Ares Commercial Real Estate (ACRE) 10-Q6 Aug 142014 Q2 Quarterly reportFinancial data

Company Profile

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
Document and Entity Information	Jun. 30, 2014	Aug. 04, 2014
Document and Entity Information	'	'
Entity Registrant Name	'Ares Commercial Real Estate Corp	'
Entity Central Index Key	'0001529377	'
Document Type	'10-Q	'
Document Period End Date	30-Jun-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Current Reporting Status	'Yes	'
Entity Filer Category	'Accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	28,604,798
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q2	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
ASSETS	'	'
Cash and cash equivalents	$20,152	$20,100
Restricted cash	24,388	16,954
Loans held for investment ($428,282 and $493,783 related to consolidated VIE, respectively)	1,161,441	958,495
Loans held for sale, at fair value	55,928	89,233
Mortgage servicing rights, at fair value	58,558	59,640
Other assets ($2,167 and $2,552 of interest receivable related to consolidated VIE, respectively; $65,501 of certificates receivable related to consolidated VIE as of June 30,2014)	101,121	32,493
Total assets	1,421,588	1,176,915
LIABILITIES	'	'
Secured funding agreements	457,291	264,419
Warehouse lines of credit	48,199	'
Convertible notes	68,088	67,815
Commercial mortgage-backed securitization debt (consolidated VIE)	395,027	395,027
Allowance for loss sharing	14,440	16,480
Due to affiliate	2,974	2,796
Dividends payable	7,151	7,127
Other liabilities ($359 and $384 of interest payable related to consolidated VIE, respectively)	24,583	17,035
Total liabilities	1,017,753	770,699
Commitments and contingencies (Note 8)	'	'
STOCKHOLDERS' EQUITY	'	'
Common stock, par value $0.01 per share, 450,000,000 shares authorized at June 30, 2014 and December 31, 2013, 28,604,798 and 28,506,977 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively	284	284
Additional paid-in capital	419,930	419,405
Accumulated deficit	-16,379	-13,473
Total stockholders' equity	403,835	406,216
Total liabilities and stockholders' equity	$1,421,588	$1,176,915

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
CONSOLIDATED BALANCE SHEETS	'	'
Loans held for investment related to consolidated VIE	$428,282	$493,783
Other assets, interest receivable related to consolidated VIE	2,167	2,552
Other assets, certificates receivable related to consolidated VIE	65,501	'
Other liabilities, interest payable related to consolidated VIE	$359	$384
Common stock, par value (in dollars per share)	$0.01	$0.01
Common stock, shares authorized	450,000,000	450,000,000
Common stock, shares issued	28,604,798	28,506,977
Common stock, shares outstanding	28,604,798	28,506,977

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net interest margin:	'	'	'	'
Interest income from loans held for investment	$17,735	$8,086	$32,887	$14,798
Interest expense	-6,835	-1,879	-11,907	-3,265
Net interest margin	10,900	6,207	20,980	11,533
Mortgage banking revenue:	'	'	'	'
Servicing fees, net	3,533	'	8,796	'
Gains from mortgage banking activities	5,446	'	6,832	'
Provision for loss sharing	1,180	'	1,061	'
Change in fair value of mortgage servicing rights	-1,888	'	-3,735	'
Mortgage banking revenue	8,271	'	12,954	'
Gain on sale of loans	'	'	680	'
Total revenue	19,171	6,207	34,614	11,533
Expenses:	'	'	'	'
Other interest expense	1,758	1,499	3,443	3,050
Management fees to affiliate	1,478	643	2,970	1,256
Professional fees	1,104	500	2,029	1,067
Compensation and benefits	4,510	'	8,531	'
Acquisition and investment pursuit costs	'	1,121	20	1,761
General and administrative expenses	2,600	453	4,819	936
General and administrative expenses reimbursed to affiliate	1,000	863	2,000	1,610
Total expenses	12,450	5,079	23,812	9,680
Changes in fair value of derivatives	'	2,137	'	1,739
Income from operations before income taxes	6,721	3,265	10,802	3,592
Income tax expense (benefit)	83	'	-591	'
Net income	$6,638	$3,265	$11,393	$3,592
Net income per common share:	'	'	'	'
Basic and diluted earnings per common share (in dollars per share)	$0.23	$0.32	$0.40	$0.37
Weighted average number of common shares outstanding:	'	'	'	'
Basic weighted average shares of common stock outstanding (in shares)	28,453,739	10,215,782	28,448,181	9,720,477
Diluted weighted average shares of common stock outstanding (in shares)	28,590,689	10,257,250	28,570,945	9,764,941
Dividends declared per share of common stock (in dollars per share)	$0.25	$0.25	$0.50	$0.50

CONSOLIDATED_STATEMENT_OF_STOC

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
In Thousands, except Share data, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Balance at Dec. 31, 2013	$406,216	$284	$419,405	($13,473)
Balance (in shares) at Dec. 31, 2013	28,506,977	28,506,977	'	'
Increase (Decrease) in Stockholders' Equity	'	'	'	'
Stock-based compensation	525	'	525	'
Stock-based compensation (in shares)	'	97,821	'	'
Net income	11,393	'	'	11,393
Dividends declared	-14,299	'	'	-14,299
Balance at Jun. 30, 2014	$403,835	$284	$419,930	($16,379)
Balance (in shares) at Jun. 30, 2014	28,604,798	28,604,798	'	'

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013
Operating activities:	'	'
Net income	$11,393	$3,592
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	'	'
Amortization of deferred financing costs	3,288	453
Change in mortgage banking activities	-3,280	'
Change in fair value of mortgage servicing rights	3,735	'
Accretion of deferred loan origination fees and costs	-1,593	-1,268
Provision for loss sharing	-1,061	'
Cash paid to settle loss sharing obligations	-883	'
Originations of mortgage loans held for sale	-151,426	'
Sale of mortgage loans held for sale to third parties	103,040	'
Stock-based compensation	525	235
Changes in fair value of derivatives	'	-1,739
Amortization of convertible notes issuance costs	443	372
Accretion of convertible notes	273	'
Depreciation expense	62	'
Deferred tax benefit	-129	'
Changes in operating assets and liabilities:	'	'
Restricted cash	-1,135	'
Other assets	-3,815	-1,242
Due to affiliate	178	243
Other liabilities	-1,937	1,374
Net cash provided by (used in) operating activities	-42,322	2,020
Investing activities:	'	'
Issuance of and fundings on loans held for investment	-267,719	-186,402
Principal repayment of loans held for investment	3,517	13,512
Proceeds from sale of a mortgage loan held for sale	80,197	'
Receipt of origination fees	2,141	1,664
Purchases of property and equipment	-244	'
Payment of acquisition deposit	'	-1,000
Net cash used in investing activities	-182,108	-172,226
Financing activities:	'	'
Proceeds from secured funding agreements	384,932	95,165
Repayments of secured funding agreements	-192,060	-138,137
Secured funding costs	-2,201	-202
Proceeds from issuance of common stock	'	243,000
Payment of offering costs	-113	-8,141
Proceeds from warehouse lines of credit	137,399	'
Repayments of warehouse lines of credit	-89,200	'
Dividends paid	-14,275	-4,634
Net cash provided by financing activities	224,482	187,051
Change in cash and cash equivalents	52	16,845
Cash and cash equivalents, beginning of period	20,100	23,390
Cash and cash equivalents, end of period	20,152	40,235
Supplemental Information:	'	'
Interest paid during the period	10,814	5,188
Income taxes paid during the period	300	'
Supplemental disclosure of noncash investing and financing activities:	'	'
Dividends payable	7,151	6,822
Deferred financing and offering costs	'	715
Certificates receivable related to consolidated VIE	$65,501	'

ORGANIZATION

ORGANIZATION	6 Months Ended
ORGANIZATION	Jun. 30, 2014
ORGANIZATION	'
ORGANIZATION	'
	1. ORGANIZATION

	Ares Commercial Real Estate Corporation (together with its consolidated subsidiaries, the “Company” or “ACRE”) is a specialty finance company that operates both as a principal lender and a mortgage banker (with respect to loans collateralized by multifamily and senior-living properties). Through Ares Commercial Real Estate Management LLC (“ACREM” or the Company’s “Manager”), a Securities and Exchange Commission (“SEC”) registered investment adviser and a subsidiary of Ares Management L.P. (“Ares Management”), a publicly traded, leading global alternative asset manager, it has investment professionals strategically located across the nation who directly source new loan opportunities for the Company with owners, operators and sponsors of commercial real estate (“CRE”) properties. The Company was formed and commenced operations in late 2011. The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in May 2012. The Company is externally managed by its Manager, pursuant to the terms of a management agreement.

	In the Company’s principal lending business, it is primarily focused on directly originating, managing and servicing a diversified portfolio of CRE debt-related investments for the Company’s own account. The Company’s target investments in its principal lending business include senior loans, bridge loans, subordinated mortgages and B-Notes, preferred equity and other CRE-related investments. These investments, which are referred to as the Company’s “principal lending target investments,” are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, senior living and other commercial real estate properties, or by ownership interests therein and include: (a) “transitional senior” mortgage loans, (b) “stretch senior” mortgage loans, (c) “bridge financing” mortgage loans, (d) subordinated real estate loans such as B-Notes, mezzanine loans, certain rated tranches of securitizations, and (e) other select CRE debt and preferred equity investments. “Transitional senior” mortgage loans provide strategic, flexible, short-term financing solutions for owners of transitional CRE middle-market assets that are the subject of a business plan that is expected to enhance the value of the property. “Stretch senior” mortgage loans provide flexible “one stop” financing for owners of CRE middle-market assets that are typically stabilized or near-stabilized properties with healthy balance sheets and steady cash flows. These mortgage loans typically have higher leverage (and thus higher loan-to-value ratios) than conventional mortgage loans provided by banks, insurance companies and other CRE lenders and are generally non-recourse to the borrower (as compared to conventional mortgage loans, which are often partial or full recourse to the borrower). Bridge loans provide short-term financing to borrowers ranging from six to 24 months in term and may be used to provide financing to borrowers seeking permanent loans from government and government-sponsored entities (collectively, “GSEs”) while they work through the application process or in the event the underlying properties need additional time to stabilize before locking in long-term debt.

	The Company is also engaged in the mortgage banking business through its wholly owned subsidiary, ACRE Capital LLC (“ACRE Capital”), which the Company believes is complementary to its principal lending business. In this business segment, the Company primarily originates, sells and services multifamily and senior-living related loans under programs offered by GSEs, such as the Federal National Mortgage Association (“Fannie Mae”) and the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”). ACRE Capital is approved as a Fannie Mae Delegated Underwriting and Servicing (“DUS”) lender, a Multifamily Accelerated Processing (“MAP”) and Section 232 LEAN lender for HUD, and a Ginnie Mae issuer. While the Company earns little interest from these activities as it generally only holds loans for short periods, the Company receives origination fees when it closes loans and sale premiums when it sells loans. The Company also retains the rights to service the loans, which are known as mortgage servicing rights (“MSRs”) and receives fees for such servicing during the life of the loans, which generally last ten years or more.

	Since the Company operates both as a principal lender and a mortgage banker, the Company can offer a wider array of financing solutions to its customers, including (i) short and long-term loans ranging from one to ten (or more) years, (ii) bridge and permanent loans, (iii) floating and fixed rate loans, and (iv) loans collateralized by development, value-add (or transitional) and stabilized properties. The Company also has the flexibility to provide a combination of solutions to its customers, including instances where the Company’s principal lending business provides a short-term, bridge loan to an owner of multifamily properties while the Company’s mortgage banking business seeks long-term permanent financing for the same customer. This provides the Company the opportunity to offer its customer an efficient “one stop” financial product and at the same time earn revenues at multiple times in the relationship with the customer. First, the Company earns interest and interest-related income while holding the short term bridge loan. Second, the Company earns origination fees and sale premiums when the Company provides permanent financing and sells the loans under GSE programs. Third, the Company earns servicing fees from MSRs that the Company retains on the permanent loans.

	The Company has elected and qualified to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, commencing with its taxable year ended December 31, 2012. The Company generally will not be subject to U.S. federal income taxes on its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with various other requirements as a REIT.

	In connection with the acquisition of ACRE Capital, the Company created a wholly owned subsidiary, ACRE Capital Holdings LLC (“TRS Holdings”), to hold the common units of ACRE Capital. The Company formed a wholly owned subsidiary in December 2013, ACRC Lender W TRS LLC (“ACRC W TRS”) and in March 2014, ACRC Lender U TRS LLC (“ACRC U TRS”) in order to issue and hold certain loans intended for sale. Entity classification elections to be taxed as a corporation and taxable REIT subsidiary (“TRS”) elections were made with respect to TRS Holdings, ACRC W TRS and ACRC U TRS. A TRS is an entity taxed as a corporation other than a REIT in which a REIT directly or indirectly holds equity, and that has made a joint election with such REIT to be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS generally may engage in any business, including investing in assets and engaging in activities that could not be held or conducted directly by the Company without jeopardizing its qualification as a REIT. A TRS is subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis.

SIGNIFICANT_ACCOUNTING_POLICIE

SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
SIGNIFICANT ACCOUNTING POLICIES	Jun. 30, 2014
SIGNIFICANT ACCOUNTING POLICIES	'
SIGNIFICANT ACCOUNTING POLICIES	'
	2. SIGNIFICANT ACCOUNTING POLICIES

	Basis of Presentation

	The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entity (“VIE”) for which the Company controls and is the primary beneficiary, and its wholly owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated.

	Interim financial statements are prepared in accordance with United States GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2014.

	Variable Interest Entities

	The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE.

	To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

	To assess whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Company.

	For VIEs in which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements.

	The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE causes the Company’s consolidation conclusion regarding the VIE to change.

	See Note 16 for further discussion of the Company’s VIEs.

	Segment Reporting

	The Company has two reportable business segments: principal lending and mortgage banking. See Note 18 for further discussion of the Company’s reportable business segments.

	Reclassifications

	Certain prior period amounts have been reclassified to conform to the current period presentation. Deferred financing costs and accrued interest receivable have been reclassified into other assets in the consolidated balance sheets. Derivative liability and accounts payable and accrued expenses have been reclassified into other liabilities in the consolidated balance sheets. Interest receivable has been reclassified into other assets in the consolidated statements of cash flows. Accounts payable, refundable deposits and accrued expenses have been reclassified into other liabilities in the consolidated statements of cash flows. The unrealized loss on the $69.0 million aggregate principal amount of unsecured 7.00% Convertible Senior Notes due 2015 (the “2015 Convertible Notes”) has been reclassified into changes in fair value of derivatives in the consolidated statements of operations.

	Cash and Cash Equivalents

	Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short-term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows.

	Restricted Cash

	Restricted cash includes escrow deposits for taxes, insurance, leasing outlays, capital expenditures, tenant security deposits and payments required under certain loan agreements. These escrow deposits are held on behalf of the respective borrowers and are offset by escrow liabilities included in other liabilities in the consolidated balance sheets. As of June 30, 2014 and December 31, 2013, through ACRE Capital, the Company held restricted cash, which consisted of reserves that are a requirement of the Fannie Mae DUS program and borrower deposits, which represent funds that were collected for the processing of the borrowers loan applications and loan commitments.

	Concentration of Credit Risk

	Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash, loans held for investment, MSRs, loans held for sale, interest receivable and derivative financial instruments. The Company places its cash and cash equivalents with financial institutions and, at times, cash held may exceed the FDIC-insured limit. The Company has exposure to credit risk on its loans held for investment and through its subsidiary ACRE Capital, the Company has exposure on credit risk on loans held for sale and the servicing portfolio whereby ACRE Capital shares in the risk of loss (see Note 7). The Company and the Company’s Manager seek to manage credit risk by performing due diligence prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate.

	Loans Held for Investment

	The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, the Company will record an allowance to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate.

	Each loan classified as held for investment is evaluated for impairment on a periodic basis. Loans are collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral, (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors.

	In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of June 30, 2014 and December 31, 2013, with respect to the Company’s loans held for investment, no impairment charges have been recognized.

	Preferred equity investments, where the risks and payment characteristics are equivalent to mezzanine loans, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included in loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan receivable utilizing the effective interest method.

	Loans Held for Sale

	Through its subsidiaries, including ACRE Capital, ACRC U TRS and ACRC W TRS, the Company originates mortgage loans held for sale, which are recorded at fair value. The holding period for loans originated by ACRE Capital is approximately 30 days. The carrying value of the mortgage loans sold is reduced by the value allocated to the associated retained MSRs based on relative fair value at the time of the sale. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the adjusted value of the related mortgage loans sold.

	Although the Company generally holds its target investments as long-term investments within its principal lending business, the Company may occasionally classify some of its investments as held for sale. Investments held for sale will be carried at fair value within loans held for sale, at fair value in the Company’s consolidated balance sheets, with changes in fair value recorded through earnings. The fees received are deferred and recognized as part of the gain or loss on sale. As of June 30, 2014, the Company did not have any loans held for sale in its principal lending business. As of December 31, 2013, the Company had one loan held for sale in its principal lending business of $84.8 million, net of deferred fees, included in the $89.2 million of loans held for sale in the consolidated balance sheets.

	Mortgage Servicing Rights

	When a mortgage loan is sold, ACRE Capital retains the right to service the loan and recognizes the MSR at fair value. The initial fair value represents expected net cash flows from servicing, as well as interest earnings on escrows and interim cash balances, borrower prepayment penalties, delinquency rates, late charges along with ancillary fees that are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. After initial recognition, changes in the MSR fair value are included within change in fair value of mortgage servicing rights in the Company’s consolidated statements of operations for the period in which the change occurs.

	Intangible Assets

Intangible assets consist of ACRE Capital’s licenses permitting it to participate in programs offered by Fannie Mae, Ginnie Mae and HUD. These licenses are intangible assets with indefinite lives. The Company evaluates identified intangibles for impairment annually or if other events or circumstances indicate that the carrying value may be impaired.

Debt Issuance Costs

Debt issuance costs are capitalized and amortized over the terms of the respective debt instrument. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization, the related unamortized debt issuance costs are charged to expense based on a pro-rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included in interest expense in the Company’s consolidated statements of operations while the unamortized balance is included in other assets in the Company’s consolidated balance sheets.

Derivative Financial Instruments

The Company does not hold or issue derivative instruments for trading purposes. The Company recognizes derivatives on its consolidated balance sheets, measures them at their estimated fair value and recognizes changes in their estimated fair value in the Company’s consolidated statements of operations for the period in which the change occurs.

Through its subsidiary, ACRE Capital, the Company enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding. In general, ACRE Capital simultaneously enters into forward sale commitments with investors in order to hedge interest rate exposure on loan commitments. The forward sale commitment with the investor locks in an interest rate and price for the sale of the loan. The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk. Loan commitments and forward sale commitments are considered undesignated derivative instruments. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value, with changes in fair value recorded in earnings.

On December 19, 2012, the Company issued the 2015 Convertible Notes. The conversion features of the 2015 Convertible Notes were deemed to be an embedded derivative under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). In accordance with ASC 815, the Company was required to bifurcate the embedded derivative related to the conversion features of the 2015 Convertible Notes. Prior to June 26, 2013, the Company recognized the embedded derivative as a liability on its balance sheet, measured at its estimated fair value and recognized changes in its estimated fair value within changes in fair value of derivatives in the Company’s consolidated statements of operations for the period in which the change occurs. See Note 6 for information on the derivative liability reclassification.

Fair Value Measurements

GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The financial instruments recorded at fair value on a recurring basis in the Company’s consolidated financial statements are derivative financial instruments, MSRs and loans held for sale. The Company has not elected the fair value option for certain other financial instruments, including loans held for investment, secured funding agreements and other debt instruments. Such financial instruments are carried at cost. Fair value is separately disclosed (see Note 13).

Allowance for Loss Sharing

When a loan is sold under the Fannie Mae DUS program, ACRE Capital undertakes an obligation to partially guarantee the performance of the loan. The date ACRE Capital commits to make a loan to a borrower, a liability for the fair value of the obligation undertaken in issuing the guaranty is recognized. Subsequent to the initial commitment date, the Company monitors the performance of each loan for events or circumstances which may signal a liability to be recognized if there is a probable and estimable loss. The initial fair value of the guarantee is estimated by examining historical loss share experienced in the ACRE Capital Fannie Mae DUS portfolio since inception. The initial fair value of the guarantee is included within provision for loss sharing in the Company’s consolidated statements of operations. These historical loss shares serve as a basis to derive a loss share rate which is then applied to the current ACRE Capital DUS portfolio (net of specifically identified impaired loans that are subject to a separate loss share reserve analysis).

Servicing Fee Payable

ACRE Capital provides additional payments to certain personnel by providing them with a percentage of the servicing fee revenue that is earned by ACRE Capital, which is initially recorded as a liability when the MSR is obtained and expensed as the servicing fee is earned over the life of the related mortgage loan. ACRE Capital incurs an expense over the life of each loan as long as the related loan is performing. If a particular loan is not performing, the recipient will not receive the additional compensation on that loan, and if a loss sharing event is triggered, the recipient will not receive a portion of the additional compensation on other loans. The servicing fee payable is included within other liabilities in the consolidated balance sheets and the related expense is included within servicing fee revenue on a net basis in the consolidated statements of operations.

Revenue Recognition

Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method. Fees earned on loans held for sale are included within gains from mortgage banking activities below.

Servicing fees are earned for servicing mortgage loans, including all activities related to servicing the loans, and are recognized as services are provided over the life of the related mortgage loan. Also included in servicing fees are the net fees earned on borrower prepayment penalties, and interest earned on borrowers’ escrow payments and interim cash balances, along with other ancillary fees and reduced by write-offs of MSRs for loans that are prepaid.

Gains from mortgage banking activities includes the initial fair value of MSRs, loan origination fees, gain on the sale of loans, interest income on loans held for sale and changes to the fair value of derivative financial instruments attributable to the loan commitments and forward sale commitments. The initial fair value of MSRs, loan origination fees, gain on the sale of loans, and certain direct loan origination costs for loans held for sale are recognized when ACRE Capital commits to make a loan to a borrower. When the Company settles a sale agreement and transfers the mortgage loan to the buyer, the Company recognizes a MSR asset equal to the present value of the expected net cash flows associated with the servicing of loans sold.

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation, which is included within compensation and benefits for ACRE Capital and general and administrative expenses for ACRE in the consolidated statements of operations. The fair value of the time vested restricted stock or restricted stock units granted is recorded to expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to directors, officers and employees, the fair value is determined based upon the market price of the stock on the grant date.

Certain ACRE Capital employees were granted restricted stock units that vest in proportion to certain financial performance targets being met over a specified period of time. The fair value of the performance based restricted stock or restricted stock units granted is recorded to expense on an accelerated basis, using the accelerated attribution method, over the performance period for the award, with an offsetting increase in stockholders’ equity. For performance based measures, compensation expense, net of estimated forfeitures, is recorded based on the Company’s estimate of the probable achievement of such measures.

Underwriting Commissions and Offering Costs

Underwriting commissions and offering costs incurred in connection with common stock or debt offerings are reflected as a reduction of additional paid-in capital. Costs incurred that are not directly associated with the completion of a common stock or debt offering are expensed when incurred. Underwriting commissions that are the responsibility of and paid by a related party, such as the Company’s Manager, are reflected as a contribution of additional paid-in capital from a sponsor in the consolidated financial statements.

Income Taxes

The Company has elected and qualified for taxation as a REIT commencing with its taxable year ended December 31, 2012. As a result of the Company’s REIT qualification and its distribution policy, the Company does not generally pay U.S. federal corporate level income taxes. Many of the REIT requirements, however, are highly technical and complex. To continue to qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Even though the Company currently qualifies for taxation as a REIT, the Company may be subject to certain U.S. federal, state, local and foreign taxes on the Company’s income and property and to U.S. federal income and excise taxes on the Company’s undistributed REIT taxable income.

The Company currently owns 100% of the equity of TRS Holdings, ACRC U TRS and ACRC W TRS, each of which is a TRS. A TRS is subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis. For financial reporting purposes, a provision for current and deferred taxes has been established for the portion of the Company’s GAAP consolidated earnings recognized by TRS Holdings, ACRC U TRS and ACRC W TRS.

FASB ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. As of June 30, 2014 and December 31, 2013, based on the Company’s evaluation, there is no reserve for any uncertain income tax positions. TRS Holdings, ACRC U TRS and ACRC W TRS recognize interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. Accrued interest and penalties are included within other liabilities in the consolidated balance sheets.

Comprehensive Income

For the three and six months ended June 30, 2014 and 2013, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Earnings per Share

The Company calculates basic earnings (loss) per share by dividing net income (loss) allocable to common stockholders for the period by the weighted-average shares of common stock outstanding for that period after consideration of the earnings (loss) allocated to the Company’s restricted stock, which are participating securities as defined in GAAP. Diluted earnings (loss) per share takes into effect any dilutive instruments, such as restricted stock and convertible debt, except when doing so would be anti-dilutive. With respect to the 2015 Convertible Notes, the Company has the ability and intention to settle the principal in cash and to settle any amount above par in shares of the Company’s common stock if the conversion options were exercised. As such, the Company is applying the treasury stock method when determining the dilutive impact on earnings per share.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The Company recognizes identifiable assets acquired and liabilities (both specific and contingent) assumed at their fair values at the acquisition date. Furthermore, acquisition-related costs, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the acquired assets. The excess of the assets acquired and liabilities assumed over the purchase price is recognized as a gain on acquisition. During the measurement period, the Company records adjustments to the assets acquired and liabilities assumed with corresponding adjustments to the gain on acquisition. After the measurement period, which could be up to one year after the transaction date, subsequent adjustments are recorded through earnings.

