XAN - Earnings call transcript Q1 2019 | ACRES Commercial Realty Corp.

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Exantas Capital Corp Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Steve Landgraber, Vice President of Corporate Finance. begin. may you Sir,

Steve Landgraber

morning you Good call. joining and you. for thank our Thank

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

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

as isolation financial accordance comparable of now intended our substitute of this with quarter. earnings in non-GAAP Accepted of to be Accounting or Generally past the are Corp., turn release will Farkas, Exantas a Reconciliations Andrew the opening Capital it measures these the for presentation Chairman financial for Our information remarks. most over accordance not presented in contained GAAP. is the of I measures in with considered to information prepared in to Principles

Andrew Farkas

Hughson, success We joining. President; to strategy, Thanks with deployment Finance. Head of are transitional our Bryant, market, the our commercial core dividend for Corporate With the to we're of The Good second by expectation continuing me our reaching and Stern, XX.X% commercial $X.XXX, origination portfolios. second Paul are our end, Bob CFO; that remain President growth announce corresponding Landgraber of Steve. Real of our and over XXXX. to progress from our increase the XXXX of on a CMBS XXXX. Estate driven operating of a our Dave our the real Vice the XXX% strategy, CEO; pleased Lending; estate dividend our the focus for you year. this an estate Matt morning, and Steve to increases the quarter and and quarterly increase today of To of real increase quarter just of everyone. our Commercial Thanks, or Lieber, pleased acceleration later heard, our over earnings with the full in expectation first quarter advance whom of That's

our very Bob? we effectively. that, proceeding turn to Bob pace at over it Lieber. So, are I'll CEO, With

Bob Lieber

and Andrew, you, morning, Thank good everybody.

net million from a the share, of deployment quarter $X.XX is core originations during XX% deployment share XXXX quarter Gross million a XXXX. of in first were we're which earnings over which per by $XX.X of of of up $X.XX and the is $X.XX reporting the quarter $XXX second quarter core the XXXX. quarter $XXX.X first from in the For up XXXX, and first from earnings share up was of net adjusted last million, of

end, million. closed the after loans Additionally, quarter we several totaling had $XX.X

we're a So, for two. quarter start to good off

caused to fourth and fees by the during Net million, $X.XX $X April finished share per CMBS par in was share our of one during $X.XX million, month During to or per $XX.X to the decrease quarter quarter, or estate real million. at we $XXX quarter the or We commercial portfolio per our income compared billion was million interest grew reduced the $X.XX first portfolio of exit share. This $XX.X to quarter deployment. latest of liquidity, of XXXX. Further, to $X.X financing to CLO of availability with liquidity The $XXX potential – XXXX which April permanent ample support for million, $XXX year. April key the our our execution full-year increased our reach XX balance this net at deployment reception over the equates of strong vehicle this on was to $XXX loan million at providing driver XXXX. sheet the financing full end million of of facilities robust another

compared to this take On during per at end our those per our the corresponding And had impact the we value second on last a in a prior quarter book share to GAAP share discussed to volatility quarter. increased the $XX.XX market book Our expand that. led year, to want $XX.XX CMBS I to on of marks. book, the decrease which value on call,

as measure $X.XX. of the income for and reported four million $XX.XX of we past been and objectives book that, over ours. shareholders. the for redemption compared is know, common our We increased notable economic Matt? to as a per anticipated also fees. covered option of quarter, turn or of consistency and would, quarter the we of or aforementioned equity gain convertible $XX.XX exit reported share, our Our first to once per earnings with the stable, price notes Stern. producing of stability to fourth think again value the we which have $X.X during economic key And between stock. Core $XX.XX book you this and our primarily share And call Matt position to are $X.XX quarters. $XX.XX during a We the quarter. dividend. our million recovered quarter, have more first reminder, net like last metric this results due value of preferred quarterly And the $X.X provides it's new Economic $X.XX the the believe to I'd CMBS of it net in And portfolio our compared meaningfully a that also accurate to the outstanding value accounts

Matt Stern

points, balance our real floating of billion, real estate commercial over commitment seven At We commercial loan Thank with loans The which a an good to $XXX rate. originated are XX, of Bob, March totaling you, portfolio an has XX.X% estate million, $XX.X and points or basis $XXX average spread morning, increased XXXX, $X.X million during unlevered average everyone. LIBOR. of XX-day asset average of weighted first fourth from compared new during X.XX% financing weighted XXXX. points first yield average billion increased basis was quarter quarter-end, basis quarter, improvement a of XX of spread Total X.XX% basis the XXXX. CRE to originations at the $X.X on XX of by with loan points to the an quarter loan XXX

originations loan factors. payoffs loan the and of quarter by due CRE portfolio Further, our first until production won't QX paydowns. grew Our full to million quarter, as during benefit the next be two $XXX.X exceeded new observed

