XAN - Earnings call transcript Q1 2018 | ACRES Commercial Realty Corp.

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Operator

Good morning and thank you for joining the Resource Capital Corporation Earnings Conference Call for the First Quarter ended March 31, 2018.

Before we begin, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. When used in this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements.

Although the company believes that these forward-looking statements are based on reasonable assumptions, such statements are based on management's current expectations and beliefs and are subject to a number of trends, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's report filed with the SEC, including its report on forms 8-K, 10-Q and 10-K, and in particular, the Risk Factor section of our Form 10-K. to only reliance hereof. as not statements, these cautioned speak which of are place on undue forward-looking Listeners the date company to statements. obligation undertakes of The forward-looking these update any no discussed Furthermore, financial certain conference measures be non-GAAP call. on will this

be the not Reconciliations Our to in financial of substitute the these be the a now prepared Andrew our accepted to generally accessed in presented in can at to would intended through opening with principles financial presentation I the non-GAAP as information with information turn or most accordance SEC the considered this to remarks. of accordance Farkas comparable for RSO, filings is accounting over measures Chairman www.sec.gov. of isolation with it measures GAAP.

Andrew Farkas

Resource thank XXXX, are for vehicle long-term me Andy Lending; capable over sustainable reposition commercial Stern, value. you With Karr, Hughson, investment took estate CFO; we strategic Matt on earnings and CEO; Estate real core the is and Bob Investor our President; business Corp. to of we Head Capital us. management of today When Dave our Bryant, plan, a shareholder embarked and who Head Paul joining into Relations. morning, Good at Real Lieber, delivering in Commercial everybody, producing of

While that this I’m XX measures, plan process report substantially has complete. required pleased months strategic to some difficult is later, the

legacy we time action believe years take through eight only of special million wanted Having of down them million loans our the million are the these to of to to loans. out real maximum work now $XX is course Of XX best commercial necessary achieve estate proceeds $XX to sell. resolved investors. the to we We business, the billion servicing the million, non-core legacy are assets similar original with $XXX over in remaining past of XX for loans C-III

per dividend the share now a in we the This quarter. quarterly in earnings, this $X.XX is plan quarterly of expect strategic and the increased XXX% largely company’s since strategic common dividend inception the increase plan. to to second With complete increase visibility into our

dividend the earnings future policy profile. expect We be improving informed company’s core to by

are to core as portion grow all fully to and $XXX and regaining and The notes meaningful We of $XXX the commercial by Capital last we nearly capitalization have to X% accretive million shareholders of before estate notes. to portfolio. months, Corp.’s acquired improve Over $XXX in efforts going a B of path including X.X% million the manager redeemed $XXX forward. the core returns investment amount came We position expertise in investments. A earnings C-III’s shares. new here as growth credit These X% achievement, convertible opportunities transitional anticipate dividend originated, preferred We’ve identifying leveraging Resource leverage halt common corresponding core issuing invest also continue company. real growth the significant adjusted of real company’s now loans taken investments us common the such which the pipeline million XX commercial of for face refocus well platform which Also, September to million acquired from its CMBS by In earnings high been earnings been we higher quality, estate the that convertible were is future. in to XXXX. broad risk investments a delivering clear; successfully tranches structure company’s subordinate for credit considering have is in the a an of to should commercial array provide to by absolute C-III’s yielding that Series real measures estate

ourselves. credit the ago, the we time months feel it to company transformed REIT rebrand we that appropriate we is XX Now into have a outlined

Capital reporting respectively. the Exantas dividend I’m I XXXX, leveraging the progress all to So CEO, future I’ll with ticker The use Exantas stock the made Greek and will Exantas as company’s the that a directly preferred progress platform I in I’m and and objects. distance effective trading May achieve visible manager’s of back the listed chapter, we attractive and is to efforts of navigational have two we shareholders fulfilled instrument of May and Series success on And Capital York stock made to this to its calls. our Stock forward the by Corporation. navigate very begin very we’ll sustainable believe New will of the we and XAN change role sextant to angular pleased symbol measures next The look over proud for to-date network. manager we XX, an And between see that earnings making. that, XXXX, the company the safely C the effective which our that promises are PrC, Bob we common to a under turn to be Exchange. the to continue to XAN Lieber. company’s assuming to XX, have is to turn sextant relates name our

