What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-09-29 compared with 2024-09-27 · 562 added, 441 removed, 310 unchanged (76% of the section changed)

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“Company,” “we,” or “us”) contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, future events or our future performance or financial condition.

cases, stockholders can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,“ “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,”

“potential,” “likely” or the negative of such terms or comparable terminology.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or

achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

An economic downturn could impair our ability to continue to operate,

which could lead to the loss of some or all of our investments, a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities, and interest rate volatility could adversely

affect our results, particularly if we elect to use leverage as a part of our investment strategy.

Further, we may experience fluctuations in our operating results due to a number of factors, including the effect of the return on our equity investments, the interest rates

payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our

markets and general economic conditions.

some cases, stockholders can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,”

“possible,” “potential,” “likely” or the negative of such terms or comparable terminology.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of

activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

An economic downturn could impair our

ability to continue to operate, which could lead to the loss of some or all of our investments, a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities, and

interest rate volatility could adversely affect our results, particularly if we elect to use leverage as a part of our investment strategy.

Further, we may experience fluctuations in our operating results due to a number of factors, including the effect of the return on our equity investments, the interest

rates payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter

competition in our markets and general economic conditions.

As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

For a discussion of additional factors that could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading

“Risk Factors” above in Item 1A of this report.

Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the 1940 Act, but we withdrew our election to be

treated as a BDC on December 31, 2020.

For a discussion of additional factors that could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the

heading “Risk Factors” above in Item 1A of this report.

Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the Investment Company Act of 1940 (the “1940

Act”), but we withdrew our election to be treated as a BDC on December 31, 2020.

Our objective remains to generate both current income and capital appreciation through real estate-related investments.

We have elected to be treated as a REIT under the Code and, as a REIT, we are not

subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and

excluding any net capital gain) to stockholders and meet certain other conditions.

To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S.

corporate income tax on our undistributed REIT taxable income.

In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under

We have elected to be treated as a REIT

under the Code and, as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined

without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meet certain other conditions.

To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our

REIT taxable income, we will be subject to U.S.

federal corporate income tax on our undistributed REIT taxable income.

In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in

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

federal tax laws.

Our wholly owned subsidiary, MacKenzie NY Real Estate 2 Corp.

(“MacKenzie NY 2”), Inc.

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

(“MacKenzie NY 2”), is subject to corporate federal and state income tax on its taxable

income at regular statutory rates.

We are managed by the Advisers, and MacKenzie provides the non-investment management services and administrative services necessary for us to operate.

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investment securities of real estate companies.

A real estate company is one that (i) derives at least 50% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or residential real estate and

A real estate company is one that (i) derives at least 50% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or residential real estate

or (ii) has at least 50% of its assets invested in such real estate.

We will not invest in general partnerships, joint ventures, or other entities that do not afford limited liability to their security holders.

However, limited liability

entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities.

When purchasing securities, we generally favor purchasing securities issued by entities that have (i) completed the

initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real properties or other real

estate related investments.

However, limited

liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities.

When purchasing securities, we generally favor purchasing securities issued by entities that have (i)

completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real

properties or other real estate related investments.

Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.

Our independent

directors review our investment policies periodically, at least annually, to confirm that our policies are in the best interests of our stockholders.

Each such determination and the basis thereof are contained in the minutes of our Board of

Directors meetings.

We seek to accomplish our objective by rigorously analyzing the value of and risks associated with potential acquisitions, and, for up to 20% of our total assets, by acquiring real estate securities

at significant discounts to their net asset value.

independent directors review our investment policies periodically, at least annually, to confirm that our policies are in the best interests of our stockholders.

Each such determination and the basis thereof are contained in the minutes of

our Board of Directors meetings.

We seek to accomplish our objective by rigorously analyzing the value of and risks associated with potential acquisitions, and, for up to 20% of our total assets, by acquiring real estate

securities at significant discounts to their net asset value.

We intend to expand our investment strategy to include acquisition of distressed real properties.

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We will engage in various investment strategies to achieve our overall investment objectives.

The strategy we select depends upon, among other things, market opportunities, the skills and experience

of the Advisers’ investment team and our overall portfolio composition.

We generally seek to acquire assets that produce ongoing distributable income for investors, yet with a primary focus on purchasing such assets at a discount from what the

Advisers estimate to be the actual or potential value of the real estate.

We intend to continue our historical activities related to launching tender offers to purchase shares of non-traded REITs in order to boost our short-term cash flow and to support our distributions,

subject to the constraint that such securities will not exceed 20% of our portfolio.

We believe this niche strategy will allow us to pay distributions that are supported by cash flow rather than paying back investors’ capital, although there can

be no assurance that some portion of any distribution is not a return of capital.

Rental and Reimbursement

The strategy we select depends upon, among other things, market opportunities, the skills and

experience of the Advisers’ investment team and our overall portfolio composition.

We generally seek to acquire assets that produce ongoing distributable income for investors, yet with a primary focus on purchasing such assets at a discount

from what the Advisers estimate to be the actual or potential value of the real estate.

We intend to continue our historical activities related to launching tender offers to purchase shares of non-traded REITs in order to boost our short-term cash flow and to support our

distributions, subject to the constraint that such securities will not exceed 20% of our portfolio.

We believe this niche strategy will allow us to pay distributions that are supported by cash flow rather than paying back investors’

capital, although there can be no assurance that some portion of any distribution is not a return of capital.

Rental, Reimbursement and Other Property Income

We generate rental revenue by leasing office space and apartment units to a building’s tenants.

These tenant leases fall under the scope of Accounting Standards Codification (“ASC”) Topic 842 and

are classified as operating leases.

These tenant leases fall under the scope of Accounting Standards Codification (“ASC”) Topic 842

and are classified as operating leases.

Revenues from such leases are recognized on a straight-line basis over the terms of the lease agreements.

Investment Income

We generate revenues in the form of operating income, capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any debt

investments that we hold.

Further, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees.

We generate revenues in the form of operating income, capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any

debt investments that we hold.

Further, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and

performance-based fees.

Any such fees are generated in connection with our investments and recognized as earned.

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obligations under the Administration Agreement;

and (iii) other operating expenses as detailed below.

Our investment advisory fees compensate our Investment Adviser and Real Estate Adviser for their work in identifying, evaluating, negotiating,

closing, monitoring and servicing our investments.

Our expenses must be billed to and paid by us, except that MacKenzie may be reimbursed for actual cost of goods and services used by us and certain necessary administrative expenses.

all other expenses of our operations and transactions, including:

and (iii) other real estate properties operating expenses, including interest expenses on debt obtained to finance our property acquisitions, as detailed below.

Our investment advisory fees

compensate our Investment Adviser and Real Estate Adviser for their work in identifying, evaluating, negotiating, closing, monitoring and servicing our investments.

Our expenses must be billed to and paid by us, except that MacKenzie may be

reimbursed for actual cost of goods and services used by us and certain necessary administrative expenses.

We will bear all other expenses of our operations and transactions, including:

the cost of operating and maintaining real estate properties;

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interest payable on debt, if any, to finance our investments;

fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and third-party

advisory fees;

fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and

third-party advisory fees;

transfer agent and safekeeping fees;

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fees and expenses associated with independent audits and outside legal costs;

costs associated with our reporting and compliance obligations under the 1934 Act and applicable federal and state securities laws;

costs associated with our reporting and compliance obligations under the Exchange Act and applicable federal and state securities laws;

all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that are based upon our allocable portion of

overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the

costs of compensation and related expenses of our chief compliance officer and our chief financial officer and any administrative support staff.

the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and any administrative support staff.

Portfolio Investment Composition

As of June 30, 2025, we owned various real estate limited partnerships and REITs that are listed in the “Investments, at fair value” in the table below.

We also owned various investments in entities

that own real estate which gave us enough control such that the investments are not securities for 1940 Act purposes, but not enough to consolidate the financial statements of such entities with our own;

these are listed below as “Unconsolidated

investments (non-securities), at fair value.” The following table summarizes the composition of our investments at fair value as of June 30, 2024 and 2023:

We also owned various investments in

entities that own real estate which gave us enough control such that the investments are not securities for 1940 Act purposes, but not enough to consolidate the financial statements of such entities with our own;

these are listed below as

“Equity method investments, at fair value”.

The following table summarizes the composition of our investments at fair value as of June 30, 2025 and 2024:

Investments, at fair value

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June 30, 2024

5210 Fountaingate, LP

Blackstone Real Estate Income Trust, Inc.

Capitol Hill Partners, LLC

Citrus Park Hotel Holdings, LLC

Healthcare Trust, Inc.

Highlands REIT, Inc.

Lakemont Partners, LLC

Moody National REIT II, Inc.

