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 per diluted common share
- Distributable earnings1 of $0.57 per diluted common share, well in excess of our current dividend, representing a 75% payout ratio
- Raised cash dividend on common stock to $0.43 per share; a $0.01 per share, or 2% increase, representing an annualized dividend of $1.72 per share
- Strong liquidity position with ~$1 billion in cash and liquidity and ~$265 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.67% over benchmark rates2
- Agency loan originations of $1.42 billion and a servicing portfolio of ~$29.45 billion, up 2%
- Structured loan originations of $209.0 million and a portfolio of ~$13.49 billion
- GAAP net income of $0.41 per diluted common share
UNIONDALE, N.Y., July 28, 2023 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (: ABR), today announced financial results for the second quarter ended June 30, 2023. Arbor reported net income for the quarter of $76.2 million, or $0.41 per diluted common share, compared to net income of $69.9 million, or $0.41 per diluted common share for the quarter ended June 30, 2022. Distributable earnings for the quarter was $114.0 million, or $0.57 per diluted common share, compared to $93.7 million, or $0.52 per diluted common share for the quarter ended June 30, 2022.
Agency Business
Loan Origination Platform
Agency Loan Volume (in thousands) | ||||||
Quarter Ended | ||||||
June 30, 2023 | March 31, 2023 | |||||
Fannie Mae | $ | 1,079,910 | $ | 795,021 | ||
Freddie Mac | 217,884 | 101,332 | ||||
FHA | 62,552 | 148,940 | ||||
Private Label | 50,256 | 41,107 | ||||
SFR-Fixed Rate | 11,837 | 5,461 | ||||
Total Originations | $ | 1,422,439 | $ | 1,091,861 | ||
Total Loan Sales | $ | 1,410,724 | $ | 932,699 | ||
Total Loan Commitments | $ | 1,133,312 | $ | 1,500,110 | ||
For the quarter ended June 30, 2023, the Agency Business generated revenues of $76.7 million, compared to $80.4 million for the first quarter of 2023. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $22.2 million for the quarter, reflecting a margin of 1.67%, compared to $13.1 million and 1.72% for the first quarter of 2023. Income from mortgage servicing rights was $16.2 million for the quarter, reflecting a rate of 1.43% as a percentage of loan commitments, compared to $18.5 million and 1.23% for the first quarter of 2023.
At June 30, 2023, loans held-for-sale was $485.1 million, with financing associated with these loans totaling $463.3 million.
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled $29.45 billion at June 30, 2023. Servicing revenue, net was $32.3 million for the quarter and consisted of servicing revenue of $48.0 million, net of amortization of mortgage servicing rights totaling $15.6 million.
Fee-Based Servicing Portfolio ($ in thousands) | ||||||||||||
June 30, 2023 | March 31, 2023 | |||||||||||
UPB | Wtd. Avg. Fee | Wtd. Avg. Life (years) | UPB | Wtd. Avg. Fee | Wtd. Avg. Life (years) | |||||||
Fannie Mae | $ | 20,002,570 | 0.489% | 7.7 | $ | 19,508,256 | 0.495% | 8.0 | ||||
Freddie Mac | 5,245,325 | 0.248% | 8.8 | 5,180,607 | 0.247% | 9.1 | ||||||
Private Label | 2,305,000 | 0.193% | 7.5 | 2,233,500 | 0.196% | 7.7 | ||||||
FHA | 1,303,812 | 0.145% | 20.0 | 1,242,669 | 0.147% | 19.8 | ||||||
Bridge | 299,578 | 0.111% | 3.5 | 467,881 | 0.116% | 2.9 | ||||||
SFR-Fixed Rate | 290,266 | 0.200% | 5.9 | 279,712 | 0.200% | 5.9 | ||||||
Total | $ | 29,446,551 | 0.401% | 8.4 | $ | 28,912,625 | 0.403% | 8.6 | ||||
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.5 million for the fair value of the guarantee obligation undertaken at June 30, 2023. The Company recorded a $7.6 million provision for loss sharing associated with CECL for the second quarter of 2023. At June 30, 2023, the Company’s total CECL allowance for loss-sharing obligations was $32.2 million, representing 0.16% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
Structured Portfolio Activity ($ in thousands) | ||||||||
Quarter Ended | ||||||||
June 30, 2023 | March 31, 2023 | |||||||
UPB | % | UPB | % | |||||
Bridge: | ||||||||
Multifamily | $ | 98,530 | 47% | $ | 186,100 | 70% | ||
SFR | 108,964 | 52% | 76,089 | 28% | ||||
207,494 | 99% | 262,189 | 98% | |||||
Mezzanine/Preferred Equity | 1,500 | 1% | 5,845 | 2% | ||||
Total Originations | $ | 208,994 | 100% | $ | 268,034 | 100% | ||
Number of Loans Originated | 26 | 24 | ||||||
SFR Commitments | $ | 200,182 | $ | 54,350 | ||||
Runoff | $ | 685,220 | $ | 1,186,649 | ||||
Structured Portfolio ($ in thousands) | ||||||||
June 30, 2023 | March 31, 2023 | |||||||
UPB | % | UPB | % | |||||
Bridge: | ||||||||
Multifamily | $ | 11,887,768 | 88% | $ | 12,034,638 | 88% | ||
SFR | 1,023,959 | 8% | 982,026 | 7% | ||||
Other | 256,575 | 2% | 282,275 | 2% | ||||
13,168,302 | 98% | 13,298,939 | 97% | |||||
Mezzanine/Preferred Equity | 312,812 | 2% | 311,819 | 2% | ||||
SFR Permanent | 10,493 | < 1% | 32,966 | < 1% | ||||
Total Portfolio | $ | 13,491,607 | 100% | $ | 13,643,724 | 100% | ||
At June 30, 2023, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $13.49 billion, with a weighted average current interest pay rate of 8.76%, compared to $13.64 billion and 8.60% at March 31, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 9.07% at June 30, 2023, compared to 8.83% at March 31, 2023.
