ACRES Commercial Realty Corp. Files Q3 2024 10-Q

TL;DR

**ACRES Commercial Realty Corp. (ACR) filed its Q3 2024 10-Q. REIT financials are now public.**

AI Summary

ACRES Commercial Realty Corp. filed its 10-Q for the period ending September 30, 2024. The company, formerly known as Exantas Capital Corp. and Resource Capital Corp., is a Real Estate Investment Trust. Its principal business address is 390 RXR Plaza, Uniondale, NY 11556.

Why It Matters

This filing provides investors with the latest financial performance and operational details of ACRES Commercial Realty Corp., a REIT, impacting their investment decisions.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing (10-Q) and does not inherently present new risks beyond those typical for a publicly traded company.

Key Numbers

• 124 — Public Document Count (Indicates the number of documents included in the filing.)
• 20240930 — Conformed Period of Report (The end date of the reporting period for this 10-Q filing.)
• 20241106 — Filed as of Date (The date the filing was officially submitted to the SEC.)

Key Players & Entities

• ACRES Commercial Realty Corp. (company) — Filer
• Exantas Capital Corp. (company) — Former Company Name
• Resource Capital Corp. (company) — Former Company Name
• 0000950170-24-122460 (other) — Accession Number
• 20240930 (date) — Reporting Period End Date
• 20241106 (date) — Filing Date
• 390 RXR Plaza, Uniondale, NY 11556 (address) — Business Address

FAQ

Key Financial Figures

• $0.001 — nge on which registered Common Stock, $0.001 par value ACR New York Stock Exchan
• $6 — tember 30, 2024 and December 31, 2023 , $6 6.8 million and $ 81.1 million, respect

Filing Documents

• acr-20240930.htm (10-Q) — 6128KB
• acr-ex31_1.htm (EX-31.1) — 13KB
• acr-ex31_2.htm (EX-31.2) — 13KB
• acr-ex32_1.htm (EX-32.1) — 8KB
• acr-ex32_2.htm (EX-32.2) — 8KB
• acr-ex99_2.htm (EX-99.2) — 76KB
• img82333635_0.jpg (GRAPHIC) — 14KB
• img82333635_1.jpg (GRAPHIC) — 54KB
• img82333635_2.jpg (GRAPHIC) — 57KB
• 0000950170-24-122460.txt ( ) — 22351KB
• acr-20240930.xsd (EX-101.SCH) — 2592KB
• acr-20240930_htm.xml (XML) — 4680KB

Financial Statements

Financial Statements 3 Consolidated Balance Sheets – September 30, 2024 (unaudited) and December 31, 2023 3 Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023 5 Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, 2024 and 2023 6 Consolidated Statements of Changes in Equity (unaudited) for the Three Months Ended March 31, 2024 and 2023 and June 30, 2024 and 2023 and September 30, 2024 and 2023 7 Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2024 and 2023 9

Notes to Consolidated Financial Statements – September 30, 2024 (unaudited)

Notes to Consolidated Financial Statements – September 30, 2024 (unaudited) 10 Item 2:

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 41 Item 3:

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 75 Item 4:

Controls and Procedures

Controls and Procedures 77 PART II 78 Item 1:

Legal Proceedings

Legal Proceedings 78 Item 1A:

Risk Factors

Risk Factors 78 Item 2: Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 78 Item 5: Other Information 79 Item 6: Exhibits 80

