ACRES Commercial Realty Corp.

Thank you. Good day, ladies and gentlemen, and welcome to the first quarter 2025 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 phone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kyle Brinjal, Vice President, Operations. You may go ahead.

Good morning, and thank you for joining our call. I would like to highlight that we have posted the first quarter 2025 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 8K, 10Q, and 10K, and in particular, the risk factor 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 Eldren Blackwell, ACR 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 operations, real estate investments, and the health of the investment portfolio, while Elder and Blackwell will discuss the financial statements, liquidity condition, book value, and operating results for the first quarter of 2025. 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 focusing on growing earnings and book value for our shareholders. Loan payoffs during the period were $115.9 million. We closed one new commitment of $15 million and funded existing loan commitments during the quarter of $12 million, producing a net reduction of the loan portfolio of $109.6 million. In addition, we sold two loans during the period, including a loan reported as held for sale at December 31, 2024, for $31.7 million in proceeds. The weighted average spread of the floating rate loans in our $1.4 billion commercial real estate loan portfolio is now 3.67% over one-month term SOFR rates. The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. Company ended the quarter with $1.4 billion of commercial real estate loans across 48 individual investments. Our weighted average risk rating was 2.9 at the end of both Q1 2025 and Q4 2024, and the number of loans rated four or five decreased by one from 12 at the end of last year to 11 at the end of this quarter. In March, we sold a $20.6 million loan at par on an underperforming self-storage facility in Miami that had a poor risk rating. This quarter, we also had a charge-off to EAD of $700,000, or 10 cents per share, related to a loan we sold on an underperforming hotel in Orlando that was reported as held for sale at December 31st. 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. We will provide updates in future quarters on the monetization of these assets. As we exit our real estate investments and the loan portfolio continues to amortize, we expect to read up the capital into attractive CRE loans. As always, we will seek to optimize our portfolio leverage in order to drive equity returns. During the quarter, we closed a new $940 million financing facility with J.P. Morgan. The facility includes a two-year reinvestment period that will provide for reinvestment of principal proceeds from asset repayments into qualifying replacement assets. The facility allowed us to refinance collateral from our two 2021 CRE securitizations to pay off a majority of the balances on our warehouse lines. As a result of the financing, we incurred a non-recurring charge of $1.5 million, or 20 cents per share, related to unamortized debt issuance costs at the two CRE securitizations. 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 new investments to enhance shareholder value. We will now have ACR CFO, Eldren Blackwell, discuss the financial statements and operating results during the quarter.