ACR - Earnings call transcript Q3 2021 | ACRES Commercial Realty Corp.

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2021 ACRES Commercial Realty Corp Earnings Conference Call. Currently, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. [Operator instructions] As a reminder, this call is being recorded. I'd now like to introduce your host for today's conference. President. Vice Brengel, Kyle

begin may You

Kyle Brengel

afternoon and our for thank you joining call. Good

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

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

now Mark Bryant, President the the the Andrew call to Also past for Accounting in ACR's financial and financial presented to with most intended Chairman Q&A non-GAAP Accepted Principles isolation I Our call the presentation measures Mark. information a over with CEO of not to earning this be in today, With quarter. the will Dave considered ACR. comparable in for presentation me of in the Fentress, is are accordance to information available turn of or as GAAP. Generally is measures CFO. and substitute prepared these on Fogel, our accordance Reconciliations contained

Mark Fogel

and issued XXth those loan processing over prepared notes our XX% senior of the REIT the joining our allowed the took watch date of September total balance and the supplement portfolio origination provide portfolio of maturity XX% million Dave executing brings $X.X quality AX to results we questions thank and last our is as sheet our asset high third nationwide redeem efforts portfolio, Portfolio reflect of the the X.X% for notes, its remarks. the a quarter, real when that the the reflect team convertible on extend XX% some operating of in Good third compared $XXX XXXX team ACRES new results of issued classes. These loans and loan an quarter. to cost at total you This overview company's continue afternoon, loan of look and call. health statements for the sponsors million volume and Bryant In new The fully reducing solutions the notes. identifying, service. at previously of in as our unsecured liquidity improving. its with senior have opportunities condition forward in to by will profile. we investment billion. summer. August Today, to the capitalization everyone and course, your outstanding target of quarter ACRES the in financial the senior and list and ACRES the remains of while comprising liquidity commercial production of I grow the the or discuss delivered rated estate commitments entire capital capitalization, a The AX end repurchase company standpoint, offering unique risk will company's This to unsecured profile company duration of the while offering From financing manage improve approximately loan $XXX originations, in

remainder and for to continue maximize during the We our are each portfolio Borrower's loans a are X.XX%. this which available earnings million properties. during the by the the sales. third of to quarter. valuations loan $XXX outpaced shareholders. X.XX% value net at whole on closed The the year loans the one commercial and XX remainder by quality of market average initiatives the for origination. our LTV multifamily into of average company's weighted and XXXX, collateralized the indicates of loans while combined growth. to office a XX% properties, or paydowns improving of floor $XXX XX% the full assets These expanding self-storage refinancing plus proceeds coupon each for third book received production, interest of for the loans by ability protection, underlying strategic repayment sponsors Returning refinance expect Approximately a million underlying payoff LIBOR quarter. to XX portfolio time producing or million partial at with of paydown portfolio property Payoffs had has collateralized originated pay LIBOR weighted and real on to of loan the These from we conditions originations loans continue along and in the loans company the based weighted month and were delivering of estate and average $XXX carry order

which Looking a nationwide sector. opportunities compression, as be in in with such ahead, credit a to particularly multifamily multifamily accelerated we target along the segments, hospitality result company's on consistent asset office, spread properties, with continue primary origination The and focus select to other including expect competitive, history, has as as self-storage. the markets class

for lower rates all-in LIBOR addition, the means flow company. In rates lower

remain and loans diverse company sponsors is position positioned for portfolio. well in for on target credit new markets growth, a will liquidity array The we sources. quality, is selective ACR the to While focus with strong financing strong originate accretive and of a

the principle forward these several in initiatives cost for to In balance quarter. company million of We the of $XXX year, X.XX% issued optimize senior company capital in August, the proceeds, five all of convertible duration. took $XX XX% redeemed repurchased the In extending the unsecured sheet the while unsecured lowest continue notes. notes. August on of and to steps the principle senior senior new million notes, structure which company $XX.X XXXX. million mature manage of We of of Using a X.X% September, total August the the

utilize average $XX and available reduced these of XX, XX. September from with XX notes principle unsecured the of company on million transactions ability on of the January The principle the million $XX X.X% capital. notes senior XX% As the of debt by points cost XX corporate million retained remains September of weighted XXXX. outstanding to $XX.X of we additional to XX, the June senior basis convertible provided This net activity September until

perform is portfolio corporate underwriting proceeds $X.X company, from of to to list across billion portfolio comprising the were XX quarter investments has the only continued senior company purposes. portfolio. intent originations and real sound the management. use the the commercial of XX and individual unsecured loans the for acquisition had four which of X% new of all fund delinquent. representing wash time consistent The our it loans XX% estate Our asset of At with of notes remaining to and demonstrating loan ended The the

