Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Exantas Capital — Investor Presentation (May 2019)
34 slides from Acres Commercial Realty's investor presentation, May 2019
Slide 1: Investor Presentation
Investor Presentation May 2019
Slide 2: Forward Looking Statements and Other Disclosures
Forward Looking Statements and Other Disclosures 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, as
Slide 3: Forward Looking Statements and Other Disclosures
Forward Looking Statements and Other Disclosures Past performance is not indicative of future results. There is no guarantee that any investment strategy referenced herein will work under all market conditions. Prior to making any investment decision, you should evaluate your ability to invest for t
Slide 4: Exantas Capital Corp. Overview
Exantas Capital Corp. Overview Sponsor Experience Extensive multi-cycle track record. Full scale platform. Management continuity. CRE Credit Expertise Extensive multi-cycle investment expertise. Access to C-III’s differentiated data and local CRE credit focused REIT contacts. NYSE: XAN
Slide 5: Investment Philosophy
Investment Philosophy XAN leverages C-III’s capabilities and expertise to invest in CRE credit investments. – Identify opportunities across the capital stack of multiple asset classes. – Source through relationships and deal flow. – Underwrite using extensive asset management platform and portfoli
Slide 6: XAN Senior Leadership
XAN Senior Leadership Andrew L. Farkas Robert C. Lieber Matthew J. Stern David J. Bryant Paul A. Hughson George E. Carleton Chairman Chief Executive Officer President Chief Financial Officer Head of Commercial Head of CMBS Real Estate Lending Investing C-III Founder, C-III Principal since C-II
Slide 7: Investment in XAN
Investment in XAN If you invested $100 in XAN on January 2, 2018, including reinvestment of dividends, the total return at May 17, 2019 would be $127.00.1 $130.00 $0.25 $125.00 $0.20 $120.00 $0.15 $115.00 $110.00 $0.10 $105.00 $0.05 $100.00 $95.00 $0.00 XAN Common Stock Dividend per share XAN Common
Slide 8: Manager Overview
&S EXANTAS Manager Overview
Slide 9: Leading CRE Manager
Leading CRE Manager C-III, which wholly owns the Manager, is a leading CRE investment management and services company engaged in a broad range of activities. Mortgage Loan Property Investment Commercial Origination Servicing Management Management Real Estate Network >$240 billion 23,000 7,000 named
Slide 10: National Footprint
National Footprint C-III’s network of commercial real estate companies provides it with granular underwriting data in primary, secondary and tertiary markets throughout the U.S. NAI Member Firms USRG Managed Properties C-III Affiliate-Sponsored Fund Owned Properties* Metropolitan Statistical Areas W
Slide 11: C-III's Investment Management Platform
C-III’s Investment Management Platform C-III is a leading commercial real estate asset management firm with $9.7 billion of AUM.1 Real Estate Debt Real Estate Equity Private/Public Non-Traded Exantas Balance Sheet Private Funds Funds2 REITS Assets Under $2.1 Billion $1.5 Billion $0.4 Billion $3.6 Bi
Slide 12: Path Forward
&S EXANTAS Path Forward
Slide 13: Investment Portfolio Transformation
Investment Portfolio Transformation 3Q’16 Assets1 Target Assets2 5% 25%-35% 32% CRE Loans 63% Other CRE Investments 65%-75% Non-Core Assets Non-Core Assets Include: Target Asset Benefits Include: Legacy CRE Loans Commercial Finance Assets Investment Type Benefit Middle Market Loans Other Non
Slide 14: Strategic Plan Execution
Strategic Plan Execution The Strategic Plan executed by C-III beginning in November 2016 has transformed XAN into a stable CRE credit investment vehicle. Before Strategic Plan1 After Strategic Plan1 Annual G&A (2016 vs. Post Plan) $63M ~$21M-$24M Non-CRE Employees 169 0 Corp. Debt Balance & Rate2 $2
Slide 15: Target Returns by Asset Class
Target Returns by Asset Class Asset Class Targeted Unlevered Yields1 Targeted Levered Yields1 CRE Whole Loans 5.0%-6.0% 9.0%-12.0% CMBS 4.0%-12.0% 9.0%-14.0% Mezzanine Debt 8.0%-11.0% 9.0%-11.0% Net Lease 5.5%-7.0% 8.0%-12.0% XAN Portfolio Total 10.0%-12.0% 1. The targeted yields set forth herein ar
Slide 16: Illustrative Earnings Profile
Illustrative Earnings Profile1 (In millions, except share and per share data) Investable Corporate Capital Convertible Notes $152.0 Trust Preferred Securities2 50.0 Preferred Equity 116.0 Common Equity 441.9 Corporate Capital Base $759.9 Less: Working Capital (40.0) Investable Corporate Capital $719
Slide 17: Deployment Progress
Deployment Progress Summary of 1Q’19 CRE Investment Portfolio1 ($ in Millions) +44.2% Loans 7 $2,090 $1,959 Amount $171 Million $1,839 $1,736 $1,628 $1,450 $1,496 Wtd. Avg. Spread 3.16% Bonds 3 Face Amount $28 Million 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 Wtd. Avg. Coupon 4.91% CRE Loans Other C
