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Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share
ソース: Nasdaq GlobeNewswire / 17 2 2023 08:15:00 America/New_York
Fourth Quarter Highlights:
- Diversified, annuity-based operating platform with a multifamily focus that generates strong distributable earnings and dividends in all cycles
- GAAP net income of $0.49 per diluted common share
- Distributable earnings of $0.60 per diluted common share1, well in excess of our current dividend, representing a 67% payout ratio
- Declares cash dividend on common stock of $0.40 per share
- Strong liquidity position with ~$685 million in cash and liquidity and ~$420 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.67% over benchmark rates2
- Structured loan originations of $500.5 million and a portfolio of $14.46 billion
- Agency loan originations of $1.55 billion and a servicing portfolio of ~$28.00 billion
- Completed our first Freddie Mac Q Series securitization totaling ~$315 million
Full Year Highlights:
- GAAP net income of $1.67 per diluted common share; distributable earnings of $2.23 per diluted common share1, representing an 11% increase over last year
- Raised dividend 3 times in 2022 to an annual run rate of $1.60 per share, representing an 8% increase over the prior year
- Best-in-class return on equity of 18%
- Structured portfolio growth of 19% from loan originations of $6.15 billion
- Agency servicing portfolio growth of 4% from loan originations of $4.77 billion
- Continued success from our industry-leading securitization platform closing 4 new securitizations totaling $3.91 billion
- Raised ~$486 million of accretive growth capital through several common and preferred equity offerings
- Issued ~$438 million of debt offerings primarily to repay existing debt
UNIONDALE, N.Y., Feb. 17, 2023 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the fourth quarter ended December 31, 2022. Arbor reported net income for the quarter of $88.2 million, or $0.49 per diluted common share, compared to net income of $106.0 million, or $0.71 per diluted common share for the quarter ended December 31, 2021. Net income for the year was $284.8 million, or $1.67 per diluted common share, compared to $317.4 million, or $2.28 per diluted common share for the year ended December 31, 2021. Distributable earnings for the quarter was $114.0 million, or $0.60 per diluted common share, compared to $94.2 million, or $0.57 per diluted common share for the quarter ended December 31, 2021. Distributable earnings for the year was $405.7 million, or $2.23 per diluted common share, compared to $313.7 million, or $2.01 per diluted common share for the year ended December 31, 2021. 1
Agency Business
Loan Origination Platform
Agency Loan Volume (in thousands) Quarter Ended Year Ended December 31, 2022 September 30, 2022 December 31, 2022 December 31, 2021 Fannie Mae $ 1,174,827 $ 629,610 $ 2,919,566 $ 3,389,312 Freddie Mac 295,258 350,980 1,353,001 1,016,142 Private Label 25,629 35,671 217,542 1,436,853 FHA 19,658 78,382 188,394 430,320 SFR-Fixed Rate 33,800 16,678 89,683 136,931 Total Originations $ 1,549,172 $ 1,111,321 $ 4,768,186 $ 6,409,558 Total Loan Sales $ 1,739,069 $ 1,082,136 $ 5,438,623 $ 6,415,169 Total Loan Commitments $ 1,523,069 $ 1,464,235 $ 5,146,718 $ 6,347,752 For the quarter ended December 31, 2022, the Agency Business generated revenues of $95.9 million, compared to $43.1 million for the third quarter of 2022. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $22.7 million for the quarter, reflecting a margin of 1.33%, compared to $13.4 million and 1.30% for the third quarter of 2022. Income from mortgage servicing rights was $17.1 million for the quarter, reflecting a rate of 1.12% as a percentage of loan commitments, compared to $17.6 million (excluding $1.8 million related to the sale of $296.9 million of bridge loans) and 1.51% for the third quarter of 2022.
At December 31, 2022, loans held-for-sale was $354.1 million, with financing associated with these loans totaling $305.4 million.
