Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q4 2021 Earnings Presentation
21 slides from Ares Commercial Real Estate's earnings presentation, Feb 15, 2022
Slide 1: Fourth Quarter and Full Year 2021 Earnings Presentation
Fourth Quarter and Full Year 2021 Earnings Presentation
Slide 2: Disclaimer
Disclaimer Statements included herein may 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, which may relate to future events or the future performance or financial co
Slide 3: Company Highlights
Company Highlights $2.4 billion 33% $1.4 billion 100% outstanding year over year in FY 2021 originations Senior Loans principal balance portfolio growth(1) Growing Strong Loan Origination Portfolio Momentum Fifth consecutive quarter Focused on high conviction sectors of portfolio growth including mu
Slide 4: Summary of Q4 and FY 2021 Results and Activity
Summary of Q4 and FY 2021 Results and Activity ∙ Q4 and FY 2021 GAAP net income of $0.36 and $1.42 per diluted common share, respectively(1) ∙ Q4 and FY 2021 Distributable Earnings of $0.41 and $1.55 per diluted common share, respectively(2) Earnings Results ∙ Book value per diluted common share of
Slide 5: Loan Portfolio Positioning and Performance
Loan Portfolio Positioning and Performance Portfolio Characteristics Focused and Geographically Diverse Portfolio(1) By Asset Type By Geography Defensive and Diversified 5% 72 $2.4 5.5% 6% 8% Portfolio Active Loans Across Diversified billion Weighted Average Unleveraged 7% 34% 18% 32% Portfolio Outs
Slide 6: Full Year Portfolio Activity
Full Year Portfolio Activity Record Year of Production in 2021 Accelerated Portfolio Growth ($ in millions) $1,366 $875 $956 $777 $609 $524 2016 2017 2018 2019 2020 2021 New commitments 33% Year Over Year Portfolio Growth(1) ($ in millions) $369 $419 $85 $317 $248 $223 $125 $131 $2,378 $2,377 $2,377
Slide 7: Q4 and FY 2021 Origination Activity
Q4 and FY 2021 Origination Activity Q4 2021 New Investment Commitments FY 2021 New Investment Commitments 16 $365 million 42 $1.4 billion new loans Q4 2021 commitments new loans FY 2021 commitments 100% 100% 100% 99% senior loans for senior loans for floating rate loans floating rate loans Q4 2021 c
Slide 8: Conservative Balance Sheet and Liquidity Management
Conservative Balance Sheet and Liquidity Management Diversified & Conservative $2.3 Diversified Sources of Financing(3) Balance Sheet 8 48% billion Sources of Non-recourse Financing(1) Financing Total Capacity 3% Across All Financings(2) 44% Secured Funding Agreements Secured Term Loan 45% CLO Secur
Slide 9: Well-Positioned for Potential Rise in Short-Term Interest Rates
Well-Positioned for Potential Rise in Short-Term Interest Rates Interest Rate Sensitivity to Benchmark Interest Rate Index(1) Changes ($ in millions) Annual estimated increase/(decrease) in net income(2) $1.4 $0.2 $1.8 $0.7 $(3.5) $(6.5) Benchmark Interest Rate 0.50% 1.00% Index at Zero Change in Be
Slide 10: History of Growing and Consistent Dividends
History of Growing and Consistent Dividends Dividend History(1) Dividends Supplemental dividend (per share) of $0.02 $0.36 $0.35 $0.35 $0.35 $0.35 $0.35 $0.34 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.33 $0.32 $0.31 $0.30 $0.29 $0.28 $0.28 $0.28 $0.27 $0.27 $0.27 $0.27 $0.26 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 11: Appendix
Appendix
Slide 12: Current Expected Credit Losses
Current Expected Credit Losses ($ in thousands) ∙ No specific loan impairments on loan portfolio ∙ Increase in CECL reserve of $0.8 million (bifurcated Balance at 9/30/2021 $ 24,481 between an increase in funded commitments Provision for CECL 765 provision of $1.2 million and a decrease in unfunded
Slide 13: Additional Details on Sources of Funding
Additional Details on Sources of Funding ($ in millions) Financing Sources Total Commitments Outstanding Balance Pricing Range Mark-to-Market Secured Funding Agreements Wells Fargo Facility $450.0 $399.5 LIBOR+1.50 to 2.75% Credit Citibank Facility 325.0 193.0 LIBOR+1.50 to 2.25% Credit CNB Facility
Slide 14: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate LIBOR Floor Effective Yield Maturity Date Terms(1) Office Loans: 1 Senior IL Nov 2020 $151.5 $150.5 $149.9
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate LIBOR Floor Effective Yield Maturity Date Terms(1) Industrial Loans: 25 Senior IL May 2021 $100.7 $77.5 $76
Slide 16: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate LIBOR Floor Effective Yield Maturity Date Terms(1) Hotel Loans: 45 Senior OR/WA May 2018 $68.1 $68.1 $67.6
Slide 17: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate LIBOR Floor Effective Yield Maturity Date Terms(1) Residential/Condominium Loans: 65 Senior FL Jul 2021 $75
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 12/31/2021 12/31/2020 ASSETS Cash and cash equivalents $ 50,615 $ 74,776 Loans held for investment ($974,424 and $550,590 related to consolidated VIEs, respectively) 2,414,383 1,815,219 Current expected credit loss r
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Revenue: Interest income $ 38,044 $ 34,023 $ 30,859 $ 30,704 $ 29,144 Interest expense (14,180) (12,669) (11,092) (12,139) (11,499) N
Slide 20: Reconciliation of Net Income to Non-GAAP Distributable Earnings
Reconciliation of Net Income to Non-GAAP Distributable Earnings For the Three Months Ended ($ in thousands, except per share data) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Net income attributable to common stockholders $ 17,154 $ 9,951 $ 17,615 $ 15,740 $ 14,407 Stock-based compensation 4
Slide 21: Glossary
Glossary Ares Warehouse The Ares Warehouse represents a real estate debt warehouse investment vehicle maintained by an affiliate of ACREM. The Ares Warehouse holds Ares Management originated commercial real estate loans, which are made available to purchase by other investment vehicles, including AC
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