Ares Commercial Real Estate (NYSE:ACRE) Posts Quarterly Earnings Results, Beats Expectations By $0.08 EPS

Ares Commercial Real Estate (NYSE:ACRE) released its quarterly earnings data on Friday. The real estate investment trust reported $0.12 earnings per share for the quarter, topping analysts’ consensus estimates of $0.04 by $0.08, FiscalAI reports. The firm had revenue of $13.51 million for the quarter, compared to analyst estimates of $12.87 million. Ares Commercial Real Estate had a negative net margin of 8.04% and a positive return on equity of 4.08%.

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 Price Performance

ACRE stock opened at $3.65 on Friday. Ares Commercial Real Estate has a 1 year low of $3.16 and a 1 year high of $5.89. The firm has a market capitalization of $202.78 million, a PE ratio of 182.84 and a beta of 1.22. The business has a 50 day simple moving average of $3.89 and a 200-day simple moving average of $4.63.

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 given a $0.15 dividend. The ex-dividend date is Thursday, December 31st. This represents a $0.60 dividend on an annualized basis and a dividend yield of 16.4%. Ares Commercial Real Estate’s dividend payout ratio is -750.00%.

Analyst Ratings Changes

A number of equities analysts have issued reports on ACRE shares. Weiss Ratings downgraded Ares Commercial Real Estate from a “sell (d+)” rating to a “sell (d)” rating in a research report on Wednesday, October 14th. Keefe, Bruyette & Woods lowered their price objective on Ares Commercial Real Estate from $5.50 to $4.50 and set an “outperform” rating on the stock in a report on Friday, October 9th. Wall Street Zen raised Ares Commercial Real Estate from a “sell” rating to a “hold” rating in a report on Saturday, August 15th. Finally, 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 report on Friday, July 17th. One research analyst has rated the stock with a Buy rating, four have assigned a Hold rating and two have assigned a Sell rating to the company’s stock. According to MarketBeat, the stock currently has a consensus rating of “Reduce” and a consensus target price of $5.00.

Key Ares Commercial Real Estate News

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

Ares Commercial Real Estate Company Profile

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.