UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbols | Name of each exchange on which registered | ||
| Item 2.02 | Results of Operations and Financial Condition. |
On February 19, 2021, Arbor Realty Trust, Inc. issued a press release announcing its earnings for the fourth quarter and full year ended December 31, 2020, a copy of which is attached hereto as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit Number |
Exhibit | |
| 99.1 | Press Release, dated February 19, 2021. | |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
EXHIBIT INDEX
Exhibit Number
| 99.1 | Press Release, dated February 19, 2021. | |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
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.
| ARBOR REALTY TRUST, INC. | ||
| By: | /s/ Paul Elenio | |
| Name: | Paul Elenio | |
| Title: | Chief Financial Officer | |
Date: February 19, 2021
Exhibit 99.1
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
Fourth Quarter Highlights:
| · | Diversified operating platform with a multifamily focus that continues to produce strong distributable earnings and dividends in all cycles |
| · | GAAP net income of $0.80 and distributable earnings of $0.49 per diluted common share1 |
| · | Raised cash dividend on common stock to $0.33 per share, our third consecutive quarterly increase |
| · | Continued strong performance from our residential mortgage banking joint venture generating pretax income of $19.6 million |
| · | Raised $105 million of accretive growth capital through the issuance of common shares |
Agency Business:
| · | Segment income of $70.9 million |
| · | Record loan originations of $2.75 billion, an 87% increase over last quarter |
| · | Servicing portfolio of $24.63 billion representing 9% growth in the current quarter |
Structured Business:
| · | Segment income of $39.9 million |
| · | Portfolio growth of 7% on $985.2 million of loan originations |
Full Year Highlights:
| · | GAAP net income of $1.41 and distributable earnings of $1.75 per diluted common share1 |
| · | Raised annual dividend run rate to $1.32 per share, a 10% increase from a year ago, representing nine straight years of dividend growth |
| · | Record originations of $9.15 billion, a 20% increase over 2019 |
| · | Agency servicing portfolio growth of 23% from record loan originations of $6.71 billion |
| · | Structured portfolio growth of 28% from loan originations of $2.43 billion |
| · | Industry leading shareholder return of 7% in 2020 despite ongoing pandemic; all other commercial mortgage REITs in our space had a negative return during 2020 |
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 2 |
| · | Raised $250 million of accretive growth capital through issuance of common stock and senior unsecured debt |
| · | Continued focus on improving funding sources: issued $275.0 million of 4.50% senior notes to replace higher cost debt, increased warehouse capacity by $420.0 million, added a new $800.0 million CLO vehicle and completed first private label securitization totaling $727.2 million |
| · | Generated pretax income of $75.7 million from residential mortgage banking joint venture |
| · | Named the top Fannie Mae Small Loan Producer two years running (2019-2020); jumped up to sixth on the Top Fannie Mae DUS Multifamily Lender list for 2020 |
Uniondale, NY, February 19, 2021 -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the fourth quarter and year ended December 31, 2020. Arbor reported net income for the quarter of $96.6 million, or $0.80 per diluted common share, compared to net income of $35.5 million, or $0.34 per diluted common share for the quarter ended December 31, 2019. Net income for the year was $163.4 million, or $1.41 per diluted common share, compared to $121.1 million, or $1.27 per diluted common share for the year ended December 31, 2019. Distributable earnings for the quarter was $67.4 million, or $0.49 per diluted common share, compared to $42.3 million, or $0.34 per diluted common share for the quarter ended December 31, 2019. Distributable earnings for the year was $234.9 million, or $1.75 per diluted common share, compared to $159.2 million, or $1.37 per diluted common share for the year ended December 31, 2019.1
“We had a tremendous fourth quarter and an exceptional 2020 demonstrating the value of our franchise and the strength of our diverse business model,” said Ivan Kaufman, founder, chairman and CEO of Arbor Realty Trust. “Our outstanding results continue to reflect the successful execution of our business strategy and our versatile operating platform that have once again allowed us to increase our dividend to 33 cents a share – our third consecutive quarterly dividend increase representing 10% growth in 2020. Arbor continues to outperform in the commercial mortgage REIT space and we are well positioned to succeed in the current economic climate giving us confidence in our ability to continue to generate strong earnings and dividends in the future.”
