Arbor Realty Trust Reports First Quarter 2024 Results and Declares Dividend of $0.43 per Share
Company Highlights:
- GAAP net income of
$0.31 per diluted common share - Distributable earnings¹ of
$0.47 , or$0.48 per diluted common share, excluding a$1.6 million realized loss on a non-performing loan that was previously reserved for - Declares cash dividend on common stock of
$0.43 per share representing a 91% payout ratio - Strong liquidity position with
~$800 million in cash and liquidity and~$600 million of restricted cash in CLO vehicles with a cost of debt below the current market² - Agency loan originations of
$846.3 million ; a servicing portfolio of~$31.38 billion , up 9% from 1Q23 - Structured loan originations of
$255.9 million , runoff of$640.0 million and a portfolio of~$12.25 billion - Repurchased
$11.4 million of common stock inApril 2024 at an average price of$12.19 per share, reflecting an ~4% discount to book value
Agency Business
Loan Origination Platform
| Agency Loan Volume (in thousands) | ||||||||
| Quarter Ended | ||||||||
| Fannie Mae | $ | 458,429 | $ | 1,177,203 | ||||
| Freddie Mac | 370,102 | 98,370 | ||||||
| FHA | — | 26,493 | ||||||
| Private Label | 15,410 | 140,606 | ||||||
| SFR-Fixed Rate | 2,318 | — | ||||||
| Total Originations | $ | 846,259 | $ | 1,442,672 | ||||
| Total Loan Sales | $ | 1,085,374 | $ | 1,270,356 | ||||
| Total Loan Commitments | $ | 934,243 | $ | 1,362,379 | ||||
For the quarter ended
At
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled
| Fee-Based Servicing Portfolio ($ in thousands) | ||||||||||||||||
| UPB | Wtd. Avg. Fee (bps) | Wtd. Avg. Life (years) | UPB | Wtd. Avg. Fee (bps) | Wtd. Avg. Life (years) | |||||||||||
| Fannie Mae | $ | 21,548,221 | 47.1 | 7.2 | $ | 21,264,578 | 47.4 | 7.4 | ||||||||
| Freddie Mac | 5,301,291 | 23.4 | 7.7 | 5,181,933 | 24.0 | 8.5 | ||||||||||
| Private Label | 2,524,013 | 18.9 | 6.3 | 2,510,449 | 19.5 | 6.7 | ||||||||||
| FHA | 1,365,329 | 14.4 | 19.0 | 1,359,624 | 14.4 | 19.2 | ||||||||||
| Bridge | 380,712 | 10.9 | 3.6 | 379,425 | 10.9 | 3.2 | ||||||||||
| SFR-Fixed Rate | 265,429 | 20.1 | 5.0 | 287,446 | 20.1 | 5.1 | ||||||||||
| Total | $ | 31,384,995 | 38.8 | 7.7 | $ | 30,983,455 | 39.1 | 8.0 | ||||||||
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes
Structured Business
Portfolio and Investment Activity
| Structured Portfolio Activity ($ in thousands) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| UPB | % | UPB | % | |||||||||||
| Bridge: | ||||||||||||||
| Multifamily | $ | 39,235 | 15 | % | $ | 38,700 | 14 | % | ||||||
| SFR | 171,490 | 67 | % | 198,629 | 75 | % | ||||||||
| 210,725 | 82 | % | 237,329 | 89 | % | |||||||||
| . | ||||||||||||||
| Mezzanine/Preferred Equity | 45,129 | 18 | % | 28,829 | 11 | % | ||||||||
| Total Originations | $ | 255,854 | 100 | % | $ | 266,158 | 100 | % | ||||||
| Number of Loans Originated | 59 | 58 | ||||||||||||
| SFR Commitments | $ | 411,617 | $ | 466,703 | ||||||||||
| Loan Runoff | $ | 640,018 | $ | 817,394 | ||||||||||
| Structured Portfolio ($ in thousands) | ||||||||||||||
| UPB | % | UPB | % | |||||||||||
| Bridge: | ||||||||||||||
| Multifamily | $ | 10,254,756 | 84 | % | $ | 10,789,936 | 86 | % | ||||||
| SFR | 1,445,028 | 12 | % | 1,316,803 | 10 | % | ||||||||
