What changed in this filing

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Item 9A. Controls and Procedures

2020-09-21 compared with 2019-09-23 · 545 added, 459 removed, 1154 unchanged (47% of the section changed)

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

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

required disclosure.

Management's Annual Report on Internal Control Over Financial Reporting

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

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

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

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

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

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

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

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

authorizations of our management and board of directors;

our management and board of directors;

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

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

Management's report was not subject to attestation

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

the Sarbanes-Oxley Act.

Management's report was not subject to attestation by

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

Sarbanes-Oxley Act.

Changes in Internal Control over Financial Reporting

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

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

past five years, are set forth below.

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

five years, are set forth below.

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

Our Board consists of a majority of Independent Directors.

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

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

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

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

Board consists of a majority of Independent Directors.

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

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

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

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

Board of Directors

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Principal Occupation(s) During Past 5 Years

"Pat" Patterson†, 78

Chairman of the Board of Directors

Patterson is co-founder and president of MacKenzie and the Adviser, and a director of their general partner, and a beneficial owner of all three companies, all since 1982.

Patterson has spent his

entire business career in the financial services industry.

Patterson founded Patterson Financial Services, Inc.

(now MCM Advisers) with Berniece A.

Patterson as a financial planning firm.

As president of the Adviser, Mr.

Patterson is responsible for all investment counseling activities.

He supervises the analysis of investment opportunities for the clients of the firm.

In February 1988, Mr.

Patterson co-founded the predecessor of MacKenzie, which acts as

the general partner and Manager to a number of prior investment funds.

Patterson is the president of MacKenzie.

Patterson is a former Certified Financial Planner, has completed the College of Financial Planning's Due Diligence

course, and is a past member of both the Institute of Certified Financial Planners and the International Association for Financial Planning.

Charles “Chip” Patterson†, 49

Chairman of the Board,

Interested Director

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

beneficial owner of all three companies, all since 2005.

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

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

degree in Political Science.

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

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

and math at the high school level for three years.

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

Tim Dozois, 58

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

January 1996 until March of 2010, Mr.

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

acquisition, financing and management of real property assets.

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

sole owner of Conseiller LLC.

From January 1996 until March of 2010, Mr.

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

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

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

financing, and management.

Dozois received his B.S.

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

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

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

During the last 35 years, Mr.

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

Paradigm was founded in June 1986 to sponsor and manage

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

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

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

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

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

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

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

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

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

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

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

Position(s) Held with the Company

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Chief Executive Officer and President

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

companies since 2005.

Dixon is C.E.

and Berniece Patterson's son-in-law.

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

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

from March 2002 until 2005.

Dixon has been president of Sutter Capital

Management since its founding.

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

Dixon received his bachelor's degree in

economics from the University of California at Los Angeles in 1992.

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

Dixon received his Master of Business

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

Dixon received his bachelor's degree in economics from the University of California at Los Angeles in 1992.

Paul Koslosky, 58

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

From 1995 to 1997 he

served as controller at Doric.

From 1995 to 1997 he served

as controller at Doric.

Glen Fuller, 47

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

Fuller is Berniece Patterson's son and C.E.

Patterson's stepson.

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

Prior to joining MacKenzie, Mr.

Fuller spent two years running the over the counter trading desk for North Coast Securities Corp.

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

Coast Securities Corp.

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

Fuller was also the

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

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

Coast Securities Corp., a registered broker-dealer.

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

Fuller has a Bachelor of

Arts in Management.

Fuller has a Bachelor of Arts in Management.

Chip Patterson, 49

General Counsel and Secretary

Chip Patterson has been the senior vice president and general counsel of MacKenzie and the Adviser since 2003, a director of their general partner since 2003, and a beneficial owner of all three companies

Chip Patterson is C.E.

Patterson's son and Berniece Patterson's stepson.

Chip Patterson graduated magna cum laude from the University of Michigan Law School with a Juris Doctor Degree and with high distinction and Phi Beta Kappa

from the University of California at Berkeley with a Bachelor of Arts Degree in Political Science.

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

Tremaine LLP.

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

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

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

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

degree in Political Science.

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

Prior to law school, Chip Patterson taught physics,

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

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

Jeri Bluth, 45

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

Mary's College of California in October 2004 (with

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

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

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

Section 16(a) Beneficial Ownership Reporting Compliance

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

To our knowledge, based solely on a review of

the copies of beneficial ownership reports furnished to us and written representations that no other reports were required, during Fiscal 2019, all of our directors, officers and more than 10% beneficial owners complied with all applicable 1934 Act

To our knowledge, based solely on a review of the

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

§16(a) filing requirements.

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

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

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

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

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

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

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

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

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

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

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

committee is currently composed of Messrs.

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

The audit committee is

currently composed of Messrs.

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

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

This amount was increased from $20,000 in October 2016.

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

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

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

No compensation is expected to be paid to

directors who are "interested persons" as that term is defined in 1940 Act §2(a)(19).

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

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

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

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

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

1940 Act §2(a)(19).

The following table details the compensation accrued to Directors fees during Fiscal 2020.

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Fiscal Year 2020 Fees (1)

“Pat” Patterson (Chairman of the Board of Directors)

Chip Patterson (Chairman of the Board of Directors)

Tim Dozois (Independent Director)

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

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

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

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

annually reviewing and approving the compensation policies for our Directors.

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

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

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

also in control of its general partner.

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

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

below are also in control of its general partner.

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

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

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Interested Director:

"Pat" Patterson

Charles "Chip" Patterson

Indirectly held

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

Patterson, Chip Patterson,

Glen Fuller and Robert Dixon.

Patterson, Chip Patterson, Glen

Fuller and Robert Dixon.

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

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Patterson, Berniece A.

Patterson, Robert

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

Patterson, Robert Dixon,

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

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

MacKenzie manages

all of our affairs except for providing investment advice.

MacKenzie manages all of our

affairs except for providing investment advice.

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

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

same beneficial owners and in the same proportions as MacKenzie.

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

beneficial owners and in the same proportions as MacKenzie.

The Adviser is led by its investment team:

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

Fuller, who serves as Chief

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

Fuller, who serves as Chief Operating

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

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

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

Dixon, who serves as

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

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

and Christine

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

and Christine E.

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

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

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liquidation).

In Fiscal 2019, 2018 and 2017, Management fees accrued and payable to the Adviser under the Advisory Agreement were $3,996,097, $2,817,524, and $1,499,272, respectively.

Administration fees accrued and payable under the Administration

Agreement for Fiscal 2019, 2018 and 2017, were $570,667, $432,000, and $220,000.

In Fiscal 2020, 2019 and 2018, Management fees accrued to the Adviser under the Advisory Agreement were $2,549,076, $3,996,097 and $2,817,524, respectively.

