Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Q1 2023 Earnings Presentation
33 slides from Acres Commercial Realty's earnings presentation, May 4, 2023
Slide 1: First Quarter 2023 Earnings Presentation
ACRES Commercial Realty Corp. First Quarter 2023 Earnings Presentation May 3, 2023
Slide 2: Disclaimer
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 (continued)
Disclaimer (continued) 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 implie
Slide 4: First Quarter 2023 Highlights
First Quarter 2023 Highlights Manager is focused on delivering shareholder value through EAD (1) growth and share repurchases Earnings and capital gains can be retained through tax assets to increase book value Percentage of Per Share GAAP Total Liquidity at Multifamily-focused CRE Net Loss / EA
Slide 5: Results for Quarter Ended March 31, 2023
Results for Quarter Ended March 31, 2023
Slide 6: Results and Recent Developments
Results and Recent Developments GAAP net loss per share for Q1 2023: ($0.28), and includes: $(0.60) due to $5.1M provision for CECL reserves, primarily attributable to modeled increases Financial Results in expected general portfolio credit risk EAD (1) for Q1 2023: $0.52 GAAP book value: $2
Slide 7: Summary of Changes to GAAP Book Value per Share
Summary of Changes to GAAP Book Value per Share $0.29 $0.07 $24.54 $24.51 $0.14 $0.05 GAAP Book Value - Dec '22 GAAP Net Income OCI Other Comprehensive Stock Repurchase Equity Equity Comp and GAAP Book Value - Mar '22 Compensation GAAP Book Value - Dec ‘22 GAAP Net Loss (1) Income Stock Repurchases
Slide 8: CRE Loan Activity and CRE Portfolio
CRE Loan Activity and CRE Portfolio
Slide 9: Deployment Progress
Deployment Progress CRE Loan Production, at Par $ in Millions 12 Mos. Ended 2nd Quarter 2022 3rd Quarter 2022 4th Quarter 2022 1st Quarter 2023 Mar. 31, 2023 (1) New CRE floating-rate loan commitments $311.7 $181.3 $18.0 $16.0 $526.9 Sales, payoffs and paydowns (109.2) (83.5) (114.6) (94.1) (401.4)
Slide 10: Production, Payoff and Paydown Detail
Production, Payoff and Paydown Detail New Loan Production in the Commitments 1st Qtr. 2023 Coupon Rate ($ in Millions) Self Storage (1 Loan) 1M BR (4.50% floor) + 5.50% $16.0 W. Avg. Payoffs & Loan Payoffs & Paydowns in the Months on Paydowns 1st Qtr. 2023 Balance Sheet W. Avg. Coupon Rate ($ in Mil
Slide 11: CRE Loan Portfolio Overview
CRE Loan Portfolio Overview $ in Millions June 30, 2022 Sep. 30, 2022 Dec. 31, 2022 Mar. 31, 2023 CRE whole loans, floating-rate $2,070.0 $2,125.9 $2,052.9 $1,990.1 CRE mezzanine loan (1) 4.7 4.7 4.7 4.7 Total loans held for investment amortized cost $2,074.7 $2,130.6 $2,057.6 $1,994.8 Allowance for
Slide 12: CRE Loan Portfolio Maturity Profile
CRE Loan Portfolio Maturity Profile Fully extended weighted average loan maturity of 3.4 years (1)(2) 94% of the par value of the portfolio has interest rate caps in place at March 31, 2023 (3)(4) Fully Extended Loan and Interest Rate Cap Maturities ($ in millions at par) $1,300 $1,203 $1,100 $9
Slide 13: Weighted Average LTV
CRE Loan Portfolio LTV 80% $2,200 $2,000 75% 74% 73% $1,800 72% 72% $1,600 70% Weighted Average LTV $1,400 Principal (in Millions) $1,200 65% $1,000 $800 60% $600 55% $400 $200 50% $- June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 Whole Loans, Floating-Rate Mezz. Loan W.A. LTV ACR
Slide 14: CRE Loan Portfolio Diversification
CRE Loan Portfolio Diversification Balance by Region (1) Property Type Office, 13.8% Multifamily, Hotel, Pacific 76.2% 6.2% Northeast 8.7% East 8.9% Self-Storage, West North North 3.4% Central Central Retail, Mountain 3.2% 6.3% Mid 0.4% 13.9% Atlantic 12.7% Southeast 23.1% Southwest 23.2% Interest R
Slide 15: CRE Loan Portfolio Risk Ratings
CRE Loan Portfolio Risk Ratings 95% of ACR’s loans have a risk rating of 2 or 3 that are performing in line or near underwritten expectations (1) All but four of ACR’s 79 loans are current on contractual payments through March 31, 2023 Percentage of Principal at March 31, 2023 vs. December 31, 2
Slide 16: Benchmark Rate Floor Trend
Benchmark Rate Floor Trend BR Floor Trend by Weighted Average Floor Pool 100% 1.00% 90% Percentage of Total CRE Whole Loan Principal 80% 0.90% 77% 70% 74% 73% 74% Benchmark Rate Floor 60% 0.80% 50% 0.67% 0.68% 40% 0.70% 0.66% 30% 0.62% 26% 27% 26% 20% 23% 0.60% 10% 0% 0.50% June 30, 2022 September 3
