ACRE - Earnings call transcript Q1 2018 | Ares Commercial Real Estate Corporation

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Operator

Good morning and welcome to Ares Commercial Real Estate Corporation's Conference Call to discuss the Company's First Quarter 2018 earnings results.

As a reminder, this conference is being recorded on May 1, 2018. I will now turn the call over to Veronica Mendiola from Investor Relations. Please go ahead.

Veronica Mendiola

Thank you. you us thank call. today's and morning for on joining conference Good am CEO, Carl Yoon; Relations. our today Drake Henderson; Investor I by Tae-Sik Jamie joined our CFO, from and

we release an posted presentation at under section the press www.arescre.com. we Resources earnings our Investor our to the SEC, addition XX-K In that of filed the with have and website

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

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

Jamie Henderson

the for morning Thank call thanks joining Veronica. you, Good today. and

how then share, our XXXX, earnings the we off first a quarter per start to by first comments from results. year's both quarter on strong environment. ever our earnings core XX% We're and level me by and results approximately first up generating current Let market highest high address quarter to are start last GAAP $X.XX of providing some great navigating

our activity of in end expected, XXXX at to strong significant us reasons by goal which our a fundings for significant achieve resulted in rate of our in earnings earnings deploying As higher origination our of the a year year-over-year start to allowed amount end, increase three-fold. run year. the the The were capital

an from investment increase our First, in portfolio. we benefited

our LIBOR benefited and lowered costs, senior increases we funding third, from primarily in floating we loan Second, on rate our strategy.

mind, expect interest everyone's earnings we and to are throughout addressing drivers competition, portfolio to on like to the to strategy. previous address market continue credit in in and rates I'd that them stable investment more are earnings support overall and years. also these topics compared our XXXX several rising quality We increasing how

property uneven segment, and with loans, there of strong strong Since markets. marketing various to by conditions selective pricing property highly dynamics quality First, competition and types. particularly lenders local and a across markets. for top But is it markets vary industry in need be is understanding

the diligence market flexible pick advantages, ACRE, repeat and don't repayment and origination buy relationships direct market structures Estate analysis our attractive where we driving market. size of our our the leverage have we Rather, Ares and the markets. investments. various portfolio, to can in to Group's characteristics are the due insights the we can knowledge in sponsor Real relative and At opportunities segment Given return source adjusted and risk spots value local critical

filling is generate available a flexible expanding to extensive reliable returns. in best order consistent and risk allow into our new market. us Ares products value adjusted products to gaps strategy select from our with have Our midmarket origination lender. that market coverage the This a our is staff, reputation augmenting coverage in relative as range the in and financing to strong sponsor broad across and has focus market of in of the a opportunities great

of that us new All to for investments. compete advantages favorably these are strong allow

months. our floating and the Secondly, We've strategy maintaining increasing by margin over focusing net last benefited rate successful primarily portfolio interest last have and loans, we the rising our yields in been interest rates. on XX from quarter overall

of For provide during the quarter yield quarter example, at from X.X% on of review. increased financial our Tae-Sik the his the unleveraged a end first the end details ago will additional X.X% at effective weighted of topic XXXX. year first average to this

Finally, trends to continue be despite aforementioned the favorable. competition, credit quality

the and XXX% loans of portfolio last selective performing through current approximately reviewed having is we the pleased year we're quality we've over to XXXX. with closed that and months. the transactions date XX, have the underlying that of Our XX closed collateral We highly April remain X% new

an past, sponsor have value track in excellent discussed we've we add backing plans. As the business record,

with we million the For for give we've is the high loans available since XX%, matched with quality first with achievable that sponsors cash by the market context, let have the on million originated our update plans. borrowers flows our by a property of which XXX increased closely With exited during five business capital. partnering our me commitments origination progress billion approximately new XX Year-to-date, highlights $X.X to that which closing inception, you value quarter, activity. loan creation

in turns loans on these gross the estimated double Our are are low range. digit and attractive leverage

year-to-date our addition, historical are April In above our through originations average.

