8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) July 12, 2013

Ares Commercial Real Estate Corporation

(Exact name of registrant as specified in its charter)

Maryland	001-35517	45-3148087
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One North Wacker Drive, 48th Floor, Chicago, IL	60606
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (312) 252-7500

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01  Entry into a Material Definitive Agreement.

On July 12, 2013, ACRC Lender C LLC (“Lender C”), a wholly owned subsidiary of the Registrant, entered into an amendment with CitiBank, N.A. (“CitiBank”) to its secured funding facility (as amended, the “CitiBank Facility”) and signed a Second Amended and Restated Note to, among other things, increase the size of the CitiBank Facility to $125 million. In connection with the amendment, the Registrant entered into an amendment to the Substitute Guaranty Agreement modifying its obligations to CitiBank in connection with the CitiBank Facility.

In addition to increasing the size of the facility, the CitiBank Facility amendment reduced the pricing on the facility from a range of LIBOR plus a pricing margin of 2.50 percent to 3.50 percent to a range of LIBOR plus a margin of 2.25 percent to 2.75 percent and changed the final repayment date from being the latest date on which a payment of principal is contractually obligated to be made in respect of each mortgage loan pledged under the CitiBank Facility to July 2, 2018.  The CitiBank Facility amendment and Substitute Guaranty Agreement amendment also modified certain financial tests and covenants to more effectively utilize the CitiBank Facility.

The foregoing description is only a summary of certain material provisions of the Second Amended and Restated Note and the amendments to the CitiBank Facility and Substitute Guaranty Agreement, and is qualified in its entirety by reference to a copy of such agreements, which are filed herewith as Exhibits 10.1, 10.2 and 10.3 and by this reference incorporated herein.

Item 2.03  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information required by Item 2.03 contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 7.01  Other Events.

On July 17, 2013 the Registrant issued a press release announcing that it had increased the size of the CitiBank Facility.  A copy of the press release is filed herewith as Exhibit 99.1 and incorporated herein by reference. The information disclosed in and pursuant to this paragraph, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01  Financial Statements and Exhibits.

(d)                           Exhibits:

Exhibit Number	Exhibit Description
10.1	Second Amendment to Master Loan and Security Agreement, dated as of July 12, 2013, among ACRC Lender C LLC, as borrower, Ares Commercial Real Estate Corporation, as guarantor, and Citibank, N.A., as lender.
10.2	Second Amended and Restated Note, dated as of July 12, 2013, among ACRC Lender C LLC, as borrower, and Citibank, N.A, as lender.
10.3	Second Amendment to Substitute Guaranty Agreement, dated as of July 12, 2013, among Ares Commercial Real Estate

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	Corporation, as guarantor, and Citibank, N.A., as lender.
99.1	Press Release, dated July 17, 2013.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:       July 17, 2013

ARES COMMERCIAL REAL ESTATE CORPORATION
By:	/s/ Timothy B. Smith
Name:	Timothy B. Smith
Title:	Vice President

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Exhibit Index

Exhibit Number	Exhibit Description
10.1	Second Amendment to Master Loan and Security Agreement, dated as of July 12, 2013, among ACRC Lender C LLC, as borrower, Ares Commercial Real Estate Corporation, as guarantor, and Citibank, N.A., as lender.
10.2	Second Amended and Restated Note, dated as of July 12, 2013, among ACRC Lender C LLC, as borrower, and Citibank, N.A, as lender.
10.3	Second Amendment to Substitute Guaranty Agreement, dated as of July 12, 2013, among Ares Commercial Real Estate Corporation, as guarantor, and Citibank, N.A., as lender.
99.1	Press Release, dated July 17, 2013.

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EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO MASTER LOAN AND SECURITY AGREEMENT

SECOND AMENDMENT TO MASTER LOAN AND SECURITY AGREEMENT, dated as of July 12, 2013 (this “Amendment”), by and among ACRC LENDER C LLC, a Delaware limited liability company (the “Borrower”), ARES Commercial Real Estate Corporation, a Maryland corporation (the “Guarantor”) and CITIBANK, N.A., a national banking association (the “Lender”).

