• | We recently withdrew our election to be regulated as a BDC and do not have a significant operating history under our new investment objectives. There is no assurance that we will be able to successfully achieve our investment objectives. |
• | Global economic, political and market conditions and economic uncertainty caused by the recent outbreak of coronavirus (COVID-19) may adversely affect our business, results of operations and financial condition. |
• | Investors will not have the opportunity to evaluate or approve any Investments prior to our acquisition or financing thereof. |
• | Investors will rely solely on the Adviser to manage the company and our Investments. The Adviser will have broad discretion to invest our capital and make decisions regarding Investments. |
• | We may not be able to invest the net proceeds of this offering on terms acceptable to investors, or at all. |
• | Investors will have limited control over changes in our policies and day-to-day operations, which increases the uncertainty and risks you face as an investor. In addition, our Board of Directors may approve changes to our policies, including our policies with respect to distributions and redemption of shares without prior notice or your approval. |
• | An investor could lose all or a substantial portion of its investment. |
• | There is no public trading market for our preferred shares, and we are not obligated to effectuate a liquidity event or a listing of our shares on any nationally recognized stock exchange by a certain date or at all. It will thus be difficult for an investor to sell its shares. |
• | We may fail to maintain our qualification as a REIT for federal income tax purposes. We would then be subject to corporate level taxation and regulation as an investment company and we would not be required to pay any distributions to our stockholders. |
• | The offering price of our shares was not established based upon any appraisals of assets we own or may own. Thus, the initial offering price may not accurately reflect the value of our assets at the time an investor’s investment is made. |
• | Substantial actual and potential conflicts of interest exist between our investors and our interests or the interests of our Adviser, and our respective affiliates, including conflicts arising out of (a) allocation of personnel to our activities, (b) allocation of investment opportunities between us, and (c) potential conflicts arising out of transactions between us, on the one hand, and our Adviser and its affiliates, on the other hand, involving compensation and incentive fees payable to our Adviser or dealings in real estate transactions between us and the Adviser and its affiliates. |
• | There are substantial risks associated with owning, financing, operating, leasing and managing real estate. |
• | The amount of distributions we make is uncertain. We may fund distributions from offering proceeds, borrowings, and the sale of assets, to the extent distributions exceed our earnings or cash flows from our operations if we are unable to make distributions from our cash flows from operations. There is no limit on the amount of offering proceeds we may use to fund distributions. Distributions paid from sources other than cash flow or funds from operations may constitute a return of capital to our stockholders. Rates of distributions may not be indicative of our actual operating results. |
Per Share | Total Maximum | |
Offering Price (1) | $25.00 | $50,000,000.00 (2) |
Underwriting Discounts and Commissions (3) | $2.50 | $5,000,000.00 |
Proceeds to Us from this Offering (Before Expenses) (4) | $22.50 | $45,000,000.00 |
1. | The price per share has been arbitrarily determined by our Adviser to be $25.00 per share. |
2. | This is a “best efforts” Offering of $45,000,000 and $5,000,000 through the dividend reinvestment program. See “Plan of Distribution” and “Series A Preferred Stock Dividend Reinvestment Program.” |
3. | We will pay selected brokers (the “Selling Agents”) a sales load of 7.0% of the offering price, which load is reduced based on the number of shares purchased from a Selling Agent, and we will also pay our dealer manager, Arete Wealth Management, LLC (“Arete”), a dealer manager fee of up to 1.9% of the offering price (the “Dealer Adviser Fee”). If shares are purchased through investment advisers, we will only pay the Dealer Adviser Fee to Arete, and no commissions will be payable. For purposes of the table, we have assumed a sales charge of 7.0%. To the extent purchasers qualify for the volume discounts or purchase through certain investment advisory accounts, the sales load amount shown in the table would be less. Selling Agents will also receive a marketing support fee of 1.1% of the offering price from us (the “Marketing Support Fee”) to assist the Selling Agents in cover their costs for the marketing of the preferred shares. For purchases through certain investment advisory accounts, Arete will only receive the 1.9% Dealer Adviser Fee in lieu of commissions and no Marketing Support Fee will be paid. The total amount of all items of compensation from any source, payable to underwriters, broker-dealers or affiliates thereof will not exceed an amount that equals 10.0% of the gross proceeds of the offering. See “Arrangements with Dealer Adviser and Selected Broker Dealers.” |
4. | We estimate that we will incur approximately $250,000 in costs in connection with this offering (not including any costs or expenses incurred in connection with the prior offerings of common stock). To the extent that these costs exceed $550,000 for this offering, any additional amounts will be reimbursed by our Advisers, except to the extent the full 10.0% in broker fees described above are not incurred. In such case, the difference will be available to be paid or reimbursed by us to brokers for marketing expenses or other non-cash compensation. Therefore, our offering costs will have either been paid by persons holding our common stock before the commencement of this offering (and will not be directly born by investors in this offering), or will be paid by our Advisers, or will be paid out of the amount not paid under the 10.0% in broker fees described above. |
APPENDIX | A-1 |
Asset Management Fee: | The asset management fee is calculated based on our “Gross Invested Capital.” The asset management fee is payable monthly at an annual rate of 3% of the first $20 million in Gross Invested Capital, 2% of the next $80 million in Gross Invested Capital and 1.5% of Gross Invested Capital over $100 million. The Asset Management Fee compensates our Adviser for managing all of our assets. The Real Estate Adviser and the Investment Adviser will allocate this fee between themselves. In the first year, we expect to pay our Adviser approximately $2,900,000 in Asset Management Fees. |
Acquisition Fees: | The Acquisition Fees are equal to 2.5% of the cost of the asset acquired. These are paid on acquisition of non-securities to our Adviser. Purchases of securities do not incur this fee. However, to the extent that such asset is not held for at least 5 years, any acquisition fee for subsequent purchases using proceeds from the sale of such asset will be reduced proportionally. These fees compensate our Adviser for traveling to and researching properties that are suitable for investment. In the first year, we expect to pay our Adviser approximately $1,800,000 in Acquisition Fees. |
Debt Financing Fee, Disposition Fee, Property Management Fee | None payable to Adviser. |
Incentive Management Fee: | Once common stockholders have received distributions equal to 6% per annum on their invested capital, from and after January 1, 2021, the Real Estate Adviser will be entitled to receive an incentive management fee equal to an amount that would result in the Adviser having received 15% of all distributions not attributable to the securities we own or to any return of capital. Because common stockholders will not receive distributions before all distributions are paid to preferred shares, no such fee can be paid to the Adviser unless the preferred return has been met on the preferred shares. The Incentive Management Fee compensates our Adviser based upon the performance of the assets in which we invest. It is impracticable to determine the amount of Incentive Management Fees that will be paid in the first year. |
• | To acquire real estate assets at substantial discounts to fair market value; |
• | To grow net cash from operations so that an increasing amount of cash flow is available for distributions to investors over the long term; |
• | To pay attractive and consistent cash distributions; |
• | To preserve and protect shareholder value; and |
• | To realize growth in the value of our investment by timing their sale to maximize value. |
• | Value-Add. We invest in well-located institutional-quality properties with strong and stable cash flows in demographically attractive knowledge economy 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 portion of total return attributable to appreciation in value. |
• | Invest-to-Own. We selectively invest in development of quality properties in target markets where we believe we can capture significant premiums upon completion. We intend to use either tender offers, a convertible loan, or convertible preferred equity structure to provide income during the early stage and/or the ability to capture premiums at completion by either acquiring controlling positions or exercising our conversion rights to take ownership. |
Preferred stock offered by us | 2,000,000 shares of Series A preferred stock, referred to herein as the “preferred shares.” |
Preferred stock to be outstanding after this Offering (assuming the maximum offering amount is sold) | 2,000,000 preferred shares |
Ranking | The preferred shares will rank, with respect to dividend rights and rights upon liquidation, winding-up, or dissolution (i) senior to all classes of our common stock, and to any other class or series of our capital stock issued in the future unless the terms of that capital stock expressly provide that it ranks senior to, or on parity with, the preferred shares, and (ii) junior to any other class or series of our capital stock, the terms of which expressly provide that it will rank senior to the preferred shares, none of which exists on the date hereof, and subject to payment of or provision for our debts and other liabilities. |
Stated Value | Each preferred share will have an initial “Stated Value” of $25.00, subject to appropriate adjustment in relation to certain events as set forth in the Articles Supplementary |
Dividend rights | Holders of our preferred shares are entitled to receive, when and as authorized by our Board of Directors and declared by us out of legally available funds, cumulative cash dividends on each preferred share at an annual rate of 6%. |
Voting rights | Our preferred shares will not be entitled to vote except on matters affecting preferred shares. |
Use of Proceeds | If the maximum number of preferred shares are sold, we estimate that the net proceeds of this Offering will be approximately, $45,000,000, after deducting organizational and offering expenses and working capital reserves. See “Use of Proceeds”. Net proceeds from this Offering will be used to acquire Investments, to pay for expenses incurred by the Company from continued operations, and for any other proper Company purpose. |
(i) | an annual report with the SEC on Form 10-K; |
(ii) | quarterly reports with the SEC on Form 10-Q; and |
(iii) | current reports with the SEC on Form 8-K. |
• | Adverse changes in national and local economic and market conditions, including the credit and securitization markets; |
• | Changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; |
• | 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; |
• | 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; |
• | The impact of present or future environmental legislation and compliance with environmental laws; |
• | 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 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 multifamily 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 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. |
• | oversupply of space and changes in market rental rates; |
• | economic or physical decline of the areas where the Investments are located; and |
• | deterioration of the physical condition of our Investments. |
• | Competition for the time and services of personnel that work for us and our affiliates; |
• | Compensation payable by us to our Adviser and its 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 Adviser, its 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 Adviser or its 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 Adviser will face conflicts of interest, some of whose officers are also our officers and two of whom are directors of ours, resulting in actions that may not be in the long-term best interests of our stockholders; |
• | Our Adviser has 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 Adviser, resulting in an internalization of our management functions; and |
• | The possibility that the competing demands for the time of our Adviser, its 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 you. |
• | we would not be able to deduct dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; |
• | we could be subject to the federal alternative minimum tax and possibly increased state and local taxes; 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. |
• | your investment will be consistent with your fiduciary obligations under ERISA and the Code; |
• | your investment will be made in accordance with the documents and instruments governing the Benefit Plan, including the Plan’s investment policy; |
• | your investment will satisfy the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA, if applicable, and other applicable provisions of ERISA and the Code; |
• | your investment will impair the liquidity of the Benefit Plan; |
• | your investment will produce “unrelated business taxable income” for the Benefit Plan; |
• | you will be able to satisfy plan liquidity requirements as there may be only a limited market to sell or otherwise dispose of our stock; and |
• | your investment will constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. |
• | under certain circumstances, part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if our stock is predominately held by qualified employee pension trusts, such that we are a “pension-held” REIT (which we do not expect to be the case); |
• | part of the income and gain recognized by a tax exempt investor with respect to our stock would constitute unrelated business taxable income if such investor incurs debt in order to acquire our preferred shares; and |
• | part or all of the income or gain recognized with respect to our stock held by social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans which are exempt from federal income taxation under Sections 501(c)(7), (9), (17) or (20) of the Code may be treated as unrelated business taxable income. |
• | We were recently withdrew our election as a BDC and do not have a significant operating history under our new strategy, performance record or financial resources. There is no assurance that we will be able to successfully achieve our investment objectives. |
• | Investors will not have the opportunity to evaluate or approve any Investments prior to our acquisition or financing thereof. |
• | Investors will rely solely on the Adviser to manage the company and our Investments. The Adviser will have broad discretion to invest our capital and make decisions regarding Investments. |
• | We may not be able to invest the net proceeds of this Offering on terms acceptable to investors, or at all. |
• | Investors will have limited control over changes in our policies and day-to-day operations, which increases the uncertainty and risks you face as an investor. In addition, our Board of Directors may approve changes to our policies, including our policies with respect to distributions and redemption of shares without prior notice or your approval. |
• | An investor could lose all or a substantial portion of its investment. |
• | There is no public trading market for our preferred shares, and we are not obligated to effectuate a liquidity event or a listing of our shares on any nationally recognized stock exchange by a certain date or at all. It will thus be difficult for an investor to sell its shares. |
• | We may fail to qualify or maintain our qualification as a REIT for federal income tax purposes. We would then be subject to corporate level taxation and regulation as an investment company and we would not be required to pay any distributions to our stockholders. |
• | The offering price of our shares was not established based upon any appraisals of assets we own or may own. Thus, the initial offering price may not accurately reflect the value of our assets at the time an investor’s investment is made. |
• | Substantial actual and potential conflicts of interest exist between our investors and our interests or the interests of our Adviser, and our respective affiliates, including conflicts arising out of (a) allocation of personnel to our activities, (b) allocation of investment opportunities between us, and (c) potential conflicts arising out of transactions between us, on the one hand, and our Adviser and its affiliates, on the other hand, involving compensation and incentive fees payable to our Adviser or dealings in real estate transactions between us and the Adviser and its affiliates. |
• | There are substantial risks associated with owning, financing, operating, leasing and managing real estate. |
• | The amount of distributions we make is uncertain. We may fund distributions from offering proceeds, borrowings, and the sale of assets, to the extent distributions exceed our earnings or cash flows from our operations if we are unable to make distributions from our cash flows from operations. There is no limit on the amount of offering proceeds we may use to fund distributions. Distributions paid from sources other than cash flow or funds from operations may constitute a return of capital to our stockholders. Rates of distributions may not be indicative of our actual operating results. |
• | Sales Comparison |
• | Income Production |
• | Cost to Rebuild |
• | Any holder of preferred shares may elect to participate in the DRIP. |
• | Preferred shares are issued at a 10% discount or at $22.50 per share. |
• | Shares purchased will be maintained in your name in book-entry form at no charge to you. |
• | Detailed recordkeeping and reporting will be provided at no charge to you. |
• | You may opt-out of the DRIP at any time. |
• | 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. |
• | 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, if any; |
• | Attendance at and participation in our board meetings; and |
• | Review of monthly and quarterly consolidated financial statements and financial projections for properties. |
• | to borrow money to help with the purchase of property; |
• | to borrow money to help with the rehabilitation of already purchased property; |
• | to borrow money against (leverage) already owned properties to help with the purchase and rehabilitation of other properties; and |
• | to borrow money to facilitate daily operation of Company. |
• | if a large number of investors invest through this Offering close in time to each other, it will take time for Company to identify appropriate real estate investments; |
• | the Company may continue to invest up to 20% of its total assets in real estate securities; or |
• | if Company has capital not in use, Company may invest the capital for a short or long period of time in something other than real estate. |
• | An annual report substantially on the SEC’s Form 10-K, which will include our financials audited by our auditor; |
• | A quarterly report after quarters 1, 2, and 3, in the form of the SEC’s Form 10-Q, which will include financials for the subject quarter, but the financials will not be audited by our auditor. |
• | limitations on capital structure; |
• | restrictions on specified investments; |
• | restrictions on leverage or senior securities; |
• | restrictions on unsecured borrowings; |
• | prohibitions on transactions with affiliates; and |
• | compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses. |
• | the Code; |
• | current, temporary and proposed Treasury regulations promulgated under the Code; |
• | the legislative history of the Code; |
• | current administrative interpretations and practices of the IRS; and |
• | court decisions; |
• | the acquisition, ownership and sale or other disposition of our securities, including the United States federal, state, local, foreign and other tax consequences; |
• | our election to be taxed as a REIT for United States federal income tax purposes; and |
• | potential changes in the applicable tax laws. |
• | First, we will be taxed at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains, provided, however, that properly designated undistributed capital gains will effectively avoid taxation at the stockholder level. |
• | Second, under certain circumstances, we may be subject to the “alternative minimum tax” on any items of tax preference and alternative minimum tax adjustments. |
