MacKenzie Realty secures $10M credit line with affiliate

MacKenzie Realty Capital, Inc. (NASDAQ:MKZR), a small-cap REIT with a market capitalization of $30.32 million, has entered into a significant financial agreement, securing a line of credit with an affiliate. The move reflects a strategic effort to bolster financial flexibility, particularly important given the company’s current ratio of 0.57. According to InvestingPro analysis, the company’s short-term obligations currently exceed its liquid assets. On January 22, 2025, the real estate investment trust engaged with Patterson Real Estate Services, LP (PRES), which is connected to the company’s real estate adviser, to establish a $10 million credit facility.

Under the terms of the agreement, MacKenzie Realty can draw up to $10 million at an interest rate of 10% per annum. Each draw on the credit line will incur a 2% origination fee, which will be added to the principal amount along with the advance. The maturity date for the line of credit is set for June 1, 2026, and it includes standard default provisions that, upon an event of default, allow the lender to accelerate repayment and exercise other remedies after a cure period, if applicable.

This financial maneuver was approved by MacKenzie Realty’s Board of Directors, including all independent directors, who considered market alternatives, the relationship with PRES, and the potential benefits to shareholders. Despite challenging market conditions that have led to a 53% decline in stock price over the past year, the company maintains an attractive 8.89% dividend yield. The line of credit is designed to provide additional capital to pursue opportunities and manage financial obligations effectively. InvestingPro subscribers can access 8 additional key insights about MKZR’s financial health and market position.

The detailed terms of the line of credit can be found in Exhibit 10.1 of the 8-K filing, which serves as the source of this information. The agreement demonstrates MacKenzie Realty’s efforts to enhance its financial position and maintain operational momentum through strategic financial planning, particularly crucial given the company’s current unprofitable status with a net loss in the last twelve months.

In other recent news, MacKenzie Realty Capital, Inc. has been active with various significant developments. The company announced that it will soon be updating its preferred and common stockholders through separate letters, addressing matters pertinent to stockholders including dividend payments and other company affairs. In addition to this, MacKenzie Realty Capital has made amendments to its Articles of Amendment and Restatement and its bylaws. These changes, approved by a majority of shares present at a Special Meeting of Stockholders, aim to align with the Maryland General Corporation Law and reflect the company’s status.

In further developments, the company held its annual stockholders’ meeting, where all four director nominees were re-elected for the upcoming fiscal year. The directors, Thomas Frame, Timothy Dozois, Chip Patterson, and Kjerstin Hatch, received strong endorsement with over 86% of the votes cast in favor of each. In the same meeting, Moss Adams, LLP was ratified as the company’s independent registered public accounting firm for the fiscal year ending June 30, 2025, with 97.16% of shares present supporting the ratification. These are the recent developments in MacKenzie Realty Capital’s ongoing efforts to update its corporate governance practices and align with the standards of publicly listed companies.

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