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Cornerstone elbows into affordable lending with $93M buy

Cornerstone Real Estate Advisers, one of the world’s largest real estate-focused investment managers, announced an agreement to acquire ACRE Capital Holdings, the lending subsidiary of Ares Commercial Real Estate Corporation for $93 million.

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.

SCOTT BROWN
SCOTT BROWN

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.

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

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