Bob Lieber

and Thank you, morning, good Andrew, everybody.

growing quarter Andrew earnings. from earnings turned since time quarter of XXXX September first the As this and company back for settlement legacy the the a plan mentioned, our for shifting to is preferred shares strategic plan first of focus the B to the in Adjusted execution Series in our of to XXXX, adjusting of positive related $X.XX redemption of core announced strategic we share now the litigation. the core charges

the earnings as quarter negative XXXX in the past negative While and $X.XX of a year, from in to the of and third XXXX core executing said the of quarter fourth first XXXX. negative a trended $X.XX have in second plan strategic $X.XX $X.XX in of XXXX, positive quarter the the over quarter adjusted I

outlook in supported increase business earnings is trend second near-term an the the in This accelerate causing trend good. and power is the of underlying anticipated the So our line the quarter dividend. to company earnings

be further as generally and will our policy any will move informed adjustments continue dividend dividend earnings core discuss earnings by we Board. to core improves, we visibility with As forward,

the of CRE core completion stock the We repurchase payoffs loan quarter preferred million. a which the realized of increase discussed, by will loans net XXXX. previously for second originated deployment fully in XXX million be beginning the in we of quarter per succeeded time We $X.XX As quarter XXXX. will first the earnings first $XX of of for

to loan increase positive expect starting CRE earnings deployment power the quarter. We of continue this help the book in second to the

XX acquired net for we deployment $XX quarter of million Additionally, million. this CMBS of

we will quarters the XXX deployment net we forward, pleased As net primary earnings ahead our our of of aggregate are for with the and be will million core deployment driver in look the to reiterate, this quarter. dividend this walk the sufficient Matt are for the of us deployment. through for guidance But second developments increased anticipated enough justify quarter. the to specifics these

quarter Turning declined This $XX.XX share the to events. end first compared value of by driven share reduction per value per to sheet. was the in $XX.XX to at at XXXX the of balance XXXX. book three of as Book end the

on we B last impairment As shares. we of associated remaining our redemption mentioned call, with the took $X.XX the preferred a

stock the to the now legacy substantially restricted of has of related and included $X.XX vesting $X.XX a that we We assets. also in stock associated with of took with the accelerated the associated employees. transformed the departure divested several non-core vesting plan legacy have loan includes The strategic CRE which mark $X.XX company

rebrand of important we put the and As reflects on chapter our a feel we new it��s company management. move identity credit REIT face forward, to under our which a new this team’s

have to deep recognize a and in counterparties this is the borrowers, issuers, for market. with the our rebranding effort of market direction the objective commercial Our team and estate our who real company management new relationship

investor As and forward, creating deck interfacing research Stern. in a by the visible research I’d and new sell-side community. weeks. meeting more more industry kickoff like Matt in the conferences next be rebranding we to turn and equity our we intend communications site, call the will efforts, frequently proactive analysts with over Web that, move Matt? with with attending To Exantas launching With be to we our new market coming to in a the

