0001253986 false 0001253986 2023-02-17 2023-02-17 0001253986 us-gaap:CommonStockMember 2023-02-17 2023-02-17 0001253986 us-gaap:SeriesAPreferredStockMember 2023-02-17 2023-02-17 0001253986 us-gaap:SeriesBPreferredStockMember 2023-02-17 2023-02-17 0001253986 us-gaap:SeriesCPreferredStockMember 2023-02-17 2023-02-17 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

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):

 

February 17, 2023

 

Arbor Realty Trust, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

maryland

(STATE OF INCORPORATION)

 

001-32136  20-0057959
(COMMISSION FILE NUMBER)  (IRS EMPLOYER ID. NUMBER)

 

333 Earle Ovington Boulevard, Suite 900 11553
Uniondale, New York (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)  

 

(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:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  
¨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 ¨

 

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. ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbols   Name of each exchange on which registered
Common Stock, par value $0.01 per share   ABR   New York Stock Exchange
Preferred Stock, 6.375% Series D Cumulative Redeemable, par value $0.01 per share   ABR-PD   New York Stock Exchange
Preferred Stock, 6.25% Series E Cumulative Redeemable, par value $0.01 per share   ABR-PE   New York Stock Exchange
Preferred Stock, 6.25% Series F Fixed-to-Floating Rate Cumulative Redeemable, par value $0.01 per share   ABR-PF   New York Stock Exchange

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition.

 

On February 17, 2023, Arbor Realty Trust, Inc. issued a press release announcing its earnings for the fourth quarter and full year ended December 31, 2022, a copy of which is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
Number
  Exhibit
99.1   Press Release, dated February 17, 2023.
     
104   Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

 

 

 

 

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.

 

  ARBOR REALTY TRUST, INC.
     
  By: /s/ Paul Elenio
  Name:  Paul Elenio
  Title:  Chief Financial Officer

 

Date: February 17, 2023

 

 

 

 

Exhibit 99.1

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

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 $0.49 per diluted common share

 

Distributable earnings of $0.60 per diluted common share1, well in excess of our current dividend, representing a 67% payout ratio

 

Declares cash dividend on common stock of $0.40 per share

 

Strong liquidity position with ~$685 million in cash and liquidity and ~$420 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.67% over benchmark rates2

 

Structured loan originations of $500.5 million and a portfolio of $14.46 billion

 

Agency loan originations of $1.55 billion and a servicing portfolio of ~$28.00 billion

 

Completed our first Freddie Mac Q Series securitization totaling ~$315 million

 

Full Year Highlights:

 

GAAP net income of $1.67 per diluted common share; distributable earnings of $2.23 per diluted common share1, representing an 11% increase over last year

 

Raised dividend 3 times in 2022 to an annual run rate of $1.60 per share, representing an 8% increase over the prior year

 

Best-in-class return on equity of 18%

 

Structured portfolio growth of 19% from loan originations of $6.15 billion

 

Agency servicing portfolio growth of 4% from loan originations of $4.77 billion

 

Continued success from our industry-leading securitization platform closing 4 new securitizations totaling $3.91 billion

 

Raised ~$486 million of accretive growth capital through several common and preferred equity offerings

 

Issued ~$438 million of debt offerings primarily to repay existing debt

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 2

 

Uniondale, NY, February 17, 2023 -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the fourth quarter ended December 31, 2022. Arbor reported net income for the quarter of $88.2 million, or $0.49 per diluted common share, compared to net income of $106.0 million, or $0.71 per diluted common share for the quarter ended December 31, 2021. Net income for the year was $284.8 million, or $1.67 per diluted common share, compared to $317.4 million, or $2.28 per diluted common share for the year ended December 31, 2021. Distributable earnings for the quarter was $114.0 million, or $0.60 per diluted common share, compared to $94.2 million, or $0.57 per diluted common share for the quarter ended December 31, 2021. Distributable earnings for the year was $405.7 million, or $2.23 per diluted common share, compared to $313.7 million, or $2.01 per diluted common share for the year ended December 31, 2021. 1

 

Agency Business

 

Loan Origination Platform

 

   Agency Loan Volume  (in thousands) 
   Quarter Ended   Year Ended 
   December 31,
2022
   September 30,
2022
   December 31,
2022
   December 31,
 2021
 
