ACRES Commercial Realty Corp.

Good day, ladies and gentlemen, and welcome to the first quarter 2022 Acres Commercial Realty Corp Earnings Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session with instructions to follow at that time. If anyone requires assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kyle Brengel, Vice President. You may begin.

Good afternoon, and thank you for joining our call. 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 word believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements. 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. These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Forms 8K, 10Q, and 10K, and in particular, the Risk Factors section of its Form 10K. 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. 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. 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. With me on the call today are Mark Vogel, President and CEO, and Dave Bryant, ACR's CFO. Also available for Q&A is Andrew Fentress, Chairman of ACR. I will now turn the call over to Mark.

Andrew Fentress Good afternoon, everyone, and thank you for joining our call. Today, I will provide an overview of the company's 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 first quarter, and provide an update on 2022 projected results. Of course, we look forward to your questions at the end of our prepared remarks. The Acres Origination Team delivered $99.9 million of new loan commitments in the first quarter, comprising three multifamily loans. Loan payoffs during the period were $92.3 million, comprising eight loans with weighted average rates of 5.33%. This net activity resulted in relatively flat production for Q1. The newly originated loans pay coupon interest at the one-month benchmark rates, which comprise LIBOR and SOFR, plus a weighted average spread of 3.37%. The weighted average spread of the floating rate loans in the company's $1.9 billion commercial real estate loan portfolio remain flat at 3.67% over the one month benchmark rates. The weighted average benchmark rate is 1.1% as of April 30th, 2022. We observed spread widening in the period and are mindful of further potential widening as we deploy capital on our way to getting the company fully invested. We plan to grow the loan portfolio net of repayments to have a loan book of at least $2.3 billion by year end 2022. Additionally, our team completed $51.6 million of initial equity investments on two properties immediately following quarter end, comprising a 388-key full-service operating hotel in Appleton, Wisconsin, and a student housing complex with approved plans to develop a nearby parcel into a 516-bed student housing property in Tallahassee, Florida. We expect these newest equity investments to deliver untaxed capital gains in the future using the company's capital loss carry forwards and create returns that can be reinvested into the loan origination pipeline once realized. The company has $242 million of liquidity as of March 31st, sufficient to meet our goal of getting fully invested and maintaining ample reserves for any unforeseen market events. The portfolio has continued to perform. demonstrating sound and consistent underwriting and proactive asset management. The company ended the quarter with $1.9 billion of commercial real estate loans across 89 individual investments, of which only two, comprising 1% of the portfolio, were delinquent and one which was performing in accordance with a forbearance agreement. As of March 31st, the number of watch list loans has reduced to seven, representing 6.5% of the portfolio. We entered into a purchase and sale agreement for one of the two real estate assets acquired through a deed in lieu of foreclosure. We expect that the net proceeds will approximate our carrying value when the sale is completed. 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 appreciation going forward. We will continue to execute on our business plan by originating high-quality investments, actively managing the portfolio, and continuing to focus on growing earnings and book value for the company's shareholders. We will now have ACR's CFO, Dave Bryant, discuss the financial statements and operating results during the first quarter of 2022.