Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q4 2023 Earnings Presentation
22 slides from Ares Commercial Real Estate's earnings presentation, Feb 22, 2024
Slide 1: Fourth Quarter and Full Year 2023 Earnings Presentation
Exhibit 99.2 Fourth Quarter and Full Year 2023 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 $2.2 billion 98% outstanding principal balance senior loans $0.20 Earnings 4Q Distributable Earnings(2) Loan per diluted common share Portfolio and $163 million CECL reserve equates to Dividends approximately 8%(1) of loans held for investment and 87% of total CECL reserve relates
Slide 4: Summary of 4Q 2023 and FY 2023 Results and Activity
Summary of 4Q 2023 and FY 2023 Results and Activity • 4Q 2023 and FY 2023 GAAP EPS (loss) of $(0.73) and $(0.72), respectively(1) Earnings • 4Q 2023 and FY 2023 Distributable EPS of $0.20 and $1.06, respectively(1,2) Results • Book value per common share of $11.56 (or $14.57 excluding the CECL reser
Slide 5: Portfolio Overview
Portfolio Overview We are focused on maximizing outcomes for our risk rated 4 and 5 loans Risk Rated 1-3 Loan Portfolio Risk Rated 4 & 5 Loan Portfolio and Held for Sale Loan $1.6 $0.6 37 10 billion Loans billion Loans Portfolio Size(2) Portfolio Size(3) Majority Collateralized by Multifamily, Total
Slide 6: Well-Positioned to Address Underperforming Loans
Well-Positioned to Address Underperforming Loans Consistent with our goal of driving positive outcomes on underperforming loans, we are focused on resolving risk rated 4 and 5 loans with the goal to redeploy capital into interest earning investments Key Elements in Addressing Our Risk Rated 4 and 5
Slide 7: Ares Management Platform
1 Ares Management Platform With approximately $419 billion in assets under management, Ares Management Corporation is a global alternative investment manager operating an integrated platform across five business groups Global Footprint(2) Profile Founded 1997 AUM $419bn Employees ~2,850 Investment P
Slide 8: Ares Real Estate Group Capabilities
1 Ares Real Estate Group Capabilities Global real estate investment manager with vertically integrated operating platform that seeks to generate compelling risk-adjusted performance(1) through market cycles $49.7 ~255 Core/Core-Plus Value-Add Opportunistic Investment billion Professionals Private De
Slide 9: Total Current Expected Credit Loss Reserves
2 Total Current Expected Credit Loss Reserves Total CECL reserves are approximately 8% of total loans(1) Total CECL Reserve by Total CECL Reserve by Risk Rating Property Type $163 million Risk Rated 4 Loans, 56% Total CECL Reserve Office, 71% Risk Rated 1 -3 Other, Loans, 9% 13% 8% Residential CECL
Slide 10: CECL Reserve for Risk Rated 4 and 5 Loans
2 CECL Reserve for Risk Rated 4 and 5 Loans Office and residential / condo loans drive the CECL reserve on risk rated 4 and 5 loans Risk Rated 4 and 5 Loans Risk Rated 4 and 5 Loans CECL Reserve by Property CECL Reserve as a Percent Type of Loan Balance(2) $149 35% Other, 6% 30% 30% 27% million Resi
Slide 11: Balance Sheet and Capital Position Provides Time and Flexibility
3 Balance Sheet and Capital Position Provides Time and Flexibility We have proactively de-levered and increased our available capital to support positive outcomes on our underperforming loans Net Debt to Equity Ratio Available Capital (excluding CECL) ($ in millions) $185 2.6x $175 1.9x $126 $125 $7
Slide 12: Appendix
OQ ARES ‘COMMERCIAL REAL ESTATE CORPORATION Appendix
Slide 13: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Office Loans: 1 Senior IL Nov 2020 $159.0 $159.0 $154.0 (
Slide 14: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Multifamily Loans: 14 Senior NY May 2022 $133.0 $132.2 $1
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Residential/Condominium Loans: 32 Senior NY Mar 2022 $91.
Slide 16: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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: 38 Senior PA Mar 2022 $18.2 $18.2 $18
Slide 17: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 12/31/2023 12/31/2022 ASSETS Cash and cash equivalents $ 110,459 $ 141,278 Loans held for investment ($892,166 and $887,662 related to consolidated VIEs, respectively) 2,126,524 2,264,008 Current expected credit loss
Slide 18: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Revenue: Interest income $ 44,348 $ 52,819 $ 51,941 $ 49,500 $ 52,552 Interest expense (29,957) (29,745) (26,951) (22,999) (22,144) N
Slide 19: 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) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Net income (loss) attributable to common stockholders $ (39,414) $ 9,184 $ (2,198) $ (6,439) $ 2,909 Stock-based comp
Slide 20: Diverse Sources of Financing Supports Portfolio
Diverse Sources of Financing Supports Portfolio Diversified financing sources totaling $2.3 billion with $640 million of undrawn capacity ($ in millions) Total Outstanding Non Spread Based Financing Sources Commitments Principal Pricing Range Mark to Credit Mark to Market Secured Funding Agreements
Slide 21: Glossary
Glossary Distributable Earnings Distributable Earnings 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 portfoli
Slide 22: Ares Commercial Real Estate Corporation
O ARES COMMERCIAL REAL ESTATE CORPORATION
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