What Management Said
Read the full Q4 2025 transcript ↗I would like to highlight that we have posted the fourth quarter 2025 earnings presentation to our website. 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. The ACRES team remains focused on executing on our business strategy by investing in high-quality CRE loans, actively managing the portfolio, and growing earnings for our shareholders. In the fourth quarter 2025, we closed new commitments of $571 million, offset by loan payoffs and net unfunded commitments totaling $127.2 million, producing a net increase to the loan portfolio of $443.8 million.
To further highlight this point, as a firm since inception 12 years ago, ACRES has incurred minimal realized losses on almost $8 billion of invested capital. GAAP net loss for the quarter included $10.7 million in net interest income, which was an increase of $2.3 million over the prior quarter. This increase in net interest income was driven by net loan originations of $443.8 million in corresponding facility draws during the quarter. When the mezzanine loan is included, the company reported an EAD loss of $0.48 per share, as compared to earnings of $1.01 per share for Q3.
We repurchased shares at accretive levels, sold an REO asset, improved the credit quality of the portfolio, and positioned the company to resume paying a dividend to common shareholders. We will continue to deploy capital through careful underwriting and then manage each investment to the optimal outcome for shareholders. Based on your illustrative earnings slide, it looks like there's some at least capacity to grow the portfolio and push leverage a little bit. We're projecting net growth in the portfolio of $500 million-$700 million in 2026.
What went well
- ACRES closed a record $571 million of new loan commitments in the quarter, driving a net portfolio increase of $443.8 million to $1.8 billion across 53 investments after $127.2 million of payoffs and net unfunded commitments.
- The originations powered a new $1 billion CRE securitization, ACRES 2026-FL4, which closed February 12, 2026 with 86.5% leverage and a weighted-average debt spread of 1.68% - the Company's fourth REIT securitization.
- Credit quality improved sharply: the weighted average risk rating fell to 2.7 from 3.0, loans rated 4 or 5 dropped to 10 from 13, and the 4/5 share on an economic-interest basis fell to 17% from 32%.
- Book value per share edged up to $30.01 from $29.63, reaching the ~$30 target, and management said the Company is now positioned to resume paying a common dividend.
- ACRES used $10 million to repurchase 493,000 shares at an approximate 33% discount to book value; since November 2020 it has bought back 5.3 million shares at an average 49% discount, and highlighted only $4.8 million of losses (1.3%) on $368 million of resolved legacy watch-list loans.
- Available liquidity rose to $108 million ($84 million unrestricted cash plus $24 million of financing capacity), and book value is up 66% since ACRES assumed management in July 2020.
What went wrong
- The Company reported a GAAP net loss allocable to common of $3.0 million, or $0.43 per share, weighed down by a $1.5 million net loss on the sale of an Austin, Texas office REO and the charge-off of a legacy mezzanine loan.
- Including a fully reserved legacy $4.7 million mezzanine loan (originated in 2018, reserved in 2022), EAD was a loss of $0.48 per share, versus $1.01 in Q3; excluding that item EAD was $0.20 per share.
- The CECL release slowed to $1.3 million ($0.19 per share) from $4.0 million in Q3, as improvements in modeled credit were partly offset by a decline in projected macroeconomic factors.
- New-loan spreads compressed to a weighted-average 2.83% as the Q4 origination push was purposely concentrated in lower-spread multifamily to build CLO collateral, leaving the portfolio heavily multifamily-weighted.