National Healthcare Properties, Inc.

SmartStop Self Storage REIT, Inc.

Starwood Real Estate Income Trust, Inc.

Strategic Realty Trust, Inc.

Summit Healthcare REIT, Inc.

Unconsolidated investments (non-securities), at fair value

Equity method investments, at fair value

June 30, 2025

June 30, 2024

5210 Fountaingate, LP

Green Valley Medical Center, LP

Lakemont Partners, LLC

Martin Plaza Associates, LP

One Harbor Center, LP

Westside Professional Center I, LP

In addition to our investment securities, we currently own and manage eight commercial real estate properties:

Satellite Place located in Duluth, GA, 1300 Main, First & Main and Main Street West

located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and four residential apartments:

Commodore Apartments

and The Park View (f/k/a as Pon De Leo Apartments), located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments in Concord, CA.

1300 Main, First & Main, Main Street West, Woodland Corporate Center,

and the Hollywood Apartments are owned through our subsidiary, the Operating Partnership;

In addition to our investment securities, we currently own and manage nine commercial real estate properties:

Satellite Place Office Building located in Duluth, GA, 1300 Main Office Building,

First & Main Office Building and Main Street West Office Building located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane Office Building, Green Valley Medical Center and Green Valley Executive Center

located in Fairfield, CA and One Harbor Center located in Suisun, CA and four residential apartments:

Commodore Apartments and The Park View Apartments, located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the

Shoreline Apartments located in Concord, CA.

1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical

Center are owned through our subsidiary, the Operating Partnership;

the Commodore Apartments are owned through our subsidiary, Madison;

The Park View (f/k/a as Pon De Leo Apartments) are owned through our subsidiary PVT;

the Shoreline Apartments are owned through our subsidiary BAA-Shoreline.

In August 2024, we have listed Hollywood Apartments for sale.

The Park View Apartments is owned through our subsidiary, PVT and Satellite Place Office Building is

owned through our subsidiary, MacKenzie Satellite Place Corp.

In August 2024, the Company listed Hollywood Apartments for sale.

However, as of February 1, 2025, we discontinued marketing the property for sale and opted to retain ownership

and continue operations.

Therefore, as of June 30, 2025, it no longer qualified as held for sale.

We own our properties through our subsidiaries, which are listed in the table below.

Property Owners

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Madison-PVT Partners LLC

The Park View (fka as Pon De Leo Apartments)

The Park View Apartments

PVT-Madison Partners LLC

Hollywood Apartments

PT Hillview GP, LLC

PT Hilview GP.

Shoreline Apartments

MacKenzie -BAA IG Shoreline LLC

Satellite Place Office Building

MacKenzie Satellite Place Corp.

Satellite Place Office Bulding

MacKenzie Satelhite Place Corp.

First & Main Office Building

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1300 Main Office Building

1300 Main, LP

Woodland Corporate Center

Woodland Corporate Center Two, LP

Woodland Corperate Center Two, LP

Main Street West Office Building

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GV Executive Center, LLC

One Harbor Center Office Building

One Harbor Center

One Harbor Center, LP

Green Valley Medical Center

Green Valley Medical Center, LP

1300 Main Office Building contains 20,145 square feet, of which approximately 13,900 square feet is office space and the remainder is designated as retail space.

As of June 30, 2024, the property is

95% occupied by 7 tenants.

As of June 30, 2025, the

property is 96% occupied by 8 tenants.

The following table shows the largest tenants and square footage occupied:

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Annual Base Rent

Lease Expiration

Wilson Daniels

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Percentage of Gross Rent

First and Main Office Building contains 27,396 square feet, of which approximately 19,000 square feet is office space and the remainder is designated as retail space.

As of June 30, 2024, the

property is 100% occupied by 9 tenants.

First & Main Office Building contains 27,398 square feet, of which approximately 19,000 square feet is office space and the remainder is designated as retail space.

As of June 30, 2025,

the property is 100% occupied by 9 tenants.

The following table shows the largest tenants and square footage occupied:

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Napa Palisades

Accounting Services

33133 Investments, Inc.

The following information pertains to lease expirations at First & Main Office Building:

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Main Street West Office Building contains 38,135 square feet, of which approximately 32,700 square feet is office space and the remainder is designated as retail space.

As of June 30, 2024, the

property is 89% occupied by 8 tenants.

As of June 30, 2025,

the property is 53% occupied by 8 tenants.

AUL Corporation elected to terminate its lease as of February 3, 2025.

During the year ended June 30, 2025, we recorded an impairment loss of $9,500,167 on Main Street West Office Building due to

the early lease termination of AUL Corporation, and the foreclosure proceedings due to maturity default of the debt secured by the property.

On March 25, 2025, the Company entered into the Forbearance Agreement with the Prior Lender and as

part of the Forbearance Agreement, the Company paid down $5 million on the loan and took control of the property from the receiver in April 2025.

The loan from the Prior Lender was paid off in June 6, 2025, with the proceeds from a new loan

from EverTrust Bank.

The following table shows the largest tenants and square footage occupied:

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Annual Base Rent

AUL Corporation

State of California

Strategies To Empower People

Strategies To

Empower People

Azzurro Pizzeria

Bay Area Legal

Legal Services

The following information pertains to lease expirations at Main Street West Office Building:

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As of June 30, 2025, the property is approximately 29% occupied by 4 tenants.

The following table shows

the largest tenants and square footage occupied:

The following table

shows the largest tenants and square footage occupied:

Largest Tenants

Annual Base Rent

OS National, LLC

Title Services

Healthcare Software

Title Services

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Woodland Corporate Center contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space.

All of the laboratories space is occupied by Agtech Innovation.

June 30, 2024, the property is 100% occupied by 14 tenants.

All of the laboratory space is occupied by Agtech Innovation.

As of June 30, 2025, the property is 91% occupied by 13 tenants.

The following table shows the largest tenants and square footage occupied:

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Research and Development

Children’s Home Society

Children’s Home

Non-Profit Education

Johnston, Martin & Montgomery

Physical Therapy

California Dept of

Rehabilitation

Rehabilitation Services

The following information pertains to lease expirations at Woodland Corporate Center:

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Annual Base Rent

Community Housing Opportunities

Arkshire Financial, LLC

Financial Services

Larsen & Toubro Limited, Inc.

Opportunities

Arkshire Financial,

Larsen & Toubro

Limited, Inc.

Multinational Conglomerate

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Percentage of Gross Rent

One Harbor Center Office Building contains 49,569 square feet, all of which is office space.

One Harbor Center contains 49,569 square feet, all of which is office space.

As of June 30, 2025, the property is 74% occupied by 12 tenants.

The following table shows the largest

tenants and square footage occupied:

The following table shows the largest tenants and

square footage occupied:

Largest Tenants

Annual Base Rent

Shimmick Construction Company, Inc.

Richmond American Homes

Wiseman Company Mgt.

The following information pertains to lease expirations at One Harbor Center Office Building:

Company, Inc.

Dwight Davenport

Financial Services

The following information pertains to lease expirations at One Harbor Center:

Number of Leases Expiring

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Percentage of Gross Rent

Green Valley Medical Center contains 31,590 square feet, of which approximately 20,100 square feet is office space, approximately 8,300 square feet is health care space, and the remainder is

designated as retail space.

As of June 30, 2025, the property is 94% occupied by 14 tenants.

The following table shows the largest tenants and square footage occupied:

Largest Tenants

Annual Base Rent

State Emergency Services

California Forever

Jethro Nicolas et al

Green Valley Oral

The following information pertains to lease expirations at Green Valley Medical Center:

Number of Leases Expiring

Annual Base Rent

Percentage of Gross Rent

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units.

As of June 30, 2024, Commodore Apartment building is approximately 87.5% occupied.

The Park View is also a

mid-rise apartment building built in 1929 and has 39 units.

As of June 30, 2024, The Park View building is approximately 92.3% occupied.

Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54

As of June 30, 2025, Commodore Apartments is approximately 97.9% occupied.

The Park View Apartments is

also a mid-rise apartment building built in 1929 and has 39 units.

As of June 30, 2025, The Park View Apartments is approximately 94.9% occupied.

Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in

1917 and has 54 units.

The property contains approximately 38,000 square feet of net rentable apartment area and 8,610 square feet of retail space.

All of the retail space is currently occupied by restaurants and nightclubs.

The apartment units are 88.9%

occupied as of June 30, 2024.

The apartment

units are 87.0% occupied as of June 30, 2025.

Shoreline Apartments is a mid-rise apartment building built in 1967 and renovated in 2015 which has 84 units.

