ACR - Earnings call transcript Q1 2022 | ACRES Commercial Realty Corp.

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Operator

Good day ladies and gentlemen and welcome to the First-Quarter 2022 ACRES Commercial Realty Corp Earnings Conference Call. Currently, all participants are in a listen-only mode. Later we will conduct a question and answer session with instructions to follow at that time. If anyone requires assistance during the conference, [Operator Instructions].

As a reminder, this call is being recorded. to host like today's now would introduce for your conference. I Vice President. Brengel, Kyle

You may begin.

Kyle Brengel

and joining Good you thank afternoon for our call.

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

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

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

Mark Fogel

the our joining provide thank the investment afternoon, originations, overview you of loan Good call. of for company's an and will portfolio. Today. And everyone. health investments the I estate real

will Bryant first an quarter, condition, statements, liquidity projected value, results Dave provide While financial update and discuss on for results. operating the XXXX, the and book

commercial at in the benchmark is loan flat real remained over billion is floating to widening period year-end rates. on to book grow a the to invested. have least the we getting fully capital are XXXX. further plan way portfolio widening portfolio X.X% of the rate April by our of billion $X.X X.XX% of repayments company company spread potential We the at spread at look remarks. plus end ACRES net flat loans X.XX%. your at This The average origination activity newly were the course, during with team The period for which the three LIBOR questions average we loan one-month the and million comprising comprise comprising prepared payoffs loan of sulfur, rates interest relatively this rates, production weighted average commitments of our originated delivered of weighted to eight XXXX. weighted mindful and $X.X of in forward $XX.X We QX. loan one-month net multi-family as Of first spread average X.XX%. quarter, in $XX.X million, loans, rate benchmark in of pay XXth, The of observed as coupon benchmark resulted deploy the loans weighted loans a new estate The loan

in complex plans Tallahassee, with develop team two properties a our approved million comprising following housing investments student in nearby bed parcel housing and Florida. Appleton, equity quarter-end, operating key full-service of on into initial to Wisconsin, a $XX.X immediately Additionally, student at completed a XXX hotel XXX property

once sound fully real reinvested comprising capital underwriting with consistent the sufficient The of loans billion our one and future realized. into accordance carry only proactive The forwards that ended getting performing loss management. gains XX origination has to returns and for any portfolio company to and of The meet equity market newest using the these deliver a $X.X be has unforeseen events. delinquent million which XXst, quarter continued expect estate investments, pipeline which goal forbearance March with asset of perform, create capital of of liquidity invested investments and as portfolio individual of untaxed company the agreement. ample demonstrating commercial company's was to across and X% maintaining can the in in the two $XXX We loan were reserves

the As foreclosure. a of of entered of estate to and representing two reduced a March XX, the agreement seven, X.X% number has through of sale real one into assets loans purchase We watchlist deed-in-lieu portfolio. acquired of the for

the the capital appreciation that expect the originations has prospects value pleased our estate, investments profile going when completed. with team the sale of sheet and approximate in net summary, and In the new the improved carrying quality proceeds investment balance with including real forward. for We ACRES is will portfolio, along the

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

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

Dave Bryant

recorded per the income first and Thank $X.X to compared or share reversal the in first in quarter or of quarter. share, reversal was the CECL to general million million, net a a $X.X In $X.XX to of in GAAP GAAP $X.X $X.XX you, we fourth million quarter. shares net the the afternoon. quarter loss provision loan $X.X good fourth compared of per common allocable million in reserves

our now allowance in March asset portfolio we support CECL million, months. supported generally multi-family, that positive losses macroeconomic and within loan outlook a for lowest charge-offs in legacy originated credit our The of CECL X.XX% $X.X million reserved. over the us, last the settlement $X.X quarter. par. has of to factors. One, of $XX.X XXst quarter XX% the the fully estimate, reflects with reserves used portfolio $X.XX improvements of model XX% share or several million XX newer to $X.X is of $X.XX or Two, the per environment. interest $X.X been operations general we the Reversal the Rate resulted continued we for related loan reserve. losses is at which on as total which per have seen and in compared book a loan impact the historical represents in first vintage all fourth by property million billion the loan was those in level addition, income classes evaluated the In charged a to of in had which a of the share Net off

the million of share income loan to $X.X $X.XX or reminder, fourth As included results per related a quarter payoffs.

a we addition, floors recovery loans. loan as of compared coupons several paying higher to loans saw In was with and when originated income rate includes newly Other years a middle-market ago. in $XXX,XXX of business loan disposed a line base off that

related to CLOs, included approximately of the the convertible $XXX,XXX two debt expense. non-recurring termination also of of quarter charges note including $X an First interest static charges approximately to and retirement for related million

We non-recurring, a for also real charge had non-cash estate of $XXX,XXX approximately depreciation.

originated contrasted flows paid flows XXXX eight X.XX% rate off at in rate of addition, In first points. quarter that of loans had newly basis the with of loans

have some we in seasonality Focusing on QX G&A, expenses.

our was during the we when the audit of bulk QX incurred work Specifically, or performed. expense XXX,XXX

