Arbor Realty Trust Reports Fourth Quarter and Full Year 2014 Results and Declares Common Stock Dividend
Fourth Quarter Highlights:
-
Net income of
$5.0 million , or$0.10 per diluted common share -
AFFO of
$7.0 million , or$0.14 per diluted common share1 -
Redeemed CLO I replacing
$87.5 million in notes primarily with capacity from existing facilities, reducing borrowing costs by approximately 150 basis points -
Recorded gains of
$2.6 million from the sales of real estate owned assets and an equity investment -
Originated
$212 million of new loans -
Declares a cash dividend of
$0.13 per share of common stock
Full Year Highlights:
-
Net income of
$85.8 million , or$1.70 per diluted common share -
AFFO of
$95.4 million , or$1.89 per diluted common share and AFFO of$37.3 million , or$0.74 per diluted common share excluding the recognition of a$58.1 million non-cash net gain related to the450 West 33rd Street transaction1 -
Recorded gains of
$10.3 million from the sales of real estate owned assets and equity investments -
Increased GAAP book value by
$1.31 , or 17%, to$8.84 per common share -
Closed a third collateralized loan obligation totaling
$375 million -
Issued
$97.9 million of senior unsecured notes -
Raised
$28.1 million of capital through two stock offerings -
Increased the capacity of financing facilities by
$70 million -
Originated over
$900 million of new loans -
Declared cash dividends of
$0.52 per share of common stock
Recent Developments:
-
Redeemed legacy CDOs I and II primarily with a new warehouse facility and CDO cash; releasing approximately
$30 million of cash equity that was previously held in these vehicles
Portfolio Activity
Loan and investment portfolio activity during the fourth quarter of 2014 consisted of:
-
21 new loan originations totaling
$212.4 million , of which 20 were bridge loans for$209.9 million . -
Payoffs and pay downs on 25 loans totaling
$281.6 million .
At
As of
The average balance of the Company's loan and investment portfolio during the fourth quarter of 2014, excluding loan loss reserves, was
The Company recorded
The Company had three non-performing loans with a carrying value of
Financing Activity
In
The balance of debt that finances the Company's loan and investment portfolio at
In
The Company is subject to various financial covenants and restrictions under the terms of its CDO/CLO vehicles and financing facilities. 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 it was in compliance with all financial covenants and restrictions as of
| Cash Flow Triggers | CDO III | CLO II | CLO III |
| Overcollateralization (1) | |||
| Current | 111.34% | 146.89% | 133.33% |
| Limit | 105.60% | 144.25% | 132.33% |
| Pass / Fail | Pass | Pass | Pass |
| Interest Coverage (2) | |||
| Current | 349.38% | 313.35% | 274.85% |
| Limit | 105.60% | 120.00% | 120.00% |
| Pass / Fail | 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. |
Sales of Real Estate and Equity Investments
During the quarter, the Company sold two real estate properties which were previously classified as held for sale for
Common Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of
Preferred Dividends
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
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
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 each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 9 and 10 of this release.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||
| Quarter Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| (Unaudited) | (Unaudited) | |||
| Interest income | $ 26,654,100 | $ 25,970,712 | $ 106,716,344 | $ 99,031,623 |
| Interest expense | 13,755,449 | 10,444,109 | 47,903,458 | 42,065,151 |
| Net interest income | 12,898,651 | 15,526,603 | 58,812,886 | 56,966,472 |
| Other revenue: | ||||
| Property operating income | 5,937,901 | 5,461,152 | 32,641,249 | 30,127,260 |
| Other income, net | 118,564 | 557,363 | 1,645,465 | 2,290,714 |
| Total other revenue | 6,056,465 | 6,018,515 | 34,286,714 | 32,417,974 |
| Other expenses: | ||||
| Employee compensation and benefits | 3,400,004 | 2,994,693 | 13,978,223 | 12,042,332 |
