Acres Commercial Realty Corp (ACR) 2023 Q4 法說會逐字稿

Thank you. Good day, ladies and gentlemen, and welcome to the fourth-quarter and full-year 2023 ACRES Commercial Realty Corporation earnings conference call. (Operator Instructions) As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kyle Brengel, Vice President, Operations. You may begin.

謝謝。女士們、先生們，美好的一天，歡迎參加 ACRES Commercial Realty Corporation 2023 年第四季和全年財報電話會議。（操作員說明）謹此提醒，此通話正在錄音。現在我想介紹今天會議的主持人，營運副總裁凱爾布倫格爾 (Kyle Brengel)。你可以開始了。

Good morning, and thank you for joining our call. I would like to highlight that we have posted the fourth-quarter 2023 earnings presentation to our website. This presentation contains summary and detailed information about the quarterly and annual 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 年第四季的收益報告。本簡報包含有關公司季度和年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時，「相信」、「預期」、「預期」等詞語以及類似的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.

儘管公司認為這些前瞻性陳述是基於合理的假設，但此類陳述是基於管理層當前的預期和信念，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。看起來的陳述。

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 for the financial information presented in accordance with GAAP.

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。

Reconciliations 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 past quarter.

上一季的收益報告中包含了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。

With me on the call today are Mark Fogel, President and CEO; and Eldron Blackwell, ACR CFO. Also available for Q&A is Andrew Fentress, the 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)；和 ACR 財務長 Eldron Blackwell。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 Eldron Blackwell will discuss the financial statements, liquidity condition, book value, and operating results for the fourth-quarter and full-year 2023. 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 Eldron Blackwell 將討論 2023 年第四季和全年的財務報表、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.

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股東收益和帳面價值的成長，繼續執行我們的業務計劃。

Loan payoffs during the period were $98.3 million. We closed one new commitment of $29.7 million and net funded commitments during the quarter were $3.9 million, producing a net decrease to the loan portfolio of $64.7 million. The weighted average spread of the floating rate loans and the $1.9 billion commercial real estate loan portfolio is now 3.77% over the one-month benchmark rates.

期內貸款償還額為 9,830 萬美元。我們完成了 2,970 萬美元的新承諾，本季的淨融資承諾為 390 萬美元，導致貸款組合淨減少 6,470 萬美元。浮動利率貸款和 19 億美元商業房地產貸款組合的加權平均利差目前較 1 個月基準利率高出 3.77%。

The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. The company ended the year with $1.9 billion of commercial real estate loans across 70 individual investments. At December 31, there were 11 loans rated 4 or 5, which represented 16% of the par value of our portfolio, an increase of three loans and 8% of par value, respectively, as compared to the end of the third quarter of 2023.

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。截至年底，該公司在 70 項個人投資中提供了 19 億美元的商業房地產貸款。截至12月31日，評級為4或5的貸款有11筆，占我們投資組合面額的16%，與2023年第三季末相比，分別增加了三筆貸款和麵額的8% 。

Additionally, the weighted average risk rating increased from 2.6 at September 30, to 2.7 at December 31. This increase in weighted average risk rating is attributable to a combination of some properties falling slightly behind on implementing underwritten business plans and our overall capital market conditions. We continue to manage several investments in real estate and we expect to monetize that 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.

此外，加權平均風險評級從9月30日的2.6上升至12月31日的2.7。加權平均風險評級的上升是由於一些物業在實施承保業務計劃方面略顯落後以及我們的整體資本市場狀況所致。我們繼續管理多項房地產投資，並預計未來將這些收益貨幣化。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 continues to be focused on the overall quality of the investment portfolio, including investments in real estate, with the goal of improving credit quality and recycling capital into performing categories.

總之，ACRES 團隊繼續專注於投資組合的整體質量，包括房地產投資，目標是提高信貸品質並將資本回收到績效類別中。

We will now have ACR's CFO, Eldron Blackwell, discuss the financial statements and operating results during the fourth quarter.

我們現在請 ACR 財務長 Eldron Blackwell 討論第四季的財務報表和營運績效。

Thank you and good morning, everyone. GAAP net income allocable to common shares in the fourth quarter was $1.7 million or $0.20 per share. Included in net income is an increase to current expected credit losses or CECL reserves of $1.1 million or $0.13 per share as compared to CECL reserves during the third quarter of $2 million.

謝謝大家，早安。第四季可分配給普通股的 GAAP 淨利潤為 170 萬美元，即每股 0.20 美元。淨利潤包括當前預期信用損失或 CECL 準備金增加 110 萬美元或每股 0.13 美元，而第三季 CECL 準備金為 200 萬美元。

The fourth-quarter increase to general CECL reserves is primarily driven by model increases and general portfolio credit risk from sustained elevated benchmark interest rates, offset by model improvement and expected macroeconomic conditions affecting the general commercial real estate market.

