10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number: 1-32733

 

ACRES COMMERCIAL REALTY CORP.

(Exact name of registrant as specified in its charter)

Maryland		20-2287134
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
390 RXR Plaza, Uniondale, New York 11556
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 516-535-0015
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	ACR	New York Stock Exchange
8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock	ACRPrC	New York Stock Exchange
7.875% Series D Cumulative Redeemable Preferred Stock	ACRPrD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☑
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

The number of outstanding shares of the registrant’s common stock on August 4, 2023 was 8,491,979 shares.

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

		PAGE
PART I		3
Item 1:	Financial Statements	3
	Consolidated Balance Sheets – June 30, 2023 (unaudited) and December 31, 2022	3
	Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	5
	Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three and Six Months Ended June 30, 2023 and 2022	6
	Consolidated Statements of Changes in Equity (unaudited) for the Three Months Ended March 31, 2023 and 2022 and June 30, 2023 and 2022	7
	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2023 and 2022	9
	Notes to Consolidated Financial Statements – June 30, 2023 (unaudited)	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	74
Item 4:	Controls and Procedures	75
PART II		76
Item 1:	Legal Proceedings	76
Item 1A:	Risk Factors	76
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	76
Item 5:	Other Information	76
Item 6:	Exhibits	77
SIGNATURES		81

PART I

ITEM 1. FINANCIAL STATEMENTS

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	June 30, 2023			December 31, 2022
	(unaudited)
ASSETS (1)
Cash and cash equivalents	$	57,112		$	66,232
Restricted cash		15,251			38,579
Accrued interest receivable		12,615			11,969
CRE loans		1,963,740			2,057,590
Less: allowance for credit losses		(25,651	)		(18,803	)
CRE loans, net		1,938,089			2,038,787
Loan receivable - related party		11,125			11,275
Investments in unconsolidated entities		1,548			1,548
Properties held for sale		61,565			53,769
Investments in real estate		137,363			120,968
Right of use assets		20,061			20,281
Intangible assets		8,376			8,880
Other assets		3,551			4,364
Total assets	$	2,266,656		$	2,376,652
LIABILITIES (2)
Accounts payable and other liabilities	$	15,597		$	10,391
Management fee payable - related party		261			898
Accrued interest payable		7,181			6,921
Borrowings		1,749,199			1,867,033
Lease liabilities		43,988			43,695
Distributions payable		3,262			3,262
Accrued tax liability		142			113
Liabilities held for sale		3,025			3,025
Total liabilities		1,822,655			1,935,338
EQUITY
Preferred stock, par value $0.001: 10,000,000 shares authorized 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share; 4,800,000 and 4,800,000 shares issued and outstanding		5			5
Preferred stock, par value $0.001: 6,800,000 shares authorized 7.875% Series D Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share; 4,607,857 and 4,607,857 shares issued and outstanding		5			5
Common stock, par value $0.001: 41,666,666 shares authorized; 8,517,595 and 8,708,100 shares issued and outstanding (including 416,675 and 583,333 unvested restricted shares)		9			9
Additional paid-in capital		1,174,094			1,174,202
Accumulated other comprehensive loss		(5,604	)		(6,394	)
Distributions in excess of earnings		(733,958	)		(732,359	)
Total stockholders’ equity		434,551			435,468
Non-controlling interests		9,450			5,846
Total equity		444,001			441,314
TOTAL LIABILITIES AND EQUITY	$	2,266,656		$	2,376,652

The accompanying notes are an integral part of these statements

3

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - (Continued)

(in thousands, except share and per share data)

	June 30, 2023		December 31, 2022
	(unaudited)
(1) Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
Restricted cash	$	14,483	$	38,180
Accrued interest receivable		9,144		8,184
CRE loans, pledged as collateral (3)		1,481,255		1,456,649
Other assets		83		119
Total assets of consolidated VIEs	$	1,504,965	$	1,503,132
(2) Liabilities of consolidated VIEs included in total liabilities above:
Accounts payable and other liabilities	$	122	$	93
Accrued interest payable		3,305		3,083
Borrowings		1,234,303		1,233,556
Total liabilities of consolidated VIEs	$	1,237,730	$	1,236,732

(3)Excludes the allowance for credit losses.

The accompanying notes are an integral part of these statements

4

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
REVENUES
Interest income:
CRE loans	$	46,351		$	26,964		$	90,821		$	49,621
Other		797			55			1,656			74
Total interest income		47,148			27,019			92,477			49,695
Interest expense		32,442			15,745			63,817			30,652
Net interest income		14,706			11,274			28,660			19,043
Real estate income		8,879			8,777			15,950			11,915
Other revenue		37			19			70			35
Total revenues		23,622			20,070			44,680			30,993
OPERATING EXPENSES
General and administrative		2,348			2,353			5,327			5,810
Real estate expenses		10,492			9,162			19,352			13,956
Management fees - related party		1,890			1,672			3,663			3,354
Equity compensation - related party		719			991			1,613			1,735
Corporate depreciation and amortization		23			21			46			43
Provision for (reversal of) credit losses, net		2,700			524			7,796			(1,278	)
Total operating expenses		18,172			14,723			37,797			23,620
		5,450			5,347			6,883			7,373
OTHER INCOME (EXPENSE)
Loss on extinguishment of debt		—			—			—			(460	)
Gain on sale of real estate		—			—			745			—
Other income		242			175			352			973
Total other income		242			175			1,097			513
INCOME BEFORE TAXES		5,692			5,522			7,980			7,886
Income tax expense		(134	)		—			(129	)		(280	)
NET INCOME		5,558			5,522			7,851			7,606
Net income allocated to preferred shares		(4,856	)		(4,856	)		(9,711	)		(9,711	)
Net loss allocable to non-controlling interest, net of taxes		115			24			261			24
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$	817		$	690		$	(1,599	)	$	(2,081	)
NET INCOME (LOSS) PER COMMON SHARE - BASIC	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)
NET INCOME (LOSS) PER COMMON SHARE - DILUTED	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		8,451,973			8,888,461			8,476,059			8,992,142
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		8,534,558			8,914,172			8,476,059			8,992,142

The accompanying notes are an integral part of these statements

5

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net income	$	5,558		$	5,522		$	7,851		$	7,606
Other comprehensive income:
Reclassification adjustments associated with net unrealized losses from interest rate swaps included in net income		397			461			790			917
Total other comprehensive income		397			461			790			917
Comprehensive income before allocation to preferred shares		5,955			5,983			8,641			8,523
Net loss allocated to non-controlling interests shares		115			24			261			24
Net income allocated to preferred shares		(4,856	)		(4,856	)		(9,711	)		(9,711	)
Comprehensive income (loss) allocable to common shares	$	1,214		$	1,151		$	(809	)	$	(1,164	)

The accompanying notes are an integral part of these statements

6

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands, except share and per share data)

(unaudited)

	Common Stock
	Shares			Amount		Series C Preferred Stock		Series D Preferred Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings (Distributions in Excess of Earnings)			Total Stockholders’ Equity			Non-Controlling Interest			Total Equity
Balance, December 31, 2022		8,708,100		$	9	$	5	$	5	$	1,174,202		$	(6,394	)	$	(732,359	)	$	435,468		$	5,846		$	441,314
Purchase and retirement of common stock		(79,744	)		—		—		—		(756	)		—			—			(756	)		—			(756	)
Stock-based compensation		17,780			—		—		—		170			—			—			170			—			170
Amortization of stock-based compensation		—			—		—		—		894			—			—			894			—			894
Contributions from non-controlling interests		—			—		—		—		—			—			—			—			2,332			2,332
Net income		—			—		—		—		—			—			2,439			2,439			(146	)		2,293
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,855	)		(4,855	)		—			(4,855	)
Amortization of terminated derivatives		—			—		—		—		—			393			—			393			—			393
Balance, March 31, 2023		8,646,136		$	9	$	5	$	5	$	1,174,510		$	(6,001	)	$	(734,775	)	$	433,753		$	8,032		$	441,785
Purchase and retirement of common stock		(135,416	)		—		—		—		(1,200	)		—			—			(1,200	)		—			(1,200	)
Stock-based compensation		6,875			—		—		—		65			—			—			65			—			65
Amortization of stock-based compensation		—			—		—		—		719			—			—			719			—			719
Contributions from non-controlling interests		—			—		—		—		—			—			—			—			1,533			1,533
Net income		—			—		—		—		—			—			5,673			5,673			(115	)		5,558
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,856	)		(4,856	)		—			(4,856	)
Amortization of terminated derivatives		—			—		—		—		—			397			—			397			—			397
Balance, June 30, 2023		8,517,595		$	9	$	5	$	5	$	1,174,094		$	(5,604	)	$	(733,958	)	$	434,551		$	9,450		$	444,001

The accompanying notes are an integral part of these statements

7

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - (Continued)

(in thousands, except share and per share data)

(unaudited)

	Common Stock
	Shares			Amount		Series C Preferred Stock		Series D Preferred Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings (Distributions in Excess of Earnings)			Total Stockholders’ Equity			Non-Controlling Interest			Total Equity
Balance, December 31, 2021		9,149,079		$	9	$	5	$	5	$	1,179,863		$	(8,127	)	$	(723,560	)	$	448,195		$	—		$	448,195
Offering costs		—			—		—		—		(37	)		—			—			(37	)		—			(37	)
Purchase and retirement of common stock		(314,552	)		—		—		—		(3,885	)		—			—			(3,885	)		—			(3,885	)
Amortization of stock-based compensation		—			—		—		—		744			—			—			744			—			744
Net income		—			—		—		—		—			—			2,084			2,084			—			2,084
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,855	)		(4,855	)		—			(4,855	)
Amortization of terminated derivatives		—			—		—		—		—			456			—			456			—			456
Balance, March 31, 2022		8,834,527		$	9	$	5	$	5	$	1,176,685		$	(7,671	)	$	(726,331	)	$	442,702		$	—		$	442,702
Offering costs		—			—		—		—		(33	)		—			—			(33	)		—			(33	)
Purchase and retirement of common stock		(237,730	)		—		—		—		(2,497	)		—			—			(2,497	)		—			(2,497	)
Stock-based compensation		333,333			—		—		—		—			—			—			—			—			—
Amortization of stock-based compensation		—			—		—		—		991			—			—			991			—			991
Contributions from non-controlling interests		—			—		—		—		—			—			—			—			5,036			5,036
Net income		—			—		—		—		—			—			5,546			5,546			(24	)		5,522
Distributions and accrual of cumulative preferred stock dividends		—			—		—		—		—			—			(4,856	)		(4,856	)		—			(4,856	)
Amortization of terminated derivatives		—			—		—		—		—			461			—			461			—			461
Balance, June 30, 2022		8,930,130		$	9	$	5	$	5	$	1,175,146		$	(7,210	)	$	(725,641	)	$	442,314		$	5,012		$	447,326

The accompanying notes are an integral part of these statements

8

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,851		$	7,606
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) credit losses, net		7,796			(1,278	)
Depreciation, amortization and accretion		2,683			5,364
Amortization of stock-based compensation		1,613			1,735
Loss on the extinguishment of debt		—			460
Gain on sale of real estate		(745	)		—
Changes in operating assets and liabilities:		5,271			(170	)
Net cash provided by operating activities		24,469			13,717
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination and purchase of loans		(66,885	)		(392,121	)
Principal payments received on loans and leases		141,430			216,368
Investments in real estate		(15,352	)		(72,279	)
Proceeds from sale of real estate		14,309			—
Purchase of furniture and fixtures		—			(20	)
Principal payments received on loan - related party		150			125
Net cash provided by (used in) investing activities		73,652			(247,927	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock		(1,956	)		(6,382	)
Proceeds from issuance of preferred shares (net of $70 of underwriting discounts and offering costs)		—			(70	)
Proceeds from borrowings:
Senior secured financing facility		—			30,025
Warehouse financing facilities and repurchase agreements		11,888			298,882
Mortgage payable		144			18,710
Payments on borrowings:
Securitizations		(851	)		(237,189	)
Senior secured financing facility		(40,554	)		(10,150	)
Warehouse financing facilities and repurchase agreements		(89,606	)		(38,150	)
Convertible senior notes		—			(39,839	)
Payment of debt issuance costs		(3,787	)		(646	)
Proceeds received from non-controlling interests		3,865			5,036
Distributions paid on preferred stock		(9,711	)		(9,711	)
Net cash (used in) provided by financing activities		(130,568	)		10,516
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(32,447	)		(223,694	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		104,810			283,931
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	72,363		$	60,237

The accompanying notes are an integral part of these statements

9

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

(unaudited)

NOTE 1 - ORGANIZATION

ACRES Commercial Realty Corp., a Maryland corporation, along with its subsidiaries (collectively, the “Company”), is a real estate investment trust (“REIT”) that is primarily focused on originating, holding and managing commercial real estate (“CRE”) mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. The Company’s manager is ACRES Capital, LLC (the “Manager”), a subsidiary of ACRES Capital Corp. (collectively, “ACRES”), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial property in top United States (“U.S.”) markets.

The Company has qualified, and expects to qualify in the current fiscal year, as a REIT.

The Company conducts its operations through the use of subsidiaries that it consolidates into its financial statements. The Company’s core assets are consolidated through its investment in ACRES Realty Funding, Inc. (“ACRES RF”), a wholly-owned subsidiary that holds CRE loans, investments in commercial real estate properties and investments in CRE securitizations, which are consolidated as VIEs as discussed in Note 3.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of the Company, majority-owned or controlled subsidiaries and VIEs for which the Company is considered the primary beneficiary. All inter-company transactions and balances have been eliminated in consolidation.

Basis of Presentation

All adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows have been made.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and within the period of financial results. Actual results could differ from those estimates. Estimates affecting the accompanying consolidated financial statements include, but are not limited to, the net realizable and fair values of the Company’s investments and derivatives, the estimated useful lives used to calculate depreciation, the expected lives over which to amortize premiums and accrete discounts, reversals of or provisions for expected credit losses and the disclosure of contingent liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. At June 30, 2023 and December 31, 2022, $53.1 million and $63.3 million, respectively, of the reported cash balances exceeded the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation deposit insurance limits of $250,000 per respective depository or brokerage institution. However, all of the Company’s cash deposits are held at multiple, established financial institutions, in multiple accounts associated with its parent and respective consolidated subsidiaries, to minimize credit risk exposure. The Company has not experienced, and does not expect, any losses on its cash and cash equivalents.

Restricted cash includes required account balance minimums primarily for the Company’s CRE debt securitizations as well as cash held in the syndicated corporate loan collateralized debt obligations (“CDOs”).

10

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The following table provides a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to the total amount shown on the consolidated statements of cash flows (in thousands):

	June 30,
	2023		2022
Cash and cash equivalents	$	57,112	$	34,870
Restricted cash		15,251		25,367
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	72,363	$	60,237

Investment in Real Estate

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	Shorter of lease term or expected useful life
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	7 to 94 years
Intangible assets	90 days to 18 years
Lease liabilities	7 to 94 years

Income Taxes

The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $21.0 million) at June 30, 2023, as the Company believes it is more likely than not that the deferred tax assets will not be realized. This assessment was based on the Company’s cumulative historical losses and uncertainties as to the amount of taxable income that would be generated in future years by the Company’s taxable REIT subsidiaries.

Earnings per Share

The Company presents both basic and diluted earnings per share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income (loss) allocable to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

Reference Rate Reform

Historically, the Company has used LIBOR as the benchmark interest rate for its floating-rate whole loans and the Company has been exposed to LIBOR through its floating-rate borrowings. In March 2021, the United Kingdom’s, or U.K.’s, Financial Conduct Authority (“FCA”) announced that it would cease publication of the one-week and the two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. In July 2021, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee composed of large U.S. financial institutions, identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR.

Following this announcement, the Company began to transition the contractual benchmark rates of existing floating-rate whole loans and borrowings to alternate rates. Additionally, beginning January 1, 2022, all variable rate loans originated by the Company and all variable rate borrowings acquired had been benchmarked to SOFR. At June 30, 2023, the Company's whole loan portfolio had a carrying value of $1.9 billion of floating rate loans, all of which have interest rates tied to SOFR. At June 30, 2023, the Company had

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

$1.6 billion of outstanding floating rate borrowings, 3.2% or $51.5 million of which have interest rates tied to LIBOR and 96.8% or $1.5 billion of which have interest rates tied to SOFR.

The Company expects to complete the process of converting its LIBOR-based borrowings to an applicable benchmark interest rate during 2023.

Recent Accounting Standards

Accounting Standards Adopted in 2023

In March 2022, the Financial Accounting Standards Board ("FASB") issued an amendment eliminating certain previously issued accounting guidance for troubled-debt restructurings (“TDRs”) and enhancing disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to the general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. The Company adopted this guidance during the six months ended June 30, 2023 and the adoption did not have a material impact on the Company's consolidated financial statements.

NOTE 3 - VARIABLE INTEREST ENTITIES

The Company has evaluated its loans, investments in unconsolidated entities, liabilities to subsidiary trusts issuing preferred securities (consisting of unsecured junior subordinated notes), securitizations, guarantees and other financial contracts in order to determine if they are variable interests in VIEs. The Company regularly monitors these legal interests and contracts and, to the extent it has determined that it has a variable interest, analyzes the related entity for potential consolidation.

Consolidated VIEs (the Company is the primary beneficiary)

Based on management’s analysis, the Company was the primary beneficiary of five VIEs at both June 30, 2023 and December 31, 2022 (collectively, the “Consolidated VIEs”).

The Consolidated VIEs are CRE securitizations and CDOs that were formed on behalf of the Company to invest in real estate-related securities, commercial mortgage-backed securities (“CMBS”), syndicated corporate loans and corporate bonds and were financed by the issuance of debt securities. By financing these assets with long-term borrowings through the issuance of debt securities, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed.

In April 2022, the Company contributed an initial investment of $13.0 million for a 72.1% interest in Charles Street-ACRES FSU Student Venture, LLC (the “FSU Student Venture”). The FSU Student Venture, a joint venture between the Company and two unrelated third parties, was formed for the purpose of developing a student housing project. The FSU Student Venture was determined not to be a VIE as there was sufficient equity at risk, it does not have disproportionate voting rights and its members all have the following characteristics: (1) the power to direct activities (2) the obligation to absorb losses and (3) the right to receive residual returns. However, the Company consolidated the FSU Student Venture due to its 72.1% interest that provides the Company with unilateral control over all major decisions of the joint venture. The portion of the joint venture that the Company does not own is presented as non-controlling interest at and for the periods presented in the Company’s consolidated financial statements.

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JUNE 30, 2023

(unaudited)

The Company has exposure to losses on its securitizations to the extent of its investments in the subordinated debt and preferred equity of each securitization. The Company is entitled to receive payments of principal and interest on the debt securities it holds and, to the extent revenues exceed debt service requirements and other expenses of the securitizations, distributions with respect to its preferred equity interests. As a result of consolidation, the debt and equity interests the Company holds in these securitizations have been eliminated; and the Company’s consolidated balance sheets reflect the assets held, debt issued by the securitizations to third parties and any accrued payables to third parties. The Company’s operating results and cash flows include the gross amounts related to the securitizations’ assets and liabilities as opposed to the Company’s net economic interests in the securitizations. Assets and liabilities related to the securitizations are disclosed, in the aggregate, on the Company’s consolidated balance sheets. For a discussion of the debt issued through the securitizations, see Note 10.

Creditors of the Company’s Consolidated VIEs have no recourse to the general credit of the Company, nor to each other. During the six months ended June 30, 2023 and 2022, the Company did not provide any financial support to any of its VIEs nor does it have any requirement to do so, although it may choose to do so in the future to maximize future cash flows on such investments by the Company. There are no explicit arrangements that obligate the Company to provide financial support to any of its Consolidated VIEs.

The following table shows the classification and carrying values of assets and liabilities of the Company’s Consolidated VIEs at June 30, 2023 (in thousands):

	CRE Securitizations		Other		Total
ASSETS
Restricted cash	$	14,201	$	282	$	14,483
Accrued interest receivable		9,144		—		9,144
CRE loans, pledged as collateral (1)		1,481,255		—		1,481,255
Other assets		27		56		83
Total assets (2)	$	1,504,627	$	338	$	1,504,965
LIABILITIES
Accounts payable and other liabilities	$	122	$	—	$	122
Accrued interest payable		3,305		—		3,305
Borrowings		1,234,303		—		1,234,303
Total liabilities	$	1,237,730	$	—	$	1,237,730

(1)Excludes allowance for credit losses.

(2)Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

Unconsolidated VIEs (the Company is not the primary beneficiary, but has a variable interest)

Based on management’s analysis, the Company is not the primary beneficiary of the VIEs discussed below since it does not have both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. Accordingly, the following VIEs are not consolidated in the Company’s financial statements at June 30, 2023. The Company continuously reassesses whether it is deemed to be the primary beneficiary of its unconsolidated VIEs. The Company’s maximum exposure to risk for each of these unconsolidated VIEs is set forth in the “Maximum Exposure to Loss” column in the table below.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Unsecured Junior Subordinated Debentures

The Company has a 100% interest in the common shares of each of Resource Capital Trust I (“RCT I”) and RCC Trust II (“RCT II”), respectively, with a value of $1.5 million in the aggregate, or 3.0% of each trust, at June 30, 2023. RCT I and RCT II were formed for the purposes of providing debt financing to the Company. The Company completed a qualitative analysis to determine whether it is the primary beneficiary of each of the trusts and determined that it was not the primary beneficiary of either trust because it does not have the power to direct the activities most significant to the trusts, which include the collection of principal and interest through servicing rights. Accordingly, neither trust is consolidated into the Company’s consolidated financial statements.

The Company records its investments in RCT I and RCT II’s common shares of $774,000 each as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II. The trusts each hold subordinated debentures for which the Company is the obligor in the amount of $25.8 million for each of RCT I and RCT II. The debentures were funded by the issuance of trust preferred securities of RCT I and RCT II.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs at June 30, 2023 (in thousands):

	Unsecured Junior Subordinated Debentures			Maximum Exposure to Loss
ASSETS
Accrued interest receivable	$	12		$	—
Investments in unconsolidated entities		1,548		$	1,548
Total assets		1,560
LIABILITIES
Accrued interest payable		404		N/A
Borrowings		51,548		N/A
Total liabilities		51,952
Net (liability) asset	$	(50,392	)

At June 30, 2023, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to any of its unconsolidated VIEs.

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes the Company’s supplemental disclosure of cash flow information (in thousands):

	For the Six Months Ended June 30,
	2023			2022
Supplemental cash flows:
Interest expense paid in cash	$	60,035		$	24,736
Income taxes paid in cash		101			180
Non-cash investing activities include the following:
Proceeds from the receipt of deed-in-lieu of foreclosure	$	20,900		$	—
Investment in properties held for sale related to the receipt of deed-in-lieu of foreclosure		(20,900	)		—
Non-cash financing activities include the following:
Incentive compensation paid in common stock	$	234		$	—
Distributions on preferred stock accrued but not paid		3,262			3,262

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JUNE 30, 2023

(unaudited)

NOTE 5 - LOANS

The following is a summary of the Company’s CRE loans held for investment by asset type (dollars in thousands, except amounts in footnotes):

Description	Quantity	Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At June 30, 2023:
Whole loans (5)(6)	77	$	1,968,322	$	(9,282	)	$	1,959,040	$	(20,951	)	$	1,938,089	1M BR plus 2.86% to 1M BR plus 8.61%	July 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	1,973,022	$	(9,282	)	$	1,963,740	$	(25,651	)	$	1,938,089
At December 31, 2022:
Whole loans (5)(6)	81	$	2,065,504	$	(12,614	)	$	2,052,890	$	(14,103	)	$	2,038,787	1M BR plus 2.85% to 1M BR plus 8.50%	January 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	2,070,204	$	(12,614	)	$	2,057,590	$	(18,803	)	$	2,038,787

(1)Amounts include unamortized loan origination fees of $9.0 million and $12.3 million and deferred amendment fees of $257,000 and $308,000 at June 30, 2023 and December 31, 2022, respectively.

(2)Benchmark rates ("BR") comprise one-month LIBOR or one-month Term SOFR. At June 30, 2023, all of the Company's whole loans used one-month Term SOFR. Weighted-average one-month benchmark rates were 5.22% and 4.21% at June 30, 2023 and December 31, 2022, respectively. Additionally, weighted-average benchmark rate floors were 0.68% at both June 30, 2023 and December 31, 2022.

(3)Maturity dates exclude contractual extension options, subject to the satisfaction of certain terms that may be available to the borrowers.

(4)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(5)Substantially all loans are pledged as collateral under various borrowings at June 30, 2023 and December 31, 2022.

(6)CRE whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreement, and any necessary approvals have been obtained.

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JUNE 30, 2023

(unaudited)

The following is a summary of the Company’s CRE loans held for investment by property type and geographic location (dollars in thousands):

	June 30, 2023					December 31, 2022
Property Type	Carrying Value		% of Loan Portfolio			Carrying Value		% of Loan Portfolio
Multifamily	$	1,460,600		75.4	%	$	1,531,697		75.2	%
Office (1)(2)		254,503		13.1	%		269,201		13.2	%
Hotel		146,099		7.5	%		178,160		8.7	%
Self-Storage		68,862		3.6	%		51,704		2.5	%
Retail (3)		8,025		0.4	%		8,025		0.4	%
Total	$	1,938,089		100	%	$	2,038,787		100	%

(1)Includes one and two whole loans in maturity default with carrying values of $20.1 million and $42.5 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes one mezzanine loan with a par value of $4.7 million that is fully reserved at both June 30, 2023 and December 31, 2022.

(3)Comprises one whole loan in maturity default at both June 30, 2023 and December 31, 2022.

	June 30, 2023					December 31, 2022
Geographic Location	Carrying Value		% of Loan Portfolio			Carrying Value		% of Loan Portfolio
Southwest (1)	$	458,573		23.6	%	$	472,327		23.2	%
Southeast		410,732		21.2	%		438,403		21.5	%
Mountain		274,289		14.2	%		329,828		16.2	%
Mid Atlantic		251,757		13.0	%		248,740		12.2	%
Pacific		170,986		8.8	%		191,706		9.4	%
Northeast (2)		200,865		10.4	%		170,236		8.3	%
East North Central (3)		106,969		5.5	%		125,211		6.1	%
West North Central		63,918		3.3	%		62,336		3.1	%
Total	$	1,938,089		100	%	$	2,038,787		100	%

(1)Includes one whole loan in maturity default with carrying values of $20.1 million and $20.7 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes one whole loan in maturity default with a carrying value of $8.0 million at both June 30, 2023 and December 31, 2022. Also includes one mezzanine loan with a par value of $4.7 million that is fully reserved at both June 30, 2023 and December 31, 2022.

(3)Includes one whole loan in maturity default with a carrying value of $21.7 million at December 31, 2022.

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JUNE 30, 2023

(unaudited)

The following is a summary of the contractual maturities of the Company’s CRE loans held for investment, at amortized cost (in thousands, except amounts in the footnotes):

Description	2023		2024		2025 and Thereafter		Total
At June 30, 2023:
Whole loans (1)	$	113,075	$	933,116	$	884,685	$	1,930,876
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	113,075	$	933,116	$	889,385	$	1,935,576
Description	2023		2024		2025 and Thereafter		Total
At December 31, 2022:
Whole loans (1)	$	268,120	$	882,175	$	851,031	$	2,001,326
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	268,120	$	882,175	$	855,731	$	2,006,026

(1)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(2)At June 30, 2023, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $58.4 million, $90.8 million and $1.8 billion in 2023, 2024 and 2025 and thereafter, respectively. At December 31, 2022, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $113.8 million, $68.6 million and $1.8 billion in 2023, 2024 and 2025 and thereafter, respectively.

At June 30, 2023 and December 31, 2022, no single loan or investment represented more than 10% of the Company’s total assets, and no single investment group generated over 10% of the Company’s revenue.

Principal Paydowns Receivable

Principal paydowns receivable represents loan principal payments that have been received by the Company’s servicers and trustees but have not been remitted to the Company. At both June 30, 2023 and December 31, 2022, the Company had no loan principal paydowns receivable.

NOTE 6 - FINANCING RECEIVABLES

The following table shows the activity in the allowance for credit losses for the six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

	Six Months Ended June 30, 2023			Year Ended December 31, 2022
Allowance for credit losses at beginning of period	$	18,803		$	8,805
Provision for credit losses		7,796			12,295
Charge offs		(948	)		(2,297	)
Allowance for credit losses at end of period	$	25,651		$	18,803

During the three and six months ended June 30, 2023, the Company recorded provisions for expected credit losses of $2.7 million and $7.8 million, respectively, primarily attributable to the impact from the near-term macroeconomic outlook of the commercial real estate market, including: forecasted increases in short-term interest rates, continued expected declines in commercial real estate pricing and forecasted higher unemployment rates, partially offset by improvements in property-level cash flows.

In June 2023, the Company received the deed-in-lieu of foreclosure on an office loan in the East North Central region with a principal balance of $22.8 million which resulted in a charge off of $948,000 against the allowance for credit losses (see Note 7).

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JUNE 30, 2023

(unaudited)

During the three months ended June 30, 2022, the Company recorded a provision for expected credit losses of approximately $524,000 primarily attributable to a decline in macroeconomic factors, offset by improvements in property-level cash flows. During the six months ended June 30, 2022, reversal of expected credit losses in the first quarter of 2022 outpaced the provision during the second quarter of 2022, resulting in a net reversal of $1.3 million in connection with resolutions of loans with specific reserves and continued improvements in property-level operations.

At June 30, 2023 and December 31, 2022, the Company individually evaluated the following loans:

•One office mezzanine loan in the Northeast region with a principal balance of $4.7 million at both June 30, 2023 and December 31, 2022. The Company fully reserved this loan in the fourth quarter of 2022, and it continues to be fully reserved at June 30, 2023. The loan entered payment default in February 2023 and has been placed on nonaccrual status.

•One retail loan in the Northeast region, with a principal balance of $8.0 million at both June 30, 2023 and December 31, 2022, for which foreclosure was determined to be probable. The loan was modified in February 2021 to extend its maturity to December 2021 and has since entered into payment default and has been put on nonaccrual status. The loan had an as-is appraised value in excess of its principal and interest balances, and, as such, had no allowance for CECL at June 30, 2023 and December 31, 2022, respectively.

•One office loan in the Southwest region, with a principal balance of $20.1 million and $20.7 million at June 30, 2023 and December 31, 2022, respectively, for which foreclosure was determined to be probable. The loan had an initial maturity of March 2022, was modified three times to extend its maturity to June 2022 and has since entered into payment default and has been put on nonaccrual status. However, in exchange for payments, comprising principal paydowns, interest payments and the reimbursement of certain legal fees, received between October 2022 and July 2023, the Company has agreed to temporarily defer its right to foreclose on the property until October 2023. Additionally, at both June 30, 2023 and December 31, 2022, this loan had an as-is appraised value in excess of its principal and interest balances, and, as such, had no CECL allowance.

Credit quality indicators

Commercial Real Estate Loans

CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten loan-to-collateral value ("LTV") ratios, loan structure and exit plan. Depending on the loan’s performance against these various factors, loans are rated on a scale from 1 to 5, with loans rated 1 representing loans with the highest credit quality and loans rated 5 representing loans with the lowest credit quality. The factors evaluated provide general criteria to monitor credit migration in the Company’s loan portfolio; as such, a loan’s rating may improve or worsen, depending on new information received.

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JUNE 30, 2023

(unaudited)

The criteria set forth below should be used as general guidelines. Therefore, not every loan will have all of the characteristics described in each category below.

Risk Rating	Risk Characteristics
1	• Property performance has surpassed underwritten expectations.
	• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high-quality tenant mix.
2	• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded.
	• Occupancy is stabilized, near stabilized or is on track with underwriting.
3	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• An updated appraisal is required upon designation and updated on an as-needed basis.

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans may experience greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, the Company pools CRE loans based on the underlying collateral property type and utilizes a probability of default and loss given default methodology for approximately one year after which it immediately reverts to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnote):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At June 30, 2023:
Whole loans, floating-rate	$	—	$	1,353,353		514,179	$	63,344	$	28,164	$	1,959,040
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,353,353	$	514,179	$	63,344	$	32,864	$	1,963,740
At December 31, 2022:
Whole loans, floating-rate	$	—	$	1,635,376	$	309,491	$	85,226	$	22,797	$	2,052,890
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,635,376	$	309,491	$	85,226	$	27,497	$	2,057,590

(1)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in the footnotes):

	2023		2022		2021		2020		2019			Prior		Total (1)
At June 30, 2023:
Whole loans, floating-rate: (2)
Rating 2	$	37,643	$	444,948	$	791,217	$	52,703	$	26,842		$	—	$	1,353,353
Rating 3		—		77,350		316,281		34,286		27,794			58,468		514,179
Rating 4		—		19,348		43,996		—		—			—		63,344
Rating 5		—		—		—		—		20,139			8,025		28,164
Total whole loans, floating-rate		37,643		541,646		1,151,494		86,989		74,775			66,493		1,959,040
Mezzanine loan (rating 5)		—		—		—		—		—			4,700		4,700
Total	$	37,643	$	541,646	$	1,151,494	$	86,989	$	74,775		$	71,193	$	1,963,740
Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	(948	)	$	—	$	(948	)
	2022		2021		2020		2019		2018			Prior		Total (1)
At December 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	526,606	$	1,003,060	$	64,944	$	26,977	$	13,789		$	—	$	1,635,376
Rating 3		—		192,490		44,657		27,881		44,463			—		309,491
Rating 4		—		—		—		20,742		64,484			—		85,226
Rating 5		—		—		—		22,797		—			—		22,797
Total whole loans, floating-rate		526,606		1,195,550		109,601		98,397		122,736			—		2,052,890
Mezzanine loan (rating 5)		—		—		—		—		4,700			—		4,700
Total	$	526,606	$	1,195,550	$	109,601	$	98,397	$	127,436		$	—	$	2,057,590

(1)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(2)Acquired CRE whole loans are grouped within each loan’s year of origination.

At both June 30, 2023 and December 31, 2022, the Company had one additional mezzanine loan included in other assets held for sale that had no carrying value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Loan Portfolio Aging Analysis

The following table presents the CRE loan portfolio aging analysis at the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):

	30-59 Days		60-89 Days		Greater than 90 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At June 30, 2023:
Whole loans, floating-rate	$	—	$	—	$	28,164	$	28,164	$	1,930,876	$	1,959,040	$	—
Mezzanine loan (4)		4,700		—		—		4,700		—		4,700		—
Total	$	4,700	$	—	$	28,164	$	32,864	$	1,930,876	$	1,963,740	$	—
At December 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	28,767	$	28,767	$	2,024,123	$	2,052,890	$	—
Mezzanine loan (4)		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	28,767	$	28,767	$	2,028,823	$	2,057,590	$	—

(1)During the three and six months ended June 30, 2023, the Company recognized interest income of $837,000 and $1.8 million, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized interest income of $333,000 and $669,000, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023.

(2)Includes one CRE whole loan, with an amortized cost of $22.8 million, in maturity default at December 31, 2022.

(3)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(4)Fully reserved at both June 30, 2023 and December 31, 2022.

At June 30, 2023, the Company had two CRE whole loans, with total amortized costs of $28.2 million, and one mezzanine loan, with a total amortized cost of $4.7 million, in payment default. At December 31, 2022, the Company had three CRE whole loans, with total amortized costs of $51.6 million, in payment default.

Modifications

During the six months ended June 30, 2023, the Company did not enter into any loan modifications for borrowers that are experiencing financial difficulty. During the six months ended June 30, 2022, the Company entered into three agreements that extended one CRE whole loan for a borrower experiencing financial difficulty. At June 30, 2022, this loan had an amortized cost of $21.8 million, which represented 1.0% of the total amortized cost of the portfolio.

NOTE 7 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

At June 30, 2023, the Company held investments in six real estate properties, four of which are included in investments in real estate, and two of which are included in properties held for sale on the consolidated balance sheets.

In February 2023, the Company sold a hotel property in the Northeast region that was previously designated as a property held for sale. The hotel property sold for $15.1 million with selling costs of $845,000, resulting in a gain of $745,000.

In June 2023, the Company received the deed-in-lieu of foreclosure on an office property in the East North Central region. The Company determined that the acquisition of the property should be accounted for as an asset acquisition, and the acquisition-date fair value of $20.9 million was determined using a third-party valuation. Additionally on the date of transfer, the Company acquired cash and receivables and assumed trade payables, resulting in a charge off of the loan against the Company's allowance for credit losses of $948,000. At June 30, 2023, the property was reported as property held for sale on the consolidated balance sheets.

21

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The following table summarizes the book value of the Company’s investments in real estate and properties held for sale (in thousands, except amounts in the footnotes):

	June 30, 2023							December 31, 2022
	Cost Basis		Accumulated Depreciation & Amortization			Carrying Value		Cost Basis		Accumulated Depreciation & Amortization			Carrying Value
Assets:
Investments in real estate, equity:
Investments in real estate (1)	$	141,008	$	(3,645	)	$	137,363	$	123,219	$	(2,251	)	$	120,968
Right of use assets (2)(3)		19,665		(342	)		19,323		19,664		(205	)		19,459
Intangible assets (4)		11,474		(3,098	)		8,376		11,474		(2,594	)		8,880
Subtotal		172,147		(7,085	)		165,062		154,357		(5,050	)		149,307
Investments in real estate from lending activities:
Properties held for sale (5)		61,565		—			61,565		53,769		—			53,769
Total		233,712		(7,085	)		226,627		208,126		(5,050	)		203,076
Liabilities:
Investments in real estate, equity:
Mortgage payable		18,233		259			18,492		18,089		155			18,244
Other liabilities		247		(201	)		46		247		(183	)		64
Lease liabilities (3)(6)		43,260		(54	)		43,206		43,260		(393	)		42,867
Subtotal (7)		61,740		4			61,744		61,596		(421	)		61,175
Investments in real estate from lending activities:
Liabilities held for sale		3,025		—			3,025		3,025		—			3,025
Total		64,765		4			64,769		64,621		(421	)		64,200
Total net investments in real estate and properties held for sale (8)	$	168,947				$	161,858	$	143,505				$	138,876

(1)Includes $38.4 million of land, which is not depreciable, at June 30, 2023 and December 31, 2022, respectively.

(2)Primarily comprises a $18.9 million right of use asset, associated with an acquired ground lease of $42.8 million (see below) accounted for as an operating lease at June 30, 2023. At December 31, 2022, the value of the right of use asset was $19.0 million associated to the ground lease with a value of $42.4 million. Amortization is booked to real estate expenses on the consolidated statements of operations.

(3)Refer to Note 8 for additional information on the Company’s remaining operating leases.

(4)Primarily comprises a franchise intangible of $5.0 million and $5.3 million, a management contract intangible of $3.0 million and $3.1 million, and a customer list intangible of $321,000 and $427,000 at June 30, 2023 and December 31, 2022, respectively.

(5)At December 31, 2022, properties held for sale included two properties originally acquired in November 2020 and July 2022. At June 30, 2023, properties held for sale included the November 2020 acquisition, as well as the property acquired via deed-in-lieu of foreclosure during the three months ended June 30, 2023.

(6)Primarily comprises a $42.8 million ground lease with a remaining term of 93 years. Lease expense for the six months ended June 30, 2023 was $1.3 million.

(7)Excludes $1.9 million of deferred debt issuance costs on construction loans that can be drawn upon subsequent to June 30, 2023.

(8)Excludes items of working capital, either acquired or assumed.

22

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The Company acquired a ground lease with its equity investment in a hotel property in April 2022. This ground lease has an associated above-market lease intangible liability. The ground lease confers the Company the right to use the land on which its hotel operates, and the ground lease payments increase 3.00% per year until 2116. The Company acquired the original 99-year lease with 94 years remaining during the second quarter of 2022. At June 30, 2023, 93 years remain in its term.

The Company recorded lease payments of $426,000 and $852,000 for the three and six months ended June 30, 2023 and $413,000 for both the three and six months ended June 30, 2022. The Company recorded amortization of $51,000 and $102,000 during the three and six months ended June 30, 2023 related to the right of use asset and accretion of $615,000 and $1.2 million during the three and six months ended June 30, 2023 related to its ground lease liability. The Company recorded amortization of $51,000 during the three and six months ended June 30, 2022 related to the right of use asset and accretion of $114,000 during the three and six months ended June 30, 2022 related to its ground lease liability.

During the three and six months ended June 30, 2023, the Company recorded amortization expense of $251,000 and $503,000, respectively, on its intangible assets. During the three and six months ended June 30, 2022, the Company recorded amortization expense of $437,000 and $1.4 million, respectively, on its intangible assets. The Company expects to record additional amortization expense of $768,000 during the remainder of fiscal year 2023. The Company, also, expects to record amortization expense of $1.2 million, $1.1 million, $1.0 million, $748,000, and $748,000 during the 2024, 2025, 2026, 2027 and 2028 fiscal years, respectively, on its intangible assets.

NOTE 8 - LEASES

In addition to the ground lease discussed in Note 7, the Company has operating leases for office space and office equipment. The leases have terms that expire between January 2024 and September 2029. The leases on the office space and office equipment contain options for early termination granted to the Company and the lessor. Lease payments are determined as follows:

• Office space: payments are made on a fixed schedule, escalating annually, and also include the Company’s responsibility for a percentage of increases in the building’s property taxes and operating expenses over the base year.

• Office equipment: payments are made on a fixed schedule.

The following table summarizes the Company’s operating leases (in thousands):

	June 30, 2023			December 31, 2022
Operating Leases:
Right of use assets	$	738		$	822
Lease liabilities	$	(782	)	$	(828	)
Weighted average remaining lease term:	6.2 years			6.7 years
Weighted average discount rate (1):		8.70	%		8.71	%

(1)The market discount rate is used, when readily determinable, in calculating the present value of lease payments for the operating lease liability. Otherwise, the incremental borrowing rate on the commencement date is used.

23

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The following table summarizes the Company’s operating lease costs and cash payments for the periods presented (in thousands):

	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022		Six Months Ended June 30, 2023		Six Months Ended June 30, 2022
Lease Cost:
Operating lease cost	$	40	$	24	$	115	$	48
Other Information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	38	$	24	$	75	$	47

The following table summarizes the Company’s operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

	Operating Leases
2023	$	77
2024		155
2025		159
2026		163
2027		167
Thereafter		303
Subtotal		1,024
Less: impact of discount		(242	)
Total	$	782

NOTE 9 - INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company’s investments in unconsolidated entities at June 30, 2023 and December 31, 2022 comprised a 100% interest in the common shares of RCT I and RCT II with a value of $1.5 million in the aggregate, or 3.0% of each trust. The Company records its investments in RCT I’s and RCT II’s common shares as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II.

During the three and six months ended June 30, 2023, the Company recorded dividends from its investments in RCT I’s and RCT II’s common shares, reported in other revenue on the consolidated statement of operations, of $37,000 and $70,000, respectively. During the three and six months ended June 30, 2022, the Company recorded dividends of $19,000 and $35,000, respectively.

24

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

NOTE 10 - BORROWINGS

The Company historically has financed the acquisition of its investments, including investment securities and loans, through the use of secured and unsecured borrowings. Certain information with respect to the Company’s borrowings is summarized in the following table (dollars in thousands, except amounts in the footnotes):

	Principal Outstanding	Unamortized Issuance Costs and Discounts	Outstanding Borrowings	Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
At June 30, 2023:
ACR 2021-FL1 Senior Notes	$674,372	$3,035	$671,337	6.70%	13.0 years	801,792
ACR 2021-FL2 Senior Notes	567,000	4,034	562,966	7.02%	13.6 years	700,000
Senior secured financing facility	50,995	3,298	47,697	8.87%	4.5 years	152,272
CRE - term warehouse financing facilities (1)	253,131	1,869	251,262	7.77%	1.3 years	377,208
Mortgage payable	18,854	362	18,492	8.95%	1.8 years	25,400
Construction loans	—	1,922	(1,922)	—	—	—
5.75% Senior Unsecured Notes	150,000	2,181	147,819	5.75%	3.1 years	—
Unsecured junior subordinated debentures	51,548	—	51,548	9.37%	13.2 years	—
Total	$1,765,900	$16,701	$1,749,199	7.04%	10.3 years	$2,056,672
	Principal Outstanding	Unamortized Issuance Costs and Discounts	Outstanding Borrowings	Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
At December 31, 2022:
ACR 2021-FL1 Senior Notes	$675,223	$3,826	$671,397	5.81%	13.5 years	802,643
ACR 2021-FL2 Senior Notes	567,000	4,841	562,159	6.13%	14.1 years	700,000
Senior secured financing facility	91,549	3,659	87,890	7.94%	5.0 years	196,837
CRE - term warehouse financing facilities (1)	330,849	2,561	328,288	6.85%	1.8 years	453,550
Mortgage payable	18,710	466	18,244	8.08%	2.3 years	25,400
5.75% Senior Unsecured Notes	150,000	2,493	147,507	5.75%	3.6 years	—
Unsecured junior subordinated debentures	51,548	—	51,548	8.52%	13.7 years	—
Total	$1,884,879	$17,846	$1,867,033	6.29%	10.3 years	$2,178,430

(1)Principal outstanding includes accrued interest payable of $673,000 and $894,000 at June 30, 2023 and December 31, 2022, respectively.

Securitizations

The following table sets forth certain information with respect to the Company’s consolidated securitizations at June 30, 2023 (in thousands, except amount in footnotes):

	Closing Date	Maturity Date	Reinvestment Period End (1)	Total Note Paydowns from Closing Date through June 30, 2023
ACR 2021-FL1	May 2021	June 2036	May 2023	$	851
ACR 2021-FL2	December 2021	January 2037	December 2023	$	—

(1)The reinvestment period is the period in which principal proceeds received may be used to acquire CRE loans for reinvestment into the securitization.

The investments held by the Company’s securitizations collateralize the securitizations’ borrowings and, as a result, are not available to the Company, its creditors, or stockholders. All senior notes of the securitizations held by the Company at both June 30, 2023 and December 31, 2022 were eliminated in consolidation.

25

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

XAN 2020-RSO8

In March 2020, the Company closed Exantas Capital Corp. 2020-RSO8, Ltd. (“XAN 2020-RSO8”), a $522.6 million CRE debt securitization transaction that provided financing for CRE loans. In March 2022, the Company exercised the optional redemption of XAN 2020-RSO8, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

XAN 2020-RSO9

In September 2020, the Company closed Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”), a $297.0 million CRE debt securitization transaction that provided financing for CRE loans. In February 2022, the Company exercised the optional redemption of XAN 2020-RSO9, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

ACR 2021-FL1

In May 2021, the Company closed ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”), a $802.6 million CRE debt securitization transaction that provided financing for CRE loans. ACR 2021-FL1 issued a total of $675.2 million of non-recourse, floating-rate notes to third parties at par. Additionally, ACRES RF retained 100% of the Class F and Class G notes and a subsidiary of ACRES RF retained 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL1. ACR 2021-FL1 included a reinvestment period, which ended in May 2023, that allowed it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. All of the notes issued mature in June 2036, although the Company has the right to call the notes beginning on the payment date in May 2023 and thereafter. The non-recourse, floating-rate notes initially charged one-month Term LIBOR but converted to one-month Term SOFR in June 2023.

ACR 2021-FL2

In December 2021, the Company closed ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”), a CRE debt securitization transaction that can finance up to $700.0 million of CRE loans. ACR 2021-FL2 issued a total of $567.0 million of non-recourse, floating-rate notes to third parties at par. Additionally, ACRES RF retained 100% of the Class F and Class G notes and a subsidiary of ACRES RF retained 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL2. ACR 2021-FL2 included a 180-day ramp up acquisition period that allowed it to acquire CRE loans using unused proceeds from the issuance of the non-recourse floating-rate notes. Additionally, ACR 2021-FL2 includes a reinvestment period, which ends in December 2023, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. All of the notes issued mature in January 2037, although the Company has the right to call the notes beginning on the payment date in December 2023 and thereafter. The non-recourse, floating-rate notes initially charged one-month Term LIBOR but converted to one-month Term SOFR in June 2023.

26

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Financing Arrangements

Borrowings under the Company’s senior secured financing facility, term warehouse financing facilities, mortgage payable and construction loans are guaranteed by the Company or one or more of its subsidiaries. The following table sets forth certain information with respect to the Company’s financing arrangements (dollars in thousands, except amounts in footnotes):

	June 30, 2023								December 31, 2022
	Outstanding Borrowings			Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	47,697		$	152,272		7	8.87%	$	87,890	$	196,837		8	7.94%
CRE - Term Warehouse Financing Facilities (2)
JPMorgan Chase Bank, N.A. (3)		118,569			185,862		8	7.73%		186,783		255,095		11	6.74%
Morgan Stanley Mortgage Capital Holdings LLC (4)		132,693			191,346		9	7.81%		141,505		198,455		10	7.00%
Mortgage Payable
Readycap Commercial, LLC (5)		18,492			25,400		1	8.95%		18,244		25,400		1	8.08%
Construction Loans
Oceanview Life and Annuity Company (6)		(1,922	)	N/A		N/A		—%		—		—		—	—%
Total	$	315,529		$	554,880				$	434,422	$	675,787

(1)Includes $3.3 million and $3.7 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(2)Outstanding borrowings include accrued interest payable.

