0001529377FALSEDecember 312021Q3http://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate201613MemberP1Y00015293772021-01-012021-09-30xbrli:shares00015293772021-11-02iso4217:USD00015293772021-09-3000015293772020-12-310001529377us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2021-09-300001529377us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2020-12-31iso4217:USDxbrli:shares00015293772021-07-012021-09-3000015293772020-07-012020-09-3000015293772020-01-012020-09-300001529377us-gaap:CommonStockMember2019-12-310001529377us-gaap:AdditionalPaidInCapitalMember2019-12-310001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001529377us-gaap:RetainedEarningsMember2019-12-3100015293772019-12-310001529377us-gaap:CommonStockMember2020-01-012020-03-310001529377us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100015293772020-01-012020-03-310001529377us-gaap:RetainedEarningsMember2020-01-012020-03-3100015293772019-01-012019-12-310001529377srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310001529377us-gaap:CommonStockMember2020-03-310001529377us-gaap:AdditionalPaidInCapitalMember2020-03-310001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001529377us-gaap:RetainedEarningsMember2020-03-3100015293772020-03-310001529377us-gaap:CommonStockMember2020-04-012020-06-300001529377us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000015293772020-04-012020-06-300001529377us-gaap:RetainedEarningsMember2020-04-012020-06-300001529377us-gaap:CommonStockMember2020-06-300001529377us-gaap:AdditionalPaidInCapitalMember2020-06-300001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001529377us-gaap:RetainedEarningsMember2020-06-3000015293772020-06-300001529377us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300001529377us-gaap:RetainedEarningsMember2020-07-012020-09-300001529377us-gaap:CommonStockMember2020-09-300001529377us-gaap:AdditionalPaidInCapitalMember2020-09-300001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001529377us-gaap:RetainedEarningsMember2020-09-3000015293772020-09-300001529377us-gaap:CommonStockMember2020-10-012020-12-310001529377us-gaap:AdditionalPaidInCapitalMember2020-10-012020-12-3100015293772020-10-012020-12-310001529377us-gaap:RetainedEarningsMember2020-10-012020-12-310001529377us-gaap:CommonStockMember2020-12-310001529377us-gaap:AdditionalPaidInCapitalMember2020-12-310001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001529377us-gaap:RetainedEarningsMember2020-12-310001529377us-gaap:CommonStockMember2021-01-012021-03-310001529377us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100015293772021-01-012021-03-310001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001529377us-gaap:RetainedEarningsMember2021-01-012021-03-310001529377us-gaap:CommonStockMember2021-03-310001529377us-gaap:AdditionalPaidInCapitalMember2021-03-310001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001529377us-gaap:RetainedEarningsMember2021-03-3100015293772021-03-310001529377us-gaap:CommonStockMember2021-04-012021-06-300001529377us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000015293772021-04-012021-06-300001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001529377us-gaap:RetainedEarningsMember2021-04-012021-06-300001529377us-gaap:CommonStockMember2021-06-300001529377us-gaap:AdditionalPaidInCapitalMember2021-06-300001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001529377us-gaap:RetainedEarningsMember2021-06-3000015293772021-06-300001529377us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001529377us-gaap:CommonStockMember2021-07-012021-09-300001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001529377us-gaap:RetainedEarningsMember2021-07-012021-09-300001529377us-gaap:CommonStockMember2021-09-300001529377us-gaap:AdditionalPaidInCapitalMember2021-09-300001529377us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001529377us-gaap:RetainedEarningsMember2021-09-300001529377acre:SecuredFundingAgreementsMember2021-01-012021-09-300001529377acre:SecuredFundingAgreementsMember2020-01-012020-09-300001529377acre:SecuredTermLoanMember2021-01-012021-09-300001529377acre:SecuredTermLoanMember2020-01-012020-09-30acre:segment0001529377srt:MaximumMemberus-gaap:BuildingAndBuildingImprovementsMember2021-01-012021-09-300001529377us-gaap:FurnitureAndFixturesMember2021-01-012021-09-300001529377acre:OfferedCertificatesAndOfferedNotesMember2021-07-012021-09-300001529377acre:OfferedCertificatesAndOfferedNotesMember2020-07-012020-09-300001529377acre:OfferedCertificatesAndOfferedNotesMember2021-01-012021-09-300001529377acre:OfferedCertificatesAndOfferedNotesMember2020-01-012020-09-300001529377us-gaap:NotesPayableToBanksMember2021-07-012021-09-300001529377us-gaap:NotesPayableToBanksMember2020-07-012020-09-300001529377us-gaap:NotesPayableToBanksMember2021-01-012021-09-300001529377us-gaap:NotesPayableToBanksMember2020-01-012020-09-300001529377us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2021-07-012021-09-300001529377us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2020-07-012020-09-300001529377us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2021-01-012021-09-300001529377us-gaap:AssetBackedSecuritiesSecuritizedLoansAndReceivablesMember2020-01-012020-09-300001529377acre:SecuredTermLoanMember2021-07-012021-09-300001529377acre:SecuredTermLoanMember2020-07-012020-09-300001529377acre:SecuredTermLoanMember2021-01-012021-09-300001529377acre:SecuredTermLoanMember2020-01-012020-09-300001529377acre:SecuredBorrowingsMember2021-07-012021-09-300001529377acre:SecuredBorrowingsMember2020-07-012020-09-300001529377acre:SecuredBorrowingsMember2021-01-012021-09-300001529377acre:SecuredBorrowingsMember2020-01-012020-09-300001529377us-gaap:OtherDebtSecuritiesMember2021-07-012021-09-300001529377us-gaap:OtherDebtSecuritiesMember2020-07-012020-09-300001529377us-gaap:OtherDebtSecuritiesMember2021-01-012021-09-300001529377us-gaap:OtherDebtSecuritiesMember2020-01-012020-09-300001529377stpr:NYacre:NotesPayableDueJune102024Memberus-gaap:NotesPayableToBanksMember2021-01-012021-09-30acre:loanxbrli:pure0001529377us-gaap:MortgageReceivablesMember2021-09-300001529377us-gaap:MortgageReceivablesMember2021-01-012021-09-300001529377acre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377acre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-01-012021-09-300001529377us-gaap:MortgageReceivablesMember2020-12-310001529377us-gaap:MortgageReceivablesMember2020-01-012020-12-310001529377acre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2020-12-310001529377acre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2020-01-012020-12-3100015293772020-01-012020-12-310001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point61PercentDueMarch2023Member2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point61PercentDueMarch2023Member2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point61PercentDueMarch2023Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point65PercentDueJanuary2023Memberacre:DiversifiedPropertiesMember2021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point65PercentDueJanuary2023Memberacre:DiversifiedPropertiesMember2021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point65PercentDueJanuary2023Memberacre:DiversifiedPropertiesMember2021-01-012021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus5Point00PercentDueJune2022Memberacre:SeniorMortgageLoansMemberstpr:FL2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus5Point00PercentDueJune2022Memberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:FL2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus5Point00PercentDueJune2022Memberacre:SeniorMortgageLoansMemberstpr:FL2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus4Point25PercentDueFebruary2023InstrumentMemberacre:MixedUseMemberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus4Point25PercentDueFebruary2023InstrumentMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:MixedUseMemberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus4Point25PercentDueFebruary2023InstrumentMemberacre:MixedUseMemberstpr:FL2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:AZsrt:OfficeBuildingMemberacre:LIBORPlus3Point50PercentDueOctober2024Member2021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberstpr:AZacre:LIBORPlus3Point50PercentDueOctober2024Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:AZsrt:OfficeBuildingMemberacre:LIBORPlus3Point50PercentDueOctober2024Member2021-01-012021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:MixedUseMemberacre:LIBORPlus3Point65PercentDueJuly2024Member2021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:MixedUseMemberacre:LIBORPlus3Point65PercentDueJuly2024Member2021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:MixedUseMemberacre:LIBORPlus3Point65PercentDueJuly2024Member2021-01-012021-09-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point25PercentDueOctober2024Memberstpr:TX2021-09-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point25PercentDueOctober2024Memberstpr:TX2021-09-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point25PercentDueOctober2024Memberstpr:TX2021-01-012021-09-300001529377acre:LIBORPlus4Point55PercentDueMay2024Memberstpr:ILacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-09-300001529377acre:LIBORPlus4Point55PercentDueMay2024Memberstpr:ILacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus4Point55PercentDueMay2024Memberstpr:ILacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-01-012021-09-300001529377stpr:NYacre:LIBORPlus5Point00PercentDueFeb2022Memberacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-09-300001529377stpr:NYacre:LIBORPlus5Point00PercentDueFeb2022Memberacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:NYacre:LIBORPlus5Point00PercentDueFeb2022Memberacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-01-012021-09-300001529377acre:LIBORPlus3Point45PercentDueMay2022Membersrt:HotelMemberacre:OregonandWashingtonMemberacre:SeniorMortgageLoansMember2021-09-300001529377srt:HotelMemberacre:LIBORPlus3Point45PercentDueMay2022Memberacre:OregonandWashingtonMemberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus3Point45PercentDueMay2022Membersrt:HotelMemberacre:OregonandWashingtonMemberacre:SeniorMortgageLoansMember2021-01-012021-09-300001529377stpr:ILacre:LIBORPlus3Point75PercentDueDecember2021Memberacre:SeniorMortgageLoansMembersrt:OfficeBuildingMember2021-09-300001529377stpr:ILacre:LIBORPlus3Point75PercentDueDecember2021Memberacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:ILacre:LIBORPlus3Point75PercentDueDecember2021Memberacre:SeniorMortgageLoansMembersrt:OfficeBuildingMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:ResidentialCondominiumMemberstpr:FLacre:LIBORPlus5Point25PercentDueJuly2023Member2021-09-300001529377acre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:ResidentialCondominiumMemberstpr:FLacre:LIBORPlus5Point25PercentDueJuly2023Member2021-09-300001529377acre:SeniorMortgageLoansMemberacre:ResidentialCondominiumMemberstpr:FLacre:LIBORPlus5Point25PercentDueJuly2023Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point55PercentDueAugust2024Memberstpr:NCsrt:OfficeBuildingMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point55PercentDueAugust2024Memberstpr:NCsrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point55PercentDueAugust2024Memberstpr:NCsrt:OfficeBuildingMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus4Point25PercentDueMarch2022Member2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus4Point25PercentDueMarch2022Member2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus4Point25PercentDueMarch2022Member2021-01-012021-09-300001529377srt:HotelMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point60PercentDueSeptember2022Memberacre:DiversifiedPropertiesMember2021-09-300001529377srt:HotelMemberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point60PercentDueSeptember2022Memberacre:DiversifiedPropertiesMember2021-09-300001529377srt:HotelMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point60PercentDueSeptember2022Memberacre:DiversifiedPropertiesMember2021-01-012021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point85PercentDueAugust2025Membersrt:OfficeBuildingMember2021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point85PercentDueAugust2025Membersrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point85PercentDueAugust2025Membersrt:OfficeBuildingMember2021-01-012021-09-300001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point95PercentDueJun2022Member2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point95PercentDueJun2022Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point95PercentDueJun2022Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:CAacre:MixedUseMember2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:CAacre:MixedUseMember2021-01-012021-09-300001529377stpr:NJacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point80PercentDueFebruary2024Member2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NJacre:SelfStorageMemberacre:LIBORPlus3Point80PercentDueFebruary2024Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:NJacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point80PercentDueFebruary2024Member2021-01-012021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:ResidentialCondominiumMember2021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:ResidentialCondominiumMember2021-01-012021-09-300001529377acre:LIBORPlus3Point05PercentDueDecember2022Memberacre:SeniorMortgageLoansMemberstpr:GAsrt:OfficeBuildingMember2021-09-300001529377acre:LIBORPlus3Point05PercentDueDecember2022Memberacre:SeniorMortgageLoansMemberstpr:GAsrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus3Point05PercentDueDecember2022Memberacre:SeniorMortgageLoansMemberstpr:GAsrt:OfficeBuildingMember2021-01-012021-09-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoansMemberstpr:FLacre:LIBORPlus5Point00PercentDueJune2022Instrument2Member2021-09-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoansMemberstpr:FLacre:LIBORPlus5Point00PercentDueJune2022Instrument2Member2021-01-012021-09-300001529377srt:HotelMemberacre:SeniorMortgageLoansMemberstpr:CAacre:LIBORPlus4Point12PercentDueJanuary2022Member2021-09-300001529377srt:HotelMemberacre:SeniorMortgageLoansMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus4Point12PercentDueJanuary2022Member2021-09-300001529377srt:HotelMemberacre:SeniorMortgageLoansMemberstpr:CAacre:LIBORPlus4Point12PercentDueJanuary2022Member2021-01-012021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus4Point75PercentDueJanuary2022Memberstpr:TX2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus4Point75PercentDueJanuary2022Memberstpr:TX2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus4Point75PercentDueJanuary2022Memberstpr:TX2021-01-012021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus2Point75PercentDueJune2023Memberstpr:SCacre:SeniorMortgageLoansMember2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus2Point75PercentDueJune2023Memberstpr:SCacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus2Point75PercentDueJune2023Memberstpr:SCacre:SeniorMortgageLoansMember2021-01-012021-09-300001529377acre:StudentHousingPropertyMemberacre:LIBORPlus3Point95PercentDueJuly2022Memberacre:SeniorMortgageLoansMemberstpr:CA2021-09-300001529377acre:StudentHousingPropertyMemberacre:LIBORPlus3Point95PercentDueJuly2022Memberacre:SeniorMortgageLoansMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:StudentHousingPropertyMemberacre:LIBORPlus3Point95PercentDueJuly2022Memberacre:SeniorMortgageLoansMemberstpr:CA2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:MixedUseMemberstpr:TX2021-09-300001529377acre:SeniorMortgageLoansMemberacre:MixedUseMemberstpr:TX2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus4Point10PercentDueMarch2023Memberstpr:CAacre:MixedUseMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus4Point10PercentDueMarch2023Memberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMemberacre:MixedUseMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus4Point10PercentDueMarch2023Memberstpr:CAacre:MixedUseMember2021-01-012021-09-300001529377stpr:MIsrt:HotelMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point95PercentDueJuly2022InstrumentTwoMember2021-09-300001529377stpr:MIsrt:HotelMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point95PercentDueJuly2022InstrumentTwoMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:MIsrt:HotelMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point95PercentDueJuly2022InstrumentTwoMember2021-01-012021-09-300001529377srt:HotelMemberstpr:ILacre:SeniorMortgageLoansMemberacre:LIBORPlus4Point40PercentDueMay2022Member2021-09-300001529377srt:HotelMemberstpr:ILacre:SeniorMortgageLoansMemberacre:LIBORPlus4Point40PercentDueMay2022Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377srt:HotelMemberstpr:ILacre:SeniorMortgageLoansMemberacre:LIBORPlus4Point40PercentDueMay2022Member2021-01-012021-09-300001529377acre:LIBORPlus3Point35PercentDueNovember2022Memberacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberstpr:CA2021-09-300001529377acre:LIBORPlus3Point35PercentDueNovember2022Memberacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus3Point35PercentDueNovember2022Memberacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberstpr:CA2021-01-012021-09-300001529377srt:MultifamilyMemberstpr:SCacre:LIBORPlus6Point50PercentDueSeptember2022Memberacre:SeniorMortgageLoansMember2021-09-300001529377srt:MultifamilyMemberstpr:SCacre:LIBORPlus6Point50PercentDueSeptember2022Memberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377srt:MultifamilyMemberstpr:SCacre:LIBORPlus6Point50PercentDueSeptember2022Memberacre:SeniorMortgageLoansMember2021-01-012021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberstpr:NCacre:LIBORPlus3Point15PercentDueFeb2022Member2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberstpr:NCus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point15PercentDueFeb2022Member2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberstpr:NCacre:LIBORPlus3Point15PercentDueFeb2022Member2021-01-012021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus3Point00PercentDueDecember2021Memberacre:SeniorMortgageLoansMemberstpr:PA2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus3Point00PercentDueDecember2021Memberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:PA2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus3Point00PercentDueDecember2021Memberacre:SeniorMortgageLoansMemberstpr:PA2021-01-012021-09-300001529377stpr:ILacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point80PercentDueJanuary2023Membersrt:OfficeBuildingMember2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point80PercentDueJanuary2023Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point80PercentDueJanuary2023Membersrt:OfficeBuildingMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus3Point53PercentDueMay2023Member2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus3Point53PercentDueMay2023Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus3Point53PercentDueMay2023Member2021-01-012021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point45PercentDueFebruary2023Memberstpr:TX2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point45PercentDueFebruary2023Memberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:TX2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point45PercentDueFebruary2023Memberstpr:TX2021-01-012021-09-300001529377acre:LIBORPlus3Point75PercentDueMay2024Memberstpr:NJacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-09-300001529377acre:LIBORPlus3Point75PercentDueMay2024Memberacre:SeniorMortgageLoansMemberstpr:NJsrt:IndustrialPropertyMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus3Point75PercentDueMay2024Memberstpr:NJacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point40PercentDueNovember2022Memberstpr:CA2021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point40PercentDueNovember2022Memberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMembersrt:OfficeBuildingMemberacre:LIBORPlus3Point40PercentDueNovember2022Memberstpr:CA2021-01-012021-09-300001529377acre:LIBORPlus4Point50PercentDueDecember2021Memberacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:CA2021-09-300001529377acre:LIBORPlus4Point50PercentDueDecember2021Memberacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:CA2021-01-012021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point25PercentDueAugust2022Memberstpr:FL2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point25PercentDueAugust2022Memberstpr:FL2021-09-300001529377acre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point25PercentDueAugust2022Memberstpr:FL2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus6Point75PercentDueFebruary2023Membersrt:IndustrialPropertyMemberstpr:CO2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus6Point75PercentDueFebruary2023Membersrt:IndustrialPropertyMemberstpr:CO2021-01-012021-09-300001529377acre:StudentHousingPropertyMemberstpr:ALacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point85PercentDueMay2024Member2021-09-300001529377acre:StudentHousingPropertyMemberstpr:ALacre:SeniorMortgageLoansMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point85PercentDueMay2024Member2021-09-300001529377acre:StudentHousingPropertyMemberstpr:ALacre:SeniorMortgageLoansMemberacre:LIBORPlus3Point85PercentDueMay2024Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point50PercentDueMarch2022Memberacre:SelfStorageMemberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point50PercentDueMarch2022Memberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point50PercentDueMarch2022Memberacre:SelfStorageMemberstpr:FL2021-01-012021-09-300001529377acre:LIBORPlus3Point00PercentDueMarch2023Membersrt:MultifamilyMemberstpr:WAacre:SeniorMortgageLoansMember2021-09-300001529377srt:MultifamilyMemberacre:LIBORPlus3Point00PercentDueMarch2023Memberacre:SeniorMortgageLoansMemberstpr:WAus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus3Point00PercentDueMarch2023Membersrt:MultifamilyMemberstpr:WAacre:SeniorMortgageLoansMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:CAacre:LIBORPlus3Point75PercentDueMarch2023Member2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point75PercentDueMarch2023Member2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:CAacre:LIBORPlus3Point75PercentDueMarch2023Member2021-01-012021-09-300001529377acre:ResidentialPropertyMemberacre:SeniorMortgageLoansMemberstpr:CA2021-09-300001529377acre:ResidentialPropertyMemberacre:SeniorMortgageLoansMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:ResidentialPropertyMemberacre:SeniorMortgageLoansMemberstpr:CA2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument1Memberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument1Memberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument1Memberstpr:FL2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus4Point00PercentDueNovember2022Member2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus4Point00PercentDueNovember2022Member2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus4Point00PercentDueNovember2022Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:AZacre:LIBORPlus2Point90PercentDueMay2024Instrument1Memberacre:SelfStorageMember2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:AZacre:LIBORPlus2Point90PercentDueMay2024Instrument1Memberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMemberstpr:AZacre:LIBORPlus2Point90PercentDueMay2024Instrument1Memberacre:SelfStorageMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueMay2024Instrument2Memberstpr:AZacre:SelfStorageMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueMay2024Instrument2Memberstpr:AZacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueMay2024Instrument2Memberstpr:AZacre:SelfStorageMember2021-01-012021-09-300001529377acre:LIBORPlus2Point90PercentDueDecember2023Instrument2Memberacre:SeniorMortgageLoansMemberacre:SelfStorageMemberstpr:FL2021-09-300001529377acre:LIBORPlus2Point90PercentDueDecember2023Instrument2Memberacre:SeniorMortgageLoansMemberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:FL2021-09-300001529377acre:LIBORPlus2Point90PercentDueDecember2023Instrument2Memberacre:SeniorMortgageLoansMemberacre:SelfStorageMemberstpr:FL2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument3Memberacre:SelfStorageMemberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument3Memberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument3Memberacre:SelfStorageMemberstpr:FL2021-01-012021-09-300001529377acre:LIBORPlus3Point00PercentDueDecember2023Instrument1Memberstpr:MOacre:SeniorMortgageLoansMemberacre:SelfStorageMember2021-09-300001529377acre:LIBORPlus3Point00PercentDueDecember2023Instrument1Memberstpr:MOacre:SeniorMortgageLoansMemberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus3Point00PercentDueDecember2023Instrument1Memberstpr:MOacre:SeniorMortgageLoansMemberacre:SelfStorageMember2021-01-012021-09-300001529377stpr:ILacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point00PercentDueDecember2023Instrument2Member2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMemberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus3Point00PercentDueDecember2023Instrument2Member2021-09-300001529377stpr:ILacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point00PercentDueDecember2023Instrument2Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument4Memberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument4Memberstpr:FL2021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus2Point90PercentDueDecember2023Instrument4Memberstpr:FL2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberstpr:COacre:LIBORPlus2Point90PercentDueApril2024Member2021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:COacre:LIBORPlus2Point90PercentDueApril2024Member2021-09-300001529377acre:SeniorMortgageLoansMemberacre:SelfStorageMemberstpr:COacre:LIBORPlus2Point90PercentDueApril2024Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberacre:LIBORPlus5Point50PercentDueSeptember2024Memberstpr:PA2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberacre:LIBORPlus5Point50PercentDueSeptember2024Memberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:PA2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberacre:LIBORPlus5Point50PercentDueSeptember2024Memberstpr:PA2021-01-012021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:COacre:LIBORPlus6Point25PercentDueSeptember2024Member2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberus-gaap:LondonInterbankOfferedRateLIBORMemberstpr:COacre:LIBORPlus6Point25PercentDueSeptember2024Member2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:COacre:LIBORPlus6Point25PercentDueSeptember2024Member2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus5Point90PercentDueOctober2024Membersrt:IndustrialPropertyMemberstpr:AZ2021-09-300001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberacre:LIBORPlus5Point90PercentDueOctober2024Memberstpr:AZus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus5Point90PercentDueOctober2024Membersrt:IndustrialPropertyMemberstpr:AZ2021-01-012021-09-300001529377acre:LIBORPlus5Point25PercentDueSeptember2024Memberacre:SeniorMortgageLoansMemberstpr:GAsrt:IndustrialPropertyMember2021-09-300001529377acre:LIBORPlus5Point25PercentDueSeptember2024Memberacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberstpr:GAus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377acre:LIBORPlus5Point25PercentDueSeptember2024Memberacre:SeniorMortgageLoansMemberstpr:GAsrt:IndustrialPropertyMember2021-01-012021-09-300001529377stpr:NJsrt:OfficeBuildingMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377stpr:NJsrt:OfficeBuildingMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-01-012021-09-300001529377stpr:HIacre:ResidentialCondominiumMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377stpr:HIacre:ResidentialCondominiumMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-01-012021-09-300001529377acre:LIBORPlus8Point25PercentDueNovember2021Membersrt:OfficeBuildingMemberstpr:CAacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377acre:LIBORPlus8Point25PercentDueNovember2021Membersrt:OfficeBuildingMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377acre:LIBORPlus8Point25PercentDueNovember2021Membersrt:OfficeBuildingMemberstpr:CAacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-01-012021-09-30acre:option0001529377srt:MinimumMember2021-01-012021-09-300001529377srt:MaximumMember2021-01-012021-09-300001529377acre:SeniorMortgageLoansMemberstpr:NCsrt:OfficeBuildingMemberacre:LIBORPlus4Point25PercentDueMarch2022Member2021-02-012021-02-280001529377acre:LIBORPlus4Point00PercentDueApril2022Memberacre:SeniorMortgageLoansMemberstpr:CAacre:MixedUseMember2021-09-300001529377acre:LIBORPlus3Point80PercentDueJanuary2024Memberacre:SeniorMortgageLoansMemberstpr:CAus-gaap:LondonInterbankOfferedRateLIBORMemberacre:MixedUseMember2021-09-300001529377acre:MezzanineAnnualFixedRateTenPercentLoanMemberacre:SeniorMortgageLoansMemberstpr:CAacre:MixedUseMember2021-09-300001529377acre:MezzanineAnnualFixedRateTenPercentLoanMemberacre:SeniorMortgageLoansMemberstpr:CAacre:MixedUseMember2021-01-012021-09-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:LIBORPlus6Point00PercentMemberacre:ResidentialCondominiumMember2021-09-300001529377stpr:NYacre:LIBORPlus14Point00PercentDueMay2021Memberacre:ResidentialCondominiumMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377stpr:NYacre:LIBORPlus14Point00PercentDueMay2021Memberus-gaap:LondonInterbankOfferedRateLIBORMemberacre:ResidentialCondominiumMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377stpr:NYacre:ResidentialCondominiumMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-09-300001529377stpr:NYacre:ResidentialCondominiumMemberacre:SubordinatedDebtAndPreferredEquityInvestmentsInMortgageLoansMember2021-01-012021-09-300001529377acre:LIBORPlus4Point75PercentDueJan2022Memberacre:StudentHousingPropertyMemberacre:SeniorMortgageLoansMemberstpr:TX2021-01-012021-01-310001529377acre:SeniorMortgageLoansMemberstpr:TX2021-03-012021-03-310001529377acre:SeniorMortgageLoansMemberacre:LIBORPlus3Point75PercentNoteAMemberstpr:TX2021-09-300001529377acre:LIBORPlus10Point00PercentNoteBMemberacre:SeniorMortgageLoansMemberstpr:TX2021-09-300001529377acre:ImpactofCOVID19Member2021-07-012021-09-300001529377acre:ImpactofCOVID19Member2021-09-300001529377acre:LoansHeldforInvestmentMember2021-09-300001529377us-gaap:UnfundedLoanCommitmentMember2021-09-300001529377acre:LoansHeldforInvestmentMember2021-06-300001529377acre:LoansHeldforInvestmentMember2021-07-012021-09-300001529377acre:LoansHeldforInvestmentMember2021-09-300001529377acre:LoansHeldforInvestmentMember2020-12-310001529377acre:LoansHeldforInvestmentMember2021-01-012021-09-300001529377us-gaap:UnfundedLoanCommitmentMember2021-06-300001529377us-gaap:UnfundedLoanCommitmentMember2021-07-012021-09-300001529377us-gaap:UnfundedLoanCommitmentMember2020-12-310001529377us-gaap:UnfundedLoanCommitmentMember2021-01-012021-09-300001529377acre:LoansHeldforInvestmentMemberacre:LevelOneLowerRiskPerformingMember2021-09-300001529377acre:LoansHeldforInvestmentMemberacre:LevelTwoAverageRiskPerformingMember2021-09-300001529377acre:LevelThreeAcceptableRiskPerformingMemberacre:LoansHeldforInvestmentMember2021-09-300001529377acre:LevelFourHigherRiskAssetPerformanceisTrailingUnderwrittenExpectationsMemberacre:LoansHeldforInvestmentMember2021-09-300001529377acre:LevelFiveImpairedLossPossibleMemberacre:LoansHeldforInvestmentMember2021-09-300001529377us-gaap:OtherAssetsMember2021-09-300001529377srt:HotelMemberstpr:NYacre:SeniorMortgageLoansMember2019-03-070001529377srt:HotelMemberstpr:NYacre:SeniorMortgageLoansMember2019-03-080001529377srt:HotelMemberstpr:NYus-gaap:LandMember2021-09-300001529377srt:HotelMemberstpr:NYus-gaap:LandMember2020-12-310001529377srt:HotelMemberstpr:NYus-gaap:BuildingAndBuildingImprovementsMember2021-09-300001529377srt:HotelMemberstpr:NYus-gaap:BuildingAndBuildingImprovementsMember2020-12-310001529377us-gaap:FurnitureAndFixturesMembersrt:HotelMemberstpr:NY2021-09-300001529377us-gaap:FurnitureAndFixturesMembersrt:HotelMemberstpr:NY2020-12-310001529377srt:HotelMemberstpr:NY2021-09-300001529377srt:HotelMemberstpr:NY2020-12-310001529377srt:HotelMemberstpr:NY2021-01-012021-09-300001529377srt:HotelMemberstpr:NY2021-07-012021-09-300001529377srt:HotelMemberstpr:NY2020-07-012020-09-300001529377srt:HotelMemberstpr:NY2020-01-012020-09-300001529377us-gaap:SecuredDebtMemberacre:WellsFargoBankNationalAssociationMember2021-09-300001529377us-gaap:SecuredDebtMemberacre:WellsFargoBankNationalAssociationMember2020-12-310001529377us-gaap:SecuredDebtMemberacre:CitibankNAMember2021-09-300001529377us-gaap:SecuredDebtMemberacre:CitibankNAMember2020-12-310001529377us-gaap:SecuredDebtMemberacre:CityNationalBankMember2021-09-300001529377us-gaap:SecuredDebtMemberacre:CityNationalBankMember2020-12-310001529377us-gaap:SecuredDebtMemberacre:MetropolitanLifeInsuranceCompanyMember2021-09-300001529377us-gaap:SecuredDebtMemberacre:MetropolitanLifeInsuranceCompanyMember2020-12-310001529377us-gaap:SecuredDebtMemberacre:MorganStanleyFacilityMember2021-09-300001529377us-gaap:SecuredDebtMemberacre:MorganStanleyFacilityMember2020-12-310001529377us-gaap:SecuredDebtMember2021-09-300001529377us-gaap:SecuredDebtMember2020-12-310001529377us-gaap:NotesPayableToBanksMember2021-09-300001529377us-gaap:NotesPayableToBanksMember2020-12-310001529377acre:SecuredTermLoanMember2021-09-300001529377acre:SecuredTermLoanMember2020-12-310001529377acre:RevolvingCreditFacilityOptionalCommitmentAmountMemberacre:WellsFargoBankNationalAssociationMember2021-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMember2021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:WellsFargoBankNationalAssociationMember2021-09-30acre:extension0001529377acre:RevolvingCreditFacilityOptionalFundingPeriodMemberacre:WellsFargoBankNationalAssociationMember2021-09-300001529377acre:RevolvingCreditFacilityOptionalFundingPeriodMemberacre:WellsFargoBankNationalAssociationMember2021-01-012021-09-300001529377acre:RevolvingCreditFacilityOptionalCommitmentAmountMemberacre:WellsFargoBankNationalAssociationMember2021-01-012021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:WellsFargoBankNationalAssociationMemberacre:DebtInstrumentVariableRateBaseLibor30DayMembersrt:MinimumMember2020-12-142020-12-140001529377srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberacre:WellsFargoBankNationalAssociationMemberacre:DebtInstrumentVariableRateBaseLibor30DayMember2020-12-142020-12-140001529377us-gaap:RevolvingCreditFacilityMemberacre:WellsFargoBankNationalAssociationMemberacre:DebtInstrumentVariableRateBaseLibor30DayMembersrt:MinimumMember2020-01-012020-12-140001529377us-gaap:RevolvingCreditFacilityMemberacre:WellsFargoBankNationalAssociationMember2021-01-012021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMember2021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMember2021-01-012021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMemberacre:DebtInstrumentVariableRateBaseLibor30DayMembersrt:MinimumMember2021-01-012021-09-300001529377srt:MaximumMemberus-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMemberacre:DebtInstrumentVariableRateBaseLibor30DayMember2021-01-012021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMember2021-07-012021-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMember2020-07-012020-09-300001529377us-gaap:RevolvingCreditFacilityMemberacre:CitibankNAMember2020-01-012020-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMember2021-01-012021-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMemberacre:DebtInstrumentVariableRateBaseFederalFundsRateMember2021