Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q1 2024 Earnings Presentation
23 slides from Ares Commercial Real Estate's earnings presentation, May 9, 2024
Slide 1: First Quarter 2024 Earnings Presentation
Exhibit 99.2 First Quarter 2024 Earnings Presentation Confidential – Not for Publication or Distribution
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 $(0.23) 1Q GAAP net income (loss) $2.0 billion 98% per diluted common share outstanding principal balance senior loans $0.22 Loan $(0.62) 1Q Distributable Earnings and Earnings Portfolio Dividends 1Q Distributable per diluted common Earnings (Loss) share excluding realized per dil
Slide 4: Summary of 1Q 2024 Results and Activity
Summary of 1Q 2024 Results and Activity • 1Q 2024 GAAP net income (loss) of $(0.23) per diluted common share • 1Q 2024 Distributable Earnings (Loss) of $(0.62) per diluted common share(1) Earnings Results • 1Q 2024 Distributable Earnings of $0.22 per diluted common share excluding realized losses of
Slide 5: 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 & 5 Loan Portfolio $1.5 $0.5 billion 36 billion 8 Portfolio Loans Portfolio Loans Size(2) Size(3) Majority Collateralized by Multifamily, Total Portfolio 77% is Collateralize
Slide 6: Ares Management
Ares Management With approximately $428 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 $428bn Employees 2,900+ Investment Professionals
Slide 7: Ares Real Estate Group Capabilities
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 $48.8 270+ Core/Core-Plus Value-Add Opportunistic Investment billion Professionals Private Debt
Slide 8: Addressing Underperforming Loans
Addressing Underperforming Loans During 1Q 2024, we made meaningful progress lowering loans on non-accrual and exposure to loans backed by office properties Addressed Four Underperforming Reduced Dollars of Loans During 1Q 2024(1) Loans on Non-Accrual(2) 31% reduction quarter over quarter $425 1 Res
Slide 9: Balance Sheet and Capital Position Provides Flexibility
Balance Sheet and Capital Position Provides Flexibility Further de-levered balance sheet and maintained available liquidity to support positive outcomes on underperforming loans Further De-Leveraged & Maintained Available Liquidity 1 Total Outstanding Borrowings 5.0x Available Liquidity ($ in millio
Slide 10: CECL Reserves Trends
CECL Reserves Trends Reduction in CECL reserves primarily reflects the reversal of previous reserves associated with the realization of losses on exited loans ACRE CECL Reserve Change $ in millions in 1Q 2024 $180 $160 $20 $140 $120 ($42) $100 $80 $163 $141 $60 $40 $20 $0 4Q 2023 CECL Reserves Rever
Slide 11: Current Expected Credit Loss Reserves
Current Expected Credit Loss Reserves CECL reserves are approximately 7% of total loans(1) CECL Reserves by CECL Reserves by Risk Rating Property Type $141 million Total CECL Reserves Risk Rated Office, 61% 4 Loans, Risk 67% Rated 1 -3 Other, 7% Loans, 11% 15% CECL Reserve as a Percent of Risk Rated
Slide 12: CECL Reserves for Risk Rated and Loans
CECL Reserves for Risk Rated 4 and 5 Loans Office and residential / condo loans drive the CECL reserves on 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) $125 Other, 7% 40% 35% 35% million 30% 28
Slide 13: Appendix
Appendix Confidential – Not for Publication or Distribution
Slide 14: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Office Loans: 1 Senior IL Nov 2020 $160.2 $160.2 $154.0 (
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Multifamily Loans: 14 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 Unleveraged Payment # Loan Type Location Date Commitment Principal Carrying Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Residential/Condominium Loans: 31 Senior NY Mar 2022 $96.
Slide 17: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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: 37 Senior PA Mar 2022 $18.2 $18.2 $18
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets Confidential – Not for Publication or Distribution 18
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations 1. There is no assurance dividends will continue at these levels or at all. Confidential – Not for Publication or Distribution 19
Slide 20: Reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss)
Reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss) 1. For the three months ended December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, Distributable Earnings includes $0.1 million, $0.1 million, $0.3 million, and $0.5 million, respectively, adjustment t
Slide 21: Diverse Sources of Financing Supports Portfolio
Diverse Sources of Financing Supports Portfolio Diversified financing sources totaling $2.1 billion with $649.7 million of undrawn capacity ($ in millions) Total Outstanding Non Spread Based Financing Sources Commitments Principal Pricing Range Mark to Credit Mark to Market Secured Funding Agreement
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: Confidential – Not for Publication or Distribution
Confidential – Not for Publication or Distribution
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