Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Q4 2023 Earnings Presentation
21 slides from Acres Commercial Realty's earnings presentation, Feb 29, 2024
Slide 1: Fourth Quarter 2023 Earnings Presentation
FOURTH QUARTER 2023 EARNINGS PRESENTATION February 28, 2024
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER 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 ACRES Commercial Realty Corp.’s (“ACR’s” or the “Company’s”) current beliefs, a
Slide 3: Disclaimer: Forward-Looking Statements (continued)
DISCLAIMER Forward-Looking Statements (continued) In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur and actual results, performance or achievement could differ materially from those anticipated or implied in the for
Slide 4: Highlights
HIGHLIGHTS Manager is focused on delivering shareholder value Earnings and capital gains can be retained through EAD1 growth and share repurchases through tax assets to increase book value Percentage of Multifamily-focused Per Share-Diluted GAAP Net Income / EAD Percentage of CRE loan CRE in Loan Po
Slide 5: Fourth Quarter Results
FOURTH QUARTER RESULTS Financial Results Book Value CRE Loan Activity & CRE Portfolio Capitalization & Liquidity $0.20 $26.65 $1.9B comprising 70 loans with a weighted average LTV of 76% 82% GAAP net income per share-diluted GAAP book value CRE loan portfolio at par value of asset-specific borrowing
Slide 6: Balance Sheet Overview
BALANCE SHEET OVERVIEW 4Q23 Balance Sheet Overview Summary of Changes to Book Value per Share 1,2 Total Assets ($B) $2.2 $1.32 $0.01 $26.65 Total Liquidity ($M) $107.7 CRE Whole Loans, at par ($B) $1.9 WA Spread 3.77% $0.05 $0.22 CECL Reserve – General ($M) $24.1 $25.07 Per BV Share / Basis Points $
Slide 7: CRE Loan Portfolio Overview
CRE LOAN PORTFOLIO OVERVIEW CRE Loan Summary 1 Balance by Region 1,3 Loans held for investment, at amortized cost $1,857.1 Pacific Northeast CECL Reserves ($28.8) 9.3% 8.8% CRE whole loans, floating-rate WA 1M BR + 3.77% Mountain Mid Atlantic WA 1M BR Floor2 0.70% 15.0% 12.9% WA CRE loan portfolio L
Slide 8: CRE Loan Portfolio Maturity Profile
CRE LOAN PORTFOLIO MATURITY PROFILE 2.8 years 85% Fully extended weighted average loan maturity 1,2 of the par value of the portfolio has interest rate caps in place at December 31, 2023 3,4 Fully Extended Loan and Interest Rate Cap Maturities ($ in millions at par) $1,000 $871 $800 $704 $600 $466 $
Slide 9: CRE Loan Risk Ratings and CECL Reserves
CRE LOAN RISK RATINGS AND CECL RESERVES 84% ofin line ACR’s loans have a risk rating of 2 or 3 that are performing with or near underwritten expectations 1 All but four of ACR’s 70 loans are current on contractual payments through December 31, 2023 Risk Rating by Collateral Type, $ at par 3Q23 W.A.
Slide 10: Investments in Real Estate Properties
INVESTMENTS IN REAL ESTATE PROPERTIES Student Housing $13.0M 3 $158.9 million • Existing structure and development of adjacent lot • Equity investment in the southeast region of net investments in real estate • Value add and development project and properties held for sale 1,2 • Acquired in April 20
Slide 11: Capitalization Overview
CAPITALIZATION OVERVIEW Total Capitalization $2,122.4 Capitalization Corporate WACC 1 7.38% $ in Millions Maximum W. Avg. Leverage Amount $ Avail. Capacity Coupon Ratio Total Asset Specific Financing $1,476.6 Term Warehouse Financing 2 $500.0 $168.6 $329.7 BR + 2.60% 0.4x WA Asset Specific Cost BR +
Slide 12: Leverage and Liquidity Trend
LEVERAGE AND LIQUIDITY TREND Leverage Ratios Total Liquidity ($ in millions) $ in millions 4.1x 3.9x 3.9x $130.6 3.8x $32.9 $107.7 $104.0 $10.4 $91.2 $24.3 $14.0 $34.6 $20.1 $5.0 1.3x 1.2x 1.2x 1.1x $87.3 $83.4 $64.4 $57.1 1Q23 2Q23 3Q23 4Q23 1Q23 2Q23 3Q23 4Q23 Recourse Debt Leverage Ratio Total Le
Slide 13: Appendix
ACRES COMMERCIAL REALTY SSS Hy y} = Ss = APPENDIX — = = = — = =
Slide 14: Consolidated Balance Sheets
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) Dec. 31, 2023 Dec. 31, 2022 Assets (unaudited) Cash and cash equivalents $ 83,449 $ 66,232 Restricted cash 8,437 38,579 Accrued interest receivable 11,783 11,969 CRE loans 1,857,093 2,057,590 Less: allowance for credit losse
Slide 15: Consolidated Statements of Operations
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except share and per share data) For the Three Months Ended For the Year Ended Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 Revenues Interest income $ 46,781 $ 42,514 $ 187,466 $ 126,274 Interest expense 33,419 28,733 130,791
Slide 16: Earnings Available for Distribution
EARNINGS AVAILABLE FOR DISTRIBUTION (Unaudited, in thousands, except share and per share data) For the Three Months Ended For the Year Ended Dec. 31, 2023 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2022 Net Income (Loss) Allocable to Common Shares - GAAP $ 1,697 $ (7,431) $ 2,968 $ (8,799) Realized gain o
Slide 17: CECL Trend Analysis Chart
CECL TREND ANALYSIS CHART ACR’s CECL reserve as a percentage of the total CRE loan portfolio remained steady from Since 3Q22, volatility in the commercial real estate sector and limited market liquidity have 1Q22 until 3Q221 caused an increase in the CECL reserves to 1.54% at 4Q23 3.00% 100% 2.50% 7
Slide 18: Benchmark Sensitivity Analysis Trend
BENCHMARK SENSITIVITY ANALYSIS TREND The recent increases to benchmark rates on net interest income have returned our match-financed investment portfolio to having a direct correlation to the rise or fall in interest rates Quarterly Net Interest Income per Share Sensitivity to Changes in BRs Decembe
Slide 19: Key Definitions
KEY DEFINITIONS Earnings Available for Distribution: Earnings Available for Distribution (“EAD”) is a non-GAAP financial measure that the Company uses to evaluate its operating performance. EAD excludes the effects of certain transactions and GAAP adjustments that it believes are not necessarily ind
Slide 20: 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 21: Contact Information
ACRES Commercial Realty Corp. is a real estate investment trust that is primarily focused on originating, holding and managing commercial real CONTACT INFORMATION estate mortgage loans and equity investments in commercial real estate property through direct ownership and joint ventures. Additional i
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