I would like to highlight that we have posted the first quarter 2026 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 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.
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. To be the best partner, we have to offer creative solutions, competitive, flexible capital, and exceptional customer experience. Over time, we want to deliver a sector-leading return profile defined by consistent above-market dividends while employing modest leverage with complete transparency. You know, how should we think about that and just capital deployment going forward?
Look, part of the strategy is, you know, as we expect to drive a dividend, that will get us to a place where we hope to be able to issue and grow from there. I see you guys mentioned that EAD supporting a common dividend in the press release there. Should we expect a dividend to be implemented in quick order once the transaction closes? Is it kind of just getting everything integrated together, and then you'll address a dividend down the road?
| Metric | Period | Current guidance |
|---|---|---|
| Internalization / merger close | 2026 | Expected to be voted on at the June 22 annual meeting and to close shortly thereafter, most likely in July 2026 |
| Net portfolio growth | FY2026 | Reiterated meaningful net growth; considers the portfolio essentially fully invested at quarter-end pending a resumed dividend and capital raising |
| FL4 securitization run-rate | Q2 2026 | Full run-rate benefit of the fully invested FL4 securitization expected to be realized in the second quarter |
| Pro forma dividend | Post-merger | Three illustrative cases at ~3.5x leverage produce dividends ranging from the mid-single digits up to the mid-teens, funded by non-balance-sheet asset-management fee revenue; dividends to be paid as earned |
| Leverage | Ongoing | Comfortable around 3.5x; internalization is expected to allow a higher dividend without increasing leverage |
| Metric | YoY | Note |
|---|---|---|
| GAAP net loss allocable to common | $(1.0) million ($(0.16) per share) | Securitization ramp and lower payoff-related fee income, partly offset by a $3.3 million gain on the Philadelphia land sale. |
| Net interest income | $9.3 million (-$1.4 million QoQ) | Ramp-up period of the new FL4 securitization plus lower fee recognition from loan payoffs. |
| Earnings available for distribution (EAD) | $0.02 per share (vs. $(0.48) in Q4) | Positive contribution from the land-sale gain and portfolio growth, offsetting the securitization ramp. |
| CRE loan portfolio | $2.2 billion across 60 loans (net +$374.4 million) | $495.6 million of new commitments at a 3.09% weighted-average new-loan spread; total spread 3.29% over one-month SOFR, with over half the book at SOFR floors above 3%. |
| GAAP book value per share | $29.98 (from $30.01) | Roughly flat quarter over quarter as portfolio activity offset modest items. |
| Allowance for credit losses | $19.4 million / 88 bps (all general) | A $1.0 million CECL release on improved macroeconomic factors, partly offset by higher modeled portfolio credit risk. |
| Leverage | 3.4x (from 2.8x) | Deliberate increase from closing the FL4 securitization to grow the portfolio, a stated objective. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Internalization of the external manager | Externally managed REIT | Announced a stock-for-stock merger to internalize ACRES Capital, forming a ~$5 billion platform; employees/board to own >40%, all consideration in ACR shares at book value, with a June 22 vote and expected July close. | — |
| Adding fee-earning asset management | Balance-sheet-only REIT earnings | The public company will become the registered investment advisor to existing funds and separately managed accounts, with those fees flowing up and included in EAD, supporting a higher dividend without added leverage. | — |
| Portfolio growth and yield protection | Rebuilding the book toward $2 billion+ | Grew to $2.2 billion (60 loans) with over half the portfolio carrying SOFR floors above 3%, protecting yield as base rates decline; considers itself fully invested at quarter-end. | — |
| Credit trajectory | Improving risk ratings | Weighted-average risk rating improved to 2.5 and the 4/5 economic-interest share fell to 14%, with the CECL allowance down to 88 bps. | — |
| Accretive capital philosophy | Buying back stock below book value | Management stressed doing everything accretively - the internalization is at book value and any future equity issuance would be at or above book value. | — |