Ares Commercial Real Estate Corporation · NYSE:ACRE
Ares Commercial Real Estate — Q1 2023 Earnings Presentation
20 slides from Ares Commercial Real Estate's earnings presentation, May 2, 2023
Slide 1: First Quarter 2023 Earnings Presentation
Exhibit 99.2 First Quarter 2023 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 $2.2 billion $0.27 outstanding 98% Q1 Distributable Earnings(2) Senior Loans per diluted common share, impacted by principal balance Earnings $0.10 per diluted common share realized loss Loan Portfolio and $92.3 million CECL reserve equates to 4% of Dividends loans held for invest
Slide 4: Summary of Q1 2023 Results and Activity
Summary of Q1 2023 Results and Activity • GAAP net loss of $0.12 per diluted common share(1) • Distributable Earnings of $0.27 per diluted common share(2) ◦ Distributable Earnings was impacted by a $5.6 million, or $0.10 per diluted common share, Earnings realized loss on the sale of a residential s
Slide 5: Loan Portfolio Positioning and Performance
Loan Portfolio Positioning and Performance Loans Held for Investment Portfolio Metrics(1) Diverse Loans Held for Investment Portfolio Outstanding principal balance(2) $2.2 billion By Asset Type(3) By Geography(3) 18% 18% Number of loans 53 23% 31% 10% 9% Percentage of senior loans(4) 98% 14% 5% 21%
Slide 6: Q1 2023 Loan Activity
Q1 2023 Loan Activity Loan Repayments and Sales Loan Repayments and Sales by Property Type 2% (1) Total repayments and sales $82.6 million 4% Number of repayments and sales(2) 6 Industrial 34% Residential/Condo Hotel Repayments and sales as a 48% Office 4% Mixed-Use percentage of total loan portfoli
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 41% 44% Outstanding principal borrowings $1.7 billion Percentage of non-recourse financing(3) 44% 6% 9% Secured Funding Agreements Secure
Slide 8: Interest Rate Sensitivity to Benchmark Interest Rate Index Changes
Interest Rate Sensitivity to Benchmark Interest Rate Index(1) Changes ($ per diluted Annual estimated change in Distributable Earnings per diluted common share(2) common share) $0.19 $0.12 $0.14 $0.09 $0.05 $0.06 $(0.05) $(0.06) $(0.09) $(0.14) $(0.12) $(0.19) (1.50)% (1.00)% (0.50)% 0.50% 1.00% 1.5
Slide 9: History of Growing and Consistent Dividends
History of Growing and Consistent Dividends Dividend History(1) Dividends (per common 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 $0.35 $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 $0.26 (2) Q2 Q3 Q4 Q
Slide 10: Appendix
Appendix
Slide 11: Current Expected Credit Losses
Current Expected Credit Losses • Increase in total CECL reserve of $21.0 million (bifurcated ($ in thousands) between an increase in funded commitments provision of $21.5 million partially offset by a decrease in unfunded Balance at 12/31/2022 $ 71,307 commitments provision of $0.5 million) Provisio
Slide 12: Additional Details on Sources of Funding
Additional Details on Sources of Funding ($ in millions) Financing Sources Total Commitments Outstanding Balance Pricing Range Mark-to-Market Secured Funding Agreements Wells Fargo Facility $450.0 $261.1 Base Rate(1)+1.50 to 3.75% Credit Citibank Facility 325.0 236.2 Base Rate(1)+1.50 to 2.10% Credi
Slide 13: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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 $155.7 $155.7 $
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) Multifamily Loans: 14 Senior NY May 2022 $133.0 $1
Slide 15: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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: 28 Senior IL May 2021 $100.7 $98
Slide 16: Loans Held for Investment Portfolio Details
Loans Held for Investment Portfolio Details ($ 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: 41 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) 3/31/2023 12/31/2022 ASSETS Cash and cash equivalents $ 153,764 $ 141,278 Loans held for investment ($846,718 and $887,662 related to consolidated VIEs, respectively) 2,173,205 2,264,008 Current expected credit loss
Slide 18: Consolidated Statements of Operations
Consolidated Statements of Operations For the Three Months Ended ($ in thousands, except share and per share data) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Revenue: Interest income $ 49,500 $ 52,552 $ 45,633 $ 38,621 $ 33,364 Interest expense (22,999) (22,144) (18,362) (13,475) (12,013) Ne
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) 3/31/2023 12/31/2022 9/30/2022 6/30/2022 3/31/2022 Net income (loss) attributable to common stockholders $ (6,439) $ 2,909 $ 644 $ 10,031 $ 16,201 Stock-based compensati
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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