CORRECTING and REPLACING Amid Declining Book Value, ACRES Commercial Realty Struggles to Sell REO Property Due to Labor Dispute with Philadelphia Hospitality Union UNITE HERE Local 274

PHILADELPHIA--(BUSINESS WIRE)--Please replace the release with the following corrected version due to multiple revisions to the first paragraph.

“We’re being held up a little bit by not having a contract with a labor union,” ACR Chairman Andrew Fentress said, “It’s difficult to sell the asset when you can’t project the expenses on a go-forward basis for labor."

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The updated release reads:

AMID DECLINING BOOK VALUE, ACRES COMMERCIAL REALTY STRUGGLES TO SELL REO PROPERTY DUE TO LABOR DISPUTE WITH PHILADELPHIA HOSPITALITY UNION UNITE HERE LOCAL 274

UNITE HERE Local 274 has learned that ACRES Commercial Realty (NYSE:ACR) recently told investors that ‘not having a contract’ was ‘holding up efforts’ to sell its Philadelphia hotel property, after management at the hotel declared impasse and walked away from contract negotiations in March.

ACR released its Q2 2026 earnings report on July 29, 2026, posting a GAAP net loss allocable to common shares of $12.5 million.

In an earnings call the following day, ACR executives were questioned about an REO property the company has held for sale since 2022. ACR Chairman Andrew Fentress replied that the property is listed for sale but has been difficult to sell due to labor strikes in the market and to the lack of an agreement with a labor union. “We’re being held up a little bit by not having a contract with a labor union,” Fentress said, “It’s difficult to sell the asset when you can’t project the expenses on a go-forward basis for labor. Yes, we’re actively trying to sell it, but it’s difficult to find a buyer until there’s some commitment on the side of the union.”

The property in question is the Hilton Garden Inn Philadelphia Center City, which ACR values at $39.8 million. It is currently the only unionized hotel in Philadelphia’s downtown core without a contract with the union. While every other union hotel in the Center City market has signed agreements over the past year, Hilton Garden Inn Center City management walked away from contract negotiations in March, declaring the parties to be at an impasse.

ACR shareholders have significant exposure to ACR’s real estate equity investments. As an mREIT, ACR generates income primarily from the spread between revenues received from interest-bearing assets and the cost to finance ownership of those assets, income from direct equity investments in commercial real estate properties. However, income from ACR’s real estate properties have accounted for an increasingly significant part of the company’s revenues, at over 58% in 2025 and over 50% in 2024, up from 21.1% in 2021. According to a recent filing, ACR’s hospitality properties account for 84.5% of the company’s real estate income.

ACR’s hospitality revenue for the three months ending June 30 2026 was 0.65% lower than during the same period in 2025, despite a bump in Philadelphia tourism in June 2026 driven by the World Cup, which reportedly increased hotel revenue in the city by 50.3% on match days compared to the previous year. Performance issues may be exacerbated if the labor dispute at the Hilton Garden Inn continues.