• Arbor Realty Trust Reports Fourth Quarter and Full Year 2021 Results and Increases Dividend for Seventh Consecutive Quarter to $0.37 per Share

    المصدر: Nasdaq GlobeNewswire / 18 فبراير 2022 07:00:01   America/Chicago

    Fourth Quarter Highlights:

    • Diversified, annuity-based operating platform with a multifamily focus that generates strong distributable earnings and dividends in all cycles

      • GAAP net income of $0.71 and distributable earnings of $0.57 per diluted common share1
      • Raised cash dividend on common stock to $0.37 per share, our seventh consecutive quarterly increase
      • Successfully raised $533 million of accretive capital to fund the significant growth of our structured portfolio

    Structured Business:

    • Record loan originations of $4.32 billion, a 75% increase over last quarter and our third consecutive quarter of record originations
    • Structured loan portfolio of over $12 billion on substantial growth of 33%
    • Closed a $2.10 billion collateralized securitization vehicle, our largest to date

    Agency Business:

    • Loan originations of $1.89 billion and a servicing portfolio of $27 billion
    • Closed our 3rd private label securitization totaling $535 million

    Full Year Highlights:

    • GAAP net income of $2.28 per diluted common share; distributable earnings of $2.01 per diluted common share1, representing a 15% increase over last year
    • Raised annual dividend run rate to $1.48 per share, a 12% increase from a year ago, and our 10th straight year of dividend growth
    • Leading shareholder return in the commercial mortgage REIT space of 39%
    • Generated industry leading ROE of over 19%
    • Record originations of $16.13 billion, a 76% increase over last year
    • Structured portfolio growth of 122% from record loan originations of $9.72 billion
    • Agency servicing portfolio growth of 9.5% from loan originations of $6.41 billion
    • Raised $1.63 billion of accretive growth capital through several equity and debt offerings
    • Continued success from our industry leading securitization platform closing six new securitizations (4 CLOs, 2 private label) totaling $6.20 billion

    Recent Developments:

    • Closed two securitizations totaling $2.54 billion and raised $75 million of preferred stock

    UNIONDALE, N.Y., Feb. 18, 2022 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the fourth quarter and year ended December 31, 2021. Arbor reported net income for the quarter of $106.0 million, or $0.71 per diluted common share, compared to net income of $96.6 million, or $0.80 per diluted common share for the quarter ended December 31, 2020. Net income for the year was $317.4 million, or $2.28 per diluted common share, compared to $163.4 million, or $1.41 per diluted common share for the year ended December 31, 2020. Distributable earnings for the quarter was $94.2 million, or $0.57 per diluted common share, compared to $67.4 million, or $0.49 per diluted common share for the quarter ended December 31, 2020. Distributable earnings for the year was $313.7 million, or $2.01 per diluted common share, compared to $234.9 million, or $1.75 per diluted common share for the year ended December 31, 2020.1

    Agency Business

    Loan Origination Platform

      Agency Loan Volume (in thousands)
      Quarter Ended Year Ended
      December 31, 2021 September 30, 2021 December 31, 2021 December 31, 2020
    Fannie Mae$968,105 $719,730 $3,389,312 $5,041,925
    Freddie Mac 437,847  307,664  1,016,142  960,508
    Private Label 282,038  625,176  1,436,853  382,191
    FHA  148,647  84,430  430,320  327,345
    SFR-Fixed Rate 57,709  67,227  136,931  -
    Total Originations$1,894,346 $1,804,227 $6,409,558 $6,711,969
             
    Total Loan Sales$2,084,211 $1,006,958 $6,415,169 $6,587,728
             
    Total Loan Commitments$1,836,799 $1,856,474 $6,347,752 $6,810,666
             

    For the quarter ended December 31, 2021, the Agency Business generated revenues (excluding gains and losses on derivative instruments) of $107.1 million, compared to $79.7 million for the third quarter of 2021. Gain on sales, including fee-based services, net was $36.9 million for the quarter, reflecting a margin of 1.77%, compared to $16.3 million and 1.62% for the third quarter of 2021. Income from mortgage servicing rights was $34.5 million for the quarter, reflecting a rate of 1.88% as a percentage of loan commitments, compared to $32.5 million and 1.75% for the third quarter of 2021.  

