Good afternoon, and welcome to the Ares Commercial Real Estate Corporation's conference call to discuss the company's second quarter 2021 financial results. As a reminder, this conference call is being recorded on July 30, 2021. I will now turn the call over to John Stilmar from Investor Relations.

Good afternoon, and thank you for joining us on today's conference call. I'm joined today by our CEO, Bryan Donohoe; Tae-Sik Yoon, our CFO; and Carl Drake, our Head of Public Company Investor Relations. In addition to our press release and the 10-Q that we filed with the SEC, we have posted an earnings presentation under the Investor Resources section of our website at www.arescre.com. Before we begin, I want to remind everyone that comments made during the course of this conference call and webcast and the accompanying documents contain forward-looking statements and are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may and similar such expressions. These forward-looking statements are based on management's current expectations of market conditions and management's judgment. These statements are not guarantees of future performance, condition, or results and involve a number of risks and uncertainties. The company's actual results could differ materially from those expressed in the forward-looking statements as a result of a number of factors, including those listed in its SEC filing. Ares Commercial Real Estate Corporation assumes no obligation to update any such forward-looking statements. During this call, we will refer to certain non-GAAP financial measures we use as a matter of presentation for operating performance, and these measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. These measures may not be comparable to like-titled measures used by other companies. Now I'd like to turn the call over to Ares Commercial Real Estate's CEO, Bryan Donohoe, who will walk through our second quarter earnings results. Bryan?

Thanks, John, and good afternoon, everybody. This morning, we announced another strong quarter with distributable earnings of $0.37 per share, up 16% year-over-year. We're pleased with our performance, which is primarily being driven by our portfolio of strong and diverse credits, increased investment activity, reduced funding costs, and the continuing benefits we received from our LIBOR floors. Our company continues to benefit from Ares' scaled real estate platform alongside a growing economy and a more active real estate market with improving fundamentals. Overall, as individual property transaction activity has increased over the quarter, we are now at levels commensurate with the second quarter of 2019. The improving economy is also driving broad-based rent growth, which is improving across all major property sectors, with particular strength in multifamily, one of our favored and targeted sectors. Against this backdrop of improving fundamentals, we are seeing an attractive competitive landscape highlighted by post-pandemic market inefficiencies on the origination side while stronger players like us are able to benefit from more attractive funding. This has resulted in a more fragmented marketplace that enables scaled platforms such as those affiliated with Ares to find attractive investment opportunities and grow market share. The capabilities and reach of the broad Ares platform are driving sourcing advantages throughout our space and even more specifically in high-conviction property types such as industrial and multifamily as well as in favorite segments such as self-storage, student housing, and select office opportunities. The increased size and diversity of our investment pipeline enabled us to remain highly selective, closing less than 5% of the loans we evaluate while maintaining a strong deployment pace. The result of this is that we are seeing loan opportunities with all-in spreads that are approximately in line with pre-pandemic levels but with attachment points and credit terms that tend to be more attractive than pre-pandemic structures. The strength of our platform and the market opportunities have enabled us to accelerate our new investment commitments. In fact, the second quarter commitments of $311 million represented the third consecutive period in which we grew new commitments and origination volumes. This higher loan activity is also driven by incumbent borrower relationships, as approximately 64% of our commitments this quarter came from repeat borrowers. However, we were also pleased to find strong receptivity from new high-quality sponsors, given the breadth of our product offerings. As an example, during the second quarter, we closed a $38 million multifamily loan with a new sponsor that is one of the largest multifamily owner-operators in the Southeast with more than 30,000 units under management. This origination momentum is continuing into the third quarter with approximately $254 million of new commitments closed thus far in July. In order to support our expanded investment pipeline and greater investment activity, we issued 6.5 million common shares to raise just over $100 million of common equity at a 10% premium to book value near the end of the second quarter. The benefits of scale from our two equity raises this year will enable us to further gain market share during an attractive time to invest as the overall economy continues to recover. As far as the capital we raised in June, we are working hard to invest the majority of the net proceeds in the third quarter but do expect that the additional shares that we have issued to have a temporary modest impact on our earnings per share in the third quarter. However, given our expected pace of capital deployment, we do not expect that our fourth quarter earnings will be impacted. Most importantly, as we have said consistently from the beginning of this year in connection with the announcement of our supplemental $0.02 per share quarter dividend, we continue to expect full coverage of both our regular and supplemental dividends from our distributable earnings for the full year 2021. Turning to the portfolio. Our book remains 98% invested in senior loans, and approximately 2/3 of our loans are collateralized by multifamily, office, industrial, and self-storage properties. We continue to be underweight hotels and retail exposures. And against the backdrop of an improving economy and further bolstered by the strength of our asset management capabilities, we continue to see strengthening of the credit of our portfolio as reflected in our weighted average internal loan risk rating, which improved for a third consecutive quarter to 2.8x as of Q2 2021 versus 2.9x in the first quarter and 3.0x at year-end 2020. Additionally, loans on non-accrual declined from 3 to 1, reflecting the healthy recovery of underlying property performance. While the COVID-19 pandemic and all the uncertainty and challenges it brought are not over, we have optimism for the remainder of 2021 and beyond. With that, I'll now turn the call over to Tae-Sik to provide more details on our second quarter results and financial position.