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 3 |
Agency Business
Loan Origination Platform
| Agency Loan Volume (in thousands) | ||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||
| December 31, 2020 | September 30, 2020 | December 31, 2020 | December 31, 2019 | |||||||||||||
| Fannie Mae | $ | 2,202,092 | $ | 1,117,679 | $ | 5,041,925 | $ | 3,346,272 | ||||||||
| Freddie Mac | 373,063 | 252,014 | 960,508 | 728,317 | ||||||||||||
| FHA | 133,523 | 100,345 | 327,345 | 123,095 | ||||||||||||
| Private Label | 44,884 | 5,840 | 382,191 | 401,216 | ||||||||||||
| CMBS/Conduit | - | - | - | 211,325 | ||||||||||||
| Total Originations | $ | 2,753,562 | $ | 1,475,878 | $ | 6,711,969 | $ | 4,810,225 | ||||||||
| Total Loan Sales | $ | 2,418,317 | $ | 1,219,462 | $ | 6,587,728 | $ | 4,401,112 | ||||||||
| Total Loan Commitments | $ | 2,808,173 | $ | 1,528,551 | $ | 6,810,666 | $ | 4,829,721 | ||||||||
For the quarter ended December 31, 2020, the Agency Business generated revenues (excluding gains and losses on derivative instruments) of $125.6 million, compared to $81.8 million for the third quarter of 2020. Gain on sales, including fee-based services, net was $34.0 million for the quarter, reflecting a margin of 1.41% on loan sales, compared to $19.9 million and 1.63% for the third quarter of 2020. Income from mortgage servicing rights was $68.8 million for the quarter, reflecting a rate of 2.45% as a percentage of loan commitments, compared to $42.4 million and 2.77% for the third quarter of 2020.
At December 31, 2020, loans held-for-sale was $986.9 million which was primarily comprised of unpaid principal balances totaling $968.6 million, with financing associated with these loans totaling $952.0 million.
Fee-Based Servicing Portfolio
Our fee-based servicing portfolio totaled $24.63 billion at December 31, 2020, an increase of 9.2% from September 30, 2020, primarily the result of $2.75 billion of new agency loan originations, net of $641.8 million in portfolio runoff during the quarter. Servicing revenue, net was $14.2 million for the quarter and consisted of servicing revenue of $27.3 million, net of amortization of mortgage servicing rights totaling $13.1 million.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 4 |
| Fee-Based Servicing Portfolio ($ in thousands) | ||||||||||||||||||||||||
| As of December 31, 2020 | As of September 30, 2020 | |||||||||||||||||||||||
| UPB | Wtd. Avg. Fee | Wtd. Avg. Life (in years) | UPB | Wtd. Avg. Fee | Wtd. Avg. Life (in | |||||||||||||||||||
| Fannie Mae | $ | 18,268,268 | 0.523 | % | 8.2 | $ | 16,462,041 | 0.516 | % | 8.4 | ||||||||||||||
| Freddie Mac | 4,881,080 | 0.279 | % | 9.9 | 4,687,197 | 0.288 | % | 10.4 | ||||||||||||||||
| FHA | 752,116 | 0.163 | % | 20.3 | 685,263 | 0.171 | % | 20.4 | ||||||||||||||||
| Private Label | 726,992 | 0.200 | % | 8.7 | 727,063 | 0.200 | % | 9.4 | ||||||||||||||||
| Total | $ | 24,628,456 | 0.454 | % | 8.9 | $ | 22,561,564 | 0.448 | % | 9.2 | ||||||||||||||
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”), and includes $34.0 million for the fair value of the guarantee obligation undertaken at December 31, 2020. The Company recorded a $7.6 million reversal of provision for loss sharing associated with current expected credit losses, or “CECL,” for the fourth quarter of 2020. At December 31, 2020, the Company’s total CECL allowance for loss-sharing obligations was $30.3 million, representing 0.17% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
Quarter ended December 31, 2020:
| - | Strong growth in the portfolio of $378.2 million, or 7.4% |
| - | Continued significant income generated by our residential mortgage banking joint venture |
| - | Originated 57 loans totaling $985.2 million, consisted primarily of multifamily bridge loans totaling $868.7 million |
| - | Payoffs and pay downs on 32 loans totaling $567.6 million |
Year ended December 31, 2020:
| - | Portfolio growth of $1.20 billion, or $27.9% |
| - | Originated 137 loans totaling $2.43 billion, consisted primarily of multifamily bridge loans totaling $2.12 billion |
| - | Payoffs and pay downs totaling $1.21 billion |
The Company recorded pretax income of $19.6 million from its significant joint venture investment in a residential mortgage banking business as a result of the continued historically low interest rate environment. Pretax income from this investment for the year ended December 31, 2020 totaled $75.7 million.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 5 |
At December 31, 2020, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $5.48 billion, with a weighted average current interest pay rate of 5.23%, compared to $5.10 billion and 5.39% at September 30, 2020. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 5.80% at December 31, 2020, compared to 5.93% at September 30, 2020.
