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Item 9A. Controls and Procedures

2023-09-28 compared with 2022-09-28 · 1167 added, 1118 removed, 1095 unchanged (68% 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.

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.

Financial Officer concluded that our disclosure controls and procedures were effective as of such date 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

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

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.

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, 2023, 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 management’s assessment, as of June 30, 2023, 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.

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

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.

There have been no 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 fourth quarter of the Company’s

fiscal year ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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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 MacKenzie.

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

the Advisers 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.

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 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.

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.

While the Company’s securities currently are not listed for trading on any exchange, our Board consists of a majority of “Independent Directors” as defined 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 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†, 52

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.

Chairman of the Board

Chip Patterson, an MRC Executive Officer (as discussed further below) since May of 2012, is managing director, general counsel, and senior vice president of the Advisers 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 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

He also has prior experience in sales, retail, and banking, and

is a licensed California Real Estate Broker.

Tim Dozois, 61

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.

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

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 over 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, 81

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

TransCentury began in May of 1973 and has syndicated and

managed over 10,000 residential units.

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

residential 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.

founded in June 1986 to sponsor and manage private, closed end “mutual funds”.

Paradigm was founded in June 1986

to sponsor and manage private, closed end “mutual funds”.

The last of the funds successfully liquidated in December of 2000.

Frame received a BA degree from the University of Kansas in Mathematics in June

1964, a Juris Doctor degree from the San Francisco Law School in June 1975, and an MBA with honors from Pepperdine University in April 1986.

Frame is currently managing his own investments which include residential units,

commercial property, and a portfolio of securities.

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

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 Advisers, Mr.

Patterson is not an Independent Director.

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Robert Dixon, 52

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.

Executive Officer and President

Dixon has been the senior vice president and chief investment officer of MacKenzie and the Advisers 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

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.

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

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, 42

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

Financial Officer

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

Paul Koslosky.

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 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

being appointed Chief Financial Officer, 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 honors.

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

Prior to joining MacKenzie, he worked as staff auditor from 2007 through 2008 and senior auditor

from 2009 through 2012 at a national public accounting firm, Moss Adams LLP.

During his career at Moss Adams, he led various audit teams involved in auditing financial services companies including private equity, asset

management and real estate investment companies.

Glen Fuller, 50

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.

Operating Officer

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

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.

, a registered broker-dealer.

Fuller was also the registered options principal and registered

municipal bond principal for North Coast Securities Corp., a registered broker-dealer.

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

Fuller has a Bachelor of Arts in

Chip Patterson,

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

He is a director of their general partner and a

beneficial owner of all three companies.

Fuller has a Bachelor of Arts in Management.

Charles “Chip” Patterson,

Counsel and Secretary

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

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

of all three companies.

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

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

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.

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 our compliance with our Code of Ethics, Bylaws, Charter, and applicable rules and regulations.

Chief Compliance Officer

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

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

Bluth oversees compliance for

all the funds advised by the Advisers, 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.

of 1996 in the Investor Services Department.

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

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Chief Portfolio Manager

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.

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

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

Simpson is responsible for

handling the day-to-day operations of The Advisers’ 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.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who own more than ten percent of a registered class of the Company’s equity securities to file with the

SEC initial reports of ownership and reports of changes in beneficial ownership of Common Stock and other equity securities of the Company.

Officers, directors and greater than ten percent shareholders are required by SEC regulation

to furnish the Company with copies of all Section 16(a) reports they file.

Based solely upon the Company’s review of copies of such reports furnished to it through the date hereof, or written representations that no other reports were

required to be filed, the Company believes that during its fiscal year ended June 30, 2023 all officers, directors and ten percent shareholders complied with the filing requirements applicable to them, except for the omission to have

filed a Form 3 Initial statement of Beneficial Ownership of Securities for Angche Sherpa, which will be corrected by filing a Form 3 subsequent to fiscal year end.

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.

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

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

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 our web site at http://www.mackenziecapital.com/sec-filings.

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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.

The Audit 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.

A copy of the Audit Committee Charter, 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’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.

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

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We have determined that Mr.

Dozois is a “financial expert” as defined by SEC rules.

Dozois is a “audit

committee 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

Dozois and Frame, both of whom are Independent Directors.

A copy of the Nominating and Corporate Governance Committee Charter, 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.The members of the nominating and corporate governance committee are Messrs.

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

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.

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

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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 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 2023.

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

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 2022 Fees (1)

Fiscal 2021 Fees (1)

Fees Earned or Paid in Cash (1)

All Other Compensation

Chip Patterson (Chairman of the Board of Directors)

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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.

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.

officers and staff are employed by MacKenzie or the Advisers, 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, 2023, 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 13,295,626.16 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.

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.

Unless known otherwise by us, the

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

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

Successors, LP, as well as officers of its general partner, which owns 51,003.50 shares in us, and Mr.

Sherpa owns 1,466.81 shares directly.

Patterson and his spouse are the sole beneficial owners of 10,182.26 shares owned in a

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

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

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

The following table shows the amount of our common and preferred stocks beneficially owned and based on a total of 13,305,608.63 shares of our common stock and 727,506.11 shares of our preferred stock

outstanding on September 28, 2023, as of that date, by (1) each of our directors and nominees for director, (2) our executive officers and (3) all directors and executive officers as a group.

To our knowledge, no other person owns

more than 5% of our common stock.

The number of shares beneficially owned by each entity, person, director or executive officer is determined under the rules of the 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, 2023, 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.

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

With respect to the

Executive Officers listed below, they are limited partners of MPF Successors, LP, as well as officers of its general partner, which owns 53,862.36 shares in us.

In addition, Mr.

Sherpa directly owns 1,549.03 shares of common stock and

Dixon directly owns 4,134.45 shares of Series A preferred stock.

Patterson, the father of Chip Patterson and his spouse are the sole beneficial owners of 10,753 shares of common stock owned in a personal holdings limited

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

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

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

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

Name and address of Beneficial Owner

Nature of Beneficial Ownership

Number of Common Shares

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Independent Directors:

Directly held

Interested Director:

Charles “Chip” Patterson

Indirectly held

Executive Officers

Directly and Indirectly held

Indirectly held

Chip Patterson

Indirectly held

Angche Sherpa

Directors and Officers as a group (6 person)

Indirectly held

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

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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.

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

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, 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.

All of the ownership interests are owned by either executive officers of the Company or related persons, and thus

all of the amounts paid by the Company to MacKenzie benefit such related persons.

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 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 led by its investment team:

Fuller, who serves as Chief Operating Officer and Managing Director of the General Partner of

MacKenzie and the Adviser;

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

Dixon, who serves as Chief Investment Officer and Managing

Director of the General Partner of MacKenzie and the Adviser;

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

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

The Investment Adviser is registered

with the SEC and is owned by the same beneficial owners and in the same proportions as MacKenzie.

The Investment Adviser is led by its investment team:

Fuller, who serves as Chief Operating Officer and Managing Director of the

General Partner of MacKenzie and the Investment Adviser;

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

Dixon, who serves as

Chief Investment Officer and Managing Director of the General Partner of MacKenzie and the Investment 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 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.

However, if MacKenzie withdraws as our administrator, it is

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

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

Partner of MacKenzie and the Investment Adviser.

We also are advised by the Real Estate Adviser, about 93% of which is owned by the executive officers and related persons of the Company and the remainder of which is owned by certain employees of the

Real Estate Adviser or their affiliates.

Thus, 93% of the ownership interests are owned by either executive officers of the Company or related persons, and thus 93% of the amounts paid by the Company to MacKenzie benefit such related

We have entered into three affiliated contracts — the Advisory Management Agreement, under which the Real Estate Adviser serves as our real estate investment adviser, the Amended and Restated Investment

Advisory Agreement, under which the Investment Adviser serves as our securities portfolio 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.

In Fiscal 2023 and 2022, Management fees accrued to the Real Estate Adviser under the Advisory

Management Agreement were $3,004,725 and $2,725,588, respectively.

Administration fees accrued and payable under the Administration Agreement for Fiscal 2023 and 2022, were $726,000 and $609,600, respectively.

Administration Agreement

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

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

For additional

information concerning the terms of these agreements and related fees paid, see Note 8 – Related Party Transactions in the consolidated financial statements included in this report.

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.

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.

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

Our Board of Directors reviews these on an annual basis.

In addition, our Board of Directors approves all our advisory and administrative agreements.

