Q - ACRES Commercial Realty
For the period ended Jun 30, 2025. Filed Aug 5, 2025.
View on SEC.govAbout this filing
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, 2025 · Filed Aug 5, 2025
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 2025-03-31; filed 2025-05-08.
0000950170-25-065958
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0000950170-25-102890
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 316 previous paragraphs and 337 current paragraphs.
200 unchanged; 103 reworded; 27 added; 10 removed; 3 previous and 7 current paragraphs rearranged.
Tables are not compared: 29 previous and 37 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 (27)
Current report
CRE mezzanine loan. The increase of $680,000 and $742,000 for the comparative three and six months ended June 30, 2025 and 2024 was attributable to the origination of our mezzanine loan in March 2025.
Current report
Net Change in Interest Expense for the Comparative three and six months ended June 30, 2025 and 2024:
Current report
Includes amortization expense of $178,000 and $167,000 for the three months ended June 30, 2025 and 2024, respectively.
Current report
Includes fee income of $1.7 million and $3.2 million on our floating-rate CRE whole loans for the six months ended June 30, 2025 and 2024, respectively.
Current report
Includes amortization expense of $353,000 and $331,000 for the six months ended June 30, 2025 and 2024, respectively.
Current report
Equity compensation - related party. The decrease of $229,000 for the comparative three months ended June 30, 2025 and 2024 is primarily related to the acceleration of expense in connection with a board member stepping down. The increase of $109,000 for the comparative six months ended June 30, 2025 and 2024 is primarily related to shares authorized in May 2024. The expense related to these new shares is higher than if it related to shares nearer to being fully vested.
Current report
Equity in losses of unconsolidated subsidiaries. The decrease of $628,000 and $1.1 million for the comparative three and six months ended June 30, 2025 and 2024, respectively, was primarily related to two unconsolidated entity formations after June 30, 2024. These unconsolidated entities had losses for both the three and six months ended June 30, 2025.
Current report
Other income. The decrease of $797,000 and $828,000 during the comparative three and six months ended June 30, 2025 and 2024, respectively, was primarily attributed to the reversal of representation and warranty reserves related to a discontinued residential lending business in 2024 that did not occur in 2025.
Current report
The total amortized cost of CRE loans excluded accrued interest receivable of $19.1 million and $14.6 million at June 30, 2025 and December 31, 2024, respectively.
Current report
The total amortized cost of CRE loans excluded accrued interest receivable of $19.1 million and $14.6 million at June 30, 2025 and December 31, 2024, respectively.
Current report
The total amortized cost of CRE whole loans excluded accrued interest receivable of $19.1 million and $14.6 million at June 30, 2025 and December 31, 2024, respectively.
Current report
During the three and six months ended June 30, 2025, we recognized interest income of $1.5 million and $3.0 million, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2025.
Current report
A multifamily loan with an amortized cost of $70.8 million, representing 5.1% 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. 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. In March 2025, the loan was novated when we foreclosed on the mezzanine loan. In connection with the novation, the new loan pays a current pay fixed rate of 5.00% and has a mezzanine loan commitment of up to $13.5 million, of which $7.3 million was funded at June 30, 2025.
Current report
Includes $3.2 million of deferred debt issuance costs at June 30, 2025.
Current report
Excludes deferred debt issuance costs of $3.2 million.
Current report
Excludes deferred debt issuance costs of $1.8 million.
Current report
Excludes deferred debt issuance costs of $894,000.
Current report
Excludes deferred debt issuance costs of $140,000.
Current report
Excludes deferred debt issuance costs of $397,000.
Current report
Principal outstanding excludes deferred debt issuance costs of $3.2 million at June 30, 2025.
Current report
The following table sets forth the coverage test summary for our financing facility for the periods presented (in thousands):
Current report
Look Through LTV cushion represents the amount by which the collateral held by the counterparty exceeds the minimum amount required.
Current report
Interest coverage includes annualized amounts based on the most recent distribution period.
Current report
Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on the CRE term reinvestment financing facility.
Current report
Excludes $255,000 of accrued interest payable.
Current report
Excludes $162,000 of accrued interest payable.
Current report
Excludes $432,000 of accrued interest payable.
