NOTE 6 – RELATED PARTY TRANSACTIONS

Advisory Agreements Effective Through December 31, 2020:

Under the Amended and Restated Investment Advisory Agreement, the Company will pay the Adviser a fee for its services consisting of three components - a portfolio structuring fee, a base management fee, and a subordinated incentive fee.

The portfolio structuring fee is for the Adviser's initial work performed in identifying, evaluating and structuring the acquisition of assets. The fee equals 3.0% of the gross invested capital (“Gross Invested Capital”), which equals the number of shares issued, multiplied by the offering price of the shares sold ($10.00, regardless of whether or not shares were issued with volume or commission discounts), plus any borrowed funds. These services are performed on an ongoing basis in anticipation of deploying new capital, generally within 15 days of the receipt of capital. Therefore, this fee is expensed in the period the capital is accepted.

The base management fee is calculated based on the Company's Gross Invested Capital plus any borrowing for investment purposes. The base management fees range from 1.5% to 3.0%, depending on the level of Gross Invested Capital.

The subordinated incentive fee has two parts—income and capital gains. The incentive fee components (other than during liquidation) are designed so that neither the income incentive fee nor the capital gains incentive fee is payable to the Adviser unless our stockholders have first received dividends at a rate of at least 7.0% per annum for the relevant measurement period (a fiscal quarter, for the income incentive fee; a fiscal year, for the capital gains incentive fee).

The income incentive fee (the “Income Fee”) is calculated and payable quarterly in arrears as follows: (i) the sum of preliminary net investment income for each fiscal quarter since the effective date of the Amended and Restated Investment Advisory Agreement (October 1, 2017) exceeding 7% of the “Contributed Capital” (which equals the number of shares issued multiplied by the maximum public offering price at the time such shares were sold, regardless of whether or not shares were issued with volume or commission discounts or through the DRIP, as such amount is computed from time to time) on an annualized basis up to 8.75% of Contributed Capital; and (ii) 20.0% of our preliminary net investment income for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate; minus (iii) the sum of all previously paid income incentive fees since the effective date, plus (iv) any incremental income incentive fee payable resulting from the reanalysis after calculation of the capital gains incentive fee.

The capital gains incentive fee (the “Capital Gains Fee”) is calculated and payable in arrears as of the end of each fiscal year as follows: (i) the sum of all "capital gains" (calculated as net realized capital gains less unrealized capital depreciation) for each fiscal year after the effective date exceeding 7% of the Contributed Capital on an annualized basis up to 8.75% of Contributed Capital, which thresholds are reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income); and (ii) 20.0% of all capital gains for each fiscal quarter after the effective date exceeding 8.75% of Contributed Capital at an annualized rate, which threshold is reduced by (but not below zero) the cumulative preliminary net investment income for each fiscal quarter since the effective date (or, increased, in the case of negative cumulative preliminary net investment income); minus (iii) the sum of all previously paid income incentive fees since the effective date and prior to the end of such fiscal year; less (iv) the aggregate amount of all capital gains incentive fees paid in prior fiscal years ending after the effective date. To the extent that such calculation would result in a capital gains incentive fee that exceeds 20% of all realized capital gains for the measurement period, the capital gains incentive fee shall be capped so that under no circumstance does it exceed 20% of the realized capital gains for the measurement period.

Advisory Agreements Effective January 1, 2021:

As discussed in Note 1, on January 26, 2021, the Board of Directors of the Company approved, effective January 1, 2021, two advisory agreements, an Advisory Management Agreement with the Real Estate Adviser and the Amended and Restated Investment Advisory Agreement with the Investment Adviser.

The terms of the Advisory Management Agreement with the Real Estate Adviser provide that the Company will continue to pay an Asset Management Fee on essentially the same terms as it was paying the Investment Adviser prior to 2021, namely based upon a percentage of Invested Capital (3% of the first $20 million, 2% of the next $80 million, and 1.5% over $100 million). Invested Capital is equal to the amount calculated by multiplying the total number of outstanding Shares, Preferred Shares, and Partnership Units issued by the Company by the price paid for each or the value ascribed to each in connection with their issuance. The Advisory Management Agreement also provides for a 2.5% Acquisition Fee on new (non-security) purchases, subject to certain limitations designed to eliminate incentives to “churn” Company assets. The new Advisory Management Agreement also provides for an incentive management fee that is equal to 15% of all distributions once shareholders have received cumulative distributions equal to 6% from the effective date of the Agreement. The Company will not pay any Property Management Fees, Debt Financing Fees, or Disposition Fees to the Real Estate Adviser.

The Investment Adviser will receive an annual fee equal to $100 for providing the investment advice to the Company as to its securities portfolio under the Amended and Restated Investment Advisory Agreement.

During the six months ended June 30, 2021, the Company incurred the asset management fees of $1,354,323 and asset acquisition fees of $343,750 under the new advisory agreement with the Real Estate Adviser. The asset acquisition fees were paid on the real estate acquisitions of Madison and PVT.

During the six months ended December 31, 2020, the Company incurred the base management fees of $1,335,376 and portfolio structuring fees of $6,679 under the previous advisory agreement with the Investment Adviser.

During the years ended June 30, 2020 and 2019, the Company incurred base management fees of $2,549,076 and $2,206,227, respectively, and portfolio structuring fees of $588,203 and $707,589, respectively, under the previous advisory agreement with the Investment Adviser.

The asset management and base management fees mentioned above were based on the following quarter ended Invested Capital segregated in two columns based on the annual fee rate:

Asset/Base Management Fee Annual %		3.0%		2.0%		1.5%	Total Invested Capital

For the Year Ended June 30, 2021
Quarter ended:
September 30, 2020	$	20,000,000	$	80,000,000	$	28,769,486	$	128,769,486
December 31, 2020		20,000,000		80,000,000		33,997,317		133,997,317
March 31, 2021		20,000,000		80,000,000		34,120,859		134,120,859
June 30, 2021		20,000,000		80,000,000		33,648,965		133,648,965

For the Year Ended June 30, 2020
Quarter ended:
September 30, 2019	$	20,000,000	$	80,000,000	$	15,998,789	$	115,998,789
December 31, 2019		20,000,000		80,000,000		21,409,289		121,409,289
March 30, 2020		20,000,000		80,000,000		27,070,974		127,070,974
June 30, 2020		20,000,000		80,000,000		28,607,752		128,607,752

For the Year Ended June 30, 2019
Quarter ended:
September 30, 2018	$	20,000,000	$	72,435,844	$	-	$	92,435,844
December 31, 2018		20,000,000		78,322,307		-		98,322,307
March 31, 2019		20,000,000		80,000,000		4,719,872		104,719,872
June 30, 2019		20,000,000		80,000,000		9,263,200		109,263,200

During the six months ended June 30, 2021, the Company did not incur or accrue any incentive management fee under the new Advisory Management Agreement.

Similarly, the Company did not accrue Income Fee or Capital Gains Fee for the six months ended December 31, 2020, under the previous advisory agreement with the Investment Advisor.

For the year ended June 30, 2020, the Company neither incurred the Capital Gains Fee nor the Income Fee. For the year ended June 30, 2019, the Company incurred $1,789,870 of the Capital Gains Fee; however, did not incur the Income Fee.

Organization and Offering Costs Reimbursement:

As provided in the previous advisory agreement with the Investment Adviser and the prospectus of the Company, offering costs incurred and paid by the Company in excess of $1,650,000 on the third public offering were reimbursed by the Investment Adviser except to the extent that 10% in broker fees are not incurred (the “broker savings”). In such case, the broker savings were available to be paid by the Company for marketing expenses or other non‑cash compensation. Total offering costs incurred on the third public offering as of the termination date of October 31, 2020 were $624,188 which were below the reimbursement threshold. Therefore, there were no amounts reimbursable from the Investment Adviser as of the offering termination date.

Of the cumulative offering costs incurred on the third public offering by the Company as of the offering termination date of October 31, 2020 and June 30, 2020, MacKenzie had paid on behalf of the Company a total of $346,349 and $300,212, respectively. Of the amounts paid by MacKenzie, as of June 30, 2020, the Company had not reimbursed MacKenzie in the amounts $52,492. Therefore, those amounts were recorded as payable to MacKenzie and included as a part of due to related entities in the consolidated statements of assets and liabilities (predecessor basis) as of June 30, 2020. The Company had fully reimbursed MacKenzie as of June 30, 2021.

During the six months ended June 30, 2021 and December 31, 2020, total offering costs paid by MacKenzie on behalf of the Company on its second and third public offerings were $0 and $46,136, respectively. During the years ended June 30, 2020 and 2019, total offering costs paid by MacKenzie on behalf of the Company on its second and third public offerings were $444,935 and $550,908, respectively.

The third public offering terminated on October 31, 2020. Therefore, the remaining deferred offering costs that had not been amortized as of the termination date were fully expensed as of December 31, 2020. Total amortization of these deferred costs for the six months ended June 30, 2021 and December 31, 2020, were $0 and $342,015, respectively. Total amortization of these deferred costs for the years ended June 30, 2020 and 2019, were $880,138 and $556,165, respectively.

Administration Agreement:

Under the Administration Agreement, the Company reimburses MacKenzie for its allocable portion of overhead and other expenses it incurs in performing its obligations under the Administration Agreement, including furnishing the Company with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities, as well as providing the Company with other administrative services, subject to the independent directors' approval. In addition, the Company reimburses MacKenzie for the fees and expenses associated with performing compliance functions, and its allocable portion of the compensation of the Company's Chief Financial Officer, Chief Compliance Officer, Director of Accounting and Financial Reporting, and any administrative support staff.

Effective November 1, 2018, transfer agent services are also provided by MacKenzie and the costs incurred by MacKenzie in providing the services are reimbursed by the Company. No fee (only cost reimbursement) is being paid by the Company to MacKenzie for this service.

The administrative cost reimbursements for the six months ended June 30, 2021 and December 31, 2020, were $310,400 and $310,400, respectively. The administrative cost reimbursements for the years ended June 30, 2020 and 2019, were $680,000 and $570,667, respectively. Transfer agent services cost reimbursements for the six months ended June 30, 2021 and December 31, 2020, were $61,600, and $61,600, respectively. Transfer agent services cost reimbursements for the years ended June 30, 2020 and 2019, were $80,000 and $23,333, respectively.

The table below outlines the related party expenses incurred for the six months ended June 30, 2021 and December 31, 2020, and years ended June 30, 2020 and 2019, and unpaid as of June 30, 2021, and 2020.

	Six Months Ended		Six Months Ended		Incurred For The Year Ended				Unpaid as of
Types and Recipient	June 30, 2021		December 31, 2020		June 30, 2020		June 30, 2019		June 30, 2021		June 30, 2020

Asset management fees- the Real Estate Adviser	$	1,354,323	$	-	$	-	$	-	$	-	$	-
Base management fees- the Investment Adviser		-		1,335,376		2,549,076		2,206,227		-		657,280
Asset acquisition fees- the Real Estate Adviser ⁽³⁾		343,750		-		-		-		-
Portfolio structuring fees- the Investment Adviser		-		6,679		588,203		707,589		-		-
Subordinated Incentive fee - the Adviser		-		-		-		1,789,870		-		-
Administrative cost reimbursements- MacKenzie		310,400		310,400		680,000		570,667		-		-
Transfer agent cost reimbursements - MacKenzie		61,600		61,600		80,000		23,333		-		-
Organization & Offering Cost ⁽²⁾- MacKenzie		-		342,015		444,935		550,908		-		52,492
Other expenses ⁽¹⁾ - MacKenzie				-		-		-		1,937		8,492

Due to related entities									$	1,937	$	718,264

⁽¹⁾Expenses paid by MacKenzie on behalf of the Company to be reimbursed to MacKenzie.

⁽²⁾Offering costs paid by MacKenzie - discussed in Note 6 under organization and offering costs reimbursements. These are amortized over twelve-month period as discussed in Note 2.

⁽³⁾Asset acquisition fees paid to the Real Estate Adviser were capitalized as a part of the real estate basis in accordance with the Company policy.

Controlled or Affiliated Investments (Predecessor Basis):

Under the 1940 Act, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and generally is deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of June 30, 2020, the Company is deemed to be either “affiliated” with, or in “control” of, the below portfolio companies despite the fact that the Company does not have the power to exercise control over the management or policies of these portfolio companies.

June 30, 2020:

Name of Issuer and Title of Issue	Fair Value at June 30, 2019		Gross Additions		Transfers			Gross Reductions ⁽¹⁾			Net Realized Gains/(Losses)		Net Change in Unrealized Gains/(Losses)			Fair Value at June 30, 2020		Interest/Dividend/Other income Year Ended June 30, 2020

Affiliated Investments:
5210 Fountaingate, LP	$	552,693	$	-	$	-		$	-		$	-	$	(126,897	)	$	425,796	$	-
Arrowpoint Burlington LLC		1,088,910		-		-			(1,333,331	)		583,331		(338,910	)		-		-
BP3 Affiliate, LLC		1,350,000		318,000		-			-			-		-			1,668,000		-
BR Desota Investment Co, LLC		4,250,000		-		-			(4,250,000	)		-		-			-		46,623
BR Everwood Investment Co, LLC		-		3,750,000		-			-			-		-			3,750,000		479,871
BR Quinn35 Investment Co, LLC		4,000,000		-		-			(4,000,000	)		-		-			-		167,768
BR Sunrise Parc Investment Co, LLC		-		2,720,911		-			-			-		-			2,720,911		253,410
BR Westerly Investment Co, LLC		-		4,120,667		-			(4,120,667	)		-		-			-		-
FSP Energy Tower I Corp. Liquidating Trust		57,566		-		-			(49,637	)		-		1,881			9,810		37,438
FSP Satellite Place		712,585		41,693		-			-			-		(221,699	)		532,579		-
Lakemont Partners, LLC		1,007,700		-		-			(58,820	)		-		(91,720	)		857,160		26,135
MPF Pacific Gateway - Class B		7,316		-		-			-			-		(152	)		7,164		-
Secured Income, LP		302,009		-		-			-			-		(40,095	)		261,914		-
Summit Healthcare REIT, Inc.		2,587,408		4,488		-			-			-		(717,346	)		1,874,550		-

