Arbor Realty Trust Reports First Quarter 2022 Results and Increases Quarterly Dividend to $0.38 per Share
Arbor Realty Trust (NYSE: ABR) reported a GAAP net income of $64.1 million ($0.40 per diluted share) for Q1 2022, down from $69.5 million ($0.55 per diluted share) in Q1 2021. Distributable earnings rose to $92.9 million ($0.55 per diluted share), up from $75.1 million ($0.52) a year earlier. The company declared a cash dividend of $0.38 per share, an eighth consecutive increase, representing a 27% rise since 2021. Notably, Arbor raised $215 million in capital and achieved a 17% growth in its structured portfolio, with $2.83 billion in loan originations.
- Distributable earnings up 23% YoY to $92.9 million ($0.55/share).
- Raised cash dividend to $0.38, marking 27% increase over eight quarters.
- Successful capital raise of $215 million for growth.
- GAAP net income fell 8.7% YoY from $69.5 million to $64.1 million.
- Agency Business revenues decreased from $111.7 million in Q4 2021 to $65.9 million.
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
$0.40 and distributable earnings of$0.55 per diluted common share1 - Raised cash dividend on common stock to
$0.38 per share, our 8th consecutive quarterly increase representing a27% increase over that span - Successfully raised
$215 million of accretive capital and increased warehouse capacity by$400 million to fund the significant growth of our structured portfolio
- GAAP net income of
Structured Business:
- Portfolio growth of
17% from strong loan originations of$2.83 billion - Closed a
$2.05 billion collateralized securitization vehicle
Agency Business:
- Loan originations of
$838.5 million and a servicing portfolio of$27 billion - Closed our 4th private label securitization totaling
$489 million
UNIONDALE, N.Y., May 06, 2022 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the first quarter ended March 31, 2022. Arbor reported net income for the quarter of
Agency Business
Loan Origination Platform
| Agency Loan Volume (in thousands) | ||||||||
| Quarter Ended | ||||||||
| March 31, 2022 | December 31, 2021 | |||||||
| Fannie Mae | $ | 449,680 | $ | 968,105 | ||||
| Freddie Mac | 299,072 | 437,847 | ||||||
| Private Label | 72,896 | 282,038 | ||||||
| FHA | 11,990 | 148,647 | ||||||
| SFR-Fixed Rate | 4,871 | 57,709 | ||||||
| Total Originations | $ | 838,509 | $ | 1,894,346 | ||||
| Total Loan Sales | $ | 1,586,715 | $ | 2,084,211 | ||||
| Total Loan Commitments | $ | 975,132 | $ | 1,836,799 | ||||
For the quarter ended March 31, 2022, the Agency Business generated revenues of
At March 31, 2022, loans held-for-sale was
The Company closed its fourth private label securitization totaling
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled
| Fee-Based Servicing Portfolio ($ in thousands) | ||||||||||||||
| As of March 31, 2022 | As of December 31, 2021 | |||||||||||||
| UPB | Wtd. Avg. Fee | Wtd. Avg. Life (years) | UPB | Wtd. Avg. Fee | Wtd. Avg. Life (years) | |||||||||
| Fannie Mae | $ | 18,781,611 | 0.534 | % | 8.1 | $ | 19,127,397 | 0.535 | % | 8.0 | ||||
| Freddie Mac | 4,792,764 | 0.267 | % | 9.3 | 4,943,905 | 0.271 | % | 9.3 | ||||||
| Private Label | 2,200,206 | 0.200 | % | 8.4 | 1,711,326 | 0.200 | % | 8.3 | ||||||
| FHA | 999,446 | 0.153 | % | 20.9 | 985,063 | 0.154 | % | 21.0 | ||||||
| SFR-Fixed Rate | 190,590 | 0.200 | % | 6.4 | 191,698 | 0.200 | % | 6.5 | ||||||
| Total | $ | 26,964,617 | 0.443 | % | 8.8 | $ | 26,959,389 | 0.449 | % | 8.8 | ||||
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
- Significant growth in the portfolio of
$2.01 billion , or16.5% - Originated 125 loans totaling
$2.83 billion , consisted primarily of multifamily bridge loans totaling$2.69 billion - Payoffs and pay downs on 36 loans totaling
$666.6 million - Committed to fund
$83.3 million single-family rental loans
At March 31, 2022, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was
The average balance of the Company’s loan and investment portfolio during the first quarter of 2022, excluding loan loss reserves, was
During the first quarter of 2022, the Company recorded a
Financing Activity
The Company completed its 18th collateralized securitization vehicle to date totaling
The Company completed the unwind of a previously issued CLO, redeeming
The balance of debt that finances the Company’s loan and investment portfolio at March 31, 2022 was
Capital Markets
The Company issued 7.5 million shares of common stock in a public offering, including the underwriters’ exercise of their over-allotment option, receiving net proceeds of
The Company completed a public offering of 3.3 million additional shares of its
Dividends
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 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 (866) 518-6930 for domestic callers and (203) 518-9797 for international callers. Please use participant passcode ABRQ122 when prompted by the operator.
