Maryland | 001-35517 | 45-3148087 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
245 Park Avenue, 42nd Floor, New York, NY | 10167 | |
(Address of Principal Executive Offices) | (Zip Code) |
Emerging growth company x |
Exhibit Number | Description | |
99.1 | Press Release, dated August 3, 2017 |
ARES COMMERCIAL REAL ESTATE CORPORATION | ||
Date: August 3, 2017 | ||
By: | /s/ Tae-Sik Yoon | |
Name: | Tae-Sik Yoon | |
Title: | Chief Financial Officer and Treasurer |
Exhibit Number | Description | |
Press Release, dated August 3, 2017 |
• | For the three months ended June 30, 2017, net income was $6.7 million or $0.24 per diluted common share. |
• | For the three months ended June 30, 2017, new originations were $320.8 million in commitments and $282.3 million in outstanding principal and an additional $6.1 million of fundings on existing commitments. For the three months ended June 30, 2017, loan repayments totaled $16.7 million in outstanding principal. |
• | In May 2017, the Company amended the master repurchase funding facility with Wells Fargo Bank, National Association (the “Wells Fargo Facility”) to increase the facility’s commitment amount from $325.0 million to $500.0 million and extend the initial maturity date to December 14, 2018. The initial maturity date of the Wells Fargo Facility is 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 Wells Fargo Facility to December 14, 2020. |
• | In May 2017, the Company amended the Bridge Loan Warehousing Credit and Security Agreement with Bank of America, N.A. (the “BAML Facility”), which has a commitment amount of $125.0 million, to extend the period during which the Company may request individual loans under the facility to May 24, 2018. Individual advances under the BAML Facility generally have a two-year maturity, subject to one 12-month extension at the Company’s option upon the satisfaction of certain conditions and applicable extension fees being paid. In addition, the final maturity date of individual loans under the BAML Facility was extended to May 25, 2021. |
• | In June 2017, the Company amended the master repurchase and securities contract with U.S. Bank National Association (the “U.S. Bank Facility”) to increase the facility’s commitment amount from $125.0 million to $186.0 million and extend the initial maturity date to July 31, 2020. The initial maturity date of the U.S. Bank Facility is 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 U.S. Bank Facility to July 31, 2022. |
As of June 30, 2017 | |||||||||||||||
Carrying Amount (1) | Outstanding Principal (1) | Weighted Average Minimum Loan Borrowing Spread (2) | Weighted Average Unleveraged Effective Yield (3) | Weighted Average Remaining Life (Years) | |||||||||||
Senior mortgage loans | $ | 1,529.1 | $ | 1,538.4 | 4.8 | % | 6.0 | % | 1.9 | ||||||
Subordinated debt and preferred equity investments | 112.3 | 113.4 | 10.7 | % | 11.8 | % | 3.2 | ||||||||
Total loans held for investment portfolio | $ | 1,641.4 | $ | 1,651.8 | 5.2 | % | 6.4 | % | 2.0 |
(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) | Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate. |
(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, premium or discount) 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 June 30, 2017 as weighted by the Outstanding Principal balance of each loan. |
PROPERTY TYPE | |||||
Outstanding Principal | % of Portfolio | ||||
Office | $ | 526.2 | 32% | ||
Multifamily | 465.1 | 27% | |||
Self Storage | 192.8 | 12% | |||
Retail | 133.6 | 8% | |||
Hotel | 128.5 | 8% | |||
Student Housing | 65.9 | 4% | |||
Mixed-use | 65.6 | 4% | |||
Healthcare | 41.6 | 3% | |||
Industrial | 32.5 | 2% | |||
Total | $ | 1,651.8 | 100% |
GEOGRAPHIC MIX | |||||
Outstanding Principal | % of Portfolio | ||||
Mid-Atlantic/Northeast | $ | 347.5 | 21% | ||
Southwest | 341.9 | 21% | |||
West | 334.5 | 20% | |||
Midwest | 317.5 | 19% | |||
Southeast | 310.4 | 19% | |||
Total | $ | 1,651.8 | 100% |
As of | |||||||
June 30, 2017 | December 31, 2016 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents ($8 related to consolidated VIEs as of December 31, 2016) | $ | 5,723 | $ | 47,270 | |||
Restricted cash | 379 | 375 | |||||
Loans held for investment ($341,158 and $21,514 related to consolidated VIEs, respectively) | 1,641,435 | 1,313,937 | |||||
