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

Company Highlights:

• GAAP net income of $0.25 and distributable earnings of $0.45, per diluted common share¹
• Declares cash dividend on common stock of $0.43 per share
• Strong liquidity position with ~$725 million in cash and liquidity and ~$215 million of CLO restricted cash²
• Agency loan originations of $1.15 billion; a servicing portfolio of ~$32.28 billion, up 3%
• Structured loan originations of $227.2 million, runoff of $629.6 million and a portfolio of ~$11.87 billion
• Redeemed our 5.75% senior notes at maturity for ~$90.0 million
• Repurchased $11.4 million of common stock at an average price of $12.19 per share
  
  

UNIONDALE, N.Y., Aug. 02, 2024 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the second quarter ended June 30, 2024. Arbor reported net income for the quarter of $47.4 million, or $0.25 per diluted common share, compared to net income of $76.2 million, or $0.41 per diluted common share for the quarter ended June 30, 2023. Distributable earnings for the quarter was $91.6 million, or $0.45 per diluted common share, compared to $114.0 million, or $0.57 per diluted common share for the quarter ended June 30, 2023.

Agency Business

Loan Origination Platform

		Agency Loan Volume (in thousands)
		Quarter Ended
		June 30, 2024			March 31, 2024
Fannie Mae		$	742,724		$	458,429
Freddie Mac			346,821			370,102
Private Label			34,714			15,410
SFR-Fixed Rate			24,996			2,318
Total Originations		$	1,149,255		$	846,259
Total Loan Sales		$	1,135,287		$	1,085,374
Total Loan Commitments		$	1,099,713		$	934,243

For the quarter ended June 30, 2024, the Agency Business generated revenues of $76.8 million, compared to $66.6 million for the first quarter of 2024. Gain on sales, including fee-based services, net was $17.4 million for the quarter, reflecting a margin of 1.54%, compared to $16.7 million and 1.54% for the first quarter of 2024. Income from mortgage servicing rights was $14.5 million for the quarter, reflecting a rate of 1.32% as a percentage of loan commitments, compared to $10.2 million and 1.32% (excluding $160.2 million of loan commitments not serviced for a fee) for the first quarter of 2024.

At June 30, 2024, loans held-for-sale was $342.9 million, with financing associated with these loans totaling $335.2 million.

Fee-Based Servicing Portfolio

The Company's fee-based servicing portfolio totaled $32.28 billion at June 30, 2024. Servicing revenue, net was $29.9 million for the quarter and consisted of servicing revenue of $46.8 million, net of amortization of mortgage servicing rights totaling $16.9 million.

		Fee-Based Servicing Portfolio ($ in thousands)
		June 30, 2024							March 31, 2024
		UPB			Wtd. Avg. Fee (bps)		Wtd. Avg. Life (years)		UPB			Wtd. Avg. Fee (bps)		Wtd. Avg. Life (years)
Fannie Mae		$	22,114,193		46.7		7.0		$	21,548,221		47.1		7.2
Freddie Mac			5,587,178		22.7		7.4			5,301,291		23.4		7.7
Private Label			2,547,308		18.9		6.0			2,524,013		18.9		6.3
FHA			1,369,507		14.4		18.9			1,365,329		14.4		19.0
Bridge			380,547		10.9		3.4			380,712		10.9		3.6
SFR-Fixed Rate			279,962		20.1		4.9			265,429		20.1		5.0
Total		$	32,278,695		38.4		7.5		$	31,384,995		38.8		7.7

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan ("loss-sharing obligations") and includes $34.8 million for the fair value of the guarantee obligation undertaken at June 30, 2024. The Company recorded a $4.4 million net provision for loss sharing associated with CECL for the second quarter of 2024. At June 30, 2024, the Company's total CECL allowance for loss-sharing obligations was $41.8 million, representing 0.19% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

