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    Acres Commercial Realty Corp (ACR)

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    Business Description

    ACRES Commercial Realty Corp. (ACR) is a Maryland-based real estate investment trust (REIT) specializing in originating, holding, and managing commercial real estate (CRE) mortgage loans and equity investments in CRE properties. The company primarily targets the middle market segment of CRE lending across the United States, focusing on property types such as multifamily, student housing, hospitality, office, and industrial properties. ACR generates income through interest-bearing assets, rental income from equity investments, and other real estate-related activities.

    1. Commercial Real Estate (CRE) Loans - Provides transitional floating-rate loans, including first mortgage loans, A-notes, B-notes, and mezzanine loans, secured by CRE properties.
    2. Real Estate Income - Generates rental income from direct equity investments in commercial real estate properties.
    3. Other Revenue - Includes miscellaneous income sources related to real estate operations.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Mark S. FogelPresident, Chief Executive Officer, and DirectorJuly 2020Co-founded ACRES Capital in 2012 and leads its executive management team. Previously held leadership roles at UC Funds, Arbor Realty Trust, and others, with nearly 30 years of experience in commercial real estate.
    Eldron C. BlackwellSenior Vice President, Chief Financial Officer, and TreasurerJanuary 1, 2024 (expected)Previously served as Vice President and Chief Accounting Officer at ACR (March 2014–December 2023). Held roles at New Penn Financial and Grant Thornton LLP, with extensive experience in accounting and auditing.
    Jaclyn A. JesbergerChief Legal Officer, Senior Vice President, and SecretaryJuly 2020Joined ACRES Capital in June 2015 as General Counsel and Chief Compliance Officer. Previously worked at Arbor Commercial Mortgage and Credit Suisse, specializing in real estate finance and securitization.
    Linda M. KilpatrickVice President and Chief Accounting OfficerJanuary 1, 2024 (expected)Previously served as Controller at ACR (October 2017–December 2023). Earlier roles include Accounting and Reporting Manager at Independence Blue Cross and Manager in audit practice at Grant Thornton LLP.
    Michael PierroSenior Vice PresidentJune 2020Also serves as Managing Director and Chief Credit Officer of ACRES Capital. Previously held senior roles at C-III Capital Partners, Nomura Securities, and other firms in commercial real estate finance.
    Kyle K. BrengelVice President – OperationsJuly 2020Also serves as Chief Operating Officer of ACRES Capital. Held various positions within ACRES since 2017 and previously worked at Napier Park Global Capital, Ares Management, and Duff & Phelps.
    Richard A. PersaudVice President – FinanceSeptember 2020Also serves as Chief Financial Officer of ACRES Capital. Previously worked at Ernst & Young LLP as a senior manager in real estate assurance practice. Certified Public Accountant and Certified Internal Auditor.

    Questions to Ask Management

    1. With 11 loans rated 4 or 5, representing 23% of your loan portfolio, can you provide more detail on the specific challenges these assets are facing, and what strategies you're implementing to mitigate risks and improve credit quality?

    2. Given the decrease in Earnings Available for Distribution (EAD) from $0.51 to $0.24 per share this quarter, can you elaborate on the factors contributing to this decline and how you plan to stabilize and grow EAD moving forward?

    3. As your current CLOs are paying down and you're considering issuing new ones, how do you anticipate the changes in financing costs and market conditions will impact your ability to achieve target returns and ROEs on new investments?

    4. Considering the significant net decrease of $134.4 million in your loan portfolio due to payoffs and foreclosures, how do you plan to effectively redeploy capital amidst current market conditions to prevent further portfolio contraction?

    5. Regarding your monetization strategy for the REO assets, particularly the student housing asset near Florida State University, what risks do you foresee that could impact your ability to realize the expected gains, and how are you addressing them to ensure positive outcomes for shareholders?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateNovember 2020 November 2023
    End Date/DurationN/AN/A
    Total Additional Amount$20.0 million $10.0 million
    Remaining Authorization$0.0 million $2.3 million
    DetailsAuthorized for repurchase of common and preferred stock Authorized for repurchase of common and preferred stock

    Notes:

    • The remaining authorization amount of $2.3 million as of September 30, 2024, is allocated entirely to Program 2 since it is the newest program.
    • Specific end dates or durations for the programs were not provided in the documents.