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Item 9A. Controls and Procedures

2022-09-28 compared with 2021-09-28 · 1481 added, 1498 removed, 732 unchanged (80% of the section changed)

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Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e)

of the 1934 Act) as of the end of the period covered by this report as required by paragraph (b) of Rule 13a-15 or 15d-15 of the 1934 Act.

Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our

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 disclosure.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined

in Rules 13a-15(e) or 15d-15(e) of the 1934 Act) as of the end of the period covered by this report as required by paragraph (b) of Rule 13a-15 or 15d-15 of the 1934 Act.

Based upon such evaluation, our Chief Executive Officer and Chief

Financial Officer concluded that our 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 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

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

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.

Our internal control over financial reporting includes those policies and procedures that:

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 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.

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.

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-

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our assessment, as of June 30, 2021, our system of internal control over financial reporting was effective at the reasonable

assurance level.

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.

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

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.

Our management’s assessment of the effectiveness of our internal control system as of June 30, 2022, was based on the framework for effective internal control over financial reporting

described in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our assessment, as of June 30, 2022, our system of internal control over financial

reporting was effective at the reasonable assurance level.

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

Management’s report was not

subject to attestation by our 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

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,

There have been changes to our 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,

2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Our business and affairs are managed under the direction of our Board of Directors.

Accordingly, our Board provides broad supervision over our affairs, including supervision of the duties performed by the Adviser and

Accordingly, our Board provides broad supervision over our affairs, including supervision of the

duties performed by the Adviser and MacKenzie.

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.

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.

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.

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.

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 us 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

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Charles “Chip” Patterson†, 51

Chairman of the Board,

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.

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.

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

at Berkeley with a B.

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.

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

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.

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

Tim Dozois, 60

Dozois was Vice President, Secretary and Corporate Counsel for Pendrell Corporation, a NASDAQ listed company specializing in intellectual property solutions, from June of 2010 until early 2018.

sole owner of Conseiller LLC.

Dozois was Vice President, Secretary and Corporate Counsel for Pendrell Corporation, a NASDAQ listed company specializing in intellectual property solutions, from June of

2010 until early 2018.

He is now sole owner of Conseiller LLC.

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 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.

from the University of Oregon School of

Law, where he was Order of the Coif.

Tom Frame, 80

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

TransCentury began in May of 1973 and has syndicated and

managed over 10,000 residential units.

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.

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

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.

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Robert Dixon, 51

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 since 2005.

Dixon has been the senior vice president and 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.

from March 2002 until 2005.

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

Dixon has been president of Sutter Capital Management since its

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 1992.

Angche Sherpa, 41

Chief Financial Officer

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

Paul Koslosky.

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

He has been employed by 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

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

(Accounting) with honors.

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.

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

Glen Fuller, 49

Chief Operating Officer

Fuller has been senior vice president and secretary of MacKenzie since 2000 and the Adviser since 2000, and a director of their general partner, and a beneficial owner of all three companies since 2000.

Fuller has been senior vice president and secretary of MacKenzie since 2000 and the Adviser since 2000, and a director of their general partner, and a beneficial owner of

all three companies since 2000.

Prior to becoming senior vice president of MacKenzie, he was with MacKenzie for two years as a portfolio manager and research analyst.

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.

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.

Fuller has a Bachelor of Arts in Management.

Fuller has a Bachelor of Arts in

Chip Patterson,

General Counsel and Secretary

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

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.

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

degree in Political

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.

Chief Compliance Officer

Bluth has been the Chief Compliance Officer for MacKenzie and the Adviser since 2009.

She owns a beneficial interest in each MacKenzie and the Adviser.

Bluth oversees compliance for all the funds

advised by the Adviser, and she oversees the Company's compliance with its Code of Ethics, Bylaws, Charter, and applicable rules and regulations.

Bluth oversees

compliance for all the funds advised by the Adviser, and she oversees our compliance with our Code of Ethics, Bylaws, Charter, and applicable rules and regulations.

Bluth began her career with MacKenzie Patterson Fuller, Inc.

in July of 1996 in the

Investor Services Department.

in July of 1996 in the Investor Services Department.

Bluth’s career with MacKenzie, she graduated from St.

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Simpson has been employed by MacKenzie and its affiliates since 1990, and has been the Adviser’s Senior Vice President of Research and Trading since 2005.

Simpson is responsible for handling the

day-to-day operations of The Adviser's research department.

responsible for handling the day-to-day operations of The Adviser’s research department.

Simpson’s career with MacKenzie, she graduated:

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.

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.

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.

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.

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.

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

A copy of the Code, as amended from time to time, has been posted to the “Corporate Documents” section of our web site at http://www.mackenziecapital.com/sec-filings.

Audit Committee

The Board of Directors has established an Audit Committee in accordance with 1934 Act §3(a)(58)(A).

The Audit Committee operates under a charter approved by our Board of Directors, which contains the responsibilities

of the Audit Committee.

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.

committee is currently composed of Messrs.

The Audit Committee operates under a Charter approved by our Board of Directors,

which contains the responsibilities of the Audit Committee.

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, 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.

We have 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.

The members of the nominating and corporate governance committee are

Dozois 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 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:

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.

are of high character and integrity;

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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.

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

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Compensation of Directors

Our Independent Directors receive an annual retainer of $28,000.

They also receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting in person and

$500 for each telephonic meeting, and also receive $500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee meeting.

In addition, the chairman of the audit committee receives an annual fee of

$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 non-independent directors.

Our Independent Directors received an annual retainer of $28,000 for fiscal years up to June 30, 2021;

the annual retainer was increased to $48,000 per year beginning July 1, 2021,

because the directors approved of our discontinuing directors’ liability insurance due to the exorbitant cost.

They also receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each

board meeting in person and $500 for each telephonic meeting, and also receive $500 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each committee meeting.

In addition, the chairman of the

Audit Committee receives an annual fee of $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 non-independent directors.

The following table details the compensation accrued to Directors fees during Fiscal 2022.

We maintain no pension, equity participation, or retirement plans for our Directors.

However, both Independent Directors have

been investing a portion of their compensation into Shares of the Company beginning this fiscal year, and have stated that they intend to continue to do so.

both Independent Directors have been investing a portion of their compensation into our Shares beginning this fiscal year, and have stated that they intend to continue to do so.

Name & Position

Fiscal Year 2021 Fees (1)

Fiscal 2022 Fees (1)

Fiscal 2021 Fees (1)

Chip Patterson (Chairman of the Board of Directors)

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None of our officers receives direct compensation from us.

We have not compensated our executive officers in any of the last three fiscal years.

We do not provide any bonus, stock options, stock appreciation rights,

non-equity incentive plans, non-qualified deferred compensation or pension benefits to our executive officers.

We have not compensated our executive officers in any of the last two fiscal years.

We do not provide any bonus, stock

options, stock appreciation rights, non-equity incentive plans, non-qualified deferred compensation or pension benefits to our executive officers.

Further, we have no agreements with any officer pertaining to change in control payments.

All of our officers and staff are employed by

MacKenzie or the Adviser, which pay all of their cash compensation.

All of our officers and staff are employed by MacKenzie or the Adviser, which pay all of their cash compensation.

Compensation Committee Interlocks and Insider Participation

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

As of September 28, 2022, 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.

The following table shows the amount of our common stock beneficially owned and based on a total of 13,295,626.16 shares of our common stock outstanding on September 28, 2022, 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.

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.

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 28, 2021, through

the exercise of any instrument.

The 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.

Under such 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 28, 2022, through 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.

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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.

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

Number of Shares

Number of Common Shares

Beneficially Owned

Percent of Class

Number of Preferred

Percent of Class

Independent Directors:

Directly held

Interested Director:

Charles “Chip” Patterson

Indirectly held

Executive Officers

Indirectly held

Chip Patterson

Indirectly held

Angche Sherpa

Directly and Indirectly held

Directors and Officers as a group (6 person)

Indirectly held

Represents less than 1% of the number of shares outstanding.

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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.

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Patterson, Berniece A.

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.

Patterson, 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;

serves as Chief Investment Officer and Managing 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;

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

and Christine E.

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

non-investment management services and administrative services necessary to conduct our day-to-day operations.

Each of these agreements is terminable by either party upon proper notice.

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 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 2021, 2020 and 2019, were $620,800 and $680,000, $570,667, respectively.

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 Management Agreement, under which the Adviser serves as our real estate investment adviser, and the Administration

Agreement, under which MacKenzie furnishes us with certain non-investment management services and administrative services necessary to conduct our day-to-day operations.

Each of these agreements is terminable by either party upon proper

In Fiscal 2022 and 2021, Management fees accrued to the Adviser under the Advisory Management Agreement were $2,725,588 and $2,689,699, respectively.

Administration fees accrued and payable under the Administration Agreement for

Fiscal 2022 and 2021, were $609,600 and $620,800, respectively.

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

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

However, if 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 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.

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 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 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.

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.

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

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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).

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.

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PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table presents fees incurred for professional services rendered by Moss Adams LLP, the Company's independent registered public accounting firm, for Fiscal 2021, Fiscal 2020, and Fiscal 2019:

Fiscal Year 2021

Fiscal Year 2020

Fiscal Year 2019

The following table presents fees incurred for professional services rendered by Moss Adams LLP, our independent registered public accounting firm, with Public Company Accounting

Oversight Board ID Number 659, for Fiscal 2022 and Fiscal 2021:

Audit-Related Fees

All Other Fees

Audit Fees were for professional services rendered for the audit of our consolidated financial statements and review of the interim consolidated financial statements included

in quarterly reports and services that are normally provided by Moss Adams in connection with statutory and regulatory filings or engagements and include quarterly reviews and security counts.

Audit-Related Fees were for assurance and related services that are reasonably related to the performance of the audit or review of the Company's consolidated financial

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.

Audit Fees were for professional services rendered for the audit of our consolidated financial statements and review of the interim

consolidated financial statements included in quarterly reports and services that are normally provided by Moss Adams in connection with statutory and regulatory filings or engagements and include quarterly reviews and security counts.

Audit-Related Fees were for assurance and related services that are reasonably related to the performance of the audit or review of our

consolidated financial 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.

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

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

These fees were incurred for their review of our registration

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 2021, 2020, and 2019.

Moss Adams LLP did not bill the

Adviser or MacKenzie, for any non-audit services in Fiscal 2022 and 2021.

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

The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm.

