ACRES Commercial Realty Corp
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
ACR$12.05-8.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0000950170-24-055428
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000950170-24-091713
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 281 previous paragraphs and 294 current paragraphs.
160 unchanged; 103 reworded; 24 added; 15 removed; 3 previous and 7 current paragraphs rearranged.
Tables are not compared: 29 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Net Change in Interest Expense for the Comparative three and six months ended June 30, 2024 and 2023:
Current report
Includes amortization expense of $167,000 and $157,000 for the three months ended June 30, 2024 and 2023, respectively.
Current report
Includes fee income of $3.2 million and $3.9 million on our floating-rate CRE whole loans for the six months ended June 30, 2024 and 2023, respectively.
Current report
Includes amortization expense of $331,000 and $311,000 for the six months ended June 30, 2024 and 2023, respectively.
Current report
Aggregate operating expenses decreased by $2.3 million and $2.1 million for the comparative three and six months ended June 30, 2024 and 2023. We attribute the change to the following:
Current report
Real estate expenses. The decrease of $756,000 for the three months ended June 30, 2024 was primarily attributable to the acquisition-date accrual of property taxes on a Chicago office property that we acquired through deed-in-lieu of foreclosure in June 2023.
Current report
Provision for credit losses. The provision for credit losses of $1.3 million for the three months ended June 30, 2024 and $6.2 million for the six months ended June 30, 2024 were primarily driven by worsening macroeconomic factors due to higher interest rates longer than expected offset by a decrease in modeled credit risk for improved property-level performance and loan payoffs. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.
Current report
Other Income. The increase of $1.2 million during each of the comparative three and six months ended June 30, 2024 and 2023 is primarily attributed to the reversal of warranty reserves and representations related to a discontinued residential lending business.
Current report
Includes a mezzanine loan of $2.1 million, at amortized cost, that has a fixed interest rate of 15.0% at June 30, 2024.
Current report
A multifamily loan in the Southeast region, with a principal balance of $9.3 million at June 30, 2024 and December 31, 2023, respectively, for which foreclosure was determined to be probable. This loan had an as-is appraised value in excess of its principal, and, as such, had no CECL allowance June 30, 2024.
Current report
At December 31, 2023, we individually evaluated two additional loans for which resolutions were reached in fiscal year 2024:
Current report
Includes three CRE whole loans, with total amortized costs of $88.5 million, that are past due on interest payments at June 30, 2024.
Current report
A multifamily loan with an amortized cost of $70.6 million, representing 4.1% of the total amortized cost of the portfolio, was modified to: (i) extend its maturity from January 2025 to January 2026 and (ii) provide for 2.00% per annum of the interest rate to be deferred until payoff. We also entered into a mezzanine loan with a total commitment of $6.0 million, of which $2.3 million was funded at June 30, 2024. The loan has a fixed rate of 15.00% that accrues and will be due at payoff in January 2026. In connection with the modification, the borrower renewed the interest rate cap.
Current report
These loans were performing in accordance with the modified contractual terms as of June 30, 2024. At June 30, 2024, these loans had a risk rating of "4." Loans with a risk rating of "4" are included in the determination of our general CECL reserves.
Current report
The increase of $772,000 in accrued interest receivable was primarily attributable to accrued deferred interest on modified loans offset by loan payoffs.
Current report
Total equity at June 30, 2024 was $444.4 million compared to total equity at December 31, 2023 of $446.2 million. The decrease in equity during the six months ended June 30, 2024 was primarily attributable to common stock and preferred stock repurchases offset by current earnings for the six months ended June 30, 2024.
Current report
For the three months ended June 30, 2024, there was no incentive compensation payable to the Manager.
Current report
Excludes accrued interest payable of $452,000 and deferred debt issuance costs of $1.6 million.
Current report
Excludes deferred debt issuance costs of $155,000.
Current report
Excludes deferred debt issuance costs of $708,000.
Current report
Excludes deferred debt issuance costs of $412,000.
Current report
Excludes $287,000 of accrued interest payable.
Current report
Includes $452,000 of accrued interest payable.
Current report
Excludes $168,000 of accrued interest payable.
