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Arbor Realty Trust Reports First Quarter 2024 Results and Declares Dividend of $0.43 per Share

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Arbor Realty Trust reported first-quarter 2024 results, declaring a $0.43 per share dividend. Net income was $0.31 per share, distributable earnings of $0.47 per share. Strong liquidity, cash of $800 million, and $600 million in CLO vehicles. Agency loan originations of $846.3 million. Repurchased $11.4 million of common stock. Company's fee-based servicing portfolio was $31.38 billion. Structured loan originations of $255.9 million. Quarterly revenues were $66.6 million.

Positive
  • Strong liquidity position with ~$800 million in cash and liquidity and ~$600 million of restricted cash in CLO vehicles

  • Agency loan originations of $846.3 million

  • Repurchased $11.4 million of common stock in April 2024 at an average price of $12.19 per share

  • Fee-based servicing portfolio totaled $31.38 billion at March 31, 2024

  • Structured loan originations of $255.9 million

Negative
  • Net income decreased from $84.3 million to $57.9 million year over year

  • Distributable earnings decreased from $122.2 million to $96.7 million year over year

  • Loss on a non-performing loan of $1.6 million impacting distributable earnings

  • Quarterly revenues declined from $96.3 million in the fourth quarter of 2023 to $66.6 million

  • Recorded a $17.8 million provision for loan losses associated with CECL in the first quarter of 2024

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 in April 2024 at an average price of $12.19 per share, reflecting an ~4% discount to book value

UNIONDALE, N.Y., May 03, 2024 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the first quarter ended March 31, 2024. Arbor reported net income for the quarter of $57.9 million, or $0.31 per diluted common share, compared to net income of $84.3 million, or $0.46 per diluted common share for the quarter ended March 31, 2023. Distributable earnings for the quarter was $96.7 million, or $0.47 per diluted common share, compared to $122.2 million, or $0.62 per diluted common share for the quarter ended March 31, 2023.

Agency Business

Loan Origination Platform

  Agency Loan Volume (in thousands)
  Quarter Ended
  March 31, 2024 December 31, 2023
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 March 31, 2024, the Agency Business generated revenues of $66.6 million, compared to $96.3 million for the fourth quarter of 2023. Gain on sales, including fee-based services, net was $16.7 million for the quarter, reflecting a margin of 1.54%, compared to $16.7 million and 1.32% for the fourth quarter of 2023. Income from mortgage servicing rights was $10.2 million for the quarter, reflecting a rate of 1.32% as a percentage of loan commitments (excluding $160.2 million of loan commitments not serviced for a fee), compared to $21.1 million and 1.55% for the fourth quarter of 2023.

At March 31, 2024, loans held-for-sale was $322.9 million, with financing associated with these loans totaling $312.0 million.

Fee-Based Servicing Portfolio

The Company’s fee-based servicing portfolio totaled $31.38 billion at March 31, 2024. Servicing revenue, net was $31.5 million for the quarter and consisted of servicing revenue of $48.2 million, net of amortization of mortgage servicing rights totaling $16.6 million.

  Fee-Based Servicing Portfolio ($ in thousands)
  March 31, 2024 December 31, 2023
  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 $34.7 million for the fair value of the guarantee obligation undertaken at March 31, 2024. The Company recorded a $0.3 million net provision for loss sharing associated with CECL for the first quarter of 2024. At March 31, 2024, the Company’s total CECL allowance for loss-sharing obligations was $38.1 million, representing 0.18% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

  Structured Portfolio Activity ($ in thousands)
  Quarter Ended
  March 31, 2024 December 31, 2023
  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)
  March 31, 2024 December 31, 2023
  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 March 31, 2024, the loan and investment portfolio’s unpaid principal balance ("UPB"), excluding loan loss reserves, was $12.25 billion, with a weighted average current interest pay rate of 8.07%, compared to $12.62 billion and 8.42% at December 31, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 8.81% at March 31, 2024, compared to 8.98% at December 31, 2023.

The average balance of the Company’s loan and investment portfolio during the first quarter of 2024, excluding loan loss reserves, was $12.52 billion with a weighted average yield of 9.44%, compared to $12.96 billion and 9.31% for the fourth quarter of 2023.

During the first quarter of 2024, the Company recorded a $17.8 million provision for loan losses associated with CECL. At March 31, 2024, the Company’s total allowance for loan losses was $211.9 million. The Company had twenty-one non-performing loans with a UPB of $464.8 million, before related loan loss reserves of $32.9 million, compared to sixteen loans with a carrying value of $274.2 million, before loan loss reserves of $27.1 million at December 31, 2023.

In addition, at March 31, 2024, the Company had twelve loans with a total UPB of $489.4 million that were less than 60 days past due, compared to twenty-four loans with a total UPB of $956.9 million at December 31, 2023. Interest income on these loans is only being recorded to the extent cash is received.