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

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, our independent registered public accounting firm, with Public Company Accounting

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

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 2023 and Fiscal 2022:

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 our

consolidated financial statements and are not reported under “Audit 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 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.

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

These fees were incurred for their review of our registration statements and Regulation

A offering statement.

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 2022 and 2021.

Moss Adams LLP did not bill the Advisers or

MacKenzie, for any non-audit services in Fiscal 2023 and 2022.

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

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.

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.

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.

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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

Description of Securities (incorporated by reference to Registrant’s Form 10-K (File No.

000-55006), filed on September 28, 2022)

Partnership Unit Designation of the Series A Preferred Limited Partnership Units of MacKenzie Realty Operating Partnership, LP (incorporated by reference to Registrant’s Form 10-K (File No.

000-55006), filed on September 28, 2022)

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.

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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 No.

6 to the Registration Statement on

Form N-2 (File No.

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

7 unchanged sentences

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

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 (File No.

000-55006 filed on May 20, 2022))

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* Filed Herewith

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

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

have been omitted.

FORM 10-K SUMMARY

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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 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 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 Balance Sheets as of June 30, 2023 and 2022

Consolidated Statements of Operations for the years ended June 30, 2023 and 2022

Consolidated Statements of Changes in Equity for the years ended June 30, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended June 30, 2023 and 2022

Notes to Consolidated Financial Statements

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Opinion on the Consolidated Financial Statements

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.

We have audited the accompanying consolidated balance sheets of Mackenzie Realty Capital, Inc.

(the “Company”), as of June 30, 2023 and 2022, the related consolidated statements of operations, changes in

equity, and cash flows for the years then ended, 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, 2023 and 2022, and the consolidated results of its operations and its cash flows for the years then ended, 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

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

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

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.

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.

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.

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 (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.

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, 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;

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, 2023, 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) that 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, 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 and 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 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 management.

Fair Value Measurements of Investments

As disclosed in Notes 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.

Establishing fair values of 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 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

Management uses a valuation model that 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 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.

(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

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

With the assistance of valuation specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions used in management’s valuation models such as future cash

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

The evaluation included comparison of the Company’s assumptions to market

data from industry transaction databases and published industry reports.

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

from those sales.

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

/s/ Moss Adams LLP

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MacKenzie Realty Capital, Inc.

Balance Sheets (Successor Basis)

Balance Sheets

June 30, 2023

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Total real estate assets, net

Cash and cash equivalents

Restricted cash

2 unchanged sentences

Investments income, rents and other receivables

Investment acquisition advance

Prepaid expenses and other assets

1 unchanged sentence

Mortgage notes payable, net

Notes payable

Deferred rent and other liabilities

Finance lease liabilities

Dividend payable

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Total liabilities

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

Common stock, $ 0.0001 par value, 80,000,000

shares authorized;

13,243,279.96 and 13,253,571.98 shares

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

issued and outstanding as of June 30, 2023 and June 30, 2022, respectively.

Preferred stock, $ 0.0001 par value, 20,000,000 shares authorized, 671,340.45

shares issued and outstanding as of June 30, 2022

and 119,416.91 shares issued and outstanding as of June 30, 2023 and June 30, 2022, respectively.

Capital in excess of par value

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Statement of Operations

(Successor Basis)

June 30, 2022

Year Ended June 30,

Rental and reimbursements

Property operating and maintenance

Interest expense

Depreciation and amortization

Asset management fees to related party (Note 8)

Interest expense

Administrative cost reimbursements to related party (note 7)

General and administrative

Administrative cost reimbursements to related party (Note 8)

Professional fees

Transfer agent cost reimbursements to related party (note 7)

Directors’ fees

Transfer agent cost reimbursements to related party (Note 8)

Impairment loss on assets held for sale

Total operating expenses

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Dividend and distribution income from equity securities at fair value

Net unrealized gain on equity securities at fair value

Net unrealized gain (loss) 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 loss on disposal of fixed assets

Net loss on disposal of real estate

Gain on extinguishment of debt

Net income (loss)

Net (income) 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.

MacKenzie Realty Capital, Inc.

Consolidated Statement of Operations (Successor Basis)

Six Months Ended

June 30, 2021

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

Dividend and distribution income from equity securities at fair value

Net unrealized gain on equity securities at fair value

Net income from equity method investments at fair value

Net realized gain from investments

Net loss attributable to non-controlling interests

Net income attributable to common stockholders

Net income per share attributable to common stockholders

Net income (loss) attributable to common stockholders

Net income (loss) per share attributable to common stockholders

Weighted average common shares outstanding

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Consolidated Statement of

Operations (Predecessor Basis)

Six Months Ended

December 31, 2020

Investment income

Non-controlled/non-affiliated investments:

Dividend and operational/sales distributions

Interest and other income

Affiliated investments:

Dividend and operational/sales distributions

Controlled investments:

Dividend and operational/sales distributions

Total investment income

Operating expenses

Base management fee (note 7)

Amortization of deferred offering costs

Administrative cost reimbursements (note 7)

Professional fees

Printing and mailing

Transfer agent cost reimbursements (note 7)

Directors’ fees

Portfolio structuring fee (note 7)

Other general and administrative

Total operating expenses

Net investment loss

Realized and unrealized gain (loss) on investments

Net realized gain (loss)

Non-controlled/non-affiliated investments

Affiliated investments

Total net realized gain

Net unrealized loss

Non-controlled/non-affiliated investments

Affiliated investments

Controlled investments

Total net unrealized loss

Total net realized and unrealized loss on investments

Net decrease in net assets resulting from operations

Net decrease in net assets resulting from operations per share

Weighted average common shares outstanding

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

MacKenzie Realty Capital, Inc.

Consolidated Statement of Changes in Equity (Successor Basis)

Changes in Equity

Preferred Stock

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Stockholders’

Non-controlling

Year Ended June 30, 2023

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Distributions to non-controlling interest holders

Operating Partnership Class A units issued

Operating Partnership Preferred Units issued

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Operating Partnership Class A conversion to common stock

Issuance of common stock

Issuance of preferred stock

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Issuance of preferred stock through reinvestment of dividends

Issuance Operating Partnership Preferred Units through

reinvestment of dividends

Payment of selling commissions and fees

Redemptions of common stock

Redemptions of preferred stock

Balance, June 30, 2023

13,243,279.96

* Amount is less than $1.

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

MacKenzie Realty Capital, Inc.

Consolidated Statement of Changes in Equity (Successor Basis)

Preferred stock

Additional Paid-

Stockholders’

Non-controlling

Six Months Ended June 30, 2021

Balance, December 31, 2020

Year Ended June 30, 2022

Balance, June 30, 2021

13,316,426.79

Contributions by non-controlling interest holders

Dividend to stockholders

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

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13,253,571.98

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

MacKenzie Realty Capital, Inc.

Consolidated Statement of Changes in

Net Assets (Predecessor Basis)

Six Months Ended

December 31, 2020

Net investment loss

Net realized gain

Net unrealized loss

Net decrease in net assets resulting from operations

Capital share transactions

Issuance of common stock

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

Selling commissions and fees

Non-controlling interest in consolidated subsidiary

Net increase in net assets resulting from capital share transactions

Total decrease in net assets

Net assets at beginning of the period

Net assets at end of the period

* Amount is less than $1.

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

MacKenzie Realty Capital, Inc.

Consolidated Statement of Cash Flows (Successor Basis)

Consolidated Statement of

Year Ended June 30,

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 (loss)

Adjustments to reconcile net income (loss) to net cash from operating activities:

Net unrealized (gain) loss 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

Net loss on disposal of fixed assets

Net loss on disposal of real estate

Impairment loss on assets held for sale

Gain on extinguishment of debt

Straight - line rent

Depreciation and amortization

Amortization of deferred financing costs

Accretion of market lease and other intangibles, net

Amortization of deferred financing costs and debt mark-to-market

Accretion of above (below) market lease, net

Changes in assets and liabilities:

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Prepaid expenses and other assets

Due from related entities

Deferred rent and other liabilities

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Cash flows from investing activities:

Proceeds from sale of investments

Proceeds from sale of and sales distribution from investments

Investment acquisition advance

Net proceeds from sale of real estate

Investments in real estate assets

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Return of capital distributions

Payment on contingent liability

Net cash from investing activities

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Payments on mortgage notes payable

Proceeds from notes payable

Payments on notes payable

Payment of deferred financing cost

Dividend to stockholders

Payment of deferred financing costs

Proceeds from issuance of preferred stock

Payment of finance lease liabilities

Payment of selling commissions and fees

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Distributions to non-controlling interests holders

Redemption of common stock

Redemption of common stock, net of stock redemption payable

Redemption of preferred stock

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

Net increase in cash, cash equivalents and restricted cash

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

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

Cash and cash equivalents 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

Total cash, cash equivalents, 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 Preferred units for the purchase of First & Main, LP (Note 1)

Issuance of the Operating Partnership Preferred units for the purchase of Main Street West, LP (Note 1)

Fair value of assets acquired from consolidation of First & Main, LP

Fair value of liabilities assumed from consolidation of First & Main, LP

Fair value of assets acquired from consolidation of 1300 Main, LP

Fair value of liabilities assumed from consolidation of 1300 Main, LP

Fair value of assets acquired from consolidation of Main Street West, LP

Fair value of liabilities assumed from consolidation of Main Street West, LP

Fair value of assets acquired from consolidation of Woodland Corporate Center Two, LP

Fair value of liabilities assumed from consolidation of Woodland Corporate Center Two, LP

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

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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.

