UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 2, 2018 (November 2, 2018)
Arbor Realty Trust, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(STATE OF INCORPORATION)
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001-32136 |
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20-0057959 |
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(COMMISSION FILE NUMBER) |
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(IRS EMPLOYER ID. NUMBER) |
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333 Earle Ovington Boulevard, Suite 900 |
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Uniondale, New York |
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11553 |
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) |
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(ZIP CODE) |
(516) 506-4200
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2018, Arbor Realty Trust, Inc. issued a press release announcing its earnings for the quarter ended September 30, 2018, a copy of which is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit |
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Exhibit |
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99.1 |
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Press Release, dated November 2, 2018. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ARBOR REALTY TRUST, INC. | |
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| |
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By: |
/s/ Paul Elenio |
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Name: |
Paul Elenio |
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Title: |
Chief Financial Officer |
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Date: November 2, 2018 |
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Arbor Realty Trust Reports Third Quarter 2018 Results and Increases Quarterly Dividend to $0.27 per Share
Company Highlights:
· GAAP net income of $0.36 per diluted common share; AFFO of $0.37, or $0.42 per diluted common share excluding a one-time loss from the early repayment of debt1
· Declares a cash dividend on common stock of $0.27 per share, a 42% increase in our dividend from a year ago and 8% higher than last quarter
· Issued $264.5 million of 5.25% convertible senior notes due in 2021 primarily to exchange our 6.50% and 5.375% convertible senior notes
Agency Business
· Segment income of $19.3 million
· Loan originations of $1.41 billion, a 36% increase from 2Q18
· Servicing portfolio of $17.79 billion, up 4% from 2Q18
Structured Business
· Segment income of $16.2 million
· Loan originations of $287.5 million
· Recognized a $10 million gain from the settlement of a litigation
Uniondale, NY, November 2, 2018 — Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the third quarter ended September 30, 2018. Arbor reported net income for the quarter of $27.7 million, or $0.36 per diluted common share, compared to $16.4 million, or $0.26 per diluted common share for the quarter ended September 30, 2017. Adjusted funds from operations (“AFFO”) for the quarter was $36.4 million, or $0.37 per diluted common share, compared to $21.0 million, or $0.25 per diluted common share for the quarter ended September 30, 2017.1
Agency Business
Loan Origination Platform
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Agency Loan Volume (in thousands) |
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Quarter Ended |
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September 30, |
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June 30, |
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Fannie Mae |
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$ |
995,662 |
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$ |
606,287 |
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Freddie Mac |
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317,516 |
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434,789 |
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FHA |
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77,236 |
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— |
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CMBS/Conduit |
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20,650 |
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— |
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Total Originations |
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$ |
1,411,064 |
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$ |
1,041,076 |
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Total Loan Sales |
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$ |
1,190,004 |
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$ |
1,018,283 |
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Total Loan Commitments |
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$ |
1,376,376 |
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$ |
1,079,478 |
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For the quarter ended September 30, 2018, the Agency Business generated revenues of $58.8 million, compared to $49.0 million for the second quarter of 2018. Gain on sales, including fee-based services, net was $17.5 million for the quarter, reflecting a margin of 1.47% on loan sales, compared to $15.6 million and 1.53% for the second quarter of 2018. Income from mortgage servicing rights was $25.2 million for the quarter, reflecting a rate of 1.83% as a percentage of loan commitments, compared to $17.9 million and 1.66% for the second quarter of 2018.
At September 30, 2018, loans held-for-sale was $500.3 million which was primarily comprised of unpaid principal balances totaling $493.0 million, with financing associated with these loans totaling $492.6 million.
Fee-Based Servicing Portfolio
Our fee-based servicing portfolio totaled $17.79 billion at September 30, 2018, an increase of 4% from June 30, 2018, primarily a result of $1.41 billion of new loan originations, net of $706.0 million in portfolio runoff during the quarter. Servicing revenue, net was $14.2 million for the quarter and consists of servicing revenue of $26.1 million, net of amortization of mortgage servicing rights totaling $11.9 million.
