Fourth quarter GAAP net income of $14.4
million or $0.43 per diluted common share and Distributable
Earnings(1) of $13.7 million or $0.41 per diluted common share Full
year GAAP net income of $21.8 million or $0.66 per diluted common
share and Distributable Earnings(1) of $45.1 million or $1.36 per
diluted common share - Subsequent to year ended December 31, 2020 -
Closed a $667 million Commercial Real Estate Collateralized Loan
Obligation Securitization Transaction Closed $146 million of new
loans year to date Declared first quarter 2021 dividend of $0.33
per diluted common share and a supplemental dividend of $0.02 per
diluted common share
Ares Commercial Real Estate Corporation (the “Company”)
(NYSE:ACRE), a specialty finance company engaged in originating and
investing in commercial real estate assets, reported generally
accepted accounting principles (“GAAP”) net income of $14.4 million
or $0.43 per diluted common share and Distributable Earnings(1) of
$13.7 million or $0.41 per diluted common share for the fourth
quarter of 2020. The Company reported GAAP net income of $21.8
million or $0.66 per diluted common share and Distributable
Earnings(1) of $45.1 million or $1.36 per diluted common share for
full year 2020.
“We ended the year in a position of strength with our highest
quarterly Distributable Earnings in 2020, an attractive balance
sheet, consistent interest collections and no credit related
losses,” said Bryan Donohoe, Chief Executive Officer of ACRE.
“Based on our strong outlook for 2021 Distributable Earnings, we
declared our regular first quarter dividend of $0.33 per share as
well as a supplemental quarterly dividend of $0.02 per share. This
supplemental quarterly dividend reflects a portion of the earnings
benefit that we expect to generate from LIBOR floors on our loans
and the related interest rate protection we put in place on our
liabilities. We expect this earnings benefit and the supplemental
dividends to remain in place throughout 2021 and we plan to retain
excess earnings to make new investments. As we have for the past
four years, we believe that our Distributable Earnings will meet or
exceed our dividends, including the supplemental dividends, for
2021.”
“Our financing structure has been a source of strength
throughout 2020 and we recently took additional steps to further
reduce our funding costs,” said Tae-Sik Yoon, Chief Financial
Officer of ACRE. “In January, we closed a $667 million CRE CLO that
reduced our weighted average funding costs, increased our share of
non-recourse financing to 67% of total aggregate amounts
outstanding and enabled us to invest in new loans to grow our
balance sheet.”
_________________________________
(1) Beginning in the fourth quarter of 2020, the non-GAAP
financial measure of Core Earnings was renamed to Distributable
Earnings. Refer to Schedule I for the definition of Distributable
Earnings.
2021 ANNUAL STOCKHOLDERS MEETING
The Board of Directors set March 26, 2021 as the record date for
the Company’s 2021 Annual Meeting of Stockholders. The 2021 Annual
Meeting of Stockholders will be held on May 25, 2021.
COMMON STOCK DIVIDEND
On December 15, 2020, the Company declared a cash dividend of
$0.33 per common share for the fourth quarter of 2020. The fourth
quarter 2020 dividend was paid on January 15, 2021 to common
stockholders of record as of December 30, 2020. On February 17,
2021, the Company declared a cash dividend of $0.33 per common
share for the first quarter of 2021 and a supplemental cash
dividend of $0.02 per common share. The first quarter 2021 and
supplemental cash dividend will be payable on April 15, 2021 to
common stockholders of record as of March 31, 2021.
ADDITIONAL INFORMATION
The Company issued a presentation of its fourth quarter and full
year 2020 results, which can be viewed at www.arescre.com on the Investor Resources section
of our home page under Events and Presentations. The presentation
is titled “Fourth Quarter and Full Year 2020 Earnings
Presentation.” The Company also filed its Annual Report on Form
10-K for the year ended December 31, 2020 with the U.S. Securities
and Exchange Commission on February 18, 2021.
CONFERENCE CALL AND WEBCAST INFORMATION
On Thursday, February 18, 2021, the Company invites all
interested persons to attend its webcast/conference call at 12:00
p.m. (Eastern Time) to discuss its fourth quarter and full year
2020 financial results.