| Selling and administrative | 2,093,042 | 2,144,160 | 9,600,139 | 10,603,247 |
| Property operating expenses | 6,170,398 | 6,031,977 | 27,857,460 | 26,728,174 |
| Depreciation and amortization | 1,595,018 | 1,922,205 | 7,371,737 | 7,250,601 |
| Impairment loss on real estate owned | -- | 1,000,000 | 250,000 | 1,000,000 |
| Provision for loan losses (net of recoveries) | (899,206) | 215,544 | (308,511) | 4,287,652 |
| Management fee - related party | 2,500,000 | 2,500,000 | 9,900,000 | 10,900,000 |
| Total other expenses | 14,859,256 | 16,808,579 | 68,649,048 | 72,812,006 |
| Income before gain on sale of equity interest, incentive management fee, gain on extinguishment of debt, gain on sale of real estate and income (loss) from equity affiliates | 4,095,860 | 4,736,539 | 24,450,552 | 16,572,440 |
| Gain on sale of equity interest | 819,067 | -- | 85,793,466 | -- |
| Incentive management fee - equity interest - related party | -- | -- | (19,047,949) | -- |
| Gain on extinguishment of debt | -- | -- | -- | 4,930,772 |
| Gain on sale of real estate, net | 1,803,512 | -- | 1,603,763 | -- |
| Income (loss) from equity affiliates | 219,287 | 40,937 | 248,658 | (204,475) |
| Net income | 6,937,726 | 4,777,476 | 93,048,490 | 21,298,737 |
| Preferred stock dividends | 1,888,430 | 1,410,305 | 7,256,255 | 4,506,583 |
| Net income attributable to noncontrolling interest | -- | -- | -- | 124,199 |
| Net income attributable to Arbor Realty Trust, Inc. common stockholders | $ 5,049,296 | $ 3,367,171 | $ 85,792,235 | $ 16,667,955 |
| Basic earnings per common share | $ 0.10 | $ 0.07 | $ 1.71 | $ 0.39 |
| Diluted earnings per common share | $ 0.10 | $ 0.07 | $ 1.70 | $ 0.39 |
| Dividends declared per common share | $ 0.13 | $ 0.13 | $ 0.52 | $ 0.50 |
| Weighted average number of shares of common stock outstanding: | ||||
| Basic | 50,477,308 | 49,136,308 | 50,143,648 | 42,399,872 |
| Diluted | 50,477,308 | 49,537,029 | 50,368,344 | 42,835,144 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEETS | ||
| December 31, | December 31, | |
| 2014 | 2013 | |
| Assets: | ||
| Cash and cash equivalents | $ 50,417,745 | $ 60,389,552 |
| Restricted cash | 218,100,529 | 54,962,316 |
| Loans and investments, net | 1,459,475,650 | 1,523,699,653 |
| Available-for-sale securities, at fair value | 2,499,709 | 37,315,652 |
| Investments in equity affiliates | 4,869,066 | 4,680,306 |
| Real estate owned, net | 84,925,641 | 111,718,177 |
| Real estate held-for-sale, net | 14,381,733 | 11,477,676 |
| Due from related party | 36,515 | 98,058 |
| Prepaid management fee - related party | -- | 19,047,949 |
| Other assets | 45,716,002 | 54,083,143 |
| Total assets | $ 1,880,422,590 | $ 1,877,472,482 |
| Liabilities and Equity: | ||
| Credit facilities and repurchase agreements | $ 180,386,200 | $ 159,125,023 |
| Collateralized debt obligations | 331,395,126 | 639,622,981 |
| Collateralized loan obligations | 458,250,000 | 264,500,000 |
| Senior unsecured notes | 97,860,025 | -- |
| Junior subordinated notes to subsidiary trust issuing preferred securities | 159,833,260 | 159,291,427 |
| Notes payable | 1,300,000 | 2,500,000 |
| Mortgage note payable – real estate owned | 21,865,136 | 42,745,650 |
| Mortgage note payable – real estate held-for-sale | 9,119,221 | 11,005,354 |
| Due to related party | 2,653,333 | 2,794,087 |
| Due to borrowers | 32,972,606 | 20,326,030 |
| Deferred revenue | -- | 77,123,133 |
| Other liabilities | 49,332,212 | 60,842,515 |
| Total liabilities | 1,344,967,119 | 1,439,876,200 |
| Equity: | ||
| Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized; 8.25% Series A, $38,787,500 aggregate liquidation preference; 1,551,500 issued and outstanding at December 31, 2014 and 2013; 7.75% Series B, $31,500,000 aggregate liquidation preference; 1,260,000 issued and outstanding at December 31, 2014 and 2013; 8.50% Series C, $22,500,000 aggregate liquidation preference; 900,000 issued and outstanding at December 31, 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 December 31, 2014 and 51,787,075 shares issued, 49,136,308 shares outstanding at December 31, 2013 | 531,280 | 517,870 |
