ACRES Commercial Realty Corp.
For the period ended Sep 30, 2025. Filed Nov 6, 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.
Sep 30, 2025 · Filed Nov 6, 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 2025-06-30; filed 2025-08-05.
0000950170-25-102890
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001193125-25-269208
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 337 previous paragraphs and 339 current paragraphs.
190 unchanged; 124 reworded; 24 added; 19 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 37 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 (24)
Current report
Preferred equity investments that are subordinate to first mortgage loans and mezzanine debt. These investments may be subject to more credit risk than subordinated debt but provide the potential for higher returns upon a liquidation of the underlying property and are typically structured to provide some credit enhancement differentiating it from the common equity in such investments. At September 30, 2025, we had one preferred equity investment included in CRE loans held for investment with a carrying value of $8.9 million. At December 31, 2024, we had no preferred equity investments included in CRE loans held for investment.
Current report
Net Change in Interest Expense for the Comparative three and nine months ended September 30, 2025 and 2024:
Current report
Includes amortization expense of $180,000 and $170,000 for the three months ended September 30, 2025 and 2024, respectively.
Current report
Includes amortization expense of $533,000 and $501,000 for the nine months ended September 30, 2025 and 2024, respectively.
Current report
Equity compensation - related party. The decrease of $459,000 and $350,000 for the comparative three and nine months ended September 30, 2025 and 2024 was primarily related to the vesting of additional shares, which decreased the monthly equity compensation expense.
Current report
Aggregate other income increased $10.1 million and $2.3 million for the comparative three and nine months ended September 30, 2025 and 2024. We attribute the change to the following:
Current report
Gain on sale of real estate. The increase of $13.1 million during the comparative three and nine months ended September 30, 2025 on the sale of real estate was attributed to the sale of a property generating a one time gain of $13.1 million. There were no sales of real estate in the three and nine months ended September 30, 2024.
Current report
We had one preferred equity investment associated with a CRE whole loan at September 30, 2025. We had no preferred equity investments associated with CRE whole loans at December 31, 2024. Our preferred equity investment has a fixed interest rate of 10%, of which 4.0% interest is deferred until maturity.
Current report
The total amortized cost of CRE loans excluded accrued interest receivable of $22.0 million and $14.6 million at September 30, 2025 and December 31, 2024, respectively.
Current report
Includes $3.0 million of deferred debt issuance costs at September 30, 2025.
Current report
Amount presented is net of the amount allocable to the non-controlling interest.
Current report
Excludes deferred debt issuance costs of $3.0 million.
Current report
Excludes deferred debt issuance costs of $1.6 million.
Current report
Excludes deferred debt issuance costs of $572,000.
Current report
In November 2025, the Morgan Stanley Facility was extended to November 2026.
Current report
In November 2025, the capacity of the Morgan Stanley Facility was increased to $400 million, as increased from time to time, and provided certain conditions are met can be increased to $500 million.
Current report
Principal outstanding excludes deferred debt issuance costs of $3.0 million at September 30, 2025.
Current report
Excludes $2.0 million of accrued interest payable.
Current report
Excludes $222,000 of accrued interest payable.
Current report
Excludes $106,000 of accrued interest payable.
Current report
Excludes $80,000 of accrued interest payable.
Current report
In September 2025, we entered into guaranties related to a $62 million construction loan and an $11 million bridge loan made to a borrower that is held by a joint venture in which we have a 90% membership interest. Pursuant to the Guaranty of Completion, executed September 2025, by Adam Friedberg, Anthony Hrusovsky, Peter Koch and us (collectively, the “Guarantors”) for the benefit of DL RCF I Loan Holdings, LLC and DL RCF I Loan Holdings (Evergreen), LLC (collectively, the “Lender”), the Guarantors guarantee to the Lender, the Borrower’s obligation to commence, construct, develop and complete the construction project in a good and workmanlike manner in accordance with the terms and conditions of the Loan Agreement, dated September 12, 2025 by and among the Borrower, DL RCF I Loan Holdings, LLC (the “Agent”) and the Lender (the “Loan Agreement”)and to perform all other work contemplated or required to be completed pursuant to the loan documentation through final completion.
Current report
In September 2025, the Guarantors also entered intoa Guaranty of Retail Space to guarantee the payment and performance of all of the obligations for the payment of debt and the performance of the obligations under the Loan Agreement anda Guaranty of Recourse Obligations toguarantee the payment and performance of certain liabilities (“bad boy”) and payment obligations set forth in the Loan Agreement and agree to be liable for the guaranteed obligations as a primary obligor. Also in September 2025, the Guarantors entered into the Guaranty of Interest and Carry Costs to guarantee the payment and performance of the Borrower’s obligation to timely pay all Carry Costs and Debt Service and its obligation to make deposits into the Carry Cost Account (each as defined in the agreement) in accordance with the Loan Agreement, and all interest due to the Bridge Lender (defined below) and/or preferred return due pursuant to the Master Tenant Operating Agreement. The Guarantors also unconditionally covenant and agree to be liable for these guaranteed obligations as a primary obligor. Additionally, the Guarantors with the Borrower also entered into an Environmental Indemnity Agreement jointly and severally in favor of the Lender and Agent whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnification.
