Second quarter GAAP net income of $9.8
million or $0.34 per diluted common share and Core Earnings(1) of
$11.0 million or $0.38 per diluted common share
- Subsequent to end of second quarter
-
Declared third quarter 2019 dividend of
$0.33 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 $9.8 million
or $0.34 per diluted common share and Core Earnings(1) of $11.0
million or $0.38 per diluted common share for the second quarter of
2019. In addition, the Company announced that its Board of
Directors declared a third quarter 2019 dividend of $0.33 per
common share payable on October 15, 2019 to common stockholders of
record as of September 30, 2019.
“We generated another strong quarter of results as we continue
to successfully execute on our annual business plan,” said Jamie
Henderson, Chief Executive Officer of ACRE. “We believe our growing
pipeline of high-quality loans will enable us to remain selective
and put us in a good position to redeploy our capital into
attractive investments for our shareholders.”
“We continue to enhance our earnings through efficient capital
deployment and by reducing the costs of our liabilities and
operating expenses,” said Tae-Sik Yoon, Chief Financial Officer of
ACRE. “During the second quarter, we successfully obtained $28.3
million in financing for our Westchester Marriott hotel, which
resulted in reducing our remaining equity capital in the investment
to just over $10 million.”
_________________________________ (1) Core Earnings is a
non-GAAP financial measure. Refer to Schedule I for further
details.
SECOND QUARTER 2019 DIVIDEND
On May 1, 2019, the Company declared a cash dividend of $0.33
per common share for the second quarter of 2019. The second quarter
2019 dividend was paid on July 16, 2019 to common stockholders of
record as of June 28, 2019.
ADDITIONAL INFORMATION
The Company issued a presentation of its second quarter 2019
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 “Second Quarter 2019 Earnings
Presentation.” The Company also filed its Quarterly Report on Form
10-Q for the quarter ended June 30, 2019 with the U.S. Securities
and Exchange Commission on July 26, 2019.
CONFERENCE CALL AND WEBCAST INFORMATION
On Friday, July 26, 2019, the Company invites all interested
persons to attend its webcast/conference call at 11:00 a.m.
(Eastern Time) to discuss its second quarter 2019 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 (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
6487844 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 August 9,
2019 at 5:00 p.m. (Eastern Time) to domestic callers by dialing
(877)-344-7529 and to international callers by dialing
+1(412)-317-0088. For all replays, please reference conference
number 10131890. An archived replay will also be available through
August 9, 2019 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 and the risks described from time to time in the Company’s
filings with the Securities and Exchange Commission. 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
June 30, 2019
December 31, 2018
(unaudited)
ASSETS
Cash and cash equivalents
$
5,215
$
11,089
Restricted cash
379
379
Loans held for investment ($434,187 and
$289,576 related to consolidated VIEs, respectively)
1,487,735
1,524,873
Real estate owned, net
36,891
—
Other assets ($1,413 and $843 of interest
receivable related to consolidated VIEs, respectively; $122,813 and
$51,582 of other receivables related to consolidated VIEs,
respectively)
141,227
66,983
Total assets
$
1,671,447
$
1,603,324
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Secured funding agreements
$
617,524
$
777,974
Notes payable
54,960
—
Secured term loan
108,735
108,345
Collateralized loan obligation
securitization debt (consolidated VIE)
442,715
270,737
Due to affiliate
3,163
3,163
Dividends payable
9,527
8,914
Other liabilities ($820 and $541 of
interest payable related to consolidated VIEs, respectively)
9,066
8,604
Total liabilities
1,245,690
1,177,737
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share,
450,000,000 shares authorized at June 30, 2019 and December 31,
2018 and 28,868,735 and 28,755,665 shares issued and outstanding at
June 30, 2019 and December 31, 2018, respectively
283
283
Additional paid-in capital
422,658
421,739
Accumulated earnings
2,816
3,565
Total stockholders' equity
425,757
425,587
Total liabilities and stockholders'
equity
$
1,671,447
$
1,603,324
ARES COMMERCIAL REAL ESTATE
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share
and per share data)
For the three months ended
June 30,
For the six months ended June
30,
2019
2018
2019
2018
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenue:
Interest income from loans held for
investment
$
29,993
$
29,604
$
57,979
$
57,040
Interest expense
(16,675
)
(15,968
)
(32,415
)
(30,267
)
Net interest margin
13,318
13,636
25,564
26,773
Revenue from real estate owned
8,357
—
10,267
—
Total revenue
21,675
13,636
35,831
26,773
Expenses:
Management and incentive fees to
affiliate
2,252
2,173
3,826
3,731
Professional fees
532
455
1,011
936
General and administrative expenses
1,029
789
2,148
1,563
General and administrative expenses
reimbursed to affiliate
771
830
1,430
1,754
Expenses from real estate owned
7,118
—
8,806
—
Total expenses
11,702
4,247
17,221
7,984
Income before income taxes
9,973
9,389
18,610
18,789
Income tax expense, including excise
tax
218
86
314
168
Net income attributable to common
stockholders
$
9,755
$
9,303
$
18,296
$
18,621
Earnings per common share:
Basic earnings per common share
$
0.34
$
0.33
$
0.64
$
0.65
Diluted earnings per common share
$
0.34
$
0.33
$
0.63
$
0.65
Weighted average number of common
shares outstanding:
Basic weighted average shares of common
stock outstanding
28,599,282
28,524,775
28,580,658
28,510,384
Diluted weighted average shares of common
stock outstanding
28,863,765
28,618,308
28,822,601
28,608,666
Dividends declared per share of common
stock
$
0.33
$
0.28
$
0.66
$
0.56
SCHEDULE I
Reconciliation of Net Income to Non-GAAP
Core Earnings
The Company believes the disclosure of Core Earnings provides
useful information to investors regarding the calculation of
incentive fees the Company pays to its manager, Ares Commercial
Real Estate Management LLC, and the Company’s financial
performance. Core Earnings is an adjusted non-GAAP 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. 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. Core Earnings is a non-GAAP measure and is defined as
net income (loss) computed in accordance with GAAP, excluding
non-cash equity compensation expense, the incentive fee,
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 external manager
and the Company’s independent directors and after approval by a
majority of the Company’s independent directors.
Reconciliation of net income attributable to common
stockholders, the most directly comparable GAAP financial measure,
to Core Earnings is set forth in the table below for the three and
twelve months ended June 30, 2019 ($ in thousands):
For the three months ended
June 30, 2019
For the twelve months ended
June 30, 2019
Net income attributable to common
stockholders
$
9,755
$
38,272
Stock-based compensation
427
1,572
Incentive fees to affiliate
674
1,215
Depreciation of real estate owned
188
242
Core Earnings
$
11,044
$
41,301
Basic Core Earnings per common share
$
0.39
$
1.45
Diluted Core Earnings per common share
$
0.38
$
1.44
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190726005074/en/
INVESTOR RELATIONS Ares Commercial Real Estate
Corporation Carl Drake or Veronica Mendiola Mayer (888) 818-5298
iracre@aresmgmt.com
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