ACR - Earnings call transcript Q1 2024 | ACRES Commercial Realty Corp.

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2024 ACRES Commercial Realty Corp. Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kyle Brengel, Vice President Operations.

You may begin.

Kyle Brengel

Good morning, and thank you for joining our call. highlight presentation have to to quarter the like earnings XXXX our would that posted we first I website. This information presentation company. about detailed the quarterly contains results of summary and the

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

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

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

Mark Fogel

real and the Good morning, while provide our book for XXXX. statements, operating health quarter investments estate of overview call. everyone, first you discuss Blackwell Eldron loan the financial portfolio, of the I for joining Today, and the value and thank condition, liquidity results of will originations, will an our investment

rated payoffs $XX.X and the loan estate proactive we decrease focus rate demonstrating the spread end continuing growing to benchmark Of our $XX.X funded management. The loan real net respectively, investments March during high-quality loans managing XX% portfolio XX the through period sound end to portfolio recognized individual represented value for an continues a prepared in December a in property which $X.X perform, floating December look loans average X office company risk the generally our million. The par of conversion of The X gain rates. consistent X.XX% billion to XX million foreclosure, of XX, earnings to across previously that plan via underwriting in XX. We portfolio million basis was at $XX.X acquisition. and X-month average We value weighted conversion. our $X.X of joint book our continues at a is lieu financials. the commitments valued lieu were originating and in contributed maximize immediately your questions commercial of rating loan deed with loans selectively from was course, weighted a the there with venture forward quarter of $XX.X the to the to ended acquired, The investments. to March X.X XXXX, commercial ACRES on of $XX and deed the of at million million now Loan increase fourth quarter of its decreased asset estate portfolio over asset of X.X multifamily our at producing a or XX and of our team upon our on and accepting the and At Chicago a an in remarks. The were $X.X XX seeking execute by of foreclosure business billion on were rated quarter real on X%, the value risk portfolio, million net compared X, shareholders. to the as during actively to

potential to to ACRES reinvest portfolio. In improving in our NOL future. of the monetize by of credit manage with be retain that anticipated the investments capital These gains recycling expect and focused quality the continue as We in in investments estate performing real to equity portfolio, and including gains offset carryforwards expect investment to several gains we will team we on estate, be continues goal quality the in into summary, the categories. loan the overall real and

CFO, Blackwell, have operating quarter. We ACR's statements to discuss results Eldron will first now the during the financial and

Eldron Blackwell

GAAP everyone. losses, CECL was common compared to shares reserves CECL during share. quarter credit as an income quarter in or or per net first the Thank income $X.XX in Included $X.X of to or million. $X.X net million to share $XXX,XXX you, per good expected current allocable the morning, reserves, is fourth of and increase $X.XX

XX. first share seasonality. GAAP difference primarily billion was $X.X our per $XX that of $X.XX $X.XX book interest portfolio due and par share a to for X.XX% share million or was and on to longer credit by specific for total lasting from $X.XX in value factors loan $XX.XX XX book credit interest loan increase operations in as compared being an quarter. share late to This higher worsening expected, as quarter was lesser per the points and increase a losses due quarter at the our increase the in CECL reserves. Earnings reserves rates XX risk. The available or March represents on at $XX.X at by is distribution, to The credit to due general macroeconomic fourth The which as for quarter for reserve in run net than real million, rate estate $X.X the general compounded which for March comprised generated during modeled was driven per million allowance buyback in net XXX the quarter. $X.XX extent, primarily basis to a decline resulting the per modifications first $XX.XX $X.XX occurred well in payoffs fourth and decline program, value December versus income EAD,

an During on the $X.X at XX. value quarter, million XXX,XXX shares book we XX% to repurchase discount to used March common approximate

discount In end. Available which comprised XX was March Series $XX. of at unrestricted million million, D million cash million $X.X on addition, stated the of of financing repurchase program $X.X shares $XX.X approximate was Board-approved the we approximately XXX,XXX projected liquidity million unlevered on value preferred quarter $X.X at of an at to used XX% assets. redemption to our available securities $XX.X remaining and There

Our X.Xx GAAP from at debt-to-equity March leverage XX XX. ratio slightly to X.Xx December decreased at

X.Xx remarks. debt consistent Fentress at both and XX. And remained recourse ratio XX Our call leverage December to I for turn that, Andrew at with March closing now the will

Andrew Fentress

you, Eldron. Thank

quarter of positive for net 'XX first but a mix, was The quarter ACR shareholders.

at of portfolio results. There's slightly as can fact, use like driving return in metrics does, the to hotel you typically some loans have also seasonality lower the expectations. the on that we we some word equity. drive And the slower be know QX portfolio below operating Our part the a of repaid, properties but been know because calendar, deleveraging were that X in

throughout our of the period. the year will CLOs this outside We expect balance are as continue reinvestment the both of

reserves While were booked, in there largely additional high. CECL quality remains macroeconomic were the some they category. Credit

a focused ACRES We'll in from and utilize the to in a that described, our past, heard to on the us are win at nice NOL. We look acquired discussion answering to questions. QX, focus you've the were monetizing Chicago on We portfolio the we Operator? The office had as for in a gain. XXXX is book shape. Q&A in and assets continue As your book monetizing our value. protecting Mark good forward

Operator

[Operator Instructions] first comes Your James. Raymond from Stephen Laws with question

