Ares Commercial Real Estate Corporation

What the company is

Ares Commercial Real Estate Corporation (ACRE) is a Maryland corporation and a specialty finance company that directly originates and invests in commercial real estate (CRE) loans and related investments.
ACRE is externally managed by ACREM, a subsidiary of Ares Management Corporation (NYSE: ARES). The management relationship is governed by the Amended and Restated Management Agreement dated July 26, 2022.
The company has elected and qualified to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.
ACRE operates to maintain REIT status and to pursue CRE debt-related investments, including potential strategic transactions in real estate or real estate finance.

ACRE has no employees; investment advisory services and day-to-day management are provided by its Manager (ACREM) and its affiliates. Company officers are employees of the Manager or its affiliates.
The Manager and Ares Management provide the executive management team and investment professionals. As of December 31, 2025, Ares Management had over 4,250 employees in more than 55 offices across more than 25 countries.

Investment focus: direct origination and management of CRE debt-related investments for ACRE’s account.
Target asset types:
- Senior mortgage loans (including first liens on CRE properties, with potential A-, B-, C-Note structures)
- Subordinated debt (including structurally subordinated first mortgage loans and junior participations)
- Mezzanine loans (subordinated debt or equity-like structures)
- Preferred equity (subordinate to first mortgages and not secured by the property)
- Other CRE investments: CRE-related securities such as CMBS, CLOs, and other debt/equity investments in real estate-related companies
Portfolio management principles emphasize collateral value, borrower/sponsor quality, business plans, exit opportunities, and compliance with REIT and Investment Company Act of 1940 requirements. The Manager may amend the investment strategy with board approval; material changes are disclosed in periodic reports.

Loans held for investment: 34 (down from 36 at 12/31/2024).
Office property concentration: approximately 28% of the total loan portfolio by outstanding principal balance is secured by office properties.
CECL reserve context: approximately 56% of the CECL Reserve is related to loans collateralized by office properties.
Portfolio exposure spans multiple property types (office, multifamily, hotel, industrial, etc.); some loans are risk-rated 4 or 5 and include non-accrual loans collateralized by office properties.
Outstanding borrowings under the Financing Agreements were about $948.2 million.
FL4 CLO securitization had an outstanding balance of $99.9 million as of 12/31/2025; the FL4 securitization was redeemed on January 20, 2026, with related notes repaid at par.
Common shares outstanding: 55,026,453 as of 12/31/2025 (54,542,178 as of 12/31/2024).

Primary sources of financing (subject to REIT and 1940 Act constraints):
- Secured financing facilities and other lending facilities
- Securitizations
- Private financing facilities, including warehouse facilities
- Public or private issuances of equity or debt
Leverage targets: historically, the company has indicated an expected debt-to-equity ratio not to exceed 4.5-to-1, depending on asset mix and liquidity.
Financing arrangements named in the filing include Wells Fargo Facility, Citibank Facility, CNB Facility, Morgan Stanley Facility (collectively, the Financing Agreements), and a Secured Term Loan ($90.0 million outstanding under a $90.0 million facility as of 12/31/2025).
Debt facilities are generally secured by assets or guarantees and may require collateral top-ups or margin calls depending on collateral values and market conditions.

ACRE has used non-recourse long-term securitizations, including CLOs, to finance portions of its CRE loan portfolio.
ACRE has owned securitization exposures and may retain portions of securitization equity or debt interests. In 2025, a CLO securitization (FL4) had $99.9 million outstanding (redeemed January 20, 2026).
The securitization process is subject to evolving regulatory and market requirements (e.g., Regulation AB, 5% risk retention). The company identifies risks and costs related to securitization activities, including changes to rules and the ability to securitize in the future.

ACRE has elected REIT status since 2012 and must meet ongoing REIT rules, including distribution requirements.
The company forms taxable REIT subsidiaries (TRSs), for example FL3 TRS and ACRC WM Tenant LLC, to hold non-REIT assets or conduct activities that could threaten REIT status if conducted directly by the REIT.
Potential tax risks include tax on undistributed income, excise taxes, TRS income taxes, and impacts if 1940 Act exemptions or REIT tests are challenged.

The Manager (ACREM) and its affiliates are responsible for investment decisions, portfolio management, and day-to-day operations.
The Management Agreement provides for base management fees (1.5% of stockholders’ equity per year) and potential incentive fees (based on Core Earnings), and a termination fee if the agreement is terminated without cause.
The filing describes conflicts of interest inherent in being part of the Ares Management platform, including allocation of investments among multiple funds, co-investments, and transactions with affiliates.
ACRE’s independent directors and governance framework provide oversight of the Manager.

The company generally earns interest and interest-related income on loans held for investment.
Incentive fees were zero for 2025 and 2024; $0.3 million of incentive fees were recognized in 2023.
Distributions to stockholders are referenced as typically sourced from REIT income.

The company is structured to maintain REIT status and an exemption from registration under the 1940 Act. Charter provisions include board classifications, ownership limits, and share issuance authorities that can affect control and value.