| Other | 166,505 | 1 | % | 166,505 | 1 | % | ||||||||
| 11,866,289 | 97 | % | 12,273,244 | 97 | % | |||||||||
| Mezzanine/Preferred Equity | 377,845 | 3 | % | 334,198 | 3 | % | ||||||||
| SFR Permanent | 5,728 | <1 | % | 7,564 | <1 | % | ||||||||
| Total Portfolio | $ | 12,249,862 | 100 | % | $ | 12,615,006 | 100 | % | ||||||
At
The average balance of the Company’s loan and investment portfolio during the first quarter of 2024, excluding loan loss reserves, was
During the first quarter of 2024, the Company recorded a
In addition, at
During the first quarter of 2024, the Company modified thirty-nine loans with a total UPB of
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at
The average balance of debt that finances the Company’s loan and investment portfolio for the first quarter of 2024 was
Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of
Earnings Conference Call
The Company will host a conference call today at
A telephonic replay of the call will be available until
About
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
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
April 30, 2024 .
| Contact: | 516-506-4422 pelenio@arbor.com |
| Consolidated Statements of Income – (Unaudited) | ||||||||
| ($ in thousands—except share and per share data) | ||||||||
| Quarter Ended |
||||||||
| 2024 | 2023 | |||||||
| Interest income | $ | 321,292 | $ | 327,947 | ||||
| Interest expense | 217,676 | 219,373 | ||||||
| Net interest income | 103,616 | 108,574 | ||||||
| Other revenue: | ||||||||
| Gain on sales, including fee-based services, net | 16,666 | 14,589 | ||||||
| Mortgage servicing rights | 10,199 | 18,458 | ||||||
| Servicing revenue, net | 31,526 | 29,565 | ||||||
| Property operating income | 1,570 | 1,381 | ||||||
| Gain (loss) on derivative instruments, net | (5,257 | ) | 4,223 | |||||
| Other income, net | 2,333 | 4,882 | ||||||
| Total other revenue | 57,037 | 73,098 | ||||||
| Other expenses: | ||||||||
| Employee compensation and benefits | 47,694 | 42,399 | ||||||
| Selling and administrative | 13,933 | 13,623 | ||||||
| Property operating expenses | 1,678 | 1,383 | ||||||
| Depreciation and amortization | 2,571 | 2,624 | ||||||
| Provision for loss sharing (net of recoveries) | 273 | 3,177 | ||||||
| Provision for credit losses (net of recoveries) | 19,118 | 22,517 | ||||||
| Total other expenses | 85,267 | 85,723 | ||||||
| Income before income from equity affiliates and income taxes | 75,386 | 95,949 | ||||||
| Income from equity affiliates | 1,418 | 14,326 | ||||||
| Provision for income taxes | (3,592 | ) | (8,029 | ) | ||||
| Net income | 73,212 | 102,246 | ||||||
| Preferred stock dividends | 10,342 | 10,342 | ||||||
| Net income attributable to noncontrolling interest | 4,997 | 7,585 | ||||||
| Net income attributable to common stockholders | $ | 57,873 | $ | 84,319 | ||||
| Basic earnings per common share | $ | 0.31 | $ | 0.47 | ||||
| Diluted earnings per common share | $ | 0.31 | $ | 0.46 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 188,710,390 | 181,116,674 | ||||||
| Diluted | 222,926,076 | 214,910,974 | ||||||
| Dividends declared per common share | $ | 0.43 | $ | 0.40 | ||||
| Consolidated Balance Sheets | ||||||||
| ($ in thousands—except share and per share data) | ||||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 908,049 | $ | 928,974 | ||||
