Market Overview

Ares Commercial Real Estate Corporation Reports Third Quarter 2019 Results

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Third quarter GAAP net income of $9.0 million or $0.31 per diluted common share and Core Earnings(1) of $9.7 million or $0.34 per diluted common share

- Subsequent to end of third quarter -

Declared fourth quarter 2019 dividend of $0.33 per common share

Announced change in leadership effective December 5, 2019

Ares Commercial Real Estate Corporation (the "Company") (NYSE:ACRE), a specialty finance company engaged in originating and investing in commercial real estate assets, reported generally accepted accounting principles ("GAAP") net income of $9.0 million or $0.31 per diluted common share and Core Earnings(1) of $9.7 million or $0.34 per diluted common share for the third quarter of 2019. In addition, the Company announced that its Board of Directors declared a fourth quarter 2019 dividend of $0.33 per common share payable on January 15, 2020 to common stockholders of record as of December 30, 2019.

Additionally, the Company announced that the Board of Directors has appointed Bryan Donohoe as Chief Executive Officer, effective December 5, 2019. Mr. Donohoe will join ACRE's senior management team alongside its President, David Roth, Chief Financial Officer, Tae-Sik Yoon, and Head of Originations, John Gerber. Jamie Henderson will be stepping down as Chief Executive Officer and Chief Investment Officer on December 5, 2019 and will continue as a Director of the Board of ACRE.

"We generated another quarter of strong earnings driven by healthy new investment activity and our well positioned balance sheet," said Jamie Henderson, Chief Executive Officer and Chief Investment Officer of ACRE.

"Based on the timing of our investment activity early in the fourth quarter and the positioning of our balance sheet to benefit from declining interest rates and other attributes of our company, we currently expect our fourth quarter earnings to exceed that of the third quarter and we remain confident that we will more than cover our annual dividend from Core Earnings for the fourth consecutive year," said Tae-Sik Yoon, Chief Financial Officer of ACRE.

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(1) Core Earnings is a non-GAAP financial measure. Refer to Schedule I for further details.

COMMON STOCK DIVIDEND

On November 8, 2019, the Company declared a cash dividend of $0.33 per common share for the fourth quarter of 2019. The third quarter 2019 dividend was paid on October 15, 2019 to common stockholders of record as of September 30, 2019.

ADDITIONAL INFORMATION

The Company issued a presentation of its third quarter 2019 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 2019 Earnings Presentation." The Company also filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 with the U.S. Securities and Exchange Commission on November 8, 2019.

CONFERENCE CALL AND WEBCAST INFORMATION

On Friday, November 8, 2019, the Company invites all interested persons to attend its webcast/conference call at 9:00 a.m. (Eastern Time) to discuss its third quarter 2019 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 http://www.arescre.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call by dialing +1 (888) 317-6003. International callers can access the conference call by dialing +1 (412) 317-6061. All callers will need to enter the Participant Elite Entry Number 3706251 followed by the # sign and reference "Ares Commercial Real Estate Corporation" once connected with the operator. 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 November 22, 2019 at 5:00 p.m. (Eastern Time) to domestic callers by dialing +1 (877) 344-7529 and to international callers by dialing +1 (412) 317-0088. For all replays, please reference conference number 10134445. An archived replay will also be available through November 22, 2019 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 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 the United States. Ares Commercial Real Estate Corporation elected and qualified to be taxed as a real estate investment trust and is externally managed by a subsidiary of Ares Management Corporation. For more information, please visit www.arescre.com. The contents of such website are not, and should not be deemed to be, incorporated by reference herein.

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 and Exchange Act of 1934, as amended, which relate to future events or the Company's future performance or financial condition. 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 the returns on current and future investments, rates of repayments and prepayments on the Company's mortgage loans, availability of investment opportunities, the Company's ability to originate additional investments and completion of pending investments, the availability of capital, the availability and cost of financing, market trends and conditions in the Company's industry and the general economy, the level of lending and borrowing spreads and interest rates, commercial real estate loan volumes and the risks described from time to time in the Company's filings with the Securities and Exchange Commission. Any forward-looking statement, including any contained herein, speaks only as of the time of this press release and Ares Commercial Real Estate Corporation undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call. Projections and forward-looking statements are based on management's good faith and reasonable assumptions, including the assumptions described herein.

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

As of

 

September 30, 2019

 

December 31, 2018

 

(unaudited)

 

 

ASSETS

 

 

 

Cash and cash equivalents

$

5,952

 

 

$

11,089

 

Restricted cash

379

 

 

379

 

Loans held for investment ($521,489 and $289,576 related to consolidated VIEs, respectively)

1,538,393

 

 

1,524,873

 

Real estate owned, net

38,020

 

 

 

Other assets ($1,269 and $843 of interest receivable related to consolidated VIEs,

respectively; $35,511 and $51,582 of other receivables related to consolidated VIEs, respectively)

91,953

 

 

66,983

 

Total assets

$

1,674,697

 

 

$

1,603,324

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

LIABILITIES

 

 

 

Secured funding agreements

$

620,030

 

 

$

777,974

 

Notes payable

55,014

 

 

 

Secured term loan

108,940

 

 

108,345

 

Collateralized loan obligation securitization debt (consolidated VIE)

442,916

 

 

270,737

 

Due to affiliate

2,627

 

 

3,163

 

Dividends payable

9,526

 

 

8,914

 

Other liabilities ($753 and $541 of interest payable related to consolidated VIEs, respectively)

9,900

 

 

8,604

 

Total

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