Acres Commercial Realty Corp (ACR) 2023 Q2 法說會逐字稿

Good day, and welcome to the ACRES Commercial Realty Corp. Second Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

美好的一天，歡迎參加 ACRES Commercial Realty Corp. 2023 年第二季財報電話會議。 （操作員說明）請注意，正在記錄此事件。

I would now like to turn the conference over to Kyle Brengel. Please go ahead.

我現在想把會議交給凱爾布倫格爾。請繼續。

Good morning, and thank you for joining our call. I would like to highlight that we have posted the second quarter 2023 earnings presentation to our website. This presentation contains summary and detailed information about the quarterly results of the company.

早安，感謝您加入我們的通話。我想強調的是，我們已在我們的網站上發布了 2023 年第二季的收益報告。本簡報包含有關公司季度業績的摘要和詳細資訊。

Before we begin, I want to remind everyone that certain statements made during this call are not based on historical information and may constitute forward-looking statements. When used in this conference call, the words believes, anticipates, expects and similar expressions are intended to identify forward-looking statements.

在開始之前，我想提醒大家，本次電話會議中所做的某些陳述並非基於歷史信息，可能構成前瞻性陳述。在本次電話會議中使用「相信」、「預期」、「預期」等字眼和類似表達方式旨在識別前瞻性陳述。

Although the company believes that these forward-looking statements are based on reasonable assumptions. Such statements are based on management's current expectations and beliefs and are subject to several trends, risks and uncertainties that could cause actual results to differ materially from those contained in forward-looking statements.

儘管該公司認為這些前瞻性陳述是基於合理的假設。此類陳述基於管理層目前的預期和信念，並受到多種趨勢、風險和不確定性的影響，這些趨勢、風險和不確定性可能導致實際結果與前瞻性陳述中包含的結果有重大差異。

These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Forms 8-K, 10-Q and 10-K, and in particular, the Risk Factors section of its Form 10-K. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update any of these forward-looking statements.

這些風險和不確定性在公司向 SEC 提交的報告中進行了討論，包括 8-K、10-Q 和 10-K 表的報告，特別是 10-K 表的風險因素部分。請聽眾不要過度依賴這些前瞻性陳述，這些陳述僅代表截至本新聞稿發布之日的情況。該公司不承擔更新任何這些前瞻性陳述的義務。

Furthermore, certain non-GAAP financial measures may be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute to the financial information presented in accordance with GAAP. Reconciliation of non-GAAP financial measures to the most comparable measures prepared in accordance with generally accepted accounting principles are contained in the earnings presentation for the quarter.

此外，本次電話會議可能會討論某些非公認會計準則財務措施。我們提供的這些資訊並非旨在被孤立地考慮或作為根據 GAAP 提供的財務資訊的替代品。非公認會計準則財務指標與根據公認會計原則編制的最具可比性指標的調節表包含在本季度的收益報告中。

With me on the call today are Mark Fogel, President and CEO; and Dave Bryant, ACR's CFO. Also available for Q&A is Andrew Fentress, Chairman of ACR.

今天與我一起參加電話會議的是總裁兼執行長馬克‧福格爾 (Mark Fogel)；以及 ACR 財務長 Dave Bryant。 ACR 主席 Andrew Fentress 也參與了問答。

I will now turn the call over to Mark.

我現在將把電話轉給馬克。

Good morning, everyone, and thank you for joining our call. Today, I will provide an overview of our loan originations, real estate investments and the health of the investment portfolio, while Dave Bryant will discuss the financial statements, liquidity condition book value and operating results for the second quarter. Of course, we look forward to your questions at the end of our prepared remarks.

大家早安，感謝您加入我們的通話。今天，我將概述我們的貸款發放、房地產投資和投資組合的健康狀況，而戴夫布萊恩特將討論第二季度的財務報表、流動性狀況帳面價值和營運績效。當然，我們期待您在我們準備好的演講結束時提出問題。

The ACRES team continues to execute on our business plan by selectively originating high-quality investments, actively managing the portfolio and continuing to focus on growing earnings and book value for our shareholders. We originated one $22.5 million mixed-use loan commitments in the second quarter, which pays coupon interest at 1-month SOFR plus a spread of 6.25%.

ACRES 團隊透過選擇性地發起高品質投資、積極管理投資組合併持續專注於為股東增加收益和帳面價值，繼續執行我們的業務計劃。我們在第二季發放了一筆 2,250 萬美元的混合用途貸款承諾，以 1 個月 SOFR 支付票面利息，利差為 6.25%。

Loan payoffs during the period were $47.3 million, and net funded commitments during the quarter were $14.8 million, producing a net decrease to the portfolio of $10 million. The weighted average spread of the floating rate loans and the $2 billion commercial real estate loan portfolio increased to 3.94% over the 1-month benchmark rates.