(3)Includes $836,000 and $1.1 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(4)Includes $1.0 million and $1.4 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(5)Includes $362,000 and $466,000 of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(6)Includes $1.9 million of deferred debt issuance costs at June 30, 2023.

The following table shows information about the amount at risk under the Company's financing arrangements (dollars in thousands):

	Amount at Risk		Weighted Average Remaining Maturity	Weighted Average Interest Rate
At June 30, 2023:
Senior Secured Financing Facility (1)
Massachusetts Mutual Life Insurance Company	$	101,490	4.5 years	8.87%
CRE - Term Warehouse Financing Facilities (1)
JPMorgan Chase Bank, N. A.	$	67,749	1.3 years	7.73%
Morgan Stanley Mortgage Capital Holdings LLC	$	58,965	1.3 years	7.81%
Mortgage Payable (2)
Readycap Commercial, LLC	$	6,452	1.8 years	8.95%

(1)Equal to the total of the estimated fair value of securities or loans sold and accrued interest receivable, minus the total of the warehouse financing agreement liabilities and accrued interest payable.

(2)Equal to the total of the estimated fair value of real estate property investment financed, minus the total of the mortgage payable agreement liability and accrued interest payable.

27

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The Company was in compliance with all financial covenants in each of the respective agreements at June 30, 2023 and December 31, 2022.

Senior Secured Financing Facility

On July 31, 2020, an indirect, wholly owned subsidiary (“Holdings”), along with its direct wholly owned subsidiary (the “Borrower”), of the Company entered into a $250.0 million Loan and Servicing Agreement (the “MassMutual Loan Agreement”) with MassMutual and the other lenders party thereto (the “Lenders”). The asset-based revolving loan facility (the “MassMutual Facility”) provided under the MassMutual Loan Agreement has been used to finance the Company’s core CRE lending business. The MassMutual Facility initially had an interest rate of 5.75% per annum payable monthly and initially matured on July 31, 2027.

In December 2022, Holdings, the Borrower and the Lenders entered into an Amended and Restated Loan and Servicing Agreement, which amends and restates the MassMutual Loan Agreement, and reflects a senior secured term loan facility, not to exceed $500.0 million, composed of individual loan series issued upon mutual agreement of the Borrower and Lenders. Each loan series will be available for three months after the closing date agreed upon by the Borrower and Lender (“Commitment Period”), subject to the maximum dollar amount agreed upon for that series. The Commitment Period is subject to immediate termination upon the occurrence of an event of default. Each loan series will have a final maturity of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the Lenders and Borrower. The advance rate on portfolio assets will be mutually agreed upon by the Lenders and Borrower. Each loan series will have its own mutually agreed upon interest rate equal to one-month Term SOFR plus the applicable spread.

CRE - Term Warehouse Financing Facilities

In April 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the “Barclays Facility”) with Barclays Bank PLC (“Barclays”) to finance the origination of CRE loans. In February 2022, such subsidiary entered into the Third Amendment to Master Repurchase Agreement (the “Barclays Amendment”) with Barclays, which amended the Barclays Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event. In October 2022, the Barclays Facility matured.

In October 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the “JPMorgan Chase Facility”) with JP Morgan Chase to finance the origination of CRE loans. At June 30, 2023, this facility has been amended five times to amend various terms. The JPMorgan Chase Facility has a maximum facility amount of $250.0 million, charges interest of one-month benchmark plus market spreads and had an initial maturity date of October 2024. In July 2023, this facility was amended to extend the maturity date to July 2026, as well as to extend the amendments to (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity and (iii) minimum unencumbered liquidity requirement, each through December 2024.

In November 2021, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase and securities contract agreement (the “Morgan Stanley Facility”) with Morgan Stanley Mortgage Capital Holdings LLC (“Morgan Stanley”) to finance the origination of CRE loans. At June 30, 2023, this facility has been amended two times to amend various terms. The Morgan Stanley Facility has a maximum facility amount of $250.0 million, charges interest of one-month Term SOFR plus market spreads and matures in November 2024. The Company also has the right to request a one-year extension.

Mortgage Payable

In April 2022, Chapel Drive West, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a Loan Agreement (the “Mortgage”) with Readycap Commercial, LLC (“Readycap”) to finance the acquisition of a student housing complex. The Mortgage is interest only and has a maximum principal balance of $20.4 million, of which, $18.7 million was advanced in the initial funding. Initially, the Mortgage charged interest of 30-day average SOFR plus a spread of 3.80%. In October 2022, the Mortgage was amended to charge interest of one-month Term SOFR plus a spread of 3.80%. The Mortgage matures in April 2025, subject to two one-year extension options.

The Mortgage contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

28

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Construction Loans

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan"). The Construction Loan is interest only and has a maximum principal balance of $48.0 million. The Construction Loan charges one-month Term SOFR plus a spread of 6.00% and matures in February 2025, subject to three one-year extension options.

In addition to the Construction Loan, Chapel Drive East, LLC, entered into a financing agreement with Florida Pace Funding Agency to fund energy efficient building improvements and has a maximum principal balance of $15.5 million. This agreement charges fixed interest of 7.26% and matures in July 2053. The Company does not guarantee this financing agreement.

In connection with the Company's investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty and unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.

Corporate Debt

4.50% Convertible Senior Notes

The Company issued $143.8 million aggregate principal of its 4.50% convertible senior notes due 2022 (“4.50% Convertible Senior Notes”) in August 2017, of which $55.8 million was repurchased in 2021.

During the six months ended June 30, 2022, the Company repurchased $39.8 million of its 4.50% Convertible Senior Notes, resulting in a charge to earnings of $574,000, comprising an extinguishment of debt charge of $460,000 in connection with the acceleration of the market discount and interest expense of $114,000 in connection with the acceleration of deferred debt issuance costs. In August 2022, the remaining $48.2 million of the 4.50% Convertible Senior Notes were paid off upon maturity at par.

5.75% Senior Unsecured Notes Due 2026

On August 16, 2021, the Company issued $150.0 million of its 5.75% senior unsecured notes due 2026 (the “5.75% Senior Unsecured Notes”) pursuant to its Indenture, dated August 16, 2021 (the “Base Indenture”), between it and Wells Fargo, now Computershare Trust Company, N.A. (“CTC”), as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated August 16, 2021, between it and Wells Fargo, now CTC, (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). Prior to May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (ii) a make-whole premium. On or after May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days’ prior notice, at a redemption price equal to 100% of the principal amount of the 5.75% Senior Unsecured Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

Unsecured Junior Subordinated Debentures

During 2006, the Company formed RCT I and RCT II for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. RCT I and RCT II are not consolidated into the Company’s consolidated financial statements because the Company is not deemed to be the primary beneficiary of these entities. In connection with the issuance and sale of the capital securities,

29

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

the Company issued junior subordinated debentures to RCT I and RCT II of $25.8 million each, representing the Company’s maximum exposure to loss. The debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II were included in borrowings and were amortized into interest expense on the consolidated statements of operations using the effective yield method over a ten year period.

There were no unamortized debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II outstanding at June 30, 2023 and December 31, 2022. The interest rates for RCT I and RCT II, at June 30, 2023, were 9.49% and 9.25%, respectively. The interest rates for RCT I and RCT II, at December 31, 2022, were 8.68% and 8.36%, respectively.

Contractual maturity dates of the Company’s borrowings’ principal outstanding by category and year are presented in the table below (in thousands):

	Total		2024		2025		2026		2027		2028 and Thereafter
At June 30, 2023:
CRE securitizations	$	1,241,372	$	—	$	—	$	—	$	—	$	1,241,372
Senior Secured Financing Facility		50,995		—		—		—		50,995		—
CRE - term warehouse financing facilities (1)		253,131		253,131		—		—		—		—
Mortgage payable		18,854		—		18,854		—		—		—
5.75% Senior Unsecured Notes		150,000		—		—		150,000		—		—
Unsecured junior subordinated debentures		51,548		—		—		—		—		51,548
Total	$	1,765,900	$	253,131	$	18,854	$	150,000	$	50,995	$	1,292,920

(1)Includes accrued interest payable in the balances of principal outstanding.

NOTE 11 - SHARE ISSUANCE AND REPURCHASE

In May 2021, and subsequently in June 2021, the Company issued a total of 4.6 million shares of 7.875% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) at a public offering price of $25.00 per share. The Company received net proceeds of $110.4 million after $4.6 million of underwriting discounts and other offering expenses. Dividends are payable quarterly in arrears at the end of January, April, July and October. The Series D Preferred Stock has no maturity date and the Company is not required to redeem the Series D Preferred Stock at any time. On or after May 21, 2026, the Company may, at its option, redeem the Series D Preferred Stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

On October 4, 2021, the Company and the Manager entered into an Equity Distribution Agreement with JonesTrading Institutional Services LLC, as placement agent (“JonesTrading”), pursuant to which the Company may issue and sell from time to time up to 2.2 million shares of the Series D Preferred Stock. Sales of the Series D Preferred Stock may be made in transactions that are deemed to be “at the market” offerings, as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation, sales made directly on the New York Stock Exchange, on any other existing trading market for the shares or to or through a market maker. Subject to the terms of the Company’s notice, JonesTrading may also sell the shares by any other method permitted by law, including but not limited to in privately negotiated transactions. The Company will pay JonesTrading a commission up to 3.0% of the gross proceeds from the sales of the Series D Preferred Stock pursuant to the agreement. The terms and conditions of the agreement include various representations and warranties, conditions to closing, indemnification rights and obligations of the parties and termination provisions. During the six months ended June 30, 2023, the Company did not issue any Series D Preferred Stock through this agreement. During the year ended December 31, 2022, the Company did not issue any Series D Preferred Stock through this agreement.

30

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

On or after July 30, 2024, the Company may, at its option, redeem its 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”), in whole or in part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date. Effective July 30, 2024 and thereafter, the Company will pay cumulative dividends on the Series C Preferred Stock at a floating rate equal to three-month LIBOR plus 5.927% per annum based on the $25.00 liquidation preference, provided that such floating rate shall not be less than the initial rate of 8.625% at any date of determination.

At June 30, 2023, the Company had 4.8 million shares of Series C Preferred Stock and 4.6 million shares of Series D Preferred Stock outstanding, with weighted average issuance prices, excluding offering costs, of $25.00.

In March 2016, the board of directors (the “Board”) approved a securities repurchase plan, and in November 2020, the Board reauthorized and approved the continued use of this plan to repurchase up to $20.0 million of the outstanding shares of the Company’s common stock. Additionally, the Board authorized the Company to enter into written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”). In July 2021, the authorized amount was fully utilized.

In November 2021, the Board authorized and approved the continued use of its existing share repurchase plan to repurchase an additional $20.0 million of the outstanding shares of the Company's common stock. Under the share repurchase plan, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 and 10b5-1 of the Exchange Act.

During the six months ended June 30, 2023 and 2022, the Company repurchased $2.0 million and $6.4 million of its common stock, respectively, representing 215,160 and 552,282 shares, respectively. At June 30, 2023, $5.3 million remains available under the November 2021 repurchase plan.

On July 31, 2020, the Company entered into a Note and Warrant Purchase Agreement (the “Note and Warrant Purchase Agreement”) with Oaktree Capital Management, L.P. (“Oaktree”) and Massachusetts Mutual Life Insurance Company (“MassMutual”) pursuant to which the Company could issue to Oaktree and MassMutual from time to time up to $125.0 million aggregate principal amount of 12.00% Senior Unsecured Notes. In connection with the Note and Warrant Purchase Agreement, the 12.00% Senior Unsecured Notes give Oaktree and MassMutual warrants to purchase an aggregate of up to 1,166,653 shares of common stock at an exercise price of $0.03 per share, subject to certain potential adjustments.

On July 31, 2020, concurrently with the issuance of the 12.00% Senior Unsecured Notes, the Company issued to Oaktree warrants to purchase 391,995 shares of common stock for an aggregate purchase price of $42.0 million and issued to MassMutual warrants to purchase 74,666 shares of common stock for an aggregate purchase price of $8.0 million. The warrants are recorded in additional paid-in capital on the consolidated balance sheets at their fair value of $3.1 million at issuance. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise. In July 2022, MassMutual exercised their warrants to purchase 74,666 shares. At June 30, 2023, the Oaktree warrants have not been exercised.

NOTE 12 - SHARE-BASED COMPENSATION

In June 2021, the Company’s shareholders approved the ACRES Commercial Realty Corp. Third Amended and Restated Omnibus Equity Compensation Plan (the “Omnibus Plan”) and the ACRES Commercial Realty Corp. Manager Incentive Plan (the “Manager Plan” and together with the Omnibus Plan, the “Plans”). The Omnibus Plan was amended to (i) increase the number of shares authorized for issuance by an additional 1,100,000 shares of common stock, less any shares of common stock issued or subject to awards granted under the Manager Plan; and (ii) extend the expiration date of the Omnibus Plan from June 2029 to June 2031. The maximum number of shares that may be subject to awards granted under the Plans, determined on a combined basis, is 1,700,817 shares of common stock.

The Company recognized stock-based compensation expense of $719,000 and $1.6 million, respectively, during the three and six months ended June 30, 2023 and $991,000 and $1.7 million, respectively, during the three and six months ended June 30, 2022.

31

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The following table summarizes the Company’s restricted common stock transactions:

	Manager			Directors			Total Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested shares at January 1, 2023		524,999			58,334			583,333		$	14.22
Issued		24,655			—			24,655			9.00
Vested		(174,653	)		(16,660	)		(191,313	)		13.90
Forfeited		—			—			—			—
Unvested shares at June 30, 2023		375,001			41,674			416,675		$	14.07

The unvested restricted common stock shares are expected to vest during the following years:

	Shares
2023		—
2024		166,658
2025		166,671
2026		83,346
Total		416,675

At June 30, 2023, total unrecognized compensation costs relating to unvested restricted stock was $2.9 million based on the grant date fair value of shares granted. The cost is expected to be recognized over a weighted average period of 2.5 years.

Under the Company’s Fourth Amended and Restated Management Agreement, as amended (“Management Agreement”), incentive compensation is paid quarterly. Up to 75% of the incentive compensation may be paid in cash and at least 25% must be paid in the form of an award of common stock, recorded in management fees on the consolidated statements of operations. During the three and six months ended June 30, 2023, the Company incurred incentive compensation expense payable to the Manager of $255,000 and $384,000, respectively, of which 50% was payable in cash and 50% was payable in common stock. At June 30, 2023, $255,000 was included in Management fee payable - related party on the consolidated balance sheets. No incentive compensation was paid to the Manager for the three and six months ended June 30, 2022.

The Company issued 24,655 shares of common stock during the six months ended June 30, 2023, pertaining to the portion of the fourth quarter 2022 and the first quarter 2023 incentive compensation that was payable in shares. In August 2023, the Company issued 14,226 shares of common stock pertaining to the portion of the second quarter incentive compensation that was payable at June 30, 2023. Shares of common stock issued under the Management Agreement for incentive compensation vest immediately upon issuance.

The Omnibus Plan and the Manager Plan are administered by the compensation committee of the Company's Board (the “Compensation Committee”). In 2020, the Compensation Committee and the Board created parameters for equity awards, whereby they are no longer discretionary but are now based upon the Company’s achievement of performance parameters using book value of the common stock as the appropriate benchmark. See Note 16 for a description of awards made under the Manager Plan.

32

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

NOTE 13 - EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted losses per common share for the periods presented (dollars in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net income	$	5,558		$	5,522		$	7,851		$	7,606
Net income allocated to preferred shares		(4,856	)		(4,856	)		(9,711	)		(9,711	)
Net loss allocable to non-controlling interest, net of taxes		115			24			261			24
Net income (loss) allocable to common shares	$	817		$	690		$	(1,599	)	$	(2,081	)
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic		8,059,978			8,421,800			8,084,064			8,525,481
Weighted average number of warrants outstanding (1)		391,995			466,661			391,995			466,661
Total weighted average number of common shares outstanding - basic		8,451,973			8,888,461			8,476,059			8,992,142
Effect of dilutive securities - unvested restricted stock		82,585			25,711			—			—
Weighted average number of common shares outstanding - diluted		8,534,558			8,914,172			8,476,059			8,992,142
Net income (loss) per common share - basic	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)
Net income (loss) per common share - diluted	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)

(1)See Note 11 for further details regarding the warrants.

NOTE 14 - DISTRIBUTIONS

In order to qualify as a REIT, the Company must currently distribute at least 90% of its taxable income. In addition, the Company must distribute 100% of its taxable income in order to not be subject to corporate federal income taxes on retained income. The Company anticipates it will distribute substantially all of its taxable income to its stockholders. Because taxable income differs from cash flow from operations due to non-cash revenues or expenses (such as provisions for loan and lease losses and depreciation) and tax loss carryforwards, in certain circumstances the Company may generate operating cash flow in excess of its distributions or, alternatively, may be required to borrow funds to make sufficient distribution payments.

The Company’s 2023 distributions are, and will be, determined by the Company's Board, which will also consider the composition of any distributions declared, including the option of paying a portion in cash and the balance in additional shares of common stock.

For the three and six months ended June 30, 2023 and 2022, the Company did not pay any common share distributions.

33

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The following tables present distributions declared (on a per share basis) for the six months ended June 30, 2023 and the year ended December 31, 2022 with respect to the Company's Series C Preferred Stock and Series D Preferred Stock:

	Series C Preferred Stock					Series D Preferred Stock
	Date Paid	Total Distribution Paid		Distribution Per Share		Date Paid	Total Distribution Paid		Distribution Per Share
		(in thousands)					(in thousands)
2023
June 30	July 31	$	2,588	$	0.5390625	July 31	$	2,268	$	0.4921875
March 31	May 1		2,587		0.5390625	May 1		2,268		0.4921875
2022
December 31	January 30, 2023	$	2,587	$	0.5390625	January 30, 2023	$	2,268	$	0.4921875
September 30	October 31		2,587		0.5390625	October 31		2,268		0.4921875
June 30	August 1		2,588		0.5390625	August 1		2,268		0.4921875
March 31	May 2		2,588		0.5390625	May 2		2,268		0.4921875

NOTE 15 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in net unrealized loss on derivatives, the sole component of accumulated other comprehensive loss, for the six months ended June 30, 2023 (in thousands):

	Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives
Balance at January 1, 2023	$	(6,394	)
Amounts reclassified from accumulated other comprehensive loss (1)		790
Balance at June 30, 2023	$	(5,604	)

(1)Amounts reclassified from accumulated other comprehensive loss are reclassified to interest expense on the Company’s consolidated statements of operations.

NOTE 16 - RELATED PARTY TRANSACTIONS

Relationship with ACRES Capital Corp. and certain of its Subsidiaries. The Manager is a subsidiary of ACRES Capital Corp., of which Andrew Fentress, the Company’s Chairman, serves as Managing Partner and Mark Fogel, the Company’s President, Chief Executive Officer and Director, serves as Chief Executive Officer and President. Mr. Fentress and Mr. Fogel are also shareholders and board members of ACRES Capital Corp.

Effective on July 31, 2020, the Company has a Management Agreement with the Manager pursuant to which the Manager provides the day-to-day management of the Company’s operations and receives management fees. On July 31, 2023, this agreement was automatically renewed for a one year term pursuant to the agreement. For the three and six months ended June 30, 2023, the Manager earned base management fees of $1.7 million and $3.3 million, respectively. For the three and six months ended June 30, 2022, the Manager earned base management fees of $1.7 million and $3.4 million, respectively.

For the three and six months ended June 30, 2023, the Manager earned incentive management fees of $255,000 and $384,000, of which 50% was payable in cash and 50% was payable in common stock. No incentive compensation was earned for the three and six months ended June 30, 2022.

At June 30, 2023 and December 31, 2022, $7,000 and $558,000, respectively, of base management fees were payable by the Company to the Manager. At June 30, 2023 and December 31, 2022, $255,000 and $340,000, respectively, of incentive management fees were payable by the Company to the Manager.

34

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The Manager and its affiliates provided the Company with a Chief Financial Officer and a sufficient number of additional accounting, finance, tax and investor relations professionals. The Company reimbursed the Manager’s expenses for (a) the wages, salaries and benefits of the Chief Financial Officer, and (b) a portion of the wages, salaries and benefits of accounting, finance, tax, legal and investor relations professionals, in proportion to such personnel’s percentage of time allocated to the Company’s operations. The Company reimbursed out-of-pocket expenses and certain other costs incurred by the Manager that related directly to the Company’s operations.

For the three and six months ended June 30, 2023, the Company reimbursed the Manager $1.4 million and $2.3 million, respectively, for all such compensation and costs. For the three and six months ended June 30, 2022, the Company reimbursed the Manager $1.0 million and $3.0 million, respectively, for all such compensation and costs. At June 30, 2023, the Company did not have any payables to the Manager pursuant to the Management Agreement related to such compensation and costs. At December 31, 2022, the Company had payables to the Manager totaling $179,000 related to such compensation and costs. The Company’s base management fee payable and expense reimbursements payable were recorded in management fee payable and accounts payable and other liabilities on the consolidated balance sheets, respectively.

On July 31, 2020, ACRES RF, a direct, wholly owned subsidiary of the Company, provided a $12.0 million loan (the “ACRES Loan”) to ACRES Capital Corp. evidenced by the promissory note from ACRES Capital Corp.

The ACRES Loan accrues interest at 3.00% per annum payable monthly. The monthly amortization payment is $25,000. The ACRES Loan matures in July 2026, subject to two one-year extensions (at ACRES Capital Corp.’s option) subject to the payment of a 0.5% extension fee to ACRES RF on the outstanding principal amount of the ACRES Loan.

During the three and six months ended June 30, 2023, the Company recorded interest income of $85,000 and $169,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations. During the three and six months ended June 30, 2022, the Company recorded interest income of $87,000 and $174,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations At June 30, 2023 and December 31, 2022, the ACRES Loan had a principal balance of $11.1 million and $11.3 million, respectively, recorded in loan receivable - related party on the consolidated balance sheets. At June 30, 2023 and December 31, 2022, the ACRES Loan had no accrued interest receivable.

During the year ended December 31, 2022, the Company originated one CRE whole loan with a par value of $38.6 million that was refinanced from a loan originated by affiliates of the Manager. The Company did not originate any loans that were refinanced from loans originated by affiliates of the Manager during the six months ended June 30, 2023. During the year ended December 31, 2022, the Company acquired 100% equity in one property for $38.6 million, that previously served as collateral for a loan held by an affiliate of the Manager prior to the acquisition.

At June 30, 2023, the Company retained equity in two securitization entities that were structured for the Company by the Manager. Under the Management Agreement, the Manager was not separately compensated by the Company for executing these transactions and was not separately compensated for managing the securitization entities and their assets.

During the year ended December 31, 2022, the Company co-originated and entered into joint funding agreements with ACRES Loan Origination, LLC, an affiliate of ACRES Capital Corp. and the Manager, on four loan originations, with total initial fundings of $97.2 million.

Relationship with ACRES Capital Servicing LLC. Under the MassMutual Loan Agreement, ACRES Capital Servicing LLC (“ACRES Capital Servicing”), an affiliate of ACRES Capital Corp. and the Manager, serves as the portfolio servicer. Additionally, ACRES Capital Servicing served as the special servicer of XAN 2020-RSO8 and XAN 2020-RSO9 and serves as special servicer of ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”) and ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”).

During the three and six months ended June 30, 2023, ACRES Capital Servicing received no portfolio servicing fees and earned $20,000 and $65,000, respectively, in special servicing fees, of which $12,000 and $47,000, respectively, was recorded as a reduction to interest income in the consolidated statement of operations. During the three and six months ended June 30, 2022, ACRES Capital Servicing received no portfolio servicing fees and $23,000 in special servicing fees, recorded as a reduction to interest income in the consolidated statement of operations.

35

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Relationship with ACRES Commercial Mortgage, LLC. During the three months ended June 30, 2023, the Company purchased a participation for $22.5 million in one CRE whole loan from ACRES Commercial Mortgage, LLC.

Relationship with ACRES Collateral Manager, LLC. ACRES Collateral Manager, LLC, an affiliate of ACRES Capital Corp. and the Manager, serves as the collateral manager of ACR 2021-FL1 and ACR 2021-FL2, a role for which it waived its fee.

Relationship with ACRES Development Management, LLC. ACRES Development Management, LLC (“DevCo”) is a wholly owned subsidiary of ACRES Capital Corp., the parent of the Manager. DevCo acts in various capacities as a co-developer or owner’s representative for direct equity investments within the Company’s portfolio. In November 2021, December 2021 and April 2022, the joint venture entities of the three CRE equity investments acquired through direct investment entered into development agreements with DevCo (the “Development Agreements”).

Pursuant to the Development Agreements, DevCo agreed to manage the development of the projects associated with each equity investment in accordance with a development standard in exchange for fees equal to between 1.25% and 1.5% of all project costs. During the three and six months ended June 30, 2023, $91,000 and $145,000 in fees were incurred and paid to DevCo for services rendered under the Development Agreements. During the three and six months ended June 30, 2022, $16,000 in fees were incurred and paid to DevCo for services rendered under the Development Agreements.

Relationship with ACRES Share Holdings, LLC. During the three and six months ended June 30, 2023, the Company issued 6,875 and 24,655 shares, respectively, to ACRES Share Holdings, LLC in connection with the fourth quarter 2022 and the first quarter 2023 incentive compensation. In August 2023, the Company issued 14,226 shares to ACRES Share Holdings, LLC in connection with the second quarter 2023 incentive compensation. The shares vested fully upon issuance pursuant to the Management Agreement.

In June 2021, the Company’s Manager Plan was approved by its shareholders, which authorized up to 1,100,000 shares of common stock for issuance to the Manager (less shares of common stock issued or subject to awards under the Omnibus Plan). There were no shares issued under this plan for the six months ended June 30, 2023. During the year ended December 31, 2022, the Company issued 299,999 restricted shares to ACRES Share Holdings, LLC under the Manager Plan that will vest 25% each year on the anniversary of the issuance date over four years. See Note 12 for additional details.

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company had no financial instruments carried at fair value on a recurring basis at June 30, 2023 and December 31, 2022.

In June 2023, the Company received the deed-in-lieu of foreclosure on a property that formerly collateralized a CRE whole loan. The property was appraised and determined to have a fair value of $20.9 million at the time of acquisition.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair values of the Company’s short-term financial instruments such as cash and cash equivalents, restricted cash, accrued interest receivable, principal paydowns receivable, accrued interest payable and distributions payable approximate their carrying values on the consolidated balance sheets. The fair values of the Company’s assets and liabilities are estimated as follows:

CRE whole loans. The fair values of the Company’s loans held for investment are measured by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Par values of loans with variable interest rates are expected to approximate fair value unless evidence of credit deterioration exists, in which case the fair value approximates the par value less the loan’s allowance estimated through individual evaluation. Fair values of loans with fixed rates are calculated using the net present values of future cash flows, discounted at market rates. The Company’s floating-rate CRE loans had interest rates from 8.04% to 13.79% and 7.03% to 12.67% at June 30, 2023 and December 31, 2022, respectively.

CRE mezzanine loan. Historically, this was measured by discounting the expected remaining cash flows using the current interest rates at which similar instruments would be originated for the same remaining maturity. The Company’s mezzanine loan was discounted at a rate of 10.00%. The Company's mezzanine loan had no carrying or fair value at June 30, 2023 or December 31, 2022.

Loan receivable- related party. This is estimated using a discounted cash flow model.

36

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Senior notes in CRE securitizations, 5.75% Senior Unsecured Notes and junior subordinated notes. These are estimated using a discounted cash flow model with implied yields based on trades for similar securities.

Senior secured financing facility, warehouse financing facilities, mortgage payable and construction loan. These are variable-rate debt instruments indexed to either LIBOR or Term SOFR that reset periodically and as a result, their carrying value approximates their fair value, excluding deferred debt issuance costs. As of June 30, 2023, all variable-rate debt instruments are indexed to SOFR.

The fair values of the Company’s remaining financial and non-financial assets that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

				Fair Value Measurements
	Carrying Value			Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2023:
Assets:
CRE whole loans	$	1,938,089		$	1,968,322	$	—	$	—	$	1,968,322
Loan receivable - related party		11,125			8,096		—		—		8,096
Liabilities:
Senior notes in CRE securitizations		1,234,303			1,185,091		—		—		1,185,091
Senior secured financing facility		47,697			50,995		—		—		50,995
Warehouse financing facilities		251,262			253,131		—		—		253,131
Mortgage payable		18,492			18,854		—		—		18,854
Construction loan (1)		(1,922	)		—		—		—		—
5.75% Senior Unsecured Notes		147,819			129,615		—		—		129,615
Junior subordinated notes		51,548			32,364		—		—		32,364
At December 31, 2022:
Assets:
CRE whole loans	$	2,038,787		$	2,065,504	$	—	$	—	$	2,065,504
Loan receivable - related party		11,275			9,672		—		—		9,672
Liabilities:
Senior notes in CRE securitizations		1,233,556			1,179,313		—		—		1,179,313
Senior secured financing facility		87,890			91,549		—		—		91,549
Warehouse financing facilities		328,288			330,848		—		—		330,848
Mortgage payable		18,244			18,710		—		—		18,710
5.75% Senior Unsecured Notes		147,507			138,435		—		—		138,435
Junior subordinated notes		51,548			35,821		—		—		35,821

(1)Deferred debt issuance costs related to the acquisition of a construction loan that has not been drawn on and has no fair value.

NOTE 18 - MARKET RISK AND DERIVATIVE INSTRUMENTS

The Company is affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as “market risks.” When deemed appropriate, the Company used derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments were interest rate risk and market price risk.

The Company also historically managed its interest rate risk with interest rate swaps. Interest rate swaps are contracts between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices.

37

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

The Company seeks to manage the extent to which net income changes as a function of changes in interest rates by matching adjustable-rate assets with variable-rate borrowings.

The Company classified its interest rate swap contracts as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability.

The Company terminated all of its interest rate swap positions associated with its financed CMBS portfolio in April 2020. At termination, the Company realized a loss of $11.8 million. At June 30, 2023 and December 31, 2022, the Company had losses of $5.8 million and $6.6 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During the three and six months ended June 30, 2023, the Company recorded amortization expense of $420,000 and $835,000, reported in interest expense on the consolidated statements of operations. During the three and six months ended June 30, 2022, the Company recorded amortization expense of $484,000 and $963,000, reported in interest expense on the consolidated statements of operations.

At June 30, 2023 and December 31, 2022, the Company had an unrealized gain of $210,000 and $256,000, respectively, attributable to two terminated interest rate swaps in accumulated other comprehensive loss on the consolidated balance sheets, to be accreted into earnings over the remaining life of the debt. For each of the three months ended June 30, 2023 and 2022, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $23,000 to accrete the accumulated other comprehensive income on the terminated swap agreements. For each of the six months ended June 30, 2023 and 2022, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $45,000 to accrete the accumulated other comprehensive income on the terminated swap agreements.

The Company’s prior origination of fixed-rate CRE whole loans exposed it to market pricing risk in connection with the fluctuations of market interest rates. As market interest rates increase or decrease, the fair value of the fixed-rate CRE whole loans will decrease or increase accordingly. In order to mitigate this market price risk, the Company entered into interest rate swap contracts in which it pays a fixed rate of interest in exchange for a variable rate of interest, usually three-month LIBOR. Unrealized gains and losses on the value of these swap contracts were recorded in other income (expense) on the consolidated statements of operations. In December 2020, these interest rate swap contracts were terminated.

The following table presents the effect of the derivative instruments on the consolidated statements of operations for the six months ended June 30, 2023 and 2022 (in thousands):

		Realized and Unrealized Gain (Loss) (1)
	Consolidated Statements of Operations Location	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
Interest rate swap contracts, hedging	Interest expense	$	(790	)	$	(917	)

(1)Negative values indicate a decrease to the associated consolidated statement of operations line items.

38

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

NOTE 19 - OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The following table presents a summary of the Company’s offsetting of financial liabilities and derivative liabilities (in thousands, except amounts in footnotes):

	(i) Gross Amounts		(ii) Gross Amounts Offset on the		(iii) = (i) - (ii) Net Amounts of Liabilities Presented on the		(iv) Gross Amounts Not Offset on the Consolidated Balance Sheets
	of Recognized Liabilities		Consolidated Balance Sheets		Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
At June 30, 2023:
Term warehouse financing facilities (2)	$	251,262	$	—	$	251,262	$	251,262	$	—	$	—
At December 31, 2022:
Term warehouse financing facilities (2)	$	328,288	$	—	$	328,288	$	328,288	$	—	$	—

(1)Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term warehouse financing facilities, repurchase agreements and derivatives.

(2)The combined fair values of loans pledged against the Company’s various term warehouse financing facilities and repurchase agreements was $377.2 million and $453.6 million at June 30, 2023 and December 31, 2022, respectively.

All balances associated with warehouse financing facilities are presented on a gross basis on the Company’s consolidated balance sheets.

Certain of the Company’s warehouse financing facilities are governed by underlying agreements that generally provide for a right of offset in the event of default or in the event of a bankruptcy of either party to the transaction.

NOTE 20 - COMMITMENTS AND CONTINGENCIES

The Company may become involved in litigation on various matters due to the nature of the Company’s business activities. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against the Company as well as monetary payments or other agreements and obligations. In addition, the Company may enter into settlements on certain matters in order to avoid the additional costs of engaging in litigation. Except as discussed below, the Company is unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at June 30, 2023.

Primary Capital Mortgage, LLC (“PCM”) is subject to potential litigation related to claims for repurchases or indemnifications on loans that PCM has sold to third parties. At both June 30, 2023 and December 31, 2022, no such litigation demand was outstanding. Reserves for such potential litigation demands are included in the reserve for mortgage repurchases and indemnifications that totaled $1.1 million and $1.2 million at June 30, 2023 and December 31, 2022, respectively. The reserves for mortgage repurchases and indemnifications are included in liabilities held for sale on the consolidated balance sheets.

The Company did not have any general litigation reserve at June 30, 2023 or December 31, 2022.

Other Contingencies

PCM is subject to additional claims for repurchases or indemnifications on loans that PCM has sold to investors. At June 30, 2023 and December 31, 2022, outstanding demands for indemnification, repurchase or make whole payments totaled $3.3 million. The Company’s estimated exposure for such outstanding claims, as well as unasserted claims, is included in its reserve for mortgage repurchases and indemnifications.

39

ACRES COMMERCIAL REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

JUNE 30, 2023

(unaudited)

Other Guarantees

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan").

In connection with the Company's investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty and unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.

Unfunded Commitments

Unfunded commitments on the Company’s originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, the Company would receive additional interest income on the advanced amount. Whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively.

Additionally, the Company and its JV partner have commitments related to its construction of a student housing complex. The Company and JV partner committed to a total funding of $31.2 million, of which $4.1 million was unfunded at June 30, 2023.

NOTE 21 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events, other than those described in Note 10, Note 12 and Note 16 that have occurred that would require adjustments to or disclosures in the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this quarterly report to “we,” “us” or the “Company” refer to ACRES Commercial Realty Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward” or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, including, without limitation, factors impacting whether we will be able to maintain our sources of liquidity and whether we will be able to identify sufficient suitable investments to increase our originations, please refer to the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the “SEC”). Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a Maryland corporation and an externally managed real estate investment trust (“REIT”) that is primarily focused on originating, holding and managing commercial real estate (“CRE”) mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. Our manager is ACRES Capital, LLC (our “Manager”), a subsidiary of ACRES Capital Corp. (collectively, “ACRES”), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial property in top United States (“U.S.”) markets. Our Manager draws upon the management team of ACRES and its collective investment experience to provide its services. Our objective is to provide our stockholders with total returns over time, including quarterly distributions and capital appreciation, while seeking to manage the risks associated with our investment strategies as well as to maximize long-term stockholder value by maintaining stability through our available liquidity and diversified CRE loan portfolio.

Currently, markets are grappling with inflation, rising interest rates, bank failures and the lingering impact of the COVID-19 pandemic. These market pressures have caused continued disruption in many market segments, including the financial services, real estate and credit markets and these disruptions have affected the availability and the cost of capital. The increase in the cost of capital is expected to cause short-term dislocations in various investment and financing markets in which we participate as we and other market participants adjust to the new financing environment.

The U.S. Federal Reserve has raised the Federal Funds rate by 5.25% in 11 rate hikes between March 2022 and July 2023 to combat inflation. A rising interest rate environment generally correlates to increases in our net income. However, increases in interest rates may adversely affect our existing borrowers and could lead to nonperformance, i.e. the borrower’s ability to pay debt service. Additionally, rising rates and increasing costs may discourage consumer spending and slow corporate profit growth, which may negatively impact the collateral underlying our loans and impact our borrowers' ability to sell or refinance in the current market.

In response, we continue to manage corporate liquidity actively and responsibly, manage our CRE assets and manage our daily operations in light of changing macroeconomic circumstances. Our Manager also continuously monitors for new capital opportunities and executes on agreements that are expected to enhance our returns.

We target originating transitional floating-rate CRE loans between $10.0 million and $100.0 million. During the year ended December 31, 2022, we originated 19 floating-rate CRE whole loans with total commitments of $610.8 million. Loan payoffs during the year ended December 31, 2022 were $399.6 million and net unfunded commitments were $21.2 million, producing a net increase to the portfolio of $190.0 million. During the six months ended June 30, 2023, we originated two floating-rate CRE whole loans, with total commitments of $38.5 million. Loan payoffs during the six months ended June 30, 2023 were $141.4 million and net funded commitments were $28.5 million, producing a net decrease to the portfolio of $74.4 million.

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Our CRE loan portfolio, which had carrying values of $1.9 billion and $2.0 billion at June 30, 2023 and December 31, 2022, respectively, comprised:

• First mortgage loans, which we refer to as whole loans. These loans are typically secured by first liens on CRE property, including the following property types: multifamily, office, hotel, self-storage and retail. All but two of our CRE whole loans were current on contractual payments at June 30, 2023.

• Mezzanine debt is senior to the borrower’s equity but is subordinated to other third-party debt. These loans are subordinated CRE loans, usually secured by a pledge of the borrower’s equity ownership in the entity that owns the property or by a second lien mortgage on the property. At both June 30, 2023 and December 31, 2022, our mezzanine loans had no carrying value. Our mezzanine loan was not current on contractual payments at June 30, 2023.

We generate our income primarily from the spread between the revenues we receive from our assets and the cost to finance our ownership of those assets, including corporate debt.

While the CRE whole loans included in the CRE loan portfolio are substantially composed of floating-rate loans benchmarked to the Secured Overnight Financing Rate (“SOFR”), asset yields are protected through the use of benchmark floors and minimum interest periods that typically range from 12 to 18 months at the time of a loan’s origination. Our benchmark floors provide asset yield protection when the benchmark rate falls below an in-place benchmark floor. Our net investment returns are enhanced by a decline in the cost of our floating-rate liabilities that do not have benchmark floors. Our net investment returns will be negatively impacted by the rising cost of our floating-rate liabilities that do not have floors until the benchmark rate is above the benchmark floor, at which point our floating-rate loans and floating-rate liabilities will be match funded, effectively locking in our net interest margin until the benchmark floor rate is activated again or the floating-rate loan is paid off or refinanced.

In a business environment where benchmark interest rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In most cases the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At June 30, 2023, 94.5% of the par value of our CRE loan portfolio had interest rate caps in place with a weighted-average maturity of nine months.

At June 30, 2023, our $2.0 billion floating-rate CRE loan portfolio, at par, had a weighted average benchmark floor of 0.68%. At December 31, 2022, our par-value $2.1 billion floating-rate CRE loan portfolio, which included one loan without a benchmark floor, had a weighted average benchmark floor of 0.68%. With the trend of rising benchmark interest rates in 2022 and 2023, we have seen the coupons on all of our floating-rate assets and debt rise accordingly. Because we have equity invested in each floating-rate loan, and because in all instances the benchmark interest rates are above our loan floors, the rise in interest rates expected by the market will result in an increase in our net interest income. See “Interest Rate Risk” in “Item 3: Quantitative and Qualitative Disclosures About Market Risk.”

42

Our portfolio comprises loans with a diverse array of collateral types. Multifamily continues to comprise the majority of our portfolio, with 75.4% of our portfolio allocated to multifamily at June 30, 2023 and 75.2% at December 31, 2022. The following charts show our portfolio allocation by property type at June 30, 2023 and December 31, 2022:

 

From time to time, we may acquire real estate property through direct equity investments or as a result of our lending activities. At June 30, 2023, the total carrying value of our net real estate-related assets and liabilities was $161.9 million on six properties owned, four of which are included in investments in real estate and two of which are included in properties held for sale. The existence of net capital loss carryforwards available until December 31, 2025, allows for potential future capital gains on certain of these investments to be shielded from income taxes.

We use leverage to enhance our returns. The cost of borrowings to finance our investments is a significant part of our expenses. Our net interest income depends on our ability to control these expenses relative to our revenue. Our CRE loans may initially be financed with term facilities, such as CRE loan warehouse financing facilities, in anticipation of their ultimate securitization. We ultimately seek to finance our CRE loans through the use of non-recourse long-term, match-funded CRE debt securitizations.

43

Our asset-specific borrowings comprised CRE debt securitizations, term warehouse financing facilities, senior secured financing facility, mortgage payable and construction loans. In May 2021, we closed ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”), a CRE debt securitization financing $802.6 million of CRE loans with $675.2 million of non-recourse, floating-rate notes at a weighted average cost of one-month LIBOR plus 1.49%. In December 2021, we closed ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”), a CRE debt securitization financing $700.0 million of CRE loans with $567.0 million of non-recourse, floating-rate notes at a weighted average cost of one-month LIBOR plus 1.80%. In June 2023, we converted one-month LIBOR to one-month Term SOFR for both ACR 2021-FL1 and ACR 2021-FL2. Each of these 2021 CLOs initially provided for a two-year reinvestment period that allowed us to reinvest CRE loan payoffs and principal paydown proceeds into the securitizations, pending certain eligibility criteria are met and rating agency approval is obtained. The reinvestment feature of the securitizations would allow us to extend the securitizations’ financing lives at favorable interest rates through the reinvestment of loan payoff proceeds into new loans. The reinvestment period on ACR 2021-FL1 ended in May 2023 and the reinvestment period on ACR 2021-FL2 will end in December 2023.

In February 2022 and March 2022, we exercised the optional redemptions of Exantas Capital Corp. 2020-RSO8, Ltd. (“XAN 2020-RSO8”) and Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”), respectively, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitizations’ assets.

At June 30, 2023 and December 31, 2022, we had an outstanding balance of $1.2 billion on CRE debt securitizations, or 70.6% and 66.1%, respectively, of total outstanding borrowings. At June 30, 2023 and December 31, 2022, we had outstanding balances on our term warehouse financing facilities of $251.3 million and $328.3 million, respectively, or 14.4% and 17.6%, respectively, of total outstanding borrowings. At June 30, 2023 and December 31, 2022, we had outstanding borrowings on our senior secured financing facility of $47.7 million and $87.9 million, respectively, or 2.7% and 4.7%, respectively, of total outstanding borrowings. At June 30, 2023 and December 31, 2022, we had $18.5 million and $18.2 million, respectively, of outstanding borrowings on our mortgage payable, or 1.1% and 1.0%, respectively, of total outstanding borrowings. At June 30, 2023, we had two construction loans that have not been drawn upon.

In February 2022, we repurchased $39.8 million par value of our 4.50% convertible senior notes due 2022 (“4.50% Convertible Senior Notes”). In conjunction with the repurchase, we accelerated $460,000 of the convertible note discount, which was recorded as an extinguishment of debt cost, and $114,000 of deferred debt issuance costs, which were recorded in interest expense. In August 2022, the remaining $48.2 million of outstanding notes were paid off upon maturity at par.

In January 2020, we adopted updated accounting guidance that replaced the incurred loss approach with the CECL model for the determination of our allowance for loan losses. We reevaluate our CECL allowance quarterly, incorporating our current expectations of macroeconomic factors considered in the determination of our CECL reserves.

At June 30, 2023, the CECL allowance on our CRE loan portfolio was $25.7 million, or 1.3% of our $2.0 billion loan portfolio. At December 31, 2022, the CECL allowance on our CRE loan portfolio was $18.8 million, or 0.9% of our $2.1 billion loan portfolio.

During the six months ended June 30, 2023, we recorded a provision for credit losses primarily attributable to the impact from the near-term macroeconomic outlook of the commercial real estate market, including: forecasted increases in short-term interest rates, continued expected declines in commercial real estate pricing and forecasted higher unemployment rates, partially offset by improvements in property-level cash flows. In June 2023, we received the deed-in-lieu of foreclosure to an office loan in the East North Central region with a principal balance of $22.8 million which resulted in a charge off of $948,000 against the allowance for credit losses.

For the year ended December 31, 2022, we recorded a net provision for credit losses, which at the time, reflected changes in macroeconomic conditions and a specific, full reserve on one mezzanine loan with a par value of $4.7 million, which was delinquent with respect to debt service.

Additionally, the steady decline in our CECL reserves from our highest reserve balance in June 30, 2020 of $61.1 million, or 3.4% of the par balance of our CRE loan portfolio, to our current reserve balance at June 30, 2023 of $25.7 million, or 1.3% of the par balance of our CRE loan portfolio, has been due to the following: the successful resolution of our individually evaluated loans with specific reserves, the overall newer vintage of our CRE loan portfolio (with 10.6% of the portfolio, at June 30, 2023, being originated prior to the fourth quarter of 2020) as well as the increased percentage allocation of our CRE loan portfolio to multifamily loans over time. Multifamily loans have historically had our lowest credit losses of any asset class and in the sample population in the third-party model that we use to support our CECL reserves. Our percentage allocation of our CRE loan portfolio to multifamily has grown from 58.4% at June 30, 2020 to 75.4% at June 30, 2023.

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We historically used derivative financial instruments, including interest rate swaps, to hedge a portion of the interest rate risk associated with our borrowings. In April 2020, we terminated all interest rate hedges in conjunction with the disposition of our financed commercial mortgage-backed securities (“CMBS”) portfolio. At June 30, 2023 and December 31, 2022, we had unrealized losses in connection with the terminated hedges of $5.8 million and $6.6 million, respectively, which will be amortized into interest expense over the remaining life of the debt. During the three and six months ended June 30, 2023, we recognized amortization expense on these terminated contracts of $420,000 and $835,000, respectively.

Common stock book value was $24.50 per share at June 30, 2023, a $0.04 per share decrease from December 31, 2022.

Impact of Reference Rate Reform

Historically, we have used LIBOR as the benchmark interest rate for our floating-rate whole loans and we have been exposed to LIBOR through our floating-rate borrowings. In March 2021, the United Kingdom’s Financial Conduct Authority announced that it would cease publication of the one-week and two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. In July 2021, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified SOFR as its preferred alternative rate for LIBOR.

Following this announcement, we began to transition the contractual benchmark rates of existing floating-rate whole loans and borrowings to alternate rates. Additionally, beginning January 1, 2022, all variable rate loans we originated and all variable rate borrowings acquired had been benchmarked to SOFR. At June 30, 2023, our loan portfolio had a carrying value of $1.9 billion of floating rate loans, all of which have interest rates tied to SOFR. At June 30, 2023, we had $1.6 billion of floating rate borrowings, 96.8% or $1.5 billion of which have interest rates tied to SOFR and 3.2% or $51.5 million of which have interest rates tied to LIBOR.

We expect to complete the process of converting our LIBOR-based borrowings to an applicable benchmark interest rate during 2023.

Results of Operations

Our net income allocable to common shares for the three months ended June 30, 2023 was $817,000 or $0.10 per share-basic ($0.10 per share-diluted) and our net loss allocable to common shares for the six months ended June 30, 2023 was $1.6 million or $(0.19) per share-basic ($(0.19) per share-diluted), respectively, as compared to net income allocable to common shares for the three months ended June 30, 2022 of $690,000, or $0.08 per share-basic ($0.08 per share-diluted) and net loss allocable to common shares for the six months ended June 30, 2022 of $2.1 million, or $(0.23) per share-basic ($(0.23) per share-diluted).

