Fourth quarter GAAP net income of $17.2
million or $0.36 per diluted common share and Distributable
Earnings(1) of $19.4 million or $0.41 per diluted common
share
Full year GAAP net income of $60.5 million
or $1.42 per diluted common share and Distributable Earnings(1) of
$66.0 million or $1.55 per diluted common share
Closed record $1.4 billion of new loan
commitments in 2021
- Subsequent to year ended December 31, 2021
-
Declared first quarter 2022 dividend of
$0.33 per common share and a supplemental dividend of $0.02 per
common share
Ares Commercial Real Estate Corporation (the “Company”)
(NYSE:ACRE), a specialty finance company engaged in originating and
investing in commercial real estate assets, reported generally
accepted accounting principles (“GAAP”) net income of $17.2 million
or $0.36 per diluted common share and Distributable Earnings(1) of
$19.4 million or $0.41 per diluted common share for the fourth
quarter of 2021. The Company reported GAAP net income of $60.5
million or $1.42 per diluted common share and Distributable
Earnings(1) of $66.0 million or $1.55 per diluted common share for
full year 2021.
“We generated strong earnings for both the fourth quarter and
full year driven by record originations of $1.4 billion while
maintaining stable credit quality and continuing to strengthen our
balance sheet,” said Bryan Donohoe, Chief Executive Officer of Ares
Commercial Real Estate Corporation. “Looking forward, the Company
continues to benefit from the advantages of the Ares real estate
platform. We are optimistic that 2022 will be another great year
for the Company and our shareholders.”
“To support the increase in our investment activity and enhance
our earnings throughout 2021, we raised accretive equity, scaled
our balance sheet and further reduced our cost of capital,” said
Tae-Sik Yoon, Chief Financial Officer of Ares Commercial Real
Estate Corporation. “During 2021, the Company fully covered its
regular and supplemental dividends through its Distributable
Earnings and the Company declared the same level of regular and
supplemental dividends for the first quarter.”
_________________________________
(1) Distributable Earnings is a non-GAAP financial measure.
Refer to Schedule I for the definition and reconciliation of
Distributable Earnings.
2022 ANNUAL STOCKHOLDERS MEETING
The Board of Directors set March 25, 2022 as the record date for
the Company’s 2022 Annual Meeting of Stockholders. The 2022 Annual
Meeting of Stockholders will be held on May 25, 2022.
COMMON STOCK DIVIDEND
On November 3, 2021, the Board of Directors of the Company
declared a regular cash dividend of $0.33 per common share and a
supplemental cash dividend of $0.02 per common share for the fourth
quarter of 2021. The fourth quarter 2021 dividend and supplemental
cash dividend were paid on January 19, 2022 to common stockholders
of record as of December 31, 2021.
On February 15, 2022, the Board of Directors of the Company
declared a regular cash dividend of $0.33 per common share and a
supplemental cash dividend of $0.02 per common share for the first
quarter of 2022. The first quarter 2022 dividend and supplemental
cash dividend will be payable on April 14, 2022 to common
stockholders of record as of March 31, 2022.
ADDITIONAL INFORMATION
The Company issued a presentation of its fourth quarter and full
year 2021 results, which can be viewed at www.arescre.com on the
Investor Resources section of our home page under Events and
Presentations. The presentation is titled “Fourth Quarter and Full
Year 2021 Earnings Presentation.” The Company also filed its Annual
Report on Form 10-K for the year ended December 31, 2021 with the
U.S. Securities and Exchange Commission on February 15, 2022.
CONFERENCE CALL AND WEBCAST INFORMATION
On Tuesday, February 15, 2022, the Company invites all
interested persons to attend its webcast/conference call at 12:00
p.m. (Eastern Time) to discuss its fourth quarter and full year
2021 financial results.
All interested parties are invited to participate via telephone
or the live webcast, which will be hosted on a webcast link located
on the Home page of the Investor Resources section of the Company’s
website at http://www.arescre.com. Please visit the website to test
your connection before the webcast. Domestic callers can access the
conference call by dialing +1 (888) 317-6003. International callers
can access the conference call by dialing +1 (412) 317-6061. All
callers will need to enter the Participant Elite Entry Number
1507058 followed by the # sign and reference “Ares Commercial Real
Estate Corporation” once connected with the operator. All callers
are asked to dial in 10-15 minutes prior to the call so that name
and company information can be collected. For interested parties,
an archived replay of the call will be available through March 1,
2022 at 5:00 p.m. (Eastern Time) to domestic callers by dialing +1
(877) 344-7529 and to international callers by dialing +1 (412)
317-0088. For all replays, please reference conference number
3956123. An archived replay will also be available through March 1,
2022 on a webcast link located on the Home page of the Investor
Resources section of the Company’s website.
