Company Highlights:

  • GAAP net income of $0.26 and AFFO of $0.33 per diluted common share1
  • Declares a cash dividend on common stock of $0.28 per share, a 4% increase in our dividend from last quarter and 12% higher than a year ago
  • Issued $90.0 million of 5.75% senior unsecured notes due in 2024

Agency Business

  • Segment income of $13.1 million
  • Loan originations of $845.9 million
  • Servicing portfolio of $18.88 billion, up 2% from 4Q18 and 13% from a year ago

Structured Business

  • Segment income of $15.0 million
  • Portfolio growth of 4% on $416.3 million of loan originations

UNIONDALE, N.Y., May 10, 2019 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the first quarter ended March 31, 2019.  Arbor reported net income for the quarter of $22.7 million, or $0.26 per diluted common share, compared to $26.2 million, or $0.42 per diluted common share for the quarter ended March 31, 2018. Adjusted funds from operations (“AFFO”) for the quarter was $35.5 million, or $0.33 per diluted common share, compared to $21.4 million, or $0.25 per diluted common share for the quarter ended March 31, 2018.1

Agency Business

  Loan Origination Platform

Agency Loan Volume  (in thousands)
 Quarter Ended
 March 31,
2019
 December 31,
2018
Originations:   
Fannie Mae$546,886 $1,067,230
Freddie Mac 192,492  527,502
FHA 1,110  15,549
CMBS/Conduit 105,425  14,025
Total Originations$845,913 $1,624,306
    
Total Loan Sales$1,101,766 $1,653,421
    
Total Loan Commitments$846,963 $1,604,502
 

For the quarter ended March 31, 2019, the Agency Business generated revenues of $47.2 million, compared to $84.4 million for the fourth quarter of 2018. Gain on sales, including fee-based services, net was $16.4 million for the quarter, reflecting a margin of 1.49% on loan sales, compared to $18.7 million and 1.13% for the fourth quarter of 2018. Income from mortgage servicing rights was $14.2 million for the quarter, reflecting a rate of 1.68% as a percentage of loan commitments, compared to $36.1 million and 2.25% for the fourth quarter of 2018. 

At March 31, 2019, loans held-for-sale was $225.9 million which was primarily comprised of unpaid principal balances totaling $222.9 million, with financing associated with these loans totaling $222.7 million.

  Fee-Based Servicing Portfolio

Our fee-based servicing portfolio totaled $18.88 billion at March 31, 2019, an increase of 2% from December 31, 2018, primarily a result of $845.9 million of new loan originations, net of $458.4 million in portfolio runoff during the quarter. Servicing revenue, net was $13.5 million for the quarter and consists of servicing revenue of $25.8 million, net of amortization of mortgage servicing rights totaling $12.3 million.

  Fee-Based Servicing Portfolio ($ in thousands)
  As of March 31, 2019 As of December 31, 2018
  UPBWtd. Avg.
Fee
Wtd. Avg.
Life (in years)
 UPBWtd. Avg.
Fee
Wtd. Avg.
Life (in years)
Fannie Mae $13,719,3510.507%7.6 $13,562,6670.513%7.4
Freddie Mac  4,515,8290.303%10.8  4,394,2870.308%10.8
FHA  648,5830.155%19.6  644,6870.155%19.6
Total $18,883,7630.446%8.7 $18,601,6410.452%8.6
 

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”). At March 31, 2019, the Company’s allowance for loss-sharing obligations was $34.5 million, representing 0.25% of the Fannie Mae servicing portfolio.

Structured Business

  Portfolio and Investment Activity

  • Originated 28 loans totaling $416.3 million, of which 23 were bridge loans for $357.3 million
  • Payoffs and pay downs on 26 loans totaling $279.5 million

At March 31, 2019, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $3.41 billion, with a weighted average current interest pay rate of 7.05%, compared to $3.28 billion and 7.02% at December 31, 2018.  Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 7.71% at March 31, 2019, compared to 7.66% at December 31, 2018.

The average balance of the Company’s loan and investment portfolio during the first quarter of 2019, excluding loan loss reserves, was $3.34 billion with a weighted average yield of 7.84%, compared to $3.23 billion and 7.76% for the fourth quarter of 2018. The increase in average yield was primarily due to an increase in LIBOR.