Thank you, Bryan, and good afternoon, everyone. Earlier today, we reported GAAP net income of $17.6 million or $0.43 per common share and distributable earnings of $15.1 million or $0.37 per common share. Our earnings continued to benefit from our LIBOR floors with a 1.36% weighted average 1-month LIBOR floor on our loan portfolio at the end of the second quarter of 2021. Our second quarter GAAP earnings also benefited from a $3.9 million reduction in our CECL reserve. The 18% decline in our CECL reserve was primarily driven by an improved macroeconomic forecast and is further evidence of the improvement of our loan portfolio risk ratings. And in addition to strong earnings, we continued to grow our book value per share. For the second quarter, supported by continued improvement in the credit performance of our portfolio and the accretive 6.5 million share common equity offering that we just executed before quarter-end, our book value per share increased by $0.22 to $14.45 per share. This marks our fourth consecutive quarter of improving book value per share. Now let me talk about the other side of our balance sheet, and specifically, the strength of our capitalization and liquidity funding mix. Our debt-to-equity ratio was 2.1x as of the end of the second quarter excluding CECL reserve. Additionally, our earnings and balance sheet continued to benefit from highly efficient match-funded and non-recourse sources of CLO financing that now comprise 69% of total outstanding borrowings, up from 34% in the second quarter of 2020. Our non-recourse debt-to-equity ratio now stands below 1x. And going forward, we believe that we have additional avenues to further optimize our leverage capacity and further lower our cost of capital. As Bryan mentioned, we have increased our common equity capital base by more than 45% since the second quarter of last year. These two equity offerings totaling more than $200 million in common equity have enabled us to begin leveraging some of the benefit of scale. For example, this greater scale has allowed us to invest in larger, more high-quality loans to build an even more diversified portfolio. And on the liability side, this greater scale has allowed us to execute on more efficient forms of financing, such as being able to complete our second CLO financing. Before I turn the call back over to Bryan, I did want to briefly discuss two loans that are beyond their contractual maturities. While we continue to work with the respective borrowers, rather than simply agreeing to extend the maturity of these loans, we have decided to keep these loans in their current status to put ourselves in the best position to negotiate successful resolutions and outcomes. Please note that we believe that we are protected through sufficient collateral values and have not taken any impairment or put these two loans on non-accrual status as of the second quarter of 2021. And with that, let me turn the call back over to Bryan for some closing remarks.

Great. Thanks, Tae-Sik. In summary, we're continuing to execute against our strategic and financial goals for the company. During the second quarter, we delivered strong earnings and healthy and improving credit quality in our portfolio. We are well capitalized to invest our capital into the attractive market opportunities we see in front of us. We believe we remain on track to continue to deliver strong profitability for our shareholders and to meet our financial goals for the year. We greatly appreciate the support of our investors and for your time today. With that, I'll turn it over to the operator to open the line for questions. Thank you.

Our first question will come from Steve Delaney with JMP Securities.

I have one main question after hearing your comments in the presentation. Repayments appeared to be relatively low in the second quarter at $125 million, which is about 7% of the funded portfolio. Can you provide some insight or perspective on how that level of repayments might develop in the second half of this year?