ABOUT ARES COMMERCIAL REAL ESTATE CORPORATION
Ares Commercial Real Estate Corporation is a specialty finance
company primarily engaged in originating and investing in
commercial real estate loans and related investments. Through its
national direct origination platform, the Company provides a broad
offering of flexible and reliable financing solutions for
commercial real estate owners and operators. The Company originates
senior mortgage loans, as well as subordinate financings, mezzanine
debt and preferred equity, with an emphasis on providing value
added financing on a variety of properties located in liquid
markets across the United States. Ares Commercial Real Estate
Corporation elected and qualified to be taxed as a real estate
investment trust and is externally managed by a subsidiary of Ares
Management Corporation. For more information, please visit
www.arescre.com. The contents of such website are not, and should
not be deemed to be, incorporated by reference herein.
FORWARD-LOOKING STATEMENTS
Statements included herein or on the webcast / conference call
may constitute “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended, which relate to
future events or the Company’s future performance or financial
condition. These statements are not guarantees of future
performance, condition or results and involve a number of risks and
uncertainties. Actual results may differ materially from those in
the forward-looking statements as a result of a number of factors,
including the returns on current and future investments, rates of
repayments and prepayments on the Company’s mortgage loans,
availability of investment opportunities, the Company’s ability to
originate additional investments and completion of pending
investments, the availability of capital, the availability and cost
of financing, market trends and conditions in the Company’s
industry and the general economy, the level of lending and
borrowing spreads and interest rates, commercial real estate loan
volumes, the impact of the COVID-19 pandemic and the pandemic's
impact on the U.S. and global economy, the Company’s ability to pay
future dividends at historical levels or at all, and the risks
described from time to time in the Company’s filings with the
Securities and Exchange Commission (the “SEC”), including, but not
limited to, the risk factors described in Part I, Item 1A. Risk
Factors in the Company's Annual Report on Form 10-K, filed with the
SEC on February 15, 2022. Any forward-looking statement, including
any contained herein, speaks only as of the time of this press
release and Ares Commercial Real Estate Corporation undertakes no
duty to update any forward-looking statements made herein or on the
webcast/conference call. Projections and forward-looking statements
are based on management’s good faith and reasonable assumptions,
including the assumptions described herein.
ARES COMMERCIAL REAL ESTATE
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
As of December 31,
2021
2020
ASSETS
Cash and cash equivalents
$ 50,615
$ 74,776
Loans held for investment ($974,424 and
$550,590 related to consolidated VIEs, respectively)
2,414,383
1,815,219
Current expected credit loss reserve
(23,939)
(23,604)
Loans held for investment, net of current
expected credit loss reserve
2,390,444
1,791,615
Real estate owned held for sale, net
36,602
37,283
Other assets ($2,592 and $1,079 of
interest receivable related to consolidated VIEs, respectively;
$128,589 and $6,410 of other receivables related to consolidated
VIEs, respectively)
154,177
25,823
Total assets
$ 2,631,838
$ 1,929,497
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Secured funding agreements
$ 840,047
$ 755,552
Notes payable
50,358
61,837
Secured term loan
149,016
110,000
Collateralized loan obligation
securitization debt (consolidated VIEs)
861,188
443,871
Secured borrowings
22,589
59,790
Due to affiliate
4,156
3,150
Dividends payable
16,674
11,124
Other liabilities ($570 and $391 of
interest payable related to consolidated VIEs, respectively)
9,182
11,158
Total liabilities
1,953,210
1,456,482
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share,
450,000,000 shares authorized at December 31, 2021 and 2020 and
47,144,058 and 33,442,332 shares issued and outstanding at December
31, 2021 and 2020, respectively
465
329
Additional paid-in capital
703,950
497,803
Accumulated other comprehensive income
2,844
—
Accumulated earnings (deficit)
(28,631)
(25,117)
Total stockholders' equity
678,628
473,015
Total liabilities and stockholders'
equity
$ 2,631,838
$ 1,929,497
ARES COMMERCIAL REAL ESTATE
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
and per share data)
For the three months ended