The average balance of the Company’s loan and investment portfolio during the second quarter of 2023, excluding loan loss reserves, was $13.66 billion with a weighted average yield of 9.19%, compared to $14.15 billion and 8.94% for the first quarter of 2023. The increase in average yield was primarily due to increases in the benchmark index rates in the second quarter of 2023.
During the second quarter of 2023, the Company recorded a $16.0 million provision for loan losses associated with CECL. At June 30, 2023, the Company’s total allowance for loan losses was $169.1 million. The Company had seven non-performing loans with a carrying value of $122.4 million, before loan loss reserves of $10.1 million, compared to four loans with a carrying value of $7.7 million, before loan loss reserves of $5.1 million at March 31, 2023.
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at June 30, 2023 was $12.11 billion with a weighted average interest rate including fees of 7.25% as compared to $12.65 billion and a rate of 6.97% at March 31, 2023.
The average balance of debt that finances the Company’s loan and investment portfolio for the second quarter of 2023 was $12.46 billion, as compared to $13.02 billion for the first quarter of 2023. The average cost of borrowings for the second quarter of 2023 was 7.11%, compared to 6.69% for the first quarter of 2023. The increase in average cost was primarily due to increases in the benchmark index rates in the second quarter of 2023.
Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.43 per share of common stock for the quarter ended June 30, 2023. The dividend is payable on August 31, 2023 to common stockholders of record on August 15, 2023. The ex-dividend date is August 14, 2023.
Earnings Conference Call
The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast and replay of the conference call will be available at www.arbor.com in the investor relations section of the Company’s website, or you can access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (800) 225-9448 for domestic callers and (203) 518-9708 for international callers. Please use participant passcode ABRQ223 when prompted by the operator.
A telephonic replay of the call will be available until August 4, 2023. The replay dial-in numbers are (800) 934-4548 for domestic callers and (402) 220-1175 for international callers.
About Arbor Realty Trust, Inc.
Arbor Realty Trust, Inc. (: 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, 2022 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor’s expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.
Notes
- 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.
- Amounts reflect approximate balances as of July 25, 2023.
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, | ||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||
Interest income | $ | 335,737 | $ | 201,328 | $ | 663,685 | $ | 368,026 | |||||||||
Interest expense | 227,195 | 107,067 | 446,569 | 189,627 | |||||||||||||
Net interest income | 108,542 | 94,261 | 217,116 | 178,399 | |||||||||||||
Other revenue: | |||||||||||||||||
Gain on sales, including fee-based services, net | 22,587 | 16,510 | 37,176 | 18,166 | |||||||||||||
Mortgage servicing rights | 16,201 | 17,567 | 34,659 | 32,879 | |||||||||||||
Servicing revenue, net | 32,347 | 20,714 | 61,913 | 41,769 | |||||||||||||
Property operating income | 1,430 | 290 | 2,811 | 586 | |||||||||||||
Gain (loss) on derivative instruments, net | (7,384 | ) | 8,606 | (3,161 | ) | 25,992 | |||||||||||
Other income (loss), net | 45 | (13,249 | ) | 4,923 | (10,048 | ) | |||||||||||
Total other revenue | 65,226 | 50,438 | 138,321 | 109,344 | |||||||||||||
Other expenses: | |||||||||||||||||
Employee compensation and benefits |