Acres Commercial Realty Corp

This management proposal requests shareholder approval of a large issuance of approximately 7.49 million shares (subject to adjustment) to effect an internalization transaction in which ACC will merge into a newly formed merger subsidiary and become a wholly‑owned subsidiary of ACRES Commercial Realty Corp. Management and the Board (following a unanimous recommendation of a Special Committee of independent directors) assert that the internalization aligns management and shareholder interests, provides fee income and origination economics from ACC’s lending and advisory platforms, creates economies of scale and potential earnings accretion, and simplifies the corporate structure while eliminating perceived conflicts of interest inherent in an external manager relationship. The Special Committee retained BTIG, which delivered a fairness opinion to the effect that the merger consideration was fair, from a financial point of view, to the company. The proposal must satisfy NYSE rules requiring shareholder approval because the issuance will exceed NYSE thresholds for issuances to related parties and because the issuance will exceed 20% of outstanding shares; certain directors and officers are accreting substantial shareholdings because they own ACC equity. Key risks disclosed include significant dilution (net increase ~6.3M shares after consolidation), integration risk, retention risk for key ACC personnel, potential undisclosed liabilities and the fact that ACC is privately held making valuation less transparent. The Board recommends a vote FOR, citing both strategic and governance rationales and the Special Committee process used to negotiate and evaluate the transaction, including engagement of legal and financial advisors and a fairness opinion; shareholders should weigh the claimed synergies and increased fee streams against dilution, execution risk, related-party conflicts, and gaps in public-market valuation metrics.

Management seeks shareholder approval of the 2026 Omnibus Equity Incentive Plan, which consolidates available shares from the prior omnibus plan and adds 975,000 new shares for a total reserve of 1,432,172 shares to support grants to employees, directors and service providers after the internalization. The Board argues the plan is necessary to attract, retain and align employees and management with shareholder interests and notes limits on individual awards, minimum vesting rules, director grant caps, and anti-repricing protections that seek to preserve governance standards. Shareholders should note the dilutive effect in the near term (the company estimates the plan represents ~11% of post-transaction fully-diluted equity) and evaluate whether the proposed share reserve, award design, and pay-for-performance features sufficiently align pay with performance given recent large equity issuances in connection with the internalization and the Company’s existing external manager compensation structure. The Compensation Committee will have substantive discretion over award design and performance metrics; shareholders should consider whether future material equity awards to insiders and newly internalized management are adequately governed and disclosed.

This routine procedural proposal asks shareholders to authorize the meeting chairman to adjourn the annual meeting to a later date/time/place if necessary to obtain additional votes to approve one or more proposals. Management recommends approval to permit additional solicitation time if votes are insufficient at the scheduled time. This proposal is common in contested or high‑profile matters where broker non‑votes or withheld votes could affect the outcome; approval gives the Board flexibility to continue outreach to stockholders to achieve a quorum and favorable vote counts. Its effect is limited — it does not change the substance of the business to be voted on — but it may materially affect the timing of shareholder approval for large matters like the internalization transaction and related stock issuance.