Removed paragraphs (10)
Previous report
Includes amortization expense of $175,000 and $164,000 for the three months ended March 31, 2025 and 2024, respectively.
Previous report
Includes $3.3 million of deferred debt issuance costs at March 31, 2025.
Previous report
Excludes deferred debt issuance costs of $2.0 million.
Previous report
Excludes accrued interest payable of $111,000 and deferred debt issuance costs of $1.2 million
Previous report
Excludes deferred debt issuance costs of $200,000.
Previous report
Excludes deferred debt issuance costs of $401,000.
Previous report
Principal outstanding excludes accrued interest payable of $2.1 million and deferred debt issuance costs of $3.3 million at March 31, 2025.
Previous report
Excludes $270,000 of accrued interest payable.
Previous report
Includes $111,000 of accrued interest payable.
Previous report
Excludes $478,000 of accrued interest payable.
Reworded paragraphs (103)
Previous wording
Furthermore, the office property market continues to experience high vacancies, slower leasing activity and current tenants reevaluating their needs for physical office space due to remote-work trends across the country. These factors, coupled with inflation, historically higher interest rates and dislocations in market liquidity, have converged to create higher levels of uncertainty surrounding property values, which in turn, also negatively impact borrowers' ability and willingness to financially support and standby their investments in their office properties, their abilities to sell or refinance their positions in the current market and ultimately our financial results.
Current wording
The multifamily real estate market continues to be a competitive market, and as a result of investors' continued confidence in that asset class, the market for those assets continues to experience spread compression on newly originated deals. Furthermore, the office property market continues to experience high vacancies, slower leasing activity and current tenants reevaluate their needs for physical office space due to remote-work trends across the country. These factors, coupled with inflation, historically higher interest rates and dislocations in market liquidity, have converged to create higher levels of uncertainty surrounding property values, which in turn, also negatively impact borrowers' ability and willingness to financially support and standby their investments in their office properties, their abilities to sell or refinance their positions in the current market and ultimately our financial results.
Previous wording
We originate transitional floating-rate CRE loans with a target size between $10.0 million and $100.0 million. During the three months ended March 31, 2025, we originated one new $15.0 million CRE mezzanine loan. Loan payoffs during the three months ended March 31, 2025 were $147.7 million, offset by net funded commitments of $12.0 million, producing a net decrease to the portfolio of $120.7 million. During the year ended December 31, 2024, we selectively originated one floating-rate CRE loan, with a total commitment of $47.9 million. Loan payoffs during the year ended December 31, 2024 were $377.6 million, along with loan foreclosures of $37.7 million, partially offset by net funded commitments of $5.9 million, producing a net decrease to the portfolio of $361.5 million.
Current wording
We originate transitional floating-rate CRE loans with a target size between $10.0 million and $100.0 million. During the six months ended June 30, 2025, we originated one new $72.0 million CRE floating-rate whole loan and one new $15.0 million CRE mezzanine loan. Loan payoffs and sales during the six months ended June 30, 2025 were $165.3 million, offset by net funded commitments of $19.3 million, producing a net decrease to the portfolio of $60.2 million. During the year ended December 31, 2024, we selectively originated one floating-rate CRE loan, with a total commitment of $47.9 million. Loan payoffs during the year ended December 31, 2024 were $377.6 million, along with loan foreclosures of $37.7 million, partially offset by net funded commitments of $5.9 million, producing a net decrease to the portfolio of $361.5 million.
Previous wording
Our CRE loan portfolio, which had carrying values of $1.3 billion and $1.5 billion at March 31, 2025 and December 31, 2024, respectively, comprised:
Current wording
Our CRE loan portfolio, which had carrying values of $1.4 billion and $1.5 billion at June 30, 2025 and December 31, 2024, respectively, comprised:
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 five of our CRE whole loans were current on contractual payments at March 31, 2025.
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, mixed-use and retail. All but five of our CRE whole loans were current on contractual payments at June 30, 2025.