A telephonic replay of the call will be available until May 13, 2022. The replay dial-in numbers are (800) 839-5152 for domestic callers and (402) 220-2694 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 uncertainties created by 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, 2021 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 the last page of this release.
| 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, | ||||||||
| 2022 | 2021 | |||||||
| Interest income | $ | 166,698 | $ | 91,144 | ||||
| Interest expense | 82,559 | 42,184 | ||||||
| Net interest income | 84,139 | 48,960 | ||||||
| Other revenue: | ||||||||
| Gain on sales, including fee-based services, net | 1,656 | 28,867 | ||||||
| Mortgage servicing rights | 15,312 | 36,936 | ||||||
| Servicing revenue, net | 21,054 | 15,536 | ||||||
| Property operating income | 295 | - | ||||||
| Gain (loss) on derivative instruments, net | 17,386 | (3,220 | ) | |||||
| Other income, net | 3,200 | 681 | ||||||
| Total other revenue | 58,903 | 78,800 | ||||||
| Other expenses: | ||||||||
| Employee compensation and benefits | 42,025 | 42,974 | ||||||
| Selling and administrative | 14,548 | 10,818 | ||||||
| Property operating expenses | 535 | 143 | ||||||
| Depreciation and amortization | 1,983 | 1,755 | ||||||
| Provision for loss sharing (net of recoveries) | (662 | ) | 1,652 | |||||
| Provision for credit losses (net of recoveries) | 2,358 | (1,075 | ) | |||||
| Total other expenses | 60,787 | 56,267 | ||||||
| Income before extinguishment of debt, sale of real estate, income from equity affiliates, and income taxes | 82,255 | 71,493 | ||||||
| Loss on extinguishment of debt | (1,350 | ) | (1,370 | ) | ||||
| Gain on sale of real estate | - | 1,228 | ||||||
| Income from equity affiliates | 7,212 | 22,251 | ||||||
| Provision for income taxes | (8,188 | ) | (12,492 | ) | ||||
| Net income | 79,929 | 81,110 | ||||||
| Preferred stock dividends | 9,056 | 1,888 | ||||||
| Net income attributable to noncontrolling interest | 6,816 | 9,743 | ||||||
| Net income attributable to common stockholders | $ | 64,057 | $ | 69,479 | ||||
| Basic earnings per common share | $ | 0.42 | $ | 0.55 | ||||
| Diluted earnings per common share | $ | 0.40 | $ | 0.55 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 153,420,238 | 125,235,405 | ||||||
| Diluted | 185,431,404 | 143,958,433 | ||||||
| Dividends declared per common share | $ | 0.37 | $ | 0.33 | ||||
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Balance Sheets | ||||||||
| ($ in thousands—except share and per share data) | ||||||||
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 350,814 | $ | 404,580 | ||||
| Restricted cash | 517,090 | 486,690 | ||||||
| Loans and investments, net (allowance for credit losses of | 13,978,283 | 11,981,048 | ||||||
| Loans held-for-sale, net | 336,959 | 1,093,609 | ||||||
| Capitalized mortgage servicing rights, net | 422,036 | 422,734 | ||||||
| Securities held-to-maturity, net (allowance for credit losses of | 161,696 | 140,484 | ||||||
| Investments in equity affiliates | 96,836 | 89,676 | ||||||
| Due from related party | 53,744 | 84,318 | ||||||
| Goodwill and other intangible assets | 99,587 | 100,760 | ||||||
| Other assets | 291,861 | 269,946 | ||||||
| Total assets | $ | 16,308,906 | $ | 15,073,845 | ||||
| Liabilities and Equity: | ||||||||