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Fee-Based Servicing Portfolio ($ in thousands) |
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As of September 30, 2018 |
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As of June 30, 2018 |
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UPB |
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Wtd. Avg. |
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Wtd. Avg. |
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UPB |
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Wtd. Avg. |
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Wtd. Avg. |
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Fannie Mae |
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$ |
13,195,643 |
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0.523 |
% |
7.7 |
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$ |
12,794,277 |
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0.530 |
% |
7.3 |
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Freddie Mac |
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3,977,619 |
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0.308 |
% |
11.0 |
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3,730,980 |
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0.308 |
% |
11.0 |
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FHA |
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621,419 |
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0.157 |
% |
20.1 |
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585,017 |
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0.159 |
% |
20.1 |
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Total |
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$ |
17,794,681 |
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0.462 |
% |
8.8 |
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$ |
17,110,274 |
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0.469 |
% |
8.6 |
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Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”). At September 30, 2018, the Company’s allowance for loss-sharing obligations was $33.4 million, representing 0.25% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
· 18 new loan originations totaling $287.5 million, of which 17 were bridge loans for $283.5 million
· Payoffs and pay downs on 14 loans totaling $255.6 million
At September 30, 2018, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $3.17 billion, with a weighted average current interest pay rate of 6.88%, compared to $3.14 billion and 6.76% at June 30, 2018. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 7.52% at September 30, 2018, compared to 7.40% at June 30, 2018. The increase in average costs was primarily due to an increase in LIBOR.
The average balance of the Company’s loan and investment portfolio during the third quarter of 2018, excluding loan loss reserves, was $3.26 billion with a weighted average yield on these assets of 7.37%, compared to $2.91 billion and 7.40% for the second quarter of 2018.
At September 30, 2018, the Company’s total loan loss reserves were $61.0 million on five loans with an aggregate carrying value before loan loss reserves of $131.9 million. The Company also had two non-performing loans with a carrying value of $2.5 million, net of related loan loss reserves of $1.7 million.
The Company recognized a net gain of approximately $10 million from the settlement of a litigation related to a prior investment.
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at September 30, 2018 was $2.92 billion with a weighted average interest rate including fees of 5.03% as compared to $2.81 billion and a rate of 4.93% at June 30, 2018. The average balance of debt that finances the Company’s loan and investment portfolio for the third quarter of 2018 was $2.86 billion, as compared to $2.54 billion for the second quarter of 2018. The average cost of borrowings for the third quarter was 4.93%, compared to 5.46% for the second quarter of 2018. The decrease in average costs was primarily due to the acceleration of $2.9 million in fees related to the early repayment of debt in the second quarter of 2018.
The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles and financing facilities. The Company believes it was in compliance with all financial covenants and restrictions as of September 30, 2018 and as of the most recent collateralized securitization vehicle determination dates in October 2018.
Capital Markets
The Company issued $264.5 million in aggregate principal amount of 5.25% convertible senior notes due 2021 (the “Notes”) through two private placements, including $34.5 million of the initial purchaser’s over-allotment options. The Company received proceeds totaling $256.1 million, net of the underwriter’s discount and fees from these offerings. The Company used the net proceeds to exchange $99.8 million in aggregate principal amount of its 6.50% convertible senior notes due 2019 and $127.6 million in aggregate principal amount of its 5.375% convertible senior notes due 2020 for a combination of $219.8 million in cash and 6.8 million shares of the Company’s common stock to settle such exchanges. The remaining net proceeds were used for general corporate purposes. As a result of these exchanges, the Company recorded a $5.0 million loss on extinguishment of debt.
Dividends
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.27 per share of common stock for the quarter ended September 30, 2018, representing an increase of 42% from a year ago and 8% over the prior quarter dividend of $0.25 per share. The dividend is payable on November 30, 2018 to common stockholders of record on November 15, 2018. The ex-dividend date is November 14, 2018.
The Company also announced today that its Board of Directors has declared cash dividends on the Company’s Series A, Series B and Series C cumulative redeemable preferred stock reflecting accrued dividends from September 1, 2018 through November 30, 2018. The dividends are payable on November 30, 2018 to preferred stockholders of record on
November 15, 2018. The Company will pay total dividends of $0.515625, $0.484375 and $0.53125 per share on the Series A, Series B and Series C preferred stock, respectively.
Earnings Conference Call
The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast of the conference call will be available at www.arbor.com in the investor relations area of the 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) 516-5034 for domestic callers and (678) 509-7613 for international callers. Please use participant passcode 8190269.
After the live webcast, the call will remain available on the Company’s website through November 30, 2018. In addition, a telephonic replay of the call will be available until November 9, 2018. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 8190269.
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, seniors housing, healthcare, and other diverse commercial real estate assets. Headquartered in Uniondale, New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in Fannie Mae, Freddie Mac, and other government-sponsored enterprises, as well as CMBS, bridge, mezzanine, and preferred equity lending. Rated by Standard and Poor’s and Fitch Ratings, Arbor is committed to building on its reputation for service, quality, and flexibility, and dedicated 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, continued ability to source new investments, changes in interest rates and/or credit spreads, changes in the real estate markets, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2017 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 page 11 of this release.