| Restricted cash | 546,643 | 608,233 | ||||||
| Loans and investments, net (allowance credit losses of |
12,001,544 | 12,377,806 | ||||||
| Loans held-for-sale, net | 322,875 | 551,707 | ||||||
| Capitalized mortgage servicing rights, net | 385,520 | 391,254 | ||||||
| Securities held-to-maturity, net (allowance credit losses of |
155,413 | 155,279 | ||||||
| Investments in equity affiliates | 90,244 | 79,303 | ||||||
| Due from related party | 104,365 | 64,421 | ||||||
| 90,205 | 91,378 | |||||||
| Other assets | 499,998 | 490,281 | ||||||
| Total assets | $ | 15,104,856 | $ | 15,738,636 | ||||
| Liabilities and Equity: | ||||||||
| Credit and repurchase facilities | $ | 2,913,483 | $ | 3,237,827 | ||||
| Securitized debt | 6,691,958 | 6,935,010 | ||||||
| Senior unsecured notes | 1,335,013 | 1,333,968 | ||||||
| Convertible senior unsecured notes | 283,776 | 283,118 | ||||||
| Junior subordinated notes to subsidiary trust issuing preferred securities | 144,096 | 143,896 | ||||||
| Due to related party | 14,159 | 13,799 | ||||||
| Due to borrowers | 95,807 | 121,707 | ||||||
| Allowance for loss-sharing obligations | 72,790 | 71,634 | ||||||
| Other liabilities | 319,466 | 343,072 | ||||||
| Total liabilities | 11,870,548 | 12,484,031 | ||||||
| Equity: | ||||||||
| Preferred stock, cumulative, redeemable, |
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, |
1,895 | 1,885 | ||||||
| Additional paid-in capital | 2,372,336 | 2,367,188 | ||||||
| Retained earnings | 91,770 | 115,216 | ||||||
| 3,099,685 | 3,117,973 | |||||||
| Noncontrolling interest | 134,623 | 136,632 | ||||||
| Total equity | 3,234,308 | 3,254,605 | ||||||
| Total liabilities and equity | $ | 15,104,856 | $ | 15,738,636 | ||||
| Statement of Income Segment Information – (Unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Quarter Ended |
||||||||||||||||
| Structured Business |
Agency Business |
Other (1) | Consolidated | |||||||||||||
| Interest income | $ | 307,888 | $ | 13,404 | $ | — | $ | 321,292 | ||||||||
| Interest expense | 212,600 | 5,076 | — | 217,676 | ||||||||||||
| Net interest income | 95,288 | 8,328 | — | 103,616 | ||||||||||||
| Other revenue: | ||||||||||||||||
| Gain on sales, including fee-based services, net | — | 16,666 | — | 16,666 | ||||||||||||
| Mortgage servicing rights | — | 10,199 | — | 10,199 | ||||||||||||
| Servicing revenue | — | 48,157 | — | 48,157 | ||||||||||||
| Amortization of MSRs | — | (16,631 | ) | — | (16,631 | ) | ||||||||||
| Property operating income | 1,570 | — | — | 1,570 | ||||||||||||
| Loss on derivative instruments, net | — | (5,257 | ) | — | (5,257 | ) | ||||||||||
| Other income, net | 2,300 | 33 | — | 2,333 | ||||||||||||
| Total other revenue | 3,870 | 53,167 | — | 57,037 | ||||||||||||
| Other expenses: | ||||||||||||||||
| Employee compensation and benefits | 18,547 | 29,147 | — | 47,694 | ||||||||||||
| Selling and administrative | 6,796 | 7,137 | — | 13,933 | ||||||||||||
| Property operating expenses | 1,678 | — | — | 1,678 | ||||||||||||
| Depreciation and amortization | 1,398 | 1,173 | — | 2,571 | ||||||||||||
| Provision for loss sharing (net of recoveries) | — | 273 | — | 273 | ||||||||||||
