Cornerstone Real Estate Advisers to Acquire Acre Capital Holdings for $93M

by Jeff Shaw

HARTFORD, Conn. and PLANO, Texas — Cornerstone Real Estate Advisers has agreed to acquire ACRE Capital Holdings LLC, the agency lending subsidiary of Ares Commercial Real Estate Corp. (NYSE: ACRE). The $93 million transaction could close as early as the third quarter of this year.

The acquisition of ACRE Capital expands Cornerstone’s commercial loan origination platform, nearly doubling the size of the company’s multifamily loan portfolio from approximately $5 billion to $10 billion. Cornerstone traditionally originates larger balance loans, while ACRE Capital typically focuses on smaller balance loans on behalf of Fannie Mae, Freddie Mac and HUD.

In addition to being complementary firms, the acquisition will allow Cornerstone to address the need for affordable housing financing in the marketplace, according to Scott Brown, global president and CEO of Cornerstone.

“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,” says Brown. “We look forward to joining forces with the professionals at ACRE Capital to expand opportunities for their borrowers.”

ACRE Capital originates and services multifamily mortgages and seniors housing and healthcare facility loans. The company is one of only 19 lenders that hold licenses with all three agencies — Fannie Mae, Freddie Mac and the Federal Housing Administration.

James Henderson, chief investment officer of Cornerstone’s alternative investments division, will manage ACRE Capital within his group post-acquisition. 

“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,” says Henderson. “Furthermore, the growth prospects in healthcare and seniors housing are compelling.”

Kimberlite Group LLC provided financial advice and Goodwin Procter LLP provided legal advice to Cornerstone in the negotiations. Proskauer Rose LLP provided legal advice to Ares Commercial Real Estate Corp.

Hartford-based Cornerstone Real Estate Advisers has $50.6 billion in global assets under management as of March 31. Cornerstone serves more than 200 clients worldwide with 374 employees located in 25 offices across the U.S., Europe and Asia.

Based in Plano 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 agency and HUD loans.

— John Nelson

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