Arbor Realty Trust Reports Fourth Quarter and Full Year 2012 Results and Declares Fourth Quarter 2012 Dividend
Fourth Quarter Highlights:
- Declares a common dividend of
$0.12 per share - FFO of
$0.9 million , or$0.03 per diluted common share1 - Net loss attributable to
Arbor Realty Trust, Inc. of$0.3 million , or$0.01 per diluted common share - Raised
$19.2 million of capital issuing 3.5 million common shares - Originated 10 new loans totaling
$90.8 million - Purchased five residential mortgage-backed securities totaling
$40.0 million - Adjusted book value per share
$10.41 , GAAP book value per share$7.34 1 - Recorded
$2.5 million in loan loss reserves
Subsequent Highlights:
- Closed a
$260.0 million collateralized loan obligation in January - Raised
$37.3 million of capital in a preferred stock offering in February - Improved funding sources by closing a
$50.0 million warehouse facility in February and increasing the capacity of two financing facilities by a total of$30.0 million in January
Full Year Highlights:
- Reinstated quarterly cash dividend, declaring
$0.405 per share of common stock related to the full year 2012 - FFO of
$23.5 million , or$0.87 per diluted common share1 - Net income attributable to
Arbor Realty Trust, Inc. of$21.5 million , or$0.79 per diluted common share - Closed a
$125.1 million collateralized loan obligation and a$15.0 million revolving line of credit - Raised
$36.7 million of capital issuing 7.0 million common shares in two offerings - Originated
$274.5 million of new loans and generated$85.3 million in cash from runoff - Purchased
$157.7 million in residential mortgage-backed securities - Generated gains of
$30.5 million from the retirement of CDO debt and$4.0 million from the sale of real estate held-for-sale - Recorded
$23.8 million in loan loss reserves - Recorded
$0.9 million in cash recoveries of previously recorded reserves
The balance of the Company's loan and investment portfolio, excluding loan loss reserves, at
The balance of debt that finances the Company's loan and investment portfolio at
Financing Activity
As of
On
Additionally, in
In
The Company is subject to various financial covenants and restrictions under the terms of the Company's CDO/CLO vehicles, credit facilities, and repurchase agreements. The Company believes that it was in compliance with all financial covenants and restrictions as of
The Company's CDO/CLO vehicles contain interest coverage and asset over collateralization covenants that must be met as of the waterfall distribution date in order for the Company to receive such payments. If the Company fails these covenants in any of its CDOs or CLO, all cash flows from the applicable vehicle would be diverted to repay principal and interest on the outstanding bonds and the Company would not receive any residual payments until that vehicle regained compliance with such covenants. As of the most recent determination dates in
The chart below is a summary of the Company's CDO/CLO compliance tests as of the most recent determination dates in
| Cash Flow Triggers | CDO I (3) | CDO II (3) | CDO III (3) | CLO I |
| Overcollateralization (1) | ||||
| Current | 172.73% | 138.89% | 105.90% | 142.96% |
| Limit | 145.00% | 127.30% | 105.60% | 137.86% |
| Pass / Fail | Pass | Pass | Pass | Pass |
| Interest Coverage (2) | ||||
| Current | 476.34% | 453.78% | 620.84% | 257.78% |
| Limit | 160.00% | 147.30% | 105.60% | 120.00% |
| Pass / Fail | Pass | Pass | Pass | Pass |
(1) The overcollateralization ratio divides the total principal balance of all collateral in the CDO/CLO by the total principal balance of the bonds associated with the applicable ratio. To the extent an asset is considered a defaulted security, the asset's principal balance for purposes of the overcollateralization test is the lesser of the asset's market value or the principal balance of the defaulted asset multiplied by the asset's recovery rate which is determined by the rating agencies.
(2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by the Company.
(3) CDO I, CDO II, and CDO III have reached the end of their replenishment periods. As such, investor capital is repaid quarterly from proceeds received from loan repayments held as collateral in accordance with the terms of the respective CDO.
