KBRA Publishes Ratings for ACRES Commercial Realty Corp.

Secured debt carries a higher rating than the issuer, while preferred stock ranks below it because of subordination.

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NEW YORK--(BUSINESS WIRE)-- KBRA publishes the issuer rating of BB, senior secured debt rating of BBB-, and preferred stock rating of BB- for ACRES Commercial Realty Corp. (NYSE: ACR, “ACRES”, or “the company”). The Outlook for the ratings is Stable. On August 5, 2026, these ratings were assigned on an unpublished basis.

Key Credit Considerations

On August 6, 2026, ACR, a real estate investment trust, acquired ACRES Capital Corp. (“ACC”), a commercial real estate (“CRE”) investment manager founded in 2012, as part of an internalization. Following the transaction, ACR operates an integrated CRE lending and investment management platform, encompassing its publicly traded REIT operations, ACRES Mortgage Fund, Ltd. (“AMF”), and separately managed accounts (“SMAs”).

The ratings consider ACRES’ comparatively small size and relatively narrow focus on CRE lending, while also acknowledging that the company's credit profile benefits from its focus on granting 1st lien mortgages at conservative LTVs to commercial properties generally owned by CRE-focused sponsors with long-term track records. While ACR's earnings have demonstrated volatility, post-internalization, the company benefits from a more diversified earnings and cash flow profile, incorporating management and origination fees generated by AMF and SMAs, as well as insurance-related revenue. Management’s track record of favorable investment returns at AMF reflects an experienced in-house team, involvement/oversight by top management at the origination stage and throughout the life of the investment, a granular portfolio, and “skin in the game” in the form of sizeable co-investments.

The internalization coincided with a $55 million upsize of an existing Barings senior secured term loan to $185 million total and the issuance of $200 million senior secured notes. Proceeds of the notes were intended to be used to refinance $150 million maturing senior notes, with the balance to be used for general corporate purposes. In addition, ACRES is authorized to issue up to $125 million of additional Series C preferred stock. The Barings facility is secured by a collateral package, including an all-assets lien on the borrowers/loan parties, gross revenue accounts, receivables, bank and securities accounts, management-related economics, AMF shares, and interests in specified eligible REO assets. The senior secured notes are secured by a first-lien pledge of residual equity interests in financing vehicles and individual assets, including pledged equity interests, CRE loans and related asset interests, and other pledged investments supporting the note collateral pool. Pro forma debt/equity assuming a $75 million incremental issuance of preferred stock and 50% debt treatment of the total preferred stock balance is expected to remain contained at or below 1x through 2030E. Pro forma debt/EBITDA, also reflecting 50% equity treatment for ACR’s preferred stock balance, is elevated at 10.5x in 2026E, but is expected to decline over the forecast period as EBITDA continues to grow. Considering the respective collateral packages and structural credit enhancements supporting the Barings facility and senior secured notes, the senior secured debt ratings incorporate a two-notch uplift from the issuer rating. The preferred stock rating is positioned one notch below the issuer rating, reflecting its subordinated ranking in the capital structure, partially mitigated by the absence of subordinated debt and the relatively uncomplicated capital structure.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

• Financial Institutions: Finance Company Global Rating Methodology
• Corporates & Financial Institutions: Corporate Instruments / Corporate-Linked Obligations Notching Global Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the US Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. Kroll Bond Rating Agency Japan K.K. is registered as a CRA with the Japan Financial Services Agency. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1017661

View source version on businesswire.com: https://www.businesswire.com/news/home/20261029951871/en/

Analytical Contacts

Jack Zimmerman, Senior Analyst (Lead Analyst)
+1 646-731-1472
jack.zimmerman@kbra.com

Leah Hallfors, Senior Director
+1 301-969-3242
leah.hallfors@kbra.com

Joe Scott, Global Head of Financial Institutions (Rating Committee Chair)
+1 646-731-2438
joe.scott@kbra.com

Business Development Contact

Constantine Schidlovsky, Senior Director
+1 646-731-1338
constantine.schidlovsky@kbra.com

Source: Kroll Bond Rating Agency, LLC

Key Terms

ebitda financial

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It measures a company's profitability by focusing on the money it makes from its core operations, ignoring expenses like taxes and accounting adjustments. Investors use EBITDA to compare how well different companies are performing financially, as it provides a clearer picture of operational success without the influence of financial structure or accounting choices.

View in glossary

reit financial

A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate, like shopping centers, apartments, or office buildings. For investors, REITs offer a way to invest in real estate without having to buy property directly, often providing regular income through dividends. They function like a mutual fund for real estate, making it easier for people to add property investments to their portfolio.

first-lien financial

A first-lien is a lender’s legal claim on specific collateral that takes priority over other claims if a borrower defaults. It matters to investors because first-lien status increases the likelihood of recovering principal from the sale of the pledged assets, reducing credit risk and often leading to lower interest rates than subordinated loans. Think of it like being first in line at a bakery: you get served before others if there’s only a limited supply.