ACRES Commercial Realty Corp. [ACR-PC] Filings

10-Q 1 acr-20230930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 1-32733

ACRES COMMERCIAL REALTY CORP.

(Exact name of registrant as specified in its charter)


Maryland		20-2287134
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
390 RXR Plaza, Uniondale, New York 11556
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 516-535-0015
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ACR	New York Stock Exchange
8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock	ACRPrC	New York Stock Exchange
7.875% Series D Cumulative Redeemable Preferred Stock	ACRPrD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

The number of outstanding shares of the registrant’s common stock on November 6, 2023 was 8,455,131 shares.

(Back to Index)

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT

ON FORM 10-Q


		PAGE
PART I		3
Item 1:	Financial Statements	3
	Consolidated Balance Sheets – September 30, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Nine Months Ended September 30, 2023 and 2022	6
	Consolidated Statements of Changes in Equity (unaudited) for the Three Months Ended March 31, 2023 and 2022, June 30, 2023 and 2022 and September 30, 2023 and 2022	7
	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2023 and 2022	9
	Notes to Consolidated Financial Statements – September 30, 2023 (unaudited)	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	77
Item 4:	Controls and Procedures	78
PART II		79
Item 1:	Legal Proceedings	79
Item 1A:	Risk Factors	79
Item 2:	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	79
Item 5:	Other Information	80
Item 6:	Exhibits	81
SIGNATURES		85

(Back to Index)

PART I

ITEM 1. FINANCIAL STATEMENTS

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	September 30, 2023			December 31, 2022
	(unaudited)
ASSETS (1)
Cash and cash equivalents	$	64,440		$	66,232
Restricted cash		35,876			38,579
Accrued interest receivable		12,433			11,969
CRE loans		1,920,205			2,057,590
Less: allowance for credit losses		(27,634	)		(18,803	)
CRE loans, net		1,892,571			2,038,787
Loan receivable - related party		11,050			11,275
Investments in unconsolidated entities		1,548			1,548
Properties held for sale		62,163			53,769
Investments in real estate		149,180			120,968
Right of use assets		19,970			20,281
Intangible assets		8,125			8,880
Other assets		4,140			4,364
Total assets	$	2,261,496		$	2,376,652
LIABILITIES (2)
Accounts payable and other liabilities	$	17,261		$	10,391
Management fee payable - related party		1,022			898
Accrued interest payable		5,598			6,921
Borrowings		1,738,829			1,867,033
Lease liabilities		44,130			43,695
Distributions payable		3,262			3,262
Accrued tax liability		142			113
Liabilities held for sale		3,025			3,025
Total liabilities		1,813,269			1,935,338
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; 4,607,857 and 4,607,857 shares issued and outstanding		5			5
Common stock, par value $0.001: 41,666,666 shares authorized; 8,448,524 and 8,708,100 shares issued and outstanding (including 416,675 and 583,333 unvested restricted shares)		8			9
Additional paid-in capital		1,173,975			1,174,202
Accumulated other comprehensive loss		(5,202	)		(6,394	)
Distributions in excess of earnings		(731,088	)		(732,359	)
Total stockholders’ equity		437,703			435,468
Non-controlling interests		10,524			5,846
Total equity		448,227			441,314
TOTAL LIABILITIES AND EQUITY	$	2,261,496		$	2,376,652

The accompanying notes are an integral part of these statements

(Back to Index)

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Continued)

(in thousands, except share and per share data)


	September 30, 2023		December 31, 2022
	(unaudited)
(1) Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
Restricted cash	$	35,048	$	38,180
Accrued interest receivable		8,841		8,184
CRE loans, pledged as collateral (3)		1,430,820		1,456,649
Other assets		71		119
Total assets of consolidated VIEs	$	1,474,780	$	1,503,132
(2) Liabilities of consolidated VIEs included in total liabilities above:
Accounts payable and other liabilities	$	179	$	93
Accrued interest payable		3,574		3,083
Borrowings		1,203,863		1,233,556
Total liabilities of consolidated VIEs	$	1,207,616	$	1,236,732

(3)

Excludes the allowance for credit losses.

