MacKenzie Realty Capital's Reverse Split: A Lifeline for Survival and a Play on Real Estate Demand

As MacKenzie Realty Capital (NASDAQ: MKZR) races against the clock to avoid Nasdaq delisting, its recently approved 1-for-10 reverse stock split is not just a technical maneuver—it's a strategic pivot to stay in the game amid shifting capital market dynamics. With its stock hovering at $0.65, well below Nasdaq's $1 minimum bid price requirement, the company faces an existential threat. But this move also positions MKZR to capitalize on surging investor demand for real estate exposure, particularly in multifamily and office properties, while navigating a structural shift in how public investors access private real estate markets.

The Reverse Split: A Necessary Lifeline to Avoid Delisting

MacKenzie's reverse split, which will reduce its outstanding shares from ~15.8 million to ~1.58 million, aims to lift its share price above Nasdaq's $1 threshold. If successful, this will prevent a delisting that would force trading into the over-the-counter market—a blow to liquidity and institutional investor interest. Nasdaq's stricter rules, effective January 2025, now require companies to meet the $1 minimum within 180 days of falling below it, with a 180-day extension possible only if the company hasn't conducted a reverse split in the prior 12 months. MKZR's split is its last chance to avoid this fate.

The company's stock has plummeted 85% over the past year, with its market cap shrinking to $10.3 million by July 2025. The reverse split will mathematically boost the per-share price to around $6.50—a critical step to retain listing status. However, this is not merely a “technical fix.” The move also addresses investor confidence: a sub-$1 price tag signals distress, while a higher post-split price could attract buyers wary of penny-stock volatility.

A Portfolio Positioned for Growth: Multifamily and Office Markets

MKZR's portfolio of 14 properties—4 multifamily, 8 office, and 2 multifamily developments—targets the West Coast, where demand for rental housing and office spaces remains resilient. Multifamily assets, in particular, have been a bright spot amid economic uncertainty, with rent growth outpacing inflation and occupancy rates holding steady. Meanwhile, office spaces are rebounding as hybrid work models stabilize demand.

The company's February 2025 registered direct offering, which raised $4.8 million, signals its focus on stabilizing operations. Proceeds will fund acquisitions, debt reduction, and capital expenditures—critical steps to improve its balance sheet and demonstrate financial discipline to investors.

Capital Markets' Structural Shift: SEC Policies Open the Floodgates for Real Estate Access

The reverse split's timing aligns with a broader market transformation. The SEC's 2025 policy changes have dismantled barriers for public investors to access private real estate. Notably, closed-end funds can now invest in private real estate without requiring investors to be accredited or meet minimum investment thresholds. This democratizes access to previously exclusive asset classes, creating a tailwind for REITs like MKZR.

While MKZR isn't a closed-end fund, its structure as a publicly traded REIT now sits at the intersection of this trend. The SEC's moves—such as lifting the 15% private fund asset cap—mean more investors, including those in retirement accounts, can deploy capital into real estate vehicles. This influx of liquidity could drive demand for REITs with diversified, income-generating portfolios, like MKZR's.

Risks and the Investment Case: A Calculated Bet on Survival and Growth

The technical picture remains challenging. MKZR's stock has fluctuated between $0.59 and $0.74 over recent days, with analysts forecasting a potential decline to $0.24–$0.34 by October—a drop that would still leave the post-split price at $2.40–$3.40, safely above $1. However, the stock's “sell” rating reflects lingering concerns about its narrow margin of safety and execution risk.

Nevertheless, MKZR's adjusted post-split price offers a compelling entry point for investors willing to bet on its survival and the real estate sector's long-term prospects. Key positives:
- Portfolio Stability: Its West Coast focus aligns with multifamily demand and office sector recovery.
- Capital Raising Momentum: The $4.8 million direct offering signals management's ability to navigate liquidity challenges.
- SEC-Driven Tailwinds: Broader access to real estate markets could boost REIT valuations as retail investors seek tangible assets.

Conclusion: A High-Risk, High-Reward Opportunity

MacKenzie Realty Capital's reverse split is a necessary gamble to avoid delisting, but it also sets the stage for a potential comeback. Investors must weigh the risks—execution delays, a volatile stock price, and sector-specific headwinds—against the opportunity to own a slice of a stabilized real estate portfolio at a discounted price. With the SEC's reforms unlocking new demand for real estate exposure, MKZR's post-split shares could emerge as a viable entry point for those betting on the sector's resilience.

As always, this is a high-risk play. But for investors comfortable with volatility and willing to bet on the structural shift toward democratized real estate access, MKZR's adjusted price post-split may offer a timely chance to position for growth.