All interested parties are invited to participate via telephone
or the live webcast, which will be hosted on a webcast link located
on the Home page of the Investor Resources section of the Company’s
website at http://www.arescre.com. Please visit the website to test
your connection before the webcast. Domestic callers can access the
conference call by dialing +1 (888) 317-6003. International callers
can access the conference call by dialing +1 (412) 317-6061. All
callers will need to enter the Participant Elite Entry Number
6155965 followed by the # sign and reference “Ares Commercial Real
Estate Corporation” once connected with the operator. All callers
are asked to dial in 10-15 minutes prior to the call so that name
and company information can be collected. For interested parties,
an archived replay of the call will be available through March 4,
2021 at 5:00 p.m. (Eastern Time) to domestic callers by dialing +1
(877) 344-7529 and to international callers by dialing +1 (412)
317-0088. For all replays, please reference conference number
10150859. An archived replay will also be available through March
4, 2021 on a webcast link located on the Home page of the Investor
Resources section of the Company’s website.
ABOUT ARES COMMERCIAL REAL ESTATE CORPORATION
Ares Commercial Real Estate Corporation is a specialty finance
company primarily engaged in originating and investing in
commercial real estate loans and related investments. Through its
national direct origination platform, the Company provides a broad
offering of flexible and reliable financing solutions for
commercial real estate owners and operators. The Company originates
senior mortgage loans, as well as subordinate financings, mezzanine
debt and preferred equity, with an emphasis on providing value
added financing on a variety of properties located in liquid
markets across the United States. Ares Commercial Real Estate
Corporation elected and qualified to be taxed as a real estate
investment trust and is externally managed by a subsidiary of Ares
Management Corporation. For more information, please visit
www.arescre.com. The contents of such
website are not, and should not be deemed to be, incorporated by
reference herein.
FORWARD-LOOKING STATEMENTS
Statements included herein or on the webcast / conference call
may constitute “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended, which relate to
future events or the Company’s future performance or financial
condition. These statements are not guarantees of future
performance, condition or results and involve a number of risks and
uncertainties. Actual results may differ materially from those in
the forward-looking statements as a result of a number of factors,
including the returns on current and future investments, rates of
repayments and prepayments on the Company’s mortgage loans,
availability of investment opportunities, the Company’s ability to
originate additional investments and completion of pending
investments, the availability of capital, the availability and cost
of financing, market trends and conditions in the Company’s
industry and the general economy, the level of lending and
borrowing spreads and interest rates, commercial real estate loan
volumes, the impact of the COVID-19 pandemic and the pandemic's
impact on the U.S. and global economy, the Company’s ability to pay
future dividends at historical levels or at all, and the risks
described from time to time in the Company’s filings with the
Securities and Exchange Commission (the “SEC”), including, but not
limited to, the risk factors described in Part I, Item 1A. Risk
Factors in the Company's Annual Report on Form 10-K, filed with the
SEC on February 18, 2021. Any forward-looking statement, including
any contained herein, speaks only as of the time of this press
release and Ares Commercial Real Estate Corporation undertakes no
duty to update any forward-looking statements made herein or on the
webcast/conference call. Projections and forward-looking statements
are based on management’s good faith and reasonable assumptions,
including the assumptions described herein.
ARES COMMERCIAL REAL ESTATE
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
As of December 31,
2020
2019
ASSETS
Cash and cash equivalents
$
74,776
$
5,256
Restricted cash
—
379
Loans held for investment ($550,590 and
$515,896 related to consolidated VIEs, respectively)
1,815,219
1,682,498
Current expected credit loss reserve
(23,604)
—
Loans held for investment, net of current
expected credit loss reserve
1,791,615
1,682,498
Real estate owned, net
37,283
37,901
Other assets ($1,079 and $1,309 of
interest receivable related to consolidated VIEs, respectively;
$6,410 and $41,104 of other receivables related to consolidated
VIEs, respectively)
25,823
58,100
Total assets
$
1,929,497
$
1,784,134
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Secured funding agreements
$
755,552
$
728,589
Notes payable
61,837
54,708
Secured term loan
110,000
109,149
Collateralized loan obligation
securitization debt (consolidated VIE)
443,871
443,177
Secured borrowings
59,790
—
Due to affiliate
3,150
2,761
Dividends payable
11,124
9,546
Other liabilities ($391 and $718 of
interest payable related to consolidated VIEs, respectively)
11,158
9,865
Total liabilities
1,456,482
1,357,795
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share,
450,000,000 shares authorized at December 31, 2020 and December 31,
2019 and 33,442,332 and 28,865,610 shares issued and outstanding at
December 31, 2020 and December 31, 2019, respectively
329
283
Additional paid-in capital
497,803
423,619
Accumulated earnings (deficit)
(25,117)
2,437
Total stockholders' equity
473,015
426,339
Total liabilities and stockholders'
equity
$
1,929,497
$
1,784,134
ARES COMMERCIAL REAL ESTATE
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
and per share data)
For the three months ended
December 31, 2020
For the year ended December
31, 2020
Revenue:
Interest income
$
29,144
$
121,052
Interest expense
(11,499)
(51,949)
Net interest margin
17,645
69,103
Revenue from real estate owned
3,560
13,593
Total revenue
21,205
82,696
Expenses:
Management and incentive fees to
affiliate
2,388
8,159
Professional fees
438
2,640
General and administrative expenses
935
3,732
General and administrative expenses
reimbursed to affiliate
762
3,653
Expenses from real estate owned
4,151
18,127
Total expenses
8,674
36,311
Provision for current expected credit
losses
(1,877)
20,185
Realized losses on loans sold
—
4,008
Income before income taxes
14,408
22,192
Income tax expense, including excise
tax
1
352
Net income attributable to common
stockholders
$
14,407
$
21,840
Earnings per common share:
Basic earnings per common share
$
0.43
$
0.66
Diluted earnings per common share
$
0.43
$
0.66
Weighted average number of common
shares outstanding:
Basic weighted average shares of common
stock outstanding
33,349,475
32,977,462
Diluted weighted average shares of common
stock outstanding
33,567,072
33,196,508
Dividends declared per share of common
stock(1)
$
0.33
$
1.32
(1) There is no assurance dividends will continue at these
levels or at all.
