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Acres Commercial Realty Corp. (ACR)
:ACR
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ACRES Commercial Realty
(NYSE:ACR)
65Neutral
Positive Factors
Earnings
The sale of an office property resulted in a gain of $7.5M, highlighting the company's strategy to utilize tax loss carryforwards and grow book value.
Financial Performance
The book value of ACRES Commercial Realty Corp. increased to $28.87 per share, showing growth in the company's value.
Shareholder Value
The company repurchased 155K shares of its common stock, which increased book value per share, indicating a strategy to enhance shareholder value.
Negative Factors
Capital Access
The investment portfolio relies heavily on access to external capital and the inability to perform and underwrite credit risk amongst borrowers may limit ACR's ability to gain additional capital.
Growth Risks
Key risks for ACR include the inability to sell equity assets at or above the current basis, which could lead to losses and an inability to grow the portfolio from the recycling of capital.
Loan Portfolio
The middle-market CRE loan portfolio decreased by 5.9%, which might be a concern for future growth prospects.
ACRES Commercial Realty (ACR) vs. S&P 500 (SPY)
Market Cap
$142.79M
Dividend YieldN/A
Average Volume (3M)51.81K
Price to Earnings (P/E)16.6
Beta (1Y)0.56
Revenue Growth-10.14%
EPS Growth235.54%
CountryUS
Employees4
SectorReal Estate
Sector Strength86
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)1.15
Shares Outstanding7,456,150
10 Day Avg. Volume43,088
30 Day Avg. Volume51,815
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)N/A
Price to Sales (P/S)3.62
Price to Cash Flow (P/CF)53.80
P/FCF Ratio0.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$22.00Price Target Upside14.88% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
ACRES Commercial Realty Business Overview & Revenue Model
Company DescriptionACRES Commercial Realty Corp., a real estate investment trust (REIT), focuses on the origination, holding, and management of commercial real estate mortgage loans and other commercial real estate-related debt investments in the United States. It invests in commercial real estate-related assets, including floating and fixed rate first mortgage loans, first priority interests in first mortgage loans, subordinated interests in first mortgage loans, mezzanine debt, preferred equity investments, commercial mortgage-backed securities, and commercial real estate equity and preferred equity investments. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income tax to the extent that it distributes 100% of its REIT taxable income. The company was formerly known as Exantas Capital Corp. and changed its name to ACRES Commercial Realty Corp. in February 2021. ACRES Commercial Realty Corp. was incorporated in 2005 and is based in Uniondale, New York.
How the Company Makes MoneyACRES Commercial Realty generates revenue primarily through interest income from its portfolio of commercial real estate loans. The company originates and acquires senior and mezzanine loans, preferred equity, and other debt-like investments in commercial properties. By charging interest on these loans, ACR earns a steady stream of income. Additionally, the company may benefit from gains on sales of its investments and other real estate-related income, such as fees associated with loan origination. The effectiveness of ACR's revenue model is influenced by the company's ability to manage credit risk, interest rate exposure, and market conditions in the commercial real estate sector.