		Structured Portfolio Activity ($ in thousands)
		Quarter Ended
		June 30, 2024						March 31, 2024
		UPB			%			UPB			%
Bridge:
Multifamily		$	19,650		9	%		$	39,235		15	%
SFR			185,500		82	%			171,490		67	%
Land			10,350		4	%			—		—	%
			215,500		95	%			210,725		82	%
								.
Mezzanine/Preferred Equity			11,684		5	%			45,129		18	%
Total Originations		$	227,184		100	%		$	255,854		100	%
Number of Loans Originated			45						59
SFR Commitments		$	277,260					$	411,617
Loan Runoff		$	629,641					$	640,018

		Structured Portfolio ($ in thousands)
		June 30, 2024						March 31, 2024
		UPB			%			UPB			%
Bridge:
Multifamily		$	9,679,128		82	%		$	10,254,756		84	%
SFR			1,622,269		14	%			1,445,028		12	%
Other			176,855		1	%			166,505		1	%
			11,478,252		97	%			11,866,289		97	%
Mezzanine/Preferred Equity			389,981		3	%			377,845		3	%
SFR Permanent			4,975		<1	%			5,728		<1	%
Total Portfolio		$	11,873,208		100	%		$	12,249,862		100	%

At June 30, 2024, the loan and investment portfolio's unpaid principal balance ("UPB"), excluding loan loss reserves, was $11.87 billion, with a weighted average interest rate of 7.79%, compared to $12.25 billion and 8.07% at March 31, 2024. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average interest rate was 8.60% at June 30, 2024, compared to 8.81% at March 31, 2024. The decrease in rate was primarily due to an increase in non-performing loans and new non-accrual loans in the second quarter of 2024.

The average balance of the Company's loan and investment portfolio during the second quarter of 2024, excluding loan loss reserves, was $12.15 billion with a weighted average yield of 8.99%, compared to $12.52 billion and 9.44% for the first quarter of 2024.

During the second quarter of 2024, the Company recorded a $28.9 million provision for loan losses associated with CECL. At June 30, 2024, the Company's total allowance for loan losses was $238.9 million. The Company had 24 non-performing loans with a UPB of $676.2 million, before related loan loss reserves of $28.1 million, compared to twenty-one loans with a UPB of $464.8 million, before loan loss reserves of $32.9 million at March 31, 2024.

In addition, at June 30, 2024, the Company had fourteen loans with a total UPB of $367.9 million (before related loan loss reserves of $15.0 million) that were less than 60 days past due, compared to twelve loans with a total UPB of $489.4 million at March 31, 2024. Interest income on these loans is only being recorded to the extent cash is received.

During the second quarter of 2024, the Company modified twenty-eight loans with a total UPB of $733.3 million. Fifteen of these loans with a total UPB of $398.1 million, contained interest rates based on pricing over SOFR ranging from 3.25% to 5.25%. 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 June 30, 2024, these modified loans had a weighted average pay rate of 7.18% and a weighted average accrual rate of 2.14%. A portion of these loans totaling $92.7 million were less than 60 days past due and $62.0 million were non-performing at March 31, 2024, and are now current in accordance with their modified terms.

Financing Activity

The balance of debt that finances the Company's loan and investment portfolio at June 30, 2024 was $10.26 billion with a weighted average interest rate including fees of 7.53%, as compared to $11.11 billion and a rate of 7.44% at March 31, 2024.

The average balance of debt that finances the Company's loan and investment portfolio for the second quarter of 2024 was $10.81 billion, as compared to $11.37 billion for the first quarter of 2024. The average cost of borrowings for the second quarter of 2024 was 7.54%, compared to 7.50% for the first quarter of 2024.

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 June 30, 2024. The dividend is payable on August 30, 2024 to common stockholders of record on August 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) 274-8461 for domestic callers and (203) 518-9843 for international callers. Please use participant passcode ABRQ224 when prompted by the operator.

A telephonic replay of the call will be available until August 9, 2024. The replay dial-in numbers are (800) 938-2487 for domestic callers and (402) 220-9026 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 July 31, 2024.

