ACRES Commercial Realty Corp. Q4 FY2024 earnings call

• Loan operations: Loan payoffs were $107.5 million, closed new commitment of $47.9 million, unfunded commitment $28.4 million, funded existing loans $6.2 million, net reduction of loan portfolio $81.8 million. Weighted average spread of floating rate loans in $1.5 billion portfolio is 3.73% over one-month term SOFR rates. - Real estate investments: Sold office property for $7.5 million gain, sold underperforming hotel loan, student housing development at 95% occupancy. - Financials: GAAP net income allocable to common shares in Q4 was $4.1 million or $0.52 per share diluted. Earnings available for distribution (EAD) for Q4 2024 was $0.48 per share. Operating GAAP book value per share was $28.87 on Dec 31st. - Share buyback: Purchased $2.3 million from previous repurchase plan, board approved additional $5 million, used $2.5 million to repurchase 155,000 common shares. - Liquidity: Available liquidity at Dec 31st was $76.9 million, comprised $56.7 million of unrestricted cash and $20.2 million of projected financing available on unlevered assets. - Leverage: GAAP debt to equity leverage ratio slightly decreased to three times at Dec 31st from 3.3 times at Sep 30th.

Loan operations: Loan payoffs during the period were $107.5 million. Closed one new commitment of $47.9 million, an unfunded commitment of $28.4 million, and funded existing loan commitments during the quarter of $6.2 million, producing a net reduction of the loan portfolio of $81.8 million. The weighted average spread of the floating rate loans in the $1.5 billion commercial real estate loan portfolio is now 3.73% over one-month term SOFR rates. Real estate investments: Sold an office property in Pennsylvania for a gain of $7.5 million in the period. Sold a loan on an underperforming hotel in Orlando in January. A student housing development at Florida State University opened in August 2024 at 95% occupancy. Working on liquidation of two CRE securitizations structured in 2021. Revenue contribution: Loan operations and real estate investments are the main segments, with loan portfolio being a significant part at $1.5 billion.

• Loan portfolio growth: Expect portfolio to be in the range of $1.8 billion to $2 billion by end of the year, up from $1.5 billion currently. - CLO structure: New structures will include a revolving period of at least twenty-four months. - Real estate gains realization: Most of the real estate related gains realization will be largely completed in 2025.

• Forward-looking statements are subject to several trends, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's reports filed with the SEC. - When refinancing the CRE CLOs in Q1 2025, there will be a one-time charge related to $2.3 million of unamortized debt issuance cost.

Q: Looking at slide eight, expecting over $100 million in payoffs from fully extended loans, do you expect additional payoffs from two-rated loans and guidance on portfolio growth?

A: We do expect more payoffs on some of the higher-rated loans. Anticipate higher level of payoff as properties stabilize and bridge loan market available for refinancing, and expect to roll those back into loan book quickly. Ultimately expect portfolio to be in range of $1.8 billion to $2 billion by end of the year.

Q: Regarding rest of REO, expecting gains near what was seen on office sale and timeline?

A: Been purposely careful not guiding specifically, but believe there will be future gains and capital will be recycled into loan book. Mostly completed in 2025.

Q: Increase in real estate expenses quarter over quarter, include selling costs or other?

A: For the most part, there are cleanup items, one-time items, and not expecting to see those kinds of expenses in 2025, mostly cleanup related as new managers hit properties to understand stabilized cost structures