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled $28.00 billion at December 31, 2022 and excludes $152.7 million of private label loans originated that were not yet sold or securitized. Servicing revenue, net was $27.7 million for the quarter and consisted of servicing revenue of $43.0 million, net of amortization of mortgage servicing rights totaling $15.3 million.
Fee-Based Servicing Portfolio ($ in thousands) December 31, 2022 September 30, 2022 December 31, 2021 UPB Wtd. Avg. Fee Wtd. Avg. Life (years) UPB Wtd. Avg. Fee Wtd. Avg. Life (years) UPB Wtd. Avg. Fee Wtd. Avg. Life (years) Fannie Mae $ 19,038,124 0.502% 8.1 $ 18,331,457 0.521% 8.3 $ 19,127,397 0.535% 8.0 Freddie Mac 5,153,207 0.250% 9.0 4,979,612 0.260% 9.5 4,943,905 0.271% 9.3 Private Label 2,074,859 0.185% 7.6 2,075,791 0.200% 8.2 1,711,326 0.200% 8.3 FHA 1,155,893 0.149% 19.5 1,136,684 0.149% 19.8 985,063 0.154% 21.0 Bridge 301,182 0.125% 1.7 299,696 0.125% 2.3 - - - SFR-Fixed Rate 274,764 0.198% 6.0 241,887 0.200% 6.2 191,698 0.200% 6.5 Total $ 27,998,029 0.411% 8.6 $ 27,065,127 0.424% 8.9 $ 26,959,389 0.449% 8.8
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.4 million for the fair value of the guarantee obligation undertaken at December 31, 2022. The Company recorded a $3.5 million net provision for loss sharing associated with CECL for the fourth quarter of 2022. At December 31, 2022, the Company’s total CECL allowance for loss-sharing obligations was $22.7 million, representing 0.12% of the Fannie Mae servicing portfolio.Structured Business
Portfolio and Investment Activity
Structured Portfolio Activity ($ in thousands) Quarter Ended Year Ended December 31, 2022 September 30, 2022 December 31, 2022 December 31, 2021 UPB % UPB % UPB % UPB % Bridge: Multifamily $ 295,451 59 % $ 592,844 77 % $ 5,468,222 89 % $ 9,101,139 94 % SFR 161,580 32 % 163,851 21 % 613,819 10 % 415,501 4 % 457,031 91 % 756,695 98 % 6,082,041 99 % 9,516,640 98 % Mezzanine/Preferred Equity 43,497 9 % 17,970 2 % 69,606 1 % 203,875 2 % Total Originations $ 500,528 100 % $ 774,665 100 % $ 6,151,647 100 % $ 9,720,515 100 % Number of Loans Originated 50 52 318 422 SFR Commitments $ 352,673 $ 457,564 $ 1,078,744 $ 264,101 Runoff $ 1,117,806 $ 911,790 $ 3,818,554 $ 2,516,771 Structured Portfolio ($ in thousands) December 31, 2022 September 30, 2022 December 31, 2021 UPB % UPB % UPB % Bridge: Multifamily $ 12,830,999 89 % $ 13,455,073 90 % $ 10,800,896 89 % SFR 927,373 6 % 825,771 6 % 408,245 3 % Other 337,682 2 % 337,682 2 % 541,568 4 % 14,096,054 98 % 14,618,526 98 % 11,750,709 97 % Mezzanine/Preferred Equity 324,224 2 % 335,003 2 % 378,891 3 % SFR Permanent 35,845 < 1 % 36,114 < 1 % 29,395 < 1 % Total Portfolio $ 14,456,123 100 % $ 14,989,643 100 % $ 12,158,995 100 % At December 31, 2022, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $14.56 billion, with a weighted average current interest pay rate of 8.17%, compared to $14.99 billion and 6.90% at September 30, 2022. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 8.42% at December 31, 2022, compared to 7.15% at September 30, 2022.
The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2022, excluding loan loss reserves, was $14.83 billion with a weighted average yield of 8.12%, compared to $15.01 billion and 6.57% for the third quarter of 2022. The increase in average yield was primarily due to increases in the benchmark index rates in the fourth quarter of 2022, as well as from back interest received upon the payoff of a non-performing loan.
During the fourth quarter of 2022, the Company recorded a $10.3 million provision for loan losses associated with CECL. At December 31, 2022, the Company’s total allowance for loan losses was $132.6 million. The Company had four non-performing loans with a carrying value of $7.7 million, before related loan loss reserves of $5.1 million, compared to four loans with a carrying value of $24.2 million, before related loan loss reserves of $5.1 million at September 30, 2022.
Financing Activity
The Company completed its first loan securitization vehicle through Freddie Mac’s Q Series securitization program, totaling $315.8 million of first priority multifamily mortgage loans. A series of pass-through certificates totaling $236.9 million were purchased by third-party investors, and the Company retained subordinate and interest-only classes in the issuing vehicle of $79.0 million. The facility has an initial interest rate of 2.00% over one-month SOFR, excluding certain fees and transaction costs.
The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2022 was $13.28 billion with a weighted average interest rate including fees of 6.50% as compared to $13.94 billion and a rate of 5.33% at September 30, 2022. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2022 was $13.69 billion, as compared to $13.90 billion for the third quarter of 2022. The average cost of borrowings for the fourth quarter of 2022 was 5.80%, compared to 4.49% for the third quarter of 2022. The increase in average cost was due to increases in the benchmark index rates in the fourth quarter of 2022.
Capital Markets
The Company issued $150.0 million of 8.50% senior notes due 2027 in a private placement. The Company received proceeds totaling $147.7 million, net of discount and fees from this offering. The Company used the net proceeds to repay debt and for general corporate purposes.
Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.40 per share of common stock for the quarter ended December 31, 2022. The dividend is payable on March 17, 2023 to common stockholders of record on March 3, 2023. The ex-dividend date is March 2, 2023.
Earnings Conference Call
The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast and replay of the conference call will be available at www.arbor.com in the investor relations section of the Company’s website, or you can access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (800) 267-6316 for domestic callers and (203) 518-9783 for international callers. Please use participant passcode ABRQ422 when prompted by the operator.
A telephonic replay of the call will be available until February 24, 2023. The replay dial-in numbers are (800) 688-7945 for domestic callers and (402) 220-1370 for international callers.
About Arbor Realty Trust, Inc.
Arbor Realty Trust, Inc. (NYSE: ABR) is a nationwide real estate investment trust and direct lender, providing loan origination and servicing for multifamily, single-family rental (SFR) portfolios, and other diverse commercial real estate assets. Headquartered in New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. Arbor is a leading Fannie Mae DUS® lender and Freddie Mac Optigo® Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender. Arbor’s product platform also includes bridge, CMBS, mezzanine and preferred equity loans. Rated by Standard and Poor’s and Fitch Ratings, Arbor is committed to building on its reputation for service, quality, and customized solutions with an unparalleled dedication to providing our clients excellence over the entire life of a loan.
Safe Harbor Statement
Certain items in this press release may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor’s expectations include, but are not limited to, changes in economic conditions generally, and the real estate markets specifically, in particular, due to the severity and duration of the COVID-19 pandemic, continued ability to source new investments, changes in interest rates and/or credit spreads, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2022 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor’s expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.
Notes- During the quarterly earnings conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A supplemental schedule of non-GAAP financial measures and the comparable GAAP financial measure can be found on the last page of this release.
- Amounts reflect approximate balances as of February 8, 2023.
Contact: Arbor Realty Trust, Inc.