These services may include audit services, audit-related services, tax

services and other services.

Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget.

The independent auditors and

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.

These services may include audit services,

audit-related services, tax services and other services.

Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific

The independent auditors and 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.

EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

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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)

814-00961), filed on June 9, 2020)

Membership Interest Purchase Agreement with The Wiseman Company, LLC, dated April 12, 2022 (incorporated by reference to the Registrant’s Form 8-K (File No.

000-55006), filed on April 18, 2022)

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

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

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

333-181853), filed on

May 14, 2014)

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

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

Description of Securities

Partnership Unit Designation of the Series A Preferred Limited Partnership Units of MacKenzie Realty Operating Partnership, LP

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.

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 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.

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

Agreement of Limited Partnership of MacKenzie Realty Operating Partnership, LP, Dated May 20, 2020 (incorporated by reference to the Registrant’s Form 8-K (File No.

814-00961 filed on June 9,

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

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333-212804) filed on August 1, 2016)

Amended Administration Agreement with MacKenzie Capital Management, LP

Amended Administration Agreement with MacKenzie Capital Management, LP (incorporated by reference to Registrant’s Form 10-K (File No.

000-55006), filed on September 28, 2021)

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

6 to the Registration Statement on Form

N-2 (File No.

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

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

Operating Agreement by and between MacKenzie Realty Operating Partnership, LP and the Hollywood Hillview Owner LLC, dated October 4, 2021 (incorporated by reference to the Registrant’s Form 8-K

000-55006 filed on October 5, 2021)

Dividend Reinvestment Plan (incorporated by reference to Registrant’s Form S-3 (File No.

000-55006), filed on December 22, 2021)

Operating Agreement by and between MacKenzie Realty Operating Partnership, LP and the MacKenzie BAA IG Shoreline LLC, dated January 25, 2022 (incorporated by reference to the Registrant’s Form 8-K

000-55006 filed on May 20, 2022)

Operating Agreement of MacKenzie Satellite Place Corp (incorporated by reference to Registrant’s Form 8-K (File No.

000-55006), filed on June 3, 2022)

List of Subsidiaries of the Registrant

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

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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*

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

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)*

Inline XBRL Taxonomy Extension Schema Documents*

Inline XBRL Taxonomy Extension Calculation Linkbase Document*

Inline XBRL Taxonomy Extension Definition Linkbase Document*

Inline XBRL Taxonomy Extension Label Linkbase Document*

Inline XBRL Taxonomy Extension Presentation Linkbase Document*

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Filed Herewith

FORM 10-K SUMMARY

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Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

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

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets (Successor Basis) as of June 30, 2022 and 2021

Consolidated Statement of Operations (Successor Basis) for the year ended June 30, 2022

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 year ended June 30, 2022

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, 2020

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 year ended June 30, 2022

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

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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.

We have audited the accompanying consolidated balance sheets (successor basis)

as of June 30, 2022 and 2021, 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 year ended June

30, 2022, 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 related notes and financial statement schedule (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2022 and 2021, and the consolidated results of its

operations (successor basis) and its cash flows (successor basis) for the year ended June 30, 2021, 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, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

These consolidated financial statements are the responsibility of the Company’s

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

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.

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.

The Company is not required to have, nor were we engaged to perform, an audit of its 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.

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.

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.

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.

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.

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 (i) relates to accounts or disclosures that are material to the consolidated financial statements

and (ii) 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.

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;

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, 2022, 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 the fair value

measurements 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 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.

(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

With the assistance of our valuation specialists, we evaluated the reasonableness of certain significant fair value inputs used in the purchase price

allocations related to acquired real estate properties such as market lease rates, carrying costs during lease-up periods, capitalization rates, discount rates, 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.

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

Fair Value Measurements of Investments and Real

Property Held for Sale

As disclosed in Note 2 and 4 to the consolidated financial statements,

investments held by the Company have been classified as Level III investments as pricing inputs for these are unobservable and there is little, if any, market activity for such investments.

As described in Note 2 and 5, real property held for

sale is recorded at fair value less cost to sell at the date of meeting the held for sale criteria.

Establishing fair values of investments and real property held for sale 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 inputs for investments classified as Level III 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.

Fair value of real property held for sale uses a valuation model which includes critical inputs such as cap rates, discount rates and consideration of the market where the

property is located.

The inputs into the determination of fair value require significant judgment by management.

The principal consideration in our determination that the Level III fair value

inputs used in the valuation of investments and real property held for sale is a critical audit matter are (i) the significant judgment by management to determine the fair value measurements;

(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

With the assistance of valuation specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions used in

management’s valuation models such as future cash flows, including the cash flows of underlying real property, risk-adjusted discount rates, cap rates, nature of the investment and local market conditions.

The evaluation included

comparison of the Company’s assumptions to market data from industry transaction databases and published industry reports.

For investments sold during the year or subsequent to year end, we evaluated management’s ability to reasonably estimate fair value by comparing

management’s historical estimates to actual results from those sales.

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

/s/ Moss Adams LLP

3 unchanged sentences

MacKenzie Realty Capital, Inc.

Consolidated Balance Sheet (Successor Basis)

Balance Sheets (Successor Basis)

June 30, 2022

June 30, 2021

Real estate assets

5 unchanged sentences

Investments, at fair value

Unconsolidated investments (non-securities), at fair value

Investments income, rent and other receivables

Unconsolidated investment (non-security), at fair value

Investments income, rents and other receivables

Prepaid expenses and other assets

Mortgage notes payable

Assets held for sale, net

Mortgage notes payable, net

Deferred rent and other liabilities

Dividend payable

Accounts payable and accrued liabilities

Stock redemption payable

Below-market lease liabilities, net

Deferred rent and other liabilities

Due to related entities

Contingent liability

Capital pending acceptance

Liabilities held for sale

Total liabilities

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

13,316,426.79 shares issued and outstanding

13,253,571.98 and 13,316,426.79 shares

issued and outstanding as of June 30, 2022 and 2021, respectively.

Preferred stock, $ 0.0001 par value, 20,000,000 shares authorized, 119,416.91

shares issued and outstanding as of June 30, 2022

Capital in excess of par value

5 unchanged sentences

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)

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

Deferred offering costs, net

Accounts payable and accrued liabilities

Capital pending acceptance

Due to related entities

Total liabilities

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

12,836,608.02 shares issued and outstanding)

Capital in excess of par value

Total distributions in excess of earnings

Total net assets

Total liabilities and net assets

Net asset value per share

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

MacKenzie Realty Capital, Inc.

Consolidated Schedule of Investments (Predecessor Basis)

Statement of Operations

(Successor Basis)

June 30, 2022

American Finance Trust 7.5% PFD

Publicly Traded Company

American Finance Trust Inc., Class A

Publicly Traded Company

Apartment Investment & Management Company- Class A

Publicly Traded Company

Ashford Hospitality Trust, Inc.

Publicly Traded Company

Bluerock Residential Growth REIT, Inc.

Publicly Traded Company

CBL & Associates Properties, Inc.

- Preferred D

Publicly Traded Company

City Office REIT, Inc.

- Preferred A

Publicly Traded Company

CorEnergy Infrastructure 7.375% PFD A

Publicly Traded Company

Host Hotels & Resorts Inc

Publicly Traded Company

Independence Realty Trust, Inc.

Publicly Traded Company

NexPoint Residential Trust, Inc.

Publicly Traded Company

One Liberty Properties, Inc.

Publicly Traded Company

RLJ Lodging Trust

Publicly Traded Company

The Macerich Company

Publicly Traded Company

WP Carey, Inc.

Publicly Traded Company

Total Publicly Traded Companies

Benefit Street Partners Realty Trust, Inc.

Non Traded Company

Carter Validus Mission Critical REIT II, Inc.

Non Traded Company

CIM Real Estate Finance Trust, Inc.

Non Traded Company

CNL Healthcare Properties, Inc.

Non Traded Company

Cole Credit Property Trust V, Inc.

Non Traded Company

Cole Credit Property Trust V, Inc.

Non Traded Company

Cole Office & Industrial REIT (CCIT II), Inc.

Non Traded Company

Cole Office & Industrial REIT (CCIT II), 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 Capital Essential Asset REIT, Inc.

Non Traded Company

Griffin-American Healthcare REIT III, Inc.

Non Traded Company

GTJ REIT, Inc.

Non Traded Company

Healthcare Trust, Inc.

Non Traded Company

Highlands REIT Inc.

Non Traded Company

23,225,520.45

HGR Liquidating Trust

Non Traded Company

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

SmartStop Self Storage REIT, Inc.

Non Traded Company

Steadfast Apartment 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 Companies (1)

3100 Airport Way South LP

5210 Fountaingate, LP

Bishop Berkeley, LLC

BP3 Affiliate, LLC

BR Cabrillo LLC

BR Everwood Investment Co, LLC

BR Sunrise Parc Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

Britannia Preferred Members, LLC -Class 2

Capitol Hill Partners, LLC

Citrus Park Hotel Holdings, LLC

Dimensions28 LLP

Lakemont Partners, LLC

MacKenzie Realty Operating Partnership, LP

MPF Pacific Gateway - Class B

Redwood Mortgage Investors VIII

Satellite Investment Holdings, LLC - Class B

Secured Income, LP

Total LP Interest

Coastal Realty Business Trust, REEP, Inc.

Investment Trust

Total Investment Trust

Total Investments

* 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 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

the management or policies of such portfolio companies.

See additional disclosures in Note 6.

(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.

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

As of June 30, 2020, 83.00% of the Company's total assets are in illiquid securities.

(6) Investments in non-income producing securities.

As of June 30, 2020, 36.00 % 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 7)

Interest expense

Administrative cost reimbursements to related party (note 7)

General and administrative

Professional fees

Transfer agent cost reimbursements to related party (note 7)

Directors’ fees

Total operating expenses

Operating loss

Other income (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

Loss on disposal of fixed assets

Impairment loss on assets held for sale

Net loss attributable to non-controlling interests

Net income attributable to preferred stockholders

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.

1 unchanged sentence

Consolidated Statement of Operations (Successor Basis)

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

Six Months Ended

22 unchanged sentences

MacKenzie Realty Capital, Inc.

Consolidated Statement of Operations (Predecessor Basis)

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

Consolidated Statement of

Operations (Predecessor Basis)

Six Months Ended

26 unchanged sentences

Total net realized gain

Net unrealized gain (loss)

Net unrealized loss

Non-controlled/non-affiliated investments

8 unchanged sentences

MacKenzie Realty Capital, Inc.