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Property Name

Percentage Leased

Monthly Base Rent/Occupied

Rent/Occupied

The Park View

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Multi-Family Residential

Hollywood Apartments

Multi-Family Residential

Los Angeles, CA

Shoreline Apartments

Multi-Family Residential

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Rent/Occupied

Hollywood Apartments

Los Angeles, CA

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marketing it for lease.

As of June 30, 2024, one tenant is occupying 7,166 square feet or 16.6% of the building.

Annualized base rent for this tenant is $249,000.

In addition to our commercial and residential real estate properties, we also own two parcels of land:

a vacant parcel adjacent to our 220 Campus Lane Office Building in Fairfield, California

(“Campus Lane Land”), and a vacant parcel located at 5000 Wiseman Way, Fairfield, California (“Aurora Land”).

We acquired the Campus Lane Land in September 2023 with the long-term objective of developing it into a multi-family residential

The entitlement process for the vacant land is currently underway, but the financial resources to realize our goal of commencing construction in late 2025 have not been secured and will be dependent upon the City’s response to our

development application that was submitted in April 2024.

The development of Aurora Land is discussed below.

Both parcels of land are owned by the Operating Partnership through its subsidiaries:

Campus Lane Residential, LLC, and MRC Aurora, LLC.

Aurora Land Development (known as Aurora at Green Valley)

We have begun to build a multi-family residential community on this land which will include 72 units and a club house.

The city’s planning commission approved our development project in September

2023, and we obtained all necessary building permits in August 2024.

In February 2024, we commenced selling preferred units in MRC Aurora with the goal of raising $10 million in preferred capital and closed on a construction loan of $17.15

We commenced the site preparation and grading work in April 2024 and the building construction will begin in September 2024.

There are no present plans for any major renovation or development of any property except for our 220 Campus Lane Office Building, Aurora at Green Valley and Campus Lane Land as discussed above.

Each property is being held for income production and increased occupancy and/or rental rates.

We have property and liability insurance policies on all properties which we believe are adequate.

As of June 30, 2025, 7 tenants are leasing space totaling 12,583 square feet or 29.1% of the building.

The annualized base rent for these tenants is $416,546.

In addition to our commercial and residential real estate properties, we own two parcels of land:

a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California

(“Campus Lane Land”) and a vacant parcel at 5000 Wiseman Way in Fairfield, California (“Aurora Land”).

These parcels were acquired with the objective of developing multi-family residential communities and are owned by the Operating

Partnership through its subsidiaries, Campus Lane Residential and MRC Aurora.

These development projects are further discussed below.

Aurora Land Development (known as the Aurora at Green Valley)

We are actively constructing a multi-family residential community on this land which will include 72 units in three buildings, and a club house.

The city’s planning commission approved our

development project in September 2023, and we obtained all necessary building permits in August 2024 and the building construction commenced in September 2024.

Construction is progressing on schedule and on budget.

The clubhouse opened in mid-June 2025 for pre-leasing activities.

The first residential building was completed and received its certificate of occupancy in July 2025.

Leasing of this building

began in August 2025, and as of this report, 22 units have been leased, with current occupancy of 30.56% of the total 72 units.

The remaining two buildings were completed and received certificates of occupancy in early September 2025.

leasing of the remaining two buildings is expected to commence in the coming weeks.

The construction of this project was financed through $10 million of preferred capital (including $7.23 million from outside investors) and a $17.15 million construction loan from Valley

Strong Credit Union.

As of the date of this report, we have borrow ed $13.29 million from the construction loan.

Campus Lane Land Development (known as Blue Ridge)

We acquired the Campus Lane Land in September 2023 with the long-term objective of developing it into a multi-family residential community.

We are preparing to launch this project, known as Blue Ridge, which

will consist of 84 luxury multi-family units in Solano County, one of the fastest-growing counties in California.

The entitlement process for the vacant land is currently underway.

Our goal is to commence

construction in spring 2026;

however, this is subject to the city’s approval of our development application submitted in April 2024 and to securing the necessary financial resources .

We are currently evaluating financing

alternatives to fund the development of this project.

We currently do not have plans for any other major renovation or development of any properties except for our 220 Campus Lane Office Building, the Aurora at Green Valley and Blue Ridge, as discussed above.

Each property is being held for income generation and potential value appreciation through increased occupancy and/or rental rates.

We maintain property and liability insurance policies on all properties, which we believe are adequate and

in line with industry standards.

Current Market and Economic Conditions

The markets in which our properties operate are highly competitive, and each property faces unique competitive challenges based upon local economic, political, and legal factors.

Our West coast

multi-family residential properties are generally restricted from raising rents significantly by local rent control laws.

Rent control can result in average rents that are significantly below market, and this provides some buffer against

declining rents in a recession.

coast multi-family residential properties are generally restricted from raising rents significantly by local rent control laws.

Rent control can result in average rents that are significantly below market, and this provides some buffer

against declining rents in a recession.

However, in order to encourage development, rent control usually does not apply to newer properties.

Since older properties may be unable to raise rents as needed, they may be unable to make improvements that could

allow them to compete with newer properties.

Our consolidated office properties, 1300 Main, First and Main, Main Street West, One Harbor Center, Satellite Place, Woodland Corporate Center, 220 Campus Lane, and Green Valley Executive Center are

all Class A suburban office properties and are located in Napa, Woodland, Suisun City and Fairfield, California and Duluth, Georgia.

All properties must compete with every other office property in the market, as well as facing the uncertainty of

workers returning to the office after COVID-19.

Recently, the broader economy began experiencing increased levels of inflation, higher interest rates and tightening monetary and fiscal policies, although inflation has now moderated and interest

rates have begun to come back down some.

The Federal Reserve increased the federal funds rate multiple times in 2022 and 2023.

Since older properties may be unable to raise rents as needed, they may be unable to make

improvements that could allow them to compete with newer properties.

Our consolidated office properties, 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, One Harbor Center, Satellite Place Office Building, Woodland

Corporate Center, 220 Campus Lane Office Building and Green Valley Executive Center are all Class A suburban office properties and are located in Napa, Woodland, Suisun City and Fairfield, California and Duluth, Georgia.

Available office

space is plentiful in each market in which our office properties are located, which magnifies the competitive challenges that we face in these markets.

The broader economy has been experiencing increased levels of inflation, higher interest rates and tightening monetary and fiscal policies.

The Federal Reserve increased the federal funds rate

multiple times in 2022 and 2023 then paused hikes in the earlier part of 2024 before implementing rate cuts in the fourth quarter.

We currently have fixed and variable interest rates for our loans.

The rise in overall interest rates has caused an

increase in our variable rate borrowing costs resulting in an increase in interest expense.

The higher interest rates imposed by the Federal Reserve to address inflation may also adversely impact real estate asset values.

In addition, a prolonged

period of high and persistent inflation could cause an increase in our expenses.

The rise in overall interest rates caused

an increase in our variable-rate borrowing costs resulting in an increase in interest expense.

The cumulative effect of the prior rate increases may adversely impact real estate asset values.

In addition, a prolonged period of high and

persistent inflation could cause an increase in our expenses.

The current market and economic conditions could have a material impact on our business, cash flow and results of operations.

It could also impact our ability to

find suitable acquisitions, sell properties, and raise equity and debt capital.

It could also impact our ability to find suitable

acquisitions, sell properties, and raise equity and debt capital.

Results of Operations

Comparison of the Fiscal Years Ended June 30, 2025 (“Fiscal 2025”) and June 30, 2024 (“Fiscal 2024”).

The commercial and residential properties owned by us during Fiscal 2024 and 2023 are as follows:

The commercial and residential properties owned by us during Fiscal

2025 and 2024 are as follows:

Commercial properties

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Satellite Place Office Building

Addison Corporate Center (sold in June 2023)

First & Main Office Building

Satellite Place Office Building

1300 Main Office Building

First & Main Office Building

Main Street West Office Building

First & Main Office Building

1300 Main Office Building

Woodland Corporate Center

1300 Main Office Building

Main Street West Office Building

220 Campus Lane Office Building (Acquired in September 2023)

Main Street West Office Building

Woodland Corporate Center

Green Valley Executive Center (Acquired in January 2024)

One Harbor Center Office Building (Acquired in May 2024)

Woodland Corporate Center

220 Campus Lane Office Building

Green Valley Executive Center

One Harbor Center

Green Valley Medical Center (Acquired in August 2024)

Residential properties

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Commodore Apartments

The Park View

The Park View Apartments

Hollywood Apartments

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Shoreline Apartments

Rental and reimbursements revenues:

Rental, reimbursements and other property income:

Rental and reimbursement revenues are generated from our commercial and residential real estate properties.

During the year ended June 30, 2025, we generated $22.06 million in rental and

reimbursements revenues, of which $9.82 million was generated from our eight commercial properties and $5.92 million was generated from our four residential properties.

