• Arbor Realty Trust Reports Second Quarter 2023 Results and Increases Quarterly Dividend to $0.43 per Share

    ソース: Nasdaq GlobeNewswire / 28 7 2023 07:15:41   America/Chicago

    Company Highlights:

    • Diversified, annuity-based operating platform with a multifamily focus that generates strong distributable earnings and dividends in all cycles

      • GAAP net income of $0.41 per diluted common share
      • Distributable earnings1 of $0.57 per diluted common share, well in excess of our current dividend, representing a 75% payout ratio
      • Raised cash dividend on common stock to $0.43 per share; a $0.01 per share, or 2% increase, representing an annualized dividend of $1.72 per share
      • Strong liquidity position with ~$1 billion in cash and liquidity and ~$265 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.67% over benchmark rates2
      • Agency loan originations of $1.42 billion and a servicing portfolio of ~$29.45 billion, up 2%
      • Structured loan originations of $209.0 million and a portfolio of ~$13.49 billion

    UNIONDALE, N.Y., July 28, 2023 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the second quarter ended June 30, 2023. Arbor reported net income for the quarter of $76.2 million, or $0.41 per diluted common share, compared to net income of $69.9 million, or $0.41 per diluted common share for the quarter ended June 30, 2022. Distributable earnings for the quarter was $114.0 million, or $0.57 per diluted common share, compared to $93.7 million, or $0.52 per diluted common share for the quarter ended June 30, 2022.

    Agency Business

    Loan Origination Platform

      Agency Loan Volume (in thousands)
      Quarter Ended
      June 30, 2023 March 31, 2023
    Fannie Mae$1,079,910 $795,021
    Freddie Mac 217,884  101,332
    FHA  62,552  148,940
    Private Label 50,256  41,107
    SFR-Fixed Rate 11,837  5,461
    Total Originations$1,422,439 $1,091,861
         
    Total Loan Sales$1,410,724 $932,699
         
    Total Loan Commitments$1,133,312 $1,500,110
         

    For the quarter ended June 30, 2023, the Agency Business generated revenues of $76.7 million, compared to $80.4 million for the first quarter of 2023. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $22.2 million for the quarter, reflecting a margin of 1.67%, compared to $13.1 million and 1.72% for the first quarter of 2023. Income from mortgage servicing rights was $16.2 million for the quarter, reflecting a rate of 1.43% as a percentage of loan commitments, compared to $18.5 million and 1.23% for the first quarter of 2023.  

    At June 30, 2023, loans held-for-sale was $485.1 million, with financing associated with these loans totaling $463.3 million.

    Fee-Based Servicing Portfolio

    The Company’s fee-based servicing portfolio totaled $29.45 billion at June 30, 2023. Servicing revenue, net was $32.3 million for the quarter and consisted of servicing revenue of $48.0 million, net of amortization of mortgage servicing rights totaling $15.6 million.

      Fee-Based Servicing Portfolio ($ in thousands)
      June 30, 2023 March 31, 2023
      UPBWtd. Avg.
    Fee
    Wtd. Avg.
    Life (years)
     UPBWtd. Avg.
    Fee
    Wtd. Avg.
    Life (years)
    Fannie Mae $20,002,5700.489% 7.7 $19,508,2560.495% 8.0
    Freddie Mac  5,245,3250.248% 8.8  5,180,6070.247% 9.1
    Private Label  2,305,0000.193% 7.5  2,233,5000.196% 7.7
    FHA  1,303,8120.145% 20.0  1,242,6690.147% 19.8
    Bridge  299,5780.111% 3.5  467,8810.116% 2.9
    SFR-Fixed Rate  290,2660.200% 5.9  279,7120.200% 5.9
    Total $29,446,5510.401% 8.4 $28,912,6250.403% 8.6
             

    Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.5 million for the fair value of the guarantee obligation undertaken at June 30, 2023. The Company recorded a $7.6 million provision for loss sharing associated with CECL for the second quarter of 2023. At June 30, 2023, the Company’s total CECL allowance for loss-sharing obligations was $32.2 million, representing 0.16% of the Fannie Mae servicing portfolio.

