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On Monday, Jones Trading initiated coverage on Acres Commercial Realty Corp (NYSE: ACR), assigning a Hold rating to the stock. The firm highlighted the company's ongoing efforts to enhance the quality of its loan portfolio and its strategy to monetize equity assets in future quarters.
Acres Commercial Realty has been working on improving its loan portfolio's credit quality, which is expected to continue benefiting from a monetary easing cycle. This environment is anticipated to bolster confidence among both borrowers and lenders. The company has maintained a defensive approach, focusing on building liquidity and leveraging carry forward net operating losses, having suspended dividends since the fourth quarter of 2019.
The current management at Acres Commercial Realty is concentrating on enhancing the asset quality in its portfolio through asset sales and reinvesting the proceeds into new senior floating-rate commercial mortgage loans. The company has also been actively repurchasing its stock below book value, signaling a potential reinstatement of dividends in the medium-term once it can deploy the recycled equity capital into new loans.
As of the second quarter of 2024, Acres Commercial Realty has bought back approximately 4 million shares, spending $44.4 million since November 2020. These repurchases were made at considerable discounts to the book value of the shares. As of June 30, 2024, there remained $4.1 million under the current authorization for further stock repurchases. The firm's strategic moves are aimed at positioning the company for future growth while maintaining a cautious financial stance.
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