Ares Commercial failed to cover its dividend with distributable EPS in Q2'25 due to significant loan losses, mainly from its troubled office loan portfolio. Despite reducing office loan exposure, high non-accruals and realized loan losses continue to pressure earnings and dividend coverage ratios. ACRE shares trade at a steep 51% discount to NAV, reflecting persistent dividend underperformance and continual portfolio shrinkage risks.

Ares Commercial Real Estate Corporation (NYSE:ACRE ) Q2 2025 Earnings Conference Call August 5, 2025 12:00 PM ET Company Participants Bryan Patrick Donohoe - CEO & Director Jeffrey Gonzales - CFO & Treasurer John W. Stilmar - Managing Director of Public Investor Relations & Corporate Communications Group Conference Call Participants Christopher Muller - Citizens JMP Securities, LLC, Research Division Douglas Michael Harter - UBS Investment Bank, Research Division Jade Joseph Rahmani - Keefe, Bruyette, & Woods, Inc., Research Division Richard Barry Shane - JPMorgan Chase & Co, Research Division Thomas Catherwood - Unidentified Company Operator Good afternoon, everyone.

ACRE's chronic loan defaults and poor underwriting make it the top mortgage REIT to avoid, despite recent distribution cuts. Recent results show a record distributable earnings loss, with only 9 cents per share versus a 15-cent distribution. Balance sheet leverage is lower, but another large office loan is distressed, and interest margins have collapsed nearly 50% year-over-year.

ST. JAMES, N.Y., Aug. 04, 2025 (GLOBE NEWSWIRE) --  Gyrodyne, LLC (NASDAQ:GYRO), an owner and manager of a diversified portfolio of real estate properties, today announced that its subsidiary, GSD Flowerfield, LLC, has entered into a purchase and sale agreement (the “Agreement”) for the sale of approximately 49 acres of vacant land located within the Company's Flowerfield complex in St. James, New York (the “Property”) to B2K Smithtown LLC (“B2K”).

NEW YORK--(BUSINESS WIRE)--Ares Commercial Real Estate Corporation (NYSE: ACRE) announced today that it will report earnings for the second quarter ended June 30, 2025 on Tuesday, August 5, 2025 prior to the opening of the New York Stock Exchange. Ares Commercial Real Estate Corporation will hold its webcast/conference call on the same day at 12:00 p.m. Eastern Time to discuss its second quarter ended June 30, 2025 financial results. All interested parties are invited to participate via telepho.

Ares Commercial Real Estate Corporation is a small mortgage REIT run by a growing, reputable alternative investment manager. ACRE's small size, high office loan exposure, and inability to cover dividends with earnings present significant risks for income investors. ACRE pays a quarterly dividend yielding 13.54%, going ex-dividend around 9/30.

ACRE has stabilized its loan portfolio, showing no new loan losses in Q1 and positive distributable profits, signaling a potential turnaround. The dividend was right-sized after two cuts, and payout metrics are improving, making a third cut unlikely and supporting a more sustainable yield. ACRE trades at a steep 51% discount to book value, which I believe is exaggerated given recent improvements and offers a re-rating opportunity.

Investors need to pay close attention to Ares Commercial Real Estate stock based on the movements in the options market lately.

How is credit risk impacting the companies within this sector? Is there gold to be found, or are there only landmines? We answer both by using two examples.

US equity markets rallied this week, capping off the best monthly gains since November 2023, as investors weighed encouraging inflation data against a whipsaw of court rulings on tariffs. Extending the on-again-off-again tariff saga, a trade court ruled that the tariffs were procedurally invalid, but an Appeals court paused the block, likely sending the decision to the Supreme Court. Rebounding from declines of 2.6% last week, the S&P 500 rallied 1.8% this week, closing within 4% of its February record highs.