During the first quarter of 2024, the Company modified thirty-nine loans with a total UPB of $1.76 billion all of which required the borrowers to invest additional capital as part of the terms of the modification agreements. Twenty-three of these loans with a total UPB of $1.07 billion, contained interest rates based on pricing over SOFR ranging from 3.25% to 4.25%. Under the loan modification terms, borrowers invested additional capital to recapitalize their deals in exchange for temporary rate relief, which we provided through a pay and accrual feature. At March 31, 2024, these modified loans had a weighted average pay rate of 6.95% and a weighted average accrual rate of 1.86%. A portion of these loans totaling $712.9 million were less than 60 days past due at December 31, 2023, which the Company received all back interest owed in accordance with the modified terms.

Financing Activity

The balance of debt that finances the Company’s loan and investment portfolio at March 31, 2024 was $11.11 billion with a weighted average interest rate including fees of 7.44%, as compared to $11.57 billion and a rate of 7.45% at December 31, 2023.

The average balance of debt that finances the Company’s loan and investment portfolio for the first quarter of 2024 was $11.37 billion, as compared to $11.77 billion for the fourth quarter of 2023. The average cost of borrowings for the first quarter of 2024 was 7.50%, compared to 7.48% for the fourth 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 March 31, 2024. The dividend is payable on May 31, 2024 to common stockholders of record on May 17, 2024. The ex-dividend date is May 16, 2024.

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) 343-5419 for domestic callers and (203) 518-9731 for international callers. Please use participant passcode ABRQ124 when prompted by the operator.

A telephonic replay of the call will be available until May 10, 2024. The replay dial-in numbers are (888) 566-0903 for domestic callers and (402) 220-6935 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, 2023 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 April 30, 2024.
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 March 31,
   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 


ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands—except share and per share data)
 
  March 31, 2024 December 31, 2023
  (Unaudited)  
Assets:    
Cash and cash equivalents $908,049  $928,974 
Restricted cash  546,643   608,233 
Loans and investments, net (allowance credit losses of $211,942 and $195,664)  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 $7,597 and $6,256)  155,413   155,279 
Investments in equity affiliates  90,244   79,303 
Due from related party  104,365   64,421 
Goodwill and other intangible assets  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:    
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 – 189,452,116 and 188,505,264 shares issued and outstanding  1,895   1,885 
Additional paid-in capital  2,372,336   2,367,188 
Retained earnings  91,770   115,216 
Total Arbor Realty Trust, Inc. stockholders’ equity  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 


ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Statement of Income Segment Information – (Unaudited)
(in thousands)
 
  Quarter Ended March 31, 2024
  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.


ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Balance Sheet Segment Information – (Unaudited)
(in thousands)
 
  March 31, 2024
  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 
Goodwill and other intangible assets  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 


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 March 31,
   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 March 31, 2024 and March 31, 2023, the diluted weighted average shares outstanding excluded 17,414,547 and 17,230,358 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, 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.


FAQ

What was Arbor Realty Trust's net income per diluted common share for the first quarter of 2024?

Arbor Realty Trust reported a net income of $0.31 per diluted common share for the first quarter of 2024.

What was the dividend declared by Arbor Realty Trust for the quarter ended March 31, 2024?

Arbor Realty Trust declared a quarterly cash dividend of $0.43 per share of common stock for the quarter ended March 31, 2024.

What was the total loan originations for Arbor Realty Trust in the first quarter of 2024?

Arbor Realty Trust's total loan originations in the first quarter of 2024 were $846.3 million.

What was the fee-based servicing portfolio total for Arbor Realty Trust at March 31, 2024?

Arbor Realty Trust's fee-based servicing portfolio totaled $31.38 billion at March 31, 2024.

What was the structured loan originations amount for Arbor Realty Trust in the first quarter of 2024?

Arbor Realty Trust's structured loan originations in the first quarter of 2024 amounted to $255.9 million.

Arbor Realty Trust, Inc.

NYSE:ABR

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UNIONDALE

About ABR

about us for over 20 years, uniondale, ny-based arbor realty trust, inc. (nyse: abr) has been helping multifamily and commercial real estate clients achieve their financial goals by focusing on growing long-term relationships and conducting business as not simply another real estate lender, but a partner. we value our clients to such an extent that we’re more comfortable calling them partners, and their relationships with arbor are the foundation of our business. founded by chairman and ceo ivan kaufman, arbor realty trust, inc. is a real estate investment trust and direct lender specializing in loan origination and servicing for multifamily, seniors housing, healthcare and other diverse commercial real estate assets. arbor is a top 10 fannie mae dus® multifamily lender by volume and a top fannie mae small loan lender, a freddie mac program plus® seller/servicer and the top freddie mac small balance loan lender, a fannie mae and freddie mac seniors housing lender, an fha multifamily ac