The accompanying notes are an integral part of these statements

(Back to Index)

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
REVENUES
Interest income:
CRE loans	$	47,567		$	33,856		$	138,388		$	83,477
Other		641			209			2,297			283
Total interest income		48,208			34,065			140,685			83,760
Interest expense		33,555			22,939			97,372			53,591
Net interest income		14,653			11,126			43,313			30,169
Real estate income		9,316			9,785			25,266			21,700
Other revenue		37			25			107			60
Total revenues		24,006			20,936			68,686			51,929
OPERATING EXPENSES
General and administrative		2,246			2,128			7,573			7,938
Real estate expenses		9,706			10,099			29,058			24,055
Management fees - related party		2,113			1,669			5,776			5,023
Equity compensation - related party		482			913			2,095			2,648
Corporate depreciation and amortization		22			21			68			64
Provision for credit losses, net		1,983			2,620			9,779			1,342
Total operating expenses		16,552			17,450			54,349			41,070
		7,454			3,486			14,337			10,859
OTHER INCOME (EXPENSE)
Loss on extinguishment of debt		—			—			—			(460	)
Gain on sale of real estate		—			1,870			745			1,870
Other income		113			130			465			1,103
Total other income		113			2,000			1,210			2,513
INCOME BEFORE TAXES		7,567			5,486			15,547			13,372
Income tax expense		—			—			(129	)		(280	)
NET INCOME		7,567			5,486			15,418			13,092
Net income allocated to preferred shares		(4,855	)		(4,855	)		(14,566	)		(14,566	)
Net loss allocable to non-controlling interest, net of taxes		158			82			419			106
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$	2,870		$	713		$	1,271		$	(1,368	)
NET INCOME (LOSS) PER COMMON SHARE - BASIC	$	0.34		$	0.08		$	0.15		$	(0.15	)
NET INCOME (LOSS) PER COMMON SHARE - DILUTED	$	0.33		$	0.08		$	0.15		$	(0.15	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		8,456,884			8,713,256			8,469,597			8,898,159
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		8,592,556			8,758,718			8,609,679			8,898,159

The accompanying notes are an integral part of these statements

(Back to Index)

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net income	$	7,567		$	5,486		$	15,418		$	13,092
Other comprehensive income:
Reclassification adjustments associated with net unrealized losses from interest rate swaps included in net income		402			415			1,192			1,332
Total other comprehensive income		402			415			1,192			1,332
Comprehensive income before allocation to preferred shares		7,969			5,901			16,610			14,424
Net loss allocated to non-controlling interests shares		158			82			419			106
Net income allocated to preferred shares		(4,855	)		(4,855	)		(14,566	)		(14,566	)
Comprehensive income (loss) allocable to common shares	$	3,272		$	1,128		$	2,463		$	(36	)

The accompanying notes are an integral part of these statements

(Back to Index)

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except share and per share data)

(unaudited)


	Common Stock
	Shares			Amount		Series C Preferred Stock		Series D Preferred Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings (Distributions in Excess of Earnings)			Total Stockholders’ Equity			Non-Controlling Interest		Total Equity
Balance, December 31, 2022		8,708,100		$	9	$	5	$	5	$	1,174,202		$	(6,394	)	$	(732,359	)	$	435,468		$	5,846	$	441,314
Purchase and retirement of common stock		(79,744	)		—		—		—		(756	)		—			—			(756	)		—		(756	)
Stock-based compensation		17,780			—		—		—		170			—			—			170			—		170
Amortization of stock-based compensation		—			—		—		—

ACRES Commercial Realty Corp. [ACR-PC] Filings
ACRES Commercial Realty Corp. [ACR] Filings
ACRES Commercial Realty Corp. [ACR-PD] Filings
10-Q	[2023-11-07]
10-Q	[2023-08-07]
10-Q	[2023-05-08]
10-K	[2023-03-07]
10-Q	[2022-11-07]
10-Q	[2022-08-08]
10-Q	[2022-05-09]
10-K	[2022-03-09]
10-Q	[2021-11-09]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-12]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-11]
10-K	[2020-03-10]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-09]
10-K	[2019-03-11]
10-Q	[2018-11-07]
10-Q	[2018-08-08]
10-Q	[2018-05-10]
10-K	[2018-03-16]
10-Q	[2017-11-09]
10-Q	[2017-08-08]
10-Q	[2017-05-10]
10-K	[2017-03-16]
10-Q	[2016-11-14]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-03-10]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-11]
10-K	[2015-03-02]
10-Q	[2014-11-10]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-03-03]
10-Q	[2013-11-12]
10-Q	[2013-08-09]
10-Q	[2013-05-10]
10-K	[2013-03-18]
10-Q	[2012-11-09]
10-Q	[2012-08-07]
10-Q	[2012-05-09]
10-K	[2012-03-15]

ACRES Commercial Realty Corp. [ACR-PC] Filings

ACRES Commercial Realty Corp. [ACR] Filings

ACRES Commercial Realty Corp. [ACR-PD] Filings