MacKenzie Realty Capital, Inc.

Consolidated Statement of Cash Flows (Successor Basis)

Six Months Ended

Cash flows from operating activities:

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

Net unrealized gain on equity securities

Net income from equity method investments at fair value

Net unrealized gain on investments

Depreciation and amortization

Accretion of market lease and other intangibles, net

Changes in assets and liabilities:

Investment income, rent and other receivables

Prepaid expenses and other assets

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

Purchase of investments

Return of capital distributions

Net cash from investing activities

Cash flows from financing activities:

Proceeds from mortgage notes payable

Payments on mortgage notes payable

Dividend to stockholders

Repurchase of common stock

Capital contributions by non-controlling interest holders

Net cash from financing activities

Net decrease in cash and restricted 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

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

Reduction in contingent consideration estimate

Cash paid for interest

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MacKenzie Realty Capital, Inc.

Consolidated Statement of

Cash Flows (Predecessor Basis)

Six Months Ended

December 31, 2020

Cash flows from operating activities:

Net decrease in net assets resulting from operations

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

Proceeds from sale of investments, net

Return of capital

Purchase of investments

Net realized gain on investments

Net unrealized loss on investments

Amortization of deferred offering costs

Changes in assets and liabilities:

Investment income, rent and other receivable

Due from related entities

Payment of deferred offering costs

Accounts payable and accrued liabilities

Due to related entities

Net cash from operating activities

Cash flows from investing activities:

Cash acquired through consolidation of subsidiary

Net cash from investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock

Payment of selling commissions and fees

Change in capital pending acceptance

Net cash from financing activities

Net increase in cash 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, cash equivalents and restricted cash at end of the period

Non-cash investing and financing activities:

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

Supplemental Disclosures:

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

Real estate assets

Cash and restricted cash

Rents and other receivable

Mortgage note payable

Accounts payable and accrued liabilities

Due to affiliates

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

MacKenzie Realty Capital, Inc.

Notes to Consolidated Financial Statements

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MacKenzie Realty Capital, Inc.

(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”).

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;

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

“our”) was incorporated under the general corporation laws of the State of Maryland on January 25, 2012.

We have elected to be treated as a real estate investment trust (“REIT”) as defined under Subchapter M of the Internal Revenue Code of 1986, as

amended (the “Code”).

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

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

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

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

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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.

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 .

terminated TRS effective December 31, 2022, after the sale of its sole investment and transferred the ownership of MacKenzie NY 2, to the Parent Company.

The financial statements of TRS (through its termination date) and MacKenzie NY 2 have been

consolidated with the Parent Company.

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, 2023, we own all limited partnership units of

the Operating Partnership except for 85,243.43 Class A Limited Partnership units and 473,570.94 preferred units, which would be entitled to receive, at liquidation of the Operating Partnership, 85,243.43 common shares of the Company (stated value of $ 10.25 per share) and $ 11,839,274 (based on the stated value of $ 25

per share for the preferred units) in liquidation preference, respectively.

The Parent Company has contributed $ 72,090,886 in capital to

the Operating Partnership since inception;

thus the Class A and Series A Preferred Units represent approximately 14.99 % of

all capital contribution s.

In March 2021, we, together with our joint venture partners, formed two operating companies:

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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;

filed a post-effective amendment to the Offering Circular on October 14, 2022, and increased the offering to sell up to $ 75 million of

shares of our Series A preferred stock.

The post-effective amendment to this Offering Circular was declared effective on November 13, 2022.

On October 4, 2021, through the Operating Partnership, we acquired a 90 % economic interest in Hollywood Hillview Owner, LLC (“Hollywood Hillview”), a Delaware limited liability company, to acquire and operate a

multifamily building located in Los Angeles, California.

The remaining 10 % economic interest in Hollywood Hillview is owned by an

unaffiliated third party, True USA, LLC.

Hollywood Hillview owns 100 % of the membership interests in PT Hillview GP, LLC (the “PT

We are the controlling majority owner of Hollywood Hillview;

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

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(“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”

On June 1, 2022, the merger closed, and MacKenzie Satellite became our wholly owned subsidiary, which owns the Satellite Place Office 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.

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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.

limited liability companies (“Management Companies”) and one parcel of entitled land from The Wiseman Company, LLC (“Wiseman”) for $ 18,333,000 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”).

Each Management Company is the sole general partner of each of the limited partnerships.

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.

We have consolidated the financial statements of the eight limited liability companies, which hold the general partnership interests in the limited partnerships, 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.

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

Concurrently with acquiring the general partnership interests in the Wiseman

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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.

On July 23, 2022, in addition to the

general partnership interest in First & Main, LP (“First & Main”), the Operating Partnership completed the acquisition of 100 %

of the limited partnership interest in First & Main for total purchase price of $ 3,376,322 , of which $ 2,711,378 was paid through issuance of 120,505.66

Preferred Units of the Operating Partnership.

We consolidated the financial statements of First & Main during the quarter ended September 30, 2022.

On October 1, 2022, in addition to the general partnership interest in 1300 Main, LP (“1300

Main”), the Operating Partnership completed the acquisition of 100 % of the limited partnership interest in 1300 Main for total

purchase price of $ 6,480,582 .

We consolidated the financial statements of 1300 Main during the quarter ended December 31, 2022.

January 3, 2023, the Operating Partnership completed the acquisition of 100 % of the limited partnership interest in Woodland Corporate

Center Two, LP (“Woodland Corporate Center Two”) for total purchase price of $ 5,636,966 , of which $ 3,242,557 was paid through the issuance of 144,113.63

Preferred Units of the Operating Partnership.

On February 1, 2023, the Operating Partnership completed the acquisition of 100 % of the

limited partnership interest in Main Street West, LP (“Main Street West”) for total purchase price of $ 8,277,016 .

We consolidated the

financial statements of Woodland Corporate Center Two and Main Street West during the quarter ended March 31, 2023.

On February 6, 2023,

we formed a new entity, MRC Aurora, LLC (the “MRC Aurora”) for the purpose of owning, developing, renovating, leasing, managing, renting, and potentially selling certain real property and building and improvements located at 5000 Wiseman Way,

Fairfield, California (the “Aurora Project”).

The Parent Company is the manager and the Operating Partnership is the sole common member of MRC Aurora.

The Operating Partnership contributed the entitled land located at 5000 Wiseman Way, Fairfield,

California in exchange for the common membership interest.

MRC Aurora plans to raise $ 10 million in preferred capital and also obtain a

construction loan to fund the development of the Aurora Project.

As of June 30, 2023, MRC Aurora has not commenced selling the preferred units, making the Operating Partnership the sole equity holder

of MRC Aurora.

Therefore, we have consolidated the financial statements of MRC Aurora .

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”).

managed by MacKenzie Capital Management, LP (“MacKenzie”) under the administration agreement dated and effective as of January 1, 2021 (the “Administration Agreement”).

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

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 us in our assessment,

acquisition, and divestiture of real estate assets.

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.

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As of June 30, 2023, we have raised approximately $ 119.10

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 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.

million from our three common stock public offerings and $ 16.37 million from our Series A preferred stock offering pursuant to the Offering Circular.

As of June 30, 2023, we have issued common and preferred shares with gross proceeds of $ 14.19 million and $ 0.08 million,

respectively, under our dividend reinvestment plan (“DRIP”).

Of the total shares issued by us as of June 30, 2023, approximately $ 13.36

million worth of common and preferred stock shares have been repurchased under our share repurchase program.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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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.