    At December 31, 2021, loans held-for-sale was $1.09 billion which was primarily comprised of unpaid principal balances totaling $1.08 billion, with financing associated with these loans totaling $956.3 million.

    The Company closed its third private label securitization totaling $535.0 million. The Company originated and sold multifamily mortgage loans to the securitization and is the primary servicer. The Company retained subordinate certificate interests in the securitization of $47.5 million, in satisfaction of credit risk retention requirements.

    Fee-Based Servicing Portfolio

    The Company’s fee-based servicing portfolio totaled $26.96 billion at December 31, 2021 and excludes $507.9 million of private label loans originated that were not yet securitized. Servicing revenue, net was $23.9 million for the quarter and consisted of servicing revenue of $38.8 million, net of amortization of mortgage servicing rights totaling $14.9 million.

      Fee-Based Servicing Portfolio ($ in thousands)
      As of December 31, 2021 As of September 30, 2021
      UPBWtd. Avg. FeeWtd. Avg. Life (years) UPBWtd. Avg. FeeWtd. Avg. Life (years)
    Fannie Mae $19,127,397 0.535%8.0 $19,271,5270.532%8.4
    Freddie Mac  4,943,905 0.271%9.3  4,726,5870.281%9.8
    Private Label  1,711,326 0.200%8.3  1,176,3910.200%8.8
    FHA  985,063 0.154%21.0  933,5190.156%21.4
    SFR-Fixed Rate 191,698 0.200%6.5  104,0940.200%5.7
    Total $26,959,389 0.449%8.8 $26,212,1180.457%9.1
             

    Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.4 million for the fair value of the guarantee obligation undertaken at December 31, 2021. The Company recorded a $5.1 million reversal of provision for loss sharing associated with CECL for the fourth quarter of 2021. At December 31, 2021, the Company’s total CECL allowance for loss-sharing obligations was $21.7 million, representing 0.11% of the Fannie Mae servicing portfolio.

    Structured Business

    Portfolio and Investment Activity

    Quarter ended December 31, 2021:

    • Substantial growth in the portfolio of $2.99 billion, or 32.6%
    • Originated 156 loans totaling $4.32 billion, consisted primarily of multifamily bridge loans totaling $4.13 billion
    • Payoffs and pay downs on 60 loans totaling $1.05 billion
    • Committed to fund $321.2 million single-family rental loans

    Year ended December 31, 2021:

    • Record portfolio growth of $6.68 billion, or 122.1%
    • Originated 422 loans totaling $9.72 billion, consisted primarily of multifamily bridge loans totaling $9.10 billion
    • Payoffs and pay downs totaling $2.52 billion
    • Committed to fund $729.5 million single-family rental loans
    • $34.6 million of income generated by our residential mortgage banking joint venture

    At December 31, 2021, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $12.16 billion, with a weighted average current interest pay rate of 4.26%, compared to $9.17 billion and 4.56% at September 30, 2021. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 4.62% at December 31, 2021, compared to 4.97% at September 30, 2021.

    The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2021, excluding loan loss reserves, was $10.46 billion with a weighted average yield of 5.03%, compared to $8.18 billion and 5.55% for the third quarter of 2021. The decrease in average yield was primarily due to lower rates on originations when compared to runoff.

    During the fourth quarter of 2021, the Company recorded a $10.3 million reversal of provision for loan losses associated with CECL on the Company’s loan and investment portfolio. At December 31, 2021, the Company’s total allowance for loan losses was $113.2 million. The Company had three non-performing loans with a carrying value of $22.7 million, before related loan loss reserves of $2.6 million, compared to six loans with a carrying value of $55.6 million, before related loan loss reserves of $2.6 million as of September 30, 2021.

