8-K: MacKenzie Capital Launches Starwood REIT Tender Offer

MacKenzie Realty Capital initiates a tender offer for Starwood REIT shares at a 22% discount, while its adviser increases ownership and a new multifamily project achieves 36% leasing.

Summary

• MacKenzie Realty Capital, Inc. (MKZR) launched a tender offer to purchase up to 150,000 Class S shares of Starwood Real Estate Income Trust, Inc. (Starwood) at $16.25 per share.
• The offer price represents an approximate 22% discount to Starwood's estimated net asset value (NAV) of $20.76 per share as of August 31, 2025.
• Starwood's share redemption program is currently oversubscribed, redeeming only about 4% of stockholder repurchase requests in June, July, and August 2025, making MacKenzie's offer an opportunity for liquidity.
• If successful in purchasing 150,000 shares, MacKenzie and its affiliates will invest $2.438 million for shares estimated by Starwood to be worth $3.114 million, representing a potential gross profit of $676,500.
• MacKenzie and its affiliates previously purchased over $3 million in Starwood shares in February 2025 ($15.30/share) and July 2024 ($17.50/share), with Starwood redeeming approximately 6,750 of these shares in September 2025 at $20.76, yielding over a 30% return on the most recent tender price.
• MacKenzie's Adviser, MacKenzie Real Estate Advisers, LP, acquired an additional 15,000 shares of MacKenzie, increasing total ownership by the Adviser, Robert Dixon, and an affiliate to over 7% of outstanding common stock.
• The company has begun leasing its multifamily development, Aurora at Green Valley, and has already leased 36% of the project.

Sentiment

Score: 8

Explanation: The filing presents several strong positive indicators: a strategic tender offer with significant profit potential, successful prior tender offer outcomes, substantial insider buying, strong initial leasing results for a new development, and a significant improvement in AFFO profitability. These factors collectively suggest a very positive outlook for the company.

Positives

• The tender offer for Starwood REIT shares presents a significant arbitrage opportunity, with a potential gross profit of $676,500 if the estimated NAV is realized.
• Previous tender offers for Starwood shares yielded strong returns for MacKenzie, with over 30% on February 2025 purchases and approximately 18% on July 2024 purchases.
• MacKenzie's Adviser and President, Robert Dixon, increased their ownership in the company to over 7%, signaling strong insider confidence.
• The company's multifamily development, Aurora at Green Valley, has achieved 36% leasing shortly after launch, indicating strong market demand.
• MacKenzie has shown an 84% improvement in Adjusted Funds From Operations (AFFO) profitability in its most recent annual results, indicating a positive financial trend.

Negatives

• None explicitly stated for MacKenzie Realty Capital, Inc. in this filing.

Risks

• Future results, performance, or transactions could differ significantly from forward-looking statements due to various factors, as detailed in the company's annual reports on Form 10-K and quarterly reports on Form 10-Q.
• The realization of the estimated value of Starwood shares is not guaranteed and depends on future market conditions and Starwood's performance.

Future Outlook

The company anticipates continued financial health and future growth prospects, driven by strategic investments in illiquid real estate securities and the performance of its real property portfolio, including the successful leasing of its Aurora at Green Valley development. Management expresses confidence in the company's future value exceeding its market price.

Management Comments

• "We have purchased another block of the Company's shares because we still believe it is a good investment and that the value of the shares substantially exceeds the market price."
• "We believe the Company has turned the corner as evidenced by its continued trend toward AFFO profitability, with the most recent annual results showing an 84% improvement in that category."
• "We have begun leasing our multifamily development, Aurora at Green Valley, and already have leased 36% of the project!"
• "We believe in the future of MacKenzie and continue put our own money where our conviction is."

Industry Context

This announcement highlights MacKenzie Realty Capital's strategy of capitalizing on illiquid real estate securities, specifically non-traded REITs like Starwood, where redemption programs are oversubscribed. This approach provides liquidity to shareholders of such REITs at a discount to NAV, creating potential arbitrage opportunities for MacKenzie. The successful initial leasing of the Aurora at Green Valley multifamily project also reflects a positive trend in the residential real estate market, aligning with MacKenzie's focus on multifamily properties.

Related Party Transactions

• MacKenzie's Adviser, MacKenzie Real Estate Advisers, LP, acquired an additional 15,000 shares of MacKenzie, resulting in combined ownership by the Adviser, Robert Dixon (President), and an affiliate of over 7% of the outstanding common stock. This was disclosed in Section 16 filings.

Stakeholder Impact

• **Shareholders of MacKenzie Realty Capital:** Potentially benefit from increased asset value and profitability through strategic tender offers, and from management's confidence demonstrated by insider share purchases.
• **Shareholders of Starwood Real Estate Income Trust:** Offered an opportunity for liquidity at a discount, which may be attractive given Starwood's oversubscribed redemption program.
• **Employees:** No direct impact mentioned, but positive company performance could lead to stability and growth opportunities.
• **Customers (tenants of Aurora at Green Valley):** Benefit from new housing options in the market.

Next Steps

• Continue with the tender offer process for Starwood Real Estate Income Trust, Inc. Class S shares.
• Continue leasing efforts for the Aurora at Green Valley multifamily development.
• File annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC, which will contain further discussion of risk factors.

Key Dates

Recommendation

The filing presents a compelling case for a 'buy' recommendation. MacKenzie Realty Capital is actively pursuing a high-potential arbitrage strategy by tendering for Starwood REIT shares at a significant discount to NAV, a strategy that has proven highly profitable in the past. The substantial insider buying by the company's adviser and president, increasing their stake to over 7%, signals strong confidence in the company's intrinsic value exceeding its market price. Furthermore, operational progress is evident with the rapid 36% leasing of the new Aurora at Green Valley multifamily development and an impressive 84% improvement in AFFO profitability. These factors collectively indicate strong management, strategic acumen, and positive financial momentum, suggesting significant upside potential for the stock.

Keywords

MacKenzie Realty Capital, MKZR, Starwood Real Estate Income Trust, Starwood REIT, Tender Offer, Real Estate Investment Trust, REIT, Illiquid Securities, Multifamily Development, Aurora at Green Valley, AFFO, Insider Buying, Real Estate