We follow the accounting principles generally accepted in the United States of America (“GAAP”) and our consolidated financial statements include 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 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.

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

The reclassification has no effect on our consolidated balance sheet or the consolidated statement of

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Refer to Note 7 for additional information .

Assets and Liabilities Held for Sale

and Liabilities Held for Sale

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

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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

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

Cash, Cash Equivalents and Restricted Cash

Our cash and cash equivalents represent current bank accounts and other bank deposits free of encumbrances and having maturity dates of three

months or less from the respective dates of deposit.

We limit cash investments to financial institutions with high credit standing;

therefore, we believe our cash investments are not exposed to any significant credit risk.

The restricted cash

includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, and 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 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

Restricted cash is subject to 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

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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.

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

As of June 30, 2023, we recognized an allowance for doubtful

accounts of $ 150,786 .

As of June 30, 2022, we have determined that all rent receivable balances outstanding, are collectible and do

not require recording any uncollectible allowance.

Capital Pending Acceptance

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 our acceptance.

We conduct closings for new issuance of our stocks twice per month and admit new stockholders effective beginning the first of each month.

Subscriptions are 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

As of June 30, 2023 and June 30, 2022 , capital pending acceptance was $ 538,600

and $ 85,000 , respectively.

Organization and Offering Costs

Organization costs include, among other things, the cost of legal services

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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

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

as a reduction of equity .

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.

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

amounts that it distributes to the stockholders, provided that, on an annual basis, it generally distributes at least 90 % of its REIT

taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meets certain other conditions.

To the extent it satisfies the annual distribution requirement but distributes

less than 100 % of its REIT taxable income, it will be subject to U.S.

federal corporate income tax on its undistributed taxable

In addition, it will be subject to a 4 % nondeductible excise tax if the actual amount that it pays to its stockholders in a

calendar year is less than a minimum amount specified under U.S.

federal tax laws.

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2022.

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not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2022.

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.

In addition, for the tax year 2023, we intend to pay the requisite amounts of dividends during the year and meet other

REIT requirements such that the Parent Company 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 2023.

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.

TRS and MacKenzie NY 2 are

subject to corporate federal and state income tax on their taxable income at regular statutory rates.

As discussed in Note 1, TRS terminated effective December 31, 2022.

As of December 31, 2022, these subsidiaries did not have material taxable

income for tax year 2022.

Therefore, TRS, and MacKenzie NY 2 did no t record any income tax provisions during any fiscal period within the tax year 2022.

As of June 30, 2023, MacKenzie NY 2 , as a taxable corporate subsidiary of the Parent Company, did no t have any

taxable income.

Therefore, we did no t record any tax provisions for tax year 2023.

MacKenzie Satellite is a qualified REIT

subsidiary of the Parent Company.

Therefore, it does not file a separate tax return.

The Operating Partnership is a limited partnership.

Hollywood Hillview, MacKenzie Shoreline, Madison, and PVT are limited liability companies.

First & Main, 1300 Main, Woodland Corporate Center Two, and Main Street West are limited partnerships.

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 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.

We 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.

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

In addition, ASC 740 provides

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

As of June 30, 2023 and 2022, 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 our consolidated financial statements taken as a whole.

Subsequent events are events or transactions that occur after the date of the consolidated balance sheets but before the date the consolidated

financial statements are issued.

Subsequent events that provide additional evidence about conditions that existed at the date of the consolidated balance sheets are considered in the preparation of the consolidated financial statements presented

Subsequent events that occur after the date of the consolidated balance sheets that do not provide evidence about the conditions that existed as of the date of the consolidated statements of changes in equity are considered for disclosure

based upon their significance in relation to our consolidated financial statements taken as a whole.

Fair Value of Financial Instruments

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Revenue Recognition

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.

Rental revenue, net of concessions, which is derived primarily from lease contracts and include rents that each tenant pays in accordance with the terms of

each lease agreement, is 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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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.

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

Distributions

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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 our earnings for the quarter.

Dividends (and distributions, if any) to 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 our earnings for the quarter.

Fair Value Measurements

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The type of investments included in Level I are publicly traded equity securities.

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.

do not adjust the quoted price for these investments even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Price inputs are quoted prices for similar financial instruments in active markets;

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entirety, requires judgment and considers factors specific to the investment.

Valuation Procedures

Valuation of Investments

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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.

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:

provides a valuation or methodology that, in the judgment of the Investment Adviser or Board of Directors, does not represent fair value, which we expect will represent a substantial portion of our portfolio of securities investments, shall

each be valued as follows:

(i) each 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 Investment Adviser and, where appropriate and necessary, the

respective third‑party valuation firms.

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

the nature and realizable value of any collateral;

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securities affected by significant events;

securities that the Adviser believes were priced incorrectly.

securities that the Investment Adviser believes were priced incorrectly.

Valuation of Real Property

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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.

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

whether any impairment is required is made and documented.

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

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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:

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, 2023 and 2022:

Fair Value as of

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Limited Liability Company

Dimensions 28, LLP

Limited Partnership

Lakemont Partners, LLC

Limited Liability Company

Secured Income L.P.

Green Valley Medical Center, LP

Limited Partnership

Martin Plaza Associates, LP

Limited Partnership

One Harbor Center, LP

Limited Partnership

Westside Professional Center I, LP

Limited Partnership

Fair Value as of

June 30, 2022

FSP Satellite Place

Non Traded Company

5210 Fountaingate, LP

Limited Partnership

Bishop Berkeley, LLC

Limited Liability Company

BP3 Affiliate, LLC

Limited Liability Company

Britannia Preferred Members, LLC - Class 1

Limited Liability Company

Britannia Preferred Members, LLC - Class 2

Limited Liability Company

Capitol Hill Partners, LLC

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Limited Partnership

1300 Main, LP

Limited Partnership

First & Main, LP

Limited Partnership

Green Valley Medical Center, LP

Limited Partnership

Main Street West, LP

Limited Partnership

Martin Plaza Associates, LP

Limited Partnership

One Harbor Center, LP

Limited Partnership

Westside Professional Center I, LP

Limited Partnership

Woodland Corporate Center Two, LP

Limited Partnership

* The general partner has a 1 % partnership interest but is also entitled to profit sharing distributions ranging from 25 %

to 50 % after certain thresholds are met.

In January 2023,

Dimension 28 sold its sole property and distributed substantially all of the sales proceeds.

We received approximately $ 21.56

Unconsolidated Investments (Non-security) at Fair Value

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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.

Therefore, we listed these equity method investments separately from the

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

As of June 30, 2023, our investments in Green Valley Medical Center, LP, Martin Plaza Associates, LP, One Harbor Center, LP and Westside Professional

Center I, LP are considered to be voting securities under the 1940 Act.

As of June 30, 2022, our investments 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 Two, LP 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.

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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:

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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relative fair value at the date of acquisition.

Subsequent change in contingent consideration impacts the cost basis of acquired assets, which may also impact the statement of operations through

subsequent accounting for the acquired asset.

We are aware of diversity in practice regarding the subsequent treatment of the statement of operations 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.

The three partnerships that we acquired during the year ended June 30, 2023;

1300 Main, Main Street West and Woodland Corporate Center Two had solar equipment leases

in place at the time of our acquisition.

Therefore, these existing solar leases were reassessed at the acquisition date and were recorded as finance leases in accordance with ASC 842.

We record leases on the consolidated balance sheet in the form

of a lease liability for the present value of future minimum payments under the lease terms and a right-of-use asset equal to the lease liability adjusted for items such as deferred or prepaid rent, lease incentives, and any impairment of the

right-of-use asset.

The discount rate used in determining the lease liability is based upon incremental borrowing rates that we could obtain for similar loans as of the date of commencement or renewal.

We do not record leases on the consolidated

balance sheets that are classified as short term (less than one year).

At lease inception, we determine the lease term by considering the minimum lease term and all optional renewal periods that we are reasonably certain to renew.

lease term is also used to calculate straight-line rent expense.

The depreciable life of leasehold improvements is limited by the estimated lease term, including renewals if they are reasonably certain to be renewed.

Our leases do not contain

residual value guarantees or material variable lease payments that will impact our ability to pay dividends or cause us to incur additional expenses.

The amortization of the right-of-use asset arising from finance leases is expensed through depreciation and amortization expense and the interest on the related

lease liability is expensed through interest expense on our consolidated statements of operations.

Impairment of Real Estate Assets

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.