Stephen Laws

you're what buying seems And Can the lot maturity appreciate been thing and hit disclosure existing a a maybe the noticed caps the far over expiration the to or traction after cap as them so quarters. any as you far, next new assets? talk play interest sponsors but it with and you color I on protection regards borrowers exploration like I on expire, wall far with about of those caps, out your supporting comments portfolio of rate the supplement. and of quarters? the expectations lot expect few performance type in to few they've next so providing in maturity seeing how the One

Mark Fogel

good this the for Mark. is question. question. Thank Stephen, It's you a

acquiring many, very buy they're management loans that they want these Our a those most caps. ahead cases, extend, expiring of asset if of expiring the to reserve can options required caps, is extension those cap. asset creating have caps new new In executed our And to interest and/or the with team caps. before be stays far months on working lieu in team on, many essentially management sponsors deposits

we're So it. ahead far of very

where to those we interest out, pretty haven't any have at sense a We don't X deposits. months with reserve to in expect are X to and we and least had respect we date, that to good cap issues of executions

Stephen Laws

once think do about senior that you able to talk past real the return think return long-term the estate earnings outlook guys off quarters. the loans. longer-term a the the quantifying EAD how realize new power you investments, know Great. maybe gains you EAD XX% spoken Can is company, you some for on level? do book When We've likely of target about I into over think you're the book, the of about you achievable? or on recycle

Andrew Fentress

That is target. our

the sell book. then would that pace is And the you portfolio driven assets of we obviously, that well. out, objective produce loan will as with pay value. pointed as be, appropriate the the the the to level yield return our So which The of or achievement the an XX% back company levered book at and EAD timing by the into getting can equity equivalent outcome at

time, run as So some off and with we're real respect those pointed the happening CLOs the of is X deleveraging addressing out the repayments. both which, as to of I

believe So to to that's of value. be able do we're book to objective, a that going is and deleveraging at it the force. XX% But we deliver ability certainly, high, EAD our

Stephen Laws

your have NOLs, expect What Others, you as repurchasing I Great. the returning talk some dividend far And play a X-year then have out? at the my the sales stock Can to asset between life. how burning last no question. about you to of dividend? off The are NOLs some think, as and capital to right the and pace shareholders about how point, exploration. time reinstating reinstate thoughts think then you or

Andrew Fentress

we're obviously where returning we're in meantime, the that the capital place at point and reinstated continues daily. want to buybacks, We be Sure. that is shareholders we In with in to end are dividend stock the program market distributed. -- in and the be a to being place, through

to back But ACRES note a ramp continue meantime, increase exact the on book to the ultimately, to full it We XX.X% timing And I'll processes can pace the the NOLs, repurchase. to As and and the of value has all per that XXXX, shareholders we're moving sales forward visibility when with since assets. we underway. as don't relates capital which been have through will of the share dividend. annualized. the just timing then we of amount the the the the are took on return over ultimately drive timing. share manager, in we The that of speak as QX

attractive value to that delivering that that in rate. shareholders think annual So statement reflects we -- we the an fact, at are,

Stephen Laws

the appreciate beneficial other quantifying to Appreciate certainly taken book the that, quite has comments been you've value. and actions buybacks and you

keep this morning. your and and for the good thanks that, on -- up So comments work

Mark Fogel

Steve. Thanks,

Operator

next Your question Chris Muller from comes Instructions] with [Operator Citizens.

Christopher Muller

there there behind Is else the fourth real line, like the Or looks from that quarter-over-quarter? that is income mostly? drop that the estate all there, at in hotels probably $X.X decline looking line. was seasonality it million So a quarter with something

Eldron Blackwell

Eldron. of other ACR this that, But is has than that Yes, with a We bit our Philadelphia. majority had hotel Chris, the market seasonality. it's to softening in little at seasonality hotels. the of do of

Christopher Muller

it. Got

quarter? third So we pick in and to up back should the expect that second

Eldron Blackwell

We do.

Christopher Muller

of Perfect. you'll you in CLO sense a CLOs, at? will Or you do periods Do the more that the I with guess, think now expired. a then, the And type both some be point, of back reinvestment at this look that think of half XXXX makes maybe year?

Mark Fogel

It's It's Mark. say. can much the CLO. really function how you product hard Chris, into contribute of a it's to

CLO So and execution. it's production are the function for where a obviously, of markets

So I the in half wouldn't this expect anything first year. obviously of

of we'll it next first end makes the year book and start quarter think and at to sense. I and look whether determine or our gauge second of quarter, market year not

Christopher Muller

just can one I more on squeeze And it. Laws' question. follow-up in, Stephen Got if a quick

sales, inclined independent of into is So you estate you of assets? on maybe if those of that the pace the be quickly process had that and to more guys process attractive Or deploy real accelerate opportunity capital to more would investments? timing selling these an

Andrew Fentress

Yes.

we're not is a in the We be now -- are are they waiting, We guess, can assets punchline. monetized. think I place the that that

And in the our we attractive, so underway. well the as the And desire the to operations of are it and that just that's set agree as processes is marketplace normalize the opportunity company. driving

Operator

There are over this further questions remarks. time. to no turn closing now call management will at for I the

Andrew Fentress

everyone, quarter call. first you, for attending Thank the

forward the to again are We always second have. We any our follow-up for to speaking look quarter. questions available that for results people you with

Operator

lines. for participating your ask and this Ladies conference you concludes disconnect for call you your thank please and that We gentlemen, today.

ACRES Commercial Realty (ACR) 2 May 242024 Q1 Earnings call transcript