Interest Income

- CRE Loans

- Securities

- Other

Real Estate Income

Other Revenue

- Dividend Income

Commercial Real Estate Debt Investments

Commercial Finance

Residential Mortgage Lending

Corporate & Other

Total Revenue

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8cfa38f227d335ebe829a1f2d72aa567ab3526df6d657b1ae4efc60f4e7f201c

Total Revenues (USD, thousands)

Total Operating Expenses (USD, thousands)

Income Before Taxes (USD, thousands)

Net Income (USD, thousands)

Net Income Allocable to Common Shares (USD, thousands)

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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]** 

What drove the nearly doubling of Net Income in FY 2023?

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Acres Commercial Realty Corp (ACR)

Financials