該期間的貸款償還額為 4,730 萬美元，該季度的淨資助承諾為 1,480 萬美元，導致投資組合淨減少 1,000 萬美元。浮動利率貸款和20億美元商業房地產貸款組合的加權平均利差較1個月基準利率上升至3.94%。

During the quarter, we acquired an office property in Chicago via deed in lieu. At the time of the foreclosure, the asset was valued at $20.9 million. This property was classified as held for sale at June 30, 2023. We expect to maintain a commercial real estate investment portfolio including our loan book and real estate properties of $2 billion to $2.3 billion throughout 2023.

本季度，我們透過代替契據收購了芝加哥的一處辦公物業。喪失抵押品贖回權時，該資產的價值為 2,090 萬美元。該房產於 2023 年 6 月 30 日被歸類為持有待售。我們預計在 2023 年全年將維持商業房地產投資組合，包括我們的貸款帳簿和 20 億至 23 億美元的房地產。

The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. The company ended the quarter with $2 billion of commercial real estate loans across 78 individual investments.

該投資組合總體上繼續表現良好，表現出良好、一致的承保和積極主動的資產管理。截至本季末，該公司在 78 項個人投資中提供了 20 億美元的商業房地產貸款。

As of June 30, 2023, there were 5 loans rated 4 or 5, including 3 loans not current on contractual payments, representing 4.9% of the portfolio. This represents a slight decrease from March 31, 2023, at which there was also 5 loans rated 4 or 5 but represented 5% of the portfolio.

截至2023年6月30日，有5筆評級為4或5的貸款，其中包括3筆未按合約付款的貸款，佔投資組合的4.9%。這比 2023 年 3 月 31 日略有下降，當時還有 5 筆評級為 4 或 5 的貸款，但佔投資組合的 5%。

We continue to manage several investments in real estate that we expect to monetize at gains in the future. These anticipated gains will be offset by NOL carryforwards and we expect to retain the equity and reinvest potential gains into our loan portfolio.

我們持續管理多項房地產投資，預計未來將獲得收益。這些預期收益將被 NOL 結轉所抵消，我們預計將保留股權並將潛在收益再投資到我們的貸款組合中。

In summary, the ACRES team is pleased with the quality of the investment portfolio, including investments in real estate, along with the improved balance sheet profile and the prospects for new originations and capital depreciation going forward.

總而言之，ACRES 團隊對投資組合的品質（包括房地產投資）、資產負債表狀況的改善以及新創始和資本折舊的前景感到滿意。

We will now have ACR's CFO, Dave Bryant, discuss the financial statements and operating results during the second quarter of 2023.

我們現在將邀請 ACR 的財務長 Dave Bryant 討論 2023 年第二季的財務報表和營運績效。

Thank you, and good morning. GAAP net income allocable to common shares in the second quarter was $817,000 or $0.10 per share. Included in that net income is an increase to CECL reserves of $2.7 million or $0.31 per share as compared to CECL reserves during the first quarter of $5.1 million. CECL reserves this quarter are made up of $1.8 million in general reserve increases plus a charge-off of $948,000 upon taking the deed in lieu of foreclosure on the office property in Chicago.

謝謝你，早安。第二季分配給普通股的 GAAP 淨利潤為 817,000 美元，即每股 0.10 美元。淨利潤包括 CECL 儲備金增加 270 萬美元，即每股 0.31 美元，而第一季 CECL 儲備金為 510 萬美元。 CECL 本季的準備金包括 180 萬美元的一般準備金增加以及因簽訂芝加哥辦公物業取消抵押品贖回權契約而沖銷的 948,000 美元。

The second quarter increase to general reserves is primarily attributable to the expected negative impact of macroeconomic factors on the general economy. Those factors are partially offset by improvements in general portfolio credit risk.

第二季一般準備金增加主要是由於預期宏觀經濟因素對總體經濟產生負面影響。這些因素被整體投資組合信用風險的改善所部分抵銷。

The total allowance for credit losses at June 30 was $25.7 million, which represents 1.3% or 130 basis points of the $2 billion loan portfolio at par and comprised $4.7 million in specific reserves and $21 million in general credit reserves. EAD, or our earnings available for distribution for the second quarter was $0.60 per share, which compared favorably to $0.52 per share in the first quarter.