Removed paragraphs (15)
Previous report
We historically used derivative financial instruments, including interest rate swaps, to hedge a portion of the interest rate risk associated with our borrowings. In April 2020, we terminated all interest rate hedges in conjunction with the disposition of our financed commercial mortgage-backed securities (“CMBS”) portfolio. At March 31, 2024 and December 31, 2023, we had unrealized losses in connection with the terminated hedges of $4.5 million and $5.0 million, respectively, which will be amortized into interest expense over the remaining life of the debt. During the three months ended March 31, 2024, we recognized amortization expense on these terminated contracts of $420,000.
Previous report
Includes amortization expense of $164,000 and $155,000 for the three months ended March 31, 2024 and 2023, respectively.
Previous report
Aggregate operating expenses increased by $169,000 for the comparative three months ended March 31, 2024 and 2023. We attribute the change to the following:
Previous report
Real estate expenses. The increase of $671,000 for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to incremental real estate operating expenses from the acquisition of an office building through deed-in-lieu of foreclosure in June 2023. This was partially offset by the loss of expenses from the sale of a hotel property in February 2023.
Previous report
The total amortized cost of CRE loans excluded accrued interest receivable of $11.8 million at both March 31, 2024 and December 31, 2023.
Previous report
The total amortized cost of CRE loans excluded accrued interest receivable of $11.8 million at both March 31, 2024 and December 31, 2023.
Previous report
The total amortized cost of CRE loans excluded accrued interest receivable of $11.8 million and at both March 31, 2024 and December 31, 2023.
Previous report
The increase of $106,000 in accrued interest receivable was primarily attributable to rising benchmark rates.
Previous report
Total equity at March 31, 2024 was $443.2 million, comprising $224.0 million of preferred equity and $219.2 million of common equity, and gave effect to $4.4 million of net unrealized losses on our terminated cash flow hedges, shown as a component of accumulated other comprehensive loss. Total equity at December 31, 2023 was $446.2 million, comprising $226.5 million of preferred equity and $219.7 million of common equity, and after giving effect to $4.8 million of net unrealized losses on our terminated cash flow hedges, shown as a component of accumulated other comprehensive loss. The decrease in equity during the three months ended March 31, 2024 was primarily attributable to distributions on our preferred stock, repurchases of preferred stock and common stock repurchases. This is partially offset by net income prior to preferred distributions, contributions from non-controlling interests and non-cash amortization of terminated cash flow hedges.
Previous report
Excludes accrued interest payable of $544,000 and deferred debt issuance costs of $1.9 million.
Previous report
Excludes deferred debt issuance costs of $207,000.
Previous report
Excludes deferred debt issuance costs of $415,000.
Previous report
Excludes $310,000 of accrued interest payable.
Previous report
Includes $544,000 of accrued interest payable.
Previous report
Excludes $146,000 of accrued interest payable.
Reworded paragraphs (103)
Previous wording
We originate transitional floating-rate CRE loans with a target size of between $10.0 million and $100.0 million. During the three months ended March 31, 2024, we did not originate new floating-rate CRE loans. Loan payoffs during the three months ended March 31, 2024 were $80.8 million, offset by net funded commitments of $11.4 million, producing a net decrease to the portfolio of $69.4 million. During the year ended December 31, 2023, we selectively originated three floating-rate CRE whole loans with total commitments of $68.2 million. Loan payoffs during the year ended December 31, 2023 were $293.1 million, offset by net funded commitments of $40.5 million, producing a net decrease to the portfolio of $184.4 million.
Current wording
We originate transitional floating-rate CRE loans with a target size of between $10.0 million and $100.0 million. During the six months ended June 30, 2024, we did not originate new floating-rate CRE loans. Loan payoffs during the six months ended June 30, 2024 were $152.0 million, offset by net funded commitments of $20.7 million, producing a net decrease to the portfolio of $131.3 million. During the year ended December 31, 2023, we selectively originated three floating-rate CRE whole loans with total commitments of $68.2 million. Loan payoffs during the year ended December 31, 2023 were $293.1 million, offset by net funded commitments of $40.5 million, producing a net decrease to the portfolio of $184.4 million.
Previous wording
First mortgage loans, which we refer to as whole loans. These loans are typically secured by first liens on CRE property, including the following property types: multifamily, student housing, hospitality, office, self-storage and retail. All but two of our CRE whole loans were current on contractual payments at March 31, 2024.
