Arbor Realty Trust Reports Second Quarter 2014 Results and Declares Common and Preferred Stock Dividends
Second Quarter Highlights:
-
FFO of
$13.7 million , or$0.27 per diluted common share1 -
Net income attributable to common stockholders of
$11.5 million , or$0.23 per diluted common share -
Declares a cash dividend of
$0.13 per share of common stock -
Declares cash dividends of
$0.515625 per share of Series A,$0.484375 per share of Series B and$0.53125 per share of Series C preferred stock -
Adjusted book value per common share of
$9.21 , GAAP book value per common share of$7.67 1 -
Closed a third collateralized loan obligation totaling
$375 million -
Issued
$58.6 million of 7.375% senior unsecured notes -
Recorded a
$7.9 million gain from the sale of an equity investment -
Recorded
$4.8 million in cash recoveries of previously recorded reserves -
Recorded
$4.0 million in loan loss reserves
Recent Developments:
-
Recognized a
$58.1 million gain in July related to the450 West 33rd Street transaction resulting in proforma GAAP book value per common share of$8.82 as ofJune 30, 2014 1 -
Purchased 1.0 million outstanding warrants for
$2.6 million in July
Portfolio Activity
Loan and investment portfolio activity during the second quarter of 2014 consisted of:
-
Originated 21 new loans totaling
$170.3 million , of which 16 were bridge loans for$154.0 million . -
Payoffs and pay downs on 26 loans totaling
$245.9 million . -
Extended 10 loans totaling
$109.6 million .
At
As of
The average balance of the Company's loan and investment portfolio during the second quarter of 2014, excluding loan loss reserves, was
The Company recorded
The Company had two non-performing loans with a carrying value of
Financing Activity
The balance of debt that finances the Company's loan and investment portfolio at
In
In
The Company amended a
The Company repaid in full a
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'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. The Company believes that it was in compliance with all financial covenants and restrictions as of
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 | CDO II | CDO III | CLO I | CLO II | CLO III |
| Overcollateralization (1) | ||||||
| Current | 171.01% | 153.44% | 109.20% | 142.96% | 146.89% | 133.33% |
| Limit | 145.00% | 127.30% | 105.60% | 137.86% | 144.25% | 132.33% |
| Pass / Fail | Pass | Pass | Pass | Pass | Pass | Pass |
| Interest Coverage (2) | ||||||
| Current | 553.88% | 387.06% | 498.96% | 206.81% | 279.82% | 274.30% |
| Limit | 160.00% | 147.30% | 105.60% | 120.00% | 120.00% | 120.00% |
| Pass / Fail | Pass | Pass | 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.
Equity Investments
In
As previously disclosed, the Company will recognize a
Common Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of
Preferred Dividends
The Company announced today that its 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
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 9 and 10 of this release.
1. See attached supplemental schedule of non-GAAP financial measures.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF INCOME - (Unaudited) | ||||
| Quarter Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Interest income | $ 25,492,429 | $ 24,329,116 | $ 50,404,284 | $ 47,317,938 |
| Interest expense | 11,222,597 | 10,333,073 | 21,813,975 | 20,975,317 |
| Net interest income | 14,269,832 | 13,996,043 | 28,590,309 | 26,342,621 |
| Other revenue: | ||||
| Property operating income | 9,001,383 | 8,231,822 | 18,259,471 | 17,127,256 |
| Other income, net | 150,187 | 605,317 | 1,008,583 | 1,984,775 |
| Total other revenue | 9,151,570 | 8,837,139 | 19,268,054 | 19,112,031 |
| Other expenses: | ||||
| Employee compensation and benefits | 3,552,548 | 2,968,678 | 6,938,497 | 6,052,317 |
| Selling and administrative | 3,194,845 | 2,969,733 | 5,177,064 | 5,159,016 |
| Property operating expenses | 7,423,080 | 7,161,334 | 14,420,203 | 14,031,493 |
| Depreciation and amortization | 2,158,353 | 1,827,595 | 3,970,036 | 3,459,726 |
| Impairment loss on real estate owned | -- | -- | 250,000 | -- |
| Provision for loan losses (net of recoveries) | (870,187) | 821,722 | (735,843) | 3,321,877 |
| Management fee - related party | 2,500,000 | 2,800,000 | 4,950,000 | 5,600,000 |
| Total other expenses | 17,958,639 | 18,549,062 | 34,969,957 | 37,624,429 |
| Income before gain on extinguishment of debt, gain on sale of equity interest and income (loss) from equity affiliates | 5,462,763 | 4,284,120 | 12,888,406 | 7,830,223 |
| Gain on extinguishment of debt | -- | -- | -- | 3,763,000 |
| Gain on sale of equity interest | 7,851,266 | -- | 7,851,266 | -- |
| Income (loss) from equity affiliates | 40,493 | (81,804) | 80,541 | (163,689) |
| Net income | 13,354,522 | 4,202,316 | 20,820,213 | 11,429,534 |
| Preferred stock dividends | 1,888,465 | 1,152,617 | 3,479,395 | 1,685,945 |
| Net income attributable to noncontrolling interest | -- | 53,833 | -- | 107,484 |
| Net income attributable to Arbor Realty Trust, Inc. common stockholders | $ 11,466,057 | $ 2,995,866 | $ 17,340,818 | $ 9,636,105 |
| Basic earnings per common share | $ 0.23 | $ 0.07 | $ 0.35 | $ 0.25 |
| Diluted earnings per common share | $ 0.23 | $ 0.07 | $ 0.35 | $ 0.25 |
| Dividends declared per common share | $ 0.13 | $ 0.12 | $ 0.26 | $ 0.24 |
| Weighted average number of shares of common stock outstanding: | ||||
| Basic | 50,267,462 | 43,113,898 | 49,804,457 | 38,468,718 |
| Diluted | 50,701,742 | 43,555,495 | 50,229,899 | 38,921,834 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| June 30, | December 31, | |
| 2014 | 2013 | |
| (Unaudited) | ||
| Assets: | ||
| Cash and cash equivalents | $ 47,813,740 | $ 60,389,552 |
| Restricted cash | 156,795,469 | 54,962,316 |
| Loans and investments, net | 1,502,586,691 | 1,523,699,653 |
| Available-for-sale securities, at fair value | 2,805,471 | 37,315,652 |
| Investments in equity affiliates | 4,588,107 | 4,680,306 |
| Real estate owned, net | 120,830,942 | 111,718,177 |
| Real estate held-for-sale, net | -- | 11,477,676 |
| Due from related party | 358,110 | 98,058 |
| Prepaid management fee - related party | 19,047,949 | 19,047,949 |
| Other assets | 48,146,390 | 54,083,143 |
| Total assets | $ 1,902,972,869 | $ 1,877,472,482 |
| Liabilities and Equity: | ||
| Credit facilities and repurchase agreements | $ 22,204,000 | $ 159,125,023 |
| Collateralized debt obligations | 433,297,191 | 639,622,981 |
| Collateralized loan obligations | 545,750,000 | 264,500,000 |
| Senior unsecured notes | 58,637,625 | -- |
| Junior subordinated notes to subsidiary trust issuing preferred securities | 159,557,894 | 159,291,427 |
| Notes payable | 2,498,542 | 2,500,000 |
| Mortgage note payable – real estate owned | 53,538,637 | 42,745,650 |
| Mortgage note payable – real estate held-for-sale | -- | 11,005,354 |
| Due to related party | 1,666,667 | 2,794,087 |
| Due to borrowers | 16,979,900 | 20,326,030 |
| Deferred revenue | 77,123,133 | 77,123,133 |
| Other liabilities | 55,127,961 | 60,842,515 |
| Total liabilities | 1,426,381,550 | 1,439,876,200 |
| Equity: | ||
| Arbor Realty Trust, Inc. stockholders' equity: | ||
| Preferred stock, $0.01 par value: 100,000,000 shares authorized; 8.25% Series A | ||
| cumulative redeemable preferred stock, $38,787,500 aggregate liquidation preference; | ||
