[Management View]
The management reported a net loan portfolio decrease of $46.8 million in Q3 2025, driven by $106.4 million in new loan commitments and $153.2 million in loan payoffs, sales, and paydowns. The total commercial real estate loan portfolio stood at $1.4 billion across 46 investments. The weighted average spread for floating rate loans was 3.63% over one-month term SOFR rates. The weighted average risk rating increased to 3.0 from 2.9. A real estate investment sale generated a $13.1 million gross capital gain. Book value per share increased to $29.63 from $27.93.

[Outlook]
Management expects substantial new loan closings in Q4 2025, aiming for positive portfolio growth for the full year. They plan to execute a CRE CLO transaction by Q1 2026. The company is nearing its book value objective of $30 per share and anticipates resuming dividends once this target is achieved and selected assets are monetized.

[Financial Performance]
GAAP net income allocable to common shares was $9.8 million, or $1.34 per diluted share. Earnings available for distribution (EAD) were $1.01 per share, up from $0.04 per share in Q2 2025. The CECL reserve decreased by $4 million, reflecting improvements in portfolio credit risk and macroeconomic factors. The total allowance for credit losses was $26.4 million, representing 1.89% of the loan portfolio.

[Q&A Highlights]

Question 1: As it relates to asset-specific financing or reinvestment, what are you looking for in the market to go out with a CLO? Is it just a matter of getting some originations out the door in Q4 to get the portfolio bigger and then go into the market?
Answer: Yes, it's about originating new loans currently. We expect to have sufficient collateral by the end of Q4 or beginning of Q1 to execute a transaction in Q1.

Question 2: Are you expecting any loans to pay off early? Have you committed any capital loans quarter to date to target the year-end goal?
Answer: We do not see any significant payoffs expected. We are still targeting net growth as previously laid out.

Question 3: Do you expect to be more active on the construction side or continue with bridge loans?
Answer: We do not typically provide construction financing within the REIT. However, our fund business does provide construction loans, which eventually benefit the REIT as those loans migrate into bridge loans.

Question 4: Do you have any thoughts on where book value could settle once the remaining properties are sold? Should we expect further increases in book value?
Answer: Our target is approximately $30 per share. There are three remaining properties, and $30 is a reasonable objective based on what we know.

Question 5: With the Fed easing, have you seen increased interest in the remaining properties? Any timing on future sales?
Answer: We have reasonable visibility on one property sale in the next couple of quarters. The other properties will benefit from operating performance and market interest rate trends.

Question 6: Can you share any potential timing around dividend resumption?
Answer: Once we hit our book value objectives and monetize selected assets, we will consider resuming dividends. We are getting close, with only one or two more properties to sell.

[Sentiment Analysis]
Analysts were positive, congratulating the management on a solid quarter and expressing optimism about the company's strategic direction. Management maintained a confident and forward-looking tone, emphasizing their strategic goals and progress.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 |
| --- | --- | --- |
| Net Loan Portfolio Change | -$46.8M | - |
| Book Value Per Share | $29.63 | $27.93 |
| GAAP Net Income Per Share | $1.34 | - |
| EAD Per Share | $1.01 | $0.04 |
| CECL Reserve | $26.4M | - |
| Debt-to-Equity Leverage | 2.7x | 3.0x |

[Risks and Concerns]
- Potential delays in loan originations and property sales.
- Market interest rate fluctuations impacting property valuations.
- Execution risks related to the planned CRE CLO transaction.

[Final Takeaway]
ACRES Realty demonstrated strong performance in Q3 2025, with significant gains from strategic asset sales and an increase in book value per share. The company is on track to achieve its book value target and is preparing for a CRE CLO transaction. Management's focus on optimizing the loan portfolio and strategic asset monetization positions the company well for future growth and potential dividend resumption.