the carrying value exceeds the estimated fair

value of the real estate and related intangible assets.

No impairment charges were recorded for the six months ended June 30, 2021 and December 31, 2020.

Gain on Dispositions of Real Estate Investments

Gains on sales of rental real estate are not considered sales to customers and will generally be recognized pursuant to the provisions of ASC 610-20, Gains and Losses from the Derecognition

of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business.

Generally, the Company’s sales of real estate

would be considered a sale of a nonfinancial asset as defined by ASC 610-20.

ASC 610-20 refers to the revenue recognition principles under ASU No.

2014-09, Revenue from Contracts with Customers (Topic 606).

Under ASC 610-20, if the Company

determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company will dispose of the asset and recognize a gain or loss on the

sale of the real estate when control of the underlying asset transfers to the buyer.

Reportable Segments

ASC 280, Segment Reporting , establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments.

Company has one reportable segment, income-producing real estate properties, which consists of activities related to investing in real estate.

The real estate properties are geographically diversified throughout the United States, and the

Company evaluates operating performance on an overall portfolio level.

NOTE 3 – INVESTMENTS IN REAL ESTATE ASSETS

The following table provides summary information regarding the Company’s operating properties, which are owned through the Company’s subsidiaries;

Operating Partnership, Madison and PVT:

Consolidated Operating Properties

Property Name:

Addison Corporate Center

Commodore Apartments

Pon de Leo Apartments

Property Owner:

The Operating Partnership

Madison-PVT Partners LLC

PVT-Madison Partners LLC

Number of Tenants:

Ownership Interest:

The following table summarizes the assets acquired and liabilities assumed at the acquisition date for the Operating Partnership’s acquisition of Property Owner on June 8, 2020:

Purchase Price Allocation

Building and tenant improvements

Intangible lease assets

Other current assets

Total assets acquired

Mortgages assumed`

Other current liabilities

Total liabilities assumed

Fair value of equity interests

As discussed in Note 1, the Company began presenting, on a consolidated basis, the underlying assets and liabilities of the Operating Partnership as of December 31, 2020.

The Company’s

carrying value of the Operating Partnership was the fair value on the effective date of the change in status, which was $8,027,584;

however, the net asset value of the Company’s interest in the Operating Partnership as of the that date was

Therefore, during consolidation the Company recorded a carrying value adjustment of $6,332,745 on all of the Operating Partnership’s long-lived assets proportionately based on the relative carrying values at December 31, 2020,

immediately prior to the termination of BDC status as shown in the following table:

Carrying Value Before Adjustment

Adjusted Carrying Value

Building and tenant improvements

Intangible lease assets:

Lease in place

Leasing commissions

Leaseholds (above market)

Leasehold improvements

Other intangibles

The following table presents the allocation of real estate assets acquired and liabilities assumed during the six months ended June 30, 2021.

Both acquisitions were considered asset

acquisitions for accounting purposes.

Property Name:

Acquisition Date:

Commodore Apartments

March 5, 2021

Pon de Leo Apartments

March 5, 2021

Purchase Price Allocation

Building and tenant improvements

Furniture, Fixtures & Equipment

Intangible lease assets

Net leasehold asset (liability)

Total consideration paid for acquired real estate investments, net of liabilities assumed

Operating Leases:

The Company’s real estate assets are leased to tenants under operating leases that contain varying terms and expirations.

The leases may have provisions to extend the lease agreements,

options for early termination after paying a specified penalty and other terms and conditions as negotiated.

The Company retains substantially all the risks and benefits of ownership of the real estate assets leased to tenants.

Generally, upon

the execution of a lease, the Company does not require a security deposit from tenants on its commercial real estate properties, depending upon the terms of the respective leases and the creditworthiness of the tenants, but security deposits

generally are not individually significant amounts.

Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of the security deposit.

Security deposits received in cash related to tenant leases

are included in other accrued liabilities in the accompanying consolidated balance sheet and were immaterial as of June 30, 2021.

The following table presents the components of income from real estate operations for the six months ended June 30, 2021:

Lease Income- Operating leases

Variable lease income (1)

Primarily includes tenant reimbursements for utilities and common area maintenance.

As of June 30, 2021, the future minimum rental income from the Company’s real estate properties under non-cancelable operating leases are as follows:

Year ended June 30,:

Rental Income

Lease Intangibles, Above-Market Lease Assets and Below-Market Lease Liabilities, Net

As of June 30, 2021, the Company’s acquired lease intangibles, above-market lease assets and below-market lease liabilities, were as follows:

Lease Intangibles

Above-Market Lease Asset

Below-Market Lease Liabilities

Accumulated amortization

Weighted average amortization period (years)

The Company’s amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the six months ended June 30, 2021, were as follows

Six Months Ended

June 30, 2021

Lease Intangibles

Above-Market Lease Asset

Below-Market Lease Liabilities

The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:

Year Ended June 30, :

In-place leases, to be included in amortization

Above-market lease intangibles

Below-market lease liabilities

Total to be included in revenue from tenants

NOTE 4 – INVESTMENTS

The following table summarizes the composition of the Company's investments at cost and fair value as of June 30, 2020 and 2019:

The following table summarizes the composition of the Company's equity method investments with fair value option election and other equity securities at fair value as of June 30, 2021

(successor basis):

June 30, 2021

Publicly Traded Companies

Non Traded Companies

Non Traded Company (Equity method investment with fair value option election)

LP Interests (Equity method investment with fair value option election)

Investment Trust

The following table summarizes the composition of the Company's investments at cost and fair value as of June 30, 2020 (predecessor basis):

June 30, 2020

2 unchanged sentences

Investment Trust

Index to Audited Consolidated Financial Statements

The following table presents fair value measurements of the Company's investments measured at fair value on a recurring basis as of June 30, 2021, according to the fair value hierarchy

(successor basis):

Publicly Traded Companies

2 unchanged sentences

The following table presents fair value measurements of the Company's investments measured at fair value on a recurring basis as of June 30, 2020, according to the fair value hierarchy

(predecessor basis):

Publicly Traded Companies

1 unchanged sentence

Investment Trust

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III) for the year ended June 30, 2020:

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair

value hierarchy) for the six months ended June 30, 2021 (successor basis):

Balance at December 31, 2020

Purchases of investments

Transfers to Level I

Proceeds from sales, net

Return of capital distributions

Net realized losses

Net unrealized gains

Ending balance at June 30, 2021

The transfers of $229,879 from Level III to Level I category during the six months ended June 30, 2021 resulted from one of the Company's investments converting from a non-traded REIT to

publicly traded REIT.

Transfers are assumed to have occurred at the beginning of the period.

For the six months ended June 30, 2021, changes in unrealized gains, net included in earnings relating to Level III investments still held at June 30, 2021 were $945,208.

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair

value hierarchy) for the six months ended December 31, 2020 (predecessor basis):

Balance at July 1, 2020

Purchases of investments

Transfers to Level I

Consolidation of the Operating Partnership (Note 1)

Proceeds from sales, net

2 unchanged sentences

Net unrealized losses

Ending balance at June 30, 2020

Ending balance at December 31, 2020

The transfers of $1,900,470 from Level III to Level I category during the six months ended December 31, 2020 resulted from one of the Company's investments converting from a non-traded REIT

to publicly traded REIT.