Current wording
First mortgage loans, which we refer to as whole loans. These loans are typically secured by first liens on CRE property, including the following property types: multifamily, student housing, hospitality, office, self-storage and retail. All but four of our CRE whole loans were current on contractual payments at June 30, 2024.
Previous wording
In a business environment where benchmark rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In most cases the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At March 31, 2024, 77% of the par value of our CRE loan portfolio had interest rate caps in place with a weighted-average maturity of six months.
Current wording
In a business environment where benchmark rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In most cases, the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At June 30, 2024, 86% of the par value of our CRE loan portfolio had interest rate caps in place with a weighted-average maturity of four months.
Previous wording
At March 31, 2024, our par-value $1.8 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 0.74%, while at December 31, 2023, this floor was 0.70%. With the trend of rising benchmark rates, we have seen the coupons on all of our floating-rate assets and debt rise accordingly. Because we have equity invested in each floating-rate loan, and because in all instances the benchmark interest rates are above our loan floors, the rise in interest rates resulted in an increase in our net interest income. See “Interest Rate Risk” in “Item 3: Quantitative and Qualitative Disclosures About Market Risk.”
Current wording
At June 30, 2024, our par-value $1.7 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 0.75%, while at December 31, 2023, this floor was 0.70%. With the trend of rising benchmark rates, we have seen the coupons on all of our floating-rate assets and debt rise accordingly. Because we have equity invested in each floating-rate loan, and because in all instances the benchmark interest rates are above our loan floors, the rise in interest rates resulted in an increase in our net interest income. See "Interest Rate Risk" in "Item 3: Quantitative and Qualitative Disclosures About Market Risk."
Previous wording
Our portfolio comprises loans with a diverse array of collateral types and locations. Multifamily continues to comprise the majority of our portfolio, with 79.1% of our portfolio allocated to multifamily at March 31, 2024 and 79.6% at December 31, 2023. The following charts show our portfolio allocation by property type at March 31, 2024 and December 31, 2023:
Current wording
Our portfolio comprises loans with a diverse array of collateral types and locations. Multifamily continues to comprise the majority of our portfolio, with 79.4% of our portfolio allocated to multifamily at June 30, 2024 and 79.6% at December 31, 2023. The following charts show our portfolio allocation by property type at June 30, 2024 and December 31, 2023:
Previous wording
From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. During the three months ended March 31, 2024, we acquired an office property located in the East North Central region via deed-in-lieu of foreclosure that, at acquisition, had a cost basis of $14.0 million and a fair value of $20.3 million. We recognized a $5.8 million gain upon converting the loan to real estate owned and immediately contributed the property into a joint venture with an unrelated third-party, seeking to maximize the property's value through a multifamily conversion. We reported this investment as an investment in an unconsolidated entity on our consolidated balance sheets.
Current wording
From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. During the first quarter of 2024, we acquired an office property located in the East North Central region via deed-in-lieu of foreclosure that, at acquisition, had a cost basis of $14.0 million and a fair value of $20.3 million. We recognized a $5.8 million gain upon converting the loan to real estate owned and immediately contributed the property into a joint venture with an unrelated third-party, seeking to maximize the property's value through a multifamily conversion. We reported this investment as an investment in an unconsolidated entity on our consolidated balance sheet at June 30, 2024.
Previous wording
At March 31, 2024, the total carrying value of our net real estate-related assets and liabilities was $162.9 million on six properties owned, four of which are included in investments in real estate and two of which are included in properties held for sale on our consolidated balance sheets. The existence of net capital loss carryforwards available until December 31, 2025 allows for potential future capital gains on certain of these investments to be shielded from income taxes.
Current wording
At June 30, 2024, the net carrying value of our net real estate-related assets and liabilities was $161.1 million on six properties owned, four of which are included in investments in real estate and two of which are included in properties held for sale on our consolidated balance sheets. The existence of net capital loss carryforwards available until December 31, 2025 allows for potential future capital gains on certain of these investments to be shielded from income taxes.
Previous wording
Each of our CRE debt securitizations initially provided for a two-year reinvestment period that allowed us to reinvest CRE loan payoffs and principal paydown proceeds into the securitizations, pending certain eligibility criteria are met and rating agency approval is obtained. The reinvestment periods on both our securitizations ended in May 2023 and December 2023.
