Ares Commercial Real Estate Corporation Reports Q1 2025 Financial Results

Ares Commercial Real Estate Corporation (ACRE) reported its financial results for the first quarter of 2025, revealing a total revenue of $14.9 million, a decrease from $18.7 million in the same period last year. The company experienced a net income of $9.3 million, a significant turnaround from a net loss of $12.3 million in the first quarter of 2024. This improvement in profitability was attributed to a net interest margin of $9.3 million, down from $15.2 million a year earlier, primarily due to a reduction in interest income and a decrease in weighted average earning assets.

The company’s total assets as of March 31, 2025, were reported at $1.52 billion, a decline from $1.75 billion at the end of 2024. Loans held for investment decreased to $1.36 billion from $1.66 billion, reflecting repayments and a current expected credit loss (CECL) reserve of $131.4 million. The CECL reserve was slightly reduced from $136.2 million at the end of 2024, indicating a relative improvement in the macroeconomic outlook. ACRE's total liabilities also decreased to $977.5 million from $1.21 billion, with secured funding agreements increasing to $674.4 million from $588.5 million.

Strategically, ACRE made significant operational adjustments, including the termination of its FL3 collateralized loan obligation (CLO) securitization in March 2025, which allowed for the repayment of all outstanding notes at par. The company also amended its Wells Fargo Facility to extend its maturity date to February 2028, with options for further extensions. Additionally, ACRE exercised a 12-month extension option for its CNB Facility, now maturing in March 2026. These actions reflect ACRE's proactive approach to managing its financing arrangements amid changing market conditions.

As of March 31, 2025, ACRE's portfolio included 27 loans held for investment, with an outstanding principal of $1.4 billion. The company funded approximately $7.2 million during the quarter while receiving repayments of $306.8 million. The weighted average effective yield on loans held for investment was reported at 6.1%, with 68.3% of these loans having Secured Overnight Financing Rate (SOFR) floors. The company’s employee headcount remained stable, and it continues to focus on maintaining its qualification as a real estate investment trust (REIT).

Looking ahead, ACRE anticipates that ongoing macroeconomic conditions, including inflation and interest rate fluctuations, will continue to impact its operations. The company remains committed to managing its portfolio effectively while navigating the challenges posed by the commercial real estate market. ACRE has declared a regular cash dividend of $0.15 per common share for the second quarter of 2025, payable on July 15, 2025, to stockholders of record as of June 30, 2025.