ACR - Earnings call transcript Q3 2024 | ACRES Commercial Realty Corp.

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Operator

Good day, ladies and gentlemen, and welcome to the Third 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

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

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

discussed believes current company statements subject based and risks beliefs cautioned to of the hereof. the reports to the on and Risk forward-looking Although that speak X-K, with XX-Q are materially results are uncertainties including particular, actual risks the are differ statements, forward-looking on in SEC, these forward-looking Form XX-K, its statements uncertainties only from such statements. reliance company's based XX-K. and cause contained Factors that Forms as which date to the not trends, the These its of reasonable expectations and place are assumptions, in several undue on could reports and on these management's section in and are filed Listeners those

update to conference Furthermore, be discussed obligation call. no of financial on undertakes measures company these forward-looking statements. this any non-GAAP The certain may

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

Mark Fogel

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

we course, to our of prepared the a earnings plan focus ACRES pipeline by growing team our execute The remarks. questions value your to shareholders. end to at continues on look portfolio business actively the investments, our for of Of continuing and forward on and book developing managing high-quality

period the Loan during were payoffs million. $XXX.X

was ended million. billion represented company our September with XX the in Foreclosures individual real commitments $X.X were which of portfolio X.X% to and XX $X.X the second quarter Portfolio rating consistent X, The underwriting of portfolio commercial both XX XX. and loans X.XX% now investments. weighted $X.X perform, At the of $XXX.X were rates. generally at of par our XX, portfolio, as and management. loans average billion to SOFR over demonstrating estate spread producing of floating the sound continues loan funded loan the during The X-month was asset term and real decrease net proactive is million, million weighted to increase $XX.X a rate X quarter value or commercial the average an September quarter X% rated June across estate loans XX% there and XXXX, our compared risk of

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

the explore a University sale asset. development August housing near September Our and occupancy, XX% Florida opened marketing at effort in student in we a of State initiated to

on quarters this updates in monetization asset. provide of future will We the

unrealized Upon conversion, gain loan office based property. property $X.X period, market million for in on X is asset recorded One on the Texas. assets. offers During we Austin, an a the foreclosed we

The Tennessee. second Memphis, million property is asset a multifamily in $X.X

bring working overall estate are positive quality outcome. investment with and portfolio, including of stabilization with in into team the of to In credit a the on summary, investments be exit to this continues the asset recycling a real improving on capital quality to plan performing goal assets. focused We and the ACRES

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

Eldron Blackwell

owned. previously in per current mentioned, net as $X.XX of operations net CECL million to the $X.X CRE $X.X common resulting Mark to from of good to third a or gain of We or million. of million expected estate loan saw increase and as CECL a $X.XX real was income or you, or income, decrease losses diluted. Thank the reserves morning, share of share depreciation an and $X.XX included credit quarter quarter which included compared net share interest $X.X a $XX.X second quarter $XXX,XXX, net during in $XXX,XXX $X.X conversion per the on of million real everyone. to GAAP the a estate allocable million income reserves shares for per in GAAP loss

resulted estate credit difference $X.XX EAD, general was in for the Series a on for driven in improvements reserves The level performance, property was rate. in million modeled was points quarter. and general comprised and XXX the a third to rate at fixed portfolio risk dividends factors. compared by available due or per the Earnings million to $XX.X $X.X offset distribution, total quarter modifications resulting the reserves. for decrease stock our allowance stock credit C $X.XX preferred of decrease share minor in or basis $X.X loan as at The $X.XX in share a reserves by represented for from per decrease million a specific real a The losses to in floating our billion payoffs and on credit macroeconomic $XX operations decrease primarily XX in converting from a $X.XX and net primarily and worsening CECL second par from September X.XX%

interest GAAP book was occurred versus $XX.XX quarter. XX. the XX share rate saw per on payoffs a September value $X.XX income net we that from $XX.XX Lastly, decline June during in net on run resulting

common repurchase at $X.X which XX XX% and end. remaining at used XXX,XXX financing $XX was program third quarter September to $XX million $X.X available million, and million unrestricted Available on the million approximately approximate of $X.X Board-approved value, shares During was at liquidity on book million there comprised the cash quarter, to an we of assets. discount unlevered projected

primarily With June I decreased that, securitizations. at both September payoffs remained at debt-to-equity X.Xx to GAAP the call remaining result leverage X.Xx consistent And XX ratio debt closing of September turn X.Xx Our XX, Fentress on for a leverage June our slightly CRE will at at X recourse from as our Andrew XX. XX remarks. and to

