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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 7, 2005 (November 7, 2005)
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Arbor Realty Trust, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 001-32136 20-0057959
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
333 Earle Ovington Boulevard, Suite 900 Uniondale, New York 11553
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(Address of principal executive offices) (Zip Code)
(516) 832-8002
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(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))
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Arbor Realty Trust, Inc.
Current Report on Form 8-K
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 7, 2005, Arbor Realty Trust, Inc. (the "Company") issued a
press release announcing its earnings for the quarter ended September 30, 2005,
a copy of which is attached hereto as Exhibit 99.1.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit Number
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99.1 Press Release, dated November 7, 2005.
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.
Dated: November 7, 2005 ARBOR REALTY TRUST, INC.
By: /s/ Walter K. Horn
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Name: Walter K. Horn
Title: General Counsel, Secretary and
Director of Compliance
EXHIBIT INDEX
Exhibit Number
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99.1 Press Release, dated November 7, 2005.
Exhibit 99.1
ARBOR REALTY TRUST REPORTS THIRD QUARTER 2005 RESULTS
Third Quarter Highlights:
- Net income increased 11% to $8.5 million from 3Q04
- Diluted earnings per share of $0.50
- New loans and investments of $303 million
- Declared quarterly dividend of $0.65 per share, an increase of 14% from
prior quarter
UNIONDALE, N.Y., Nov. 7 /PRNewswire-FirstCall/ -- Arbor Realty Trust, Inc.
(NYSE: ABR), a real estate investment trust focused on the business of investing
in real estate related bridge and mezzanine loans, preferred and direct equity
investments, mortgage-related securities and other real estate related assets,
today announced financial results for the quarter ended September 30, 2005.
Arbor reported net income for the quarter of $8.5 million, or $0.50 per diluted
common share, compared to net income for the quarter ended September 30, 2004 of
$7.6 million, or $0.47 per diluted common share. Net income for the nine months
ended September 30, 2005 was $41.0 million, or $2.44 per diluted common share,
compared to net income for the nine months ended September 30, 2004 of $16.5
million, or $1.25 per diluted common share.
"Our quarterly results continue to demonstrate successful execution of our
strategy," said Ivan Kaufman, Chairman and Chief Executive Officer of Arbor.
"Over the last several quarters, we have taken various steps to enhance our
long-term franchise value despite an increasingly competitive market. In the
third quarter we successfully deployed funds generated from trust-preferred
securities issued in the prior quarter. Excluding the impact of the equity
participation interest received last quarter, our net interest margin increased
by $2.2 million over the second quarter."
During the third quarter, Arbor originated 16 loans and investments
totaling $303 million, the highest quarterly loan volume in Arbor's history. Of
this volume, $77 million was from a loan originally scheduled to close last
quarter and $226 million represented new originations. "The third quarter loan
volume demonstrates our ability to consistently add high-quality assets despite
the competitive market," said Mr. Kaufman.
Mr. Kaufman continued, "Since completion of our CDO in the first quarter,
we have closed $184 million of fixed rate loans, or 26% of the loan volume this
year. Fixed rate loans tend to be longer-term assets that generally include
prepayment protection. Because we are able to hedge these assets within the CDO,
we are able to lock in attractive spreads for the duration of the loan. While
these spreads are somewhat lower than spreads historically earned on variable
rate product, these long-term assets provide stable returns which will enhance
our franchise value."
Total revenues for the quarter ended September 30, 2005 were $27.1 million,
an increase of 61% from the third quarter of 2004.
At September 30, 2005, the net balance in the loan and investment portfolio
was $1.1 billion, an increase of 15% from June 30, 2005. The average balance of
the loan and investment portfolio during the third quarter was $1.0 billion and
the average yield on these assets for the quarter was 10.11%, representing a 26
basis point increase over the second quarter, excluding the impact from the
second quarter equity participation interest distribution.
Interest expense for the quarter was $12.5 million, an increase of 123%
from the third quarter of 2004. This increase reflects increased average
borrowings during the quarter as well as increased interest rates. The average
balance of debt financing on the loan and investment portfolio during the
quarter was $752 million and the average cost of these borrowings was 6.40%.
For the third quarter, Arbor's manager, Arbor Commercial Mortgage, LLC,
earned $0.7 million of incentive compensation, representing 25% of the amount by
which earnings for the four most recent quarters exceeded a 9.5% return on
equity, as described in the management agreement with Arbor's manager. Arbor
Commercial Mortgage intends to exercise its option to receive all of its
incentive compensation in shares of Arbor's common stock.