Transfers are assumed to have occurred at the beginning of the period.

For the six months ended December 31, 2020, changes in unrealized losses, net included in earnings relating to Level III investments still held at December 31, 2020 were $1,836,915.

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III of the fair

value hierarchy) for the year ended June 30, 2020 (predecessor basis):

Balance at July 1, 2019

Purchases of investments

Transfers from Level III to Level I

Proceeds from sales, net

3 unchanged sentences

Ending balance at June 30, 2020

The transfers from Level III to Level I category during the year ended June 30, 2020, relates to changes in tradability of the securities in an active market due to two of the Company's investments converting from

non-traded REIT shares to publicly traded REIT shares.

Transfers are assumed to have occurred at the beginning of the year.

For the year ended June 30, 2020, changes in unrealized loss included in earnings relating to Level III investments still held at June 30, 2020, was $12,445,631.

For the year ended June 30, 2019, changes in

unrealized loss included in earnings relating to Level III investments still held at June 30, 2019, was $2,008,334.

Index to Audited Consolidated Financial Statements

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2020:

Primary Valuation Techniques

For the year ended June 30, 2020, changes in unrealized losses, net included in earnings relating to Level III investments still held at June 30, 2020 were $12,445,631.

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2021 (successor basis):

Primary Valuation

Unobservable Inputs Used

Non Traded Companies

Weighted Average

Non Traded Company

Direct Capitalization Method

1 unchanged sentence

Liquidity discount

32.0% - 35.0%

Non Traded Companies

2 unchanged sentences

Liquidity discount

12.0% - 78.0%

Bankruptcy filing

Non Traded Companies

1 unchanged sentence

Secondary market industry publication

Liquidity discount

Underlying property sales contract

Acquisition cost

Direct Capitalization Method

7 unchanged sentences

Underlying property sales contract

Underlying property appraisal

Liquidity discount

19.0% - 43.0%

Market Activity

Underlying security sales contract

Secondary market industry publication

Contributed capital

Investment Trust

Market Activity

Underlying security sales contract

* In the past years, the Company valued Level III investments primarily by reference to secondary market activities.

However, due to the COVID-19 pandemic, secondary market activities significantly declined during the second quarter of 2020.

While the most active of these securities had transactions reported based on new COVID-19 occupancy and financial information, two of the Level III investments only had earlier reported transactions.

Therefore, to determine the fair values of these

non-traded securities as of June 30, 2020, management reviewed and evaluated multiple data sources as part of management’s Level III valuation process and applied significant subjective judgment about the effects of overall market declines during times

of economic turmoil to arrive at these valuations.

Impact of COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted the fair value of our investments as of June

30, 2020, and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments.

The impact of the COVID-19 pandemic may not yet be fully reflected in the valuation of our

investments as our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of

private information that is often from a time period earlier, generally two to three months, than the quarter for which we are reporting.

Additionally, we may not have yet received information or certifications from our portfolio companies that

indicate any or the full extent of declining performance or non-compliance with debt covenants, as applicable, as a result of the COVID-19 pandemic.

As a result, our valuations at June 30, 2020 may not show the complete or continuing impact of the

COVID-19 pandemic and the resulting measures taken in response thereto.

In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value.

Accordingly, we may continue to

incur additional net unrealized losses or may incur realized losses after June 30, 2020, which could have a material adverse effect on our business, financial condition and results of operations.

Index to Audited Consolidated Financial Statements

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2019:

Direct Capitalization Method

Capitalization rate

Liquidity discount

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2020 (predecessor basis):

Primary Valuation Techniques

Unobservable Inputs Used

Weighted Average

Non Traded Companies

2 unchanged sentences

Liquidity discount

19.0% - 34.0%

Non Traded Companies

Discounted Cash Flow

Discount rate

Discount term (months)

Non Traded Companies

Estimated Liquidation Value

1 unchanged sentence

Liquidity discount

12.0% - 70.0%

Non Traded Companies

1 unchanged sentence

Secondary market industry publication

Liquidity discount

Direct Capitalization Method

1 unchanged sentence

Liquidity discount

19.0% - 25.0%

Discounted Cash Flow

Discount rate

15.0% - 30.0%

Discount term (months)

1 unchanged sentence

Sponsor provided value

Underlying contracted agreement

Underlying property sales contract

Underlying property appraisal

Liquidity discount

19.0% - 34.0%

Market Activity

Acquisition Cost

Book value of underlying loans

Liquidity discount

19.0% - 30.0%

Underlying security sales contract

Secondary market industry publication

Contributed capital

Investment Trust

Direct Capitalization Method

Capitalization rate

Liquidity discount

$ 101,094,142

Unconsolidated Significant Subsidiaries

Our investments are generally in small and mid-sized companies in a variety of industries.

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, we must determine which of our unconsolidated controlled

investments are considered “significant subsidiaries,” if any.

In evaluating these investments, there are three tests utilized to determine if any of our controlled investments are considered significant subsidiaries:

the investment test, the asset

test, and the income test.

Rule 3-09 of Regulation S-X requires separate audited financial statements for any unconsolidated majority-owned subsidiary in an annual report if any of the three tests exceed 20%.

Rule 4-08(g) of Regulation S-X requires

summarized financial information in an annual report if any of the three tests exceeds 10%.

As of June 30, 2020, and 2019, none of our investments was considered a significant subsidiary under Rule 3-09 and 4-08(g) with the exception of MacKenzie Realty Operating Partnership, LP, which was determined to be a

significant subsidiary under the asset test as the partnership’s total assets exceeded 20% of the Company’s total assets as of June 30, 2020.

Under the Rule 3-09, separate audited financial statements are required to be included in the Company’s

annual report.

However, as disclosed below under Note 5, the partnership was formed in May 2020 and its fiscal year does not end until December 31, 2020.

Therefore, separate audited financial statements of this partnership for its year ended December

31, 2020 will be included in the Company’s annual report for the fiscal year ended June 30, 2021.

The summarized financial information of the partnership as of June 30, 2020 is as follows:

Market Activity

Underlying security sales contract

* In the past years, the Company valued Level III investments primarily by reference to secondary market activities.

However, due to the COVID-19 pandemic, secondary market

activities significantly declined during the second quarter of 2020.

While the most active of these securities had transactions reported based on new COVID-19 occupancy and financial information, two of the Level III investments only had

earlier reported transactions.

Therefore, to determine the fair values of these non-traded securities as of June 30, 2020, management reviewed and evaluated multiple data sources as part of management’s Level III valuation process and

applied significant subjective judgment about the effects of overall market declines during times of economic turmoil to arrive at these valuations.

Impact of COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted the fair value of our investments as of June 30, 2021 and June 30, 2020, and the values assigned as of

this date may differ materially from the values that we may ultimately realize with respect to our investments.

The impact of the COVID-19 pandemic may not yet be fully reflected in the valuation of our investments as our valuations, and

particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of private information that is

often from a time period earlier, generally two to three months, than the quarter for which we are reporting.

Additionally, we may not have yet received information or certifications from our portfolio companies that indicate any or the full

extent of declining performance or non-compliance with debt covenants, as applicable, as a result of the COVID-19 pandemic.

As a result, our valuations at June 30, 2021 and 2020, may not show the complete or continuing impact of the COVID-19

pandemic and the resulting measures taken in response thereto.

