Arbor Realty Trust Reports Second Quarter 2017 Results and Declares Common Stock Dividend

Company Highlights:

GAAP net income of $0.21 and AFFO of $0.22 per diluted common share¹
Raised $76.2 million of capital in a common stock offering
Completed the full internalization of our management team
Declares a cash dividend on common stock of $0.18 per share

Agency Business

Segment income of $13.5 million
Loan originations of $1.02 billion
Servicing portfolio of $15.02 billion at June 30, 2017, up 4% from 1Q17

Structured Business

Segment income of $3.9 million
Closed a seventh collateralized securitization vehicle totaling $360 million with improved terms
Portfolio growth of 10% on loan originations of $437.9 million

UNIONDALE, N.Y., Aug. 04, 2017 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the second quarter ended June 30, 2017. Arbor reported net income for the quarter of $11.9 million, or $0.21 per diluted common share, compared to $10.2 million, or $0.20 per diluted common share for the quarter ended June 30, 2016. Adjusted funds from operations (“AFFO”) for the quarter was $17.6 million, or $0.22 per diluted common share, compared to $12.0 million, or $0.23 per diluted common share for the quarter ended June 30, 2016.¹

Agency Business

Loan Origination Platform


Agency Loan Volume ($ in 000's)

	Quarter Ended
	June 30, 2017		March 31, 2017
Fannie Mae	$	669,897	$	896,549
Freddie Mac		317,490		235,033
FHA		32,878		137,935
CMBS/Conduit		-		21,370
Total Originations	$	1,020,265	$	1,290,887

Total Loan Sales	$	1,204,353	$	1,364,850

Total Loan Commitments	$	1,101,243	$	1,151,944

For the quarter ended June 30, 2017, the Agency Business generated revenues of $45.7 million, compared to $48.0 million for the first quarter of 2017. Gain on sales, including fee-based services, net was $18.8 million for the quarter, reflecting a margin of 1.56% on loan sales, compared to $19.2 million and 1.40% for the first quarter of 2017. Income from mortgage servicing rights was $17.3 million for the quarter, reflecting a rate of 1.57% as a percentage of loan commitments, compared to $20.0 million and 1.74% for the first quarter of 2017.

At June 30, 2017, loans held-for-sale was $387.4 million which was primarily comprised of unpaid principal balances totaling $381.8 million, with financing associated with these loans totaling $381.3 million.

Fee-Based Servicing Portfolio

The fee-based servicing portfolio totaled $15.02 billion at June 30, 2017, an increase of 4% from March 31, 2017, primarily as a result of $1.02 billion of new loan originations during the quarter. Servicing revenue, net was $6.6 million for the quarter, and consists of servicing revenue of $18.4 million net of amortization of mortgage servicing rights totaling $11.8 million.


	Fee-Based Servicing Portfolio ($ in 000s)
	As of June 30, 2017					As of March 31, 2017

	UPB		Wtd. Avg. Fee		Wtd. Avg. Life (in years)	UPB		Wtd. Avg. Fee		Wtd. Avg. Life (in years)
Fannie Mae	$	12,034,573	0.54	%	7.1	$	11,804,141	0.53	%	6.9
Freddie Mac		2,458,530	0.23	%	10.9		2,163,124	0.23	%	10.8
FHA		525,944	0.17	%	20.0		498,034	0.17	%	19.7
Total	$	15,019,047	0.47	%	8.1	$	14,465,299	0.48	%	7.9

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”). At June 30, 2017, the Company’s allowance for loss-sharing obligations was $32.8 million which consists of general loss sharing guaranty obligations of $28.7 million, representing 0.24% of the Fannie Mae servicing portfolio, and $4.1 million of loss-sharing obligations on specifically identified loans with losses determined to be probable and estimable.

Structured Business

Portfolio and Investment Activity

Second quarter of 2017:

22 new loan originations totaling $437.9 million, of which 21 were bridge loans for $415.9 million
Payoffs and pay downs on 17 loans totaling $263.6 million
Portfolio growth of 10% from 1Q17

At June 30, 2017, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $1.90 billion, with a weighted average current interest pay rate of 6.05%, compared to $1.73 billion and 5.81% at March 31, 2017. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 6.71% at June 30, 2017, compared to 6.45% at March 31, 2017.

The average balance of the Company’s loan and investment portfolio during the second and first quarters of 2017, excluding loan loss reserves, was $1.80 billion with a weighted average yield on these assets of 6.60% and 6.39%, respectively. The increase in average yield was primarily due to an increase in the one-month LIBOR interest rate.

At June 30, 2017, the Company’s total loan loss reserves were $81.3 million on six loans with an aggregate carrying value before loan loss reserves of $184.8 million. The Company also had five non-performing loans with a carrying value of $34.6 million, net of related loan loss reserves of $25.9 million.

Financing Activity

The Company completed its seventh collateralized securitization vehicle totaling $360.0 million of real estate related assets and cash. Investment grade-rated notes totaling $279.0 million were issued, and the Company retained an $81.0 million equity interest in the portfolio. The facility has a three year asset replenishment period and an initial weighted average interest rate of 1.99% plus one-month LIBOR, excluding fees and transaction costs.

The balance of debt that finances the Company’s loan and investment portfolio at June 30, 2017 was $1.49 billion with a weighted average interest rate including fees of 4.69%, as compared to $1.38 billion and a rate of 4.51% at March 31, 2017. The average balance of debt that finances the Company’s loan and investment portfolio for the second quarter of 2017 was $1.46 billion, as compared to $1.37 billion for the first quarter of 2017. The average cost of borrowings for the second quarter was 4.60%, compared to 4.51% for the first quarter of 2017. The increase in average cost was primarily due to an increase in the one-month LIBOR interest rate.

The Company is subject to various financial covenants and restrictions under the terms of its CLO vehicles and financing facilities. The Company believes it was in compliance with all financial covenants and restrictions as of June 30, 2017 and as of the most recent CLO determination dates in July 2017.

Capital Markets

The Company issued 9.5 million shares of common stock in a public offering receiving net proceeds of $76.2 million. The Company used a portion of the net proceeds to fully internalize its management team and terminate the existing management agreement with its external manager, and intends to use the remaining proceeds to make investments and for general corporate purposes.

Internalization of Management Team

The Company exercised its option to fully internalize its management team and terminate the existing management agreement with its external manager. On May 31, 2017, the Company paid $25.0 million in consideration of this internalization.

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.18 per share of common stock for the quarter ended June 30, 2017. The dividend is payable on August 31, 2017 to common stockholders of record on August 16, 2017. The ex-dividend date is August 14, 2017.

As previously announced, the Board of Directors has declared cash dividends on the Company's Series A, Series B and Series C cumulative redeemable preferred stock reflecting accrued dividends from June 1, 2017 through August 31, 2017. The dividends are payable on August 31, 2017 to preferred stockholders of record on August 15, 2017. The Company will pay total dividends of $0.515625, $0.484375 and $0.53125 per share on the Series A, Series B and Series C preferred stock, respectively.

Earnings Conference Call

The Company will host a conference call today at 10:00 a.m. ET. A live webcast of the conference call will be available at www.arbor.com in the investor relations area of the website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 516-5034 for domestic callers and (678) 509-7613 for international callers. Please use participant passcode 56886553.

After the live webcast, the call will remain available on the Company's website through August 31, 2017. In addition, a telephonic replay of the call will be available until August 11, 2017. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 56886553.

About Arbor Realty Trust, Inc.

Arbor Realty Trust, Inc. (NYSE: ABR) is a real estate investment trust and national direct lender specializing in loan origination and servicing for multifamily, seniors housing, healthcare and other diverse commercial real estate assets. Arbor is a Top 10 Fannie Mae DUS^® Multifamily Lender by volume and a Top Fannie Mae Small Loan lender, a Freddie Mac Program Plus^® Seller/Servicer and the Top Freddie Mac Small Balance Loan Lender, a Fannie Mae and Freddie MacSeniors Housing Lender, an FHA Multifamily Accelerated Processing (MAP)/LEAN Lender, a HUD-approved LIHTC Lender as well as a CMBS, bridge, mezzanine and preferred equity lender, consistently building on its reputation for service, quality and flexibility. With a fee-based servicing portfolio of over $15 billion, Arbor is a primary commercial loan servicer and special servicer rated by Standard & Poor’s with an Above Average rating. Arbor is also on the Standard & Poor’s Select Servicer List and is a primary commercial loan servicer and loan level special servicer rated by Fitch Ratings.

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 December 31, 2016 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.

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 page 11 of this release.

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)


		Quarter Ended						Six Months Ended
		June 30,						June 30,
		2017			2016			2017			2016
		2017			2016			2017			2016
Interest income		$	34,468,274		$	27,969,498		$	67,993,290		$	53,787,963
Other interest income, net			-			2,539,274			-			2,539,274
Interest expense			20,411,386			13,243,488			39,848,224			25,992,101
	Net interest income		14,056,888			17,265,284			28,145,066			30,335,136

Other revenue:
Gain on sales, including fee-based services, net			18,830,042			-			38,000,898			-
Mortgage servicing rights			17,254,059			-			37,284,399			-
Servicing revenue, net			6,609,147			-			11,402,790			-
Property operating income			2,863,259			4,426,555			6,086,463			9,758,087
Other income, net			(821,252	)		214,668			(1,707,549	)		304,431
	Total other revenue		44,735,255			4,641,223			91,067,001			10,062,518

Other expenses:
Employee compensation and benefits			21,824,684			4,311,412			41,666,148			8,639,754
Selling and administrative			7,834,927			1,719,337			15,528,814			4,374,813
Acquisition costs			-			745,734			-			3,855,644
Property operating expenses			2,621,922			3,856,264			5,259,826			8,172,819
Depreciation and amortization			1,815,726			443,112			3,712,975			1,320,645
Impairment loss on real estate owned			1,500,000			11,200,000			2,700,000			11,200,000
Provision for loss sharing			532,185			-			2,211,570			-
Provision for loan losses (net of recoveries)			(1,760,000	)		44,005			(2,455,653	)		29,005
Management fee - related party			2,673,260			2,850,000			6,673,260			5,550,000
	Total other expenses		37,042,704			25,169,864			75,296,940			43,142,680

Income (loss) before gain on extinguishment of debt,
	gain on sale of real estate, (loss) income from
	equity affiliates and provision for income taxes		21,749,439			(3,263,357	)		43,915,127			(2,745,026	)
Gain on extinguishment of debt			-			-			7,116,243			-
Gain on sale of real estate			-			11,023,134			-			11,630,687
(Loss) income from equity affiliates			(2,944	)		4,367,101			759,833			6,264,543
Provision for income taxes			(3,435,000	)		-			(9,536,000	)		-

Net income			18,311,495			12,126,878			42,255,203			15,150,204

Preferred stock dividends			1,888,430			1,888,430			3,776,860			3,776,860
Net income attributable to noncontrolling interest			4,493,627			-			10,935,231			-
Net income attributable to common stockholders		$	11,929,438		$	10,238,448		$	27,543,112		$	11,373,344

Basic earnings per common share		$	0.21		$	0.20		$	0.51		$	0.22
Diluted earnings per common share		$	0.21		$	0.20		$	0.50		$	0.22


Weighted average shares outstanding:
	Basic		56,652,334			51,381,405			54,071,085			51,213,312
	Diluted		79,064,503			51,741,951			76,365,118			51,418,539

Dividends declared per common share		$	0.18		$	0.15		$	0.35		$	0.30

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


				June 30,			December 31,
				2017			2016
				(Unaudited)
Assets:
Cash and cash equivalents				$	80,759,389		$	138,645,430
Restricted cash					187,239,506			29,314,929
Loans and investments, net					1,798,865,292			1,695,732,351
Loans held-for-sale, net					387,354,589			673,367,304
Capitalized mortgage servicing rights, net					243,083,459			227,742,986
Available-for-sale securities, at fair value					5,102,433			5,403,463
Securities held to maturity					8,083,435			-
Investments in equity affiliates					32,992,895			33,948,853
Real estate owned, net					17,398,560			19,491,805
Due from related party					5,628,805			1,464,732
Goodwill and other intangible assets					119,688,979			97,489,884
Other assets					49,248,026			48,184,509
Total assets				$	2,935,445,368		$	2,970,786,246

Liabilities and Equity:
Credit facilities and repurchase agreements				$	505,815,453		$	906,636,790
Collateralized loan obligations					1,004,815,901			728,441,109
Senior unsecured notes					94,897,231			94,521,566
Convertible senior unsecured notes, net					94,803,761			80,660,038
Junior subordinated notes to subsidiary trust issuing preferred securities					139,248,112			157,858,555
Related party financing					50,000,000			50,000,000
Due to related party					1,477,443			6,038,707
Due to borrowers					86,947,525			81,019,386
Allowance for loss-sharing obligations					32,797,406			32,407,554
Other liabilities					86,660,938			86,164,613
Total liabilities					2,097,463,770			2,223,748,318

Equity:
	Arbor Realty Trust, Inc. stockholders' equity:
		Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000
			shares authorized; special voting preferred shares, 21,230,769 shares
			issued and outstanding; 8.25% Series A, $38,787,500 aggregate
			liquidation preference;1,551,500 shares issued and outstanding;
			7.75% Series B, $31,500,000 aggregate liquidation preference;
			1,260,000 shares issued and outstanding; 8.50% Series C, $22,500,000
			aggregate liquidation preference; 900,000 shares issued and outstanding		89,508,213			89,508,213
		Common stock, $0.01 par value: 500,000,000 shares authorized; 61,349,916
			and 51,401,295 shares issued and outstanding, respectively		613,499			514,013
		Additional paid-in capital			701,397,021			621,931,995
		Accumulated deficit			(117,379,709	)		(125,134,403	)
		Accumulated other comprehensive income			440,919			320,917
Total Arbor Realty Trust, Inc. stockholders’ equity					674,579,943			587,140,735

Noncontrolling interest					163,401,655			159,897,193
Total equity					837,981,598			747,037,928

Total liabilities and equity				$	2,935,445,368		$	2,970,786,246

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

STATEMENT OF INCOME SEGMENT INFORMATION - (Unaudited)


		Quarter Ended June 30, 2017

		Structured Business			Agency Business			Other / Eliminations ⁽¹⁾			Consolidated

Interest income		$	29,917,559		$	4,550,715		$	-		$	34,468,274
Interest expense			16,712,261			2,737,302			961,823			20,411,386
	Net interest income		13,205,298			1,813,413			(961,823	)		14,056,888

Other revenue:
Gain on sales, including fee-based services, net			-			18,830,042			-			18,830,042
Mortgage servicing rights			-			17,254,059			-			17,254,059
Servicing revenue			-			18,436,985			-			18,436,985
Amortization of OMSR			-			(11,827,838	)		-			(11,827,838	)
Property operating income			2,863,259			-			-			2,863,259
Other income, net			730,879			(1,552,131	)		-			(821,252	)
	Total other revenue		3,594,138			41,141,117			-			44,735,255

Other expenses:
Employee compensation and benefits			4,066,972			17,757,712			-			21,824,684
Selling and administrative			2,897,495			4,937,432			-			7,834,927
Property operating expenses			2,621,922			-			-			2,621,922
Depreciation and amortization			415,272			1,400,454			-			1,815,726
Impairment loss on real estate owned			1,500,000			-			-			1,500,000
Provision for loss sharing			-			532,185			-			532,185
Provision for loan losses (net of recoveries)			(1,760,000	)		-			-			(1,760,000	)
Management fee - related party			1,284,048			1,389,212			-			2,673,260
	Total other expenses		11,025,709			26,016,995			-			37,042,704

Income before loss from equity affiliates and
	provision for income taxes		5,773,727			16,937,535			(961,823	)		21,749,439
Loss from equity affiliates			(2,944	)		-			-			(2,944	)
Provision for income taxes			-			(3,435,000	)		-			(3,435,000	)

Net income		$	5,770,783		$	13,502,535		$	(961,823	)	$	18,311,495

Preferred stock dividends			1,888,430			-			-			1,888,430
Net income attributable to noncontrolling interest			-			-			4,493,627			4,493,627
Net income attributable to common stockholders		$	3,882,353		$	13,502,535		$	(5,455,450	)	$	11,929,438

⁽¹⁾ Includes certain corporate expenses not allocated to the two reportable segments, such as financing costs associated with the acquisition of the Agency Business in 2016 as well as income allocated to the noncontrolling interest holder.

