8-K: MacKenzie Realty Capital Announces 1-for-10 Reverse Stock Split

MacKenzie Realty Capital, Inc. announced a 1-for-10 reverse stock split to increase its per share trading price and meet Nasdaq listing requirements, effective August 4, 2025.

Summary

• A one-for-ten reverse stock split of common stock was approved, effective at 5:00 p.m. Eastern Time on August 4, 2025.
• The par value of the common stock will decrease from $0.001 to $0.0001 per share, effective at 5:01 p.m. Eastern Time on August 4, 2025.
• No fractional shares will be issued; stockholders will receive a cash payment based on the closing price of the common stock on Nasdaq on August 1, 2025 (as adjusted for the split).
• Common stock will begin trading on a split-adjusted basis on The Nasdaq Capital Market on August 5, 2025, under the existing trading symbol MKZR, with a new CUSIP number (55453W501).
• The reverse stock split will reduce the number of outstanding common shares from 16,760,977.79 to approximately 1,676,098.
• The conversion price of Series A and C Preferred Stock will proportionally increase from $10.25 to $102.50 per share.
• The conversion price of Series B Preferred Stock will change to the lower of $102.50 or the volume weighted average of the Last Reported Sale Price per share of Common Stock on Nasdaq for the twenty trading days prior to conversion.
• The Common Dividend Threshold for Series B Preferred Stock will be adjusted to the first date after December 31, 2022, on which common stockholders received aggregate distributions equal to 10% per annum on the $73.80 per share NAV as of December 31, 2022, with pre-split distributions increased by a multiple of ten.
• The exercise price of Prefunded Warrants will be adjusted to $0.001.
• The exercise price of Series A and Series B Warrants will be adjusted to $17.10 per share, and the number of acquirable shares reduced to 33,800, 141,314.90, and 282,629.90, respectively.

Sentiment

Score: 6

Explanation: The reverse stock split is a necessary corporate action to maintain Nasdaq listing compliance, which is a positive for market access and investor perception. However, it does not fundamentally change the company's valuation or operational performance, and there is no guarantee of continued compliance.

Positives

• The reverse stock split is intended to increase the per share trading price of the common stock to meet the minimum bid price requirement for continued listing on the Nasdaq Capital Market.
• The reverse stock split will not affect any particular stockholder's relative ownership percentage of common shares, except for de minimis changes from cash in lieu of fractional shares.
• The relative voting or other rights accompanying the common shares will not be affected.
• There will be no change to the number of authorized shares of common stock.
• The company has paid a dividend every year since its inception in 2013.

Negatives

• There is no assurance that the common stock will meet all Nasdaq requirements for continued listing, despite the reverse stock split.
• Stockholders who would otherwise receive fractional shares will instead receive a cash payment, potentially resulting in a slight reduction of their overall holding.

Risks

• There is no assurance that MacKenzie Realty Capital's common stock will meet all Nasdaq requirements for continued listing, despite the reverse stock split.
• 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.

Future Outlook

The company intends for the reverse stock split to increase the per share trading price of its common stock to enable it to meet the minimum bid price requirement for continued listing on the Nasdaq Capital Market. However, there is no assurance that it will meet all Nasdaq requirements.

Management Comments

• MacKenzie's common stock is expected to begin trading on a split-adjusted basis on the Nasdaq Capital Market on August 5, 2025, under the current trading symbol, MKZR.
• The reverse stock split was approved by MacKenzie's Board of Directors on July 3, 2025, and is intended to increase the per share trading price of the Company's common stock to enable the Company to meet the minimum bid price requirement for continued listing on the Nasdaq Capital Market.
• There is no assurance that MacKenzie's common stock will meet all Nasdaq requirements for continued listing.

Industry Context

Reverse stock splits are a common corporate action undertaken by companies whose stock price has fallen below exchange minimums, such as Nasdaq's $1.00 bid price requirement. This move aims to regain compliance and potentially improve the stock's perception among institutional investors, who often avoid lower-priced stocks. MacKenzie Realty Capital, as a REIT, is taking this step to maintain its market access and liquidity on a major exchange.

Corporate Governance

Stakeholder Impact

• Shareholders: Common stockholders will hold fewer shares at a proportionally higher price per share. Those with fractional shares will receive cash in lieu. Preferred stockholders and warrant holders will see adjustments to their conversion/exercise prices and the number of shares acquirable, maintaining their proportional economic interest.
• Nasdaq: The action is intended to bring the company into compliance with Nasdaq's minimum bid price requirement, which is positive for the exchange's listing standards.

Next Steps

• Common stock will begin trading on a split-adjusted basis on The Nasdaq Capital Market on August 5, 2025.
• Stockholders of record are not required to take any action to receive post-split shares in book-entry form.
• Stockholders owning shares through a bank, broker, custodian, or other nominee should contact their respective entities for information regarding the processing of the reverse stock split.

Key Dates

Recommendation

The reverse stock split is a technical maneuver to maintain Nasdaq listing compliance, which is a positive for the company's market presence. However, it does not reflect an improvement in underlying business fundamentals or financial performance. Investors should hold to observe if the company can sustain its listing and improve its operational results, as the split itself doesn't guarantee long-term value creation.

Keywords

Real Estate, REIT, Reverse Stock Split, Nasdaq Listing, Corporate Action, Common Stock, Preferred Stock, Warrants, Share Price, Corporate Governance