Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Q4 2022 Earnings Presentation
33 slides from Acres Commercial Realty's earnings presentation, Mar 2, 2023
Slide 1: Fourth Quarter 2022 Earnings Presentation
ACRES Commercial Realty Corp. Fourth Quarter 2022 Earnings Presentation March 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: Fourth Quarter 2022 Highlights
Fourth Quarter 2022 Highlights ➢ Manager is focused on delivering shareholder value through earnings growth and share repurchases ➢ Earnings and capital gains can be retained through tax assets to increase book value Percentage of Per Share GAAP Net Loss Total Liquidity at Multifamily-focused CRE /
Slide 5: Results for Quarter Ended December 31, 2022
Results for Quarter Ended December 31, 2022
Slide 6: Results and Recent Developments
Results and Recent Developments ➢ GAAP net loss for Q4 2022: ($0.87), and includes: ➢ $(1.28) due to $11M provision for CECL reserves, primarily attributable to the negative impact Financial Results of macroeconomic factors focused on expected increases in inflation, energy costs and interest rates,
Slide 7: Summary of Changes to GAAP Book Value per Share
Summary of Changes to GAAP Book Value per Share $0.87 $25.08 $0.10 $0.18 $24.54 $0.05 GAAP Book Value - Sep '22 GAAP Net Income OCI Equity Compensation Stock Equity Repurchasesand GAAP Book Value - Dec. '22 Compensation GAAP Book Value - Sep ‘22 GAAP Net Loss Other Comprehensive Stock Repurchases (1
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 4th Quarter 2022 3rd Quarter 2022 2nd Quarter 2022 1st Quarter 2022 Dec. 31, 2022 (1) New CRE floating-rate loan commitments $18.0 $181.3 $311.7 $99.9 $610.8 Sales, payoffs and paydowns (114.6) (83.5) (109.2) (92.3) (399.6)
Slide 10: Production, Payoff and Paydown Detail
Production, Payoff and Paydown Detail Commitments New Loan Production in the 4th Qtr. 2022 W. Avg. Coupon Rate ($ in Millions) Multifamily (1 Loan) 1M BR (4.32% floor) + 4.80% $18.0 W. Avg. Payoffs & Loan Payoffs & Paydowns in the Months on Paydowns 4th Qtr. 2022 Balance Sheet W. Avg. Coupon Rate ($
Slide 11: CRE Loan Portfolio Overview
CRE Loan Portfolio Overview $ in Millions Dec. 31, 2022 Sep. 30, 2022 Jun. 30, 2022 Mar. 31, 2022 CRE whole loans, floating-rate $2,052.9 $2,125.9 $2,070.0 $1,891.7 CRE mezzanine loan (1) 4.7 4.7 4.7 4.7 Total loans held for investment amortized cost $2,057.6 $2,130.6 $2,074.7 $1,896.4 Allowance for
Slide 12: CRE Loan Portfolio Maturity Profile
CRE Loan Portfolio Maturity Profile ➢ Fully extended weighted average loan maturity of 3.6 years (1)(2) ➢ 89% of the par value of the portfolio has interest rate caps in place at December 31, 2022 (3) Fully Extended Loan and Interest Rate Cap Maturities ($ in millions at par) $1,200 $1,136 $1,000 $9
Slide 13: Weighted Average LTV
CRE Loan Portfolio LTV 80% $2,200 $2,000 75% $1,800 73% 72% 72% 72% $1,600 70% Weighted Average LTV Principal (in Millions) $1,400 $1,200 65% $1,000 $800 60% $600 55% $400 $200 50% $- March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 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, 13.2% Multifamily, Pacific Hotel, Northeast 75.2% 9.4% East 8.7% 8.3% Self-Storage, West North North Central Central 2.5% Retail, Mountain 3.1% 6.1% Mid 0.4% 16.2% Atlantic 12.2% Southeast 21.5% 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 three of ACR’s 82 loans are current on contractual payments through December 31, 2022 Percentage of Principal at December 31, 2022 vs. Septemb
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% 70% 74% 73% 74% 72% Benchmark Rate Floor 60% 0.80% 50% 40% 0.67% 0.68% 0.70% 0.66% 0.62% 30% 28% 27% 26% 26% 20% 0.60% 10% 0% 0.50% March 31, 2022 June 30, 2
Slide 17: 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 Quarterly
Slide 18: Investments in Real Estate Properties
Investments in Real Estate Properties ➢ $138.9 million of net investments in real estate and properties 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
Slide 19: Capitalization and Liquidity
Capitalization and Liquidity
Slide 20: Summary Capitalization
Summary Capitalization ➢ $580.2 million of availability at December 31, 2022 (2) $ in Millions Capitalization (1) Maximum Leverage Amount Availability W. Avg. Coupon Capacity Ratio Term warehouse financing facilities (2) $500.0 $328.3 $170.0 6.85% 0.8x Senior secured financing facility (2) 500.0 87.
Slide 21: Historical Leverage Ratios
Historical Leverage Ratios Historical Leverage Ratios 4.3x 4.2x 4.2x 3.7x 1.5x 1.4x 1.4x 0.9x March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Recourse Debt Leverage Ratio Total Leverage Ratio ACRESREIT.COM 21
Slide 22: Liquidity at December 31, 2022
Liquidity at December 31, 2022 ($ in Millions) $37.7 $117.6 $13.7 $66.2 Unrestricted Cash CRE Term CRE Term and andSecured Senior Reinvestment Cash at CRE Total Liquidity Senior Secured Facilities Facilities Estimated Estimated Unfinanced Securitizations Proceeds (1) Unfinanced Proceeds (1) Includes
Slide 23: Appendix
ACRES COMMERCIAL REALTY Appendix
Slide 24: Consolidated Balance Sheets
Consolidated Balance Sheets ACRESREIT.COM 24
Slide 25: Consolidated Statements of Operations
Consolidated Statements of Operations ACRESREIT.COM 25
Slide 26: Earnings Available for Distribution
Earnings Available for Distribution (1) ➢ The following table provides a reconciliation from GAAP net (loss) income allocable to common shares to Earnings Available for Distribution (previously labeled Core Earnings) allocable to common shares, a non-GAAP measure, for the periods presented: (1) See
Slide 27: 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% 1
Slide 28: Illustrative Earnings Potential
Illustrative Earnings Potential (1) ➢ 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. (In millions, except percentages and per share data) Projected Maximum CRE Loan Portfolio Size & GAAP EPS &
Slide 29: Projected Book Value & Common Stock Growth
Projected Book Value & Common Stock Growth(1) ➢ ACR’s strategy is to drive book value (“BV”) growth over the coming years, with a 35.6% 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 ➢ Projec
Slide 30: Key Definitions
Key Definitions Earnings Available for Distribution: Earnings Available for Distribution (“EAD”) (previously labeled Core Earnings) 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
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 $635.4 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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