Arbor Realty Trust Reports First Quarter 2016 Results and Declares Common Stock Dividend
First Quarter Highlights:
- Net income of
$1.1 million , or$0.02 per diluted common share - AFFO of
$6.9 million , or$0.13 per diluted common share1 - Earned
$1.9 million of income from equity investments - Originated
$218 million of new loans - GAAP book value per common share of
$9.19 - Declares a cash dividend on common stock of
$0.15 per share
Announced the proposed acquisition of Arbor Commercial Mortgage’s agency platform including a Top 10 DUS® Lender with an ~
- This transaction is expected to provide several strategic benefits including:
- Immediate accretion to earnings and dividends
- Significant diversification and predictability of earnings streams from the acquisition of a long dated prepayment protected servicing portfolio
- Fully integrated franchise through significant new origination and servicing verticals providing a strong foothold in the GSE multifamily sector with high barriers to entry and meaningfully increase Arbor’s size and scale
- A larger more efficient company to access capital through a significant increase in market cap and equity base
- Full alignment with shareholders through senior management’s significant stock ownership
Proposed Acquisition
In
The transactions contemplated pursuant to the purchase agreement will require certain government and GSE approvals, as well as a vote of the Company’s stockholders and other third party approvals. The transaction is expected to close by the third quarter of 2016; however, there can be no assurances that these transactions will be completed during this period or at all. In connection with evaluating the proposed acquisition, the Company incurred advisory fees totaling
In addition, pursuant to the purchase agreement, ACM has provided a two year option for the Company to purchase the existing management agreement and fully internalize its management structure for
Portfolio Activity
Loan and investment portfolio activity consisted of:
- 18 new loan originations totaling
$218.2 million , of which 16 were bridge loans for$208.4 million . - Payoffs and pay downs on nine loans totaling
$84.6 million .
At
The average balance of the Company’s loan and investment portfolio during the first quarter of 2016, excluding loan loss reserves, was
At
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at
The Company amended a
The Company is subject to various financial covenants and restrictions under the terms of its CLO vehicles and financing facilities. The Company’s 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 | CLO III | CLO IV | CLO V | |||||||||
| Overcollateralization (1) | ||||||||||||
| Current | 133.33 | % | 136.99 | % | 130.72 | % | ||||||
| Limit | 132.33 | % | 135.99 | % | 129.72 | % | ||||||
| Pass / Fail | Pass | Pass | Pass | |||||||||
| Interest Coverage (2) | ||||||||||||
| Current | 299.10 | % | 327.01 | % | 270.88 | % | ||||||
| Limit | 120.00 | % | 120.00 | % | 120.00 | % | ||||||
| Pass / Fail | Pass | Pass | Pass | |||||||||
| (1) The overcollateralization ratio divides the total principal balance of all collateral in the 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. | ||||||||||||
Other Activity
The Company recorded
The Company sold a hotel real estate property which was 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
The Company 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
Important Information for Investors and Stockholders
This press release shall not constitute a solicitation of any vote or approval. The proposed acquisition referred to in this press release will be submitted to the stockholders of the Company for their consideration at a special meeting of the Company's stockholders to be held on
The Company and its directors, executive officers, and certain other members of management and employees may be deemed to be participants in the solicitation of proxies in favor of the proposed transaction from the stockholders of the Company. Information about the directors and executive officers of the Company is set forth in the proxy statement on Schedule 14A for the Company’s 2016 Annual Meeting of Stockholders, which was filed with the
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 the Company’s expectations will be detailed in our
The following factors, among others, could cause our actual results and financial condition to differ materially from those expressed or implied in the forward-looking statements: (1) our continued ability to source new investments, (2) changes in interest rates and/or credit spreads, (3) changes in the real estate markets, (4) the occurrence of any event, change or other circumstances that could give rise to the termination of the Asset Purchase Agreement between us and
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 10 of this release.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME - (Unaudited) | ||||||||
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Interest income | $ | 25,818,465 | $ | 27,209,395 | ||||
| Interest expense | 12,748,613 | 13,927,367 | ||||||
| Net interest income | 13,069,852 | 13,282,028 | ||||||
