MacKenzie Realty Capital, Inc SC TO-I, filed Feb 18, 2020
MacKenzie Realty Capital, Inc. (MKZR)
SC TO-I
2020-02-18
View Original
Added on
October 19, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
MACKENZIE REALTY CAPITAL, INC.
(Name of Subject Company (Issuer))
MACKENZIE REALTY CAPITAL, INC.
(Names of filing Persons (Offeror and Issuer))
Common Stock, Par Value $0.0001 per share
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
Chip Patterson, Esq.
MacKenzie Capital Management, LP
89 Davis Road, Suite 100
Orinda, California 94563
(925) 631-9100 ext. 1006
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of filing person)
Calculation of Filing Fee
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Transaction
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Amount of
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Valuation*
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Filing Fee
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$1,240,650
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$161.04
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*
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For purposes of calculating the filing fee only. Assumes the purchase of 135,000 Shares at a purchase price equal to $9.19 per Share in cash.
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◻ Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable
◻ Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the statement relates:
◻ third-party tender offer subject to Rule 14d-1.
⌧ issuer tender offer subject to Rule 13e-4.
◻ going-private transaction subject to Rule 13e-3.
◻ amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results of the tender offer: ◻
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If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
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Rule 13e-4(i) (Cross-Border Issuer Tender Offer)
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Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)
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Item 1. Summary Term Sheet.
The information set forth in the section of the Offer to Purchase, dated February 18, 2020 (the “Offer to Purchase”), attached hereto as Exhibit 99(a)(1)(A), entitled “Summary Term Sheet,” is incorporated herein by reference.
Item 2. Subject Company Information.
(a) Name and Address. The name of
the issuer is MacKenzie Realty Capital, Inc., an externally managed, non-diversified, closed-end management investment company incorporated in Maryland (the “Company”). The address of its principal executive office is 89 Davis Road, Suite 100,
Orinda, CA 94563; and the telephone number of its principal executive office is (925) 631-9100.
(b) Securities. This Tender Offer
Statement on Schedule TO relates to an offer by the Company to purchase, as approved by the Company’s board of directors (the “Board”), 135,000 shares of its issued and outstanding common stock, par value $0.0001 per share (the “Shares”). As of February 18, 2020, there were 12,510,237.41 shares of common stock issued and outstanding. The offer is for cash at a purchase price equal to $9.19 (Shares are
currently being sold in our offering at $10.25) per Share (the “Purchase Price”), and is made upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the “Offer”).
The information set forth in the Offer to Purchase is incorporated herein by reference.
(c) Trading Market and Price. The
Shares are not currently traded on an established trading market.
Item 3. Identity and Background of Filing Person.
(a) Name and Address. The Company is
the filing person and the subject company. The information set forth under Item 2(a) above and in the Offer to Purchase under Section 9 (“Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning
the Shares”) is incorporated herein by reference.
Item 4. Terms of the Transaction.
(a) Material Terms. The information
set forth in the Offer to Purchase under the “Summary Term Sheet,” Section 1 (“Purchase Price; Number of Shares; Expiration Date”), Section 3 (“Certain Conditions of the Offer”), Section 4 (“Procedures for Tendering Shares”), Section 5 (“Withdrawal
Rights”), Section 6 (“Payment for Shares”), Section 9 (“Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning the Shares”), Section 10 (“Certain Effects of the Offer”), Section 13 (“Certain
United States Federal Income Tax Consequences”) and Section 14 (“Amendments; Extension of Tender Period; Termination”) is incorporated herein by reference.
(b) Purchases. The information set
forth in the Offer to Purchase under Section 9 (“Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
(e) Agreements Involving the Subject
Company’s Securities. The information set forth in the Offer to Purchase under Section 9 (“Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning the Shares”) is incorporated herein by
reference. Except as set forth herein, the Company does not know of any other contract, arrangement, understanding or relationship relating, directly or indirectly, to the Offer (whether or not legally enforceable) between the Company, any of its
executive officers or directors, any person controlling the Company or any officer or director of any corporation ultimately in control of the Company and any person with respect to any securities of the Company (including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding
of proxies, consents or authorizations).
Item 6. Purposes of the Transaction and Plans or Proposals.
(a) Purposes. The information set
forth in the Offer to Purchase under Section 2 (“Purpose of the Offer; Plans or Proposals of the Company”) is incorporated herein by reference.
(b) Use of Securities Acquired. The
information set forth in the Offer to Purchase under Section 2 (“Purpose of the Offer; Plans or Proposals of the Company”) and Section 10 (“Certain Effects of the Offer”) is incorporated herein by reference.
(c) Plans. Except as previously
disclosed by the Company or as referred to in the Offer to Purchase under Section 2 (“Purpose of the Offer; Plans or Proposals of the Company”), Section 7 (“Source and Amount of Funds”) and Section 10 (“Certain Effects of the Offer”), each of which
is incorporated herein by reference, the Company does not have any present plans or proposals and is not engaged in any negotiations that relate to or would result in:
(1) any extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any of its
subsidiaries;
(2) other than in connection with transactions in the ordinary course of the Company’s operations and for purposes of
funding the Offer, any purchase, sale or transfer of a material amount of assets of the Company or any of its subsidiaries;
(3) any material change in the Company’s investment policy, indebtedness, or capitalization of the Company (other than
through the sale of Shares pursuant to the Company’s current offering);
(4) any change in the present Board or management of the Company, including, but not limited to, any plans or proposals
to change the number or the term of directors or to fill any existing vacancies on the Board or to change any material term of the employment contract of any executive officer;
(5) any other material change in the Company’s corporate structure or business, including any plans or proposals to make
any changes in the Company’s investment policy for which a vote would be required by Section 13 of the Investment Company Act of 1940, as amended;
(6) any class of equity securities of the Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an automated quotations system operated by a national securities association;
(7) any class of equity securities of the Company becoming eligible for termination of registration under Section
12(g)(4) of the Securities Exchange Act or 1934, as amended (the “Exchange Act”);
(8) the suspension of the Company’s obligation to file reports under Section 15(d) of the Exchange Act;
(9) other than in connection with transactions in the ordinary course of the Company’s operations, the acquisition by
any person of additional securities of the Company, or the disposition of securities of the Company; or
(10) any changes in the Company’s charter, bylaws or other governing instruments or other actions that could impede the
acquisition of control of the Company.
Item 7. Source and Amount of Funds or Other Consideration.
(a) Source of Funds. The information
set forth in the Offer to Purchase under Section 7 (“Source and Amount of Funds”) is incorporated herein by reference.
(b) Conditions. Not applicable.
(d) Borrowed Funds. Not applicable.
Item 8. Interest in Securities of the Subject Company.
(a) Securities Ownership. The
information set forth in the Offer to Purchase under Section 9 (“Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.
(b) Securities Transactions. The
information set forth in the Offer to Purchase under Section 9 (“Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.
Item 9. Persons/Assets, Retained, Employed, Compensated or Used.
(a) Solicitations or Recommendations.
Not applicable.
Item 10. Financial Statements.
(a) Financial Information. Not
applicable. Financial statements have not been included because the consideration offered to security holders consists solely of cash, the Offer is not subject to any financing condition, and the Company is a public reporting company under Section
13(a) of the Exchange Act and files its reports electronically on the EDGAR system.
(b) Pro Forma Information. Not
applicable.
Item 11. Additional Information.
(a) Agreements, Regulatory Requirements and
Legal Proceedings.
(1) The information set forth in the Offer to Purchase under Section 9 (“Interest of Directors, Executive Officers and
Certain Related Persons; Transactions and Arrangements Concerning the Shares”) is incorporated herein by reference.
(2)-(5) Not applicable.
(c) Other Material Information. The
entire text of the Offer to Purchase and the related Letter of Transmittal, attached hereto as Exhibits 99(a)(1)(A) and 99(a)(1)(B), respectively, is incorporated herein by reference.
Item 12. Exhibits.
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EXHIBIT NO.
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DESCRIPTION
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99(a)(1)(A)
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Offer to Purchase, dated February 18, 2020.
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99(a)(1)(B)
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Form of Letter of Transmittal.
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99(a)(1)(C)
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Form of Notice of Withdrawal.
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99(a)(1)(D)
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Notice of Offer to Shareholders
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Item 13. Information Required By Schedule 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete
and correct.
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Dated: February 18, 2020
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MacKenzie Realty Capital, Inc.
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By:
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/s/ Chip Patterson
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Name: Chip Patterson
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Title: Chairman, Secretary, and General Counsel
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OFFER TO PURCHASE 135,000 SHARES OF COMMON STOCK FOR CASH
AT A PURCHASE PRICE EQUAL
TO $9.19
THE OFFER WILL EXPIRE AND THE LETTER OF TRANSMITTAL MUST BE RECEIVED BY
MACKENZIE REALTY CAPITAL, INC. BY 5:00 P.M., PACIFIC TIME, ON March 18, 2020, UNLESS THE OFFER IS EXTENDED.
MACKENZIE REALTY CAPITAL, INC. BY 5:00 P.M., PACIFIC TIME, ON March 18, 2020, UNLESS THE OFFER IS EXTENDED.
To the Stockholders of MacKenzie Realty Capital, Inc.:
MacKenzie Realty Capital, Inc., an externally managed, non-diversified, closed-end management investment company incorporated in Maryland
(the “Company,” “we,” or “us”), is offering to purchase 135,000 shares of our issued and outstanding common stock, $0.0001 par
value per share (the “Shares”). The purpose of the offer is to provide our stockholders (“Stockholders”) with limited liquidity because there is otherwise no public market for the Shares. See Section 2 below. The Offer is for cash at a price
equal to $9.19 (the “Purchase Price”). Shares are currently being sold in our offering at $10.25 The Offer is made upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the “Offer”). The Offer will expire at 5:00 p.m., Pacific Time, on
March 18, 2020 (the “Expiration Date”), unless extended.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO OTHER
CONDITIONS. SEE SECTION 3 BELOW.