Fannie Mae  $1,174,827   $629,610   $2,919,566   $3,389,312 
Freddie Mac   295,258    350,980    1,353,001    1,016,142 
Private Label   25,629    35,671    217,542    1,436,853 
FHA   19,658    78,382    188,394    430,320 
SFR-Fixed Rate   33,800    16,678    89,683    136,931 
Total Originations  $1,549,172   $1,111,321   $4,768,186   $6,409,558 
                     
Total Loan Sales  $1,739,069   $1,082,136   $5,438,623   $6,415,169 
                     
Total Loan Commitments  $1,523,069   $1,464,235   $5,146,718   $6,347,752 

 

For the quarter ended December 31, 2022, the Agency Business generated revenues of $95.9 million, compared to $43.1 million for the third quarter of 2022. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $22.7 million for the quarter, reflecting a margin of 1.33%, compared to $13.4 million and 1.30% for the third quarter of 2022. Income from mortgage servicing rights was $17.1 million for the quarter, reflecting a rate of 1.12% as a percentage of loan commitments, compared to $17.6 million (excluding $1.8 million related to the sale of $296.9 million of bridge loans) and 1.51% for the third quarter of 2022.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 3

 

At December 31, 2022, loans held-for-sale was $354.1 million, with financing associated with these loans totaling $305.4 million.

 

Fee-Based Servicing Portfolio

 

The Company’s fee-based servicing portfolio totaled $28.00 billion at December 31, 2022 and excludes $152.7 million of private label loans originated that were not yet sold or securitized. Servicing revenue, net was $27.7 million for the quarter and consisted of servicing revenue of $43.0 million, net of amortization of mortgage servicing rights totaling $15.3 million.

 

   Fee-Based Servicing Portfolio ($ in thousands) 
   December 31, 2022   September 30, 2022   December 31, 2021 
   UPB   Wtd.
Avg. Fee
   Wtd. Avg. Life
(years)
   UPB   Wtd.
Avg. Fee
   Wtd. Avg. Life
(years)
   UPB   Wtd.
Avg. Fee
   Wtd. Avg. Life
(years)
 
Fannie Mae  $19,038,124    0.502%   8.1   $18,331,457    0.521%   8.3   $19,127,397    0.535%   8.0 
Freddie Mac   5,153,207    0.250%   9.0    4,979,612    0.260%   9.5    4,943,905    0.271%   9.3 
Private Label   2,074,859    0.185%   7.6    2,075,791    0.200%   8.2    1,711,326    0.200%   8.3 
FHA   1,155,893    0.149%   19.5    1,136,684    0.149%   19.8    985,063    0.154%   21.0 
Bridge   301,182    0.125%   1.7    299,696    0.125%   2.3    -    -    - 
SFR-Fixed Rate   274,764    0.198%   6.0    241,887    0.200%   6.2    191,698    0.200%   6.5 
Total  $27,998,029    0.411%   8.6   $27,065,127    0.424%   8.9   $26,959,389    0.449%   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 $34.4 million for the fair value of the guarantee obligation undertaken at December 31, 2022. The Company recorded a $3.5 million net provision for loss sharing associated with CECL for the fourth quarter of 2022. At December 31, 2022, the Company’s total CECL allowance for loss-sharing obligations was $22.7 million, representing 0.12% of the Fannie Mae servicing portfolio.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 4

 

Structured Business

 

Portfolio and Investment Activity

 

   Structured Portfolio Activity ($ in thousands) 
   Quarter Ended   Year Ended 
   December 31, 2022   September 30, 2022   December 31, 2022   December 31, 2021 
   UPB   %   UPB   %   UPB   %   UPB   % 
Bridge:                                
Multifamily  $295,451    59%  $592,844    77%  $5,468,222    89%  $9,101,139    94%
SFR   161,580    32%   163,851    21%   613,819    10%   415,501    4%
    457,031    91%   756,695    98%   6,082,041    99%   9,516,640    98%
                                         
Mezzanine/Preferred Equity   43,497    9%   17,970    2%   69,606    1%   203,875    2%
Total Originations  $500,528    100%  $774,665    100%  $6,151,647    100%  $9,720,515    100%
                                         
Number of Loans Originated   50         52         318         422      
                                         
SFR Commitments  $352,673        $457,564        $1,078,744        $264,101      
                                         
Runoff  $1,117,806        $911,790        $3,818,554        $2,516,771      

 

