Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the ACRES Commercial Realty Corp.

Second Quarter 2023 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 morning, for call. joining Good

about that posted to company. the would detailed website. like quarter have highlight to information and summary presentation I second of we XXXX presentation contains quarterly the results This the our earnings

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

results based the reasonable on contained those that Although beliefs several could believes these statements. to company forward-looking expectations in actual and current Such forward-looking and based differ statements are materially risks are subject to that trends, on from statements are and assumptions. uncertainties management's cause

XX-K. These speak only and discussed risks to Listeners reports which company XX-Q the the forward-looking SEC, hereof. date the Forms update of forward-looking of undertakes particular, its of filed these place on Form The in and these section any the are with company's X-K, statements. undue obligation as statements, to and reports Factors reliance cautioned its on are no including XX-K, not in uncertainties Risk

measures Furthermore, on certain non-GAAP may this financial discussed be conference call.

this the the quarter. to accordance are contained information in measures principles accordance presented measures for to of earnings be Reconciliation a financial the non-GAAP generally presentation the considered comparable information financial with intended presentation is not accounting prepared as with Our to in in isolation accepted substitute or most of in GAAP.

Also Chairman for Dave Fogel, Mark of Bryant, Q&A today is With ACR's me the call Fentress, President and on CEO; ACR. Andrew and available CFO. are

call over now turn will I Mark. to the

Mark Fogel

thank and morning, call. Good you for our joining everyone,

originations, investments quarter. the and condition, Bryant while Today, financial estate I the of results discuss the of for portfolio, second will operating an liquidity book real and value Dave health investment our loan the provide overview will statements,

we our course, the look end of Of questions your at remarks. prepared forward to

selectively continues The to investments, to book ACRES actively managing team execute focus by portfolio value earnings for continuing our the on growing and business originating high-quality plan shareholders. our on and

$XX.X and net $XX.X decrease We of which to loan mixed-use commitments real X.XX%. portfolio one-month $XX.X of million. million, the funded billion in estate a period at coupon commercial benchmark one-month X.XX% spread plus SOFR Loan quarter, the pays million, of interest and $XX the increased average second spread payoffs a one quarter originated commitments during portfolio million during loans producing The loan were the over the the were the rates. floating weighted $X rate to net

for via XX, During held an office in at we as Chicago in This the the acquired asset property the million. XXXX. was the time deed classified was valued At property of $XX.X at quarter, lieu. June foreclosure, sale

We book real real expect properties portfolio to maintain estate a XXXX. to estate and of commercial investment including $X.X our billion throughout billion loan $X

XX The individual demonstrating quarter The sound billion of consistent across estate real with portfolio and management. commercial $X ended investments. continues to asset proactive the perform, generally underwriting loans company and

of or which three As slight a were This current from of represented X, or there X contractual portfolio. XX, June decrease on rated loans but XX, March representing X portfolio. represents of the including five loans XXXX, XXXX, X the rated was X.X% five payments, at also loans X% not there

to we monetize real and loan the expect NOL be manage will that gains estate portfolio. reinvest We potential retain gains into to These and at future. expect we offset carry-forwards in gains equity the investments continue our several to by in anticipated

with real depreciation profile investment new and portfolio, prospects the improved with investments including and ACRES the along capital estate, for the originations summary, quality sheet In pleased the the in team balance is going of forward.

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

Dave Bryant

good you, Thank morning. and

share. quarter are allocable million. general $X.X shares $XXX,XXX or a common the CECL GAAP Chicago. net million per increase the $X.XX during plus to deed the or charge-off reserves $XXX,XXX $X.XX reserves of made property as first that of up quarter of was $X.X reserves in quarter compared foreclosure taking CECL per net the second on in of to office share income Included million CECL this upon increases reserve lieu in $X.X in to of in income is an

portfolio is The general expected to the of factors attributable by factors the risk. partially improvements macroeconomic economy. second offset reserves quarter increase on primarily are to negative general credit general in impact Those

credit or and X.X% loan par comprised $XX.X The specific in XX in losses for total $XX general million June reserves. was XXX of basis the points portfolio at and $X.X represents at credit allowance billion reserves million, million which $X

earnings distribution, to was favorably per compared per our or available EAD, the $X.XX second for in quarter which for share, the first $X.XX quarter. share

XX $XX.XX March versus GAAP XX. was share June on book on value per $XX.XX

million, million reinvestment XXXX, cash, projected $XX of comprised June which in assets at CRE of a of on $XX liquidity was unrestricted and available available million million unlevered Available XX, an cash $XX financing $XX securitization.

