MacKenzie Realty Capital Inc. (NASDAQ: MKZR) reported its financial results for the first quarter ended September 30 2025, showing a revenue decline of 8.3% to $4.54 million from $4.95 million in the same period last year. Net loss narrowed to $3.05 million, a substantial improvement from the $7.41 million loss recorded in Q1 2024, while the net operating loss fell 53% to $3.49 million. Funds‑from‑operations (FFO) for the quarter were negative $1.93 million, better than the negative $0.58 million seen in the prior year, indicating a clear trend toward operational efficiency.
The year‑over‑year revenue drop reflects a combination of softer leasing activity and broader market softness in the multifamily and office segments that make up the company’s portfolio. Despite the top‑line decline, the company’s cost‑control initiatives and lean operating structure have translated into a sharper reduction in losses. The 53% drop in net operating loss demonstrates that operating expenses have been managed more tightly relative to revenue, a key step in moving toward the company’s goal of FFO profitability in 2026.
MacKenzie Realty Capital’s strategic shift from a business development company to a real‑estate investment trust focused on physical assets underpins the current financial picture. The transition, completed in 2020, has allowed the firm to invest directly in institutional‑quality apartment communities and boutique office properties, a move that is expected to generate more stable cash flows over time. Leasing activity at the Aurora at Green Valley project is now over 50% occupied, providing a tangible source of future revenue growth that can help offset the current revenue decline.
Management reiterated its confidence in the REIT transition and its plan to achieve FFO profitability in the coming year. While the company did not provide new guidance figures, the narrowing loss profile and improving FFO suggest that management believes the cost‑control measures and portfolio expansion are on track to deliver the targeted profitability milestone.
The company’s results highlight a classic trade‑off in the early stages of a REIT transition: revenue growth may lag as the firm builds its physical asset base, but disciplined cost management can accelerate the path to profitability. Investors will likely focus on the company’s ability to sustain the loss reduction trend, convert the negative FFO into positive cash flow, and continue to fill its portfolio to support long‑term revenue growth.
The overall narrative is one of cautious progress: revenue is down, but losses are shrinking and FFO is improving, signaling that the company’s strategic pivot is beginning to pay off, albeit with ongoing headwinds from a slower leasing market.
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