R E C I T A L S:

WHEREAS, the Borrower and the Lender entered into that certain Master Loan and Security Agreement dated as of December 8, 2011, as amended by that certain First Amendment to Master Loan and Security Agreement, dated as of April 16, 2012 (collectively, the “Loan Agreement”; capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement, as amended hereby).

WHEREAS, the parties wish to amend the Loan Agreement as more specifically set forth herein.

NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto hereby covenant, agree, represent and warrant that the Loan Agreement is hereby amended as follows, effective as of the date hereof:

Section 1.              Amendment to Loan Agreement.

1.1          The following definitions in Section 1.01 of the Loan Agreement are hereby deleted in their entirety and the following corresponding definitions are substituted therefor:

“Applicable Margin” shall mean, with respect to each Mortgage Loan that is made part of the Collateral after the date of this Amendment, the applicable percentage set forth below which shall be determined by Lender as of the initial Funding Date for such Mortgage Loan based upon the related Debt Yield for such Mortgage Loan as of such Funding Date (and shall not be subject to adjustment or modification thereafter based upon changes in Debt Yield):

Debt Yield	Applicable Margin
>6.0% and <7.5%	2.75	%
>7.5% and <9.0%	2.50	%
>9.0%	2.25	%

With respect to each Mortgage Loan which comprises the Collateral as of the date hereof, the Applicable Margin shall equal the applicable percentage set forth in the related Funding Confirmation or otherwise mutually agreed to by Borrower and Lender in writing.

“Final Repayment Date” shall mean the Payment Date in July, 2018.

“Maximum Credit” shall mean $125,000,000.

1.2          Exhibit A to the Loan Agreement is hereby deleted in its entirety and replaced with Exhibit A attached hereto and made a part hereof.

1.3          In Section 2.02(a) of the Loan Agreement, the phrase “dated as of April 16, 2012” is hereby deleted and replaced with the phrase “dated as of July 12, 2013”.

Section 2.              Omnibus Amendment to Loan Documents.

2.1          Any references to the Loan Agreement in the Loan Documents shall hereinafter refer to the Loan Agreement as modified by this Amendment.

Section 3.              Covenants, Representations and Warranties of Borrower.

3.1          The Borrower hereby reaffirms all terms and covenants made in the Loan Documents as amended hereby.

3.2          The Borrower hereby represents and warrants that this Amendment has been duly executed and delivered by the Borrower.  This Amendment is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.

3.3          The Borrower hereby represents and warrants that, to the best of its knowledge, as of the date hereof, no Event of Default has occurred and is continuing, and no Event of Default will occur as a result of the execution, delivery and performance by the Borrower of this Amendment.

Section 4.              Reaffirmation of Guaranty.

4.1          Guarantor has executed this Amendment for the purpose of acknowledging and agreeing that, notwithstanding the execution and delivery of this Amendment and the amendment of the Loan Agreement hereunder, all of Guarantor’s obligations under the Guaranty remain in full force and effect and the same are hereby irrevocably and unconditionally ratified and confirmed by Guarantor in all respects.

Section 5.              Effect Upon Loan Documents.

5.1          The Borrower hereby ratifies and confirms as of the date hereof that all of the terms, covenants, indemnifications and provisions of the Loan Agreement and the other Loan Documents are and shall remain in full force and effect without change except as otherwise expressly and specifically modified by this Amendment, that certain Second Amendment to Substitute Guaranty Agreement dated as of the date hereof, and as previously provided to Lender under the terms of the Loan Documents.

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5.2          The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lender under the Loan Documents, or any other document, instrument or agreement executed and/or delivered in connection therewith.

5.3          The Borrower acknowledges that nothing contained herein shall be construed to relieve the Borrower from its obligations under any Loan Document except as otherwise expressly and specifically modified by this Amendment.

Section 6.              No Oral Modification.   This Amendment may not be modified, amended, waived, changed or terminated orally, but only by an agreement in writing signed by the party against whom the enforcement of the modification, amendment, waiver, change or termination is sought.

Section 7.              Binding Effect.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

Section 8.              Counterparts.  This Amendment may be executed in any number of duplicate originals and each such duplicate original shall be deemed to constitute but one and the same instrument.

Section 9.              Invalidity.  If any term, covenant or condition of this Amendment shall be held to be invalid, illegal or unenforceable in any respect, this Amendment shall be construed without such provision.