-01-012021-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMemberacre:DebtInstrumentVariableRateBaseLIBOROneMonthMember2021-01-012021-09-300001529377acre:DebtInstrumentVariableRateBaseOneTwoThreeSixOr12MonthLIBORMemberacre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMembersrt:MinimumMember2021-01-012021-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMember2021-07-012021-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMember2020-07-012020-09-300001529377acre:CityNationalBankMemberacre:March2014CityNationalBankFacilityMember2020-01-012020-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MetropolitanLifeInsuranceCompanyMember2021-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MetropolitanLifeInsuranceCompanyMember2020-08-310001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MetropolitanLifeInsuranceCompanyMember2021-01-012021-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MetropolitanLifeInsuranceCompanyMemberacre:DebtInstrumentVariableRateBaseLibor30DayMember2020-08-132020-08-130001529377us-gaap:RevolvingCreditFacilityMemberacre:MetropolitanLifeInsuranceCompanyMember2020-08-132020-08-130001529377us-gaap:RevolvingCreditFacilityMemberacre:MetropolitanLifeInsuranceCompanyMember2020-08-130001529377acre:MetropolitanLifeInsuranceCompanyMemberacre:March2014CityNationalBankFacilityMember2021-07-012021-09-300001529377acre:MetropolitanLifeInsuranceCompanyMemberacre:March2014CityNationalBankFacilityMember2021-01-012021-09-300001529377acre:MetropolitanLifeInsuranceCompanyMemberacre:March2014CityNationalBankFacilityMember2020-07-012020-09-300001529377acre:MetropolitanLifeInsuranceCompanyMemberacre:March2014CityNationalBankFacilityMember2020-01-012020-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MorganStanleyFacilityMember2021-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MorganStanleyFacilityMember2021-05-310001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MorganStanleyFacilityMember2021-06-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MorganStanleyFacilityMember2021-01-012021-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MorganStanleyFacilityMemberacre:DebtInstrumentVariableRateBaseLIBOROneMonthMembersrt:MinimumMember2021-01-012021-09-300001529377acre:RevolvingMasterRepurchaseFacilityMemberacre:MorganStanleyFacilityMemberacre:DebtInstrumentVariableRateBaseLIBOROneMonthMember2021-01-012021-09-300001529377us-gaap:NotesPayableToBanksMember2019-11-300001529377stpr:SCus-gaap:NotesPayableToBanksMember2019-11-300001529377stpr:NYacre:NotesPayableDueJune102024Memberus-gaap:NotesPayableToBanksMember2021-09-300001529377stpr:NYacre:NotesPayableDueJune102024Member2021-01-012021-09-300001529377acre:NotesPayableDueJune102024Member2021-01-012021-09-300001529377us-gaap:NotesPayableToBanksMember2021-01-012021-09-300001529377stpr:NYus-gaap:NotesPayableToBanksMemberus-gaap:NotesPayableToBanksMember2021-01-012021-09-300001529377us-gaap:NotesPayableToBanksMember2019-11-302019-11-300001529377us-gaap:NotesPayableToBanksMember2021-09-300001529377acre:SecuredTermLoanMember2020-12-012020-12-310001529377acre:SecuredTermLoanMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-09-300001529377acre:SecuredTermLoanMembersrt:ScenarioForecastMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-10-012021-12-310001529377acre:SecuredTermLoanMembersrt:ScenarioForecastMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-01-012022-03-310001529377acre:SecuredTermLoanMembersrt:ScenarioForecastMemberus-gaap:LondonInterbankOfferedRateLIBORMember2022-04-012022-06-300001529377acre:SecuredTermLoanMember2021-03-012021-03-3100015293772020-02-012020-02-290001529377stpr:NCus-gaap:NotesPayableToBanksMember2019-04-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberstpr:FLus-gaap:NotesPayableToBanksMember2020-06-300001529377acre:SubordinatedParticipationNotesOnemonthLIBORPlus10Point50PercentMembersrt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberstpr:FL2020-06-300001529377srt:MultifamilyMemberstpr:NCus-gaap:NotesPayableToBanksMember2019-04-300001529377acre:SeniorMortgageLoansMemberstpr:NC2020-02-290001529377acre:SeniorMortgageLoansMemberstpr:NC2019-04-012019-04-300001529377stpr:NCacre:SeniorMortgageLoanDueMay52023Membersrt:OfficeBuildingMember2019-04-012019-04-300001529377stpr:NCacre:SeniorMortgageLoanDueMay52023Membersrt:OfficeBuildingMember2021-09-300001529377srt:MultifamilyMemberus-gaap:ParticipatingMortgagesMemberstpr:FL2021-06-300001529377srt:MultifamilyMemberus-gaap:ParticipatingMortgagesMemberstpr:FL2020-06-300001529377srt:MultifamilyMemberus-gaap:ParticipatingMortgagesMemberstpr:FL2020-06-012020-06-300001529377srt:MultifamilyMemberstpr:FLus-gaap:NotesPayableToBanksMember2020-06-012020-06-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberstpr:FLus-gaap:NotesPayableToBanksMember2020-06-012020-06-300001529377srt:MultifamilyMemberacre:SubordinatedParticipationMemberstpr:FL2021-09-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberus-gaap:ParticipatingMortgagesMemberstpr:FL2021-06-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberus-gaap:ParticipatingMortgagesMemberstpr:FL2020-06-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberus-gaap:ParticipatingMortgagesMemberstpr:FL2020-06-012020-06-300001529377srt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberacre:SubordinatedParticipationMemberstpr:FL2020-06-012020-06-300001529377acre:SubordinatedParticipationNotesOnemonthLIBORPlus10Point50PercentMembersrt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberstpr:FL2020-06-012020-06-300001529377acre:SubordinatedParticipationNotesOnemonthLIBORPlus10Point50PercentMembersrt:MultifamilyMemberacre:SeniorMortgageLoanPurchasedMemberstpr:FL2021-09-30acre:derivative0001529377us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-09-300001529377us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-09-300001529377us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:InterestRateCapMember2021-09-300001529377us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:InterestRateCapMember2021-01-012021-09-300001529377us-gaap:OtherAssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-09-300001529377us-gaap:OtherAssetsMemberus-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-12-310001529377us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMember2021-09-300001529377us-gaap:InterestRateContractMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherLiabilitiesMember2020-12-310001529377us-gaap:CommonStockMember2019-11-220001529377srt:MaximumMemberus-gaap:CommonStockMember2019-11-222019-11-220001529377us-gaap:CommonStockMember2021-03-152021-03-150001529377us-gaap:CommonStockMember2021-03-150001529377us-gaap:CommonStockMember2021-03-182021-03-180001529377us-gaap:CommonStockMember2021-06-172021-06-170001529377us-gaap:CommonStockMember2021-06-222021-06-220001529377us-gaap:RestrictedStockMemberacre:AmendedandRestated2012EquityIncentivePlanMember2018-06-300001529377srt:MinimumMemberacre:RestrictedStockAndRestrictedStockUnitsMember2021-01-012021-09-300001529377srt:MaximumMemberacre:RestrictedStockAndRestrictedStockUnitsMember2021-01-012021-09-300001529377srt:DirectorMemberus-gaap:RestrictedStockMember2020-12-310001529377us-gaap:RestrictedStockMembersrt:OfficerMember2020-12-310001529377srt:OfficerMemberus-gaap:RestrictedStockUnitsRSUMember2020-12-310001529377srt:DirectorMemberus-gaap:RestrictedStockMember2021-01-012021-09-300001529377us-gaap:RestrictedStockMembersrt:OfficerMember2021-01-012021-09-300001529377srt:OfficerMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001529377srt:DirectorMemberus-gaap:RestrictedStockMember2021-09-300001529377us-gaap:RestrictedStockMembersrt:OfficerMember2021-09-300001529377srt:OfficerMemberus-gaap:RestrictedStockUnitsRSUMember2021-09-300001529377acre:ACRECapitalHoldingsLLCMember2021-07-012021-09-300001529377acre:ACRECapitalHoldingsLLCMember2020-07-012020-09-300001529377acre:ACRECapitalHoldingsLLCMember2021-01-012021-09-300001529377acre:ACRECapitalHoldingsLLCMember2020-01-012020-09-300001529377us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateContractMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001529377us-gaap:FairValueInputsLevel2Memberus-gaap:InterestRateContractMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001529377us-gaap:FairValueInputsLevel3Memberus-gaap:InterestRateContractMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001529377us-gaap:InterestRateContractMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001529377us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-09-300001529377us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-09-300001529377us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310001529377us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001529377us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-09-300001529377us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001529377srt:AffiliatedEntityMember2021-01-012021-09-300001529377srt:AffiliatedEntityMember2021-09-30acre:quarter0001529377srt:AffiliatedEntityMemberacre:ManagementFeesMemberus-gaap:SegmentContinuingOperationsMember2021-07-012021-09-300001529377srt:AffiliatedEntityMemberacre:ManagementFeesMemberus-gaap:SegmentContinuingOperationsMember2020-07-012020-09-300001529377srt:AffiliatedEntityMemberacre:ManagementFeesMemberus-gaap:SegmentContinuingOperationsMember2021-01-012021-09-300001529377srt:AffiliatedEntityMemberacre:ManagementFeesMemberus-gaap:SegmentContinuingOperationsMember2020-01-012020-09-300001529377srt:AffiliatedEntityMemberacre:ManagementFeesMemberus-gaap:SegmentContinuingOperationsMember2021-09-300001529377srt:AffiliatedEntityMemberacre:ManagementFeesMemberus-gaap:SegmentContinuingOperationsMember2020-12-310001529377acre:IncentiveFeesMembersrt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2021-07-012021-09-300001529377acre:IncentiveFeesMembersrt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2020-07-012020-09-300001529377acre:IncentiveFeesMembersrt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2021-01-012021-09-300001529377acre:IncentiveFeesMembersrt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2020-01-012020-09-300001529377acre:IncentiveFeesMembersrt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2021-09-300001529377acre:IncentiveFeesMembersrt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2020-12-310001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMemberus-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMemberus-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMemberus-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMemberus-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMemberus-gaap:GeneralAndAdministrativeExpenseMember2021-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMemberus-gaap:GeneralAndAdministrativeExpenseMember2020-12-310001529377srt:AffiliatedEntityMemberacre:DirectThirdPartyCostsMemberus-gaap:SegmentContinuingOperationsMember2021-07-012021-09-300001529377srt:AffiliatedEntityMemberacre:DirectThirdPartyCostsMemberus-gaap:SegmentContinuingOperationsMember2020-07-012020-09-300001529377srt:AffiliatedEntityMemberacre:DirectThirdPartyCostsMemberus-gaap:SegmentContinuingOperationsMember2021-01-012021-09-300001529377srt:AffiliatedEntityMemberacre:DirectThirdPartyCostsMemberus-gaap:SegmentContinuingOperationsMember2020-01-012020-09-300001529377srt:AffiliatedEntityMemberacre:DirectThirdPartyCostsMemberus-gaap:SegmentContinuingOperationsMember2021-09-300001529377srt:AffiliatedEntityMemberacre:DirectThirdPartyCostsMemberus-gaap:SegmentContinuingOperationsMember2020-12-310001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2021-07-012021-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2020-07-012020-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2021-01-012021-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2020-01-012020-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2021-09-300001529377srt:AffiliatedEntityMemberus-gaap:SegmentContinuingOperationsMember2020-12-310001529377us-gaap:ResidentialRealEstateMember2021-09-300001529377us-gaap:ResidentialRealEstateMember2020-12-310001529377acre:SeniorMortgageLoansMemberus-gaap:LoanPurchaseCommitmentsMembersrt:IndustrialPropertyMember2021-09-300001529377acre:SeniorMortgageLoansMemberus-gaap:LoanPurchaseCommitmentsMemberstpr:NCsrt:IndustrialPropertyMember2021-01-012021-01-310001529377acre:SeniorMortgageLoansMemberacre:LoansHeldforInvestmentMemberus-gaap:LoanPurchaseCommitmentsMembersrt:IndustrialPropertyMemberstpr:NC2021-01-310001529377stpr:ILacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point00PercentDueJanuary2024Member2021-01-310001529377acre:LoansHeldforInvestmentMemberstpr:ILacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point00PercentDueJanuary2024Member2021-01-310001529377acre:LoansHeldforInvestmentMemberacre:SeniorMortgageLoansMemberacre:LIBORPlus2Point90PercentDueJanuary2024Memberacre:SelfStorageMemberstpr:FL2021-01-310001529377acre:LoansHeldforInvestmentMemberacre:LIBORPlus2Point90PercentDueJanuary2024InstrumentTwoMemberacre:SeniorMortgageLoansMemberacre:SelfStorageMemberstpr:FL2021-01-310001529377acre:LoansHeldforInvestmentMemberacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus2Point90PercentDueJanuary2024InstrumentThreeMemberstpr:FL2021-01-310001529377acre:LoansHeldforInvestmentMemberacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus2Point90PercentDueJanuary2024InstrumentFourMemberstpr:FL2021-01-310001529377stpr:MOacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point00PercentDueJanuary2024Member2021-01-310001529377acre:LoansHeldforInvestmentMemberstpr:MOacre:SeniorMortgageLoansMemberacre:SelfStorageMemberacre:LIBORPlus3Point00PercentDueJanuary2024Member2021-01-310001529377stpr:ILacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-05-310001529377acre:LoansHeldforInvestmentMemberstpr:ILacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-05-310001529377stpr:NJacre:SeniorMortgageLoansMemberacre:SelfStorageMember2021-06-300001529377stpr:NJacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-06-300001529377acre:LoansHeldforInvestmentMemberstpr:NJacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMember2021-06-300001529377stpr:NYacre:SeniorMortgageLoansMemberacre:AresWarehouseVehicleMember2021-07-310001529377acre:LoansHeldforInvestmentMemberstpr:NYacre:SeniorMortgageLoansMemberacre:AresWarehouseVehicleMember2021-07-010001529377stpr:NYacre:SeniorMortgageLoansMemberacre:AresWarehouseVehicleMember2021-08-310001529377acre:LoansHeldforInvestmentMemberstpr:NYacre:SeniorMortgageLoansMemberacre:AresWarehouseVehicleMember2021-08-310001529377acre:SeniorPariPassuNotesMemberacre:SeniorMortgageLoansMemberstpr:AZacre:AresWarehouseVehicleMember2021-09-300001529377acre:LoansHeldforInvestmentMemberacre:SeniorPariPassuNotesMemberacre:SeniorMortgageLoansMemberacre:AresWarehouseVehicleMemberstpr:AZ2021-09-300001529377acre:SeniorPariPassuNotesMemberacre:SeniorMortgageLoansMemberstpr:AZ2021-09-3000015293772021-07-302021-07-3000015293772021-05-042021-05-0400015293772021-02-172021-02-1700015293772020-09-162020-09-1600015293772020-06-192020-06-1900015293772020-02-202020-02-200001529377us-gaap:NotesPayableToBanksMemberacre:WellsFargoBankNationalAssociationMemberacre:A2019FL3CLOSecuritizationMember2019-01-110001529377acre:WellsFargoBankNationalAssociationMemberus-gaap:CollateralizedLoanObligationsMemberacre:A2019FL3CLOSecuritizationMember2019-01-110001529377us-gaap:NotesPayableToBanksMemberacre:WellsFargoBankNationalAssociationMember2017-03-310001529377acre:WellsFargoBankNationalAssociationMemberus-gaap:CollateralizedLoanObligationsMember2017-03-310001529377acre:FloatingRateNotesWeightedAverageCouponRateLIBORPlus1point85PercentMember2021-01-012021-09-300001529377acre:FloatingRateNotesWeightedAverageCouponRateLIBORPlus1point85PercentMember2021-09-300001529377acre:FloatingRateNotesWeightedAverageCouponRateLIBORPlus1point85PercentMember2021-01-012021-03-310001529377acre:FloatingRateNotesWeightedAverageCouponRateLIBORPlus1point85PercentMember2020-12-310001529377acre:OfferedNotesMembersrt:SubsidiariesMember2021-09-300001529377acre:OfferedCertificatesMembersrt:ParentCompanyMember2021-09-300001529377srt:ParentCompanyMemberacre:OfferedCertificatesAndOfferedNotesMember2021-09-300001529377acre:ACRECommercialMortgage2021FL4LtdAndACRECommercialMortgage2021FL4LLCMemberacre:SecuredFloatingRateNotesMember2021-01-280001529377acre:ACRECommercialMortgage2021FL4LtdAndACRECommercialMortgage2021FL4LLCMemberus-gaap:PreferredStockMember2021-01-282021-01-280001529377acre:FL4MortgageAssetsMember2021-07-012021-09-300001529377acre:FL4MortgageAssetsMember2021-09-300001529377acre:ACRECommercialMortgage2021FL4LtdAndACRECommercialMortgage2021FL4LLCMemberacre:WhollyOwnedSubsidiaryToParentCompanyMemberacre:SecuredFloatingRateNotesMember2021-09-300001529377acre:ACRECommercialMortgage2021FL4LtdAndACRECommercialMortgage2021FL4LLCMemberacre:WhollyOwnedSubsidiaryToParentCompanyMemberus-gaap:PreferredStockMember2021-01-012021-09-300001529377acre:ACRECommercialMortgage2021FL4LtdAndACRECommercialMortgage2021FL4LLCMemberacre:WhollyOwnedSubsidiaryToParentCompanyMemberacre:SecuredFloatingRateNotesMember2021-07-012021-09-300001529377srt:MultifamilyMemberacre:LiborPlus2Point50PercentMemberacre:SeniorMortgageLoansMemberus-gaap:SubsequentEventMemberstpr:TX2021-10-070001529377acre:LiborPlus5Point50PercentMemberstpr:TNacre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberus-gaap:SubsequentEventMember2021-10-190001529377acre:SeniorMortgageLoansMembersrt:IndustrialPropertyMemberus-gaap:SubsequentEventMemberacre:LiborPlus5Point90PercentMemberstpr:PA2021-10-270001529377us-gaap:SubsequentEventMember2021-10-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________ 
FORM 10-Q
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2021
 OR
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _____ to _____

