ACR - Earnings call transcript Q2 2022 | ACRES Commercial Realty Corp.

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Operator

Good afternoon, and welcome to ACRES Commercial Realty Corp.

Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Kyle Brengel. Please go ahead.

Kyle Brengel

you our thank and afternoon, for call. joining Good that posted our the would like XXXX have highlight to to I QX we shareholder website. presentation quarterly the contains information presentation and and the year-to-date This results company. summary of about detailed

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

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

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

Mark Fogel

joining provide thank Today, the and Dave estate and book statements, quarter and of everyone, investment will investments call. provide projected the our our you operating I the XXXX discuss results afternoon, condition, will of financial overview while Good results. portfolio, health for value for the liquidity Bryant loan originations, update and real an an on second

million billion the are maintain to on We unfunded newly a we period loan million potential look of XXXX. to end forward weighted of we average the X.XX% in XX, way quarter We loans balance loans The one-month second The widening in our a a the of as observed ACRES questions average further portfolio book The getting were benchmark net spread increased invested. $XXX.X loan X.XX% the commitments rates, $XXX.X and were $X.X rates. one office benchmark $XX.X loan multifamily originated course, commitments the Loan million. benchmark over of average and plan comprising the company of remarks. quarter, Of period through mindful of spread widening payoffs billion and increase and $XXX.X during of fully our loans at $X.X the of as deploy commercial X.XX%. your origination loan. SOFR estate to interest team prepared our weighted at The new is real rate to $X the spread producing delivered weighted one-month floating coupon during which comprised billion July pay XXXX. the plus net rate capital million, to eight

$X.X We this not sound amount. on perform, only has of billion and were loans underwriting the management. X% across proactive of five real investments, has increasing investments. of As plan individual the which do equity commercial demonstrating and we three, consistent with comprising quarter XX continued asset delinquent. have discussed previously, portfolio the portfolio, estate The company We to ended

team June of In along new investment in forward. seven with of ACRES portfolio. XX, the the the pleased appreciation As profile capital prospects with there were investments is the balance watchlist of portfolio, X.X% including representing quality and real and sheet the summary, loans estate, originations improved of the going

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

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

Dave Bryant

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

the outlook macroeconomic estimate the allowance share billion in which on charge-offs $X.X in at The par. million expected in $X.XX or partially income total property interest The compared XX second impact unemployment was growth to credit $X.XX quarter for in increases million, of and our collateral. points million losses reserves quarter to June in second and a the quarter. our rates represents loan interest X.XX% by XX on due of Net or change a in $X.X loan as resulted reflects portfolio, of increase share the first operations inflation, or level basis offset in per and $X.X $XX.X improvement to the portfolio per the continued general CECL

or of early of period. and during to the loans interest results three The payoffs origination second related accelerations quarter million included share fee $X.XX per $X.X minimum

net the $XXX loan net reflects attributable second in year-to-date addition, our portfolio growth quarter. the interest million quarter was of In the which million of $XXX.X second income to

both expense These were improvements or liquidated net in additional per offset issuance $X.XX repurchase, debt quarter million our and occurring note interest our share to of $X.X In interest per first approximately quarter. from decreased addition, primarily net from income real our borrowings is Included term performance. X.X% second from estate depreciation and convertible In quarter. had operating share million by improved the $X.X facilities. first in and non-recurring loss investments our operating under $X.X or was $X.X to in of second we costs quarter, This million million the $XXX,XXX CLOs the deferred due the to $X.XX loss bank savings our quarter, non-cash property property from second amortization.

call some in that had expenses We G&A. seasonality on approximately million. covered totaled last $X.X on Focusing quarter’s QX

the June million per repurchases $XX.XX $X.XX grants. XX, to Second book $X.XX was share net on per March accretion value value from what be $XX.XX will share manager XXXX. common of offset of we rate quarter director stock increased quarter primarily XXXX. to XXXX for expense increase share per XX, and on book our $X.X run G&A anticipate for balance GAAP driven by The per reflects quarterly of of related share income from and $X.XX to the vesting by second the of share

we to GAAP per of During June the plan redeemed million repurchase share These used March X.Xx equity quarter, XX share X.Xx of book repurchases discount represented increased million. Board XX. from approved on second leverage debt ratio XXX,XXX to to value $XX our June a and XX. $X.X on on XX% shares

