ACRES Commercial Realty Corp.

Overview

• Status: Maryland corporation, incorporated in 2005; REIT-qualifying entity under Subchapter M of the Internal Revenue Code.
• Name: Amended in 2021 to ACRES Commercial Realty Corp. (formerly Exantas Capital Corp.).
• Business purpose: Real estate investment and financing company focused on commercial real estate (CRE) mortgage loans and CRE equity investments, held directly and through joint ventures.
• External management: Externally managed by ACRES Capital, LLC (the Manager), a subsidiary of ACRES Capital Corp. The Manager provides day-to-day management, investment sourcing, financing, and advisory services.

Core business and strategy

• Primary activities: Originate, hold, and manage CRE mortgage loans and CRE equity investments.
• Investment focus: Floating-rate first mortgage whole loans, first-priority interests in first mortgage loans (A-notes), subordinated interests (B-notes), CRE-related preferred equity, and CRE equity investments.
• Income sources: Net interest income from the spread between asset yields and financing costs, plus rental income from CRE equity holdings.
• Origination scale (2025): Originated 15 CRE loans with total commitments of $757.3 million.
• Target asset types: Predominantly floating-rate transitional CRE loans, typically $10–$100 million per loan.
• Portfolio management approach: Emphasizes credit analysis and active monitoring by the Manager, with asset management to mitigate losses and optimize recoveries.

Key portfolio and financial metrics (as of December 31, 2025)

• Assets under management: $2.2 billion.

• Investment portfolio:

  • Total investment portfolio: Amortized cost $1,983,390 thousand; net carrying amount $1,962,992 thousand.
  • Loans held for investment:
    • CRE whole loans: Amortized cost $1,820,942 thousand; net carrying amount $1,800,784 thousand; 91.74% of portfolio; weighted average coupon 7.32%.
    • CRE preferred equity investment: Amortized cost $9,425 thousand; net carrying amount $9,185 thousand; 0.47% of portfolio; weighted average coupon 10.00%.
  • Other investments:
    • Investments in unconsolidated entities: $29,237 thousand.
    • Investments in real estate (equity): $56,277 thousand.
    • Properties held for sale: $67,509 thousand.
    • Total other investments: $153,023 thousand (7.79% of portfolio).
  • Net credit losses allowance: $20.4 million.

• CRE loan portfolio composition and risk mitigation:

  • Typical loan-to-value (LTV) guidance by asset type:
    • Whole loans: typically LTV not exceeding 85%.
    • A-notes: typically LTV not exceeding 70%.
    • B-notes: typical LTV between 55% and 80%.
    • Mezzanine and preferred equity: higher risk with variable LTV ranges.
  • Interest rate protection: 76.5% of par value of the CRE loan portfolio had interest rate caps or funded debt service reserves; weighted-average maturity of caps ~15 months.

• Financing outstanding (as of December 31, 2025):

  • CRE - Term Reinvestment Financing Facility: Borrowings $728,167 thousand; collateral value $1,009,622 thousand; equity at risk $295,734 thousand (debt issuance costs included in borrowings).
  • CRE - Term Warehouse Financing Facilities: Borrowings total $554,047 thousand (JPMorgan Chase $116,488; Morgan Stanley Mortgage Capital Holdings LLC $417,374; ReadyCap Commercial, LLC $20,185); collateral value $1,897,049 thousand (debt issuance costs included).
  • Total borrowings: $1,343,859 thousand; total collateral value associated with facilities: $1,897,049 thousand.
  • Securitization and leverage strategy: Uses securitizations and long-term facilities to align investment and financing maturities and considers additional debt through securitizations and facilities as needed.

Investments portfolio details

• Real estate investments:
  • Direct real estate equity: 3 directly owned equity investments; 3 investments acquired through lending activities (deeds-in-lieu of foreclosure). Some assets classified as held for sale as of 12/31/2025.
  • Carrying values:
    • Real estate equity carrying value: $91,439 thousand.
    • Real estate from lending activities: $10,174 thousand.
    • Properties held for sale: $90,825 thousand.
    • Aggregate investments in real estate and properties held for sale: $192,438 thousand.
  • Liabilities associated with these real estate assets: mortgage payables $20,185 thousand; lease liabilities $45,336 thousand.
• Lease and intangible assets: Right-of-use assets and intangible assets are recorded (examples in footnotes include right-of-use assets ~ $18.6 million for real estate and $0.4 million for lending activities; franchise, management contract, and customer list intangibles are also noted).

Management, governance, and operations

• Manager relationship: The Manager handles sourcing, underwriting, asset management, financing, and advisory functions. The Manager’s affiliates provide the CFO and additional professionals as needed; associated costs are allocated to the company.
• Fees to Manager:
  • Base management fee: 1.50% per annum applied monthly (1/12 of annual rate times equity).
  • Incentive management fee: Paid quarterly based on excess economic alignment distribution (EAD) relative to a benchmark; minimum payable per quarter is zero; up to 75% of incentive may be paid in cash with at least 25% paid in common stock (subject to vesting and lock-ups).
  • Termination fee: Equal to four times the sum of the average annual base management fee and average annual incentive compensation earned in the two preceding 12-month periods; no fee for termination for cause.
  • Contract term: Current term ends July 31, 2026, with automatic one-year renewals unless terminated; independent directors review Manager performance annually.
• Conflicts and alignment: The Manager and ACRES may face conflicts of interest related to allocation of opportunities and time commitments; policies exist to review and approve related-party transactions.
• Employees: The company has no direct employees; management and support personnel are provided by ACRES and its affiliates.

Regulatory and tax framework

• REIT framework: Operates as a REIT and relies on Investment Company Act exclusions (including Section 3(a)(1)(C)) and 3(c)(5)(C) for certain securitization vehicles to preserve REIT qualification. The company monitors asset tests and gross income tests required for REIT status.
• Subsidiaries and tax structure: May use TRS subsidiaries taxed separately; limits on TRS assets relative to total assets are observed.
• Tax considerations: The company identifies potential tax risks tied to REIT qualification, excess inclusion income, prohibited transactions tax, and potential corporate-level tax if REIT status is lost. The company references applicable IRS guidance and safe harbors for certain distressed debt modifications.

ESG, cybersecurity, and operations

• ESG: The company maintains ESG policies in coordination with the Manager.
• Cybersecurity: Cyber risk is managed under the Manager’s policies and the company’s cybersecurity program; the Board and audit committee oversee risk management and incident reporting; third-party assessments and annual risk reviews are conducted.

Properties and offices

• Principal office: 390 RXR Plaza, Uniondale, NY 11556.
• Other offices: New York City, NY and Philadelphia, PA.
• Real property holdings: The company’s principal real property holdings consist of its CRE investments.

Disclosed highlights

• Business model: Primary focus on floating-rate CRE mortgage loans and CRE equity investments, managed externally by ACRES Capital, LLC.
• Scale and composition (12/31/2025): AUM approximately $2.2 billion; total investment portfolio amortized cost $1,983,390 thousand (net carrying amount $1,962,992 thousand); CRE loan portfolio par/net around $1.8 billion; total borrowings approximately $1,343,859 thousand with substantial collateral coverage.
• Governance and fees: External management with base and incentive fees, defined termination provisions, and annual oversight by independent directors.