Yes, thanks. Good question. I think one of the factors is the active asset management that our team works through in the portfolio, and we're in constant dialogue with our borrowers to understand and try to get as much transparency as we can about future repayments. And we'll work to kind of keep what we can and keep what makes sense in the portfolio and extend the life cycle of loans. I think that active asset management, that is certainly a big part of our platform benefits us to some degree there. The way we're managing it, though, probably most importantly is that we're going to operate as if the expectation is that as our loan portfolio matures, that we will see some accelerated repayment. So we're going to manage the book as if it's coming. But thus far, it has been probably more muted than we would have expected and we'll continue to manage it as actively as we can. But really hard to put a specific point on it, but it's certainly a focus of ours.

You are working to increase lending and seize current opportunities to build your pipeline in anticipation of a possible surge. Your goal is to maintain and hopefully slightly expand your portfolio, particularly with the new common equity. I understand that giving a specific outlook is challenging due to the uncertainties, especially regarding borrower behavior over the next five months. However, I believe you mentioned that the recent rate, around 7% for the quarter, seemed somewhat lower than expected, if I heard you correctly.

To a degree. Each of the assets we have invested in is underwritten specifically, and each will have a different life cycle. Generally, we are looking at these loans having a weighted average life of around 2.5 to 3 years. We are aware that some repayments were lower last year, so we are managing the portfolio with the expectation of seeing more repayments. We are focusing on ensuring a net positive deployment perspective and maintaining active communication with these borrowers to ensure transparency. At a macro level, we consider the weighted average life to be in the 30- to 36-month range.

Our next question will come from Rick Shane with JPMorgan.

Look, there's been a steady ramp in originations. And if we look back, you are on pace to potentially have your strongest year ever, especially when we sort of think about what July looked like in terms of fundings and volume. I am curious when we think about the binding constraints on the model going forward and we think about capital and we think about repayments. I'm curious, how much scalability you think you have on the originations side? I think it's pretty clear that you can source $1 billion of funding a year. Do you think you can go meaningfully above that? And again, I'm not asking for guidance. I'm asking just from a capability perspective if the balance sheet supports it.

Yes. That's a great question. What we aimed to convey in our earlier discussion was really the breadth of our platform. We've assembled an origination team that aligns with the scale we believe we can handle in this business. Some of the capital raises that Tae-Sik mentioned enable us to enhance the quality of our borrowers. Larger loan sizes will ultimately attract more institutional sponsorship groups. The scale we can now achieve in terms of originations means larger loan sizes. Therefore, it’s not only the number of deals that will increase, but also their size, along with a corresponding improvement in the quality of the sponsors and properties. In summary, we've built our team to effectively pursue the opportunities we see in the market. It’s not merely about increasing the quantity of deals; it's about increasing their size, which is essential for our growth.

Got it, okay. That's very helpful. And look, I understand there's been a long-term investment in the origination platform. And I think right now, the opportunity is really sort of catching up with that.

Our next question will come from Jade Rahmani with KBW.

What are your thoughts around the sustainability of the supplemental dividend as you think about future runoff on the portfolio, incremental investment yields, cost of financings, other capital avenues the company may explore?

Yes, great question, Jade. I'm going to let Tae-Sik take it at the outset here and I'll add some color.

Yes, that's a great question, Jade. Earlier this year, when we introduced the supplemental dividend of $0.02, we indicated that we expect this dividend to remain in place for the full year of 2021, and that we would reevaluate it towards the end of the year. So far, we've paid out three-quarters of that dividend as we initially indicated, and we are on track to do the same for the fourth quarter, although we haven't officially declared it yet. Regarding the LIBOR floors, we've had a limited amount of repayment in the first six months of this year, allowing us to continue to benefit from them. At the end of the second quarter, the weighted average LIBOR floor was 1.36%, while the 1-month LIBOR today is about 10 basis points. We remain well above our LIBOR floors. Although there has been some runoff since the beginning of the year, we continue to generate significant positive income from them. We recognize that this is a finite life asset, and we are positioning our portfolio accordingly. We have several strategies to ensure that, when the benefits from LIBOR floors diminish, we will still achieve enough earnings to maintain an attractive dividend. One strategy is to leverage greater scale for more efficient financing, which can yield higher proceeds and lower costs of debt. We aim to continue increasing our deployment levels, ensuring our available capital is effectively utilized. We will also push for better spreads on our assets while minimizing our funding costs. With the growth of our capital base by 45%, we expect to see general and administrative savings as a percentage of our equity. Currently, our debt-to-equity ratio stands at 2.1x. Our organic earnings are somewhat under-optimized due to this lower leverage, but we plan to increase our leverage closer to our target of 3.0x debt-to-equity. These strategies are actively being implemented, and as we move past the LIBOR floors, we will continue to enforce them to sustain our earnings. At that time, we will decide on the future of the supplemental dividend. For now, we are confident in maintaining it for 2021, and we will be in a better position to discuss its future later in the year.