• | Third, if we have (i) net income from the sale or other disposition of “foreclosure property” (which is, in general, property acquired by foreclosure or otherwise on default of a loan secured by the property) that is held primarily for sale to customers in the ordinary course of business or (ii) other nonqualifying income from foreclosure property, we will be subject to tax at the highest corporate rate on such income. |
• | Fourth, if we have net income from prohibited transactions (which are, in general, certain sales or other dispositions of property (other than foreclosure property) held primarily for sale to customers in the ordinary course of business), such income will be subject to a 100% tax on prohibited transactions. |
• | Fifth, if we should fail to satisfy the 75.0% gross income test or the 95.0% gross income test (as discussed below), and have nonetheless maintained our qualification as a REIT because certain other requirements have been met, we will be subject to a tax in an amount equal to the greater of either (i) the amount by which 75.0% of our gross income exceeds the amount qualifying under the 75.0% test for the taxable year or (ii) the amount by which 95.0% of our gross income exceeds the amount of our income qualifying under the 95.0% test for the taxable year, multiplied in either case by a fraction intended to reflect our profitability. |
• | Sixth, if we should fail to satisfy any of the asset tests (as discussed below) for a particular quarter and do not qualify for certain de minimis exceptions but have nonetheless maintained our qualification as a REIT because certain other requirements are met, we will be subject to a tax equal to the greater of (i) $50,000 or (ii) the amount determined by multiplying the highest corporate tax rate by the net income generated by the nonqualifying assets that caused us to fail such test. |
• | Seventh, if we fail to satisfy REIT requirements (other than the income or asset tests) and the violation is due to reasonable cause and not due to willful neglect, we will maintain our REIT status but we must pay a penalty of $50,000 for each such failure. |
• | Eighth, if we should fail to distribute during each calendar year at least the sum of (i) 85.0% of our REIT ordinary income for such year; (ii) 95.0% of our REIT capital gain net income for such year (for this purpose such term includes capital gains which we elect to retain but which we report as distributed to our stockholders; see “Annual Distribution Requirements” below); and (iii) any undistributed taxable income from prior years, we would be subject to a 4% excise tax on the excess of such required distribution over the amounts actually distributed. |
• | Ninth, we would be subject to a 100.0% penalty tax with respect to amounts received (or on certain expenses deducted by a taxable REIT subsidiary) if arrangements among us, our tenants and a taxable REIT subsidiary were not comparable to similar arrangements among unrelated parties. |
• | Tenth, if we sell property subject to the built-in gains tax, we will be subject to a corporate level tax on such built-in gains if such assets are sold during the five-year period following the acquisition of such property. Built-in gain assets are assets whose fair market value exceeds the REIT’s adjusted tax basis at the time the asset was acquired from a C corporation and our initial tax basis in the asset is less than the fair market value of that asset. The results described in this paragraph with respect to the recognition of gain assume that the C corporation will refrain from making an election to receive different treatment under applicable Treasury Regulations on its tax return for the year in which we acquire the asset from the C corporation. Treasury Regulations exclude from the application of this built-in gains tax any gain from the sale of property we acquire in an exchange under Section 1031 (a like-kind exchange) or 1033 (an involuntary conversion) of the Code. |
• | Eleventh, our subsidiaries that are C corporations, including our “taxable REIT subsidiaries,” generally will be required to pay federal corporate income tax on their earnings. |
• | Twelfth, we may elect to retain and pay income tax on our net capital gain. In that case, a stockholder would include its proportionate share of our undistributed net capital gain (to the extent we make a timely designation of such gain to the stockholder) in its income, would be deemed to have paid the tax that we paid on such gain, and would be allowed a credit for its proportionate share of the tax deemed to have been paid, and an adjustment would be made to increase the basis of the stockholder in our capital stock. |
(i) | that is managed by one or more trustees or directors; |
(ii) | that issues transferable shares or transferable certificates of beneficial interest to evidence its beneficial ownership; |
(iii) | that would be taxable as a domestic corporation but for Code Sections 856 through 860; |
(iv) | that is not a financial institution or an insurance company within the meaning of the Code; |
(v) | that is beneficially owned by 100 or more persons; |
(vi) | not more than 50.0% in value of the outstanding capital stock of which is owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of each taxable year after applying certain attribution rules; |
(vii) | that makes an election to be treated as a REIT for the current taxable year or has made an election for a previous taxable year which has not been terminated or revoked; and |
(viii) | which meets certain other tests, described below, regarding the nature of its income and assets. |
1. | At least 75.0% of the value of our total assets must be represented by “real estate assets,” cash, cash items and government securities. Our real estate assets include, for this purpose, our allocable share of real estate assets held by the partnerships in which we own an interest, and the non‑corporate subsidiaries of these partnerships, as well as stock or debt instruments held for less than one year purchased with the proceeds of an offering of shares or long term debt. Real estate assets are defined to include debt instruments issued by publicly offered REITs that are not secured by a real estate asset (a “nonqualified publicly offered REIT debt instrument”). Although treated as a real estate asset, the gain on the sale of a nonqualified publicly offered REIT debt instrument does not qualify for purposes of the 75.0% gross income test and not more than 25% of the value of our total assets may be represented by nonqualified publicly offered REIT debt instruments. |
2. | Not more than 25.0% of the value of our total assets may be represented by securities, other than those in the 75.0% asset class. |
3. | Except for certain investments in REITs, qualified REIT subsidiaries, and taxable REIT subsidiaries, the value of any one issuer’s securities owned by us may not exceed 5.0% of the value of our total assets. |
4. | Except for certain investments in REITs, qualified REIT subsidiaries and taxable REIT subsidiaries, we may not own more than 10.0% of the total voting power of any one issuer’s outstanding securities. |
5. | Except for certain investments in REITs, qualified REIT subsidiaries and taxable REIT subsidiaries, we may not own more than 10.0% of the total value of the outstanding securities of any one issuer, other than securities that qualify for the debt safe harbors discussed below. As described further below, solely for purposes the 10.0% value test, the determination of our interest in the assets of an entity treated as a partnership for federal income tax purposes in which we own an interest will be based on our proportionate interest in any securities issued by the partnership, excluding for this purpose certain securities described in the Code. |
6. | Not more than 20.0% of our total assets may be represented by the securities of one or more taxable REIT subsidiaries. For tax years prior to 2018, this percentage was 25.0%. |
• | 90.0% of our REIT taxable income; and |
• | 90.0% of the net income (after tax), if any, from foreclosure property, minus |
• | the sum of certain items of noncash income. |
• | a citizen or resident of the United States; |
• | a corporation, partnership or other entity created in or organized under the laws of the United States or any political subdivision thereof; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust that (i) is subject to the supervision of a court within the United States and the control of a United States person or (ii) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
• | the amount of cash and the fair market value of any property received on such disposition; and |
• | the U.S. stockholder’s adjusted basis in such stock for tax purposes. |
• | a lower treaty rate applies and the Non‑U.S. stockholder files an IRS Form W‑8BEN�� evidencing eligibility for that reduced rate is filed with us or |
• | the Non‑U.S. stockholder filed an IRS Form W‑8ECI with us claiming that the distribution is income treated as effectively connected to a U.S. trade or business. |
• | the gain is effectively connected with the non‑U.S. stockholder’s United States trade or business, in which case the non‑U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain; or |
• | the non‑U.S. stockholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non‑U.S. stockholder will incur a 30.0% tax on his or her capital gains derived from sources within the United States. |
• | fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number; |
• | furnishes an incorrect taxpayer identification number; |
• | is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or |
• | fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding. |
• | For tax years beginning after December 31, 2017, and before January 1, 2026, (i) the U.S. federal income tax rates on ordinary income of individuals, trusts and estates have been generally reduced, and (ii) non-corporate taxpayers are permitted to take a deduction equal to 20% of certain pass-through business income, including dividends received from REITs that are not designated as capital gain dividends or qualified dividend income, subject to certain limitations. |
• | The maximum U.S. federal income tax rate for corporations has been reduced from a maximum rate of 35% to a flat 21% rate, and the alternative minimum tax has been eliminated for corporations. |
• | The maximum withholding rate on distributions by us to non-U.S. stockholders that are treated as attributable to gain from the sale or exchange of a U.S. real property interest is reduced from 35% to 21%. |
• | Certain new limitations on the deductibility of interest expense now apply, which generally limit the deduction for net business interest to 30% of the borrower’s adjusted taxable income (excluding non-business income, net operating business interest income, and for taxable years beginning before January 1, 2022, depreciation and amortization). If a REIT and its taxable REIT subsidiaries qualify as real estate companies, they can elect not to be subject to such limitation in exchange for depreciation of corporate property using longer depreciation schedules than would otherwise be available. |
• | Certain new limitations on the ability to recognize net operating losses now apply, which limitations may affect the timing and amount of recognition of net operating losses generated by REITs and taxable REIT subsidiaries. |
• | A U.S. tax-exempt stockholder that is subject to tax on its unrelated business taxable income (“UBTI”) will be required to separately compute its taxable income and loss for each unrelated trade or business activity for purposes of determining its UBTI. |
• | New accounting rules generally require taxpayers, including REITs, to recognize income items for federal income tax purposes no later than when such taxpayer takes the item into account for financial reporting purposes, which may accelerate recognition of certain income items. |
Dollar Amount of preferred shares Purchased | Purchase Price per Incremental Unit in Volume Discount Range(1) | |||||||||
Reduced Commission Rate | ||||||||||
$ | 1 – $ 250,000 | $ | 25.00 | 7.0% | ||||||
$ | 250,001 – 500,000 | 24.75 | 6.0% | |||||||
$ | 500,001 – 750,000 | 24.50 | 5.0% | |||||||
$ | 750,001 – 1,000,000 | 24.25 | 4.0% | |||||||
$ | 1,000,001 –1,500,000 | 24.00 | 3.0% | |||||||
$ 1,500,001 and up | 23.75 | 2.0% |
(1) | Assumes a $25 per Share offering price. Discounts will be adjusted appropriately for changes in the offering price. |
• | $250,000 at $25.00 per Share (total: 10,000 preferred shares) and a 7.0% commission; |
• | $250,000 at $24.75 per Share (total: 10,101 preferred shares) and a 6.0% commission |
• | an individual, his spouse, their children under the age of 21 and all pension or trust funds established by each such individual; |
• | a corporation, partnership, association, joint‑stock company, trust fund or any organized group of persons, whether incorporated or not; |
• | an employees’ trust, pension, profit‑sharing or other employee benefit plan qualified under Section 401(a) of the Internal Revenue Code; and |
• | all commingled trust funds maintained by a given bank. |
(1) Title of Class | (2) Amount Authorized | (3) Amount Held by Us or for Our Account | (4) Amount Outstanding Exclusive of Amounts Shown Under Column (3) | |||||||||
Common stock | 80,000,000 | - | 13,362,419.23 | |||||||||
Preferred Stock | 20,000,000 | 0 |
(i) | Beginning on the day a stockholder acquires their preferred shares (the “Acquisition Date”) and continuing for a one-year period, the purchase price for the repurchased preferred shares will be equal to 88% of the Purchase Price for the preferred shares (or $22 per Preferred Share); |
(ii) | Beginning on the first anniversary of the Acquisition Date and continuing for a one-year period, the purchase price for the repurchased preferred shares will be equal to 91% of the Purchase Price for the preferred shares (or $22.75 per Preferred Share); |
(iii) | Beginning on the second anniversary of the Acquisition Date and continuing for a one-year period, the purchase price for the repurchased preferred shares will be equal to 94% of the Purchase Price for the preferred shares (or $23.50 per Preferred Share); |
(iv) | Beginning on the third anniversary of the Acquisition Date and continuing for a one-year period, the purchase price for the repurchased preferred shares will be equal to 97% of the Purchase Price for the preferred shares (or $24.25 per Preferred Share); and |
(v) | Beginning on the fourth anniversary of the Acquisition Date and thereafter, the purchase price for the repurchased preferred shares will be equal to 100% of the Purchase Price for the preferred shares (or $25.00 per Preferred Share). |
• | 9.8% of our common stock by value or by number of shares, whichever is more restrictive (the “Common Stock Ownership Limit”); or |
• | 9.8% of our outstanding capital stock (which includes our common stock and preferred stock) by value (the “Aggregate Stock Ownership Limit”). |
• | beneficially or constructively owning shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code or otherwise failing to qualify as a REIT; and |
• | making any transfer of shares of our capital stock that, if effective, would result in our being beneficially owned by fewer than 100 persons (as determined under Section 856(a)(5) of the Code). |
• | no person’s beneficial or constructive ownership of Company stock will result in the Company being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a real estate investment trust under the Code; and |
• | such stockholder does not and will not own, actually or constructively, an interest in a tenant of the Company (or a tenant of any entity owned or controlled by the Company) that would cause the Company to own, actually or constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (or the Board determines that revenue derived from such tenant will not affect the Company’s ability to qualify as a real estate investment trust under the Code). |
• | if a transfer to a charitable trust, as described above, would be ineffective for any reason to prevent a violation of the restrictions described above, the transfer that would have resulted in such violation will be void ab initio, and the proposed transferee shall acquire no rights in such shares; and |
• | any transfer that results in the violation of the restriction relating to our shares of capital stock being beneficially owned by fewer than 100 persons will be void ab initio, and the intended transferee shall acquire no rights in such shares. |
• | rescind as void any vote cast by a Prohibited Owner prior to our discovery that such shares have been transferred to the trustee; and |
• | recast such vote in accordance with the desires of the trustee acting for the benefit of the trust’s beneficiary. |
• | the price paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not give value for the shares in connection with the event causing the shares to be held in the charitable trust (for example, in the case of a gift or devise), the market price of the shares on the day of the event causing the shares to be held in the charitable trust; and |
• | the price per share received by the trustee from the sale or other disposition of the shares held in the charitable trust (less any commission and other expenses of a sale). |
• | such shares will be deemed to have been sold on behalf of the charitable trust; and |
• | to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that the Prohibited Owner was entitled to receive as described above, the excess must be paid to the trustee upon demand. |
• | the price per share in the transaction that resulted in such transfer to the charitable trust (or, in the case of a gift or devise, the market price at the time of the gift or devise); and |
• | the market price on the date we, or our designee, accept such offer. |
• | the cost of calculating our NAV; |
• | 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, and any stock exchange listing fees in the future; |
• | federal, state, and local taxes, if any; |
• | 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, including printing, mailing, and staff; |
• | fees and expenses associated with independent audits and outside legal costs; |
• | costs associated with our reporting and compliance obligations under the 1934 Act and applicable federal and state securities laws, including EDGAR filing services; and |
• | all other expenses incurred by either MacKenzie or us in connection with administering our business, including payments under the Administration Agreement that will be 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, our Chief Financial Officer, Director of Accounting and Financial Reporting, General Counsel, and any administrative support staff. |
Fair Value | ||||
Asset Type | December 31, 2020 | |||
Publicly Traded Companies | $ | 7,631,403 | ||
Non Traded Companies | 28,417,286 | |||
Non Traded Company (Fair Value Option) | 2,214,310 | |||
LP Interests | 423,473 | |||
LP Interests (Fair Value Option) | 37,788,830 | |||
Investment Trust | 33,990 | |||
Total | $ | 76,509,292 |
Largest Tenants | Square Ft. Occupied | |
Sun Life | 100,623 | |
Triumph | 88,255 | |
Quest Diagnostics | 63,102 |
June 30, 2020 | ||||||||
Asset Type | Cost | Fair Value | ||||||
Publicly Traded Companies | $ | 8,454,348 | $ | 7,244,654 | ||||
Non Traded Companies | 42,474,614 | 32,808,076 | ||||||
LP Interests | 53,713,785 | 53,618,425 | ||||||
Investment Trust | 49,901 | 33,990 | ||||||
Total | $ | 104,692,648 | $ | 93,705,145 |
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | �� | Percent of Class | |||||
Independent Directors: | ||||||||
Tim Dozois | 5,086.08 | * | ||||||
Tom Frame | 5,213.43 | * | ||||||
Interested Director: | ||||||||
Charles “Chip” Patterson | 59,414.57 | * | ||||||
Executive Officers: | ||||||||
Paul Koslosky | 59,414.57 | * | ||||||
Glen Fuller | 59,414.57 | * | ||||||
Chip Patterson | 59,414.57 | * | ||||||
Robert Dixon | 59,414.57 | * | ||||||
Directors and Officers as a group (6 persons) | 69,714.08 | * | ||||||
* | Represents less than 1% of the number of shares outstanding. |
Name | Age | Position | Director Since | ||||
Interested Director | |||||||
Chip Patterson | 50 | Chairman of the Board of Directors, Secretary, and General Counsel | 2019 | ||||
Independent Directors | |||||||
Tim Dozois | 58 | Director | 2012 | ||||
Tom Frame | 79 | Director | 2012 | ||||
Name | Age | Position | ||
Robert Dixon | 50 | Chief Executive Officer and President | ||
Paul Koslosky | 59 | Chief Financial Officer and Treasurer | ||
Glen Fuller | 47 | Chief Operating Officer | ||
Christine Simpson | 56 | Chief Portfolio Manager | ||
Jeri Bluth | 46 | Chief Compliance Officer | ||
• | are of high character and integrity; |
• | are accomplished in their respective fields, with superior credentials and recognition; |
• | have relevant expertise and experience upon which to be able to offer advice and guidance to management; |
• | have sufficient time available to devote to our affairs; |
• | are able to work with the other members of the Board of Directors and contribute to our success; |
• | can represent the long‑term interests of our stockholders as a whole; and |
• | are selected such that the Board of Directors represents a range of backgrounds and experience. |
• | the selection, purchase and sale of our portfolio investments; |
• | our financing activities; |
• | leasing of our Investment to tenants; |
• | sales of our assets in order to provide liquidity; |
• | maintenance and risk mitigation (including insurances acquisition) |
• | providing us with real estate advisory services. |
MacKenzie Realty Capital, Inc.
