ACRES Commercial Realty Corp.

Please stand by. We're about to begin. Good day, ladies and gentlemen, and welcome to the third quarter 2024 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 Bringle, Vice President, Operations. You may begin.

Good morning and thank you for joining our call. I would like to highlight that we have posted the third quarter 2024 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 the 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 the forward-looking statements. These risks and uncertainties are discussed in the company's report filed with the SEC, including its reports on Forms 8K, 10Q, and 10K, and in particular, the risk factor section of its Form 10K. 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. 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 Elgin Blackwell, KCRCFO. 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 operations, real estate investments, and the health of the investment portfolio, while Eldren Blackwell will discuss the financial statements, liquidity condition, book value, and operating results for the third quarter of 2024. 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 developing a pipeline of 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 $118.1 million, foreclosures were $23.7 million, and funded commitments during the quarter were $7.4 million, producing a net decrease to the loan portfolio of $134.4 million. The weighted average spread of the floating rate loans in our $1.6 billion commercial real estate loan portfolio is now 3.73% over one-month term SOFR rates. The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. The company ended the quarter with $1.6 billion of commercial real estate loans across 56 individual investments. At September 30th, there were 11 loans rated 4 or 5, which represented 23% of the par value of our portfolio, an increase of 2% as compared to the second quarter, 2024, and our weighted average risk rating was 2.7 at both June 30th and September 30th. 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 deferred tax assets, and we expect to retain the equity and reinvest potential gains into our loan portfolio. Our student housing development near Florida State University opened in August at 95% occupancy, and we initiated a marketing effort in September to explore a sale of the asset. We will provide updates in future quarters on the monetization of this asset. During the period, we foreclosed on two loan assets. One asset is an office property in Austin, Texas. Upon conversion, we recorded a $2.8 million unrealized gain based on market offers for the property. The second asset is a $9.3 million multifamily property in Memphis, Tennessee. We are working on a plan to bring this asset to stabilization and exit with a positive outcome. 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 assets. We will now have ACR's CFO, Aldrin Blackwell, discuss the financial statements and operating results during the third quarter.