ACRES Commercial Realty Corp. [ACR-PC] Filings

10-Q 1 acr-20240630.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 June 30, 2024


☐	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 August 2, 2024 was 7,873,232 shares.

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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 – June 30, 2024 (unaudited) and December 31, 2023	3
	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2024 and 2023	5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Six Months Ended June 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	7
	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2024 and 2023	9
	Notes to Consolidated Financial Statements – June 30, 2024 (unaudited)	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	69
Item 4:	Controls and Procedures	71
PART II		72
Item 1:	Legal Proceedings	72
Item 1A:	Risk Factors	72
Item 2:	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	72
Item 5:	Other Information	72
Item 6:	Exhibits	73
SIGNATURES		77

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PART I

ITEM 1. FINANCIAL STATEMENTS

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30, 2024			December 31, 2023
	(unaudited)
ASSETS (1)
Cash and cash equivalents	$	89,622		$	83,449
Restricted cash		1,971			8,437
Accrued interest receivable		12,555			11,783
CRE loans		1,713,711			1,857,093
Less: allowance for credit losses		(34,990	)		(28,757	)
CRE loans, net		1,678,721			1,828,336
Principal paydowns receivable		2,500			—
Loan receivable - related party		10,850			10,975
Investments in unconsolidated entities		21,630			1,548
Properties held for sale		63,341			62,605
Investments in real estate		182,403			157,621
Right of use assets		19,706			19,879
Intangible assets		7,395			7,882
Other assets		4,548			3,590
Total assets	$	2,095,242		$	2,196,105
LIABILITIES (2)
Accounts payable and other liabilities	$	9,438		$	13,963
Management fee payable - related party		540			584
Accrued interest payable		7,881			8,459
Borrowings		1,582,031			1,676,200
Lease liabilities		44,592			44,276
Distributions payable		3,229			3,262
Accrued tax liability		16			121
Liabilities held for sale		3,123			3,025
Total liabilities		1,650,850			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; 7,903,175 and 7,878,216 shares issued and outstanding (including 574,538 and 416,675 unvested restricted shares)		8			8
Additional paid-in capital		1,165,176			1,169,970
Accumulated other comprehensive loss		(4,006	)		(4,801	)
Distributions in excess of earnings		(727,182	)		(729,391	)
Total stockholders’ equity		434,006			435,796
Non-controlling interests		10,386			10,419
Total equity		444,392			446,215
TOTAL LIABILITIES AND EQUITY	$	2,095,242		$	2,196,105

The accompanying notes are an integral part of these statements

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ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Continued)

(in thousands, except share and per share data)


	June 30, 2024		December 31, 2023
	(unaudited)
(1) Assets of consolidated variable interest entities ("VIEs") included in total assets above:
Restricted cash	$	190	$	220
Accrued interest receivable		9,954		9,188
CRE loans, pledged as collateral (3)		1,353,610		1,466,463
Principal paydown receivable		2,500		—
Prepaid Expenses		30		—
Other assets		155		71
Total assets of consolidated VIEs	$	1,366,439	$	1,475,942
(2) Liabilities of consolidated VIEs included in total liabilities above:
Accounts payable and other liabilities	$	91	$	143
Accrued interest payable		2,821		3,828
Borrowings		1,093,953		1,204,569
Total liabilities of consolidated VIEs	$	1,096,865	$	1,208,540

(3)

Excludes the allowance for credit losses.

