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Arbor Realty Trust Reports Third Quarter 2023 Results and Declares Dividend of $0.43 per Share

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Arbor Realty Trust, Inc. (NYSE: ABR) reports Q3 2023 financial results, with net income of $77.9 million and distributable earnings of $112.2 million. The company declares a cash dividend of $0.43 per share. Strong liquidity position with $1 billion in cash and liquidity. Agency loan originations of $1.15 billion and servicing portfolio of $29.94 billion. Structured loan originations of $240.2 million and portfolio of $13.12 billion.
Positive
  • Arbor Realty Trust reports strong Q3 2023 financial results, with net income of $77.9 million and distributable earnings of $112.2 million. The company declares a cash dividend of $0.43 per share, representing an annualized dividend of $1.72 per share. Strong liquidity position with $1 billion in cash and liquidity. Agency loan originations of $1.15 billion and a servicing portfolio of $29.94 billion. Structured loan originations of $240.2 million and a portfolio of $13.12 billion.
Negative
  • None.

Company Highlights:

  • Diversified, annuity-based operating platform with a multifamily focus that has continued to generate strong distributable earnings and dividends
    • GAAP net income of $0.41 per diluted common share
    • Distributable earnings1 of $0.55 per diluted common share, well in excess of our current dividend, representing a 78% payout ratio
    • Declares cash dividend on common stock of $0.43 per share representing an annualized dividend of $1.72 per share
    • Strong liquidity position with ~$1 billion in cash and liquidity and ~$500 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.70% over benchmark rates2
    • Agency loan originations of $1.15 billion and a servicing portfolio of ~$29.94 billion, up 2%
    • Structured loan originations of $240.2 million and a portfolio of ~$13.12 billion

UNIONDALE, N.Y., Oct. 27, 2023 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the third quarter ended September 30, 2023. Arbor reported net income for the quarter of $77.9 million, or $0.41 per diluted common share, compared to net income of $62.7 million, or $0.36 per diluted common share for the quarter ended September 30, 2022. Distributable earnings for the quarter was $112.2 million, or $0.55 per diluted common share, compared to $105.1 million, or $0.56 per diluted common share for the quarter ended September 30, 2022.

Agency Business

Loan Origination Platform

 Agency Loan Volume (in thousands)
 Quarter Ended
 September 30, 2023 June 30, 2023
Fannie Mae$721,398 $1,079,910
Freddie Mac 339,241  217,884
Private Label 67,965  50,256
FHA 19,215  62,552
SFR-Fixed Rate 2,030  11,837
Total Originations$1,149,849 $1,422,439
    
Total Loan Sales$1,275,420 $1,410,724
    
Total Loan Commitments$1,211,347 $1,133,312
 

For the quarter ended September 30, 2023, the Agency Business generated revenues of $80.8 million, compared to $76.7 million for the second quarter of 2023. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $17.7 million for the quarter, reflecting a margin of 1.48%, compared to $22.2 million and 1.67% for the second quarter of 2023. Income from mortgage servicing rights was $14.1 million for the quarter, reflecting a rate of 1.16% as a percentage of loan commitments, compared to $16.2 million and 1.43% for the second quarter of 2023.

At September 30, 2023, loans held-for-sale was $364.3 million, with financing associated with these loans totaling $354.6 million.

Fee-Based Servicing Portfolio

The Company’s fee-based servicing portfolio totaled $29.94 billion at September 30, 2023. Servicing revenue, net was $35.5 million for the quarter and consisted of servicing revenue of $51.4 million, net of amortization of mortgage servicing rights totaling $15.9 million.

 Fee-Based Servicing Portfolio ($ in thousands)
 September 30, 2023 June 30, 2023
 UPB Wtd. Avg.
Fee (bps)
 Wtd. Avg.
Life (years)
 UPB Wtd. Avg.
Fee (bps)
 Wtd. Avg.
Life (years)
Fannie Mae$20,463,620 48.3 7.7 $20,002,570 48.9 7.7
Freddie Mac 5,184,888 24.2 8.5  5,245,325 24.8 8.8
Private Label 2,371,475 19.2 7.3  2,305,000 19.3 7.5
FHA 1,322,832 14.5 19.9  1,303,812 14.5 20.0
Bridge 305,950 11.2 3.6  299,578 11.1 3.5
SFR-Fixed Rate 287,942 20.1 5.8  290,266 20.0 5.9
Total$29,936,707 39.7 8.3 $29,446,551 40.1 8.4
 