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

BALANCE SHEET SEGMENT INFORMATION - (Unaudited)


	June 30, 2017
	Structured Business		Agency Business		Other / Eliminations ⁽¹⁾		Consolidated
Assets:
Cash and cash equivalents	$	58,875,741	$	21,883,648	$	-	$	80,759,389
Restricted cash		171,592,585		15,646,921		-		187,239,506
Loans and investments, net		1,798,865,292		-		-		1,798,865,292
Loans held-for-sale, net		-		387,354,589		-		387,354,589
Capitalized mortgage servicing rights, net		-		243,083,459		-		243,083,459
Investments in equity affiliates		32,992,895		-		-		32,992,895
Goodwill and other intangible assets		12,500,000		107,188,979		-		119,688,979
Other assets		61,675,038		23,786,221		-		85,461,259
Total assets	$	2,136,501,551	$	798,943,817	$	-	$	2,935,445,368

Liabilities:
Debt obligations	$	1,458,231,271	$	381,349,187	$	50,000,000	$	1,889,580,458
Allowance for loss-sharing obligations		-		32,797,406		-		32,797,406
Other liabilities		136,880,296		37,115,558		1,090,052		175,085,906
Total liabilities	$	1,595,111,567	$	451,262,151	$	51,090,052	$	2,097,463,770

⁽¹⁾ Includes debt and accrued interest costs associated with the acquisition of the Agency Business in 2016, not allocated to the two reportable segments.

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

Supplemental Schedule of Non-GAAP Financial Measures -
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
(Unaudited)

	Quarter Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	2017			2016			2017			2016
Net income attributable to common stockholders	$	11,929,438		$	10,238,448		$	27,543,112		$	11,373,344

Adjustments:
Gain on sale of real estate		-			(11,023,134	)		-			(11,630,687	)
Net income attributable to noncontrolling interest		4,493,627			-			10,935,231			-
Impairment loss on real estate owned		1,500,000			11,200,000			2,700,000			11,200,000
Depreciation - real estate owned		168,803			443,112			419,098			1,320,645
Depreciation - investments in equity affiliates		101,447			93,588			202,894			187,176

Funds from operations ⁽¹⁾	$	18,193,315		$	10,952,014		$	41,800,335		$	12,450,478

Adjustments:
Income from mortgage servicing rights		(17,254,059	)		-			(37,284,399	)		-
Impairment loss on real estate owned		(1,500,000	)		(11,200,000	)		(2,700,000	)		(11,200,000	)
Deferred tax (benefit) provision		(890,000	)		-			937,000			-
Amortization and write-offs of MSRs		14,931,697			-			30,213,162			-
Depreciation and amortization		1,873,107			-			3,740,660			-
Net loss on changes in fair value of derivatives		1,552,131			-			2,549,155			-
Gain on sale of real estate		-			11,023,134			-			11,630,687
Stock-based compensation		681,711			481,664			2,986,233			2,163,094
Acquisition costs		-			745,734			-			3,855,644

Adjusted funds from operations ⁽¹⁾	$	17,587,902		$	12,002,546		$	42,242,146		$	18,899,903

Diluted FFO per share ⁽¹⁾	$	0.23		$	0.21		$	0.55		$	0.24

Diluted AFFO per share ⁽¹⁾	$	0.22		$	0.23		$	0.55		$	0.37

Diluted weighted average shares outstanding ⁽¹⁾		79,064,503			51,741,951			76,365,118			51,418,539

⁽¹⁾ Amounts are attributable to common stockholders and OP Unit holder. 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 FFO and AFFO because management believes they are important supplemental measures of the Company’s operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) attributable to common stockholders (computed in accordance with 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 ventures.

The Company defines AFFO as funds from operations adjusted for accounting items such as non-cash stock-based compensation expense, income from mortgage servicing rights ("MSRs"), changes in fair value of certain derivatives that temporarily flow through earnings, amortization and write-offs of MSRs, deferred tax (benefit) provision and the amortization of the convertible senior notes conversion option. The Company also adds back one-time charges such as acquisition costs and impairment losses on real estate and gains/losses on sales of real estate. The Company is generally not in the business of operating real estate property and has obtained real estate by foreclosure or through partial or full settlement of mortgage debt related to the Company's loans to maximize the value of the collateral and minimize the Company's exposure. Therefore, the Company deems such impairment and gains/losses on real estate as an extension of the asset management of its loans, thus a recovery of principal or additional loss on the Company's initial investment.

FFO and AFFO are not intended to be an indication of the Company's cash flow 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 FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited.

Contacts:
Arbor Realty Trust, Inc.Paul Elenio, Chief Financial Officer
516-506-4422
pelenio@arbor.com

Media:
Bonnie Habyan, EVP of Marketing
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