Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Q2 2023 Earnings Presentation
28 slides from Acres Commercial Realty's earnings presentation, Aug 3, 2023
Slide 1: Second Quarter 2023 Earnings Presentation
Second Quarter 2023 Earnings Presentation August 2, 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: Highlights
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 Income / EAD June 30, 2023 i
Slide 5: Second Quarter Results
Second Quarter Results GAAP net income per share for Q2 2023: $0.10, and includes: $(0.31) due to $2.7M provision for CECL reserves, primarily attributable to the expected Financial Results negative impact of macroeconomic factors on the general economy, partially offset by improvements in gener
Slide 6: Summary of Changes to GAAP Book Value per Share
Summary of Changes to GAAP Book Value per Share $0.25 $0.41 $0.05 $0.10 $24.51 $24.50 GAAP Book Value - Mar GAAP Net Income OCI Stock Repurchase Equity Comp GAAP Book Value - Jun '23 '23 Other Comprehensive Equity Compensation GAAP Book Value - Mar ‘23 GAAP Net Income (1) Income Stock Repurchases (2
Slide 7: CRE Loan Portfolio Overview
CRE Loan Portfolio Overview CRE Loan Summary $ in Millions Sep. 30, 2022 Dec. 31, 2022 Mar. 31, 2023 Jun. 30, 2023 CRE whole loans, floating-rate $2,125.9 $2,052.9 $1,990.1 $1,959.1 CRE mezzanine loan (1) 4.7 4.7 4.7 4.7 Total loans held for investment amortized cost $2,130.6 $2,057.6 $1,994.8 $1,96
Slide 8: CRE Loan Portfolio Diversification
CRE Loan Portfolio Diversification Balance by Region (1)(2) Property Type (2) Pacific 8.8% Northeast Multifamily, Office, East 10.4% 75.4% 13.1% Hotel, West North North Central 7.5% Central Mountain 3.3% 5.5% Mid 14.2% Self-Storage, Atlantic 3.6% 13.0% Southeast Retail, 0.4% 21.2% Southwest 23.6% To
Slide 9: Second Quarter Portfolio Activity
Second Quarter Portfolio Activity CRE Loan Production, at Par $ in Millions 12 Mos. Ended 3rd Quarter 2022 4th Quarter 2022 1st Quarter 2023 2nd Quarter 2023 Jun. 30, 2023 New CRE floating-rate loan commitments $181.3 $18.0 $16.0 $22.5 $237.8 Sales, payoffs and paydowns (83.5) (114.6) (94.1) (47.3)
Slide 10: CRE Loan Portfolio Maturity Profile
CRE Loan Portfolio Maturity Profile Fully extended weighted average loan maturity of 3.2 years (1)(2) 95% of the par value of the portfolio has interest rate caps in place at June 30, 2023 (3)(4) Fully Extended Loan and Interest Rate Cap Maturities ($ in millions at par) $1,400 $1,345 $1,200 $1,
Slide 11: CRE Loan Portfolio LTV
CRE Loan Portfolio LTV 80% $2,200 $2,000 75% 74% 74% $1,800 73% 72% $1,600 70% Weighted Average LTV $1,400 Principal (in Millions) $1,200 65% $1,000 $800 60% $600 55% $400 $200 50% $- September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Whole Loans, Floating-Rate Mezz. Loan W.A. LTV ACR
Slide 12: 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 with or near underwritten expectations (1) All but three of ACR’s 78 loans are current on contractual payments through June 30, 2023 Percentage of Principal at June 30, 2023 vs. March 31,
Slide 13: Investments in Real Estate Properties
Investments in Real Estate Properties $161.9 million of net investments in real estate and properties held for sale (1)(2)(3) Office $14.6M (4) Student Housing $13.0M (4) • 99K SF Class A office / life science/ lab space • Existing structure and development of adjacent lot • Equity investment in t
Slide 14: Summary Capitalization
Summary Capitalization $761.5 million of availability at June 30, 2023 $ in Millions Capitalization (1) Maximum Leverage Amount Availability W. Avg. Coupon Capacity Ratio Term warehouse financing facilities (2) $500.0 $251.3 $247.5 BR + 2.65% 0.6x Senior secured financing facility (2) 500.0 47.7 4
Slide 15: Historical Leverage Ratios
Historical Leverage Ratios 4.3x 4.2x 4.1x 3.9x 1.5x 1.4x 1.3x 1.2x September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Recourse Debt Leverage Ratio Total Leverage Ratio ACRESREIT.COM 15
Slide 16: Liquidity
Liquidity ($ in Millions) $14.0 $91.2 $20.1 $57.1 Unrestricted Cash CRE Term and Reinvestment Cash Total Liquidity at June 30, 2023 Senior Secured Facilities Estimated at CRE Securitizations Unfinanced Proceeds (1) (1) Includes the projected amount of proceeds available to the Company if the unfinan
Slide 17: Appendix
Appendix
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands, except share and per share data) Jun. 30, 2023 Dec. 31, 2022 Assets (unaudited) Cash and cash equivalents $ 57,112 $ 66,232 Restricted cash 15,251 38,579 Accrued interest receivable 12,615 11,969 CRE loans 1,963,740 2,057,590 Less: allowance for credit loss
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations (Unaudited, in thousands, except share and per share data) For the Three Months Ended For the Six Months Ended Jun. 30, 2023 Jun. 30, 2022 Jun. 30, 2023 Jun. 30, 2022 Revenues Interest income $ 47,148 $ 27,019 $ 92,477 $ 49,695 Interest expense 32,442 15,745 63,
Slide 20: Earnings Available for Distribution
Earnings Available for Distribution The following table provides a reconciliation from GAAP net income (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
Slide 21: CECL Trend Analysis Chart
CECL Trend Analysis Chart ACR’s CECL reserve as a percentage of the total CRE loan portfolio declined from 2Q21 until 3Q22 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) Dur
Slide 22: 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 23: 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 24: 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 cumulative 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
Slide 25: 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 26: 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 27: Key Assumptions
Key Assumptions Illustrative Earnings Potential – page 23 Net deployable capital is calculated as the total current corporate capital of $634.5 million, less total projected commitments for investments in real estate, excluding potential financing, of $110.7 million and a working capital reserve o
Slide 28: ACRES Commercial Realty Corp. company description and contact 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 information is availa
ACRES Commercial Realty — Q2 2023 Earnings Presentation on 6ix