Ares Commercial Real Estate: Wait For The Turn
Summary
- Ares Commercial Real Estate's stock performance has continued to lag behind the market, falling 7.9% compared to a 27% return in the S&P 500.
- Concerns about the company's deteriorating credit metrics have been validated, with significant provisions for credit losses and a focus on office loans.
- The commercial real estate market is experiencing a flood of office buildings transacting at a fraction of their prior valuations, leading to defaults and short-sales. ACRE has cut its dividend to conserve capital.
- I recommend investors wait for an actual turn in commercial real estate markets and not try to bottom pick stocks like ACRE. Better safe than sorry.
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