On November 3, 2023, Ares Commercial Real Estate Corp (ACRE, Financial) released its Q3 2023 earnings report. The company reported a GAAP net income of $9.2 million or $0.17 per diluted common share and Distributable Earnings of $13.5 million or $0.25 per diluted common share for the third quarter of 2023.
Financial Performance
ACRE's Q3 2023 performance was marked by significant liquidity and moderate leverage, which allowed the company to maximize credit outcomes and selectively originate new loans in the market to take advantage of attractive spreads. The company's strong balance sheet and deep credit capabilities have positioned it well to navigate industry challenges and generate attractive dividends for shareholders.
Income Statement Highlights
ACRE's revenue for the third quarter of 2023 was $23.88 million, primarily driven by net interest margin of $23.07 million. The company's total expenses for the quarter were $6.6 million, including management and incentive fees to affiliate of $2.97 million and general and administrative expenses of $1.69 million.
Balance Sheet Overview
As of September 30, 2023, ACRE's total assets stood at $2.36 billion, including cash and cash equivalents of $61.02 million and net loans held for investment of $2.06 billion. The company's total liabilities were $1.68 billion, including secured funding agreements of $654.51 million and collateralized loan obligation securitization debt of $735.14 million. The company's total stockholders' equity was $682.96 million.
Dividend Declaration
Subsequent to the end of the third quarter, ACRE declared a fourth quarter 2023 dividend of $0.33 per common share. The dividend will be payable on January 17, 2024, to common stockholders of record as of December 29, 2023.
Company's Commentary
During the third quarter, we continued to operate with significant liquidity and moderate leverage, which enabled us to maximize credit outcomes and selectively originate new loans in today’s market to take advantage of attractive spreads," said Bryan Donohoe, Chief Executive Officer of Ares Commercial Real Estate Corporation.
We resolved one of our defaulted loans during the quarter resulting in a realized loss of $0.09 per diluted common share," said Tae-Sik Yoon, Chief Financial Officer of Ares Commercial Real Estate Corporation. "Our Distributable Earnings for the third quarter of $0.25 per diluted common share includes this realized loss."
Explore the complete 8-K earnings release (here) from Ares Commercial Real Estate Corp for further details.
