Ares Commercial Real Estate Corporation (NYSE:ACRE) Announces $0.15 Quarterly Dividend

Key Points

• Quarterly dividend of $0.15 declared (annualized $0.60) for Ares Commercial Real Estate, with an 11.8% yield; ex-dividend date is June 30 and payable July 15.
• The dividend appears unsustainable — ACRE has a payout ratio of 260.9% and analysts forecast $0.56 EPS next year, implying the $0.60 annual dividend would exceed expected earnings (~107% payout).
• Shares traded down about 3% to $5.07 (market cap ~$280M) and Wall Street consensus is a "Reduce" rating with a $5.38 price target.

Ares Commercial Real Estate Corporation (NYSE:ACRE - Get Free Report) declared a quarterly dividend on Thursday, May 7th. Investors of record on Tuesday, June 30th will be paid a dividend of 0.15 per share by the real estate investment trust on Wednesday, July 15th. This represents a c) dividend on an annualized basis and a yield of 11.8%. The ex-dividend date is Tuesday, June 30th.

Ares Commercial Real Estate has decreased its dividend by an average of 0.1%annually over the last three years. Ares Commercial Real Estate has a dividend payout ratio of 260.9% indicating that the company cannot currently cover its dividend with earnings alone and is relying on its balance sheet to cover its dividend payments. Analysts expect Ares Commercial Real Estate to earn $0.56 per share next year, which means the company may not be able to cover its $0.60 annual dividend with an expected future payout ratio of 107.1%.

Ares Commercial Real Estate Trading Down 3.0%

NYSE:ACRE traded down $0.16 during trading hours on Thursday, reaching $5.07. The company had a trading volume of 516,961 shares, compared to its average volume of 485,133. The firm has a market cap of $280.44 million, a price-to-earnings ratio of -253.25 and a beta of 1.18. The firm's 50 day moving average price is $5.03 and its 200-day moving average price is $5.00. Ares Commercial Real Estate has a 52 week low of $4.05 and a 52 week high of $5.89.

Wall Street Analyst Weigh In

A number of research firms have recently issued reports on ACRE. Wells Fargo & Company raised their price target on Ares Commercial Real Estate from $4.00 to $5.00 and gave the stock an "underweight" rating in a research note on Thursday, February 12th. Keefe, Bruyette & Woods increased their target price on Ares Commercial Real Estate from $5.50 to $6.00 and gave the company an "outperform" rating in a report on Wednesday, February 11th. Zacks Research cut Ares Commercial Real Estate from a "strong-buy" rating to a "hold" rating in a research report on Wednesday, February 4th. Finally, JPMorgan Chase & Co. cut their price target on Ares Commercial Real Estate from $6.00 to $5.50 and set a "neutral" rating for the company in a research note on Thursday, April 16th. One equities research analyst has rated the stock with a Buy rating, three have given a Hold rating and two have given a Sell rating to the stock. According to MarketBeat.com, the company has a consensus rating of "Reduce" and a consensus price target of $5.38.

Ares Commercial Real Estate Company Profile

Ares Commercial Real Estate Corporation NYSE: ACRE is a publicly traded real estate investment trust (REIT) primarily focused on commercial real estate debt investments. Externally managed by an affiliate of Ares Management Corporation, ACRE seeks to generate attractive risk-adjusted returns through its diversified portfolio of CRE financing strategies. The company specializes in originating, acquiring, financing and managing first mortgages, mezzanine loans, preferred equity and other structured finance products.

Since its inception, Ares Commercial Real Estate has targeted a broad range of property types, including multifamily, office, industrial, retail and hospitality assets.

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