At March 31, 2019, the Company’s total loan loss reserves were $71.1 million on five loans with an aggregate carrying value before loan loss reserves of $131.3 million. The Company also had two non-performing loans with a carrying value of $2.5 million, net of related loan loss reserves of $1.7 million.

  Financing Activity

The balance of debt that finances the Company’s loan and investment portfolio at March 31, 2019 was $3.13 billion with a weighted average interest rate including fees of 5.22% as compared to $2.89 billion and a rate of 5.24% at December 31, 2018. The average balance of debt that finances the Company’s loan and investment portfolio for the first quarter of 2019 was $2.96 billion, as compared to $2.90 billion for the fourth quarter of 2018. The average cost of borrowings for the first quarter was 5.24%, compared to 5.12% for the fourth quarter of 2018. The increase in average costs was primarily due to an increase in LIBOR.

The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles and financing facilities. The Company believes it was in compliance with all financial covenants and restrictions as of March 31, 2019 and as of the most recent collateralized securitization vehicle determination dates in April 2019.

Capital Markets

The Company issued $90.0 million in aggregate principal amount of 5.75% senior unsecured notes in a private placement, generating net proceeds of $88.2 million after deducting offering expenses. The notes are due in April 2024 and the proceeds were used to make investments and for general corporate purposes.

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.28 per share of common stock for the quarter ended March 31, 2019, representing an increase of 4% over the prior quarter dividend of $0.27 per share and 12% from a year ago. The dividend is payable on May 31, 2019 to common stockholders of record on May 23, 2019. The ex-dividend date is May 22, 2019.

As previously announced, the Board of Directors has declared cash dividends on the Company's Series A, Series B and Series C cumulative redeemable preferred stock reflecting accrued dividends from March 1, 2019 through May 31, 2019. The dividends are payable on May 31, 2019 to preferred stockholders of record on May 15, 2019. The Company will pay total dividends of $0.515625, $0.484375 and $0.53125 per share on the Series A, Series B and Series C preferred stock, respectively.

Earnings Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast of the conference call will be available at www.arbor.com in the investor relations area of the website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 516-5034 for domestic callers and (678) 509-7613 for international callers. Please use participant passcode 6079039.

After the live webcast, the call will remain available on the Company's website through May 31, 2019.  In addition, a telephonic replay of the call will be available until May 17, 2019. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 6079039.

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, seniors housing, healthcare 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 Fannie Mae DUS® lender and Freddie Mac Optigo Seller/Servicer. Arbor’s product platform also includes CMBS, bridge, mezzanine and preferred equity lending. 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, continued ability to source new investments, changes in interest rates and/or credit spreads, changes in the real estate markets, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2018 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.

1. Non-GAAP Financial Measures

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 page 11 of this release.

Contacts:
Arbor Realty Trust, Inc.
Paul Elenio, Chief Financial Officer
516-506-4422
pelenio@arbor.com
Investors:
The Ruth Group
Janhavi Mohite
646-536-7026
jmohite@theruthgroup.com
  
Media:
Bonnie Habyan, Chief Marketing Officer
516-506-4615
bhabyan@arbor.com
 


 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
($ in thousands—except share and per share data)
       
   Quarter Ended 
   March 31, 
   2019 2018 
         
       
Interest income $71,277  $51,612 
Interest expense  41,865   33,387 
 Net interest income  29,412   18,225 
       
Other revenue:     
Gain on sales, including fee-based services, net  16,389   18,193 
Mortgage servicing rights  14,232   19,634 
Servicing revenue, net  13,552   9,547 
Property operating income  2,803   2,910 
Other income, net  (2,128)  2,878 
 Total other revenue  44,848   53,162 
       
Other expenses:     
Employee compensation and benefits  31,764   29,494 
Selling and administrative  9,761   8,915 
Property operating expenses  2,396   2,796 
Depreciation and amortization  1,912   1,846 
Provision for loss sharing (net of recoveries)  454   473 
Provision for loan losses (net of recoveries)  -   325 
 Total other expenses  46,287   43,849 
       