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Net Interest Income

The following tables analyze the change in interest income and interest expense for the comparative three and six months ended June 30, 2023 and 2022 by changes in volume and changes in rates. The changes attributable to the combined changes in volume and rate have been allocated proportionately, based on absolute values, to the changes due to volume and changes due to rates (dollars in thousands, except amounts in footnotes):

	Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
							Due to Changes in
	Net Change			Percent Change (1)			Volume			Rate
Increase (decrease) in interest income:
CRE whole loans (2)	$	19,505			73	%	$	(1,118	)	$	20,623
CRE mezzanine loan		(118	)		(100	)%		—			(118	)
Other		742			1,349	%		28			714
Total increase in interest income		20,129			74	%		(1,090	)		21,219
Increase (decrease) in interest expense:
Securitized borrowings: (3)
ACR 2021-FL1 Senior Notes		7,185			168	%		(3	)		7,188
ACR 2021-FL2 Senior Notes		6,040			147	%		—			6,040
Senior secured financing facility (3)		870			178	%		867			3
CRE - term warehouse financing facilities (3)		3,099			125	%		(92	)		3,191
4.50% Convertible Senior Notes (3)		(891	)		(100	)%		(891	)		—
5.75% Senior Unsecured Notes (3)		10			0	%		10			—
12.00% Senior Unsecured Notes (3)		(96	)		(100	)%		(96	)		—
Unsecured junior subordinated debentures		544			85	%		—			544
Hedging		(64	)		(14	)%		(64	)		—
Total increase in interest expense		16,697			106	%		(269	)		16,966
Net increase in net interest income	$	3,432					$	(821	)	$	4,253

(1)Percent change is calculated as the net change divided by the respective interest income or interest expense for the three months ended June 30, 2022.

(2)Includes a decrease in fee income of $771,000 recognized on our CRE whole loans that was due to changes in volume.

(3)Includes decreases in amortization expense of $107,000, $349,000 and $96,000 on our CRE - term warehouse financing facilities, 4.50% Convertible Senior Notes and 12.00% senior unsecured notes, respectively, and increases in amortization expense of $30,000 and $10,000 on our senior secured financing facility and 5.75% Senior Unsecured Notes, respectively, that were due to changes in volume.

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	Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
							Due to Changes in
	Net Change			Percent Change (1)			Volume			Rate
Increase (decrease) in interest income:
CRE whole loans (2)	$	41,452			84	%	$	931		$	40,521
Legacy CRE loan		(29	)		(100	)%		(29	)		—
CRE mezzanine loan		(223	)		(94	)%		—			(223	)
Other		1,582			2,138	%		17			1,565
Total increase in interest income		42,782			86	%		919			41,863
Increase (decrease) in interest expense:
Securitized borrowings: (3)
XAN 2020-RSO8 Senior Notes		(1,208	)		(100	)%		(1,208	)		—
XAN 2020-RSO9 Senior Notes		(956	)		(100	)%		(956	)		—
ACR 2021-FL1 Senior Notes		14,538			195	%		(7	)		14,545
ACR 2021-FL2 Senior Notes		12,215			168	%		—			12,215
Senior secured financing facility (3)		1,913			191	%		1,886			27
CRE - term warehouse financing facilities (3)		8,174			232	%		2,207			5,967
4.50% Convertible Senior Notes (3)		(2,247	)		(100	)%		(2,247	)		—
5.75% Senior Unsecured Notes (3)		18			0	%		18			—
12.00% Senior Unsecured Notes (3)		(274	)		(100	)%		(274	)		—
Unsecured junior subordinated debentures		1,120			95	%		—			1,120
Hedging		(128	)		(14	)%		(128	)		—
Total increase in interest expense		33,165			108	%		(709	)		33,874
Net increase in net interest income	$	9,617					$	1,628		$	7,989

(1)Percent change is calculated as the net change divided by the respective interest income or interest expense for the six months ended June 30, 2022.

(2)Includes a decrease in fee income of $762,000 recognized on our CRE whole loans that was due to changes in volume.

(3)Includes decreases in amortization expense of $1.1 million, $214,000, $944,000 and $274,000 on our securitized borrowings, CRE - term warehouse financing facilities, 4.50% Convertible Senior Notes and 12.00% senior unsecured notes, respectively, and increases in amortization expense of $60,000 and $18,000 on our senior secured financing facility and 5.75% Senior Unsecured Notes, respectively, that were due to changes in volume.

Net Change in Interest Income for the Comparative three and six months ended June 30, 2023 and 2022:

Aggregate interest income increased by $20.1 million and $42.8 million for the comparative three and six months ended June 30, 2023 and 2022, respectively. We attribute the changes to the following:

CRE whole loans. The increases of $19.5 million and $41.5 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, were primarily attributable to an increase in the benchmark rate over the comparative periods.

Net Change in Interest Expense for the Comparative three and six months ended June 30, 2023 and 2022:

Aggregate interest expense increased by $16.7 million and $33.2 million for the comparative three and six months ended June 30, 2023 and 2022. We attribute the changes to the following:

Securitized borrowings. The net increases of $13.2 million and $24.6 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, were primarily attributable to an increase in the benchmark rate over the comparative periods. The increase for the comparative six months ended June 30, 2023 and 2022 was partially offset by the 2022 liquidations of XAN 2020-RSO8 and XAN 2020-RSO9.

Senior secured financing facility. The increases of $870,000 and $1.9 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, were primarily attributable to increased utilization of the senior secured financing facility.

CRE - term warehouse financing facilities. The increases of $3.1 million and $8.2 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, were primarily attributable to an increase in the benchmark rate over the comparative periods. The increase for the comparative six months ended June 30, 2023 and 2022 was also attributable to the increased utilization of these facilities over the comparative periods.

47

4.50% Convertible Senior Notes. The decreases of $891,000 and $2.2 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, were primarily attributable to the redemption of the remaining $88.0 million of these notes during the year ended December 31, 2022.

Unsecured junior subordinated debentures. The increases of $544,000 and $1.1 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, were attributable to an increase in the benchmark rate over the comparative periods.

Average Net Yield and Average Cost of Funds:

The following tables present the average net yield and average cost of funds for the three and six months ended June 30, 2023 and 2022 (dollars in thousands, except amounts in footnotes):

	Three Months Ended June 30, 2023								Three Months Ended June 30, 2022
	Average Amortized Cost		Interest Income (Expense)			Average Net Yield (Cost of Funds) (1)			Average Amortized Cost		Interest Income (Expense)			Average Net Yield (Cost of Funds) (1)
Interest-earning assets
CRE whole loans, floating-rate (2)	$	1,974,604	$	46,351			9.41	%	$	1,953,740	$	26,846			5.51	%
CRE mezzanine loan		4,700		—			—	%		4,700		118			9.96	%
Other		70,238		797			4.55	%		51,135		55			0.43	%
Total interest income/average net yield		2,049,542		47,148			9.22	%		2,009,575		27,019			5.39	%
Interest-bearing liabilities
Collateralized by:
CRE whole loans (3)		1,555,911		(28,546	)		(7.36	)%		1,494,037		(11,352	)		(3.00	)%
General corporate debt:
Unsecured junior subordinated debentures		51,548		(1,186	)		(9.10	)%		51,548		(642	)		(4.93	)%
4.50% Convertible Senior Notes (4)		—		—			—	%		47,823		(891	)		(7.37	)%
5.75% Senior Unsecured Notes (5)		147,741		(2,313	)		(6.28	)%		147,132		(2,303	)		(6.28	)%
12.00% Senior Unsecured Notes (6)(7)		—		—			—	%		—		(96	)		—	%
Hedging (8)		—		(397	)		—	%		—		(461	)		—	%
Total interest expense/average cost of funds		1,755,200		(32,442	)		(7.32	)%		1,740,540		(15,745	)		(3.45	)%
Total net interest income			$	14,706							$	11,274

(1)Average net yield includes net amortization/accretion and fee income and is computed based on average amortized cost.

(2)Includes fee income of $1.9 million and $2.6 million on our floating-rate CRE whole loans for the three months ended June 30, 2023 and 2022, respectively.

(3)Includes amortization expense of $1.3 million and $1.4 million for the three months ended June 30, 2023 and 2022, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

(4)Includes amortization expense of $349,000 for the three months ended June 30, 2022.

(5)Includes amortization expense of $157,000 and $147,000 for the three months ended June 30, 2023 and 2022, respectively.

(6)Includes amortization expense of $96,000 for the three months ended June 30, 2022.

(7)The outstanding par balance of our 12.00% Senior Unsecured Notes was redeemed in full in August 2021. At any time and from time to time prior to July 31, 2022, we were permitted to elect to issue up to $75.0 million of principal of additional notes. The interest expense incurred during the three months ended June 30, 2022 comprised amortization of deferred debt issuance costs on the remaining availability.

(8)Includes net amortization expense of $397,000 and $461,000 for the three months ended June 30, 2023 and 2022, respectively, on 20 and 22 terminated interest rate swap agreements, respectively, that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.

48

	Six Months Ended June 30, 2023								Six Months Ended June 30, 2022
	Average Amortized Cost		Interest Income (Expense)			Average Net Yield (Cost of Funds) (1)			Average Amortized Cost		Interest Income (Expense)			Average Net Yield (Cost of Funds) (1)
Interest-earning assets
CRE whole loans, floating-rate (2)	$	1,993,000	$	90,808			9.19	%	$	1,918,678	$	49,356			5.19	%
Legacy CRE loan		—		—			—	%		318		29			18.08	%
CRE mezzanine loan		4,700		13			0.54	%		4,700		236			9.96	%
Other		90,565		1,656			3.69	%		93,667		74			0.16	%
Total interest income/average net yield		2,088,265		92,477			8.93	%		2,017,363		49,695			4.97	%
Interest-bearing liabilities
Collateralized by:
CRE whole loans (3)		1,588,306		(56,102	)		(7.12	)%		1,487,428		(21,426	)		(2.82	)%
General corporate debt:
Unsecured junior subordinated debentures		51,548		(2,301	)		(8.88	)%		51,548		(1,181	)		(4.56	)%
4.50% Convertible Senior Notes (4)		—		—			—	%		57,396		(2,247	)		(7.79	)%
5.75% Senior Unsecured Notes (5)		147,664		(4,624	)		(6.31	)%		147,060		(4,606	)		(6.31	)%
12.00% Senior Unsecured Notes (6)(7)		—		—			—	%		—		(274	)		—	%
Hedging (8)		—		(790	)		—	%		—		(918	)		—	%
Total interest expense/average cost of funds		1,787,518		(63,817	)		(7.10	)%		1,743,432		(30,652	)		(3.33	)%
Total net interest income			$	28,660							$	19,043

(1)Average net yield includes net amortization/accretion and fee income and is computed based on average amortized cost.

(2)Includes fee income of $3.9 million and $4.7 million on our floating-rate CRE whole loans for the six months ended June 30, 2023 and 2022, respectively.

(3)Includes amortization expense of $2.7 million and $3.9 million for the six months ended June 30, 2023 and 2022, respectively, on our interest-bearing liabilities collateralized by CRE whole loans.

(4)Includes amortization expense of $944,000 for the six months ended June 30, 2022.

(5)Includes amortization expense of $311,000 and $293,000 for the six months ended June 30, 2023 and 2022, respectively.

(6)Includes amortization expense of $274,000 for the six months ended June 30, 2022.

(7)The outstanding par balance of our 12.00% Senior Unsecured Notes was redeemed in full in August 2021. At any time and from time to time prior to July 31, 2022, we were permitted to elect to issue up to $75.0 million of principal of additional notes. The interest expense incurred during the six months ended June 30, 2022 comprised amortization of deferred debt issuance costs on the remaining availability.

(8)Includes net amortization expense of $790,000 and $918,000 for the six months ended June 30, 2023 and 2022, respectively, on 20 and 22 terminated interest rate swap agreements, respectively, that were in net loss positions at the time of termination. The remaining net losses, reported in accumulated other comprehensive loss on the consolidated balance sheets, will be accreted over the remaining life of the debt.

Real Estate Income and Other Revenue

The following table sets forth information relating to our real estate income and other revenue for the periods presented (dollars in thousands):

	For the Three Months Ended June 30,
	2023		2022		Dollar Change		Percent Change
Real estate income and other revenue:
Real estate income	$	8,879	$	8,777	$	102		1	%
Other revenue		37		19		18		95	%
Total	$	8,916	$	8,796	$	120		1	%

	For the Six Months Ended June 30,
	2023		2022		Dollar Change		Percent Change
Real estate income and other revenue:
Real estate income	$	15,950	$	11,915	$	4,035		34	%
Other revenue		70		35		35		100	%
Total	$	16,020	$	11,950	$	4,070		34	%

Aggregate real estate income and other revenue increased by $120,000 and $4.1 million for the comparative three and six months ended June 30, 2023 and 2022, respectively. The increase in real estate income for the comparative six months ended was primarily attributable to the acquisition of two properties, a hotel and a student housing facility, in April 2022, as well as increased real estate income at our hotel property acquired in 2020 that benefited from increased personal and business travel resulting from lifted COVID-19 restrictions that occurred late in the spring of 2022. The increase for the comparative six months was partially offset by the sale of an office property in September 2022, as well as decreased revenue on an office property acquired in October 2021.

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Operating Expenses

The following tables set forth information relating to our operating expenses for the periods presented (dollars in thousands):

	For the Three Months Ended June 30,
	2023		2022		Dollar Change			Percent Change
Operating expenses:
General and administrative	$	2,348	$	2,353	$	(5	)		(0	)%
Real estate expenses		10,492		9,162		1,330			15	%
Management fees - related party		1,890		1,672		218			13	%
Equity compensation - related party		719		991		(272	)		(27	)%
Corporate depreciation and amortization		23		21		2			10	%
Provision for credit losses, net		2,700		524		2,176			415	%
Total	$	18,172	$	14,723	$	3,449			23	%

	For the Six Months Ended June 30,
	2023		2022			Dollar Change			Percent Change
Operating expenses:
General and administrative	$	5,327	$	5,810		$	(483	)		(8	)%
Real estate expenses		19,352		13,956			5,396			39	%
Management fees - related party		3,663		3,354			309			9	%
Equity compensation - related party		1,613		1,735			(122	)		(7	)%
Corporate depreciation and amortization		46		43			3			7	%
Provision for (reversal of) credit losses, net		7,796		(1,278	)		9,074			710	%
Total	$	37,797	$	23,620		$	14,177			60	%

Aggregate operating expenses increased by $3.4 million and $14.2 million for the comparative three and six months ended June 30, 2023 and 2022, respectively. We attribute the changes to the following:

General and administrative. General and administrative expenses decreased by $5,000 and $483,000 for the comparative three and six months ended June 30, 2023 and 2022, respectively. The following table summarizes the information relating to our general and administrative expenses for the periods presented (dollars in thousands):

	For the Three Months Ended June 30,
	2023		2022		Dollar Change			Percent Change
General and administrative
Professional services	$	961	$	1,157	$	(196	)		(17	)%
Wages and benefits		350		290		60			21	%
D&O insurance		322		360		(38	)		(11	)%
Operating expenses		239		266		(27	)		(10	)%
Dues and subscriptions		229		186		43			23	%
Director fees		206		76		130			171	%
Tax penalties, interest & franchise tax		20		1		19			1,900	%
Travel		21		17		4			24	%
Total	$	2,348	$	2,353	$	(5	)		(0	)%

50

	For the Six Months Ended June 30,
	2023		2022		Dollar Change			Percent Change
General and administrative
Professional services	$	2,481	$	3,049	$	(568	)		(19	)%
Wages and benefits		741		649		92			14	%
D&O insurance		641		716		(75	)		(10	)%
Operating expenses		506		425		81			19	%
Dues and subscriptions		433		392		41			10	%
Director fees		412		413		(1	)		(0	)%
Tax penalties, interest & franchise tax		86		140		(54	)		(39	)%
Travel		27		26		1			4	%
Total	$	5,327	$	5,810	$	(483	)		(8	)%

The decrease in general and administrative expense for the comparative six months ended June 30, 2023 and 2022 was primarily attributable to a decrease in professional services in connection with (i) legal expenses incurred during the six months ended June 30, 2022 pertaining to the liquidation of 2020-RSO8 and 2020-RSO9 compounded by reimbursement from a borrower for legal costs during the six months ended June 30, 2023, (ii) a decrease in marketing expenses over the comparative periods and (iii) the timing of CRE valuations for the year end audit.

Real estate expenses. The increase of $1.3 million and $5.4 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, was primarily attributable to the acquisition of two properties, a hotel in April 2022 and an office property on which we received the deed-in-lieu of foreclosure in June 2023. The increase for the comparative three and six months ended was partially offset by the sale of an office property in September 2022. The increase for the comparative six months ended was also attributable to the acquisition of a student housing complex in April 2022, partially offset by a decrease in depreciation expense on an office property acquired in October 2021 over the comparative periods.

Provision for credit losses, net. The increase of $2.2 million and $9.1 million for the comparative three and six months ended June 30, 2023 and 2022, respectively, was primarily attributable to the impact from the near-term macroeconomic outlook of the commercial real estate market, including: forecasted increases in short-term interest rates, continued expected declines in commercial real estate pricing and forecasted higher unemployment rates, partially offset by improvements in property-level cash flows.

Other Income (Expense)

The following table sets forth information relating to our other income (expense) incurred for the periods presented (dollars in thousands):

	For the Three Months Ended June 30,
	2023		2022		Dollar Change		Percent Change
Other income (expense):
Other income		242		175		67		38	%
Total	$	242	$	175	$	67		38	%

	For the Six Months Ended June 30,
	2023		2022			Dollar Change			Percent Change
Other income (expense):
Loss on extinguishment of debt	$	—	$	(460	)	$	460			(100	)%
Gain on sale of real estate		745		—			745			100	%
Other income		352		973			(621	)		(64	)%
Total	$	1,097	$	513		$	584			114	%

51

Aggregate other income increased $67,000 and $584,000 for the comparative three and six months ended June 30, 2023 and 2022, respectively. We attribute the changes to the following:

Loss on extinguishment of debt. There were no losses on extinguishment of debt in the three and six months ended June 30, 2023. The loss of $460,000 for the six months ended June 30, 2022 was attributable to non-cash losses in connection with the ratable acceleration of the 4.50% Convertible Senior Notes' market discount due to the partial redemption of our 4.50% Convertible Senior Notes in February 2022.

Gain on sale of real estate. The gain of $745,000 for the six months ended June 30, 2023 was attributed to the sale of a hotel property in the Northeast region in February 2023 that generated non-recurring gains. There were no sales of property during the three and six months ended June 30, 2022.

Other Income. The decrease of $621,000 during the comparative six months ended June 30, 2023 and 2022 was primarily attributable to a loan recovery received during the six months ended June 30, 2022 on a middle market loan that was previously charged off in a prior quarter. During the three and six months ended June 30, 2023, no loan recoveries occurred.

52

Financial Condition

Summary

Our total assets were $2.3 billion and $2.4 billion at June 30, 2023 and December 31, 2022, respectively.

Investment Portfolio

The tables below summarize the amortized cost and net carrying amount of our investment portfolio, classified by asset type, at June 30, 2023 and December 31, 2022 as follows (dollars in thousands, except amounts in footnotes):

At June 30, 2023	Amortized Cost		Net Carrying Amount (1)		Percent of Portfolio			Weighted Average Coupon
Loans held for investment:
CRE whole loans, floating-rate	$	1,959,040	$	1,938,089		92.22	%	9.16%
CRE mezzanine loan		4,700		—		0.00	%	10.00%
		1,963,740		1,938,089		92.22	%
Other investments:
Investments in unconsolidated entities		1,548		1,548		0.07	%	N/A (4)
Investments in real estate (2)		103,318		103,318		4.92	%	N/A (4)
Property held for sale (3)		58,540		58,540		2.79	%	N/A (4)
		163,406		163,406		7.78	%
Total investment portfolio	$	2,127,146	$	2,101,495		100.00	%
At December 31, 2022	Amortized Cost		Net Carrying Amount (1)		Percent of Portfolio			Weighted Average Coupon
Loans held for investment:
CRE whole loans, floating-rate	$	2,052,890	$	2,038,787		93.56	%	7.99%
CRE mezzanine loan		4,700		—		0.00	%	10.00%
		2,057,590		2,038,787		93.56	%
Other investments:
Investments in unconsolidated entities		1,548		1,548		0.07	%	N/A (4)
Investments in real estate (2)		88,132		88,132		4.04	%	N/A (4)
Property held for sale (3)		50,744		50,744		2.33	%	N/A (4)
		140,424		140,424		6.44	%
Total investment portfolio	$	2,198,014	$	2,179,211		100.00	%

(1)Net carrying amount includes an allowance for credit losses of $25.7 million and $18.8 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes real estate-related right of use assets of $19.3 million and $19.5 million, mortgage payable of $18.5 million and $18.2 million, intangible assets of $8.4 million and $8.9 million, lease liabilities of $43.2 million and $42.9 million and other liabilities of $46,000 and $64,000 at June 30, 2023 and December 31, 2022, respectively.

(3)Includes property held for sale-related liabilities of $3.0 million at both June 30, 2023 and December 31, 2022.

(4)There are no stated rates associated with these investments.

CRE loans. During the six months ended June 30, 2023, we originated $38.5 million of floating-rate CRE whole loan commitments. Loan payoffs during the six months ended June 30, 2023 were $141.4 million and net funded commitments were $28.5 million, producing a net decrease to the portfolio of $74.4 million.

53

The following is a summary of our loans (dollars in thousands, except amounts in footnotes):

Description	Quantity	Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At June 30, 2023:
Whole loans (5)(6)	77	$	1,968,322	$	(9,282	)	$	1,959,040	$	(20,951	)	$	1,938,089	1M BR plus 2.86% to 1M BR plus 8.61%	July 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	1,973,022	$	(9,282	)	$	1,963,740	$	(25,651	)	$	1,938,089
At December 31, 2022:
Whole loans (5)(6)	81	$	2,065,504	$	(12,614	)	$	2,052,890	$	(14,103	)	$	2,038,787	1M BR plus 2.85% to 1M BR plus 8.50%	January 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	2,070,204	$	(12,614	)	$	2,057,590	$	(18,803	)	$	2,038,787

(1)Amounts include unamortized loan origination fees of $9.0 million and $12.3 million and deferred amendment fees of $257,000 and $308,000 at June 30, 2023 and December 31, 2022, respectively.

(2)Benchmark rates ("BR") comprise one-month LIBOR or one-month Term SOFR. At June 30, 2023, all of our whole loans used one-month Term SOFR. Weighted-average one-month benchmark rates were 5.22% and 4.21% at June 30, 2023 and December 31, 2022, respectively. Additionally, weighted-average benchmark rate floors were 0.68% at both June 30, 2023 and December 31, 2022.

(3)Maturity dates exclude contractual extension options, subject to the satisfaction of certain terms that may be available to the borrowers.

(4)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(5)Substantially all loans are pledged as collateral under various borrowings at June 30, 2023 and December 31, 2022.

(6)CRE whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreement, and any necessary approvals have been obtained.

At June 30, 2023, 23.6%, 21.2% and 14.2% of our CRE loan portfolio was concentrated in the Southwest, Southeast and Mountain regions, respectively, based on carrying value, as defined by the NCREIF. At December 31, 2022, 23.2%, 21.5% and 16.2% of our CRE loan portfolio was concentrated in the Southwest, Southeast and Mountain regions, respectively, based on carrying value. At June 30, 2023 and December 31, 2022, no single loan or investment represented more than 10% of our total assets and no single investment group generated over 10% of our revenue.

Investments in unconsolidated entities. Our investments in unconsolidated entities at June 30, 2023 and December 31, 2022 comprised a 100% interest in the common shares of Resource Capital Trust I (“RCT I”) and RCC Trust II (“RCT II”), with a value of $1.5 million in the aggregate, or 3.0% of each trust. We record our investments in RCT I’s and RCT II’s common shares as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II.

We recorded dividends from our investments in RCT I’s and RCT II’s common shares, reported in other revenue on the consolidated statement of operations, of $37,000 and $70,000, respectively, during the three and six months ended June 30, 2023. During the three and six months ended June 30, 2022, we recorded dividends of $19,000 and $35,000, respectively.

Investments in real estate and property held for sale. At June 30, 2023, we held investments in six real estate properties, four of which are included in investments in real estate and two of which are included in properties held for sale on the consolidated balance sheets.

In February 2023, we sold a hotel property in the Northeast region that we previously designated as a property held for sale. The hotel property sold for $15.1 million with selling costs of $845,000, resulting in a gain of $745,000.

54

In June 2023, we received the deed-in-lieu of foreclosure on an office property in the East North Central region. We determined that the acquisition of the property should be accounted for as an asset acquisition, and the acquisition-date fair value of $20.9 million was determined using a third-party valuation. Additionally on the date of transfer, we also acquired cash and receivables, and assumed trade payables, resulting in a charge off of the loan against our allowance for credit losses of $948,000. At June 30, 2023, the property was reported as property held for sale on the consolidated balance sheets.

The following table summarizes the book value of our investments in real estate and related intangible assets at June 30, 2023 and December 31, 2022 (in thousands, except amounts in the footnotes):

	June 30, 2023							December 31, 2022
	Cost Basis		Accumulated Depreciation & Amortization			Carrying Value		Cost Basis		Accumulated Depreciation & Amortization			Carrying Value
Assets:
Investments in real estate, equity:
Investments in real estate (1)	$	141,008	$	(3,645	)	$	137,363	$	123,219	$	(2,251	)	$	120,968
Right of use assets (2)(3)		19,665		(342	)		19,323		19,664		(205	)		19,459
Intangible assets (4)		11,474		(3,098	)		8,376		11,474		(2,594	)		8,880
Subtotal		172,147		(7,085	)		165,062		154,357		(5,050	)		149,307
Investments in real estate from lending activities:
Properties held for sale (5)		61,565		—			61,565		53,769		—			53,769
Total		233,712		(7,085	)		226,627		208,126		(5,050	)		203,076
Liabilities:
Investments in real estate, equity:
Mortgage payable		18,233		259			18,492		18,089		155			18,244
Other liabilities		247		(201	)		46		247		(183	)		64
Lease liabilities (3)(6)		43,260		(54	)		43,206		43,260		(393	)		42,867
Subtotal (7)		61,740		4			61,744		61,596		(421	)		61,175
Investments in real estate from lending activities:
Liabilities held for sale		3,025		—			3,025		3,025		—			3,025
Total		64,765		4			64,769		64,621		(421	)		64,200
Total net investments in real estate and properties held for sale (8)	$	168,947				$	161,858	$	143,505				$	138,876

(1)Includes $38.4 million of land, which is not depreciable, at June 30, 2023 and December 31, 2022, respectively.

(2)Primarily comprises a $18.9 million right of use asset, associated with an acquired ground lease of $42.8 million accounted for as an operating lease at June 30, 2023 and $19.0 million right of use asset, associated to the acquired ground lease of $42.4 million. December 31, 2022. Amortization is booked to real estate expenses on the consolidated statements of operations.

(3)Refer to Note 8 in the Notes to the Consolidated Financial Statements for additional information on our remaining operating leases.

(4)Primarily comprises a franchise intangible of $5.0 million and $5.3 million, a management contract of $3.0 million and $3.1 million and a customer list of $321,000 and $427,000 at June 30, 2023 and December 31, 2022, respectively.

(5)At December 31, 2022, properties held for sale included two properties originally acquired in November 2020 and July 2022. At June 30, 2023, properties held for sale included the November 2020 acquisition, as well as the property acquired via deed-in-lieu of foreclosure during the three months ended June 30, 2023.

(6)Primarily comprises a $42.8 million ground lease with a remaining term of 93 years. Lease expenses for the six months ended June 30, 2023 were $1.3 million.

(7)Excludes $1.9 million of deferred debt issuance costs on construction loans that can be drawn upon subsequent to June 30, 2023.

(8)Excludes items of working capital, either acquired or assumed.

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Financing Receivables

The following tables show the activity in the allowance for credit losses for the six months ended June 30, 2023 and year ended December 31, 2022 (in thousands):

	Six Months Ended June 30, 2023			Year Ended December 31, 2022
Allowance for credit losses at beginning of period	$	18,803		$	8,805
Provision for credit losses		7,796			12,295
Charge offs		(948	)		(2,297	)
Allowance for credit losses at end of period	$	25,651		$	18,803

During the three and six months ended June 30, 2023, we recorded provisions for expected credit losses of $2.7 million and $7.8 million, respectively, primarily attributable to the impact from the near-term macroeconomic outlook of the commercial real estate market, including: forecasted increases in short-term interest rates, continued expected declines in commercial real estate pricing and forecasted higher unemployment rates, partially offset by improvements in property-level cash flows.

In June 2023, we received the deed-in-lieu of foreclosure on an office loan in the East North Central region with a principal balance of $22.8 million which resulted in a charge off of $948,000 against the allowance for credit losses.

During the three months ended June 30, 2022, we recorded a provision for expected credit losses of approximately $524,000 primarily attributable to a decline in macroeconomic factors, offset by improvements in property-level cash flows. During the six months ended June 30, 2022, reversal of expected credit losses in the first quarter of 2022 outpaced the provision during the second quarter of 2022, resulting in a net reversal of $1.3 million in connection with resolutions of loans with specific reserves and continued improvements in property-level operations.

At June 30, 2023 and December 31, 2022, we individually evaluated the following loans:

•One office mezzanine loan in the Northeast region with a principal balance of $4.7 million at both June 30, 2023 and December 31, 2022. We fully reserved this loan in the fourth quarter of 2022, and it continues to be fully reserved at June 30, 2023. The loan entered payment default in February 2023 and has been placed on nonaccrual status.

•One retail loan in the Northeast region, with a principal balance of $8.0 million at both June 30, 2023 and December 31, 2022, for which foreclosure was determined to be probable. The loan was modified in February 2021 to extend the loan's maturity to December 2021 and has since entered into payment default and has been put on nonaccrual status. The loan had an as-is appraised value in excess of its principal and interest balances, and, as such, had no allowance for CECL at June 30, 2023 and December 31, 2022, respectively.

•One office loan in the Southwest region, with a principal balance of $20.1 million and $20.7 million at June 30, 2023 and December 31, 2022, respectively, for which foreclosure was determined to be probable. The loan had an initial maturity of March 2022, was modified three times to extend its maturity to June 2022 and has since entered into payment default and has been put on nonaccrual status. However, in exchange for payments, comprising principal paydowns, interest payments and the reimbursement of certain legal fees, received between October 2022 and July 2023, we have agreed to temporarily defer our right to foreclose on the property until October 2023. Additionally, at both June 30, 2023 and December 31, 2022, this loan had an as-is appraised value in excess of its principal and interest balances, and, as such, had no CECL allowance.

Credit quality indicators

Commercial Real Estate Loans

CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten loan-to-collateral value (“LTV”) ratios, loan structure and exit plan. Depending on the loan’s performance against these various factors, loans are rated on a scale from 1 to 5, with loans rated 1 representing loans with the highest credit quality and loans rated 5 representing loans with the lowest credit quality. Loans are rated a 2 at origination. The factors evaluated provide general criteria to monitor credit migration in our loan portfolio; as such, a loan’s rating may improve or worsen, depending on new information received.

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The criteria set forth below should be used as general guidelines and, therefore, not every loan will have all of the characteristics described in each category below.

Risk Rating	Risk Characteristics
1	• Property performance has surpassed underwritten expectations.
	• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high quality tenant mix.
2	• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded.
	• Occupancy is stabilized, near stabilized or is on track with underwriting.
3	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• An updated appraisal is required upon designation and updated on an as-needed basis.

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans may experience greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, we pool CRE loans based on the underlying collateral property type and utilize a probability of default and loss given default methodology for approximately one year after which we immediately revert to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnotes):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At June 30, 2023:
Whole loans, floating-rate	$	—	$	1,353,353		514,179	$	63,344	$	28,164	$	1,959,040
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,353,353	$	514,179	$	63,344	$	32,864	$	1,963,740
At December 31, 2022:
Whole loans, floating-rate	$	—	$	1,635,376	$	309,491	$	85,226	$	22,797	$	2,052,890
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,635,376	$	309,491	$	85,226	$	27,497	$	2,057,590

(1)The total amortized cost of CRE loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

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Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in footnotes):

	2023		2022		2021		2020		2019			Prior		Total (1)
At June 30, 2023:
Whole loans, floating-rate: (2)
Rating 2	$	37,643	$	444,948	$	791,217	$	52,703	$	26,842		$	—	$	1,353,353
Rating 3		—		77,350		316,281		34,286		27,794			58,468		514,179
Rating 4		—		19,348		43,996		—		—			—		63,344
Rating 5		—		—		—		—		20,139			8,025		28,164
Total whole loans, floating-rate		37,643		541,646		1,151,494		86,989		74,775			66,493		1,959,040
Mezzanine loan (rating 5)		—		—		—		—		—			4,700		4,700
Total	$	37,643	$	541,646	$	1,151,494	$	86,989	$	74,775		$	71,193	$	1,963,740
Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	(948	)	$	—	$	(948	)
	2022		2021		2020		2019		2018			Prior		Total (1)
At December 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	526,606	$	1,003,060	$	64,944	$	26,977	$	13,789		$	—	$	1,635,376
Rating 3		—		192,490		44,657		27,881		44,463			—		309,491
Rating 4		—		—		—		20,742		64,484			—		85,226
Rating 5		—		—		—		22,797		—			—		22,797
Total whole loans, floating-rate		526,606		1,195,550		109,601		98,397		122,736			—		2,052,890
Mezzanine loan (rating 5)		—		—		—		—		4,700			—		4,700
Total	$	526,606	$	1,195,550	$	109,601	$	98,397	$	127,436		$	—	$	2,057,590

(1)The total amortized cost of CRE loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(2)Acquired CRE whole loans are grouped within each loan’s year of origination.

At both June 30, 2023 and December 31, 2022, we had one additional mezzanine loan included in other assets held for sale that had no carrying value.

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Loan Portfolio Aging Analysis

The following table presents the CRE loan portfolio aging analysis as of the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):

	30-59 Days		60-89 Days		Greater than 90 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At June 30, 2023:
Whole loans, floating-rate	$	—	$	—	$	28,164	$	28,164	$	1,930,876	$	1,959,040	$	—
Mezzanine loan (4)		4,700		—		—		4,700		—		4,700		—
Total	$	4,700	$	—	$	28,164	$	32,864	$	1,930,876	$	1,963,740	$	—
At December 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	28,767	$	28,767	$	2,024,123	$	2,052,890	$	—
Mezzanine loan (4)		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	28,767	$	28,767	$	2,028,823	$	2,057,590	$	—

(1)During the three and six months ended June 30, 2023, we recognized interest income of $837,000 and $1.8 million, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023. During the three and six months ended June 30, 2022, we recognized interest income of $333,000 and $668,000 on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023.

(2)Includes one whole loan with an amortized cost of $22.8 million, in maturity default at December 31, 2022.

(3)The total amortized cost of CRE loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(4)Fully reserved at both June 30, 2023 and December 31, 2022.

At June 30, 2023, we had two CRE whole loans, with total amortized costs of $28.2 million, and one mezzanine loan, with a total amortized cost of $4.7 million, in payment default. During the twelve months ended June 30, 2023, one of the CRE whole loans, with an amortized value of $20.1 million at June 30, 2023, had been extended three times due to the borrower experiencing financial difficulty. At June 30, 2022, this loan had an amortized cost of $21.8 million, which represented 1.0% of the total amortized cost of the portfolio.

During the six months ended June 30, 2023, we did not enter into any loan modifications for borrowers that are experiencing financial difficulty.

Restricted Cash

At June 30, 2023, we had restricted cash of $15.3 million, which consisted of $14.5 million of restricted cash held within our five consolidated securitization entities and $768,000 held in escrow for deposits or tax payments at our real estate properties. At December 31, 2022, we had restricted cash of $38.6 million, which consisted of $38.2 million held within our five consolidated securitization entities and $400,000 held in escrow for deposits or tax payments at our real estate properties or pledged with minimum reserve balance requirements. The decrease of $23.3 million was primarily attributable to reinvesting the proceeds in one of our securitizations prior to the end of the reinvestment period.

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Accrued Interest Receivable

The following table summarizes our accrued interest receivable at June 30, 2023 and December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022		Net Change
Accrued interest receivable from loans	$	12,602	$	11,936	$	666
Accrued interest receivable from promissory note, escrow, sweep and reserve accounts		13		33		(20	)
Total	$	12,615	$	11,969	$	646

The increase of $646,000 in accrued interest receivable was primarily attributable to rising benchmark rates.

Other Assets

The following table summarizes our other assets at June 30, 2023 and December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022		Net Change
Tax receivables and prepaid taxes	$	197	$	224	$	(27	)
Other receivables		355		1,086		(731	)
Other prepaid expenses		2,066		2,181		(115	)
Fixed assets - non real estate		328		326		2
Other assets, miscellaneous		605		547		58
Total	$	3,551	$	4,364	$	(813	)

The decrease of $813,000 in other assets was primarily attributable to receivables held at our real estate properties and miscellaneous receivables from our real estate properties acquired in 2022 and 2023 offset by the purchase of other assets at our real estate properties.

Deferred Tax Assets

At June 30, 2023 and December 31, 2022, our net deferred tax asset was zero, resulting from a full valuation allowance of $21.0 million and $21.2 million, respectively, on our deferred tax asset as we believed it was more likely than not that some or all of the deferred tax assets would not be realized. We will continue to evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing forecasted taxable income using both historical and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry back years (if permitted) and the availability of tax planning strategies.

Derivative Instruments

Historically, we sought to mitigate the potential impact on net income (loss) of adverse fluctuations in interest rates incurred on our borrowings by entering into hedging agreements. We classified our interest rate hedges as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability.

We terminated interest rate swap positions associated with our prior financed CMBS portfolio in April 2020. At termination, we realized a loss of $11.8 million. At June 30, 2023 and December 31, 2022, we had a loss of $5.8 million and $6.6 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During the three and six months ended June 30, 2023, we recorded amortization expense of $420,000 and $835,000, respectively, reported in interest expense on the consolidated statements of operations. During the three and six months ended June 30, 2022, we recorded amortization expense of $484,000 and $963,000, respectively, reported in interest expense on the consolidated statements of operations.

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At June 30, 2023 and December 31, 2022, we had unrealized gains of $210,000 and $256,000, respectively, attributable to two terminated interest rate swaps, in accumulated other comprehensive loss on the consolidated balance sheets, to be accreted into earnings over the remaining life of the debt. During both the three months ended June 30, 2023 and 2022, we recorded accretion income, reported in interest expense on the consolidated statements of operations, of $23,000, to accrete the accumulated other comprehensive income on the terminated swap agreements. During both the six months ended June 30, 2023 and 2022, we recorded accretion income, reported in interest expense on the consolidated statements of operations, of $45,000, to accrete the accumulated other comprehensive income on the terminated swap agreements.

The following tables present the effect of derivative instruments on our consolidated statements of operations for the six months ended June 30, 2023 and 2022 (in thousands):

		Realized and Unrealized Gain (Loss) (1)
	Consolidated Statements of Operations Location	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
Interest rate swap contracts, hedging	Interest expense	$	(790	)	$	(917	)

(1)Negative values indicate a decrease to the associated consolidated statement of operations line items.

Financing Arrangements

Borrowings under our senior secured financing facility, term warehouse financing facilities, mortgage payable and construction loans are guaranteed by us or one or more of our subsidiaries. The following table sets forth certain information with respect to our financing arrangements (dollars in thousands, except amounts in footnotes):

	June 30, 2023								December 31, 2022
	Outstanding Borrowings			Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	47,697		$	152,272		7	8.87%	$	87,890	$	196,837		8	7.94%
CRE - Term Warehouse Financing Facilities (2)
JPMorgan Chase Bank, N.A. (3)		118,569			185,862		8	7.73%		186,783		255,095		11	6.74%
Morgan Stanley Mortgage Capital Holdings LLC (4)		132,693			191,346		9	7.81%		141,505		198,455		10	7.00%
Mortgage Payable
Readycap Commercial, LLC (5)		18,492			25,400		1	8.95%		18,244		25,400		1	8.08%
Construction Loans
Oceanview Life and Annuity Company (6)		(1,922	)	N/A		N/A		—%		—		—		—	—%
Total	$	315,529		$	554,880				$	434,422	$	675,787

(1)Includes $3.3 million and $3.7 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(2)Outstanding borrowings include accrued interest payable.

(3)Includes $836,000 and $1.1 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(4)Includes $1.0 million and $1.4 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(5)Includes $362,000 and $466,000 of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(6)Includes $1.9 million of deferred debt issuance costs at June 30, 2023.

We were in compliance with all covenants in the respective agreements at June 30, 2023 and December 31, 2022.

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Senior Secured Financing Facility

In July 2020, an indirect, wholly-owned subsidiary of ours (“Holdings”), along with its direct wholly-owned subsidiary (the “Borrower”), entered into a $250.0 million loan and servicing agreement (the “MassMutual Loan Agreement”) with Massachusetts Mutual Life Insurance Company (“MassMutual”) and the other lenders party thereto (the “Lenders”) to form an asset-based revolving loan facility ("MassMutual Facility") to finance our core CRE lending business. The MassMutual Facility initially had an interest rate of 5.75% per annum payable monthly and initially matured on July 31, 2027.

In December 2022, Holdings, the Borrower and the Lenders entered into an Amended and Restated Loan and Servicing Agreement, which amends and restates the MassMutual Loan Agreement, and reflects a senior secured term loan facility, not to exceed $500.0 million, composed of individual loan series issued upon mutual agreement of the Borrower and Lenders. Each loan series will be available for three months after the closing date agreed upon by the Borrower and Lender (“Commitment Period”), subject to the maximum dollar amount agreed upon for that series. The Commitment Period is subject to immediate termination upon the occurrence of an event of default. Each loan series will have a final maturity of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the Lenders and Borrower. The advance rate on portfolio assets will be mutually agreed upon by the Lenders and Borrower. Each loan series will have its own mutually agreed upon interest rate equal to one-month Term SOFR plus the applicable spread.

CRE - Term Warehouse Financing Facilities

In April 2018, an indirect, wholly-owned subsidiary of ours entered into a master repurchase agreement (the “Barclays Facility”) with Barclays Bank PLC (“Barclays”) to finance the origination of CRE loans. In February 2022, such subsidiary entered into the Third Amendment to Master Repurchase Agreement (the “Barclays Amendment”) with Barclays, which amended the Barclays Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event. In October 2022, the Barclays Facility matured.

In October 2018, an indirect, wholly-owned subsidiary of ours entered into a master repurchase agreement (the “JPMorgan Chase Facility”) with JP Morgan Chase to finance the origination of CRE loans. At June 30, 2023, this facility has been amended five times to amend various terms. The JPMorgan Chase Facility has a maximum facility amount of $250.0 million, charges interest of one-month benchmark plus market spreads and had an initial maturity date of October 2024. In July 2023, this facility was amended to extend the maturity date to July 2026, as well as to extend the amendments to (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity and (iii) minimum unencumbered liquidity requirement, each through December 2024.

In November 2021, an indirect, wholly-owned subsidiary of ours entered into a master repurchase and securities contract agreement (the “Morgan Stanley Facility”) with Morgan Stanley Mortgage Capital Holdings LLC (“Morgan Stanley”) to finance the origination of CRE loans. At June 30, 2023, this facility has been amended two times to amend various terms. The Morgan Stanley Facility has a maximum facility amount of $250.0 million, charges interest of one-month Term SOFR plus market spreads and matures in November 2024. We also have the right to request a one-year extension.

Mortgage Payable

In April 2022, Chapel Drive West, LLC, a wholly owned subsidiary of Charles Street – ACRES FSU Student Venture, LLC entered into a Loan Agreement (the “Mortgage”) with Readycap Commercial, LLC (“Readycap”) to finance the acquisition of a student housing complex. The Mortgage is interest only and has a maximum principal balance of $20.4 million, of which, $18.7 million was advanced in the initial funding. The Mortgage charges interest of one-month Term SOFR plus a spread of 3.80% and matures in April 2025, subject to two one-year extension options.

The Mortgage contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

Construction Loans

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan"). The Construction Loan is interest only and has a maximum principal balance of $48.0 million. The Construction Loan charges one-month Term SOFR plus a spread of 6.00% and matures in February 2025, subject to three one-year extension options.

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In addition to the Construction Loan, Chapel Drive East, LLC, entered into a financing agreement with Florida Pace Funding Agency to fund energy efficient building improvements and has a maximum principal balance of $15.5 million. This agreement charges fixed interest of 7.26% and matures in July 2053. We do not guarantee this financing agreement.

In connection with our investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty and unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.

Securitizations

At June 30, 2023, we retained equity in two CRE loan securitizations that we executed, as follows:

ACR 2021-FL1

In May 2021, we closed ACR 2021-FL1, an $802.6 million CRE debt securitization transaction that provided financing for CRE loans. ACR 2021-FL1 included a reinvestment period, which ended in May 2023, that allowed it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. ACR 2021-FL1 issued a total of $675.2 million of non-recourse, floating-rate notes to third parties at par. We retained 100% of the Class F and Class G notes in addition to 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL1. All notes issued mature in June 2036, although we have the right to call the notes beginning on the payment date in May 2023 and thereafter. The non-recourse, floating-rate notes initially charged one-month Term LIBOR, but converted to one-month Term SOFR in June 2023.

ACR 2021-FL2

In December 2021, we closed ACR 2021-FL2, a CRE debt securitization transaction that can finance up to $700.0 million of CRE loans. ACR 2021-FL2 includes a reinvestment period, which ends in December 2023, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. The reinvestment period included a 180-day ramp-up acquisition period that allowed it to acquire CRE loans using unused proceeds from the issuance of the non-recourse floating-rate notes. ACR 2021-FL2 issued a total of $567.0 million of non-recourse, floating-rate notes to third parties at par. We retained 100% of the Class F and Class G notes in addition to 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL2. All notes issued mature in January 2037, although we have the right to call the notes beginning on the payment date in December 2023 and thereafter. The non-recourse, floating-rate notes initially charged one-month Term LIBOR, but converted to one-month Term SOFR in June 2023.

Corporate Debt

4.50% Convertible Senior Notes

We issued $143.8 million aggregate principal of our 4.50% Convertible Senior Notes in August 2017, of which $55.8 million was repurchased in 2021.

In February 2022, we repurchased $39.8 million of our 4.50% Convertible Senior Notes, resulting in a charge to earnings of $574,000, comprising an extinguishment of debt charge of $460,000 in connection with the acceleration of the market discount and interest expense of $114,000 in connection with the acceleration of deferred debt issuance costs. In August 2022, the remaining $48.2 million of the 4.50% Convertible Senior Notes were paid off upon maturity at par.

5.75% Senior Unsecured Notes Due 2026

On August 16, 2021, we issued $150.0 million of our 5.75% senior unsecured notes due 2026 (the “5.75% Senior Unsecured Notes”) pursuant to our Indenture, dated August 16, 2021 (the “Base Indenture”), between Wells Fargo, now Computershare Trust Company, N.A. (“CTC”), as trustee (the “Trustee”), and us as supplemented by the First Supplemental Indenture, dated August 16,

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2021, between Wells Fargo, now CTC, and us (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). Prior to May 15, 2026, we may at our option redeem the 5.75% Senior Unsecured Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (ii) a make-whole premium.

Unsecured Junior Subordinated Debentures

During 2006, we formed RCT I and RCT II for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. RCT I and RCT II are not consolidated into our consolidated financial statements because we are not deemed to be the primary beneficiary of these entities. In connection with the issuance and sale of the capital securities, we issued junior subordinated debentures to RCT I and RCT II of $25.8 million each, representing our maximum exposure to loss. The debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II were included in borrowings and were amortized into interest expense on the consolidated statements of operations using the effective yield method over a ten year period.

There were no unamortized debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II outstanding at June 30, 2023 and December 31, 2022. The interest rates for RCT I and RCT II, at June 30, 2023, were 9.49% and 9.25%, respectively. The interest rates for RCT I and RCT II, at December 31, 2022, were 8.68% and 8.36%, respectively.

Equity

Total equity at June 30, 2023 was $444.0 million and gave effect to $5.6 million of net unrealized losses on our terminated cash flow hedges, shown as a component of accumulated other comprehensive loss. Equity at December 31, 2022 was $441.3 million and gave effect to $6.4 million of net unrealized losses on our terminated cash flow hedges, shown as a component of accumulated other comprehensive loss. The increase in stockholders’ equity during the six months ended June 30, 2023 was primarily attributable to contributions from non-controlling interests, partially offset by distributions on our preferred stock in excess of earnings as well as common stock repurchases.

Balance Sheet - Book Value Reconciliation

The following table rolls forward our common stock book value for the three and six months ended June 30, 2023 (in thousands, except per share data and amounts in footnotes):

	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	Total Amount			Per Share Amount			Total Amount			Per Share Amount
Common stock book value at beginning of period (1)	$	207,263		$	24.51		$	208,976		$	24.54
Net income (loss) allocable to common shares (2)		817			0.10			(1,599	)		(0.19	)
Change in other comprehensive income on derivatives		397			0.05			790			0.09
Repurchase of common stock (3)		(1,200	)		0.25			(1,955	)		0.40
Net impact to equity of share-based compensation		783			(0.41	)		1,848			(0.34	)
Total net increase (decrease)		797			(0.01	)		(916	)		(0.04	)
Common stock book value at end of period (4)	$	208,060		$	24.50		$	208,060		$	24.50

(1)Per share calculations exclude unvested restricted stock, as disclosed on our consolidated balance sheets, of 416,675 and 583,333 shares at both June 30, 2023 and December 31, 2022, and include warrants to purchase up to 391,995 shares of common stock at June 30, 2023 and December 31, 2022, respectively. The denominators for the calculations were 8,492,915 and 8,516,762 shares at June 30, 2023 and December 31, 2022, respectively.

