Ares Commercial Real Estate Corporation Reports Third Quarter 2024 Results
Ares Commercial Real Estate (NYSE:ACRE) reported a GAAP net loss of $(5.9) million or $(0.11) per diluted common share for Q3 2024, with Distributable Earnings of $3.7 million or $0.07 per diluted common share. The company's risk rated 4 and 5 loans declined by 33%, and outstanding debt balance decreased by 8%. The Board declared a regular cash dividend of $0.25 per common share for both Q3 and Q4 2024, with the Q4 dividend payable on January 15, 2025.
Ares Commercial Real Estate (NYSE:ACRE) ha riportato una perdita netta GAAP di $(5.9) milioni, ovvero $(0.11) per azione ordinaria diluita per il terzo trimestre del 2024, con utili distribuibili di $3.7 milioni o $0.07 per azione ordinaria diluita. Il rating dei prestiti considerati a rischio 4 e 5 è diminuito del 33%, e il saldo del debito in essere è sceso dell'8%. Il Consiglio ha dichiarato un dividendo regolare in contante di $0.25 per azione ordinaria sia per il terzo che per il quarto trimestre del 2024, con il dividendo del quarto trimestre che sarà pagabile il 15 gennaio 2025.
Ares Commercial Real Estate (NYSE:ACRE) reportó una pérdida neta GAAP de $(5.9) millones o $(0.11) por acción ordinaria diluida para el tercer trimestre de 2024, con ganancias distribuibles de $3.7 millones o $0.07 por acción ordinaria diluida. El riesgo de los préstamos clasificados como 4 y 5 disminuyó en un 33%, y el saldo de la deuda pendiente se redujo en un 8%. La Junta declaró un dividendo regular en efectivo de $0.25 por acción ordinaria tanto para el tercer como para el cuarto trimestre de 2024, con el dividendo del cuarto trimestre pagadero el 15 de enero de 2025.
Ares Commercial Real Estate (NYSE:ACRE)는 2024년 3분기에 GAAP 기준으로 $(5.9) 백만 또는 희석된 일반 주식 한 주당 $(0.11)의 순손실을 보고했으며, 배당 가능한 수익은 $3.7 백만 또는 희석된 일반 주식 한 주당 $0.07입니다. 회사의 위험 등급이 4와 5인 대출은 33% 감소했으며, 미지급 부채 잔액은 8% 감소했습니다. 이사회는 2024년 3분기와 4분기를 위해 일반 주식 한 주당 $0.25의 정기 현금 배당금을 선언했으며, 4분기 배당금은 2025년 1월 15일에 지급될 예정입니다.
Ares Commercial Real Estate (NYSE:ACRE) a rapporté une perte nette GAAP de $(5.9) millions, soit $(0.11) par action ordinaire diluée pour le troisième trimestre de 2024, avec des bénéfices distribuables de $3.7 millions ou $0.07 par action ordinaire diluée. Les prêts classés risque 4 et 5 ont diminué de 33 %, et le solde de la dette en cours a baissé de 8 %. Le Conseil a déclaré un dividende en espèces régulier de $0.25 par action ordinaire pour les troisième et quatrième trimestres de 2024, avec le dividende du quatrième trimestre payable le 15 janvier 2025.
Ares Commercial Real Estate (NYSE:ACRE) berichtete im 3. Quartal 2024 von einem GAAP-Nettoverlust von $(5.9) Millionen oder $(0.11) pro verwässerter Stammaktie, mit ausschüttbaren Erträgen von $3.7 Millionen oder $0.07 pro verwässerter Stammaktie. Die risikobewerten Kredite der Kategorien 4 und 5 sanken um 33%, und die ausstehende Schuldenlast verringerte sich um 8%. Der Vorstand erklärte eine regelmäßige Barausschüttung von $0.25 pro Stammaktie für das 3. und 4. Quartal 2024, wobei die Ausschüttung für das 4. Quartal am 15. Januar 2025 zahlbar ist.
