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

Ares Commercial Real Estate (NYSE:ACRE) announced its earnings results on Tuesday. The real estate investment trust reported $0.12 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.04 by $0.08, FiscalAI reports. Ares Commercial Real Estate had a positive return on equity of 4.04% and a negative net margin of 8.04%.The business had revenue of $14.36 million for the quarter, compared to analysts’ expectations of $10.96 million.

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

• Portfolio growth and diversification continued: Loans held for investment reached $1.8 billion, up 36% year over year, while $900 million of new commitments were deployed over the past 12 months. Office exposure fell to $442 million, or less than 25% of the loan portfolio, from 39% a year earlier.
• Credit metrics remained broadly stable, with no risk-rated one-to-three loans migrating into the four-to-five category for the third consecutive quarter, no new REO properties, and a largely unchanged CECL reserve for the existing portfolio.
• Management sees significant earnings upside from resolving problem assets: More than $150 million of loans, net of CECL, are not accruing interest, and successful resolutions could free capital for new interest-earning investments. Management expects earnings to recover to the dividend level and potentially historical returns of roughly 9%–10% as assets are resolved and redeployed.
• The four risk-rated four- and five loans remain the main focus, including the Chicago office loan, Brooklyn condo, and California industrial subordinate loan. The Chicago loan was extended by three months, while the California loan was downgraded to risk-rated five because of its January 2027 maturity and higher potential loss risk.
• Distributable earnings were $0.12 per share, book value was relatively stable at $8.82 per share, and the company declared a $0.15 quarterly dividend—an annualized yield of approximately 14% at the cited stock price. The board also reauthorized a share repurchase program of up to $50 million through July 2027.

Ares Commercial Real Estate Stock Performance

ACRE stock traded up $0.10 during midday trading on Thursday, reaching $4.79. 193,649 shares of the company were exchanged, compared to its average volume of 478,610. Ares Commercial Real Estate has a 1-year low of $4.11 and a 1-year high of $5.89. The company has a market cap of $266.03 million, a price-to-earnings ratio of -59.81 and a beta of 1.15. The stock’s 50-day simple moving average is $4.63 and its 200 day simple moving average is $4.89.

Ares Commercial Real Estate Announces Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Thursday, October 15th. Stockholders of record on Wednesday, September 30th will be issued a $0.15 dividend. This represents a $0.60 dividend on an annualized basis and a dividend yield of 12.5%. The ex-dividend date is Wednesday, September 30th. Ares Commercial Real Estate’s dividend payout ratio (DPR) is presently -166.67%.

Institutional Trading of Ares Commercial Real Estate

Several institutional investors and hedge funds have recently bought and sold shares of ACRE. Russell Investments Group Ltd. increased its stake in Ares Commercial Real Estate by 456.0% in the 3rd quarter. Russell Investments Group Ltd. now owns 6,033 shares of the real estate investment trust’s stock valued at $27,000 after buying an additional 4,948 shares during the period. Triumph Capital Management acquired a new stake in shares of Ares Commercial Real Estate during the 3rd quarter valued at approximately $38,000. Strs Ohio purchased a new stake in shares of Ares Commercial Real Estate during the 1st quarter worth approximately $47,000. BNP Paribas Financial Markets increased its stake in Ares Commercial Real Estate by 100.3% in the 3rd quarter. BNP Paribas Financial Markets now owns 10,367 shares of the real estate investment trust’s stock valued at $47,000 after purchasing an additional 5,192 shares in the last quarter. Finally, Brooklyn Investment Group boosted its position in Ares Commercial Real Estate by 210.0% during the third quarter. Brooklyn Investment Group now owns 10,955 shares of the real estate investment trust’s stock worth $49,000 after purchasing an additional 7,421 shares in the last quarter. Hedge funds and other institutional investors own 41.34% of the company’s stock.

Analysts Set New Price Targets

A number of equities analysts have recently weighed in on ACRE shares. Weiss Ratings raised Ares Commercial Real Estate from a “sell (d)” rating to a “sell (d+)” rating in a research note on Tuesday. UBS Group started coverage on Ares Commercial Real Estate in a report on Tuesday, June 2nd. They set a “neutral” rating and a $5.50 price target on the stock. Keefe, Bruyette & Woods decreased their price target on Ares Commercial Real Estate from $6.00 to $5.50 and set an “outperform” rating for the company in a research note on Wednesday, May 13th. Wall Street Zen downgraded Ares Commercial Real Estate from a “hold” rating to a “sell” rating in a research report on Sunday. Finally, Zacks Research raised shares of Ares Commercial Real Estate from a “strong sell” rating to a “hold” rating in a report on Friday, July 10th. One analyst has rated the stock with a Buy rating, four have assigned a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat.com, the company presently has an average rating of “Reduce” and an average target price of $5.25.

Ares Commercial Real Estate Company Profile

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.