Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q3 2022 Earnings Presentation
21 slides from Ares Commercial Real Estate's earnings presentation, Nov 2, 2022
Slide 1: Third Quarter 2022 Earnings Presentation
Third 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 $2.5 billion 98% $0.39 outstanding Distributable Earnings(1) Senior Loans principal balance per diluted common share Loan Earnings Portfolio and Q3 2022 investment activity included multifamily Dividends and self storage loan originations plus Declared Q4 2022 regular dividend of
Slide 4: Summary of Q3 2022 Results and Activity
Summary of Q3 2022 Results and Activity • GAAP net income of $0.01 per diluted common share Earnings • Distributable Earnings of $0.39 per diluted common share Results • Book value per outstanding common share of $14.09 • Cash dividend of $0.33 and supplemental cash dividend of $0.02(1) • Loan portf
Slide 5: Loan Portfolio Positioning and Performance
Loan Portfolio Positioning and Performance Loan Portfolio Metrics Diverse Loan Portfolio(2) Outstanding principal balance(1) $2.5 billion By Asset Type By Geography 2% 6% Number of loans 70 10% 8% 25% 34% 9% Percentage of senior loans(2) 98% 25% 11% 22% Percentage of floating rate loans(2) 98% 10% 2
Slide 6: Q3 2022 Investment Activity
Q3 2022 Investment Activity New Investments Investment Composition(1) Total new investments(2) $78 million Number of new investments 6 27% 37% Floating rate investments 100% 36% Multifamily AAA CRE Debt Securities Self Storage $311 Note: Differences may arise due to rounding. 1. Based on commitment
Slide 7: Well-Positioned Balance Sheet
Well-Positioned Balance Sheet Financing Metrics Diversified Sources of Financing(3) Total capacity across all financings(1) $2.4 billion Sources of financing(2) 8 43% 44% Percentage of non-recourse financing (3) 43% Debt to equity ratio(4) 2.3x 5% 8% Secured Funding Agreements Secured Term Loan Spre
Slide 8: Well-Positioned for Potential Rise in Short-Term Interest Rates
Well-Positioned for Potential Rise in Short-Term Interest Rates Interest Rate Sensitivity to Benchmark Interest Rate Index(1) Changes ($ per share) Annual estimated increase in Distributable Earnings per share(2) $0.50 $0.40 $0.30 $0.29 $0.23 $0.20 $0.18 $0.12 $0.10 $0.06 0.50% 1.00% 1.50% 2.00% 2.5
Slide 9: History of Growing and Consistent Dividends
History of Growing and Consistent Dividends Dividend History(1) Dividends (per share) Supplemental dividend of $0.02 $0.36 $0.35 $0.35 $0.35 $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 $0.28 $0.26 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 10: Appendix
Appendix
Slide 11: Current Expected Credit Losses
Current Expected Credit Losses • Increase in total CECL reserve of $19.5 million (bifurcated ($ in thousands) between an increase in funded commitments provision of $18.5 million and an increase in unfunded commitments Balance at 6/30/2022 $ 32,421 provision of $1.0 million) Provision for CECL 19,48
Slide 12: Additional Details on Sources of Funding
Additional Details on Sources of Funding ($ in millions) Financing Sources Total Commitments Outstanding Balance Pricing Range Mark-to-Market Secured Funding Agreements Wells Fargo Facility $450.0 $353.9 Base Rate(1)+1.50 to 2.75% Credit Citibank Facility 325.0 273.3 Base Rate(1)+1.50 to 2.10% Credi
Slide 13: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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 $151.5 $
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) Mixed-Use Loans: 25 Senior FL Feb 2019 $84.0 $84.0
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Hotel Loans: 44 Senior Diversified Sep 2018 $49.9
Slide 16: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ in millions) Origination Current Loan Outstanding LIBOR/ Unleveraged Payment # Loan Type Location Date Commitment Principal Carrying Value Interest Rate SOFR Floor Effective Yield Maturity Date Terms(1) Self Storage Loans: 50 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: 66 Senior FL Jul 20
Slide 18: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 9/30/2022 12/31/2021 ASSETS Cash and cash equivalents $ 77,297 $ 50,615 Loans held for investment ($930,603 and $974,424 related to consolidated VIEs, respectively) 2,508,609 2,414,383 Current expected credit loss re
Slide 19: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Revenue: Interest income $ 45,633 $ 38,621 $ 33,364 $ 38,044 $ 34,023 Interest expense (18,362) (13,475) (12,013) (14,180) (12,669) 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) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Net income attributable to common stockholders $ 644 $ 10,031 $ 16,201 $ 17,154 $ 9,951 Stock-based compensation 673 6
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
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