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, we assess 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 we 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 .

impairment charges on assets held for use were recorded for the years ended June 30, 2023 and 2022.

However, we recorded an impairment loss of $ 8,121,090

and $ 9,126,461 on our assets held for sale during the year ended June 30, 2023 and 2022, respectively, which is discussed in Note 5.

Gain on Dispositions of Real Estate Investments

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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.

The following

tables provide summary information regarding our operating properties, which are owned through our subsidiaries.

The ownership interest shown below is the percentage of the property owned by the subsidiary, not the percentage of the subsidiary

owned by the Parent Company or the Operating Partnership .

Consolidated Operating Properties

Property Name:

Addison Corporate Center

Commodore Apartments

Pon de Leo Apartments

Hollywood Apartments

Shoreline Apartments

Property Owner:

The Operating Partnership

Madison-PVT Partners LLC

PVT-Madison Partners LLC

PT Hillview GP, LLC

MacKenzie BAA IG Shoreline LLC

Hollywood, CA

Number of Tenants:

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Property Name:

Hollywood Property

Shoreline Apartments

Satellite Place

Satellite Place Office Building

First & Main Office Building

1300 Main Office Building

Woodland Corporate Center

Property Owner:

The Operating Partnership

MacKenzie Satellite Place Inc.

Hollywood, CA

MacKenzie Satellite Place Corp.

First & Main, LP

1300 Main, LP

Woodland Corporate Center, Two, LP

Number of Tenants:

Ownership Interest:

Property Name:

Main Street West Office Building

Property Owner:

Main Street West, LP

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.

the purchase price allocation of real estate assets acquired during the year ended June 30, 2023 based on asset

acquisition accounting .

Property Name:

Hollywood Property

First & Main Office Building

Acquisition Date:

October 4, 2021

July 23, 2022

Purchase Price Allocation

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Tenant Improvements

Furniture, Fixtures & Equipment

Lease in Place

Leasing Commissions

Legal & Marketing Lease Up Costs

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 .

Net Leasehold Asset (Liability)

Total assets acquired, net

Property Name:

Shoreline Apartments

1300 Main Office Building

Acquisition Date:

October 1, 2022

Purchase Price Allocation

Tenant Improvements

Lease In Place

Leasing Commissions

Legal & Marketing Lease Up Costs

Debt Mark-to-Market

Solar Finance Lease

Total assets acquired

Net Leasehold Asset (Liability)

Total assets acquired, net

Property Name:

Woodland Corporate Center

Acquisition Date:

January 3, 2023

Purchase Price Allocation

Site Improvements

Furniture, Fixtures & Equipment

Tenant Improvements

Lease In Place

Leasing Commissions

Legal & Marketing Lease Up

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 .

Net Leasehold Asset (Liability)

Total assets acquired, net

Property Name:

Satellite Place

Main Street West Office Building

Acquisition Date:

February 1, 2023

Purchase Price Allocation

Site Imporvements

Site Improvements

Tenant Improvements

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Leasing Commissions

Legal & Marketing Lease Up Costs

Debt Mark-to-Market

Total assets acquired

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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.

The total depreciation expense of our operating properties for the years ended June 30, 2023 and June 30, 2022 was $ 3,735,162 and $ 2,866,400 , respectively .

Operating Leases:

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liabilities in the accompanying consolidated balance sheets and were immaterial as of June 30, 2023 and 2022 .

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

The following table presents the components of income from real estate operations for the year ended June 30, 2023 and 2022:

Year Ended June 30,

Lease Income - Operating leases

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Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the year ended June 30, 2023, were as

June 30, 2022

Year Ended June 30, 2023

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

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

Year Ended June 30, 2022

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

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Below-market lease liabilities

Total to be included in revenue from tenants

NOTE 4 – INVESTMENTS

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):

fair value as of June 30, 2023 and 2022:

June 30, 2023

June 30, 2022

Publicly Traded Companies

Non Traded Companies

Non Traded Company (Equity method investment with fair value option election)

GP Interests (Equity method investment with fair value option election)

LP Interests (Equity method investment with fair value option election)

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The following table presents fair value measurements of our investments as of June 30, 2023 and 2022, according to the fair value hierarchy:

(successor basis):

As of June 30,2023

Non Traded Companies

Investment Trust

As of June 30,2022

Publicly Traded Companies

Non Traded Companies

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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):

significant unobservable inputs (Level III of the fair value hierarchy) for the year ended June 30, 2023:

Balance at July 1, 2022

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Transfers to Level I

Fair value adjustment on FSP Satellite Corp.

units owned prior to consolidation (Note 1)

Transfer to Investments in Real Estate

Proceeds from sales, net

Return of capital distributions

Written off contingent consideration

Net realized gains

Net unrealized gains

Net unrealized loss

Ending balance at June 30, 2023

The transfer of $ 30,753 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.

investments from Level III to Level I category during the year ended June 30, 2023 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

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 .

For the year ended June 30, 2023, changes in unrealized loss , net included in earnings relating to Level III investments still held at June 30, 2023 were $ 2,815,465 .

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

significant unobservable inputs (Level III of the fair value hierarchy) for the year ended June 30, 2022:

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 losses

Net realized gains

Net unrealized gains

Ending balance at June 30, 2022

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):

Balance at July 1, 2020

Purchases of investments

Transfers to Level I

Consolidation of the Operating Partnership

Proceeds from sales, net

Return of capital

Net realized gains

Net unrealized losses

Ending balance at December 31, 2020

The transfer of $ 230,160 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 table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used

at June 30, 2022 (successor basis):

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 table shows quantitative information about

significant unobservable inputs related to the Level III fair value measurements used at June 30, 2023:

Primary Valuation

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Non Traded Companies

Estimated Liquidation Value

Sponsor provided value

Liquidity discount

25.0 % - 75.0 %

Non Traded Companies

Market Activity

Secondary market industry publication

Contracted purchase of security

Market Activity

Contracted purchase price

Direct Capitalization Method

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6.3 % - 6.5 %

Liquidity discount

Discounted Cash Flow

Discount rate

6.8 % - 7.0 %

Discounted Cash Flow

Discount rate

Estimated Liquidation Value

Sponsor provided value

Liquidity discount

Market Activity

Secondary market industry publication

Investment Trust

Direct Capitalization Method

Capitalization rate

Liquidity discount

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

at June 30, 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:

Primary Valuation

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Weighted Average

Non Traded Company

Direct Capitalization Method

Capitalization rate

Liquidity discount

Non Traded Companies

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25.0 % - 75.0 %

Bankruptcy filing

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

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Liquidity discount

20.0 % - 33.0 %

Discounted Cash Flow

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6.3 % - 9.0 %

Discount term (months)

Estimated Liquidation Value

Sponsor provided value

Underlying property sales contract

Liquidity discount

5.0 % - 46.19 %

Market Activity

Secondary market industry publication

Investment Trust

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Liquidity discount

Impact of COVID-19 Pandemic

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)

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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,

In addition to the SEC rules, ASC 323-10-50-3(c) requires summarized financial statements of our 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

Our investment in Citrus Park Hotel Holdings, LLC were determined to be significant under the income test as of June 30, 2023.

In addition, our equity method investments accounted under the

fair value option were material in the aggregate as of June 30, 2023.

The summarized financial information of Citrus Park Hotel Holdings, LLC and aggregated summarized financial information of all equity method investees as of June 30, 2023 is as

Park Hotel Holdings,

All Equity Method

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Total Expenses

Total Net Income (Loss)

Total Net Income

Unconsolidated Significant Subsidiaries

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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:

A s discussed in Note 1, on May 6, 2022, the Operating Partnership purchased 100 % of the membership interests in the eight Management Companies that own

the general partnership interests in eight limited partnerships, each of which own a Class A or B office property in Napa, Fairfield,

Suisun City or Woodland, California.

Each Management Company is the sole general partner of each of the limited partnerships as disclosed in the following table :

General Partnership Interests

Management Companies

Total Purchase

Total Purchase Price

1300 Main, LP

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Westside Professional Center, LLC

Woodland Corporate Center II, LP

Woodland Corporate Center Two, 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

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 shown below:

General Partnership Interests

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Westside Professional Center I, LP

Woodland Corporate Center II, LP

Woodland Corporate Center Two, LP

The Operating

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

As discussed in Note 1, on July 23, 2022, in addition to the general partnership interest, the Operating Partnership completed the acquisition of 100 % of the limited partnership interest in First & Main for total purchase price of $ 3,376,322 ,

of which $ 2,711,378 was paid through issuance of 120,505.66 Preferred Units of the Operating Partnership.