Matt Stern

loan and like begin on look everyone. the million the and first by morning, a weighted XX-day good March Andrew closed In CRE loan basis quarter rate Bob, portfolio taking and comprised is of XXX XXXX, X.X points At alluded earlier. Thank origination over floating XXXX, self-originated I’d spread that Bob with transitional of LIBOR. a you, XXX average of real of estate at of billion commitments investment commercial we activity to closer a to XX, loans. home our

and many earnings lender our increases our in like of floating a rates. interest competitors, rate short-term benefit As from

earnings call that and origination guidance to team are flow be Our continues volume XXXX achieved. improved recent we competitive see CRE continue a our the and market, provided on last despite loan that optimistic in our growth deal should can origination

bonds included tranches acquired during a investments our amount class. a to million of in single We single these with strong borrower face CMBS the Turning quarter attractive first Among asset, XXXX. in XX transaction CMBS sponsor portfolio. K-Series deal asset other of Mac an and investments, a Freddie of

yields and is trusts. returns of investments while diversification core C-III’s adjusted CMBS meaningful duration capital of good underwriting provide credit estate throughout risk adding competencies the real One the portfolio. identifying adjusted and company’s attractive to risk CMBS We stack believe

into believe to its prudent some for predictable stable opportunities commercial ROE anticipate sustainable Capital majority loan be our it for investment be and that with we portfolio that investments continue estate vehicle Exantas base to to the enhance provide enhance income-oriented visibility We continue loans transitional shareholders. Exantas Capital, as and supplement duration end, streams open such While earnings deliver stability. real value investment we an explore of for and duration and earnings asset will substantial to can longer

provides the on our rest such to discussed As calls, of diversification well CMBS as portfolio. duration as prior

opportunities favorable attractive also these net attributes. We are have criteria evaluating tax investments Capital, which meet and certain other Exantas including for lease

Turning to plan. the strategic

of relate legacy We million million assets which have of approximately remaining, loans. XX CRE plan XX strategic to

XXX progress our on reducing cost the we by capital in our discussed nearly of company’s in basis call, XXXX. points September last Finally,

our look terms company’s and favorable platform discuss to financing professionals, asset come. our we progress through quarters over on patience Exantas, by and existing We facility continued have interest with we to financials. while continue of transform to estate to With capital. make real advanced network level of and for it rate appreciate market in more updating the of source and to renew Using that your like warehouse We turn the evaluate cost that, terms investment continued the our Dave and on to our improving front opportunities you and the company C-III’s forward lenders. I’d progress improving to Bryant as pursuing

Dave Bryant

Thank morning. you, Matt, good and

was ended share. net common the XX.X GAAP million to or March XXst months for shares loss Our three $X.XX per allocable

preferred B A difference stock which X.X And includes on $X.XX first the and/or for significant in fair quarter XX.X the X.X These stock share. in a of value included and non-core is of remaining following net the million million million we the value strategic redeemed. loss non-core which Our net redemption items. assets strategic or carrying loss Series non-recurring the CRE the redemption of totaled the represents of A preferred a net between our loss of decline value the included XXX,XXX loan plan. from plan. adjustments in the per the

XX, months was Our or loss of per March ended core earnings for $X.XX X.X million the share. three a XXXX

for was from the X.X share nonrecurring net Our for core the $X.XX and that of fourth core significant and share B which adjusted in X.X lawsuit net adjusted total loss Series from stock are our pending share per a The share our for quarter on core first of XXXX. up of per of or redemption following or in earnings share loss a When these XXXX. quarter includes a million we first $X.XX after-mentioned adjust $X.XX per minus per of $X.XX, million $X.XX the items settlement accrued nonrecurring XXXX, per the of of quarter loss earnings the preferred the net items. completed

impact per We commercial see our expect equity of quarter rate run our the share and our in will earnings of increase incremental core $X.XX in when share we real full platform deployed with the redemptions. preferred savings we additional second realize estate core to investment credit

to mark-to-market for the As dilution relates dividend again includes $X.XX per share stock per following; net $X.XX full which $X.XX can $XX.XX items preferred reminder, share at from share equates redemptions share to XX stock attributed of to quarter. of December per impact common $X.XX per XX of share a annual a decline of of of $XX.XX be to from $X.XX value of $X.XX in accelerated March the $X.XX. The payout plus decrease a an savings reduction restricted adjustments book of of net nonrecurring loss and at vesting, vested $X.XX our the net a which or the to GAAP