- 33% reduction in risk rated 4 and 5 loans
- 8% reduction in outstanding debt balance
- Maintained consistent quarterly dividend of $0.25 per share
- Q3 2024 GAAP net loss of $5.9 million
- Negative earnings per share of $(0.11)
- Lower Distributable Earnings of $0.07 per share
Insights
The Q3 2024 results reveal significant challenges for ACRE with a
The
Third quarter GAAP net income (loss) of
Distributable Earnings(1) of
- Subsequent to three months ended September 30, 2024 -
Declared fourth quarter 2024 dividend of
“During the third quarter, we continued to make progress on our objective of further strengthening our balance sheet position and resolving our risk rated 4 and 5 loans, which declined by
“We believe our balance sheet positioning is paramount in our ability to drive successful outcomes resolving our remaining underperforming assets,” said Jeff Gonzales, Chief Financial Officer of Ares Commercial Real Estate Corporation. “During the third quarter, we have continued to further de-lever our balance sheet with our outstanding debt balance declining by an additional
| ____________________ | ||
(1) |
Distributable Earnings (Loss) is a non-GAAP financial measure. Refer to Schedule I for the definition and reconciliation of Distributable Earnings (Loss). |
|
COMMON STOCK DIVIDEND
On August 6, 2024, the Board of Directors of the Company declared a regular cash dividend of
On November 7, 2024, the Board of Directors of the Company declared a regular cash dividend of
ADDITIONAL INFORMATION
The Company issued a presentation of its third quarter 2024 results, which can be viewed at www.arescre.com on the Investor Resources section of our home page under Events and Presentations. The presentation is titled “Third Quarter 2024 Earnings Presentation.” The Company also filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 with the
CONFERENCE CALL AND WEBCAST INFORMATION
On November 7, 2024, the Company invites all interested persons to attend its webcast/conference call at 12:00 p.m. (Eastern Time) to discuss its third quarter 2024 financial results.
All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of the Company’s website at www.arescre.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call by dialing +1 (800) 225-9448. International callers can access the conference call by dialing +1 (203) 518-9708. Please provide passcode ACREQ324. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available through December 7, 2024 at 5:00 p.m. (Eastern Time) to domestic callers by dialing +1 (800) 839-1246 and to international callers by dialing +1 (402) 220-0464. An archived replay will also be available through December 7, 2024 on a webcast link located on the Home page of the Investor Resources section of the Company’s website.
ABOUT ARES COMMERCIAL REAL ESTATE CORPORATION
Ares Commercial Real Estate Corporation (the “Company”) is a specialty finance company primarily engaged in originating and investing in commercial real estate loans and related investments. Through its national direct origination platform, the Company provides a broad offering of flexible and reliable financing solutions for commercial real estate owners and operators. The Company originates senior mortgage loans, as well as subordinate financings, mezzanine debt and preferred equity, with an emphasis on providing value added financing on a variety of properties located in liquid markets across
FORWARD-LOOKING STATEMENTS
Statements included herein or on the webcast / conference call may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the Company’s future performance or financial condition and include, but are not limited to, statements about the resolution of underperforming loans, reduction or increase of CECL reserve, increase of available borrowings, the industry, and the loan market. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including global economic trends and economic conditions, including high inflation, slower growth, changes to fiscal and monetary policy, higher interest rates and currency fluctuations, as well as geopolitical instability, including conflicts between
ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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(in thousands, except share and per share data) |
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|
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As of |
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|
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September 30,
|
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December 31,
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(unaudited) |
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|
||||
ASSETS |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
68,881 |
|
|
$ |
110,459 |
|
Restricted cash ( |
|
|
3,466 |
|
|
|
— |
|
Loans held for investment ( |
|
|
1,812,773 |
|
|
|
2,126,524 |
|
Current expected credit loss reserve |
|
|
(144,068 |
) |
|
|
(159,885 |
) |
Loans held for investment, net of current expected credit loss reserve |
|
|
1,668,705 |
|
|
|
1,966,639 |
|
Loans held for sale ( |
|
|
— |
|
|
|
38,981 |
|
Investment in available-for-sale debt securities, at fair value |
|
|
27,005 |
|
|
|
28,060 |
|
Real estate owned held for investment, net ( |
|
|
140,912 |
|
|
|
83,284 |
|
Real estate owned held for sale ( |
|
|
14,509 |
|
|
|
— |
|
Other assets ( |
|
|
17,125 |
|
|
|
52,354 |
|
Total assets |
|
$ |
1,940,603 |
|
|
$ |
2,279,777 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
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||||
LIABILITIES |
|
|
|
|
||||
Secured funding agreements |
|
$ |
640,610 |
|
|
$ |
639,817 |
|
Notes payable |
|
|
— |
|
|
|
104,662 |
|