Other assets ($857 and $203 of interest receivable related to consolidated VIEs, respectively) | 15,033 | 12,121 | |||||
Total assets | $ | 1,662,570 | $ | 1,373,703 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES | |||||||
Secured funding agreements | $ | 809,737 | $ | 780,713 | |||
Secured term loan | 151,112 | 149,878 | |||||
Collateralized loan obligation securitization debt (consolidated VIE) | 270,759 | — | |||||
Due to affiliate | 2,625 | 2,699 | |||||
Dividends payable | 7,718 | 7,406 | |||||
Other liabilities ($352 of interest payable related to consolidated VIEs as of June 30, 2017) | 3,637 | 3,334 | |||||
Total liabilities | 1,245,588 | 944,030 | |||||
EQUITY | |||||||
Common stock, par value $0.01 per share, 450,000,000 shares authorized at June 30, 2017 and December 31, 2016, and 28,582,690 and 28,482,756 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively | 283 | 283 | |||||
Additional paid-in capital | 420,251 | 420,056 | |||||
Accumulated deficit | (3,552 | ) | (1,310 | ) | |||
Total stockholders' equity | 416,982 | 419,029 | |||||
Non-controlling interests in consolidated VIEs | — | 10,644 | |||||
Total equity | 416,982 | 429,673 | |||||
Total liabilities and equity | $ | 1,662,570 | $ | 1,373,703 |
For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Net interest margin: | |||||||||||||||
Interest income from loans held for investment | $ | 22,643 | $ | 18,929 | $ | 43,770 | $ | 37,679 | |||||||
Interest expense | (12,232 | ) | (8,415 | ) | (23,020 | ) | (16,940 | ) | |||||||
Net interest margin | 10,411 | 10,514 | 20,750 | 20,739 | |||||||||||
Expenses: | |||||||||||||||
Management and incentive fees to affiliate | 1,654 | 1,338 | 3,466 | 2,690 | |||||||||||
Professional fees | 428 | 535 | 819 | 1,025 | |||||||||||
General and administrative expenses | 640 | 686 | 1,282 | 1,409 | |||||||||||
General and administrative expenses reimbursed to affiliate | 949 | 660 | 1,897 | 1,557 | |||||||||||
Total expenses | 3,671 | 3,219 | 7,464 | 6,681 | |||||||||||
Income from continuing operations before income taxes | 6,740 | 7,295 | 13,286 | 14,058 | |||||||||||
Income tax expense, including excise tax | 27 | 3 | 95 | 7 | |||||||||||
Net income from continuing operations | 6,713 | 7,292 | 13,191 | 14,051 | |||||||||||
Net income from operations of discontinued operations, net of income taxes | — | 2,689 | — | 2,355 | |||||||||||
Net income attributable to ACRE | 6,713 | 9,981 | 13,191 | 16,406 | |||||||||||
Less: Net income attributable to non-controlling interests | — | (1,288 | ) | (25 | ) | (2,577 | ) | ||||||||
Net income attributable to common stockholders | $ | 6,713 | $ | 8,693 | $ | 13,166 | $ | 13,829 | |||||||
Basic earnings per common share: | |||||||||||||||
Continuing operations | $ | 0.24 | $ | 0.21 | $ | 0.46 | $ | 0.40 | |||||||
Discontinued operations | — | 0.09 | — | 0.08 | |||||||||||
Net income | $ | 0.24 | $ | 0.31 | $ | 0.46 | $ | 0.49 | |||||||
Diluted earnings per common share: | |||||||||||||||
Continuing operations | $ | 0.24 | $ | 0.21 | $ | 0.46 | $ | 0.40 | |||||||
Discontinued operations | — | 0.09 | — | 0.08 | |||||||||||
Net income | $ | 0.24 | $ | 0.31 | $ | 0.46 | $ | 0.48 | |||||||
Weighted average number of common shares outstanding: | |||||||||||||||
Basic weighted average shares of common stock outstanding | 28,475,853 | 28,428,703 | 28,472,356 | 28,479,015 | |||||||||||
Diluted weighted average shares of common stock outstanding | 28,546,624 | 28,495,833 | 28,514,867 | 28,548,944 | |||||||||||
Dividends declared per share of common stock | $ | 0.27 | $ | 0.26 | $ | 0.54 | $ | 0.52 |
For the three months ended | For the twelve months ended | ||||||
June 30, 2017 | |||||||
Amount | Amount | ||||||
Net income attributable to common stockholders | $ | 6,713 | $ | 39,673 | |||
Stock-based compensation(1) | 97 | 238 | |||||
Adjustments relating to ACRE activities: | |||||||
Incentive fees to affiliate | 113 | 729 | |||||
Adjustments relating to ACRE Capital LLC activities: | |||||||
Change in fair value of mortgage servicing rights | — | 2,562 | |||||
Deferred income tax expense | — | 1,367 | |||||
Provision for loss sharing | — | 143 | |||||
Originated mortgage servicing rights | — | (6,154 | ) | ||||
Core Earnings | $ | 6,923 | $ | 38,558 |
(1) | Includes both ACRE and ACRE Capital LLC stock-based compensation. |
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