    Structured Business

    Portfolio and Investment Activity

      Structured Portfolio Activity ($ in thousands)
      Quarter Ended
      June 30, 2023 March 31, 2023
      UPB% UPB%
    Bridge:      
    Multifamily $98,53047% $186,10070%
    SFR  108,96452%  76,08928%
       207,49499%  262,18998%
           
    Mezzanine/Preferred Equity  1,5001%  5,8452%
    Total Originations $208,994100% $268,034100%
           
    Number of Loans Originated  26   24 
           
    SFR Commitments $200,182  $54,350 
           
    Runoff $685,220  $1,186,649 
            
           
           
      Structured Portfolio ($ in thousands)
      June 30, 2023 March 31, 2023
      UPB% UPB%
    Bridge:      
    Multifamily $11,887,76888% $12,034,63888%
    SFR  1,023,9598%  982,0267%
    Other  256,5752%  282,2752%
       13,168,30298%  13,298,93997%
           
    Mezzanine/Preferred Equity  312,8122%  311,8192%
    SFR Permanent  10,493< 1%  32,966< 1%
    Total Portfolio $13,491,607100% $13,643,724100%
           
           

    At June 30, 2023, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $13.49 billion, with a weighted average current interest pay rate of 8.76%, compared to $13.64 billion and 8.60% at March 31, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 9.07% at June 30, 2023, compared to 8.83% at March 31, 2023.

    The average balance of the Company’s loan and investment portfolio during the second quarter of 2023, excluding loan loss reserves, was $13.66 billion with a weighted average yield of 9.19%, compared to $14.15 billion and 8.94% for the first quarter of 2023. The increase in average yield was primarily due to increases in the benchmark index rates in the second quarter of 2023.

    During the second quarter of 2023, the Company recorded a $16.0 million provision for loan losses associated with CECL. At June 30, 2023, the Company’s total allowance for loan losses was $169.1 million. The Company had seven non-performing loans with a carrying value of $122.4 million, before loan loss reserves of $10.1 million, compared to four loans with a carrying value of $7.7 million, before loan loss reserves of $5.1 million at March 31, 2023.

    Financing Activity

    The balance of debt that finances the Company’s loan and investment portfolio at June 30, 2023 was $12.11 billion with a weighted average interest rate including fees of 7.25% as compared to $12.65 billion and a rate of 6.97% at March 31, 2023.

    The average balance of debt that finances the Company’s loan and investment portfolio for the second quarter of 2023 was $12.46 billion, as compared to $13.02 billion for the first quarter of 2023. The average cost of borrowings for the second quarter of 2023 was 7.11%, compared to 6.69% for the first quarter of 2023. The increase in average cost was primarily due to increases in the benchmark index rates in the second quarter of 2023.

    Dividend

    The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.43 per share of common stock for the quarter ended June 30, 2023. The dividend is payable on August 31, 2023 to common stockholders of record on August 15, 2023. The ex-dividend date is August 14, 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) 225-9448 for domestic callers and (203) 518-9708 for international callers. Please use participant passcode ABRQ223 when prompted by the operator.

    A telephonic replay of the call will be available until August 4, 2023. The replay dial-in numbers are (800) 934-4548 for domestic callers and (402) 220-1175 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, 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

    1. 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.
    2. Amounts reflect approximate balances as of July 25, 2023.  
    Contact:
    Arbor Realty Trust, Inc.
    Paul Elenio, Chief Financial Officer
    516-506-4422
    pelenio@arbor.com


    ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
              
    Consolidated Statements of Income - (Unaudited)
    ($ in thousands—except share and per share data)
              
       Quarter Ended June 30, Six Months Ended June 30,
        2023
       2022
       2023
       2022
     
                      
    Interest income $335,737  $201,328  $663,685  $368,026 
    Interest expense  227,195   107,067   446,569   189,627 
     Net interest income  108,542   94,261   217,116   178,399 
              
    Other revenue:        
    Gain on sales, including fee-based services, net  22,587   16,510   37,176   18,166 
    Mortgage servicing rights  16,201   17,567   34,659   32,879 
    Servicing revenue, net  32,347   20,714   61,913   41,769 
    Property operating income  1,430   290   2,811   586 
    Gain (loss) on derivative instruments, net  (7,384)  8,606   (3,161)  25,992 
    Other income (loss), net  45   (13,249)  4,923   (10,048)
     Total other revenue  65,226   50,438   138,321   109,344 
              
    Other expenses:        
    Employee compensation and benefits  41,310   38,900   83,708   80,925 
    Selling and administrative  12,584   13,188   26,207   27,735 
    Property operating expenses  1,365   542   2,747   1,077 
    Depreciation and amortization  2,387   2,031   5,011   4,014 
    Provision for loss sharing (net of recoveries)  7,672   (1,949)  10,848   (2,611)
    Provision for credit losses (net of recoveries)  13,878   5,067   36,395   7,426 
     Total other expenses  79,196   57,779   164,916   118,566 
              
             
    Income before extinguishment of debt, income from equity affiliates, and income taxes  94,572   86,920   190,521   169,177 
    Loss on extinguishment of debt  (1,247)  -   (1,247)  (1,350)
    Income from equity affiliates  5,560   6,547   19,886   13,759 
    Provision for income taxes  (5,553)  (5,352)  (13,582)  (13,540)
              
    Net income  93,332   88,115   195,578   168,046 
              
    Preferred stock dividends  10,342   11,214   20,684   20,270 
    Net income attributable to noncontrolling interest  6,826   6,992   14,411   13,808 
    Net income attributable to common stockholders $76,164  $69,909  $160,483  $133,968 
              
    Basic earnings per common share $0.42  $0.43  $0.88  $0.85 
    Diluted earnings per common share $0.41  $0.41  $0.87  $0.82 
              
    Weighted average shares outstanding:        
     Basic  181,815,469   163,044,217   181,468,002   158,258,813 
     Diluted  216,061,876   195,013,810   215,489,604   190,357,030 
              
    Dividends declared per common share $0.42  $0.38  $0.82  $0.75 
              


    ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
            
    Consolidated Balance Sheets
    ($ in thousands—except share and per share data)
            
            
         June 30, December 31,
          2023  2022
         (Unaudited)  
    Assets:    
    Cash and cash equivalents $846,362 $534,357
    Restricted cash  396,866  713,808
    Loans and investments, net (allowance credit losses of $169,054 and $132,559)  13,271,359  14,254,674
    Loans held-for-sale, net  485,126  354,070
    Capitalized mortgage servicing rights, net  394,410  401,471
    Securities held-to-maturity, net (allowance credit losses of $4,534 and $3,153)  155,210  156,547
    Investments in equity affiliates  72,806  79,130
    Due from related party  73,263  77,419
    Goodwill and other intangible assets  93,723  96,069
    Other assets  368,502  371,440
    Total assets $16,157,627 $17,038,985
            
    Liabilities and Equity:    
    Credit and repurchase facilities $3,579,080 $3,841,814
    Securitized debt  7,168,104  7,849,270
    Senior unsecured notes  1,331,875  1,385,994
    Convertible senior unsecured notes  281,737  280,356
    Junior subordinated notes to subsidiary trust issuing preferred securities  143,506  143,128
    Due to related party  3,556  12,350
    Due to borrowers  102,495  61,237
    Allowance for loss-sharing obligations  66,681  57,168
    Other liabilities  320,952  335,789
    Total liabilities  12,997,986  13,967,106
            
    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  633,684
       Special voting preferred shares - 16,293,589 shares    
       6.375% Series D - 9,200,000 shares    
       6.25% Series E - 5,750,000 shares    
       6.25% Series F - 11,342,000 shares    
      Common stock, $0.01 par value: 500,000,000 shares authorized - 183,067,388    
       and 178,230,522 shares issued and outstanding  1,831  1,782
      Additional paid-in capital  2,280,632  2,204,481
      Retained earnings  107,561  97,049
    Total Arbor Realty Trust, Inc. stockholders’ equity  3,023,708  2,936,996
            
    Noncontrolling interest  135,933  134,883
    Total equity  3,159,641  3,071,879
            
    Total liabilities and equity $16,157,627 $17,038,985
            


    ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
            
    Statement of Income Segment Information - (Unaudited)
    (in thousands)
              
       Quarter Ended June 30, 2023
              
       Structured
    Business
     Agency
    Business
     Other /
    Eliminations(1)
     Consolidated
              
    Interest income $322,105  $13,632  $-  $335,737 
    Interest expense  220,966   6,229   -   227,195 
     Net interest income  101,139   7,403   -   108,542 
              
