Financial Statements and Reporting - The unaudited consolidated interim financial statements are prepared in accordance with GAAP and reflect all necessary adjustments for fair presentation[28]. - The Company evaluates available-for-sale debt securities for other than temporary impairment on a quarterly basis[48]. - Debt issuance costs are capitalized and amortized over the term of the respective debt instrument[50]. - Derivative financial instruments are classified as either other assets or other liabilities at fair value in the Company's consolidated balance sheets[52]. - The effective portion of unrealized gains or losses on cash flow hedges is recorded in Other Comprehensive Income (OCI)[54]. - The Company’s investments in loans held for investment are accounted for at amortized cost, with the difference between carrying amount and outstanding principal consisting of unamortized purchase discounts and deferred loan fees[66]. - The Company did not incur any expense for U.S. federal excise tax in Q1 2024, while it incurred $100 thousand in Q1 2023[129]. - The Company did not incur any incentive fees for the three months ended March 31, 2024, and 2023[145]. Loan Portfolio and Performance - The Company monitors its loans held for investment portfolio through borrower review, economic review, property review, and market review[37]. - Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more[38]. - As of March 31, 2024, the Company's portfolio included 44 loans held for investment with an outstanding principal of approximately $2.0 billion, down from $2.1 billion as of December 31, 2023[62]. - The Company funded approximately $13.0 million of outstanding principal and received repayments of $78.4 million during the three months ended March 31, 2024[62]. - The weighted average unleveraged effective yield for the total loans held for investment portfolio was 7.9% as of March 31, 2024[58]. - The Company had seven loans on non-accrual status with a carrying value of $266.5 million as of March 31, 2024, a decrease from nine loans valued at $399.3 million as of December 31, 2023[74]. - The CECL Reserve for loans held for investment was $140.9 million, representing 658 basis points of the total loans held for investment commitment balance of $2.1 billion[79]. - The Company recognized a realized loss of $1.7 million on a senior mortgage loan and $43.1 million on another senior mortgage loan during the three months ended March 31, 2024, due to discounted payoffs[73]. - The Company’s CECL Reserve decreased from $159.9 million at December 31, 2023, to $139.8 million at March 31, 2024, reflecting a provision for current expected credit losses of $20.1 million[82]. - The outstanding balance of the Financing Agreements as of March 31, 2024, is $885.3 million, with total commitments of $1,535.0 million[100]. - The Company recognized a realized loss of $43.1 million on a senior mortgage loan with an outstanding principal of $56.9 million due to a short sale[183]. - Realized losses on loans for Q1 2024 totaled $45.7 million, compared to $5.6 million in Q1 2023, indicating a substantial increase in loan defaults[203][220]. Revenue and Expenses - Total revenue for Q1 2024 was $18.7 million, a decrease of 29.8% from $26.5 million in Q1 2023[203]. - Total expenses increased to $8.6 million in Q1 2024 from $6.2 million in Q1 2023, representing a 38.4% rise[206]. - The net interest margin for the three months ended March 31, 2024, was $15.2 million, down from $26.5 million in the same period of 2023[202]. - General and administrative expenses rose to $2.1 million in Q1 2024 from $1.7 million in Q1 2023, driven by increased stock-based compensation[209]. - Revenue from real estate owned for Q1 2024 was $3.5 million, with no revenue reported in Q1 2023[204]. Macroeconomic Conditions - Current macroeconomic conditions, including high inflation and interest rates, may adversely impact the Company's business and operations[30]. - Macroeconomic conditions may impair the company's ability to access financing and capital markets[225]. Dividends and Stockholder Returns - The company declared a cash dividend of $0.25 per share for the three months ended March 31, 2024, totaling $13,802,000, compared to a dividend of $0.35 per share totaling $19,345,000 for the same period in 2023, indicating a decrease of 28.6% in total dividends[153][156]. - The board of directors declared a regular cash dividend of $0.25 per common share for the second quarter of 2024, payable on July 16, 2024[196]. Financing and Debt - The Company has a current expected credit loss (CECL) reserve for funded loan commitments, which is recorded within the current expected credit loss reserve in the consolidated balance sheets[84]. - The Company incurred net depreciation and amortization expense of $786 thousand for the three months ended March 31, 2024[92]. - The Company has a $180.0 million revolving master repurchase facility with MetLife, maturing on August 13, 2024, with a non-utilization fee of $74 thousand for Q1 2024[106]. - The Secured Term Loan amounts to $150.0 million, with a maturity date of November 12, 2026, and an effective interest rate of 4.6% for Q1 2024[111][112]. - The Company amended the Secured Term Loan, reducing the outstanding principal from $150 million to $140 million by paying down $10 million[200]. Real Estate and Asset Management - The Company recognized rental revenue from its mixed-use property, which was acquired in September 2023, primarily from operating leases[55]. - Revenue from real estate owned includes revenue associated with the operations of a mixed-use property, contributing to the overall revenue stream[56]. - The Company acquired a mixed-use property in Florida through foreclosure, with a fair value of $84.3 million, which was previously collateralized by an $82.9 million senior mortgage loan[89]. - The Company did not recognize any impairment charges for real estate owned as of March 31, 2024[91]. - The Company’s real estate owned, acquired through foreclosure, is evaluated for impairment quarterly, with fair value determined using Level 3 inputs[138]. Related Party Transactions - For the three months ended March 31, 2024, the company incurred total related party costs of $3,944,000, compared to $3,762,000 for the same period in 2023, representing an increase of 4.8%[151].

Exhibit 99.1 ARES COMMERCIAL REAL ESTATE CORPORATION REPORTS FIRST QUARTER 2024 RESULTS First quarter GAAP net income (loss) of $(12.3) million or $(0.23) per diluted common share and Distributable Earnings (Loss)(1) of $(33.5) million or $(0.62) per diluted common share - Subsequent to three months ended March 31, 2024 - Declared second quarter 2024 dividend of $0.25 per common share NEW YORK—(BUSINESS WIRE)—Ares Commercial Real Estate Corporation (the “Company”) (NYSE:ACRE), a specialty finance company en ...

Ares Commercial Real Estate (ACRE) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended March 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released ...

Klaus Vedfelt/DigitalVision via Getty Images In our last coverage of Ares Commercial Real Estate Corporation (NYSE:ACRE) we gave it a "Sell" rating. What was unusual about our stance is that we did it in the face of a declining stock. Generally, we tend to move our ratings in the opposite direction of the stock price. As good news gets priced in and stocks move higher, we move from "Buy" to "Hold". Conversely, when stocks tank, we recognize that bad news is possibly getting priced in and move from "Sell ...

Core Viewpoint - The macroeconomic environment is challenging for commercial real estate, particularly for Ares Commercial Real Estate Corporation (ACRE), due to high exposure to struggling sectors like offices and multifamily properties, leading to credit quality concerns and a recent dividend cut [28]. Macroeconomic Factors - The expectation is for both interest rates and inflation to remain elevated, which could pressure credit quality and force the Federal Reserve to prioritize financial stability over combating inflation [2]. - Economic growth forecasts are in the 2-3% range, but credit quality is declining, indicating stress in the economy [4]. Commercial Real Estate Market - As of December, distressed US properties totaled nearly $86 billion, with offices making up 41% of this value. Potential distress across all property types is approximately $235 billion, with apartments accounting for over $67 billion [5][7]. - ACRE's portfolio is heavily weighted towards struggling sectors, with 39% in office debt and 26% in multifamily, totaling 65% exposure to these vulnerable areas [14]. Financial Performance - ACRE reported a net loss of $39.4 million in Q4 2023, translating to a loss of $0.73 per share, primarily due to a significant increase in the Current Expected Credit Loss (CECL) provision of $47.5 million [16][18]. - The total CECL reserves reached $163 million by the end of 2023, representing 7.6% of the outstanding principal balance of loans held for investments, with 71% of this reserve allocated to office loans [18][21]. Dividend and Shareholder Value - ACRE cut its dividend by 24% to $0.25 per share per quarter, reflecting a shift towards preserving book value and liquidity amid economic challenges [24][25]. - The company generated $1.06 in distributable earnings per share in 2023, which is only slightly above the new annualized dividend, indicating a high payout ratio and potential for further cuts [25][26]. Valuation and Market Sentiment - ACRE trades at 62% of its book value, down from nearly 90% before recent debt issues, with a current consensus price target of $7.70, representing an 8% upside from the current price [26][27]. - The overall sentiment is cautious, with expectations of worsening credit quality in the coming quarters, leading to a Sell rating for ACRE [27][28].

JasonOndreicka/iStock via Getty ImagesWe recently wrote about our purchase of a 9% yield from MFAN (MFAN). Another one of those opportunities popped up recently, so we went for it again. Today’s 9% yield (about 8.95% at our purchase prices) comes from RCB (RCB). This is one of the baby bonds from Ready Capital (RC). We purchased shares twice this week. I see this as an attractive choice for risk/reward. We’re feeling a bit cautious about the overall economy. I wanted to take a defensive position, but st ...

filo/iStock via Getty Images As part of my portfolio review process last year, I sold Ares Commercial Real Estate Corporation (NYSE:ACRE) due to growing dividend risks. Ares Commercial Real Estate's payout ratio had risen substantially above 100% in the third quarter, which made a dividend cut that much more probable. The commercial trust indeed slashed its first quarter dividend by 24.2% to $0.25 per share, but this new payout is better covered by the trust's distributable earnings. I think that the safest ...

walik/E+ via Getty ImagesThe mortgage REITs have finished reporting. Well, ARMOUR Residential REIT (ARR) is in a strange spot. They haven’t filed a 10-K. They did file a form indicating that they won’t be able to file their 10-K in a timely manner. However, we have the preliminary results and those should be good enough for the assessment. Today we finally got the update from Cherry Hill Mortgage (CHMI). CHMI’s book value per share was garbage. Book value per share fell over 9%. That compares negatively ...

Richard Drury Ares Commercial Real Estate (NYSE:ACRE) announced a 24% dividend cut last week as the company suffers from the fallout in the commercial real estate market. Like other commercial mortgage lenders, the REIT has seen an increase in its reserve for expected credit losses, which impacted Ares Commercial's P&L negatively in the fourth quarter. The earnings report and associated dividend cut caused shares to drop to a new 1-year low. However, since the REIT is now going to have better dividend cover ...

Ares Commercial Real Estate Corporation (NYSE:ACRE) Q4 2023 Earnings Conference Call February 22, 2024 9:00 AM ET Company Participants John Stilmar - Managing Director, Investor Relations Bryan Donohoe - Chief Executive Officer Tae-Sik Yoon - Chief Financial Officer Conference Call Participants Sarah Barcomb - BTIG Stephen Laws - Raymond James Richard Shane - JPMorgan Donald Fandetti - Wells Fargo Steve DeLaney - JMP Securities Douglas Harter - UBS Jade Rahmani - KBW Operator Please standby your program is ...