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): August 30, 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):

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

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

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

o   Pre-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 August 30, 2013 (the “Closing Date”), Ares Commercial Real Estate Corporation, a Maryland corporation (the “Registrant”), completed its acquisition (the “Acquisition”) of all of the outstanding common units of EF&A Funding, L.L.C., d/b/a Alliant Capital LLC, a Michigan limited liability company (“Alliant”), from Alliant, Inc., a Florida corporation, and The Alliant Company, LLC, a Florida limited liability company (together with Alliant, Inc., the “Sellers”).  Pursuant to the Purchase and Sale Agreement (the “Agreement”), dated as of May 14, 2013, by and among the Registrant and the Sellers, the Registrant paid approximately $53.4 million in cash and issued 588,235 shares of its common stock in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933 as consideration for the Acquisition.

The foregoing description of the Acquisition does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement.  A copy of the Agreement was filed as Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “Commission”) on May 15, 2013 and is incorporated herein by reference.

On the Closing Date, the Registrant entered into two letter agreements with the Sellers (the “Letter Agreements”). The Letter Agreements amend the Agreement to, among other things, (i) provide that the common units of Alliant purchased in the Acquisition will be delivered to ACRE Capital Holdings LLC, a wholly owned subsidiary of the Company that intends to elect to be a taxable REIT subsidiary, (ii) make certain adjustments to the proportion of the purchase price received by each Seller and the calculation of Net Working Capital (as such term is defined in the Agreement) and (iii) amend the Fixed Cash Consideration (as such term is defined in the Agreement) to be $53,415,000.

The foregoing description of the Letter Agreements is qualified in its entirety by reference to the full text of the Letter Agreements, which are filed as Exhibit 10.1 and Exhibit 10.2 to this report, and are incorporated herein by reference.

Item 2.01 Completion of Acquisition or Disposition of Assets

On the Closing Date, the Acquisition was completed pursuant to the terms of the Agreement.  Upon closing of the Acquisition, Alliant became an indirect wholly owned subsidiary of the Registrant.  Following the closing, Alliant will change its name to ACRE Capital LLC and retain its two warehouse line debt facilities to finance multi-family loan origination activity.

Item 3.02. Unregistered Sales of Equity Securities.

On the Closing Date, in connection with the closing of the Acquisition described in Item 2.01 above and as partial consideration for the Acquisition, the Company issued the Stock Consideration (as such term is defined in the Agreement), comprising 588,235 shares of the Company’s common stock, par value $0.01 per share, to the Sellers. In issuing the Stock Consideration, the Company relied on an exemption from registration under Section 4(2) of the Securities Act of 1933.

Item 9.01  Financial Statements and Exhibits.

(a)Financial Statements of the Business Acquired

The audited financial statements of EF&A Funding L.L.C. as of and for the years ended December 31, 2012 and 2011, including the notes and the independent auditors’ reports related thereto, were filed as Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on June 4, 2013 and are incorporated herein by reference.

The unaudited financial statements of EF&A Funding L.L.C. as of and for the six months ended June 30, 2013 and 2012, including the related notes, will be filed as soon as practicable, but in any event no later than 71 calendar days after the date by which this Current Report on Form 8-K is required to be filed.

(b)Pro Forma Financial Information

Ares Commercial Real Estate Corporation unaudited pro forma consolidated financial information, comprised of a pro forma consolidated balance sheet as of June 30, 2013 and a pro forma consolidated statement of income for the six months ended June 30, 2013, will be filed as soon as practicable, but in any event no later than 71 calendar days after the date by which this Current Report on Form 8-K is required to be filed.

(d)                           Exhibits:

Exhibit Number	Exhibit Description
2.1	Purchase and Sale Agreement, among Alliant, Inc., a Florida corporation, The Alliant Company, LLC, a Florida limited liability company and Ares Commercial Real Estate Corporation (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on May 15, 2013).
10.1	Letter Agreement re: Closing Statement Reference Date, dated as of August 30, 2013, among Ares Commercial Real Estate Corporation, The Alliant Company, LLC, a Florida limited liability company, and Alliant Inc., a Florida corporation.
10.2	Letter Agreement re: “Greenleaf at Broadway” Reimbursable Loss Loan, dated as of August 30, 2013, among Ares Commercial Real Estate Corporation, The Alliant Company, LLC, a Florida limited liability company, and Alliant Inc., a Florida corporation.
99.1	EF&A Funding L.L.C. financial statements as of and for the years ended December 31, 2012 and 2011, and independent auditors’ reports with respect to the financial statements as of and for the years ended December 31, 2012 and 2011 (incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on June 4, 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: August 30, 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
2.1	Purchase and Sale Agreement, among Alliant, Inc., a Florida corporation, The Alliant Company, LLC, a Florida limited liability company and Ares Commercial Real Estate Corporation (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed on May 15, 2013).
10.1	Letter Agreement re: Closing Statement Reference Date, dated as of August 30, 2013, among Ares Commercial Real Estate Corporation, The Alliant Company, LLC, a Florida limited liability company, and Alliant Inc., a Florida corporation.
10.2	Letter Agreement re: “Greenleaf at Broadway” Reimbursable Loss Loan, dated as of August 30, 2013, among Ares Commercial Real Estate Corporation, The Alliant Company, LLC, a Florida limited liability company, and Alliant Inc., a Florida corporation.
99.1	EF&A Funding L.L.C. financial statements as of and for the years ended December 31, 2012 and 2011, and independent auditors’ reports with respect to the financial statements as of and for the years ended December 31, 2012 and 2011 (incorporated by reference to Exhibit 99.1 of the Registrant’s Current Report on Form 8-K filed on June 4, 2013).

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EX-10.1

Exhibit 10.1

ARES COMMERCIAL REAL ESTATE CORPORATION

One North Wacker Drive, 48th Floor

Chicago, Illinois 60606

August 30, 2013

The Alliant Company LLC

340 Royal Poinciana Way, Suite 305

Palm Beach, Florida 33480

Attn: Sidney Kohl

RE:         Closing Statement Reference Date

Ladies and Gentlemen,

Reference is made to that certain Purchase and Sale Agreement, dated as of May 14, 2013 (the “Purchase Agreement”), by and among Alliant, Inc., The Alliant Company, LLC  (each, a “Seller” and, collectively, the “Sellers”), and Ares Commercial Real Estate Corporation (the “Buyer”), pursuant to which Sellers have agreed, among other things, to sell all of the limited liability company interests in EF&A Funding, L.L.C. d/b/a Alliant Capital LLC (the “Company”) to the Buyer on the terms and subject to the conditions specified therein.  Capitalized terms used but otherwise not defined herein shall have the meanings given to such terms in the Purchase Agreement.

Buyer and Sellers hereby agree that:

1.Subject to the closing of the transactions contemplated by the Purchase Agreement, for purposes of Sellers’ calculation of Net Working Capital, Recruiting Expenses, Excess Reserve Amount and the Cash Consideration in connection with the preparation and delivery of both the Estimated Closing Statement and the Final Closing Statement pursuant to Sections 2.4 and 2.5(a) of the Purchase Agreement, respectively, the “Closing Date” referred to in such sections shall mean 11:59 PM EST on August 31, 2013.

2.Notwithstanding anything to the contrary in the Purchase Agreement, except as set forth in the preceding paragraph, all references to “Closing Date” in the Purchase Agreement shall mean “5:30 PM EST on August 30, 2013”.

3.The references in (i) the first clause of Section 2.2 and (ii) Section 2.5(c) to “in proportion to their respective percentage interest in the Outstanding Units as set forth on Section 3.2(a) of the Seller Disclosure Schedule” are hereby amended and restated to read “in such proportion as provided by Sellers to Buyer prior to Closing”.

4.The references in (i) the last sentence of Section 2.2, (ii) Section 2.3(a)(i) and (iii) Section 2.3(a)(iii) to “in proportion to Sellers’ respective percentage interest in the Outstanding Units as set forth on Section 3.2(a) of the Seller Disclosure Schedule” are hereby amended and restated to read “in such proportion as provided by Sellers to Buyer prior to Closing”.

5.Section 2.3(b)(i) of the Purchase Agreement is hereby amended and restated in its entirety to read as follows: “an assignment to ACRE Capital Holdings LLC of the Outstanding Units, free and clear of all Liens, in form and substance reasonably satisfactory to the Buyer;”

6.The second sentence of Section 2.2 is hereby amended and restated in its entirety to read as follows: “The Final Cash Consideration shall consist of: (i) $53,415,000 (the “Fixed Cash Consideration”); plus (ii) the Final Excess Reserve Amount; plus (iii) the Final Recruiting Expenses; minus (iv) the amount, if any, by which the Required Net Working Capital exceeds the Final Net Working Capital; plus (vi) the amount, if any, by which the Final Net Working Capital exceeds the Required Net Working Capital.”

7.For the purposes of clarity, the parties also agree that the Required Restricted Reserve Amount shall be calculated solely in reference to the basis points required by Fannie Mae as of the Closing Date and shall not in any event take into account any accrual for any increase in any reserve requirements applicable to the third quarter of 2013.

8.The parties further agree that the $551,000 included in the “Miscellaneous Receivables”  column of the Estimated Closing Statement attributable to the vestee credit loss offset shall be the same amount when the parties calculate the Final Closing Statement (i.e., such amount shall not subject to adjustment pursuant to Section 2.5 of the Agreement).

This letter agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, discussions, writings, agreements and understandings, oral and written, between the parties with respect to the subject matter hereof.  This letter agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by instrument in writing signed by the parties hereto, or, in the case of a waiver, by the party waiving compliance.

The provisions of Article IX of the Purchase Agreement are hereby incorporated by reference into this letter agreement mutatis mutandis.

(The remainder of this page is intentionally left blank.)

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If this letter agreement correctly sets forth our understanding and agreement with respect to the matters addressed herein, please so confirm by executing this letter agreement in the space provided below.