Accordingly, we may continue to incur additional net unrealized losses or may incur realized losses subsequent to June 30, 2021, which could have a material adverse effect on our

business, financial condition and results of operations.

Summarized or Separate Audited Financial Statements for Equity Method Investments (Fair Value Option)

Our investments in securities are generally in small and mid-sized companies in a variety of industries.

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, we must

determine which of our equity method investments measured at fair value under the Fair Value Option are considered “significant,” if any.

Regulation S-X mandates the use of three different tests to determine if any of our investments are

considered significant investments:

the investment test, the asset test, and the income test.

Rule 3-09 of Regulation S-X requires separate audited financial statements for any significant equity method investments in an annual report if any

of the three tests exceed 20%.

Rule 4-08(g) of Regulation S-X requires summarized financial information in an annual report if any of the three tests exceeds 10%.

For interim reporting, under SEC Rule 10-01(b)(1), the investment and income

tests prescribed under Rule 3-09 should be applied to all of our equity method investments measured at fair value under the Fair Value Option and if either of the two tests exceed 20%, summarized income statement information of each

equity method investee is required to be disclosed separately.

The summarized income statement information is not required for any equity method investee that would not be required, pursuant to Rule 13a-13 or 15d -13, to file quarterly financial information with the SEC if it were a registrant.

In addition to the SEC rules, ASC 323-10-50-3(c) requires summarized financial statements of its equity method investments, including those reported under the fair value option, if they are

material individually or in aggregate.

The Company’s equity method investments accounted under the fair value option were material in aggregate as of June 30, 2021.

The aggregated summarized financial information of the investees are as

Total Liabilities

NOTE 4—MARGIN LOANS

The Fund has a brokerage account through which it buys and sells publicly traded securities.

The provisions of the account allow the Company to borrow on certain securities held in the account.

Amounts borrowed are

collateralized by the securities held in the account and bear interest at a negotiated rate payable monthly.

Securities pledged to secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account are

used as collateral.

As of June 30, 2020, the Company had $2,655,155 of margin credit available for cash withdrawal or the ability to purchase up to $18,770,519 in additional publicly traded securities.

As of June 30, 2019, the Company had $18,126 of

margin credit available for cash withdrawal or the ability to purchase up to $60,419 in additional publicly traded securities.

As of June 30, 2020, and 2019, there was no loan outstanding under this short-term credit line.

Index to Audited Consolidated Financial Statements

Total Equities

Total Revenues

Total Expenses

Total Net Income

Unconsolidated Significant Subsidiaries

In accordance with SEC Rules 3-09 and 4-08(g) of Regulation S-X, we must determine which of our investments in securities are considered “significant subsidiaries,” if any.

Regulation S-X

mandates the use of three different tests to determine if any of our controlled investments are significant subsidiaries:

the investment test, the asset test, and the income test.

Rule 3-09 of Regulation S-X requires separate audited financial

statements for any unconsolidated majority-owned subsidiary in an annual report if any of the three tests exceed 20%.

Rule 4-08(g) of Regulation S-X requires summarized financial information in an annual report if any of the three tests exceeds

As of June 30, 2021, none of our investments were considered a significant subsidiary under both SEC rules.

As of June 30, 2020, one of our investments, the Operating Partnership, was

determined to be a significant subsidiary under the asset test as the Operating Partnership’s total assets exceeded 20% of the Company’s total assets as of June 30, 2020.

Under the Rule 3-09, separate audited financial statements were required

to be included in the Company’s annual report for the fiscal year ended June 30, 2021.

However, as discussed in Note 1, in connection with the termination of the Company’s status as a BDC, the Operating Partnership was consolidated with the

Company as of December 31, 2020.

Therefore, separate audited financial statements of this partnership are no longer required in the Company’s annual report for the year ended June 30, 2021.

NOTE 5 – VARIABLE INTEREST ENTITIES

A variable interest in a variable interest entity (VIE) is an investment or other interest that will absorb portions of the VIE’s expected losses and/or receive portions of the VIE’s expected

residual returns.

The Company’s variable interests in VIEs include limited partnership interests.

VIEs sometimes finance the purchase of assets by issuing limited partnership interests that are either collateralized by or indexed to the assets

held by the VIE.

The enterprise with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE.

The Company determines whether it is the primary beneficiary of a

VIE by performing an analysis that principally considers:

(a) which variable interest holder has the power to direct activities of the VIE that most significantly impact the VIE’s economic performance;

(b) which variable interest holder has the

obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE;

interest holders;

(d) the VIE’s capital structure;

(e) the terms between the VIE and its variable interest holders and other parties involved with the VIE;

and (f) related-party relationships.

The Company reassesses its evaluation of whether an

entity is a VIE when certain reconsideration events occur.

The Company reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances.

Nonconsolidated VIEs

As of June 30, 2021, thirteen of the Company’s unconsolidated VIEs include interests in limited partnerships and limited liability companies.

The Company has determined that it is not the

primary beneficiary of these entities because the managing partner or member of each of these entities has the power to direct the activities that most significantly affect the VIE’s economic performance.

Accordingly, these VIEs have not been

consolidated with the Company, and they have been reported as investments in limited partnerships recorded at fair value in the June 30, 2021, consolidated balance sheet.

The table below presents a summary of the nonconsolidated VIEs in which the Company holds variable interests.

Total Nonconsolidated VIEs

As of June 30, 2021

Fair value of investments in VIEs

Carrying value of variable interests - assets

Carrying value of variable interests - liabilities

Maximum Exposure to Loss:

Limited Partnership Interest

The Company’s exposure to the obligations of VIEs is generally limited to the carrying value of the limited partnership interests in these entities.

NOTE 6 – RELATED PARTY TRANSACTIONS

Amended and Restated Investment Advisory Agreement :

Under the Amended and Restated Investment Advisory Agreement, the Company will pay the Adviser a fee for its services consisting of three components — a portfolio structuring fee, a base management fee, and a

subordinated incentive fee.

Advisory Agreements Effective Through December 31, 2020:

Under the Amended and Restated Investment Advisory Agreement, the Company will pay the Adviser a fee for its services consisting of three components - a portfolio structuring fee, a base

management fee, and a subordinated incentive fee.

The portfolio structuring fee is for the Adviser's initial work performed in identifying, evaluating and structuring the acquisition of assets.

The fee equals 3.0% of the gross invested capital (“Gross Invested

Capital”), which equals the number of shares issued, multiplied by the offering price of the shares sold ($10.00, regardless of whether or not shares were issued with volume or commission discounts), plus any borrowed funds.

These services are

performed on an ongoing basis in anticipation of deploying new capital, generally within 15 days of the receipt of capital.

The fee equals 3.0% of the gross invested

capital (“Gross Invested Capital”), which equals the number of shares issued, multiplied by the offering price of the shares sold ($10.00, regardless of whether or not shares were issued with volume or commission discounts), plus any borrowed

These services are performed on an ongoing basis in anticipation of deploying new capital, generally within 15 days of the receipt of capital.

Therefore, this fee is expensed in the period the capital is accepted.

The base management fee is calculated based on the Company's Gross Invested Capital plus any borrowing for investment purposes.

The base management fees range from 1.5% to 3.0%, depending on the level of Gross Invested

The base management fees range from 1.5% to 3.0%, depending on

the level of Gross Invested Capital.

