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Arbor Realty Trust Reports Second Quarter 2022 Results and Increases Dividend for Ninth Consecutive Quarter to $0.39 per Share
المصدر: Nasdaq GlobeNewswire / 29 يوليو 2022 08:00:52 America/New_York
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 $0.41 and distributable earnings of $0.52 per diluted common share1
- Raised cash dividend on common stock to $0.39 per share, our 9th consecutive quarterly increase, representing a 30% increase over that time span
- Distributable earnings well in excess of current dividend, representing a 75% payout ratio
- Structured portfolio net interest income increased $10.8 million compared to 1Q22 from strong portfolio growth and increases in interest rates
Structured Business:
- Loan portfolio surpasses $15.00 billion, representing growth of 6% on $2.05 billion of loan originations
- Closed a $1.05 billion collateralized securitization vehicle
Agency Business:
- Loan originations of $1.27 billion and a servicing portfolio of $26.77 billion
UNIONDALE, N.Y., July 29, 2022 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the second quarter ended June 30, 2022. Arbor reported net income for the quarter of $69.9 million, or $0.41 per diluted common share, compared to net income of $69.1 million, or $0.51 per diluted common share for the quarter ended June 30, 2021. Distributable earnings for the quarter was $93.7 million, or $0.52 per diluted common share, compared to $68.8 million, or $0.45 per diluted common share for the quarter ended June 30, 2021.1
Agency Business
Loan Origination Platform
Agency Loan Volume (in thousands) Quarter Ended June 30, 2022 March 31, 2022 Fannie Mae $ 665,449 $ 449,680 Freddie Mac 407,691 299,072 Private Label 83,346 72,896 FHA 78,364 11,990 SFR-Fixed Rate 34,334 4,871 Total Originations $ 1,269,184 $ 838,509 Total Loan Sales $ 1,030,703 $ 1,586,715 Total Loan Commitments $ 1,184,282 $ 975,132 For the quarter ended June 30, 2022, the Agency Business generated revenues of $68.8 million, compared to $65.9 million for the first quarter of 2022. Gain on sales, including fee-based services, net on the GSE/Agency business was $16.2 million for the quarter, reflecting a margin of 1.59%, compared to $15.3 million and 1.39% for the first quarter of 2022. Income from mortgage servicing rights was $17.6 million for the quarter, reflecting a rate of 1.48% as a percentage of loan commitments, compared to $15.3 million and 1.57% for the first quarter of 2022.
At June 30, 2022, loans held-for-sale was $518.9 million which was primarily comprised of unpaid principal balances (“UPB”) totaling $519.1 million, with financing associated with these loans totaling $455.6 million.
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled $26.77 billion at June 30, 2022 and excludes $106.0 million of private label loans originated that were not yet securitized. Servicing revenue, net was $20.7 million for the quarter and consisted of servicing revenue of $35.5 million, net of amortization of mortgage servicing rights totaling $14.8 million.