Administration fees accrued and payable under the Administration Agreement for

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

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

However, if MacKenzie withdraws as our administrator, it

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

However, if MacKenzie withdraws as our administrator, it is

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

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

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

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

transactions with the BDC or a company controlled by it.

with the BDC or a company controlled by it.

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

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review these procedures on an annual basis.

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

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

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Our only interested director is

"Pat" Patterson.

Charles “Chip” Patterson.

Our independent directors are Tim Dozois and Tom Frame.

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

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

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

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

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

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

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

The Audit Committee

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

The Audit Committee may

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

EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

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Description of Document

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

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

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

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

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

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

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

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

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

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

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

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

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

reference to Registrant’s Post-Effective Amendment No.

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

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

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

Registration Statement on Form N-2(File No.

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

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

Statement on Form N-2(File No.

333-212804) filed on August 1, 2016)

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

reference to Registrant's Pre-Effective Amendment No.

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

Registrant's Pre-Effective Amendment No.

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

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333-181853) filed on August 6, 2014)

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

by reference to Registrant’s Pre-Effective Amendment No.

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

reference to Registrant’s Pre-Effective Amendment No.

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

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

(incorporated by reference to

Registrant's Pre-Effective Amendment No.

(incorporated by reference to Registrant's

Pre-Effective Amendment No.

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

333-181853) filed on May 30, 2013)

Form of Administration Agreement with MacKenzie Capital Management, LP (incorporated by reference to

Registrant's Pre-Effective Amendment No.

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

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

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(incorporated by reference to Post-Effective Amendment No.

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

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

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

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

by referenced to Registrant's Pre-Effective Amendment No.

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

referenced to Registrant's Pre-Effective Amendment No.

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

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

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

FORM 10-K SUMMARY

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Notes to Consolidated Financial Statements

Index to Audited Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

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

federal securities laws and the applicable

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

federal securities laws and the applicable rules

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

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

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

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

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

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

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

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

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

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

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

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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Accounts payable and accrued liabilities

Income tax payable

Dividend payable

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Due to related entities

Deferred tax liability, net

Total liabilities

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Capital in excess of par value

Total distributable earnings

Total distributable earnings (distributions in excess of earnings)

Total net assets

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The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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June 30, 2020

Total Fair Value

% of Net Assets

American Finance Trust 7.5% PFD

Publicly Traded Company

American Finance Trust Inc., Class A

Publicly Traded Company

Total Publicly Traded Company

Apartment Investment & Management Company- Class A

Publicly Traded Company

Ashford Hospitality Trust, Inc.

Publicly Traded Company

Bluerock Residential Growth REIT, Inc.

Publicly Traded Company

CBL & Associates Properties, Inc.

- Preferred D

Publicly Traded Company

City Office REIT, Inc.

- Preferred A

Publicly Traded Company

CorEnergy Infrastructure 7.375% PFD A

Publicly Traded Company

Host Hotels & Resorts Inc

Publicly Traded Company

Independence Realty Trust, Inc.

Publicly Traded Company

NexPoint Residential Trust, Inc.

Publicly Traded Company

One Liberty Properties, Inc.

Publicly Traded Company

RLJ Lodging Trust

Publicly Traded Company

The Macerich Company

Publicly Traded Company

WP Carey, Inc.

Publicly Traded Company

Total Publicly Traded Companies

Benefit Street Partners Realty Trust, Inc.

Non Traded Company

BRE Select Hotels Corp.

- Preferred A

Carter Validus Mission Critical REIT II, Inc.

Non Traded Company

Carter Validus Mission Critical REIT

CIM Real Estate Finance Trust, Inc.

Non Traded Company

Cole Credit Property Trust IV, Inc.

CNL Healthcare Properties, Inc.

Non Traded Company

3 unchanged sentences

Non Traded Company

CNL Healthcare Properties, Inc.

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

Non Traded Company

Hines Global REIT, Inc.

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

Non Traded Company

15 unchanged sentences

Non Traded Company

Griffin-American Healthcare REIT III, Inc.

Non Traded Company

Griffin Capital Essential Asset REIT, Inc.

Non Traded Company

Griffin-American Healthcare REIT III, Inc.

Non Traded Company

GTJ REIT, Inc.

5 unchanged sentences

23,225,520.45

HGR Liquidating Trust

Non Traded Company

Hospitality Investors Trust, Inc.

12 unchanged sentences

Non Traded Company

Steadfast Apartment REIT

SmartStop Self Storage REIT, Inc.

Non Traded Company

Steadfast Income REIT

Steadfast Apartment REIT

Non Traded Company

5 unchanged sentences

Non Traded Company

Total Non Traded Company (1)

Total Non Traded Companies (1)

3100 Airport Way South LP

5210 Fountaingate, LP

Addison NC, LLC

Addison Property Member, LLC

Arrowpoint Burlington LLC

Bishop Berkeley, LLC

BP3 Affliliate, LLC

BP3 Affiliate, LLC

BR Cabrillo LLC

BR Desota Investment Co, LLC

BR Quinn35 Investment Co, LLC

BR Everwood Investment Co, LLC

BR Sunrise Parc Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

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Capitol Hill Partners, LLC

CRP I Roll Up, LLC

CRP III Roll Up, LLC

Citrus Park Hotel Holdings, LLC

Dimensions28 LLP

Lakemont Partners, LLC

MacKenzie Realty Operating Partnership, LP

MPF Pacific Gateway - Class B

Redwood Mortgage Investors VIII

Satellite Investment Holdings, LLC - Class A

Satellite Investment Holdings, LLC - Class B

Secured Income, LP

The Weatherly Building, LLC

The Weatherly, LTD

Total LP Interest

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Total Investments

$ 104,692,648

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

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

As of June 30, 2019, the

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

additional disclosures in Note 5.

As of June 30, 2020, the Company

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

See additional

disclosures in Note 5.

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

control over the management or policies of such portfolio company.

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

the management or policies of such portfolio companies.

See additional disclosures in Note 5.

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

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The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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June 30, 2019

Total Fair Value

% of Net Assets

Ashford Hospitality Trust, Inc.

Publicly Traded Company

Bluerock Residential Growth REIT, Inc.

Publicly Traded Company

Braemar Hotels & Resorts Inc.

Publicly Traded Company

CBL & Associates Properties, Inc.

Publicly Traded Company

Independence Realty Trust, Inc.

Publicly Traded Company

Omega Healthcare Investors, Inc.

Publicly Traded Company

RLJ Lodging Trust

Publicly Traded Company

Sabra Health Care REIT, Inc.

Publicly Traded Company

American Finance Trust Inc., Class A

Publicly Traded Company

Total Publicly Traded Company

American Finance Trust, Inc.

Non Traded Company

American Realty Capital Healthcare Trust III, Inc.

Non Traded Company

American Realty Capital New York City REIT, Inc.

