Who is MacKenzie?
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Most advisors wouldn’t consider a non-traded business development company for real estate exposure, but they should. MacKenzie Capital Management, a sponsor of direct real estate investment programs, offers just that – diversified commercial real estate exposure in a business development company with all the benefits of a real estate investment trust.
Formed in 1982 by C.E. Patterson, a former wirehouse advisor who would acquire limited partnership units in the secondary market for his clients, MacKenzie uses an innovative approach to provide advisors and investors access to a diversified portfolio of commercial real estate holdings. The company acquires thinly traded public and private limited partnership securities and shares of REITs at discounts to net asset value. They do so by tendering securities from investors of closed programs that typically no longer offer a liquidity option. Investors seeking liquidity are able to sell their interests without paying commissions to MacKenzie and receive payment in a timely manner after the tender has expired.
Historically, the Moraga, California-based MacKenzie has sponsored Regulation D private placements. Today, the company is raising $50 million in a public, non-traded business development company that acquires interests in non-traded REITs and other direct real estate programs.
Brooke Buckley, director of sales and marketing for MacKenzie, says the company pivoted after broker-dealer partners suggested a public offering would be more suitable in today’s environment. Public offerings are more transparent and accessible due to lower net worth and income requirements; two key considerations for broker-dealers and registered representatives. As the company explored the available options, it became clear that the business development company structure was the right choice.
Investors in MacKenzie Realty Capital, MacKenzie’s non-traded business development company, have the ability to own a diversified portfolio of non-traded REITS and limited partnerships with underlying assets in all real estate sectors. This non-traded business development company differs from others in that it acquires securities rather than debt. It differs from other non-traded REITs because investors own a portfolio of CRE diversified by asset type and manager.
MacKenzie Realty Capital targets a 7 percent yield which comes from the underlying securities. As a business development company, MacKenzie Realty Capital has the ability to pay distributions from any source, but currently opts to only do so from income generated by its underlying assets. REIT distributions, or proceeds from REIT and limited partnership liquidity events or asset sales, are distributed to investors as required by REIT rules. The company has the option to list on an exchange or liquidate its assets as a means of providing an exit for its investors.
MacKenzie raises capital through independent broker-dealers and registered investment advisors. Its wholesaling team, which is led by Buckley, is licensed through Arete Wealth Management LLC, a FINRA registered broker-dealer.
With more than 20 years of experience in making tender offers, MacKenzie has rendered the usually time-consuming and expensive process into an efficient and cost-effective method of acquiring securities. In addition, MacKenzie is the only company that purchases securities on the secondary market to create a portfolio that is both income-producing and growth-oriented.
In a way, MacKenzie Realty Capital serves two investors; those seeking liquidity from an illiquid non-traded REIT or limited partnership and those interested in acquiring a mature portfolio of diversified commercial real estate assets.
As of March 31, 2015, MacKenzie Realty Capital’s portfolio consisted of interests in more than 40 securities, including eight different non-traded REITs.
To learn more, visit MacKenzie here.
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