Acres Commercial Realty Corp. · NYSE:ACR
Acres Commercial Realty — Q2 2022 Earnings Presentation
31 slides from Acres Commercial Realty's earnings presentation, Aug 4, 2022
Slide 1: Second Quarter 2022 Earnings Presentation
ACRES Commercial Realty Corp. Second Quarter 2022 Earnings Presentation August 4, 2022
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: Second Quarter 2022 Highlights
Second Quarter 2022 Highlights Manager is focused on delivering shareholder value through earnings growth and share repurchases Earnings Available for Distribution or “EAD” and capital gains can be retained through tax asset to increase book value Multifamily-focused CRE Liquidity at GAAP Net In
Slide 5: Results for Quarter Ended June 30, 2022
Results for Quarter Ended June 30, 2022
Slide 6: Results and Recent Developments
Results and Recent Developments GAAP net income: $0.08, and includes: $0.17 of combined minimum interest collections and origination fee accelerations included in interest income as the result of payoffs on three loans during the quarter $(0.06) provision for CECL reserves, primarily attributa
Slide 7: Manager Focus on Delivering Increased Book Value per Share
Manager Focus on Delivering Increased Book Value per Share Summary of Changes to GAAP Book Value per Share $0.37 $0.12 $24.48 $0.05 $0.08 $24.10 GAAP Book Value - Mar. ‘22 '22 GAAP Other Comprehensive Equity Compensation and GAAP Book Value - June. '22 GAAPNet NetIncome Income OCI 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 1st Quarter 2022 4th Quarter 2021 3rd Quarter 2021 Jun. 30, 2022 New CRE floating-rate loan commitments $311.7 $99.9 $447.2 $468.2 $1,327.0 Sales, payoffs and paydowns (109.2) (92.3) (363.2) (120.3) (684.9)
Slide 10: Production, Payoff and Paydown Detail
Production, Payoff and Paydown Detail Commitments New Loan Production in the 2nd Qtr. 2022 W. Avg. Coupon Rate ($ in Millions) Multifamily (8 Loans) 1M BR (0.53% floor) + 3.70% $276.2 Office (1 Loan) 1M BR (1.50% floor) + 5.00% 35.5 W. Avg/Total (9 Loans) 1M BR (0.61% floor) + 3.79% $311.7 W. Avg. P
Slide 11: CRE Loan Portfolio Overview
CRE Loan Portfolio Overview $ in Millions Jun. 30, 2022 Mar. 31, 2022 Dec. 31, 2021 Sep. 30, 2021 CRE whole loans, floating-rate $2,070.0 $1,891.7 $1,877.9 $1,841.0 CRE mezzanine loan 4.7 4.7 4.7 4.7 Total loans held for investment amortized cost $2,074.7 $1,896.4 $1,882.6 $1,845.7 Allowance for cre
Slide 12: CRE Loan Portfolio LTV
CRE Loan Portfolio LTV 80% $2,200 $2,000 75% $1,800 72% 72% 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% $- September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 Whole Loans, Floating-Rate Mezz. Loan W.A. LTV ACR
Slide 13: CRE Loan Portfolio Diversification
CRE Loan Portfolio Diversification Balance by Region (1) Property Type Office, Multifamily, 13.2% Pacific 77.5% Hotel, 8.7% Northeast 5.8% East 6.3% Self-Storage, West North North 2.8% Central Central Retail, Mountain 2.0% 4.3% Mid 0.7% 16.5% Atlantic 12.5% Southeast 24.1% Southwest 25.6% Interest R
Slide 14: CRE Loan Portfolio Risk Ratings
CRE Loan Portfolio Risk Ratings 93% 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 89 loans are current on contractual payments through June 30, 2022 Percentage of Principal at June 30, 2022 vs. March 31, 2022
Slide 15: Benchmark Rate Floor Trend
Benchmark Rate Floor Trend BR Floor Trend by Weighted Average Floor Pool 100% 1.20% 90% 1.03% Percentage of Total CRE Whole Loan Principal 1.00% 80% 70% 74% 0.75% 72% 0.80% Benchmark Rate Floor 67% 60% 0.66% 0.62% 50% 53% 0.60% 47% 40% 0.40% 30% 33% 28% 20% 26% 0.20% 10% 0% 0.00% September 30, 2021
Slide 16: Investments in Real Estate Properties
Investments in Real Estate Properties $117.2 million of investments in real estate (1)(2) are being managed to generate a positive return for ACR’s shareholders Office Value Add $14.6M Hotel $39.8M • 99K SF Class A office / life science/ lab space • 279-key hotel next to a convention center • Equi
Slide 17: Capitalization and Liquidity
Capitalization and Liquidity
Slide 18: Summary Capitalization
Summary Capitalization $725.4 million of availability $ in Millions Capitalization (1) Maximum Leverage Amount Availability W. Avg. Coupon Capacity Ratio Term warehouse financing facilities (2) $750.0 $328.4 $418.6 3.62% 0.7x Senior secured financing facility (2) 250.0 16.7 230.1 5.75% 0.1x Mortga
Slide 19: Historical Leverage Ratios
Historical Leverage Ratios Historical Leverage Ratio 4.2x 4.0x 3.7x 3.6x 1.4x 1.4x 0.9x 0.8x September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 Recourse Debt Leverage Ratio Total Leverage Ratio ACRESREIT.COM 19
Slide 20: Liquidity at July 22, 2022
Liquidity at July 22, 2022 ($ in Millions) $71.4 $78.2 $(40.0) $46.8 Unrestricted Cash CRE Term and CRE Senior Term andSecured Working Capital Net Liquidity Facilities Estimated Unfinanced Senior Secured Facilities Estimated Reserve Proceeds (1) Unfinanced Proceeds (1) Includes the projected amount
Slide 21: Appendix
ACRES COMMERCIAL REALTY Appendix
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands, except share and per share data) Jun. 30, 2022 Dec. 31, 2021 Assets (unaudited) Cash and cash equivalents $34,870 $35,500 Restricted cash 25,367 248,431 Accrued interest receivable 7,162 6,112 CRE loans 2,074,689 1,882,551 Less: allowance for credit losses
Slide 23: 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, 2022 Jun. 30, 2021 Jun. 30, 2022 Jun. 30, 2021 Revenues Interest income $27,019 $25,793 $49,695 $50,542 Interest expense 15,745 18,702 30,652
Slide 24: Earnings Available for Distribution
Earnings Available for Distribution (1) The following table provides a reconciliation from GAAP net income (loss) 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: (unaudit
Slide 25: CECL Trend Analysis Chart
CECL Trend Analysis Chart ACR’s CECL reserve as a percentage of the total CRE loan portfolio has declined 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) 100% 3.50% 100% 100%
Slide 26: 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 & E
Slide 27: 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 Projected OPERATING loss carryforwards of approx. $63M, expected to be fully utilized Projected CAPITAL loss carryforwards of approx. $139M, expected to be partially utilized
Slide 28: 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 29: 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 30: Key Assumptions
Key Assumptions Illustrative Earnings Potential – page 26 Net deployable capital is calculated as the total current corporate capital of approximately $642.3 million, less total projected commitments for investments in real estate, excluding potential financing, of approximately $110.7 million and
Slide 31: 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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