UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ACRES Commercial Realty Corp.

(Exact name of Registrant as Specified in Its Charter)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

On January 24, 2023, in connection with ACRES Commercial Realty Corp.’s (the “Company”) investment in a student housing complex, ACRES Realty Funding, Inc., a direct, wholly-owned subsidiary of the Company (“ARF”) entered into guaranties related to a $48 million construction loan made by the joint venture in which the Company has a membership interest. Pursuant to the Guaranty Agreement, dated as of January 24, 2023, by Jason Pollack, Frank Dellaglio and ARF (collectively, the “Guarantors”) for the benefit of Oceanview Life and Annuity Company (the “Lender”), the Guarantors provided limited (“bad boy”) guaranties to the Lender pursuant to the Building Loan Agreement, dated January 24, 2023 between Chapel Drive East, LLC, a Delaware limited liability company (the “Borrower”) and the Lender (“Loan Agreement”) until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by the Lender.

On January 24, 2023, the Guarantors also entered into a Completion Guaranty Agreement for the benefit of the Lender to guaranty the timely completion of the project in accordance with the Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of the Lender to guaranty the prompt and unconditional payment by Borrower of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of the Lender whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnification (collectively the “Guaranties”). The Guaranties include certain financial covenants required of ARF, including required net worth and liquidity requirements.

The foregoing description of the Guaranty Agreement, the Completion Guaranty Agreement, the Carry Guaranty Agreement and the Environmental Indemnity Agreement are only summaries, do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 hereto and are incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.