The subordinated incentive fee has two parts—income and capital gains.

The incentive fee components (other than during liquidation) are designed so that neither the income incentive fee nor the capital gains incentive

fee is payable to the Adviser unless our stockholders have first received dividends at a rate of at least 7.0% per annum for the relevant measurement period (a fiscal quarter, for the income incentive fee;

a fiscal year, for the capital gains

incentive fee).

The incentive fee components (other than during liquidation) are designed so that neither the income incentive fee nor

the capital gains incentive fee is payable to the Adviser unless our stockholders have first received dividends at a rate of at least 7.0% per annum for the relevant measurement period (a fiscal quarter, for the income incentive fee;

year, for the capital gains incentive fee).

The income incentive fee (the “Income Fee”) is calculated and payable quarterly in arrears as follows:

(i) the sum of preliminary net investment income for each fiscal quarter since the effective date of the Amended

and Restated Investment Advisory Agreement (October 1, 2017) exceeding 7% of the “Contributed Capital” (which equals the number of shares issued multiplied by the maximum public offering price at the time such shares were sold, regardless of whether

or not shares were issued with volume or commission discounts or through the DRIP, as such amount is computed from time to time) on an annualized basis up to 8.75% of Contributed Capital;

and (ii) 20.0% of our preliminary net investment income for

each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate;

minus (iii) the sum of all previously paid income incentive fees since the effective date, plus (iv) any incremental income incentive fee

payable resulting from the reanalysis after calculation of the capital gains incentive fee.

(i) the sum of preliminary net investment income for each fiscal quarter since the

effective date of the Amended and Restated Investment Advisory Agreement (October 1, 2017) exceeding 7% of the “Contributed Capital” (which equals the number of shares issued multiplied by the maximum public offering price at the time such

shares were sold, regardless of whether or not shares were issued with volume or commission discounts or through the DRIP, as such amount is computed from time to time) on an annualized basis up to 8.75% of Contributed Capital;

and (ii) 20.0%

of our preliminary net investment income for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate;

minus (iii) the sum of all previously paid income incentive fees since the effective date,

plus (iv) any incremental income incentive fee payable resulting from the reanalysis after calculation of the capital gains incentive fee.

The capital gains incentive fee (the “Capital Gains Fee”) is calculated and payable in arrears as of the end of each fiscal year as follows:

(i) the sum of all "capital gains" (calculated as net realized capital gains

less unrealized capital depreciation) for each fiscal year after the effective date exceeding 7% of the Contributed Capital on an annualized basis up to 8.75% of Contributed Capital, which thresholds are reduced by (but not below zero) the cumulative

preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income);

and (ii) 20.0% of all capital gains for each fiscal quarter after the

effective date exceeding 8.75% of Contributed Capital at an annualized rate, which threshold is reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the

case of negative cumulative preliminary net investment income);

(i) the sum of all "capital gains" (calculated as

net realized capital gains less unrealized capital depreciation) for each fiscal year after the effective date exceeding 7% of the Contributed Capital on an annualized basis up to 8.75% of Contributed Capital, which thresholds are reduced by

(but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income);

and (ii) 20.0% of all capital gains

for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate, which threshold is reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since

the effective date (or, increased, in the case of negative cumulative preliminary net investment income);

minus (iii) the sum of all previously paid income incentive fees since the effective date and prior to the end of such fiscal year;

less (iv) the aggregate amount of all capital gains

incentive fees paid in prior fiscal years ending after the effective date.

To the extent that such calculation would result in a capital gains incentive fee that exceeds 20% of all realized capital gains for the measurement period, the capital gains

incentive fee shall be capped so that under no circumstance does it exceed 20% of the realized capital gains for the measurement period.

The portfolio structuring fees for the years ended June 30, 2020, 2019, and 2018 were $588,203, $707,589 and $690,220, respectively.

Index to Audited Consolidated Financial Statements

The base management fee is calculated on a quarterly basis at the end of each quarter based on the quarter ended Gross Invested Capital and is payable in arrears.

The base management fees for the years ended June 30,

2020, 2019, and 2018, were $2,549,076, $2,206,227 and $1,725,173, respectively.

These base management fees were based on the following quarter ended Gross Invested Capital segregated in three columns based on the fee annual percentages:

Base Management Fee Annual %

Total Gross Invested Capital

(iv) the aggregate amount of all capital gains incentive fees paid in prior fiscal years ending after the effective date.

To the extent that such calculation would result in a capital gains incentive fee that exceeds 20% of all realized capital

gains for the measurement period, the capital gains incentive fee shall be capped so that under no circumstance does it exceed 20% of the realized capital gains for the measurement period.

Advisory Agreements Effective January 1, 2021:

As discussed in Note 1, on January 26, 2021, the Board of Directors of the Company approved, effective January 1, 2021, two advisory agreements, an Advisory Management Agreement with the Real

Estate Adviser and the Amended and Restated Investment Advisory Agreement with the Investment Adviser.

The terms of the Advisory Management Agreement with the Real Estate Adviser provide that the Company will continue to pay an Asset Management Fee on essentially the same terms as it was

paying the Investment Adviser prior to 2021, namely based upon a percentage of Invested Capital (3% of the first $20 million, 2% of the next $80 million, and 1.5% over $100 million).

Invested Capital is equal to the amount calculated by

multiplying the total number of outstanding Shares, Preferred Shares, and Partnership Units issued by the Company by the price paid for each or the value ascribed to each in connection with their issuance.

The Advisory Management Agreement

also provides for a 2.5% Acquisition Fee on new (non-security) purchases, subject to certain limitations designed to eliminate incentives to “churn” Company assets.

The new Advisory Management Agreement also provides for an incentive management

fee that is equal to 15% of all distributions once shareholders have received cumulative distributions equal to 6% from the effective date of the Agreement.

The Company will not pay any Property Management Fees, Debt Financing Fees, or

Disposition Fees to the Real Estate Adviser.

The Investment Adviser will receive an annual fee equal to $100 for providing the investment advice to the Company as to its securities portfolio under the Amended and Restated Investment

Advisory Agreement.

During the six months ended June 30, 2021, the Company incurred the asset management fees of $1,354,323 and asset acquisition fees of $343,750 under the new advisory agreement with the Real

Estate Adviser.

The asset acquisition fees were paid on the real estate acquisitions of Madison and PVT.

During the six months ended December 31, 2020, the Company incurred the base management fees of $1,335,376 and portfolio structuring fees of $6,679 under the previous advisory agreement with

the Investment Adviser.

During the years ended June 30, 2020 and 2019, the Company incurred base management fees of $2,549,076 and $2,206,227, respectively, and portfolio structuring fees of $588,203 and $707,589,

respectively, under the previous advisory agreement with the Investment Adviser.

The asset management and base management fees mentioned above were based on the following quarter ended Invested Capital segregated in two columns based on the annual fee rate:

Asset/Base Management Fee Annual %

Total Invested Capital

For the Year Ended June 30, 2021

16 unchanged sentences

June 30, 2019

During the six months ended June 30, 2021, the Company did not incur or accrue any incentive management fee under the new Advisory Management Agreement.

Similarly, the Company did not accrue Income Fee or Capital Gains Fee for the six months ended December 31, 2020, under the previous advisory agreement with the Investment Advisor.