Consolidated Sta tements of Operations (Predecessor Basis)

Consolidated Statement of Changes in Equity (Successor Basis)

Preferred stock

Additional Paid-

Stockholders’

Non-controlling

Year Ended June 30, 2022

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)

Portfolio structuring fee (note 6)

Subordinated incentive fee (reversal) (note 6)

Administrative cost reimbursements (note 6)

Transfer agent cost reimbursements (note 6)

Amortization of deferred offering costs

Professional fees

Directors' fees

Printing and mailing

Other general and administrative

Total operating expenses

Net investment income before taxes

Income tax provision (benefit) - (note 2)

Net investment income

Realized and unrealized gain (loss) on investments

Net realized gain (loss)

Non-controlled/non-affiliated investments

Affiliated investments:

Controlled 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 increase (decrease) in net assets resulting from operations

Net increase (decrease) in net assets resulting from operations per share

Weighted average common shares outstanding

Balance, June 30, 2021

13,316,426.79

Contributions by non-controlling interest holders

Distributions to non-controlling interest holders

Operating Partnership Class A units issued

Operating Partnership Preferred Units issued

Dividends to common stockholders

Dividends to preferred stockholders

Net income (loss)

Operating Partnership Class A conversion to common stock

Issuance of common stock

Issuance of preferred stock

Issuance of common stock through reinvestment of dividends

Issuance of preferred stock through reinvestment of dividends

Payment of selling commissions and fees

Redemptions of common stock

Balance, June 30, 2022

13,253,571.98

* Amount is less than $1.

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

1 unchanged sentence

Consolidated Statement of Changes in Equity (Successor Basis)

Six Months Ended June 30, 2021

Additional Paid-

Stockholders’

Non-controlling

Six Months Ended June 30, 2021

Balance, December 31, 2020

13,362,419.23

Capital contributions by non-controlling interest holders

Dividends to stockholders

Contributions by non-controlling interest holders

Dividend to stockholders

Net income (loss)

Issuance of common stock through

reinvestment of dividends

Repurchase of common stock

Issuance of common stock through reinvestment of dividends

Redemptions of common stock

Balance, June 30 , 2021

2 unchanged sentences

MacKenzie Realty Capital, Inc.

Consolidated Statement of Changes in Net Assets (Predecessor Basis)

Consolidated Statement of Changes in

Net Assets (Predecessor Basis)

Six Months Ended

8 unchanged sentences

Selling commissions and fees

Non-controlling interest in consolidated subsidary

Non-controlling interest in consolidated subsidiary

Net increase in net assets resulting from capital share transactions

2 unchanged sentences

Net assets at end of the period

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

MacKenzie Realty Capital, Inc.

Consolidated Statements of Changes in Net Assets (Predecessor Basis)

Year Ended June 30,

Net investment income

Net realized gain

Net unrealized loss

Net increase (decrease) in net assets resulting from operations

Dividends to stockholders

Capital share transactions

Issuance of common stock

Issuance of common stock through reinvestment of dividends

Consolidated Statement of Cash Flows (Successor Basis)

Cash flows from operating activities:

June 30, 2022

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

Net unrealized gain on equity securities at fair value

Net income from equity method investments at fair value

Net realized gain on investments

Loss on disposal of fixed assets

Impairment loss on assets held for sale

Straight - line rent

Depreciation and amortization

Amortization of deferred financing costs

Accretion of market lease and other intangibles, net

Changes in assets and liabilities:

Investments income, rent and other receivables

Prepaid expenses and other assets

Deferred rent and other liabilities

Accounts payable and accrued 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

Payment of deferred financing costs

Proceeds from issuance of preferred stock

Payment of selling commissions and fees

Contributions by non-controlling interests holders

Distributions to non-controlling interests holders

Redemption of common stock

Selling commissions and fees

Net increase in net assets resulting from capital share transactions

Total increase in net assets

Net assets at beginning of the year

Net assets at end of the year

Capital pending acceptance

Net cash from financing activities

Net increase in cash and restricted cash

Cash and restricted cash at beginning of the year

Cash and restricted cash at end of the year

Cash at end of the year

Restricted cash at end of the year

Cash and restricted cash at end of the year classified as assets held for sale

Total cash, restricted cash and cash classified as held for sale at end of the year

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

Issuance of the Operating Partnership Class A units for the purchase of real estate assets (Note 5)

Issuance of the Operating Partnership Preferred units for the purchase of investments (Note 5)

Issuance of common stock for merger of FSP Satellite Place Corp.

Issuance of preferred stocks for merger of FSP Satellite Place Corp.

Fair value of subsidiary’s units owned prior to the merger date

Issuance of common stock through reinvestment of dividends

Issuance of preferred 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.

2 unchanged sentences

Six Months Ended

June 30, 2021

Cash flows from operating activities:

2 unchanged sentences

Net income from equity method investments at fair value

Net realized gain on investments

Net unrealized gain on investments

Depreciation and amortization

3 unchanged sentences

Prepaid expenses and other assets

Accounts payable and accrued liabilities

Deferred rent and other liabilities

Accounts payable and accrued liabilities

Due to related entities

2 unchanged sentences

Proceeds from sale of investments

Investments in real estate assets

Investments in real estate

Purchase of investments

8 unchanged sentences

Net cash from financing activities

Net decrease in cash

Net decrease in cash and restricted cash

Cash and restricted cash at beginning of the period

1 unchanged sentence

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

Cash and restricted cash at end of the period classified as assets held for sale

Total cash, restricted cash and cash classified held for sale at end of the period

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

Issuance of common stock through reinvestment of dividends

2 unchanged sentences

MacKenzie Realty Capital, Inc.

Consolidated Statement of Cash Flows (Predecessor Basis)

Consolidated Statement of

Cash Flows (Predecessor Basis)

Six Months Ended

6 unchanged sentences

Purchase of investments

Net realized gains on investments

Net realized gain on investments

Net unrealized loss on investments

15 unchanged sentences

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

Net increase in cash and cash equivalents

Cash, cash equivalents and restricted cash at beginning of the period

Cash, cash equivalents and restricted cash at end of the period

Cash and cash equivalents at end of the period

Restricted cash at end of the period

Total cash and restricted cash at end of the period

Total cash, cash equivalents and restricted cash at end of the period

Non-cash investing and financing activities:

1 unchanged sentence

Supplemental Disclosures:

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

Carrying value of a subsidiary’s consolidated assets, liabilities and net assets:

Real estate assets

6 unchanged sentences

MacKenzie Realty Capital, Inc.

Consolidated Statement of Cash Flows (Predecessor Basis)

Year Ended June 30,

Cash flows from operating activities:

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:

Proceeds from sale of investments, net

Return of capital

Purchase of investments

Net realized gain on investments

Net unrealized (gain) loss on investments

Amortization of deferred offering costs

Changes in assets and liabilities:

Accounts receivable

Payment of deferred offering costs

Accounts payable and accrued liabilities

Income tax payable

Due to related entities

Deferred tax liability

Net cash from operating activities

Cash flows from financing activities:

Proceeds from issuance of common stock

Redemption of common stock

Dividends to stockholders

Payment of selling commissions and fees

Change in capital pending acceptance

Net cash from financing activities

Net increase (decrease) in cash

Cash at beginning of the year

Cash at end of the year

Non-cash financing activities:

Issuance of common stock through reinvestment of dividends

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

MacKenzie Realty Capital, Inc.

Notes to Consolidated Financial Statements

2 unchanged sentences

MacKenzie Realty Capital, Inc.

(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

(the “Parent Company” together with its subsidiaries as discussed below, the “Company,” “we,” “us,” or “our”) was

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

We were 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

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.

We withdrew our election to be treated as a BDC on December 31, 2020.

We have elected to be treated as a real estate investment trust (“REIT”) as defined under Subchapter M of the Internal

Revenue Code of 1986, as amended (the “Code”).

We are authorized to issue 100,000,000 shares, of which (i) 80,000,000 are designated as common stock, with a $ 0.0001

par value per share;

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

We commenced our operations on February 28, 2013, and our fiscal year-end is June 30.

We filed our initial registration statement in June 2012 with the Securities and Exchange Commission (“SEC”) to register the initial public offering

of 5,000,000 shares of our common stock.

The initial public offering commenced in January 2014 and concluded in October 2016.

second registration statement with the SEC to register a subsequent public offering of 15,000,000 shares of our common stock.

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

We filed a third registration statement with the SEC to register a public offering of 15,000,000

shares of our 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.

On October 23, 2020, holders of a majority of our outstanding common stock authorized our Board of Directors to withdraw our election to be regulated as a BDC under the 1940 Act.

withdrawal was effective with the SEC on December 31, 2020, when we filed the appropriate form with the SEC.

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”).

financial statements of TRS and MacKenzie NY 2 have been consolidated with the Parent Company.

On May 20, 2020, we formed an operating partnership, MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”) for the purpose of acquiring and

operating real estate assets.

As of June 30, 2022, we own all limited partnership units of the Operating Partnership except for 89,722.28

Class A Limited Partnership units and 206,666.67 preferred units, which would be entitled to receive, at liquidation of the Operating

Partnership, 89,722.28 common shares of the Company (stated value of $ 10.25 per share) and $ 5,166,666.75 (stated value of $ 25 per share) in liquidation preference, respectively, which are approximately 10.48 % of the Operating Partnership’s total capital outstanding .

In March 2021, we, together with our 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.

We own 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.

We are the controlling majority owner of both companies;

therefore, effective March 31, 2021, we have consolidated the financial statements of these companies.

On April 13, 2021, we filed a preliminary offering circular (the “Offering Circular”) pursuant to Regulation A with the SEC to sell up to $ 50,000,000 of shares of our Series A preferred stock at an initial offering price of $ 25.00 per share.

The sale of shares pursuant to this offering began in November 2021 after the definitive version of the Offering Circular was qualified by the SEC on November 2, 2021.

On October 4, 2021, through the Operating Partnership, we acquired a 90 % economic interest in Hollywood Hillview, a Delaware limited liability company, to acquire and operate a multifamily building located in Los Angeles,

The remaining 10 % economic interest in Hollywood Hillview is owned by an unaffiliated third party, True USA, LLC.

Hillview owns 100 % of the membership interests in PT Hillview GP, LLC (the “PT Hillview”).

