Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Q3 2021 Earnings Presentation
30 slides from Acres Commercial Realty's earnings presentation, Nov 4, 2021
Slide 1: Third Quarter 2021 Earnings Presentation
ACRES Commercial Realty Corp. Third Quarter 2021 Earnings Presentation November 4, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements are not historical facts but rather are based on our current beliefs, assumptions and expectations. These beliefs, assumptions and expectat
Slide 3: Forward Looking Statements (continued)
Forward Looking Statements (continued) We undertake no obligation, and specifically disclaim any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks and uncerta
Slide 4: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights1 Approximately $1.1 billion of CRE2 loan originations for the nine months ended September 30, 2021 Growth in CRE Loan Robust Liquidity at GAAP Net Loss2 Originations October 31, 2021 $(1.03) $201M $468M per share-diluted, including $0.94 of non-recurring debt of net l
Slide 5: Results for Quarter and Nine Months Ended September 30, 2021
Results for Quarter and Nine Months Ended September 30, 2021
Slide 6: Results and Recent Developments
Three and Nine Months Ended Sep. 30, 2021 Results and Recent Developments GAAP net (loss) income3,4: $(1.03) and $1.09, respectively GAAP net (loss) income4 includes $0.94 of losses on the full redemption of the 12.00% Senior Unsecured Notes and the partial repurchase of the 4.50% Convertible Se
Slide 7: Third Quarter 2021 Book Value
Third Quarter 2021 Book Value GAAP Book Value per Share Walk $23.56 $0.94 of the GAAP net loss was attributable to non-recurring extinguishment losses on the full redemption of the 12.00% Senior Unsecured Notes and partial repurchase of the 4.50% Convertible Senior Notes $0.06 $22.68 $0.04 $0.05 $(1
Slide 8: Summary of Tax Loss Carryforwards
Summary of Tax Loss Carryforwards In October 2021, ACR finalized its 2020 tax return. The following table summarizes the expected tax assets and the conditions of the useful lives: $ in Millions Tax Year REIT (QRS13) REIT (QRS) TRS13 TRS Tax Asset Item Recognized Ordinary Losses Capital Losses Ord
Slide 9: CRE Loan Activity and Portfolio
CRE Loan Activity and Portfolio
Slide 10: Deployment Progress
Deployment Progress CRE Loan Production, at Par $ in Millions 12 Months 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter Ended 2021 2021 2021 2020 Sep. 30, 2021 New CRE floating-rate loan commitments $468.2 $470.2 $144.3 $83.4 $1,166.1 Sales, payoffs and paydowns (120.3) (353.1) (197.2) (162.0) (832.
Slide 11: Production, Payoff and Paydown Detail
Production, Payoff and Paydown Detail $ in Millions New Loan Production in the 3rd Qtr. 2021 W. Avg. Coupon Rate Commitments Multifamily (14 Loans) 1M L + 3.27% $396.0 Self-Storage (2 Loans) 1M L + 5.02% 37.1 Office (1 Loan) 1M L + 4.25% 35.1 W. Avg./Total (17 loans) 1M L + 3.46% $468.2 $ in Million
Slide 12: CRE Loan Portfolio Overview
CRE Loan Portfolio Overview $ in Millions Sep. 30, 2021 Jun. 30, 2021 Mar. 31, 2021 Dec. 31, 2020 (96 loans) (88 loans) (92 loans) (100 loans) CRE whole loans, floating-rate21,22 $1,841 $1,559 $1,456 $1,510 CRE mezzanine loan 5 5 5 5 CRE preferred equity investments23 - - 22 27 Total loans held for
Slide 13: CRE Loan Portfolio LTV
CRE Loan Portfolio LTV26 80% $1,800 75% $1,600 74% 72% 71% $1,400 72% 70% Weighted Average LTV $1,200 Principal (in Millions) $1,000 65% $800 60% $600 $400 55% $200 50% $- December 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 Whole Loans, Floating-Rate Mezz. Loan Pref. Equity Invests. W.
