The first quarter of 2026 was defined by ACRES Commercial Realty's announcement that it would internalize its external manager, acquiring ACRES Capital in a stock-for-stock merger to create a roughly $5 billion internally managed platform in which employees and board members would own more than 40% of the company. Management framed the deal as adding a fee-earning asset-management business - the public company becoming the registered investment advisor to existing funds and separately managed accounts, with those fees flowing into earnings available for distribution and supporting a higher dividend without added leverage; a shareholder vote was set for June 22 with an expected July close, and no pro forma book value was provided. Operationally, ACRES grew its CRE loan portfolio a net $374.4 million to $2.2 billion across 60 investments on $495.6 million of new commitments at a 3.09% weighted-average spread, deliberately lifting GAAP leverage to 3.4x from 2.8x after closing the $1 billion ACRES 2026-FL4 securitization, whose full run-rate benefit was expected in Q2. EAD returned to a positive $0.02 per share (from a $0.48 loss in Q4), helped by a $3.3 million gain on the sale of a Philadelphia land parcel, though a securitization ramp and lower payoff fees produced a GAAP net loss to common of $1.0 million ($0.16 per share) and net interest income slipped to $9.3 million; book value per share was essentially flat at $29.98. Credit continued to improve, with the weighted-average risk rating at 2.5, the 4/5-rated economic-interest share down to 14%, the CECL allowance at 88 bps, and more than half the portfolio protected by SOFR floors above 3%. Management reiterated an accretive capital philosophy - the internalization struck at book value and any future equity issuance at or above book - and pointed to illustrative pro forma dividend scenarios ranging from the mid-single digits to the mid-teens at roughly 3.5x leverage.
Good morning, thank you for joining our call. I would like to highlight that we have posted the first quarter 2026 earnings presentation to our website. This presentation contains summary and detailed information about the quarterly results of the company. Before we begin, I want to remind everyone that certain statements made during this call are not based on historical information and may constitute forward-looking statements. When used in this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements. Although the company believes these forward-looking statements are based on reasonable assumptions, such statements are based on management's current expectations and beliefs and are subject to several trends, risks, and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements.
These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Forms 8-K, 10-Q, and 10-K, and in particular, the risk factor section of its Form 10-K. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update any of these forward-looking statements. Certain non-GAAP financial measures may be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute to the financial information presented in accordance with GAAP. 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.
With me on the call today are Mark Fogel, President and CEO, Andrew Fentress, Chairman of ACR, and Eldron C. Blackwell, ACR CFO. I will now turn the call over to Mark.
Good morning, everyone, and thank you for joining our call. Today, I will provide an overview of our loan operations, real estate investments, and the health of the investment portfolio, while Eldron C. Blackwell, our CFO, will discuss the financial statements, liquidity condition, book value, and operating results for the first quarter 2026. Of course, we look forward to your questions at the end of our prepared remarks. Since acquiring the ACR management contract in 2020, we have executed on our strategy to drive book value by originating high-quality loans, aggressively managing the portfolio, repurchasing our stock, and creatively using tax assets available to the company. As part of that strategy, this quarter we sold another of our real estate investments and realized a $3.3 million GAAP and EAD gain.
This sale, coupled with the sale of an office building in 2024 and our development and sale of the student housing project in Florida and other projects, were key components to our real estate investment strategy. The gains on the real estate investment, stock repurchases, and retained earnings raised our book value by 66% since 2020, $29.98 per share. We deployed the proceeds from sales back into our loan book, originating high-quality loans, and this quarter closed on our new CRE securitization. ACRES 2026-FL4 is a $1 billion CRE securitization that has leverage of 86.5% at SOFR plus 1.68% and includes a 30-month reinvestment period. We completed the ramp-up period investments during the first quarter 2026 and will see the full run rate benefit of the transaction in the second quarter.
This is the fourth securitization transaction that we have completed at the REIT. We were able to increase our GAAP leverage from 2.8x at December 31st to 3.4x at March 31st, which was a stated objective we had last year to increase portfolio leverage and the size of the CRE loan portfolio. In the first quarter 2026, we closed new commitments of $495.6 million, offset by loan payoffs and net unfunded commitments totaling $121.2 million, producing a net increase to the loan portfolio of $374.4 million. The weighted average spread on newly originated loans is 3.09%.