Previous wording
Mezzanine debt that is senior to borrower’s equity but is subordinated to other third-party debt. These loans are subordinated CRE loans, usually secured by a pledge of the borrower’s equity ownership in the entity that owns the property or by a second lien mortgage on the property. At March 31, 2025, we had two mezzanine loans included in CRE loans held for investment with a carrying value of $14.2 million. At December 31, 2024, we had one mezzanine loan included in CRE loans held for investment that had no carrying value. This mezzanine loan was not current on contractual payments at both March 31, 2025 and December 31, 2024.
Current wording
Mezzanine debt that is senior to borrower’s equity but is subordinated to other third-party debt. These loans are subordinated CRE loans, usually secured by a pledge of the borrower’s equity ownership in the entity that owns the property or by a second lien mortgage on the property. At June 30, 2025, we had two mezzanine loans included in CRE loans held for investment with a carrying value of $14.4 million. At December 31, 2024, we had one mezzanine loan included in CRE loans held for investment that had no carrying value. This mezzanine loan was not current on contractual payments at both June 30, 2025 and December 31, 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 certain 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, 2025, 79% of the par value of our CRE loan portfolio had interest rate caps or funded debt service reserves in place with a weighted-average maturity of four 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 certain 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, 2025, 62% of the par value of our CRE loan portfolio had interest rate caps or funded debt service reserves in place with a weighted-average maturity of three months.
Previous wording
At March 31, 2025, our par-value $1.4 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 1.05%. At December 31, 2024, our par value $1.5 billion floating rate CRE loan portfolio had a weighted average benchmark floor of 0.97%. With the historical 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, which was offset due to the decrease in our floating-rate CRE loan portfolio. See "Interest Rate Risk" in "Item 3: Quantitative and Qualitative Disclosures About Market Risk."
Current wording
At June 30, 2025, our par-value $1.4 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 1.17%. At December 31, 2024, our par value $1.5 billion floating rate CRE loan portfolio had a weighted average benchmark floor of 0.97%. With the historical 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, which was offset due to the decrease in our floating-rate CRE loan portfolio. 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 76.8% of our portfolio allocated to multifamily at March 31, 2025 and 77.4% at December 31, 2024. The following charts show our portfolio allocation by property type at March 31, 2025 and December 31, 2024:
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 75.0% of our portfolio allocated to multifamily at June 30, 2025 and 77.4% at December 31, 2024. The following charts show our portfolio allocation at carrying value by property type at June 30, 2025 and December 31, 2024:
Previous wording
At March 31, 2025, the net carrying value of our net real estate-related assets and liabilities was $177.0 million on seven properties owned, three of which are included in investments in real estate and four 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 or there is a requirement to distribute under the REIT tax regulations.
Current wording
At June 30, 2025, the net carrying value of our net real estate-related assets and liabilities was $176.8 million on seven properties owned, three of which are included in investments in real estate and four 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 or a requirement to distribute under the REIT tax regulations.
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, 2025, the CECL allowance on our CRE loan portfolio was $31.1 million, or 2.3% of our $1.4 billion loan portfolio. During the three months ended March 31, 2025, we recorded a reversal of credit losses primarily attributable to loan payoffs.
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, 2025, the CECL allowance on our CRE loan portfolio was $30.3 million, or 2.2% of our $1.4 billion loan portfolio. During the six months ended June 30, 2025, we recorded a reversal of credit losses primarily attributable to improvements in the modeled credit risk of our loan portfolio and loan payoffs, offset by a general worsening in macroeconomic factors.
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, 2025 of $31.1 million, or 2.3% 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 9.9% of the portfolio, at March 31, 2025, 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 76.8% at March 31, 2025.
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, 2025 of $30.3 million, or 2.2% 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 9.7% of the portfolio, at June 30, 2025, 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 at carrying value has grown from 58.4% at June 30, 2020 to 75.0% at June 30, 2025.
Previous wording
Common stock book value was $28.50 per share at March 31, 2025, a $0.37 per share decrease from December 31, 2024.
Current wording
Common stock book value was $27.93 per share at June 30, 2025, a $0.94 per share decrease from December 31, 2024.
Previous wording
Our net loss allocable to common shares for the three months ended March 31, 2025 was $5.9 million or $(0.80) per share-basic ($(0.80) per share-diluted) as compared to net income allocable to common shares for the three months ended March 31, 2024 of $556,000 or $0.07 per share-basic ($0.07 per share-diluted).
