Business condition attached to the margin of safety
The properties generate positive operating cash flow after interest, management fees and overhead for a full fiscal year, without one-time payments and without support from new share or preferred issuance.
MacKenzie Realty Capital owns and operates a portfolio of small California commercial and residential properties: office buildings in Napa, Woodland, Fairfield and Suisun, plus four apartment properties including Hollywood Apartments in Los Angeles and buildings in Oakland. It converted from an investment fund into a property owner in recent years and is managed externally by affiliates of MacKenzie Capital Management, which is paid asset management fees. Its shares moved from the OTCQX market to the Nasdaq Capital Market in November 2024, and it did a 1-for-10 reverse stock split in August 2025. All per-share figures here are on the post-split basis. What the business actually earns. We measure what is left for common shareholders after interest, fees and overhead, less a charge for share compensation and for the capital spending needed to keep the buildings competitive. On that basis the company has not produced positive earnings in any year we could compare. Cash from operations was about -$6.6 million in fiscal 2023, -$0.6 million in fiscal 2024 and -$1.7 million in fiscal 2025, and it was about -$2.8 million for the first nine months of fiscal 2026 (from the quarterly data). Revenue grew from $15.7 million to $22.1 million in fiscal 2025, but that year included a one-time $3 million lease-termination payment from a tenant at Satellite Place, and interest expense rose to $8.5 million. After capital spending, our owner-earnings figure is about -$14 per share in fiscal 2023, -$8 in 2024 and -$10 in 2025. Even if all capital spending is ignored, the figure is still negative in each year (about -$1.8 million in fiscal 2025). We only used fiscal 2023 onward because earlier years reflect the investment-fund era or the first year of the property build-out, which are not comparable. Because roughly $18.9 million a year was spent on buildings, we treated part of it as growth spending using the company's own spending-to-revenue history, and the rest as upkeep. The conclusion does not depend on that split. Why all three cases are worth zero. We only credit value that can be tied to something in the filings. Here nothing named produces positive cash for common shareholders: rents have not covered debt service, asset management fees and overhead, revenue in the nine months of fiscal 2026 is lower than the prior-year period, and the company has covered its shortfall and its dividends with borrowing and new share and preferred issuance.
Base case: the current pattern of small negative operating cash continues and there is no evidenced improvement, so the ongoing business adds no value.
Bull case: the properties earn a bit more and the extra fees and professional costs from the listing (general and administrative and professional fees rose by about $2.7 million in fiscal 2025) shrink; that still leaves the earnings figure at or below zero, so it is also $0 (we did not credit rent increases, new acquisitions or a turnaround because none is contracted or has a multi-year record).
Bear case: the cash drain continues while $28.6 million of loans come due in fiscal 2026 and another $29.0 million in fiscal 2028 and must be refinanced at higher rates; that is more of the same, and because the company holds properties with a book value of about $225 million against about $142 million of total liabilities, we do not show a negative value, so it is $0. What this does and does not say. This is a measure of earning power, not a measure of what the buildings could be sold for. The company owns real estate with a book value well above its debt, but a substantial part of that belongs to Series A and Series B preferred holders (liquidation preference about $27.7 million at the operating-partnership level, in addition to preferred stock at the parent company) and to minority partners in several properties, and the company recorded a $9.5 million write-down of a property in fiscal 2025, showing asset values can fall short of cost. If the properties were sold at or above book value, common shareholders could receive value we do not credit here. Our view would change if the company shows a full year of positive operating cash flow after interest and fees without one-time items or new capital raises. Change note and limits. This is the first analysis of the company. The most recent annual report we have is for the year ended June 30, 2025; the following quarterly report (March 2026) was used only for cash-flow, revenue and share-count figures, and we could not read its text. Per-share figures for fiscal 2023 and 2024 were adjusted for the August 2025 reverse split.