Commission File No. 001-35517
ACRE-20210930_G1.JPG
 ARES COMMERCIAL REAL ESTATE CORPORATION
(Exact name of Registrant as specified in its charter) 
Maryland   45-3148087
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)
 
245 Park Avenue, 42nd Floor, New York, NY 10167
(Address of principal executive offices) (Zip Code)
 
(212) 750-7300
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.01 par value per share ACRE New York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes ý  No o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ý  No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 
Large accelerated filer   Accelerated filer
Non-accelerated filer   Smaller reporting company
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class   Outstanding at November 2, 2021
Common stock, $0.01 par value   47,001,821
1


TABLE OF CONTENTS

Page
Part I. Financial Information
 
Item 1. Consolidated Financial Statements
 
5
6
7
8
9
 


1

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this quarterly report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend such statements to be covered by the safe harbor provisions contained therein. The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. This description contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in “Risk Factors” and elsewhere in this quarterly report on Form 10-Q and in our annual report on Form 10-K for the fiscal year ended December 31, 2020. In addition, some of the statements in this quarterly report (including in the following discussion) constitute forward-looking statements, which relate to future events or the future performance or financial condition of Ares Commercial Real Estate Corporation (“ACRE” and, together with its consolidated subsidiaries, the “Company,” “we,” “us” and “our”). The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

our business and investment strategy;

our projected operating results;

the return or impact of current and future investments;

the severity and duration of the novel coronavirus (“COVID-19”) pandemic;

the impact of the COVID-19 pandemic, on our business and the United States and global economies;

the impact of the COVID-19 pandemic on the real estate industry and our borrowers, the performance of the properties securing our loans that may cause deterioration in the performance of our investments and, potentially, principal losses to us;

whether, or how much, we or our borrowers have benefited or may benefit from government stimulus programs in response to the COVID-19 pandemic;

the length of the economic slowdown resulting from the COVID-19 pandemic as well as the rate and extent of economic recovery;

management’s current estimate of expected credit losses and current expected credit loss reserve;

the collectability and timing of cash flows, if any, from our investments;

estimates relating to our ability to make distributions to our stockholders in the future;

defaults by borrowers in paying amounts due on outstanding indebtedness and our ability to collect all amounts due according to the contractual terms of our investments;

our ability to obtain, maintain, repay or refinance financing arrangements, including securitizations;

market conditions and our ability to access alternative debt markets and additional debt and equity capital;

the amount of commercial mortgage loans requiring refinancing;

the demand for commercial real estate loans;

our expected investment capacity and available capital;

financing and advance rates for our target investments;

our expected leverage;

changes in interest rates, credit spreads and the market value of our investments;
2

the impact of the replacement of the London Interbank Offered Rate (“LIBOR”) on our operating results;

effects of hedging instruments on our target investments;

rates of default or decreased recovery rates on our target investments;

rates of prepayments on our mortgage loans and the effect on our business of such prepayments;

the degree to which our hedging strategies may or may not protect us from interest rate volatility;

availability of investment opportunities in mortgage-related and real estate-related investments and securities;

the ability of Ares Commercial Real Estate Management LLC (“ACREM” or our “Manager”) to locate suitable investments for us, monitor, service and administer our investments and execute our investment strategy;

allocation of investment opportunities to us by our Manager;

our ability to successfully identify, complete and integrate any acquisitions;

our ability to maintain our qualification as a real estate investment trust (“REIT”) for United States federal income tax purposes;

our ability to maintain our exemption from registration under the Investment Company Act of 1940 (the “1940 Act”);

our understanding of our competition;

general volatility of the securities markets in which we may invest;

adverse changes in the real estate, real estate capital and credit markets and the impact of a protracted decline in the liquidity of credit markets on our business;

changes in governmental regulations, tax law and rates, and similar matters (including interpretation thereof);

authoritative or policy changes from standard-setting bodies such as the Financial Accounting Standards Board, the Securities and Exchange Commission, the Internal Revenue Service, the stock exchange where we list our common stock, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business;

actions and initiatives of the United States Government or governments outside of the United States, and changes to United States Government policies;

the state of the United States, European Union and Asian economies generally or in specific geographic regions;

global economic trends and economic conditions; and

market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Our actual results and condition could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Risk Factors” and the other information included in our annual report on Form 10-K and elsewhere in this quarterly report on Form 10-Q.

We have based the forward-looking statements included in this quarterly report on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements. Although we
3

undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, registration statements on Form S-3, quarterly reports on Form 10-Q and current reports on Form 8-K.
4

PART I — FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
 
ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

As of
September 30, 2021 December 31, 2020
(unaudited)
ASSETS
Cash and cash equivalents $ 15,787  $ 74,776 
Loans held for investment ($1,135,660 and $550,590 related to consolidated VIEs, respectively)
2,363,499  1,815,219 
Current expected credit loss reserve (22,691) (23,604)
Loans held for investment, net of current expected credit loss reserve 2,340,808  1,791,615 
Real estate owned, net 36,695  37,283 
Other assets ($2,524 and $1,079 of interest receivable related to consolidated VIEs, respectively; $47,618 and $6,410 of other receivables related to consolidated VIEs, respectively)
73,395  25,823 
Total assets $ 2,466,685  $ 1,929,497 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Secured funding agreements $ 656,014  $ 755,552 
Notes payable 47,381  61,837 
Secured term loan 60,000  110,000 
Collateralized loan obligation securitization debt (consolidated VIEs) 940,133  443,871 
Secured borrowings 59,962  59,790 
Due to affiliate 3,947  3,150 
Dividends payable 16,523  11,124 
Other liabilities ($549 and $391 of interest payable related to consolidated VIEs, respectively)
9,982  11,158 
Total liabilities 1,793,942  1,456,482 
Commitments and contingencies (Note 9)
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share, 450,000,000 shares authorized at September 30, 2021 and December 31, 2020 and 47,001,821 and 33,442,332 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
464  329 
Additional paid-in capital 701,370  497,803 
Accumulated other comprehensive income 19  — 
Accumulated earnings (deficit) (29,110) (25,117)
Total stockholders' equity 672,743  473,015 
Total liabilities and stockholders' equity $ 2,466,685  $ 1,929,497 

   See accompanying notes to consolidated financial statements.
5

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)

  For the three months ended September 30, For the nine months ended September 30,
  2021 2020 2021 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue:
Interest income $ 34,023  $ 30,626  $ 95,587  $ 91,908 
Interest expense (12,669) (11,875) (35,900) (40,450)
Net interest margin 21,354  18,751  59,687  51,458 
Revenue from real estate owned 5,850  3,623  12,271  10,032 
Total revenue 27,204  22,374  71,958  61,490 
Expenses:
Management and incentive fees to affiliate 3,175  1,847  8,693  5,771 
Professional fees 480  639  1,880  2,202 
General and administrative expenses 1,119  969  3,470  2,797 
General and administrative expenses reimbursed to affiliate 773  802  2,313  2,890 
Expenses from real estate owned 5,339  4,046  12,458  13,976 
Total expenses 10,886  8,303  28,814  27,636 
Provision for current expected credit losses 6,367  (1,048) (756) 22,063 
Realized losses on loans sold —  4,008  —  4,008 
Change in unrealized losses on loans held for sale —  (3,998) —  — 
Income before income taxes 9,951  15,109  43,900  7,783 
Income tax expense, including excise tax —  181  593  350 
Net income attributable to common stockholders $ 9,951  $ 14,928  $ 43,307  $ 7,433 
Earnings per common share:
Basic earnings per common share $ 0.21  $ 0.45  $ 1.06  $ 0.23 
Diluted earnings per common share $ 0.21  $ 0.44  $ 1.05  $ 0.22 
Weighted average number of common shares outstanding:
Basic weighted average shares of common stock outstanding 46,957,339  33,337,445  40,840,453  32,852,553 
Diluted weighted average shares of common stock outstanding 47,209,469  33,550,444  41,120,751  33,072,085 
Dividends declared per share of common stock $ 0.35  $ 0.33  $ 1.05  $ 0.99 

   See accompanying notes to consolidated financial statements.
6

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

  For the three months ended September 30, For the nine months ended September 30,
  2021 2020 2021 2020
(unaudited) (unaudited) (unaudited) (unaudited)
Net income attributable to common stockholders $ 9,951  $ 14,928  $ 43,307  $ 7,433 
Other comprehensive income:
Unrealized gains (losses) on derivative financial instruments (98) —  19  — 
Comprehensive income $ 9,853  $ 14,928  $ 43,326  $ 7,433 

   See accompanying notes to consolidated financial statements.
7

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share and per share data)
(unaudited)
  Common Stock Additional
Paid-in
Capital
Accumulated Other Comprehensive Income Accumulated
Earnings (Deficit)
Total Stockholders’ Equity
  Shares Amount
Balance at December 31, 2019 28,865,610  $ 283  $ 423,619  $ —  $ 2,437  $ 426,339 
Sale of common stock 4,600,000  46  73,186  —  —  73,232 
Offering costs —  —  (341) —  —  (341)
Stock-based compensation (66,658) —  225  —  —  225 
Net loss —  —  —  —  (17,263) (17,263)
Dividends declared —  —  —  —  (11,076) (11,076)
Impact of adoption of CECL (Note 2) —  —  —  —  (5,051) (5,051)
Balance at March 31, 2020 33,398,952  $ 329  $ 496,689  $ —  $ (30,953) $ 466,065 
Stock-based compensation 42,985  —  365  —  —  365 
Net income —  —  —  —  9,768  9,768 
Dividends declared —  —  —  —  (11,072) (11,072)
Balance at June 30, 2020 33,441,937  $ 329  $ 497,054  $ —  $ (32,257) $ 465,126 
Stock-based compensation —  —  367  —  —  367 
Net income —  —  —  —  14,928  14,928 
Dividends declared —  —  —  —  (11,072) (11,072)
Balance at September 30, 2020 33,441,937  $ 329  $ 497,421  $ —  $ (28,401) $ 469,349 
Stock-based compensation 395  —  382  —  —  382 
Net income —  —  —  —  14,407  14,407 
Dividends declared —  —  —  —  (11,123) (11,123)
Balance at December 31, 2020 33,442,332  $ 329  $ 497,803  $ —  $ (25,117) $ 473,015 
Sale of common stock 7,000,000  70  100,800  —  —  100,870 
Offering costs —  —  (188) —  —  (188)
Stock-based compensation 35,509  —  521  —  —  521 
Other comprehensive income —  —  —  263  —  263 
Net income —  —  —  —  15,740  15,740 
Dividends declared —  —  —  —  (14,248) (14,248)
Balance at March 31, 2021 40,477,841  $ 399  $ 598,936  $ 263  $ (23,625) $ 575,973 
Sale of common stock 6,500,000  65  101,725  —  —  101,790 
Offering costs —  —  (164) —  —  (164)
Stock-based compensation 23,280  —  497  —  —  497 
Other comprehensive income —  —  —  (146) —  (146)
Net income —  —  —  —  17,615  17,615 
Dividends declared —  —  —  —  (16,528) (16,528)
Balance at June 30, 2021 47,001,121  $ 464  $ 700,994  $ 117  $ (22,538) $ 679,037 
Offering costs —  —  (52) —  —  (52)
Stock-based compensation 700  —  428  —  —  428 
Other comprehensive income —  —  —  (98) —  (98)
Net income —  —  —  —  9,951  9,951 
Dividends declared —  —  —  —  (16,523) (16,523)
Balance at September 30, 2021 47,001,821  $ 464  $ 701,370  $ 19  $ (29,110) $ 672,743 
   
See accompanying notes to consolidated financial statements.
8

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
  For the nine months ended September 30,
  2021 2020
(unaudited) (unaudited)
Operating activities:
Net income $ 43,307  $ 7,433 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of deferred financing costs 7,111  4,906 
Accretion of deferred loan origination fees and costs (5,979) (5,732)
Stock-based compensation 1,446  956 
Depreciation of real estate owned 674  668 
Provision for current expected credit losses (756) 22,063 
Realized losses on loans sold —  4,008 
Changes in operating assets and liabilities:
Other assets (16,728) (9,302)
Due to affiliate 797  (91)
Other liabilities 408  (2,165)
Net cash provided by (used in) operating activities 30,280  22,744 
Investing activities:
Issuance of and fundings on loans held for investment (877,950) (485,913)
Principal repayment of loans held for investment 299,021  280,318 
Proceeds from sale of loans held for sale —  96,597 
Receipt of origination fees 4,636  3,978 
Purchases of capitalized additions to real estate owned (86) (243)
Payments under derivative financial instruments (700) — 
Net cash provided by (used in) investing activities (575,079) (105,263)
Financing activities:
Proceeds from secured funding agreements 611,515  466,778 
Repayments of secured funding agreements (711,054) (404,231)
Proceeds from notes payable 13,008  3,000 
Repayments of notes payable (27,880) — 
Repayments of secured term loan (50,000) — 
Proceeds from secured borrowings —  55,095 
Payment of secured funding costs (9,734) (3,700)
Proceeds from issuance of debt of consolidated VIEs 540,471  — 
Repayments of debt of consolidated VIEs (40,982) — 
Dividends paid (41,901) (31,694)
Proceeds from sale of common stock 202,660  73,232 
Payment of offering costs (293) (301)
Net cash provided by (used in) financing activities 485,810  158,179 
Change in cash and cash equivalents (58,989) 75,660 
Cash and cash equivalents, beginning of period 74,776  5,635 
Cash and cash equivalents, end of period $ 15,787  $ 81,295 

See accompanying notes to consolidated financial statements.
9

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2021
(in thousands, except share and per share data, percentages and as otherwise indicated)
(unaudited)

1.   ORGANIZATION

Ares Commercial Real Estate Corporation (together with its consolidated subsidiaries, the “Company” or “ACRE”) is a specialty finance company primarily engaged in originating and investing in commercial real estate loans and related investments. Through Ares Commercial Real Estate Management LLC (“ACREM” or the Company’s “Manager”), a Securities and Exchange Commission (“SEC”) registered investment adviser and a subsidiary of Ares Management Corporation (NYSE: ARES) (“Ares Management” or “Ares”), a publicly traded, leading global alternative investment manager, it has investment professionals strategically located across the United States and Europe who directly source new loan opportunities for the Company with owners, operators and sponsors of commercial real estate (“CRE”) properties. The Company was formed and commenced operations in late 2011. The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in May 2012. The Company is externally managed by its Manager, pursuant to the terms of a management agreement (the “Management Agreement”).
 
