MacKenzie Realty Capital, Inc.: Form 10-K for the period ended Jun 30, 2026

Organization

MacKenzie Realty Capital, Inc. (the “Parent Company” together with its subsidiaries as discussed below, collectively, the “Company,” “we,” “us,” or “our”) was incorporated under the general corporation laws of the State of Maryland on January 27, 2012. We have elected to be treated as a real estate investment trust (“REIT”) as defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). We are authorized to issue 100,000,000 shares, of which (i) 80,000,000 are designated as common stock, with a $0.0001 par value per share; and (ii) 20,000,000 are designated as preferred stock, with a $0.0001 par value per share. We commenced our operations on February 28, 2013, and our fiscal year-end is June 30.

We are registered under Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and we will continue to file periodic reports on Form 10-K, Form 10-Q, and Form 8-K, as well as file proxy statements and other reports required under the Exchange Act.

We filed our initial registration statement with the Securities and Exchange Commission (“SEC”) in 2012 and have since completed multiple public offerings of our common stock. On November 6, 2024, The Nasdaq Stock Market (“Nasdaq”) approved the listing of our common stock, and trading commenced on the Nasdaq Capital Market on November 11, 2024.

We are externally managed by MacKenzie Capital Management, LP (“MacKenzie”) under a turnkey administration agreement dated and effective as of January 1, 2021 (the “Administration Agreement”). MCM Advisers, LP (the “Investment Adviser”), an affiliate of MacKenzie, advises us in our assessment, acquisition, and divestiture of securities under the advisory agreement amended and restated effective January 1, 2021 (the “Amended and Restated Investment Advisory Agreement”). Another affiliate of MacKenzie, MacKenzie Real Estate Advisers, LP (the “Real Estate Adviser”; together, the “Investment Adviser” and the “Real Estate Adviser” may be referred to as “Adviser” or “Advisers” as appropriate) advises us in our assessment, acquisition, and divestiture of real estate assets under the Advisory Management Agreement, dated January 27, 2021 and as amended on December 29, 2025, effective January 1, 2026 (as amended, the “Advisory Management Agreement”). Under the Advisory Management Agreement, as amended, we pay the Real Estate Adviser (i) a base management fee equal to 1.25% per annum of our gross assets under management (excluding depreciation and amortization), paid monthly, and (ii) a bonus management fee equal to 5% of our adjusted funds from operations for each quarter. The Advisory Management Agreement has a five-year term that renews automatically on each January 1 unless we deliver a timely non-renewal notice, and requires us to pay a substantial early termination fee if we terminate the agreement other than for cause. See Note 8 to the consolidated financial statements included in this report for additional information about the terms of these arrangements and the fees paid to our Advisers. We pursue a strategy focused on investing primarily in real estate assets, and to a lesser extent (intended to be less than 20% of our portfolio) in illiquid or non-traded debt and equity securities issued by U.S. companies generally owning commercial real estate. These companies are likely to be non-traded REITs, small-capitalization publicly traded REITs, public and private real estate limited partnerships, and limited liability companies.

Prior to January 1, 2026, the Company conducted substantially all of its real estate operations through MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”), which was formed in May 2020. Effective January 1, 2026, the Company reorganized its real estate operations by separating its multi-family residential portfolio from its commercial real estate investments. The Company contributed its multi-family residential properties (Commodore, The Park View, Hollywood and Shoreline Apartments and Aurora at Green Valley) and Blue Ridge at Suisun Valley (“Blue Ridge”) development project to MacKenzie Apartment Communities, Inc. (“MAC”), a newly formed entity, in exchange for 1,906,580 shares of MAC, representing all of the outstanding shares of MAC at the time of the contribution, on a 1:1 basis with the Parent Company’s outstanding shares at the time of the contribution. Blue Ridge is a planned multi-family residential development project located on vacant land adjacent to the Company’s 220 Campus Lane Office Building in Fairfield, California. The project is expected to consist of 84 multi-family residential units, and the entitlement process is ongoing. The Parent Company is the sole shareholder of MAC as of June 30, 2026. On January 8, 2026, the Board of Directors of MAC approved an estimated net asset value of the common stock of MAC equal to $18.10 per share for MAC’s common stock. The estimated net asset value solely applies to MAC common stock and does not reflect the net asset value of the Parent Company’s common stock. The contributed properties and development project are held by MAC Operating Partnership, LP (“MAC OP”), of which MAC is the sole general partner and owner of all limited partnership units (except for 1 unit held by the Operating Partnership to ensure there are 2 partners in MAC OP). MAC OP directly or indirectly owns and operates five residential properties and one development project. Following the reorganization, the Company’s commercial real estate investments continued to be held through the Operating Partnership.

As of June 30, 2026, we own all limited partnership units of the Operating Partnership except for 81,909.89 Class A Limited Partnership units, 1,063,239.94 Series A preferred units and 43,212.86 Series B preferred units. Upon a limited partner’s request for redemption or upon liquidation of the Operating Partnership, the 81,909.89 Class A Limited Partnership units are convertible into shares of the Company’s common stock on the basis of 1 share of common stock for every 10 units or, at the Company’s election, for cash based upon the 10-day average trading price of the Company’s common stock, also on the basis of 1 share of common stock for every 10 units (as a result of the Company’s 1-for-10 common stock reverse stock split (the “Reverse Stock Split”) on August 4, 2025; previously the units were convertible on the basis of 1 share of common stock for every 1 unit). Upon a request of a holder of Series A or Series B preferred units, the Company may elect to repurchase such units with the Company’s common stock based upon the volume weighted average price per share of common stock for the twenty (20) trading days prior to the repurchase date, or at the Company’s election or upon liquidation, the 1,063,239.94 Series A preferred units are entitled to a liquidation preference of $26,580,999 (based on the stated value of $25 per share for the Series A preferred units) and the 43,212.86 Series B preferred units are entitled to a liquidation preference of $1,080,322 (based on the stated value of $25 per share for the Series B preferred units). The Parent Company has contributed net capital of $72,457,055 to the Operating Partnership since inception; thus, the Class A, Series A and Series B preferred units represent approximately 28.23% of all capital contributions.

The consolidated financial statements include the accounts of the Parent Company, the Operating Partnership, MAC, MAC OP, MacKenzie NY Real Estate 2 Corp. (“MacKenzie NY 2”), a taxable REIT subsidiary, and their majority-owned and controlled subsidiaries, including joint ventures and property-owning entities acquired or formed to own, operate, develop, or manage multi-family, office, and mixed-use real estate properties. The consolidated entities include Madison-PVT Partners LLC (“Madison”), PVT-Madison Partners LLC (“PVT”), Hollywood Hillview Owner, LLC (“Hollywood Hillview”), MacKenzie-BAA IG Shoreline LLC (“MacKenzie Shoreline”), MacKenzie Satellite Place Corp. (“MacKenzie Satellite”), MRC Aurora, LLC (“MRC Aurora”), 220 Campus Lane, LLC (“220 Campus Lane”), Campus Lane Residential, LLC (“Campus Lane Residential”), GV Executive Center, LLC (“GVEC”), Innovate Napa, LLC (“Innovate Napa”), MRC QRS, Inc. (“MRC QRS”), and various limited partnerships (each a “Wiseman Partnership”) acquired in connection with the Wiseman transaction, including First & Main, LP (“First & Main”), 1300 Main, LP (“1300 Main”), Woodland Corporate Center Two, LP (“Woodland Corporate Center Two”), Main Street West, LP (“Main Street West”), One Harbor Center, LP (“One Harbor Center”), and Green Valley Medical Center, LP (“Green Valley Medical Center”). Each Wiseman Partnership owns a Class A or B office property in Napa, Fairfield, Suisun, or Woodland, California (the “Wiseman Properties”). Intercompany balances and transactions are eliminated in consolidation.

We are conducting a Regulation A offering of our preferred stock pursuant to an offering circular qualified by the SEC on November 21, 2025, (as amended, the “Offering Circular”) which permits the offer and sale of up to $72.90 million of Series A, Series B, and Series C preferred stock, at an offering price of $22.50 per Series A share and $25.00 per Series B or Series C share. Prior Regulation A offerings have been terminated or superseded.

In November 2024, we filed a new shelf registration statement on Form S-3 (the “Form S-3 Registration Statement”) to sell our common and preferred stock, warrants, rights and units up to an aggregate of $75 million. The Form S-3 Registration Statement was declared effective by the SEC on January 15, 2025. Also on January 15, 2025, we entered into an Equity Distribution Agreement (the “ATM Sales Agreement”) with Maxim Group LLC (the “Sales Agent” or “Maxim”) pursuant to which we may issue and sell shares of our common stock, covered by the prospectus supplement filed with the SEC on January 15, 2025 and accompanying base prospectus dated January 15, 2025 (together, the “ATM Prospectus”), subject to maintaining compliance with General Instruction I.B.6 of Form S-3 Registration Statement which requires that in no event will we sell securities in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below $75 million.

On January 7, 2026, in connection with the at the market offering program (the “ATM Offering”) through which the Company may sell up to $20,000,000 of shares of the Company’s common stock at $0.0001 par value per share, the Company entered into an amendment to the ATM Sales Agreement with Maxim.

In accordance with the terms of the amendment, the ATM Sales Agreement will now terminate upon the earlier of (i) the issuance and sale of all of the common stock subject to the ATM Sales Agreement, (ii) termination of the ATM Sales Agreement by the Company or the Sales Agent with 15 days written notice, or (iii) July 15, 2027.

On August 26, 2024, the Company entered into a letter agreement with Maxim to provide general financial advisory and investment banking services to the Company in connection with, among other things, strategic planning, potential uplisting to a U.S. exchange (Nasdaq, New York Stock Exchange), and potential rights offering, equity issuance or other mechanisms to enhance corporate and shareholder value. In connection with the agreement, the Company issued to Maxim’s affiliate in a private placement 13,300 shares of common stock, representing approximately 1% of the Company’s outstanding stock. The common stock does not have any conversion rights.

On August 4, 2025, the Company effected a 1-for-10 Reverse Stock Split of its common stock. In connection with the Reverse Stock Split, the Company amended its charter to temporarily increase the par value of the common stock from $0.0001 per share to $0.001 per share and, on the same date, further amended its charter to restore the par value to $0.0001 per share. The Reverse Stock Split did not change the number of authorized shares of common stock. Prior to the Reverse Stock Split, the Company had 16,760,978 shares of common stock outstanding. Immediately following the Reverse Stock Split (and after giving effect to the payment of cash in lieu of fractional shares), the Company had 1,675,776 shares of common stock outstanding. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders entitled to receive a fractional share instead received a cash payment equal to the fraction of a share multiplied by the closing price of the Company’s common stock on The Nasdaq Capital Market on August 1, 2025, as adjusted for the Reverse Stock Split, without interest. All common share and per-share information in the accompanying consolidated financial statements and notes have been retroactively adjusted to reflect the Reverse Stock Split.

As of June 30, 2026, we have raised approximately $125.76 million from our common stock public offerings (including $4.83 million from our Registered Offering and the concurrent private placement, and $1.83 million from the ATM offering), $19.90 million from our Series A preferred stock offering, $3.72 million from our Series B preferred stock offering and $1.37 million from our Series C preferred stock offering pursuant to the Offering Circular. As of June 30, 2026, we have issued shares of common stock, Series A preferred stock, Series B preferred stock, and Series C preferred stock with gross proceeds of $15.56 million, $0.63 million, $0.04 million, and a minimal worth of shares, respectively, under our dividend reinvestment plans (each a “DRIP” and together the “DRIPs”). Of the total shares issued by us as of June 30, 2026, we have repurchased approximately $14.28 million in shares of common stock, $2.41 million in shares of Series A preferred stock and $0.15 million in shares of Series B preferred stock, respectively, under our share repurchase program. As of June 30, 2026, we have 2,512,270 shares of common stock, 733,447.24 shares of Series A preferred stock, 124,627.52 shares of Series B preferred stock, and 54,707.09 shares of Series C preferred stock outstanding.

Investment Objective

Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments. Our independent directors review our investment policies periodically, at least annually, to confirm that our policies are in the best interests of our stockholders. Each such determination and the basis thereof are contained in the minutes of our Board of Directors meetings.

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

Our Corporate Information

Our offices are currently located at 89 Davis Road, Suite 100, Orinda, CA 94563 and our telephone number is (925) 631-9100 or (800) 854-8357.

Investment Strategy

Following withdrawal of our election to be regulated as a BDC in 2020, we have continued to invest in private companies that directly or indirectly own real property, increased our control over our private investments, and consolidated those investments for financial reporting purposes when appropriate, and we intend to continue to do the same. We conduct many of our operations through the Operating Partnership. The withdrawal of our BDC election has also allowed us to expand our investment pool to include real, physical assets, as opposed to only investment securities. We believe that this expanded pool of potential investments allows access to risk-adjusted returns consistent with our investment objective, while allowing us to maintain our REIT status.

We engage in various investment strategies to achieve our overall investment objectives. The strategy we select depends upon, among other things, market opportunities, the skills and experience of the Advisers’ investment team and our overall portfolio composition. We generally seek to acquire assets that produce ongoing distributable income for investors, yet with a primary focus on purchasing such assets at a discount from what the Advisers estimate to be the actual or potential value of the real estate.

When evaluating opportunities to buy properties, we look for opportunistic and value-add situations similar to our approach to targeting real estate securities, including unique situations and value-added opportunities. We evaluate the broader market, the property’s position in the market, the needs our capital can address, and the track record of the sponsor or operator bringing the opportunity to us. We do not generally engage brokers to search for or acquire properties, and the majority of our properties were acquired in “off market” transactions.

We acquire mid-market properties that may be too small to attract most institutions, and where we believe we can create long-term value for our stockholders utilizing the following investment strategies.

• Value-Add. We invest in well-located properties with strong and stable cash flows in demographically attractive economic growth markets where we believe there exists significant potential for medium-term capital appreciation through renovation or redevelopment, to reposition the asset and drive future rental growth.
• Opportunistic. We invest in properties available at opportunistic prices (i.e., at prices we believe are below those available in an otherwise efficient market) that exhibit some characteristics of distress, such as operational inefficiencies, significant deferred capital maintenance, or broken capital structures providing an opportunity for a substantial return from appreciation in value.
• Invest-to-Own. We may invest in the development of properties in target markets where we believe we can capture significant development premiums upon completion. We generally use a mezzanine loan or convertible preferred equity structure which provides income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership.

We intend to continue our historical activities related to tender offers for shares of non-traded REITs to boost our short-term cash flow and to support our distributions, subject to the constraint that such securities will not exceed 20% of our portfolio. We believe this niche strategy will allow us to pay distributions that are supported by cash flow rather than paying back investors’ capital, although there can be no assurance that some portion of any distribution is not a return of capital. This strategy can boost cash-flow in two ways: (1) most such non-traded REITs pay regular cash distributions; and (2) when such non-traded REIT shares are liquidated or sold, we may realize a profit from having purchased the shares at a discount to the underlying net asset value.

Types of Investments

We target real estate-related investments which may include equity interests in LLCs, tenancies-in-common, mortgages, loans, bonds, other real estate-related investment entities, or direct ownership of real property. We intend to purchase primarily majority interests in properties or companies that own properties so that we can consolidate them into our financial statements. We may purchase non-controlling interests, but we intend that such investments will constitute less than 20% of our portfolio. We do not invest in general partnerships or other entities that do not afford limited liability to their security owners. However, limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities.

Investment Selection

Our Advisers’ investment team is responsible for all aspects of our investment process. The current members of the investment team are Glen Fuller, Chip Patterson, Robert Dixon, Angche Sherpa, and Christine Simpson. The investment strategy involves a team approach, whereby potential transactions are screened by various members of the investment team.

Our process for acquiring targeted real estate typically involves three steps: (i) identifying assets of the type we may be interested in acquiring; (ii) evaluating the assets to estimate their value or potential value to us, and (iii) either acquiring such assets directly or through our network of real estate partners. Different circumstances may require different procedures, or different combinations of procedures, and we adjust our acquisition strategy to fit the circumstances. Nonetheless, the typical stages of our investment selection process are as follows:

Deal Generation/Origination

We source investments through long-standing relationships with real estate operators, developers, industry contacts, brokers, commercial and investment bankers, entrepreneurs, services providers such as lawyers and accountants, as well as current and former clients, portfolio companies and investors. Our Advisers’ goal is to establish relationships with successful operators with proven track records in each region in which we operate, and to grow and deepen those relationships as they prove successful.

Screening

In screening potential investments, the Advisers’ investment team utilizes a value-oriented investment philosophy and commits resources to managing downside exposure.

Due Diligence

In conducting due diligence, the Advisers use publicly available information as well as information from its relationships with former and current management teams, investors, consultants, competitors and investment bankers.

Our Advisers’ due diligence typically includes:

• review of operating history, appraisals, market reports, vacancies, deferred maintenance;
• review of historical and prospective financial information and regulatory disclosures;
• research relating to the property’s management, industry, markets, products and services and competitors;
• verification of collateral; and
• appraisals or opinions of value by third party advisers.

Upon the completion of due diligence and a decision to proceed with an investment, the investment professionals leading the investment present the investment opportunity to the Advisers’ investment team, which then determines whether to pursue the potential investment. Additional due diligence with respect to any investment may be conducted on our behalf by attorneys and independent accountants prior to the closing of the investment, as well as other outside third-party advisers, as appropriate. Any fees and expenses incurred by the Advisers to oversee due diligence investigations undertaken by third parties may be reimbursed by us, which are in addition to any management or incentive fees payable by us under the advisory agreements.

Monitoring

Our Advisers monitor our investments on an ongoing basis. Our Advisers have several methods of evaluating and monitoring the performance and value of the assets in which we invest, which include the following:

• Assessment of success in adhering to business plans and compliance with covenants;
• Periodic and regular contact with property management to discuss financial position, requirements, and accomplishments;
• Comparisons to other properties in the geographic area or sector;
• Attendance at and participation in our board meetings; and
• Review of monthly and quarterly consolidated financial statements and financial projections for properties.

Valuation of Investments

Securities for which market quotations are readily available on an exchange will be valued at the closing price on the day closest to the valuation date. Where a security is traded but in limited volume, we may instead utilize the weighted average closing price of the security over the prior 10 trading days. To value securities that do not trade on a national exchange, we may use published secondary market trading information.

Securities for which reliable market data is not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Investment Adviser or Board of Directors, does not accurately measure fair value, are valued as follows: (i) the securities are initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuation conclusions are documented and discussed with our senior management; and (iii) the Board of Directors reviews these preliminary valuations and, where appropriate and necessary, valuations by third-party valuation firms, and uses such valuations, as adjusted by the Board if appropriate, to determine the fair value of the securities.

Securities for which market data is not readily available or for which a pricing source does not accurately measure value may include the following:

• private placements and restricted securities that do not have an active trading market;
• securities whose trading has been suspended or for which market quotes are no longer available;
• debt securities that have recently gone into default and for which there is no current market;
• securities whose prices are stale;
• securities affected by significant events; and
• securities that the Investment Adviser believes were priced incorrectly.

Valuation of Real Property

Valuation of real property used to evaluate impairment of real property held for use, held for sale, or to determine the fair value of certain real properties held by equity method investments accounted for using the fair value method, involve subjective judgments and estimates. To determine the valuation of the real estate properties, management utilizes the income approach, either the discounted cash flow or direct capitalization valuation model. Determining fair value requires management to make estimates of future cash flows, which are based on a number of inputs and assumptions, including property operations, terminal capitalization rates, and discount rates. We estimate future leasing activities and associated costs, generally over a ten-year period, to determine the fair value of the property. Once the fair value is determined, we determine whether any impairment is required and document our conclusion. As part of their review of our quarterly and annual reports, the Board of Directors reviews the valuations and impairment determinations. In addition, we may obtain a third-party appraisal on directly owned properties.

The inputs used in the valuation of real property are unobservable and accordingly, the notes to our consolidated financial statements describe the uncertainty with respect to the possible effect of such valuations, and any changes in such valuations, on our consolidated financial statements.

Human Capital

As of June 30, 2026, we did not have any employees. Our day-to-day investment operations are managed by the Advisers. Our Advisers may hire additional investment professionals, based upon their needs. We also entered into the Administration Agreement with MacKenzie, under which we reimburse MacKenzie for our allocable portion of overhead and other expenses incurred by it in performing its obligations, including rent, the fees and expenses associated with performing compliance functions, and the compensation of our chief financial officer, our chief compliance officer, and any administrative support staff. We have also retained MacKenzie as our initial transfer agent for our common and preferred stock and reimburse MacKenzie for software maintenance costs. Following our listing of common stock, we retained a third-party transfer agent for our common stock, while MacKenzie continues to serve as transfer agent for our preferred stock.

Compliance with governmental laws and regulations, including those relating to environmental matters

Because we operate as a REIT and own real estate properties, we are required to comply with various governmental laws and regulations, including those relating to environmental matters. Because we are a public company, we also must comply with the Exchange Act.

Environmental Matters

We have invested, and expect to continue to invest, in real property assets, which are subject to laws and regulations relating to the protection of the environment and human health and safety. Environmental laws and regulations may impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal. This liability could be substantial. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such property as collateral for future borrowings.

Some of these laws and regulations have been amended to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us. Future laws, ordinances or regulations may impose material environmental liability. Additionally, our tenant companies’ operations, the existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and that may subject us to liability in the form of fines or damages for noncompliance. Any material expenditures, fines, or damages we must pay would reduce our ability to make distributions.

Other Regulations

State and federal laws in this area are constantly evolving, and we intend to monitor these laws and take commercially reasonable steps to protect ourselves from the impact of these laws, including where deemed necessary, obtaining environmental assessments of properties that we acquire; however, we will not obtain an independent third-party environmental assessment for every property we acquire. In addition, any assessment we obtain may not reveal all environmental liabilities or whether a prior owner of a property created a material environmental condition not known to us. The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution.

Board Approval of the Administration and Advisory Agreements

Our advisory and administrative services agreements were initially approved by our Board of Directors in January 2021, and have been reviewed and approved annually since 2021. Such approvals were made on the basis of an evaluation satisfactory to our Board of Directors including a consideration of, among other factors, (i) the nature, quality, and extent of the advisory and other services to be provided under the agreements, (ii) the investment performance of the personnel who manage REITs with objectives similar to ours, to the extent available, (iii) comparative data with respect to advisory fees or similar expenses paid by other REITs with similar investment objectives, to the extent available, and (iv) information about the services to be performed and the personnel performing such services under each of the agreements.

On December 29, 2025, our Board of Directors, including a majority of our independent directors, unanimously approved an amendment to the Advisory Management Agreement with the Real Estate Adviser, effective January 1, 2026, that replaced the prior asset management, incentive management, acquisition, financing and disposition fee structure with a base management fee equal to 1.25% per annum of our gross assets under management (excluding depreciation and amortization), paid monthly, and a bonus management fee equal to 5% of our adjusted funds from operations for each quarter. In approving the amendment, our Board of Directors considered, among other factors, the anticipated effect of the amended fee structure on our total advisory expenses as compared to the prior structure, the nature and scope of the services to be provided by the Real Estate Adviser, comparative data with respect to advisory fees paid by other externally managed REITs, and the alignment of the amended fee structure with the current scale and strategy of our real estate portfolio.

Our internet address is www.mackenzierealty.com (http://www.mackenzierealty.com). We are a reporting company and file reports, proxy statements, and other information with the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. We make available free of charge on or through our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

An investment in our common stock or preferred stock involves substantial risks. You should specifically consider the following material risks in addition to the other information contained in this annual report on Form 10-K. The occurrence of any of the following risks might have a material adverse effect on our business, financial condition, and results of operations, which could cause the price or value of our common stock or preferred stock to decline and could result in our stockholders losing some or all of their investment. The risks and uncertainties discussed below are not the only ones we face, but they represent those risks and uncertainties that we believe are most significant to our business, operating results, financial condition, prospects and forward-looking statements. As used herein, the term “you” refers to our current stockholders or potential investors in our common or preferred stock.

RISK FACTORS SUMMARY

The following is a summary of the most significant risks relating to our business activities that we have identified. If any of these risks occur, our business, financial condition, or results of operation, including our ability to generate cash and make distributions, could be materially adversely affected. For a more complete understanding of our material risk factors, this summary should be read in conjunction with the detailed discussion of our risk factors, which follows this summary.

• Real property investments are subject to various risks, many of which are beyond our control, which could cause declines in our operating revenues and/or the underlying value of one or more of our properties.
• The market for real estate investments is highly competitive and investments in real estate-related assets can be speculative.
• Illiquidity of real estate investments could significantly affect our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
• We could be exposed to environmental liabilities, which could impact the value of real properties that we may acquire or underlying our investments.
• We may not obtain independent third-party appraisals or valuation reports on all of our investments.
• We may be adversely affected by unfavorable economic conditions, particularly in the specific geographic areas where our investments are concentrated.
• Inflation may adversely affect our financial condition and results of operations.
• Our success is materially dependent on attracting qualified tenants and, when vacancies occur, we may not be able to re-lease or renew leases at the properties held by us on terms favorable to us, or at all.
• The bankruptcy, insolvency, or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition.
• Significant restrictions on transfer and encumbrance of investments subject to mortgage or other debt financing are expected, and we may experience delays in the sale of an investment.
• We face possible risks associated with climate change.
• Future debt or capital stock issuances by the Company could dilute the ownership interest of current stockholders and could subject us to covenants restricting our future financial and operating flexibility.
• We do not have guaranteed cash flow, and if we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and our stockholders’ overall return will be reduced.
• We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
• We may change our targeted investment and operational policies without stockholder consent.
• Our Board of Directors can revoke our REIT qualification without stockholder approval.
• Our future growth will depend on our ability to acquire real estate investments in several competitive real estate markets, and lack of diversification in numbers or types of investments increases our dependence on individual investments.
• We may experience difficulty in ultimately selling properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors.
• Subject to broad investment guidelines approved by our Board of Directors, we are dependent on the investment analysis and management services provided by our Advisers and their key personnel for our success.
• Our investments will be carried at estimated fair value as determined by our Advisers and there may be uncertainty as to the value of these investments.
• We, through our Advisers, are often required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations.
• A cyber incident or deficiency in our cybersecurity could disrupt our operations, compromise confidential information, damage our business relationships and negatively impact our financial results.
• Our Charter permits our Board of Directors to issue stock with terms that may subordinate the rights of common stockholders or preferred shareholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
• Our rights and the rights of our shareholders to recover claims against our officers, directors, and our Advisers are limited.
• The Advisory Agreements with our Advisers were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.
• We may have conflicts of interest with our Adviser and other affiliates, which may result in investment decisions that are not in the best interest of our stockholders.
• The fees payable to our Real Estate Adviser under the amended Advisory Management Agreement effective January 1, 2026, may cause our Real Estate Adviser’s economic interests to diverge from the interests of our stockholders.
• Our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of real estate investments, and such conflicts may not be resolved in our favor.
• We have not adopted any specific conflicts of interest policies, and, therefore, other than in respect of the restrictions placed on our Advisers in the Advisory Agreements, we will be reliant upon the good faith of our Advisers, officers, and directors in the resolution of any conflict.
• We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments and reduce the cash available for distribution to stockholders.
• High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.
• High mortgage rates may make it difficult for us to finance or refinance properties, may require us to pay down loans with investment capital, which could reduce the number of properties we can acquire, our cash flow from operations, and the amount of cash distributions we can make.
• If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.
• Failure to remain qualified as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders.
• Complying with minimum required distributions and other REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
• The stock ownership limit imposed by the Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities.
• Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, and a failure to make required distributions would subject us to U.S. federal corporate income tax.
• The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.
• We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.
• There are unresolved issues relating to the rights of the holder of our unfunded warrants, who has taken the position that dividends are payable on those warrants notwithstanding that we did not agree to pay such dividends, and any claims for participation in future dividends could be material if and when we resume dividend payments on our common stock.
• We may be unable to satisfy the continued listing standards of The Nasdaq Capital Market, and our common stock could be delisted.

Risks Related to Investing in Real Estate

Real estate investments are subject to risks particular to real property, including:

• Adverse changes in national and local economic and market conditions, including the credit and securitization markets;
• Impacts from governmental laws and regulations, fiscal policies and zoning ordinances, including the impact of environmental laws and regulations, and related compliance costs, including costs to comply with future changes;
• Takings by condemnation or eminent domain;
• Real estate conditions, such as an oversupply of or a reduction in demand for real estate space in the area, which could adversely affect market rental rates;
• The perceptions of tenants and prospective tenants of the convenience, attractiveness and safety of our properties;
• Competition from comparable properties;
• The occupancy rate of our properties;
• The ability to collect all rent from tenants on a timely basis;
• The effects of any bankruptcies or insolvencies of major tenants;
• The expense of re-leasing space;
• Changes in interest rates and in the availability, cost and terms of mortgage funding;
• Economic or physical decline of the areas where our investments are located;
• Deterioration in the physical condition of our investments and resulting maintenance expenses;
• Acts of war or terrorism, including the consequences of terrorist attacks;
• Acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses; and
• Cost of compliance with the Americans with Disabilities Act.

Any of these or similar events may reduce our return from an affected property or investment and reduce or eliminate our ability to make distributions to stockholders.

The market for real estate investments is highly competitive.

Identifying attractive real estate investment opportunities is difficult and involves a high degree of uncertainty. Furthermore, the historical performance of a particular property or market is not a guarantee or prediction of the property’s or market’s future performance. There can be no assurance that we will be able to locate suitable acquisition opportunities in our target markets, achieve our investment goal and objectives, or fully deploy our cash.

Because of the recent growth in demand for real estate investments, there may be increased competition among investors to invest in the same asset classes as we do. This competition may lead to an increase in investment prices or otherwise less favorable investment terms. If this situation occurs with a particular investment, our return on that investment is likely to be less than the return we could have achieved if we had invested at a time of less investor competition for the investment. For this and other reasons, the Real Estate Adviser is under no restrictions concerning the timing of investments.

Real estate investments are not as liquid as other types of assets, which may reduce economic returns to our stockholders.

Real estate investments are not as liquid as some other types of investments. The market for the sale of real estate properties can vary greatly and it may take a significant amount of time for us to sell any particular property on favorable terms, if at all. As a result, our ability to sell under-performing assets in our portfolio or respond to changes in economic and other conditions may be relatively limited.

Investments in real estate-related assets can be speculative.

Investments in real estate-related assets can involve speculative risks and always involve substantial risks. No assurance can be given that the Advisers will be able to execute the investment strategy or that stockholders in the company will realize their investment objectives. No assurance can be given that our stockholders will realize a substantial return (if any) on their investment or that they will not lose their entire investment in us.

We will likely receive limited representations and warranties from sellers.

Investments will likely be acquired with limited representations and warranties from the seller regarding the condition of the investment, the status of leases, the presence of hazardous substances, the status of governmental approvals and entitlements and other significant matters affecting the use, ownership and enjoyment of the investment. As a result, if defects in an investment or other matters adversely affecting an investment are discovered, we may not be able to pursue a claim for damages against the seller of the investment. The extent of damages that we may incur as a result of such matters cannot be predicted, but potentially could result in a significant adverse effect on the value of the affected investments.

We may be subject to the risk of liability and casualty loss as the owner of an investment.

We will maintain insurance against certain liabilities and other losses for an investment, but the insurance obtained will not cover all amounts or types of loss. There is no assurance that any loss that may occur will be insured or that, if insured, the insurance proceeds will be sufficient to cover the loss.

There are certain categories of loss that may be or may become uninsurable or not economically insurable, such as earthquakes, floods and liabilities related to hazardous waste. Further, if losses arise from hazardous substance contamination that cannot be recovered from a responsible party, the financial viability of the affected investment may be substantially impaired. It is possible that we will acquire an investment with known or unknown environmental problems that may adversely affect our investments.

We could be exposed to environmental liabilities with respect to investments to which we take title.

In the course of our business, and taking title to properties, we could be subject to environmental liabilities with respect to such properties. In such a circumstance, we may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or we may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. If we become subject to significant environmental liabilities, our business, financial condition, liquidity and results of operations could be materially and adversely affected.

Liability relating to environmental matters may impact the value of the properties that we may acquire or underlying our investments.

Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. If we fail to disclose environmental issues, we could also be liable to a buyer or lessee of a property.

There may be environmental problems associated with our properties which we were unaware of at the time of acquisition. The presence of hazardous substances may adversely affect our ability to sell real estate, including the affected property, or to borrow additional funds using real estate as collateral. The presence of hazardous substances, if any, on our properties may cause us to incur substantial remediation costs and potential costs of indemnification in the case of properties we sell or rent to others, thus harming our financial condition. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to our stockholders.

Discovery of previously undetected environmentally hazardous conditions, including mold or asbestos, may lead to liability for adverse health effects and costs of remediating the problem could adversely affect our operating results.

Under various U.S. federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the cost of removal or remediation of hazardous or toxic substances on, under or in such property. The costs of removal or remediation could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used, and these restrictions may require substantial expenditures. Environmental laws provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances, including asbestos-containing materials into the air, and third parties may seek recovery from owners or operators of real properties for personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims related to any contaminated property could materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution to our security holders.

Adverse economic conditions may negatively affect our results of operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our investments.

Our operating results may be adversely affected by market and economic challenges, which may negatively affect our returns and profitability and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our investments. These market and economic challenges may include, but are not limited to, the following:

• any future downturn in the U.S. economy and the related reduction in spending, reduced home prices and high unemployment could result in tenant defaults under leases, vacancies at our office, industrial, retail or multi-family properties, and concessions or reduced rental rates under new leases due to reduced demand;
• the rate of household formation or population growth in our target markets or a continued or exacerbated economic slow-down experienced by the local economies where our properties are located or by the real estate industry generally may result in changes in the supply of or demand for apartment units in our target markets; and
• the failure of the real estate market to attract the same level of capital investment in the future that it attracts at the time of our purchases or a reduction in the number of companies seeking to acquire properties may result in the value of our investments not appreciating or decreasing significantly below the amount we pay for these investments.

The length and severity of any economic slow-down or downturn cannot be predicted. Our operations and, as a result, our ability to make distributions to our stockholders and/or our ability to realize appreciation in the value of our properties could be materially and adversely affected to the extent that an economic slow-down or downturn is prolonged or becomes severe.

We may be adversely affected by unfavorable economic changes in the specific geographic areas where our investments are concentrated.

We expect to diversify our investments and expect that our real estate investments will be located throughout the United States. However, our investments may nonetheless result in significant concentration in one or more target markets. Our largest concentrations of investments are in California and Georgia. Adverse conditions (including business layoffs or downsizing, industry slowdowns, changing demographics and other factors) in the areas where our investments are located and/or concentrated, including any cities or towns within such target States, and local real estate conditions (such as oversupply of, or reduced demand for, office, industrial, retail or multi-family properties) may have an adverse effect on the value of our investments. A material decline in the demand or the ability of tenants to pay rent, or the general market for sales of multi-family properties in such geographic areas may result in a material decline in our cash available for distribution to our stockholders.

Inflation may adversely affect our financial condition and results of operations.

Increased inflation could have a more pronounced negative impact on any variable-rate debt we incur in the future and on our results of operations. During times when inflation is greater than increases in rent, the contracted rent increases called for under our leases may be unable to keep pace with the rate of inflation. Additionally, substantial inflationary pressures and increased costs may have an adverse impact on our tenants, which may adversely affect the ability of our tenants to pay rent.

Our success is materially dependent on attracting qualified tenants.

We will not collect revenue for a property while it is vacant and we will be responsible for all utility costs and maintenance services until we are able to lease it. Our success is dependent on the financial stability of tenants in the aggregate. If we cannot rent our properties or our tenants default on our leases or fail to comply with the terms of our leases, our operations, financial performance, and the quality and value of our properties could be negatively impacted.

We may not be able to re-lease or renew leases at the investments held by us on terms favorable to us or at all.

We are subject to risks that upon expiration or earlier termination of the leases for our properties that such properties may not be re-leased or, if re-leased, the terms of the renewal or re-leasing (including the costs of required renovations or concessions to tenants) may be less favorable than current lease terms. Any of these situations may result in extended periods where there is a significant decline in revenues or no revenues generated by an investment. If we are unable to re-lease or renew leases for all or substantially all of our investments, or if the rental rates upon such renewal or re-leasing are significantly lower than expected, and if our reserves for these purposes prove inadequate, or if we are required to make significant renovations or concessions to tenants as part of the renewal or re-leasing process, we will experience a reduction in net income and may be required to reduce or eliminate distributions to our stockholders.

The bankruptcy, insolvency or diminished creditworthiness of our tenants under their leases or delays by our tenants in making rental payments could seriously harm our operating results and financial condition.

We will lease our properties to tenants, and we receive rents from our tenants during the terms of their respective leases. A tenant’s ability to pay rent is often initially determined by the creditworthiness of the tenant and the income of the tenant. However, if a tenant’s credit deteriorates or a tenant’s income deteriorates, the tenant may default on its obligations under its lease and the tenant may also become bankrupt. The bankruptcy or insolvency of our tenants or other failure to pay is likely to adversely affect the income produced by our real estate investments. Any bankruptcy filings by or relating to one of our tenants could bar us from collecting pre-bankruptcy debts from that tenant or its property, unless we receive an order permitting us to do so from the bankruptcy court. A tenant bankruptcy could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. If a tenant files for bankruptcy, we may not be able to evict the tenant solely because of such bankruptcy or failure to pay. A court, however, may authorize a tenant to reject and terminate its lease with us. In such a case, our claim against the tenant for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining rent owed under the lease. In addition, certain amounts paid to us within 90 days prior to the tenant’s bankruptcy filing could be required to be returned to the tenant’s bankruptcy estate. In any event, it is highly unlikely that a bankrupt or insolvent tenant would pay in full amounts it owes us under its lease. In other circumstances, where a tenant’s financial condition has become impaired, we may agree to partially or wholly terminate the lease in advance of the termination date in consideration for a lease termination fee that is likely less than the agreed rental amount. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold against a bankrupt entity may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. We may recover substantially less than the full value of any unsecured claims, which would harm our financial condition.

We may not obtain audited results of prior operations for certain properties in which we invest.

In some cases, we will not obtain audited operating statements regarding the prior operations of an investment. In such case, we will rely on unaudited financial information provided by the sellers of the investments. Thus, it is possible that information relied upon by us with respect to the acquisition of some of the investments may not be accurate at the time that we acquire such investment.

Significant restrictions on transfer and encumbrance of investments subject to mortgage or other debt financing are expected.

The terms of any mortgage or other debt financing applicable to an investment are expected to prohibit the transfer or further encumbrance of that investment or any interest in that investment except with the lender’s prior consent, which consent each lender is expected to be able to withhold. The relative illiquidity of the investments may prevent or substantially impair our ability to dispose of an investment at times when it may be otherwise advantageous for us to do so. If we were forced to immediately liquidate some or all of our investments, the proceeds are likely to result in a significant loss, if such a liquidation is possible at all.

We may not obtain independent third-party appraisals or valuation reports on all of our investments.

We typically may not obtain independent third-party appraisals or valuations, or other reports concerning an investment, before we invest in such investment. If we do not obtain such third-party appraisals or valuations, there can be no assurance that an investment’s value will exceed its cost or that any sale or other disposition of such investment will result in a profit. Third-party appraisals and other reports may be prepared for lenders, in which case we typically will try to obtain a copy of such appraisals and reports for review, as well as reliance letters from the third-party preparers to allow us to rely on appraisals and reports. To the extent we do not obtain such other reports or reliance letters before making an investment, the risk of such investment may be increased.

We may experience delays in the sale of an investment.

Should we need to dispose of an investment, it may not be possible to sell any or all of our investments at a favorable price, or at all, in the desired time frame. If we are unable to sell our investments in the time frames or for the prices anticipated, our ability to make distributions to you may be materially delayed or reduced, you may not be able to get a return of capital as expected or you may not have any liquidity with respect to your investment in our securities.

We face possible risks associated with climate change.

We may become subject to laws or regulations related to climate change, which could cause our business, results of operations and financial condition to be impacted adversely. Both the federal government and many of the states and localities in which we operate have enacted, and may continue to enact, certain climate change laws and regulations or have begun regulating carbon footprints and greenhouse gas emissions. Although these laws and regulations have not had any known material adverse effects on our business to date, they could result in substantial costs, including compliance costs, increased energy costs, retrofit costs and construction costs, including monitoring and reporting costs, and capital expenditures for environmental control facilities and other new equipment. We cannot predict how future laws and regulations, or future interpretations of current laws and regulations, related to climate change will affect our business, results of operations and financial condition. Additionally, the potential physical impacts of climate change on our operations are highly uncertain and may include changes to global weather patterns, which could include local changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperature averages or extremes. These impacts may adversely affect our properties, our business, financial condition and results of operations.

Additionally, there has been increasing public focus by investors, environmental activists, the media and governmental and nongovernmental organizations on a variety of environmental, social and other sustainability matters. We may make commitments relating to sustainability matters that affect us, including the design and implementation of specific risk mitigation strategic initiatives relating to sustainability. If we are not effective in addressing environmental, social and other sustainability matters affecting our business, or setting and meeting relevant sustainability goals, our reputation may suffer.

Risks Related to Our Financial Position

We are subject to risks associated with debt and capital stock issuances, and such issuances may have consequences to holders of shares of our securities.

Whenever we raise additional capital through the issuance of equity securities, we could dilute the interests of holders of shares of our current outstanding securities.

Further, we may incur indebtedness in the future to finance our operations. Such indebtedness could result in important consequences to holders of our common and preferred shares, including subjecting us to covenants restricting our operating flexibility, increasing our vulnerability to general adverse economic and industry conditions, limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements, requiring the use of a portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures, distributions to our stockholders and general corporate requirements, and limiting our flexibility in planning for, or reacting to, changes in our business and our industry.

If we pay distributions from sources other than our cash flow from operations, we will have fewer funds available for investments and stockholders’ overall return will be reduced.

Although our distribution policy is to use our cash flow from operations to make distributions, we are permitted to pay distributions from any source, including offering proceeds, borrowings, or sales of assets. We have not placed a cap on the use of proceeds to fund distributions.

We do not have guaranteed cash flow.

There can be no assurance that cash flow or profits will be generated by our investments. If the investments do not generate the anticipated amount of cash flow, we may not be able to pay the anticipated distributions to our stockholders without making such distributions from the net proceeds of any offerings of capital stock or from reserves.

While we are subject to minimum distribution requirements to maintain our status as a REIT, such distributions are not guaranteed and the availability and timing of cash distributions is uncertain.

Our ability to pay dividends is dependent on our ability to purchase, develop, or operate our assets profitably, and there are many factors that can affect the availability and timing of cash distributions to stockholders. Because we may receive rents and income from our properties and liquidations of or distributions from our securities at various times during our fiscal year, distributions paid may not reflect our income earned in that particular distribution period. The amount of cash available for distribution will be affected by many factors, including without limitation, the amount of income we will earn from investments in target assets, the amount of our operating expenses and many other variables. Actual cash available for distribution may vary substantially from our expectations.

While we intend to fund the payment of quarterly distributions to holders of our common and preferred shares entirely from distributable cash flows, we may fund quarterly distributions to our stockholders from a combination of available net cash flows, equity capital and proceeds from borrowings. In the event we are unable to consistently fund future quarterly distributions to stockholders entirely from distributable cash flows, the value of our common and preferred shares may be negatively impacted.

We are generally required to distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to qualify as a REIT under the Code, which we intend to satisfy through quarterly cash distributions of all or substantially all of our REIT taxable income in such year, subject to certain adjustments. Our Board of Directors will determine the amount and timing of any distributions. In making such determinations, our directors will consider all relevant factors, including the amount of cash available for distribution, capital expenditures, general operational requirements and applicable law. We intend over time to make regular quarterly distributions to holders of our preferred shares. However, we bear all expenses incurred by our operations, and the funds generated by operations, after deducting these expenses, may not be sufficient to cover desired levels of distributions to stockholders. In addition, our Board of Directors, in its discretion, may retain any portion of such cash in excess of our REIT taxable income for working capital. We cannot predict the amount of distributions we may make over time.

We may in the future choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.

We may in the future distribute taxable dividends that are payable in a combination of cash and shares of our equity securities at the election of each stockholder. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for United States federal income tax purposes. As a result, a U.S. stockholder may be required to pay income taxes with respect to such dividends in excess of the cash dividends received.

The IRS has issued guidance authorizing elective cash/stock dividends to be made by public REITs where a cap of at least 20% is placed on the amount of cash that may be paid as part of the dividend, provided that certain requirements are met. It is unclear whether and to what extent we would be able to or choose to pay taxable distributions in cash and stock. In addition, no assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock distributions, including on a retroactive basis, or assert that the requirements for such taxable cash/stock distributions have not been met.

Risks Related to Our Business Operations and Strategy

We may change our targeted investment and operational policies without stockholder consent.

We may change our investment and operational policies, including our policies with respect to investments (including changes to our Advisers’ targeted assets and asset allocation), acquisitions, growth, operations, indebtedness, capitalization and distributions, at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the types of investments described in this filing. Any such changes may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect our ability to make distributions. Furthermore, a change in our asset allocation could result in our making investments in asset categories different from those described in this annual report.

The ability of our Board of Directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our Charter provides that our Board of Directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

Our future growth will depend upon our ability to acquire real estate investments in several competitive real estate markets.

Our future growth will depend, in large part, upon our initial and continued ability to acquire properties. We face significant competition with respect to our acquisition and origination of assets from many other companies, including other REITs, insurance companies, private investment funds, hedge funds, specialty finance companies and other investors.

Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Some of our competitors also may have greater financial and operational resources, larger customer bases, and more established relationships with their customers and suppliers than we do. The competitive pressures we face, if not effectively managed, may have a material adverse effect on our business, financial condition, liquidity and results of operations.

Competition may limit the number of suitable investment opportunities offered to us and may result in higher prices, lower yields and a narrower spread of yields over our borrowing costs, making it more difficult for us to identify and pursue opportunities consistent with our objectives and to acquire new investments on attractive terms. This could delay our investment in desirable assets. Any failure to identify or consummate investments on satisfactory terms, or at all, may impede our growth, reduce our earnings per share and negatively affect our cash available for distribution to our stockholders.

Due diligence by our Advisers may not reveal all of the liabilities associated with the investments being evaluated and may not reveal other weaknesses in such investments, which could lead to investment losses.

Because we intend to purchase real estate at below-market-prices, there may not be enough time to investigate the condition of any particular investment.

Before making an investment, our Advisers will assess the strengths and weaknesses of a target investment property. The Advisers will also consider other factors and characteristics that are material to the performance of the investment. Such other factors may include the pricing trends for similar properties in the area where the target investment property is located. In making such assessments and otherwise conducting customary due diligence, our Advisers rely on resources available to them and, in some cases, an investigation by third parties. There can be no assurance that our Advisers’ due diligence process will uncover all relevant facts or that any investment will be successful.

We may experience difficulty in ultimately selling any property or groups of properties which no longer fit our investment criteria or are impractical to lease and maintain, which could force us to sell a property at a price that reduces the return to our investors.

The real estate market is affected by many factors that are out of our control, including the availability of financing, interest rates and other factors, as well as supply and demand for real estate investments. As a result, we cannot predict whether we will be able to sell any property or groups of properties which no longer fit our investment criteria or are impractical to lease and maintain on favorable terms, or whether such sale could be made at a favorable price or on terms acceptable to us. We also cannot predict the length of time which will be needed to obtain a purchaser or to complete the sale of any property.

In addition, the terms of our leases and the laws regulating REITs could impact our ability to sell any property or groups of properties. To qualify as a REIT for federal income tax purposes, we must continually satisfy various tests, including tests regarding the nature of our assets which could restrict our disposition strategy.

Lack of diversification in numbers or types of investments increases our dependence on individual investments.

Our investment strategy depends in large part on acquiring a diversified portfolio based on the number of properties or investments we acquire relative to our total assets. Such diversification reduces the risk that a default or other problem with any single property or investment will have a material negative impact on our earnings.

Currently, our investments are concentrated in nine commercial real estate properties and five multi-family residential apartment properties, located primarily in the Oakland-San Francisco Bay area in California. If, due to factors such as lack of adequate capital, or the unavailability of suitable investment opportunities, we acquire relatively few properties or acquire properties or investments that are significant (in terms of capital invested) to our overall asset size, we may be unable to reduce the degree of concentration of our portfolio, which could increase the risk of loss to stockholders if a default or other problem arises.

Additionally, property sales may reduce the aggregate amount of our property investment portfolio in value or number. As a result, our portfolio could become more concentrated, thereby further reducing the benefits of diversification by factors such as geography, property type, tenancy, or other measures. While we intend to endeavor to grow and diversify our portfolio through additional property acquisitions, we may never reach a significant size to achieve true portfolio diversity.

Our success is materially dependent on the financial stability of our tenants.

The success of our business is dependent on the financial stability of the tenants occupying our properties. A default of a tenant on its lease payments may cause us to lose some of the anticipated revenue from an investment property.

Since our portfolio is relatively small, our exposure to each tenant may be more significant than we expect. We believe that this exposure will diminish (but not entirely) as we acquire more properties. In the event of a material default, we may experience delays in enforcing our rights as landlords and we may incur substantial costs in protecting our investment and possibly re-letting the property, as the case may be. If a lease is terminated, we cannot assure our investors that the property could be leased for the same amount of rent previously received or that we could sell the property without incurring a loss.

We are dependent on our Advisers and their key personnel for our success.

We are, and will continue to be, advised by our Advisers and, pursuant to the Advisory Agreement, our Advisers is not obligated to dedicate any specific personnel exclusively to us, nor is its personnel obligated to dedicate any specific portion of their time to the management of our business.

As a result, we cannot provide any assurances regarding the amount of time our Advisers will dedicate to the management of our business. Moreover, each of our officers and non-independent directors is also an employee of our Advisers or one of its affiliates and has significant responsibilities for other investment vehicles currently managed by affiliates, and may not always be able to devote sufficient time to the management of our business. Consequently, we may not receive the level of support and assistance that we otherwise might receive if we were internally managed.

In addition, we offer no assurance that our Advisers will remain our Advisers or that we will continue to have access to our Advisers’ principals and professionals. The term of our Agreements with our Advisers only extends until the end of each calendar year, with automatic one-year renewals, and may be terminated earlier under certain circumstances. If the Agreement is terminated or not renewed and no suitable replacement is found to manage us, we may not be able to execute our business plan, which could have a material adverse effect on our results of operations and our ability to make distributions to our stockholders.

Our Board of Directors has approved very broad investment guidelines for our Advisers and will not approve each investment and financing decision made by our Advisers unless required by our investment guidelines.

Our Advisers are authorized to follow very broad investment guidelines established by our Board of Directors. Our Board of Directors will periodically review our investment guidelines and our portfolio of assets but will not, and will not be required to, review all of our proposed investments, except in limited circumstances as set forth in our investment policies.

Our Advisers have great latitude within the broad parameters of our investment guidelines in determining the types and amounts of assets in which to invest on our behalf, including making investments that may result in returns that are substantially below expectations or result in losses, which would materially and adversely affect our business and results of operations, or may otherwise not be in the best interests of our stockholders. Transactions entered into by our Advisers may be costly, difficult or impossible to unwind by the time they are reviewed by our Board of Directors.

Because stockholders will be unable to evaluate the merits of these operational and investment guidelines, they will have to rely entirely on the ability of our Advisers and Board of Directors to formulate and follow these operational and investment guidelines.

Because we are dependent upon our Advisers and its affiliates to conduct our operations, any adverse changes in the financial or operational condition of our Advisers or its affiliates, or our relationship with them, could hinder our operating performance and the return on your investment.

We are dependent on our Advisers and their affiliates to manage our operations and acquire and manage our portfolio of real estate assets. Under the direction of our Board of Directors, and subject to our investment guidelines, our Advisers makes all decisions with respect to the management of our company. Our Advisers depend upon the fees and other compensation they receive from us, and upon their ability to attract and retain skilled personnel, in carrying out these functions. Any adverse changes in the financial or operational condition of our Advisers and their affiliates, or in our relationship with our Advisers, could hinder their ability to successfully manage our operations and our portfolio of investments, which would adversely affect us and our stockholders.

Our investments will be carried at estimated fair value as determined by our Investment Adviser and there may be uncertainty as to the value of these investments.

Substantially all of our investments are illiquid, and the securities in which we invest are not publicly traded. To determine our net asset value, our Investment Adviser estimates the fair value of our assets in conjunction with our external valuation experts.

Because such valuations are inherently uncertain, our value may fluctuate over short periods of time, and may be based on numerous estimates and assumptions, our determinations of fair value of our investments are inherently speculative and subject to errors. The value of our shares could be adversely affected if our determinations regarding the fair value of these investments are materially higher than the values that we ultimately realize upon their disposal.

We, through our Advisers, are often required to make a number of judgments in applying accounting policies, and different estimates and assumptions in the application of these policies could result in changes to our reporting of financial condition and results of operations.

Various valuation estimates are used in the preparation of our consolidated financial statements, including estimates related to asset and liability valuations (or potential impairments) and various receivables. Often these estimates require the use of market data values that may be difficult to assess, as well as estimates of future performance or receivables collectability that may be difficult to accurately predict. While we have identified those accounting policies that are considered critical and have procedures in place to facilitate the associated judgments, different assumptions in the application of these policies could result in material changes to our consolidated financial condition and results of operations.

The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As reliance on technology by the Company, as well as the Advisers and tenants, has increased, so have the risks posed to our systems, both internal and those we have outsourced. Our three primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationship with our tenants, and private data exposure. We have implemented processes, procedures and controls to help mitigate these risks, but these measures, as well as our increased awareness of a risk of a cyber incident, do not guarantee that our financial results will not be negatively impacted by such an incident.

Risks Related to Our Organization and Corporate Structure

Our Charter permits our Board of Directors to issue stock with terms that may subordinate the rights of common stockholders or preferred shareholders or discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.

Our Charter permits our Board of Directors to issue up to 80,000,000 shares of common stock and 20,000,000 preferred shares. Our Board of Directors is permitted, subject to certain restrictions set forth in our Charter, to authorize the issuance of shares of common stock and preferred stock without stockholder approval. Further, our Board of Directors may classify or reclassify any unissued shares of common or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms or conditions of redemption of the stock and may amend our Charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue without stockholder approval. Thus, our Board of Directors could authorize us to issue shares of preferred stock ranking senior to our common stock with respect to distribution rights upon our liquidation, dissolution or winding up or with terms and conditions that could have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets, that might provide a premium price for holders of our common stock.

Our rights and the rights of our shareholders to recover claims against our officers, directors and our Advisers are limited.

Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the corporation’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our Charter, in the case of our directors, officers, employees and agents, and the advisory agreements, in the case of the Advisers, require us to indemnify our directors, officers, employees and agents and the Advisers and its affiliates for actions taken by them in good faith and without negligence or misconduct.

Additionally, our Charter limits the liability of our directors and officers for monetary damages to the fullest extent permitted under Maryland law. Although our Charter does not allow us to exonerate and indemnify our directors and officers to a greater extent than permitted under Maryland law, we and our stockholders may have more limited rights against our directors, officers, employees and agents, and our Advisers and its affiliates, than might otherwise exist under common law, which could reduce our investor’s and our recovery against them. In addition, we may be obligated to fund the defense costs incurred by our directors, officers, employees and agents or the Advisers in some cases which would reduce the cash available for distributions.

Risks Related to Conflicts of Interest

The Advisory Agreements with our Advisers were not negotiated on an arm’s-length basis and may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

Our executive officers, including one of our directors, are executives of our Advisers. Our Advisory Agreements were negotiated between related parties and their terms, including fees payable to our Advisers, may not be as favorable to us as if it had been negotiated with an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the Advisory Agreements because of our desire to maintain our ongoing relationship with the Advisers and its affiliates.

We may have conflicts of interest with our Advisers and other affiliates, which could result in investment decisions that are not in the best interests of our stockholders.

There are numerous conflicts of interest between our interests and the interests of our Advisers and its respective affiliates, including conflicts arising out of allocation of personnel to our activities, allocation of investment opportunities between us and investment vehicles affiliated with our Advisers, purchase or sale of properties, including from or to investment entities affiliated with our Advisers, and fee arrangements with our Advisers that might induce our Advisers to make investment decisions that are not in our best interests. Examples of these potential conflicts of interest include, but are not limited to:

• Competition for the time and services of personnel that work for us and our affiliates;
• Compensation payable by us to our Advisers and their affiliates for their various services, which may not be on market terms and is payable, in some cases, whether or not our stockholders receive distributions;
• The possibility that our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of properties and other investments, and that such conflicts may not be resolved in our favor, thus potentially limiting our investment opportunities, impairing our ability to make distributions and adversely affecting the trading price of our stock;
• The possibility that if we acquire properties from investment entities affiliated with our Advisers or their affiliates, the price may be higher than we would pay if the transaction were the result of arm’s-length negotiations with a third party;
• The possibility that our Advisers will face conflicts of interest, since some of their officers are also our officers and two serve as directors of ours, resulting in actions that may not be in the long-term best interests of our stockholders;
• Our Advisers have considerable discretion with respect to the terms and timing of our acquisition, disposition and leasing transactions;
• The possibility that we may acquire or merge with our Advisers, resulting in an internalization of our management functions; and
• The possibility that the competing demands for the time of our Advisers, their affiliates and our officers may result in them spending insufficient time on our business, which may result in our missing investment opportunities or having less efficient operations, which could reduce our profitability and result in lower distributions to stockholders.

Any of these and other conflicts of interest between us and our Advisers could have a material adverse effect on the returns on our investments, our ability to make distributions to stockholders and the trading price of our stock.

The fees payable to our Real Estate Adviser under the amended Advisory Management Agreement effective January 1, 2026 may cause our Real Estate Adviser's economic interests to diverge from the interests of our stockholders.

Effective January 1, 2026, we amended our Advisory Management Agreement with the Real Estate Adviser. Under the amended agreement, we pay the Real Estate Adviser (i) a base management fee equal to 1.25% per annum of our gross assets under management (excluding depreciation and amortization), computed monthly based on our reported quarter-end gross assets, and (ii) a bonus management fee equal to 5% of our adjusted funds from operations, or AFFO, for each quarter. The amended agreement has a five-year term that renews automatically each year unless we deliver a timely non-renewal notice, and requires us to pay a substantial early termination fee if we terminate the agreement other than for cause. Because our Real Estate Adviser is an affiliate of ours and of our other Advisers and executive officers, and because the Real Estate Adviser advises us on acquisitions, dispositions, financings and other strategic transactions, the following features of these fee arrangements create inherent conflicts of interest that may result in decisions that are not aligned with our stockholders’ interests:

• Our base management fee is calculated on our gross assets, not our stockholders’ equity or net asset value. Because the base management fee is measured on the gross value of our assets, the fee increases whenever we grow gross assets (for example, by acquiring additional properties or by holding rather than divesting existing properties), regardless of whether those actions increase per-share cash flow, per-share net asset value or total returns to our stockholders. In particular, if we finance acquisitions through additional mortgage debt, high-cost secured promissory notes, affiliate borrowings, preferred stock issuances or other leverage, the base management fee will increase even if the incremental leverage reduces our stockholders’ equity, increases our financial risk profile, or dilutes per-share cash flow. As a result, the fee structure could incentivize our Real Estate Adviser to recommend that we (i) acquire additional properties even where per-share stockholder value would decline, (ii) retain properties that could otherwise be sold on more favorable terms, (iii) employ more leverage than we would otherwise choose, or (iv) delay divestitures or portfolio rebalancing that would reduce our gross assets under management.
• Our bonus management fee is tied to AFFO, a non-GAAP measure calculated by our Real Estate Adviser using management judgment about non-recurring items. AFFO is a non-GAAP financial measure that we calculate through our Real Estate Adviser by making a number of judgment-intensive adjustments to net income (loss), including adjustments for real estate depreciation and amortization, straight-line rent, above- and below-market lease amortization, acquisition-related costs, unrealized gains and losses on investments, stock-based compensation, consulting, marketing and listing-related costs, and other items that management and the Real Estate Adviser determine, from time to time, to be “non-recurring” or not reflective of ongoing operations. GAAP does not define AFFO or prescribe which items should be treated as non-recurring, and reasonable minds may differ. Because the Real Estate Adviser calculates the metric that directly determines its own bonus management fee, there is an inherent incentive to characterize expenses or losses as non-recurring (thereby increasing AFFO and the corresponding fee) and to defer or de-emphasize adjustments that would reduce AFFO.
• The Advisory Management Agreement is a related-party contract, has a long renewable term and imposes a substantial early termination fee, which may make it difficult for us to renegotiate or replace our Real Estate Adviser on terms favorable to our stockholders. The amended Advisory Management Agreement was negotiated between us and our Real Estate Adviser, which is an affiliate of our executive officers and other Advisers. Although a majority of our Board of Directors is independent and reviews and approves related-party arrangements, our Real Estate Adviser and its affiliates have substantial influence over our management and operations. The amended agreement has a five-year term that renews automatically each year, and if we terminate the agreement for reasons other than “cause,” we must pay a substantial early termination fee. As a result, even if our Board of Directors were to conclude that the base management fee, the bonus management fee or other terms of the amended Advisory Management Agreement are no longer in the best interests of our stockholders, our practical ability to renegotiate, restructure or replace the arrangement, including retaining an unaffiliated manager, may be limited. Any inability to align our management fees with stockholder interests, or to renegotiate or terminate the Advisory Management Agreement on acceptable terms, could adversely affect our business, financial condition, results of operations and the market price of our common stock.

Our Advisers, their officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of real estate investments, and such conflicts may not be resolved in our favor.

Conflicts created by our Advisers’ relationships with us and with other investment entities affiliated with our Advisers or their affiliates, as described above, may severely curtail our investment opportunities, impair our ability to make distributions and reduce the value of stockholders’ investment in us. Our Advisers also advise other clients and such clients may compete with us for investments. Our Advisers have policies in place to deal with such potential conflicts, but such policies may result in other clients buying assets that may be in our best interest to purchase.

Our Advisers and the personnel they provide are not exclusively dedicated to management of our business.

If the competing demands for the time of our Advisers, their key personnel, their affiliates and our officers result in them spending insufficient time on our business, we may miss investment opportunities or have less efficient operations, which could reduce our profitability and result in lower distributions to stockholders.

We have not adopted any specific conflicts of interest policies, and, therefore, other than in respect of the restrictions placed on our Advisers in the Advisory Agreements, we will be reliant upon the good faith of our Advisers, officers and directors in the resolution of any conflict.

We do not have a policy that expressly restricts any of our directors, officers, stockholders or affiliates, including our Advisers and their officers and employees, from having a pecuniary interest in an investment in or from conducting, for their own account, business activities of the type we conduct. This may mean that our ability to access the best investments may be curtailed, which could result in greater than expected operating expense, losses and reduced distributions to our shareholders.

Risks Associated with Debt Financing

We expect to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which increases our expenses and could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments.

We are permitted to acquire real properties and other real estate-related investments, including entity acquisitions, by either assuming existing financing secured by the asset or borrowing new funds. In addition, we may incur or increase our mortgage debt by obtaining loans secured by some or all of our assets to obtain funds to acquire additional investments or to pay distributions to our stockholders. We also may borrow funds if necessary to satisfy the requirement that we distribute at least 90% of our annual “REIT taxable income” (determined without regard to the dividends paid deduction and excluding any net capital gain), or otherwise as is necessary or advisable to assure that we maintain our qualification as a REIT for federal income tax purposes.

There is no limit on the amount we may invest in any single property or other asset or on the amount we can borrow to purchase any individual property or other investment. If we mortgage a property and have insufficient cash flow to service the debt, we risk an event of default which may result in our lenders foreclosing on the properties securing the mortgage and the loss of our interests in such properties if we are unable to repay or refinance.

High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.

Our policies do not limit us from incurring debt. For purposes of calculating our leverage, we assume full consolidation of all of our real estate investments, whether or not they would be consolidated under the accounting principles generally accepted in the United States of America (“GAAP”).

High debt levels will cause us to incur higher interest charges, resulting in higher debt service payments, and may be accompanied by restrictive covenants. Interest we pay reduces cash available for distribution to stockholders. Additionally, with respect to our

variable-rate debt, increases in interest rates increase our interest costs, which reduces our cash flow and our ability to make distributions to you. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times which may not permit realization of the maximum return on such investments and could result in a loss. In addition, if we are unable to service our debt, our lenders may foreclose on our interests in the real property that secures such debt.

High mortgage rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash distributions we can make.

To qualify as a REIT, we generally will be required to distribute at least 90% of our annual taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to our stockholders in each taxable year, limiting our ability to retain internally generated cash. Accordingly, our ability to acquire properties or to make capital improvements to or remodel properties will depend on our ability to obtain debt or equity financing from third parties or the sellers of properties. If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on properties, we run the risk of being unable to refinance the properties when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance the properties, our income could be reduced. The interest rate may increase on some of our fixed-rate debt after the initial fixed rate period. If any of these events occur, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to stockholders and may hinder our ability to raise additional capital.

Our ability to obtain financing on reasonable terms would be impacted by negative capital market conditions.

Recently, domestic and international financial markets have experienced unusual volatility and uncertainty. Liquidity has tightened in overall financial markets, including the investment grade debt and equity capital markets. Consequently, there is greater uncertainty regarding our ability to access the credit market in order to attract financing on reasonable terms. Investment returns on our assets and our ability to make acquisitions could be adversely affected by our inability to secure financing on reasonable terms, if at all.

If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.

In obtaining certain nonrecourse loans, we may provide standard carve-out guaranties. These guaranties are only applicable if and when the borrower directly, or indirectly through agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” guaranties). Although we believe that “bad boy” carve-out guaranties are not guaranties of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under such guaranties. In the event such claims were made against us under a “bad boy” carve-out guaranty following foreclosure on mortgages or related loans, and such claims were successful, our business and financial results could be materially adversely affected.

Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.

We may finance our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon” payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments would reduce the funds available for distribution to our stockholders.

We may use floating rate, interest-only or short-term loans to acquire investments.

The Real Estate Adviser has the right, in its sole discretion, to negotiate any debt financing, including obtaining (i) interest-only, (ii) floating rate and/or (iii) short-term loans to acquire Investments. If the Real Estate Adviser obtains floating rate loans, the interest rate would not be fixed but would float with an established index (probably at higher interest rates in the future). No principal would be repaid on interest-only loans. Finally, we would be required to refinance short term loans at the end of a relatively short period. The credit markets have recently been in flux and are experiencing a malaise. No assurance can be given that the Real Estate Adviser would be able to refinance with fixed-rate permanent loans in the future, on favorable terms or at all, to refinance the short-term loans. In addition, no assurance can be given that the terms of such future loans to refinance the short-term loans would be favorable to us.

Risks Related to Our Taxation as a REIT

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for stockholders.

We intend to continue to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. Our initial and continued qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, and stockholder ownership requirements on a continuing basis. Our ability to satisfy some of the asset tests depends upon the fair market values of our assets, some of which are not able to be precisely determined and for which we will not obtain independent appraisals.

If we were to fail to qualify as a REIT in any taxable year, and certain statutory relief provisions were not available, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and distributions to stockholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution.

Unless entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our securities.

Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.

We have elected to be taxed as a REIT under the federal income tax laws commencing with our taxable year ended December 31, 2014. We believe that we have and will continue to operate in a manner qualifying us as a REIT for our taxable year ended December 31, 2026, and intend to continue to so operate.

However, we cannot assure the stockholders that we will remain qualified as a REIT. Moreover, our qualification and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the federal tax laws. Tax counsel will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because:

• we would be taxed as a regular domestic corporation, which under current law, among other things, means being unable to deduct distributions paid to stockholders in computing our taxable income and being subject to U.S. federal income tax on our taxable income at corporate income tax rates;
• we could be subject to the federal alternative minimum tax and possibly increased state and local taxes;
• we would be required to pay taxes and, therefore, our cash available for distribution to stockholders would be reduced for each of the years during which we did not qualify as a REIT and for which we had taxable income; and
• unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our securities.

REIT distribution requirements could adversely affect our liquidity.

In order to maintain our REIT status and to meet the REIT distribution requirements, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not favorable for these borrowings or sales. To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, determined without regard to the deduction for dividends paid and excluding any net capital gain.

In addition, we will be subject to corporate income tax to the extent we distribute less than 100% of our net taxable income including any realized net capital gain. We intend to make distributions to our stockholders to comply with the requirements of the Code for REITs and to minimize or eliminate our corporate income tax obligation to the extent consistent with our business objectives.

Our cash flows from operations may be insufficient to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt service or amortization payments. The insufficiency of our cash flows to cover our distribution requirements could have an adverse impact on our ability to raise short- and long-term debt or sell equity securities in order to fund distributions required to maintain our REIT status. We will be subject to regular corporate income taxes on any undistributed REIT taxable income each year. In addition, we will be subject to a 4% non-deductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

Further, amounts distributed will not be available to fund investment activities. We expect to fund our investments by raising equity capital and through borrowings from financial institutions and the debt capital markets. If we fail to obtain debt or equity capital in the future, it could limit our ability to grow, which could have a material adverse effect on the value of our preferred shares.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To maintain our qualification as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our capital stock. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.

In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities, qualified real estate assets and taxable REIT subsidiaries) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer, among other limitations.

In addition, in general, no more than 5% of the value of our assets (other than government securities, qualified real estate assets and taxable REIT subsidiaries) can consist of the securities of any one issuer, and no more than 20% of the value of our assets can consist of the securities of one or more taxable REIT subsidiaries. If we fail to comply with these requirements at the end of any calendar quarter, we generally must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

The tax status of the Operating Partnership and other partnerships could impact our qualification as a REIT.

If the IRS were to successfully challenge the status of the Operating Partnership, MAC, MAC OP or any other partnership in which we invest as a partnership or disregarded entity for U.S. federal income tax purposes, such partnerships could be subject to an entity level tax and could, depending on the circumstances, jeopardize our ability to qualify as a REIT.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we remain qualified as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes.

The stock ownership limit imposed by the Code for REITs and in our Charter may inhibit market activity in our stock and may restrict our business combination opportunities.

In order for us to maintain our qualification as a REIT under the Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of each taxable year. Our Charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT.

Unless exempted by the Board of Directors, no person may own more than 9.80% of the aggregate value of the outstanding shares of our stock or more than 9.80% in value or in number of shares, whichever is more restrictive, of the aggregate outstanding common or preferred shares of the Company. The Board of Directors may not grant such an exemption to any proposed transferee whose ownership in excess of 9.80% of the value of our outstanding shares or more than 9.80% in value or in number of shares, whichever is more restrictive, would result in the termination of our status as a REIT. These ownership limits could delay or prevent a transaction or a change in our control that might be in the best interest of our stockholders.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are taxed at individual rates is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified dividend income. The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our preferred shares.

However, under current law, individual taxpayers are entitled to claim a deduction in determining their taxable income of 20% of ordinary REIT dividends (dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us), which reduces the effective tax rate on such dividends. You are urged to consult with your tax advisor regarding the effect of this rule on your effective tax rate with respect to REIT dividends.

The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of business.

Although we intend to acquire and hold all of our assets as investments and not for sale to customers in the ordinary course of business, the IRS may assert that we are subject to the prohibited transaction tax equal to 100% of net gain upon a disposition of real property.

Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, not all of our prior property dispositions qualified for the safe harbor and we cannot assure the stockholders that we can comply with the safe harbor in the future or that we have avoided, or will avoid, owning property that may be characterized as held primarily for sale to customers in the ordinary course of business.

Failure to make required distributions would subject us to U.S. federal corporate income tax.

We intend to continue to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. In order to remain qualified as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under the Code.

We may be unable to generate sufficient revenue from operations, operating cash flow or portfolio income to pay our operating expenses, and our operating expenses could rise, diminishing our ability to pay distributions to our stockholders.

As a REIT, we are generally required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To qualify for the tax benefits accorded to REITs, we intend to continue to make distributions to our stockholders in amounts such that we distribute all or substantially all our REIT taxable income each year, subject to certain adjustments.

However, our ability to make distributions may be adversely affected by the risk factors described herein. Our ability to make and sustain cash distributions is based on many factors, including the return on our investments, the size of our investment portfolio, operating expense levels, and certain restrictions imposed by Maryland law.

Some of the factors are beyond our control and a change in any such factor could affect our ability to pay future distributions. No assurance can be given as to our ability to pay distributions to our stockholders. In the event of a downturn in our operating results and financial performance or unanticipated declines in the value of our asset portfolio, we may be unable to declare or pay annual distributions or make distributions to our stockholders. The timing and amount of distributions are in the sole discretion of our Board of Directors, which considers, among other factors, our earnings, financial condition, debt service obligations and applicable debt covenants, REIT qualification requirements and other tax considerations and capital expenditure requirements as our Board of Directors may deem relevant from time to time.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our shares.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.

The Inflation Reduction Act of 2022 (the “IRA”) includes numerous tax provisions that impact corporations, including the implementation of a corporate alternative minimum tax as well as a 1% excise tax on certain stock repurchases and economically similar transactions. However, REITs are excluded from the definition of an “applicable corporation” and therefore are not subject to the corporate alternative minimum tax. Additionally, stock repurchases by REITs are specifically excepted from the 1% excise tax. The impact of tax reform and any potential tax changes on our shares is uncertain. Investors should consult their own tax advisors regarding changes in tax laws.

Risk Related to Outbreaks of Infectious Diseases

Any future pandemic or similar threat, and governmental responses thereto, could once again materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance, as well as adversely affect our and our tenants’ financial condition and results of operations.

Our operating results depend, in large part, on generating revenues from leases to residential or commercial tenants, which in turn requires tenants to generate sufficient income to pay their rents in a timely manner. Any local, regional, national or international outbreak of a contagious disease or other public health emergency — including any resurgence of COVID-19, or new strains of influenza, coronaviruses or other pathogens — could adversely affect our operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our investments. Such events could result in increases in unemployment, decrease the willingness of customers to patronize our tenants’ retail facilities, discourage residents from renting in our multi-family communities, cause shortages of employees to staff our tenants’ operations, interrupt supplies from third parties upon which our tenants rely, cause us or our tenants to temporarily close one or more of our properties, result in governmental regulation adversely impacting our or our tenants’ businesses and otherwise have a material adverse effect on our business, financial condition and results of operations, especially where a tenant may be unwilling or unable to pay rent in full on a timely basis. In some cases, the companies in which we have invested may have to restructure tenants’ rent obligations, and they may not be able to do so on terms as favorable to us as those currently in place. Numerous state, local, federal, and industry-initiated efforts may also affect property owners’ ability to collect rent or enforce remedies for the failure to pay rent. This may lead to reduction or cancellation of distributions, which will in turn affect our ability to pay our expenses and to pay distributions to our shareholders.

Risks Relating to Potential Rescission Claims

Previous issuances of common shares under our dividend reinvestment program may have violated certain federal and/or state securities laws, and shareholders could file suit to seek rescission of such securities.

During the period beginning June 2021 and ending December 2021, in an offering pursuant to our registration statement on Form N-2, we made sales of securities under our dividend reinvestment program pursuant to a deficient registration statement (which registration statement became deficient by virtue of our inadvertently failing to amend the registration statement to include the then-current audit report of our auditors). Consequently, the offer and sale of securities pursuant to the Form N-2 may have failed to comply fully with Section 5 of the Securities Act which may trigger a right of rescission under the Securities Act for investors that purchased shares of our common stock during this period under our dividend reinvestment program.

Accordingly, we may have liability to purchasers of such securities if they were to file suit against us; the remedy could be to repurchase such securities at their purchase price plus statutory interest, less the amount of any income received with respect to such shares.

There may be claims relating to our possible non-compliance with federal and/or state securities laws relating to the deficient Form N-2 referenced above, and we may continue to be contingently liable for rescission or damages of an indeterminate amount.

It is possible that regulators could pursue enforcement actions or impose penalties and fines against us with respect to any violations of securities laws relating to the issuance of dividend reinvestment program shares under the deficient Form N-2 referenced above.

If we have to repurchase shares as discussed above, it may affect our cash balances.

If we have to repurchase shares of our common stock issued under the deficient registration statement referenced above, such rescission payments will be funded from our existing cash balances. Any rescission payments would reduce funds available to us for our operations. If all persons issued shares without registration were to successfully file suit and force rescission, we could need to pay a total of approximately $865,000 and our results of operations, cash balances or financial condition will be negatively affected.

Risks Relating to Issuance of Warrants

There are unresolved issues related to rights of the warrant holder.

In February 2025, we issued pre-funded and unfunded warrants to a single institutional investor pursuant to warrant agreements that granted the investor the right to share in dividends. This dividend right is undisputed with respect to pre-funded warrants to purchase up to 129,226.50 shares of common stock (although after August 2025, this issue became moot when the investor exercised all its prefunded warrants). However, the Company did not agree to pay dividends on unfunded warrants to purchase 423,944.85 shares of common stock. Nonetheless, the investor has taken the position that dividends are payable on its unfunded warrants. The Company attempted to resolve this misunderstanding with the investor, but no resolution has been reached.

The holder of unfunded warrants could assert claims for dividends on the unfunded warrants.

The unfunded warrants became exercisable at the end of August 2025, six months after issuance of the warrants. From and after that time, the holder of the unfunded warrants could bring claims for participation rights in any dividends declared by the Company on its common stock. While the Company has suspended the payment of dividends on its common stock while experiencing negative cash flow, such potential claims by the holder of the unfunded warrants could be material if and when the Company re-starts dividend payments.

Risks Relating to Our Common Stock, Nasdaq Listing and Liquidity

We may be unable to satisfy the continued listing standards of The Nasdaq Capital Market, and our common stock could be delisted.

Our common stock is listed on The Nasdaq Capital Market. To maintain that listing, we must satisfy Nasdaq’s continued listing standards, which include a minimum bid price of $1.00 per share, a minimum stockholders’ equity requirement, a minimum market value of publicly held shares, a minimum public float and other quantitative and qualitative requirements. There can be no assurance that our common stock will continue to satisfy the minimum bid price rule or Nasdaq’s other continued listing standards. If we fail to satisfy any of these requirements, Nasdaq may commence delisting procedures. Any future delisting could, among other things, reduce the liquidity and market price of our common stock, cause us to lose our eligibility to use Form S-3 to register the offer and sale of our securities on a shelf basis, make it more difficult and expensive for us to raise capital, and result in “events of default” or other adverse consequences under our existing financings.

Risk Management and Strategy

As an externally managed company, our day-to-day operations are managed by our Advisers and our executive officers under the oversight of our Board of Directors. As such, we rely on our Advisers’ cybersecurity program, as discussed herein, for assessing, identifying, and managing material risks to our business from cybersecurity threats.

Because none of our executive officers or other members of management has specialized cybersecurity expertise, such as prior professional cybersecurity experience, cybersecurity certifications, or advanced degrees in cybersecurity, information security, or a related field, our Advisers have elected to outsource the information technology function to a third-party managed service provider (the “MSP”) that specializes in fully managed information technology services and fully managed cybersecurity. The MSP is responsible for managing all of our Advisers’ hosted services, all of the computer and computer-related hardware and software used by our Advisers to manage our operations, and all onsite and offsite backups. The MSP also provides managed security services designed to prevent cybersecurity threats, to identify and remediate vulnerabilities, to monitor systems, to protect data and systems, to detect potential intrusions and cybersecurity incidents, to quarantine systems should they be compromised, and to recover from business interruptions or other disasters. The MSP follows the NIST Cybersecurity Framework, developed by the National Institute of Standards and Technology of the U.S. Department of Commerce, to measure the maturity of the services it provides to us and its other clients.

The MSP conducts ongoing cybersecurity training to ensure all employees are aware of cybersecurity risks and performs periodic phishing simulation testing for increased cyber resilience. Annually, the MSP conducts penetration testing to assess cybersecurity measures and to review the information security control environment and operating effectiveness. In addition, our Advisers evaluate key third-party service providers before granting the service provider access to its information systems and have a process in place to ensure that future access is appropriate. Our assessment of risks associated with the use of third-party providers is part of the Advisers’ overall cybersecurity risk management framework. For any software platforms that are hosted by third parties, our Advisers confirm the vendor maintains a System and Organization Controls (“SOC”) report. While we have control, through our contract with the MSP, over our information systems, we do not have control over the information systems of third parties who provide services, and in particular certain property management services, at our commercial and residential real estate properties. Although we confirm third party software platforms maintain a SOC report, we rely on third parties for managing their cybersecurity risk. Our Advisers maintain third-party cyber insurance and upon identification of a significant cyber incident involving the Advisers managed IT environment, our Advisers would notify their cyber insurance carrier.

As of the date of this annual report, we are not aware of any risks from cybersecurity threats, including as a result of any cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. However, our business is highly dependent on our ability to collect, use, store and manage organizational and property data. If any of our significant information and data management systems do not operate properly or are disabled, we could suffer a material disruption of our business or managing real estate, liability to tenants, loss of tenant or other sensitive data, regulatory intervention, breach of confidentiality or other contract provisions, or reputational damage. These systems may fail to operate properly or become disabled as a result of events wholly or partially beyond our control, including disruptions of electrical or communications services, natural disasters, political instability, terrorist attacks, sabotage, computer viruses, deliberate attempts to disrupt our computer systems through “hacking”, “phishing”, or other forms of both deliberate or unintentional cyber-attack, or our inability to occupy our office location. As our Advisers have elected to outsource our information technology functions to third-party providers, we bear the risk of having less direct control over the security and performance of those systems.

Governance

As part of its responsibilities pursuant to our corporate governance guidelines, our Board of Directors oversees our policies with respect to risk assessment and risk management, including with respect to cybersecurity risks. The Board of Directors administers its risk oversight function by receiving regular reports from our executive officers on areas of material risk to us, which reports include updates regarding cybersecurity incidents or other developments.

None of our executive officers or other members of management have specialized cybersecurity expertise, such as prior professional cybersecurity experience, cybersecurity certifications, or advanced degrees in cybersecurity, information security, or a related field. Instead, as discussed above, we engaged the MSP, which specializes in fully managed information technology and cybersecurity services, to supply that expertise, and we rely on the knowledge and capabilities of the MSP with respect to identifying, assessing, monitoring, and managing cybersecurity risks and supporting our information technology network. The MSP reports periodically to our management team, including our Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer, on the status of our information technology environment and any identified cybersecurity threats, vulnerabilities, or incidents. Our Chief Operating Officer, working with the MSP, oversees our day-to-day cybersecurity risk management, including reviewing mitigation strategies and controls recommended by the MSP and coordinating our response to any cybersecurity incident.

We currently own and manage nine commercial real estate properties: Satellite Place Office Building located in Duluth, GA, 1300 Main Office Building, First & Main Office Building and Main Street West Office Building located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane Office Building, Green Valley Medical Center and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and five residential apartments: Aurora at Green Valley located in Fairfield, CA, Commodore Apartments and The Park View Apartments, located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments located in Concord, CA.

Additional details concerning the properties are discussed under the heading Properties in Item 7 in this report.

We are not currently subject to any material pending legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Statements by MacKenzie Realty Capital, Inc., together with its subsidiaries as discussed in Note 1 of the financial statements included in this report (collectively, the “Company,” “we,” or “us”) contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, stockholders can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any anticipated results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. An economic downturn could impair our ability to continue to operate, which could lead to the loss of some or all of our investments, a contraction of available credit and/or an inability to access the equity markets could impair our lending and investment activities, and interest rate volatility could adversely affect our results, particularly if we elect to use leverage as a part of our investment strategy.

Further, we may experience fluctuations in our operating results due to a number of factors, including the effect of the return on our equity investments, the interest rates payable on our debt investments, the default rates on such investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

For a discussion of additional factors that could cause our actual results to differ from forward-looking statements contained herein, please see the discussion under the heading “Risk Factors” above in Item 1A of this report.

Overview

Historically, we were an externally managed non-diversified closed-end management investment company that elected to be treated as a BDC under the Investment Company Act of 1940 (the “1940 Act”), but we withdrew our election to be treated as a BDC on December 31, 2020. Our objective remains to generate both current income and capital appreciation through real estate-related investments. We have elected to be treated as a REIT under the Code and, as a REIT, we are not subject to federal income taxes on amounts that we distribute to the stockholders, provided that, on an annual basis, we generally distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meet certain other conditions. To the extent that we satisfy the annual distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Our wholly owned subsidiary, MacKenzie NY Real Estate 2 Corp. (“MacKenzie NY 2”), is subject to corporate federal and state income tax on its taxable income at regular statutory rates.

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

Investment Plan

We generally seek to invest in real estate assets. We intend to invest at least 80% of our total assets in equity or debt in real estate assets. We can invest up to 20% of our total assets in investment securities of real estate companies. A real estate company is one that (i) derives at least 50% of its revenue from the ownership, construction, financing, management or sale of commercial, industrial or residential real estate and land; or (ii) has at least 50% of its assets invested in such real estate. We will not invest in general partnerships, joint ventures, or other entities that do not afford limited liability to their security holders. However, limited liability entities in which we invest may hold interests in general partnerships, joint ventures, or other non-limited liability entities. When purchasing securities, we generally favor purchasing securities issued by entities that have (i) completed the initial offering of their securities, (ii) operated for a period of at least two years, and typically more than five years, from the completion of their initial offering, and (iii) fully invested their capital in real properties or other real estate related investments.

Our investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments. Our independent directors review our investment policies periodically, at least annually, to confirm that our policies are in the best interests of our stockholders. Each such determination and the basis thereof are contained in the minutes of our Board of Directors meetings.

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

We intend to expand our investment strategy to include acquisition of distressed real properties. Like our other investments, we would expect to hold distressed properties and infuse funds as necessary to extract unrealized value.

We will engage in various investment strategies to achieve our overall investment objectives. The strategy we select depends upon, among other things, market opportunities, the skills and experience of the Advisers’ investment team and our overall portfolio composition. We generally seek to acquire assets that produce ongoing distributable income for investors, yet with a primary focus on purchasing such assets at a discount from what the Advisers estimate to be the actual or potential value of the real estate.

We intend to continue our historical activities related to launching tender offers to purchase shares of non-traded REITs in order to boost our short-term cash flow and to support our distributions, subject to the constraint that such securities will not exceed 20% of our portfolio. We believe this niche strategy will allow us to pay distributions that are supported by cash flow rather than paying back investors’ capital, although there can be no assurance that some portion of any distribution is not a return of capital.

Rental, Reimbursement and Other Property Income

We generate rental revenue by leasing office space and apartment units to a building’s tenants. These tenant leases fall under the scope of Accounting Standards Codification (“ASC”) Topic 842 and are classified as operating leases. Revenues from such leases are recognized on a straight-line basis over the terms of the lease agreements.

Investment Income

We generate revenues in the form of operating income, capital gains and dividends on dividend-paying equity securities or other equity interests that we acquire, in addition to interest on any debt investments that we hold. Further, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, fees for providing managerial assistance and possibly consulting fees and performance-based fees. Any such fees are generated in connection with our investments and recognized as earned.

Expenses

Our primary operating expenses include the payment of: (i) advisory fees to our Advisers; (ii) our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement; and (iii) other real estate properties operating expenses, including interest expenses on debt obtained to finance our property acquisitions, as detailed below. Our investment advisory fees compensate our Investment Adviser and Real Estate Adviser for their work in identifying, evaluating, negotiating, closing, monitoring and servicing our investments. Our expenses must be billed to and paid by us, except that MacKenzie may be reimbursed for actual cost of goods and services used by us and certain necessary administrative expenses. We will bear all other expenses of our operations and transactions, including:

• the cost of operating and maintaining real estate properties;
• the cost of calculating our net asset value, including the cost of any third-party valuation services;
• the cost of effecting sales and repurchases of our shares and other securities;
• interest payable on debt, if any, to finance our investments;
• fees payable to third parties relating to, or associated with, making investments, including fees and expenses associated with performing due diligence reviews of prospective investments and third-party advisory fees;
• transfer agent and safekeeping fees;
• fees and expenses associated with marketing efforts;
• federal and state registration fees, any stock exchange listing fees in the future;
• federal, state and local taxes;
• independent directors’ fees and expenses;
• brokerage commissions;
• fidelity bond, directors and officers errors and omissions liability insurance, and other insurance premiums;
• direct costs and expenses of administration and sub-administration, including printing, mailing, long distance telephone and staff;
• fees and expenses associated with independent audits and outside legal costs;
• costs associated with our reporting and compliance obligations under the Exchange Act and applicable federal and state securities laws; and
• all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that are based upon our allocable portion of overhead and other expenses incurred by MacKenzie in performing its obligations under the Administration Agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the costs of compensation and related expenses of our chief compliance officer and our chief financial officer and any administrative support staff.

Portfolio Investment Composition

As of June 30, 2026, we owned interests in various real estate limited partnerships and REITs. In addition, we held investments in entities that own real estate where we have sufficient control for the investments to be considered non-securities for purposes of the Investment Company Act of 1940, but not enough control to require consolidation of their financial statements with ours. These investments are reported as “Equity method investments, at fair value.” The following table summarizes the composition of our investments at fair value as of June 30, 2026 and 2025:

Properties

In addition to our investment securities, we currently own and manage nine commercial real estate properties: Satellite Place Office Building located in Duluth, GA, 1300 Main Office Building, First & Main Office Building and Main Street West Office Building located in Napa, CA, Woodland Corporate Center located in Woodland, CA, 220 Campus Lane Office Building, Green Valley Medical Center and Green Valley Executive Center located in Fairfield, CA and One Harbor Center located in Suisun, CA and five residential apartments: Aurora at Green Valley located in Fairfield, CA, Commodore Apartments and The Park View Apartments, located in Oakland, CA, Hollywood Apartments located in Los Angeles, CA, and the Shoreline Apartments located in Concord, CA.

Aurora at Green Valley is owned through our subsidiary MRC Aurora. 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, Woodland Corporate Center, Hollywood Apartments, Shoreline Apartments and Green Valley Medical Center are owned through our subsidiary, the Operating Partnership; Commodore Apartments is owned through our subsidiary, Madison; The Park View Apartments is owned through our subsidiary, PVT and Satellite Place Office Building are owned through our subsidiary, MacKenzie Satellite. In October 2025, we listed Woodland Corporate Center Two for sale, and in September 2026, we entered into a purchase and sale agreement with a third party to sell the property. The sale is subject to customary closing conditions.

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

We use occupancy rate as a key performance indicator to evaluate the performance of our real estate properties. Average occupancy rates on our commercial and residential properties are 65% and 90%, respectively, as of the measurement date. We believe occupancy rate provides investors with a useful measure of the revenue-generating capacity of our portfolio. Management uses occupancy rate to monitor leasing progress, identify re-leasing risk, and compare portfolio performance across periods.

In connection with the formation of MAC, MAC OP was established as the operating partnership through which substantially all of MAC’s business is conducted. The contributed properties and development project are held through subsidiaries of MAC OP, which directly or indirectly owns and operates a portfolio of five residential properties and one development project. MAC owns all of the limited partnership units of MAC OP except for one unit owned by the Operating Partnership and is the sole general partner of MAC OP.

Commercial Properties:

The following commercial properties are owned through subsidiaries of the Operating Partnership:

1300 Main Office Building

1300 Main Office Building contains 20,145 square feet, of which approximately 13,900 square feet is office space and the remainder is designated as retail space. As of June 30, 2026, the property is 70% occupied by 6 tenants. The following table shows the largest tenants and square footage occupied:

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The following information pertains to lease expirations at 1300 Main Office Building:

First & Main Office Building

First & Main Office Building contains 27,398 square feet, of which approximately 19,000 square feet is office space and the remainder is designated as retail space. As of June 30, 2026, the property is 87% occupied by 8 tenants. The following table shows the largest tenants and square footage occupied:

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

Main Street West Office Building

Main Street West Office Building contains 38,135 square feet, of which approximately 32,600 square feet is office space and the remainder is designated as retail space. As of June 30, 2026, the property is 97% occupied by 9 tenants. AUL Corporation elected to terminate its lease as of February 3, 2025. The following table shows the largest tenants and square footage occupied:

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

Satellite Place Office Building

Satellite Place Office Building contains 134,785 square feet, all of which is office space. As of June 30, 2026, the property is approximately 33% occupied by 5 tenants. The following table shows the largest tenants and square footage occupied:

The following information pertains to lease expirations at Satellite Place Office Building:

Woodland Corporate Center

Woodland Corporate Center contains 37,034 square feet, of which 7,797 square feet are laboratories and the rest is office space. All of the laboratory space is occupied by Agtech Innovation. Beginning October 2025, the property has been marketed for sale. Accordingly, Woodland Corporate Center is classified as an asset held for sale as of June 30, 2026. During the year ended June 30, 2026, we recorded an impairment loss on assets held for sale of $1,687,783 on Woodland Corporate Center which was our only asset held for sale. The impairment was primarily attributable to the estimated fair value of the property being below its carrying value. In determining the estimated fair value as of June 30, 2026, we considered a third-party appraisal of the property and the purchase price being negotiated with a prospective third-party buyer. Based on our assessment of the anticipated sale, we used the negotiated purchase price in our June 30, 2026 impairment analysis. In September 2026, the Company entered into a purchase and sale agreement with a third party to sell Woodland Corporate Center, subject to customary closing conditions.

As of June 30, 2026, the property is 100% occupied by 14 tenants. The following table shows the largest tenants and square footage occupied:

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

Green Valley Executive Center

Green Valley Executive Center contains 46,101 square feet, of which approximately 41,600 square feet is office space and the remainder is designated as retail space. As of June 30, 2026, the property is 94% occupied by 15 tenants. The following table shows the largest tenants and square footage occupied:

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

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One Harbor Center

One Harbor Center contains 49,573 square feet, all of which is office space. As of June 30, 2026, the property is 76% occupied by 11 tenants. The following table shows the largest tenants and square footage occupied:

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

Green Valley Medical Center

Green Valley Medical Center contains 31,590 square feet, of which approximately 20,100 square feet is office space, approximately 8,300 square feet is health care space, and the remainder is designated as retail space. As of June 30, 2026, the property is 87% occupied by 12 tenants. The following table shows the largest tenants and square footage occupied:

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

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220 Campus Lane Office Building

220 Campus Lane Office Building was purchased in September 2023. The property was vacant at the time of acquisition. Following the acquisition, we renovated the building and commenced leasing activities. As of June 30, 2026, the building was approximately 26% leased, with four tenants occupying an aggregate of 11,246 square feet. The annualized base rent from these tenants totals approximately $363,648.

Residential Properties:

Effective January 1, 2026, the Company contributed all of its multi-family residential properties, consisting of Commodore Apartments, The Park View Apartments, Hollywood Apartments, Shoreline Apartments and Aurora at Green Valley, as well as the Blue Ridge development project, to MAC. The contributed properties and development project are held through subsidiaries of MAC OP, through which substantially all of MAC’s business is conducted. MAC owns all of the limited partnership units and is the sole general partner of MAC OP.

Commodore Apartments

Commodore Apartments is a mid-rise apartment building built in 1912 and has 48 units. As of June 30, 2026, Commodore Apartments is approximately 89.6% occupied.

The Park View Apartments

The Park View Apartments is also a mid-rise apartment building built in 1929 and has 39 units. As of June 30, 2026, The Park View Apartments is approximately 89.7% occupied.

Hollywood Apartments

Hollywood Apartments, located in Los Angeles, CA, is a mid-rise apartment building built in 1917 and has 54 units. The property contains approximately 38,000 square feet of net rentable apartment area and 8,610 square feet of retail space. All of the retail space is currently occupied by restaurants and nightclubs. As of June 30, 2026, the apartment units are 88.9% occupied.

Shoreline Apartments

Shoreline Apartments is a mid-rise apartment building built in 1968 and renovated in 2015 which has 84 units. As of June 30, 2026, Shoreline Apartments building is approximately 89.3% occupied.

Aurora at Green Valley

Aurora at Green Valley is a newly constructed multi-family residential community consisting of 72 units across three buildings, along with a clubhouse. The project was financed through $10 million of preferred equity capital (including $7.23 million from outside investors) and a $17.15 million construction loan from Valley Strong Credit Union. The clubhouse opened in mid-June 2025 for pre-leasing activity. Construction of the residential buildings was completed in phases. The first residential building was completed in July 2025, with leasing commencing in August 2025. The remaining two buildings were completed in August and September 2025, with leasing commencing shortly thereafter. As of June 30, 2026, the property was approximately 93.1% occupied. As of the date of this report, the property is 100% leased.

The following table provides information regarding each of the residential properties as of June 30, 2026:

Campus Lane Land Development (known as Blue Ridge)

In addition to our commercial and residential real estate properties, we own a vacant parcel adjacent to the 220 Campus Lane Office Building in Fairfield, California (the “Campus Lane Land”). This parcel of land was acquired with the objective of developing a multi-family residential community and is owned by the MAC OP through its subsidiary, Campus Lane Residential, LLC (“Campus Lane Residential”).

This project, known as Blue Ridge, is expected to consist of 84 luxury multi-family units in Solano County, one of the fastest-growing counties in California. The entitlement process for the vacant land is on-going. Our goal is to commence construction in fall 2027; however, this is subject to the city’s approval of our development application submitted in April 2024 and to securing the necessary financial resources. The Company is currently evaluating potential development and financing structures for the project, including discussions with a third-party developer pursuant to which the Company may contribute the land and the third party may arrange construction financing and development capital for the project.

We currently do not have plans for any other major renovation or development of any properties except for Blue Ridge, as discussed above. Each property is being held for income generation and potential value appreciation through increased occupancy and/or rental rates. We maintain property and liability insurance policies on all properties, which we believe are adequate and in line with industry standards.

Material Changes in Financial Condition

Real estate assets

During the year ended June 30, 2026, total real estate assets, net decreased by $11.84 million. The decrease was attributable to the reclassification of $11.71 million of net real estate assets related to Woodland Corporate Center Two to assets held for sale as of June 30, 2026, and to $9.27 million of additional depreciation and amortization. These decreases were partially offset by $9.14 million of real estate additions, including $6.39 million related to the capitalization of additional construction costs at Aurora at Green Valley.

Mortgage notes payable, net

During the year ended June 30, 2026, the Company borrowed an additional $10.55 million on the MRC Aurora construction loan from Valley Strong Credit Union, primarily to fund building expenditures associated with the completion of Aurora at Green Valley. During the year ended June 30, 2026, the Company also entered into a $12.24 million loan agreement with Meriwest Credit Union on April 6, 2026 to refinance its $10.37 million prior loan with Exchange Bank, which is secured by the First & Main Office Building.

Current Market and Economic Conditions

The markets in which our properties operate are highly competitive, and each property faces unique competitive challenges based upon local economic, political, and legal factors. Our West Coast multi-family residential properties are generally restricted from raising rents significantly by local rent control laws. Rent control can result in average rents that are significantly below market, and this provides some buffer against declining rents in a recession. However, in order to encourage development, rent control usually does not apply to newer properties. Since older properties may be unable to raise rents as needed, they may be unable to make improvements that could allow them to compete with newer properties.

Our consolidated office properties, 1300 Main Office Building, First & Main Office Building, Main Street West Office Building, One Harbor Center, Satellite Place Office Building, Woodland Corporate Center, 220 Campus Lane Office Building and Green Valley Executive Center are all Class A suburban office properties and are located in Napa, Woodland, Suisun City and Fairfield, California and Duluth, Georgia. Available office space is plentiful in each market in which our office properties are located, which magnifies the competitive challenges that we face in these markets.

The broader economy has been experiencing increased levels of inflation, higher interest rates and tightening monetary and fiscal policies. While the Federal Reserve began reducing the federal funds rate in the fourth quarter of 2024 and continued reducing the rate during 2025, interest rates remain elevated compared to recent historical levels, which continues to impact real estate valuations and financing costs. We currently have fixed and variable interest rates for our loans. The rise in overall interest rates caused an increase in our variable-rate borrowing costs resulting in an increase in interest expense. The cumulative effect of the prior rate increases may adversely impact real estate asset values. In addition, a prolonged period of high and persistent inflation has increased our operating costs and could result in further increases. The current market and economic conditions could have a material impact on our business, cash flow and results of operations. It could also impact our ability to find suitable acquisitions, sell properties, and raise equity and debt capital.

Results of Operations:

Commercial Properties

The commercial properties owned by us during the Fiscal Years Ended June 30, 2026 (“Fiscal 2026”) and June 30, 2025 (“Fiscal 2025”) are as follows:

Rental, reimbursements and other property income:

During the year ended June 30, 2026, we generated $13.07 million in rental and reimbursements revenues from our nine commercial properties, compared to $16.17 million during the year ended June 30, 2025. The $3.10 million decrease was primarily attributable to a $3.59 million decrease in rental and other property income at our Satellite Place Office Building, primarily due to approximately $3.0 million of lease termination income recognized in the 2025 period related to the early termination of a tenant’s lease in December 2024. The decrease at Satellite Place was partially offset by a $0.23 million increase in rental income at our Main Street West Office Building, as most of the space vacated following an early lease termination in February 2025 was re-leased to Napa County effective January 1, 2026.

Expenses:

Property operating and maintenance expenses:

Operating and maintenance expenses mainly consist of real estate taxes, utilities, repair and maintenance, cleaning, landscape, security, property management fees, insurance, and various other administrative expenses incurred in the operation of our commercial real estate assets. During the year ended June 30, 2026, we incurred operating and maintenance expenses of $4.90 million in the operation of our nine commercial properties, compared to $4.65 million during the year ended June 30, 2025. The increase in the operating expenses was mainly due to higher utilities costs and real estate taxes.

Depreciation and amortization:

During the year ended June 30, 2026, we recorded depreciation and amortization of $6.09 million attributable to the depreciation and amortization of real estate and intangible assets of our nine commercial properties, compared to $9.24 million during the year ended June 30, 2025. The decrease in total depreciation and amortization of $3.15 million was mainly due to the impairment of assets related to our Main Street West Office Building and the write-off of tenant improvements, leasehold improvements, lease commissions, and in-place lease related to our Satellite Place Office Building due to an early lease termination of its anchor tenant in December 2024. The decrease was also due to the classification of the Woodland Corporate Center Two building as held for sale in October 2025, upon which depreciation and amortization ceased.

Interest expense:

During the year ended June 30, 2026, we recorded $4.84 million of interest expense related to mortgage notes payable associated with the Company’s nine commercial properties, compared to $5.02 million during the year ended June 30, 2025.

The decrease of $0.19 million was primarily due to lower interest expense resulting from the Main Street West loan refinancing in May 2025. The decrease was partially offset by higher interest expense resulting from the First & Main loan paying higher interest rates between the old loan’s maturity and the new refinancing in April 2026.

Other operating expenses:

Other operating expenses include professional fees, printing and mailing, and other general and administrative expenses. During the year ended June 30, 2026, we recorded $0.60 million of other operating expenses associated with the Company’s nine commercial properties, compared to $0.89 million during the year ended June 30, 2025. The decrease in other operating expenses was mainly due to lower legal and professional fees at our Main Street West Office Building. During the year ended June 30, 2025, Main Street West incurred additional legal and professional fees while the property was under a court-appointed receiver.

Residential Properties

The residential properties owned by us during Fiscal 2026 and 2025 are as follows:

Rental, reimbursements and other property income:

During the year ended June 30, 2026, we generated $6.94 million in rental and reimbursements revenues from our five residential properties, compared to $5.89 million from our four residential properties during the year ended June 30, 2025. The increase in rental revenues was mainly due to the completion of the Aurora at Green Valley in July 2025 and the commencement of leasing in August 2025.

Expenses:

Property operating and maintenance expenses:

Operating and maintenance expenses mainly consist of real estate taxes, utilities, repair and maintenance, cleaning, landscape, security, property management fees, insurance, and various other administrative expenses incurred in the operation of our residential real estate assets. During the year ended June 30, 2026, we incurred operating and maintenance expenses of $3.18 million in the operation of our five residential properties, compared to $2.73 million in the operation of our four residential properties during the year ended June 30, 2025. The increase in the operating expenses was mainly due to the completion of Aurora at Green Valley in July 2025 and the commencement of leasing in August 2025. Aurora at Green Valley consists of three residential buildings and a clubhouse, resulting in additional operating costs during the 2026 period.

Depreciation and amortization:

During the year ended June 30, 2026, we recorded depreciation and amortization of $3.05 million attributable to the depreciation and amortization of real estate and intangible assets of our five residential properties, compared to $2.19 million on our four residential properties during the year ended June 30, 2025. The increase in total depreciation and amortization of $0.86 million was mainly due to the completion of Aurora at Green Valley in July 2025 and the commencement of leasing in August 2025, which resulted in additional depreciation and amortization during the 2026 period.

Interest expense:

During the year ended June 30, 2026, we recorded $3.36 million related to mortgage notes payable associated with the Company’s five residential properties and debt on the Campus Lane Land, compared to $3.12 million related to the Company’s four residential properties and debt on the Campus Lane Land during the year ended June 30, 2025. During the year ended June 30, 2026, $0.19 million of interest incurred on the Aurora construction loan and the Blue Ridge loan was capitalized. During the year ended June 30, 2025, $0.14 million of interest incurred on the Aurora construction loan and the Blue Ridge loan was capitalized.

The $0.25 million increase was primarily due to $1.26 million of interest expense and loan fee amortization related to the Aurora at Green Valley construction loan following the completion of construction in July 2025. Prior to the completion of Aurora at Green Valley, interest expense on the construction loan was capitalized. The increase was partially offset by lower interest expense resulting from the refinancing of Hollywood Apartments in March 2025.

Other operating expenses:

Other operating expenses include professional fees, printing and mailing, and other general and administrative expenses. During the year ended June 30, 2026, we recorded $0.61 million of other operating expenses associated with the Company’s five residential properties, compared to $0.71 million during the year ended June 30, 2025. The decrease in other operating expenses was mainly due to the decrease in tenant settlement and bad debt expenses at our Hollywood Apartments. The decrease was partially offset by the other operating expenses associated with the completion of Aurora at Green Valley in July 2025.

Corporate and Other

The corporate and other operations during Fiscal 2026 and 2025 are as follows:

Investment income:

Investment income is made up of dividends, distributions from operations, distributions from sales/capital transactions, interest, and other investment income. Total investment income during the years ended June 30, 2026, and 2025, were $0.25 million and $0.07 million, respectively. The increase was mainly due to higher dividend and distribution income from our non-traded REIT investments.

Unallocated corporate expenses:

Unallocated corporate expenses include corporate overhead expenses that are not directly attributable to one of our business segments and include asset management and incentive management fees, administrative costs and transfer agent reimbursements, and other corporate operating expenses.

Our asset management and incentive management fees are based on the advisory agreements that were effective January 1, 2021, and subsequently amended effective January 1, 2026.

Asset management fee:

Base management fees under the amended Advisory Management Agreement effective January 1, 2026, and asset management fees under the Advisory Management Agreement prior to such amendment, for the years ended June 30, 2026 and 2025 were $3.39 million and $3.45 million, respectively. The decrease was primarily due to the lower base management fee rate under the amended Advisory Management Agreement, effective January 1, 2026. The amended agreement provides for a base management fee of 1.25% per annum of gross assets under management, excluding depreciation and amortization, compared to the prior agreement, which provided for a fee based on invested capital at 3.00% of the first $20 million, 2.00% of the next $80 million, and 1.50% of amounts over $100 million.

Incentive or bonus management fee:

Under the Advisory Management Agreement effective January 1, 2021, we were previously subject to an incentive management fee equal to 15% of all distributions once shareholders had received cumulative distributions equal to 6% from the effective date of the agreement. Effective January 1, 2026, the amended Advisory Management Agreement replaced the incentive management fee, as well as the acquisition, financing and disposition fees, with a bonus management fee equal to 5% of adjusted funds from operations each quarter. During the year ended June 30, 2026, we incurred bonus management fees of $0.03 million for the quarter ended March 31, 2026 under the amended Advisory Management Agreement. We did not incur any incentive or bonus management fees during the year ended June 30, 2025. The slight increase was primarily due to the bonus management fee earned based on adjusted funds from operations under the amended Advisory Management Agreement.

Administrative cost and transfer agent reimbursements:

Costs reimbursed to MacKenzie for the year ended June 30, 2026 were $0.88 million as compared to $0.67 million for the year ended June 30, 2025. The increase was due to an increase in the allocable portion of overhead and other expenses incurred by MacKenzie in comparison to June 30, 2025, as a result of the increase in the number of real estate assets owned by us since June 30, 2025.

During the year ended June 30, 2026, no transfer agent cost reimbursements were paid to MacKenzie. During the year ended June 30, 2025, there were $0.01 million transfer agent cost reimbursements paid to MacKenzie.

Interest expense:

During the year ended June 30, 2026, we recorded $1.72 million of interest expense related to the Company’s line of credit agreement and note purchase agreement, compared to $0.38 million during the year ended June 30, 2025.

The increase was attributable to additional borrowings by the Parent Company under the line of credit with PRES and promissory notes issued to Streeterville Capital, LLC.

Other operating expenses:

Other operating expenses include professional fees, directors’ fees, printing and mailing expense, and other general and administrative expenses. Other operating expenses for the years ended June 30, 2026 and 2025, were $1.29 million and $2.95 million, respectively. The decrease in other operating expenses was mainly due to the decrease in legal, professional and consulting fees since June 30, 2025.

Net realized gain on sale of investments:

During the year ended June 30, 2026, we recorded a net realized gain of $0.02 million as compared to $0.13 million net realized gain during the year ended June 30, 2025. Total net realized gain for the year ended June 30, 2026, was realized from the sale of four publicly traded REIT securities and five non-traded REIT securities. Total net realized gain for the year ended June 30, 2025, was realized from the sale of three non-traded REIT securities and one limited partnership interest.

Net unrealized gain (loss) on investments:

During the year ended June 30, 2026, we recorded a net unrealized gain of $1.21 million, which was net of $1.33 million of unrealized loss reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period. Accordingly, the net unrealized losses excluding the reclassification adjustment for the year ended June 30, 2026, were $0.12 million, which resulted from fair value depreciation of $0.54 million from non-traded REIT securities and fair value appreciations of $0.39 million from general partnership interests and $0.03 million from limited partnership interests.

During the year ended June 30, 2025, we recorded a net unrealized loss of $0.72 million, which was net of $0.17 million of unrealized gain reclassification adjustment. The reclassification adjustments are the accumulated unrealized gains or losses as of the end of the prior period that are realized during the current period. Accordingly, the net unrealized losses excluding the reclassification adjustment for the year ended June 30, 2025, were $0.55 million, which resulted from fair value depreciations of $0.69 million from general partnership interests, $0.08 million from limited partnership interests and fair value appreciations of $0.22 million from non-traded REIT securities.

Income tax provision (benefit):

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and, as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders, provided that, on an annual basis, it generally distributes at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and excluding any net capital gain) to the stockholders and meets certain other conditions. To the extent it satisfies the annual distribution requirement but distributes less than 100% of its REIT taxable income, it will be subject to U.S. federal corporate income tax on its undistributed taxable income. In addition, it will be subject to a 4% nondeductible excise tax if the actual amount that it pays to its stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.

The Parent Company satisfied the annual dividend payment and other REIT requirements for the tax year ended December 31, 2025. Therefore, it did not incur any tax expense or excise tax on its income from operations during the quarterly periods within the tax year 2025. Although the Board of Directors suspended the Company’s regular quarterly common stock dividend effective May 19, 2025, based on the Company’s current estimates, any REIT taxable income for the tax year 2026, if any, is expected to be fully covered by the dividends-paid deduction, including dividends paid on its preferred stock. Accordingly, the Parent Company did not record any provision for federal income taxes during the fiscal periods within the tax year 2026.

MacKenzie NY 2 is subject to corporate federal and state income tax on its taxable income at regular statutory rates. As of June 30, 2026, it did not have any taxable income for tax years 2025 and 2026. Therefore, we did not record any tax provisions during any fiscal periods within the tax years 2025 and 2026. MacKenzie Satellite, MRC QRS and MAC are qualified REIT subsidiaries of the Parent Company. Therefore, they do not file a separate tax return.

The Operating Partnership is a limited partnership. 220 Campus Lane, GVEC and Innovate Napa are limited liability companies. First & Main, 1300 Main, Woodland Corporate Center Two, Main Street West, One Harbor Center, LP and Green Valley Medical Center, LP are limited partnerships. Accordingly, all income tax liabilities of these entities ultimately flow through to the Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these entities.

MAC OP is a limited partnership. Hollywood Hillview, MacKenzie Shoreline, Madison, PVT, Campus Lane Residential and MRC Aurora are limited liability companies. Accordingly, all income tax liabilities of these entities ultimately flow through to the Company, with the exception of minority membership interests. Therefore, no income tax provisions are recorded for these entities.

Non-GAAP Financial Measures

The Company believes that Funds from Operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and Adjusted Funds from Operations (“AFFO”) are meaningful supplemental non-GAAP measures of operating performance. Management believes these measures provide investors with additional information that is useful in evaluating the operating performance of the Company’s real estate portfolio, facilitate comparisons of operating performance between reporting periods and with other REITs, and assist in evaluating the Company’s ability to generate cash from its core operating activities.

Historical cost accounting under GAAP requires real estate assets, other than land, to be depreciated over their estimated useful lives. Because real estate values have historically fluctuated based on market conditions and other factors, management believes that presentations of operating results that include historical cost depreciation may be less informative in evaluating the operating performance of a REIT.

Consistent with the current definition established by NAREIT, FFO is defined as net income (loss), computed in accordance with GAAP, excluding gains or losses from sales of depreciable real estate and impairment write-downs of depreciable real estate, plus depreciation and amortization related to real estate assets.

The Company defines AFFO as FFO adjusted to exclude items that management believes are not representative of the Company’s ongoing operating performance. These adjustments include the effects of straight-line rental revenue, amortization of above-market and below-market lease intangibles, amortization of deferred financing costs, debt mark-to-market adjustments, unrealized gain (loss) on investments at fair value, and other non-cash or non-recurring items, such as consulting and marketing fees and stock issued as part of our listing efforts, when applicable. The consulting and marketing fees and stock issuances presented as adjustments in the AFFO reconciliation below were incurred in connection with the completed listing of our common stock on the Nasdaq Capital Market. Because that listing is a one-time event that has occurred, we do not expect these listing-related consulting and marketing fees or share issuances to recur in future periods.

Management uses FFO and AFFO, together with GAAP financial measures, to evaluate period-over-period operating performance, assess the operating performance of the Company’s real estate portfolio, evaluate trends in the Company’s business, and make operating and capital allocation decisions. In addition, under the Advisory Management Agreement, as amended effective January 1, 2026, AFFO is used in determining the quarterly bonus management fee payable to the Company’s Real Estate Adviser. Management prepares the quarterly FFO and AFFO calculations and the related bonus management fee calculation, which are reviewed and approved by the Company’s Board of Directors.

FFO and AFFO are supplemental measures of operating performance and should not be considered alternatives to net income (loss), cash flows from operating activities, or any other measure of financial performance or liquidity determined in accordance with GAAP. These measures do not represent cash generated from operating activities and do not reflect changes in working capital, capital expenditures, principal payments on debt, leasing costs, tenant improvements, or other cash requirements necessary to operate the Company’s business.

AFFO is not a measure defined by GAAP or NAREIT, and there is no standardized method of calculating AFFO. Accordingly, the Company’s computation of AFFO may not be comparable to similarly titled measures reported by other REITs. In addition, FFO may not be comparable to FFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than the Company.

The calculation of AFFO requires management to use judgment in the application of accounting policies, including making estimates and assumptions regarding, among other things: (i) the fair value of investments and the resulting unrealized gain (loss) on investments at fair value recognized for the period; (ii) straight-line rent adjustments; (iii) the identification, valuation, and estimated useful lives of above-market and below-market lease intangibles and the related amortization; (iv) the amortization of loan fees and debt mark-to-market, and the fair value estimates that underlie such amounts; and (v) the identification and classification of items that management considers non-cash or non-recurring, including consulting and marketing fees and stock issued as part of the Company’s listing efforts. Management’s determination of whether a particular item is “non-recurring” is itself a judgment, and items previously classified as non-recurring may recur in future periods. Actual results could differ from these estimates, and changes in the underlying judgments or assumptions could result in a materially different calculation of AFFO. Because AFFO is used to determine the quarterly bonus management fee payable to our Real Estate Adviser under the Advisory Management Agreement, changes in management’s judgments or assumptions in calculating AFFO may also affect the amount of that fee.

The following table reconciles net income (loss), the most directly comparable GAAP financial measure, to FFO and AFFO for the years ended June 30, 2026 and 2025:

(1) This represents the issuance of 13,300 shares of common stock to Maxim’s affiliate in a private placement, representing approximately 1% of the Company’s outstanding stock. On August 26, 2024, the Company entered into a letter agreement with Maxim to provide general financial advisory and investment banking services to the Company in connection with, among other things, strategic planning, uplisting to a U.S. exchange (Nasdaq, New York Stock Exchange), and potential rights offering, equity issuance or other mechanisms to enhance corporate and shareholder value.

(2) This represents the amortization of prepaid marketing expenses in relation to the common stock issued to Outside The Box Capital Inc. (“OTB Capital”) in a private placement. On January 30, 2025, the Company entered into a letter agreement with OTB Capital to provide marketing and distribution services to communicate information about the Company.

(3) This represents consulting fees to IR Agency in connection with the completed listing of our common stock on the Nasdaq Capital Market.

(4) This represents consulting fees to Interactive Offers, LLC in connection with the completed listing of our common stock on the Nasdaq Capital Market.

FFO losses increased from $3.04 million for the year ended June 30, 2025 to $3.30 million for the year ended June 30, 2026, primarily driven by lower rental, reimbursements and other property income, due to the early lease termination by a tenant at the Satellite Place Office Building; higher interest expense, mainly due to additional borrowings from PRES and promissory notes issued to Streeterville Capital, LLC; and higher property operating and maintenance expenses due to the completion of Aurora at Green Valley. These factors were partially offset by lower general and administrative expenses, lower professional fees and improved results from investments at fair value.

AFFO loss increased from $0.57 million for the year ended June 30, 2025 to $3.47 million for the year ended June 30, 2026, primarily due to the factors affecting FFO, a $1.93 million unfavorable change in the adjustment for unrealized gains and losses on investments at fair value, and a $1.04 million decrease in other AFFO adjustments, primarily due to lower stock issued for advisory and marketing services and lower listing-related consulting and marketing fees. These factors were partially offset by changes in other AFFO adjustments.

Liquidity and Capital Resources

Capital Resources:

We offered to sell up to 5 million shares of common stock in our first public offering and up to 15 million shares of common stock in each of our second and third public offerings. We have raised total gross proceeds of $119.10 million from the issuance of common stock under the public offerings, consisting of $42.46 million from our first public offering, which concluded in October 2016, $67.99 million from the second public offering, which concluded in October 2019, and $8.65 million from our third public offering, which concluded in October 2020. In addition, we have raised $15.56 million from the issuance of shares of common stock under the common stock DRIP as of June 30, 2026. Out of the total proceeds from DRIPs, we have utilized a total of $14.28 million to repurchase shares of common stock under the share repurchase program. We have raised $19.90 million through the sale of our Series A preferred stock, $3.72 million through the sale of our Series B preferred stock and $1.37 million through the sale of our Series C preferred stock pursuant to a Regulation A offering as of June 30, 2026. In addition, we have raised $0.67 million from the issuance of shares of Series A, Series B and Series C preferred stock under the preferred stock DRIP. In January 2025, the Offering Circular was qualified by the SEC for the sale of 1,286,638.62 shares of Series A and 1,267,216.17 shares of Series B preferred stock. The Offering Circular was amended in October 2025 to offer up to 645,545.52 shares of Series A Preferred Stock, 1,161,981.94 shares of Series B Preferred Stock, and 1,159,219.11 shares of Series C Preferred Stock. Of these amounts, 150,000 shares of each series are reserved for the preferred stock DRIP. On January 15, 2025, our shelf registration statement on Form S-3 for the sale of up to $75 million in common stock, preferred stock, warrants, and units was declared effective by the SEC, and we entered into an equity distribution agreement with Maxim to issue and sell our common stock for an aggregate gross sales price of up to $20 million pursuant to the at-the-market offering described in the ATM Prospectus, subject to maintaining compliance with General Instruction I.B.6 of Form S-3. As of June 30, 2026, under the ATM Offering, we had sold 111,716.60 shares of common stock for gross proceeds of approximately $1.80 million. In addition, on February 28, 2025, the Company offered and sold 153,403.40 shares of the Company’s common stock, pre-funded warrants to purchase up to 129,226.50 shares of common stock, and warrants to purchase up to an aggregate of 423,944.85 shares of common stock. The gross proceeds to the Company from this transaction were approximately $4.83 million, before deducting the placement agent’s fees and other offering expenses payable by the Company. In July and August 2025, 129,226.50 shares of common stock were issued upon exercise of all of the pre-funded warrants. All share amounts are presented after giving effect to the Reverse Stock Split.

We plan to fund future investments with the net proceeds raised from our preferred equity offering and any future offerings of securities and cash flows from operations, as well as interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. However, we have not raised as much from our preferred equity offering in the past fiscal year as we did in previous years, at least in part due to rising interest rates making the preferred return less attractive. Thus, there is no guarantee that we can raise sufficient funds to meet our goals in terms of growth, strategic or necessary loan rebalancing, and additional investments. We also may fund a portion of our investments through borrowings from banks and issuances of senior securities. We also may borrow money within the underlying companies in which we have majority ownership.

We intend to utilize leverage to enhance the total returns of our portfolio. Historically, we were only able to access leverage at attractive costs through a credit facility, but the termination of our BDC status effective December 31, 2020 provided us with greater flexibility in choosing among different alternatives for raising capital through debt, equity participation features (such as warrants and convertible notes) and/or additional classes of stock (such as preferred) in order to facilitate capital formation.

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

We used the funds raised from our public offerings to invest in portfolio companies and to pay operating expenses.

We finished the year ended June 30, 2026, with cash and cash equivalents, and restricted cash of approximately $3.81 million. Our principal demands for cash are to fund operating and administrative expenses, debt service obligations, and dividends on our common and Series A, B and C preferred stock. In addition, we may also use cash to purchase additional properties. We expect to fund our material cash requirements over the next year through a combination of cash on hand, net cash provided by our property operations, new capital raised from our Series A, B and C preferred stock, and new borrowings at the underlying companies.

Cash Flows:

Fiscal 2026:

For the year ended June 30, 2026, we experienced a net decrease in cash of $0.31 million. During this year, we used net cash of $3.31 million in our operating activities and $9.14 million in our investing activities and generated net cash of $12.14 million in our financing activities.

The net cash outflow of $3.31 million from operating activities resulted from $22.67 million used in operating expenses, offset by cash inflows of $19.11 million of rental revenues and $0.25 million of investment income.

The net cash outflow of $9.14 million from investing activities resulted primarily from $9.15 million of investments in real estate assets through our subsidiaries, including $6.39 million of construction costs related to Aurora at Green Valley and approximately $2.76 million of tenant improvements and other capitalized costs related to our other properties. The Company also used $3.70 million for purchases of equity investments, partially offset by $3.71 million of proceeds from the sale of investments.

The net cash inflow of $12.14 million from financing activities resulted from $22.80 million of additional mortgage borrowings, $3.63 million of additional notes payable, $1.37 million of issuance of Series C preferred stock, $1.15 million from issuance of Series A preferred stock, $0.41 million proceeds from borrowings under the affiliated party line of credit, $0.33 million from issuance of Series B preferred stock and $0.32 million from issuance of common stock, offset by cash outflows of $11.66 million payments on existing mortgage notes payables, $2.05 million payment on existing notes, $1.53 million capital distributions to non-controlling interests holders, $0.94 million payment of dividends to Series A preferred stockholders, $0.92 million payment of financing fees, $0.38 million payment of selling commissions and fees, $0.27 million repayment of finance lease liabilities, $0.06 million payment of dividends to Series B preferred stockholders, $0.05 million payment of dividends to Series C preferred stockholders and $0.01 million change in capital pending acceptance.

Fiscal 2025:

For the year ended June 30, 2025, we experienced a net decrease in cash of $8.96 million. During this year, we used net cash of $1.69 million in our operating activities, used net cash of $19.12 million in our investing activities and generated net cash of $11.85 million in our financing activities.

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

The net cash outflow of $19.12 million from investing activities resulted from $18.90 million of real estate acquisitions through our subsidiaries, and $1.18 million purchases of equity investments, offset by cash inflow of $0.96 million from sale of investments.

The net cash inflow of $11.85 million from financing activities resulted from $48.47 million of additional mortgage borrowings, $9.59 million proceeds from borrowings under the affiliated party line of credit, $5.57 million of capital contributions by non-controlling interests holders, $3.79 million of issuance of common stock, $1.94 million of issuance of pre-funded warrants, $1.65 million of issuance of Series B preferred stock, $1.12 million of additional notes payable, $0.38 million of issuance of Series A common stock warrants, $0.23 million of issuance of Series A preferred stock and $0.22 million of issuance of Series B common stock warrants, offset by cash outflow of $48.89 million payments on existing mortgage notes payables, $4.80 million payment of dividends to common stockholders, $2.32 million payment of financing fees, $1.88 million payment of selling commissions and fees, $1.49 million capital distributions to non-controlling interests holders, $0.95 million payment of dividends to Series A preferred stockholders, $0.28 million change in capital pending acceptance, $0.23 million repayment of finance lease liabilities, $0.22 million payment on existing notes, $0.04 million payment of dividends to Series B preferred stockholders and $0.01 million redemption of Series A preferred stock.

Material Cash Obligations

We have entered into two contracts under which we have material future commitments: (i) the Advisory Management Agreement and the Amended and Restated Investment Advisory Agreement, under which the Advisers serve as our advisers, and (ii) the Administration Agreement, under which MacKenzie furnishes us with certain non-investment management services and administrative services necessary to conduct our day-to-day operations. Each of these agreements is terminable by either party upon proper notice. Payments under the Advisory Management Agreement, as amended effective January 1, 2026, will be (i) a base management fee equal to 1.25% per annum of gross assets under management (excluding depreciation and amortization), paid monthly, and (ii) a bonus management fee equal to 5% of adjusted funds from operations each quarter. The bonus management fee replaces any incentive fee, acquisition fee, financing fee, or disposition fee that was payable under the prior agreement. Payments under the Administration Agreement will occur on an ongoing basis as expenses are incurred on our behalf by MacKenzie. However, if MacKenzie withdraws as our administrator, it will be liable for any expenses we incur as a result of such withdrawal. For additional information concerning the terms of these agreements and related fees paid, see Note 8 in the consolidated financial statements included in this report.

Our material cash requirements over the next year and thereafter also include:

• Scheduled principal and interest payments on our mortgage notes payable, line of credit and notes payable. As of June 30, 2026, our mortgage notes payable had an aggregate outstanding principal balance of approximately $134.21 million, with scheduled maturities in fiscal years 2027 through 2033. Our line of credit with PRES (as extended, maturing December 31, 2027) had an aggregate outstanding principal balance of $10 million while notes payable, net had an aggregate outstanding principal balance of approximately $3.86 million, including $2.94 million outstanding under the Streeterville Capital, LLC secured promissory notes maturing on various dates through July 2027 and September 2027, in each case as described in Note 10 to the consolidated financial statements. See Note 10 for a discussion of the material terms, guarantees and required principal payments of our indebtedness.
• Dividends declared on our Series A, Series B and Series C preferred stock, which are payable pro-rata at the rate of $0.125, $0.0625 (in cash) and $0.1875 per share per month for the Series A, Series B and Series C preferred stock, respectively, subject to the discretion of our Board of Directors. See Note 14 for a discussion of preferred stock dividends declared during fiscal 2026. The Company suspended the regular quarterly dividend on its common stock effective May 19, 2025, and the common stock dividend remains suspended.
• Operating expenses incurred in the ordinary course of business, including property operating and maintenance expenses, real estate taxes, insurance, professional fees, director fees and other general and administrative expenses.

We expect to fund these material cash requirements through a combination of cash on hand, net cash provided by our property operations, borrowings under the line of credit with PRES, secured promissory notes and other borrowings at the Company and its subsidiaries, mortgage refinancings, sales or contributions of properties, and net proceeds from the Regulation A preferred stock offering under the Offering Circular and from the sale of common stock under the ATM Offering.

Borrowings

On January 22, 2025, we entered into a revolving line of credit agreement with PRES, an affiliate of the Adviser, of up to $10,000,000. Interest will accrue on any unpaid principal balance on the note at a fixed annual interest rate of 10%. In addition, an origination fee of 2% will be charged on each advance and the sum will be added to the principal balance. The original maturity date of the loan was June 1, 2026. On September 24, 2025, the maturity date was extended to December 31, 2027. The loan requires monthly interest beginning on March 1, 2025, with the remaining principal balance due at maturity. As of June 30, 2026, the Company has borrowed $10 million in entirety, which includes $196,078 of loan origination fees, under the line of credit.

We use the proceeds from this credit facility on a short-term basis to bridge the gap between our asset acquisition expenditures and debt refinancings. We are subject to various customary covenants and restrictions on our operations, such as covenants that may (i) require us to maintain certain financial ratios, including asset coverage, debt to equity and interest coverage, and a minimum net worth, and/or (ii) restrict our ability to incur liens or additional debt, merge, sell assets, make certain investments and/or distributions or engage in transactions with affiliates. We also borrow money within the underlying companies in which we have majority ownership.

As of June 30, 2026, the Company was not in compliance with the required debt service coverage ratio under the MacKenzie Satellite Mortgage Notes Payable. As a result of the covenant violation, the remaining unpaid principal balance of approximately $5.8 million is presented in the fiscal year ending June 30, 2027 maturity category in the table below. See Note 10, Debt, for additional information.

The table below presents the total loans outstanding at the underlying companies as of June 30, 2026 and the fiscal years those loans mature:

Critical Accounting Policies and Estimates

Below is a discussion of the accounting policies and estimates that management considers critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. In addition to the discussion below, our critical accounting policies are discussed in Note 2 of our consolidated financial statements, which are part of this annual report beginning on page F-1.

Real Estate Purchase Price Allocations

In accordance with the guidance for business combinations, upon the acquisition of real estate properties, we evaluate whether the transaction is a business combination or an asset acquisition. If the transaction does not meet the definition of a business combination, we record the assets acquired, the liabilities assumed, and any non-controlling interest as of the acquisition date, measured at their relative fair values. Acquisition-related costs are capitalized in the period incurred and are added to the components of the real estate assets acquired. We assess the acquisition-date fair values of all tangible assets, identifiable intangible assets, and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant. Intangible assets include the value of in-place leases, which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. We amortize the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which is on average five years. Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require us to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates, and the number of years the property will be held for investment. The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets, and assumed liabilities, which could impact the amount of our net income (loss). Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based upon the assumptions made in calculating these estimates.

Fair Value Measurements

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observables used in measuring investments at fair value. Market price is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observables and a lesser degree of judgment used in measuring fair value.

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

Level I – Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I are publicly traded equity securities. We do not adjust the quoted price for these investments even in situations where we hold a large position and a sale could reasonably impact the quoted price.

Level II – Price inputs are quoted prices for similar financial instruments in active markets; quoted prices for identical or similar financial instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets. Investments which are generally included in this category are publicly traded equity securities with restrictions.

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

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement, in its entirety, requires judgment and considers factors specific to the investment.

Valuation of Investments

Our consolidated financial statements include investments that are measured at their estimated fair values in accordance with GAAP. Our valuation procedures are summarized below:

Securities for which market quotations are readily available on an exchange will be valued at such price as of the closing price on the day closest to the valuation date. Where a security is traded but in limited volume, we may instead utilize the weighted average closing price of the security over the prior 10 trading days. We may value securities that do not trade on a national exchange by using published secondary market trading information. When doing so, we first confirm that GAAP recognizes the trading price as the fair value of the security.

Securities for which reliable market data is not readily available or for which the pricing source does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of the Investment Adviser or Board of Directors, does not represent fair value, are valued as follows: (i) each portfolio company or investment is initially valued by the investment professionals responsible for the portfolio investment; (ii) preliminary valuation conclusions are documented and discussed with our senior management; and (iii) the Board of Directors will discuss valuations and determine the fair value of each investment in our portfolio in good faith based on the input of the Investment Adviser and, where appropriate and necessary, the respective third‑party valuation firms. The recommendation of fair value will generally be based on the following factors, as relevant:

• the nature and realizable value of any collateral;
• the portfolio company’s ability to make payments;
• the portfolio company’s earnings and discounted cash flow;
• the markets in which the issuer does business; and
• comparisons to publicly traded securities.

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

• private placements and restricted securities that do not have an active trading market;
• securities whose trading has been suspended or for which market quotes are no longer available;
• debt securities that have recently gone into default and for which there is no current market;
• securities whose prices are stale;
• securities affected by significant events; and
• securities that the Investment Adviser believes were priced incorrectly.

Valuation of Real Property

Valuation of real property used to evaluate impairment of real property held for use, held for sale, or to determine the fair value of certain real properties held by equity method investments accounted for using the fair value method, involve subjective judgments and estimates. To determine the valuation of the real estate properties, management utilizes the income approach, either the discounted cash flow or direct capitalization valuation model. Determining fair value requires management to make estimates of future cash flows, which are based on a number of inputs and assumptions, including property operations, terminal capitalization rates, and discount rates. We estimate future leasing activities and associated costs, generally over a ten-year period, to determine the fair value of the property. Once the fair value is determined, we determine whether any impairment is required and document our conclusion. As part of their review of our quarterly and annual reports, the Board of Directors reviews the valuations and impairment determinations. In addition, we may obtain a third-party appraisal on directly owned properties.

The inputs used in the valuation of real property are unobservable and accordingly, the notes to our consolidated financial statements describe the uncertainty with respect to the possible effect of such valuations, and any changes in such valuations, on our consolidated financial statements.

Below is a discussion of additional accounting policies and estimates. While management determined these to be not critical, they are still considered to be significant and relevant for understanding and evaluating our reported financial results.

Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported asset values, liabilities, revenues, expenses and unrealized gains (losses) on investments during the reporting period. Material estimates are susceptible to change, and actual results could differ from those estimates.

Revenue Recognition

Rental revenue, net of concessions, which is derived primarily from lease contracts and includes rents that each tenant pays in accordance with the terms of each lease agreement, is recognized on a straight-line basis over the term of the lease, when collectability is determined to be probable.

Minimum rent, including rental abatements, lease incentives, and contractual fixed increases attributable to operating leases are recognized on a straight-line basis over the term of the related leases when collectability is probable. Amounts expected to be received in later years are recorded as deferred rent receivable. If the lease provides for tenant improvements, we determine whether the tenant improvements, for accounting purposes, are owned by the tenant or us. When we are the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that can be taken in the form of cash or a credit against the tenant’s rent) that is funded is treated as a lease incentive and amortized as a reduction of rental revenue over the lease term.

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

• whether the lease stipulates how a tenant improvement allowance may be spent;
• whether the lessee or lessor supervises the construction and bears the risk of cost overruns;
• whether the amount of a tenant improvement allowance is in excess of market rates;
• whether the tenant or landlord retains legal title to the improvements at the end of the lease term;
• whether the tenant improvements are unique to the tenant or general purpose in nature; and
• whether the tenant improvements are expected to have any residual value at the end of the lease.

In accordance with ASC Topic 842, we determine whether collectability of lease payments in an operating lease is probable. If we determine the lease payments are not probable of collection, we fully reserve for rent and reimbursement receivables, including deferred rent receivable, and recognize rental income on a cash basis.

Distributions received from investments are evaluated by management and recorded as dividend income or a return of capital (reduction of investment) on the ex-dividend date. Operational dividends or distributions received from portfolio investments are recorded as investment income. Distributions resulting from the sale or refinance of an investee’s underlying assets are compared to the estimated value of the remaining assets and are recorded as a return of capital or as investment income as appropriate.

Realized gains or losses on investments are recognized in the period of disposal, distribution, or exchange and are measured by the difference between the proceeds from the sale or distribution and the cost of the investment. Investments are disposed of on a first-in, first-out basis. Net change in unrealized gain (loss) reflects the net change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gains or losses.

Variable Interest Entities

We evaluate the need to consolidate other entities in when we have invested in their securities in accordance with ASC Topic 810, Consolidation. In determining whether we have a controlling interest in a variable interest entity that requires us to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the partners/members, as well as whether the entity is a variable interest entity for which we are the primary beneficiary.

Real Estate Assets, Capital Additions, Depreciation and Amortization

We capitalize costs, including certain indirect costs, incurred for capital additions, including redevelopment, development, and construction projects. We also allocate certain department costs, including payroll, at the corporate levels as “indirect costs” of capital additions, if such costs clearly relate to capital additions. We also capitalize interest, property taxes, and insurance during periods in which redevelopment, development, and construction projects are in progress. Cost capitalization begins once the development or construction activity commences and ceases when the asset is ready for its intended use. Repair and maintenance and tenant turnover costs are expensed as incurred. Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset. Depreciation and amortization expense are computed on the straight-line method over the asset’s estimated useful life. We consider the period of future benefit of an asset to determine its appropriate useful life and anticipate the estimated useful lives of assets by class to be generally as follows:

Impairment of Real Estate Assets

We continually monitor events and changes in circumstances that could indicate that the carrying value of our real estate and related intangible assets may not be recoverable. When indicators of potential impairment emerge, we assess whether we will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition. Based on this assessment, if we do not believe that we will recover the carrying value of the real estate and related intangible assets, we will record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets.

During the year ended June 30, 2026, we recorded an impairment loss on assets held for sale of $1,687,783, which is discussed in Note 5. During the year ended June 30, 2025, due to an early lease termination by the anchor tenant at our Main Street West Office Building, we recognized an accumulated impairment loss of $9,500,167. We utilized a third-party appraisal to estimate the fair value of the property and determine the impairment amount. We consider these inputs as Level III measurements within the fair value hierarchy.

Assets and Liabilities Held for Sale

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

• Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group);
• The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups);
• An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated;
• The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year;
• The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value. The price at which a long-lived asset (disposal group) is being marketed is indicative of whether the entity currently has the intent and ability to sell the asset (disposal group). A market price that is reasonable in relation to fair value indicates that the asset (disposal group) is available for immediate sale, whereas a market price in excess of fair value indicates that the asset (disposal group) is not available for immediate sale; and
• Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

On the day that these criteria are met, we suspend depreciation on the investment properties held for sale, including depreciation for tenant improvements and additions, as well as on the amortization of acquired in-place leases. Assets and liabilities of the disposal group are presented separately on the consolidated balance sheets and measured at the lower of carrying value or fair value less costs to sell. Prior year balances have been reclassified as assets and liabilities held for sale for comparative purposes on the consolidated balance sheet as of June 30, 2025. Woodland Corporate Center Two was listed for sale as discussed in Note 5.

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of the end of the period covered by this report as required by paragraph (b) of Rule 13a-15 or 15d-15 of the Exchange Act. Based upon such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date and provided reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange 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.

There have been no changes in our internal control over financial reporting (identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act) during the fiscal year ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rules 13a-15(f) and 15d-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP.

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

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

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

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

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation and presentation and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management’s assessment of the effectiveness of our internal control system as of June 30, 2026, was based on the framework for effective internal control over financial reporting described in Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s assessment, as of June 30, 2026, our system of internal control over financial reporting was effective at the reasonable assurance level.

This annual report does not include an attestation report of our independent registered public accounting firm regarding control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to Section 989G of the Dodd-Frank Wall Street and Consumer Protection Act, which exempts non-accelerated filers from the auditor attestation requirement of Section 404 (b) of the Sarbanes-Oxley Act.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that occurred during the fourth quarter of the Company’s fiscal year ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.