Weekly Real Estate News
Ares Commercial Real Estate Corporation reported a $10 million third-quarter profit, but the result was boosted by a $7.1 million gain on the sale of an office property as the commercial mortgage lender continued to reduce troubled real estate exposure.
In its November 6 earnings release filed with the Securities and Exchange Commission, the New York-based real estate investment trust reported net income attributable to common shareholders of $10.05 million, or 18 cents per diluted share, for the quarter ended September 30. That compares with $4.65 million, or 8 cents per diluted share, a year earlier.
An office-property sale helped drive the profit
The company recorded a $7.08 million realized gain on the sale of real estate owned. Without that transaction, the quarter’s reported profit would have looked substantially different. The sale was part of a broader effort to reduce office and real estate-owned investments, according to Chief Executive Officer Bryan Donohoe.
Distributable earnings, a non-GAAP measure that Ares uses to assess operating performance and dividend capacity, totaled $6.74 million, or 12 cents per diluted share. It should not be treated as interchangeable with GAAP net income.
Total revenue declined to $13.51 million from $14.11 million a year earlier. Net interest margin was $7.94 million, down from $8.47 million. Those figures suggest the increase in reported net income did not come from broad revenue growth.
Credit risk remains central to the strategy
Ares said it is focused on resolving loans rated 4 and 5 on its internal risk scale. Chief Financial Officer Jeff Gonzales said addressing those investments would help the company reposition its portfolio and improve future earnings. Those statements describe management’s objectives, not completed recoveries.
At September 30, the company’s loans held for investment totaled approximately $1.74 billion before its $139.3 million current expected credit loss reserve. The reserve was up from $125.8 million at December 31, 2025. Its real estate-owned holdings, net, fell to $75.5 million from $130.2 million over the same period.
Following the quarter’s end, Ares fully repaid and terminated a $90 million secured term loan. The company also declared a fourth-quarter dividend of 15 cents per common share, payable January 15, 2027, to shareholders of record on December 31, 2026.
Why the results matter for commercial real estate finance
Ares is one of the public lenders providing financing to commercial property owners. Its results illustrate two competing forces in the sector: lenders can improve reported earnings by disposing of properties and resolving distressed exposures, while underlying loan income and credit-loss reserves continue to determine the durability of that improvement.
Investors and borrowers will be watching whether Ares can work through its higher-risk loans without further significant losses and whether its remaining portfolio generates sufficient recurring income to support distributions. The latest quarterly figures offer evidence of progress in selling an office asset, but do not establish that the company’s credit problems have been resolved.
The underlying quarterly results cover July through September 2026. The Form 8-K was accepted by the SEC at 9:47:22 p.m. Eastern on November 5 and lists November 6 as its filing date. The company’s public earnings release was issued November 6 at 6 a.m. Eastern.
Primary source: Ares Commercial Real Estate Corporation, SEC Form 8-K and Exhibit 99.1, November 6, 2026. Featured image is illustrative and does not depict an Ares property; photo: Dima/Unsplash.
Simple Content Summary
Ares Commercial Real Estate reported $10 million in third-quarter net income, aided by a $7.1 million gain from an office-property sale. Revenue declined year over year, and the lender continues to work through higher-risk commercial mortgages. It also repaid a $90 million term loan after quarter-end and declared a 15-cent quarterly dividend.