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.6 million for the fair value of the guarantee obligation undertaken at September 30, 2023. The Company recorded a $1.6 million net provision for loss sharing associated with CECL for the third quarter of 2023. At September 30, 2023, the Company’s total CECL allowance for loss-sharing obligations was $34.7 million, representing 0.17% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

 Structured Portfolio Activity ($ in thousands)
 Quarter Ended
 September 30, 2023 June 30, 2023
 UPB % UPB %
Bridge:       
Multifamily$92,000 38% $98,530 47%
SFR 140,379 59%  108,964 52%
  232,379 97%  207,494 99%
        
Mezzanine/Preferred Equity 7,779 3%  1,500 1%
Total Originations$240,158 100% $208,994 100%
        
Number of Loans Originated 42    26  
        
SFR Commitments$429,452   $200,182  
        
Runoff$664,792   $685,220  
 


 Structured Portfolio ($ in thousands)
 September 30, 2023 June 30, 2023
 UPB % UPB %
Bridge:       
Multifamily$11,421,819 87% $11,887,768 88%
SFR 1,163,648 9%  1,023,959 8%
Other 205,505 2%  256,575 2%
  12,790,972 98%  13,168,302 98%
        
Mezzanine/Preferred Equity 321,729 2%  312,812 2%
SFR Permanent 9,694 <1%  10,493 <1%
Total Portfolio$13,122,395 100% $13,491,607 100%
 

At September 30, 2023, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $13.12 billion, with a weighted average current interest pay rate of 8.80%, compared to $13.49 billion and 8.76% at June 30, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 9.12% at September 30, 2023, compared to 9.07% at June 30, 2023.

The average balance of the Company’s loan and investment portfolio during the third quarter of 2023, excluding loan loss reserves, was $13.40 billion with a weighted average yield of 9.25%, compared to $13.66 billion and 9.19% for the second quarter of 2023.

During the third quarter of 2023, the Company recorded a $15.0 million provision for loan losses associated with CECL. At September 30, 2023, the Company’s total allowance for loan losses was $184.1 million. The Company had twelve non-performing loans with a carrying value of $137.9 million, before related loan loss reserves of $12.6 million, compared to seven loans with a carrying value of $122.4 million, before loan loss reserves of $10.1 million at June 30, 2023.

Financing Activity

The balance of debt that finances the Company’s loan and investment portfolio at September 30, 2023 was $11.86 billion with a weighted average interest rate including fees of 7.41% as compared to $12.11 billion and a rate of 7.25% at June 30, 2023.

The average balance of debt that finances the Company’s loan and investment portfolio for the third quarter of 2023 was $12.00 billion, as compared to $12.46 billion for the second quarter of 2023. The average cost of borrowings for the third quarter of 2023 was 7.37%, compared to 7.11% for the second quarter of 2023. The increase in average cost was primarily due to increases in the benchmark index rates in the third 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 September 30, 2023. The dividend is payable on November 30, 2023 to common stockholders of record on November 17, 2023. The ex-dividend date is November 16, 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 ABRQ323 when prompted by the operator.

A telephonic replay of the call will be available until November 3, 2023. The replay dial-in numbers are (800) 839-2485 for domestic callers and (402) 220-7222 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

  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 October 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 September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
Interest income$336,474  $259,778  $1,000,159  $627,804 
Interest expense 229,180   160,452   675,749   350,079 
Net interest income 107,294   99,326   324,410   277,725 
        
Other revenue:       
Gain on sales, including fee-based services, net 18,619   14,360   55,795   32,526 
Mortgage servicing rights 14,109   19,408   48,769   52,287 
Servicing revenue, net 35,463   22,744   97,376   64,513 
Property operating income 1,450   445   4,261   1,031 
Gain (loss) on derivative instruments, net (421)  (15,909)  (3,582)  10,083 
Other income (loss), net 173   (6,014)  5,099   (16,061)
Total other revenue 69,393   35,034   207,718   144,379 
        