Bryan, did you have any additional comments?

No, Jade. I think Tae-Sik covered it well. I think you talked about the different avenues that we would explore. And I think the primary one Tae-Sik finished with, which is just our leverage capacity, which is there's a lot of different forms of leverage available to us, and I think we can continue to press on that efficiency, and I think we'll see the benefit from that moving forward.

A couple of questions on credit. The decline in non-accrual loans to $31.3 million from $66.8 million. I apologize if I didn't get a chance to go through all the footnotes, but could you just discuss what took place there?

Yes. Tae-Sik, you want to cover that?

Sure. We had three loans that were on non-accrual status, and during the last quarter, we removed two from that status. One was a student housing project that was sold, and the new buyer injected an additional $6 million in equity. We worked with this new buyer to keep the property in our portfolio, and we believe they have a solid business plan to revitalize the property. Given that it has the same collateral but $6 million less in proceeds, we decided to remove it from non-accrual status as it is a new loan. The repayment on the original loan was more than enough to cover our carrying value, resulting in no loss, in fact, a small gain compared to what we received from the principal repayment. The second property we took off non-accrual status is a portfolio of hotel loans. We scrutinized our hotel portfolio closely during the pandemic, and lately, this hotel portfolio has experienced strong increases in occupancy, ADR, and RevPAR, even surpassing pre-pandemic levels. With this sustained recovery in performance, we felt it was appropriate to take it off non-accrual status as well. This leaves us with one loan collateralized by a hotel that remains on non-accrual status. We are hopeful for continued improvement in that property, although we believe the progress hasn’t been sufficient or consistent enough yet to change its status.

And on the modification side, I think usually, you guys disclose the number of modifications or the aggregate amount of principal that it relates to, and I didn't see that in the 10-Q. I'm assuming perhaps there were no modifications but wanted to double-check that.

Yes, Jade, I think that's right. Again, nothing really worth noting. Obviously, the 2 loans that we mentioned that are past the maturity, we have not modified and we have allowed them to be in their status quo. But yes, nothing material.

And just the 2 loans in maturity default, what do you think the timing of resolution is for those? And it seems you did not take an impairment or book of reserves, anything of that nature. So you feel there's adequate coverage on the asset side?

Yes, part of the reason is that I will jump in after you, Tae-Sik.

Okay. Sorry, Bryan. Yes. No, I was going to just mention on the impairment side, yes, no, Jade, I think that's the most important point here, right, is we do believe there is sufficient collateral to protect us from an impairment. Obviously, that's the reason we don't believe an impairment in either case is warranted. As you know, we've had situations in the past where we've had defaults, and we felt it was in our best interest to put the loans in default so that we will have proper positioning with the borrower to negotiate the best resolution. But Bryan, why don't you go ahead? I just wanted to make the comment certainly on the impairment question.

Yes. In response to your question about timing, I mentioned earlier that we have the capability and expertise to address loan issues in various ways. We have multiple approaches available, ranging from acceleration to simply declaring a default. Currently, we believe the most effective and timely solution is to let these loans remain in their current status. However, we anticipate that the default interest and other economic factors will help expedite the resolution of these transactions soon.

Jade, before you go, I want to clarify that we did not make any modifications regarding borrower requests. To be thorough, I should mention that we did make one modification on a multifamily loan because a potential maturity was approaching, and we wanted to retain that loan in our portfolio. While one might consider it a technical modification, it was not due to any performance issues; rather, it's a loan we want to keep, allowing us to maintain it on our books.

And good to know that. Appreciate it.

Our next question will come from Stephen Laws with Raymond James.

Good discussion so far. And wanted to touch on the REO asset. Revenue came in a good bit above what I was looking for. Can you talk about the trajectory there with that asset? And how do we think about seasonality with the asset versus more of a straight-line recovery from COVID on the hotel?

