ares management commercial real estate
Has there been any development with that facility?
Got it. If you missed any part of today's call, an archived replay of this conference call will be available approximately one hour after the end of this call through August 20, 2020, to domestic callers by dialing 1-888-344-7529, and to international callers by dialing 1-412-317-0088.
Good afternoon, and welcome to the Ares Commercial Real Estate Corporation's Conference Call to discuss the Company's Second Quarter 2020 Financial Results. At the onset of the COVID-19 pandemic and its disruptions to the real estate markets, we immediately set several goals and objectives.
We also built in LIBOR floors to protect our earnings in low interest rate environments.Furthermore, we maintained diversified sources of funding, particularly with respect to hotel loans and we refused to finance our loans with spread-based mark-to-market facilities. So, we do think that the loss on Westchester Marriott heading into the third quarter looks like it's going to be materially mitigated versus even second quarter. Good news money associated with leasing of assets, so that for the dollars are necessary for tenant improvements, for leasing commissions, capital expenditures that may be necessary or part of that. On a recourse basis, our debt-to-equity leverage has been reduced to less than 1.9 times. We do think that's a full impact of LIBOR floors will continue to be felt in the third quarter.
We are using our extensive relationships and leveraging the power of the Ares platform to see off-market, higher spread, attractive investment opportunities, albeit with less senior leverage available. Thanks everyone for joining today and spending time with us.
100% of our loans held for investment made their contractual debt service payments through July, including the three loans that remain on non-accrual status. ACRE is externally managed by Ares Commercial Real Estate Management LLC, a subsidiary of Ares. Investing Basics Our progress is expected to be seen in the third quarter with expected losses to be materially curtailed.Turning now to our liquidity, as of yesterday's close, we had approximately $80 million in unrestricted cash. You mentioned a few positives that could bolster earnings, including LIBOR floors, as well as some recent improvement in credit and expense curtailment on the Westchester Hotel property. [Operator Instructions] Our next question comes from Jade Rahmani of KBW. • the return or impact of current and future investments;• the impact of the COVID-19 pandemic on the real estate industry and• the collectability and timing of cash flows, if any, from our investments;• our ability to obtain and maintain financing arrangements, including• market conditions and our ability to access alternative debt markets• the amount of commercial mortgage loans requiring refinancing;• our expected investment capacity and available capital;• financing and advance rates for our target investments;• changes in interest rates, credit spreads and the market value of our• the impact of changes in London Interbank Offered Rate ("LIBOR") on• effects of hedging instruments on our target investments;• rates of default or decreased recovery rates on our target investments;• the degree to which our hedging strategies may or may not protect us• availability of investment opportunities in mortgage-related and real• allocation of investment opportunities to us by our Manager;• our ability to successfully identify, complete and integrate any acquisitions;• our ability to maintain our qualification as a real estate investment• general volatility of the securities markets in which we may invest;• actions and initiatives of the United States Government or governments• global economic trends and economic conditions; and• market trends in our industry, interest rates, real estate values, the secured borrowing liability in our consolidated balance sheets. Or what do you think about is the right leverage level to operate the business going forward? As a reminder, this conference is being recorded on August 6, 2020.I will now turn the call over to Veronica Mayer from Investor Relations. I would say right now, we're underneath that 3.0, if you want to call it, approximately 2.5 to 2.75 is sort of the target range overall.But having said that, I think it's important to point out that, again, it will depend on the multitude of factors, I think you suggested one of them, which is really important, which is our recourse leverage those that are subject to potential margin calls, even if they are simply credit-based and not spread-based, what is termed out? We are a global alternative investment manager that has generated cycle-tested performance for investors since our inception in 1997. Founded in 1997, Ares is one of the largest diversified alternative investment managers in the world and maintains three distinct business lines: credit, private equity and real estate.
So, just wondering directionally what you're thinking.Sure.
But just to make sure that the $4 million mark-to-market loss that we took in the second quarter that impacted GAAP earnings did not impact core earnings since the definition core earnings would add back unrealized gains and losses. Visit Ares Management (1) As of June 30, 2020. Again, that is a very, very general number, so I wouldn't count on that being the number for any specific quarter but that's kind of been what we've seen in the past.And our final question comes from Chris Muller of JMP Securities. These five transactions totaled $238 million in unpaid principal balance and generated $60 million of net cash. And so, we did have that loan repayment but that happened early third quarter, not second quarter.Got it.
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