Costs Associated with Restructuring Activities

The Company began restructuring and relocating certain ACRE Capital support services during the three months ended March 31, 2014. The Company will incur costs related to these restructuring activities, including employee termination costs and office relocation costs. The employee termination costs are associated with the severance of certain employees, retention bonuses and guaranteed bonuses to certain key employees, insurance and outplacement, which will be accounted for on a straight-line basis over the period from notification through each employee’s termination date. If employees are required to render service (beyond a minimum retention period) in order to receive the termination benefits, a liability for employee termination costs is measured initially at the communication date based on its fair value, as of the termination date, and recognized ratably over the future service period. Office relocation costs include costs that will be incurred in the physical move of offices and incremental rent costs, which will be expensed when space is vacated. The costs incurred to date are included within general and administrative expenses in the Company’s consolidated statements of operations.

New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance in this update supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition.” Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

LOANS_HELD_FOR_INVESTMENT

LOANS HELD FOR INVESTMENT

6 Months Ended

Jun. 30, 2014

LOANS HELD FOR INVESTMENT

3. LOANS HELD FOR INVESTMENT

As of June 30, 2014, the Company had originated or co-originated 40 loans secured by CRE middle market properties, excluding six loans that were repaid since inception. The aggregate originated commitment under these loans at closing was approximately $1.3 billion and outstanding principal was $1.2 billion as of June 30, 2014. During the six months ended June 30, 2014, the Company funded approximately $273.1 million and received repayments of $69.0 million as described in more detail in the tables below. Such investments are referred to herein as the Company’s investment portfolio. As of June 30, 2014, 74.9% of the Company’s loans have LIBOR floors, with a weighted average floor of 0.38%, calculated based on loans with LIBOR floors. References to LIBOR or “L” are to 30-day LIBOR (unless otherwise specifically stated).

The Company’s investments in mortgages and loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of June 30, 2014 and December 31, 2013:

June 30, 2014

$ in thousands

Carrying

Outstanding

Weighted

Amount (1)

Principal (1)

Average Interest

Average

Rate

Unleveraged

Remaining

Effective

Life (Years)

Yield (2)

Senior mortgage loans

1,036,799

1,043,673

4.80%

5.40%

2.2

Subordinated debt and preferred equity investments

124,642

125,857

9.60%

10.00%

3.8

Total

1,161,441

1,169,530

5.40%

5.90%

2.4

December 31, 2013

$ in thousands

Carrying

Outstanding

Weighted

Amount (1)

Principal (1)

Average Interest

Average

Rate

Unleveraged

Remaining

Effective

Life (Years)

Yield (2)

Senior mortgage loans

867,578

873,781

5.10%

5.60%

2.4

Subordinated debt and preferred equity investments

90,917

91,655

9.80%

10.20%

3.6

Total

958,495

965,436

5.50%

6.00%

2.5

(1) The difference between the Carrying Amount and the Outstanding Principal face amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of June 30, 2014 and December 31, 2013 as weighted by the Outstanding Principal balance of each loan.

A more detailed listing of the Company’s current investment portfolio, based on information available as of June 30, 2014 is as follows:

(amounts in millions, except percentages)

Loan Type

Location

Outstanding

Carrying

Interest

Unleveraged

Maturity

Payment

Principal (1)

Amount (1)

Rate

Effective

Date (3)

Terms (4)

Yield (2)

Transitional Senior Mortgage Loans:

Office

75.0

74.4

L+3.75%

4.20%

Aug-17

I/O

Retail

69.4

L+4.25%

4.90%

Aug-17

I/O

Office

55.8

54.8

L+5.00%

6.10%

Jan-17

I/O

Apartment

49.1

48.9

L+4.80%

5.90%

Jan-16

I/O

Apartment

45.1

L+4.95%

-5

5.70%

Apr-16

I/O

Apartment

42.6

42.4

L+3.75%

4.50%

Jul-16

I/O

Industrial

MO and KS

37.7

L+4.30%

5.10%

Jan-17

I/O

Apartment

37.8

L+4.95%

-5

5.70%

Apr-16

I/O

Apartment

37.7

37.4

L+5.00%

6.10%

Oct-17

I/O

Apartment

34.9

34.7

L+4.70%

5.60%

Apr-16

I/O

Apartment

34.3

L+3.75%

4.70%

Mar-17

I/O

Apartment

33.8

33.6

L+3.75%

4.50%

Jul-16

I/O

Office

33.5

33.4

L+5.75%-L+5.25%

-6

7.60%

Mar-15

I/O

Office

31.3

L+5.25%

-7

6.30%

Feb-15

I/O

Office

29.6

29.5

L+5.35%-L+5.00%

-8

6.00%

Nov-15

I/O

Office

27.5

27.2

L+4.50%

5.20%

Apr-17

I/O

Apartment

26.3

26.1

L+3.65%

4.30%

Jan-17

I/O

Office

25.5

25.3

L+5.00%

5.80%

Mar-16

I/O

Apartment

23.8

L+3.65%

4.30%

Jan-17

I/O

Apartment

23.1

L+4.95%

-5

5.70%

Apr-16

I/O

Apartment

21.8

21.7

L+4.25%

5.90%

Sep-15

I/O

Apartment

20.8

20.6

L+3.85%

4.80%

May 2017

I/O

Industrial

19.6

19.4

L+5.25%

6.00%

May 2017

I/O

Industrial

18.9

L+5.25%

6.40%

Dec-15

I/O

Office

15.1

L+3.75%

4.50%

Jul-16

I/O

Apartment

14.8

L+4.50%

5.20%

Dec-16

I/O

Office

14.8

14.7

L+4.50%

5.30%

Jul-16

I/O

Apartment

14.3

14.1

L+4.00%

4.80%

Apr-17

I/O

Apartment

12.8

12.7

L+3.80%

4.60%

Feb-17

I/O

Office

10.8

L+5.50%

7.40%

Jan-15

I/O

Apartment

10.2

10.1

L+3.80%

4.60%

Feb-17

I/O

Stretch Senior Mortgage Loans:

Office

47.3

L+5.25%

-9

5.40%

Apr-16

I/O

Industrial

32.7

32.4

L+4.20%

4.70%

May 2018

I/O

Office

14.5

14.4

L+4.75%

5.70%

Feb-16

I/O

Subordinated Debt and Preferred Equity Investments:

Office

36.7

8.75%

9.10%

Aug-16

I/O

Apartment

33.3

33.1

L+7.46%

-10

7.90%

Jan-19

I/O

Apartment

GA and FL

22.6

L+11.85%

-11

12.40%

June 2021

I/O

Office

14.3

10.50%

-12

11.00%

Aug-17

I/O

Apartment

13.8

13.7

11.50%

-13

11.90%

Nov-16

I/O

Apartment

4.9

4.8

L+11.00%

-14

11.50%

Oct-16

I/O

Total/Average

1,169.50

1,161.40

5.90%

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of June 30, 2014 or the LIBOR floor, as applicable. The Total/Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of June 30, 2014 as weighted by the Outstanding Principal balance of each loan.

(3) Certain loans are subject to contractual extension options that vary between one and two 12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without prepayment penalty. The Company may also extend contractual maturities in connection with loan modifications.

(4) I/O =nterest only. Amortization begins on the transitional senior Missouri/Kansas loan with an outstanding principal of $38.0 million in January 2015 and on the transitional senior New York loan with an outstanding principal of $37.7 million in October 2016, respectively, as of June 30, 2014. Amortization begins on the stretch senior Ohio loan with an outstanding principal as of June 30, 2014 of $32.7 million in May 2017. The remainder of the loans in the Company’s principal lending portfolio are non-amortizing through their primary terms.

(5) These loans were originally structured as an A/B note in a cross collateralized loan pool with the Company holding the B-note. In connection with the commercial mortgage-backed securities (“CMBS”) financing on November 19, 2013, the Company purchased the A-note and modified and split the combined loan into individual senior whole loans.

(6) The initial interest rate for this loan of L+5.75% steps down based on performance hurdles to L+5.25%.

(7) This loan was originally structured as an A/B note with the Company holding the B-note. In connection with the CMBS financing on November 19, 2013, the Company purchased the A-note and the loan was modified and combined into a senior whole loan.

(8) The initial interest rate for this loan of L+5.35% steps down based on performance hurdles to L+5.00%.

(9) On March 28, 2014, the Company entered into a loan modification that extended the loan for a term of two years and lowered the interest rate to L+5.25%.

(10) In March 2014, the $85.2 million (outstanding principal) senior loan held for sale by the Company was restructured whereby the principal balance was reduced from $85.2 million to $80.4 million and total commitment was decreased from $93.8 million to $88.4 million. The senior note was subsequently sold to third party purchasers. The transaction qualified for sale accounting under FASB ASC Topic 860, Transfers and Servicing. The origination and exit fees associated with the senior loan were not restructured and the Company retained the right to a portion of the origination and the exit fees. Upon the sale of the senior loan, the Company recorded a $680 thousand (net of expenses) gain on sale of loans in its consolidated statements of operations. The $28.4 million (outstanding principal) mezzanine loan retained by the Company was also restructured whereby the principal balance was increased from $28.4 million to $33.3 million and total commitment was increased from $31.3 million to $36.6 million. In connection with the restructuring of the mezzanine loan, the interest rate decreased from L+9.90% with a LIBOR floor of 0.17% to L+7.46% with a LIBOR floor of 0.17%. The principal balance, interest rate and unleveraged effective yield of the mezzanine loan may change further based on certain asset-level performance hurdles being met.

(11) In June 2014, the Company made a $60.0 million preferred equity investment with a 7-year term to acquire and reposition three multifamily properties. The preferred rate for this investment is L+11.85% with 2.00% as payment-in-kind (“PIK”), to the extent cash flow is not available. There is no capped dollar limit on accrued PIK.

(12) The interest rate for this loan increases to 11.00% on September 1, 2014.

(13) The current interest rate on this loan is 9.00% with 2.50% as PIK up to capped dollar amount based on the borrower’s election.

(14) The preferred return is L+11.00% with an L+ 9.00% current pay and up to a certain dollar limit as PIK.

For the six months ended June 30, 2014, the activity in the Company’s loan portfolio was as follows ($ in thousands):

Balance as of December 31, 2013

958,495

Initial funding

227,520

Receipt of origination fee, net of costs

(2,741

)

Additional funding

45,592

Loan payoffs

(69,018

)

Origination fee accretion

1,593

Balance as of June 30, 2014

1,161,441

No impairment charges have been recognized during the three and six months ended June 30, 2014 and 2013.

MORTGAGE_SERVICING_RIGHTS

MORTGAGE SERVICING RIGHTS	6 Months Ended
	Jun. 30, 2014
MORTGAGE SERVICING RIGHTS	'
MORTGAGE SERVICING RIGHTS	'
	4. MORTGAGE SERVICING RIGHTS

	MSRs represent servicing rights retained by ACRE Capital for loans it originates and sells. The servicing fees are collected from the monthly payments made by the borrowers. ACRE Capital generally receives other remuneration including rights to various loan fees such as late charges, collateral re-conveyance charges, loan prepayment penalties, and other ancillary fees. In addition, ACRE Capital is also generally entitled to retain the interest earned on funds held pending remittance related to its collection of loan principal and escrow balances. As of June 30, 2014, the carrying value of MSRs was approximately $58.6 million. As of June 30, 2014, the Company had a servicing portfolio consisting of 974 loans with an unpaid principal balance of $3.8 billion.

	Activity related to MSRs for the six months ended June 30, 2014 was as follows ($ in thousands):

	Beginning balance, as of December 31, 2013	$	59,640
	Additions, following sale of loan	3,406
	Changes in fair value	-3,735
	Prepayments and write-offs	-753
	Ending balance, as of June 30, 2014	$	58,558

	As discussed in Note 2, the Company determines the fair values of the MSRs based on discounted cash flow models that calculate the present value of estimated future net servicing income. The fair values of ACRE Capital’s MSRs are subject to changes in discount rates. For example, a 100 basis point increase or decrease in the weighted average discount rate would decrease or increase, respectively, the fair value of ACRE Capital’s MSRs outstanding as of June 30, 2014 by approximately $1.8 million.

INTANGIBLE_ASSETS

INTANGIBLE ASSETS	6 Months Ended
INTANGIBLE ASSETS	Jun. 30, 2014
INTANGIBLE ASSETS	'
INTANGIBLE ASSETS	'
	5. INTANGIBLE ASSETS

	As of June 30, 2014 and December 31, 2013, the carrying values of the Company’s intangible assets, as described in Note 2, were $5.0 million, which are included within other assets in the Company’s consolidated balance sheets. The identified intangible assets have indefinite lives and are not subject to amortization. The Company performs an annual assessment of impairment of its intangible assets in the fourth quarter of each year or whenever events or circumstances make it more likely than not that impairment may have occurred. For the three and six months ended June 30, 2014, no impairment charges have been recognized.

DEBT

DEBT	6 Months Ended
	Jun. 30, 2014
DEBT	'
DEBT	'
	6. DEBT

	Funding Agreements

	The Company borrows funds under the ASAP Line of Credit, the BAML Line of Credit (the “Warehouse Lines of Credit”), and the Wells Fargo Facility, the Citibank Facility, the Capital One Facility, the CNB Facility and the UBS Facility (defined below) (collectively, together with the Warehouse Lines of Credit, the “Funding Agreements”). As of June 30, 2014 and December 31, 2013, the outstanding balances and total commitments under the Funding Agreements consisted of the following ($ in thousands):

		As of June 30, 2014				As of December 31, 2013
	$ in thousands	Outstanding Balance		Total		Outstanding Balance		Total
				Commitment				Commitment
	Wells Fargo Facility	$	128,293	$	225,000	$	166,934	$	225,000
	Citibank Facility	113,286		250,000		97,485		125,000
	Capital One Facility	65,967		100,000		-		100,000
	CNB Facility	30,000		50,000		-		-
	UBS Facility	119,745		195,000		-		-
	ASAP Line of Credit	-		105,000		-		105,000
	BAML Line of Credit	48,199		80,000		-		80,000
	Total	$	505,490	$	1,005,000	$	264,419	$	635,000

	The Funding Agreements are generally collateralized by assignments of specific loans held for investment or loans held for sale owned by the Company. The Funding Agreements (excluding the Warehouse Lines of Credit) are guaranteed by the Company. Generally, the Company partially offsets interest rate risk by matching the interest index of loans held for investment with the Funding Agreement used to fund them.

	Wells Fargo Facility

	The Company is party to a secured revolving funding facility arranged by Wells Fargo Bank, National Association (as amended and restated, the “Wells Fargo Facility”), which allows the Company to borrow up to $225.0 million. The Company is permitted to borrow funds under the Wells Fargo Facility to finance qualifying senior commercial mortgage loans, A-Notes, pari passu participations in commercial mortgage loans and mezzanine loans under certain circumstances, subject to available collateral. Advances under the Wells Fargo Facility accrue interest at a per annum rate equal to the sum of (i) 30 day LIBOR plus (ii) a pricing margin range of 2.00%-2.50%. The Company incurs a non-utilization fee of 25 basis points on the daily available balance of the Wells Fargo Facility to the extent less than 75% of the Wells Fargo Facility is utilized. For the three and six months ended June 30, 2014, the Company incurred a non-utilization fee of $63 thousand and $72 thousand, respectively. For the three and six months ended June 30, 2013, the Company incurred a non-utilization fee of $30 thousand and $74 thousand, respectively. The initial maturity date of the Wells Fargo Facility is December 14, 2014 and, provided that certain conditions are met and applicable extension fees are paid, is subject to two 12-month extension options. As of June 30, 2014 and December 31, 2013, the outstanding balance on the Wells Fargo Facility was $128.3 million and $166.9 million, respectively.

	The Wells Fargo Facility contains various affirmative and negative covenants applicable to the Company and certain of the Company’s subsidiaries, including the following: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments in excess of the minimum amount necessary to continue to qualify as a REIT and avoid the payment of income and excise taxes, (d) maintenance of adequate capital, (e) limitations on change of control, (f) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (g) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (h) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12-month period ending on the last date of the applicable reporting period to be at least 1.25 to 1.00, (i) maintaining a tangible net worth of at least the sum of (1) approximately $135.5 million, plus (2) 80% of the net proceeds raised in all future equity issuances by the Company and (j) if certain specific debt yield, loan to value or other credit based tests are not met with respect to assets on the Wells Fargo Facility, the Company may be required to repay certain amounts under the Wells Fargo Facility. As of June 30, 2014, the Company was in compliance in all material respects with the terms of the Wells Fargo Facility.

	Citibank Facility

	The Company is party to a secured revolving funding facility with Citibank, N.A. (as amended and restated, the “Citibank Facility”), which allows the Company to borrow up to $250.0 million. The Company is permitted to borrow funds under the Citibank Facility to finance qualifying senior commercial mortgage loans and A-Notes, subject to available collateral. Under the Citibank Facility, the Company borrows funds on a revolving basis in the form of individual loans. Each individual loan is secured by an underlying loan originated by the Company. Amounts outstanding under each individual loan accrue interest at a per annum rate equal to 30 day LIBOR plus a pricing margin of 2.25% to 2.75% (subject to a 0.50% LIBOR floor for one mortgage loan pledged on the Citibank Facility), based on the debt yield of the assets securing the Citibank Facility. The Company incurs a non-utilization fee of 25 basis points on the daily available balance of the Citibank Facility. For the three and six months ended June 30, 2014, the Company incurred a non-utilization fee of $58 thousand and $73 thousand, respectively. For the three and six months ended June 30, 2013, the Company incurred a non-utilization fee of $17 thousand and $77 thousand, respectively. The final repayment date on which a payment of principal is contractually obligated to be made in respect of each mortgage loan pledged under the Citibank Facility is the latest date on which a payment of principal is contractually obligated to be made in respect of each mortgage loan pledged under the Citibank Facility and the earlier of December 2, 2018. As of June 30, 2014 and December 31, 2013, the outstanding balance on the Citibank Facility was $113.3 million and $97.5 million, respectively.

	The Citibank Facility contains various affirmative and negative covenants applicable to the Company and certain of the Company’s subsidiaries, including the following: (a) maintaining tangible net worth of at least the sum of (1) 80% of the Company’s tangible net worth as of September 30, 2013, plus (2) 80% of the total net capital raised in all future equity issuances by the Company, (b) maintaining liquidity in an amount not less than the greater of (1) $5.0 million or (2) 5% of the Company’s recourse indebtedness, not to exceed $10.0 million (provided that in the event the Company’s total liquidity equals or exceeds $5.0 million, the Company may satisfy the difference between the minimum total liquidity requirement and the Company’s total liquidity with available borrowing capacity), (c) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12-month period ending on the last date of the applicable reporting period to be at least 1.25 to 1.00, (d) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (e) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00 and (f) if certain specific debt yield and loan to value tests are not met with respect to assets on the Citibank Facility, the Company may be required to pay certain amounts under the Citibank Facility. The Citibank Facility also prohibits the Company from amending the management agreement with its Manager in a material respect without the prior consent of the lender. The covenants listed above reflect the amendments to the Citibank Facility on May 6, 2014. As of June 30, 2014, the Company was in compliance in all material respects with the terms of the Citibank Facility.

	Capital One Facility

	The Company is party to a secured revolving funding facility with Capital One, National Association (as amended and restated, the “Capital One Facility”), which allows the Company to borrow up to $100.0 million. The Company is permitted to borrow funds under the Capital One Facility to finance qualifying senior commercial mortgage loans, subject to available collateral. Under the Capital One Facility, the Company borrows funds on a revolving basis in the form of individual notes evidenced by individual loans. Each individual loan is secured by an underlying loan originated by the Company. Amounts outstanding under each individual loan accrue interest at a per annum rate equal to the sum of (i) 30 day LIBOR, (ii) plus a pricing margin of 2.00% to 3.50%. The Company may request individual loans under the Capital One Facility through and including May 18, 2015, subject to successive 12-month extension options at the lender’s discretion. The maturity date of each individual loan is the same as the maturity date of the underlying loan that secures such individual loan. As of June 30, 2014, the outstanding balance on the Capital One Facility was $66.0 million. As of December 31, 2013, there was no outstanding balance under the Capital One Facility. The Company does not incur a non-utilization fee under the terms of the Capital One Facility.

	The Capital One Facility contains various affirmative and negative covenants applicable to the Company and certain of the Company’s subsidiaries, including the following: (a) maintaining a ratio of debt to tangible net worth of not more than 3.00 to 1.00, (b) maintaining a tangible net worth of at least the sum of (1) 80% of the Company’s tangible net worth as of May 1, 2012, plus (2) 80% of the net proceeds received from all future equity issuances by the Company, and (c) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12-month period ending on the last date of the applicable reporting period to be at least 1.25 to 1.00. As of June 30, 2014, the Company was in compliance in all material respects with the terms of the Capital One Facility.

	City National Bank Facility

	The Company is party to a $50.0 million secured revolving funding facility with City National Bank (the “CNB Facility”). The Company is permitted to borrow funds under the CNB Facility to finance new investments and for other working capital and general corporate needs. Advances under the CNB Facility accrue interest at a per annum rate equal to the sum of, at the Company’s option, either (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 3.00% or (b) a base rate (which is the highest of a prime rate, the federal funds rate plus 0.50%, or one month LIBOR plus 1.00%) plus 1.25%; provided that in no event shall the interest rate be less than 3.00%. Unless at least 75% of the CNB Facility is used on average, unused commitments under the CNB Facility accrue unused line fees at the rate of 0.375% per annum. For the three and six months ended June 30, 2014, the Company incurred a non-utilization fee of $35 thousand and $43 thousand, respectively. The initial maturity date is March 11, 2016, subject to one 12-month extension at the Company’s option if certain conditions are met. As of June 30, 2014, the outstanding balance on the CNB Facility was $30.0 million.

	The agreements governing the CNB Facility contain various representations and warranties, and impose certain covenants on the Company and certain of its subsidiaries, as borrower under the CNB Facility, including the following and other customary requirements for similar revolving credit facilities: (a) limitations on the incurrence of additional indebtedness or liens, (b) limitations on how borrowed funds may be used, (c) limitations on certain distributions and dividend payments following a default or event of default, (d) limitations on dispositions of assets, (e) maintenance of minimum total asset value by the borrower under the CNB Facility and its subsidiaries, and (f) prohibitions of certain change of control events. The agreements governing the CNB Facility also impose certain covenants on the Company, including the following: (i) maintaining a ratio of total debt to tangible net worth of not more than 4.00 to 1.00, (ii) maintaining a ratio of recourse debt to tangible net worth of not more than 3.00 to 1.00, (iii) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of the net cash proceeds raised in equity issuances by the Company after March 12, 2014, (iv) maintaining a fixed charge coverage ratio (expressed as the ratio of EBITDA (net income before net interest expense, income tax expense, depreciation and amortization), as defined, to fixed charges) for the immediately preceding 12-month period ending on the last date of the applicable reporting period of at least 1.25 to 1.00, (v) limitations on mergers, consolidations, transfers of assets and similar transactions, and (vi) maintaining its status as a REIT. As of June 30, 2014, the Company was in compliance in all material respects with the terms of the CNB Facility.

	UBS Facility

	On April 9, 2014, the Company entered into a $195.0 million revolving master repurchase facility (the “UBS Facility”) with UBS Real Estate Securities Inc. (“UBS”), pursuant to which certain subsidiaries of the Company may sell, and later repurchase, commercial mortgage loans, under certain circumstances, commercial real estate mezzanine loans, and other assets meeting defined eligibility criteria that are approved by UBS in its sole discretion. The initial maturity date of the UBS Facility is April 7, 2017, subject to annual extensions in UBS’ sole discretion. The initial purchase price paid by UBS for assets financed under the UBS Facility is based on a specified percentage of the relevant value under the UBS Facility. The price differential (or interest rate) on the UBS Facility is one-month LIBOR plus 1.88%, excluding amortization of commitment and exit fees. Upon termination of the UBS Facility, the Company will pay UBS, if applicable, the amount by which the aggregate price differential paid over the term of the UBS Facility is less than the defined minimum price differential and an exit fee, in each case, unless certain conditions are met. As of June 30, 2014, the outstanding balance on the UBS Facility was $119.7 million.

	The UBS Facility contains margin call provisions that provide UBS with certain rights if the applicable percentage of the aggregate asset value of the purchased assets under the UBS Facility is less than the aggregate purchase price for such assets. The UBS Facility is fully guaranteed by the Company and requires the Company to maintain certain financial and other covenants including the following: (a) maintaining a ratio of (i) recourse debt to tangible net worth of not more than 3.00 to 1.00 and (ii) total debt to tangible net worth of not more than 4.00 to 1.00, (b) maintaining a tangible net worth of at least 80% of the Company’s net worth as of September 30, 2013, plus 80% of net cash proceeds received from all subsequent equity issuances by the Company, and (c) maintaining a fixed charge coverage ratio (expressed as the ratio of adjusted-EBITDA (net income before net interest expense, income tax expense, depreciation and amortization) to fixed charges) for the immediately preceding 12-month period ending on the last day of the applicable reporting period of at least 1.25 to 1.00. In addition, the UBS Facility contains certain affirmative and negative covenants and provisions regarding events of default that are customary for similar repurchase facilities. As of June 30, 2014, the Company was in compliance in all material respects with the terms of the UBS Facility.