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Contacts: |
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Arbor Realty Trust, Inc. |
Investors: |
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Paul Elenio, Chief Financial Officer |
The Ruth Group |
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516-506-4422 |
Lee Roth |
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pelenio@arbor.com |
646-536-7012 |
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lroth@theruthgroup.com |
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Media: |
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Bonnie Habyan, EVP of Marketing |
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516-506-4615 |
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bhabyan@arbor.com |
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
($ in thousands—except share and per share data)
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Quarter Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2018 |
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2017 |
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2018 |
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2017 |
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Interest income |
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$ |
67,500 |
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$ |
42,140 |
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$ |
178,408 |
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$ |
110,133 |
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Interest expense |
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39,548 |
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23,850 |
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110,819 |
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63,698 |
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Net interest income |
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27,952 |
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18,290 |
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67,589 |
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46,435 |
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|
|
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|
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|
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Other revenue: |
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|
|
|
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|
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Gain on sales, including fee-based services, net |
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17,451 |
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17,126 |
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51,266 |
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55,127 |
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Mortgage servicing rights |
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25,216 |
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18,897 |
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62,787 |
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56,182 |
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Servicing revenue, net |
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14,244 |
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8,520 |
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34,662 |
|
19,923 |
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Property operating income |
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2,651 |
|
2,668 |
|
8,525 |
|
8,755 |
| ||||
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Other income, net |
|
(3,982 |
) |
778 |
|
(1,574 |
) |
(931 |
) | ||||
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Total other revenue |
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55,580 |
|
47,989 |
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155,666 |
|
139,056 |
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|
|
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|
|
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|
|
|
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Other expenses: |
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|
|
|
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|
|
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Employee compensation and benefits |
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27,775 |
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25,194 |
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84,084 |
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66,861 |
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Selling and administrative |
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9,994 |
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7,607 |
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27,783 |
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23,136 |
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Property operating expenses |
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2,437 |
|
2,583 |
|
8,089 |
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7,843 |
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Depreciation and amortization |
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1,848 |
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1,829 |
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5,539 |
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5,542 |
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Impairment loss on real estate owned |
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— |
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— |
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2,000 |
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2,700 |
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Provision for loss sharing (net of recoveries) |
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2,019 |
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(2,617 |
) |
2,840 |