Current wording
Each of our CRE debt securitizations initially provided for a two-year reinvestment period that allowed us to reinvest CRE loan payoffs and principal paydown proceeds into the securitizations, pending certain eligibility criteria are met and rating agency approval is obtained. The reinvestment periods on our securitizations ended in May 2023 and December 2023, respectively.
Previous wording
We reevaluate our current expected credit losses ("CECL") allowance quarterly, incorporating our current expectations of macroeconomic factors considered in the determination of our CECL reserves. At March 31, 2024, the CECL allowance on our CRE loan portfolio was $33.7 million, or 1.9% of our $1.8 billion loan portfolio. During the three months ended March 31, 2024, we recorded a provision for credit losses primarily attributable to worsening macroeconomic factors due to higher interest rates lasting longer than expected, compounded by an increase in modeled credit risk from the expected worsening of property-level performance.
Current wording
We reevaluate our current expected credit losses ("CECL") allowance quarterly, incorporating our current expectations of macroeconomic factors considered in the determination of our CECL reserves. At June 30, 2024, the CECL allowance on our CRE loan portfolio was $35.0 million, or 2.0% of our $1.7 billion loan portfolio. During the six months ended June 30, 2024, we recorded a provision for credit losses primarily attributable to worsening macroeconomic factors, including, but not limited to, higher interest rates lasting longer than expected pressuring CRE pricing, offset, in part, by a decrease in modeled credit risk resulting from payoffs and net improvements in property-level performance.
Previous wording
Additionally, the decline in our CECL reserves from our highest reserve balance at June 30, 2020 of $61.1 million, or 3.4% of the par balance of our CRE loan portfolio, to our current reserve balance at March 31, 2024 of $33.7 million, or 1.9% of the par balance of our CRE loan portfolio, has been due to the following: the successful resolution of our individually evaluated loans with specific reserves, the overall newer vintage of our CRE loan portfolio (with only 9.4% of the portfolio, at March 31, 2024, being originated prior to the fourth quarter of 2020) as well as the increased percentage allocation of our CRE loan portfolio to multifamily loans over time. Multifamily loans have historically had the lowest credit losses of any asset class, and our percentage allocation of our CRE loan portfolio to multifamily has grown from 58.4% at June 30, 2020 to 79.1% at March 31, 2024.
Current wording
Additionally, the decline in our CECL reserves from our highest reserve balance at June 30, 2020 of $61.1 million, or 3.4% of the par balance of our CRE loan portfolio, to our current reserve balance at June 30, 2024 of $35.0 million, or 2.0% of the par balance of our CRE loan portfolio, has been due to the following: the successful resolution of our individually evaluated loans with specific reserves, the overall newer vintage of our CRE loan portfolio (with only 8.8% of the portfolio, at June 30, 2024, being originated prior to the fourth quarter of 2020) as well as the increased percentage allocation of our CRE loan portfolio to multifamily loans over time. Multifamily loans have historically had the lowest credit losses of any asset class, and our percentage allocation of our CRE loan portfolio to multifamily has grown from 58.4% at June 30, 2020 to 79.4% at June 30, 2024.
Previous wording
Common stock book value was $27.25 per share at March 31, 2024, a $0.60 per share increase from December 31, 2023.
Current wording
Common stock book value was $27.20 per share at June 30, 2024, a $0.55 per share increase from December 31, 2023.
Previous wording
Our net income allocable to common shares for the three months ended March 31, 2024 was $556,000, or $0.07 per share-basic ($0.07 per share-diluted), as compared to net loss allocable to common shares for the three months ended March 31, 2023 of $2.4 million, or $0.28 per share-basic ($0.28 per share-diluted).
Current wording
Our net income allocable to common shares for the three months ended June 30, 2024 was $1.7 million or $0.22 per share-basic ($0.21 per share-diluted) as compared to net income allocable to common shares for the three months ended June 30, 2023 of $817,000 or $0.10 per share-basic ($0.10 per share-diluted). Our net income allocable to common shares for the six months ended June 30, 2024 was $2.2 million, or $0.29 per share-basic ($0.28 per share-diluted), as compared to net loss allocable to common shares for the six months ended June 30, 2023 of $1.6 million, or $0.19 per share-basic ($0.19 per share-diluted).
