ACRES Commercial Realty Q3 Loss Hits $56.3 Million on Merger Costs

ACRES Commercial Realty lost $56.3 million, or $5.16 a diluted share, in the third quarter, mostly because of $38.3 million of costs tied to buying its external manager, according to the quarterly report the commercial real estate lender filed with the SEC on Monday, Nov. 9. A year earlier it earned $9.8 million, or $1.34 a share. The company first reported the headline loss in a brief release on Nov. 4.

ACRES (NYSE: ACR), based in Uniondale, New York, makes floating-rate loans on middle-market commercial property, with a focus on multifamily, student housing, hotels, office and industrial buildings. On Aug. 6 it completed its merger with ACRES Capital Corp., the parent of its former manager, and became internally managed. The deal also brought in third-party fund management, servicing and insurance businesses, the 10-Q says.

Why did ACRES lose money in the third quarter?

Mainly the merger. Merger and internalization costs of $38.3 million covered professional fees and post-combination share-based compensation, the company said. It also recorded an $8.3 million provision for credit losses, against a $4.0 million reversal a year earlier. Real estate expenses also rose, primarily because of a catch-up in depreciation at two properties moved back to held for investment.

Measure	Q3 2026	Q3 2025
Net income (loss) to common shares	$(56.3) million	$9.8 million
Net interest income	$12.8 million	$8.4 million
Average yield on floating-rate CRE whole loans	6.95%	8.22%
Average cost of funds	5.89%	6.65%
Merger and internalization costs	$38.3 million	None
Provision for (reversal of) credit losses	$8.3 million	$(4.0) million

Source: ACRES Commercial Realty Form 10-Q for the quarter ended Sept. 30, 2026.

What happened to book value?

It dropped. Common book value fell to $16.81 a share at Sept. 30 from $26.76 at June 30, the 10-Q says. The company put the net impact of the merger at $8.62 a share, including transaction costs and the issuance of common shares as payment. Shares outstanding rose to about 13.5 million from about 6.9 million at the end of 2025. "As an internally managed company, the employees and directors own over 45% of the common shares and are directly aligned with shareholders," Chairman Andrew Fentress said in the Nov. 4 release.

Is ACRES still growing its loan book?

Yes. Its commercial real estate loans totaled $2.14 billion at Sept. 30, up from $1.83 billion at the end of 2025, with a credit loss allowance of $29.4 million. Net interest income rose because the average loan balance grew to $2.12 billion from $1.32 billion, even as falling benchmark rates cut yields. Its loans are funded through securitizations, term warehouse facilities and other financing facilities, its interest expense breakdown shows; our warehouse line of credit guide explains how those work. For the benchmarks behind floating-rate loans, see hard money and private lending rates today.

The merger also put a consolidated fund on its balance sheet, with $1.92 billion of investments and $1.28 billion of borrowings at Sept. 30, which helped lift total assets to $4.57 billion from $2.16 billion. ACRES reports its business in three segments now: principal investing, investment management and strategic holdings. Last week Ares Commercial Real Estate reported higher profit on a foreclosed office sale.