IMPORTANT INFORMATION
Stockholders who desire to tender their Shares should either: (i) properly complete and sign the Letter of Transmittal, provide thereon the
original of any required signature guarantee(s) and mail or deliver it and any other documents required by the Letter of Transmittal; or (ii) request their broker, dealer, commercial bank, trust company or other nominee to effect the transaction on
their behalf. Stockholders who desire to tender Shares registered in the name of such a firm must contact that firm to effect a tender on their behalf. Tendering Stockholders will not be obligated to pay brokerage commissions in connection with their
tender of Shares, but they may be charged a fee by such a firm for processing the tender(s). The Company reserves the absolute right to reject tenders determined not to be in appropriate form.
IF YOU DO NOT WISH TO TENDER YOUR SHARES, YOU NEED NOT TAKE ANY ACTION.
NEITHER THE COMPANY, THE BOARD, MACKENZIE CAPITAL MANAGEMENT, LP (“MCM”) NOR MCM ADVISERS, LP (“MCMA”) MAKES ANY
RECOMMENDATION TO ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY, THE BOARD, MCM, OR MCMA AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN
FROM TENDERING SHARES PURSUANT TO THE OFFER OR TO MAKE ANY REPRESENTATION OR TO GIVE ANY INFORMATION IN CONNECTION WITH THE OFFER OTHER THAN AS CONTAINED HEREIN OR IN THE ACCOMPANYING LETTER OF TRANSMITTAL. IF MADE OR GIVEN, ANY SUCH RECOMMENDATION,
REPRESENTATION OR INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE BOARD, MCM, OR MCMA STOCKHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE
THEIR OWN DECISIONS WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission nor any other regulatory authority has approved or disapproved of these transactions or determined if the information contained herein is truthful or complete. Any
representation to the contrary is a criminal offense.
The Offer does not constitute an offer to buy or the solicitation of an offer to sell securities in
any circumstances or jurisdiction in which such offer or solicitation is unlawful. The delivery of the materials pertaining to the Offer shall not under any circumstances create any implication that the information contained therein is current as of
any time subsequent to the date of such information.
The Date of this Offer to Purchase is February 18, 2020
SUMMARY TERM SHEET
(Section references are to this Offer to Purchase)
This Summary Term Sheet highlights the material information concerning the Offer. For a more complete discussion of the terms and
conditions of the Offer, you should read carefully the entire Offer to Purchase and the related Letter of Transmittal.
What is the Offer?
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We are offering to purchase up to 135,000 Shares. The Offer is for cash at a price equal to $9.19 (the “Purchase Price”), upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal.
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Why is the Company making the tender offer?
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The Offer is designed to provide limited liquidity to Stockholders, for which there is otherwise no current public market. Under
our share repurchase program, we plan to conduct quarterly tender offers.
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When will the Offer expire, and may the Offer be extended?
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The Offer will expire at 5:00 p.m., Pacific Time, on March 18, 2020, unless extended. The Company may extend the period of time
the Offer will be open by issuing a press release or making some other public announcement by no later than 9:00 a.m., Eastern Time, on the next business day after the Offer otherwise would have expired. See Section 14 below.
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Are there conditions to the Offer?
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Yes. If the amount of repurchase requests exceeds the number of Shares we seek to repurchase, we will repurchase Shares on a pro
rata basis. See Section 3 below for a more complete description of the conditions to the Offer.
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How do I tender my Shares?
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If your Shares are registered in your name, you should obtain the Offer, which consists of the Offer to Purchase, the related
Letter of Transmittal and any amendments or supplements thereto, read the materials, and if you should decide to tender, complete a Letter of Transmittal and submit any other documents required by the Letter of Transmittal. These materials
must be received by the Company at the address listed in Section 4 of this Offer to Purchase, in proper form, before 5:00 p.m., Pacific Time, on March 18, 2020 (unless the Offer is extended by the Company, in which case the new deadline will
be as stated in the public announcement of the extension). If your Shares are custodial held or broker controlled, approval signoff is required from the third party. The Letter of Transmittal must be signed by the third party. See Section 4
below.
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Is there any cost to me to tender?
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There is no cost charged by the Company in connection with the Offer. Your broker, dealer, commercial bank, trust company or
other nominee may charge you fees according to its individual policies. See the Letter of Transmittal.
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May I withdraw my Shares after I have tendered them and, if so, by when?
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Yes, you may withdraw your Shares at any time prior to the expiration of the Offer (including any extension period) by submitting
a Notice of Withdrawal to the Company at the address listed in Section 4 of this Offer to Purchase. In addition, you may withdraw your tendered Shares any time after April 18, 2020 if they have not been accepted for payment by that date. See
Section 5 below for more details.
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How do I withdraw tendered Shares?
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A Notice of Withdrawal of tendered Shares must be timely received by the Company specifying the name of the Stockholder who
tendered the Shares, the number of Shares being withdrawn and other information. See Section 5 below and the Form of Notice of Withdrawal which accompanies the Offer.
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If I change my mind after tendering my Shares and it is past the Expiration Date, and I have received payment for my tendered Shares may I
rescind my tender?
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No.
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May I place any conditions on my tender of Shares?
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No. However, you may select to sell “all or none” of your Shares by checking the applicable box on the Letter of Transmittal.
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Who may sign on my behalf?
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Only the holder of record as registered on the account or an authorized power of attorney. If a power of attorney signs on behalf
of the holder of record, the document evidencing the power must accompany the Letter of Transmittal and must be dated or recertified within one year.
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Is there a limit on the number of Shares I may tender?
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You may tender all of the Shares you own as of the Expiration Date of the Offer. However, we are limiting the aggregate number of
Shares to be repurchased from all Stockholders to 135,000. See Section 1 below.
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What if more than the amount of Shares offered for repurchase are tendered (and not timely withdrawn)?
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The Company will purchase duly tendered Shares from tendering Stockholders pursuant to the terms and conditions of the Offer on a
pro rata basis in accordance with the number of Shares tendered by each Stockholder (and not timely withdrawn). However, you have the option to sell ‘All or None’ of your Shares by checking the appropriate box on the Letter of Transmittal.
If you check that box, we will only purchase your Shares if we can purchase all of your Shares; otherwise, you will be deemed to automatically withdraw your tender. See Section 1. Purchase Price; Number of Shares; Expiration Date and Section
5. Withdrawal Rights.
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If I decide not to tender, how will the Offer affect the Shares I hold?
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If any Shares are tendered by Stockholders (and not timely withdrawn), and the Company does not issue any additional shares, your
percentage ownership interest in the Company will increase after completion of the Offer. See Section 10 below.
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Does the Company have the financial resources to make payment for Shares accepted in the Offer?
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Yes. See Section 7 below.
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If Shares I tender are accepted by the Company, when will payment be made?
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Payment for properly tendered Shares (not timely withdrawn) will be made as promptly as practicable following expiration of the
Offer. See Section 6 below.
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Is my sale of Shares pursuant to the Offer a taxable transaction?
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We anticipate U.S. Stockholders, other than those who are tax-exempt, who sell Shares in the Offer will recognize gain or loss
for U.S. federal income tax purposes equal to the difference between the cash they receive for the Shares sold and their adjusted tax basis in such Shares. Shortly after the end of the calendar year, most taxpayers who sell their Shares will
receive an IRS Form 1099-B which will also be provided to the Internal Revenue Service (the “IRS”). See Section 13
below for details, including the nature of the income or loss and the possibility of other tax treatment. Section 13 also discusses the treatment of Non-U.S. Stockholders. You are urged to consult your own tax advisor regarding the tax
consequences to you of any sale of Shares pursuant to the Offer.
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Is the Company required to complete the Offer and purchase all Shares tendered, assuming the total Shares tendered are less than the total
Shares offered?
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Under most circumstances, yes. There are certain circumstances, however, in which the Company will not be required to purchase
any Shares tendered, as described in Section 3 below.
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Is there any reason Shares tendered would not be accepted?
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In addition to those circumstances described in Section 3 below under which the Company is not required to accept tendered
Shares, the Company has reserved the right to reject any and all tenders determined by it not to be in appropriate form. If a properly completed tender is not timely submitted prior to the Expiration Date, an investor must subsequently submit
new tender documentation during the next offer period in order for his or her shares to be repurchased during that period.
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How will tendered Shares be accepted for payment?
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Properly tendered Shares will be accepted for payment by the Company promptly following expiration of the Offer. See Section 6
below.
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What action need I take if I decide not to tender my Shares?
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None.
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Does management encourage Stockholders to participate in the Offer, and will they participate in the Offer?
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Neither the Company, nor the Board nor any of the Advisers, nor MacKenzie Capital Management, LP is making any recommendation to
tender or not to tender Shares in the Offer. Based upon information provided or available to us, none of our directors, officers or affiliates intends to tender Shares pursuant to the Offer. The Offer does not, however, restrict the purchase
of Shares pursuant to the Offer from any such person. See Section 9 below. Management does note that the Offer Price is a 0% discount to the most recent net asset value of $9.19.
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What is the market value of my Shares?
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The Shares do not have a readily ascertainable market value, and there is no established public trading market for our Shares and
no assurance that one will develop or that the shares will be listed on a national securities exchange. Our review of independent secondary market reporting publications such as The Stanger Report and The Direct Investments Spectrum revealed
no trading prices on secondary markets during the 4th Quarter 2019 and no trading prices on secondary markets in Nov/Dec 2019, respectively. The information published by these independent sources is believed to be the product of their private
market research and does not constitute the comprehensive transaction reporting of a securities exchange. We are unaware of any other recent trading prices. Although there can be no certainty as to the actual present value of the Shares,
we estimated that the net asset value is $9.19 per Share as of December 31, 2019. There can be no assurance that this estimate accurately reflects an approximate value of the Shares or that the actual amounts which may be realized by
Shareholders for the Shares may not vary substantially from this estimate.
