ACRES Commercial Realty Corp.

Ladies and gentlemen, and welcome to the third quarter 2023 Acres Commercial Realty Carp 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, Jacqueline Jesberger, Chief Legal Officer. You may begin.

Good morning, and thank you for joining our call. I would like to highlight that we have posted the third 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 these 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 Factors section of its Form 10-K. 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 Fogel, 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 third 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. And following this business plan, we chose not to originate any new investments in the current quarter. Loan payoffs during the period were $53.4 million, and net funded commitments during the quarter were $8.1 million, producing a net decrease to the portfolio of $45.3 million. The weighted average spread of the floating rate loans in the $1.9 billion commercial real estate loan portfolio is now 3.91% over the one month benchmark rates. 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 through 2023. The portfolio generally continues 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 75 individual investments. At September 30th, there were eight loans rated 4 or 5, which represented 8.4% of the par value of our portfolio. Five of these loans were also rated 4 or 5 at June 30th. Included in these eight loans were five loans not current on contractual payments, three of which were also not current on contractual payments at June 30th. Additionally, the weighted average risk rating increased from 2.4 at June 30th to 2.6 at September 30th. This increase in weighted average risk rating is attributable to a combination of some properties falling slightly behind on implementing underwritten business plans and or capital market conditions. 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. This quarter, we released an updated earnings presentation that includes a revamped design expanded financial highlights, along with increased disclosures on CECL and risk ratings. We feel that the new earnings presentation communicates our financial position in a more effective manner. We hope you appreciated this refreshed presentation. We will now have ACR's CFO, Dave Bryan, discuss the financial statements and operating results during the third quarter.