第四季CECL一般準備金的增加主要是由模型增加和基準利率持續升高帶來的一般投資組合信用風險推動的，但被模型改善和影響一般商業房地產市場的預期宏觀經濟狀況所抵消。

The total allowance for credit losses at December 31 was $28.8 million, which represents 1.54% or 154 basis points of the $1.9 billion loan portfolio at par and comprised $4.7 million in specific reserves and $24.1 million in general credit reserves.

截至12 月31 日，信貸損失準備金總額為2,880 萬美元，佔面額19 億美元貸款組合的1.54%，即154 個基點，其中包括470 萬美元的特定準備金和2,410 萬美元的一般信貸準備金。

Turning to results from our real estate investments. Net loss from real estate investments increased to approximately $800,000 in the fourth quarter from approximately $400,000 in the third quarter. This was primarily due to the seasonality of hotel operations. Included in the fourth-quarter property operating loss was $1.2 million of non-cash depreciation and amortization. Earnings available for distribution or EAD for the fourth quarter was $0.55 per share as compared to $0.73 per share for the third quarter.

轉向我們的房地產投資的結果。房地產投資淨虧損從第三季的約 40 萬美元增加到第四季的約 80 萬美元。這主要是由於酒店運營的季節性所致。第四季的房地產營運虧損包括 120 萬美元的非現金折舊和攤提。第四季可供分配或 EAD 的收益為每股 0.55 美元，而第三季為每股 0.73 美元。

The difference being a $0.15 decline in net interest income from net payoffs and the impact of two nonperforming loans and $0.08 increase in G&A expenses, offset by a $0.05 reduction in management fees. GAAP book value per share was $26.65 on December 31 versus $25.07 on September 30. This increase was primarily due to our buyback program, which generated $1.32 of book value per share for the fourth quarter,

差異在於淨收益和兩筆不良貸款的影響導致的淨利息收入下降了 0.15 美元，一般管理費用增加了 0.08 美元，但被管理費減少了 0.05 美元所抵消。12 月 31 日的 GAAP 每股帳面價值為 26.65 美元，9 月 30 日為 25.07 美元。這一增長主要是由於我們的回購計劃，第四季度每股帳面價值為 1.32 美元，

We used $4.7 million of the share repurchase plan to redeem 601,000 common shares at an approximate 71% discount to book value at December 31. At quarter end, there was approximately $9.8 million remaining on the Board-approved program, which had been increased by $10 million by our Board during the fourth quarter.

我們使用 470 萬美元的股票回購計劃以較 12 月 31 日帳面價值約 71% 的折扣贖回 601,000 股普通股。截至季末，董事會批准的計畫剩餘約 980 萬美元，董事會在第四季增加了 1,000 萬美元。

Available liquidity at December 31 was $108 million, which comprised $83 million of unrestricted cash and $25 million of projected financing available on unlevered assets. We completed the reinvestment window in both of our CRE securitizations during 2024. Any loan payoffs in the securitizations will now pay down notes going forward.

截至 12 月 31 日，可用流動資金為 1.08 億美元，其中包括 8,300 萬美元的非限制性現金和 2,500 萬美元的無槓桿資產預計可用融資。我們在 2024 年完成了兩項 CRE 證券化的再投資窗口。證券化中的任何貸款償還現在都將用於償還未來的票據。

Our GAAP debt to equity leverage ratio slightly decreased to 3.8 times at December 31 from 3.9 times at September 30. Our recourse debt leverage ratio also slightly decreased to 1.1 times at December 31 from 1.2 times at September 30, primarily due to a reduction in our CRE loan book, offset by borrowings related to our development of a student housing project at Florida State University.

我們的 GAAP 債務股本槓桿率從 9 月 30 日的 3.9 倍小幅下降至 12 月 31 日的 3.8 倍。我們的追索權債務槓桿率也從9 月30 日的1.2 倍小幅下降至12 月31 日的1.1 倍，這主要是由於我們的CRE 貸款賬面減少，但被與佛羅裡達州立大學學生住房項目開發相關的借款所抵銷。

With that, I will now 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, Eldron. And I think as we all know, 2023 was a challenging year for the mortgage markets broadly. But looking into 2024, we see improvements as capital markets are reopening and asset level transactions are beginning again. As a firm, we remain focused on the credit quality of the portfolio. We're maximizing the value of our investments made to offset the company's NOLs, and we're continuing to serve the needs of our borrower clients.

謝謝你，艾爾德隆。我認為眾所周知，2023 年對於整個抵押貸款市場來說是充滿挑戰的一年。但展望 2024 年，隨著資本市場重新開放和資產層級交易重新開始，我們看到了改善。作為一家公司，我們仍然關注投資組合的信用品質。我們正在最大限度地提高投資價值，以抵消公司的 NOL，我們將繼續滿足借款客戶的需求。

This concludes our opening remarks, and I'll turn the call back over 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) Stephen Laws, Raymond James.

