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ACRE Ares Commercial Real Estate

Ares Commercial Real Estate Corporation is a specialty finance company primarily engaged in 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.

Company profile

Ticker
ACRE
Exchange
Website
CEO
Bryan Donohoe
Employees
Incorporated
Location
Fiscal year end
SEC CIK
Subsidiaries
ACRC Holdings LLC • ACRC Lender LLC • ACRC Lender C LLC • ACRC Lender W LLC • ACRC Lender W TRS LLC • ACRC 2017-FL3 Holder LLC • ACRC Lender ML LLC • ACRC Mezz Holdings LLC • ACRC Warehouse Holdings LLC • ACRC 2017-FL3 Holder I L.P. ...
IRS number
453148087

ACRE stock data

(
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Investment data

Data from SEC filings
Securities sold
Number of investors

Calendar

29 Jul 21
21 Oct 21
31 Dec 21
Quarter (USD)
Jun 21 Mar 21 Dec 20 Sep 20
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS
Annual (USD)
Dec 20 Dec 19 Dec 18 Dec 17
Revenue
Cost of revenue
Operating income
Operating margin
Net income
Net profit margin
Cash on hand
Change in cash
Diluted EPS

Financial data from company earnings reports.

Cash burn rate (estimated) Burn method: Change in cash Burn method: Operating income/loss Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 75.67M 75.67M 75.67M 75.67M 75.67M 75.67M
Cash burn (monthly) 7.42M (positive/no burn) (positive/no burn) (positive/no burn) (positive/no burn) (positive/no burn)
Cash used (since last report) 27.64M n/a n/a n/a n/a n/a
Cash remaining 48.03M n/a n/a n/a n/a n/a
Runway (months of cash) 6.5 n/a n/a n/a n/a n/a

Beta Read what these cash burn values mean

Date Owner Security Transaction Code Indirect 10b5-1 $Price #Shares $Value #Remaining
12 Jul 21 Feingold Anton Common Stock Payment of exercise Dispose F No No 14.9601 730 10.92K 26,381
22 Apr 21 April Rand Scott Common Stock Grant Acquire A No No 0 4,656 0 6,805
22 Apr 21 Blakely Caroline Common Stock Grant Acquire A No No 0 4,656 0 25,064
22 Apr 21 Browning William Common Stock Grant Acquire A No No 0 4,656 0 31,233
22 Apr 21 Moriarty Edmond N. III Common Stock Grant Acquire A No No 0 4,656 0 26,647

Data for the last complete 13F reporting period. To see the most recent changes to ownership, click the ownership history button above.

50.9% owned by funds/institutions
13F holders
Current Prev Q Change
Total holders 123 134 -8.2%
Opened positions 19 27 -29.6%
Closed positions 30 14 +114.3%
Increased positions 55 47 +17.0%
Reduced positions 28 37 -24.3%
13F shares
Current Prev Q Change
Total value 351.91M 502.49M -30.0%
Total shares 23.94M 21.6M +10.9%
Total puts 116.4K 22.5K +417.3%
Total calls 186.2K 100.1K +86.0%
Total put/call ratio 0.6 0.2 +178.1%
Largest owners
Shares Value Change
BLK Blackrock 4.02M $59.06M +18.1%
Vanguard 2.19M $32.19M +19.6%
1832 Asset Management 1.58M $23.05M +103.7%
DFP Delphi Financial 1.56M $22.94M -0.6%
IVZ Invesco 1.14M $16.71M +16.8%
Millennium Management 880.65K $12.94M +17.3%
JPM JPMorgan Chase & Co. 880.17K $12.93M +24.0%
Boston Partners 844.51K $12.39M -0.6%
STT State Street 743.37K $11.17M +18.0%
Smith, Graham & Co., Investment Advisors 717.76K $10.54M -2.9%
Largest transactions
Shares Bought/sold Change
1832 Asset Management 1.58M +803.48K +103.7%
BLK Blackrock 4.02M +616.69K +18.1%
EJF Capital 0 -574.6K EXIT
Vanguard 2.19M +359.79K +19.6%
LDR Capital Management 293.26K +278.76K +1922.5%
Marshall Wace 0 -278.69K EXIT
Two Sigma Investments 461.25K +271.33K +142.9%
MS Morgan Stanley 415.06K +269.74K +185.6%
Two Sigma Advisers 632.9K +264.2K +71.7%
FHI Federated Hermes 232.34K +232.34K NEW

Financial report summary

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Risks
  • RISKS RELATED TO OUR BUSINESS
  • The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our business and operations.
  • Our board of directors may change our investment strategy or guidelines, financing strategy or leverage policies without stockholder consent.
  • Changes in laws or regulations governing our operations, changes in the interpretation thereof or newly enacted laws or regulations and any failure by us to comply with these laws or regulations, could require changes to certain of our business practices, negatively impact our operations, cash flow or financial condition, impose additional costs on us or otherwise adversely affect our business.
  • Adoption of the Basel III standards and other proposed supplementary regulatory standards may negatively impact our access to financing or affect the terms of our future financing arrangements.
  • State licensing requirements will cause us to incur expenses and our failure to comply with such requirements may have a material adverse effect on us and our operations.
  • We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
  • If we fail to comply with laws, regulations and market standards regarding the privacy, use and security of customer information, we may be subject to legal and regulatory actions and our reputation would be harmed, which would materially adversely affect us.
  • We may incur significant debt, which may subject us to increased risk of loss and may reduce cash available for distributions to our stockholders.
  • The Financing Agreements impose, and any additional lending facilities will impose, restrictive covenants and other restrictions.
  • Monetary policy actions by the United States Federal Reserve, including a continuation of the historically low interest rate environment, could adversely impact our financial condition.
  • The Financing Agreements and any bank credit facilities and repurchase agreements that we may use in the future to finance our assets may require us to provide additional collateral or pay down debt.
  • Our access to sources of financing may be limited and thus our ability to grow our business and to maximize our returns may be adversely affected.
  • Lender consent rights under our warehouse facilities may limit our ability to originate or acquire assets
  • We have utilized and may continue to utilize in the future non-recourse long-term securitizations. Such structures may expose us to risks which could result in losses.
  • The securitization process is subject to an evolving regulatory environment that may affect certain aspects of our current business.
  • We may enter into hedging transactions that could expose us to contingent liabilities in the future.
  • Hedging against interest rate or currency exposure may adversely affect our earnings, which could reduce our cash available for distribution to our stockholders.
  • Hedging instruments often are not traded on regulated exchanges or guaranteed by an exchange or its clearing house, and involve risks and costs that could result in material losses.
  • We may fail to qualify for hedge accounting treatment.
  • We may enter into derivative contracts that could expose us to contingent liabilities in the future.
  • We are currently exempt from being regulated as a commodity pool operator in part because we comply with certain restrictions regarding our use of certain derivative instruments, and failure to comply with such restrictions could subject us to additional regulation and compliance requirements which could materially adversely affect our business and financial condition.
  • RISKS RELATED TO OUR INVESTMENTS
  • We will allocate our available capital without input from our stockholders.
  • The lack of liquidity in our investments may adversely affect our business.
  • Our portfolio is concentrated in a limited number of loans, which subjects us to a risk of significant loss if any of these loans default.
  • A prolonged economic slowdown, a lengthy or severe recession or further declines in real estate values could impair our investments and harm our operations.
  • Our real estate investments are subject to risks particular to real property. These risks may result in a reduction or elimination of, or return from, a loan secured by a particular property.
  • The CRE loans we originate and the mortgage loans underlying any commercial mortgage-backed securities investments that we may make will be subject to the ability of the commercial property owner to generate net income from operating the property, as well as the risks of delinquency and foreclosure.
  • We are subject to various risks related to our ownership of certain real property, including hotel properties.
  • We operate in a competitive market for investment opportunities and loan originations and competition may limit our ability to originate or acquire our target investments on attractive terms.
  • If our Manager overestimates the yields or incorrectly prices the risks of our investments, we may experience losses.
  • Loans on properties in transition will involve a greater risk of loss than traditional investment-grade mortgage loans with fully insured borrowers.
  • Risks of cost overruns and noncompletion of renovation of the properties underlying short term senior loans on properties in transition may result in significant losses.
  • Investments in non-investment grade rated CRE loans or securities involve increased risk of loss.
  • The B-Notes that we have originated or may originate or acquire in the future may be subject to additional risks related to the privately negotiated structure and terms of the transaction, which may result in losses to us.
  • Our mezzanine loan assets involve greater risks of loss than senior loans secured by real properties.
  • Investments in preferred equity involve a greater risk of loss than traditional debt financing.
  • Any credit ratings assigned to our investments will be subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded.
  • We may experience a decline in the fair value of our assets.
  • Some of our portfolio investments may be recorded at fair value and, as a result, there will be uncertainty as to the value of these investments.
  • If we invest in commercial mortgage-backed securities, such investments would pose additional risks, including the risks of the securitization process and the risk that the special servicer may take actions that could adversely affect our interests.
  • Real estate valuation is inherently subjective and uncertain.
  • We may invest in non-performing real estate loans and participations.
  • Insurance on mortgage loans and real estate securities collateral may not cover all losses.
  • Liability relating to environmental matters may impact the value of properties that we may acquire upon foreclosure of the properties underlying our investments.
  • Construction loans involve an increased risk of loss.
  • Our investments in construction loans require us to make estimates about the fair value of land improvements that may be challenged by the IRS.
  • Our investments may be concentrated and could be subject to risk of default.
  • RISKS RELATED TO OUR COMMON STOCK
  • The market price of our common stock may fluctuate significantly.
  • Common stock eligible for future sale may have adverse effects on our share price.
  • We have not established a minimum distribution payment level and we may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at any time in the future.
  • Our distributions may exceed our cash flow from our operations and our net income.
  • Investing in our common stock may involve a high degree of risk.
  • Future offerings of securities may adversely affect the market price of our common stock.
  • The Maryland General Corporation Law, or the “MGCL,” prohibits certain business combinations, which may make it more difficult for us to be acquired.
  • Stockholders have limited control over changes in our policies and operations.
  • Our authorized but unissued shares of common and preferred stock may prevent a change in control.
  • Maintenance of our exemption from registration under the 1940 Act imposes significant limits on our operations. Your investment return may be reduced if we are required to register as an investment company under the 1940 Act.
  • Rapid and steep declines in the values of our real estate-related investments may make it more difficult for us to maintain our qualification as a REIT or exemption from the 1940 Act.
  • Our rights and the rights of our stockholders to recover on claims against our directors and officers are limited, which could reduce our stockholders and our recovery against them if they negligently cause us to incur losses.
  • Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management.
  • Ownership limitations may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.
  • RISKS RELATED TO OUR RELATIONSHIP WITH OUR MANAGER AND ITS AFFILIATES
  • Our future success depends on our Manager, its key personnel and their access to the investment professionals of Ares Management. We may not find a suitable replacement for our Manager if our Management Agreement is terminated or if such key personnel or investment professionals leave the employment of our Manager or Ares Management or otherwise become unavailable to us.
  • Our growth depends on the ability of our Manager to make investments on favorable terms that satisfy our investment strategy and otherwise generate attractive risk-adjusted returns initially and consistently from time to time.
  • There are various conflicts of interest in our relationship with our Manager and Ares Management that could result in decisions that are not in the best interests of our stockholders.
  • The ability of our Manager and its officers and employees to engage in other business activities may reduce the time our Manager spends managing our business and may result in certain conflicts of interest.
  • Our Management Agreement with our Manager was not negotiated on an arm’s-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party, and the manner of determining the management fees may not provide sufficient incentive to our Manager to maximize risk-adjusted returns for our portfolio since it is based on our stockholders’ equity per annum and not on our performance.
  • Terminating our Management Agreement for unsatisfactory performance of the Manager or electing not to renew the Management Agreement may be difficult and terminating the agreement in certain circumstances requires payment of a substantial termination fee.
  • The incentive fee payable to our Manager under the Management Agreement may cause our Manager to select investments in riskier assets to increase its incentive compensation.
  • Our Manager manages our portfolio in accordance with very broad investment guidelines and our board of directors does not approve each investment and financing decision made by our Manager, which may result in us making riskier investments than those currently comprising our investment portfolio.
  • Our Manager may change its investment process, or elect not to follow it, without stockholder consent at any time, which may adversely affect our investments.
  • We do not have a policy that expressly prohibits our directors, officers, stockholders or affiliates from engaging for their own account in business activities of the types conducted by us.
  • Our Manager is subject to extensive regulation as an investment adviser, which could adversely affect its ability to manage our business.
  • We may not replicate Ares Management’s historical performance.
  • In addition to other analytical tools, our Manager may utilize financial models to evaluate commercial mortgage loans and CRE-related debt instruments, the accuracy and effectiveness of which cannot be guaranteed.
  • We do not own the Ares name, but we may use the name pursuant to a license agreement with Ares Management. Use of the name by other parties or the termination of our license agreement may harm our business.
  • Our Manager’s and Ares Management’s liability is limited under the Management Agreement, and we have agreed to indemnify our Manager against certain liabilities. As a result, we could experience poor performance or losses for which our Manager would not be liable.
  • UNITED STATES FEDERAL INCOME TAX RISKS
  • Our failure to remain qualified as a REIT would subject us to United States federal income tax and potentially state and local tax, and would adversely affect our operations and the market price of our common stock.
  • REITs, in certain circumstances, may incur tax liabilities that would reduce the cash available for distribution to our stockholders.
  • To qualify as a REIT, we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce your overall return.
  • Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on your investment.
  • The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of securitizing mortgage loans that would be treated as sales for United States federal income tax purposes.
  • TRSs are subject to corporate-level taxes and dealings with TRSs may be subject to 100% excise tax.
  • Our investments in certain debt instruments may cause us to recognize income for United States federal income tax purposes even though no cash payments have been received on the debt instruments, and certain modifications of such debt by us could cause the modified debt to not qualify as a good REIT asset, thereby jeopardizing our REIT qualification.
  • The failure of mortgage loans subject to a repurchase agreement to qualify as a real estate asset would adversely affect our ability to qualify as a REIT.
  • The failure of mezzanine loans to qualify as a real estate asset would adversely affect our ability to qualify as a REIT.
  • Our qualification as a REIT and exemption from United States federal income tax with respect to certain assets may be dependent on the accuracy of legal opinions or advice rendered or given or statements by the issuers of assets that we acquire, and the inaccuracy of any such opinions, advice or statements may adversely affect our REIT qualification and result in corporate-level tax.
  • The taxable mortgage pool, or “TMP,” rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations.
  • We may choose to make distributions in our own stock, in which case you may be required to pay income taxes in excess of the cash dividends you receive.
  • Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
  • Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.
  • Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities.
  • We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our common stock.
  • Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.
  • Global economic, political and market conditions, including in the United States, could have a significant adverse effect on our business, financial condition and results of operations.
  • Cybersecurity risks and cyber incidents may adversely affect our business or the business of our borrowers by causing a disruption to our operations or the operations of our borrowers, a compromise or corruption of our confidential information or the confidential information of our borrowers and/or damage to our business relationships or the business relationships of our borrowers, all of which could negatively impact the business, financial condition and operating results of us or our borrowers.
  • We are subject to risks related to corporate social responsibility.
Content analysis
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New words: Arizona, awarded, Colorado, Delta, discourage, mixed, permanent, variant
Removed: covenant, deferral, experiencing, forbearance, pressure, reconciliation, repurposing, reversal, temporary, troubled