Ladies and gentlemen, the second quarter of 2025 is already off to a bumpy start. With one of the largest economic disruptions emerging at the start of the second quarter, nearly every asset class is reeling as theAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than ...

Core Viewpoint - Ares Commercial Real Estate (ACRE) announced a 40% dividend cut for the first fiscal quarter of FY 2025, reducing the quarterly payment to $0.15 per share going forward [1] Summary by Category Company Actions - ACRE will implement a 40% reduction in its dividend, resulting in a new quarterly payment of $0.15 per share [1] Financial Implications - The dividend cut reflects the company's strategy to adjust its financial commitments in response to market conditions [1] Market Context - The decision to reduce the dividend is indicative of broader trends in the real estate investment trust (REIT) sector, where companies may be facing pressures that necessitate such adjustments [1]

Core Viewpoint - Ares Commercial Real Estate Corporation (NYSE: ACRE) has reduced its dividend by 24% in early 2024 due to loan problems and weak pay-out metrics, indicating that the mortgage real estate investment trust did not generate sufficient distributable profits to cover its dividend obligations [1]. Group 1 - Ares Commercial Real Estate Corporation cut its dividend by 24% [1] - The company faced loan problems and weak pay-out metrics [1] - The mortgage real estate investment trust did not earn its dividend with distributable profits [1]

Core Insights - Hoya Capital Research & Index Innovations is affiliated with Hoya Capital Real Estate, providing investment advisory services focused on publicly traded securities in the real estate industry [2] - The commentary published by Hoya Capital is intended for informational and educational purposes only, and does not constitute investment, tax, or legal advice [2] - The views expressed in the commentary are subject to change and should not be considered a complete analysis of the subjects discussed [2] Company and Industry Summary - Hoya Capital operates as a registered investment advisory firm based in Rowayton, Connecticut, serving ETFs, individuals, and institutions [2] - The firm offers non-advisory services including market commentary, research, and index administration, specifically targeting the real estate sector [2] - The commentary emphasizes that past performance is not indicative of future results, and investing in real estate companies involves unique risks [2][3]

Financial Data and Key Metrics Changes - For Q4 2024, the company reported a GAAP net loss of $10.7 million or $0.20 per common share, and distributable earnings for the same period were a net loss of $8.3 million or $0.15 per common share, including realized losses of $18 million or $0.33 per common share [18][19] - For the full year 2024, the company reported a GAAP net loss of $35 million or $0.64 per common share and a distributable earnings loss of $44.6 million or $0.82 per common share [19] - The net debt-to-equity ratio, excluding CECL, was 1.6 times at year-end, a 16% decrease from year-end 2023 [13][25] Business Line Data and Key Metrics Changes - The company reduced risk-rated 4 and 5 loans by approximately 34% or $182 million in 2024, leaving five loans risk-rated 4 and 5 with a total outstanding principal balance of $357 million [10] - The company collected $137 million in repayments during Q4 2024, contributing to a total of $350 million for the full year, nearly double the amount collected in 2023 [12][20] - The cash yield on the carrying value of REO properties was over 8%, with two REO properties remaining totaling $139 million in carrying value [22][24] Market Data and Key Metrics Changes - The commercial real estate market saw a moderate recovery in 2024, with increased transaction volumes and stable to improving property values, particularly in the second half of the year [8] - Positive net absorption in the U.S. office market was noted for Q4 2024, marking the first such occurrence since pre-COVID [8] Company Strategy and Development Direction - The company aims to further reduce risk-weighted 4 and 5 loans, office loans, and REO properties in 2025, with a specific goal of proving out book value [13][27] - The company is focused on resolving underperforming assets while maintaining higher liquidity and lower financial leverage, which may impact current earnings [15][27] Management's Comments on Operating Environment and Future Outlook - Management noted that the pace of market recovery accelerated towards year-end 2024, with expectations for continued capital flows into real estate [32] - The company anticipates maintaining the pace of reduction in risk-weighted loans in the first half of 2025, supported by positive capital flows [32] Other Important Information - The company declared a regular cash dividend of $0.15 per common share for Q1 2025, with an annualized dividend yield above 10% based on the stock price as of February 10, 2025 [26] Q&A Session Summary Question: What are the expectations for repayments, deal activity, and realized losses in 2025? - Management indicated that they expect to maintain the pace of reduction in risk-weighted loans and see positive capital flows, which will support repayments and deal activity [32] Question: What environment is needed to increase originations and stabilize leverage? - Management stated that continued reduction of risk-weighted loans will be catalytic for deployment, and they are prepared to participate in market opportunities as asset management issues are clarified [38][41] Question: Can you discuss the Boston Life Science deal and its outlook? - Management noted a shift in business plans from full life science use to more traditional office use due to supply growth, and they are in active dialogue with the borrower [45][50] Question: What are the trends in the multi-family sector? - Management highlighted strong fundamentals in leasing and absorption, with expectations for resilient credit despite changes in interest rates [53][55] Question: What are the plans for issuing CLOs in 2025? - Management mentioned that they are considering the CLO market as an opportunistic way to term out leverage, depending on market conditions and portfolio scale [61][63] Question: How will repayment volumes impact new lending? - Management indicated that strong cash positions and the resolution of underperforming assets will prompt further deployment and portfolio growth [66][67]

Exhibit 99.2 Fourth Quarter and Full Year 2024 Earnings Presentation 0 42 65 156 110 2 3 93 109 127 127 127 GENERAL PALETTE 0 42 65 2 87 133 71 126 163 120 163 198 Credit Private Equity Real Estate Secondary Solutions BUSINESS SECTOR PALETTE 192 212 229 Strategic Initiatives Disclaimer Statements included herein may constitute "forward-looking statementsˮ within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended, which may r ...