We are the controlling majority owner of

Hollywood Hillview;

therefore, effective December 31, 2021, we have consolidated the financial statements of Hollywood Hillview.

On January 25, 2022, through the Operating Partnership, we acquired a 98 % limited liability company interest in MacKenzie BAA IG Shoreline LLC (“MacKenzie Shoreline”), formed to acquire, renovate, and own the 84-unit

multifamily building located at 1841 Laguna Street, Concord, CA.

The joint venture partners own the remaining 2 % of the limited

liability company interest as well as a carried interest.

We are the controlling majority owner of the MacKenzie Shoreline;

therefore, effective June 30, 2022, we have consolidated the financial statements of MacKenzie Shoreline.

On April 1, 2022, we, and our newly formed, wholly owned subsidiary, FSP

Merger Sub, Inc.

(“Merger Sub”) entered into a reverse triangular merger agreement with FSP Satellite Place Corp.

(“FSP Satellite”), pursuant to which the Merger Sub would be merged with and into FSP Satellite with FSP Satellite as the surviving

entity, but renamed MacKenzie Satellite Place, Inc.

(“MacKenzie Satellite”).

On June 1, 2022, the merger closed, and MacKenzie Satellite became a wholly owned subsidiary of us, which in turn owns the Satellite Place building, a six-story Class “A”

suburban office building containing approximately 134,785 rentable square feet of space located on approximately 10 acres of land in Duluth, GA.

The former shareholders of FSP Satellite received cash or shares of the Company, based upon their election.

shareholders of FSP Satellite holders elected to be paid in cash with the exception of two shareholders who elected to receive common

and preferred stocks in the amount of $ 27,503 and $ 13,752 , respectively.

Subsequent to the completion of the merger, we have consolidated the financial statements of MacKenzie Satellite effective June 30, 2022.

On May 6, 2022, the Operating Partnership purchased 100 % of the membership interests in eight

limited liability companies and one parcel of entitled land from The Wiseman Company, LLC (“Wiseman”) for $ 17,325,000 and $ 3,050,000 , respectively.

The limited liability companies own the general partnership interests in eight limited partnerships, each of which own a Class A or B office property in Napa, Fairfield, or Woodland, California (the “Wiseman Properties”).

The membership interest

purchase price is subject to adjustments and holdbacks as provided in the membership interest purchase agreement.

As part of the purchase agreement, $ 4,650,000

of the purchase price was paid through the issuance of 206,666.67 Preferred Units of the Operating Partnership and $ 750,000 of the land purchase price was paid through the issuance of 77,881.62 Class A units of the Operating Partnership.

Further details of this acquisition are discussed in Note 5.

We have consolidated the financial statements of the eight limited liability companies(but not the Wiseman Properties themselves) effective June 30, 2022.

Wiseman is a full-service real estate syndicator, developer, broker, and property manager.

It was founded in 1979 and serves as the general partner for nine currently active partnerships owning the Wiseman Properties.

Concurrently with acquiring the general partnership interests in the Wiseman

Properties, the Operating Partnership also negotiated the right to acquire the limited partnership interest in each Wiseman Property at pre-determined prices over the following two years .

Management believes this transaction is strategically important as it focuses the portfolio on our desired geographic area (Western United States) and creates a

captive pipeline of properties which we can acquire when convenient over the next two years .

Subsequently, on July 29, 2022, the

Operating Partnership completed the acquisition of the limited partnership interest in First & Main, LP for total purchase price of $ 3,376,322 ,

of which $ 2,711,377 was paid through issuance of 120,505.66 Preferred Units of the Operating Partnership.

We are 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 our affairs except for providing investment

MCM Advisers, LP (the “Investment Adviser”) advises us in our assessment, acquisition, and divestiture of securities under the advisory agreement amended and restated effective January 1, 2021 (the “Amended and Restated Investment

Advisory Agreement”).

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.

together, the “Investment Adviser” and the “Real Estate Adviser” may be referred to as “Adviser” or “Advisers” as appropriate) advises us in our assessment,

acquisition, and divestiture of real estate assets.

We pursue a strategy focused on investing primarily in real estate assets, and to a lesser 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.

1 unchanged sentence

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.

As of June 30, 2022, we have raised approximately $ 139.29

million, including proceeds from our dividend reinvestment plan (“DRIP”) of approximately $ 12.55 million.

Of the shares issued by us in

exchange for the total capital raised as of June 30, 2022, approximately $ 11.65 million worth of shares have been repurchased under our

share repurchase program.

We have raised $ 2.96 million pursuant to the Offering Circular as of June 30, 2022.

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.

Prior to the termination

of our status as a BDC, we recorded our 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 our status as a BDC, we are no longer subject to

fair value accounting requirements.

However, we have elected the fair value option (see Note 2) to recognize and measure our investments in certain limited partnerships, limited liability companies and corporations that otherwise would have been

required to be recognized and measured using the equity method of accounting.

Therefore, we continue to record the changes in fair value of these investments in the consolidated statement of operations.

We also continue to recognize and measure our

equity securities including investments in publicly traded securities at fair value with changes in fair value recorded in the consolidated statement of operation s.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation Policy

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 accompanying consolidated financial statements of the Company have been prepared in accordance with the instructions

to Form 10-K and Regulation S-X.

We follow the accounting principles generally accepted in the United States of America (“GAAP”) and includes the accounts of our wholly owned consolidated subsidiaries and majority-owned controlled subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

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.

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.

Prior to the termination of our status as a BDC, we were an investment company under the Financial Accounting Standards

Board (“FASB”) ASC 946.

Under the 1940 Act rules, regulations pursuant to Article 6 of Regulation S-X and ASC 946, subject to certain inapplicable exceptions, we were precluded from consolidating portfolio company investments, including those in

which we had a controlling interest, unless the portfolio company was an investment company.

Therefore, our portfolio company investments, including those in which we had a controlling interest, were carried on the consolidated balance sheets at

fair value with changes to fair value recognized as “Net unrealized gain (loss)” on the consolidated statement of operations until the investment was 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 exceeded the tests of significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, we included required financial information for such subsidiary in the notes or as

an attachment to our consolidated financial statements.

As a result of the termination of our status as a BDC, we are no longer an investment company under the FASB ASC 946.

discontinued applying the guidance in ASC 946 and began to account for the change in status prospectively by accounting for our investments in accordance with other U.S.

GAAP as of the date of the change in status.

Our financial statements for

the period subsequent to the termination of our BDC status are prepared on a consolidated basis to include the financial position, results of operations, and our cash flows and of our wholly owned and majority-owned subsidiaries.

in status and the application of different accounting principles makes it difficult to compare consolidated financial statements for 2022 and 2021.

As such, for the year ended June 30, 2022, the consolidated statements of operations, changes in equity and cash flows have been

presented as they would be for a REIT (on a “successor basis”).

For the year ended June 30, 2021, the

consolidated statements of operations, changes in net assets (referred to as “equity” effective June 30, 2021) and cash flows have been presented in two separate statements.

For the six months ended December 31, 2020, the consolidated

statements of operations have been presented as they would be for an investment company (on a “predecessor basis”) and for the six months ended June 30, 2021 as they would be for a REIT (on a “successor basis”).

The consolidated balance

sheets at June 30, 2022 and 2021, have been presented on the successor basis.

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

The reclassification has no effect on our 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.

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.

We evaluate the need to consolidate our investments in securities in accordance

with ASC 810.

In determining whether we have a controlling interest in a variable interest entity and whether 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, as well as whether the entity is a variable interest entity for which we are the primary beneficiary.

Refer to Note 6 for additional information .

Assets and Liabilities Held for Sale

We classify long-lived assets or disposal groups to be sold as held for sale in the period in

which all of the following criteria are met:

Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group);

The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary

for sales of such assets (disposal groups);

An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been

The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as

a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year;

The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value.

price at which a long-lived asset (disposal group) is being marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group).

A market price that is reasonable in relation to fair

value indicates that the asset (disposal group) is available for immediate sale, whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale;

Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan

will be withdrawn.

On the day that these criteria are met, we suspend

depreciation on the investment properties held for sale, including depreciation for tenant improvements and additions, as well as on the amortization of acquired in-place leases.

The investment properties and liabilities associated with those

investment properties that are held for sale are classified separately on the consolidated balance sheets for the most recent reporting period and recorded at the lesser of the carrying value or fair value less costs to sell.

The prior period

investment properties and liabilities associated with those investment properties that are classified as held for sale have been classified separately as assets and liabilities held for sale on the consolidated balance sheet as of June 30, 2021

for comparative purpose.

Refer to Note 5.

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.

Our cash represents 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, and cash pledged as collateral for securities sold short.

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

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

Restricted cash is subject to a legal or contractual restrictions as to withdrawal or use, including restrictions that require the funds to be used

for a specified purpose and restrictions that limit the purpose for which the funds can be used.

We consider cash pledged as collateral for securities sold short to be restricted cash.

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

income 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.

We monitor and adjust our receivables, and those deemed to be uncollectible are written-off only after all reasonable collection efforts are exhausted.

We have determined that all

investments income receivable balances outstanding as of June 30, 2022 and 2021, are collectible and do not require recording any uncollectible allowance .

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.

We 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.

We exercise judgment in establishing these allowances and considers payment history and current credit status of tenants in developing these estimates.

We have determined that all rent receivable balances

outstanding as of June 30, 2022 and 2021, are collectible and do not require recording any uncollectible allowance.

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.

We conduct closings for new purchases of our 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.

effective only upon our 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 balance sheets .

As of June 30, 2022, capital pending acceptance was $ 85,000 .

As of June 30, 2021, there was no capital pending

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 public offerings 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 the 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.

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.

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 we were a BDC, offering costs were capitalized as deferred offering costs as

incurred by us and subsequently amortized to expense over a twelve-month period.

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.

The offering costs incurred by us on the Offering Circular to sell the Series A preferred stock have been classified as a reduction of

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, 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.

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 satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2021.

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, it did

not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2021.

Similarly, for the tax year 2022, 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 2022.

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 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.

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

However, as of June 30, 2022, they did no t have any taxable income for tax years 2021 or 2022.

Therefore, TRS, MacKenzie NY

2 and MacKenzie Satellite did no t record any income tax provisions during any fiscal period within the tax year 2021 and 2022.