Andrew Fentress

thanks, Eldron, joining everybody and and Thanks, Mark, morning. this call appreciate the

of REO process have X we've X value We've fourth just over that you how quarters, first, per will the proactively calendar that of the assets having about, the that recently. monetizing arisen. share. As current not we're some acquired expect the impact talked and last and they're got book that results going to we'll couple to examples of work on of next that we probably over to report be profitably also much quarter in be the and the assets back the able that we done years, the of but And completed,

XX capital the monetization, than directionally, it where book focus to into we those the market-based But it's going over the to ability dividend forward redeploy turn and and months. that to to and that is drive projection on to sales today. expect back really our page is earnings be better to loan With a flat our

specifics that's so we'll your questions. where as you much really And is during And the and organized with focused team we and the forward Q&A as today. can to look share try to

the we'll forward first So question. the that, to with line if can operator, you look up, open

Operator

We'll from Trading. Matthew Jones instructions] first [Operator hear with [indiscernible]

Mark Fogel

of it originating latter. to monetizing your when clear assets guys Or together will So disposing turning this to assets the the of to while and originations? it are to at stuff these are equity be same kind books you and of open before looking fully you're hand-in-hand comes guys REO, doing time? It you off

going until as all wait to We're redeploy completed they're monetize, to So we'll that begin we not process. gradually.

Unknown Analyst

for Is monetization up That's that of amount helpful targets? towards then What there. guys you what full the and deployed? get And of to the x assets going? of back capital are guys looking there looking there you are getting Okay. as and it turning dividend, kind for

Mark Fogel

as target, a what and we, on then believe be going the set we is back to haven't monetize EAD but will focusing specific that do continue driving drive growing we're to assets, relever balance and get again, We a of dividend to pay earnings. to EAD the sheet out

a As on paid deleveraging the you're of the fighting, current that's down. being will, the we're if aware, EAD front the is that CLOs as things result of one occurring you

goes first monetization for created the gets that tranches. pay liquidity AAA the so And to down

our about to how point So flip as to new and at to will well. some thinking to a issue have impact drive ability one, earnings we're going to that

So all the in us. near future for that's

Unknown Analyst

Right, I I left? what there? missed the guys then but helpful think you amount X I remind repurchases then what's me for how saw shares, there. you right. used much can quarter That's this And was and those numbers. share XXX,XXX the

Eldron Blackwell

million million, used have We about We the and program. used is we left $X.X Eldon. $X.X this -- on

Operator

Stephen Next, James. from with of we'll Laws the Raymond hear line

Stephen Laws

mortgage Close on to over you REIT doubled to has best-performing the end guys last and I stock want your that the year. congratulate year year-to-date.

are lot. guys to it And like you pretty going given next comments. exciting, a So months be your I know seems have Andrew, X accomplished the

And on so follow I wanted up that. to

domino with next think the how assets think the Can out is months? we you first asset REO what liquidations think I over talk first housing near-term to and likely about are FSU the other sale. the sales do playing you the student call X should about

Mark Fogel

give because in over is, But results others Yes. have that now that. the there projections that we addition certainty executed would of Without say next a too to are high in the specific, of rather than getting X on are report on to one want the on degree we quarters. you couple being what I that mentioned, process Stephen,

Stephen Laws

loan about to Great. way assets you to of that pipeline how on And the start Are the the on, some when see to already buyer is to and you work as you put know? think we'll money new Kind going? these think back close? of you reengaged assets a pipeline we originations ramping about on up do do where loans how then as any turning there

