Confirms
$0.33 per Share First Quarter 2020 Cash Dividend Payable on April
15, 2020
Loan
Portfolio Comprised of 95% Senior Loans Primarily in Multifamily,
Office and Industrial Properties
Diverse
Funding Sources with No Spread-Based Margin Calls
Hotel Loans
Financed Across Multiple Credit Facilities with Diverse
Collateral
Ares Commercial Real Estate Corporation (“ACRE” or the
“Company”) (NYSE:ACRE) issued a letter today to stakeholders.
Dear Fellow Stakeholders,
On behalf of the ACRE leadership team, we hope this letter finds
you, your families and your colleagues healthy and safe during
these challenging times. Following the outbreak of COVID-19 and its
impact on our economy and our business, we want to assure our
stakeholders that our manager’s highly experienced senior team and
dedicated employees are fully operational during the ongoing
disruption. Over the past few weeks, we have been in constant and
constructive dialogue with our borrowers and our financing
partners. While it is too early to quantify the potential impacts
of COVID-19 on ACRE, we want to assure you that the management team
is intensely focused on protecting stakeholder value.
We have historically managed our liquidity through a combination
of cash, equity offerings (including our most recent equity raise
of $73 million in net proceeds in January 2020) and access to a
diverse number of credit facilities with numerous major money
center financial institutions. Our external manager, a subsidiary
of Ares Management Corporation (“Ares”), has significant and
longstanding relationships with each of our financing partners that
we believe are beneficial to ACRE. In addition, none of our
financing facilities allow margin calls to be made based upon
changes in market borrowing spreads and ACRE continues to
match-fund its assets and liabilities, where our liabilities have
maturities that are equal to or beyond the term of our assets.
As of March 31, 2020, our portfolio is 95% in senior loans and
includes 53 loans collateralized by diverse property segments. The
majority of our portfolio is collateralized by multifamily, office
and industrial properties. Our hotel exposure is limited to six
senior loans secured by nationally branded properties or portfolios
of properties totaling approximately $268 million, or approximately
14% of our total loan portfolio based on outstanding principal
balance. (1)Consistent with our established practice of
diversifying our credit sources, we have strategically financed our
senior hotel loans across multiple facilities. For example, three
of these senior hotel loans are financed within our FL-3
securitization, which has no “mark-to-market” limitations. The
remaining three senior hotel loans are each individually financed
with three separate credit facility providers where the majority of
the collateral loans securing each of these three credit facilities
are backed by non-hotel assets. In addition, we have no loans
collateralized by retail shopping centers and we do not own any
residential or commercial mortgage-backed securities.
On February 20, 2020, our Board of Directors declared a first
quarter dividend of $0.33 per share payable on April 15, 2020, to
stockholders of record as of March 31, 2020, and we confirm that we
will pay this dividend in cash on the scheduled date.
ACRE is managed by a highly experienced senior management team
and dedicated employees from Ares, a leading global alternative
investment manager with $149 billion in assets under management as
of December 31, 2019. Ares has successfully operated through
difficult cycles before and maintains a strong long-term track
record of growth. We continue to believe that ACRE’s ability to
navigate through this situation is meaningfully enhanced by the
resources, relationships, access to capital and experience of the
broader Ares platform.
As fellow stakeholders of ACRE, please rest assured that the
management team is dedicated to protecting stakeholder value during
this unprecedented time. As you may know, select members of our
Board and our executive team have recently purchased shares in
ACRE. We will remain in contact to update you on our business
through our regulatory filings, earnings press releases and
quarterly conference calls. On behalf of the management team and
our Board, we greatly appreciate your support.
Sincerely,
Bryan Donohoe
Chief Executive Officer
Tae-Sik Yoon Chief Financial Officer
________________________________________________________________________
Note: All data as of March 31, 2020, unless otherwise noted.
- ACRE also owns the Westchester Marriott Hotel located in
Tarrytown, NY, which is subject to an approximate $28 million
non-recourse loan from a third-party lender.
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 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
a guarantee 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, imposition of margin calls or
valuation adjustment events in connection with such financings,
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
COVID-19 and significant market volatility on our business, our
borrowers, our industry and the global economy, our 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. 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. Projections and forward-looking statements are based on
management’s good faith and reasonable assumptions, including the
assumptions described herein.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200407005145/en/
Investor Relations: Ares Commercial Real Estate
Corporation Carl Drake or Veronica Mayer (888)-818-5298
iracre@aresmgmt.com Media Relations: Mendel Communications
Bill Mendel 212-397-1030 bill@mendelcommunications.com
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