ACRES Commercial Realty Financial Statement Overview
Summary
ACRES Commercial Realty shows strong revenue growth and improved net profit margins, indicating effective management and profitability improvements. The balance sheet reflects a strengthened financial position with zero debt, though historical equity fluctuations indicate some volatility. Cash flow management shows variability, necessitating careful future planning to support sustainable growth.Income Statement
ACRES Commercial Realty has demonstrated consistent revenue growth over the years, with a noticeable increase from $19.5 million in 2020 to $83.5 million in 2024. The gross profit margin has remained stable, showcasing efficient operational management. However, there is fluctuation in EBIT and EBITDA margins, with significant negative EBIT in 2020 impacting historical averages. The net profit margin has improved in recent years, indicating better cost control and profitability.75
Positive
Balance Sheet
The company's debt-to-equity ratio has significantly improved due to the reduction of total debt to zero in 2024, enhancing financial stability. The equity ratio remains strong, reflecting a solid capital structure. However, the fluctuations in stockholders’ equity over the years suggest some instability in value retention. The return on equity (ROE) has improved with positive net income in recent periods, highlighting effective use of equity to generate profits.68
Positive
Cash Flow
ACRES Commercial Realty's operating cash flow has shown variability, though it remains positive, which is crucial for maintaining operational liquidity. The free cash flow experienced volatility, which can impact future growth investments. The recent decrease in operating cash flow to net income ratio suggests growing efficiency challenges. The company has managed significant financing activities, indicating effective capital management but also potential future cash flow constraints.62
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 83.49M | 80.23M | 70.00M | 44.86M | 19.49M | Gross Profit |
| 36.59M | 41.32M | 36.15M | 38.68M | 19.19M | EBIT |
| 11.60M | 20.67M | 93.09M | 33.92M | -197.71M | EBITDA |
| 144.72M | 149.96M | 88.44M | 0.00 | -136.79M | Net Income Common Stockholders |
| 28.70M | 22.39M | 10.62M | 33.92M | -197.71M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 56.71M | 83.45M | 67.78M | 35.50M | 31.43M | Total Assets |
| 1.88B | 2.20B | 2.38B | 2.28B | 1.65B | Total Debt |
| 1.41B | 1.72B | 1.91B | 1.82B | 1.31B | Net Debt |
| 1.35B | 1.64B | 1.84B | 1.78B | 1.28B | Total Liabilities |
| 1.43B | 1.75B | 1.94B | 1.84B | 1.32B | Stockholders Equity |
| 439.13M | 435.80M | 435.47M | 448.19M | 334.38M |
| Cash Flow | Free Cash Flow | |||
| 19.39M | 45.61M | 31.96M | 40.53M | 31.80M | Operating Cash Flow |
| 19.39M | 45.61M | 32.70M | 40.59M | 31.81M | Investing Cash Flow |
| 299.07M | 161.31M | -232.55M | -390.50M | 244.89M | Financing Cash Flow |
| -352.74M | -219.85M | 20.74M | 566.10M | -303.40M |
ACRES Commercial Realty Technical Analysis
Neutral
19.15
Price Trends
20.31
Negative
18.64
Positive
16.83
Positive
Market Momentum
0.37
Positive
49.64
Neutral
20.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACR, the sentiment is Neutral. The current price of 19.15 is below the 20-day moving average (MA) of 21.41, below the 50-day MA of 20.31, and above the 200-day MA of 16.83, indicating a neutral trend. The MACD of 0.37 indicates Positive momentum. The RSI at 49.64 is Neutral, neither overbought nor oversold. The STOCH value of 20.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ACR.
ACRES Commercial Realty Risk Analysis
ACRES Commercial Realty disclosed 69 risk factors in its most recent earnings report. ACRES Commercial Realty reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ACRES Commercial Realty Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $5.94B | 16.00 | 5.55% | 11.11% | -0.97% | 3.75% | |
68 Neutral | $1.29B | 11.79 | 7.06% | 9.19% | -5.09% | 6.25% | |
65 Neutral | $142.79M | 16.59 | 6.75% | ― | -10.14% | 235.54% | |
61 Neutral | $4.31B | 16.14 | -3.60% | 11.88% | 6.17% | -20.99% | |
60 Neutral | $3.05B | ― | -5.01% | 11.82% | -12.86% | -182.05% | |
49 Neutral | $1.15B | ― | -6.02% | 13.78% | -9.71% | -426.57% | |
47 Neutral | $97.21M | ― | -28.15% | 15.07% | -26.87% | -189.15% |
* Real Estate Sector Average
Performance Comparison
ACR
ACRES Commercial Realty
19.15
5.00
35.34%
ARI
Apollo Real Estate
8.56
-0.89
-9.42%
BXMT
Blackstone Mortgage
18.31
1.63
9.77%
STWD
Starwood Property
18.61
1.28
7.39%
LADR
Ladder Capital
10.50
0.86
8.92%
GPMT
Granite Point Mortgage
2.11
-1.86
-46.85%
ACRES Commercial Realty Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: -4.92% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted positive developments such as net income, successful asset sales, and a strong liquidity position. However, there were challenges, including an increase in risk ratings, credit losses, and a reduction in the loan portfolio. The company is at an inflection point, focusing on asset monetization and redeployment of capital.Highlights
Positive Net Income and Earnings
GAAP net income allocable to common shares in the Fourth Quarter was $4.1 million or $0.52 per share diluted. Earnings available for distribution (EAD) for the Fourth Quarter 2024 was $0.48 per share, up from $0.24 per share in the Third Quarter.