The Company operates as one operating segment and is primarily focused on directly originating and managing a diversified portfolio of CRE debt-related investments for the Company’s own account. The Company’s target investments include senior mortgage loans, subordinated debt, preferred equity, mezzanine loans and other CRE investments, including commercial mortgage backed securities. These investments are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, self storage, student housing, residential, senior-living and other commercial real estate properties, or by ownership interests therein.

    The Company has elected and qualified to be taxed as a real estate investment trust (“REIT”) for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2012. The Company generally will not be subject to United States federal income taxes on its REIT taxable income as long as it annually distributes all of its REIT taxable income prior to the deduction for dividends paid to stockholders and complies with various other requirements as a REIT.

2.   SIGNIFICANT ACCOUNTING POLICIES
    
The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the related management's discussion and analysis of financial condition and results of operations included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC.

    Refer to the Company’s Annual Report on Form 10-K for a description of the Company’s recurring accounting policies. The Company has included disclosure below regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly or (ii) the Company views as critical as of the date of this report.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entities (“VIEs”) that the Company controls and of which the Company is the primary beneficiary, and the Company’s wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated.

Interim financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2021.

10

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. As of the filing date of this Quarterly Report, there is a continued outbreak of the novel coronavirus (“COVID-19”) pandemic, for which the World Health Organization has declared a global pandemic, the United States has declared a national emergency and every state in the United States is under a federal disaster declaration. Many states, including those in which the Company and its borrowers operate, have issued orders requiring the closure of, or certain restrictions on the operation of, non-essential businesses and/or requiring residents to stay at home. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions and overall economic and financial market instability both globally and in the United States. The COVID-19 pandemic continues to disrupt global supply chains, has caused labor shortages and has added broad inflationary pressures, which has the potential to negatively impact the Company and its borrowers. While several countries, as well as certain states in the United States, have relaxed the public health restrictions with a view to partially or fully reopen their economies, recurring COVID-19 outbreaks, including outbreaks of several variants of COVID-19, such as the Delta variant, have led to the re-introduction of such restrictions in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere.

Additionally, in December 2020, the U.S. Food and Drug Administration authorized certain vaccines for emergency use, which are currently being distributed nationwide and globally. However, it remains unclear how quickly “herd immunity” will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely. These uncertainties could lead the public to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Additionally, concerns about the long-term effects of the vaccines could discourage people from obtaining a vaccine. Even after the COVID-19 pandemic subsides, the U.S. economy and most other major global economies may experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States. The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of September 30, 2021, however, uncertainty over the ultimate impact the COVID-19 pandemic will have on the global economy and the Company’s business, makes any estimates and assumptions as of September 30, 2021 inherently less certain than they would be absent the current and potential impacts of the COVID-19 pandemic. Actual results could differ from those estimates.

Variable Interest Entities

The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE.
 
To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

To assess whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Company.

11

For VIEs of which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements.

The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE cause the Company’s consolidation conclusion regarding the VIE to change. See Note 16 included in these consolidated financial statements for further discussion of the Company’s VIEs.

Cash and Cash Equivalents

Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short‑term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows.

Loans Held for Investment

    The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs (the “carrying value”). Loans are generally collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its loans held for investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors.

    Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower’s ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

    Loan balances that are deemed to be uncollectible are written off as a realized loss and are deducted from the current expected credit loss reserve. The write-offs are recorded in the period in which the loan balance is deemed uncollectible based on management’s judgment.


12

Current Expected Credit Losses

Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, requires the Company to reflect current expected credit losses (“CECL”) on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broad range of historical experience adjusted for current conditions and reasonable and supportable forecast information to inform credit loss estimates (the “CECL Reserve”). ASU No. 2016-13 was effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. ASU No. 2016-13 was adopted by the Company on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of January 1, 2020. Subsequent period increases and decreases to expected credit losses impact earnings and are recorded within provision for current expected credit losses in the Company’s consolidated statements of operations. The CECL Reserve related to outstanding balances on loans held for investment required under ASU No. 2016-13 is a valuation account that is deducted from the amortized cost basis of the Company’s loans held for investment in the Company’s consolidated balance sheets. The CECL Reserve related to unfunded commitments on loans held for investment is recorded within other liabilities in the Company's consolidated balance sheets. See Note 4 included in these consolidated financial statements for CECL related disclosures.

Real Estate Owned

    Real estate assets are carried at their estimated fair value at acquisition and are presented net of accumulated depreciation and impairment charges. The Company allocates the purchase price of acquired real estate assets based on the fair value of the acquired land, building, furniture, fixtures and equipment.

    Real estate assets are depreciated using the straight-line method over estimated useful lives of up to 40 years for buildings and improvements and up to 15 years for furniture, fixtures and equipment. Renovations and/or replacements that improve or extend the life of the real estate asset are capitalized and depreciated over their estimated useful lives. The cost of ordinary repairs and maintenance are expensed as incurred.

    Real estate assets are evaluated for indicators of impairment on a quarterly basis. Factors that the Company may consider in its impairment analysis include, among others: (1) significant underperformance relative to historical or anticipated operating results; (2) significant negative industry or economic trends; (3) costs necessary to extend the life or improve the real estate asset; (4) significant increase in competition; and (5) ability to hold and dispose of the real estate asset in the ordinary course of business. A real estate asset is considered impaired when the sum of estimated future undiscounted cash flows expected to be generated by the real estate asset over the estimated remaining holding period is less than the carrying amount of such real estate asset. Cash flows include operating cash flows and anticipated capital proceeds generated by the real estate asset. An impairment charge is recorded equal to the excess of the carrying value of the real estate asset over the fair value. When determining the fair value of a real estate asset, the Company makes certain assumptions including, but not limited to, consideration of projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the real estate asset based upon the Company’s estimate of a capitalization rate and discount rate.

    The Company reviews its real estate assets, from time to time, in order to determine whether to sell such assets. Real estate assets are classified as held for sale when the Company commits to a plan to sell the asset, when the asset is being actively marketed for sale at a reasonable price and the sale of the asset is probable and the transfer of the asset is expected to qualify for recognition as a completed sale within one year. Real estate assets that are held for sale are carried at the lower of the asset’s carrying amount or its fair value less costs to sell.

Debt Issuance Costs

Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the term of the respective debt instrument. Unamortized debt issuance costs are expensed when the associated debt is repaid prior to maturity. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization and the outstanding principal balance of the securitization debt is reduced, the related unamortized debt issuance costs are charged to expense based on a pro‑rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included within interest expense, except as noted below, in the Company’s consolidated statements of operations while the unamortized balance on (i) Secured Funding Agreements (each individually defined in Note 6 included in these consolidated financial statements) is included within other assets and (ii) Notes Payable, the Secured Term Loan (each defined in Note 6 included in these consolidated financial statements) and Secured Borrowings (defined in Note 7 included in these consolidated financial statements) and debt securitizations are each included as a reduction to the carrying amount of the liability, in the Company’s consolidated balance sheets. Amortization of debt issuance costs for the note payable on the hotel property that is recognized as
13

real estate owned in the Company’s consolidated balance sheets (see Note 6 included in these consolidated financial statements for additional information on the note payable) is included within expenses from real estate owned in the Company’s consolidated statements of operations.

Derivative Financial Instruments

Derivative financial instruments are classified as either other assets (gain positions) or other liabilities (loss positions) in the Company’s consolidated balance sheets at fair value. These amounts may be offset to the extent that there is a legal right to offset and if elected by management.

On the date the Company enters into a derivative contract, the Company designates each contract as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability, or cash flow hedge, or as a derivative instrument not to be designated as a hedging derivative, or non-designated hedge. For all derivatives other than those designated as non-designated hedges, the Company formally documents the hedge relationships and designation at the contract’s inception. This documentation includes the identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and an evaluation of the effectiveness of its hedged transaction.

The Company performs a formal assessment on a quarterly basis on whether the derivative designated in each hedging relationship is expected to be, and has been, highly effective in offsetting changes in the value or cash flows of the hedged items. Changes in the fair value of derivative contracts are recorded each period in either current earnings or other comprehensive income (“OCI”), depending on whether the derivative is designated as part of a hedge transaction and, if so, the type of hedge transaction. For derivatives that are designated as cash flow hedges, the effective portion of the unrealized gains or losses on these contracts is recorded in OCI. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued and the changes in fair value of the instrument are included in current earnings prospectively. The Company does not enter into derivatives for trading or speculative purposes.

Revenue Recognition

    Interest income is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, the origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income over the initial loan term as a yield adjustment using the effective interest method.

    Revenue from real estate owned represents revenue associated with the operations of a hotel property classified as real estate owned. Revenue from the operation of the hotel property is recognized when guestrooms are occupied, services have been rendered or fees have been earned. Revenues are recorded net of any discounts and sales and other taxes collected from customers. Revenues consist of room sales, food and beverage sales and other hotel revenues.

Net Interest Margin and Interest Expense
    Net interest margin in the Company’s consolidated statements of operations serves to measure the performance of the Company’s loans as compared to its use of debt leverage. The Company includes interest income from its loans and interest expense related to its Secured Funding Agreements, Notes Payable, securitization debt, the Secured Term Loan (each individually defined in Note 6 included in these consolidated financial statements) and Secured Borrowings (defined in Note 7 included in these consolidated financial statements) in net interest margin. For the three and nine months ended September 30, 2021 and 2020, interest expense is comprised of the following ($ in thousands):
14

For the three months ended September 30, For the nine months ended September 30,
  2021 2020 2021 2020
Secured funding agreements $ 4,308  $ 6,000  $ 11,327  $ 22,447 
Notes payable (1) 368  337  1,841  952 
Securitization debt 5,414  2,518  14,858  9,879 
Secured term loan 844  1,668  2,982  5,469 
Secured borrowings 1,469  1,352  4,350  1,703 
Other (2) 266  —  542  — 
Interest expense $ 12,669  $ 11,875  $ 35,900  $ 40,450 
____________________________
(1)    Excludes interest expense on the $28.3 million note payable, which is secured by a hotel property that is recognized as real estate owned in the Company’s consolidated balance sheets (see Note 6 included in these consolidated financial statements for additional information on the note payable). Interest expense on the $28.3 million note payable is included within expenses from real estate owned in the Company’s consolidated statements of operations.
(2)    Represents the net interest expense recognized from the Company’s derivative financial instruments upon periodic settlement.
Comprehensive Income

Comprehensive income consists of net income and OCI that are excluded from net income.

Recent Accounting Pronouncements

    In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. ASU No. 2020-04 and ASU No. 2021-01 are effective for all entities and may be adopted retrospectively as of any date from the beginning of any interim period that includes or is subsequent to March 12, 2020 or prospectively to new modifications through December 31, 2022. The Company is currently evaluating the impact of adopting these ASUs on its consolidated financial statements.

3.   LOANS HELD FOR INVESTMENT

As of September 30, 2021, the Company’s portfolio included 64 loans held for investment, excluding 108 loans that were repaid, sold or converted to real estate owned since inception. The aggregate originated commitment under these loans at closing was approximately $2.7 billion and outstanding principal was $2.4 billion as of September 30, 2021. During the nine months ended September 30, 2021, the Company funded approximately $891.3 million of outstanding principal and received repayments of $340.4 million of outstanding principal as described in more detail in the tables below. As of September 30, 2021, 94.8% of the Company’s loans have LIBOR floors, with a weighted average floor of 1.17%, calculated based on loans with LIBOR floors. References to LIBOR or “L” are to 30-day LIBOR (unless otherwise specifically stated).
 
The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of September 30, 2021 and December 31, 2020 ($ in thousands):

15

  As of September 30, 2021
Carrying Amount (1) Outstanding Principal (1) Weighted Average Unleveraged Effective Yield Weighted Average Remaining Life (Years)
Senior mortgage loans $ 2,332,686  $ 2,345,569  5.6  % (2) 5.7  % (3) 1.4
Subordinated debt and preferred equity investments 30,813  31,511  15.3  % (2) 15.3  % (3) 2.3
Total loans held for investment portfolio $ 2,363,499  $ 2,377,080  5.7  % (2) 5.8  % (3) 1.4

  As of December 31, 2020
Carrying Amount (1) Outstanding Principal (1) Weighted Average Unleveraged Effective Yield Weighted Average Remaining Life (Years)
Senior mortgage loans $ 1,713,601  $ 1,723,638  5.9% (2) 6.2  % (3) 1.2
Subordinated debt and preferred equity investments 101,618  102,603  13.4% (2) 13.4  % (3) 1.9
Total loans held for investment portfolio $ 1,815,219  $ 1,826,241  6.3% (2) 6.6  % (3) 1.2
______________________________

(1)The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.
(2)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of September 30, 2021 and December 31, 2020 as weighted by the outstanding principal balance of each loan.
(3)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all interest accruing loans held by the Company as of September 30, 2021 and December 31, 2020 as weighted by the total outstanding principal balance of each interest accruing loan (excludes loans on non-accrual status as of September 30, 2021 and December 31, 2020).