On October 1, 2022, the Operating Partnership completed the acquisition of 100 % of the limited partnership interest in 1300 Main for total purchase price of $ 6,480,582 ,

all of which was paid in cash.

The Operating Partnership completed the acquisition of 100 % of the limited partnership interests in

Woodland Corporate Center Two on January 3, 2023 for a total purchase price of $ 5,636,966 , of which $ 3,242,557 was paid through the issuance of 144,113.63

Preferred Units of the Operating Partnership.

The Operating Partnership completed the acquisition of 100 % of the limited partnership

interests in Main Street West on February 1, 2023 for a total purchase price of $ 8,277,016 , all of which were paid in cash.

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.

As discussed in our June 30, 2022 consolidated

financial statements, p ursuant 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 in the amount of $ 2,715,000 was recorded as a contingent liability as of the acquisition date.

During the year ended June 30, 2023, we paid $ 1,154,125 of the total contingent liability.

In addition, we reduced the contingent liability by $ 57,875 as of June 30, 2023, due to the actual holdback payment on Westside Professional Center I being lower than the original estimated amount.

As of June 30, 2023 and 2022, contingent liability amounted to $ 1,503,000 and $ 2,715,000 , respectively .

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.

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

The mortgage loans of 1300

Main, LP, One Harbor Center, LP, Martin Plaza Associates, LP, and Main Street West, LP are also guaranteed by the partnerships’ 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

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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

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

O n June 28, 2022, the Addison Property Owner, LLC (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 10.

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 sheets.

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.

Therefore, we recorded an impairment loss allowance of $ 9,126,461 on assets held for sale as of June 30, 2022.

Due to an additional decrease in estimated fair value of the property, which was based on the estimated sale price less the estimated

closing costs, we recorded an additional impairment loss allowance of $ 8,121,090 prior to the sale of the property during the year

ended June 30, 2023 .

On June 14, 2023, we sold Addison Corporate Center to a third party for net sales proceeds of $ 8,695,764 , after $ 304,236 of closing costs, and recognized a

net loss of $ 352,540 .

This is included in the net loss on disposal of real estate in the statement of operations.

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

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Total real estate assets, net

Restricted cash

Investments income, rents and other receivables

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Accounts payable and accrued liabilities

Due to related entities

Total liabilities

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applicable guidance.

NOTE 6 – LEASES

Lessee Arrangements

As discussed in Note 2, we acquired three

partnerships which had solar equipment leases in place.

We reassessed the leases as of the acquisition date and recorded them as finance leases in accordance with ASC 842.

Our leases have remaining terms of 7.33 to 7.75 years.

Right-of-use assets and lease liabilities by

lease type, and the associated balance sheet classifications, are as follows:

Balance Sheet Classification

June 30, 2023

Right-of-use assets:

Finance leases

Real estate assets, net

Lease liabilities:

Finance leases

Finance lease liabilities

We have included these

leases in real estate assets , net as follows:

June 30, 2023

Building, fixtures and improvements

Accumulated depreciation

Lease Expense

The components of total lease cost were as follows for the year ended June 30,

June 30, 2023

Finance lease cost

Right-of-use asset amortization

Interest expense

Total lease cost

Lease Obligations

Future undiscounted lease payments for

finance leases with initial terms of one year or more are as follows:

Fiscal Year Ending June 30, :

Finance Leases

Total undiscounted lease payments

Imputed interest

Net lease liabilities

Supplemental Lease Information

June 30, 2023

Finance lease weighted average remaining lease term (years)

Finance lease weighted average discount rate

Cash paid for amounts included in the measurement of lease liabilities

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for new finance lease liabilities

NOTE 7 – VARIABLE INTEREST ENTITIES

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Nonconsolidated VIEs

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.

As of June 30, 2023 and 2022, four

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

determined that the Company 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, 2023 and 2022, consolidated balance sheets.

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NOTE 8 – RELATED PARTY TRANSACTIONS

Advisory Agreements Effective Through December 31, 2020:

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, 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 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 we were 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 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.

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.

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.

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, 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 %

During the year ended June 30, 2023, we incurred asset management fees of $ 3,004,725 .

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

The asset management and base management fees mentioned above were based on the following quarter ended Invested Capital segregated in three

columns based on the annual fee rate:

Asset Management Fee Annual %

Total Invested

For the Year Ended June 30, 2022

Quarter ended:

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June 30, 2023

For the Year Ended June 30, 2021

Quarter ended:

3 unchanged sentences

June 30, 2022

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.

During the years ended June 31, 2023 and 2022, we did no t incur or accrue any incentive management fee under the new Advisory Management Agreement.

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

On May 6, 2022, the Real Estate Adviser’s newly formed wholly owned subsidiary, Wiseman Company Management, LLC (“WCM”), 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.

Therefore, effective the acquisition date, WCM has been providing 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 terms with the property

limited partnerships since the acquisition of the property management service rights.

During the year ended June 30, 2023, the eight

limited partnerships paid total property management fees of $ 489,387 and leasing commissions of $ 591,596 to WCM.

In addition, during the year ended June 30, 2023, the eight partnerships also paid $ 1,963,432 to WCM for direct operating

costs and construction of tenant improvements.

Organization and Offering Costs Reimbursement:

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.

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.

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 Advisers except to the extent that 10 % in broker fees are not incurred.

In 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

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.

Total offering costs

incurred as of June 30, 2022, were in an excess of the total offering cost reimbursement threshold including the broker savings by $ 21,841 .

However, we increased the offering costs reimbursement threshold from $ 550,000 to $ 825,000 as noted in our updated Offering Circular filed on October 14, 2022.

Therefore, the cumulative offering costs as of June 30, 2022 were below the reimbursement

As of June 30, 2023, we incurred $ 1,099,189 of offering costs on our Offering Circular to sell the preferred stocks, of

which $ 1,000,667 relates to syndication cost paid by Mackenzie on behalf of us in connection with the preferred stock offering.

Total offering costs incurred as of June 30, 2023 were below the offering cost reimbursement threshold including the broker savings.

Administration Agreement:

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,

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.

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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.

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

The administrative cost reimbursements for the years ended June 30, 2023 and 2022 were $ 726,000 and $ 609,600 , respectively.

The transfer agent services cost

reimbursement for the years ended June 30, 2023 and 2022 were $ 92,000 and $ 106,401 .

The table below outlines the related party expenses incurred for the years ended June 30, 2023 and 2022, and unpaid as of June 30, 2023 and 2022.

Types and Recipient

1 unchanged sentence

June 30, 2022

December 31, 2020

June 30, 2023

June 30, 2022

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

Asset management fees- the Real Estate Adviser

Asset acquisition fees- the Real Estate Adviser (3)

Administrative cost reimbursements- MacKenzie

Transfer agent cost reimbursements - MacKenzie

Organization & Offering Cost (2) - MacKenzie

Other expenses (1) - MacKenzie and Subsidiary’s GPs

Due to related entities

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.

Offering costs paid by MacKenzie - discussed in this note 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

The acquisition fee paid during the year ended June 30, 2023 was for the acquisition of First & Main in July 2022, 1300 Main in October 2022, Woodland Corporate Center Two in January 2023 and Main Street West in February

Affiliated Investments:

2 unchanged sentences

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

series of CRBT and is the only beneficiary of such series.

We own the following

series of CRBT and we are the only beneficiary of that series.

Under the terms of the agreement, there are no redemption rights to any of the series participants.

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.

CRBT, REEP, Inc.– A has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland.

the year ended June 30, 2023, the series sold the underlying investments, distributed the proceeds to us and dissolved the series.

We received total proceeds of $ 81,627 and realized a gain of $ 47,637 .

NOTE 9 – MARGIN LOANS

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

We have a brokerage account through which we buy and sell publicly traded securities.

The provisions of the account allow us to borrow on

5 unchanged sentences

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

NOTE 9 – MORTGAGE NOTES PAYABLE AND DEBT GUARANTY

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.

NOTE 10 – MORTGAGE NOTES PAYABLE, NOTES PAYABLE AND DEBT

Addison Property Owner Mortgage Notes 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 was secured by the property owned by Addison Property Owner.

On June 8, 2020, as part of the Contribution Agreement, we agreed to “bad-boy”

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, 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.

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 loan required 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.

On April 30, 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.

The loan accrued interest at the default rate as per the loan agreement.

