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Ares Commercial Real Estate Closes New $155MM Secured Term Loan

December 14, 2015, 07:29 AM
Filed Under: Lender Finance

Ares Commercial Real Estate Corporation announced has closed a new $155.0 million secured term loan. The loan has a term of three years and proceeds will be used to fund new loan originations as well as for other general corporate purposes. The company made an initial draw of $75.0 million at closing with the remaining $80.0 million to be funded within nine months of closing. The term loan carries a coupon of LIBOR + 6.0% with a LIBOR floor of 1.0% on drawn amounts. In addition, there are fees on undrawn amounts and discounts on amounts funded. The following is an excerpt from an 8-K filing with the SEC.

On December 9, 2015 (the “Closing Date”), Ares Commercial Real Estate Corporation (the “Company”), as borrower and ACRC Holdings LLC, ACRC Mezz Holdings LLC, ACRC CP Investor LLC and ACRC Warehouse Holdings LLC, wholly owned subsidiaries of the Company, as guarantors (collectively, the “Guarantors”), entered into a Credit and Guaranty Agreement (the “Term Loan Agreement”) with the lenders referred to therein, Highbridge Principal Strategies, LLC, as administrative agent (the “Administrative Agent”), and DBD Credit Funding LLC, as collateral agent (the “Collateral Agent”). The Term Loan Agreement provides for an initial term loan of $75.0 million (the “Initial Term Loan”), which was funded on the Closing Date, and one or more additional term loans in the aggregate principal amount not to exceed $80.0 million to be funded during the nine-month commitment period following the Closing Date (collectively with the Initial Term Loan, the “Term Loans”), subject to the satisfaction of certain conditions.

The Company will use the proceeds from the Term Loans to invest in new assets and for other general corporate purposes. The maturity date of the Term Loans is December 9, 2018.

“This unique facility will provide us incremental capital to originate new loans, fund commitments on existing loans and for other potential corporate uses that will help us improve shareholder value,” said Robert L. Rosen, Chairman and Interim Co-Chief Executive Officer of ACRE. “The delay draw feature of this term loan allows us to better match the benefits of capital deployment with the associated expense.”

“We are pleased that this facility significantly increases our ability to originate new loans and further enhances our mortgage banking capabilities,” said John Jardine, President and Co-Chief Executive Officer of ACRE. “Together with utilizing our warehouse lines, this new facility increases our capacity to originate new senior commercial real estate loans to more than $500 million assuming a 3-to-1 debt-to-equity ratio, excluding additional capital that we expect from pay offs of our existing loans.”

Prior to the closing of this facility, the company had conserved and set aside adequate capital to repay the $69.0 million in convertible notes that mature on December 15, 2015. The company expects that none of the proceeds of the $155.0 million term loan will be used in connection with repayment of the convertible notes.

Ares Commercial Real Estate Corporation is a specialty finance company primarily engaged in principal lending and mortgage banking of commercial real estate investments. Through Ares Commercial Real Estate Corporation’s national direct origination platform, it provides a broad offering of flexible financing solutions for commercial real estate owners and operators.

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