XAN - Earnings call transcript Q3 2020 | ACRES Commercial Realty Corp.

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Operator

Good day Ladies and gentlemen, and welcome to the Q3 2020 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, Brian Brennan, Vice President. begin. may you Thank

Brian Brennan

thank joining and call. you afternoon, our for Good

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

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

Andrew Fogel, the me Bryant, Chairman quarter. of is I'd over the for for like is call release Also considered now presented call prepared as Exantas. the to and Dave our earnings our in to CEO; measures and of Our presentation accordance in comparable non-GAAP Reconciliations or be turn today GAAP. financial principles accepted is past QA on most accounting available measures to of with these isolation, to the With Fentress, information substitute intended are President generally the with CFO. accordance in to this contained a Mark not the in Mark. information financial

Mark Fogel

afternoon, on accomplishments. and and the enhancing to thank report for Since joining of highlight loans. the Exantas Capital, company the the originating our management to you the results an July that XX Today will focused date. with update transition operating our I'd complete. key like is I'm accomplishments the to the our quarter. ACRES Bryant pleased associated and portfolio, management everyone statements Dave on Exantas call. discuss provide then existing key discuss profile, the financial to financial Good for integration of our and restart I the acquisition will company's is work closing, loan contract stabilizing few to a positioning contract

the ACRES team integration combined over gone the is prior XX and has brought smoothly. management working very the seamlessly. from together individuals First,

the underlying in portfolio the on Second, this continued work environment. our team the loans has during challenging ACRES

a We entire asset deep list. have for the watch plan have dive into each loan portfolio on taken and specific created a our

real ensure estate track. commercial of working primarily onset have since reduce We risk, due to forbearance pandemic on total every a form financial loans, or where executed some COVID have XX payments difficulties. credit provided we to are with relief remain of portfolio the an related to extension Of borrower closely of the their agreement received XXX the

through are two portfolio, of loans loans, With debt our the on of X% current October exception representing XXXX. total the payments approximately all of service

months in the the borrowers risk, of with we complying currently uncertainty, loans proactively and in given face loans ongoing could the at the their addressed ahead. quarters have While we believe terms additional challenges

our We quality $XXX million believe during uncertain in of loan including to fully and this assets the environment borrowers the several ability total many with and the are to loans speaks underlying retail quarter. health multifamily a that repaid refinance collateral Additionally, portfolio. pay down their of of the

the September, mortgage acquired closed loan $XXX Exantas. a company originated commitments estate real floating-rate or backed by first CLO in of Third, million commercial by

the the liquidity warehouse exposure senior to reduced CLO the to which margin With further lines, from able call issuance off from the and proceeds pay the existing company secured was risk. facility,

end payments. cash October, the the cash of capacity Series payment company liquidity, C billion of including restart $X to the and balance As access company stock, million approximately of Fourth, of with of a preferred its improved on dividends had the financing which all to with accrued approximately resumed originations. $XXX loan

location, basis. the stabilizing quarterly In underwriting will this business presents the experienced of the our ideal company dividend, quality all policy of necessary steps the is platforms. you our into for on current of evaluates on now terms of look assets We management and believe sponsorship. key dividend the is and We With going on taking new capital The board of on we approach. underwriting focused and actively a in compelling quarter. the our highly forward. towards acquisition the opportunities ACRES activity of its behalf finding to the opportunities a common nature driver over opportunity we remain has the forward improved complementary quarter and and Exantas ACRES the disciplined to fourth The are the The combination is loan originating the of contract the company. reporting course team, position.

validated focuses the volume to execute strong focus asset sheet Exantas candidates years, lender $XX term and growing $XX country. and million are loans balance first ACRES many The is of our platform, borrowers loans on seek for been are increasing short the ACRES. in mortgage million across has the sponsors within to our Over of MSAs business The the believe the term We classes XX have the in to successful top transitional all eight and thinking range. market they potential loans. with on middle-market past focused which a on major longer loans these

nationwide. middle-market full being to will of We are as network towards additional provide solution access borrowers for a confident end for Exantas that ACRES' our to estate real work we end goal originations commercial

Bryant results our and We our Dave operating will discuss CFO, the statements now during quarter. third financial have

Dave Bryant

Thank seamlessly. would working sentiments coming Mark's you together like I and afternoon. and to about good team echo the

impact results of quarter positive COVID-XX continue third to ongoing we make. reflect well as progress Our the as the

