Mackenzie Realty Capital: Investigating Potential Claims

The White Law Group continues to investigate potential claims involving broker-dealers who may have improperly recommended non-traded REIT,Mackenzie Realty Capital to investors.

According to the DI Wire today, MacKenzie Realty Capital Inc., a publicly registered non-traded real estate investment trust (REIT), has decided to pursue a listing of its common stock on a securities exchange. As a result, the company has suspended its dividend reinvestment and share repurchase programs effective immediately.

Initially, MacKenzie reportedly plans to list its stock on the OTCQX, with a potential listing on the NYSE-American later this year. The company noted in a filing that it cannot provide guidance on the share price or timing of the listing, nor can it guarantee the listing will occur.

MacKenzie’s portfolio comprises multifamily housing and office real estate properties across the United States, including interests in six multifamily properties and 11 office properties in five states.

Recent financial data indicates total assets of $204 million and total equity of approximately $103 million as of December 31, 2023. With 13.2 million shares outstanding, this results in a book value per share of $7.75. MacKenzie also reported share repurchase activity averaging $7.38 across 128,589 shares in 2023.

Investing in Illiquid Real Estate Securities

Mackenzie Realty Capital, Inc. and its affiliates are reportedly in the business of purchasing illiquid real estate securities, both in open market transactions and through tender offers. There are numerous risk factors involved with investing in Mackenzie Realty Capital, according to the company: 

• “Inflation may adversely affect our financial condition and results of operations. 
• We do not have guaranteed cash flow. 
• High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.” 

These risks don’t include the general risks that are associated with investing in alternative investments.  

Decline in Net Asset Value – Mackenzie Realty Capital

According to a 10-K filing, the company updated its Net Asset Value (NAV) per share as of December 31, 2022, to $7.38 per share. The company notes its investment objective is to generate current income and capital appreciation through the acquisition of real estate assets and debt and equity real estate-related investments.

According to Central Trade and Transfer, a secondary market for alternative, non-traded investments, shares of Mackenzie Realty Capital were listed to sell for around $5.65 per share. This could indicate losses for investors as the original offering price was $10 per share.   

As we previously reported from filings with the SEC, in November 2020, Mackenzie Realty Capital Inc. shareholders voted to withdraw from the company’s election as a business development company in order to shift its investment focus to real estate.   

In May 2020, the company suspended its share repurchase program (SRP) due to market disruptions from the Covid-19 global pandemic stating that the value of assets “owned and sought by the company” have declined, in filings with the SEC.  

The Risks of Alternative Investments  

Alternative investments such as Mackenzie Realty Capital are high-risk, often have high commissions, and lack liquidity.  

The White Law Group has represented numerous investors over the last few years in non-traded REITs and as well as non-traded BDCs. The high commission structure may lead to unscrupulous financial advisors pushing these products unsuitably to maximize their own commissions.  

Brokerage firms are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor considering that investor’s age, investment experience, net worth, risk tolerance, investment objectives, and income.  Firms that fail to perform adequate due diligence or that make unsuitable recommendations can be held responsible for investment losses in a FINRA arbitration claim.  

If you are concerned about your investment in Mackenzie Realty Capital and would like to discuss your options, please call the securities attorneys of The White Law Group at (888)637-5510 for a free consultation.  

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.  The firm represents investors in FINRA arbitration claims throughout the country.  For more information on the firm, visit https://www.whitesecuritieslaw.com.