I would like to highlight that we have posted the Q2 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 quarter. We still anticipate meeting our target $500 million of net growth in the REIT for 2026.
GAAP net loss for the quarter also included $10.5 million in net interest income, which was an increase of $1.3 million over the prior quarter. This increase in net interest income was primarily driven by the full quarter's impact of our new CRE securitization. GAAP net loss for the quarter also included $1.1 million of net increase in the performance of our net real estate operations.
We do this by staying focused on serving our borrowers and delivering them the service and capital that they need. As you probably are aware, the GAAP requires us to record expenses as they get created, so that's why some of them showed up in Q2. This is AUM and fees related to an evergreen fund vehicle, separate accounts, and new fund products that are in our pipeline at ACRES.
| Metric | Period | Current guidance |
|---|---|---|
| Internalization close | Q3 2026 | Approved by ~99% of votes cast; closing expected in short order (completed August 6, 2026) |
| Internalization transaction costs | Q3 2026 | Additional transaction-related costs expected in Q3, but lower than the Q2 level |
| Net REIT portfolio growth | FY2026 | Still anticipates meeting the target of $500 million of net growth in the REIT for 2026 |
| Pro forma asset-management (AUM) fees | Post-merger | Case scenarios span roughly $48 million to $73 million of fee revenue depending on AUM growth in evergreen funds, separate accounts and new fund products |
| Financial reporting | Going forward | Reporting will expand from a REIT balance sheet to also include fee-related revenues; management asked for patience during the transition |
| Metric | YoY | Note |
|---|---|---|
| GAAP net loss allocable to common | $(12.5) million ($(1.87) per share) | Included $5.1 million of internalization transaction costs and $4.0 million of incremental compensation from accelerated vesting of restricted stock. |
| Net interest income | $10.5 million (+$1.3 million QoQ) | Full-quarter impact of the new ACRES 2026-FL4 CRE securitization. |
| Earnings available for distribution (EAD) | $(0.74) per share (or $0.14 ex-costs) | $5.5 million of internalization transaction costs and $984,000 of accelerated deferred debt costs drove the reported loss; underlying EAD was positive at $0.14. |
| GAAP book value per share | $26.76 (from $29.98) | Vesting of restricted stock, transaction costs and deferred debt costs recognized ahead of the internalization close. |
| CRE loan portfolio | Net -$74.9 million | $92.7 million of payoffs and paydowns exceeded $17.8 million of funded commitments as the Company stayed selective. |
| Allowance for credit losses | $21.1 million / 99 bps (all general) | A $1.7 million CECL increase on weaker projected macroeconomic factors. |
| Leverage | 3.2x (from 3.4x) | Net repayments on the CRE loan portfolio during the quarter. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Completing the internalization | Announced merger; June vote pending | About 99% of votes cast approved the share issuance and management expected to close in short order (subsequently completed August 6, 2026), transitioning ACRES to an internally managed company with employees/board owning 40%+. | — |
| Transaction costs and book-value impact | One-time costs expected | Q2 absorbed $5.1-5.5 million of transaction costs, $4.0 million of accelerated-vesting compensation and $984,000 of accelerated deferred debt costs, cutting reported EAD and book value; management said Q3 costs would be lower. | — |
| Dual revenue model | Balance-sheet REIT plus incoming fee business | The combined company will have two primary revenue sources - the CRE loan balance sheet plus asset-management fees - with fee cases of roughly $48-73 million and expanded reporting to reflect fee-related revenue. | — |
| Loan pipeline and market opportunity | Fully invested; targeting net growth | Management said the pipeline is stronger than ever amid market capitulation and asset sales, reaffirming a ~$500 million net-growth target for the REIT in 2026 while remaining selective. | — |
| Remaining real estate monetization | Winding down REO | Two REO properties remain, including a hotel held for sale since 2022 that is hard to sell without a labor-union contract; it is back on the market. | — |
| Tax assets | $32.1 million of NOLs | Gross NOL carryforwards grew to $94.1 million (~$6.36 per share) available to offset future income. | — |