(2)The per share amounts are calculated with the denominator referenced in footnote (1) at June 30, 2023. We calculated net income (loss) per common share-diluted of $0.10 and $(0.19) using the weighted average diluted shares outstanding during the three and six months ended June 30, 2023, respectively.

(3)In November 2021, our Board authorized and approved the continued use of our existing share repurchase program to repurchase up to $20.0 million of our outstanding common stock. We purchased 1.3 million shares for $14.7 million through June 30, 2023. Because we repurchased our common stock at significant discounts to book value, these repurchases were accretive to per share book value since the inception of the program. For the three and six months ended June 30, 2023, $1.2 million and $2.0 million, respectively, or 135,000 and 215,000 shares, respectively, were repurchased under the reauthorized plan.

(4)We calculated common stock book value as total stockholders’ equity of $434.6 million less preferred stock equity of $226.5 million at June 30, 2023.

Management Agreement Equity

Our monthly base management fee, as defined in our Management Agreement, is equal to 1/12 of the amount of our equity multiplied by 1.50% and is calculated and paid monthly in arrears.

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The following table summarizes the calculation of equity, as defined in the Management Agreement (in thousands):

	Amount
At June 30, 2023:
Proceeds from capital stock issuances, net (1)	$	1,330,472
Retained earnings, net (2)		(651,502	)
Payments for repurchases of capital stock		(241,631	)
Total	$	437,339

(1)Deducts underwriting discounts and commissions and other expenses and costs relating to such issuances.

(2)Excludes non-cash equity compensation expense incurred to date.

Earnings Available for Distribution

Earnings Available for Distribution (“EAD”) is a non-GAAP financial measure intended to supplement our financial results computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and we believe EAD will serve as a useful indicator for investors in evaluating our performance and ability to pay dividends.

EAD excludes the effects of certain transactions and adjustments in accordance with GAAP that we believe are not necessarily indicative of our current CRE loan portfolio and other CRE-related investments and operations. EAD excludes income (loss) from all non-core assets such as commercial finance, middle market lending, residential mortgage lending, certain legacy CRE loans and other non-CRE assets designated as assets held for sale at the initial measurement date of December 31, 2016.

EAD, for reporting purposes, is defined as GAAP net income (loss) allocable to common shares, excluding (i) non-cash equity compensation expense, (ii) unrealized gains and losses, (iii) non-cash provisions for credit losses, (iv) non-cash impairments on securities, (v) non-cash amortization of discounts or premiums associated with borrowings, (vi) net income or loss from a limited partnership interest owned at the initial measurement date, (vii) net income or loss from non-core assets, (viii) real estate depreciation and amortization, (ix) foreign currency gains or losses and (x) income or loss from discontinued operations. EAD may also be adjusted periodically to exclude certain one-time events pursuant to changes in GAAP and certain non-cash items.

Although pursuant to the Management Agreement we calculate incentive compensation using EAD that excludes incentive compensation payable to our Manager, we include incentive compensation payable to our Manager in calculating EAD for reporting purposes.

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The following table provides a reconciliation from GAAP net income (loss) allocable to common shares to EAD allocable to common shares for the periods presented (in thousands, except per share data and amounts in the footnotes):

	For the Three Months Ended June 30,											For the Six Months Ended June 30,
	2023			Per Share Data		2022			Per Share Data			2023			Per Share Data			2022			Per Share Data
Net income (loss) allocable to common shares - GAAP	$	817		$	0.10	$	690		$	0.08		$	(1,599	)	$	(0.19	)	$	(2,081	)	$	(0.23	)
Reconciling items from continuing operations:
Non-cash equity compensation expense		719			0.08		991			0.11			1,613			0.19			1,735			0.19
Non-cash provision for (reversal of) CRE credit losses		2,700			0.31		524			0.06			7,796			0.90			(1,278	)		(0.14	)
Real estate depreciation and amortization		946			0.11		1,564			0.18			1,900			0.22			2,955			0.32
Non-cash amortization of discounts or premiums associated with borrowings		—			—		280			0.03			—			—			1,126			0.13
Net income from non-core assets (1)		(26	)		—		(76	)		(0.01	)		(52	)		—			(730	)		(0.08	)
Reconciling items from CRE assets:
Net interest income on legacy CRE assets (1)		—			—		—			—			—			—			(29	)		—
Earnings Available for Distribution allocable to common shares	$	5,156		$	0.60	$	3,973		$	0.45		$	9,658		$	1.12		$	1,698		$	0.19
Weighted average common shares - diluted on Earnings Available for Distribution allocable to common shares		8,535					8,914						8,618						8,992
Earnings Available for Distribution per common share - diluted	$	0.60				$	0.45					$	1.12					$	0.19

(1)Non-core assets are investments and securities owned by us at the initial measurement date in (i) commercial finance, (ii) middle market lending, (iii) residential mortgage lending, (iv) legacy CRE loans designated as held for sale and (v) other non-CRE assets included in assets held for sale.

For the three and six months ended June 30, 2023, EAD in accordance with the Management Agreement, which excludes incentive compensation payable, was $5.4 million and $10.0 million, respectively, or $0.63 and $1.17, respectively, per common share outstanding. Incentive compensation payable was $255,000 and $384,000 for the three and six months ended June 30, 2023, respectively.

Incentive Compensation Hurdle

Prior to the quarter ended December 31, 2022, in accordance with the Management Agreement, incentive compensation was earned by our Manager when our EAD (as defined in the Management Agreement) for such quarter exceeded an amount equal to: (1) the weighted average of (a) book value (as defined in the Management Agreement) as of the end of such quarter divided by 10,293,783 shares and (b) the price per share (including the conversion price, if applicable) paid for common shares in each offering (or issuance, upon the conversion of convertible securities) by us subsequent to September 30, 2017, in each case at the time of issuance, multiplied by (2) the greater of (a) 1.75% and (b) 0.4375% plus one-fourth of the ten year treasury rate, as defined in the Management Agreement, for such quarter (the “Incentive Compensation Hurdle”).

Commencing with the quarter ended December 31, 2022, incentive compensation was calculated and payable in arrears in an amount, not less than zero, equal to:

(i)for the first full calendar quarter ended December 31, 2022, the product of (a) 20% and (b) the excess of (i) our EAD (as defined in the Management Agreement) for such calendar quarter, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) as of the end of such calendar quarter, and (B) 7% per annum;

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(ii)for each of the second, third and fourth full calendar quarters following the calendar quarter ending December 31, 2022, the excess of (1) the product of (a) 20% and (b) the excess of (i) our EAD (as defined in the Management Agreement) for the calendar quarter(s) following September 30, 2022, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) in the calendar quarter(s) following September 30, 2022, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to our Manager with respect to the prior calendar quarter(s) following September 30, 2022 (other than the most recent calendar quarter); and

(iii)for each calendar quarter thereafter, the excess of (1) the product of (a) 20% and (b) the excess of (i) our EAD (as defined in the Management Agreement) for the previous 12-month period, over (ii) the product of (A) our book value equity (as defined in the Management Agreement) in the previous 12-month period, and (B) 7% per annum, over (2) the sum of any incentive compensation paid to our Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive compensation shall be payable with respect to any calendar quarter unless EAD (as defined in the Management Agreement) for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters from September 30, 2022) in the aggregate is greater than zero.

The following table summarizes the calculation of the Incentive Compensation Hurdle for the three months ended June 30, 2023 (dollars in thousands, except per share data):

Book Value Equity	Amount
Stockholders' equity less equity attributable to any outstanding preferred stock at September 30, 2022	$	216,026
Cumulative EAD from and after October 1, 2022 to the end of the most recently completed calendar quarter		15,601
Amount paid to repurchase common stock after October 1, 2022		(2,889	)
Incentive Compensation paid after October 1, 2022		(469	)
Book value equity at June 30, 2023	$	228,269
Incentive Compensation Hurdle (1)	$	11,984
Average closing price of 30 day period ending three days prior to issuance date	$	8.95

(1)Calculated as book value equity at June 30, 2023 multiplied by 7% per annum.

The amount by which EAD (as defined in the Management Agreement) for the calendar quarters following September 30, 2022 exceeds the Incentive Compensation Hurdle is multiplied by 20% to arrive at incentive compensation for the quarter.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to pay dividends, fund investments, repay borrowings and provide for other general business needs, including payment of our base management fee and incentive compensation. Our ability to meet our on-going liquidity needs is subject to our ability to generate cash from operating activities, which was $24.5 million for the six months ended June 30, 2023, and our ability to maintain and/or obtain additional debt financing and equity capital together with the funds referred to below.

During the six months ended June 30, 2023, our principal sources of liquidity were: (i) gross proceeds of $95.0 million from CRE whole loan purchases by our managed CRE securitization ACR 2021-FL1, (ii) net proceeds of $30.6 million from repayments on our CRE portfolio, (iii) gross proceeds of $14.3 million from the sale of a real estate property, (iv) proceeds of $12.3 million from the purchase of loan advances by our managed CRE securitizations ACR 2021-FL1 and ACR 2021-FL2 and, (v) gross proceeds of $12.1 million from our CRE - term financing facilities. These sources of liquidity were offset by our paydowns on our senior secured and term warehouse facilities, deployments in CRE whole loans and real estate investments, repurchases of common stock, distributions on our preferred stock and ongoing operating expenses and substantially resulted in the $57.1 million of unrestricted cash we held at June 30, 2023.

The outstanding balance of our loan to ACRES Capital Corp., the parent of our Manager, was $11.1 million and $11.3 million at June 30, 2023 and December 31, 2022, respectively. The note bears interest at 3.00% per annum, payable monthly, and matures in July 2026, subject to two one-year extensions, at ACRES Capital Corp.’s option, and amortizes at a rate of $25,000 per month.

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We utilize a variety of financing arrangements to finance certain assets. We generally utilize the following five types of financing arrangements:

1.Senior Secured Financing Facility: Our senior secured financing facility allows us to borrow against loans and real estate investments that we own. This facility has an individual floating rate loan series structure that have a three month commitment period after the financing is approved by the lender, subject to the maximum dollar amount agreed upon for the series. Each floating rate loan series will have mutually agreed upon terms including (i) total commitment, including the capacity to fund future funding commitments, where applicable; (ii) advance rate on portfolio assets; (iii) interest rate composed of one-month Term SOFR plus a market rate spread; and (iv) maturity date of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the parties. The facility has a maximum portfolio LTV of 85% and contains customary events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement.

2.Term Warehouse Financing Facilities (CRE loans): Term warehouse financing facilities effectively allow us to borrow against loans that we own. Under these agreements, we transfer loans to a counterparty and agree to purchase the same loans from the counterparty at a price equal to the transfer price plus interest. The counterparty retains the sole discretion over both whether to purchase the loan from us and, subject to certain conditions, the collateral value of such loan for purposes of determining whether we are required to pay margin to the counterparty. Generally, if the lender determines (subject to certain conditions) that the value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, we would be required to repay any amounts borrowed in excess of the product of (i) the revised collateral or market value multiplied by (ii) the applicable advance rate. During the term of these agreements, we receive the principal and interest on the related loans and pay interest to the counterparty.

3.Securitizations: We seek non-recourse long-term financing from securitizations of our investments in CRE loans. The securitizations generally involve a senior portion of our loan but may involve the entire loan. Securitization generally involves transferring notes to a special purpose vehicle (or the issuing entity), which then issues one or more classes of non-recourse notes pursuant to the terms of an indenture. The notes are secured by the pool of assets. In exchange for the transfer of assets to the issuing entity, we receive cash proceeds from the sale of non-recourse notes. Securitizations of our portfolio investments might magnify our exposure to losses on those portfolio investments because the retained subordinate interest in any particular overall loan would be subordinate to the loan components sold and we would, therefore, absorb all losses sustained with respect to the overall loan before the owners of the senior notes experience any losses with respect to the loan in question.

4.Mortgage payable: We have entered into a loan agreement to finance the acquisition of a student housing complex. This loan is interest only and has a maximum principal balance, most of which was advanced in the initial funding. The loan agreement contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

5.Construction loans: We have entered into a construction loan agreement to finance the construction of a student housing complex. This loan is interest only and has a maximum principal balance of $48.0 million. The loan agreement contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction. Additionally, we have entered into a financing agreement to fund energy efficient building improvements at this student housing complex, with a maximum principal balance of $15.5 million.

The issuances of ACR 2021-FL1 and ACR 2021-FL2 included 24-month reinvestment periods ending in May 2023 and December 2023, respectively, that allowed us to reinvest CRE loan payoffs and paydowns into the securitizations upon the satisfaction of certain eligibility and reinvestment criteria along with rating agency approval. The reinvestment features of the securitizations allowed us to extend the securitizations’ financing capabilities at attractive weighted-average rates by increasing the useful lives of the senior notes through the reinvestment of loan proceeds into new loans. We were also able to acquire future funding participations of the collateral in the securitizations during the reinvestment period.

We were in compliance with all of our covenants at June 30, 2023 in accordance with the terms provided in agreements with our lenders.

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At June 30, 2023, we had a senior secured financing facility, term warehouse financing facilities, mortgage payable and construction loans as summarized below (in thousands, except amounts in footnotes):

	Execution Date	Maturity Date	Maximum Capacity		Facility Principal Outstanding		Availability
Senior Secured Financing Facility (1)
Massachusetts Mutual Life Insurance Company	July 2020	December 2027	$	500,000	$	50,995	$	449,005
CRE - Term Warehouse Financing Facilities (2)
JPMorgan Chase Bank, N.A.	October 2018	October 2024		250,000		119,021		130,979
Morgan Stanley Mortgage Capital Holdings LLC	November 2021	November 2024		250,000		133,437		116,563
Mortgage Payable (3)
Readycap Commercial, LLC	April 2022	April 2025		20,375		18,854		1,521
Construction Loans (4)
Oceanview Life and Annuity Company	January 2023	February 2025		48,000		—		48,000
Florida Pace Funding Agency	January 2023	January 2053		15,500		—		15,500
Total					$	322,307

(1)Facility principal outstanding excludes deferred debt issuance costs of $3.3 million at June 30, 2023. In December 2022, we amended the previous revolving fixed rate credit facility to a floating rate term loan series structure. Each loan series will have a maturity date of five years from the issuance date for the loan series.

(2)Facilities principal outstanding excludes accrued interest payable of $673,000 and deferred debt issuance costs of $1.9 million at June 30, 2023. In July 2023, we extended the maturity of the JPMorgan facility to July 2026.

(3)Mortgage payable excludes deferred debt issuance costs of $362,000 at June 30, 2023.

(4)Facility principal outstanding excludes deferred debt issuance costs of $1.9 million at June 30, 2023.

The following table summarizes the average principal outstanding during the three months ended June 30, 2023 and December 31, 2022 and the principal outstanding on our financing arrangements at June 30, 2023 and December 31, 2022 (in thousands, except amounts in footnotes):

	Three Months Ended June 30, 2023		June 30, 2023		Three Months Ended December 31, 2022		December 31, 2022
	Average Principal Outstanding		Principal Outstanding (1)(2)		Average Principal Outstanding		Principal Outstanding (1)(2)
Financing Arrangement
Senior secured financing facility	$	53,054	$	50,995	$	88,795	$	91,549
Term warehouse financing facilities - CRE loans		273,931		252,458		359,829		329,955
Total	$	326,985	$	303,453	$	448,624	$	421,504

(1)Excludes accrued interest payable on the senior secured financing facility collateralized by CRE loans and investments in real estate of $214,000 and $202,000 at June 30, 2023 and December 31, 2022, respectively. Also excludes deferred debt issuance costs on the senior secured financing facility of $3.3 million and $3.7 million at June 30, 2023 and December 31, 2022, respectively.

(2)Excludes accrued interest payable on term warehouse financing facilities collateralized by CRE loans of $673,000 and $894,000 and deferred debt issuance costs of $1.9 million and $2.6 million at June 30, 2023 and December 31, 2022, respectively.

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The following table summarizes the maximum month-end principal outstanding on our financing arrangements during the periods presented (in thousands):

	Maximum Month-End Principal Outstanding During the
	Six Months Ended June 30, 2023		Year Ended December 31, 2022
Financing Arrangement
Senior secured financing facility	$	63,314	$	94,549
Term warehouse financing facilities - CRE loans		333,834		392,716

Historically, we have financed the acquisition of our investments through collateralized debt obligations ("CDO") and securitizations that essentially match the maturity and repricing dates of these financing vehicles with the maturities and repricing dates of our investments. In the past, we have derived substantial operating cash from our equity investments in our CDOs and securitizations, which will cease if the CDOs and securitizations fail to meet certain tests. Through June 30, 2023, we did not experience difficulty in maintaining our existing CDO and securitization financing and passed all of the critical tests required by these financings.

The following table sets forth the distributions received by us and coverage test summaries for our active securitizations for the periods presented (in thousands, except amount in the footnotes):

	Cash Distributions				Overcollateralization Cushion (1)				Annualized Interest Coverage Cushion (2)(3)
Name	For the Six Months Ended June 30, 2023		For the Year Ended December 31, 2022		At June 30, 2023		At the Initial Measurement Date		At June 30, 2023		Reinvestment Period End (4)
ACR 2021-FL1	$	12,310	$	21,141	$	6,961	$	6,758	$	20,922	May 2023
ACR 2021-FL2		9,541		14,537		5,652		5,652		15,437	December 2023

(1)Overcollateralization cushion represents the amount by which the collateral held by the securitization issuer exceeds the minimum amount required.

(2)Interest coverage includes annualized amounts based on the most recent trustee statements.

(3)Interest coverage cushion represents the amount by which annualized interest income expected exceeds the annualized amount payable on our active securitizations.

(4)The reinvestment period is the period in which principal proceeds received before the end of the period may be used to acquire CRE loans or the funded commitments of existing collateral for reinvestment into the securitization.

The following table sets forth the distributions received by us and liquidation details for our liquidated securitizations for the periods presented (in thousands):

	Cash Distributions				Liquidation Details
Name	For the Six Months Ended June 30, 2023		For the Year Ended December 31, 2022		Liquidation Date	Remaining Assets at the Liquidation Date (1)
XAN 2020-RSO9 (2)	$	—	$	14,308	February 2022	$	111,335
XAN 2020-RSO8		—		1,628	March 2022		171,225

(1)The remaining assets at the liquidation date were distributed to us in exchange for our notes owned and preference shares in the respective securitization.

(2)Cash distributions for the year ended December 31, 2022 included a principal distribution on our preference share at liquidation of $13.5 million for XAN 2020-RSO9.

At June 30, 2023, our liquidity consisted of $57.1 million of unrestricted cash and cash equivalents, $14.0 million of reinvestment cash at our CRE securitizations and $20.1 million of unlevered financeable CRE loans.

Our leverage ratio, defined as the ratio of borrowings to total equity, may vary as a result of the various funding strategies we use. At June 30, 2023 and December 31, 2022, our leverage ratio was 3.9 and 4.2 times, respectively. The leverage ratio decreased during the period due to the net decrease in borrowings in combination with a net increase to total equity.

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Net Operating Losses and Loss Carryforwards

The following table sets forth the net operating losses and loss carryforwards for the periods presented (in millions):

	Tax Year Recognized	REIT (QRS) Tax Loss Carryforwards				TRS Tax Loss Carryforwards
Tax Asset Item		Operating		Capital		Operating		Capital
Net Operating Loss Carryforwards:
Cumulative as of 2021	2021 Return	$	46.6	$	—	$	60.1	$	—
Estimated - realized in 2023	2022 Return		—		—		0.1		—
Estimated - generated in 2023	2023 Return		—		—		0.8		—
Net Capital Loss Carryforwards:
Cumulative as of 2021	2021 Return		—		121.9		—		1.0
Total tax asset estimates		$	46.6	$	121.9	$	61.0	$	1.0
Useful life		Unlimited		5 years		Various		5 years

During the year ended December 31, 2021, we generated $1.1 million of taxable income which was offset by our cumulative net operating losses (“NOL”), leaving $46.6 million to carry forward to future years. NOL can generally be carried forward to offset both ordinary taxable income and capital gains in future years. The Tax Cuts and Jobs Act (“TCJA”) along with revisions made by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act reduced the deduction for NOLs to 80% of taxable income and granted an indefinite carryforward period.

Additionally, $15.0 million of net capital gains was reported on our tax return for the year ended December 31, 2021. This was offset with our cumulative total net capital losses, leaving $121.9 million to carry forward to future years. No capital losses expired during 2022 or 2021.

We also have tax assets in our taxable REIT subsidiaries (“TRS”). These tax assets are analyzed and disclosed quarterly in our financial statements. At June 30, 2023, our TRSs have $39.8 million of pre-TCJA NOLs, some of which are set to expire beginning in 2044, $21.2 million of NOLs with an indefinite carryforward period and $1.0 million of net capital losses.

Distributions

We did not pay distributions on our common shares during the six months ended June 30, 2023 as we were focused on prudently retaining and managing sufficient liquidity. As a result of losses during 2020, we received significant NOL carryforwards and net capital loss carryforwards, as finalized in our 2020 tax return. We intend to retain taxable income by utilizing our NOL carryforwards and expect to generate capital gains to use a portion of our net capital loss carryforwards, thereby growing book value and our investable equity base. As we continue to take steps necessary to stabilize our earnings available for distribution, our Board will establish a plan for the prudent resumption of the payment of common share distributions. No assurance, however, can be given as to the amounts or timing of future distributions as such distributions are subject to our earnings, financial condition, capital requirements and such other factors as our Board deems relevant.

We intend to continue to make regular quarterly distributions to holders of our preferred stock.

U.S. federal income tax law generally requires that a REIT distribute at least 90% of its REIT taxable income annually, determined without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating and debt service requirements on our repurchase agreements and other debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets or borrow funds to make cash distributions, or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

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Contractual Obligations and Commitments

	Contractual Commitments
	(dollars in thousands, except amounts in footnotes)
	Payments due by Period
	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
At June 30, 2023:
CRE securitizations	$	1,241,372	$	—	$	—	$	—	$	1,241,372
Senior secured financing facility (1)		50,995		—		—		50,995		—
CRE - term warehouse financing facilities (2)		253,131		—		253,131		—		—
Mortgage payable (3)		18,854		—		18,854		—		—
5.75% Senior Unsecured Notes (4)		150,000		—		—		150,000		—
Unsecured junior subordinated debentures (5)		51,548		—		—		—		51,548
Lease liabilities (6)		855,337		1,608		5,572		6,088		842,069
Unfunded commitments on CRE loans (7)		128,749		31,154		97,595		—		—
Unfunded commitments on construction loan (8)		4,055		4,055		—		—		—
Base management fees (9)		6,560		6,560		—		—		—
Total	$	2,760,601	$	43,377	$	375,152	$	207,083	$	2,134,989

(1)Excludes $214,000 of accrued interest payable.

(2)Includes $673,000 of accrued interest payable. In July 2023, we extended the JPMorgan Chase Facility to July 2026.

(3)Excludes $94,000 of accrued interest payable.

(4)Excludes $30.2 million of interest expense payable through maturity in August 2026.

(5)Excludes $25.4 million and $26.4 million of estimated interest expense payable through maturity, in June 2036 and October 2036, respectively.

(6)Lease liabilities includes a ground rent lease for a hotel property with a term of 93 years and an annual growth rate of 3%.

(7)Unfunded commitments on our originated CRE loans generally fall into two categories: (i) pre-approved capital improvement projects and (ii) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, we would receive additional interest income on the advanced amount. At June 30, 2023, we had unfunded commitments on 57 CRE whole loans.

(8)In July 2023, we fully funded our commitment on the construction loan.

(9)Base management fees presented are based on an estimate of base management fees payable to our Manager over the next 12 months. Our Management Agreement also provides for an incentive compensation arrangement that is based on operating performance. The incentive compensation is not a fixed and determinable amount, and therefore it is not included in this table.

Off-Balance Sheet Arrangements

General

At June 30, 2023, we did not maintain any relationships with unconsolidated entities or financial partnerships that were established for the purpose of facilitating off-balance sheet arrangements or contractually narrow or limited purposes, although we do have interests in unconsolidated entities not established for those purposes. Except as set forth below, at June 30, 2023, we had not guaranteed obligations of any unconsolidated entities or entered into any commitment or letter of intent to provide additional funding to any such entities.

Unfunded Commitments

In the ordinary course of business, we make commitments to borrowers whose loans are in our CRE loan portfolio to provide additional loan funding in the future. Disbursement of funds pursuant to these commitments is subject to the borrower meeting pre-specified criteria. These commitments are subject to the same underwriting requirements and ongoing portfolio maintenance as are the on-balance sheet financial investments that we hold. Since these commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively. Unfunded commitments are not considered in the CECL reserve if they are unconditionally cancellable.

Additionally, we and our JV partner have commitments related to our construction of a student housing complex. We and our JV partner committed to a total funding of $31.2 million, of which $4.1 million was unfunded at June 30, 2023.

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Guarantees and Indemnifications

In the ordinary course of business, we may provide guarantees and indemnifications that contingently obligate us to make payments to the guaranteed or indemnified party based on changes in the value of an asset, liability or equity security of the guaranteed or indemnified party. As such, we may be obligated to make payments to a guaranteed party based on another entity’s failure to perform or achieve specified performance criteria, or we may have an indirect guarantee of the indebtedness of others.

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan").

In connection with our investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty and unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 30, 2023, the primary components of our market risk were credit risk, counterparty risk, financing risk, and interest rate risk, as described below. While we do not seek to avoid risk completely, we do seek to assume risk that can be quantified from historical experience, to actively manage that risk, to earn sufficient compensation to justify assuming that risk and to maintain capital levels consistent with the risk we undertake or to which we are exposed.

Credit Risks

Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the sponsors’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, ACRES Capital, LLC’s asset management team reviews our investment portfolios and in certain instances is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

In addition, we are exposed to the risks generally associated with the commercial real estate (“CRE”) market, including variances in occupancy rates, capitalization rates, absorption rates, and other macroeconomic factors beyond our control. We seek to manage these risks through our underwriting and asset management processes.

In a business environment where benchmark interest rates are increasing significantly, cash flows of the CRE assets underlying our loans may not be sufficient to pay debt service on our loans, which could result in non-performance or default. We partially mitigate this risk by generally requiring our borrowers to purchase interest rate cap agreements with non-affiliated, well-capitalized third parties and by selectively requiring our borrowers to have and maintain debt service reserves. These interest rate caps generally mature prior to the maturity date of the loan and the borrowers are required to pay to extend them. In most cases the sponsors will need to fund additional equity into the properties to cover these costs as the property may not generate sufficient cash flow to pay these costs. At June 30, 2023, 94.5% of the par value of our CRE loan portfolio had interest rate caps in place with a weighted-average maturity of nine months.

These macroeconomic conditions may persist into the future and impair our borrowers’ ability to comply with the terms under our loan agreements. We maintain a robust asset management relationship with our borrowers and have utilized these relationships to address the rising interest rates, lingering impacts of the COVID-19 pandemic, and other macroeconomic factors on our loans secured by properties experiencing cash flow pressure. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments. In order to mitigate that risk, we have proactively engaged with our borrowers, particularly with those with near-term maturities, in order to maximize recovery.

Counterparty Risk

The nature of our business requires us to hold our cash and cash equivalents and obtain financing from with various financial institutions. This exposes us to the risk that these financial institutions may not fulfill their obligations to us under these various contractual arrangements. We mitigate this exposure by depositing our cash and cash equivalents and entering into financing agreements with high credit-quality institutions.

Financing Risk

We finance our target assets using our CRE debt securitizations, a senior secured financing facility and warehouse financing facilities. Over time, as market conditions change, we may use other forms of leverage in addition to these methods of financing. Weakness or volatility in the financial markets, the CRE and mortgage markets or the economy generally could adversely affect one or more of our lenders or potential lenders and could cause one or more of our lenders or potential lenders to be unwilling or unable to provide us with financing, or to decrease the amount of our available financing, or to increase the costs of that financing.

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Interest Rate Risk

Our business model is such that rising interest rates will increase our net income, while declining interest rates will decrease net income, subject to the impact of interest rate floors. At June 30, 2023, 99.8% of our CRE loan portfolio by par value earned a floating rate of interest and may be financed with liabilities that both pay interest at floating rates and that are fixed. Floating-rate loans financed with fixed rate liabilities have a negative correlation with declining interest rates to the extent of our financing. The remaining 0.2% of our CRE loan portfolio by par value earned a fixed rate of interest. To the extent that interest rate floors on our floating-rate CRE loans are in the money, our net interest will have a negative correlation with rising interest rates to the extent of those interest rate floors. Our floating-rate loan portfolio of $2.0 billion had a weighted-average benchmark floor of 0.68% at June 30, 2023.

The following table estimates the hypothetical impact on our net interest income assuming an immediate increase or decrease of 100 basis points in the applicable interest rate benchmark (in thousands, except per share data):

		Three Months Ended June 30, 2023
At June 30, 2023		100 Basis Point Decrease (4)						100 Basis Point Increase
Net Assets Subject to Interest Rate Sensitivity (1)(2)(3)		Decrease to Net Interest Income			Decrease to Net Interest Income Per Share			Increase to Net Interest Income		Increase to Net Interest Income Per Share
$	371,949	$	(924	)	$	(0.11	)	$	943	$	0.11

(1)Includes our floating-rate CRE loans at June 30, 2023.

(2)Includes amounts outstanding on our securitizations, CRE term warehouse financing facilities, senior secured financing facility and unsecured junior subordinated debentures.

(3)Certain of our floating rate loans are subject to a benchmark floor.

(4)Decrease in rates assumes the applicable benchmark rate does not fall below 0%.

Risk Management

To the extent consistent with maintaining our status as a REIT, we seek to manage our interest rate risk exposure to protect our variable rate debt against the effects of major interest rate changes. We generally seek to manage our interest rate risk by monitoring and adjusting, if necessary, the reset index and interest rate related to our borrowings.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

We may become involved in litigation on various matters due to the nature of our business activities. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against us as well as monetary payments or other agreements and obligations. In addition, we may enter into settlements on certain matters in order to avoid the additional costs of engaging in litigation. Except as discussed below, we are unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at June 30, 2023.

Our subsidiary, Primary Capital Mortgage, LLC (“PCM”), is subject to potential litigation related to claims for repurchases or indemnifications on loans that PCM has sold to third parties. At June 30, 2023 and December 31, 2022, no such litigation demand was outstanding. Reserves for such litigation demands are included in the reserve for mortgage repurchases and indemnifications that totaled $1.1 million and $1.2 million at June 30, 2023 and December 31, 2022, respectively. The reserves for mortgage repurchases and indemnifications are included in liabilities held for sale on the consolidated balance sheets. At June 30, 2023, we have substantially completed disposing of PCM’s business.

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”), except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

In March 2016, our Board approved our securities repurchase program. In November 2020, our Board authorized and approved the continued use of our existing share repurchase program in order to repurchase up to $20.0 million of our outstanding shares of common stock. In July 2021, the authorized amount was fully utilized and in November 2021, our Board authorized and approved the continued use of our existing share repurchase program to repurchase an additional $20.0 million of our outstanding common stock.

The following table presents information about our common stock repurchases made during the six months ended June 30, 2023 in accordance with our repurchase program (dollars in thousands, except per share data):

	Common Stock
	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs
January 19, 2023 - January 31, 2023		9,822	$	9.78		9,822	$	7,121
February 1, 2023 - February 28, 2023		24,754		9.48		24,754		6,887
March 1, 2023 - March 31, 2023		45,168		9.39		45,168		6,464
April 3, 2023 - April 28, 2023		45,645		9.48		45,645		6,032
May 1, 2023 - May 31, 2023		62,001		8.61		62,001		5,499
June 1, 2023 - June 30, 2023		27,770		8.41		27,770		5,266

(1)The average price paid per share as reflected above includes broker fees and commissions.

ITEM 5. OTHER INFORMATION

During the three months ended June 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 6. EXHIBITS

Exhibit No.	Description
2.1	Asset Purchase Agreement, dated June 6, 2017, by and among Stearns Lending, LLC, Primary Capital Mortgage, LLC, and Resource Capital Corp. (10)
3.1(a)	Amended and Restated Articles of Incorporation of Resource Capital Corp. (1)
3.1(b)	Articles of Amendment to Restated Certificate of Incorporation of Resource Capital Corp. (9)
3.1(c)	Articles Supplementary 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (7)
3.1(d)	Articles Supplementary 7.875% Series D Cumulative Redeemable Preferred Stock, as corrected. (24)
3.1(e)	Articles of Amendment, effective May 25, 2018. (12)
3.1(f)	Articles of Amendment, effective February 16, 2021. (21)
3.1(g)	Articles of Amendment, effective May 28, 2021. (25)
3.2	Fourth Amended and Restated Bylaws of ACRES Commercial Realty Corp. (21)
4.1(a)	Form of Certificate for Common Stock for Resource Capital Corp. (1)
4.1(b)	Form of Certificate for 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock. (7)
4.1(c)	Form of Certificate for 7.875% Series D Cumulative Redeemable Preferred Stock. (24)
4.2(a)	Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated May 25, 2006. (2)
4.2(b)	Amendment to Junior Subordinated Indenture and Junior Subordinated Note due 2036 between Resource Capital Corp. and Wells Fargo Bank, N.A., dated October 26, 2009 and effective September 30, 2009. (6)
4.3(a)	Amended and Restated Trust Agreement among Resource Capital Corp., Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative Trustees named therein, dated May 25, 2006. (2)
4.3(b)	Amendment to Amended and Restated Trust Agreement and Preferred Securities Certificate among Resource Capital Corp., Wells Fargo Bank, N.A. and the Administrative Trustees named therein, dated October 26, 2009 and effective September 30, 2009. (6)
4.4	Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (6)
4.5(a)	Junior Subordinated Indenture between Resource Capital Corp. and Wells Fargo Bank, N.A., dated September 29, 2006. (3)
4.5(b)	Amendment to Junior Subordinated Indenture and Junior Subordinated Note due 2036 between Resource Capital Corp. and Wells Fargo Bank, N.A., dated October 26, 2009 and effective September 30, 2009. (6)
4.6(a)	Amended and Restated Trust Agreement among Resource Capital Corp., Wells Fargo Bank, N.A., Wells Fargo Delaware Trust Company and the Administrative Trustees named therein, dated September 29, 2006. (3)
4.6(b)	Amendment to Amended and Restated Trust Agreement and Preferred Securities Certificate among Resource Capital Corp., Wells Fargo Bank, N.A. and the Administrative Trustees named therein, dated October 26, 2009 and effective September 30, 2009. (6)
4.7	Junior Subordinated Note due 2036 in the principal amount of $25,774,000, dated October 26, 2009. (6)
4.8	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. (35)
4.9(a)	Base Indenture, dated August 16, 2021, between the Company and the Trustee. (28)
4.9(b)	First Supplemental Indenture, dated August 16, 2021, between the Company and the Trustee. (28)
4.9(c)	Form of 5.75% Senior Note due 2026 (included in Exhibit 4.9(b)).
10.1(a)	Fourth Amended and Restated Management Agreement, dated as of July 31, 2020, by and among Exantas Capital Corp., ACRES Capital, LLC and ACRES Capital Corp. (16)
10.1(b)	First Amendment to Fourth Amended and Restated Management Agreement, dated as of February 16, 2021, by and among ACRES Commercial Realty Corp. f/k/a Exantas Capital Corp., ACRES Capital, LLC and ACRES Capital Corp. (22)
10.1(c)	Second Amendment to Fourth Amended and Restated Management Agreement, dated as of May 6, 2022, by and among ACRES Commercial Realty Corp. f/k/a Exantas Capital Corp., ACRES Capital, LLC and ACRES Capital Corp. (36)
10.2(a)	Second Amended and Restated Omnibus Equity Compensation Plan. (14)
10.2(b)	Amendment No. 1 to the Exantas Capital Corp. Second Amended and Restated Omnibus Equity Compensation Plan. (17)
10.2(c)	Third Amended and Restated Omnibus Equity Compensation Plan. (23)
10.2(d)	Form of Stock Award Agreement. (8)
10.2(e)	Form of Stock Award Agreement (for employees with Resource America, Inc. employment agreements). (8)
10.3	Form of Indemnification Agreement. (11)
10.4(a)	Loan and Servicing Agreement, dated as of July 31, 2020, among RCC Real Estate SPE Holdings LLC, as Holdings, RCC Real Estate SPE 9 LLC, as the Borrower, Massachusetts Mutual Life Insurance Company and the other Lenders from time to time party thereto, Wells Fargo Bank, National Association, as the Administrative Agent, Massachusetts Mutual Life Insurance Company, as the Facility Servicer, ACRES Capital Servicing LLC, as the Portfolio Asset Servicer, and Wells Fargo Bank, National Association, as the Collateral Custodian. (16)
10.4(b)	First Amendment to Loan and Servicing Agreement, dated as of September 16, 2020, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association, as the Administrative Agent. (18)

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10.4(c)	Second Amendment to Loan and Servicing Agreement, dated as of May 25, 2021, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (27)
10.4(d)	Third Amendment to Loan and Servicing Agreement, dated as of August 16, 2021, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent.(33)
10.4(e)	Fourth Amendment to Loan and Servicing Agreement, dated as of April 12, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (36)
10.4(f)	Fifth Amendment to Loan and Servicing Agreement, dated as of July 26, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (37)
10.4(g)	Sixth Amendment to Loan and Servicing Agreement, dated as of August 29, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, the Lenders party thereto and Massachusetts Mutual Life Insurance Company and Wells Fargo Bank, National Association as the Administrative Agent. (38)
10.4(h)	Guaranty, dated as of July 31, 2020, by Exantas Capital Corp., and each of Exantas Real Estate Funding 2018-RSO6 Investor, LLC, Exantas Real Estate Funding 2019-RSO7 Investor, LLC, and Exantas Real Estate Funding 2020-RSO8 Investor, LLC, in favor of the Secured Parties. (16)
10.4(i)	Amended and Restated Loan and Servicing Agreement, dated as of December 22, 2022, among RCC Real Estate SPE Holdings LLC, RCC Real Estate SPE 9 LLC, Plymouth Meeting Holdings, LLC, Exantas Phili Holdings, LLC, ACRES Real Estate TRS 9 LLC, Massachusetts Mutual Life Insurance Company and ACRES Capital Servicing. (40)
10.4(j)	Guaranty, dated May 25, 2021 between Exantas Phili Holdings, LLC in favor of the Secured Parties. (36)
10.4(k)	Guaranty, dated May 25, 2021 between 65 E. Wacker Holdings, LLC in favor of the Secured Parties. (36)
10.4(l)	Guaranty, dated May 25, 2021 between Plymouth Meeting Holdings, LLC in favor of the Secured Parties. (36)
10.4(m)	Pledge and Guaranty Agreement, dated August 16, 2021 between ACRES Real Estate TRS 9 LLC in favor of the Secured Parties. (36)
10.4(n)	Guaranty, dated April 12, 2022 between Appleton Hotel Holdings, LLC and Appleton Hotel Leasing, LLC in favor of the Secured Parties. (36)
10.5(a)	Note and Warrant Purchase Agreement, dated as of July 31, 2020, by and among Exantas Capital Corp. and the Purchasers signatory thereto. (16)
10.5(b)	Agreement between the Company, OCM XAN Holdings PT, LLC and the Massachusetts Mutual Life Insurance Company, dated August 18, 2021. (29)
10.5(c)	Amendment No. 1 to Note and Warrant Purchase Agreement, dated January 31, 2022, between ACRES Commercial Realty Corp. and the Purchasers signatory thereto. (34)
10.6	Promissory Note, dated as of July 31, 2020, issued by ACRES Capital Corp. to RCC Real Estate, Inc. (16)
10.7(a)	Manager Incentive Plan. (23)
10.7(b)	Form of Stock Award Agreement Under the Manager Incentive Plan. (26)
10.8	Equity Distribution Agreement, dated October 4, 2021, by and among ACRES Commercial Realty Corp., ACRES Capital, LLC and JonesTrading Institutional Services LLC. (31)
10.9(a)	Building Loan Agreement, dated as of January 24, 2023 between Chapel Drive East, LLC and Oceanview Life and Annuity Company. (42)
10.9(b)	Guaranty Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. for the benefit of Oceanview Life and Annuity Company. (39)
10.9(c)	Completion Guaranty Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. for the benefit of Oceanview Life and Annuity Company. (39)
10.9(d)	Carry Guaranty Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. for the benefit of Oceanview Life and Annuity Company. (39)
10.9(e)	Environmental Indemnity Agreement executed January 24, 2023 by Jason Pollack, Frank Dellaglio and ACRES Realty Funding, Inc. in favor of Oceanview Life and Annuity Company. (39)
31.1	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Financial Officer.
32.1	Certification Pursuant to 18 U.S.C. Section 1350.
32.2	Certification Pursuant to 18 U.S.C. Section 1350.
99.1(a)	Master Repurchase Agreement for $250,000,000 between RCC Real Estate SPE 8, LLC, as Seller, and JPMorgan Chase Bank, National Association, as Buyer, dated October 26, 2018. (13)
99.1(b)	First Amendment to Uncommitted Master Repurchase Agreement dated as of August 14, 2020 between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (20)
99.1(c)	Amendment No. 2 to Master Repurchase Agreement, dated September 1, 2021 between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (30)
99.1(d)	Amendment No. 3 to Master Repurchase Agreement and Guarantee Agreement, dated October 26, 2021 between RCC Real Estate SPE 8, LLC, JPMorgan Chase Bank, National Association and ACRES Commercial Realty Corp., as guarantor (32)

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99.1(e)	Amendment No. 4 to Master Repurchase Agreement, dated July 21, 2023, between RCC Real Estate SPE 8, LLC and JPMorgan Chase Bank, National Association. (43)
99.1(f)	Guarantee made by Exantas Capital Corp., as guarantor, in favor of JPMorgan Chase Bank, National Association, dated October 26, 2018. (13)
99.1(g)	First Amendment to Guarantee Agreement, dated May 6, 2020, between Exantas Capital Corp. and JPMorgan Chase Bank, National Association. (15)
99.1(h)	Amendment No. 2 To Guarantee Agreement, dated October 2, 2020 between Exantas Capital Corp. and JPMorgan Chase Bank, National Association. (19)
99.1(i)	Amendment No. 4 To Guarantee Agreement, dated November 17, 2022 between ACRES Commercial Realty Corp. and JPMorgan Chase Bank, National Association. (41)
99.1(j)	Amendment No. 5 to Guarantee Agreement, dated July 21, 2023, between ACRES Commercial Realty Corp. and JPMorgan Chase Bank, National Association. (43)
99.2(a)	Master Repurchase and Securities Contract Agreement between ACRES Real Estate SPE 10, LLC, as Seller, and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent, dated November 3, 2021. (33)
99.2(b)	First Amendment to Master Repurchase and Securities Contract Agreement, dated January 28, 2022, between ACRES Real Estate SPE 10, LLC and Morgan Stanley Mortgage Capital Holdings LLC, as Administrative Agent. (34)
99.2(c)	Guaranty made by ACRES Commercial Realty Corp., as Guarantor, in favor of Morgan Stanley Mortgage Capital Holdings LLC, dated November 3, 2021. (33)
99.2(d)	Amendment No. 1 to Guaranty, dated November 18, 2022 between ACRES Commercial Realty Corp. and Morgan Stanley Mortgage Capital Holdings LLC. (41)
99.3	Material Federal Income Tax Considerations. (42)
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File.

79

(1)	Filed previously as an exhibit to the Company’s Registration Statement on Form S-11, Registration No. 333-126517.
(2)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.
(3)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.
(4)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.
(5)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 26, 2014.
(6)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
(7)	Filed previously as an exhibit to the Company’s Registration Statement on Form 8-A filed on June 9, 2014.
(8)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.
(9)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 1, 2015.
(10)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 8, 2017.
(11)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.
(12)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on May 25, 2018.
(13)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 30, 2018.
(14)	Filed previously as an exhibit to the Company’s Proxy Statement filed on April 18, 2019.
(15)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
(16)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 3, 2020.
(17)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.
(18)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 22, 2020.
(19)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 7, 2020.
(20)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
(21)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on February 18, 2021.
(22)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
(23)	Filed previously as an exhibit to the Company’s Proxy Statement filed on April 12, 2021.
(24)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on May 21, 2021.
(25)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 1, 2021.
(26)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on June 9, 2021.
(27)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.
(28)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 17, 2021.
(29)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 20, 2021.
(30)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on September 2, 2021.
(31)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 7, 2021.
(32)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on October 29, 2021.
(33)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.
(34)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on February 3, 2022.
(35)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
(36)	Filed previously as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
(37)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on July 27, 2022.
(38)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on August 30, 2022.
(39)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on January 25, 2023.
(40)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on December 22, 2022.
(41)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on November 18, 2022.
(42)	Filed previously as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
(43)	Filed previously as an exhibit to the Company’s Current Report on Form 8-K filed on July 25, 2023.