Financing Activity
Mr. Kaufman commented, "As we discussed last quarter, we believe we have
enhanced the long-term value of our franchise by issuing approximately $100
million of long-term junior subordinated notes at historically low spreads. We
continue to view the issuance of these notes as a favorable alternative to
raising capital and as a preferable avenue to financing the future growth of our
portfolio. While they were slightly dilutive last quarter, we are pleased with
the progress made during the third quarter in deploying these funds."
As of September 30, 2005, Arbor's financing facilities for the loan and
investment portfolio totaled approximately $1 billion and borrowings outstanding
under such facilities were $830 million.
Portfolio Activity
During the third quarter of 2005, we originated 16 new loans and
investments totaling $303 million. Of the new loans and investments, seven were
bridge loans totaling $138 million, six were mezzanine loans totaling $123
million, and three were junior participating interests totaling $42 million.
During the quarter, eight loans with an outstanding balance of
approximately $160 million were paid off prior to their scheduled maturities. Of
this amount, $156 million were loans on properties that were either sold or
refinanced outside of Arbor and $4 million was concurrent with an Arbor
refinance.
At September 30, 2005, the loan and investment portfolio unpaid principal
balance was $1.1 billion with a weighted average current interest pay rate of
9.03%. At the same date, advances on financing facilities pertaining to the loan
and investment portfolio totaled $830 million, with a weighted average interest
rate of 5.73%.
The loan and investment portfolio continues to perform according to terms
and there have been no defaults. Arbor continues to seek loans and investments
that will generate superior risk-adjusted returns with a long-term objective of
capital preservation and earnings stability in varying interest rate and credit
cycles.
Dividend
As previously announced, the Board of Directors declared a dividend of
$0.65 per share for the quarter ended September 30, 2005, which will be paid on
November 11, 2005 to shareholders of record on October 27, 2005. This dividend
represents a 14% increase over the previous quarter and reflects management's
understanding of the importance to investors of a stable and growing dividend.
Equity Participation Interests
During the quarter there were no material changes to the status of the
investments with equity participation interests disclosed last quarter and no
income was recorded from any of these interests. There were two new IRR lookback
loans made during the quarter. These loans total $14.8 million, have a weighted
average current pay rate of 9.44% and have a weighted average IRR of 14.94%. The
IRR lookback rate is not being accrued into income at this time.
Earnings Conference Call
Management will host a conference call today at 10:00 a.m. EST. A live
webcast of the conference call will be available online at
http://www.arborrealtytrust.com. Web participants are encouraged to go to
Arbor's Web site at least 15 minutes prior to the start of the call to register,
download and install any necessary audio software. Listening to the webcast
requires speakers and RealPlayer(TM) software, downloadable without charge at
http://www.real.com. Those without Web access should access the call
telephonically at least ten minutes prior to the conference call. The dial-in
numbers are 866-271-5140 for domestic callers and 617-213-8893 for international
callers. The participant passcode for both is 58062009.
After the live webcast, the call will remain available on Arbor's Web site,
http://www.arborrealtytrust.com through November 28, 2005. In addition, a
telephonic replay of the call will be available until November 25, 2005. The
replay dial-in number is 888-286-8010 for domestic callers and 617-801-6888.
Please use passcode: 96026579.
About Arbor Realty Trust, Inc.
Arbor Realty Trust, Inc. is a real estate investment trust which invests in
a diversified portfolio of multi-family and commercial real estate related
bridge and mezzanine loans, preferred equity investments, mortgage related
securities and other real estate related assets. Arbor commenced operations in
July 2003 and conducts substantially all of its operations through its operating
partnership, Arbor Realty Limited Partnership and its subsidiaries. Arbor is
externally managed and advised by Arbor Commercial Mortgage, LLC, a national
commercial real estate finance company operating through 15 offices in the U.S.
that specializes in debt and equity financing for multi-family and commercial
real estate.
