ACRES Commercial Realty Corp.

GAAP net loss allocable to common shares in Q2 2026 was $12.5 million, or $1.87 per share. EAD was a loss of $0.74 per share versus a gain of $0.02 per share in Q1; management said EAD would have been $0.14 per share excluding transaction-related costs and deferred debt cost acceleration. GAAP net interest income was $10.5 million, up $1.3 million from the prior quarter, driven mainly by the full-quarter impact of the new CRE securitization. GAAP book value per share was $26.76 at June 30 versus $29.98 at March 31; liquidity was $83 million, including $41 million of unrestricted cash and $42 million of projected financing available on unlevered assets. The allowance for credit losses was $21.1 million, or 0.99% of the $2.1 billion loan portfolio at par, and leverage fell to 3.2x from 3.4x. For the loan portfolio, payoffs and paydowns were $92.7 million and funded commitments were $17.8 million, resulting in a net decrease of $74.9 million. Management still expects to meet its target of $500 million in net REIT growth for 2026. For Q3, management said additional transaction-related costs will be recognized, but those one-time expenses will be lower than in Q2.

Mark Steven Fogel said the portfolio continues to be actively managed and is improving on underperforming assets, while underwriting remains selective. He emphasized that the market is showing more capitulation, which is creating opportunities to buy or originate loans backed by quality sponsors. He also highlighted that the internalization is progressing and that the company expects to provide more updates as it gets completed.

Eldron C. Blackwell focused on the quarter’s accounting impacts and balance sheet position. He cited $5.1 million of internalization transaction costs, $4 million of incremental compensation expense from accelerated vesting, and $984 thousand of accelerated deferred debt costs, all of which pressured earnings and EAD. He also pointed to $83 million of available liquidity, a $21.1 million allowance for credit losses, and a reduction in leverage to 3.2x, while noting that additional transaction costs should flow through Q3 as the deal closes.

Analysts focused on the path to the $500 million net growth target, the internalization expense run-rate, the drivers of post-merger AUM fees, and the timeline for selling remaining REO assets. Management said the pipeline is stronger than ever and that growth should come from converting existing equity dollars in the portfolio into loan book, not primarily from warehouse financing. On fees, management pointed to evergreen funds, separate accounts, and new fund products, saying AUM growth would push fee income higher. On the remaining hotel REO, management said it is back on the market but remains difficult to sell because labor issues make expense forecasting hard.