80

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ACRES COMMERCIAL REALTY CORP.
		(Registrant)
August 7, 2023	By:	/s/ Mark Fogel
		Mark Fogel
		President & Chief Executive Officer
August 7, 2023	By:	/s/ David J. Bryant
		David J. Bryant
		Senior Vice President
		Chief Financial Officer and Treasurer
August 7, 2023	By:	/s/ Eldron C. Blackwell
		Eldron C. Blackwell
		Vice President
		Chief Accounting Officer

81

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Mark Fogel, certify that:

1.I have reviewed this report on Form 10-Q for the quarter ended June 30, 2023 of ACRES Commercial Realty Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 7, 2023	/s/ Mark Fogel
	Mark Fogel
	President & Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David J. Bryant, certify that:

1.I have reviewed this report on Form 10-Q for the quarter ended June 30, 2023 of ACRES Commercial Realty Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 7, 2023	/s/ David J. Bryant
	David J. Bryant
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ACRES Commercial Realty Corp. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Fogel, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 7, 2023	/s/ Mark Fogel
	Mark Fogel
	President & Chief Executive Officer

This certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this certification required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ACRES Commercial Realty Corp. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Bryant, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 7, 2023	/s/ David J. Bryant
	David J. Bryant
	Chief Financial Officer

This certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this certification required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 04, 2023
Document Information [Line Items]
Entity Registrant Name	ACRES COMMERCIAL REALTY CORP.
Entity Central Index Key	0001332551
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding (in shares)		8,491,979
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity File Number	1-32733
Entity Tax Identification Number	20-2287134
Entity Address, Address Line One	390 RXR Plaza
Entity Address, City or Town	Uniondale
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11556
City Area Code	516
Local Phone Number	535-0015
Entity Interactive Data Current	Yes
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	MD
Common Stock
Document Information [Line Items]
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	ACR
Security Exchange Name	NYSE
8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock
Trading Symbol	ACRPrC
Security Exchange Name	NYSE
7.875% Series D Cumulative Redeemable Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	7.875% Series D Cumulative Redeemable Preferred Stock
Trading Symbol	ACRPrD
Security Exchange Name	NYSE

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS:
Cash and cash equivalents	$ 57,112	$ 66,232
Restricted cash	15,251	38,579
Accrued interest receivable	12,615	11,969
CRE loans	1,963,740	2,057,590
Less: allowance for credit losses	(25,651)	(18,803)
CRE loans, net	1,938,089	2,038,787
Loan receivable - related party	11,125	11,275
Investments in unconsolidated entities	1,548	1,548
Properties held for sale	61,565	53,769
Investments in real estate	137,363	120,968
Right of use assets	20,061	20,281
Intangible assets	8,376	8,880
Other assets	3,551	4,364
Total assets	2,266,656	2,376,652
LIABILITIES
Accounts payable and other liabilities	15,597	10,391
Management fee payable - related party	261	898
Accrued interest payable	7,181	6,921
Borrowings	1,749,199	1,867,033
Lease liabilities	43,988	43,695
Distributions payable	3,262	3,262
Accrued tax liability	142	113
Liabilities held for sale	3,025	3,025
Total liabilities	1,822,655	1,935,338
EQUITY
Common stock, par value $0.001: 41,666,666 shares authorized; 8,517,595 and 8,708,100 shares issued and outstanding (including 416,675 and 583,333 unvested restricted shares)	9	9
Additional paid-in capital	1,174,094	1,174,202
Accumulated other comprehensive loss	(5,604)	(6,394)
Distributions in excess of earnings	(733,958)	(732,359)
Total stockholders’ equity	434,551	435,468
Non-controlling interests	9,450	5,846
Total equity	444,001	441,314
TOTAL LIABILITIES AND EQUITY	2,266,656	2,376,652
8.625% Series C Preferred Stock
EQUITY
Preferred stock, value	5	5
7.875% Series D Preferred Stock
EQUITY
Preferred stock, value	$ 5	$ 5

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	41,666,666	41,666,666
Common stock, shares issued (in shares)	8,517,595	8,708,100
Common stock, shares outstanding (in shares)	8,517,595	8,708,100
Common stock, shares issued, non-vested restricted shares (in shares)	416,675	583,333
Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
Restricted cash	$ 15,251	$ 38,579
Accrued interest receivable	12,615	11,969
CRE loans	1,938,089	2,038,787
Other assets	3,551	4,364
Total assets of consolidated VIEs	2,266,656	2,376,652
Accounts payable and other liabilities	15,597	10,391
Accrued interest payable	7,181	6,921
Borrowings	1,749,199	1,867,033
Total liabilities of consolidated VIEs	$ 1,822,655	$ 1,935,338
8.625% Series C Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, coupon authorized	8.625%	8.625%
Preferred stock, shares issued (in shares)	4,800,000	4,800,000
Preferred stock, shares outstanding (in shares)	4,800,000	4,800,000
7.875% Series D Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	6,800,000	6,800,000
Preferred stock, liquidation preference (in dollars per share)	$ 25.00	$ 25.00
Preferred stock, coupon authorized	7.875%	7.875%
Preferred stock, shares issued (in shares)	4,607,857	4,607,857
Preferred stock, shares outstanding (in shares)	4,607,857	4,607,857
VIE, Primary Beneficiary
Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
Restricted cash	$ 14,483	$ 38,180
Accrued interest receivable	9,144	8,184
Other assets	83	119
Total assets of consolidated VIEs	1,504,965	1,503,132
Accounts payable and other liabilities	122	93
Accrued interest payable	3,305	3,083
Borrowings	1,234,303	1,233,556
Total liabilities of consolidated VIEs	1,237,730	1,236,732
VIE, Primary Beneficiary | Pledged as Collateral
Assets of consolidated variable interest entities (“VIEs”) included in total assets above:
CRE loans	$ 1,481,255	$ 1,456,649

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest income:
CRE loans	$ 46,351	$ 26,964	$ 90,821	$ 49,621
Other	797	55	1,656	74
Total interest income	47,148	27,019	92,477	49,695
Interest expense	32,442	15,745	63,817	30,652
Net interest income	14,706	11,274	28,660	19,043
Real estate income	8,879	8,777	15,950	11,915
Other revenue	37	19	70	35
Total revenues	23,622	20,070	44,680	30,993
OPERATING EXPENSES
General and administrative	2,348	2,353	5,327	5,810
Real estate expenses	10,492	9,162	19,352	13,956
Management fees - related party	1,890	1,672	3,663	3,354
Equity compensation - related party	719	991	1,613	1,735
Corporate depreciation and amortization	23	21	46	43
Provision for (reversal of) credit losses, net	2,700	524	7,796	(1,278)
Total operating expenses	18,172	14,723	37,797	23,620
Net interest and other revenues less operating expenses	5,450	5,347	6,883	7,373
OTHER INCOME (EXPENSE)
Loss on extinguishment of debt	(0)	0	0	(460)
Gain on sale of real estate	0	0	745	0
Other income	242	175	352	973
Total other income	242	175	1,097	513
INCOME BEFORE TAXES	5,692	5,522	7,980	7,886
Income tax expense	(134)	0	(129)	(280)
NET INCOME	5,558	5,522	7,851	7,606
Net income allocated to preferred shares	(4,856)	(4,856)	(9,711)	(9,711)
Net loss allocable to non-controlling interest, net of taxes	115	24	261	24
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$ 817	$ 690	$ (1,599)	$ (2,081)
NET INCOME (LOSS) PER COMMON SHARE - BASIC	$ 0.10	$ 0.08	$ (0.19)	$ (0.23)
NET INCOME (LOSS) PER COMMON SHARE - DILUTED	$ 0.10	$ 0.08	$ (0.19)	$ (0.23)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC	8,451,973	8,888,461	8,476,059	8,992,142
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED	8,534,558	8,914,172	8,476,059	8,992,142

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement Of Income And Comprehensive Income [Abstract]
Net [income]	$ 5,558	$ 5,522	$ 7,851	$ 7,606
Other comprehensive income
Reclassification adjustments associated with net unrealized losses from interest rate swaps included in net income	397	461	790	917
Total other comprehensive income	397	461	790	917
Comprehensive income before allocation to preferred shares	5,955	5,983	8,641	8,523
Net loss allocated to non-controlling interests shares	115	24	261	24
Net income allocated to preferred shares	(4,856)	(4,856)	(9,711)	(9,711)
Comprehensive income (loss) allocable to common shares	$ 1,214	$ 1,151	$ (809)	$ (1,164)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands	Total	Common Stock	Preferred Stock 8.625% Series C Preferred Stock	Preferred Stock 7.875% Series D Preferred Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Retained Earnings (Distributions In Excess of Earnings)	Parent	Non-Controlling Interest
Beginning balance at Dec. 31, 2021	$ 448,195	$ 9	$ 5	$ 5	$ 1,179,863	$ (8,127)	$ (723,560)	$ 448,195
Beginning balance (in shares) at Dec. 31, 2021		9,149,079
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Offering costs	(37)				(37)			(37)
Purchase and retirement of common stock	(3,885)				(3,885)			(3,885)
Purchase and retirement of common stock (in shares)		(314,552)
Amortization of stock-based compensation	744				744			744
Net income	2,084						2,084	2,084
Distributions and accrual of cumulative preferred stock dividends	(4,855)						(4,855)	(4,855)
Amortization of terminated derivatives	456					456		456
Ending balance at Mar. 31, 2022	442,702	$ 9	5	5	1,176,685	(7,671)	(726,331)	442,702
Ending balance (in shares) at Mar. 31, 2022		8,834,527
Beginning balance at Dec. 31, 2021	448,195	$ 9	5	5	1,179,863	(8,127)	(723,560)	448,195
Beginning balance (in shares) at Dec. 31, 2021		9,149,079
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	7,606
Ending balance at Jun. 30, 2022	447,326	$ 9	5	5	1,175,146	(7,210)	(725,641)	442,314	$ 5,012
Ending balance (in shares) at Jun. 30, 2022		8,930,130
Beginning balance at Mar. 31, 2022	442,702	$ 9	5	5	1,176,685	(7,671)	(726,331)	442,702
Beginning balance (in shares) at Mar. 31, 2022		8,834,527
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Offering costs	(33)				(33)			(33)
Purchase and retirement of common stock	(2,497)				(2,497)			(2,497)
Purchase and retirement of common stock (in shares)		(237,730)
Stock-based compensation (in shares)		333,333
Amortization of stock-based compensation	991				991			991
Contributions from non-controlling interests	5,036								5,036
Net income	5,522						5,546	5,546	(24)
Distributions and accrual of cumulative preferred stock dividends	(4,856)						(4,856)	(4,856)
Amortization of terminated derivatives	461					461		461
Ending balance at Jun. 30, 2022	447,326	$ 9	5	5	1,175,146	(7,210)	(725,641)	442,314	5,012
Ending balance (in shares) at Jun. 30, 2022		8,930,130
Beginning balance at Dec. 31, 2022	$ 441,314	$ 9	5	5	1,174,202	(6,394)	(732,359)	435,468	5,846
Beginning balance (in shares) at Dec. 31, 2022	8,708,100	8,708,100
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Purchase and retirement of common stock	$ (756)				(756)			(756)
Purchase and retirement of common stock (in shares)		(79,744)
Stock-based compensation	170				170			170
Stock-based compensation (in shares)		17,780
Amortization of stock-based compensation	894				894			894
Contributions from non-controlling interests	2,332								2,332
Net income	2,293						2,439	2,439	(146)
Distributions and accrual of cumulative preferred stock dividends	(4,855)						(4,855)	(4,855)
Amortization of terminated derivatives	393					393		393
Ending balance at Mar. 31, 2023	441,785	$ 9	5	5	1,174,510	(6,001)	(734,775)	433,753	8,032
Ending balance (in shares) at Mar. 31, 2023		8,646,136
Beginning balance at Dec. 31, 2022	$ 441,314	$ 9	5	5	1,174,202	(6,394)	(732,359)	435,468	5,846
Beginning balance (in shares) at Dec. 31, 2022	8,708,100	8,708,100
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 7,851
Ending balance at Jun. 30, 2023	$ 444,001	$ 9	5	5	1,174,094	(5,604)	(733,958)	434,551	9,450
Ending balance (in shares) at Jun. 30, 2023	8,517,595	8,517,595
Beginning balance at Mar. 31, 2023	$ 441,785	$ 9	5	5	1,174,510	(6,001)	(734,775)	433,753	8,032
Beginning balance (in shares) at Mar. 31, 2023		8,646,136
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Purchase and retirement of common stock	(1,200)				(1,200)			(1,200)
Purchase and retirement of common stock (in shares)		(135,416)
Stock-based compensation	65				65			65
Stock-based compensation (in shares)		6,875
Amortization of stock-based compensation	719				719			719
Contributions from non-controlling interests	1,533								1,533
Net income	5,558						5,673	5,673	(115)
Distributions and accrual of cumulative preferred stock dividends	(4,856)						(4,856)	(4,856)
Amortization of terminated derivatives	397					397		397
Ending balance at Jun. 30, 2023	$ 444,001	$ 9	$ 5	$ 5	$ 1,174,094	$ (5,604)	$ (733,958)	$ 434,551	$ 9,450
Ending balance (in shares) at Jun. 30, 2023	8,517,595	8,517,595

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical)	Aug. 31, 2022	Jun. 30, 2022	Aug. 16, 2021	Aug. 31, 2017
Interest rate, stated percentage			5.75%
4.5% Convertible Senior Notes
Interest rate, stated percentage	4.50%	4.50%		4.50%

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 7,851	$ 7,606
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for (reversal of) credit losses, net	7,796	(1,278)
Depreciation, amortization and accretion	2,683	5,364
Amortization of stock-based compensation	1,613	1,735
Loss on the extinguishment of debt	0	460
Gain on sale of real estate	(745)	0
Changes in operating assets and liabilities	5,271	(170)
Net cash provided by operating activities	24,469	13,717
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination and purchase of loans	(66,885)	(392,121)
Principal payments received on loans and leases	141,430	216,368
Investments in real estate	(15,352)	(72,279)
Proceeds from sale of real estate	14,309	0
Purchase of furniture and fixtures	0	(20)
Principal payments received on loan - related party	150	125
Net cash provided by (used in) investing activities	73,652	(247,927)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock	(1,956)	(6,382)
Proceeds from issuance of preferred shares (net of $70 of underwriting discounts and offering costs)	0	(70)
Proceeds from borrowings:
Senior secured financing facility	0	30,025
Warehouse financing facilities and repurchase agreements	11,888	298,882
Mortgage payable	144	18,710
Payments on borrowings:
Securitizations	(851)	(237,189)
Senior secured financing facility	(40,554)	(10,150)
Warehouse financing facilities and repurchase agreements	(89,606)	(38,150)
Convertible senior notes		(39,839)
Payment of debt issuance costs	(3,787)	(646)
Proceeds received from non-controlling interests	3,865	5,036
Distributions paid on preferred stock	(9,711)	(9,711)
Net cash (used in) provided by financing activities	(130,568)	10,516
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(32,447)	(223,694)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	104,810	283,931
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$ 72,363	$ 60,237

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($)
Statement Of Cash Flows [Abstract]
Underwriting discounts and offering costs	$ 70

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ORGANIZATION

6 Months Ended

Jun. 30, 2023

Organization Consolidation And Presentation Of Financial Statements [Abstract]

ORGANIZATION

NOTE 1 - ORGANIZATION

ACRES Commercial Realty Corp., a Maryland corporation, along with its subsidiaries (collectively, the “Company”), is a real estate investment trust (“REIT”) that is primarily focused on originating, holding and managing commercial real estate (“CRE”) mortgage loans and equity investments in commercial real estate properties through direct ownership and joint ventures. The Company’s manager is ACRES Capital, LLC (the “Manager”), a subsidiary of ACRES Capital Corp. (collectively, “ACRES”), a private commercial real estate lender exclusively dedicated to nationwide middle market CRE lending with a focus on multifamily, student housing, hospitality, office and industrial property in top United States (“U.S.”) markets.

The Company has qualified, and expects to qualify in the current fiscal year, as a REIT.

The Company conducts its operations through the use of subsidiaries that it consolidates into its financial statements. The Company’s core assets are consolidated through its investment in ACRES Realty Funding, Inc. (“ACRES RF”), a wholly-owned subsidiary that holds CRE loans, investments in commercial real estate properties and investments in CRE securitizations, which are consolidated as VIEs as discussed in Note 3.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of the Company, majority-owned or controlled subsidiaries and VIEs for which the Company is considered the primary beneficiary. All inter-company transactions and balances have been eliminated in consolidation.

Basis of Presentation

All adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows have been made.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and within the period of financial results. Actual results could differ from those estimates. Estimates affecting the accompanying consolidated financial statements include, but are not limited to, the net realizable and fair values of the Company’s investments and derivatives, the estimated useful lives used to calculate depreciation, the expected lives over which to amortize premiums and accrete discounts, reversals of or provisions for expected credit losses and the disclosure of contingent liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. At June 30, 2023 and December 31, 2022, $53.1 million and $63.3 million, respectively, of the reported cash balances exceeded the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation deposit insurance limits of $250,000 per respective depository or brokerage institution. However, all of the Company’s cash deposits are held at multiple, established financial institutions, in multiple accounts associated with its parent and respective consolidated subsidiaries, to minimize credit risk exposure. The Company has not experienced, and does not expect, any losses on its cash and cash equivalents.

Restricted cash includes required account balance minimums primarily for the Company’s CRE debt securitizations as well as cash held in the syndicated corporate loan collateralized debt obligations (“CDOs”).

The following table provides a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to the total amount shown on the consolidated statements of cash flows (in thousands):

	June 30,
	2023		2022
Cash and cash equivalents	$	57,112	$	34,870
Restricted cash		15,251		25,367
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	72,363	$	60,237

Investment in Real Estate

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	Shorter of lease term or expected useful life
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	7 to 94 years
Intangible assets	90 days to 18 years
Lease liabilities	7 to 94 years

Income Taxes

The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $21.0 million) at June 30, 2023, as the Company believes it is more likely than not that the deferred tax assets will not be realized. This assessment was based on the Company’s cumulative historical losses and uncertainties as to the amount of taxable income that would be generated in future years by the Company’s taxable REIT subsidiaries.

Earnings per Share

The Company presents both basic and diluted earnings per share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income (loss) allocable to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

Reference Rate Reform

Historically, the Company has used LIBOR as the benchmark interest rate for its floating-rate whole loans and the Company has been exposed to LIBOR through its floating-rate borrowings. In March 2021, the United Kingdom’s, or U.K.’s, Financial Conduct Authority (“FCA”) announced that it would cease publication of the one-week and the two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. In July 2021, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee composed of large U.S. financial institutions, identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR.

Following this announcement, the Company began to transition the contractual benchmark rates of existing floating-rate whole loans and borrowings to alternate rates. Additionally, beginning January 1, 2022, all variable rate loans originated by the Company and all variable rate borrowings acquired had been benchmarked to SOFR. At June 30, 2023, the Company's whole loan portfolio had a carrying value of $1.9 billion of floating rate loans, all of which have interest rates tied to SOFR. At June 30, 2023, the Company had

$1.6 billion of outstanding floating rate borrowings, 3.2% or $51.5 million of which have interest rates tied to LIBOR and 96.8% or $1.5 billion of which have interest rates tied to SOFR.

The Company expects to complete the process of converting its LIBOR-based borrowings to an applicable benchmark interest rate during 2023.

Recent Accounting Standards

Accounting Standards Adopted in 2023

In March 2022, the Financial Accounting Standards Board ("FASB") issued an amendment eliminating certain previously issued accounting guidance for troubled-debt restructurings (“TDRs”) and enhancing disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to the general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. The Company adopted this guidance during the six months ended June 30, 2023 and the adoption did not have a material impact on the Company's consolidated financial statements.

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VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2023

Organization Consolidation And Presentation Of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 3 - VARIABLE INTEREST ENTITIES

The Company has evaluated its loans, investments in unconsolidated entities, liabilities to subsidiary trusts issuing preferred securities (consisting of unsecured junior subordinated notes), securitizations, guarantees and other financial contracts in order to determine if they are variable interests in VIEs. The Company regularly monitors these legal interests and contracts and, to the extent it has determined that it has a variable interest, analyzes the related entity for potential consolidation.

Consolidated VIEs (the Company is the primary beneficiary)

Based on management’s analysis, the Company was the primary beneficiary of five VIEs at both June 30, 2023 and December 31, 2022 (collectively, the “Consolidated VIEs”).

The Consolidated VIEs are CRE securitizations and CDOs that were formed on behalf of the Company to invest in real estate-related securities, commercial mortgage-backed securities (“CMBS”), syndicated corporate loans and corporate bonds and were financed by the issuance of debt securities. By financing these assets with long-term borrowings through the issuance of debt securities, the Company seeks to generate attractive risk-adjusted equity returns and to match the term of its assets and liabilities. The primary beneficiary determination for each of these VIEs was made at each VIE’s inception and is continually assessed.

In April 2022, the Company contributed an initial investment of $13.0 million for a 72.1% interest in Charles Street-ACRES FSU Student Venture, LLC (the “FSU Student Venture”). The FSU Student Venture, a joint venture between the Company and two unrelated third parties, was formed for the purpose of developing a student housing project. The FSU Student Venture was determined not to be a VIE as there was sufficient equity at risk, it does not have disproportionate voting rights and its members all have the following characteristics: (1) the power to direct activities (2) the obligation to absorb losses and (3) the right to receive residual returns. However, the Company consolidated the FSU Student Venture due to its 72.1% interest that provides the Company with unilateral control over all major decisions of the joint venture. The portion of the joint venture that the Company does not own is presented as non-controlling interest at and for the periods presented in the Company’s consolidated financial statements.

The Company has exposure to losses on its securitizations to the extent of its investments in the subordinated debt and preferred equity of each securitization. The Company is entitled to receive payments of principal and interest on the debt securities it holds and, to the extent revenues exceed debt service requirements and other expenses of the securitizations, distributions with respect to its preferred equity interests. As a result of consolidation, the debt and equity interests the Company holds in these securitizations have been eliminated; and the Company’s consolidated balance sheets reflect the assets held, debt issued by the securitizations to third parties and any accrued payables to third parties. The Company’s operating results and cash flows include the gross amounts related to the securitizations’ assets and liabilities as opposed to the Company’s net economic interests in the securitizations. Assets and liabilities related to the securitizations are disclosed, in the aggregate, on the Company’s consolidated balance sheets. For a discussion of the debt issued through the securitizations, see Note 10.

Creditors of the Company’s Consolidated VIEs have no recourse to the general credit of the Company, nor to each other. During the six months ended June 30, 2023 and 2022, the Company did not provide any financial support to any of its VIEs nor does it have any requirement to do so, although it may choose to do so in the future to maximize future cash flows on such investments by the Company. There are no explicit arrangements that obligate the Company to provide financial support to any of its Consolidated VIEs.

The following table shows the classification and carrying values of assets and liabilities of the Company’s Consolidated VIEs at June 30, 2023 (in thousands):

	CRE Securitizations		Other		Total
ASSETS
Restricted cash	$	14,201	$	282	$	14,483
Accrued interest receivable		9,144		—		9,144
CRE loans, pledged as collateral (1)		1,481,255		—		1,481,255
Other assets		27		56		83
Total assets (2)	$	1,504,627	$	338	$	1,504,965
LIABILITIES
Accounts payable and other liabilities	$	122	$	—	$	122
Accrued interest payable		3,305		—		3,305
Borrowings		1,234,303		—		1,234,303
Total liabilities	$	1,237,730	$	—	$	1,237,730

(1)Excludes allowance for credit losses.

(2)Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

Unconsolidated VIEs (the Company is not the primary beneficiary, but has a variable interest)

Based on management’s analysis, the Company is not the primary beneficiary of the VIEs discussed below since it does not have both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb the losses of the VIE or the right to receive the benefits from the VIE, which could be significant to the VIE. Accordingly, the following VIEs are not consolidated in the Company’s financial statements at June 30, 2023. The Company continuously reassesses whether it is deemed to be the primary beneficiary of its unconsolidated VIEs. The Company’s maximum exposure to risk for each of these unconsolidated VIEs is set forth in the “Maximum Exposure to Loss” column in the table below.

Unsecured Junior Subordinated Debentures

The Company has a 100% interest in the common shares of each of Resource Capital Trust I (“RCT I”) and RCC Trust II (“RCT II”), respectively, with a value of $1.5 million in the aggregate, or 3.0% of each trust, at June 30, 2023. RCT I and RCT II were formed for the purposes of providing debt financing to the Company. The Company completed a qualitative analysis to determine whether it is the primary beneficiary of each of the trusts and determined that it was not the primary beneficiary of either trust because it does not have the power to direct the activities most significant to the trusts, which include the collection of principal and interest through servicing rights. Accordingly, neither trust is consolidated into the Company’s consolidated financial statements.

The Company records its investments in RCT I and RCT II’s common shares of $774,000 each as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II. The trusts each hold subordinated debentures for which the Company is the obligor in the amount of $25.8 million for each of RCT I and RCT II. The debentures were funded by the issuance of trust preferred securities of RCT I and RCT II.

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs at June 30, 2023 (in thousands):

	Unsecured Junior Subordinated Debentures			Maximum Exposure to Loss
ASSETS
Accrued interest receivable	$	12		$	—
Investments in unconsolidated entities		1,548		$	1,548
Total assets		1,560
LIABILITIES
Accrued interest payable		404		N/A
Borrowings		51,548		N/A
Total liabilities		51,952
Net (liability) asset	$	(50,392	)

At June 30, 2023, there were no explicit arrangements or implicit variable interests that could require the Company to provide financial support to any of its unconsolidated VIEs.

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SUPPLEMENTAL CASH FLOW INFORMATION

6 Months Ended

Jun. 30, 2023

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION

The following table summarizes the Company’s supplemental disclosure of cash flow information (in thousands):

	For the Six Months Ended June 30,
	2023			2022
Supplemental cash flows:
Interest expense paid in cash	$	60,035		$	24,736
Income taxes paid in cash		101			180
Non-cash investing activities include the following:
Proceeds from the receipt of deed-in-lieu of foreclosure	$	20,900		$	—
Investment in properties held for sale related to the receipt of deed-in-lieu of foreclosure		(20,900	)		—
Non-cash financing activities include the following:
Incentive compensation paid in common stock	$	234		$	—
Distributions on preferred stock accrued but not paid		3,262			3,262

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LOANS

6 Months Ended

Jun. 30, 2023

Loans Held For Investment [Abstract]

LOANS

NOTE 5 - LOANS

The following is a summary of the Company’s CRE loans held for investment by asset type (dollars in thousands, except amounts in footnotes):

Description	Quantity	Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At June 30, 2023:
Whole loans (5)(6)	77	$	1,968,322	$	(9,282	)	$	1,959,040	$	(20,951	)	$	1,938,089	1M BR plus 2.86% to 1M BR plus 8.61%	July 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	1,973,022	$	(9,282	)	$	1,963,740	$	(25,651	)	$	1,938,089
At December 31, 2022:
Whole loans (5)(6)	81	$	2,065,504	$	(12,614	)	$	2,052,890	$	(14,103	)	$	2,038,787	1M BR plus 2.85% to 1M BR plus 8.50%	January 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	2,070,204	$	(12,614	)	$	2,057,590	$	(18,803	)	$	2,038,787

(1)Amounts include unamortized loan origination fees of $9.0 million and $12.3 million and deferred amendment fees of $257,000 and $308,000 at June 30, 2023 and December 31, 2022, respectively.

(2)Benchmark rates ("BR") comprise one-month LIBOR or one-month Term SOFR. At June 30, 2023, all of the Company's whole loans used one-month Term SOFR. Weighted-average one-month benchmark rates were 5.22% and 4.21% at June 30, 2023 and December 31, 2022, respectively. Additionally, weighted-average benchmark rate floors were 0.68% at both June 30, 2023 and December 31, 2022.

(3)Maturity dates exclude contractual extension options, subject to the satisfaction of certain terms that may be available to the borrowers.

(4)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(5)Substantially all loans are pledged as collateral under various borrowings at June 30, 2023 and December 31, 2022.

(6)CRE whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreement, and any necessary approvals have been obtained.

The following is a summary of the Company’s CRE loans held for investment by property type and geographic location (dollars in thousands):

	June 30, 2023					December 31, 2022
Property Type	Carrying Value		% of Loan Portfolio			Carrying Value		% of Loan Portfolio
Multifamily	$	1,460,600		75.4	%	$	1,531,697		75.2	%
Office (1)(2)		254,503		13.1	%		269,201		13.2	%
Hotel		146,099		7.5	%		178,160		8.7	%
Self-Storage		68,862		3.6	%		51,704		2.5	%
Retail (3)		8,025		0.4	%		8,025		0.4	%
Total	$	1,938,089		100	%	$	2,038,787		100	%

(1)Includes one and two whole loans in maturity default with carrying values of $20.1 million and $42.5 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes one mezzanine loan with a par value of $4.7 million that is fully reserved at both June 30, 2023 and December 31, 2022.

(3)Comprises one whole loan in maturity default at both June 30, 2023 and December 31, 2022.

	June 30, 2023					December 31, 2022
Geographic Location	Carrying Value		% of Loan Portfolio			Carrying Value		% of Loan Portfolio
Southwest (1)	$	458,573		23.6	%	$	472,327		23.2	%
Southeast		410,732		21.2	%		438,403		21.5	%
Mountain		274,289		14.2	%		329,828		16.2	%
Mid Atlantic		251,757		13.0	%		248,740		12.2	%
Pacific		170,986		8.8	%		191,706		9.4	%
Northeast (2)		200,865		10.4	%		170,236		8.3	%
East North Central (3)		106,969		5.5	%		125,211		6.1	%
West North Central		63,918		3.3	%		62,336		3.1	%
Total	$	1,938,089		100	%	$	2,038,787		100	%

(1)Includes one whole loan in maturity default with carrying values of $20.1 million and $20.7 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes one whole loan in maturity default with a carrying value of $8.0 million at both June 30, 2023 and December 31, 2022. Also includes one mezzanine loan with a par value of $4.7 million that is fully reserved at both June 30, 2023 and December 31, 2022.

(3)Includes one whole loan in maturity default with a carrying value of $21.7 million at December 31, 2022.

The following is a summary of the contractual maturities of the Company’s CRE loans held for investment, at amortized cost (in thousands, except amounts in the footnotes):

Description	2023		2024		2025 and Thereafter		Total
At June 30, 2023:
Whole loans (1)	$	113,075	$	933,116	$	884,685	$	1,930,876
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	113,075	$	933,116	$	889,385	$	1,935,576
Description	2023		2024		2025 and Thereafter		Total
At December 31, 2022:
Whole loans (1)	$	268,120	$	882,175	$	851,031	$	2,001,326
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	268,120	$	882,175	$	855,731	$	2,006,026

(1)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(2)At June 30, 2023, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $58.4 million, $90.8 million and $1.8 billion in 2023, 2024 and 2025 and thereafter, respectively. At December 31, 2022, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $113.8 million, $68.6 million and $1.8 billion in 2023, 2024 and 2025 and thereafter, respectively.

At June 30, 2023 and December 31, 2022, no single loan or investment represented more than 10% of the Company’s total assets, and no single investment group generated over 10% of the Company’s revenue.

Principal Paydowns Receivable

Principal paydowns receivable represents loan principal payments that have been received by the Company’s servicers and trustees but have not been remitted to the Company. At both June 30, 2023 and December 31, 2022, the Company had no loan principal paydowns receivable.

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FINANCING RECEIVABLES

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

FINANCING RECEIVABLES

NOTE 6 - FINANCING RECEIVABLES

The following table shows the activity in the allowance for credit losses for the six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

	Six Months Ended June 30, 2023			Year Ended December 31, 2022
Allowance for credit losses at beginning of period	$	18,803		$	8,805
Provision for credit losses		7,796			12,295
Charge offs		(948	)		(2,297	)
Allowance for credit losses at end of period	$	25,651		$	18,803

During the three and six months ended June 30, 2023, the Company recorded provisions for expected credit losses of $2.7 million and $7.8 million, respectively, primarily attributable to the impact from the near-term macroeconomic outlook of the commercial real estate market, including: forecasted increases in short-term interest rates, continued expected declines in commercial real estate pricing and forecasted higher unemployment rates, partially offset by improvements in property-level cash flows.

In June 2023, the Company received the deed-in-lieu of foreclosure on an office loan in the East North Central region with a principal balance of $22.8 million which resulted in a charge off of $948,000 against the allowance for credit losses (see Note 7).

During the three months ended June 30, 2022, the Company recorded a provision for expected credit losses of approximately $524,000 primarily attributable to a decline in macroeconomic factors, offset by improvements in property-level cash flows. During the six months ended June 30, 2022, reversal of expected credit losses in the first quarter of 2022 outpaced the provision during the second quarter of 2022, resulting in a net reversal of $1.3 million in connection with resolutions of loans with specific reserves and continued improvements in property-level operations.

At June 30, 2023 and December 31, 2022, the Company individually evaluated the following loans:

•One office mezzanine loan in the Northeast region with a principal balance of $4.7 million at both June 30, 2023 and December 31, 2022. The Company fully reserved this loan in the fourth quarter of 2022, and it continues to be fully reserved at June 30, 2023. The loan entered payment default in February 2023 and has been placed on nonaccrual status.

•One retail loan in the Northeast region, with a principal balance of $8.0 million at both June 30, 2023 and December 31, 2022, for which foreclosure was determined to be probable. The loan was modified in February 2021 to extend its maturity to December 2021 and has since entered into payment default and has been put on nonaccrual status. The loan had an as-is appraised value in excess of its principal and interest balances, and, as such, had no allowance for CECL at June 30, 2023 and December 31, 2022, respectively.

•One office loan in the Southwest region, with a principal balance of $20.1 million and $20.7 million at June 30, 2023 and December 31, 2022, respectively, for which foreclosure was determined to be probable. The loan had an initial maturity of March 2022, was modified three times to extend its maturity to June 2022 and has since entered into payment default and has been put on nonaccrual status. However, in exchange for payments, comprising principal paydowns, interest payments and the reimbursement of certain legal fees, received between October 2022 and July 2023, the Company has agreed to temporarily defer its right to foreclose on the property until October 2023. Additionally, at both June 30, 2023 and December 31, 2022, this loan had an as-is appraised value in excess of its principal and interest balances, and, as such, had no CECL allowance.

Credit quality indicators

Commercial Real Estate Loans

CRE loans are collateralized by a diversified mix of real estate properties and are assessed for credit quality based on the collective evaluation of several factors, including but not limited to: collateral performance relative to underwritten plan, time since origination, current implied and/or re-underwritten loan-to-collateral value ("LTV") ratios, loan structure and exit plan. Depending on the loan’s performance against these various factors, loans are rated on a scale from 1 to 5, with loans rated 1 representing loans with the highest credit quality and loans rated 5 representing loans with the lowest credit quality. The factors evaluated provide general criteria to monitor credit migration in the Company’s loan portfolio; as such, a loan’s rating may improve or worsen, depending on new information received.

The criteria set forth below should be used as general guidelines. Therefore, not every loan will have all of the characteristics described in each category below.

Risk Rating	Risk Characteristics
1	• Property performance has surpassed underwritten expectations.
	• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high-quality tenant mix.
2	• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded.
	• Occupancy is stabilized, near stabilized or is on track with underwriting.
3	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• An updated appraisal is required upon designation and updated on an as-needed basis.

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans may experience greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, the Company pools CRE loans based on the underlying collateral property type and utilizes a probability of default and loss given default methodology for approximately one year after which it immediately reverts to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnote):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At June 30, 2023:
Whole loans, floating-rate	$	—	$	1,353,353		514,179	$	63,344	$	28,164	$	1,959,040
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,353,353	$	514,179	$	63,344	$	32,864	$	1,963,740
At December 31, 2022:
Whole loans, floating-rate	$	—	$	1,635,376	$	309,491	$	85,226	$	22,797	$	2,052,890
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,635,376	$	309,491	$	85,226	$	27,497	$	2,057,590

(1)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in the footnotes):

	2023		2022		2021		2020		2019			Prior		Total (1)
At June 30, 2023:
Whole loans, floating-rate: (2)
Rating 2	$	37,643	$	444,948	$	791,217	$	52,703	$	26,842		$	—	$	1,353,353
Rating 3		—		77,350		316,281		34,286		27,794			58,468		514,179
Rating 4		—		19,348		43,996		—		—			—		63,344
Rating 5		—		—		—		—		20,139			8,025		28,164
Total whole loans, floating-rate		37,643		541,646		1,151,494		86,989		74,775			66,493		1,959,040
Mezzanine loan (rating 5)		—		—		—		—		—			4,700		4,700
Total	$	37,643	$	541,646	$	1,151,494	$	86,989	$	74,775		$	71,193	$	1,963,740
Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	(948	)	$	—	$	(948	)
	2022		2021		2020		2019		2018			Prior		Total (1)
At December 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	526,606	$	1,003,060	$	64,944	$	26,977	$	13,789		$	—	$	1,635,376
Rating 3		—		192,490		44,657		27,881		44,463			—		309,491
Rating 4		—		—		—		20,742		64,484			—		85,226
Rating 5		—		—		—		22,797		—			—		22,797
Total whole loans, floating-rate		526,606		1,195,550		109,601		98,397		122,736			—		2,052,890
Mezzanine loan (rating 5)		—		—		—		—		4,700			—		4,700
Total	$	526,606	$	1,195,550	$	109,601	$	98,397	$	127,436		$	—	$	2,057,590

(1)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(2)Acquired CRE whole loans are grouped within each loan’s year of origination.

At both June 30, 2023 and December 31, 2022, the Company had one additional mezzanine loan included in other assets held for sale that had no carrying value.

Loan Portfolio Aging Analysis

The following table presents the CRE loan portfolio aging analysis at the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):

	30-59 Days		60-89 Days		Greater than 90 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At June 30, 2023:
Whole loans, floating-rate	$	—	$	—	$	28,164	$	28,164	$	1,930,876	$	1,959,040	$	—
Mezzanine loan (4)		4,700		—		—		4,700		—		4,700		—
Total	$	4,700	$	—	$	28,164	$	32,864	$	1,930,876	$	1,963,740	$	—
At December 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	28,767	$	28,767	$	2,024,123	$	2,052,890	$	—
Mezzanine loan (4)		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	28,767	$	28,767	$	2,028,823	$	2,057,590	$	—

(1)During the three and six months ended June 30, 2023, the Company recognized interest income of $837,000 and $1.8 million, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized interest income of $333,000 and $669,000, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023.

(2)Includes one CRE whole loan, with an amortized cost of $22.8 million, in maturity default at December 31, 2022.

(3)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(4)Fully reserved at both June 30, 2023 and December 31, 2022.

At June 30, 2023, the Company had two CRE whole loans, with total amortized costs of $28.2 million, and one mezzanine loan, with a total amortized cost of $4.7 million, in payment default. At December 31, 2022, the Company had three CRE whole loans, with total amortized costs of $51.6 million, in payment default.

Modifications

During the six months ended June 30, 2023, the Company did not enter into any loan modifications for borrowers that are experiencing financial difficulty. During the six months ended June 30, 2022, the Company entered into three agreements that extended one CRE whole loan for a borrower experiencing financial difficulty. At June 30, 2022, this loan had an amortized cost of $21.8 million, which represented 1.0% of the total amortized cost of the portfolio.

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

6 Months Ended

Jun. 30, 2023

Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Abstract]

INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

NOTE 7 - INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES

At June 30, 2023, the Company held investments in six real estate properties, four of which are included in investments in real estate, and two of which are included in properties held for sale on the consolidated balance sheets.

In February 2023, the Company sold a hotel property in the Northeast region that was previously designated as a property held for sale. The hotel property sold for $15.1 million with selling costs of $845,000, resulting in a gain of $745,000.

In June 2023, the Company received the deed-in-lieu of foreclosure on an office property in the East North Central region. The Company determined that the acquisition of the property should be accounted for as an asset acquisition, and the acquisition-date fair value of $20.9 million was determined using a third-party valuation. Additionally on the date of transfer, the Company acquired cash and receivables and assumed trade payables, resulting in a charge off of the loan against the Company's allowance for credit losses of $948,000. At June 30, 2023, the property was reported as property held for sale on the consolidated balance sheets.

The following table summarizes the book value of the Company’s investments in real estate and properties held for sale (in thousands, except amounts in the footnotes):

	June 30, 2023							December 31, 2022
	Cost Basis		Accumulated Depreciation & Amortization			Carrying Value		Cost Basis		Accumulated Depreciation & Amortization			Carrying Value
Assets:
Investments in real estate, equity:
Investments in real estate (1)	$	141,008	$	(3,645	)	$	137,363	$	123,219	$	(2,251	)	$	120,968
Right of use assets (2)(3)		19,665		(342	)		19,323		19,664		(205	)		19,459
Intangible assets (4)		11,474		(3,098	)		8,376		11,474		(2,594	)		8,880
Subtotal		172,147		(7,085	)		165,062		154,357		(5,050	)		149,307
Investments in real estate from lending activities:
Properties held for sale (5)		61,565		—			61,565		53,769		—			53,769
Total		233,712		(7,085	)		226,627		208,126		(5,050	)		203,076
Liabilities:
Investments in real estate, equity:
Mortgage payable		18,233		259			18,492		18,089		155			18,244
Other liabilities		247		(201	)		46		247		(183	)		64
Lease liabilities (3)(6)		43,260		(54	)		43,206		43,260		(393	)		42,867
Subtotal (7)		61,740		4			61,744		61,596		(421	)		61,175
Investments in real estate from lending activities:
Liabilities held for sale		3,025		—			3,025		3,025		—			3,025
Total		64,765		4			64,769		64,621		(421	)		64,200
Total net investments in real estate and properties held for sale (8)	$	168,947				$	161,858	$	143,505				$	138,876

(1)Includes $38.4 million of land, which is not depreciable, at June 30, 2023 and December 31, 2022, respectively.

(2)Primarily comprises a $18.9 million right of use asset, associated with an acquired ground lease of $42.8 million (see below) accounted for as an operating lease at June 30, 2023. At December 31, 2022, the value of the right of use asset was $19.0 million associated to the ground lease with a value of $42.4 million. Amortization is booked to real estate expenses on the consolidated statements of operations.

(3)Refer to Note 8 for additional information on the Company’s remaining operating leases.

(4)Primarily comprises a franchise intangible of $5.0 million and $5.3 million, a management contract intangible of $3.0 million and $3.1 million, and a customer list intangible of $321,000 and $427,000 at June 30, 2023 and December 31, 2022, respectively.

(5)At December 31, 2022, properties held for sale included two properties originally acquired in November 2020 and July 2022. At June 30, 2023, properties held for sale included the November 2020 acquisition, as well as the property acquired via deed-in-lieu of foreclosure during the three months ended June 30, 2023.

(6)Primarily comprises a $42.8 million ground lease with a remaining term of 93 years. Lease expense for the six months ended June 30, 2023 was $1.3 million.

(7)Excludes $1.9 million of deferred debt issuance costs on construction loans that can be drawn upon subsequent to June 30, 2023.

(8)Excludes items of working capital, either acquired or assumed.

The Company acquired a ground lease with its equity investment in a hotel property in April 2022. This ground lease has an associated above-market lease intangible liability. The ground lease confers the Company the right to use the land on which its hotel operates, and the ground lease payments increase 3.00% per year until 2116. The Company acquired the original 99-year lease with 94 years remaining during the second quarter of 2022. At June 30, 2023, 93 years remain in its term.

The Company recorded lease payments of $426,000 and $852,000 for the three and six months ended June 30, 2023 and $413,000 for both the three and six months ended June 30, 2022. The Company recorded amortization of $51,000 and $102,000 during the three and six months ended June 30, 2023 related to the right of use asset and accretion of $615,000 and $1.2 million during the three and six months ended June 30, 2023 related to its ground lease liability. The Company recorded amortization of $51,000 during the three and six months ended June 30, 2022 related to the right of use asset and accretion of $114,000 during the three and six months ended June 30, 2022 related to its ground lease liability.

During the three and six months ended June 30, 2023, the Company recorded amortization expense of $251,000 and $503,000, respectively, on its intangible assets. During the three and six months ended June 30, 2022, the Company recorded amortization expense of $437,000 and $1.4 million, respectively, on its intangible assets. The Company expects to record additional amortization expense of $768,000 during the remainder of fiscal year 2023. The Company, also, expects to record amortization expense of $1.2 million, $1.1 million, $1.0 million, $748,000, and $748,000 during the 2024, 2025, 2026, 2027 and 2028 fiscal years, respectively, on its intangible assets.

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LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

NOTE 8 - LEASES

In addition to the ground lease discussed in Note 7, the Company has operating leases for office space and office equipment. The leases have terms that expire between January 2024 and September 2029. The leases on the office space and office equipment contain options for early termination granted to the Company and the lessor. Lease payments are determined as follows:

• Office space: payments are made on a fixed schedule, escalating annually, and also include the Company’s responsibility for a percentage of increases in the building’s property taxes and operating expenses over the base year.

• Office equipment: payments are made on a fixed schedule.

The following table summarizes the Company’s operating leases (in thousands):

	June 30, 2023			December 31, 2022
Operating Leases:
Right of use assets	$	738		$	822
Lease liabilities	$	(782	)	$	(828	)
Weighted average remaining lease term:	6.2 years			6.7 years
Weighted average discount rate (1):		8.70	%		8.71	%

(1)The market discount rate is used, when readily determinable, in calculating the present value of lease payments for the operating lease liability. Otherwise, the incremental borrowing rate on the commencement date is used.

The following table summarizes the Company’s operating lease costs and cash payments for the periods presented (in thousands):

	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022		Six Months Ended June 30, 2023		Six Months Ended June 30, 2022
Lease Cost:
Operating lease cost	$	40	$	24	$	115	$	48
Other Information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	38	$	24	$	75	$	47

The following table summarizes the Company’s operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

	Operating Leases
2023	$	77
2024		155
2025		159
2026		163
2027		167
Thereafter		303
Subtotal		1,024
Less: impact of discount		(242	)
Total	$	782

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INVESTMENTS IN UNCONSOLIDATED ENTITIES

6 Months Ended

Jun. 30, 2023

Equity Method Investments And Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

NOTE 9 - INVESTMENTS IN UNCONSOLIDATED ENTITIES

The Company’s investments in unconsolidated entities at June 30, 2023 and December 31, 2022 comprised a 100% interest in the common shares of RCT I and RCT II with a value of $1.5 million in the aggregate, or 3.0% of each trust. The Company records its investments in RCT I’s and RCT II’s common shares as investments in unconsolidated entities using the cost method, recording dividend income when declared by RCT I and RCT II.

During the three and six months ended June 30, 2023, the Company recorded dividends from its investments in RCT I’s and RCT II’s common shares, reported in other revenue on the consolidated statement of operations, of $37,000 and $70,000, respectively. During the three and six months ended June 30, 2022, the Company recorded dividends of $19,000 and $35,000, respectively.

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BORROWINGS

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

BORROWINGS

10 - BORROWINGS

The Company historically has financed the acquisition of its investments, including investment securities and loans, through the use of secured and unsecured borrowings. Certain information with respect to the Company’s borrowings is summarized in the following table (dollars in thousands, except amounts in the footnotes):

	Principal Outstanding	Unamortized Issuance Costs and Discounts	Outstanding Borrowings	Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
At June 30, 2023:
ACR 2021-FL1 Senior Notes	$674,372	$3,035	$671,337	6.70%	13.0 years	801,792
ACR 2021-FL2 Senior Notes	567,000	4,034	562,966	7.02%	13.6 years	700,000
Senior secured financing facility	50,995	3,298	47,697	8.87%	4.5 years	152,272
CRE - term warehouse financing facilities (1)	253,131	1,869	251,262	7.77%	1.3 years	377,208
Mortgage payable	18,854	362	18,492	8.95%	1.8 years	25,400
Construction loans	—	1,922	(1,922)	—	—	—
5.75% Senior Unsecured Notes	150,000	2,181	147,819	5.75%	3.1 years	—
Unsecured junior subordinated debentures	51,548	—	51,548	9.37%	13.2 years	—
Total	$1,765,900	$16,701	$1,749,199	7.04%	10.3 years	$2,056,672
	Principal Outstanding	Unamortized Issuance Costs and Discounts	Outstanding Borrowings	Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
At December 31, 2022:
ACR 2021-FL1 Senior Notes	$675,223	$3,826	$671,397	5.81%	13.5 years	802,643
ACR 2021-FL2 Senior Notes	567,000	4,841	562,159	6.13%	14.1 years	700,000
Senior secured financing facility	91,549	3,659	87,890	7.94%	5.0 years	196,837
CRE - term warehouse financing facilities (1)	330,849	2,561	328,288	6.85%	1.8 years	453,550
Mortgage payable	18,710	466	18,244	8.08%	2.3 years	25,400
5.75% Senior Unsecured Notes	150,000	2,493	147,507	5.75%	3.6 years	—
Unsecured junior subordinated debentures	51,548	—	51,548	8.52%	13.7 years	—
Total	$1,884,879	$17,846	$1,867,033	6.29%	10.3 years	$2,178,430

(1)Principal outstanding includes accrued interest payable of $673,000 and $894,000 at June 30, 2023 and December 31, 2022, respectively.

Securitizations

The following table sets forth certain information with respect to the Company’s consolidated securitizations at June 30, 2023 (in thousands, except amount in footnotes):

	Closing Date	Maturity Date	Reinvestment Period End (1)	Total Note Paydowns from Closing Date through June 30, 2023
ACR 2021-FL1	May 2021	June 2036	May 2023	$	851
ACR 2021-FL2	December 2021	January 2037	December 2023	$	—

(1)The reinvestment period is the period in which principal proceeds received may be used to acquire CRE loans for reinvestment into the securitization.

The investments held by the Company’s securitizations collateralize the securitizations’ borrowings and, as a result, are not available to the Company, its creditors, or stockholders. All senior notes of the securitizations held by the Company at both June 30, 2023 and December 31, 2022 were eliminated in consolidation.

XAN 2020-RSO8

In March 2020, the Company closed Exantas Capital Corp. 2020-RSO8, Ltd. (“XAN 2020-RSO8”), a $522.6 million CRE debt securitization transaction that provided financing for CRE loans. In March 2022, the Company exercised the optional redemption of XAN 2020-RSO8, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

XAN 2020-RSO9

In September 2020, the Company closed Exantas Capital Corp. 2020-RSO9, Ltd. (“XAN 2020-RSO9”), a $297.0 million CRE debt securitization transaction that provided financing for CRE loans. In February 2022, the Company exercised the optional redemption of XAN 2020-RSO9, and all of the outstanding senior notes were paid off from the sales proceeds of certain of the securitization’s assets.

ACR 2021-FL1

In May 2021, the Company closed ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”), a $802.6 million CRE debt securitization transaction that provided financing for CRE loans. ACR 2021-FL1 issued a total of $675.2 million of non-recourse, floating-rate notes to third parties at par. Additionally, ACRES RF retained 100% of the Class F and Class G notes and a subsidiary of ACRES RF retained 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL1. ACR 2021-FL1 included a reinvestment period, which ended in May 2023, that allowed it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. All of the notes issued mature in June 2036, although the Company has the right to call the notes beginning on the payment date in May 2023 and thereafter. The non-recourse, floating-rate notes initially charged one-month Term LIBOR but converted to one-month Term SOFR in June 2023.

ACR 2021-FL2

In December 2021, the Company closed ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”), a CRE debt securitization transaction that can finance up to $700.0 million of CRE loans. ACR 2021-FL2 issued a total of $567.0 million of non-recourse, floating-rate notes to third parties at par. Additionally, ACRES RF retained 100% of the Class F and Class G notes and a subsidiary of ACRES RF retained 100% of the outstanding preference shares. The preference shares are subordinated in right of payment to all other securities issued by ACR 2021-FL2. ACR 2021-FL2 included a 180-day ramp up acquisition period that allowed it to acquire CRE loans using unused proceeds from the issuance of the non-recourse floating-rate notes. Additionally, ACR 2021-FL2 includes a reinvestment period, which ends in December 2023, that allows it to acquire CRE loans for reinvestment into the securitization using uninvested principal proceeds. All of the notes issued mature in January 2037, although the Company has the right to call the notes beginning on the payment date in December 2023 and thereafter. The non-recourse, floating-rate notes initially charged one-month Term LIBOR but converted to one-month Term SOFR in June 2023.

