NOTE 16 - RELATED PARTY TRANSACTIONS

Relationship with ACRES Capital Corp. and certain of its Subsidiaries. The Manager is a subsidiary of ACRES Capital Corp., of which Andrew Fentress, the Company’s Chairman, serves as Managing Partner, and Mark Fogel, the Company’s President, Chief Executive Officer and Director, serves as Chief Executive Officer and President. Mr. Fentress and Mr. Fogel are also shareholders and board members of ACRES Capital Corp.

Effective on July 31, 2020, the Company has a Management Agreement with the Manager pursuant to which the Manager provides the day-to-day management of the Company’s operations and receives management fees. For the three and six months ended June 30, 2025 and 2024, the Manager earned base management fees of $1.6 million and $3.2 million, respectively.

For the three and six months ended June 30, 2025 and 2024, the Manager did not earn an incentive management fee.

At June 30, 2025 and December 31, 2024, $531,000 and $540,000, respectively, of base management fees were payable by the Company to the Manager. At June 30, 2025 and December 31, 2024, there was no incentive management fee payable.

The Manager and its affiliates provide the Company with a Chief Financial Officer and a sufficient number of additional accounting, finance, tax and investor relations professionals. The Company reimburses the Manager’s expenses for (a) the wages, salaries and benefits of the Chief Financial Officer, and (b) a portion of the wages, salaries and benefits of accounting, finance, tax, and investor relations professionals, in proportion to such personnel’s percentage of time allocated to the Company’s operations. The Company reimburses out-of-pocket expenses and certain other costs incurred by the Manager that related directly to the Company’s operations. These costs are recorded in general and administrative expenses on the consolidated statements of operations.

The Company reimbursed the Manager $1.2 million and $2.3 million, for the three and six months ended June 30, 2025, respectively, and $1.1 million and $2.6 million, for the three and six months ended June 30, 2024, respectively, for all such compensation and costs. At June 30, 2025 and December 31, 2024, the Company had payables to the Manager pursuant to the Management Agreement totaling $685,000 and $353,000, respectively, related to such compensation and costs. The Company’s base management fee payable was recorded in management fee payable while expense reimbursement payables were recorded in accounts payable and other liabilities on the consolidated balance sheets, respectively.

On July 31, 2020, ACRES RF, a direct, wholly owned subsidiary of the Company, provided a $12.0 million loan (the "ACRES Loan") to ACRES Capital Corp. evidenced by the promissory note from ACRES Capital Corp.

The ACRES Loan accrues interest at 3.00% per annum payable monthly. The monthly amortization payment is $25,000. The ACRES Loan matures in July 2026, subject to two one-year extensions (at ACRES Capital Corp.’s option) subject to the payment of a 0.5% extension fee to ACRES RF on the outstanding principal amount of the ACRES Loan.

In March 2025, the Company amended and restated the promissory note in connection with the ACRES Loan. The ACRES Loan was amended and restated to: (i) be issued by ACRES Holdings, LLC, (ii) provide for a six month option for ACRES Holdings, LLC to draw an additional balance of $7.0 million, and (iii) if such option is exercised, (a) to extend the maturity to July 31, 2031, (b) increase the interest rate to 5.00% and (c) increase the monthly amortization to $50,000.

The Company recorded interest income of $80,000 and $160,000 for the three and six months ended June 30, 2025 and $82,000 and $166,000 for the three and six months ended June 30, 2024, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations. At June 30, 2025 and December 31, 2024, the ACRES Loan had a principal balance of $10.6 million and $10.7 million, respectively, recorded in loan receivable - due from Manager on the consolidated balance sheets. At June 30, 2025 ACRES Loan had accrued interest receivable of $26,000. At December 31, 2024, the ACRES Loan had no accrued interest receivable.

The Company retained equity in two securitization entities that were structured for the Company by the Manager. Under the Management Agreement, the Manager was not separately compensated by the Company for executing this transaction and was not separately compensated for managing the securitization entity and its assets. The two securitizations were liquidated during March 2025.

Relationship with ACRES Mortgage Loan Funding, LLC. Subsequent to the quarter ended June 30, 2025, the Company sold $45.8 million of a $72.0 million CRE whole loan commitment that originated in the second quarter of 2025 to ACRES Mortgage Loan Funding, LLC. The Company transferred $344,000 of the origination fee related to the portion of this CRE whole loan to ACRES Capital, LLC.

