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 o |
Exhibit Number | Description | |
Press Release, dated February 21, 2019 |
ARES COMMERCIAL REAL ESTATE CORPORATION | ||
Date: February 21, 2019 | By: | /s/ Tae-Sik Yoon |
Name: | Tae-Sik Yoon | |
Title: | Chief Financial Officer and Treasurer |
• | For the three months ended December 31, 2018, GAAP net income was $10.0 million or $0.35 per diluted common share and Core Earnings(1) were $10.9 million or $0.38 per diluted common share. |
• | For the three months ended December 31, 2018, new originations were $181.6 million in commitments and $161.0 million in outstanding principal funded at the origination date and an additional $15.8 million of fundings on existing commitments. |
• | For the three months ended December 31, 2018, the Company exited $310.4 million of loans held for investment as measured by outstanding principal. |
• | In December 2018, the Company amended the master repurchase facility with Citibank, N.A. (the “Citibank Facility”) to increase the facility’s commitment amount from $250.0 million to $325.0 million and extend the initial maturity date to December 13, 2021. The initial maturity date of the Citibank Facility is subject to two 12-month extensions, each of which may be exercised at the Company’s option assuming no existing defaults under the Citibank Facility and applicable extension fees being paid, which, if both were exercised, would extend the maturity date of the Citibank Facility to December 13, 2023. In addition, in December 2018, the Company amended the Citibank Facility to decrease the interest rate on advances from a per annum rate equal to the sum of one-month LIBOR plus an indicative pricing margin range of 2.25% to 2.50%, subject to certain exceptions, to a per annum rate equal to the sum of one-month LIBOR plus an indicative pricing margin range of 1.50% to 2.25%, subject to certain exceptions. |
• | In December 2018, the Company amended the master repurchase funding facility with Wells Fargo Bank, National Association (the “Wells Fargo Facility”) to extend the initial maturity date to December 14, 2020. The initial maturity date of the Wells Fargo Facility is subject to three 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 all three were exercised, would extend the maturity date of the Wells Fargo Facility to December 14, 2023. In addition, in December 2018, the Company amended the Wells Fargo Facility to decrease the interest rate on advances from a per annum rate equal to the sum of one-month LIBOR plus a pricing margin range of 1.75% to 2.35% to a per annum rate equal to the sum of one-month LIBOR plus a pricing margin range of 1.50% to 2.25%. |
• | For full-year 2018, GAAP net income was $38.6 million or $1.35 per diluted common share and Core Earnings(1) were $40.8 million or $1.43 per diluted common share. |
• | For full-year 2018, new originations were $608.6 million in commitments and $510.5 million in outstanding principal funded at the origination date and an additional $33.7 million of fundings on existing commitments. |
• | For full-year 2018, the Company exited $746.8 million of loans held for investment as measured by outstanding principal. |
As of December 31, 2018 | |||||||||||||||
Carrying Amount (2) | Outstanding Principal (2) | Weighted Average Minimum Loan Borrowing Spread (3) | Weighted Average Unleveraged Effective Yield (4) | Weighted Average Remaining Life (Years) | |||||||||||
Senior mortgage loans | $ | 1,489.7 | $ | 1,498.5 | 5.2 | % | 7.0 | % | 1.7 | ||||||
Subordinated debt and preferred equity investments | 35.2 | 36.2 | 12.7 | % | 14.9 | % | 4.3 | ||||||||
Total loans held for investment portfolio | $ | 1,524.9 | $ | 1,534.7 | 5.4 | % | 7.1 | % | 1.8 |
(1) | Core Earnings is a non-GAAP financial measure. Refer to Schedule I for further details. |
(2) | 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. |
(3) | 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. |
(4) | 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, premiums or discounts) 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 December 31, 2018 as weighted by the outstanding principal balance of each loan. |
PROPERTY TYPE | ||||||
Outstanding Principal | % of Portfolio | |||||
Multifamily | $ | 511.1 | 33 | % | ||
Office | 411.1 | 27 | % | |||
Hotel | 298.9 | 20 | % | |||
Student Housing | 169.5 | 11 | % | |||
Industrial | 52.0 | 3 | % | |||
Mixed-use | 50.0 | 3 | % | |||
Residential/Condominium | 42.1 | 3 | % | |||
Total | $ | 1,534.7 | 100 | % |
GEOGRAPHIC MIX | ||||||
Outstanding Principal | % of Portfolio | |||||
West | $ | 382.5 | 25 | % | ||
Midwest | 370.2 | 24 | % | |||
Southeast | 363.7 | 24 | % | |||
Southwest | 218.3 | 14 | % | |||
Mid-Atlantic/Northeast | 200.0 | 13 | % | |||
Total | $ | 1,534.7 | 100 | % |
As of December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 11,089 | $ | 28,343 | |||
Restricted cash | 379 | 379 | |||||
Loans held for investment ($289,576 and $341,158 related to consolidated VIEs, respectively) | 1,524,873 | 1,726,283 | |||||
Other assets ($843 and $945 of interest receivable related to consolidated VIEs, respectively; $51,582 of other receivables related to consolidated VIEs as of December 31, 2018) | 66,983 | 15,214 | |||||
Total assets | $ | 1,603,324 | $ | 1,770,219 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
LIABILITIES | |||||||
Secured funding agreements | $ | 777,974 | $ | 957,960 | |||
Secured term loan | 108,345 | 107,595 | |||||
Collateralized loan obligation securitization debt (consolidated VIE) | 270,737 | 271,211 | |||||
Due to affiliate | 3,163 | 2,628 | |||||
Dividends payable | 8,914 | 7,722 | |||||
Other liabilities ($541 and $414 of interest payable related to consolidated VIEs, respectively) | 8,604 | 3,933 | |||||
Total liabilities | 1,177,737 | 1,351,049 | |||||
STOCKHOLDERS' EQUITY | |||||||
Common stock, par value $0.01 per share, 450,000,000 shares authorized at December 31, 2018 and 2017, and 28,755,665 and 28,598,916 shares issued and outstanding at December 31, 2018 and 2017, respectively | 283 | 283 | |||||
Additional paid-in capital | 421,739 | 420,637 | |||||
Accumulated earnings (deficit) | 3,565 | (1,750 | ) | ||||
Total stockholders' equity | 425,587 | 419,170 | |||||
Total liabilities and stockholders' equity | $ | 1,603,324 | $ | 1,770,219 |
For the three months ended December 31, 2018 | For the year ended December 31, 2018 | ||||||
Net interest margin: | |||||||
Interest income from loans held for investment | $ | 30,882 | $ | 118,284 | |||
Interest expense | (16,357 | ) | (63,002 | ) | |||
Net interest margin | 14,525 | 55,282 | |||||
Expenses: | |||||||
Management and incentive fees to affiliate | 2,116 | 7,418 | |||||
Professional fees | 510 | 1,945 | |||||
General and administrative expenses | 892 | 3,307 | |||||
General and administrative expenses reimbursed to affiliate | 946 | 3,570 | |||||
Total expenses | 4,464 | 16,240 | |||||
Income before income taxes | 10,061 | 39,042 | |||||
Income tax expense, including excise tax | 43 | 446 | |||||
Net income attributable to common stockholders | $ | 10,018 | $ | 38,596 | |||
Earnings per common share: | |||||||
Basic and diluted earnings per common share | $ | 0.35 | $ | 1.35 | |||
Weighted average number of common shares outstanding: | |||||||
Basic weighted average shares of common stock outstanding | 28,553,540 | 28,529,439 | |||||
Diluted weighted average shares of common stock outstanding | 28,709,145 | 28,656,660 | |||||
Dividends declared per share of common stock | $ | 0.31 | $ | 1.16 |
For the three months ended December 31, 2018 | For the year ended December 31, 2018 | ||||||
Net income attributable to common stockholders | $ | 10,018 | $ | 38,596 | |||
Stock-based compensation | 324 | 1,102 | |||||
Incentive fees to affiliate | 540 | 1,150 | |||||
Core Earnings | $ | 10,882 | $ | 40,848 |
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