    Financing Activity

    The Company completed its largest collateralized securitization vehicle to date totaling $2.10 billion of real estate related assets and cash. Investment grade-rated notes totaling $1.71 billion were issued, and the Company retained subordinate interests in the issuing vehicle of $385.9 million. The facility has a two-and-a-half-year asset replenishment period and an initial weighted average interest rate of 1.68% over LIBOR, excluding fees and transaction costs.

    The Company completed the unwind of a previously issued CLO, redeeming $533.0 million of outstanding notes, which were repaid primarily from the refinancing of the remaining assets primarily within the $2.10 billion CLO described above, as well as with cash held by this CLO, and expensed $2.0 million of deferred financing fees into loss on extinguishment of debt on the consolidated statements of income.

    The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2021 was $11.17 billion with a weighted average interest rate including fees of 2.61% as compared to $8.58 billion and a rate of 2.64% at September 30, 2021. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2021 was $9.38 billion, as compared to $7.31 billion for the third quarter of 2021. The average cost of borrowings for the fourth quarter of 2021 was 2.65%, compared to 2.76% for the third quarter of 2021.

    Capital Markets

    The Company raised a substantial amount of accretive capital to fund its significant growth primarily through the following transactions:

    • A public offering of 8.05 million shares of 6.25% Series F fixed-to-floating cumulative redeemable preferred stock, including the underwriters’ exercise of their over-allotment option, generating net proceeds of $194.8 million

    • Issuance of $180.0 million of 5.00% senior unsecured notes due in 2028 in a private placement, generating net proceeds of $177.2 million

    • Issuance of 7.91 million shares of common stock in a public offering receiving net proceeds of $153.9 million

    Dividends

    The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.37 per share of common stock for the quarter ended December 31, 2021, the Company’s seventh consecutive quarterly increase, representing a 23% increase over that time span. The dividend is payable on March 18, 2022 to common stockholders of record on March 4, 2022. The ex-dividend date is March 3, 2022.

    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 http://www.arbor.com in the investor relations section of the Company’s website. Those without web access should 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 ABRQ421 when prompted by the operator.

    A telephonic replay of the call will be available until February 25, 2022. The replay dial-in numbers are (800) 753-9146 for domestic callers and (402) 220-2705 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
    ($ in thousands—except share and per share data)
              
       Quarter Ended December 31, Year Ended December 31,
        2021   2020   2021   2020 
       (Unaudited) (Unaudited)    
    Interest income $144,315  $86,157  $466,087  $339,465 
    Interest expense  67,883   40,044   212,005   169,216 
     Net interest income  76,432   46,113   254,082   170,249 
              
    Other revenue:        
    Gain on sales, including fee-based services, net  36,935   34,041   123,037   94,607 
    Mortgage servicing rights  34,542   68,809   130,230   165,517 
    Servicing revenue, net  23,875   14,229   74,814   54,385 
    Property operating income  185   -   185   3,976 
    Gain (loss) on derivative instruments, net  4,636   518   (2,684)  (58,335)
    Other income, net  3,425   706   7,566   4,109 
     Total other revenue  103,598   118,303   333,148   264,259 
              
    Other expenses:        
    Employee compensation and benefits  43,149   42,728   171,796   144,380 
    Selling and administrative  11,868   8,334   45,575   37,348 
    Property operating expenses  297   120   718   4,898 
    Depreciation and amortization  1,865   1,810   7,215   7,640 
    Provision for loss sharing (net of recoveries)  (5,096)  (6,884)  (6,167)  14,822 
    Provision for credit losses (net of recoveries)  (8,424)  1,600   (21,113)  61,110 
     Total other expenses  43,659   47,708   198,024   270,198 
              
    Income before extinguishment of debt, gain (loss) on real estate, income from equity affiliates, and income taxes        
      136,371   116,708   389,206   164,310 
    Loss on extinguishment of debt  (2,004)  -   (3,374)  (3,546)
    Gain (loss) on real estate  2,466   1,493   3,693   (375)
    Income from equity affiliates  2,472   19,402   34,567   76,161 
    Provision for income taxes  (12,929)  (24,901)  (46,285)  (40,393)
              