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How do I obtain information?
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Questions and requests for assistance or requests for additional copies of the Offer to Purchase, the Letter of Transmittal and
all other Offer documents should be directed to the Company as follows.
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Our website:
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www.mackenzierealty.com
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Our phone number:
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925-631-9100
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Our mailing address:
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MacKenzie Realty Capital, Inc.
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89 Davis Road, Suite 100
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Orinda, CA 94563
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Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer.
The properly completed Letter of Transmittal should be sent to the Company at the address above.
1. Purchase Price; Number of Shares; Expiration Date.
We are offering to purchase 135,000 Shares. The purpose of the Offer is to provide Stockholders with limited liquidity because there is otherwise no public
market for the Shares. See Section 2 below. The Offer is for cash at a price equal to $9.19 (the “Purchase Price”). The Offer
is made upon the terms and subject to the conditions set forth in this Offer to Purchase and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the “Offer”). You will not receive interest on the Purchase Price under any circumstances, and you will not be entitled to any dividends paid after the date
that Company has accepted your Shares for purchase (generally, the Expiration Date). Thus, if the Company pays any dividends after your Shares are purchased, even if the proceeds for such dividend relate to the period during which you owned your
Shares, you will not receive the dividend. For example, the Company has historically made a quarterly dividend, if any, on or about 45 days after the end of the quarter. Because this Offer expires on March 18, 2020, you would likely not receive
any dividend payable with respect to the period ending March 31, 2020, which would ordinarily be paid on or about April 30, 2020, for any Shares sold under this Offer. If more than the number of Shares offered for repurchase are duly tendered
pursuant to the Offer (and not timely withdrawn, as provided in Section 5 below), we will repurchase Shares on a pro rata basis, in accordance with the number of Shares duly tendered by or on behalf of each Stockholder (and not so withdrawn). As a
result, we may repurchase less than the full amount of Shares that you request to have repurchased.
Stockholders may indicate, by checking a box on the Letter of Transmittal (the 'All or None' Box), that they only wish to sell their Shares if they will be
able to sell all of their Shares, without any proration. See Section 5—Withdrawal Rights. If more than 135,000 Shares have been properly tendered without checking the All or None Box, then the above description of proration will apply only to tenders
of such Shares that do not have the All or None Box checked. As of February 18, 2020, there were 12,510,237.41 Shares issued and outstanding, and there were 2,898 holders of record of Shares. Certain of these holders of record were brokers,
dealers, commercial banks and trust companies. The Offer will remain open until 5:00 p.m., Pacific Time, on March 18, 2020, unless and until we, in our discretion, extend the period of time during which the Offer will remain open. If we extend the
period of time during which the Offer remains open, the term “Expiration Date” will refer to the latest time and date at which
the Offer expires. See Section 14 below for a description of our rights to extend, delay, terminate and/or amend the Offer.
We will publish a notice to all Stockholders by means of a public press release
or some other public announcement, if we decide to extend, terminate, supplement or amend the terms of the Offer. If the Offer is scheduled to expire within ten (10) business days from the date we notify you of a significant amendment to the Offer,
we also intend to extend the Offer, if necessary, to ensure that the Offer remains open for at least ten (10) business days after the date we publish notice of the amendment. A “business day” means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through midnight, Pacific Time. In the judgment of the Board, including the independent directors, the Offer is in the best interests of our Stockholders and does not violate applicable law. Under the Maryland General Corporation Law, a Maryland corporation may not
make a dividend to Stockholders, including pursuant to our share repurchase program, if, after giving effect to the dividend, (i) the corporation would not be able to pay its indebtedness in the ordinary course or (ii) the corporation’s total
assets would be less than its total liabilities plus preferential amounts payable on dissolution with respect to preferred stock.
The Board also considered the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase Shares and
under what terms:
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the liquidity of our assets (including fees and costs associated with disposing of assets);
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our investment plans and working capital requirements;
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·
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the relative economies of scale with respect to our size;
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·
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our history in repurchasing Shares or portions thereof; and
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·
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the condition of the securities markets.
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The Board has approved the Offer. The Board recognizes that the decision to accept or reject the Offer is an individual one that should be based on a variety
of factors, and Stockholders should consult with their personal advisors if they have questions about their financial and/or tax situations. As a result, we are not expressing any opinion as to whether a Stockholder should accept or reject the Offer.
2. Purpose of the Offer; Plans or Proposals of the Company.
The purpose of the Offer is to provide limited liquidity to our Stockholders because there is otherwise no public market for the Shares. Under our share
repurchase program, we plan to conduct quarterly tender offers for up to the lesser of (a) the amount available from sales of shares under our dividend reinvestment program and (b) 5.0% per year of our weighted average number of outstanding Shares
for the prior calendar year, at a price equal to $9.25 until February 2021, $9.50 until February 2022, $9.75 until February 2023, and $10 thereafter, except that if the planned offer price is greater than NAV then our Board may decide to limit the
offer price to the then-current NAV. Our repurchase program recognizes that our Shares are not listed on a national securities exchange and have limited liquidity prior to the occurrence of a “liquidity event.” A liquidity event could include (1) the
sale of all or substantially all of our assets either on a complete portfolio basis or individually followed by a liquidation, (2) a listing of our Shares on a national securities exchange, or (3) a merger or another transaction approved by our Board
in which our Stockholders will receive cash or shares of a publicly traded company. While our Charter requires us to seek to explore a potential liquidity event eight years following the completion of our offering period, there can be no assurance
that a suitable transaction will be available or that market conditions for a liquidity event will be favorable during that timeframe. In making a determination of what type of liquidity event is in our best interest, our Board, including our
independent directors, may consider a variety of criteria, including, but not limited to, portfolio diversification, portfolio performance, our financial condition, potential access to capital as a listed company, market conditions for the sale of
our assets or listing of our securities, internal management considerations and the potential for Stockholder liquidity. At the sole discretion of our Board, we may use cash on hand, cash available from borrowings and cash from liquidation of
investments as of the end of the applicable period to repurchase Shares.
We do not have any present plans or proposals and are not engaged in any negotiations that relate to or would result in (i) any extraordinary transaction,
such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; (ii) other than in connection with transactions in the ordinary course of the Company’s operations and for purposes of funding the Offer, any purchase,
sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iii) any material change in the Company’s investment policy, indebtedness, or capitalization of the Company; (iv) any change in the present Board or
management of the Company, including, but not limited to, any plans or proposals to change the number or the term of directors or to fill any existing vacancies on the Board or to change any material term of the employment contract of any executive
officer; (v) any other material change in the Company’s corporate structure or business, including any plans or proposals to make any changes in the Company’s investment policy for which a vote would be required by Section 13 of the Investment
Company Act of 1940, as amended (the “1940 Act”); (vi) any class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act or 1934, as amended (the “Exchange Act”);
(vii) the suspension of the Company’s obligation to file reports pursuant to Section 15(d) of the Exchange Act; (viii) other than in connection with transactions in the ordinary course of the Company’s operations, the acquisition by any person of
additional securities of the Company, or the disposition of securities of the Company; or (ix) any changes in the Company’s charter, bylaws or other governing instruments or other actions that could impede the acquisition of control of the Company.
3. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, we will not be required to
purchase any Shares tendered pursuant to the Offer if such purchase will cause us to be in violation of the securities, commodities or other laws of the United States or any other relevant jurisdiction. Further, we will not be required to purchase
any Shares tendered in the Offer if there is any (i) material legal action or proceeding instituted or threatened which challenges, in the Board’s judgment, the Offer or otherwise materially adversely affects the Company, (ii) declaration of a
banking moratorium by federal, state or foreign authorities or any suspension of payment by banks in the United States, the State of California, or in a foreign country which is material to the Company, (iii) limitation which affects the Company or
the issuers of its portfolio securities imposed by federal, state or foreign authorities on the extension of credit by lending institutions or on the exchange of foreign currencies, (iv) commencement of war, armed hostilities or other international
or national calamity directly or indirectly involving the United States or any foreign country that is material to the Company, or (v) other event or condition that, in the Board’s judgment, would have a material adverse effect on the Company or
its Stockholders if Shares tendered pursuant to the Offer were purchased. The foregoing conditions are for our sole benefit and may be asserted by us regardless
of the circumstances giving rise to any such condition, and any such condition may be waived by us, in whole or in part, at any time and from time to time in our reasonable judgment. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts or circumstances; and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time; provided that any such waiver shall apply to all tenders of Shares. Any determination by us concerning the events described in this Section 3 shall be final and binding.
We reserve the right, at any time during the pendency of the Offer, to amend, extend or terminate the Offer in any respect. See Section 14 below.
4. Procedures for Tendering Shares.
Participation in the Offer is voluntary. If you elect not to participate in the Offer, your Shares will remain outstanding. To participate in the Offer, you
must complete and deliver the accompanying Letter of Transmittal to us at:
MacKenzie Realty Capital, Inc.
