MacKenzie Realty Capital: Aurora at Green Valley Project Update

MacKenzie Realty Capital, Inc. (Nasdaq: MKZR) has provided an update on its development project, Aurora at Green Valley, in Fairfield, CA. The project is progressing on schedule, with occupancy expected to begin during the third quarter for the first residential building, and the other two buildings to be delivered by the end of the year. The Sunrise Center clubhouse, with leasing offices, is scheduled to be delivered 45 days prior to the first residential building to assist in leasing activities.

The project has had minimal overruns, with a forecasted total use of only 23% of the contingencies provided in the budget. MacKenzie expects to commence drawing on its construction loan facility next month, as it will have invested its $12.5 million cash equity. The lender, Valley Strong Credit Union, has already begun performing inspections to ensure a smooth draw process.

Market occupancies for similar projects are maintaining at 95% occupancy, including Nova, the newest large project in Green Valley, which has now stabilized its 281 units at that 95% level. Rents in this market increased by 25% between 2021 and 2023, and while they pulled back a bit at the end of 2023, they have resumed a positive trend and are now just about 3% off the rental peak established in 2023. MacKenzie believes there is not enough new product in this growth market to satisfy demand.

Robert Dixon, Chief Executive Officer at MacKenzie, stated, "We are excited about the progress we are making in developing the Aurora project and are committed to helping meet the continued demand for housing in the San Francisco Bay Area. This development is staying on the budget and schedule we initially disclosed. I want to thank our team here at MacKenzie as well as all the contractors and subcontractors involved."

MacKenzie's investment in the Aurora project aligns with its income-focused strategy, as the project is expected to generate significant rental income. The high demand for housing in the area, as evidenced by the high occupancies and increasing rents, indicates a strong potential for rental income. Investors can expect a return on their investment through the appreciation of the property's value and the distribution of rental income as dividends. MacKenzie has paid a dividend every year since inception, and the current portfolio includes interests in 4 multifamily properties and 8 office properties plus 2 multifamily developments.

In conclusion, MacKenzie Realty Capital's Aurora at Green Valley project is progressing on schedule and within budget, with strong market demand and rental trends supporting the company's income-focused strategy. Investors can expect potential capital gains through rental income appreciation and dividend distributions.