The accompanying notes are an integral part of these statements

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ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
REVENUES
Interest income:
CRE loans	$	40,340		$	46,351		$	82,206		$	90,821
Other		726			797			1,471			1,656
Total interest income		41,066			47,148			83,677			92,477
Interest expense		30,311			32,442			61,562			63,817
Net interest income		10,755			14,706			22,115			28,660
Real estate income		10,143			8,879			17,514			15,950
Other revenue		38			37			75			70
Total revenues		20,936			23,622			39,704			44,680
OPERATING EXPENSES
General and administrative		2,356			2,348			5,611			5,327
Real estate expenses		9,736			10,492			19,267			19,352
Management fees - related party		1,620			1,890			3,247			3,663
Equity compensation - related party		814			719			1,291			1,613
Corporate depreciation and amortization		16			23			24			46
Provision for credit losses, net		1,337			2,700			6,233			7,796
Total operating expenses		15,879			18,172			35,673			37,797
		5,057			5,450			4,031			6,883
OTHER INCOME (EXPENSE)
Equity in losses of unconsolidated subsidiaries		(41	)		—			(41	)		—
Gain on conversion of real estate		—			—			5,835			—
Gain on sale of real estate		—			—			—			745
Other income		1,435			242			1,550			352
Total other income		1,394			242			7,344			1,097
INCOME BEFORE TAXES		6,451			5,692			11,375			7,980
Income tax expense		(54	)		(134	)		(54	)		(129	)
NET INCOME		6,397			5,558			11,321			7,851
Net income allocated to preferred shares		(4,806	)		(4,856	)		(9,628	)		(9,711	)
Carrying value in excess of consideration paid for preferred shares		—			—			242			—
Net loss allocable to non-controlling interest, net of taxes		62			115			274			261
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$	1,653		$	817		$	2,209		$	(1,599	)
NET INCOME (LOSS) PER COMMON SHARE - BASIC	$	0.22		$	0.10		$	0.29		$	(0.19	)
NET INCOME (LOSS) PER COMMON SHARE - DILUTED	$	0.21		$	0.10		$	0.28		$	(0.19	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		7,664,077			8,451,973			7,709,104			8,476,059
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		7,841,753			8,534,558			7,937,784			8,476,059

The accompanying notes are an integral part of these statements

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ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023
Net income	$	6,397		$	5,558		$	11,321		$	7,851
Other comprehensive income:
Reclassification adjustments associated with net unrealized losses from interest rate swaps included in net income		398			397			795			790
Total other comprehensive income		398			397			795			790
Comprehensive income before allocation to preferred shares		6,795			5,955			12,116			8,641
Net loss allocated to non-controlling interests shares		62			115			274			261
Carrying value in excess of consideration paid for preferred shares		—			—			242			—
Net income allocated to preferred shares		(4,806	)		(4,856	)		(9,628	)		(9,711	)
Comprehensive income (loss) allocable to common shares	$	2,051		$	1,214		$	3,004		$	(809	)

The accompanying notes are an integral part of these statements

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ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except 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, 2023		7,878,216		$	8	$	5	$	5	$	1,169,970		$	(4,801	)	$	(729,391	)	$	435,796		$	10,419		$	446,215
Purchase and retirement of common stock		(194,827	)		—		—		—		(2,068	)		—			—			(2,068	)		—			(2,068	)
Stock-based compensation		1,911			—		—		—		19			—			—			19			—			19
Amortization of stock-based compensation		—			—		—		—		477			—			—			477			—			477
Preferred stock redemption		—			—		—		—		(2,399	)		—			242			(2,157	)		—			(2,157	)
Contributions from non-controlling interests		—			—		—		—		—			—			—			—			180			180
Net income		—			—		—		—		—			—			5,136			5,136			(212	)		4,924
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,822	)		(4,822	)		—			(4,822	)
Amortization of terminated derivatives		—			—		—		—		—			397			—			397			—			397
Balance, March 31, 2024		7,685,300		$	8	$	5	$	5	$	1,165,999		$	(4,404	)	$	(728,835	)	$	432,778		$	10,387		$	443,165
Purchase and retirement of common stock		(115,458	)		—		—		—		(1,555	)		—			—			(1,555	)		—			(1,555	)
Stock-based compensation		333,333			—		—		—		—			—			—			—			—			—
Offering costs		—			—		—		—		(82	)		—			—			(82	)		—			(82	)
Amortization of stock-based compensation		—			—		—		—		814			—			—			814			—			814
Contributions from non-controlling interests		—			—		—		—		—			—			—			—			61			61
Net income		—			—		—		—		—			—			6,459			6,459			(62	)		6,397
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,806	)		(4,806	)		—			(4,806	)
Amortization of terminated derivatives		—			—		—		—		—			398			—			398			—			398
Balance, June 30, 2024		7,903,175		$	8	$	5	$	5	$

ACRES Commercial Realty Corp. [ACR-PC] Filings
ACRES Commercial Realty Corp. [ACR] Filings
ACRES Commercial Realty Corp. [ACR-PD] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-08]
10-K	[2024-03-07]
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