ACRE

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 12:00 p.m. ET Partner of Public Markets Investor Relations - John Stilmar Chief Executive Officer - Bryan Donohoe Chief Financial Officer - Jeffrey Gonzales Chief Operating Officer - Tae-Sik Yoon Operator: Good afternoon. Welcome to the Ares Commercial Real Estate Corporation's Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Tuesday, August 4, 2026. I would now like to turn the call over to Mr. John Stilmar, Partner of Public Markets Investor Relations. Please go ahead, sir. John Stilmar: Good afternoon, and thank you for joining us on today's conference call. In addition to our press release and the 10-Q that we filed with the SEC, we have posted an earnings presentation under the Investor Resources section of our website at www.arescre.com. Before we begin, I want to remind everyone that comments made during the course of this conference call and webcast and the accompanying documents contain forward-looking statements and are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may and similar such expressions. These forward-looking statements are based on management's current expectation of market conditions and management's judgment. These statements are not guarantees of future performance, conditions or results and do involve a number of risks and uncertainties. The company's actual results could differ materially from those expressed in forward-looking statements as a result of a number of factors, including those listed in its SEC filings. Ares Commercial Real Estate Corporation assumes no obligation to update any such forward-looking statements. During this conference call, we will refer to certain non-GAAP financial measures. We use these as measures of operating performance, and these measures should not be considered in isolation for or a substitute for measures prepared in accordance with generally accepted accounting principles. These measures may not be comparable to like-kind measures used by other companies. Now I'd like to turn the call over to our CEO, Bryan Donohoe. Bryan? Bryan Donohoe: Thank you, John. Good afternoon, everyone, and thank you for joining us. I'm here today with Jeff Gonzales, our CFO; Tae-Sik Yoon, our COO; as well as other members of the management and Investor Relations teams. During the second quarter, we saw the commercial real estate market exhibit relative stability despite broader macroeconomic and geopolitical uncertainty. Property prices appreciated modestly, financing markets remained open and liquidity continued to improve. While sales transaction activity did moderate somewhat during the second quarter, we see compelling opportunities driven by refinancing needs and a robust pipeline of floating rate lending opportunities, offering attractive risk-adjusted returns. Consistent with recent trends, private real estate capital continues to increase its role in the market. Today, debt funds have become the second largest source of commercial real estate lending behind banks according to MSCI, reflecting both the continued evolution of the lending market and the growing importance of alternative asset managers. We continue to believe that the scale of the Ares Real Estate platform is a key differentiator in allowing us to access greater institutional quality assets in a diversified manner and efficiently deploying our available capital. The strength of the platform allowed ACRE to deploy over $900 million in new loan commitments in the past 12 months, which represents more than 40% of our current loan portfolio. Supported by these platform benefits and the progress we have made in executing our business plan, we believe ACRE is well positioned to capitalize on market opportunities while continuing to advance our portfolio repositioning strategy. To this end, we have continued to make meaningful progress in addressing risk rated 4 and 5 loans while further reducing office loans and REO properties. At the same time, we are strategically redeploying capital into high-quality new investments, largely to support growth in earnings and achieve our long-term portfolio objectives. We believe our second quarter results reflect the continued execution against that strategy. Importantly, key portfolio and financial metrics remained consistent quarter-over-quarter as reflected by our relatively stable CECL reserve. Additionally, for the third consecutive quarter, no risk rated 1 to 3 loans migrated to risk rated 4 or 5 loans. We also had no new REO properties and the operating performance across our existing REO assets remained stable. Supported by these metrics, the depth of the Ares platform and a supportive commercial real estate market, ACRE saw another quarter of steady portfolio growth. As of June 30, 2026, we increased the outstanding principal balance of the total portfolio by 36% year-over-year, while improving portfolio diversification and reducing the office loan portfolio. During the second quarter, we closed 3 new loan commitments totaling $130 million across multifamily, self-storage and hotel properties. Consistent with last quarter, all 3 new loan commitments were part of co-investment opportunities alongside other Ares management affiliated vehicles. We believe ACRE's ability to selectively co-invest alongside Ares managed vehicles allows us to reduce asset concentration risk while participating in institutional properties in major markets, which would otherwise be beyond our stand-alone capital base. Loans originated over the past 12 months now account for 42% of the total portfolio of loans held for investment. These loans contribute to broader diversification across vintage, sector, geography and credit while providing gross levered returns in the low double digits. These loans also reinforce the solid foundation of the underlying portfolio. By number of loans, 89% of the loan portfolio is risk rated 1 to 3 and primarily consists of loans collateralized by multifamily, industrial and self-storage loans. These loans continue to execute their business plan in line with expectations. In order to achieve the goals of the business, over the past several years, we proactively strengthened our balance sheet to address identified assets within our portfolio that were adversely affected by changing market dynamics or property-specific challenges. The progress we have made in repositioning the portfolio is a direct result of the continued focus in addressing risk rated 4 and 5 loans and REO properties and further reducing our office investments. We believe that resolving these assets and redeploying that capital into yielding new investments remains an important driver of future earnings growth. Let me now dive a bit deeper into the specific investments we continue to focus on and provide an update on the progress we're making towards resolutions. Starting with our risk rated 4 and 5 loans, similar to last quarter, there are 4 loans outstanding. Looking at the largest risk rated 5 loan in the portfolio, the Chicago office loan remains on nonaccrual, but continues to make its contractual interest payments. Fundamentals at the property remain steady. Occupancy is above 90% with a weighted average lease term of over 7 years and positive net cash flow. Further, while Chicago remains challenged, there have been positive signs of a nascent recovery in the market. As mentioned on our previous quarter's call, we remain engaged with the borrower on their ongoing sales process. Although the time line has extended beyond our original expectations, we remain encouraged by the negotiations, which continue to advance towards a resolution. We note that post quarter end, the loan was extended from July 2026 by 3 months to support the borrowers' business plan and continued efforts to reach a conclusion in the sales process. Turning to the second largest risk rated 4 and 5 loan. The Brooklyn Residential Condo remains on nonaccrual, but advancements in the business plan continued during the quarter. Construction on this building is now substantially complete. Our CECL reserve takes into account estimated future costs with remaining costs largely limited to settling payables from completed work and completing punch list items. Early marketing and presales efforts remain ongoing, supporting a more visible path towards resolution. Next, I want to address the $13 million subordinate loan collateralized by a California industrial property adjusted to a risk rated 5 from a risk rated 4 during the quarter. As a reminder, this subordinate loan is part of a larger capital structure. We continue to receive sponsor support as well as growing interest from prospective tenants alongside positive trends in this submarket. However, with the maturity of the loan in January 2027, we adjusted the risk rating to reflect the higher probability of a near-term realized loss. These updates underscore the highly asset-specific nature of our 4 remaining risk rated 4 and 5 loans. Throughout this cycle, we have proactively identified challenges, deleveraged the balance sheet and enhanced liquidity, enabling us to resolve underperforming assets while positioning the company to address these remaining investments. We believe that our work to date has narrowed the potential outcomes, in part reflected in the stability of CECL this quarter. During the quarter and consistent with our goal to change the complexion of our investment portfolio, office loans decreased to $442 million or less than 25% of the total loan portfolio as compared to 39% of the total loan portfolio at the end of Q2 2025. As of June 30, 2026, there were 5 risk rated 1 to 3 office loans remaining. Further demonstrating the execution of our strategy to reduce our office investments, last quarter, we launched the sale of the North Carolina office REO asset. Market interest in this property has been strong, and we continue to work towards the sale of this asset. With regard to our other remaining REO, the Florida mixed-use property continues to exhibit consistent occupancy with an income yield of 10%. While we do not intend to be long-term owners of this property, we