Ares Commercial Real Estate Corporation (ACRE)

Ares Commercial Real Estate Corporation (ACRE) Financial Services Profile

Ares Commercial Real Estate Corporation (ACRE) operates as a specialty finance REIT, originating and investing in commercial real estate loans across the U.S. With a focus on senior mortgage loans and subordinate debt products, ACRE provides financing solutions to CRE property owners and operators, distinguishing itself through a diverse investment portfolio.

What Is the Investment Thesis for ACRE?

Ares Commercial Real Estate Corporation presents an investment opportunity driven by its focus on commercial real estate lending and its REIT structure. With a dividend yield of 11.67%, ACRE offers income potential for investors seeking exposure to the real estate market. The company's strategy of originating and investing in a variety of CRE loans, including senior mortgages and subordinate debt, allows it to capitalize on different risk-return profiles. However, the company's negative profit margin of -24.9% warrants caution, indicating potential challenges in profitability. Monitoring the performance of ACRE's loan portfolio and its ability to manage credit risk will be crucial. The company's beta of 1.28 suggests higher volatility compared to the broader market.

Based on FMP financials and quantitative analysis

ACRE Key Highlights

• Market capitalization of $251.05M, reflecting its size within the mortgage REIT sector.
• P/E ratio of 8.5, indicating the price investors are willing to pay for each dollar of earnings.
• Gross margin of 70.0%, showcasing the profitability of its lending activities before operating expenses.
• Dividend yield of 11.67%, providing a significant income stream for investors.
• Beta of 1.28, suggesting higher volatility compared to the overall market.

Who Are ACRE's Competitors?

ACRE is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are ACRE's Key Strengths?

• Expertise in commercial real estate lending.
• Diverse investment portfolio across various CRE asset classes.
• REIT structure provides tax advantages.
• Established relationships with CRE property owners and operators.

What Are ACRE's Weaknesses?

• Negative profit margin indicates potential profitability challenges.
• Exposure to credit risk in the commercial real estate market.
• Sensitivity to interest rate fluctuations.
• Reliance on external management by Ares Commercial Real Estate Management LLC.

What Could Drive ACRE Stock Higher?

• Potential for increased demand for CRE financing solutions.
• Strategic acquisitions to expand market presence.
• Diversification of investment portfolio to mitigate risk.
• Changes in interest rates impacting borrowing costs.

What Are the Key Risks for ACRE?

• Financial-distress signal — its Altman Z-Score of -0.15 sits in the distress zone (elevated bankruptcy risk).
• Negative return on equity (-3.9%) — the business is not currently generating profit on shareholder capital.
• Weak fundamentals — a Piotroski F-Score of 1/9 flags soft profitability, leverage or efficiency.
• Economic downturns impacting the commercial real estate market.
• Increased competition from other REITs and specialty finance companies.
• Credit risk associated with commercial real estate loans.
• Regulatory changes impacting the REIT industry.

What Are the Growth Opportunities for ACRE?

• Expansion of Lending Activities: ACRE has the opportunity to expand its lending activities by targeting underserved segments within the commercial real estate market. By focusing on niche markets or property types with limited access to traditional financing, ACRE can increase its loan origination volume and generate higher returns. This expansion can be achieved through strategic partnerships with real estate developers and operators, as well as targeted marketing efforts to reach potential borrowers. Timeline: Ongoing.
• Diversification of Investment Portfolio: ACRE can diversify its investment portfolio by increasing its allocation to different types of CRE loans and investments. By reducing its concentration in any single asset class or geographic region, ACRE can mitigate risk and enhance its overall portfolio performance. This diversification can involve increasing its exposure to mezzanine loans, preferred equity investments, and commercial mortgage-backed securities (CMBS). Timeline: Ongoing.
• Strategic Acquisitions and Partnerships: ACRE can pursue strategic acquisitions and partnerships to expand its market presence and enhance its capabilities. By acquiring smaller or complementary finance companies, ACRE can gain access to new markets, technologies, and expertise. Strategic partnerships with real estate developers, property managers, and other industry players can also provide ACRE with access to new deal flow and investment opportunities. Timeline: Ongoing.
• Enhancement of Credit Risk Management: ACRE can enhance its credit risk management capabilities by implementing more sophisticated underwriting and monitoring processes. By utilizing advanced data analytics and risk modeling techniques, ACRE can better assess the creditworthiness of borrowers and identify potential risks in its loan portfolio. This enhancement can involve investing in new technologies, hiring experienced credit professionals, and implementing more rigorous loan review procedures. Timeline: Ongoing.
• Capitalizing on Market Dislocations: ACRE can capitalize on market dislocations and periods of economic uncertainty to acquire distressed CRE assets at attractive prices. By identifying undervalued properties and loans, ACRE can generate significant returns through strategic acquisitions and restructurings. This strategy requires a deep understanding of the CRE market, strong relationships with distressed asset specialists, and access to capital to execute transactions. Timeline: Ongoing.

What Opportunities Does ACRE Have?

• Expansion of lending activities in underserved CRE segments.
• Diversification of investment portfolio to mitigate risk.
• Strategic acquisitions and partnerships to expand market presence.
• Capitalizing on market dislocations to acquire distressed CRE assets.

What Threats Does ACRE Face?

• Increased competition from other REITs and specialty finance companies.
• Economic downturns impacting the commercial real estate market.
• Changes in interest rates affecting borrowing costs and investment returns.
• Regulatory changes impacting the REIT industry.

What Are ACRE's Competitive Advantages?

• Established relationships with CRE property owners and operators.
• Expertise in commercial real estate lending and investment.
• Access to capital for originating and investing in CRE loans.
• REIT structure provides tax advantages and income distribution to shareholders.

What Does ACRE Do?

Ares Commercial Real Estate Corporation (ACRE), established in 2011 and based in New York City, is a specialty finance company that focuses on originating and investing in commercial real estate (CRE) loans and related investments throughout the United States. The company provides a comprehensive suite of financing solutions tailored to the needs of owners, operators, and sponsors of CRE properties. ACRE's investment portfolio includes senior mortgage loans, subordinate debt products, mezzanine loans, real estate preferred equity investments, and commercial mortgage-backed securities (CMBS). ACRE operates as a real estate investment trust (REIT) under the Internal Revenue Code of 1986, allowing it to pass income directly to shareholders. Ares Commercial Real Estate Management LLC serves as the manager of the company, overseeing its investment strategies and day-to-day operations. ACRE's approach involves identifying and capitalizing on opportunities within the CRE market, providing capital to projects and properties that require financing. The company aims to generate attractive risk-adjusted returns for its investors through strategic investments and active management of its portfolio.

What Products and Services Does ACRE Offer?

• Originates senior mortgage loans for commercial real estate properties.
• Provides subordinate debt products to CRE owners and operators.
• Invests in mezzanine loans to fill capital stacks.
• Offers real estate preferred equity investments.
• Participates in commercial mortgage-backed securities (CMBS).
• Provides financing solutions for CRE property owners, operators, and sponsors.
• Operates as a real estate investment trust (REIT).

How Does ACRE Make Money?

• Generates revenue from interest income on commercial real estate loans.
• Earns fees from loan origination and servicing.
• Profits from investments in commercial mortgage-backed securities (CMBS).
• Distributes income to shareholders through dividends as a REIT.

What Industry Does ACRE Operate In?

Ares Commercial Real Estate Corporation operates within the REIT - Mortgage industry, a segment of the broader financial services sector. Mortgage REITs generate income from the interest earned on mortgage loans and mortgage-backed securities. The industry is influenced by interest rate movements, credit spreads, and the overall health of the commercial real estate market. Competition includes other REITs and specialty finance companies. Market trends include increased demand for alternative financing solutions in the CRE sector and evolving regulatory landscape.

Who Are ACRE's Key Customers?

• Owners of commercial real estate properties.
• Operators of commercial real estate properties.
• Sponsors of commercial real estate projects.
• Real estate developers.

Ares Commercial Real Estate Corporation (ACRE) Valuation Context

Valued at $251.05M, ACRE is classified as a micro-cap stock. Relative to its peer group, ACRE's quantitative score of 26/100 is below the peer average of 57/100.

ACRE Revenue & Earnings Trend

In Q1 2026, ACRE generated $27.5M in top-line revenue, marking a sequential decrease of 6.2%. The company recorded a net loss of $9.6M, with diluted EPS of $-0.17. Quarter-over-quarter revenue has been mixed, typical for a micro-cap company operating in Financial Services.

Company Profile

Ares Commercial Real Estate Corporation operates in the REIT - Mortgage industry within the Real Estate sector. It is headquartered in New York City, US. The company is led by CEO Bryan Patrick Donohoe. ACRE has traded publicly since 2012.

ROE -4%Key Financial Metrics

Return on equity for Ares Commercial Real Estate Corporation stands at -3.9%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is -1.1%, showing how much profit it generates from its asset base. Its free cash flow yield is -16.0%, a gauge of the cash the business throws off relative to its market value. A current ratio of 0.47 means current liabilities exceed short-term assets, a liquidity point worth watching. Its earnings yield is -7.3%, the inverse of the P/E and a quick read on earnings relative to price.

F-Score 1/9Financial Health

Ares Commercial Real Estate Corporation's Piotroski F-Score is 1/9, a 9-point checklist of profitability, leverage and efficiency — flagging fundamental weakness worth scrutiny. Its Altman Z-Score of -0.15 places it in the distress zone, a signal of elevated financial risk.

FY2026 estForward Outlook

Wall Street analysts project Ares Commercial Real Estate Corporation revenue of about $47.2M for fiscal 2026, with EPS near $0.13. The estimate reflects 4 contributing analysts.

Net buyingInsider Activity

Over the past six months, Ares Commercial Real Estate Corporation insiders filed 9 SEC Form 4 transactions — 3 sales and 6 purchases. On net that is roughly 78K shares acquired (about $175K) — insiders putting money in tends to read as conviction.

ACRE Financials

ACRE Latest News

ACRE Analyst Consensus

ACRE MoonshotScore

What Investors Ask About Ares Commercial Real Estate Corporation (ACRE) — Financial Services

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

Official Resources