Contact:	Arbor Realty Trust, Inc. Paul Elenio, Chief Financial Officer 516-506-4422 [email protected]

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Income - (Unaudited) ($ in thousands—except share and per share data)
		Quarter Ended June 30,								Six Months Ended June 30,
			2024				2023				2024				2023
Interest income		$	297,188			$	335,737			$	618,480			$	663,685
Interest expense			209,227				227,195				426,903				446,569
Net interest income			87,961				108,542				191,577				217,116
Other revenue:
Gain on sales, including fee-based services, net			17,448				22,587				34,114				37,176
Mortgage servicing rights			14,534				16,201				24,733				34,659
Servicing revenue, net			29,910				32,347				61,436				61,913
Property operating income			1,444				1,430				3,014				2,811
Loss on derivative instruments, net			(275	)			(7,384	)			(5,533	)			(3,161	)
Other income, net			2,081				45				4,414				4,923
Total other revenue			65,142				65,226				122,178				138,321
Other expenses:
Employee compensation and benefits			42,836				41,310				90,529				83,708
Selling and administrative			12,823				12,584				26,756				26,207
Property operating expenses			1,584				1,365				3,262				2,747
Depreciation and amortization			2,423				2,387				4,994				5,011
Provision for loss sharing (net of recoveries)			4,333				7,672				4,607				10,848
Provision for credit losses (net of recoveries)			29,564				13,878				48,682				36,395
Total other expenses			93,563				79,196				178,830				164,916
Income before extinguishment of debt, sale of real estate, income from equity affiliates and income taxes			59,540				94,572				134,925				190,521
Loss on extinguishment of debt			(412	)			(1,247	)			(412	)			(1,247	)
Gain on sale of real estate			3,813				—				3,813				—
Income from equity affiliates			2,793				5,560				4,211				19,886
Provision for income taxes			(3,901	)			(5,553	)			(7,493	)			(13,582	)
Net income			61,833				93,332				135,044				195,578
Preferred stock dividends			10,342				10,342				20,684				20,684
Net income attributable to noncontrolling interest			4,094				6,826				9,090				14,411
Net income attributable to common stockholders		$	47,397			$	76,164			$	105,270			$	160,483
Basic earnings per common share		$	0.25			$	0.42			$	0.56			$	0.88
Diluted earnings per common share		$	0.25			$	0.41			$	0.56			$	0.87
Weighted average shares outstanding:
Basic			188,655,801				181,815,469				188,683,095				181,468,002
Diluted			205,487,711				216,061,876				205,499,619				215,489,604
Dividends declared per common share		$	0.43			$	0.42			$	0.86			$	0.82

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets ($ in thousands—except share and per share data)
		June 30, 2024			December 31, 2023
		(Unaudited)
Assets:
Cash and cash equivalents		$	737,485		$	928,974
Restricted cash			218,228			608,233
Loans and investments, net (allowance credit losses of $238,923 and $195,664)			11,603,944			12,377,806
Loans held-for-sale, net			342,870			551,707
Capitalized mortgage servicing rights, net			380,719			391,254
Securities held-to-maturity, net (allowance credit losses of $9,132 and $6,256)			156,080			155,279
Investments in equity affiliates			72,872			79,303
Due from related party			105,097			64,421
Goodwill and other intangible assets			89,032			91,378
Other assets			490,885			490,281
Total assets		$	14,197,212		$	15,738,636
Liabilities and Equity:
Credit and repurchase facilities		$	3,160,384		$	3,237,827
Securitized debt			5,716,513			6,935,010
Senior unsecured notes			1,245,956			1,333,968
Convertible senior unsecured notes			284,473			283,118
Junior subordinated notes to subsidiary trust issuing preferred securities			144,275			143,896
Due to related party			2,709			13,799
Due to borrowers			75,837			121,707
Allowance for loss-sharing obligations			76,561			71,634
Other liabilities			303,865			343,072
Total liabilities			11,010,573			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 - 188,548,879 and 188,505,264 shares issued and outstanding			1,885			1,885
Additional paid-in capital			2,361,466			2,367,188
Retained earnings			57,894			115,216
Total Arbor Realty Trust, Inc. stockholders' equity			3,054,929			3,117,973
Noncontrolling interest			131,710			136,632
Total equity			3,186,639			3,254,605
Total liabilities and equity		$	14,197,212		$	15,738,636