Other expenses:       
Employee compensation and benefits 39,810   38,811   123,518   119,736 
Selling and administrative 12,367   13,225   38,574   40,960 
Property operating expenses 1,479   366   4,227   1,443 
Depreciation and amortization 2,286   2,078   7,297   6,092 
Provision for loss sharing (net of recoveries) 1,679   412   12,528   (2,199)
Provision for credit losses (net of recoveries) 18,652   2,274   55,047   9,700 
Total other expenses 76,273   57,166   241,191   175,732 
        
Income before extinguishment of debt, income from equity affiliates, and income taxes 100,414   77,194   290,937   246,372 
Loss on extinguishment of debt (314)  (3,262)  (1,561)  (4,612)
Income from equity affiliates 809   4,748   20,694   18,507 
(Provision for) benefit from income taxes (5,854)  374   (19,436)  (13,166)
        
Net income 95,055   79,054   290,634   247,101 
        
Preferred stock dividends 10,342   10,342   31,027   30,612 
Net income attributable to noncontrolling interest 6,789   6,002   21,200   19,811 
Net income attributable to common stockholders$77,924  $62,710  $238,407  $196,678 
        
Basic earnings per common share$0.42  $0.37  $1.30  $1.21 
Diluted earnings per common share$0.41  $0.36  $1.28  $1.18 
        
Weighted average shares outstanding:       
Basic 187,023,395   170,227,553   183,340,149   162,292,235 
Diluted 221,328,818   205,865,016   217,457,399   195,529,340 
        
Dividends declared per common share$0.43  $0.39  $1.25  $1.14 
 


ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
($ in thousands—except share and per share data)

 September 30, 2023 December 31, 2022
 (Unaudited)  
Assets:   
Cash and cash equivalents$895,298 $534,357
Restricted cash 419,158  713,808
Loans and investments, net (allowance credit losses of $184,069 and $132,559) 12,892,796  14,254,674
Loans held-for-sale, net 364,320  354,070
Capitalized mortgage servicing rights, net 392,203  401,471
Securities held-to-maturity, net (allowance credit losses of $5,943 and $3,153) 155,172  156,547
Investments in equity affiliates 62,795  79,130
Due from related party 211,655  77,419
Goodwill and other intangible assets 92,551  96,069
Other assets 416,741  371,440
Total assets$15,902,689 $17,038,985
    
Liabilities and Equity:   
Credit and repurchase facilities$3,391,441 $3,841,814
Securitized debt 7,004,634  7,849,270
Senior unsecured notes 1,332,926  1,385,994
Convertible senior unsecured notes 282,428  280,356
Junior subordinated notes to subsidiary trust issuing preferred securities 143,695  143,128
Due to related party 2,170  12,350
Due to borrowers 114,660  61,237
Allowance for loss-sharing obligations 69,261  57,168
Other liabilities 320,973  335,789
Total liabilities 12,662,188  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 - 188,501,642 and 178,230,522 shares issued and outstanding 1,885  1,782
Additional paid-in capital 2,364,395  2,204,481
Retained earnings 104,821  97,049
Total Arbor Realty Trust, Inc. stockholders’ equity 3,104,785  2,936,996
    
Noncontrolling interest 135,716  134,883
Total equity 3,240,501  3,071,879
    
Total liabilities and equity$15,902,689 $17,038,985
 


ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

Statement of Income Segment Information - (Unaudited)
(in thousands)

 Quarter Ended September 30, 2023
 Structured
Business
 Agency
Business
 Other /
Eliminations(1)
 Consolidated
Interest income$322,819  $13,655  $-  $336,474 
Interest expense 222,996   6,184   -   229,180 
Net interest income 99,823   7,471   -   107,294 
        
Other revenue:       
Gain on sales, including fee-based services, net -   18,619   -   18,619 
Mortgage servicing rights -   14,109   -   14,109 
Servicing revenue -   51,363   -   51,363 
Amortization of MSRs -   (15,900)  -   (15,900)
Property operating income 1,450   -   -   1,450 
Gain (loss) on derivative instruments, net -   (421)  -   (421)
Other income (loss), net 751   (578)  -   173 
Total other revenue 2,201   67,192   -   69,393 
        
