ACRES Commercial Realty(US:ACR)2022-11-06 16:00Financial Performance - Net interest income for the three months ended September 30, 2022, was $11,126 thousand, up from $9,452 thousand for the same period in 2021, reflecting a year-over-year increase of 17.7%[7] - The company reported a net income of $713 thousand for the three months ended September 30, 2022, compared to a net loss of $9,805 thousand for the same period in 2021, indicating a significant turnaround[7] - Net income for the three months ended September 30, 2022, was $5,486,000, compared to a net loss of $4,928,000 for the same period in 2021, representing a significant turnaround[8] - Comprehensive income before allocation to preferred shares for the nine months ended September 30, 2022, was $14,424,000, down from $23,151,000 in the same period of 2021[8] - Net income for the nine months ended September 30, 2022, was $13.1 million, a decrease of 39.5% compared to $21.8 million for the same period in 2021[12] - Total revenues for the three months ended September 30, 2022, were $20,936, compared to $12,096 for the same period in 2021, representing a 73.5% increase[7] Assets and Liabilities - Total assets increased to $2,426,386 thousand as of September 30, 2022, compared to $2,284,275 thousand on December 31, 2021, representing a growth of approximately 6.2%[5] - Total liabilities rose to $1,978,907 thousand as of September 30, 2022, from $1,836,080 thousand at the end of 2021, marking an increase of approximately 7.8%[5] - The company’s total equity decreased slightly to $447,479 thousand as of September 30, 2022, from $448,195 thousand at the end of 2021, reflecting a marginal decline of 0.16%[5] - Total stockholders' equity as of September 30, 2022, was $442,549,000, with a non-controlling interest of $4,930,000[9] - Total assets as of September 30, 2022, amounted to $1,500,325,000, with CRE securitizations contributing $1,499,956,000[32] Cash Flow and Investments - Net cash provided by operating activities was $19.0 million, down 25.4% from $25.5 million in the prior year[12] - Cash and cash equivalents and restricted cash at the end of the period totaled $76.9 million, down 46.1% from $142.4 million at the end of the previous year[12] - The company recorded a net cash used in investing activities of $300,507 for the nine months ended September 30, 2022, compared to $316,421 in 2021, showing a slight improvement[12] - The company has $193.7 million in unfunded loan commitments as of September 30, 2022, compared to $157.6 million at December 31, 2021[38] - The company reported a net cash used in investing activities of $300.5 million, a slight improvement from $316.4 million in the previous year[12] Credit Losses and Provisions - The provision for credit losses was $2,620 thousand for the three months ended September 30, 2022, compared to a reversal of $537 thousand for the same period in 2021, indicating a shift in credit quality assessment[7] - The company recorded a provision for expected credit losses of $2.6 million during the three months ended September 30, 2022, reflecting the impact of increased portfolio credit risk[142] - The allowance for credit losses decreased to $7.9 million from $8.8 million, representing a reduction of approximately 10.8%[5] - The provision for (reversal of) credit losses for the three months ended September 30, 2022, was $2,620, compared to a reversal of $537 in the same period of 2021[7] - The company reported a net reversal of credit losses of $15.4 million for the nine months ended September 30, 2021, indicating prior improvements in macroeconomic conditions[133] Stock and Equity - The weighted average number of common shares outstanding was 8,713,256 for the three months ended September 30, 2022, down from 9,553,412 for the same period in 2021, reflecting a decrease of approximately 8.8%[7] - The company repurchased common stock amounting to $8,194 during the nine months ended September 30, 2022, compared to $14,725 in the same period of 2021[12] - The company declared distributions of $0.54 per share for Series C Preferred Stock and $0.49 per share for Series D Preferred Stock for the three months ended September 30, 2022[91] - The company issued a total of 4.6 million shares of 7.875% Series D Cumulative Redeemable Preferred Stock, receiving net proceeds of $110.4 million[82] - The company had 4.8 million shares of Series C Preferred Stock and 4.6 million shares of Series D Preferred Stock outstanding as of September 30, 2022[82] Real Estate and Investments - Real estate income for the nine months ended September 30, 2022, was $21,700 thousand, compared to $7,013 thousand for the same period in 2021, representing a substantial increase of 209.5%[7] - The company acquired two real estate properties with a combined acquisition-date fair value of $51.6 million[52] - The company received a deed-in-lieu of foreclosure on a hotel property with an acquisition-date fair value of $14.3 million, which was reported as property held for sale[54] - The company recognized a realized loss of $2.3 million from a discounted payoff of a loan during the nine months ended September 30, 2022[51] - The total fair value of net assets acquired during the nine months ended September 30, 2022, was $65,926[53] Interest Rates and Financing - The weighted average interest rate for the Senior Secured Financing Facility was 5.75% as of September 30, 2022[158] - The company reported a total of $482,802,000 in outstanding borrowings across various financing facilities as of September 30, 2022[77] - The company entered into a Note and Warrant Purchase Agreement allowing for the issuance of up to $125.0 million of 12.00% Senior Unsecured Notes, with $42.0 million issued to Oaktree and $8.0 million to MassMutual[73] - The company exercised optional redemption for XAN 2020-RSO8 and XAN 2020-RSO9, paying off all outstanding senior notes from sales proceeds of certain securitization assets[71] - The company reported interest expense paid in cash of $46,999,000 for the nine months ended September 30, 2022, compared to $33,889,000 for the same period in 2021, reflecting a 38.7% increase[35] Economic Conditions and Outlook - The U.S. Federal Reserve raised the Federal Funds rate by 3.00% in five rate hikes between March 2022 and September 2022 to combat inflation[112] - The Company continuously monitors the effects of domestic and global events, including inflation and rising interest rates, on its operations and financial position[112] - The company expects to qualify as a REIT in the current fiscal year, focusing on commercial real estate mortgage loans and equity investments[14] - The company is focused on originating, holding, and managing commercial real estate mortgage loans and equity investments in commercial real estate properties[112] - The anticipated CRE loan originations, CRE debt securitizations, and other CRE-related investments for the year ended December 31, 2022, are projected to be between $600.0 million and $800.0 million[113]