    Net income  126,376   112,702   377,807   196,157 
              
    Preferred stock dividends  8,672   1,888   21,888   7,554 
    Net income attributable to noncontrolling interest  11,701   14,197   38,507   25,208 
    Net income attributable to common stockholders $106,003  $96,617  $317,412  $163,395 
              
    Basic earnings per common share $0.72  $0.81  $2.30  $1.44 
    Diluted earnings per common share $0.71  $0.80  $2.28  $1.41 
              
    Weighted average shares outstanding:        
     Basic  147,899,133   119,875,315   137,830,691   113,811,471 
     Diluted  166,104,325   138,630,532   156,089,595   133,969,296 
              
    Dividends declared per common share $0.36  $0.32  $1.38  $1.23 
              


    ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    ($ in thousands—except share and per share data)
            
         December 31, December 31,
         2021  2020 
            
    Assets:    
    Cash and cash equivalents $404,580 $339,528 
    Restricted cash  486,690  197,470 
    Loans and investments, net (allowance for credit losses of $113,241 and $148,329)  11,981,048  5,285,868 
    Loans held-for-sale, net  1,093,609  986,919 
    Capitalized mortgage servicing rights, net  422,734  379,974 
    Securities held-to-maturity, net (allowance for credit losses of $1,753 and $1,644)  140,484  95,524 
    Investments in equity affiliates  89,676  74,274 
    Due from related party  84,318  12,449 
    Goodwill and other intangible assets  100,760  105,451 
    Other assets  269,946  183,529 
    Total assets $15,073,845 $7,660,986 
            
    Liabilities and Equity:    
    Credit and repurchase facilities $4,481,579 $2,234,883 
    Collateralized loan obligations  5,892,810  2,517,309 
    Senior unsecured notes  1,280,545  662,843 
    Convertible senior unsecured notes, net  259,385  267,973 
    Junior subordinated notes to subsidiary trust issuing preferred securities  142,382  141,656 
    Due to related party  26,570  2,365 
    Due to borrowers  96,641  89,325 
    Allowance for loss-sharing obligations  56,064  64,303 
    Other liabilities  287,885  197,644 
    Total liabilities  12,523,861  6,178,301 
            
    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:  556,163  89,472 
       Special voting preferred shares, 16,325,095 and 17,560,633 shares    
       8.25% Series A, 0 and 1,551,500 shares    
       7.75% Series B, 0 and 1,260,000 shares    
       8.50% Series C, 0 and 900,000 shares    
       6.375% Series D, 9,200,000 and 0 shares    
       6.25% Series E, 5,750,000 and 0 shares    
       6.25% Series F, 8,050,000 and 0 shares    
      Common stock, $0.01 par value: 500,000,000 shares authorized, 151,362,181    
       and 123,181,173 shares issued and outstanding  1,514  1,232 
      Additional paid-in capital  1,797,913  1,317,109 
      Retained earnings (accumulated deficit)  62,532  (63,442)
    Total Arbor Realty Trust, Inc. stockholders’ equity  2,418,122  1,344,371 
            
    Noncontrolling interest  131,862  138,314 
    Total equity  2,549,984  1,482,685 
            
    Total liabilities and equity $15,073,845 $7,660,986 
            


    ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
    Statement of Income Segment Information - (Unaudited)
    (in thousands)
              
       Quarter Ended December 31, 2021
              
       Structured
    Business
     Agency
    Business
     Other /
    Eliminations (1)
     Consolidated
              
    Interest income $132,622  $11,693  $-  $144,315 
    Interest expense  62,640   5,243   -   67,883 
     Net interest income  69,982   6,450   -   76,432 
              
