Ares Commercial Real Estate (ACRE) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following yea ...

Group 1 - The article discusses the performance of Commercial Real Estate (CRE) Real Estate Investment Trusts (REITs), highlighting that the strongest REITs are taking loan loss provisions while increasing their borrowings [1] - Binary Tree Analytics (BTA) is introduced as a firm focused on providing transparency and analytics in capital markets, particularly in Closed-End Funds (CEFs), Exchange-Traded Funds (ETFs), and Special Situations, aiming for high annualized returns with low volatility [1]

Group 1 - Rida Morwa is a former investment and commercial banker with over 35 years of experience, focusing on high-yield investment strategies since 1991 [1] - The Investing Group High Dividend Opportunities aims for sustainable income through high-yield investments with a targeted safe yield of +9% [1] - The service includes a model portfolio with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and regular market updates [1] Group 2 - The service philosophy emphasizes community, education, and the belief that investors should not invest alone [1] - The article mentions that recommendations are closely monitored, with Buy and Sell alerts exclusive to members [3]

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Core Insights - Investors are increasingly turning to dividend-yielding stocks during market turbulence and uncertainty, as these companies typically have high free cash flows and offer substantial dividend payouts [1] Company Summaries Ares Commercial Real Estate Corp (NYSE:ACRE) - Dividend Yield: 12.22% - Analyst Ratings: Keefe, Bruyette & Woods analyst Jade Rahmani maintained a Market Perform rating and raised the price target from $4.5 to $4.75 on Nov. 11, 2025, with an accuracy rate of 66% [7] - Recent Performance: Reported better-than-expected third-quarter financial results on Nov. 7 [7] Oaktree Specialty Lending Corp (NASDAQ:OCSL) - Dividend Yield: 11.70% - Analyst Ratings: Wells Fargo analyst Finian O'Shea maintained an Equal-Weight rating and cut the price target from $15 to $14 on April 28, 2025, with an accuracy rate of 63% [7] - Upcoming Events: Scheduled to report fourth fiscal quarter financial results before the opening bell on Nov. 18 [7] Starwood Property Trust Inc (NYSE:STWD) - Dividend Yield: 10.72% - Analyst Ratings: Keefe, Bruyette & Woods analyst Jade Rahmani maintained an Outperform rating and cut the price target from $22 to $21 on Nov. 12, 2025, with an accuracy rate of 66% [7] - Recent Performance: Posted mixed quarterly results on Nov. 10 [7]

Core Insights - Investors are increasingly turning to dividend-yielding stocks during market turbulence and uncertainty, as these companies typically have high free cash flows and offer substantial dividend payouts [1] Group 1: Ares Commercial Real Estate Corp (ACRE) - ACRE has a dividend yield of 12.22% [7] - Analyst Jade Rahmani from Keefe, Bruyette & Woods maintained a Market Perform rating and raised the price target from $4.5 to $4.75 on November 11, 2025, with an accuracy rate of 66% [7] - Analyst Steven Delaney from JMP Securities reiterated a Market Perform rating on April 21, 2025, with an accuracy rate of 64% [7] - ACRE reported better-than-expected third-quarter financial results on November 7 [7] Group 2: Oaktree Specialty Lending Corp (OCSL) - OCSL has a dividend yield of 11.70% [7] - Analyst Finian O'Shea from Wells Fargo maintained an Equal-Weight rating and cut the price target from $15 to $14 on April 28, 2025, with an accuracy rate of 63% [7] - Analyst Paul Johnson from Keefe, Bruyette & Woods maintained a Market Perform rating and reduced the price target from $16.5 to $15 on April 8, 2025, with an accuracy rate of 60% [7] - OCSL is set to report its financial results for the fourth fiscal quarter before the opening bell on November 18 [7] Group 3: Starwood Property Trust Inc (STWD) - STWD has a dividend yield of 10.72% [7] - Analyst Jade Rahmani from Keefe, Bruyette & Woods maintained an Outperform rating and lowered the price target from $22 to $21 on November 12, 2025, with an accuracy rate of 66% [7] - Analyst Donald Fandetti from Wells Fargo maintained an Outperform rating and reduced the price target from $23 to $22 on November 11, 2025, with an accuracy rate of 72% [7] - STWD posted mixed quarterly results on November 10 [7]

Core Insights - Ares Commercial Real Estate Corporation (ACRE) is a mortgage REIT that has reported its Q3 earnings, indicating progress in addressing distressed loans, although significant work remains to be done [1] Company Summary - ACRE has made strides in turning around its distressed loans, but challenges persist, suggesting a need for continued focus on loan management and recovery strategies [1] Investment Analysis - The analysis is based on value investing principles, emphasizing an owner's mindset and a long-term investment horizon, which may appeal to investors looking for stability in the mortgage REIT sector [1]

Group 1 - The article does not provide any specific content or key points related to a company or industry [1]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported GAAP net income of approximately $5 million or $0.08 per diluted common share, with distributable earnings of approximately $6 million or $0.10 per diluted common share, which excludes a realized loss of $1.6 million [14][15] - The net debt-to-equity ratio, excluding CECL, decreased to 1.1 times, down from 1.2 times quarter over quarter and 1.8 times year over year [16] - Outstanding borrowings were reduced to $811 million, a decrease of 9% quarter over quarter and 40% year over year [16][17] - The CECL reserve declined to $117 million, representing approximately 9% of the total outstanding principal balance of loans held for investment [17][18] Business Line Data and Key Metrics Changes - The office portfolio was reduced to $495 million, a decrease of 6% quarter over quarter and 26% year over year, driven by repayments and strategic restructuring [5] - The company closed five new loan commitments totaling $93 million across multifamily and self-storage properties during Q3, with continued momentum into Q4, closing over $270 million of loans [11][12] Market Data and Key Metrics Changes - The multifamily sector showed strong demand, with absorption rates significantly higher than historical averages, indicating a positive outlook despite stagnant rent growth [37] - The company noted that the office market continues to face headwinds, impacting the overall lending environment [28] Company Strategy and Development Direction - The company aims to maintain a strong balance sheet while addressing risk-rated 4 and 5 loans, with a focus on capital deployment to diversify the loan portfolio [4][5] - The strategy includes leveraging the ARES Real Estate platform to participate in larger institutional assets while maintaining a focus on middle-market lending [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term earnings potential, emphasizing the importance of resolving non-accrual loans and reinvesting proceeds to expand the loan portfolio [13] - The company anticipates a return to portfolio growth in the first half of 2026, supported by a strong liquidity position and ongoing repayments [16][19] Other Important Information - The board declared a regular cash dividend of $0.15 per common share for Q4 2025, payable on January 15, 2026 [18] - The company highlighted the benefits of co-investing with other ARES Real Estate funds, resulting in a more diversified portfolio [12] Q&A Session Summary Question: Comments on the mix of new loans and market focus - Management acknowledged the small dataset affecting average loan sizes and emphasized a focus on self-storage assets while also participating in larger transactions through the ARES platform [24][25] Question: Timeline for resolving risk-rated five loans - Management indicated ongoing progress and a focus on balancing resolution speed with principal recovery, with a commitment to resolving these assets [33][34] Question: Drivers behind multifamily downgrades and market outlook - Management noted that upcoming maturity dates were significant factors in downgrades, while overall demand in the multifamily sector remains strong, with a positive outlook for the next few years [36][37]

Financial Performance - GAAP net income was $5 million, or $0.08 per diluted common share[12] - Distributable Earnings were $6 million, or $0.10 per diluted common share[12] - Excluding realized losses of $2 million or $0.03 per diluted common share, Distributable Earnings were $7 million, or $0.13 per diluted common share[12] - Book value was $521 million, or $9.47 per common share ($11.60 per common share excluding CECL reserve)[12] Portfolio & Balance Sheet - The company collected $162 million of repayments in 3Q 2025, bringing the YTD repayments to $498 million[12] - The company reduced office loans by $29 million QoQ to $495 million, a decrease of 6% QoQ and 26% YoY[12] - The company maintained a strong balance sheet with $173 million of available capital as of September 30, 2025, including $88 million of cash[12] - The company's total portfolio is $1.4 billion, comprised of loans held for investment and REO properties[15] CECL Reserve - The CECL reserve is $117 million, representing 9% of outstanding principal balance of loans held for investment[12,45] - 95% of the CECL reserve relates to risk rated 4 and 5 loans[46] - 90% of the CECL reserve relates to office and residential/condo loans[46] Ares Management Overview - Ares Management has approximately $596 billion in assets under management[22] - Ares Real Estate has $109 billion+ in Real Estate AUM[30]