Advanced Flower Capital (AFCG) Proxy Filing summary

Executive summary

• Board unanimously approved conversion from a REIT to a BDC, aiming for greater investment flexibility and alignment with long-term strategy.

• Conversion will involve revoking REIT status and electing BDC regulation under the 1940 Act, with intent to qualify as a RIC for tax purposes.

• Expanded investment mandate will allow broader portfolio diversification, including non-real estate-backed assets and middle-market companies.

• Conversion expected to occur in the first quarter of 2026, pending shareholder approval.

• Board believes benefits of enhanced flexibility and value creation outweigh associated risks.

Voting matters and shareholder proposals

• Shareholders are asked to approve: (1) a new 1940 Act-compliant investment advisory agreement with AFC Management, LLC, and (2) application of reduced asset coverage requirements (from 200% to 150%) to permit increased leverage.

• Board recommends voting FOR both proposals; approval of Proposal 1 is required for the conversion to proceed.

• Special Meeting will be held virtually; only shareholders of record as of the record date may vote.

• If proposals are not approved, the Board will consider alternatives, but conversion cannot proceed without Proposal 1.

Board of directors and corporate governance

• Board and independent directors evaluated the new advisory agreement, considering service quality, fees, profitability, economies of scale, and ancillary benefits.

• Board concluded the proposed fees are fair and not unreasonable, and unanimously approved the agreement for a two-year term.

• Key executives include Leonard Tannenbaum (Chairman), Robyn Tannenbaum (President/CIO), and Daniel Neville (CEO).