Financing Arrangements

Borrowings under the Company’s senior secured financing facility, term warehouse financing facilities, mortgage payable and construction loans are guaranteed by the Company or one or more of its subsidiaries. The following table sets forth certain information with respect to the Company’s financing arrangements (dollars in thousands, except amounts in footnotes):

	June 30, 2023								December 31, 2022
	Outstanding Borrowings			Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	47,697		$	152,272		7	8.87%	$	87,890	$	196,837		8	7.94%
CRE - Term Warehouse Financing Facilities (2)
JPMorgan Chase Bank, N.A. (3)		118,569			185,862		8	7.73%		186,783		255,095		11	6.74%
Morgan Stanley Mortgage Capital Holdings LLC (4)		132,693			191,346		9	7.81%		141,505		198,455		10	7.00%
Mortgage Payable
Readycap Commercial, LLC (5)		18,492			25,400		1	8.95%		18,244		25,400		1	8.08%
Construction Loans
Oceanview Life and Annuity Company (6)		(1,922	)	N/A		N/A		—%		—		—		—	—%
Total	$	315,529		$	554,880				$	434,422	$	675,787

(1)Includes $3.3 million and $3.7 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(2)Outstanding borrowings include accrued interest payable.

(3)Includes $836,000 and $1.1 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(4)Includes $1.0 million and $1.4 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(5)Includes $362,000 and $466,000 of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(6)Includes $1.9 million of deferred debt issuance costs at June 30, 2023.

The following table shows information about the amount at risk under the Company's financing arrangements (dollars in thousands):

	Amount at Risk		Weighted Average Remaining Maturity	Weighted Average Interest Rate
At June 30, 2023:
Senior Secured Financing Facility (1)
Massachusetts Mutual Life Insurance Company	$	101,490	4.5 years	8.87%
CRE - Term Warehouse Financing Facilities (1)
JPMorgan Chase Bank, N. A.	$	67,749	1.3 years	7.73%
Morgan Stanley Mortgage Capital Holdings LLC	$	58,965	1.3 years	7.81%
Mortgage Payable (2)
Readycap Commercial, LLC	$	6,452	1.8 years	8.95%

(1)Equal to the total of the estimated fair value of securities or loans sold and accrued interest receivable, minus the total of the warehouse financing agreement liabilities and accrued interest payable.

(2)Equal to the total of the estimated fair value of real estate property investment financed, minus the total of the mortgage payable agreement liability and accrued interest payable.

The Company was in compliance with all financial covenants in each of the respective agreements at June 30, 2023 and December 31, 2022.

Senior Secured Financing Facility

On July 31, 2020, an indirect, wholly owned subsidiary (“Holdings”), along with its direct wholly owned subsidiary (the “Borrower”), of the Company entered into a $250.0 million Loan and Servicing Agreement (the “MassMutual Loan Agreement”) with MassMutual and the other lenders party thereto (the “Lenders”). The asset-based revolving loan facility (the “MassMutual Facility”) provided under the MassMutual Loan Agreement has been used to finance the Company’s core CRE lending business. The MassMutual Facility initially had an interest rate of 5.75% per annum payable monthly and initially matured on July 31, 2027.

In December 2022, Holdings, the Borrower and the Lenders entered into an Amended and Restated Loan and Servicing Agreement, which amends and restates the MassMutual Loan Agreement, and reflects a senior secured term loan facility, not to exceed $500.0 million, composed of individual loan series issued upon mutual agreement of the Borrower and Lenders. Each loan series will be available for three months after the closing date agreed upon by the Borrower and Lender (“Commitment Period”), subject to the maximum dollar amount agreed upon for that series. The Commitment Period is subject to immediate termination upon the occurrence of an event of default. Each loan series will have a final maturity of five years from the issuance date for the loan series unless an additional time is mutually agreed upon by the Lenders and Borrower. The advance rate on portfolio assets will be mutually agreed upon by the Lenders and Borrower. Each loan series will have its own mutually agreed upon interest rate equal to one-month Term SOFR plus the applicable spread.

CRE - Term Warehouse Financing Facilities

In April 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the “Barclays Facility”) with Barclays Bank PLC (“Barclays”) to finance the origination of CRE loans. In February 2022, such subsidiary entered into the Third Amendment to Master Repurchase Agreement (the “Barclays Amendment”) with Barclays, which amended the Barclays Facility to add market terms regarding the replacement of LIBOR upon determination of a benchmark transition event. In October 2022, the Barclays Facility matured.

In October 2018, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase agreement (the “JPMorgan Chase Facility”) with JP Morgan Chase to finance the origination of CRE loans. At June 30, 2023, this facility has been amended five times to amend various terms. The JPMorgan Chase Facility has a maximum facility amount of $250.0 million, charges interest of one-month benchmark plus market spreads and had an initial maturity date of October 2024. In July 2023, this facility was amended to extend the maturity date to July 2026, as well as to extend the amendments to (i) EBITDA to interest expense ratio, (ii) maximum ratio of total indebtedness to its total equity and (iii) minimum unencumbered liquidity requirement, each through December 2024.

In November 2021, an indirect, wholly-owned subsidiary of the Company entered into a master repurchase and securities contract agreement (the “Morgan Stanley Facility”) with Morgan Stanley Mortgage Capital Holdings LLC (“Morgan Stanley”) to finance the origination of CRE loans. At June 30, 2023, this facility has been amended two times to amend various terms. The Morgan Stanley Facility has a maximum facility amount of $250.0 million, charges interest of one-month Term SOFR plus market spreads and matures in November 2024. The Company also has the right to request a one-year extension.

Mortgage Payable

In April 2022, Chapel Drive West, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a Loan Agreement (the “Mortgage”) with Readycap Commercial, LLC (“Readycap”) to finance the acquisition of a student housing complex. The Mortgage is interest only and has a maximum principal balance of $20.4 million, of which, $18.7 million was advanced in the initial funding. Initially, the Mortgage charged interest of 30-day average SOFR plus a spread of 3.80%. In October 2022, the Mortgage was amended to charge interest of one-month Term SOFR plus a spread of 3.80%. The Mortgage matures in April 2025, subject to two one-year extension options.

The Mortgage contains events of default, subject to certain materiality thresholds and grace periods, customary for this type of financing arrangement. The remedies for such events of default are also customary for this type of transaction.

Construction Loans

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan"). The Construction Loan is interest only and has a maximum principal balance of $48.0 million. The Construction Loan charges one-month Term SOFR plus a spread of 6.00% and matures in February 2025, subject to three one-year extension options.

In addition to the Construction Loan, Chapel Drive East, LLC, entered into a financing agreement with Florida Pace Funding Agency to fund energy efficient building improvements and has a maximum principal balance of $15.5 million. This agreement charges fixed interest of 7.26% and matures in July 2053. The Company does not guarantee this financing agreement.

In connection with the Company's investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty and unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.

Corporate Debt

4.50% Convertible Senior Notes

The Company issued $143.8 million aggregate principal of its 4.50% convertible senior notes due 2022 (“4.50% Convertible Senior Notes”) in August 2017, of which $55.8 million was repurchased in 2021.

During the six months ended June 30, 2022, the Company repurchased $39.8 million of its 4.50% Convertible Senior Notes, resulting in a charge to earnings of $574,000, comprising an extinguishment of debt charge of $460,000 in connection with the acceleration of the market discount and interest expense of $114,000 in connection with the acceleration of deferred debt issuance costs. In August 2022, the remaining $48.2 million of the 4.50% Convertible Senior Notes were paid off upon maturity at par.

5.75% Senior Unsecured Notes Due 2026

On August 16, 2021, the Company issued $150.0 million of its 5.75% senior unsecured notes due 2026 (the “5.75% Senior Unsecured Notes”) pursuant to its Indenture, dated August 16, 2021 (the “Base Indenture”), between it and Wells Fargo, now Computershare Trust Company, N.A. (“CTC”), as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated August 16, 2021, between it and Wells Fargo, now CTC, (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). Prior to May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (ii) a make-whole premium. On or after May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days’ prior notice, at a redemption price equal to 100% of the principal amount of the 5.75% Senior Unsecured Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

Unsecured Junior Subordinated Debentures

During 2006, the Company formed RCT I and RCT II for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. RCT I and RCT II are not consolidated into the Company’s consolidated financial statements because the Company is not deemed to be the primary beneficiary of these entities. In connection with the issuance and sale of the capital securities,

the Company issued junior subordinated debentures to RCT I and RCT II of $25.8 million each, representing the Company’s maximum exposure to loss. The debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II were included in borrowings and were amortized into interest expense on the consolidated statements of operations using the effective yield method over a ten year period.

There were no unamortized debt issuance costs associated with the junior subordinated debentures for RCT I and RCT II outstanding at June 30, 2023 and December 31, 2022. The interest rates for RCT I and RCT II, at June 30, 2023, were 9.49% and 9.25%, respectively. The interest rates for RCT I and RCT II, at December 31, 2022, were 8.68% and 8.36%, respectively.

Contractual maturity dates of the Company’s borrowings’ principal outstanding by category and year are presented in the table below (in thousands):

	Total		2024		2025		2026		2027		2028 and Thereafter
At June 30, 2023:
CRE securitizations	$	1,241,372	$	—	$	—	$	—	$	—	$	1,241,372
Senior Secured Financing Facility		50,995		—		—		—		50,995		—
CRE - term warehouse financing facilities (1)		253,131		253,131		—		—		—		—
Mortgage payable		18,854		—		18,854		—		—		—
5.75% Senior Unsecured Notes		150,000		—		—		150,000		—		—
Unsecured junior subordinated debentures		51,548		—		—		—		—		51,548
Total	$	1,765,900	$	253,131	$	18,854	$	150,000	$	50,995	$	1,292,920

(1)Includes accrued interest payable in the balances of principal outstanding.

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SHARE ISSUANCE AND REPURCHASE

6 Months Ended

Jun. 30, 2023

Stockholders Equity Note [Abstract]

SHARE ISSUANCE AND REPURCHASE

NOTE 11 - SHARE ISSUANCE AND REPURCHASE

In May 2021, and subsequently in June 2021, the Company issued a total of 4.6 million shares of 7.875% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”) at a public offering price of $25.00 per share. The Company received net proceeds of $110.4 million after $4.6 million of underwriting discounts and other offering expenses. Dividends are payable quarterly in arrears at the end of January, April, July and October. The Series D Preferred Stock has no maturity date and the Company is not required to redeem the Series D Preferred Stock at any time. On or after May 21, 2026, the Company may, at its option, redeem the Series D Preferred Stock, in whole or part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date.

On October 4, 2021, the Company and the Manager entered into an Equity Distribution Agreement with JonesTrading Institutional Services LLC, as placement agent (“JonesTrading”), pursuant to which the Company may issue and sell from time to time up to 2.2 million shares of the Series D Preferred Stock. Sales of the Series D Preferred Stock may be made in transactions that are deemed to be “at the market” offerings, as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation, sales made directly on the New York Stock Exchange, on any other existing trading market for the shares or to or through a market maker. Subject to the terms of the Company’s notice, JonesTrading may also sell the shares by any other method permitted by law, including but not limited to in privately negotiated transactions. The Company will pay JonesTrading a commission up to 3.0% of the gross proceeds from the sales of the Series D Preferred Stock pursuant to the agreement. The terms and conditions of the agreement include various representations and warranties, conditions to closing, indemnification rights and obligations of the parties and termination provisions. During the six months ended June 30, 2023, the Company did not issue any Series D Preferred Stock through this agreement. During the year ended December 31, 2022, the Company did not issue any Series D Preferred Stock through this agreement.

On or after July 30, 2024, the Company may, at its option, redeem its 8.625% Fixed-to-Floating Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”), in whole or in part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date. Effective July 30, 2024 and thereafter, the Company will pay cumulative dividends on the Series C Preferred Stock at a floating rate equal to three-month LIBOR plus 5.927% per annum based on the $25.00 liquidation preference, provided that such floating rate shall not be less than the initial rate of 8.625% at any date of determination.

At June 30, 2023, the Company had 4.8 million shares of Series C Preferred Stock and 4.6 million shares of Series D Preferred Stock outstanding, with weighted average issuance prices, excluding offering costs, of $25.00.

In March 2016, the board of directors (the “Board”) approved a securities repurchase plan, and in November 2020, the Board reauthorized and approved the continued use of this plan to repurchase up to $20.0 million of the outstanding shares of the Company’s common stock. Additionally, the Board authorized the Company to enter into written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”). In July 2021, the authorized amount was fully utilized.

In November 2021, the Board authorized and approved the continued use of its existing share repurchase plan to repurchase an additional $20.0 million of the outstanding shares of the Company's common stock. Under the share repurchase plan, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 and 10b5-1 of the Exchange Act.

During the six months ended June 30, 2023 and 2022, the Company repurchased $2.0 million and $6.4 million of its common stock, respectively, representing 215,160 and 552,282 shares, respectively. At June 30, 2023, $5.3 million remains available under the November 2021 repurchase plan.

On July 31, 2020, the Company entered into a Note and Warrant Purchase Agreement (the “Note and Warrant Purchase Agreement”) with Oaktree Capital Management, L.P. (“Oaktree”) and Massachusetts Mutual Life Insurance Company (“MassMutual”) pursuant to which the Company could issue to Oaktree and MassMutual from time to time up to $125.0 million aggregate principal amount of 12.00% Senior Unsecured Notes. In connection with the Note and Warrant Purchase Agreement, the 12.00% Senior Unsecured Notes give Oaktree and MassMutual warrants to purchase an aggregate of up to 1,166,653 shares of common stock at an exercise price of $0.03 per share, subject to certain potential adjustments.

On July 31, 2020, concurrently with the issuance of the 12.00% Senior Unsecured Notes, the Company issued to Oaktree warrants to purchase 391,995 shares of common stock for an aggregate purchase price of $42.0 million and issued to MassMutual warrants to purchase 74,666 shares of common stock for an aggregate purchase price of $8.0 million. The warrants are recorded in additional paid-in capital on the consolidated balance sheets at their fair value of $3.1 million at issuance. The warrants are immediately exercisable on issuance and expire seven years from the issuance date. The warrants can be exercised with cash or as a net exercise. In July 2022, MassMutual exercised their warrants to purchase 74,666 shares. At June 30, 2023, the Oaktree warrants have not been exercised.

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SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

SHARE-BASED COMPENSATION

NOTE 12 - SHARE-BASED COMPENSATION

In June 2021, the Company’s shareholders approved the ACRES Commercial Realty Corp. Third Amended and Restated Omnibus Equity Compensation Plan (the “Omnibus Plan”) and the ACRES Commercial Realty Corp. Manager Incentive Plan (the “Manager Plan” and together with the Omnibus Plan, the “Plans”). The Omnibus Plan was amended to (i) increase the number of shares authorized for issuance by an additional 1,100,000 shares of common stock, less any shares of common stock issued or subject to awards granted under the Manager Plan; and (ii) extend the expiration date of the Omnibus Plan from June 2029 to June 2031. The maximum number of shares that may be subject to awards granted under the Plans, determined on a combined basis, is 1,700,817 shares of common stock.

The Company recognized stock-based compensation expense of $719,000 and $1.6 million, respectively, during the three and six months ended June 30, 2023 and $991,000 and $1.7 million, respectively, during the three and six months ended June 30, 2022.

The following table summarizes the Company’s restricted common stock transactions:

	Manager			Directors			Total Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested shares at January 1, 2023		524,999			58,334			583,333		$	14.22
Issued		24,655			—			24,655			9.00
Vested		(174,653	)		(16,660	)		(191,313	)		13.90
Forfeited		—			—			—			—
Unvested shares at June 30, 2023		375,001			41,674			416,675		$	14.07

The unvested restricted common stock shares are expected to vest during the following years:

	Shares
2023		—
2024		166,658
2025		166,671
2026		83,346
Total		416,675

At June 30, 2023, total unrecognized compensation costs relating to unvested restricted stock was $2.9 million based on the grant date fair value of shares granted. The cost is expected to be recognized over a weighted average period of 2.5 years.

Under the Company’s Fourth Amended and Restated Management Agreement, as amended (“Management Agreement”), incentive compensation is paid quarterly. Up to 75% of the incentive compensation may be paid in cash and at least 25% must be paid in the form of an award of common stock, recorded in management fees on the consolidated statements of operations. During the three and six months ended June 30, 2023, the Company incurred incentive compensation expense payable to the Manager of $255,000 and $384,000, respectively, of which 50% was payable in cash and 50% was payable in common stock. At June 30, 2023, $255,000 was included in Management fee payable - related party on the consolidated balance sheets. No incentive compensation was paid to the Manager for the three and six months ended June 30, 2022.

The Company issued 24,655 shares of common stock during the six months ended June 30, 2023, pertaining to the portion of the fourth quarter 2022 and the first quarter 2023 incentive compensation that was payable in shares. In August 2023, the Company issued 14,226 shares of common stock pertaining to the portion of the second quarter incentive compensation that was payable at June 30, 2023. Shares of common stock issued under the Management Agreement for incentive compensation vest immediately upon issuance.

The Omnibus Plan and the Manager Plan are administered by the compensation committee of the Company's Board (the “Compensation Committee”). In 2020, the Compensation Committee and the Board created parameters for equity awards, whereby they are no longer discretionary but are now based upon the Company’s achievement of performance parameters using book value of the common stock as the appropriate benchmark. See Note 16 for a description of awards made under the Manager Plan.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 13 - EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted losses per common share for the periods presented (dollars in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net income	$	5,558		$	5,522		$	7,851		$	7,606
Net income allocated to preferred shares		(4,856	)		(4,856	)		(9,711	)		(9,711	)
Net loss allocable to non-controlling interest, net of taxes		115			24			261			24
Net income (loss) allocable to common shares	$	817		$	690		$	(1,599	)	$	(2,081	)
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic		8,059,978			8,421,800			8,084,064			8,525,481
Weighted average number of warrants outstanding (1)		391,995			466,661			391,995			466,661
Total weighted average number of common shares outstanding - basic		8,451,973			8,888,461			8,476,059			8,992,142
Effect of dilutive securities - unvested restricted stock		82,585			25,711			—			—
Weighted average number of common shares outstanding - diluted		8,534,558			8,914,172			8,476,059			8,992,142
Net income (loss) per common share - basic	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)
Net income (loss) per common share - diluted	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)

(1)See Note 11 for further details regarding the warrants.

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DISTRIBUTIONS

6 Months Ended

Jun. 30, 2023

Distributions [Abstract]

DISTRIBUTIONS

NOTE 14 - DISTRIBUTIONS

In order to qualify as a REIT, the Company must currently distribute at least 90% of its taxable income. In addition, the Company must distribute 100% of its taxable income in order to not be subject to corporate federal income taxes on retained income. The Company anticipates it will distribute substantially all of its taxable income to its stockholders. Because taxable income differs from cash flow from operations due to non-cash revenues or expenses (such as provisions for loan and lease losses and depreciation) and tax loss carryforwards, in certain circumstances the Company may generate operating cash flow in excess of its distributions or, alternatively, may be required to borrow funds to make sufficient distribution payments.

The Company’s 2023 distributions are, and will be, determined by the Company's Board, which will also consider the composition of any distributions declared, including the option of paying a portion in cash and the balance in additional shares of common stock.

For the three and six months ended June 30, 2023 and 2022, the Company did not pay any common share distributions.

The following tables present distributions declared (on a per share basis) for the six months ended June 30, 2023 and the year ended December 31, 2022 with respect to the Company's Series C Preferred Stock and Series D Preferred Stock:

	Series C Preferred Stock					Series D Preferred Stock
	Date Paid	Total Distribution Paid		Distribution Per Share		Date Paid	Total Distribution Paid		Distribution Per Share
		(in thousands)					(in thousands)
2023
June 30	July 31	$	2,588	$	0.5390625	July 31	$	2,268	$	0.4921875
March 31	May 1		2,587		0.5390625	May 1		2,268		0.4921875
2022
December 31	January 30, 2023	$	2,587	$	0.5390625	January 30, 2023	$	2,268	$	0.4921875
September 30	October 31		2,587		0.5390625	October 31		2,268		0.4921875
June 30	August 1		2,588		0.5390625	August 1		2,268		0.4921875
March 31	May 2		2,588		0.5390625	May 2		2,268		0.4921875

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ACCUMULATED OTHER COMPREHENSIVE LOSS

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 15 - ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in net unrealized loss on derivatives, the sole component of accumulated other comprehensive loss, for the six months ended June 30, 2023 (in thousands):

	Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives
Balance at January 1, 2023	$	(6,394	)
Amounts reclassified from accumulated other comprehensive loss (1)		790
Balance at June 30, 2023	$	(5,604	)

(1)Amounts reclassified from accumulated other comprehensive loss are reclassified to interest expense on the Company’s consolidated statements of operations.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 16 - RELATED PARTY TRANSACTIONS

Relationship with ACRES Capital Corp. and certain of its Subsidiaries. The Manager is a subsidiary of ACRES Capital Corp., of which Andrew Fentress, the Company’s Chairman, serves as Managing Partner and Mark Fogel, the Company’s President, Chief Executive Officer and Director, serves as Chief Executive Officer and President. Mr. Fentress and Mr. Fogel are also shareholders and board members of ACRES Capital Corp.

Effective on July 31, 2020, the Company has a Management Agreement with the Manager pursuant to which the Manager provides the day-to-day management of the Company’s operations and receives management fees. On July 31, 2023, this agreement was automatically renewed for a one year term pursuant to the agreement. For the three and six months ended June 30, 2023, the Manager earned base management fees of $1.7 million and $3.3 million, respectively. For the three and six months ended June 30, 2022, the Manager earned base management fees of $1.7 million and $3.4 million, respectively.

For the three and six months ended June 30, 2023, the Manager earned incentive management fees of $255,000 and $384,000, of which 50% was payable in cash and 50% was payable in common stock. No incentive compensation was earned for the three and six months ended June 30, 2022.

At June 30, 2023 and December 31, 2022, $7,000 and $558,000, respectively, of base management fees were payable by the Company to the Manager. At June 30, 2023 and December 31, 2022, $255,000 and $340,000, respectively, of incentive management fees were payable by the Company to the Manager.

The Manager and its affiliates provided the Company with a Chief Financial Officer and a sufficient number of additional accounting, finance, tax and investor relations professionals. The Company reimbursed the Manager’s expenses for (a) the wages, salaries and benefits of the Chief Financial Officer, and (b) a portion of the wages, salaries and benefits of accounting, finance, tax, legal and investor relations professionals, in proportion to such personnel’s percentage of time allocated to the Company’s operations. The Company reimbursed out-of-pocket expenses and certain other costs incurred by the Manager that related directly to the Company’s operations.

For the three and six months ended June 30, 2023, the Company reimbursed the Manager $1.4 million and $2.3 million, respectively, for all such compensation and costs. For the three and six months ended June 30, 2022, the Company reimbursed the Manager $1.0 million and $3.0 million, respectively, for all such compensation and costs. At June 30, 2023, the Company did not have any payables to the Manager pursuant to the Management Agreement related to such compensation and costs. At December 31, 2022, the Company had payables to the Manager totaling $179,000 related to such compensation and costs. The Company’s base management fee payable and expense reimbursements payable were recorded in management fee payable and accounts payable and other liabilities on the consolidated balance sheets, respectively.

On July 31, 2020, ACRES RF, a direct, wholly owned subsidiary of the Company, provided a $12.0 million loan (the “ACRES Loan”) to ACRES Capital Corp. evidenced by the promissory note from ACRES Capital Corp.

The ACRES Loan accrues interest at 3.00% per annum payable monthly. The monthly amortization payment is $25,000. The ACRES Loan matures in July 2026, subject to two one-year extensions (at ACRES Capital Corp.’s option) subject to the payment of a 0.5% extension fee to ACRES RF on the outstanding principal amount of the ACRES Loan.

During the three and six months ended June 30, 2023, the Company recorded interest income of $85,000 and $169,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations. During the three and six months ended June 30, 2022, the Company recorded interest income of $87,000 and $174,000, respectively, on the ACRES Loan in other income (expense) on the consolidated statements of operations At June 30, 2023 and December 31, 2022, the ACRES Loan had a principal balance of $11.1 million and $11.3 million, respectively, recorded in loan receivable - related party on the consolidated balance sheets. At June 30, 2023 and December 31, 2022, the ACRES Loan had no accrued interest receivable.

During the year ended December 31, 2022, the Company originated one CRE whole loan with a par value of $38.6 million that was refinanced from a loan originated by affiliates of the Manager. The Company did not originate any loans that were refinanced from loans originated by affiliates of the Manager during the six months ended June 30, 2023. During the year ended December 31, 2022, the Company acquired 100% equity in one property for $38.6 million, that previously served as collateral for a loan held by an affiliate of the Manager prior to the acquisition.

At June 30, 2023, the Company retained equity in two securitization entities that were structured for the Company by the Manager. Under the Management Agreement, the Manager was not separately compensated by the Company for executing these transactions and was not separately compensated for managing the securitization entities and their assets.

During the year ended December 31, 2022, the Company co-originated and entered into joint funding agreements with ACRES Loan Origination, LLC, an affiliate of ACRES Capital Corp. and the Manager, on four loan originations, with total initial fundings of $97.2 million.

Relationship with ACRES Capital Servicing LLC. Under the MassMutual Loan Agreement, ACRES Capital Servicing LLC (“ACRES Capital Servicing”), an affiliate of ACRES Capital Corp. and the Manager, serves as the portfolio servicer. Additionally, ACRES Capital Servicing served as the special servicer of XAN 2020-RSO8 and XAN 2020-RSO9 and serves as special servicer of ACRES Commercial Realty 2021-FL1 Issuer, Ltd. (“ACR 2021-FL1”) and ACRES Commercial Realty 2021-FL2 Issuer, Ltd. (“ACR 2021-FL2”).

During the three and six months ended June 30, 2023, ACRES Capital Servicing received no portfolio servicing fees and earned $20,000 and $65,000, respectively, in special servicing fees, of which $12,000 and $47,000, respectively, was recorded as a reduction to interest income in the consolidated statement of operations. During the three and six months ended June 30, 2022, ACRES Capital Servicing received no portfolio servicing fees and $23,000 in special servicing fees, recorded as a reduction to interest income in the consolidated statement of operations.

Relationship with ACRES Commercial Mortgage, LLC. During the three months ended June 30, 2023, the Company purchased a participation for $22.5 million in one CRE whole loan from ACRES Commercial Mortgage, LLC.

Relationship with ACRES Collateral Manager, LLC. ACRES Collateral Manager, LLC, an affiliate of ACRES Capital Corp. and the Manager, serves as the collateral manager of ACR 2021-FL1 and ACR 2021-FL2, a role for which it waived its fee.

Relationship with ACRES Development Management, LLC. ACRES Development Management, LLC (“DevCo”) is a wholly owned subsidiary of ACRES Capital Corp., the parent of the Manager. DevCo acts in various capacities as a co-developer or owner’s representative for direct equity investments within the Company’s portfolio. In November 2021, December 2021 and April 2022, the joint venture entities of the three CRE equity investments acquired through direct investment entered into development agreements with DevCo (the “Development Agreements”).

Pursuant to the Development Agreements, DevCo agreed to manage the development of the projects associated with each equity investment in accordance with a development standard in exchange for fees equal to between 1.25% and 1.5% of all project costs. During the three and six months ended June 30, 2023, $91,000 and $145,000 in fees were incurred and paid to DevCo for services rendered under the Development Agreements. During the three and six months ended June 30, 2022, $16,000 in fees were incurred and paid to DevCo for services rendered under the Development Agreements.

Relationship with ACRES Share Holdings, LLC. During the three and six months ended June 30, 2023, the Company issued 6,875 and 24,655 shares, respectively, to ACRES Share Holdings, LLC in connection with the fourth quarter 2022 and the first quarter 2023 incentive compensation. In August 2023, the Company issued 14,226 shares to ACRES Share Holdings, LLC in connection with the second quarter 2023 incentive compensation. The shares vested fully upon issuance pursuant to the Management Agreement.

In June 2021, the Company’s Manager Plan was approved by its shareholders, which authorized up to 1,100,000 shares of common stock for issuance to the Manager (less shares of common stock issued or subject to awards under the Omnibus Plan). There were no shares issued under this plan for the six months ended June 30, 2023. During the year ended December 31, 2022, the Company issued 299,999 restricted shares to ACRES Share Holdings, LLC under the Manager Plan that will vest 25% each year on the anniversary of the issuance date over four years. See Note 12 for additional details.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company had no financial instruments carried at fair value on a recurring basis at June 30, 2023 and December 31, 2022.

In June 2023, the Company received the deed-in-lieu of foreclosure on a property that formerly collateralized a CRE whole loan. The property was appraised and determined to have a fair value of $20.9 million at the time of acquisition.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair values of the Company’s short-term financial instruments such as cash and cash equivalents, restricted cash, accrued interest receivable, principal paydowns receivable, accrued interest payable and distributions payable approximate their carrying values on the consolidated balance sheets. The fair values of the Company’s assets and liabilities are estimated as follows:

CRE whole loans. The fair values of the Company’s loans held for investment are measured by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Par values of loans with variable interest rates are expected to approximate fair value unless evidence of credit deterioration exists, in which case the fair value approximates the par value less the loan’s allowance estimated through individual evaluation. Fair values of loans with fixed rates are calculated using the net present values of future cash flows, discounted at market rates. The Company’s floating-rate CRE loans had interest rates from 8.04% to 13.79% and 7.03% to 12.67% at June 30, 2023 and December 31, 2022, respectively.

CRE mezzanine loan. Historically, this was measured by discounting the expected remaining cash flows using the current interest rates at which similar instruments would be originated for the same remaining maturity. The Company’s mezzanine loan was discounted at a rate of 10.00%. The Company's mezzanine loan had no carrying or fair value at June 30, 2023 or December 31, 2022.

Loan receivable- related party. This is estimated using a discounted cash flow model.

Senior notes in CRE securitizations, 5.75% Senior Unsecured Notes and junior subordinated notes. These are estimated using a discounted cash flow model with implied yields based on trades for similar securities.

Senior secured financing facility, warehouse financing facilities, mortgage payable and construction loan. These are variable-rate debt instruments indexed to either LIBOR or Term SOFR that reset periodically and as a result, their carrying value approximates their fair value, excluding deferred debt issuance costs. As of June 30, 2023, all variable-rate debt instruments are indexed to SOFR.

The fair values of the Company’s remaining financial and non-financial assets that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

				Fair Value Measurements
	Carrying Value			Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2023:
Assets:
CRE whole loans	$	1,938,089		$	1,968,322	$	—	$	—	$	1,968,322
Loan receivable - related party		11,125			8,096		—		—		8,096
Liabilities:
Senior notes in CRE securitizations		1,234,303			1,185,091		—		—		1,185,091
Senior secured financing facility		47,697			50,995		—		—		50,995
Warehouse financing facilities		251,262			253,131		—		—		253,131
Mortgage payable		18,492			18,854		—		—		18,854
Construction loan (1)		(1,922	)		—		—		—		—
5.75% Senior Unsecured Notes		147,819			129,615		—		—		129,615
Junior subordinated notes		51,548			32,364		—		—		32,364
At December 31, 2022:
Assets:
CRE whole loans	$	2,038,787		$	2,065,504	$	—	$	—	$	2,065,504
Loan receivable - related party		11,275			9,672		—		—		9,672
Liabilities:
Senior notes in CRE securitizations		1,233,556			1,179,313		—		—		1,179,313
Senior secured financing facility		87,890			91,549		—		—		91,549
Warehouse financing facilities		328,288			330,848		—		—		330,848
Mortgage payable		18,244			18,710		—		—		18,710
5.75% Senior Unsecured Notes		147,507			138,435		—		—		138,435
Junior subordinated notes		51,548			35,821		—		—		35,821

(1)Deferred debt issuance costs related to the acquisition of a construction loan that has not been drawn on and has no fair value.

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MARKET RISK AND DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2023

Derivative Instruments And Hedging Activities Disclosure [Abstract]

MARKET RISK AND DERIVATIVE INSTRUMENTS

NOTE 18 - MARKET RISK AND DERIVATIVE INSTRUMENTS

The Company is affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as “market risks.” When deemed appropriate, the Company used derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments were interest rate risk and market price risk.

The Company also historically managed its interest rate risk with interest rate swaps. Interest rate swaps are contracts between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices.

The Company seeks to manage the extent to which net income changes as a function of changes in interest rates by matching adjustable-rate assets with variable-rate borrowings.

The Company classified its interest rate swap contracts as cash flow hedges, which are hedges that eliminate the risk of changes in the cash flows of a financial asset or liability.

The Company terminated all of its interest rate swap positions associated with its financed CMBS portfolio in April 2020. At termination, the Company realized a loss of $11.8 million. At June 30, 2023 and December 31, 2022, the Company had losses of $5.8 million and $6.6 million, respectively, recorded in accumulated other comprehensive loss, which will be amortized into earnings over the remaining life of the debt. During the three and six months ended June 30, 2023, the Company recorded amortization expense of $420,000 and $835,000, reported in interest expense on the consolidated statements of operations. During the three and six months ended June 30, 2022, the Company recorded amortization expense of $484,000 and $963,000, reported in interest expense on the consolidated statements of operations.

At June 30, 2023 and December 31, 2022, the Company had an unrealized gain of $210,000 and $256,000, respectively, attributable to two terminated interest rate swaps in accumulated other comprehensive loss on the consolidated balance sheets, to be accreted into earnings over the remaining life of the debt. For each of the three months ended June 30, 2023 and 2022, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $23,000 to accrete the accumulated other comprehensive income on the terminated swap agreements. For each of the six months ended June 30, 2023 and 2022, the Company recorded accretion income, reported in interest expense on the consolidated statements of operations, of $45,000 to accrete the accumulated other comprehensive income on the terminated swap agreements.

The Company’s prior origination of fixed-rate CRE whole loans exposed it to market pricing risk in connection with the fluctuations of market interest rates. As market interest rates increase or decrease, the fair value of the fixed-rate CRE whole loans will decrease or increase accordingly. In order to mitigate this market price risk, the Company entered into interest rate swap contracts in which it pays a fixed rate of interest in exchange for a variable rate of interest, usually three-month LIBOR. Unrealized gains and losses on the value of these swap contracts were recorded in other income (expense) on the consolidated statements of operations. In December 2020, these interest rate swap contracts were terminated.

The following table presents the effect of the derivative instruments on the consolidated statements of operations for the six months ended June 30, 2023 and 2022 (in thousands):

		Realized and Unrealized Gain (Loss) (1)
	Consolidated Statements of Operations Location	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
Interest rate swap contracts, hedging	Interest expense	$	(790	)	$	(917	)

(1)Negative values indicate a decrease to the associated consolidated statement of operations line items.

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OFFSETTING OF FINANCIAL LIABILITIES

6 Months Ended

Jun. 30, 2023

Offsetting [Abstract]

OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

NOTE 19 - OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES

The following table presents a summary of the Company’s offsetting of financial liabilities and derivative liabilities (in thousands, except amounts in footnotes):

	(i) Gross Amounts		(ii) Gross Amounts Offset on the		(iii) = (i) - (ii) Net Amounts of Liabilities Presented on the		(iv) Gross Amounts Not Offset on the Consolidated Balance Sheets
	of Recognized Liabilities		Consolidated Balance Sheets		Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
At June 30, 2023:
Term warehouse financing facilities (2)	$	251,262	$	—	$	251,262	$	251,262	$	—	$	—
At December 31, 2022:
Term warehouse financing facilities (2)	$	328,288	$	—	$	328,288	$	328,288	$	—	$	—

(1)Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term warehouse financing facilities, repurchase agreements and derivatives.

(2)The combined fair values of loans pledged against the Company’s various term warehouse financing facilities and repurchase agreements was $377.2 million and $453.6 million at June 30, 2023 and December 31, 2022, respectively.

All balances associated with warehouse financing facilities are presented on a gross basis on the Company’s consolidated balance sheets.

Certain of the Company’s warehouse financing facilities are governed by underlying agreements that generally provide for a right of offset in the event of default or in the event of a bankruptcy of either party to the transaction.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

Commitments And Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 20 - COMMITMENTS AND CONTINGENCIES

The Company may become involved in litigation on various matters due to the nature of the Company’s business activities. The resolution of these matters may result in adverse judgments, fines, penalties, injunctions and other relief against the Company as well as monetary payments or other agreements and obligations. In addition, the Company may enter into settlements on certain matters in order to avoid the additional costs of engaging in litigation. Except as discussed below, the Company is unaware of any contingencies arising from such litigation that would require accrual or disclosure in the consolidated financial statements at June 30, 2023.

Primary Capital Mortgage, LLC (“PCM”) is subject to potential litigation related to claims for repurchases or indemnifications on loans that PCM has sold to third parties. At both June 30, 2023 and December 31, 2022, no such litigation demand was outstanding. Reserves for such potential litigation demands are included in the reserve for mortgage repurchases and indemnifications that totaled $1.1 million and $1.2 million at June 30, 2023 and December 31, 2022, respectively. The reserves for mortgage repurchases and indemnifications are included in liabilities held for sale on the consolidated balance sheets.

The Company did not have any general litigation reserve at June 30, 2023 or December 31, 2022.

Other Contingencies

PCM is subject to additional claims for repurchases or indemnifications on loans that PCM has sold to investors. At June 30, 2023 and December 31, 2022, outstanding demands for indemnification, repurchase or make whole payments totaled $3.3 million. The Company’s estimated exposure for such outstanding claims, as well as unasserted claims, is included in its reserve for mortgage repurchases and indemnifications.

Other Guarantees

In January 2023, Chapel Drive East, LLC, a wholly owned subsidiary of the FSU Student Venture, entered into a loan agreement (the "Construction Loan Agreement") with Oceanview Life and Annuity Company ("Oceanview") to finance the construction of a student housing complex (the "Construction Loan").

In connection with the Company's investment in the student housing complex, ACRES RF entered into guarantees related to the Construction Loan. Pursuant to the guarantees, Jason Pollack, Frank Dellaglio and ACRES RF (collectively, the "Guarantors"), for the benefit of Oceanview, provided limited "bad boy" guaranties to Oceanview pursuant to the Construction Loan Agreement until the earlier of the payment in full of the indebtedness or the date of a sale of the property pursuant to a foreclosure of the mortgage or deed or other transfer in lieu of foreclosure is accepted by Oceanview. The Guarantors also entered into a Completion Guaranty Agreement for the benefit of Oceanview to guaranty the timely completion of the project in accordance with the Construction Loan Agreement, as well as a Carry Guaranty Agreement, for the benefit of Oceanview to guaranty and unconditional payment by Chapel Drive East, LLC of all customary or necessary costs and expenses incurred in connection with the operation, maintenance and management of the property and an Environmental Indemnity Agreement jointly and severally in favor of Oceanview whereby the Guarantors serving as Indemnitors provided environmental representations and warranties, covenants and indemnifications (collectively the "Guaranties"). The Guaranties include certain financial covenants required of ACRES RF, including required net worth and liquidity requirements.

Unfunded Commitments

Unfunded commitments on the Company’s originated CRE loans generally fall into two categories: (1) pre-approved capital improvement projects and (2) new or additional construction costs subject, in each case, to the borrower meeting specified criteria. Upon completion of the improvements or construction, the Company would receive additional interest income on the advanced amount. Whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively.

Additionally, the Company and its JV partner have commitments related to its construction of a student housing complex. The Company and JV partner committed to a total funding of $31.2 million, of which $4.1 million was unfunded at June 30, 2023.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 21 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events, other than those described in Note 10, Note 12 and Note 16 that have occurred that would require adjustments to or disclosures in the consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of the Company, majority-owned or controlled subsidiaries and VIEs for which the Company is considered the primary beneficiary. All inter-company transactions and balances have been eliminated in consolidation.

Basis of Presentation

Basis of Presentation

All adjustments necessary to fairly present the Company’s financial position, results of operations and cash flows have been made.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and within the period of financial results. Actual results could differ from those estimates. Estimates affecting the accompanying consolidated financial statements include, but are not limited to, the net realizable and fair values of the Company’s investments and derivatives, the estimated useful lives used to calculate depreciation, the expected lives over which to amortize premiums and accrete discounts, reversals of or provisions for expected credit losses and the disclosure of contingent liabilities.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of three months or less at the time of purchase. At June 30, 2023 and December 31, 2022, $53.1 million and $63.3 million, respectively, of the reported cash balances exceeded the Federal Deposit Insurance Corporation and Securities Investor Protection Corporation deposit insurance limits of $250,000 per respective depository or brokerage institution. However, all of the Company’s cash deposits are held at multiple, established financial institutions, in multiple accounts associated with its parent and respective consolidated subsidiaries, to minimize credit risk exposure. The Company has not experienced, and does not expect, any losses on its cash and cash equivalents.

Restricted cash includes required account balance minimums primarily for the Company’s CRE debt securitizations as well as cash held in the syndicated corporate loan collateralized debt obligations (“CDOs”).

The following table provides a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to the total amount shown on the consolidated statements of cash flows (in thousands):

	June 30,
	2023		2022
Cash and cash equivalents	$	57,112	$	34,870
Restricted cash		15,251		25,367
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	72,363	$	60,237

Investment In Real Estate

Investment in Real Estate

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	Shorter of lease term or expected useful life
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	7 to 94 years
Intangible assets	90 days to 18 years
Lease liabilities	7 to 94 years

Income Taxes

Income Taxes

The Company recorded a full valuation allowance against its net deferred tax assets (tax effected expense of $21.0 million) at June 30, 2023, as the Company believes it is more likely than not that the deferred tax assets will not be realized. This assessment was based on the Company’s cumulative historical losses and uncertainties as to the amount of taxable income that would be generated in future years by the Company’s taxable REIT subsidiaries.

Earnings Per Share

Earnings per Share

The Company presents both basic and diluted earnings per share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income (loss) allocable to common shareholders by the weighted average number of shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

Reference Rate Reform

Reference Rate Reform

Historically, the Company has used LIBOR as the benchmark interest rate for its floating-rate whole loans and the Company has been exposed to LIBOR through its floating-rate borrowings. In March 2021, the United Kingdom’s, or U.K.’s, Financial Conduct Authority (“FCA”) announced that it would cease publication of the one-week and the two-month USD LIBOR immediately after December 31, 2021 and cease publication of the remaining tenors immediately after June 30, 2023. In July 2021, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee composed of large U.S. financial institutions, identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR.

Following this announcement, the Company began to transition the contractual benchmark rates of existing floating-rate whole loans and borrowings to alternate rates. Additionally, beginning January 1, 2022, all variable rate loans originated by the Company and all variable rate borrowings acquired had been benchmarked to SOFR. At June 30, 2023, the Company's whole loan portfolio had a carrying value of $1.9 billion of floating rate loans, all of which have interest rates tied to SOFR. At June 30, 2023, the Company had

$1.6 billion of outstanding floating rate borrowings, 3.2% or $51.5 million of which have interest rates tied to LIBOR and 96.8% or $1.5 billion of which have interest rates tied to SOFR.

The Company expects to complete the process of converting its LIBOR-based borrowings to an applicable benchmark interest rate during 2023.

Recent Accounting Standards

Recent Accounting Standards

Accounting Standards Adopted in 2023

In March 2022, the Financial Accounting Standards Board ("FASB") issued an amendment eliminating certain previously issued accounting guidance for troubled-debt restructurings (“TDRs”) and enhancing disclosure requirements surrounding refinancings, restructurings, and write-offs. Current GAAP provides an exception to the general recognition and measurement guidance for loan restructurings if they meet specific criteria to be considered TDRs. If a modification is a TDR, incremental expected losses are recorded in the allowance for credit losses upon modification and specific disclosures are required. The new amendment eliminates the TDR recognition and measurement guidance and requires the reporting entity to evaluate whether the modification represents a new loan or a continuation of an existing loan, consistent with accounting for other loan modifications. The amendment also requires public business entities to disclose current-period gross write-offs by year of origination for certain financing receivables and net investments in leases. The Company adopted this guidance during the six months ended June 30, 2023 and the adoption did not have a material impact on the Company's consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Reconciliation of cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash on the consolidated balance sheets to the total amount shown on the consolidated statements of cash flows (in thousands):

	June 30,
	2023		2022
Cash and cash equivalents	$	57,112	$	34,870
Restricted cash		15,251		25,367
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$	72,363	$	60,237

Schedule of Investments in Real Estate and Amortizes Intangible Assets Over The Estimated Useful Lives of Assets

The Company depreciates investments in real estate and amortizes related intangible assets over the estimated useful lives of the assets as follows:

Category	Term
Building	35 to 40 years
Building improvements	8 to 35 years
Site improvements	10 years
Tenant improvements	Shorter of lease term or expected useful life
Furniture, fixtures and equipment	3 to 12 years
Right of use assets	7 to 94 years
Intangible assets	90 days to 18 years
Lease liabilities	7 to 94 years

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VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2023

VIE, Primary Beneficiary

Schedule of variable interest entities

The following table shows the classification and carrying values of assets and liabilities of the Company’s Consolidated VIEs at June 30, 2023 (in thousands):

	CRE Securitizations		Other		Total
ASSETS
Restricted cash	$	14,201	$	282	$	14,483
Accrued interest receivable		9,144		—		9,144
CRE loans, pledged as collateral (1)		1,481,255		—		1,481,255
Other assets		27		56		83
Total assets (2)	$	1,504,627	$	338	$	1,504,965
LIABILITIES
Accounts payable and other liabilities	$	122	$	—	$	122
Accrued interest payable		3,305		—		3,305
Borrowings		1,234,303		—		1,234,303
Total liabilities	$	1,237,730	$	—	$	1,237,730

(1)Excludes allowance for credit losses.

(2)Assets of each of the Consolidated VIEs may only be used to settle the obligations of each respective VIE.

VIE, Not Primary Beneficiary

Schedule of variable interest entities

The following table shows the classification, carrying value and maximum exposure to loss with respect to the Company’s unconsolidated VIEs at June 30, 2023 (in thousands):

	Unsecured Junior Subordinated Debentures			Maximum Exposure to Loss
ASSETS
Accrued interest receivable	$	12		$	—
Investments in unconsolidated entities		1,548		$	1,548
Total assets		1,560
LIABILITIES
Accrued interest payable		404		N/A
Borrowings		51,548		N/A
Total liabilities		51,952
Net (liability) asset	$	(50,392	)

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SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

6 Months Ended

Jun. 30, 2023

Supplemental Cash Flow Elements [Abstract]

Schedule of other significant noncash transactions

The following table summarizes the Company’s supplemental disclosure of cash flow information (in thousands):

	For the Six Months Ended June 30,
	2023			2022
Supplemental cash flows:
Interest expense paid in cash	$	60,035		$	24,736
Income taxes paid in cash		101			180
Non-cash investing activities include the following:
Proceeds from the receipt of deed-in-lieu of foreclosure	$	20,900		$	—
Investment in properties held for sale related to the receipt of deed-in-lieu of foreclosure		(20,900	)		—
Non-cash financing activities include the following:
Incentive compensation paid in common stock	$	234		$	—
Distributions on preferred stock accrued but not paid		3,262			3,262

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LOANS (Tables)

6 Months Ended

Jun. 30, 2023

Loans Held For Investment [Abstract]

Summary of loans held for Investments by Asset type, Property type, and Geographic location

The following is a summary of the Company’s CRE loans held for investment by asset type (dollars in thousands, except amounts in footnotes):

Description	Quantity	Principal		Unamortized (Discount) Premium, net (1)			Amortized Cost		Allowance for Credit Losses			Carrying Value		Contractual Interest Rates (2)	Maturity Dates (3)(4)
At June 30, 2023:
Whole loans (5)(6)	77	$	1,968,322	$	(9,282	)	$	1,959,040	$	(20,951	)	$	1,938,089	1M BR plus 2.86% to 1M BR plus 8.61%	July 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	1,973,022	$	(9,282	)	$	1,963,740	$	(25,651	)	$	1,938,089
At December 31, 2022:
Whole loans (5)(6)	81	$	2,065,504	$	(12,614	)	$	2,052,890	$	(14,103	)	$	2,038,787	1M BR plus 2.85% to 1M BR plus 8.50%	January 2023 to July 2026
Mezzanine loan (5)	1		4,700		—			4,700		(4,700	)		—	10.00%	June 2028
Total		$	2,070,204	$	(12,614	)	$	2,057,590	$	(18,803	)	$	2,038,787

(1)Amounts include unamortized loan origination fees of $9.0 million and $12.3 million and deferred amendment fees of $257,000 and $308,000 at June 30, 2023 and December 31, 2022, respectively.

(2)Benchmark rates ("BR") comprise one-month LIBOR or one-month Term SOFR. At June 30, 2023, all of the Company's whole loans used one-month Term SOFR. Weighted-average one-month benchmark rates were 5.22% and 4.21% at June 30, 2023 and December 31, 2022, respectively. Additionally, weighted-average benchmark rate floors were 0.68% at both June 30, 2023 and December 31, 2022.

(3)Maturity dates exclude contractual extension options, subject to the satisfaction of certain terms that may be available to the borrowers.

(4)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(5)Substantially all loans are pledged as collateral under various borrowings at June 30, 2023 and December 31, 2022.

(6)CRE whole loans had $128.7 million and $158.2 million in unfunded loan commitments at June 30, 2023 and December 31, 2022, respectively. These unfunded loan commitments are advanced as the borrowers formally request additional funding and meet certain benchmarks, as permitted under the loan agreement, and any necessary approvals have been obtained.

