MKZR

Mackenzie Realty Capital ($MKZR) Executives Buy $534K After 80% Crash... Bottom Signal or Last Stand?

08/07/2025 21:51

Mackenzie Realty Capital ($MKZR) is presenting investors with a dramatic dilemma. While this California-based real estate investment trust has plummeted over 80% in the past eight months, insiders are aggressively buying shares. Mackenzie Realty Capital, established in 2013, is a diversified REIT investing in multifamily residential properties and boutique Class A office buildings primarily on the U.S. West Coast. The portfolio consists of interests in 4 multifamily properties, 8 office properties, and 2 multifamily developments. The company maintains a strategy of investing at least 80% of assets in real property and up to 20% in illiquid real estate securities. The most striking aspect is the insider buying pattern. Over two days, August 6-7, four key executives - CFO Angche Sherpa, CCO Jeri Bluth, Officer Charles Patterson II, and Officer Christine Simpson - purchased shares at identical price points ($4.31, $4.64) totaling approximately $534,000. This represents significant investment for a company with a current market cap of just $21.2 million. More notably, this isn't isolated buying. CEO Robert Dixon has been consistently purchasing shares from January through March 2025. Starting with 10,000 and 15,000 share purchases on January 16-17, he made 14 separate purchases totaling approximately 150,000 shares through March, continuing to buy as the stock fell from $2.85 to $1.55. However, the company's financial condition is severe. For Q1 2025, it reported $23.04 million in revenue against a net loss of $23.53 million, with a debt-to-equity ratio of 132.82%. Operating margin sits at -87.65% and net profit margin at -96.22%. Cash stands at just $5.14 million against total debt of $130.06 million. Despite this, some positive indicators exist. EBITDA remains positive at $7.57 million, indicating operational cash generation capability. Additionally, levered free cash flow of $6.02 million is positive. The company is taking aggressive survival measures. It raised approximately $4.8 million through equity offerings in early March, implemented a 1-for-10 reverse stock split on August 5, and completed refinancing of its Main Street West property loan in June. The dividend policy presents an interesting point. The company offers an extremely high yield of 18.35%, though sustainability appears questionable given the current loss structure. Insider buying typically signals strong confidence, especially when multiple executives buy simultaneously at market bottoms. This suggests management views the current share price as significantly undervalued. However, the company's severe financial distress cannot be ignored. At $4.58, the stock trades at just 0.11x book value and 0.33x sales, objectively appearing undervalued. The question is whether this undervaluation is justified or excessive. Key factors to watch include whether next quarter's results show operational improvement signs, debt restructuring plans, and asset sale efforts to improve financial structure. Time will tell whether insider buying signals a bottom or merely wishful thinking.