During the year ended June 30, 2023, we generated $15.11 million in rental

and reimbursements revenues, of which $9.10 million was generated from our six commercial properties and $6.01 million was generated from our four residential properties.

The total increase in rental revenues was mainly due to the acquisition of

three office buildings since June 2023 partly offset by the disposal of Addison Corporate Center in June 2023.

reimbursements revenues, of which $16.17 million was generated from our nine commercial properties and $5.89 million was generated from our four residential properties.

During the year ended June 30, 2024, we generated $15.74 million in

rental and reimbursements revenues, of which $9.82 million was generated from our eight commercial properties and $5.92 million was generated from our four residential properties.

The total increase in rental revenues was mainly due to the

acquisition of one office building (Green Valley Medical Center) since June 30, 2024, and an early lease termination income of $3 million received from one of the tenants at our Satellite Place Office Building in December 2024.

Investment income:

Investment income was made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income.

Total investment income for the years

ended June 30, 2024 and 2023 was $0.85 million and $11.31 million, respectively.

During the year ended June 30, 2024, we received dividends, interest, and other investment income of $0.58 million as compared to $0.49 million received during the

year ended June 30, 2023.

This increase was mainly due to increase in interest income from our cash deposits in money market funds during the year ended June 30, 2024.

During the year ended June 30, 2024 we received $0.27 million of distributions

from operations, sales, and liquidations as compared to $10.82 million during the year ended June 30, 2023.

The decrease was mainly due to the liquidation of Dimension 28, LP in December 2022, which had provided $10.08 of sales distributions

Total investment income for the

years ended June 30, 2025 and 2024 were $0.07 million and $0.85 million, respectively.

During the year ended June 30, 2025, we received minimal distributions from operations, sales, and liquidations as compared to $0.27 million received

during the year ended June 30, 2024.

The remaining decrease was due to the decrease in our investment portfolio since June 30, 2023.

Other income:

There was no other income or loss during the year ended June 30, 2024.

During the year ended June 30, 2023, we recognized net other income of $14.49 million, of which $14.84 million was gain on

extinguishment of debt income resulting from the sale of Addison Property Owner offset by $0.35 million of loss on disposal of real estate of Addison Corporate Center.

The decrease was mainly due to the decrease in distributions received from investments.

During the year ended June 30, 2025, we received dividends, interest, and other investment income of $0.07 million

as compared to $0.58 million received during the year ended June 30, 2024.

This decrease was mainly due to decrease in interest income from our cash deposits in money market funds during the year ended June 30, 2025, as we withdrew all of

the deposits during 2024.

Property operating and maintenance expenses:

Operating and maintenance expenses mainly consist of real estate taxes, utilities, repair and maintenance, cleaning, landscape, security, property management fees, insurance, and various other

administrative expenses incurred in the operation of our commercial and residential real estate assets.

During the year ended June 30, 2025, we incurred operating and maintenance expenses of $7.39 million, of which $4.65 million were

incurred in the operation of our nine commercial properties, $2.73 million were incurred in the operation of our four residential properties and $0.01 million were incurred in the operation of the Operating Partnership.

During the year

ended June 30, 2024, we incurred operating and maintenance expenses of $6.52 million, of which $3.78 million were incurred in the operation of our eight commercial properties, $2.73 million were incurred in the operation of our four

residential properties and $0.01 million were incurred in the operation of the Operating Partnership.

The increase in the operating expenses was mainly due to the acquisition of one new office building (Green Valley Medical Center) in

Depreciation and amortization:

During the year ended June 30, 2025, we recorded depreciation and amortization of $11.43 million, of which $9.24 million was attributable to the depreciation and amortization of real estate

and intangible assets of our nine commercial properties and $2.19 million was attributable to our four residential properties.

During the year ended June 30, 2024, we recorded depreciation and amortization of $7.15 million, of which $4.98

million was attributable to the depreciation and amortization of real estate and intangible assets of our eight commercial properties and $2.17 million was attributable to our four residential properties.

The increase in total depreciation

and amortization of $4.28 million during the year ended June 30, 2025, was due to the acquisition of one new office building (Green Valley Medical Center) in August 2024 and write-off of leasehold improvements, lease commissions, and

in-place lease related to our Satellite Place Office Building due to an early lease termination of its anchor tenant in December 2024.

Interest expense:

Interest expense for the year ended June 30, 2025 was $8.52 million, of which $5.02 million was incurred on the mortgage notes payable associated with our nine commercial properties,

$3.12 million was incurred on the mortgage notes payable associated with our four residential properties and the debt on Campus Lane Land, and $0.38 million was incurred on the line of credit agreement of the Company.

Interest expense for

the year ended June 30, 2024 was $6.12 million, of which $3.12 million was incurred on the mortgage notes payable associated with our four residential properties and the loan on Campus Lane Land and $3 million was incurred on the mortgage

notes payable associated with our seven commercial properties, which exclude Satellite Place Office Building since there is no debt on the property.

The total increase of $2.40 million in interest expense for the year ended June 30, 2025,

was primarily attributable to additional mortgage notes payable related to two office buildings (Satellite Place Office Building and Green Valley Medical Center) since June 30, 2024 and a residential property (Hollywood Apartments)

incurring loan maturity extension fees and refinancing fees in 2025.

Additionally, Main Street West’s loan with the Prior Lender accrued interest at 4% until its November 2024 maturity, after which it defaulted and increased to 8% subject

to a Forbearance Agreement.

On June 6, 2025, the loan was refinanced with EverTrust Bank at a rate equal to the Wall Street Journal Prime Rate (currently 7.50% annually), subject to a 6.50% floor.

A small increase was also attributable to

borrowings by the Parent Company under its new line of credit.

Unallocated corporate expenses:

Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include interest expense, asset management fees to

related party, general and administrative, professional fees, administrative cost reimbursements to related party, directors’ fees, and transfer agent cost reimbursements to related party.

Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021.

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The asset management fees for the years ended June 30, 2025 and 2024 were $3.45 million and $3.22 million, respectively.

The slight increase was due to total increase of $16.52 in total invested

capital from $162.31 million as of June 30, 2023 to $178.83 million as of June 30, 2024.

The slight increase was due to total increase of $8.92 million in total

invested capital from $178.83 million as of June 30, 2024 to $187.75 million as of June 30, 2025.

Incentive management fee:

Under the Advisory Management Agreement, we pay 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.

Under the Advisory Management Agreement, we pay 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 Advisory Management Agreement.

We did not incur any incentive management fee for the years ended June 30, 2025 and 2024.

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Costs reimbursed to MacKenzie for the year ended June 30, 2025 were $0.67 million as compared to $0.76 million for the year ended June 30, 2024.

The slight increase was due to an increase in the

allocable portion of overhead and other expenses incurred by MacKenzie in comparison to June 30, 2023, as a result of the increase in the number of real estate assets owned by us since June 2023.

The slight decrease was due to a decrease in

the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to June 30, 2024, mainly due to hiring of a third-party transfer agent after June 30, 2024.

Transfer agent cost reimbursements paid to MacKenzie for the years ended June 30, 2025 and 2024 were $0.01 million and $0.07 million, respectively.

Property operating and maintenance expenses:

Operating and maintenance expenses mainly consist of real estate taxes, utilities, repair and maintenance, cleaning, landscape, security, property management fees, insurance, and various other

administrative expenses incurred in the operation of our commercial and residential real estate assets.

During the year ended June 30, 2024, we incurred operating and maintenance expenses of $6.52 million, of which $3.78 million were incurred in

the operation of our eight commercial properties and $2.74 million were incurred in the operation of our four residential properties.

During the year ended June 30, 2023, we incurred operating and maintenance expenses of $9.03 million, of which

$6.51 million were incurred in the operation of our six commercial properties and $2.52 million were incurred in the operation of our four residential properties.

The decrease in the operating expenses was mainly due to the sale of Addison

Property in June 2023 partly offset by the acquisitions of three new office buildings (220 Campus Lane Office Building, Green Valley Executive Center and One Harbor Center Office Building) since June 30, 2023.

Depreciation and amortization:

During the year ended June 30, 2024, we recorded depreciation and amortization of $7.15 million, of which $4.98 million was attributable to the depreciation and amortization of real estate and

intangible assets of our eight commercial properties and $2.17 million was attributable to our four residential properties.

During the year ended June 30, 2023, we recorded depreciation and amortization of $5.27 million, of which $3.01 million

was attributable to the depreciation and amortization of real estate and intangible assets of our five commercial properties, which exclude Addison Corporate Center as it was held for sale and not depreciated, and $2.26 million was attributable

to our four residential properties.

