Ares Commercial Real Estate Corporation (NYSE:ACRE) Q1 2024 Earnings Conference Call May 9, 2024 9:00 AM ET

Company Participants

John Stilmar - Managing Director, Investor Relations
Bryan Donohoe - CEO
Tae-Sik Yoon - CFO

Conference Call Participants

Doug Harter - UBS
Jason Sabshon - KBW
Stephen Laws - Raymond James
Steven Delaney - Citizens JMP
Richard Shane - JPMorgan

Operator

Good morning and welcome to the Ares Commercial Real Estate Corporation's First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, May 9, 2024.

I will now turn the call over to Mr. John Stilmar, Partner of Public Markets Investor Relations. Please go ahead.

John Stilmar

Good morning, and thank you for joining us on today's conference call. I'm joined today by our CEO, Bryan Donohoe; our CFO, Tae-Sik Yoon, and other members of the management team. In addition to our press release and the 10-Q that we filed with the SEC, we've posted an earnings presentation under the Investor Resources section of our website at www.arescre.com.

Before we begin, I want to remind everyone that comments made during the course of this conference call and webcast, as well as the accompanying documents, contain forward-looking statements that are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may, and similar such expressions. These forward-looking statements are based on management's current expectation of market conditions and management's judgment. The statements are not guarantees of future performance, condition, or results, involve a number of risks and uncertainties. The company's actual results could differ materially from those expressed in the forward-looking statements as a result of a number of factors, including those listed in its SEC filings. Ares Commercial Real Estate assumes no obligation to update any such forward-looking statements.

During this call, we will refer to certain non-GAAP financial measures. We use these as a measure of operating performance. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. These measures may not be comparable to like titled measures used by other companies.

Now I'd like to turn the call over to our CEO, Bryan Donohoe. Bryan?

Bryan Donohoe

Thank you, John. During the first quarter, we made meaningful progress towards our goal of resolving underperforming loans, reducing the outstanding principal balance of nonaccrual loans by $133 million, as well as reducing our exposure to the commercial office property sector by $70 million, or 8% of our total loans backed by office properties. By addressing a total of 4 nonaccrual loans during the first quarter, we increased our distributable earnings, excluding losses, compared to the prior quarter, by approximately $0.02 per common share, and further delevered our balance sheet by $138 million to an outstanding balance of less than $1.5 billion at the end of the first quarter. Our focus remains on returning ACRE to its core business of originating loans and managing a portfolio of loans backed by commercial real estate properties in order to earn consistent income to support an attractive level of dividends for our shareholders.