DEF 14A: MacKenzie Realty Capital Seeks Charter Amendments to Facilitate Nasdaq Listing and Future Growth

MacKenzie Realty Capital is asking shareholders to approve amendments to its charter to align with publicly listed companies and remove outdated restrictions, aiming for a Nasdaq listing and improved capital raising.

Summary

• MacKenzie Realty Capital is holding a special meeting on December 18, 2024, to vote on proposals to amend and restate its charter.
• The proposed amendments include removing limitations imposed by the North American Securities Administrators Association (NASAA), revising the charter to align with publicly listed companies, and removing provisions related to the Investment Company Act.
• The company believes these changes are necessary to facilitate a listing on the Nasdaq Capital Market and to raise funds in the public markets.
• The board of directors recommends that stockholders vote in favor of all proposals.
• The record date for determining stockholders eligible to vote at the special meeting was November 6, 2024.
• As of the record date, there were approximately 13,435,656.80 shares of common stock outstanding and eligible to vote.
• The company has retained Georgeson to assist with the proxy solicitation process, with fees of approximately $10,500 plus expenses for basic services and an additional $10,000 in printing expenses.
• The company intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K within four business days after the meeting.

Sentiment

Score: 8

Explanation: The document is generally positive, focusing on strategic moves to improve the company's position and access to capital markets. The language is forward-looking and confident, with a clear recommendation from the board to approve the proposals.

Positives

• The proposed charter amendments are expected to facilitate the company's listing on the Nasdaq Capital Market.
• The removal of NASAA-mandated provisions will provide the company with greater operational flexibility.
• Aligning the charter with publicly listed companies is expected to improve corporate governance.
• The removal of investor suitability requirements will make it easier for stockholders to sell their shares.
• The company will have increased flexibility to raise capital through public equity offerings.
• The company is expanding exculpation and indemnification of its officers and directors to the maximum extent permitted by Maryland law, which may help attract and retain qualified personnel.

Negatives

• If less than all of the proposed amendments are approved, it may be more difficult to raise additional equity.
• The removal of certain restrictions could increase the risk of the company pursuing transactions that may not be in the best interest of stockholders.
• The proposed changes may increase the risk that the company will pursue transactions such as investments in joint ventures, general partnerships, and with affiliates, which, if such investments perform poorly, could adversely affect the company's results of operations and the value of your investment.

Risks

• Failure to obtain stockholder approval for all proposed amendments could hinder the company's ability to list on the Nasdaq and raise capital.
• The removal of certain restrictions could lead to increased risk-taking by the company.
• There is a risk that the company may not be able to maintain its REIT qualification.
• The company may not be able to successfully raise additional equity in conjunction with the Nasdaq listing.
• The company may not be able to achieve its strategic objectives.

Future Outlook

The company aims to list its shares on the Nasdaq Capital Market and raise capital through public equity offerings. The proposed charter amendments are considered crucial for these objectives.

Management Comments

• The Board believes that these amendments are crucial to our ability to be a Nasdaq-listed company, to raise funds in the public markets, and to grow our asset based and enhance stockholder returns.
• We encourage stockholders to approve these proposals.
• The Board of Directors, including the independent directors, recommends that you vote for the proposals.

Industry Context

The move to amend the charter and seek a Nasdaq listing is consistent with a trend of non-traded REITs seeking greater liquidity and access to capital markets. The removal of NASAA-mandated provisions is also a common step for REITs transitioning to a listed environment.

Comparison to Industry Standards

• The company's current charter includes provisions required by the NASAA REIT Guidelines, which are typically found in non-traded REITs.
• Publicly traded REITs generally do not have these NASAA-mandated provisions in their charters.
• The proposed amendments aim to bring the company's charter in line with those of publicly listed REITs, such as those listed on the NYSE or Nasdaq.
• The company's move to allow director removal only for cause is a common practice among publicly traded companies.
• The company's move to allow stockholders to take action by written consent is a common practice among publicly traded companies.
• The company's move to expand exculpation and indemnification of its officers and directors to the maximum extent permitted by Maryland law is a common practice among publicly traded companies.

Corporate Governance

Stakeholder Impact

• Shareholders are expected to benefit from the company's increased access to capital markets and potential for enhanced returns.
• Employees may benefit from the company's growth and improved financial position.
• Customers and suppliers are not directly impacted by the proposed charter amendments.

Next Steps

• Stockholders will vote on the proposed charter amendments at the special meeting on December 18, 2024.
• If approved, the company will file the Second Articles of Amendment and Restatement with the State Department of Assessments and Taxation of Maryland.
• The board of directors will amend the bylaws to eliminate inconsistencies resulting from the charter amendments.
• The company will proceed with its application to list on the Nasdaq Capital Market.

Key Dates

Keywords

charter amendment, Nasdaq listing, REIT, proxy statement, corporate governance, capital raising, NASAA, Investment Company Act, stockholder vote