Third quarter GAAP net income of $9.0
million or $0.31 per diluted common share and Core Earnings(1) of
$9.7 million or $0.34 per diluted common share
- Subsequent to end of third quarter
-
Declared fourth quarter 2019 dividend of
$0.33 per common share
Announced change in leadership effective
December 5, 2019
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 $9.0 million
or $0.31 per diluted common share and Core Earnings(1) of $9.7
million or $0.34 per diluted common share for the third quarter of
2019. In addition, the Company announced that its Board of
Directors declared a fourth quarter 2019 dividend of $0.33 per
common share payable on January 15, 2020 to common stockholders of
record as of December 30, 2019.
Additionally, the Company announced that the Board of Directors
has appointed Bryan Donohoe as Chief Executive Officer, effective
December 5, 2019. Mr. Donohoe will join ACRE’s senior management
team alongside its President, David Roth, Chief Financial Officer,
Tae-Sik Yoon, and Head of Originations, John Gerber. Jamie
Henderson will be stepping down as Chief Executive Officer and
Chief Investment Officer on December 5, 2019 and will continue as a
Director of the Board of ACRE.
“We generated another quarter of strong earnings driven by
healthy new investment activity and our well positioned balance
sheet,” said Jamie Henderson, Chief Executive Officer and Chief
Investment Officer of ACRE.
“Based on the timing of our investment activity early in the
fourth quarter and the positioning of our balance sheet to benefit
from declining interest rates and other attributes of our company,
we currently expect our fourth quarter earnings to exceed that of
the third quarter and we remain confident that we will more than
cover our annual dividend from Core Earnings for the fourth
consecutive year,” said Tae-Sik Yoon, Chief Financial Officer of
ACRE.
_________________________________ (1) Core Earnings is a
non-GAAP financial measure. Refer to Schedule I for further
details.
COMMON STOCK DIVIDEND
On November 8, 2019, the Company declared a cash dividend of
$0.33 per common share for the fourth quarter of 2019. The third
quarter 2019 dividend was paid on October 15, 2019 to common
stockholders of record as of September 30, 2019.
ADDITIONAL INFORMATION
The Company issued a presentation of its third 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 “Third Quarter 2019 Earnings Presentation.” The Company
also filed its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2019 with the U.S. Securities and Exchange Commission
on November 8, 2019.
CONFERENCE CALL AND WEBCAST INFORMATION
On Friday, November 8, 2019, the Company invites all interested
persons to attend its webcast/conference call at 9:00 a.m. (Eastern
Time) to discuss its third 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 +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
3706251 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 November
22, 2019 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
10134445. An archived replay will also be available through
November 22, 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
September 30, 2019
December 31, 2018
(unaudited)
ASSETS
Cash and cash equivalents
$
5,952
$
11,089
Restricted cash
379
379
Loans held for investment ($521,489 and
$289,576 related to consolidated VIEs, respectively)
1,538,393
1,524,873
Real estate owned, net
38,020
—
Other assets ($1,269 and $843 of interest
receivable related to consolidated VIEs, respectively; $35,511 and
$51,582 of other receivables related to consolidated VIEs,
respectively)
91,953
66,983
Total assets
$
1,674,697
$
1,603,324
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Secured funding agreements
$
620,030
$
777,974
Notes payable
55,014
—
Secured term loan
108,940
108,345
Collateralized loan obligation
securitization debt (consolidated VIE)
442,916
270,737
Due to affiliate
2,627
3,163
Dividends payable
9,526
8,914
Other liabilities ($753 and $541 of
interest payable related to consolidated VIEs, respectively)
9,900
8,604
Total liabilities
1,248,953
1,177,737
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share,
450,000,000 shares authorized at September 30, 2019 and December
31, 2018 and 28,865,610 and 28,755,665 shares issued and
outstanding at September 30, 2019 and December 31, 2018,
respectively
283
283
Additional paid-in capital
423,137
421,739
Accumulated earnings
2,324
3,565
Total stockholders' equity
425,744
425,587
Total liabilities and stockholders'
equity
$
1,674,697
$
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
September 30,
For the nine months ended
September 30,
2019
2018
2019
2018
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenue:
Interest income from loans held for
investment
$
28,269
$
30,362
$
86,248
$
87,401
Interest expense
(15,124
)
(16,378
)
(47,539
)
(46,645
)
Net interest margin
13,145
13,984
38,709
40,756
Revenue from real estate owned
6,702
—
16,970
—
Total revenue
19,847
13,984
55,679
40,756
Expenses:
Management and incentive fees to
affiliate
1,578
1,571
5,405
5,302
Professional fees
542
498
1,553
1,435
General and administrative expenses
1,005
852
3,153
2,415
General and administrative expenses
reimbursed to affiliate
831
870
2,261
2,624
Expenses from real estate owned
6,838
—
15,644
—
Total expenses
10,794
3,791
28,016
11,776
Income before income taxes
9,053
10,193
27,663
28,980
Income tax expense, including excise
tax
19
236
332
403
Net income attributable to common
stockholders
$
9,034
$
9,957
$
27,331
$
28,577
Earnings per common share:
Basic earnings per common share
$
0.32
$
0.35
$
0.96
$
1.00
Diluted earnings per common share
$
0.31
$
0.35
$
0.95
$
1.00
Weighted average number of common
shares outstanding:
Basic weighted average shares of common
stock outstanding
28,634,514
28,542,828
28,598,807
28,521,317
Diluted weighted average shares of common
stock outstanding
28,867,603
28,698,600
28,837,766
28,638,973
Dividends declared per share of common
stock
$
0.33
$
0.29
$
0.99
$
0.85
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 September 30, 2019 ($ in thousands):
For the three months ended
September 30, 2019
For the twelve months ended
September 30, 2019
Net income attributable to common
stockholders
$
9,034
$
37,350
Stock-based compensation
479
1,721
Incentive fees to affiliate
—
1,215
Depreciation of real estate owned
207
448
Core Earnings
$
9,720
$
40,734
Basic Core Earnings per common share
$
0.34
$
1.42
Diluted Core Earnings per common share
$
0.34
$
1.41
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191108005108/en/
INVESTOR RELATIONS Ares Commercial Real Estate
Corporation Carl Drake or Veronica Mendiola Mayer (888) 818-5298
iracre@aresmgmt.com
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