Mark Fogel

is So liquidity. it really about

So company $XX seen, we've got the about right million of available liquidity now. as you've to

amount keep on on So be of are, you're redeploy then assets, And CLO. these as that mindful of we to not aware, able be liquidity sheet. balance many we'll as again, repay, the them want to a because appropriate the of to

to it it. we they -- And sell, pay so don't doesn't down have when associated with bonds

as ACRES in away a platform that reoriginate. it's To really to equity go you and a available they're becomes and -- just So REIT. put reminder, capital give this manages a from also warehouse

much every And each with we originating marketplace weekly. are so engaged new very the loans and day and

into some so expect able to flow the to available. And we are of move the dollars once REIT just be that

we have been So marketplace. from not absent the

And once so profile the be of origination will just allocating some the is to liquidity this vehicle appropriate. this

Stephen Laws

are your CLO little compare to. at other And But when mortgage of are FLX of markets close the ramp financing the how that. got to a kind we the and and Great. at how period to cost one that looking both deal? the do what highlighting with doing new of And costs exactly X- financing follow-up done couple and to Appreciate markets today? recently X I've vehicles to a CLO you you a a have look they today? have in blended on included the get compare does of of comments are these filings deals those, the the down where on where kind see collapsing to X-year securitizations. period. know reinvest paid I How REITs

Mark Fogel

a relates it were X terms, that in were as those the done, to particularly So attractive. and environment obviously, FLX market

well. not the sure and these are going collapse to a they're we wider one, be if into same I'm levels, as So redeploy X spreads at new but

in happening with kind really the able see structure they focus shareholders. to on based CRE we'll upon today. of to high ROE that mid- at that to current that be So are a the where we that the the deliver we expect approximate collateral the ROEs pipeline, based we market upon what have, And to assuming the can that stays what's what warehousing, CLO market executions CLO the drive what are teens in levels outcome we're we

that and about we're definitely it. thinking So for developed plans have

Operator

Muller, We'll instructions] Citizens [Operator Chris from hear JPM. next

Christopher Muller

it. as here. valuations So you up are I footnotes some of guess of one REO deck that following of in on in the the I date topic the acquired your see

guys where you given any properties those while could type be general Or of have thoughts held a you've for of little had directionally, valuations then? guess, just So some today any of appraisal I now? since

Mark Fogel

hold a So we if they're you're cost right, depreciation [indiscernible] value at that schedule. or being depreciated these they're on

So until get actually them not mark to monetized. we're they going

So the asset Does then. part gains when the the your we actually as question? record we'll sell that of process, answer

Christopher Muller

just assets any thoughts gains $XXX on the there. what mean it's sheet of those million be? And Yes. I those could of about balance

that going number? to is like million on that type million? just a $XXX is incremental top So be Or some of there gains $XXX

Mark Fogel

gains, completed. gain. the I sort think, losses, give not that of I -- in terms get want it be they're And going not category. it latter look, to be are don't of to be positive you gains. would when projections. we're We'll put in to going categorize There as the I But giving actually specific I'll incremental they results

Christopher Muller

guess Got housekeeping And note, just one. quick it. it. a Got then a on similar I

that is through on conversion, REO once will with that gain realized, EAD? So the unrealized that flow

Mark Fogel

That's monetize that an When over. adjustment That as correct. asset, is see EAD. we you'll to that

Christopher Muller

it. then one last it. here. And Got quick just one Got

it one in it by that loan off declined So did that X loan foreclosed one loans? rated Or pay Was the loans quarter. was of the like or upgraded? looks the

Mark Fogel

That's a correct. It to Mark. conversion This is REO. was

Christopher Muller

just real I it. guess quick. And following that on up Got

helpful. going your to on X guys' would was Was you give from it that color could Just on any drove something that what to radar? So REO? a that be

Mark Fogel

ahead been foreclosure borrower working borrower The and our on run within ability as Yes. of I his portfolio has keep It in have with. the that remedy we a loan current. our mean we out went his always issues it with essentially and kind other of radar. the was steam the to quarter. was And

Operator

additional we turn to I'd closing [Operator further comments. like have management or It over at to no any questions floor this instructions] back appears the time. for

Kyle Brengel

gentlemen, joining today's Once for you. conclude again, Thank Everyone, ladies you, everyone, that for the have a you call. Thank safe participation. and call. Halloween. Thank happy and will your

may disconnect time. this at You

ACRES Commercial Realty (ACR) 31 Oct 242024 Q3 Earnings call transcript