Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q1 2022 Earnings Presentation
21 slides from Ares Commercial Real Estate's earnings presentation, May 3, 2022
Slide 1: First Quarter 2022 Earnings Presentation
First Quarter 2022 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: Company Highlights
Company Highlights $2.4 billion 99% $0.34 outstanding Distributable Earnings(1) Senior Loans Well- principal balance per diluted common share Positioned Earnings Loan and Portfolio Dividends Declared Q2 2022 regular dividend of $0.33 Stable credit quality; plus $0.02 supplemental dividend per sold s
Slide 4: Summary of Q1 2022 Results and Activity
Summary of Q1 2022 Results and Activity • GAAP net income of $0.34 per diluted common share Earnings • Distributable Earnings of $0.34 per diluted common share(1) Results • Book value per diluted common share of $14.54 • Cash dividend of $0.33 and supplemental cash dividend of $0.02(2) • Portfolio w
Slide 5: Loan Portfolio Positioning and Performance
Loan Portfolio Positioning and Performance Portfolio Metrics Focused and Geographically Diverse Portfolio(2) Outstanding principal balance(1) $2.4 billion By Asset Type By Geography 3% 6% 6% Number of loans 77 9% 18% 32% 35% Percentage of senior loans(2) 99% 12% 12% 20% Percentage of floating loans(
Slide 6: Portfolio Activity
Portfolio Activity New Investment Commitments Q1 2022 Loan Origination Composition(1) 16% 10 $263 million new loans new commitments 5% 44% 7.1% $223 million 35% weighted average unleveraged effective outstanding principal yield funded(2) Hotel Residential/Condo Industrial Self Storage LTM Portfolio
Slide 7: Well-Positioned Balance Sheet
Well-Positioned Balance Sheet Financing Metrics Diversified Sources of Financing(5) 1% Total capacity across all financings(1) $2.3 billion Sources of financing(2) 8 42% 49% Percentage of non-recourse financing 50% Debt to equity ratio(3) 2.5x 8% Secured Funding Agreements Secured Term Loan Spread b
Slide 8: Well-Positioned for Potential Rise in Short-Term Interest Rates
Well-Positioned for Potential Rise in Short-Term Interest Rates Interest Rate Sensitivity to Benchmark Interest Rate Index(1) Changes ($ per share) Annual estimated increase/(decrease) in net income(2) $0.37 $0.24 $0.04 $0.01 $0.12 $0.08 $(0.07) $0.01 $(0.04) $(0.05) 0.50% 1.00% 1.50% 2.00% 2.50% Ch
Slide 9: 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 $0.26 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 10: Appendix
Appendix
Slide 11: Current Expected Credit Losses
Current Expected Credit Losses ($ in thousands) • No specific loan impairments on loan portfolio • Decrease in CECL reserve of $0.6 million (bifurcated Balance at 12/31/2021 $ 25,247 between a decrease in funded commitments provision Provision for CECL (594) of $3.5 million and an increase in unfund
Slide 12: Additional Details on Sources of Funding
Additional Details on Sources of Funding ($ in millions) Financing Sources Total Commitments Outstanding Balance Pricing Range Mark-to-Market Secured Funding Agreements Wells Fargo Facility $450.0 $345.9 Base Rate(1)+1.50 to 2.75% Credit Citibank Facility 325.0 201.0 Base Rate(1)+1.50 to 2.10% Credi
Slide 13: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying LIBOR/ 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 $151.5 $150.5 $
Slide 14: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying LIBOR/ Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Hotel Loans: 25 Senior OR/WA May 2018 $68.1 $68.1
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying LIBOR/ Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Industrial Loans: 37 Senior IL May 2021 $100.7 $86
Slide 16: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying LIBOR/ Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Self Storage Loans: 52 Senior NJ Apr 2021 $55.5 $5
Slide 17: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding Carrying LIBOR/ Unleveraged Payment # Loan Type Location Date Commitment Principal Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Residential/Condominium Loans: 72 Senior FL Jul 20
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 3/31/2022 12/31/2021 ASSETS Cash and cash equivalents $ 13,759 $ 50,615 Loans held for investment ($1,028,398 and $974,424 related to consolidated VIEs, respectively) 2,421,772 2,414,383 Current expected credit loss
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Revenue: Interest income $ 33,364 $ 38,044 $ 34,023 $ 30,859 $ 30,704 Interest expense (12,013) (14,180) (12,669) (11,092) (12,139) Ne
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) 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 Net income attributable to common stockholders $ 16,201 $ 17,154 $ 9,951 $ 17,615 $ 15,740 Stock-based compensation 76
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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