| Credit facilities and repurchase agreements | $ | 4,302,819 | $ | 4,481,579 | ||||
| Collateralized loan obligations | 7,099,770 | 5,892,810 | ||||||
| Senior unsecured notes | 1,281,489 | 1,280,545 | ||||||
| Convertible senior unsecured notes, net | 262,483 | 259,385 | ||||||
| Junior subordinated notes to subsidiary trust issuing preferred securities | 142,570 | 142,382 | ||||||
| Due to related party | 12,812 | 26,570 | ||||||
| Due to borrowers | 106,796 | 96,641 | ||||||
| Allowance for loss-sharing obligations | 55,172 | 56,064 | ||||||
| Other liabilities | 272,947 | 287,885 | ||||||
| Total liabilities | 13,536,858 | 12,523,861 | ||||||
| Equity: | ||||||||
| Arbor Realty Trust, Inc. stockholders' equity: | ||||||||
| Preferred stock, cumulative, redeemable, | 633,734 | 556,163 | ||||||
| Special voting preferred shares - 16,325,095 shares | ||||||||
| Common stock, | 1,602 | 1,514 | ||||||
| Additional paid-in capital | 1,927,621 | 1,797,913 | ||||||
| Retained earnings | 75,828 | 62,532 | ||||||
| Total Arbor Realty Trust, Inc. stockholders’ equity | 2,638,785 | 2,418,122 | ||||||
| Noncontrolling interest | 133,263 | 131,862 | ||||||
| Total equity | 2,772,048 | 2,549,984 | ||||||
| Total liabilities and equity | $ | 16,308,906 | $ | 15,073,845 | ||||
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||||||||||
| Statement of Income Segment Information - (Unaudited) | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Quarter Ended March 31, 2022 | ||||||||||||||||
| Structured Business | Agency Business | Other / Eliminations (1) | Consolidated | |||||||||||||
| Interest income | $ | 156,260 | $ | 10,438 | $ | - | $ | 166,698 | ||||||||
| Interest expense | 78,202 | 4,357 | - | 82,559 | ||||||||||||
| Net interest income | 78,058 | 6,081 | - | 84,139 | ||||||||||||
| Other revenue: | ||||||||||||||||
| Gain on sales, including fee-based services, net | - | 1,656 | - | 1,656 | ||||||||||||
| Mortgage servicing rights | - | 15,312 | - | 15,312 | ||||||||||||
| Servicing revenue | - | 36,026 | - | 36,026 | ||||||||||||
| Amortization of MSRs | - | (14,972 | ) | - | (14,972 | ) | ||||||||||
| Property operating income | 295 | - | - | 295 | ||||||||||||
| Gain on derivative instruments, net | - | 17,386 | - | 17,386 | ||||||||||||
| Other income, net | 3,196 | 4 | - | 3,200 | ||||||||||||
| Total other revenue | 3,491 | 55,412 | - | 58,903 | ||||||||||||
| Other expenses: | ||||||||||||||||
| Employee compensation and benefits | 15,487 | 26,538 | - | 42,025 | ||||||||||||
| Selling and administrative | 7,409 | 7,139 | - | 14,548 | ||||||||||||
| Property operating expenses | 535 | - | - | 535 | ||||||||||||
| Depreciation and amortization | 810 | 1,173 | - | 1,983 | ||||||||||||
| Provision for loss sharing (net of recoveries) | - | (662 | ) | - | (662 | ) | ||||||||||
| Provision for credit losses (net of recoveries) | 2,069 | 289 | - | 2,358 | ||||||||||||
| Total other expenses | 26,310 | 34,477 | - | 60,787 | ||||||||||||
| Income before extinguishment of debt, income from equity affiliates, and income taxes | 55,239 | 27,016 | - | 82,255 | ||||||||||||
| Loss on extinguishment of debt | (1,350 | ) | - | - | (1,350 | ) | ||||||||||
| Income from equity affiliates | 7,212 | - | - | 7,212 | ||||||||||||
| Provision for income taxes | (1,432 | ) | (6,756 | ) | - | (8,188 | ) | |||||||||
| Net income | 59,669 | 20,260 | - | 79,929 | ||||||||||||