The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2020, excluding loan loss reserves, was $5.09 billion with a weighted average yield of 6.04%, compared to $4.98 billion and 5.98% for the third quarter of 2020.
During the fourth quarter of 2020, the Company recorded additional provisions for loan losses of $1.7 million as a result of its loan review process associated with CECL. At December 31, 2020, the Company’s total allowance for loan losses was $148.3 million. The Company had seven non-performing loans with a carrying value of $60.3 million, before related loan loss reserves of $6.5 million, compared to eight loans with a carrying value of $62.9 million, before related loan loss reserves of $9.1 million as of September 30, 2020.
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2020 was $4.92 billion with a weighted average interest rate including fees of 3.03% as compared to $4.52 billion and a rate of 3.09% at September 30, 2020. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2020 was $4.64 billion, as compared to $4.59 billion for the third quarter of 2020. The average cost of borrowings for the fourth quarter of 2020 was 3.05%, compared to 3.06% for the third quarter of 2020.
The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles, financing facilities and unsecured debt. The Company believes it was in compliance with all financial covenants and restrictions as of December 31, 2020 and as of the most recent collateralized securitization vehicle determination dates in February 2021.
Capital Markets
The Company issued 7.0 million shares of common stock in a public offering receiving net proceeds of $93.0 million. The proceeds are primarily to be used to make investments and for general corporate purposes.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 6 |
Dividends
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.33 per share of common stock for the quarter ended December 31, 2020, representing a 10.0% increase from a year ago. The dividend is payable on March 19, 2021 to common stockholders of record on March 3, 2021. The ex-dividend date is March 2, 2021.
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 December 1, 2020 through February 28, 2021. The dividends are payable on March 1, 2021 to preferred stockholders of record on February 15, 2021. 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. Eastern Time. A live webcast and replay of the conference call will be available at http://www.arbor.com in the investor relations section of the Company’s website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (877) 876-9173 for domestic callers and (785) 424-1667 for international callers. Please use participant passcode ABRQ420 when prompted by the operator.
A telephonic replay of the call will be available until February 26, 2021. The replay dial-in numbers are (800) 839-6737 for domestic callers and (402) 220-6052 for international callers.
About Arbor Realty Trust, Inc.
Arbor Realty Trust, Inc. (NYSE:ABR) is a nationwide real estate investment trust and direct lender, providing loan origination and servicing for multifamily, seniors housing, healthcare and other diverse commercial real estate assets. Headquartered in New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. Arbor is a Fannie Mae DUS® lender and Freddie Mac Optigo Seller/Servicer. Arbor’s product platform also includes CMBS, bridge, mezzanine and preferred equity lending. Rated by Standard and Poor’s and Fitch Ratings, Arbor is committed to building on its reputation for service, quality and customized solutions with an unparalleled dedication to providing our clients excellence over the entire life of a loan.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 7 |
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 December 31, 2020 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 12 of this release.
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Contacts: Arbor Realty Trust, Inc. Paul Elenio, Chief Financial Officer 516-506-4422 pelenio@arbor.com |
Investors: The Ruth Group Daniel Kontoh-Boateng/James Salierno 646-536-7019/7028 dboateng@theruthgroup.com jsalierno@theruthgroup.com |
Media: Bonnie Habyan Chief Marketing Officer 516-506-4615 bhabyan@arbor.com |
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 8 |
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 9 |
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 10 |
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 11 |
Arbor Realty Trust Reports Fourth Quarter and Full Year 2020 Results and Increases Dividend for Third Consecutive Quarter to $0.33 per Share
| February 19, 2021 | Page 12 |
