ACRES Commercial Realty Corp.

Hey, and welcome to the Acres Commercial Realty Corp second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press start and one on touchtone phone. To withdraw your question, please press Start and 2. Please note this event is being recorded. I would now like to turn the conference over to Kyle Burgell. Please go ahead.

Good morning and thank you for joining our call. I would like to highlight that we have posted the second quarter 2023 earnings presentation to our website. This presentation contains summary and detailed information about the quarterly results of the company. 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. 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 8-K, 10-Q, and 10-K, and in particular, the risk factor section of its Form 10-K. Listeners are cautioned not to place under-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. Reconciliation 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 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.

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 Dave Bryant will discuss the financial statements, liquidity condition, book value, and operating results for the second quarter. Of course, we look forward to your questions at the end of our prepared remarks. 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. We originated one $22.5 million mixed-use loan commitment in the second quarter, which pays coupon interest at one month SOFR plus a spread of 6.25%. Loan payoffs during the period were $47.3 million, and net funded commitments during the quarter were $14.8 million, producing a net decrease to the portfolio of $10 million. The weighted average spread of the floating rate loans in the $2 billion commercial real estate loan portfolio increased to 3.94% over the one-month benchmark rates. During the quarter, we acquired an office property in Chicago via Deed & Loo. At the time of the foreclosure, the asset was valued at $20.9 million. This property was classified as held for sale at June 30, 2023. We expect to maintain a commercial real estate investment portfolio, including our loan book and real estate properties of $2 billion to $2.3 billion throughout 2023. The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. the company ended the quarter with $2 billion of commercial real estate loans across 78 individual investments. As of June 30, 2023, there were five loans rated 4 or 5, including three loans not current on contractual payments representing 4.9% of the portfolio. This represents a slight decrease from March 31, 2023, at which there was also five loans rated 4 or 5 but represented 5% of the portfolio. We continue to manage several investments in real estate that we expect to monetize at gains in the future. These anticipated gains will be offset by NOL carry forwards, and we expect to retain the equity and reinvest potential gains into our loan portfolio. 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 now have ACR's CFO, Dave Bryan, discuss the financial statements and operating results during the second quarter of 2023. Thank you and good morning.