Summary
This 8-K filing from Ares Management Corp. (ARES), dated July 31, 2014, reports on a new credit support agreement for a $75 million credit facility entered into by Ares Commercial Real Estate Corporation (ACRE), a subsidiary of ARES. Ares Management LLC, the parent entity of ACRE's external manager, has agreed to provide credit support to this new facility with City National Bank (CNB). Key terms include Ares Management's commitment to purchase all outstanding loans and obligations under the CNB Facility under specific conditions, such as acceleration or default by ACRE, or if Ares Management's corporate credit rating is downgraded below investment grade. In return, ACRE will pay Ares Management a credit support fee of 1.50% per annum on the outstanding principal balance, plus reimbursement for out-of-pocket expenses. This arrangement provides ACRE with financial backing while generating fee income for Ares Management.
Key Highlights
- 1Ares Management Corp. (ARES) is providing credit support to a new $75 million credit facility for its subsidiary, Ares Commercial Real Estate Corporation (ACRE).
- 2The credit facility is with City National Bank (CNB).
- 3Ares Management LLC will purchase outstanding loans and obligations under the CNB Facility upon certain events of default or acceleration by ACRE.
- 4Ares Management's obligation to provide credit support is triggered if its corporate credit rating falls below investment grade.
- 5ACRE will pay Ares Management a credit support fee of 1.50% per annum on the average outstanding principal amount.
- 6ACRE will also reimburse Ares Management for any out-of-pocket expenses related to the facility.