16

A more detailed listing of the Company’s loans held for investment portfolio based on information available as of September 30, 2021 is as follows ($ in millions, except percentages):
Loan Type Location Outstanding Principal (1) Carrying Amount (1) Interest Rate Unleveraged Effective Yield (2) Maturity Date (3) Payment Terms (4)
Senior Mortgage Loans:
Office IL $150.5 $149.8 L+3.61% 5.5% Mar 2023 I/O
Office Diversified 112.5 112.2 L+3.65% 5.7% Jan 2023 I/O
Multifamily FL 91.3 91.0 L+5.00% 6.7% Jun 2022 I/O
Mixed-use FL 84.0 84.0 L+4.25% 5.7% Feb 2023 (5) I/O
Office AZ 77.4 76.5 L+3.50% 4.0% Oct 2024 I/O
Mixed-use NY 75.0 74.3 L+3.65% 4.1% Jul 2024 I/O
Multifamily TX 75.0 74.8 L+3.25% 3.5% Oct 2024 I/O
Industrial IL 70.1 69.4 L+4.55% 5.2% May 2024 I/O
Industrial NY 69.4 69.2 L+5.00% 7.1% Feb 2022 (7) I/O
Hotel OR/WA 68.1 67.3 L+3.45% 7.4% May 2022 (6) I/O
Office IL 67.8 67.8 L+3.75% 5.3% Dec 2021 I/O
Residential Condominium FL 65.7 65.1 L+5.25% 5.9% Jul 2023 I/O
Office NC 64.6 63.8 L+3.55% 4.2% Aug 2024 I/O
Office NC 63.5 63.5 L+4.25% 6.7% Mar 2022 (8) I/O
Hotel Diversified 60.8 60.6 L+3.60% 6.0% Sep 2022 (9) I/O
Office NY 60.4 59.7 L+3.85% 4.3% Aug 2025 I/O
Office IL 57.4 57.3 L+3.95% 6.2% Jun 2022 (10) P/I (14)
Mixed-use CA 56.8 56.6 (11) 5.4% Jan 2024 I/O
Self Storage NJ 55.5 55.6 L+3.80% 4.1% Feb 2024 I/O
Residential Condominium NY 53.6 53.6 (12) 10.9% May 2021 (12) I/O
Office GA 46.3 46.1 L+3.05% 5.7% Dec 2022 I/O
Multifamily FL 46.2 46.1 L+5.00% 6.6% Jun 2022 I/O
Hotel CA 40.0 40.0 L+4.12% 5.8% Jan 2022 I/O
Student Housing TX 39.5 39.5 L+4.75% 5.5% Jan 2022 (13) P/I (14)
Multifamily SC 37.5 37.2 L+2.75% 3.4% Jun 2023 I/O
Student Housing CA 36.5 36.5 L+3.95% 4.3% Jul 2022 I/O
Mixed-use TX 35.8 35.6 (15) 4.7% Sep 2022 I/O
Mixed-use CA 35.2 34.9 L+4.10% 6.3% Mar 2023 I/O
Hotel MI 33.2 33.2 L+3.95% 4.3% Jul 2022 I/O
Hotel IL 32.9 31.0 L+4.40% —% (16) May 2022 (16) I/O
Office CA 32.2 32.1 L+3.35% 6.0% Nov 2022 I/O
Multifamily SC 30.9 30.7 L+6.50% 10.2% Sep 2022 I/O
Student Housing NC 30.0 30.0 L+3.15% 5.9% Feb 2022 I/O
Multifamily PA 29.4 29.3 L+3.00% 5.9% Dec 2021 I/O
Office IL 28.5 28.4 L+3.80% 6.2% Jan 2023 I/O
Office NC 28.5 28.1 L+3.53% 6.8% May 2023 I/O
Student Housing TX 24.6 24.4 L+3.45% 5.5% Feb 2023 I/O
Industrial NJ 23.2 22.9 L+3.75% 4.5% May 2024 I/O
Office CA 22.9 22.8 L+3.40% 6.2% Nov 2022 (17) I/O
Industrial CA 23.0 23.0 L+4.50% 7.4% Dec 2021 I/O
Student Housing FL 22.0 21.9 L+3.25% 5.9% Aug 2022 I/O
Industrial CO 20.8 20.6 L+6.75% 7.7% Feb 2023 I/O
Student Housing AL 19.5 19.3 L+3.85% 4.3% May 2024 I/O
Self Storage FL 19.5 19.5 L+3.50% 6.0% Mar 2022 I/O
Multifamily WA 18.7 18.6 L+3.00% 5.1% Mar 2023 I/O
Industrial CA 16.7 16.6 L+3.75% 6.3% Mar 2023 I/O
Residential CA 14.3 14.3 13.00% —% (18) May 2021 (18) I/O
Self Storage FL 10.8 10.7 L+2.90% 4.4% Dec 2023 I/O
Office NC 9.4 9.4 L+4.00% 6.6% Nov 2022 I/O
Self Storage AZ 8.3 8.3 L+2.90% 4.0% May 2024 I/O
Self Storage AZ 7.4 7.3 L+2.90% 4.1% May 2024 I/O
Self Storage FL 7.0 6.9 L+2.90% 4.3% Dec 2023 I/O
Self Storage FL 6.4 6.4 L+2.90% 4.3% Dec 2023 I/O
Self Storage MO 6.1 6.1 L+3.00% 4.4% Dec 2023 I/O
Self Storage IL 5.5 5.5 L+3.00% 4.3% Dec 2023 I/O
Self Storage FL 4.4 4.4 L+2.90% 4.2% Dec 2023 I/O
Self Storage CO 3.2 3.2 L+2.90% 3.8% Apr 2024 I/O
17

Industrial PA 3.0 2.9 L+5.50% 6.1% Sep 2024 I/O
Industrial CO 2.9 2.9 L+6.25% 6.9% Sep 2024 I/O
Industrial AZ 2.7 2.7 L+5.90% 6.5% Oct 2024 I/O
Industrial GA 1.3 1.3 L+5.25% 5.9% Sep 2024 I/O
Subordinated Debt and Preferred Equity Investments:
Office NJ 17.0 16.3 12.00% 13.7% Jan 2026 I/O
Residential Condominium HI 11.5 11.5 14.00% 19.0% Aug 2021 (19) I/O
Office CA 3.0 3.0 L+8.25% 9.7% Nov 2021 I/O
Total/Weighted Average $2,377.1 $2,363.5 5.7%

_________________________

(1)The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs. For the loans held for investment that represent co-investments with other investment vehicles managed by Ares Management (see Note 14 included in these consolidated financial statements for additional information on co-investments), only the portion of Carrying Amount and Outstanding Principal held by the Company is reflected.
(2)Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premiums or discounts) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of September 30, 2021 or the LIBOR floor, as applicable. The total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of September 30, 2021 as weighted by the outstanding principal balance of each loan.
(3)Certain loans are subject to contractual extension options that generally vary between one and two 12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.
(4)I/O = interest only, P/I = principal and interest.
(5)In March 2021, the Company and the borrower entered into a modification and extension agreement to, among other things, extend the maturity date on the senior Florida loan to February 2023.
(6)In March 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the Oregon/Washington loan to May 2022. At origination, the Oregon/Washington loan was structured as both a senior and mezzanine loan with the Company holding both positions. The mezzanine position of this loan, which had an outstanding principal balance of $13.1 million as of September 30, 2021, was previously on non-accrual status. During the three months ended June 30, 2021, the mezzanine position was restored to accrual status as, based on management's judgment, there is no longer reasonable doubt that principal or interest will be collected in full.
(7)In August 2021, the borrower exercised a six-month extension option in accordance with the loan agreement, which extended the maturity date on the senior New York loan to February 2022.
(8)In February 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior North Carolina loan to March 2022.
(9)In September 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior diversified loan to September 2022.
(10)In April 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Illinois loan to June 2022.
(11)At origination, the California loan was structured as both a senior and mezzanine loan with the Company holding both positions. The senior loan, which had an outstanding principal balance of $45.0 million as of September 30, 2021, accrues interest at a per annum rate of L + 3.80% and the mezzanine loan, which had an outstanding principal balance of $11.8 million as of September 30, 2021, accrues interest at a per annum rate of 10.00%.
(12)At origination, the New York loan was structured as both a senior and mezzanine loan with the Company holding the mezzanine loan and a third party holding the senior loan. In April 2021, the Company purchased the senior loan from the third party at par. The senior loan, which had an outstanding principal balance of $35.0 million as of September 30, 2021, accrues interest at a per annum rate of L + 6.00% and the mezzanine loan, which had an outstanding principal balance of $15.9 million as of September 30, 2021, accrues interest at a per annum rate of L + 14.00%. The mezzanine loan includes a $2.6 million loan to the borrower, for which such amount accrues interest at a per annum rate of 20.00%. As of September 30, 2021, the New York loan, which is collateralized by a residential condominium property located in New York, is in maturity default due to the failure of the borrower to repay the outstanding principal balance
18

of the loan by the May 2021 maturity date. The Company evaluated this loan for impairment and concluded that no impairment charge should be recognized as of September 30, 2021 and that this loan should not be placed on non-accrual status as of September 30, 2021. This conclusion was based in part on: (1) the current estimated fair market value of the underlying collateral property and applicable reserves and (2) the estimated cash flows from the sale of units of the underlying collateral property. The estimated fair market value of the underlying collateral property was determined using the comparable market sales approach.
(13)In January 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Texas loan to January 2022.
(14)Amortization began on the senior Texas loan, which had an outstanding principal balance of $39.5 million as of September 30, 2021 and the senior Illinois loan, which had an outstanding principal balance of $57.4 million as of September 30, 2021, in February 2021 and July 2021, respectively. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms.
(15)In March 2021, the Company and the borrower entered into a modification agreement to, among other things, split the original senior Texas loan into two separate notes. Note A, which had an outstanding principal balance of $35.3 million as of September 30, 2021, accrues interest at a per annum rate of L + 3.75% and Note B, which had an outstanding principal balance of $0.4 million as of September 30, 2021, accrues interest at a per annum rate of L+10.00%.
(16)Loan was on non-accrual status as of September 30, 2021 and therefore, there is no Unleveraged Effective Yield as the loan is non-interest accruing. In May 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Illinois loan to May 2022.
(17)In September 2021, the borrower exercised a one-year extension option in accordance with the loan agreement, which
extended the maturity date on the senior California loan to November 2022.
(18)Loan was on non-accrual status as of September 30, 2021 and therefore, there is no Unleveraged Effective Yield as the loan is non-interest accruing. As of September 30, 2021, the senior California loan, which is collateralized by a residential property, is in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the May 2021 maturity date. The Company evaluated this loan for impairment and concluded that no impairment charge should be recognized as of September 30, 2021. This conclusion was based in part on: (1) the current estimated fair market value of the underlying collateral property, (2) the estimated value of the contractual right to residual proceeds from the sale of a second residential property and (3) the recourse payment guarantee from two individuals that are the owners of the underlying collateral. The estimated fair market value of the underlying collateral property was determined using the comparable market sales approach.
(19)As of September 30, 2021, the subordinated Hawaii loan, which is collateralized by a residential condominium property, is in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the August 2021 maturity date. The Company evaluated this loan for impairment and concluded that no impairment charge should be recognized as of September 30, 2021 and that this loan should not be placed on non-accrual status as of September 30, 2021. This conclusion was based in part on the current estimated fair market value of the underlying collateral property, which was determined using the comparable market sales approach and land residual method.

The Company has made, and may continue to make, modifications to loans, including loans that are in default. Loan terms that may be modified include interest rates, required prepayments, asset release prices, maturity dates, covenants, principal amounts and other loan terms. The terms and conditions of each modification vary based on individual circumstances and will be determined on a case by case basis. The Company’s Manager monitors and evaluates each of the Company’s loans held for investment and has maintained regular communications with borrowers and sponsors regarding the potential impacts of the COVID-19 pandemic on the Company’s loans. Some of the Company’s borrowers, in particular, borrowers with properties exposed to the hospitality, student housing and retail industries, have indicated that due to the impact of the COVID-19 pandemic, they may be unable to timely execute their business plans, are experiencing cash flow pressure, have had to temporarily close their businesses or have experienced other negative business consequences. Certain borrowers have requested temporary interest deferral or forbearance or other modifications of their loans. Based on these discussions with borrowers, the Company has made three loan modifications, representing an aggregate principal balance of $110.7 million, during the three months ended September 30, 2021. These modifications included deferrals or capitalization of interest, amendments in extension, future funding or performance tests, extension of the maturity date, repurposing of reserves or covenant waivers on loans secured by properties directly or indirectly impacted by the COVID-19 pandemic. Loan modifications during the period were conducted pursuant to the relief granted via the Coronavirus Aid, Relief, and Economic Security Act and therefore are not evaluated for or accounted for as troubled debt restructurings.

19

For the nine months ended September 30, 2021, the activity in the Company’s loan portfolio was as follows ($ in thousands):
Balance at December 31, 2020 $ 1,815,219 
Initial funding 822,684 
Origination fees and discounts, net of costs (8,851)
Additional funding 68,581 
Amortizing payments (1,848)
Loan payoffs (338,265)
Origination fee accretion 5,979 
Balance at September 30, 2021 $ 2,363,499 

Except as described above, as of September 30, 2021, all loans held for investment were paying in accordance with their contractual terms. As of September 30, 2021, the Company had two loans held for investment on non-accrual status with a carrying value of $45.3 million.

4.     CURRENT EXPECTED CREDIT LOSSES

    The Company estimates its CECL Reserve primarily using a probability-weighted model that considers the likelihood of default and expected loss given default for each individual loan. Calculation of the CECL Reserve requires loan specific data, which includes capital senior to the Company when the Company is the subordinate lender, changes in net operating income, debt service coverage ratio, loan-to-value, occupancy, property type and geographic location. Estimating the CECL Reserve also requires significant judgment with respect to various factors, including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of the Company’s floating-rate loan portfolio and (iv) the Company’s current and future view of the macroeconomic environment. The Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve. In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company utilizes historical market loan loss data licensed from a third party data service. The third party’s loan database includes historical loss data for commercial mortgage-backed securities, or CMBS, issued dating back to 1998, which the Company believes is a reasonably comparable and available data set to its type of loans. The Company utilized macroeconomic data that reflects a current recession; however, the short and long-term economic implications of the COVID-19 pandemic and its financial impact on the Company are highly uncertain. For periods beyond the reasonable and supportable forecast period, the Company reverts back to historical loss data. Management’s current estimate of expected credit losses increased from June 30, 2021 to September 30, 2021 primarily due to growth in the loan portfolio and other changes to the loan portfolio, partially offset by forecasted improvement in macroeconomic factors, shorter average remaining loan term and loan payoffs, during the three months ended September 30, 2021. The CECL Reserve takes into consideration the macroeconomic impact of the COVID-19 pandemic on CRE properties and is not specific to any loan losses or impairments on the Company’s loans held for investment.
    
As of September 30, 2021, the Company’s CECL Reserve for its loans held for investment portfolio is $24.5 million or 93 basis points of the Company’s total loans held for investment commitment balance of $2.6 billion and is bifurcated between the CECL reserve (contra-asset) related to outstanding balances on loans held for investment of $22.7 million and a liability for unfunded commitments of $1.8 million. The liability was based on the unfunded portion of the loan commitment over the full contractual period over which the Company is exposed to credit risk through a current obligation to extend credit. Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion.    

20

Current Expected Credit Loss Reserve for Funded Loan Commitments    

    Activity related to the CECL Reserve for outstanding balances on the Company’s loans held for investment as of and for the three and nine months ended September 30, 2021 was as follows ($ in thousands):
Balance at June 30, 2021 (1)
$ 16,892 
Provision for current expected credit losses 5,799 
Write-offs — 
Recoveries — 
Balance at September 30, 2021 (1)
$ 22,691 
Balance at December 31, 2020 (1)
$ 23,604 
Provision for current expected credit losses (913)
Write-offs — 
Recoveries — 
Balance at September 30, 2021 (1)
$ 22,691 
__________________________

(1)     The CECL Reserve related to outstanding balances on loans held for investment is recorded within current expected credit loss reserve in the Company's consolidated balance sheets.

Current Expected Credit Loss Reserve for Unfunded Loan Commitments    

    Activity related to the CECL Reserve for unfunded commitments on the Company’s loans held for investment as of and for the three and nine months ended September 30, 2021 was as follows ($ in thousands):

Balance at June 30, 2021 (1)
$ 1,221 
Provision for current expected credit losses 568 
Write-offs — 
Recoveries — 
Balance at September 30, 2021 (1)
$ 1,789 
Balance at December 31, 2020 (1)
$ 1,632 
Provision for current expected credit losses 157 
Write-offs — 
Recoveries — 
Balance at September 30, 2021 (1)
$ 1,789 
__________________________

(1)     The CECL Reserve related to unfunded commitments on loans held for investment is recorded within other liabilities in the Company's consolidated balance sheets.

The Company continuously evaluates the credit quality of each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Risk factors include property type, geographic and local market dynamics, physical condition, leasing and tenant profile, projected cash flow, loan structure and exit plan, loan-to-value ratio, debt service coverage ratio, project sponsorship, and other factors deemed necessary. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:
21

Ratings     Definition
1 Very Low Risk
2 Low Risk
3 Medium Risk
4 High Risk/Potential for Loss: Asset performance is trailing underwritten expectations. Loan at risk of impairment without material improvement to performance
5 Impaired/Loss Likely: A loan that has a significantly increased probability of default and principal loss

    The risk ratings are primarily based on historical data as well as taking into account future economic conditions.