			Very truly yours,
			ARES COMMERCIAL REAL ESTATE CORPORATION
			By:	/s/ John B. Bartling, Jr.
				Name:	John B. Bartling, Jr.
				Title:	Co-Chief Executive Officer
Acknowledged and agreed:
THE ALLIANT COMPANY, LLC
By:	Alliant, Inc., its managing member
By:	/s/ James C. Jenkins
	Name:	James C. Jenkins
	Title:	Vice President
ALLIANT, INC.
By:	/s/ James C. Jenkins
	Name:	James C. Jenkins
	Title:	Vice President

Closing Statement Reference Date Letter Agreement Signature Page

EX-10.2

Exhibit 10.2

ARES COMMERCIAL REAL ESTATE CORPORATION

One North Wacker Drive, 48th Floor

Chicago, Illinois 60606

August 30, 2013

The Alliant Company LLC

340 Royal Poinciana Way, Suite 305

Palm Beach, Florida 33480

Attn: Sidney Kohl

RE:         “Greenleaf at Broadway” Reimbursable Loss Loan

Ladies and Gentlemen,

Reference is made to that certain Purchase and Sale Agreement, dated as of May 14, 2013 (the “Purchase Agreement”), by and among Alliant, Inc., The Alliant Company, LLC  (each, a “Seller” and, collectively, the “Sellers”), and Ares Commercial Real Estate Corporation (the “Buyer”), pursuant to which Sellers have agreed, among other things, to sell all of the limited liability company interests in EF&A Funding, L.L.C. d/b/a Alliant Capital LLC (the “Company”) to the Buyer on the terms and subject to the conditions specified therein.  Capitalized terms used but otherwise not defined herein shall have the meanings given to such terms in the Purchase Agreement.

This letter memorializes our understanding with respect to the Waived Fees (as defined below) related to the “Greenleaf at Broadway” Reimbursable Loss Loan (as such Reimbursable Loss Loan is identified on Schedule 5.13 of the Seller Disclosure Schedule) (the “Greenleaf Reimbursable Loss Loan”) and certain related matters with respect to the Greenleaf Reimbursable Loss Loan.

In connection with SPVEF/RCMG Broadway Gardens LLC’s sale and transfer of the Greenleaf Reimbursable Loss Loan to a new borrower approved by the Company in accordance with the terms of the underlying loan documents and Fannie Mae guidelines, the Company has agreed to waive one hundred twenty-five thousand dollars ($125,000) in accrued interest and charges attributable to such Reimbursable Loss Loan (the “Waived Fees”) in order to facilitate the sale and transfer.  Buyer and Sellers agree and acknowledge that the Waived Fees are not eligible for reimbursement or any other credit pursuant to the Fannie Mae Delegated Underwriting and Servicing Master Loss Sharing Agreement to which the Company is a party, or under any other Program Lender-sponsored program in which the Company may participate.  Buyer and Sellers have agreed that the cost of the Waived Fees shall be borne equally by Buyer, on the one hand, and Sellers, on the other hand.

Accordingly, Buyer and Sellers agree that, subject to (i) the closing of the transactions contemplated by the Purchase Agreement occurring and (ii) the consummation of the sale and

transfer of the Greenleaf Reimbursable Loss Loan to the new borrower, Sellers’ calculation of the Company’s Net Working Capital in connection with the preparation and delivery of both the Estimated Closing Statement and the Final Closing Statement pursuant to Sections 2.4 and 2.5(a) of the Purchase Agreement, respectively, shall include a sixty-two thousand five hundred dollar ($62,500) liability, which amount shall be labeled “Greenleaf Waived Fees” on the applicable Closing Statement, representing fifty-percent of the Waived Fee allocable to Sellers.

Buyer and Sellers further agree that, following the Closing Date, the Greenleaf Reimbursable Loss Loan shall be treated in accordance with such Reimbursable Loss Loans’ classification as an “Additional Risk Loan”, and that any Loan Loss Amounts incurred by the Company in respect of such Reimbursable Loss Loan shall be treated in accordance with Section 5.13(a)(iv) without regard to the treatment of the Waived Fees as provided for herein.

This letter agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior negotiations, discussions, writings, agreements and understandings, oral and written, between the parties with respect to the subject matter hereof.  This letter agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by instrument in writing signed by the parties hereto, or, in the case of a waiver, by the party waiving compliance.

The provisions of Article IX of the Purchase Agreement are hereby incorporated by reference into this letter agreement mutatis mutandis.

(The remainder of this page is intentionally left blank.)

2

If this letter agreement correctly sets forth our understanding and agreement with respect to the matters addressed herein, please so confirm by executing this letter agreement in the space provided below.

			Very truly yours,
			ARES COMMERCIAL REAL ESTATE CORPORATION
			By:	/s/ John B. Bartling, Jr.
				Name:	John B. Bartling, Jr.
				Title:	Co-Chief Executive Officer
Acknowledged and agreed:
THE ALLIANT COMPANY, LLC
By:	Alliant, Inc., its managing member
By:	/s/ James C. Jenkins
	Name:	James C. Jenkins
	Title:	Vice President
ALLIANT, INC.
By:	/s/ James C. Jenkins
	Name:	James C. Jenkins
	Title:	Vice President

Greenleaf Letter Agreement Signature Page