Section 10.            Governing Law.  This Amendment shall be governed by the laws of the state of New York (without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction) and applicable United States Federal Law.

Section 11.            No Novation.  This Amendment does not, and shall not be construed to, constitute the creation of a new indebtedness or the satisfaction, discharge or extinguishment of the debt secured by the Loan Documents, nor does it in any way affect or impair the lien of the Loan Documents.  No action undertaken pursuant to this Amendment shall constitute a waiver or a novation of the Lender’s rights under the Loan Documents.

Section 12.            Costs.  The Borrower hereby acknowledges and agrees that it shall be responsible for the payment of any reasonable out-of-pocket costs, fees and expenses of the Lender incurred in connection with the preparation, negotiation, execution or delivery of this Amendment (including, without limitation, the reasonable fees and disbursements of counsel to the Lender).

[Signatures appear on following pages]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized representatives, all as of the day and year first above written.

BORROWER:
ACRC LENDER C LLC,
a Delaware limited liability company
By:	/s/ Timothy B. Smith
	Name: Timothy B. Smith
	Title: Vice President
GUARANTOR:
ARES COMMERCIAL REAL ESTATE CORPORATION, a Maryland corporation
By:	/s/ Timothy B. Smith
	Name: Timothy B. Smith
	Title: Vice President

[SIGNATURES CONTINUE ON NEXT PAGE]

LENDER:
CITIBANK, N.A.,
a national banking association
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

EXHIBIT A

FORM OF SECOND AMENDED AND RESTATED NOTE

Dated: July 12, 2013

THIS SECOND AMENDED AND RESTATED NOTE (as the same may be further amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, this “Promissory Note”), is made by ACRC LENDER C LLC, a Delaware limited liability company (“Borrower”) and CITIBANK, N.A., a national banking association (together with its successors and/or assigns, “Lender”).

RECITALS

WHEREAS, Lender is the holder of that certain Amended and Restated Note dated April 16, 2012, made by Borrower in favor of Lender in the maximum stated principal amount of $50,000,000 (or after a Public Capital Markets Event, the amount determined in accordance with the definition of Maximum Credit in the Loan Agreement, up to the maximum principal sum of One Hundred Million Dollars ($100,000,000)) (the “Existing Note”);

WHEREAS, Lender and Borrower have agreed to amend and restate the terms and provisions of the Existing Note as provided herein;  and

WHEREAS, Lender and Borrower intend these Recitals to be a material part of this Promissory Note.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:

(a)           The Existing Note is hereby modified, amended and restated in its entirety so that henceforth the terms, covenants, conditions and provisions of the Existing Note shall read and be as set forth in this Promissory Note and Borrower agrees to comply with and be subject to all of the terms, covenants and conditions of this Promissory Note;

(b)           This Promissory Note is an extension and continuation of the debt evidenced by the Existing Note and is issued in replacement of and substitution for the Existing Note; and

(c)           The Existing Note, as modified and restated in its entirety pursuant to this Promissory Note, and the obligations of Borrower thereunder, are hereby ratified and confirmed, and shall remain in full force and effect until the full payment of all Loans of Borrower under the Loan Agreement referred to below and the other Loan Documents.

FOR VALUE RECEIVED, Borrower, hereby promises to pay to the order of Lender, at the principal office of Lender at 388 Greenwich Street, New York, New York 10013 in lawful money of the United States, and in immediately available funds, the principal sum of ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by Lender to Borrower under the Loan Agreement), on the dates and in the principal amounts provided in the Loan Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Loan Agreement.

The date, the amount and interest rate of each Loan made by Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by Lender on its books and, prior to any transfer of this Promissory Note, endorsed by Lender on the schedule attached hereto or any continuation thereof; provided, that the failure of Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the Loans made by Lender.

This Promissory Note is the Note referred to in the Master Loan and Security Agreement dated as of December 8, 2011, as amended by that certain First Amendment to Master Loan and Security Agreement, dated as of April 16, 2012 and that certain Second Amendment to Master Loan and Security Agreement, dated as of the date hereof (as further amended, supplemented or otherwise modified and in effect from time to time, the “Loan Agreement”) between Borrower and Lender, and evidences Loans made by Lender thereunder.  Terms used but not defined in this Promissory Note have the respective meanings assigned to them in the Loan Agreement.