Yes, that's a good question. The performance of the asset speaks for itself, and I appreciate your observation. The situation relates to several themes we've discussed in previous quarters, specifically the unusual reduction in supply in the market and our efforts to capture as much demand as possible in that area. It's difficult to predict how seasonality will affect us this year, especially as people emerge from COVID and make their travel plans. I don't believe we'll be as tied to traditional calendars as we have been in the past. Usually, the first quarter and the first couple of months of the year are somewhat slower, but demand for the asset has been trending positively. Additionally, as we continue to assess the situation each quarter, we will monitor the recovery and look into the ultimate resolution of the asset.

Great. When I think about the operating expenses there, I mean, can we take the sequential change and think about that as the variable expenses associated with that amount of incremental revenue? Are there other factors, either plus or minus that number that we should consider?

I think it's been pretty constructive in general in terms of the way we've worked with the manager there to kind of operate in a, as we've described, the kind of a mid-service model. And I think to the extent that we're seeing increased revenues, clearly, some operational expenses will come part and parcel with that. But I think we'll continue to be constructive in terms of limiting expenses and making sure that we're focused on margins as well as revenues.

Great. And then I wanted to follow up on Steve's question earlier, just as far as managing portfolio growth and repayments coming in. I went back and looked a couple of years ago, unfunded commitments were in the mid-teens. You guys have those in the high single digits now under 10. I know you've got the pipeline, you've got the Ares facility. Is that enough to manage the upcoming repayments as those start to come in, in 6 or 12 months? Or do you think you'll take back the unfunded commitment side back up into the mid or high teens?

Good question. Tae-Sik, you want to touch on that a little bit?

Sure. I think, obviously, we have a number of things that we can do on the balance sheet to help manage repayments and making sure that we're as fully deployed and interest-earning as possible. I mean, you certainly mentioned one, which is the Ares Warehouse line. Ares Warehouse line, as you know, is about $200 million-plus of capacity that we would have to do senior loans there. It is something that has been very, very valuable to us, particularly during the pandemic to help manage the liquidity needs of ACRE. And I think going forward, I think it will be extremely helpful for us to, again, put loans on the Ares Warehouse line so that again, real-time, we have the ability to bring it back on to the balance sheet as loans pay off on the ACRE side itself. In addition, we have, as we mentioned, significant debt capacity right now. We are significantly underlevered from our target of 3.0x. So I think the best strategy to manage repayments, frankly, is to make sure that we are as fully invested as fast as we can make good loans and find ourselves in a position where we will be fully invested. We'll have loans in the Ares Warehouse, and we will be in a good position at that point then to handle the upcoming repayments. And again, one of the strategies that we just covered in one example that we'll continue to push on is we'll work very hard to keep the loans that we want on our books. And if that means generating more attractive terms for the borrower, we certainly will do that to make sure that we're at least at market. But there are certainly a number of strategies that we can do to help mitigate what we would anticipate to be the growing repayments in the upcoming quarters.

Our next question will come from Doug Harter with Credit Suisse.

Could you discuss the spreads you have seen on loans from the second quarter and through the third quarter so far, and how they compare to your existing portfolio?

Yes, that's a good question. Despite the scale of deployments, we have noted the inefficiencies in the market. Overall, there has been a compression in multifamily and industrial sectors. Similarly, financing costs have also compressed and are currently in a stable state. When looking at the broader picture, we see relative value in the real estate space and debt markets generally, with spreads aligning with pre-pandemic levels, although there is some variation in asset class allocation at this time.

Got it. Bryan, you mentioned that one of the advantages of scaling is the ability to engage with higher quality sponsors and borrowers. How does that translate? Do you sacrifice some spread to make that transition? Also, how would you assess the relative value in this context?

I believe it's important to note that higher-quality sponsors can lead to lower coupon rates. Our main goal is to establish a stable portfolio that provides yields for our investors. The performance and quality of assets associated with higher-quality sponsors are beneficial overall. As Tae-Sik mentions every quarter, our primary focus is not just on the spreads from the loans we originate but on the margin between our borrowing costs and the loans we provide. Higher-quality loans and larger positions give us greater pricing power with our lending counterparts. Therefore, even if coupons decrease while maintaining high-quality sponsors, we believe we are in a stronger position overall.

Our next question will come from Tim Hayes with BTIG.

First one, obviously, it's nice growth this quarter but interest income was pretty flat sequentially. So just curious if there was a timing mismatch between originations being closed in the back end of the quarter versus repayments on the front end or if maybe there were just some older vintages that paid off so you got less prepayment income. Just trying to reconcile that.

