ACRES Commercial Realty Reports $9.1 Million Net Income for 2024, Driven by Increased Interest Income

ACRES Commercial Realty Corp. (ACRES) reported net income allocable to common shares of $9.1 million, or $1.19 per basic share ($1.15 diluted), for the year ended December 31, 2024, compared to $3.0 million, or $0.35 per share (basic and diluted), in 2023. This increase is largely attributable to a rise in net interest income, driven by increases in benchmark interest rates, partially offset by a decrease in interest income from CRE whole loans due to loan payoffs and foreclosures. Real estate income and other revenue also increased by $7.9 million, primarily due to increased revenues from several properties. Operating expenses increased by $1.4 million, mainly due to higher real estate expenses and a decrease in the provision for credit losses.

The company's CRE loan portfolio decreased from a carrying value of $1.8 billion in 2023 to $1.5 billion in 2024, primarily due to loan payoffs and foreclosures, partially offset by new loan originations and funded commitments. At year-end 2024, the portfolio consisted primarily of first mortgage loans (whole loans), with a weighted average spread of 3.73% over one-month benchmark interest rates and a weighted average floor of 0.97%. 74.7% of the portfolio's par value had interest rate caps or funded debt service reserves in place, mitigating interest rate risk. The portfolio is diversified across property types, with multifamily comprising 77.4% of the carrying value, and geographically, with no single region exceeding 25% of the portfolio's carrying value.

During 2024, ACRES selectively originated one CRE loan with a total commitment of $47.9 million. The company also acquired several properties through foreclosure or deed-in-lieu of foreclosure, some of which were immediately contributed to joint ventures. One office property was sold for $20.0 million, resulting in a net gain of $7.5 million. The company's total net real estate-related assets and liabilities had a carrying value of $176.6 million at year-end 2024. The company's financing arrangements included CRE debt securitizations, term warehouse financing facilities, a senior secured financing facility, mortgages payable, and senior unsecured notes. The company was in compliance with all financial covenants at year-end 2024.

The company's common stock book value increased to $28.87 per share at December 31, 2024, an 8% increase from the previous year. No common share distributions were paid in 2024 due to a focus on retaining liquidity, but the company intends to resume common share distributions in the future, subject to earnings, financial condition, and other factors. The company's tax loss carryforwards, including $32.1 million in NOL carryforwards and $121.9 million in net capital loss carryforwards, will be utilized to support future growth. The company has no direct employees, relying instead on its manager, ACRES Capital, LLC, for all personnel and services.

Looking ahead, ACRES expects to modestly increase leverage through new CRE debt securitizations and continued use of existing financing facilities. The company will continue to monitor compliance with REIT requirements and its exclusion from regulation under the Investment Company Act. The company acknowledges various risks, including those related to economic conditions, financing, operations, investments, its manager, its organizational structure, and tax matters, as detailed in the filing's "Risk Factors" section. The company also notes that its financial performance is significantly influenced by interest rates and other macroeconomic factors.