The increase in total depreciation and amortization of $1.88 million during the year ended June 30, 2024 was due to the acquisitions of three new office buildings (220 Campus Lane Office Building, Green Valley

Executive Center and One Harbor Center Office Building) since June 30, 2023.

Interest expense:

Interest expense for the year ended June 30, 2024 was $6.12 million, of which $3.12 million was incurred on the mortgage notes payable associated with our four residential properties and the loan on

Campus Lane Residential and $3.00 million was incurred on the mortgage notes payable associated with our seven commercial properties, which exclude Satellite Place Office Building since there is no debt on the property.

Interest expense for the

year ended June 30, 2023 was $7.10 million, of which $4.14 million was incurred on the mortgage notes payable associated with our five commercial properties, excluding Satellite Place Office Building and $2.96 million was incurred on the mortgage

notes payable associated with our four residential properties.

The total decrease of $0.98 million in interest expense during year ended June 30, 2024, was primarily due to the settlement of the Addison Property Owner debt after the sale of

Addison Corporate Center in June 2023.

Other operating expenses:

Other operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses.

Other operating expenses for the years ended June

30, 2024 and 2023, were $1.80 million and $1.63 million, respectively.

The increase in other operating expenses was mainly due to the acquisition of three commercial properties (220 Campus Lane Office Building, Green Valley Executive Center and

One Harbor Center Office Building) since June 30, 2023 resulting in a higher amount of general and administrative operating expenses during the year ended June 30, 2024.

Other corporate operating expenses:

Other corporate operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses.

Other operating expenses for the

years ended June 30, 2025 and 2024, were $4.55 million and $1.80 million, respectively.

The increase in other operating expenses was due to the acquisition of one commercial property (Green Valley Medical Center) since June 30, 2024,

resulting in a higher amount of general and administrative operating expenses, and new consulting and marketing services expenses incurred by the Company during the year ended June 30, 2025.

Net realized gain (loss) on sale of investments:

During the year ended June 30, 2024, we recorded a net realized loss of $3.02 million as compared to $0.66 million net realized gain during the year ended June 30, 2023.

Total net realized loss for

the year ended June 30, 2024, was realized from the write-off of two limited partnership interests (BP3 Affiliate, LLC and Capitol Hill Partners, LLC) with a realized loss of $3.06 million offset by the sale of four non-traded REIT securities

with a net realized gain of $0.04 million.

The total net realized gain for the year ended June 30, 2023, was realized from the sale of three limited partnership interest with net realized gain of $0.43, nine non-traded REIT securities with net

realized gain of $0.17 million, one investment trust with net realized gain of $0.05 million, and one publicly traded REIT securities with total realized gains of $0.01 million.

During the year ended June 30, 2025, we recorded a net realized gain of $0.13 million as compared to $3.02 million net realized loss during the year ended June 30, 2024.

Total realized gain

for year ended June 30, 2025, was realized from the sale of three non-traded REIT securities and a limited partnership interest.

Total net realized loss for the year ended June 30, 2024, was realized from the write-off of two limited

partnership interests (BP3 Affiliate, LLC and Capitol Hill Partners, LLC) with a realized loss of $3.06 million offset by the sale of four non-traded REIT securities with a net realized gain of $0.04 million.

Net unrealized gain (loss) on investments:

During the year ended June 30, 2024, we recorded a net unrealized gain of $0.86 million, which was net of a $2.32 million unrealized loss reclassification adjustments.

During the year ended June 30, 2025, we recorded a net unrealized loss of $0.72 million, which was net of $0.17 million of unrealized gain reclassification adjustment.

The reclassification

adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period.

Accordingly, the net unrealized loss excluding the reclassification adjustment for the year ended June 30,

2024 was $1.46 million, which resulted from fair value depreciations of $1.06 million from non-traded REIT securities, $0.36 million from general partnership interests and $0.04 million from limited partnership interest.

During the year ended June 30, 2023, we recorded a net unrealized loss of $10.28 million, which was net of a $8.30 million unrealized gain reclassification adjustments.

Accordingly, the net unrealized losses excluding the reclassification adjustment for the year ended

June 30, 2025, were $0.55 million, which resulted from fair value depreciations of $0.69 million from general partnership interests, $0.08 million from limited partnership interests and fair value appreciations of $0.22 million from

non-traded REIT securities.

During the year ended June 30, 2024, we recorded a net unrealized gain of $0.86 million, which was net of a $2.32 million unrealized loss reclassification adjustments.

The reclassification

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Accordingly, the net unrealized loss excluding the reclassification adjustment for the year ended June

2023 was $1.98 million, which resulted from fair value depreciations of $1.80 million from non-traded REIT securities and $0.67 million from limited partnership interests, offset by a net fair value appreciation of $0.49 million from general

partnership interests.

30, 2024 was $1.46 million, which resulted from fair value of $1.06 million from non-traded REIT securities, $0.36 million from general partnership interests and $0.04 million from limited partnership interest.

Income tax provision (benefit):

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 generally distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding any capital gain) to the stockholders and meets certain other conditions.

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 generally distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding any capital gain) 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 REIT taxable income, it will be subject to U.S.

federal corporate income tax on its undistributed taxable income.

In addition, it will be

subject to a 4% 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 corporate income tax on its undistributed taxable

In addition, it will be subject to a 4% 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, 2024.

Therefore, it did not incur any tax expense or excise tax on its income

from operations during the quarterly periods within the tax year 2023.

In addition, for the tax year 2024, 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, it did not incur any tax expense or excise tax on its

income from operations during the quarterly periods within the tax year 2024.

In addition, for the tax year 2025, the Parent Company intends 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 2025.

MacKenzie NY 2 is subject to corporate federal and state income tax on its taxable income at regular statutory rates.

As of June 30, 2024, it did not have any taxable income for tax year 2023 and

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

As of June 30, 2025, they did not have any taxable income

for tax year 2024 and 2025.

Therefore, we did not record any tax provisions during any fiscal periods within the tax year 2024 and 2025.

MacKenzie Satellite is a qualified REIT subsidiary of the Parent Company.

Therefore, it does not file a separate tax return.

MacKenzie Satellite and MRC QRS are qualified REIT subsidiaries of the Parent Company.

Therefore, they

do not file a separate tax return.

The Operating Partnership is a limited partnership.

Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, 220 Campus Lane, Campus Lane Residential, GV Executive Center and One Harbor Center 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

Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, 220 Campus Lane, Campus Lane Residential, GVEC and Innovate Napa are limited

liability companies.

First & Main, 1300 Main, Woodland Corporate Center Two, Main Street West, One Harbor Center, LP and Green Valley Medical Center, LP are limited partnerships.

Accordingly, all income tax liabilities of these entities

flow through to their partners, which, subject to the minority exceptions described in this document, ultimately is the Company.

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

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Capital Resources:

We offered to sell up to 5 million shares of common stock in our first public offering and up to 15 million shares of common stock in each of our second and third public offerings.

have raised total gross proceeds of $119.10 million from the issuance of common stock under the three public offerings, $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public

offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020.

In addition, we have raised $15.56 million from the issuance of common shares under the DRIP as of June 30, 2024.

of the total proceeds from DRIP, we have utilized a total of $14.28 million to repurchase common shares under the Share Repurchase Program.

In November 2021, the SEC qualified our Offering Circular pursuant to Regulation A to sell up to

$50,000,000 of shares of our Series A preferred stock at an initial offering price of $25.00 per share.

On October 14, 2022, we amended our Offering Circular and increased the offering to sell up to $75 million of shares of our Series A

preferred stock.

On November 1, 2023, we further amended our Offering Circular to sell an aggregate of up to $75 million of shares of either our Series A preferred stock or our Series B preferred stock.

This post-effective amendment to the

Offering Circular was declared effective on November 14, 2023.

We had raised $18.51 million through the sale of our Series A preferred stock and $1.26 million Series B preferred stock pursuant to the Offering Circular as of June 30, 2024.

addition, we have raised $0.25 million from the issuance of Series A and Series B preferred shares under the DRIP.

We plan to fund future investments with the net proceeds raised from our preferred equity offering and any future offerings of

securities and cash flows from operations, as well as interest earned from the temporary investment of cash in U.S.

We offered to sell up to 5 million shares of common stock in our first public offering and up to 15 million shares of common stock in each of

our second and third public offerings.

We have raised total gross proceeds of $119.10 million from the issuance of common stock under the public offerings, $42.46 million from our first public offering, which concluded in October 2016,

$67.99 million from the second public offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020.

In addition, we have raised $15.56 million from the issuance of shares of

common stock under the common stock DRIP as of June 30, 2025.

Out of the total proceeds from DRIPs, we have utilized a total of $14.28 million to repurchase shares of common stock under the share repurchase program.