Effective June 28, 2022, on monthly basis the lender collected all cash

revenues from Addison Corporate Center and deducted funds sufficient to satisfy monthly accrued interest at the default rate, any outstanding fees and costs incurred by the lender.

The excess cash was made available to the borrower for the

payment of previously approved budgeted operating expenses.

Any funds remaining thereafter were applied towards the unpaid loan principal balance.

As discussed in

Note 5, on June 14, 2023, we sold Addison Corporate Center in accordance with the forbearance agreement.

The total net sales proceeds of $ 7,612,492

were applied to the loan in full satisfaction of the amounts owed.

The total outstanding principal balance on the note as of the note settlement date was $ 21,633,233 after sweeping the remaining operating cash balance of $ 495,466 and the accrued

interest was $ 819,987 .

Therefore, after the sale, we recorded a gain on extinguishment of debt of $ 14,840,728 , as shown in the consolidated statement of operations.

The outstanding loan amount as of June 30, 2022 was $ 19,604,382 .

Under the Loan Modification Agreement and Replacement Guaranty, we guaranteed

only the “Recourse Obligations” under the loan, which were triggered only if the guarantor of the loan engaged 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, 2022, we did not record any debt guaranty obligation because (i) the Addison Property Owner was current on the loan payments, (ii) Addison Property Owner had sufficient

cash flow to meet its monthly payments, and (iii) we had not engaged in inappropriate actions that would give rise to a guaranty obligation.

As of June 30, 2023, we did not record any debt guaranty obligations because the Property was sold as

of June 30, 2023 as discussed above.

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 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.

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.

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,

Effective May 1, 2026, interest rates will be the average of the twelve most recently published yields on U.S.

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 The Park View (f/k/a as

Pon De Leo Apartments), which are located in Oakland, California.

The loans mature on April 1, 2031 and are cross-collateralized

by both properties owned by Madison and PVT.

The loan requires interest only monthly payments through April 1, 2026 and beginning May 1, 2026, monthly payments of principal and interests are due based on 360 months of amortization period.

The remaining unpaid principal balance is due at maturity date.

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.

Accordingly, as of June 30, 2023 and 2022, 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.

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 was 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 Apartments.

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 Apartments.

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 .

The outstanding balances as of

June 30, 2023, and June 30, 2022, were $ 17,500,000 and $ 16,804,689 , respectively, which is disclosed as a part of the mortgage notes payable in the consolidated balance sheets.

PT Hillview also entered into an interest rate

cap agreement on October 4, 2021, as required by the lender.

We have not recorded the fair value and the changes in the fair value of the contract in our consolidated financial statements as the amounts were insignificant to our

consolidated financial statements.

Pursuant to Section 2.4.5 of the loan agreement, the lender determined

that a substitute benchmark rate transition event occurred.

Accordingly, the loan agreement was amended on March 15, 2023 to update the interest rate on the loan.

Pursuant to the amendment, effective April 6, 2023, the annual interest rate

shall be equal to the greater of (i) a floating rate of interest equal to 5.61148 % plus the secured overnight financing rate

(SOFR) published by Federal Reserve Bank of New York, and (ii) 5.75 %.

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.

“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.

As of June 30, 2023, we have not recorded any guaranty obligations since we have not

engaged in any bad boy acts, substantial cash reserves are maintained to cover the basic carrying costs and the redevelopment construction work has been completed as agreed.

MacKenzie Shoreline Mortgage Notes Payable

On May 6, 2021, MacKenzie Shoreline entered into a loan agreement with

Pacific Premier Bank, in the amount of $ 17,650,000 .

The annual interest rate under the agreement is 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 .

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

Accordingly, the outstanding loan balance as of June 30, 2023 and 2022, was $ 17,650,000 , which is disclosed as a part

of the mortgage notes payable in the consolidated balance sheets.

First & Main Mortgage Notes Payable

On January 4, 2021, First & Main entered into a loan agreement

with Exchange Bank, in the amount of $ 12,000,000 at a fixed annual interest rate of 3.75 %.

The loan was obtained to finance the acquisition of First & Main Office Building.

The loan matures on February 1, 2026 and is secured by First & Main Office Building.

The loan requires monthly payments of principal and interest based on a 25 -year amortization period with the remaining principal balance due at maturity.

The loan is guaranteed by Wiseman, but Wiseman was

subsequently indemnified by the Operating Partnership on July 1, 2022 as discussed in Note 5.

The outstanding balance of the loan as of June 30, 2023 was $ 11,288,012 , which is disclosed as a part of the mortgage notes payable in the consolidated balance sheet.

We consolidated First & Main with our consolidated financial statements during the quarter

ended September 30, 2022, accordingly, this mortgage note payable is not included in our consolidated balance sheet as of June 30, 2022.

The following table provides the projected principal and interest

payments on the loan for the next three years:

Fiscal Year Ending June 30, :

First & Main Other Note Payables:

In 2018, First & Main voted to issue $ 1,000,000 in interest-only junior promissory notes.

The notes were issued in 2018 and 2019 with a maturity date of December 31, 2023 and include no

prepayment penalty for early retirement.

Interest on the notes is payable on the first day of each month at 7 % per annum.

The promissory notes are disclosed as a part of the notes payable in the consolidated balance sheet as of June 30, 2023.

We consolidated First & Main with our consolidated financial statements during the quarter ended September 30,

accordingly, these notes are not included in our consolidated balance sheet as of June 30, 2022.

Small Business Administration (“SBA”) Loan

In June 2020, First & Main borrowed $ 151,000 from the SBA, under the Economic Injury Disaster Loan program.

The loan will be paid back over 30 years at an annual interest rate of 3.75 %

starting in December 2022.

Monthly payments will be $ 731 .

The loan is disclosed as a part of the notes payable in the

consolidated balance sheet as of June 30, 2023.

We consolidated First & Main with our consolidated financial statements during the quarter ended September 30, 2022;

accordingly, this loan was not included in our consolidated balance

sheet as of June 30, 2022.

Solar System Loan (First & Main)

In August 2020, First & Main borrowed $ 220,000 from The Wiseman Family Trust to fund the installation of the solar power system at First & Main Office Building.

The loan will

be paid back over a period of 10 years at an annual interest rate of 5 %.

Monthly payments of principal and interest will be $ 1,486 .

As of June 30, 2023, the outstanding balance of the loan amounted to $ 182,393 and is disclosed as a part of the notes payable

in the consolidated balance sheet.

We consolidated First & Main with our consolidated financial statements during the quarter ended September 30, 2022;

accordingly, this loan is not included in our consolidated balance sheet as of

June 30, 2022.

1300 Main Mortgage Notes Payable

On April 12, 2019, 1300 Main entered into a loan agreement with Suncrest

Bank, in the amount of $ 9,160,000 at a fixed annual interest rate of 4.55 % for the first 60 payments.

Beginning May 25,

2024, the interest rate will be calculated on the unpaid principal balance at an interest rate based on the Prime Rate as published in the Western Edition Wall Street Journal, plus a margin of 1 %.

The loan was obtained to consolidate the construction loans obtained during the development and construction of the building.

The loan matures on April 25, 2029 , and is secured by 1300 Main Office Building.

The loan requires monthly payments of principal and interest of $ 51,610 for 60 consecutive

payments followed by 59 monthly payments of principal and interest of $ 60,674 with the remaining principal balance due at maturity.

The loan is guaranteed by Wiseman, but Wiseman was subsequently indemnified by the Operating Partnership

on July 1, 2022 as discussed in Note 5.

The outstanding balance of the loan as of June 30, 2023 was $ 8,393,068 , which is

disclosed as a part of the mortgage notes payable in the consolidated balance sheet as of June 30, 2023.

We consolidated 1300 Main with our consolidated financial statements during the quarter ended December 31, 2022, accordingly, this

mortgage note payable was not included in our consolidated balance sheet as of June 30, 2022.

In accordance with the asset acquisition accounting, the debt assumed

from the acquisition of 1300 Main was measured at fair value.

The interest rate on the debt was below the current market rates, as a result, $ 338,000

of the acquisition cost was allocated to debt mark-to-market as disclosed in Note 2.

The debt mark-to-market value is amortized over the remaining loan term.

The debt mark-to-market value, net of accumulated amortization as of June 30,

2023 amounted to $ 177,895 and was netted against the total debt balance in the consolidated balance sheet.

