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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) October 29, 2004
(October 29, 2004)
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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 (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
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))
Arbor Realty Trust, Inc.
Current Report on Form 8-K
Item 2.02 Results of Operations and Financial Condition.
On October 28, 2004, Arbor Realty Trust, Inc. (the "Company") issued a
press release announcing its earnings for the quarterly period ended September
30, 2004, a copy of which is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number
99.1 Press Release, dated October 28, 2004.
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: October 29, 2004 ARBOR REALTY TRUST, INC..
By: /s/ Frederick C. Herbst
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Name: Frederick C. Herbst
Title: Chief Financial Officer
EXHIBIT INDEX
Exhibit Number
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99.1 Press Release, dated October 28, 2004.
Exhibit 99.1
Arbor Realty Trust Reports Record Third Quarter 2004 Results
- Net income of $7.6 million, increase of 32% from 2Q04
- Net income of $0.48 per basic share; $0.47 per diluted share
- New loan/investment originations of $165 million
- Total loans/investments of $791 million at end of 3Q04, up 19% from
June 30, 2004
- Declared quarterly dividend of $0.43 per share
UNIONDALE, N.Y., Oct. 28 /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 equity
investments, mortgage related securities and other real estate related assets,
today announced financial results for the quarter ended September 30, 2004.
Arbor reported net income for the quarter ended September 30, 2004 of $7.6
million, or $0.48 per basic common share and $0.47 per diluted common share,
compared to net income for the quarter ended June 30, 2004 of $5.8 million, or
$0.39 per basis common share or $0.38 per diluted share. For the nine months
ended September 30, 2004, net income totaled $16.5 million, or $1.28 per basic
common share and $1.25 per diluted common share.
"Once again, we are pleased to report on the successful implementation of
our strategy to grow our portfolio and earnings," said Ivan Kaufman, Chairman
and Chief Executive Officer of Arbor Realty Trust. "The growth of our
portfolio illustrates the success we have had in deploying the funds from
April's IPO. The record earnings we achieved represent our ongoing commitment
to enhance shareholder value through strong financial performance."
Kaufman added, "During the quarter, we originated eight loans and
investments totaling $165 million. We continue to assess market conditions and
focus on opportunities to optimize our capital structure. We believe the level
of originations this quarter reflects our goal of strategically enhancing
shareholder value. Our pipeline remains strong and we continue to see
significant opportunity to further augment the portfolio."
Total revenues for the quarter ended September 30, 2004 were $16.9
million, of which $16.5 million was from the loan and investment portfolio.
This is an increase of 41% from the previous quarter. The balance in the loan
and investment portfolio increased to $791 million by quarter end, up from
$664 million as of June 30, 2004. The average balance of the loan and
investment portfolio was $754 million during the third quarter and the average
yield on these assets was 8.55%.
As of September 30, Arbor had six loans and investments with equity
participation interests, referred to as equity kickers. These equity kickers
have the potential to generate additional revenues to the Company as a result
of excess cash flows being distributed and/or as appreciated properties are
sold or refinanced. In the third quarter, one such investment, Prime Retail,
Inc., made a distribution reflecting excess cashflows generated through
September 30, 2004. Arbor's portion of this distribution was $667,000 and was
recorded as interest income in the third quarter 2004.
In addition, Arbor invested in mortgage-backed securities, which had a
weighted average balance of $52.6 million for the third quarter with an
average yield of 2.80%. These assets were financed by borrowings with a
weighted average balance of $50.2 million and an average cost of 1.65%.
Interest expense for the quarter was $5.6 million, an increase of 69% from
the previous quarter, of which $5.4 million was from the debt financing of the
loan and investment portfolio. This growth reflects increased leverage during
the quarter. The average balance of debt financing on the loan and investment
portfolio was $462 million during the quarter and the average cost of these
borrowings was 4.55%.