Our three GAAP XXXX. months to per of share. XXXX, $X.X earnings for shares million XX, payoffs million to for in $X.XX loan was third the income and loan and third second pause during a interest the Core sale were of XXXX. per The quarters September were temporary transaction million costs downs $X.X $X.X $X.XX to the ended compared allocatable or the pay for share income originations quarter adjusted of the the net loans, or for estate Net the ACRES million common of one-time quarter related drivers quarter, by in decline declined million real third of of primary second XXXX. the the $X $X.X commercial and

at of the over These LIBOR end the our rate one floor to an our LIBOR issued Additionally, $X the $X.X second notes loans. of in of at quarter weighted increase million Senior end, for stable a are average corporate of unsecured month quarter third portfolio floors in quarter interest on remained one decline. weighted X.XX% our the loans X.XX%. on at average contributed expense billion September. floating-rate With XX points on the spread in all money The loan for the of the at approximately XX% basis LIBOR month in rate floating gross X.XX%

loans debt We to on projects loans interest forward with the low performing estate XXXX. LIBOR as commercial expect our rates in service continue real through eight end including two of remain All meaningful to of net balance current benefit were to forbearance a agreements. the income for accordance see of the to XXX except curve company's payments October,

determining the requires reduction institutions expected and historical provided on agreements The evaluate losses to our loan property over this other credit our to of of all loss We X.X% The data CECL our expected This site impact losses in billion of as of future provided CECL losses rates by other loss a estimate resulted loan from relief third-party relevant payoffs, or term total life modifications short economic in we and XX reserves and which current loan together on as at XX, well portfolio. have In loans from and our mortgage by credit the implementation and for in credit the us estimated allowance million loan form available financial with anticipated macroeconomic loan year. impact forbearance applies improvement loans. resulting represents million, June losses. on macroeconomic XX, expectations of loss credit conditions, million $XXX $XX.X estimated September $X.X of an at on the $X.X our experts. related potential

from protective as book XX. warrants quarter offer certain the shares, was in $X.XX unsecured purchase adjustment issuances purchase on to book of our income share to $X.XX million and of $X.X advances net value largely driven during to for August. legacy by prepaid amortization based driven share, to at and to by XXXX, non-core third per by of expenses. the XX, an rose XXXX, primarily senior the at announced During offset compared net GAAP which the quarter asset June The we a value property, the September balances impact the incurred notes per related increase property received held $X.X we common million had valuation of sale, on of operating charges slightly

MassMutual weighted Exantas September, secured the financed zero refinancing of including estate increased a X.XX%. to X.Xx decline with issuing $XXX a of XX, XX, due retained million to down CLO from and XXXX-RSXX. XXXX to CLO Xx Our year-to-date. the assets and XXXX average issued at a loan from Corp CLO Senior commercial facilities million at In at to new notes, new of September term million The financing estate we liquidated by paid cost commitment month ratio our real warehouse our but one plus GAAP parties, third debt $XXX decreased to commercial June facility earnings LIBOR $XXX in equity Capital year-end financing by real

a and With commitments forward. XX, short refinanced including quarter, of improved result of unsecured liquidity have October including we made company's on build was million for and $XX senior the available amount notes as real to that, and financial and a to estate of financing million and end this cash the facilities during we notes. move on profile, the of September. continuing $XXX liquidity like aggregated With questions. At senior look enhanced progress secured the in the commercial warehouse financing I'd progress had availability margin unsecured reduced forward up the its of as of $XXX by encouraged open time are the to we million $XXX debt an call approximately term million, company the As on senior and of risk, availability Operator? new unrestricted

Operator

the question Laws with Raymond of from line Instructions] first comes question. Steven Proceed with your Our [Operator James.

StevenLaws

afternoon good Hi, congratulations. and

months three reading release and guess in You guys with start first through like from accomplished lot. comments have Mark, a I around It seems the the updates. the originations.

You've Are got think have you looking we liquidity. as going you're are of do? in the types? on loans new property loans what roughly there? model, origination talk will certain fees to impact there $XXX any income about Also Can how about any million think impact the type loans fees about line, these one-time how the or interest do upfront we the to

DaveBryant

in versus I today. and office, look our origination that credit to related types classes, are dictate which hospitality, loans right think Sure. the XX% taking in type we In in in will look compared Then to that portfolio these very existing our other assets industrial, you? to of the opportunities geared assets. our of of time do. retail, a new certainly taking Will focus of now don't loan types being the It's lot will what's will portfolio quality at and we're on on words, markets the Right assets. nature a knitting, loans a that other the different careful, lion's those going new understanding really of dramatically XX%, share the there lot to stick Dave. hard towards out of is about asset the now pricing. what's are be is the How residential

it go, that Meaning bulk today. in won't what X% the As fees. that book nature much far different exists origination in as our loans be fees the origination than have of the

StevenLaws

performance? but of XXX portfolio but Great, helpful. these the numbers slightly are all think may off, Can a towards at loans have current. that's you talk the Mark, X little I it's I

some two some aren't So the if partial the modifications interest said about you of color my believe what deals? seeing you give on have contribute to actions there capital like? the that in the typical place deferral? interest you experienced XX look really can into it the modification. you Is and I'm Correct taking us Can the release more talk borrowers Are there? off. type maybe talk of Can I number loans type

MarkFogel

Sure.

loans paid to the one As the that the subsequent quarter. pay as end two actually far haven't did of

work the deal some good view the forbearance that in resolved as and that agreements and include, standing our by of interest, They far back lieu deed in turn their place the the September, In have the loans. effort cases August of In that loan paid taken time has of loans majority need the hard properties not as a loan. some corner. agreements positive they in forbearance one So in majority the is to on a we -- in a of our through infusion project equity are many That team. was that's But borrower. the in put of tacked on borrowers which their The feel of foreclosure. essentially bulk believe you only value to borrowers were cases like is a modified management asset been go, just principal finding situations lot situation. a lot of on a the that gave as the and lot to situations three-month so a the we the of through which We're suggested, as by interest the being of reprieve. balance were and

infusing So the they majority equity of are cases. in

modified those are in deals with all forbearance in forbearance All loans performing modifications. were those that accordance in the accordance the that are of and agreements were with performing

