ACRES Commercial Realty(US:ACR)2025-05-01 15:02Financial Data and Key Metrics Changes - GAAP net loss allocable to common shares in Q1 2025 was $5,900,000 or $0.80 per share diluted, compared to earnings of $0.48 per share in the previous quarter [11] - Earnings available for distribution (EAD) for Q1 2025 was a loss of $0.86 per share, a decrease of $1.34 from the previous quarter [11][12] - GAAP book value per share decreased to $28.5 on March 31 from $28.87 on December 31 [12] - Available liquidity at March 31 was $87,000,000, comprising $66,000,000 of unrestricted cash and $21,000,000 of projected financing available on unlevered assets [13] Business Line Data and Key Metrics Changes - Loan payoffs during the period were $115,900,000, with a net reduction of the loan portfolio of $109,600,000 [5] - The company closed one new commitment of $15,000,000 and funded existing loan commitments of $12,000,000 [5] - The weighted average spread of the floating rate loans in the $1,400,000,000 commercial real estate loan portfolio is now 3.67% over one month term SOFR rates [6] - The total allowance for credit losses at March 31 was $31,100,000, representing 2.26% of the loan portfolio [11] Market Data and Key Metrics Changes - The number of loans rated four, zero, five decreased from 12 at the end of last year to 11 at the end of this quarter [7] - The company expects to grow the portfolio by $300,000,000 to $500,000,000 by the end of the year, despite loan payoffs [19] Company Strategy and Development Direction - The company aims to optimize portfolio leverage to drive equity returns and is focused on improving credit quality while recycling capital into new investments [9][10] - The investment landscape is described as attractive, with the company actively closing new loans across various asset classes, including multifamily, student housing, self-storage, and retail [14][19] Management's Comments on Operating Environment and Future Outlook - Management indicated that Q1 2025 represents a trough in portfolio size, with expectations of ramping securitization in the second half of the year [14] - The company noted that the pipeline has been stronger than ever, with increased quoting of deals due to market volatility pushing more opportunities their way [26] Other Important Information - The company incurred a non-recurring charge of $1,500,000 related to unamortized debt issuance costs during the quarter [9] - The company sold a $20,600,000 loan at par and took a $700,000 loss on a non-performing hotel property [7][23] Q&A Session Summary Question: Could you talk a little bit about the portfolio and the payoffs that occurred during the quarter? - Management confirmed that the payoffs were expected, with five loan payoffs occurring, including refinancings and asset sales [17] Question: Should we expect more early payments and what are the opportunities for portfolio growth? - Management expects more payoffs throughout the year and anticipates net growth in the portfolio between $300,000,000 and $500,000,000 [19] Question: Can you provide details on the loan sales and the impact on earnings? - One loan was sold at par, while another non-performing hotel property was sold at 94¢ on the dollar, resulting in a $700,000 loss [23] Question: Is the increase in real estate expenses due to seasonality, and should we expect REO sales in 2025? - Management indicated that the increase is primarily due to seasonality and expects to report on asset sales in the upcoming quarters [25] Question: How is the pipeline looking given recent market volatility? - Management reported a stronger pipeline than ever, with increased quoting of deals due to some lenders moving to the sidelines [26]