	Warehouse Lines of Credit

	ASAP Line of Credit

	ACRE Capital is party to a multifamily as soon as pooled (“ASAP”) sale agreement with Fannie Mae. As of June 30, 2014, the Fannie Mae ASAP Line of Credit (the “ASAP Line of Credit”) had a borrowing capacity of $105.0 million with no expiration date. Fannie Mae advances payment to ACRE Capital in two separate installments according to the terms as set forth in the ASAP sale agreement. The first installment is considered an advance to ACRE Capital from Fannie Mae and not a sale until the second advance and settlement is made. Installments received by ACRE Capital from Fannie Mae are financed on the ASAP Line of Credit, which charges interest at a floating daily rate of 30-day LIBOR+1.40% with a floor of 1.75% and is secured by the underlying originated loan. As of June 30, 2014 and December 31, 2013, there was no outstanding balance under the ASAP Line of Credit.

	BAML Line of Credit

	ACRE Capital is party to a line of credit with Bank of America, N.A. (the “BAML Line of Credit”) of $80.0 million with a stated interest rate of Bank of America LIBOR Daily Floating Rate plus 1.60%. The BAML Line of Credit was amended in May 2014 to extend the maturity date to April 15, 2015. For the three and six months ended June 30, 2014, the Company incurred a non-utilization fee of $20 thousand and $43 thousand, respectively. As of June 30, 2014, the outstanding balance under the BAML Line of Credit was $48.2 million. As of December 31, 2013, there was no outstanding balance under the BAML Line of Credit.

	The BAML Line of Credit is collateralized by a first lien on ACRE Capital’s interest in the mortgage loans that it originates. Advances from the BAML Line of Credit cannot exceed 100% of the principal amounts of the mortgage loans originated by ACRE Capital and must be repaid at the earlier of the sale or other disposition of the mortgage loans or at the expiration date of the BAML Line of Credit. The terms of the BAML Line of Credit require ACRE Capital to comply with various covenants, including a minimum tangible net worth requirement. As of June 30, 2014, ACRE Capital was in compliance in all material respects with the terms of the BAML Line of Credit.

	2015 Convertible Notes

On December 19, 2012, the Company issued $69.0 million aggregate principal amount of the 2015 Convertible Notes. Of this aggregate principal amount, $60.5 million aggregate principal amount of the 2015 Convertible Notes was sold to the initial purchasers (including $9.0 million pursuant to the initial purchasers’ exercise in full of their overallotment option) and $8.5 million aggregate principal amount of the 2015 Convertible Notes was sold directly to certain directors, officers and affiliates of the Company in a private placement. The 2015 Convertible Notes were issued pursuant to an Indenture, dated December 19, 2012 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The sale of the 2015 Convertible Notes generated net proceeds of approximately $66.2 million. Aggregate estimated offering expenses in connection with the transaction, including the initial purchasers’ discount of approximately $2.1 million, were approximately $2.8 million. As of June 30, 2014 and December 31, 2013, the carrying value of the 2015 Convertible Notes was $68.1 million and $67.8 million, respectively.

The 2015 Convertible Notes bear interest at a rate of 7.00% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2013. The estimated effective interest rate of the 2015 Convertible Notes, which is equal to the stated rate of 7.00% plus the accretion of the original issue discount and associated costs, was 9.4% for the three and six months ended June 30, 2014 and 2013. For the three and six months ended June 30, 2014, the interest expense incurred on this indebtedness was $1.6 million and $3.1 million, respectively. For the three and six months ended June 30, 2013, the interest expense incurred on this indebtedness was $1.5 million and $3.1 million, respectively. The 2015 Convertible Notes will mature on December 15, 2015 (the “Maturity Date”), unless previously converted or repurchased in accordance with their terms. The 2015 Convertible Notes are the Company’s senior unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 2015 Convertible Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

Prior to the close of business on the business day immediately preceding June 15, 2015, holders may convert their 2015 Convertible Notes only under certain circumstances as set forth in the Indenture. On or after June 15, 2015 until the close of business on the scheduled trading day immediately preceding the Maturity Date, holders may convert their 2015 Convertible Notes at any time. Upon conversion, the Company will pay or deliver, as the case may be, at its election, cash, shares of its common stock or a combination of cash and shares of its common stock. The conversion rate is initially 53.6107 shares of common stock per $1,000 principal amount of 2015 Convertible Notes (equivalent to an initial conversion price of approximately $18.65 per share of common stock). The conversion rate will be subject to adjustment in some events, including for regular quarterly dividends in excess of $0.35 per share, but will not be adjusted for any accrued and unpaid interest. In addition, if certain corporate events occur prior to the Maturity Date, the conversion rate will be increased but will in no event exceed 61.6523 shares of common stock per $1,000 principal amount of 2015 Convertible Notes.

Prior to June 26, 2013, the Company could not elect to issue shares of common stock upon conversion of the 2015 Convertible Notes to the extent such election would result in the issuance of 20% or more of the common stock outstanding immediately prior to the issuance of the 2015 Convertible Notes until the Company received stockholder approval for issuances above this threshold. Until such stockholder approval was obtained, the Company could not share-settle the full conversion option. As a result, the embedded conversion option did not qualify for equity classification and instead was separately valued and accounted for as a derivative liability. The initial value allocated to the derivative liability was $1.7 million, which represented a discount to the debt cost to be amortized through other interest expense using the effective interest method through the maturity of the 2015 Convertible Notes. The effective interest rate used to amortize the debt discount on the 2015 Convertible Notes was 9.4%. During each reporting period, the derivative liability was marked to fair value through earnings.

On June 26, 2013, stockholder approval was obtained for the issuance of shares in excess of 20% of the Company’s common stock outstanding to satisfy any conversions of the 2015 Convertible Notes. As a result, the Company has the ability to fully settle in shares the conversion option and the embedded conversion option is no longer required to be separately valued and accounted for as a derivative liability on a prospective basis. As of June 26, 2013, the conversion option’s cumulative value of $86 thousand was reclassified to additional paid-in capital and will no longer be marked-to-market through earnings. The remaining debt discount of $1.5 million as of June 26, 2013, which arose at the date of debt issuance from the original bifurcation, will continue to be amortized through other interest expense. As of June 30, 2014 and December 31, 2013, there was no derivative liability.

The Company does not have the right to redeem the 2015 Convertible Notes prior to the Maturity Date, except to the extent necessary to preserve its qualification as a REIT. No sinking fund is provided for the 2015 Convertible Notes. In addition, if the Company undergoes certain corporate events that constitute a “fundamental change,” the holders of the 2015 Convertible Notes may require the Company to repurchase for cash all or part of their 2015 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2015 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

ALLOWANCE_FOR_LOSS_SHARING

ALLOWANCE FOR LOSS SHARING	6 Months Ended
	Jun. 30, 2014
ALLOWANCE FOR LOSS SHARING	'
ALLOWANCE FOR LOSS SHARING	'
	7. ALLOWANCE FOR LOSS SHARING

	Loans originated and sold by ACRE Capital to Fannie Mae under the Fannie Mae DUS program are subject to the terms and conditions of a Master Loss Sharing Agreement by ACRE Capital, which was amended and restated during 2012. Under the Master Loss Sharing Agreement, ACRE Capital is responsible for absorbing certain losses incurred by Fannie Mae with respect to loans originated under the DUS program, as described below in more detail.

	The losses incurred with respect to individual loans are allocated between ACRE Capital and Fannie Mae based on the loss level designation (“Loss Level”) for the particular loan. Loans are designated as Loss Level I, Loss Level II or Loss Level III. All loans are designated Loss Level I unless Fannie Mae and ACRE Capital agree upon a different Loss Level for a particular loan at the time of the loan commitment, or if Fannie Mae determines that the loan was not underwritten, processed or serviced according to Fannie Mae guidelines.

	Losses on Loss Level I loans are shared 33.33% by ACRE Capital and 66.67% by Fannie Mae. The maximum amount of ACRE Capital’s risk-sharing obligation with respect to any Loss Level I loan is 33.33% of the original principal amount of the loan. Losses incurred in connection with Loss Level II and Loss Level III loans are allocated disproportionately to ACRE Capital until ACRE Capital has absorbed the maximum level of its risk-sharing obligation with respect to the particular loan. The maximum loss allocable to ACRE Capital for Loss Level II loans is 30% of the original principal amount of the loan, and for Loss Level III loans is 40% of the original principal amount of the loan.

	According to the Master Loss Sharing Agreement, Fannie Mae may unilaterally increase the amount of the risk-sharing obligation of ACRE Capital with respect to individual loans without regard to a particular Loss Level if (i) the loan does not meet specific underwriting criteria, (ii) the loan is defaulted within twelve (12) months after it is purchased by Fannie Mae, or (iii) Fannie Mae determines that there was fraud, material misrepresentation or gross negligence by ACRE Capital in its underwriting, closing, delivery or servicing of the loan. Under certain limited circumstances, Fannie Mae may require ACRE Capital to absorb 100% of the losses incurred on a loan by requiring ACRE Capital to repurchase the loan.

	The amount of loss incurred on a particular loan is determined at the time the loss is incurred, for example, at the time a property is foreclosed by Fannie Mae (whether acquired by Fannie Mae or a third party) or at the time a loan is modified in connection with a default. Losses may be determined by reference to the price paid by a third party at a foreclosure sale or by reference to an appraisal obtained by Fannie Mae in connection with the default on the loan.

	In connection with the Company’s acquisition of ACRE Capital, Alliant, Inc., a Florida corporation, and The Alliant Company, LLC, a Florida limited liability company (the “Sellers”), are jointly and severally obligated to fund directly (if permitted) or to reimburse ACRE Capital for amounts due and owing after the closing date to Fannie Mae pursuant to ACRE Capital’s allowance for loss sharing with respect to settlement of certain DUS program mortgage loans originated and serviced by ACRE Capital, subject to certain limitations. In addition, the Sellers are jointly and severally obligated to indemnify ACRE Capital for, among other things, certain losses arising from Sellers’ failure to fulfill the funding or reimbursement obligations described above. As of June 30, 2014 and December 31, 2013, the preliminary estimate of the portion of such contributions towards such losses relating to the allowance for loss sharing of ACRE Capital is $1.4 million and $2.0 million, respectively, and is included within other assets in the consolidated balance sheets. Additionally, with respect to the settlement of certain non-designated DUS program mortgage loans originated and serviced by ACRE Capital, the Sellers are jointly and severally obligated to fund directly (if permitted) or to reimburse ACRE Capital in each of the three 12 month periods following the closing date for eighty percent (80%) of amounts due and owing after the closing date to Fannie Mae pursuant to ACRE Capital’s allowance for loss sharing in excess of $2.0 million during such 12 month period; provided that in no event shall Sellers obligations exceed in the aggregate $3.0 million for the entire three year period.

	ACRE Capital uses several tools to manage its risk-sharing obligation, including maintenance of disciplined underwriting and approval processes and procedures, and periodic review and evaluation of underwriting criteria based on underlying multifamily housing market data and limitation of exposure to particular geographic markets and submarkets and to individual borrowers. In situations where payment under the guaranty is probable and estimable on a specific loan, the Company records an additional liability through a charge to the provision for loss sharing in the consolidated statements of operations. The amount of the provision reflects the Company’s assessment of the likelihood of payment by the borrower, the estimated disposition value of the underlying collateral and the level of risk-sharing. Historically, among other factors, the loss recognition occurs at or before the loan becoming 60 days delinquent.

	A summary of the Company’s allowance for loss sharing for the six months ended June 30, 2014 is as follows ($ in thousands):

	Beginning balance, as of December 31, 2013	$	16,480
	Current period provision for loss sharing	-1,061
	Settlements/Writeoffs	-979
	Ending balance, as of June 30, 2014	$	14,440

	As of June 30, 2014 and December 31, 2013, the maximum quantifiable allowance for loss sharing associated with the Company’s guarantees under the Fannie Mae DUS agreement was $1.2 billion and $1.3 billion, respectively, from a total recourse at risk pool of $3.5 billion and $3.7 billion, respectively. Additionally, as of June 30, 2014 and December 31, 2013, the non-at risk pool was $2.9 million and $5.2 million, respectively. The at risk pool is subject to Fannie Mae’s Master Loss Sharing Agreement and the non-at risk pool is not subject to such agreement. The maximum quantifiable allowance for loss sharing is not representative of the actual loss the Company would incur. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.

COMMITMENTS_AND_CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2014
COMMITMENTS AND CONTINGENCIES	'
COMMITMENTS AND CONTINGENCIES	'
	8. COMMITMENTS AND CONTINGENCIES

	The Company has various commitments to fund investments in its portfolio, extend credit and sell loans as described below.

	As of June 30, 2014 and December 31, 2013, the Company had the following commitments to fund various stretch senior, transitional senior mortgage loans, subordinated and mezzanine debt investments, as well as preferred equity investments accounted for as loans held for investment:

		As of
	$ in thousands	June 30, 2014		December 31, 2013
	Total commitments	$	1,316,008	$	1,191,212
	Less: funded commitments	-1,169,530		-1,050,674
	Total unfunded commitments	$	146,478	$	140,538

	Commitments to extend credit by ACRE Capital are generally agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Occasionally, the commitments may expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements. As of June 30, 2014 and December 31, 2013, ACRE Capital had the following commitments to sell and fund loans:

		As of
	$ in thousands	June 30, 2014		December 31, 2013
	Commitments to sell loans	$	84,325	$	56,115
	Commitments to fund loans	$	31,618	$	51,794

DERIVATIVES

6 Months Ended

Jun. 30, 2014

DERIVATIVES

9. DERIVATIVES

Non-designated Hedges

Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or for which the Company has not elected to designate as hedges. Changes in the fair value of derivatives related to the loan commitments and forward sale commitments are recorded directly in gains from mortgage banking activities in the consolidated statements of operations.

Loan commitments and forward sale commitments

Through its subsidiary, ACRE Capital, the Company enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding. In general, ACRE Capital simultaneously enters into forward sale commitments with investors in order to hedge against the interest rate exposure on loan commitments. The forward sale commitment with the investor locks in an interest rate and price for the sale of the loan. The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk. Loan commitments and forward sale commitments are considered undesignated derivative instruments. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value, with changes in fair value recorded in earnings. For the six months ended June 30, 2014, the Company entered into ten loan commitments and ten forward sale commitments. For the three months ended June 30, 2014, the Company entered into eight loan commitments and eight forward sale commitments.

As of June 30, 2014, the Company had two loan commitments with a total notional amount of $31.6 million and six forward sale commitments with a total notional amount of $84.3 million, with maturities ranging from 29 to 92 days that were not designated as hedges in qualifying hedging relationships. As of December 31, 2013, the Company had two loan commitments with a total notional amount of $51.8 million and five forward sale commitments with a total notional amount of $56.1 million, with maturities ranging from 24 to 60 days that were not designated as hedges in qualifying hedging relationships.

Right to acquire MSRs

In connection with the acquisition of ACRE Capital, the Company assumed the right to acquire the servicing for certain HUD loans at a future date. This right was contingent upon satisfaction of certain conditions, which were all satisfied in the fourth quarter of 2013. Accordingly, the Company assumed servicing of these loans as of January 1, 2014. Pursuant to the acquisition method of accounting, a gain on acquisition related to these MSRs was recognized retrospectively as of August 30, 2013, the acquisition date of Alliant Capital. The derivative asset associated with the right to service these loans in 2014 is included within other assets in the consolidated balance sheets as of December 31, 2013.

Embedded conversion option

In connection with the issuance of the 2015 Convertible Notes, the Company could not elect to issue shares of common stock upon conversion of the 2015 Convertible Notes to the extent such election would result in the issuance of 20% or more of the common stock outstanding immediately prior to the issuance of the 2015 Convertible Notes until the Company received stockholder approval for issuances above this threshold. As a result, the embedded conversion option did not qualify for equity classification and instead was separately valued and accounted for as a derivative liability. On June 26, 2013, stockholder approval was obtained for the issuance of shares in excess of 20% of the Company’s common stock outstanding to satisfy any conversions of the 2015 Convertible Notes. As a result, the Company had the ability to fully settle in shares the conversion option and the embedded conversion option was no longer required to be separately valued and accounted for as a derivative liability on a prospective basis. As of June 30, 2014 and December 31, 2013, there was no derivative liability. For the three and six months ended June 30, 2013, changes in the fair value of the embedded conversion option are included within changes in fair value of derivatives in the consolidated statements of operations.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification within the Company’s consolidated balance sheets as of June 30, 2014 and December 31, 2013 ($ in thousands):

As of

June 30, 2014

December 31, 2013

Balance Sheet

Fair Value

Balance Sheet

Fair Value

Location

Derivatives not designated as hedging instruments

Loan commitments

Other assets

1,760

Other assets

2,038

Forward sale commitments

Other assets

272

Right to acquire MSRs

Other assets

1,717

Forward sale commitments

Other liabilities

-786

Other liabilities

-500

Total derivatives not designated as hedging instruments

974

3,527

STOCKHOLDERS_EQUITY

STOCKHOLDERS' EQUITY	6 Months Ended
STOCKHOLDERS' EQUITY	Jun. 30, 2014
STOCKHOLDERS' EQUITY	'
STOCKHOLDERS' EQUITY	'
	10. STOCKHOLDERS’ EQUITY

	On May 9, 2013, the Company filed a registration statement on Form S-3 (the “Shelf Registration Statement”), with the SEC in order to permit the Company to offer, from time to time, in one or more offerings or series of offerings up to $1.5 billion of the Company’s common stock, preferred stock, debt securities, subscription rights to purchase shares of the Company’s common stock, warrants representing rights to purchase shares of the Company’s common stock, preferred stock or debt securities, or units. On June 17, 2013, the registration statement was declared effective by the SEC.

	On June 21, 2013, the Company priced a public offering of 18,000,000 shares of its common stock at a public offering price of $13.50 per share (the “Offering”), raising gross proceeds of approximately $243.0 million. The Company incurred approximately $8.4 million in offering expenses related to the public offering resulting in net proceeds of $234.6 million. In connection with the Offering, the Company also granted the underwriters an option to purchase up to an additional 2.7 million shares of common stock. On July 9, 2013, the Company sold 601,590 shares of its common stock to the underwriters, pursuant to the underwriters’ partial exercise of the option to purchase additional shares. The Company raised approximately $7.7 million in net proceeds from the sale of these additional shares of its common stock, which brought the total net proceeds of the offering to approximately $242.3 million. The Offering was made under the Company’s Shelf Registration Statement. The net proceeds from the Offering are being used to invest in target investments, repay indebtedness, fund future funding commitments on existing loans and for other general corporate purposes.

	In connection with the Company’s acquisition of ACRE Capital, on August 30, 2013, the Company issued 588,235 shares of its common stock to the Sellers in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”).

	Equity Incentive Plan

	On April 23, 2012, the Company adopted an equity incentive plan (the “2012 Equity Incentive Plan”). Pursuant to the 2012 Equity Incentive Plan, the Company may grant awards consisting of restricted shares of the Company’s common stock, restricted stock units and/or other equity-based awards to the Company’s outside directors, employees, officers, ACREM and other eligible awardees under the plan, subject to an aggregate limitation of 690,000 shares of common stock (7.5% of the issued and outstanding shares of the Company’s common stock immediately after giving effect to the issuance of the shares sold in the IPO). Any restricted shares of the Company’s common stock and restricted stock units will be accounted for under FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), resulting in share-based compensation expense equal to the grant date fair value of the underlying restricted shares of common stock or restricted stock units.

	Restricted stock grants generally vest ratably over a one to four year period from the vesting start date. The grantee receives additional compensation for each outstanding restricted stock grant, classified as dividends paid, equal to the per-share dividends received by common shareholders.

	During the six months ended June 30, 2014, an ACRE Capital employee was granted restricted stock that vests in proportion to certain financial performance targets being met over a specified period of time. The fair value of the performance based restricted stock granted is recorded to expense on an accelerated basis using the accelerated attribution method over the performance period for the award, with an offsetting increase in stockholders’ equity.

	The following table details the restricted stock grants awarded as of June 30, 2014:

	Grant Date	Vesting Start Date	Shares Granted
	Grant Date	Vesting Start Date	Shares Granted
	1-May-12	1-Jul-12	35,135
	18-Jun-12	1-Jul-12	7,027
	9-Jul-12	1-Oct-12	25,000
	26-Jun-13	1-Jul-13	22,526
	25-Nov-13	25-Nov-16	30,381
	31-Jan-14	15-Mar-15	48,273
	26-Feb-14	26-Feb-14	12,030
	27-Feb-14	27-Aug-14	22,354
	24-Jun-14	24-Jun-14	17,658
	Total		220,384

	The following tables summarize the non-vested shares of restricted stock and the vesting schedule of shares of restricted stock for directors, officers and employees as of June 30, 2014.

	Schedule of Non-Vested Share and Share Equivalents

		Restricted Stock	Restricted Stock	Restricted Stock	Total
		Grants—Directors	Grants—Officer	Grants—Employees	Total
	Balance as of December 31, 2013	25,420	17,186	30,381	72,987
	Granted	29,688	-	70,627	100,315
	Vested	-18,926	-3,124	-	-22,050
	Forfeited	-2,494	-	-	-2,494
	Balance as of June 30, 2014	33,688	14,062	101,008	148,758

	Future Anticipated Vesting Schedule

		Restricted Stock	Restricted Stock	Restricted Stock	Total
		Grants—Directors	Grants—Officer	Grants—Employees (1)	Total
	2014	12,364	3,126	4,471	19,961
	2015	16,320	6,250	8,942	31,512
	2016	4,170	4,686	39,322	48,178
	2017	834	-	-	834
	2018	-	-	-	-
	Total	33,688	14,062	52,735	100,485

	(1) Future anticipated vesting related to employees that were granted restricted stock that vests in proportion to certain financial performance targets being met over a specified period of time are not included due to uncertainty in actual vesting date.

EARNINGS_PER_SHARE

EARNINGS PER SHARE	6 Months Ended
	Jun. 30, 2014
EARNINGS PER SHARE	'
EARNINGS PER SHARE	'
	11. EARNINGS PER SHARE

	The following information sets forth the computations of basic and diluted earnings per common share for the three and six months ended June 30, 2014 and 2013:

		For the three months ended June 30,				For the six months ended June 30,
	$ in thousands (except share and per share data)	2014		2013		2014		2013
	Net income attributable to common stockholders:	$	6,638	$	3,265	$	11,393	$	3,592
	Divided by:
	Basic weighted average shares of common stock outstanding:	28,453,739		10,215,782		28,448,181		9,720,477
	Non-vested restricted stock	136,950		41,468		122,764		44,464
	Diluted weighted average shares of common stock outstanding:	28,590,689		10,257,250		28,570,945		9,764,941
	Basic and diluted earnings per common share:	$	0.23	$	0.32	$	0.4	$	0.37

	The Company has considered the impact of the 2015 Convertible Notes and the restricted shares on diluted earnings per common share. The number of shares of common stock that the 2015 Convertible Notes are convertible into were not included in the computation of diluted net income per common share because the inclusion of those shares would have been anti-dilutive for the three and six months ended June 30, 2014 and 2013.

INCOME_TAX

INCOME TAX	6 Months Ended
	Jun. 30, 2014
INCOME TAX	'
INCOME TAX	'
	12. INCOME TAX

	As discussed in Note 1, the Company established a TRS, TRS Holdings, in connection with the acquisition of ACRE Capital. In addition, in December 2013 and March 2014, the Company formed ACRC W TRS and ACRC U TRS, respectively, in order to issue and hold certain loans intended for sale. The TRS’ income tax provision consisted of the following for the three and six months ended June 30, 2014 ($ in thousands):

		For the three months ended			For the six months ended
		June 30, 2014			June 30, 2014
	Current	$	-420		$	-462
	Deferred	503			-129
	Total income tax provision	$	83		$	-591

	Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are presented net by tax jurisdiction and are included within other assets and other liabilities in the consolidated balance sheets, respectively. As of June 30, 2014, the TRS’ U.S. tax jurisdiction was in a net deferred tax liability position. The following table presents the U.S. tax jurisdiction and the tax effects of temporary differences on their respective net deferred tax assets and liabilities ($ in thousands). The TRS’ are not currently subject to tax in any foreign tax jurisdictions.

		As of
		June 30, 2014			December 31, 2013
	Deferred tax assets
	Mortgage servicing rights	$	1,760		$	749
	Other temporary differences	343			125
	Sub-total-deferred tax assets	2,103			874

	Deferred tax liabilities
	Basis difference in assets from acquisition of ACRE Capital	$	-2,810		$	-2,810
	Components of gains from mortgage banking activities	-1,927			-893
	Amortization of intangible assets	-115			-49
	Sub-total-deferred tax liabilities	-4,852			-3,752
	Net deferred tax liability	$	-2,749		$	-2,878

	Based on the TRS’ assessment, it is more likely than not that the deferred tax assets will be realized through future taxable income. The TRS’ recognize interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. Accrued interest and penalties are included within other liabilities in the consolidated balance sheets.