For the year ended June 30, 2020, the Company neither incurred the Capital Gains Fee nor the Income Fee.

For the year ended June 30, 2019, the Company incurred $1,789,870 of the Capital Gains Fee;

For the year ended June 30, 2019, the Company incurred $1,789,870 of the Capital Gains

however, did not incur the Income Fee.

ended June 30, 2018, the Company incurred $277,691 of the Income Fee and $814,660 of the Capital Gains Fee.

Organization and Offering Costs Reimbursement:

As provided in the Amended and Restated Investment Advisory Agreement and the prospectus of the Company, offering costs incurred and paid by the Company in excess of $1,650,000

each on the second and third public offering will be reimbursed by the Adviser except to the extent that 10% in broker fees are not incurred (the “broker savings”).

In such case, the broker savings will be available to be paid by the Company for

marketing expenses or other non‑cash compensation.

As of the offering conclusion date, the broker savings was $399,793 on the second public offering.

Accordingly, second offering costs in excess of $2,049,793 were reimbursable by the Adviser to the

The cumulative offering costs incurred in connection with the second public offering as of December 31, and June 30, 2019 were $1,843,071 and $1,685,426, respectively, both of which were below the reimbursement threshold of $2,049,793.

There were no additional offering costs incurred on the second offering after December 31, 2019.

Total offering costs incurred on the third public offering as of June 30, 2020, were $560,194, which was also below the reimbursement threshold.

Therefore, there were no amounts reimbursable from the Adviser as of June 30, 2020 and June 30, 2019 on account of either public offering.

Of the cumulative offering costs incurred on the second public offering by the Company as of December 31, 2019, MacKenzie had paid on behalf of the Company a total of $932,780, all of which was

fully reimbursed to MacKenzie as of December 31, 2019.

As of June 30, 2019, MacKenzie had paid on behalf of the Company a total of $788,057, of which $116,115 was payable to MacKenzie as of June 30, 2019 and was included as a part of due to related

entities in the consolidated statements of assets and liabilities as of June 30, 2019.

Index to Audited Consolidated Financial Statements

Of the cumulative offering costs incurred on the third public offering by the Company as of June 30, 2020, MacKenzie had paid on behalf of the Company a total of $300,212, of which $52,492 was

payable to MacKenzie as of June 30, 2020 and was included as a part of due to related entities in the consolidated statements of assets and liabilities as of June 30, 2020.

During the year ended June 30, 2020, 2019 and 2018, total offering costs paid by MacKenzie on behalf of the Company on its second and third public offerings were $444,935, $550,908, and $237,149,

As provided in the previous advisory agreement with the Investment Adviser and the prospectus of the Company, offering costs incurred and paid by the Company in excess of $1,650,000 on the

third public offering were reimbursed by the Investment Adviser except to the extent that 10% in broker fees are not incurred (the “broker savings”).

In such case, the broker savings were available to be paid by the Company for marketing

expenses or other non‑cash compensation.

Total offering costs incurred on the third public offering as of the termination date of October 31, 2020 were $624,188 which were below the reimbursement threshold.

Therefore, there were no amounts

reimbursable from the Investment Adviser as of the offering termination date.

Of the cumulative offering costs incurred on the third public offering by the Company as of the offering termination date of October 31, 2020 and June 30, 2020, MacKenzie had paid on behalf

of the Company a total of $346,349 and $300,212, respectively.

Of the amounts paid by MacKenzie, as of June 30, 2020, the Company had not reimbursed MacKenzie in the amounts $52,492.

Therefore, those amounts were recorded as payable to

MacKenzie and included as a part of due to related entities in the consolidated statements of assets and liabilities (predecessor basis) as of June 30, 2020.

The Company had fully reimbursed MacKenzie as of June 30, 2021.

During the six months ended June 30, 2021 and December 31, 2020, total offering costs paid by MacKenzie on behalf of the Company on its second and third public offerings were $0 and $46,136,

respectively.

During the years ended June 30, 2020 and 2019, total offering costs paid by MacKenzie on behalf of the Company on its second and third public offerings were $444,935 and $550,908, respectively.

The third public offering terminated on October 31, 2020.

Therefore, the remaining deferred offering costs that had not been amortized as of the termination date were fully expensed as of

December 31, 2020.

Total amortization of these deferred costs for the six months ended June 30, 2021 and December 31, 2020, were $0 and $342,015, respectively.

Total amortization of these deferred costs for the years ended June 30, 2020 and

2019, were $880,138 and $556,165, respectively.

Administration Agreement:

Under the Administration Agreement, the Company reimburses MacKenzie for its allocable portion of overhead and other expenses it incurs in performing its obligations under the Administration Agreement, including

furnishing the Company with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing the Company with other administrative services, subject to the Independent Directors' approval.

addition, the Company reimburses MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of the Company's Chief Financial Officer, Chief Compliance Officer, Director of

Accounting and Financial Reporting, and any administrative support staff.

Effective November 1, 2018, transfer agent services are also provided by MacKenzie in-house and the costs incurred by MacKenzie in providing the services are reimbursed by the Company.

No fee (only cost reimbursement)

is being paid by the Company to MacKenzie for this service.

The administrative cost reimbursements for the years ended June 30, 2020, 2019, and 2018, were $680,000, $570,667 and $432,000, respectively.

Transfer agent services cost reimbursements for the year ended June 30, 2020

and 2019 were $80,000 and $23,333.

The table below outlines the related party expenses incurred for the years ended June 30, 2020, 2019, and 2018, and unpaid as of June 30, 2020, and 2019.

Under the Administration Agreement, the Company reimburses MacKenzie for its allocable portion of overhead and other expenses it incurs in performing its obligations under the Administration

Agreement, including furnishing the Company with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing the Company with other administrative services, subject to the

independent directors' approval.

In addition, the Company reimburses MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of the Company's Chief Financial Officer,

Chief Compliance Officer, Director of Accounting and Financial Reporting, and any administrative support staff.

Effective November 1, 2018, transfer agent services are also provided by MacKenzie and the costs incurred by MacKenzie in providing the services are reimbursed by the Company.

cost reimbursement) is being paid by the Company to MacKenzie for this service.

The administrative cost reimbursements for the six months ended June 30, 2021 and December 31, 2020, were $310,400 and $310,400, respectively.

The administrative cost reimbursements for the

years ended June 30, 2020 and 2019, were $680,000 and $570,667, respectively.

Transfer agent services cost reimbursements for the six months ended June 30, 2021 and December 31, 2020, were $61,600, and $61,600, respectively.

Transfer agent

services cost reimbursements for the years ended June 30, 2020 and 2019, were $80,000 and $23,333, respectively.

The table below outlines the related party expenses incurred for the six months ended June 30, 2021 and December 31, 2020, and years ended June 30, 2020 and 2019, and unpaid as of June 30,

2021, and 2020.

Six Months Ended

Incurred For The Year Ended

1 unchanged sentence

June 30, 2021

December 31, 2020

June 30, 2020

2 unchanged sentences

June 30, 2020

Base Management fees- the Adviser

Portfolio Structuring fee- the Adviser

Asset management fees- the Real Estate Adviser

Base management fees- the Investment Adviser

Asset acquisition fees- the Real Estate Adviser (3)

Portfolio structuring fees - the Investment Adviser

Subordinated Incentive fee - the Adviser

4 unchanged sentences

Due to related entities

Expenses paid by MacKenzie to third parties on behalf of the Company to be reimbursed.