SCHEDULE I
Reconciliation of Net Income to Non-GAAP
Distributable Earnings
Beginning in the fourth quarter of 2020, the non-GAAP financial
measure of Core Earnings was renamed to Distributable Earnings to
more appropriately reflect the principal purpose of the measure.
Distributable Earnings 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 portfolio and operations. To maintain the
Company’s REIT status, the Company is generally required to
annually distribute to its stockholders substantially all of its
taxable income. The Company believes the disclosure of
Distributable Earnings provides useful information to investors
regarding the Company's ability to pay dividends, which is one of
the principal reasons investors invest in the Company. The
presentation of this additional information is not meant to be
considered in isolation or as a substitute for financial results
prepared in accordance with GAAP. Distributable Earnings is defined
as net income (loss) computed in accordance with GAAP, excluding
non-cash equity compensation expense, the incentive fees the
Company pays to its Manager (Ares Commercial Real Estate Management
LLC), depreciation and amortization (to the extent that any of the
Company’s target investments are structured as debt and the Company
forecloses on any properties underlying such debt), any unrealized
gains, losses or other non-cash items recorded in net income (loss)
for the period, regardless of whether such items are included in
other comprehensive income or loss, or in net income (loss),
one-time events pursuant to changes in GAAP and certain non-cash
charges after discussions between the Company’s manager and the
Company’s independent directors and after approval by a majority of
the Company’s independent directors. Loan balances that are deemed
to be uncollectible are written off as a realized loss and are
included in Distributable Earnings. Distributable Earnings is
aligned with the calculation of "Core Earnings,” which is defined
in the Management Agreement and is used to calculate the incentive
fees the Company pays to its Manager.
Reconciliation of net income attributable to common
stockholders, the most directly comparable GAAP financial measure,
to Distributable Earnings is set forth in the table below for the
three months and year ended December 31, 2020 ($ in thousands):
For the three months ended
December 31, 2020
For the year ended December
31, 2020
Net income attributable to common
stockholders
$
14,407
$
21,840
Stock-based compensation
382
1,339
Incentive fees to affiliate
533
836
Depreciation of real estate owned
224
892
Provision for current expected credit
losses
(1,877)
20,185
Distributable Earnings
$
13,669
$
45,092
Net income attributable to common
stockholders
$
0.43
$
0.66
Stock-based compensation
0.01
0.04
Incentive fees to affiliate
0.02
0.03
Depreciation of real estate owned
0.01
0.03
Provision for current expected credit
losses
(0.06)
0.61
Basic Distributable Earnings per common
share
$
0.41
$
1.37
Net income attributable to common
stockholders
$
0.43
$
0.66
Stock-based compensation
0.01
0.04
Incentive fees to affiliate
0.02
0.03
Depreciation of real estate owned
0.01
0.03
Provision for current expected credit
losses
(0.06)
0.61
Diluted Distributable Earnings per
common share
$
0.41
$
1.36
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210218005353/en/
INVESTOR RELATIONS Ares Commercial Real Estate
Corporation Carl Drake or Veronica Mendiola Mayer (888) 818-5298
iracre@aresmgmt.com
Ares Commercial Real Est... (NYSE:ACRE)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ares Commercial Real Est... (NYSE:ACRE)
Historical Stock Chart
From Sep 2023 to Sep 2024