    As of September 30, 2021, the carrying value, excluding the CECL Reserve, of the Company’s loans held for investment within each risk rating by year of origination is as follows ($ in thousands):
2021 2020 2019 2018 2017 Prior Total
Risk rating:
1 $ 28,436 $ $ $ 9,374 $ $ $ 37,810
2 312,909 104,805 39,528 457,242
3 348,175 521,897 429,477 191,642 171,586 16,307 1,679,084
4 35,025 2,649 118,525 33,164 189,363
5
Total $ 724,545 $ 521,897 $ 536,931 $ 319,541 $ 211,114 $ 49,471 $ 2,363,499

Accrued Interest Receivable

    The Company elected not to measure a CECL Reserve on accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner. As of September 30, 2021, interest receivable of $17.2 million is included within other assets in the Company's consolidated balance sheets and is excluded from the carrying value of loans held for investment. If the Company were to have uncollectible accrued interest receivable, it generally would reverse accrued and unpaid interest against interest income and no longer accrue for these amounts.

5.     REAL ESTATE OWNED

On March 8, 2019, the Company acquired legal title to a hotel property located in New York through a deed in lieu of foreclosure. Prior to March 8, 2019, the hotel property collateralized a $38.6 million senior mortgage loan held by the Company that was in maturity default due to the failure of the borrower to repay the outstanding principal balance of the loan by the December 2018 maturity date. In conjunction with the deed in lieu of foreclosure, the Company derecognized the $38.6 million senior mortgage loan and recognized the hotel property as real estate owned. As the Company does not expect to complete a sale of the hotel property within the next twelve months, the hotel property is considered held for use, and is carried at its estimated fair value at acquisition and is presented net of accumulated depreciation and impairment charges. The Company did not recognize any gain or loss on the derecognition of the senior mortgage loan as the fair value of the hotel property of $36.9 million and the net assets held at the hotel property of $1.7 million at acquisition approximated the $38.6 million carrying value of the senior mortgage loan. The assets and liabilities of the hotel property are included within other assets and other liabilities, respectively, in the Company’s consolidated balance sheets and include items such as cash, restricted cash, trade receivables and payables and advance deposits.

The following table summarizes the Company’s real estate owned as of September 30, 2021 and December 31, 2020 ($ in thousands):
22

As of
September 30, 2021 December 31, 2020
Land $ 10,200  $ 10,200 
Buildings and improvements 24,281  24,281 
Furniture, fixtures and equipment 4,448  4,362 
38,929  38,843 
Less: Accumulated depreciation (2,234) (1,560)
Real estate owned, net $ 36,695  $ 37,283 

As of September 30, 2021, no impairment charges have been recognized for real estate owned.

For the three and nine months ended September 30, 2021, the Company incurred depreciation expense of $225 thousand and $674 thousand, respectively. For the three and nine months ended September 30, 2020, the Company incurred depreciation expense of $224 thousand and $668 thousand, respectively. Depreciation expense is included within expenses from real estate owned in the Company’s consolidated statements of operations.

6.   DEBT

Financing Agreements

The Company borrows funds, as applicable in a given period, under the Wells Fargo Facility, the Citibank Facility, the CNB Facility, the MetLife Facility and the Morgan Stanley Facility (individually defined below and collectively, the “Secured Funding Agreements”), Notes Payable (as defined below) and the Secured Term Loan (as defined below). The Company refers to the Secured Funding Agreements, Notes Payable and the Secured Term Loan as the “Financing Agreements.” The outstanding balance of the Financing Agreements in the table below are presented gross of debt issuance costs. As of September 30, 2021 and December 31, 2020, the outstanding balances and total commitments under the Financing Agreements consisted of the following ($ in thousands):

September 30, 2021 December 31, 2020
Outstanding Balance Total
Commitment
Outstanding Balance Total
Commitment
Secured Funding Agreements:
Wells Fargo Facility $ 281,150  $ 350,000  (1) $ 336,001  $ 350,000  (1)
Citibank Facility 147,982  325,000  117,506  325,000 
CNB Facility —  50,000  (2) 50,000  50,000  (2)
MetLife Facility 20,648  180,000  104,124  180,000 
Morgan Stanley Facility 206,234  250,000  147,921  150,000 
Subtotal $ 656,014  $ 1,155,000  $ 755,552  $ 1,055,000 
Notes Payable $ 48,250  $ 51,755  $ 63,122  $ 84,155 
Secured Term Loan $ 60,000  $ 60,000  $ 110,000  $ 110,000 
   Total $ 764,264  $ 1,266,755  $ 928,674  $ 1,249,155 

______________________________

(1)    The maximum commitment for the Wells Fargo Facility (as defined below) may be increased to up to $500.0 million at the Company’s option, subject to the satisfaction of certain conditions, including payment of an upsize fee.
(2)    The CNB Facility (as defined below) has an accordion feature that provides for, subject to approval by City National Bank in its sole discretion, an increase in the commitment amount from $50.0 million to $75.0 million for up to a period of 120 days once per calendar year.
23


Some of the Company’s Financing Agreements are collateralized by (i) assignments of specific loans, preferred equity or a pool of loans held for investment or loans held for sale owned by the Company, (ii) interests in the subordinated portion of the Company’s securitization debt, or (iii) interests in wholly-owned entity subsidiaries that hold the Company’s loans held for investment. The Company is the borrower or guarantor under each of the Financing Agreements. Generally, the Company partially offsets interest rate risk by matching the interest index of loans held for investment with the Secured Funding Agreements used to fund them. The Company’s Financing Agreements contain various affirmative and negative covenants, including negative pledges, and provisions regarding events of default that are normal and customary for similar financing arrangements.

Wells Fargo Facility
 
The Company is party to a master repurchase funding facility with Wells Fargo Bank, National Association (“Wells Fargo”) (the “Wells Fargo Facility”), which allows the Company to borrow up to $350.0 million. The maximum commitment may be increased to up to $500.0 million at the Company’s option, subject to the satisfaction of certain conditions, including payment of an upsize fee. Under the Wells Fargo Facility, the Company is permitted to sell, and later repurchase, certain qualifying senior commercial mortgage loans, A-Notes, pari-passu participations in commercial mortgage loans and mezzanine loans under certain circumstances, subject to available collateral approved by Wells Fargo in its sole discretion. The funding period of the Wells Fargo Facility expires on December 14, 2022, subject to one 12-month extension at the Company’s option, which, if exercised, would extend the funding period to December 14, 2023. The initial maturity date of the Wells Fargo Facility is December 14, 2022, subject to three 12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if all three were exercised, would extend the maturity date of the Wells Fargo Facility to December 14, 2025. Advances under the Wells Fargo Facility accrue interest at a per annum rate equal to the sum of one-month LIBOR plus a pricing margin range of 1.50% to 2.75%, subject to certain exceptions. In December 2020, the Company amended the Wells Fargo Facility to, among other things, eliminate the non-utilization fee on the Wells Fargo Facility. Prior to the amendment, the Company incurred a non-utilization fee of 25 basis points per annum on the average daily available balance of the Wells Fargo Facility to the extent less than 75% of the Wells Fargo Facility was utilized. For the three months ended September 30, 2020, the Company did not incur a non-utilization fee. For the nine months ended September 30, 2020, the Company incurred a non-utilization fee of $19 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

Citibank Facility

The Company is party to a $325.0 million master repurchase facility with Citibank, N.A. (“Citibank”) (the “Citibank Facility”). Under the Citibank Facility, the Company is permitted to sell and later repurchase certain qualifying senior commercial mortgage loans and A-Notes approved by Citibank in its sole discretion. The initial maturity date of the Citibank Facility is December 13, 2021, subject to two 12-month extensions, each of which may be exercised at the Company’s option assuming no existing defaults under the Citibank Facility and applicable extension fees being paid, which, if both were exercised, would extend the maturity date of the Citibank Facility to December 13, 2023. Advances under the Citibank Facility accrue interest at a per annum rate equal to the sum of one-month LIBOR plus an indicative pricing margin range of 1.50% to 2.25%, subject to certain exceptions. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the Citibank Facility to the extent less than 75% of the Citibank Facility is utilized. For the three and nine months ended September 30, 2021, the Company incurred a non-utilization fee of $162 thousand and $496 thousand, respectively. For the three and nine months ended September 30, 2020, the Company incurred a non-utilization fee of $129 thousand and $386 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

CNB Facility
    The Company is party to a $50.0 million secured revolving funding facility with City National Bank (the “CNB Facility”), which has an accordion feature that provides for, subject to approval by City National Bank in its sole discretion, an increase in the commitment amount from $50.0 million to $75.0 million for up to a period of 120 days once per calendar year. The Company is permitted to borrow funds under the CNB Facility to finance investments and for other working capital and general corporate needs. In March 2021, the Company exercised a 12-month extension option on the CNB Facility to extend the maturity date to March 10, 2022. Advances under the CNB Facility accrue interest at a per annum rate equal to the sum of, at the Company’s option, either (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 2.65% or (b) a base rate (which is the highest of a prime rate, the federal funds rate plus 0.50%, or one-month LIBOR plus 1.00%) plus 1.00%; provided that in no event shall the interest rate be less than 2.65%. Unless at least 75% of the CNB Facility is used on average, unused commitments under the CNB Facility accrue non-utilization fees at the rate of 0.375% per annum.
24

For the three and nine months ended September 30, 2021, the Company incurred a non-utilization fee of $28 thousand and $96 thousand, respectively. For the three and nine months ended September 30, 2020, the Company incurred a non-utilization fee of $6 thousand and $38 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.
MetLife Facility    

The Company is party to a $180.0 million revolving master repurchase facility with Metropolitan Life Insurance Company (“MetLife”) (the “MetLife Facility”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans meeting defined eligibility criteria which are approved by MetLife in its sole discretion. The initial maturity date of the MetLife Facility is August 13, 2022, subject to two 12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the MetLife Facility to August 13, 2024. Advances under the MetLife Facility accrue interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 2.50%, subject to certain exceptions. For a period of nine months subsequent to August 2020, the non-utilization fee of 25 basis points per annum on the average daily available balance of the MetLife Facility, which is owed if less than 65% of the MetLife Facility is utilized, was waived. For the three and nine months ended September 30, 2021, the Company incurred a non-utilization fee of $62 thousand and $100 thousand, respectively. For the three and nine months ended September 30, 2020, the Company incurred a non-utilization fee of $5 thousand and $7 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.
Morgan Stanley Facility
    The Company is party to a $250.0 million master repurchase and securities contract with Morgan Stanley Bank, N.A. (“Morgan Stanley”) (the “Morgan Stanley Facility”). Under the Morgan Stanley Facility, the Company is permitted to sell, and later repurchase, certain qualifying commercial mortgage loans collateralized by retail, office, mixed-use, multifamily, industrial, hospitality, student housing or self-storage properties. Morgan Stanley may approve the mortgage loans that are subject to the Morgan Stanley Facility in its sole discretion. The Morgan Stanley Facility has an accordion feature that provides for a $100.0 million permanent increase in the commitment amount from $150.0 million to $250.0 million, which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an upsized commitment fee. In June 2021, the Company exercised the option to increase the commitment amount from $150.0 million to $250.0 million. The initial maturity date of the Morgan Stanley Facility is January 16, 2023, subject to two 12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the Morgan Stanley Facility to January 16, 2025. Advances under the Morgan Stanley Facility generally accrue interest at a per annum rate equal to the sum of one-month LIBOR plus a spread ranging from 1.75% to 2.25%, determined by Morgan Stanley, depending upon the mortgage loan sold to Morgan Stanley in the applicable transaction.
Notes Payable

Certain of the Company’s subsidiaries are party to two separate non-recourse note agreements (the “Notes Payable”) with the lenders referred to therein, consisting of (1) a $28.3 million note that was closed in June 2019, which is secured by a hotel property located in New York that is recognized as real estate owned in the Company’s consolidated balance sheets and (2) a $23.5 million note that was closed in November 2019, which is secured by a $34.6 million senior mortgage loan held by the Company on a multifamily property located in South Carolina.

The maturity date of the $28.3 million note is June 10, 2024, subject to one 6-month extension, which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, which, if exercised, would extend the maturity date to December 10, 2024. The loan may be prepaid at any time subject to the payment of a prepayment fee, if applicable. Initial advances under the $28.3 million note accrue interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 3.00%. If the hotel property that collateralizes the $28.3 million note achieves certain financial performance hurdles, the interest rate on advances will decrease to a per annum rate equal to the sum of one-month LIBOR plus a spread of 2.50%. The $28.3 million loan amount may be increased to up to $30.0 million to fund certain construction costs of improvements at the hotel, subject to the satisfaction of certain conditions and the payment of a commitment fee. As of September 30, 2021, the total outstanding principal balance of the note was $28.3 million.

The initial maturity date of the $23.5 million note is September 5, 2022, subject to two 12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date to September 5, 2024. Advances under the $23.5
25

million note accrue interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 3.75%. As of September 30, 2021, the total outstanding principal balance of the note was $20.0 million.

Secured Term Loan

The Company and certain of its subsidiaries are party to a $60.0 million Credit and Guaranty Agreement with the lenders referred to therein and Cortland Capital Market Services LLC, as administrative agent and collateral agent for the lenders (the “Secured Term Loan”). In December 2020, the Company exercised a 12-month extension option on the Secured Term Loan to extend the maturity date to December 22, 2021. Advances under the Secured Term Loan accrue interest at a per annum rate equal to the sum of, at the Company’s option, one, two, three or six-month LIBOR plus a spread of 5.00%. During the extension period, the spread on advances under the Secured Term Loan increases every three months by 0.125%, 0.375% and 0.750% per annum, respectively, beginning after the third-month of the extension period. In March 2021, the Company voluntarily elected to repay $50.0 million of outstanding principal on the Secured Term Loan at par prior to the scheduled maturity as permitted by the contractual terms of the Secured Term Loan. As of September 30, 2021, the Secured Term Loan has a remaining outstanding principal balance of $60.0 million.

The total original issue discount on the Secured Term Loan draws was $2.6 million, which represents a discount to the debt cost to be amortized into interest expense using the effective interest method over the term of the Secured Term Loan. For the three and nine months ended September 30, 2021, the estimated per annum effective interest rate of the Secured Term Loan, which is equal to LIBOR plus the spread plus the accretion of the original issue discount and associated costs, was 5.5% and 5.3%, respectively. For the three and nine months ended September 30, 2020, the estimated per annum effective interest rate of the Secured Term Loan was 5.9% and 6.5%, respectively.

