ACRES Commercial 2025 Q2 Earnings Declining Net Income Amid Revenue Growth

ACRES Commercial (ACR) reported its fiscal 2025 Q2 earnings on August 6, 2025, delivering mixed results. While revenue rose 4.5% year-over-year to $21.87 million, the company swung to a loss of $0.10 per share, down from $0.22 per share in the prior-year quarter, marking a 145.5% negative change in earnings.

Revenue
Total revenue for ACRES Commercial increased by 4.5% year-over-year to $21.87 million in Q2 2025, reflecting a modest improvement compared to $20.94 million in the same period of 2024.

Earnings/Net Income
The company swung to a loss of $0.10 per share in Q2 2025, a significant decline from a profit of $0.22 per share in Q2 2024, representing a 145.5% negative change. Net income also fell to $4.32 million, down 32.4% from $6.40 million in the prior-year period. This indicates a challenging earnings performance, with a notable deterioration in profitability.

Price Action
The stock price of ACRES Commercial has risen 1.19% on the latest trading day, 4.87% over the past full trading week, and 7.70% month-to-date, showing a recent upward trend in investor sentiment.

Post-Earnings Price Action Review
The strategy of buying ACR following a positive earnings surprise and selling after 30 days yielded a total return of 19.88% with a CAGR of 5.48%, though it lagged behind the 44.99% benchmark return. Despite the underperformance, the strategy demonstrated a Sharpe ratio of 0.28, suggesting a reasonable risk-adjusted return. Notably, the strategy experienced no drawdown during the backtest period and exhibited a volatility rate of 19.84%, lower than the benchmark, highlighting its conservative nature.

CEO Commentary
ACRES Commercial Realty Corp. CEO John M. DeCree acknowledged the company’s mixed Q2 performance, noting growth in net interest income and real estate operations but expressing caution over an expanded loan portfolio and a net loss. He emphasized the need to redeploy capital from asset sales and loan payoffs to drive portfolio expansion and maintain liquidity, while also addressing credit loss management as a top priority. DeCree maintained a cautiously optimistic outlook, balancing near-term challenges with long-term growth potential in the commercial real estate sector.

Guidance
ACRES Commercial expects to grow its loan portfolio by $300 million to $500 million through strategic capital redeployment, targeting a weighted average spread of 3.65% over 1-month SOFR. The company aims to maintain liquidity at $65 million, manage credit losses within 2.18% of the loan portfolio, and improve net interest income via lower financing costs and portfolio optimization.

Additional News
In the 2025 fiscal first half, ACRES Commercial reported a cumulative revenue of $38.875 million, down 2.09% from $39.704 million in the same period of 2024. Net income for the first half declined by 68.25% to $3.594 million from $11.321 million in the prior year, with a basic EPS of -$0.90, compared to $0.29 in 2024. The company operates in the retail REIT sector and is externally managed by ACRES Capital, LLC. ACRES Commercial was formerly known as Exantas Capital Corp. and was rebranded on February 16, 2021. The firm’s investment strategy includes originating, holding, and managing commercial real estate mortgages and making equity investments in commercial real estate via direct ownership and joint ventures. Its parent, ACRES Capital Corp., specializes in mid-market CRE loans across multifamily, student housing, hotel, industrial, and office properties.