Slide 17: Investments in Real Estate Properties
Investments in Real Estate Properties $134.6 million of net investments in real estate and property held for sale (1)(2) Office $14.6M (3) Student Housing $13.0M (3) • 99K SF Class A office / life science/ lab space • Existing structure and development of adjacent lot • Equity investment in the no
Slide 18: Capitalization and Liquidity
Capitalization and Liquidity
Slide 19: Summary Capitalization
Summary Capitalization $699.3 million of availability at March 31, 2023 $ in Millions Capitalization (1) Maximum Leverage Amount Availability W. Avg. Coupon Capacity Ratio Term warehouse financing facilities (2) $500.0 $311.3 $187.4 BR + 2.55% 0.8x Senior secured financing facility (2) 500.0 49.8
Slide 20: Historical Leverage Ratios
Historical Leverage Ratios Historical Leverage Ratios 4.3x 4.2x 4.2x 4.1x 1.5x 1.4x 1.4x 1.3x June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 Recourse Debt Leverage Ratio Total Leverage Ratio ACRESREIT.COM 20
Slide 21: Liquidity at March 31, 2023
Liquidity at March 31, 2023 ($ in Millions) $32.9 $130.6 $10.4 $87.3 Unrestricted Cash CRE Term and Reinvestment Cash Total Liquidity Senior Secured Facilities Estimated at CRE Securitizations Unfinanced Proceeds (1) (1) Includes the projected amount of proceeds available to the Company if the unfin
Slide 22: Appendix
ACRES COMMERCIAL REALTY Appendix
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands, except share and per share data) Mar. 31, 2023 Dec. 31, 2022 Assets (una udi ted) Ca s h a nd ca s h equi va lents $ 87,314 $ 66,232 Res tri cted ca sh 33,940 38,579 Accrued i nterest recei va bl e 12,570 11,969 CRE l oa ns 1,994,790 2,057,590 Les s : a l l
Slide 24: Consolidated Statements of Operations
Consolidated Statements of Operations (Unaudited, in thousands, except share and per share data) For the Three Months Ended Mar. 31, 2023 Mar. 31, 2022 Revenues Interes t i ncome $ 45,329 $ 22,676 Interes t expens e 31,375 14,907 Net i nteres t i ncome 13,954 7,769 Rea l esta te i ncome 7,071 3,138
Slide 25: Earnings Available for Distribution
Earnings Available for Distribution The following table provides a reconciliation from GAAP net loss allocable to common shares to Earnings Available for Distribution allocable to common shares, a non-GAAP measure, for the periods presented (1): (unaudited, in thousands, except share and per share
Slide 26: CECL Trend Analysis Chart
CECL Trend Analysis Chart ACR’s CECL reserve as a percentage of the total CRE loan portfolio has declined from 4Q20 as ACR (i) increased its percentage of multifamily loans and (ii) simultaneously reduced its portfolio percentage of loans originated prior to 4Q20 (“Pre-Covid Loans”)(1)(2) 3.50% 10
Slide 27: 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 Quarterl
Slide 28: Illustrative Earnings Potential
Illustrative Earnings Potential The chart below is meant to display the illustrative earnings potential of the Company. It is not meant to represent performance guidance for any period (1) (In millions, except percentages and per share data) Projected Maximum CRE Loan Portfolio Size & GAAP EPS & E
Slide 29: Projected Book Value Growth
Projected Book Value Growth(1) ACR’s strategy is to drive book value (“BV”) growth over the coming years, with a 35.4% increase in book value since ACRES acquisition in the 3rd quarter of 2020 Projected OPERATING loss carryforwards of $46.6M, expected to be fully utilized Projected CAPITAL los
Slide 30: 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 31: 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 32: Key Assumptions
Key Assumptions Illustrative Earnings Potential – page 28 Net deployable capital is calculated as the total current corporate capital of $633.8 million, less total projected commitments for investments in real estate, excluding potential financing, of $110.7 million and a working capital reserve o
Slide 33: 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 equity investments in commercial real estate property through direct ownership and joint ventures. Additional i
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