Paul Elenio, Chief Financial Officer
516-506-4422
pelenio@arbor.comARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Income - (Unaudited) ($ in thousands—except share and per share data) Quarter Ended December 31, Year Ended December 31, 2022 2021 2022 2021 (Unaudited) (Unaudited) Interest income $ 320,597 $ 144,315 $ 948,401 $ 466,087 Interest expense 207,538 67,883 557,617 212,005 Net interest income 113,059 76,432 390,784 254,082 Other revenue: Gain on sales, including fee-based services, net 23,290 36,935 55,816 123,037 Mortgage servicing rights 17,059 34,542 69,346 130,230 Servicing revenue, net 27,679 23,875 92,192 74,814 Property operating income 846 185 1,877 185 Gain (loss) on derivative instruments, net 16,526 4,636 26,609 (2,684 ) Other income, net (1,500 ) 3,425 (17,563 ) 7,566 Total other revenue 83,900 103,598 228,277 333,148 Other expenses: Employee compensation and benefits 42,089 43,149 161,825 171,796 Selling and administrative 13,030 11,868 53,990 45,575 Property operating expenses 694 297 2,136 718 Depreciation and amortization 2,640 1,865 8,732 7,215 Provision for loss sharing (net of recoveries) 4,061 (5,096 ) 1,862 (6,167 ) Provision for credit losses (net of recoveries) 11,469 (8,424 ) 21,169 (21,113 ) Litigation settlement 7,350 - 7,350 - Total other expenses 81,333 43,659 257,064 198,024 Income before extinguishment of debt, sale of real estate, income from equity affiliates, and income taxes 115,626 136,371 361,997 389,206 Loss on extinguishment of debt (320 ) (2,004 ) (4,933 ) (3,374 ) Gain on sale of real estate - 2,466 - 3,693 (Loss) income from equity affiliates (4,260 ) 2,472 14,247 34,567 Provision for income taxes (4,318 ) (12,929 ) (17,484 ) (46,285 ) Net income 106,728 126,376 353,827 377,807 Preferred stock dividends 10,342 8,672 40,954 21,888 Net income attributable to noncontrolling interest 8,234 11,701 28,044 38,507 Net income attributable to common stockholders $ 88,152 $ 106,003 $ 284,829 $ 317,412 Basic earnings per common share $ 0.51 $ 0.72 $ 1.72 $ 2.30 Diluted earnings per common share $ 0.49 $ 0.71 $ 1.67 $ 2.28 Weighted average shares outstanding: Basic 174,444,084 147,899,133 165,355,167 137,830,691 Diluted 209,743,771 166,104,325 199,112,630 156,089,595 Dividends declared per common share $ 0.40 $ 0.36 $ 1.54 $ 1.38 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets ($ in thousands—except share and per share data) December 31, December 31, 2022 2021 Assets: Cash and cash equivalents $ 534,357 $ 404,580 Restricted cash 713,808 486,690 Loans and investments, net (allowance for credit losses of $132,559 and $113,241) 14,254,674 11,981,048 Loans held-for-sale, net 354,070 1,093,609 Capitalized mortgage servicing rights, net 401,471 422,734 Securities held-to-maturity, net (allowance for credit losses of $3,153 and $1,753) 156,547 140,484 Investments in equity affiliates 79,130 89,676 Due from related party 77,419 84,318 Goodwill and other intangible assets 96,069 100,760 Other assets 371,440 269,946 Total assets $ 17,038,985 $ 15,073,845 Liabilities and Equity: Credit and repurchase facilities $ 3,841,814 $ 4,481,579 Securitized debt 7,849,270 5,892,810 Senior unsecured notes 1,385,994 1,280,545 Convertible senior unsecured notes, net 280,356 259,385 Junior subordinated notes to subsidiary trust issuing preferred securities 143,128 142,382 Due to related party 12,350 26,570 Due to borrowers 61,237 96,641 Allowance for loss-sharing obligations 57,168 56,064 Other liabilities 335,789 287,885 Total liabilities 13,967,106 12,523,861 Equity: Arbor Realty Trust, Inc. stockholders' equity: Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized, shares issued and outstanding by period: 633,684 556,163 Special voting preferred shares - 16,293,589 and 16,325,095 shares 6.375% Series D - 9,200,000 shares 6.25% Series E - 5,750,000 shares 6.25% Series F - 11,342,000 and 8,050,000 shares Common stock, $0.01 par value: 