June 30, 2020 | June 30, 2019 | |||||||
Assets | ||||||||
Investments, at fair value | ||||||||
Non-controlled/non-affiliated investments (cost of $48,895,786 and $46,997,608, respectively) | $ | 38,081,970 | $ | 48,839,999 | ||||
Affiliated investments (cost of $12,426,110 and $14,699,474, respectively) | 12,107,884 | 15,916,187 | ||||||
Controlled investments (cost of $43,370,752 and $35,541,173, respectively) | 43,515,291 | 38,488,962 | ||||||
Total investments, at fair value (cost of $104,692,648 and $97,238,255, respectively) | 93,705,145 | 103,245,148 | ||||||
Cash and cash equivalents | 8,957,393 | 1,278,668 | ||||||
Accounts receivable | 1,087,432 | 3,170,068 | ||||||
Other assets | 138,773 | 219,050 | ||||||
Deferred offering costs, net | 278,021 | 440,320 | ||||||
Total assets | $ | 104,166,764 | $ | 108,353,254 | ||||
Liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 135,040 | $ | 226,722 | ||||
Dividend payable | - | 1,877,101 | ||||||
Capital pending acceptance | 87,739 | 668,165 | ||||||
Due to related entities | 718,264 | 2,465,885 | ||||||
Total liabilities | 941,043 | 5,237,873 | ||||||
Net assets | ||||||||
Common stock, $0.0001 par value, 80,000,000 shares authorized; 12,836,608.02 and 10,926,319.99 shares issued and outstanding, respectively | 1,284 | 1,093 | ||||||
Capital in excess of par value | 116,455,600 | 99,077,308 | ||||||
Total distributable earnings (distributions in excess of earnings) | (13,231,163) | 4,036,980 | ||||||
Total net assets | 103,225,721 | 103,115,381 | ||||||
Total liabilities and net assets | $ | 104,166,764 | $ | 108,353,254 | ||||
Net asset value per share | $ | 8.04 | $ | 9.44 |
Name | Asset Type | Shares/Units | Cost Basis | Total Fair Value | % of Net Assets | |
American Finance Trust 7.5% PFD | (4) | Publicly Traded Company | 34,000.00 | $ 610,229 | $ 797,980 | 0.78 |
American Finance Trust Inc., Class A | (4) | Publicly Traded Company | 86,500.00 | 500,619 | 686,378 | 0.66 |
Apartment Investment & Management Company- Class A | (4) | Publicly Traded Company | 26,200.00 | 999,945 | 986,168 | 0.96 |
Ashford Hospitality Trust, Inc. | (4) | Publicly Traded Company | 360,000.00 | 244,092 | 260,136 | 0.25 |
Bluerock Residential Growth REIT, Inc. | (4) | Publicly Traded Company | 70,000.00 | 513,940 | 565,600 | 0.55 |
CBL & Associates Properties, Inc. - Preferred D | (4) | Publicly Traded Company | 188,000.00 | 1,707,042 | 169,200 | 0.16 |
City Office REIT, Inc. - Preferred A | (4) | Publicly Traded Company | 12,196.00 | 201,436 | 288,679 | 0.28 |
CorEnergy Infrastructure 7.375% PFD A | (4) | Publicly Traded Company | 36,031.00 | 621,401 | 487,139 | 0.47 |
Host Hotels & Resorts Inc | (4) | Publicly Traded Company | 24,500.00 | 237,354 | 264,355 | 0.26 |
Independence Realty Trust, Inc. | (4) | Publicly Traded Company | 33,000.00 | 295,551 | 379,170 | 0.37 |
NexPoint Residential Trust, Inc. | (4) | Publicly Traded Company | 8,000.00 | 294,490 | 282,800 | 0.27 |
One Liberty Properties, Inc. | (4) | Publicly Traded Company | 24,500.00 | 370,318 | 431,690 | 0.42 |
RLJ Lodging Trust | (4) | Publicly Traded Company | 42,000.00 | 243,541 | 396,480 | 0.38 |
The Macerich Company | (4) | Publicly Traded Company | 59,943.00 | 1,018,578 | 537,689 | 0.52 |
VEREIT, Inc | (4) | Publicly Traded Company | 58,000.00 | 294,437 | 372,940 | 0.36 |
WP Carey, Inc. | (4) | Publicly Traded Company | 5,000.00 | 301,375 | 338,250 | 0.33 |
Total Publicly Traded Companies | 8,454,348 | 7,244,654 | 7.02 | |||
Benefit Street Partners Realty Trust, Inc. | (5) | Non Traded Company | 239,401.33 | 3,488,167 | 2,496,956 | 2.41 |
Carter Validus Mission Critical REIT II, Inc. Class A | (5) | Non Traded Company | 288,506.00 | 1,666,123 | 1,632,944 | 1.58 |
CIM Real Estate Finance Trust, Inc. | (5) | Non Traded Company | 522,144.54 | 3,043,423 | 2,349,650 | 2.28 |
CNL Healthcare Properties, Inc. | (5) | Non Traded Company | 268,532.71 | 1,562,429 | 1,176,173 | 1.14 |
Cole Credit Property Trust V, Inc. | (5) | Non Traded Company | 55,455.36 | 693,789 | 610,009 | 0.59 |
Cole Credit Property Trust V, Inc. Class T | (5) | Non Traded Company | 1,466.55 | 18,438 | 16,132 | 0.02 |
Cole Office & Industrial REIT (CCIT II), Inc. Class A | (5) | Non Traded Company | 17,792.56 | 114,700 | 124,370 | 0.12 |
Cole Office & Industrial REIT (CCIT II), Inc. Class T | (5) | Non Traded Company | 1,441.84 | 6,906 | 10,078 | 0.01 |
Corporate Property Associates 18 Global A Inc. | (5) | Non Traded Company | 4,695.14 | 39,627 | 30,471 | 0.03 |
First Capital Real Estate Trust, Inc. | (5)(6) | Non Traded Company | 3,792.51 | 15,161 | 13,388 | 0.01 |
FSP 1441 Main Street | (5)(6) | Non Traded Company | 15.73 | 8,559 | 39,128 | 0.04 |
FSP 303 East Wacker Drive Corp. Liquidating Trust | (5)(6) | Non Traded Company | 3.00 | 30 | 679 | - |
FSP Energy Tower I Corp. Liquidating Trust | (2)(5)(6) | Non Traded Company | 19.35 | 7,929 | 9,810 | 0.01 |
FSP Grand Boulevard Liquidating Trust | (5)(6) | Non Traded Company | 7.50 | 8 | 2,851 | - |
FSP Satellite Place | (2)(5)(6) | Non Traded Company | 19.60 | 588,176 | 532,579 | 0.52 |
Griffin Capital Essential Asset REIT, Inc. | (5) | Non Traded Company | 23,044.28 | 151,802 | 144,027 | 0.14 |
Griffin-American Healthcare REIT III, Inc. | (5) | Non Traded Company | 59,480.45 | 324,537 | 312,272 | 0.30 |
GTJ REIT, Inc. | (5) | Non Traded Company | 1,000.00 | 11,530 | 9,280 | 0.01 |
Healthcare Trust, Inc. | (5) | Non Traded Company | 479,718.92 | 4,806,568 | 3,271,683 | 3.17 |
Highlands REIT Inc. | (5)(6) | Non Traded Company | 23,225,520.45 | 4,120,660 | 3,019,318 | 2.92 |
HGR Liquidating Trust | (5)(6) | Non Traded Company | 73,170.41 | 244,648 | 292,682 | 0.28 |
Hospitality Investors Trust, Inc. | (5)(6) | Non Traded Company | 20,493.11 | 90,607 | 20,083 | 0.02 |
InvenTrust Properties Corp. | (5) | Non Traded Company | 2,235,413.80 | 2,710,159 | 2,749,559 | 2.66 |
KBS Real Estate Investment Trust II, Inc. | (5)(6) | Non Traded Company | 1,365,338.22 | 3,754,369 | 2,266,461 | 2.20 |
KBS Real Estate Investment Trust III, Inc. | (5) | Non Traded Company | 65,717.13 | 550,359 | 529,680 | 0.51 |
New York City REIT, Inc. | (5)(6) | Non Traded Company | 319,024.14 | 3,800,940 | 3,110,485 | 3.01 |
NorthStar Healthcare Income, Inc. | (5)(6) | Non Traded Company | 23,573.29 | 87,643 | 35,596 | 0.03 |
Phillips Edison & Company, Inc | (5) | Non Traded Company | 851,563.96 | 6,286,760 | 4,589,930 | 4.45 |
SmartStop Self Storage REIT, Inc. | (5) | Non Traded Company | 7,304.42 | 54,166 | 57,048 | 0.06 |
Steadfast Apartment REIT | (5) | Non Traded Company | 73,226.79 | 815,995 | 741,055 | 0.72 |
Strategic Realty Trust, Inc. | (5) | Non Traded Company | 321,296.92 | 1,252,790 | 649,020 | 0.63 |
Summit Healthcare REIT, Inc. | (2)(5)(6) | Non Traded Company | 1,409,436.22 | 1,926,736 | 1,874,550 | 1.82 |
The Parking REIT Inc. | (5)(6) | Non Traded Company | 17,989.90 | 230,880 | 90,129 | 0.09 |
Total Non Traded Companies (1) | 42,474,614 | 32,808,076 | 31.78 | |||
3100 Airport Way South LP | (5) | LP Interest | 1.00 | 355,000 | 320,253 | 0.31 |
5210 Fountaingate, LP | (2)(5)(6) | LP Interest | 9.89 | 500,000 | 425,796 | 0.41 |
Bishop Berkeley, LLC | (3)(5) | LP Interest | 4,050.00 | 4,050,000 | 3,854,223 | 3.73 |
BP3 Affiliate, LLC | (2)(5)(6) | LP Interest | 1,668.00 | 1,668,000 | 1,668,000 | 1.62 |
BR Cabrillo LLC | (5)(6) | LP Interest | 346,723.23 | 104,944 | 104,017 | 0.10 |
BR Everwood Investment Co, LLC | (2)(5) | LP Interest | 3,750,000.00 | 3,750,000 | 3,750,000 | 3.63 |
BR Sunrise Parc Investment Co, LLC | (2)(5) | LP Interest | 2,720,911.00 | 2,720,911 | 2,720,911 | 2.64 |
Britannia Preferred Members, LLC -Class 1 | (3)(5)(6) | LP Interest | 103.88 | 2,597,000 | 3,505,950 | 3.40 |
Britannia Preferred Members, LLC -Class 2 | (3)(5)(6) | LP Interest | 514,858.30 | 6,826,931 | 7,089,599 | 6.87 |
Capitol Hill Partners, LLC | (3)(5)(6) | LP Interest | 190,000.00 | 1,900,000 | 1,468,700 | 1.42 |
Citrus Park Hotel Holdings, LLC | (3)(5) | LP Interest | 5,000,000.00 | 5,000,000 | 5,000,000 | 4.84 |
Dimensions28 LLP | (3)(5) | LP Interest | 10,800.00 | 10,801,015 | 10,949,688 | 10.61 |
Lakemont Partners, LLC | (2)(5) | LP Interest | 1,000.00 | 941,180 | 857,160 | 0.83 |
MacKenzie Realty Operating Partnership, LP | (3)(5)(6) | LP Interest | 1,451,642.63 | 12,145,905 | 11,613,141 | 11.25 |
MPF Pacific Gateway - Class B | (2)(5)(6) | LP Interest | 23.20 | 6,287 | 7,164 | 0.01 |
Redwood Mortgage Investors VIII | (5) | LP Interest | 56,300.04 | 29,700 | 12,949 | 0.01 |
Satellite Investment Holdings, LLC - Class B | (5)(6) | LP Interest | 0.31 | �� 22 | 8,960 | 0.01 |
Secured Income, LP | (2)(5)(6) | LP Interest | 64,670.00 | 316,890 | 261,914 | 0.25 |
Total LP Interest | 53,713,785 | 53,618,425 | 51.94 | |||
Coastal Realty Business Trust, REEP, Inc. - A | (3)(5)(6) | Investment Trust | 72,320.00 | 49,901 | 33,990 | 0.03 |
Total Investment Trust | 49,901 | 33,990 | 0.03 | |||
Total Investments | $ 104,692,648 | $ 93,705,145 | 90.77 |
(1) Investments primarily in non-traded public REITs or their successors. |
(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2020, the Company is deemed to be either “affiliated” with, or in “control” of, these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 5. |
(3) Under the 1940 Act, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2020, the Company is deemed to be in “control” of these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 5. |
(4) Non-qualifying assets under Section 55(a) of the 1940 Act. As of June 30, 2020, the total percentage of non-qualifying assets is 6.95%, and as a business development company non-qualifying assets may not exceed 30% of our total assets. |
(5) Investments in illiquid securities, or securities that are not traded on a national exchange. As of June 30, 2020, 83.00% of the Company's total assets are in illiquid securities. |
(6) Investments in non-income producing securities. As of June 30, 2020, 36.00% of the Company's total assets are in non-income producing securities. |
Name | Asset Type | Shares/Units | Cost Basis | Total Fair Value | % of Net Assets | |
American Finance Trust Inc., Class A | (4) | Publicly Traded Company | 197,340.00 | $ 2,186,682 | $ 2,151,006 | 2.09 |
Total Publicly Traded Company | 2,186,682 | 2,151,006 | 2.09 | |||
Benefit Street Partners Realty Trust, Inc. | (5) | Non Traded Company | 214,175.77 | 3,207,614 | 3,075,563 | 2.96 |
BRE Select Hotels Corp. - Preferred A | (5) | Non Traded Company | 358,717.00 | 594,992 | 670,801 | 0.65 |
Carter Validus Mission Critical REIT | (5) | Non Traded Company | 315,639.56 | 1,087,300 | 1,325,686 | 1.29 |
Cole Credit Property Trust IV, Inc. | (5) | Non Traded Company | 314,451.92 | 1,879,482 | 2,185,441 | 2.12 |
Cole Credit Property Trust V, Inc. | (5) | Non Traded Company | 8,631.50 | 116,442 | 112,123 | 0.11 |
Cole Credit Property Trust V, Inc. Class T | (5) | Non Traded Company | 395.88 | 5,492 | 5,143 | - |
CNL Healthcare Properties, Inc. | (5)(6) | Non Traded Company | 104,158.67 | 658,615 | 625,994 | 0.61 |
Hines Global REIT, Inc. | (5) | Non Traded Company | 17,936.21 | 120,637 | 92,013 | 0.09 |
Corporate Property Associates 18 Global A Inc. | (5) | Non Traded Company | 4,695.14 | 39,627 | 37,139 | 0.04 |
First Capital Real Estate Trust, Inc. | (5)(6) | Non Traded Company | 3,792.51 | 15,161 | 18,242 | 0.02 |
FSP 1441 Main Street | (5)(6) | Non Traded Company | 15.73 | 8,559 | 31,245 | 0.03 |
FSP 303 East Wacker Drive Corp. Liquidating Trust | (5)(6) | Non Traded Company | 3.00 | 30 | 600 | - |
FSP Energy Tower I Corp. Liquidating Trust | (2)(5)(6) | Non Traded Company | 19.35 | 57,567 | 57,566 | 0.06 |
FSP Grand Boulevard Liquidating Trust | (5)(6) | Non Traded Company | 7.50 | 8 | 8 | - |
FSP Satellite Place | (2)(5)(6) | Non Traded Company | 17.60 | 546,482 | 712,585 | 0.69 |
Griffin-American Healthcare REIT III, Inc. | (5) | Non Traded Company | 686.48 | 4,494 | 5,149 | - |
Griffin Capital Essential Asset REIT, Inc. | (5) | Non Traded Company | 21,368.03 | 140,003 | 169,021 | 0.16 |
GTJ REIT, Inc. | (5) | Non Traded Company | 1,000.00 | 11,620 | 11,980 | 0.01 |
Healthcare Trust, Inc. | (5) | Non Traded Company | 305,526.76 | 3,473,952 | 3,211,086 | 3.11 |
Highlands REIT Inc. | (5)(6) | Non Traded Company | 21,255,526.80 | 3,965,354 | 3,825,995 | 3.71 |
Hospitality Investors Trust, Inc. | (5)(6) | Non Traded Company | 1,650.75 | 11,802 | 9,327 | 0.01 |
InvenTrust Properties Corp. | (5) | Non Traded Company | 14,799.52 | 22,603 | 26,195 | 0.03 |
KBS Real Estate Investment Trust II, Inc. | (5) | Non Traded Company | 1,364,838.21 | 4,776,934 | 4,831,527 | 4.69 |
KBS Real Estate Investment Trust III, Inc. | (5) | Non Traded Company | 62,516.45 | 515,050 | 593,906 | 0.58 |
New York City REIT, Inc. | (5)(6) | Non Traded Company | 241,297.69 | 3,032,703 | 3,136,870 | 3.04 |
NorthStar Healthcare Income, Inc. | (5)(6) | Non Traded Company | 23,573.29 | 87,643 | 66,477 | 0.06 |
Phillips Edison & Company, Inc | (5) | Non Traded Company | 777,332.00 | 5,760,907 | 6,350,802 | 6.16 |
Steadfast Apartment REIT | (5) | Non Traded Company | 2,083.29 | 17,197 | 26,041 | 0.03 |
Steadfast Income REIT | (5) | Non Traded Company | 109,471.94 | 740,163 | 743,314 | 0.72 |
Strategic Realty Trust, Inc. | (5) | Non Traded Company | 199,425.07 | 792,538 | 853,539 | 0.83 |
Summit Healthcare REIT, Inc. | (2)(5)(6) | Non Traded Company | 1,406,200.22 | 1,922,248 | 2,587,408 | 2.51 |
The Parking REIT Inc. | (5)(6) | Non Traded Company | 17,989.90 | 230,880 | 242,504 | 0.24 |
Total Non Traded Company (1) | 33,844,099 | 35,641,290 | 34.56 | |||
3100 Airport Way South LP | (5) | LP Interest | 1.00 | 355,000 | 387,990 | 0.37 |
5210 Fountaingate, LP | (2)(5) | LP Interest | 9.89 | 500,000 | 552,693 | 0.54 |
Addison NC, LLC | (3)(5)(6) | LP Interest | 200,000.00 | 2,000,000 | 3,600,000 | 3.49 |
Addison Property Member, LLC | (3)(5) | LP Interest | 731,485.60 | 7,316,326 | 7,314,855 | 7.08 |
Arrowpoint Burlington LLC | (2)(5) | LP Interest | 7.50 | 750,000 | 1,088,910 | 1.06 |