- Non-controlling interest jumped to about $130 million from roughly $1 million after the Company sold a portion of a previously issued JPMorgan financing arrangement, adding balance-sheet complexity.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Net portfolio growth | FY2026 | Projecting net growth in the portfolio of $500 million to $700 million in 2026, with a significant amount already occurring in Q1 2026 |
| Loan repayments | FY2026 | Projecting roughly $500 million of repayments, mostly older-vintage assets, bringing 2023-and-older vintages down to about 15% of the portfolio |
| Portfolio mix | FY2026 | Expects to diversify back toward its historical 60-65% multifamily weighting, adding self-storage, office and retail as spreads there are more attractive |
| Leverage | Ongoing | Comfortable inside four turns of total leverageable capital and does not expect to exceed that level |
| Common dividend | Not specified | Positioned to resume a common dividend having reached the ~$30 book-value objective |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| GAAP net loss allocable to common | $(3.0) million ($(0.43) per share) | A $1.5 million loss on the Austin office REO sale and a $4.7 million legacy mezzanine charge-off outweighed higher net interest income. |
| Net interest income | $10.7 million (+$2.3 million QoQ) | Net loan originations of $443.8 million and corresponding facility draws during the quarter. |
| Earnings available for distribution (EAD) | $(0.48) per share (or $0.20 ex-mezzanine) | The fully reserved legacy mezzanine loan settlement drove the reported EAD loss; underlying EAD was positive at $0.20 per share. |
| CRE loan portfolio | $1.8 billion across 53 loans (net +$443.8 million) | Record $571 million of new commitments at a 2.83% weighted-average new-loan spread; total portfolio spread 3.35% over one-month SOFR. |
| GAAP book value per share | $30.01 (from $29.63) | Accretive repurchases below book value and portfolio performance, reaching the ~$30 target. |
| Allowance for credit losses | $20.4 million / 111 bps (all general) | A $1.3 million CECL release plus the charge-off of the fully reserved legacy mezzanine loan. |
| Leverage | 2.8x (from 2.7x) | Net originations on the CRE loan portfolio funded with facility draws. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Portfolio rebuild and securitization | Warehousing collateral for a Q1 2026 CLO | Delivered a record $571 million origination quarter and closed the $1 billion ACRES 2026-FL4 securitization (86.5% leverage, 1.68% debt spread) with a 30-month reinvestment period allowing up to 40% non-multifamily assets. | — |
| Credit and legacy loan resolution | Working down inherited watch-list loans | Resolved 21 of 23 legacy 4/5-rated loans ($368 million par) since 2020 with only $4.8 million (1.3%) of losses; risk rating improved to 2.7 and 4/5 loans fell to 10, with a legacy mezzanine loan finally charged off. | — |
| Loan mix and spreads | Historically 60-65% multifamily | Q4 originations were intentionally multifamily-heavy at 2.83% spreads to feed the CLO; management plans to diversify into self-storage, office and retail in 2026 to lift spreads above 2.83%. | — |
| Capital return and dividend | Buybacks at deep discounts; dividend suspended | Repurchased 493,000 shares at ~33% discount (5.3 million shares at ~49% average discount since 2020); reached the ~$30 book-value target and is now positioned to resume a common dividend. | — |
| Tax assets | Capital loss carryforwards being utilized | Capital loss carryforwards largely expired at year-end, but $32.1 million of NOLs (~$4.89 per share) plus TRS NOLs remain to shelter future gains and operating income. | — |
Q&A Summary
Matthew Erdner (JonesTrading) asked for more color on the record net loan growth, the 2.83% spread, and the current pipeline.
CEO Mark Fogel said originations were mostly multifamily with average loan sizes of about $40-50 million and spreads of 250-325 bps, purposely concentrated in multifamily to feed the new CLO, which allows up to 40% reinvestment outside multifamily over a 30-month period.
Matthew Erdner (JonesTrading) asked about plans for the remaining equity/real estate investments and expected exits in 2026.
Fogel said one smaller land deal is under LOI to sell, another asset is on the market with offers expected during the year, and decisions will depend on pricing.
Matthew Erdner (JonesTrading) asked why non-controlling interest jumped to about $130 million from roughly $1 million.
Chairman Andrew Fentress explained the Company sold a portion of its previously issued JPMorgan financing arrangement, and that interest is recorded as an NCI.
Chris Muller (Citizens JMP) asked whether the Q4 pace of deployment is sustainable or was mostly tied to the January CLO execution.
Fogel said a decent amount of additional deployment is expected, with a significant amount already occurring in Q1 2026, and reiterated a projection of $500-700 million of net portfolio growth in 2026.
Chris Muller (Citizens JMP) asked whether future REO gains would be fully taxed now that capital loss carryforwards expired.
CFO Eldron Blackwell said $32.1 million of NOLs remain available, and with ongoing depreciation and normal operating expenses he does not expect future gains on those capital items to be taxable, with additional NOLs in the TRS providing further protection.
Gabriel Poggi (Raymond James) asked about the comfort level on leverage as the portfolio ramps toward 3.5x.
Fentress said the Company is comfortable inside four turns of total leverageable capital (inclusive of preferred and NCI) and does not expect to exceed that level.
More on ACRES Commercial Realty Corp.
Reported 2026-03-05 · figures from the ACRES Commercial Realty Corp. Q4 2025 earnings call.
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