second quarter of 2026
Filed Aug 3, 2026Second quarter GAAP net income of $4.4 million or $0.08 per diluted common share and Distributable Earnings of $6.9 million or $0.12 per diluted common share
The Company returned to quarterly GAAP net income, total revenue increased versus the prior-year quarter, and expenses declined, but it recorded a current expected credit loss provision and first-half net loss attributable to common stockholders.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Interest incomeGAAP | $27,754 (in thousands) | – | – |
| Interest expenseGAAP | $(19,182) (in thousands) | – | – |
| Net interest marginGAAP | $8,572 (in thousands) | – | – |
| Revenue from real estate ownedGAAP | $5,784 (in thousands) | – | – |
| Total revenueGAAP | $14,356 (in thousands) | – | – |
| Management and incentive fees to affiliateGAAP | $2,394 (in thousands) | – | – |
| Professional feesGAAP | $699 (in thousands) | – | – |
| General and administrative expensesGAAP | $1,723 (in thousands) | – | – |
| General and administrative expenses reimbursed to affiliateGAAP | $853 (in thousands) | – | – |
| Expenses from real estate ownedGAAP | $3,301 (in thousands) | – | – |
| Total expensesGAAP | $8,970 (in thousands) | – | – |
| Provision for current expected credit losses, netGAAP | $(865) (in thousands) | – | – |
| Realized losses on loansGAAP | — | – | – |
| Income (loss) before income taxesGAAP | $4,521 (in thousands) | – | – |
| Income tax expense, including excise taxGAAP | $138 (in thousands) | – | – |
| Net income attributable to common stockholdersGAAP | $4,383 (in thousands) | – | – |
| Basic earnings per common shareGAAP | $0.08 | – | – |
| Diluted earnings per common shareGAAP | $0.08 | – | – |
| Basic weighted average shares of common stock outstandingGAAP | 55,367,375 | – | – |
| Diluted weighted average shares of common stock outstandingGAAP | 56,354,988 | – | – |
| Dividends declared per share of common stockother | $0.15 | – | – |
| Distributable Earningsnon-GAAP | $6.9 million or $0.12 per diluted common share | – | – |
| Six months ended June 30, 2026 total revenueGAAP | $27,816 (in thousands) | – | – |
| Six months ended June 30, 2026 total expensesGAAP | $17,527 (in thousands) | – | – |
| Six months ended June 30, 2026 net income (loss) attributable to common stockholdersGAAP | $(5,223) (in thousands) | – | – |
| Six months ended June 30, 2026 diluted earnings (loss) per common shareGAAP | $(0.09) | – | – |
Capital returns
- Regular cash dividend of $0.15 per common share for the second quarter of 2026, paid on July 15, 2026 to common stockholders of record as of June 30, 2026.
- Regular cash dividend of $0.15 per common share for the third quarter of 2026, declared on August 4, 2026 and payable on October 15, 2026 to common stockholders of record as of September 30, 2026.
What drove it
- The Company closed $130 million of new loan commitments in the second quarter.
- Total new loan commitments were over $900 million in the last twelve months.
- Management cited progress in repositioning the portfolio, addressing risk rated 4 and 5 loans, reducing office loans and REO properties, and investing in new loans.
- Net interest margin was $8,572 (in thousands), compared with $7,016 (in thousands) for the three months ended June 30, 2025.
- Expenses from real estate owned were $3,301 (in thousands), compared with $4,628 (in thousands) for the three months ended June 30, 2025.
Concerns
- The Company recorded a provision for current expected credit losses, net, of $(865) (in thousands) in the second quarter of 2026.
- Current expected credit loss reserve was $(137,810) (in thousands) as of June 30, 2026, compared with $(125,756) (in thousands) as of December 31, 2025.
- Net income (loss) attributable to common stockholders for the six months ended June 30, 2026 was $(5,223) (in thousands).
- Management continues to address risk rated 4 and 5 loans, office loans and REO properties.
What to watch
- Resolution of risk rated 4 and 5 loans and the reduction of office loans and REO properties.
- New loan commitments and the deployment of available capital of over $100 million.
- Current expected credit loss reserve and future provisions or reversals of current expected credit losses.
- Whether management's execution rebuilds earnings to levels expected to meet or exceed the current dividend level.
- Payment of the third quarter 2026 dividend on October 15, 2026.
Balance sheet and cash flow
- Cash and cash equivalents were $17,558 (in thousands) as of June 30, 2026, compared with $29,289 (in thousands) as of December 31, 2025.
- Restricted cash was $41,017 (in thousands) as of June 30, 2026, compared with $37,868 (in thousands) as of December 31, 2025.
- Loans held for investment were $1,748,835 (in thousands) as of June 30, 2026, compared with $1,528,806 (in thousands) as of December 31, 2025.
- Current expected credit loss reserve was $(137,810) (in thousands) as of June 30, 2026, compared with $(125,756) (in thousands) as of December 31, 2025.
- Loans held for investment, net of current expected credit loss reserve, were $1,611,025 (in thousands) as of June 30, 2026, compared with $1,403,050 (in thousands) as of December 31, 2025.
- Real estate owned held for investment, net, was $76,238 (in thousands) as of June 30, 2026, compared with $130,165 (in thousands) as of December 31, 2025.
- Real estate owned held for sale was $53,934 (in thousands) as of June 30, 2026, compared with — as of December 31, 2025.
- Total assets were $1,817,275 (in thousands) as of June 30, 2026, compared with $1,618,142 (in thousands) as of December 31, 2025.
- Secured funding agreements were $1,173,027 (in thousands) as of June 30, 2026, compared with $858,176 (in thousands) as of December 31, 2025.
- Secured term loan was $89,722 (in thousands) as of June 30, 2026, compared with $89,360 (in thousands) as of December 31, 2025.
- Collateralized loan obligation securitization debt was — as of June 30, 2026, compared with $99,921 (in thousands) as of December 31, 2025.
- Total liabilities were $1,328,050 (in thousands) as of June 30, 2026, compared with $1,108,574 (in thousands) as of December 31, 2025.
- Total stockholders' equity was $489,225 (in thousands) as of June 30, 2026, compared with $509,568 (in thousands) as of December 31, 2025.
Analysis
ACRE reported second-quarter GAAP net income attributable to common stockholders of $4,383 (in thousands), or $0.08 per diluted common share, compared with a net loss attributable to common stockholders of $(11,035) (in thousands), or $(0.20) per diluted common share, in the prior-year quarter. Distributable Earnings, a non-GAAP measure, were $6.9 million or $0.12 per diluted common share. The quarterly return to GAAP profitability came as total revenue was $14,356 (in thousands), compared with $12,565 (in thousands), while total expenses were $8,970 (in thousands), compared with $10,750 (in thousands).
Interest income was $27,754 (in thousands), compared with $23,117 (in thousands), while interest expense was $(19,182) (in thousands), compared with $(16,101) (in thousands). Net interest margin was $8,572 (in thousands), compared with $7,016 (in thousands). Revenue from real estate owned was $5,784 (in thousands), compared with $5,549 (in thousands), and expenses from real estate owned fell to $3,301 (in thousands) from $4,628 (in thousands). Management also reported $130 million of new loan commitments during the quarter and over $900 million of total new loan commitments in the last twelve months.
Credit remains central to the earnings profile. The Company recorded a provision for current expected credit losses, net, of $(865) (in thousands), versus a reversal of $20,150 (in thousands) in the prior-year quarter. The balance-sheet current expected credit loss reserve was $(137,810) (in thousands) at June 30, 2026, versus $(125,756) (in thousands) at December 31, 2025. Management specifically highlighted ongoing work on risk rated 4 and 5 loans, office loans and REO properties. For the six months ended June 30, 2026, net income (loss) attributable to common stockholders was $(5,223) (in thousands), compared with $(1,690) (in thousands) in the prior-year period.
The balance sheet expanded through loans held for investment of $1,748,835 (in thousands), compared with $1,528,806 (in thousands) at December 31, 2025. Secured funding agreements increased to $1,173,027 (in thousands) from $858,176 (in thousands), while collateralized loan obligation securitization debt was — compared with $99,921 (in thousands). Management described leverage as moderate and available capital as over $100 million. The Company maintained its $0.15 per common share dividend, with the second-quarter dividend paid on July 15, 2026 and a third-quarter dividend of $0.15 per common share declared for payment on October 15, 2026. No quantitative financial guidance was provided.
Management, verbatim
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.
Bryan Donohoe, Chief Executive Officer of Ares Commercial Real Estate Corporation
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.
Bryan Donohoe, Chief Executive Officer of Ares Commercial Real Estate Corporation
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.
Jeff Gonzales, Chief Financial Officer of Ares Commercial Real Estate Corporation
Not in the filing
stated, not guessed- The Schedule I reconciliation of Net Income (Loss) to Non-GAAP Distributable Earnings (Loss) is truncated in the supplied filing text, so the reconciliation line items and comparative Distributable Earnings figures are not available.
- Prior-quarter comparisons and sequential percentage changes for reported metrics were not provided.
- Gross margin was not reported.
- Operating income was not reported.
- Operating cash flow was not reported.
- Free cash flow was not reported.
- Share repurchases were not reported.
- Quantitative forward financial guidance was not reported.
- Prior outlook was not provided, so comparison with prior guidance is unavailable.
- Reportable segment revenue was not provided.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.