截至6 月30 日，信貸損失準備金總額為2,570 萬美元，佔面額20 億美元貸款組合的1.3%，即130 個基點，其中包括470 萬美元的特定準備金和2,100 萬美元的一般信貸準備金。 EAD，即我們第二季度可供分配的收益為每股 0.60 美元，相比第一季的每股 0.52 美元要好。

GAAP book value per share was $24.50 on June 30 versus $24.51 on March 31. Available liquidity at June 30, 2023 was $91 million, which comprised $57 million of unrestricted cash, $20 million of projected financing available on an unlevered assets and $14 million of reinvestment cash available in a CRE securitization.

6 月30 日的GAAP 每股帳面價值為24.50 美元，而3 月31 日為24.51 美元。截至2023 年6 月30 日的可用流動資金為9,100 萬美元，其中包括5,700 萬美元的非限制性現金、 2,000 萬美元的無槓桿資產預計可用融資以及1,400 萬美元的再投資CRE 證券化中的可用現金。

GAAP debt-to-equity leverage ratio decreased to 3.9x on June 30, 2023 from 4.1x on March 31, 2023. Our recourse debt leverage ratio also decreased to 1.2x on June 30 from 1.3x on March 31. The decrease to the leverage and recourse debt leverage ratios were primarily due to decreased borrowings on our bank term facilities.

GAAP 債務股本槓桿率從2023 年3 月31 日的4.1 倍降至2023 年6 月30 日的3.9 倍。我們的追索權債務槓桿率也從3 月31 日的1.3 倍降至6 月30 日的1.2 倍。槓桿率和追索權債務槓桿率主要是由於我們的銀行定期融資借款減少所致。

Turning to results from our real estate investments. Net loss from real estate investments decreased to $1.6 million in the second quarter of 2023 from $1.8 million in the first quarter 2023. During the second quarter, we incurred $1 million of property tax arrearages on the asset that we acquired via deed in lieu of foreclosure. Included in the second quarter property operating loss was approximately $946,000 of noncash depreciation and amortization.

轉向我們的房地產投資的結果。房地產投資的淨虧損從2023 年第一季的180 萬美元降至2023 年第二季的160 萬美元。第二季度，我們透過取代喪失抵押品贖回權的契約獲得的資產拖欠了100 萬美元的財產稅。第二季的財產營運損失包括約 946,000 美元的非現金折舊和攤提。

Focusing on G&A. The second quarter 2023 expense of $2.3 million versus first quarter 2023 expense of $3 million reflects seasonality in quarterly G&A primarily due to the incurrence of the year-end audit expense, which amounted to approximately $600,000 in the first quarter. Our annual G&A expense projection remains unchanged.

專注於一般行政費用。 2023 年第二季的費用為230 萬美元，而2023 年第一季的費用為300 萬美元，反映了季度一般管理費用的季節性，主要是由於年終審計費用的產生，第一季的費用約為60 萬美元。我們的年度一般及行政費用預測維持不變。

Regarding share repurchases, during the second quarter, we used $1.2 million of the share repurchase plan to redeem 135,000 shares at an approximate 64% discount to book value on June 30. There was approximately $5.3 million remaining on the Board-approved program at quarter end.

關於股票回購，在第二季度，我們使用了120 萬美元的股票回購計劃，以6 月30 日賬面價值約64% 的折扣贖回了135,000 股股票。截至季度末，董事會批准的計劃還剩約530 萬美元。 。

With respect to full year 2023 guidance, we still expect EAD in a range of $1.75 and $2.25, which if paid as a cash dividend would represent 7% to 9% of book value, approximately in line with the peer group. In addition, we still expect GAAP EPS of $0.75 to $1.25 per share.

就 2023 年全年指引而言，我們仍預期 EAD 在 1.75 美元至 2.25 美元之間，如果以現金股利支付，則將佔帳面價值的 7% 至 9%，與同業大致持平。此外，我們仍預期 GAAP 每股收益為 0.75 美元至 1.25 美元。

Now I will turn the call to Andrew Fentress for closing remarks.

現在我將請安德魯芬特雷斯 (Andrew Fentress) 致閉幕詞。

Thank you, Dave. As you're all aware, the environment for the mortgage REIT sector remains challenging. The ACRES team is focused on managing a high-quality portfolio that is primarily invested in multifamily assets throughout the United States. Fundamentals remain strong in this segment as low levels of unemployment, strong demographic trends continue to drive low vacancy and positive rent growth.