Bishop Berkeley, LLC | (3)(5) | LP Interest | 4,050.00 | 4,050,000 | 4,051,013 | 3.93 |
BP3 Affiliate, LLC | (2)(5)(6) | LP Interest | 1,350.00 | 1,350,000 | 1,350,000 | 1.31 |
BR Cabrillo LLC | (5)(6) | LP Interest | 346,723.32 | 104,942 | 131,755 | 0.13 |
BR Desota Investment Co, LLC | (2)(5) | LP Interest | 4,250,000.00 | 4,250,000 | 4,250,000 | 4.12 |
BR Quinn35 Investment Co, LLC | (2)(5) | LP Interest | 4,000,000.00 | 4,000,000 | 4,000,000 | 3.88 |
Britannia Preferred Members, LLC -Class 1 | (3)(5)(6) | LP Interest | 103.88 | 2,597,000 | 2,986,550 | 2.90 |
Britannia Preferred Members, LLC -Class 2 | (3)(5)(6) | LP Interest | 514,858.30 | 6,826,931 | 7,758,915 | 7.52 |
Capitol Hill Partners, LLC | (3)(5)(6) | LP Interest | 190,000.00 | 1,900,000 | 1,852,500 | 1.80 |
CRP I Roll Up, LLC | (5) | LP Interest | 4,500,000.00 | 4,500,000 | 4,995,000 | 4.84 |
CRP III Roll Up, LLC | (5) | LP Interest | 6,000,000.00 | 6,000,000 | 6,540,000 | 6.34 |
Dimensions28 LLP | (3)(5)(6) | LP Interest | 10,800.00 | 10,801,015 | 10,886,076 | 10.56 |
Lakemont Partners, LLC | (2)(5) | LP Interest | 1,000.00 | 1,000,000 | 1,007,700 | 0.98 |
MPF Pacific Gateway - Class B | (2)(5)(6) | LP Interest | 23.20 | 6,287 | 7,316 | 0.01 |
Redwood Mortgage Investors VIII | (5) | LP Interest | 56,300.04 | 29,700 | 39,410 | 0.04 |
Satellite Investment Holdings, LLC - Class A | (5) | LP Interest | 22.00 | 2,200,000 | 2,200,000 | 2.13 |
Secured Income, LP | (2)(5)(6) | LP Interest | 64,670.00 | 316,890 | 302,009 | 0.29 |
The Weatherly Building, LLC | (5)(6) | LP Interest | 17.50 | 118,721 | 47,846 | 0.05 |
The Weatherly, LTD | (5)(6) | LP Interest | 60.00 | 184,761 | 63,261 | 0.06 |
Total LP Interest | 61,157,573 | 65,413,799 | 63.43 | |||
Coastal Realty Business Trust, REEP, Inc. - A | (3)(5)(6) | Investment Trust | 72,320.00 | 49,901 | 39,053 | 0.04 |
Total Investment Trust | 49,901 | 39,053 | 0.04 | |||
Total Investments | $ 97,238,255 | $ 103,245,148 | 100.12 |
(1) Investments primarily in non-traded public REITs or their successors. |
(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2019, the Company is deemed to be either “affiliated” with, or in “control” of, these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 5. |
(3) Under the 1940 Act, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2019, the Company is deemed to be in “control” of these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 5. |
(4) Non-qualifying assets under Section 55(a) of the 1940 Act. As of June 30, 2019, the total percentage of non-qualifying assets is 1.99%, and as a business development company non-qualifying assets may not exceed 30% of our total assets. |
(5) Investments in illiquid securities, or securities that are not traded on a national exchange. As of June 30, 2019, 93.30% of the Company's total assets are in illiquid securities. |
(6) Investments in non-income producing securities. As of June 30, 2019, 37.23% of the Company's total assets are in non-income producing securities. |
Year Ended June 30, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Investment income | ||||||||||||
Non-controlled/non-affiliated investments: | ||||||||||||
Dividend and operational/sales distributions | $ | 5,012,907 | $ | 8,995,648 | $ | 4,673,414 | ||||||
Interest and other income | 353,636 | 374,121 | 457,835 | |||||||||
Affiliated investments: | ||||||||||||
Dividend and operational/sales distributions | 1,011,245 | 1,549,329 | 157,116 | |||||||||
Controlled investments: | ||||||||||||
Dividend and operational/sales distributions | 2,352,153 | 960,192 | 1,690,000 | |||||||||
Total investment income | 8,729,941 | 11,879,290 | 6,978,365 | |||||||||
Operating expenses | ||||||||||||
Base management fee (note 5) | 2,549,076 | 2,206,227 | 1,725,173 | |||||||||
Portfolio structuring fee (note 5) | 588,203 | 707,589 | 690,220 | |||||||||
Subordinated incentive fee (reversal) (note 5) | - | 1,789,870 | 1,092,351 | |||||||||
Administrative cost reimbursements (note 5) | 680,000 | 570,667 | 432,000 | |||||||||
Transfer agent cost reimbursements (note 5) | 80,000 | 23,333 | - | |||||||||
Amortization of deferred offering costs | 880,138 | 556,165 | 374,115 | |||||||||
Professional fees | 263,868 | 145,112 | 206,631 | |||||||||
Directors' fees | 68,000 | 64,500 | 65,000 | |||||||||
Printing and mailing | 86,507 | 58,774 | 38,992 | |||||||||
Other general and administrative | 65,292 | 126,295 | 123,253 | |||||||||
Total operating expenses | 5,261,084 | 6,248,532 | 4,747,735 | |||||||||
Net investment income before taxes | 3,468,857 | 5,630,758 | 2,230,630 | |||||||||
Income tax provision (benefit) - (note 2) | - | (13,348) | 3,431 | |||||||||
Net investment income | 3,468,857 | 5,644,106 | 2,227,199 | |||||||||
Realized and unrealized gain (loss) on investments | ||||||||||||
Net realized gain (loss) | ||||||||||||
Non-controlled/non-affiliated investments | 1,216,657 | 1,197,788 | 2,744,629 | |||||||||
Affiliated investments: | 583,331 | - | - | |||||||||
Controlled investments | - | 6,262 | (52,856) | |||||||||
Total net realized gain (loss) | 1,799,988 | 1,204,050 | 2,691,773 | |||||||||
Net unrealized gain (loss) | ||||||||||||
Non-controlled/non-affiliated investments | (12,656,209) | (5,474,933) | 4,765,578 | |||||||||
Affiliated investments | (1,534,938) | 621,817 | 613,578 | |||||||||
Controlled investments | (2,803,250) | 890,467 | 467,683 | |||||||||
Total net unrealized gain (loss) | (16,994,397) | (3,962,649) | 5,846,839 | |||||||||
Total net realized and unrealized gain (loss) on investments | (15,194,409) | (2,758,599) | 8,538,612 | |||||||||
Net increase (decrease) in net assets resulting from operations | $ | (11,725,552) | $ | 2,885,507 | $ | 10,765,811 | ||||||
Net increase (decrease) in net assets resulting from operations per share | $ | (0.96) | $ | 0.29 | $ | 1.45 | ||||||
Weighted average common shares outstanding | 12,198,040 | 9,951,816 | 7,440,841 |
Year Ended June 30, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Operations | ||||||||||||
Net investment income | $ | 3,468,857 | $ | 5,644,106 | $ | 2,227,199 | ||||||
Net realized gain | 1,799,988 | 1,204,050 | 2,691,773 | |||||||||
Net unrealized gain (loss) | (16,994,397) | (3,962,649) | 5,846,839 | |||||||||
Net increase (decrease) in net assets resulting from operations | (11,725,552) | 2,885,507 | 10,765,811 | |||||||||
Dividends | ||||||||||||
Dividends to stockholders | (5,542,591) | (7,237,635) | (6,759,484) | |||||||||
Capital share transactions | ||||||||||||
Issuance of common stock | 19,505,452 | 23,244,171 | 23,007,310 | |||||||||
Issuance of common stock through reinvestment of dividends | 2,891,349 | 3,006,069 | 2,340,042 | |||||||||
Redemption of common stock | (3,194,670) | (2,368,035) | (1,454,120) | |||||||||
Selling commissions and fees | (1,823,648) | (2,010,015) | (2,293,765) | |||||||||
Net increase in net assets resulting from capital share transactions | 17,378,483 | 21,872,190 | 21,599,467 | |||||||||
Total increase in net assets | 110,340 | 17,520,062 | 25,605,794 | |||||||||
Net assets at beginning of the period | 103,115,381 | 85,595,319 | 59,989,525 | |||||||||
Net assets at end of the period | $ | 103,225,721 | $ | 103,115,381 | $ | 85,595,319 |
Year Ended June 30, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (11,725,552) | $ | 2,885,507 | $ | 10,765,811 | ||||||
Adjustments to reconcile net increase (decrease) in net assets resulting from | ||||||||||||
operations to net cash from operating activities: | ||||||||||||
Proceeds from sale of investments, net | 8,057,094 | 57,437,720 | 43,866,485 | |||||||||
Return of capital | 31,368,113 | 19,019,276 | 17,189,743 | |||||||||
Purchase of investments | (45,079,613) | (107,876,237) | (79,216,595) | |||||||||
Net realized gain on investments | (1,799,988) | (1,204,050) | (2,691,773) | |||||||||
Net unrealized (gain) loss on investments | 16,994,397 | 3,962,649 | (5,846,839) | |||||||||
Amortization of deferred offering costs | 880,138 | 556,165 | 374,115 | |||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable | 2,082,636 | 2,708,225 | (3,637,478) | |||||||||
Other assets | 41,846 | 180,875 | (185,716) | |||||||||
Payment of deferred offering costs | (717,839) | (709,871) | (416,922) | |||||||||
Accounts payable and accrued liabilities | (80,251) | 198,907 | (53,507) | |||||||||
Income tax payable | - | (37,153) | 37,153 | |||||||||
Due to related entities | (1,747,621) | 658,857 | 1,219,019 | |||||||||
Deferred tax liability | - | (3,518) | (41,845) | |||||||||
Net cash from operating activities | (1,726,640) | (22,222,648) | (18,638,349) | |||||||||
Cash flows from financing activities: | ||||||||||||
Borrowings on margin loan | - | - | 6,012,413 | |||||||||
Payments on margin loan | - | - | (6,012,413) | |||||||||
Proceeds from issuance of common stock | 19,505,452 | 23,244,171 | 23,007,310 | |||||||||
Redemption of common stock | (3,194,670) | (2,368,035) | (1,454,120) | |||||||||
Dividends to stockholders | (4,528,343) | (3,793,273) | (2,980,634) | |||||||||
Payment of selling commissions and fees | (1,796,648) | (2,045,661) | (2,184,880) | |||||||||
Change in capital pending acceptance | (580,426) | 21,865 | (1,156,790) | |||||||||
Net cash from financing activities | 9,405,365 | 15,059,067 | 15,230,886 | |||||||||
Net increase (decrease) in cash and cash equivalents | 7,678,725 | (7,163,581) | (3,407,463) | |||||||||
Cash and cash equivalents at beginning of the period | 1,278,668 | 8,442,249 | 11,849,712 | |||||||||
Cash and cash equivalents at end of the period | $ | 8,957,393 | $ | 1,278,668 | $ | 8,442,249 | ||||||
Non-cash financing activities: | ||||||||||||
Issuance of common stock through reinvestment of dividends | $ | 2,891,349 | $ | 3,006,069 | $ | 2,340,042 |
Year Ended | |||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2018 | |||||||||
MacKenzie Realty Capital, Inc - built-in gain tax adjustments | $ | - | $ | (13,348) | $ | (3,292) | |||||
MRC TRS, Inc - income tax expenses | - | - | 6,723 | ||||||||
Total Income Tax Provision (Benefit) | $ | - | $ | (13,348) | $ | 3,431 |
• | Recently quoted trading prices for the same or similar securities; |
• | Recent purchase prices paid for the same or similar securities; |
• | Recent sale prices received for the same or similar securities; |
• | Relevant reports issued by industry analysts and publications; and |
• | Other relevant observable and unobservable inputs, including liquidity discounts. |
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. The Company does not adjust the quoted price for these investments even in situations where the Company holds a large position and a sale could reasonably impact the quoted price. |
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. |
June 30, 2020 | June 30, 2019 | ||||||||||||||
Asset Type | Cost | Fair Value | Cost | Fair Value | |||||||||||
Publicly Traded Companies | $ | 8,454,348 | $ | 7,244,654 | $ | 2,186,682 | $ | 2,151,006 | |||||||
Non Traded Companies | 42,474,614 | 32,808,076 | 33,844,099 | 35,641,290 | |||||||||||
LP Interests | 53,713,785 | 53,618,425 | 61,157,573 | 65,413,799 | |||||||||||
Investment Trust | 49,901 | 33,990 | 49,901 | 39,053 | |||||||||||
Total | $ | 104,692,648 | $ | 93,705,145 | $ | 97,238,255 | $ | 103,245,148 |
Asset Type | Total | Level I | Level II | Level III | ||||||||||||
Publicly Traded Companies | $ | 7,244,654 | $ | 7,244,654 | $ | - | $ | - | ||||||||
Non Traded Companies | 32,808,076 | - | - | 32,808,076 | ||||||||||||
LP Interests | 53,618,425 | - | - | 53,618,425 | ||||||||||||
Investment Trust | 33,990 | - | - | 33,990 | ||||||||||||
Total | $ | 93,705,145 | $ | 7,244,654 | $ | - | $ | 86,460,491 |
Asset Type | Total | Level I | Level II | Level III | ||||||||||||
Publicly Traded Companies | $ | 2,151,006 | $ | 2,151,006 | $ | - | $ | - | ||||||||
Non Traded Companies | 35,641,290 | - | - | 35,641,290 | ||||||||||||
LP Interests | 65,413,799 | - | - | 65,413,799 | ||||||||||||
Investment Trust | 39,053 | - | - | 39,053 | ||||||||||||
Total | $ | 103,245,148 | $ | 2,151,006 | $ | - | $ | 101,094,142 |
Balance at July 1, 2019 | $ | 101,094,142 | |
Purchases of investments | 35,586,486 | ||
Proceeds from sales, net | (3,639,699) | ||
Return of capital | (31,368,114) | ||
Net realized gains | 608,053 | ||
Net unrealized losses | (15,820,377) | ||
Ending balance at June 30, 2020 | $ | 86,460,491 |
Balance at July 1, 2018 | $ | 67,923,423 | |
Purchases of investments | 76,131,760 | ||
Transfers from Level III to Level I | (1,991,230) | ||
Proceeds from sales, net | (21,260,960) | ||
Return of capital | (19,019,275) | ||
Net realized gains | 3,229,130 | ||
Net unrealized losses | (3,918,706) | ||
Ending balance at June 30, 2019 | $ | 101,094,142 |
Asset Type | Fair Value | Primary Valuation Techniques | Unobservable Inputs Used | Range | Wt. Average | |||||
Non Traded Companies | $ 541,858 | Direct Capitalization Method | Capitalization rate | 6.5% - 7.6% | 7.5% | |||||
Liquidity discount | 32.0% - 35.0% | 32.1% | ||||||||
Non Traded Companies | 65,856 | Estimated Liquidation Value | Sponsor provided value | |||||||
Liquidity discount | 12.0% - 78.0% | 45.1% | ||||||||
Non Traded Companies | 32,200,362 | Market Activity | Secondary market industry publication | |||||||
Liquidity discount | * | 7.5% - 12.5% | 7.6% | |||||||
LP Interests | 24,974,379 | Direct Capitalization Method | Capitalization rate | 3.4% - 6.8% | 5.2% | |||||
Liquidity discount | 5.0% - 40.0% | 15.5% | ||||||||
LP Interests | 14,976,861 | Discounted Cash Flow | Discount rate | 9.0% - 20.0% | 11.6% | |||||
Discount term (months) | 6.0 - 9.0 | 7.1 | ||||||||
LP Interests | 11,724,322 | Estimated Liquidation Value | Sponsor provided value | |||||||
Underlying property sales contract | ||||||||||
Underlying property appraisal | ||||||||||
Liquidity discount | 19.0% - 43.0% | 41.5% | ||||||||
LP Interests | 1,942,863 | Market Activity | Underlying security sales contract | |||||||