Non Traded Company

Behringer Harvard Opportunity REIT I, Inc.

Non Traded Company

Benefit Street Partners Realty Trust, Inc.

7 unchanged sentences

Non Traded Company

Cole Credit Property Trust V, Inc.

Non Traded Company

Cole Credit Property Trust V, Inc.

Non Traded Company

CNL Healthcare Properties, Inc.

Non Traded Company

Hines Global REIT, Inc.

Non Traded Company

Corporate Property Associates 18 Global A Inc.

Non Traded Company

First Capital Real Estate Trust, Inc.

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FSP 303 East Wacker Drive Corp.

Liquidating Trust

Non Traded Company

FSP Energy Tower I Corp.

Liquidating Trust

Non Traded Company

FSP Grand Boulevard

FSP Grand Boulevard Liquidating Trust

Non Traded Company

16 unchanged sentences

Non Traded Company

KBS Legacy Partners Apartment REIT, Inc.

Non Traded Company

KBS Real Estate Investment Trust II, Inc.

2 unchanged sentences

Non Traded Company

New York City REIT, Inc.

Non Traded Company

NorthStar Healthcare Income, Inc.

2 unchanged sentences

Non Traded Company

Phillips Edison Grocery Center REIT II, Inc.

Steadfast Apartment REIT

Non Traded Company

11 unchanged sentences

Addison NC, LLC

Addison Property Member, LLC

Arrowpoint Burlington LLC

BR Axis West Investment Co.

Bishop Berkeley, LLC

BP3 Affiliate, LLC

BR Cabrillo LLC

BR Desota Investment Co, LLC

BR Quinn35 Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

Britannia Preferred Members, LLC -Class 2

Capitol Hill Partners, LLC

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CRP III Roll Up, LLC

Dimensions28 LLP

Lakemont Partners, LLC

MPF Pacific Gateway - Class B

Redwood Mortgage Investors VIII

Rosewood Hillsboro Holdings, LLC

Satellite Investment Holdings, LLC - Class A

2 unchanged sentences

The Weatherly, LTD

Uniprop Manufactured Housing Income Fund II, LP

Total LP Interest

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Total Investment Trust

OrCal and MIC Promissory Note

Total Investments

$ 103,245,148

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

(2) Investments in affiliated companies.

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

As of June 30, 2019, the Company

See additional

disclosures in Note 5.

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

control over the management or policies of such portfolio company.

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

the management or policies of such portfolio companies.

See additional disclosures in Note 5.

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The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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Non-controlled/non-affiliated investments

Affiliated investments:

Controlled investments

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The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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Net investment income

Net realized gain (loss)

Net realized gain

Net unrealized gain (loss)

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The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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Cash flows from operating activities:

Net increase in net assets resulting from operations

Adjustments to reconcile net increase in net assets resulting from

Net increase (decrease) in net assets resulting from operations

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

operations to net cash from operating activities:

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Issuance of common stock through reinvestment of dividends

Supplemental disclosures:

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

Index to Audited Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

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MacKenzie Realty Capital, Inc.

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

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

80,000,000 are designated as Common Stock, with a $0.0001 par value per share;

The Parent Company

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

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

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

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

The Company commenced its operations on February 28, 2013, and its fiscal

year-end is June 30.

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

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

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

In August 2016, the Company filed a second registration statement with the SEC to register a subsequent public offering of 15,000,000 shares of its common stock”) that was

declared effective by the SEC on December 20, 2016, and the offering commenced shortly thereafter.

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

The second offering commenced in

December 2016 and concluded on October 28, 2019.

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

The third offering commenced shortly thereafter and is continuing.

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

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

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

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

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

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

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

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

MacKenzie manages

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

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

(the "Amended and Restated Investment Advisory Agreement”).

MacKenzie manages all

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

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

"Amended and Restated Investment Advisory Agreement”).

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

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

The Company follows the accounting principles generally

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

The Company follows the accounting principles generally accepted

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

All intercompany accounts and transactions have been eliminated in consolidation.

Under the 1940 Act rules,

regulations pursuant to Article 6 of Regulation S-X and Topic 946 of the Accounting Standards Codification, as amended (the "ASC"), of the Financial Accounting Standards Board ("FASB"), Financial Services-Investment Companies, the Company is

precluded from consolidating portfolio company investments, including those in which the Company has a controlling interest, unless the portfolio company is an investment company.

An exception to this general principle occurs if the Company owns a

controlled operating company whose purpose is to provide services to the Company such as an investment adviser or transfer agent.

Under the 1940 Act rules, regulations pursuant

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

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

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

Company such as an investment adviser or transfer agent.

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

Therefore, the Company’s portfolio company

investments, including those in which the Company has a controlling interest, are carried on the consolidated statements of assets and liabilities at fair value with changes to fair value recognized as “Net Unrealized gain (loss)” on the

Consolidated Statements of Operations until the investment is realized, usually upon exit, resulting in any gain or loss on exit being recognized as a realized gain or loss.

However, in the event that any controlled subsidiary exceeds the tests of

significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, the Company will include required financial information for such subsidiary in the notes or as an attachment to its consolidated financial statements.

Reclassifications

Certain amounts in the consolidated statements of assets and liabilities as of June 30, 2018 related to non-controlled/non-affiliated investments have been reclassified as affiliated or controlled investments to

conform to the presentation as of June 30, 2019.

In addition, the corresponding investment income, net realized gains (losses) and net unrealized gains (losses) from those non-controlled/non-affiliated investments have been reclassified to

respective line items under affiliated or controlled investments in the consolidated statements of operations for the year ended June 30, 2018.

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

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

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

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

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

Index to Audited Consolidated Financial Statements

Use of Estimates

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

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

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

In August 2016, the Company filed the second registration statement with the SEC to register a public offering of 15,000,000 shares of the Company's common stock.

The offering costs incurred in connection with this

public offering through June 30, 2019 and 2018 were $1,685,426 and $975,555, respectively.

These offering costs are deferred and expensed over a twelve-month period beginning from the date the registration was declared effective by the SEC.

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

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

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

broker fees incurred are less than 10%.

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

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

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

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

The offering costs incurred in connection

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

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

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

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

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

as of December 31, 2019.

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

The offering costs incurred and paid by the Company in excess of $1,650,000 on this public offering will be

reimbursed by the Adviser except to the extent the full 10.0% in broker fees are not incurred.

In such case, the difference will be available to be paid or reimbursed by the Company to brokers for marketing expenses or other non‑cash

compensation.

The amounts reimbursable by the Adviser are discussed in Note 5.

Income Taxes and Deferred Tax Liability

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

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

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

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

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

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

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

Index to Audited Consolidated Financial Statements

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

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

Therefore, The Parent

Company did not record any income tax provisions during the years ended June 30, 2019, 2018, and 2017.