increased June X.X% debt leverage $XX target Available $XX $XX XX million of due on including increased notes July borrowings from available XXXX and increase approximately a convertible offset were unrestricted leverage were X.Xx facilities. available capital outstanding financing on was Our reserve on of assets. XX, with cash, recourse of ratios working liquidity projected mature unlevered to primarily on the bank intend August cash. ratio million million. approximately X.Xx by to of redeem on components to million recourse term March XXXX $XX that These The $XX.X XX, We XX. to debt our million, at leverage the

income to rates. in and estate our nominal projected impacted This Looking for $X.X project that projected by of represents the share we for real and estimate and of per forward, received investments over calendar per report result is benchmark call minimum previous calendar estimated the commercial between payoffs or the increases loan This year we provided will depreciation and an on $X.XX of GAAP related in million on QX improvement $X.XX amortization share interest non-cash GAAP result currently the income properties is primarily year. zero XXXX.

payoff for distribution available projection volatility $X.XX to rate income subject non-recurring Earnings from was the per quarter remains other and or arise. loan second volume increases, Our for that may items share. unexpected

positive With and investments any income portfolio distribution the Retaining our capital the in to future first estate grow of available to loan steadily real our of in for for loan gains and million half growth the will grow periods. expect generated $XXX earnings us remain and from equity our allow we XXXX. XXXX, our earnings net balance

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

Andrew Fentress

all widening We Thank And landscape. with to continue you, with fully some remains caution us. to in quarter liquidity. want do The and the period. nearly anticipation platform the sound to seen ample clients interesting has watchlist continues to Dave. the transactions The sponsor across have while dramatic, present names of not ACRES we the the and more company evaluate, with our portfolio spreads resolved in approached opportunities widen spread

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

maximizing I’ll operator on questions. back This repurchase to time. share the investing turn assets our And through call earnings, dividends returning opening the capital everyone’s focused and high-quality remarks. We’re in over Operator? strategically concludes over and for

Operator

go Please question comes Delaney Steve ahead. first Our Instructions] [Operator you. JMP Securities. from with Thank

Steve Delaney

this you. is to try two your March, earnings evening, and so for Page opening of XX. to want laid maybe EAD the that me late I caused thanks guys I’m everyone three apologize, unfortunately, Mark’s in increase on drivers missed the with key I don’t so minutes hopping I $X.XX to the – Page point you think I Good to Hi. X quarter $X.XX. on, indulge Delighted Would I question. just out, strongly was this to And my The Thank quarter. or EAD in taking XX number, way me was estimate remarks. first have, year.

Dave Bryant

Primary Steve, Yes. about EAD I versus net loss of quarter, the starting $XXX,XXX the drivers actually $X is being per key this couple a point say quarter pieces. million. one of income about this income Dave. that last are was would

Steve Delaney

Got it.

Dave Bryant

And I we I in quarter mentioned my retired think, CLOs. you had adjustments if last Steve, those when recall, this, and we some onetime remarks,

then the cash. we been accelerated, EAD, – any interest the was my of and accelerated, fact was issuance quarter, that costs we we’re So, right? of other have recorded the would you when it that out. adjust CECL the thing greater follow would even termination. removing when if say to you the adjustments that that’s our And And last logic loss expense interest spite debt had in quarter, in I take last expense reversal, that So a loss is related were those

Steve Delaney

it. this And got a Got positive Yes. you quarter, $XXX,XXX.

Dave Bryant

correct. That’s Yes. correct. That’s

drivers. primary the be would those So

Steve Delaney

the was depreciation that And $X.X million, so - million estate real and flat... flat Okay. $X.X amortization, relatively at relatively

Dave Bryant

It about was probably up flat. $XXX,XXX $XXX,XXX, relatively but or

Steve Delaney

day well, Yes, can been – quite Great. it a with certainly Okay. calls. it’s

XX REIT we’re line obviously I’m the it will there’s with if think so very call a forgive us $X.XX, I see just say days. next couple little earnings yes, calls today, let and of Dave, fantastic. I But to bit. We’ll mortgage that’s back in me up March. But, you pleased scrambling

So, summer. everybody stay well, enjoy the rest your of

Dave Bryant

Steve. you, Thank

Operator

concludes This like Instructions] would turn remarks. Please for to any Fentress question-and-answer Andrew conference [Operator over the go I back our ahead. closing to session.

Andrew Fentress

we to rest call. and has look for questions, look of any forward over everyone, to specific please with you, Thank connecting the joining again. And anybody weeks. coming everybody. days, your forward If we the Enjoy you reach the Thank summer, out. connecting

Operator

presentation. The Thank concluded. conference today’s for has attending you now

disconnect. You now may

ACRES Commercial Realty (ACR) 6 Aug 222022 Q2 Earnings call transcript