the we standard in the total our credit a and estate investments of execution ratably strategic leverage. expect use assets commercial We with increase proceeds of plan finalize real deploy to new remaining the as market

increased to assets. deploy at Our our credit equity to continue remaining to exit will capital XX% as to core allocated XX% compared this increase investments year-end we plan equity and available as strategic and further XXXX the

two of commercial combined is capacity available redemptions. with closed quarter to at predominately deals. during securitizations of liquidate million, XXXX. leverage We December X.Xx borrowings similar XXX that results XX, facility of and approximate asset debt ratio we CLO up million of the have increase the of XX one million least XXXX, from in term XXX facilities, April We a at on again GAAP which to now XXX XXXX we on XX, will equity the April estate equity our of in have liquidated new our issued Our XXXX total XXXX. net approximately preferred an net decrease in lifespan, in at which our third stands expect and million including our from our as real level XXXX The of a result a reiterate three-year increase on recently X.Xx, share is

issuance a target new in securitization as permit. will market conditions We XXXX

on going assets of have at Before end we million any the XX from additional plan, sale liquidity our of forward remaining we with of liquidity the or cash strategic hand to the fund settlement over April. held-for-sale business ample believe in

comments. from currently call on Bob finance our have also are facilities that, the access of CRE to approximately to sheet. term real our I’ll and held back to in balance XX final liquidity We estate loans additional investments CMBS turn CMBS million With for newer unlevered that and

Bob Lieber

efforts with you rebranded that, attend to to on this results up our Thanks, here Dave. calls. under of our conferences We interest name potential updating upcoming we and look to all time call Capital investment as And forward the open your ask future progress We any your appreciate discuss the operator I’ll questions. Exantas the the and morning. on

Operator

Instructions]. [Operator

Securities. Our JMP comes the from of DeLaney line first Steve question from

is line Your now open.

Steve DeLaney

morning, everyone. Good

maybe hope the First comment GO color group fair to just get is number first quarter you type love steers I of you. the loans? anything new unique the property and calm could Thank a that name. If of winds. on it we or waters more the little originations, in loans, about

Matt Stern

and It was as Sure. there nine was total, the majority in but XXX was well. in million side, diversity there investments in the some aggregate multi-family

Steve DeLaney

somewhere your XXX much. Okay, looks and bit It you of How that’s you you’re should about there’s somewhere Am think very just I think you XXX additional to little approximately metrics, guys up sheet that I currently pushed helpful. maybe shifting, they’re on that Thank portfolio talked million a guess of available. your you having loan new basis that X it rough and we the very do capacity million for growth? seem about kind under know but that capacity like balance see XXX capital – million facility between and pipeline And would of and a the maybe have I seeing? net lending billion.

Matt Stern

from a think that’s largely correct, perspective, think I I Steve. liquidity

targeted assets When mentioned. on appropriate what think have Dave say for correct we or would so is then are aggregate be liquidity the the would more level business. XX incremental the is then we we we had as So leverage I that, balance probably sheet a million and and deploy at incremental

partially growth and that driver is that’s of see – we we base which net to not the partially, do anticipate. earnings as asset the expect, do core So deployment that’s primary Dave grow mentioned,

Steve DeLaney

sense, Makes sure.

And helpful Okay, triple always then that’s repayments and do your comments your anything challenge modeling for are appreciate – I really purposes. net a and CMBS lease. about

terms do type or duration do loan some of or repayments that the in re-pace? portfolio see size smaller that To and end, up of prevent think that quarter-to-quarter sizable for helpful. your expect lumpy I you very mixed surprise in is kind you there anything big just of

Matt Stern

that disproportionate. as know, looking anything We certainly is But see difficult the you predict repayments are don’t aggregate. in to out

normal maturity get we’ll origination we business. that But time that to flow have profile over to see for don’t at We the and anticipate as least expect rate a normal we a out something run smooth we right now. disproportionate

Steve DeLaney

Great. Well, much thank very you for comments. the

Matt Stern

Thanks, Steve.

