Ares Commercial Real Estate Corporation (NYSE: ACRE) reported second-quarter GAAP net income of $4.4 million, or $0.08 per diluted share, and closed $130 million of new loan commitments during the quarter, the specialty finance REIT said Tuesday in a press release filed with the Securities and Exchange Commission. Distributable earnings, a non-GAAP measure, came to $6.9 million, or $0.12 per diluted share.
The board declared a third-quarter dividend of $0.15 per common share, payable Oct. 15 to shareholders of record as of Sept. 30 β matching the dividend paid for the second quarter.
New lending builds on a year of originations
“We continue to make advancements in repositioning our portfolio, addressing risk rated 4 and 5 loans, and reducing office loans and REO properties, while investing in new loans,” said Bryan Donohoe, the company’s chief executive. “Supported by the Ares platform, in the second quarter, we closed $130 million of new loan commitments, bringing the total new loan commitments to over $900 million in the last twelve months.”
Chief Financial Officer Jeff Gonzales said the company ended the quarter with more than $100 million in available capital and moderate leverage. “We continue to execute the goals we have outlined, which we believe will allow us to rebuild earnings to levels that are expected to meet or exceed the current dividend level,” Gonzales said.
Balance sheet shows a growing reserve and shrinking equity
Ares Commercial Real Estate’s balance sheet, filed alongside the earnings release, showed loans held for investment grew to $1.75 billion as of June 30, up from $1.53 billion at the end of 2025, while its current expected credit loss reserve rose to $137.8 million from $125.8 million over the same period. Total assets increased to $1.82 billion from $1.62 billion.
Total stockholders’ equity fell to $489.2 million as of June 30 from $509.6 million at year-end 2025, even as shares outstanding rose slightly to about 55.5 million, pointing to a lower book value per share than six months earlier. Real estate owned held for investment declined to $76.2 million from $130.2 million, while the company added $53.9 million of real estate owned held for sale β consistent with Donohoe’s statement that the company is working through distressed office exposure and REO. Secured funding agreements, the company’s primary financing source, grew to $1.17 billion from $858.2 million.
Interest income for the quarter rose to $27.8 million from $23.1 million a year earlier, while interest expense increased to $19.2 million from $16.1 million, leaving net interest margin at $8.6 million, up from $7.0 million in the second quarter of 2025. Ares Commercial Real Estate is externally managed by a subsidiary of Ares Management Corporation and invests primarily in senior mortgage loans, subordinate financings, mezzanine debt and preferred equity secured by commercial property.
What it means
The verified facts are drawn from the company’s own SEC filing: net income, new loan volume, dividend and balance-sheet figures for the quarter. Donohoe’s characterization of the results as “repositioning” progress and Gonzales’ expectation that earnings will eventually cover the dividend are management’s attributed outlook, not yet demonstrated results β GAAP net income of $0.08 per share remains below the $0.15 per-share dividend the board just reauthorized. Ares Commercial Real Estate’s experience β growing new originations while still absorbing higher credit-loss reserves tied to legacy office loans β mirrors what Blackstone Mortgage Trust reported for its own Q2, and comes against a backdrop in which the Federal Reserve’s latest senior loan officer survey found banks easing commercial real estate lending standards. What to watch: whether the pace of new originations outruns further reserve increases in the second half of the year.