In November 2021, the

SEC qualified our Offering Circular pursuant to Regulation A to sell up to $50,000,000 of shares of our Series A preferred stock at an initial offering price of $25 per share.

On October 14, 2022, we amended our Offering Circular and

increased the offering to sell up to $75 million of shares of our Series A preferred stock.

On November 1, 2023, we further amended our Offering Circular to sell an aggregate of up to $75 million of shares of either our Series A preferred

stock or our Series B preferred stock.

This post-effective amendment to the Offering Circular was declared effective on November 14, 2023, and terminated on November 1, 2024.

We have raised $18.74 million through the sale of our Series A

preferred stock and $3.11 million Series B preferred stock pursuant to the Offering Circular as of June 30, 2025.

In addition, we have raised $0.45 million from the issuance of shares of Series A and Series B preferred stock under the

preferred stock DRIP.

In January 2025, the Second Offering Circular was qualified by the SEC for the sale of 1,286,638.62 shares of Series A and 1,267,216.17 shares of Series B preferred stock.

The Second Offering Circular was amended in

June 2025 to offer up to 647,991 shares of Series A Preferred Stock, 1,166,383 shares of Series B Preferred Stock, and 1,166,383 shares of Series C Preferred Stock.

Of these amounts, 150,000 shares of each are reserved for the preferred

On January 15, 2025, our shelf registration statement on Form S-3 for the sale of up to $75 million in common stock, preferred stock, warrants, and units was declared effective by the SEC, and we entered into an equity

distribution agreement with Maxim to issue and sell our common stock for an aggregate gross sales price of $20 million pursuant to the at-the-market offering described in the ATM Prospectus, subject to maintaining compliance with General

Instruction I.B.6 of Form S-3 which requires that in no event will we sell securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains

below $75 million.

As of June 30, 2025, under the ATM offering, we sold 56,948.30 shares with gross proceeds of approximately $1.50 million.

In addition, on February 28, 2025, the Company offered and sold 153,403.40 shares of the

Company’s common stock, pre-funded warrants to purchase up to 129,226.50 shares of common stock, and warrants to purchase up to an aggregate of 423,944.85 shares of common stock.

The gross proceeds to the Company from this transaction

were approximately $4.80 million before deducting the placement agent’s fees and other offering expenses payable by the Company.

All share amounts are presented after giving effect to the Reverse Stock Split.

We plan to fund future investments with the net proceeds raised from our preferred equity offering and any future offerings of securities and cash flows from operations, as well as interest

earned from the temporary investment of cash in U.S.

government securities and other high-quality debt investments that mature in one year or less.

We also may fund a portion of our

investments through borrowings from banks and issuances of senior securities.

We also may borrow money within the underlying companies in which we have majority ownership.

In addition, from time to time, we may draw on the Company’s margin line

of credit on a temporary basis to bridge our investment purchases and sales or capital raising.

Additional information concerning our margin borrowing activity

is discussed in Note 9 - Margin Loans in the financial statements included in this report.

However, we have not raised as much from our preferred equity offering in the past fiscal

year as we did in previous years, at least in part due to rising interest rates making the preferred return less attractive.

Thus, there is no guarantee that we can raise sufficient funds to meet our goals in terms of growth, strategic or

necessary loan rebalancing, and additional investments.

We also may fund a portion of our investments through borrowings from banks and issuances of senior securities.

We also may borrow money within the underlying companies in which we

have majority ownership.

We intend to utilize leverage to enhance the total returns of our portfolio.

Historically, we were only able to access leverage at attractive costs through a credit facility, but the termination of

our BDC status effective December 31, 2020 has provided us with greater flexibility in choosing among different alternatives for raising debt capital going forward.

We also have greater flexibility in issuing securities with common equity participation features (such as warrants and convertible notes) and/or additional classes of stock (such as preferred) in

order to facilitate capital formation now that we are no longer subject to the restrictions of the 1940 Act.

Historically, we were only able to access leverage at attractive costs through a credit facility, but the

termination of our BDC status effective December 31, 2020 provided us with greater flexibility in choosing among different alternatives for raising capital through debt, equity participation features (such as warrants and convertible notes)

and/or additional classes of stock (such as preferred) in order to facilitate capital formation.

Our aggregate borrowings (if any), secured and unsecured, are expected to be reasonable in relation to our net assets and will be reviewed by the Board of Directors at least quarterly.

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We finished the year ended June 30, 2025, with cash and cash equivalents, and restricted cash of approximately $4.12 million.

Our principal demands for cash are to fund operating and administrative

expenses, debt service obligations, and dividends on our common and preferred Series A and B stocks.

Our principal demands for cash are to fund operating and

administrative expenses, debt service obligations, and dividends on our common and preferred Series A, B and C stock.

In addition, we may also use cash to purchase additional properties.

We expect to fund our material cash requirements over the next year through

a combination of cash on hand, net cash provided by our property operations, new capital raised from our preferred series A and B stocks, and new borrowings at the underlying companies and at the Parent Company level under a new line of credit.

We expect to fund our material cash requirements over

the next year through a combination of cash on hand, net cash provided by our property operations, new capital raised from our preferred Series A, B and C stock, and borrowings at the underlying companies and at the Parent Company level

under lines of credit.

For the year ended June 30, 2025, we experienced a net decrease in cash of $8.96 million.

During this year, we used cash of $0.59 million in our operating activities, $1.30 million in our investing

activities and $3.17 million in our financing activities.

During this period, we used net cash of $1.69 million in our operating activities, used net cash of

$19.12 million in our investing activities and generated net cash of $11.85 million in our financing activities.

The net cash outflow of $1.69 million from operating activities resulted from $22.29 million used in operating expenses, offset by cash inflows of $20.52 million of rental revenues and $0.08

million of investment income.

The net cash outflow of $19.12 million from investing activities resulted from $18.90 million of real estate acquisitions through our subsidiaries, and $1.18 million purchases of equity

investments, offset by cash inflow of $0.96 million from sale of investments.

The net cash inflow of $11.85 million from financing activities resulted from $48.47 million of additional mortgage borrowings, $9.59 million proceeds from borrowings under the affiliated

party line of credit, $5.57 million of capital contributions by non-controlling interests holders, $3.79 million of issuance of common stock, $1.94 million of issuance of pre-funded warrants, $1.65 million of issuance of Series B preferred

stock, $1.12 million of additional notes payable, $0.38 million of issuance of Series A common stock warrants, $0.23 million of issuance of Series A preferred stock and $0.22 million of issuance of Series B common stock warrants, offset by

cash outflows of $48.89 million payments on existing mortgage notes, $4.80 million payment of dividends to common stockholders, $2.32 million payment of financing fees, $1.88 million payment of selling commissions and fees, $1.49 million

capital distributions to non-controlling interests holders, $0.95 million payment of dividends to Series A preferred stockholders, $0.28 million change in capital pending acceptance, $0.23 million repayment of finance lease liabilities,

$0.22 million payment on existing notes payables, $0.04 million payment of dividends to Series B preferred stockholders and $0.01 million redemption of Series A preferred stock.

For the year ended June 30, 2024, we experienced a net decrease in cash of $5.06 million.

During this year, we used net cash of $0.59 million in our operating activities, $1.30 million in our

investing activities and $3.17 million in our financing activities.

The net cash outflow of $0.59 million from operating activities resulted from $16.73 million of cash used in operating expenses offset by cash inflow of $15.28 million of rental revenues and

$0.86 million of investment income.

The net cash outflow of $1.30 million from investing activities resulted from $10.23 million real estate acquisitions through our subsidiaries, $1.51 million payment on the contingent liability and

$1.06 million purchases of equity investments, offset by $10.56 million sale of investments and $0.94 million distributions received from our investments that are considered return of capital.

The net cash outflow of $1.30 million from investing activities resulted from $10.23 million real estate acquisitions through our subsidiaries, $1.51 million payment on the contingent

liability and $1.06 million purchases of equity investments, offset by $10.56 million sale of investments and $0.94 million distributions received from our investments that are considered return of capital.

The net cash outflow of $3.17 million from financing activities resulted from $5.18 million payments of dividends, $1.40 million redemption of common stock, $1.35 million payments on existing

mortgage notes payables, $0.90 million payments of syndication costs, $0.89 million payments of dividends of Series A preferred stockholders, $0.88 million payment of loan extension fee, $0.83 million capital distribution to non-controlling

interest holders, $0.37 million payment on note payable, $0.34 million acquisition of below market debt, $0.24 million capital pending acceptance, $0.10 million repayments of finance lease liabilities and $0.08 million redemption of Series A

preferred stock, offset by $3.29 million additional mortgage borrowings, $2.53 million capital contributions by non-controlling interests holders, $2.14 million issuance of Series A preferred stock, $1.23 million issuance of Series B preferred

stock and $0.20 million proceeds from notes payable.