（操作員說明）Stephen Laws、Raymond James。

Hi, good morning. Appreciate the comments so far. Can you maybe talk a little bit more about what drove that increase in 4-rated loans? Is it discussions for borrowers at the asset-level performance nearing maturity dates? Kind of what drove that increase and how should we think about loan migration of roughly (inaudible)?

早安.感謝迄今為止的評論。您能否多談談推動 4 級貸款增加的原因？是否針對借款人在接近到期日時資產層級的表現進行討論？是什麼推動了這種增長以及我們應該如何考慮大約的貸款遷移（聽不清楚）？

Good morning, Steve. Thank you. This is Mark. We had four loans migrate into the 4 and 5 territory this quarter using our standards, our watchlist standards. I think it's more about some property level cash flows, less about the credit quality of the asset in general. And we feel really good about those assets. It's really just sort of a short-term hiccup on property operations. And just because deals flow into that 4 and 5 category does not mean that we expect a principal loss on those assets. In fact, one of our five assets was resolved in Q1 of this year with the recovery of our entire full principal balance.

早安，史蒂夫。謝謝。這是馬克。本季度，我們有四筆貸款使用我們的標準（我們的觀察名單標準）遷移到了 4 和 5 區域。我認為這與某些房地產層面的現金流有關，而不是與整體資產的信用品質有關。我們對這些資產感覺非常好。這其實只是房地產營運的短期問題。僅僅因為交易流入第 4 類和第 5 類並不意味著我們預期這些資產會出現本金損失。事實上，我們的五項資產中的一項已在今年第一季解決，並收回了全部本金餘額。

I appreciate the comments on that. And then, Mark, maybe to follow up on your comments in the prepared remarks around some point monetizing the constant investments in recycling and the use of cash flowing and CRE loan investments. How do you think about the timing of that, any asset queued up there maybe do that [with sooner rather than later]?

我很欣賞對此的評論。然後，馬克，也許會跟進您在準備好的評論中的評論，圍繞將回收方面的持續投資貨幣化以及現金流和商業房地產貸款投資的使用進行貨幣化。您如何看待這個時機，排隊的任何資產都可能會這樣做[宜早不宜遲]？

Stephen, we have some visibility on two of those assets. There's no certainty around those right now, but they're sort of getting to the point that which we expected to monetize. But at this juncture, we have no visibility on the timing of that.

史蒂芬，我們對其中兩項資產有一定的了解。目前還沒有確定性，但它們已經達到了我們期望貨幣化的程度。但目前，我們還不清楚具體時間。

Okay. And then lastly, the stock repurchases were very accretive during the quarter. Can you talk about how you gave there any authorization, but then continued appetite for that versus hospital reinstating the dividend or possibly them or kind of how do you think about returning [acquisition this year]?

好的。最後，本季的股票回購非常增值。你能談談你是如何給予那裡任何授權的，但隨後對此的持續興趣與醫院恢復股息或可能是他們或你如何考慮返回【今年收購】？

Hey, Stephen. This is Andrew. So I think as we've said in the past, we're really focused. So as the stock continues to rally, that gap gets narrowed and it will be more favorable to deploy capital into the loan book and ultimately begin returning capital to shareholders through dividends. So we took advantage of some pretty meaningful discounts.

嘿，史蒂芬。這是安德魯。所以我認為正如我們過去所說的，我們真的很專注。因此，隨著股價繼續上漲，這一差距將縮小，將資本投入貸款帳簿並最終開始透過股息將資本返還給股東將更加有利。所以我們利用了一些相當有意義的折扣。

There were some block volume that were presented to us in the late part of the fourth quarter that we took advantage of because we felt the discount was just significantly attractive. I don't know if we're going to see those again at those levels -- hopefully not. But that's our plan as we think about managing shareholder capital and returns of capital to shareholders.

我們利用了第四季末出現的一些批量交易量，因為我們認為折扣非常有吸引力。我不知道我們是否會再次看到這樣的水平——希望不會。但這就是我們的計劃，因為我們考慮管理股東資本和股東資本回報。

Appreciate the comments this morning and congrats on a nice quarter.

感謝今天早上的評論，並祝賀這個季度的美好表現。

Chris Muller, Citizens JMP Securities.

Chris Muller，JMP 證券公民。

Thanks for taking the question. I want to echo Stephen's comments there. It's great to see those buybacks, a nice book value accretion. So I just wanted to hit on the dividend a little bit here. Do you guys think that that's a 2024 event? Or is that going to be more 2025 after you get some of the REO off the books and start getting some new loans coming in here? I guess what's -- how do you guys view a new loan originations versus dividends? And just the whole capital deployment picture in this current environment? Thanks.