Borrower agrees to pay all of Lender’s costs of collection and enforcement (including reasonable attorneys’ fees and disbursements of Lender’s counsel) in respect of this Promissory Note in accordance with the Loan Agreement, including, without limitation, reasonable attorneys’ fees through appellate proceedings.

Notwithstanding the pledge of the Collateral, Borrower hereby acknowledges, admits and agrees that Borrower’s obligations under this Promissory Note are recourse obligations of Borrower to which Borrower pledges its full faith and credit.

Borrower, and any endorsers or guarantors hereof, (a) severally waive diligence, presentment, protest and demand and also notice of protest, demand, dishonor and nonpayments of this Promissory Note, (b) expressly agree that this Promissory Note, or any payment hereunder, may be extended from time to time, and consent to the acceptance of further Collateral, the release of any Collateral for this Promissory Note, the release of any party primarily or secondarily liable hereon, and (c) expressly agree that it will not be necessary for Lender, in order to enforce payment of this Promissory Note, to first institute or exhaust Lender’s remedies against Borrower or any other party liable hereon or against any Collateral for this Promissory Note.  No extension of time for the payment of this Promissory Note, or any installment hereof, made by agreement by Lender with any person now or hereafter liable for the

payment of this Promissory Note, shall affect the liability under this Promissory Note of Borrower, even if Borrower is not a party to such agreement; provided, however, that Lender and Borrower, by written agreement between them, may affect the liability of Borrower.

Any reference herein to Lender shall be deemed to include and apply to every subsequent holder of this Promissory Note.  Reference is made to the Loan Agreement for provisions concerning optional and mandatory prepayments, Collateral, acceleration and other material terms affecting this Promissory Note.

This Promissory Note shall be governed by and construed under the laws of the State of New York whose laws Borrower expressly elects to apply to this Promissory Note.  Borrower agrees that any action or proceeding brought to enforce or arising out of this Promissory Note may be commenced in the Supreme Court of the State of New York, Borough of Manhattan, or in the District Court of the United States for the Southern District of New York.

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IN WITNESS WHEREOF, each of Borrower and Lender have duly executed this Promissory Note as of the date first above written.

ACRC LENDER C LLC,
a Delaware limited liability company
By:
	Name:
	Title:

[SIGNATURES CONTINUE ON NEXT PAGE]

LENDER:
CITIBANK, N.A.,
a national banking association
By:
	Name:
	Title:

EX-10.2

Exhibit 10.2

SECOND AMENDED AND RESTATED NOTE

Dated:  July 12, 2013

THIS SECOND AMENDED AND RESTATED NOTE (as the same may be further amended, restated, replaced, supplemented, renewed, extended or otherwise modified from time to time, this “Promissory Note”), is made by ACRC LENDER C LLC, a Delaware limited liability company (“Borrower”) and CITIBANK, N.A., a national banking association (together with its successors and/or assigns, “Lender”).

RECITALS

WHEREAS, Lender is the holder of that certain Amended and Restated Note dated April 16, 2012, made by Borrower in favor of Lender in the maximum stated principal amount of $50,000,000 (or after a Public Capital Markets Event, the amount determined in accordance with the definition of Maximum Credit in the Loan Agreement, up to the maximum principal sum of One Hundred Million Dollars ($100,000,000)) (the “Existing Note”);

WHEREAS, Lender and Borrower have agreed to amend and restate the terms and provisions of the Existing Note as provided herein;  and

WHEREAS, Lender and Borrower intend these Recitals to be a material part of this Promissory Note.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby covenant and agree as follows:

(a)           The Existing Note is hereby modified, amended and restated in its entirety so that henceforth the terms, covenants, conditions and provisions of the Existing Note shall read and be as set forth in this Promissory Note and Borrower agrees to comply with and be subject to all of the terms, covenants and conditions of this Promissory Note;

(b)           This Promissory Note is an extension and continuation of the debt evidenced by the Existing Note and is issued in replacement of and substitution for the Existing Note; and

(c)           The Existing Note, as modified and restated in its entirety pursuant to this Promissory Note, and the obligations of Borrower thereunder, are hereby ratified and confirmed, and shall remain in full force and effect until the full payment of all Loans of Borrower under the Loan Agreement referred to below and the other Loan Documents.