Secondary market industry publication | ||||||||||
Contributed capital | ||||||||||
Investment Trust | 33,990 | Market Activity | Underlying security sales contract | |||||||
$ 86,460,491 |
Impact of COVID-19 Pandemic
Asset Type | Fair Value | Primary Valuation Techniques | Unobservable Inputs Used | Range | Wt. Average | |||||
Non Traded Companies | $ 1,010,852 | Direct Capitalization Method | Capitalization rate | 6.3% - 6.9% | 6.9% | |||||
Liquidity discount | 19.0% - 34.0% | 20.7% | ||||||||
Non Traded Companies | 670,801 | Discounted Cash Flow | Discount rate | 24.0% | ||||||
Discount term (months) | 28.0 | |||||||||
Non Traded Companies | 107,660 | Estimated Liquidation Value | Sponsor provided value | |||||||
Liquidity discount | 12.0% - 70.0% | 23.5% | ||||||||
Non Traded Companies | 33,851,977 | Market Activity | Secondary market industry publication | |||||||
LP Interests | 26,798,895 | Direct Capitalization Method | Capitalization rate | 4.2% - 7.3% | 5.3% | |||||
Liquidity discount | 19.0% - 25.0% | 19.4% | ||||||||
LP Interests | 27,636,406 | Discounted Cash Flow | Discount rate | 15.0% - 30.0% | 17.8% | |||||
Discount term (months) | 18.0 - 24.0 | 19.4 | ||||||||
LP Interests | 250,178 | Estimated Liquidation Value | Sponsor provided value | |||||||
Underlying contracted agreement | ||||||||||
Liquidity discount | 19.0% - 34.0% | 33.2% | ||||||||
LP Interests | 10,728,320 | Market Activity | Acquisition Cost | |||||||
Book value of underlying loans | ||||||||||
Liquidity discount | 19.0% - 30.0% | 19.4% | ||||||||
Investment Trust | 39,053 | Direct Capitalization Method | Capitalization rate | 6.0% | ||||||
Liquidity discount | 25.0% | |||||||||
$ 101,094,142 |
Total Assets | $ | 45,517,060 | ||
Total Liabilities | $ | 25,792,551 | ||
Total Equity | $ | 19,724,509 |
Base Management Fee Annual % | 3.0% | 2.0% | 1.5% | Total Gross Invested Capital | |||||||||||
For the Year Ended June 30, 2020 | |||||||||||||||
Quarter ended: | |||||||||||||||
September 30, 2019 | $ | 20,000,000 | $ | 80,000,000 | $ | 15,998,789 | $ | 115,998,789 | |||||||
December 31, 2019 | 20,000,000 | 80,000,000 | 21,409,289 | 121,409,289 | |||||||||||
March 30, 2020 | 20,000,000 | 80,000,000 | 27,070,974 | 127,070,974 | |||||||||||
June 30, 2020 | 20,000,000 | 80,000,000 | 28,607,752 | 128,607,752 | |||||||||||
For the Year Ended June 30, 2019 | |||||||||||||||
Quarter ended: | |||||||||||||||
September 30, 2018 | $ | 20,000,000 | $ | 72,435,844 | $ | - | $ | 92,435,844 | |||||||
December 31, 2018 | 20,000,000 | 78,322,307 | - | 98,322,307 | |||||||||||
March 31, 2019 | 20,000,000 | 80,000,000 | 4,719,872 | 104,719,872 | |||||||||||
June 30, 2019 | 20,000,000 | 80,000,000 | 9,263,200 | 109,263,200 | |||||||||||
For the Year Ended June 30, 2018 | |||||||||||||||
Quarter ended: | |||||||||||||||
September 30, 2017 | $ | 20,000,000 | $ | 47,783,337 | $ | - | $ | 67,783,337 | |||||||
December 31, 2017 | 20,000,000 | 53,814,885 | - | 73,814,885 | |||||||||||
March 31, 2018 | 20,000,000 | 58,474,911 | - | 78,474,911 | |||||||||||
June 30, 2018 | 20,000,000 | 64,961,416 | - | 84,961,416 |
Incurred For The Year Ended | Unpaid as of | |||||||||||
Types and Recipient | June 30, 2020 | June 30, 2019 | June 30, 2018 | June 30, 2020 | June 30, 2019 | |||||||
Base Management fees- the Adviser | $ 2,549,076 | $ 2,206,227 | $ 1,725,173 | $ 657,280 | $ 584,737 | |||||||
Portfolio Structuring fee- the Adviser | 588,203 | 707,589 | 690,220 | - | - | |||||||
Subordinated Incentive fee - the Adviser | - | 1,789,870 | 1,092,351 | - | 1,789,870 | |||||||
Administrative Cost Reimbursements- MacKenzie | 680,000 | 570,667 | 432,000 | - | - | |||||||
Transfer agent cost reimbursements - MacKenzie | 80,000 | 23,333 | - | - | (30,000) | (3) | ||||||
Organization & Offering Cost (2) - MacKenzie | 444,935 | 550,908 | 237,149 | 52,492 | 116,115 | |||||||
Other expenses (1)- MacKenzie | 8,492 | 5,163 | ||||||||||
Due to related entities | $ 718,264 | $ 2,465,885 |
(1) | Expenses paid by MacKenzie to third parties on behalf of the Company to be reimbursed. |
(2) | Offering costs paid by MacKenzie- discussed in Note 5 under organization and offering costs reimbursements. These are amortized over twelve-month period as discussed in Note 2. |
(3) | Transfer agent cost reimbursements for the period of November 1, 2018 through March 14, 2019 that MacKenzie refunded in July 2019. |
Name of issuer and title of issue | Fair Value at June 30, 2019 | Gross Additions | Transfers | Gross Reductions (1) | Net Realized Gains (losses) | Net Change in Unrealized Gains/(Losses) | Fair Value at June 30, 2020 | Interest/Dividend/Other income Year Ended June 30, 2020 | ||||||||||||||||||||||||
Affiliated Investments: | ||||||||||||||||||||||||||||||||
5210 Fountaingate, LP | $ | 552,693 | $ | - | $ | - | $ | - | $ | - | $ | (126,897) | $ | 425,796 | $ | - | ||||||||||||||||
Arrowpoint Burlington LLC | 1,088,910 | - | - | (1,333,331) | 583,331 | (338,910) | - | - | ||||||||||||||||||||||||
BP3 Affiliate, LLC | 1,350,000 | 318,000 | - | - | - | - | 1,668,000 | - | ||||||||||||||||||||||||
BR Desota Investment Co, LLC | 4,250,000 | - | - | (4,250,000) | - | - | - | 46,623 | ||||||||||||||||||||||||
BR Everwood Investment Co, LLC | - | 3,750,000 | - | - | - | - | 3,750,000 | 479,871 | ||||||||||||||||||||||||
BR Quinn35 Investment Co, LLC | 4,000,000 | - | - | (4,000,000) | - | - | - | 167,768 | ||||||||||||||||||||||||
BR Sunrise Parc Investment Co, LLC | - | 2,720,911 | - | - | - | - | 2,720,911 | 253,410 | ||||||||||||||||||||||||
BR Westerly Investment Co, LLC | - | 4,120,667 | - | (4,120,667) | - | - | - | - | ||||||||||||||||||||||||
FSP Energy Tower I Corp. Liquidating Trust | 57,566 | - | - | (49,637) | - | 1,881 | 9,810 | 37,438 | ||||||||||||||||||||||||
FSP Satellite Place | 712,585 | 41,693 | - | - | - | (221,699) | 532,579 | - | ||||||||||||||||||||||||
Lakemont Partners, LLC | 1,007,700 | - | - | (58,820) | - | (91,720) | 857,160 | 26,135 | ||||||||||||||||||||||||
MPF Pacific Gateway - Class B | 7,316 | - | - | - | - | (152) | 7,164 | - | ||||||||||||||||||||||||
Secured Income, LP | 302,009 | - | - | - | - | (40,095) | 261,914 | - | ||||||||||||||||||||||||
Summit Healthcare REIT, Inc. | 2,587,408 | 4,488 | - | - | - | (717,346) | 1,874,550 | - | ||||||||||||||||||||||||
$ | 15,916,187 | $ | 10,955,759 | $ | - | $ | (13,812,455) | $ | 583,331 | $ | (1,534,938) | $ | 12,107,884 | $ | 1,011,245 | |||||||||||||||||
Controlled Investments: | ||||||||||||||||||||||||||||||||
Addison NC, LLC | $ | 3,600,000 | $ | - | $ | (2,000,000) | $ | - | $ | - | $ | (1,600,000) | $ | - | $ | - | ||||||||||||||||
Addison Property Member, LLC | 7,314,855 | - | (7,316,326) | - | - | 1,471 | - | 1,176,187 | ||||||||||||||||||||||||
Bishop Berkeley, LLC | 4,051,013 | - | - | - | - | (196,790) | 3,854,223 | 69,034 | ||||||||||||||||||||||||
Britannia Preferred Members, LLC -Class 1 | 2,986,550 | - | - | - | - | 519,400 | 3,505,950 | - | ||||||||||||||||||||||||
Britannia Preferred Members, LLC -Class 2 | 7,758,915 | - | - | - | - | (669,316) | 7,089,599 | - | ||||||||||||||||||||||||
Capitol Hill Partners, LLC | 1,852,500 | - | - | - | - | (383,800) | 1,468,700 | - | ||||||||||||||||||||||||
Citrus Park Hotel Holdings, LLC | - | 5,000,000 | - | - | - | - | 5,000,000 | 287,500 | ||||||||||||||||||||||||
Coastal Realty Business Trust, REEP, Inc. - A | 39,053 | - | - | - | - | (5,063) | 33,990 | - | ||||||||||||||||||||||||
Dimensions28 LLP | 10,886,076 | - | - | - | - | 63,612 | 10,949,688 | 485,321 | ||||||||||||||||||||||||
MacKenzie Realty Operating Partnership, LP | - | 2,829,579 | 9,316,326 | - | - | (532,764) | 11,613,141 | - | ||||||||||||||||||||||||
Sunlit Holdings, LLC | - | 5,000,000 | - | (5,000,000) | - | - | - | 334,111 | ||||||||||||||||||||||||
$ | 38,488,962 | $ | 12,829,579 | $ | - | $ | (5,000,000) | $ | - | $ | (2,803,250) | $ | 43,515,291 | $ | 2,352,153 |
Name of issuer and title of issue | Fair Value at June 30, 2018 | Gross Additions | Gross Reductions (1) | Net Realized Gains (losses) | Net Change in Unrealized Gains/(Losses) | Fair Value at June 30, 2019 | Interest/Dividend/Other income Year Ended June 30, 2019 | |||||||||||||||||||||
Affiliated Investments: | ||||||||||||||||||||||||||||
5210 Fountaingate, LP | $ | 555,728 | $ | - | $ | - | $ | - | $ | (3,035) | $ | 552,693 | $ | 18,124 | ||||||||||||||
Arrowpoint Burlington LLC | 869,072 | - | - | - | 219,838 | 1,088,910 | 83,333 | |||||||||||||||||||||
BP3 Affliliate, LLC | - | 1,350,000 | - | - | - | 1,350,000 | - | |||||||||||||||||||||
BR Desota Investment Co, LLC | - | 4,250,000 | - | - | - | 4,250,000 | 205,560 | |||||||||||||||||||||
BR Quinn35 Investment Co, LLC | - | 4,000,000 | - | - | - | 4,000,000 | 69,056 | |||||||||||||||||||||
FSP Energy Tower I Corp. Liquidating Trust | 301,373 | 415,374 | (661,307) | - | 2,126 | 57,566 | 1,080,192 | |||||||||||||||||||||
FSP Satellite Place | 499,140 | 151,169 | - | - | 62,276 | 712,585 | - | |||||||||||||||||||||
Lakemont Partners, LLC | - | 1,000,000 | - | - | 7,700 | 1,007,700 | 4,381 | |||||||||||||||||||||
MPF Pacific Gateway - Class B | 6,613 | - | - | - | 703 | 7,316 | - | |||||||||||||||||||||
Secured Income, LP | 320,763 | - | - | - | (18,754) | 302,009 | - | |||||||||||||||||||||
Summit Healthcare REIT, Inc. | 2,043,379 | 193,066 | - | - | 350,963 | 2,587,408 | 88,683 | |||||||||||||||||||||
$ | 4,596,068 | $ | 11,359,609 | $ | (661,307) | $ | - | $ | 621,817 | $ | 15,916,187 | $ | 1,549,329 | |||||||||||||||
Controlled Investments: | ||||||||||||||||||||||||||||
Addison NC, LLC | $ | 3,000,000 | $ | - | $ | - | $ | - | $ | 600,000 | $ | 3,600,000 | $ | - | ||||||||||||||
Addison Property Member, LLC | - | 7,316,326 | - | - | (1,471) | 7,314,855 | 598,191 | |||||||||||||||||||||
Bandon PV Holdings, LLC | - | 5,250,000 | (5,256,262) | 6,262 | - | - | 173,390 | |||||||||||||||||||||
Bishop Berkeley, LLC | - | 4,050,000 | - | - | 1,013 | 4,051,013 | 23,011 | |||||||||||||||||||||
BR Gate Investment Co, LLC | - | 3,475,000 | (3,475,000) | - | - | - | - | |||||||||||||||||||||
Britannia Preferred Members, LLC -Class 1 | - | 2,597,000 | - | - | 389,550 | 2,986,550 | - | |||||||||||||||||||||
Britannia Preferred Members, LLC -Class 2 | 2,547,000 | 5,326,932 | - | - | (115,017) | 7,758,915 | - | |||||||||||||||||||||
Capitol Hill Partners, LLC | 1,919,000 | - | - | - | (66,500) | 1,852,500 | - | |||||||||||||||||||||
Coastal Realty Business Trust, REEP, Inc. - A | 41,222 | - | - | - | (2,169) | 39,053 | - | |||||||||||||||||||||
Dimensions28 LLP | - | 10,801,015 | - | - | 85,061 | 10,886,076 | 165,600 | |||||||||||||||||||||
$ | 7,507,222 | $ | 38,816,273 | $ | (8,731,262) | $ | 6,262 | $ | 890,467 | $ | 38,488,962 | $ | 960,192 |
(1) | Gross reductions include sales proceeds and return of capital distributions. |
• | CRBT, REEP, Inc.-A has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland. |
For The Year Ended | ||||||||||||||||||||
June 30, 2020 | June 30, 2019 | June 30, 2018 | June 30, 2017 | June 30, 2016 | ||||||||||||||||
Per Share Data: | ||||||||||||||||||||
Beginning net asset value ("NAV") | $ | 9.44 | $ | 10.07 | $ | 9.84 | $ | 9.94 | $ | 10.18 | ||||||||||
Net investment income (1) | 0.28 | 0.57 | 0.30 | 0.33 | 0.26 | |||||||||||||||
Net realized gain (1) | 0.15 | 0.12 | 0.36 | 0.31 | 0.91 | |||||||||||||||
Net unrealized gain (loss) (1) | (1.39) | (0.40) | 0.79 | 0.39 | (0.01) | |||||||||||||||
Net increase in net assets resulting from operations | (0.96) | 0.29 | 1.45 | 1.03 | 1.16 | |||||||||||||||
Issuance of common stock above (below) NAV (1) (4) | - | (0.21) | (0.32) | (0.37) | (0.68) | |||||||||||||||
Redemption of common stock below NAV (1) (6) | 0.01 | 0.02 | 0.01 | 0.02 | 0.05 | |||||||||||||||
Dividends to stockholders (1) (5) | (0.45) | (0.73) | (0.91) | (0.78) | (0.77) | |||||||||||||||
Ending NAV | $ | 8.04 | $ | 9.44 | $ | 10.07 | $ | 9.84 | $ | 9.94 | ||||||||||
Weighted average common Shares outstanding | 12,198,040 | 9,951,816 | 7,440,841 | 5,183,166 | 3,073,448 | |||||||||||||||
Shares outstanding at the end of period | 12,836,608 | 10,926,320 | 8,496,142 | 6,096,773 | 4,057,319 | |||||||||||||||
Net assets at the end of period | $ | 103,225,721 | $ | 103,115,381 | $ | 85,595,319 | $ | 59,989,525 | $ | 40,332,191 | ||||||||||
Average net assets (2) | $ | 103,170,551 | $ | 94,355,350 | $ | 72,792,422 | $ | 50,160,858 | $ | 31,346,210 | ||||||||||
Ratios to average net assets | ||||||||||||||||||||
Total expenses | 5.10% | 6.62% | 6.52% | 6.05% | 5.83% | |||||||||||||||
Net investment income | 3.36% | 5.98% | 3.06% | 3.46% | 2.58% | |||||||||||||||
Total rate of return (2) (3) | (11.37)% | 3.06% | 14.79% | 10.67% | 11.49% |
(1) Based on weighted average number of shares of common stock outstanding for the period. |
(2) Average net assets were derived from the beginning and ending period-end net assets. |
(3) Total return is based on the net increase (decrease) in net assets resulting from operations divided by average net assets. An individual stockholder’s return may vary from this return based on the time of capital transactions. |
(4) Net of sales commissions and dealer manager fees of $1.00 per share as of October 30, 2019 and $1.03 per share thereafter. |
(5) Dividends are determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under GAAP. |
(6) Amounts based on differences between the actual redemption price and the NAVs preceding the redemptions. |
Period | Total Number of shares Repurchased | Repurchase Price Per Share | Total Repurchase Consideration | ||||||||
During the year ended June 30, 2020: | |||||||||||
August 13, 2019 through September 16, 2019 | 70,114.03 | $ | 9.00 | $ | 631,026 | ||||||
November 18, 2019 through December 19, 2019 | 102,739.90 | $ | 9.00 | 924,659 | |||||||
February 14, 2020 through March 18, 2020 | 178,344.44 | $ | 9.19 | 1,638,985 | |||||||
351,198.37 | $ | 3,194,670 |