Previous wording
The following tables analyze the change in interest income and interest expense for the comparative three months ended March 31, 2024 and 2023 by changes in volume and changes in rates. The changes attributable to the combined changes in volume and rate have been allocated proportionately, based on absolute values, to the changes due to volume and changes due to rates (dollars in thousands, except amounts in footnotes):
Current wording
The following tables analyze the change in interest income and interest expense for the comparative three and six months ended June 30, 2024 and 2023 by changes in volume and changes in rates. The changes attributable to the combined changes in volume and rate have been allocated proportionately, based on absolute values, to the changes due to volume and changes due to rates (dollars in thousands, except amounts in footnotes):
Previous wording
Includes a decrease in fee income of $341,000 recognized on our CRE whole loans that was due to changes in volume.
Current wording
Includes a decrease in fee income of $393,000 recognized on our CRE whole loans that was due to changes in volume.
Previous wording
Net Change in Interest Income for the Comparative three months ended March 31, 2024 and 2023:
Current wording
Net Change in Interest Income for the Comparative three and six months ended June 30, 2024 and 2023:
Previous wording
Aggregate interest income decreased by $2.7 million for the comparative three months ended March 31, 2024 and 2023. We attribute the change to the following:
Current wording
Aggregate interest income decreased by $6.1 million and $8.8 million for the comparative three and six months ended June 30, 2024 and 2023, respectively. We attribute the change to the following:
Previous wording
CRE whole loans. The decrease of $2.6 million for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to a decrease in total par value of our CRE portfolio, offset by an increase in the benchmark rate over the comparative periods.
Current wording
CRE whole loans. The decrease of $6.0 million and $8.6 million for the comparative three and six months ended June 30, 2024 and 2023 was primarily attributable to a decrease in total par value of our CRE portfolio, offset, in part, by an increase in the benchmark rate over the comparative periods.
Previous wording
Other. The decrease of $114,000 for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to a decrease in restricted cash in our CRE securitizations, offset by an increase in yields on our interest earning money market accounts.
Current wording
Other. The decrease of $71,000 and $185,000 for the comparative three and six months ended June 30, 2024 and 2023 was primarily attributable to a decrease in restricted cash in our CRE securitizations, offset, in part, by an increase in yields on our interest earning money market accounts.
Previous wording
Aggregate interest expense decreased by $124,000 for the comparative three months ended March 31, 2024 and 2023. We attribute the change to the following:
Current wording
Aggregate interest expense decreased by $2.1 million and $2.3 million for the comparative three and six months ended June 30, 2024 and 2023. We attribute the change to the following:
Previous wording
Securitized borrowings. The net increase of $1.8 million for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to an increase in the benchmark rate over the comparative periods, offset by paydowns on our borrowings.
Current wording
Securitized borrowings. The net decrease of $599,000 for the comparative three months ended June 30, 2024 and 2023 was primarily attributable to paydowns on our borrowings. The net increase of $1.2 million for the comparative six months ended June 30, 2024 and 2023 was primarily attributable to an increase in the benchmark rate over the comparative periods, offset, in part, by paydowns on our borrowings.
Previous wording
Senior secured financing facility. The increase of $120,000 for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to an increase in the benchmark rate over the comparative periods.
Current wording
Senior secured financing facility. The increase of $291,000 and $410,000 for the comparative three and six months ended June 30, 2024 and 2023 was primarily attributable to an increase in borrowings and the benchmark rate over the comparative periods.
Previous wording
CRE - term warehouse financing facilities. The decrease of $2.2 million for the comparative three months ended March 31, 2024 and 2023 were primarily attributable to paydowns on our borrowings.
Current wording
CRE - term warehouse financing facilities. The decrease of $1.9 million and $4.1 million for the comparative three and six months ended June 30, 2024 and 2023 were primarily attributable to paydowns on our borrowings.
Previous wording
Unsecured junior subordinated debentures. The increase of $122,000 for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to an increase in the benchmark rate over the comparative periods.
Current wording
Unsecured junior subordinated debentures. The increase of $62,000 and $184,000 for the comparative three and six months ended June 30, 2024 and 2023 was primarily attributable to an increase in the benchmark rate over the comparative periods.
