Ares Commercial Real Estate (NYSE:ACRE) Issues Earnings Results

Ares Commercial Real Estate (NYSE:ACRE) announced its earnings results on Friday. The real estate investment trust reported $0.12 EPS for the quarter, beating analysts’ consensus estimates of $0.04 by $0.08, FiscalAI reports. Ares Commercial Real Estate had a positive return on equity of 4.08% and a negative net margin of 8.04%.

Here are the key takeaways from Ares Commercial Real Estate’s conference call:

• Third-quarter Distributable Earnings were $0.12 per share ($0.11 excluding a realized gain), below the $0.15 quarterly dividend. Management said resolving non-accrual investments is a key potential driver of earnings growth, but gave no timeline for dividend coverage.
• ACRE sold its Charlotte office REO for about $7 million above carrying value and was repaid on its only defaulted loan, including accrued default interest. It is pursuing title to the Chicago office property for greater control over resolution, while Brooklyn condo losses will be recognized as individual units sell.
• The $141 million CECL reserve was little changed, but 94% relates to risk-rated four and five loans, with nearly half tied to the Chicago office loan. These loans represent 10% of portfolio carrying value net of CECL.
• Management cited $116 million of available capital, moderate net debt-to-equity of 1.9x, and a portfolio largely matched with floating-rate financing. Risk-rated one-to-three loans account for 90% of loan carrying value net of CECL, and 94% of those loans have interest-rate caps.

Ares Commercial Real Estate Trading Up 7.5%

Shares of Ares Commercial Real Estate stock traded up $0.26 during trading hours on Friday, hitting $3.65. 1,360,513 shares of the company were exchanged, compared to its average volume of 654,659. Ares Commercial Real Estate has a 1 year low of $3.16 and a 1 year high of $5.89. The business has a 50-day moving average of $3.89 and a 200-day moving average of $4.63. The stock has a market capitalization of $202.78 million, a price-to-earnings ratio of -45.69 and a beta of 1.22.

Ares Commercial Real Estate Dividend Announcement

The business also recently declared a quarterly dividend, which will be paid on Friday, January 15th. Stockholders of record on Thursday, December 31st will be paid a dividend of $0.15 per share. This represents a $0.60 annualized dividend and a dividend yield of 16.4%. The ex-dividend date is Thursday, December 31st. Ares Commercial Real Estate’s dividend payout ratio is -750.00%.

Analyst Upgrades and Downgrades

Several equities analysts recently issued reports on ACRE shares. JPMorgan Chase & Co. decreased their target price on Ares Commercial Real Estate from $5.50 to $5.00 and set a “neutral” rating on the stock in a research note on Friday, July 17th. Keefe, Bruyette & Woods cut their target price on Ares Commercial Real Estate from $5.50 to $4.50 and set an “outperform” rating on the stock in a research report on Friday, October 9th. Zacks Research upgraded shares of Ares Commercial Real Estate from a “strong sell” rating to a “hold” rating in a research note on Friday, July 10th. Weiss Ratings cut Ares Commercial Real Estate from a “sell (d+)” rating to a “sell (d)” rating in a research report on Wednesday, October 14th. Finally, Citizens Jmp restated a “market perform” rating on shares of Ares Commercial Real Estate in a research note on Thursday, July 9th. One research analyst has rated the stock with a Buy rating, four have given a Hold rating and two have assigned a Sell rating to the stock. According to MarketBeat.com, Ares Commercial Real Estate presently has an average rating of “Reduce” and a consensus target price of $5.00.

Trending Headlines about Ares Commercial Real Estate

Here are the key news stories impacting Ares Commercial Real Estate this week:

• Positive Sentiment: ACRE posted $10.0 million in GAAP net income, or $0.18 per diluted share, and distributable earnings of $6.7 million, or $0.12 per share. Distributable earnings exceeded analyst estimates and rose from $0.10 per share a year earlier. Third-quarter results
• Positive Sentiment: After quarter-end, the company fully repaid and terminated a $90 million secured term loan, reducing debt obligations. It also declared a fourth-quarter dividend of $0.15 per common share. Third-quarter results
• Positive Sentiment: Management said it continued to reduce office and real-estate-owned investments, including through an office-property sale that generated a gain. Third-quarter results
• Neutral Sentiment: Management cited $116 million in available capital and is pursuing resolutions for about $160 million of net nonaccrual carrying value. Available capital offers flexibility, but the focus on resolutions highlights continuing credit and asset-workout exposure. Available capital and asset resolutions

About Ares Commercial Real Estate

Ares Commercial Real Estate Corporation is a specialty finance company organized as a real estate investment trust (REIT). The company originates and invests in commercial real estate loans, with a primary focus on senior mortgage loans secured by properties in the United States.

Its investment portfolio may include loans backed by multifamily, office, industrial, retail, hotel and other commercial properties. Ares Commercial Real Estate generally targets transitional and other commercial real estate assets that require financing for acquisition, redevelopment, renovation or repositioning.