Current wording
Our net loss allocable to common shares for the three months ended June 30, 2025 was $732,000 or ($0.10) per share-basic (($0.10) per share-diluted) as compared to net income allocable to common shares for the three months ended June 30, 2024 of $1.7 million or $0.22 per share-basic ($0.21 per share-diluted). Our net loss allocable to common shares for the six months ended June 30, 2025 was $6.6 million, or ($0.90) per share-basic (($0.90) per share-diluted), as compared to net income allocable to common shares for the six months ended June 30, 2024 of $2.2 million, or $0.29 per share-basic ($0.28 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, 2025 and 2024 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, 2025 and 2024 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 $961,000 recognized on our CRE whole loans that was due to changes in volume.
Current wording
Includes a decrease in fee income of $575,000 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, 2025 and 2024:
Current wording
Net Change in Interest Income for the Comparative three and six months ended June 30, 2025 and 2024:
Previous wording
Aggregate interest income decreased by $13.9 million for the comparative three months ended March 31, 2025 and 2024. We attribute the change to the following:
Current wording
Aggregate interest income decreased by $12.2 million and $26.1 million for the comparative three and six months ended June 30, 2025 and 2024. We attribute the change to the following:
Previous wording
CRE whole loans. The decrease of $13.5 million for the comparative three months ended March 31, 2025 and 2024 was primarily attributable to a decrease in (i) total par value of our CRE portfolio resulting from loan payoffs and foreclosures and (ii) the benchmark rate over the comparative period.
Current wording
CRE whole loans. The decrease of $12.5 million and $26.0 million for the comparative three and six months ended June 30, 2025 and 2024 was primarily attributable to a decrease in (i) total par value of our CRE portfolio resulting from loan payoffs and foreclosures and (ii) the benchmark rate over the comparative period.
Previous wording
Other. The decrease of $488,000 for the comparative three months ended March 31, 2025 and 2024, was primarily attributable to a decrease in (i) restricted cash in our CRE securitizations and (ii) yields on our interest earning money market accounts.
Current wording
Other. The decrease of $392,000 and $880,000 for the comparative three and six months ended June 30, 2025 and 2024, was primarily attributable to a decrease in (i) restricted cash in our CRE securitizations and (ii) yields on our interest earning money market accounts.
Previous wording
Aggregate interest expense decreased by $8.1 million for the comparative three months ended March 31, 2025 and 2024, We attribute the change to the following:
Current wording
Aggregate interest expense decreased by $10.0 million and $18.2 million for the comparative three and six months ended June 30, 2025 and 2024, We attribute the change to the following:
Previous wording
Securitized borrowings. The net decrease of $8.6 million for the comparative three months ended March 31, 2025 and 2024, was primarily attributable to the redemptions of our ACR 2021-FL1 and ACR 2021-FL2 securitizations and a decrease in the benchmark rate over the comparative periods.
Current wording
Securitized borrowings. The net decrease of $21.0 million and $29.6 million for the comparative three and six months ended June 30, 2025 and 2024, was primarily attributable to the redemptions of our ACR 2021-FL1 and ACR 2021-FL2 securitizations and a decrease in the benchmark rate over the comparative periods.
Previous wording
Senior secured financing facility. The decrease of $208,000 for the comparative three months ended March 31, 2025 and 2024, was primarily attributable to a decrease in the benchmark rate over the comparative periods.
Current wording
Senior secured financing facility. The decrease of $167,000 and $374,000 for the comparative three and six months ended June 30, 2025 and 2024, was primarily attributable to a decrease in the benchmark rate over the comparative periods.
Previous wording
CRE - term warehouse financing facilities. The decrease of $1.3 million for the comparative three months ended March 31, 2025 and 2024, was primarily attributable to paydowns on our borrowings and a decrease in the benchmark rate over the comparative periods.
Current wording
CRE - term warehouse financing facilities. The decrease of $2.6 million and $3.9 million for the comparative three and six months ended June 30, 2025 and 2024, was primarily attributable to paydowns on our borrowings and a decrease in the benchmark rate over the comparative periods.
