Ares mercial Real Estate (ACRE) - 2025 Q2 - Quarterly Results

Ares Commercial Real Estate Corporation Q2 2025 Earnings Release Financial & Operational Highlights Ares Commercial Real Estate Corporation reported a GAAP net loss of $11.0 million and a Distributable Earnings loss of $27.9 million for Q2 2025, while strategically strengthening its portfolio and liquidity Q2 2025 Key Financial Results | Metric | Value (in millions) | Per Diluted Share | | :--- | :--- | :--- | | GAAP Net Income (Loss) | $(11.0) | $(0.20) | | Distributable Earnings (Loss) | $(27.9) | $(0.51) | - Management's strategic focus in Q2 was on strengthening the balance sheet by accelerating resolutions of risk-rated 4 and 5 loans and reducing exposure to office properties[2] - Subsequent to quarter-end, the company closed $43 million of new senior loan commitments, signaling a return to investing in what it views as a more active real estate market[1][2] - The company bolstered its liquidity, collecting $337 million in repayments during the first half of 2025. As of June 30, 2025, it held approximately $178 million in available capital, including $94 million in cash[2] Common Stock Dividend The Board of Directors declared a cash dividend of $0.15 per common share for both Q2 and Q3 2025 Dividend Declarations | Quarter | Dividend per Share | Record Date | Payment Date | | :--- | :--- | :--- | :--- | | Q2 2025 | $0.15 | June 30, 2025 | July 15, 2025 | | Q3 2025 | $0.15 | September 30, 2025 | October 15, 2025 | Consolidated Financial Statements The consolidated financial statements detail the company's financial position and performance, showing decreased assets and liabilities, and a net loss for the quarter Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $1.44 billion from $1.75 billion, driven by reduced loans, with total liabilities also decreasing to $914.9 million Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $89,985 | $63,799 | | Loans held for investment, net | $1,182,975 | $1,520,464 | | Total assets | $1,438,638 | $1,751,206 | | Collateralized loan obligation debt | $137,587 | $455,839 | | Total liabilities | $914,939 | $1,211,074 | | Total stockholders' equity | $523,699 | $540,132 | Consolidated Statements of Operations For Q2 2025, the company reported a net loss of $11.0 million, or $(0.20) per share, primarily due to decreased interest income and realized loan losses, partially offset by a reversal of credit loss provisions Q2 Statement of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net interest margin | $7,016 | $13,364 | | Total revenue | $12,565 | $16,797 | | (Provision for) reversal of CECL, net | $20,150 | $2,374 | | Realized losses on loans | $(33,000) | $(16,387) | | Net income (loss) | $(11,035) | $(6,125) | | Diluted EPS | $(0.20) | $(0.11) | Non-GAAP Financial Measures This section reconciles GAAP net loss to Distributable Earnings (Loss), a non-GAAP measure used by management to evaluate financial performance and dividend capacity - Distributable Earnings (Loss) is a non-GAAP measure defined as GAAP net income excluding non-cash items such as stock-based compensation, depreciation, unrealized gains/losses, and the provision for credit losses. It is intended to provide investors with a clearer view of the company's capacity to pay dividends[17] Reconciliation of Net Income (Loss) to Distributable Earnings (Loss) For Q2 2025, the GAAP net loss of $11.0 million was adjusted to a Distributable Earnings loss of $27.9 million, mainly by excluding the $20.2 million net reversal of credit loss provisions Q2 2025 Reconciliation to Distributable Earnings (Loss) (in thousands) | Line Item | Amount | | :--- | :--- | | Net income (loss) attributable to common stockholders | $(11,035) | | Stock-based compensation | $937 | | Depreciation and amortization of real estate owned | $2,318 | | Provision for (reversal of) current expected credit losses, net | $(20,150) | | Distributable Earnings (Loss) | $(27,930) | Q2 2025 Per Share Reconciliation | Line Item | Per Share Amount | | :--- | :--- | | Net income (loss) per common share | $(0.20) | | Adjustments (net) | $(0.31) | | Basic Distributable Earnings (Loss) per common share | $(0.51) |