Successful Asset Sales
Sold an office property in Pennsylvania for a gain of $7.5 million. Additionally, sold a loan on an underperforming hotel in Orlando at 94% of basis, allowing capital redeployment.
Preleasing and Occupancy Success
Student housing development at Florida State University opened at 95% occupancy with preleasing for the 2025-2026 school year tracking well, showing a 20% increase in preleasing and near double-digit rent growth.
Strong Liquidity Position
Available liquidity at December 31st was $76.9 million, including $56.7 million of unrestricted cash.
Book Value Increase
GAAP book value per share increased to $28.87 on December 31st, up from $27.92 on September 30th.
Lowlights
Increase in Risk Rating and Credit Losses
Weighted average risk rating increased to 2.9 from 2.7, with twelve loans rated four or five, representing 27% of the portfolio, up from 23%. Total balance for credit losses was $32.8 million, representing 2.2% of the loan portfolio at par.
Loan Portfolio Reduction
Net reduction of the loan portfolio by $81.8 million due to loan payoffs, with only one new commitment of $47.9 million.
Charge-offs and Decreases in Net Interest Income
Recorded a $700,000 charge-off related to the Orlando hotel loan. Net loss on real estate operations of $2.3 million, including depreciation, and a $0.24 decrease in net interest income due to loan payoffs.
Company Guidance
During the Fourth Quarter 2024 earnings call for ACRES Commercial Realty Corp., several key financial metrics and strategic updates were highlighted. The company reported a GAAP net income of $4.1 million, equivalent to $0.52 per diluted share, and a book value per share of $28.87 as of December 31st, up from $27.92 on September 30th. The commercial real estate loan portfolio totaled $1.5 billion, with a weighted average risk rating of 2.9, slightly higher than the previous quarter's 2.7. Loan payoffs amounted to $107.5 million, while new commitments and funded existing loan commitments totaled $47.9 million and $6.2 million, respectively, resulting in a net portfolio reduction of $81.8 million. The weighted average spread over one-month term SOFR was 3.73%. The company's liquidity stood at $76.9 million, with $56.7 million in unrestricted cash. The leverage ratio decreased slightly to 3.0 from 3.3 times due to loan payoffs. In terms of future strategy, ACRES plans to expand its portfolio to between $1.8 billion and $2 billion by the end of 2025, focusing on redeploying capital from real estate sales into the loan portfolio, and aims to achieve mid-teens ROEs and an 8% to 10% EAD range.ACRES Commercial Realty Corporate Events
Business Operations and StrategyFinancial Disclosures
ACRES Commercial Realty Reports Q4 2024 Financial Results
Positive
Mar 5, 2025
On March 5, 2025, ACRES Commercial Realty Corp. reported its financial results for the fourth quarter and year ended December 31, 2024. The company achieved a GAAP net income of $4.1 million or $0.52 per share-diluted for the quarter. The company plans to expand its loan portfolio in 2025 by investing in high-growth markets with experienced sponsors, indicating a strategic focus on enhancing shareholder value and capitalizing on renewed transactional activity in the real estate markets.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.