For the year ended June 30, 2023, we experienced a net increase in cash of $9.14 million.

During this year, we used cash of $6.62 million in our operating activities and generated $15.31 million in

our investing activities and $0.45 million in our financing activities.

The net cash outflow of $6.62 million from operating activities resulted from $23.71 million of cash used in operating expenses offset by cash inflow of $15.19 million of rental revenues and $1.90

million of investment income.

The net cash inflow of $15.31 million from investing activities resulted from $15.24 million sale of investments and distributions received from investments, $8.69 million sale of real estate and

$12.96 million distributions received from our investments that are considered return of capital, offset by $18.70 million real estate acquisitions through our subsidiaries, $1.62 million purchases of equity investments , $1.16 million payment on

the contingent liability and $0.10 million payment of investment acquisition advance.

The net cash inflow of $0.45 million from financing activities resulted from $13.42 million issuance of preferred stock, $3.24 million additional mortgage borrowings, and $0.45 million proceeds from

capital pending acceptance, offset by $8.86 million payments on existing mortgage note payables, $4.47 million payments of dividends, $1.59 million redemption of common stock, $1.21 million payments of syndication cost, $0.45 million capital

distributions to non-controlling interests holders, $0.03 million redemption of preferred stock, $0.03 million payments of finance lease liabilities, and $0.02 million payment on note payable.

A preferred stock, offset by $3.29 million additional mortgage borrowings, $2.53 million capital contributions by non-controlling interests holders, $2.14 million issuance of Series A preferred stock, $1.23 million issuance of Series B

preferred stock and $0.20 million proceeds from notes payable.

Material Cash Obligations

We have entered into two contracts under which we have material future commitments:

(i) the Advisory Management Agreement, under which the Real Estate Adviser serves as our adviser, and (ii) 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.

(i) the Advisory Management Agreement and the Amended and Restated Investment Advisory Agreement, under

which the Advisers serves as our advisers, and (ii) the Administration Agreement, under which MacKenzie furnishes us with certain non-investment management services and administrative services necessary to conduct our day-to-day operations.

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

Payments under the Advisory Management Agreement in future periods will be (i) a percentage of the value of our Invested Capital;

(ii) Acquisition Fees, and (iii) incentive fees based on our performance above specified hurdles.

(ii) Acquisition Fees, and (iii)

incentive fees based on our performance above specified hurdles.

Payments under the Administration Agreement will occur on an ongoing basis as expenses are incurred on our behalf by MacKenzie.

However, if MacKenzie withdraws as our administrator, it will be liable for any expenses we incur as a result of such

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.

In August 2024, we have applied for a new line of credit at the Parent Company level.

We expect to be subject to various customary covenants and restrictions on our operations, such as covenants

which would (i) require us to maintain certain financial ratios, including asset coverage, debt to equity and interest coverage, and a minimum net worth, and/or (ii) restrict our ability to incur liens, additional debt, merge or sell assets, make

certain investments and/or distributions or engage in transactions with affiliates.

We also borrow money within the underlying companies in which we have majority ownership.

The below table presents the total loan outstanding at the underlying companies as of June 30, 2024 and the fiscal years those loans mature:

However, if MacKenzie withdraws as our

administrator, it will be 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 in the consolidated financial statements

included in this report.

On January 22, 2025, we entered into a revolving line of credit agreement with PRES, an affiliate of the Adviser, of up to $10,000,000.

Interest will accrue on any unpaid principal balance on

the note at a fixed annual interest rate of 10%.

In addition, an origination fee of 2% will be charged on each advance and the sum will be added to the principal balance.

The loan matures on June 1, 2026.

The loan requires monthly interest

payments beginning on March 1, 2025, with the remaining principal balance due at maturity.

As of the date of this report, the Company has borrowed $10 million, which includes $196,078 of loan origination fees, under the line of credit.

We used the proceeds from this credit facility on a short-term basis to bridge the gap between our asset acquisition expenditures and debt refinancing.

We expect to be subject to various

customary covenants and restrictions on our operations, such as covenants which would (i) require us to maintain certain financial ratios, including asset coverage, debt to equity and interest coverage, and a minimum net worth, and/or (ii)

restrict our ability to incur liens, additional debt, merge or sell assets, make certain investments and/or distributions or engage in transactions with affiliates.

We also borrow money within the underlying companies in which we have

majority ownership.

The below table presents the total loans outstanding at the underlying companies as of June 30, 2025 and the fiscal years those loans mature:

Fiscal Year Ending June 30, :

Three of our underlying companies:

Hollywood Hillview, Woodland Corporate Center Two, and Main Street West’s debts mature during the fiscal year

ending June 30, 2025.

The $17.5 million note payable on Hollywood Hillview matures in October 2024.

We listed the underlying property for sale in August 2024, and we are currently in negotiation with the lender for a short-term extension to allow

for the property to be marketed and sold.

The $7.5 million note payable on Woodland Corporate Center Two also matures in October 2024, is currently being refinanced through a new loan, which is scheduled to close in October 2024.

million note payable on Main Street West matures in November 2024.

We are currently in negotiation with the lender to extend the maturity.

An appraisal has been ordered by the bank to determine the current value and a modified loan amount.

likely that a partial principal paydown is required.

Three of our underlying companies (Hollywood Hillview, Woodland Corporate Center Two, and Main Street West) had debts that matured during the fiscal year ending June 30, 2025.

Corporate Center Two loan was refinanced in October 2024, the Hollywood Hillview loan was refinanced in March 2025, and the Main Street West loan was refinanced in May 2025, as detailed below.

The $14.74 million note payable on Main Street West matured on November 1, 2024.

Following a default, the bank initiated foreclosure proceedings in January 2025 and a court-appointed receiver

took control of the property in February 2025.

On March 25, 2025, the Company entered into a Forbearance Agreement with the Prior Lender.

As part of the Forbearance Agreement, the Company paid down $5 million on the loan and regained

control of the property from the receiver in April 2025.

On May 21, 2025, the Company obtained a loan with EverTrust Bank for an amount of $9.50 million to refinance the prior loan with the Prior Lender.

As of June 30, 2025, the outstanding

balance on the loan with EverTrust Bank was $9.50 million.

Critical Accounting Policies and Estimates

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matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results.

These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets

and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

With different estimates or assumptions, materially different amounts could be reported in our

consolidated financial statements.

These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent

assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

With different estimates or assumptions, materially different amounts could be

reported in our consolidated financial statements.

Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

In addition to the discussion below, our

critical accounting policies are discussed in Note 2 of our consolidated financial statements, which are part of this annual report beginning on page F-1.

In addition to the

discussion below, our critical accounting policies are discussed in Note 2 of our consolidated financial statements, which are part of this annual report beginning on page F-1.

Real Estate Purchase Price Allocations

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

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

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

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

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

We assess the acquisition-date fair values of all tangible assets, identifiable intangible assets, and assumed

liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information.

Estimates of future cash flows are

based on several factors including historical operating results, known and anticipated trends, and market and economic conditions.

The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant.

Intangible assets include the value of in-place leases, which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property

been vacant at the time of acquisition and subject to lease-up.

We amortize the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which is on average five years.

Estimates of the fair values of

the tangible assets, identifiable intangibles and assumed liabilities require us to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market

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

The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible

assets, and assumed liabilities, which could impact the amount of our net income (loss).

Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based upon the assumptions made in

calculating these estimates.

We assess the acquisition-date fair values of all tangible assets, identifiable intangible assets,

and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information.

future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions.

The fair value of tangible assets of an acquired property considers the value of the

property as if it was vacant.

would have occurred had the property been vacant at the time of acquisition and subject to lease-up.

We amortize the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which is on average

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require us to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during

lease-up periods, discount rates, market absorption periods, prevailing interest rates, and the number of years the property will be held for investment.

The use of inappropriate assumptions could result in an incorrect valuation of

acquired tangible assets, identifiable intangible assets, and assumed liabilities, which could impact the amount of our net income (loss).

Differences in the amount attributed to the fair value estimate of the various assets acquired can be

significant based upon the assumptions made in calculating these estimates.

Fair Value Measurements

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observables used in measuring investments at fair value.

Market price is impacted by a

number of factors, including the type of investment and the characteristics specific to the investment.

Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will

have a higher degree of market price observables and a lesser degree of judgment used in measuring fair value.

Market price is impacted by

a number of factors, including the type of investment and the characteristics specific to the investment.

Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices

generally will have a higher degree of market price observables and a lesser degree of judgment used in measuring fair value.

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

Level I – Quoted prices are available in active markets for identical investments as of the reporting date.