分组1 - Ares Commercial Real Estate (ACRE) reported a quarterly loss of $0.15 per share, missing the Zacks Consensus Estimate of $0.06, and down from earnings of $0.20 per share a year ago, representing an earnings surprise of -350% [1] - The company posted revenues of $33.49 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 8.09%, and down from $44.35 million in the same quarter last year [2] - ACRE has not surpassed consensus EPS estimates over the last four quarters, with only one instance of topping consensus revenue estimates [2] 分组2 - The stock has gained about 3.4% since the beginning of the year, slightly outperforming the S&P 500's gain of 3.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $35.18 million, and for the current fiscal year, it is $0.11 on revenues of $145.52 million [7] - The Zacks Industry Rank for REIT and Equity Trust is in the bottom 46% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Position and Debt - As of December 31, 2024, the outstanding balance under the Financing Agreements was $718.5 million[33] - The company had $130.0 million outstanding under its Credit and Guaranty Agreement as of December 31, 2024[33] - The outstanding balance of CLO Securitizations was $456.0 million as of December 31, 2024[35] - The company expects to maintain a debt-to-equity ratio not exceeding 4.5-to-1, focusing on first and senior mortgages[31] - As of December 31, 2024, the company had approximately $718.5 million in outstanding borrowings under Financing Agreements and $456.0 million under CLO Securitizations[80] - The company may incur significant debt through various financing arrangements, which increases the risk of loss and reduces cash available for distributions[80] - The company anticipates utilizing additional bank credit facilities or repurchase agreements to finance its assets if available on acceptable terms[86] - The company may incur significant additional debt through various financing arrangements, including term loans and structured financing[89] Investment Strategy and Operations - The company aims to utilize prudent leverage to fund target investments, with financing sources including credit facilities and securitizations[30] - The company has formed several wholly-owned subsidiaries to manage specific loans and investments, enhancing its operational flexibility[37] - The company relies on its Manager for investment advisory services, with management fees and potential termination fees outlined in the Management Agreement[29] - The company operates in a competitive market for investment opportunities, which may limit its ability to acquire target investments on attractive terms[124] - The company is organized as a holding company and conducts its businesses primarily through wholly-owned and other majority-owned subsidiaries, limiting its operations under the 1940 Act[182] Risk Management and Economic Environment - The current macroeconomic environment is characterized by inflation, labor shortages, changing interest rates, and volatility in global capital markets, which could adversely affect the company's financial condition[46] - Changes in interest rates and credit spreads could significantly impact the company's financial condition and results of operations[59] - The company aims to mitigate risk by reducing risk rated "4" and "5" loans, increasing liquidity, and reducing debt in 2024 and 2025[48] - The company is subject to significant risks related to the ownership of real property, including potential declines in asset values and liquidity issues[46] - The company may face challenges in refinancing loans due to declining real estate values, which could lead to increased defaults[48] Credit Quality and Loan Portfolio - The estimated expected credit losses (CECL Reserve) decreased from $163.1 million on December 31, 2023, to $145.0 million on December 31, 2024, primarily due to realized losses on risk rated "5" loans[54] - Approximately 65% of the CECL Reserve is related to loans collateralized by office space, while 38% of the total loan portfolio is also related to office space loans[54] - The company holds 96.5% of its loans held for investment portfolio as floating rate loans as of December 31, 2024, benefiting from higher interest rates[60] - As of December 31, 2024, approximately 44.2% of the total loan portfolio is related to loans collateralized by office and mixed-use space, which are at higher risk of foreclosure[110] - The company holds a total of 36 loans for investment as of December 31, 2024, down from 46 loans in 2023, indicating a potential reduction in investment diversification[110] Cybersecurity and Compliance Risks - The company faces increased cybersecurity risks due to reliance on technology and third-party vendors, which could disrupt operations and damage reputation[67] - The SEC has adopted new rules requiring public companies to disclose material cybersecurity incidents, increasing compliance costs for the company[72] - State licensing requirements impose expenses and compliance risks that could materially affect operations if not adhered to[73] - The company is required to maintain a certain amount of cash or set aside assets to satisfy liquidity positions, which could limit its ability to leverage investments[86] Management and Governance - The company relies on its Manager for day-to-day operations and investment advisory services, making its success dependent on the Manager's key personnel[200] - Conflicts of interest may arise from the relationship with Ares Management, which could lead to decisions not in the best interests of stockholders[206] - The management fee structure is based on 1.5% of stockholders' equity per annum, which may not incentivize the manager to maximize risk-adjusted returns[217] - The management agreement was not negotiated on an arm's-length basis, potentially resulting in less favorable terms for the company[216] - The company does not have a policy prohibiting directors and officers from engaging in competing business activities, which may lead to conflicts of interest[224] Distribution and Shareholder Returns - The company has not established a minimum distribution payment level to stockholders, which may affect future cash flows and distributions[10] - The company must distribute at least 90% of its REIT taxable income to maintain its REIT status, limiting funds available for investment[91] - The company intends to continue making regular quarterly distributions, but there is no assurance that net income or cash flow from operating activities will be sufficient to cover future distributions[169] - Distributions may exceed cash flow from operations and net income, leading the company to use other sources of funds to cover portions of future distributions[169] - The company may use net operating losses carried forward to offset future REIT taxable income, potentially reducing dividend requirements[167] Market and Investment Risks - The company may face challenges in accessing financing due to adverse economic conditions, which could limit its ability to grow and maximize returns[89] - The company may invest in non-performing real estate loans, which carry a high degree of credit and market risk, especially during economic downturns[144] - The company’s investments are subject to various risks related to real property, which could reduce returns and affect the ability to pay dividends to stockholders[112] - The company may experience significant losses if it fails to successfully integrate new assets or manage growth effectively, impacting its results of operations[123] - The market price of the company's common stock may fluctuate significantly due to various factors, including operating results and market conditions[157]

Financial Performance - Fourth quarter GAAP net income (loss) was $(10.7) million or $(0.20) per diluted common share, while full year GAAP net income (loss) was $(35.0) million or $(0.64) per diluted common share[1][2] - Distributable Earnings (Loss) for the fourth quarter was $(8.3) million or $(0.15) per diluted common share, and for the full year it was $(44.6) million or $(0.82) per diluted common share[1][2] - The company reported a net loss attributable to common stockholders of $(10.7) million for the fourth quarter and $(35.0) million for the full year[13] - For the three months ended December 31, 2024, the net income attributable to common stockholders was $(10,664) thousand, and for the year ended December 31, 2024, it was $(34,993) thousand[18] - Distributable Earnings (Loss) for the three months ended December 31, 2024, was $(8,274) thousand, and for the year ended December 31, 2024, it was $(44,641) thousand[18] - Basic Distributable Earnings (Loss) per common share for the three months ended December 31, 2024, was $(0.15), and for the year ended December 31, 2024, it was $(0.82)[18] - The diluted Distributable Earnings (Loss) per common share for the three months ended December 31, 2024, was $(0.15), and for the year ended December 31, 2024, it was $(0.82)[18] Revenue and Assets - Total revenue for the fourth quarter was $17.5 million, with interest income of $33.5 million and net interest margin of $11.2 million[13] - Total assets as of December 31, 2024, were $1.75 billion, down from $2.28 billion in 2023[12] - Total liabilities decreased to $1.21 billion from $1.65 billion in the previous year[12] Credit and Loan Performance - The company reported a 34% year-over-year decline in risk-rated 4 and 5 loans, indicating progress in resolving underperforming loans[2] - The company has a current expected credit loss reserve of $(136.2) million as of December 31, 2024[12] - The provision for current expected credit losses, net, for the three months ended December 31, 2024, was $(970) thousand, and for the year it was $(18,152) thousand[18] - The change in unrealized losses on loans held for sale for the year ended December 31, 2024, was $(995) thousand[18] Capital Management - The company collected $166 million in repayments, increasing available capital to over $200 million, a 66% increase since the end of the third quarter[2] - The quarterly dividend was lowered to $0.15 per share for the first quarter of 2025, down from $0.25 per share declared for the fourth quarter of 2024[4][5] Expenses - Stock-based compensation for the three months ended December 31, 2024, amounted to $1,122 thousand, and for the year, it was $4,739 thousand[18] - Depreciation and amortization of real estate owned for the three months ended December 31, 2024, was $2,238 thousand, and for the year, it was $4,760 thousand[18] Regulatory Compliance - The Company is required to distribute substantially all of its taxable income to maintain its REIT status[17] - Distributable Earnings (Loss) is aligned with the calculation of "Core Earnings," which is used to calculate the incentive fees paid to the Company's Manager[17]

Group 1 - Colorado Wealth Management specializes in Real Estate Investment Trusts (REITs) and has a long history in the investment industry, starting from a family-owned realtor office [1] - The firm focuses on Equity REITs, Mortgage REITs, and preferred shares, indicating a diverse investment strategy within the REIT sector [1] - Scott Kennedy, a partner at a national accounting firm, is a Certified Public Accountant and has expertise in financial forensics, adding credibility to the analysis provided by Colorado Wealth Management [1] Group 2 - The REIT Forum, which includes contributions from Colorado Wealth Management Fund and Scott Kennedy, provides ratings and outlooks that are closely monitored, with Buy and Sell alerts exclusive to members [3] - There is an indirect conflict of interest with specific mREIT stocks, indicating a need for careful consideration when evaluating recommendations related to ABR and STWD [3]