Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Exantas Capital — Investor Presentation (March 2019)
35 slides from Acres Commercial Realty's investor presentation, March 2019
Slide 1: Investor Presentation March 2019
Investor Presentation March 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 multicycle 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 March 15, 2019 would be $119.86.1 $125.00 $0.20 $120.00 $115.00 $0.15 $110.00 $0.10 $105.00 $0.05 $100.00 $95.00 $0.00 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Se
Slide 8: Manager Overview
& EXANTAS Manager Overview
Slide 9: Leading CRE Asset Management and Services Firm
Leading CRE Asset Management and Services Firm1 Mortgage Origination ~240 Unique Platform Information Commercial Loan Offices Advantage Real Estate Network $10 billion Servicing Nationwide4 mortgage originations since inception 7,000 >$240 billion real estate professionals named special servicing2,
Slide 10: National Footprint
National Footprint Ability to utilize local market CRE professionals nationwide to source, diligence and underwrite investments. NAI Locations USRG Managed Properties C-III Affiliate-Sponsored Fund Owned Properties Metropolitan Statistical Areas Where C-III Has Resolved Assets C-III Offices As of De
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 $2.0 Billion $1.5 Billion $0.5 Billion $3.5 Bi
Slide 12: Path Forward
& 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 $151.2 Trust Preferred Securities2 50.0 Preferred Equity 116.0 Common Equity 437.9 Corporate Capital Base $755.1 Less: Working Capital (40.0) Investable Corporate Capital $715
Slide 17: Deployment Progress
Deployment Progress Summary of 4Q’18 CRE Investment Portfolio1 ($ in Millions) +45.2% Loans 11 $1,959 $1,839 Amount $275 Million $1,736 $1,628 $1,496 $1,450 $1,349 Wtd. Avg. Spread 3.06% Bonds 10 Face Amount $83 Million 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 Wtd. Avg. Coupon 4.71% CRE Loans Other
Slide 18: Economic Book Value
Economic Book Value Economic Book Value (“EBV”) is a non-GAAP measure which 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
< 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 Pacific 17.1% Northeast 7.3% West North Multifamily Office Central 0.5% East North 63.5% 13.4% Central Mountain 4.1% 20.9% Mid Atlantic 6.5% Southeast 11.3% Southwest 32.3% Hotel R
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 Risk, Shape Credit, Invest Capital Every Loan in Pool at Any Risk/ Return Objective Principal & Interest Borrower & Lender Multiple Lenders Sell Master Servicer administers timely payment of principal and interest from Close 1st
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
& 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
& EXANTAS Appendix
Slide 31: Consolidated Statements of Operations
Consolidated Statements of Operations (In thousands, except share and per share data) For the Three Months Ended For the Year Ended Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2018 Dec. 31, 2017 Revenues Interest income $35,326 $26,229 $122,779 $99,318 Interest expense 19,751 15,203 67,616 57,657 Net inter
Slide 32: Consolidated Balance Sheets
Consolidated Balance Sheets (In thousands, except share and per share data) Dec 31, 2018 Dec. 31, 2017 Assets Cash and cash equivalents $82,816 $181,490 Restricted cash 12,658 22,874 Accrued interest receivable 8,198 6,859 CRE loans, net of allowances of $1,401 and $5,328 1,551,967 1,284,822 Investm
Slide 33: Core Earnings
Core Earnings1 (Unaudited, in thousands, except share and per share data) For the Three Months Ended For the Year Ended Dec. 31, Sept. 30, Jun. 30, Mar. 31, Dec. 31, 2018 2018 2018 2018 2018 Net income (loss) allocable to common shares – GAAP $7,367 $6,036 $6,152 ($12,582) $6,973 Adjustment for real
Slide 34: Capitalization and Liquidity at December 31, 2018
Capitalization and Liquidity at December 31, 2018 XAN Capitalization XAN Liquidity $600 Item Amount Wghtd. Avg. Cost Cash/ Item Availability $2,000 $500 Term & Repurchase $850 L + 1.83% Facilities Wells Fargo $1,500 $400 CRE Facility $244 $300 $1,000 Securitizations $501 L + 1.14% $173 JPMorgan Conv
Slide 35: Strategic Plan Progress
Strategic Plan Progress $435.9 million (91%) of the Strategic Plan assets have been sold for proceeds of $436.6 million4. Impairments and Assets Monetized Impairments and Net Book Value Identified Assets, Adjustments on through Adjustments on at December 31, at Plan Inception Non-Monetized December