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(405 |
) | ||||
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Provision for loan losses (net of recoveries) |
|
836 |
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2,000 |
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(967 |
) |
(457 |
) | ||||
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Litigation settlement gain |
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(10,170 |
) |
— |
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(10,170 |
) |
— |
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Management fee - related party |
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— |
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— |
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— |
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6,673 |
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Total other expenses |
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34,739 |
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36,596 |
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119,198 |
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111,893 |
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|
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|
|
|
|
|
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Income before extinguishment of debt, (loss) income from equity affiliates and income taxes |
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48,793 |
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29,683 |
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104,057 |
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73,598 |
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(Loss) gain on extinguishment of debt |
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(4,960 |
) |
— |
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(4,960 |
) |
7,116 |
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(Loss) income from equity affiliates |
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(1,028 |
) |
996 |
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1,104 |
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1,756 |
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Provision for income taxes |
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(5,381 |
) |
(6,708 |
) |
(1,096 |
) |
(16,244 |
) | ||||
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|
|
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|
|
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Net income |
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37,424 |
|
23,971 |
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99,105 |
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66,226 |
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|
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Preferred stock dividends |
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1,888 |
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1,888 |
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5,665 |
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5,665 |
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Net income attributable to noncontrolling interest |
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7,799 |
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5,662 |
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22,347 |
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16,597 |
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Net income attributable to common stockholders |
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$ |
27,737 |
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$ |
16,421 |
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$ |
71,093 |
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$ |
43,964 |
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Basic earnings per common share |
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$ |
0.37 |
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$ |
0.27 |
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$ |
1.05 |
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$ |
0.78 |
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Diluted earnings per common share |
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$ |
0.36 |
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$ |
0.26 |
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$ |
1.03 |
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$ |
0.77 |
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Weighted average shares outstanding: |
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|
|
|
|
| ||||
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Basic |
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74,802,582 |
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61,582,796 |
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67,490,132 |
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56,602,504 |
| ||||
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Diluted |
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98,435,964 |
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83,918,117 |
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91,133,607 |
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78,942,919 |
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|
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|
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|
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|
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| ||||
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Dividends declared per common share |
|
$ |
0.25 |
|
$ |
0.18 |
|
$ |
0.71 |
|
$ |
0.53 |
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands—except share and per share data)
|
|
|
September 30, |
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December 31, |
| ||
|
|
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2018 |
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2017 |
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|