Previous wording
CRE - term reinvestment financing facility. The increase of $2.2 million was attributable to the close of our new CRE term reinvestment financing facility.
Current wording
CRE - term reinvestment financing facility. The increase of $13.8 million and $16.0 million for the comparative three and six months ended June 30, 2025 and 2024 was attributable to the close of our new CRE term reinvestment financing facility.
Previous wording
Unsecured junior subordinated debentures. The decrease of $133,000 for the comparative three months ended March 31, 2025 and 2024, was primarily attributable to a decrease in the benchmark rate over the comparative periods.
Current wording
Unsecured junior subordinated debentures. The decrease of $140,000 and $273,000 for the comparative three and six months ended June 30, 2025 and 2024, was primarily attributable to a decrease 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, 2025 and 2024 (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, 2025 and 2024 (dollars in thousands, except amounts in footnotes):
Previous wording
Includes fee income of $777,000 and $1.7 million recognized on our floating-rate CRE whole loans for the three months ended March 31, 2025 and 2024, respectively.
Current wording
Includes fee income of $895,000 and $1.5 million recognized on our floating-rate CRE whole loans for the three months ended June 30, 2025 and 2024, respectively.
Previous wording
Includes amortization expense of $2.8 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.
Current wording
Includes amortization expense of $669,000 and $1.3 million for the three months ended June 30, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.
Previous wording
Includes net amortization expense of $393,000 and $397,000 for the three months ended March 31, 2025 and 2024, 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 wording
Includes net amortization expense of $397,000 for both the three months ended June 30, 2025 and 2024, 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 $4.0 million for the comparative three months ended March 31, 2025 and 2024. The increase in the comparative three months was attributed to: (i) incremental increase in revenue related to a student housing property that completed construction and became operational in August 2024, (ii) asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through foreclosures, and (iii) increased revenues from two hotel properties that had increased occupancy and rental rates for both the comparative three month periods.
Current wording
Aggregate real estate income and other revenue increased by $3.1 million and $7.1 million for the comparative three and six months ended June 30, 2025 and 2024. The increase in the comparative three and six months was attributed to: (i) incremental increase in revenue related to a student housing property that completed construction and became operational in August 2024, (ii) asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through foreclosures, and (iii) increased revenues from two hotel properties that had increased occupancy and rental rates for both the comparative three and six month periods.
Previous wording
Aggregate operating expenses decreased by $2.5 million for the comparative three months ended March 31, 2025 and 2024. We attribute the changes to the following:
Current wording
Aggregate operating expenses increased by $1.6 million for the comparative three months ended June 30, 2025 and 2024 and decreased by $914,000 for the comparative six months ended June 30, 2025 and 2024. We attribute the changes to the following:
Previous wording
General and administrative. General and administrative expenses decreased by $96,000 for the comparative three months ended March 31, 2025 and 2024. 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 $380,000 and $284,000 for the comparative three and six months ended June 30, 2025 and 2024. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):
Previous wording
The decrease in general and administrative expense for the comparative three months ended March 31, 2025 and 2024 was primarily attributable to decreased professional services related to audit expenses being accrued monthly and a decrease in legal expenses related to CRE loan assets, partially offset by (i) an increase in allocated percentages of wages and benefits from the Manager, (ii) consent fees paid to prior auditors to reissue their prior year opinion and (iii) an increase in construction consulting fees paid to third parties.
Current wording
The increase in general and administrative expense for the comparative three and six months ended June 30, 2025 and 2024 was primarily attributable to increased professional services related to (i) audit expenses being accrued monthly, (ii) consent fees paid to prior auditors to reissue their prior year opinion and (iii) an increase in construction consulting fees paid to third parties. Additionally, there was an increase in operating expenses related to initial set-up costs associated with the new financing facility.
Previous wording
Real estate expenses. The increase of $3.8 million for the comparative three months ended March 31, 2025 was primarily related to (i) an increase in expenses related to a student housing property that completed construction and became operational in August 2024, (ii) asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through deed-in-lieu of foreclosure and (iii) an increase in expenses at a hotel property that had an incremental increase in operating expenses and an increase in one time expenses related to various operating costs.
