Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q3 2024 Earnings Presentation
24 slides from Ares Commercial Real Estate's earnings presentation, Nov 7, 2024
Slide 1: Third Quarter 2024 Earnings Presentation
Exhibit 99.2 Third Quarter 2024 Earnings Presentation
Slide 2: Disclaimer
Disclaimer Statements included herein may constitute “forward-looking statementsˮ 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: 3Q 2024 Company Results and Highlights
3Q 2024 Company Results and Highlights • 3Q 2024 GAAP net income (loss) of $(0.11) per diluted common share • 3Q 2024 Distributable Earnings of $0.07 per diluted common share(1) • 3Q 2024 Distributable Earnings of $0.17 per diluted common share excluding realized losses of $0.10 per diluted Earnings
Slide 4: Ares Management
Ares Management With approximately $464 billion in assets under management, Ares Management Corporation is a global alternative investment manager operating an integrated platform across five business groups Global Footprint2 Profile Founded 1997 AUM $464bn Employees 3,140+ Investment Professionals
Slide 5: Ares Real Estate
Ares Real Estate Global real estate investment manager with vertically integrated operating platform that seeks to generate compelling risk-adjusted performance through market cycles $54 bn 280+ Core/Core-Plus Value-Add Opportunistic Real Estate Investment AUM Professionals Global Debt US Private Re
Slide 6: Portfolio Overview
Portfolio Overview Focused on maximizing outcomes for our risk rated 4 and 5 loans Risk Rated 1-3 Loan Portfolio Risk Rated 4 and 5 Loan Portfolio $1.5 $0.3 billion 35 billion 5 Portfolio Loans Portfolio Loans Size(2) Size(3) Majority Collateralized by Multifamily, Total Portfolio (1) 94% is Collate
Slide 7: Continued Progress Addressing Risk Rated 4 and 5 Loans in 3Q 2024
Continued Progress Addressing Risk Rated 4 and 5 Loans in 3Q 2024 33% reduction in outstanding principal balance of loans risk rated 4 and 5 since 2Q 2024 and a 41% reduction since 4Q 2023 Reduced Loans Risk Rated 4 and 5(1) as Measured by Outstanding Principal Balance 1 2 3 4 Note: As of September
Slide 8: Balance Sheet and Capital Position Provides Flexibility
Balance Sheet and Capital Position Provides Flexibility Focused on further de-levering the balance sheet and maintaining higher levels of available liquidity to support positive outcomes on risk rated 4 and 5 loans 2024 Loan Repayments 1 Total Outstanding Borrowings ($ in millions) 2 $124 million in
Slide 9: Trends in CECL Reserves
Trends in CECL Reserves ($ in millions) Change in CECL Reserves 3Q 2024 Note: As of September 30, 2024 unless otherwise noted. Past performance is not indicative of future results. Numbers may not sum due to rounding. 9
Slide 10: CECL Reserves
CECL Reserves CECL Reserves by CECL Reserves by Risk Rating (1) Property Type (1) $146 million Total CECL Reserves 8% CECL Reserves as a Percent of Loans Held for Investment (1) 87% 87% CECL reserves relates to office and residential / CECL reserves relates to risk rated 4 and 5 loans condo loans No
Slide 11: CECL Reserves for Risk Rated 4 and 5 Loans
CECL Reserves for Risk Rated 4 and 5 Loans Risk Rated 4 and 5 Loans Risk Rated 4 and 5 Loans CECL Reserves by Property CECL Reserves as a Type Percent of Loan Balance (2) $128 million CECL Reserves for Risk Rated 4 and 5 Loans 40% CECL Reserves as a Percent of Risk Rated 4 and 5 Loan Balance(1) Note
Slide 12: Summary of Real Estate Owned ("REO")
Summary of Real Estate Owned ("REO") Mixed Use Office Office Quarter Converted to REO: 3Q 2023 2Q 2024 3Q 2024 Location: Florida California North Carolina Square Footage: 816 197 568 Carrying Value:(1) $81 $15 $60 Income Yield:(2) 9% 11% 8%(3) Note: As of September 30, 2024 unless otherwise noted. P
Slide 13: Appendix
Appendix
Slide 14: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Office Loans: 1 Senior IL Nov 2020 $162.6 $162.6 $152.1 (
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Multifamily Loans: 12 Senior NY May 2022 $133.0 $132.2 $1
Slide 16: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Residential/Condominium Loans: 27 Senior NY Mar 2022 $109
Slide 17: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Unleveraged Payment # Loan Type Location Date Commitment Principal Carrying Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Self Storage Loans: 33 Senior PA Mar 2022 $18.2 $18.2 $18
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 9/30/2024 12/31/2023 ASSETS Cash and cash equivalents $ 68,881 $ 110,459 Restricted cash ($3,466 related to consolidated VIEs as of September 30, 2024) 3,466 — Loans held for investment ($658,956 and $892,166 related
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Revenue: Interest income $ 39,345 $ 40,847 $ 44,033 $ 44,348 $ 52,819 Interest expense (27,401) (27,483) (28,819) (29,957) (29,745) Ne
Slide 20: Reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss)
Reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss) For the Three Months Ended ($ in thousands, except per share data) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Net income (loss) attributable to common stockholders $ (5,880) $ (6,125) $ (12,323) $ (39,414) $ 9,184
Slide 21: Diverse Sources of Financing Supports Portfolio
Diverse Sources of Financing Supports Portfolio Diversified financing sources totaling $1.8 billion with $460 million of undrawn capacity(1,2) ($ in millions) Total Outstanding Non Spread Based Financing Sources Commitments Principal Pricing Range Mark to Credit Mark to Market Secured Funding Agreem
Slide 22: Glossary
Glossary 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 origin
Slide 23: Endnotes
Endnotes Company Results and Highlights Note: As of September 30, 2024 unless otherwise noted. Past performance is not indicative of future results. Due to rounding, numbers may not add up to the totals provided. 1. Distributable Earnings (Loss) and Distributable Earnings excluding realized losses a
Slide 24: Ares Commercial Real Estate Corporation
QO ARES COMMERCIAL REAL ESTATE CORPORATION
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