10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________________ 

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 001-35517

ARES COMMERCIAL REAL ESTATE CORPORATION

(Exact name of Registrant as specified in its charter) 

Maryland	45-3148087
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

245 Park Avenue, 42nd Floor, New York, NY 10167

(Address of principal executive offices) (Zip Code)

(212) 750-7300

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes ý  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ý  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 27, 2018
Common stock, $0.01 par value	28,598,916

ARES COMMERCIAL REAL ESTATE CORPORATION

INDEX

Part I.	Financial Information
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	2
	Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 (unaudited)	3
	Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2018 (unaudited)	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	34
Part II.	Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36

PART I — FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	As of
	March 31, 2018			December 31, 2017
	(unaudited)
ASSETS
Cash and cash equivalents	$	5,201		$	28,343
Restricted cash	379			379
Loans held for investment ($275,040 and $341,158 related to consolidated VIEs, respectively)	1,658,375			1,726,283
Other assets ($769 and $945 of interest receivable related to consolidated VIEs, respectively; $66,118 of other receivables related to consolidated VIEs as of March 31, 2018)	80,200			15,214
Total assets	$	1,744,155		$	1,770,219
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Secured funding agreements	$	929,454		$	957,960
Secured term loan	107,797			107,595
Collateralized loan obligation securitization debt (consolidated VIE)	271,393			271,211
Due to affiliate	2,531			2,628
Dividends payable	8,008			7,722
Other liabilities ($453 and $414 of interest payable related to consolidated VIEs, respectively)	4,258			3,933
Total liabilities	1,323,441			1,351,049
Commitments and contingencies (Note 5)
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share, 450,000,000 shares authorized at March 31, 2018 and December 31, 2017, and 28,598,916 shares issued and outstanding at March 31, 2018 and December 31, 2017	283			283
Additional paid-in capital	420,871			420,637
Accumulated deficit	(440		)	(1,750		)
Total stockholders' equity	420,714			419,170
Total liabilities and stockholders' equity	$	1,744,155		$	1,770,219

   See accompanying notes to consolidated financial statements.

2

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

	For the three months ended March 31,
	2018			2017
	(unaudited)			(unaudited)
Net interest margin:
Interest income from loans held for investment	$	27,436		$	21,127
Interest expense	(14,299		)	(10,788		)
Net interest margin	13,137			10,339
Expenses:
Management and incentive fees to affiliate	1,558			1,812
Professional fees	482			391
General and administrative expenses	774			642
General and administrative expenses reimbursed to affiliate	924			948
Total expenses	3,738			3,793
Income before income taxes	9,399			6,546
Income tax expense, including excise tax	81			68
Net income attributable to ACRE	9,318			6,478
Less: Net income attributable to non-controlling interests	—			(25		)
Net income attributable to common stockholders	$	9,318		$	6,453
Earnings per common share:
Basic and diluted earnings per common share	$	0.33		$	0.23
Weighted average number of common shares outstanding:
Basic weighted average shares of common stock outstanding	28,495,833			28,468,819
Diluted weighted average shares of common stock outstanding	28,598,916			28,482,756
Dividends declared per share of common stock	$	0.28		$	0.27

   See accompanying notes to consolidated financial statements.

3

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

(unaudited)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2017	28,598,916	$	283	$	420,637	$	(1,750	)	$	419,170
Stock‑based compensation	—	—		234		—			234
Net income	—	—		—		9,318			9,318
Dividends declared	—	—		—		(8,008		)	(8,008		)
Balance at March 31, 2018	28,598,916	$	283	$	420,871	$	(440	)	$	420,714

See accompanying notes to consolidated financial statements.

4

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the three months ended March 31,
	2018			2017
	(unaudited)			(unaudited)
Operating activities:
Net income	$	9,318		$	6,478
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of deferred financing costs	1,487			1,733
Accretion of deferred loan origination fees and costs	(1,854		)	(1,454		)
Stock-based compensation	234			98
Changes in operating assets and liabilities:
Other assets	194			(582		)
Due to affiliate	(97		)	156
Other liabilities	413			(221		)
Net cash provided by (used in) operating activities	9,695			6,208
Investing activities:
Issuance of and fundings on loans held for investment	(77,260		)	(133,461		)
Principal repayment of loans held for investment	79,933			75,518
Receipt of origination fees	1,040			1,256
Net cash provided by (used in) investing activities	3,713			(56,687		)
Financing activities:
Proceeds from secured funding agreements	54,672			88,850
Repayments of secured funding agreements	(83,178		)	(293,057		)
Payment of secured funding costs	(322		)	(3,031		)
Proceeds from issuance of debt of consolidated VIEs	—			272,927
Dividends paid	(7,722		)	(7,406		)
Contributions from non-controlling interests	—			12
Distributions to non-controlling interests	—			(10,681		)
Net cash provided by (used in) financing activities	(36,550		)	47,614
Change in cash, cash equivalents and restricted cash	(23,142		)	(2,865		)
Cash, cash equivalents and restricted cash, beginning of period	28,722			47,645
Cash, cash equivalents and restricted cash, end of period	$	5,580		$	44,780

See accompanying notes to consolidated financial statements.

5

ARES COMMERCIAL REAL ESTATE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2018

(in thousands, except share and per share data, percentages and as otherwise indicated)

(unaudited)

1.     ORGANIZATION

Ares Commercial Real Estate Corporation (together with its consolidated subsidiaries, the “Company” or “ACRE”) is a specialty finance company primarily engaged in originating and investing in commercial real estate loans and related investments. Through Ares Commercial Real Estate Management LLC (“ACREM” or the Company’s “Manager”), a Securities and Exchange Commission (“SEC”) registered investment adviser and a subsidiary of Ares Management, L.P. (NYSE: ARES) (“Ares Management”), a publicly traded, leading global alternative asset manager, it has investment professionals strategically located across the United States and Europe who directly source new loan opportunities for the Company with owners, operators and sponsors of commercial real estate (“CRE”) properties. The Company was formed and commenced operations in late 2011. The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in May 2012. The Company is externally managed by its Manager, pursuant to the terms of a management agreement (the “Management Agreement”).

The Company is primarily focused on directly originating and managing a diversified portfolio of CRE debt-related investments for the Company’s own account. The Company’s target investments include senior mortgage loans, subordinated debt, preferred equity, mezzanine loans and other CRE investments, including commercial mortgage backed securities. These investments are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, senior-living, self storage, student housing and other commercial real estate properties, or by ownership interests therein.

The Company has elected and qualified to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2012. The Company generally will not be subject to U.S. federal income taxes on its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with various other requirements as a REIT.

2.   SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the related management's discussion and analysis of financial condition and results of operations included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC.

Refer to the Company’s Annual Report on Form 10-K for a description of the Company’s recurring accounting policies. The Company has included disclosure below regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly or (ii) the Company views as critical as of the date of this report.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entities (“VIEs”) that the Company controls and of which the Company is the primary beneficiary, and the Company’s wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated.

Interim financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2018.

6

Variable Interest Entities

The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE.

To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

To assess whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Company.

For VIEs of which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements.

The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE cause the Company’s consolidation conclusion regarding the VIE to change. See Note 12 included in these consolidated financial statements for further discussion of the Company’s VIEs.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short‑term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows.

Restricted cash includes deposits required under certain Secured Funding Agreements (each individually defined in Note 4 included in these consolidated financial statements).

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows ($ in thousands):

	As of
	March 31, 2018		March 31, 2017
Cash and cash equivalents	$	5,201	$	44,400
Restricted cash	379		380
Total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows	$	5,580	$	44,780

7

Loans Held for Investment

The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, the Company will record an allowance to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate.

Each loan classified as held for investment is evaluated for impairment on a quarterly basis. Loans are generally collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors.

In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of March 31, 2018 and December 31, 2017, the Company did not recognize any impairment charges with respect to its loans held for investment.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower’s ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Preferred equity investments, which are subordinate to any loans but senior to common equity, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included within loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan held for investment utilizing the effective interest method.

Debt Issuance Costs

Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the term of the respective debt instrument. Unamortized debt issuance costs are expensed when the associated debt is repaid prior to maturity. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization and the outstanding principal balance of the securitization debt is reduced, the related unamortized debt issuance costs are charged to expense based on a pro‑rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance on (i) Secured Funding Agreements (each individually defined in Note 4 included in these consolidated financial statements) is included within other assets and (ii) the Secured Term Loan (defined in Note 4 included in these consolidated financial statements) and debt securitizations are both included as a reduction to the carrying amount of the liability, in the Company’s consolidated balance sheets.

The original issue discount (“OID”) on amounts drawn under the Company’s Secured Term Loan represents a discount to the face amount of the drawn debt obligations. The OID is amortized over the term of the Secured Term Loan using the effective interest method and is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance is included as a reduction to the carrying amount of the Secured Term Loan in the Company’s consolidated balance sheets.

8

Revenue Recognition

Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method.

A reconciliation of the Company's interest income from loans held for investment, excluding non-controlling interests, to the Company's interest income from loans held for investment as included within its consolidated statements of operations for the three months ended March 31, 2018 and 2017 is as follows ($ in thousands):

	For the three months ended March 31,
	2018		2017
Interest income from loans held for investment, excluding non-controlling interests	$	27,436	$	21,092
Interest income from non-controlling interest investment held by third parties	—		35
Interest income from loans held for investment	$	27,436	$	21,127

Net Interest Margin and Interest Expense

Net interest margin in the Company’s consolidated statements of operations serves to measure the performance of the Company's loans held for investment as compared to its use of debt leverage. The Company includes interest income from its loans held for investment and interest expense related to its Secured Funding Agreements, securitizations debt and the Secured Term Loan (individually defined in Note 4 included in these consolidated financial statements) in net interest margin. For the three months ended March 31, 2018 and 2017, interest expense is comprised of the following ($ in thousands):

	For the three months ended March 31,
	2018		2017
Secured funding agreements and securitizations debt	$	12,301	$	7,468
Secured term loan	1,998		3,320
Interest expense	$	14,299	$	10,788

Comprehensive Income

For the three months ended March 31, 2018 and 2017, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this ASU supersedes the revenue recognition requirements in Revenue Recognition (Topic 605). Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company has assessed and determined that the application of this guidance does not have a material impact on the Company’s consolidated financial statements, primarily because the majority of the Company’s revenue is accounted for under FASB ASC Topic 310, Receivables, which is excluded from this standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard will replace the incurred loss impairment methodology pursuant to GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU No. 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted after December 15, 2018, including interim periods within that reporting period. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

9

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force). The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU No. 2016-18 in the first quarter of 2018 and applied the guidance retrospectively to the prior period consolidated statement of cash flows.

3.   LOANS HELD FOR INVESTMENT

As of March 31, 2018, the Company’s portfolio totaled 42 loans held for investment, excluding 63 loans that were repaid or sold since inception. The aggregate originated commitment under these loans at closing was approximately $1.9 billion and outstanding principal was $1.7 billion as of March 31, 2018. During the three months ended March 31, 2018, the Company funded approximately $77.3 million of outstanding principal and received repayments of $146.1 million of outstanding principal, as described in more detail in the tables below. Such investments are referred to herein as the Company’s “investment portfolio.” As of March 31, 2018, 86.8% of the Company’s loans have London Interbank Offered Rate (“LIBOR”) floors, with a weighted average floor of 0.87%, calculated based on loans with LIBOR floors. References to LIBOR or “L” are to 30-day LIBOR (unless otherwise specifically stated).

The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of March 31, 2018 and December 31, 2017 ($ in thousands):

	As of March 31, 2018
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,606,225	$	1,615,703	4.9	%	6.5	%	1.8
Subordinated debt and preferred equity investments	52,150		52,860		9.5	%	11.0	%	3.2
Total loans held for investment portfolio	$	1,658,375	$	1,668,563	5.0	%	6.6	%	1.9

	As of December 31, 2017
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,674,169	$	1,684,439	4.8	%	6.2	%	1.9
Subordinated debt and preferred equity investments	52,114		52,847		9.5	%	10.8	%	3.4
Total loans held for investment portfolio	$	1,726,283	$	1,737,286	5.0	%	6.3	%	2.0

_______________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate.

(3) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2018 and December 31, 2017 as weighted by the Outstanding Principal balance of each loan.

10

A more detailed listing of the Company’s investment portfolio based on information available as of March 31, 2018 is as follows ($ in millions, except percentages):

Loan Type		Location	Outstanding Principal (1)	Carrying Amount (1)	Interest Rate	Unleveraged Effective Yield (2)	Maturity Date (3)		Payment Terms (4)
Senior Mortgage Loans:
Self Storage	(5)	Diversified	$116.7	$116.4	L+4.35%	7.0%	Oct 2018		I/O
Office		TX	96.9	96.1	L+3.60%	6.0%	July 2020		I/O
Multifamily		FL	89.7	89.4	L+4.75%	7.2%	Sep 2019		I/O
Various	(6)	Diversified	82.3	82.1	L+4.75%	7.3%	Oct 2018		I/O
Mixed-use		NY	65.6	65.4	L+4.16%	6.5%	Apr 2019		I/O
Multifamily		UT	62.6	62.2	L+3.25%	5.4%	Dec 2020		I/O
Office		IL	60.4	59.8	L+3.75%	6.2%	Dec 2020		I/O
Office		IL	58.6	58.2	L+3.99%	6.3%	Aug 2019		I/O
Office		CO	54.0	53.5	L+4.15%	6.4%	June 2021		I/O
Multifamily		FL	53.8	53.4	L+3.65%	5.9%	Mar 2021		I/O
Industrial		MN	51.6	51.1	L+3.15%	5.5%	Dec 2020		I/O
Office		NJ	49.6	49.2	L+4.65%	7.2%	July 2020		I/O
Mixed-use		CA	49.0	48.6	L+4.00%	6.3%	Apr 2021		I/O
Multifamily		FL	45.4	45.3	L+4.75%	7.2%	Sep 2019		I/O
Multifamily		TX	42.7	42.4	L+3.30%	5.5%	Dec 2020		I/O
Student Housing		CA	41.8	41.4	L+3.95%	6.4%	July 2020		I/O
Student Housing		TX	40.1	39.8	L+4.75%	7.2%	Jan 2021		I/O
Hotel		CA	40.0	39.7	L+4.12%	6.4%	Jan 2021		I/O
Student Housing		NC	38.7	38.5	L+4.00%	7.7%	Feb 2019		I/O
Hotel		NY	38.6	38.6	L+4.75%	7.1%	June 2018		I/O
Hotel		MI	35.2	35.2	L+4.15%	6.0%	July 2018		I/O
Multifamily		NY	31.3	31.2	L+4.55%	6.9%	Feb 2019		I/O
Multifamily		NY	29.5	29.5	L+3.75%	5.9%	Oct 2018		P/I	(7)
Multifamily		NY	29.4	29.1	L+3.20%	5.4%	Dec 2020		I/O
Industrial		OH	27.5	27.4	L+4.20%	6.4%	May 2019	(8)	P/I	(7)
Multifamily		TX	27.5	27.3	L+3.20%	5.6%	Oct 2020		I/O
Multifamily		TX	26.3	26.2	L+3.80%	5.8%	Jan 2019		I/O
Multifamily		CA	25.7	25.5	L+3.85%	6.2%	July 2020		I/O
Student Housing		AL	24.1	23.9	L+4.45%	6.9%	Feb 2020		I/O
Student Housing		TX	24.0	23.8	L+4.10%	6.5%	Jan 2021		I/O
Multifamily		CA	22.7	22.6	L+3.90%	6.1%	Mar 2021		I/O
Multifamily		FL	22.5	22.4	L+4.25%	6.8%	Feb 2019		I/O
Office		PA	19.6	19.5	L+4.70%	7.1%	Mar 2020		I/O
Office		FL	18.4	18.3	L+4.30%	6.8%	Apr 2020		I/O
Multifamily		FL	18.4	18.3	L+4.00%	6.2%	Nov 2020		I/O
Multifamily		CA	18.0	17.8	L+3.30%	5.6%	Feb 2021		I/O
Multifamily		NY	16.3	16.3	L+4.35%	6.5%	Nov 2018		I/O
Multifamily		CA	13.9	13.8	L+3.80%	6.1%	July 2020		I/O
Residential		CA	7.3	7.0	12.00%	14.7%	Feb 2020		I/O
Subordinated Debt and Preferred Equity Investments:
Multifamily		NY	33.3	33.3	L+8.07%	10.2%	Jan 2019		I/O
Office		NJ	17.0	16.3	12.00%	12.8%	Jan 2026		I/O	(7)
Office		CA	2.6	2.6	L+8.25%	10.3%	Nov 2021		I/O
Total/Weighted Average			$1,668.6	$1,658.4		6.6%

_______________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of March 31, 2018 or the LIBOR floor, as applicable. The Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2018 as weighted by the Outstanding Principal balance of each loan.

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(3) Certain loans are subject to contractual extension options that vary between one and two12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(4) I/O = interest only, P/I = principal and interest.

(5) Prior to December 2017, the $116.7 million senior mortgage loan collateralized by a portfolio of self storage properties was in payment default due to the failure of the borrower to repay an amount equal to $42.5 million with respect to the retail and office properties (which included $37.0 million of allocated loan amount and $5.5 million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the borrower repaid $25.1 million with respect to the office property (which included $21.8 million of allocated loan amount and $3.3 million of release premium). In conjunction with the repayment with respect to the office property, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to January 2018. On January 31, 2018, the Company received a repayment of outstanding principal of $17.4 million (which included $15.1 million of allocated loan amount and $2.3 million of release premium). The principal repayments related to the retail and office properties resulted in the release of the retail and office properties from the collateral pool. Subsequent to the principal repayments, the outstanding principal balance of the senior mortgage loan was $116.7 million and was collateralized by a portfolio of self storage properties.

(6) Prior to December 2017, the $82.3 million senior mortgage loan collateralized by a portfolio of self storage properties and one retail property was in payment default due to the failure of the borrower to repay an amount equal to $13.9 million with respect to the retail property (which included $12.1 million of allocated loan amount and $1.8 million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to the maturity date of the loan in October 2018. The senior mortgage loan continues to have a recourse payment guarantee of up to $12.1 million from an individual who is the indirect owner of the underlying collateral and an affiliate of the borrower.

(7) In May 2017, amortization began on the senior Ohio loan, which had an outstanding principal balance of $27.5 million as of March 31, 2018. In October 2017, amortization began on the senior New York loan, which had an outstanding principal balance of $29.5 million as of March 31, 2018. In February 2021, amortization will begin on the subordinated New Jersey loan, which had an outstanding principal balance of $17.0 million as of March 31, 2018. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms.

(8) In February 2018, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Ohio loan to May 2019.

The Company has made, and may continue to make, modifications to loans, including loans that are in default. Loan terms that may be modified include interest rates, required prepayments, asset release prices, maturity dates, covenants, principal amounts and other loan terms. The terms and conditions of each modification vary based on individual circumstances and will be determined on a case by case basis.

For the three months ended March 31, 2018, the activity in the Company’s loan portfolio was as follows ($ in thousands):

Balance at December 31, 2017	$	1,726,283
Initial funding	74,110
Origination fees and discounts, net of costs	(1,040		)
Additional funding	3,218
Amortizing payments	(233		)
Loan payoffs	(145,817		)
Origination fee accretion	1,854
Balance at March 31, 2018	$	1,658,375

As of March 31, 2018, all loans were paying in accordance with their contractual terms. No impairment charges have been recognized during the three months ended March 31, 2018 and 2017.

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4.   DEBT

Financing Agreements

The Company borrows funds, as applicable in a given period, under the Wells Fargo Facility, the Citibank Facility, the BAML Facility, the CNB Facility, the MetLife Facility, the UBS Facility and the U.S. Bank Facility (individually defined below and collectively, the “Secured Funding Agreements”) and the Secured Term Loan (as defined below). The Company refers to the Secured Funding Agreements and the Secured Term Loan as the “Financing Agreements.” The outstanding balance of the Financing Agreements in the table below are presented gross of debt issuance costs. As of March 31, 2018 and December 31, 2017, the outstanding balances and total commitments under the Financing Agreements consisted of the following ($ in thousands):

	March 31, 2018					December 31, 2017
	Outstanding Balance		Total Commitment			Outstanding Balance		Total Commitment
Wells Fargo Facility	$	384,432	$	500,000		$	407,853	$	500,000
Citibank Facility	174,075		250,000		(1)	175,651		250,000		(1)
BAML Facility	56,320		125,000			78,320		125,000
CNB Facility	15,260		50,000			—		50,000
MetLife Facility	101,131		180,000			101,131		180,000
UBS Facility	34,000		140,000			34,000		140,000
U.S. Bank Facility	164,236		185,989			161,005		185,989
Secured Term Loan	110,000		110,000			110,000		110,000
Total	$	1,039,454	$	1,540,989		$	1,067,960	$	1,540,989

______________________________________________________________________________

(1) The Citibank Facility (as defined below) has an accordion feature that provides for an increase in the $250.0 million commitment amount with respect to approved assets, as determined by Citibank, N.A. in its sole discretion.

Some of the Company’s Financing Agreements are collateralized by (i) assignments of specific loans, preferred equity or a pool of loans held for investment or loans held for sale owned by the Company, (ii) interests in the subordinated portion of the Company’s securitization debt, or (iii) interests in wholly-owned entity subsidiaries that hold the Company’s loans held for investment. The Company is the borrower or guarantor under each of the Financing Agreements. Generally, the Company partially offsets interest rate risk by matching the interest index of loans held for investment with the Secured Funding Agreements used to fund them. The Company’s Financing Agreements contain various affirmative and negative covenants, including negative pledges, and provisions regarding events of default that are normal and customary for similar financing arrangements.

Wells Fargo Facility

The Company is party to a master repurchase funding facility with Wells Fargo Bank, National Association (“Wells Fargo”) (the “Wells Fargo Facility”), which allows the Company to borrow up to $500.0 million. Under the Wells Fargo Facility, the Company is permitted to sell, and later repurchase, certain qualifying senior commercial mortgage loans, A-Notes, pari passu participations in commercial mortgage loans and mezzanine loans under certain circumstances, subject to available collateral approved by Wells Fargo in its sole discretion. The initial maturity date of the Wells Fargo Facility is December 14, 2018, subject to two12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the Wells Fargo Facility to December 14, 2020. Advances under the Wells Fargo Facility accrue interest at a per annum rate equal to the sum of (i) one-month LIBOR plus (ii) a pricing margin range of 1.75% to 2.35%. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the Wells Fargo Facility to the extent less than 75% of the Wells Fargo Facility is utilized. For the three months ended March 31, 2018, the Company did not incur a non-utilization fee. For the three months ended March 31, 2017, the Company incurred a non-utilization fee of $9 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

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Citibank Facility

The Company is party to a $250.0 million master repurchase facility with Citibank, N.A. (“Citibank”) (the “Citibank Facility”). Under the Citibank Facility, the Company is permitted to sell and later repurchase certain qualifying senior commercial mortgage loans and A-Notes approved by Citibank in its sole discretion. The Citibank Facility has an accordion feature that provides for an increase in the $250.0 million commitment amount with respect to approved assets, as determined by Citibank in its sole discretion. The initial maturity date of the Citibank Facility is December 10, 2018, subject to three12-month extensions, each of which may be exercised at the Company’s option assuming no existing defaults under the Citibank Facility and applicable extension fees being paid, which, if all three were exercised, would extend the maturity date of the Citibank Facility to December 8, 2021. Advances under the Citibank Facility accrue interest at a per annum rate equal to one-month LIBOR plus a pricing margin range of 2.25% to 2.50%, subject to certain exceptions. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the Citibank Facility. For the three months ended March 31, 2018 and 2017, the Company incurred a non-utilization fee of $51 thousand and $20 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

BAML Facility

The Company is party to a $125.0 million Bridge Loan Warehousing Credit and Security Agreement with Bank of America, N.A. (“Bank of America”) (the “BAML Facility”). Under the BAML Facility, the Company may obtain advances secured by eligible commercial mortgage loans collateralized by multifamily properties. Bank of America may approve the loans on which advances are made under the BAML Facility in its sole discretion. The Company may request individual loans under the BAML Facility up to May 24, 2018. Individual advances under the BAML Facility generally have a two-year maturity, subject to one 12-month extension at the Company’s option upon the satisfaction of certain conditions and applicable extension fees being paid. The final maturity date of individual loans under the BAML Facility is May 25, 2021. Since October 2, 2017, advances under the BAML Facility accrue interest at a per annum rate equal to one-month LIBOR plus a spread of 2.00%. Prior to and including October 1, 2017, advances under the BAML Facility accrued interest at a per annum rate equal to one-month LIBOR plus a spread ranging from 2.25% to 2.75% depending upon the type of asset securing such advance. The Company incurs a non-utilization fee of 12.5 basis points per annum on the average daily available balance of the BAML Facility to the extent less than 50% of the BAML Facility is utilized. For the three months ended March 31, 2018 and 2017, the Company incurred a non-utilization fee of $11 thousand and $9 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

CNB Facility

The Company is party to a $50.0 million secured revolving funding facility with City National Bank (the “CNB Facility”). The Company is permitted to borrow funds under the CNB Facility to finance investments and for other working capital and general corporate needs. In February 2018, the Company exercised a 12-month extension option on the CNB Facility to extend the initial maturity date to March 10, 2019. The Company has one additional 12-month extension, which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if exercised, would extend the maturity date of the CNB Facility to March 10, 2020. Advances under the CNB Facility accrue interest at a per annum rate equal to the sum of, at the Company’s option, either (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 3.00% or (b) a base rate (which is the highest of a prime rate, the federal funds rate plus 0.50%, or one-month LIBOR plus 1.00%) plus 1.25%; provided that in no event shall the interest rate be less than 3.00%. Unless at least 75% of the CNB Facility is used on average, unused commitments under the CNB Facility accrue non-utilization fees at the rate of 0.375% per annum. For the three months ended March 31, 2018 and 2017, the Company incurred a non-utilization fee of $46 thousand and $47 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

MetLife Facility

The Company and certain of its subsidiaries are party to a $180.0 million revolving master repurchase facility with Metropolitan Life Insurance Company (“MetLife”) (the “MetLife Facility”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans meeting defined eligibility criteria which are approved by MetLife in its sole discretion. The initial maturity date of the MetLife Facility is August 12, 2020, subject to two12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the MetLife Facility to August 12, 2022. Since August 4, 2017, advances under the MetLife Facility accrue interest at a per annum rate equal to one-month LIBOR plus a spread of 2.30%. Prior to and including August 3, 2017, advances under the MetLife Facility accrued interest at a per annum rate equal to one-month LIBOR plus a spread of 2.35%. Effective in February 2018, the Company began incurring a non-

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utilization fee of 25 basis points per annum on the average daily available balance of the MetLife Facility to the extent less than 65% of the MetLife Facility is utilized. For the three months ended March 31, 2018, the Company incurred a non-utilization fee of $6 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

UBS Facility

The Company and certain of its subsidiaries are party to a $140.0 million revolving master repurchase facility with UBS Real Estate Securities Inc. (“UBS”) (the “UBS Facility”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans and, under certain circumstances, other assets meeting defined eligibility criteria that are approved by UBS in its sole discretion. The maturity date of the UBS Facility is October 21, 2018, subject to annual extensions in UBS’ sole discretion. The interest rate on advances under the UBS Facility is one-month LIBOR plus (a) 1.88% per annum, for assets that are subject to an advance for one year or less, (b) 2.08% per annum, for assets that are subject to an advance in excess of one year but less than two years and (c) 2.28% per annum, for assets that are subject to an advance for greater than two years.

U.S. Bank Facility

The Company and certain of its subsidiaries are party to a $186.0 million master repurchase and securities contract with U.S. Bank National Association (“U.S. Bank”) (the “U.S. Bank Facility”). Pursuant to the U.S. Bank Facility, the Company is permitted to sell, and later repurchase, eligible commercial mortgage loans collateralized by retail, office, mixed-use, multifamily, industrial, hospitality, student housing, manufactured housing or self storage properties. U.S. Bank may approve the mortgage loans that are subject to the U.S. Bank Facility in its sole discretion. The initial maturity date of the U.S. Bank Facility is July 31, 2020, subject to two12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the U.S. Bank Facility to July 31, 2022. Advances under the U.S. Bank Facility generally accrue interest at a per annum rate equal to one-month LIBOR plus a spread of 2.25%, unless otherwise agreed between U.S. Bank and the Company, depending upon the mortgage loan sold to U.S. Bank in the applicable transaction. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the U.S. Bank Facility to the extent less than 50% of the U.S. Bank Facility is utilized. For the three months ended March 31, 2018, the Company did not incur a non-utilization fee. For the three months ended March 31, 2017, the Company incurred a non-utilization fee of $42 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

Secured Term Loan

The Company and certain of its subsidiaries are party to a $110.0 million Credit and Guaranty Agreement with the lenders referred to therein and Cortland Capital Market Services LLC, as administrative agent and collateral agent for the lenders (the “Secured Term Loan”). The initial maturity date of the Secured Term Loan is December 22, 2020, subject to one12-month extension, which may be exercised at the Company’s option, provided there are no existing events of default under the Secured Term Loan, which, if exercised, would extend the maturity date of the Secured Term Loan to December 22, 2021. During the extension period, the spread on advances under the Secured Term Loan increases every three months by 0.125%, 0.375% and 0.750% per annum, respectively, beginning after the third-month of the extension period. Since December 22, 2017, advances under the Secured Term Loan accrue interest at a per annum rate equal to the sum of, at the Company’s option, one, two, three or six-month LIBOR plus a spread of 5.00%. Prior to and including December 21, 2017, advances under the Secured Term Loan accrued interest at a per annum rate equal to one-month LIBOR plus a spread of 6.00% (with a 1.00% LIBOR floor). The total original issue discount on the Secured Term Loan draws was $2.6 million, which represents a discount to the debt cost to be amortized into interest expense using the effective interest method over the term of the Secured Term Loan. For the three months ended March 31, 2018 and 2017, the estimated per annum effective interest rate of the Secured Term Loan, which is equal to LIBOR plus the spread plus the accretion of the original issue discount and associated costs, was 7.3% and 8.5%, respectively.

5.     COMMITMENTS AND CONTINGENCIES

As of March 31, 2018 and December 31, 2017, the Company had the following commitments to fund various senior mortgage loans, subordinated debt investments, as well as preferred equity investments accounted for as loans held for investment ($ in thousands):

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	As of
	March 31, 2018			December 31, 2017
Total commitments	$	1,788,189		$	1,847,534
Less: funded commitments	(1,668,563		)	(1,737,286		)
Total unfunded commitments	$	119,626		$	110,248

The Company from time to time may be party to litigation relating to claims arising in the normal course of business. As of March 31, 2018, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.  

6.   STOCKHOLDERS’ EQUITY

Common Stock

There were no shares issued in public or private offerings for the three months ended March 31, 2018. See “Equity Incentive Plan” below for shares issued under the plan.

Equity Incentive Plan

On April 23, 2012, the Company adopted an equity incentive plan (the “2012 Equity Incentive Plan”). Pursuant to the 2012 Equity Incentive Plan, the Company may grant awards consisting of restricted shares of the Company’s common stock, restricted stock units and/or other equity-based awards to the Company’s outside directors, employees of the Manager, officers, ACREM and other eligible awardees under the plan, subject to an aggregate limitation of 690,000 shares of common stock (7.5% of the issued and outstanding shares of the Company’s common stock immediately after giving effect to the issuance of the shares sold in the IPO). Any restricted shares of the Company’s common stock and restricted stock units will be accounted for under FASB ASC Topic 718, Compensation—Stock Compensation, resulting in share-based compensation expense equal to the grant date fair value of the underlying restricted shares of common stock or restricted stock units.

Restricted stock grants generally vest ratably over a one to four year period from the vesting start date. The grantee receives additional compensation for each outstanding restricted stock grant, classified as dividends paid, equal to the per-share dividends received by common stockholders.

The following table details the restricted stock grants awarded as of March 31, 2018:

Grant Date	Vesting Start Date	Shares Granted
May 1, 2012	July 1, 2012	35,135
June 18, 2012	July 1, 2012	7,027
July 9, 2012	October 1, 2012	25,000
June 26, 2013	July 1, 2013	22,526
November 25, 2013	November 25, 2016	30,381
January 31, 2014	August 31, 2015	48,273
February 26, 2014	February 26, 2014	12,030
February 27, 2014	August 27, 2014	22,354
June 24, 2014	June 24, 2014	17,658
June 24, 2015	July 1, 2015	25,555
April 25, 2016	July 1, 2016	10,000
June 27, 2016	July 1, 2016	24,680
April 25, 2017	April 25, 2018	81,710
June 7, 2017	July 1, 2017	18,224
October 17, 2017	January 2, 2018	7,278
December 15, 2017	January 2, 2018	8,948
Total		396,779

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The following tables summarize the (i) non-vested shares of restricted stock and (ii) the vesting schedule of shares of restricted stock for the Company’s directors and officers as of March 31, 2018:

Schedule of Non-Vested Share and Share Equivalents

	Restricted Stock Grants—Directors		Restricted Stock Grants—Officers		Total
Balance at December 31, 2017	21,394		90,658		112,052
Granted	—		—		—
Vested	(6,942	)	(2,231	)	(9,173	)
Forfeited	—		—		—
Balance at March 31, 2018	14,452		88,427		102,879

Future Anticipated Vesting Schedule

	Restricted Stock Grants—Directors	Restricted Stock Grants—Officers	Total
2018	9,448	33,954	43,402
2019	3,336	27,237	30,573
2020	1,668	27,236	28,904
2021	—	—	—
2022	—	—	—
Total	14,452	88,427	102,879

7.   EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted earnings per common share for the three months ended March 31, 2018 and 2017 ($ in thousands, except share and per share data):

	For the three months ended March 31,
	2018		2017
Net income attributable to common stockholders	$	9,318	$	6,453
Divided by:
Basic weighted average shares of common stock outstanding:	28,495,833		28,468,819
Non-vested restricted stock	103,083		13,937
Diluted weighted average shares of common stock outstanding:	28,598,916		28,482,756
Basic and diluted earnings per common share	$	0.33	$	0.23

8.   INCOME TAX

The Company wholly-owns ACRC Lender W TRS LLC and ACRC Lender U TRS LLC, which are taxable REIT subsidiaries (“TRS”) formed in order to issue and hold certain loans intended for sale. The Company also wholly-owns ACRC 2017-FL3 TRS LLC, which is a TRS formed in order to hold a portion of the CLO Securitization (as defined below) to the extent it generates excess inclusion income.

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The income tax provision for the Company and the TRSs consisted of the following for the three months ended March 31, 2018 and 2017 ($ in thousands):

	For the three months ended March 31,
	2018		2017
Current	$	6	$	3
Deferred	—		—
Excise tax	75		65
Total income tax expense, including excise tax	$	81	$	68

For the three months ended March 31, 2018 and 2017, the Company recorded an expense of $75 thousand and $65 thousand, respectively, for U.S. federal excise tax. Excise tax represents a 4% tax on a portion of the required amount of the Company’s ordinary income and net capital gains not distributed during the year. If it is determined that the Company’s estimated current year taxable income plus any undistributed shortfall from its prior calendar year will be in excess of estimated dividend distributions (including capital gain dividend) for the current year, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned. The quarterly expense is calculated in accordance with applicable tax regulations.

The TRSs recognize interest and penalties related to unrecognized tax benefits within income tax expense in the Company’s consolidated statements of operations. Accrued interest and penalties, if any, are included within other liabilities in the Company’s consolidated balance sheets.

As of March 31, 2018, tax years 2014 through 2017 remain subject to examination by taxing authorities. The Company does not have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months.

9.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows FASB ASC Topic 820-10, Fair Value Measurement (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure requirements for fair value measurements. ASC 820-10 determines fair value to be the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value.

In accordance with ASC 820-10, the inputs used to measure fair value are summarized in the three broad levels listed below:

•Level 1-Quoted prices in active markets for identical assets or liabilities.

• Level 2-Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

• Level 3-Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

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As of March 31, 2018 and December 31, 2017, the Company did not have any assets or liabilities required to be recorded at fair value on a recurring or nonrecurring basis.

As of March 31, 2018 and December 31, 2017, the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands):

		As of
		March 31, 2018				December 31, 2017
	Level in Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Loans held for investment	3	$	1,658,375	$	1,668,563	$	1,726,283	$	1,737,286
Financial liabilities:
Secured funding agreements	2	$	929,454	$	929,454	$	957,960	$	957,960
Secured term loan	2	107,797		110,000		107,595		110,000
Collateralized loan obligation securitization debt (consolidated VIE)	3	271,393		272,927		271,211		272,927

The carrying values of cash and cash equivalents, restricted cash, interest receivable, due to affiliate liability and accrued expenses, which are all categorized as Level 2 within the fair value hierarchy, approximate their fair values due to their short-term nature.

Loans held for investment are recorded at cost, net of unamortized loan fees and origination costs and net of an allowance for loan losses. The Company may record fair value adjustments on a nonrecurring basis when it has determined that it is necessary to record a specific reserve against a loan and the Company measures such specific reserve using the fair value of the loan’s collateral. To determine the fair value of the collateral, the Company may employ different approaches depending on the type of collateral. The Financing Agreements and collateralized loan obligation (“CLO”) securitization debt are recorded at outstanding principal, which is the Company’s best estimate of the fair value.

10.   RELATED PARTY TRANSACTIONS

Management Agreement

The Company is party to a Management Agreement under which ACREM, subject to the supervision and oversight of the Company’s board of directors, is responsible for, among other duties, (a) performing all of the Company’s day-to-day functions, (b) determining the Company’s investment strategy and guidelines in conjunction with the Company’s board of directors, (c) sourcing, analyzing and executing investments, asset sales and financing, and (d) performing portfolio management duties. In addition, ACREM has an Investment Committee that oversees compliance with the Company’s investment strategy and guidelines, investment portfolio holdings and financing strategy.

In exchange for its services, ACREM is entitled to receive a base management fee, an incentive fee, expense reimbursements, grants of equity-based awards pursuant to the Company’s 2012 Equity Incentive Plan and a termination fee, if applicable.

The base management fee is equal to 1.5% of the Company’s stockholders’ equity per annum, which is calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, stockholders’ equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro-rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings at the end of the most recently completed fiscal quarter determined in accordance with GAAP (without taking into account any non-cash equity compensation expense incurred in current or prior periods); less (b) (x) any amount that the Company has paid to repurchase the Company’s common stock since inception, (y) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in the Company’s consolidated financial statements prepared in accordance with GAAP, and (z) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between ACREM and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown in the Company’s consolidated financial statements.

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The incentive fee is an amount, not less than zero, equal to the difference between: (a) the product of (i) 20% and (ii) the difference between (A) the Company’s Core Earnings (as defined below) for the previous 12-month period, and (B) the product of (1) the weighted average of the issue price per share of the Company’s common stock of all of the Company’s public offerings of common stock multiplied by the weighted average number of all shares of common stock outstanding including any restricted shares of the Company’s common stock, restricted stock units or any shares of the Company’s common stock not yet issued, but underlying other awards granted under the Company’s 2012 Equity Incentive Plan (see Note 6 included in these consolidated financial statements) in the previous 12-month period, and (2) 8%; and (b) the sum of any incentive fees earned by ACREM with respect to the first three fiscal quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any fiscal quarter unless cumulative Core Earnings for the 12 most recently completed fiscal quarters is greater than zero. “Core Earnings” is a non-GAAP measure and is defined as GAAP net income (loss) computed in accordance with GAAP, excluding non-cash equity compensation expense, the incentive fee, depreciation and amortization (to the extent that any of the Company’s target investments are structured as debt and the Company forecloses on any properties underlying such debt), any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss), and one-time events pursuant to changes in GAAP and certain non-cash charges after discussions between ACREM and the Company’s independent directors and after approval by a majority of the Company’s independent directors. For the three months ended March 31, 2018, no incentive fees were incurred. For the three months ended March 31, 2017, $268 thousand of incentive fees were incurred.

The Company reimburses ACREM at cost for operating expenses that ACREM incurs on the Company’s behalf, including expenses relating to legal, financial, accounting, servicing, due diligence and other services.

The Company will not reimburse ACREM for the salaries and other compensation of its personnel, except for the allocable share of the salaries and other compensation of the Company’s (a) Chief Financial Officer, based on the percentage of his time spent on the Company’s affairs and (b) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment professional personnel of ACREM or its affiliates who spend all or a portion of their time managing the Company’s affairs based on the percentage of their time spent on the Company’s affairs. The Company is also required to pay its pro-rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of ACREM and its affiliates that are required for the Company’s operations. The term of the Management Agreement ends on May 1, 2019, with automatic one-year renewal terms thereafter. Except under limited circumstances, upon a termination of the Management Agreement, the Company will pay ACREM a termination fee equal to three times the average annual base management fee and incentive fee received by ACREM during the 24-month period immediately preceding the most recently completed fiscal quarter prior to the date of termination, each as described above.

Certain of the Company’s subsidiaries, along with the Company’s lenders under certain of the Company’s Secured Funding Agreements, as well as under the CLO transaction have entered into various servicing agreements with ACREM’s subsidiary servicer, Ares Commercial Real Estate Servicer LLC (“ACRES”). The Company’s Manager will specially service, as needed, certain of the Company’s investments. Effective May 1, 2012, ACRES agreed that no servicing fees pursuant to these servicing agreements would be charged to the Company or its subsidiaries by ACRES or the Manager for so long as the Management Agreement remains in effect, but that ACRES will continue to receive reimbursement for overhead related to servicing and operational activities pursuant to the terms of the Management Agreement.

The following table summarizes the related party costs incurred by the Company for the three months ended March 31, 2018 and 2017 and amounts payable to the Company’s Manager as of March 31, 2018 and December 31, 2017 ($ in thousands):

	Incurred				Payable
	For the three months ended March 31,				As of
	2018		2017		March 31, 2018		December 31, 2017
Affiliate Payments
Management fees	$	1,558	$	1,544	$	1,558	$	1,549
Incentive fees	—		268		—		—
General and administrative expenses	924		948		924		1,016
Direct costs (1)	103		60		49		63
Total	$	2,585	$	2,820	$	2,531	$	2,628

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______________________________________________________________________________

(1) For the three months ended March 31, 2018 and 2017, direct costs incurred are included within general and administrative expenses in the Company’s consolidated statements of operations.

11.   DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the three months ended March 31, 2018 and 2017 ($ in thousands, except per share data):

Date Declared	Record Date	Payment Date	Per Share Amount		Total Amount
March 1, 2018	March 29, 2018	April 17, 2018	$	0.28	$	8,008
Total cash dividends declared for the three months ended March 31, 2018			$	0.28	$	8,008
March 7, 2017	March 31, 2017	April 17, 2017	$	0.27	$	7,690
Total cash dividends declared for the three months ended March 31, 2017			$	0.27	$	7,690

12.   VARIABLE INTEREST ENTITIES

Consolidated VIEs

As discussed in Note 2, the Company evaluates all of its investments and other interests in entities for consolidation, including its investment in the CLO Securitization (as defined below), which is considered to be a variable interest in a VIE.

CLO Securitization

On March 2, 2017, ACRE Commercial Mortgage 2017-FL3 Ltd. (the “Issuer”) and ACRE Commercial Mortgage 2017-FL3 LLC (the “Co-Issuer”), both wholly-owned indirect subsidiaries of the Company, entered into an indenture (the “Indenture”) with Wells Fargo Bank, National Association, as advancing agent and note administrator, and Wilmington Trust, National Association as trustee, which governs the issuance of approximately $308.8 million principal balance secured floating rate notes (the “Notes”) and $32.4 million of preferred equity in the Issuer (the “CLO Securitization”).

As of March 31, 2018, the Notes were collateralized by interests in a pool of eleven mortgage assets having a total principal balance of approximately $275.0 million (the “Mortgage Assets”) that were originated by a subsidiary of the Company and approximately $66.1 million of receivables related to repayments of outstanding principal on previous mortgage assets. As of December 31, 2017, the Notes were collateralized by interests in a pool of thirteen mortgage assets having a total principal balance of approximately $341.2 million that were originated by a subsidiary of the Company. During the reinvestment period ending on March 15, 2019, the Company may direct the Issuer to acquire additional mortgage assets meeting applicable reinvestment criteria using the principal repayments from the Mortgage Assets, subject to the satisfaction of certain conditions, including receipt of a Rating Agency Confirmation and investor approval of the new mortgage assets.

The contribution of the Mortgage Assets to the Issuer is governed by a Mortgage Asset Purchase Agreement between ACRC Lender LLC (the “Seller”), a wholly-owned subsidiary of the Company, and the Issuer, and acknowledged by the Company solely for purposes of confirming its status as a REIT, in which the Seller made certain customary representations, warranties and covenants.

In connection with the securitization, the Issuer and Co-Issuer offered and issued the following classes of Notes: Class A, Class A-S, Class B, Class C and Class D Notes (collectively, the “Offered Notes”) to a third party.  A wholly-owned subsidiary of the Company retained approximately $35.8 million of the Notes and all of the $32.4 million of preferred equity in the Issuer, which totaled $68.2 million. The Company, as the holder of the subordinated Notes and all of the preferred equity in the Issuer, has the obligation to absorb losses of the CLO, since the Company has a first loss position in the capital structure of the CLO.

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 After March 15, 2021, the Issuer may redeem the Offered Notes subject to paying a make whole prepayment fee of 1.0% of the then outstanding balance of the Offered Notes. In addition, once the Class A Notes, Class A-S Notes, Class B Notes and Class C Notes have been repaid in full, the Issuer has the right to redeem the Class D Notes, subject to paying a make whole prepayment fee of 1.0% on the Class D Notes.

As the directing holder of the CLO Securitization, the Company has the ability to direct activities that could significantly impact the CLO Securitization’s economic performance. ACRES is designated as special servicer of the CLO Securitization and has the power to direct activities during the loan workout process on defaulted and delinquent loans, which is the activity that most significantly impacts the CLO Securitization’s economic performance. ACRES did not waive the special servicing fee, and the Company pays its overhead costs. If an unrelated third party had the right to unilaterally remove the special servicer, then the Company would not have the power to direct activities that most significantly impact the CLO Securitization’s economic performance. In addition, there were no substantive kick-out rights of any unrelated third party to remove the special servicer without cause. The Company’s subsidiaries, as directing holders, have the ability to remove the special servicer without cause. Based on these factors, the Company is determined to be the primary beneficiary of the CLO Securitization; thus, the CLO Securitization is consolidated into the Company’s consolidated financial statements.

The CLO Securitization is consolidated in accordance with FASB ASC Topic 810 and is structured as a pass through entity that receives principal and interest on the underlying collateral and distributes those payments to the note holders, as applicable. The assets and other instruments held by the CLO Securitization are restricted and can only be used to fulfill the obligations of the CLO Securitization. Additionally, the obligations of the CLO Securitization do not have any recourse to the general credit of any other consolidated entities, nor to the Company as the primary beneficiary.

The inclusion of the assets and liabilities of the CLO Securitization of which the Company is deemed the primary beneficiary has no economic effect on the Company. The Company’s exposure to the obligations of the CLO Securitization is generally limited to its investment in the entity. The Company is not obligated to provide, nor has it provided, any financial support for the consolidated structure. As such, the risk associated with the Company’s involvement in the CLO Securitization is limited to the carrying value of its investment in the entity. As of March 31, 2018, the Company’s maximum risk of loss was $68.2 million, which represents the carrying value of its investment in the CLO Securitization. For the three months ended March 31, 2018 and 2017, the Company incurred interest expense related to the CLO Securitization of $2.3 million and $599 thousand, respectively, which is included within interest expense in the Company’s consolidated statements of operations.

13.   SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended March 31, 2018, except as disclosed below.

On April 17, 2018, the Company originated a $39.2 million senior mortgage loan on a multifamily property located in South Carolina. At closing, the outstanding principal balance was approximately $38.5 million. The loan has a per annum interest rate of LIBOR plus a spread of 3.36% (plus fees) and an initial term of three years.

On April 17, 2018, the Company originated a $32.9 million senior mortgage loan on a hotel property located in Illinois. At closing, the outstanding principal balance was approximately $18.9 million. The loan has a per annum interest rate of LIBOR plus a spread of 4.40% (plus fees) and an initial term of three years.

On May 1, 2018, the Company declared a cash dividend of $0.28 per common share for the second quarter of 2018. The second quarter 2018 dividend is payable on July 17, 2018 to common stockholders of record as of June 29, 2018.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Some of the statements contained in this quarterly report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. This description contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in “Risk Factors” and elsewhere in this quarterly report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. In addition, some of the statements in this quarterly report (including in the following discussion) constitute forward-looking statements, which relate to future events or the future performance or financial condition of Ares Commercial Real Estate Corporation (“ACRE” and, together with its consolidated subsidiaries, the “Company,” “we,” “us” and “our”). The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

• our business and investment strategy;

• our projected operating results;

• the return or impact of current and future investments;

• the timing of cash flows, if any, from our investments;

• estimates relating to our ability to make distributions to our stockholders in the future;

• defaults by borrowers in paying amounts due on outstanding indebtedness and our ability to collect all amounts due according to the contractual terms of our investments;

• our ability to obtain and maintain financing arrangements, including securitizations;

• market conditions and our ability to access alternative debt markets and additional debt and equity capital;

• the amount of commercial mortgage loans requiring refinancing;

• our expected investment capacity and available capital;

• financing and advance rates for our target investments;

• our expected leverage;

• changes in interest rates, credit spreads and the market value of our investments;

• the impact of changes in London Interbank Offered Rate (“LIBOR”) on our operating results;

• effects of hedging instruments on our target investments;

• rates of default or decreased recovery rates on our target investments;

• rates of prepayments on our mortgage loans and the effect on our business of such prepayments;

• the degree to which our hedging strategies may or may not protect us from interest rate volatility;

• availability of investment opportunities in mortgage-related and real estate-related investments and securities;

• the ability of Ares Commercial Real Estate Management LLC (“ACREM” or our “Manager”) to locate suitable investments for us, monitor, service and administer our investments and execute our investment strategy;

• allocation of investment opportunities to us by our Manager;

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• our ability to successfully identify, complete and integrate any acquisitions;

• our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;

• our ability to maintain our exemption from registration under the Investment Company Act of 1940 (the “1940 Act”);

• our understanding of our competition;

• general volatility of the securities markets in which we may invest;

• adverse changes in the real estate, real estate capital and credit markets and the impact of a protracted decline in the liquidity of credit markets on our business;

• changes in governmental regulations, tax law and rates, and similar matters (including interpretation thereof);

• authoritative or policy changes from standard-setting bodies such as the Financial Accounting Standards Board, the Securities and Exchange Commission, the Internal Revenue Service, the stock exchange where we list our common stock, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business;

• actions and initiatives of the U.S. Government and changes to U.S. Government policies;

• the state of the United States, European Union and Asian economies generally or in specific geographic regions;

• global economic trends and economic recoveries; and

• market trends in our industry, interest rates, real estate values, the debt securities markets or the general economy.

We use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those expressed in the forward-looking statements for any reason, including the factors set forth under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and elsewhere in this quarterly report on Form 10-Q.

We have based the forward-looking statements included in this quarterly report on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements.

Overview

We are a specialty finance company primarily engaged in originating and investing in commercial real estate (“CRE”) loans and related investments. We are externally managed by ACREM, a subsidiary of Ares Management, L.P. (NYSE: ARES) (“Ares Management”), a publicly traded, leading global alternative asset manager, pursuant to the terms of the management agreement dated April 25, 2012, as amended, between us and our Manager (the “Management Agreement”). From the commencement of our operations in late 2011, we have been primarily focused on directly originating and managing a diversified portfolio of CRE debt-related investments for our own account.

We were formed and commenced operations in late 2011. We are a Maryland corporation and completed our initial public offering in May 2012. We have elected and qualified to be taxed as a REIT for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended, commencing with our taxable year ended December 31, 2012. We generally will not be subject to U.S. federal income taxes on our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to the extent that we annually distribute all of our REIT taxable income to stockholders and comply with various other requirements as a REIT. We also operate our business in a manner that is intended to permit us to maintain our exemption from registration under the 1940 Act.

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Developments During the First Quarter of 2018:

• ACRE originated a $16.7 million senior mortgage loan on the construction of a residential property located in California.

• ACRE originated a $21.7 million senior mortgage loan on a multifamily property located in California.

• ACRE originated a $56.1 million senior mortgage loan on a mixed-use property located in California.

• ACRE exercised a 12-month extension option on the CNB Facility (as defined below) to extend the initial maturity date to March 10, 2019. ACRE has one additional 12-month extension option, which, if exercised, would extend the maturity date of the CNB Facility to March 10, 2020.

Factors Impacting Our Operating Results

The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, commercial mortgage loans, CRE debt and other financial assets in the marketplace. Our net interest income, which reflects the amortization of origination fees and direct costs, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate. Interest rates will vary according to the type of investment, conditions in the financial markets, creditworthiness of our borrowers, competition and other factors, none of which can be predicted with any certainty. Our operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by borrowers.

Investment Portfolio

As of March 31, 2018, our portfolio totaled 42 loans held for investment, excluding 63 loans that were repaid or sold since inception. Such investments are referred to herein as our investment portfolio. As of March 31, 2018, the aggregate originated commitment under these loans at closing was approximately $1.9 billion and outstanding principal was $1.7 billion. During the three months ended March 31, 2018, we funded approximately $77.3 million of outstanding principal and received repayments of $146.1 million of outstanding principal. As of March 31, 2018, 86.8% of our loans have LIBOR floors, with a weighted average floor of 0.87%, calculated based on loans with LIBOR floors. References to LIBOR or “L” are to 30-day LIBOR (unless otherwise specifically stated).

As of March 31, 2018, all loans were paying in accordance with their contractual terms. During the three months ended March 31, 2018, there were no impairments with respect to our loans held for investment.

Our loans held for investment are accounted for at amortized cost. The following table summarizes our loans held for investment as of March 31, 2018 ($ in thousands):

	As of March 31, 2018
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,606,225	$	1,615,703	4.9	%	6.5	%	1.8
Subordinated debt and preferred equity investments	52,150		52,860		9.5	%	11.0	%	3.2
Total loans held for investment portfolio	$	1,658,375	$	1,668,563	5.0	%	6.6	%	1.9

_____________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate.

(3) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by us as of March 31, 2018 as weighted by the Outstanding Principal balance of each loan.

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Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles, which require management to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and other factors management believes to be reasonable. Actual results may differ from those estimates and assumptions. There have been no significant changes to our critical accounting policies as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. See Note 2 to our consolidated financial statements included in this quarterly report on Form 10-Q, which describes the recently issued accounting pronouncements that were adopted or not yet required to be adopted by us.

RESULTS OF OPERATIONS

The following table sets forth a summary of our consolidated results of operations for the three months ended March 31, 2018 and 2017 ($ in thousands):

	For the three months ended March 31,
	2018		2017
Net interest margin	$	13,137	$	10,339
Total expenses	3,738		3,793
Income before income taxes	9,399		6,546
Income tax expense, including excise tax	81		68
Net income attributable to ACRE	9,318		6,478
Less: Net income attributable to non-controlling interests	—		(25		)
Net income attributable to common stockholders	$	9,318	$	6,453

The following tables set forth select details of our consolidated results of operations for the three months ended March 31, 2018 and 2017 ($ in thousands):

Net Interest Margin

	For the three months ended March 31,
	2018			2017
Interest income from loans held for investment	$	27,436		$	21,127
Interest expense	(14,299		)	(10,788		)
Net interest margin	$	13,137		$	10,339

For the three months ended March 31, 2018 and 2017, net interest margin was approximately $13.1 million and $10.3 million, respectively. For the three months ended March 31, 2018 and 2017, interest income from loans held for investment of $27.4 million and $21.1 million, respectively, was generated by weighted average earning assets of $1.7 billion and $1.3 billion, respectively, offset by $14.3 million and $10.8 million, respectively, of interest expense, unused fees and amortization of deferred loan costs. For the three months ended March 31, 2018 and 2017, the weighted average borrowings under the Wells Fargo Facility, the Citibank Facility, the BAML Facility, the CNB Facility, the MetLife Facility, the UBS Facility and the U.S. Bank Facility (individually defined below and collectively, the “Secured Funding Agreements”) and securitization debt and the Secured Term Loan (defined below) were $1.3 billion and $983.9 million, respectively. The increase in interest income from loans held for investment and interest expense for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 primarily relates to an increase in our weighted average earning assets and weighted average borrowings for the three months ended March 31, 2018.

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Operating Expenses

	For the three months ended March 31,
	2018		2017
Management and incentive fees to affiliate	$	1,558	$	1,812
Professional fees	482		391
General and administrative expenses	774		642
General and administrative expenses reimbursed to affiliate	924		948
Total expenses	$	3,738	$	3,793

For the three months ended March 31, 2018 and 2017, we incurred operating expenses of $3.7 million and $3.8 million, respectively, which was relatively consistent for both periods.

Related Party Expenses

For the three months ended March 31, 2018, related party expenses included $1.6 million in management fees due to our Manager and $0.9 million for our share of allocable general and administrative expenses for which we were required to reimburse our Manager pursuant to the Management Agreement. For the three months ended March 31, 2017, related party expenses included $1.5 million in management fees due to our Manager and $0.9 million for our share of allocable general and administrative expenses for which we were required to reimburse our Manager pursuant to the Management Agreement. The management fees and allocable general and administrative expenses due to our Manager were relatively consistent for both periods. For the three months ended March 31, 2018, there were no incentive fees due to our Manager. For the three months ended March 31, 2017, there were $0.3 million of incentive fees due to our Manager.

Other Expenses

For the three months ended March 31, 2018 and 2017, professional fees were $0.5 million and $0.4 million, respectively. The increase in professional fees for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 primarily relates to an increase in our use of third party professionals due to changes in transaction activity year over year. For the three months ended March 31, 2018 and 2017, general and administrative expenses were $0.8 million and $0.6 million, respectively. The increase in general and administrative expenses for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 primarily relates to an increase in stock-based compensation expense due to new restricted stock grants awarded after March 31, 2017.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make distributions to our stockholders and other general business needs. We use significant cash to purchase our target investments, make principal and interest payments on our borrowings, make distributions to our stockholders and fund our operations. Our primary sources of cash generally consist of unused borrowing capacity under our Secured Funding Agreements, the net proceeds of future offerings, payments of principal and interest we receive on our portfolio of assets and cash generated from our operating activities. However, principal repayments from mortgage loans in securitizations where we retain the subordinate securities are applied sequentially, first used to pay down the senior notes, and accordingly, we will not receive any proceeds from repayment of loans in the securitizations until all senior notes are repaid in full. Subject to maintaining our qualification as a REIT and our exemption from the 1940 Act, we expect that our primary sources of financing will be, to the extent available to us, through (a) credit, secured funding and other lending facilities, (b) securitizations, (c) other sources of private financing, including warehouse and repurchase facilities, and (d) public or private offerings of our equity or debt securities. We may seek to sell certain of our investments in order to manage liquidity needs, interest rate risk, meet other operating objectives and adapt to market conditions.

Cash Flows

The following table sets forth changes in cash, cash equivalents and restricted cash for the three months ended March 31, 2018 and 2017 ($ in thousands):

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	For the three months ended March 31,
	2018			2017
Net income	$	9,318		$	6,478
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	377			(270		)
Net cash provided by (used in) operating activities	9,695			6,208
Net cash provided by (used in) investing activities	3,713			(56,687		)
Net cash provided by (used in) financing activities	(36,550		)	47,614
Change in cash, cash equivalents and restricted cash	$	(23,142	)	$	(2,865	)

During the three months ended March 31, 2018 and 2017, cash, cash equivalents and restricted cash decreased by $23.1 million and $2.9 million, respectively.

Operating Activities

For the three months ended March 31, 2018 and 2017, net cash provided by operating activities totaled $9.7 million and $6.2 million, respectively. For the three months ended March 31, 2018, adjustments to net income related to operating activities primarily included accretion of deferred loan origination fees and costs of $1.9 million and amortization of deferred financing costs of $1.5 million. For the three months ended March 31, 2017, adjustments to net income related to operating activities primarily included accretion of deferred loan origination fees and costs of $1.5 million and amortization of deferred financing costs of $1.7 million.

Investing Activities

For the three months ended March 31, 2018 and 2017, net cash provided by (used in) investing activities totaled $3.7 million and $(56.7) million, respectively. This change in net cash provided by (used in) investing activities was primarily as a result of the cash received from principal repayment of loans held for investment exceeding the cash used for the origination of new loans held for investment for the three months ended March 31, 2018.

Financing Activities

For the three months ended March 31, 2018, net cash used in financing activities totaled $36.6 million and primarily related to repayments of our Secured Funding Agreements of $83.2 million, partially offset by proceeds from our Secured Funding Agreements of $54.7 million. For the three months ended March 31, 2017, net cash provided by financing activities totaled $47.6 million and primarily related to proceeds from our Secured Funding Agreements of $88.9 million and proceeds from the issuance of debt of consolidated variable interest entities (“VIEs”) of $272.9 million, partially offset by repayments of our Secured Funding Agreements of $293.1 million.

Summary of Financing Agreements

The sources of financing, as applicable in a given period, under our Secured Funding Agreements and the Secured Term Loan (collectively, the "Financing Agreements") are described in the following table ($ in thousands):

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	As of
	March 31, 2018									December 31, 2017
	Total Commitment			Outstanding Balance		Interest Rate		Maturity Date		Total Commitment			Outstanding Balance		Interest Rate		Maturity Date
Secured Funding Agreements:
Wells Fargo Facility	$	500,000		$	384,432	LIBOR+1.75 to 2.35%		December 14, 2018	(1)	$	500,000		$	407,853	LIBOR+1.75 to 2.35%		December 14, 2018	(1)
Citibank Facility	250,000		(2)	174,075		LIBOR+2.25 to 2.50%		December 10, 2018	(2)	250,000		(2)	175,651		LIBOR+2.25 to 2.50%		December 10, 2018	(2)
BAML Facility	125,000			56,320		LIBOR+2.00%		May 24, 2018	(3)	125,000			78,320		LIBOR+2.00%		May 24, 2018	(3)
CNB Facility	50,000			15,260		LIBOR+3.00%		March 10, 2019	(4)	50,000			—		LIBOR+3.00%		March 11, 2018	(4)
MetLife Facility	180,000			101,131		LIBOR+2.30%		August 12, 2020	(5)	180,000			101,131		LIBOR+2.30%		August 12, 2020	(5)
UBS Facility	140,000			34,000		LIBOR+1.88 to 2.28%	(6)	October 21, 2018		140,000			34,000		LIBOR+1.88 to 2.28%	(6)	October 21, 2018
U.S. Bank Facility	185,989			164,236		LIBOR+1.85 to 2.25%		July 31, 2020	(7)	185,989			161,005		LIBOR+1.85 to 2.25%		July 31, 2020	(7)
Subtotal	$	1,430,989		$	929,454					$	1,430,989		$	957,960
Secured Term Loan	$	110,000		$	110,000	LIBOR+5.00%		December 22, 2020	(8)	$	110,000		$	110,000	LIBOR+5.00%		December 22, 2020	(8)
Total	$	1,540,989		$	1,039,454					$	1,540,989		$	1,067,960

______________________________________________________________________________

(1) The maturity date of the master repurchase funding facility with Wells Fargo Bank, National Association (the “Wells Fargo Facility”) is subject to two 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid.

(2) The maturity date of the master repurchase facility with Citibank, N.A. (the “Citibank Facility”) is subject to three 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid. The Citibank Facility has an accordion feature that provides for an increase in the $250.0 million commitment amount with respect to approved assets, as determined by Citibank, N.A. in its sole discretion.

(3) Individual advances on loans under the Bridge Loan Warehousing Credit and Security Agreement with Bank of America, N.A. (the “BAML Facility”) generally have a two-year maturity, subject to a 12-month extension at our option provided that certain conditions are met and applicable extension fees are paid.

(4) The maturity date of the secured revolving funding facility with City National Bank (the “CNB Facility”) is subject to one 12-month extension at our option provided that certain conditions are met and applicable extension fees are paid. In February 2018, we exercised a 12-month extension option on the CNB Facility to extend the maturity date to March 10, 2019.

(5) The maturity date of the revolving master repurchase facility with Metropolitan Life Insurance Company (the “MetLife Facility”) is subject to two 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid.

(6) The interest rate on advances under the revolving master repurchase facility with UBS Real Estate Securities Inc. (the “UBS Facility”) is one-month LIBOR plus (i) 1.88% per annum, for assets that are subject to an advance for one year or less, (ii) 2.08% per annum, for assets that are subject to an advance in excess of one year but less than two years, and (iii) 2.28% per annum, for assets that are subject to an advance for more than two years.

(7) The maturity date of the master repurchase and securities contract with U.S. Bank National Association (the “U.S. Bank Facility”) is subject to two 12-month extensions at our option provided that certain conditions are met and applicable extension fees are paid.

(8) The maturity date of the Credit and Guaranty Agreement with the lenders referred to therein and Cortland Capital Market Services LLC, as administrative agent and collateral agent for the lenders (the “Secured Term Loan”), is subject to one 12-month extension at our option provided that certain conditions are met.

Our Financing Agreements contain various affirmative and negative covenants, including negative pledges, and provisions related to events of default that are normal and customary for similar financing agreements. As of March 31, 2018, we were in compliance with all financial covenants of each respective Financing Agreement. See Note 4 to our consolidated financial statements included in this quarterly report on Form 10-Q for more information on our Financing Agreements.

Securitizations

We may seek to enhance the returns on our senior mortgage loan investments through securitizations, if available. To the extent available, we intend to securitize the senior portion of some of our loans, while retaining the subordinate securities in

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our investment portfolio. The securitization of this senior portion will be accounted for as either a “sale” and the loans will be removed from our balance sheet or as a “financing” and will be classified as “loans held for investment” in our consolidated balance sheets, depending upon the structure of the securitization. As of March 31, 2018, the carrying amount and outstanding principal of our CLO Securitization was $271.4 million and $272.9 million, respectively. See Note 12 to our consolidated financial statements included in this quarterly report on Form 10-Q for additional terms and details of our CLO Securitization.

Capital Markets

We may periodically raise additional capital through public offerings of debt and equity securities to fund new investments. On June 6, 2016, we filed a registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”), which became effective on August 29, 2016, in order to permit us to offer, from time to time, in one or more offerings or series of offerings up to $1.25 billion of our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, or units.

Other Sources of Financing

In addition to the sources of liquidity described above, in the future, we may also use other sources of financing to fund the origination or acquisition of our target investments or to refinance expiring Financing Agreements and securitizations, including other credit facilities, warehouse facilities, repurchase facilities, non-convertible or convertible debt, securitized financings and other public and private forms of borrowing. These financings may be issued by us or our subsidiaries, be collateralized or non-collateralized, accrue interest at either fixed or floating rates and may involve one or more lenders.

Leverage Policies

We intend to use prudent amounts of leverage to increase potential returns to our stockholders. To that end, subject to maintaining our qualification as a REIT and our exemption from registration under the 1940 Act, we intend to continue to use borrowings to fund the origination or acquisition of our target investments. Given current market conditions and our focus on first or senior mortgages, we currently expect that such leverage would not exceed, on a debt-to-equity basis, a 4-to-1 ratio. Our charter and bylaws do not restrict the amount of leverage that we may use. The amount of leverage we will deploy for particular investments in our target investments will depend upon our Manager’s assessment of a variety of factors, which may include, among others, the anticipated liquidity and price volatility of the assets in our investment portfolio, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, including hedges, the availability and cost of financing the assets, our opinion of the creditworthiness of our financing counterparties, the health of the U.S. economy generally or in specific geographic regions and commercial mortgage markets, our outlook for the level and volatility of interest rates, the slope of the yield curve, the credit quality of our assets, the collateral underlying our assets, and our outlook for asset spreads relative to the LIBOR curve.

Dividends

We elected to be taxed as a REIT for U.S. federal income tax purposes and, as such, anticipate annually distributing to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. To the extent that we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if a REIT distributes less than the sum of 85% of its ordinary income for the calendar year, 95% of its capital gain net income for the calendar year plus any undistributed shortfall from its prior calendar year (the “Required Distribution”) to its stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then it is required to pay non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. Any of these taxes would decrease cash available for distribution to our stockholders. The 90% distribution requirement does not require the distribution of net capital gains. However, if a REIT elects to retain any of its net capital gain for any tax year, it must notify its stockholders and pay tax at regular corporate rates on the retained net capital gain. The stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT's tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If we determine that our estimated current year taxable income (including net capital gain) will be in excess of estimated dividend distributions (including capital gains dividends) for the current year from such income, we accrue excise tax on a portion of the estimated excess taxable income as such taxable income is earned.

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Before we make any distributions, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our Financing Agreements and other debt payable. If our cash available for distribution is less than our REIT taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the Required Distribution in the form of a taxable stock distribution or distribution of debt securities.

OFF-BALANCE SHEET ARRANGEMENTS

We have commitments to fund various senior mortgage loans, as well as subordinated debt and preferred equity investments in our portfolio.

Other than as set forth in this quarterly report on Form 10-Q, we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, special purpose entities or VIEs, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities or entered into any commitment or intend to provide additional funding to any such entities.

RECENT DEVELOPMENTS

On April 17, 2018, we originated a $39.2 million senior mortgage loan on a multifamily property located in South Carolina. At closing, the outstanding principal balance was approximately $38.5 million. The loan has a per annum interest rate of LIBOR plus a spread of 3.36% (plus fees) and an initial term of three years.

On April 17, 2018, we originated a $32.9 million senior mortgage loan on a hotel property located in Illinois. At closing, the outstanding principal balance was approximately $18.9 million. The loan has a per annum interest rate of LIBOR plus a spread of 4.40% (plus fees) and an initial term of three years.

On May 1, 2018, we declared a cash dividend of $0.28 per common share for the second quarter of 2018. The second quarter 2018 dividend is payable on July 17, 2018 to common stockholders of record as of June 29, 2018.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

As part of our risk management strategy, our Manager closely monitors our portfolio and actively manages the credit, interest rate, market, prepayment, real estate inflation and financing risks associated with holding a portfolio of our target investments. We manage our portfolio through an interactive process with our Manager and Ares Management. Our Manager has an Investment Committee that oversees compliance with our investment strategy and guidelines, investment portfolio holdings and financing strategy. We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value while, at the same time, seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock. While we do not seek to avoid risk completely, we believe the risks can be quantified from historical experience and seek to actively manage those risks, to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake.

Credit Risk

We are subject to varying degrees of credit risk in connection with holding our target investments. We have exposure to credit risk on our CRE loans and other target investments in our business. Our Manager seeks to manage credit risk by performing our due diligence process prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate. Credit risk is also addressed through our Manager’s ongoing review of our investment portfolio. In addition, with respect to any particular target investment, our Manager’s investment team evaluates, among other things, relative valuation, comparable analysis, supply and demand trends, shape of yield curves, delinquency and default rates, recovery of various sectors and vintage of collateral.

Interest Rate Risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our assets and our related financing obligations, including our borrowings under the Financing Agreements. We primarily originate or acquire floating rate mortgage assets and finance those assets with index-matched floating rate liabilities. As a result, we significantly reduce our exposure to changes in portfolio value and cash flow variability related to changes in interest rates.  However, we regularly measure our exposure to interest rate risk and assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not we should enter into hedging transactions and derivative financial instruments, such as forward sale commitments and interest rate floors in order to mitigate our exposure to changes in interest rates.

While hedging activities may mitigate our exposure to adverse fluctuations in interest rates, certain hedging transactions that we may enter into in the future, such as interest rate swap agreements, may also limit our ability to participate in the benefits of lower interest rates with respect to our investments. In addition, there can be no assurance that we will be able to effectively hedge our interest rate risk.

In addition to the risks related to fluctuations in asset values and cash flows associated with movements in interest rates, there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates, the additional debt service payments due from our borrowers may strain the operating cash flows of the real estate assets underlying our mortgages and, potentially, contribute to non-performance or, in severe cases, default.

Interest Rate Effect on Net Interest Margin

 Our operating results depend in large part on differences between the income earned on our assets and our cost of borrowing. The cost of our borrowings generally is based on prevailing market interest rates. During a period of rising interest rates, our borrowing costs generally increase while the yields earned on our leveraged fixed-rate mortgage assets remain static, which could result in a decline in our net interest spread and net interest margin.

For the three months ended March 31, 2018, the following fluctuations in the average 30-day LIBOR would have resulted in the following increases in net interest margin on our loans held for investment ($ in millions):

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Change in Average 30-Day LIBOR	For the three months ended March 31, 2018
Up 300 basis points	$	2.7
Up 200 basis points	$	1.8
Up 100 basis points	$	0.9
Down to 0 basis points	$	1.5

The severity of any such impact depends on our asset/liability composition at the time as well as the magnitude and duration of the interest rate increase and any applicable floors and caps. Further, an increase in short-term interest rates could also have a negative impact on the market value of our target investments. If any of these events happen, we could experience a decrease in net income or incur a net loss during these periods, which could adversely affect our liquidity and results of operations.

Interest Rate Cap and Floor Risk

We primarily originate or acquire floating rate mortgage assets. These are assets in which the mortgages may be subject to periodic and lifetime interest rate caps and floors, which limit the amount by which the asset’s interest yield changes during any given period. However, our borrowing costs pursuant to our Financing Agreements sometimes are not subject to similar restrictions or have different floors and caps. As a result, in a period of increasing interest rates, interest rate costs on our borrowings could increase without limitation by caps, while the interest rate yields on our floating rate mortgage assets could be limited if we do not implement effective caps. In addition, floating rate mortgage assets may be subject to periodic payment caps that result in some portion of the interest being deferred and added to the principal outstanding. This could result in our receipt of less cash income on such assets than we would need to pay the interest cost on our related borrowings. In addition, in a period of decreasing interest rates, the interest rate yields on our floating rate mortgage assets could decrease, while the interest rate costs on certain of our borrowings could be fixed at a higher floor. These factors could lower our net interest income or cause a net loss during periods of decreasing interest rates, which would harm our financial condition, cash flows and results of operations.

Market Risk

The estimated fair values of our investments fluctuate primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of the fixed-rate securities would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of the fixed-rate securities would be expected to increase. As market volatility increases or liquidity decreases, the fair value of our investments may be adversely impacted.

Prepayment and Securitizations Repayment Risk

Our net income and earnings may be affected by prepayment rates on our existing CRE loans. When we originate our CRE loans, we anticipate that we will generate an expected yield. When borrowers prepay their CRE loans faster than we expect, we may be unable to replace these CRE loans with new CRE loans that will generate yields which are as high as the prepaid CRE loans. Additionally, principal repayment proceeds from mortgage loans in the CLO Securitization are applied sequentially, first used to pay down the senior CLO Securitization notes. We will not receive any proceeds from the repayment of loans in the CLO Securitization until all senior notes are repaid in full.

Financing Risk

We borrow funds under our Financing Agreements to finance our target assets. Over time, as market conditions change, in addition to these financings, we may use other forms of leverage. Weakness or volatility in the financial markets, the commercial real estate and mortgage markets and the economy generally could adversely affect one or more of our potential lenders and could cause one or more of our potential lenders to be unwilling or unable to provide us with financing or to increase the costs of that financing.

Real Estate Risk

Commercial mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; local markets with

33

a significant exposure to the energy sector; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loan or loans, as the case may be, which could also cause us to suffer losses. We seek to manage these risks through our underwriting and asset management processes.

Inflation Risk

Virtually all of our assets and liabilities are sensitive to interest rates. As a result, interest rates and other factors influence our performance far more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. In each case, in general, our activities and balance sheet are measured with reference to historical cost and/or fair market value without considering inflation.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that, as of March 31, 2018, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a‑15(f) and 15d‑15(f) under the Exchange Act) during the quarter ended March 31, 2018 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, we may be subject to various legal proceedings from time to time. Furthermore, third parties may try to seek to impose liability on us in connection with our loans. As of March 31, 2018, we were not subject to any material pending legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017. You should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number	Exhibit Description
2.1*	Purchase and Sale Agreement, among Ares Commercial Real Estate Corporation and Cornerstone Real Estate Advisers LLC. (1)
2.2*	Waiver and Amendment to Purchase and Sale Agreement, dated as of September 29, 2016, among Ares Commercial Real Estate Corporation and Barings Real Estate Advisers LLC (formerly known as Cornerstone Real Estate Advisers LLC). (2)
3.1*	Articles of Amendment and Restatement of Ares Commercial Real Estate Corporation. (3)
3.2*	Amended and Restated Bylaws of Ares Commercial Real Estate Corporation. (4)
10.1	Second Amendment to Master Repurchase and Securities Contract, dated as of March 15, 2018, by and between ACRC Lender US LLC, as seller, and U.S. Bank National Association, as buyer, and acknowledged and agreed to by Ares Commercial Real Estate Corporation.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

______________________________________________________________________________

*	Previously filed
(1)	Incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K (File No. 001-35517), filed on June 29, 2016.
(2)	Incorporated by reference to Exhibit 2.2 to the Company’s Form 10-Q (File No. 001-35517), filed on August 3, 2017.
(3)	Incorporated by reference to Exhibit 3.1 to the Company’s Form 10-K (File No. 001-35517), filed on March 1, 2016.
(4)	Incorporated by reference to Exhibit 3.2 to the Company’s Form S-8 (File No. 333-181077), filed on May 1, 2012.

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SIGNATURES

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 thereunto duly authorized.

	ARES COMMERCIAL REAL ESTATE CORPORATION
Date: May 1, 2018	By:	/s/ James A. Henderson
		James A. Henderson
		Chief Executive Officer, Chief Investment Officer and President (Principal Executive Officer)
Date: May 1, 2018	By:	/s/ Tae-Sik Yoon
		Tae-Sik Yoon
		Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO

MASTER REPURCHASE AND SECURITIES CONTRACT

THIS SECOND AMENDMENT TO MASTER REPURCHASE AND SECURITIES CONTRACT (this “Amendment”) is made as of March 15, 2018 (“Amendment Effective Date”), by and among ACRC LENDER US LLC, a Delaware limited liability company (“Seller”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (the “Buyer”).

RECITALS

A.The Buyer and Seller are parties to that certain Master Repurchase and Securities Contract dated as of August 1, 2016 (as amended, the “Repurchase Agreement”), as amended by that First Amendment to Master Repurchase and Securities Contract dated as of June 23, 2017 (the “First Amendment”).

B.The Buyer and Seller desire to further amend the Repurchase Agreement as described herein.

NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

AGREEMENT

1.Definitions. Capitalized terms not otherwise defined in this Amendment shall have the meaning set forth in the Repurchase Agreement, including, for the avoidance of doubt, as amended and modified by this Amendment.

2.Amendment to Repurchase Agreement. The Repurchase Agreement is hereby amended as follows, effective as of the Amendment Effective Date:

a) Amendments to Section 2. Section 2 of the Repurchase Agreement is hereby amended as follows:

i. The defined term “Activation Period” and “Servicer Remittance Date” are hereby added to Section 2 as follows, each in their proper alphabetical order:

““Activation Period” means the period (i) commencing on the date Buyer denies access to Seller to the Cash Management Account (followed promptly by written notice from Buyer to Seller of such Activation Period) and (b) ending on the date Buyer thereafter grants access to Seller to the Cash Management Account.”

““Servicer Remittance Date” shall have the meaning assigned such term in the Servicing Agreement.”

ii. The definition of “Covenant Determination” is hereby amended by removing the phrase “clause second of part II” and replacing such phrase with “the second sentence.”

b) Amendments to Section 5. Section 5 of the Repurchase Agrement is hereby amended as follows:

i. Section 5(c) is hereby amended and restated in its entirety as follows:

“(c)On each Remittance Date, unless an Activiation Period is in effect or a Default or Event of Default has occurred and is continuing, Buyer may withdraw from the Cash Management Account an amount equal to the aggregate amount that would be payable to Buyer under clauses (i) through (vi) of the first sentence of Section 5(d) on such Remittance Date (as though an Activation Period were in effect). Seller shall have access to the Cash

1

Management Account and may withdraw funds on deposit therein up to the amount remaining after giving effect to Buyer's withdrawals described in the preceding sentence on any day unless (i) an Activation Period in effect on such day, (ii) such day falls during the period from and including a Servicer Remittance Date to and including the immediately succeeding Remittance Date or (iii) in the case of a withdrawal of any proceeds of a Principal Payment in excess of $1,000,000, such day occurs prior to the date that the distributions relating to such Principal Payments are made by the Depository as described in the second sentence of Section 5(d).”

ii. Section 5(d) is hereby amended and restated in its entirety as follows:

“(d)If an Activation Period is then in effect, so long as no Default or Event of Default shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Mortgage Loan and the related Hedging Transactions during each Collection Period shall be applied by the Depository at the direction of Buyer on the related Remittance Date as follows:

(i)first, to remit to Buyer an amount equal to the Price Differential which has accrued and is outstanding in respect of all of the Purchased Mortgage Loans as of such Remittance Date;

(ii)second, to remit to Buyer an amount equal to any and all fees, costs and expenses, including, but not limited to, reasonable attorneys’ fees and expenses and enforcement costs, due and owing by Seller to Buyer (or any other Indemnified Party) under the Transaction Documents as of such Remittance Date;

(iii)third, to remit to Buyer (A) its proportionate share of any Principal Payment received with respect to a Purchased Mortgage Loan, in an amount equal to the product of (x) the amount of such Principal Payment received and (y) the Purchase Price Percentage or (B) if such Principal Payment reduces the Mortgagor’s obligation under the Mortgage Note to $0, the Repurchase Price of the related Purchased Mortgage Loan;

(iv)fourth, if a Margin Deficit exists with respect to any Purchased Mortgage Loan, to remit to Buyer an amount sufficient to eliminate such outstanding Margin Deficit (without limiting Seller’s obligation, if any, to satisfy a Margin Deficit in a timely manner as required pursuant to Section 4);

(v)fifth, [reserved];

(vi)sixth, to remit to Buyer to pay in full any other outstanding obligation of Seller then due and payable to Buyer or its Affiliates under this Agreement; and

(vii)seventh, all remaining Income shall be remitted to Seller.

Notwithstanding the above, so long as no Default or Event of Default shall have occurred and be continuing, but whether or not an Activation Period is in effect, to the extent a Principal Payment on a Purchased Mortgage Loan in excess of $1,000,000 on any date is received in the Cash Management Account, the Buyer shall direct the Depository to distribute such amount on the Business Day immediately succeeding notice to Buyer from Seller of

2

deposit in immediately available funds of such amount in the Cash Management Account, as follows (in each case, after giving effect to amounts withdrawn from the Cash Management Account by Buyer pursuant to Section 5(c) and any payments to Buyer pursuant to the first sentence of this Section 5(d), as applicable):

(i)first, to remit to Buyer, Custodian or Depository to pay in full any obligations of Seller to Buyer, Custodian or Depository under this Agreement or any other Transaction Document that was not paid when due on any prior Remittance Date;

(ii)second, if a Margin Deficit exists or would, upon the occurrence of such Principal Payment, exist with respect to any Purchased Mortgage Loan, including the Purchased Mortgage Loan that is the subject of such Principal Payment, to remit to Buyer an amount sufficient to eliminate such outstanding Margin Deficit (without limiting Seller’s obligation to satisfy a Margin Deficit in a timely manner as required pursuant to Section 4);

(iii)third, to remit to Buyer (A) its proportionate share of such Principal Payment, in an amount equal to the product of (x) the amount of such Principal Payment received and (y) the Purchase Price Percentage or (B) if such Principal Payment reduces the Mortgagor’s obligation under the Mortgage Note to $0, the Repurchase Price for the related Purchased Mortgage Loan; and

(iv)fourth, all remaining amounts shall be remitted to Seller.”

c) Amendments to Section 13. Section 13 of the Repurchase Agrement is hereby amended as follows:

i. Section 13(vii) is hereby amended and restated in its entirety as follows:

“(vii)failure of Buyer to receive on any Remittance Date the accreted value of the Price Differential or Unused Fee (less any amount of such Price Differential or Unused Fee previously paid by Seller to Buyer) (including in the event the Income paid or distributed on or in respect of the Purchased Mortgage Loan into the Cash Management Account is insufficient to make such payment and Seller does not make such payment or cause such payment to be made) and Seller fails to cure such failure within two (2) Business Days (except that such failure shall not be an Event of Default if sufficient Income is on deposit in the Cash Management Account and either the Depository fails to remit such funds to Buyer or Buyer has failed to make a withdrawal of such funds from the Cash Management Account as contemplated by Section 4(c));”

ii. Section 13(ix) is hereby amended and restated in its entirety as follows:

“(ix)failure of Seller to make any other payment (i.e., a payment of a type not specified in any other clause of this Section 13) owing to Buyer that has become due, whether by acceleration or otherwise under the terms of this Agreement which failure is not remedied within the applicable period (in the case of a failure pursuant to Section 4) or five (5) Business Days after written notice from Buyer to Seller (in the case of any other such failure) (except that such failure shall not be an Event of Default if sufficient Income is on deposit in the Cash Management Account and either the Depository fails to remit such funds to Buyer or Buyer has failed to make a withdrawal of such funds from the Cash Management Account as

3

contemplated by Section 4(c));”

3.Conditions to Effectiveness. This Amendment shall become effective upon fulfillment, to Buyer’s satisfaction, of each of the following conditions (unless waived in writing by the Buyer):

(a)Receipt of Documents. The Buyer’s receipt of counterparts of this Amendment executed by the Buyer and Seller and acknowledged and agreed to by Guarantor, each of which shall be originals or telecopies or electronic copies in portable document format (.pdf) (in each case, followed promptly by originals) unless otherwise specified, properly executed by an authorized officer of the Seller or Guarantor, as applicable.

(b)Representations True; No Default. After giving effect to this Amendment and the transactions contemplated hereby, (i) the representations and warranties of the Seller contained in Section 9 of the Repurchase Agreement and in the other Transaction Documents, or which are contained in any documents furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and (ii) no Default or Event of Default exists or will occur as a result of the Seller’s execution of this Amendment.

(c)Fees and Expenses. Seller shall have paid to Buyer its expenses (including reasonable attorneys’ fees) in connection the negotiation, execution and delivery of this Amendment.

5.Proper Authorization; No Further Amendment. The parties hereto agree that this Amendment has been properly authorized and executed in accordance with the terms of the Repurchase Agreement. Except as expressly modified by the terms of this Amendment, all of the terms and conditions of the Repurchase Agreement shall remain in full force and effect and the parties hereto expressly reaffirm and ratify their respective obligations thereunder. References in the Repurchase Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, and “hereof”) and in any Transaction Document to the Repurchase Agreement shall be deemed to be references to the Repurchase Agreement as modified by this Amendment.

6.Reservation of Rights. The Seller acknowledges and agrees that the execution and delivery by the Buyer of this Amendment shall not be deemed to create a course of dealing or otherwise obligate the Buyer to forbear or execute similar amendments under the same or similar circumstances in the future.

7.Miscellaneous.

(a)Integration. This Amendment, together with the other Transaction Documents (as amended on the date hereof, as applicable), comprises the complete, final and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

(b)Severability. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(c)Counterparts. This Amendment may be executed in multiple counterparts, including by facsimile transmission or the exchange of PDFs of signature pages by email, each of which shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement.

4

(d)Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

[Signature pages follow]

5

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

SELLER:

ACRC LENDER US LLC

By: /s/ Anton Feingold_______________

Name: Anton Feingold

Title: Vice President

BUYER:

U.S. BANK NATIONAL ASSOCIATION

By: /s/ Jason Cohan_____________________

Name: Jason Cohan

Title: AVP

6

Acknowledged and Agreed:

GUARANTOR:

Ares commercial real estate corporation

By: /s/ Anton Feingold_______________

Name: Anton Feingold

Title: Vice President

7

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, James A. Henderson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ares Commercial Real Estate Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 1, 2018

/s/ James A. Henderson

James A. Henderson

Chief Executive Officer, Chief Investment Officer and President

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Tae-Sik Yoon, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Ares Commercial Real Estate Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 1, 2018

/s/ Tae-Sik Yoon

Tae-Sik Yoon

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to

18 U.S.C Section 1350

In connection with the Quarterly Report on Form 10-Q of Ares Commercial Real Estate Corporation (the "Company") for the quarter ended March 31, 2018 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), James A. Henderson, as Chief Executive Officer of the Company, and Tae-Sik Yoon, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 1, 2018

/s/ James A. Henderson

James A. Henderson
Chief Executive Officer, Chief Investment Officer and President

/s/ Tae-Sik Yoon

Tae-Sik Yoon

Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 27, 2018
Document and Entity Information
Entity Registrant Name	Ares Commercial Real Estate Corp
Entity Central Index Key	0001529377
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		28,598,916
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
ASSETS
Cash and cash equivalents	$ 5,201	$ 28,343
Restricted cash	379	379
Loans held for investment ($275,040 and $341,158 related to consolidated VIEs, respectively)	1,658,375	1,726,283
Other assets ($769 and $945 of interest receivable related to consolidated VIEs, respectively; $66,118 of other receivables related to consolidated VIEs as of March 31, 2018)	80,200	15,214
Total assets	1,744,155	1,770,219
LIABILITIES
Secured funding agreements	929,454	957,960
Secured term loan	107,797	107,595
Collateralized loan obligation securitization debt (consolidated VIE)	271,393	271,211
Due to affiliate	2,531	2,628
Dividends payable	8,008	7,722
Other liabilities ($453 and $414 of interest payable related to consolidated VIEs, respectively)	4,258	3,933
Total liabilities	1,323,441	1,351,049
Commitments and contingencies (Note 5)
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share, 450,000,000 shares authorized at March 31, 2018 and December 31, 2017, and 28,598,916 shares issued and outstanding at March 31, 2018 and December 31, 2017	283	283
Additional paid-in capital	420,871	420,637
Accumulated deficit	(440)	(1,750)
Total stockholders' equity	420,714	419,170
Total liabilities and stockholders' equity	$ 1,744,155	$ 1,770,219

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Loans held for investment related to consolidated VIE	$ 275,040	$ 341,158
Other assets, interest receivable related to consolidated VIE	769	945
Other assets, other receivable related to consolidated VIE	66,118
Other liabilities, interest payable related to consolidated VIE	$ 453	$ 414
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	450,000,000	450,000,000
Common stock, shares issued	28,598,916	28,598,916
Common stock, shares outstanding	28,598,916	28,598,916

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net interest margin:
Interest income from loans held for investment	$ 27,436	$ 21,127
Interest expense	(14,299)	(10,788)
Net interest margin	13,137	10,339
Expenses:
Management and incentive fees to affiliate	1,558	1,812
Professional fees	482	391
General and administrative expenses	774	642
General and administrative expenses reimbursed to affiliate	924	948
Total expenses	3,738	3,793
Income before income taxes	9,399	6,546
Income tax expense, including excise tax	81	68
Net income attributable to ACRE	9,318	6,478
Less: Net income attributable to non-controlling interests	0	(25)
Net income attributable to common stockholders	$ 9,318	$ 6,453
Earnings Per Share [Abstract]
Basic and diluted earnings per common share (in dollars per share)	$ 0.33	$ 0.23
Weighted average number of common shares outstanding:
Basic weighted average shares of common stock outstanding (in shares)	28,495,833	28,468,819
Diluted weighted average shares of common stock outstanding (in shares)	28,598,916	28,482,756
Dividends declared per share of common stock (in dollars per share)	$ 0.28	$ 0.27

XML

CONSOLIDATED STATEMENT OF EQUITY - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
Beginning Balance (in shares) at Dec. 31, 2017	28,598,916	28,598,916
Beginning Balance at Dec. 31, 2017		$ 283	$ 420,637	$ (1,750)	$ 419,170
Increase (Decrease) in Stockholders' Equity
Stock-based compensation (in shares)		0
Stock‑based compensation			234		234
Net income	$ 9,318			9,318	9,318
Dividends declared	$ (8,008)			(8,008)	(8,008)
Ending Balance (in shares) at Mar. 31, 2018	28,598,916	28,598,916
Ending Balance at Mar. 31, 2018		$ 283	$ 420,871	$ (440)	$ 420,714

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities:
Net income	$ 9,318	$ 6,478
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of deferred financing costs	1,487	1,733
Accretion of deferred loan origination fees and costs	(1,854)	(1,454)
Stock-based compensation	234	98
Changes in operating assets and liabilities:
Other assets	194	(582)
Due to affiliate	(97)	156
Other liabilities	413	(221)
Net cash provided by (used in) operating activities	9,695	6,208
Investing activities:
Issuance of and fundings on loans held for investment	(77,260)	(133,461)
Principal repayment of loans held for investment	79,933	75,518
Receipt of origination fees	1,040	1,256
Net cash provided by (used in) investing activities	3,713	(56,687)
Financing activities:
Proceeds from secured funding agreements	54,672	88,850
Repayments of secured funding agreements	(83,178)	(293,057)
Payment of secured funding costs	(322)	(3,031)
Proceeds from issuance of debt of consolidated VIEs	0	272,927
Dividends paid	(7,722)	(7,406)
Contributions from non-controlling interests	0	12
Distributions to non-controlling interests	0	(10,681)
Net cash provided by (used in) financing activities	(36,550)	47,614
Change in cash, cash equivalents and restricted cash	(23,142)	(2,865)
Cash, cash equivalents and restricted cash, end of period	28,722	47,645
Cash, cash equivalents and restricted cash, beginning of period	$ 5,580	$ 44,780

XML

ORGANIZATION

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

Ares Commercial Real Estate Corporation (together with its consolidated subsidiaries, the “Company” or “ACRE”) is a specialty finance company primarily engaged in originating and investing in commercial real estate loans and related investments. Through Ares Commercial Real Estate Management LLC (“ACREM” or the Company’s “Manager”), a Securities and Exchange Commission (“SEC”) registered investment adviser and a subsidiary of Ares Management, L.P. (NYSE: ARES) (“Ares Management”), a publicly traded, leading global alternative asset manager, it has investment professionals strategically located across the United States and Europe who directly source new loan opportunities for the Company with owners, operators and sponsors of commercial real estate (“CRE”) properties. The Company was formed and commenced operations in late 2011. The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in May 2012. The Company is externally managed by its Manager, pursuant to the terms of a management agreement (the “Management Agreement”).

The Company is primarily focused on directly originating and managing a diversified portfolio of CRE debt-related investments for the Company’s own account. The Company’s target investments include senior mortgage loans, subordinated debt, preferred equity, mezzanine loans and other CRE investments, including commercial mortgage backed securities. These investments are generally held for investment and are secured, directly or indirectly, by office, multifamily, retail, industrial, lodging, senior-living, self storage, student housing and other commercial real estate properties, or by ownership interests therein.

The Company has elected and qualified to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2012. The Company generally will not be subject to U.S. federal income taxes on its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to the extent that it annually distributes all of its REIT taxable income to stockholders and complies with various other requirements as a REIT.

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the related management's discussion and analysis of financial condition and results of operations included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC.

Refer to the Company’s Annual Report on Form 10-K for a description of the Company’s recurring accounting policies. The Company has included disclosure below regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly or (ii) the Company views as critical as of the date of this report.

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entities (“VIEs”) that the Company controls and of which the Company is the primary beneficiary, and the Company’s wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated.

Interim financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2018.

Variable Interest Entities

The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE.

To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

To assess whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Company.

For VIEs of which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements.

The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE cause the Company’s consolidation conclusion regarding the VIE to change. See Note 12 included in these consolidated financial statements for further discussion of the Company’s VIEs.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short‑term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and statements of cash flows.

Restricted cash includes deposits required under certain Secured Funding Agreements (each individually defined in Note 4 included in these consolidated financial statements).

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows ($ in thousands):

	As of
	March 31, 2018		March 31, 2017
Cash and cash equivalents	$	5,201	$	44,400
Restricted cash	379		380
Total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows	$	5,580	$	44,780

Loans Held for Investment

The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, the Company will record an allowance to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate.

Each loan classified as held for investment is evaluated for impairment on a quarterly basis. Loans are generally collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors.

In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of March 31, 2018 and December 31, 2017, the Company did not recognize any impairment charges with respect to its loans held for investment.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower’s ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Preferred equity investments, which are subordinate to any loans but senior to common equity, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included within loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan held for investment utilizing the effective interest method.

Debt Issuance Costs

Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the term of the respective debt instrument. Unamortized debt issuance costs are expensed when the associated debt is repaid prior to maturity. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization and the outstanding principal balance of the securitization debt is reduced, the related unamortized debt issuance costs are charged to expense based on a pro‑rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance on (i) Secured Funding Agreements (each individually defined in Note 4 included in these consolidated financial statements) is included within other assets and (ii) the Secured Term Loan (defined in Note 4 included in these consolidated financial statements) and debt securitizations are both included as a reduction to the carrying amount of the liability, in the Company’s consolidated balance sheets.

The original issue discount (“OID”) on amounts drawn under the Company’s Secured Term Loan represents a discount to the face amount of the drawn debt obligations. The OID is amortized over the term of the Secured Term Loan using the effective interest method and is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance is included as a reduction to the carrying amount of the Secured Term Loan in the Company’s consolidated balance sheets.

Revenue Recognition

Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method.

A reconciliation of the Company's interest income from loans held for investment, excluding non-controlling interests, to the Company's interest income from loans held for investment as included within its consolidated statements of operations for the three months ended March 31, 2018 and 2017 is as follows ($ in thousands):

	For the three months ended March 31,
	2018		2017
Interest income from loans held for investment, excluding non-controlling interests	$	27,436	$	21,092
Interest income from non-controlling interest investment held by third parties	—		35
Interest income from loans held for investment	$	27,436	$	21,127

Net Interest Margin and Interest Expense

Net interest margin in the Company’s consolidated statements of operations serves to measure the performance of the Company's loans held for investment as compared to its use of debt leverage. The Company includes interest income from its loans held for investment and interest expense related to its Secured Funding Agreements, securitizations debt and the Secured Term Loan (individually defined in Note 4 included in these consolidated financial statements) in net interest margin. For the three months ended March 31, 2018 and 2017, interest expense is comprised of the following ($ in thousands):

	For the three months ended March 31,
	2018		2017
Secured funding agreements and securitizations debt	$	12,301	$	7,468
Secured term loan	1,998		3,320
Interest expense	$	14,299	$	10,788

Comprehensive Income

For the three months ended March 31, 2018 and 2017, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this ASU supersedes the revenue recognition requirements in Revenue Recognition (Topic 605). Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company has assessed and determined that the application of this guidance does not have a material impact on the Company’s consolidated financial statements, primarily because the majority of the Company’s revenue is accounted for under FASB ASC Topic 310, Receivables, which is excluded from this standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard will replace the incurred loss impairment methodology pursuant to GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU No. 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted after December 15, 2018, including interim periods within that reporting period. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force). The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU No. 2016-18 in the first quarter of 2018 and applied the guidance retrospectively to the prior period consolidated statement of cash flows.

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LOANS HELD FOR INVESTMENT

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

LOANS HELD FOR INVESTMENT

LOANS HELD FOR INVESTMENT

As of March 31, 2018, the Company’s portfolio totaled 42 loans held for investment, excluding 63 loans that were repaid or sold since inception. The aggregate originated commitment under these loans at closing was approximately $1.9 billion and outstanding principal was $1.7 billion as of March 31, 2018. During the three months ended March 31, 2018, the Company funded approximately $77.3 million of outstanding principal and received repayments of $146.1 million of outstanding principal, as described in more detail in the tables below. Such investments are referred to herein as the Company’s “investment portfolio.” As of March 31, 2018, 86.8% of the Company’s loans have London Interbank Offered Rate (“LIBOR”) floors, with a weighted average floor of 0.87%, calculated based on loans with LIBOR floors. References to LIBOR or “L” are to 30-day LIBOR (unless otherwise specifically stated).

The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of March 31, 2018 and December 31, 2017 ($ in thousands):

	As of March 31, 2018
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,606,225	$	1,615,703	4.9	%	6.5	%	1.8
Subordinated debt and preferred equity investments	52,150		52,860		9.5	%	11.0	%	3.2
Total loans held for investment portfolio	$	1,658,375	$	1,668,563	5.0	%	6.6	%	1.9

	As of December 31, 2017
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,674,169	$	1,684,439	4.8	%	6.2	%	1.9
Subordinated debt and preferred equity investments	52,114		52,847		9.5	%	10.8	%	3.4
Total loans held for investment portfolio	$	1,726,283	$	1,737,286	5.0	%	6.3	%	2.0

_______________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate.

(3) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2018 and December 31, 2017 as weighted by the Outstanding Principal balance of each loan.

A more detailed listing of the Company’s investment portfolio based on information available as of March 31, 2018 is as follows ($ in millions, except percentages):

Loan Type		Location	Outstanding Principal (1)	Carrying Amount (1)	Interest Rate	Unleveraged Effective Yield (2)	Maturity Date (3)		Payment Terms (4)
Senior Mortgage Loans:
Self Storage	(5)	Diversified	$116.7	$116.4	L+4.35%	7.0%	Oct 2018		I/O
Office		TX	96.9	96.1	L+3.60%	6.0%	July 2020		I/O
Multifamily		FL	89.7	89.4	L+4.75%	7.2%	Sep 2019		I/O
Various	(6)	Diversified	82.3	82.1	L+4.75%	7.3%	Oct 2018		I/O
Mixed-use		NY	65.6	65.4	L+4.16%	6.5%	Apr 2019		I/O
Multifamily		UT	62.6	62.2	L+3.25%	5.4%	Dec 2020		I/O
Office		IL	60.4	59.8	L+3.75%	6.2%	Dec 2020		I/O
Office		IL	58.6	58.2	L+3.99%	6.3%	Aug 2019		I/O
Office		CO	54.0	53.5	L+4.15%	6.4%	June 2021		I/O
Multifamily		FL	53.8	53.4	L+3.65%	5.9%	Mar 2021		I/O
Industrial		MN	51.6	51.1	L+3.15%	5.5%	Dec 2020		I/O
Office		NJ	49.6	49.2	L+4.65%	7.2%	July 2020		I/O
Mixed-use		CA	49.0	48.6	L+4.00%	6.3%	Apr 2021		I/O
Multifamily		FL	45.4	45.3	L+4.75%	7.2%	Sep 2019		I/O
Multifamily		TX	42.7	42.4	L+3.30%	5.5%	Dec 2020		I/O
Student Housing		CA	41.8	41.4	L+3.95%	6.4%	July 2020		I/O
Student Housing		TX	40.1	39.8	L+4.75%	7.2%	Jan 2021		I/O
Hotel		CA	40.0	39.7	L+4.12%	6.4%	Jan 2021		I/O
Student Housing		NC	38.7	38.5	L+4.00%	7.7%	Feb 2019		I/O
Hotel		NY	38.6	38.6	L+4.75%	7.1%	June 2018		I/O
Hotel		MI	35.2	35.2	L+4.15%	6.0%	July 2018		I/O
Multifamily		NY	31.3	31.2	L+4.55%	6.9%	Feb 2019		I/O
Multifamily		NY	29.5	29.5	L+3.75%	5.9%	Oct 2018		P/I	(7)
Multifamily		NY	29.4	29.1	L+3.20%	5.4%	Dec 2020		I/O
Industrial		OH	27.5	27.4	L+4.20%	6.4%	May 2019	(8)	P/I	(7)
Multifamily		TX	27.5	27.3	L+3.20%	5.6%	Oct 2020		I/O
Multifamily		TX	26.3	26.2	L+3.80%	5.8%	Jan 2019		I/O
Multifamily		CA	25.7	25.5	L+3.85%	6.2%	July 2020		I/O
Student Housing		AL	24.1	23.9	L+4.45%	6.9%	Feb 2020		I/O
Student Housing		TX	24.0	23.8	L+4.10%	6.5%	Jan 2021		I/O
Multifamily		CA	22.7	22.6	L+3.90%	6.1%	Mar 2021		I/O
Multifamily		FL	22.5	22.4	L+4.25%	6.8%	Feb 2019		I/O
Office		PA	19.6	19.5	L+4.70%	7.1%	Mar 2020		I/O
Office		FL	18.4	18.3	L+4.30%	6.8%	Apr 2020		I/O
Multifamily		FL	18.4	18.3	L+4.00%	6.2%	Nov 2020		I/O
Multifamily		CA	18.0	17.8	L+3.30%	5.6%	Feb 2021		I/O
Multifamily		NY	16.3	16.3	L+4.35%	6.5%	Nov 2018		I/O
Multifamily		CA	13.9	13.8	L+3.80%	6.1%	July 2020		I/O
Residential		CA	7.3	7.0	12.00%	14.7%	Feb 2020		I/O
Subordinated Debt and Preferred Equity Investments:
Multifamily		NY	33.3	33.3	L+8.07%	10.2%	Jan 2019		I/O
Office		NJ	17.0	16.3	12.00%	12.8%	Jan 2026		I/O	(7)
Office		CA	2.6	2.6	L+8.25%	10.3%	Nov 2021		I/O
Total/Weighted Average			$1,668.6	$1,658.4		6.6%

_______________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of March 31, 2018 or the LIBOR floor, as applicable. The Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2018 as weighted by the Outstanding Principal balance of each loan.

(3) Certain loans are subject to contractual extension options that vary between one and two12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(4) I/O = interest only, P/I = principal and interest.

(5) Prior to December 2017, the $116.7 million senior mortgage loan collateralized by a portfolio of self storage properties was in payment default due to the failure of the borrower to repay an amount equal to $42.5 million with respect to the retail and office properties (which included $37.0 million of allocated loan amount and $5.5 million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the borrower repaid $25.1 million with respect to the office property (which included $21.8 million of allocated loan amount and $3.3 million of release premium). In conjunction with the repayment with respect to the office property, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to January 2018. On January 31, 2018, the Company received a repayment of outstanding principal of $17.4 million (which included $15.1 million of allocated loan amount and $2.3 million of release premium). The principal repayments related to the retail and office properties resulted in the release of the retail and office properties from the collateral pool. Subsequent to the principal repayments, the outstanding principal balance of the senior mortgage loan was $116.7 million and was collateralized by a portfolio of self storage properties.

(6) Prior to December 2017, the $82.3 million senior mortgage loan collateralized by a portfolio of self storage properties and one retail property was in payment default due to the failure of the borrower to repay an amount equal to $13.9 million with respect to the retail property (which included $12.1 million of allocated loan amount and $1.8 million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to the maturity date of the loan in October 2018. The senior mortgage loan continues to have a recourse payment guarantee of up to $12.1 million from an individual who is the indirect owner of the underlying collateral and an affiliate of the borrower.

(7) In May 2017, amortization began on the senior Ohio loan, which had an outstanding principal balance of $27.5 million as of March 31, 2018. In October 2017, amortization began on the senior New York loan, which had an outstanding principal balance of $29.5 million as of March 31, 2018. In February 2021, amortization will begin on the subordinated New Jersey loan, which had an outstanding principal balance of $17.0 million as of March 31, 2018. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms.

(8) In February 2018, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Ohio loan to May 2019.

The Company has made, and may continue to make, modifications to loans, including loans that are in default. Loan terms that may be modified include interest rates, required prepayments, asset release prices, maturity dates, covenants, principal amounts and other loan terms. The terms and conditions of each modification vary based on individual circumstances and will be determined on a case by case basis.

For the three months ended March 31, 2018, the activity in the Company’s loan portfolio was as follows ($ in thousands):

Balance at December 31, 2017	$	1,726,283
Initial funding	74,110
Origination fees and discounts, net of costs	(1,040		)
Additional funding	3,218
Amortizing payments	(233		)
Loan payoffs	(145,817		)
Origination fee accretion	1,854
Balance at March 31, 2018	$	1,658,375

As of March 31, 2018, all loans were paying in accordance with their contractual terms. No impairment charges have been recognized during the three months ended March 31, 2018 and 2017.

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DEBT

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

DEBT

DEBT

Financing Agreements

The Company borrows funds, as applicable in a given period, under the Wells Fargo Facility, the Citibank Facility, the BAML Facility, the CNB Facility, the MetLife Facility, the UBS Facility and the U.S. Bank Facility (individually defined below and collectively, the “Secured Funding Agreements”) and the Secured Term Loan (as defined below). The Company refers to the Secured Funding Agreements and the Secured Term Loan as the “Financing Agreements.” The outstanding balance of the Financing Agreements in the table below are presented gross of debt issuance costs. As of March 31, 2018 and December 31, 2017, the outstanding balances and total commitments under the Financing Agreements consisted of the following ($ in thousands):

	March 31, 2018					December 31, 2017
	Outstanding Balance		Total Commitment			Outstanding Balance		Total Commitment
Wells Fargo Facility	$	384,432	$	500,000		$	407,853	$	500,000
Citibank Facility	174,075		250,000		(1)	175,651		250,000		(1)
BAML Facility	56,320		125,000			78,320		125,000
CNB Facility	15,260		50,000			—		50,000
MetLife Facility	101,131		180,000			101,131		180,000
UBS Facility	34,000		140,000			34,000		140,000
U.S. Bank Facility	164,236		185,989			161,005		185,989
Secured Term Loan	110,000		110,000			110,000		110,000
Total	$	1,039,454	$	1,540,989		$	1,067,960	$	1,540,989

______________________________________________________________________________

(1) The Citibank Facility (as defined below) has an accordion feature that provides for an increase in the $250.0 million commitment amount with respect to approved assets, as determined by Citibank, N.A. in its sole discretion.

Some of the Company’s Financing Agreements are collateralized by (i) assignments of specific loans, preferred equity or a pool of loans held for investment or loans held for sale owned by the Company, (ii) interests in the subordinated portion of the Company’s securitization debt, or (iii) interests in wholly-owned entity subsidiaries that hold the Company’s loans held for investment. The Company is the borrower or guarantor under each of the Financing Agreements. Generally, the Company partially offsets interest rate risk by matching the interest index of loans held for investment with the Secured Funding Agreements used to fund them. The Company’s Financing Agreements contain various affirmative and negative covenants, including negative pledges, and provisions regarding events of default that are normal and customary for similar financing arrangements.

Wells Fargo Facility

The Company is party to a master repurchase funding facility with Wells Fargo Bank, National Association (“Wells Fargo”) (the “Wells Fargo Facility”), which allows the Company to borrow up to $500.0 million. Under the Wells Fargo Facility, the Company is permitted to sell, and later repurchase, certain qualifying senior commercial mortgage loans, A-Notes, pari passu participations in commercial mortgage loans and mezzanine loans under certain circumstances, subject to available collateral approved by Wells Fargo in its sole discretion. The initial maturity date of the Wells Fargo Facility is December 14, 2018, subject to two12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the Wells Fargo Facility to December 14, 2020. Advances under the Wells Fargo Facility accrue interest at a per annum rate equal to the sum of (i) one-month LIBOR plus (ii) a pricing margin range of 1.75% to 2.35%. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the Wells Fargo Facility to the extent less than 75% of the Wells Fargo Facility is utilized. For the three months ended March 31, 2018, the Company did not incur a non-utilization fee. For the three months ended March 31, 2017, the Company incurred a non-utilization fee of $9 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

Citibank Facility

The Company is party to a $250.0 million master repurchase facility with Citibank, N.A. (“Citibank”) (the “Citibank Facility”). Under the Citibank Facility, the Company is permitted to sell and later repurchase certain qualifying senior commercial mortgage loans and A-Notes approved by Citibank in its sole discretion. The Citibank Facility has an accordion feature that provides for an increase in the $250.0 million commitment amount with respect to approved assets, as determined by Citibank in its sole discretion. The initial maturity date of the Citibank Facility is December 10, 2018, subject to three12-month extensions, each of which may be exercised at the Company’s option assuming no existing defaults under the Citibank Facility and applicable extension fees being paid, which, if all three were exercised, would extend the maturity date of the Citibank Facility to December 8, 2021. Advances under the Citibank Facility accrue interest at a per annum rate equal to one-month LIBOR plus a pricing margin range of 2.25% to 2.50%, subject to certain exceptions. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the Citibank Facility. For the three months ended March 31, 2018 and 2017, the Company incurred a non-utilization fee of $51 thousand and $20 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

BAML Facility

The Company is party to a $125.0 million Bridge Loan Warehousing Credit and Security Agreement with Bank of America, N.A. (“Bank of America”) (the “BAML Facility”). Under the BAML Facility, the Company may obtain advances secured by eligible commercial mortgage loans collateralized by multifamily properties. Bank of America may approve the loans on which advances are made under the BAML Facility in its sole discretion. The Company may request individual loans under the BAML Facility up to May 24, 2018. Individual advances under the BAML Facility generally have a two-year maturity, subject to one 12-month extension at the Company’s option upon the satisfaction of certain conditions and applicable extension fees being paid. The final maturity date of individual loans under the BAML Facility is May 25, 2021. Since October 2, 2017, advances under the BAML Facility accrue interest at a per annum rate equal to one-month LIBOR plus a spread of 2.00%. Prior to and including October 1, 2017, advances under the BAML Facility accrued interest at a per annum rate equal to one-month LIBOR plus a spread ranging from 2.25% to 2.75% depending upon the type of asset securing such advance. The Company incurs a non-utilization fee of 12.5 basis points per annum on the average daily available balance of the BAML Facility to the extent less than 50% of the BAML Facility is utilized. For the three months ended March 31, 2018 and 2017, the Company incurred a non-utilization fee of $11 thousand and $9 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

CNB Facility

The Company is party to a $50.0 million secured revolving funding facility with City National Bank (the “CNB Facility”). The Company is permitted to borrow funds under the CNB Facility to finance investments and for other working capital and general corporate needs. In February 2018, the Company exercised a 12-month extension option on the CNB Facility to extend the initial maturity date to March 10, 2019. The Company has one additional 12-month extension, which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if exercised, would extend the maturity date of the CNB Facility to March 10, 2020. Advances under the CNB Facility accrue interest at a per annum rate equal to the sum of, at the Company’s option, either (a) LIBOR for a one, two, three, six or, if available to all lenders, 12-month interest period plus 3.00% or (b) a base rate (which is the highest of a prime rate, the federal funds rate plus 0.50%, or one-month LIBOR plus 1.00%) plus 1.25%; provided that in no event shall the interest rate be less than 3.00%. Unless at least 75% of the CNB Facility is used on average, unused commitments under the CNB Facility accrue non-utilization fees at the rate of 0.375% per annum. For the three months ended March 31, 2018 and 2017, the Company incurred a non-utilization fee of $46 thousand and $47 thousand, respectively. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

MetLife Facility

The Company and certain of its subsidiaries are party to a $180.0 million revolving master repurchase facility with Metropolitan Life Insurance Company (“MetLife”) (the “MetLife Facility”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans meeting defined eligibility criteria which are approved by MetLife in its sole discretion. The initial maturity date of the MetLife Facility is August 12, 2020, subject to two12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the MetLife Facility to August 12, 2022. Since August 4, 2017, advances under the MetLife Facility accrue interest at a per annum rate equal to one-month LIBOR plus a spread of 2.30%. Prior to and including August 3, 2017, advances under the MetLife Facility accrued interest at a per annum rate equal to one-month LIBOR plus a spread of 2.35%. Effective in February 2018, the Company began incurring a non-utilization fee of 25 basis points per annum on the average daily available balance of the MetLife Facility to the extent less than 65% of the MetLife Facility is utilized. For the three months ended March 31, 2018, the Company incurred a non-utilization fee of $6 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

UBS Facility

The Company and certain of its subsidiaries are party to a $140.0 million revolving master repurchase facility with UBS Real Estate Securities Inc. (“UBS”) (the “UBS Facility”), pursuant to which the Company may sell, and later repurchase, commercial mortgage loans and, under certain circumstances, other assets meeting defined eligibility criteria that are approved by UBS in its sole discretion. The maturity date of the UBS Facility is October 21, 2018, subject to annual extensions in UBS’ sole discretion. The interest rate on advances under the UBS Facility is one-month LIBOR plus (a) 1.88% per annum, for assets that are subject to an advance for one year or less, (b) 2.08% per annum, for assets that are subject to an advance in excess of one year but less than two years and (c) 2.28% per annum, for assets that are subject to an advance for greater than two years.

U.S. Bank Facility

The Company and certain of its subsidiaries are party to a $186.0 million master repurchase and securities contract with U.S. Bank National Association (“U.S. Bank”) (the “U.S. Bank Facility”). Pursuant to the U.S. Bank Facility, the Company is permitted to sell, and later repurchase, eligible commercial mortgage loans collateralized by retail, office, mixed-use, multifamily, industrial, hospitality, student housing, manufactured housing or self storage properties. U.S. Bank may approve the mortgage loans that are subject to the U.S. Bank Facility in its sole discretion. The initial maturity date of the U.S. Bank Facility is July 31, 2020, subject to two12-month extensions, each of which may be exercised at the Company’s option, subject to the satisfaction of certain conditions, including payment of an extension fee, which, if both were exercised, would extend the maturity date of the U.S. Bank Facility to July 31, 2022. Advances under the U.S. Bank Facility generally accrue interest at a per annum rate equal to one-month LIBOR plus a spread of 2.25%, unless otherwise agreed between U.S. Bank and the Company, depending upon the mortgage loan sold to U.S. Bank in the applicable transaction. The Company incurs a non-utilization fee of 25 basis points per annum on the average daily available balance of the U.S. Bank Facility to the extent less than 50% of the U.S. Bank Facility is utilized. For the three months ended March 31, 2018, the Company did not incur a non-utilization fee. For the three months ended March 31, 2017, the Company incurred a non-utilization fee of $42 thousand. The non-utilization fee is included within interest expense in the Company’s consolidated statements of operations.

Secured Term Loan

The Company and certain of its subsidiaries are party to a $110.0 million Credit and Guaranty Agreement with the lenders referred to therein and Cortland Capital Market Services LLC, as administrative agent and collateral agent for the lenders (the “Secured Term Loan”). The initial maturity date of the Secured Term Loan is December 22, 2020, subject to one12-month extension, which may be exercised at the Company’s option, provided there are no existing events of default under the Secured Term Loan, which, if exercised, would extend the maturity date of the Secured Term Loan to December 22, 2021. During the extension period, the spread on advances under the Secured Term Loan increases every three months by 0.125%, 0.375% and 0.750% per annum, respectively, beginning after the third-month of the extension period. Since December 22, 2017, advances under the Secured Term Loan accrue interest at a per annum rate equal to the sum of, at the Company’s option, one, two, three or six-month LIBOR plus a spread of 5.00%. Prior to and including December 21, 2017, advances under the Secured Term Loan accrued interest at a per annum rate equal to one-month LIBOR plus a spread of 6.00% (with a 1.00% LIBOR floor). The total original issue discount on the Secured Term Loan draws was $2.6 million, which represents a discount to the debt cost to be amortized into interest expense using the effective interest method over the term of the Secured Term Loan. For the three months ended March 31, 2018 and 2017, the estimated per annum effective interest rate of the Secured Term Loan, which is equal to LIBOR plus the spread plus the accretion of the original issue discount and associated costs, was 7.3% and 8.5%, respectively.

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

As of March 31, 2018 and December 31, 2017, the Company had the following commitments to fund various senior mortgage loans, subordinated debt investments, as well as preferred equity investments accounted for as loans held for investment ($ in thousands):

	As of
	March 31, 2018			December 31, 2017
Total commitments	$	1,788,189		$	1,847,534
Less: funded commitments	(1,668,563		)	(1,737,286		)
Total unfunded commitments	$	119,626		$	110,248

The Company from time to time may be party to litigation relating to claims arising in the normal course of business. As of March 31, 2018, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

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STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2018

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

EQUITY

Common Stock

There were no shares issued in public or private offerings for the three months ended March 31, 2018. See “Equity Incentive Plan” below for shares issued under the plan.

Equity Incentive Plan

On April 23, 2012, the Company adopted an equity incentive plan (the “2012 Equity Incentive Plan”). Pursuant to the 2012 Equity Incentive Plan, the Company may grant awards consisting of restricted shares of the Company’s common stock, restricted stock units and/or other equity-based awards to the Company’s outside directors, employees of the Manager, officers, ACREM and other eligible awardees under the plan, subject to an aggregate limitation of 690,000 shares of common stock (7.5% of the issued and outstanding shares of the Company’s common stock immediately after giving effect to the issuance of the shares sold in the IPO). Any restricted shares of the Company’s common stock and restricted stock units will be accounted for under FASB ASC Topic 718, Compensation—Stock Compensation, resulting in share-based compensation expense equal to the grant date fair value of the underlying restricted shares of common stock or restricted stock units.

Restricted stock grants generally vest ratably over a one to four year period from the vesting start date. The grantee receives additional compensation for each outstanding restricted stock grant, classified as dividends paid, equal to the per-share dividends received by common stockholders.

The following table details the restricted stock grants awarded as of March 31, 2018:

Grant Date	Vesting Start Date	Shares Granted
May 1, 2012	July 1, 2012	35,135
June 18, 2012	July 1, 2012	7,027
July 9, 2012	October 1, 2012	25,000
June 26, 2013	July 1, 2013	22,526
November 25, 2013	November 25, 2016	30,381
January 31, 2014	August 31, 2015	48,273
February 26, 2014	February 26, 2014	12,030
February 27, 2014	August 27, 2014	22,354
June 24, 2014	June 24, 2014	17,658
June 24, 2015	July 1, 2015	25,555
April 25, 2016	July 1, 2016	10,000
June 27, 2016	July 1, 2016	24,680
April 25, 2017	April 25, 2018	81,710
June 7, 2017	July 1, 2017	18,224
October 17, 2017	January 2, 2018	7,278
December 15, 2017	January 2, 2018	8,948
Total		396,779

The following tables summarize the (i) non-vested shares of restricted stock and (ii) the vesting schedule of shares of restricted stock for the Company’s directors and officers as of March 31, 2018:

Schedule of Non-Vested Share and Share Equivalents

	Restricted Stock Grants—Directors		Restricted Stock Grants—Officers		Total
Balance at December 31, 2017	21,394		90,658		112,052
Granted	—		—		—
Vested	(6,942	)	(2,231	)	(9,173	)
Forfeited	—		—		—
Balance at March 31, 2018	14,452		88,427		102,879

Future Anticipated Vesting Schedule

	Restricted Stock Grants—Directors	Restricted Stock Grants—Officers	Total
2018	9,448	33,954	43,402
2019	3,336	27,237	30,573
2020	1,668	27,236	28,904
2021	—	—	—
2022	—	—	—
Total	14,452	88,427	102,879

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted earnings per common share for the three months ended March 31, 2018 and 2017 ($ in thousands, except share and per share data):

	For the three months ended March 31,
	2018		2017
Net income attributable to common stockholders	$	9,318	$	6,453
Divided by:
Basic weighted average shares of common stock outstanding:	28,495,833		28,468,819
Non-vested restricted stock	103,083		13,937
Diluted weighted average shares of common stock outstanding:	28,598,916		28,482,756
Basic and diluted earnings per common share	$	0.33	$	0.23

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INCOME TAX

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAX

INCOME TAX

The Company wholly-owns ACRC Lender W TRS LLC and ACRC Lender U TRS LLC, which are taxable REIT subsidiaries (“TRS”) formed in order to issue and hold certain loans intended for sale. The Company also wholly-owns ACRC 2017-FL3 TRS LLC, which is a TRS formed in order to hold a portion of the CLO Securitization (as defined below) to the extent it generates excess inclusion income.

The income tax provision for the Company and the TRSs consisted of the following for the three months ended March 31, 2018 and 2017 ($ in thousands):

	For the three months ended March 31,
	2018		2017
Current	$	6	$	3
Deferred	—		—
Excise tax	75		65
Total income tax expense, including excise tax	$	81	$	68

For the three months ended March 31, 2018 and 2017, the Company recorded an expense of $75 thousand and $65 thousand, respectively, for U.S. federal excise tax. Excise tax represents a 4% tax on a portion of the required amount of the Company’s ordinary income and net capital gains not distributed during the year. If it is determined that the Company’s estimated current year taxable income plus any undistributed shortfall from its prior calendar year will be in excess of estimated dividend distributions (including capital gain dividend) for the current year, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned. The quarterly expense is calculated in accordance with applicable tax regulations.

The TRSs recognize interest and penalties related to unrecognized tax benefits within income tax expense in the Company’s consolidated statements of operations. Accrued interest and penalties, if any, are included within other liabilities in the Company’s consolidated balance sheets.

As of March 31, 2018, tax years 2014 through 2017 remain subject to examination by taxing authorities. The Company does not have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows FASB ASC Topic 820-10, Fair Value Measurement (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure requirements for fair value measurements. ASC 820-10 determines fair value to be the price that would be received for a financial instrument in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 specifies a hierarchy of valuation techniques based on the inputs used in measuring fair value.

In accordance with ASC 820-10, the inputs used to measure fair value are summarized in the three broad levels listed below:

•Level 1-Quoted prices in active markets for identical assets or liabilities.

• Level 2-Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

• Level 3-Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

As of March 31, 2018 and December 31, 2017, the Company did not have any assets or liabilities required to be recorded at fair value on a recurring or nonrecurring basis.

As of March 31, 2018 and December 31, 2017, the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands):

		As of
		March 31, 2018				December 31, 2017
	Level in Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Loans held for investment	3	$	1,658,375	$	1,668,563	$	1,726,283	$	1,737,286
Financial liabilities:
Secured funding agreements	2	$	929,454	$	929,454	$	957,960	$	957,960
Secured term loan	2	107,797		110,000		107,595		110,000
Collateralized loan obligation securitization debt (consolidated VIE)	3	271,393		272,927		271,211		272,927

The carrying values of cash and cash equivalents, restricted cash, interest receivable, due to affiliate liability and accrued expenses, which are all categorized as Level 2 within the fair value hierarchy, approximate their fair values due to their short-term nature.

Loans held for investment are recorded at cost, net of unamortized loan fees and origination costs and net of an allowance for loan losses. The Company may record fair value adjustments on a nonrecurring basis when it has determined that it is necessary to record a specific reserve against a loan and the Company measures such specific reserve using the fair value of the loan’s collateral. To determine the fair value of the collateral, the Company may employ different approaches depending on the type of collateral. The Financing Agreements and collateralized loan obligation (“CLO”) securitization debt are recorded at outstanding principal, which is the Company’s best estimate of the fair value.

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Management Agreement

The Company is party to a Management Agreement under which ACREM, subject to the supervision and oversight of the Company’s board of directors, is responsible for, among other duties, (a) performing all of the Company’s day-to-day functions, (b) determining the Company’s investment strategy and guidelines in conjunction with the Company’s board of directors, (c) sourcing, analyzing and executing investments, asset sales and financing, and (d) performing portfolio management duties. In addition, ACREM has an Investment Committee that oversees compliance with the Company’s investment strategy and guidelines, investment portfolio holdings and financing strategy.

In exchange for its services, ACREM is entitled to receive a base management fee, an incentive fee, expense reimbursements, grants of equity-based awards pursuant to the Company’s 2012 Equity Incentive Plan and a termination fee, if applicable.

The base management fee is equal to 1.5% of the Company’s stockholders’ equity per annum, which is calculated and payable quarterly in arrears in cash. For purposes of calculating the base management fee, stockholders’ equity means: (a) the sum of (i) the net proceeds from all issuances of the Company’s equity securities since inception (allocated on a pro-rata daily basis for such issuances during the fiscal quarter of any such issuance), plus (ii) the Company’s retained earnings at the end of the most recently completed fiscal quarter determined in accordance with GAAP (without taking into account any non-cash equity compensation expense incurred in current or prior periods); less (b) (x) any amount that the Company has paid to repurchase the Company’s common stock since inception, (y) any unrealized gains and losses and other non-cash items that have impacted stockholders’ equity as reported in the Company’s consolidated financial statements prepared in accordance with GAAP, and (z) one-time events pursuant to changes in GAAP, and certain non-cash items not otherwise described above, in each case after discussions between ACREM and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown in the Company’s consolidated financial statements.

The incentive fee is an amount, not less than zero, equal to the difference between: (a) the product of (i) 20% and (ii) the difference between (A) the Company’s Core Earnings (as defined below) for the previous 12-month period, and (B) the product of (1) the weighted average of the issue price per share of the Company’s common stock of all of the Company’s public offerings of common stock multiplied by the weighted average number of all shares of common stock outstanding including any restricted shares of the Company’s common stock, restricted stock units or any shares of the Company’s common stock not yet issued, but underlying other awards granted under the Company’s 2012 Equity Incentive Plan (see Note 6 included in these consolidated financial statements) in the previous 12-month period, and (2) 8%; and (b) the sum of any incentive fees earned by ACREM with respect to the first three fiscal quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any fiscal quarter unless cumulative Core Earnings for the 12 most recently completed fiscal quarters is greater than zero. “Core Earnings” is a non-GAAP measure and is defined as GAAP net income (loss) computed in accordance with GAAP, excluding non-cash equity compensation expense, the incentive fee, depreciation and amortization (to the extent that any of the Company’s target investments are structured as debt and the Company forecloses on any properties underlying such debt), any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss), and one-time events pursuant to changes in GAAP and certain non-cash charges after discussions between ACREM and the Company’s independent directors and after approval by a majority of the Company’s independent directors. For the three months ended March 31, 2018, no incentive fees were incurred. For the three months ended March 31, 2017, $268 thousand of incentive fees were incurred.

The Company reimburses ACREM at cost for operating expenses that ACREM incurs on the Company’s behalf, including expenses relating to legal, financial, accounting, servicing, due diligence and other services.

The Company will not reimburse ACREM for the salaries and other compensation of its personnel, except for the allocable share of the salaries and other compensation of the Company’s (a) Chief Financial Officer, based on the percentage of his time spent on the Company’s affairs and (b) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment professional personnel of ACREM or its affiliates who spend all or a portion of their time managing the Company’s affairs based on the percentage of their time spent on the Company’s affairs. The Company is also required to pay its pro-rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of ACREM and its affiliates that are required for the Company’s operations. The term of the Management Agreement ends on May 1, 2019, with automatic one-year renewal terms thereafter. Except under limited circumstances, upon a termination of the Management Agreement, the Company will pay ACREM a termination fee equal to three times the average annual base management fee and incentive fee received by ACREM during the 24-month period immediately preceding the most recently completed fiscal quarter prior to the date of termination, each as described above.

Certain of the Company’s subsidiaries, along with the Company’s lenders under certain of the Company’s Secured Funding Agreements, as well as under the CLO transaction have entered into various servicing agreements with ACREM’s subsidiary servicer, Ares Commercial Real Estate Servicer LLC (“ACRES”). The Company’s Manager will specially service, as needed, certain of the Company’s investments. Effective May 1, 2012, ACRES agreed that no servicing fees pursuant to these servicing agreements would be charged to the Company or its subsidiaries by ACRES or the Manager for so long as the Management Agreement remains in effect, but that ACRES will continue to receive reimbursement for overhead related to servicing and operational activities pursuant to the terms of the Management Agreement.

The following table summarizes the related party costs incurred by the Company for the three months ended March 31, 2018 and 2017 and amounts payable to the Company’s Manager as of March 31, 2018 and December 31, 2017 ($ in thousands):

	Incurred				Payable
	For the three months ended March 31,				As of
	2018		2017		March 31, 2018		December 31, 2017
Affiliate Payments
Management fees	$	1,558	$	1,544	$	1,558	$	1,549
Incentive fees	—		268		—		—
General and administrative expenses	924		948		924		1,016
Direct costs (1)	103		60		49		63
Total	$	2,585	$	2,820	$	2,531	$	2,628

______________________________________________________________________________

(1) For the three months ended March 31, 2018 and 2017, direct costs incurred are included within general and administrative expenses in the Company’s consolidated statements of operations.

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DIVIDENDS AND DISTRIBUTIONS

3 Months Ended

Mar. 31, 2018

DIVIDENDS AND DISTRIBUTIONS

DIVIDENDS AND DISTRIBUTIONS

DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the three months ended March 31, 2018 and 2017 ($ in thousands, except per share data):

Date Declared	Record Date	Payment Date	Per Share Amount		Total Amount
March 1, 2018	March 29, 2018	April 17, 2018	$	0.28	$	8,008
Total cash dividends declared for the three months ended March 31, 2018			$	0.28	$	8,008
March 7, 2017	March 31, 2017	April 17, 2017	$	0.27	$	7,690
Total cash dividends declared for the three months ended March 31, 2017			$	0.27	$	7,690

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VARIABLE INTEREST ENTITIES

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

Consolidated VIEs

As discussed in Note 2, the Company evaluates all of its investments and other interests in entities for consolidation, including its investment in the CLO Securitization (as defined below), which is considered to be a variable interest in a VIE.

CLO Securitization

On March 2, 2017, ACRE Commercial Mortgage 2017-FL3 Ltd. (the “Issuer”) and ACRE Commercial Mortgage 2017-FL3 LLC (the “Co-Issuer”), both wholly-owned indirect subsidiaries of the Company, entered into an indenture (the “Indenture”) with Wells Fargo Bank, National Association, as advancing agent and note administrator, and Wilmington Trust, National Association as trustee, which governs the issuance of approximately $308.8 million principal balance secured floating rate notes (the “Notes”) and $32.4 million of preferred equity in the Issuer (the “CLO Securitization”).

As of March 31, 2018, the Notes were collateralized by interests in a pool of eleven mortgage assets having a total principal balance of approximately $275.0 million (the “Mortgage Assets”) that were originated by a subsidiary of the Company and approximately $66.1 million of receivables related to repayments of outstanding principal on previous mortgage assets. As of December 31, 2017, the Notes were collateralized by interests in a pool of thirteen mortgage assets having a total principal balance of approximately $341.2 million that were originated by a subsidiary of the Company. During the reinvestment period ending on March 15, 2019, the Company may direct the Issuer to acquire additional mortgage assets meeting applicable reinvestment criteria using the principal repayments from the Mortgage Assets, subject to the satisfaction of certain conditions, including receipt of a Rating Agency Confirmation and investor approval of the new mortgage assets.

The contribution of the Mortgage Assets to the Issuer is governed by a Mortgage Asset Purchase Agreement between ACRC Lender LLC (the “Seller”), a wholly-owned subsidiary of the Company, and the Issuer, and acknowledged by the Company solely for purposes of confirming its status as a REIT, in which the Seller made certain customary representations, warranties and covenants.

In connection with the securitization, the Issuer and Co-Issuer offered and issued the following classes of Notes: Class A, Class A-S, Class B, Class C and Class D Notes (collectively, the “Offered Notes”) to a third party.  A wholly-owned subsidiary of the Company retained approximately $35.8 million of the Notes and all of the $32.4 million of preferred equity in the Issuer, which totaled $68.2 million. The Company, as the holder of the subordinated Notes and all of the preferred equity in the Issuer, has the obligation to absorb losses of the CLO, since the Company has a first loss position in the capital structure of the CLO.

 After March 15, 2021, the Issuer may redeem the Offered Notes subject to paying a make whole prepayment fee of 1.0% of the then outstanding balance of the Offered Notes. In addition, once the Class A Notes, Class A-S Notes, Class B Notes and Class C Notes have been repaid in full, the Issuer has the right to redeem the Class D Notes, subject to paying a make whole prepayment fee of 1.0% on the Class D Notes.

As the directing holder of the CLO Securitization, the Company has the ability to direct activities that could significantly impact the CLO Securitization’s economic performance. ACRES is designated as special servicer of the CLO Securitization and has the power to direct activities during the loan workout process on defaulted and delinquent loans, which is the activity that most significantly impacts the CLO Securitization’s economic performance. ACRES did not waive the special servicing fee, and the Company pays its overhead costs. If an unrelated third party had the right to unilaterally remove the special servicer, then the Company would not have the power to direct activities that most significantly impact the CLO Securitization’s economic performance. In addition, there were no substantive kick-out rights of any unrelated third party to remove the special servicer without cause. The Company’s subsidiaries, as directing holders, have the ability to remove the special servicer without cause. Based on these factors, the Company is determined to be the primary beneficiary of the CLO Securitization; thus, the CLO Securitization is consolidated into the Company’s consolidated financial statements.

The CLO Securitization is consolidated in accordance with FASB ASC Topic 810 and is structured as a pass through entity that receives principal and interest on the underlying collateral and distributes those payments to the note holders, as applicable. The assets and other instruments held by the CLO Securitization are restricted and can only be used to fulfill the obligations of the CLO Securitization. Additionally, the obligations of the CLO Securitization do not have any recourse to the general credit of any other consolidated entities, nor to the Company as the primary beneficiary.

The inclusion of the assets and liabilities of the CLO Securitization of which the Company is deemed the primary beneficiary has no economic effect on the Company. The Company’s exposure to the obligations of the CLO Securitization is generally limited to its investment in the entity. The Company is not obligated to provide, nor has it provided, any financial support for the consolidated structure. As such, the risk associated with the Company’s involvement in the CLO Securitization is limited to the carrying value of its investment in the entity. As of March 31, 2018, the Company’s maximum risk of loss was $68.2 million, which represents the carrying value of its investment in the CLO Securitization. For the three months ended March 31, 2018 and 2017, the Company incurred interest expense related to the CLO Securitization of $2.3 million and $599 thousand, respectively, which is included within interest expense in the Company’s consolidated statements of operations.

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended March 31, 2018, except as disclosed below.

On April 17, 2018, the Company originated a $39.2 million senior mortgage loan on a multifamily property located in South Carolina. At closing, the outstanding principal balance was approximately $38.5 million. The loan has a per annum interest rate of LIBOR plus a spread of 3.36% (plus fees) and an initial term of three years.

On April 17, 2018, the Company originated a $32.9 million senior mortgage loan on a hotel property located in Illinois. At closing, the outstanding principal balance was approximately $18.9 million. The loan has a per annum interest rate of LIBOR plus a spread of 4.40% (plus fees) and an initial term of three years.

On May 1, 2018, the Company declared a cash dividend of $0.28 per common share for the second quarter of 2018. The second quarter 2018 dividend is payable on July 17, 2018 to common stockholders of record as of June 29, 2018.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and include the accounts of the Company, the consolidated variable interest entities (“VIEs”) that the Company controls and of which the Company is the primary beneficiary, and the Company’s wholly-owned subsidiaries. The consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated.

Interim financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2018.

Variable Interest Entities

Variable Interest Entities

The Company evaluates all of its interests in VIEs for consolidation. When the Company’s interests are determined to be variable interests, the Company assesses whether it is deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, defines the primary beneficiary as the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses and the right to receive benefits from the VIE which could be potentially significant. The Company considers its variable interests, as well as any variable interests of its related parties in making this determination. Where both of these factors are present, the Company is deemed to be the primary beneficiary and it consolidates the VIE. Where either one of these factors is not present, the Company is not the primary beneficiary and it does not consolidate the VIE.

To assess whether the Company has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, the Company considers all facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE or have the right to unilaterally remove those decision makers are deemed to have the power to direct the activities of a VIE.

To assess whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, the Company considers all of its economic interests, including debt and equity investments, servicing fees, and other arrangements deemed to be variable interests in the VIE. This assessment requires that the Company applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Factors considered in assessing significance include: the design of the VIE, including its capitalization structure; subordination of interests; payment priority; relative share of interests held across various classes within the VIE’s capital structure; and the reasons why the interests are held by the Company.

For VIEs of which the Company is determined to be the primary beneficiary, all of the underlying assets, liabilities, equity, revenue and expenses of the structures are consolidated into the Company’s consolidated financial statements.

The Company performs an ongoing reassessment of: (1) whether any entities previously evaluated under the majority voting interest framework have become VIEs, based on certain events, and therefore are subject to the VIE consolidation framework, and (2) whether changes in the facts and circumstances regarding its involvement with a VIE cause the Company’s consolidation conclusion regarding the VIE to change.

Loans Held for Investment

Loans Held for Investment

The Company originates CRE debt and related instruments generally to be held for investment. Loans that are held for investment are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If a loan is considered to be impaired, the Company will record an allowance to reduce the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate.

Each loan classified as held for investment is evaluated for impairment on a quarterly basis. Loans are generally collateralized by real estate. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its investment portfolio under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Such impairment analyses are completed and reviewed by asset management and finance personnel who utilize various data sources, including periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, and the borrower’s exit plan, among other factors.

In addition, the Company evaluates the entire portfolio to determine whether the portfolio has any impairment that requires a valuation allowance on the remainder of the loan portfolio. As of March 31, 2018 and December 31, 2017, the Company did not recognize any impairment charges with respect to its loans held for investment.

Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower’s ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Preferred equity investments, which are subordinate to any loans but senior to common equity, are accounted for as loans held for investment and are carried at cost, net of unamortized loan fees and origination costs, unless the loans are deemed impaired, and are included within loans held for investment in the Company’s consolidated balance sheets. The Company accretes or amortizes any discounts or premiums over the life of the related loan held for investment utilizing the effective interest method.

Debt Issuance Costs

Debt Issuance Costs

Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the term of the respective debt instrument. Unamortized debt issuance costs are expensed when the associated debt is repaid prior to maturity. Debt issuance costs related to debt securitizations are capitalized and amortized over the term of the underlying loans using the effective interest method. When an underlying loan is prepaid in a debt securitization and the outstanding principal balance of the securitization debt is reduced, the related unamortized debt issuance costs are charged to expense based on a pro‑rata share of the debt issuance costs being allocated to the specific loans that were prepaid. Amortization of debt issuance costs is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance on (i) Secured Funding Agreements (each individually defined in Note 4 included in these consolidated financial statements) is included within other assets and (ii) the Secured Term Loan (defined in Note 4 included in these consolidated financial statements) and debt securitizations are both included as a reduction to the carrying amount of the liability, in the Company’s consolidated balance sheets.

The original issue discount (“OID”) on amounts drawn under the Company’s Secured Term Loan represents a discount to the face amount of the drawn debt obligations. The OID is amortized over the term of the Secured Term Loan using the effective interest method and is included within interest expense in the Company’s consolidated statements of operations while the unamortized balance is included as a reduction to the carrying amount of the Secured Term Loan in the Company’s consolidated balance sheets.

Revenue Recognition

Revenue Recognition

Interest income from loans held for investment is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans held for investment, origination fees, contractual exit fees and direct loan origination costs are also recognized in interest income from loans held for investment over the initial loan term as a yield adjustment using the effective interest method.

Net Interest Margin and Interest Expense

Net Interest Margin and Interest Expense

Net interest margin in the Company’s consolidated statements of operations serves to measure the performance of the Company's loans held for investment as compared to its use of debt leverage. The Company includes interest income from its loans held for investment and interest expense related to its Secured Funding Agreements, securitizations debt and the Secured Term Loan (individually defined in Note 4 included in these consolidated financial statements) in net interest margin.

Comprehensive Income

Comprehensive Income

For the three months ended March 31, 2018 and 2017, comprehensive income equaled net income; therefore, a separate consolidated statement of comprehensive income is not included in the accompanying consolidated financial statements.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this ASU supersedes the revenue recognition requirements in Revenue Recognition (Topic 605). Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No. 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company has assessed and determined that the application of this guidance does not have a material impact on the Company’s consolidated financial statements, primarily because the majority of the Company’s revenue is accounted for under FASB ASC Topic 310, Receivables, which is excluded from this standard.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard will replace the incurred loss impairment methodology pursuant to GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU No. 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period, with early adoption permitted after December 15, 2018, including interim periods within that reporting period. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force). The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted ASU No. 2016-18 in the first quarter of 2018 and applied the guidance retrospectively to the prior period consolidated statement of cash flows.

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Restrictions on Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the consolidated balance sheets to the total amount shown in the consolidated statements of cash flows ($ in thousands):

	As of
	March 31, 2018		March 31, 2017
Cash and cash equivalents	$	5,201	$	44,400
Restricted cash	379		380
Total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows	$	5,580	$	44,780

Reconciliation of interest income from loan held for investment

A reconciliation of the Company's interest income from loans held for investment, excluding non-controlling interests, to the Company's interest income from loans held for investment as included within its consolidated statements of operations for the three months ended March 31, 2018 and 2017 is as follows ($ in thousands):

	For the three months ended March 31,
	2018		2017
Interest income from loans held for investment, excluding non-controlling interests	$	27,436	$	21,092
Interest income from non-controlling interest investment held by third parties	—		35
Interest income from loans held for investment	$	27,436	$	21,127

Schedule of interest expense

For the three months ended March 31, 2018 and 2017, interest expense is comprised of the following ($ in thousands):

	For the three months ended March 31,
	2018		2017
Secured funding agreements and securitizations debt	$	12,301	$	7,468
Secured term loan	1,998		3,320
Interest expense	$	14,299	$	10,788

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LOANS HELD FOR INVESTMENT (Tables)

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Schedule of loans held for investments

The Company’s investments in loans held for investment are accounted for at amortized cost. The following tables summarize the Company’s loans held for investment as of March 31, 2018 and December 31, 2017 ($ in thousands):

	As of March 31, 2018
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,606,225	$	1,615,703	4.9	%	6.5	%	1.8
Subordinated debt and preferred equity investments	52,150		52,860		9.5	%	11.0	%	3.2
Total loans held for investment portfolio	$	1,658,375	$	1,668,563	5.0	%	6.6	%	1.9

	As of December 31, 2017
	Carrying Amount (1)		Outstanding Principal (1)		Weighted Average Minimum Loan Borrowing Spread (2)		Weighted Average Unleveraged Effective Yield (3)		Weighted Average Remaining Life (Years)
Senior mortgage loans	$	1,674,169	$	1,684,439	4.8	%	6.2	%	1.9
Subordinated debt and preferred equity investments	52,114		52,847		9.5	%	10.8	%	3.4
Total loans held for investment portfolio	$	1,726,283	$	1,737,286	5.0	%	6.3	%	2.0

_______________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Minimum Loan Borrowing Spread is equal to (a) for floating rate loans, the margin above the applicable index rate (e.g., LIBOR) plus floors, if any, on such applicable index rates, and (b) for fixed rate loans, the applicable interest rate.

(3) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. The Total Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2018 and December 31, 2017 as weighted by the Outstanding Principal balance of each loan.

Schedule of current investment portfolio

A more detailed listing of the Company’s investment portfolio based on information available as of March 31, 2018 is as follows ($ in millions, except percentages):

Loan Type		Location	Outstanding Principal (1)	Carrying Amount (1)	Interest Rate	Unleveraged Effective Yield (2)	Maturity Date (3)		Payment Terms (4)
Senior Mortgage Loans:
Self Storage	(5)	Diversified	$116.7	$116.4	L+4.35%	7.0%	Oct 2018		I/O
Office		TX	96.9	96.1	L+3.60%	6.0%	July 2020		I/O
Multifamily		FL	89.7	89.4	L+4.75%	7.2%	Sep 2019		I/O
Various	(6)	Diversified	82.3	82.1	L+4.75%	7.3%	Oct 2018		I/O
Mixed-use		NY	65.6	65.4	L+4.16%	6.5%	Apr 2019		I/O
Multifamily		UT	62.6	62.2	L+3.25%	5.4%	Dec 2020		I/O
Office		IL	60.4	59.8	L+3.75%	6.2%	Dec 2020		I/O
Office		IL	58.6	58.2	L+3.99%	6.3%	Aug 2019		I/O
Office		CO	54.0	53.5	L+4.15%	6.4%	June 2021		I/O
Multifamily		FL	53.8	53.4	L+3.65%	5.9%	Mar 2021		I/O
Industrial		MN	51.6	51.1	L+3.15%	5.5%	Dec 2020		I/O
Office		NJ	49.6	49.2	L+4.65%	7.2%	July 2020		I/O
Mixed-use		CA	49.0	48.6	L+4.00%	6.3%	Apr 2021		I/O
Multifamily		FL	45.4	45.3	L+4.75%	7.2%	Sep 2019		I/O
Multifamily		TX	42.7	42.4	L+3.30%	5.5%	Dec 2020		I/O
Student Housing		CA	41.8	41.4	L+3.95%	6.4%	July 2020		I/O
Student Housing		TX	40.1	39.8	L+4.75%	7.2%	Jan 2021		I/O
Hotel		CA	40.0	39.7	L+4.12%	6.4%	Jan 2021		I/O
Student Housing		NC	38.7	38.5	L+4.00%	7.7%	Feb 2019		I/O
Hotel		NY	38.6	38.6	L+4.75%	7.1%	June 2018		I/O
Hotel		MI	35.2	35.2	L+4.15%	6.0%	July 2018		I/O
Multifamily		NY	31.3	31.2	L+4.55%	6.9%	Feb 2019		I/O
Multifamily		NY	29.5	29.5	L+3.75%	5.9%	Oct 2018		P/I	(7)
Multifamily		NY	29.4	29.1	L+3.20%	5.4%	Dec 2020		I/O
Industrial		OH	27.5	27.4	L+4.20%	6.4%	May 2019	(8)	P/I	(7)
Multifamily		TX	27.5	27.3	L+3.20%	5.6%	Oct 2020		I/O
Multifamily		TX	26.3	26.2	L+3.80%	5.8%	Jan 2019		I/O
Multifamily		CA	25.7	25.5	L+3.85%	6.2%	July 2020		I/O
Student Housing		AL	24.1	23.9	L+4.45%	6.9%	Feb 2020		I/O
Student Housing		TX	24.0	23.8	L+4.10%	6.5%	Jan 2021		I/O
Multifamily		CA	22.7	22.6	L+3.90%	6.1%	Mar 2021		I/O
Multifamily		FL	22.5	22.4	L+4.25%	6.8%	Feb 2019		I/O
Office		PA	19.6	19.5	L+4.70%	7.1%	Mar 2020		I/O
Office		FL	18.4	18.3	L+4.30%	6.8%	Apr 2020		I/O
Multifamily		FL	18.4	18.3	L+4.00%	6.2%	Nov 2020		I/O
Multifamily		CA	18.0	17.8	L+3.30%	5.6%	Feb 2021		I/O
Multifamily		NY	16.3	16.3	L+4.35%	6.5%	Nov 2018		I/O
Multifamily		CA	13.9	13.8	L+3.80%	6.1%	July 2020		I/O
Residential		CA	7.3	7.0	12.00%	14.7%	Feb 2020		I/O
Subordinated Debt and Preferred Equity Investments:
Multifamily		NY	33.3	33.3	L+8.07%	10.2%	Jan 2019		I/O
Office		NJ	17.0	16.3	12.00%	12.8%	Jan 2026		I/O	(7)
Office		CA	2.6	2.6	L+8.25%	10.3%	Nov 2021		I/O
Total/Weighted Average			$1,668.6	$1,658.4		6.6%

_______________________________________________________________________________

(1) The difference between the Carrying Amount and the Outstanding Principal amount of the loans held for investment consists of unamortized purchase discount, deferred loan fees and loan origination costs.

