Ares Commercial Real Estate Corporation

Good afternoon, and welcome to ARIES Commercial Real Estate Corporation's conference call to discuss the company's first quarter 2022 financial results. As a reminder, this conference call is being recorded on May 3rd, 2022. I will now turn the call over to Veronica Mayer from Investor Relations.

Thank you, Matt. Good afternoon, and thank you for joining us on today's conference call. I am joined today by our CEO, Brian Donahoe, Tasek Yu, our CFO, and Carl Drake, Head of Public Markets Investor Relations. In addition to our press release and the 10Q that we filed with the SEC, we have posted an earnings presentation under the Investor Resources section of our website at www.arescre.com. Before we begin, I want to remind everyone that comments made during the course of this conference call on webcast and the accompanying documents contain forward-looking statements and are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may, and similar expressions. These forward-looking statements are based on management's current expectations of market conditions and management's judgment. These statements are not guarantees of future performance, condition, or results and involve a number of risks and uncertainties. The company's actual results could differ materially from those expressed in the forward-looking statements as a result of a number of factors, including those listed as SEC filings. ARIES Commercial Real Estate Corporation assumes no obligation to update any such forward-looking statements. During this conference call, we will refer to certain non-GAAP financial measures. We use these measures of operating performance, and these measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. These measures may not be comparable to like-titled measures used by other companies. Now, I would like to turn the call over to our CEO, Brian Donahoe.

Thanks, Veronica, and good afternoon, everybody. Following a very strong end to last year, we believe we are well positioned to continue to deliver attractive returns for our shareholders in 2022. During the first quarter, we leveraged the breadth of the ARIES origination platform to navigate volatile and uncertain markets to originate 263 million of new loans. We continued this momentum with $123 million in loans closed to date in the second quarter, and we have more than $200 million in the closing process. The overall credit quality of the portfolio remains stable, and we finalized the sale of our only REO property, the Westchester Marriott Hotel. And as Teysik will discuss in detail, our earnings are positioned to continue to benefit from increases in interest rates due to our floating rate portfolio and the hedges we have on our liabilities. We began the year navigating significant market volatility caused by rising inflation, more aggressive Fed tightening, and global conflicts, all of which served to further slow what is already a seasonally light quarter for activity. In the first two months of the quarter, we continued to be highly selective, and we believed that our patience was rewarded. Toward the end of the first quarter, when our transaction flow and originations increased, we began to see more attractive credit spreads on new investments. Our first quarter distributable earnings of 34 cents per share were influenced by our more measured approach on new originations early in the quarter. And as we discussed on our last quarter's earnings call, the pull forward impact of early prepayment related fees that we recognized in the fourth quarter of last year. While we are pleased with our execution of the sale of this REO property, holding the asset through what is a seasonally weak quarter for this hotel, we incurred a loss of 3 cents per share in the quarter. We expect the accelerated pace of our originations at wider spreads, coupled with increases in base interest rates, should result in a pickup in distributable earnings for the second quarter, and our asset-sensitive balance sheet puts us in a great position to generate additional earnings, assuming interest rate increases throughout the year. As a result of these factors, we believe we are on track toward our goal of having distributable earnings cover our dividends for the full year, as we have done for the past five years. During the second quarter, we've seen investment opportunities with more conservative structures at wider spreads amidst the volatility. Our market visibility continues to increase from being a part of the broader ARIES management global real estate strategy, which now has $46 billion of assets under management, including over $10 billion of real estate debt assets. Our presence in liquid and illiquid markets across the U.S. and Europe provides valuable insight into how we invest in dynamic markets. We also benefit from in-house specialized capabilities, like in the industrial sector, where we've been a top three buyer of U.S. industrial real estate over the past decade. This type of in-house expertise and the information that comes with it allows us to see trends in real time. As we have grown the real estate debt platform, we have also expanded our suite of products which has allowed us to be even better partners to our sponsors and borrowers and to increase share. We continue to find attractive opportunities in our target sectors like industrial and self-storage, which can complement investments in other sectors where we see attractive relative value. For example, in the first quarter, we found an opportunity on a unique destination hospitality property backed by a highly regarded sponsor at an attractive spread. In terms of geographic dispersion, we continue to see robust activity in the south and mid-Atlantic regions where we see strong demographic growth drivers. Our originations this quarter were consistent with our existing portfolio, which is comprised of 99 percent senior loans and 98 percent in floating rate instruments and continues to perform well. Let me now turn the call over to Tasek to walk through our quarterly financial highlights.