Offering costs paid by MacKenzie- discussed in Note 5 under organization and offering costs reimbursements.

(1) Expenses paid by MacKenzie on behalf of the Company to be reimbursed to MacKenzie.

(2) Offering costs paid by MacKenzie - discussed in Note 6 under organization and offering costs

reimbursements.

These are amortized over twelve-month period as discussed in Note 2.

Transfer agent cost reimbursements for the period of November 1, 2018 through March 14, 2019 that MacKenzie refunded in July 2019.

Index to Audited Consolidated Financial Statements

Controlled or Affiliated Investments :

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a

portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company.

As of June 30, 2020, the Company is deemed to be either

“affiliated” with, or in “control” of, the below portfolio companies despite the fact that the Company does not have the power to exercise control over the management or policies of these portfolio companies.

(3) Asset acquisition fees paid to the Real Estate Adviser were capitalized as a part of the real estate

basis in accordance with the Company policy.

Controlled or Affiliated Investments ( Predecessor Basis ) :

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is

As of June 30, 2020, the Company is

deemed to be either “affiliated” with, or in “control” of, the below portfolio companies despite the fact that the Company does not have the power to exercise control over the management or policies of these portfolio companies.

June 30, 2020:

2 unchanged sentences

June 30, 2019

Gross Additions

Gross Reductions (1)

Net Realized Gains (losses)

Net Change in Unrealized Gains/(Losses)

Reductions (1)

Net Realized Gain/

Net Change in

Gains/(Losses)

Fair Value at

30 unchanged sentences

Sunlit Holdings, LLC

June 30, 2019:

Name of issuer and title of issue

Fair Value at

June 30, 2018

Gross Additions

Gross Reductions (1)

Net Realized Gains (losses)

Net Change in Unrealized Gains/(Losses)

Fair Value at

June 30, 2019

Interest/Dividend/Other income

June 30, 2019

Affiliated Investments:

5210 Fountaingate, LP

Arrowpoint Burlington LLC

BP3 Affliliate, LLC

BR Desota Investment Co, LLC

BR Quinn35 Investment Co, LLC

FSP Energy Tower I Corp.

Liquidating Trust

FSP Satellite Place

Lakemont Partners, LLC

MPF Pacific Gateway - Class B

Secured Income, LP

Summit Healthcare REIT, Inc.

Controlled Investments:

Addison NC, LLC

Addison Property Member, LLC

Bandon PV Holdings, LLC

Bishop Berkeley, LLC

BR Gate Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

Britannia Preferred Members, LLC -Class 2

Capitol Hill Partners, LLC

Coastal Realty Business Trust, REEP, Inc.

Dimensions28 LLP

Gross reductions include sales proceeds and return of capital distributions.

Index to Audited Consolidated Financial Statements

Of the investments listed above, the Company (or its affiliates) has the power to exercise control over the management or policies of the portfolio companies listed below:

2 unchanged sentences

Each series of the trust has its own beneficiaries and own assets.

The Company owns the following two series of CRBT and is the only beneficiary of such

The Company owns two series of CRBT and is the only beneficiary

of such series.

Under the terms of the agreement, there are no redemption rights to any of the series participants.

CRBT, REEP, Inc.-A has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland.

MacKenzie Realty Operating Partnership, LP (the “OP”):

On May 20, 2020, the Company formed an operating partnership, MacKenzie Realty Operating Partnership, LP (the “OP”).

Prior to the formation of the OP, the Company had preferred equity interests in Addison NC, LLC

(“Addison NC”) and Addison Property Member, LLC (“Addison Member”).

Both companies had ownership interests in Addison Property Owner, LLC (“Property Owner”), which owned an office and industrial development real estate property called Addison

Corporate Center.

On June 8, 2020, the Company and the OP entered into and closed on a Contribution Agreement with Addison Member, Addison NC, the managing members and other affiliates of these two entities (collectively referred to as the “Addison

Group”) whereby the Addison Group and the Company agreed to contribute all of their interests in Property Owner to the OP in exchange for partnership Units in the OP (“OP Units”).

At closing, the OP issued 516,144 of Class A OP units to the Addison

At closing, the Company also contributed $1,555,861 in cash to the OP, of which $1,311,458 was directly paid to the lender to pay down principal, fees, and reserve deposits in order to secure an extension of Property

Owner’s $24.4 million existing mortgage debt (the “Loan”) for up to 2 years, and pursuant to which the lender agreed to the assignment of the membership interests in Property Owner to the OP and to have the Company be the replacement guarantor of the

recourse obligations under the Loan.

The Loan is secured by the properties owned by Property Owner.

In exchange for the cash contributed to the OP and the contribution of the Company’s previously owned indirect equity interest in the Property Owner

to the OP, the Company received 1,451,642.63 Class B units in the OP.

At closing, the parties also entered into the Agreement of Limited Partnership of the OP that provides for redemption rights for the contributors (and its permitted transferees) to redeem the Class A OP Units for cash

or shares of the Company, at the Company’s election.

The OP Units will also receive distributions at the same rate paid to holders of the Company’s common stock.

The Company and TRS are the sole beneficiaries of the following series as of June 30, 2021 and 2020:

CRBT, REEP, Inc.-A, which has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland.

The Operating Partnership:

As of June 30, 2020, the Operating Partnership was considered as a controlled investment.

The Operating Partnership has been consolidated with the Company effective December 31, 2020 as

discussed above in note 1.

MPF Pacific Gateway:

MPF Pacific Gateway, which is managed by MacKenzie, is a holding company that owns an investment in a REIT Liquidating Trust.

The Company has a 15.82% ownership interest in MPF Pacific Gateway.

NOTE 6 – DEBT GUARANTY

On June 8, 2020, as part of the Contribution Agreement discussed above under Note 5, the Company replaced as the loan guarantor and the maturity date of the Loan was extended to April 30, 2021, with an option to

further extend the maturity date to April 30, 2022.

Under the Loan Modification Agreement and Replacement Guaranty, the Company guaranteed only the “Recourse Obligations” under the Loan, typically referred to as “Bad Boy Acts” (such as fraud,

intentional misrepresentation, willful misconduct, waste, conversion, intentional failure to pay taxes or maintain insurance, filing for bankruptcy, etc.).

As of June 30, 2020, the Company has not recorded any debt guaranty obligation since the

borrower, Property Owner, was current on the Loan payments and has sufficient cash flow to meet its monthly payments and there have been no inappropriate actions that would give rise to a guaranty obligation.

In addition, the appraised value of the

collateral was higher than the loan balance of $24.4 million as of June 30, 2020.

Index to Audited Consolidated Financial Statements

NOTE 7 – FINANCIAL HIGHLIGHTS

MPF Pacific Gateway, which was managed by MacKenzie, was a holding company that owned an investment in a REIT Liquidating Trust.

The Company had a 15.82% ownership interest in MPF Pacific

The company made final liquidating distributions and dissolved during the year ended June 30, 2021.

Related Party Investment Purchases:

During the year ended June 30, 2021, two investment funds affiliated with the Company’s Advisers, which are also advised by the Investment Adviser, desired to sell Britannia Preferred Members, LLC- Class 1 and

Class 2 and FSP Satellite Place, LLC for cash.