Other expenses:       
Employee compensation and benefits 12,912   26,898   -   39,810 
Selling and administrative 5,291   7,076   -   12,367 
Property operating expenses 1,479   -   -   1,479 
Depreciation and amortization 1,114   1,172   -   2,286 
Provision for loss sharing (net of recoveries) -   1,679   -   1,679 
Provision for credit losses (net of recoveries) 17,243   1,409   -   18,652 
Total other expenses 38,039   38,234   -   76,273 
        
Income before extinguishment of debt, income from equity affiliates and income taxes 63,985   36,429   -   100,414 
        
Loss on extinguishment of debt (314)  -   -   (314)
Income from equity affiliates 809   -   -   809 
Benefit from (provision for) income taxes 1,078   (6,932)  -   (5,854)
        
Net income 65,558   29,497   -   95,055 
        
Preferred stock dividends 10,342   -   -   10,342 
Net income attributable to noncontrolling interest -   -   6,789   6,789 
Net income attributable to common stockholders$55,216  $29,497  $(6,789) $77,924 
 
(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)

 September 30, 2023
 Structured
Business
 Agency
Business
 Consolidated
Assets:     
Cash and cash equivalents$499,511 $395,787 $895,298
Restricted cash 410,056  9,102  419,158
Loans and investments, net 12,892,796  -  12,892,796
Loans held-for-sale, net -  364,320  364,320
Capitalized mortgage servicing rights, net -  392,203  392,203
Securities held-to-maturity, net -  155,172  155,172
Investments in equity affiliates 62,795  -  62,795
Goodwill and other intangible assets 12,500  80,051  92,551
Other assets and due from related party 536,789  91,607  628,396
Total assets$14,414,447 $1,488,242 $15,902,689
      
Liabilities:     
Debt obligations$11,800,537 $354,587 $12,155,124
Allowance for loss-sharing obligations -  69,261  69,261
Other liabilities and due to related party 323,061  114,742  437,803
Total liabilities$12,123,598 $538,590 $12,662,188
 


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 September 30, Nine Months Ended September 30,
  2023   2022   2023   2022 
Net income attributable to common stockholders$77,924  $62,710  $238,407  $196,678 
        
Adjustments:       
Net income attributable to noncontrolling interest 6,789   6,002   21,200   19,811 
Income from mortgage servicing rights (14,109)  (19,408)  (48,769)  (52,287)
Deferred tax benefit (2,433)  (5,407)  (6,630)  (7,833)
Amortization and write-offs of MSRs 18,757   26,555   58,684   81,850 
Depreciation and amortization 3,957   2,666   12,310   7,846 
Loss on extinguishment of debt 314   3,262   1,561   4,612 
Provision for credit losses, net 16,922   2,708   57,437   10,254 
Gain on derivative instruments, net 1,002   22,925   2,036   18,472 
Stock-based compensation 3,047   3,085   12,141   12,327 
        
Distributable earnings (1)$112,170  $105,098  $348,377  $291,730 
        
Diluted distributable earnings per share (1)$0.55  $0.56  $1.74  $1.63 
        
Diluted weighted average shares outstanding (1) (2) 204,016,436   187,049,617   200,185,980   179,174,194 


(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 September 30, 2023 and September 30, 2022, the diluted weighted average shares outstanding excluded 17,312,382 and 18,815,399 of these potentially issuable shares, respectively. For the nine months ended September 30, 2023 and September 30, 2022, the diluted weighted average shares outstanding excluded 17,271,419 and 16,355,146 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.

 


FAQ

What are the financial results for Arbor Realty Trust in Q3 2023?

Arbor Realty Trust reported net income of $77.9 million and distributable earnings of $112.2 million in Q3 2023.

What is the cash dividend declared by Arbor Realty Trust?

Arbor Realty Trust declared a cash dividend of $0.43 per share for the quarter ended September 30, 2023.

What is the liquidity position of Arbor Realty Trust?

Arbor Realty Trust has a strong liquidity position with $1 billion in cash and liquidity.

What are the agency loan originations and servicing portfolio of Arbor Realty Trust?

Arbor Realty Trust had agency loan originations of $1.15 billion and a servicing portfolio of $29.94 billion.

What are the structured loan originations and portfolio of Arbor Realty Trust?

Arbor Realty Trust had structured loan originations of $240.2 million and a portfolio of $13.12 billion.

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