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.
| 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 |
| 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. |
| 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. | — |