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

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

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

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

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

quoted prices for

identical or similar financial instruments in markets that are not active;

quoted prices

for identical or similar financial instruments in markets that are not active;

and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.

Investments which are generally included in

this category are publicly traded equity securities with restrictions.

Level III – Pricing inputs are unobservable and include situations where there is little, if any, market activity for

Investments which are generally

included in this category are publicly traded equity securities with restrictions.

Level III – Pricing inputs are unobservable and include situations where there is little, if any, market

activity for the investment.

Fair values for these investments are estimated by management using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the

nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, financial condition, and financing transactions subsequent to the acquisition of

the investment.

investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, financial condition, and financing transactions subsequent to the acquisition of the investment.

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

Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had an active market for

these investments existed.

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

Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used

had an active market for these investments existed.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, an investment’s level within the fair value hierarchy is based on

the lowest level of input that is significant to the fair value measurement.

Management’s assessment of the significance of a particular input to the fair value measurement, in its entirety, requires judgment and considers factors specific to the

In such cases, an investment’s level within the fair value hierarchy is

based on the lowest level of input that is significant to the fair value measurement.

Management’s assessment of the significance of a particular input to the fair value measurement, in its entirety, requires judgment and considers factors

specific to the investment.

Valuation of Investments

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

Where a security is traded

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

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

Where a security is

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

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

trading information.

When doing so, we first confirm that GAAP recognizes the trading price as the fair value of the security.

Securities for which reliable market data is 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 Investment Adviser or Board of Directors, does not represent fair value, are valued as follows:

(i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment;

Securities for which reliable market data is 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 Investment Adviser or Board of Directors, does not represent fair value, are valued as follows:

(i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio

(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.

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:

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escalators, expenses, market data in the area where the property is located, cap rates, discount rates, mortgages, interest rates, and other pertinent information.

We estimate future leasing and costs associated, generally over a ten-year period,

to determine the fair value of the property.

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 of Directors, a determination of whether any impairment is required is made and documented.

In addition, we may obtain a third-party

appraisal on directly owned properties.

In addition, we may obtain a

third-party appraisal on directly owned properties.

Determination of fair value involves subjective judgments and estimates and is reviewed by the Board of Directors.

Accordingly, the notes to our consolidated financial statements will express the

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

Accordingly, the notes to our consolidated financial statements will express

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

Below is a discussion of additional accounting policies and estimates.

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Use of Estimates

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

(losses) on investments during the reporting period.

These estimates are susceptible to change, and actual results could differ materially from those estimates, which in turn could have material impacts on our reported financial results.

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

liabilities, revenues, expenses and unrealized gains (losses) on investments during the reporting period.

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

Revenue Recognition

Rental revenue, net of concessions, which is derived primarily from lease contracts and includes 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.

Rental revenue, net of concessions, which is derived primarily from lease contracts and includes 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 us.

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.

If the lease provides for tenant improvements, we determine whether the tenant improvements, for

accounting purposes, are owned by the tenant or us.

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

If we determine the lease payments are not probable of collection, we fully

reserve for rent and reimbursement receivables, including deferred rent receivable, and recognize rental income on a cash basis.

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

Operational dividends or

distributions received from portfolio investments are recorded as investment income.

Distributions resulting from the sale or refinance of an investee’s underlying assets are compared to the estimated value of the remaining assets and are

recorded as a return of capital or as investment income as appropriate.

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

and the cost of the investment.

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

Distributions resulting from the sale or refinance of an investee’s underlying assets are compared to the estimated value of the remaining

assets and are recorded as a return of capital or as investment income as appropriate.

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

distribution and the cost of the investment.

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

Net change in unrealized gain (loss) reflects the net change in portfolio investment values during the reporting period, including the reversal of

previously recorded unrealized gains or losses.

Net change in unrealized gain (loss) reflects the net change in portfolio investment values during the reporting period, including the

reversal of previously recorded unrealized gains or losses.

Variable Interest Entities

We evaluate the need to consolidate other entities in when we have invested in their securities in accordance with ASC Topic 810, Consolidation (“ASC

In determining whether we have a controlling interest in a variable interest entity that requires us to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and

We evaluate the need to consolidate other entities in when we have invested in their securities in accordance with ASC Topic 810, Consolidation .

determining whether we have a controlling interest in a variable interest entity that requires us to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and

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

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

We also allocate certain department costs,

including payroll, at the corporate levels as “indirect costs” of capital additions, if such costs clearly relate to capital additions.

We also capitalize interest, property taxes, and insurance during periods in which redevelopment, development,

and construction projects are in progress.

We also allocate certain department

costs, including payroll, at the corporate levels as “indirect costs” of capital additions, if such costs clearly relate to capital additions.

We also capitalize interest, property taxes, and insurance during periods in which redevelopment,

development, and construction projects are in progress.

Cost capitalization begins once the development or construction activity commences and ceases when the asset is ready for its intended use.

Repair and maintenance and tenant turnover costs are expensed

Repair and maintenance and tenant turnover

costs are expensed as incurred.

Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset.

Depreciation and amortization expense are computed on the straight-line method over the asset’s estimated

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 anticipate the estimated useful lives of assets by class to be generally as follows:

16 – 45 years

Building improvements

Land improvements

Buildings improvements

Land improvent

Furniture, fixtures and equipment

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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, 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.

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.

During the year ended June 30, 2025, we recorded an impairment loss of $9,500,167, with respect to our Main Street West Office Building due to an early lease termination by the anchor tenant

and maturity default of the debt secured by the property.

We utilized the inputs from a recent third-party appraisal and potential new leases to estimate the fair value of the property to determine the impairment amount.

We consider these

inputs as Level 3 measurements within the fair value hierarchy.

Assets and Liabilities Held for Sale

We classify long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met:

We classify long-lived assets to be sold as held for sale in the period in which all of the following criteria are met:

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

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

The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or circumstances

beyond our control extend the period of time required to sell the asset or disposal group beyond one year;

The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or

circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year;

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

The price at which a long-lived asset (disposal group) is being marketed

is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group).

A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available for immediate

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

The price at which a long-lived asset (disposal group) is being

marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group).

A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available

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

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

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amortization of acquired in-place leases.

The investment properties and liabilities associated with those investment properties that are held for sale are classified separately on the consolidated balance sheets for the most recent reporting

period and recorded at the lesser of the carrying value or fair value less costs to sell.

The investment properties and liabilities associated with those investment properties that are held for sale are classified separately on the consolidated balance sheets for the most recent

reporting period and recorded at the lesser of the carrying value or fair value less costs to sell.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our portfolio primarily consists of equity and debt investments in smaller U.S.

companies that primarily own commercial real estate that are either illiquid or not listed on any exchange, and

our investments are considered speculative in nature.

As a result, we are subject to risk of loss which may prevent our stockholders from achieving price appreciation, dividend distributions and a return of their capital.

At June 30, 2025, financial instruments that subjected us to concentrations of market risk consisted principally of equity investments, which represented approximately 1.60% of our total

assets as of that date.

As discussed in Note 4, to our consolidated financial statements, these investments primarily consist of securities in companies with no readily determinable market values and as such are valued in accordance with

our fair value policies and procedures.

Our investment portfolio sometimes also includes shares of publicly traded REITs, which are valued at recently quoted trading prices.

Our investment strategy represents a high degree of business and

financial risk due primarily to the general illiquidity of our investments.

We may make short-term investments in cash equivalents, U.S.

government securities and other high-quality investments that mature in one year or less, pending

investments in portfolio companies made according to our principal investment strategy.

In addition, we are exposed to interest rate risk with respect to our variable-rate indebtedness;

generally, an increase in interest rates would directly result in higher interest expense.

seek to manage our exposure to interest rate risk by utilizing a mix of fixed and floating rate financing, and through interest rate hedging agreements to fix or cap our variable-rate debt.

As of June 30, 2025, $17.65 million, $14.99

million and $15.13 million of our total outstanding loan balance was under variable-rate debt indexed to the Secured Overnight Financing Rate (“SOFR”), Prime rate, and U.S Treasury yield, respectively.

For the Prime rate, a hypothetical

increase or decrease of 100 basis points would result in a corresponding increase or decrease in our annual interest expense of approximately $0.15 million.

As of June 30, 2025, the applicable variable rates were 7.50% for the Prime rate,

4.15% for SOFR, and 3.96% for the U.S.

Treasury yield.

Variable interest under the SOFR and U.S.

Treasury–indexed loans are not yet applicable as of June 30, 2025.

These payments are scheduled to commence on May 1, 2027, and May 1, 2026,

respectively.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and notes to the consolidated financial statements are set forth beginning on page F-1 in this annual report on Form 10-K and are incorporated herein by

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 7. Management’s Discussion and Analysis