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Investing.com - Citizens JMP analyst Steven DeLaney has reiterated a Market Perform rating on Ares Commercial Real Estate Corporation (NYSE:ACRE), which currently offers a substantial 13.3% dividend yield and has maintained dividend payments for 14 consecutive years, ahead of the company’s second-quarter 2025 results due August 6.
The research firm noted that Ares Commercial is making "solid progress" on its objectives, with credit showing signs of stabilization and leverage well below historical averages, providing flexibility for both offensive and defensive strategies. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 8.36, supporting this operational flexibility.
Citizens JMP pointed out that ACRE shares are currently trading at 0.46 times book value compared to the commercial mortgage REIT median of 0.72 times, which the firm considers "reasonably fairly valued" given expectations for realized loan losses over the next one to two years. InvestingPro’s Fair Value analysis suggests the stock may be undervalued, with additional insights available in the comprehensive Pro Research Report covering this and 1,400+ other US equities.
The firm maintains a cautious view on ACRE shares while the company works through its disclosed problem loan challenges, according to the research note.
Citizens JMP indicated it will continue monitoring credit resolutions and any additional problem credits to gain more insight into how book value per share and dividends might perform over the next 12-15 months.
In other recent news, Ares Commercial Real Estate Corporation reported a strong performance in the first quarter of 2025, significantly exceeding earnings per share (EPS) expectations. The company posted an EPS of $0.17, well above the projected $0.04, demonstrating effective cost management and operational efficiency. However, revenue slightly missed forecasts, coming in at $14.95 million compared to the anticipated $15.22 million. Additionally, Ares reduced its office loan portfolio by 25% and lowered its net debt-to-equity ratio to 1.2x, reflecting improved financial stability.
The company also held its 2025 Annual Meeting of Stockholders, where three Class I directors were elected, and Ernst & Young LLP was ratified as the independent auditor for the year ending December 31, 2025. Stockholders approved executive compensation on a non-binding advisory basis and favored an annual advisory vote on this matter in future proxy materials. These developments highlight Ares’ strategic focus on maintaining strong governance and financial management.
Analysts from firms like JPMorgan and Citizens JMP expressed interest in Ares’ cautious investment approach and strategic initiatives, including potential share buybacks. The company’s liquidity position remains robust, with $147 million available as of early May 2025. These recent developments underscore Ares Commercial Real Estate Corporation’s commitment to enhancing shareholder value and navigating market challenges effectively.
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