#USA #Uniondale #Real Estate Investment Trust #ACRES Commercial Realty #ACRES Capital Corp

ACRES Commercial Realty Announces Major Strategic Merger

ACRES Commercial Realty Corp. (NYSE: ACR) and ACRES Capital Corp. (ACC) have unveiled a game-changing merger agreement aimed at enhancing operational efficiency and aligning management interests with those of stockholders. This merger marks a significant transitional phase for ACR, which plans to internalize its management structure while acquiring ACC in an all-stock transaction. This move is designed to foster alignment of interests between management and stockholders and streamline operations.

Purpose of the Merger

The merger is set to transform ACRES from an externally managed real estate investment trust (REIT) to an internally managed entity. This change aims to remove the dependence on external management, thus increasing flexibility and control over operations. The ACR board, with independent directors forming a special committee, unanimously approved this agreement, which is anticipated to close in the third quarter of 2026 pending approval from stockholders.

Anticipated Benefits

One of the primary advantages of this merger is expected to be the substantial increase in assets managed by ACRES, which will rise from approximately $2.2 billion to an anticipated $4.7 billion thanks to the integration of ACC's asset management capabilities. Furthermore, management will have a vested interest in the company, with over 45% ownership of ACR common equity at closing. This alignment is crucial for stability and growth, as it encourages management to drive positive performance outcomes.

The merger entails the consideration being entirely in ACR common shares, calculated at the company's fully diluted book value as of the end of the previous calendar year. This structure not only secures a more sustainable financial model but also introduces a new recurring revenue stream derived from third-party fees linked to an evergreen fund—a strategy to mitigate exposure to capital market fluctuations.

Strategic Leadership Post-Merger

ACR's existing leadership team will continue to guide the company, with Andrew Fentress as Chairman and Managing Director, and Mark Fogel as President. This stability is vital for the transition as the company integrates the personnel from ACC. By retaining key employees from the Manager—those involved in asset management, legal, accounting, tax, and treasury operations—ACR can leverage existing expertise to ensure a smooth transition and maintain operational integrity post-merger.

Call to Action

Stockholders and potential investors are encouraged to keep a close watch on the developments related to this proposed merger, particularly on the upcoming proxy materials that will be filed with the SEC, which will provide crucial information about the transaction.

ACRES Commercial Realty Corp. stands poised for a transformative journey as it integrates ACC and moves towards independent management. This strategic initiative not only serves to fortify ACR's market position but also reflects a commitment to long-term value for stockholders through prudent management practices and enhanced operational efficiencies. The potential growth and stability resulting from this merger could pave the way for a stronger, more resilient ACRES.