Current report
In connection with the $10.9 million bridge loan from Hoyne Savings Bank (“Bridge Lender”) to Borrower, we entered into the Repayment and Completion Guaranty in September 2025, in favor of Bridge Lender subject to the Bridge Loan Agreement between Borrower and Bridge Lender (the “Bridge Loan Agreement”) to guarantee the prompt payment of all indebtedness under the Bridge Loan Agreement and the prompt performance of all other covenants, obligations and agreements of Borrower under the Bridge Loan Agreement, including but not limited to, construction of the improvements and completion before the completion date and material compliance with all environmental covenants and indemnities set forth in the Bridge Loan Agreement.
Removed paragraphs (19)
Previous report
Net Change in Interest Expense for the Comparative three and six months ended June 30, 2025 and 2024:
Previous report
Includes amortization expense of $178,000 and $167,000 for the three months ended June 30, 2025 and 2024, respectively.
Previous report
Includes amortization expense of $353,000 and $331,000 for the six months ended June 30, 2025 and 2024, respectively.
Previous 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.
Previous report
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 report
Current market conditions have resulted in, and may continue to result in, a dislocation in capital markets, declining real estate values of certain asset classes and increased delinquencies and defaults, resulting in increased loan modifications, increased allowances for credit losses and an increased risk to borrowers of foreclosure actions. We routinely employ rigorous risk management and underwriting practices to proactively evaluate and maintain the credit quality of our CRE loan portfolio and work closely with our borrowers to mitigate potential losses.
Previous report
At both June 30, 2025 and December 31, 2024, we had one additional mezzanine loan included in other assets held for sale that had no carrying value.
Previous report
Includes $3.2 million of deferred debt issuance costs at June 30, 2025.
Previous report
Construction loans: We have entered into a loan agreement to finance the construction of a student housing complex. This loan is interest only and has a maximum principal balance of $48.0 million. The loan agreement contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction. Additionally, we have entered into a financing agreement to fund energy efficient building improvements at this student housing complex, with a maximum principal balance of $15.5 million.
Previous report
Excludes deferred debt issuance costs of $3.2 million.
Previous report
Excludes deferred debt issuance costs of $894,000.
Previous report
Excludes deferred debt issuance costs of $140,000.
Previous report
Excludes deferred debt issuance costs of $397,000.
Previous report
Principal outstanding excludes deferred debt issuance costs of $3.2 million at June 30, 2025.
Previous report
Excludes $2.1 million of accrued interest payable.
Previous report
Excludes $255,000 of accrued interest payable.
Previous report
Excludes $162,000 of accrued interest payable.
Previous report
Excludes $432,000 of accrued interest payable.
Previous report
Unfunded commitments on our originated CRE loans generally fall into two categories: (i) pre-approved capital improvement projects and (ii) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, we would receive additional interest income on the advanced amount. At June 30, 2025, we had unfunded commitments on 20 CRE whole loans.
Reworded paragraphs (124)
Previous wording
We are a Maryland corporation and an externally managed real estate investment trust ("REIT") that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. Our manager is ACRES Capital, LLC (our "Manager"), a subsidiary of ACRES Capital Corp. (collectively, "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial properties in top United States ("U.S.") markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services. Our longer-term objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies as well as to maximize long-term stockholder value by maintaining stability through our available liquidity and diversified CRE loan portfolio. Our short-term strategy is to drive book value ("BV") growth by utilizing both our NOL carryforwards of $32.1 million, which may be used over the coming years, and a portion of our net capital loss carryforwards of $121.9 million, which expire on December 31, 2025 (each balance as of June 30, 2025). By retaining future earnings, we can grow our investable base and selectively deploy the anticipated capital growth into new whole loan originations at attractive yields, which we expect will grow our earnings available for distribution.
Current wording
We are a Maryland corporation and an externally-managed real estate investment trust ("REIT") that is primarily focused on originating, holding and managing commercial real estate ("CRE") mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. Our manager is ACRES Capital, LLC (our "Manager"), a subsidiary of ACRES Capital Corp. (collectively, "ACRES"), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial properties in top United States ("U.S.") markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services. Our longer-term objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies as well as to maximize long-term stockholder value by maintaining stability through our available liquidity and diversified CRE loan portfolio. Our short-term strategy is to drive book value ("BV") growth by utilizing both our NOL carryforwards of $32.1 million, which may be used over the coming years, and a portion of our net capital loss carryforwards of $115.9 million, which expire on December 31, 2025 (each balance as of September 30, 2025). By retaining future earnings, we can grow our investable base and selectively deploy the anticipated capital growth into new whole loan originations at attractive yields, which we expect will grow our earnings available for distribution.
Previous wording
The U.S. Federal Reserve raised the Federal Funds rate by 5.25% in 11 rate hikes between March 2022 and July 2023 to combat inflation. While the U.S Federal Reserve has lowered rates in September, November and December 2024, there is no certainty with respect to the timing and pace of potential future decreases or if such decreases will continue to occur. Interest rates may remain at or near recent highs, which creates further uncertainty for the economy and our borrowers. A rising interest rate environment generally correlates to increases in our net income. However, increases in interest rates may adversely affect our existing borrowers and could lead to nonperformance, i.e. the borrower’s inability to pay debt service. Lowering rates and decreasing costs may encourage consumer spending and accelerate corporate profit growth, which may positively impact the collateral underlying our loans and positively impact our borrowers' ability to sell or refinance in the current market; however, lower rates would also correlate to decreases in our net income.
Current wording
Since September 2024, the U.S. Federal Reserve lowered the Federal Funds rate by 1.50% in five rate cuts reaching its lowest levels since 2022. Lowering rates and decreasing costs may encourage consumer spending and accelerate corporate profit growth, which may positively impact the credit profile of the collateral underlying our loans and positively impact our borrowers' ability to sell or refinance in the current market; however, lower rates would also correlate to decreases in our net income. There is also no certainty with respect to the timing and pace of potential future decreases or if such decreases will continue to occur.
Previous 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.
Current wording
We originate transitional floating-rate CRE loans with a target size between $10.0 million and $100.0 million. During the nine months ended September 30, 2025, we originated two new CRE floating-rate whole loans, with total commitments of $162.0 million, one new $15.0 million CRE mezzanine loan, one new $9.3 million CRE preferred equity investment and funded $25.2 million of previously unfunded loan commitments. Loan payoffs and sales during the nine months ended September 30, 2025 were $318.6 million, producing a net decrease to the portfolio of $107.1 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
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.
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 four of our CRE whole loans were current on contractual payments at September 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 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.
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 September 30, 2025, we had two mezzanine loans included in CRE loans held for investment with a carrying value of $14.6 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 September 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 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.
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 September 30, 2025, 63% 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 six months.
Previous 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."
Current wording
At September 30, 2025, our par value $1.4 billion floating-rate CRE loan portfolio had a weighted average benchmark floor of 1.25%. 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 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:
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 74.6% of our portfolio allocated to multifamily at September 30, 2025 and 77.4% at December 31, 2024. The following charts show our portfolio allocation at carrying value by property type at September 30, 2025 and December 31, 2024:
Previous 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.
Current wording
At September 30, 2025, the net carrying value of our net real estate-related assets and liabilities was $143.0 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 a requirement to distribute under the REIT tax regulations. To that end, we closed on two real estate sale transactions in the past twelve months, one this quarter and one in the fourth quarter of 2024, with total proceeds of $126.8 million and generating total net gains of $20.6 million. The capital generated by these gains will be protected by our net capital loss carryforwards and will be redeployed into our CRE loan portfolio.
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 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.
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 September 30, 2025, the CECL allowance on our CRE loan portfolio was $26.4 million, or 1.9% of our $1.4 billion loan portfolio. During the nine months ended September 30, 2025, we recorded a reversal of credit losses primarily attributable to improvements in the modeled credit risk of our loan portfolio and expected macroeconomic factors during the quarter.
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 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.
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 September 30, 2025 of $26.4 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 5.7% of the portfolio, at September 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 74.6% at September 30, 2025.
Previous wording
Common stock book value was $27.93 per share at June 30, 2025, a $0.94 per share decrease from December 31, 2024.
Current wording
Common stock book value was $29.63 per share at September 30, 2025, a $0.76 per share increase from December 31, 2024.
Previous 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).
Current wording
Our net income allocable to common shares for the three months ended September 30, 2025 was $9.8 million, or $1.38 per share-basic ($1.34 per share-diluted), as compared to net income allocable to common shares for the three months ended September 30, 2024 of $2.8 million, or $0.37 per share-basic ($0.36 per share-diluted). Our net income allocable to common shares for the nine months ended September 30, 2025 was $3.2 million, or $0.44 per share-basic ($0.42 per share-diluted), as compared to net income allocable to common shares for the nine months ended September 30, 2024 of $5.0 million, or $0.65 per share-basic ($0.63 per share-diluted).
Previous 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):
Current wording
The following tables analyze the change in interest income and interest expense for the comparative three and nine months ended September 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 $575,000 recognized on our CRE whole loans that was due to changes in volume.