	$	15,916,187	$	10,955,759	$	-		$	(13,812,455	)	$	583,331	$	(1,534,938	)	$	12,107,884	$	1,011,245
Controlled Investments:
Addison NC, LLC		3,600,000	$	-	$	(2,000,000	)	$	-		$	-	$	(1,600,000	)	$	-	$	-
Addison Property Member, LLC		7,314,855		-		(7,316,326	)		-			-		1,471			-		1,176,187
Bishop Berkeley, LLC		4,051,013		-		-			-			-		(196,790	)		3,854,223		69,034
Britannia Preferred Members, LLC -Class 1		2,986,550		-		-			-			-		519,400			3,505,950		-
Britannia Preferred Members, LLC -Class 2		7,758,915		-		-			-			-		(669,316	)		7,089,599		-
Capitol Hill Partners, LLC		1,852,500		-		-			-			-		(383,800	)		1,468,700		-
Citrus Park Hotel Holdings, LLC		-		5,000,000		-			-			-		-			5,000,000		287,500
Coastal Realty Business Trust, REEP, Inc. - A		39,053		-		-			-			-		(5,063	)		33,990		-
Dimensions28 LLP		10,886,076		-		-			-			-		63,612			10,949,688		485,321
MacKenzie Realty Operating Partnership, LP		-		2,829,579		9,316,326			-			-		(532,764	)		11,613,141		-
Sunlit Holdings, LLC		-		5,000,000		-			(5,000,000	)		-		-			-		334,111

	$	38,488,962	$	12,829,579	$	-		$	(5,000,000	)	$	-	$	(2,803,250	)	$	43,515,291	$	2,352,153

Of the investments listed above, the Company (or its affiliates) has the power to exercise control over the management or policies of the portfolio companies listed below:

Coastal Realty Business Trust ("CRBT"):

CRBT is a Nevada business trust whose trustee is MacKenzie. Each series of the trust has its own beneficiaries and own assets. The Company owns two series of CRBT and is the only beneficiary of such series. Under the terms of the agreement, there are no redemption rights to any of the series participants. The Company and TRS are the sole beneficiaries of the following series as of June 30, 2021 and 2020:

•

CRBT, REEP, Inc.-A, which has an ownership interest in one of three general partners of a limited partnership which owns one multi-family property located in Frederick, Maryland.

The Operating Partnership:

As of June 30, 2020, the Operating Partnership was considered as a controlled investment. The Operating Partnership has been consolidated with the Company effective December 31, 2020 as discussed above in note 1.

MPF Pacific Gateway:

MPF Pacific Gateway, which was managed by MacKenzie, was a holding company that owned an investment in a REIT Liquidating Trust. The Company had a 15.82% ownership interest in MPF Pacific Gateway. The company made final liquidating distributions and dissolved during the year ended June 30, 2021.

Related Party Investment Purchases:

During the year ended June 30, 2021, two investment funds affiliated with the Company’s Advisers, which are also advised by the Investment Adviser, desired to sell Britannia Preferred Members, LLC- Class 1 and Class 2 and FSP Satellite Place, LLC for cash. The Company desired to purchase those securities at a price equal to the net asset value as agreed to by the Investment Adviser and the Board. While the Investment Adviser believes that the purchase price for each of the securities was higher than any other third party would reasonably pay, the Company desired to increase its ownership of these two securities in order to solidify more control of them. The Board of Directors approved the offers made to the Funds and each of the Funds subsequently accepted the offer. The details of these purchases are as follows:

Name of the Securities	Purchase Price per Unit		Units Purchased		Total Price Paid
Britannia Preferred Members, LLC - Class 1	$	36,250.00		62.52	$	2,266,350
Britannia Preferred Members, LLC - Class 2	$	10.40		106,000.00		1,102,400
FSP Satellite Place LLC	$	46,895.00		19.01		891,709
					$	4,260,459