G&A which In loss was non-recurring increased share quarter share for related rate costs $XX.XX which to book by items was some value X.X a of CLOs, had partially the run XXX,XXX. first $XX.XX items, Larry unusual to expect when Furthermore, a of When million. the share. we quarterly per taxes of March GAAP reflect termination G&A from consider XXXX we XXX,XXX approximately balance of XXX,XXX. per share we the million combined for X.X driven addition, QX, of for we of and per $X.XX majority first the GAAP XXXXXX, increase to These $X.XX to items by to XXXX. approximately repurchases common franchise on totaled in offset our December stock the per these other accretion book from value net X.X

approved times March. company thousand debt ratio GAAP represented shares book discount the $XX redeemed to share its of of XX% December and decreased $X.X from XX March from leverage the times increased million. senior used leverage a X.X repurchases XXX value QX, repurchase the on XX, plan X.X% March During December on million X.X ratio These of on convertible In XXst February, board debt-to-equity per recourse of share on on principal company $XX.X the times X.X XX. X.X The times million notes. to to repurchased

million, financing available related at including with principal These and ratios projected We on $XX decrease to warehouse was XXXX capital the of the the $XX.X CLO remaining unlevered bank of were leverage end the also in reserve of CLOs respectively. of XX% liquidity increase on of static of liquidation notes. debt to components due senior April $XXX approximately company's target million The a $XX cash, the notes senior the XXXX unrestricted offset of and the the the ratio million facilities. were Available $XX unsecured and recourse working CLO to $XXX million RSOX $XXX.X approximately and coupled the RSOX leverage primarily by of million availability assets, redeemed million on financing million.

and XX forecast our properties. XX that Also, was increased by benchmark investments This real related an interest given partially rates in during projections $X.XX increases and due the our has an improvement net project share company's CECL early to the base depreciation The which incur loss reserve further rate caused year-end our the increase improvement per amortization compared projection. currently we the XXXX, points curve the income basis forward, represents is and This will commercial to we've to XXXX. is at basis over forward Looking $X primarily losses company what seen points between estate decline for projected March. expected in to GAAP period. in in from

volume income Our arise. rate may items or non-recurring subject and that from remains volatility payoff other loan projection increases, unexpected to

by of growth COOs, the With XXXX financing the we loan the in net capacity close additional XXXX. expect provided

We growing end, of the also earnings in earnings and we future book discussed, can are tax anticipate beginning retained highlighted of our they equity in gains assets closed two estate new as presentation. and as that thereby in company's to carry-forwards, investments To the utilization Mark our capital be that maximize loss projected that years. value the April real

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

Andrew Fentress

spread with company ample do evaluate, to opportunities nearly ACRES and the liquidity target being have and in has to widening deploying platform The half the approached want to we names year. watchlist in caution the you, looking this quarter forward into sponsor dramatic, present while fully year. invested spreads the our fully the with all of some reach interesting transactions we of back The and sound Thank David widen later seen and with our of we're current landscape to the resolved capital and quarter across anticipation not to remains the continues us. more clients portfolio

Our over to deliver long value shareholders the mission is term.

and focused remarks investing dividends Operator are This opening and in for through We back and earnings, will I questions. maximizing turn call repurchases assets, the strategically share capital concludes the returning high-quality prepared our over on to time. and

Operator

And Instructions]. your we question. -- [Operator questions you. with at Rick time from got Please question Scibetta this to Thank just be with there Austin actually ventures. a appears no proceed

Rick Pleczko

Rick any stubborn this I on is just back trying there. looking it not just -- When sold progress, ACRES, and Does XX,XXX people this back not watched even sold was I'm being too stock the figure seeing is I what, average to like not with a but and This almost on Pleczko. why lot the RSO I anybody and I'm so of anemic an steady that? of to on company -- here. got go decline just trading? we're actually but Dave, on of XEN because out XX-years, shares that's the at comment the a common I'm

Andrew Fentress

for the this Fentress exchange there's and don't the the on volume answer I a Rick, trades Hey, good Andrew every have day. is why you,

million the it indicated under on see our shares what we've tell why volume does. you But just to As sheet, you can't outstanding. there's can does balance as XX I

Rick Pleczko

thoughts dividends the positive common? On for the Any future? for

Andrew Fentress

not repurchases program repurchase or quarter. returning in number where on active focused share through of were the shares day, and shareholders the capital whether the market company an to each coming that's has share the reported and We're in

way back and get book we trading best discount we at turn return when repurchasing by then to at plan shareholders and right the now, NOL's, the capital is the that's the so shares dividend And can to the increasing through they're that value, is on.

Rick Pleczko

Okay.

Operator

you. at There are time. Instructions]. no this Thank [Operator further questions

Kyle Brengel

Thank the you for everyone joining call.

soon. look always, As forward reach us to with any is line we If to has again our like questions everybody speaking open. talk anybody about and they'd out, please to

Operator

the disconnect does That lines. conference participation you please conclude and for that your thank for call your ask today. We you

ACRES Commercial Realty (ACR) 5 May 222022 Q1 Earnings call transcript