Yes. Tim, I think timing sort of any quarter certainly makes a big difference, right? And I think you're right. I think some of the loans that we closed in the second quarter really were much more back-ended for the second quarter so you didn't see as much income being generated for the quarter. Now the second thing at work is that because we are less deployed in terms of our leverage, as I mentioned 2.1x, we continue to accrue the amortization of fees associated with much of our interest expenses, and that is not being spread over a bigger borrowed amount. And so you'll see a little bit of a tick-up in our borrowing costs as well. So I think those are probably your two major reasons we're not seeing that lift, if you want to call it that, with the higher originated balance. But I think you'll see that start to even out in the third quarter. As we mentioned, in the third quarter, so far, we've kind of had the opposite situation, which is great, right, which is that we've closed $200-plus million of loans in the first month of the quarter unlike second quarter where, again, most of the loans were a little bit more back-ended.

Right, right. Makes sense. And then on the capital stack, it's small but I know you have the term loan, about $60 million of term loan coming due. I forget exactly when, but sometime in the next few months, I believe. And just curious how you feel about addressing that if you're considering upsizing it and refinancing at a lower cost, given other execution in the market. Or if there are other forms of debt capital you're considering to add to the cap stack that can help kind of satisfy that maturity.

Sure. No, great question. So the $60 million term loan comes due in December of this year so a couple of months away. Basically, as you know, the history here is that it began as a $110 million term loan, and we did pay down $50 million of it earlier this year so leaving a balance of $60 million. Today's capital markets, there are numerous options for us to pursue. As I mentioned, basically getting our company closer or, if not, to the full target leverage over the next few months is a big priority of ours, right, from 2.1x to closer to 3.0x. And as part of that leveraging up of the balance sheet, I think paying down the $60 million of term loan debt and recapitalizing the company with different forms of leverage is certainly something that we are well underway analyzing and executing on. Whether we'll replace it with another term loan, whether we'll refinance with our existing lender, whether we'll pursue other forms of debt capital such as convertible notes, unsecured, there's quite a few debt capital available that is out there. And so we feel we're in a very good spot to do it. Final answer, of course, is that $60 million is a relatively small amount of debt as available maturity, so not too concerned about the amount itself. But it is going to be basically refinanced as part of an overall sort of recapitalization plan of our debt as we continue to increase our debt to equity from 2.1x up to 3.0x.

Yes, that makes sense. My last question is about nearly 50% of your originations being in the industrial space this quarter. I understand that mortgage REITs and commercial lenders often struggle to find suitable loans in that sector. I'm interested in hearing about your pipeline—specifically where this is coming from and whether it relates to the Ares platform and your expertise in equity in that area providing resources. Additionally, as you target larger loans, are there opportunities to pursue significantly larger loans that could be syndicated across various Ares vehicles, allowing you to gain exposure to higher-quality sponsors and assets without making a substantial capital commitment?

Yes, that's a good question, Tim. I'll address your second question first. There is indeed an opportunity to leverage various elements of our broader platform to capitalize on assets and gain the benefits you've mentioned. This represents a significant advancement for our team. I believe our investors in ACRE will see the advantages of this going forward. Regarding the specific industrial asset, a couple of points come to mind. Firstly, it seems your question suggests that the pricing for fully stabilized industrial assets is somewhat more core than what would typically align with the mortgage REIT model. What we gain from this particular asset is twofold. Firstly, it is a high-confidence asset class for us historically at Ares in both debt and equity. Additionally, the integration of Black Creek into the broader platform adds valuable insights that enable us to engage in this asset class at various stages of its life cycle. Before stabilization, we can have greater confidence based on our expertise and the substantial investment track record we have in this sector. Secondly, the nature of this acquisition involved a repeat sponsor, and the timeline for closing was structured in a way that allowed us to leverage specific advantages of the closing process and find an asset in this field that aligns with our overall return on equity targets.

Ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Bryan Donohoe for any closing remarks.

Yes. Thank you. And thanks, everybody, for the time today. We continue to appreciate all the support of ACRE and look forward to speaking to you again in a few months. Stay well. Thank you.

Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today's call, an archived replay of this conference call will be available approximately 1 hour after the end of this call through August 13, 2021, to domestic callers by dialing 1 (877) 344-7529 and to international callers by dialing 1 (412) 317-0088. For all replays, please reference conference number 10156566. An archived replay will also be available on a webcast link located on the home page of the Investor Resources section of our website. You may now disconnect.