Period | Total Number of shares Repurchased | Repurchase Price Per Share | Total Repurchase Consideration | ||||||||
During the year ended June 30, 2019: | |||||||||||
August 17, 2018 through September 17, 2018 | 31,570.04 | $ | 9.00 | $ | 284,130 | ||||||
November 14, 2018 through December 18, 2018 | 19,944.93 | $ | 9.00 | 179,505 | |||||||
February 14, 2019 through March 18, 2019 | 78,252.02 | $ | 9.00 | 704,268 | |||||||
May 14, 2019 through June 21, 2019 | 133,347.94 | $ | 9.00 | 1,200,131 | |||||||
263,114.93 | $ | 2,368,034 |
Dividends | |||||||
During the Quarter Ended | Per Share | Amount | |||||
September 30, 2019 | $ | 0.175 | $ | 1,983,801 | |||
December 31, 2019 | 0.175 | 2,096,915 | |||||
March 31, 2020 | 0.120 | 1,461,875 | |||||
$ | 0.470 | $ | 5,542,591 |
Dividends | |||||||
During the Quarter Ended | Per Share | Amount | |||||
September 30, 2018 | $ | 0.175 | $ | 1,571,551 | |||
December 31, 2018 | 0.206 | 1,994,972 | |||||
March 31, 2019 | 0.175 | 1,794,012 | |||||
June 30, 2019 | 0.175 | 1,877,100 | |||||
$ | 0.731 | $ | 7,237,635 |
December 31, 2019 | December 31, 2018 | |||||||
Capital gain | $ | 2,415,285 | $ | 6,236,421 | ||||
Ordinary income | 3,085,298 | - | ||||||
Return of capital | 24,521 | - | ||||||
Total dividends | $ | 5,525,104 | $ | 6,236,421 |
December 31, 2019 | December 31, 2018 | |||||||
Undistributed long term capital gain | $ | - | $ | 129,808 | ||||
Unrealized fair value appreciation | 4,813,649 | 6,802,996 | ||||||
$ | 4,813,649 | $ | 6,932,804 |
June 30, 2020 | June 30, 2019 | |||||||
Aggregate gross unrealized appreciation | $ | 4,054,329 | $ | 9,058,278 | ||||
Aggregate gross unrealized depreciation | (12,067,004) | (827,940) | ||||||
Net unrealized appreciation (depreciation) | $ | (8,012,675) | $ | 8,230,338 | ||||
Aggregate cost (tax basis) | $ | 101,717,821 | $ | 95,014,809 |
Quarter Ended | ||||||||||||||||
September 30, 2019 | December 31, 2019 | March 31, 2020 | June 30, 2020 | |||||||||||||
Net investment income (loss) | $ | 566,933 | $ | 859,482 | $ | 1,871,946 | $ | 170,496 | ||||||||
Net realized gain from sale of investments | $ | 109,014 | $ | 1,301,005 | $ | (174,489) | $ | 564,458 | ||||||||
Net unrealized gain (loss) on investments | $ | 1,056,774 | $ | (2,294,778) | $ | (9,855,131) | $ | (5,901,262) | ||||||||
Net increase in net assets resulting from operations | $ | 1,732,721 | $ | (134,291) | $ | (8,157,674) | $ | (5,166,308) | ||||||||
Net increase in net assets resulting from operations per Share | $ | 0.15 | $ | (0.01) | $ | (0.65) | $ | (0.40) | ||||||||
Weighted average Share outstanding | 11,391,769 | 12,070,832 | 12,533,824 | 12,805,995 | ||||||||||||
Quarter Ended | ||||||||||||||||
September 30, 2018 | December 31, 2018 | March 31, 2019 | June 30, 2019 | |||||||||||||
Net investment income (loss) | $ | 2,871,700 | $ | 488,253 | $ | 508,911 | $ | 1,775,242 | ||||||||
Net realized gain from sale of investments | $ | 3,637,660 | $ | (1,604,128) | $ | (812,058) | $ | (17,424) | ||||||||
Net unrealized gain (loss) on investments | $ | (4,645,656) | $ | 1,438,916 | $ | 152,181 | $ | (908,090) | ||||||||
Net increase in net assets resulting from operations | $ | 1,863,704 | $ | 323,041 | $ | (150,966) | $ | 849,728 | ||||||||
Net increase in net assets resulting from operations per Share | $ | 0.21 | $ | 0.03 | $ | (0.01) | $ | 0.08 | ||||||||
Weighted average Share outstanding | 9,004,403 | $ | 9,660,553.21 | 10,314,925 | 10,844,984 | |||||||||||
Quarter Ended | ||||||||||||||||
September 30, 2017 | December 31, 2017 | March 31, 2018 | June 30, 2018 | |||||||||||||
Net investment income | $ | (373,346) | $ | 1,066,485 | $ | 2,083,485 | $ | (549,425) | ||||||||
Net realized gain from sale of investments | $ | 848,583 | $ | 849,890 | $ | 53,645 | $ | 939,655 | ||||||||
Net unrealized gain (loss) on investments | $ | 961,773 | $ | (192,957) | $ | (1,578,694) | $ | 6,656,717 | ||||||||
Net increase in net assets resulting from operations | $ | 1,437,010 | $ | 1,723,418 | $ | 558,436 | $ | 7,046,947 | ||||||||
Net increase in net assets resulting from operations per Share | $ | 0.22 | $ | 0.24 | $ | 0.07 | $ | 0.85 | ||||||||
Weighted average Share outstanding | 6,577,208 | $ | 7,205,816 | 7,723,757 | 8,271,765 |
Consolidated Financial Statements (unaudited) | |
Assets | ||||
Real estate assets | ||||
Land | $ | 6,456,615 | ||
Building, fixtures and improvements | 20,191,134 | |||
Intangible lease assets | 5,525,899 | |||
Less: accumulated depreciation and amortization | (1,977,177) | |||
Total real estate assets, net | 30,196,471 | |||
Cash and cash equivalents | 12,539,943 | |||
Restricted cash | 1,613,569 | |||
Investments, at fair value | 76,509,292 | |||
Investment income, rent and other receivable | 1,732,590 | |||
Prepaid expenses and other assets | 901,492 | |||
Total assets | $ | 123,493,357 | ||
Liabilities | ||||
Mortgage note payable | $ | 23,974,545 | ||
Accounts payable and accrued liabilities | 1,030,485 | |||
Due to related entities | 705,597 | |||
Total liabilities | 25,710,627 | |||
Equity | ||||
Common stock, $0.0001 par value, 80,000,000 shares authorized; 13,362,419.23 shares issued and outstanding | 1,336 | |||
Capital in excess of par value | 120,613,042 | |||
Accumulated deficit | (22,898,300) | |||
Non-controlling interests | 66,652 | |||
Total equity | 97,782,730 | |||
Total liabilities and equity | $ | 123,493,357 |
Assets | ||||
Investments, at fair value | ||||
Non-controlled/non-affiliated investments (cost of $48,895,786) | $ | 38,081,970 | ||
Affiliated investments (cost of $12,426,110) | 12,107,884 | |||
Controlled investments (cost of $43,370,752) | 43,515,291 | |||
Total investments, at fair value (cost of $104,692,648) | 93,705,145 | |||
Cash and cash equivalents | 8,957,393 | |||
Accounts receivable | 1,087,432 | |||
Other assets | 138,773 | |||
Deferred offering costs, net | 278,021 | |||
Total assets | $ | 104,166,764 | ||
Liabilities | ||||
Accounts payable and accrued liabilities | $ | 135,040 | ||
Capital pending acceptance | 87,739 | |||
Due to related entities | 718,264 | |||
Total liabilities | 941,043 | |||
Net assets | ||||
Common stock, $0.0001 par value, 80,000,000 shares authorized; 12,836,608.02 shares issued and outstanding | 1,284 | |||
Capital in excess of par value | 116,455,600 | |||
Total distributions in excess of earnings | (13,231,163) | |||
Total net assets | 103,225,721 | |||
Total liabilities and net assets | $ | 104,166,764 | ||
Net asset value per share | $ | 8.04 |
Name | Asset Type | Shares/Units | Cost Basis | Total Fair Value | % of Net Assets | |
American Finance Trust 7.5% PFD | (4) | Publicly Traded Company | 34,000.00 | $ 610,229 | $ 797,980 | 0.78 |
American Finance Trust Inc., Class A | (4) | Publicly Traded Company | 86,500.00 | 500,619 | 686,378 | 0.66 |
Apartment Investment & Management Company- Class A | (4) | Publicly Traded Company | 26,200.00 | 999,945 | 986,168 | 0.96 |
Ashford Hospitality Trust, Inc. | (4) | Publicly Traded Company | 360,000.00 | 244,092 | 260,136 | 0.25 |
Bluerock Residential Growth REIT, Inc. | (4) | Publicly Traded Company | 70,000.00 | 513,940 | 565,600 | 0.55 |
CBL & Associates Properties, Inc. - Preferred D | (4) | Publicly Traded Company | 188,000.00 | 1,707,042 | 169,200 | 0.16 |
City Office REIT, Inc. - Preferred A | (4) | Publicly Traded Company | 12,196.00 | 201,436 | 288,679 | 0.28 |
CorEnergy Infrastructure 7.375% PFD A | (4) | Publicly Traded Company | 36,031.00 | 621,401 | 487,139 | 0.47 |
Host Hotels & Resorts Inc | (4) | Publicly Traded Company | 24,500.00 | 237,354 | 264,355 | 0.26 |
Independence Realty Trust, Inc. | (4) | Publicly Traded Company | 33,000.00 | 295,551 | 379,170 | 0.37 |
NexPoint Residential Trust, Inc. | (4) | Publicly Traded Company | 8,000.00 | 294,490 | 282,800 | 0.27 |
One Liberty Properties, Inc. | (4) | Publicly Traded Company | 24,500.00 | 370,318 | 431,690 | 0.42 |
RLJ Lodging Trust | (4) | Publicly Traded Company | 42,000.00 | 243,541 | 396,480 | 0.38 |
The Macerich Company | (4) | Publicly Traded Company | 59,943.00 | 1,018,578 | 537,689 | 0.52 |
VEREIT, Inc | (4) | Publicly Traded Company | 58,000.00 | 294,437 | 372,940 | 0.36 |
WP Carey, Inc. | (4) | Publicly Traded Company | 5,000.00 | 301,375 | 338,250 | 0.33 |
Total Publicly Traded Companies | 8,454,348 | 7,244,654 | 7.02 | |||
Benefit Street Partners Realty Trust, Inc. | (5) | Non Traded Company | 239,401.33 | 3,488,167 | 2,496,956 | 2.41 |
Carter Validus Mission Critical REIT II, Inc. Class A | (5) | Non Traded Company | 288,506.00 | 1,666,123 | 1,632,944 | 1.58 |
CIM Real Estate Finance Trust, Inc. | (5) | Non Traded Company | 522,144.54 | 3,043,423 | 2,349,650 | 2.28 |
CNL Healthcare Properties, Inc. | (5) | Non Traded Company | 268,532.71 | 1,562,429 | 1,176,173 | 1.14 |
Cole Credit Property Trust V, Inc. | (5) | Non Traded Company | 55,455.36 | 693,789 | 610,009 | 0.59 |
Cole Credit Property Trust V, Inc. Class T | (5) | Non Traded Company | 1,466.55 | 18,438 | 16,132 | 0.02 |
Cole Office & Industrial REIT (CCIT II), Inc. Class A | (5) | Non Traded Company | 17,792.56 | 114,700 | 124,370 | 0.12 |
Cole Office & Industrial REIT (CCIT II), Inc. Class T | (5) | Non Traded Company | 1,441.84 | 6,906 | 10,078 | 0.01 |
Corporate Property Associates 18 Global A Inc. | (5) | Non Traded Company | 4,695.14 | 39,627 | 30,471 | 0.03 |
First Capital Real Estate Trust, Inc. | (5)(6) | Non Traded Company | 3,792.51 | 15,161 | 13,388 | 0.01 |
FSP 1441 Main Street | (5)(6) | Non Traded Company | 15.73 | 8,559 | 39,128 | 0.04 |
FSP 303 East Wacker Drive Corp. Liquidating Trust | (5)(6) | Non Traded Company | 3.00 | 30 | 679 | - |
FSP Energy Tower I Corp. Liquidating Trust | (2)(5)(6) | Non Traded Company | 19.35 | 7,929 | 9,810 | 0.01 |
FSP Grand Boulevard Liquidating Trust | (5)(6) | Non Traded Company | 7.50 | 8 | 2,851 | - |
FSP Satellite Place | (2)(5)(6) | Non Traded Company | 19.60 | 588,176 | 532,579 | 0.52 |
Griffin Capital Essential Asset REIT, Inc. | (5) | Non Traded Company | 23,044.28 | 151,802 | 144,027 | 0.14 |
Griffin-American Healthcare REIT III, Inc. | (5) | Non Traded Company | 59,480.45 | 324,537 | 312,272 | 0.30 |
GTJ REIT, Inc. | (5) | Non Traded Company | 1,000.00 | 11,530 | 9,280 | 0.01 |
Healthcare Trust, Inc. | (5) | Non Traded Company | 479,718.92 | 4,806,568 | 3,271,683 | 3.17 |
Highlands REIT Inc. | (5)(6) | Non Traded Company | 23,225,520.45 | 4,120,660 | 3,019,318 | 2.92 |
HGR Liquidating Trust | (5)(6) | Non Traded Company | 73,170.41 | 244,648 | 292,682 | 0.28 |
Hospitality Investors Trust, Inc. | (5)(6) | Non Traded Company | 20,493.11 | 90,607 | 20,083 | 0.02 |
InvenTrust Properties Corp. | (5) | Non Traded Company | 2,235,413.80 | 2,710,159 | 2,749,559 | 2.66 |
KBS Real Estate Investment Trust II, Inc. | (5)(6) | Non Traded Company | 1,365,338.22 | 3,754,369 | 2,266,461 | 2.20 |
KBS Real Estate Investment Trust III, Inc. | (5) | Non Traded Company | 65,717.13 | 550,359 | 529,680 | 0.51 |
New York City REIT, Inc. | (5)(6) | Non Traded Company | 319,024.14 | 3,800,940 | 3,110,485 | 3.01 |
NorthStar Healthcare Income, Inc. | (5)(6) | Non Traded Company | 23,573.29 | 87,643 | 35,596 | 0.03 |
Phillips Edison & Company, Inc | (5) | Non Traded Company | 851,563.96 | 6,286,760 | 4,589,930 | 4.45 |
SmartStop Self Storage REIT, Inc. | (5) | Non Traded Company | 7,304.42 | 54,166 | 57,048 | 0.06 |
Steadfast Apartment REIT | (5) | Non Traded Company | 73,226.79 | 815,995 | 741,055 | 0.72 |
Strategic Realty Trust, Inc. | (5) | Non Traded Company | 321,296.92 | 1,252,790 | 649,020 | 0.63 |
Summit Healthcare REIT, Inc. | (2)(5)(6) | Non Traded Company | 1,409,436.22 | 1,926,736 | 1,874,550 | 1.82 |
The Parking REIT Inc. | (5)(6) | Non Traded Company | 17,989.90 | 230,880 | 90,129 | 0.09 |
Total Non Traded Companies (1) | 42,474,614 | 32,808,076 | 31.78 | |||
3100 Airport Way South LP | (5) | LP Interest | 1.00 | 355,000 | 320,253 | 0.31 |
5210 Fountaingate, LP | (2)(5)(6) | LP Interest | 9.89 | 500,000 | 425,796 | 0.41 |
Bishop Berkeley, LLC | (3)(5) | LP Interest | 4,050.00 | 4,050,000 | 3,854,223 | 3.73 |
BP3 Affiliate, LLC | (2)(5)(6) | LP Interest | 1,668.00 | 1,668,000 | 1,668,000 | 1.62 |
BR Cabrillo LLC | (5)(6) | LP Interest | 346,723.23 | 104,944 | 104,017 | 0.10 |
BR Everwood Investment Co, LLC | (2)(5) | LP Interest | 3,750,000.00 | 3,750,000 | 3,750,000 | 3.63 |
BR Sunrise Parc Investment Co, LLC | (2)(5) | LP Interest | 2,720,911.00 | 2,720,911 | 2,720,911 | 2.64 |
Britannia Preferred Members, LLC -Class 1 | (3)(5)(6) | LP Interest | 103.88 | 2,597,000 | 3,505,950 | 3.40 |
Britannia Preferred Members, LLC -Class 2 | (3)(5)(6) | LP Interest | 514,858.30 | 6,826,931 | 7,089,599 | 6.87 |
Capitol Hill Partners, LLC | (3)(5)(6) | LP Interest | 190,000.00 | 1,900,000 | 1,468,700 | 1.42 |
Citrus Park Hotel Holdings, LLC | (3)(5) | LP Interest | 5,000,000.00 | 5,000,000 | 5,000,000 | 4.84 |
Dimensions28 LLP | (3)(5) | LP Interest | 10,800.00 | 10,801,015 | 10,949,688 | 10.61 |
Lakemont Partners, LLC | (2)(5) | LP Interest | 1,000.00 | 941,180 | 857,160 | 0.83 |
MacKenzie Realty Operating Partnership, LP | (3)(5)(6) | LP Interest | 1,451,642.63 | 12,145,905 | 11,613,141 | 11.25 |
MPF Pacific Gateway - Class B | (2)(5)(6) | LP Interest | 23.20 | 6,287 | 7,164 | 0.01 |
Redwood Mortgage Investors VIII | (5) | LP Interest | 56,300.04 | 29,700 | 12,949 | 0.01 |
Satellite Investment Holdings, LLC - Class B | (5)(6) | LP Interest | 0.31 | 22 | 8,960 | 0.01 |
Secured Income, LP | (2)(5)(6) | LP Interest | 64,670.00 | 316,890 | 261,914 | 0.25 |
Total LP Interest | 53,713,785 | 53,618,425 | 51.94 | |||
Coastal Realty Business Trust, REEP, Inc. - A | (3)(5)(6) | Investment Trust | 72,320.00 | 49,901 | 33,990 | 0.03 |
Total Investment Trust | 49,901 | 33,990 | 0.03 | |||
Total Investments | $ 104,692,648 | $ 93,705,145 | 90.77 |
(1) Investments primarily in non-traded public REITs or their successors. |
(2) Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns between 5% and 25% of the portfolio company’s voting securities. As of June 30, 2020, the Company is deemed to be “affiliated” with these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 6. |
