Cottonwood Communities, Inc. 8-K

What Happened
Cottonwood Communities, Inc. (CCI) filed an 8‑K (Dec. 19, 2025) reporting that, effective Dec. 18, 2025, RealSource Properties, Inc. (RS) merged into Cottonwood’s Merger Sub and RealSource Properties OP, LP (RSOP) merged into Cottonwood Residential O.P., LP (CROP). The filing also discloses an amendment to the advisory agreement reducing the external advisor’s management fee to an annualized 1.25% of CROP’s adjusted net asset value (adjusted NAV, which includes value attributable to convertible preferred stock). CCI’s executive officers additionally intend to invest $3.0 million in CCI securities (split between common/CROP units and Series A convertible preferred) no later than Jan. 2, 2026.

Key Details

• Merger effective date: December 18, 2025; reported in 8‑K filed Dec. 19, 2025.
• Exchange ratio at closing: each RS common share or RSOP unit converted into 0.8634 CCI common shares or CROP common units (down from an initial 0.8893 after specified adjustments).
• Exchange-ratio adjustments: lowered at closing for RS transaction expenses above $4,675,000 and if RSOP net current assets were below −$2,571,106; post‑closing adjustments possible (environmental claims up to 2 years, other reps/covenants up to 1 year) with caps ($30M aggregate for certain CCI claims, $20M cap for RS claims).
• Advisory fee change: CC Advisors III management fee set to 1.25% of CROP adjusted NAV; adjusted NAV expressly includes value from preferred stock convertible into common equity.

Why It Matters
This filing confirms Cottonwood completed a major acquisition (RealSource) that expands its platform and issued new CCI common stock/CROP units to RS securityholders under a specific exchange formula. The reduced advisor fee (to 1.25% of adjusted NAV) may lower ongoing operating costs paid to the external advisor. Post‑closing adjustment rights and caps mean the final number of securities issued to former RS holders could change later if certain liabilities or breaches are discovered — investors should watch for any future adjustment notices. The planned $3.0M insider purchases signal management’s financial commitment to the combined company.