The following is a summary of the Company’s CRE loans held for investment by property type and geographic location (dollars in thousands):

	June 30, 2023					December 31, 2022
Property Type	Carrying Value		% of Loan Portfolio			Carrying Value		% of Loan Portfolio
Multifamily	$	1,460,600		75.4	%	$	1,531,697		75.2	%
Office (1)(2)		254,503		13.1	%		269,201		13.2	%
Hotel		146,099		7.5	%		178,160		8.7	%
Self-Storage		68,862		3.6	%		51,704		2.5	%
Retail (3)		8,025		0.4	%		8,025		0.4	%
Total	$	1,938,089		100	%	$	2,038,787		100	%

(1)Includes one and two whole loans in maturity default with carrying values of $20.1 million and $42.5 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes one mezzanine loan with a par value of $4.7 million that is fully reserved at both June 30, 2023 and December 31, 2022.

(3)Comprises one whole loan in maturity default at both June 30, 2023 and December 31, 2022.

	June 30, 2023					December 31, 2022
Geographic Location	Carrying Value		% of Loan Portfolio			Carrying Value		% of Loan Portfolio
Southwest (1)	$	458,573		23.6	%	$	472,327		23.2	%
Southeast		410,732		21.2	%		438,403		21.5	%
Mountain		274,289		14.2	%		329,828		16.2	%
Mid Atlantic		251,757		13.0	%		248,740		12.2	%
Pacific		170,986		8.8	%		191,706		9.4	%
Northeast (2)		200,865		10.4	%		170,236		8.3	%
East North Central (3)		106,969		5.5	%		125,211		6.1	%
West North Central		63,918		3.3	%		62,336		3.1	%
Total	$	1,938,089		100	%	$	2,038,787		100	%

(1)Includes one whole loan in maturity default with carrying values of $20.1 million and $20.7 million at June 30, 2023 and December 31, 2022, respectively.

(2)Includes one whole loan in maturity default with a carrying value of $8.0 million at both June 30, 2023 and December 31, 2022. Also includes one mezzanine loan with a par value of $4.7 million that is fully reserved at both June 30, 2023 and December 31, 2022.

(3)Includes one whole loan in maturity default with a carrying value of $21.7 million at December 31, 2022.

Summary of Contractual Maturities of Commercial Real Estate Loans at Amortized Cost

The following is a summary of the contractual maturities of the Company’s CRE loans held for investment, at amortized cost (in thousands, except amounts in the footnotes):

Description	2023		2024		2025 and Thereafter		Total
At June 30, 2023:
Whole loans (1)	$	113,075	$	933,116	$	884,685	$	1,930,876
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	113,075	$	933,116	$	889,385	$	1,935,576
Description	2023		2024		2025 and Thereafter		Total
At December 31, 2022:
Whole loans (1)	$	268,120	$	882,175	$	851,031	$	2,001,326
Mezzanine loan		—		—		4,700		4,700
Total CRE loans (2)	$	268,120	$	882,175	$	855,731	$	2,006,026

(1)Maturity dates exclude two and three whole loans, with amortized costs of $28.2 million and $51.6 million, in maturity default at June 30, 2023 and December 31, 2022, respectively.

(2)At June 30, 2023, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $58.4 million, $90.8 million and $1.8 billion in 2023, 2024 and 2025 and thereafter, respectively. At December 31, 2022, the amortized costs of the floating-rate CRE whole loans, summarized by contractual maturity assuming full exercise of the extension options, were $113.8 million, $68.6 million and $1.8 billion in 2023, 2024 and 2025 and thereafter, respectively.

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FINANCING RECEIVABLES (Tables)

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Activity in Allowance for Credit Losses

The following table shows the activity in the allowance for credit losses for the six months ended June 30, 2023 and the year ended December 31, 2022 (in thousands):

	Six Months Ended June 30, 2023			Year Ended December 31, 2022
Allowance for credit losses at beginning of period	$	18,803		$	8,805
Provision for credit losses		7,796			12,295
Charge offs		(948	)		(2,297	)
Allowance for credit losses at end of period	$	25,651		$	18,803

Credit quality indicators for bank loans and commercial real estate loans

The criteria set forth below should be used as general guidelines. Therefore, not every loan will have all of the characteristics described in each category below.

Risk Rating	Risk Characteristics
1	• Property performance has surpassed underwritten expectations.
	• Occupancy is stabilized, the property has had a history of consistently high occupancy, and the property has a diverse and high-quality tenant mix.
2	• Property performance is consistent with underwritten expectations and covenants and performance criteria are being met or exceeded.
	• Occupancy is stabilized, near stabilized or is on track with underwriting.
3	• Property performance lags behind underwritten expectations.
	• Occupancy is not stabilized and the property has some tenancy rollover.
4	• Property performance significantly lags behind underwritten expectations. Performance criteria and loan covenants have required occasional waivers.
	• Occupancy is not stabilized and the property has a large amount of tenancy rollover.
5	• Property performance is significantly worse than underwritten expectations. The loan is not in compliance with loan covenants and performance criteria and may be in default. Expected sale proceeds would not be sufficient to pay off the loan at maturity.
	• The property has a material vacancy rate and significant rollover of remaining tenants.
	• An updated appraisal is required upon designation and updated on an as-needed basis.

All CRE loans are evaluated for any credit deterioration by debt asset management and certain finance personnel on at least a quarterly basis. Mezzanine loans may experience greater credit risks due to their nature as subordinated investments.

For the purpose of calculating the quarterly provision for credit losses under CECL, the Company pools CRE loans based on the underlying collateral property type and utilizes a probability of default and loss given default methodology for approximately one year after which it immediately reverts to a historical mean loss ratio.

Credit risk profiles of CRE loans at amortized cost were as follows (in thousands, except amounts in the footnote):

	Rating 1		Rating 2		Rating 3		Rating 4		Rating 5		Total (1)
At June 30, 2023:
Whole loans, floating-rate	$	—	$	1,353,353		514,179	$	63,344	$	28,164	$	1,959,040
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,353,353	$	514,179	$	63,344	$	32,864	$	1,963,740
At December 31, 2022:
Whole loans, floating-rate	$	—	$	1,635,376	$	309,491	$	85,226	$	22,797	$	2,052,890
Mezzanine loan		—		—		—		—		4,700		4,700
Total	$	—	$	1,635,376	$	309,491	$	85,226	$	27,497	$	2,057,590

(1)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

Credit risk profiles of CRE loans by origination year at amortized cost were as follows (in thousands, except amounts in the footnotes):

	2023		2022		2021		2020		2019			Prior		Total (1)
At June 30, 2023:
Whole loans, floating-rate: (2)
Rating 2	$	37,643	$	444,948	$	791,217	$	52,703	$	26,842		$	—	$	1,353,353
Rating 3		—		77,350		316,281		34,286		27,794			58,468		514,179
Rating 4		—		19,348		43,996		—		—			—		63,344
Rating 5		—		—		—		—		20,139			8,025		28,164
Total whole loans, floating-rate		37,643		541,646		1,151,494		86,989		74,775			66,493		1,959,040
Mezzanine loan (rating 5)		—		—		—		—		—			4,700		4,700
Total	$	37,643	$	541,646	$	1,151,494	$	86,989	$	74,775		$	71,193	$	1,963,740
Current Period Gross Write-Offs	$	—	$	—	$	—	$	—	$	(948	)	$	—	$	(948	)
	2022		2021		2020		2019		2018			Prior		Total (1)
At December 31, 2022:
Whole loans, floating-rate: (2)
Rating 2	$	526,606	$	1,003,060	$	64,944	$	26,977	$	13,789		$	—	$	1,635,376
Rating 3		—		192,490		44,657		27,881		44,463			—		309,491
Rating 4		—		—		—		20,742		64,484			—		85,226
Rating 5		—		—		—		22,797		—			—		22,797
Total whole loans, floating-rate		526,606		1,195,550		109,601		98,397		122,736			—		2,052,890
Mezzanine loan (rating 5)		—		—		—		—		4,700			—		4,700
Total	$	526,606	$	1,195,550	$	109,601	$	98,397	$	127,436		$	—	$	2,057,590

(1)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(2)Acquired CRE whole loans are grouped within each loan’s year of origination.

At both June 30, 2023 and December 31, 2022, the Company had one additional mezzanine loan included in other assets held for sale that had no carrying value.

Loan portfolios aging analysis

The following table presents the CRE loan portfolio aging analysis at the dates indicated for CRE loans at amortized cost (in thousands, except amounts in footnotes):

	30-59 Days		60-89 Days		Greater than 90 Days (1)		Total Past Due		Current (2)		Total Loans Receivable (3)		Total Loans > 90 Days and Accruing
At June 30, 2023:
Whole loans, floating-rate	$	—	$	—	$	28,164	$	28,164	$	1,930,876	$	1,959,040	$	—
Mezzanine loan (4)		4,700		—		—		4,700		—		4,700		—
Total	$	4,700	$	—	$	28,164	$	32,864	$	1,930,876	$	1,963,740	$	—
At December 31, 2022:
Whole loans, floating-rate	$	—	$	—	$	28,767	$	28,767	$	2,024,123	$	2,052,890	$	—
Mezzanine loan (4)		—		—		—		—		4,700		4,700		—
Total	$	—	$	—	$	28,767	$	28,767	$	2,028,823	$	2,057,590	$	—

(1)During the three and six months ended June 30, 2023, the Company recognized interest income of $837,000 and $1.8 million, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized interest income of $333,000 and $669,000, respectively, on two CRE whole loans with a principal payment past due greater than 90 days at June 30, 2023.

(2)Includes one CRE whole loan, with an amortized cost of $22.8 million, in maturity default at December 31, 2022.

(3)The total amortized cost of CRE whole loans excluded accrued interest receivable of $12.6 million and $11.9 million at June 30, 2023 and December 31, 2022, respectively.

(4)Fully reserved at both June 30, 2023 and December 31, 2022.

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2023

Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Abstract]

Schedule of Investments in Real Estate and Related Intangible Assets

The following table summarizes the book value of the Company’s investments in real estate and properties held for sale (in thousands, except amounts in the footnotes):

	June 30, 2023							December 31, 2022
	Cost Basis		Accumulated Depreciation & Amortization			Carrying Value		Cost Basis		Accumulated Depreciation & Amortization			Carrying Value
Assets:
Investments in real estate, equity:
Investments in real estate (1)	$	141,008	$	(3,645	)	$	137,363	$	123,219	$	(2,251	)	$	120,968
Right of use assets (2)(3)		19,665		(342	)		19,323		19,664		(205	)		19,459
Intangible assets (4)		11,474		(3,098	)		8,376		11,474		(2,594	)		8,880
Subtotal		172,147		(7,085	)		165,062		154,357		(5,050	)		149,307
Investments in real estate from lending activities:
Properties held for sale (5)		61,565		—			61,565		53,769		—			53,769
Total		233,712		(7,085	)		226,627		208,126		(5,050	)		203,076
Liabilities:
Investments in real estate, equity:
Mortgage payable		18,233		259			18,492		18,089		155			18,244
Other liabilities		247		(201	)		46		247		(183	)		64
Lease liabilities (3)(6)		43,260		(54	)		43,206		43,260		(393	)		42,867
Subtotal (7)		61,740		4			61,744		61,596		(421	)		61,175
Investments in real estate from lending activities:
Liabilities held for sale		3,025		—			3,025		3,025		—			3,025
Total		64,765		4			64,769		64,621		(421	)		64,200
Total net investments in real estate and properties held for sale (8)	$	168,947				$	161,858	$	143,505				$	138,876

(1)Includes $38.4 million of land, which is not depreciable, at June 30, 2023 and December 31, 2022, respectively.

(2)Primarily comprises a $18.9 million right of use asset, associated with an acquired ground lease of $42.8 million (see below) accounted for as an operating lease at June 30, 2023. At December 31, 2022, the value of the right of use asset was $19.0 million associated to the ground lease with a value of $42.4 million. Amortization is booked to real estate expenses on the consolidated statements of operations.

(3)Refer to Note 8 for additional information on the Company’s remaining operating leases.

(4)Primarily comprises a franchise intangible of $5.0 million and $5.3 million, a management contract intangible of $3.0 million and $3.1 million, and a customer list intangible of $321,000 and $427,000 at June 30, 2023 and December 31, 2022, respectively.

(5)At December 31, 2022, properties held for sale included two properties originally acquired in November 2020 and July 2022. At June 30, 2023, properties held for sale included the November 2020 acquisition, as well as the property acquired via deed-in-lieu of foreclosure during the three months ended June 30, 2023.

(6)Primarily comprises a $42.8 million ground lease with a remaining term of 93 years. Lease expense for the six months ended June 30, 2023 was $1.3 million.

(7)Excludes $1.9 million of deferred debt issuance costs on construction loans that can be drawn upon subsequent to June 30, 2023.

(8)Excludes items of working capital, either acquired or assumed.

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LEASES (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Summary of Operating Leases

The following table summarizes the Company’s operating leases (in thousands):

	June 30, 2023			December 31, 2022
Operating Leases:
Right of use assets	$	738		$	822
Lease liabilities	$	(782	)	$	(828	)
Weighted average remaining lease term:	6.2 years			6.7 years
Weighted average discount rate (1):		8.70	%		8.71	%

(1)The market discount rate is used, when readily determinable, in calculating the present value of lease payments for the operating lease liability. Otherwise, the incremental borrowing rate on the commencement date is used.

Summary of Operating Lease Costs and Cash Payments

The following table summarizes the Company’s operating lease costs and cash payments for the periods presented (in thousands):

	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022		Six Months Ended June 30, 2023		Six Months Ended June 30, 2022
Lease Cost:
Operating lease cost	$	40	$	24	$	115	$	48
Other Information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	38	$	24	$	75	$	47

Summary of Operating Leases Cash Flow Obligations on Undiscounted, Annual Basis

The following table summarizes the Company’s operating leases cash flow obligations on an undiscounted, annual basis (in thousands):

	Operating Leases
2023	$	77
2024		155
2025		159
2026		163
2027		167
Thereafter		303
Subtotal		1,024
Less: impact of discount		(242	)
Total	$	782

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BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Information with respect to borrowings

Certain information with respect to the Company’s borrowings is summarized in the following table (dollars in thousands, except amounts in the footnotes):

	Principal Outstanding	Unamortized Issuance Costs and Discounts	Outstanding Borrowings	Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
At June 30, 2023:
ACR 2021-FL1 Senior Notes	$674,372	$3,035	$671,337	6.70%	13.0 years	801,792
ACR 2021-FL2 Senior Notes	567,000	4,034	562,966	7.02%	13.6 years	700,000
Senior secured financing facility	50,995	3,298	47,697	8.87%	4.5 years	152,272
CRE - term warehouse financing facilities (1)	253,131	1,869	251,262	7.77%	1.3 years	377,208
Mortgage payable	18,854	362	18,492	8.95%	1.8 years	25,400
Construction loans	—	1,922	(1,922)	—	—	—
5.75% Senior Unsecured Notes	150,000	2,181	147,819	5.75%	3.1 years	—
Unsecured junior subordinated debentures	51,548	—	51,548	9.37%	13.2 years	—
Total	$1,765,900	$16,701	$1,749,199	7.04%	10.3 years	$2,056,672
	Principal Outstanding	Unamortized Issuance Costs and Discounts	Outstanding Borrowings	Weighted Average Borrowing Rate	Weighted Average Remaining Maturity	Value of Collateral
At December 31, 2022:
ACR 2021-FL1 Senior Notes	$675,223	$3,826	$671,397	5.81%	13.5 years	802,643
ACR 2021-FL2 Senior Notes	567,000	4,841	562,159	6.13%	14.1 years	700,000
Senior secured financing facility	91,549	3,659	87,890	7.94%	5.0 years	196,837
CRE - term warehouse financing facilities (1)	330,849	2,561	328,288	6.85%	1.8 years	453,550
Mortgage payable	18,710	466	18,244	8.08%	2.3 years	25,400
5.75% Senior Unsecured Notes	150,000	2,493	147,507	5.75%	3.6 years	—
Unsecured junior subordinated debentures	51,548	—	51,548	8.52%	13.7 years	—
Total	$1,884,879	$17,846	$1,867,033	6.29%	10.3 years	$2,178,430

(1)Principal outstanding includes accrued interest payable of $673,000 and $894,000 at June 30, 2023 and December 31, 2022, respectively.

Schedule of securitizations

The following table sets forth certain information with respect to the Company’s consolidated securitizations at June 30, 2023 (in thousands, except amount in footnotes):

	Closing Date	Maturity Date	Reinvestment Period End (1)	Total Note Paydowns from Closing Date through June 30, 2023
ACR 2021-FL1	May 2021	June 2036	May 2023	$	851
ACR 2021-FL2	December 2021	January 2037	December 2023	$	—

(1)The reinvestment period is the period in which principal proceeds received may be used to acquire CRE loans for reinvestment into the securitization.

Senior secured warehouse financing facilities and repurchase agreements

The following table sets forth certain information with respect to the Company’s financing arrangements (dollars in thousands, except amounts in footnotes):

	June 30, 2023								December 31, 2022
	Outstanding Borrowings			Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate	Outstanding Borrowings		Value of Collateral		Number of Positions as Collateral		Weighted Average Interest Rate
Senior Secured Financing Facility
Massachusetts Mutual Life Insurance Company (1)	$	47,697		$	152,272		7	8.87%	$	87,890	$	196,837		8	7.94%
CRE - Term Warehouse Financing Facilities (2)
JPMorgan Chase Bank, N.A. (3)		118,569			185,862		8	7.73%		186,783		255,095		11	6.74%
Morgan Stanley Mortgage Capital Holdings LLC (4)		132,693			191,346		9	7.81%		141,505		198,455		10	7.00%
Mortgage Payable
Readycap Commercial, LLC (5)		18,492			25,400		1	8.95%		18,244		25,400		1	8.08%
Construction Loans
Oceanview Life and Annuity Company (6)		(1,922	)	N/A		N/A		—%		—		—		—	—%
Total	$	315,529		$	554,880				$	434,422	$	675,787

(1)Includes $3.3 million and $3.7 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(2)Outstanding borrowings include accrued interest payable.

(3)Includes $836,000 and $1.1 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(4)Includes $1.0 million and $1.4 million of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(5)Includes $362,000 and $466,000 of deferred debt issuance costs at June 30, 2023 and December 31, 2022, respectively.

(6)Includes $1.9 million of deferred debt issuance costs at June 30, 2023.

Schedule of amount at risk under credit facility

The following table shows information about the amount at risk under the Company's financing arrangements (dollars in thousands):

	Amount at Risk		Weighted Average Remaining Maturity	Weighted Average Interest Rate
At June 30, 2023:
Senior Secured Financing Facility (1)
Massachusetts Mutual Life Insurance Company	$	101,490	4.5 years	8.87%
CRE - Term Warehouse Financing Facilities (1)
JPMorgan Chase Bank, N. A.	$	67,749	1.3 years	7.73%
Morgan Stanley Mortgage Capital Holdings LLC	$	58,965	1.3 years	7.81%
Mortgage Payable (2)
Readycap Commercial, LLC	$	6,452	1.8 years	8.95%

(1)Equal to the total of the estimated fair value of securities or loans sold and accrued interest receivable, minus the total of the warehouse financing agreement liabilities and accrued interest payable.

(2)Equal to the total of the estimated fair value of real estate property investment financed, minus the total of the mortgage payable agreement liability and accrued interest payable.

Schedule of contractual obligations and commitments

Contractual maturity dates of the Company’s borrowings’ principal outstanding by category and year are presented in the table below (in thousands):

	Total		2024		2025		2026		2027		2028 and Thereafter
At June 30, 2023:
CRE securitizations	$	1,241,372	$	—	$	—	$	—	$	—	$	1,241,372
Senior Secured Financing Facility		50,995		—		—		—		50,995		—
CRE - term warehouse financing facilities (1)		253,131		253,131		—		—		—		—
Mortgage payable		18,854		—		18,854		—		—		—
5.75% Senior Unsecured Notes		150,000		—		—		150,000		—		—
Unsecured junior subordinated debentures		51,548		—		—		—		—		51,548
Total	$	1,765,900	$	253,131	$	18,854	$	150,000	$	50,995	$	1,292,920

(1)Includes accrued interest payable in the balances of principal outstanding.

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SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of restricted common stock transactions

The following table summarizes the Company’s restricted common stock transactions:

	Manager			Directors			Total Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested shares at January 1, 2023		524,999			58,334			583,333		$	14.22
Issued		24,655			—			24,655			9.00
Vested		(174,653	)		(16,660	)		(191,313	)		13.90
Forfeited		—			—			—			—
Unvested shares at June 30, 2023		375,001			41,674			416,675		$	14.07

Summary of unvested restricted common stock expected to vest

The unvested restricted common stock shares are expected to vest during the following years:

	Shares
2023		—
2024		166,658
2025		166,671
2026		83,346
Total		416,675

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Reconciliation of basic and diluted losses per common share

The following table presents a reconciliation of basic and diluted losses per common share for the periods presented (dollars in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Net income	$	5,558		$	5,522		$	7,851		$	7,606
Net income allocated to preferred shares		(4,856	)		(4,856	)		(9,711	)		(9,711	)
Net loss allocable to non-controlling interest, net of taxes		115			24			261			24
Net income (loss) allocable to common shares	$	817		$	690		$	(1,599	)	$	(2,081	)
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic		8,059,978			8,421,800			8,084,064			8,525,481
Weighted average number of warrants outstanding (1)		391,995			466,661			391,995			466,661
Total weighted average number of common shares outstanding - basic		8,451,973			8,888,461			8,476,059			8,992,142
Effect of dilutive securities - unvested restricted stock		82,585			25,711			—			—
Weighted average number of common shares outstanding - diluted		8,534,558			8,914,172			8,476,059			8,992,142
Net income (loss) per common share - basic	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)
Net income (loss) per common share - diluted	$	0.10		$	0.08		$	(0.19	)	$	(0.23	)

(1)See Note 11 for further details regarding the warrants.

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DISTRIBUTIONS (Tables)

6 Months Ended

Jun. 30, 2023

Distributions [Abstract]

Distributions Declared

The following tables present distributions declared (on a per share basis) for the six months ended June 30, 2023 and the year ended December 31, 2022 with respect to the Company's Series C Preferred Stock and Series D Preferred Stock:

	Series C Preferred Stock					Series D Preferred Stock
	Date Paid	Total Distribution Paid		Distribution Per Share		Date Paid	Total Distribution Paid		Distribution Per Share
		(in thousands)					(in thousands)
2023
June 30	July 31	$	2,588	$	0.5390625	July 31	$	2,268	$	0.4921875
March 31	May 1		2,587		0.5390625	May 1		2,268		0.4921875
2022
December 31	January 30, 2023	$	2,587	$	0.5390625	January 30, 2023	$	2,268	$	0.4921875
September 30	October 31		2,587		0.5390625	October 31		2,268		0.4921875
June 30	August 1		2,588		0.5390625	August 1		2,268		0.4921875
March 31	May 2		2,588		0.5390625	May 2		2,268		0.4921875

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of accumulated other comprehensive loss

The following table presents the changes in net unrealized loss on derivatives, the sole component of accumulated other comprehensive loss, for the six months ended June 30, 2023 (in thousands):

	Accumulated Other Comprehensive Loss - Net Unrealized Loss on Derivatives
Balance at January 1, 2023	$	(6,394	)
Amounts reclassified from accumulated other comprehensive loss (1)		790
Balance at June 30, 2023	$	(5,604	)

(1)Amounts reclassified from accumulated other comprehensive loss are reclassified to interest expense on the Company’s consolidated statements of operations.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair value financial and non-financial assets not reported at fair value

The fair values of the Company’s remaining financial and non-financial assets that are not reported at fair value on the consolidated balance sheets are reported in the following table (in thousands):

				Fair Value Measurements
	Carrying Value			Fair Value		Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2023:
Assets:
CRE whole loans	$	1,938,089		$	1,968,322	$	—	$	—	$	1,968,322
Loan receivable - related party		11,125			8,096		—		—		8,096
Liabilities:
Senior notes in CRE securitizations		1,234,303			1,185,091		—		—		1,185,091
Senior secured financing facility		47,697			50,995		—		—		50,995
Warehouse financing facilities		251,262			253,131		—		—		253,131
Mortgage payable		18,492			18,854		—		—		18,854
Construction loan (1)		(1,922	)		—		—		—		—
5.75% Senior Unsecured Notes		147,819			129,615		—		—		129,615
Junior subordinated notes		51,548			32,364		—		—		32,364
At December 31, 2022:
Assets:
CRE whole loans	$	2,038,787		$	2,065,504	$	—	$	—	$	2,065,504
Loan receivable - related party		11,275			9,672		—		—		9,672
Liabilities:
Senior notes in CRE securitizations		1,233,556			1,179,313		—		—		1,179,313
Senior secured financing facility		87,890			91,549		—		—		91,549
Warehouse financing facilities		328,288			330,848		—		—		330,848
Mortgage payable		18,244			18,710		—		—		18,710
5.75% Senior Unsecured Notes		147,507			138,435		—		—		138,435
Junior subordinated notes		51,548			35,821		—		—		35,821

(1)Deferred debt issuance costs related to the acquisition of a construction loan that has not been drawn on and has no fair value.

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MARKET RISK AND DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Derivative Instruments And Hedging Activities Disclosure [Abstract]

The effect of derivative instruments on the statement of income

The following table presents the effect of the derivative instruments on the consolidated statements of operations for the six months ended June 30, 2023 and 2022 (in thousands):

		Realized and Unrealized Gain (Loss) (1)
	Consolidated Statements of Operations Location	Six Months Ended June 30, 2023			Six Months Ended June 30, 2022
Interest rate swap contracts, hedging	Interest expense	$	(790	)	$	(917	)

(1)Negative values indicate a decrease to the associated consolidated statement of operations line items.

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OFFSETTING OF FINANCIAL LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2023

Offsetting [Abstract]

Offsetting financial liabilities

The following table presents a summary of the Company’s offsetting of financial liabilities and derivative liabilities (in thousands, except amounts in footnotes):

	(i) Gross Amounts		(ii) Gross Amounts Offset on the		(iii) = (i) - (ii) Net Amounts of Liabilities Presented on the		(iv) Gross Amounts Not Offset on the Consolidated Balance Sheets
	of Recognized Liabilities		Consolidated Balance Sheets		Consolidated Balance Sheets		Financial Instruments (1)		Cash Collateral Pledged		(v) = (iii) - (iv) Net Amount
At June 30, 2023:
Term warehouse financing facilities (2)	$	251,262	$	—	$	251,262	$	251,262	$	—	$	—
At December 31, 2022:
Term warehouse financing facilities (2)	$	328,288	$	—	$	328,288	$	328,288	$	—	$	—

(1)Amounts represent financial instruments pledged that are available to be offset against liability balances associated with term warehouse financing facilities, repurchase agreements and derivatives.

(2)The combined fair values of loans pledged against the Company’s various term warehouse financing facilities and repurchase agreements was $377.2 million and $453.6 million at June 30, 2023 and December 31, 2022, respectively.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Summary Of Significant Accounting Policies [Line Items]
Cash balance in excess of federal deposit Insurance limit, amount	$ 53.1	$ 63.3
Operating loss carryforwards, valuation allowance, tax expense impact	21.0
Floating rate loans at carring value	$ 1,900.0
Accounting standards adopted	true
Accounting standards adopted date	Jun. 30, 2023
Accounting standards adopted material effect	false
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Summary Of Significant Accounting Policies [Line Items]
Floating Rate Borrowings value	$ 1,600.0
London Interbank Offered Rate (LIBOR)
Summary Of Significant Accounting Policies [Line Items]
Interest rate	3.20%
London Interbank Offered Rate (LIBOR) | CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Summary Of Significant Accounting Policies [Line Items]
Floating Rate Borrowings value	$ 51.5
Secured Overnight Financing Rate (SOFR) | CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Summary Of Significant Accounting Policies [Line Items]
Floating Rate Borrowings value	$ 1,500.0
Interest borrowing rate	96.80%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash and cash equivalents	$ 57,112	$ 66,232	$ 34,870
Restricted cash	15,251	38,579	25,367
Total cash, cash equivalents and restricted cash shown on the Company’s consolidated statements of cash flows	$ 72,363	$ 104,810	$ 60,237	$ 283,931

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Investments in Real Estate and Amortizes Intangible Assets Over The Estimated Useful Lives of Assets (Details)	6 Months Ended
	Jun. 30, 2023
Summary Of Significant Accounting Policies [Line Items]
Site improvements	10 years
Tenant improvements	Shorter of lease term or expected useful life
Maximum
Summary Of Significant Accounting Policies [Line Items]
Building	40 years
Building improvements	35 years
Furniture, fixtures and equipment	12 years
Right of use assets	94 years
Intangible assets	18 years
Lease liabilities	94 years
Minimum
Summary Of Significant Accounting Policies [Line Items]
Building	35 years
Building improvements	8 years
Furniture, fixtures and equipment	3 years
Right of use assets	7 years
Intangible assets	90 days
Lease liabilities	7 years

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VARIABLE INTEREST ENTITIES (Consolidated VIEs) (the Company is the primary beneficiary) (Details) - VIE, Primary Beneficiary	6 Months Ended
	Jun. 30, 2023 USD ($) Entity	Jun. 30, 2022 USD ($)	Dec. 31, 2022 Entity
Variable Interest Entity [Line Items]
Number of consolidated VIEs | Entity	5		5
Financial support, amount | $	$ 0	$ 0

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VARIABLE INTEREST ENTITIES (Charles Street-ACRES FSU Student Venture, LLC) (Details) - USD ($) $ in Thousands	1 Months Ended
	Apr. 30, 2022	Jun. 30, 2023	Dec. 31, 2022
Variable Interest Entity [Line Items]
Investments in unconsolidated entities		$ 1,548	$ 1,548
VIE, Not Primary Beneficiary | Charles Street-ACRES FSU Student Venture, LLC
Variable Interest Entity [Line Items]
Ownership percentage in VIE	72.10%
Investments in unconsolidated entities	$ 13,000

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VARIABLE INTEREST ENTITIES (Schedule of Carrying Value of Assets and Liabilities of Consolidated VIEs) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
ASSETS:
Restricted cash	$ 15,251	$ 38,579	$ 25,367
Accrued interest receivable	12,615	11,969
CRE loans	1,938,089	2,038,787
Other assets	3,551	4,364
Total assets	2,266,656	2,376,652
LIABILITIES
Accounts payable and other liabilities	15,597	10,391
Accrued interest payable	7,181	6,921
Borrowings	1,749,199	1,867,033
Total liabilities	1,822,655	1,935,338
VIE, Primary Beneficiary
ASSETS:
Restricted cash	14,483	38,180
Accrued interest receivable	9,144	8,184
Other assets	83	119
Total assets	1,504,965	1,503,132
LIABILITIES
Accounts payable and other liabilities	122	93
Accrued interest payable	3,305	3,083
Borrowings	1,234,303	1,233,556
Total liabilities	1,237,730	1,236,732
Pledged as Collateral | VIE, Primary Beneficiary
ASSETS:
CRE loans	1,481,255	$ 1,456,649
CRE Securitizations | VIE, Primary Beneficiary
ASSETS:
Restricted cash	14,201
Accrued interest receivable	9,144
Other assets	27
Total assets	1,504,627
LIABILITIES
Accounts payable and other liabilities	122
Accrued interest payable	3,305
Borrowings	1,234,303
Total liabilities	1,237,730
CRE Securitizations | Pledged as Collateral | VIE, Primary Beneficiary
ASSETS:
CRE loans	1,481,255
Other | VIE, Primary Beneficiary
ASSETS:
Restricted cash	282
Accrued interest receivable	0
Other assets	56
Total assets	338
LIABILITIES
Accounts payable and other liabilities	0
Accrued interest payable	0
Borrowings	0
Total liabilities	0
Other | Pledged as Collateral | VIE, Primary Beneficiary
ASSETS:
CRE loans	$ 0

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VARIABLE INTEREST ENTITIES (Unconsolidated VIEs) (the Company is not the primary beneficiary, but has a variable interest) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 1,548,000	$ 1,548,000
Borrowings	$ 1,749,199,000	$ 1,867,033,000
VIE, Not Primary Beneficiary | Investment in RCT I and II
Variable Interest Entity [Line Items]
Ownership percentage in VIE	100.00%
Investments in unconsolidated entities	$ 1,500,000
VIE, Not Primary Beneficiary | Interest in RCT I
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 774,000
Percentage of value of trusts owned	3.00%
Borrowings	$ 25,800,000
VIE, Not Primary Beneficiary | Interest in RCT II
Variable Interest Entity [Line Items]
Investments in unconsolidated entities	$ 774,000
Percentage of value of trusts owned	3.00%
Borrowings	$ 25,800,000

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VARIABLE INTEREST ENTITIES (Schedule of Classification, Carrying Value, and Maximum Exposure to Loss of Unconsolidated VIEs) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS:
Total assets	$ 2,266,656	$ 2,376,652
LIABILITIES
Total liabilities	1,822,655	$ 1,935,338
VIE, Not Primary Beneficiary | Interest Receivable
ASSETS:
Maximum Exposure to Loss	0
VIE, Not Primary Beneficiary | Investments in Unconsolidated Entities
ASSETS:
Maximum Exposure to Loss	1,548
Unsecured Junior Subordinated Debentures | VIE, Not Primary Beneficiary
ASSETS:
Accrued interest receivable	12
Investments in unconsolidated entities	1,548
Total assets	1,560
LIABILITIES
Accrued interest payable	404
Borrowings	51,548
Total liabilities	51,952
Net (liability) asset	$ (50,392)

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SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Supplemental cash flows:
Interest expense paid in cash	$ 60,035	$ 24,736
Income taxes paid in cash	101	180
Non-cash investing activities include the following:
Proceeds from the receipt of deed in lieu of foreclosure	20,900
Investment in properties held for sale related to the receipt of deed-in-lieu of foreclosure	(20,900)
Non-cash financing activities include the following:
Incentive compensation paid in common stock	234
Preferred Stock
Non-cash financing activities include the following:
Distributions accrued but not paid	$ 3,262	$ 3,262

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LOANS (Summary of Loans) (Details)	Jun. 30, 2023 USD ($) Loan Note	Dec. 31, 2022 USD ($) Loan Note	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Receivables With Imputed Interest [Line Items]
Amortized Cost, Loans held for investment	$ 1,963,740,000	$ 2,057,590,000
Less: allowance for credit losses	$ (25,651,000)	$ (18,803,000)		$ (8,805,000)
Recorded investment			$ 21,800,000
Mezzanine loan
Receivables With Imputed Interest [Line Items]
Number of bank loans | Note	1	1
Commercial Real Estate Loans
Receivables With Imputed Interest [Line Items]
Principal, Loans held for investment	$ 1,973,022,000	$ 2,070,204,000
Unamortized (Discount) Premium, net	(9,282,000)	(12,614,000)
Amortized Cost, Loans held for investment	1,963,740,000	2,057,590,000
Less: allowance for credit losses	(25,651,000)	(18,803,000)
Carrying Value, Loans held for investment	1,938,089,000	2,038,787,000
Loan origination fees	9,000,000.0	12,300,000
Deferred amendment fees	$ 257,000	$ 308,000
Concentration of loan portfolio risk	100.00%	100.00%
Commercial Real Estate Loans | Multifamily
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 1,460,600,000	$ 1,531,697,000
Concentration of loan portfolio risk	75.40%	75.20%
Commercial Real Estate Loans | Office
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 254,503,000	$ 269,201,000
Concentration of loan portfolio risk	13.10%	13.20%
Commercial Real Estate Loans | Hotel
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 146,099,000	$ 178,160,000
Concentration of loan portfolio risk	7.50%	8.70%
Commercial Real Estate Loans | Self Storage
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 68,862,000	$ 51,704,000
Concentration of loan portfolio risk	3.60%	2.50%
Commercial Real Estate Loans | Retail
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 8,025,000	$ 8,025,000
Concentration of loan portfolio risk	0.40%	0.40%
Commercial Real Estate Loans | Southwest
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 458,573,000	$ 472,327,000
Concentration of loan portfolio risk	23.60%	23.20%
Commercial Real Estate Loans | Southeast
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 410,732,000	$ 438,403,000
Concentration of loan portfolio risk	21.20%	21.50%
Commercial Real Estate Loans | Mountain
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 274,289,000	$ 329,828,000
Concentration of loan portfolio risk	14.20%	16.20%
Commercial Real Estate Loans | Mid Atlantic
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 251,757,000	$ 248,740,000
Concentration of loan portfolio risk	13.00%	12.20%
Commercial Real Estate Loans | Pacific
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 170,986,000	$ 191,706,000
Concentration of loan portfolio risk	8.80%	9.40%
Commercial Real Estate Loans | Northeast
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 200,865,000	$ 170,236,000
Concentration of loan portfolio risk	10.40%	8.30%
Commercial Real Estate Loans | East North Central
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 106,969,000	$ 125,211,000
Concentration of loan portfolio risk	5.50%	6.10%
Commercial Real Estate Loans | West North Central
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 63,918,000	$ 62,336,000
Concentration of loan portfolio risk	3.30%	3.10%
Commercial Real Estate Loans | Whole Loans
Receivables With Imputed Interest [Line Items]
Principal, Loans held for investment	$ 1,968,322,000	$ 2,065,504,000
Unamortized (Discount) Premium, net	(9,282,000)	(12,614,000)
Amortized Cost, Loans held for investment	1,959,040,000	2,052,890,000
Less: allowance for credit losses	(20,951,000)	(14,103,000)
Carrying Value, Loans held for investment	$ 1,938,089,000	$ 2,038,787,000
Quantity | Loan	77	81
Loans held for investment, unfunded loan commitments	$ 128,700,000	$ 158,200,000
Commercial Real Estate Loans | Whole Loans | Benchmark Rate
Receivables With Imputed Interest [Line Items]
Loan Receivable Interest Rate Floor	5.22%	4.21%
Commercial Real Estate Loans | Whole Loans | Benchmark Rate | Minimum
Receivables With Imputed Interest [Line Items]
Contractual Interest Rates	2.86%	2.85%
Commercial Real Estate Loans | Whole Loans | Benchmark Rate | Maximum
Receivables With Imputed Interest [Line Items]
Contractual Interest Rates	8.61%	8.50%
Commercial Real Estate Loans | Mezzanine loan
Receivables With Imputed Interest [Line Items]
Principal, Loans held for investment	$ 4,700,000	$ 4,700,000
Amortized Cost, Loans held for investment	4,700,000	4,700,000
Less: allowance for credit losses	$ (4,700,000)	$ (4,700,000)
Quantity | Loan	1	1
Contractual Interest Rates	10.00%	10.00%
Commercial Real Estate Loans | Mezzanine loan | Benchmark Rate
Receivables With Imputed Interest [Line Items]
Loan Receivable Interest Rate Floor	0.68%	0.68%
Commercial Real Estate Loans | Whole Loans in Default
Receivables With Imputed Interest [Line Items]
Amortized Cost, Loans held for investment	$ 28,200,000	$ 51,600,000
Quantity | Loan	2	3
Commercial Real Estate Loans | Whole Loans in Default | Office
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 20,100,000	$ 42,500,000
Quantity | Loan	1	2
Commercial Real Estate Loans | Whole Loans in Default | Retail
Receivables With Imputed Interest [Line Items]
Quantity | Loan	1	1
Commercial Real Estate Loans | Whole Loans in Default | Southwest
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 20,100,000	$ 20,700,000
Quantity | Loan	1	1
Commercial Real Estate Loans | Whole Loans in Default | Northeast
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment	$ 8,000,000.0	$ 8,000,000.0
Quantity | Loan	1	1
Commercial Real Estate Loans | Whole Loans in Default | East North Central
Receivables With Imputed Interest [Line Items]
Carrying Value, Loans held for investment		$ 21,700,000
Quantity | Loan		1
Commercial Real Estate Loans | Mazzanine Loans In Payment Defaults
Receivables With Imputed Interest [Line Items]
Number of bank loans | Loan	1	1
Recorded investment	$ 4,700,000	$ 4,700,000

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LOANS (Commercial Real Estate Loans, at Amortized Cost) (Details) $ in Thousands	Jun. 30, 2023 USD ($) Loan	Dec. 31, 2022 USD ($) Loan
Receivables With Imputed Interest [Line Items]
CRE loans	$ 1,963,740	$ 2,057,590
Commercial Real Estate Loans
Receivables With Imputed Interest [Line Items]
CRE loans	1,963,740	2,057,590
Commercial Real Estate Loans | Whole Loans in Default
Receivables With Imputed Interest [Line Items]
CRE loans	$ 28,200	$ 51,600
Number of loans | Loan	2	3
Commercial Real Estate Loans
Receivables With Imputed Interest [Line Items]
2023	$ 113,075	$ 268,120
2024	933,116	882,175
2025 and Thereafter	889,385	855,731
Amortized Cost, Loans held for investment	$ 1,935,576	$ 2,006,026
Commercial Real Estate Loans | Whole Loans in Default
Receivables With Imputed Interest [Line Items]
Number of loans | Loan	2	3
Commercial Real Estate Loans | Whole Loans
Receivables With Imputed Interest [Line Items]
2023	$ 113,075	$ 268,120
2024	933,116	882,175
2025 and Thereafter	884,685	851,031
Amortized Cost, Loans held for investment	1,930,876	2,001,326
Commercial Real Estate Loans | Mezzanine loan
Receivables With Imputed Interest [Line Items]
2025 and Thereafter	4,700	4,700
Amortized Cost, Loans held for investment	4,700	4,700
Commercial Real Estate Loans | Whole Loans | Whole Loan in Extension Option
Receivables With Imputed Interest [Line Items]
2023	58,400	113,800
2024	90,800	68,600
2025 and Thereafter	$ 1,800,000	$ 1,800,000

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LOANS (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Variable Interest Entity [Line Items]
Principal paydowns receivable	$ 0	$ 0
Commercial Real Estate Loans
Variable Interest Entity [Line Items]
Concentration of loan portfolio risk	100.00%	100.00%

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FINANCING RECEIVABLES (Activity in Allowance for Credit Losses) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Receivables [Abstract]
Allowance for credit losses at beginning of period	$ 18,803	$ 8,805	$ 8,805
Provision for (reversal of) credit losses, net	7,796	$ (1,278)	12,295
Charge offs	(948)		(2,297)
Allowance for credit losses at end of period	$ 25,651		$ 18,803

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FINANCING RECEIVABLES (Details)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($) Loan Note	Jun. 30, 2023 USD ($) Loan Note	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Loan Contract Note	Jun. 30, 2022 USD ($) Contract	Dec. 31, 2022 USD ($) Loan Note
Accounts Notes And Loans Receivable [Line Items]
Reversal of credit losses, net				$ 7,796,000	$ (1,278,000)	$ 12,295,000
Charge offs				$ 948,000		$ 2,297,000
Recorded investment			$ 21,800,000		$ 21,800,000
Percentage of total amortization cost					1.00%
Extended Maturity
Accounts Notes And Loans Receivable [Line Items]
No of extension agreements | Contract				0	3
Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
Number of bank loans | Note	1	1		1		1
Northeast Region | Retail Loan
Accounts Notes And Loans Receivable [Line Items]
Number of loans individually evaluated | Loan				1		1
Principal balance individually evaluated	$ 8,000,000.0	$ 8,000,000.0		$ 8,000,000.0		$ 8,000,000.0
Northeast Region | Office Loan
Accounts Notes And Loans Receivable [Line Items]
Principal balance individually evaluated	22,800,000	22,800,000		$ 22,800,000
Charge offs	948,000
Northeast Region | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
Number of loans individually evaluated | Loan				1		1
Principal balance individually evaluated	4,700,000	4,700,000		$ 4,700,000		$ 4,700,000
Southwest region | Office Loan
Accounts Notes And Loans Receivable [Line Items]
Number of loans individually evaluated | Loan				1		1
Principal balance individually evaluated	20,100,000	20,100,000		$ 20,100,000		$ 20,700,000
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
Reversal of credit losses, net		2,700,000	$ 524,000	7,800,000	$ 1,300,000
Commercial Real Estate Loans | Extended Maturity
Accounts Notes And Loans Receivable [Line Items]
No of extension agreements | Contract					3
Commercial Real Estate Loans | Three Whole Loans in Maturity Default
Accounts Notes And Loans Receivable [Line Items]
Recorded investment	$ 28,200,000	$ 28,200,000		$ 28,200,000		$ 51,600,000
Commercial Real Estate Loans | Whole Loan In Payment Defaults
Accounts Notes And Loans Receivable [Line Items]
Number of bank loans | Loan	2	2		2		3
Commercial Real Estate Loans | Mazzanine Loans In Payment Defaults
Accounts Notes And Loans Receivable [Line Items]
Number of bank loans | Loan	1	1		1		1
Recorded investment	$ 4,700,000	$ 4,700,000		$ 4,700,000		$ 4,700,000

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FINANCING RECEIVABLES (Credit Risk Profiles and Allowance For Loan Losses) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Accounts Notes And Loans Receivable [Line Items]
CRE loans	$ 1,963,740	$ 2,057,590
Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	1,963,740	2,057,590
Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	1,959,040	2,052,890
Commercial Real Estate Loans | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
CRE loans	4,700	4,700
Rating1 | Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	0	0
Rating1 | Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	0	0
Rating1 | Commercial Real Estate Loans | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
CRE loans	0	0
Rating 2 | Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	1,353,353	1,635,376
Rating 2 | Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	1,353,353	1,635,376
Rating 2 | Commercial Real Estate Loans | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
CRE loans	0	0
Rating 3 | Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	514,179	309,491
Rating 3 | Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	514,179	309,491
Rating 3 | Commercial Real Estate Loans | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
CRE loans	0	0
Rating 4 | Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	63,344	85,226
Rating 4 | Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	63,344	85,226
Rating 4 | Commercial Real Estate Loans | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
CRE loans	0	0
Rating 5 | Commercial Real Estate Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	32,864	27,497
Rating 5 | Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
CRE loans	28,164	22,797
Rating 5 | Commercial Real Estate Loans | Mezzanine loan
Accounts Notes And Loans Receivable [Line Items]
CRE loans	$ 4,700	$ 4,700

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FINANCING RECEIVABLES (Credit Risk Profiles and Allowance For Loan Losses) (Parenthetical) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Commercial Real Estate Loans | Whole Loans
Accounts Notes And Loans Receivable [Line Items]
Recorded investment excluded accrued interest receivable	$ 12.6	$ 11.9

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FINANCING RECEIVABLES (Credit Risk Profiles of CRE Loans by Origination Year at Amortized Costs) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year write offs, 2019	$ (948)
Loans and receivables by origination year write offs, Total	(948)
Commercial Real Estate Loans
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	37,643	$ 526,606
Loans and receivables by origination year, 2022/2021	541,646	1,195,550
Loans and receivables by origination year, 2021/2020	1,151,494	109,601
Loans and receivables by origination year, 2020/2019	86,989	98,397
Loans and receivables by origination year, 2019/2018	74,775	127,436
Loans and receivables by origination year, Prior	71,193	0
Loans and receivables by origination year, Total	1,963,740	2,057,590
Whole Loans | Commercial Real Estate Loans
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	37,643	526,606
Loans and receivables by origination year, 2022/2021	541,646	1,195,550
Loans and receivables by origination year, 2021/2020	1,151,494	109,601
Loans and receivables by origination year, 2020/2019	86,989	98,397
Loans and receivables by origination year, 2019/2018	74,775	122,736
Loans and receivables by origination year, Prior	66,493	0
Loans and receivables by origination year, Total	1,959,040	2,052,890
Whole Loans | Commercial Real Estate Loans | Rating 2
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	37,643	526,606
Loans and receivables by origination year, 2022/2021	444,948	1,003,060
Loans and receivables by origination year, 2021/2020	791,217	64,944
Loans and receivables by origination year, 2020/2019	52,703	26,977
Loans and receivables by origination year, 2019/2018	26,842	13,789
Loans and receivables by origination year, Prior	0	0
Loans and receivables by origination year, Total	1,353,353	1,635,376
Whole Loans | Commercial Real Estate Loans | Rating 3
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	0	0
Loans and receivables by origination year, 2022/2021	77,350	192,490
Loans and receivables by origination year, 2021/2020	316,281	44,657
Loans and receivables by origination year, 2020/2019	34,286	27,881
Loans and receivables by origination year, 2019/2018	27,794	44,463
Loans and receivables by origination year, Prior	58,468	0
Loans and receivables by origination year, Total	514,179	309,491
Whole Loans | Commercial Real Estate Loans | Rating 4
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	0	0
Loans and receivables by origination year, 2022/2021	19,348	0
Loans and receivables by origination year, 2021/2020	43,996	0
Loans and receivables by origination year, 2020/2019	0	20,742
Loans and receivables by origination year, 2019/2018	0	64,484
Loans and receivables by origination year, Prior	0	0
Loans and receivables by origination year, Total	63,344	85,226
Whole Loans | Commercial Real Estate Loans | Rating 5
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	0	0
Loans and receivables by origination year, 2022/2021	0	0
Loans and receivables by origination year, 2021/2020	0	0
Loans and receivables by origination year, 2020/2019	0	22,797
Loans and receivables by origination year, 2019/2018	20,139	0
Loans and receivables by origination year, Prior	8,025	0
Loans and receivables by origination year, Total	28,164	22,797
Mezzanine loan | Commercial Real Estate Loans | Rating 5
Financing Receivable Recorded Investment [Line Items]
Loans and receivables by origination year, 2023/2022	0	0
Loans and receivables by origination year, 2022/2021	0	0
Loans and receivables by origination year, 2021/2020	0	0
Loans and receivables by origination year, 2020/2019	0	0
Loans and receivables by origination year, 2019/2018	0	4,700
Loans and receivables by origination year, Prior	4,700	0
Loans and receivables by origination year, Total	$ 4,700	$ 4,700