origination deliberately Given matching our new our closely repayment expected activity with velocity. more status, fully invested are we our

property our and an under pipeline a construction, especially is value number types the We're we best seeing adjusted that growing attractive in capitalized across risk finding returns. believe diverse of offers relative opportunities, on Our products. area and reflects focus currently forward

market the As portfolio find of adapt value past, and context in focus composition conditions. to relative the we've our the investment done we'll best in changing

quarter floating rate our approximately has interest floating reflecting the of currently, from evolved portfolio XXXX our the at XX% XX% loans views in on rate example, rising a to senior rate loans relative value For first environment. end

our translate by our rising position first returns efforts an and and attractive to benefit in generate capital shareholders maintain sheet that rates. from quarter Tae-Sik to and asset detail. cost manage for supported our dividends commitment strong results into balance now activities sensitive our utilization officially to financial interest of further adjusted risk discuss is will Our further

Tae-Sik Yoon

$X.XX This $X.XX of core first and reported XXXX. you, million share morning of per quarter everyone. net for GAAP and we Thank Jamie or earnings common the million of X.X or good X.X share income common per morning,

by our three factors. first a As results Jamie quarter of strong primarily mentioned, combination were driven

increase during our share year-over-year, approximately average First, $X.XX of quarter $X.XX last in year. to GAAP million assets per held increase due $XXX earnings share per earning versus the our approximately approximately in was of an

due $X.XX $X.XX lower finally, from was per earnings And factors. another to points share one stability. loan. which another among including expected drivers increases Second, greater to XXXX basis month costs, earnings contribute the funding are throughout year-over-year benefit recent was term XX same LIBOR, increased These about million in of modification $XXX to other and our approximately us

the to during time to balance XXXX, secured term at pricing quarter reminder, million our to the and that of the XXX reduce a loan elected million. outstanding we $XXX reduced XX As fourth repay on million

by going per $X.XX year approximately or $X.XX be result, our share we annual approximately a per As interest expect forward, per quarter. expense reduced will

earnings XXXX, an level year first activities during quarter. higher our Given for first XXXX the billion, million XXXX. was outstanding this principal increase investment for increased our in this average the at net contributed of approximately of of end Again, quarter quarter the XXX balance first of our X.X increase held investment loans from to

Turning consistent given a now XX% asset to portfolio with floating last our rate times. target, sheet, remained our senior our mix level equity quarter's was is leverage debt of our loans. to ratio consistent This X.X balance of our loan with in with

and liabilities. focus to continue our on funding match We assets

weighted term on of remaining XX, extensions, approximate exceeds held of XXXX, average years a As we year of facilities, for two or X.X which life aggregate average including our the remaining loans had funding investment. matches our March

rates, our both positioned rising assets We level offer continue liabilities protection benefit term and shareholders. floating from our and are interest a of inflation as to be to rate to short well

balance, measured month principal LIBOR. floating March indexed one US portfolio, of all of of to As rate unpaid XX% loans, as XX, our XXXX, comprised was by

As an our strategy, match US of one to indexed debt also part again rate, funding XXX% of month important floating liabilities our are LIBOR. also

earnings I comparable per earnings period $X.XX of XXXX. XX, LIBOR our share of XXXX over share discussed ended in in the LIBOR $X.XX approximately per approximately in in hypothetical a share we versus Using resulted one quarter. or first in $X.XX additional one approximately in As increase earlier, about XX liabilities, quarter portfolio points quarter month that per months this basis basis and a for XXX an the increase increase XXXX an on resulted XX in points basis March US corresponding estimate have would month first annualized per common past

Turning capital ability year quickly invest on our Based that We XXXX capital. pipeline business of for earnings to to believe repayments our activity, to is as for analysis are as XXX current we Jamie be recognize our million discussed, repaid. it us million through Therefore, is will levels refining April. first line million. and we XXX borrowers' to XXX we prior in our important available at it repayment for quarter more in with XXXX during our the continue to million that year redeploy saw total date and of XXX plans, repayments further to

level with more costs XXXX We to of past of interest years. for expect held in loans benefits combined and higher our and reduced will investment that earnings borrowing throughout rising contribute LIBOR than stable higher earning

quarter Jamie of board of on some I July with as our payable turn XXXX. want XXXX declared per that to for XX, closing And to remarks. XX, to that, mention of I dividend now will stockholders share the back second over $X.XX call June a record Finally,

