ACRES Commercial Realty(US:ACR)2025-07-31 15:00Financial Data and Key Metrics Changes - GAAP net loss allocable to common shares for Q2 2025 was $732,000, translating to a loss of $0.10 per diluted share, which included $8,600,000 in interest income, an increase of $3,000,000 from the prior quarter [10] - Earnings available for distribution (EAD) for Q2 2025 was $0.04 per share, compared to a loss of $0.86 per share in Q1 2025, reflecting a $0.40 increase in net interest income and a $0.26 increase from real estate operations [11] - GAAP book value per share decreased to $27.93 on June 30 from $28.50 on March 31 [11] Business Line Data and Key Metrics Changes - The company closed one new commitment of $72,000,000 with an unfunded commitment of $1,200,000, and funded existing loan commitments of $7,300,000, resulting in a net increase to the loan portfolio of $60,500,000 [6] - The commercial real estate loan portfolio totaled $1,400,000,000 across 48 individual investments, with a weighted average risk rating of 2.9 [7] Market Data and Key Metrics Changes - The total allowance for credit losses at June 30 was $30,300,000, representing 2.18 basis points on the $1,400,000,000 loan portfolio at par [11] - The weighted average spread of floating rate loans in the portfolio is now 3.65% over one-month term SOFR rates [6] Company Strategy and Development Direction - The company aims to grow the portfolio by $300,000,000 to $500,000,000 by the end of the year, which will include capital from loan payoffs and sales of REO properties [18] - The strategy includes optimizing portfolio leverage to drive equity returns and redeploying capital into attractive commercial real estate loans [8] Management's Comments on Operating Environment and Future Outlook - Management noted a stable credit picture and expressed confidence in the ability to achieve targeted returns on equity by focusing on specific asset classes [20] - The company plans to execute another CLO in the back half of the year, although specific timing remains uncertain [25] Other Important Information - The company used $5,100,000 to repurchase 272,000 common shares at an approximate 33% discount to book value [12] - Available liquidity at June 30 was $65,000,000, consisting of $43,000,000 in unrestricted cash and $22,000,000 in projected financing available on unlevered assets [12] Q&A Session Summary Question: Timing of payoffs and asset sales for capital redeployment - Management indicated a goal to grow the portfolio by $300,000,000 to $500,000,000 through payoffs and sales of REO properties [18] Question: Opportunities in the marketplace and guidance for spreads - Management acknowledged compressed spreads in certain sectors but expressed confidence in achieving targeted returns on equity by focusing on specific assets [20] Question: Thoughts on leverage and REO financing - Management stated they could increase leverage to around 3.5 to 4 turns using non-recourse CRE CLO financing, with current properties being levered at the asset level [23] Question: Plans for a CLO in the back half of the year - Management confirmed plans to execute another CLO, with timing likely in Q4 or Q1 [25] Question: Reinstating the dividend - Management indicated that reinstating the dividend would depend on monetizing assets and ramping the portfolio to target levels [27]