ACRE Files Q2 2024 10-Q with Financial Updates

TL;DR

**ACRE Q2 10-Q filed. Financials and operations detailed for period ending June 30, 2024.**

AI Summary

Ares Commercial Real Estate Corp. (ACRE) filed its 10-Q for the period ending June 30, 2024. The filing details the company's financial performance and operations for the second quarter. Key financial data and operational highlights are presented, reflecting the company's real estate investment trust activities.

Why It Matters

This filing provides investors with a detailed look at Ares Commercial Real Estate Corp.'s financial health and operational performance for the second quarter of 2024, crucial for investment decisions.

Risk Assessment

Risk Level: medium — As a real estate investment trust, ACRE is subject to market fluctuations, interest rate changes, and real estate sector-specific risks.

Key Numbers

• 6.61 — P1Y (Likely refers to a per-share metric for the year, though context is limited in the provided snippet.)

Key Players & Entities

• Ares Commercial Real Estate Corp. (company) — Filer of the 10-Q
• 20240630 (date) — End of reporting period
• 20240806 (date) — Filing date
• 212.515.3400 (phone_number) — Company business phone

FAQ

Key Financial Figures

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

Filing Documents

• acre-20240630.htm (10-Q) — 1779KB
• acreq2-24exhibit101.htm (EX-10.1) — 166KB
• acreq2-24exhibit102.htm (EX-10.2) — 147KB
• acreq2-24exhibit103.htm (EX-10.3) — 931KB
• acreq2-24exhibit104.htm (EX-10.4) — 120KB
• acreq2-24exhibit311.htm (EX-31.1) — 10KB
• acreq2-24exhibit312.htm (EX-31.2) — 10KB
• acreq2-24exhibit321.htm (EX-32.1) — 7KB
• acre-20240630_g1.jpg (GRAPHIC) — 195KB
• 0001628280-24-034916.txt ( ) — 12656KB
• acre-20240630.xsd (EX-101.SCH) — 82KB
• acre-20240630_cal.xml (EX-101.CAL) — 73KB
• acre-20240630_def.xml (EX-101.DEF) — 454KB
• acre-20240630_lab.xml (EX-101.LAB) — 882KB
• acre-20240630_pre.xml (EX-101.PRE) — 637KB
• acre-20240630_htm.xml (XML) — 1785KB

Financial Information

Part I. Financial Information

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 5 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited) 6 Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited) 7 Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 (unaudited) and the Year Ended December 31, 2023 8 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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 41

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 53

Controls and Procedures

Item 4. Controls and Procedures 56

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 56

Risk Factors

Item 1A. Risk Factors 57

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 57

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 57

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 57

Other Information

Item 5. Other Information 57

Exhibits

Item 6. Exhibits 59

Signatures

Signatures 61 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 June 30, 2024 December 31, 2023 (unaudited) ASSETS Cash and cash equivalents $ 70,649 $ 110,459 Loans held for investment ($ 741,218 and $ 892,166 related to consolidated VIEs, respectively) 1,972,551 2,126,524 Current expected credit loss reserve ( 137,403 ) ( 159,885 ) Loans held for investment, net of current expected credit loss reserve 1,835,148 1,966,639 Loans held for sale ($ 38,981 related to consolidated VIEs as of December 31, 2023) 20,534 38,981 Investment in available-for-sale debt securities, at fair value 28,113 28,060 Real estate owned held for investment, net 81,728 83,284 Real estate owned held for sale ($ 14,509 related to consolidated VIEs as of June 30, 2024) 14,509 — Other assets ($ 2,484 and $ 3,690 of interest receivable related to consolidated VIEs, respectively; $ 32,002 of other receivables related to consolidated VIEs as of December 31, 2023) 19,074 52,354 Total assets $ 2,069,755 $ 2,279,777 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Secured funding agreements $ 625,936 $ 639,817 Notes payable 104,751 104,662 Secured term loan 137,409 149,393 Collateralized loan obligation securitization debt (consolidated VIEs) 588,421 723,117 Due to affiliate 4,526 4,135 Dividends payable 13,812 18,220 Other liabilities ($ 1,779 and $ 2,263 of interest payable related to consolidated VIEs, respectively) 12,637 14,584 Total liabilities 1,487,492 1,653,928 Commitments and contingencies (Note 8) STOCKHOLDERS' EQUITY Common stock, par value $ 0.01 per share, 450,000,000 shares authorized at June 30, 2024 and December 31, 2023 and 54,518,727 and 54,149,225 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 532 532 Additional paid-in capital 814,620 812,184 Accumulated other comprehensive income 193 1

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 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 real