FOR VALUE RECEIVED, Borrower, hereby promises to pay to the order of Lender, at the principal office of Lender at 388 Greenwich Street, New York, New York 10013 in lawful money of the United States, and in immediately available funds, the principal sum of ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000) (or such lesser

amount as shall equal the aggregate unpaid principal amount of the Loans made by Lender to Borrower under the Loan Agreement), on the dates and in the principal amounts provided in the Loan Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Loan Agreement.

The date, the amount and interest rate of each Loan made by Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by Lender on its books and, prior to any transfer of this Promissory Note, endorsed by Lender on the schedule attached hereto or any continuation thereof; provided, that the failure of Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the Loans made by Lender.

This Promissory Note is the Note referred to in the Master Loan and Security Agreement dated as of December 8, 2011, as amended by that certain First Amendment to Master Loan and Security Agreement, dated as of April 16, 2012 and that certain Second Amendment to Master Loan and Security Agreement, dated as of the date hereof (as further amended, supplemented or otherwise modified and in effect from time to time, the “Loan Agreement”) between Borrower and Lender, and evidences Loans made by Lender thereunder.  Terms used but not defined in this Promissory Note have the respective meanings assigned to them in the Loan Agreement.

Borrower agrees to pay all of Lender’s costs of collection and enforcement (including reasonable attorneys’ fees and disbursements of Lender’s counsel) in respect of this Promissory Note in accordance with the Loan Agreement, including, without limitation, reasonable attorneys’ fees through appellate proceedings.

Notwithstanding the pledge of the Collateral, Borrower hereby acknowledges, admits and agrees that Borrower’s obligations under this Promissory Note are recourse obligations of Borrower to which Borrower pledges its full faith and credit.

Borrower, and any endorsers or guarantors hereof, (a) severally waive diligence, presentment, protest and demand and also notice of protest, demand, dishonor and nonpayments of this Promissory Note, (b) expressly agree that this Promissory Note, or any payment hereunder, may be extended from time to time, and consent to the acceptance of further Collateral, the release of any Collateral for this Promissory Note, the release of any party primarily or secondarily liable hereon, and (c) expressly agree that it will not be necessary for Lender, in order to enforce payment of this Promissory Note, to first institute or exhaust Lender’s remedies against Borrower or any other party liable hereon or against any Collateral for this Promissory Note.  No extension of time for the payment of this Promissory Note, or any installment hereof, made by agreement by Lender with any person now or hereafter liable for the payment of this Promissory Note, shall affect the liability under this Promissory Note of Borrower, even if Borrower is not a party to such agreement; provided, however, that Lender and Borrower, by written agreement between them, may affect the liability of Borrower.

Any reference herein to Lender shall be deemed to include and apply to every subsequent holder of this Promissory Note.  Reference is made to the Loan Agreement for provisions concerning optional and mandatory prepayments, Collateral, acceleration and other material terms affecting this Promissory Note.

This Promissory Note shall be governed by and construed under the laws of the State of New York whose laws Borrower expressly elects to apply to this Promissory Note.  Borrower agrees that any action or proceeding brought to enforce or arising out of this Promissory Note may be commenced in the Supreme Court of the State of New York, Borough of Manhattan, or in the District Court of the United States for the Southern District of New York.

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IN WITNESS WHEREOF, each of Borrower and Lender have duly executed this Promissory Note as of the date first above written.

ACRC LENDER C LLC,
a Delaware limited liability company
By:	/s/ Timothy B. Smith
	Name: Timothy B. Smith
	Title: Vice President

[SIGNATURES CONTINUE ON NEXT PAGE]

LENDER:
CITIBANK, N.A.,
a national banking association
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

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EX-10.3

Exhibit 10.3

SECOND AMENDMENT TO SUBSTITUTE GUARANTY AGREEMENT

SECOND AMENDMENT TO SUBSTITUTE GUARANTY AGREEMENT, dated as of July 12, 2013 (this “Amendment”), by and among ARES COMMERCIAL REAL ESTATE CORPORATION, a Maryland corporation, whose address is c/o Ares Management LLC, One North Wacker Drive, 48th Floor, Chicago, IL 60606 (the “Guarantor”), and CITIBANK, N.A., a national banking association, whose address is 388 Greenwich Street, New York, New York 10013  (the “Lender”).

R E C I T A L S:

WHEREAS, ACRC Lender C LLC, a Delaware limited liability company (“Borrower”) and the Lender entered into that certain Master Loan and Security Agreement dated as of December 8, 2011, as amended by that certain First Amendment to Master Loan and Security Agreement, dated as of April 16, 2012 and that certain Second Amendment to Master Loan and Security Agreement, dated as of July 12, 2013 (as further amended, restated, supplemented or otherwise modified and in effect from time to time, collectively, the “Loan Agreement”).

WHEREAS, in connection with the Loan Agreement, Guarantor executed and delivered that certain Substitute Guaranty Agreement in favor of Lender, dated as of May 1, 2012, as amended by that certain First Amendment to Substitute Guaranty Agreement, dated as of April 29, 2013 (as further amended, restated, supplemented or otherwise modified and in effect from time to time, collectively, the “Guaranty Agreement”; capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Guaranty Agreement).

WHEREAS, Guarantor and Lender desire to amend the Guaranty Agreement as more specifically set forth herein.

NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto hereby covenant, agree, represent and warrant that the Guaranty Agreement is hereby amended as follows, effective as of the date hereof:

Section 1.              Amendment to Guaranty Agreement.

1.1          Section 11.7(b) of the Guaranty Agreement is hereby deleted in its entirety and replaced with the following:

“(b)  Minimum Total Liquidity.  Guarantor’s Total Liquidity to be less than the greater of (x) $5,000,000 and (y) 5% of Guarantor’s Recourse Indebtedness, not to exceed $10,000,000; provided, that notwithstanding the foregoing or anything herein to the contrary, in the event Guarantor’s Total Liquidity shall equal or exceed $5,000,000 (such amount, the “Guarantor’s Actual Total Liquidity

Amount”), then Guarantor may satisfy the difference between the minimum Total Liquidity requirement and the Guarantor’s Actual Total Liquidity Amount with Available Borrowing Capacity.”

1.2          The words “and thereafter on a quarterly basis” in the fourth line of Section 11.7 of the Guaranty Agreement are hereby deleted in their entirety and replaced with the following:  “and thereafter as of the end of each Test Period”.

1.3          Section 11.7(c) of the Guaranty Agreement is hereby deleted in its entirety and replaced with the following:

“(c)  Fixed Charge Coverage Ratio.  Guarantor’s Fixed Charge Coverage Ratio to be less than 1.25 to 1.00.”

1.4          Section 1 of the Guaranty Agreement is hereby amended by (1) deleting the defined terms “Consolidated Net Income”, “Dividend Payout Ratio”, “Guarantor Dividend Distributions” and “REIT”, (2) adding the following new defined terms in their appropriate alphabetical location, and (3) deleting the defined term “Tangible Net Worth” and replacing it with the new definition of “Tangible Net Worth”:

“Available Borrowing Capacity” means, with respect to any Person, on any date of determination, the total unrestricted borrowing capacity which may be drawn (taking into account required reserves and discounts) upon by such Person or its Subsidiaries, at such Person’s or its Subsidiaries’ request based upon approved but undrawn amounts, under committed credit facilities or repurchase agreements which provide financing to such Person or its Subsidiaries.

“Debt Service” means, for any Test Period, the sum of (a) Interest Expense for Guarantor determined on a consolidated basis for such period, and (b) all regularly scheduled principal payments made with respect to Indebtedness of Guarantor and its Subsidiaries during such period, other than (i) any voluntary or involuntary prepayment or (ii) prepayment occasioned by the repayment of an underlying asset, or any balloon, bullet, margin or similar principal payment which repays such Indebtedness in part or in full.

“EBITDA” means, with respect to any Person and for any Test Period, an amount equal to the sum of (a) Net Income (or loss) of such Person (prior to any impact from minority or non-controlling interests or joint venture net income and before deduction of any dividends on preferred stock of such Person), plus the following (but only to the extent actually included in determination of such Net Income (or loss)): (i) depreciation and amortization expense (other than those related to capital expenditures that have not been included in the calculation of Fixed Charges as defined in the Guarantee Agreement), (ii) Interest Expense, (iii) income tax expense, (iv) extraordinary or non-recurring gains, losses and expenses including but not limited to transaction expenses relating to business combinations, other acquisitions and unconsummated transactions, (v) unrealized loan loss reserves,  impairments and other similar charges including but not

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limited to reserves for loss sharing arrangement associated with mortgage servicing rights, (vi) realized losses on loans and loss sharing arrangements associated with mortgage servicing rights and (vii) unrealized gains, losses and expenses associated with (A) derivative liabilities including but not limited to convertible note issuances and (B) mortgage servicing rights (other than the initial revenue recognition of recording an asset), plus (b) such Person’s proportionate share of Net Income (prior to any impact from minority or non-controlling interests or joint venture net income and before deduction of any dividends on preferred stock of such Person) of the joint venture investments and unconsolidated Affiliates of such Person, all with respect to such period.

“Fixed Charge Coverage Ratio” means, with respect to Guarantor, the EBITDA (as determined in accordance with GAAP) for the immediately preceding twelve (12) month period ending on the last date of the applicable Test Period, divided by the Fixed Charges for the immediately preceding twelve (12) month period ending on the last date of the applicable Test Period.

“Fixed Charges” means, with respect to Guarantor at any time, the sum of (a) Debt Service, (b) all preferred dividends that Guarantor is required, pursuant to the terms of the certificate of designation or other similar document governing the rights of preferred shareholders, to pay and is not permitted to defer, (c) Capital Lease Obligations paid or accrued during such period, and (d) any amounts payable under any Ground Lease.

“Interest Expense” means, with respect to any Person and for any Test Period, the amount of total interest expense incurred by such Person, including capitalized or accruing interest (but excluding interest funded under a construction loan and the amortization of financing costs), plus such Person’s proportionate share of interest expense from the joint venture investments and unconsolidated Affiliates of such Person, all with respect to such period.

“Net Income” means, with respect to any Person for any period, the net income of such Person for such period as determined in accordance with GAAP.

“Recourse Indebtedness” means, with respect to any Person, on any date of determination, the amount of (x) Indebtedness for which such Person has recourse liability in part or in whole (such as through a guarantee agreement), exclusive of any such Indebtedness for which such recourse liability is limited to obligations relating to or under agreements containing customary nonrecourse carve-outs or (y) Indebtedness which contains “mark-to-market” provisions entitling the lender to such Person to require repayments based upon changes in asset values from time to time, whether due to price or credit movements.

“Tangible Net Worth” means, with respect to any Person and any date, (i) all amounts which would be included under capital or shareholder’s equity (or any like caption) on a consolidated balance sheet of such Person and its consolidated Subsidiaries, as determined in accordance with GAAP, plus, without duplication,

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(ii) all Qualified Capital Commitments plus origination fees, net of deferred origination costs, minus (a) intangible assets included in the foregoing and (b) prepaid taxes and/or expenses, all on or as of such date. For sake of clarity, mortgage servicing rights shall not be deemed to be intangible assets.

“Test Period” means the time period from the first day of each calendar quarter, through and including the last day of such calendar quarter.

Section 2.              Covenants, Representations and Warranties of Borrower.

2.1          The Guarantor hereby ratifies, confirms and reaffirms, as of the date hereof, that all of the terms, covenants, indemnifications and provisions of the Guaranty Agreement are and shall remain in full force and effect without change except as otherwise expressly and specifically modified by this Amendment.

2.2          The Guarantor hereby represents and warrants that this Amendment has been duly executed and delivered by the Guarantor.  This Amendment is the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms.

2.3          The Guarantor hereby represents and warrants that, to the best of its knowledge, as of the date hereof, (i) no Event of Default (as defined in the Loan Agreement) has occurred and is continuing and no event which, but for the passage of time or the giving of notice or both, would constitute an Event of Default, (ii) no Event of Default will occur as a result of the execution, delivery and performance by the Guarantor of this Amendment, and (iii) no default under any of the terms, covenants or provisions of the Guaranty Agreement has occurred and is continuing and no event which, but for the passage of time or the giving of notice or both, would constitute a default under the Guaranty Agreement.

