ACRES Preferreds: Analyst Cautious on Series C Despite Higher Yield

A Seeking Alpha analyst said the floating-rate Series C preferreds of ACRES Commercial Realty carry risks that outweigh the higher yield. The analyst prefers the fixed-rate Series B instead.

The Series C coupon floats with three-month SOFR plus a spread, with a 7.75% floor. The floating-rate feature means payments can decline if short-term rates fall. The preferred also ranks lower in the capital structure, adding to the risk, the analyst said.

ACR's portfolio includes office and multifamily properties, sectors under pressure from higher rates and shifting demand. The higher yield on the Series C does not offset these risks, according to the analyst.

The Series B offers an 8.25% fixed coupon and ranks equally in the capital structure. The analyst sees it as a more attractive option.

No further rating action was announced.