Income before extinguishment of debt, income from     
 equity affiliates and income taxes  27,973   27,538 
Loss on extinguishment of debt  (128)  - 
Income from equity affiliates  2,151   746 
Benefit from income taxes  10   8,784 
       
Net income  30,006   37,068 
       
Preferred stock dividends  1,888   1,888 
Net income attributable to noncontrolling interest  5,468   8,991 
Net income attributable to common stockholders $22,650  $26,189 
       
Basic earnings per common share $0.27  $0.42 
Diluted earnings per common share $0.26  $0.42 
       
Weighted average shares outstanding:     
 Basic  85,151,878   61,842,336 
 Diluted  107,869,511   84,699,735 
       
Dividends declared per common share $0.27  $0.21 
       


 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS
($ in thousands—except share and per share data)
        
        
     March 31, December 31,
     2019 2018
     (Unaudited)  
Assets:    
Cash and cash equivalents $124,505  $160,063 
Restricted cash  291,865   180,606 
Loans and investments, net  3,323,778   3,200,145 
Loans held-for-sale, net  225,878   481,664 
Capitalized mortgage servicing rights, net  277,639   273,770 
Securities held to maturity, net  86,036   76,363 
Investments in equity affiliates  28,444   21,580 
Real estate owned, net  14,473   14,446 
Due from related party  1,975   1,287 
Goodwill and other intangible assets  114,764   116,165 
Other assets  108,368   86,086 
Total assets $4,597,725  $4,612,175 
        
Liabilities and Equity:    
Credit facilities and repurchase agreements  1,032,495   1,135,627 
Collateralized loan obligations  1,594,970   1,593,548 
Debt fund  68,304   68,183 
Senior unsecured notes  211,001   122,484 
Convertible senior unsecured notes, net  252,229   254,768 
Junior subordinated notes to subsidiary trust issuing preferred securities  140,434   140,259 
Due to related party  261   - 
Due to borrowers  76,396   78,662 
Allowance for loss-sharing obligations  34,518   34,298 
Other liabilities  109,734   118,780 
Total liabilities  3,520,342   3,546,609 
        
Equity:    
 Arbor Realty Trust, Inc. stockholders' equity:    
  Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000    
   shares authorized; special voting preferred shares; 20,487,544 and    
   20,653,584 shares issued and outstanding, respectively; 8.25% Series A,   
   $38,787,500 aggregate liquidation preference; 1,551,500 shares issued and  
   outstanding; 7.75% Series B, $31,500,000 aggregate liquidation preference;  
   1,260,000 shares issued and outstanding; 8.50% Series C, $22,500,000    
   aggregate liquidation preference; 900,000 shares issued and outstanding 89,501   89,502 
  Common stock, $0.01 par value: 500,000,000 shares authorized; 85,955,995   
   and 83,987,707 shares issued and outstanding, respectively  860   840 
  Additional paid-in capital  893,471   879,029 
  Accumulated deficit  (74,589)  (74,133)
Total Arbor Realty Trust, Inc. stockholders’ equity  909,243   895,238 
        
Noncontrolling interest  168,140   170,328 
Total equity  1,077,383   1,065,566 
        
Total liabilities and equity $4,597,725  $4,612,175 
        


 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES 
STATEMENT OF INCOME SEGMENT INFORMATION- (Unaudited)
(in thousands)
          
          
   Quarter Ended March 31, 2019
          
   Structured
Business
 Agency
Business
 Other /
Eliminations (1)
 Consolidated
          
Interest income $65,809  $5,468  $-  $71,277 
Interest expense  38,257   3,608   -   41,865 
 Net interest income  27,552   1,860   -   29,412 
          
Other revenue:        
Gain on sales, including fee-based services, net  -   16,389   -   16,389 
Mortgage servicing rights  -   14,232   -   14,232 
Servicing revenue  -   25,834   -   25,834 
Amortization of MSRs  -   (12,282)  -   (12,282)
Property operating income  2,803   -   -   2,803 
Other income, net  337   (2,465)  -   (2,128)
 Total other revenue  3,140   41,708   -   44,848 
          
Other expenses:        
Employee compensation and benefits  8,464   23,300   -   31,764 
Selling and administrative  4,421   5,340   -   9,761 
Property operating expenses  2,396   -   -   2,396 
Depreciation and amortization  512   1,400   -   1,912 
Provision for loss sharing (net of recoveries)  -   454   -   454 
 Total other expenses  15,793   30,494   -   46,287 
          
