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Cornerstone Real Estate Advisers to Acquire ACRE Capital Holdings LLC

Jun 29, 2016

HARTFORD, Conn. June 29, 2016 – Cornerstone Real Estate Advisers (“Cornerstone”), one of the world’s largest real estate-focused investment managers, today announced a definitive agreement to acquire ACRE Capital Holdings LLC (“ACRE Capital”), the agency lending subsidiary of Ares Commercial Real Estate Corporation (NYSE:ACRE), for $93 million. The transaction is expected to close as early as the third quarter of 2016, pending regulatory approvals.

ACRE Capital originates and services multifamily residential mortgage loans, senior housing and healthcare facility loans by utilizing programs overseen by governmental agencies and government-sponsored entities.  The company is one of only 19 lenders that hold licenses with all three agencies (Fannie Mae, Freddie Mac and the Federal Housing Administration). Based in Plano, Texas, and operating in seven national offices, ACRE Capital has 106 employees, including 50 dedicated lending professionals. The company manages a servicing portfolio of approximately $4.4 billion of unpaid principal balance of GSE and HUD loans, and is an S&P rated primary servicer.  

For Cornerstone, the acquisition of ACRE Capital significantly expands the firm’s commercial loan origination platform, creating a reliable source of funding and nearly doubling the size of the company’s multifamily loan portfolio, from approximately $5 billion to $10 billion. Additionally, the companies are highly complementary, with Cornerstone traditionally originating larger balance loans and ACRE Capital focusing on smaller balance loans, on behalf of the Agencies and HUD. 

Scott Brown, Global President and Chief Executive Officer of Cornerstone, commented: “The acquisition of ACRE Capital expands Cornerstone’s national commercial lending platform, further strengthening our relationships with multifamily borrowers, while providing access to other sectors including senior housing and healthcare. We see significant growth in all of these sectors and will be uniquely positioned to deliver best in class executions for our clients.  The affordable housing segment of the marketplace is under-served, and acquiring ACRE Capital will allow us to meaningfully address the current and looming scarcity in affordable residential housing and increase lending to communities nationwide.  We look forward to joining forces with the professionals at ACRE Capital to expand opportunities for their borrowers.”

James Henderson, Chief Investment Officer of Cornerstone’s Alternative Investments Group, will manage ACRE Capital within his group post-acquisition.  Mr. Henderson commented: “The acquisition of ACRE Capital is highly complementary to Cornerstone’s long-standing industry leadership in multifamily lending and investment.  For multifamily owners, we can begin to provide a true end-to-end solution, including joint venture equity, preferred equity, mezzanine finance and a variety of bridge lending and first mortgage solutions.  Furthermore, the growth prospects in healthcare and senior housing are compelling.”

Kimberlite Group, LLC provided financial advice and Goodwin Procter LLP provided legal advice to Cornerstone, and Proskauer Rose LLP provided legal advice to Ares Commercial Real Estate Corporation.

 

About Cornerstone Real Estate Advisers

Cornerstone Real Estate Advisers LLC, with subsidiary and affiliate offices in the U.S., UK, Europe, and Asia, is one of the largest global real estate-focused investment managers with $50.6 billion in global assets under management as of March 31, 2016. Cornerstone’s current portfolio of equity and debt investments in the multi-family sector exceeds $9.5 billion.  It provides core, value‐added and opportunistic investment and advisory services, including a comprehensive suite of private and public real estate debt, equity and securities expertise and services, to institutional and other qualified investors around the globe. Cornerstone, a wholly owned subsidiary of Babson Capital Management, one of the world’s leading global asset managers, is a member of the MassMutual Financial Group. For more information, visit www.cornerstoneadvisers.com.

About Ares Commercial Real Estate Corporation

Ares Commercial Real Estate Corporation is a specialty finance company primarily engaged in originating and investing in commercial real estate loans and related 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. Ares Commercial Real Estate Corporation elected and qualified to be taxed as a real estate investment trust and is externally managed by a subsidiary of Ares Management, L.P. (NYSE:ARES), a publicly traded, leading global alternative asset manager with approximately $94 billion of assets under management as of March 31, 2016. For more information, please visit www.arescre.com. The contents of such website are not, and should not be deemed to be, incorporated by reference herein.

 

 

For more information, contact:

FTI Consulting

Doug Donsky

doug.donsky@fticonsulting.com / +1-212-850‐5740

Raina Gajjar

raina.gajjar@fticonsulting.com / +1-212-850-5724

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