DESCRIPTION OF THE NOTES
The following description of the terms of the notes (referred to in the accompanying prospectus as the debt securities)
supplements, and to the extent inconsistent, replaces the description of the general terms and provisions of the debt securities set forth in the accompanying prospectus. The following description does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the actual terms and provisions of the notes and the indenture. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the notes or the indenture, as
applicable. As used in this section, the term Issuer, we, our, us, or ACRES refers to ACRES Commercial Realty Corp. and not to any of its subsidiaries. This description does not restate the
indenture in its entirety. We urge you to read the indenture, because it, and not this description, defines your rights as holders of the notes. You may request copies of the indenture and the form of the notes at our address set forth under the
heading Where You Can Find More Information in this prospectus supplement.
General
The notes will be issued pursuant to an indenture, to be dated as of August 16, 2021, between ACRES, as issuer, and Wells Fargo Bank, National
Association, as trustee, and a supplemental indenture, to be dated as of August 16, 2021 (together, the indenture), between ACRES, as issuer, and Wells Fargo Bank, National Association, as trustee.
The notes will be unsecured senior obligations of the Issuer, will rank equally in right of payment with any of our existing and future
unsecured senior Indebtedness (as defined below), including our existing 12.00% Senior Unsecured Notes due 2027 and our existing 4.50% Convertible Senior Notes due 2022. The notes will be effectively subordinated in right of payment to all of our
existing and future secured Indebtedness, if any, to the extent of the value of the assets securing such Indebtedness and will be structurally subordinated in right of payment to all indebtedness, other liabilities, including trade payables, and
preferred equity of any of our subsidiaries. As of June 30, 2021, after giving effect to this offering and the expected use of proceeds therefrom, including the expected redemption of $50.0 million aggregate principal amount of our 12.00% Senior
Unsecured Notes due 2027, we on a consolidated basis would have had $1.5 billion aggregate principal amount of debt outstanding, including $1.1 billion aggregate principal amount of secured bonds held in consolidated variable interest entities,
$150.0 million aggregate principal amount of the notes offered hereby, $143.8 million aggregate principal amount of 4.50% Convertible Senior Notes, $67.4 million aggregate principal amount of other secured indebtedness and $51.5 million aggregate
principal amount of unsecured junior subordinated debentures. See Risk FactorsWe have a substantial amount of indebtedness which may limit our financial and operating activities, and the indenture governing the Notes includes certain
financial covenants, any of which may adversely affect our ability to incur additional debt to fund future needs. and Risk FactorsThe notes will be structurally subordinated to all indebtedness, other liabilities and preferred
equity of our subsidiaries.
The notes will initially be limited to an aggregate principal amount of $150,000,000. We may from time
to time, without notice to or consent of existing holders of the notes, create and issue additional notes having the same terms and conditions as the notes offered by this prospectus supplement in all respects, except for the Issue Date (as defined
below) and, under certain circumstances, the issue price and first payment of interest thereon; provided that such issuance complies with the covenants described under Certain Covenants. Additional notes issued in this
manner will be consolidated with and will form a single series with the previously outstanding notes; provided, however, that, if such additional notes will not be fungible with the applicable previously outstanding notes for U.S. federal
income tax purposes, such additional notes will have a separate CUSIP number. The notes offered by this prospectus supplement and any additional notes would rank equally and ratably in right of payment and would be treated as a single series of debt
securities for all purposes under the indenture.
Subject to compliance with the financial covenants described below, the indenture will
not limit the amount of debt we may issue under the indenture or otherwise.
The notes will be issued only in fully registered, book-entry
form, in denominations of $2,000 and integral multiples of $1,000 in excess thereof, except under the limited circumstances described below under Book-Entry, Delivery and Form. The registered holder of a note will be treated as its
owner for all purposes.
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