The following table provides the projected principal and interest

payments on the loan for the next five years:

Fiscal Year Ending June 30, :

1300 Main Other Notes Payable:

On January 13, 2021, 1300 Main borrowed $ 150,000 from the SBA, under the Economic Injury Disaster Loan program.

The loan will be paid back over 30 years at an annual interest rate of 3.75 %

starting in July 2023.

Monthly payments will be $ 731 .

The loan is disclosed as a part of the notes payable in the

consolidated balance sheet as of June 30, 2023.

We consolidated 1300 Main with our consolidated financial statements during the quarter ended December 31, 2022;

accordingly, this loan was not included in our consolidated balance sheet

as of June 30, 2022.

Woodland Corporate Center Two Mortgage Notes Payable

On October 2, 2019, Woodland Corporate Center Two entered into a loan

agreement with Western Alliance Bank, in the amount of $ 7,500,000 at a fixed annual interest rate of 4.15 %.

The loan was obtained to finance the acquisition of Woodland Corporate Center Two Office Building.

The loan matures on October 7, 2024

and is secured by Woodland Corporate Center Two Office Building.

The loan requires monthly payments of principal and interest based on a 5 year

amortization period with the remaining principal balance due at maturity.

The loan is guaranteed by Wiseman, but Wiseman was subsequently indemnified by the Operating Partnership on July 1, 2022 as discussed in Note 5.

The outstanding

balance of the loan as of June 30, 2023 was $ 6,827,930 , which is disclosed as a part of the mortgage notes payable in the

consolidated balance sheet.

We consolidated Woodland Corporate Center Two with our consolidated financial statements during the quarter ended March 31, 2023, accordingly, this mortgage note payable was not included in our consolidated

balance sheet as of June 30, 2022

The following table provides the projected principal and interest

payments on the loan for the next two years:

Fiscal Year Ending June 30, :

Main Street West Mortgage Notes Payable

On October 22, 2019, Main Street West entered into a loan agreement

with First Northern Bank of Dixon, in the amount of $ 16,600,000 at a fixed annual interest rate of 4 %.

The loan was obtained to finance the acquisition of Main Street West Office Building.

The loan matures on November 1, 2024 and is

secured by Main Street West Office Building.

The loan requires monthly payments of principal and interest based on a 5 year

amortization period with the remaining principal balance due at maturity.

The loan is guaranteed by Wiseman, but Wiseman was subsequently indemnified by the Operating Partnership on July 1, 2022 as discussed in Note 5.

The outstanding

balance of the loan as of June 30, 2023 was $ 15,337,106 , which is disclosed as a part of the mortgage notes payable in the

consolidated balance sheet.

We consolidated Main Street West with our consolidated financial statements during the quarter ended March 31, 2023, accordingly, this mortgage note payable was not included in our consolidated balance sheet

as of June 30, 2022.

In accordance with the asset acquisition accounting, the debt assumed

from the acquisition of Main Street West was measured at fair value.

The interest rate on the debt was below the current market rates, as a result, $ 717,000 of the acquisition cost was allocated to debt mark-to-market as disclosed in Note 2.

The debt mark-to-market value is amortized over the remaining loan term.

The debt mark-to-market value, net of

accumulated amortization as of June 30, 2023 amounted to $ 15,337,106 and was netted against the total debt balance in the

consolidated balance sheet.

The following table provides the projected principal and interest

payments on the loan for the next two years:

Fiscal Year Ending June 30, :

Main Street West Other Notes Payable:

On April 7, 2021, Main Street West borrowed $ 150,000 from the SBA, under the Economic Injury Disaster Loan program.

The loan will be paid back over 30 years at an annual interest rate of 3.75 %

starting in September 4, 2022.

Monthly payments will be $ 731 .

The loan is disclosed as a part of the notes payable in the

consolidated balance sheet as of June 30, 2023.

We consolidated Main Street West with our consolidated financial statements during the quarter ended March 31, 2023;

accordingly, this loan was not included in our consolidated balance sheet

as of June 30, 2022.

NOTE 11 – 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 year ended June 30, 2022, six months ended June 30, 2021 and six months ended December 31, 2020 :

Six Months Ended

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 years ended June 30, 2023 and 2022 :

June 30, 2023

June 30, 2022

December 31, 2020

(Successor Basis)

(Predecessor Basis)

Net income (loss) attributable to common stockholders

2 unchanged sentences

13,340,164.03

13,020,208.16

Basic and diluted earnings per share

NOTE 12 – SHARE OFFERINGS AND FEES

During the year ended June 30, 2023, we issued 189,289.44 common shares with total gross proceeds of $ 1,638,720 under the DRIP.

In addition, in April 2023 and July 2022, we issued 4,309.17

and 169.67 common shares at $ 10.25

per share, to the Class A unit holders of the Operating Partnership who exercised their option to convert their Class A units to our common shares.

During the year ended June 30, 2023, we issued 552,587.88 preferred shares with total gross proceeds of $ 13,408,089 under the Offering Circular and incurred syndication costs of $ 1,652,903

in relation to preferred shares offering.

For the year ended June 30, 2023, we issued 735.56 preferred shares with total gross

proceeds of $ 75,379 under the DRIP.

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

4 unchanged sentences

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

3 unchanged sentences

NOTE 13 – SHARE REPURCHASE PLAN

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:

During the years ended June 30, 2023 and 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

3 unchanged sentences

During the year ended June 30, 2023

December 22, 2021

January 6, 2022 through March 31, 2022

Common stocks

September 1, 2022 through September 30, 2022

December 1, 2022 through December 31, 2022

March 1, 2023 through March 31, 2023

June 1, 2023 through June 30, 2023

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:

Preferred stocks

April 1, 2023 through April 30, 2023

of Shares Repurchased

Repurchase Price

Average Repurchase

Total Repurchase

1 unchanged sentence

During the year ended June 30, 2022

April 22, 2021 through May 12, 2021

December 22, 2021

January 6, 2022 through March 31, 2022

June 1, 2022 through June 30, 2022

NOTE 14 – STOCKHOLDER DIVIDENDS

2 unchanged sentences

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 :

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, 2023:

Preferred Stock

4 unchanged sentences

June 30, 2023

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

During the year ended June 30, 2023, we paid common dividends of $ 5,691,554 , of which $ 1,638,739 have been reinvested under our DRIP.

During the year ended June 30, 2023, we paid preferred dividends of $ 491,410 , of which $ 75,379 have been

reinvested under our DRIP.

Preferred and common dividends declared during the year ended June 30, 2023 were paid in July 2023 .

The following table reflects the distributions declared by the Operating Partnership for the Class A and Preferred unit holders during the year

ended June 30, 2023:

Class A Units

Preferred Units

During the Quarter Ended

September 30, 2022

December 31, 2022

March 31, 2023

June 30, 2023

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

September 30, 2021

December 31, 2021

March 31, 2022

June 30, 2022

* $ 0.06 per share of dividend for the quarter ended June 30, 2021 was declared subsequently in July 2021 ;

therefore, it is included in the dividend declared during the quarter ended September 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.

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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.

per unit) was related to dividend 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

July 14, 2023 , 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, 2023 , August 31, 2023 , and September 30, 2023 .

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

Subsequently,

on September 18, 2023 , 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, 2023 , November 30, 2023 , and December 31, 2023 .

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 .

preferred stock dividend declared on July 14, 2023, will be paid on or about October 15, 2023 , and the preferred stock

dividend declared on September 18, 2023, will be paid on or about January 15, 2024 .

September 18, 2023 , we also declared the common stock quarterly dividend of $ 0.125 per share for the quarter ended September 30, 2023.

The common stock dividend declared on September 18, 2023 will be paid on or about October 30, 2023 , to record holders as of September 30, 2023 .

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.

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Subsequent Disposal

Gross Amount Carried at

Acquisition Date

1 unchanged sentence

June 30, 2023

Gross Amount Carried at

June 30, 2023

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Satellite Place

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

MRC Aurora (f/k/a WW Land)

First & Main Office Building

July 23, 2022

1300 Main Office Building

October 1, 2022

Woodland Corporate Center

January 3, 2023

Main Street West Office Building

February 1, 2023

A summary of activity for real estate and accumulated

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

depreciation for the years ended June 30, 2023 and 2022 :

Year Ended June 30,

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Balance at end of the year

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

Excludes $ 2,370,116 of accumulated amortization associated with acquired intangible assets reclassified as held for sale for the year ended June 30, 2022.

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.

MACKENZIE REALTY CAPITAL, INC.

2 unchanged sentences

September 28, 2023

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

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.

/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