Jamie Henderson

provide to the benefit could our efficiently quarter and company. like I earnings increases your to for line as Thanks, to year. with excited have initiatives, that questions pleased to the our capital always, versus for to we answers. of LIBOR and our our continue more to from come We're greater ACRE appreciate us now growth use balance stability. expect we sheet and operator earnings the in help the to we in would potential and enhance for are further Tae-Sik. steps In origination our the please implemented years strong open believe for efforts to first positioning last results We the our that, With ask support future potential we the closing,

Operator

from Your today with Delaney Instructions] Securities. question comes JMP Steve first [Operator

Steve Delaney

I the That found I - I first release the the repayments. the match Thank mean, is wording there you have and if to and could of for strong the certainly the congratulations year. The interesting. phrase question was the caught created inconsistency my start eye wording Jamie, in you. periods to past in been press on progress, address earnings. that that rollercoaster because maybe, to position have this

starting a take. fact as comment the in that for if point, appreciate but on near portfolio love the I'm whether much could and would appear it in growth So being there's goal if that term and is I too you cautious to doesn't my net room that that suggest in

Jamie Henderson

great question, a That's Sure. Steve.

job, we've think repayments. great to a getting of matching quarter also both in of I and invested the new nearly fourth originations year-to-date fully done the

impacts on it's invested time and positive as be starting we're growth, any I is think fully we to given terms see approach prudently - at of to of earnings. be our the our In can that objective as

Steve Delaney

peak you've Tae-Sik, you to current you March current your see idea sheet could balance some XX, on some a larger slightly the do capacity balance view sheet. previously, - to the us as X based or liquidity, calls Is debt your portfolio. equity of as of X in support do that earnings given

Tae-Sik Yoon

we but Sure. deployed in We our than the invest we future remaining do thanks to that fact doing we that Steve will some capital other much have on repayments Good sheet, less and the I think course capacity available for expect. obviously better have means being of do been job morning, the have question. the balance fully a that

we see benefits also it's to through. our all in think also that and efforts a rising to that very come benefit I more to lowering we're those also fully continue funding you'll to be to focused all our be sure well on at important cost. times, will again making mention think rates on from focused portfolio the I have of addition that deployed positioned We're

lower fact again So remarks, from from from that of from we $X.XX quarter another as quarter to that but first costs. came the my to came the $X.XX from higher another portfolio $X.XX LIBOR first positioned I mentioned 'XX that I 'XX, in investments, benefit mentioned increase and are funding as came $X.XX rising level overall well

investments I to asset think a ways interest again other there is earning So having are maximize continue us base larger earnings. while to for important,

Steve Delaney

question, final two us understand my Texas And your a you good given you've disclosure I have loans. there. reworked

at your lumpy the about highlight table hit and to XXX early in looking quarter. combined, XX the Q that's trying Just in would fourth maturities, on million that page in those

give you that us you this loans relationship end and a fact update books comment your off to as those if the could curious on Just think will of general in be at year? whether

Jamie Henderson

Sure. Great question, Steve.

perform. Good no full plan. been already exactly the and/or year our best in expectations to was hard borrowers that these of call. part of we loan. discussed borrower for end, time, being to And is open that one very XXXX, all work loans terms as news with the final carefully with understand selling mentioned. now, assets exception, last reflected status. very very in And our on back it repaying or These So are We and of two was date is, working with our they that working the made very are large. between due noted where loan. our two continues mentioned October. business you in is now repayment obviously, as the performing at refinancing obviously on Right on they earnings It much October have we is loan line and loans that January since put loan that payment in we as

So together, XXX million. just under they're

balance. I precise think more is XXX the

when are we of loan earnings that happen, on being that repayment this sure very, and the to again so of very make So cautious drag know will top capital. having minimize we on that stay careful of invested we we so the

Operator

Harter Doug from Credit comes question next Suisse. The with

Doug Harter

did compared to how or were of this you when curious quarter. about last stood that differences, anything repayment and through just walking mention Thanks. Tae-Sik, you of the earning acceleration repayment this quarter income kind

Tae-Sik Yoon

Sure. Great this have some as specifically, we but quarter. question, anything did Doug. I mention didn't noted, you repayments