December 31, 2021
For the year ended December
31, 2021
Revenue:
Interest income
$ 38,044
$ 133,631
Interest expense
(14,180)
(50,080)
Net interest margin
23,864
83,551
Revenue from real estate owned
6,247
18,518
Total revenue
30,111
102,069
Expenses:
Management and incentive fees to
affiliate
3,443
12,136
Professional fees
556
2,436
General and administrative expenses
1,271
4,741
General and administrative expenses
reimbursed to affiliate
703
3,016
Expenses from real estate owned
6,089
18,548
Total expenses
12,062
40,877
Provision for current expected credit
losses
765
10
Income before income taxes
17,284
61,182
Income tax expense, including excise
tax
130
722
Net income attributable to common
stockholders
$ 17,154
$ 60,460
Earnings per common share:
Basic earnings per common share
$ 0.36
$ 1.43
Diluted earnings per common share
$ 0.36
$ 1.42
Weighted average number of common
shares outstanding:
Basic weighted average shares of common
stock outstanding
47,026,252
42,399,613
Diluted weighted average shares of common
stock outstanding
47,312,873
42,681,505
Dividends declared per share of common
stock(1)
$ 0.35
$ 1.40
(1) There is no assurance dividends will continue at these
levels or at all.
SCHEDULE I
Reconciliation of Net Income to Non-GAAP
Distributable Earnings
Distributable Earnings is a non-GAAP financial measure that
helps the Company evaluate its financial performance excluding the
effects of certain transactions and GAAP adjustments that it
believes are not necessarily indicative of its current loan
origination portfolio and operations. To maintain the Company’s
REIT status, the Company is generally required to annually
distribute to its stockholders substantially all of its taxable
income. The Company believes the disclosure of Distributable
Earnings provides useful information to investors regarding the
Company's ability to pay dividends, which is one of the principal
reasons investors invest in the Company. The presentation of this
additional information is not meant to be considered in isolation
or as a substitute for financial results prepared in accordance
with GAAP. Distributable Earnings is defined as net income (loss)
computed in accordance with GAAP, excluding non-cash equity
compensation expense, the incentive fees the Company pays to its
Manager (Ares Commercial Real Estate Management LLC), depreciation
and amortization (to the extent that any of the Company’s target
investments are structured as debt and the Company forecloses on
any properties underlying such debt), any unrealized gains, losses
or other non-cash items recorded in net income (loss) for the
period, regardless of whether such items are included in other
comprehensive income or loss, or in net income (loss), one-time
events pursuant to changes in GAAP and certain non-cash charges
after discussions between the Company’s Manager and the Company’s
independent directors and after approval by a majority of the
Company’s independent directors. Loan balances that are deemed to
be uncollectible are written off as a realized loss and are
included in Distributable Earnings. Distributable Earnings is
aligned with the calculation of “Core Earnings,” which is defined
in the Management Agreement and is used to calculate the incentive
fees the Company pays to its Manager.
Reconciliation of net income attributable to common
stockholders, the most directly comparable GAAP financial measure,
to Distributable Earnings is set forth in the table below for the
three months and year ended December 31, 2021 ($ in thousands):
For the three months ended
December 31, 2021
For the year ended December
31, 2021
Net income attributable to common
stockholders
$ 17,154
$ 60,460
Stock-based compensation
494
1,940
Incentive fees to affiliate
830
2,752
Depreciation of real estate owned
151
825
Provision for current expected credit
losses
765
10
Distributable Earnings
$ 19,394
$ 65,987
Net income attributable to common
stockholders
$ 0.36
$ 1.43
Stock-based compensation
0.01
0.05
Incentive fees to affiliate
0.02
0.06
Depreciation of real estate owned
—
0.02
Provision for current expected credit
losses
0.02
—
Basic Distributable Earnings per common
share
$ 0.41
$ 1.56
Net income attributable to common
stockholders
$ 0.36
$ 1.42
Stock-based compensation
0.01
0.05
Incentive fees to affiliate
0.02
0.06
Depreciation of real estate owned
—
0.02
Provision for current expected credit
losses
0.02
—
Diluted Distributable Earnings per
common share
$ 0.41
$ 1.55
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220214005925/en/
INVESTOR RELATIONS
Ares Commercial Real Estate Corporation Carl Drake or Veronica
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