the closed had payoffs our at first of quarter XXXX we in late of quarter. a fourth number second, First, of some early QX QX. the of end and the the originations of And part

deployment quarter As result, to current full results the our a and this at quarterly of quarter. our benefit see are the end, second during net than run expect we lower rate

continue accounting loans as type and in property demand with space. we to opportunity diversification constant XX.X% see multi-family held Our our that of strong for quarter, last from portfolio,

increase we we deployment. as progress toward So, full the expect types asset contribution to from other

hotels the were at office of including allocation the followed allocation XX.X%, a and by allocation highest next XX.X% is rest Our single our in to digits. to retail,

broader the institutional a given While X.X%, can the where are loans manufactured decreased capture exposure has presence. housing asset to We strong are to meaningfully spread, and competitive we try and our where retail self-storage target excess we've in to markets, type. see this negativity these less opportunities opportunistically area do as we high-quality additional an markets C-III retail surrounding

loan loans of the can we from spread impact originations of will at smaller, that supplement in We this marketplace. be yields our tend to While and risk. some offset the ongoing better believe achieve the similar compression feel levels we traditional

Turning now CMBS portfolio. to our

face average of During for of million $XXX coupon in March by first $XX.X offset floating par our we fixed $XX.X XXXX, was At $XXX rate at partially rate portfolio of million acquisitions bonds million comprised acquired rate of at X.XX%. million million bonds, of the CMBS in CMBS amount weighted a $XXX and million quarter, bonds. paydowns net XX, $XX.X of

our CMBS to source for portfolio swaps. that enhance In and in rate be is attractive remain mentioned, financing increase net the $XXX of floating $X.XX CLO pursue efficient loan continue CMBS a growing As in consisting markets reported $X.X interest net including $XXX.X for million sold of $XXX.X offerings. and and and billion. to million transactions We the notes investment investors. net of quarter, date, an this find our income our earnings. closed quarter, $XX.X After total this million our million, CLO, financing the we CRE our commercial opportunistically core we demand for portfolio interest debt in aggregate, production in Bob mark-to-market and accelerate help was the CLO on portfolio CRE to rate estate loans portfolio encouraged non-recourse of to This and $XXX.X the will increasing quarter core impact third-party of and for we to by real our strong debt loans million our the largest market

over discussing disclosed second to quarters XXXX and announce dividend like XXXX, are – Bryant the our or and to to fifth track it forward over Dave discuss on between of of of to pleased consecutive XX.X% you turn and to our origination come. reach a increase of still in $X.XXX, quarterly believe the We our we first our With for billion XXXX. quarter we guidance our to a financials. look We with that, expectation progress also previously the I'd $X in increase investment to for quarter to million $XXX are

Dave Bryant

Good you, Matt. morning, Thank everyone.

core borrowings. income $X.XX The per million our earnings, share. a per allocable $X.XX $X.X $X.X per for and to $X.X non-cash add-back XX, made million GAAP $X.XX March per shares were a transparency and XX, was metric dividend. non-cash common three, at an two, our to million, value, the add-back or non-GAAP We with $X.XX general million, book million, $XX.XX loss of for per a for note loan net equity for release. $X.XX netted the adjustments XXXX or earnings three our of convertible for $XXX,XXX $X.X The share in Furthermore, $X income Schedule with share share ended a core for of following balance or amortization associated arrive discounts earnings our to improve the XQ share at XXXX. share, in shareholders economic reserve; earnings December the GAAP listed December book QX for material covers QX from Our $X.XX to XXXX. and Core began of XX, compensation; analyst a common effort the $X.XX net $X.XX months are increase deduction addition XQ add-back XXXX, our of to XXXX the value were common was non-cash reporting X adjustments to community. per

a made value As two reminder, adjustments to economic to arrive book book at value. are GAAP

on First, of options operating notes value million of nothing our March GAAP of the with share remaining time, our company's interest has XXXX. book the reduces $X.XX increases conversion includes is convertible balance equity the per into value at notes do value over amortized liability performance. to but and XX, This GAAP our aggregate convertible book amount expense, or the $XX.X

the stock. we preferred million book which value be XX, which reduced this redeem pay should million share $X.XX reflect amount obligation Series by difference, $X of carrying and our distributions per not million, the stock XXXX. amount is of be we $XXX would March for would preferred due, C the does Adjusting at ever the preferred of balance the $XXX full on Second,

book per at two So in value GAAP share per economic XX. share, the totaling discussed, $XX.XX value of March $XX.XX, per taking items yields our less $X.XX book of share

