2024-04-08 23:35:41 ET
Summary
- Credit quality in the commercial real estate market is dropping, with offices and multifamily apartments being the worst affected areas.
- Ares Commercial Real Estate Corporation has significant exposure to these struggling sectors, leading to a net loss in Q4 2023 and an increase in loan loss reserves.
- ACRE has cut its dividend by 24% and may face further challenges in maintaining profitability and protecting its dividend in the future.
Introduction
As most of my regular readers will know, I always try to incorporate the "bigger picture" into my research, as this allows me to get a good understanding of factors that may impact the stocks in our portfolios and on our watchlist.
One of the most important things to keep in mind is the macro situation, including economic growth, interest rates, inflation, and factors like credit quality.
In this environment, one of the cornerstones of my research is credit quality, as I am in the camp of investors who expect both interest rates and inflation to be "higher for longer."...
Read the full article on Seeking Alpha
For further details see:
I'm Deeply Worried About Ares Commercial Real Estate's 14% Yield (Rating Downgrade)