Current wording
Includes a decrease in fee income of $990,000 recognized on our CRE whole loans that was due to changes in volume.
Previous wording
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 wording
Percent change is calculated as the net change divided by the respective interest income or interest expense for the nine months ended September 30, 2024.
Previous wording
Includes a decrease in fee income of $1.5 million recognized on our CRE whole loans that was due to changes in volume.
Current wording
Includes a decrease in fee income of $2.5 million recognized on our CRE whole loans that was due to changes in volume.
Previous wording
Net Change in Interest Income for the Comparative three and six months ended June 30, 2025 and 2024:
Current wording
Net Change in Interest Income for the Comparative three and nine months ended September 30, 2025 and 2024:
Previous 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:
Current wording
Aggregate interest income decreased by $11.0 million and $37.1 million for the comparative three and nine months ended September 30, 2025 and 2024. We attribute the change to the following:
Previous 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.
Current wording
CRE whole loans. The decrease of $11.3 million and $37.3 million for the comparative three and nine months ended September 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
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 wording
CRE mezzanine loan. The increase of $687,000 and $1.4 million for the comparative three and nine months ended September 30, 2025 and 2024 was attributable to the origination of a mezzanine loan in March 2025.
Previous 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.
Current wording
Other. The decrease of $356,000 and $1.2 million for the comparative three and nine months ended September 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 $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:
Current wording
Aggregate interest expense decreased by $8.9 million and $27.1 million for the comparative three and nine months ended September 30, 2025 and 2024. We attribute the change to the following:
Previous 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.
Current wording
Securitized borrowings. The net decrease of $19.5 million and $49.1 million for the comparative three and nine months ended September 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 $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.
Current wording
Senior secured financing facility. The decrease of $158,000 and $532,000 for the comparative three and nine months ended September 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 $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.
Current wording
CRE - term warehouse financing facilities. The decrease of $2.4 million and $6.3 million for the comparative three and nine months ended September 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 $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.
Current wording
CRE - term reinvestment financing facility. The increase of $13.3 million and $29.2 million for the comparative three and nine months ended September 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 $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.
Current wording
Unsecured junior subordinated debentures. The decrease of $133,000 and $406,000 for the comparative three and nine months ended September 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 and six months ended June 30, 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 nine months ended September 30, 2025 and 2024 (dollars in thousands, except amounts in footnotes):
Previous 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.
Current wording
Includes fee income of $908,000 and $1.9 million recognized on our floating-rate CRE whole loans for the three months ended September 30, 2025 and 2024, respectively.
Previous 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.
Current wording
Includes amortization expense of $677,000 and $1.3 million for the three months ended September 30, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.
Previous 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.
Current wording
Includes net amortization expense of $402,000 for both the three months ended September 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.
Previous wording
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 wording
Includes fee income of $2.6 million and $5.1 million on our floating-rate CRE whole loans for the nine months ended September 30, 2025 and 2024, respectively.
Previous wording
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 wording
Includes amortization expense of $4.1 million and $4.0 million for the nine months ended September 30, 2025 and 2024, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.
Previous wording
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 wording
Includes net amortization expense of $1.2 million for the nine months ended September 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.
Previous 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.
Current wording
Aggregate real estate income and other revenue increased by $772,000 and $7.9 million for the comparative three and nine months ended September 30, 2025 and 2024. The increase in the comparative three and nine months was attributed to: (i) an increase in revenues related to a student housing property that completed construction and became operational in August 2024, (ii) an increase in revenues in the comparative nine month period at two properties that we obtained in the third quarter of 2024 and (iii) an incremental increase in revenues at a hotel property due to an increase in occupancy and revenue rates for the comparative nine month period.
Previous 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:
Current wording
Aggregate operating expenses decreased by $1.2 million for the comparative three months ended September 30, 2025 and 2024 and decreased by $2.1 million for the comparative nine months ended September 30, 2025 and 2024. We attribute the changes to the following:
Previous 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):
Current wording
General and administrative. General and administrative expenses increased by $60,000 and $344,000 for the comparative three and nine months ended September 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 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.
Current wording
The increase in general and administrative expense for the comparative three and nine months ended September 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 $3.6 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.
Current wording
Real estate expenses. The increase of $2.9 million for the three months ended September 30, 2025 and $10.4 million for the nine months ended September 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 and an increase in expenses related to the sale of a portion of the property, (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) increased expenses at two hotel properties related to higher occupancy rates and other operational expenses.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreements, and any necessary approvals have been obtained. At September 30, 2025, we had unfunded commitments on 16 CRE whole loans.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
Excludes deferred debt issuance costs of $1.8 million.
Previous report — wording carried elsewhere
In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan").
Previous report — wording carried elsewhere
In connection with our investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.