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(Unaudited) |
|
|
| ||
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Assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
92,598 |
|
$ |
104,374 |
|
|
Restricted cash |
|
202,736 |
|
139,398 |
| ||
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Loans and investments, net |
|
3,097,689 |
|
2,579,127 |
| ||
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Loans held-for-sale, net |
|
500,281 |
|
297,443 |
| ||
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Capitalized mortgage servicing rights, net |
|
259,401 |
|
252,608 |
| ||
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Securities held to maturity, net |
|
50,520 |
|
27,837 |
| ||
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Investments in equity affiliates |
|
22,101 |
|
23,653 |
| ||
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Real estate owned, net |
|
14,563 |
|
16,787 |
| ||
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Due from related party |
|
97,505 |
|
688 |
| ||
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Goodwill and other intangible assets |
|
117,565 |
|
121,766 |
| ||
|
Other assets |
|
79,301 |
|
62,264 |
| ||
|
Total assets |
|
$ |
4,534,260 |
|
$ |
3,625,945 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Equity: |
|
|
|
|
| ||
|
Credit facilities and repurchase agreements |
|
1,169,586 |
|
528,573 |
| ||
|
Collateralized loan obligations |
|
1,592,089 |
|
1,418,422 |
| ||
|
Debt fund |
|
68,099 |
|
68,084 |
| ||
|
Senior unsecured notes |
|
122,358 |
|
95,280 |
| ||
|
Convertible senior unsecured notes, net |
|
263,653 |
|
231,287 |
| ||
|
Junior subordinated notes to subsidiary trust issuing preferred securities |
|
140,084 |
|
139,590 |
| ||
|
Related party financing |
|
— |
|
50,000 |
| ||
|
Due to related party |
|
538 |
|
— |
| ||
|
Due to borrowers |
|
77,006 |
|
99,829 |
| ||
|
Allowance for loss-sharing obligations |
|
33,405 |
|
30,511 |
| ||
|
Other liabilities |
|
100,970 |
|
99,813 |
| ||
|
Total liabilities |
|
3,567,788 |
|
2,761,389 |
| ||
|
|
|
|
|
|
| ||
|
Equity: |
|
|
|
|
| ||
|
Arbor Realty Trust, Inc. stockholders’ equity: |
|
|
|
|
| ||
|
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized; special voting preferred shares; 20,653,584 and 21,230,769 shares issued and outstanding, respectively; 8.25% Series A, $38,787,500 aggregate liquidation preference; 1,551,500 shares issued and outstanding; 7.75% Series B, $31,500,000 aggregate liquidation preference; 1,260,000 shares issued and outstanding; 8.50% Series C, $22,500,000 aggregate liquidation preference; 900,000 shares issued and outstanding |
|
89,508 |
|
89,508 |
| ||
|
Common stock, $0.01 par value: 500,000,000 shares authorized; 75,684,964 and 61,723,387 shares issued and outstanding, respectively |
|
757 |
|
617 |
| ||
|
Additional paid-in capital |
|
785,364 |
|
707,450 |
| ||
|
Accumulated deficit |
|
(78,316 |
) |
(101,926 |
) | ||
|
Accumulated other comprehensive income |
|
— |
|
176 |
| ||
|
|
|
|
|
|
| ||
|
Total Arbor Realty Trust, Inc. stockholders’ equity |
|
797,313 |
|
695,825 |
| ||
|
|
|
|
|
|
| ||
|
Noncontrolling interest |
|
169,159 |
|
168,731 |
| ||
|
Total equity |
|
966,472 |
|
864,556 |
| ||
|
|
|
|
|
|
| ||
|
Total liabilities and equity |
|
$ |
4,534,260 |
|
$ |
3,625,945 |
|
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
STATEMENT OF INCOME SEGMENT INFORMATION - (Unaudited)
(in thousands)
|
|
|
Quarter Ended September 30, 2018 |
| ||||||||||
|
|
|
Structured |
|
Agency |
|
Other / |
|
Consolidated |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Interest income |
|
$ |
61,232 |
|
$ |
6,268 |
|
$ |
— |
|
$ |
67,500 |
|
|
Interest expense |
|
35,508 |
|
4,040 |
|
— |
|
39,548 |
| ||||
|
Net interest income |
|
25,724 |
|
2,228 |
|
— |
|
27,952 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Other revenue: |
|
|
|
|
|
|
|
|
| ||||
|
Gain on sales, including fee-based services, net |
|
— |
|
17,451 |
|
— |
|
17,451 |
| ||||
|
Mortgage servicing rights |
|
— |
|
25,216 |
|
— |
|
25,216 |
| ||||
|
Servicing revenue |
|
— |
|
26,082 |
|
— |
|
26,082 |
| ||||
|
Amortization of MSRs |
|
— |
|
(11,838 |
) |
— |
|
(11,838 |
) | ||||
|
Property operating income |
|
2,651 |
|
— |
|
— |
|
2,651 |
| ||||
|
Other income, net |
|
406 |
|
(4,388 |
) |
— |
|
(3,982 |
) | ||||
|
Total other revenue |
|
3,057 |
|
52,523 |
|
— |
|
55,580 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Other expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Employee compensation and benefits |
|
6,683 |
|
21,092 |
|
— |
|
27,775 |
| ||||
|
Selling and administrative |
|
4,465 |
|
5,529 |
|
— |
|
9,994 |
| ||||
|
Property operating expenses |
|
2,437 |
|
— |
|
— |
|
2,437 |
| ||||
|
Depreciation and amortization |
|
447 |
|
1,401 |
|
— |
|
1,848 |
| ||||
|
Provision for loss sharing (net of recoveries) |
|
— |
|
2,019 |
|
— |
|
2,019 |
| ||||
|
Provision for loan losses (net of recoveries) |
|
836 |
|
— |
|
— |
|
836 |
| ||||
|
Litigation settlement gain |
|
(10,170 |
) |
— |
|
— |
|
(10,170 |
) | ||||
|
Total other expenses |
|
4,698 |
|
30,041 |
|
— |
|
34,739 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before extinguishment of debt, loss from equity affiliates and income taxes |
|
24,083 |
|
24,710 |
|
— |
|
48,793 |
| ||||
|
Loss on extinguishment of debt |
|
(4,960 |
) |
— |
|
— |
|
(4,960 |
) | ||||
|
Loss from equity affiliates |
|
(1,028 |
) |
— |
|
— |
|
(1,028 |
) | ||||
|
Provision for income taxes |
|
— |
|
(5,381 |
) |
— |
|
(5,381 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income |
|
$ |
18,095 |
|
$ |
19,329 |
|
$ |
— |
|
$ |
37,424 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Preferred stock dividends |
|
1,888 |
|
— |
|
— |
|
1,888 |
| ||||
|
Net income attributable to noncontrolling interest |
|
— |
|
— |
|
7,799 |
|
7,799 |
| ||||
|
Net income attributable to common stockholders |
|
$ |
16,207 |
|
$ |
19,329 |
|
$ |
(7,799 |
) |
$ |
27,737 |
|
(1) Includes certain income or expenses not allocated to the two reportable segments. Amount reflects income attributable to the noncontrolling interest holders.
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
BALANCE SHEET SEGMENT INFORMATION - (Unaudited)
(in thousands)
|
|
|
September 30, 2018 |
| |||||||
|
|
|
Structured |
|
Agency |
|
Consolidated |
| |||
|
Assets: |
|
|
|
|
|
|
| |||
|
Cash and cash equivalents |
|
$ |
45,001 |
|
$ |
47,597 |
|
$ |
92,598 |
|
|
Restricted cash |
|
202,736 |
|
— |
|
202,736 |
| |||
|
Loans and investments, net |
|
3,097,689 |
|
— |
|
3,097,689 |
| |||
|
Loans held-for-sale, net |
|
— |
|
500,281 |
|
500,281 |
| |||
|
Capitalized mortgage servicing rights, net |
|
— |
|
259,401 |
|
259,401 |
| |||
|
Securities held to maturity, net |
|
— |
|
50,520 |
|
50,520 |
| |||
|
Investments in equity affiliates |
|
22,101 |
|
— |
|
22,101 |
| |||
|
Goodwill and other intangible assets |
|
12,500 |
|
105,065 |
|
117,565 |
| |||
|
Other assets |
|
172,078 |
|
19,291 |
|
191,369 |
| |||
|
Total assets |
|
$ |
3,552,105 |
|
$ |
982,155 |
|
$ |
4,534,260 |
|
|
|
|
|
|
|
|
|
| |||
|
Liabilities: |
|
|
|
|
|
|
| |||
|
Debt obligations |
|
2,863,267 |
|
492,603 |
|
3,355,870 |
| |||
|
Allowance for loss-sharing obligations |
|
— |
|
33,405 |
|
33,405 |
| |||
|
Other liabilities |
|
140,661 |
|
37,852 |
|
178,513 |
| |||
|
Total liabilities |
|
$ |
3,003,928 |
|
$ |
563,860 |
|
$ |
3,567,788 |
|
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Supplemental Schedule of Non-GAAP Financial Measures - (Unaudited)
Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)
($ in thousands—except share and per share data)
|
|
|
Quarter Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
September 30, |
|
September 30, |
| ||||||||
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income attributable to common stockholders |
|
$ |
27,737 |
|
$ |
16,421 |
|
$ |
71,093 |
|
$ |
43,964 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
|
Net income attributable to noncontrolling interest |
|
7,799 |
|
5,661 |
|
22,347 |
|
16,596 |
| ||||
|
Impairment loss on real estate owned |
|
— |
|
— |
|
2,000 |
|
2,700 |
| ||||
|
Depreciation - real estate owned |
|
177 |
|
173 |
|
533 |
|
592 |
| ||||
|
Depreciation - investments in equity affiliates |
|
125 |
|
101 |
|
374 |
|
305 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Funds from operations (1) |
|
$ |
35,838 |
|
$ |
22,356 |
|
$ |
96,347 |
|
$ |
64,157 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
|
Income from mortgage servicing rights |
|
(25,216 |
) |
(18,897 |
) |
(62,787 |
) |
(56,182 |
) | ||||
|
Impairment loss on real estate owned |
|
— |
|
— |
|
(2,000 |
) |
(2,700 |
) | ||||
|
Deferred tax (benefit) provision |
|
(1,319 |
) |
(922 |
) |
(14,454 |
) |
15 |
| ||||
|
Amortization and write-offs of MSRs |
|
18,989 |
|
15,927 |
|
52,868 |
|
46,140 |
| ||||
|
Depreciation and amortization |
|
2,525 |
|
1,883 |
|
7,035 |
|
5,623 |
| ||||
|
Net loss (gain) on changes in fair value of derivatives |
|
4,388 |
|
(237 |
) |
2,331 |
|
2,313 |
| ||||
|
Stock-based compensation |
|
1,192 |
|
847 |
|
4,838 |
|
3,833 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Adjusted funds from operations (1) (2) |
|
$ |
36,397 |
|
$ |
20,957 |
|
$ |
84,178 |
|
$ |
63,199 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted FFO per share (1) |
|
$ |
0.36 |
|
$ |
0.27 |
|
$ |
1.06 |
|
$ |
0.81 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted AFFO per share (1) (2) |
|
$ |
0.37 |
|
$ |
0.25 |
|
$ |
0.92 |
|
$ |
0.80 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Diluted weighted average shares outstanding (1) |
|
98,435,964 |
|
83,918,117 |
|
91,133,607 |
|
78,942,919 |
| ||||
(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) Excluding the impact of a $5.0 million loss on extinguishment of debt related to the exchange of our 6.50% and 5.375% convertible senior notes, AFFO for the third quarter of 2018 was $41.4 million, or $0.42 per diluted common share.
The Company is presenting FFO and AFFO because management believes they are important supplemental measures of the Company’s operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated real properties, plus impairments of depreciated real properties and real estate related depreciation and amortization, and after adjustments for unconsolidated ventures.
The Company defines AFFO as funds from operations adjusted for accounting items such as non-cash stock-based compensation expense, income from mortgage servicing rights (“MSRs”), changes in fair value of certain derivatives that temporarily flow through earnings, amortization and write-offs of MSRs, deferred tax (benefit) provision and the amortization of the convertible senior notes conversion option. The Company also adds back one-time charges such as acquisition costs and impairment losses on real estate and gains (losses) on sales of real estate. The Company is generally not in the business of operating real estate property and has obtained real estate by foreclosure or through partial or full settlement of mortgage debt related to the Company’s loans to maximize the value of the collateral and minimize the Company’s exposure. Therefore, the Company deems such impairment and gains (losses) on real estate as an extension of the asset management of its loans, thus a recovery of principal or additional loss on the Company’s initial investment.
FFO and AFFO are not intended to be an indication of the Company’s cash flow 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 FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited.