UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number 000-55006

MacKenzie Realty Capital, Inc.

(Exact name of registrant as specified in its charter)

Maryland	45-4355424
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

89 Davis Road, Suite 100, Orinda, CA	94563
(Address of principal executive offices)	(Zip Code)

(925) 631-9100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of class	Trading symbol (s)	Name of exchange on which registered
Common Stock, $0.0001 par value per share	MKZR	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☑	Smaller reporting company ☑
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of the shares of issuer’s Common Stock outstanding as of May 15, 2026 was 2,255,114.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements	1

	Consolidated Balance Sheets as of March 31, 2026 and June 30, 2025 (Unaudited)	1
	Consolidated Statements of Operations for the three and nine months ended March 31, 2026 and 2025 (Unaudited)	2
	Consolidated Statements of Changes in Equity for the three and nine months ended March 31, 2026 (Unaudited)	3
	Consolidated Statements of Changes in Equity for the three and nine months ended March 31, 2025 (Unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended March 31, 2026 and 2025 (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65

Item 4.	Controls and Procedures	65

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	66

Item 1A.	Risk Factors	66

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66

Item 3.	Defaults Upon Senior Securities	66

Item 4.	Mine Safety Disclosures	66

Item 5.	Other Information	66

Item 6.	Exhibits	67

Table of Contents

Part I.

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

MacKenzie Realty Capital, Inc.

Consolidated Balance Sheets

(Unaudited)

	March 31, 2026			June 30, 2025
Assets
Real estate assets
Land	$	42,566,256		$	42,566,256
Building, fixtures and improvements		188,450,666			182,879,586
Intangible lease assets		10,673,707			11,686,822
Less: accumulated depreciation and amortization		(27,684,830	)		(24,358,852	)
Total real estate assets, net		214,005,799			212,773,812
Cash and cash equivalents		3,975,776			3,627,360
Restricted cash		342,286			328,239
Investments, at fair value		3,427,327			1,749,528
Equity method investments, at fair value		2,487,154			2,125,451
Investments income, rents and other receivables		2,460,561			2,227,630
Prepaid expenses and other assets		901,942			1,184,801
Assets held for sale, net		11,839,279			11,975,357
Total assets	$	239,440,124		$	235,992,178

Liabilities
Mortgage notes payable, net	$	130,168,850		$	120,417,074
Line of credit and notes payable, net		13,847,592			12,016,507
Deferred rent and other liabilities		1,548,218			1,513,283
Finance lease liabilities		1,730,319			1,898,005
Dividend payable		735,265			715,498
Accounts payable and accrued liabilities		4,629,717			4,514,142
Below-market lease liabilities, net		295,890			530,474
Due to related entities		450,618			167,764
Capital pending acceptance		131,350			13,411
Liabilities held for sale		645,407			664,577
Total liabilities		154,183,226			142,450,735

Equity
Common stock, $0.0001 par value, 80,000,000 shares authorized; 2,164,158.00 and 1,578,192.98 shares issued and outstanding as of March 31, 2026 and June 30, 2025, respectively.		216			158
Preferred stock, $0.0001 par value, 20,000,000 shares authorized:
Series A Preferred stock, 747,753.79 and 766,176.57 shares issued and outstanding as of March 31, 2026 and June 30, 2025, respectively.		75			77
Series B Preferred stock, 124,363.67 and 116,112.32 shares issued and outstanding as of March 31, 2026 and June 30, 2025, respectively.		12			12
Series C Preferred stock, 52,656.67 issued and outstanding as of March 31, 2026.		5			-
Additional paid-in capital		147,591,001			145,050,643
Accumulated deficit		(96,829,745	)		(85,192,267	)
Total stockholders’ equity		50,761,564			59,858,623
Non-controlling interests		34,495,334			33,682,820
Total equity		85,256,898			93,541,443

Total liabilities and equity	$	239,440,124		$	235,992,178

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

Table of Contents

MacKenzie Realty Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
	2026			2025			2026			2025
Revenue
Rental, reimbursements and other property income	$	5,441,504		$	4,273,646		$	14,574,624		$	17,256,191

Expenses
Depreciation and amortization		2,114,736			2,634,617			6,984,439			7,091,297
Interest expense		2,471,562			2,661,864			7,151,845			6,521,686
Property operating and maintenance		1,916,805			1,889,737			6,069,945			5,478,951
Asset management fees to related party (Note 8)		807,830			863,824			2,584,957			2,570,860
General and administrative		233,696			895,587			982,808			1,735,449
Professional fees		141,675			933,624			718,686			1,499,257
Administrative cost reimbursements to related party (Note 8)		220,250			167,463			660,750			502,391
Directors’ fees		36,250			55,863			120,750			177,902
Transfer agent cost reimbursements to related party (Note 8)		-			1,537			-			4,609
Impairment loss		-			-			-			9,500,167
Total operating expenses		7,942,804			10,104,116			25,274,180			35,082,569

Operating loss		(2,501,300	)		(5,830,470	)		(10,699,556	)		(17,826,378	)

Other income (loss)
Dividend and distribution income from equity securities at fair value		70,752			12,418			183,083			47,953
Dividend expense from securities sold, not yet purchased, at fair value		-			-			(1,055	)		-
Net unrealized gain (loss) on equity securities at fair value		354,510			14,938			1,643,528			(6,182	)
Net income (loss) from equity method investments at fair value		469,174			(308,396	)		367,245			(407,521	)
Net realized income (loss) from investments		621,080			18,430			(764	)		232,645

Net loss		(985,784	)		(6,093,080	)		(8,507,519	)		(17,959,483	)
Net income attributable to non-controlling interests		(662,608	)		(452,186	)		(1,962,654	)		(1,325,269	)
Net income attributable to preferred stockholders Series A, B and C		(396,199	)		(366,133	)		(1,167,305	)		(1,048,826	)
Net loss attributable to common stockholders	$	(2,044,591	)	$	(6,911,399	)	$	(11,637,478	)	$	(20,333,578	)

Basic and diluted net loss per share attributable to common stockholders *	$	(0.98	)	$	(4.68	)	$	(6.16	)	$	(14.69	)

Basic and diluted weighted average common shares outstanding *		2,078,226			1,476,410			1,889,821			1,384,615

*	After giving effect to the 1-for-10 Reverse Stock Split that was effective August 4, 2025.

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

Table of Contents

MacKenzie Realty Capital, Inc.

Consolidated Statements of Changes in Equity

(Unaudited)

	Common Stock					Series A Preferred Stock						Series B Preferred Stock						Series C Preferred Stock											Total						Total Equity
	Number of		Par			Number of			Par			Number of			Par			Number of		Par			Additional Paid-			Accumulated			Stockholders’			Non-controlling
Three Months Ended March 31, 2026	Shares		Value			Shares			Value			Shares			Value			Shares		Value			in Capital			Deficit			Equity			Interests

Balance, December 31, 2025		1,906,580.00	$	191			750,696.07		$	75			121,278.65		$	12			42,960.00	$	4		$	146,599,782		$	(94,785,154	)	$	51,814,910		$	34,218,900		$	86,033,810
Distributions to non-controlling interest holders		-		-			-			-			-			-			-		-			-			-			-			(437,346	)		(437,346	)
Dividends to Series A preferred stockholders		-		-			-			-			-			-			-		-			-			(276,780	)		(276,780	)		-			(276,780	)
Dividends to Series B preferred stockholders		-		-			-			-			-			-			-		-			-			(92,230	)		(92,230	)		-			(92,230	)
Dividends to Series C preferred stockholders		-		-			-			-			-			-			-		-			-			(27,189	)		(27,189	)		-			(27,189	)
Net income (loss)		-		-			-			-			-			-			-		-			-			(1,648,392	)		(1,648,392	)		662,608			(985,784	)
Preferred Series A conversion to common stock		238,094.00		24			(37,913.23	)		(4	)		-			-			-		-			(20	)		-			-			-			-
Preferred Series B conversion to common stock		18,432.00		1			-			-			(2,776.67	)		(1	)		-		-			-			-			-			-			-
Issuance of common stock		1,052.00		-	*		-			-			-			-			-		-			5,260			-			5,260			-			5,260
Issuance of Series A preferred stock through reinvestment of dividends		-		-			1,979.84			-	*		-			-			-		-			44,547			-			44,547			-			44,547
Issuance of Series B preferred stock through reinvestment of dividends		-		-			-			-			284.63			-	*		-		-			6,403			-			6,403			-			6,403
Issuance of Series C preferred stock through reinvestment of dividends		-		-			-			-			-			-			16.67		-	*		375			-			375			-			375
Issuance of Series A preferred stock		-		-			32,991.11			4			-			-			-		-			742,296			-			742,300			-			742,300
Issuance of Series B preferred stock		-		-			-			-			5,577.06			1			-		-			136,349			-			136,350			-			136,350
Issuance of Series C preferred stock		-		-			-			-			-			-			9,680.00		1			241,999			-			242,000			-			242,000
Increase in liquidation preference - Series B preferred stock		-		-			-			-			-			-			-		-			69,173			-			69,173			-			69,173
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends		-		-			-			-			-			-			-		-			-			-			-			26,866			26,866
Increase in liquidation preference of Operating Partnership Series B Preferred Units		-		-			-			-			-			-			-		-			-			-			-			24,306			24,306
Payment of selling commissions and fees		-		-			-			-			-			-			-		-			(255,118	)		-			(255,118	)		-			(255,118	)
Redemptions of Series A preferred stock		-		-			-			-			-			-			-		-			(37	)		-			(37	)		-			(37	)
Redemptions of Series B preferred stock		-		-			-			-			-			-			-		-			(9	)		-			(9	)		-			(9	)

Balance, March 31, 2026		2,164,158.00	$	216			747,753.79		$	75			124,363.67		$	12			52,656.67	$	5		$	147,591,001		$	(96,829,745	)	$	50,761,564		$	34,495,334		$	85,256,898

	Common Stock						Series A Preferred Stock						Series B Preferred Stock						Series C Preferred Stock											Total						Total Equity
	Number of			Par			Number of			Par			Number of			Par			Number of		Par			Additional Paid-			Accumulated			Stockholders’			Non-controlling
Nine Months Ended March 31, 2026	Shares **			Value **			Shares			Value			Shares			Value			Shares		Value			in Capital **			Deficit			Equity			Interests

Balance, June 30, 2025		1,578,192.98		$	158			766,176.57		$	77			116,112.32		$	12			-	$	-		$	145,050,643		$	(85,192,267	)	$	59,858,623		$	33,682,820		$	93,541,443
Distributions to non-controlling interest holders		-			-			-			-			-			-			-		-			-			-			-			(1,302,351	)		(1,302,351	)
Dividends to Series A preferred stockholders		-			-			-			-			-			-			-		-			-			(843,430	)		(843,430	)		-			(843,430	)
Dividends to Series B preferred stockholders		-			-			-			-			-			-			-		-			-			(271,306	)		(271,306	)		-			(271,306	)
Dividends to Series C preferred stockholders		-			-			-			-			-			-			-		-			-			(52,569	)		(52,569	)		-			(52,569	)
Net income (loss)		-			-			-			-			-			-			-		-			-			(10,470,173	)		(10,470,173	)		1,962,654			(8,507,519	)
Preferred Series A conversion to common stock		365,351.00			37			(62,207.12	)		(6	)		-			-			-		-			(31	)		-			-			-			-
Preferred Series B conversion to common stock		36,969.00			3			-			-			(6,067.10	)		(1	)		-		-			(2	)		-			-			-			-
Pre-funded warrants conversion to common stock		129,226.50			13			-			-			-			-			-		-			116			-			129			-			129
Issuance of common stock		54,768.30			5			-			-			-			-			-		-			316,987			-			316,992			-			316,992
Issuance of Series A preferred stock through reinvestment of dividends		-			-			6,409.45			-	*		-			-			-		-			144,214			-			144,214			-			144,214
Issuance of Series B preferred stock through reinvestment of dividends		-			-			-			-			878.30			-	*		-		-			19,761			-			19,761			-			19,761
Issuance of Series C preferred stock through reinvestment of dividends		-			-			-			-			-			-			16.67		-	*		375			-			375			-			375
Issuance of Series A preferred stock		-			-			37,374.89			4			-			-			-		-			840,931			-			840,935			-			840,935
Issuance of Series B preferred stock		-			-			-			-			13,440.15			1			-		-			329,410			-			329,411			-			329,411
Issuance of Series C preferred stock		-			-			-			-			-			-			52,640.00		5			1,315,995			-			1,316,000			-			1,316,000
Increase in liquidation preference - Series B preferred stock		-			-			-			-			-			-			-		-			203,479			-			203,479			-			203,479
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends		-			-			-			-			-			-			-		-			-			-			-			79,290			79,290
Increase in liquidation preference of Operating Partnership Series B Preferred Units		-			-			-			-			-			-			-		-			-			-			-			72,921			72,921
Payment of selling commissions and fees		-			-			-			-			-			-			-		-			(629,005	)		-			(629,005	)		-			(629,005	)
Redemptions of common stock		(349.78	)		-	*		-			-			-			-			-		-			(1,784	)		-			(1,784	)		-			(1,784	)
Redemptions of Series A preferred stock		-			-			-			-			-			-			-		-			(75	)		-			(75	)		-			(75	)
Redemptions of Series B preferred stock		-			-			-			-			-			-			-		-			(13	)		-			(13	)		-			(13	)

Balance, March 31, 2026		2,164,158.00		$	216			747,753.79		$	75			124,363.67		$	12			52,656.67	$	5		$	147,591,001		$	(96,829,745	)	$	50,761,564		$	34,495,334		$	85,256,898

*	Amount is less than $1.

**	After giving effect to the 1-for-10 Reverse Stock Split that was effective August 4, 2025.

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

Table of Contents

MacKenzie Realty Capital, Inc.

Consolidated Statements of Changes in Equity

(Unaudited)

	Common Stock				Series A Preferred Stock						Series B Preferred Stock											Total						Total Equity
	Number of		Par		Number of			Par			Number of		Par			Additional Paid-			Accumulated			Stockholders’			Non-controlling
Three Months Ended March 31, 2025	Shares **		Value **		Shares			Value			Shares		Value			in Capital **			Deficit			Equity			Interests

Balance, December 31, 2024		1,347,307.58	$	134		764,887.87		$	74			95,088.26	$	10		$	138,815,263		$	(70,490,641	)	$	68,324,840		$	29,411,877		$	97,736,717
Contributions by non-controlling interest holders		-		-		-			-			-		-			-			-			-			1,968,338			1,968,338
Distributions to non-controlling interest holders		-		-		-			-			-		-			-			-			-			(434,893	)		(434,893	)
Dividends to common stockholders		-		-		-			-			-		-			-			(786,925	)		(786,925	)		-			(786,925	)
Dividends to Series A preferred stockholders		-		-		-			-			-		-			-			(286,981	)		(286,981	)		-			(286,981	)
Dividends to Series B preferred stockholders		-		-		-			-			-		-			-			(79,152	)		(79,152	)		-			(79,152	)
Net income (loss)		-		-		-			-			-		-			-			(6,545,266	)		(6,545,266	)		452,186			(6,093,080	)
Preferred Series A conversion to common stock		7,609.50		1		(6,165.51	)		(1	)		-		-			7			-			7			-			7
Issuance of common stock		210,351.70		21		-			-			-		-			3,794,230			-			3,794,251			-			3,794,251
Issuance of pre-funded warrants		-		-		-			-			-		-			1,935,455			-			1,935,455			-			1,935,455
Issuance of Series A common stock warrants		-		-		-			-			-		-			376,268			-			376,268			-			376,268
Issuance of Series B common stock warrants		-		-		-			-			-		-			223,409			-			223,409			-			223,409
Stock-based compensation		8,583.70		1		-			-			-		-			199,999			-			200,000			-			200,000
Issuance of Series A preferred stock through reinvestment of dividends		-		-		2,044.86			-	*		-		-			46,010			-			46,010			-			46,010
Issuance of Series B preferred stock through reinvestment of dividends		-		-		-			-			189.11		-	*		4,255			-			4,255			-			4,255
Issuance of Series A preferred stock		-		-		5,068.00			1			-		-			126,699			-			126,700			-			126,700
Issuance of Series B preferred stock		-		-		-			-			13,215.56		1			330,389			-			330,390			-			330,390
Increase in liquidation preference - Series B preferred stock		-		-		-			-			-		-			59,365			-			59,365			-			59,365
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends		-		-		-			-			-		-			-			-			-			25,149			25,149
Increase in liquidation preference of Operating Partnership Series B Preferred Units		-		-		-			-			-		-			-			-			-			24,308			24,308
Payment of selling commissions and fees		-		-		-			-			-		-			(1,071,624	)		-			(1,071,624	)		(176,445	)		(1,248,069	)
Redemptions of common stock		-		-		-			-			-		-			(3	)		-			(3	)		-			(3	)

Balance, March 31, 2025		1,573,852.48	$	157		765,835.22		$	74			108,492.93	$	11		$	144,839,722		$	(78,188,965	)	$	66,650,999		$	31,270,520		$	97,921,519

	Common Stock					Series A Preferred Stock						Series B Preferred Stock											Total						Total Equity
	Number of		Par			Number of			Par			Number of		Par			Additional Paid-			Accumulated			Stockholders’			Non-controlling
Nine Months Ended March 31, 2025	Shares **		Value **			Shares			Value			Shares		Value			in Capital **			Deficit			Equity			Interests

Balance, June 30, 2024		1,330,257.30	$	133			761,370.46		$	76			49,564.56	$	5		$	137,073,480		$	(54,715,347	)	$	82,358,347		$	25,590,745		$	107,949,092
Contributions by non-controlling interest holders		-		-			-			-			-		-			-			-			-			3,157,990			3,157,990
Distributions to non-controlling interest holders		-		-			-			-			-		-			-			-			-			(1,302,583	)		(1,302,583	)
Dividends to common stockholders		-		-			-			-			-		-			-			(3,140,040	)		(3,140,040	)		-			(3,140,040	)
Dividends to Series A preferred stockholders		-		-			-			-			-		-			-			(860,703	)		(860,703	)		-			(860,703	)
Dividends to Series B preferred stockholders		-		-			-			-			-		-			-			(188,123	)		(188,123	)		-			(188,123	)
Net income (loss)		-		-			-			-			-		-			-			(19,284,752	)		(19,284,752	)		1,325,269			(17,959,483	)
Operating Partnership Class A conversion to common stock		32.18		-	*		-			-			-		-			3,300			-			3,300			(3,300	)		-
Preferred Series A conversion to common stock		11,327.60		1			(10,805.38	)		(4	)		-		-			10			-			7			-			7
Issuance of common stock		210,351.70		21			-			-			-		-			3,794,230			-			3,794,251			-			3,794,251
Issuance of pre-funded warrants		-		-			-			-			-		-			1,935,455			-			1,935,455			-			1,935,455
Issuance of Series A common stock warrants		-		-			-			-			-		-			376,268			-			376,268			-			376,268
Issuance of Series B common stock warrants		-		-			-			-			-		-			223,409			-			223,409			-			223,409
Stock-based compensation		21,883.70		2			-			-			-		-			665,498			-			665,500			-			665,500
Issuance of Series A preferred stock through reinvestment of dividends		-		-			6,226.14			1			-		-			140,090			-			140,091			-			140,091
Issuance of Series B preferred stock through reinvestment of dividends		-		-			-			-			414.81		-	*		9,333			-			9,333			-			9,333
Issuance of Series A preferred stock		-		-			9,044.00			1			-		-			226,102			-			226,103			-			226,103
Issuance of Series B preferred stock		-		-			-			-			58,513.56		6			1,462,833			-			1,462,839			-			1,462,839
Increase in liquidation preference - Series B preferred stock		-		-			-			-			-		-			141,096			-			141,096			-			141,096
Operating Partnership Series A Preferred Units issued		-		-			-			-			-		-			-			-			-			2,712,194			2,712,194
Issuance of Operating Partnership Series A Preferred Units through reinvestment of dividends		-		-			-			-			-		-			-			-			-			73,400			73,400
Increase in liquidation preference of Operating Partnership Series B Preferred Units		-		-			-			-			-		-			-			-			-			72,922			72,922
Payment of selling commissions and fees		-		-			-			-			-		-			(1,205,828	)		-			(1,205,828	)		(356,117	)		(1,561,945	)
Redemptions of common stock		-		-			-			-			-		-			(24	)		-			(24	)		-			(24	)
Redemptions of Series A preferred stock		-		-			-			-			-		-			(5,530	)		-			(5,530	)		-			(5,530	)

Balance, March 31, 2025		1,573,852.48	$	157			765,835.22		$	74			108,492.93	$	11		$	144,839,722		$	(78,188,965	)	$	66,650,999		$	31,270,520		$	97,921,519

*	Amount is less than $1.

**	After giving effect to the 1-for-10 Reverse Stock Split that was effective August 4, 2025.

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

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MacKenzie Realty Capital, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended March 31,
	2026			2025
Cash flows from operating activities:
Net loss	$	(8,507,519	)	$	(17,959,483	)
Adjustments to reconcile net loss to net cash from operating activities:
Net unrealized (gain) loss on equity securities at fair value		(1,643,528	)		6,182
Net income (loss) from equity method investments at fair value		(361,703	)		408,116
Net realized (gain) loss on investments		764			(232,645	)
Impairment loss		-			9,500,167
Straight-line rent		(94,558	)		(115,638	)
Depreciation and amortization		6,984,439			7,091,297
Amortization of deferred financing costs and debt mark-to-market		952,454			1,188,056
Accretion of above (below) market lease, net		(109,682	)		(187,373	)
Stock-based compensation		(37,363	)		528,137
Changes in assets and liabilities:
Investments income, rents and other receivables		(431,811	)		(134,948	)
Due from related entities		(493	)		-
Prepaid expenses and other assets		278,126			(116,665	)
Deferred rent and other liabilities		39,953			(182,300	)
Accounts payable and accrued liabilities		160,922			149,674
Due to related entities		14,129			4,334
Net cash from operating activities		(2,755,870	)		(53,089	)

Cash flows from investing activities:
Proceeds from sale of investments		3,608,279			828,573
Investments in real estate assets		(8,213,913	)		(14,869,576	)
Purchase of investments		(3,643,314	)		(225,862	)
Net cash from investing activities		(8,248,948	)		(14,266,865	)

Cash flows from financing activities:
Borrowing under mortgage notes payable		10,348,269			35,320,378
Payments on mortgage notes payable		(997,720	)		(38,158,531	)
Borrowing under line of credit		412,000			8,160,000
Proceeds from notes payable		3,418,449			-
Payments on notes payable		(1,815,692	)		(218,259	)
Payment of financing fees		(459,857	)		(1,845,710	)
Dividends to common stockholders		-			(4,015,938	)
Dividends to Series A preferred stockholders		(709,752	)		(718,365	)
Dividends to Series B preferred stockholders		(46,273	)		(25,829	)
Dividends to Series C preferred stockholders		(25,005	)		-
Proceeds from issuance of Series A preferred stock		840,935			226,103
Proceeds from issuance of Series B preferred stock		329,411			1,462,839
Proceeds from issuance of Series C preferred stock		1,316,000			-
Proceeds from issuance of common stock		317,121			3,794,251
Proceeds from issuance of pre-funded warrants		-			1,935,455
Proceeds from issuance of Series A common stock warrants		-			376,268
Proceeds from issuance of Series B common stock warrants		-			223,409
Payment on finance lease liabilities		(203,389	)		(169,194	)
Payment of selling commissions and fees		(352,765	)		(1,596,214	)
Contributions by non-controlling interests holders		-			2,588,412
Distributions to non-controlling interests holders		(1,148,818	)		(1,104,011	)
Redemptions of common stock		(1,784	)		(24	)
Redemptions of Series A preferred stock		(75	)		(5,530	)
Redemptions of Series B preferred stock		(13	)		-
Capital pending acceptance		117,939			469,250
Net cash from financing activities		11,338,981			6,698,760

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

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MacKenzie Realty Capital, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Net increase (decrease) in cash, cash equivalents and restricted cash	$	334,163	$	(7,621,194	)
Cash, cash equivalents and restricted cash at beginning of the period		4,116,321		13,077,339
Cash, cash equivalents and restricted cash at end of the period	$	4,450,484	$	5,456,145

Cash and cash equivalents at end of the period	$	3,975,776	$	5,143,928
Restricted cash at end of the period		342,286		126,992
Cash at end of the period classified as assets held for sale		132,422		185,225
Total cash, cash equivalents, restricted cash and cash classified as held for sale at end of the period	$	4,450,484	$	5,456,145

Supplemental disclosure of non-cash financing activities and other cash flow information:
Issuance of Series A preferred stock through reinvestment of dividends	$	144,214	$	140,091
Issuance of Series B preferred stock through reinvestment of dividends	$	19,761	$	9,333
Increase in liquidation preference of Series B preferred stock	$	203,479	$	141,096
Issuance Operating Partnership Preferred Units - Series A through reinvestment of dividends	$	79,290	$	73,400
Cash paid for interest	$	5,632,244	$	5,319,505
Increase in liquidation preference of Operating Partnership Preferred Units - Series B	$	72,921	$	72,922
Preferred Series A conversion to common stock	$	2,144,562	$	268,162
Preferred Series B conversion to common stock	$	233,717	$	-
Conversion of Series B preferred stock liquidation preference (9% non-cash dividend) to common stock	$	8,804	$	-
Reclassification of prepaid expenses and other assets to mortgage notes payable, net	$	293,042	$	-
Capitalized construction in progress outstanding as accounts payable and accrued expenses	$	9,540	$	1,647,391
Issuance of the Operating Partnership Preferred Units for the purchase of Green Valley Medical Center, LP (Note 1)	$	-	$	2,712,194
Fair value of assets acquired from consolidation of Green Valley Medical Center, LP	$	-	$	13,621,753
Fair value of liabilities assumed from consolidation of Green Valley Medical Center, LP	$	-	$	8,904,457
Stock-based compensation	$	-	$	665,500
Operating Partnership Class A conversion to common stock	$	-	$	3,300

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

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MacKenzie Realty Capital, Inc.

Notes to Consolidated Financial Statements

March 31, 2026

(Unaudited)

NOTE 1 – PRINCIPAL BUSINESS AND 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. 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.

The Company conducts substantially all of its real estate operations through MacKenzie Realty Operating Partnership, LP (the “Operating Partnership”), which was formed in May 2020. As of March 31, 2026, we own all limited partnership units of the Operating Partnership except for 81,909.89 Class A Limited Partnership units, 1,067,028.35 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 the Company’s common stock on a 10:1 basis or, at the Company’s election, for cash based upon the 10-day average trading price of the Company’s stock, also on a 10:1 basis (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 a 1:1 basis). 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 1,067,028.35 Series A preferred units are entitled to a liquidation preference of $26,675,709 (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 $73,650,033 to the Operating Partnership since inception; thus, the Class A, Series A and Series B preferred units represent approximately 27.97% of all capital contributions.

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The consolidated financial statements include the accounts of the Parent Company, the Operating Partnership, 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 multifamily, 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.

On January 1, 2026, the Company contributed all of its multi-family residential properties (Commodore, The Park View, Hollywood and Shoreline Apartments and Aurora at Green Valley) and Blue Ridge development project to a newly formed entity MacKenzie Apartment Communities, Inc. (“MAC”) in exchange for 1,906,580 shares of MAC (on a 1:1 basis with the Parent Company’s outstanding shares). MAC is focused on developing and owning multi-family properties on the West Coast. The Parent Company is the sole shareholder of MAC as of March 31, 2026.

In connection with the formation of MAC, MAC Operating Partnership, LP (“MAC OP”) was established as an operating partnership through which all of MAC’s business is conducted. The contributed properties and development project are held by MAC OP, which directly or indirectly owns and operates a portfolio of six residential properties. MAC owns all the limited partnership units and is the sole general partner of MAC OP.

We are conducting a Regulation A offering of our preferred stock pursuant to an offering circular qualified by the SEC on January 29, 2025 and amended in June 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.

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On August 4, 2025, the Company effected a 1-for-10 Reverse Stock Split of its common stock, increasing the par value from $0.0001 per share to $0.001 per share. However, on the same date, the Company amended its charter to decrease the par value back to $0.0001. 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 March 31, 2026, we have raised approximately $125.76 million from our common stock public offerings (including $4.80 million from our Registered Offering and the concurrent private placement, and $1.80 million from the ATM offering), $19.58 million from our Series A preferred stock offering, $3.64 million from our Series B preferred stock offering and $1.32 million from our Series C preferred stock offering pursuant to the Offering Circular. As of March 31, 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, $0.58 million, $0.03 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 March 31, 2026, approximately $14.28 million, $0.11 million and a minimal worth of shares of common stock, Series A preferred stock and Series B and Series C preferred stock have been repurchased under our share repurchase program, respectively. As of March 31, 2026, we have 2,164,158.00 shares of common stock, 747,753.79 shares of Series A preferred stock, 124,363.67 shares of Series B preferred stock, and 52,656.67 shares of Series C preferred stock outstanding.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation Policy

The accompanying consolidated financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X. We follow the accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of our wholly owned consolidated subsidiaries and majority-owned controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited consolidated financial statements reflect all normal recurring adjustments, which are, in the opinion of management, necessary for the fair presentation of our results for the interim periods presented. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year.

The assets and liabilities of each of the consolidated subsidiaries are separate from those of the Parent Company and the Operating Partnership. Consequently, the assets of the consolidated subsidiaries are not available to settle the obligations of the Parent Company or the Operating Partnership, and the obligations of the subsidiaries does not constitute obligations of the Parent Company or the Operating Partnership.

These unaudited consolidated financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2025, included in our annual report on Form 10-K filed with the SEC.

There have been no changes in the significant accounting policies from those disclosed in the audited financial statements for the year ended June 30, 2025.

Certain prior period information has been reclassified to conform to the current year end presentation. The reclassification has no effect on our consolidated balance sheet or the consolidated statement of operations as previously reported.

Use of Estimates

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

Cash, Cash Equivalents and Restricted Cash

Our cash and cash equivalents represent current bank accounts and other bank deposits free of encumbrances and having maturity dates of three months or less from the respective dates of deposit. We limit cash investments to financial institutions with high credit standing; therefore, we believe our cash investments are not exposed to any significant credit risk. The restricted cash includes escrow accounts for real property taxes, insurance, capital expenditures and tenant improvements, and debt service and leasing costs held by lenders. These balances are insured by the Federal Deposit Insurance Corporation up to certain limits. Often, the cash balances held in financial institutions by us may exceed these insured limits.

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Restricted cash is subject to legal or contractual restrictions as to withdrawal or use, including restrictions that require the funds to be used for a specified purpose and restrictions that limit the purpose for which the funds can be used.

Investment Income Receivable

Investment income receivable represents dividends, distributions, and sales proceeds recognized in accordance with our revenue recognition policy but not yet received as of the date of the consolidated financial statements. We monitor and adjust our receivables, and those deemed to be uncollectible are written-off only after all reasonable collection efforts are exhausted. We believe, based on the credit worthiness of the obligors, that all investment income receivable balances outstanding as of March 31, 2026 and June 30, 2025, are collectible and do not require recording any uncollectible allowance.

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.

Rents and Other Receivables

We will periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. We exercise judgment in establishing these allowances and consider payment history and current credit status of tenants in developing these estimates. As of March 31, 2026 and June 30, 2025, we recognized an allowance for doubtful accounts of $137,285 and $259,590, respectively.

Capital Pending Acceptance

We conduct closings for new issuance of our Series A, Series B and Series C preferred stock and MRC Aurora preferred units twice per month and admit new stockholders effective beginning the first day of each month. Subscriptions are effective only upon our acceptance. Any gross proceeds received from subscriptions which are not accepted as of the period-end are classified as capital pending acceptance in the consolidated balance sheets. We close our common stock ATM sales on a daily basis. As of March 31, 2026, capital pending acceptance related to our Series A preferred stock, Series B preferred stock and Series C preferred stock was $131,350. As of June 30, 2025, capital pending acceptance related to our Series A and Series B preferred stock was $13,411.

Income Taxes and Deferred Tax Liability

The Parent Company has elected to be treated as a REIT for tax purposes under the Code and as a REIT, is not subject to federal income taxes on amounts that it distributes to the stockholders, provided that, on an annual basis, it 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 meet certain other conditions. To the extent it satisfies the annual distribution requirement but distribute less than 100% of its REIT taxable income, it will be subject to U.S. federal corporate income tax on their 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. In addition, for the tax year 2026, the Parent Company intends to pay the requisite amounts of dividends during the year and meet other REIT requirements such that the Parent Company will not owe any income taxes. Therefore, the Parent Company did not record any income tax provisions during any fiscal periods within the tax year 2026.

MacKenzie NY 2 is subject to corporate federal and state income tax on their taxable income at regular statutory rates. As of March 31, 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.

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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.

We follow ASC 740, Income Taxes (“ASC 740”), to account for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the future tax liabilities attributable to the net unrealized investment gain (losses) on existing investments. In estimating future tax consequences, we consider all future events, other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period of enactment. In addition, ASC 740 provides guidance for recognizing, measuring, presenting, and disclosing uncertain tax positions in the financial statements. As of March 31, 2026 and June 30, 2025, there were no uncertain tax positions. Management’s determinations regarding ASC 740 are subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof.

Subsequent Events

Subsequent events are events or transactions that occur after the date of the consolidated balance sheets but before the date the consolidated financial statements are issued. Subsequent events that provide additional evidence about conditions that existed at the date of the consolidated balance sheets are considered in the preparation of the consolidated financial statements presented herein. Subsequent events that occur after the date of the consolidated balance sheets that do not provide evidence about the conditions that existed as of the date of the consolidated statements of changes in equity are considered for disclosure based upon their significance in relation to our consolidated financial statements taken as a whole.

Fair Value of Financial Instruments

Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. We believe that the carrying amounts of our financial instruments, consisting of cash, restricted cash, investments income, rents and other receivables, prepaid expenses and other assets, mortgage notes payable, net, line of credit and notes payable, net, accounts payable and accrued liabilities, below-market lease liabilities, net, deferred rent and other liabilities and due to related entities, approximate the fair values of such items based on their nature, terms, and interest rates.

Equity Securities

We have minority and non-controlling equity investments in various limited partnerships and non-traded entities, which do not have readily determinable fair values. We do not have controlling interests in these entities. Thus, these investments have been recorded as investments in equity securities in accordance with ASC Topic 321, Investments – Equity Securities, and measured at fair value. The changes in the fair value of these investments are recorded in the consolidated statements of operations.

Equity Method Investments with Fair Value Option Election

We elected the fair value option of accounting for the investments listed below that would have otherwise been recorded under the equity method of accounting. The primary purpose of electing the fair value option was to enhance the transparency of our financial condition. Changes in the fair value of these investments, which are inclusive of equity in income, are recorded in the consolidated statements of operations during the period such changes occur. The below investments would have been accounted for under the equity method if the fair value method had not been elected as of March 31, 2026 and June 30, 2025:

Investee	Legal Form	Asset Type	% Ownership				Fair Value as of March 31, 2026
Lakemont Partners, LLC	Limited Liability Company	LP Interest		17.02	%		$	708,780
Martin Plaza Associates, LP	Limited Partnership	GP and LP Interest		25.00	%			596,258
Westside Professional Center I, LP	Limited Partnership	GP Interest		1.00	%	*		1,182,116
Total							$	2,487,154

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Investee	Legal Form	Asset Type	% Ownership				Fair Value as of June 30, 2025
Lakemont Partners, LLC	Limited Liability Company	LP Interest		17.02	%		$	711,740
Martin Plaza Associates, LP	Limited Partnership	GP and LP Interest		25.00	%			531,544
Westside Professional Center I, LP	Limited Partnership	GP Interest		1.00	%	*		882,167
Total							$	2,125,451

*	The general partner has a 1% partnership interest but is also entitled to profit sharing distributions ranging from 25% to 50% after certain thresholds are met.

Assets and Liabilities Held for Sale

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

•

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

•

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

•

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

Leases

Six of our properties, 1300 Main, Main Street West, Woodland Corporate Center, Green Valley Executive Center, One Harbor Center and Green Valley Medical Center had solar equipment leases in place at the time of our acquisition. Therefore, these existing solar leases were reassessed at the acquisition date and were recorded as finance leases in accordance with ASC 842. We record leases on the consolidated balance sheets in the form of a lease liability for the present value of future minimum payments under the lease terms and a right-of-use asset equal to the lease liability adjusted for items such as deferred or prepaid rent, lease incentives, and any impairment of the right-of-use asset. The discount rate used in determining the lease liability is based upon incremental borrowing rates that we could obtain for similar loans as of the date of commencement or renewal. We do not record leases on the consolidated balance sheets that are classified as short term (less than one year).

At lease inception, we determine the lease term by considering the minimum lease term and all optional renewal periods that are reasonably certain to be exercised. The lease term is also used to calculate straight-line rent expense. The depreciable life of leasehold improvements is limited by the estimated lease term, including renewals if they are reasonably certain to be exercised. Our leases do not contain residual value guarantees or material variable lease payments that will impact our ability to pay dividends or cause us to incur additional expenses.

The amortization of the right-of-use asset arising from finance leases is expensed through depreciation and amortization expense and the interest on the related lease liability is expensed through interest expense on our consolidated statements of operations.

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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 three and nine months ended March 31, 2026, we did not record any impairment loss. However, 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, of which none and $9,500,167 were recognized during the three and nine months ended March 31, 2025, respectively. 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.

Stock-based Compensation

ASC 718, Stock-based Compensation, requires generally that all equity awards granted to employees and consultants be accounted for at fair value. This fair value is measured at grant date for stock settled awards, and at subsequent exercise or settlement for cash-settled awards. Under this method, we recorded the 13,300 shares of common stock issued to Maxim discussed in Note 1 at fair value as compensation for services rendered to the Company. The fair value is computed based on the trading price of the common stock on the OTCQX capital market at the grant date of August 26, 2024. Additionally, we recorded the 8,583.70 shares of common stock issued to OTB Capital discussed in Note 1 at fair value in consideration for their marketing and distribution services. The fair value is computed based on the public trading price of the common stock at the grant date of February 3, 2025.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes – Improvements to Income Tax, to enhance the transparency and decision usefulness of income tax disclosures, primarily related to rate reconciliation and income taxes paid information. The amendment is effective for annual periods beginning after December 15, 2024, and should be applied on a prospective basis, with the option to apply retrospectively. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The adoption of these amendments did not have any impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The ASU’s purpose is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). This ASU is effective for the Company’s annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this ASU on our consolidated financial statements.

NOTE 3 – INVESTMENTS IN REAL ESTATE

The following tables provide summary information regarding our operating properties, which are owned through our subsidiaries. The ownership interest shown below is the percentage of the property owned by the subsidiary, not the percentage of the subsidiary owned by the Company.

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Consolidated Operating Properties

Property Name:	Commodore Apartments	The Park View Apartments	Hollywood Apartments	Shoreline Apartments
Property Owner:	Madison-PVT Partners LLC	PVT-Madison Partners LLC	PT Hillview GP, LLC	MacKenzie-BAA IG Shoreline LLC
Location:	Oakland, CA	Oakland, CA	Hollywood, CA	Concord, CA
Number of Tenants:	43	37	51	75
Year Built:	1912	1929	1917	1968
Ownership Interest:	100%	100%	100%	100%

Property Name:	Satellite Place Office Building	First & Main Office Building	1300 Main Office Building	Woodland Corporate Center
Property Owner:	MacKenzie Satellite Place Corp.	First & Main, LP	1300 Main, LP	Woodland Corporate Center Two, LP
Location:	Duluth, GA	Napa, CA	Napa, CA	Woodland, CA
Number of Tenants:	5	8	7	12
Year Built:	2002	2001	2020	2004
Ownership Interest:	100%	100%	100%	100%

Property Name:	Main Street West Office Building	220 Campus Lane Office Building	Green Valley Executive Center	One Harbor Center
Property Owner:	Main Street West, LP	220 Campus Lane, LLC	GV Executive Center, LLC	One Harbor Center, LP
Location:	Napa, CA	Fairfield, CA	Fairfield, CA	Suisun, CA
Number of Tenants:	9	6	15	12
Year Built:	2007	1990	2006	2001
Ownership Interest:	100%	100%	100%	100%

Property Name:	Green Valley Medical Center	Aurora at Green Valley
Property Owner:	Green Valley Medical Center, LP	MRC Aurora, LLC
Location:	Fairfield, CA	Fairfield, CA
Number of Tenants:	13	54
Year Built:	2002	2025
Ownership Interest:	100%	100%

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

The total depreciation expense of our operating properties for the three and nine months ended March 31, 2026 were $1,719,022 and $5,468,353, respectively. The total depreciation expense of our operating properties for the three and nine months ended March 31, 2025 were $1,860,548 and $4,967,727, respectively.

Operating Leases:

Our real estate assets are leased to tenants under operating leases that contain varying terms and expirations. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. We retain substantially all the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, we do not require a security deposit from tenants on our commercial real estate properties, depending upon the terms of the respective leases and the creditworthiness of the tenants. Even when required, security deposits generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of the security deposit. Security deposits received in cash related to tenant leases are included in other accrued liabilities in the accompanying consolidated balance sheets and were immaterial as of March 31, 2026 and June 30, 2025.

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The following table presents the components of income from real estate operations for the three and nine months ended March 31, 2026:

	Three Months Ended		Nine Months Ended
	March 31, 2026		March 31, 2026
Lease income - Operating leases	$	5,104,037	$	13,550,805
Variable lease income ⁽¹⁾		337,467		1,023,819
	$	5,441,504	$	14,574,624

⁽¹⁾	Primarily includes tenant reimbursements for utilities and common area maintenance.

The following table presents the components of income from real estate operations for the three and nine months ended March 31, 2025:

	Three Months Ended		Nine Months Ended
	March 31, 2025		March 31, 2025
Lease income - Operating leases	$	3,931,309	$	16,291,143
Variable lease income⁽¹⁾		342,337		965,048
	$	4,273,646	$	17,256,191

⁽¹⁾	Primarily includes tenant reimbursements for utilities and common area maintenance.

As of March 31, 2026, the future minimum rental income from our real estate properties under non-cancelable operating leases are as follows:

Year ended June 30, :	Rental Income
2026 (remainder)	$	3,797,395
2027		11,991,149
2028		8,821,195
2029		6,648,044
2030		5,409,610
Thereafter		13,802,653
Total	$	50,470,046

Lease Intangibles, Above-Market Lease Assets and Below-Market Lease Liabilities, Net

As of March 31, 2026 and June 30, 2025, our acquired lease intangibles, above-market lease assets, and below-market lease liabilities were as follows:

	As of March 31, 2026
	Lease Intangibles			Above-Market Lease Assets			Below-Market Lease Liabilities
Cost	$	10,285,888		$	628,574		$	2,125,443
Accumulated amortization		(7,051,283	)		(439,299	)		(1,771,441	)
Accumulated impairment loss		(232,915	)		(7,840	)		(58,112	)
Total	$	3,001,690		$	181,435		$	295,890

Weighted average amortization period (years)		5.5			4.6			4.8

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	As of June 30, 2025
	Lease Intangibles			Above-Market Lease Assets			Below-Market Lease Liabilities
Cost	$	11,184,664		$	628,572		$	2,643,300
Accumulated amortization		(7,038,895	)		(338,589	)		(2,082,971	)
Accumulated impairment loss		(121,974	)		(4,440	)		(29,855	)
Total	$	4,023,795		$	285,543		$	530,474

Weighted average amortization period (years)		4.8			4.6			4.8

Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the three and nine months ended March 31, 2026, were as follows:

	Three Months Ended March 31, 2026
	Lease Intangibles		Above-Market Lease Assets		Below-Market Lease Liabilities
Amortization	$	395,714	$	22,923	$	(53,144	)

	Nine Months Ended March 31, 2026
	Lease Intangibles		Above-Market Lease Assets		Below-Market Lease Liabilities
Amortization	$	1,516,086	$	107,723	$	(217,405	)

Our amortization of lease intangibles, above-market lease assets and below-market lease liabilities for the three and nine months ended March 31, 2025, were as follows:

	Three Months Ended March 31, 2025
	Lease Intangibles		Above-Market Lease Assets		Below-Market Lease Liabilities
Amortization	$	774,069	$	46,743	$	(104,788	)

	Nine Months Ended March 31, 2025
	Lease Intangibles		Above-Market Lease Assets		Below-Market Lease Liabilities
Amortization	$	2,123,570	$	162,268	$	(349,641	)

The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:

	Year Ended June 30,
	2026 (remainder)			2027			2028			2029			2030			Thereafter
In-place leases, to be included in amortization	$	331,883		$	882,526		$	532,091		$	390,380		$	311,439		$	554,901

Above-market lease intangibles	$	22,923		$	71,665		$	36,119		$	30,827		$	24,388		$	3,353
Below-market lease liabilities		(55,818	)		(133,677	)		(48,433	)		(36,413	)		(6,829	)

MacKenzie Realty Capital, Inc. 10-Q