XX book December economic book point share, $XX.XX per XXXX was value of a reflects the comparison, stability. which As of our value at

times of Our XX, rose GAAP XXXX. X.X at slightly XX up March ratio times XXXX, to December debt-to-equity at X.X from

in result reflected to increase other that a million few had during $X is three ended GAAP category in operating comprehensive the running reserve, and net period, plan in equity XXXX, specific the to net by adjusted related $XX.X inched bond a improvements stockholders' debt two loans up which the prices, the therefore, our million, modestly months our We loan million primarily rose $X income. while income of for we rating by balances as March three-month Asset from of million. risk loan primarily net general are slightly a $XX our behind includes three. category XX,

CMBS and million at XXXX of quarter discussed, Loan during a plus of plus of payoffs with a million strong Matt spread bonds, months. loan XX floating paydowns acquired As and rate of an had $XX.X of we all were average and of production $XX.X LIBOR we were X.XX%. the LIBOR life spread CRE X.X% also first which

loan net the the Matt second see QX. positive latter production in full Our the toward detailed production earlier, as And we of quarter that was benefit XXXX. of part will achieved of

saw Corp. first a spread Leverage we our closing, offered the that, LIBOR of for execution the the Bob one of the BBB XXXX-RSOX, call plus we real our with the team, back Capital offered pricing million excellent forward, XX.XX%, minus Looking of to the with ended. commercial of notes. was Exantas At quarter CLO purchased on final month $XX I'll X.XX% With notes. comments. new at CLO, after estate closing just by turn

Bob Lieber

Matt. Thanks, Dave, and thanks,

track. you our on longtime As see, remains strategy operating can

grow on our to recovered reach CMBS in quarter. book The marks full our strategically Economic deployment last to portfolio with keeping as deployed portfolio value track increased capital, from us in continue XXXX. anticipated. We

earnings in run-rate We second quarter. the quarter boosted first be by adjustments expect the of production, the has towards will originated end which from

progress, raise the dividend, which these call. drive updating have for about pleased which With Board and up of callers. operator core with core earnings our to and our are XXXX. recommending to the from I'll look open ask results quarter to We $X.XXX optimistic forward remain our questions you that, will and any largest second We're on our next earnings we increase we CLO this that closed the covered in to-date, quarter help our to

Operator

Thank you. the JMP first DeLaney Securities. [Operator line Steve of question Instructions] from comes of Our

Steve DeLaney

it's more think you, on looking And loan you just in the first start to if Bryant's is did this Dave comments a trying general Thank I comment, this net does wonder ahead XXXX. from could I we've increase percentage you some was and strong congratulations if that's growth. CECL? as the though I'll of this I I the is that million, with X% get at reserve that general Thanks. intend that reserve start to a even the $X guess, because loss a loan roughly to not Or specific to the in going apply classify of forward. this two about to you reserve? increase moving loans three relate seen.

Matt Stern

process, provides at behind, behind along are that. We anything is, a it's That's of applying mean operating there certainly does rise if for that. it. proactively for up is not is those And aware expectation performance anticipated gave to are CECL go basically taking at a falls mechanism an operating rise will se. there balance a what that of This the peers, is mechanism, But what end more plan lines we quite at to the if or where provide Thanks the all gave all, loss look Steve. per a reserve. of this and quarterly, a similar Yes. property question, just But proactive. our a to to through a bit it is, really

just a that to and – couple bit a properties were three. are – two operationally behind there little we're that plan there were a a went they of So, from

Steve DeLaney

Okay.

for an I'm what every you're at not Matt, that growth So, automatically in hearing X% loan your hearing But that a forward should loss cushion to point, not putting purposes. loan that this you to I are mouth, any dollar but specific I'm to I'm in, say, not put additional quarter-by-quarter is you don't assigning trying also modeling you but have we property. of words on programmatically. build going net say, general

Matt Stern

That's correct, Steve.

Steve DeLaney

everybody comment in relief Was on up. or And can that Obviously, it the for the you flat then somewhat quarter Thank of you if Okay. market. improvement for credit if see that. generally comments trend back lined sort saw on the a first positive March since remained that in you the XX? quarter, tightened just second is things the to was curious CMBS clarifying

Matt Stern

all throughout that come has have quarter. I first And that, think spreads think I across I pretty CMBS much in mean continued. the product

that reversing. So, our that is expectation we is think don't

Steve DeLaney

Okay.

the I was trying get be get that better not expecting to Great. it to a I touch today, to to But trying just even specific. might but be wasn't Okay. Yes. reversing. fact you

you. the you thank It Well, Okay. Thank helpful. comments. was for

Matt Stern

Thanks, Steve.

Operator

this Corp. there Thank in At questions. Instructions] Capital further for XXXX Earnings the Conference no are time, participating [Operator Exantas you QX Call.

You may now disconnect.

ACRES Commercial Realty (ACR) 2 May 192019 Q1 Earnings call transcript