Relationship with ACRES Capital Servicing LLC. Under the MassMutual Loan Agreement, ACRES Capital Servicing LLC ("ACRES Capital Servicing"), an affiliate of ACRES Capital Corp. and the Manager, serves as the portfolio servicer. Additionally, ACRES Capital Servicing served as special servicer of ACR 2021-FL1 and ACR 2021-FL2 prior to the liquidation in March 2025.

During the three months ended June 30, 2025, ACRES Capital Servicing received no portfolio servicing fees and did not earn any special servicing fees. During the six months ended June 30, 2025, ACRES Capital Servicing received no portfolio servicing fees and earned $182,000 in special servicing fees with no reduction to interest income. During the three and six months ended June 30, 2024, ACRES Capital Servicing received no portfolio servicing fees and earned $11,000 and $26,000 in special servicing fees, respectively, of which $4,000 and $7,000, respectively, was recorded as a reduction to interest income in the consolidated statements of operations.

Relationship with ACRES Collateral Manager, LLC. ACRES Collateral Manager, LLC, an affiliate of ACRES Capital Corp. and the Manager, served as the collateral manager of ACR 2021-FL1 and ACR 2021-FL2, a role for which it waived its fee. In March 2025, ACR 2021-FL1 and ACR 2021-FL2 were liquidated.

Relationship with ACRES Development Management, LLC. ACRES Development Management, LLC ("DevCo") is a wholly owned subsidiary of ACRES Capital Corp., the parent of the Manager. DevCo acts in various capacities as a co-developer or owner’s representative for direct equity investments within the Company’s portfolio. In November 2021, December 2021 and April 2022, the joint venture entities of the three CRE equity investments acquired through direct investment entered into development agreements with DevCo (the "Development Agreements").

Pursuant to the Development Agreements, DevCo agreed to manage the development of the projects associated with each equity investment in accordance with a development standard in exchange for fees equal to between 1.25% and 1.5% of all project costs. The Company did not incur nor pay fees for services rendered under these agreements for the three and six months ended June 30, 2025. During the three and six months ended June 30, 2024, the Company incurred and paid $82,000 and $206,000, respectively, in fees for services rendered under the Development Agreements.

Relationship with ACRES Share Holdings, LLC. During the six months ended June 30, 2024, the Company issued 1,911 shares to ACRES Share Holdings, LLC in connection with the incentive compensation payable to the Manager under the Management Agreement. There was no activity for the three and six months ended June 30, 2025. The shares vested fully upon issuance pursuant to the Management Agreement.

Under the Manager Plan, the Company can issue restricted shares of common stock to ACRES Share Holdings, LLC after meeting the established per share book value hurdle. The grants vest 25% per year over four years. There was no activity for the three and six months ended June 30, 2025. During the three and six months ended June 30, 2024, the Company issued 295,237 restricted shares of common stock to ACRES Share Holdings, LLC.

Relationship with McCallum JV. In September 2024, ACRES RF, a direct, wholly owned subsidiary, entered into a $33.7 million senior loan commitment and a $1.5 million mezzanine loan commitment with McCallum JV in which the Company holds a 50% interest. The loans have an initial maturity date of September 5, 2027. The senior loan has a rate of one-month Term SOFR plus a spread of 2.75%, while the mezzanine loan has a fixed rate of 20.00%. At June 30, 2025, the senior loan was fully funded, while the mezzanine loan had an outstanding balance of $475,000. During the three and six months ended June 30, 2025, the Company recognized $617,000 and $1.2 million, respectively, of revenue related to the McCallum JV loans, with $547,000 of accrued interest outstanding at June 30, 2025.

Relationship with Pacmulti JV. In March 2025, ACRES RF, a direct, wholly owned subsidiary, entered into a $70.8 million senior loan commitment and a $13.5 million mezzanine loan commitment with Pacmulti JV in which the Company holds a 50% interest. The loans have an initial maturity date of May 5, 2030. The senior loan has a rate of one-month Term SOFR plus a spread of 3.41%, while the mezzanine loan has a fixed rate of 15.00%. At June 30, 2025, the senior loan has been fully funded, while the mezzanine loan had an outstanding balance of $7.3 million. During the three and six months ended June 30, 2025, the Company recognized $1.6 million and $1.7 million, respectively, of revenue related to the loans, with $3.1 million of accrued interest outstanding at June 30, 2025.