謝謝你，戴夫。眾所周知，抵押房地產投資信託行業的環境仍然充滿挑戰。 ACRES 團隊專注於管理高品質的投資組合，該投資組合主要投資於美國各地的多戶資產。由於低失業率、強勁的人口趨勢持續推動低空置率和積極的租金成長，該領域的基本面依然強勁。

We're mindful of the margin pressures our sponsors are facing given higher cost of capital and other inputs. Credit quality on our portfolio remains stable, and we're actively monitoring for any early signs of weakness. Our long-run mission remains unchanged, namely to deliver value to our shareholders through increasing earnings and book value over time.

由於資本和其他投入成本較高，我們注意到贊助商面臨的利潤壓力。我們投資組合的信貸品質保持穩定，我們正在積極監控任何早期疲軟跡象。我們的長期使命保持不變，即透過隨著時間的推移增加收益和帳面價值為股東創造價值。

This concludes our opening remarks, and I'll turn the call back to the operator for questions.

我們的開場白到此結束，我會將電話轉回給接線生詢問問題。

(Operator Instructions) Our first question comes from Chris Muller with JMP Securities.

（操作員指令）我們的第一個問題來自 JMP 證券的 Chris Muller。

So I want to talk about spreads on your new originations. Looking at the last couple of quarters, there's been a nice steady trend of improvements there. So I guess the question is, is this something that you guys are seeing more broadly? Or are the loans that you guys are originating more the outliers in the group?

所以我想談談你們新產品的利差。看看過去幾個季度，出現了良好的穩定改善趨勢。所以我想問題是，這是你們更廣泛看到的嗎？或者你們所發放的貸款是否屬於該組中的異常值？

Mark, can you take the call?

馬克，你能接電話嗎？

Sure. Yes, there are opportunities to invest in loans with some higher spreads in the market today. Frankly, we're really focused more on high credit quality, good sponsorship in markets in which we believe. So a couple of those deals were just sort of outliers, and they're good assets where we were able to gain good spread. But for the most part, our real focus on originations going forward is to ensure that we have high credit quality assets coming into the portfolio, good sponsorship, strong LTVs and in markets that are highly liquid.

當然。是的，當今市場上有投資利差較高的貸款的機會。坦白說，我們確實更關注我們所相信的市場的高信用品質和良好贊助。因此，其中一些交易只是異常值，它們是我們能夠獲得良好利差的優質資產。但在大多數情況下，我們對未來發起的真正關注是確保我們的投資組合中擁有高信用品質的資產、良好的贊助、強大的生命週期價值以及高流動性的市場。

Got it. And being able to check all those boxes is obviously the best case scenario. So the other question I have is on the share repurchases. So it's nice to see some repurchases in the quarter, especially with where you guys are trading at book to book. But can you talk about how you guys think about or how the Board thinks about further buybacks versus originating new loans, even if you're cherry picking some of those better opportunities?

知道了。能夠勾選所有這些框顯然是最好的情況。我的另一個問題是關於股票回購。因此，很高興看到本季出現一些回購，尤其是在你們逐筆交易的情況下。但是，您能否談談您如何看待或董事會如何看待進一步回購與發放新貸款，即使您正在挑選一些更好的機會？

Yes, this is Andrew. So the way we think about the share repurchases is as long as we're wider than a 15% return on equity, we're going to allocate -- we're going to continue to allocate a portion of our liquidity to share repurchases. And given the discount that's available today, we're over that 15% ROE target. So we're going to -- we have an authorized $20 million share repurchase that has about $5 million left on it. And as long as we're trading at the ranges that the stock is today, I think we'll continue to utilize the remaining $5 million and then reevaluate.

是的，這是安德魯。因此，我們考慮股票回購的方式是，只要股本回報率超過 15%，我們就會進行分配——我們將繼續將部分流動性分配給股票回購。考慮到今天提供的折扣，我們已經超過了 15% 的 ROE 目標。因此，我們將授權進行價值 2,000 萬美元的股票回購，目前還剩約 500 萬美元。只要我們的交易價格處於目前股票的範圍，我認為我們將繼續利用剩餘的 500 萬美元，然後重新評估。

Ladies and gentlemen, this concludes our question-and-answer session for today. I would like to turn the conference back over to Andrew Fentress for any closing remarks.

女士們、先生們，今天的問答環節到此結束。我想將會議轉回安德魯·芬特雷斯（Andrew Fentress）發表閉幕詞。

Thanks, everyone, for joining, and we appreciate the attendance and the questions, and we look forward to speaking with you again next quarter. Thank you very much.

感謝大家的加入，我們感謝大家的出席和提問，我們期待下個季度再次與您交談。非常感謝。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。