| 1,551,500 issued and outstanding at June 30, 2014 and December 31, 2013; | ||
| 7.75% Series B cumulative redeemable preferred stock, $31,500,000 aggregate | ||
| liquidation preference; 1,260,000 issued and outstanding at June 30, 2014 and | ||
| December 31, 2013; 8.50% Series C cumulative redeemable preferred stock, | ||
| $22,500,000 aggregate liquidation preference; 900,000 issued and outstanding at | ||
| June 30, 2014, no shares issued and outstanding at December 31, 2013 | 89,295,905 | 67,654,655 |
| Common stock, $0.01 par value: 500,000,000 shares authorized; 53,128,075 | ||
| shares issued, 50,477,308 shares outstanding at June 30, 2014 and | ||
| 51,787,075 shares issued, 49,136,308 shares outstanding at December 31, 2013 | 531,280 | 517,870 |
| Additional paid-in capital | 631,889,669 | 623,993,245 |
| Treasury stock, at cost - 2,650,767 shares at June 30, 2014 and December 31, 2013 | (17,100,916) | (17,100,916) |
| Accumulated deficit | (207,803,092) | (212,231,319) |
| Accumulated other comprehensive loss | (20,221,527) | (25,237,253) |
| Total stockholders' equity | 476,591,319 | 437,596,282 |
| Total liabilities and equity | $ 1,902,972,869 | $ 1,877,472,482 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||
| Supplemental Schedule of Non-GAAP Financial Measures-- | ||
| Adjusted and GAAP Book Value per Common Share (Actual and Pro Forma) | ||
| (Unaudited) | ||
| Pro Forma | ||
| June 30, 2014 | June 30, 2014 | |
| GAAP Arbor Realty Trust, Inc. Stockholders' Equity | $ 476,591,319 | $ 534,666,503 |
| Subtract: 8.25% Series A, 7.75% Series B and 8.50% Series C cumulative redeemable preferred stock | (89,295,905) | (89,295,905) |
| GAAP Arbor Realty Trust, Inc. Common Stockholders' Equity | 387,295,414 | 445,370,598 |
| Add: 450 West 33rd Street transaction - deferred revenue | 77,123,133 | -- |
| Unrealized loss on derivative instruments | 19,551,436 | 19,551,436 |
| Subtract: 450 West 33rd Street transaction - prepaid management fee | (19,047,949) | -- |
| Adjusted Arbor Realty Trust, Inc. Common Stockholders' Equity | $ 464,922,034 | $ 464,922,034 |
| Adjusted book value per common share | $ 9.21 | $ 9.21 |
| GAAP book value per common share | $ 7.67 | $ 8.82 |
| Common shares outstanding | 50,477,308 | 50,477,308 |
Given the magnitude and the deferral structure of the
GAAP book value per common share and adjusted book value per common share calculations do not take into account any dilution from the 1,000,000 warrants issued to Wachovia as part of the 2009 debt restructuring. These warrants were purchased in the third quarter of 2014 for
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| Supplemental Schedule of Non-GAAP Financial Measures (Continued) -- | ||||
| Funds from Operations | ||||
| (Unaudited) | ||||
| Quarter Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net income attributable to Arbor Realty Trust, Inc. common stockholders | $ 11,466,057 | $ 2,995,866 | $ 17,340,818 | $ 9,636,105 |
| Add: | ||||
| Impairment loss on real estate owned | -- | -- | 250,000 | -- |
| Depreciation - real estate owned | 2,158,353 | 1,827,595 | 3,970,036 | 3,459,726 |
| Depreciation - investment in equity affiliate | 69,370 | 22,599 | 138,740 | 45,198 |
| Funds from operations ("FFO") | $ 13,693,780 | $ 4,846,060 | $ 21,699,594 | $ 13,141,029 |
| Diluted FFO per common share | $ 0.27 | $ 0.11 | $ 0.43 | $ 0.34 |
| Diluted weighted average shares outstanding | 50,701,742 | 43,555,495 | 50,229,899 | 38,921,834 |
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 REITs.
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:Joseph Green The Ruth Group 646-536-7013 jgreen@theruthgroup.com
