ACRES Commercial Realty Corp.

Thank you. Good day, ladies and gentlemen, and welcome to the fourth quarter and full year 2023 Acres Commercial Realty Corporation 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, Operations. You may begin.

Kyle Brengel Good morning and thank you for joining our call. I would like to highlight that we have posted the fourth quarter 2023 earnings presentation to our website. This presentation contains summary and detailed information about the quarterly and annual 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 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 for 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 Eldrin Blackwell, 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 Eldrin Blackwell will discuss the financial statements, liquidity condition, book value, and operating results for the fourth quarter and full year 2023. 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. Loan payoffs during the period were $98.3 million. We closed one new commitment of $29.7 million, and net funded commitments during the quarter were $3.9 million, producing a net decrease to the loan portfolio of $64.7 million. The weighted average spread of the floating rate loans in the $1.9 billion commercial real estate loan portfolio is now 3.77% over the one-month benchmark rates. The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. The company ended the year with $1.9 billion of commercial real estate loans across 70 individual investments, At December 31st, there were 11 loans rated four or five, which represented 16% of the par value of our portfolio, an increase of three loans and 8% of par value, respectively, as compared to the end of the third quarter of 2023. Additionally, the weighted average risk rating increased from 2.6 at September 30th to 2.7 at December 31st. 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 overall 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 continues to be focused on the overall quality of the investment portfolio, including investments in real estate, with the goal of improving credit quality and recycling capital into performing categories. We will now have ACR's CFO, Eldrin Blackwell, discuss the financial statements and operating results during the fourth quarter.