(2) Unleveraged Effective Yield is the compounded effective rate of return that would be earned over the life of the investment based on the contractual interest rate (adjusted for any deferred loan fees, costs, premium or discount) and assumes no dispositions, early prepayments or defaults. Unleveraged Effective Yield for each loan is calculated based on LIBOR as of March 31, 2018 or the LIBOR floor, as applicable. The Weighted Average Unleveraged Effective Yield is calculated based on the average of Unleveraged Effective Yield of all loans held by the Company as of March 31, 2018 as weighted by the Outstanding Principal balance of each loan.

(3) Certain loans are subject to contractual extension options that vary between one and two12-month extensions and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(4) I/O = interest only, P/I = principal and interest.

(5) Prior to December 2017, the $116.7 million senior mortgage loan collateralized by a portfolio of self storage properties was in payment default due to the failure of the borrower to repay an amount equal to $42.5 million with respect to the retail and office properties (which included $37.0 million of allocated loan amount and $5.5 million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the borrower repaid $25.1 million with respect to the office property (which included $21.8 million of allocated loan amount and $3.3 million of release premium). In conjunction with the repayment with respect to the office property, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to January 2018. On January 31, 2018, the Company received a repayment of outstanding principal of $17.4 million (which included $15.1 million of allocated loan amount and $2.3 million of release premium). The principal repayments related to the retail and office properties resulted in the release of the retail and office properties from the collateral pool. Subsequent to the principal repayments, the outstanding principal balance of the senior mortgage loan was $116.7 million and was collateralized by a portfolio of self storage properties.

(6) Prior to December 2017, the $82.3 million senior mortgage loan collateralized by a portfolio of self storage properties and one retail property was in payment default due to the failure of the borrower to repay an amount equal to $13.9 million with respect to the retail property (which included $12.1 million of allocated loan amount and $1.8 million of release premium). This payment amount was due in September 2017, which was prior to the initial maturity date of the loan in October 2018. In December 2017, the senior mortgage loan was modified to, among other things, waive the payment default on the loan and extend the repayment obligation with respect to the retail property to the maturity date of the loan in October 2018. The senior mortgage loan continues to have a recourse payment guarantee of up to $12.1 million from an individual who is the indirect owner of the underlying collateral and an affiliate of the borrower.

(7) In May 2017, amortization began on the senior Ohio loan, which had an outstanding principal balance of $27.5 million as of March 31, 2018. In October 2017, amortization began on the senior New York loan, which had an outstanding principal balance of $29.5 million as of March 31, 2018. In February 2021, amortization will begin on the subordinated New Jersey loan, which had an outstanding principal balance of $17.0 million as of March 31, 2018. The remainder of the loans in the Company’s portfolio are non-amortizing through their primary terms.

(8) In February 2018, the borrower exercised a one-year extension option in accordance with the loan agreement, which extended the maturity date on the senior Ohio loan to May 2019.

Schedule of activity in loan portfolio

For the three months ended March 31, 2018, the activity in the Company’s loan portfolio was as follows ($ in thousands):

Balance at December 31, 2017	$	1,726,283
Initial funding	74,110
Origination fees and discounts, net of costs	(1,040		)
Additional funding	3,218
Amortizing payments	(233		)
Loan payoffs	(145,817		)
Origination fee accretion	1,854
Balance at March 31, 2018	$	1,658,375

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DEBT (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of outstanding balances and total commitments under Financing Agreements

The Company borrows funds, as applicable in a given period, under the Wells Fargo Facility, the Citibank Facility, the BAML Facility, the CNB Facility, the MetLife Facility, the UBS Facility and the U.S. Bank Facility (individually defined below and collectively, the “Secured Funding Agreements”) and the Secured Term Loan (as defined below). The Company refers to the Secured Funding Agreements and the Secured Term Loan as the “Financing Agreements.” The outstanding balance of the Financing Agreements in the table below are presented gross of debt issuance costs. As of March 31, 2018 and December 31, 2017, the outstanding balances and total commitments under the Financing Agreements consisted of the following ($ in thousands):

	March 31, 2018					December 31, 2017
	Outstanding Balance		Total Commitment			Outstanding Balance		Total Commitment
Wells Fargo Facility	$	384,432	$	500,000		$	407,853	$	500,000
Citibank Facility	174,075		250,000		(1)	175,651		250,000		(1)
BAML Facility	56,320		125,000			78,320		125,000
CNB Facility	15,260		50,000			—		50,000
MetLife Facility	101,131		180,000			101,131		180,000
UBS Facility	34,000		140,000			34,000		140,000
U.S. Bank Facility	164,236		185,989			161,005		185,989
Secured Term Loan	110,000		110,000			110,000		110,000
Total	$	1,039,454	$	1,540,989		$	1,067,960	$	1,540,989

______________________________________________________________________________

(1) The Citibank Facility (as defined below) has an accordion feature that provides for an increase in the $250.0 million commitment amount with respect to approved assets, as determined by Citibank, N.A. in its sole discretion.

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COMMITMENTS AND CONTINGENCIES (Tables)

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of loan commitments

As of March 31, 2018 and December 31, 2017, the Company had the following commitments to fund various senior mortgage loans, subordinated debt investments, as well as preferred equity investments accounted for as loans held for investment ($ in thousands):

	As of
	March 31, 2018			December 31, 2017
Total commitments	$	1,788,189		$	1,847,534
Less: funded commitments	(1,668,563		)	(1,737,286		)
Total unfunded commitments	$	119,626		$	110,248

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STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2018

Stockholders' Equity Note [Abstract]

Schedule of restricted stock grants awarded

The following table details the restricted stock grants awarded as of March 31, 2018:

Grant Date	Vesting Start Date	Shares Granted
May 1, 2012	July 1, 2012	35,135
June 18, 2012	July 1, 2012	7,027
July 9, 2012	October 1, 2012	25,000
June 26, 2013	July 1, 2013	22,526
November 25, 2013	November 25, 2016	30,381
January 31, 2014	August 31, 2015	48,273
February 26, 2014	February 26, 2014	12,030
February 27, 2014	August 27, 2014	22,354
June 24, 2014	June 24, 2014	17,658
June 24, 2015	July 1, 2015	25,555
April 25, 2016	July 1, 2016	10,000
June 27, 2016	July 1, 2016	24,680
April 25, 2017	April 25, 2018	81,710
June 7, 2017	July 1, 2017	18,224
October 17, 2017	January 2, 2018	7,278
December 15, 2017	January 2, 2018	8,948
Total		396,779

Schedule of restricted stock award activity

The following tables summarize the (i) non-vested shares of restricted stock and (ii) the vesting schedule of shares of restricted stock for the Company’s directors and officers as of March 31, 2018:

Schedule of Non-Vested Share and Share Equivalents

	Restricted Stock Grants—Directors		Restricted Stock Grants—Officers		Total
Balance at December 31, 2017	21,394		90,658		112,052
Granted	—		—		—
Vested	(6,942	)	(2,231	)	(9,173	)
Forfeited	—		—		—
Balance at March 31, 2018	14,452		88,427		102,879

Future anticipated vesting schedule of restricted stock awards

Future Anticipated Vesting Schedule

	Restricted Stock Grants—Directors	Restricted Stock Grants—Officers	Total
2018	9,448	33,954	43,402
2019	3,336	27,237	30,573
2020	1,668	27,236	28,904
2021	—	—	—
2022	—	—	—
Total	14,452	88,427	102,879

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Schedule of computations of basic and diluted earnings per share

The following information sets forth the computations of basic and diluted earnings per common share for the three months ended March 31, 2018 and 2017 ($ in thousands, except share and per share data):

	For the three months ended March 31,
	2018		2017
Net income attributable to common stockholders	$	9,318	$	6,453
Divided by:
Basic weighted average shares of common stock outstanding:	28,495,833		28,468,819
Non-vested restricted stock	103,083		13,937
Diluted weighted average shares of common stock outstanding:	28,598,916		28,482,756
Basic and diluted earnings per common share	$	0.33	$	0.23

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INCOME TAX (Tables)

3 Months Ended

Mar. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of components of the TRS's income tax provision

The income tax provision for the Company and the TRSs consisted of the following for the three months ended March 31, 2018 and 2017 ($ in thousands):

	For the three months ended March 31,
	2018		2017
Current	$	6	$	3
Deferred	—		—
Excise tax	75		65
Total income tax expense, including excise tax	$	81	$	68

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Schedule of carrying value and estimated fair value of the Company's financial instruments not carried at fair value on the consolidated balance sheet

As of March 31, 2018 and December 31, 2017, the carrying values and fair values of the Company’s financial assets and liabilities recorded at cost are as follows ($ in thousands):

		As of
		March 31, 2018				December 31, 2017
	Level in Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Loans held for investment	3	$	1,658,375	$	1,668,563	$	1,726,283	$	1,737,286
Financial liabilities:
Secured funding agreements	2	$	929,454	$	929,454	$	957,960	$	957,960
Secured term loan	2	107,797		110,000		107,595		110,000
Collateralized loan obligation securitization debt (consolidated VIE)	3	271,393		272,927		271,211		272,927

XML

RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Summary of related-party costs incurred by the Company and amounts payable to the Manager

The following table summarizes the related party costs incurred by the Company for the three months ended March 31, 2018 and 2017 and amounts payable to the Company’s Manager as of March 31, 2018 and December 31, 2017 ($ in thousands):

	Incurred				Payable
	For the three months ended March 31,				As of
	2018		2017		March 31, 2018		December 31, 2017
Affiliate Payments
Management fees	$	1,558	$	1,544	$	1,558	$	1,549
Incentive fees	—		268		—		—
General and administrative expenses	924		948		924		1,016
Direct costs (1)	103		60		49		63
Total	$	2,585	$	2,820	$	2,531	$	2,628

______________________________________________________________________________

(1) For the three months ended March 31, 2018 and 2017, direct costs incurred are included within general and administrative expenses in the Company’s consolidated statements of operations.

XML

DIVIDENDS AND DISTRIBUTIONS (Tables)

3 Months Ended

Mar. 31, 2018

DIVIDENDS AND DISTRIBUTIONS

Summary of the Company's dividends declared

The following table summarizes the Company’s dividends declared during the three months ended March 31, 2018 and 2017 ($ in thousands, except per share data):

Date Declared	Record Date	Payment Date	Per Share Amount		Total Amount
March 1, 2018	March 29, 2018	April 17, 2018	$	0.28	$	8,008
Total cash dividends declared for the three months ended March 31, 2018			$	0.28	$	8,008
March 7, 2017	March 31, 2017	April 17, 2017	$	0.27	$	7,690
Total cash dividends declared for the three months ended March 31, 2017			$	0.27	$	7,690

XML

SIGNIFICANT ACCOUNTING POLICIES - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Cash and cash equivalents	$ 5,201	$ 28,343	$ 44,400
Restricted cash	379	379	380
Total cash, cash equivalents and restricted cash shown in the Company's consolidated statements of cash flows	$ 5,580	$ 28,722	$ 44,780	$ 47,645

XML

SIGNIFICANT ACCOUNTING POLICIES - Disclosures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenue Recognition [Abstract]
Interest income from loans held for investment, excluding non-controlling interests	$ 27,436	$ 21,092
Interest income from non-controlling interest investment held by third parties	0	35
Interest income from loans held for investment	$ 27,436	$ 21,127

XML

SIGNIFICANT ACCOUNTING POLICIES - Schedule of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Debt Instrument [Line Items]
Interest expense	$ 14,299	$ 10,788
Secured funding agreements and securitizations debt
Debt Instrument [Line Items]
Interest expense	12,301	7,468
Secured term loan
Debt Instrument [Line Items]
Interest expense	$ 1,998	$ 3,320

XML

SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details)	3 Months Ended
	Mar. 31, 2018
Accounting Policies [Abstract]
Minimum period of past due for loans to be placed on non accrual status	30 days

XML

LOANS HELD FOR INVESTMENT - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($) Loan
Receivables [Abstract]
Number of loans originated or co-originated | Loan	42
Number of loans repaid or sold | Loan	63
Total Commitment	$ 1,900.0
Loans held for investment	1,700.0
Amount funded	77.3
Amount of repayments	$ 146.1
Percentage of loans held for investment having LIBOR floors	86.80%
Weighted average floor (as a percent)	0.87%

XML

LOANS HELD FOR INVESTMENT - Loans held for Investments (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Mortgage Loans on Real Estate [Line Items]
Carrying Amount	$ 1,658,375	$ 1,726,283
Outstanding Principal	$ 1,668,563	$ 1,737,286
Weighted Average Minimum Loan Borrowing Spread	5.00%	5.00%
Weighted Average Unleveraged Effective Yield	6.60%	6.30%
Weighted Average Remaining Life	1 year 10 months 24 days	2 years
Senior mortgage loans
Mortgage Loans on Real Estate [Line Items]
Carrying Amount	$ 1,606,225	$ 1,674,169
Outstanding Principal	$ 1,615,703	$ 1,684,439
Weighted Average Minimum Loan Borrowing Spread	4.90%	4.80%
Weighted Average Unleveraged Effective Yield	6.50%	6.20%
Weighted Average Remaining Life	1 year 9 months 18 days	1 year 10 months 24 days
Subordinated debt and preferred equity investments
Mortgage Loans on Real Estate [Line Items]
Carrying Amount	$ 52,150	$ 52,114
Outstanding Principal	$ 52,860	$ 52,847
Weighted Average Minimum Loan Borrowing Spread	9.50%	9.50%
Weighted Average Unleveraged Effective Yield	11.00%	10.80%
Weighted Average Remaining Life	3 years 2 months 12 days	3 years 4 months 24 days

XML

LOANS HELD FOR INVESTMENT - Reconciliation of Loans Held for Investment (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Mortgage Loans on Real Estate [Line Items]
Carrying Amount	$ 1,658,375,000	$ 1,726,283,000
Total loans held for investment portfolio (excluding non-controlling interests held by third parties), outstanding principal	1,668,563,000	1,737,286,000
Loans held for investment, carrying amount	1,658,375,000	$ 1,726,283,000
Non-controlling interest investment
Mortgage Loans on Real Estate [Line Items]
Loans held for investment, carrying amount	0
Loans held for investment, outstanding principal	$ 0

XML

LOANS HELD FOR INVESTMENT - Investment Portfolio (Details) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018 USD ($) extension_option	Dec. 31, 2017 USD ($)	Jan. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 1,668,563	$ 1,737,286
Mortgage Loans on Real Estate, Principal Amount of Delinquent Loans		21,800	$ 15,100
Carrying Amount	$ 1,658,375	$ 1,726,283
Fixed interest rate	5.00%	5.00%
Unleveraged Effective Yield	6.60%	6.30%
Mortgage Loans on Real Estate, Write-down or Reserve, Amount		$ 3,300	2,300
Mortgage Loans on Real Estate, Recourse Payment Guarantee		12,100
Mortgage Loans on Real Estate, Delinquent Principal or Interest, Acquired from Affiliates		25,100	17,400
Minimum
Mortgage Loans on Real Estate [Line Items]
Number of extension options | extension_option	1
Maximum
Mortgage Loans on Real Estate [Line Items]
Number of extension options | extension_option	2
Extension period of maturity date	12 months
Senior Mortgage Loans | Industrial | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 29,500
Senior Mortgage Loans | Industrial | NEW JERSEY
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	17,000
Senior Mortgage Loans | Industrial | OHIO
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 27,500
Senior Mortgage Loans | Residential | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Fixed interest rate	12.00%
Senior Mortgage Loans | Residential | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 7,300
Carrying Amount	$ 7,000
Unleveraged Effective Yield	14.70%
Subordinated debt and preferred equity investments | Office | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 17,000
Carrying Amount	$ 16,300
Fixed interest rate	12.00%
Unleveraged Effective Yield	12.80%
LIBOR Plus 4.35%, Due October 2018 | Senior Mortgage Loans | Self Storage | Diversified
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 116,700
Carrying Amount	$ 116,400
Unleveraged Effective Yield	7.00%
LIBOR Plus 4.35%, Due October 2018 | Senior Mortgage Loans | Self Storage | Diversified | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.35%
LIBOR Plus 4.35%, Due October 2018 | Senior Mortgage Loans | Various | Diversified
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal			$ 116,700
LIBOR Plus 4.35%, Due October 2018 | Senior Mortgage Loans | Retail and Office | Diversified
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal				$ 37,000
Mortgage Loans on Real Estate, Principal Amount of Delinquent Loans				42,500
Mortgage Loans on Real Estate, Write-down or Reserve, Amount				5,500
LIBOR Plus 3.60%, Due July 2020 | Senior Mortgage Loans | Office | TEXAS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 96,900
Carrying Amount	$ 96,100
Unleveraged Effective Yield	6.00%
LIBOR Plus 3.60%, Due July 2020 | Senior Mortgage Loans | Office | TEXAS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.60%
LIBOR Plus 4.75%, Due September 2019, Instrument 1 | Senior Mortgage Loans | Multifamily | FLORIDA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 89,700
Carrying Amount	$ 89,400
Unleveraged Effective Yield	7.20%
LIBOR Plus 4.75%, Due September 2019, Instrument 1 | Senior Mortgage Loans | Multifamily | FLORIDA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.75%
LIBOR Plus 4.75%, Due October 2018 | Senior Mortgage Loans | Various | Diversified
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 82,300	$ 82,300
Carrying Amount	$ 82,100
Unleveraged Effective Yield	7.30%
LIBOR Plus 4.75%, Due October 2018 | Senior Mortgage Loans | Various | Diversified | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.75%
LIBOR Plus 4.75%, Due October 2018 | Senior Mortgage Loans | Retail | Diversified
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal				12,100
Mortgage Loans on Real Estate, Principal Amount of Delinquent Loans				13,900
Mortgage Loans on Real Estate, Write-down or Reserve, Amount				$ 1,800
LIBOR Plus 4.16%, Due April 2019 | Senior Mortgage Loans | Mixed-use | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 65,600
Carrying Amount	$ 65,400
Unleveraged Effective Yield	6.50%
LIBOR Plus 4.16%, Due April 2019 | Senior Mortgage Loans | Mixed-use | NEW YORK | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.16%
LIBOR Plus 3.25%, Due December 2020 | Senior Mortgage Loans | Multifamily | UTAH
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 62,600
Carrying Amount	$ 62,200
Unleveraged Effective Yield	5.40%
LIBOR Plus 3.25%, Due December 2020 | Senior Mortgage Loans | Multifamily | UTAH | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.25%
LIBOR Plus 3.75%, Due December 2020 | Senior Mortgage Loans | Office | ILLINOIS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 60,400
Carrying Amount	$ 59,800
Unleveraged Effective Yield	6.20%
LIBOR Plus 3.75%, Due December 2020 | Senior Mortgage Loans | Office | ILLINOIS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.75%
LIBOR Plus 3.99%, Due August 2019 | Senior Mortgage Loans | Office | ILLINOIS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 58,600
Carrying Amount	$ 58,200
Unleveraged Effective Yield	6.30%
LIBOR Plus 3.99%, Due August 2019 | Senior Mortgage Loans | Office | ILLINOIS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.99%
LIBOR Plus 4.15%, Due June 2021 | Senior Mortgage Loans | Office | COLORADO
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 54,000
Carrying Amount	$ 53,500
Unleveraged Effective Yield	6.40%
LIBOR Plus 4.15%, Due June 2021 | Senior Mortgage Loans | Office | COLORADO | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.15%
LIBOR Plus 3.65%, Due March 2021 | Senior Mortgage Loans | Multifamily | FLORIDA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 53,800
Carrying Amount	$ 53,400
Unleveraged Effective Yield	5.90%
LIBOR Plus 3.65%, Due March 2021 | Senior Mortgage Loans | Multifamily | FLORIDA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.65%
LIBOR Plus 3.15%, Due December 2020 | Senior Mortgage Loans | Industrial | MINNESOTA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 51,600
Carrying Amount	$ 51,100
Unleveraged Effective Yield	5.50%
LIBOR Plus 3.15%, Due December 2020 | Senior Mortgage Loans | Industrial | MINNESOTA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.15%
LIBOR Plus 4.65%, Due June 2020 | Senior Mortgage Loans | Office | NEW JERSEY
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 49,600
Carrying Amount	$ 49,200
Unleveraged Effective Yield	7.20%
LIBOR Plus 4.65%, Due June 2020 | Senior Mortgage Loans | Office | NEW JERSEY | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.65%
LIBOR Plus 4.00%, Due April 2021 | Senior Mortgage Loans | Mixed-use | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 49,000
Carrying Amount	$ 48,600
Unleveraged Effective Yield	6.30%
LIBOR Plus 4.00%, Due April 2021 | Senior Mortgage Loans | Mixed-use | CALIFORNIA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.00%
LIBOR Plus 4.75%, Due September 2019, Instrument 2 | Senior Mortgage Loans | Multifamily | FLORIDA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 45,400
Carrying Amount	$ 45,300
Unleveraged Effective Yield	7.20%
LIBOR Plus 4.75%, Due September 2019, Instrument 2 | Senior Mortgage Loans | Multifamily | FLORIDA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.75%
LIBOR Plus 3.30%, Due December 2020 | Senior Mortgage Loans | Multifamily | TEXAS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 42,700
Carrying Amount	$ 42,400
Unleveraged Effective Yield	5.50%
LIBOR Plus 3.30%, Due December 2020 | Senior Mortgage Loans | Multifamily | TEXAS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.30%
LIBOR Plus 3.95%, Due July 2020 | Senior Mortgage Loans | Student Housing | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 41,800
Carrying Amount	$ 41,400
Unleveraged Effective Yield	6.40%
LIBOR Plus 3.95%, Due July 2020 | Senior Mortgage Loans | Student Housing | CALIFORNIA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.95%
LIBOR Plus 4.75%, Due Jan 2021 | Senior Mortgage Loans | Student Housing | TEXAS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 40,100
Carrying Amount	$ 39,800
Unleveraged Effective Yield	7.20%
LIBOR Plus 4.75%, Due Jan 2021 | Senior Mortgage Loans | Student Housing | TEXAS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.75%
LIBOR Plus 4.12%, Due January 2021 | Senior Mortgage Loans | Hotel | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 40,000
Carrying Amount	$ 39,700
Unleveraged Effective Yield	6.40%
LIBOR Plus 4.12%, Due January 2021 | Senior Mortgage Loans | Hotel | CALIFORNIA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.12%
LIBOR Plus 4.00%, Due February 2019 | Senior Mortgage Loans | Student Housing | NORTH CAROLINA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 38,700
Carrying Amount	$ 38,500
Unleveraged Effective Yield	7.70%
LIBOR Plus 4.00%, Due February 2019 | Senior Mortgage Loans | Student Housing | NORTH CAROLINA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.00%
LIBOR Plus 4.75%, Due June 2018 | Senior Mortgage Loans | Hotel | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 38,600
Carrying Amount	$ 38,600
Unleveraged Effective Yield	7.10%
LIBOR Plus 4.75%, Due June 2018 | Senior Mortgage Loans | Hotel | NEW YORK | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.75%
LIBOR Plus 4.15%, Due July 2018 | Senior Mortgage Loans | Hotel | MICHIGAN
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 35,200
Carrying Amount	$ 35,200
Unleveraged Effective Yield	6.00%
LIBOR Plus 4.15%, Due July 2018 | Senior Mortgage Loans | Hotel | MICHIGAN | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.15%
LIBOR Plus 4.55%, Due February 2019 | Senior Mortgage Loans | Multifamily | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 31,300
Carrying Amount	$ 31,200
Unleveraged Effective Yield	6.90%
LIBOR Plus 4.55%, Due February 2019 | Senior Mortgage Loans | Multifamily | NEW YORK | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.55%
LIBOR Plus 3.75%, Due October 2018 | Senior Mortgage Loans | Multifamily | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 29,500
Carrying Amount	$ 29,500
Unleveraged Effective Yield	5.90%
LIBOR Plus 3.75%, Due October 2018 | Senior Mortgage Loans | Multifamily | NEW YORK | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.75%
LIBOR Plus 3.20%, Due December 2020 | Senior Mortgage Loans | Multifamily | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 29,400
Carrying Amount	$ 29,100
Unleveraged Effective Yield	5.40%
LIBOR Plus 3.20%, Due December 2020 | Senior Mortgage Loans | Multifamily | NEW YORK | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.20%
LIBOR Plus 4.20%, Due May 2019 | Senior Mortgage Loans | Industrial | OHIO
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 27,500
Carrying Amount	$ 27,400
Unleveraged Effective Yield	6.40%
LIBOR Plus 4.20%, Due May 2019 | Senior Mortgage Loans | Industrial | OHIO | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.20%
LIBOR Plus 3.20%, Due October 2020 | Senior Mortgage Loans | Multifamily | TEXAS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 27,500
Carrying Amount	$ 27,300
Unleveraged Effective Yield	5.60%
LIBOR Plus 3.20%, Due October 2020 | Senior Mortgage Loans | Multifamily | TEXAS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.20%
LIBOR Plus 3.80%, Due January 2019 | Senior Mortgage Loans | Multifamily | TEXAS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 26,300
Carrying Amount	$ 26,200
Unleveraged Effective Yield	5.80%
LIBOR Plus 3.80%, Due January 2019 | Senior Mortgage Loans | Multifamily | TEXAS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.80%
LIBOR Plus 3.85%, Due July 2020 | Senior Mortgage Loans | Multifamily | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 25,700
Carrying Amount	$ 25,500
Unleveraged Effective Yield	6.20%
LIBOR Plus 3.85%, Due July 2020 | Senior Mortgage Loans | Multifamily | CALIFORNIA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.85%
LIBOR Plus 4.45%, Due February 2020 | Senior Mortgage Loans | Student Housing | ALABAMA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 24,100
Carrying Amount	$ 23,900
Unleveraged Effective Yield	6.90%
LIBOR Plus 4.45%, Due February 2020 | Senior Mortgage Loans | Student Housing | ALABAMA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.45%
LIBOR Plus 4.10%, Due January 2021 | Senior Mortgage Loans | Student Housing | TEXAS
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 24,000
Carrying Amount	$ 23,800
Unleveraged Effective Yield	6.50%
LIBOR Plus 4.10%, Due January 2021 | Senior Mortgage Loans | Student Housing | TEXAS | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.10%
LIBOR Plus 3.90%, Due March 2021 | Senior Mortgage Loans | Multifamily | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 22,700
Carrying Amount	$ 22,600
Unleveraged Effective Yield	6.10%
LIBOR Plus 3.90%, Due March 2021 | Senior Mortgage Loans | Multifamily | CALIFORNIA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	3.90%
LIBOR Plus 4.25%, Due February 2019 | Senior Mortgage Loans | Multifamily | FLORIDA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 22,500
Carrying Amount	$ 22,400
Unleveraged Effective Yield	6.80%
LIBOR Plus 4.25%, Due February 2019 | Senior Mortgage Loans | Multifamily | FLORIDA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.25%
LIBOR Plus 4.70%, Due March 2020 | Senior Mortgage Loans | Office | PENNSYLVANIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 19,600
Carrying Amount	$ 19,500
Unleveraged Effective Yield	7.10%
LIBOR Plus 4.70%, Due March 2020 | Senior Mortgage Loans | Office | PENNSYLVANIA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.70%
LIBOR Plus 4.30%, Due April 2020 | Senior Mortgage Loans | Office | FLORIDA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 18,400
Carrying Amount	$ 18,300
Unleveraged Effective Yield	6.80%
LIBOR Plus 4.30%, Due April 2020 | Senior Mortgage Loans | Office | FLORIDA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.30%
LIBOR Plus 4.00%, Due November 2020 | Senior Mortgage Loans | Multifamily | FLORIDA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 18,400
Carrying Amount	$ 18,300
Unleveraged Effective Yield	6.20%
LIBOR Plus 4.00%, Due November 2020 | Senior Mortgage Loans | Multifamily | FLORIDA | LIBOR
Mortgage Loans on Real Estate [Line Items]
Basis spread on variable rate	4.00%
LIBOR Plus 3.30%, Due February 2021 | Senior Mortgage Loans | Multifamily | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 18,000
Carrying Amount	$ 17,800
Basis spread on variable rate	3.30%
Unleveraged Effective Yield	5.60%
LIBOR Plus 4.35%, Due November 2018 | Senior Mortgage Loans | Multifamily | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 16,300
Carrying Amount	$ 16,300
Basis spread on variable rate	4.35%
Unleveraged Effective Yield	6.50%
LIBOR Plus 3.80%, Due July 2020 | Senior Mortgage Loans | Multifamily | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 13,900
Carrying Amount	$ 13,800
Basis spread on variable rate	3.80%
Unleveraged Effective Yield	6.10%
LIBOR Plus 8.07%, Due January 2019 | Subordinated debt and preferred equity investments | Multifamily | NEW YORK
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 33,300
Carrying Amount	$ 33,300
Basis spread on variable rate	8.07%
Unleveraged Effective Yield	10.20%
LIBOR Plus 8.25%, Due November 2021 | Subordinated debt and preferred equity investments | Office | CALIFORNIA
Mortgage Loans on Real Estate [Line Items]
Outstanding Principal	$ 2,600
Carrying Amount	$ 2,600
Basis spread on variable rate	8.25%
Unleveraged Effective Yield	10.30%

XML

LOANS HELD FOR INVESTMENT - Portfolio Activity (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Change in the activity of loan portfolio
Balance at the beginning of the period	$ 1,726,283,000
Initial funding	74,110,000
Origination fees and discounts, net of costs	(1,040,000)
Additional funding	3,218,000
Amortizing payments	(233,000)
Loan payoffs	(145,817,000)
Origination fee accretion	1,854,000	$ 1,454,000
Balance at the end of the period	1,658,375,000
Impairment charges recognized	$ 0	$ 0

XML

DEBT - Schedule of outstanding balances and total commitments under Financing Agreements (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Outstanding Balance	$ 1,039,454,000	$ 1,067,960,000
Total Commitment	1,540,989,000	1,540,989,000
Secured Term Loan
Debt Instrument [Line Items]
Outstanding Balance	110,000,000	110,000,000
Total Commitment	110,000,000	110,000,000
Wells Fargo Facility
Debt Instrument [Line Items]
Outstanding Balance	384,432,000	407,853,000
Total Commitment	500,000,000	500,000,000
Wells Fargo Facility | Secured revolving funding facility
Debt Instrument [Line Items]
Total Commitment	500,000,000
Citibank Facility
Debt Instrument [Line Items]
Outstanding Balance	174,075,000	175,651,000
Total Commitment	250,000,000	250,000,000
Citibank Facility | Secured revolving funding facility
Debt Instrument [Line Items]
Total Commitment	250,000,000
BAML Facility
Debt Instrument [Line Items]
Outstanding Balance	56,320,000	78,320,000
Total Commitment	125,000,000	125,000,000
City National Bank Facility | March 2014 CNB Facility
Debt Instrument [Line Items]
Outstanding Balance	15,260,000	0
Total Commitment	50,000,000	50,000,000
MetLife Facility
Debt Instrument [Line Items]
Outstanding Balance	101,131,000	101,131,000
Total Commitment	180,000,000	180,000,000
April 2014 UBS Facility
Debt Instrument [Line Items]
Outstanding Balance	34,000,000	34,000,000
Total Commitment	140,000,000	140,000,000
U.S. Bank Facility
Debt Instrument [Line Items]
Outstanding Balance	164,236,000	161,005,000
Total Commitment	$ 185,989,000	$ 185,989,000

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DEBT - Disclosures (Details)		3 Months Ended					12 Months Ended
	Dec. 14, 2015	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018 USD ($) extension	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 21, 2017
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 1,540,989,000		$ 1,540,989,000
Amount of debt discount on the initial draw down amount							2,600,000
Maximum
Funding agreements
Extension period of maturity date					12 months
Secured term loan
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 110,000,000		110,000,000
Number of extension periods available for maturity date | extension					1
Extension period of maturity date					12 months
Aggregate principal amount					$ 110,000,000
Debt discount on initial draw down (as a percent)						8.70%
Secured term loan | LIBOR
Funding agreements
Interest rate margin (as a percent)					500.00%			600.00%
Debt Instrument, Interest Rate, Effective Percentage					730.00%	850.00%
Secured term loan | LIBOR | Scenario, Forecast
Funding agreements
Debt Instrument, Interest Rate, Increase (Decrease)		75.00%	37.50%	12.50%
Secured term loan | Minimum | LIBOR
Funding agreements
Interest rate margin (as a percent)								100.00%
Wells Fargo Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 500,000,000		500,000,000
Wells Fargo Facility | Secured revolving funding facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 500,000,000
Number of extension periods available for maturity date | extension					2
Extension period of maturity date					12 months
Non-utilization fee on average available balance (as a percent)					0.25%
Non-utilization threshold percentage (less than) (as a percent)					75.00%
Non-utilization/commitment fee						$ 9,000
Wells Fargo Facility | Secured revolving funding facility | Minimum | 30 day LIBOR
Funding agreements
Interest rate margin (as a percent)	1.75%
Wells Fargo Facility | Secured revolving funding facility | Maximum | 30 day LIBOR
Funding agreements
Interest rate margin (as a percent)	2.35%
Wells Fargo Facility | Revolving master repurchase facility | 30 day LIBOR
Funding agreements
Non-utilization/commitment fee					$ 0
Citibank Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					250,000,000		250,000,000
Citibank Facility | Secured revolving funding facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 250,000,000
Number of extension periods available for maturity date | extension					3
Extension period of maturity date					12 months
Non-utilization fee on average available balance (as a percent)					0.25%
Non-utilization/commitment fee					$ 51,000	20,000
Citibank Facility | Secured revolving funding facility | Minimum | 30 day LIBOR
Funding agreements
Interest rate margin (as a percent)					2.25%
Citibank Facility | Secured revolving funding facility | Maximum | 30 day LIBOR
Funding agreements
Interest rate margin (as a percent)					2.50%
BAML Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 125,000,000		125,000,000
BAML Facility | Secured revolving funding facility
Funding agreements
Non-utilization fee on average available balance (as a percent)					0.125%
BAML Facility | Secured funding facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 125,000,000
Non-utilization/commitment fee					$ 11,000	9,000
Term of debt					2 years
Facility used on average (at least) (as a percent)					50.00%
BAML Facility | Secured funding facility | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					2.00%
BAML Facility | Secured funding facility | Minimum | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					2.25%
BAML Facility | Secured funding facility | Maximum | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					2.75%
City National Bank Facility | March 2014 CNB Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 50,000,000		50,000,000
Non-utilization fee on average available balance (as a percent)					0.375%
Non-utilization/commitment fee					$ 46,000	47,000
City National Bank Facility | March 2014 CNB Facility | LIBOR for a one, two, three, six or 12-month
Funding agreements
Interest rate margin (as a percent)					3.00%
City National Bank Facility | March 2014 CNB Facility | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					1.00%
City National Bank Facility | March 2014 CNB Facility | Federal funds rate
Funding agreements
Interest rate margin (as a percent)					0.50%
City National Bank Facility | March 2014 CNB Facility | Base rate
Funding agreements
Interest rate margin (as a percent)					1.25%
City National Bank Facility | March 2014 CNB Facility | Minimum
Funding agreements
Interest rate (as a percent)					3.00%
Facility used on average (at least) (as a percent)					75.00%
April 2014 UBS Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 140,000,000		140,000,000
April 2014 UBS Facility | Revolving master repurchase facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 140,000,000
April 2014 UBS Facility | Assets subject to an advance for one year or less | Revolving master repurchase facility | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					1.88%
April 2014 UBS Facility | Assets subject to an advance in excess of one year but less than two years | Revolving master repurchase facility | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					2.08%
April 2014 UBS Facility | Assets subject to an advance for greater than two years | Revolving master repurchase facility | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					2.28%
U.S. Bank Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 185,989,000		185,989,000
U.S. Bank Facility | Revolving master repurchase facility
Funding agreements
Number of extension periods available for maturity date | extension					2
Extension period of maturity date					12 months
U.S. Bank Facility | Revolving master repurchase facility | 30 day LIBOR
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 186,000,000
Interest rate margin (as a percent)					0.00%
Non-utilization/commitment fee					$ 0	$ 42,000
U.S. Bank Facility | Revolving master repurchase facility | One-month LIBOR
Funding agreements
Interest rate margin (as a percent)					2.25%
MetLife Facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 180,000,000		$ 180,000,000
MetLife Facility | Secured revolving funding facility
Funding agreements
Non-utilization threshold percentage (less than) (as a percent)					65.00%
Non-utilization/commitment fee					$ 6,000
MetLife Facility | Revolving master repurchase facility
Funding agreements
Line of credit facility, maximum borrowing capacity					$ 180,000,000
Number of extension periods available for maturity date | extension					2
Extension period of maturity date					12 months
MetLife Facility | Revolving master repurchase facility | 30 day LIBOR
Funding agreements
Interest rate margin (as a percent)					2.35%	2.30%
Non-utilization/commitment fee						$ 0

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COMMITMENTS AND CONTINGENCIES - Commitments to Fund (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Total commitments	$ 1,788,189	$ 1,847,534
Less: funded commitments	(1,668,563)	(1,737,286)
Total unfunded commitments	$ 119,626	$ 110,248

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STOCKHOLDERS' EQUITY - Common Stock (Details)	3 Months Ended
	Mar. 31, 2018 shares
Stockholders' Equity Note [Abstract]
Common stock shares issued in public or private offerings	0

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STOCKHOLDERS' EQUITY - Disclosures (Details) - shares	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2012	Apr. 23, 2012
Equity Incentive Plan
Number of shares of common stock that may granted under the plan (in shares)			690,000
Percentage of issued and outstanding shares of common stock eligible to be granted under the plan		7.50%
Restricted stock
Equity Incentive Plan
Shares Granted (in shares)	396,779
Restricted stock activity
Balance at the beginning of the period (in shares)	112,052
Granted (in shares)	0
Vested (in shares)	(9,173)
Forfeited (in shares)	0
Balance at the end of the period (in shares)	102,879
Future Anticipated Vesting Schedule
2018 (in shares)	43,402
2019 (in shares)	30,573
2020 (in shares)	28,904
2021 (in shares)	0
2022 (in shares)	0
Total (in shares)	102,879
Restricted stock | Minimum
Equity Incentive Plan
Award vesting period	1 year
Restricted stock | Maximum
Equity Incentive Plan
Award vesting period	4 years
Restricted stock | Directors
Restricted stock activity
Balance at the beginning of the period (in shares)	21,394
Granted (in shares)	0
Vested (in shares)	(6,942)
Forfeited (in shares)	0
Balance at the end of the period (in shares)	14,452
Future Anticipated Vesting Schedule
2018 (in shares)	9,448
2019 (in shares)	3,336
2020 (in shares)	1,668
2021 (in shares)	0
2022 (in shares)	0
Total (in shares)	14,452
Restricted stock | Officer
Restricted stock activity
Balance at the beginning of the period (in shares)	90,658
Granted (in shares)	0
Vested (in shares)	(2,231)
Forfeited (in shares)	0
Balance at the end of the period (in shares)	88,427
Future Anticipated Vesting Schedule
2018 (in shares)	33,954
2019 (in shares)	27,237
2020 (in shares)	27,236
2021 (in shares)	0
2022 (in shares)	0
Total (in shares)	88,427
Restricted stock | May 1, 2012
Equity Incentive Plan
Shares Granted (in shares)	35,135
Restricted stock | June 18, 2012
Equity Incentive Plan
Shares Granted (in shares)	7,027
Restricted stock | July 9, 2012
Equity Incentive Plan
Shares Granted (in shares)	25,000
Restricted stock | June 26, 2013
Equity Incentive Plan
Shares Granted (in shares)	22,526
Restricted stock | November 25, 2013
Equity Incentive Plan
Shares Granted (in shares)	30,381
Restricted stock | January 31, 2014
Equity Incentive Plan
Shares Granted (in shares)	48,273
Restricted stock | February 26, 2014
Equity Incentive Plan
Shares Granted (in shares)	12,030
Restricted stock | February 27, 2014
Equity Incentive Plan
Shares Granted (in shares)	22,354
Restricted stock | June 24, 2014
Equity Incentive Plan
Shares Granted (in shares)	17,658
Restricted stock | June 24, 2015
Equity Incentive Plan
Shares Granted (in shares)	25,555
Restricted stock | April 25, 2016
Equity Incentive Plan
Shares Granted (in shares)	10,000
Restricted stock | June 27, 2016
Equity Incentive Plan
Shares Granted (in shares)	24,680
Restricted stock | April 25, 2017
Equity Incentive Plan
Shares Granted (in shares)	81,710
Restricted stock | June 7, 2017
Equity Incentive Plan
Shares Granted (in shares)	18,224
Restricted stock | October 17, 2017
Equity Incentive Plan
Shares Granted (in shares)	7,278
Restricted stock | December 15, 2017
Equity Incentive Plan
Shares Granted (in shares)	8,948

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EARNINGS PER SHARE - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share [Abstract]
Net income attributable to common stockholders	$ 9,318	$ 6,453
Divided by:
Basic weighted average shares of common stock outstanding (in shares)	28,495,833	28,468,819
Non-vested restricted stock (in shares)	103,083	13,937
Diluted weighted average shares of common stock outstanding (in shares)	28,598,916	28,482,756
Basic and diluted earnings per common share (in dollars per share)	$ 0.33	$ 0.23

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INCOME TAX - Schedule of Components of Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Components of the company's income tax provision
Total income tax expense, including excise tax	$ 81	$ 68
Excise tax rate	4.00%
ACRE Capital Sale
Components of the company's income tax provision
Current	$ 6	3
Deferred	0	0
Excise tax	75	65
Total income tax expense, including excise tax	$ 81	$ 68

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Carrying Value and Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet
Loans held for investment	$ 1,658,375	$ 1,726,283
Carrying Value
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet
Loans held for investment	1,658,375	1,726,283
Financial liabilities:
Secured funding agreements	929,454	957,960
Secured term loan	107,797	107,595
Collateralized loan obligation securitization debt (consolidated VIE)	271,393	271,211
Fair Value | Level II
Financial liabilities:
Secured funding agreements	929,454	957,960
Secured term loan	110,000	110,000
Fair Value | Level III
Carrying value and estimated fair value of the financial assets on the consolidated balance sheet
Loans held for investment	1,668,563	1,737,286
Financial liabilities:
Collateralized loan obligation securitization debt (consolidated VIE)	$ 272,927	$ 272,927

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RELATED PARTY TRANSACTIONS - Narrative (Details)	3 Months Ended
	Mar. 31, 2018 USD ($) quarter	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Related Party Transaction [Line Items]
Line of credit facility, maximum borrowing capacity	$ 1,540,989,000		$ 1,540,989,000
Management fee renewal term	1 year
Management fee look back period	24 months
Multiplier of average annual base management fee to arrive at termination fee	3
ACREM
Related Party Transaction [Line Items]
Base management fees as a percentage of stockholders' equity per annum	1.50%
Incentive fee payable (not less than)	$ 0
Percentage multiplied to arrive at first value affecting calculation of incentive fees	20.00%
Previous period for which core earnings are considered to arrive at first value affecting calculation of incentive fees	12 months
Previous period for product of weighted average price per share and weighted average number of shares of common stock and other shares	12 months
Percentage multiplied to arrive at difference of first value affecting calculation of incentive fees	8.00%
Period for which cumulative core earnings must be greater than zero | quarter	9
Period whose fiscal quarters are considered to arrive at first value affecting calculation of incentive fees	12 months
Period considered to arrive at second value affecting calculation of incentive fees	3 years
Minimum cumulative core earnings (greater than)	$ 12
Incentive fees incurred	$ 0	$ 268,000

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RELATED PARTY TRANSACTIONS - Related Party Costs Incurred (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Related Party Transaction [Line Items]
Payable	$ 2,531		$ 2,628
Continuing Operations | ACREM
Related Party Transaction [Line Items]
Incurred	2,585	$ 2,820
Payable	2,531		2,628
Continuing Operations | ACREM | Management fees
Related Party Transaction [Line Items]
Incurred	1,558	1,544
Payable	1,558		1,549
Continuing Operations | ACREM | Incentive fees
Related Party Transaction [Line Items]
Incurred	0	268
Payable	0		0
Continuing Operations | ACREM | General and administrative expenses
Related Party Transaction [Line Items]
Incurred	924	948
Payable	924		1,016
Continuing Operations | ACREM | Direct costs
Related Party Transaction [Line Items]
Incurred	103	$ 60
Payable	$ 49		$ 63

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DIVIDENDS AND DISTRIBUTIONS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended
	Mar. 01, 2018	Mar. 07, 2017	Mar. 31, 2018	Mar. 31, 2017
DIVIDENDS AND DISTRIBUTIONS
Dividends per share amount declared (in dollars per share)	$ 0.28	$ 0.27	$ 0.28	$ 0.27
Total cash dividends	$ 8,008	$ 7,690	$ 8,008	$ 7,690

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VARIABLE INTEREST ENTITIES - Narrative (Details)		3 Months Ended
	Mar. 02, 2017 USD ($) Loan	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Variable Interest Entity [Line Items]
Carrying Amount		$ 1,658,375,000		$ 1,726,283,000
Loans held for investment related to consolidated VIE		275,040,000		341,158,000
Primary beneficiary
Variable Interest Entity [Line Items]
Maximum exposure to loss		68,200,000.0
Floating Rate Notes, Weighted Average Coupon Rate, LIBOR Plus 1.85%
Variable Interest Entity [Line Items]
Number of properties collateralized for mortgage loan | Loan	11
Collateral amount		275,000,000		$ 341,200,000
Receivables related to repayments of outstanding principal		$ 66,100,000
Offered Certificates
Variable Interest Entity [Line Items]
Prepayment fee, percent		1.00%
Mortgaged Assets
Variable Interest Entity [Line Items]
Prepayment fee, percent		1.00%
Interest expense		$ 2,300,000	$ 599,000
Parent Company | Secured funding agreements and securitizations debt
Variable Interest Entity [Line Items]
Carrying Amount	$ 68,200,000
Parent Company | Offered Certificates
Variable Interest Entity [Line Items]
Preferred equity fully funded amount	32,400,000
Holdco | Mortgaged Assets
Variable Interest Entity [Line Items]
Principal amount of certificates retained by wholly owned subsidiary of the entity	35,800,000
ACRE Commercial Mortgage 2017-FL3 Ltd And ACRE Commercial Mortgage 2017-FL3 LLC | Floating Rate Notes, Weighted Average Coupon Rate, LIBOR Plus 1.85%
Variable Interest Entity [Line Items]
Carrying Amount	$ 308,800,000

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SUBSEQUENT EVENTS (Details) - USD ($)					3 Months Ended
	May 01, 2018	Apr. 17, 2018	Mar. 01, 2018	Mar. 07, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Subsequent Events
Outstanding Principal					$ 1,668,563,000		$ 1,737,286,000
Dividends declared per share of common stock (in dollars per share)			$ 0.28	$ 0.27	$ 0.28	$ 0.27
Mortgage Loans on Real Estate, Commercial and Consumer, Net					$ 1,658,375,000		$ 1,726,283,000
Subsequent event
Subsequent Events
Dividends declared per share of common stock (in dollars per share)	$ 0.28
Senior Mortgage Loans | Multifamily | SOUTH CAROLINA | Subsequent event
Subsequent Events
Outstanding Principal		$ 39,200,000.0
Mortgage Loans on Real Estate, Commercial and Consumer, Net		$ 38,500,000
Debt Instrument, Interest Rate, Stated Percentage		336.00%
Term of debt		3 years
Senior Mortgage Loans | Hotel | ILLINOIS | Subsequent event
Subsequent Events
Outstanding Principal		$ 32,900,000.0
Mortgage Loans on Real Estate, Commercial and Consumer, Net		$ 18,900,000
Debt Instrument, Interest Rate, Stated Percentage		440.00%
Term of debt		3 years