89 Davis Road, Suite 100
Orinda, CA 94563
The Letter of Transmittal must be received by us at the address above before 5:00 p.m., Pacific Time, on the Expiration Date.
a. Proper Tender of Shares and Method of
Delivery. For Shares to be properly tendered pursuant to the Offer, a properly completed and duly executed Letter of Transmittal bearing original signature(s) for all Shares to be tendered and any other documents required by the Letter of
Transmittal must be physically received by us at the address listed above before 5:00 p.m., Pacific Time, on the Expiration Date. These materials may be sent via mail, courier or personal delivery. If your Shares are custodial held or broker
controlled, approval signoff is required from the third party. The Letter of Transmittal must be signed by the third party.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER. Stockholders have the responsibility to cause their Shares to be tendered,
the Letter of Transmittal properly completed and bearing original signature(s) and the original of any required signature guarantee(s), and any other documents required by the Letter of Transmittal, to be timely delivered. Timely delivery is a
condition precedent to acceptance of Shares for purchase pursuant to the Offer and to payment of the purchase amount.
b. Determination of Validity. All
questions as to the validity, form, eligibility (including time of receipt) and acceptance of tenders will be determined by us, in our sole discretion, which determination shall be final and binding. We reserve the absolute right to reject any or all
tenders determined not to be in appropriate form or to refuse to accept for payment, purchase, or pay for, any Shares if accepting, purchasing or paying for such Shares would be unlawful. We also reserve the absolute right to waive any of the
conditions of the Offer or any defect in any tender, whether generally or with respect to any particular Share(s) or Stockholder(s). Our interpretations, in consultation with our counsel, of the terms and conditions of the Offer shall be final and
binding.
WE WILL NOT BE OBLIGATED TO GIVE ANY NOTICE OF ANY DEFECT OR IRREGULARITY IN ANY TENDER, AND WILL NOT INCUR ANY
LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
c. United States Federal Backup
Withholding. Each Stockholder accepting the Offer who has not previously submitted to the Company a correct, completed and signed IRS Form W-9 (“Form W-9”) or substituted IRS Form W-9 (included with
the original subscription) (for U.S. Stockholders) or IRS Form W-8BEN (“ Form W-8BEN”), IRS Form W-8IMY (“Form W-8IMY”), IRS Form W-8ECI (“Form W-8ECI”), or other applicable form (for Non-U.S. Stockholders), or otherwise established an exemption from such withholding, must submit the appropriate form to the Company. This form requirement is intended
to prevent the potential imposition of U.S. federal backup withholding tax on the gross payments made pursuant to the Offer, prior to receiving such payments. See Section 13 below. For this purpose, a “U.S. Stockholder” is, in general, a Stockholder that is (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income of which is subject to United States federal income taxation regardless of the source of such income or (iv) a trust if (A) a court within the United States is able to
exercise primary supervision over the administration of the trust and (B) one or more U.S. persons have the authority to control all substantial decisions of the trust. A “Non-U.S. Stockholder” is any Stockholder other than a U.S. Stockholder.
d. Cost Basis. The Company has elected the first-in, first-out (FIFO) method as the default for calculating cost basis for covered shares as defined in the Company’s offering
documents. If you wish to change your cost basis method, please contact investor relations.
5. Withdrawal Rights.
At any time prior to 5:00 p.m., Pacific Time, on the Expiration Date, and, if the
Shares have not by then been accepted for payment by us, at any time after April 18, 2020, any Stockholder may withdraw any number of the Shares that the Stockholder has tendered. To be effective, a written notice of withdrawal of Shares tendered
must be timely received by us via mail, courier, facsimile or personal delivery at the address listed in Section 4 of this Offer to Purchase. Any notice of withdrawal must be substantially in the form that accompanies the Offer and specify the
name(s) of the person having tendered the Shares to be withdrawn and the number of Shares to be withdrawn. All questions as to the validity, form and eligibility
(including time of receipt) of notices of withdrawal will be determined by us in our sole discretion, which determination shall be final and binding. Shares properly withdrawn will not thereafter be deemed to be tendered for purposes of the Offer.
Withdrawn Shares, however, may be re-tendered by following the procedures described in Section 4 above prior to 5:00 p.m., Pacific Time, on the Expiration Date.
Automatic Withdrawal Option. Shareholders may indicate, by checking a box on the Letter of Transmittal (the 'All or None Box'), that they only wish to sell
their Shares if they will be able to sell all of their Shares, without any proration. If at any time during the day of the Expiration Date more than 135,000 Shares have been properly tendered, unless the Purchaser amends the Offer to increase the
number of Shares to be purchased, the Purchaser will deem all Shares from Shareholders who have checked the All or None Box to be withdrawn and not validly tendered for purposes of the Offer. Neither the Purchaser nor any other person will be under
any duty to give any notice that such automatic withdrawal will occur. Shareholders may change their election whether or not to check the All or None Box at any time on or prior to the Expiration Date by submitting a new Letter of Transmittal with
their preferred election.
6. Payment for Shares.
Our acceptance of your Shares will form a binding agreement between you and the
Company on the terms and subject to the conditions of the Offer. We will have accepted for payment Shares validly submitted for purchase and not timely withdrawn, when we give oral or written notice to MacKenzie Capital Management, LP, our
depository (the “Depository”), of our
acceptance for payment of such Shares pursuant to the Offer. The Purchase Price will be $9.19. You will not receive interest on the Purchase Price under any circumstances. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by us of: (i) a Letter of Transmittal properly completed and (ii) any other documents required by the Letter of Transmittal.
Stockholders may be charged a fee by their broker, dealer or other institution for processing the tender requested. We may not be obligated to purchase Shares pursuant to the Offer under certain conditions. See Section 3 above. Any tendering Stockholder or other payee who has not previously submitted a correct, completed and signed Form W-9, Form W-8BEN, Form W-8IMY, Form W-8ECI or other appropriate
form, as necessary, and who fails to complete fully and sign either the Substitute Form W-9 in the Letter of Transmittal or other appropriate form (e.g., Form W-8BEN, Form W-8IMY or Form W-8ECI) and provide such properly completed form to us may be
subject to federal backup withholding tax on the gross proceeds paid to such Stockholder or other payee pursuant to the Offer. See Section 13 regarding this tax as well as possible withholding on the gross proceeds payable to tendering Non-U.S.
Stockholders.
7. Source and Amount of Funds.
The total cost to us of purchasing a maximum of 135,000 of our issued and outstanding Shares pursuant to the Offer, at a Purchase Price of $9.19 per Share,
would be $1,240,650. As discussed in Section 1, we are limiting the aggregate number of Shares to be repurchased to 135,000 Shares. The actual number of Shares that will be repurchased and, therefore, our total cost of purchasing Shares pursuant to
the Offer, is not determinable at this time. At the sole discretion of our board of directors, we may use proceeds from the Dividend Reinvestment Program, cash on hand, cash available from borrowings, and cash from liquidation of investments as of
the end of the applicable period to repurchase shares.
8. Financial Statements.
Financial statements have not been included herein because the consideration offered to Stockholders consists solely of cash, the Offer is not subject to any
financing condition, and the Company is a public reporting company under Section 13(a) of the Exchange Act and files its reports electronically on the EDGAR system. Information about the Company and reports filed with the SEC can be viewed and
copied at the SEC’s Public Reference Room in Washington, DC. Information about the Reference Room’s operations may be obtained by calling the SEC at (202) 551-8090. Reports and other information about the Company are available on the EDGAR Database
on the SEC’s Internet site (www.sec.gov), and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Public Reference Section of the
SEC, 100 F Street, N.E., Washington, DC 20549. Such reports are also available on our website.
9. Interest of Directors, Executive Officers and Certain Related Persons; Transactions and Arrangements Concerning the Shares.
As of the date hereof, there are no beneficial owners of more than 5% of our outstanding Shares, as determined in accordance with Rule 13d-3 under the
Exchange Act. The following table sets forth information with respect to the beneficial ownership of our Shares as of February 18, 2020, by (1) MacKenzie Capital Management, LP or MCM Advisers or Affiliates, (2) our directors, (3) our executive
officers and (4) all of our directors and executive officers as a group. Except as otherwise indicated, all shares are owned directly, and the owner of such shares has the sole voting and investment power with respect thereto.
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Name and Address of Beneficial Owner †
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Number of Shares Beneficially Owned
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Percent of Class
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Dollar Range of Equity Securities Beneficially Owned(1)
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Independent Directors:
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Tim Dozois
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4,111
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*
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$10,001 – $50,000
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Tom Frame
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4,187
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*
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$10,001 – $50,000
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Interested Director:
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Chip Patterson
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58,688(2)
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*(2)
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$500,001 - $1,00,000(2)
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Executive Officers:
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Paul Koslosky
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58,688 (2)
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*(2)
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$500,001 - $1,00,000(2)
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Jeri Bluth
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58,688 (2)
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*(2)
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$500,001 - $1,00,000(2)
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Christine Simpson
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58,688 (2)
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*(2)
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$500,001 - $1,00,000(2)
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Glen Fuller
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58,688 (2)
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*(2)
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$500,001 - $1,00,000(2)
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Robert Dixon
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58,688 (2)
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*(2)
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$500,001 - $1,00,000(2)
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Directors and Officers as a group (6 persons)
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66,986
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.54%
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$500,001 - $1,00,000(2)
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† The address of each beneficial owner is c/o MacKenzie Realty Capital, Inc., 89 Davis Road, Suite 100, Orinda, CA 94563
| * |
Represents less than 1% of the number of shares outstanding.
|
| (1) |
Dollar ranges are as follows: None, $1 – $10,000, $10,001 – $50,000, $50,001 – $100,000, $100,001 – $500,000, $500,001 – $1,000,000; or Over $1,000,000.
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| (2) |
With respect to the Executive Officers listed above, they are limited partners of MPF Successors, LP, as well as officers of its general partner, which owns
49,106.24 shares in us. Mr. Chip Patterson and the executive officers are in control of the general partner of a personal holdings limited partnership and so are deemed to be the beneficial owners of 9,582.11 shares owned in it. Thus,
they are all deemed to have voting and dispositive control over such shares and the number of shares owned listed is the number of shares owned by MPF Successors, LP and the personal holding partnership.
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For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under Exchange Act pursuant to which a person is deemed to have
“beneficial ownership” of shares of our stock that the person has the right to acquire within 60 days. For purposes of computing the percentage of outstanding shares of the Company’s stock held by each person or group of persons named in the table,
any shares that such person or persons have the right to acquire within 60 days of February 18, 2020 are deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other persons. Based
on a total of 12,510,237.41 shares of our Common Stock issued and outstanding on February 18, 2020. Except for transactions pursuant to the dividend reinvestment plan, based upon our records and upon information provided to us, there have not been
any other transactions in Shares that were effected during such period by any of our directors or executive officers, any person controlling the Company, any director or executive officer of any corporation or other person ultimately in control of
the Company, any associate or minority-owned subsidiary of the Company or any executive officer or director of any subsidiary of the Company. Except as set forth in the Offer, neither we nor, to the best of our knowledge, any of the above-mentioned
persons, is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly, to the Offer with respect to any of our securities (including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies, consents or
authorizations). Based upon information provided or available to us, none of our directors, officers or affiliates intends to tender Shares pursuant to the Offer. The Offer does not, however, restrict the purchase of Shares pursuant to the Offer from
any such person.
10. Certain Effects of the Offer.
The purchase of Shares pursuant to the Offer will have the effect of increasing the proportionate interest in the Company of Stockholders who do not tender
Shares. All Stockholders remaining after the Offer will be subject to any increased risks associated with the reduction in the number of outstanding Shares and the reduction in the Company’s assets resulting from payment for the tendered Shares. See
Section 7 above. All Shares purchased by the Company pursuant to the Offer will be retired and thereafter will be authorized and unissued Shares.
11. Certain Information about the Company.
We are a non-diversified closed-end management investment company that has elected to be treated as a business development company under the 1940 Act. Formed
as a Maryland corporation on January 25, 2012, we are externally advised by MCM Advisers, LP and managed by MacKenzie Capital Management, LP. Our Adviser is responsible for sourcing potential investments, conducting due diligence on prospective
investments, analyzing investment opportunities, structuring investments and monitoring our portfolio on an ongoing basis. MCM Adviser, LP is registered as an investment adviser with the SEC. We have elected to be treated for federal income tax
purposes, and intend to qualify annually thereafter, as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).
Please refer to our prospectus dated October 31, 2019 for a discussion of our business and your investment. Please also refer to the Additional Information
mentioned in Item 12 below.
12. Additional Information.
Information concerning our business, including our background, strategy, business, investment portfolio, competition and personnel, as well as our financial
information, is included in:
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·
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our Annual Report on Form 10-K for the for the fiscal year ended June 30, 2019 as filed with the SEC on September 23, 2019;
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·
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our Quarterly Report on Form 10-Q for the for the fiscal quarter ended December 31, 2019, as filed with the SEC on February 12,
2020;
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Each of the foregoing documents is incorporated by reference herein. We also hereby incorporate by reference additional documents that we may file with the
SEC prior to the Expiration Date. You may inspect and copy these reports, proxy statements and other information at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC, which are available on the SEC’s
website at www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the
SEC’s Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.
13. Certain United States Federal Income Tax Consequences.
The following discussion is a general summary of certain United States federal income tax consequences of a sale of Shares pursuant to the Offer. This summary
is based upon the Code, applicable Treasury regulations promulgated thereunder, rulings and administrative pronouncements and judicial decisions, changes in which could affect the tax consequences described herein and could apply on a retroactive
basis. This summary addresses only Shares held as capital assets. This summary does not address all of the tax consequences that may be relevant to Stockholders in light of their particular circumstances. In addition, this summary does not address
(i) any state, local or foreign tax considerations that may be relevant to a Stockholder’s decision to tender Shares pursuant to the Offer; or (ii) any tax consequences to any corporation, partnership, estate, trust or other entity created or
organized in or under the laws of the United States or any state thereof or the District of Columbia for U.S. federal tax purposes (or their partners, members, etc.) tendering Shares pursuant to the Offer. Stockholders should consult their own tax
advisors regarding the federal, state, local and foreign tax consequences of a sale of Shares pursuant to the Offer.
a. U.S. Stockholders. The sale of Shares by a U.S. Stockholder
pursuant to the Offer generally will be treated as a sale or exchange for federal income tax purposes or under certain circumstances, as a “dividend.” Under Section 302(b) of the Code, a sale of Shares pursuant to the Offer generally will be
treated as a “sale or exchange” if the sale: (i) results in a “complete termination” of the U.S. Stockholder’s interest in the Company, (ii) is “substantially disproportionate” with respect to the U.S. Stockholder or (iii) is “not essentially
equivalent to a dividend” with respect to the U.S. Stockholder. In determining whether any of these tests has been met, Shares actually owned, as well as Shares considered to be owned by the U.S. Stockholder by reason of certain constructive
ownership rules set forth in Section 318 of the Code, generally must be taken into account. If any of these three tests for “sale or exchange” treatment is met, the U.S. Stockholder will recognize gain or loss equal to the difference between the
amount of cash received pursuant to the Offer and the adjusted tax basis of the Shares sold. Such gain or loss generally will be a capital gain or loss and will be long-term capital gain or loss if the holding period for such Shares is more than
one year. The ability to deduct capital losses is limited. Under the “wash sale” rules of the Code, recognition of a loss on Shares sold pursuant to the Offer will ordinarily be disallowed to the extent a U.S. Stockholder acquires substantially
identical Shares, including Shares purchased pursuant to the Company’s Dividend Reinvestment Program, within 30 days before or after the date the Shares are purchased by the Company pursuant to the Offer. In that event, the basis and holding period
of the Shares acquired by the U.S. Stockholder will be adjusted to reflect the disallowed loss. Additionally, any loss realized upon a taxable disposition of Shares held for six months or less will be treated as a long-term capital loss to the
extent of any capital gains dividends received by the U.S. Stockholder (or amounts credited to the U.S. Stockholder as undistributed capital gains) with respect to such Shares. If none of the tests set forth in Section 302(b) of the Code is met, amounts received by a U.S. Stockholder who sells Shares pursuant to the Offer will be taxable to the U.S. Stockholder as a “dividend” to the extent of such U.S.
Stockholder’s share of the Company’s current and accumulated earnings and profits, and the excess of such amounts received over the portion that is taxable as a dividend will constitute a non-taxable return of capital (to the extent of the U.S.
Stockholder’s adjusted tax basis in the Shares sold pursuant to the Offer). Any amounts received in excess of the U.S. Stockholder’s adjusted tax basis in such case will constitute taxable gain. If the amounts received by a tendering U.S.
Stockholder are treated as a “dividend,” the tax basis (after an adjustment for non-taxable return of capital discussed above) in the Shares tendered to the Company will be transferred to any remaining Shares held by such U.S. Stockholder.
In addition, if a tender of Shares is treated as a “dividend” to a tendering U.S.
Stockholder, the IRS may take the position that a constructive distribution under Section 305(c) of the Code may result to a U.S. Stockholder whose proportionate interest in the earnings and assets of the Company has been increased by such tender.
U.S. Stockholders are urged to consult their own tax advisors regarding the possibility of deemed distributions resulting from the sale of Shares pursuant to the Offer. We cannot predict whether or the extent to which the Offer will be oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant to the Offer will cause us to accept fewer Shares than are tendered. Therefore, a U.S.
Stockholder can be given no assurance that a sufficient number of such U.S. Stockholder’ Shares will be purchased pursuant to the Offer to ensure that such purchase will be treated as a sale or exchange, rather than as a dividend, for U.S. federal
income tax purposes pursuant to the rules discussed above. The Company may be required to withhold 28% of the gross proceeds paid to a U.S. Stockholder or other
payee pursuant to the Offer as backup withholding unless the U.S. Stockholder has completed and submitted to the Company an IRS Form W-9 (or substitute IRS Form W-9), providing the U.S. Stockholder’s employer identification number or social
security number, as applicable, and certifying under penalties of perjury that: (a) such number is correct; (b) either (i) the U.S. Stockholder is exempt from backup withholding, (ii) the U.S. Stockholder has not been notified by the IRS that the
U.S. Stockholder is subject to backup withholding as a result of an under-reporting of interest or dividends, or (iii) the IRS has notified the U.S. Stockholder that the U.S. Stockholder is no longer subject to backup withholding; or (c) an
exception applies under applicable law. Even though the Company may have received a completed IRS Form W-9 from a U.S. Stockholder, the Company may nevertheless be required to backup withhold if it receives a notice from the IRS to that effect.
b. Non-U.S. Stockholders. The U.S. federal income taxation of a Non-U.S. Stockholder on a sale of Shares pursuant to the Offer depends on
whether the sale is “effectively connected” with a trade or business carried on in the U.S. by the Non-U.S. Stockholder (and if an income tax treaty applies, on whether the Non-U.S. Stockholder maintains a U.S. permanent establishment) as well as the
tax characterization of the transaction as either a sale of the Shares or a dividend distribution by the Company, as discussed above for U.S. Stockholders. If the sale of Shares pursuant to the Offer is not so “effectively connected” (or, if an
income tax treaty applies, the Non-U.S. Stockholder does not maintain a U.S. permanent establishment) and if, as anticipated for U.S. Stockholders, the sale is treated as a sale or exchange rather than a dividend for federal income tax purposes, any
gain realized by a Non-U.S. Stockholder upon the tender of Shares pursuant to the Offer will not be subject to U.S. federal income tax or to any U.S. tax withholding; provided, however, that such a gain will be subject to U.S. federal income tax at
the rate of 30% (or such lower rate as may be applicable under an income tax treaty) if the Non-U.S. Stockholder is a non-resident alien individual who is physically present in the United States for more than 182 days during the taxable year of the
sale. If, however, Non-U.S. Stockholders are deemed, for the reasons described above in respect of U.S. Stockholders, to receive a dividend distribution from the Company with respect to Shares they tender, the portion of the distribution treated as a
dividend (which may not include the portion of such dividend attributable to certain interest income and certain capital gain income) to the Non-U.S. Stockholder would be subject to a U.S. withholding tax at the rate of 30% (or such lower rate as may
be applicable under a tax treaty) if the dividend is not effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Stockholder (or, if an income tax treaty applies, the Non-U.S. Stockholder does not maintain a
U.S. permanent establishment).
If the amount realized on the tender of Shares by a Non-U.S. Stockholder is
effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Stockholder (and, if an income tax treaty applies, the Non-U.S. Stockholder maintains a U.S. permanent establishment), regardless of whether the
tender is characterized as a sale or as giving rise to a dividend distribution from the Company for U.S. federal income tax purposes, the transaction will be treated and taxed in the same manner as if the Shares involved were tendered by a U.S.
Stockholder. Any dividends received by a corporate Non-U.S. Stockholder that are effectively connected with a U.S. trade or business in which the corporate
Stockholder is engaged (and if an income tax treaty applies, are attributable to a permanent establishment maintained by the corporate Non-U.S. Stockholder) also may be subject to an additional branch profits tax at a 30% rate, or lower applicable
treaty rate. Non-U.S. Stockholders should provide the Company with a properly completed IRS Form W-8BEN, IRS Form W-8IMY, IRS Form W-8ECI or other applicable form
in order to avoid backup withholding (at a rate of 28%) on the cash they receive from the Company regardless of how they are taxed with respect to their tender of the Shares involved.
United States IRS Circular 230 Notice: To ensure compliance with IRS Circular
230, Stockholders are hereby notified that: (a) any discussion of U.S. federal tax issues contained or referred to in this Offer to Purchase or any document referred to herein is not intended or written to be used, and cannot be used by
Stockholders for the purpose of avoiding penalties that may be imposed on them under the Code; (b) such discussion is written for use in connection with the promotion or marketing of the transactions or matters addressed herein; and (c)
Stockholders should seek advice based on their particular circumstances from an independent tax advisor. The tax discussion set forth above is included for
general information only. Each Stockholder is urged to consult such Stockholder’s own tax advisor to determine the particular tax consequences to such Stockholder of the Offer, including the applicability and effect of federal, state, local and
foreign tax laws.
14. Amendments; Extension of Tender Period; Termination.
We reserve the right, at any time during the pendency of the Offer, to amend,
supplement, extend or terminate the Offer in any respect. Without limiting the manner in which we may choose to make a public announcement of such an amendment, supplement, extension or termination, we shall have no obligation to publish, advertise
or otherwise communicate any such public announcement, except as provided by applicable law (including Rules 14e-1(d) and 13e-4(e)(3) promulgated under the Exchange Act). We may extend the period of time the Offer will be open by issuing a press release or making some other public announcement by no later than 9:00 a.m., Eastern Time, on the next business day after the Offer otherwise would have expired.
Except to the extent required by applicable law (including Rule 13e-4(f)(1) promulgated under the Exchange Act), we will have no obligation to extend the Offer.
15. Forward Looking Statements; Miscellaneous.
The Offer may include forward-looking statements. Words like “anticipate,”
“believe,” “expect,” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. Although we believe that the expectations reflected in such forward-looking statements are based upon
reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the current global economic downturn, increased direct
competition, changes in government regulations or accounting rules, changes in local, national and global capital market conditions, our ability to obtain or maintain credit lines or credit facilities on satisfactory terms, changes in interest
rates, availability of proceeds from our offering, our ability to identify suitable investments, our ability to close on identified investments, inaccuracies of our accounting estimates, our ability to locate suitable borrowers for our loans and
the ability of such borrowers to make payments under their respective loans. Our actual results could differ materially from those implied or expressed in the
forward-looking statements for any reason. We have based the forward-looking statements included in the Offer on information available to us on the date of the Offer, and we assume no obligation to update any such forward-looking statements.
Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional
disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements and
projections contained in the Offer are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. The Offer is not being made to, nor will we accept tenders from or on behalf of, owners of Shares in any jurisdiction in which the making of the Offer or its acceptance would not comply with the securities or “blue sky” laws
of that jurisdiction. We are not aware of any jurisdiction in which the making of the Offer or the acceptance of tenders of, purchase of, or payment for, Shares in accordance with the Offer would not be in compliance with the laws of such
jurisdiction. We, however, reserve the right to exclude Stockholders in any jurisdiction in which it is asserted that the Offer cannot lawfully be made or tendered Shares cannot lawfully be accepted, purchased or paid for. So long as we make a
good-faith effort to comply with any state law deemed applicable to the Offer, we believe that the exclusion of holders residing in any such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on our behalf by one or more brokers or dealers licensed under the laws of such jurisdiction.
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INSTRUCTIONS: IN ORDER TO PROCESS YOUR TENDER, ALL PAPERWORK AND SIGNATURES MUST BE RECEIVED IN OUR OFFICE BY March 18, 2020. FAILURE TO RETURN
ANY NECESSARY PAPERWORK, SIGNATURES, OR GUARANTEES BY THAT DATE WILL RESULT IN YOUR REPURCHASE BEING REJECTED.
1. Please be sure to have ALL account owners sign above.
2. ALL signatures must have a separate Medallion Signature Guarantee.
3. If your shares are held in an IRA or other custodial account, YOU must obtain the custodian’s signature and Medallion Guarantee. You will also need to obtain from your custodian a corporate resolution or similar
document showing that the person signing on behalf of the custodian is authorized to sign on behalf of the custodian.
4. Change of registration: if the registration shown above is no longer correct, you will need to provide us with all the necessary paperwork to update the registration
before the repurchase can be completed.
5. You must return all 3 pages of the Letter of Transmittal.
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February 18, 2020
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MACKENZIE REALTY CAPITAL, INC.
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Letter of Transmittal
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This is the Letter of Transmittal for the Share Repurchase Program pursuant to the Offer to Purchase dated February 14, 2020 (the “Offer to Purchase”) to purchase 135,000 shares of issued and outstanding common stock, par value $0.0001 per share (the “Shares”), of MacKenzie Realty Capital, Inc. (the “Company”) at a purchase price in cash equal to $9.19 (the “Purchase Price”). Any questions
concerning the Offer to Purchase or this Letter of Transmittal may be directed to the following address:
MacKenzie Realty Capital, Inc., 89 Davis Road, Suite 100, Orinda, CA 94563
Delivery of this Letter of Transmittal and all other documents to an address
other than as set forth above will not constitute a valid delivery to the Company. The Offer to Purchase and this entire Letter of Transmittal, including the
accompanying instructions, should be read carefully before this Letter of Transmittal is completed.
IF YOU WISH TO RETAIN YOUR SHARES YOU NEED NOT TAKE ANY ACTION.
Instructions
1. Guarantee of Signatures. Signatures on this Letter
of Transmittal must have a Medallion Signature Guarantee, which you should be able to obtain from your bank or broker.
2. Delivery of Letter of Transmittal. This Letter of Transmittal, properly completed and duly executed, should be sent by mail or courier or delivered by hand to the Company in each case at the address set forth
on the front page of this Letter of Transmittal, in order to make an effective tender. A properly completed and duly executed Letter of Transmittal must be received by the Company at the address set forth on the front page of this Letter of
Transmittal by 5:00 p.m., Pacific Time, on March 18, 2020, unless the Offer (as defined below) is extended. The Purchase Price will be paid and issued in exchange for the Shares tendered and accepted for purchase by the Company pursuant to the
Offer to Purchase in all cases only after receipt by the Company of a properly completed and duly executed Letter of Transmittal. The method of delivery of all
documents is at the option and risk of the Signatory (as defined below) and the delivery will be deemed made only when actually received. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended.
3. Signatures on this Letter of Transmittal, Powers of
Attorney and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s) of the Shares to be tendered, the signature(s) of the holder on this Letter of
Transmittal must correspond exactly with the name(s) on the subscription agreement accepted by the Company in connection with the purchase of the Shares, unless such Shares have been transferred by the registered holder(s), in which event this Letter
of Transmittal should be signed in exactly the same form as the name of the last transferee indicated on the stock ledger maintained in book-entry form by MacKenzie Capital Management, LP, the Company’s transfer agent.
(b) If any Shares tendered with this Letter of Transmittal are owned of record by two or more joint owners, all such owners must sign this Letter of
Transmittal.
(c) If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares listed, such person must so indicate when signing,
and proper evidence satisfactory to the Company of such person’s authority to so act must be submitted.
4. Withholding. Each stockholder accepting the Offer
who has not previously submitted to the Company a correct, completed and signed Internal Revenue Service (“IRS”) Form W-9 (“Form W-9”) or substituted Form W-9 (included with the original subscription) (for U.S. Stockholders) or IRS Form W-8BEN (“Form W-8BEN”), IRS Form W-8IMY (“Form W-8IMY”), IRS Form W-8ECI (“Form W-8ECI”), or other applicable form (for Non-U.S.
Stockholders), or otherwise established an exemption from such withholding, must submit the appropriate form to the Company. This form requirement is intended to prevent the potential imposition of U.S. federal backup withholding tax on the gross
payments made pursuant to the Offer, prior to receiving such payments. A stockholder should consult his or her tax advisor as to his or her qualification for exemption from the backup withholding requirements and the procedure for obtaining an
exemption.
5. Determinations of Validity. All questions as to the
form of documents and the validity of Shares will be resolved by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any deliveries of any Shares that are not in proper
form, or the acceptance of which would, in the opinion of the Company, be unlawful. The Company reserves the absolute right to waive any defect or irregularity of delivery for exchange with regard to any Shares, provided that any such waiver shall
apply to all tenders of Shares.
6. Cost Basis. The Company has elected the first-in,
first-out (FIFO) method as the default for calculating cost basis for covered shares as defined in the Company’s offering documents. If you wish to change your cost basis method, please complete Section 3 of the form below.
WE WILL NOT BE OBLIGATED TO GIVE ANY NOTICE OF ANY DEFECT OR IRREGULARITY IN ANY TENDER, AND WILL NOT INCUR ANY LIABILITY FOR FAILURE TO
GIVE ANY SUCH NOTICE.
IMPORTANT: THIS LETTER OF TRANSMITTAL PROPERLY COMPLETED AND BEARING ORIGINAL SIGNATURE(S) AND THE ORIGINAL OF ANY REQUIRED SIGNATURE
GUARANTEE(S) MUST BE RECEIVED BY THE COMPANY PRIOR TO THE EXPIRATION OF THE OFFER.
Letter of Transmittal - PLEASE CAREFULLY REVIEW THE INSTRUCTIONS AND COMPLETE THE NUMBERED ITEMS BELOW
Ladies and Gentlemen:
The person(s) signing this Letter of Transmittal (the “Signatory”) hereby tender(s) to the Company, which is an externally managed, non-diversified, closed-end management investment company incorporated in Maryland, the number of Shares specified on page 4 for purchase in
cash by the Company at a purchase price equal ton $9.19, under the terms and subject to the conditions set forth in the Offer to Purchase, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which Offer to Purchase and Letter
of Transmittal, together with any amendments or supplements thereto, collectively constitute the “Offer”). Subject to, and
effective upon, acceptance for payment of, or payment for, Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms or conditions of any such extension
or amendment), the Signatory hereby sells, assigns and transfers to, or upon the order of, the Company, all right, title and interest in and to all of the Shares that are being tendered hereby that are purchased pursuant to the Offer, and hereby
irrevocably constitutes and appoints MacKenzie Capital Management, LP as attorney-in-fact of the Signatory with respect to such Shares, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an
interest), to receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares, all in accordance with the terms and subject to the conditions set forth in the Offer.
The Signatory recognizes that, under certain circumstances as set forth in the
Offer to Purchase, the Company may amend, extend or terminate the Offer or may not be required to purchase any of the Shares tendered hereby. In any such event, the Signatory understands that the Shares not purchased, if any, will continue to be
held by the Signatory and will not be tendered. The Signatory understands that acceptance of Shares by the Company for payment will constitute a binding agreement
between the Signatory and the Company upon the terms and subject to the conditions of the Offer. The Signatory understands that the payment of the Purchase Price
for the Shares accepted for purchase by the Company will be made as promptly as practicable by the Company following the conclusion of the Offer and that in no event will the Signatory receive any interest on the Purchase Price or any dividends
paid after the date the Company accepts the Signatory’s shares for repurchase. Payment of the Purchase Price for the Shares tendered by the undersigned will be made on behalf of the Company by check in accordance with the Signatory’s payment
instructions provided. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the Signatory and all obligations of the Signatory hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the Signatory. Except as stated in the Offer, this tender is irrevocable. The Signatory hereby acknowledges that capitalized terms not defined in this Letter of Transmittal shall have the meanings ascribed to them in the
Offer to Purchase.
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1.
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Investor Information
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Name(s) as registered on the account.
(Correct if necessary)
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Name(s) On the Account
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Social Security Number or TIN on Account
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Financial Advisor Name and Phone Number
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2.
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Share Repurchase Request
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Enter Amount
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Number of Shares you are submitting for repurchase at a purchase price equal to $9.19:
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o All Shares as of the Expiration Date, or
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o Other number of Shares ____________
o SELL ALL OR NONE: ◻ (check this box
if you wish to sell your Shares ONLY if ALL your Shares will be purchased)
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NOTE :
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If the aggregate amount of Shares tendered for repurchase exceeds the number of Shares the Company seeks to repurchase, the
Company will repurchase Shares on a pro rata basis.
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3.
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Payment Instructions
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Payment Method
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Indicate how you wish to receive your payment below. If an option is not selected, a check will be sent to your address of
record. Proceeds for qualified accounts, including IRAs and other Custodial accounts, and certain Broker-controlled accounts as required by your Broker/Dealer of record, will automatically be issued to the Custodian or Broker/Dealer of
record, as applicable. All custodial held and broker-controlled accounts must include the Custodian and/or Broker/Dealer
signature.
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□ Cash/Check Mailed to Address of Record
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□ Cash/Check Mailed to Third
Party/Custodian
Name/Entity Name/Financial Institution: _______________________
Mailing Address: __________________________________________
City, State and Zip Code: ____________________________________
Account Number: __________________________________________
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4.
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Dividend Reinvestment
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Only applicable to
Dividend Reinvestment Plan participants.
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Your participation in the Dividend Reinvestment Plan will continue unless 1) you have no Shares outstanding after the completion
of this Offer or 2) the Company is otherwise notified by you. If you wish to discontinue your participation, you must complete the Dividend Election Form which can be obtained by contacting Investor Relations.
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5.
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Authorized Signatures
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By executing this Letter of Transmittal, the
undersigned hereby delivers to the Company in connection with the Offer to Purchase the number of Shares indicated above. All Custodial held and Broker-controlled accounts must include the Custodian and/or Broker/Dealer signature. Additional documentation may be required if redeeming due to Death or from a Trust, Corporation, Pension Plan, or Partnership account. Contact Investor
Relations for detailed instructions at 925.631.9100.
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Owner & Custodian Information
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Medallion (office use)
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Owner*
Name: _________________________________
Signature: ______________________________
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Date _______
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(Obtain a Medallion Guarantee Stamp here from your bank or broker)
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Co-Owner(s) (if applicable)
Name(s): _______________________________
Signature(s): ____________________________
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Date _______
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(Your Custodian will place a Medallion Guarantee Stamp here if this is an IRA or other custodial account or this can be used for a co-owner
Medallion)
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Custodian/Broker-Dealer (if applicable)
Name: _________________________________
Signature: ______________________________
IRA or Tax #: ____________________________
Phone Number: __________________________
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Date _______
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* If signature is by trustee(s), executor(s), administrator(s), guardian(s), attorney(s) in fact, agent(s),
officer(s), or a corporation or another acting in a fiduciary or representing capacity, please provide the following information:
Name: ____________________________ Capacity: _________________________
EFFECTIVE DATE OF REDEMPTION: March 18, 2020
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Return to:
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MacKenzie Realty Capital, Inc.
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89 Davis Road, Suite 100,
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Orinda, CA 94563
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925-631-9119 (fax) or investors@mackenzierealty.com
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NOTICE OF WITHDRAWAL OF TENDER REGARDING SHARES HELD IN
MACKENZIE REALTY CAPITAL, INC.
COMPLETING AND RETURNING THIS FORM WILL RESCIND YOUR SHARE REPURCHASE REQUEST. PLEASE ONLY COMPLETE AND RETURN THIS FORM IF YOU WISH TO
RESCIND YOUR PENDING SHARE REPURCHASE REQUEST FOR THE OFFER DATED February 18, 2020.
The undersigned recognizes that upon the receipt on a timely basis of this Notice of Withdrawal of Tender, properly executed, the shares (the “Shares”) of MacKenzie Realty Capital, Inc. (the “Company”) previously tendered will not be purchased by the Company.
Information
Tendered pursuant to the Offer to Purchase dated February 18, 2020. The offer and withdrawal rights will expire at, and this Notice of Withdrawal must be received by the Company either by hand-delivery, mail or facsimile before 5:00 P.M., Pacific Time, on March 18, 2020, unless the offer is extended.
COMPLETE THIS NOTICE OF WITHDRAWAL AND RETURN TO THE FOLLOWING ADDRESS:
MacKenzie Realty Capital, Inc.
89 Davis Road, Suite 100, Orinda, CA 94563
925.631.9119 (Fax) or investors@mackenzierealty.com
You are responsible for confirming that this Notice of Withdrawal is received by the Company at the address above.
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1.
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Investor Information
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Print name(s) as registered on the account.
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Name(s) On the Account
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Social Security Number or TIN on Account
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Financial Advisor Name and Phone Number
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2.
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Withdrawal Request
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The undersigned hereby withdraws the tender of its Shares to the Company for purchase by the Company that previously was
submitted by the undersigned in a Letter of Transmittal dated ________________________, 201__.
This tender was in the amount of: □ All
Shares as of the Expiration Date, or □ _____________ Number of Shares.
The undersigned recognizes that upon the receipt on a timely basis of this Notice of Withdrawal of Tender, properly executed, the
Shares previously tendered will not be purchased by the Company.
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3.
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Authorized Signatures
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Sign exactly as
your account is registered |
Investor Name (Please
Print) Signature Date
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Investor Name (Please Print)
Signature Date
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MACKENZIE REALTY CAPITAL, INC.
THIS IS NOTIFICATION OF THE SHARE REPURCHASE OFFER
DATED February 18, 2020
DATED February 18, 2020
Dear Stockholder:
We are writing to you to announce the quarterly share repurchase offer by
MacKenzie Realty Capital, Inc. The purpose of this Offer (as defined below) is to provide limited liquidity to holders of shares of our common stock by offering to repurchase certain of those shares at a purchase price equal to $9.19 per Share (the
“Purchase Price”) (Shares are currently
being sold in our offering at $10.25) The Offer period will
begin February 18, 2020 and end at 5:00 P.M., Pacific Time, on March 18, 2020. Subject to the limitations contained in the Offer to Purchase, which is available on
our website at www.mackenziecapital.com/sec-filings, all properly completed and duly executed letters of transmittal returned to the Company will be processed on or about March 18, 2020.