Previous wording
The following tables present the average net yield and average cost of funds for the three months ended March 31, 2024 and 2023 (dollars in thousands, except amounts in footnotes):
Current wording
The following tables present the average net yield and average cost of funds for the three and six months ended June 30, 2024 and 2023 (dollars in thousands, except amounts in footnotes):
Previous wording
Includes fee income of $1.7 million and $2.1 million recognized on our floating-rate CRE whole loans for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Includes fee income of $1.5 million and $1.9 million recognized on our floating-rate CRE whole loans for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Includes net amortization expense of $397,000 and $393,000 for the three months ended March 31, 2024 and 2023, respectively, on 20 terminated interest rate swap agreements, respectively, that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.
Current wording
Includes net amortization expense of $397,000 for each of the three months ended June 30, 2024 and 2023 on 20 terminated interest rate swap agreements that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.
Previous wording
Aggregate real estate income and other revenue increased by $304,000 for the comparative three months ended March 31, 2024 and 2023. The increase in the comparative three months was primarily attributed to incremental revenues from the acquisition of an office building through deed-in-lieu of foreclosure in June 2023. The impact of those incremental revenues was partially offset by the loss of revenues from the sale of a hotel property in February 2023.
Current wording
Aggregate real estate income and other revenue increased by $1.3 million and $1.6 million for the comparative three and six months ended June 30, 2024 and 2023. The increase in the comparative three and six months was attributed to: (i) incremental increase in revenues from the acquisition of an office building through deed-in-lieu of foreclosure in June 2023, (ii) increased revenues from a hotel property that had increased occupancy and rental rates for both the comparative three and six month periods, partially offset by (iii) the loss of revenues from the sale of a hotel property in February 2023 for the comparative three-month period.
Previous wording
General and administrative. General and administrative expenses increased by $276,000 for the comparative three months ended March 31, 2024 and 2023. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):
Current wording
General and administrative. General and administrative expenses increased by $8,000 and $284,000 for the comparative three and six months ended June 30, 2024 and 2023. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):
Previous wording
The increase in general and administrative expense for the comparative three months ended March 31, 2024 and 2023 was primarily attributable to the increase in legal fees related to our CRE loan assets and the timing of our interim audit billings.
Current wording
The increase in general and administrative expense for the comparative three and six months ended June 30, 2024 and 2023 was primarily attributable to an increase in professional services in connection with legal expenses incurred pertaining to CRE loan workouts and the timing of our interim audit billings.
Previous wording
Equity compensation - related party. The decrease of $417,000 for the comparative three months ended March 31, 2024 and 2023 was primarily related to the vesting of shares in 2023. As these shares fully vest, the expense related to equity compensation - related party decreases.
Current wording
Equity compensation - related party. The decrease of $322,000 for the comparative six months ended June 30, 2024 and 2023 was primarily related to the vesting of shares in the second quarter 2024. As these shares fully vest, the expense related to equity compensation - related party decreases.
Previous wording
Aggregate other income increased $5.1 million for the comparative three months ended March 31, 2024 and 2023. We attribute the change to the following:
Current wording
Aggregate other income increased $1.2 million and $6.2 million for the comparative three and six months ended June 30, 2024 and 2023. We attribute the change to the following:
Previous wording
Gain on sale of real estate. The decrease of $745,000 during the comparative three months ended March 31, 2024 and 2023 was primarily attributed to the sale of a hotel property in the Northeast region in February 2023 that generated a non-recurring gain of $745,000. No sales of real estate occurred in the three months ended March 31, 2024.
Current wording
Gain on sale of real estate. The decrease of $745,000 during the comparative six months ended June 30, 2024 and 2023 was primarily attributed to the sale of a hotel property in the Northeast region in February 2023 that generated a non-recurring gain of $745,000. No sales of real estate occurred in the six months ended June 30, 2024.
Previous wording
Gain on conversion of real estate. The increase of $5.8 million during the comparative three months ended March 31, 2024 and 2023 was primarily attributed to the completion of a deed-in-lieu of foreclosure that generated a non-recurring gain of $5.8 million as the fair value of the property exceeded the amortized cost basis of the loan.
Current wording
Gain on conversion of real estate. The increase of $5.8 million during the comparative six months ended June 30, 2024 and 2023 was primarily attributed to the completion of a deed-in-lieu of foreclosure that generated a non-recurring gain of $5.8 million as the fair value of the property exceeded the amortized cost basis of the loan.
