Analysis:

Performance Analysis:

Ares Commercial Real Estate Corp is a Maryland-based corporation that primarily originates and invests in commercial real estate loans and related investments for its own account. The company is managed by ACREM, a subsidiary of Ares Management. During the first quarter of 2023, the company closed the sale of the senior mortgage loan collateralized by a residential property in California that was in maturity default. ACRE recognized a realized loss of $5.6 million as the carrying value, not including the current expected credit losses (“CECL”) reserve, exceeded the sale price of the loan. In the same quarter, the company entered into a sale agreement with a third party to sell a senior mortgage loan with outstanding principal of $27.4 million, which is collateralized by an office property located in Illinois and is in maturity default. As of March 31, 2023, the sale had not yet closed, and the loan was reclassified from held for investment to held for sale and carried at fair value.

The company also operates its business in a manner that is intended to permit it to maintain its exemption from registration under the 1940 Act. Moreover, global markets continued to see volatility during the first quarter of 2023, fueled by continued high inflation and interest rates and geopolitical uncertainty. As a result, the Federal Reserve may continue to raise interest rates, which has continued to result in uncertainty for the economy and for the company's borrowers. In addition, during the first quarter of 2023, several financial institutions in the U.S. and abroad, sustained liquidity problems resulting in volatility in the financial markets and concerns with respect to market-wide liquidity problems.

Forward-Looking Analysis:

The performance of Ares Commercial Real Estate Corp is primarily shaped by the level of its net interest income, the market value of its assets, and the supply of, and demand for, commercial mortgage loans, CRE debt, and other financial assets in the marketplace. The company's net interest income is recognized based on the contractual rate and the outstanding principal balance of the loans it originates. Interest rates will vary according to the type of investment, conditions in the financial markets, creditworthiness of borrowers, competition, and other factors that cannot be predicted with any certainty. The company's operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by borrowers.

Moreover, the company's loans held for investment are accounted for at amortized cost, and as of March 31, 2023, all loans held for investment were paying in accordance with their contractual terms. Given the uncertainties surrounding inflation, rising interest rates, and market-wide liquidity problems, it is essential for the company to maintain an adequate level of liquidity and capital. The company should also focus on originating diversified loans with a reasonable risk profile and keeping a watchful eye on the creditworthiness of its borrowers.

In addition, the company could consider investing in alternative asset classes that provide attractive risk-adjusted returns, including equity investments in real estate assets, corporate debt securities, and private structured debt transactions. Furthermore, the company could assess opportunities to expand its geographical footprint beyond the United States and invest in diversified real estate assets across international markets to mitigate geopolitical risks and diversify its revenue streams.

According to the CEO of Ares Commercial Real Estate Corp, "Despite the macroeconomic headwinds, we remain well-positioned to capitalize on market opportunities given our diverse originations capabilities and ability to move up the capital structure." As the economy continues to navigate through challenging times, the company remains optimistic about the long-term prospects of its business model and its ability to navigate changing market conditions.

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Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Ares Commercial Real Estate Corp

Ares Commercial RE: Q1 loss on CA prop sale, senior mortgage loan still held for sale in IL

Ares Commercial Real Estate Corporation (ACRE) reported strong financial performance for the first quarter of 2023, posting a net income of $14.0 million or $0.27 per diluted common share. Additionally, even with the impact of a realized loss, the company's distributable earnings stood at $13.3 million, or $0.25 per common share. 

ACRE's strong financial position, deep credit capabilities and broad resources of Ares Management are expected to support it through current industry challenges, while also enabling it to capitalize on market opportunities from bank retrenchment. With a non-spread based mark to market financing and net debt-to-equity ratio below 2, ACRE plans to maximize credit outcomes on its higher risk-rated assets, and invest in new opportunistic ventures with attractive risk-adjusted returns.

Furthermore, ACRE has paid out quarterly dividends of $0.02 per common share and supplemental cash dividends for the first quarter of 2023 to its stockholders. The company believes its strong balance sheet positions it to continue generating attractive dividends for its shareholders.

Investors can view a presentation of ACRE's first quarter 2023 results on its website, https://www.arescre.com/, and access the Quarterly Report on Form 10-Q for the same period filed with the U.S. Securities and Exchange Commission for detailed information. 

However, the COVID-19 pandemic remains a key risk factor for ACRE and may continue to impact the U.S. commercial real estate market in the near future. Therefore, it is recommended that investors review all of the risks and uncertainties involved before investing in ACRE.

Form 8-K - Current report - Item 2.02 Item 7.01 Item 9.01

$ACRE reports strong first quarter earnings and plans to capitalize on market opportunities.

Announcement: ACRE 8-K Special Filing

Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405]

Ares Commercial Real Estate Corp Beats Expectations on Q1 Growth ##:
Strong loan origination and refinancing activities see ACRE adding nine loans totalling $181.4m to its portfolio in Q1.

Current Analysis##:
Ares Commercial Real Estate Corp saw a gain of $12.7m in Q1 2022. The company surpassed investor expectations following a strong loan origination and refinancing period including nine loans worth a total value of $181.4m. CRE debt originates rose to a value of $470m with the company restructuring its Citibank Facility, extending maturity date and funding availability period to January 2025.  ACRE also terminated its interest rate cap derivative recording a $2m gain under FASB ASC Topic 815, Derivatives and Hedging. 

Forward-Looking Analysis##:
Ares Commercial Real Estate Corp's forward-looking approach is focused on continuing to diversify its CRE debt portfolio while sustainably managing its financial position. The company intends to allocate funds towards further loan origination and refinancing, with a focus on owning select equity investments in certain assets. ACRE is optimistic that the global economic recovery will continue and that it is well-positioned to capitalise on the trend. With no defaults under its Citibank facility to date, the company's portfolio is expected to remain stable with a continued low default rate despite economic volatility.

Announcement: ACRE 10-K Annual Report

Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend]

Ares Commercial RE: Q1 loss on CA prop sale, senior mortgage loan still held for sale in IL

Ares Commercial RE: Q1 loss on CA prop sale, senior mortgage loan still held for sale in IL

$ACRE reports strong first quarter earnings and plans to capitalize on market opportunities.

$ACRE reports strong first quarter earnings and plans to capitalize on market opportunities.

Announcement: ACRE 8-K Special Filing

Announcement: ACRE 8-K Special Filing

Announcement: ACRE 10-K Annual Report

Announcement: ACRE 10-K Annual Report

Announcement: ACRE SC 13G/A Statement of acquisition of beneficial ownership by individuals - amendment

Announcement: ACRE SC 13G/A Statement of acquisition of beneficial ownership by individuals - amendment

Announcement: ACRE 10-Q Quarterly Report

Announcement: ACRE 10-Q Quarterly Report