Ares Commercial Real Estate Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported GAAP net income of $10.0 million ($0.18 per diluted common share) for the three months ended September 30, 2026, compared to $4.7 million ($0.08 per diluted common share) in the same period in 2025.
• Reported Distributable Earnings of $6.7 million ($0.12 per diluted common share) for the quarter, compared to $0.02 per share for the twelve months ended September 30, 2026.
• Total revenue was $13.5 million for the quarter, down from $14.1 million in the prior year period; interest income was $26.9 million versus $23.3 million in the prior year.
• Net interest margin was $7.9 million for the quarter, a decrease from $8.5 million in the prior year period.
• Realized gain on the sale of real estate owned was $7.1 million for the quarter, compared to zero in the prior year period.
• Total expenses were $8.7 million for the quarter, down from $10.0 million in the prior year period.
• Reversal of current expected credit losses (CECL) was $1.8 million for the quarter, compared to a provision of $2.2 million in the prior year period.
• Loans held for investment, net of CECL reserve, increased to $1.60 billion as of September 30, 2026, from $1.40 billion as of December 31, 2025.
• Real estate owned held for investment decreased to $75.5 million as of September 30, 2026, from $130.2 million as of December 31, 2025.
• Total liabilities increased to $1.26 billion as of September 30, 2026, from $1.11 billion as of December 31, 2025.
• Stockholders' equity was $491.7 million as of September 30, 2026, compared to $509.6 million as of December 31, 2025.

Guidance and Future Outlook:

• Management indicated continued focus on resolving risk-rated 4 and 5 loans to advance portfolio repositioning and enhance future earnings.
• The Board declared a regular cash dividend of $0.15 per common share for the fourth quarter of 2026, payable on January 15, 2027.

Business Segments and Product Lines:

• The company sold an REO office property during the third quarter, resulting in a realized gain.
• The diversified loan portfolio continues to exhibit overall stability supported by the Ares Real Estate Debt platform.
• The company is actively reducing office and REO investments as a strategic priority.

Market and Competitive Landscape:

• The company operates as a specialty finance company primarily engaged in directly originating and investing in commercial real estate loans and related investments.
• The company invests in whole and co-invested senior mortgage loans, subordinate financings, mezzanine debt, and preferred equity in liquid markets across the United States.

Risks and Challenges:

• Management is focused on addressing risk-rated 4 and 5 loans, which represent challenges to the portfolio that require resolution.
• Forward-looking statements highlight risks including global economic trends, inflation, labor shortages, changing interest rates, credit spreads, and the amount of commercial mortgage loans requiring refinancing.
• Risks include potential changes in fiscal and monetary policy, foreign currency exchange volatility, geopolitical instability, and uncertainties caused by tariffs and trade disputes.
• Risks also include the Company's ability to locate suitable investments, monitor and service investments, and execute its investment strategy.

Management Commentary and Tone:

• CEO Bryan Donohoe stated the company continued progress on the strategic priority of reducing office and REO investments.
• CFO Jeff Gonzales expressed confidence in the continued execution of strategic priorities and future earnings potential, citing the resolution of underperforming investments.
• Management emphasized that resolving risk-rated 4 and 5 loans will advance the repositioning of the portfolio.

Other Key Points:

• Subsequent to the three months ended September 30, 2026, the company fully repaid and terminated a $90 million secured term loan.
• The third quarter 2026 dividend of $0.15 per share was paid on October 15, 2026.
• The company is externally managed by a subsidiary of Ares Management Corporation and is taxed as a real estate investment trust.
• A conference call and webcast regarding the results were scheduled for November 6, 2026, at 10:00 a.m. Eastern Time.
• The company issued a presentation titled "Third Quarter 2026 Earnings Presentation" available on its investor website.