We have increased the loan portfolio to $2.2 billion and 60 investments as of March 31st, and the spread is now 3.29% over one-month Term SOFR rates. We now have over half of the portfolio at SOFR floors of over 3%, so we have yield protection in a declining base rate environment. The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. At March 31st, our weighted average risk rating was 2.5, a decrease from 2.7 at December 31st, and the number of loans rated four or five was 10, no change from the end of the fourth quarter. The portion of our CRE loan portfolio rated 4 or 5 based on the company's economic interest was 14% at March 31st, down from 17% at December 31st.
As noted earlier, we are excited to announce that we sold one of our real estate investments in the Greater Philadelphia area this quarter, which resulted in a GAAP and EAD gain of $3.3 million. We will now have ACR's CFO, Eldron C. Blackwell, discuss the financial statements and operating results during the first quarter.
Thank you, good morning, everyone. GAAP net loss allocable to common shares in the first quarter was $1 million or $0.16 per share.
GAAP net loss for the quarter included $9.3 million in net interest income, which was a decrease of $1.4 million over the prior quarter. This decrease in net interest income was primarily driven by the ramp-up period of our new CRE securitization, combined with lower fee recognition from loan payoffs. As Mark noted, we'll see the run rate impact of the fully invested FL4 securitization during the second quarter. GAAP net loss for the quarter also included a $1.3 million net decrease in the performance of our net real estate operations to a net loss of $1.2 million and a $3.3 million net gain on the sale of the previously mentioned land sale in the Philadelphia area.
We saw a decrease in current expected CECL losses or CECL reserves of $1 million or $0.15 per share, as compared to a decrease in CECL reserves during the fourth quarter of $1.3 million, which was primarily driven by improvements in projected macroeconomic factors during the quarter, offset by an increase in the model credit risk of the company's loan portfolio. The total allowance for credit losses at March 31st was $19.4 million and represented 0.88% or 88 basis points on our $2.2 billion loan portfolio at par and was composed entirely of general credit reserves. EAD for the first quarter 2026 was $0.02 per share as compared to an EAD loss of $0.48 per share for the fourth quarter.
GAAP book value per share was $29.98 on March 31st versus $30.01 on December 31st. Available liquidity at March 31st was $87 million, which comprised $48 million of unrestricted cash and $38 million of projected financing available on unlevered assets. Our GAAP debt-to-equity leverage ratio increased to 3.4 times at March 31st from 2.8 times at December 31st, primarily from the closing of the securitization. At the end of the first quarter 2026, the company's net operating loss carryforwards were $32.1 million or approximately $4.89 per share. With that, I will turn the call to Andrew Fentress for closing remarks.
Thank you, Eldron. Along with the entire ACRES team and board members of ACRES Commercial Realty, I'm thrilled to announce the internalization combination of these two companies. The logic for the combination is simple: to be the best resource possible for our middle-market customers. To be the best partner, we have to offer creative solutions, competitive, flexible capital, and exceptional customer experience. Today, ACRES provides a complete dirt-to-perm financing solution program. As we continue to grow this roughly $5 billion platform, our offering and service will only improve, further driving value for all of our stakeholders. Post the merger, the ACRES employees and board members will be the largest shareholders in the company with over a 40% interest. We'll keep this directly aligned with our other shareholders and focused on credit, customers, and costs.
Over time, we want to deliver a sector-leading return profile defined by consistent above-market dividends while employing modest leverage with complete transparency. Management will remain in place. All the ACRES owners and employees received 100% of their consideration for this transaction in ACR shares at book value, signaling our belief in the long-term success of this company. While we humbly recognize the challenges in our market, ACRES is front-footed and growing. We love to compete each day and look forward to working with each of you in the coming years. In addition to our regular shareholder presentation for the Q1, we've also added a short presentation to help further explain the merit of the transaction. Both can be found on our website. This concludes our opening remarks. I'll now turn the call back to the operator for questions.