	The following table is a reconciliation of the TRS’ effective tax rate to the TRS’ statutory U.S. federal income tax rate for the three and six months ended June 30, 2014:

		For the three months ended		For the six months ended
		June 30, 2014		June 30, 2014
	Federal statutory rate	35.00%		35.00%
	State income taxes	5.70%		5.70%
	Federal benefit of state tax deduction	-2.00%		-2.00%
	Effective tax rate	38.70%		38.70%

	Intercompany Note

	The Company partially capitalized TRS Holdings with a $44.0 million note. The income statement effects of this obligation are eliminated in consolidation for financial reporting purposes, but the interest income and expense from the note will affect the taxable income of the Company and TRS Holdings.

FAIR_VALUE_OF_FINANCIAL_INSTRU

FAIR VALUE OF FINANCIAL INSTRUMENTS	6 Months Ended
FAIR VALUE OF FINANCIAL INSTRUMENTS	Jun. 30, 2014
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
	13. FAIR VALUE OF FINANCIAL INSTRUMENTS

	The Company follows FASB ASC Topic 820-10, Fair Value Measurement (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure requirements for fair value measurements. ASC 820-10 determines fair value to be the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. The financial instruments recorded at fair value on a recurring basis in the Company’s consolidated financial statements are derivative instruments, MSRs and loans held for sale. ASC 820-10 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value.

	In accordance with ASC 820-10, the inputs used to measure fair value are summarized in the three broad levels listed below:

	Level I—Quoted prices in active markets for identical assets or liabilities.

	Level II—Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

	Level III—Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

	GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

	Financial Instruments Reported at Fair Value

	The Company has certain assets and liabilities that are required to be recorded at fair value on a recurring basis in accordance with GAAP. Financial instruments reported at fair value in the Company’s consolidated financial statements include MSRs, right to acquire MSRs, loan commitments, forward sale commitments and loans held for sale.

	The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of June 30, 2014 and December 31, 2013 ($ in thousands):

			Fair Value as of June 30, 2014
			Level I			Level II			Level III			Total
	Loans held for sale		$	-		$	55,928		$	-		$	55,928
	Mortgage servicing rights		-			-			58,558			58,558
	Derivative assets:
	Loan commitments		-			-			1,760			1,760
	Derivative liabilities:
	Forward sale commitments		-			-			-786			-786


			Fair Value as of December 31, 2013
			Level I			Level II			Level III			Total
	Loans held for sale		$	-		$	89,233		$	-		$	89,233
	Mortgage servicing rights		-			-			59,640			59,640
	Derivative assets:
	Loan commitments		-			-			2,038			2,038
	Forward sale commitments		-			-			272			272
	Right to acquire MSRs		-			-			1,717			1,717
	Derivative liabilities:
	Forward sale commitments		-			-			-500			-500


	There were no transfers between the levels as of June 30, 2014 and December 31, 2013. Transfers between levels are recognized based on the fair value of the financial instrument at the beginning of the period.

	Loan commitments and forward sale commitments are valued based on a discounted cash flow model that incorporates changes in interest rates during the period. The MSRs and right to acquire MSRs are valued based on discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. The loans held for sale are valued based on discounted cash flow models that incorporate quoted observable prices from market participants. The valuation of derivative instruments are determined using widely accepted valuation techniques, including market yield analyses and discounted cash flow analysis on the expected cash flows of each derivative.

	The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of June 30, 2014 ($ in thousands):

							Unobservable Input
			Fair		Primary						Weighted
	Asset Category		Value		Valuation Technique		Input		Range		Average
	Mortgage servicing rights		$ 58,558		Discounted cash flow		Discount rate		8 - 14%		12%
	Loan commitments and forward sale commitments		974		Discounted cash flow		Discount rate		8 - 12%		9%

	The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of December 31, 2013 ($ in thousands):

							Unobservable Input
			Fair		Primary						Weighted
	Asset Category		Value		Valuation Technique		Input		Range		Average
	Mortgage servicing rights		$ 59,640		Discounted cash flow		Discount rate		8 - 14%		12%
	Loan commitments and forward sale commitments		1,810		Discounted cash flow		Discount rate		8 - 12%		8%
	Right to acquire MSRs		1,717		Discounted cash flow		Discount rate		8%		8%

The table above is not intended to be all-inclusive, but instead is intended to capture the significant unobservable inputs relevant to the Company’s determination of fair values. Changes in market yields, discount rates or EBITDA multiples, each in isolation, may have changed the fair value of the financial instruments. Generally, an increase in market yields or discount rates or decrease in EBITDA multiples may have resulted in a decrease in the fair value of the financial instruments.

The Company’s management is responsible for the Company’s fair value valuation policies, processes and procedures related to Level III financial instruments. The Company’s management reports to the Company’s Chief Financial Officer, who has final authority over the valuation of the Company’s Level III financial instruments.

The following table summarizes the change in derivative assets and liabilities classified as Level III related to mortgage banking activities for the six months ended June 30, 2014 ($ in thousands):

		As of and for the six months ended
		June 30, 2014
Beginning balance, as of December 31, 2013		$	3,527
Settlements		(5,016		)
Realized gains (losses) recorded in net income (1)		1,489
Unrealized gains (losses) recorded in net income (1)		974
Ending balance, as of June 30, 2014		$	974

(1) Realized and unrealized gains (losses) from derivatives are included within gains from mortgage banking activities in the consolidated statements of operations.

The following table summarizes the change in the embedded conversion option classified as Level III for the six months ended June 30, 2013 ($ in thousands):

		As of and for the six months
		ended June 30, 2013
Beginning balance, as of December 31, 2012		$	-1,825
Unrealized gain on the embedded conversion option		1,739		-1
Reclassification of additional paid-in capital		86
Ending balance, as of June 30, 2013		$	-

(1) The unrealized gain on the embedded conversion option is included within changes in fair value of derivatives in the consolidated statements of operations for the six months ended June 30, 2013. The Company reclassified certain prior quarter and prior year amounts included within other interest expense related to the fair value of the derivative to conform to the Company’s presentation for the six months ended June 30, 2014.

See Note 4 for the changes in MSRs that are classified as Level III.

As of June 30, 2014 and December 31, 2013, the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands):

				As of
				June 30, 2014						December 31, 2013
		Level in Fair		Carrying			Fair Value			Carrying			Fair Value
		Value Hierarchy		Value			Fair Value			Value			Fair Value
Financial assets:
Loans held for investment		3		$	1,161,441		$	1,161,441		$	958,495		$	958,495
Financial liabilities:
Secured funding agreements		2		$	457,291		$	457,291		$	264,419		$	264,419
Warehouse lines of credit		2		48,199			48,199			-			-
Convertible notes		2		68,088			68,088			67,815			67,815
Commercial mortgage-backed securitization debt (consolidated VIE)		3		395,027			395,027			395,027			395,027

The carrying values of cash and cash equivalents, restricted cash, interest receivable and accrued expenses approximate their fair values due to their short-term nature.

Loans held for investment are recorded at cost, net of unamortized loan fees and origination costs and net of an allowance for loan losses. The Company may record fair value adjustments on a nonrecurring basis when it has determined that it is necessary to record a specific reserve against a loan and the Company measures such specific reserve using the fair value of the loan’s collateral. To determine the fair value of the collateral, the Company may employ different approaches depending on the type of collateral. The Funding Agreements and CMBS debt are recorded at outstanding principal and the convertible notes are recorded at carrying value, which is the Company’s best estimate of the fair value.

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Jun. 30, 2014
RELATED PARTY TRANSACTIONS	'
RELATED PARTY TRANSACTIONS	'
	14. RELATED PARTY TRANSACTIONS

	Management Agreements

	The Company was party to an interim management agreement with ACREM prior to the IPO. Pursuant to the interim management agreement, ACREM provided investment advisory and management services to the Company on an interim basis until the IPO. For providing these services, ACREM received only reimbursements from the Company for any third party costs that ACREM incurred on behalf of the Company.

	On April 25, 2012, in connection with the Company’s IPO, the Company entered into a management agreement (the “Management Agreement”) with ACREM under which ACREM, subject to the supervision and oversight of the Company’s board of directors, will be responsible for, among other duties, (a) performing all of the Company’s day-to-day functions, (b) determining the Company’s investment strategy and guidelines in conjunction with the Company’s board of directors, (c) sourcing, analyzing and executing investments, asset sales and financing, and (d) performing portfolio management duties.

	In addition, ACREM has an Investment Committee that oversees compliance with the Company’s investment strategy and guidelines, investment portfolio holdings and financing strategy.

	Effective May 1, 2012, in exchange for its services, ACREM is entitled to receive a base management fee, an incentive fee, expense reimbursements, grants of equity-based awards pursuant to the Company’s 2012 Equity Incentive Plan and a termination fee, if applicable.

	The base management fee is equal to 1.5% of the Company’s stockholders’ equity per annum, which is calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, stockholders’ equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings at the end of the most recently completed fiscal quarter determined in accordance with GAAP (without taking into account any non-cash equity compensation expense incurred in current or prior periods); less (b) (x) any amount that the Company has paid to repurchase the Company’s common stock since inception, (y) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in the Company’s consolidated financial statements prepared in accordance with GAAP, and (z) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between ACREM and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown on the Company’s consolidated financial statements.

	The incentive fee is an amount, not less than zero, equal to the difference between: (a) the product of (i) 20% and (ii) the difference between (A) the Company’s Core Earnings (as defined below) for the previous 12-month period, and (B) the product of (1) the weighted average of the issue price per share of the Company’s common stock of all of the Company’s public offerings of common stock multiplied by the weighted average number of all shares of common stock outstanding (including any restricted shares of the Company’s common stock, restricted stock units or any shares of the Company’s common stock not yet issued, but underlying other awards granted under the Company’s 2012 Equity Incentive Plan (See Note 10)) in the previous 12-month period, and (2) 8%; and (b) the sum of any incentive fees earned by ACREM with respect to the first three fiscal quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any fiscal quarter unless cumulative Core Earnings for the 12 most recently completed fiscal quarters is greater than zero. “Core Earnings” is a non-GAAP measure and is defined as GAAP net income (loss) computed in accordance with GAAP, excluding non-cash equity compensation expense, the incentive fee, depreciation and amortization (to the extent that any of the Company’s target investments are structured as debt and the Company forecloses on any properties underlying such debt), any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss), and one-time events pursuant to changes in GAAP and certain non-cash charges after discussions between ACREM and the Company’s independent directors and after approval by a majority of the Company’s independent directors. No incentive fees were earned for the three and six months ended June 30, 2014 and 2013.

	The Company reimburses ACREM at cost for operating expenses that ACREM incurs on the Company’s behalf, including expenses relating to legal, financial, accounting, servicing, due diligence and other services. The Company’s reimbursement obligation is not subject to any dollar limitation other than as noted below with respect to the Servicing Limitation and the Restricted Cost Amendment.

	The Company will not reimburse ACREM for the salaries and other compensation of its personnel, except for the allocable share of the salaries and other compensation of the Company’s (a) Chief Financial Officer, based on the percentage of his time spent on the Company’s affairs and (b) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment professional personnel of ACREM or its affiliates who spend all or a portion of their time managing the Company’s affairs based on the percentage of their time spent on the Company’s affairs (collectively, “Personnel Expenses”). The Company is also required to pay its pro rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of ACREM and its affiliates that are required for the Company’s operations (collectively, “Overhead Expenses”). The initial term of the Management Agreement will end May 1, 2015, with automatic one-year renewal terms. Except under limited circumstances, upon a termination of the Management Agreement, the Company will pay ACREM a termination fee equal to three times the average annual base management fee and incentive fee received by ACREM during the 24-month period immediately preceding the most recently completed fiscal quarter prior to the date of termination, each as described above.

	Certain of the Company’s subsidiaries, along with the Company’s lenders under the Wells Fargo Facility, the Citibank Facility, the UBS Facility and certain other facilities have entered into various servicing agreements with ACREM’s subsidiary servicer, Ares Commercial Real Estate Servicer LLC (“ACRES”), a Standard & Poor’s-rated commercial primary and special servicer that is included on Standard & Poor’s Select Servicer List. Effective May 1, 2012, ACRES agreed that no servicing fees pursuant to these servicing agreements would be charged to the Company or its subsidiaries for so long as the Management Agreement remains in effect, but that ACRES will continue to receive reimbursement for overhead related to servicing and operational activities pursuant to the terms of the Management Agreement (the “Servicing Limitation”).

	Effective as of September 30, 2013, the Company and ACREM entered into an amendment to the Management Agreement (the “Restricted Cost Amendment”) whereby ACREM agreed not to seek reimbursement of Restricted Costs (as defined below), in excess of $1.0 million per quarter for the quarterly periods ending on September 30, 2013, December 31, 2013, March 31, 2014 and June 30, 2014. “Restricted Costs” are Personnel Expenses and Overhead Expenses incurred in the ordinary course of the Company’s origination business and do not include any Personnel Expenses or Overhead Expenses that were incurred in connection with transactions outside our ordinary course of business, including without limitation, transactions for the acquisition of a portfolio of investments or for the acquisition of another company or its assets and business.

	Summarized below are the related-party costs incurred by the Company, including ACRE Capital, for the three and six months ended June 30, 2014 and 2013 and amounts payable to the Manager as of June 30, 2014 and December 31, 2013 ($ in thousands):

		Incurred								Payable
		For the three months ended June 30,				For the six months ended June 30,				As of
	$ in thousands	2014		2013		2014		2013		June 30, 2014		December 31, 2013
	Affiliate Payments
	Management fees	$	1,478	$	643	$	2,970	$	1,256	$	1,596	$	1,497
	General and administrative expenses	1,000		863		2,000		1,610		1,181		1,000
	Direct third party costs	184		57		255		139		197		299
		$	2,662	$	1,563	$	5,225	$	3,005	$	2,974	$	2,796

	Ares Investments

	As of June 30, 2014 and December 31, 2013, Ares Investments Holdings LLC owned $1.2 million aggregate principal amount of the 2015 Convertible Notes.

DIVIDENDS_AND_DISTRIBUTIONS

DIVIDENDS AND DISTRIBUTIONS

6 Months Ended

Jun. 30, 2014

DIVIDENDS AND DISTRIBUTIONS

15. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the six months ended June 30, 2014 and 2013 ($ in thousands, except per share data):

Date declared

Record date

Payment date

Per share

Total amount

amount

For the six months ended June 30, 2014

May 7, 2014

June 30, 2014

July 16, 2014

0.25

7,151

March 17, 2014

March 31, 2014

April 16, 2014

0.25

7,147

Total cash dividends declared for the six months ended June 30, 2014

0.5

14,298

For the six months ended June 30, 2013

May 15, 2013

June 28, 2013

July 18, 2013

0.25

6,822

March 14, 2013

April 08, 2013

April 18, 2013

0.25

2,317

Total cash dividends declared for the six months ended June 30, 2013

0.5

9,139

VARIABLE_INTEREST_ENTITIES

VARIABLE INTEREST ENTITIES	6 Months Ended
	Jun. 30, 2014
VARIABLE INTEREST ENTITIES	'
VARIABLE INTEREST ENTITIES	'
	16.VARIABLE INTEREST ENTITIES

	Consolidated VIEs

	On November 19, 2013, ACRC 2013-FL1 Depositor LLC (the “Depositor”), a wholly owned subsidiary of the Company entered into a Pooling and Servicing Agreement, dated as of November 1, 2013, which was amended on March 28, 2014, (the “Pooling and Servicing Agreement”), with Wells Fargo Bank, National Association, as master servicer (“Wells Fargo”), Ares Commercial Real Estate Servicer LLC (“Ares Servicer”), U.S. Bank National Association, as trustee, certificate administrator, paying agent and custodian, and Trimont Real Estate Advisors, Inc., as trust advisor, in connection with forming ACRE Commercial Mortgage Trust 2013-FL1 (the “Trust”). The Pooling and Servicing Agreement governs the issuance of approximately $493.8 million aggregate principal balance commercial mortgage pass-through certificates (the “Certificates”) in a CMBS effected by the Depositor. The Trust is treated for U.S. federal income tax purposes as a real estate mortgage investment conduit.

	In connection with the securitization, the Depositor contributed to the Trust a pool of 18 adjustable rate participation interests (the “Trust Assets”) in commercial mortgage loans secured by 27 commercial properties, which loans were originated or co-originated by the Company or its subsidiaries. The Certificates represent, in the aggregate, the entire beneficial ownership interest in, and the obligations of, the Trust. The senior portions of the CMBS are rated securities issued by the Trust; the Trust’s subordinated, non-rated securities, are held by the Company who acts as the Trust’s directing holder. As the Trust’s directing holder, the Company has the ability to direct activities that could significantly impact the Trust’s economic performance. However, in those instances where an unrelated third party has the right to unilaterally remove the special servicer, the Company does not have the power to direct activities that most significantly impact the Trust’s economic performance. In addition, there are no substantive kick-out rights of any party to remove the special servicer without cause; however, the Company’s subsidiary, as directing holder, has the ability to remove the special servicer without cause. Based on these factors, the Company is determined to be the primary beneficiary of the VIE; thus, the VIE is consolidated into the Company’s financial statements.

	In connection with the securitization, the Company offered and sold the following classes of certificates: Class A, Class B, Class C and Class D Certificates (collectively, the “Offered Certificates”) to third parties pursuant to an offering made privately in transactions exempt from the registration requirements of the Securities Act. As of June 30, 2014 and December 31, 2013, the aggregate principal balance of the Offered Certificates was approximately $395.0 million and the weighted average coupon of the Offered Certificates was LIBOR plus 1.89%. In addition, a wholly owned subsidiary of the Company retained approximately $98.8 million of the Certificates.

	The proceeds from the sale of the Offered Certificates, net of expenses, were approximately $389.3 million. The Company used the net proceeds to repay outstanding amounts under its Funding Agreements and to acquire the A-Notes with respect to certain mortgage loans in which the Company held the related B-Notes.

	As discussed in Note 2, the Company evaluates all of its investments and other interests in entities for consolidation, including its investments in this CMBS transaction and the Company’s retained interests in the subordinated classes of the Trust it initiated, all of which are generally considered to be variable interests in a VIE.

	The primary and special servicer is designated to be Ares Servicer, which is a wholly owned subsidiary of Ares Commercial Real Estate Management LLC (the Manager of the Company and thus, a related party of the Company). Ares Servicer has the power to direct activities of the Trust during the loan workout process on defaulted and delinquent loans, which is the activity that most significantly impacts the economic performance of the Trust. In exchange for these services, Ares Servicer receives a fee.

	Additionally, the Company, as the holder of the subordinated classes of the Trust, has the obligation to absorb losses of the Trust (the Company has a first loss position in the capital structure of the Trust).

	The VIE consolidated in accordance with FASB ASC Topic 810 is structured as a pass through entity that receives principal and interest on the underlying collateral and distributes those payments to the Certificate holders. The assets and other instruments held by this securitization entity are restricted and can only be used to fulfill the obligations of the entity. Additionally, the obligations of the securitization entity do not have any recourse to the general credit of any other consolidated entities, nor to the Company as the primary beneficiary.

	The inclusion of the assets and liabilities of VIEs in which the Company is deemed the primary beneficiary has no economic effect on the Company. The Company’s exposure to the obligations of VIEs is generally limited to its investment in these entities. The Company is not obligated to provide, nor has it provided, any financial support for any of these consolidated structures. As such, the risk associated with the Company’s involvement in these VIEs is limited to the carrying value of its investment in the entity. As of June 30, 2014 and December 31, 2013, the Company’s maximum risk of loss was $98.8 million. For the three and six months ended June 30, 2014, the Company incurred interest expense of $2.0 million and $4.1 million, respectively, and is included within interest expense in the Company’s consolidated statements of operations.

	Unconsolidated VIEs

	The Company holds variable interests in VIEs structured as preferred equity investments, but the Company does not have a majority controlling financial interest. For these structures, the Company is not deemed to be the primary beneficiary of the VIE, and the Company does not consolidate these VIEs. These preferred equity investments are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included in loans held for investment in the Company’s consolidated balance sheets.

	The Company is not obligated to provide, nor have we provided, any financial support for any of the Company’s unconsolidated VIEs. As such, the risks associated with the Company’s involvement in these VIEs are limited to the outstanding principal of the Company’s investment in the entity.

	The following table presents the carrying value and the maximum exposure of unconsolidated VIEs as of June 30, 2014 and December 31, 2013 ($ in thousands):

		As of
		June 30, 2014		December 31, 2013
	Carrying value	$	26,813	$	4,804
	Maximum exposure to loss	$	27,452	$	4,850

ACQUISITION_OF_ACRE_CAPITAL

ACQUISITION OF ACRE CAPITAL	6 Months Ended
	Jun. 30, 2014
ACQUISITION OF ACRE CAPITAL	'
ACQUISITION OF ACRE CAPITAL	'
	17. ACQUISITION OF ACRE CAPITAL

	On August 30, 2013, (the “Acquisition Date”), the Company completed its acquisition of all of the outstanding common units of ACRE Capital from the Sellers. For accounting purposes, the acquisition was deemed to be effective on the close of business September 1, 2013, or the “Accounting Effective Date.” Pursuant to the Purchase and Sale Agreement, dated as of May 14, 2013, by and among the Company and the Sellers, the Company paid approximately $53.4 million in cash, subject to adjustment, and issued 588,235 shares of its common stock in a private placement exempt from registration under Section 4(2) of the Securities Act resulting in total consideration paid of approximately $60.9 million. The transaction was accounted for as a business combination under FASB ASC Topic 805, Business Combinations (“ASC 805”).

	Through ACRE Capital, the Company operates its mortgage banking business. ACRE Capital primarily originates, sells and services multifamily and other senior living-related loans under programs offered by Fannie Mae and HUD.

	The Company provisionally allocated the purchase price to the assets acquired and liabilities assumed based on their estimated Accounting Effective Date fair values. The purchase price allocation may change as additional information becomes available and additional analyses are completed. A change to the provisional amounts recorded for assets acquired and liabilities assumed during the measurement period affects the amount of the purchase price allocated to gain on acquisition. Such changes to the purchase price allocation during the measurement period are recorded as retrospective adjustments to the consolidated financial statements. During the measurement period, the Company identified adjustments to certain of the provisional amounts recorded that had the net effect of decreasing gain on acquisition by $747 thousand.

	The following table summarizes the purchase price allocation recorded as of the Acquisition Date, including retrospective adjustments during the measurement period ($ in thousands):

	Assets acquired:
	Cash	$	1,157
	Restricted cash	15,586
	Loans held for sale	22,154
	Mortgage servicing rights	61,236
	Intangible assets	5,000
	Derivative assets	182
	Risk-sharing indemnification	3,703
	Other assets	4,748
	Total assets acquired	$	113,766
	Liabilities assumed:
	Warehouse lines of credit	$	14,472
	Allowance for loss sharing	18,386
	Accounts payable and accrued expenses	4,748
	Other liabilities (1)	10,795
	Total liabilities assumed	$	48,401
	Net Assets Acquired	$	65,365

	(1) Other liabilities includes a $6 million payable incurred in connection with the close of the transaction.

	The measurement period adjustments included in the purchase price allocation above were recorded based on information obtained subsequent to the Acquisition Date that related to information that existed as of the Acquisition Date.

	The Sellers provided the Company with a minimum working capital balance prior to the Accounting Effective Date. To the extent actual working capital exceeded or fell below the minimum requirement, the Company would either pay or receive funds from the Sellers. Final purchase price allocations are subject to further adjustments under the terms of the Purchase and Sale Agreement, including among other provisions, adjustments to working capital. To date, the gain on acquisition was $4.4 million. There have been no adjustments to the gain on acquisition during the three and six months ended June 30, 2014.

SEGMENTS

SEGMENTS	6 Months Ended
	Jun. 30, 2014
SEGMENTS	'
SEGMENTS	'
	18. SEGMENTS

	The Company’s reportable segments reflect the significant components of the Company’s operations that are evaluated separately by the Company’s chief operating decision maker, the Company’s Chief Executive Officer, and have discrete financial information available. The Company organizes its segments based primarily upon the nature of the underlying products and services. The Company’s Chief Executive Officer and management review certain financial information, including segmented internal profit and loss statements, which are presented below on that basis. The amounts in the reportable segments included in the tables below are in conformity with GAAP and the Company’s significant accounting policies as described in Note 2.

	The Company operates in two reportable business segments:

	· principal lending—includes all business activities of the Company, excluding the ACRE Capital business, which generally represents investments in real estate related loans and securities that are held for investment.

	· mortgage banking—includes all business activities of the acquired ACRE Capital business.

	The Company is primarily focused on two business segments involving CRE loans. First, in its principal lending business, the Company originates, invests in, manages and services middle-market CRE loans and other CRE-related investments for its own account. These loans are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial and other commercial real estate properties, or by ownership interests therein. Second, in its mortgage banking business, conducted through a recently acquired subsidiary, ACRE Capital, the Company originates, sells and retains servicing of primarily multifamily and other senior living-related CRE loans. These loans are generally held for sale.

	Allocated costs between the segments include management fees and general and administrative expenses payable to the Company’s Manager, both of which represent shared costs. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. As the Company integrates ACRE Capital into its existing business, the Company expects future allocations to include costs relating to services performed by one segment on behalf of other segments.

	The table below presents the Company’s total assets as of June 30, 2014 by business segment ($ in thousands):

			Principal			Mortgage
			Lending			Banking			Total
	Cash and cash equivalents		$	18,903		$	1,249		$	20,152
	Restricted cash		9,336			15,052			24,388
	Loans held for investment		1,161,441			-			1,161,441
	Loans held for sale, at fair value		-			55,928			55,928
	Mortgage servicing rights, at fair value		-			58,558			58,558
	Other assets		86,272			14,849			101,121
	Total Assets		$	1,275,952		$	145,636		$	1,421,588

	The table below presents the Company’s total assets as of December 31, 2013 by business segment ($ in thousands):

			Principal			Mortgage
			Lending			Banking			Total
	Cash and cash equivalents		$	14,444		$	5,656		$	20,100
	Restricted cash		3,036			13,918			16,954
	Loans held for investment		958,495			-			958,495
	Loans held for sale, at fair value		84,769			4,464			89,233
	Mortgage servicing rights, at fair value		-			59,640			59,640
	Other assets		16,632			15,861			32,493
	Total Assets		$	1,077,376		$	99,539		$	1,176,915

	The table below presents the Company’s consolidated net income for the three months ended June 30, 2014 by business segment ($ in thousands):

			Principal			Mortgage			Total
			Lending			Banking
	Net interest margin:
	Interest income from loans held for investment		$	17,735		$	-		$	17,735
	Interest expense		-6,835			-			-6,835
	Net interest margin		10,900		-1	-			10,900

	Mortgage banking revenue:
	Servicing fees, net		-			3,533			3,533
	Gains from mortgage banking activities		-			5,446			5,446
	Provision for loss sharing		-			1,180			1,180
	Change in fair value of mortgage servicing rights		-			-1,888			-1,888
	Mortgage banking revenue		-			8,271			8,271

	Total revenue		10,900			8,271			19,171

	Expenses:
	Other interest expense		1,579			179		-2	1,758
	Management fees to affiliate		1,362			116			1,478
	Professional fees		742			362			1,104
	Compensation and benefits		-			4,510			4,510
	General and administrative expenses		761			1,839			2,600
	General and administrative expenses reimbursed to affiliate		863			137			1,000
Total expenses		5,307			7,143			12,450
Income from operations before income taxes		5,593			1,128			6,721
Income tax expense (benefit)		-7			90			83
Net income		$	5,600		$	1,038		$	6,638

(1) Revenues from one of the Company’s customers in the principal lending segment represented approximately 13.3% of the Company’s consolidated revenues for the three months ended June 30, 2014.

(2) Other interest expense does not include interest expense related to the intercompany note between the two business segments presented, mortgage banking (conducted through ACRE Capital Holdings LLC) as borrower and principal lending (conducted through the Company) as lender, as described in Note 12. Interest expense related to the intercompany note is eliminated in the consolidated financial statements of the Company. If interest expense related to the intercompany note were included, other interest expense and net income for the three months ended June 30, 2014 would have been $1.1 million and $130 thousand, respectively, for mortgage banking.

The table below presents the Company’s consolidated net income for the six months ended June 30, 2014 by business segment ($ in thousands):

		Principal			Mortgage			Total
		Lending			Banking
Net interest margin:
Interest income from loans held for investment		$	32,887		$	-		$	32,887
Interest expense		-11,907			-			-11,907
Net interest margin		20,980		-1	-			20,980

Mortgage banking revenue:
Servicing fees, net		-			8,796			8,796
Gains from mortgage banking activities		-			6,832			6,832
Provision for loss sharing		-			1,061			1,061
Change in fair value of mortgage servicing rights		-			-3,735			-3,735
Mortgage banking revenue		-			12,954			12,954

Gain on sale of loans		680			-			680
Total revenue		21,660			12,954			34,614

Expenses:
Other interest expense		3,132			311		-2	3,443
Management fees to affiliate		2,736			234			2,970
Professional fees		1,449			580			2,029
Compensation and benefits		-			8,531			8,531
Acquisition and investment pursuit costs		20			-			20
General and administrative expenses		1,476			3,343			4,819
General and administrative expenses reimbursed to affiliate		1,682			318			2,000
Total expenses		10,495			13,317			23,812
Income from operations before income taxes		11,165			-363			10,802
Income tax expense (benefit)		234			-825			-591
Net income		$	10,931		$	462		$	11,393

(1) Revenues from one of the Company’s customers in the principal lending segment represented approximately 13.7% of the Company’s consolidated revenues for the six months ended June 30, 2014.

(2) Other interest expense does not include interest expense related to the intercompany note between the two business segments presented, mortgage banking (conducted through ACRE Capital Holdings LLC) as borrower and principal lending (conducted through the Company) as lender, as described in Note 12. Interest expense related to the intercompany note is eliminated in the consolidated financial statements of the Company. If interest expense related to the intercompany note were included, other interest expense and net loss for the six months ended June 30, 2014 would have been $2.1 million and $1.3 million, respectively, for mortgage banking.

COSTS_ASSOCIATED_WITH_RESTRUCT

COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES	6 Months Ended
	Jun. 30, 2014
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES	'
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES	'
	19. COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES

	During the three months ended March 31, 2014, the Company began restructuring and relocating certain ACRE Capital support services in order to centralize the ACRE Capital platform into one location, including the asset management team and leadership.

	For the three and six months ended June 30, 2014, the Company has incurred restructuring costs in the mortgage banking segment of $345 thousand and $555 thousand, respectively. As of June 30, 2014, the Company expects to incur an additional $340 thousand in restructuring costs in the mortgage banking segment.

	The table below presents a reconciliation of the liability attributable to restructuring costs incurred in the mortgage banking segment as of June 30, 2014 ($ in thousands):

		Employee
		Termination Costs
	Beginning balance, as of January 1, 2014	$	-
	Accruals	555
	Payments	-80
	Ending balance, as of June 30, 2014	$	475

	The employee termination costs above are associated with employee severance compensation, retention bonuses and guaranteed bonuses to certain key employees, insurance and outplacement. The costs incurred above are included within general and administrative expenses in the Company’s consolidated statements of operations. As of June 30, 2014, the restructuring is incomplete; however, all of the costs the Company expects to incur have been measured. This measurement includes employee costs for employees that are required to render service (beyond a minimum retention period) in order to receive the termination benefits; the Company will recognize a liability ratably over the future service period. The Company expects the restructuring to be complete by September 30, 2014.

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	6 Months Ended
SUBSEQUENT EVENTS	Jun. 30, 2014
SUBSEQUENT EVENTS	'
SUBSEQUENT EVENTS	'
	20. SUBSEQUENT EVENTS

	The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than those disclosed below, there have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the accompanying consolidated financial statements as of and for the three and six months ended June 30, 2014.

	On July 16, 2014, the Company originated a $29.0 million transitional first mortgage loan on a mixed-use complex located in New York, New York. At closing, the outstanding principal balance was approximately $25.0 million. The loan has an interest rate of LIBOR + 4.25% (plus origination and exit fees) subject to a 0.15% LIBOR floor and a term of three years.

	On July 22, 2014, the Company received repayment of a $49.1 million transitional first mortgage loan.

	On July 30, 2014, the Company and certain of its subsidiaries entered into a $75.0 million revolving credit facility (the “July 2014 CNB Facility”) with City National Bank. The July 2014 CNB Facility will be used to finance qualifying investments and for other working capital and general corporate needs. The July 2014 CNB Facility is in addition to the Company’s existing March 2014 $50.0 million secured revolving facility with City National Bank. Advances under the July 2014 CNB Facility will accrue interest at a per annum rate equal, at the Company’s option, to (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 1.50% or (b) the base rate plus 0.25%; provided that in no event will the interest rate be less than 1.50%. Unless at least 75% of the July 2014 CNB Facility is used on average, unused commitments will accrue unused line fees at the rate of 0.125% per annum. The initial maturity date is July 31, 2015, subject to one 12-month extension option, provided that certain conditions are met and applicable extension fees are paid. A subsidiary of Ares Management and an affiliate of the Company’s external manager (“Ares”), agreed to provide credit support in connection with the July 2014 CNB Facility and to purchase all loans and other obligations outstanding under the July 2014 CNB Facility upon (i) an acceleration or certain events of default or (ii) in the event that, among other things, Ares’ corporate credit rating is downgraded to below investment grade. On July 30, 2014, the Company and certain of its subsidiaries entered into a Credit Support Fee Agreement with Ares under which the Company agreed to pay Ares a credit support fee in an amount equal to 1.50% per annum times the average amount of the loans outstanding under the July 2014 CNB Facility and to reimburse Ares for its out-of-pocket costs and expenses in connection with the transaction.

	On August 1, 2014, a newly formed indirect wholly owned Cayman qualified REIT subsidiary, ACRE Commercial Mortgage 2014-FL2 Ltd. (the “Issuer”), received commitments from investors for the purchase of approximately $308.7 million in principal balance of secured floating rate notes (the “Notes”). The Notes will be backed by approximately $378.8 million of commercial and multifamily mortgage loans originated or to-be originated by ACRC Lender LLC, an indirect wholly owned subsidiary of the Company. The Company expects to retain (either directly or through one of its wholly owned subsidiaries) approximately $70.1 million principal balance of the non-investment grade tranches of the notes and the equity in the Issuer, which notes and equity were not offered to investors. The initial weighted average coupon of the offered notes offered to third parties is expected to be LIBOR plus 1.445%. The sale of the Notes is scheduled to close on or about August 15, 2014. The sale of the Notes is subject to customary closing conditions and, as a result, the Company can give no assurances that it will close.

	On August 5, 2014, ACRE Capital LLC was approved by Freddie Mac as a Program Plus® seller/servicer for multifamily loans.

	On August 6, 2014, the Company declared a cash dividend of $0.25 per common share for the third quarter of 2014. The third quarter 2014 dividend is payable on October 15, 2014 to common stockholders of record as of September 30, 2014.

SIGNIFICANT_ACCOUNTING_POLICIE1

SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Policies)	Jun. 30, 2014
SIGNIFICANT ACCOUNTING POLICIES	'
Basis of Presentation	'
	Basis of Presentation

	The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entity (“VIE”) for which the Company controls and is the primary beneficiary, and its wholly owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated.

	Interim financial statements are prepared in accordance with United States GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2014.
Variable Interest Entities	'
	Variable Interest Entities

	The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”), defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE.

	To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

	To assess whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Company.

	For VIEs in which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements.

	The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE causes the Company’s consolidation conclusion regarding the VIE to change.

	See Note 16 for further discussion of the Company’s VIEs.
Segment Reporting	'
	Segment Reporting

	The Company has two reportable business segments: principal lending and mortgage banking. See Note 18 for further discussion of the Company’s reportable business segments.
Reclassifications	'
	Reclassifications

	Certain prior period amounts have been reclassified to conform to the current period presentation. Deferred financing costs and accrued interest receivable have been reclassified into other assets in the consolidated balance sheets. Derivative liability and accounts payable and accrued expenses have been reclassified into other liabilities in the consolidated balance sheets. Interest receivable has been reclassified into other assets in the consolidated statements of cash flows. Accounts payable, refundable deposits and accrued expenses have been reclassified into other liabilities in the consolidated statements of cash flows. The unrealized loss on the $69.0 million aggregate principal amount of unsecured 7.00% Convertible Senior Notes due 2015 (the “2015 Convertible Notes”) has been reclassified into changes in fair value of derivatives in the consolidated statements of operations.
Cash and Cash Equivalents	'
	Cash and Cash Equivalents

	Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short-term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows.
Restricted Cash	'
	Restricted Cash

	Restricted cash includes escrow deposits for taxes, insurance, leasing outlays, capital expenditures, tenant security deposits and payments required under certain loan agreements. These escrow deposits are held on behalf of the respective borrowers and are offset by escrow liabilities included in other liabilities in the consolidated balance sheets. As of June 30, 2014 and December 31, 2013, through ACRE Capital, the Company held restricted cash, which consisted of reserves that are a requirement of the Fannie Mae DUS program and borrower deposits, which represent funds that were collected for the processing of the borrowers loan applications and loan commitments.
Concentration of Credit Risk	'
	Concentration of Credit Risk

	Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash, loans held for investment, MSRs, loans held for sale, interest receivable and derivative financial instruments. The Company places its cash and cash equivalents with financial institutions and, at times, cash held may exceed the FDIC-insured limit. The Company has exposure to credit risk on its loans held for investment and through its subsidiary ACRE Capital, the Company has exposure on credit risk on loans held for sale and the servicing portfolio whereby ACRE Capital shares in the risk of loss (see Note 7). The Company and the Company’s Manager seek to manage credit risk by performing due diligence prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate.
Loans Held for Investment	'
	Loans Held for Investment

	The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, the Company will record an allowance to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate.

	Each loan classified as held for investment is evaluated for impairment on a periodic basis. Loans are collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral, (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors.

	In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of June 30, 2014 and December 31, 2013, with respect to the Company’s loans held for investment, no impairment charges have been recognized.

	Preferred equity investments, where the risks and payment characteristics are equivalent to mezzanine loans, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included in loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan receivable utilizing the effective interest method.
Loans Held for Sale	'
	Loans Held for Sale

	Through its subsidiaries, including ACRE Capital, ACRC U TRS and ACRC W TRS, the Company originates mortgage loans held for sale, which are recorded at fair value. The holding period for loans originated by ACRE Capital is approximately 30 days. The carrying value of the mortgage loans sold is reduced by the value allocated to the associated retained MSRs based on relative fair value at the time of the sale. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the adjusted value of the related mortgage loans sold.

	Although the Company generally holds its target investments as long-term investments within its principal lending business, the Company may occasionally classify some of its investments as held for sale. Investments held for sale will be carried at fair value within loans held for sale, at fair value in the Company’s consolidated balance sheets, with changes in fair value recorded through earnings. The fees received are deferred and recognized as part of the gain or loss on sale. As of June 30, 2014, the Company did not have any loans held for sale in its principal lending business. As of December 31, 2013, the Company had one loan held for sale in its principal lending business of $84.8 million, net of deferred fees, included in the $89.2 million of loans held for sale in the consolidated balance sheets.
Mortgage Servicing Rights	'
	Mortgage Servicing Rights

	When a mortgage loan is sold, ACRE Capital retains the right to service the loan and recognizes the MSR at fair value. The initial fair value represents expected net cash flows from servicing, as well as interest earnings on escrows and interim cash balances, borrower prepayment penalties, delinquency rates, late charges along with ancillary fees that are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. After initial recognition, changes in the MSR fair value are included within change in fair value of mortgage servicing rights in the Company’s consolidated statements of operations for the period in which the change occurs.
Intangible Assets	'
	Intangible Assets

	Intangible assets consist of ACRE Capital’s licenses permitting it to participate in programs offered by Fannie Mae, Ginnie Mae and HUD. These licenses are intangible assets with indefinite lives. The Company evaluates identified intangibles for impairment annually or if other events or circumstances indicate that the carrying value may be impaired.
Debt Issuance Costs	'
	Debt Issuance Costs

	Debt issuance costs are capitalized and amortized over the terms of the respective debt instrument. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization, the related unamortized debt issuance costs are charged to expense based on a pro-rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included in interest expense in the Company’s consolidated statements of operations while the unamortized balance is included in other assets in the Company’s consolidated balance sheets.
Derivative Financial Instruments	'
	Derivative Financial Instruments

	The Company does not hold or issue derivative instruments for trading purposes. The Company recognizes derivatives on its consolidated balance sheets, measures them at their estimated fair value and recognizes changes in their estimated fair value in the Company’s consolidated statements of operations for the period in which the change occurs.

	Through its subsidiary, ACRE Capital, the Company enters into loan commitments with borrowers on loan originations whereby the interest rate on the prospective loan is determined prior to funding. In general, ACRE Capital simultaneously enters into forward sale commitments with investors in order to hedge interest rate exposure on loan commitments. The forward sale commitment with the investor locks in an interest rate and price for the sale of the loan. The terms of the loan commitment with the borrower and the forward sale commitment with the investor are matched with the objective of hedging interest rate risk. Loan commitments and forward sale commitments are considered undesignated derivative instruments. Accordingly, such commitments, along with any related fees received from potential borrowers, are recorded at fair value, with changes in fair value recorded in earnings.

	On December 19, 2012, the Company issued the 2015 Convertible Notes. The conversion features of the 2015 Convertible Notes were deemed to be an embedded derivative under FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). In accordance with ASC 815, the Company was required to bifurcate the embedded derivative related to the conversion features of the 2015 Convertible Notes. Prior to June 26, 2013, the Company recognized the embedded derivative as a liability on its balance sheet, measured at its estimated fair value and recognized changes in its estimated fair value within changes in fair value of derivatives in the Company’s consolidated statements of operations for the period in which the change occurs. See Note 6 for information on the derivative liability reclassification.
Fair Value Measurements	'
	Fair Value Measurements

	GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The financial instruments recorded at fair value on a recurring basis in the Company’s consolidated financial statements are derivative financial instruments, MSRs and loans held for sale. The Company has not elected the fair value option for certain other financial instruments, including loans held for investment, secured funding agreements and other debt instruments. Such financial instruments are carried at cost. Fair value is separately disclosed (see Note 13).
Allowance for Loss Sharing	'
	Allowance for Loss Sharing

	When a loan is sold under the Fannie Mae DUS program, ACRE Capital undertakes an obligation to partially guarantee the performance of the loan. The date ACRE Capital commits to make a loan to a borrower, a liability for the fair value of the obligation undertaken in issuing the guaranty is recognized. Subsequent to the initial commitment date, the Company monitors the performance of each loan for events or circumstances which may signal a liability to be recognized if there is a probable and estimable loss. The initial fair value of the guarantee is estimated by examining historical loss share experienced in the ACRE Capital Fannie Mae DUS portfolio since inception. The initial fair value of the guarantee is included within provision for loss sharing in the Company’s consolidated statements of operations. These historical loss shares serve as a basis to derive a loss share rate which is then applied to the current ACRE Capital DUS portfolio (net of specifically identified impaired loans that are subject to a separate loss share reserve analysis).
Servicing Fee Payable	'
	Servicing Fee Payable

	ACRE Capital provides additional payments to certain personnel by providing them with a percentage of the servicing fee revenue that is earned by ACRE Capital, which is initially recorded as a liability when the MSR is obtained and expensed as the servicing fee is earned over the life of the related mortgage loan. ACRE Capital incurs an expense over the life of each loan as long as the related loan is performing. If a particular loan is not performing, the recipient will not receive the additional compensation on that loan, and if a loss sharing event is triggered, the recipient will not receive a portion of the additional compensation on other loans. The servicing fee payable is included within other liabilities in the consolidated balance sheets and the related expense is included within servicing fee revenue on a net basis in the consolidated statements of operations.
Revenue Recognition	'
	Revenue Recognition

	Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method. Fees earned on loans held for sale are included within gains from mortgage banking activities below.

	Servicing fees are earned for servicing mortgage loans, including all activities related to servicing the loans, and are recognized as services are provided over the life of the related mortgage loan. Also included in servicing fees are the net fees earned on borrower prepayment penalties, and interest earned on borrowers’ escrow payments and interim cash balances, along with other ancillary fees and reduced by write-offs of MSRs for loans that are prepaid.

	Gains from mortgage banking activities includes the initial fair value of MSRs, loan origination fees, gain on the sale of loans, interest income on loans held for sale and changes to the fair value of derivative financial instruments attributable to the loan commitments and forward sale commitments. The initial fair value of MSRs, loan origination fees, gain on the sale of loans, and certain direct loan origination costs for loans held for sale are recognized when ACRE Capital commits to make a loan to a borrower. When the Company settles a sale agreement and transfers the mortgage loan to the buyer, the Company recognizes a MSR asset equal to the present value of the expected net cash flows associated with the servicing of loans sold.
Stock-Based Compensation	'
	Stock-Based Compensation

	The Company recognizes the cost of stock-based compensation, which is included within compensation and benefits for ACRE Capital and general and administrative expenses for ACRE in the consolidated statements of operations. The fair value of the time vested restricted stock or restricted stock units granted is recorded to expense on a straight-line basis over the vesting period for the award, with an offsetting increase in stockholders’ equity. For grants to directors, officers and employees, the fair value is determined based upon the market price of the stock on the grant date.

	Certain ACRE Capital employees were granted restricted stock units that vest in proportion to certain financial performance targets being met over a specified period of time. The fair value of the performance based restricted stock or restricted stock units granted is recorded to expense on an accelerated basis, using the accelerated attribution method, over the performance period for the award, with an offsetting increase in stockholders’ equity. For performance based measures, compensation expense, net of estimated forfeitures, is recorded based on the Company’s estimate of the probable achievement of such measures.
Underwriting Commissions and Offering Costs	'
	Underwriting Commissions and Offering Costs

	Underwriting commissions and offering costs incurred in connection with common stock or debt offerings are reflected as a reduction of additional paid-in capital. Costs incurred that are not directly associated with the completion of a common stock or debt offering are expensed when incurred. Underwriting commissions that are the responsibility of and paid by a related party, such as the Company’s Manager, are reflected as a contribution of additional paid-in capital from a sponsor in the consolidated financial statements.
Income Taxes	'
	Income Taxes

	The Company has elected and qualified for taxation as a REIT commencing with its taxable year ended December 31, 2012. As a result of the Company’s REIT qualification and its distribution policy, the Company does not generally pay U.S. federal corporate level income taxes. Many of the REIT requirements, however, are highly technical and complex. To continue to qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distribute annually at least 90% of the Company’s REIT taxable income to the Company’s stockholders. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Even though the Company currently qualifies for taxation as a REIT, the Company may be subject to certain U.S. federal, state, local and foreign taxes on the Company’s income and property and to U.S. federal income and excise taxes on the Company’s undistributed REIT taxable income.

	The Company currently owns 100% of the equity of TRS Holdings, ACRC U TRS and ACRC W TRS, each of which is a TRS. A TRS is subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis. For financial reporting purposes, a provision for current and deferred taxes has been established for the portion of the Company’s GAAP consolidated earnings recognized by TRS Holdings, ACRC U TRS and ACRC W TRS.

	FASB ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported. As of June 30, 2014 and December 31, 2013, based on the Company’s evaluation, there is no reserve for any uncertain income tax positions. TRS Holdings, ACRC U TRS and ACRC W TRS recognize interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statements of operations. Accrued interest and penalties are included within other liabilities in the consolidated balance sheets.
Comprehensive Income	'
	Comprehensive Income

	For the three and six months ended June 30, 2014 and 2013, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.
Earnings per Share	'
	Earnings per Share

	The Company calculates basic earnings (loss) per share by dividing net income (loss) allocable to common stockholders for the period by the weighted-average shares of common stock outstanding for that period after consideration of the earnings (loss) allocated to the Company’s restricted stock, which are participating securities as defined in GAAP. Diluted earnings (loss) per share takes into effect any dilutive instruments, such as restricted stock and convertible debt, except when doing so would be anti-dilutive. With respect to the 2015 Convertible Notes, the Company has the ability and intention to settle the principal in cash and to settle any amount above par in shares of the Company’s common stock if the conversion options were exercised. As such, the Company is applying the treasury stock method when determining the dilutive impact on earnings per share.
Use of Estimates in the Preparation of Financial Statements	'
	Use of Estimates in the Preparation of Financial Statements

	The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.
Business Combinations	'
	Business Combinations

	The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The Company recognizes identifiable assets acquired and liabilities (both specific and contingent) assumed at their fair values at the acquisition date. Furthermore, acquisition-related costs, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the acquired assets. The excess of the assets acquired and liabilities assumed over the purchase price is recognized as a gain on acquisition. During the measurement period, the Company records adjustments to the assets acquired and liabilities assumed with corresponding adjustments to the gain on acquisition. After the measurement period, which could be up to one year after the transaction date, subsequent adjustments are recorded through earnings.
Costs Associated with Restructuring Activities	'
	Costs Associated with Restructuring Activities

	The Company began restructuring and relocating certain ACRE Capital support services during the three months ended March 31, 2014. The Company will incur costs related to these restructuring activities, including employee termination costs and office relocation costs. The employee termination costs are associated with the severance of certain employees, retention bonuses and guaranteed bonuses to certain key employees, insurance and outplacement, which will be accounted for on a straight-line basis over the period from notification through each employee’s termination date. If employees are required to render service (beyond a minimum retention period) in order to receive the termination benefits, a liability for employee termination costs is measured initially at the communication date based on its fair value, as of the termination date, and recognized ratably over the future service period. Office relocation costs include costs that will be incurred in the physical move of offices and incremental rent costs, which will be expensed when space is vacated. The costs incurred to date are included within general and administrative expenses in the Company’s consolidated statements of operations.
New Accounting Pronouncements	'
	New Accounting Pronouncements

	In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The guidance in this update supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition.” Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

LOANS_HELD_FOR_INVESTMENT_Tabl

LOANS HELD FOR INVESTMENT (Tables)

6 Months Ended

Jun. 30, 2014

LOANS HELD FOR INVESTMENT

Schedule of loans held for investments

June 30, 2014

$ in thousands

Carrying

Outstanding

Weighted

Amount (1)

Principal (1)

Average Interest

Average

Rate

Unleveraged

Remaining

Effective

Life (Years)

Yield (2)

Senior mortgage loans

1,036,799

1,043,673

4.80%

5.40%

2.2

Subordinated debt and preferred equity investments

124,642

125,857

9.60%

10.00%

3.8

Total

1,161,441

1,169,530

5.40%

5.90%

2.4

December 31, 2013

$ in thousands

Carrying

Outstanding

Weighted

Amount (1)

Principal (1)

Average Interest

Average

Rate

Unleveraged

Remaining

Effective

Life (Years)

Yield (2)

Senior mortgage loans

867,578

873,781

5.10%

5.60%

2.4

Subordinated debt and preferred equity investments

90,917

91,655

9.80%

10.20%

3.6

Total

958,495

965,436

5.50%

6.00%

2.5

Schedule of current investment portfolio and Outstanding Principal

(amounts in millions, except percentages)

Loan Type

Location

Outstanding

Carrying

Interest

Unleveraged

Maturity

Payment

Principal (1)

Amount (1)

Rate

Effective

Date (3)

Terms (4)

Yield (2)

Transitional Senior Mortgage Loans:

Office

75.0

74.4

L+3.75%

4.20%

Aug-17

I/O

Retail

69.4

L+4.25%

4.90%

Aug-17

I/O

Office

55.8

54.8

L+5.00%

6.10%

Jan-17

I/O

Apartment

49.1

48.9

L+4.80%

5.90%

Jan-16

I/O

Apartment

45.1

L+4.95%

-5

5.70%

Apr-16

I/O

Apartment

42.6

42.4

L+3.75%

4.50%

Jul-16

I/O

Industrial

MO and KS

37.7

L+4.30%

5.10%

Jan-17

I/O

Apartment

37.8

L+4.95%

-5

5.70%

Apr-16

I/O

Apartment

37.7

37.4

L+5.00%

6.10%

Oct-17

I/O

Apartment

34.9

34.7

L+4.70%

5.60%

Apr-16

I/O

Apartment

34.3

L+3.75%

4.70%

Mar-17

I/O

Apartment

33.8

33.6

L+3.75%

4.50%

Jul-16

I/O

Office

33.5

33.4

L+5.75%-L+5.25%

-6

7.60%

Mar-15

I/O

Office

31.3

L+5.25%

-7

6.30%

Feb-15

I/O

Office

29.6

29.5

L+5.35%-L+5.00%

-8

6.00%

Nov-15

I/O

Office

27.5

27.2

L+4.50%

5.20%

Apr-17

I/O

Apartment

26.3

26.1

L+3.65%

4.30%

Jan-17

I/O

Office

25.5

25.3

L+5.00%

5.80%

Mar-16

I/O

Apartment

23.8

L+3.65%

4.30%

Jan-17

I/O

Apartment

23.1

L+4.95%

-5

5.70%

Apr-16

I/O

Apartment

21.8

21.7

L+4.25%

5.90%

Sep-15

I/O

Apartment

20.8

20.6

L+3.85%

4.80%

May 2017

I/O

Industrial

19.6

19.4

L+5.25%

6.00%

May 2017

I/O

Industrial

18.9

L+5.25%

6.40%

Dec-15

I/O

Office

15.1

L+3.75%

4.50%

Jul-16

I/O

Apartment

14.8

L+4.50%

5.20%

Dec-16

I/O

Office

14.8

14.7

L+4.50%

5.30%

Jul-16

I/O

Apartment

14.3

14.1

L+4.00%

4.80%

Apr-17

I/O

Apartment

12.8

12.7

L+3.80%

4.60%

Feb-17

I/O

Office

10.8

L+5.50%

7.40%

Jan-15

I/O

Apartment

10.2

10.1

L+3.80%

4.60%

Feb-17

I/O

Stretch Senior Mortgage Loans:

Office

47.3

L+5.25%

-9

5.40%

Apr-16

I/O

Industrial

32.7

32.4

L+4.20%

4.70%

May 2018

I/O

Office

14.5

14.4

L+4.75%

5.70%

Feb-16

I/O

Subordinated Debt and Preferred Equity Investments:

Office

36.7

8.75%

9.10%

Aug-16

I/O

Apartment

33.3

33.1

L+7.46%

-10

7.90%

Jan-19

I/O

Apartment

GA and FL

22.6

L+11.85%

-11

12.40%

June 2021

I/O

Office

14.3

10.50%

-12

11.00%

Aug-17

I/O

Apartment

13.8

13.7

11.50%

-13

11.90%

Nov-16

I/O

Apartment

4.9

4.8

L+11.00%

-14

11.50%

Oct-16

I/O

Total/Average

1,169.50

1,161.40

5.90%

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of June 30, 2014 or the LIBOR floor, as applicable. The Total/Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of June 30, 2014 as weighted by the Outstanding Principal balance of each loan.

(6) The initial interest rate for this loan of L+5.75% steps down based on performance hurdles to L+5.25%.

(8) The initial interest rate for this loan of L+5.35% steps down based on performance hurdles to L+5.00%.

(9) On March 28, 2014, the Company entered into a loan modification that extended the loan for a term of two years and lowered the interest rate to L+5.25%.

(12) The interest rate for this loan increases to 11.00% on September 1, 2014.

(13) The current interest rate on this loan is 9.00% with 2.50% as PIK up to capped dollar amount based on the borrower’s election.

(14) The preferred return is L+11.00% with an L+ 9.00% current pay and up to a certain dollar limit as PIK.

Schedule of activity in loan portfolio

For the six months ended June 30, 2014, the activity in the Company’s loan portfolio was as follows ($ in thousands):

Balance as of December 31, 2013

958,495

Initial funding

227,520

Receipt of origination fee, net of costs

(2,741

)

Additional funding

45,592

Loan payoffs

(69,018

)

Origination fee accretion

1,593

Balance as of June 30, 2014

1,161,441

MORTGAGE_SERVICING_RIGHTS_Tabl

MORTGAGE SERVICING RIGHTS (Tables)	6 Months Ended
	Jun. 30, 2014
MORTGAGE SERVICING RIGHTS	'
Schedule of activity related to MSRs	'
	Activity related to MSRs for the six months ended June 30, 2014 was as follows ($ in thousands):

	Beginning balance, as of December 31, 2013	$	59,640
	Additions, following sale of loan	3,406
	Changes in fair value	-3,735
	Prepayments and write-offs	-753
	Ending balance, as of June 30, 2014	$	58,558

DEBT_Tables

DEBT (Tables)	6 Months Ended
	Jun. 30, 2014
DEBT	'
Schedule of outstanding balances and total commitments under the Funding Agreements	'
	As of June 30, 2014 and December 31, 2013, the outstanding balances and total commitments under the Funding Agreements consisted of the following ($ in thousands):

		As of June 30, 2014				As of December 31, 2013
	$ in thousands	Outstanding Balance		Total		Outstanding Balance		Total
				Commitment				Commitment
	Wells Fargo Facility	$	128,293	$	225,000	$	166,934	$	225,000
	Citibank Facility	113,286		250,000		97,485		125,000
	Capital One Facility	65,967		100,000		-		100,000
	CNB Facility	30,000		50,000		-		-
	UBS Facility	119,745		195,000		-		-
	ASAP Line of Credit	-		105,000		-		105,000
	BAML Line of Credit	48,199		80,000		-		80,000
	Total	$	505,490	$	1,005,000	$	264,419	$	635,000

ALLOWANCE_FOR_LOSS_SHARING_Tab

ALLOWANCE FOR LOSS SHARING (Tables)	6 Months Ended
	Jun. 30, 2014
ALLOWANCE FOR LOSS SHARING	'
Summary of the Company's allowance for loss sharing	'
	A summary of the Company’s allowance for loss sharing for the six months ended June 30, 2014 is as follows ($ in thousands):

	Beginning balance, as of December 31, 2013	$	16,480
	Current period provision for loss sharing	-1,061
	Settlements/Writeoffs	-979
	Ending balance, as of June 30, 2014	$	14,440

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Jun. 30, 2014
COMMITMENTS AND CONTINGENCIES	'
Schedule of loan commitments	'


		As of
	$ in thousands	June 30, 2014		December 31, 2013
	Total commitments	$	1,316,008	$	1,191,212
	Less: funded commitments	-1,169,530		-1,050,674
	Total unfunded commitments	$	146,478	$	140,538

Schedule of ACRE Capital's commitments to sell and fund loans	'


		As of
	$ in thousands	June 30, 2014		December 31, 2013
	Commitments to sell loans	$	84,325	$	56,115
	Commitments to fund loans	$	31,618	$	51,794

DERIVATIVES_Tables

DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2014

DERIVATIVES

Schedule of fair value of the Company's derivative financial instruments as well as their classification on the balance sheet

As of

June 30, 2014

December 31, 2013

Balance Sheet

Fair Value

Balance Sheet

Fair Value

Location

Derivatives not designated as hedging instruments

Loan commitments

Other assets

1,760

Other assets

2,038

Forward sale commitments

Other assets

272

Right to acquire MSRs

Other assets

1,717

Forward sale commitments

Other liabilities

-786

Other liabilities

-500

Total derivatives not designated as hedging instruments

974

3,527

STOCKHOLDERS_EQUITY_Tables

STOCKHOLDERS' EQUITY (Tables)	6 Months Ended
STOCKHOLDERS' EQUITY (Tables)	Jun. 30, 2014
STOCKHOLDERS' EQUITY	'
Schedule of restricted stock grants awarded	'


	Grant Date	Vesting Start Date	Shares Granted
	Grant Date	Vesting Start Date	Shares Granted
	1-May-12	1-Jul-12	35,135
	18-Jun-12	1-Jul-12	7,027
	9-Jul-12	1-Oct-12	25,000
	26-Jun-13	1-Jul-13	22,526
	25-Nov-13	25-Nov-16	30,381
	31-Jan-14	15-Mar-15	48,273
	26-Feb-14	26-Feb-14	12,030
	27-Feb-14	27-Aug-14	22,354
	24-Jun-14	24-Jun-14	17,658
	Total		220,384

Schedule of restricted stock award activity	'


		Restricted Stock	Restricted Stock	Restricted Stock	Total
		Grants—Directors	Grants—Officer	Grants—Employees	Total
	Balance as of December 31, 2013	25,420	17,186	30,381	72,987
	Granted	29,688	-	70,627	100,315
	Vested	-18,926	-3,124	-	-22,050
	Forfeited	-2,494	-	-	-2,494
	Balance as of June 30, 2014	33,688	14,062	101,008	148,758

Future anticipated vesting schedule of restricted stock awards	'


		Restricted Stock	Restricted Stock	Restricted Stock	Total
		Grants—Directors	Grants—Officer	Grants—Employees (1)	Total
	2014	12,364	3,126	4,471	19,961
	2015	16,320	6,250	8,942	31,512
	2016	4,170	4,686	39,322	48,178
	2017	834	-	-	834
	2018	-	-	-	-
	Total	33,688	14,062	52,735	100,485

	(1) Future anticipated vesting related to employees that were granted restricted stock that vests in proportion to certain financial performance targets being met over a specified period of time are not included due to uncertainty in actual vesting date.

EARNINGS_PER_SHARE_Tables

EARNINGS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2014
EARNINGS PER SHARE	'
Schedule of computations of basic and diluted earnings per share	'


		For the three months ended June 30,				For the six months ended June 30,
	$ in thousands (except share and per share data)	2014		2013		2014		2013
	Net income attributable to common stockholders:	$	6,638	$	3,265	$	11,393	$	3,592
	Divided by:
	Basic weighted average shares of common stock outstanding:	28,453,739		10,215,782		28,448,181		9,720,477
	Non-vested restricted stock	136,950		41,468		122,764		44,464
	Diluted weighted average shares of common stock outstanding:	28,590,689		10,257,250		28,570,945		9,764,941
	Basic and diluted earnings per common share:	$	0.23	$	0.32	$	0.4	$	0.37

INCOME_TAX_Tables

INCOME TAX (Tables)	6 Months Ended
INCOME TAX (Tables)	Jun. 30, 2014
INCOME TAX	'
Schedule of components of the TRS's income tax provision	'
	The TRS’ income tax provision consisted of the following for the three and six months ended June 30, 2014 ($ in thousands):

		For the three months ended			For the six months ended
		June 30, 2014			June 30, 2014
	Current	$	-420		$	-462
	Deferred	503			-129
	Total income tax provision	$	83		$	-591

Schedule of U.S. tax jurisdiction and the tax effects of temporary differences on their respective net deferred tax assets and liabilities	'
	The following table presents the U.S. tax jurisdiction and the tax effects of temporary differences on their respective net deferred tax assets and liabilities ($ in thousands). The TRS’ are not currently subject to tax in any foreign tax jurisdictions.

		As of
		June 30, 2014			December 31, 2013
	Deferred tax assets
	Mortgage servicing rights	$	1,760		$	749
	Other temporary differences	343			125
	Sub-total-deferred tax assets	2,103			874

	Deferred tax liabilities
	Basis difference in assets from acquisition of ACRE Capital	$	-2,810		$	-2,810
	Components of gains from mortgage banking activities	-1,927			-893
	Amortization of intangible assets	-115			-49
	Sub-total-deferred tax liabilities	-4,852			-3,752
	Net deferred tax liability	$	-2,749		$	-2,878

Schedule of reconciliation of the TRS's effective tax rate determined using the TRS's statutory U.S. federal tax rate	'


		For the three months ended		For the six months ended
		June 30, 2014		June 30, 2014
	Federal statutory rate	35.00%		35.00%
	State income taxes	5.70%		5.70%
	Federal benefit of state tax deduction	-2.00%		-2.00%
	Effective tax rate	38.70%		38.70%

FAIR_VALUE_OF_FINANCIAL_INSTRU1

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	6 Months Ended
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)	Jun. 30, 2014
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
Summary of the levels in the fair value hierarchy into which the Company's financial instruments were categorized	'
	The following table summarizes the levels in the fair value hierarchy into which the Company’s financial instruments were categorized as of June 30, 2014 and December 31, 2013 ($ in thousands):

		Fair Value as of June 30, 2014
		Level I			Level II			Level III			Total
	Loans held for sale	$	-		$	55,928		$	-		$	55,928
	Mortgage servicing rights	-			-			58,558			58,558
	Derivative assets:
	Loan commitments	-			-			1,760			1,760
	Derivative liabilities:
	Forward sale commitments	-			-			-786			-786


		Fair Value as of December 31, 2013
		Level I			Level II			Level III			Total
	Loans held for sale	$	-		$	89,233		$	-		$	89,233
	Mortgage servicing rights	-			-			59,640			59,640
	Derivative assets:
	Loan commitments	-			-			2,038			2,038
	Forward sale commitments	-			-			272			272
	Right to acquire MSRs	-			-			1,717			1,717
	Derivative liabilities:
	Forward sale commitments	-			-			-500			-500


Schedule of significant unobservable inputs used to value the financial instruments categorized within Level 3	'
	The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of June 30, 2014 ($ in thousands):

						Unobservable Input
		Fair		Primary						Weighted
	Asset Category	Value		Valuation Technique		Input		Range		Average
	Mortgage servicing rights	$ 58,558		Discounted cash flow		Discount rate		8 - 14%		12%
	Loan commitments and forward sale commitments	974		Discounted cash flow		Discount rate		8 - 12%		9%

	The following table summarizes the significant unobservable inputs the Company used to value financial instruments categorized within Level III as of December 31, 2013 ($ in thousands):

						Unobservable Input
		Fair		Primary						Weighted
	Asset Category	Value		Valuation Technique		Input		Range		Average
	Mortgage servicing rights	$ 59,640		Discounted cash flow		Discount rate		8 - 14%		12%
	Loan commitments and forward sale commitments	1,810		Discounted cash flow		Discount rate		8 - 12%		8%
	Right to acquire MSRs	1,717		Discounted cash flow		Discount rate		8%		8%

FAIR VALUE OF FINANCIAL INSTRUMENTS	'
Summary of change in derivative assets and liabilities classified as Level III	'
	The following table summarizes the change in derivative assets and liabilities classified as Level III related to mortgage banking activities for the six months ended June 30, 2014 ($ in thousands):

		As of and for the six months ended
		June 30, 2014
	Beginning balance, as of December 31, 2013	$	3,527
	Settlements	(5,016		)
	Realized gains (losses) recorded in net income (1)	1,489
	Unrealized gains (losses) recorded in net income (1)	974
	Ending balance, as of June 30, 2014	$	974

	(1) Realized and unrealized gains (losses) from derivatives are included within gains from mortgage banking activities in the consolidated statements of operations.
Schedule of carrying value and estimated fair value of the Company's financial instruments not carried at fair value on the consolidated balance sheet	'
	As of June 30, 2014 and December 31, 2013, the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands):

				As of
				June 30, 2014						December 31, 2013
		Level in Fair		Carrying			Fair Value			Carrying			Fair Value
		Value Hierarchy		Value			Fair Value			Value			Fair Value
	Financial assets:
	Loans held for investment	3		$	1,161,441		$	1,161,441		$	958,495		$	958,495
	Financial liabilities:
	Secured funding agreements	2		$	457,291		$	457,291		$	264,419		$	264,419
	Warehouse lines of credit	2		48,199			48,199			-			-
	Convertible notes	2		68,088			68,088			67,815			67,815
	Commercial mortgage-backed securitization debt (consolidated VIE)	3		395,027			395,027			395,027			395,027

Embedded conversion option	'
FAIR VALUE OF FINANCIAL INSTRUMENTS	'
Schedule of change in the embedded conversion option classified as Level III	'
	The following table summarizes the change in the embedded conversion option classified as Level III for the six months ended June 30, 2013 ($ in thousands):

		As of and for the six months
		ended June 30, 2013
	Beginning balance, as of December 31, 2012	$	-1,825
	Unrealized gain on the embedded conversion option	1,739		-1
	Reclassification of additional paid-in capital	86
	Ending balance, as of June 30, 2013	$	-

	(1) The unrealized gain on the embedded conversion option is included within changes in fair value of derivatives in the consolidated statements of operations for the six months ended June 30, 2013. The Company reclassified certain prior quarter and prior year amounts included within other interest expense related to the fair value of the derivative to conform to the Company’s presentation for the six months ended June 30, 2014.

RELATED_PARTY_TRANSACTIONS_Tab

RELATED PARTY TRANSACTIONS (Tables)	6 Months Ended
	Jun. 30, 2014
RELATED PARTY TRANSACTIONS	'
Summary of related-party costs incurred by the Company and amounts payable to the Manager	'
	Summarized below are the related-party costs incurred by the Company, including ACRE Capital, for the three and six months ended June 30, 2014 and 2013 and amounts payable to the Manager as of June 30, 2014 and December 31, 2013 ($ in thousands):

		Incurred								Payable
		For the three months ended June 30,				For the six months ended June 30,				As of
	$ in thousands	2014		2013		2014		2013		June 30, 2014		December 31, 2013
	Affiliate Payments
	Management fees	$	1,478	$	643	$	2,970	$	1,256	$	1,596	$	1,497
	General and administrative expenses	1,000		863		2,000		1,610		1,181		1,000
	Direct third party costs	184		57		255		139		197		299
		$	2,662	$	1,563	$	5,225	$	3,005	$	2,974	$	2,796

DIVIDENDS_AND_DISTRIBUTIONS_Ta

DIVIDENDS AND DISTRIBUTIONS (Tables)

6 Months Ended

Jun. 30, 2014

DIVIDENDS AND DISTRIBUTIONS

Summary of the Company's dividends declared

The following table summarizes the Company’s dividends declared during the six months ended June 30, 2014 and 2013 ($ in thousands, except per share data):

Date declared

Record date

Payment date

Per share

Total amount

amount

For the six months ended June 30, 2014

May 7, 2014

June 30, 2014

July 16, 2014

0.25

7,151

March 17, 2014

March 31, 2014

April 16, 2014

0.25

7,147

Total cash dividends declared for the six months ended June 30, 2014

0.5

14,298

For the six months ended June 30, 2013

May 15, 2013

June 28, 2013

July 18, 2013

0.25

6,822

March 14, 2013

April 08, 2013

April 18, 2013

0.25

2,317

Total cash dividends declared for the six months ended June 30, 2013

0.5

9,139

VARIABLE_INTEREST_ENTITIES_Tab

VARIABLE INTEREST ENTITIES (Tables)	6 Months Ended
	Jun. 30, 2014
VARIABLE INTEREST ENTITIES	'
Schedule of carrying value and maximum exposure of unconsolidated VIEs	'
	The following table presents the carrying value and the maximum exposure of unconsolidated VIEs as of June 30, 2014 and December 31, 2013 ($ in thousands):

		As of
		June 30, 2014		December 31, 2013
	Carrying value	$	26,813	$	4,804
	Maximum exposure to loss	$	27,452	$	4,850

ACQUISITION_OF_ACRE_CAPITAL_Ta

ACQUISITION OF ACRE CAPITAL (Tables)	6 Months Ended
ACQUISITION OF ACRE CAPITAL (Tables)	Jun. 30, 2014
ACQUISITION OF ACRE CAPITAL	'
Summary of the amounts of identified assets acquired and liabilities assumed	'
	The following table summarizes the purchase price allocation recorded as of the Acquisition Date, including retrospective adjustments during the measurement period ($ in thousands):

	Assets acquired:
	Cash	$	1,157
	Restricted cash	15,586
	Loans held for sale	22,154
	Mortgage servicing rights	61,236
	Intangible assets	5,000
	Derivative assets	182
	Risk-sharing indemnification	3,703
	Other assets	4,748
	Total assets acquired	$	113,766
	Liabilities assumed:
	Warehouse lines of credit	$	14,472
	Allowance for loss sharing	18,386
	Accounts payable and accrued expenses	4,748
	Other liabilities (1)	10,795
	Total liabilities assumed	$	48,401
	Net Assets Acquired	$	65,365

	(1) Other liabilities includes a $6 million payable incurred in connection with the close of the transaction.

SEGMENTS_Tables

SEGMENTS (Tables)	6 Months Ended
	Jun. 30, 2014
SEGMENTS	'
Schedule of the Company's results of total assets by business segment	'
	The table below presents the Company’s total assets as of June 30, 2014 by business segment ($ in thousands):

			Principal			Mortgage
			Lending			Banking			Total
	Cash and cash equivalents		$	18,903		$	1,249		$	20,152
	Restricted cash		9,336			15,052			24,388
	Loans held for investment		1,161,441			-			1,161,441
	Loans held for sale, at fair value		-			55,928			55,928
	Mortgage servicing rights, at fair value		-			58,558			58,558
	Other assets		86,272			14,849			101,121
	Total Assets		$	1,275,952		$	145,636		$	1,421,588

	The table below presents the Company’s total assets as of December 31, 2013 by business segment ($ in thousands):

			Principal			Mortgage
			Lending			Banking			Total
	Cash and cash equivalents		$	14,444		$	5,656		$	20,100
	Restricted cash		3,036			13,918			16,954
	Loans held for investment		958,495			-			958,495
	Loans held for sale, at fair value		84,769			4,464			89,233
	Mortgage servicing rights, at fair value		-			59,640			59,640
	Other assets		16,632			15,861			32,493
	Total Assets		$	1,077,376		$	99,539		$	1,176,915

Schedule of Company's consolidated net income by business segment	'
	The table below presents the Company’s consolidated net income for the three months ended June 30, 2014 by business segment ($ in thousands):

			Principal			Mortgage			Total
			Lending			Banking
	Net interest margin:
	Interest income from loans held for investment		$	17,735		$	-		$	17,735
	Interest expense		-6,835			-			-6,835
	Net interest margin		10,900		-1	-			10,900

	Mortgage banking revenue:
	Servicing fees, net		-			3,533			3,533
	Gains from mortgage banking activities		-			5,446			5,446
	Provision for loss sharing		-			1,180			1,180
	Change in fair value of mortgage servicing rights		-			-1,888			-1,888
	Mortgage banking revenue		-			8,271			8,271

	Total revenue		10,900			8,271			19,171

	Expenses:
	Other interest expense		1,579			179		-2	1,758
	Management fees to affiliate		1,362			116			1,478
	Professional fees		742			362			1,104
	Compensation and benefits		-			4,510			4,510
	General and administrative expenses		761			1,839			2,600
	General and administrative expenses reimbursed to affiliate		863			137			1,000
	Total expenses		5,307			7,143			12,450
	Income from operations before income taxes		5,593			1,128			6,721
	Income tax expense (benefit)		-7			90			83
	Net income		$	5,600		$	1,038		$	6,638

	(1) Revenues from one of the Company’s customers in the principal lending segment represented approximately 13.3% of the Company’s consolidated revenues for the three months ended June 30, 2014.

	(2) Other interest expense does not include interest expense related to the intercompany note between the two business segments presented, mortgage banking (conducted through ACRE Capital Holdings LLC) as borrower and principal lending (conducted through the Company) as lender, as described in Note 12. Interest expense related to the intercompany note is eliminated in the consolidated financial statements of the Company. If interest expense related to the intercompany note were included, other interest expense and net income for the three months ended June 30, 2014 would have been $1.1 million and $130 thousand, respectively, for mortgage banking.

	The table below presents the Company’s consolidated net income for the six months ended June 30, 2014 by business segment ($ in thousands):

			Principal			Mortgage			Total
			Lending			Banking
	Net interest margin:
	Interest income from loans held for investment		$	32,887		$	-		$	32,887
	Interest expense		-11,907			-			-11,907
	Net interest margin		20,980		-1	-			20,980

	Mortgage banking revenue:
	Servicing fees, net		-			8,796			8,796
	Gains from mortgage banking activities		-			6,832			6,832
	Provision for loss sharing		-			1,061			1,061
	Change in fair value of mortgage servicing rights		-			-3,735			-3,735
	Mortgage banking revenue		-			12,954			12,954

	Gain on sale of loans		680			-			680
	Total revenue		21,660			12,954			34,614

	Expenses:
	Other interest expense		3,132			311		-2	3,443
	Management fees to affiliate		2,736			234			2,970
	Professional fees		1,449			580			2,029
	Compensation and benefits		-			8,531			8,531
	Acquisition and investment pursuit costs		20			-			20
	General and administrative expenses		1,476			3,343			4,819
	General and administrative expenses reimbursed to affiliate		1,682			318			2,000
	Total expenses		10,495			13,317			23,812
	Income from operations before income taxes		11,165			-363			10,802
Income tax expense (benefit)		234			-825			-591
Net income		$	10,931		$	462		$	11,393

(1) Revenues from one of the Company’s customers in the principal lending segment represented approximately 13.7% of the Company’s consolidated revenues for the six months ended June 30, 2014.

(2) Other interest expense does not include interest expense related to the intercompany note between the two business segments presented, mortgage banking (conducted through ACRE Capital Holdings LLC) as borrower and principal lending (conducted through the Company) as lender, as described in Note 12. Interest expense related to the intercompany note is eliminated in the consolidated financial statements of the Company. If interest expense related to the intercompany note were included, other interest expense and net loss for the six months ended June 30, 2014 would have been $2.1 million and $1.3 million, respectively, for mortgage banking.

COSTS_ASSOCIATED_WITH_RESTRUCT1

COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES (Tables)	6 Months Ended
	Jun. 30, 2014
COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES	'
Schedule of reconciliation of the liability attributable to restructuring costs incurred in the mortgage banking segment	'
	The table below presents a reconciliation of the liability attributable to restructuring costs incurred in the mortgage banking segment as of June 30, 2014 ($ in thousands):

		Employee
		Termination Costs
	Beginning balance, as of January 1, 2014	$	-
	Accruals	555
	Payments	-80
	Ending balance, as of June 30, 2014	$	475

ORGANIZATION_Details

ORGANIZATION (Details)	6 Months Ended	12 Months Ended	0 Months Ended	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Aug. 30, 2013	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2014
			ACRE Capital, formerly known as Alliant	Minimum	Minimum	Maximum	Maximum
			TRS Holdings		Bride loan		Bride loan
ORGANIZATION	'	'	'	'	'	'	'
Term of mortgage loan	'2 years 4 months 24 days	'2 years 6 months	'	'	'6 months	'	'24 months
Term of debt	'	'	'	'1 year	'	'10 years	'
Excise tax rate (as a percent)	'	'	100.00%	'	'	'	'

SIGNIFICANT_ACCOUNTING_POLICIE2

SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Dec. 19, 2012
	item	Dec. 31, 2013	2015 Convertible Notes
Segment Reporting	'	'	'
Number of reportable segments as a result of the Acquisition	2	'	'
Convertible Senior Notes	'	'	'
Aggregate principal amount	'	'	$69,000,000
Interest rate (as a percent)	'	'	7.00%
Loans Held for Investment	'	'	'
Impairments of loan held for investment	$0	$0	'

SIGNIFICANT_ACCOUNTING_POLICIE3

SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2013	Jun. 30, 2014
			Principal Lending	ACRE Capital
			item
Loans held for sale	'	'	'	'
Holding period of mortgage loans held for sale	'	'	'	'30 days
Number of loans held for sale	'	'	1	'
Loans held for sale	$55,928,000	$89,233,000	$84,769,000	'
Loans held for sale, net of deferred fees	'	'	$89,200,000	'

SIGNIFICANT_ACCOUNTING_POLICIE4

SIGNIFICANT ACCOUNTING POLICIES (Details 3)	6 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Details 3)	Jun. 30, 2014
Income Taxes	'
Period of disqualification of REIT status	'4 years
Business Combinations	'
Maximum measurement period after the transaction date for subsequent adjustments	'1 year

SIGNIFICANT_ACCOUNTING_POLICIE5

SIGNIFICANT ACCOUNTING POLICIES (Details 4) (ACRE Capital)	0 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Details 4) (ACRE Capital)	Aug. 30, 2013
ACRC W TRS	'
Income Taxes	'
Ownership percentage	100.00%
Excise tax rate (as a percent)	100.00%
TRS Holdings	'
Income Taxes	'
Ownership percentage	100.00%
Excise tax rate (as a percent)	100.00%
ACRC U TRS	'
Income Taxes	'
Ownership percentage	100.00%
Excise tax rate (as a percent)	100.00%

LOANS_HELD_FOR_INVESTMENT_Deta

LOANS HELD FOR INVESTMENT (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
	item	Dec. 31, 2013
LOANS HELD FOR INVESTMENT	'	'
Number of loans originated or co-originated	40	'
Number of loans repaid	6	'
Amount funded	$273,100,000	'
Amount of repayments	69,000,000	'
Percentage of loans held for investment having LIBOR floors	74.90%	'
Weighted average floor (as a percent)	0.38%	'
Loans held for investment	'	'
Carrying Amount	1,161,441,000	958,495,000
Outstanding Principal	1,169,530,000	965,436,000
Interest Rate (as a percent)	5.40%	5.50%
Unleveraged Effective Yield (as a percent)	5.90%	6.00%
Remaining Life	'2 years 4 months 24 days	'2 years 6 months
Unleveraged effective yield dispositions, early prepayments or defaults	0	'
Senior mortgage loans	'	'
Loans held for investment	'	'
Carrying Amount	1,036,799,000	867,578,000
Outstanding Principal	1,043,673,000	873,781,000
Interest Rate (as a percent)	4.80%	5.10%
Unleveraged Effective Yield (as a percent)	5.40%	5.60%
Remaining Life	'2 years 2 months 12 days	'2 years 4 months 24 days
Subordinated debt and preferred equity investments	'	'
Loans held for investment	'	'
Carrying Amount	124,642,000	90,917,000
Outstanding Principal	$125,857,000	$91,655,000
Interest Rate (as a percent)	9.60%	9.80%
Unleveraged Effective Yield (as a percent)	10.00%	10.20%
Remaining Life	'3 years 9 months 18 days	'3 years 7 months 6 days

LOANS_HELD_FOR_INVESTMENT_Deta1

LOANS HELD FOR INVESTMENT (Details 2) (USD $)

6 Months Ended

12 Months Ended

1 Months Ended

6 Months Ended

0 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

12 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Mar. 28, 2014

Jun. 30, 2014

Mar. 31, 2014

Jun. 30, 2014

Dec. 31, 2013

Feb. 28, 2014

Jun. 30, 2014

Preferred equity investment

Office Building in CA

Retail Property in IL

Office Building in TX

Apartment Building in FL

Apartment Building in GA

Apartment Building in TX

Industrial in MO and KS

Apartment Building in GA

Apartment Building in NY

Apartment Building in TX

Apartment Building in FL

Apartment Building in TX

Office Complex in TX

Office Building in FL

Office Building in OH

Office Building in CA

Apartment Building in TX

Office Building in KS

Apartment Building in TX

Apartment Building in GA

Apartment Complex in AZ

Apartment Building in GA

Industrial in CA

Industrial in VA

Office Building in CA

Apartment Building in NY

Office Building in CA

Apartment Building in NC

Apartment Building in FL

Office Building in CO

Apartment Building in FL

Office Building in FL

Industrial in OH

Office Building in CA

Office Building in IL

Apartment Building in NY

Apartment Building in GA and FL

Office Building in GA

Apartment Building in NY

Apartment Building in TX

Minimum

Maximum

item

PIK

item

Office Complex in TX

Office Building in OH

item

Office Complex in TX

Office Building in OH

Loans held for investment

Total Commitment

$60,000,000

$36,600,000

$31,300,000

$93,800,000

Total Commitment

88,400,000

Outstanding Principal

1,169,530,000

965,436,000

75,000,000

70,000,000

55,800,000

49,100,000

45,100,000

42,600,000

38,000,000

37,800,000

37,700,000

34,900,000

34,300,000

33,800,000

33,500,000

31,300,000

29,600,000

27,500,000

26,300,000

25,500,000

24,000,000

23,100,000

21,800,000

20,800,000

19,600,000

19,000,000

15,100,000

15,000,000

14,800,000

14,300,000

12,800,000

10,800,000

10,200,000

47,300,000

32,700,000

14,500,000

37,000,000

33,300,000

28,400,000

22,600,000

14,300,000

13,800,000

4,900,000

Carrying Amount

1,161,441,000

958,495,000

74,400,000

69,400,000

54,800,000

48,900,000

45,100,000

42,400,000

37,700,000

37,800,000

37,400,000

34,700,000

34,000,000

33,600,000

33,400,000

31,300,000

29,500,000

27,200,000

26,100,000

25,300,000

23,800,000

23,100,000

21,700,000

20,600,000

19,400,000

18,900,000

15,000,000

14,800,000

14,700,000

14,100,000

12,700,000

10,800,000

10,100,000

47,300,000

32,400,000

14,400,000

36,700,000

33,100,000

22,000,000

14,300,000

13,700,000

4,800,000

Fixed interest rate (as a percent)

5.40%

5.50%

11.50%

8.75%

11.50%

10.50%

11.50%

Preferred return fixed interest rate (as a percent)

11.00%

11.85%

11.00%

Basis spread (as a percent)

3.75%

4.25%

5.00%

4.80%

4.95%

3.75%

4.30%

4.95%

5.00%

4.70%

3.75%

5.25%

4.50%

3.65%

5.00%

3.65%

4.95%

4.25%

3.85%

5.25%

3.75%

4.50%

4.00%

3.80%

5.50%

3.80%

5.25%

4.20%

4.75%

7.46%

9.90%

11.85%

2.00%

5.00%

2.50%

11.00%

9.00%

5.25%

5.00%

5.75%

5.35%

LIBOR Floor (as a percent)

0.17%

Unleveraged Effective Yield (as a percent)

5.90%

6.00%

4.20%

4.90%

6.10%

5.90%

5.70%

4.50%

5.10%

5.70%

6.10%

5.60%

4.70%

4.50%

7.60%

6.30%

6.00%

5.20%

4.30%

5.80%

4.30%

5.70%

5.90%

4.80%

6.00%

6.40%

4.50%

5.20%

5.30%

4.80%

4.60%

7.40%

4.60%

5.40%

4.70%

5.70%

9.10%

7.90%

12.40%

11.00%

11.90%

11.50%

Base rate

'30-day LIBOR

Preferred return base rate

'30-day LIBOR

Number of extension options

Period of extension options

'2 years

Term to acquire and reposition of properties

'7 years

Number of multifamily properties

Recognized gain on sale

680,000

Loans held for sale

80,400,000

85,200,000

Increased interest rate (as a percent)

11.00%

Unleveraged effective yield dispositions, early prepayments or defaults

LOANS_HELD_FOR_INVESTMENT_Deta2

LOANS HELD FOR INVESTMENT (Details 3) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013
Change in the activity of loan portfolio	'	'
Balance at the beginning of the period	$958,495	'
Initial funding	227,520	'
Receipt of origination fee, net of costs	-2,741	'
Additional funding	45,592	'
Loan payoffs	-69,018	'
Origination fee accretion	1,593	1,268
Balance at the end of the period	1,161,441	'
Impairment charges recognized	$0	$0

MORTGAGE_SERVICING_RIGHTS_Deta

MORTGAGE SERVICING RIGHTS (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
	Jun. 30, 2014	item
MORTGAGE SERVICING RIGHTS	'	'
Number of loans held under MSR portfolio	'	974
Unpaid principal amount on servicing assets	$3,800,000,000	$3,800,000,000
Activity related to MSRs	'	'
Beginning balance	'	59,640,000
Additions, following sale of loan	'	3,406,000
Change in fair value	-1,888,000	-3,735,000
Prepayments and write-offs	'	-753,000
Ending balance	58,558,000	58,558,000
Discount rate (as a percent)	'	1.00%
Change in fair value of ACRE Capital's MSRs outstanding due to increase (decrease) in weighted average discount rate	'	$1,800,000

INTANGIBLE_ASSETS_Details

INTANGIBLE ASSETS (Details) (USD $)	3 Months Ended	6 Months Ended
In Millions, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
INTANGIBLE ASSETS	'	'	'
Carrying value	$5	$5	$5
Impairment charges	$0	$0	'

DEBT_Details

DEBT (Details) (USD $)

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Mar. 31, 2014

Jun. 30, 2014

Apr. 09, 2014

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Wells Fargo Facility

Citibank Facility

Capital One Facility

CNB Facility

UBS Facility

Fannie Mae

Bank of America

Amended Citibank Facility

Secured revolving funding facility

Secured funding facility

Secured revolving funding facility

ASAP Line of Credit

BAML Line of Credit

Secured revolving funding facility

item

Minimum

Maximum

Minimum

Maximum

Minimum

Maximum

item

LIBOR for a one, two, three, six or 12-month

Federal funds rate

One-month LIBOR

Base rate

Minimum

Maximum

Minimum

Maximum

ACRE Capital

ACRC Lender C LLC

item

Funding agreements

Total Commitment

$1,005,000,000

$635,000,000

$225,000,000

$250,000,000

$125,000,000

$100,000,000

$50,000,000

$195,000,000

$105,000,000

$80,000,000

Variable interest basis

'30 day LIBOR

'LIBOR for a one, two, three, six or12-month

'federal funds rate

'one month LIBOR

'base rate

'one-month LIBOR

'30 day LIBOR

'LIBOR

'30 day LIBOR

Interest rate margin (as a percent)

2.00%

2.25%

2.75%

2.00%

3.50%

3.00%

0.50%

1.00%

1.25%

1.88%

1.40%

1.60%

Number of mortgage loans with LIBOR floor

Interest rate (as a percent)

3.00%

Facility used on average (as a percent)

75.00%

Variable interest rate floor (as a percent)

1.75%

Non-utilization fee on average available balance (as a percent)

0.25%

0.38%

Non-utilization threshold percentage (as a percent)

75.00%

Non-utilization /Commitment fee

63,000

30,000

72,000

74,000

58,000

17,000

73,000

77,000

35,000

43,000

20,000

43,000

Number of extension periods available for maturity date

Extension period of maturity date

'12 months

Outstanding Balance

457,291,000

264,419,000

128,293,000

166,934,000

128,300,000

166,900,000

113,286,000

97,485,000

113,300,000

97,500,000

65,967,000

66,000,000

30,000,000

119,745,000

119,700,000

48,199,000

Ratio of total debt to tangible net worth

Ratio of recourse debt to tangible net worth

Specified amount for computing the tangible net worth to be maintained

135,500,000

Period immediately preceding on the last date of the applicable reporting period for maintaining fixed charge coverage ratio

'12 months

Amount of liquidity to be maintained

$5,000,000

$10,000,000

Liquidity to be maintained as a percentage of recourse indebtedness

5.00%

Fixed charge coverage ratio

1.25

Percentage of net proceeds raised in all future equity issuances used for computing the tangible net worth to be maintained

80.00%

Percentage of tangible net worth as of September 30, 2013 used for computing the tangible net worth to be maintained

80.00%

Number of separate installments received

Maximum advances as a percentage of principal amounts of the mortgage loans originated by acquiree

100.00%

DEBT_Details_2

DEBT (Details 2) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Dec. 19, 2012	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 26, 2013	Jun. 30, 2014	Jun. 26, 2013
			2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes	2015 Convertible Notes
										Maximum	Minimum
Convertible Senior Notes	'	'	'	'	'	'	'	'	'	'	'
Aggregate principal amount	'	'	$69,000,000	'	'	'	'	'	'	'	'
Principle amount issued to initial purchasers	'	'	60,500,000	'	'	'	'	'	'	'	'
Amount issued to initial purchasers' exercise in full of their overallotment option	'	'	9,000,000	'	'	'	'	'	'	'	'
Principle amount issued to certain directors, officers and affiliates	'	'	8,500,000	'	'	'	'	'	'	'	'
Net proceeds	'	'	66,200,000	'	'	'	'	'	'	'	'
Initial purchasers' discount	'	'	2,100,000	'	'	'	'	'	1,500,000	'	'
Aggregate estimated offering expenses	'	'	2,800,000	'	'	'	'	'	'	'	'
Carrying value of unsecured debt	68,088,000	67,815,000	'	68,100,000	'	68,100,000	'	67,800,000	'	'	'
Interest rate (as a percent)	'	'	7.00%	'	'	'	'	'	'	'	'
Effective interest rate used to amortize the debt discount	'	'	'	9.40%	9.40%	9.40%	9.40%	'	'	'	'
Interest expense incurred	'	'	'	1,600,000	1,500,000	3,100,000	3,100,000	'	'	'	'
Initial conversion rate	'	'	'	'	'	53.6107	'	'	'	61.6523	'
Principal amount used for debt instrument conversion ratio	'	'	'	'	'	1,000	'	'	'	'	'
Initial conversion price (in dollars per share)	'	'	'	$18.65	'	$18.65	'	'	'	'	'
Regular quarterly dividends beyond which an adjustment will be made in conversion rate (in dollars per share)	'	'	'	'	'	$0.35	'	'	'	'	'
Initial value of derivative liability	'	'	'	'	'	'	'	'	1,700,000	'	'
Percentage of accretion of Original issue discount and associated costs	'	'	'	'	'	'	'	'	9.40%	'	'
Fair value of derivative liability	0	0	'	0	'	0	'	0	'	'	'
Conversion option's cumulative value	'	'	'	'	'	'	'	'	86,000	'	'
Amount of sinking fund provided for debt	'	'	'	'	'	$0	'	'	'	'	'
Repurchase price of debt instrument as percentage of principal amount	'	'	'	'	'	100.00%	'	'	'	'	'
Percentage of common stock issued on conversion without shareholder's approval	'	'	'	'	'	'	'	'	'	'	20.00%

ALLOWANCE_FOR_LOSS_SHARING_Det

ALLOWANCE FOR LOSS SHARING (Details) (USD $)	3 Months Ended	6 Months Ended			6 Months Ended			6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2014
			Fannie Mae DUS license	Fannie Mae DUS license	Fannie Mae master loss sharing agreement	Fannie Mae master loss sharing agreement	Fannie Mae master loss sharing agreement	Fannie Mae master loss sharing agreement	Fannie Mae master loss sharing agreement	Fannie Mae master loss sharing agreement
					Loss Level I	ACRE Capital	ACRE Capital	ACRE Capital	ACRE Capital	ACRE Capital
						item		Loss Level I	Loss Level II	Loss Level III
Allowance for loss sharing	'	'	'	'	'	'	'	'	'	'
Loss sharing on the basis of Pari Passu Loss Sharing (as a percent)	'	'	'	'	66.67%	'	'	33.33%	'	'
Maximum risk-sharing obligation as a percentage of original principal amount of the loan	'	'	'	'	'	'	'	33.33%	30.00%	40.00%
Maximum period considered for increase in risk-sharing obligation if loan defaulted after purchase	'	'	'	'	'	'12 months	'	'	'	'
Absorption of losses under certain limited circumstances (as a percent)	'	'	'	'	'	100.00%	'	'	'	'
Contributions for reimbursement obligation	'	'	'	'	'	$1,400,000	$2,000,000	'	'	'
Number of twelve months periods following closing date considered for reimbursement	'	'	'	'	'	3	'	'	'	'
Period following closing date considered for reimbursement	'	'	'	'	'	'12 months	'	'	'	'
Percentage of amounts due and owing after closing date that sellers are obligated to fund directly (if permitted) or to reimburse	'	'	'	'	'	80.00%	'	'	'	'
Threshold limit of allowance for loss sharing pursuant to which sellers obligation arise to fund directly (if permitted) or to reimburse	'	'	'	'	'	2,000,000	'	'	'	'
Sellers obligations for the entire three (3) year period	'	'	'	'	'	3,000,000	'	'	'	'
Period considered in determination of maximum sellers obligations	'	'	'	'	'	'3 years	'	'	'	'
Delinquent period	'	'	'	'	'	'60 days	'	'	'	'
Maximum quantifiable allowance for loss sharing	'	'	1,200,000,000	1,300,000,000	'	'	'	'	'	'
Maximum quantifiable recourse liability at risk pool	'	'	3,500,000,000	3,700,000,000	'	'	'	'	'	'
Maximum quantifiable recourse liability non-at risk pool	'	'	2,900,000	5,200,000	'	'	'	'	'	'
Summary of the Company's allowance for loss sharing	'	'	'	'	'	'	'	'	'	'
Beginning balance	'	16,480,000	'	'	'	'	'	'	'	'
Current period provision for loss sharing	-1,180,000	-1,061,000	'	'	'	'	'	'	'	'
Settlements/Writeoffs	'	-979,000	'	'	'	'	'	'	'	'
Ending balance	$14,440,000	$14,440,000	'	'	'	'	'	'	'	'

COMMITMENTS_AND_CONTINGENCIES_1

COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
COMMITMENTS AND CONTINGENCIES	'	'
Total commitments	$1,316,008	$1,191,212
Less: funded commitments	-1,169,530	-1,050,674
Total unfunded commitments	$146,478	$140,538

COMMITMENTS_AND_CONTINGENCIES_2

COMMITMENTS AND CONTINGENCIES (Details 2) (ACRE Capital, USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Commitments to sell loans	'	'
Commitments and Contingencies	'	'
Commitments	$84,325	$56,115
Commitments to fund loans	'	'
Commitments and Contingencies	'	'
Commitments	$31,618	$51,794

DERIVATIVES_Details

DERIVATIVES (Details) (USD $)

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 26, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

2015 Convertible Notes

Non-designated Hedges

Minimum

Loan commitments

Forward sale commitments

Right to acquire MSRs

item

Other assets

item

Minimum

Maximum

Other assets

Other liabilities

Other assets

Derivatives

Number of instruments

Number of contracts entered into by the company

Notional amount

$31,600,000

$51,800,000

$84,300,000

$56,100,000

Maturity term

'29 days

'24 days

'92 days

'60 days

Percentage of common stock issued on conversion without shareholder's approval

20.00%

Fair value of derivative liability

Derivatives in asset position, Fair Value

1,760,000

2,038,000

272,000

1,717,000

Derivatives in liability position, Fair Value

-786,000

-500,000

Derivatives assets net of liabilities

$974,000

$3,527,000

STOCKHOLDERS_EQUITY_Details

STOCKHOLDERS' EQUITY (Details) (USD $)	0 Months Ended			1 Months Ended	6 Months Ended
	Aug. 30, 2013	Jul. 09, 2013	Jun. 21, 2013	Jul. 09, 2013	Jun. 30, 2013	Jul. 09, 2013	9-May-13
	Aug. 30, 2013	Jul. 09, 2013	Jun. 21, 2013	Jul. 09, 2013	Jun. 30, 2013	Jul. 09, 2013	Maximum
STOCKHOLDER'S EQUITY	'	'	'	'	'	'	'
Securities to be offered under registration statement	'	'	'	'	'	'	$1,500,000,000
Common shares issued	'	601,590	18,000,000	'	'	'	'
Common stock price (in dollars per share)	'	'	$13.50	'	'	'	'
Gross proceeds from offering	'	'	243,000,000	'	'	'	'
Offering expenses	'	'	8,400,000	'	'	'	'
Net proceeds from offering	'	$7,700,000	$234,600,000	$242,300,000	$243,000,000	$242,300,000	'
Number of additional shares of common stock to be purchased under the option granted to underwriters	'	'	2,700,000	'	'	'	'
Common stock shares sold in a private placement	588,235	'	'	'	'	'	'

STOCKHOLDERS_EQUITY_Details_2

STOCKHOLDERS' EQUITY (Details 2)	6 Months Ended	12 Months Ended
STOCKHOLDERS' EQUITY (Details 2)	Jun. 30, 2014	Dec. 31, 2012	Apr. 23, 2012
Equity Incentive Plan	'	'	'
Number of shares of common stock that may granted under the plan	'	'	690,000
Percentage of issued and outstanding shares of common stock eligible to be granted under the plan	'	7.50%	'
Restricted stock activity	'	'	'
Balance at the beginning of the period (in shares)	72,987	'	'
Granted (in shares)	100,315	'	'
Vested (in shares)	-22,050	'	'
Forfeited (in shares)	-2,494	'	'
Balance at the end of the period (in shares)	148,758	'	'
Future Anticipated Vesting Schedule	'	'	'
2014 (in shares)	19,961	'	'
2015 (in shares)	31,512	'	'
2016 (in shares)	48,178	'	'
2017 (in shares)	834	'	'
Total (in shares)	100,485	'	'
Restricted stock	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	220,384	'	'
Restricted stock \| Minimum	'	'	'
Equity Incentive Plan	'	'	'
Award vesting period	'1 year	'	'
Restricted stock \| Maximum	'	'	'
Equity Incentive Plan	'	'	'
Award vesting period	'4 years	'	'
Restricted stock \| Directors	'	'	'
Restricted stock activity	'	'	'
Balance at the beginning of the period (in shares)	25,420	'	'
Granted (in shares)	29,688	'	'
Vested (in shares)	-18,926	'	'
Forfeited (in shares)	-2,494	'	'
Balance at the end of the period (in shares)	33,688	'	'
Future Anticipated Vesting Schedule	'	'	'
2014 (in shares)	12,364	'	'
2015 (in shares)	16,320	'	'
2016 (in shares)	4,170	'	'
2017 (in shares)	834	'	'
Total (in shares)	33,688	'	'
Restricted stock \| Officer	'	'	'
Restricted stock activity	'	'	'
Balance at the beginning of the period (in shares)	17,186	'	'
Vested (in shares)	-3,124	'	'
Balance at the end of the period (in shares)	14,062	'	'
Future Anticipated Vesting Schedule	'	'	'
2014 (in shares)	3,126	'	'
2015 (in shares)	6,250	'	'
2016 (in shares)	4,686	'	'
Total (in shares)	14,062	'	'
Restricted stock \| Employees	'	'	'
Restricted stock activity	'	'	'
Balance at the beginning of the period (in shares)	30,381	'	'
Granted (in shares)	70,627	'	'
Balance at the end of the period (in shares)	101,008	'	'
Future Anticipated Vesting Schedule	'	'	'
2014 (in shares)	4,471	'	'
2015 (in shares)	8,942	'	'
2016 (in shares)	39,322	'	'
Total (in shares)	52,735	'	'
Restricted stock \| May 1, 2012	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	35,135	'	'
Restricted stock \| June 18, 2012	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	7,027	'	'
Restricted stock \| July 9, 2012	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	25,000	'	'
Restricted stock \| June 26, 2013	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	22,526	'	'
Restricted stock \| November 25, 2013	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	30,381	'	'
Restricted stock \| January 31, 2014	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	48,273	'	'
Restricted stock \| February 26, 2014	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	12,030	'	'
Restricted stock \| February 27, 2014	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	22,354	'	'
Restricted stock \| June 24, 2014	'	'	'
Equity Incentive Plan	'	'	'
Shares Granted	17,658	'	'

EARNINGS_PER_SHARE_Details

EARNINGS PER SHARE (Details) (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
EARNINGS PER SHARE	'	'	'	'
Net income attributable to common stockholders: (in dollars)	$6,638	$3,265	$11,393	$3,592
Divided by:	'	'	'	'
Basic weighted average shares of common stock outstanding (in shares)	28,453,739	10,215,782	28,448,181	9,720,477
Non-vested restricted stock	136,950	41,468	122,764	44,464
Diluted weighted average shares of common stock outstanding (in shares)	28,590,689	10,257,250	28,570,945	9,764,941
Basic and diluted earnings per common share: (in dollars per share)	$0.23	$0.32	$0.40	$0.37

INCOME_TAX_Details

INCOME TAX (Details) (USD $)	3 Months Ended	6 Months Ended
INCOME TAX (Details) (USD $)	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Components of the company's income tax provision	'	'	'
Deferred	'	($129,000)	'
Total income tax provision	83,000	-591,000	'
TRS'	'	'	'
Components of the company's income tax provision	'	'	'
Current	-420,000	-462,000	'
Deferred	503,000	-129,000	'
Total income tax provision	83,000	-591,000	'
Deferred tax asset	'	'	'
Mortgage servicing rights	1,760,000	1,760,000	749,000
Other temporary differences	343,000	343,000	125,000
Sub-total-deferred tax assets	2,103,000	2,103,000	874,000
Deferred tax liabilities	'	'	'
Basis difference in assets from acquisition of ACRE Capital	-2,810,000	-2,810,000	-2,810,000
Components of gains from mortgage banking activities	-1,927,000	-1,927,000	-893,000
Amortization of intangible assets	-115,000	-115,000	-49,000
Sub-total-deferred tax liabilities	-4,852,000	-4,852,000	-3,752,000
Net deferred tax liability	-2,749,000	-2,749,000	-2,878,000
Reconciliation of the Company's effective tax rate to the Company's statutory federal income tax rate	'	'	'
Federal statutory rate (as a percent)	35.00%	35.00%	'
State income taxes (as a percent)	5.70%	5.70%	'
Federal benefit of state tax deduction (as a percent)	-2.00%	-2.00%	'
Effective tax rate (as a percent)	38.70%	38.70%	'
Amount of note partially capitalized	$44,000,000	$44,000,000	'

FAIR_VALUE_OF_FINANCIAL_INSTRU2

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Loans held for sale	$55,928	$89,233
Transfer of asset from level 1 to level 2	0	0
Transfer of asset from level 2 to level 1	0	0
Transfer of liabilities from level 1 to level 2	0	0
Transfer of liabilities from level 2 to level 1	0	0
Recurring basis \| Level II	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Loans held for sale	55,928	89,233
Recurring basis \| Level III \| Mortgage servicing rights	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	58,558	59,640
Recurring basis \| Level III \| Loan commitments	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	1,760	2,038
Recurring basis \| Level III \| Forward sale commitments	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	'	272
Derivative liabilities	-786	-500
Recurring basis \| Level III \| Right to acquire MSRs	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	'	1,717
Recurring basis \| Total	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Loans held for sale	55,928	89,233
Recurring basis \| Total \| Mortgage servicing rights	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	58,558	59,640
Recurring basis \| Total \| Loan commitments	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	1,760	2,038
Recurring basis \| Total \| Forward sale commitments	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	'	272
Derivative liabilities	-786	-500
Recurring basis \| Total \| Right to acquire MSRs	'	'
Levels in the fair value hierarchy into which the financial instruments were categorized	'	'
Derivative assets	'	$1,717

FAIR_VALUE_OF_FINANCIAL_INSTRU3

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (Level 3, Discounted cash flow, USD $)	6 Months Ended	12 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Mortgage servicing rights	'	'
Fair Value Measurements	'	'
Derivative assets	58,558	59,640
Mortgage servicing rights \| Minimum	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	8.00%	8.00%
Mortgage servicing rights \| Maximum	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	14.00%	14.00%
Mortgage servicing rights \| Weighted Average	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	12.00%	12.00%
Loan commitments and forward sale commitments	'	'
Fair Value Measurements	'	'
Derivative assets	974	1,810
Loan commitments and forward sale commitments \| Minimum	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	8.00%	8.00%
Loan commitments and forward sale commitments \| Maximum	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	12.00%	12.00%
Loan commitments and forward sale commitments \| Weighted Average	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	9.00%	8.00%
Right to acquire MSRs	'	'
Fair Value Measurements	'	'
Derivative assets	'	1,717
Discount rate (as a percent)	'	8.00%
Right to acquire MSRs \| Weighted Average	'	'
Fair Value Measurements	'	'
Discount rate (as a percent)	'	8.00%

FAIR_VALUE_OF_FINANCIAL_INSTRU4

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2014
	Embedded conversion option	Interest Rate Lock Commitments and Forward Contracts	Interest Rate Lock Commitments and Forward Contracts
		TRS Holdings	TRS Holdings
			Gains from Mortgage Banking Activities
Change in derivative instruments classified as Level III	'	'	'
Balance at the beginning of the period	($1,825)	$3,527	'
Settlements	'	-5,016	'
Realized gains (losses) recorded in net income	'	'	1,489
Unrealized gains (losses) recorded in net income	1,739	'	974
Reclassification to additional paid-in capital	86	'	'
Balance at the end of the period	'	$974	'

FAIR_VALUE_OF_FINANCIAL_INSTRU5

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet	'	'
Loans held for investment	$1,161,441	$958,495
Financial Liabilities:	'	'
Convertible notes	68,088	67,815
Commercial mortgage-backed securitization debt (consolidated VIE)	395,027	395,027
Carrying Value	'	'
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet	'	'
Loans held for investment	1,161,441	958,495
Financial Liabilities:	'	'
Secured financing agreements	457,291	264,419
Warehouse line of credit	48,199	'
Convertible notes	68,088	67,815
Commercial mortgage-backed securitization debt (consolidated VIE)	395,027	395,027
Estimated Fair Value \| Level II	'	'
Financial Liabilities:	'	'
Secured financing agreements	457,291	264,419
Warehouse line of credit	48,199	'
Convertible notes	68,088	67,815
Estimated Fair Value \| Level III	'	'
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet	'	'
Loans held for investment	1,161,441	958,495
Financial Liabilities:	'	'
Commercial mortgage-backed securitization debt (consolidated VIE)	$395,027	$395,027

RELATED_PARTY_TRANSACTIONS_Det

RELATED PARTY TRANSACTIONS (Details) (USD $)

Jun. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Mar. 31, 2014

Dec. 31, 2013

Sep. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Dec. 31, 2013

Restricted Costs

ACREM

Ares Investments Holdings LLC

Maximum

Management Fees

General and administrative expenses

Direct third party costs

RELATED PARTY TRANSACTIONS

Base management fees as a percentage of stockholders' equity per annum

1.50%

Percentage multiplied to arrive at first value affecting calculation of incentive fees

20.00%

Previous period for which core earnings are considered to arrive at first value affecting calculation of incentive fees

'12 months

Previous period for product of weighted average price per share and weighted average number of shares of common stock and other shares

'12 months

Percentage multiplied to arrive at difference of first value affecting calculation of incentive fees

8.00%

Number of fiscal quarters considered to arrive at second value affecting calculation of incentive fees

'9 months

Period whose fiscal quarters are considered to arrive at first value affecting calculation of incentive fees

'12 months

Incentive fee payable

Minimum cumulative core earnings

Period for which cumulative core earnings must be greater than zero

'3 years

Automatic renewal period of management agreement

'1 year

Incentive fees earned

Multiplier of average annual base management and incentive fee to arrive at termination fee

Period preceding most recently completed fiscal quarter considered for calculation of average of annual base management and incentive fee

'24 months

Costs to be reimbursed per quarter

1,000,000

Incurred

2,662,000

1,563,000

5,225,000

3,005,000

1,478,000

643,000

2,970,000

1,256,000

1,000,000

863,000

2,000,000

1,610,000

184,000

57,000

255,000

139,000

Amount owed by the entity to related party

2,974,000

2,796,000

2,974,000

2,796,000

1,596,000

1,497,000

1,181,000

1,000,000

197,000

299,000

Aggregate principal amount

$1,200,000

DIVIDENDS_AND_DISTRIBUTIONS_De

DIVIDENDS AND DISTRIBUTIONS (Details) (USD $)	6 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013
DIVIDENDS AND DISTRIBUTIONS	'	'
Dividend per share amount declared (in dollars per share)	$0.50	$0.50
Dividends per share amount paid (in dollars per share)	$0.50	$0.50
Total cash dividends	$14,299	$9,139
May 07 ,2014	'	'
DIVIDENDS AND DISTRIBUTIONS	'	'
Dividend per share amount declared (in dollars per share)	$0.25	'
Dividends per share amount paid (in dollars per share)	$0.25	'
Total cash dividends	7,151	'
17-Mar-14	'	'
DIVIDENDS AND DISTRIBUTIONS	'	'
Dividend per share amount declared (in dollars per share)	$0.25	'
Dividends per share amount paid (in dollars per share)	$0.25	'
Total cash dividends	7,147	'
15-May-13	'	'
DIVIDENDS AND DISTRIBUTIONS	'	'
Dividend per share amount declared (in dollars per share)	'	$0.25
Dividends per share amount paid (in dollars per share)	'	$0.25
Total cash dividends	'	6,822
14-Mar-13	'	'
DIVIDENDS AND DISTRIBUTIONS	'	'
Dividend per share amount declared (in dollars per share)	'	$0.25
Dividends per share amount paid (in dollars per share)	'	$0.25
Total cash dividends	'	$2,317

VARIABLE_INTEREST_ENTITIES_Det

VARIABLE INTEREST ENTITIES (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014	Nov. 19, 2013
	Primary beneficiary	Primary beneficiary	Not primary beneficiary	Not primary beneficiary	Offered Certificates	Offered Certificates	Offered Certificates	Depositor	Depositor
								Commercial Mortgage Pass-Through Certificates (the "Certificates")	Commercial Mortgage Pass-Through Certificates (the "Certificates")
								item
Variable Interest Entities	'	'	'	'	'	'	'	'	'
Aggregate principal amount	'	'	'	'	$395,000,000	$395,000,000	$395,000,000	'	$493,800,000
Number of adjustable rate participation interests (the "Trust Assets") in commercial mortgage loans contributed in connection with securitization	'	'	'	'	'	'	'	18	'
Number of properties collateralized for commercial mortgage loan	'	'	'	'	'	'	'	27	'
Variable interest basis	'	'	'	'	'	'LIBOR	'	'	'
Interest rate margin (as a percent)	'	'	'	'	'	1.89%	1.89%	'	'
Principal amount of Certificates retained by wholly owned subsidiary of the entity	'	'	'	'	98,800,000	98,800,000	'	'	'
Proceeds from issuance of debt of consolidated VIE	'	'	'	'	'	389,300,000	'	'	'
Interest expense	'	'	'	'	2,000,000	4,100,000	'	'	'
Carrying value and the maximum exposure of unconsolidated VIEs	'	'	'	'	'	'	'	'	'
Carrying value	'	'	26,813,000	4,804,000	'	'	'	'	'
Maximum exposure to loss	$98,800,000	$98,800,000	$27,452,000	$4,850,000	'	'	'	'	'

ACQUISITION_OF_ACRE_CAPITAL_De

ACQUISITION OF ACRE CAPITAL (Details) (USD $)	6 Months Ended	11 Months Ended	0 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014	Aug. 30, 2013	Jun. 30, 2014	Jun. 30, 2014
	Jun. 30, 2014	Jun. 30, 2014	ACRE Capital	ACRE Capital	ACRE Capital
ACQUISITION OF ACRE CAPITAL	'	'	'	'	'
Cash as consideration for the acquisition	'	'	$53,400,000	'	'
Number of shares of common stock issued as consideration for the acquisition	'	'	588,235	'	'
Total consideration paid	'	'	60,900,000	'	'
Decrease in gain on acquisition	-747,000	'	'	0	0
Assets acquired:	'	'	'	'	'
Cash	'	'	'	1,157,000	1,157,000
Restricted cash	'	'	'	15,586,000	15,586,000
Loans held for sale	'	'	'	22,154,000	22,154,000
Mortgage servicing rights	'	'	'	61,236,000	61,236,000
Intangible assets	'	'	'	5,000,000	5,000,000
Derivative assets	'	'	'	182,000	182,000
Risk-sharing indemnification	'	'	'	3,703,000	3,703,000
Other assets	'	'	'	4,748,000	4,748,000
Total assets acquired	'	'	'	113,766,000	113,766,000
Liabilities assumed:	'	'	'	'	'
Warehouse lines of credit	'	'	'	14,472,000	14,472,000
Allowance for loss sharing	'	'	'	18,386,000	18,386,000
Accounts payable and accrued expenses	'	'	'	4,748,000	4,748,000
Other liabilities	'	'	'	10,795,000	10,795,000
Total liabilities assumed	'	'	'	48,401,000	48,401,000
Net Assets Acquired	'	'	'	65,365,000	65,365,000
Payable incurred in connection with close of the transaction	'	'	6,000,000	'	'
Gain on acquisition	'	$4,400,000	'	'	'

SEGMENTS_Details

SEGMENTS (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
	Jun. 30, 2014	Jun. 30, 2013	item	Jun. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
SEGMENTS	'	'	'	'	'	'
Number of reportable segments	'	'	2	'	'	'
ASSETS	'	'	'	'	'	'
Cash and cash equivalents	$20,152,000	$40,235,000	$20,152,000	$40,235,000	$20,100,000	$23,390,000
Restricted cash	24,388,000	'	24,388,000	'	16,954,000	'
Loans held for investment	1,161,441,000	'	1,161,441,000	'	958,495,000	'
Loans held for sale, at fair value	55,928,000	'	55,928,000	'	89,233,000	'
Mortgage servicing rights, at fair value	58,558,000	'	58,558,000	'	59,640,000	'
Other assets	101,121,000	'	101,121,000	'	32,493,000	'
Total assets	1,421,588,000	'	1,421,588,000	'	1,176,915,000	'
Net interest margin:	'	'	'	'	'	'
Interest income from loans held for investment	17,735,000	8,086,000	32,887,000	14,798,000	'	'
Interest expense	-6,835,000	-1,879,000	-11,907,000	-3,265,000	'	'
Net interest margin	10,900,000	6,207,000	20,980,000	11,533,000	'	'
Mortgage banking revenue:	'	'	'	'	'	'
Servicing fees, net	3,533,000	'	8,796,000	'	'	'
Gains from mortgage banking activities	5,446,000	'	6,832,000	'	'	'
Provision for loss sharing	1,180,000	'	1,061,000	'	'	'
Change in fair value of mortgage servicing rights	-1,888,000	'	-3,735,000	'	'	'
Mortgage banking revenue	8,271,000	'	12,954,000	'	'	'
Gain on sale of loans	'	'	680,000	'	'	'
Total revenue	19,171,000	6,207,000	34,614,000	11,533,000	'	'
Expenses:	'	'	'	'	'	'
Other interest expense	1,758,000	1,499,000	3,443,000	3,050,000	'	'
Management fees to affiliate	1,478,000	643,000	2,970,000	1,256,000	'	'
Professional fees	1,104,000	500,000	2,029,000	1,067,000	'	'
Compensation and benefits	4,510,000	'	8,531,000	'	'	'
Acquisition and investment pursuit costs	'	1,121,000	20,000	1,761,000	'	'
General and administrative expenses	2,600,000	453,000	4,819,000	936,000	'	'
General and administrative expenses reimbursed to affiliate	1,000,000	863,000	2,000,000	1,610,000	'	'
Total expenses	12,450,000	5,079,000	23,812,000	9,680,000	'	'
Income from operations before income taxes	6,721,000	3,265,000	10,802,000	3,592,000	'	'
Income tax expense (benefit)	83,000	'	-591,000	'	'	'
Net income	6,638,000	'	11,393,000	'	'	'
Principal Lending	'	'	'	'	'	'
ASSETS	'	'	'	'	'	'
Cash and cash equivalents	18,903,000	'	18,903,000	'	14,444,000	'
Restricted cash	9,336,000	'	9,336,000	'	3,036,000	'
Loans held for investment	1,161,441,000	'	1,161,441,000	'	958,495,000	'
Loans held for sale, at fair value	'	'	'	'	84,769,000	'
Other assets	86,272,000	'	86,272,000	'	16,632,000	'
Total assets	1,275,952,000	'	1,275,952,000	'	1,077,376,000	'
Net interest margin:	'	'	'	'	'	'
Interest income from loans held for investment	17,735,000	'	32,887,000	'	'	'
Interest expense	-6,835,000	'	-11,907,000	'	'	'
Net interest margin	10,900,000	'	20,980,000	'	'	'
Mortgage banking revenue:	'	'	'	'	'	'
Gain on sale of loans	'	'	680,000	'	'	'
Total revenue	10,900,000	'	21,660,000	'	'	'
Expenses:	'	'	'	'	'	'
Other interest expense	1,579,000	'	3,132,000	'	'	'
Management fees to affiliate	1,362,000	'	2,736,000	'	'	'
Professional fees	742,000	'	1,449,000	'	'	'
Acquisition and investment pursuit costs	'	'	20,000	'	'	'
General and administrative expenses	761,000	'	1,476,000	'	'	'
General and administrative expenses reimbursed to affiliate	863,000	'	1,682,000	'	'	'
Total expenses	5,307,000	'	10,495,000	'	'	'
Income from operations before income taxes	5,593,000	'	11,165,000	'	'	'
Income tax expense (benefit)	-7,000	'	234,000	'	'	'
Net income	5,600,000	'	10,931,000	'	'	'
Principal Lending \| Revenue \| Customer concentration	'	'	'	'	'	'
Expenses:	'	'	'	'	'	'
Number of customers	1	'	1	'	'	'
Concentration risk (as a percent)	13.30%	'	13.70%	'	'	'
ACRE Capital	'	'	'	'	'	'
ASSETS	'	'	'	'	'	'
Cash and cash equivalents	1,249,000	'	1,249,000	'	5,656,000	'
Restricted cash	15,052,000	'	15,052,000	'	13,918,000	'
Loans held for sale, at fair value	55,928,000	'	55,928,000	'	4,464,000	'
Mortgage servicing rights, at fair value	58,558,000	'	58,558,000	'	59,640,000	'
Other assets	14,849,000	'	14,849,000	'	15,861,000	'
Total assets	145,636,000	'	145,636,000	'	99,539,000	'
Mortgage banking revenue:	'	'	'	'	'	'
Servicing fees, net	3,533,000	'	8,796,000	'	'	'
Gains from mortgage banking activities	5,446,000	'	6,832,000	'	'	'
Provision for loss sharing	1,180,000	'	1,061,000	'	'	'
Change in fair value of mortgage servicing rights	-1,888,000	'	-3,735,000	'	'	'
Mortgage banking revenue	8,271,000	'	12,954,000	'	'	'
Total revenue	8,271,000	'	12,954,000	'	'	'
Expenses:	'	'	'	'	'	'
Other interest expense	179,000	'	311,000	'	'	'
Management fees to affiliate	116,000	'	234,000	'	'	'
Professional fees	362,000	'	580,000	'	'	'
Compensation and benefits	4,510,000	'	8,531,000	'	'	'
General and administrative expenses	1,839,000	'	3,343,000	'	'	'
General and administrative expenses reimbursed to affiliate	137,000	'	318,000	'	'	'
Total expenses	7,143,000	'	13,317,000	'	'	'
Income from operations before income taxes	1,128,000	'	-363,000	'	'	'
Income tax expense (benefit)	90,000	'	-825,000	'	'	'
Net income	1,038,000	'	462,000	'	'	'
Other interest expense after adjustment of intercompany note	1,100,000	'	2,100,000	'	'	'
Net income (loss) after adjustment of intercompany note	$130,000	'	($1,300,000)	'	'	'

SEGMENTS_Details_2

SEGMENTS (Details 2) (USD $)	3 Months Ended		6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Segments	'	'	'	'
Revenue	$19,171	$6,207	$34,614	$11,533
Principal Lending	'	'	'	'
Segments	'	'	'	'
Revenue	$10,900	'	$21,660	'

COSTS_ASSOCIATED_WITH_RESTRUCT2

COSTS ASSOCIATED WITH RESTRUCTURING ACTIVITIES (Details) (ACRE Capital, Employee termination costs, USD $)	3 Months Ended	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2014
ACRE Capital \| Employee termination costs	'	'
Company's exit and disposal costs incurred	'	'
Amount incurred	$345	$555
Additional amount expected to be incurred	340	340
Reconciliation of the liability attributable to exit and disposal costs incurred	'	'
Accruals	'	555
Payments	'	-80
Balance at the end of the period	$475	$475

SUBSEQUENT_EVENTS_Details

SUBSEQUENT EVENTS (Details) (USD $)

3 Months Ended

6 Months Ended

12 Months Ended

6 Months Ended

0 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Mar. 31, 2014

Jun. 30, 2014

Aug. 06, 2014

Jul. 22, 2014

Jul. 16, 2014

Jul. 30, 2014

Aug. 01, 2014

July 2014 CNB Facility

Revolving credit facility

Subsequent event

July 2014 CNB Facility

Transitional first mortgage

Revolving credit facility

Offered Notes

item

Minimum

Base rate

LIBOR for a one, two, three, six or 12-month

Mixed-use complex located in New York

July 2014 CNB Facility

ACRC Lender LLC

Issuer

item

Minimum

Base rate

LIBOR for a one, two, three, six or 12-month

Ares

Subsequent Events

Commitment

$29,000,000

Outstanding Principal

1,169,530,000

965,436,000

25,000,000

Variable rate basis

'LIBOR

Basis spread (as a percent)

4.25%

LIBOR Floor (as a percent)

0.15%

Term of mortgage loan

'2 years 4 months 24 days

'2 years 6 months

'3 years

Repayment of mortgage loan

49,100,000

Maximum borrowing capacity

1,005,000,000

635,000,000

50,000,000

75,000,000

Variable interest basis

'base rate

'LIBOR for a one, two, three, six or12-month

'base rate

'LIBOR for a one, two, three, six or12-month

'LIBOR

Interest rate margin (as a percent)

1.25%

3.00%

0.25%

1.50%

1.45%

Interest rate (as a percent)

3.00%

1.50%

Facility used on average (as a percent)

75.00%

Non-utilization fee on average available balance (as a percent)

0.38%

0.13%

Extension period of maturity date

'12 months

Number of extension periods available for maturity date

Credit support fee agreed to be paid as percentage of average outstanding balance (as a percent)

1.50%

Principal balance of debt to be offered to third parties

308,700,000

Collateral amount

378,800,000

Principal amount of non-investment grade tranches of the notes to be retained by the entity either directly or through one of its wholly owned subsidiaries

$70,100,000

Dividends declared per share of common stock (in dollars per share)

$0.25

$0.50

$0.25