7b33886c1ba4b9cfb6fed5791f3edb211ac9a83ec830b03053b90f7f91a5351e

Net income [USD, thousands]

Provision for credit losses, net [USD, thousands]

Depreciation, amortization and accretion [USD, thousands]

Amortization of stock-based compensation [USD, thousands]

Gain on conversion of real estate [USD, thousands]

Equity in losses of unconsolidated subsidiaries [USD, thousands]

Changes in operating assets and liabilities [USD, thousands]

Net cash provided by operating activities [USD, thousands]

Principal fundings of CRE loans [USD, thousands]

Principal payments received on CRE loans [USD, thousands]

Investments in real estate [USD, thousands]

Purchases of furniture and fixtures [USD, thousands]

Principal payments received on loan - due from Manager [USD, thousands]

Net cash provided by investing activities [USD, thousands]

Repurchase of common stock [USD, thousands]

Repurchase of preferred stock [USD, thousands]

Proceeds from borrowings: Warehouse financing facilities and repurchase agreements [USD, thousands]

Proceeds from borrowings: Mortgages payable [USD, thousands]

Payments on borrowings: Securitizations [USD, thousands]

Payments on borrowings: Warehouse financing facilities and repurchase agreements [USD, thousands]

Payment of debt issuance costs [USD, thousands]

Proceeds received from non-controlling interests [USD, thousands]

Distributions paid on preferred stock [USD, thousands]

Net cash used in financing activities [USD, thousands]

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH [USD, thousands]

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD [USD, thousands]

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD [USD, thousands]

083197fd58444ea89adb25150adf9ee4a6acdd8c1f3a5b3ef8465632fe8fc478

The documents do not provide a specific explanation for why Total Revenues dipped in Q4 2023. While one document outlines factors that influenced the overall Q4 performance—such as increased interest income from CRE loans, growth in real estate income, and a rise in other revenue—it does not directly address the dip when compared to Q3 2023, where Total Revenues were **24,006 thousand** versus **22,445 thousand** in Q4 2023.  **[0000950170-23-060179_acr-20230930.htm:4]** **[0000950170-24-027462_acr-20231231.htm:137]** 

Why did Total Revenues dip in Q4 2023?

In Q4 2023, net income dropped from **$7,567 thousand** in Q3 to **$6,430 thousand** mainly due to a combination of negative factors. Notably, there was a **$0.15 decline in net interest income** and a **$0.08 increase in G&A expenses** which reduced Earnings Available for Distribution. Additionally, the net loss from real estate investments doubled from **$400,000** in Q3 to **$800,000** in Q4, reflecting the seasonality of hotel operations. These factors outweighed some positive elements like the reduction in CECL reserves and benefits from the share buyback program.  **[0000950170-24-027462_acr-20231231.htm:137]** **[ACR_3376073_2]** 

Why did Net Income drop in Q4 2023?

Despite the turnaround from a loss in Q1 2023, the **Net Income Allocable to Common Shares** in Q1 2024 remained modest at **$556,000**. According to the documents, this result was influenced by several factors. While there was a significant one-time **gain of $5,835,000** on the conversion of real estate that helped move the company from a net loss situation, other ongoing factors limited overall profitability. In particular, **provisions for credit losses** remained relatively high and operating expenses—though stable—continued to exert pressure. Additionally, while there was some benefit from a decrease in non-cash equity compensation expenses, these improvements were not enough to generate a higher net income outcome in Q1 2024 compared to other periods.  **[0000950170-24-055428_acr-20240331.htm:4]** **[0000950170-24-051305_acr-ex99_2.htm:5]** 

Why is Net Income Allocable to Common Shares so low in Q1 2024?

In Q3 2024, several factors contributed to the improvement in net income over the nine-month period. First, the company achieved **$10.5 million in net interest income**, driven by loan payoffs, modifications, and adjustments in its loan portfolio.  **[ACR_3405160_1]** **[ACR_3405160_2]**  Additionally, a **reduction in current expected credit losses (CECL) reserves by $291,000** helped improve net income compared to previous periods.  **[ACR_3405160_2]**  Moreover, while there was a **net loss of $665,000 on real estate operations**—partially due to **$1.3 million in depreciation**—a **$2.8 million gain from converting a commercial real estate loan to REO** offset some of these losses.  **[ACR_3405160_2]**  The share repurchase of **114,000 common shares** during the quarter may have also contributed positively by influencing earnings per share metrics.  **[ACR_3405160_2]** 

What factors contributed to the Net Income improvement in Q3 2024?

The nearly doubling of net income in FY 2023 was primarily driven by a combination of factors. **Interest income** significantly increased from **$126,274,000** in FY 2022 to **$187,466,000** in FY 2023, which, along with a rise in **net interest income** and **real estate income**, provided a strong boost. Additionally, a **decrease in other income (expense)** further supported the increase, despite a modest rise in operating expenses. These factors together more than compensated for the increased expenses, leading to the nearly doubled net income in FY 2023.  **[0000950170-24-027462_acr-20231231.htm:137]** 

ACRES Commercial Realty (ACR)

Financials