Portfolio Activity
During the fourth quarter of 2012, Arbor purchased five residential mortgage-backed securities with a total face value of
During the fourth quarter of 2012, Arbor originated nine bridge loans totaling approximately
Additionally, 10 loans totaling approximately
At
As of
During the fourth quarter of 2012, the Company recorded
The Company had nine non-performing loans with a carrying value of approximately
Equity Offerings
In
In
Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of
Earnings Conference Call
Management will host a conference call today at
After the live webcast, the call will remain available on the Company's Website, www.arborrealtytrust.com, through
About
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
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 each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 11 and 12 of this release.
1. See attached supplemental schedule of non-GAAP financial measures.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| Quarter Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | ||
| Interest income | $ 20,859,047 | $ 18,762,829 | $ 79,998,762 | $ 73,867,556 |
| Interest expense | 9,824,542 | 11,411,004 | 40,866,832 | 51,651,933 |
| Net interest income | 11,034,505 | 7,351,825 | 39,131,930 | 22,215,623 |
| Other revenues: | ||||
| Property operating income | 5,604,657 | 4,647,105 | 30,173,754 | 23,359,492 |
| Other income | 544,235 | 98,050 | 1,280,289 | 188,485 |
| Total other revenues | 6,148,892 | 4,745,155 | 31,454,043 | 23,547,977 |
| Other expenses: | ||||
| Employee compensation and benefits | 3,005,535 | 4,498,442 | 10,173,572 | 11,195,663 |
| Selling and administrative | 2,160,153 | 2,251,555 | 7,882,914 | 7,325,801 |
| Property operating expenses | 6,466,269 | 6,136,198 | 27,963,386 | 21,428,112 |
| Depreciation and amortization | 1,586,921 | 1,609,776 | 5,794,013 | 5,090,498 |
| Provision for loan losses (net of recoveries) | 2,362,205 | 20,224,087 | 22,946,396 | 38,542,888 |
| Loss on sale and restructuring of loans | -- | 4,710,000 | -- | 5,710,000 |
| Management fee - related party | 2,500,000 | 2,250,000 | 10,000,000 | 8,300,000 |
| Total other expenses | 18,081,083 | 41,680,058 | 84,760,281 | 97,592,962 |
| Loss from continuing operations before gain on extinguishment of debt, income (loss) from equity affiliates and benefit from income taxes | (897,686) | (29,583,078) | (14,174,308) | (51,829,362) |
| Gain on extinguishment of debt | -- | 2,958,556 | 30,459,023 | 10,878,218 |
| Income (loss) from equity affiliates | 2,347 | (94,748) | (697,856) | 3,671,386 |
| (Loss) income before benefit from income taxes | (895,339) | (26,719,270) | 15,586,859 | (37,279,758) |
| Benefit from income taxes | 275,000 | -- | 801,558 | -- |
| (Loss) income from continuing operations | (620,339) | (26,719,270) | 16,388,417 | (37,279,758) |
| Loss on impairment of real estate held-for-sale | -- | (700,000) | -- | (1,450,000) |
| Gain on sale of real estate held-for-sale | 466,310 | -- | 3,953,455 | -- |
| (Loss) income from operations of real estate held-for-sale | (59,241) | (308,591) | 1,374,583 | (1,366,299) |
| Income (loss) from discontinued operations | 407,069 | (1,008,591) | 5,328,038 | (2,816,299) |
| Net (loss) income | (213,270) | (27,727,861) | 21,716,455 | (40,096,057) |
| Net income attributable to noncontrolling interest | 53,969 | 54,037 | 215,567 | 215,656 |
| Net (loss) income attributable to Arbor Realty Trust, Inc. | $ (267,239) | $ (27,781,898) | $ 21,500,888 | $ (40,311,713) |
| Basic (loss) earnings per common share: | ||||