| Additional paid-in capital | 629,880,774 | 623,993,245 |
| Treasury stock, at cost - 2,650,767 shares at December 31, 2014 and 2013 | (17,100,916) | (17,100,916) |
| Accumulated deficit | (152,483,322) | (212,231,319) |
| Accumulated other comprehensive loss | (14,668,250) | (25,237,253) |
| Total stockholders' equity | 535,455,471 | 437,596,282 |
| Total liabilities and equity | $ 1,880,422,590 | $ 1,877,472,482 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||
| Supplemental Schedule of Non-GAAP Financial Measures - | ||||
| Funds from Operations and Adjusted Funds from Operations | ||||
| (Unaudited) | ||||
| Quarter Ended | Year Ended | |||
| December 31, | December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Net income attributable to Arbor Realty Trust, Inc. common stockholders | $ 5,049,296 | $ 3,367,171 | $ 85,792,235 | $ 16,667,955 |
| Subtract: | ||||
| Gain on sale of real estate, net | (1,803,512) | -- | (1,603,763) | -- |
| Add: | ||||
| Impairment loss on real estate owned | -- | 1,000,000 | 250,000 | 1,000,000 |
| Depreciation - real estate owned and held-for-sale | 1,595,018 | 1,922,205 | 7,371,737 | 7,250,601 |
| Depreciation - investment in equity affiliates | 64,742 | 22,599 | 268,224 | 90,396 |
| Funds from operations ("FFO") | $ 4,905,544 | $ 6,311,975 | $ 92,078,433 | $ 25,008,952 |
| Subtract: | ||||
| Impairment loss on real estate owned | -- | (1,000,000) | (250,000) | (1,000,000) |
| Add: | ||||
| Gain on sale of real estate, net | 1,803,512 | -- | 1,603,763 | -- |
| Stock-based compensation | 300,808 | 167,936 | 1,989,439 | 1,600,142 |
| Adjusted funds from operations ("AFFO") | $ 7,009,864 | $ 5,479,911 | $ 95,421,635 | $ 25,609,094 |
| Diluted FFO per common share | $ 0.10 | $ 0.13 | $ 1.83 | $ 0.58 |
| Diluted AFFO per common share | $ 0.14 | $ 0.11 | $ 1.89 | $ 0.60 |
| Diluted weighted average shares outstanding | 50,477,308 | 49,537,029 | 50,368,344 | 42,835,144 |
| Arbor 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, as well as the add back of 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 owned 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 the Company's 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 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 and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited. |
| Excluding the impact of a $58.1 million non-cash net gain related to the 450 West 33rd Street transaction recorded in the third quarter of 2014, full year 2014 FFO was $34.0 million, or $0.68 per diluted common share and AFFO was $37.3 million, or $0.74 per diluted common share. |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |
| Supplemental Schedule of Non-GAAP Financial Measures (Continued) - | |
| Adjusted and GAAP Book Value per Common Share | |
| (Unaudited) | |
| December 31, | |
| 2014 | |
| GAAP Arbor Realty Trust, Inc. Stockholders' Equity | $ 535,455,471 |
| Subtract: Cumulative redeemable preferred stock | (89,295,905) |
| GAAP Arbor Realty Trust, Inc. Common Stockholders' Equity | 446,159,566 |
| Add: Unrealized loss on derivative instruments | 13,908,163 |
| Adjusted Arbor Realty Trust, Inc. Common Stockholders' Equity | $ 460,067,729 |
| Adjusted book value per common share | $ 9.11 |
| GAAP book value per common share | $ 8.84 |
| Common shares outstanding | 50,477,308 |
| Given the significance of the unrealized gain/loss position of our qualifying derivative instruments, Arbor has elected to report adjusted book value per common share for the affected period to currently reflect the removal of the temporary nature of unrealized gains/losses as a component of equity from qualifying interest rate swaps on our financial position. Over time, as these qualifying interest rate swaps reach their maturity, the fair value of these swaps will return to their original par value. Management considers this non-GAAP financial measure to be an effective indicator of Arbor's financial condition. 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. |
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:The Ruth Group Joseph Green 646-536-7013 jgreen@theruthgroup.com
