ACRE · Ares Commercial Real Estate Corporation

Ares Commercial Real Estate Corporation reported a GAAP net loss of $9.6 million or $(0.17) per diluted share for Q1 2026, contrasting with Q1 2025 net income of $9.3 million or $0.17 per share. The loss was primarily driven by a $11.1 million provision for current expected credit losses and $3.3 million in realized losses on loans, partially offset by net interest income of $7.5 million and real estate owned revenue of $5.9 million. Total revenue declined to $13.5 million from $14.9 million year-over-year, reflecting lower interest income of $24.9 million versus $27.5 million, amid higher interest expense dynamics. Expenses decreased to $8.6 million from $10.7 million, aiding margin preservation. Distributable Earnings, a non-GAAP measure adjusting for non-cash items like the CECL provision, stock-based compensation, and depreciation, came in at $3.2 million or $0.06 per share, providing insight into dividend capacity. CEO Bryan Donohoe highlighted portfolio growth with $294 million in new senior loan commitments, increasing loans held for investment to $1.7 billion, while focusing on resolving risk-rated 4 and 5 loans, reduced to $368 million after exiting a $28 million multifamily loan. No negative credit migrations occurred. CFO Jeff Gonzales noted balance sheet flexibility, with $94 million in repayments, $300 million borrowing capacity expansion, and FL4 CLO redemption lowering costs. Available capital stood at $163 million. The board declared a Q2 2026 dividend of $0.15 per share, consistent with Q1, payable July 15 to June 30 record holders, signaling commitment to shareholders despite GAAP losses. The CECL reserve rose to $137 million or 8% of loan principal, with book value at $8.89 per share ($11.39 excluding reserve). Post-quarter, $95 million in new commitments closed.