| (Loss) income from continuing operations, net of noncontrolling interest | $ (0.02) | $ (1.11) | $ 0.60 | $ (1.50) |
| Income (loss) from discontinued operations | 0.01 | (0.04) | 0.20 | (0.11) |
| Net (loss) income attributable to Arbor Realty Trust, Inc. | $ (0.01) | $ (1.15) | $ 0.80 | $ (1.61) |
| Diluted (loss) earnings per common share: | ||||
| (Loss) income from continuing operations, net of noncontrolling interest | $ (0.02) | $ (1.11) | $ 0.59 | $ (1.50) |
| Income (loss) from discontinued operations | 0.01 | (0.04) | 0.20 | (0.11) |
| Net (loss) income attributable to Arbor Realty Trust, Inc. | $ (0.01) | $ (1.15) | $ 0.79 | $ (1.61) |
| Dividends declared per common share | $ 0.110 | $ -- | $ 0.285 | $ -- |
| Weighted average number of shares of common stock outstanding: | ||||
| Basic | 30,868,790 | 24,239,100 | 26,956,938 | 24,968,894 |
| Diluted | 30,868,790 | 24,239,100 | 27,211,287 | 24,968,894 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| December 31, | December 31, | |
| 2012 | 2011 | |
| (Unaudited) | ||
| Assets: | ||
| Cash and cash equivalents | $ 29,188,889 | $ 55,236,479 |
| Restricted cash (includes $41,537,212 and $65,357,993 from consolidated VIEs, respectively) | 42,535,514 | 67,326,530 |
| Loans and investments, net (includes $1,113,745,356 and $1,093,893,014 from consolidated VIEs, respectively) | 1,325,667,053 | 1,302,440,660 |
| Available-for-sale securities, at fair value (includes $1,100,000 and $2,000,000 from consolidated VIEs, respectively) | 3,552,736 | 4,276,368 |
| Securities held-to-maturity, net (includes $0 and $742,602 from consolidated VIEs, respectively) | 42,986,980 | 29,942,108 |
| Investment in equity affiliates | 59,581,242 | 60,450,064 |
| Real estate owned, net (includes $80,787,215 and $83,099,540 from consolidated VIEs, respectively) | 124,148,199 | 128,397,612 |
| Real estate held-for-sale, net (includes $0 and $2,550,000 from consolidated VIEs, respectively) | -- | 62,084,412 |
| Due from related party (includes $0 and $1,217 from consolidated VIEs, respectively) | 24,094 | 656,290 |
| Prepaid management fee - related party | 19,047,949 | 19,047,949 |
| Other assets (includes $11,709,103 and $11,696,071 from consolidated VIEs, respectively) | 55,148,624 | 46,855,858 |
| Total assets | $ 1,701,881,280 | $ 1,776,714,330 |
| Liabilities and Equity: | ||
| Repurchase agreements and credit facilities | $ 130,661,619 | $ 76,105,000 |
| Collateralized debt obligations (includes $812,452,845 and $1,002,615,393 from consolidated VIEs, respectively) | 812,452,845 | 1,002,615,393 |
| Collateralized loan obligations (includes $87,500,000 and $0 from consolidated VIEs, respectively) | 87,500,000 | -- |
| Junior subordinated notes to subsidiary trust issuing preferred securities | 158,767,145 | 158,261,468 |
| Notes payable | 51,457,708 | 85,457,708 |
| Mortgage notes payable – real estate owned | 53,751,004 | 53,751,004 |
| Mortgage note payable – held-for-sale | -- | 62,190,000 |
| Due to related party | 3,084,627 | 2,728,819 |
| Due to borrowers (includes $1,320,943 and $740,809 from consolidated VIEs, respectively) | 23,056,640 | 2,825,636 |
| Deferred revenue | 77,123,133 | 77,123,133 |
| Other liabilities (includes $22,013,896 and $27,839,757 from consolidated VIEs, respectively) | 72,765,437 | 82,595,636 |
| Total liabilities | 1,470,620,158 | 1,603,653,797 |
| Commitments and contingencies | -- | -- |
| Equity: | ||
| Arbor Realty Trust, Inc. stockholders' equity: | ||
| Preferred stock, $0.01 par value: 100,000,000 shares authorized; no shares issued or outstanding | -- | -- |