Operator

Our next the line from comes from of Zucker question Ben BTIG.

Your line is open.

Benjamin Zucker

talk pref other guys that you plan guys for preferred a debt? about investment the and and morning Good investment to equity Can or equity we more my subordinate for taking type questions. types a Was made? that look you do at thanks one-off just of of second

Matt Stern

Yes, the We junior more investment structuring was a attractive or the thought of really like loan a had return it to. a we mezzanine matter that property profile wanted just on effectively make part stack investment a was anything to an than preferred the capital else. and of

don’t become evaluate with as I yield that we know earn opportunities certainly we a base the when it asset we’ll While the to disproportionate part borrowers, work of would credit. excess like

Bob Lieber

just on would the the play can preferred well. – that stack real presents credit estate to different for are we I we as are capital opportunities focus that And those you equity and and lots in add of places there that

Benjamin Zucker

them on expertise of and platform Is understand can the mentioned potentially in you the of the those can guess being think so duration bank. net and on that of little? a help of I not a seeing that’s a an of think that the provide, lease benefit call C-III we’d I identify you heard us that I I something smaller pursuing welcome I portfolio. C-III? that also expand Could there investments. hear net lease a kind And lender the diversified some you you

Matt Stern

and mentioned, terms at perspective think opportunity, investment in and profile evaluate. are an sets and visibility underwriting a many But that that to think want look into we it But of duration identifying the within could to we it’s warranted something set present housed skill skill concurred, earnings Yes, from as it’s ROE perspective. the from of credit as thought evaluate do that mentioning. and something I an and is provide opportunities, the we’ve we looking continue we continue it C-III the we

Benjamin Zucker

up appreciate the quality that. remaining in reserves, your really loans as for of weeks five Got of pace the could reason CRE cetera, the last of you like sale follow that operations status, is to you for loan there a and review up assets any basically discontinued the et on held all up, sales discontinued so? or point? quickly pick And your And at this the legacy make seem that

Matt Stern

divestitures of don’t the until Certainly is of cases, awaiting terms causation terms some the we but not end In are just there specifically planning necessarily of of weeks. that know the the few last the in I some just pickup, in for that. year in

that the we’re we it’s we that specifics have the feel profile, through difficult through the have we But as of to appraisals, that, work on continue to those remaining working work though continue assets. obtained to book. on through received terms we taken and to And reserve provide reserves resolutions. In the as cetera, remain or based loans et appropriate

Benjamin Zucker

subsequent housekeeping, an on was that end? to lastly asset and is that that And books one held quarter a one bit asset you. had your the Got that’s X still million fair of sold that value, sale the or on write-down just for of

Dave Bryant

That on Ben. books, is our still

Benjamin Zucker

increase, Perfect. the Thanks. congrats right, dividend the continued All progress well, on and guys.

Bob Lieber

you. Thank

Operator

over like Andrew call closing At remarks. to I’m further I any to would this turn for the Farkas back questions. showing no time,

Andrew Farkas

you team that entirely be it progress we everybody are to executed. we’ve taken within appreciate we and followed At Exantas, will you plans consistent has the And company. now do. really execute and as will think what thank executed we’re which they’d really execute the we that with fervently far that going we in to what accomplished we Thank as quarter. to the said once steps concerned, can I progress timeframes we touch I continue said So having our do plan that I’m been was of to in as and that be want the that’s say again you with we is that, we as we just look on. continue next to continued here along management and proceed always to that everything forward I’ll I you. are have you articulated. the the we would we with said on C-III results that make we we again. has the would believe With to brand very continue greatly tell say support the that proud we And

Operator

you today’s thank for gentlemen, the program. conclude This conference. and in does your participation Ladies

Everyone, disconnect. day. all may You have great a

ACRES Commercial Realty (ACR) 4 May 182018 Q1 Earnings call transcript