The income tax provision (benefit) amounts in the consolidated statements of operation for the years ended June 30, 2019, 2018 and 2017, relate to The Parent Company’s built-in gain tax adjustments and TRS’ income

tax provisions as follows:

Therefore, The Parent Company

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

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

provisions as follows:

June 30, 2020

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

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

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

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

election date ended on December 31, 2018.

Therefore, the remaining deferred tax liabilities on the unrealized built-in gains were reversed as of June 30, 2019.

The remaining net unrealized built-in gains, which were subject to tax, as of June 30,

2018 were $8,025 and the deferred tax liabilities relating to those net unrealized built-in gains were $3,518.

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

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

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

ended on December 31, 2018.

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

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

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

therefore, TRS did

not record any income tax provisions.

The income tax expense of $800 for the year ended June 30, 2017, was the minimum state tax paid by TRS.

therefore, TRS did not

record any income tax provisions.

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

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

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

the consolidated financial statements.

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

consolidated financial statements.

As of June 30, 2020, and 2019, there were no uncertain tax positions.

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

Index to Audited Consolidated Financial Statements

Fair Value of Financial Instruments

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

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

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

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

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

Accounts Receivable

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

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

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

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

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

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

Index to Audited Consolidated Financial Statements

Recent Accounting Pronouncements:

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014‑09, Revenue from Contracts with Customers (Topic 606).

ASU 2014‑09 supersedes the revenue recognition

requirements under ASC 605, Revenue Recognition , and most industry‑specific guidance throughout the Industry Topics of the ASC.

The core principle of the guidance is that an entity should recognize revenue

to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services.

Under the new guidance, an entity is required to

perform the following five steps:

(1) identify the contract(s) with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

(4) allocate the transaction price to the performance obligations in the

contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

Company’s income is not within the scope of ASU 2014-09.

As a result, the Company’s timing of its revenue recognition remains the same and the adoption of the standard did not have any impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01 , Financial Instruments-Overall:

Recognition and Measurement of Financial Assets and Financial Liabilities which amends the

guidance related to the classification and measurement of investments in equity securities.

The guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the

investee) to be measured at fair value with changes in fair value recognized in net income.

The ASU will also amend the guidance related to the presentation of certain fair value changes for financial liabilities measured at fair value and certain

disclosure requirements associated with the fair value of financial instruments.

For public companies, this ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

The adoption of

this new accounting standard did not have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No.

2016-15, Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts and Cash

Payments, which addresses eight specific cash flow issues including, among other things, the classification of debt prepayment or debt extinguishment costs.

2016-15 is effective for annual reporting periods, and the interim periods

within those periods, beginning after December 15, 2017.

The adoption of this new accounting standard did not have a material impact on the Company’s consolidated financial statements.

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

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

Among other requirements, the guidance

requires disclosure of the range and weighted average of the significant unobservable inputs for Level 3 fair value measurements and the way it is calculated.

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

The guidance also eliminated the following disclosures:

(1) amount and reason for

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

The guidance is effective for all entities for interim and annual

periods beginning after December 15, 2019.

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

The guidance is effective for all entities

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

Early adoption is permitted upon issuance of the guidance.

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

SEC Disclosure Update and Simplification

In August 2018, the SEC adopted the final rule under SEC Release No.

33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or

As a result of the amendments, we are required to present a reconciliation of changes in stockholders’ equity in the notes or as a separate statement.

This analysis should reconcile the beginning balance to the ending balance of each

caption in stockholders’ equity for each period for which an income statement is required to be filed and comply with the remaining content requirements of Rule 3-04 of Regulation S-X.

In October 2018, the SEC announced that this final rule will

become effective on November 5, 2018.

In light of the timing of effectiveness of the amendments and proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC staff commented that it would not object if the first

presentation of the changes in shareholders’ equity is included in a filer’s Form 10-Q for the quarter that begins after the effective date of the amendments.

Accordingly, the Company changed the periods presented in the consolidated statements of

changes in net assets beginning our third quarter ended March 31, 2019.

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

consolidated financial statements.

In May 2020, the SEC adopted rules Release No.

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

used in the determination of a significant subsidiary.

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

the footnotes of the financial statements.

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

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

Valuation of Investments

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realized upon actual sale at a future date.

Index to Audited Consolidated Financial Statements

Fair Value Measurements

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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 with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of

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

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

1 unchanged sentence

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

The Company does not adjust the quoted price for

these investments even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

The Company does not adjust the quoted price for these

investments even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

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

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

and model-derived valuations in which all significant

inputs or significant value-drivers are observable in active markets.

and model-derived valuations in which all significant inputs

or significant value-drivers are observable in active markets.

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

Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment.

Fair values for these investments are estimated by management using valuation methodologies that consider a

range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected

operating performance, financial condition, and financing transactions subsequent to the acquisition of the investment.

Fair values for these investments are estimated by management using valuation methodologies that consider a range of

factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating

performance, financial condition, and financing transactions subsequent to the acquisition of the investment.

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

Due to the inherent

uncertainty of these estimates, these values may differ materially from the values that would have been used had an active market for these investments existed.

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.

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Investment Trust

Index to Audited Consolidated Financial Statements

The following table presents fair value measurements of the Company's investments measured at fair value on a recurring basis as of June 30, 2020, according to the fair value hierarchy:

Publicly Traded Company

Publicly Traded Companies

Non Traded Companies

7 unchanged sentences

Purchases of investments

Transfers to Level I

Proceeds from sales, net

3 unchanged sentences

Ending balance at June 30, 2020

The transfers from Level III to Level I category during the year ended June 30, 2019, relates to changes in tradability of the securities in an active market due to two of the Company's investments converting from

non-traded REIT shares to publicly traded REIT shares.

Transfers are assumed to have occurred at the beginning of the year.

The following is a reconciliation of the beginning and ending balances for investments measured at fair value on a recurring basis using significant unobservable inputs (Level III) for the year ended June 30, 2019:

1 unchanged sentence

Purchases of investments

Transfers from Level III to Level I

Proceeds from sales, net

1 unchanged sentence

Net realized gains

Net unrealized gains

Net unrealized losses

Ending balance at June 30, 2019

The transfers from Level III to Level I category during the year ended June 30, 2020, relates to changes in tradability of the securities in an active market due to two of the Company's investments converting from

non-traded REIT shares to publicly traded REIT shares.

Transfers are assumed to have occurred at the beginning of the year.

For the year ended June 30, 2020, changes in unrealized loss included in earnings relating to Level III investments still held at June 30, 2020, was $12,445,631.

For the year ended June 30, 2019, changes in

unrealized gain included in earnings relating to Level III investments still held at June 30, 2018, was $7,494,696.

unrealized loss included in earnings relating to Level III investments still held at June 30, 2019, was $2,008,334.

Index to Audited Consolidated Financial Statements

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2020:

7 unchanged sentences

Non Traded Companies

Discounted Cash Flow

Discount rate

Discount term (months)

Non Traded Companies

Estimated Liquidation Value

5 unchanged sentences

Secondary market industry publication

Liquidity discount

Direct Capitalization Method

1 unchanged sentence

Liquidity discount

19.0% - 25.0%

Discounted Cash Flow

Discount rate

15.0% - 30.0%

Discount term (months)

1 unchanged sentence

Sponsor provided value

Underlying contracted agreement

Underlying property sales contract

Underlying property appraisal

Liquidity discount

1 unchanged sentence

Market Activity

Acquisition Cost

Book value of underlying loans

Liquidity discount

19.0% - 30.0%

Underlying security sales contract

Secondary market industry publication

Contributed capital

Investment Trust

Market Activity

Underlying security sales contract

* In the past years, the Company valued Level III investments primarily by reference to secondary market activities.

However, due to the COVID-19 pandemic, secondary market activities significantly declined during the second quarter of 2020.

While the most active of these securities had transactions reported based on new COVID-19 occupancy and financial information, two of the Level III investments only had earlier reported transactions.

Therefore, to determine the fair values of these

non-traded securities as of June 30, 2020, management reviewed and evaluated multiple data sources as part of management’s Level III valuation process and applied significant subjective judgment about the effects of overall market declines during times

of economic turmoil to arrive at these valuations.

Impact of COVID-19 Pandemic

The COVID-19 pandemic has adversely impacted the fair value of our investments as of June

30, 2020, and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments.

The impact of the COVID-19 pandemic may not yet be fully reflected in the valuation of our

investments as our valuations, and particularly valuations of private investments and private companies, are inherently uncertain, may fluctuate over short periods of time and are often based on estimates, comparisons and qualitative evaluations of

private information that is often from a time period earlier, generally two to three months, than the quarter for which we are reporting.

Additionally, we may not have yet received information or certifications from our portfolio companies that

indicate any or the full extent of declining performance or non-compliance with debt covenants, as applicable, as a result of the COVID-19 pandemic.

As a result, our valuations at June 30, 2020 may not show the complete or continuing impact of the

COVID-19 pandemic and the resulting measures taken in response thereto.

In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value.

Accordingly, we may continue to

incur additional net unrealized losses or may incur realized losses after June 30, 2020, which could have a material adverse effect on our business, financial condition and results of operations.

Index to Audited Consolidated Financial Statements

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2019:

Primary Valuation Techniques

Unobservable Inputs Used

Non Traded Companies

Direct Capitalization Method

2 unchanged sentences

19.0% - 34.0%

The following table shows quantitative information about significant unobservable inputs related to the Level III fair value measurements used at June 30, 2018:

Primary Valuation Techniques

Unobservable Inputs Used

Non Traded Companies

Discounted Cash Flow

Discount rate

Discount term (months)

Non Traded Companies

Estimated Liquidation Value

Sponsor provided value

Liquidity discount

12.0% - 70.0%

Non Traded Companies

Market Activity

Acquisition Cost

Secondary market industry publication

Contracted sale price of security

Non Traded Companies

Net Asset Value (1)

Direct Capitalization Method

Capitalization rate

1 unchanged sentence

19.0% - 25.0%

Sponsor provided value

Market Activity

Acquisition Cost

Discounted Cash Flow

Underlying note discount rate

Discount term (months)

Net Asset Value (1)

Capitalization rate

Discount rate

15.0% - 30.0%

Liquidity discount

Discount term (months)

Estimated Liquidation Value

Sponsor provided value

Contracted sale price of underlying property

Underlying contracted agreement

Liquidity discount

19.0% - 34.0%

Market Activity

Acquisition Cost

Book value of underlying loans

Liquidity discount

19.0% - 30.0%

Investment Trust

Net Asset Value (1)

Direct Capitalization Method

Capitalization rate

Liquidity discount

Discounted Cash Flow

Discount rate

Discount term (months)

Valuation Technique Terms:

The net asset value of the issuer's shares was calculated by the Company.

$ 101,094,142

Unconsolidated Significant Subsidiaries

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summarized financial information in an annual report if any of the three tests exceeds 10%.

As of June 30, 2019, and 2018, none of our investments was considered a significant subsidiary under Rule 3-09 and 4-08(g).

As of June 30, 2020, and 2019, none of our investments was considered a significant subsidiary under Rule 3-09 and 4-08(g) with the exception of MacKenzie Realty Operating Partnership, LP, which was determined to be a

significant subsidiary under the asset test as the partnership’s total assets exceeded 20% of the Company’s total assets as of June 30, 2020.

Under the Rule 3-09, separate audited financial statements are required to be included in the Company’s

annual report.

However, as disclosed below under Note 5, the partnership was formed in May 2020 and its fiscal year does not end until December 31, 2020.

Therefore, separate audited financial statements of this partnership for its year ended December

31, 2020 will be included in the Company’s annual report for the fiscal year ended June 30, 2021.

The summarized financial information of the partnership as of June 30, 2020 is as follows:

Total Liabilities

NOTE 4—MARGIN LOANS

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collateralized by the securities held in the account and bear interest at a negotiated rate payable monthly.

Securities pledged to secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account

are used as collateral.

Securities pledged to secure margin balances cannot be specifically identified as a portion of all securities held in a brokerage account are

used as collateral.

As of June 30, 2020, the Company had $2,655,155 of margin credit available for cash withdrawal or the ability to purchase up to $18,770,519 in additional publicly traded securities.

As of June 30, 2018, the Company had $10,946,343

of margin credit available for cash withdrawal or the ability to purchase up to $22,198,676 in additional publicly-traded securities.

As of June 30, 2019, the Company had $18,126 of

margin credit available for cash withdrawal or the ability to purchase up to $60,419 in additional publicly traded securities.

As of June 30, 2020, and 2019, there was no loan outstanding under this short-term credit line.

Index to Audited Consolidated Financial Statements

NOTE 5 –RELATED PARTY TRANSACTIONS

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The base management fee is calculated based on the Company's Gross Invested Capital plus any borrowing for investment purposes.

The base management fees range from 1.5% to 3.0%, depending on the level of Gross

Invested Capital.

The base management fees range from 1.5% to 3.0%, depending on the level of Gross Invested

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

The incentive fee components (other than during liquidation) are designed so that neither the income incentive fee nor the capital gains

incentive fee is payable to the Adviser unless our stockholders have first received dividends at a rate of at least 7.0% per annum for the relevant measurement period (a fiscal quarter, for the income incentive fee;

a fiscal year, for the capital

gains incentive fee).

The incentive fee components (other than during liquidation) are designed so that neither the income incentive fee nor the capital gains incentive

fee is payable to the Adviser unless our stockholders have first received dividends at a rate of at least 7.0% per annum for the relevant measurement period (a fiscal quarter, for the income incentive fee;

a fiscal year, for the capital gains

incentive fee).