Secured term loan |
|
|
127,828 |
|
|
|
149,393 |
|
Collateralized loan obligation securitization debt (consolidated VIEs) |
|
|
574,896 |
|
|
|
723,117 |
|
Due to affiliate |
|
|
4,106 |
|
|
|
4,135 |
|
Dividends payable |
|
|
13,809 |
|
|
|
18,220 |
|
Other liabilities ( |
|
|
15,601 |
|
|
|
14,584 |
|
Total liabilities |
|
|
1,376,850 |
|
|
|
1,653,928 |
|
Commitments and contingencies |
|
|
|
|
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STOCKHOLDERS' EQUITY |
|
|
|
|
||||
Common stock, par value |
|
|
532 |
|
|
|
532 |
|
Additional paid-in capital |
|
|
815,802 |
|
|
|
812,184 |
|
Accumulated other comprehensive income |
|
|
190 |
|
|
|
153 |
|
Accumulated earnings (deficit) |
|
|
(252,771 |
) |
|
|
(187,020 |
) |
Total stockholders' equity |
|
|
563,753 |
|
|
|
625,849 |
|
Total liabilities and stockholders' equity |
|
$ |
1,940,603 |
|
|
$ |
2,279,777 |
|
ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except share and per share data) |
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(unaudited) |
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For the Three Months Ended
|
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For the Nine Months Ended
|
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2024 |
|
2023 |
|
2024 |
|
2023 |
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Revenue: |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
$ |
39,345 |
|
|
$ |
52,819 |
|
|
$ |
124,225 |
|
|
$ |
154,260 |
|
Interest expense |
|
|
(27,401 |
) |
|
|
(29,745 |
) |
|
|
(83,703 |
) |
|
|
(79,695 |
) |
Net interest margin |
|
|
11,944 |
|
|
|
23,074 |
|
|
|
40,522 |
|
|
|
74,565 |
|
Revenue from real estate owned |
|
|
4,709 |
|
|
|
809 |
|
|
|
11,619 |
|
|
|
809 |
|
Total revenue |
|
|
16,653 |
|
|
|
23,883 |
|
|
|
52,141 |
|
|
|
75,374 |
|
Expenses: |
|
|
|
|
|
|
|
|
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Management and incentive fees to affiliate |
|
|
2,654 |
|
|
|
2,974 |
|
|
|
8,114 |
|
|
|
9,317 |
|
Professional fees |
|
|
681 |
|
|
|
682 |
|
|
|
1,971 |
|
|
|
2,080 |
|
General and administrative expenses |
|
|
1,939 |
|
|
|
1,691 |
|
|
|
5,978 |
|
|
|
5,414 |
|
General and administrative expenses reimbursed to affiliate |
|
|
871 |
|
|
|
775 |
|
|
|
3,280 |
|
|
|
2,617 |
|
Expenses from real estate owned |
|
|
3,164 |
|
|
|
480 |
|
|
|
7,426 |
|
|
|
480 |
|
Total expenses |
|
|
9,309 |
|
|
|
6,602 |
|
|
|
26,769 |
|
|
|
19,908 |
|
Provision for current expected credit losses |
|
|
7,461 |
|
|
|
3,227 |
|
|
|
(17,182 |
) |
|
|
44,373 |
|
Realized losses on loans |
|
|
5,766 |
|
|
|
4,886 |
|
|
|
67,879 |
|
|
|
10,499 |
|
Change in unrealized losses on loans held for sale |
|
|
— |
|
|
|
— |
|
|
|
(995 |
) |
|
|
— |
|
Income (loss) before income taxes |
|
|
(5,883 |
) |
|
|
9,168 |
|
|
|
(24,330 |
) |
|
|
594 |
|
Income tax expense (benefit), including excise tax |
|
|
(3 |
) |
|
|
(16 |
) |
|
|
(1 |
) |
|
|
48 |
|
Net income (loss) attributable to common stockholders |
|
$ |
(5,880 |
) |
|
$ |
9,184 |
|
|
$ |
(24,329 |
) |
|
$ |
546 |
|
Earnings (loss) per common share: |
|
|
|
|
|
|
|
|
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Basic earnings (loss) per common share |
|
$ |
(0.11 |
) |
|
$ |
0.17 |
|
|
$ |
(0.45 |
) |
|
$ |
0.01 |
|
Diluted earnings (loss) per common share |
|
$ |
(0.11 |
) |
|
$ |
0.17 |
|
|
$ |
(0.45 |
) |
|
$ |
0.01 |
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic weighted average shares of common stock outstanding |
|
|
54,464,147 |
|
|
|
54,085,035 |
|
|
|
54,429,014 |
|
|
|
54,339,441 |
|
Diluted weighted average shares of common stock outstanding |
|
|
54,464,147 |
|
|
|
54,796,413 |
|
|
|
54,429,014 |
|
|
|
55,043,206 |
|
Dividends declared per share of common stock(1) |
|
$ |
0.25 |
|
|
$ |
0.33 |
|
|
$ |
0.75 |
|
|
$ |
1.03 |
|
(1) |
There is no assurance dividends will continue at these levels or at all. |
SCHEDULE I
Reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss)
Distributable Earnings (Loss) is a non-GAAP financial measure that helps the Company evaluate its financial performance excluding the effects of certain transactions and GAAP adjustments that it believes are not necessarily indicative of its current loan origination portfolio and operations. To maintain the Company’s REIT status, the Company is generally required to annually distribute to its stockholders substantially all of its taxable income. The Company believes the disclosure of Distributable Earnings (Loss) provides useful information to investors regarding the Company’s ability to pay dividends, which is one of the principal reasons the Company believes investors invest in the Company. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Distributable Earnings (Loss) is defined as net income (loss) attributable to common stockholders computed in accordance with GAAP, excluding non-cash equity compensation expense, the incentive fees the Company pays to its Manager, depreciation and amortization (to the extent that any of the Company’s target investments are structured as debt and the Company forecloses on any properties underlying such debt), any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss), one-time events pursuant to changes in GAAP and certain non-cash charges after discussions between the Company’s Manager and the Company’s independent directors and after approval by a majority of the Company’s independent directors. Loan balances that are deemed to be uncollectible are written off as a realized loss and are included in Distributable Earnings (Loss). Distributable Earnings (Loss) is aligned with the calculation of “Core Earnings,” which is defined in the Management Agreement and is used to calculate the incentive fees the Company pays to its Manager.