| Provision for credit losses (net of recoveries) | 17,777 | 1,341 | — | 19,118 | ||||||||||||
| Total other expenses | 46,196 | 39,071 | — | 85,267 | ||||||||||||
| Income before income from equity affiliates and income taxes | 52,962 | 22,424 | — | 75,386 | ||||||||||||
| Income from equity affiliates | 1,418 | — | — | 1,418 | ||||||||||||
| Provision for income taxes | (81 | ) | (3,511 | ) | — | (3,592 | ) | |||||||||
| Net income | 54,299 | 18,913 | — | 73,212 | ||||||||||||
| Preferred stock dividends | 10,342 | — | — | 10,342 | ||||||||||||
| Net income attributable to noncontrolling interest | — | — | 4,997 | 4,997 | ||||||||||||
| Net income attributable to common stockholders | $ | 43,957 | $ | 18,913 | $ | (4,997 | ) | $ | 57,873 | |||||||
| (1) Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments. | ||||||||||||||||
| Balance Sheet Segment Information – (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| Structured Business |
Agency Business |
Consolidated | ||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | $ | 453,316 | $ | 454,733 | $ | 908,049 | ||||||
| Restricted cash | 530,099 | 16,544 | 546,643 | |||||||||
| Loans and investments, net | 12,001,544 | — | 12,001,544 | |||||||||
| Loans held-for-sale, net | — | 322,875 | 322,875 | |||||||||
| Capitalized mortgage servicing rights, net | — | 385,520 | 385,520 | |||||||||
| Securities held-to-maturity, net | — | 155,413 | 155,413 | |||||||||
| Investments in equity affiliates | 90,244 | — | 90,244 | |||||||||
| 12,500 | 77,705 | 90,205 | ||||||||||
| Other assets and due from related party | 532,385 | 71,978 | 604,363 | |||||||||
| Total assets | $ | 13,620,088 | $ | 1,484,768 | $ | 15,104,856 | ||||||
| Liabilities: | ||||||||||||
| Debt obligations | $ | 11,056,363 | $ | 311,963 | $ | 11,368,326 | ||||||
| Allowance for loss-sharing obligations | — | 72,790 | 72,790 | |||||||||
| Other liabilities and due to related party | 343,557 | 85,875 | 429,432 | |||||||||
| Total liabilities | $ | 11,399,920 | $ | 470,628 | $ | 11,870,548 | ||||||
| Reconciliation of Distributable Earnings to GAAP Net Income – (Unaudited) | ||||||||
| ($ in thousands—except share and per share data) | ||||||||
| Quarter Ended |
||||||||
| 2024 | 2023 | |||||||
| Net income attributable to common stockholders | $ | 57,873 | $ | 84,319 | ||||
| Adjustments: | ||||||||
| Net income attributable to noncontrolling interest | 4,997 | 7,585 | ||||||
| Income from mortgage servicing rights | (10,199 | ) | (18,458 | ) | ||||
| Deferred tax (benefit) provision | (3,952 | ) | 3,164 | |||||
| Amortization and write-offs of MSRs | 18,418 | 18,723 | ||||||
| Depreciation and amortization | 3,193 | 4,295 | ||||||
| Provision for credit losses, net | 14,804 | 23,704 | ||||||
| Loss (gain) on derivative instruments, net | 5,523 | (7,051 | ) | |||||
| Stock-based compensation | 6,020 | 5,901 | ||||||
| Distributable earnings (1) | $ | 96,677 | $ | 122,182 | ||||
| Diluted distributable earnings per share (1) | $ | 0.47 | $ | 0.62 | ||||
| Diluted weighted average shares outstanding (1) (2) | 205,511,529 | 197,680,616 | ||||||
| (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 |
||||||||
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, 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.
Source: Arbor Realty Trust
