Arbor Realty Trust Reports Fourth Quarter and Full Year 2021 Results and Increases Dividend for Seventh Consecutive Quarter to $0.37 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
$0.71 and distributable earnings of$0.57 per diluted common share1 - Raised cash dividend on common stock to
$0.37 per share, our seventh consecutive quarterly increase - Successfully raised
$533 million of accretive capital to fund the significant growth of our structured portfolio
- GAAP net income of
Structured Business:
- Record loan originations of
$4.32 billion , a 75% increase over last quarter and our third consecutive quarter of record originations - Structured loan portfolio of over
$12 billion on substantial growth of 33% - Closed a
$2.10 billion collateralized securitization vehicle, our largest to date
Agency Business:
- Loan originations of
$1.89 billion and a servicing portfolio of$27 billion - Closed our 3rd private label securitization totaling
$535 million
Full Year Highlights:
- GAAP net income of
$2.28 per diluted common share; distributable earnings of$2.01 per diluted common share1, representing a 15% increase over last year - Raised annual dividend run rate to
$1.48 per share, a 12% increase from a year ago, and our 10th straight year of dividend growth - Leading shareholder return in the commercial mortgage REIT space of 39%
- Generated industry leading ROE of over 19%
- Record originations of
$16.13 billion , a 76% increase over last year - Structured portfolio growth of 122% from record loan originations of
$9.72 billion - Agency servicing portfolio growth of 9.5% from loan originations of
$6.41 billion - Raised
$1.63 billion of accretive growth capital through several equity and debt offerings - Continued success from our industry leading securitization platform closing six new securitizations (4 CLOs, 2 private label) totaling
$6.20 billion
Recent Developments:
- Closed two securitizations totaling
$2.54 billion and raised$75 million of preferred stock
Agency Business
Loan Origination Platform
| Agency Loan Volume (in thousands) | ||||||||||||
| Quarter Ended | Year Ended | |||||||||||
| Fannie Mae | $ | 968,105 | $ | 719,730 | $ | 3,389,312 | $ | 5,041,925 | ||||
| Freddie Mac | 437,847 | 307,664 | 1,016,142 | 960,508 | ||||||||
| Private Label | 282,038 | 625,176 | 1,436,853 | 382,191 | ||||||||
| FHA | 148,647 | 84,430 | 430,320 | 327,345 | ||||||||
| SFR-Fixed Rate | 57,709 | 67,227 | 136,931 | - | ||||||||
| Total Originations | $ | 1,894,346 | $ | 1,804,227 | $ | 6,409,558 | $ | 6,711,969 | ||||
| Total Loan Sales | $ | 2,084,211 | $ | 1,006,958 | $ | 6,415,169 | $ | 6,587,728 | ||||
| Total Loan Commitments | $ | 1,836,799 | $ | 1,856,474 | $ | 6,347,752 | $ | 6,810,666 | ||||
For the quarter ended
At
The Company closed its third private label securitization totaling
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled
| Fee-Based Servicing Portfolio ($ in thousands) | |||||||||||
| As of |
As of |
||||||||||
| UPB | Wtd. Avg. Fee | Wtd. Avg. Life (years) | UPB | Wtd. Avg. Fee | Wtd. Avg. Life (years) | ||||||
| Fannie Mae | $ | 19,127,397 | 0.535% | 8.0 | $ | 19,271,527 | 0.532% | 8.4 | |||
| Freddie Mac | 4,943,905 | 0.271% | 9.3 | 4,726,587 | 0.281% | 9.8 | |||||
| Private Label | 1,711,326 | 0.200% | 8.3 | 1,176,391 | 0.200% | 8.8 | |||||
| FHA | 985,063 | 0.154% | 21.0 | 933,519 | 0.156% | 21.4 | |||||
| SFR-Fixed Rate | 191,698 | 0.200% | 6.5 | 104,094 | 0.200% | 5.7 | |||||
| Total | $ | 26,959,389 | 0.449% | 8.8 | $ | 26,212,118 | 0.457% | 9.1 | |||
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes
Structured Business
Portfolio and Investment Activity
Quarter ended
- Substantial growth in the portfolio of
$2.99 billion , or 32.6% - Originated 156 loans totaling
$4.32 billion , consisted primarily of multifamily bridge loans totaling$4.13 billion - Payoffs and pay downs on 60 loans totaling
$1.05 billion - Committed to fund $321.2 million single-family rental loans
Year ended
- Record portfolio growth of
$6.68 billion , or 122.1% - Originated 422 loans totaling
$9.72 billion , consisted primarily of multifamily bridge loans totaling$9.10 billion - Payoffs and pay downs totaling
$2.52 billion - Committed to fund
$729.5 million single-family rental loans $34.6 million of income generated by our residential mortgage banking joint venture
At
The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2021, excluding loan loss reserves, was
During the fourth quarter of 2021, the Company recorded a
Financing Activity
The Company completed its largest collateralized securitization vehicle to date totaling $2.10 billion of real estate related assets and cash. Investment grade-rated notes totaling $1.71 billion were issued, and the Company retained subordinate interests in the issuing vehicle of $385.9 million. The facility has a two-and-a-half-year asset replenishment period and an initial weighted average interest rate of 1.68% over LIBOR, excluding fees and transaction costs.
The Company completed the unwind of a previously issued CLO, redeeming $533.0 million of outstanding notes, which were repaid primarily from the refinancing of the remaining assets primarily within the
The balance of debt that finances the Company’s loan and investment portfolio at
Capital Markets
The Company raised a substantial amount of accretive capital to fund its significant growth primarily through the following transactions:
- A public offering of 8.05 million shares of 6.25% Series F fixed-to-floating cumulative redeemable preferred stock, including the underwriters’ exercise of their over-allotment option, generating net proceeds of
$194.8 million - Issuance of
$180.0 million of 5.00% senior unsecured notes due in 2028 in a private placement, generating net proceeds of$177.2 million - Issuance of 7.91 million shares of common stock in a public offering receiving net proceeds of
$153.9 million
Dividends
The Company announced today that its Board of Directors has declared a quarterly cash dividend of
Earnings Conference Call
The Company will host a conference call today at
A telephonic replay of the call will be available until
About
Safe Harbor Statement
Certain items in this press release may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor’s expectations include, but are not limited to, changes in economic conditions generally, and the real estate markets specifically, in particular, due to the uncertainties created by the COVID-19 pandemic, continued ability to source new investments, changes in interest rates and/or credit spreads, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended
1. Non-GAAP Financial Measures
During the quarterly earnings conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A supplemental schedule of non-GAAP financial measures and the comparable GAAP financial measure can be found on the last page of this release.
| Contact: |
516-506-4422 pelenio@arbor.com |
| Consolidated Statements of Income | |||||||||||||||||
| ($ in thousands—except share and per share data) | |||||||||||||||||
| Quarter Ended |
Year Ended |
||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||
| Interest income | $ | 144,315 | $ | 86,157 | $ | 466,087 | $ | 339,465 | |||||||||
| Interest expense | 67,883 | 40,044 | 212,005 | 169,216 | |||||||||||||
| Net interest income | 76,432 | 46,113 | 254,082 | 170,249 | |||||||||||||
| Other revenue: | |||||||||||||||||
| Gain on sales, including fee-based services, net | 36,935 | 34,041 | 123,037 | 94,607 | |||||||||||||
| Mortgage servicing rights | 34,542 | 68,809 | 130,230 | 165,517 | |||||||||||||
| Servicing revenue, net | 23,875 | 14,229 | 74,814 | 54,385 | |||||||||||||
| Property operating income | 185 | - | 185 | 3,976 | |||||||||||||
| Gain (loss) on derivative instruments, net | 4,636 | 518 | (2,684 | ) | (58,335 | ) | |||||||||||
| Other income, net | 3,425 | 706 | 7,566 | 4,109 | |||||||||||||
| Total other revenue | 103,598 | 118,303 | 333,148 | 264,259 | |||||||||||||
| Other expenses: | |||||||||||||||||
| Employee compensation and benefits | 43,149 | 42,728 | 171,796 | 144,380 | |||||||||||||
| Selling and administrative | 11,868 | 8,334 | 45,575 | 37,348 | |||||||||||||
| Property operating expenses | 297 | 120 | 718 | 4,898 | |||||||||||||
| Depreciation and amortization | 1,865 | 1,810 | 7,215 | 7,640 | |||||||||||||
| Provision for loss sharing (net of recoveries) | (5,096 | ) | (6,884 | ) | (6,167 | ) | 14,822 | ||||||||||
| Provision for credit losses (net of recoveries) | (8,424 | ) | 1,600 | (21,113 | ) | 61,110 | |||||||||||
| Total other expenses | 43,659 | 47,708 | 198,024 | 270,198 | |||||||||||||
| Income before extinguishment of debt, gain (loss) on real estate, income from equity affiliates, and income taxes | |||||||||||||||||
| 136,371 | 116,708 | 389,206 | 164,310 | ||||||||||||||
| Loss on extinguishment of debt | (2,004 | ) | - | (3,374 | ) | (3,546 | ) | ||||||||||
| Gain (loss) on real estate | 2,466 | 1,493 | 3,693 | (375 | ) | ||||||||||||
| Income from equity affiliates | 2,472 | 19,402 | 34,567 | 76,161 | |||||||||||||
| Provision for income taxes | (12,929 | ) | (24,901 | ) | (46,285 | ) | (40,393 | ) | |||||||||
| Net income | 126,376 | 112,702 | 377,807 | 196,157 | |||||||||||||
| Preferred stock dividends | 8,672 | 1,888 | 21,888 | 7,554 | |||||||||||||
| Net income attributable to noncontrolling interest | 11,701 | 14,197 | 38,507 | 25,208 | |||||||||||||
| Net income attributable to common stockholders | $ | 106,003 | $ | 96,617 | $ | 317,412 | $ | 163,395 | |||||||||
| Basic earnings per common share | $ | 0.72 | $ | 0.81 | $ | 2.30 | $ | 1.44 | |||||||||
| Diluted earnings per common share | $ | 0.71 | $ | 0.80 | $ | 2.28 | $ | 1.41 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 147,899,133 | 119,875,315 | 137,830,691 | 113,811,471 | |||||||||||||
| Diluted | 166,104,325 | 138,630,532 | 156,089,595 | 133,969,296 | |||||||||||||
| Dividends declared per common share | $ | 0.36 | $ | 0.32 | $ | 1.38 | $ | 1.23 | |||||||||
| Consolidated Balance Sheets | ||||||||||
| ($ in thousands—except share and per share data) | ||||||||||
| 2021 | 2020 | |||||||||
| Assets: | ||||||||||
| Cash and cash equivalents | $ | 404,580 | $ | 339,528 | ||||||
| Restricted cash | 486,690 | 197,470 | ||||||||
| Loans and investments, net (allowance for credit losses of |
11,981,048 | 5,285,868 | ||||||||
| Loans held-for-sale, net | 1,093,609 | 986,919 | ||||||||
| Capitalized mortgage servicing rights, net | 422,734 | 379,974 | ||||||||
| Securities held-to-maturity, net (allowance for credit losses of |
140,484 | 95,524 | ||||||||
| Investments in equity affiliates | 89,676 | 74,274 | ||||||||
| Due from related party | 84,318 | 12,449 | ||||||||
| 100,760 | 105,451 | |||||||||
| Other assets | 269,946 | 183,529 | ||||||||
| Total assets | $ | 15,073,845 | $ | 7,660,986 | ||||||
| Liabilities and Equity: | ||||||||||
| Credit and repurchase facilities | $ | 4,481,579 | $ | 2,234,883 | ||||||
| Collateralized loan obligations | 5,892,810 | 2,517,309 | ||||||||
| Senior unsecured notes | 1,280,545 | 662,843 | ||||||||
| Convertible senior unsecured notes, net | 259,385 | 267,973 | ||||||||
| Junior subordinated notes to subsidiary trust issuing preferred securities | 142,382 | 141,656 | ||||||||
| Due to related party | 26,570 | 2,365 | ||||||||
| Due to borrowers | 96,641 | 89,325 | ||||||||
| Allowance for loss-sharing obligations | 56,064 | 64,303 | ||||||||
| Other liabilities | 287,885 | 197,644 | ||||||||
| Total liabilities | 12,523,861 | 6,178,301 | ||||||||
| Equity: | ||||||||||
| Preferred stock, cumulative, redeemable, |
||||||||||
| authorized, shares issued and outstanding by period: | 556,163 | 89,472 | ||||||||
| Special voting preferred shares, 16,325,095 and 17,560,633 shares | ||||||||||
| 8.25% Series A, 0 and 1,551,500 shares | ||||||||||
| 7.75% Series B, 0 and 1,260,000 shares | ||||||||||
| 8.50% Series C, 0 and 900,000 shares | ||||||||||
| 6.375% Series D, 9,200,000 and 0 shares | ||||||||||
| 6.25% Series E, 5,750,000 and 0 shares | ||||||||||
| 6.25% Series F, 8,050,000 and 0 shares | ||||||||||
| Common stock, |
||||||||||
| and 123,181,173 shares issued and outstanding | 1,514 | 1,232 | ||||||||
| Additional paid-in capital | 1,797,913 | 1,317,109 | ||||||||
| Retained earnings (accumulated deficit) | 62,532 | (63,442 | ) | |||||||
| 2,418,122 | 1,344,371 | |||||||||
| Noncontrolling interest | 131,862 | 138,314 | ||||||||
| Total equity | 2,549,984 | 1,482,685 | ||||||||
| Total liabilities and equity | $ | 15,073,845 | $ | 7,660,986 | ||||||
| Statement of Income Segment Information - (Unaudited) | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| Quarter Ended |
|||||||||||||||||
| Structured Business |
Agency Business |
Other / Eliminations (1) |
Consolidated | ||||||||||||||
| Interest income | $ | 132,622 | $ | 11,693 | $ | - | $ | 144,315 | |||||||||
| Interest expense | 62,640 | 5,243 | - | 67,883 | |||||||||||||
| Net interest income | 69,982 | 6,450 | - | 76,432 | |||||||||||||
| Other revenue: | |||||||||||||||||
| Gain on sales, including fee-based services, net | - | 36,935 | - | 36,935 | |||||||||||||
| Mortgage servicing rights | - | 34,542 | - | 34,542 | |||||||||||||
| Servicing revenue | - | 38,747 | - | 38,747 | |||||||||||||
| Amortization of MSRs | - | (14,872 | ) | - | (14,872 | ) | |||||||||||
| Property operating income | 185 | - | - | 185 | |||||||||||||
| Gain on derivative instruments, net | - | 4,636 | - | 4,636 | |||||||||||||
| Other income, net | 3,385 | 40 | - | 3,425 | |||||||||||||
| Total other revenue | 3,570 | 100,028 | - | 103,598 | |||||||||||||
| Other expenses: | |||||||||||||||||
| Employee compensation and benefits | 13,659 | 29,490 | - | 43,149 | |||||||||||||
| Selling and administrative | 5,586 | 6,282 | - | 11,868 | |||||||||||||
| Property operating expenses | 297 | - | - | 297 | |||||||||||||
| Depreciation and amortization | 692 | 1,173 | - | 1,865 | |||||||||||||
| Provision for loss sharing (net of recoveries) | - | (5,096 | ) | - | (5,096 | ) | |||||||||||
| Provision for credit losses (net of recoveries) | (8,416 | ) | (8 | ) | - | (8,424 | ) | ||||||||||
| Total other expenses | 11,818 | 31,841 | - | 43,659 | |||||||||||||
| Income before extinguishment of debt, gain on real estate, income from equity affiliates, and income taxes | |||||||||||||||||
| 61,734 | 74,637 | - | 136,371 | ||||||||||||||
| Loss on extinguishment of debt | (2,004 | ) | - | - | (2,004 | ) | |||||||||||
| Gain on real estate | 2,466 | - | - | 2,466 | |||||||||||||
| Income from equity affiliates | 2,472 | - | - | 2,472 | |||||||||||||
| Benefit from (provision for) income taxes | 348 | (13,277 | ) | - | (12,929 | ) | |||||||||||
| Net income | 65,016 | 61,360 | - | 126,376 | |||||||||||||
| Preferred stock dividends | 8,672 | - | - | 8,672 | |||||||||||||
| Net income attributable to noncontrolling interest | - | - | 11,701 | 11,701 | |||||||||||||
| Net income attributable to common stockholders | $ | 56,344 | $ | 61,360 | $ | (11,701 | ) | $ | 106,003 | ||||||||
| (1) Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments. | |||||||||||||||||
| Balance Sheet Segment Information - (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| Structured Business |
Agency Business |
Consolidated | ||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | $ | 142,771 | $ | 261,809 | $ | 404,580 | ||||||
| Restricted cash | 468,013 | 18,677 | 486,690 | |||||||||
| Loans and investments, net | 11,981,048 | - | 11,981,048 | |||||||||
| Loans held-for-sale, net | - | 1,093,609 | 1,093,609 | |||||||||
| Capitalized mortgage servicing rights, net | - | 422,734 | 422,734 | |||||||||
| Securities held-to-maturity, net | - | 140,484 | 140,484 | |||||||||
| Investments in equity affiliates | 89,676 | - | 89,676 | |||||||||
| 12,500 | 88,260 | 100,760 | ||||||||||
| Other assets | 285,600 | 68,664 | 354,264 | |||||||||
| Total assets | $ | 12,979,608 | $ | 2,094,237 | $ | 15,073,845 | ||||||
| Liabilities: | ||||||||||||
| Debt obligations | $ | 11,100,429 | $ | 956,272 | $ | 12,056,701 | ||||||
| Allowance for loss-sharing obligations | - | 56,064 | 56,064 | |||||||||
| Other liabilities | 278,726 | 132,370 | 411,096 | |||||||||
| Total liabilities | $ | 11,379,155 | $ | 1,144,706 | $ | 12,523,861 | ||||||
| Reconciliation of Distributable Earnings to GAAP Net Income - (Unaudited) | |||||||||||||||
| ($ in thousands—except share and per share data) | |||||||||||||||
| Quarter Ended |
Year Ended |
||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Net income attributable to common stockholders | $ | 106,003 | $ | 96,617 | $ | 317,412 | $ | 163,395 | |||||||
| Adjustments: | |||||||||||||||
| Net income attributable to noncontrolling interest | 11,701 | 14,197 | 38,507 | 25,208 | |||||||||||
| Income from mortgage servicing rights | (34,542 | ) | (68,809 | ) | (130,230 | ) | (165,517 | ) | |||||||
| Deferred tax provision | 201 | 9,898 | 10,892 | 4,726 | |||||||||||
| Amortization and write-offs of MSRs | 29,268 | 17,241 | 91,356 | 65,979 | |||||||||||
| Depreciation and amortization | 2,763 | 2,755 | 10,900 | 11,486 | |||||||||||
| Loss on extinguishment of debt | 2,004 | - | 3,374 | 3,546 | |||||||||||
| Provision for credit losses, net | (21,646 | ) | (5,742 | ) | (39,856 | ) | 73,402 | ||||||||
| (Gain) loss on derivative instruments, net | (1,053 | ) | (518 | ) | 432 | 43,596 | |||||||||
| Gain on real estate from settlement of loan | (2,466 | ) | - | (2,466 | ) | - | |||||||||
| Stock-based compensation | 1,943 | 1,761 | 9,929 | 9,046 | |||||||||||
| Loss on redemption of preferred stock | - | - | 3,479 | - | |||||||||||
| Distributable earnings (1) | $ | 94,176 | $ | 67,400 | $ | 313,729 | $ | 234,867 | |||||||
| Diluted distributable earnings per share (1) | $ | 0.57 | $ | 0.49 | $ | 2.01 | $ | 1.75 | |||||||
| Diluted weighted average shares outstanding (1) | 166,104,325 | 138,630,532 | 156,089,595 | 133,969,296 | |||||||||||
| (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. | |||||||||||||||
| 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, the tax impact on cumulative gains/losses on derivative instruments associated with Private Label loans sold during the periods presented, changes in fair value of GSE-related derivatives that temporarily flow through earnings, deferred tax provision (benefit), CECL provisions for credit losses (adjusted for realized losses as described below), amortization of the convertible senior notes conversion option 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. Loans are deemed nonrecoverable upon the earlier of: (i) 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 (ii) 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. | |||||||||||||||
Source: Arbor Realty Trust