感謝您提出問題。我想回應史蒂芬的評論。很高興看到這些回購，帳面價值大幅增加。所以我只想在這裡談股息。你們認為這是 2024 年的活動嗎？或者，在您將一些 REO 記入帳簿並開始獲得一些新貸款之後，這會是 2025 年嗎？我想你們如何看待新貸款發放和股利？以及當前環境下的整個資本部署情況？謝謝。

Yes. So again, when we deploy new dollars in the loan book, our objectives are for roughly a 15% return on equity. So that's the calculus that goes through our deployment lens, and we think about that in the context of repurchasing shares as well. So at the levels that we were repurchasing in the fourth quarter, you can do the math that we're significantly above that 15% ROE number. So that's why we were happy to return capital to shareholders through repurchases that we did in the Q4.

是的。因此，當我們在貸款帳簿中配置新資金時，我們的目標是獲得約 15% 的股本回報率。這就是我們部署鏡頭中的計算，我們也在回購股票的背景下考慮這一點。因此，按照我們第四季回購的水平，您可以計算出我們的 ROE 數字明顯高於 15%。這就是為什麼我們很高興透過第四季的回購向股東返還資本。

As it relates to the timing of the dividend, we have not given guidance as to specifically when that will occur. I would tell you that as Mark indicated, our objectives are to monetize some of the investments that the company made to offset the NOL this year. And as those monetizations occur, the capital will be able to be redeployed back into the loan book and drive additional EAD or earnings available for distribution.

由於它與股利的發放時間有關，我們尚未就具體何時發放股利給予指引。我想告訴你，正如馬克指出的那樣，我們的目標是將公司今年為抵消 NOL 所做的一些投資貨幣化。隨著這些貨幣化的發生，資本將能夠重新部署回貸款帳戶，並推動額外的 EAD 或可用於分配的收入。

Another one of our stated objectives is to have an EAD that roughly equates to a 10% dividend at book value. We think that dividend is roughly competitive with the market and our peers. And so those are the metrics that we're using internally to think about monetizing assets, returning capital into loan book, and then ultimately having EAD capacity to pay at a common dividend.

我們既定的另一個目標是 EAD 大致相當於帳面價值 10% 的股利。我們認為股息與市場和同業相比大致具有競爭力。因此，這些是我們在內部使用的衡量標準，用於考慮資產貨幣化、將資本返還到貸款帳簿中，以及最終使 EAD 有能力支付共同股息。

Got it. That context is helpful. And then I guess -- so in the deck, you guys put a slide in there with interest rate cap maturities, and I think that's very helpful. And so it looks like you have a big chunk of maturities come in the next -- interest rate cut maturity to be clear, in the next couple of quarters. I guess how are conversations going with those borrowers? And do you expect broadly most of the borrowers to be able to replace those caps in this current rate environment?

知道了。這種背景很有幫助。然後我想——所以在甲板上，你們放了一張利率上限到期日的幻燈片，我認為這非常有幫助。因此，看起來接下來會有很大一部分到期——降息到期將在接下來的幾季內明確。我想與那些借款人的對話進行得怎麼樣？您是否預期大多數借款人能夠在當前利率環境下取代這些上限？

We're getting ahead a bit obviously. We're having conversations early on, six months in advance of those interest rate cap maturities. For the most part, I think our borrowers are replacing the cash no issues. Obviously, there's conversations around structure. Some wish to potentially create some interest reserves in lieu of caps.

我們明顯領先了一點。我們正在儘早進行對話，在利率上限到期之前六個月。在大多數情況下，我認為我們的借款人更換現金沒有任何問題。顯然，存在著圍繞結構的對話。有些人希望建立一些利息儲備來代替上限。

But generally speaking, our borrowers have a lot of equity invested in these assets and there's a lot of upside related to the majority of our assets. So they're sticking by their assets; they're investing in the caps. And I would say that the majority of the conversations have been very positive.

但總的來說，我們的借款人在這些資產上投資了大量股權，而且我們的大部分資產都有很大的上升空間。所以他們堅持自己的資產；他們正在投資上限。我想說，大多數對話都是非常正面的。

Got it. Thanks for taking the questions. And congrats on a strong finish to the year.

知道了。感謝您提出問題。並祝賀今年圓滿成功。

Thank you.

謝謝。

This concludes our question-and-answer session and the fourth-quarter and full-year 2023 ACRES Commercial Realty Corp. earnings conference call. Thank you for attending today's presentation. You may now disconnect.

我們的問答環節以及 ACRES Commercial Realty Corp. 2023 年第四季和全年財報電話會議到此結束。感謝您參加今天的演講。您現在可以斷開連線。