The Operating Partnership is a limited partnership and

its subsidiaries;

Addison Property Owner, LLC (the “Addison Property Owner”), Hollywood Hillview Owner, LLC (“Hollywood Hillview”) and MacKenzie BAA IG Shoreline LLC (“MacKenzie Shoreline”) are limited liability companies.

Madison and PVT are

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

In estimating future tax

consequences, we consider 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.

addition, ASC 740 provides guidance for recognizing, measuring, presenting, and disclosing uncertain tax positions in the financial statements.

As of June 30, 2022 and 2021, there were no uncertain tax positions.

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.

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.

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 our 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, 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.

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.

believe that the carrying amounts of our 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 based on their nature, terms, and interest rates .

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.

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.

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.

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

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.

revenue, net of concessions, which is derived primarily from lease contracts, which include rents that each tenant pays in accordance with the terms of each lease agreement, are recognized on a straight-line basis over the term of the lease,

when collectability is determined to be probable.

Minimum rent,

including rental abatements, lease incentives, and contractual fixed increases attributable to operating leases are recognized on a straight-line basis over the term of the related leases when collectability is probable.

Amounts expected to be

received in later years are recorded as deferred rent receivable.

If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or the Company.

When we are 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:

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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.

In accordance with ASC Topic 842, we determine whether collectability of lease payments in an operating lease is probable.

If we determine the

lease payments are not probable of collection, we fully reserve for rent and reimbursement receivables, including deferred rent receivable, and recognizes rental income on cash basis.

Distributions

received from investments are evaluated by management and recorded as dividend income or a return of capital (reduction of investment) on the ex-dividend date.

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 compared to the estimated value of the remaining assets and are recorded as a return of capital or as investment income as

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 of the investment.

Investments are disposed of on a

first-in, first-out basis.

Net change in unrealized gain (loss) reflects the net change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gains or losses.

Dividends and Distributions

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.

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 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

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

Recently quoted trading prices for the same or similar securities;

Recent purchase prices paid for the same or similar securities;

Recent sale prices received for the same or similar securities;

Relevant reports issued by industry analysts and publications;

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.

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 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;

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.

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 our earnings for the quarter.

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.

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.

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

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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.

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.

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

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.

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.

Valuation Procedures

Valuation of Investments:

Our consolidated financial statements include investments that are measured at their estimated fair values in accordance with GAAP.

Our valuation

procedures are summarized below:

Securities for which market quotations are readily available on an exchange will be valued at such price as of the closing price on the day closest

to the valuation date.

Where a security is traded but in limited volume, we may instead utilize the weighted average closing price of the security over the prior 10 trading days.

We may value securities that do not trade on a national exchange by using published secondary market trading information.

When doing so, we first confirm that GAAP

recognizes the trading price as the fair value of the security.

Securities for which reliable market data are not readily available or for which the pricing source does not provide a valuation or methodology or

provides a valuation or methodology that, in the judgment of the Adviser or Board of Directors, does not represent fair value, which we expect will represent a substantial portion of our portfolio, shall each be valued as follows:

portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment;

(ii) preliminary valuation conclusions are documented and discussed with our senior management;

and (iii) the Board of

Directors will discuss valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the Adviser and, where appropriate and necessary, the respective third‑party valuation firms.

recommendation of fair value will generally be based on the following factors, as relevant:

the nature and realizable value of any collateral;

the portfolio company’s ability to make payments;

the portfolio company’s earnings and discounted cash flow;

the markets in which the issuer does business;

comparisons to publicly traded securities.

Securities for which market data is not readily available or for which a pricing source is not sufficient may include the following:

private placements and restricted securities that do not have an active trading market;

securities whose trading has been suspended or for which market quotes are no longer available;

debt securities that have recently gone into default and for which there is no current market;

securities whose prices are stale;

securities affected by significant events;

securities that the Adviser believes were priced incorrectly.

Valuation of Real Property:

When property is owned directly, the valuation process includes a full review of the property financial

An Argus model is created using all known data such as current rent rolls, escalators, expenses, market data in the area where the property is located, cap rates, discount rates, mortgages, interest rates, and other pertinent

We estimate future leasing and costs associated, generally over a ten-year period, to determine the fair value of the property.

Once the fair value is determined, and reviewed by the board, a determination of impairment is made

and documented.

In addition, once per year, we obtain a third-party appraisal on directly owned properties.

Determination of fair value involves subjective judgments and estimates.

Accordingly, the notes to our consolidated financial statements will

express the uncertainty of such valuations, and any change in such valuations, on our consolidated financial statements.

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.

We have minority and non-controlling equity investments in various limited partnerships and non-traded entities, which do not have readily

determinable fair values.

We do 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.

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:

We 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 our 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 in the

consolidated balance sheets as of June 30, 2022 and 2021:

Fair Value as of

June 30, 2022

5210 Fountaingate, LP

Limited Partnership

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

Fair Value as of

June 30, 2021

FSP Satellite Place

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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

Unconsolidated Investments (Non-security) at Fair Value

These are equity method investments that do

not meet the consolidation requirements under ASC 810.

Under the 1940 Act, these investments are considered “voting securities” as opposed to “investment securities”.

Therefore, we listed these equity method investments separately from rest

of the equity method investments at fair value in the consolidated balance sheets.

As of June 30, 2022, our investment in 1300 Main, LP, First & Main, LP, Dimensions 28, LLP, Green Valley Medical Center, LP, Main Street West, LP, Martin

Plaza Associates, LP, One Harbor Center, LP, Westside Professional Center I, LP and Woodland Corporate Center II, LP are considered to be voting securities under the 1940 Act.

As of June 30, 2021, our investments in Bishop Berkeley, LLC, BP3

Affiliate, LLC, Britannia Preferred Members, LLC - Class 1 and Class 2, and Dimensions 28, LLP were considered to be voting securities under the 1940 Act.

Therefore, these investments were shown as unconsolidated investments (non-security),

at fair value in the consolidated balance sheets.

For GAAP purposes, these investments have been recorded under the equity method investments, for which we have elected the fair value option as discussed above.

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.

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.

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.

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.

We 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 we or one of our subsidiaries is the lessor.

Our current portfolio consists of commercial office properties and residential apartment buildings whereby we generate rental revenue by leasing office space and apartment units to the building’s tenants.

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.

Non-lease components of our 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 our consolidated financial statements relate to assets for which we are the

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.

capitalize costs, including certain indirect costs, incurred for capital additions, including redevelopment, development, and construction projects.

We also allocate certain department costs, including payroll, at the corporate levels as

“indirect costs” of capital additions, if such costs clearly relate to capital additions.

We also capitalize 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

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 .

We consider 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 as follows:

16 – 45 years

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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.

In accordance with the guidance for business combinations, upon the acquisition of real estate properties, we evaluate whether the transaction is a business combination or an asset acquisition.

transaction does not meet the definition of a business combination, we record the assets acquired, the liabilities assumed, and any non-controlling interest as of the acquisition date, measured at their relative fair values.

Acquisition-related

costs are capitalized in the period incurred and are added to the components of the real estate assets acquired.

We assess 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 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.

We amortize 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 us 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.

inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets, and assumed liabilities, which could impact the amount of our 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.

Contingent Consideration in an Asset Acquisition

Contingent consideration recognized is included in the initial cost of the assets acquired.

Subsequent changes in the recorded amount of contingent

consideration will generally be recognized as an adjustment to the cost basis of the acquired assets, in accordance with ASC 323-10-35-14a and ASC 360-10-30-1.

The subsequent changes will be allocated to the acquired assets based on their

relative fair value at the date of acquisition.

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.

We continually monitor events and changes in circumstances that could indicate

that the carrying value of our real estate and related intangible assets may not be recoverable.

When indicators of potential impairment emerge, our assesses whether we will recover the carrying value of the asset through its undiscounted

future cash flows and its eventual disposition.

Based on this assessment, if we do not believe that it will recover the carrying value of the real estate and related intangible assets, we 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

on assets held for use were recorded for the year ended June 30, 2022, and six months ended June 30, 2021.

Impairment charges on assets held for sale are discussed in Note 5.

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.

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, our 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.

2014-09, Revenue from Contracts with

Customers (Topic 606).

Under ASC 610-20, if we determine we do 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, we 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:

ASC 280, Segment Reporting , establishes standards for reporting financial and descriptive information

about an enterprise’s reportable segments.

We have 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 we evaluate operating performance on an overall portfolio level.

Subsequent change in contingent consideration impacts the cost basis of acquired assets, which may also impact the income statement through subsequent accounting for the acquired asset.

We are aware of diversity in practice regarding

the subsequent treatment of the income statement effect of changes to the cost basis of the acquired assets.

We generally believe the depreciation or amortization of these assets should be recognized as a cumulative “catch up” adjustment, as

if the additional amount of consideration that is no longer contingent had been accrued from the outset of the arrangement .

NOTE 3 – INVESTMENTS IN REAL ESTATE

The following tables provide summary information regarding our operating properties, which are owned through our subsidiaries:

the Operating Partnership, MacKenzie Satellite, Madison and PVT.

Consolidated Operating Properties

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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:

Property Name:

Hollywood Property

Shoreline Apartments

Satellite Place

Property Owner:

The Operating Partnership

MacKenzie Satellite Place Inc.

Hollywood, CA

Number of Tenants:

Ownership Interest:

The following table presents

the purchase price allocation of real estate assets acquired on October 4, 2021 based on asset acquisition accounting.

Property Name:

Hollywood Property

Acquisition Date:

October 4, 2021

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:

Site Improvements

Tenant Improvements

Furniture, Fixtures & Equipment

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.

Total assets acquired

The following table presents the purchase price allocation of real estate assets acquired on May 16, 2022 based

on asset acquisition accounting .

Property Name:

Shoreline Apartments

Acquisition Date:

Commodore Apartments

March 5, 2021

Pon de Leo Apartments

March 5, 2021

Purchase Price Allocation

Building and tenant improvements

Site Improvements

Furniture, Fixtures & Equipment

Intangible lease assets

Lease In Place

Total assets acquired

The following table presents the purchase price allocation of real estate assets acquired on June 1, 2022 based

on asset acquisition accounting .

Property Name:

Satellite Place

Acquisition Date:

Purchase Price Allocation

Site Imporvements

Tenant Improvements

Lease in Place

Leasing Commissions

Total assets acquired

Net leasehold asset (liability)

Total consideration paid for acquired real estate investments, net of liabilities assumed

Total assets acquired, net

The total depreciation expense of our operating properties for the year ended June 30, 2022 was $ 2,866,400 .

The total depreciation expense of our operating properties for the six months ended June 30, 2021 was $ 1,107,467 .

We did no t incur depreciation expense during the six months ended

December 31, 2020 as we did not own and operate any real estate assets as of December 31, 2020.

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.

Our 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.

We retain substantially all the risks and benefits of ownership of the real estate assets leased to tenants.

Generally, upon the execution of a

lease, we do not require a security deposit from tenants on our commercial real estate properties, depending upon the terms of the respective leases and the creditworthiness of the tenants.

Even when required, security deposits generally are not

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:

Security deposits received in cash related to tenant leases are included in other accrued

liabilities in the accompanying consolidated balance sheets and were immaterial as of June 30, 2022 and 2021 .

The following table presents the components of income from real estate operations for the year ended June 30, 2022 and six months ended June 30, 2021:

Six Months Ended

June 30, 2022

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:

Primarily includes tenant

reimbursements for utilities and common area maintenance.

As of June 30, 2022, the future minimum rental income from our real estate properties under non-cancelable operating leases are as follows:

Year ended June 30,:

1 unchanged sentence

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:

As of June 30, 2022 and 2021, our acquired lease intangibles, above-market lease assets, and below-market lease liabilities were as follows:

As of June 30, 2022

Lease Intangibles

Above-Market Lease Asset

Below-Market Lease Liabilities

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

As of June 30, 2021

Lease Intangibles

Lease Liabilities

Accumulated amortization

Weighted average amortization period (years)

Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the year ended June 30, 2022, were as

June 30, 2022

Lease Liabilities

Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the six months ended June 30, 2021, were as

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:

Lease Liabilities

We did no t have lease intangibles as

of December 31, 2020.

Therefore, we did no t have any amortization.

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, :

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NOTE 4 – INVESTMENTS

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):

The following table summarizes the composition of our equity method investments with fair value option election and other equity securities at

fair value as of June 30, 2022 and 2021 (successor basis):

June 30, 2022

June 30, 2021

Publicly Traded Companies

3 unchanged sentences

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

Publicly Traded Companies

Non Traded Companies

Investment Trust

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

Our above total investments at fair value are disclosed in two separate lines as investments and unconsolidated investments (non-securities) in the

consolidated balance sheets as of June 30, 2022 and 2021.

The following table presents fair value measurements of our investments as of June 30, 2022 and 2021, according to the fair value hierarchy

(successor basis):

Publicly Traded Companies

As of June 30,2022

Non Traded Companies

Investment Trust

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):

As of June 30,2021

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 of the fair

value hierarchy) for the six months ended June 30, 2021 (successor basis):

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, 2022 (successor basis):

Balance at July 1, 2021

Purchases of investments

Transfers to Level I

Fair value adjustment on FSP Satellite Corp.

units owned prior to consolidation (Note 1)

Proceeds from sales, net

Return of capital distributions

Net realized gains

Net unrealized gains

Ending balance at June 30, 2022

The transfer of $ 230,160 of

investments from Level III to Level I category during the year ended June 30, 2022 resulted from two of our investments converting from a non-traded REIT to publicly traded REIT.

Transfers are assumed to have occurred at the beginning of the

For the year ended June 30, 2022, changes in unrealized gains, net included in earnings relating to Level III investments still held at June

30, 2022 were $ 8,698,216 .

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

6 unchanged sentences

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.

The transfers of $ 229,879 from

Level III to Level I category during the six months ended June 30, 2021 resulted from one of our 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):

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

1 unchanged sentence

Transfers to Level I

Consolidation of the Operating Partnership (Note 1)

Consolidation of the Operating Partnership

Proceeds from sales, net

3 unchanged sentences

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.

The transfer of $ 1,900,470 of

investments from Level III to Level I category during the six months ended December 31, 2020 resulted from one of our 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

Proceeds from sales, net

Return of capital

Net realized gains

Net unrealized losses

Ending balance at June 30, 2020

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):

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used

at June 30, 2022 (successor basis):

Primary Valuation

1 unchanged sentence

Weighted Average

Non Traded Company

Direct Capitalization Method

Capitalization rate

Liquidity discount

Non Traded Companies

2 unchanged sentences

Liquidity discount

Bankruptcy filing

25.0 % - 75.0 %

Non Traded Companies

1 unchanged sentence

Secondary market industry publication

Underlying property sales contract

Acquisition cost

Contracted purchase of security

Market Activity

Contracted purchase price

Direct Capitalization Method

Capitalization rate

4.0 % - 5.0 %

Liquidity discount

1 unchanged sentence

Discount rate

Discount term (months)

6.3 % - 9.0 %

Estimated Liquidation Value

Sponsor provided value

Underlying property sales contract

Liquidity discount

Market Activity

Secondary market industry publication

Investment Trust

2 unchanged sentences

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

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

Weighted Average

Non Traded Companies

Non Traded Company

Direct Capitalization Method

5 unchanged sentences

Liquidity discount

2.0 % - 67.0 %

Bankruptcy filing

Non Traded Companies

1 unchanged sentence

Secondary market industry publication

Liquidity discount

Underlying property sales contract

Acquisition cost

Direct Capitalization Method

Capitalization rate

3.5 % - 7.5 %

Liquidity discount

20.0 % - 33.0 %

Discounted Cash Flow

Discount rate

9.0 % - 20.0 %

Discount term (months)

2 unchanged sentences

Underlying property sales contract

Underlying property appraisal

Liquidity discount

Market Activity

Underlying security sales contract

Secondary market industry publication

Contributed capital

5.0 % - 46.19 %

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.

Direct Capitalization Method

Capitalization rate

Liquidity discount

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 COVID-19 pandemic and related changes in tenant behavior have adversely impacted the fair value of our investments as of June 30, 2022 and

2021, 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, 2022 and 2021, 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, 2022, which could

have a material adverse effect on our business, financial condition and results of operations.

Summarized 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 the Rule 8-03(b)(3) of Regulation S-X applicable for smaller reporting companies, 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

requires summarized financial statements for any significant equity method investments in an annual and interim report if any of the three tests exceed 20% .

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.

Our investment in Dimension 28, LLP was determined to be significant under the income test as of June 30, 2022.

In addition, our equity method investments accounted under the fair value

option were material in aggregate as of June 30, 2022.

The summarized financial information of Dimension 28, LLP and aggregated summarized financial information of all equity method investees is as follows:

Dimension 28, LLP

All Equity Method

Investee Aggregated

Total Liabilities

2 unchanged sentences

Total Expenses

Total Net Income

Total Net Income (Loss)

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:

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.

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, 2022 and 2021, none of our investments in securities was considered an unconsolidated significant subsidiary under the SEC

rules described above.

NOTE 5 – ACQUISITIONS AND HELD FOR SALE

Acquisition of General Partnership Interests

We entered into a

membership interest purchase agreement with The Wiseman Company LLC (“Wiseman”) on April 12, 2022, to acquire 100 % of the membership

interests in eight limited liability companies (“Management Companies”) owned by Wiseman.

We assigned all our rights, title and

obligations with respect to the membership interest purchase agreement to the Operating Partnership on May 5, 2022, and the purchase of these Management Companies closed on May 6, 2022.

After the closing, the Operating Partnership became the sole

member of the Management Companies.

Accordingly, we have consolidated the financial statements of these Management Companies as of June 30, 2022.

Each Management Company manages a property company limited partnership and is the sole general partner

of each of the limited partnerships.

The following table presents the purchase price allocation of general partnership interests acquired on May 6, 2022:

General Partnership Interests

Management Companies

Total Purchase

1300 Main, LP

1300 Main, LLC

First & Main, LP

First & Main, LLC

Green Valley Medical Center, LP

Green Valley Medical Center, LLC

Main Street West, LP

Main Street West, LLC

Martin Plaza Associates, LP

Martin Plaza, LLC

One Harbor Center, LP

One Harbor Center, LLC

Westside Professional Center I, LP

Westside Professional Center, LLC

Woodland Corporate Center II, LP

Woodland Corporate Center, LLC

The acquisition of general partnership interests was made in exchange for cash, preferred units in the Operating Partnership, and, in some cases, a contingent liability as

General Partnership Interests

Preferred Units

1300 Main, LP

First & Main, LP

Green Valley Medical Center, LP

Main Street West, LP

Martin Plaza Associates, LP

One Harbor Center, LP

Westside Professional Center I, LP

Woodland Corporate Center II, LP

The Operating

Partnership’s preferred units are issued with a $ 25 liquidation preference, but because Wiseman agreed to a 4 -year “lock-up” we agreed to a discounted issuance price of $ 22.50 per unit.

Thus, the value of the preferred units listed above is $ 22.50 per unit.

Contingent Consideration

Pursuant to the membership interest purchase agreement, the purchase price paid at closing for the general partnership interests was reduced by 20 % as of the closing date for the property companies that had not received fully executed and in force leases, the annualized scheduled rents of which

are equal to or greater than the target scheduled rent as stated in the membership interest purchase agreement.

This 20 % holdback will

be paid upon a property company reaching the stabilization threshold, reduced by stabilization costs, as defined in the membership interest purchase agreement.

Management believes that it is probable that the stabilization thresholds will be

reached for each of the property companies that did not meet this threshold at the acquisition date.

Hence, the 20 % holdback was

considered as a contingent liability in the consolidated balance sheet as of June 30, 2022.

Debt Guaranty

The property companies have mortgage loans with various banks and the loans are guaranteed by Wiseman and its owner, Doyle Wiseman and his trust.

mortgage loans of 1300 Main, LP, One Harbor Center, LP, Martin Plaza Associates, LP, and Main Street West, LP are also guaranteed by the partnership’s general partner as the co-guarantor.

On July 1, 2022, subsequent to Operating Partnership’s acquisition of the management companies, Wiseman’s owner, Doyle Wiseman and the Operating

Partnership entered into an indemnity agreement whereby the Operating Partnership will indemnify Doyle Wiseman for any losses suffered by him through the default of a limited partnership on the mortgage secured by the property owned by the limited

Historically, none of the limited partnerships has had any defaults on any mortgages and Doyle Wiseman has not had to satisfy any mortgage default through a guaranty.

Furthermore, each of the limited partnerships is adequately

capitalized, has sufficient cash flow from operations to service the mortgage notes and has not required Doyle Wiseman to provide any subordinated financial support to the limited partnerships.

Therefore, we have no t recorded any liability related to the guaranty on the mortgage loans as of June 30, 2022.

Acquisition of Land

The Operating Partnership acquired a parcel of entitled land of approximately 3 acres located at the corner of Business Center Drive and Healthcare Drive in Fairfield, California from Wiseman on May 6, 2022.

As part of the land acquisition, the Operating Partnership acquired all development agreements and rights, civil, design and building plans, right,

benefits and privileges held by Wiseman.

The total acquisition price of the land was $ 3,050,000 , of which $ 750,000 was paid through the issuance 77,882

Class A units of the Operating Partnership.

Assets and Liabilities Held for Sale

On June 28, 2022, the Addison Property Owner entered into a forbearance agreement for the sale of Addison Corporate Center with the lender of the note

payable discussed in Note 9.

As a result, the Addison Property Owner’s operations met the criteria to be classified as held for sale, which requires us to present the related assets and liabilities as separate line items in our consolidated balance

We recorded these assets and liabilities at fair value less any costs to sell.

Impairment loss recognized on assets held for sale amounted to $ 9,126,461

for the year ended June 30, 2022.

The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in our

consolidated balance sheets:

June 30, 2022

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 income, rents and other receivables

Due from related entities

Prepaid expenses and other assets

Allowance for impairment of assets held for sale

Deferred rent and other liabilities

Accounts payable and accrued liabilities

Due to related entities

Total liabilities

We determined that the operations included in the table above did not meet the criteria to be classified as discontinued operations under the

applicable guidance.

NOTE 6 – 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.

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.

Our 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;

whether we are 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

(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;

was designed to create and pass through to its variable 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.

and (f) related-party

relationships.

We reassess our evaluation of whether an entity is a VIE when certain reconsideration events occur.

We reassess our 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.

As of June 30, 2022 and 2021, six

and eleven of our unconsolidated VIEs, respectively, include interests in limited partnerships and limited liability companies.

have 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 us, and they have been reported as investments at fair value in the June 30, 2022 and 2021, consolidated balance sheets.

The table below presents a summary of the nonconsolidated VIEs in which we hold variable interests:

Total Nonconsolidated VIEs

As of June 30, 2022

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.

Our exposure to the obligations of VIEs is generally limited to the carrying value of the limited partnership interests in these entities.

NOTE 7 – RELATED PARTY TRANSACTIONS

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

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 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;

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.

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);

minus (iii) the sum of all previously paid income incentive fees since the effective date and prior to the end of such fiscal year;

(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.

Under the Amended and Restated Investment Advisory Agreement, we paid 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 was for the Adviser’s initial work performed in identifying, evaluating, and structuring the acquisition of

The fee equaled 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 were performed on an ongoing basis in anticipation of deploying new capital, generally within 15 days of the receipt of capital.

Therefore, this fee was expensed in the period the capital was accepted.

The base management fee was calculated based on our Gross Invested Capital plus any borrowing for investment purposes.

The base management

fees ranged from 1.5 % to 3.0 %,

depending on the level of Gross Invested Capital.

The subordinated incentive fee had two parts—income and capital gains.

The incentive fee components (other than during liquidation) were

designed so that neither the income incentive fee nor the capital gains incentive fee was payable to the Adviser unless our stockholders had 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 income incentive fee (the “Income Fee”) was 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.

The capital gains incentive fee (the “Capital Gains Fee”) was 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 were 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 was 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 was capped so that under

no circumstance would it have exceeded 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.

As discussed in Note 1, on January 26, 2021, our Board of Directors 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 we 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

Invested Capital is equal to the amount calculated by multiplying the total number of outstanding shares, preferred shares, and the partnership units (units in our operating partnership

issued by us and held by persons other than us) issued by us 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” our assets.

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.

We 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 us as to our securities portfolio under the Amended and Restated Investment Advisory Agreement.

During the year ended June 30, 2022, we incurred the asset management fees of $ 2,725,588 .

During the six months ended June 30, 2021, we 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:

During the six months ended December 31, 2020, we 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.

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

Quarter ended:

September 30, 2020

December 31, 2020

March 31, 2021

June 30, 2021

Total Invested

For the Year Ended June 30, 2022

10 unchanged sentences

June 30, 2021

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

however, did not incur the Income Fee.

During the year ended June 31, 2022, and six months ended June 30, 2021, we did no t incur or accrue any incentive

management fee under the new Advisory Management Agreement.

we did no t accrue Income Fee or Capital Gains Fee for the six months ended December 31, 2020, under the previous advisory

agreement with the Investment Adviser.

Property Management and Leasing Services:

On May 6, 2022, the Real Estate Adviser's newly formed wholly owned subsidiary, Wiseman Company Management, LLC, purchased the property

management and leasing services rights from Wiseman.

Therefore, effective the acquisition date, Wiseman Company Management has been providing the property management and leasing services to the eight property limited partnerships in

accordance with the pre-existing agreements.

There have been no changes to any of the management services agreements with the property limited partnerships since the acquidition of the property management service rights.

Organization and Offering Costs Reimbursement:

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.

As provided in the previous advisory agreement with the Investment Adviser and the prospectus of us, offering costs incurred and paid by us 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 us 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.

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.

Therefore, the remaining deferred offering costs that had not been amortized as of

the termination date were fully expensed as of December 31, 2020.

As provided in the Offering Circular, offering costs incurred and paid by us in excess of $ 550,000 in connection

with the offering will be reimbursed by the Investment Adviser except to the extent that 10 % in broker fees are not incurred.

such case, the broker savings were available to be paid by us for marketing expenses or other non-cash compensation.

As of June 30, 2022, we have incurred $ 600,130 of offering costs on our Offering Circular to sell the preferred stock, of which $ 501,917

relates to syndication cost paid by Mackenzie on behalf of us in connection with the preferred stock offering.

The total offering costs incurred as of June 30, 2022, is $ 21,841 in excess of the total offering cost reimbursement threshold including the broker savings.

Therefore, the $ 21,841 excess will be reimbursed by the Investment Adviser and is netted against due to related entities in the consolidated balance sheet.

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.

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.

Under the Administration Agreement, we reimburse MacKenzie for its allocable portion of overhead and other expenses it incurs in performing

its obligations under the Administration Agreement, including furnishing us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing us with other administrative services,

subject to the independent directors’ approval.

In addition, we reimburse MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of our 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 us.

No fee (only cost reimbursement) is being paid by us to MacKenzie for this service.

The administrative

cost reimbursements for the year ended June 30, 2022 was $ 609,600 .

administrative cost reimbursements for the six months ended June 30, 2021 and December 31, 2020, were both $ 310,400 .

agent services cost reimbursement for the year ended June 30, 2022 was $ 106,401 .

Transfer agent services cost reimbursements for

the six months ended June 30, 2021 and December 31, 2020, were both $ 61,600 .

below outlines the related party expenses incurred for the year ended June 30, 2022, six months ended June 30, 2021, and six months ended December 31, 2020, and unpaid as of June 30, 2022, and June 30, 2021 .

Six Months Ended

Incurred For The Year Ended

Types and Recipient

June 30, 2022

December 31, 2020

June 30, 2021

June 30, 2019

December 31, 2020

June 30, 2022

June 30, 2021

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

Administrative cost reimbursements - MacKenzie

Transfer agent cost reimbursements - MacKenzie

Organization & Offering Cost (2) - MacKenzie

Other expenses (1) - MacKenzie

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

Administrative cost

reimbursements- MacKenzie

Transfer agent cost

reimbursements - MacKenzie

Organization & Offering

Cost (2) - MacKenzie

Other expenses (1) -

MacKenzie and Subsidiary’s GP’s

Due to related entities

(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.

(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

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.

June 30, 2020:

Name of Issuer and Title of Issue

Fair Value at

June 30, 2019

Reductions (1)

Net Realized Gain/

Net Change in

Gains/(Losses)

Fair Value at

June 30, 2020

Interest/Dividend/Other income

June 30, 2020

Expenses paid by MacKenzie and General Partner of a subsidiary on behalf of us and subsidiary.

Offering costs paid by MacKenzie - discussed in Note 7 under organization and offering costs reimbursements.

Asset acquisition fees paid to the Real Estate Adviser were capitalized as a part of the real estate basis in accordance with our

Affiliated Investments:

5210 Fountaingate, LP

Arrowpoint Burlington LLC

BP3 Affiliate, LLC

BR Desota Investment Co, LLC

BR Everwood Investment Co, LLC

BR Quinn35 Investment Co, LLC

BR Sunrise Parc Investment Co, LLC

BR Westerly 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

Bishop Berkeley, LLC

Britannia Preferred Members, LLC -Class 1

Britannia Preferred Members, LLC -Class 2

Capitol Hill Partners, LLC

Citrus Park Hotel Holdings, LLC

Coastal Realty Business Trust, REEP, Inc.

Dimensions28 LLP

MacKenzie Realty Operating Partnership, LP

Sunlit Holdings, LLC

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:

Coastal Realty Business Trust (“CRBT”):

1 unchanged sentence

Each series of the trust has its own beneficiaries and own assets.

The Company owns two series of CRBT and is the only beneficiary

of such series.

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.

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 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

We and TRS are the sole beneficiaries of the following series as of June 30, 2022 and

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.

NOTE 8 – 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

We have a brokerage account through which it buys and sells publicly traded securities.

The provisions of the account allow us 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

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, 2022 and 2021, we had no margin credit available for cash withdrawal or the ability to purchase in additional securities.

Accordingly, as of June 30, 2022 and 2021,

there was no amount outstanding under this short-term credit line.

NOTE 9 – 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.

Addison Property Owner Note Payable

Addison Property Owner is the obligor under a note payable to Wells Fargo Bank, NA (the “Lender”) 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 Addison Property Owner.

On June 8, 2020, as part of the Contribution Agreement, we 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, we 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 %.

The outstanding loan amounts as of June 30, 2022 and 2021, were $ 19,604,382 and $ 23,568,330 ,

respectively.

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.

Under the Loan Modification Agreement and Replacement Guaranty, we 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.).

of June 30, 2022 and 2021, we have not recorded any debt guaranty obligation because (i) the Addison Property Owner was current on the loan payments, (ii) we believe the Addison Property Owner has sufficient cash flow to meet its monthly

payments, and (iii) we have not engaged in inappropriate actions that would give rise to a guaranty obligation.

2022, the notes payable matured and Addison Property Owner was unable to extend the loan.