Fee-Based Servicing Portfolio ($ in thousands) As of June 30, 2022 As of March 31, 2022 UPB Wtd. Avg. Fee Wtd. Avg. Life (years) UPB Wtd. Avg. Fee Wtd. Avg. Life (years) Fannie Mae $ 18,600,196 0.526 % 8.2 $ 18,781,611 0.534 % 8.1 Freddie Mac 4,805,068 0.264 % 9.5 4,792,764 0.267 % 9.3 Private Label 2,061,813 0.200 % 8.4 2,200,206 0.200 % 8.4 FHA 1,076,237 0.151 % 19.5 999,446 0.153 % 20.9 SFR-Fixed Rate 226,568 0.200 % 6.3 190,590 0.200 % 6.4 Total $ 26,769,882 0.436 % 8.9 $ 26,964,617 0.443 % 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 $34.3 million for the fair value of the guarantee obligation undertaken at June 30, 2022. The Company recorded a $2.1 million reversal of provision for loss sharing associated with CECL for the second quarter of 2022, which included a $1.2 million recovery. At June 30, 2022, the Company’s total CECL allowance for loss-sharing obligations was $18.7 million, representing 0.10% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
Structured Portfolio Activity ($ in thousands) Quarter Ended June 30, 2022 March 31, 2022 UPB % UPB % Bridge: Multifamily $ 1,892,618 92 % $ 2,687,309 95 % SFR 154,981 8 % 133,407 5 % 2,047,599 100 % 2,820,716 100 % Mezzanine/Preferred Equity - - % 8,139 < 1 % Total Originations $ 2,047,599 100 % $ 2,828,855 100 % Number of Loans Originated 91 125 SFR Commitments $ 185,201 $ 83,306 Payoffs and Paydowns $ 1,122,407 $ 666,551 Structured Portfolio ($ in thousands) As of June 30, 2022 As of March 31, 2022 UPB % of Total UPB % of Total Bridge: Multifamily $ 13,663,343 91 % $ 12,712,015 89 % SFR 653,814 5 % 521,275 4 % Other 351,261 2 % 523,658 4 % 14,668,418 98 % 13,756,948 97 % Mezzanine/Preferred Equity 329,273 2 % 376,486 3 % SFR Permanent 36,120 < 1 % 36,362 < 1 % Total Portfolio $ 15,033,811 100 % $ 14,169,796 100 %
At June 30, 2022, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $15.03 billion, with a weighted average current interest pay rate of 5.49%, compared to $14.17 billion and 4.38% at March 31, 2022. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 5.82% at June 30, 2022, compared to 4.74% at March 31, 2022.
The average balance of the Company’s loan and investment portfolio during the second quarter of 2022, excluding loan loss reserves, was $14.63 billion with a weighted average yield of 5.26%, compared to $13.02 billion and 4.86% for the first quarter of 2022. The increase in average yield was primarily due to increases in the benchmark index rates in the second quarter of 2022.
During the second quarter of 2022, the Company recorded a $4.9 million provision for loan losses associated with CECL, which was net of a $1.5 million loan loss recovery. At June 30, 2022, the Company’s total allowance for loan losses was $121.3 million. The Company had four non-performing loans with a carrying value of $25.2 million, before related loan loss reserves of $5.1 million, which is unchanged from March 31, 2022.
Financing Activity
The Company completed its 19th collateralized securitization vehicle to date totaling $1.05 billion of real estate related assets and cash. Investment grade-rated notes totaling $872.8 million were issued, and the Company retained subordinate interests in the issuing vehicle of $177.2 million. The facility has a two-year asset replenishment period and an initial weighted average interest rate of 2.36% over term SOFR, excluding fees and transaction costs.
The balance of debt that finances the Company’s loan and investment portfolio at June 30, 2022 was $13.83 billion with a weighted average interest rate including fees of 4.00% as compared to $12.86 billion and a rate of 2.81% at March 31, 2022. The average balance of debt that finances the Company’s loan and investment portfolio for the second quarter of 2022 was $13.37 billion, as compared to $11.99 billion for the first quarter of 2022. The average cost of borrowings for the second quarter of 2022 was 3.10%, compared to 2.65% for the first quarter of 2022. The increase in average cost was primarily due to increases in the benchmark index rates in the second quarter of 2022.
Dividends
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.39 per share of common stock for the quarter ended June 30, 2022. The dividend is payable on August 31, 2022 to common stockholders of record on August 15, 2022. The ex-dividend date is August 12, 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 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) 459-5346 for domestic callers and (785) 424-1249 for international callers. Please use participant passcode ABRQ222 when prompted by the operator.