StevenLaws

Great.

metrics on the current when there Lastly, comments current think comments on around timing should about common any look may we around at the dividend? the that but dividend what any be reinstated? or where to thoughts know either general and preferred, you're I

AndrewFentress

it's I'll take Andrew one. Fentress. Steven, that

period standpoint, the reinstate of in as September said liquidity really which remarks, and have the then the we where Feb an early QX we're the discussing prepared our evaluate you and a a standpoint exercise the dividend for pay is the highlighted, the ending make dividends did through elected XX. preferred to from origination to will But board common with and the meeting, decision point. at be again a As and pay into company board went in to on going a we period, January, the next have that conversation conversation

Steven Laws

books returning announced know capital buyback I that way Andrew. accretive be thanks, highly the Great, clearly should with to shareholders you're looking there. discounted and at

your So Dave, Andrew, Mark, there, thank you for time appreciate it.

AndrewFentress

Thanks.

Operator

line with [Operator Delaney proceed Instructions] Our next with Please question comes from securities. question. Steve of your the JMP

SteveDelaney

a for us Hi, good Stephen that just your the with loans that Mark over out quarters? good kind my portfolio. of on of Repayments, they table. assigned the got glad agree looking is good repayments everyone. you out purposes there I'm on couple comment the you share with evening took couple Can any ones I visibility have in next but of modeling

MarkFogel

repaid past that related assets. of It's loans quarter the the hard to majority multifamily The say. were

a People for are Fannie, I that's and makes it tenants to takeout anybody know, loans for and say the on might in might what's that's little It's right wary, situations to estate. look good paid at world. go-forward about active market with what analyze think still how the of to quality look just juncture this rent. that these you a going might would potential pay really difficult given on a not types now Freddie a basis, multifamily very get hard even real like at those it off. on looking As that bit when about lender

SteveDelaney

look How about another let look that would at that is would your have to looking say opportunities, almost serious will March, way is with before portfolio capital would portfolio billion, portfolio loans the find doesn't year loans? uncertainty Maybe $X.X adding too get be $X.X now far some us to the the positioning redeploy contract that is, you between the the fall you below to that new for that billion? attractive and to assume new reasonable current over, Tying at you the extent start at your to extent Sure. much it it to so repayments, you to that

MarkFogel

at we're looking Steve, No. new actively right now. loans

as Dave not careful. very We're out We origination in process. mentioned liquidity being that start pay sure we're looking we're market we waiting the off so in have but down for the we the but We at make into to ensure want right quality don't to the deals any right now. have active that are pricing market the bring assets at in we problems good portfolio the road, to

SteveDelaney

touch of portfolio Well, over the thanks couple the take a clarifying see might We up even for that. quarters. next

Okay, this for sale on? is just took Dave, you sale quarter, had Dave. cleanup loan that same the loan held assume housekeeping should we $X.X that for The a great. the that the write-down Then you loan is in million

DaveBryant

No, Steve.

Let actually me to the I referred second the clarify. of The loan sale happened that at quarter. end

was what loan sales is, referred the pause of second loan in Mark interest loan temporary heard payoffs the they that combined So the about the income combination tail net to our the I explain at to and of you've originations, the with saying decline. that end all quarter,

the of in by quarter loan was the $XX was loan because that the probably it and didn't have income third that So generated second $XXX,XXX net million we quarter. the interest end a of gone

SteveDelaney

Got it.

to it you're sounds Now write the the was got that was bid you final the and for the done write-down that is a like did loan sold so property that down in property take asset? on with it you

DaveBryant

of end the done sold. we until know, and by get we're hope would close done we're year. not We're we not all the It's but yet there as to

SteveDelaney

original the one? this plan books Okay. than from Any strategic Exantas left the on other further remaining legacy assets

DaveBryant

was other quarter, payoff disposed be asset. it had will a still discounted when we are where to through It's of one took specific to that that say reserve about the talked our actively We're working which fee we we it. borrower, it. against is last a on way working There exactly hard but

SteveDelaney

and Okay, two so cleanup that. those with done you'll all be items,

DaveBryant

Correct.

SteveDelaney

to look your the keep thanks. quarters price with work. Well, good We'll Appreciate over good and stock forward hopefully little couple Okay. the of next here a job. will comments and bit help up buyback the the

MarkFogel

Steve. Thanks,

Operator

further in the I over the back Since closing Fentress there to queue, call turn questions any no would to Andrew left for like remarks.

Andrew Fentress

the forward end joining January, the at conference for look Thank for fourth much our you. very again of results you everybody call updating sometimes quarter we and you Thank February. to

Operator

teleconference. This concludes today's

You your this for Thank may now a disconnect your at wonderful day. you lines time. and participation have

ACRES Commercial Realty (ACR) 4 Nov 202020 Q3 Earnings call transcript