The management fee for the quarter included $499,000 of incentive
compensation to the manager. This fee represents 25% of the amount by which
the earnings for the last twelve months exceeded a 9.5% return on equity
threshold, as described in the Management Agreement with the manager. The
manager intends to exercise its option to receive the entire amount of its fee
in Arbor common stock.
Financing Activity
Arbor maintains four financing facilities for its loan and investment
portfolio with total capacity of $750 million. Outstanding balances under
these facilities totaled $561 million as of September 30, 2004.
While it is anticipated that capacity within these financing facilities is
adequate to support continued growth in the portfolio, Arbor continues to
explore additional financing alternatives to maximize shareholder returns. As
previously announced, Arbor recently hired an executive to oversee the
completion and management of a collateralized debt obligation (CDO) issuance,
which is anticipated to be executed over the next several months. In
addition, the Company continues to explore other opportunities to obtain
unsecured financing.
Common Stock
As part of the July 1, 2003 formation transactions of Arbor and the
related private placement, Arbor issued warrants for 1,610,000 shares of stock
and 629,345 operating partnership units, exercisable at $15.00 per share or
operating partnership unit. In July 2004, such warrants became exercisable.
Through October 15, 2004, a total of 1,236,357 warrants were exercised,
generating $11.7 million in new capital. In addition, all of the operating
partnership unit warrants were exercised by the manager, generating $9.4
million in new capital. A schedule summarizing the warrant activity to date
is attached to this press release.
Portfolio Activity
During the second quarter, eight new loans totaling $165 million were
originated, of which $149 million was funded in the quarter. Of the amount
funded, $13 million was participated out to other parties. Participations are
being used on certain transactions to manage credit exposure and optimize
usage of capital. Of the new loans, five were mezzanine loans totaling $121
million and three were bridge loans totaling $44 million. In addition to the
new loans, additional fundings of $8.7 million were made on commitments issued
in prior quarters. During the quarter, loan payoffs and pay downs aggregated
$17.4 million.
At September 30, 2004, the loan and investment portfolio balance was $791
million, with a weighted average current interest pay rate of 7.49%. At the
same date, advances on financing facilities pertaining to the loan and
investment portfolio totaled $514 million, with a weighted average funding
cost of 3.84%. These balances constitute an advance rate of approximately 65%
as of September 30, 2004.
The loan and investment portfolio continues to perform according to
expectations 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 disclosed on September 30, 2004, a dividend of $0.43 per
share for the quarter ended September 30, 2004 will be paid on October 29,
2004 to stockholders of record on October 15, 2004.
Earnings Conference Call
Management will host a conference call on Friday, October 29, 2004 at
10:00 a.m. EDT. 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 free 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 (888) 560-1989 for domestic callers and (973) 582-2830 for
international callers. The participant passcode for both is 5270702.
After the live webcast, the call will remain available on Arbor's Web
site, http://www.arborrealtytrust.com through November 26, 2004. In addition,
a telephonic replay of the call will be available until November 12, 2004.
The replay dial-in number is (877) 519-4471 for domestic callers and (973)
341-3080. Please use passcode: 5270702.
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. Arbor is externally
managed and advised by Arbor Commercial Mortgage, LLC, a national commercial
real estate finance company operating through 15 offices in the US 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 from time to time in the Arbor's periodic and 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.