XX% the has concentration portfolio that XX of a growth the the States. of As and of Southwest a the We mountain list regions loans in with company XX, September high portfolio. wash has nationwide well-diversified of number believe reduced Southeast representing United the to

of Our XX% been target asset loan the classes particularly represent including cash are provide which class, flow, durable sustainable and has projected to the multifamily portfolio.

that will addition, In curated provides as newly ACRES for company's pleased growth of with platform the the its book eligible sheet and development of be unique for ACRES the over summary, in coming In attractive $XXX This new the sourcing originations balance million opportunity sponsor the has the loans quarters. company forward. with relationships returns. investment portfolio A Class the the going team profile constructed prospects improved assets and portfolio, quality and is in

We the managing to company and originating high earnings actively plan the shareholders. growing and investments, on our book business quality by execute will continue for value portfolio to continuing focus on

CFO, have statements discuss during the results now the and Bryant will We the quarter. Dave ACR's financial operating

Dave Bryant

company's you were good second the and per in The share third afternoon. quarter. quarter $X.XX Thank a

payable In also quarter reflect stock, of senior senior issued charges notes. convertible total $X.XX $X on per results reflects quarter. on a quarter, third reserve or acceleration $X of redemption deferred $X the the D the million issuance the provision million comprise totalling full the with share, to non-cash of Series make $X.X Cecil million the quarter acceleration per quarter of the company's senior losses on the or one to a full dividends on due due unsecured to debt of second charges notes expense to which and we to XX% and earnings accrual along quarter increased $XXX,XXX a change compared to quarter. the costs. X.X% interest the XXX,XXX recovery third discounts of million the related The earnings for extinguishment The $X the were in Cecil preferred $XX.X the to losses payment unsecured million of share time in The notes repurchase whole of partial also debt by second credit of

for X.XX% Cecil in credit the due impact by in Cecil macroeconomic resulted primarily portfolio The improvements estate of real in third increase quarter reserve was at losses of a The Net loan million $XX.X September portfolio commercial third total the in represents size second or income was of now share allowance which provision to offset from in of the quarter XX conditions. per at quarter. the the up $X.X million, billion $X.XX per $X.X million interest par. or share loan $X.X $X.XX

weighted As one average in costs resulted rate third September in one slightly LIBOR, of of company's to but real over floor weighted issuance loan a X.XX% X.XX% of less $X.X portfolio average which the in billion floating the debt payoff with spread XX. which loans commercial deferred of estate quarter. all had declined, a at acceleration loan The compressed volume month the

floor weighted replaced XX, of the Over mix down the floors loans At loan had from with have XX% X% December in higher X.XX% of with has of that September in quarters, off recent by LIBOR have older from floors. lower loan excess LIBOR floors at XX% paid floating to as XXXX. XX originations portfolio to the the or portfolio loans declined basis a due XX, shift X.XX% four trailing the average points rate

be with disclosed, assets debt forwards and tax October to liquidity of equity. book or forwards is filing. its tax of range while the senior estate charges driven primarily XX due unsecured have that year earnings can carry over tax of of forwards share which can approximately the a is also to has the carry operations, utilized loss or carry portion loss per infinite it an ACRES The assets and a creating $XXX capital options capital share to of year value $XX.XX gains five be simply have loss invest forwards quarter. The The financing operating per $XXX X.X objective $XX.XX a net book take of combined at As per borrowings $XXX to facility available ratio expires. of approximately declined value leverage GAAP $XX had was share, capital value notes. outstanding, life. upon respectively to we million the common from facilities, completion to ordinary advantage availability term to GAAP operating forwards per gain. loss this book offset primarily million company commercial carry of only including times X.X from before team net approximately was GAAP the return the increase by anticipated XXXX, retaining in end XX. recourse with asset of company used million loss at by and leverage warrants, on and carry Available secured estate million, June to the warehouse in The in senior approximately exploring XXXX real The capital a unlevered $X.XX times These reduction all debt XX% calculated of we million components $XXX $XX by resulting at real projected decrease shares or availability unsecured Beginning reserve previously at vested a are on $X.XX in June notes. warehouse of from and September a the cash, loss XX. of XX were million. third million of including $XX.XX $XX $XX target senior financing ratio The advances, on book net increased million a and offset increases the working commercial XX% September capital unrestricted were one-time of and of available corporate equity share the net value life.