Reconciliation of net income (loss) attributable to common stockholders, the most directly comparable GAAP financial measure, to Distributable Earnings (Loss) is set forth in the table below for the three months and twelve months ended September 30, 2024 ($ in thousands):
|
For the Three Months Ended
|
|
For the Twelve Months Ended
|
|||||
Net income (loss) attributable to common stockholders |
$ |
(5,880 |
) |
|
$ |
(63,742 |
) |
|
Stock-based compensation |
|
1,182 |
|
|
|
4,658 |
|
|
Incentive fees to affiliate |
|
— |
|
|
|
— |
|
|
Depreciation and amortization of real estate owned |
|
967 |
|
|
|
3,331 |
|
|
Provision for current expected credit losses |
|
7,461 |
|
|
|
30,271 |
|
|
Realized gain on termination of interest rate cap derivative (1) |
|
— |
|
|
|
(105 |
) |
|
Unrealized losses on loans held for sale |
|
— |
|
|
|
— |
|
|
Distributable Earnings (Loss) |
$ |
3,730 |
|
|
$ |
(25,587 |
) |
|
|
|
|
|
|||||
Net income (loss) attributable to common stockholders |
$ |
(0.11 |
) |
|
$ |
(1.17 |
) |
|
Stock-based compensation |
|
0.02 |
|
|
|
0.09 |
|
|
Incentive fees to affiliate |
|
— |
|
|
|
— |
|
|
Depreciation and amortization of real estate owned |
|
0.02 |
|
|
|
0.06 |
|
|
Provision for current expected credit losses |
|
0.14 |
|
|
|
0.56 |
|
|
Realized gain on termination of interest rate cap derivative (1) |
|
— |
|
|
|
— |
|
|
Unrealized losses on loans held for sale |
|
— |
|
|
|
— |
|
|
Basic Distributable Earnings (Loss) per common share |
$ |
0.07 |
|
|
$ |
(0.47 |
) |
|
|
|
|
|
|||||
Net income (loss) attributable to common stockholders |
$ |
(0.11 |
) |
|
$ |
(1.17 |
) |
|
Stock-based compensation |
|
0.02 |
|
|
|
0.09 |
|
|
Incentive fees to affiliate |
|
— |
|
|
|
— |
|
|
Depreciation and amortization of real estate owned |
|
0.02 |
|
|
|
0.06 |
|
|
Provision for current expected credit losses |
|
0.14 |
|
|
|
0.56 |
|
|
Realized gain on termination of interest rate cap derivative (1) |
|
— |
|
|
|
— |
|
|
Unrealized losses on loans held for sale |
|
— |
|
|
|
— |
|
|
Diluted Distributable Earnings (Loss) per common share |
$ |
0.07 |
|
|
$ |
(0.47 |
) |
|
(1) |
For the twelve months ended September 30, 2024, Distributable Loss includes a |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107316756/en/
INVESTOR RELATIONS CONTACTS
Ares Commercial Real Estate Corporation
Carl Drake or John Stilmar
(888) 818-5298
iracre@aresmgmt.com
Source: Ares Commercial Real Estate Corporation
FAQ
What was ACRE's net income for Q3 2024?
What dividend did ACRE declare for Q4 2024?
How much did ACRE's risk rated loans decrease in Q3 2024?
What was ACRE's debt reduction in Q3 2024?