   Structured Portfolio ($ in thousands) 
   December 31, 2022   September 30, 2022   December 31, 2021 
   UPB   %   UPB   %   UPB   % 
Bridge:                        
Multifamily  $12,830,999    89%  $13,455,073    90%  $10,800,896    89%
SFR   927,373    6%   825,771    6%   408,245    3%
Other   337,682    2%   337,682    2%   541,568    4%
    14,096,054    98%   14,618,526    98%   11,750,709    97%
                               
Mezzanine/Preferred Equity   324,224    2%   335,003    2%   378,891    3%
SFR Permanent   35,845    <1%   36,114    <1%   29,395    <1%
Total Portfolio  $14,456,123    100%  $14,989,643    100%  $12,158,995    100%

 

At December 31, 2022, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $14.56 billion, with a weighted average current interest pay rate of 8.17%, compared to $14.99 billion and 6.90% at September 30, 2022. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 8.42% at December 31, 2022, compared to 7.15% at September 30, 2022.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 5

 

The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2022, excluding loan loss reserves, was $14.83 billion with a weighted average yield of 8.12%, compared to $15.01 billion and 6.57% for the third quarter of 2022. The increase in average yield was primarily due to increases in the benchmark index rates in the fourth quarter of 2022, as well as from back interest received upon the payoff of a non-performing loan.

 

During the fourth quarter of 2022, the Company recorded a $10.3 million provision for loan losses associated with CECL. At December 31, 2022, the Company’s total allowance for loan losses was $132.6 million. The Company had four non-performing loans with a carrying value of $7.7 million, before related loan loss reserves of $5.1 million, compared to four loans with a carrying value of $24.2 million, before related loan loss reserves of $5.1 million at September 30, 2022.

 

Financing Activity

 

The Company completed its first loan securitization vehicle through Freddie Mac’s Q Series securitization program, totaling $315.8 million of first priority multifamily mortgage loans. A series of pass-through certificates totaling $236.9 million were purchased by third-party investors, and the Company retained subordinate and interest-only classes in the issuing vehicle of $79.0 million. The facility has an initial interest rate of 2.00% over one-month SOFR, excluding certain fees and transaction costs.

 

The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2022 was $13.28 billion with a weighted average interest rate including fees of 6.50% as compared to $13.94 billion and a rate of 5.33% at September 30, 2022. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2022 was $13.69 billion, as compared to $13.90 billion for the third quarter of 2022. The average cost of borrowings for the fourth quarter of 2022 was 5.80%, compared to 4.49% for the third quarter of 2022. The increase in average cost was due to increases in the benchmark index rates in the fourth quarter of 2022.

 

Capital Markets

 

The Company issued $150.0 million of 8.50% senior notes due 2027 in a private placement. The Company received proceeds totaling $147.7 million, net of discount and fees from this offering. The Company used the net proceeds to repay debt and for general corporate purposes.

 

Dividend

 

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.40 per share of common stock for the quarter ended December 31, 2022. The dividend is payable on March 17, 2023 to common stockholders of record on March 3, 2023. The ex-dividend date is March 2, 2023.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 6

 

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) 267-6316 for domestic callers and (203) 518-9783 for international callers. Please use participant passcode ABRQ422 when prompted by the operator.

 

A telephonic replay of the call will be available until February 24, 2023. The replay dial-in numbers are (800) 688-7945 for domestic callers and (402) 220-1370 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 severity and duration of 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, 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.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 7

 

Notes

 

1.During the quarterly earnings conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A supplemental schedule of non-GAAP financial measures and the comparable GAAP financial measure can be found on the last page of this release.

 

2.Amounts reflect approximate balances as of February 8, 2023.

 

Contact:

Arbor Realty Trust, Inc.

Paul Elenio, Chief Financial Officer

516-506-4422

pelenio@arbor.com

 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 8

 

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

                   

Consolidated Statements of Income - (Unaudited)

($ in thousands—except share and per share data)

 

   Quarter Ended December 31,   Year Ended December 31, 
   2022   2021   2022   2021 
   (Unaudited)   (Unaudited)         
Interest income  $320,597   $144,315   $948,401   $466,087 
Interest expense   207,538    67,883    557,617    212,005 
Net interest income   113,059    76,432    390,784    254,082 
                     
Other revenue:                    
Gain on sales, including fee-based services, net   23,290    36,935    55,816    123,037 
Mortgage servicing rights   17,059    34,542    69,346    130,230 
Servicing revenue, net   27,679    23,875    92,192    74,814 
Property operating income   846    185    1,877    185 
Gain (loss) on derivative instruments, net   16,526    4,636    26,609    (2,684)
Other income, net   (1,500)   3,425    (17,563)   7,566 
Total other revenue   83,900    103,598    228,277    333,148 
                     
Other expenses:                    
Employee compensation and benefits   42,089    43,149    161,825    171,796 
Selling and administrative   13,030    11,868    53,990    45,575 
Property operating expenses   694    297    2,136    718 
Depreciation and amortization   2,640    1,865    8,732    7,215 
Provision for loss sharing (net of recoveries)   4,061    (5,096)   1,862    (6,167)
Provision for credit losses (net of recoveries)   11,469    (8,424)   21,169    (21,113)
Litigation settlement   7,350    -    7,350    - 
Total other expenses   81,333    43,659    257,064    198,024 
                     
Income before extinguishment of debt, sale of real estate, income from equity affiliates, and income taxes   115,626    136,371    361,997    389,206 
Loss on extinguishment of debt   (320)   (2,004)   (4,933)   (3,374)
Gain on sale of real estate   -    2,466    -    3,693 
(Loss) income from equity affiliates   (4,260)   2,472    14,247    34,567 
Provision for income taxes   (4,318)   (12,929)   (17,484)   (46,285)
                     
Net income   106,728    126,376    353,827    377,807 
                     
Preferred stock dividends   10,342    8,672    40,954    21,888 
Net income attributable to noncontrolling interest   8,234    11,701    28,044    38,507 
Net income attributable to common stockholders  $88,152   $106,003   $284,829   $317,412 
                     
Basic earnings per common share  $0.51   $0.72   $1.72   $2.30 
Diluted earnings per common share  $0.49   $0.71   $1.67   $2.28 
                     
Weighted average shares outstanding:                    
Basic   174,444,084    147,899,133    165,355,167    137,830,691 
Diluted   209,743,771    166,104,325    199,112,630    156,089,595 
                     
Dividends declared per common share  $0.40   $0.36   $1.54   $1.38 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 9

 

 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

               

 Consolidated Balance Sheets

($ in thousands—except share and per share data)

               

   December 31,   December 31, 
   2022   2021 
Assets:          
Cash and cash equivalents  $534,357   $404,580 
Restricted cash   713,808    486,690 
Loans and investments, net (allowance for credit losses of $132,559 and $113,241)   14,254,674    11,981,048 
Loans held-for-sale, net   354,070    1,093,609 
Capitalized mortgage servicing rights, net   401,471    422,734 
Securities held-to-maturity, net (allowance for credit losses of $3,153 and $1,753)   156,547    140,484 
Investments in equity affiliates   79,130    89,676 
Due from related party   77,419    84,318 
Goodwill and other intangible assets   96,069    100,760 
Other assets   371,440    269,946 
Total assets  $17,038,985   $15,073,845 
           
Liabilities and Equity:          
Credit and repurchase facilities  $3,841,814   $4,481,579 
Securitized debt   7,849,270    5,892,810 
Senior unsecured notes   1,385,994    1,280,545 
Convertible senior unsecured notes, net   280,356    259,385 
Junior subordinated notes to subsidiary trust issuing preferred securities   143,128    142,382 
Due to related party   12,350    26,570 
Due to borrowers   61,237    96,641 
Allowance for loss-sharing obligations   57,168    56,064 
Other liabilities   335,789    287,885 
Total liabilities   13,967,106    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 - 178,230,522 and 151,362,181 shares issued and outstanding   1,782    1,514 
Additional paid-in capital   2,204,481    1,797,913 
Retained earnings   97,049    62,532 
Total Arbor Realty Trust, Inc. stockholders’ equity   2,936,996    2,418,122 
           
Noncontrolling interest   134,883    131,862 
Total equity   3,071,879    2,549,984 
           
Total liabilities and equity  $17,038,985   $15,073,845 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 10

 

 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

               

 Statement of Income Segment Information - (Unaudited)

(in thousands)

                   

   Quarter Ended December 31, 2022 
   Structured Business   Agency Business   Other / Eliminations (1)   Consolidated 
Interest income  $305,775   $14,822   $-   $320,597 
Interest expense   199,968    7,570    -    207,538 
Net interest income   105,807    7,252    -    113,059 
                     
Other revenue:                    
Gain on sales, including fee-based services, net   -    23,290    -    23,290 
Mortgage servicing rights   -    17,059    -    17,059 
Servicing revenue   -    43,023    -    43,023 
Amortization of MSRs   -    (15,344)   -    (15,344)
Property operating income   846    -    -    846 
Gain on derivative instruments, net   -    16,526    -    16,526 
Other income, net   2,012    (3,512)   -    (1,500)
Total other revenue   2,858    81,042    -    83,900 
                     
Other expenses:                    
Employee compensation and benefits   13,338    28,751    -    42,089 
Selling and administrative   6,260    6,770    -    13,030 
Property operating expenses   694    -    -    694 
Depreciation and amortization   1,467    1,173    -    2,640 
Provision for loss sharing (net of recoveries)   -    4,061    -    4,061 
Provision for credit losses (net of recoveries)   10,407    1,062    -    11,469 
Litigation settlement   7,350    -    -    7,350 
Total other expenses   39,516    41,817    -    81,333 
                     
Income before extinguishment of debt, income from equity affiliates, and income taxes   69,149    46,477    -    115,626 
                     
Loss on extinguishment of debt   (320)   -    -    (320)
Loss from equity affiliates   (4,260)   -    -    (4,260)
Benefit from (provision for) income taxes   548    (4,866)   -    (4,318)
                     
Net income   65,117    41,611    -    106,728 
                     
Preferred stock dividends   10,342    -    -    10,342 
Net income attributable to noncontrolling interest   -    -    8,234    8,234 
Net income attributable to common stockholders  $54,775   $41,611   $(8,234)  $88,152 

 

(1) Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments.                                

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 11

 

 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

         

 Balance Sheet Segment Information - (Unaudited)

(in thousands)

           

   December 31, 2022 
   Structured
Business
   Agency
Business
   Consolidated 
Assets:            
Cash and cash equivalents  $200,514   $333,843   $534,357 
Restricted cash   713,615    193    713,808 
Loans and investments, net   14,254,674    -    14,254,674 
Loans held-for-sale, net   -    354,070    354,070 
Capitalized mortgage servicing rights, net   -    401,471    401,471 
Securities held-to-maturity, net   -    156,547    156,547 
Investments in equity affiliates   79,130    -    79,130 
Goodwill and other intangible assets   12,500    83,569    96,069 
Other assets   367,837    81,022    448,859 
Total assets  $15,628,270   $1,410,715   $17,038,985 
                
Liabilities:               
Debt obligations  $13,195,120   $305,442   $13,500,562 
Allowance for loss-sharing obligations   -    57,168    57,168 
Other liabilities   299,559    109,817    409,376 
Total liabilities  $13,494,679   $472,427   $13,967,106 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2022 Results and Declares Dividend of $0.40 per Share

 

February 17, 2023       Page 12

 

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, 
   2022   2021   2022   2021 
Net income attributable to common stockholders  $88,152   $106,003   $284,829   $317,412 
                     
Adjustments:                    
Net income attributable to noncontrolling interest   8,234    11,701    28,044    38,507 
Income from mortgage servicing rights   (17,059)   (34,542)   (69,346)   (130,230)
Deferred tax provision (benefit)   6,092    201    (1,741)   10,892 
Amortization and write-offs of MSRs   22,528    29,268    104,378    91,356 
Depreciation and amortization   3,225    2,763    11,069    10,900 
Loss on extinguishment of debt   320    2,004    4,933    3,374 
Provision for credit losses, net   14,823    (21,646)   25,077    (39,856)
(Gain) loss on derivative instruments, net   (14,992)   (1,053)   3,480    432 
Gain on real estate from settlement of loan   -    (2,466)   -    (2,466)
Stock-based compensation   2,643    1,943    14,973    9,929 
Loss on redemption of preferred stock   -    -    -    3,479 
                     
Distributable earnings (1)  $113,966   $94,176   $405,696   $313,729 
                     
Diluted distributable earnings per share (1)  $0.60   $0.57   $2.23   $2.01 
                     
Diluted weighted average shares outstanding (1) (2)   191,273,691    166,104,325    182,224,404    156,089,595 

 

(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 year ended December 31, 2022, the diluted weighted average shares outstanding excluded 18,470,080 and 16,888,226 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, changes in fair value of GSE-related derivatives that temporarily flow through earnings (net of any tax impact), 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.