Section 3.              Effect Upon Loan Documents.

3.1          The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lender under the Loan Documents (as defined in the Loan Agreement), or any other document, instrument or agreement executed and/or delivered in connection therewith.

3.2          The Guarantor acknowledges that nothing contained herein shall be construed to relieve the Guarantor or the Borrower from their respective obligations under any Loan Document (as defined in the Loan Agreement) except as otherwise expressly and specifically modified by this Amendment.

Section 4.              No Oral Modification.   This Amendment may not be modified, amended, waived, changed or terminated orally, but only by an agreement in writing signed by the party against whom the enforcement of the modification, amendment, waiver, change or termination is sought.

Section 5.              Binding Effect.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

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Section 6.              Counterparts.  This Amendment may be executed in any number of duplicate originals and each such duplicate original shall be deemed to constitute but one and the same instrument.

Section 7.              Invalidity.  If any term, covenant or condition of this Amendment shall be held to be invalid, illegal or unenforceable in any respect, this Amendment shall be construed without such provision.

Section 8.              Governing Law.  This Amendment shall be governed by the laws of the state of New York (without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction) and applicable United States Federal Law.

Section 9.              No Novation.  No action undertaken pursuant to this Amendment shall constitute a waiver or a novation of the Lender’s rights under the Guaranty Agreement or any of the other Loan Documents (as defined in the Loan Agreement).

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Section 10.            Costs.  The Guarantor hereby acknowledges and agrees that it shall be responsible for the payment of any out-of-pocket costs, fees and expenses of the Lender incurred in connection with the preparation, negotiation, execution or delivery of this Amendment (including, without limitation, the reasonable fees and disbursements of counsel to the Lender).

[Signatures appear on following pages]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized representatives, all as of the day and year first above written.

GUARANTOR:
ARES COMMERCIAL REAL ESTATE
CORPORATION, a Maryland corporation
By:	/s/ Timothy B. Smith
	Name: Timothy B. Smith
	Title: Vice President

[SIGNATURES CONTINUE ON NEXT PAGE]

LENDER:
CITIBANK, N.A.,
a national banking association
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

EX-99.1

Exhibit 99.1

Ares Commercial Real Estate Corporation Expands Size & Improves Pricing on its Citigroup Funding Facility

New $125 Million Citigroup Facility Brings Total Revolving Funding Capacity to $400 Million

CHICAGO- July 17, 2013 - Ares Commercial Real Estate Corporation (NYSE: ACRE) announced today that it has expanded its Citigroup revolving funding facility from $86.2 million to $125.0 million.  In addition, the pricing on the facility was reduced from a range of LIBOR plus a margin of 2.50 percent to 3.50 percent to a range of LIBOR plus a margin of 2.25 percent to 2.75 percent.

Through this amendment, Ares Commercial Real Estate Corporation has increased its total revolving funding facility capacity across its three facilities to $400 million.

“We appreciate Citigroup’s support in recognition of our increased scale, improved balance sheet, and more diversified investment portfolio,” said Todd Schuster, Co-Chief Executive Officer of Ares Commercial Real Corporation.  “The incremental capacity and enhanced flexibility should provide economic benefits to our shareholders as we fund additional investments and provide the capital sought by our growing client base.”

About Ares Commercial Real Estate Corporation

Ares Commercial Real Estate Corporation is a specialty finance company that originates, invests in and manages middle-market commercial real estate loans and other commercial real estate investments. Through its national direct origination platform, Ares Commercial Real Estate Corporation provides flexible financing solutions for middle market borrowers. Ares Commercial Real Estate Corporation intends to elect to be taxed as a real estate investment trust and is externally managed by an affiliate of Ares Management LLC, a global alternative asset manager with approximately $65 billion in committed capital under management as of March 31, 2013 and pro forma for the closing of the AREA Property Partners transaction which occurred on July 1, 2013.  For more information, please visit our website at arescre.com.

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or our future performance or financial condition.  These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties.  Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission.  Ares Commercial Real Estate undertakes no duty to update any forward-looking statements made herein.

Contact:

Ares Commercial Real Estate Corporation
Carl Drake

(404) 814-5204