The income incentive fee (the “Income Fee”) is calculated and payable quarterly in arrears as follows:

(i) the sum of preliminary net investment income for each fiscal quarter since the effective date of the Amended

and Restated Investment Advisory Agreement (October 1, 2017) exceeding 7% of the “Contributed Capital” (which equals the number of shares issued multiplied by the maximum public offering price at the time such shares were sold, regardless of

whether or not shares were issued with volume or commission discounts or through the DRIP, as such amount is computed from time to time) on an annualized basis up to 8.75% of Contributed Capital;

and (ii) 20.0% of our preliminary net investment

income for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate;

minus (iii) the sum of all previously paid income incentive fees since the effective date, plus (iv) any incremental income

incentive fee payable resulting from the reanalysis after calculation of the capital gains incentive fee.

or not shares were issued with volume or commission discounts or through the DRIP, as such amount is computed from time to time) on an annualized basis up to 8.75% of Contributed Capital;

and (ii) 20.0% of our preliminary net investment income for

each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate;

minus (iii) the sum of all previously paid income incentive fees since the effective date, plus (iv) any incremental income incentive fee

payable resulting from the reanalysis after calculation of the capital gains incentive fee.

The capital gains incentive fee (the “Capital Gains Fee”) is calculated and payable in arrears as of the end of each fiscal year as follows:

(i) the sum of all "capital gains" (calculated as net realized capital

gains less unrealized capital depreciation) for each fiscal year after the effective date exceeding 7% of the Contributed Capital on an annualized basis up to 8.75% of Contributed Capital, which thresholds are reduced by (but not below zero) the

cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income);

and (ii) 20.0% of all capital gains for each fiscal quarter after

the effective date exceeding 8.75% of Contributed Capital at an annualized rate, which threshold is reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased,

in the case of negative cumulative preliminary net investment income);

(i) the sum of all "capital gains" (calculated as net realized capital gains

less unrealized capital depreciation) for each fiscal year after the effective date exceeding 7% of the Contributed Capital on an annualized basis up to 8.75% of Contributed Capital, which thresholds are reduced by (but not below zero) the cumulative

preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income);

and (ii) 20.0% of all capital gains for each fiscal quarter after the

effective date exceeding 8.75% of Contributed Capital at an annualized rate, which threshold is reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the

case of negative cumulative preliminary net investment income);

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

less (iv) the aggregate amount of all capital

gains incentive fees paid in prior fiscal years ending after the effective date.

To the extent that such calculation would result in a capital gains incentive fee that exceeds 20% of all realized capital gains for the measurement period, the

capital gains incentive fee shall be capped so that under no circumstance does it exceed 20% of the realized capital gains for the measurement period.

less (iv) the aggregate amount of all capital gains

incentive fees paid in prior fiscal years ending after the effective date.

To the extent that such calculation would result in a capital gains incentive fee that exceeds 20% of all realized capital gains for the measurement period, the capital gains

incentive fee shall be capped so that under no circumstance does it exceed 20% of the realized capital gains for the measurement period.

The portfolio structuring fees for the years ended June 30, 2020, 2019, and 2018 were $588,203, $707,589 and $690,220, respectively.

Index to Audited Consolidated Financial Statements

The base management fee is calculated on a quarterly basis at the end of each quarter based on the quarter ended Gross Invested Capital and is payable in arrears.

22 unchanged sentences

June 30, 2018

For the year ended June 30, 2020, the Company neither incurred the Capital Gains Fee nor the Income Fee.

For the year ended June 30, 2019, the Company incurred $1,789,870 of the Capital Gains Fee;

however, did not incur the Income Fee.

For the year ended June 30, 2018, the

Company incurred $277,691 of the income incentive fees and $814,660 of the capital gains incentive fees.

For the year ended June 30, 2017, the Company incurred the capital gains incentive fees of $232,198;

however, did not incur the income

incentive fee.

ended June 30, 2018, the Company incurred $277,691 of the Income Fee and $814,660 of the Capital Gains Fee.

Organization and Offering Costs Reimbursement:

As provided in the Investment Advisory Agreement and the prospectus of the Company, offering costs incurred and paid by the Company in excess of $1,650,000 on the second public offering will be reimbursed by the

Adviser except to the extent the full 10.0% in broker fees are not incurred.

In such case, the difference will be available to be paid or reimbursed by the Company to brokers for marketing expenses or other non‑cash compensation.

As of June 30,

2019, the marketing expenses or non-cash compensation that was available to be paid or reimbursed to brokers that the Adviser was not required to reimburse the Company was $316,400.

Accordingly, the offering cost in excess of $1,966,400 will be

reimbursed by the Adviser to the Company.

The cumulative offering costs incurred in connection with this public offering as of June 30, 2019 and 2018 were $1,685,426 and $975,555, respectively, both of which were below the reimbursement threshold

of $1,966,400.

Therefore, there were no amounts reimbursable from the Adviser as of June 30, 2019 and 2018.

Of the total offering costs incurred by the Company during the year ended June 30, 2019 and 2018, MacKenzie had paid on behalf of the

Company in the amounts of $550,908 and $237,149, respectively.

Of those amounts paid by MacKenzie, as of June 30, 2019 and 2018, the Company had not reimbursed MacKenzie in the amounts of $116,115 and $237,149, respectively.

Therefore, those

amounts were recorded as payable to MacKenzie and included as a part of due to related entities in the statements of assets and liabilities as of June 30, 2019 and 2018.

As provided in the Amended and Restated Investment Advisory Agreement and the prospectus of the Company, offering costs incurred and paid by the Company in excess of $1,650,000

each on the second and third public offering will be reimbursed by the Adviser except to the extent that 10% in broker fees are not incurred (the “broker savings”).

In such case, the broker savings will be available to be paid by the Company for

marketing expenses or other non‑cash compensation.

As of the offering conclusion date, the broker savings was $399,793 on the second public offering.

Accordingly, second offering costs in excess of $2,049,793 were reimbursable by the Adviser to the

The cumulative offering costs incurred in connection with the second public offering as of December 31, and June 30, 2019 were $1,843,071 and $1,685,426, respectively, both of which were below the reimbursement threshold of $2,049,793.

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

Total offering costs incurred on the third public offering as of June 30, 2020, were $560,194, which was also below the reimbursement threshold.

Therefore, there were no amounts reimbursable from the Adviser as of June 30, 2020 and June 30, 2019 on account of either public offering.

Of the cumulative offering costs incurred on the second public offering by the Company as of December 31, 2019, MacKenzie had paid on behalf of the Company a total of $932,780, all of which was

fully reimbursed to MacKenzie as of December 31, 2019.