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FINANCING RECEIVABLES (Credit Risk Profiles of CRE Loans by Origination Year at Amortized Costs) (Parenthetical) (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment excluded accrued interest receivable	$ 12.6	$ 11.9

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FINANCING RECEIVABLES (Loan Portfolio Aging Analysis) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	$ 1,963,740	$ 2,057,590
Total Loans Receivable (3)	1,963,740	2,057,590
Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,963,740	2,057,590
Total Loans Receivable (3)	1,963,740	2,057,590
Total Loans > 90 Days and Accruing	0	0
Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,959,040	2,052,890
Total Loans Receivable (3)	1,959,040	2,052,890
Total Loans > 90 Days and Accruing	0	0
Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	4,700	4,700
Total Loans Receivable (3)	4,700	4,700
Total Loans > 90 Days and Accruing	0	0
30-59 Days | Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	4,700	0
Total Loans Receivable (3)	4,700	0
30-59 Days | Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
Total Loans Receivable (3)	0	0
30-59 Days | Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	4,700	0
Total Loans Receivable (3)	4,700	0
60-89 Days | Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
Total Loans Receivable (3)	0	0
60-89 Days | Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
Total Loans Receivable (3)	0	0
60-89 Days | Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
Total Loans Receivable (3)	0	0
Greater than 90 Days | Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	28,164	28,767
Total Loans Receivable (3)	28,164	28,767
Greater than 90 Days | Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	28,164	28,767
Total Loans Receivable (3)	28,164	28,767
Greater than 90 Days | Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	0
Total Loans Receivable (3)	0	0
Total Past Due | Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	32,864	28,767
Total Loans Receivable (3)	32,864	28,767
Total Past Due | Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	28,164	28,767
Total Loans Receivable (3)	28,164	28,767
Total Past Due | Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	4,700	0
Total Loans Receivable (3)	4,700	0
Current | Commercial Real Estate Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,930,876	2,028,823
Total Loans Receivable (3)	1,930,876	2,028,823
Current | Commercial Real Estate Loans | Whole Loans
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	1,930,876	2,024,123
Total Loans Receivable (3)	1,930,876	2,024,123
Current | Commercial Real Estate Loans | Mezzanine loan
Financing Receivable Recorded Investment Past Due [Line Items]
CRE loans	0	4,700
Total Loans Receivable (3)	$ 0	$ 4,700

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FINANCING RECEIVABLES (Loan Portfolio Aging Analysis) (Parenthetical) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Financing Receivable Recorded Investment Past Due [Line Items]
Interest income	$ 47,148,000	$ 27,019,000	$ 92,477,000	$ 49,695,000
Recorded investment		21,800,000		21,800,000
Commercial Real Estate Loans | Whole Loans In Maturity Default
Financing Receivable Recorded Investment Past Due [Line Items]
Interest income	837,000	$ 333,000	1,800,000	$ 669,000
Recorded investment					$ 22,800,000
Recorded investment excluded accrued interest receivable	$ 12,600,000		$ 12,600,000		$ 11,900,000

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Details)	1 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) Property	Feb. 28, 2023 USD ($)	Jun. 30, 2023 USD ($) Property	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Property	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Number of real estate properties | Property	6		6		6
Amortization expense on intangible assets			$ 251,000	$ 437,000	$ 503,000	$ 1,400,000
Investments in real estate	$ 137,363,000		137,363,000		137,363,000		$ 120,968,000
Amortization expense on intangible assets during 2023	768,000		768,000		768,000
Amortization expense on intangible assets during 2024	1,200,000		1,200,000		1,200,000
Amortization expense on intangible assets during 2025	1,100,000		1,100,000		1,100,000
Amortization expense on intangible assets during 2026	1,000,000.0		1,000,000.0		1,000,000.0
Amortization expense on intangible assets during 2027	748,000		748,000		748,000
Amortization expense on intangible assets during 2028	748,000		748,000		748,000
Lease Expense			38,000	24,000	75,000	47,000
Proceeds from Sale of Property Held-for-sale		$ 15,100,000
Gain (Loss) on Disposition of Property Plant Equipment		745,000
Selling costs of property held for sale		$ 845,000
Allowance for credit losses	25,651,000		25,651,000		25,651,000		$ 18,803,000	$ 8,805,000
CRE Whole Loan
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Fair value of assets acquired	20,900,000
Allowance for credit losses	$ 948,000		948,000		948,000
Ground Lease | Above-market Leases
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Offsetting amortization on right of use assets and amortization lease liability			51,000	51,000	102,000	51,000
Offsetting amortization on right of use assets accretion and amortization lease liability			615,000	114,000	$ 1,200,000	114,000
Second Ground Lease | Above-market Leases
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Original term of operating lease acquired					99 years
Remaining term of operating lease acquired					94 years
Lease Expense			$ 426,000	$ 413,000	$ 852,000	$ 413,000
Operating lease, remaining lease term	93 years		93 years		93 years
Percentage of increase in ground lease payments					3.00%
Investments in Real Estate
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Number of real estate properties | Property	4		4		4
Properties Held for Sale
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Number of real estate properties | Property	2		2		2

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Schedule of Investments in Real Estate and Related Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Investment in Real Estate, Carrying Value	$ 137,363	$ 120,968
Right of use Assets, Carrying Value	20,061	20,281
Assets Acquired, Cost Basis	233,712	208,126
Assets Acquired, Accumulated Depreciation & Amortization	(7,085)	(5,050)
Assets Acquired, Carrying Value	226,627	203,076
Liabilities Assumed, Cost Basis	64,765	64,621
Liabilities Assumed, Accumulated Depreciation & Amortization	(4)	(421)
Liabilities Assumed, Carrying Value	64,769	64,200
Assets Acquired and Liabilities Assumed, Cost Basis	168,947	143,505
Asset Acquired and Liabilities Assumed, Carrying Value	161,858	138,876
Investments In Real Estate Equity
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Investment in Real Estate, Cost Basis	141,008	123,219
Investment in Real Estate Accumulated Depreciation & Amortization	(3,645)	(2,251)
Investment in Real Estate, Carrying Value	137,363	120,968
Right of use Assets, Cost Basis	19,665	19,664
Right of use Assets Accumulated Depreciation & Amortization	(342)	(205)
Right of use Assets, Carrying Value	19,323	19,459
Intangible Assets, Cost Basis	11,474	11,474
Intangible Assets, Accumulated Depreciation & Amortization	(3,098)	(2,594)
Intangible Assets, Carrying Value	8,376	8,880
Assets Acquired, Cost Basis	172,147	154,357
Assets Acquired, Accumulated Depreciation & Amortization	(7,085)	(5,050)
Assets Acquired, Carrying Value	165,062	149,307
Mortgage payable, Cost Basis	18,233	18,089
Mortgage payable, Accumulated Depreciation & Amortization	259	155
Mortgage payable, Carrying Value	18,492	18,244
Other liabilities, Cost Basis	247	247
Other liabilities, Accumulated Depreciation & Amortization	(201)	(183)
Other liabilities, Carrying Value	46	64
Lease liabilities, Cost Basis	43,260	43,260
Lease liabilities, Accumulated Depreciation & Amortization	(54)	(393)
Lease liabilities, Carrying Value	43,206	42,867
Liabilities Assumed, Cost Basis	61,740	61,596
Liabilities Assumed, Accumulated Depreciation & Amortization	(4)	(421)
Liabilities Assumed, Carrying Value	61,744	61,175
Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Property Held for Sale, Cost Basis	61,565	53,769
Properties Held for Sale, Carrying Value	61,565	53,769
Liabilities held for sale liabilities, Cost Basis	3,025	3,025
Liabilities held for sale liabilities, Carrying Value	$ 3,025	$ 3,025

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INVESTMENTS IN REAL ESTATE AND OTHER ACQUIRED ASSETS AND ASSUMED LIABILITIES (Schedule of Investments in Real Estate and Related Intangible Assets) (Parenthetical) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Right of use assets	$ 20,061,000		$ 20,061,000		$ 20,281,000
Unamortized issuance costs and discounts	16,701,000		16,701,000		17,846,000
Lease Expense	38,000	$ 24,000	75,000	$ 47,000
Acquired Ground Lease
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Right of use assets	18,900,000		18,900,000
Investments In Real Estate From Lending Activities
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Ground leases	42,800,000		42,800,000
Investments In Real Estate Equity [Member]
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Right of use assets	19,323,000		19,323,000		19,459,000
Ground leases	42,800,000		42,800,000		42,400,000
Unamortized issuance costs and discounts	1,900,000		1,900,000
Investments In Real Estate Equity [Member] | Land
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Investments in real estate	38,400,000		38,400,000		38,400,000
Franchise Agreement | Investments In Real Estate Equity [Member]
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Intangible assets	5,000,000.0		5,000,000.0		5,300,000
Management Contract | Investments In Real Estate Equity [Member]
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Intangible assets	3,000,000.0		3,000,000.0		3,100,000
Customer Lists | Investments In Real Estate Equity [Member]
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Intangible assets	$ 321,000		$ 321,000		427,000
Land Lease
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Operating lease, remaining lease term	93 years		93 years
Lease Expense			$ 1,300,000
Ground Lease
Investment In Real Estate And Other Acquired Assets And Assumed Liabilities [Line Items]
Right of use assets					$ 19,000,000.0

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LEASES (Details) - Office Space and Office Equipment	6 Months Ended
	Jun. 30, 2023
Minimum
Lessee Lease Description [Line Items]
Operating lease expiration date	2024-01
Maximum
Lessee Lease Description [Line Items]
Operating lease expiration date	2029-09

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LEASES (Summary of Operating Leases) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Right of use assets	$ 738	$ 822
Lease liabilities	$ (782)	$ (828)
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities	Other Liabilities
Weighted average remaining lease term:	6 years 2 months 12 days	6 years 8 months 12 days
Weighted average discount rate:	8.70%	8.71%

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LEASES (Summary of Operating Lease Costs and Cash Payments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Lease Cost:
Operating lease cost	$ 40	$ 24	$ 115	$ 48
Other Information:
Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases	$ 38	$ 24	$ 75	$ 47

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LEASES (Summary of Operating Leases Cash Flow Obligations on Undiscounted, Annual Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
2023	$ 77
2024	155
2025	159
2026	163
2027	167
Thereafter	303
Subtotal	1,024
Less: impact of discount	(242)
Total	$ 782	$ 828
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Other Liabilities	Other Liabilities

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INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Schedule Of Equity Method Investments [Line Items]
Investments in unconsolidated entities	$ 1,548,000		$ 1,548,000		$ 1,548,000
VIE, Not Primary Beneficiary | Investment in RCT I and II
Schedule Of Equity Method Investments [Line Items]
Ownership percentage in VIE			100.00%		100.00%
Investments in unconsolidated entities	1,500,000		$ 1,500,000		$ 1,500,000
Dividends from investments in unconsolidated entities	$ 37,000	$ 19,000	$ 70,000	$ 35,000
VIE, Not Primary Beneficiary | Interest in RCT I
Schedule Of Equity Method Investments [Line Items]
Percentage of value of trusts owned	3.00%		3.00%		3.00%
VIE, Not Primary Beneficiary | Interest in RCT II
Schedule Of Equity Method Investments [Line Items]
Percentage of value of trusts owned	3.00%		3.00%		3.00%

XML

BORROWINGS (Schedule of Debt) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Principal Outstanding	$ 1,765,900	$ 1,884,879
Unamortized Issuance Costs and Discounts	16,701	17,846
Outstanding Borrowings	$ 1,749,199	$ 1,867,033
Weighted Average Borrowing Rate	7.04%	6.29%
Weighted Average Remaining Maturity	10 years 3 months 18 days	10 years 3 months 18 days
Value of Collateral	$ 2,056,672	$ 2,178,430
ACR 2021-FL1 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding	674,372	675,223
Unamortized Issuance Costs and Discounts	3,035	3,826
Outstanding Borrowings	$ 671,337	$ 671,397
Weighted Average Borrowing Rate	6.70%	5.81%
Weighted Average Remaining Maturity	13 years	13 years 6 months
Value of Collateral	$ 801,792	$ 802,643
ACR 2021-FL2 Senior Notes
Debt Instrument [Line Items]
Principal Outstanding	567,000	567,000
Unamortized Issuance Costs and Discounts	4,034	4,841
Outstanding Borrowings	$ 562,966	$ 562,159
Weighted Average Borrowing Rate	7.02%	6.13%
Weighted Average Remaining Maturity	13 years 7 months 6 days	14 years 1 month 6 days
Value of Collateral	$ 700,000	$ 700,000
Senior Secured Financing Facility
Debt Instrument [Line Items]
Principal Outstanding	50,995	91,549
Unamortized Issuance Costs and Discounts	3,298	3,659
Outstanding Borrowings	$ 47,697	$ 87,890
Weighted Average Borrowing Rate	8.87%	7.94%
Weighted Average Remaining Maturity	4 years 6 months	5 years
Value of Collateral	$ 152,272	$ 196,837
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Principal Outstanding	253,131	330,849
Unamortized Issuance Costs and Discounts	1,869	2,561
Outstanding Borrowings	$ 251,262	$ 328,288
Weighted Average Borrowing Rate	7.77%	6.85%
Weighted Average Remaining Maturity	1 year 3 months 18 days	1 year 9 months 18 days
Value of Collateral	$ 377,208	$ 453,550
Mortgage Payable
Debt Instrument [Line Items]
Principal Outstanding	18,854	18,710
Unamortized Issuance Costs and Discounts	362	466
Outstanding Borrowings	$ 18,492	$ 18,244
Weighted Average Borrowing Rate	8.95%	8.08%
Weighted Average Remaining Maturity	1 year 9 months 18 days	2 years 3 months 18 days
Value of Collateral	$ 25,400	$ 25,400
Construction Loans
Debt Instrument [Line Items]
Principal Outstanding	0
Unamortized Issuance Costs and Discounts	1,922
Outstanding Borrowings, Unamortized Issuance Costs and Discounts	$ (1,922)
Weighted Average Borrowing Rate	0.00%
Value of Collateral	$ 0
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Principal Outstanding	150,000	150,000
Unamortized Issuance Costs and Discounts	2,181	2,493
Outstanding Borrowings	$ 147,819	$ 147,507
Weighted Average Borrowing Rate	5.75%	5.75%
Weighted Average Remaining Maturity	3 years 1 month 6 days	3 years 7 months 6 days
Value of Collateral	$ 0	$ 0
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Principal Outstanding	51,548	51,548
Unamortized Issuance Costs and Discounts	0	0
Outstanding Borrowings	$ 51,548	$ 51,548
Weighted Average Borrowing Rate	9.37%	8.52%
Weighted Average Remaining Maturity	13 years 2 months 12 days	13 years 8 months 12 days
Value of Collateral	$ 0	$ 0

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BORROWINGS (Schedule of Debt) (Parenthetical) (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Aug. 16, 2021
Debt Instrument [Line Items]
Accrued interest payable	$ 7,181,000	$ 6,921,000
Interest rate, stated percentage			5.75%
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Accrued interest payable	$ 673,000	$ 894,000
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Interest rate, stated percentage	5.75%	5.75%

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BORROWINGS (Securitization) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
ACR 2021-FL1 Senior Notes
Debt Instrument [Line Items]
Closing Date	2021-05
Maturity Date	2036-06
End of Designated Principal Reinvestment Period	2023-05
Total Note Paydowns Received from Closing Date through March 31. 2023	$ 851
ACR 2021-FL2 Senior Notes
Debt Instrument [Line Items]
Closing Date	2021-12
Maturity Date	2037-01
End of Designated Principal Reinvestment Period	2023-12
Total Note Paydowns Received from Closing Date through March 31. 2023	$ 0

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BORROWINGS (XAN 2020-RSO8) (Details) $ in Millions	Mar. 31, 2020 USD ($)
XAN 2020-RSO8 Senior Notes
Debt Instrument [Line Items]
Closing transaction amount	$ 522.6

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BORROWINGS (XAN 2020-RSO9) (Details) $ in Millions	Sep. 30, 2020 USD ($)
XAN 2020-RSO9 Senior Notes
Debt Instrument [Line Items]
Closing transaction amount	$ 297.0

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BORROWINGS (ACR 2021-FL1) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	May 31, 2021
Debt Instrument [Line Items]
Face amount of debt issued	$ 315,529	$ 434,422
ACR 2021-FL1 Senior Notes
Debt Instrument [Line Items]
Closing transaction amount			$ 802,600
Face amount of debt issued			$ 675,200
ACR 2021-FL1 Senior Notes | Subsidiary of ACRES Realty Funding, Inc | Debt Instrument, Class F
Debt Instrument [Line Items]
Interest ownership percentage on outstanding debt			100.00%
ACR 2021-FL1 Senior Notes | Subsidiary of ACRES Realty Funding, Inc | Debt Instrument, Class G
Debt Instrument [Line Items]
Interest ownership percentage on outstanding debt			100.00%
ACR 2021-FL1 Senior Notes | Subsidiary of ACRES Realty Funding, Inc | Preferred Stock
Debt Instrument [Line Items]
Interest ownership percentage on outstanding debt			100.00%

XML

BORROWINGS (ACR 2021-FL2) (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Face amount of debt issued	$ 315,529	$ 434,422
ACR 2021-FL2 Senior Notes
Debt Instrument [Line Items]
Closing transaction amount			$ 700,000
Face amount of debt issued			$ 567,000
ACR 2021-FL2 Senior Notes | Subsidiary of ACRES Realty Funding, Inc | Debt Instrument, Class F
Debt Instrument [Line Items]
Interest ownership percentage on outstanding debt			100.00%
ACR 2021-FL2 Senior Notes | Subsidiary of ACRES Realty Funding, Inc | Debt Instrument, Class G
Debt Instrument [Line Items]
Interest ownership percentage on outstanding debt			100.00%
ACR 2021-FL2 Senior Notes | Subsidiary of ACRES Realty Funding, Inc | Preferred Stock [Member]
Debt Instrument [Line Items]
Interest ownership percentage on outstanding debt			100.00%

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BORROWINGS (Senior Secured Financing Facility and Term Warehouse Financing Facilities, Mortgage Payable and Construction Loan) (Details) $ in Thousands	Jun. 30, 2023 USD ($) Loan	Dec. 31, 2022 USD ($) Loan
Debt Instrument [Line Items]
Outstanding Borrowings	$ 315,529	$ 434,422
Value of Collateral	$ 554,880	$ 675,787
Weighted Average Interest Rate	7.04%	6.29%
Senior Secured Financing Facility | Massachusetts Mutual Life Insurance Company
Debt Instrument [Line Items]
Outstanding Borrowings, Unamortized Issuance Costs and Discounts	$ 47,697	$ 87,890
Value of Collateral	$ 152,272	$ 196,837
Number of Positions as Collateral | Loan	7	8
Weighted Average Interest Rate	8.87%	7.94%
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Outstanding Borrowings	$ 118,569	$ 186,783
Value of Collateral	$ 185,862	$ 255,095
Number of Positions as Collateral | Loan	8	11
Weighted Average Interest Rate	7.73%	6.74%
CRE - Term Warehouse Financing Facilities | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Outstanding Borrowings	$ 132,693	$ 141,505
Value of Collateral	$ 191,346	$ 198,455
Number of Positions as Collateral | Loan	9	10
Weighted Average Interest Rate	7.81%	7.00%
Mortgage Payable | Readycap Commercial, LLC
Debt Instrument [Line Items]
Outstanding Borrowings	$ 18,492	$ 18,244
Value of Collateral	$ 25,400	$ 25,400
Number of Positions as Collateral | Loan	1	1
Weighted Average Interest Rate	8.95%	8.08%
Mortgage Payable | Oceanview Life and Annuity Company
Debt Instrument [Line Items]
Weighted Average Interest Rate	0.00%
Construction Loans
Debt Instrument [Line Items]
Outstanding Borrowings, Unamortized Issuance Costs and Discounts	$ (1,922)
Weighted Average Interest Rate	0.00%
Construction Loans | Oceanview Life and Annuity Company
Debt Instrument [Line Items]
Outstanding Borrowings		$ 0
Outstanding Borrowings, Unamortized Issuance Costs and Discounts	$ (1,922)
Value of Collateral		$ 0
Number of Positions as Collateral | Loan		0
Weighted Average Interest Rate		0.00%

XML

BORROWINGS (Senior Secured Financing Facility and Term Warehouse Financing Facilities, Mortgage Payable and Construction Loan (Parenthetical) (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	$ 16,701,000	$ 17,846,000
Construction Loans
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	1,922,000
Readycap Commercial, LLC | Mortgage Payable
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	362,000	466,000
Oceanview Life and Annuity Company | Construction Loans
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	1,900,000
Senior Secured Financing Facility | Massachusetts Mutual Life Insurance Company
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	3,300,000	3,700,000
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	836,000	1,100,000
CRE - Term Warehouse Financing Facilities | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Unamortized issuance costs and discounts	$ 1,000,000.0	$ 1,400,000

XML

BORROWINGS (Amount at Risk Under Warehouse Financing Facilities and Mortgage Payable) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	10 years 3 months 18 days	10 years 3 months 18 days
Weighted Average Interest Rate	7.04%	6.29%
Senior Secured Financing Facility
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	4 years 6 months	5 years
Weighted Average Interest Rate	8.87%	7.94%
Senior Secured Financing Facility | Massachusetts Mutual Life Insurance Company
Debt Instrument [Line Items]
Amount at Risk	$ 101,490
Weighted Average Remaining Maturity	4 years 6 months
Weighted Average Interest Rate	8.87%
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Weighted Average Remaining Maturity	1 year 3 months 18 days	1 year 9 months 18 days
Weighted Average Interest Rate	7.77%	6.85%
CRE - Term Warehouse Financing Facilities | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Amount at Risk	$ 67,749
Weighted Average Remaining Maturity	1 year 3 months 18 days
Weighted Average Interest Rate	7.73%
CRE - Term Warehouse Financing Facilities | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Amount at Risk	$ 58,965
Weighted Average Remaining Maturity	1 year 3 months 18 days
Weighted Average Interest Rate	7.81%
Mortgage Payable | Readycap Commercial, LLC
Debt Instrument [Line Items]
Amount at Risk	$ 6,452
Weighted Average Remaining Maturity	1 year 9 months 18 days
Weighted Average Interest Rate	8.95%	8.08%
Mortgage Payable | Oceanview Life and Annuity Company
Debt Instrument [Line Items]
Weighted Average Interest Rate	0.00%
Construction Loans
Debt Instrument [Line Items]
Weighted Average Interest Rate	0.00%
Construction Loans | Oceanview Life and Annuity Company
Debt Instrument [Line Items]
Weighted Average Interest Rate		0.00%

XML

BORROWINGS (Senior Secured Financing Facility) (Details) - USD ($) $ in Thousands		1 Months Ended
	Jul. 31, 2020	Dec. 31, 2022	Jun. 30, 2023	Aug. 16, 2021
Debt Instrument [Line Items]
Face amount of debt issued		$ 434,422	$ 315,529
Debt instrument, interest rate, stated percentage				5.75%
Loan and Servicing Agreement | Senior Secured Financing Facility
Debt Instrument [Line Items]
Debt instrument, commitment period of each loan series		3 months
Debt instrument, final maturity period of each loan series		5 years
Loan and Servicing Agreement | Maximum | Senior Secured Financing Facility
Debt Instrument [Line Items]
Face amount of debt issued		$ 500,000
Loan and Servicing Agreement | MassMutual and Other Lenders | Senior Secured Financing Facility
Debt Instrument [Line Items]
Face amount of debt issued	$ 250,000
Debt instrument, interest rate, stated percentage	5.75%
Loan and Servicing Agreement | MassMutual and Other Lenders | If Borrower Obtains Rating of BBB or Higher by October 31, 2020 | Senior Secured Financing Facility
Debt Instrument [Line Items]
Debt instrument, maturity date	Jul. 31, 2027

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Borrowings (CRE - Term Warehouse Financing Facilities) (Details) - CRE - Term Warehouse Financing Facilities - USD ($) $ in Millions	1 Months Ended
	Nov. 30, 2021	Oct. 31, 2018
Master Repurchase Agreement | JP Morgan Chase Bank, N.A.
Debt Instrument [Line Items]
Maximum facility amount		$ 250.0
Maturity Date		2024-10
Master Repurchase and Securities Agreement | Morgan Stanley Mortgage Capital Holdings LLC
Debt Instrument [Line Items]
Maximum facility amount	$ 250.0
Maturity Date	2024-11
Option to extend, term	1 year

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BORROWINGS (Mortgage Payable) (Details) - Mortgage Payable - Readycap Commercial, LLC $ in Millions	1 Months Ended
	Oct. 31, 2022 Extension	Apr. 30, 2022 USD ($)
Debt Instrument [Line Items]
Maximum facility amount		$ 20.4
Advanced in initial funding		$ 18.7
Basis spread on variable rate	3.80%
Maturity Date	2025-04
Number of options to extend | Extension	2
Option to extend, term	1 year
30 Day Average SOFR Rate
Debt Instrument [Line Items]
Basis spread on variable rate		3.80%

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BORROWINGS (Construction Loan) (Details) $ in Millions	1 Months Ended
	Jan. 31, 2023 USD ($) Extension	Aug. 16, 2021
Debt Instrument [Line Items]
Borrowing rate		5.75%
Constraction Loan Agreement | Oceanview Life and Annuity Company
Debt Instrument [Line Items]
Maximum facility amount	$ 48.0
Maturity Date	2025-02
Number of options to extend | Extension	3
Option to extend, term	1 year
Constraction Loan Agreement | Oceanview Life and Annuity Company | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate	6.00%
Constraction Loan Agreement | Florida Pace Funding Agency
Debt Instrument [Line Items]
Maximum facility amount	$ 15.5
Borrowing rate	7.26%
Maturity Date	2053-07

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BORROWINGS (4.50% Convertible Senior Notes) (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Aug. 16, 2021	Aug. 31, 2017
Debt Instrument [Line Items]
Face amount of debt issued		$ 315,529,000		$ 315,529,000		$ 434,422,000
Interest rate, stated percentage								5.75%
Loss on extinguishment of debt		(0)	$ 0	0	$ (460,000)
Interest expense		$ 32,442,000	$ 15,745,000	$ 63,817,000	$ 30,652,000
4.5% Convertible Senior Notes
Debt Instrument [Line Items]
Face amount of debt issued									$ 143,800,000
Interest rate, stated percentage	4.50%		4.50%		4.50%				4.50%
Repurchase of convertible senior notes			$ 39,800,000		$ 39,800,000		$ 55,800,000
Charge to earnings					574,000
Loss on extinguishment of debt					460,000
Interest expense					$ 114,000
Repayment of convertible senior notes	$ 48,200,000

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BORROWINGS (5.75% Senior Unsecured Notes Due 2026) (Details) - USD ($) $ in Thousands		6 Months Ended
	Aug. 16, 2021	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Interest rate, stated percentage	5.75%
Face amount of debt issued		$ 315,529	$ 434,422
Debt instrument redemption term		100%
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Interest rate, stated percentage		5.75%	5.75%
Face amount of debt issued	$ 150,000
Percentage of principal amount to be redeemed	100.00%
Debt instrument redemption term		Prior to May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, in whole or in part, at a redemption price equal to the sum of (i) 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date, and (ii) a make-whole premium. On or after May 15, 2026, the Company may at its option redeem the 5.75% Senior Unsecured Notes, at any time, in whole or in part, on not less than 15 nor more than 60 days’ prior notice, at a redemption price equal to 100% of the principal amount of the 5.75% Senior Unsecured Notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

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BORROWINGS (Unsecured Junior Subordinated Debentures) (Details) - Unsecured Junior Subordinated Debentures - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Jun. 30, 2023	Dec. 31, 2022	Dec. 13, 2016
RCT I entity
Debt Instrument [Line Items]
Face amount of debt issued				$ 25.8
Debt issuance costs, amortization period (in years)	10 years
Interest rate at period end		9.49%	8.68%
RCT II entity
Debt Instrument [Line Items]
Face amount of debt issued				$ 25.8
Debt issuance costs, amortization period (in years)	10 years
Interest rate at period end		9.25%	8.36%

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BORROWINGS (Contractual Commitments) (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Debt Instrument [Line Items]
Total	$ 1,765,900
2024	253,131
2025	18,854
2026	150,000
2027	50,995
2028 and Thereafter	1,292,920
CRE securitizations
Debt Instrument [Line Items]
Total	1,241,372
2024	0
2025	0
2026	0
2027	0
2028 and Thereafter	1,241,372
Senior Secured Financing Facility
Debt Instrument [Line Items]
Total	50,995
2024	0
2025	0
2026	0
2027	50,995
2028 and Thereafter	0
CRE - Term Warehouse Financing Facilities
Debt Instrument [Line Items]
Total	253,131
2024	253,131
2025	0
2026	0
2027	0
2028 and Thereafter	0
Mortgage Payable
Debt Instrument [Line Items]
Total	18,854
2024	0
2025	18,854
2026	0
2027	0
2028 and Thereafter	0
5.75% Senior Unsecured Notes
Debt Instrument [Line Items]
Total	150,000
2024	0
2025	0
2026	150,000
2027	0
2028 and Thereafter	0
Unsecured Junior Subordinated Debentures
Debt Instrument [Line Items]
Total	51,548
2024	0
2025	0
2026	0
2027	0
2028 and Thereafter	$ 51,548

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SHARE ISSUANCE AND REPURCHASE (Details) - USD ($)		2 Months Ended	6 Months Ended		12 Months Ended
	Jul. 31, 2020	Jun. 30, 2021	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Jul. 31, 2022	Nov. 30, 2021	Oct. 04, 2021	Aug. 16, 2021	Nov. 30, 2020
Class Of Stock [Line Items]
Proceeds from issuance of preferred stock, net			$ 0	$ (70,000)
Shares repurchased during period, value			$ 2,000,000.0	$ 6,400,000
Shares repurchased during period, shares			215,160	552,282
Interest rate, stated percentage									5.75%
Equity and Debt Securities Repurchase Program
Class Of Stock [Line Items]
Stock repurchase program, authorized amount (up to)							$ 20,000,000.0			$ 20,000,000.0
Stock repurchase program, remaining authorized repurchase amount			$ 5,300,000
Note and Warrant Purchase Agreement | Oaktree and MassMutual
Class Of Stock [Line Items]
Warrant exercise price per share	$ 0.03
Maximum notes that may be issued from time to time under note and warrant purchase agreement	$ 125,000,000.0
Warrants recorded in additional paid-in capital, fair value	$ 3,100,000
Warrants expiration term	7 years
Interest rate, stated percentage	12.00%
Note and Warrant Purchase Agreement | Oaktree
Class Of Stock [Line Items]
Warrants issued to purchase common stock	391,995
Purchase price of common stock for warrants issued	$ 42,000,000.0
Warrants exercised			0
Note and Warrant Purchase Agreement | MassMutual
Class Of Stock [Line Items]
Warrants issued to purchase common stock	74,666
Purchase price of common stock for warrants issued	$ 8,000,000.0
Warrants to purchase additional shares of common stock						74,666
Note and Warrant Purchase Agreement | Maximum | Oaktree and MassMutual
Class Of Stock [Line Items]
Aggregate purchase of common stock warrants	1,166,653
7.875% Series D Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares issued (in shares)		4,600,000	4,607,857		4,607,857
Preferred stock, coupon authorized		7.875%	7.875%		7.875%
Offering price		$ 25.00
Proceeds from issuance of preferred stock, net		$ 110,400,000
Payment of underwriting discounts and other offering expenses		$ 4,600,000
Preferred stock, liquidation preference (in dollars per share)			$ 25.00		$ 25.00
Preferred stock, shares outstanding (in shares)			4,607,857		4,607,857
Series D Preferred Stock | Equity Distribution Agreement
Class Of Stock [Line Items]
Preferred stock, shares issued (in shares)			0
Series D Preferred Stock | Equity Distribution Agreement | Maximum | JonesTrading Institutional Services LLC
Class Of Stock [Line Items]
Number of shares that may be issued or sold from time to time under agreement								2,200,000
Commission fee payable of gross proceeds from sale of stock in percentage								3.00%
8.625% Series C Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares issued (in shares)			4,800,000		4,800,000
Preferred stock, coupon authorized			8.625%		8.625%
Preferred stock, liquidation preference (in dollars per share)			$ 25.00		$ 25.00
Preferred stock, shares outstanding (in shares)			4,800,000		4,800,000
Preferred stock, weighted average issuance price (in dollars per share)			$ 25.00
8.625% Series C Preferred Stock | London Interbank Offered Rate (LIBOR)
Class Of Stock [Line Items]
Dividend payment rate, variable, basis spread on variable rate			5.927%

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SHARE-BASED COMPENSATION (Details) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2021	Jun. 30, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognized stock-based compensation expense			$ 719,000	$ 991,000	$ 1,600,000	$ 1,700,000
Total unrecognized compensation costs related to unvested restricted stock			2,900,000		$ 2,900,000
Cost is expected to be recognized over a weighted average period					2 years 6 months
Percentage of incentive management fee payable in cash pursuant to the management agreement					50.00%
Percentage incentive management fee payable in common stock pursuant to the management agreement					50.00%
Manager Pursuant To Management Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Cash awards, percentage (up to)					75.00%
Common stock awards, percentage (at least)					25.00%
Incentive management fee pursuant to the management agreement			$ 255,000	$ 0	$ 384,000	$ 0
2007 Omnibus Equity Compensation Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of share authorized for issue (in shares)			1,100,000		1,100,000
Share based compensation expiration period	2029-06	2031-06
Common shares granted			1,700,817		1,700,817

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SHARE-BASED COMPENSATION (Common Stock Activity) (Details)	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Restricted common stock transactions
Unvested shares, end of period (in shares)	416,675
Restricted Stock
Restricted common stock transactions
Unvested shares, beginning of period (in shares)	583,333
Issued (shares)	24,655
Vested (shares)	(191,313)
Forfeited (shares)	0
Unvested shares, end of period (in shares)	416,675
Weighted-Average Grant-Date Fair Value, beginning of period (in shares) | $ / shares	$ 14.22
Weighted-Average Grant-Date Fair Value, Issued | $ / shares	9.00
Weighted-Average Grant-Date Fair Value, Vested | $ / shares	13.90
Weighted-Average Grant-Date Fair Value, Forfeited | $ / shares	0
Weighted-Average Grant-Date Fair Value, end of period (in shares) | $ / shares	$ 14.07
Restricted Stock | Manager
Restricted common stock transactions
Unvested shares, beginning of period (in shares)	524,999
Issued (shares)	24,655
Vested (shares)	(174,653)
Forfeited (shares)	0
Unvested shares, end of period (in shares)	375,001
Restricted Stock | Directors
Restricted common stock transactions
Unvested shares, beginning of period (in shares)	58,334
Issued (shares)	0
Vested (shares)	(16,660)
Forfeited (shares)	0
Unvested shares, end of period (in shares)	41,674

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SHARE-BASED COMPENSATION (Common Stock Expected to Vest) (Details) - shares	Jun. 30, 2023	Dec. 31, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
2023	0
2024	166,658
2025	166,671
2026	83,346
Total	416,675
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total	416,675	583,333

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Net income	$ 5,558	$ 2,293	$ 5,522	$ 2,084	$ 7,851	$ 7,606
Net income allocated to preferred shares	(4,856)		(4,856)		(9,711)	(9,711)
Net loss allocable to non-controlling interest, net of taxes	115		24		261	24
NET INCOME (LOSS) ALLOCABLE TO COMMON SHARES	$ 817		$ 690		$ (1,599)	$ (2,081)
Weighted average number of common shares outstanding:
Weighted average number of common shares outstanding - basic	8,059,978		8,421,800		8,084,064	8,525,481
Weighted average number of warrants outstanding	391,995		466,661		391,995	466,661
Total weighted average number of common shares outstanding - basic	8,451,973		8,888,461		8,476,059	8,992,142
Effect of dilutive securities - unvested restricted stock	82,585		25,711		0	0
Weighted average number of common shares outstanding - diluted	8,534,558		8,914,172		8,476,059	8,992,142
Net income (loss) per common share - basic	$ 0.10		$ 0.08		$ (0.19)	$ (0.23)
Net income (loss) per common share - diluted	$ 0.10		$ 0.08		$ (0.19)	$ (0.23)

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DISTRIBUTIONS (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Class Of Stock [Line Items]
REIT required taxable income distribution, percentage (at least)			90.00%
REIT taxable income distribution required for exempt federal income taxes, percentage			100.00%
Common Stock
Class Of Stock [Line Items]
Dividend per share (in dollars per share)	$ 0	$ 0	$ 0	$ 0

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DISTRIBUTIONS (Distributions Declared) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022
Series C Preferred Stock
Class Of Stock [Line Items]
Date Paid	Jul. 31, 2023	May 01, 2023	Jan. 30, 2023	Oct. 31, 2022	Aug. 01, 2022	May 02, 2022
Total Distributions Paid	$ 2,588	$ 2,587	$ 2,587	$ 2,587	$ 2,588	$ 2,588
Distributions Per Share	$ 0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625	$ 0.5390625
Series D Preferred Stock
Class Of Stock [Line Items]
Date Paid	Jul. 31, 2023	May 01, 2023	Jan. 30, 2023	Oct. 31, 2022	Aug. 01, 2022	May 02, 2022
Total Distributions Paid	$ 2,268	$ 2,268	$ 2,268	$ 2,268	$ 2,268	$ 2,268
Distributions Per Share	$ 0.4921875	$ 0.4921875	$ 0.4921875	$ 0.4921875	$ 0.4921875	$ 0.4921875

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Accumulated Other Comprehensive Loss [Roll Forward]
Beginning balance	$ 435,468
Ending balance	434,551
Net Unrealized Loss on Derivatives
Accumulated Other Comprehensive Loss [Roll Forward]
Beginning balance	(6,394)
Amounts reclassified from accumulated other comprehensive loss	790
Ending balance	$ (5,604)

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RELATED PARTY TRANSACTIONS (Relationship with ACRES Capital Corp and Certain of its Subsidiaries) (Details)		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 31, 2020 USD ($) Extension	Aug. 31, 2023 shares	Jun. 30, 2023 USD ($) Loan shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Loan Entity shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) Loan Property shares
Related Party Transaction [Line Items]
Renewal period					1 year
Base management fees paid by the Company			$ 1,890,000	$ 1,672,000	$ 3,663,000	$ 3,354,000
General and administrative			2,348,000	2,353,000	5,327,000	5,810,000
Interest income			47,148,000	27,019,000	92,477,000	49,695,000
Accrued interest receivable			$ 12,615,000		$ 12,615,000		$ 11,969,000
Incentive Compensation Shares Payable | shares			14,226		24,655
Commercial Real Estate Loans
Related Party Transaction [Line Items]
Loans refinanced by affiliates					$ 0		$ 38,600,000
Percentage of interest acquired in property							100.00%
Number of properties acquired | Property							1
Acquisition price of property served as collateral for loan prior to acquisition							$ 38,600,000
Manager Pursuant To Management Agreement | ACRES Commercial Realty Corp
Related Party Transaction [Line Items]
Base management fees paid by the Company			$ 1,700,000	1,700,000	3,300,000	3,400,000
Incentive compensation			255,000	0	$ 384,000	0
Incentive compensation payable in cash percentage					50.00%
Incentive compensation payable in common stock percentage					50.00%
Total indebtedness			7,000		$ 7,000		558,000
Incentive compensation payable and Servicing fees payable			255,000		255,000		340,000
General and administrative			1,400,000	1,000,000.0	2,300,000	3,000,000.0
Manager Pursuant To Management Agreement | ACRES Commercial Realty Corp | Other Liabilities
Related Party Transaction [Line Items]
Total indebtedness			0		$ 0		179,000
ACRES Capital Corp
Related Party Transaction [Line Items]
Number of securitization entities | Entity					2
ACRES Capital Corp | XAN 2020-RSO9 Senior Notes
Related Party Transaction [Line Items]
Portfolio servicing fees			0	0	$ 0	0
Special servicing fees			20,000	23,000	65,000	23,000
ACRES Capital Corp | Interest Income | XAN 2020-RSO9 Senior Notes
Related Party Transaction [Line Items]
Special servicing fees			12,000		47,000
ACRES Capital Corp | ACRES Commercial Realty Corp | Loan Evidenced by Promissory Note
Related Party Transaction [Line Items]
Related party transaction, loan amount	$ 12,000,000.0
Related party transaction, interest rate	3.00%
Related party transaction, monthly amortization payment	$ 25,000
Related party debt, maturity month and year	2026-07
Number of options to extend | Extension	2
Related party debt, extension term	1 year
Related party debt, percentage of extension fee	0.50%
Principal balance			11,100,000		11,100,000		11,300,000
Accrued interest receivable			0		0		0
ACRES Capital Corp | ACRES Commercial Realty Corp | Loan Evidenced by Promissory Note | Other Income (Expense)
Related Party Transaction [Line Items]
Interest income			85,000	87,000	169,000	174,000
ACRES Loan Origination, LLC | Joint Funding Agreements
Related Party Transaction [Line Items]
Related party transaction, loan amount							$ 97,200,000
Number of loan | Loan							4
DevCo
Related Party Transaction [Line Items]
Fees payments			$ 91,000	$ 16,000	$ 145,000	$ 16,000
DevCo | Minimum
Related Party Transaction [Line Items]
Market rate for fees					1.25%
DevCo | Maximum
Related Party Transaction [Line Items]
Market rate for fees					1.50%
ACRES Share Holdings, LLC
Related Party Transaction [Line Items]
Number of share authorized for issue (in shares) | shares			1,100,000		1,100,000
Incentive Compensation Shares Payable | shares			6,875		24,655
Shares of common stock issued | shares					0
ACRES Share Holdings, LLC | Forecast
Related Party Transaction [Line Items]
Incentive Compensation Shares Payable | shares		14,226
ACRES Share Holdings, LLC | Restricted Stock | Manager
Related Party Transaction [Line Items]
Shares of common stock vest percentage							25.00%
Vest in installments							4 years
Shares of common stock issued | shares							299,999
ACRES Capital, LLC | Commercial Real Estate Loans
Related Party Transaction [Line Items]
Loans refinanced by affiliates			$ 22,500,000
Number of loan | Loan			1		1

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	1 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
CRE Whole Loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of assets acquired	$ 20,900,000
Mezzanine loan | Expected Future Cash Flows | Measurement Input, Discount Rate | VIE, Not Primary Beneficiary
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value inputs, discount rate	0.1000
Minimum | Level 3 | Loans Pledged as Collateral | Expected Future Cash Flows
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, interest rate, stated percentage	8.04%	7.03%
Maximum | Level 3 | Loans Pledged as Collateral | Expected Future Cash Flows
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, interest rate, stated percentage	13.79%	12.67%
Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial instruments carried at fair value	$ 0	$ 0

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value, by Balance Sheet Grouping) (Details) - USD ($) $ in Thousands		Jun. 30, 2023	Dec. 31, 2022
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables		$ 1,938,089	$ 2,038,787
Mortgage payable		1,765,900	1,884,879
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party		0	0
Senior notes in CRE securitizations		0	0
Senior secured financing facility		0	0
Warehouse financing facilities		0	0
Mortgage payable		0	0
Construction loan	[1]	0
Junior subordinated notes		0	0
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1) | CRE Whole Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables		0	0
Quoted Prices in Active Markets for Identical Assets of Liabilities (Level 1) | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
5.75% Senior Unsecured Notes		0	0
Significant Other Observable Inputs (Level 2)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party		0	0
Senior notes in CRE securitizations		0	0
Senior secured financing facility		0	0
Warehouse financing facilities		0	0
Mortgage payable		0	0
Construction loan	[1]	0
Junior subordinated notes		0	0
Significant Other Observable Inputs (Level 2) | CRE Whole Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables		0	0
Significant Other Observable Inputs (Level 2) | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
5.75% Senior Unsecured Notes		0	0
Significant Unobservable Inputs (Level 3)
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party		8,096	9,672
Senior notes in CRE securitizations		1,185,091	1,179,313
Senior secured financing facility		50,995	91,549
Warehouse financing facilities		253,131	330,848
Mortgage payable		18,854	18,710
Construction loan	[1]	0
Junior subordinated notes		32,364	35,821
Significant Unobservable Inputs (Level 3) | CRE Whole Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables		1,968,322	2,065,504
Significant Unobservable Inputs (Level 3) | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
5.75% Senior Unsecured Notes		129,615	138,435
Carrying Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party		11,125	11,275
Senior notes in CRE securitizations		1,234,303	1,233,556
Senior secured financing facility		47,697	87,890
Warehouse financing facilities		251,262	328,288
Mortgage payable		18,492	18,244
Construction loan	[1]	(1,922)
Junior subordinated notes		51,548	51,548
Carrying Value | CRE Whole Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables		1,938,089	2,038,787
Carrying Value | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
5.75% Senior Unsecured Notes		147,819	147,507
Fair Value
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loan receivable - related party		8,096	9,672
Senior notes in CRE securitizations		1,185,091	1,179,313
Senior secured financing facility		50,995	91,549
Warehouse financing facilities		253,131	330,848
Mortgage payable		18,854	18,710
Construction loan	[1]	0
Junior subordinated notes		32,364	35,821
Fair Value | CRE Whole Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loans and receivables		1,968,322	2,065,504
Fair Value | 5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
5.75% Senior Unsecured Notes		$ 129,615	$ 138,435

[1] Deferred debt issuance costs related to the acquisition of a construction loan that has not been drawn on and has no fair value.

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value, by Balance Sheet Grouping) (Parenthetical) (Details)	Jun. 30, 2023	Dec. 31, 2022	Aug. 16, 2021
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt instrument, interest rate, stated percentage			5.75%
5.75% Senior Unsecured Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt instrument, interest rate, stated percentage	5.75%	5.75%

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MARKET RISK AND DERIVATIVE INSTRUMENTS (Details)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2020 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) Derivative	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Derivatives, Fair Value [Line Items]
Amortization expense reported in interest expense		$ 420,000		$ 835,000
Terminated interest rate swap
Derivatives, Fair Value [Line Items]
Realized loss on derivatives, net	$ (11,800,000)
Gain (loss) on derivatives				(5,800,000)		$ (6,600,000)
Amortization expense reported in interest expense			$ 484,000		$ 963,000
Unrealized gains (loss) on derivatives, net				$ 210,000		$ 256,000
Number of hedges terminated | Derivative				2
Interest expense to fully amortize		$ 23,000	$ 23,000	$ 45,000	$ 45,000

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MARKET RISK AND DERIVATIVE INSTRUMENTS (Fair Value and Classification of Derivatives) (Details) - Designated as Hedging Instrument [Member] - Interest rate swaps - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Derivatives Fair Value [Line Items]
Realized and Unrealized Gain (Loss)	$ (790)	$ (917)
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration]	Interest expense	Interest expense

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OFFSETTING OF FINANCIAL LIABILITIES (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Term warehouse financing facilities
Gross Amounts of Recognized Liabilities	$ 251,262	$ 328,288
Gross Amounts Offset on the Consolidated Balance Sheets	0	0
Net Amounts of Liabilities Presented on the Consolidated Balance Sheets	251,262	328,288
Gross Amounts Not Offset on the Consolidated Balance Sheets- Financial Instruments	251,262	328,288
Gross Amounts Not Offset on the Consolidated Balance Sheets- Cash Collateral Pledged	0	0
Net Amount	0	0
Fair value of securities pledged against term warehouse financing facilities	$ 377,200	$ 453,600

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Loss Contingencies [Line Items]
Estimated litigation liability	$ 0	$ 0
Construction of Student Housing Complex | JV Partner
Loss Contingencies [Line Items]
Unfunded loan commitments	4,100,000
Loan commitments	31,200,000
Commercial Real Estate Loans | CRE whole loans
Loss Contingencies [Line Items]
Loans held for investment, unfunded loan commitments	128,700,000	158,200,000
Indemnification Agreement
Loss Contingencies [Line Items]
Estimated litigation liability	1,100,000	1,200,000
PCM
Loss Contingencies [Line Items]
Outstanding demands to indemnify purchaser of residential mortgage loans	3,300,000	3,300,000
PCM | Indemnification Agreement
Loss Contingencies [Line Items]
Outstanding litigation demands	$ 0	$ 0