ACRES Commercial Realty Corp. reported a net income allocable to common shares of $239,000, or $0.03 per share, for the year ended December 31, 2025, a significant decrease compared to the $9.1 million, or $1.19 per share, reported for the previous year. The company's interest income decreased by $38.1 million, primarily due to a decrease in the daily average par value of the CRE portfolio and a decrease in benchmark rates. Interest expense also decreased by $30.2 million, mainly due to the redemption of ACR 2021-FL1 and ACR 2021-FL2 securitizations and a decrease in benchmark rates.
The company's strategic focus remained on originating, holding, and managing CRE mortgage loans and equity investments. During 2025, ACRES originated 14 new CRE floating-rate whole loans with total commitments of $733 million, one new $15 million CRE mezzanine loan, one new $9.3 million CRE preferred equity investment and net funded commitments of $3.1 million. Loan payoffs and sales totaled $418.9 million, resulting in a net increase to the portfolio of $341.5 million. The CRE loan portfolio at par comprised $1.8 billion of CRE whole loans with a weighted average spread of 3.35% over the one-month benchmark interest rates utilized, which have a weighted average floor of 1.78%.
Key operational developments included the active management of corporate liquidity and CRE assets, along with continuous monitoring for new capital opportunities. The company's CECL allowance on its CRE loan portfolio was $20.4 million, or 1.1% of the $1.8 billion loan portfolio, at the end of 2025. This was a decrease from $32.8 million, or 2.2% of the $1.5 billion loan portfolio, at the end of 2024. The decrease in CECL reserves was primarily driven by net improvements in the modeled credit risk of the loan portfolio and loan payoffs, offset by a general decline in projected macroeconomic factors.
Looking ahead, ACRES Commercial Realty Corp. will continue to focus on managing its investment portfolio, interest rate risk, and liquidity risk. The company expects to modestly increase leverage through new CRE debt securitizations and the continued use of its senior secured financing facility and term financing facilities, subject to market conditions. The company also aims to maintain diversification by property type and geographic location while allocating capital to the most economically attractive investment opportunities. The Management Agreement's current contract term ends on July 31, 2026, with automatic one-year renewals unless terminated.
About ACRES Commercial Realty Corp.
ACRES Commercial Realty Corp. is a Maryland-based real estate finance company focused on originating and managing commercial real estate (CRE) mortgage loans and equity investments. Targeting the multifamily, student housing, hospitality, industrial, and office sectors, it operates primarily in top U.S. markets. With a portfolio of $1.9 billion, ACRES aims to provide stockholders with total returns through strategic investments and risk management, while adhering to REIT regulations.
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