    Other revenue:        
    Gain on sales, including fee-based services, net  -   22,587   -   22,587 
    Mortgage servicing rights  -   16,201   -   16,201 
    Servicing revenue  -   47,952   -   47,952 
    Amortization of MSRs  -   (15,605)  -   (15,605)
    Property operating income  1,430   -   -   1,430 
    Loss on derivative instruments, net  -   (7,384)  -   (7,384)
    Other income (loss), net  760   (715)  -   45 
     Total other revenue  2,190   63,036   -   65,226 
              
    Other expenses:        
    Employee compensation and benefits  13,438   27,872   -   41,310 
    Selling and administrative  5,833   6,751   -   12,584 
    Property operating expenses  1,365   -   -   1,365 
    Depreciation and amortization  1,214   1,173   -   2,387 
    Provision for loss sharing (net of recoveries)  -   7,672   -   7,672 
    Provision for credit losses (net of recoveries)  14,369   (491)  -   13,878 
     Total other expenses  36,219   42,977   -   79,196 
              
             
    Income before extinguishment of debt, income from equity affiliates, and income taxes    67,110   27,462   -   94,572 
              
    Loss on extinguishment of debt  (1,247)  -   -   (1,247)
    Income from equity affiliates  5,560   -   -   5,560 
    Provision for income taxes  (1,200)  (4,353)  -   (5,553)
              
    Net income  70,223   23,109   -   93,332 
              
    Preferred stock dividends  10,342   -   -   10,342 
    Net income attributable to noncontrolling interest  -   -   6,826   6,826 
    Net income attributable to common stockholders $59,881  $23,109  $(6,826) $76,164 
              
    (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)
                 
         June 30, 2023
         Structured
    Business
     Agency Business Consolidated
    Assets:       
    Cash and cash equivalents $468,515 $377,847 $846,362
    Restricted cash  391,872  4,994  396,866
    Loans and investments, net  13,271,359  -  13,271,359
    Loans held-for-sale, net  -  485,126  485,126
    Capitalized mortgage servicing rights, net  -  394,410  394,410
    Securities held-to-maturity, net  -  155,210  155,210
    Investments in equity affiliates  72,806  -  72,806
    Goodwill and other intangible assets  12,500  81,223  93,723
    Other assets  358,528  83,237  441,765
    Total assets $14,575,580 $1,582,047 $16,157,627
              
    Liabilities:      
    Debt obligations $12,041,014 $463,288 $12,504,302
    Allowance for loss-sharing obligations  -  66,681  66,681
    Other liabilities  309,875  117,128  427,003
    Total liabilities $12,350,889 $647,097 $12,997,986
              


    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 June 30, Six Months Ended June 30, 
      2023
       2022
       2023
       2022
      
             
    Net income attributable to common stockholders$76,164  $69,909  $160,483  $133,968  
             
    Adjustments:        
    Net income attributable to noncontrolling interest 6,826   6,992   14,411   13,808  
    Income from mortgage servicing rights (16,201)  (17,567)  (34,659)  (32,879) 
    Deferred tax benefit (7,360)  (706)  (4,197)  (2,426) 
    Amortization and write-offs of MSRs 21,204   27,625   39,927   55,295  
    Depreciation and amortization 4,058   2,617   8,353   5,186  
    Loss on extinguishment of debt 1,247   -   1,247   1,350  
    Provision for credit losses, net 16,810   5,849   40,515   7,546  
    (Gain) loss on derivative instruments, net 8,085   (4,155)  1,034   (4,453) 
    Stock-based compensation 3,193   3,149   9,094   9,241  
             
    Distributable earnings (1)$114,026  $93,713  $236,208  $186,636  
             
    Diluted distributable earnings per share (1)$0.57  $0.52  $1.19  $1.06  
             
    Diluted weighted average shares outstanding (1) (2) 198,791,261   179,873,329   198,239,006   175,252,399  
             
    (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) 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. For the quarters ended June 30, 2023 and June 30, 2022, the diluted weighted average shares outstanding excluded 17,270,615 and 15,140,481 of these potentially issuable shares, respectively. For the six months ended June 30, 2023 and June 30, 2022, the diluted weighted average shares outstanding excluded 17,250,598 and 15,104,631 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) 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. 
      

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