They we because As built did and some some less million related this to those it's our paid off they some, want receive say, regular, fees if three plus it, fees, we type of they those did we're into always a I penny some connection of those accelerated Again, are or fees XXX cases, are occur. nonrecurring, periodic loans call receive but mentioned, minus we repayments. those but purposeful with a we would quarter about to and do in repayments, but we or reluctant of to these repayments called and loan you that had documents, call repayments. incremental did get some of in for in fees, terms so

Doug Harter

improvement that are you there? funds, just talking here then of your obviously, further kind cost for And other improvement a drive of you lines quarter, Great. this but about nice think are can where any there renewal up

Tae-Sik Yoon

the that largest event, drive probably with did with with capital. loan year reduction lenders, while at was restructuring to constantly to of lenders, the And Sure. lenders try existing single our that we down working of end XXXX we're our term cost new the

that necessarily to sure that that what you them. I is, call come in work a with we on it bit when for we for dialog find again, before change, of lag our modify that asset up if rates forms very ongoing do those don't looking our change our change, lag spreads want a one a addition see changes make of of will think liabilities of couple change wait asset of that a liability It's but our the to in are benefit have to to lenders lines for we have quarters, effect, a permanent there's And are renewal. other and to yield with spreads can we but all effect, of we basis a we do we regular more terms again that, from. financing

of constantly we make business to our So sheet know from a on private bigger continue is right really us past Management lowest a Ares and of Ares we side I of the the that interest balance Management funding going power past, both markets we sure benefited much in gives margin we'll hand I as standalone again, cost to of in our very forward. much that being the evaluating have than so benefit think as them part and benefited from possible. net part in in the buying and based being company, get the well have the securitization markets, we're

Operator

Jade Rahmani comes KBW. with from next question The

Jade Rahmani

book the of what's that value the plan gap? is that price, XX% the Just value, thinking to and book close about stock about

Jamie Henderson

a investment demonstrating be in I senior. community. help it XX% the We've need help of from get we floating what a a think rate into time So great built, great little And message We the floating job that from that portfolio. It's earnings broadly we're little company. benefiting LIBOR. doing the a attractive audience it's the to we real of power distributed rate, in increases It's to undervalued. predominately consider an more consider

consider is - we stock Our undervalued.

a to trying we're quarter it like traction. year and at feel time one one we're So, time at great getting and a prove

get word help need out. and So the some

Jade Rahmani

whether XX% I it potential for potentially discount strategic that there be part asset is would attractive? privatizing transaction of the you net value to portfolio that to assume I some the Is of bulk kind unlock mean company? value, or the selling think

Jamie Henderson

think sustainable. We're really this. of our think is find core our a business. of I and core investors viable do best the We always the see we it model discount lot course action that and and think would we business lookout opportunities, our that and core on see would but answer the say great - one pursuing business. in of is excellence I We demonstrating hopeful we're of like question inside strategic benefits will we're like the is We this the Ares being attractive.

Jade Rahmani

Is of your and there's allow question based on the X% help why significant gap the further and potential which for book growth take dividend that would do current existing perhaps base? that leverage or think not in the be, narrow targets, to the up level stabilized about And ROE earnings for you upside to more with portfolio would a related XX% capital multifamily, value. of a would

Tae-Sik Yoon

Sure. Jade, Tae-Sik. is this

of the it's ask this you X%. you quarter's first around think Again, terms annualize quarter's think results, mentioned our do when sustainable In is we've I We about is results, past, to an level. as net really $XXX,XXX share. ROE, I the in the per see is company, our right size a of penny income that in X a just annual earnings more of be quarter-to-quarter evaluated about than our because basis given on think smaller in

quarter-to-quarter but that feel some something forward. So, do we can the fluctuation, we have there X% be can ROE is achieved, target going that achieve

goal invested over and to funding and four rates, growing all lowering to be a we is, think with our consistent those I the share do at higher hope market on fully Our demonstrate that from steps course can of we earnings if time generate keep we to we that price. And rewarded more dividends, we rising to times, and of and mentioned, cost keep focusing portfolio. to high maintain a remain benefiting as credit to it's

overall question it's leverage, your the debt about of you'll point. to When look you at X.X see I terms to differences your think look you leverage, at equity. our competition, In some when

and year leverage X, a of we lot receive we you if of those our assets that so. multifamily more done of I itself, are X of portfolio be periods We that our at we'll again versus did did profile to feel that overall. overall look now, that of or was basket little the continue we've monitor which So the where where X.X. itself comprised portfolio, the X on it's and about more securitization where it's level. comfortable debt to feel continue for Again, X, point appropriate in for But primarily over have periods FLX a to cost that. There multifamily, type there look we think to your that. will than will portfolio, will advanced to the that but to X ago under have of comfortable, it right rate putting and risk to be X mentioned for a profile securitization be of minus an We'll level credit we plus our given market, available to reduce to the equity continue capital, of think we'll that's capital, portfolio that's a

Jade Rahmani

like about lastly, products And structured do between senior produce levered return that preferreds. source products, potentially tradeoff the versus how higher a you mortgages think floater could and other mezzanine

Jamie Henderson

core value, We do every attractive in which line we're a So really deal in value internally a of relative single those We time. compare business, of pursue loans. rate relative still we a evaluate seeing lot other value relative on are see when senior our and see it. sectors. flow at we We a floating daily basis one deal

Operator

of question Shane Morgan. next comes from Rick The JP

Rick Shane

looking Look, peers that be the effectively side, to new there of and spreads going of exacerbating the very is, a the this appear historically of at CLOs your going a we've an flipside been in right seen the of with the be the to in on supply approach side Are these market the financing that of at and just forward point of structures sheet. couple that Ares the has industry are efficient We've seen? hallmarks capital balance of one markets you're being manager spiral forms financing structures the that on leader as increasing

Tae-Sik Yoon

for Sure. morning, Good is Thanks This question. Tae-Sik. Rick. your

leader an been of for the the thanks on on about right industry your side having sheet. comment balance hand financing So Ares

That of is branding And left Ares the management experience just we as part balance think experience from of as we that asset's to lot and of the that as that an is area an we sheet. pride and all is benefit think that actively great and again that we area and I the value think of I of side get I importantly advantages base. take of hand manage a of knowledge relationship being franchise one mentioned, in.

third you of know, have one to were have utilizing structure CLOs and remix or ago fully three, structures actually think that We a I senior four done place, of the years fully think fully obviously terms back structures into as get early have so-called which roundtrip, of doing period, one loans. ACRE the two having new we we was So, in I leader again one a year proceeds or repaid, we rather where three within than done. leaders first even for of in this manage those to redeploy bonds, loans to replacement repaid

that have we in been with as think That that no advantage a forward. with to securitization cost taking leader much and of at financing it is a explore and lower continue I financing, very recourse of great space, as match going means funding. So a strategy a we'll

Capital who continuing to in we add recently our In we team build experience a out that to make a fact, new Markets and side, of internally. We are and the our side, added continued that full built securitization in team as of have has to of part to Head that asset side. on investments amount tremendous

our to So capabilities the of grow. sheet on balance side our liability continues

the that cost of our to you continue structures, to space role I think see in expand and CLO look push see financing. us at continue to down will us we'll leadership you'll continue

And warehouse effectively in address side. mix. part of day continue capital it's does flows asset to our your see to on higher all capital quantities of day expand You'll continuous is effort a banking therefore yields. securitization This Sure, to question in relationships. think lower I and result result and us about,

of you price capital. cost you'll find cost your capital, lower if with likely So assets yourself commensurate a it's of that with then lower

correlation So, but I some and to think correlation the there and that there, some effect would to I impact, there. measure guess exact is there venture hard some cause is

Operator

comes The Ken with of Lynch. next Bank Merrill question America from Bruce

Ken Bruce

I going has that on thought I questioning Jade over able as it really to of really better a to it's built level down. up would - it's of like flow a pick was allow The proprietary capital. by to a on been ACRE guess, viability kind of add line time Ares, kind basically doesn't to been to deal been of drive portfolio returning set this stock standpoint, think you and value it's shareholders that been I grow. has constrained being

of in reinvest do could terms kind valuation kind up runoff stuck getting solve I getting of of out, ability help you of that just your of the the sufficiently if kind to of enough do much that and it So kind would story that and understand would, you're the, puzzle.

job doing improving of are in You financial guys a of great engineering, terms the cost earnings. better and funding

that unlikely be feels to set to that's a from away want need have a that, of nothing to to there put market going on you're capital. So frankly a issue taken to premium kind is it just does equity. up knows tension get going that They're going but like not really business to broken because the

going not terms or sufficient strategic is able kind unfortunately really this of am to I market business subscale of able not the terms is get in of in the that to much just be do realize you're a So alternative really you're getting just what value struck out if of to particular to paradigm.

Jamie Henderson

Ken, question. that couple thank take of in That's guess we So can I parts. you. a a great

biggest impacted inconsistent that little than been observation, peer set. against the thing are that the lower have ROEs and our have a variables the I my earnings think from book valuation biggest

control. within are those think I our

conduct operationally. confident exercise platform remedying going is would I think to a excellent those that the progress to this there. can in I ability pretty we any its we're market I put at And competitor and demonstrating we're some and squarely in get marketplace point, against think in perform of relative the value terms

advantage be is No. a to it So, small? structural

also think that. structural sit the acutely aware kind there's is and direction. we to in out. of us it's nimble a And company we're points that market going in be in a to the counterpoint allows positive the be where are us market where deals very the So, We pick figure we of It market's working and now. very think the and allows on like we to deliberately that to disadvantage We it huge. to moving right is very

Ken Bruce

guess maybe I'll what's just the direct Jamie. And I Okay. - this have to towards

situation, many I for it the you degrees, roll on at up, thing think mean, what's board's I this tolerance just board. in look Ares should you're privatize frankly if this the of existing kind to kind of and up the the board been basically it of situation? it scale up? back What's after market the entertain willingness to it, it's scaled bring the

Jamie Henderson

we've of is that I the supportive think the board undertaken. activities tremendously

they see see peer team's I strong QX they in that think, generated there see strong results. difference We strong fully get - a capability right really think I think it's had set. company invested terms tremendous I are and in and to of results but generate the fourth quarter. ROEs the with the just they We early,

As you to know, estate. real we He's regard Bill the all of who's of real seat catbird chairman the head Benjamin, global board. in just with new the brought on as Ares the estate

great sign. step. that's So a a great That's

and believe the supportive, is board patient I in the think they think model. I business

Tae-Sik Yoon

us not portfolio rate of mentioned, at we the are We're every when as well something admittedly available maybe our share think us as performing. to XX% much up invested, the we LIBOR, sorry, the in we earnings liabilities time, Jamie's you as we're the behind add very look the advantage and business a to that have addition those in tools growing response, are hopefully on XX% the the is again, strongly our investment mentioned, on can think higher to trading obviously plan dividend at us senior. we I all one goal to just lower I and done that the costs recognize board market of that, past, to in those over do Actually floating rising that take and is above that focused purpose tools X% we We're to efforts. fully price. And will increase we're have and but on our Jamie to Jamie am best yield, funding when keep focus with XXX% an I reward rates. company, to on and mean, morning, more of job further wake is I that I rises and are on I driving our think believe as loans consistent dividend further earnings

Ken Bruce

is just the strategy willing work plan you've good how I'm a if to the market That's with bit all. be doesn't one wondering the look, and set up. And everyone's I then Yes. patient think can a kind of grow got more, little

Operator

question next The Zucker comes Instructions] BTIG. with Ben [Operator from

Ben Zucker

if I loan you about but touched guys guys right, still I any transitional I going space the that opportunities. looking at, ask best was is products new that think heard and were to bridge relative thinking you're Jade on you the value

borrower event of in rate that plans, come. business just is your is taking I'm forward to maybe the on definite any type to date, or move this is demand of medium market for a firm acceleration time, the wondering place. right just seen right there Fed but what might at I'll year higher telegraphing slowdown meaningfully near impressions rates a the or keep additional are the to And So causing turn, pull sentiment We've hikes jump very of into now. obviously sort clearly same

Jamie Henderson

great a a choppy. Look, is little question, the That's market Ben.

financing. commercial real ten-year that the That's They're people to to are and come open looking own think, they're quite rates lot treasuries at a rise the eyes of potential certainly wide of to estate the cap significantly. the And sensitive their more, has Fed. spreads, in treasury. activities a I cost risen

a things think I have happened. of So couple

seen any real of in terms off. forward haven't paying We people aggressive pull us

our lot. portfolio the a un-levered gone of fact, quite up have returns In

relief aren't the meaningful bars the in on getting So, - of coupon kind side. any

bid over year. the down fairly of in a is we've course of There that marketplace. sales velocity I transactions formed is the slowed last think material really observed spread the what has

transaction, years. but recently for So good that, that next have news the still bit, over there's saw significant trades of several is little uptick our a a the very a slowed amount course little in maturing are of loans business

excess $X trillion. it's think in of I

money If relative to the add lot deals paid basis all off. mortgage to up all get a amount REITs, of the that you of of on the it's of capacity not need of a

equity the record in dry to terms add addition side of equity opportunistic is powder the funds. there In value and house that, on of

it's So the still I a, prospects good. think, are

Ben Zucker

spread of you work time of be be to originations they understand right put on capital the theme being at that And tightening these subsequent bridge a I there's constraint as last of the does But mentioned, of a competition. kind into benefits action. you loans try your look might this at to might maybe couple said, or lot that's have I I Obviously, guess so now right loan abundance that capital chasing been That very you if to don't look and of year. trend. in one has consistent nearing a extrapolate of need money want a to just slightly move spreads and it is rate any don't like bottom. for now is with nice unique, way a question a each a to floating on

you So is and trough of we nearing the but to still points I focus compression up or all returns now, LIBOR the wanted basis right I wanted up just year-to-date, in XX of month on a spread do course there are additional think side to things. that ask, room about spread nicely some with for holding are one

Jamie Henderson

say happen points. the say XX basis let's So, it's we what's XX between mean, where and hard sit, to we compression spreads. course to months, notable spread the with saw XX going over from of I last

still done we've are investments a think yields. generating of originating of a I mix job attractive great that

nicely held I It's last XX over essentially think our up the NIM flat. has months.

been forever? spreads fairly if many, Will have you all at I where credit credit looked with what's that think spreads, global across to years. graph a credit I last asset spreads happen many, suggest of a So for decline on sustained many regard classes, are, with not. going to would

I of advantage well it, will it very widens. think if to be we positioned take

Ben Zucker

largest your already portfolio. secured I like referenced, Steve million mortgage the that like That's is maybe helpful. million and cleanup repaid. this also that Delaney repayment the was XX.X open a by Tae-Sik, little diversified that's then in the loan that portfolio that XXX.X for for now a portion, had lastly, And doing know said you

there are now. contractually due now wondering remaining to entire just any October, loan or staggered within in that maturities balance prepayment more that those I'm is So subject

Tae-Sik Yoon

Ben. Thanks, Sure.

final So portfolio. for maturity there are remainder of no the more It's the staggered one maturities.

of a all January, So assets so-called million have portfolio, the $XXX.X again, loan that so one that months being few in commercial been in repaid, last ago.

remaining there the of is again, no $XX.X $XXX.X no are maturity, million we of staggered is all there the self-storage assets in state as is there That and similarly, one maturity. the million So portfolio. staggered one we but instead still is just In remaining self-storage. portfolio, assets portfolio XX unpaid commercial that in asset a over one million. asset refer that commercial that various at balance - of That's to has one why asset, principal as mentioned,

So is commercial to entirety is asset. of the maturity for October loan of The related XXXX. XX.X, just that over that million XX the

Operator

like Henderson This our question-and-answer over turn back concludes I remarks. to closing for session. the conference would to Jamie any

Jamie Henderson

earnings in on next I call. thank forward look their again for you Thank to our few time everyone want months We with you. a today. to speaking

Operator

our conference call Ladies for and gentlemen, concludes today. this

approximately XXth call, X-XXX-XXX-XXXX dialing If by X-XXX-XXX-XXXX. domestic of available to conference this the this replay after one XXXX call any May call through of of be dialing by to and callers will hour you today's an callers end international missed archived part

An webcast Relations the on of website. please home Investor page located replays, available also will conference all number section For archived replay reference link our XXXXXXXX. be of a on the

now You may disconnect.

Ares Commercial Real Estate (ACRE) 1 May 182018 Q1 Earnings call transcript