    Other revenue:        
    Gain on sales, including fee-based services, net  -   36,935   -   36,935 
    Mortgage servicing rights  -   34,542   -   34,542 
    Servicing revenue  -   38,747   -   38,747 
    Amortization of MSRs  -   (14,872)  -   (14,872)
    Property operating income  185   -   -   185 
    Gain on derivative instruments, net  -   4,636   -   4,636 
    Other income, net  3,385   40   -   3,425 
     Total other revenue  3,570   100,028   -   103,598 
              
    Other expenses:        
    Employee compensation and benefits  13,659   29,490   -   43,149 
    Selling and administrative  5,586   6,282   -   11,868 
    Property operating expenses  297   -   -   297 
    Depreciation and amortization  692   1,173   -   1,865 
    Provision for loss sharing (net of recoveries)  -   (5,096)  -   (5,096)
    Provision for credit losses (net of recoveries)  (8,416)  (8)  -   (8,424)
     Total other expenses  11,818   31,841   -   43,659 
              
    Income before extinguishment of debt, gain on real estate, income from equity affiliates, and income taxes        
      61,734   74,637   -   136,371 
              
    Loss on extinguishment of debt  (2,004)  -   -   (2,004)
    Gain on real estate  2,466   -   -   2,466 
    Income from equity affiliates  2,472   -   -   2,472 
    Benefit from (provision for) income taxes  348   (13,277)  -   (12,929)
              
    Net income  65,016   61,360   -   126,376 
              
    Preferred stock dividends  8,672   -   -   8,672 
    Net income attributable to noncontrolling interest  -   -   11,701   11,701 
    Net income attributable to common stockholders $56,344  $61,360  $(11,701) $106,003 
              
    (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)
              
         December 31, 2021
         Structured
    Business
     Agency
    Business
     Consolidated
    Assets:       
    Cash and cash equivalents $142,771 $261,809 $404,580
    Restricted cash  468,013  18,677  486,690
    Loans and investments, net  11,981,048  -  11,981,048
    Loans held-for-sale, net  -  1,093,609  1,093,609
    Capitalized mortgage servicing rights, net -  422,734  422,734
    Securities held-to-maturity, net  -  140,484  140,484
    Investments in equity affiliates  89,676  -  89,676
    Goodwill and other intangible assets  12,500  88,260  100,760
    Other assets  285,600  68,664  354,264
    Total assets $12,979,608 $2,094,237 $15,073,845
              
    Liabilities:      
    Debt obligations $11,100,429 $956,272 $12,056,701
    Allowance for loss-sharing obligations  -  56,064  56,064
    Other liabilities  278,726  132,370  411,096
    Total liabilities $11,379,155 $1,144,706 $12,523,861
              


    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 December 31, Year Ended December 31,
      2021   2020   2021   2020 
                    
    Net income attributable to common stockholders$106,003  $96,617  $317,412  $163,395 
            
    Adjustments:       
    Net income attributable to noncontrolling interest 11,701   14,197   38,507   25,208 
    Income from mortgage servicing rights (34,542)  (68,809)  (130,230)  (165,517)
    Deferred tax provision 201   9,898   10,892   4,726 
    Amortization and write-offs of MSRs 29,268   17,241   91,356   65,979 
    Depreciation and amortization 2,763   2,755   10,900   11,486 
    Loss on extinguishment of debt 2,004   -   3,374   3,546 
    Provision for credit losses, net (21,646)  (5,742)  (39,856)  73,402 
    (Gain) loss on derivative instruments, net (1,053)  (518)  432   43,596 
    Gain on real estate from settlement of loan (2,466)  -   (2,466)  - 
    Stock-based compensation 1,943   1,761   9,929   9,046 
    Loss on redemption of preferred stock -   -   3,479   - 
            
    Distributable earnings (1)$94,176  $67,400  $313,729  $234,867 
            
    Diluted distributable earnings per share (1)$0.57  $0.49  $2.01  $1.75 
            
    Diluted weighted average shares outstanding (1) 166,104,325   138,630,532   156,089,595   133,969,296 
            
    (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.
     
    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, 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 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. Loans are deemed nonrecoverable upon the earlier of: (i) 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 (ii) 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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