A telephonic replay of the call will be available until August 5, 2022. The replay dial-in numbers are (800) 938-1601 for domestic callers and (402) 220-1546 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 June 30, Six Months Ended June 30, 2022 2021 2022 2021 Interest income $ 201,328 $ 105,148 $ 368,026 $ 196,292 Interest expense 107,067 46,378 189,627 88,562 Net interest income 94,261 58,770 178,399 107,730 Other revenue: Gain on sales, including fee-based services, net 16,510 40,901 18,166 69,768 Mortgage servicing rights 17,567 26,299 32,879 63,235 Servicing revenue, net 20,714 15,315 41,769 30,850 Property operating income 290 - 586 - Gain (loss) on derivative instruments, net 8,606 (2,607 ) 25,992 (5,828 ) Other income, net (13,249 ) 1,263 (10,048 ) 1,943 Total other revenue 50,438 81,171 109,344 159,968 Other expenses: Employee compensation and benefits 38,900 43,700 80,925 86,674 Selling and administrative 13,188 11,133 27,735 21,947 Property operating expenses 542 129 1,077 272 Depreciation and amortization 2,031 1,788 4,014 3,543 Provision for loss sharing (net of recoveries) (1,949 ) 549 (2,611 ) 2,201 Provision for credit losses (net of recoveries) 5,067 (7,815 ) 7,426 (8,890 ) Total other expenses 57,779 49,484 118,566 105,747 Income before extinguishment of debt, sale of real estate, income from equity affiliates, and income taxes 86,920 90,457 169,177 161,951 Loss on extinguishment of debt - - (1,350 ) (1,370 ) Gain on sale of real estate - - - 1,228 Income from equity affiliates 6,547 4,759 13,759 27,010 Provision for income taxes (5,352 ) (10,959 ) (13,540 ) (23,451 ) Net income 88,115 84,257 168,046 165,368 Preferred stock dividends 11,214 6,414 20,270 8,303 Net income attributable to noncontrolling interest 6,992 8,717 13,808 18,459 Net income attributable to common stockholders $ 69,909 $ 69,126 $ 133,968 $ 138,606 Basic earnings per common share $ 0.43 $ 0.51 $ 0.85 $ 1.06 Diluted earnings per common share $ 0.41 $ 0.51 $ 0.82 $ 1.06 Weighted average shares outstanding: Basic 163,044,217 135,262,197 158,258,813 130,276,499 Diluted 195,013,810 153,616,591 190,357,030 148,818,030 Dividends declared per common share $ 0.38 $ 0.34 $ 0.75 $ 0.67
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets ($ in thousands—except share and per share data) June 30, December 31, 2022 2021 (Unaudited) Assets: Cash and cash equivalents $ 341,991 $ 404,580 Restricted cash 787,952 486,690 Loans and investments, net (allowance for credit losses of $121,331 and $113,241) 14,832,302 11,981,048 Loans held-for-sale, net 518,935 1,093,609 Capitalized mortgage servicing rights, net 411,534 422,734 Securities held-to-maturity, net (allowance for credit losses of $2,022 and $1,753) 159,686 140,484 Investments in equity affiliates 90,855 89,676 Due from related party 53,037 84,318 Goodwill and other intangible assets 98,414 100,760 Other assets 284,884 269,946 Total assets $ 17,579,590 $ 15,073,845 Liabilities and Equity: Credit and repurchase facilities $ 4,549,460 $ 4,481,579 Collateralized loan obligations 7,968,495 5,892,810 Senior unsecured notes 1,282,498 1,280,545 Convertible senior unsecured notes, net 263,126 259,385 Junior subordinated notes to subsidiary trust issuing preferred securities 142,758 142,382 Due to related party 27,014 26,570 Due to borrowers 115,990 96,641 Allowance for loss-sharing obligations 53,053 56,064 Other liabilities 264,200 287,885 Total liabilities 14,666,594 12,523,861 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: 633,684 556,163 Special voting preferred shares - 16,293,589 and 16,325,095 shares 6.375% Series D - 9,200,000 shares 6.25% Series E - 5,750,000 shares 6.25% Series F - 11,342,000 and 8,050,000 shares Common stock, $0.01 par value: 500,000,000 shares authorized - 168,454,805 and 151,362,181 shares issued and outstanding 1,685 1,514 Additional paid-in capital 2,060,837 1,797,913 Retained earnings 83,271 62,532 Total Arbor Realty Trust, Inc. stockholders’ equity 