| Common stock, $0.01 par value: 500,000,000 shares authorized; 33,899,992 shares issued, 31,249,225 shares outstanding at December 31, 2012 and 26,778,737 shares issued, 24,298,140 shares outstanding at December 31, 2011 | 339,000 | 267,787 |
| Additional paid-in capital | 493,211,222 | 455,994,695 |
| Treasury stock, at cost - 2,650,767 shares at December 31, 2012 and 2,480,597 shares at December 31, 2011 | (17,100,916) | (16,416,152) |
| Accumulated deficit | (207,558,257) | (221,015,880) |
| Accumulated other comprehensive loss | (39,561,700) | (47,704,045) |
| Total Arbor Realty Trust, Inc. stockholders' equity | 229,329,349 | 171,126,405 |
| Noncontrolling interest in consolidated entity | 1,931,773 | 1,934,128 |
| Total equity | 231,261,122 | 173,060,533 |
| Total liabilities and equity | $ 1,701,881,280 | $ 1,776,714,330 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |
| SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES | |
| (Unaudited) | |
| December 31, | |
| 2012 | |
| GAAP Arbor Realty Trust, Inc. Stockholders' Equity | $ 229,329,349 |
| Add: 450 West 33rd Street transaction - deferred revenue | 77,123,133 |
| Unrealized loss on derivative instruments | 37,754,775 |
| Subtract: 450 West 33rd Street transaction - prepaid management fee | (19,047,949) |
| Adjusted Arbor Realty Trust, Inc. Stockholders' Equity | $ 325,159,308 |
| Adjusted book value per share | $ 10.41 |
| GAAP book value per share | $ 7.34 |
| Common shares outstanding | 31,249,225 |
Given the magnitude and the deferral structure of the
GAAP book value per share and adjusted book value per share calculations do not take into account any dilution from the potential exercise of the warrants issued to Wachovia as part of the 2009 debt restructuring.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES - Continued | ||||
| (Unaudited) | ||||
| Quarter Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net (loss) income attributable to Arbor Realty Trust, Inc., GAAP basis | $ (267,239) | $ (27,781,898) | $ 21,500,888 | $ (40,311,713) |
| Subtract: | ||||
| Gain on sale of real estate-held-for-sale | (466,310) | -- | (3,953,455) | -- |
| Add: | ||||
| Loss on impairment of real estate-held-for-sale | -- | 700,000 | -- | 1,450,000 |
| Depreciation - real estate owned and held-for-sale (1) | 1,612,605 | 1,820,565 | 5,904,089 | 5,951,525 |
| Depreciation - investment in equity affiliate | 9,589 | 331,544 | 90,396 | 331,544 |
| Funds from operations ("FFO") | $ 888,645 | $ (24,929,789) | $ 23,541,918 | $ (32,578,644) |
| Diluted FFO per common share | $ 0.03 | $ (1.03) | $ 0.87 | $ (1.30) |
| Diluted weighted average shares outstanding | 31,143,198 | 24,239,100 | 27,211,287 | 24,968,894 |
| (1) Includes discontinued operations | ||||
Arbor is presenting funds from operations, or FFO, because management believes it to be an important supplemental measure of the Company's operating performance in that it is frequently used by analysts, investors and other parties in the evaluation of real estate investment trusts (REITs). The revised White Paper on FFO approved by the
FFO is not intended to be an indication of our cash flow from operating activities (determined in accordance with GAAP) or a measure of our liquidity, nor is it entirely indicative of funding our cash needs, including our ability to make cash distributions. Arbor's calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.
CONTACT:
516-506-4422
pelenio@arbor.com
Investors:
646-536-7023
scarrington@theruthgroup.com
aglynn@theruthgroup.com
Media:
516-506-4615
bhabyan@arbor.com