Consolidated Balance Sheets
September 30, 2004 and December 31, 2003
30-Sep-04 31-Dec-03
Assets (unaudited)
Cash $16,650,785 $6,115,525
Loans and investments, net 766,902,095 286,036,610
Related party loans, net 24,353,569 35,940,881
Available-for-sale securities,
at fair value 49,897,181 --
Investment in equity affiliates 8,439,417 5,917,542
Other assets 11,738,861 4,153,874
Total assets $877,981,908 $338,164,432
Liabilities and stockholders' equity
Notes payable and repurchase agreements $561,379,488 $172,528,471
Dividends payable 8,660,551 --
Due to borrowers 7,088,108 8,409,945
Other liabilities 4,933,773 2,478,300
Total liabilities 582,061,920 183,416,716
Minority interest 48,575,265 43,631,602
Stockholders' Equity:
Preferred stock, $0.01 par value:
100,000,000 shares authorized;
3,146,724 shares issued and
outstanding 31,467 31,467
Common stock, $0.01 par value:
500,000,000 shares authorized;
16,022,516 and 8,199,567 shares
issued and outstanding as of
September 30, 2004 and December
31, 2003, respectively 160,225 81,996
Additional paid - in capital 247,968,777 112,215,649
Retained (distributions in excess
of) earnings 258,703 (691,865)
Deferred compensation (228,324) (521,133)
Accumulated other comprehensive loss (846,125) --
Total stockholders' equity 247,344,723 111,116,114
Total liabilities and
stockholders' equity $877,981,908 $338,164,432
Arbor Realty Trust, Inc.
Consolidated Statement of Operations
Three Months Nine Months Three Months
Ended Ended Ended
30-Sep-04 30-Sep-04 30-Sep-03
(unaudited) (unaudited) (unaudited)
Revenue
Interest income $16,843,068 $36,945,809 $4,669,990
Other income 9,098 35,629 500
Total revenue 16,852,166 36,981,438 4,670,490
Expenses
Interest expense 5,592,059 11,526,496 721,854
Employee compensation and benefits 448,564 1,679,007 446,845
Stock-based compensation 49,792 256,799 1,587,674
Selling and administrative 544,575 1,155,729 133,304
Management fee 1,058,845 1,892,902 293,501
Total expenses 7,693,835 16,510,933 3,183,178
Income before minority
interest 9,158,331 20,470,505 1,487,312
Income allocated to minority
interest 1,524,359 3,952,258 412,557
Net income $7,633,972 $16,518,247 $1,074,755
Weighted average common shares
outstanding
Basic 15,775,029 12,951,875 8,199,567
Diluted 19,344,325 16,414,387 11,346,291
Earnings per common share
Basic $0.48 $1.28 $0.13
Diluted $0.47 $1.25 $0.13
Arbor Realty Trust, Inc.
Schedule of Warrant Exercises
July 1 - Oct. 1 -
Sept. 30 Oct. 15 To Date
Common Stock
Warrants exercised
Cash exercise 439,430 341,265 780,695
Cashless exercise 452,529 3,333 455,862
Total warrants exercised 891,959 344,598 1,236,557
Common stock issued
Cash exercise 439,430 341,265 780,695
Cashless exercise 111,720 966 112,686
Total shares issued 551,150 342,231 893,381
Funds received $6,591,450 $5,118,975 $11,710,425
Operating Partnership Units
Warrants exercised for cash -- 629,345 629,345
Operating Partnership Units issued -- 629,345 629,345
Funds Received $- $9,440,175 $9,440,175
Contacts: Investors:
Arbor Realty Trust, Inc. Stephanie Carrington/ Denise Roche
Rick Herbst, Chief Financial Officer The Ruth Group
516-832-7408 646-536-7017 / 7008
rick.herbst@thearbornet.com scarrington@theruthgroup.com
droche@theruthgroup.com
Media:
Bonnie Habyan, VP of Marketing
516-229-6615
bonnie.habyan@thearbornet.com
SOURCE Arbor Realty Trust, Inc.
-0- 10/28/2004
/CONTACT: Rick Herbst, Chief Financial Officer of Arbor Realty Trust,
Inc., +1-516-832-7408, rick.herbst@thearbornet.com; 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.; Media: Bonnie Habyan, VP of Marketing of Arbor Realty
Trust, Inc., +1-516-229-6615 /
/Web site: http://www.arborrealtytrust.com /
(ABR)
CO: Arbor Realty Trust, Inc.
ST: New York
IN: RLT FIN
SU: ERN DIV CCA