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| 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, prior to its amendment effective January 1, 2026, provided that we would pay an Asset Management Fee based upon a percentage of invested capital (3% of the first $20 million, 2% of the next $80 million, and 1.50% over $100 million). Invested capital was equal to the amount calculated by multiplying the total number of outstanding shares of common stock, shares of preferred stock, 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 provided for a 2.50% Acquisition Fee on new (non-security) purchases, subject to certain limitations designed to eliminate incentives to “churn” our assets, and for an incentive management fee equal to 15% of all distributions once shareholders had received cumulative distributions equal to 6% from the effective date of the Advisory Management 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.
The asset management fees incurred for the period from July 1, 2025 through December 31, 2025 under the prior Advisory Management Agreement effective January 1, 2021 were calculated based on quarter-end invested capital, segregated into the three categories presented below.
Advisory Agreements Effective January 1, 2026:
On December 29, 2025, the Board of Directors of the Company unanimously approved, effective January 1, 2026, an amendment to the Advisory Management Agreement with the Real Estate Adviser.
The amended Advisory Management Agreement requires the Company to pay a base management fee equal to 1.25% per annum of its gross assets under management, not including depreciation and amortization. The base management fee is paid monthly based on the assets under management for the quarter ending as reported in the most recently filed quarterly report. The amended Advisory Management Agreement also calls for a bonus management fee equal to 5% of adjusted funds from operations each quarter. The bonus fee replaces any incentive fee, acquisition fee, financing fee, or disposition fee. The amended agreement contains a rolling renewal provision that reinstates a five-year term at the beginning of each calendar year unless the Company provides notice of non-renewal. If the Company terminates the agreement prior to expiration for other than cause, the Company must pay a substantial early termination fee.
The base management fee for the six months ended June 30, 2026 was calculated based on gross assets under management (excluding depreciation and amortization) of approximately $257.30 million as of June 30, 2026. During the years ended June 30, 2026 and 2025, we incurred asset management fees or base management fees of $3,389,022 and $3,449,487, respectively.
During the year ended June 30, 2026, we incurred bonus management fees of $26,876 under the new Advisory Management Agreement. During the year ended June 30, 2025, we did not incur or accrue any incentive management fee under the prior Advisory Management Agreement.
Property Management and Leasing Services:
When we acquired the Wiseman Properties on May 6, 2022, our Real Estate Adviser’s newly formed wholly owned subsidiary − Wiseman Company Management, LLC, which is now known as Wiseman
Commercial, Inc. (“Wiseman Commercial”) − purchased the property management and leasing services rights from Wiseman. As a result, effective as of the acquisition date, Wiseman Commercial has been providing property management and leasing
services to the Wiseman Partnerships under the pre-existing agreements. Since the acquisition of these service rights, there have been no changes to the terms of the management services agreements with these limited partnerships. In addition,
Wiseman Commercial also provides the property management and leasing services to 220 Campus Lane under a similar term as the Wiseman Partnerships.
During the year ended June 30, 2026, these Wiseman Commercial managed limited partnerships paid total property management fees of $572,749 and total leasing commissions of $791,805 to Wiseman Commercial. In addition, during the year ended June 30, 2026, nine of the limited partnerships also paid $2,167,985 to Wiseman Commercial for direct operating costs and construction of tenant improvements.
During the year ended June 30, 2025, these Wiseman Commercial managed limited partnerships paid total property management fees of $663,427 and total leasing commissions of $529,836 to Wiseman Commercial. In addition, during the year ended June 30, 2025, nine of the limited partnerships also paid $1,246,476 to Wiseman Commercial for direct operating costs and construction of tenant improvements.
Organization and Offering Costs Reimbursement:
Under our Offering Circular, which the SEC qualified on November 21, 2025, offering costs incurred and paid by us in excess of $825,000 (excluding legal fees) in connection with the preferred stock offering are reimbursable by the Advisers. If broker fees of 10% are not incurred during the issuance of the preferred stock, the resulting savings may be applied to marketing expenses or other non-cash compensation. In such cases, the broker fee savings increase the reimbursement threshold from the Advisers. As of June 30, 2026, we had incurred total offering costs of $479,392 (excluding legal fees), of which $445,392 was paid by MacKenzie on our behalf in connection with the preferred stock offering. As of June 30, 2025, we had incurred total offering costs of $61,023 (excluding legal fees), of which $44,023 was paid by MacKenzie on our behalf in connection with the offering. The total offering costs incurred were below the reimbursable threshold as of June 30, 2026 and 2025.
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 out-of-pocket costs incurred by MacKenzie being reimbursed by us. No fee (only cost reimbursement) is paid
to MacKenzie for this service. Effective March 5, 2024, to comply with Nasdaq listing requirements, we hired Securities Transfer Corporation, a third-party transfer agent, to provide these services for our common and Series B preferred
stock. However, effective September 30, 2024, Computershare Inc., another third-party transfer agent, took over as transfer agent for our common stock.
The administrative cost reimbursements for the years ended June 30, 2026 and 2025 were $881,000 and $669,855, respectively. During the year ended June 30, 2026, we did not incur any transfer agent services cost reimbursements. The transfer agent services cost reimbursement for the year ended June 30, 2025 was $6,145.
The table below outlines the related party expenses incurred for the years ended June 30, 2026 and 2025, and unpaid as of June 30, 2026 and 2025.
(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, 2025 was for the acquisition of Green Valley Medical Center in August 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.
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