Ares Commercial Real Estate Corporation Reports Third Quarter 2020 Results
Oct 29, 2020 6:00 AM
Third quarter GAAP net income of
“This morning, we announced another quarter of consistent earnings with continued stable credit performance and liquidity position,” said
“Our continued strategic focus on defensive, senior loans in growing, non-gateway markets continues to produce attractive results as 100% of our loans made their contractual debt service payments for the third quarter and October payment dates,” said
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(1) Core Earnings is a non-GAAP financial measure. Refer to Schedule I for further details.
COMMON STOCK DIVIDEND
On
ADDITIONAL INFORMATION
The Company issued a presentation of its third quarter 2020 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 2020 Earnings Presentation.” The Company also filed its Quarterly Report on Form 10-Q for the quarter ended
CONFERENCE CALL AND WEBCAST INFORMATION
On
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 2414923 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
ABOUT
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, the impact of the COVID-19 pandemic and the pandemic's impact on the
ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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(in thousands, except share and per share data) |
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As of |
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(unaudited) |
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ASSETS |
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Cash and cash equivalents |
$ |
81,295 |
|
|
$ |
5,256 |
|
|
Restricted cash |
— |
|
|
379 |
|
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Loans held for investment ( |
1,778,199 |
|
|
1,682,498 |
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Current expected credit loss reserve |
(25,454 |
) |
|
— |
|
|||
Loans held for investment, net of current expected credit loss reserve |
1,752,745 |
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|
1,682,498 |
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Real estate owned, net |
37,476 |
|
|
37,901 |
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Other assets ( |
77,542 |
|
|
58,100 |
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Total assets |
$ |
1,949,058 |
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|
$ |
1,784,134 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
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LIABILITIES |
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Secured funding agreements |
$ |
791,136 |
|
|
$ |
728,589 |
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|
Notes payable |
57,848 |
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|
54,708 |
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Secured term loan |
109,803 |
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|
109,149 |
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Collateralized loan obligation securitization debt (consolidated VIE) |
443,860 |
|
|
443,177 |
|
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Secured borrowings |
54,617 |
|
|
— |
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Due to affiliate |
2,670 |
|
|
2,761 |
|
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Dividends payable |
11,072 |
|
|
9,546 |
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Other liabilities ( |
8,703 |
|
|
9,865 |
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Total liabilities |
1,479,709 |
|
|
1,357,795 |
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Commitments and contingencies |
|
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STOCKHOLDERS' EQUITY |
|
|
|
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Common stock, par value |
329 |
|
|
283 |
|
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Additional paid-in capital |
497,421 |
|
|
423,619 |
|
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Accumulated earnings (deficit) |
(28,401 |
) |
|
2,437 |
|
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Total stockholders' equity |
469,349 |
|
|
426,339 |
|
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Total liabilities and stockholders' equity |
$ |
1,949,058 |
|
|
$ |
1,784,134 |
|
ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except share and per share data) |
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For the three months ended
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For the nine months ended
|
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2020 |
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2019 |
|
2020 |
|
2019 |
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(unaudited) |
|
(unaudited) |
|
(unaudited) |
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(unaudited) |
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Revenue: |
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Interest income |
$ |
30,626 |
|
|
$ |
28,269 |
|
|
$ |
91,908 |
|
|
$ |
86,248 |
|
|
Interest expense |
(11,875 |
) |
|
(15,124 |
) |
|
(40,450 |
) |
|
(47,539 |
) |
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Net interest margin |
18,751 |
|
|
13,145 |
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|
51,458 |
|
|
38,709 |
|
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Revenue from real estate owned |
3,623 |
|
|
6,702 |
|
|
10,032 |
|
|
16,970 |
|
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Total revenue |
22,374 |
|
|
19,847 |
|
|
61,490 |
|
|
55,679 |
|
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Expenses: |
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|
|
|
|
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Management and incentive fees to affiliate |
1,847 |
|
|
1,578 |
|
|
5,771 |
|
|
5,405 |
|
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Professional fees |
639 |
|
|
542 |
|
|
2,202 |
|
|
1,553 |
|
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General and administrative expenses |
969 |
|
|
1,005 |
|
|
2,797 |
|
|
3,153 |
|
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General and administrative expenses reimbursed to affiliate |
802 |
|
|
831 |
|
|
2,890 |
|
|
2,261 |
|
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Expenses from real estate owned |
4,046 |
|
|
6,838 |
|
|
13,976 |
|
|
15,644 |
|
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Total expenses |
8,303 |
|
|
10,794 |
|
|
27,636 |
|
|
28,016 |
|
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Provision for current expected credit losses |
(1,048 |
) |
|
— |
|
|
22,063 |
|
|
— |
|
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Realized losses on loans sold |
4,008 |
|
|
— |
|
|
4,008 |
|
|
— |
|
|||||
Change in unrealized losses on loans held for sale |
(3,998 |
) |
|
— |
|
|
— |
|
|
— |
|
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Income before income taxes |
15,109 |
|
|
9,053 |
|
|
7,783 |
|
|
27,663 |
|
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Income tax expense, including excise tax |
181 |
|
|
19 |
|
|
350 |
|
|
332 |
|
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Net income attributable to common stockholders |
$ |
14,928 |
|
|
$ |
9,034 |
|
|
$ |
7,433 |
|
|
$ |
27,331 |
|
|
Earnings per common share: |
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Basic earnings per common share |
$ |
0.45 |
|
|
$ |
0.32 |
|
|
$ |
0.23 |
|
|
$ |
0.96 |
|
|
Diluted earnings per common share |
$ |
0.44 |
|
|
$ |
0.31 |
|
|
$ |
0.22 |
|
|
$ |
0.95 |
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
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Basic weighted average shares of common stock outstanding |
33,337,445 |
|
|
28,634,514 |
|
|
32,852,553 |
|
|
28,598,807 |
|
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Diluted weighted average shares of common stock outstanding |
33,550,444 |
|
|
28,867,603 |
|
|
33,072,085 |
|
|
28,837,766 |
|
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Dividends declared per share of common stock (1) |
$ |
0.33 |
|
|
$ |
0.33 |
|
|
$ |
0.99 |
|
|
$ |
0.99 |
|
(1) There is no assurance dividends will continue at these levels or at all.
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,
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
|
For the three months ended
|
For the twelve months ended
|
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Net income attributable to common stockholders |
$ |
14,928 |
|
|
$ |
17,093 |
|
||
Stock-based compensation |
367 |
|
|
1,438 |
|
||||
Incentive fees to affiliate |
— |
|
|
680 |
|
||||
Depreciation of real estate owned |
224 |
|
|
887 |
|
||||
Provision for current expected credit losses |
(1,048 |
) |
|
22,063 |
|
||||
Change in unrealized losses on loans held for sale |
(3,998 |
) |
|
— |
|
||||
Core Earnings |
$ |
10,473 |
|
|
$ |
42,161 |
|
||
|
|
|
|
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Net income attributable to common stockholders |
$ |
0.45 |
|
|
$ |
0.54 |
|
||
Stock-based compensation |
0.01 |
|
|
0.05 |
|
||||
Incentive fees to affiliate |
— |
|
|
0.02 |
|
||||
Depreciation of real estate owned |
0.01 |
|
|
0.03 |
|
||||
Provision for current expected credit losses |
(0.03 |
) |
|
0.69 |
|
||||
Change in unrealized losses on loans held for sale |
(0.12 |
) |
|
— |
|
||||
Basic Core Earnings per common share |
$ |
0.31 |
|
|
$ |
1.33 |
|
||
|
|
|
|
||||||
Net income attributable to common stockholders |
$ |
0.44 |
|
|
$ |
0.53 |
|
||
Stock-based compensation |
0.01 |
|
|
0.04 |
|
||||
Incentive fees to affiliate |
— |
|
|
0.02 |
|
||||
Depreciation of real estate owned |
0.01 |
|
|
0.03 |
|
||||
Provision for current expected credit losses |
(0.03 |
) |
|
0.69 |
|
||||
Change in unrealized losses on loans held for sale |
(0.12 |
) |
|
— |
|
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Diluted Core Earnings per common share |
$ |
0.31 |
|
|
$ |
1.32 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005399/en/
INVESTOR RELATIONS CONTACTS
(888) 818-5298
[email protected]
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