Slide 18: Economic Book Value
Economic Book Value Economic Book Value (“EBV”) is a non-GAAP measure that provides a more accurate metric for the economic position of our common shareholders. EBV adjusts for certain capital markets transactions where discounts and options are recognized as equity (book value) and therefore carry
Slide 19: CRE Loan Origination
Lis Sele EXANTAS CRE Loan Origination 16
Slide 20: Leveraging Platform to Find Good Risk-Adjusted Returns
Leveraging Platform to Find Good Risk-Adjusted Returns XAN’s core investment strategy is to originate transitional CRE loans, which C-III enhances by: Expanding XAN’s product type and structuring capabilities. Broadening XAN’s spectrum of borrower relationships. Due Diligence & Investment Asset
Slide 21: XAN's CRE Loan Portfolio Diversification
XAN’s CRE Loan Portfolio Diversification XAN CRE Loan Balance by NCREIF U.S. Region1 XAN Loan Balance by Property Type1,2 Pacific 14.4% Northeast 9.8% West North Multifamily Office Central 0.5% East North 62.2% 13.8% Central Mountain 3.8% 21.0% Mid Atlantic 7.5% Southeast 13.6% Southwest 29.4% Hotel
Slide 22: XAN's Origination Platform
XAN’s Origination Platform Comprehensive % of loans Deals Screened1 origination, screened underwriting, due 100% diligence and ~$21.9B vetting process. Reviewed and Quoted1 25% ~$5.5B Underwritten1 10% ~$2.2B Deals Closed $862M 4% 1. Values are approximate and represent all calendar year 2018 activi
Slide 23: Real Estate Credit Investment Opportunities
Real Estate Credit Investment Opportunities 20
Slide 24: Benefits of Longer Duration Investments
Benefits of Longer Duration Investments Transitional CRE lending remains XAN’s primary investment strategy. As an open-ended, stable income-oriented investment vehicle, supplementing XAN’s loan portfolio with longer duration investments can enhance return on equity and could provide increased: –
Slide 25: CMBS Investing
CMBS Investing CMBS investments improve XAN’s portfolio diversification. ‒ CMBS collateral pools consist of numerous fixed-rate, stable income producing properties. In-house CMBS expertise and trading flow position XAN to invest throughout the CMBS capital stack. CMBS B-Piece investing provide
Slide 26: Applying Competitive Advantages to CMBS
Applying Competitive Advantages to CMBS Ability to Re-Underwrite Assess the Relative Risk to Achieve Every Loan in Pool Attractive Risk-Adjusted Returns Principal & Interest Borrower & Lender Multiple Lenders Sell Master Servicer administers timely payment of principal and interest from Close 1st Mo
Slide 27: Net Lease Investment Opportunity
Net Lease Investment Opportunity Net lease investments provide a long duration supplement to XAN’s asset portfolio. – Single tenant office, industrial and retail properties. – Rated and unrated credit tenants. Broad platform provides sourcing, due diligence, underwriting and credit capabilities
Slide 28: Conclusion
&S EXANTAS Conclusion
Slide 29: Creating Shareholder Value
Creating Shareholder Value 1 Executed Strategic Plan 2 Leverage C-III’s Sponsorship Refocused Investment Strategy Full Scale Platform Rejuvenated Business Plan Differentiated Data and Network Created Path to Deliver Core Earnings Experienced Management Team 3 XAN’s Investment Capabilitie
Slide 30: Appendix
&S EXANTAS Appendix
Slide 31: Consolidated Statements of Operations
Consolidated Statements of Operations (Unaudited, in thousands, except share and per share data) For the Three Months Ended Mar. 31, 2019 Mar. 31, 2018 Revenues Interest income $33,932 $25,957 Interest expense 19,395 14,384 Net interest income 14,537 11,573 Other revenue (expense) 26 (95) Total reve
Slide 32: Consolidated Balance Sheets
Consolidated Balance Sheets (In thousands, except share and per share data) Mar. 31, 2019 Dec. 31, 2018 (Unaudited) Assets Cash and cash equivalents $55,660 $82,816 Restricted cash 7,485 12,658 Accrued interest receivable 8,455 8,198 CRE loans, net of allowances of $2,427 and $1,401 1,661,080 1,551,
Slide 33: Core Earnings
Core Earnings1 (Unaudited, in thousands, except share and per share data) For the Three Months Ended Last Twelve Months Ended Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 2019 2018 2018 2018 2019 Net income allocable to common shares - GAAP $5,545 $7,367 $6,036 $6,152 $25,100 Adjustment for realize
Slide 34: Capitalization and Liquidity at March 31, 2019
Capitalization and Liquidity at March 31, 2019 (Dollars in millions) XAN Capitalization XAN Liquidity $1,000 Item Amount Wghtd. Avg. Cost Cash/ $2,000 Item Availability $900 Term & Repurchase $800 $964 L1 + 1.84% Facilities Wells Fargo $1,500 $295 $700 CRE Facility $600 $500 $1,000 Securitizations $