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Statement of Income Segment Information - (Unaudited) (in thousands)
		Quarter Ended June 30, 2024
		Structured Business				Agency Business				Other (1)				Consolidated
Interest income		$	282,077			$	15,111			$	—			$	297,188
Interest expense			203,062				6,165				—				209,227
Net interest income			79,015				8,946				—				87,961
Other revenue:
Gain on sales, including fee-based services, net			—				17,448				—				17,448
Mortgage servicing rights			—				14,534				—				14,534
Servicing revenue			—				46,797				—				46,797
Amortization of MSRs			—				(16,887	)			—				(16,887	)
Property operating income			1,444				—				—				1,444
Loss on derivative instruments, net			—				(275	)			—				(275	)
Other income, net			1,975				106				—				2,081
Total other revenue			3,419				61,723				—				65,142
Other expenses:
Employee compensation and benefits			15,805				27,031				—				42,836
Selling and administrative			5,828				6,995				—				12,823
Property operating expenses			1,584				—				—				1,584
Depreciation and amortization			1,250				1,173				—				2,423
Provision for loss sharing (net of recoveries)			—				4,333				—				4,333
Provision for credit losses (net of recoveries)			28,030				1,534				—				29,564
Total other expenses			52,497				41,066				—				93,563
Income before extinguishment of debt, sale of real estate, income from equity affiliates and income taxes			29,937				29,603				—				59,540
Loss on extinguishment of debt			(412	)			—				—				(412	)
Gain on sale of real estate			3,813				—				—				3,813
Income from equity affiliates			2,793				—				—				2,793
Benefit from (provision for) income taxes			865				(4,766	)			—				(3,901	)
Net income			36,996				24,837				—				61,833
Preferred stock dividends			10,342				—				—				10,342
Net income attributable to noncontrolling interest			—				—				4,094				4,094
Net income attributable to common stockholders		$	26,654			$	24,837			$	(4,094	)		$	47,397

(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)
		June 30, 2024
		Structured Business			Agency Business			Consolidated
Assets:
Cash and cash equivalents		$	272,614		$	464,871		$	737,485
Restricted cash			203,223			15,005			218,228
Loans and investments, net			11,603,944			—			11,603,944
Loans held-for-sale, net			—			342,870			342,870
Capitalized mortgage servicing rights, net			—			380,719			380,719
Securities held-to-maturity, net			—			156,080			156,080
Investments in equity affiliates			72,872			—			72,872
Goodwill and other intangible assets			12,500			76,532			89,032
Other assets and due from related party			521,039			74,943			595,982
Total assets		$	12,686,192		$	1,511,020		$	14,197,212
Liabilities:
Debt obligations		$	10,216,430		$	335,171		$	10,551,601
Allowance for loss-sharing obligations			—			76,561			76,561
Other liabilities and due to related party			305,813			76,598			382,411
Total liabilities		$	10,522,243		$	488,330		$	11,010,573

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 June 30,								Six Months Ended June 30,
			2024				2023				2024				2023
Net income attributable to common stockholders		$	47,397			$	76,164			$	105,270			$	160,483
Adjustments:
Net income attributable to noncontrolling interest			4,094				6,826				9,090				14,411
Income from mortgage servicing rights			(14,534	)			(16,201	)			(24,733	)			(34,659	)
Deferred tax benefit			(2,944	)			(7,360	)			(6,896	)			(4,197	)
Amortization and write-offs of MSRs			19,518				21,204				37,936				39,927
Depreciation and amortization			3,044				4,058				6,239				8,353
Loss on extinguishment of debt			412				1,247				412				1,247
Provision for credit losses, net			31,457				16,810				46,260				40,515
Loss on derivative instruments, net			371				8,085				5,894				1,034
Stock-based compensation			2,750				3,193				8,772				9,094
Distributable earnings (1)		$	91,565			$	114,026			$	188,244			$	236,208
Diluted distributable earnings per share (1)		$	0.45			$	0.57			$	0.92			$	1.19
Diluted weighted average shares outstanding (1) (2)			205,487,711				198,791,261				205,499,619				198,239,006

(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 exclude the potential shares issuable upon conversion and settlement of the Company's convertible senior notes principal balance.

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.