Previous wording
Net carrying amount includes an allowance for credit losses of $33.7 million and $28.8 million at March 31, 2024 and December 31, 2023, respectively.
Current wording
Net carrying amount includes an allowance for credit losses of $35.0 million and $28.8 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
Includes real estate related right of use assets of $19.1 million and $19.2 million, intangible assets of $7.6 million and $7.9 million, lease liabilities of $43.7 million and $44.3 million, mortgages payable of $51.3 million and $41.8 million, and other liabilities of $18,000 and $27,000 at March 31, 2024 and December 31, 2023, respectively.
Current wording
Includes real estate related right of use assets of $19.1 million and $19.2 million, intangible assets of $7.4 million and $7.9 million, lease liabilities of $43.9 million and $43.5 million, mortgages payable of $64.0 million and $41.8 million, and other liabilities of $9,000 and $27,000 at June 30, 2024 and December 31, 2023, respectively.
Previous wording
Includes property held for sale-related liabilities of $3.0 million at both March 31, 2024 and December 31, 2023.
Current wording
Includes property held for sale-related liabilities of $3.1 million and $3.0 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
CRE loans. During the three months ended March 31, 2024, we did not originate new CRE loans. We received $80.8 million in proceeds from loan payoffs offset by funding of $11.4 million of previously unfunded loan commitments, producing a net reduction of $69.4 million in the par balance of the portfolio.
Current wording
CRE loans. During the six months ended June 30, 2024, we did not originate any new CRE loans. We received $152.0 million in proceeds from loan payoffs offset by funding of $20.7 million of previously unfunded loan commitments, producing a net reduction of $131.3 million in the par balance of the portfolio.
Previous wording
Amounts include unamortized loan origination fees of $4.2 million and $5.8 million and deferred amendment fees of $509,000 and $110,000 at March 31, 2024 and December 31, 2023, respectively.
Current wording
Amounts include unamortized loan origination fees of $3.1 million and $5.8 million and deferred amendment fees of $902,000 and $110,000 at June 30, 2024 and December 31, 2023, respectively.
Previous wording
Benchmark rates ("BR") comprise one-month Term SOFR. Weighted-average one-month benchmark rates were 5.36% and 5.39% at March 31, 2024 and December 31, 2023, respectively. Additionally, weighted-average benchmark rate floors were 0.74% and 0.70% at March 31, 2024 and December 31, 2023, respectively.
Current wording
Benchmark rates ("BR") comprise one-month Term SOFR. Weighted-average one-month benchmark rates were 5.38% and 5.39% at June 30, 2024 and December 31, 2023, respectively. Additionally, weighted-average benchmark rate floors were 0.75% and 0.70% at June 30, 2024 and December 31, 2023, respectively.
Previous wording
Maturity dates exclude two and three whole loans, with amortized costs of $27.2 million and $41.2 million, in maturity default at March 31, 2024 and December 31, 2023, respectively.
Current wording
Maturity dates exclude one and three whole loans, with amortized costs of $14.4 million and $41.2 million, in maturity default at June 30, 2024 and December 31, 2023, respectively.
Showing the first 40 of 103 pairs. Open the source sections for the rest.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Percent change is calculated as the net change divided by the respective interest income or interest expense for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Includes a decrease in fee income of $734,000 recognized on our CRE whole loans that was due to changes in volume.
Current report — wording carried from elsewhere
Net change pertains to amortization expense and is reflected in the change in volume.
Current report — wording carried from elsewhere
Average net yield includes net amortization/accretion and fee income and is computed based on average amortized cost.
Current report — wording carried from elsewhere
Includes amortization expense of $2.7 million for each of the six months ended June 30, 2024 and 2023 on our interest-bearing liabilities collateralized by CRE whole loans.
Current report — wording carried from elsewhere
Includes net amortization expense of $794,000 and $790,000 for the six months ended June 30, 2024 and 2023, respectively, on 20 terminated interest rate swap agreements that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.
Current report — wording carried from elsewhere
Excludes deferred debt issuance costs of $2.6 million.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Net Change in Interest Expense for the Comparative three months ended March 31, 2024 and 2023:
Previous report — wording carried elsewhere
Excludes deferred debt issuance costs of $2.7 million.
Previous report — wording carried elsewhere
Excludes deferred debt issuance costs of $1.0 million.