Ares Commercial Real Estate (ACRE) Q2 2025 earnings summary

Executive summary

• Reported GAAP net loss of $11 million ($0.20 per share) for Q2 2025, driven by a $33 million realized loss on a discounted office/life sciences loan exit and lower net interest margin.

• Distributable loss was $28 million ($0.51 per share), but distributable earnings were $5 million ($0.09 per share) excluding the realized loss.

• Book value per share was $9.52 as of June 30, 2025, including CECL reserve.

• Declared a $0.15 per share dividend for Q3 2025, with an annualized yield above 13%.

• Achieved strategic balance sheet objectives, reducing risk-rated 4 and 5 loans and office loan exposure, and exited all life sciences property loans.

Financial highlights

• Total revenue for Q2 2025 was $12.6 million, down from $16.8 million in Q2 2024.

• Net interest margin for Q2 2025 was $7.0 million, compared to $13.4 million in Q2 2024.

• Collected $337 million in repayments year-to-date, nearly triple the first half of 2024.

• Outstanding borrowings reduced to $889 million, down 6% quarter-over-quarter and 39% year-over-year.

• Office loans reduced to $524 million, down 10% quarter-over-quarter and 30% year-over-year.

Outlook and guidance

• Origination activity expected to increase as repayments are collected and risk-rated loans are resolved.

• Management anticipates enhanced future earnings as non-accrual drag lessens and liquidity improves.

• Portfolio size anticipated to be equal to or larger than current levels over the next 12 months.

• Anticipates continued opportunistic investment in new loans as market activity increases.

• Dividend of $0.15 per share declared for Q3 2025, payable October 15, 2025.