Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q4 2022 Earnings Presentation
20 slides from Ares Commercial Real Estate's earnings presentation, Feb 15, 2023
Slide 1: Fourth Quarter and Full Year 2022 Earnings Presentation
Exhibit 99.2 Fourth Quarter and Full Year 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 $2.3 billion $0.44 1.1x outstanding 98% Q4 Distributable FY 2022 Distributable Senior Loans Earnings(2) per diluted Earnings(2) dividend principal balance Earnings common share coverage Loan Portfolio and Dividends Portfolio concentration in multifamily Declared Q1 2023 regular di
Slide 4: Summary of Q4 and FY 2022 Results and Activity
Summary of Q4 and FY 2022 Results and Activity • Q4 and FY 2022 GAAP net income of $0.05 and $0.57 per diluted common share, respectively(1) • Q4 and FY 2022 Distributable Earnings of $0.44 and $1.55 per diluted common share, respectively(2) Earnings Results • Book value per outstanding common share
Slide 5: Loan Portfolio Positioning and Performance
Loan Portfolio Positioning and Performance Loan Portfolio Metrics(1) Diverse Loan Portfolio(1)(3) Outstanding principal balance(2) $2.3 billion By Asset Type By Geography 2% 7% Number of loans 60 11% 4% 27% 7% 37% Percentage of senior loans(3) 98% 24% 10% 11% 19% Percentage of floating rate loans(3)
Slide 6: FY 2022 Loan Activity
FY 2022 Loan Activity FY 2022 New Loan Activity(1) FY 2022 Loan Composition(1)(3) By Property Type Total new loans $724.5 million 15% Number of new loans 22 Multifamily 35% Industrial Office 16% Residential/Condo Hotel Percentage of floating rate loans 100% Self Storage 13% 2% 19% Percentage of seni
Slide 7: Well-Positioned Balance Sheet
Well-Positioned Balance Sheet Financing Metrics Diversified Sources of Financing(3) Total capacity across all financings(1) $2.3 billion Sources of financing(2) 8 40% 45% Percentage of non-recourse financing(3) 45% Debt to equity ratio(4) 2.1x 9% 6% Secured Funding Agreements Secured Term Loan Sprea
Slide 8: Well-Positioned for Potential Rise in Short-Term Interest Rates
Well-Positioned for Potential Rise in Short-Term Interest Rates Interest Rate Sensitivity to Benchmark Interest Rate Index(1) Changes ($ per share) Annual estimated change in Distributable Earnings per share(2) $0.28 $0.18 $0.16 $0.09 $0.11 $0.05 $(0.05) $(0.11) $(0.09) $(0.16) $(0.18) $(0.27) (1.50
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 $0.35 $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
Slide 10: Appendix
Appendix
Slide 11: Current Expected Credit Losses
Current Expected Credit Losses • Increase in total CECL reserve of $19.4 million (bifurcated ($ in thousands) between an increase in funded commitments provision of $19.9 million partially offset by a decrease in unfunded Balance at 9/30/2022 $ 51,906 commitments provision of $0.5 million) Provision
Slide 12: Additional Details on Sources of Funding
Additional Details on Sources of Funding ($ in millions) Financing Sources Total Commitments Outstanding Balance Pricing Range Mark-to-Market Secured Funding Agreements Wells Fargo Facility $450.0 $270.8 Base Rate(1)+1.50 to 3.75% Credit Citibank Facility 325.0 236.2 Base Rate(1)+1.50 to 2.10% Credi
Slide 13: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Industrial Loans: 25 Senior IL May 2021 $100.7 $98
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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) Residential/Condominium Loans: 41 Senior FL Jul 20
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: 48 Senior PA Mar 2022 $18.2 $1
Slide 17: Consolidated Balance Sheets
Consolidated Balance Sheets As of ($ in thousands, except share and per share data) 12/31/2022 12/31/2021 ASSETS Cash and cash equivalents $ 141,278 $ 50,615 Loans held for investment ($887,662 and $974,424 related to consolidated VIEs, respectively) 2,264,008 2,414,383 Current expected credit loss
Slide 18: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Revenue: Interest income $ 52,552 $ 45,633 $ 38,621 $ 33,364 $ 38,044 Interest expense (22,144) (18,362) (13,475) (12,013) (14,180) 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) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Net income attributable to common stockholders $ 2,909 $ 644 $ 10,031 $ 16,201 $ 17,154 Stock-based compensation 738
Slide 20: 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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