to XXXX from XX, GAAP X.Xx March on XXXX. debt-to-equity June leverage on XX, ratio X.Xx decreased

recourse decreased facilities. Our decrease XX term decreased primarily our leverage were recourse borrowings ratios the to to debt on debt due bank on ratio from The on X.Xx to X.Xx March leverage also leverage June and XX.

from to estate in investments. XXXX. Net Turning million the first decreased $X.X the XXXX real real quarter million our from loss from estate quarter to in results second investments $X.X

quarter loss property and the quarter, of asset non-cash second $XXX,XXX property of depreciation incurred Included tax lieu the approximately via million the we amortization. arrearages During that on acquired $X was in in foreclosure. operating deed we second of

G&A. on Focusing

of expense, $X.X due expense $XXX,XXX reflects primarily first the quarter. $X million quarterly million in the of year-end G&A, The XXXX seasonality quarter the in second of which XXXX versus approximately incurrence to quarter to amounted expense first audit

Our unchanged. annual G&A projection remains expense

XX% XX. million Board approximately discount on repurchases, share to approximate June was during an we repurchase book used $X.X plan of the value program shares Regarding second quarter, XXX,XXX remaining on redeem $X.X at million approved at quarter-end. share to the the There

if respect to as approximately paid group. expect peer full the line XXXX EAD would we cash X% $X.XX, in value, with With dividend range X% and a still book year a to which of in of guidance, represent $X.XX

In still EPS $X.XX GAAP we share. expect per addition, $X.XX of to

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

Andrew Fentress

Thank you, David.

you're drive vacancy strong portfolio strong aware, the as multifamily all rent Fundamentals and focused throughout the invested environment As low is in ACRES for REIT is mortgage growth. challenging. levels this positive the The high-quality of remains primarily States. low segment continue to demographic assets managing United remain in trends team a unemployment, sector on that

our higher and other pressures stable, of for quality inputs. given actively of portfolio cost We're monitoring mindful any on of facing, are the capital weakness. Credit margin our remains signs we're sponsors early and

to namely our and value to increasing Our over deliver long-run value book shareholders time. mission earnings remains through unchanged,

for This the concludes remarks, turn our opening and operator questions. call back I'll to the

Operator

comes Securities. Instructions] first JMP [Operator go from Muller with question Chris Please Our ahead.

Chris Muller

question. thanks for taking guys, Hey, the

So, spreads I on want talk to about originations. your new

at there's quarters, steady there. the improvements Looking a of of been couple last trend nice

group? to So, is loans this that in the you I question more that the broadly? are guess guys something originating is, more guys Thanks. outliers are Or you the the seeing are

Andrew Fentress

that one? do you take want Mark, to

Mark Fogel

in the to invest spreads morning, believe. really more are we're Chris. in high in which market focused credit are in loans today. markets we there How Good some on with good Frankly, Yes, Sure. opportunities you? sponsorship higher quality,

credit in were are those ensure assets assets good most and But coming deals of quality a able we forward to just where real high good highly liquid. for part, to sort spread. markets on we originations were have and So good of sponsorship, that the going LTVs our are the they portfolio, outliers, gain into strong couple that focus is

Chris Muller

being Got it. case able all to obviously those best boxes And the scenario. check is

repurchases. the have is So question the other I on share

or some better are So think with trading picking talk those you even quarter, of the where buybacks book guys in how versus repurchases new about to at book. further guys see But how the especially about thinks can originating if opportunities? nice Board you're loans, some cherry it's to about you you

Andrew Fentress

is Andrew. this Yes,

we going XX% think -- given that to to to share a the that's on portion So, ROE about going is over available allocate than return as we're long today, the allocate discount target. share equity, to the liquidity our repurchases XX% repurchases. we're we're way we're of wider a as continue And

has at and to the trading we're So, an $XX share that the authorized repurchase we're left million that have utilize million $X million on as is -- about we we'll to ranges remaining today, going continue $X reevaluate. then long as think stock And it. I the

Chris Muller

my questions. helpful. it. That's Got for Thanks taking very

Operator

for this gentlemen, Andrew to question-and-answer the concludes like turn closing Fentress to and for session today. I any remarks. conference our over back Ladies would

Andrew Fentress

you Thank forward again attendance everyone, for and the you questions, much. very joining, speaking appreciate we and to the quarter. next with and we look Thanks,

Operator

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

You may now disconnect.

ACRES Commercial Realty (ACR) 3 Aug 232023 Q2 Earnings call transcript