RELATED PARTY TRANSACTIONS

12 Months Ended

Jun. 30, 2024

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 8 – RELATED PARTY TRANSACTIONS

Advisory Agreements Effective January 1, 2021:

As discussed in Note 1, on January 26, 2021, our Board of Directors 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 we will continue to pay an Asset Management Fee on essentially the same terms as we were 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 the partnership units (units in our operating partnership issued by us and held by persons other than us) issued by us 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” our 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 Investment Adviser will receive an annual fee equal to $100 for providing the investment advice to us as to our securities portfolio under the Amended and Restated Investment Advisory Agreement.

During the years ended June 30, 2024 and 2023, we incurred asset management fees of $3,224,834 and $3,004,725, respectively.

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

Asset Management Fee Annual %	3.0%		2.0%		1.5%		Total Invested Capital
Quarter ended:
September 30, 2023	$	20,000,000	$	80,000,000	$	64,229,944	$	164,229,944
December 31, 2023	$	20,000,000	$	80,000,000	$	64,735,338	$	164,735,338
March 31, 2024	$	20,000,000	$	80,000,000	$	74,236,629	$	174,236,629
June 30, 2024	$	20,000,000	$	80,000,000	$	78,833,574	$	178,833,574
Quarter ended:
September 30, 2022	$	20,000,000	$	80,000,000	$	48,639,649	$	148,639,649
December 31, 2022	$	20,000,000	$	80,000,000	$	52,470,792	$	152,470,792
March 31, 2023	$	20,000,000	$	80,000,000	$	60,153,751	$	160,153,751
June 30, 2023	$	20,000,000	$	80,000,000	$	62,313,487	$	162,313,487

During the years ended June 31, 2024 and 2023, we did not incur or accrue any incentive management fee under the new Advisory Management Agreement.

Property Management and Leasing Services:

On May 6, 2022, the Real Estate Adviser’s newly formed wholly owned subsidiary, Wiseman Company Management, LLC (“WCM”), purchased the property management and leasing services rights from Wiseman. Therefore, effective the acquisition date, WCM has been providing property management and leasing services to the eight property limited partnerships in accordance with the pre-existing agreements. There have been no changes to any of the management services agreements terms with the property limited partnerships since the acquisition of the property management service rights.

During the year ended June 30, 2024, the ten limited partnerships paid total property management fees of $596,268 and leasing commissions of $489,571 to WCM. In addition, during the year ended June 30, 2024, the eleven partnerships also paid $1,702,616 to WCM for direct operating costs and construction of tenant improvements.

During the year ended June 30, 2023, the eight limited partnerships paid total property management fees of $489,387 and leasing commissions of $591,596 to WCM. In addition, during the year ended June 30, 2023, the eight partnerships also paid $1,963,432 to WCM for direct operating costs and construction of tenant improvements.

Organization and Offering Costs Reimbursement:

As detailed in the Offering Circular, offering costs incurred and paid by us in excess of $825,000 (excluding legal fees) in connection with the offering of preferred stock will be reimbursed by the Advisers except to the extent that 10% in broker fees are not incurred during the issuance of the preferred shares. In such case, the broker fees savings are available to us for paying marketing expenses or other non-cash compensation and therefore the broker fees savings increases the offering cost reimbursement threshold from the Advisers. As of June 30, 2024, we incurred $1,385,342 (excluding legal fees) of offering costs, of which $1,363,107 relates to offering cost paid by Mackenzie on behalf of us in connection with the preferred stock offering. As of June 30, 2023, we incurred $1,099,189 of offering costs, of which $1,000,667 relates to offering cost paid by Mackenzie on behalf of us in connection with the preferred stock offering. The total offering cost incurred as of June 30, 2024 were in excess of the total offering cost reimbursement threshold including the broker savings by $259,575. The total offering costs incurred as of June 30, 2023 were below the offering cost reimbursement threshold including the broker savings. The cumulative offering costs in excess of the reimbursable threshold have been reimbursed by the Adviser during the year ended June 30, 2024.

Administration Agreement:

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

Since November 1, 2018, MacKenzie has provided transfer agent services, with the costs incurred by MacKenzie being reimbursed by us. No fee (only cost reimbursement) is paid to MacKenzie for this service. Effective March 5, 2024, we hired Securities Transfer Corporation, a third-party transfer agent, to provide these services for our common and Series B preferred stock.

The administrative cost reimbursements for the years ended June 30, 2024 and 2023 were $756,733 and $726,000, respectively. The transfer agent services cost reimbursement for the years ended June 30, 2024 and 2023 were $66,267 and $92,000, respectively.

The table below outlines the related party expenses incurred for the years ended June 30, 2024 and 2023, and unpaid as of June 30, 2024 and 2023.

	Year ended				Unpaid as of
Types and Recipient	June 30, 2024		June 30, 2023		June 30, 2024		June 30, 2023
Asset management fees- the Real Estate Adviser	$	3,224,834	$	3,004,725	$	-	$	-
Administrative cost reimbursements- MacKenzie		756,733		726,000		-		-
Asset acquisition fees- the Real Estate Adviser (1)		1,075,048		1,878,356		-		-
Transfer agent cost reimbursements - MacKenzie		66,267		92,000		-		-
Organization & Offering Cost (2) - MacKenzie		102,871		499,689		79,632		151,132
Other expenses (3)- MacKenzie and Subsidiary’s GPs		-		-		91,987		5,232
Due to related entities					$	171,619	$	156,364

⁽¹⁾ Asset acquisition fees paid to the Real Estate Adviser were capitalized as a part of the real estate basis in accordance with our policy. The acquisition fee paid during the year ended June 30, 2024 was for the acquisition of 220 Campus Lane and Campus Lane Residential in September 2023, Green Valley Executive Center in January 2024 and One Harbor Center in May 2024.

⁽²⁾ Offering costs paid by MacKenzie - discussed in this Note under organization and offering costs reimbursements.

⁽³⁾ Expenses paid by MacKenzie and General Partner of a subsidiary on behalf of us and subsidiary.