As of June 30, 2019, MacKenzie had paid on behalf of the Company a total of $788,057, of which $116,115 was payable to MacKenzie as of June 30, 2019 and was included as a part of due to related

entities in the consolidated statements of assets and liabilities as of June 30, 2019.

Index to Audited Consolidated Financial Statements

Of the cumulative offering costs incurred on the third public offering by the Company as of June 30, 2020, MacKenzie had paid on behalf of the Company a total of $300,212, of which $52,492 was

payable to MacKenzie as of June 30, 2020 and was included as a part of due to related entities in the consolidated statements of assets and liabilities as of June 30, 2020.

During the year ended June 30, 2020, 2019 and 2018, total offering costs paid by MacKenzie on behalf of the Company on its second and third public offerings were $444,935, $550,908, and $237,149,

respectively.

Administration Agreement:

1 unchanged sentence

furnishing the Company with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing the Company with other administrative services, subject to the Independent Directors' approval.

In addition, the Company reimburses MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of the Company's Chief Financial Officer, Chief Compliance Officer, Director of

addition, the Company reimburses MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of the Company's Chief Financial Officer, Chief Compliance Officer, Director of

Accounting and Financial Reporting, and any administrative support staff.

Effective November 1, 2018, transfer agent services are also provided by MacKenzie inhouse and the costs incurred by MacKenzie in providing the services are reimbursed by the Company.

Effective November 1, 2018, transfer agent services are also provided by MacKenzie in-house and the costs incurred by MacKenzie in providing the services are reimbursed by the Company.

No fee (only cost reimbursement)

1 unchanged sentence

The administrative cost reimbursements for the years ended June 30, 2020, 2019, and 2018, were $680,000, $570,667 and $432,000, respectively.

Transfer agent services cost reimbursement for the year ended June 30,

2019 was $23,333.

Transfer agent services cost reimbursements for the year ended June 30, 2020

and 2019 were $80,000 and $23,333.

The table below outlines the related party expenses incurred for the years ended June 30, 2020, 2019, and 2018, and unpaid as of June 30, 2020, and 2019.

16 unchanged sentences

Offering costs paid by MacKenzie- discussed in Note 5 under organization and offering costs reimbursements.

These are amortized over twelve-month period as discussed in

These are amortized over twelve-month period as discussed in Note

Transfer agent cost reimbursements for the period of November 1, 2018 through March 14, 2019 that MacKenzie refunded in July 2019.

Index to Audited Consolidated Financial Statements

Controlled or Affiliated Investments :

18 unchanged sentences

Arrowpoint Burlington LLC

BP3 Affliliate, LLC

BP3 Affiliate, LLC

BR Desota Investment Co, LLC

BR Everwood Investment Co, LLC

BR Quinn35 Investment Co, LLC

BR Sunrise Parc Investment Co, LLC

BR Westerly Investment Co, LLC

FSP Energy Tower I Corp.

8 unchanged sentences

Addison Property Member, LLC

Bandon PV Holdings, LLC

Bishop Berkeley, LLC

BR Gate Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

1 unchanged sentence

Capitol Hill Partners, LLC

Citrus Park Hotel Holdings, LLC

Coastal Realty Business Trust, REEP, Inc.

Dimensions28 LLP

MacKenzie Realty Operating Partnership, LP

Sunlit Holdings, LLC

June 30, 2019:

10 unchanged sentences

June 30, 2019

Affiliated Investment:

Affiliated Investments:

5210 Fountaingate, LP

Arrowpoint Burlington LLC

BP3 Affliliate, LLC

BR Desota Investment Co, LLC

BR Quinn35 Investment Co, LLC

FSP Energy Tower I Corp.

Liquidating Trust

FSP Satellite Place

Lakemont Partners, LLC

MPF Pacific Gateway - Class B

Secured Income, LP

Summit Healthcare REIT, Inc.

MPF Pacific Gateway - Class B

Controlled Investments:

Addison NC, LLC

Addison Property Member, LLC

Bandon PV Holdings, LLC

Bishop Berkeley, LLC

BR Gate Investment Co, LLC

Britannia Preferred Members, LLC -Class 1

Coastal Realty Business Trust, REEP, Inc.

Coastal Realty Business Trust, Series H2- A

Britannia Preferred Members, LLC -Class 2

Capitol Hill Partners, LLC

MC 15 Preferred Equity, LLC

Coastal Realty Business Trust, REEP, Inc.

Dimensions28 LLP

Gross reductions include sales proceeds and return of capital distributions.

Investments that are now deemed affiliated or controlled, as defined under the Investment company Act of 1940, after the amendment to Article 6 of Regulation S-X became

effective in November 2018.

These investments have been added in the June 30, 2018 table to conform to the presentation as of June 30, 2019.

Index to Audited Consolidated Financial Statements

Of the investments listed above, the Company (or its affiliates) has the power to exercise control over the management or policies of the portfolio companies listed below:

5 unchanged sentences

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

CRBT, Series H2-A invests in shares of a REIT which owns a real estate portfolio within asset classes of ski and mountain lifestyle, senior housing, attractions, marinas and other lifestyle properties located in the United States and

During the year ended June 30, 2018, this Series made liquidating distributions and dissolved after the sole underlying REIT investment liquidated and dissolved.

MC 15 Preferred Equity, LLC:

MC 15 Preferred Equity, LLC is a holding company that owns preferred equity of a company that owns a commercial real estate property in Austin, Texas.

The Company is a co-manager of MC 15 Preferred Equity, LLC and

has approximately 55.8% ownership interest in the company.

During the year ended June 30, 2019, MC 15 Preferred Equity, LLC dissolved after it received the preferred equity distributions from the underlying real estate company and distributed the

proceeds to its members in accordance with the operating agreement.

MacKenzie Realty Operating Partnership, LP (the “OP”):

On May 20, 2020, the Company formed an operating partnership, MacKenzie Realty Operating Partnership, LP (the “OP”).

Prior to the formation of the OP, the Company had preferred equity interests in Addison NC, LLC

(“Addison NC”) and Addison Property Member, LLC (“Addison Member”).

Both companies had ownership interests in Addison Property Owner, LLC (“Property Owner”), which owned an office and industrial development real estate property called Addison

Corporate Center.

On June 8, 2020, the Company and the OP entered into and closed on a Contribution Agreement with Addison Member, Addison NC, the managing members and other affiliates of these two entities (collectively referred to as the “Addison

Group”) whereby the Addison Group and the Company agreed to contribute all of their interests in Property Owner to the OP in exchange for partnership Units in the OP (“OP Units”).

