Ares Commercial Real Estate Corporation

Good afternoon and welcome to Ares Commercial Real Estate Corporation's conference call to discuss the company's second quarter 2022 financial results. As a reminder, this conference call is being recorded on July 29th, 2022. I'll now hand the call over to John Stillmar from Investor Relations.

Good afternoon and thank you for joining us on today's conference call. I'm joined today by our CEO, Brian Donahoe, Jacek Yoon, our CFO, Carl Drake, head of public markets investor relations, and other members of our team. 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 and webcast, as well as 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 words such as anticipates, believes, expects, intends, will, should, may, and similar such 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, conditions, 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 statement as a result of the number of facts including those listed in its SEC filings. AirAge Commercial Real Estate Corporation assumes no obligation to update any such forward-looking statements. During this call, we'll refer to certain non-GAAP financial measures. We use these measures of operating performance and 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'd like to turn the call over to our CEO, Brian Delahoe.

Thanks, John, and good afternoon, everyone. This morning we announced second quarter distributable earnings of 38 cents per share, an increase of 12% from the first quarter, exceeding our combined regular and supplemental dividends paid of 35 cents per share. The growth in our distributable earnings was driven by new investment activity, prepayment fees, and the benefits of rising interest rates. Looking forward, we expect that our earnings potential will continue to benefit from further increases in interest rates due to our floating rate loan portfolio and the hedges we put in place early last year on our liabilities. Let me touch on the changing market conditions and how it influences our investment activity. Overall property level fundamentals continue to be stable, although rising interest rates, heightened inflation, and an uncertain economic backdrop have led to diverging views of property values. This has resulted in a cooling off of commercial real estate transaction activity and has pressured properties that lack an ability to increase cash flows. As market volatility increases and a greater dispersion of expectations for property performance unfolds, we believe we are well positioned to benefit with respect to new investments. We believe the sourcing and informational benefits we derive from being a part of the ARIES global platform provides even more significant advantages for us in today's dynamic environment. During the second quarter, we found investment opportunities with generally more conservative structures and at wider spreads in our target sectors. For the second quarter, we closed $356 million of senior floating rate loan commitments across eight transactions, with approximately 80% of the commitments collateralized by multifamily and self-storage properties. Reflecting the widening spread opportunities we see in the market, spreads on the multifamily loans originated this quarter, for example, were approximately 90 basis points higher than our post-pandemic average spreads for multifamily transactions. Before turning the call over to Taysop, I want to highlight that our board recently authorized a new $50 million share buyback plan, providing us the opportunity to repurchase our stock where it is accretive to our earnings and our book value. Given our strong capital position, having this plan in place widens our opportunity set as we seek to continue to prudently invest in a more lender-friendly environment. I'll now turn it over to Tasek to walk through our quarterly financial highlights. and further details on our portfolio.