Arbor Realty Trust Reports Second Quarter 2012 Results and Declares Second Quarter 2012 Dividend
Second Quarter Highlights:
- Declares a common dividend of
$0.10 per share, a 33% increase from 1Q12 - FFO of
$17.1 million , or$0.68 per diluted common share1 - Net income attributable to
Arbor Realty Trust, Inc. of$15.5 million , or$0.62 per diluted common share - Raised
$17.5 million of capital issuing 3.5 million common shares - Closed a
$15.0 million revolving line of credit and obtained an additional$12.6 million of warehouse financing - Originated five new loans totaling
$58.0 million and generated$36.3 million in cash runoff for reinvestment - Purchased 11 residential mortgage-backed securities totaling
$41.5 million - Generated gains of
$21.0 million from the retirement of CDO debt - Adjusted book value per share
$11.19 , GAAP book value per share$7.58 1 - Recorded
$8.6 million in loan loss reserves - Recorded
$0.7 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
In
In
The Company is subject to various financial covenants and restrictions under the terms of the Company's CDO 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 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, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and the Company would not receive any residual payments until that CDO regained compliance with such covenants. As of the most recent determination dates in
The chart below is a summary of the Company's CDO compliance tests as of the most recent determination dates in
| Cash Flow Triggers | CDO I (3) | CDO II (3) | CDO III (3) |
| Overcollateralization (1) | |||
| Current | 212.94% | 191.93% | 106.96% |
| Limit | 184.00% | 169.50% | 105.60% |
| Pass / Fail | Pass | Pass | Pass |
| Interest Coverage (2) | |||
| Current | 394.01% | 449.45% | 510.13% |
| Limit | 160.00% | 147.30% | 105.60% |
| Pass / Fail | Pass | Pass | Pass |
| (1) The overcollateralization ratio divides the total principal balance of all collateral in the CDO 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 second quarter of 2012, Arbor purchased 11 residential mortgage-backed securities with a total face value of
During the second quarter of 2012, Arbor originated five bridge loans totaling approximately
Additionally, eight loans totaling approximately
At
As of
During the second quarter of 2012, the Company recorded
The Company had eight non-performing loans with a carrying value of approximately
The Company had a
Equity Offering
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, http://www.globenewswire.com/newsroom/ctr?d=10000607&l=27&a=www.arborrealtytrust.com&u=http%3A%2F%2Fwww.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 in the tables below.
1. See attached supplemental schedule of non-GAAP financial measures.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| Quarter Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Interest income | $ 19,502,713 | $ 18,572,772 | $ 39,109,120 | $ 36,580,339 |
| Interest expense | 9,770,807 | 15,792,751 | 21,532,207 | 28,833,700 |
| Net interest income | 9,731,906 | 2,780,021 | 17,576,913 | 7,746,639 |
| Other revenues: | ||||
| Property operating income | 8,312,794 | 7,534,536 | 17,335,955 | 12,207,955 |
| Other income | 369,609 | 41,556 | 401,639 | 63,432 |
| Total other revenues | 8,682,403 | 7,576,092 | 17,737,594 | 12,271,387 |
| Other expenses: | ||||
| Employee compensation and benefits | 2,381,817 | 2,285,433 | 4,866,595 | 4,373,487 |
| Selling and administrative | 2,191,769 | 1,583,793 | 3,852,002 | 2,781,618 |
| Property operating expenses | 7,574,422 | 6,292,041 | 14,899,729 | 9,148,012 |
| Depreciation and amortization | 1,540,217 | 1,705,366 | 2,716,972 | 1,944,815 |
| Provision for loan losses (net of recoveries) | 7,945,453 | 7,560,263 | 15,734,861 | 8,095,398 |
| Loss on sale and restructuring of loans | -- | -- | -- | 1,000,000 |
| Management fee - related party | 2,500,000 | 2,050,000 | 5,000,000 | 4,000,000 |
| Total other expenses | 24,133,678 | 21,476,896 | 47,070,159 | 31,343,330 |
| Loss from continuing operations before gain on extinguishment of debt, (loss) income from equity affiliates and (provision) benefit for income taxes | (5,719,369) | (11,120,783) | (11,755,652) | (11,325,304) |
| Gain on extinguishment of debt | 20,968,214 | 1,926,700 | 26,314,335 | 2,819,200 |
| (Loss) income from equity affiliates | (224,136) | 24,446 | (474,710) | 48,811 |
| Income (loss) before (provision) benefit for income taxes | 15,024,709 | (9,169,637) | 14,083,973 | (8,457,293) |
| (Provision) benefit for income taxes | (600,000) | -- | 801,558 | -- |
| Income (loss) from continuing operations | 14,424,709 | (9,169,637) | 14,885,531 | (8,457,293) |
| Loss on impairment of real estate held-for-sale | -- | (750,000) | -- | (750,000) |
| Gain on sale of real estate held-for-sale | -- | -- | 3,487,145 | -- |
| Income (loss) from operations of real estate held-for-sale | 1,175,120 | (381,220) | 1,442,744 | (772,719) |
| Income (loss) from discontinued operations | 1,175,120 | (1,131,220) | 4,929,889 | (1,522,719) |
| Net income (loss) | 15,599,829 | (10,300,857) | 19,815,420 | (9,980,012) |
| Net income attributable to noncontrolling interest | 53,811 | 53,878 | 107,622 | 107,574 |
| Net income (loss) attributable to Arbor Realty Trust, Inc. | $ 15,546,018 | $ (10,354,735) | $ 19,707,798 | $ (10,087,586) |
| Basic earnings (loss) per common share: | ||||
| Income (loss) from continuing operations, net of noncontrolling interest | $ 0.57 | $ (0.37) | $ 0.60 | $ (0.34) |
| Income (loss) from discontinued operations | 0.05 | (0.04) | 0.20 | (0.06) |
| Net income (loss) attributable to Arbor Realty Trust, Inc. | $ 0.62 | $ (0.41) | $ 0.80 | $ (0.40) |
| Diluted earnings (loss) per common share: | ||||
| Income (loss) from continuing operations, net of noncontrolling interest | $ 0.57 | $ (0.37) | $ 0.59 | $ (0.34) |
| Income (loss) from discontinued operations | 0.05 | (0.04) | 0.20 | (0.06) |
| Net income (loss) attributable to Arbor Realty Trust, Inc. | $ 0.62 | $ (0.41) | $ 0.79 | $ (0.40) |
| Dividends declared per common share | $ 0.075 | $ -- | $ 0.075 | $ -- |
| Weighted average number of shares of common stock outstanding: | ||||
| Basic | 24,977,879 | 25,440,380 | 24,579,022 | 25,202,248 |
| Diluted | 25,267,459 | 25,440,380 | 24,805,807 | 25,202,248 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| June 30, | December 31, | |
| 2012 | 2011 | |
| (Unaudited) | ||
| Assets: | ||
| Cash and cash equivalents | $ 64,281,810 | $ 55,236,479 |
| Restricted cash (includes $75,806,337 and $65,357,993 from consolidated VIEs, respectively) | 77,691,781 | 67,326,530 |
| Loans and investments, net (includes $1,041,040,686 and $1,093,893,014 from consolidated VIEs, respectively) | 1,224,753,997 | 1,302,440,660 |
| Available-for-sale securities, at fair value (includes $1,500,000 and $2,000,000 from consolidated VIEs, respectively) | 3,864,552 | 4,276,368 |
| Securities held-to-maturity, net (includes $734,515 and $742,602 from consolidated VIEs, respectively) | 64,041,729 | 29,942,108 |
| Investment in equity affiliates | 60,097,517 | 60,450,064 |
| Real estate owned, net (includes $83,099,540 and $83,099,540 from consolidated VIEs, respectively) | 127,077,250 | 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) | 206,568 | 656,290 |
| Prepaid management fee - related party | 19,047,949 | 19,047,949 |
| Other assets (includes $10,326,594 and $11,696,071 from consolidated VIEs, respectively) | 49,906,372 | 46,855,858 |
| Total assets | $ 1,690,969,525 | $ 1,776,714,330 |
| Liabilities and Equity: | ||
| Repurchase agreements and credit facilities | $ 127,297,594 | $ 76,105,000 |
| Collateralized debt obligations (includes $910,206,205 and $1,002,615,393 from consolidated VIEs, respectively) | 910,206,205 | 1,002,615,393 |
| Junior subordinated notes to subsidiary trust issuing preferred securities | 158,509,407 | 158,261,468 |
| Notes payable | 53,457,708 | 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 | 1,852,829 | 2,728,819 |
| Due to borrowers (includes $639,644 and $740,809 from consolidated VIEs, respectively) | 16,400,826 | 2,825,636 |
| Deferred revenue | 77,123,133 | 77,123,133 |
| Other liabilities (includes $25,064,700 and $27,839,757 from consolidated VIEs, respectively) | 79,978,223 | 82,595,636 |
| Total liabilities | 1,478,576,929 | 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; 30,399,992 shares issued, 27,749,225 shares outstanding at June 30, 2012 and 26,778,737 shares issued, 24,298,140 shares outstanding at December 31, 2011 | 304,000 | 267,787 |
| Additional paid-in capital | 474,091,222 | 455,994,695 |
| Treasury stock, at cost - 2,650,767 shares at June 30, 2012 and 2,480,597 shares at December 31, 2011 | (17,100,916) | (16,416,152) |
| Accumulated deficit | (203,130,388) | (221,015,880) |
| Accumulated other comprehensive loss | (43,704,083) | (47,704,045) |
| Total Arbor Realty Trust, Inc. stockholders'equity | 210,459,835 | 171,126,405 |
| Noncontrolling interest in consolidated entity | 1,932,761 | 1,934,128 |
| Total equity | 212,392,596 | 173,060,533 |
| Total liabilities and equity | $ 1,690,969,525 | $ 1,776,714,330 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |
| SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES | |
| (Unaudited) | |
| June 30, 2012 | |
| GAAP Arbor Realty Trust, Inc. Stockholders' Equity | $ 210,459,835 |
| Add: 450 West 33rd Street transaction - deferred revenue | 77,123,133 |
| Unrealized loss on derivative instruments | 41,880,177 |
| Subtract: 450 West 33rd Street transaction - prepaid management fee | (19,047,949) |
| Adjusted Arbor Realty Trust, Inc. Stockholders' Equity | $ 310,415,196 |
| Adjusted book value per share | $ 11.19 |
| GAAP book value per share | $ 7.58 |
| Common shares outstanding | 27,749,225 |
| Given the magnitude and the deferral structure of the 450 West 33rd Street transaction combined with the change in the fair value of certain derivative instruments, Arbor has elected to report adjusted book value per share for the affected period to currently reflect the future impact of the 450 West 33rd Street transaction on the Company's financial condition as well as the evaluation of Arbor without the effects of unrealized losses from certain of the Company's derivative instruments. Management considers this non-GAAP financial measure to be an effective indicator, for both management and investors, of Arbor's financial performance. Arbor's management does not advocate that investors consider this non-GAAP financial measure in isolation from, or as a substitute for, financial measures prepared in accordance with GAAP. | |
| 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 | Six Months Ended | |||
| June 30, | June 30, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net income (loss) attributable to Arbor Realty Trust, Inc., GAAP basis | $ 15,546,018 | $ (10,354,735) | $ 19,707,798 | $ (10,087,586) |
| Subtract: | ||||
| Gain on sale of real estate-held-for-sale | -- | -- | (3,487,145) | -- |
| Add: | ||||
| Loss on impairment of real estate-held-for-sale | -- | 750,000 | -- | 750,000 |
| Depreciation - real estate owned and held-for-sale (1) | 1,540,217 | 1,898,034 | 2,716,972 | 2,330,499 |
| Depreciation - investment in equity affiliate | 26,936 | -- | 53,871 | -- |
| Funds from operations ("FFO") | $ 17,113,171 | $ (7,706,701) | $ 18,991,496 | $ (7,007,087) |
| Diluted FFO per common share | $ 0.68 | $ (0.30) | $ 0.77 | $ (0.28) |
| Diluted weighted average shares outstanding | 25,267,459 | 25,440,380 | 24,805,807 | 25,202,248 |
| (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 Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in April 2002 defines FFO as net income (loss) attributable to Arbor Realty Trust, Inc. (computed in accordance with generally accepted accounting principles (GAAP)), excluding gains (losses) from sales of depreciated real properties, plus impairments of depreciated real properties and real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. The Company considers gains and losses on the sales of undepreciated real estate investments to be a normal part of its recurring operating activities in accordance with GAAP and should not be excluded when calculating FFO. Losses from discontinued operations are not excluded when calculating FFO. | ||||
| 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:Arbor Realty Trust, Inc. Paul Elenio , Chief Financial Officer 516-506-4422 pelenio@arbor.com Media:Bonnie Habyan , EVP of Marketing 516-506-4615 bhabyan@arbor.com Investors:Stephanie Carrington /Amy Glynn The Ruth Group 646-536-7023 scarrington@theruthgroup.com aglynn@theruthgroup.com