(3) Under the 1940 Act, the Company generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2020, the Company is deemed to be in “control” of these portfolio companies despite that fact that the Company does not have the power to exercise control over the management or policies of such portfolio companies. See additional disclosures in Note 6. |
(4) Non-qualifying assets under Section 55(a) of the 1940 Act. As of June 30, 2020, the total percentage of non-qualifying assets is 6.95%, and as a business development company non-qualifying assets may not exceed 30% of our total assets. |
(5) Investments in illiquid securities, or securities that are not traded on a national exchange. As of June 30, 2020, 83.00% of the Company's total assets are in illiquid securities. |
(6) Investments in non-income producing securities. As of June 30, 2020, 36.00 % of the Company's total assets are in non-income producing securities. |
Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Investment income | ||||||||||||||||
Non-controlled/non-affiliated investments: | ||||||||||||||||
Dividend and operational/sales distributions | $ | 666,953 | $ | 1,351,904 | $ | 1,079,159 | $ | 2,313,696 | ||||||||
Interest and other income | 696 | 149,594 | 899 | 327,979 | ||||||||||||
Affiliated investments: | ||||||||||||||||
Dividend and operational/sales distributions | 92,450 | 228,840 | 208,663 | 447,611 | ||||||||||||
Controlled investments: | ||||||||||||||||
Dividend and operational/sales distributions | 256,812 | 654,986 | 592,823 | 1,237,933 | ||||||||||||
Total investment income | 1,016,911 | 2,385,324 | 1,881,544 | 4,327,219 | ||||||||||||
Operating expenses | ||||||||||||||||
Base management fee (note 6) | 677,490 | 630,285 | 1,335,376 | 1,240,280 | ||||||||||||
Portfolio structuring fee (note 6) | 1,827 | 165,981 | 6,679 | 361,592 | ||||||||||||
Administrative cost reimbursements (note 6) | 155,200 | 170,000 | 310,400 | 340,000 | ||||||||||||
Transfer agent cost reimbursements (note 6) | 30,800 | 20,000 | 61,600 | 40,000 | ||||||||||||
Amortization of deferred offering costs | 200,126 | 446,516 | 342,015 | 640,208 | ||||||||||||
Professional fees | 136,728 | 30,919 | 235,132 | 148,521 | ||||||||||||
Directors' fees | 19,500 | 18,500 | 36,000 | 34,000 | ||||||||||||
Printing and mailing | 38,826 | 24,590 | 70,528 | 62,040 | ||||||||||||
Other general and administrative | 16,765 | 19,051 | 31,665 | 34,163 | ||||||||||||
Total operating expenses | 1,277,262 | 1,525,842 | 2,429,395 | 2,900,804 | ||||||||||||
Net investment income (loss) | (260,351) | 859,482 | (547,851) | 1,426,415 | ||||||||||||
Realized and unrealized gain (loss) on investments | ||||||||||||||||
Net realized gain (loss) | ||||||||||||||||
Non-controlled/non-affiliated investments | (26) | 717,674 | 1,022,383 | 826,688 | ||||||||||||
Affiliated investments: | - | 583,331 | (6,057) | 583,331 | ||||||||||||
Total net realized gain (loss) | (26) | 1,301,005 | 1,016,326 | 1,410,019 | ||||||||||||
Net unrealized gain (loss) | ||||||||||||||||
Non-controlled/non-affiliated investments | 1,684,106 | (1,823,089) | (2,005,301) | (2,432,516) | ||||||||||||
Affiliated investments | 89,218 | (612,811) | (40,100) | (493,991) | ||||||||||||
Controlled investments | (8,732,871) | 141,122 | (8,090,211) | 1,688,503 | ||||||||||||
Total net unrealized loss | (6,959,547) | (2,294,778) | (10,135,612) | (1,238,004) | ||||||||||||
Total net realized and unrealized gain (loss) on investments | (6,959,573) | (993,773) | (9,119,286) | 172,015 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (7,219,924) | $ | (134,291) | $ | (9,667,137) | $ | 1,598,430 | ||||||||
Net increase (decrease) in net assets resulting from operations per share | $ | (0.55) | $ | (0.01) | $ | (0.74) | $ | 0.14 | ||||||||
Weighted average common shares outstanding | 13,190,889 | 12,070,832 | 13,020,208 | 11,731,300 |
Three Months Ended | Six Months Ended | |||||||||||||||
December 31, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | (260,351) | $ | 859,482 | $ | (547,851) | $ | 1,426,415 | ||||||||
Net realized gain (loss) | (26) | 1,301,005 | 1,016,326 | 1,410,019 | ||||||||||||
Net unrealized loss | (6,959,547) | (2,294,778) | (10,135,612) | (1,238,004) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | (7,219,924) | (134,291) | (9,667,137) | 1,598,430 | ||||||||||||
Dividends | ||||||||||||||||
Dividends to stockholders | - | (2,910,017) | - | (4,080,716) | ||||||||||||
Capital share transactions | ||||||||||||||||
Issuance of common stock | 57,700 | 5,500,305 | 218,439 | 11,966,284 | ||||||||||||
Issuance of common stock to redeem subsidiary's non-controlling interest | 3,957,115 | - | 3,957,115 | - | ||||||||||||
Issuance of common stock through reinvestment of dividends | - | 813,102 | - | 1,629,033 | ||||||||||||
Redemption of common stock | - | (924,659) | - | (1,555,685) | ||||||||||||
Selling commissions and fees | (2,888) | (519,100) | (18,060) | (1,107,124) | ||||||||||||
Non-controlling interest in consolidated subsidary | 66,652 | - | 66,652 | - | ||||||||||||
Net increase in net assets resulting from capital share transactions | 4,078,579 | 4,869,648 | 4,224,146 | 10,932,508 | ||||||||||||
Total increase (decrease) in net assets | (3,141,345) | 1,825,340 | (5,442,991) | 8,450,222 | ||||||||||||
Net assets at beginning of the period | 100,924,075 | 109,740,263 | 103,225,721 | 103,115,381 | ||||||||||||
Net assets at end of the period | $ | 97,782,730 | $ | 111,565,603 | $ | 97,782,730 | $ | 111,565,603 |
| ||||||||
| Six Months Ended | |||||||
| 2020 | 2019 | ||||||
Cash flows from operating activities: | ||||||||
Net increase (decrease) in net assets resulting from operations | $ | (9,667,137) | $ | 1,598,430 | ||||
Adjustments to reconcile net increase (decrease) in net assets resulting from | ||||||||
operations to net cash from operating activities: | ||||||||
Proceeds from sale of investments, net | 5,204,853 | 6,324,865 | ||||||
Return of capital | 11,486,835 | 12,814,896 | ||||||
Purchase of investments | (12,685,590) | (25,994,956) | ||||||
Net realized gains on investments | (1,016,326) | (1,410,019) | ||||||
Net unrealized loss on investments | 10,135,612 | 1,238,004 | ||||||
Amortization of deferred offering costs | 342,015 | 640,208 | ||||||
Changes in assets and liabilities: | ||||||||
Investment income, rent and other receivable | (447,398) | 1,577,347 | ||||||
Due from related entities | (150,866) | - | ||||||
Other assets | 65,129 | (76,965) | ||||||
Payment of deferred offering costs | (36,578) | (497,374) | ||||||
Accounts payable and accrued liabilities | (48,028) | (139,296) | ||||||
Due to related entities | (40,083) | (1,768,932) | ||||||
Net cash from operating activities | 3,142,438 | (5,693,792) | ||||||
| ||||||||
Cash flows from investing activities: | ||||||||
Cash acquired through consolidation of subsidiary | 1,932,088 | - | ||||||
Net cash from investing activities | 1,932,088 | - | ||||||
| ||||||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 218,439 | 11,966,284 | ||||||
Redemption of common stock | - | (1,555,685) | ||||||
Dividends to stockholders | - | (2,231,869) | ||||||
Payment of selling commissions and fees | (9,107) | (1,114,752) | ||||||
Change in capital pending acceptance | (87,739) | 355,085 | ||||||
Net cash from financing activities | 121,593 | 7,419,063 | ||||||
| ||||||||
Net increase in cash and cash equivalents | 5,196,119 | 1,725,271 | ||||||
Cash, cash equivalents and restricted cash at beginning of the period | 8,957,393 | 1,278,668 | ||||||
Cash, cash equivalents and restricted cash at end of the period | $ | 14,153,512 | $ | 3,003,939 | ||||
| ||||||||
Cash and cash equivalents at end of the period | $ | 12,539,943 | $ | 3,003,939 | ||||
Restricted cash at end of the period | 1,613,569 | - | ||||||
Total cash, cash equivalents, and restricted cash at end of the period | $ | 14,153,512 | $ | 3,003,939 | ||||
| ||||||||
Non-cash investing and financing activities: | ||||||||
Issuance of common stock through reinvestment of dividends | $ | - | $ | 1,629,033 | ||||
Issuance of the Company's common stocks to redeem subsidiary's non-controlling interests | $ | 3,957,115 | $ | - | ||||
| ||||||||
Supplemental Disclosures: | ||||||||
Carrying value of a subsidary's consolidated assets, liabilities and net assets: | ||||||||
Assets: | ||||||||
Real estate assets | $ | 30,196,471 | $ | - | ||||
Cash and restricted cash | $ | 1,932,088 | $ | - | ||||
Rents and other receivable | $ | 197,760 | $ | - | ||||
Other assets | $ | 837,133 | $ | - | ||||
Liabilities: | ||||||||
Mortgage note payable | $ | 23,974,545 | $ | - | ||||
Accounts payable and accrued liabilities | $ | 943,805 | $ | - | ||||
Due to affiliates | $ | 150,866 | $ | - | ||||
Net assets | $ | 8,094,236 |
December 31, 2020 | ||||||||||||
Investment Type | Original Carrying Value | Carrying Value Adjustment (Realized loss) | Fair Value/ New Carrying Value | |||||||||
Publicly Traded Companies | $ | 10,342,217 | $ | (2,710,814) | $ | 7,631,403 | ||||||
Non Traded Companies | 41,610,397 | (10,978,801) | 30,631,596 | |||||||||
LP Interests | 37,554,454 | 657,849 | 38,212,303 | |||||||||
Investment Trust | 49,900 | (15,910) | 33,990 | |||||||||
Total non-consolidated investments | 89,556,968 | (13,047,676) | 76,509,292 | |||||||||
The Operating Partnership (Consolidated) | 16,103,020 | (8,075,436) | 8,027,584 | |||||||||
Total | $ | 105,659,988 | $ | (21,123,112) | $ | 84,536,876 |
Investee | Legal Form | Asset Type | % Ownership | Fair Value as of December 31, 2020 | ||||||
FSP Satellite Place | Corporation | Non-Traded Company | 28.73% | $ | 2,214,310 | |||||
5210 Fountaingate, LP | Limited Partnership | LP Interest | 9.92% | 494,442 | ||||||
Bishop Berkeley, LLC | Limited Liability Company | LP Interest | 69.03% | 3,869,289 | ||||||
BP3 Affiliate, LLC | Limited Liability Company | LP Interest | 12.51% | 1,668,000 | ||||||
BR Galleria Village Investment Co, LLC | Limited Liability Company | LP Interest | 13.82% | 2,463,774 | ||||||
Britannia Preferred Members, LLC -Class 1 | Limited Liability Company | LP Interest | 16.85% | 3,765,650 | ||||||
Britannia Preferred Members, LLC - Class 2 | Limited Liability Company | LP Interest | 33.41% | 6,528,403 | ||||||
Capitol Hill Partners, LLC | Limited Liability Company | LP Interest | 25.93% | 1,394,600 | ||||||
Citrus Park Hotel Holdings, LLC | Limited Liability Company | LP Interest | 35.27% | 5,000,000 | ||||||
Dimensions 28, LLP | Limited Liability Partnership | LP Interest | 90.00% | 11,481,048 | ||||||
Lakemont Partners, LLC | Limited Liability Company | LP Interest | 17.02% | 861,710 | ||||||
Secured Income L.P. | Limited Partnership | LP Interest | 6.57% | 261,914 | ||||||
Total | $ | 40,003,140 |
• | 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. |
Property Name: | Addison Corporate Center | |
Location: | Windsor, CT | |
Number of Tenants: | 6 | |
Year Built: | 1980 | |
Ownership Interest: | 100% |
Purchase Price Allocation | ||||
June 8, 2020 | ||||
Land | $ | 7,814,670 | ||
Building | 19,761,048 | |||
Building and tenant improvements | 4,553,356 | |||
Intangible lease assets | 6,580,926 | |||
Other current assets | 3,872,238 | |||
Total assets acquired | $ | 42,582,238 | ||
Mortgages assumed | $ | 24,404,257 | ||
Other current liabilities | 1,647,965 | |||
Total liabilities assumed | 26,052,222 | |||
Fair value of equity interests | $ | 16,530,016 |
Carrying Value Before Adjustment | Adjustment | Adjusted Carrying Value | ||||||||||
Land | $ | 7,814,670 | $ | 1,358,055 | $ | 6,456,615 | ||||||
Building | 19,040,593 | 3,308,926 | 15,731,667 | |||||||||
Building and tenant improvements | 3,986,945 | 692,862 | 3,294,083 | |||||||||
Intangible lease assets: | ||||||||||||
Lease in place | 4,237,905 | 736,475 | 3,501,430 | |||||||||
Leasing commissions | 782,349 | 120,558 | 661,791 | |||||||||
Leaseholds (above market) | 541,822 | 94,159 | 447,663 | |||||||||
Leasehold improvements | 99,599 | 17,308 | 82,291 | |||||||||
Other intangibles | 25,333 | 4,402 | 20,931 | |||||||||
$ | 36,529,216 | $ | 6,332,745 | $ | 30,196,471 |
Year ended June 30,: | Rental Income | |||
2021 | $ | 2,106,490 | ||
2022 | 4,596,996 | |||
2023 | 2,107,398 | |||
2024 | 1,753,599 | |||
2025 | 1,797,916 | |||
Thereafter | 1,233,560 | |||
Total | $ | 13,595,959 |
Fair Value | ||||
Asset Type | December 31, 2020 | |||
Publicly Traded Companies | $ | 7,631,403 | ||
Non Traded Companies | 28,417,286 | |||
Non Traded Company (Fair Value Option) | 2,214,310 | |||
LP Interests | 423,473 | |||
LP Interests (Fair Value Option) | 37,788,830 | |||
Investment Trust | 33,990 | |||
Total | $ | 76,509,292 |
June 30, 2020 | ||||||||
Asset Type | Cost | Fair Value | ||||||
Publicly Traded Companies | $ | 8,454,348 | $ | 7,244,654 | ||||
Non Traded Companies | 42,474,614 | 32,808,076 | ||||||
LP Interests | 53,713,785 | 53,618,425 | ||||||
Investment Trust | 49,901 | 33,990 | ||||||
Total | $ | 104,692,648 | $ | 93,705,145 |
Asset Type | Total | Level I | Level II | Level III | ||||||||||||
Publicly Traded Companies | $ | 7,631,403 | $ | 7,631,403 | $ | - | $ | - | ||||||||
Non Traded Companies | 30,631,596 | - | - | 30,631,596 | ||||||||||||
LP Interests | 38,212,303 | - | - | 38,212,303 | ||||||||||||
Investment Trust | 33,990 | - | - | 33,990 | ||||||||||||
Total | $ | 76,509,292 | $ | 7,631,403 | $ | - | $ | 68,877,889 |
Asset Type | Total | Level I | Level II | Level III | ||||||||||||
Publicly Traded Companies | $ | 7,244,654 | $ | 7,244,654 | $ | - | $ | - | ||||||||
Non Traded Companies | 32,808,076 | - | - | 32,808,076 | ||||||||||||
LP Interests | 53,618,425 | - | - | 53,618,425 | ||||||||||||
Investment Trust | 33,990 | - | - | 33,990 | ||||||||||||
Total | $ | 93,705,145 | $ | 7,244,654 | $ | - | $ | 86,460,491 |
Balance at July 1, 2020 | $ | 86,460,491 | ||
Purchases of investments | 13,448,477 | |||