Slide 14: CRE Loan Portfolio Diversification
CRE Loan Portfolio Diversification Balance by Region27,28 Property Type28 Office, 14.4% Hotel, 9.9% Pacific Northeast 12.0% East Multifamily, Self-Storage, 10.8% 6.1% West North North 66.2% Central Central Retail, Mountain 2.7% 6.2% Mid 2.6% 15.7% Atlantic Manufactured Housing, 12.2% 0.8% Southeast
Slide 15: CRE Loan Portfolio Risk Ratings
CRE Loan Portfolio Risk Ratings30 90% of ACR’s loans have a risk rating of 2 or 3 that are performing in line or near underwritten expectations All but four31 of ACR’s 96 loans are current on contractual payments through September 2021 Percentage of Principal at September 30, 2021 Percentage of
Slide 16: LIBOR Floor Trend
LIBOR Floor Trend All but one of ACR’s floating-rate CRE whole loans had LIBOR floors, which provide asset yield protection to LIBOR changes LIBOR Floor Trend by Weighted Average Floor Pool 100% 2.00% 1.88% 90% 1.72% 1.80% 92% Percentage of Total CRE Whole Loan Principal 80% 85% 1.60% 70% 1.31% 1.
Slide 17: LIBOR Sensitivity Analysis Trend
LIBOR Sensitivity Analysis Trend The potential impact of increases to LIBOR on net interest income has compressed as the weighted average LIBOR floor has declined Quarterly Net Interest Income per Share Sensitivity to Changes in Quarterly Net Interest Income per Share Sensitivity to Changes in LIB
Slide 18: Capitalization and Liquidity
Capitalization and Liquidity
Slide 19: Summary Capitalization
Summary Capitalization $713.6 million of availability33 on the term warehouse and senior secured financing facilities and 12.00% Senior Unsecured Notes at September 30, 2021 $ in Millions Capitalization7 Maximum Wghtd. Avg. Leverage Amount Availability33 Capacity Coupon Ratio34 Term warehouse fina
Slide 20: Historical Leverage Ratios
Historical Leverage Ratios Historical Leverage Ratio34 3.9x 3.9x 3.6x 3.0x 1.4x 1.2x 0.8x 0.7x December 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 Recourse Debt Recourse Leverage Debt Ratio 35 Leverage Ratio Total Leverage Ratio ACRESREIT.COM 20
Slide 21: Liquidity at October 31, 2021
Liquidity at October 31, 2021 ($ in Millions) $75.0 $200.8 $(40.0) $47.9 $117.9 Unrestricted Cash CRE Term CRE Term and Senior Senior Unsecured Working Capital Net Liquidity and Senior Secured Facilities NotesAvailability Notes Availability37 Reserve Secured Facilities Estimated Unfinanced Unfinance
Slide 22: Appendix
ACRES COMMERCIAL REALTY Appendix
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets (In Thousands, except share and per share data) Sep. 30, 2021 Dec. 31, 2020 Assets (Unaudited) Cash and cash equivalents $109,949 $29,355 Restricted cash 32,406 38,386 Accrued interest receivable 6,678 7,372 CRE loans 1,845,688 1,541,992 Less: allowance for credit losses
Slide 24: Consolidated Statements of Operations
Consolidated Statements of Operations (Unaudited, in thousands, except share and per share data) For the Three Months Ended For the Nine Months Ended Sep. 30, 2021 Sep. 30, 2020 Sep. 30, 2021 Sep. 30, 2020 Revenues Interest income $23,986 $24,638 $74,528 $85,171 Interest expense 14,534 13,033 46,960
Slide 25: Core Earnings
Core Earnings46 The following table provides a reconciliation from GAAP net (loss) income allocable to common shares to Core Earnings allocable to common shares, a non-GAAP measure, for the periods presented: (Unaudited, In Thousands, except share and per share data) For the Three Months Ended For
Slide 26: Footnotes
Footnotes 1. “Third quarter 2021 highlights” includes activity that occurred during the fourth outstanding common stock through June 2021 or until the $20.0 million is fully quarter of 2021 or balances at October 31, 2021, where specifically referenced. deployed. The program was completed in July 20
Slide 27: Footnotes (Continued)
Footnotes (Continued) 27. Regions refer to the regions identified by the National Council of Real Estate $235.0 million, respectively. Investment Fiduciaries. 40. The CLO closed in May 2021 includes $21.1 million of uninvested proceeds that can 28. At September 30, 2021; percentages are calculated b
Slide 28: Other Disclosures
Other Disclosures Commercial Real Estate Loans Risk Ratings CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwri
Slide 29: Other Disclosures (continued)
Other Disclosures (continued) Core Earnings Core Earnings is a non-GAAP financial measure that we use to evaluate our operating performance. Core Earnings exclude the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current CRE loan portfolio
Slide 30: Company Information
Company Information ACRES Commercial Realty Corp. is a real estate investment trust that is primarily focused on originating, holding and managing commercial real estate mortgage loans and other commercial real estate-related debt investments. Additional information is available at the Company’s web
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