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 the Arbor's Annual Report on Form 10-K for the year ended December
31, 2004 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, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
UNAUDITED
Three Months Ended Nine Months Ended
September 30, September 30,
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2005 2004 2005 2004
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Revenue:
Interest income $ 27,073,076 $ 16,843,068 $ 89,489,543 $ 36,945,809
Other income 35,730 9,098 423,574 35,629
Total revenue 27,108,806 16,852,166 89,913,117 36,981,438
Expenses:
Interest expense 12,462,458 5,592,059 30,479,170 11,526,496
Employee compensation
and benefits 948,312 448,564 3,059,208 1,679,007
Stock based
compensation 808,687 49,792 1,273,542 256,799
Selling and
administrative 1,213,889 544,575 2,987,662 1,155,729
Management fee --
related party 1,322,643 1,058,845 10,313,908 1,892,902
Total expenses 16,755,989 7,693,835 48,113,490 16,510,933
Income before
minority interest
and income from
equity affiliates 10,352,817 9,158,331 41,799,627 20,470,505
Income from equity
affiliates - - 8,453,440 -
Income before
minority interest 10,352,817 9,158,331 50,253,067 20,470,505
Income allocated to
minority interest 1,881,055 1,524,359 9,209,291 3,952,258
Net income $ 8,471,762 $ 7,633,972 $ 41,043,776 $ 16,518,247
Basic earnings per
common share $ 0.50 $ 0.48 $ 2.44 $ 1.28
Diluted earnings per
common share $ 0.50 $ 0.47 $ 2.44 $ 1.25
Dividends declared
per common share $ 0.57 $ 0.43 $ 1.59 $ 1.16
Weighted average number
of shares of common
stock outstanding:
Basic 17,003,174 15,775,029 16,812,537 12,951,875
Diluted 20,779,243 19,344,325 20,612,717 16,414,387
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2005 2004
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(Unaudited)
Assets:
Cash $ 15,283,852 $ 6,401,701
Restricted cash 52,663,234 -
Loans and investments, net 1,079,215,917 831,783,364
Related party loans, net 7,749,538 7,749,538
Available-for-sale securities, at
fair value 33,627,095 46,582,592
Investment in equity affiliates 16,599,976 5,254,733
Other assets 29,679,504 14,523,249
Total assets $ 1,234,819,116 $ 912,295,177
Liabilities and Stockholders' Equity:
Repurchase agreements $ 387,318,180 $ 409,109,372
Collateralized debt obligations 301,319,000 -
Notes payable 143,019,405 165,771,447
Notes payable -- related party 30,000,000 -
Due to related party 891,763 1,484,485
Due to borrowers 5,051,472 8,587,070
Other liabilities 15,600,493 4,339,899
Total liabilities 883,200,313 589,292,273
Minority interest 63,816,505 60,249,731
Stockholders' equity:
Preferred stock, $0.01 par value:
100,000,000 shares authorized;
3,776,069 shares issued and
outstanding 37,761 37,761
Common stock, $0.01 par value:
500,000,000 shares authorized; 17,029,471
and 16,467,218 shares issued and
outstanding at September 30, 2005 and
December 31, 2004, respectively 170,295 164,672
Additional paid-in capital 266,025,383 254,427,982
Retained earnings 23,177,398 8,813,138
Deferred compensation (2,064,932) (160,780)
Accumulated other comprehensive
income (loss) 456,393 (529,600)
Total stockholders' equity 287,802,298 262,753,173
Total liabilities and stockholders'
equity $ 1,234,819,116 $ 912,295,177
Contacts: Investors:
Arbor Realty Trust, Inc. Stephanie Carrington/ Denise Roche
Paul Elenio, Chief Financial Officer The Ruth Group
516-832-7422 646-536-7017 / 7008
paul.elenio@thearbornet.com scarrington@theruthgroup.com
droche@theruthgroup.com
Media:
Bonnie Habyan, SVP of Marketing
516-229-6615
bonnie.habyan@thearbornet.com
SOURCE Arbor Realty Trust, Inc.
-0- 11/07/2005
/CONTACT: Paul Elenio, Chief Financial Officer, +1-516-832-7422,
paul.elenio@thearbornet.com, or Media: Bonnie Habyan, SVP of Marketing,
+1-516-229-6615, bonnie.habyan@thearbornet.com, both of Arbor Realty Trust,
Inc.; or Investors: Stephanie Carrington, +1-646-536-7017,
scarrington@theruthgroup.com, or Denise Roche, +1-646-536-7008,
droche@theruthgroup.com, both of The Ruth Group, for Arbor Realty Trust, Inc./
/Web site: http://www.arborrealtytrust.com /
(ABR)