2,779,477 2,418,122 Noncontrolling interest 133,519 131,862 Total equity 2,912,996 2,549,984 Total liabilities and equity $ 17,579,590 $ 15,073,845 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES Statement of Income Segment Information - (Unaudited) (in thousands) Quarter Ended June 30, 2022 Structured Business Agency Business Other / Eliminations(1) Consolidated Interest income $ 192,047 $ 9,281 $ - $ 201,328 Interest expense 103,165 3,902 - 107,067 Net interest income 88,882 5,379 - 94,261 Other revenue: Gain on sales, including fee-based services, net - 16,510 - 16,510 Mortgage servicing rights - 17,567 - 17,567 Servicing revenue - 35,493 - 35,493 Amortization of MSRs - (14,779 ) - (14,779 ) Property operating income 290 - - 290 Gain on derivative instruments, net - 8,606 - 8,606 Other income, net (9,328 ) (3,921 ) - (13,249 ) Total other revenue (9,038 ) 59,476 - 50,438 Other expenses: Employee compensation and benefits 13,866 25,034 - 38,900 Selling and administrative 6,429 6,759 - 13,188 Property operating expenses 542 - - 542 Depreciation and amortization 858 1,173 - 2,031 Provision for loss sharing (net of recoveries) - (1,949 ) - (1,949 ) Provision for credit losses (net of recoveries) 5,088 (21 ) - 5,067 Total other expenses 26,783 30,996 - 57,779 Income before income from equity affiliates, and income taxes 53,061 33,859 - 86,920 Income from equity affiliates 6,547 - - 6,547 Provision for income taxes (255 ) (5,097 ) - (5,352 ) Net income 59,353 28,762 - 88,115 Preferred stock dividends 11,214 - - 11,214 Net income attributable to noncontrolling interest - - 6,992 6,992 Net income attributable to common stockholders $ 48,139 $ 28,762 $ (6,992 ) $ 69,909 (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, 2022 Structured Business Agency Business Consolidated Assets: Cash and cash equivalents $ 94,983 $ 247,008 $ 341,991 Restricted cash 769,009 18,943 787,952 Loans and investments, net 14,832,302 - 14,832,302 Loans held-for-sale, net - 518,935 518,935 Capitalized mortgage servicing rights, net - 411,534 411,534 Securities held-to-maturity, net - 159,686 159,686 Investments in equity affiliates 90,855 - 90,855 Goodwill and other intangible assets 12,500 85,914 98,414 Other assets 272,679 65,242 337,921 Total assets $ 16,072,328 $ 1,507,262 $ 17,579,590 Liabilities: Debt obligations $ 13,750,783 $ 455,554 $ 14,206,337 Allowance for loss-sharing obligations - 53,053 53,053 Other liabilities 311,873 95,331 407,204 Total liabilities $ 14,062,656 $ 603,938 $ 14,666,594
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, 2022 2021 2022 2021 Net income attributable to common stockholders $ 69,909 $ 69,126 $ 133,968 $ 138,606 Adjustments: Net income attributable to noncontrolling interest 6,992 8,717 13,808 18,459 Income from mortgage servicing rights (17,567 ) (26,299 ) (32,879 ) (63,235 ) Deferred tax (benefit) provision (706 ) (50 ) (2,426 ) 4,436 Amortization and write-offs of MSRs 27,625 20,299 55,295 38,331 Depreciation and amortization 2,617 2,733 5,186 5,432 Loss on extinguishment of debt - - 1,350 1,370 Provision for credit losses, net 5,849 (8,065 ) 7,546 (8,343 ) Gain on derivative instruments, net (4,155 ) (3,230 ) (4,453 ) (9 ) Stock-based compensation 3,149 2,044 9,241 5,375 Loss on redemption of preferred stock - 3,479 - 3,479 Distributable earnings (1) $ 93,713 $ 68,754 $ 186,636 $ 143,901 Diluted distributable earnings per share (1) $ 0.52 $ 0.45 $ 1.06 $ 0.97 Diluted weighted average shares outstanding (1) (2) 179,873,329 153,616,591 175,252,399 148,818,030 (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 and six months ended June 30, 2022, the diluted weighted average shares outstanding excluded 15,140,481 and 15,104,631 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, 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.
- Diversified, annuity-based operating platform with a multifamily focus that generates strong distributable earnings and dividends in all cycles