The Company desired to purchase those securities at a price equal to the net asset value as agreed to by the Investment Adviser and the Board.

While the Investment Adviser believes

that the purchase price for each of the securities was higher than any other third party would reasonably pay, the Company desired to increase its ownership of these two securities in order to solidify more control of them.

Directors approved the offers made to the Funds and each of the Funds subsequently accepted the offer.

The details of these purchases are as follows:

Name of the Securities

Purchase Price per Unit

Units Purchased

Total Price Paid

Britannia Preferred Members, LLC - Class 1

Britannia Preferred Members, LLC - Class 2

FSP Satellite Place LLC

NOTE 7 – MARGIN LOANS

The Company has a brokerage account through which it buys and sells publicly traded securities.

The provisions of the account allow the Company to borrow on certain securities held in the

account and to purchase additional securities based on the account equity (including cash).

Amounts borrowed are collateralized by the securities held in the account and bear interest at a negotiated rate payable monthly.

Securities pledged to

secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account are used as collateral.

As of June 30, 2021, the Company had no margin credit available for cash withdrawal or the ability to

purchase in additional securities.

As of June 30, 2020, the Company had $2,655,155 of margin credit available for cash withdrawal or the ability to purchase up to $18,770,519 in additional publicly traded securities.

As of June 30, 2021 and

2020, there was no amount outstanding under this short-term credit line.

NOTE 8 – MORTGAGE NOTES PAYABLE AND DEBT GUARANTY

Property Owner Note Payable

Property Owner is the obligor under a note payable to Wells Fargo Bank, NA in the original loan amount of $32,000,000 at an interest rate of LIBOR plus 3.75%.

The loan originally matured on

November 1, 2019 and is secured by the properties owned by Property Owner.

On June 8, 2020, as part of the Contribution Agreement discussed above under Note 1, the Company agreed to guarantee the loan and the maturity date of the loan was extended to April 30, 2021,

with an option to further extend the maturity date to April 30, 2022.

In April 2021, the Company exercised the option and extended the loan maturity date to April 30, 2022.

The principal balance of the loan immediately prior to the Loan

Modification Agreement was $25,827,107.

The new loan principal amount due under the modified agreement was $24,404,257, and the interest rate was modified to be equal to the Federal Funds Rate plus 3.75%.

As of June 30, 2021, the outstanding

loan amount was $23,568,330.

The loan requires payments only of interest through the maturity date;

however, certain provisions of the loan agreement allow the lender to apply excess cash flow during a cash trap period to the principal balance.

Under the Loan Modification Agreement and Replacement Guaranty, the Company guaranteed only the “Recourse Obligations” under the loan, which are triggered only if the guarantor of the loan

engages in “Bad Boy Acts” (such as fraud, intentional misrepresentation, willful misconduct, waste, conversion, intentional failure to pay taxes or maintain insurance, filing for bankruptcy, etc.).

As of June 30, 2021, the Company has not

recorded any debt guaranty obligation because (i) the Property Owner was current on the loan payments, (ii) the Company believes the Property Owner has sufficient cash flow to meet its monthly payments, and (iii) the Company has not engaged in

inappropriate actions that would give rise to a guaranty obligation.

In addition, the appraised value of the collateral was higher than the loan balance as of June 30, 2021.

Madison and PVT Notes Payable

On February 26, 2021, Madison and PVT obtained mortgage loans from First Republic Bank in the amounts of $6,737,500 and $8,387,500, respectively, both at a fixed interest rate

of 3.0% per annum through April 1, 2026.

Effective May 1, 2026, interest rates will be the average of the twelve most recently published yields on US Treasury securities adjusted a constant maturity of one year as published by the Federal

Reserve System in the Statistical Release H.15 plus 2.75% per annum.

The loans were obtained to finance the acquisition of the Commodore Apartments and Pon De Leo Apartments, which are located in Oakland, California.

The loans mature on

April 1, 2031 and are cross-collateralized by both properties owned by Madison and PVT.

The loan requires interest only monthly payments through April 1, 2026 and beginning May 1, 2026 monthly payments of

principal and interests are due based on 360 months of amortization period.

The remaining unpaid principal balance is due at maturity date.

As of June 30, 2021, the outstanding loan amounts were $6,737,500 and $8,387,500, on the Madison and

PVT mortgage loans, respectively.

NOTE 9 - FINANCIAL HIGHLIGHTS (PREDECESSOR BASIS)

The following is a schedule of financial highlights of the Company for the years ended June 30, 2020, 2019, 2018, and 2017:

4 unchanged sentences

June 30, 2017

June 30, 2016

Per Share Data:

18 unchanged sentences

(3) Total return is based on the net increase (decrease) in net assets resulting from operations divided by average net assets.

An individual stockholder’s return may vary from this return based on the

time of capital transactions.

An individual stockholder’s return may vary from this return based on the time

of capital transactions.

(4) Net of sales commissions and dealer manager fees of $1.00 per share as of October 30, 2019 and $1.03 per share thereafter .

1 unchanged sentence

(6) Amounts based on differences between the actual redemption price and the NAVs preceding the redemptions .

NOTE 10 – EARNINGS PER SHARE

Basic earnings per share is computed using the weighted average number of shares outstanding.

Diluted earnings per share is computed using the weighted average number of shares outstanding

adjusted for the incremental shares attributed to potentially diluted securities.

The following table sets forth the computation of basic and diluted earnings per share for the six months ended June 30, 2021 and December 31, 2020, and years

ended June 30, 2020 and 2019:

Six Months Ended

June 30, 2021

Six Months Ended

December 31, 2020

June 30, 2020

June 30, 2019

(Successor Basis)

(Predecessor Basis)

Net Income (loss)

Basic and diluted weighted Average

common shares outstanding

13,332,535.70

13,020,208.16

12,198,040.44

Basic and diluted earnings per share

NOTE 11 – SHARE OFFERINGS AND FEES

During the year ended June 30, 2020, the Company issued 1,943,646 shares with gross proceeds of $19,505,452, under the current offering and issued 317,840 shares under the Company's dividend reinvestment plan ("DRIP")

with gross proceeds of $2,891,349.

During the year ended June 30, 2021, the Company issued 21,720 shares with gross proceeds of $218,439.

For the year ended June 30, 2021, the Company incurred selling commissions and fees of

No selling commissions and fees were incurred for the shares issued under the DRIP.

During the year ended June 30, 2019, the Company issued 2,359,285 shares with gross proceeds of $23,244,171, under the current offering and issued 334,008 shares under the Company's dividend reinvestment plan ("DRIP")

with gross proceeds of $3,006,069.

In addition to the shares sold through our public offering, in October 2020, the Company issued 504,091.15 shares at $7.85 per share, which was the most recent NAV at the time of the issuance, to the Class A unit holders of the

Operating Partnership as discussed in Note 1.

During the year ended June 30, 2020, the Company issued 1,943,646 shares with gross proceeds of $19,505,452, under the current offering and issued 317,840 shares under the Company's dividend

reinvestment plan ("DRIP") with gross proceeds of $2,891,349.

For the year ended June 30, 2020, the Company incurred selling commissions and fees of $1,823,648.

No selling commissions and fees were incurred for the shares issued under the DRIP.

Index to Audited Consolidated Financial Statements

NOTE 12 – SHARE REPURCHASE PLAN

Pursuant to the Company's share repurchase program, during the year ended June 30, 2020, the Company made three tender offers to purchase its own shares as noted in the below table:

On May 11, 2020, after assessing the impacts of the COVID-19 pandemic, the Company’s board of directors unanimously approved the suspension of the Company’s Share Repurchase Program.

Company resumed the Share Repurchase Program on March 19, 2021.

During the year ended June 30, 2021, the Company made tender offers to purchase its own shares as noted in the below table:

of Shares Repurchased

2 unchanged sentences

During the year ended June 30, 2021:

August 13, 2019 through September 16, 2019

November 18, 2019 through December 19, 2019

February 14, 2020 through March 18, 2020

During the year ended June 30, 2019, the Company made four tender offers to purchase its own shares as noted in the below table:

April 22, 2021 through May 12, 2021

During the year ended June 30, 2020, the Company made tender offers to purchase its own shares as noted in the below table:

of Shares Repurchased

5 unchanged sentences

February 14, 2020 through March 18, 2020

May 14, 2019 through June 21, 2019

On May 11, 2020, after assessing the impacts of the Covid-19 pandemic, the Company’s board of directors unanimously approved the suspension of the Company’s Share Repurchase Program, effective immediately.

the Company did not repurchase any shares thereafter.

NOTE 13 – STOCKHOLDER DIVIDENDS AND INCOME TAXES

The following table reflects the dividends per share that the Company has declared on its common stock during the year ended June 30, 2020.

During the Quarter Ended

On March 31, 2020, after assessing the impacts of the COVID-19 pandemic, the Company’s board of directors unanimously approved the suspension of regular quarterly dividends to the Company’s

stockholders.

On May 10, 2021, the Board of Directors reinstated the quarterly dividend at the rate of $0.05 per common share, payable to holders of record as of May 15, 2021.

Subsequently, the Company declared $0.06 per common share for the quarter ended June 30, 2021, on July 9, 2021 and $0.07 per common share for the quarter ending September 30, 2021 on

September 13, 2021.

December 31, 2019

March 31, 2020

Of the total dividends paid during the year ended June 30, 2020, $2,891,349 has been reinvested under the Company’s DRIP.

On March 31, 2020, after assessing the impacts of the Covid-19 pandemic, the Company’s board of directors unanimously approved the suspension of regular quarterly dividends to the Company’s stockholders, effective

As a result, the Company did not pay or accrue any dividend for the quarter ended June 30, 2020.

Index to Audited Consolidated Financial Statements

The dividend declared on July 9, 2021 was paid on July 26, 2021.

The dividend declared on September 13, 2021 will be paid on or about October 30, 2021.

The Board intends to continue such dividend so long as it is supported

by the previous quarter’s income, but may increase or decrease the dividend accordingly.

The following table reflects the dividends per share that the Company has declared on its common stock during the six months ended June 30, 2021:

Distributions

During the Quarter Ended

June 30, 2021

Of the total dividends paid during the six months ended June 30, 2021, $204,277 has been reinvested under the Company’s DRIP.

The following table reflects the dividends per share that the Company has declared on its common stock during the year ended June 30, 2020:

Distributions

During the Quarter Ended

2 unchanged sentences

March 31, 2020

June 30, 2019

Of the total dividends paid during the year ended June 30, 2020, $2,891,349 has been reinvested under the Company’s DRIP.

Income Taxes (Predecessor Basis)

While our fiscal year end for financial reporting purposes is June 30 of each year, our tax year end is December 31 of each year.

The information presented in this footnote is based on our tax year end for each period

presented, unless otherwise specified.

The information presented in this footnote is based on our

tax year end for each period presented, unless otherwise specified.

For income tax purposes, dividends paid to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof.

The tax character of dividends paid to stockholders for

the tax years ended December 31, 2019, (the most recent tax year end completed and filed) and 2018, were as follows:

December 31, 2019

The tax character of dividends

paid to stockholders for the tax year ended December 31, 2019 (the most recent tax year ended completed and filed), is as follows:

December 31, 2019

2 unchanged sentences

Total dividends

The tax character of dividends paid to stockholders since December 31, 2019 (the most recent tax year ended completed and filed) through June 30, 2020, is expected to be ordinary income and capital gains.

the difference between our fiscal and tax year ends, the final determination of the tax character of dividends will not be made until we file our tax return for the tax year ending December 31, 2019.

The components of undistributed earnings on a tax basis as of December 31, 2019 (the most recent tax year end completed and filed) and December 31, 2018, were as follows:

December 31, 2019

The tax character of dividends paid to stockholders during the tax year ended December 31, 2020, is expected to be ordinary income, capital gains and return of capital.

Because of the

difference between our fiscal and tax year ends, the final determination of the tax character of dividends will not be made until we file our tax return for the tax year ending December 31, 2020.

The components of undistributed earnings on a tax basis as of December 31, 2019 is as follows:

December 31, 2019

Undistributed long term capital gain

Unrealized fair value appreciation

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June 30, 2020

June 30, 2019

Aggregate gross unrealized appreciation

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Aggregate cost (tax basis)

Index to Audited Consolidated Financial Statements

NOTE 11 – QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents selected unaudited quarterly financial data for each quarter during the years ended June 30, 2020, 2019, and 2018.

Quarter Ended

September 30, 2019

December 31, 2019

March 31, 2020

MacKenzie Realty Capital, Inc.

Schedule III- Real Estate Properties and Accumulated Depreciation

June 30, 2021

Net investment income (loss)

Net realized gain from sale of investments

Net unrealized gain (loss) on investments

Net increase in net assets resulting from operations

Net increase in net assets resulting from operations per Share

Weighted average Share outstanding

Quarter Ended

September 30, 2018

December 31, 2018

March 31, 2019

Initial Costs

Subsequent Acquisition

Gross Amount Carried at

Acquisition Date

Encumbrances at

June 30, 2021

Net investment income (loss)

Net realized gain from sale of investments

Net unrealized gain (loss) on investments

Net increase in net assets resulting from operations

Net increase in net assets resulting from operations per Share

Weighted average Share outstanding

Quarter Ended

September 30, 2017

June 30, 2021

Accumulated Depreciation

Addison Corporate Center

December 31, 2020 *

Commodore Apartment Building

March 5, 2021

Pon Do Leo Apartment Building

March 5, 2021

*Date the Company consolidated the underlying entity that owns the property

A summary of activity for real estate and accumulated depreciation for the year ended June 30, 2021.

The Company did not own any real estate properties prior to year ended June 30, 2021.

June 30, 2021

Net investment income

Net realized gain from sale of investments

Net unrealized gain (loss) on investments

Net increase in net assets resulting from operations

Net increase in net assets resulting from operations per Share

Weighted average Share outstanding

Index to Audited Consolidated Financial Statements

Balance at the beginning of the year

Additions- acquisitions

Balance at end of the year

Accumulated Depreciation

Balance at the beginning of the year

Depreciation expense

Balance at end of the year

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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(Principal Executive Officer)

/s/ Paul Koslosky

/s/ Angche Sherpa

Chief Financial Officer

September 28, 2021

Paul Koslosky

Angche Sherpa

(Principal Financial and Accounting Officer)

/s/ Chip Patterson

September 28, 2021

Chip Patterson

/s/ Tim Dozois

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures