Ares Commercial Real Estate Corporation (NYSE:ACRE) Q1 2023 Earnings Call Transcript

Bryan Donohoe: No problem. Thanks, Jade.

Operator: Our next question comes from Derek Hewett with Bank of America. Please proceed.

Derek Hewett: Good morning, everyone. Could you talk about the funding strategy for the potential $83 million mixed use property in Florida? And then my second question is just what percentage of the overall portfolio has interest recaps?

Bryan Donohoe: Absolutely, let me I’ll get started just on the interest rate cap side, a little over 80% of the portfolio has interest rate cap coverage. And as I mentioned a bit earlier, to the extent it doesn’t it’s for specific situations, either where the capital that would have gotten there is better used elsewhere, or it’s a short duration hold, like the situation with the – short interest payment on the asset that that Sarah brought up so less than 20% does not have it. And there’s usually some specific reason around what we’re working through on that. In terms of funding strategy for that asset, there is liquidity in the space for situations like this. We have – fairly advantageous position that the yield to us as lender on that asset, given the cash flow profile, is accretive to us, and would allow for various financing structures.

And we mentioned the credit tenancy of the asset as well as long duration of that lease. So the type of cash flow profile that we’re talking about there would allow for a good bit of flexibility as we go out to re-lever that asset should we decide that’s the best path. But we’ve got a few different financing sources that could provide liquidity directly or indirectly to assets situations like that.

Derek Hewett: Great, thank you.

Operator: Thank you. There are no further questions in queue at this time. I would like to turn the call back over to Bryan Donohoe for closing comments.

Bryan Donohoe: Thank you. And I’d like to just thank everybody for their time today. Appreciate your continued support of Ares Commercial Real Estate, and we look forward to speaking with you again in a few months on our next earnings call. Thank you.

Operator: Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today’s call, an archived replay of this conference call will be available approximately one hour at the at the end of this call through May 30, 2023 to domestic callers by dialing 877-660-6853, and to international callers by dialing 201-612-7415. For all replays please reference conference number 13736870. An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section on our website. Thank you. You may now disconnect.