Ares Management Corporation · NYSE:ARES
Ares Management — Ares Commercial Real Estate — Q4 2020 Earnings Presentation
18 slides from Ares Management's earnings presentation, February 2021
Slide 1: Fourth Quarter and Full Year 2020 Earnings Presentation
Fourth Quarter and Full Year 2020 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 Focused and Defensive Portfolio Conservative Balance Sheet of Senior Loans and Liquidity Position 94% 50 $88.3 million 2.8x (1) senior loans loans across 17 markets of unrestricted cash debt to equity ratio(2) $1.8 billion 7 facilities(3) outstanding principal balance with intenti
Slide 4: Summary of Q4 and FY 2020 Results and Activity
Summary of Q4 and FY 2020 Results and Activity ∙ Q4 and FY 2020 GAAP net income of $0.43 and $0.66 per diluted common share, respectively(1) Earnings ∙ Q4 and FY 2020 Distributable Earnings of $0.41 and $1.36 per diluted common share, respectively(2) 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 Portfolio 50 $1.8 billion 61% 1% Number of Active Outstanding Multifamily, Office Loans Principal Balance(2) and Industrial 2% 7%
Slide 6: Full Year 2020 Portfolio Activity
Full Year 2020 Portfolio Activity Investment Characteristics Notable Loan Portfolio Activity ∙ Average size of new loan originated in 2020 was 42% 9 $58.2 million average larger than portfolio average of $41.1 million new loans(1) loan size ∙ Portfolio grew by 8% year over year ∙ Lower than average
Slide 7: Conservative Balance Sheet and Liquidity Management
Conservative Balance Sheet and Liquidity Management Diversified Sources of Financing(4) Diversified & Conservative Balance Sheet 7 $1.7 billion 5% Sources of 37% Outstanding Total Non-recourse(2) Capacity Across All Financing(1) Secured Funding Agreements Financings(3) 32% Secured Term Loan 55% 2017
Slide 8: History of Growing and Consistent Dividends
History of Growing and Consistent Dividends Dividend History(1) Stable dividend in 2020 $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 $0.24 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2
Slide 9: Appendix
Appendix
Slide 10: Current Expected Credit Losses
Current Expected Credit Losses ($ in thousands) ∙ No specific loan impairments on loan portfolio ∙ Reduction in provision for CECL of $1.9 million Balance at 9/30/2020 $ 27,113 (bifurcated between funded commitments of $1.8 Provision for CECL (1,877) million and unfunded commitments of $0.1 million)
Slide 11: Additional Details on Sources of Funding
Additional Details on Sources of Funding ($ in millions) Financing Sources Total Commitments Outstanding Balance Pricing Range Mark-to-Market Secured Funding Agreements Wells Fargo Facility $ 350.0 $ 336.0 LIBOR+1.45 to 2.75% Credit Citibank Facility 325.0 117.5 LIBOR+1.50 to 2.25% Credit CNB Facili
Slide 12: 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 Diversified Jan 2020 $132.5 $109.
Slide 13: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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: 27 Senior OR/WA May 2018 $68.1 $68.1 $67.3
Slide 14: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Industrial Loans: 43 Senior NY Jan 2020 $77.5 $52.3 $51.
Slide 15: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 12/31/2020 12/31/2019 ASSETS Cash and cash equivalents $ 74,776 $ 5,256 Restricted cash — 379 Loans held for investment ($550,590 and $515,896 related to consolidated VIEs, respectively) 1,815,219 1,682,498 Current e
Slide 16: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Revenue: Interest income $ 29,144 $ 30,626 $ 29,835 $ 31,448 $ 28,536 Interest expense (11,499) (11,875) (13,042) (15,534) (15,044) N
Slide 17: 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) 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Net income (loss) attributable to common stockholders $ 14,407 $ 14,928 $ 9,768 $ (17,263) $ 9,660 Stock-based compen
Slide 18: Glossary
Glossary Ares Warehouse The Ares Warehouse represents a real estate debt warehouse investment vehicle maintained by an affiliate of ACRE's Manager. The Ares Warehouse holds Ares Management originated commercial real estate loans, which are made available to purchase by other investment vehicles, inc
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