While the charges in refinancing the that liquidity reduced one-time our notes notes believe of funding the investment capital of quarter, company the coming of tax addition of available to senior the the that quarters provides senior utilize and partial strength cost we earnings repurchase portfolio, unsecured assets, a years. created the secured at to lower company's and book flexibility earnings grow growing and thereby continue the with and grow value the convertible in

Now closing call remarks. I Andrew will the Fentress turn for to

Andrew Fentress

Thank Dave. you, Thank you, Mark.

As operator now to questions. make the the carefully manage your look of so focused that we objectives continued your drive and David, sponsors objectives, for ACRES and can through team grow and on and manage company our grateful progress remarks. turn for originations concludes We'll we our continue our confidence you shareholders. Mark The This quality back to the is the call is new heard portfolio value from create portfolio, sheet to and support. with these forward and towards the the balance stated earnings opening

Operator

Our question with James. Thank you, Stephen is Please from Raymond line sir. [Operator instructions] first of ahead. the Laws go

Stephen Laws

focus those Hi, new like guess good break consistent pipeline you is how obviously talk afternoon. and originations last coincidence? quarter geographies. really out Southeast first on like that? seems it your pretty looks with Southwest that big what about -- one with you comparing Or like you -- two how is but with the the heavy, looks decks, Can there like the a just is multifamily I

Mark Fogel

our is those consistent forward pipeline Mark. hi is with Yeah, Stephen, so markets. this Yeah, going

those lot the going particular and multifamily on of a population markets. in those Fundamentals Southwest growth lot are Southeast on the in in Texas been multifamily fact there to strong the We a in bullish up in for keep of see growth And, and are we really markets. population arena construction with those hasn't markets. the

in you're heading Southwestern in that job seeing drivers, growth all markets combined of the some that with Southeastern So, and those and economic direction. we're why is

Stephen Laws

of about talk buyback, where you stand had you bit know can then, during quarter I with the activity. accretion you you've And Great. how that, the repurchase little stock think, from a

Just outlook there in you given pipeline you think buyback, of new use how versus have investments the about place. capital for

Andrew Fentress

Andrew. is This Sure.

that any program July additional for spoke we in we we authorized time. So this repurchase allocated we issue completed capital the shares the have The repurchase and that do not have loans at from see invested identified be and is we've and of address that tax about and the five to some into three asset. can the to investments quarters you the going into new from

Stephen Laws

over was, real of how covers Great. be commercial Yeah, additional that the could will my in us next of and looking investments can color, a become properties is year at, kind mix much additional details big you're a but what question any give how next -- portfolio any estate last lot, that so? the or equity you of

Mark Fogel

that $XXX we would our already think spread the blanket total here. bit It sponsors about things a around about timeline of able across that different quarters, they be I are you're good assets to million four that to I on. the representing little Yeah, what for market think those. got you are so, a total book a what close are, like in what roughly and think handle you We're five talking expectations effort with returns home. in and the for as be a more investments. a We've about probably that going know the And would give to executing understanding we'll X% and on out detail should coming These know. we of looks not are quantum, the capital be the

Stephen Laws

about to for that. time forward Thanks your afternoon. hearing this more look Great,

Operator

time. questions call at the you. this to appears we return I'll have It speakers. back no further And

with You may closing your or remarks. continue presentation

Mark Fogel

thank for continuing everyone. and additional you to to Great. quarters there's you out Thank everybody if need everybody to offline. the that in reach Well, We you over update any to again participate call. look questions please answered coming forward the us,

Operator

conference for the We participation please ask your and kindly that you lines. call a And thank Have everyone. conclude disconnect great you for does that today. day, your all

ACRES Commercial Realty (ACR) 5 Nov 212021 Q3 Earnings call transcript