Current wording
Real estate expenses. The increase of $3.6 million for the three months ended June 30, 2025 and $7.4 million for the six months ended June 30, 2025 was primarily related to (i) an increase in expenses related to a student housing property that completed construction and became operational in August 2024, (ii) asset acquisitions in the third quarter of 2024 of a multifamily property and an office property through deed-in-lieu of foreclosure and (iii) an increase in expenses at a hotel property that had an incremental increase in operating expenses and an increase in one-time expenses related to various operating costs.
Previous wording
Provision for credit losses. The decrease in the provision for credit losses of $6.6 million for the comparative three months ended March 31, 2025 was primarily driven by a decrease in modeled credit risk for improved property performance, qualitative adjustments to macroeconomic factors and loan payoffs. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.
Current wording
Provision for credit losses. The decrease in the provision for credit losses of $2.1 million and $8.7 million for the comparative three and six months ended June 30, 2025 and 2024 was primarily driven by a decrease in modeled credit risk for improved property performance, qualitative adjustments to macroeconomic factors and loan payoffs. Please refer to the "Financing Receivables" section for more information on our provision for credit losses.
Previous wording
Aggregate other income decreased $6.4 million for the comparative three months ended March 31, 2025 and 2024. We attribute the change to the following:
Current wording
Aggregate other income decreased $1.4 million and $7.8 million for the comparative three and six months ended June 30, 2025 and 2024. We attribute the change to the following:
Previous wording
Gain on conversion of real estate. The decrease of $5.8 million during the comparative three months ended March 31, 2025 and 2024, was primarily attributed to the completion of one deed-in-lieu of foreclosure that generated a non-recurring gain of $5.8 million, in the first quarter of 2024, as the fair value of the property exceeded the amortized cost basis of the loans.
Current wording
Gain on conversion of real estate. The decrease of $5.8 million during the comparative six months ended June 30, 2025, was primarily attributed to the completion of one deed-in-lieu of foreclosure that generated a non-recurring gain of $5.8 million, in the first quarter of 2024, as the fair value of the property exceeded the amortized cost basis of the loans.
Previous wording
Net carrying amount includes an allowance for credit losses of $31.1 million and $32.8 million at March 31, 2025 and December 31, 2024, respectively.
Current wording
Net carrying amount includes an allowance for credit losses of $30.3 million and $32.8 million at June 30, 2025 and December 31, 2024, respectively.
Previous wording
Includes real estate related right of use assets of $19.2 million and $19.3 million, intangible assets of $6.9 million and $7.0 million, lease liabilities of $44.8 million and $44.6 million, and mortgages payable of $79.5 million and $79.6 million at March 31, 2025 and December 31, 2024, respectively. There were no other liabilities at March 31, 2025 compared to $12,000 of other liabilities at December 31, 2024.
Current wording
Includes real estate related right of use assets of $19.1 million and $19.3 million, intangible assets of $6.7 million and $7.0 million, and lease liabilities of $45.0 million and $44.6 million at June 30, 2025 and December 31, 2024, respectively. Also includes mortgages payable of $79.6 million at both June 30, 2025 and December 31, 2024. There were no other liabilities at June 30, 2025 compared to $12,000 of other liabilities at December 31, 2024.
Previous wording
Includes property held for sale-related liabilities of $3.1 million and $3.2 million at March 31, 2025 and December 31, 2024, respectively.
Current wording
Includes properties held for sale-related liabilities of $3.2 million at both June 30, 2025 and December 31, 2024.
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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, 2024.
Current report — wording carried from elsewhere
Includes a decrease in fee income of $1.5 million 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 $3.5 million and $2.7 million for the six months ended June 30, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.
Current report — wording carried from elsewhere
Includes net amortization expense of $790,000 and $794,000 for the six months ended June 30, 2025 and 2024, 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
We are in the process of evaluating the impact of this guidance, however, we do not expect a material impact to our consolidated financial statements.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Net Change in Interest Expense for the Comparative three months ended March 31, 2025 and 2024:
Previous report — wording carried elsewhere
Includes one CRE whole loan with an amortized cost of $33.7 million in maturity default at March 31, 2025.
Previous report — wording carried elsewhere
Excludes accrued interest payable of $2.1 million and deferred debt issuance costs of $3.3 million.