| Preferred stock dividends | 9,056 | - | - | 9,056 | ||||||||||||
| Net income attributable to noncontrolling interest | - | - | 6,816 | 6,816 | ||||||||||||
| Net income attributable to common stockholders | $ | 50,613 | $ | 20,260 | $ | (6,816 | ) | $ | 64,057 | |||||||
(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, 2022 | |||||||||||
| Structured Business | Agency Business | Consolidated | |||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 90,106 | $ | 260,708 | $ | 350,814 | |||||
| Restricted cash | 498,412 | 18,678 | 517,090 | ||||||||
| Loans and investments, net | 13,978,283 | - | 13,978,283 | ||||||||
| Loans held-for-sale, net | - | 336,959 | 336,959 | ||||||||
| Capitalized mortgage servicing rights, net | - | 422,036 | 422,036 | ||||||||
| Securities held-to-maturity, net | - | 161,696 | 161,696 | ||||||||
| Investments in equity affiliates | 96,836 | - | 96,836 | ||||||||
| Goodwill and other intangible assets | 12,500 | 87,087 | 99,587 | ||||||||
| Other assets | 282,065 | 63,540 | 345,605 | ||||||||
| Total assets | $ | 14,958,202 | $ | 1,350,704 | $ | 16,308,906 | |||||
| Liabilities: | |||||||||||
| Debt obligations | $ | 12,787,332 | $ | 301,799 | $ | 13,089,131 | |||||
| Allowance for loss-sharing obligations | - | 55,172 | 55,172 | ||||||||
| Other liabilities | 268,454 | 124,101 | 392,555 | ||||||||
| Total liabilities | $ | 13,055,786 | $ | 481,072 | $ | 13,536,858 | |||||
| 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, | |||||||
| 2022 | 2021 | ||||||
| Net income attributable to common stockholders | $ | 64,057 | $ | 69,479 | |||
| Adjustments: | |||||||
| Net income attributable to noncontrolling interest | 6,816 | 9,743 | |||||
| Income from mortgage servicing rights | (15,312 | ) | (36,936 | ) | |||
| Deferred tax (benefit) provision | (1,720 | ) | 4,486 | ||||
| Amortization and write-offs of MSRs | 27,669 | 18,032 | |||||
| Depreciation and amortization | 2,569 | 2,700 | |||||
| Loss on extinguishment of debt | 1,350 | 1,370 | |||||
| Provision for credit losses, net | 1,696 | (277 | ) | ||||
| (Gain) loss on derivative instruments, net | (298 | ) | 3,220 | ||||
| Stock-based compensation | 6,092 | 3,330 | |||||
| Distributable earnings (1) | $ | 92,919 | $ | 75,147 | |||
| Diluted distributable earnings per share (1) | $ | 0.55 | $ | 0.52 | |||
| Diluted weighted average shares outstanding (1) (2) | 170,363,021 | 143,958,433 | |||||
(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) Beginning in the first quarter of 2022, 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. Excluding the effect of a potential conversion in shares until a conversion occurs is consistent with past treatment and other unrealized adjustments to distributable earnings. For the quarter ended March 31, 2022, the diluted weighted average shares outstanding excluded 15,068,383 of these potentially issuable shares.
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
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, the tax impact on cumulative gains/losses on derivative instruments associated with Private Label loans sold during the periods presented, 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), amortization of the convertible senior notes conversion option (in comparative periods prior to 2022) 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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