Chip Patterson
About Chip Patterson
Charles “Chip” Patterson (age 54) is Chair of the Board (since 2019) and an executive officer of MacKenzie Realty Capital, Inc. (since May 2012). He is managing director, general counsel, and SVP of the Advisers and the Manager, and a director of their general partner, with beneficial ownership interests in these entities (since 2005). He earned a J.D. magna cum laude from the University of Michigan Law School and a B.A. with high distinction and Phi Beta Kappa from UC Berkeley; prior roles include securities/corporate finance attorney at Davis Wright Tremaine LLP and three years teaching physics, chemistry, and math; he is also a licensed California real estate broker . Patterson is a non‑independent director given his relationships with the Advisers/Manager; the Board operates with independent‑only committees and executive sessions to mitigate dual‑role conflicts .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| MacKenzie Realty Capital, Inc. | Executive Officer | Since May 2012 | Legal, regulatory, investment valuation and governance expertise applied to REIT operations |
| MacKenzie Realty Capital, Inc. | Chair of the Board | Since 2019 | Board leadership; risk oversight via independent committees and CCO reporting |
| MacKenzie Advisers and Manager | Managing Director, General Counsel, SVP; Director of GP; Beneficial Owner | Since 2005 | Affiliated private funds/investment platform leadership; deep real estate and valuation knowledge |
| Davis Wright Tremaine LLP | Securities & Corporate Finance Attorney | Until July 2003 | Capital markets, securities law, financing transactions experience |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Advisers’ General Partner | Director | Since 2005 | Governance of affiliated investment entities; beneficial ownership |
| California Department of Real Estate | Licensed Real Estate Broker | N/A | Professional licensure supporting real estate transactions |
| Education sector | Teacher (Physics/Chemistry/Math) | 3 years | Quantitative/analytical skill set; early career teaching |
Fixed Compensation
| Item | FY 2025 | Notes |
|---|---|---|
| Director fees paid to Chip Patterson | $0 | Non‑independent directors are not paid director compensation |
| Executive officers’ direct compensation from MKZR | $0 | Externally managed; officers are employed by Advisers/Manager |
Director fee framework for independent directors: $48,000 annual retainer (since July 1, 2023), $1,000 per in‑person board meeting, $500 per telephonic/committee meeting, plus $1,000 per year for each committee chair .
Performance Compensation
MKZR has no equity incentive plan and pays no incentive‑based compensation to executive officers; a clawback policy (effective Oct 2, 2023) would apply only if incentive pay is ever made and later recouped due to a restatement (none to date) . Executive economics are indirectly driven by fees paid to the externally‑managed Advisers/Manager, in which Patterson has beneficial interests:
- Asset Management Fee (tiered on Invested Capital): $3,449,487 (FY25) and $3,224,834 (FY24) .
- Acquisition Fees: $292,000 (FY25) and $1,075,048 (FY24) .
- Administrative cost reimbursements to Manager: $669,855 (FY25) and $756,733 (FY24) .
- Incentive management fee: 15% of all distributions once shareholders have received cumulative distributions equal to 6% from the agreement effective date; no incentive management fees were incurred/accrued in FY25 or FY24 .
| Fee Type | FY 2024 ($) | FY 2025 ($) | Terms |
|---|---|---|---|
| Asset Management Fee | 3,224,834 | 3,449,487 | 3% first $20M, 2% next $80M, 1.5% >$100M of Invested Capital |
| Acquisition Fees | 1,075,048 | 292,000 | 2.5% on new non‑security purchases (anti‑churning limits) |
| Administrative Reimbursements | 756,733 | 669,855 | Allocable overhead, compliance, CFO/CCO/admin staff |
| Incentive Management Fee | 0 | 0 | 15% of distributions after 6% cumulative threshold |
Equity Ownership & Alignment
| Metric | FY 2024 | FY 2025 |
|---|---|---|
| Common shares beneficially owned | 66,810 | 77,424 |
| Ownership % of common | <1% | 4.4% |
Notes:
- Executives share voting/investment power over shares owned by MPF Successors, LP (5,569 post‑split) and the Adviser (71,855) due to their roles/LP interests; some executives also own small direct positions. Address for beneficial owners: 89 Davis Road, Suite 100, Orinda, CA 94563 .
- No stock options, RSUs, PSUs, or director equity plans are disclosed; MKZR states it has no equity incentive plan .
- Hedging and pledging are strongly discouraged under the Insider Trading Policy; any such transactions require pre‑clearance by the Compliance Officer . Quarterly blackout periods, pre‑clearance for all Section 16 insiders, and Rule 10b5‑1 plan guidelines (6–24 month duration, 30‑day cooling‑off) apply . Section 16 filings were timely in FY2025 .
Employment Terms
| Term | Detail |
|---|---|
| MKZR employment status | Externally managed; all executive officers are employed by the Advisers or the Manager; MKZR pays no direct executive compensation . |
| Executive tenure | Executive officer since May 2012; Chair since 2019 . |
| Advisory Agreements | Approved Jan 2021; auto‑renew annually through year‑end; can be terminated earlier under specified circumstances . |
| Severance/change‑of‑control | No executive severance or CoC provisions disclosed at MKZR; Charter allows issuances/classifications of stock that may discourage a change of control/premium takeout . |
| Clawback | Executive Compensation Clawback Policy effective Oct 2, 2023; would recoup erroneously awarded incentive pay upon restatement; currently not applicable as no incentive pay is made . |
| Non‑compete/non‑solicit | Not disclosed. |
Board Governance & Committee Roles
- Board leadership: Chair of the Board is Chip Patterson (non‑independent). There is no designated Lead Independent Director; independent directors meet in executive session and all standing committees are independent‑only to mitigate conflict risk .
- Independence: All directors are independent except Patterson, due to relationships with Advisers/Manager .
| Committee | Members | Chair | FY 2025 Meetings | Responsibilities |
|---|---|---|---|---|
| Audit | Dozois, Frame, Hatch (all Independent) | Dozois (audit committee financial expert) | 4 | Valuation oversight; auditor selection; internal controls; filings; pre‑approve fees |
| Nominating | Dozois, Frame, Hatch (all Independent) | Frame | 1 | Director nominations; governance principles; board/management evaluation |
| Compensation | Dozois, Frame, Hatch (all Independent) | Not specified | 1 | Oversight of independent director compensation and external Advisers’ fee performance (MKZR has no employee pay) |
Director Compensation
| Director | FY 2025 Fees (Cash) | Total |
|---|---|---|
| Chip Patterson | $0 | $0 |
| Tim Dozois | $53,500 | $53,500 |
| Tom Frame | $53,500 | $53,500 |
| Kjerstin Hatch | $42,223 | $42,223 |
Performance & Track Record (Company Financials)
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenues ($) | 15,107,219 | 15,736,103 | 22,059,843 |
| EBITDA ($) | 2,819,461* | 4,913,860* | 4,692,392* |
| Net Income ($) | (4,097,405)* | (12,077,497)* | (25,915,680)* |
| EBITDA Margin (%) | 15.94%* | 27.98%* | 22.04%* |
- Values retrieved from S&P Global.
Context:
- Revenues increased FY2023→FY2025, while net income remained negative, reflecting financing/legal and property dynamics disclosed elsewhere (e.g., foreclosure/forbearance and re‑financing in 2025) .
Risk Indicators & Red Flags
- Non‑independent Chair; no Lead Independent Director, mitigated by independent committees/executive sessions .
- External management and related‑party economics; advisory agreements not negotiated at arm’s length; conflicts with Advisers (asset management and acquisition fees, investment allocation) .
- Material related‑party fees/reimbursements paid to affiliates (asset management, acquisition, administration), indicating economic alignment via the Advisers .
- Rescission risk from past DRIP issuances under deficient registration; potential $865k exposure and possible regulatory actions .
- Unresolved warrant dividend participation rights for unfunded warrants issued Feb 2025; potential claims if dividends resume .
- Property foreclosure/receiver appointment and subsequent forbearance/financing changes in 2025 (Main Street West) .
- Anti‑hedging/pledging policy; hedging/pledging discouraged and requires pre‑clearance, reducing alignment risks from monetization strategies .
- Section 16 filings timely in FY2025 (positive governance indicator) .
- Charter provisions could deter change‑of‑control transactions that might otherwise deliver a premium to shareholders .
Investment Implications
- Pay‑for‑performance alignment is indirect: Patterson’s economics flow through Advisers/Manager fees (asset management, acquisition) and potential incentive management fees upon achieving a 6% cumulative distribution threshold; this can favor asset growth/distribution resumption over GAAP profitability, and requires monitoring of fee intensity versus shareholder returns .
- Insider selling pressure appears structurally limited (no MKZR equity awards/options and strong anti‑hedging/pledging constraints), but trading activity would still be governed by pre‑clearance/blackouts/Rule 10b5‑1 plans; watch for any Form 4 activity, new 10b5‑1 plans, or changes to blackout practices .
- Governance dual‑role risk persists (non‑independent Chair, no Lead Independent Director); independent‑only committees and executive sessions are mitigating, but sustained conflict vigilance is warranted, especially around affiliate transactions and valuations .
- Financial trajectory shows rising revenues but continued net losses; focus on asset quality, refinancing progress, and resolution of legal/warrant issues to reduce execution risk and unlock pathway to distributions (which would activate incentive fee mechanics) .