Transfers to Level I | (1,900,470) | |||
Consolidation of the Operating Partnership (Note 1) | (8,027,584) | |||
Proceeds from sales, net | (1,011,748) | |||
Return of capital | (11,486,835) | |||
Net realized gains | 30,050 | |||
Net unrealized losses | (8,634,492) | |||
Ending balance at December 31, 2020 | $ | 68,877,889 |
Balance at July 1, 2019 | $ | 101,094,142 | ||
Purchases of investments | 24,287,915 | |||
Proceeds from sales, net | (3,510,705) | |||
Return of capital | (12,814,896) | |||
Net realized gains | 782,541 | |||
Net unrealized losses | (497,239) | |||
Ending balance at December 31, 2019 | $ | 109,341,758 |
Asset Type | Fair Value | Primary Valuation Techniques | Unobservable Inputs Used | Range | Wt. Average | |||||||||
Non Traded Companies | $ | 2,224,531 | Direct Capitalization Method | Capitalization rate | 6.5% - 7.4% | 7.3% | ||||||||
Liquidity discount | 25.0% - 30.0% | 25.0% | ||||||||||||
Non Traded Companies | 65,867 | Estimated Liquidation Value | Sponsor provided value | |||||||||||
Liquidity discount | 6.0% - 9.0% | 1.8% | ||||||||||||
Non Traded Companies | 28,341,198 | Market Activity | Secondary market industry publication | |||||||||||
Liquidity discount * | 7.8% | |||||||||||||
LP Interests | 24,935,999 | Direct Capitalization Method | Capitalization rate | 3.5% - 7.0% | 5.2% | |||||||||
Liquidity discount | 20.0% - 29.0% | 20.9% | ||||||||||||
LP Interests | 11,229,424 | Discounted Cash Flow | Discount rate | 9.0% - 20.0% | 12.7% | |||||||||
Discount term (months) | 3.0 | |||||||||||||
LP Interests | 1,772,017 | Estimated Liquidation Value | Sponsor provided value | |||||||||||
Underlying property sales contract | ||||||||||||||
Underlying property appraisal | ||||||||||||||
Liquidity discount | 43.0% | |||||||||||||
LP Interests | 274,863 | Market Activity | Underlying security sales contract | |||||||||||
Underlying assets book value | ||||||||||||||
Liquidity discount | 75.0% | |||||||||||||
Investment Trust | 33,990 | Market Activity | Underlying security sales contract | |||||||||||
$ | 68,877,889 |
Asset Type | Fair Value | Primary Valuation Techniques | Unobservable Inputs Used | Range | Wt. Average | |||||||||
Non Traded Companies | $ | 541,858 | Direct Capitalization Method | Capitalization rate | 6.5% - 7.6% | 7.5% | ||||||||
Liquidity discount | 32.0% - 35.0% | 32.1% | ||||||||||||
Non Traded Companies | 65,856 | Estimated Liquidation Value | Sponsor provided value | |||||||||||
Liquidity discount | 12.0% - 78.0% | 45.1% | ||||||||||||
Non Traded Companies | 32,200,362 | Market Activity | Secondary market industry publication | |||||||||||
Liquidity discount * | 7.5% - 12.5% | 7.6% | ||||||||||||
LP Interests | 24,974,379 | Direct Capitalization Method | Capitalization rate | 3.4% - 6.8% | 5.2% | |||||||||
Liquidity discount | 5.0% - 40.0% | 15.5% | ||||||||||||
LP Interests | 14,976,861 | Discounted Cash Flow | Discount rate | 9.0% - 20.0% | 11.6% | |||||||||
Discount term (months) | 6.0 - 9.0 | 7.1 | ||||||||||||
LP Interests | 11,724,322 | Estimated Liquidation Value | Sponsor provided value | |||||||||||
Underlying property sales contract | ||||||||||||||
Underlying property appraisal | ||||||||||||||
Liquidity discount | 19.0% - 43.0% | 41.5% | ||||||||||||
LP Interests | 1,942,863 | Market Activity | Underlying security sales contract | |||||||||||
Secondary market industry publication | ||||||||||||||
Contributed capital | ||||||||||||||
Investment Trust | 33,990 | Market Activity | Underlying security sales contract | |||||||||||
$ | 86,460,491 |
Total Assets | $ | 254,897,999 | ||
Total Liabilities | $ | 146,306,066 | ||
Total Equities | $ | 108,591,933 | ||
Total Revenues | $ | 22,819,759 | ||
Total Expenses | $ | 19,909,934 | ||
Total Net Income | $ | 2,909,825 |
Total Nonconsolidated VIEs | As of December 31, 2020 | |||
Fair value of investments in VIEs | $ | 37,594,325 | ||
Carrying value of variable interests - assets | $ | 37,594,325 | ||
Carrying value of variable interests - liabilities | $ | - | ||
Maximum Exposure to Loss: | ||||
Limited Partnership Interest | $ | 37,594,325 |
Base Management Fee Annual % | 3.0% | 2.0% | 1.5% | Total Gross Invested Capital | ||||||||||||
For the Year Ended June 30, 2021 | ||||||||||||||||
Quarter ended: | ||||||||||||||||
September 30, 2020 | $ | 20,000,000 | $ | 80,000,000 | $ | 28,769,486 | $ | 128,769,486 | ||||||||
December 31, 2020 | 20,000,000 | 80,000,000 | 33,997,317 | 133,997,317 | ||||||||||||
For the Year Ended June 30, 2020 | ||||||||||||||||
Quarter ended: | ||||||||||||||||
September 30, 2019 | $ | 20,000,000 | $ | 80,000,000 | $ | 15,998,789 | $ | 115,998,789 | ||||||||
December 31, 2019 | 20,000,000 | 80,000,000 | 21,409,289 | 121,409,289 |
Six Months Ended | Unpaid as of | |||||||||||||||
Types and Recipient | December 31, 2020 | December 31, 2019 | December 31, 2020 | June 30, 2020 | ||||||||||||
Base Management fees- the Adviser | $ | 1,335,376 | 1,240,280 | $ | 677,490 | $ | 657,280 | |||||||||
Portfolio Structuring fee- the Adviser | 6,679 | 361,592 | - | - | ||||||||||||
Administrative Cost Reimbursements- MacKenzie | 310,400 | 340,000 | - | - | ||||||||||||
Transfer agent cost reimbursements - MacKenzie | 61,600 | 40,000 | - | - | ||||||||||||
Organization & Offering Cost (2) - MacKenzie | 46,136 | 269,107 | 27,416 | 52,492 | ||||||||||||
Other expenses (1)- MacKenzie | 691 | 8,492 | ||||||||||||||
Due to related entities | $ | 705,597 | $ | 718,264 |
• | CRBT, REEP, Inc.--A, which has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland. |
Net Income (loss) | $ | (9,667,137) | ||
Basic and diluted weighted Average common shares outstanding | 13,020,208.16 | |||
Basic and diluted loss per share | $ | (0.74) |
Period | Total Number of shares Repurchased | Repurchase Price Per Share | Total Repurchase Consideration | |||||||||
During the year ended June 30, 2020: | ||||||||||||
August 13, 2019 through September 16, 2019 | 70,114.03 | $ | 9.00 | $ | 631,026 | |||||||
November 18, 2019 through December 19, 2019 | 102,739.90 | $ | 9.00 | $ | 924,659 | |||||||
172,853.93 | $ | 1,555,685 |
Dividends | ||||||||
During the Quarter Ended | Per Share | Amount | ||||||
September 30, 2019 | $ | 0.175 | $ | 1,983,801 | ||||
December 31, 2019 | 0.175 | 2,096,915 | ||||||
$ | 0.350 | $ | 4,080,716 |
Subscription Amount $ |
☐ | Initial Investment ($5,000 minimum) |
☐ | Additional Investment ($500 minimum) (complete all sections except 2 and 4) |
☐ | Registered Investment Adviser |
☐ | Wrap Fee Arrangement at your Broker-Dealer* |
☐ | Other Net of Commission Purchase (specify: _____________________) |
☐ | a corporation, partnership, association, joint-stock company, trust fund, or any organized group of persons, whether incorporated or not |
☐ | an employees’ trust, pension, profit-sharing, or other employee benefit plan qualified under Section 401(a) of the Internal Revenue Code |
☐ | all commingled trust funds maintained by a single bank. |
☐ | Investor wishes to combine his/her order with another subscriber who is his spouse, their children under the age of 21, and all pension or trust funds established by each such individual, whose name(s) must be identified in the line below: |
Name(s): |
☐ | Individual (non-qualified) | ☐ | Joint Tenants with Rights of Survivorship | ☐ | UGMA: State of ________ |
(one signature) | (all parties must sign) | (custodian signature required) | |||
☐ | Community Property | ☐ | Tenants in Common | ☐ | UTMA: State of ________ |
(all parties must sign) | (all parties must sign) | (custodian signature required) | |||
☐ | Qualified Pension/Profit Sharing Plan | ☐ | IRA (Traditional or Roth) | ☐ | Trust |
(include Plan Documents) | (Custodian signature required) | (include title and signature page) | |||
☐ | Corporation (include Corporate | ☐ | Partnership/LLC/LP (include Partnership | ☐ | Other (specify and include title and |
Resolution; authorized signature) | Agreement; authorized signature) | signature pages) |
Individual/Beneficial Owner | |||
(first, middle, last) | email address |
SSN/Tax ID # | Country of Citizenship | Contact Phone # |
Mailing Address | Date of Birth | |||||||
(street) | (city/state) | (zip) | (mm/dd/yyyy) |
Permanent Address | |||||
(street) | (city/state) | (zip) |
Joint or Beneficial Owner | |||
(first, middle, last) | email address |
SSN/Tax ID # | Country of Citizenship | Contact Phone # |
Mailing Address | Date of Birth | |||||||
(street) | (city/state) | (zip) | (mm/dd/yyyy) |
Permanent Address | |||||
(street) | (city/state) | (zip) |
Name of Trust or Custodian | Date of Trust | ||
(mm/dd/yyyy) |
Address | |||||
(street) | (city/state) | (zip) |
Phone | Email |
Trustee(s) or Custodian | Custodian Tax ID |
Beneficial Owner(s) | Social Security # |
Beneficial Owner(s) Address | DOB | ||||||
(street) | (city/state) | (zip) | (mm/dd/yyyy) |
Custodial Account Number |
Entity Name | Date of Entity | ||
Formation | (mm/dd/yyyy) |
Address | |||||
(street) | (city/state) | (zip) |
Entity Type | If corporation | ☐ | C Corp | ☐ | S Corp | Tax ID |
Officer(s), General Partner or Authorized Person(s) |
☐ | I choose to participate in the Company’s Dividend | ☐ | I choose to have dividends deposited in | ☐ | I choose to have dividends sent to the | ☐ | I choose to have dividends mailed to me at the following address: |
Reinvestment Plan. | a checking, savings or brokerage account. | address in section 3. | |||||
(Complete information below.) | (Cash dividends for custodial and brokerage accounts will | ||||||
be sent to the custodian of record.) |
Name of Financial Institution | Account Type |
Mailing Address | |||||
(street) | (city/state) | (zip) |
ABA Routing Number (if applicable) | Account Number | |
☐ | In lieu of receiving documents by mail, I authorize the Company to make available on its website at www.mackenzierealty.com its quarter-ly reports, annual reports, tender offer materials, proxy statements, Offering Circular supplements or other reports required to be delivered to me, as well as any investment or marketing updates, and to notify me via e-mail when such reports or updates are available. (Any investor who elects this option must provide an e-mail address below and ensure that the Company has a current e-mail address for as long as he or she owns Shares.) |
E-mail Address | Initials |
Owner (initials) | Joint Owner (initials) | ||||
a. | I(we) acknowledge that no United States federal or state agency or agency of any other jurisdiction has made any finding or determination as to the fairness of the terms of the offering and sale of the Shares. I(we) ac-knowledge that there are tax consequences associated with an investment in the Shares, and I(we) have had the opportunity to discuss such consequences with my (our) own adviser. I(we) acknowledge that an invest-ment in the Shares is highly speculative and that the Company can provide no assurances that the Shares will retain any of their value. | ||||
b. | I (we) have no intention of selling, granting any participation in, or otherwise distributing or disposing of any Shares, nor do I(we) intend to subdivide the Shares with any person. | ||||
c. | I(we) acknowledge that the Shares are not liquid, that the Company’s Articles of Incorporation limit my (our) ability to transfer the Shares, and that there is no established public market, nor does the Company expect a public market to develop in the foreseeable future, for the sale of the Shares. I(we) acknowledge that I(we) will be required to hold the Shares and bear the risk of investment in the Shares for an indefinite time. | ||||
d. | I (we are) certify that I am (we are): (i) a United States citizen or resident or a corporation, partnership, limited li- ability company, trust, or equivalent legal entity organized under the laws of the United States; and (ii) is a “qualified purchaser” as that term is defined under Regulation A under the Securities Act because the aggregate purchase price I will pay for the Shares is no more than ten percent (10%) of the greater of my (our): (1) if I am (we are) a natural person, annual income or net worth (with annual income and net worth determined as provided in Rule 501 of the Securities Act); or (2) if I am (we are) a non-natural person, revenue or net assets for my (our) most recently completed fiscal year end |
Owner or Authorized Person (Print Name) | Owner or Authorized Person (Print Name) | |||||
Owner or Authorized Person Signature | Owner or Authorized Person Signature | |||||
Date (mm/dd/yyyy) | Date (mm/dd/yyyy) | |||||
Custodian Name [if applicable] (Print Name) | Custodian Signature [if applicable] | |||||
Date (mm/dd/yyyy) | ||||||
A) Registered Representative | or | B) Registered Investment Adviser | |||||
Name | Name | ||||||
Address | Address | ||||||
City | State | ZIP | City | State | ZIP | ||
Phone | CRD# | Phone | IARD# | ||||
Name of Broker/Dealer | Name of Clearing Firm |
Financial Adviser Signatures | ||
Signature of Registered or RA Representative | Signature of B/D or Clearing Firm |
☐ | Custodial Accounts | ☐ | By Mail: | ||
Forward Subscription Agreement to the custodian | Checks should be made payable to “MacKenzie Realty Capital, Inc.” | ||||
Regular Mail or Express/Overnight Delivery | |||||
89 Davis Road, Suite 100 | |||||
Orinda, CA 94563 | |||||
☐ | By Wire Transfer | ☐ | Payment to be sent under separate cover | ||
Summit Bank, ABA Routing #121138958 | |||||
MacKenzie Realty Capital, Inc., | |||||
Account #122003452 | |||||
Beneficial Owner(s) – include in memo field |
Signature | Title | Date |
/s/ Robert Dixon | Chief Executive Officer | April 13, 2021 |
Robert Dixon | (Principal Executive Officer) | |
/s/ Paul Koslosky | Chief Financial Officer | April 13, 2021 |
Paul Koslosky | (Principal Financial and Accounting Officer) | |
/s/ C.E. Patterson | Director | April 13, 2021 |
C.E. Patterson | ||
/s/ Tim Dozois | Director | April 13, 2021 |
Tim Dozois | ||
/s/ Tom Frame | Director | April 13, 2021 |
Tom Frame |