SIGNATURES

SIGNATURES 84 (Back to Index) (Back to Index) PART I

FINANCI AL STATEMENTS

ITEM 1. FINANCI AL STATEMENTS ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES CONSOLIDATED B ALANCE SHEETS (in thousands, except share and per share data) September 30, 2024 December 31, 2023 (unaudited) ASSETS (1) Cash and cash equivalents $ 70,074 $ 83,449 Restricted cash 961 8,437 Accrued interest receivable 13,944 11,783 CRE loans 1,580,516 1,857,093 Less: allowance for credit losses ( 34,699 ) ( 28,757 ) CRE loans, net 1,545,817 1,828,336 Principal paydowns receivable 24,445 — Loan receivable - due from Manager 10,750 10,975 Investments in unconsolidated entities 22,036 1,548 Properties held for sale 200,194 62,605 Investments in real estate 89,379 157,621 Right of use assets 19,613 19,879 Intangible assets 7,152 7,882 Other assets 5,971 3,590 Total assets $ 2,010,336 $ 2,196,105 LIABILITIES (2) Accounts payable and other liabilities $ 16,421 $ 13,963 Management fee payable - related party 540 584 Accrued interest payable 4,867 8,459 Borrowings 1,489,229 1,676,200 Lease liabilities 44,739 44,276 Distributions payable 3,740 3,262 Accrued tax liability 735 121 Liabilities held for sale 3,173 3,025 Total liabilities 1,563,444 1,749,890 EQUITY Preferred stock, par value $ 0.001 : 10,000,000 shares authorized 8.625 % Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock, liquidation preference $ 25.00 per share; 4,800,000 and 4,800,000 shares issued and outstanding 5 5 Preferred stock, par value $ 0.001 : 6,800,000 shares authorized 7.875 % Series D Cumulative Redeemable Preferred Stock, liquidation preference $ 25.00 per share; 4,507,857 and 4,607,857 shares issued and outstanding 5 5 Common stock, par value $ 0.001 : 41,666,666 shares authorized; 7,789,217 and 7,878,216 shares issued and outstanding (including 574,538 and 416,675 unvested restricted shares) 8 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2024 (unaudited) NOTE 1 - ORGANIZATION ACRES Commercial Realty Corp., a Maryland corporation, along with its subsidiaries (collectively, the "Company"), is a real estate investment trust ("REIT") that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. The Company's manager is ACRES Capital, LLC (the "Manager"), a subsidiary of ACRES Capital Corp. (collectively, "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial property in top United States ("U.S.") markets. The Company has qualified, and expects to qualify in the current fiscal year, as a REIT. The Company conducts its operations through the use of subsidiaries that it consolidates into its financial statements. The Company's core assets are consolidated through its investment in ACRES Realty Funding, Inc. ("ACRES RF"), a wholly-owned subsidiary that holds CRE loans, investments in commercial real estate properties and investments in CRE securitizations, which are consolidated as variable interest entities ("VIEs") as discussed in Note 3. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. ("GAAP"). In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments necessary to fairly present the Company's financial position, results of operations and cash flows. Principles of Consolidation The consolidated financial statements include the accounts of the Company, majority-owned or controlled subsidiaries and VIEs for which

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) September 30, 2024 (unaudited) The following table provides a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to the total amount shown on the consolidated statements of cash flows (in thousands): September 30, 2024 2023 Cash and cash equivalents $ 70,074 $ 64,440 Restricted cash 961 35,876 Total cash, cash equivalents and restricted cash shown on the Company's consolidated statements of cash flows $ 71,035 $ 100,316 Investments in Real Estate The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows: Category Term Building 35 to 40 years Building improvements 8 to 35 years Site improvements 10 years Tenant improvements Shorter of lease term or expected useful life Furniture, fixtures and equipment 3 to 12 years Right of use assets 7 to 94 years Intangible assets 90 days to 18 years Lease liabilities 7 to 94 years Income Taxes The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $ 21.4 million ) at September 30, 2024 , as the Company believes it is more likely than not that the deferred tax assets will not be realized. This assessment was based on the Company's cumulative historical losses and uncertainties as to the amount of taxable income that would be generated in future years by the Company's taxable REIT subsidiaries. Earnings per Share The Company presents both basic and diluted earnings per share ("EPS"). Basic EPS excludes dilution and is computed by dividing net income (loss) allocable to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into com

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) September 30, 2024 (unaudited) NOTE 3 - VARIABLE INTEREST ENTITIES The Company has evaluated its loans, investments in unconsolidated entities, liabilities to subsidiary trusts issuing preferred securities (consisting of unsecured junior subordinated notes), securitizations, guarantees and other financial contracts in order to determine if they are variable interests in VIEs. The Company regularly monitors these legal interests and contracts and, to the extent it has determined that it has a variable interest, analyzes the related entity for potential consolidation. Consolidated VIEs (the Company is the primary beneficiary) Based on management's analysis, the Company was the primary beneficiary of two VIEs at both September 30, 2024 and December 31, 2023 (collectively, the "Consolidated VIEs"). The Consolidated VIEs are CRE securitizations that were formed on behalf of the Company to invest in CRE whole loans that were financed by the issuance of debt securities. By financing these assets with long-term borrowings through the issuance of debt securities, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE's inception and is continually assessed. The Consolidated VIEs are accounted for as secured borrowings in accordance with GAAP. The Company has exposure to losses on its securitizations to the extent of its investments in the subordinated debt and preferred equity of each securitization. The Company is entitled to receive payments of principal and interest on the debt securities it holds and, to the extent revenues exceed debt service requirements and other expenses of the securitizations, distributions with respect to its preferred equity

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View this 10-Q filing on SEC EDGAR