ACRES Commercial Realty: A Buyback Bonanza at a Bargain Price?

The stock market is a relentless judge of value, often punishing companies that fail to prove their worth. But what happens when a company actively buys back its own shares at what looks like a screaming deal? That's the situation we're seeing with ACRES Commercial Realty (ACR), a small-cap REIT that's been aggressively repurchasing stock while trading at a historic discount to its book value. Let's dive into the details—because this could be a rare chance to buy a quality asset on the cheap.

The Buyback Blitz: Confidence in a Discounted Stock

ACRES has been doubling down on its stock repurchase programs, signaling confidence in its undervaluation. In mid-2024, the company announced a $5 million buyback for both common and preferred shares—a move that represented about 4% of its market cap at the time. But the real fireworks came in April 2025, when ACRES reauthorized an additional $10 million for repurchases, nearly doubling its commitment.

This isn't just corporate window-dressing. When a company uses cash to buy back shares at prices far below their book value, it's a clear vote of confidence in the business. And right now, ACR's stock is trading at a Price-to-Book (P/B) ratio of just 0.31—meaning it's valued at roughly one-third of its net asset value. To put that in perspective, the REIT industry median P/B is 0.815.

The Undervaluation Argument: Cold, Hard Numbers

Let's get into the math. As of March 2025, ACRES reported a book value per share of $58.01, yet its stock was trading at just $18.12—a 68% discount to its stated asset value. That's a gap so wide, it's practically a neon sign saying “BUY ME NOW!”

Historically, ACR's P/B ratio has swung between 0.10 and 0.71 over the past decade, but today's 0.31 is near the lower end. Even better: the company's net asset value (NAV) has been remarkably stable, hovering around $22 per share for the past year. If the stock were to simply reach 50% of NAV (a modest target), it would need to double from current levels.

But Wait—Why the Discount?

Critics will point to ACR's recent stumble: a Q1 2025 net loss of $0.97 per share versus a $0.18 profit estimate. The company also saw revenue crater to $5.6 million, way below expectations. However, I'd argue these are short-term speed bumps, not a death sentence.

ACRES operates in the volatile commercial real estate lending space, where deals can be lumpy. CEO Mark Fogel noted in earnings calls that the company is focusing on high-growth markets like multifamily and industrial properties, which are critical to economic recovery. Plus, the company's debt-to-EBITDA ratio improved to 8.9x in Q1, showing better balance sheet discipline.

The Capital Efficiency Play

Buybacks are a double-edged sword. Done poorly, they can signal desperation. But here, ACRES is deploying cash strategically to reduce shares outstanding, boosting per-share metrics like FFO (Funds From Operations). Remember, ACR doesn't pay a dividend on common shares—so buybacks are its primary way to return capital.

With $15 million now authorized for repurchases (and a stock at fire-sale prices), every dollar spent on buybacks is a direct investment in shareholder value. For example, if the $10 million reauthorized in April 2025 were used to buy shares at $18 each, it would retire over 550,000 shares—shrinking the float and amplifying future earnings growth per share.

Risks: Don't Get Complacent

No deal is without risks. ACR's narrow focus on middle-market commercial loans leaves it vulnerable to economic slowdowns or rising interest rates, which could crimp borrowers' ability to repay. Additionally, the stock's lack of a dividend might deter income-focused investors.

But here's the key: ACR's discount to book value is so extreme that it's already pricing in a lot of pessimism. If the company can stabilize earnings and grow its loan portfolio (as Fogel claims), the stock has nowhere to go but up.

The Bottom Line: Buy the Dip, but Watch the Horizon

ACRES Commercial Realty is a classic “value trap” candidate—if things go south, the discount could get deeper. But if you're a long-term investor willing to bet on management's ability to execute, this is a compelling opportunity.

Action Plan:
- Buy now if you can stomach volatility. The $18 price tag is a steal if NAV holds near $22.
- Set a stop-loss around $15 to guard against further downside.
- Hold for 12–18 months to let the buybacks and earnings stabilization work their magic.

In a market starved for bargains, ACRES's combination of cheap valuation, active capital returns, and a disciplined management team makes it worth a serious look. This isn't a “set it and forget it” stock—but for aggressive investors, it's a chance to turn $18 into $30 with a little patience.

Remember: Investing is about timing. This might be the moment to pounce.