At closing, the OP issued 516,144 of Class A OP units to the Addison

At closing, the Company also contributed $1,555,861 in cash to the OP, of which $1,311,458 was directly paid to the lender to pay down principal, fees, and reserve deposits in order to secure an extension of Property

Owner’s $24.4 million existing mortgage debt (the “Loan”) for up to 2 years, and pursuant to which the lender agreed to the assignment of the membership interests in Property Owner to the OP and to have the Company be the replacement guarantor of the

recourse obligations under the Loan.

The Loan is secured by the properties owned by Property Owner.

In exchange for the cash contributed to the OP and the contribution of the Company’s previously owned indirect equity interest in the Property Owner

to the OP, the Company received 1,451,642.63 Class B units in the OP.

At closing, the parties also entered into the Agreement of Limited Partnership of the OP that provides for redemption rights for the contributors (and its permitted transferees) to redeem the Class A OP Units for cash

or shares of the Company, at the Company’s election.

The OP Units will also receive distributions at the same rate paid to holders of the Company’s common stock.

MPF Pacific Gateway:

1 unchanged sentence

The Company has a 15.82% ownership interest in MPF Pacific Gateway.

NOTE 6 – DEBT GUARANTY

On June 8, 2020, as part of the Contribution Agreement discussed above under Note 5, the Company replaced as the loan guarantor and the maturity date of the Loan was extended to April 30, 2021, with an option to

further extend the maturity date to April 30, 2022.

Under the Loan Modification Agreement and Replacement Guaranty, the Company guaranteed only the “Recourse Obligations” under the Loan, typically referred to as “Bad Boy Acts” (such as fraud,

intentional misrepresentation, willful misconduct, waste, conversion, intentional failure to pay taxes or maintain insurance, filing for bankruptcy, etc.).

As of June 30, 2020, the Company has not recorded any debt guaranty obligation since the

borrower, Property Owner, was current on the Loan payments and has sufficient cash flow to meet its monthly payments and there have been no inappropriate actions that would give rise to a guaranty obligation.

In addition, the appraised value of the

collateral was higher than the loan balance of $24.4 million as of June 30, 2020.

Index to Audited Consolidated Financial Statements

NOTE 7 – FINANCIAL HIGHLIGHTS

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time of capital transactions.

(4) Net of sales commissions and dealer manager fees of $1.00 per share.

(4) Net of sales commissions and dealer manager fees of $1.00 per share as of October 30, 2019 and $1.03 per share thereafter.

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

1 unchanged sentence

NOTE 8 – SHARE OFFERINGS AND FEES

During the year ended June 30, 2019, the Company issued 2,359,285 shares with gross proceeds of $23,244,171, under the current offering and issued 334,008 shares under the Company's dividend reinvestment plan

("DRIP") with gross proceeds of $3,006,069.

During the year ended June 30, 2020, the Company issued 1,943,646 shares with gross proceeds of $19,505,452, under the current offering and issued 317,840 shares under the Company's dividend reinvestment plan ("DRIP")

with gross proceeds of $2,891,349.

For the year ended June 30, 2020, the Company incurred selling commissions and fees of $1,823,648.

No selling commissions and fees were incurred for the shares issued under the DRIP.

During the year ended June 30, 2018, the Company issued 2,300,933 shares with gross proceeds of $23,007,310, under the current offering and issued 260,005 shares under the Company's dividend reinvestment plan

("DRIP") with gross proceeds of $2,340,042.

with gross proceeds of $3,006,069.

For the year ended June 30, 2020, the Company incurred selling commissions and fees of $2,010,015.

No selling commissions and fees were incurred for the shares issued under the DRIP.

Index to Audited Consolidated Financial Statements

NOTE 9 – SHARE REPURCHASE PLAN

Pursuant to the Company’s share Repurchase Program, during the year ended June 30, 2019, the Company submitted four tender offers to purchase its own shares at $9 per share.

The Company repurchased a total of 263,115

shares for a total of $2,368,035.

Similarly, during the year ended June 30, 2018, the Company submitted four tender offers and repurchased a total of 161,569 shares for a total of $1,454,120.

Pursuant to the Company's share repurchase program, during the year ended June 30, 2020, the Company made three tender offers to purchase its own shares as noted in the below table:

of shares Repurchased

Repurchase Price

Total Repurchase Consideration

During the year ended June 30, 2020:

August 13, 2019 through September 16, 2019

November 18, 2019 through December 19, 2019

February 14, 2020 through March 18, 2020

During the year ended June 30, 2019, the Company made four tender offers to purchase its own shares as noted in the below table:

of shares Repurchased

Repurchase Price

Total Repurchase Consideration

During the year ended June 30, 2019:

August 17, 2018 through September 17, 2018

November 14, 2018 through December 18, 2018

February 14, 2019 through March 18, 2019

May 14, 2019 through June 21, 2019

On May 11, 2020, after assessing the impacts of the Covid-19 pandemic, the Company’s board of directors unanimously approved the suspension of the Company’s Share Repurchase Program, effective immediately.

the Company did not repurchase any shares thereafter.

NOTE 10 – STOCKHOLDER DIVIDENDS AND INCOME TAXES

4 unchanged sentences

March 31, 2020

June 30, 2019

Of the total dividends paid during the year ended June 30, 2020, $2,891,349 has been reinvested under the Company’s DRIP.

On March 31, 2020, after assessing the impacts of the Covid-19 pandemic, the Company’s board of directors unanimously approved the suspension of regular quarterly dividends to the Company’s stockholders, effective

As a result, the Company did not pay or accrue any dividend for the quarter ended June 30, 2020.

Index to Audited Consolidated Financial Statements

The following table reflects the dividends per share that the Company has declared on its common stock during the year ended June 30, 2019.

5 unchanged sentences

Of the total dividends paid during the year ended June 30, 2019, $3,006,069 has been reinvested under the Company’s DRIP.

On July 28, 2019, the Company's Board of Directors approved a monthly dividend of $0.0583 per share for the quarter ending September 30, 2019, payable on or about the quarterly payment date of October 31, 2019, to

record holders as of July 31, 2019, August 31, 2019, and September 30, 2019.

While our fiscal year end for financial reporting purposes is June 30 of each year, our tax year end is December 31 of each year.

The information presented in this footnote is based on our tax year end for each period presented, unless otherwise

The information presented in this footnote is based on our tax year end for each period

presented, unless otherwise specified.

For income tax purposes, dividends paid to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof.

4 unchanged sentences

Ordinary income

Return of capital

Total dividends

11 unchanged sentences

Aggregate gross unrealized depreciation

Net unrealized appreciation

Net unrealized appreciation (depreciation)

Aggregate cost (tax basis)

Index to Audited Consolidated Financial Statements

NOTE 11 – QUARTERLY FINANCIAL DATA (UNAUDITED)

16 unchanged sentences

June 30, 2019

Net investment income

Net investment income (loss)

Net realized gain from sale of investments

14 unchanged sentences

Weighted average Share outstanding

Index to Audited Consolidated Financial Statements

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures