Ares Commercial Real Estate (ACRE) Announces Closing of $159M Senior Loan
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Ares Commercial Real Estate Corporation (NYSE: ACRE) announced the recent closing on September 28, 2016 of a new $159 million senior loan commitment collateralized primarily by self-storage properties across a multi-state area, bringing total new loan commitments for the third quarter of 2016 to approximately $605 million with $577 million of initial funding.
Also during the third quarter of 2016, the company’s capital availability benefited from loan repayments of approximately $250 million of senior loans with a weighted average unleveraged effective yield of 4.9%(1), which is below the company’s stated overall senior loan weighted average unleveraged effective yield of 5.1%(1) as of June 30, 2016. Net loan growth of more than $325 million for the third quarter resulted in an ending principal loan balance of approximately $1.4 billion as of September 30, 2016 and a weighted average loan balance of $1.16 billion for the third quarter, excluding non-controlling interests held by third parties.
“We had a very active third quarter with more than $600 million in new senior loan commitments that are well diversified by geography and property type and originated weighted average unleveraged yields in excess of our senior loan portfolio at June 30, 2016,” said Robert L. Rosen, Chairman and Interim Co-CEO of Ares Commercial Real Estate Corporation. “Even with this high level of originations, we continue to have substantial capital available to further expand our portfolio and grow future earnings as we are able to accretively reinvest the capital with new and existing sponsors.”
“Given the health and quality of our loan portfolio and strong market demand for high quality stabilized properties, approximately $250 million of senior loans successfully repaid, reflecting the execution of the value enhancement plans of our borrowers,” commented John Jardine, President and Co-Chief Executive Officer of Ares Commercial Real Estate Corporation. “As an example, for the $250 million of senior loans that repaid, the average cash flow growth on the underlying properties was in excess of 20% during our loan commitment period. We believe this growth reflects the successful value creation on behalf of the sponsors, and the gradual de-risking of our investments that we seek in our value-added lending strategy.”-
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