IF YOU HAVE NO DESIRE TO SELL ANY OF YOUR SHARES AT $9.19 PER SHARE, PLEASE DISREGARD THE REMAINDER OF THIS NOTICE.
We intend to contact you again next quarter and each quarter thereafter to notify you if the Company intends to offer to repurchase a portion of its issued
and outstanding shares of common stock.
If you would like to tender a portion or all of your shares pursuant to the terms of this Offer, you must obtain from our website, or request that we mail
to you, a copy of the Offer to Purchase, dated February 18, 2020 (the “Offer to Purchase”) and the related Letter of Transmittal (the “Letter of Transmittal”) (which together, as they may be amended and supplemented from time to time, constitute the
“Offer”) and other documents related to the Offer (which together, as they may be amended and supplemented from time to time, constitute the “Share Repurchase Package”). Please read the following pages and the Share Repurchase Package because they
contain important information about the Offer. Requests for the Share Repurchase Package may be directed to the Company as follows:
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Our website:
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www.mackenzierealty.com/sec-filings
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Our phone number:
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925.631.9100
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Our mailing address:
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MacKenzie Realty Capital, Inc.
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89 Davis Road, Suite 100,
Orinda, CA 94563
Stockholders may also contact their financial advisor, broker, dealer, commercial bank or trust company for assistance concerning the Offer.
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This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares. The Offer is made solely by the
Offer to Purchase, dated February 18, 2020, and the related Letter of Transmittal, and any amendments or supplements thereto. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of shares of common stock
in any jurisdiction in which the making or acceptance or offers to sell shares would not be in compliance with the laws of that jurisdiction.
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SHARE REPURCHASE TERMS
MacKenzie Realty Capital, Inc., is offering to purchase 135,000
shares of its issued and outstanding common stock (the “Shares”) upon the terms and subject to the conditions described in the Offer to Purchase
and the Letter of Transmittal. This Offer has been approved by the Board. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., PACIFIC TIME, ON March 18, 2020, UNLESS THE OFFER IS EXTENDED. The Offer is not conditioned upon any minimum number of Shares being tendered. The Offer is, however, subject to other conditions as
set forth in the Offer to Purchase. The Offer is for cash at a purchase price equal to $9.19 (the “Purchase Price”). Shares are currently being sold in our offering at $10.25 per Share.
NEITHER THE COMPANY, THE BOARD, MCM ADVISERS, LP, NOR MACKENZIE CAPITAL MANAGEMENT, LP, MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE COMPANY, THE BOARD, THE ADVISERS OR THE MANAGER AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR REFRAIN
FROM TENDERING SHARES PURSUANT TO THE OFFER OR TO MAKE ANY REPRESENTATION OR TO GIVE ANY INFORMATION IN CONNECTION WITH THE OFFER OTHER THAN AS CONTAINED IN THE OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL.
The Company will purchase, at the Purchase Price, all Shares properly tendered and not properly withdrawn prior to the Expiration Date
(as defined below), upon the terms and subject to the conditions of the Offer, including the proration provisions (as described in the Offer to Purchase). Under no circumstances will the Company pay interest on the Purchase Price for the Shares,
regardless of any delay in making payment, nor will you be entitled to dividends or distributions on record dates that occur on or after the date that Company accepts your Shares for purchase.
The term “Expiration
Date” means 5:00 P.M., PACIFIC TIME, ON March 18, 2020, unless the Company, in its sole discretion, shall have extended the period of
time during which the Offer will remain open, in which event the term “Expiration Date” shall refer to the latest time and date at which the Offer, as so extended, shall expire. For purposes of the Offer, the Company will be deemed to have accepted for payment and, therefore, purchased, Shares properly tendered (and not properly withdrawn), only when, as and if the Company gives oral or written notice to
MacKenzie Capital Management, LP, the depositary for the Offer (the “Depositary”), of its acceptance of such Shares for payment
under the Offer.
Upon the terms and subject to the conditions of the Offer, if more than 135,000 Shares have been properly tendered and not properly
withdrawn prior to the Expiration Date, the Company will purchase properly tendered Shares on a pro-rata basis from all stockholders who properly tender Shares and do not properly withdraw them before the Expiration Date.
We expressly reserve the right, in our sole discretion, at any time and from time to time, to extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and payment for, any Shares by giving oral or written notice of such extension to the Depositary and making a public announcement thereof no later than 9:00 a.m., Eastern Time, on the next
business day after the last previously scheduled or announced Expiration Date. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer and to the right of a tendering stockholder to
withdraw such stockholder’s Shares. The Company also expressly reserves the right to terminate the Offer, as described in the Offer to Purchase. Subject to compliance with applicable law, the Company further reserves the right, regardless of whether
any of the circumstances described in the Offer to Purchase shall have occurred or shall be deemed by the Company to have occurred, to amend the Offer in any respect, including by increasing or decreasing the consideration offered. The Company will
announce any such termination or amendment to the Offer by making a public announcement of the termination or amendment in accordance with applicable law. Without limiting the manner in which the Company may choose to make a public announcement,
except as required by applicable law (including Rule 13e-4 under the Exchange Act), the Company shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a press release.
Generally, the receipt of cash from the Company in exchange for a stockholder’s Shares will be a taxable event for the stockholder for
U.S. federal income tax purposes. The receipt of cash for a stockholder’s Shares generally will be treated for U.S. federal income tax purposes either as (1) a sale or exchange of the Shares or (2) a distribution in respect of stock from the Company.
The Depositary (or other applicable withholding agent) may be required to withhold U.S. federal taxes on the gross proceeds of the Offer paid to a non-U.S. stockholder. For additional information, see Section 13 of the Offer to Purchase. Each
stockholder is urged to consult his, her or its own tax advisor to determine the particular tax consequences to him, her or it of the Offer, including the applicability and effect of federal, state, local and foreign tax laws. To prevent the
potential imposition of U.S. federal backup withholding on the gross payments made pursuant to the Offer, prior to receiving such payments, each stockholder accepting the Offer who has not previously submitted to the Company a correct, completed and
signed Internal Revenue Service (“IRS”) Form W-9 or substituted Form W-9 (included with the original subscription) (for U.S.
stockholders) or IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form W-8IMY, IRS Form W-8ECI, or other applicable form (for non-U.S. stockholders), or otherwise established an exemption from such withholding, must submit the appropriate form to the Company.
Tenders of Shares under the Offer are irrevocable, except that such Shares may be withdrawn at any time prior to the Expiration Date,
and, unless previously accepted for payment by the Company under the Offer, may also be withdrawn at any time after April 18, 2020 (which is 40 business days after
the commencement of the Offer). For such withdrawal to be effective, the Depositary must timely receive a written, telegraphic or facsimile transmission notice of withdrawal at the respective addresses or facsimile number specified for such manner of
delivery set forth on the notice of withdrawal. Any such notice of withdrawal must specify the name of the tendering stockholder, the number of Shares to be withdrawn and the name of the registered holder of such Shares. If Shares have been tendered
pursuant to the procedure for book-entry transfer set forth in the Offer to Purchase, any notice of withdrawal also must specify the name and the number of the account at the book-entry transfer facility to be credited with the withdrawn Shares and
must otherwise comply with such book-entry transfer facility’s procedures. The Company will determine, in its sole discretion, all questions as to the form and
validity of any notice of withdrawal, including the time of receipt, and such determination will be final and binding, subject to a stockholder’s right to challenge the Company’s determination in an arbitration. The information required to be
disclosed by Rule 13e-4(d)(1) under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference.
The purpose of the Offer is to provide limited liquidity to our stockholders, because there is otherwise no public market for the
Shares. Under our share repurchase program, we plan to conduct quarterly tender offers approximately 5% per year of our weighted average number of outstanding Shares. Unless our board of directors determines otherwise, we will limit the number of
shares to be repurchased by us during any calendar year to the proceeds we receive from the sale of our common stock under our dividend reinvestment plan during that year. At the discretion of our Board of Directors, we may also use cash on hand,
cash available from any borrowings and cash from liquidation of securities investments as of the end of the applicable period to repurchase Shares. We further anticipate that we will offer to repurchase such Shares on each date of repurchase at a
price equal to $9.25 until February 2021, $9.50 until February 2022, $9.75 until February 2023, and $10.00 thereafter, subject to such price being below the then-current NAV per share. If the NAV is below the anticipated purchase price, the Board
may decide to limit the purchase price to the then-current NAV. We anticipate that offers to purchase Shares will be disseminated during the second month of the quarter, and each offer to purchase shares will expire in the third month of the quarter
and Shares tendered will be purchased before the last business day of each calendar quarter, unless otherwise determined by the Board.
Our repurchase program recognizes that our Shares are not listed on a national securities exchange and have limited liquidity prior to
the occurrence of a “liquidity event.” A liquidity event could include (1) the sale of all or substantially all of our assets either on a complete portfolio basis or individually followed by a liquidation, (2) a listing of our Shares on a national
securities exchange, or (3) a merger or another transaction approved by our Board in which our Stockholders will receive cash or shares of a publicly traded company. While our Charter requires us to seek to explore a potential liquidity event eight
years following the completion of our offering period, there can be no assurance that a suitable transaction will be available or that market conditions for a liquidity event will be favorable during that timeframe. In making a determination of what
type of liquidity event is in our best interest, our Board, including our independent directors, may consider a variety of criteria, including, but not limited to, portfolio diversification, portfolio performance, our financial condition, potential
access to capital as a listed company, market conditions for the sale of our assets or listing of our securities, internal management considerations and the potential for Stockholder liquidity. At the sole discretion of our Board, we may use cash on
hand, cash available from borrowings and cash from liquidation of investments as of the end of the applicable period to repurchase Shares.