ACRES Commercial Realty Reports Mixed Q3 Results, Net Income Up Despite Revenue Decline

ACRES Commercial Realty Corp. reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.

For the three months ended September 30, 2024, total revenues decreased to $22.4 million from $24.0 million in the same period of 2023. This decline was primarily driven by a reduction in total interest income, which fell to $39.3 million from $48.2 million year-over-year. Net interest income also decreased to $10.5 million from $14.7 million. Despite these declines, net income increased to $8.1 million, up from $7.6 million in the prior year, resulting in a net income per common share of $0.37, compared to $0.34 in 2023.

For the nine months ended September 30, 2024, total revenues were $62.1 million, down from $68.7 million in 2023. Net income for this period rose to $19.4 million from $15.4 million, with net income per common share increasing to $0.65 from $0.15. The increase in net income was attributed to improved performance in real estate income, which rose to $29.4 million from $25.3 million, driven by new acquisitions and increased occupancy rates.

The company’s total assets decreased to $2.0 billion as of September 30, 2024, from $2.2 billion at the end of 2023. This decline was largely due to a reduction in commercial real estate (CRE) loans, which fell to $1.6 billion from $1.9 billion. The company also reported a significant increase in properties held for sale, which rose to $200.2 million from $62.6 million.

Strategically, ACRES Commercial Realty did not originate any new floating-rate CRE loans during the nine months ended September 30, 2024, and experienced a net decrease in its loan portfolio due to $270.1 million in loan payoffs and $37.7 million in foreclosures. The company’s allowance for credit losses increased to $34.7 million, reflecting the impact of macroeconomic factors and heightened credit risks in the commercial real estate sector.

In terms of financing, total borrowings decreased to $1.5 billion from $1.7 billion, with a notable reduction in CRE debt securitizations. The company maintained compliance with all financial covenants and reported a leverage ratio of 3.3 times as of September 30, 2024, down from 3.8 times at the end of 2023.

Overall, ACRES Commercial Realty Corp. navigated a challenging market environment characterized by rising interest rates and inflation, while focusing on maintaining liquidity and managing its investment portfolio effectively.