On June 28, 2022, Addison Property Owner entered into a forbearance agreement with the Lender.

As of June 30,

2022, Addison Corporate Center is being marketed for sale in accordance with all the conditions set forth in the forbearance agreement.

In addition, effective June 28, 2022, on monthly basis the lender will collect all cash revenues from Addison Corporate Center and deduct funds sufficient to

satisfy monthly accrued interest at the default rate, any outstanding fees and costs incurred by the lender.

The excess cash will be made available to the borrower for the payment of previously approved budgeted operating expenses.

funds remaining thereafter will be applied towards the unpaid loan principal balance.

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.

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 U.S.

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.

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:

For The Year Ended

June 30, 2020

June 30, 2019

June 30, 2018

June 30, 2017

Per Share Data:

Beginning net asset value ("NAV")

Net investment income (1)

Net realized gain (1)

Net unrealized gain (loss) (1)

Net increase in net assets resulting from operations

Issuance of common stock above (below) NAV (1) (4)

Redemption of common stock below NAV (1) (6)

Dividends to stockholders (1) (5)

Weighted average common Shares outstanding

Shares outstanding at the end of period

Net assets at the end of period

Average net assets (2)

Ratios to average net assets

Total expenses

Net investment income

Total rate of return (2) (3)

(1) Based on weighted average number of shares of common stock outstanding for the period.

(2) Average net assets were derived from the beginning and ending period-end net assets.

(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.

(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 .

(5) Dividends are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under GAAP.

(6) Amounts based on differences between the actual redemption price and the NAVs preceding the redemptions .

Accordingly, as of June 30, 2022 and 2021, the outstanding loan amounts for both years were $ 6,737,500 and $ 8,387,500 , on the Madison and PVT

mortgage loans, respectively.

PT Hillview Notes Payable

On October 4, 2021, PT Hillview entered into a loan agreement with Ladder Capital Finance in the amount of $ 17,500,000 .

The annual interest rate shall equal to the greater of (i) a floating rate of interest equal to 5.5 % plus LIBOR, and (ii) 5.75 %.

The loan was obtained to finance the acquisition of Hollywood Property.

The loan matures on October 6, 2023 and can be extended

for two successive 12

month terms (the “Maturity Date”) and is secured by the Hollywood Property.

The loan requires interest-only monthly payments with the principal balance due at maturity date.

Interest is due based on a 360 -day amortization period.

As of June 30, 2022, the outstanding loan amounted to $ 16,804,689 .

We (along with three other principals of True USA) guaranteed:

(1) the “Recourse Obligations” as defined in the loan agreement,

which are triggered only if the borrower 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, ADA noncompliance, and environmental contamination, etc.), (2) a “Debt Service and Carry Guaranty” under the loan, which guarantees the payment of interest on the loan and other “Basic Carrying Costs”, and (3) a “Guaranty of

Completion” guaranteeing that the redevelopment work contracted to be performed will be completed as agreed.

We were comfortable issuing such guarantees because the loan provides for a substantial “Carrying Costs” reserve and for the full

funding of the construction contract, which is subject to a guaranteed maximum price.

MacKenzie Shoreline Notes Payable

On May 6, 2021, MacKenzie Shoreline entered into a loan agreement with Pacific Premier Bank, or order, in the amount of $ 17,650,000 .

The annual interest rate shall be 3.65 %

for the first 60 months, and a variable interest rate based on a 6 -month CME Term Secured Overnight Financing Rate plus a margin of 3.00

percentage points, for months thereafter until maturity.

The loan was obtained to finance the acquisition of Shoreline Apartments.

The loan matures on June 1, 2032 and is secured by Shoreline Apartments.

The loan requires interest only monthly payments through June 30, 2027, and beginning July 1, 2027, monthly payments of principal and interests are due

based on 360 months of amortization period.

As of June 30, 2022, the outstanding loan amounted to $ 17,650,000 .

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:

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 year ended June 30, 2022, six months ended June 30, 2021 and six months ended December 31, 2020 :

Six Months Ended

June 30, 2021

Six Months Ended

December 31, 2020

June 30, 2022

June 30, 2021

December 31, 2020

(Successor Basis)

(Predecessor Basis)

(Successor Basis)

(Predecessor Basis)

Net Income (loss)

Basic and diluted weighted Average

common shares outstanding

Net income (loss) attributable to common stockholders

Basic and diluted weighted average common shares outstanding

13,340,164.03

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NOTE 11 – SHARE OFFERINGS AND FEES

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

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.

During the year ended June 30, 2022, we issued 128,741 common shares with total gross proceeds of $ 1,187,630

under the D RIP.

In March 2022, we issued 212 common shares at $ 10.25 per

share to the Class A unit holders of the Operating Partnership.

The Class A units of the Operating Partnerships are convertible to our common share on 1 :1

In addition, we also issued 3,172 units of common shares at $ 8.67 per share pursuant to the FSP Satellite merger as discussed in Note 1.

During the year

ended June 30, 2021, we issued 21,720 shares with gross proceeds of $ 218,439 .

For the year ended June 30, 2021, we incurred selling commissions and fees of $ 18,060 .

In addition to the shares sold through our public offering, in October 2020, we 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, 2022, we issued 119,380 preferred shares with gross proceeds of $ 2,957,530 and incurred syndication costs of $ 847,167

in relation to preferred shares offering.

For the year ended June 30, 2022, we issued 36.70 preferred shares with total gross

proceeds of $ 826 under the DRIP.

NOTE 12 – SHARE REPURCHASE PLAN

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:

During the year ended June 30, 2022, we repurchased our own shares through our Share Repurchase Program and through third-party auctions as noted in

the below table:

of Shares Repurchased

Repurchase Price

Total Repurchase Consideration

Average Repurchase

Total Repurchase

Consideration

During the year ended June 30, 2022

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:

December 22, 2021

January 6, 2022 through March 31, 2022

June 1, 2022 through June 30, 2022

On May 11, 2020, after assessing the impacts of the COVID-19 pandemic, our Board of Directors suspended our Share Repurchase Program.

we did no t repurchase any shares during the nine months ended March 31, 2021.

We resumed the Share Repurchase Program on March 19, 2021.

During the year ended June 30, 2021, we repurchased our own shares through our Share Repurchase Program and through third-party auctions as noted in

the below table:

of Shares Repurchased

Repurchase Price

Total Repurchase Consideration

Total Repurchase

Consideration

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

NOTE 13 – STOCKHOLDER DIVIDENDS AND INCOME TAXES

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.

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

April 22, 2021 through May 12, 2021

NOTE 13 – STOCKHOLDER DIVIDENDS

On March 31, 2020, after assessing the impacts of the COVID- 19 pandemic, our Board of Directors unanimously approved the suspension of regular quarterly dividends to our stockholders.

On May 10, 2021, the Board of Directors resumed the

quarterly dividends after reassessing our cash flow.

The following table reflects the dividends per share

that we have declared on our common stock and preferred stock during the year ended June 30, 2022 :

Preferred stock

During the Quarter Ended

2 unchanged sentences

March 31, 2022

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.

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 year ended December 31, 2019 (the most recent tax year ended completed and filed), is as follows:

December 31, 2019

Ordinary income

Return of capital

Total dividends

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

Unrealized fair value appreciation

The following table presents the aggregate gross unrealized appreciation, depreciation, and cost basis of investments for income tax purposes as of:

June 30, 2022

Aggregate gross unrealized appreciation

Aggregate gross unrealized depreciation

Net unrealized appreciation (depreciation)

Aggregate cost (tax basis)

* $ 0.06 per share dividend was declared for the quarter ended June 30, 2021.

During the year ended June 30, 2022, we paid total dividends of $ 4,012,882 of which $ 1,188,456 has been reinvested under our DRIP.

Dividends declared during the quarter ended June 30, 2022 , were paid on July 29, 2022 .

Total distributions declared by the Operating

Partnership for the Class A unit holders during the year ended June 30, 2022, was $ 9,985 (which was $ 0.40 per unit), of which $ 723 ( $ 0.06

per unit) was related to distributions declared for the quarter ended June 30, 2021.

Total distributions declared by the Operating

Partnership for the preferred unit holders during the year ended June 30, 2022 was $ 51,667 (which was 0.25 per unit).

June 28, 2022 , we declared the Series A Preferred stock quarterly dividend of $ 0.375 per share payable at the rate of $ 0.125

per month for holders of record as of July 31, 2022 , August 31, 2022 , and September 30, 2022 .

Subsequently, on September 6, 2022 , we declared the Series A Preferred stock quarterly dividend of $ 0.375 per share payable at the rate of $ 0.125

per month for holders of record as of October 31, 2022 , November 30, 2022 , and December 31, 2022 .

The preferred stock

dividend declared on June 28, 2022, will be paid on or about October 15, 2022 , and the preferred stock dividend declared

on September 6, 2022, will be paid on or about January 15, 2023 .

September 6, 2022 , we also declared the common stock quarterly dividend of $ 0.105 per share for the quarter ended September 30, 2022.

The common stock dividend declared on September 6, 2022 will be paid on or about October 30, 2022 , to record holders as of September 30, 2022 .

The following table reflects the dividends per share

that we have declared on our common stock during the six months ended June 30, 2021 :

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 our DRIP.

MacKenzie Realty Capital, Inc.

3 unchanged sentences

Subsequent Acquisition

Gross Amount Carried at

Subsequent Disposal

Acquisition Date

1 unchanged sentence

June 30, 2022

Gross Amount Carried at

June 30, 2022

Accumulated Depreciation

Addison Corporate Center

December 31, 2020 *

Commodore Apartment Building

March 5, 2021

Pon Do Leo Apartment Building

The Park View 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

Hollywood Property

October 4, 2021

Shoreline Apartments

Satellite Place

Excludes the note payable on property held for sale as of June 30, 2022.

A summary of activity for real estate and accumulated

depreciation for the year ended June 30, 2022 and 2021 :

Year Ended June 30,

Balance at the beginning of the year

Additions - acquisitions

Balance at end of the year

Reclassified to assets held for sale

Balance at the end of the year

Accumulated Depreciation

1 unchanged sentence

Depreciation expense

Reclassified to assets held for sale

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.

Excludes $ 2,370,116 of accumulated amortization associated with acquired intangible assets reclassified as held for sale.

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

MACKENZIE REALTY CAPITAL, INC.

2 unchanged sentences

September 28, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates

/s/ Robert Dixon

15 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