500,000,000 shares authorized - 178,230,522 and 151,362,181 shares issued and outstanding 1,782 1,514 Additional paid-in capital 2,204,481 1,797,913 Retained earnings 97,049 62,532 Total Arbor Realty Trust, Inc. stockholders’ equity 2,936,996 2,418,122 Noncontrolling interest 134,883 131,862 Total equity 3,071,879 2,549,984 Total liabilities and equity $ 17,038,985 $ 15,073,845 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Statement of Income Segment Information - (Unaudited) (in thousands) Quarter Ended December 31, 2022 Structured Business Agency Business Other / Eliminations (1) Consolidated Interest income $ 305,775 $ 14,822 $ - $ 320,597 Interest expense 199,968 7,570 - 207,538 Net interest income 105,807 7,252 - 113,059 Other revenue: Gain on sales, including fee-based services, net - 23,290 - 23,290 Mortgage servicing rights - 17,059 - 17,059 Servicing revenue - 43,023 - 43,023 Amortization of MSRs - (15,344 ) - (15,344 ) Property operating income 846 - - 846 Gain on derivative instruments, net - 16,526 - 16,526 Other income, net 2,012 (3,512 ) - (1,500 ) Total other revenue 2,858 81,042 - 83,900 Other expenses: Employee compensation and benefits 13,338 28,751 - 42,089 Selling and administrative 6,260 6,770 - 13,030 Property operating expenses 694 - - 694 Depreciation and amortization 1,467 1,173 - 2,640 Provision for loss sharing (net of recoveries) - 4,061 - 4,061 Provision for credit losses (net of recoveries) 10,407 1,062 - 11,469 Litigation settlement 7,350 - - 7,350 Total other expenses 39,516 41,817 - 81,333 Income before extinguishment of debt, income from equity affiliates, and income taxes 69,149 46,477 - 115,626 Loss on extinguishment of debt (320 ) - - (320 ) Loss from equity affiliates (4,260 ) - - (4,260 ) Benefit from (provision for) income taxes 548 (4,866 ) - (4,318 ) Net income 65,117 41,611 - 106,728 Preferred stock dividends 10,342 - - 10,342 Net income attributable to noncontrolling interest - - 8,234 8,234 Net income attributable to common stockholders $ 54,775 $ 41,611 $ (8,234 ) $ 88,152 (1) Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments. ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Balance Sheet Segment Information - (Unaudited) (in thousands) December 31, 2022 Structured Business Agency Business Consolidated Assets: Cash and cash equivalents $ 200,514 $ 333,843 $ 534,357 Restricted cash 713,615 193 713,808 Loans and investments, net 14,254,674 - 14,254,674 Loans held-for-sale, net - 354,070 354,070 Capitalized mortgage servicing rights, net - 401,471 401,471 Securities held-to-maturity, net - 156,547 156,547 Investments in equity affiliates 79,130 - 79,130 Goodwill and other intangible assets 12,500 83,569 96,069 Other assets 367,837 81,022 448,859 Total assets $ 15,628,270 $ 1,410,715 $ 17,038,985 Liabilities: Debt obligations $ 13,195,120 $ 305,442 $ 13,500,562 Allowance for loss-sharing obligations - 57,168 57,168 Other liabilities 299,559 109,817 409,376 Total liabilities $ 13,494,679 $ 472,427 $ 13,967,106 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Reconciliation of Distributable Earnings to GAAP Net Income - (Unaudited) ($ in thousands—except share and per share data) Quarter Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net income attributable to common stockholders $ 88,152 $ 106,003 $ 284,829 $ 317,412 Adjustments: Net income attributable to noncontrolling interest 8,234 11,701 28,044 38,507 Income from mortgage servicing rights (17,059 ) (34,542 ) (69,346 ) (130,230 ) Deferred tax provision (benefit) 6,092 201 (1,741 ) 10,892 Amortization and write-offs of MSRs 22,528 29,268 104,378 91,356 Depreciation and amortization 3,225 2,763 11,069 10,900 Loss on extinguishment of debt 320 2,004 4,933 3,374 Provision for credit losses, net 14,823 (21,646 ) 25,077 (39,856 ) (Gain) loss on derivative instruments, net (14,992 ) (1,053 ) 3,480 432 Gain on real estate from settlement of loan - (2,466 ) - (2,466 ) Stock-based compensation 2,643 1,943 14,973 9,929 Loss on redemption of preferred stock - - - 3,479 Distributable earnings (1) $ 113,966 $ 94,176 $ 405,696 $ 313,729 Diluted distributable earnings per share (1) $ 0.60 $ 0.57 $ 2.23 $ 2.01 Diluted weighted average shares outstanding (1) (2) 191,273,691 166,104,325 182,224,404 156,089,595 (1) Amounts are attributable to common stockholders and OP Unit holders. The OP Units are redeemable for cash, or at the Company's option for shares of the Company's common stock on a one-for-one basis. (2) Beginning in the first quarter of 2022, the diluted weighted average shares outstanding were adjusted to exclude the potential shares issuable upon conversion and settlement of the Company's convertible senior notes principal balance. Excluding the effect of a potential conversion in shares until a conversion occurs is consistent with past treatment and other unrealized adjustments to distributable earnings. For the quarter and year ended December 31, 2022, the diluted weighted average shares outstanding excluded 18,470,080 and 16,888,226 of these potentially issuable shares, respectively. The Company is presenting distributable earnings because management believes it is an important supplemental measure of the Company's operating performance and is useful to investors, analysts and other parties in the evaluation of REITs and their ability to provide dividends to stockholders. Dividends are one of the principal reasons investors invest in REITs. To maintain REIT status, REITs are required to distribute at least 90% of their REIT-taxable income. The Company considers distributable earnings in determining its quarterly dividend and believes that, over time, distributable earnings is a useful indicator of the Company's dividends per share. The Company defines distributable earnings as net income (loss) attributable to common stockholders computed in accordance with GAAP, adjusted for accounting items such as depreciation and amortization (adjusted for unconsolidated joint ventures), non-cash stock-based compensation expense, income from MSRs, amortization and write-offs of MSRs, gains/losses on derivative instruments primarily associated with Private Label loans not yet sold and securitized, changes in fair value of GSE-related derivatives that temporarily flow through earnings (net of any tax impact), deferred tax provision (benefit), CECL provisions for credit losses (adjusted for realized losses as described below), amortization of the convertible senior notes conversion option (in comparative periods prior to 2022) and gains/losses on the receipt of real estate from the settlement of loans (prior to the sale of the real estate). The Company also adds back one-time charges such as acquisition costs and one-time gains/losses on the early extinguishment of debt and redemption of preferred stock. The Company reduces distributable earnings for realized losses in the period management determines that a loan is deemed nonrecoverable in whole or in part. Loans are deemed nonrecoverable upon the earlier of: (1) when the loan receivable is settled (i.e., when the loan is repaid, or in the case of foreclosure, when the underlying asset is sold); or (2) when management determines that it is nearly certain that all amounts due will not be collected. The realized loss amount is equal to the difference between the cash received, or expected to be received, and the book value of the asset. Distributable earnings is not intended to be an indication of the Company's cash flows from operating activities (determined in accordance with GAAP) or a measure of its liquidity, nor is it entirely indicative of funding the Company's cash needs, including its ability to make cash distributions. The Company's calculation of distributable earnings may be different from the calculations used by other companies and, therefore, comparability may be limited.