7.   SECURED BORROWINGS

    Certain of the Company’s subsidiaries are party to three separate secured borrowing arrangements related to transferred loans, consisting of (1) a secured borrowing that was closed in February 2020, which is secured by a $24.4 million senior mortgage loan on an office property located in North Carolina that was originated by the Company, (2) a secured borrowing that was closed in June 2020, which is secured by a $24.9 million subordinated loan on a multifamily property located in Florida that was originated by the Company and (3) a secured borrowing that was closed in June 2020, which is secured by a $12.6 million subordinated loan on a multifamily property located in Florida that was originated by the Company (collectively, the “Secured Borrowings”).
    In April 2019, the Company originated a $30.5 million loan on an office property located in North Carolina, which was bifurcated between a $24.4 million senior mortgage loan and a $6.1 million mezzanine loan. In February 2020, the Company transferred its interest in the $24.4 million senior mortgage loan to a third party and retained the $6.1 million mezzanine loan. The Company evaluated whether the transfer of the $24.4 million senior mortgage loan met the criteria in FASB ASC Topic 860, Transfers and Servicing, for treatment as a sale – legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint and transfer of effective control – and determined that the transfer did not qualify as a sale and thus, is treated as a financing transaction. As such, the Company did not derecognize the $24.4 million senior mortgage loan asset and recorded a secured borrowing liability in the consolidated balance sheets. The initial maturity date of the $24.4 million secured borrowing is May 5, 2023, subject to one 12-month extension, which may be exercised at the transferee’s option, which, if exercised, would extend the maturity date to May 5, 2024. Advances under the $24.4 million secured borrowing accrue interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 2.50%. As of September 30, 2021, the total outstanding principal balance of the secured borrowing was $22.7 million.
    In June 2020, the Company originated a $91.8 million senior mortgage loan on a multifamily property located in Florida, which the Company subsequently bifurcated between a $66.9 million senior participation, which accrues interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 2.94% and a $24.9 million subordinated participation, which accrues interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 10.50%. In June 2020, the Company transferred its interest in the $24.9 million subordinated participation to a third party and retained the $66.9 million senior participation. The Company evaluated whether the transfer of the $24.9 million subordinated participation met the criteria in FASB ASC Topic 860, Transfers and Servicing, for treatment as a sale. As the $66.9 million senior participation and the $24.9 million subordinated participation failed to meet the participating interest requirements in FASB ASC Topic 860, Transfers and Servicing, since the cash flows from the original $91.8 million senior mortgage loan are not allocated pro rata to the participation holders and there is a subordination of interest amongst the holders, it was determined that the transfer did not qualify as a sale and thus, is treated as a financing transaction. As such, the Company did not derecognize the $24.9 million subordinated participation and recorded a secured borrowing liability in the consolidated balance sheets. The initial maturity date of the $24.9 million secured borrowing is June 5, 2022, subject to one 12-month extension, which may be exercised at the
26

borrower’s option, which, if exercised, would extend the maturity date to June 5, 2023. As of September 30, 2021, the total outstanding principal balance of the secured borrowing was $24.9 million.
    In June 2020, the Company closed the purchase of a $46.7 million senior mortgage loan on a multifamily property located in Florida, which the Company subsequently bifurcated between a $34.1 million senior participation, which accrues interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 2.94% and a $12.6 million subordinated participation, which accrues interest at a per annum rate equal to the sum of one-month LIBOR plus a spread of 10.50%. In June 2020, the Company transferred its interest in the $12.6 million subordinated participation to a third party and retained the $34.1 million senior participation. The Company evaluated whether the transfer of the $12.6 million subordinated participation met the criteria in FASB ASC Topic 860, Transfers and Servicing, for treatment as a sale. As the $34.1 million senior participation and the $12.6 million subordinated participation failed to meet the participating interest requirements in FASB ASC Topic 860, Transfers and Servicing, since the cash flows from the original $46.7 million senior mortgage loan are not allocated pro rata to the participation holders and there is a subordination of interest amongst the holders, it was determined that the transfer did not qualify as a sale and thus, is treated as a financing transaction. As such, the Company did not derecognize the $12.6 million subordinated participation and recorded a secured borrowing liability in the consolidated balance sheets. The initial maturity date of the $12.6 million secured borrowing is June 5, 2022, subject to one 12-month extension, which may be exercised at the borrower’s option, which, if exercised, would extend the maturity date to June 5, 2023. As of September 30, 2021, the total outstanding principal balance of the secured borrowing was $12.6 million.

8.   DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments, which includes interest rate swaps and interest rate caps, on certain borrowing transactions to manage its net exposure to interest rate changes and to reduce its overall cost of borrowing. These derivatives may or may not qualify as cash flow hedges under the hedge accounting requirements of FASB ASC Topic 815, Derivatives and Hedging. Derivatives not designated as cash flow hedges are not speculative and are used to manage our exposure to interest rate movements. See Note 2 included in these consolidated financial statements for additional discussion of the accounting for designated and non-designated hedges.

The use of derivative financial instruments involves certain risks, including the risk that the counterparties to these contractual arrangements do not perform as agreed. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties that have appropriate credit ratings and are major financial institutions with which the Company and its affiliates may also have other financial relationships.

The following tables detail our outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk as of September 30, 2021 (notional amount in thousands):

Interest Rate Derivatives Number of Instruments Notional Amount
Rate(1)
Index Weighted Average Maturity (Years)
Interest rate swaps 1 $ 870,000  0.2075  %
LIBOR(2)
1.0
Interest rate caps 1 $ 275,000  0.5000  % LIBOR 1.0
_______________________________

(1)    Represents fixed rate for interest rate swaps and strike rate for interest rate caps.
(2)    Subject to a 0.00% floor.

The following table summarizes the fair value of our derivative financial instruments ($ in thousands):

 
Fair Value of Derivatives in an Asset Position(1) as of
Fair Value of Derivatives in a Liability Position(2) as of
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
Derivatives designated as hedging instruments:
Interest rate derivatives $ 165  —  —  — 
____________________________

(1)    Included in other assets in the Company’s consolidated balance sheets.
(2)    Included in other liabilities in the Company’s consolidated balance sheets.

27

9.   COMMITMENTS AND CONTINGENCIES

    As further discussed in Note 2, the full extent of the impact of the COVID-19 pandemic on the global economy and the Company’s business is uncertain. As of September 30, 2021, there were no contingencies recorded on the Company’s consolidated balance sheets as a result of the COVID-19 pandemic, however, if the global pandemic continues and market conditions worsen, it could adversely affect the Company’s business, financial condition and results of operations.
    
    As of September 30, 2021 and December 31, 2020, the Company had the following commitments to fund various senior mortgage loans, subordinated debt investments, as well as preferred equity investments accounted for as loans held for investment ($ in thousands):
  As of
September 30, 2021 December 31, 2020
Total commitments $ 2,633,877  $ 2,013,993 
Less: funded commitments (2,377,080) (1,826,241)
Total unfunded commitments $ 256,797  $ 187,752 

The Company from time to time may be a party to litigation relating to claims arising in the normal course of business. As of September 30, 2021, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

10.   STOCKHOLDERS’ EQUITY

At the Market Stock Offering Program

    On November 22, 2019, the Company entered into an equity distribution agreement (the “Equity Distribution Agreement”), pursuant to which the Company may offer and sell, from time to time, shares of the Company’s common stock, par value $0.01 per share, having an aggregate offering price of up to $100.0 million. Subject to the terms and conditions of the Equity Distribution Agreement, sales of common stock, if any, may be made in transactions that are deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. During the nine months ended September 30, 2021, the Company did not issue or sell any shares of common stock under the Equity Distribution Agreement.

Equity Offerings

On March 15, 2021, the Company entered into an underwriting agreement (the “March 2021 Underwriting Agreement”), by and among the Company, ACREM, and Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, and BofA Securities, Inc., as representatives of the several underwriters listed therein (collectively, the “March 2021 Underwriters”). Pursuant to the terms of the March 2021 Underwriting Agreement, the Company agreed to sell, and the March 2021 Underwriters agreed to purchase, subject to the terms and conditions set forth in the March 2021 Underwriting Agreement, an aggregate of 7,000,000 shares of the Company’s common stock, par value $0.01 per share. The public offering closed on March 18, 2021 and generated net proceeds of approximately $100.7 million, after deducting transaction expenses.

On June 17, 2021, the Company entered into an underwriting agreement (the “June 2021 Underwriting Agreement”), by and among the Company, ACREM, and Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, and BofA Securities, Inc., as representatives of the several underwriters listed therein (collectively, the “June 2021 Underwriters”). Pursuant to the terms of the June 2021 Underwriting Agreement, the Company agreed to sell, and the June 2021 Underwriters agreed to purchase, subject to the terms and conditions set forth in the June 2021 Underwriting Agreement, an aggregate of 6,500,000 shares of the Company’s common stock, par value $0.01 per share. The public offering closed on June 22, 2021 and generated net proceeds of approximately $101.6 million, after deducting transaction expenses.

Equity Incentive Plan
 
On April 23, 2012, the Company adopted an equity incentive plan. In April 2018, the Company’s board of directors authorized, and in June 2018, the Company’s stockholders approved, an amended and restated equity incentive plan that increased the total amount of shares of common stock the Company may grant thereunder to 1,390,000 shares (the “Amended and Restated 2012 Equity Incentive Plan”). Pursuant to the Amended and Restated 2012 Equity Incentive Plan, the Company may grant awards consisting of restricted shares of the Company’s common stock, restricted stock units (“RSUs”) and/or other
28

equity-based awards to the Company’s outside directors, employees of the Manager, officers, ACREM and other eligible awardees under the plan. Any restricted shares of the Company’s common stock and RSUs will be accounted for under FASB ASC Topic 718, Compensation—Stock Compensation, resulting in stock-based compensation expense equal to the grant date fair value of the underlying restricted shares of common stock or RSUs.
 
Restricted stock and RSU grants generally vest ratably over a one to four year period from the vesting start date. The grantee receives additional compensation for each outstanding restricted stock or RSU grant, classified as dividends paid, equal to the per-share dividends received by common stockholders.

The following tables summarize the (i) non-vested shares of restricted stock and RSUs and (ii) vesting schedule of shares of restricted stock and RSUs for the Company’s directors and officers and employees of the Manager as of September 30, 2021:

Schedule of Non-Vested Share and Share Equivalents
 Restricted Stock Grants—Directors Restricted Stock Grants—Officers and Employees of the Manager RSUs—Officers and Employees of the Manager Total
Balance at December 31, 2020 22,324  68,851  267,507  358,682 
Granted 23,280  —  3,439  26,719 
Vested (28,144) (40,122) (38,176) (106,442)
Forfeited —  (1,967) (24,665) (26,632)
Balance at September 30, 2021 17,460  26,762  208,105  252,327 

Future Anticipated Vesting Schedule
Restricted Stock Grants—Directors Restricted Stock Grants—Officers and Employees of the Manager RSUs—Officers and Employees of the Manager Total
2021 5,820  1,389  —  7,209 
2022 11,640  25,373  79,156  116,169 
2023 —  —  79,141  79,141 
2024 —  —  49,808  49,808 
2025 —  —  —  — 
Total 17,460  26,762  208,105  252,327 

11.   EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2021 and 2020 ($ in thousands, except share and per share data):

For the three months ended September 30, For the nine months ended September 30,
2021 2020 2021 2020
Net income attributable to common stockholders $ 9,951  $ 14,928  $ 43,307  $ 7,433 
Divided by:
Basic weighted average shares of common stock outstanding: 46,957,339  33,337,445  40,840,453  32,852,553 
Weighted average non-vested restricted stock and RSUs 252,130  212,999  280,298  219,532 
Diluted weighted average shares of common stock outstanding: 47,209,469  33,550,444  41,120,751  33,072,085 
Basic earnings per common share $ 0.21  $ 0.45  $ 1.06  $ 0.23 
Diluted earnings per common share $ 0.21  $ 0.44  $ 1.05  $ 0.22 
29

12.   INCOME TAX
    
    The Company wholly owns ACRC Lender W TRS LLC, which is a taxable REIT subsidiary (“TRS”) formed to issue and hold certain loans intended for sale. The Company also wholly owns ACRC 2017-FL3 TRS LLC, which is a TRS formed to hold a portion of the FL3 CLO Securitization and FL4 CLO Securitization (as defined below), including the portion that generates excess inclusion income. Additionally, the Company wholly owns ACRC WM Tenant LLC, which is a TRS formed to lease from an affiliate the hotel property classified as real estate owned acquired on March 8, 2019. ACRC WM Tenant LLC engaged a third-party hotel management company to operate the hotel under a management contract.

The income tax provision for the Company and the TRSs consisted of the following for the three and nine months ended September 30, 2021 and 2020 ($ in thousands):
For the three months ended September 30, For the nine months ended September 30,
  2021 2020 2021 2020
Current $ (35) $ 76  $ 437  $ 179 
Deferred —  —  —  (99)
Excise tax 35  105  156  270 
   Total income tax expense, including excise tax $ —  $ 181  $ 593  $ 350 

    For the three and nine months ended September 30, 2021, the Company incurred an expense of $35 thousand and $156 thousand, respectively, for U.S. federal excise tax. For the three and nine months ended September 30, 2020, the Company incurred an expense of $105 thousand and $270 thousand, respectively, for U.S. federal excise tax. Excise tax represents a 4% tax on the sum of a portion of the Company’s ordinary income and net capital gains not distributed during the calendar year (including any distribution declared in the fourth quarter and paid following January) plus any prior year shortfall. If it is determined that an excise tax liability exists for the current year, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned. The quarterly expense is calculated in accordance with applicable tax regulations.

The TRSs recognize interest and penalties related to unrecognized tax benefits within income tax expense in the Company’s consolidated statements of operations. Accrued interest and penalties, if any, are included within other liabilities in the Company’s consolidated balance sheets.

As of September 30, 2021, tax years 2017 through 2021 remain subject to examination by taxing authorities. The Company does not have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months.

30

13.   FAIR VALUE

The Company follows FASB ASC Topic 820-10, Fair Value Measurement (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure requirements for fair value measurements. ASC 820-10 determines fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. ASC 820-10 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value.

In accordance with ASC 820-10, the inputs used to measure fair value are summarized in the three broad levels listed below:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level 3—Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

GAAP requires disclosure of fair value information about financial and nonfinancial assets and liabilities, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial and nonfinancial assets and liabilities could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

Recurring Fair Value Measurements

The Company is required to record derivative financial instruments at fair value on a recurring basis in accordance with GAAP. The fair value of interest rate derivatives was estimated using a third-party specialist, based on contractual cash flows and observable inputs comprising credit spreads.

The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021:
Level 1 Level 2 Level 3 Total
Financial assets:
Interest rate derivatives $ —  $ 165  $ —  $ 165 
Financial liabilities:
Interest rate derivatives $ —  $ —  $ —  $ — 

    As of September 30, 2021, the Company did not have any nonfinancial assets or liabilities required to be recorded at fair value on a recurring basis. As of December 31, 2020, the Company did not have any financial and nonfinancial assets or liabilities required to be recorded at fair value on a recurring basis.
Nonrecurring Fair Value Measurements

The Company is required to record real estate owned, a nonfinancial asset, at fair value on a nonrecurring basis in accordance with GAAP. Real estate owned consists of a hotel property that was acquired by the Company on March 8, 2019 through a deed in lieu of foreclosure. See Note 5 included in these consolidated financial statements for more information on
31

real estate owned. Real estate owned is recorded at fair value at acquisition using Level 3 inputs and is evaluated for indicators of impairment on a quarterly basis. Real estate owned is considered impaired when the sum of estimated future undiscounted cash flows expected to be generated by the real estate owned over the estimated remaining holding period is less than the carrying amount of such real estate owned. Cash flows include operating cash flows and anticipated capital proceeds generated by the real estate owned. An impairment charge is recorded equal to the excess of the carrying value of the real estate owned over the fair value. The fair value of the hotel property at acquisition was estimated using a third-party appraisal, which utilized standard industry valuation techniques such as the income and market approach. When determining the fair value of a hotel, certain assumptions are made including, but not limited to: (1) projected operating cash flows, including factors such as booking pace, growth rates, occupancy, daily room rates, hotel specific operating costs and future capital expenditures; and (2) projected cash flows from the eventual disposition of the hotel based upon the Company’s estimation of a hotel specific capitalization rate, hotel specific discount rates and comparable selling prices in the market.

As of September 30, 2021 and December 31, 2020, the Company did not have any financial assets or liabilities or nonfinancial liabilities required to be recorded at fair value on a nonrecurring basis.

Financial Assets and Liabilities Not Measured at Fair Value
 
As of September 30, 2021 and December 31, 2020, the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands):
As of
September 30, 2021 December 31, 2020
Level in Fair Value Hierarchy Carrying Value Fair
Value
Carrying Value Fair
Value
Financial assets:
   Loans held for investment 3 $ 2,363,499  $ 2,355,551  $ 1,815,219  $ 1,800,003 
Financial liabilities:
   Secured funding agreements 2 $ 656,014  $ 656,014  $ 755,552  $ 755,552 
   Notes payable 3 47,381  48,250  61,837  63,122 
   Secured term loan 3 60,000  60,000