| Other revenue: | ||||||||
| Property operating income | 5,331,532 | 8,450,343 | ||||||
| Other income, net | 89,763 | 36,000 | ||||||
| Total other revenue | 5,421,295 | 8,486,343 | ||||||
| Other expenses: | ||||||||
| Employee compensation and benefits | 4,328,342 | 4,290,206 | ||||||
| Selling and administrative | 2,655,476 | 2,897,810 | ||||||
| Acquisition costs | 3,109,910 | - | ||||||
| Property operating expenses | 4,316,555 | 6,385,088 | ||||||
| Depreciation and amortization | 877,533 | 1,438,677 | ||||||
| Provision for loan losses (net of recoveries) | (15,000 | ) | 982,680 | |||||
| Management fee - related party | 2,700,000 | 2,675,000 | ||||||
| Total other expenses | 17,972,816 | 18,669,461 | ||||||
| Income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate and income from equity affiliates | 518,331 | 3,098,910 | ||||||
| Gain on acceleration of deferred income | - | 11,009,162 | ||||||
| Loss on termination of swaps | - | (4,289,450 | ) | |||||
| Gain on sale of real estate | 607,553 | 3,984,364 | ||||||
| Income from equity affiliates | 1,897,442 | 3,095,913 | ||||||
| Net income | 3,023,326 | 16,898,899 | ||||||
| Preferred stock dividends | 1,888,430 | 1,888,430 | ||||||
| Net income attributable to common stockholders | $ | 1,134,896 | $ | 15,010,469 | ||||
| Basic earnings per common share | $ | 0.02 | $ | 0.30 | ||||
| Diluted earnings per common share | $ | 0.02 | $ | 0.30 | ||||
| Dividends declared per common share | $ | 0.15 | $ | 0.13 | ||||
| Weighted average number of shares of common stock outstanding: | ||||||||
| Basic | 51,045,219 | 50,544,575 | ||||||
| Diluted | 51,095,128 | 50,832,736 | ||||||
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| March 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 145,132,766 | $ | 188,708,687 | ||||
| Restricted cash | 20,124,435 | 48,301,244 | ||||||
| Loans and investments, net | 1,581,621,970 | 1,450,334,341 | ||||||
| Available-for-sale securities, at fair value | 411,525 | 2,022,030 | ||||||
| Investments in equity affiliates | 34,927,586 | 30,870,235 | ||||||
| Real estate owned, net | 31,698,213 | 60,845,509 | ||||||
| Real estate held-for-sale, net | 28,590,235 | 8,669,203 | ||||||
| Due from related party | 435,552 | 8,082,265 | ||||||
| Other assets | 29,478,178 | 29,558,430 | ||||||
| Total assets | $ | 1,872,420,460 | $ | 1,827,391,944 | ||||
| Liabilities and Equity: | ||||||||
| Credit facilities and repurchase agreements | $ | 183,926,292 | $ | 136,252,135 | ||||
| Collateralized loan obligations | 759,734,287 | 758,899,661 | ||||||
| Senior unsecured notes | 93,955,461 | 93,764,994 | ||||||
| Junior subordinated notes to subsidiary trust issuing preferred securities | 157,305,257 | 157,117,130 | ||||||
| Mortgage note payable – real estate owned | - | 27,155,000 | ||||||
| Mortgage note payable – real estate held-for-sale | 27,112,443 | - | ||||||
| Due to related party | 2,406,027 | 3,428,333 | ||||||
| Due to borrowers | 42,020,339 | 34,629,595 | ||||||
| Other liabilities | 44,605,843 | 51,054,321 | ||||||
| Total liabilities | 1,311,065,949 | 1,262,301,169 | ||||||
| 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 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 |
89,295,905 | 89,295,905 | ||||||
| Common stock, $0.01 par value: 500,000,000 shares authorized; 51,381,405 and 50,962,516 shares issued and outstanding, respectively | 513,814 | 509,625 | ||||||
| Additional paid-in capital | 617,921,438 | 616,244,196 | ||||||
| Accumulated deficit | (142,631,782 | ) | (136,118,001 | ) | ||||
| Accumulated other comprehensive loss | (3,744,864 | ) | (4,840,950 | ) | ||||
| Total equity | 561,354,511 | 565,090,775 | ||||||
| Total liabilities and equity | $ | 1,872,420,460 | $ | 1,827,391,944 | ||||
| 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 | |||||||||
| March 31, | |||||||||
| 2016 | 2015 | ||||||||
| Net income attributable to common stockholders | $ | 1,134,896 | $ | 15,010,469 | |||||
| Subtract: | |||||||||
| Gain on sale of real estate | (607,553 | ) | (3,984,364 | ) | |||||
| Add: | |||||||||
| Depreciation - real estate owned and held-for-sale | 877,533 | 1,438,677 | |||||||
| Depreciation - investments in equity affiliates | 93,588 | 93,588 | |||||||
| FFO attributable to common stockholders | $ | 1,498,464 | $ | 12,558,370 | |||||
| Add: | |||||||||
| Gain on sale of real estate | 607,553 | 3,984,364 | |||||||
| Stock-based compensation | 1,681,431 | 1,692,066 | |||||||
| Acquisition costs | 3,109,910 | - | |||||||
| AFFO attributable to common stockholders | $ | 6,897,358 | $ | 18,234,800 | |||||
| Diluted FFO per common share | $ | 0.03 | $ | 0.25 | |||||
| Diluted AFFO per common share | $ | 0.13 | $ | 0.36 | |||||
| Diluted weighted average shares outstanding | 51,095,128 | 50,832,736 | |||||||
| 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, as well as the add-back of one-time charges such as acquisition costs. The Company also adds back 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 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 516-506-4615 bhabyan@arbor.com Investors:The Ruth Group Joseph Green 646-536-7013 jgreen@theruthgroup.com