believe the current yield of this investment is attractive while we evaluate the optimal path to exit this investment. In closing, we continue to execute the strategy we've outlined over the past several quarters. We are making steady progress resolving underperforming assets while selectively investing alongside the broader Ares platform in high-quality new originations. Although there is still work ahead, the portfolio today is materially different than it was a year ago. It is larger, more diversified and increasingly comprised of newer investments originated in today's attractive lending environment. With more than $150 million in carrying value of loans net of CECL not accruing interest, we are squarely focused on resolving these assets and capturing the potential earnings power of our future balance sheet. Looking ahead, we expect repayments to continue advancing our portfolio repositioning efforts, while successful asset resolutions will provide additional capacity to support future growth. We are encouraged by the progress achieved thus far and remain confident that the actions we're taking today are building a high-quality portfolio, enhancing future earnings power and creating a clear path back to increased levels of profitability. With that, I'll turn the call over to Jeff, who will walk you through our second quarter financial results. Jeffrey Gonzales: Thank you, Bryan. For the second quarter of 2026, we reported GAAP net income of approximately $4.4 million or $0.08 per diluted common share. Our distributable earnings for the second quarter of 2026 was approximately $6.9 million or $0.12 per diluted common share, and there were no realized gains or losses recognized in the quarter. Additionally, during the second quarter, we collected $1.7 million or $0.03 per diluted common share of cash interest on loans that were on nonaccrual and was accounted for as a reduction in our loan basis. We continue to maintain our strong balance sheet position with moderate leverage, which supports further resolution of underperforming loans and future growth. We ended the second quarter with a net debt-to-equity ratio, excluding CECL, of 2.0x. Our portfolio of loans held for investment reached $1.8 billion as of June 30, 2026, an increase of $129 million quarter-over-quarter and $484 million year-over-year. During the quarter, we sold the $69 million loan that corresponds to a larger $144 million retail loan that was originated and classified as held for sale in Q1 2026. This short-term hold led to additional earnings from accrued interest and fee income during the second quarter. We anticipate utilizing this strategy opportunistically in the future in order for ACRE to selectively deploy its available liquidity on a short-term basis while capturing attractive economics on high conviction loans. As we continue to reposition the portfolio, we remain focused on maintaining balance sheet flexibility through strong liquidity and disciplined liability management in the first half of 2026 repayments. While repayments in the second quarter slowed from the first quarter, we expect repayment activity in the second half to be driven by natural portfolio turnover as well as further resolution. In addition, we continue to maintain liquidity of over $100 million in order to support asset resolutions and new investing activity. As of June 30, 2026, our available capital was $106 million. Supported by our strong liquidity position, deep lender relationships, access to financing and the resources of the Ares Real Estate platform, we believe we are well positioned to continue to execute on our portfolio objectives and future growth initiatives. Turning to our CECL reserve. The total CECL reserve increased marginally to $139 million as of June 30, 2026, an increase of approximately $900,000 from the CECL reserve as of March 31, 2026. This increase was primarily driven by a reserve increase of $1 million related to the new loans closed in the quarter, while the CECL reserve for our previously existing loan portfolio was largely flat quarter-over-quarter. The total CECL reserve at the end of the second quarter of $139 million represents approximately 8% of the total outstanding principal balance of our loans held for investment. 94% of our total CECL reserve or $130 million relates to our risk rated 4 and 5 loans and nearly half of the total CECL reserve is attributed to the risk-rated 5 Chicago office loan. Overall, the $130 million of reserves attributable to our risk rated 4 and 5 loans represents approximately 34% of the outstanding principal balance of those risk rated 4 and 5 loans. Our book value remained relatively stable at $8.82 per share. While we still have work to do, we believe that the relative stability of our book value and reserve levels reflects the progress we have made in repositioning the portfolio and underlines the strength of the overall portfolio. We believe this foundation, combined with our liquidity and financial flexibility, positions us well for the opportunities ahead. Subsequent to quarter end and as part of our ongoing capital allocation framework, our Board of Directors reauthorized our share repurchase program for an additional year through July 31, 2027, authorizing the repurchase of up to $50 million of our common stock. We will continue to assess share repurchases relative to other capital deployment opportunities. To conclude, the Board declared a regular cash dividend of $0.15 per common share for the third quarter of 2026. The third quarter dividend will be payable on October 15, 2026, to common stockholders of record as of September 30, 2026. At our current stock price on July 30, 2026, the annualized dividend yield on our third quarter dividend is approximately 14%. With that, I will turn the call back over to Bryan for some closing remarks. Bryan Donohoe: Thanks, Jeff. Before we begin Q&A, we'd like to take a moment to comment on the leadership transition that we announced this morning. Tae-Sik Yoon will be stepping down as our Chief Operating Officer and expect to transition from his day-to-day executive role to serve as a senior adviser to Ares management, including continuing to work with ACRE. We believe this transition will allow ACRE to continue benefiting from Tae-Sik's deep industry expertise and experience. He will remain a valued adviser to me and the rest of our team as we continue executing on our strategy. On behalf of our Board of Directors and everyone at ACRE, I want to sincerely thank Tae-Sik for his 14 years of dedication, leadership and significant contributions to the company. One of Tae-Sik's strengths has been the active mentorship of the team around him, which has created a deep bench of talent, positioning us well for the future. We at ACRE look forward to his continued guidance and friendship as we move forward together. As always, we appreciate you joining our call today, and we'd be happy to open the line for questions. Operator? Operator: [Operator Instructions] Our first question will come from Jade Rahmani with KBW. Jade Rahmani: We started the year with investors seeming optimistic around the commercial real estate cycle, yet something most people didn't expect has been the spike in interest rates and the shifting outlook. Can you comment on your thoughts as to where we are in the cycle, if you're seeing any new pressures emerge either in the existing risk 4 to 5 loan bucket or in the risk 3 area? And also, if you could share a broader perspective about how Ares is viewing the world from a real estate perspective and also within that from its own equity investing perspective. Bryan Donohoe: Yes. Thanks for the question, Jade. I'll start with overall market view and then come back to your question on portfolio a little bit. I guess to start with it, in terms of where we are in the cycle and what we see out there, it feels like we're somewhere in the fourth, fifth inning, but probably in a bit of a rain delay, if that makes sense. With the idea being the digestion of the higher rates seems to be on the come. I think that people still have a viewpoint out there that there may be reason in the future for rates to either stabilize or come down some bit, but the inflationary pressures are real. What that leads us to is to continue to avoid heavy CapEx-intensive assets. And while there's always something to do in the addressable universe of real estate, it isn't always the same thing, right? So whether it's equity or credit that we dig into more or less, I think humbly recognizing the cyclicality of our business is a really important attribute of what we've created at Ares in terms of our participation in real estate. So like I think there's still growth to create out there on the equity side of the ledger, but it is much more intensive at the actual asset level. So the operating expertise is more important than it was in prior cycles. And I think we additionally humbly recognize that the disparity of outcomes on certain assets is candidly broader than it was in prior cycles. So I think there's still plenty to do as we reflect in the refinancing side. Acquisitions certainly slowed for the broader market as a whole in end of Q1 and into Q2. But we're still in a digestion phase for geopolitics and where rates are. And I was looking at the yen versus dollar chart last night. There's more questions out there that I think we as an industry and as an economy need to answer. Jade Rahmani: And just the follow-up would be any pressure on the risk-free side. It didn't sound like you had seen anything. Maybe you could also comment on the industrial since we haven't really seen pressure in that space. Bryan Donohoe: Yes. I think, look, we have consistently team around what we think is as of the moment going on in the market in our portfolio, and that is reflected in the risk ratings that you see today. That takes into account market rates, borrower behavior, loan structure and the like. And I think, as I said a minute ago, it does recognize or we position the balance sheet to be able to allow for changes in that, right? Because I think there has been a very dynamic marketplace for us to digest over the past 3 years. So absolutely, the risk rated [ 1 to 5. ] I wouldn't say any loan is not impacted by the change in rates, but those impacts are part of the calculation for what goes into that risk rating. In terms of logistics, I think it is still asset to asset and market to market. We have been extremely active across the board, equity and debt in the sector. But given the higher rates, which equates to higher carry costs, I would say that the time line that one might be willing to wait to mark-to-market rents, if you start with the premise that rents have gone up over the past 5 to 7 years, the capture of that mark-to-market is going to be shorter in nature than it would have been with lower rates, if that makes sense. There are pressures in [indiscernible] in certain submarkets. But largely speaking, we still feel very comfortable with the reduction in supply in that marketplace and the long-term viability of Class A industrial around the country. Operator: Our next question will come from Rick Shane with JPMorgan. Richard Shane: First of all, and I'm not big on compliments on earnings calls, but I will throw one out here. Finding a twist on Wall Street's favorite metaphor of what inning are we in. I got to give you credit for that one. So thank you for making a smile with that. In terms of real questions, a year ago, you guys had $120 million worth of reserves. In the last 12 months, I think you've realized about $5 million of actual losses. The reserve has gone up to about $140 million since then. Again, very conservative. But ultimately, the opportunity here is to recycle the capital that is tied up in the nonaccruing loans. It sounds like Chicago, which represents about 30% of the reserve should be resolved fairly quickly. What is the cadence that we should expect for recycling of the remaining 4 and 5 rated loans over the next, call it, 12 to 18 months? Bryan Donohoe: Yes, it's a great question. Rick, I'd say that, look, we -- I think we've said we have narrowed these -- we feel like we've narrowed these potential outcomes, but we've consistently over the past few years, positioned the balance sheet to allow for something unforeseen to occur because I feel like that has occurred in the broader real estate market over the past few years. So I'm going to start with that. You're right that the redeployment of -- if all goes to plan and you're able to resolve that loan, you reduce the office allocation by another 50% or thereabouts and free up capital to reinvest. That is the charge. That's what we set forth to do years ago, and we addressed that in the prepared remarks. So I think in terms of the build back, Jeff, maybe you want to opine in terms of what that leads to. But the conditions precedent, and I think we did a good job framing Rick, in terms of getting through those assets over the period of time that they allow for. Jeffrey Gonzales: Yes. I think we have significant earnings potential tied up in those 4 and 5 rate loans. I think we said in our prepared remarks, it was about $150-ish million. So I think it will happen in stages as we resolve these 4 or 5 rate loans that we will increase our earnings to -- up to the dividend level and eventually beyond it. So we are hyper focused on resolving those as efficiently as possible and getting that capital back to deploying and interest-earning loans. Bryan Donohoe: Yes. And I think, Rick, here, right, is the -- if you had a much larger granular portfolio, you'd point to averages and kind of run things off over a period of time. We have isolated these loans and they are somewhat idiosyncratic. So what we've attempted to do is not count it until it's done, but work very hard to accelerate those resolutions. So it's tough to point to a regular cadence. Obviously, we wish it was faster, but a lot of what we're going to deal with over the coming quarters is how can we accelerate those resolutions and then how quickly can we redeploy. But it's difficult to point to a consistent cadence given almost the idiosyncratic nature of each of them and the behaviors that sit behind those assets. Richard Shane: Fair enough. And again, look, having them fully reserved is the foundation for being able to achieve that. And Bryan, you made a comment that I thought was interesting. You talked about sort of the dispersion in terms of valuations across the industry. When we think about loan types isn't the right word, but transaction types, whether it is a new development, a sort of traditional refi or a workout resolution, is that dispersion particularly pronounced? Is that one of the things that sort of drives the slower timeline on resolutions right now? Bryan Donohoe: Well, it certainly drove our approach to the balance sheet, right? We felt like -- I think if I go back into history, the loss severity of certain assets in this cycle has been more broad than typical reserves would have provided for, right? We saw an orphaning of life science assets given what went on with the credits underlying the tenancy there as well as very heavy CapEx. We see massive dispersion from Park Ave to Third Avenue on office sector. And so based on that higher loss severity we wanted to position the balance sheet to allow for those outcomes. But certainly, to your specific question, absolutely, that dispersion will impact velocity. Richard Shane: Got it. And then very last question. Implicitly, it looks like the new fundings in the quarter were put on with about a 75 basis point CECL reserve. Is that correct? And is that sort of what we should expect for new originations in this environment as you start to build the balance sheet again? Jeffrey Gonzales: Typically, you should expect to see on a standard 3-year floating rate loan around 100 basis points reserve at closing. That's typically what we see. And that -- it usually is lower if it's not -- if it's below a 3-year term. Richard Shane: Got it. And is that what drove it lower this quarter? Jeffrey Gonzales: Correct. One of the loans had a 2-year initial term on it. Operator: Our next question comes from Gabe Poggi with Raymond James. Gabriel Poggi: I kind of want to piggyback on what Jade and Rick were asking about and just think about the go forward if you're successful with some of this capital recycling, how do you think about in conjunction with the world we live in and geopolitics and rate vol, et cetera, how should we think about today's kind of go-forward return on equity profile for the REIT, right? If I think about where the dividend is set today, where D/E is today, the ability to recycle capital and get above it, how do you think about what the right level is from a risk-adjusted return perspective in the here and now? Bryan Donohoe: Let me -- it's a great question, Chris. Let me -- I'll have Jeff walk through the math of how we build back the book, if you will, and then I'll talk markets if that works for you. Gabriel Poggi: Sure. Jeffrey Gonzales: Yes. So I think -- yes, just going back, we did reset our dividend last year to more closely align with our strategic objective of building liquidity, reducing leverage. So we troughed at a D/E ratio of about 1.1 a year ago, and we positioned ourselves to start investing again over that time. As we mentioned in our prepared remarks, we've originated $900 million over the last 12 months of new loans. So I think we've built up to the earnings that to a higher amount, and we are working through those 4 and 5 rated loans. It will happen in stages. It takes one, I would say, to probably get us to a point of hitting the dividend as soon as we have the capital deployed again. And then over a longer-term period, as we resolve the remaining 4 and 5 rated loans, we expect to get back to our historical ROE of about 9% to 10% on our book. Bryan Donohoe: Yes. And maybe, Chris, I'll just pile on in terms of the market landscape. I think we've proven with the $900 million of deployment that Jeff references that we have found more than enough to originate to service the capital base of ACRE. We have a massive addressable universe of $7 trillion of transactions across the U.S. and Europe that our platform invests in. And therefore, the scale of this platform is very ably serviced by the team that we've created. In terms of the ROE, I think what we are seeking out is certainly those high single-digit net returns. I think that we've proven that is achievable. And how you achieve that can ebb and flow to some degree with the use of back leverage and things like that. So there's a lot of ways to create that yield. But I believe what we are attempting to do is create a much more diversified company in terms of smaller portions of assets comprising that baseline and then creating a very stable and consistent income profile that the market provides for. I don't think that the market and investors will reward risk taking when it is not available and is not going to create that durable income profile. So hopefully, that's helpful from a partially macro view of how we're thinking about it. Operator: Our next question will come from Chris Muller with Citizens Capital Markets. Christopher Muller: Congrats on a solid quarter. It's nice to see the market rewarding your guys stock today. I guess on the Chicago 5-rated loan, so there's been a note in the slide deck for several quarters now about them engaging in a sales process, and you guys mentioned that in your prepared remarks as well. But I guess the question is, how patient are you guys willing to be on this asset versus just taking it back yourselves? Is that 3-month extension what we should be watching for more clarity on that path forward? Bryan Donohoe: I think we mentioned it because it's the best indication, right? We remain the lender there. Obviously, the result is frustrating and the timeline has been frustrating, but we do feel encouraged by where it's gone. And that timeline, I think, is as reflective of the expected outcome as we can put forth today, right? As I mentioned, I think, in Jade's question around the risk rating, right? It's reflective of everything we know when we know it. I do think, and we mentioned in the prepared remarks, a little bit around that nascent recovery, certainly a bifurcation of assets that either have leasing and are relevant assets to a potential tenant in the market versus those that have a very heavy CapEx cycle in front of them to make them relevant building us again. But when we combine what this building's leasing profile is, especially when you look at the yield versus our reserve hold position, I think we would like to exit. But at the same time, the credit quality and that durable income profile with 7 years of WALT remaining gives us a good bit of comfort that if it doesn't come to fruition, we can still create an accretive asset for our position moving forward. So we are hopeful and encouraged, but we also like the relative position and the cash flow profile of the asset. Christopher Muller: Got it. That's helpful. And then maybe changing gears a little bit. On the held-for-sale loan strategy, are these transactions pre-negotiated? Or are you guys taking on some risk if the market moves dramatically while those loans are on your balance sheet before you can sell it off? Bryan Donohoe: Yes, it's a great question. So I don't want to say there is -- certainly, if we entered into a period of volatility, we would consider that. It is -- I think we generally have a view of the potential outcomes in the homes for those assets, but they are not fully baked, if that makes sense. So there is short duration risk. But obviously, since we end up holding that loan, we begin the day liking the underlying collateral and position as it relates to overall profile, and we feel like they are liquid positions on the other side. Jeffrey Gonzales: And just to add to that, typical hold period ranges between 30 to 120 days. So it's not a significant period of time that we're holding these. Operator: [Operator Instructions] We do have a follow-up from Jade Rahmani with KBW. Jade Rahmani: Can you give an update on the Brooklyn Condo and if there's presales marketing or anything of that nature, like any initial indications as to how it's going? Bryan Donohoe: Yes, we have entered into the typical presale period for the condominium. It is -- obviously, the summer months are -- can be a little bit slower, but we have been -- I'd say we look forward to an acceleration, but we have entered that presale period and no issues as we sit here today in terms of velocity or price. Operator: At this time, this concludes our question-and-answer session. I would now like to turn the meeting back over to Bryan Donohoe for any closing remarks. Bryan Donohoe: Thank you very much, and I want to just thank everybody for their time today. We appreciate your continued support of Ares Commercial Real Estate and look forward to speaking with you again on our next earnings call. Thank you, and have a good day. Operator: Ladies and gentlemen, this concludes our conference call today. If you missed any part of today's call, an archived replay of this conference call will be available approximately 1 hour after the end of this call through September 4, 2026, to domestic callers by dialing + 1 (800) 723-0532 or to international callers by dialing 1 (402) 220-2655. An archived replay will also be available on the webcast link located on the homepage of the Investor Resources section of our website. Thank you. Have a great day. 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Interested in Ares Commercial Real Estate Corporation? Here are five stocks we like better. ACRE reported second-quarter 2026 distributable earnings of $6.9 million, or $0.12 per diluted share, while GAAP net income totaled $4.4 million, or $0.08 per share. The board declared a $0.15 quarterly dividend. The company continued repositioning its portfolio, growing loans held for investment to $1.8 billion and closing $130 million in new commitments. Office exposure fell to less than 25% of the loan portfolio from 39% a year earlier. Credit risks remain concentrated in troubled assets: CECL reserves rose to $139 million, with 94% tied to risk-rated four and five loans. ACRE is pursuing resolutions and asset sales while maintaining $106 million of available capital and a 2.0x net debt-to-equity ratio. Ares Commercial Real Estate (NYSE:ACRE) reported second-quarter 2026 GAAP net income of approximately $4.4 million, or $0.08 per diluted common share, while distributable earnings totaled about $6.9 million, or $0.12 per diluted common share. The commercial mortgage REIT said it continued to reposition its portfolio during the quarter by reducing office exposure, addressing underperforming loans and deploying capital into newer investments. CEO Bryan Donohoe said commercial real estate markets showed relative stability despite macroeconomic and geopolitical uncertainty, with modest property-price appreciation, open financing markets and improving liquidity. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control “We are making steady progress resolving underperforming assets while selectively investing alongside the broader Ares platform in high-quality new originations,” Donohoe said. Loans held for investment reached $1.8 billion as of June 30, up $129 million from the prior quarter and $484 million from a year earlier, according to CFO Jeff Gonzales. The outstanding principal balance of the overall portfolio increased 36% year over year, Donohoe said. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? During the second quarter, ACRE closed three new loan commitments totaling $130 million across multifamily, self-storage and hotel properties. Each commitment was made through co-investment opportunities with other Ares Management-affiliated vehicles. The company has committed more than $900 million to new loans over the past 12 months, representing more than 40% of its current loan portfolio. Loans originated over that period accounted for 42% of loans held for investment and offer gross levered returns in the low double digits, according to management. → Why Rare Earth Processing Could Be the Real 2027 Opportunity ACRE also sold a $69 million loan during the quarter that corresponded to a larger $144 million loan originated and classified as held for sale in the first quarter. Gonzales said the short-term holding period generated additional income from accrued interest and fees. The company may use the approach opportunistically in the future, though management said such loans are generally held for between 30 and 120 days. Office loans declined to $442 million, representing less than 25% of the total loan portfolio, compared with 39% at the end of the second quarter of 2025. The company had five risk-rated one through three office loans as of June 30. Management said there were four risk-rated four and five loans outstanding at quarter-end. For a third consecutive quarter, no loans rated one through three migrated into the risk-rated four or five categories. The company also reported no new real estate owned, or REO, properties. The largest risk-rated five loan, a Chicago office loan, remained on non-accrual status but continued to make contractual interest payments. Donohoe said the property had occupancy above 90%, a weighted-average lease term of more than seven years and positive net cash flow. The loan was extended for three months after quarter-end from its July 2026 maturity as the borrower continued a sales process. ACRE’s Brooklyn residential condominium loan also remained on non-accrual, although construction is now substantially complete. The company said marketing and pre-sale activity was underway, with no issues reported so far regarding sales velocity or pricing. A $13 million subordinate loan secured by a California industrial property was downgraded to risk-rated five from risk-rated four. Management cited the January 2027 loan maturity and a higher probability of a near-term realized loss, while noting continuing sponsor support, prospective tenant interest and positive trends in the submarket. The company is also working toward a sale of its North Carolina office REO property, where Donohoe said market interest has been strong. Its remaining REO investment, a Florida mixed-use property, maintained consistent occupancy and generated a 10% income yield. ACRE’s current expected credit loss, or CECL, reserve increased by roughly $900,000 from the prior quarter to $139 million, equal to approximately 8% of loans held for investment. Gonzales said the increase was driven principally by about $1 million of reserves associated with new loans, while reserves for the existing portfolio were largely unchanged. Risk-rated four and five loans accounted for $130 million, or 94%, of the CECL reserve. Nearly half of the total reserve was associated with the Chicago office loan. The reserve attributed to risk-rated four and five assets represented approximately 34% of those loans’ outstanding principal balance. The company ended the quarter with a net debt-to-equity ratio, excluding CECL, of 2.0 times and available capital of $106 million. It collected more than $110 million of repayments in the first half of 2026 and expects repayment activity in the second half to be supported by portfolio turnover and additional asset resolutions. Management said more than $150 million in carrying value of loans, net of CECL, was not accruing interest. Gonzales said resolving those loans and redeploying the proceeds could enable earnings to rise to the current dividend level and eventually beyond it. Over the longer term, the company expects to return to a historical return on equity of roughly 9% to 10%. The board reauthorized a share repurchase program through July 31, 2027, permitting repurchases of up to $50 million of common stock. It also declared a third-quarter cash dividend of $0.15 per common share, payable Oct. 15 to shareholders of record as of Sept. 30. ACRE also announced that Chief Operating Officer Tae-Sik Yoon will step down from his day-to-day executive role and transition to senior advisor to Ares Management, including continued work with ACRE. Donohoe thanked Yoon for 14 years of service and said the company would continue to benefit from his industry experience and guidance. Ares Commercial Real Estate Corporation (NYSE: ACRE) is a publicly traded real estate investment trust (REIT) primarily focused on commercial real estate debt investments. Externally managed by an affiliate of Ares Management Corporation, ACRE seeks to generate attractive risk-adjusted returns through its diversified portfolio of CRE financing strategies. The company specializes in originating, acquiring, financing and managing first mortgages, mezzanine loans, preferred equity and other structured finance products. Since its inception, Ares Commercial Real Estate has targeted a broad range of property types, including multifamily, office, industrial, retail and hospitality assets. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Ares Commercial Real Estate Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. GAAP Net Income: Approximately $4.4 million, or $0.08 per diluted common share for Q2 2026. Distributable Earnings: Approximately $6.9 million, or $0.12 per diluted common share for Q2 2026. Loan Portfolio: Reached $1.8 billion as of June 30, 2026, an increase of $129 million quarter-over-quarter and $484 million year-over-year. New Loan Commitments: Closed three new loan commitments totaling $130 million during the quarter. Office Loan Portfolio: Decreased to $442 million, representing less than 25% of the total loan portfolio, down from 39% at the end of Q2 2025. CECL Reserve: Increased marginally to $139 million as of June 30, 2026, up approximately $900,000 from the prior quarter. Book Value: Remained relatively stable at $8.82 per share. Net Debt-to-Equity Ratio: 2.0 times, excluding CECL. Available Capital: $106 million as of June 30, 2026. Dividend: Declared a regular cash dividend of $0.15 per common share for Q3 2026, with an annualized dividend yield of approximately 14%. Warning! GuruFocus has detected 3 Warning Signs with ACRE. Is ACRE fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Ares Commercial Real Estate Corp (NYSE:ACRE) deployed over $900 million in new loan commitments in the past 12 months, representing more than 40% of its current loan portfolio, showcasing strong origination capabilities. The company reported a 36% year-over-year increase in the outstanding principal balance of its total portfolio, indicating significant portfolio growth. Ares Commercial Real Estate Corp (NYSE:ACRE) saw no new REO properties and no risk rated 1 to 3 loans migrate to risk rated 4 or 5 for the third consecutive quarter, reflecting improved credit quality. The company maintained a stable CECL reserve quarter-over-quarter, with the reserve for previously existing loans largely flat, indicating stability in credit risk. Ares Commercial Real Estate Corp (NYSE:ACRE) continued to reduce its office loan portfolio, decreasing office loans to less than 25% of total loans from 39% a year ago, aligning with its strategic repositioning. The company collected $1.7 million in cash interest on nonaccrual loans, which was accounted for as a reduction in loan basis, providing some cash flow from troubled assets. Ares Commercial Real Estate Corp (NYSE:ACRE) maintained a strong balance sheet with a net debt-to-equity ratio of 2.0 times and over $100 million in liquidity, supporting future growth and asset resolutions. The company's book value remained relatively stable at $8.82 per share, reflecting progress in portfolio repositioning and overall portfolio strength. Ares Commercial Real Estate Corp (NYSE:ACRE) declared a regular cash dividend of $0.15 per share, offering an annualized dividend yield of approximately 14% at the current stock price. The company's Board reauthorized a $50 million share repurchase program, demonstrating confidence in the company's value and commitment to returning capital to shareholders. Ares Commercial Real Estate Corp (NYSE:ACRE) reported GAAP net income of only $0.08 per diluted share, which is below the dividend level, indicating earnings are not covering distributions. The company has over $150 million in carrying value of loans net of CECL not accruing interest, which is a significant drag on earnings and capital. The largest risk rated 5 loan, the Chicago office loan, remains on nonaccrual and its sales process timeline has extended beyond original expectations, requiring a three-month extension. A $13 million subordinate loan collateralized by a California industrial property was downgraded to risk rated 5, reflecting a higher probability of near-term realized loss. The Brooklyn Residential Condo loan remains on nonaccrual, with construction substantially complete but presales and marketing efforts still ongoing, indicating a slow path to resolution. The company's CECL reserve increased marginally to $139 million, with 94% of the reserve attributed to risk rated 4 and 5 loans, highlighting ongoing credit concerns. Ares Commercial Real Estate Corp (NYSE:ACRE) experienced a slowdown in repayment activity in the second quarter, which could delay capital recycling and future growth. The company's distributable earnings of $0.12 per share are below the dividend of $0.15 per share, indicating a shortfall that may require additional capital or asset resolutions to cover. The commercial real estate market faces broader macroeconomic and geopolitical uncertainty, with a spike in interest rates and shifting outlook, which could pressure asset values and loan performance. The company's leadership transition, with the COO stepping down, may introduce operational uncertainty, although the individual will remain as a senior adviser. Q: What is the expected cadence for resolving and recycling capital from the risk-rated 4 and 5 loans over the next 12 to 18 months? A: CEO Bryan Donohoe noted that the four remaining risk-rated 4 and 5 loans are idiosyncratic, making it difficult to provide a consistent timeline. CFO Jeffrey Gonzales added that the company has roughly $150 million in carrying value tied up in these non-accruing loans and expects earnings to increase in stages as they are resolved, eventually reaching the dividend level and beyond. The company is hyper-focused on resolving these assets efficiently to redeploy capital into interest-earning loans. Q: How should investors think about the go-forward return on equity (ROE) profile for the REIT, given the current dividend, leverage, and ability to recycle capital? A: CFO Jeffrey Gonzales stated that the company expects to return to its historical ROE of approximately 9% to 10% on its book value over the longer term as it resolves the remaining risk-rated 4 and 5 loans. He noted that resolving one of these loans could be enough to get earnings back to the dividend level. CEO Bryan Donohoe added that the company has proven it can deploy capital effectively, having originated $900 million in new loans over the past 12 months, and is focused on creating a diversified, stable income profile. Q: Can you provide an update on the Chicago office loan, which is the largest risk-rated 5 loan, and how patient the company is willing to be versus taking the asset back? A: CEO Bryan Donohoe acknowledged the timeline has been frustrating but stated the company remains encouraged by the ongoing sales process. He noted the loan was extended by three months post-quarter-end to support the borrower's efforts. The property maintains occupancy above 90% with a weighted average lease term of over seven years and positive net cash flow. Donohoe emphasized that while they would like to exit, the asset's durable income profile provides comfort that it can remain an accretive asset if the sale does not come to fruition. Q: Are there any new pressures emerging in the risk-rated 3 loan bucket or the broader portfolio given the recent spike in interest rates? A: CEO Bryan Donohoe stated that the company's risk ratings reflect all known information, including market rates, borrower behavior, and loan structure. He noted that while all loans are impacted by rate changes, these impacts are factored into the risk ratings. Regarding industrial assets, he said the company remains comfortable with the long-term viability of Class A industrial, though higher carry costs may shorten the timeline for capturing mark-to-market rents. He described the current market as being in the "fourth or fifth inning, but in a bit of a rain delay" due to rate volatility and geopolitical uncertainty. Q: What is the expected CECL reserve for new loan originations in the current environment? A: CFO Jeffrey Gonzales explained that a standard three-year floating rate loan would typically carry a CECL reserve of around 100 basis points at closing. He noted that the reserve would be lower for loans with shorter terms, which explains why the new fundings in the quarter had a reserve of approximately 75 basis points, as one of the loans had a two-year initial term. Q: Can you provide an update on the Brooklyn Residential Condo loan and the progress of presales and marketing efforts? A: CEO Bryan Donohoe stated that construction on the building is now substantially complete, with remaining costs largely limited to settling payables and completing punch list items. The property has entered the typical presale period, and while summer months can be slower, there have been no issues with velocity or pricing so far. The company sees a more visible path toward resolution as early marketing and presales efforts continue. Q: Are the held-for-sale loan transactions pre-negotiated, and what is the risk if the market moves dramatically while the loans are on the balance sheet? A: CEO Bryan Donohoe explained that while the company generally has a view of potential outcomes for these assets, they are not fully baked, so there is short-duration risk. However, the company begins by liking the underlying collateral and considers these positions liquid. CFO Jeffrey Gonzales added that the typical hold period for these loans ranges between 30 to 120 days, which limits the duration of exposure. Q: How is the company thinking about the broader commercial real estate cycle and the disparity in outcomes across different asset types? A: CEO Bryan Donohoe described the market as being in a "digestion phase" for higher rates and geopolitical uncertainty. He noted that the disparity of outcomes on certain assets is broader than in prior cycles, citing examples like the orphaning of life science assets and the massive dispersion in office valuations. This higher loss severity has driven the company's conservative approach to positioning its balance sheet and reserves. He emphasized that the company continues to avoid heavy CapEx-intensive assets and remains focused on creating durable income profiles. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Second quarter GAAP net income of $4.4 million or $0.08 per diluted common share and Distributable Earnings1 of $6.9 million or $0.12 per diluted common share - Subsequent to the three months ended June 30, 2026 - Declared third quarter 2026 dividend of $0.15 per common share NEW YORK, Aug. 4, 2026 /PRNewswire/ -- Ares Commercial Real Estate Corporation (the "Company") (NYSE: ACRE), a specialty finance company primarily engaged in directly originating and investing in commercial real estate loans and related investments, reported generally accepted accounting principles ("GAAP") net income of $4.4 million or $0.08 per diluted common share and Distributable Earnings1 of $6.9 million or $0.12 per diluted common share for the second quarter of 2026. "We continue to make advancements in repositioning our portfolio, addressing risk rated 4 and 5 loans, and reducing office loans and REO properties, while investing in new loans," said Bryan Donohoe, Chief Executive Officer of Ares Commercial Real Estate Corporation. "Supported by the Ares platform, in the second quarter, we closed $130 million of new loan commitments, bringing the total new loan commitments to over $900 million in the last twelve months." "During the second quarter, we maintained our balance sheet flexibility with moderate leverage and available capital of over $100 million to support our business priorities," said Jeff Gonzales, Chief Financial Officer of Ares Commercial Real Estate Corporation. "We continue to execute the goals we have outlined, which we believe will allow us to rebuild earnings to levels that are expected to meet or exceed the current dividend level." COMMON STOCK DIVIDEND On May 7, 2026, the Board of Directors of the Company declared a regular cash dividend of $0.15 per common share for the second quarter of 2026. The second quarter 2026 dividend was paid on July 15, 2026 to common stockholders of record as of June 30, 2026. On August 4, 2026, the Board of Directors of the Company declared a regular cash dividend of $0.15 per common share for the third quarter of 2026. The third quarter 2026 dividend will be payable on October 15, 2026 to common stockholders of record as of September 30, 2026. ADDITIONAL INFORMATION The Company issued a presentation of its second quarter 2026 results, which can be viewed at www.arescre.com on the Investor Resources section of our home page under Events and Presentations. The presentation is titled "Second Quarter 2026 Earnings Presentation." The Company also filed its Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 with the U.S. Securities and Exchange Commission on August 4, 2026. CONFERENCE CALL AND WEBCAST INFORMATION On Tuesday, August 4, 2026, the Company invites all interested persons to attend its webcast/conference call at 12:00 p.m. (Eastern Time) to discuss its second quarter 2026 financial results. All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of the Company's website at www.arescre.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call by dialing +1 (800) 343-5172. International callers can access the conference call by dialing +1 (203) 518-9856. Please provide passcode ACREQ226. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available through September 4, 2026 at 5:00 p.m. (Eastern Time) to domestic callers by dialing +1 (800) 723-0532 and to international callers by dialing +1 (402) 220-2655. An archived replay will also be available through September 4, 2026 on a webcast link located on the Home page of the Investor Resources section of the Company's website. ABOUT ARES COMMERCIAL REAL ESTATE CORPORATION Ares Commercial Real Estate Corporation (the "Company") is a specialty finance company primarily engaged in directly originating and investing in commercial real estate loans and related investments. Through its national direct origination platform, the Company provides a broad offering of flexible and reliable financing solutions for commercial real estate owners and operators. The Company invests in whole and co-invested senior mortgage loans, as well as subordinate financings, mezzanine debt and preferred equity, with an emphasis on providing value added financing on a variety of properties located in liquid markets across the United States. Ares Commercial Real Estate Corporation elected and qualified to be taxed as a real estate investment trust and is externally managed by a subsidiary of Ares Management Corporation. For more information, please visit www.arescre.com. The contents of such website are not, and should not be deemed to be, incorporated by reference herein. FORWARD-LOOKING STATEMENTS Statements included herein or on the webcast / conference call may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. These statements relate to future events or the Company's future performance or financial condition and include, but are not limited to, statements about potential earnings, the resolution of underperforming loans, increased investment activity, liquidity management, reduction or increase of CECL reserve, reduction or increase of available borrowings, the industry and the loan market. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including global economic trends and economic conditions, including slower growth, changes to fiscal and monetary policy, inflation, labor shortages, changing interest rates, foreign currency exchange volatility and uncertainties caused by tariffs and trade disputes, as well as geopolitical instability, changes in interest rates and credit spreads, management's estimate of current expected credit losses and current expected credit loss reserve, the amount of commercial mortgage loans requiring refinancing, the demand for commercial real estate loans, the Company's expected investment capacity and available capital, rates of default or decreased recovery rates on the Company's target investments, the Company's business and investment strategy, the Company's projected operating results, the ability of Ares Commercial Real Estate Management LLC ("ACREM" or the Company's "Manager") to locate suitable investments for the Company, monitor, service and administer the Company's investments and execute its investment strategy, and the risks described from time to time in the Company's filings with the Securities and Exchange Commission (the "SEC"), including, but not limited to, the risk factors described in Part I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K, filed with the SEC on February 10, 2026. Any forward-looking statement, including any contained herein, speaks only as of the time of this press release and Ares Commercial Real Estate Corporation undertakes no duty to update any forward-looking statements made herein or on the webcast/conference call. Projections and forward-looking statements are based on management's good faith and reasonable assumptions, including the assumptions described herein. INVESTOR RELATIONS CONTACTS Ares Commercial Real Estate CorporationCarl Drake or John Stilmar(888) [email protected] SCHEDULE I Reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss) Distributable Earnings (Loss) is a non-GAAP financial measure that helps the Company evaluate its financial performance excluding the effects of certain transactions and GAAP adjustments that it believes are not necessarily indicative of its current loan origination portfolio and operations. To maintain the Company's REIT status, the Company is generally required to annually distribute to its stockholders substantially all of its taxable income. The Company believes the disclosure of Distributable Earnings (Loss) provides useful information to investors regarding the Company's ability to pay dividends, which is one of the principal reasons the Company believes investors invest in the Company. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Distributable Earnings (Loss) is defined as net income (loss) attributable to common stockholders computed in accordance with GAAP, excluding non-cash equity compensation expense, the incentive fees the Company pays to its Manager, depreciation and amortization (to the extent that any of the Company's target investments are structured as debt and the Company forecloses on any properties underlying such debt), any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss), one-time events pursuant to changes in GAAP and certain non-cash charges after discussions between the Company's Manager and the Company's independent directors and after approval by a majority of the Company's independent directors. Loan balances that are deemed to be uncollectible are written-off as a realized loss and are included in Distributable Earnings (Loss). Distributable Earnings (Loss) is aligned with the calculation of "Core Earnings," which is defined in the Management Agreement and is used to calculate the incentive fees the Company pays to its Manager. Reconciliation of net income (loss) attributable to common stockholders, the most directly comparable GAAP financial measure, to Distributable Earnings (Loss) is set forth in the table below for the three and twelve months ended June 30, 2026 ($ in thousands): View original content to download multimedia:https://www.prnewswire.com/news-releases/ares-commercial-real-estate-corporation-reports-second-quarter-2026-results-302841855.html

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the quarter's stability to a commercial real estate market that exhibited modest price appreciation and improved liquidity despite broader macroeconomic uncertainty. The company is executing a deliberate shift in portfolio composition, reducing office exposure to less than 25% of the total loan portfolio compared to 39% a year ago. Performance was supported by the fact that no risk rated 1 to 3 loans migrated to the underperforming 4 or 5 categories for the third consecutive quarter. Management highlighted the scale of the Ares platform as a differentiator, allowing for co-investment opportunities that reduce asset concentration while accessing institutional-quality properties. New originations over the past 12 months now represent 42% of the portfolio, providing gross levered returns in the low double digits and improving vintage diversification. The company is prioritizing the resolution of $150 million in non-accruing loans to capture future earnings power and return to historical profitability levels. Management expects future earnings growth to be driven by the successful resolution of risk rated 4 and 5 loans and the subsequent redeployment of that capital into yielding investments. Repayment activity in the second half of 2026 is expected to be driven by natural portfolio turnover and further asset resolutions. The company intends to opportunistically utilize a 'held-for-sale' loan strategy to capture short-term economics on high-conviction loans while maintaining liquidity. Guidance for new originations assumes a standard CECL reserve of approximately 100 basis points for 3-year floating rate loans. Management aims to return to a historical return on equity (ROE) of approximately 9% to 10% as non-accruing capital is recycled into interest-earning assets. The Chicago office loan, the largest risk rated 5 asset, remains on non-accrual but was extended by three months to support an ongoing sales process. A $13 million subordinate industrial loan was downgraded to risk rated 5 due to its January 2027 maturity, reflecting a higher probability of a near-term realized loss. The Brooklyn Residential Condo project is substantially complete, with remaining costs limited to payables and punch list items as it enters the presale phase. Chief Operating Officer Tae-Sik Yoon is transitioning to a senior adviser role after 14 years, with management emphasizing a deep bench of talent for the leadership transition. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management described the market as being in a 'rain delay' in the middle innings of the cycle, where the digestion of higher interest rates is still ongoing. The company is avoiding heavy CapEx-intensive assets because the disparity of outcomes for such properties is broader than in prior cycles. Management noted that resolutions are idiosyncratic and difficult to predict on a regular cadence, but they are hyper-focused on accelerating these exits. Resolving the Chicago office loan alone would reduce total office allocation by approximately 50% and free up significant capital for reinvestment. These loans typically have a short hold period of 30 to 120 days, minimizing duration risk while allowing the company to capture fee income. Management clarified that while they have a view of potential 'homes' for these assets, they are not always pre-negotiated, though they only select collateral they are comfortable holding.

Ares Commercial Real Estate (ACRE) came out with quarterly earnings of $0.12 per share, beating the Zacks Consensus Estimate of $0.08 per share. This compares to a loss of $0.51 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +50.00%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.08 per share when it actually produced earnings of $0.06, delivering a surprise of -25%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Ares Commercial Real Estate, which belongs to the Zacks REIT and Equity Trust industry, posted revenues of $27.75 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.65%. This compares to year-ago revenues of $23.12 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Ares Commercial Real Estate shares have lost about 11.1% since the beginning of the year versus the S&P 500's gain of 11%. While Ares Commercial Real Estate has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Ares Commercial Real Estate was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.13 on $28.15 million in revenues for the coming quarter and $0.36 on $110.03 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Starwood Property Trust (STWD), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This commercial real estate investment trust is expected to post quarterly earnings of $0.40 per share in its upcoming report, which represents a year-over-year change of -7%. The consensus EPS estimate for the quarter has been revised 3.8% lower over the last 30 days to the current level. Starwood Property Trust's revenues are expected to be $505.6 million, up 13.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ares Commercial Real Estate Corporation (ACRE) : Free Stock Analysis Report STARWOOD PROPERTY TRUST, INC. (STWD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Franklin BSP (FBRT) came out with quarterly earnings of $0.25 per share, beating the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.27 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +8.70%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.22 per share when it actually produced earnings of $0.22, delivering no surprise. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Franklin BSP, which belongs to the Zacks REIT and Equity Trust industry, posted revenues of $65.29 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 11.04%. This compares to year-ago revenues of $49.29 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Franklin BSP shares have lost about 22.7% since the beginning of the year versus the S&P 500's gain of 8.5%. While Franklin BSP has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Franklin BSP was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.26 on $75.2 million in revenues for the coming quarter and $0.86 on $301.65 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust is currently in the bottom 33% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Ares Commercial Real Estate (ACRE), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 4. This real estate investment trust is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of +115.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Ares Commercial Real Estate's revenues are expected to be $26.52 million, up 14.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Franklin BSP Realty Trust, Inc. (FBRT) : Free Stock Analysis Report Ares Commercial Real Estate Corporation (ACRE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

BrightSpire (BRSP) came out with quarterly earnings of $0.13 per share, missing the Zacks Consensus Estimate of $0.14 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -7.14%. A quarter ago, it was expected that this real estate investment trust would post earnings of $0.15 per share when it actually produced earnings of $0.14, delivering a surprise of -6.67%. Over the last four quarters, the company has not been able to surpass consensus EPS estimates. Colony Credit, which belongs to the Zacks REIT and Equity Trust industry, posted revenues of $17.23 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 10.09%. This compares to year-ago revenues of $16.73 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Colony Credit shares have lost about 6.4% since the beginning of the year versus the S&P 500's gain of 8.3%. While Colony Credit has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Colony Credit was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.15 on $16.5 million in revenues for the coming quarter and $0.60 on $65.95 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, REIT and Equity Trust is currently in the bottom 41% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Ares Commercial Real Estate (ACRE), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 4. This real estate investment trust is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of +115.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Ares Commercial Real Estate's revenues are expected to be $26.52 million, up 14.7% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BrightSpire Capital, Inc. (BRSP) : Free Stock Analysis Report Ares Commercial Real Estate Corporation (ACRE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

NEW YORK, July 21, 2026 /PRNewswire/ -- Ares Commercial Real Estate Corporation (NYSE: ACRE) announced today that it will report earnings for the second quarter ended June 30, 2026 on Tuesday, August 4, 2026 prior to the opening of the New York Stock Exchange. Ares Commercial Real Estate Corporation will hold its webcast/conference call on the same day at 12:00 p.m. Eastern Time to discuss its second quarter ended June 30, 2026 financial results. All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of our website at http://www.arescre.com. Please visit the website to test your connection before the webcast. Domestic callers can access the conference call by dialing +1 (800) 343-5172. International callers can access the conference call by dialing +1 (203) 518-9856. Please provide passcode ACREQ226. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available through September 4, 2026 at 5:00 p.m. (Eastern Time) to domestic callers by dialing +1 (800) 723-0532 and to international callers by dialing +1 (402) 220-2655. An archived replay will also be available through September 4, 2026 on a webcast link located on the Home page of the Investor Resources section of our website. About Ares Commercial Real Estate Corporation Ares Commercial Real Estate Corporation (the "Company") is a specialty finance company primarily engaged in directly originating and investing in commercial real estate loans and related investments. Through its national direct origination platform, the Company provides a broad offering of flexible and reliable financing solutions for commercial real estate owners and operators. The Company originates senior mortgage loans, as well as subordinate financings, mezzanine debt and preferred equity, with an emphasis on providing value added financing on a variety of properties located in liquid markets across the United States. Ares Commercial Real Estate Corporation elected and qualified to be taxed as a real estate investment trust and is externally managed by a subsidiary of Ares Management Corporation. For more information, please visit www.arescre.com. The contents of such website are not, and should not be deemed to be, incorporated by reference herein. Investor Relations Contact: Ares Commercial Real Estate Corporation Carl Drake or John Stilmar (888) 818-5298 [email protected] View original content to download multimedia:https://www.prnewswire.com/news-releases/ares-commercial-real-estate-corporation-schedules-earnings-release-and-conference-call-for-the-second-quarter-ended-june-30-2026-302831201.html

Interested in Ares Commercial Real Estate Corporation? Here are five stocks we like better. Ares Commercial Real Estate reported a first-quarter net loss of about $9.6 million, as higher CECL reserves and a realized loss on a Pennsylvania multifamily loan weighed on results. Distributable earnings were $3.2 million, or $0.06 per share, before excluding that realized loss. Management said the portfolio is being reshaped toward higher-quality loans and away from office exposure, with three new commitments totaling $294 million in Q1 and office balance down nearly 25% year over year. The company emphasized improved diversification and a constructive lending backdrop as commercial real estate values stabilize. Credit stress remains concentrated in two troubled loans: a Chicago office loan and a Brooklyn condominium loan, which drove an increase in the total CECL reserve to $138 million. ACRE also declared a $0.15 quarterly dividend and said it ended the quarter with $163 million of available capital. Ares Commercial Real Estate (NYSE:ACRE) reported a first-quarter loss as higher credit reserves tied to two large troubled loans weighed on results, while management said it continued to reshape the portfolio through new originations, asset resolutions and reduced office exposure. Chief Executive Officer Bryan Donohoe said the commercial real estate market showed “relative stability” during the quarter despite uncertainty in broader macroeconomic and corporate credit markets. He said limited new supply supported modest valuation growth and that reset valuations, along with what the company views as early capital rotation back into commercial real estate, created an attractive lending environment. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% Against that backdrop, Donohoe said ACRE remained focused on reducing risk while originating higher-quality loans. The company closed three new loan commitments totaling $294 million in the first quarter, backed by multifamily, mixed-use and retail properties. Loans held for investment rose to 35 loans totaling $1.7 billion at quarter-end, up $110 million from the prior quarter. “We believe today’s commercial real estate environment offers the opportunity to originate at attractive attachment points with stronger credit structures and risk-adjusted returns,” Donohoe said. → Light Speed Returns: Corning Cashes In on NVIDIA Growth Management highlighted that 37% of the investment loan portfolio balance was originated during the past 12 months. ACRE committed approximately $780 million to new loans over that period, with more than 75% of those dollars committed through co-investments alongside other Ares Management-affiliated vehicles. Donohoe said that activity represents a portion of nearly $10 billion in new loan commitments across the broader Ares real estate debt platform during the same period. Donohoe said ACRE has increased the outstanding principal balance of its portfolio by 22% year over year while improving diversification and reducing the office loan balance by nearly 25%. The company has redeployed capital into property types including industrial, multifamily, select retail and self-storage. → Years in the Making, AMD’s Upside Movement Has Just Begun As of March 31, 31 of ACRE’s 35 loans were rated risk grade one through three. Donohoe said there were no negative credit migrations during the first quarter among loans in those categories. Management said four loans remain rated risk grade four or five, with the two largest accounting for more than 90% of the outstanding principal balance in that group. The largest is a risk-rated five Chicago office loan that remains on nonaccrual. Donohoe said the loan continues to make contractual interest payments, which are applied to the company’s basis. He said the property’s occupancy remains above 90%, with a weighted average lease term of about eight years and positive net cash flow. However, the sales process has taken longer than expected, and ACRE increased its CECL reserve for the loan by about $5 million to reflect current market indications for a potential sale. The second-largest troubled loan is a risk-rated four residential condominium loan in Brooklyn, New York, which also remains on nonaccrual. Donohoe said the preliminary condo sales process began earlier this year, and initial sales proceeds are expected to pay down project debt, with later sales expected to generate cash flow back to the company. In response to an analyst question, management said a sellout period for a similarly sized project would generally be expected to be inside two years, though timing depends on demand. ACRE also began a formal sales process during the quarter for its North Carolina office real estate owned property. Donohoe said the decision was supported by improved property fundamentals and capital markets activity. The remaining property was reclassified as held for sale at the end of the quarter. Chief Financial Officer Jeff Gonzales said ACRE reported a GAAP net loss of approximately $9.6 million, or $0.17 per diluted common share, for the first quarter of 2026. Distributable earnings were approximately $3.2 million, or $0.06 per diluted common share. That figure included a realized loss of $3.3 million, or $0.06 per diluted common share, related to the exit of a risk-rated five Pennsylvania multifamily loan. Excluding that realized loss, distributable earnings were approximately $6.5 million, or $0.12 per diluted common share. Gonzales also said ACRE collected $2.1 million, or $0.04 per diluted common share, of cash interest on nonaccrual loans, which was accounted for as a reduction in loan basis. The company’s total CECL reserve increased to $138 million as of March 31, up approximately $11 million from the end of 2025. Gonzales said the increase was primarily driven by a $15 million combined increase in reserves for risk-rated four and five loans, particularly the Chicago office and Brooklyn condominium loans, as well as a $2 million reserve increase tied to new loans closed in the quarter. These increases were partially offset by the realized loss associated with exiting the Pennsylvania multifamily loan and other factors. The total CECL reserve represented approximately 8% of the outstanding principal balance of loans held for investment. Gonzales said 94% of the reserve, or $129 million, related to risk-rated four and five loans. About half of the total reserve is tied to the only risk-rated five loan in the portfolio. Book value was $8.89 per share, inclusive of the CECL reserve. ACRE ended the quarter with a net debt-to-equity ratio, excluding CECL, of 1.9 times. Gonzales said the company collected $94 million in repayments during the quarter and had $163 million of available capital as of March 31, including $86 million in cash. The company also increased borrowing capacity by $300 million, subject to available collateral, and reduced borrowing costs. Gonzales said ACRE upsized its Morgan Stanley facility to $350 million and extended it by three years, increased its Citibank facility to $425 million, and redeemed its FL4 CLO securitization. In the second quarter to date, ACRE has closed $95 million of new loan commitments collateralized by multifamily and self-storage properties, both structured as co-investment opportunities. The board declared a regular cash dividend of $0.15 per common share for the second quarter of 2026, payable July 15 to stockholders of record as of June 30. Gonzales said that, based on ACRE’s stock price on May 4, the annualized dividend yield on the second-quarter dividend was approximately 11.5%. During the question-and-answer session, management said the broader commercial real estate market remains constructive, with capital flowing back into the sector and values showing stability or modest appreciation. In discussing new investments, management said banks’ willingness to provide capital and back leverage has allowed ACRE to move lower on the risk spectrum while still targeting returns consistent with historical norms. Management said ACRE remains underweight office on a go-forward basis and is focused on lower capital-expenditure asset classes, while evaluating fundamentals including supply, demand, geography, property vintage and location. Donohoe closed by saying the company remains focused on reducing risk-rated four and five loans, addressing office and REO exposures, and opportunistically investing in new loans. Ares Commercial Real Estate Corporation (NYSE: ACRE) is a publicly traded real estate investment trust (REIT) primarily focused on commercial real estate debt investments. Externally managed by an affiliate of Ares Management Corporation, ACRE seeks to generate attractive risk-adjusted returns through its diversified portfolio of CRE financing strategies. The company specializes in originating, acquiring, financing and managing first mortgages, mezzanine loans, preferred equity and other structured finance products. Since its inception, Ares Commercial Real Estate has targeted a broad range of property types, including multifamily, office, industrial, retail and hospitality assets. The article "Ares Commercial Real Estate Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.