Income before extinguishment of debt, income        
 from equity affiliates and income taxes  14,899   13,074   -   27,973 
Loss on extinguishment of debt  (128)  -   -   (128)
Income from equity affiliates  2,151   -   -   2,151 
Benefit from income taxes  -   10   -   10 
          
Net income $16,922  $13,084  $-  $30,006 
          
Preferred stock dividends  1,888   -   -   1,888 
Net income attributable to noncontrolling interest -   -   5,468   5,468 
Net income attributable to common stockholders $15,034  $13,084  $(5,468) $22,650 
          
(1) Includes certain income or expenses not allocated to the two reportable segments. Amount reflects income attributable to the noncontrolling interest holders.
          

 

 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES 
BALANCE SHEET SEGMENT INFORMATION - (Unaudited)
(in thousands)
       
  March 31, 2019
  Structured
Business
 Agency
Business
 Consolidated
Assets:      
Cash and cash equivalents $53,006 $71,499 $124,505
Restricted cash  291,865  -  291,865
Loans and investments, net  3,323,778  -  3,323,778
Loans held-for-sale, net  -  225,878  225,878
Capitalized mortgage servicing rights, net -  277,639  277,639
Securities held to maturity, net  10,000  76,036  86,036
Investments in equity affiliates  28,444  -  28,444
Goodwill and other intangible assets  12,500  102,264  114,764
Other assets  96,436  28,380  124,816
Total assets $3,816,029 $781,696 $4,597,725
       
Liabilities:      
Debt obligations  3,076,716  222,717  3,299,433
Allowance for loss-sharing obligations -  34,518  34,518
Other liabilities  143,022  43,369  186,391
Total liabilities $3,219,738 $300,604 $3,520,342
       


ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Supplemental Schedule of Non-GAAP Financial Measures - (Unaudited)
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
($ in thousands—except share and per share data)
        
 Quarter Ended
 March 31,
 2019 2018
Net income attributable to common stockholders$22,650  $26,189 
        
Adjustments:       
Net income attributable to noncontrolling interest 5,468   8,991 
Depreciation - real estate owned 175   178 
Depreciation - investments in equity affiliates 126   125 
        
Funds from operations  (1)$28,419  $35,483 
        
Adjustments:       
Income from mortgage servicing rights (14,232)  (19,634)
Deferred tax benefit (4,168)  (13,320)
Amortization and write-offs of MSRs 16,739   16,676 
Depreciation and amortization 2,564   2,255 
Net loss (gain) on changes in fair value of derivatives 2,465   (2,645)
Stock-based compensation 3,756   2,545 
        
Adjusted funds from operations  (1)$35,543  $21,360 
        
Diluted FFO per share  (1)$0.26  $0.42 
        
Diluted AFFO per share  (1)$0.33  $0.25 
        
Diluted weighted average shares outstanding  (1) 107,869,511   84,699,735 
        
(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.
        
The Company is presenting FFO and AFFO because management believes they are important supplemental measures of the Company’s operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs.  The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated real properties, plus impairments of depreciated real properties and real estate related depreciation and amortization, and after adjustments for unconsolidated ventures.
        
The Company defines AFFO as funds from operations adjusted for accounting items such as non-cash stock-based compensation expense, income from mortgage servicing rights ("MSRs"), changes in fair value of certain derivatives that temporarily flow through earnings, amortization and write-offs of MSRs, deferred tax (benefit) provision and the amortization of the convertible senior notes conversion option. The Company also adds back one-time charges such as acquisition costs and impairment losses on real estate and gains (losses) on sales of real estate. The Company is generally not in the business of operating real estate property and has obtained real estate by foreclosure or through partial or full settlement of mortgage debt related to the Company's loans to maximize the value of the collateral and minimize the Company's exposure.  Therefore, the Company deems such impairment and gains (losses) on real estate as an extension of the asset management of its loans, thus a recovery of principal or additional loss on the Company's initial investment.
        
FFO and AFFO are not intended to be an indication of the Company's cash flow 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 FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited.