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Maryland
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45-3148087
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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Emerging growth company
o
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Class
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Outstanding at April 27, 2018
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Common stock, $0.01 par value
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28,598,916
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As of
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||||||
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March 31, 2018
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December 31, 2017
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||||
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(unaudited)
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ASSETS
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||||
Cash and cash equivalents
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$
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5,201
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$
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28,343
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Restricted cash
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379
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379
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Loans held for investment ($275,040 and $341,158 related to consolidated VIEs, respectively)
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1,658,375
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1,726,283
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Other assets ($769 and $945 of interest receivable related to consolidated VIEs, respectively; $66,118 of other receivables related to consolidated VIEs as of March 31, 2018)
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80,200
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15,214
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Total assets
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$
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1,744,155
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$
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1,770,219
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES
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Secured funding agreements
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$
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929,454
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$
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957,960
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Secured term loan
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107,797
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107,595
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Collateralized loan obligation securitization debt (consolidated VIE)
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271,393
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271,211
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Due to affiliate
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2,531
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2,628
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Dividends payable
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8,008
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7,722
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Other liabilities ($453 and $414 of interest payable related to consolidated VIEs, respectively)
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4,258
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3,933
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Total liabilities
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1,323,441
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1,351,049
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Commitments and contingencies (Note 5)
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STOCKHOLDERS' EQUITY
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Common stock, par value $0.01 per share, 450,000,000 shares authorized at March 31, 2018 and December 31, 2017, and 28,598,916 shares issued and outstanding at March 31, 2018 and December 31, 2017
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283
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283
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Additional paid-in capital
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420,871
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420,637
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Accumulated deficit
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(440
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)
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(1,750
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)
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Total stockholders' equity
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420,714
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419,170
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Total liabilities and stockholders' equity
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$
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1,744,155
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$
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1,770,219
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For the three months ended March 31,
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2018
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2017
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(unaudited)
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(unaudited)
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Net interest margin:
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Interest income from loans held for investment
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$
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27,436
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$
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21,127
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Interest expense
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(14,299
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)
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(10,788
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)
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Net interest margin
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13,137
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10,339
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Expenses:
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Management and incentive fees to affiliate
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1,558
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1,812
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Professional fees
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482
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391
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General and administrative expenses
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774
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642
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General and administrative expenses reimbursed to affiliate
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924
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948
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Total expenses
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3,738
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3,793
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Income before income taxes
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9,399
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6,546
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Income tax expense, including excise tax
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81
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68
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Net income attributable to ACRE
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9,318
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6,478
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Less: Net income attributable to non-controlling interests
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—
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(25
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)
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Net income attributable to common stockholders
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$
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9,318
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$
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6,453
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Earnings per common share:
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Basic and diluted earnings per common share
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$
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0.33
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$
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0.23
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Weighted average number of common shares outstanding:
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Basic weighted average shares of common stock outstanding
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28,495,833
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28,468,819
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Diluted weighted average shares of common stock outstanding
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28,598,916
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28,482,756
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Dividends declared per share of common stock
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$
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0.28
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$
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0.27
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Common Stock
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Additional
Paid-in
Capital
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Accumulated
Deficit
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Total Stockholders’ Equity
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|||||||||||
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Shares
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Amount
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|||||||||||||||
Balance at December 31, 2017
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28,598,916
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$
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283
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$
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420,637
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$
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(1,750
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)
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$
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419,170
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Stock‑based compensation
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—
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—
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234
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—
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234
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Net income
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—
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—
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—
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9,318
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9,318
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||||
Dividends declared
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—
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—
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—
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(8,008
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)
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(8,008
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)
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||||
Balance at March 31, 2018
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28,598,916
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$
|
283
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$
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420,871
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$
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(440
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)
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$
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420,714
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For the three months ended March 31,
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||||||
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2018
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2017
|
||||
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(unaudited)
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(unaudited)
|
||||
Operating activities:
|
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|
||||
Net income
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$
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9,318
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$
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6,478
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Adjustments to reconcile net income to net cash provided by (used in) operating activities:
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Amortization of deferred financing costs
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1,487
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1,733
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Accretion of deferred loan origination fees and costs
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(1,854
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)
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(1,454
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)
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Stock-based compensation
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234
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98
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|
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Changes in operating assets and liabilities:
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Other assets
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194
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(582
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)
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Due to affiliate
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(97
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)
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156
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Other liabilities
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413
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(221
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)
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Net cash provided by (used in) operating activities
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9,695
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6,208
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Investing activities:
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Issuance of and fundings on loans held for investment
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(77,260
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)
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(133,461
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)
|
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Principal repayment of loans held for investment
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79,933
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75,518
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Receipt of origination fees
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1,040
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1,256
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|
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Net cash provided by (used in) investing activities
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3,713
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(56,687
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)
|
||
Financing activities:
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||||
Proceeds from secured funding agreements
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54,672
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88,850
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Repayments of secured funding agreements
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(83,178
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)
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(293,057
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)
|
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Payment of secured funding costs
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(322
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)
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(3,031
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)
|
||
Proceeds from issuance of debt of consolidated VIEs
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—
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272,927
|
|
||
Dividends paid
|
(7,722
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)
|
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(7,406
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)
|
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Contributions from non-controlling interests
|
—
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12
|
|
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Distributions to non-controlling interests
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—
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(10,681
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)
|
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Net cash provided by (used in) financing activities
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(36,550
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)
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47,614
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|
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Change in cash, cash equivalents and restricted cash
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(23,142
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)
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(2,865
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)
|
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Cash, cash equivalents and restricted cash, beginning of period
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28,722
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47,645
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Cash, cash equivalents and restricted cash, end of period
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$
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5,580
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$
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44,780
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As of
|
||||||
|
March 31, 2018
|
|
March 31, 2017
|
||||
Cash and cash equivalents
|
$
|
5,201
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|
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$
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44,400
|
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Restricted cash
|
379
|
|
|
380
|
|
||
Total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows
|
$
|
5,580
|
|
|
$
|
44,780
|
|
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For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Interest income from loans held for investment, excluding non-controlling interests
|
$
|
27,436
|
|
|
$
|
21,092
|
|
Interest income from non-controlling interest investment held by third parties
|
—
|
|
|
35
|
|
||
Interest income from loans held for investment
|
$
|
27,436
|
|
|
$
|
21,127
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Secured funding agreements and securitizations debt
|
$
|
12,301
|
|
|
$
|
7,468
|
|
Secured term loan
|
1,998
|
|
|
3,320
|
|
||
Interest expense
|
$
|
14,299
|
|
|
$
|
10,788
|
|
|
As of March 31, 2018
|
||||||||||||||
|
Carrying Amount (1)
|
|
Outstanding Principal (1)
|
|
Weighted Average Minimum Loan Borrowing Spread (2)
|
|
Weighted Average Unleveraged Effective Yield (3)
|
|
Weighted Average Remaining Life (Years)
|
||||||
Senior mortgage loans
|
$
|
1,606,225
|
|
|
$
|
1,615,703
|
|
|
4.9
|
%
|
|
6.5
|
%
|
|
1.8
|
Subordinated debt and preferred equity investments
|
52,150
|
|
|
52,860
|
|
|
9.5
|
%
|
|
11.0
|
%
|
|
3.2
|
||
Total loans held for investment portfolio
|
$
|
1,658,375
|
|
|
$
|
1,668,563
|
|
|
5.0
|
%
|
|
6.6
|
%
|
|
1.9
|
|
As of December 31, 2017
|
||||||||||||||
|
Carrying Amount (1)
|
|
Outstanding Principal (1)
|
|
Weighted Average Minimum Loan Borrowing Spread (2)
|
|
Weighted Average Unleveraged Effective Yield (3)
|
|
Weighted Average Remaining Life (Years)
|
||||||
Senior mortgage loans
|
$
|
1,674,169
|
|
|
$
|
1,684,439
|
|
|
4.8
|
%
|
|
6.2
|
%
|
|
1.9
|
Subordinated debt and preferred equity investments
|
52,114
|
|
|
52,847
|
|
|
9.5
|
%
|
|
10.8
|
%
|
|
3.4
|
||
Total loans held for investment portfolio
|
$
|
1,726,283
|
|
|
$
|
1,737,286
|
|
|
5.0
|
%
|
|
6.3
|
%
|
|
2.0
|
(1)
|
The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.
|
(2)
|
Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate.
|
(3)
|
Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of
March 31, 2018 and December 31, 2017
as weighted by the Outstanding Principal balance of each loan.
|
Loan Type
|
|
Location
|
|
Outstanding Principal (1)
|
|
Carrying Amount (1)
|
|
Interest Rate
|
|
Unleveraged Effective Yield (2)
|
|
Maturity Date (3)
|
|
Payment Terms (4)
|
|
Senior Mortgage Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Self Storage
|
(5)
|
Diversified
|
|
$116.7
|
|
$116.4
|
|
L+4.35%
|
|
7.0%
|
|
Oct 2018
|
|
I/O
|
|
Office
|
|
TX
|
|
96.9
|
|
96.1
|
|
L+3.60%
|
|
6.0%
|
|
July 2020
|
|
I/O
|
|
Multifamily
|
|
FL
|
|
89.7
|
|
89.4
|
|
L+4.75%
|
|
7.2%
|
|
Sep 2019
|
|
I/O
|
|
Various
|
(6)
|
Diversified
|
|
82.3
|
|
82.1
|
|
L+4.75%
|
|
7.3%
|
|
Oct 2018
|
|
I/O
|
|
Mixed-use
|
|
NY
|
|
65.6
|
|
65.4
|
|
L+4.16%
|
|
6.5%
|
|
Apr 2019
|
|
I/O
|
|
Multifamily
|
|
UT
|
|
62.6
|
|
62.2
|
|
L+3.25%
|
|
5.4%
|
|
Dec 2020
|
|
I/O
|
|
Office
|
|
IL
|
|
60.4
|
|
59.8
|
|
L+3.75%
|
|
6.2%
|
|
Dec 2020
|
|
I/O
|
|
Office
|
|
IL
|
|
58.6
|
|
58.2
|
|
L+3.99%
|
|
6.3%
|
|
Aug 2019
|
|
I/O
|
|
Office
|
|
CO
|
|
54.0
|
|
53.5
|
|
L+4.15%
|
|
6.4%
|
|
June 2021
|
|
I/O
|
|
Multifamily
|
|
FL
|
|
53.8
|
|
53.4
|
|
L+3.65%
|
|
5.9%
|
|
Mar 2021
|
|
I/O
|
|
Industrial
|
|
MN
|
|
51.6
|
|
51.1
|
|
L+3.15%
|
|
5.5%
|
|
Dec 2020
|
|
I/O
|
|
Office
|
|
NJ
|
|
49.6
|
|
49.2
|
|
L+4.65%
|
|
7.2%
|
|
July 2020
|
|
I/O
|
|
Mixed-use
|
|
CA
|
|
49.0
|
|
48.6
|
|
L+4.00%
|
|
6.3%
|
|
Apr 2021
|
|
I/O
|
|
Multifamily
|
|
FL
|
|
45.4
|
|
45.3
|
|
L+4.75%
|
|
7.2%
|
|
Sep 2019
|
|
I/O
|
|
Multifamily
|
|
TX
|
|
42.7
|
|
42.4
|
|
L+3.30%
|
|
5.5%
|
|
Dec 2020
|
|
I/O
|
|
Student Housing
|
|
CA
|
|
41.8
|
|
41.4
|
|
L+3.95%
|
|
6.4%
|
|
July 2020
|
|
I/O
|
|
Student Housing
|
|
TX
|
|
40.1
|
|
39.8
|
|
L+4.75%
|
|
7.2%
|
|
Jan 2021
|
|
I/O
|
|
Hotel
|
|
CA
|
|
40.0
|
|
39.7
|
|
L+4.12%
|
|
6.4%
|
|
Jan 2021
|
|
I/O
|
|
Student Housing
|
|
NC
|
|
38.7
|
|
38.5
|
|
L+4.00%
|
|
7.7%
|
|
Feb 2019
|
|
I/O
|
|
Hotel
|
|
NY
|
|
38.6
|
|
38.6
|
|
L+4.75%
|
|
7.1%
|
|
June 2018
|
|
I/O
|
|
Hotel
|
|
MI
|
|
35.2
|
|
35.2
|
|
L+4.15%
|
|
6.0%
|
|
July 2018
|
|
I/O
|
|
Multifamily
|
|
NY
|
|
31.3
|
|
31.2
|
|
L+4.55%
|
|
6.9%
|
|
Feb 2019
|
|
I/O
|
|
Multifamily
|
|
NY
|
|
29.5
|
|
29.5
|
|
L+3.75%
|
|
5.9%
|
|
Oct 2018
|
|
P/I
|
(7)
|
Multifamily
|
|
NY
|
|
29.4
|
|
29.1
|
|
L+3.20%
|
|
5.4%
|
|
Dec 2020
|
|
I/O
|
|
Industrial
|
|
OH
|
|
27.5
|
|
27.4
|
|
L+4.20%
|
|
6.4%
|
|
May 2019
|
(8)
|
P/I
|
(7)
|
Multifamily
|
|
TX
|
|
27.5
|
|
27.3
|
|
L+3.20%
|
|
5.6%
|
|
Oct 2020
|
|
I/O
|
|
Multifamily
|
|
TX
|
|
26.3
|
|
26.2
|
|
L+3.80%
|
|
5.8%
|
|
Jan 2019
|
|
I/O
|
|
Multifamily
|
|
CA
|
|
25.7
|
|
25.5
|
|
L+3.85%
|
|
6.2%
|
|
July 2020
|
|
I/O
|
|
Student Housing
|
|
AL
|
|
24.1
|
|
23.9
|
|
L+4.45%
|
|
6.9%
|
|
Feb 2020
|
|
I/O
|
|
Student Housing
|
|
TX
|
|
24.0
|
|
23.8
|
|
L+4.10%
|
|
6.5%
|
|
Jan 2021
|
|
I/O
|
|
Multifamily
|
|
CA
|
|
22.7
|
|
22.6
|
|
L+3.90%
|
|
6.1%
|
|
Mar 2021
|
|
I/O
|
|
Multifamily
|
|
FL
|
|
22.5
|
|
22.4
|
|
L+4.25%
|
|
6.8%
|
|
Feb 2019
|
|
I/O
|
|
Office
|
|
PA
|
|
19.6
|
|
19.5
|
|
L+4.70%
|
|
7.1%
|
|
Mar 2020
|
|
I/O
|
|
Office
|
|
FL
|
|
18.4
|
|
18.3
|
|
L+4.30%
|
|
6.8%
|
|
Apr 2020
|
|
I/O
|
|
Multifamily
|
|
FL
|
|
18.4
|
|
18.3
|
|
L+4.00%
|
|
6.2%
|
|
Nov 2020
|
|
I/O
|
|
Multifamily
|
|
CA
|
|
18.0
|
|
17.8
|
|
L+3.30%
|
|
5.6%
|
|
Feb 2021
|
|
I/O
|
|
Multifamily
|
|
NY
|
|
16.3
|
|
16.3
|
|
L+4.35%
|
|
6.5%
|
|
Nov 2018
|
|
I/O
|
|
Multifamily
|
|
CA
|
|
13.9
|
|
13.8
|
|
L+3.80%
|
|
6.1%
|
|
July 2020
|
|
I/O
|
|
Residential
|
|
CA
|
|
7.3
|
|
7.0
|
|
12.00%
|
|
14.7%
|
|
Feb 2020
|
|
I/O
|
|
Subordinated Debt and Preferred Equity Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multifamily
|
|
NY
|
|
33.3
|
|
33.3
|
|
L+8.07%
|
|
10.2%
|
|
Jan 2019
|
|
I/O
|
|
Office
|
|
NJ
|
|
17.0
|
|
16.3
|
|
12.00%
|
|
12.8%
|
|
Jan 2026
|
|
I/O
|
(7)
|
Office
|
|
CA
|
|
2.6
|
|
2.6
|
|
L+8.25%
|
|
10.3%
|
|
Nov 2021
|
|
I/O
|
|
Total/Weighted Average
|
|
|
|
$1,668.6
|
|
$1,658.4
|
|
|
|
6.6%
|
|
|
|
|
|
(1)
|
The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.
|
(2)
|
Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of
March 31, 2018
or the LIBOR floor, as applicable. The Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of
March 31, 2018
as weighted by the Outstanding Principal balance of each loan.
|
(3)
|
Certain loans are subject to contractual extension options that vary between
one
and
two
12
-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.
|
(4)
|
I/O = interest only, P/I = principal and interest.
|
(5)
|
Prior to December 2017, the $
116.7
million senior mortgage loan collateralized by a portfolio of self storage properties was in payment default due to the failure of the borrower to repay an amount equal to $
42.5
million with respect to the retail and office properties (which included $
37.0
million of allocated loan amount and $
5.5
million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the borrower repaid $
25.1
million with respect to the office property (which included $
21.8
million of allocated loan amount and $
3.3
million of release premium). In conjunction with the repayment with respect to the office property, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to January 2018. On January 31, 2018, the Company received a repayment of outstanding principal of $
17.4
million (which included $
15.1
million of allocated loan amount and $
2.3
million of release premium). The principal repayments related to the retail and office properties resulted in the release of the retail and office properties from the collateral pool. Subsequent to the principal repayments, the outstanding principal balance of the senior mortgage loan was $
116.7
million and was collateralized by a portfolio of self storage properties.
|
(6)
|
Prior to December 2017, the $
82.3
million senior mortgage loan collateralized by a portfolio of self storage properties and one retail property was in payment default due to the failure of the borrower to repay an amount equal to $
13.9
million with respect to the retail property (which included $
12.1
million of allocated loan amount and $
1.8
million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to the maturity date of the loan in October 2018. The senior mortgage loan continues to have a recourse payment guarantee of up to $
12.1
million from an individual who is the indirect owner of the underlying collateral and an affiliate of the borrower.
|
(7)
|
In May 2017, amortization began on the senior Ohio loan, which had an outstanding principal balance of
$27.5
million as of
March 31, 2018
. In October 2017, amortization began on the senior New York loan, which had an outstanding principal balance of
$29.5 million
as of
March 31, 2018
. In February 2021, amortization will begin on the subordinated New Jersey loan, which had an outstanding principal balance of $
17.0
million as of
March 31, 2018
. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms.
|
(8)
|
In February 2018, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Ohio loan to May 2019.
|
Balance at December 31, 2017
|
$
|
1,726,283
|
|
Initial funding
|
74,110
|
|
|
Origination fees and discounts, net of costs
|
(1,040
|
)
|
|
Additional funding
|
3,218
|
|
|
Amortizing payments
|
(233
|
)
|
|
Loan payoffs
|
(145,817
|
)
|
|
Origination fee accretion
|
1,854
|
|
|
Balance at March 31, 2018
|
$
|
1,658,375
|
|
|
|
|
|
|
|
|||||||||||
|
March 31, 2018
|
|
December 31, 2017
|
|
||||||||||||
|
Outstanding Balance
|
|
Total
Commitment |
|
Outstanding Balance
|
|
Total
Commitment |
|
||||||||
Wells Fargo Facility
|
$
|
384,432
|
|
|
$
|
500,000
|
|
|
$
|
407,853
|
|
|
$
|
500,000
|
|
|
Citibank Facility
|
174,075
|
|
|
250,000
|
|
(1)
|
175,651
|
|
|
250,000
|
|
(1)
|
||||
BAML Facility
|
56,320
|
|
|
125,000
|
|
|
78,320
|
|
|
125,000
|
|
|
||||
CNB Facility
|
15,260
|
|
|
50,000
|
|
|
—
|
|
|
50,000
|
|
|
||||
MetLife Facility
|
101,131
|
|
|
180,000
|
|
|
101,131
|
|
|
180,000
|
|
|
||||
UBS Facility
|
34,000
|
|
|
140,000
|
|
|
34,000
|
|
|
140,000
|
|
|
||||
U.S. Bank Facility
|
164,236
|
|
|
185,989
|
|
|
161,005
|
|
|
185,989
|
|
|
||||
Secured Term Loan
|
110,000
|
|
|
110,000
|
|
|
110,000
|
|
|
110,000
|
|
|
||||
Total
|
$
|
1,039,454
|
|
|
$
|
1,540,989
|
|
|
$
|
1,067,960
|
|
|
$
|
1,540,989
|
|
|
(1)
|
The Citibank Facility (as defined below) has an accordion feature that provides for an increase in the
$250.0 million
commitment amount with respect to approved assets, as determined by Citibank, N.A. in its sole discretion.
|
|
As of
|
||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Total commitments
|
$
|
1,788,189
|
|
|
$
|
1,847,534
|
|
Less: funded commitments
|
(1,668,563
|
)
|
|
(1,737,286
|
)
|
||
Total unfunded commitments
|
$
|
119,626
|
|
|
$
|
110,248
|
|
Grant Date
|
|
Vesting Start Date
|
|
Shares Granted
|
May 1, 2012
|
|
July 1, 2012
|
|
35,135
|
June 18, 2012
|
|
July 1, 2012
|
|
7,027
|
July 9, 2012
|
|
October 1, 2012
|
|
25,000
|
June 26, 2013
|
|
July 1, 2013
|
|
22,526
|
November 25, 2013
|
|
November 25, 2016
|
|
30,381
|
January 31, 2014
|
|
August 31, 2015
|
|
48,273
|
February 26, 2014
|
|
February 26, 2014
|
|
12,030
|
February 27, 2014
|
|
August 27, 2014
|
|
22,354
|
June 24, 2014
|
|
June 24, 2014
|
|
17,658
|
June 24, 2015
|
|
July 1, 2015
|
|
25,555
|
April 25, 2016
|
|
July 1, 2016
|
|
10,000
|
June 27, 2016
|
|
July 1, 2016
|
|
24,680
|
April 25, 2017
|
|
April 25, 2018
|
|
81,710
|
June 7, 2017
|
|
July 1, 2017
|
|
18,224
|
October 17, 2017
|
|
January 2, 2018
|
|
7,278
|
December 15, 2017
|
|
January 2, 2018
|
|
8,948
|
Total
|
|
|
|
396,779
|
|
Restricted Stock Grants—Directors
|
|
Restricted Stock Grants—Officers
|
|
Total
|
|||
Balance at December 31, 2017
|
21,394
|
|
|
90,658
|
|
|
112,052
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
Vested
|
(6,942
|
)
|
|
(2,231
|
)
|
|
(9,173
|
)
|
Forfeited
|
—
|
|
|
—
|
|
|
—
|
|
Balance at March 31, 2018
|
14,452
|
|
|
88,427
|
|
|
102,879
|
|
|
Restricted Stock Grants—Directors
|
|
Restricted Stock Grants—Officers
|
|
Total
|
|||
2018
|
9,448
|
|
|
33,954
|
|
|
43,402
|
|
2019
|
3,336
|
|
|
27,237
|
|
|
30,573
|
|
2020
|
1,668
|
|
|
27,236
|
|
|
28,904
|
|
2021
|
—
|
|
|
—
|
|
|
—
|
|
2022
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
14,452
|
|
|
88,427
|
|
|
102,879
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income attributable to common stockholders
|
$
|
9,318
|
|
|
$
|
6,453
|
|
Divided by:
|
|
|
|
||||
Basic weighted average shares of common stock outstanding:
|
28,495,833
|
|
|
28,468,819
|
|
||
Non-vested restricted stock
|
103,083
|
|
|
13,937
|
|
||
Diluted weighted average shares of common stock outstanding:
|
28,598,916
|
|
|
28,482,756
|
|
||
Basic and diluted earnings per common share
|
$
|
0.33
|
|
|
$
|
0.23
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Current
|
$
|
6
|
|
|
$
|
3
|
|
Deferred
|
—
|
|
|
—
|
|
||
Excise tax
|
75
|
|
|
65
|
|
||
Total income tax expense, including excise tax
|
$
|
81
|
|
|
$
|
68
|
|
•
|
Level 2-Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.
|
•
|
Level 3-Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.
|
|
|
|
As of
|
||||||||||||||
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||
|
Level in Fair Value Hierarchy
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Loans held for investment
|
3
|
|
$
|
1,658,375
|
|
|
$
|
1,668,563
|
|
|
$
|
1,726,283
|
|
|
$
|
1,737,286
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Secured funding agreements
|
2
|
|
$
|
929,454
|
|
|
$
|
929,454
|
|
|
$
|
957,960
|
|
|
$
|
957,960
|
|
Secured term loan
|
2
|
|
107,797
|
|
|
110,000
|
|
|
107,595
|
|
|
110,000
|
|
||||
Collateralized loan obligation securitization debt (consolidated VIE)
|
3
|
|
271,393
|
|
|
272,927
|
|
|
271,211
|
|
|
272,927
|
|
|
Incurred
|
|
Payable
|
||||||||||||
|
For the three months ended March 31,
|
|
As of
|
||||||||||||
|
2018
|
|
2017
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
Affiliate Payments
|
|
|
|
|
|
|
|
||||||||
Management fees
|
$
|
1,558
|
|
|
$
|
1,544
|
|
|
$
|
1,558
|
|
|
$
|
1,549
|
|
Incentive fees
|
—
|
|
|
268
|
|
|
—
|
|
|
—
|
|
||||
General and administrative expenses
|
924
|
|
|
948
|
|
|
924
|
|
|
1,016
|
|
||||
Direct costs (1)
|
103
|
|
|
60
|
|
|
49
|
|
|
63
|
|
||||
Total
|
$
|
2,585
|
|
|
$
|
2,820
|
|
|
$
|
2,531
|
|
|
$
|
2,628
|
|
(1)
|
For the three months ended March 31, 2018
and 2017, direct costs incurred are included within general and administrative expenses in the Company’s consolidated statements of operations.
|
Date Declared
|
|
Record Date
|
|
Payment Date
|
|
Per Share Amount
|
|
Total Amount
|
||||
March 1, 2018
|
|
March 29, 2018
|
|
April 17, 2018
|
|
$
|
0.28
|
|
|
$
|
8,008
|
|
Total cash dividends declared for the three months ended March 31, 2018
|
|
|
|
|
|
$
|
0.28
|
|
|
$
|
8,008
|
|
|
|
|
|
|
|
|
|
|
||||
March 7, 2017
|
|
March 31, 2017
|
|
April 17, 2017
|
|
$
|
0.27
|
|
|
$
|
7,690
|
|
Total cash dividends declared for the three months ended March 31, 2017
|
|
|
|
|
|
$
|
0.27
|
|
|
$
|
7,690
|
|
•
|
our business and investment strategy;
|
•
|
our projected operating results;
|
•
|
the return or impact of current and future investments;
|
•
|
the timing of cash flows, if any, from our investments;
|
•
|
estimates relating to our ability to make distributions to our stockholders in the future;
|
•
|
defaults by borrowers in paying amounts due on outstanding indebtedness and our ability to collect all amounts due according to the contractual terms of our investments;
|
•
|
our ability to obtain and maintain financing arrangements, including securitizations;
|
•
|
market conditions and our ability to access alternative debt markets and additional debt and equity capital;
|
•
|
the amount of commercial mortgage loans requiring refinancing;
|
•
|
our expected investment capacity and available capital;
|
•
|
financing and advance rates for our target investments;
|
•
|
our expected leverage;
|
•
|
changes in interest rates, credit spreads and the market value of our investments;
|
•
|
the impact of changes in London Interbank Offered Rate (“LIBOR”) on our operating results;
|
•
|
effects of hedging instruments on our target investments;
|
•
|
rates of default or decreased recovery rates on our target investments;
|
•
|
rates of prepayments on our mortgage loans and the effect on our business of such prepayments;
|
•
|
the degree to which our hedging strategies may or may not protect us from interest rate volatility;
|
•
|
availability of investment opportunities in mortgage-related and real estate-related investments and securities;
|
•
|
the ability of Ares Commercial Real Estate Management LLC (“ACREM” or our “Manager”) to locate suitable investments for us, monitor, service and administer our investments and execute our investment strategy;
|
•
|
allocation of investment opportunities to us by our Manager;
|
•
|
our ability to successfully identify, complete and integrate any acquisitions;
|
•
|
our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
|
•
|
our ability to maintain our exemption from registration under the Investment Company Act of 1940 (the “1940 Act”);
|
•
|
our understanding of our competition;
|
•
|
general volatility of the securities markets in which we may invest;
|
•
|
adverse changes in the real estate, real estate capital and credit markets and the impact of a protracted decline in the liquidity of credit markets on our business;
|
•
|
changes in governmental regulations, tax law and rates, and similar matters (including interpretation thereof);
|
•
|
authoritative or policy changes from standard-setting bodies such as the Financial Accounting Standards Board, the Securities and Exchange Commission, the Internal Revenue Service, the stock exchange where we list our common stock, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business;
|
•
|
actions and initiatives of the U.S. Government and changes to U.S. Government policies;
|
•
|
the state of the United States, European Union and Asian economies generally or in specific geographic regions;
|
•
|
global economic trends and economic recoveries; and
|
•
|
market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy.
|
•
|
ACRE originated a $16.7 million senior mortgage loan on the construction of a residential property located in California.
|
•
|
ACRE originated a $21.7 million senior mortgage loan on a multifamily property located in California.
|
•
|
ACRE originated a $56.1 million senior mortgage loan on a mixed-use property located in California.
|
•
|
ACRE exercised a 12-month extension option on the CNB Facility (as defined below) to extend the initial maturity date to March 10, 2019. ACRE has one additional 12-month extension option, which, if exercised, would extend the maturity date of the CNB Facility to March 10, 2020.
|
|
As of March 31, 2018
|
||||||||||||||
|
Carrying Amount (1)
|
|
Outstanding Principal (1)
|
|
Weighted Average Minimum Loan Borrowing Spread (2)
|
|
Weighted Average Unleveraged Effective Yield (3)
|
|
Weighted Average Remaining Life (Years)
|
||||||
Senior mortgage loans
|
$
|
1,606,225
|
|
|
$
|
1,615,703
|
|
|
4.9
|
%
|
|
6.5
|
%
|
|
1.8
|
Subordinated debt and preferred equity investments
|
52,150
|
|
|
52,860
|
|
|
9.5
|
%
|
|
11.0
|
%
|
|
3.2
|
||
Total loans held for investment portfolio
|
$
|
1,658,375
|
|
|
$
|
1,668,563
|
|
|
5.0
|
%
|
|
6.6
|
%
|
|
1.9
|
(1)
|
The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.
|
(2)
|
Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate.
|
(3)
|
Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by us as of
March 31, 2018
as weighted by the Outstanding Principal balance of each loan.
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net interest margin
|
$
|
13,137
|
|
|
$
|
10,339
|
|
Total expenses
|
3,738
|
|
|
3,793
|
|
||
Income before income taxes
|
9,399
|
|
|
6,546
|
|
||
Income tax expense, including excise tax
|
81
|
|
|
68
|
|
||
Net income attributable to ACRE
|
9,318
|
|
|
6,478
|
|
||
Less: Net income attributable to non-controlling interests
|
—
|
|
|
(25
|
)
|
||
Net income attributable to common stockholders
|
$
|
9,318
|
|
|
$
|
6,453
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Interest income from loans held for investment
|
$
|
27,436
|
|
|
$
|
21,127
|
|
Interest expense
|
(14,299
|
)
|
|
(10,788
|
)
|
||
Net interest margin
|
$
|
13,137
|
|
|
$
|
10,339
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Management and incentive fees to affiliate
|
$
|
1,558
|
|
|
$
|
1,812
|
|
Professional fees
|
482
|
|
|
391
|
|
||
General and administrative expenses
|
774
|
|
|
642
|
|
||
General and administrative expenses reimbursed to affiliate
|
924
|
|
|
948
|
|
||
Total expenses
|
$
|
3,738
|
|
|
$
|
3,793
|
|
|
For the three months ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
9,318
|
|
|
$
|
6,478
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
377
|
|
|
(270
|
)
|
||
Net cash provided by (used in) operating activities
|
9,695
|
|
|
6,208
|
|
||
Net cash provided by (used in) investing activities
|
3,713
|
|
|
(56,687
|
)
|
||
Net cash provided by (used in) financing activities
|
(36,550
|
)
|
|
47,614
|
|
||
Change in cash, cash equivalents and restricted cash
|
$
|
(23,142
|
)
|
|
$
|
(2,865
|
)
|
|
|
As of
|
|||||||||||||||||||||||
|
|
March 31, 2018
|
|
December 31, 2017
|
|
||||||||||||||||||||
|
|
Total
Commitment |
|
Outstanding Balance
|
|
Interest Rate
|
|
Maturity Date
|
|
Total
Commitment |
|
Outstanding Balance
|
|
Interest Rate
|
|
Maturity Date
|
|
||||||||
Secured Funding Agreements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Wells Fargo Facility
|
|
$
|
500,000
|
|
|
$
|
384,432
|
|
|
LIBOR+1.75 to 2.35%
|
|
December 14, 2018
|
(1)
|
$
|
500,000
|
|
|
$
|
407,853
|
|
|
LIBOR+1.75 to 2.35%
|
|
December 14, 2018
|
(1)
|
Citibank Facility
|
|
250,000
|
|
(2)
|
174,075
|
|
|
LIBOR+2.25 to 2.50%
|
|
December 10, 2018
|
(2)
|
250,000
|
|
(2)
|
175,651
|
|
|
LIBOR+2.25 to 2.50%
|
|
December 10, 2018
|
(2)
|
||||
BAML Facility
|
|
125,000
|
|
|
56,320
|
|
|
LIBOR+2.00%
|
|
May 24, 2018
|
(3)
|
125,000
|
|
|
78,320
|
|
|
LIBOR+2.00%
|
|
May 24, 2018
|
(3)
|
||||
CNB Facility
|
|
50,000
|
|
|
15,260
|
|
|
LIBOR+3.00%
|
|
March 10, 2019
|
(4)
|
50,000
|
|
|
—
|
|
|
LIBOR+3.00%
|
|
March 11, 2018
|
(4)
|
||||
MetLife Facility
|
|
180,000
|
|
|
101,131
|
|
|
LIBOR+2.30%
|
|
August 12, 2020
|
(5)
|
180,000
|
|
|
101,131
|
|
|
LIBOR+2.30%
|
|
August 12, 2020
|
(5)
|
||||
UBS Facility
|
|
140,000
|
|
|
34,000
|
|
|
LIBOR+1.88 to 2.28%
|
(6)
|
October 21, 2018
|
|
140,000
|
|
|
34,000
|
|
|
LIBOR+1.88 to 2.28%
|
(6)
|
October 21, 2018
|
|
||||
U.S. Bank Facility
|
|
185,989
|
|
|
164,236
|
|
|
LIBOR+1.85 to 2.25%
|
|
July 31, 2020
|
(7)
|
185,989
|
|
|
161,005
|
|
|
LIBOR+1.85 to 2.25%
|
|
July 31, 2020
|
(7)
|
||||
Subtotal
|
|
$
|
1,430,989
|
|
|
$
|
929,454
|
|
|
|
|
|
|
$
|
1,430,989
|
|
|
$
|
957,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Secured Term Loan
|
|
$
|
110,000
|
|
|
$
|
110,000
|
|
|
LIBOR+5.00%
|
|
December 22, 2020
|
(8)
|
$
|
110,000
|
|
|
$
|
110,000
|
|
|
LIBOR+5.00%
|
|
December 22, 2020
|
(8)
|
Total
|
|
$
|
1,540,989
|
|
|
$
|
1,039,454
|
|
|
|
|
|
|
$
|
1,540,989
|
|
|
$
|
1,067,960
|
|
|
|
|
|
|
(1)
|
The maturity date of the master repurchase funding facility with Wells Fargo Bank, National Association (the “Wells Fargo Facility”) is subject to two 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid.
|
(2)
|
The maturity date of the master repurchase facility with Citibank, N.A. (the “Citibank Facility”) is subject to three 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid. The Citibank Facility has an accordion feature that provides for an increase in the
$250.0 million
commitment amount with respect to approved assets, as determined by Citibank, N.A. in its sole discretion.
|
(3)
|
Individual advances on loans under the Bridge Loan Warehousing Credit and Security Agreement with Bank of America, N.A. (the “BAML Facility”) generally have a two-year maturity, subject to a 12-month extension at our option provided that certain conditions are met and applicable extension fees are paid.
|
(4)
|
The maturity date of the secured revolving funding facility with City National Bank (the “CNB Facility”) is subject to one 12-month extension at our option provided that certain conditions are met and applicable extension fees are paid. In February 2018, we exercised a 12-month extension option on the CNB Facility to extend the maturity date to March 10, 2019.
|
(5)
|
The maturity date of the revolving master repurchase facility with Metropolitan Life Insurance Company (the “MetLife Facility”) is subject to two 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid.
|
(6)
|
The interest rate on advances under the revolving master repurchase facility with UBS Real Estate Securities Inc. (the “UBS Facility”) is one-month LIBOR plus (i) 1.88% per annum, for assets that are subject to an advance for one year or less, (ii) 2.08% per annum, for assets that are subject to an advance in excess of one year but less than two years, and (iii) 2.28% per annum, for assets that are subject to an advance for more than two years.
|
(7)
|
The maturity date of the master repurchase and securities contract with U.S. Bank National Association (the “U.S. Bank Facility”) is subject to two 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid.
|
(8)
|
The maturity date of the Credit and Guaranty Agreement with the lenders referred to therein and Cortland Capital Market Services LLC, as administrative agent and collateral agent for the lenders (the “Secured Term Loan”), is subject to one 12-month extension at our option provided that certain conditions are met.
|
Change in Average 30-Day LIBOR
|
|
For the three months ended March 31, 2018
|
||
Up 300 basis points
|
|
$
|
2.7
|
|
Up 200 basis points
|
|
$
|
1.8
|
|
Up 100 basis points
|
|
$
|
0.9
|
|
Down to 0 basis points
|
|
$
|
1.5
|
|
Exhibit Number
|
|
Exhibit Description
|
|
2.1
*
|
|
Purchase and Sale Agreement, among Ares Commercial Real Estate Corporation and Cornerstone Real Estate Advisers LLC. (1)
|
|
2.2
*
|
|
Waiver and Amendment to Purchase and Sale Agreement, dated as of September 29, 2016, among Ares Commercial Real Estate Corporation and Barings Real Estate Advisers LLC (formerly known as Cornerstone Real Estate Advisers LLC). (2)
|
|
3.1
*
|
|
Articles of Amendment and Restatement of Ares Commercial Real Estate Corporation. (3)
|
|
3.2
*
|
|
Amended and Restated Bylaws of Ares Commercial Real Estate Corporation. (4)
|
|
|
Second Amendment to Master Repurchase and Securities Contract, dated as of March 15, 2018, by and between ACRC Lender US LLC, as seller, and U.S. Bank National Association, as buyer, and acknowledged and agreed to by Ares Commercial Real Estate Corporation.
|
||
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS
|
|
XBRL Instance Document
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
*
|
Previously filed
|
(1)
|
Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K (File No. 001-35517), filed on June 29, 2016.
|
(2)
|
Incorporated by reference to Exhibit 2.2 to the Company’s Form 10-Q (File No. 001-35517), filed on August 3, 2017.
|
(3)
|
Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-K (File No. 001-35517), filed on March 1, 2016.
|
(4)
|
Incorporated by reference to Exhibit 3.2 to the Company’s Form S-8 (File No. 333-181077), filed on May 1, 2012.
|
|
ARES COMMERCIAL REAL ESTATE CORPORATION
|
|
|
|
|
|
|
|
Date: May 1, 2018
|
By:
|
/s/ James A. Henderson
|
|
|
James A. Henderson
|
|
|
Chief Executive Officer, Chief Investment Officer and President
(Principal Executive Officer)
|
|
|
|
Date: May 1, 2018
|
By:
|
/s/ Tae-Sik Yoon
|
|
|
Tae-Sik Yoon
|
|
|
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|
a)
|
Amendments to Section 2
. Section 2 of the Repurchase Agreement is hereby amended as follows:
|
i.
|
The defined term “
Activation Period
” and “
Servicer Remittance Date
” are hereby added to Section 2 as follows, each in their proper alphabetical order:
|
ii.
|
The definition of “
Covenant Determination
” is hereby amended by removing the phrase “clause second of part II” and replacing such phrase with “the second sentence.”
|
b)
|
Amendments to Section 5.
Section 5 of the Repurchase Agrement is hereby amended as follows:
|
i.
|
Section 5(c) is hereby amended and restated in its entirety as follows:
|
ii.
|
Section 5(d) is hereby amended and restated in its entirety as follows:
|
c)
|
Amendments to Section 13.
Section 13 of the Repurchase Agrement is hereby amended as follows:
|
i.
|
Section 13(vii) is hereby amended and restated in its entirety as follows:
|
ii.
|
Section 13(ix) is hereby amended and restated in its entirety as follows:
|
1.
|
I have reviewed this Quarterly Report on Form
10-Q
of Ares Commercial Real Estate Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ James A. Henderson
|
|
James A. Henderson
Chief Executive Officer, Chief Investment Officer and President
|
|
1.
|
I have reviewed this Quarterly Report on Form
10-Q
of Ares Commercial Real Estate Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Tae-Sik Yoon
|
|
Tae-Sik Yoon
Chief Financial Officer and Treasurer
|
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James A. Henderson
|
|
James A. Henderson
Chief Executive Officer, Chief Investment Officer and President |
|
|
|
/s/ Tae-Sik Yoon
|
|
Tae-Sik Yoon
Chief Financial Officer and Treasurer
|
|