Ares Commercial Real Estate Corp Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Ares Commercial Real Estate Corp filed its Q1 2024 10-Q report on May 9, 2024.</b>

AI Summary

Ares Commercial Real Estate Corp (ACRE) filed a Quarterly Report (10-Q) with the SEC on May 9, 2024. The filing is a 10-Q report for Ares Commercial Real Estate Corp. The reporting period is the first quarter of 2024, ending March 31, 2024. The company's Central Index Key (CIK) is 0001529377. The filing was submitted on May 9, 2024. Ares Commercial Real Estate Corp is classified under Real Estate Investment Trusts (SIC code 6798).

Why It Matters

For investors and stakeholders tracking Ares Commercial Real Estate Corp, this filing contains several important signals. This 10-Q provides investors with a quarterly update on the company's financial performance and operational status. Understanding the details within this filing is crucial for assessing the company's current financial health and future prospects in the real estate investment trusts sector.

Risk Assessment

Risk Level: low — Ares Commercial Real Estate Corp shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain immediate red flags or significant negative developments based on the provided header information.

Analyst Insight

Review the detailed financial statements and management's discussion and analysis within the full 10-Q to understand the company's performance and outlook.

Key Numbers

• 2024-03-31 — Reporting Period End Date (Conformed period of report)
• 2024-05-09 — Filing Date (Filed as of date)
• 0001529377 — Central Index Key (Filer's CIK)
• 6798 — SIC Code (Real Estate Investment Trusts)

Key Players & Entities

• Ares Commercial Real Estate Corp (company) — Filer name
• 0001529377 (company) — Central Index Key
• 2024-03-31 (date) — Conformed period of report
• 2024-05-09 (date) — Filed as of date
• 212.515.3400 (phone) — Business phone number
• 6798 (industry) — Standard Industrial Classification

FAQ

Industry Context

Ares Commercial Real Estate Corp operates within the Real Estate Investment Trusts (REITs) sector, which focuses on income-generating real estate.

Regulatory Implications

The filing is made under the Securities Exchange Act of 1934, requiring public companies to submit regular financial disclosures to the SEC.

What Investors Should Do

1. Analyze the detailed financial statements within the 10-Q for revenue, net income, and balance sheet changes.
2. Review the Management's Discussion and Analysis (MD&A) section for insights into the company's performance drivers and risks.
3. Compare key financial metrics to prior periods and industry benchmarks to assess trends.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q
• 2024-05-09: Filing Date — Date the 10-Q was officially filed with the SEC

Glossary

10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC) that provides a continuing disclosure by public companies. (Provides investors with an update on the company's financial performance during the quarter.)

Real Estate Investment Trusts

Companies that own, operate, or finance income-generating real estate. (Indicates the industry sector in which Ares Commercial Real Estate Corp operates.)

Year-Over-Year Comparison

This is the first 10-Q filing for the 2024 fiscal year, providing the initial quarterly update.

Key Financial Figures

• $0.01 — ange on which registered Common stock, $0.01 par value per share ACRE New York Stock

Filing Documents

• acre-20240331.htm (10-Q) — 1576KB
• acreq1-24exhibit311.htm (EX-31.1) — 10KB
• acreq1-24exhibit312.htm (EX-31.2) — 10KB
• acreq1-24exhibit321.htm (EX-32.1) — 7KB
• acreq1-24exhibit102.htm (EX-10.2) — 1486KB
• acreq1-24exhibit103.htm (EX-10.3) — 40KB
• acreq1-24exhibit104.htm (EX-10.4) — 44KB
• acreq1-24exhibit105.htm (EX-10.5) — 36KB
• acreq1-24exhibit106.htm (EX-10.6) — 48KB
• acreq1-24exhibit107.htm (EX-10.7) — 1085KB
• acre-20240331_g1.jpg (GRAPHIC) — 195KB
• 0001628280-24-021911.txt (&nbsp;) — 13359KB
• acre-20240331.xsd (EX-101.SCH) — 79KB
• acre-20240331_cal.xml (EX-101.CAL) — 72KB
• acre-20240331_def.xml (EX-101.DEF) — 419KB
• acre-20240331_lab.xml (EX-101.LAB) — 837KB
• acre-20240331_pre.xml (EX-101.PRE) — 613KB
• acre-20240331_htm.xml (XML) — 1629KB

Financial Information

Part I. Financial Information

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 5 Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023 (unaudited) 6 Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023 (unaudited) 7 Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2024 (unaudited) and the Year Ended December 31, 2023 8 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited) 9

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 39

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 50

Controls and Procedures

Item 4. Controls and Procedures 53

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 53

Risk Factors

Item 1A. Risk Factors 54

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 54

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 54

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 54

Other Information

Item 5. Other Information 55

Exhibits

Item 6. Exhibits 56

Signatures

Signatures 57 2 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS Some of the statements contained in this quarterly report constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and we intend such statements to be covered by the safe harbor provisions contained therein. The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In addition, some of the statements in this quarterly report (including in the following discussion) constitute forward-looking statements, which relate to future events or the future performance or financial condition of Ares Commercial Real Estate Corporation ("ACRE" and, together with its consolidated subsidiaries, the "Company," "we," "us" and "our"). The forward-looking statements contained in this report involve a number of risks and uncertainties, including: global economic trends and economic conditions, including high inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates and currency fluctuations, as well as geopolitical instability, including conflicts between Russia and Ukraine and between Israel and Hamas; changes in interest rates, credit spreads and the market value of our investments; our business and investment strategy; our projected operating results; the return or impact of current and future investments; management's current estimate of expected credit losses and current expected credit loss reserve; the collectability and timing of cash flows, if any, from our investments; estimates relating to our ability to make distributions to our stockholders in the future; defaults by borrowers in paying amounts due on outstanding indebtedness and our ability to collect all amounts due according to the contractual terms of our inv

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

: Consolidated Financial Statements

Item 1: Consolidated Financial Statements ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) As of March 31, 2024 December 31, 2023 (unaudited) ASSETS Cash and cash equivalents $ 99,518 $ 110,459 Loans held for investment ($ 773,904 and $ 892,166 related to consolidated VIEs, respectively) 2,014,500 2,126,524 Current expected credit loss reserve ( 139,763 ) ( 159,885 ) Loans held for investment, net of current expected credit loss reserve 1,874,737 1,966,639 Loans held for sale, at fair value ($ 38,981 related to consolidated VIEs as of December 31, 2023) — 38,981 Investment in available-for-sale debt securities, at fair value 28,148 28,060 Real estate owned, net 82,499 83,284 Other assets ($ 3,537 and $ 3,690 of interest receivable related to consolidated VIEs, respectively; $ 6,539 and $ 32,002 of other receivables related to consolidated VIEs, respectively) 25,795 52,354 Total assets $ 2,110,697 $ 2,279,777 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Secured funding agreements $ 630,299 $ 639,817 Notes payable 104,714 104,662 Secured term loan 149,443 149,393 Collateralized loan obligation securitization debt (consolidated VIEs) 595,105 723,117 Due to affiliate 4,281 4,135 Dividends payable 13,802 18,220 Other liabilities ($ 1,918 and $ 2,263 of interest payable related to consolidated VIEs, respectively) 11,964 14,584 Total liabilities 1,509,608 1,653,928 Commitments and contingencies (Note 8) STOCKHOLDERS' EQUITY Common stock, par value $ 0.01 per share, 450,000,000 shares authorized at March 31, 2024 and December 31, 2023 and 54,422,613 and 54,149,225 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 532 532 Additional paid-in capital 813,468 812,184 Accumulated other comprehensive income 234 153 Accumulated earnings (deficit) ( 213,145 ) ( 187,020 ) Total stockholders' equity 601,089 625,849 Tota

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2024 (in thousands, except share and per share data, percentages and as otherwise indicated) (unaudited) 1. ORGANIZATION Ares Commercial Real Estate Corporation (together with its consolidated subsidiaries, the "Company" or "ACRE") is a specialty finance company primarily engaged in originating and investing in commercial real estate loans and related investments. Through Ares Commercial Real Estate Management LLC ("ACREM" or the Company's "Manager"), a Securities and Exchange Commission ("SEC") registered investment adviser and a subsidiary of Ares Management Corporation (NYSE: ARES) ("Ares Management" or "Ares"), a publicly traded, leading global alternative investment manager, it has investment professionals strategically located across the United States and Europe who directly source new loan opportunities for the Company with owners, operators and sponsors of commercial real estate ("CRE") properties. The Company was formed and commenced operations in late 2011. The Company is a Maryland corporation and completed its initial public offering (the "IPO") in May 2012. The Company is externally managed by its Manager, pursuant to the terms of a management agreement (the "Management Agreement"). The Company operates as one operating segment and is primarily focused on directly originating and managing a diversified portfolio of CRE debt-related investments for the Company's own account. The Company's target investments include senior mortgage loans, subordinated debt, preferred equity, mezzanine loans and other CRE investments, including commercial mortgage-backed securities. These investments are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, self storage, student housing, residential and other commercial real estate properties, or by ownership interests therein. The Company has elected and qualified to be taxed as a rea