Arbor Realty Trust Reports Second Quarter 2016 Results and Increases Common Stock Dividend by 7%
Second Quarter Highlights:
- Net income of
$10.2 million , or$0.20 per diluted common share - AFFO of
$12.0 million , or$0.23 per diluted common share1 - Declares a cash dividend on common stock of
$0.16 per share, a 7% increase - Earned
$4.4 million of income from equity investments - Recorded a net gain of
$1.9 million from a structured transaction - Originated
$170 million of new loans - GAAP book value per common share of
$9.27
Recent Developments:
- Completed the acquisition of Arbor Commercial Mortgage’s agency platform including a Top 10 DUS® Lender with an ~
$12 billion servicing portfolio
Acquisition of Arbor Commercial Mortgage’s Agency Platform
As previously announced on
The acquisition includes a leading national multifamily agency loan origination and servicing platform with over 200 direct employees, including 20 originators in eight states. The agency business originated over
In addition, the Company has obtained a two year option to purchase for
Portfolio Activity
Loan and investment portfolio activity consisted of:
- 14 new loan originations totaling
$170.1 million , of which 13 were bridge loans for$160.1 million . - Payoffs and pay downs on 17 loans totaling
$215.5 million .
At
The average balance of the Company’s loan and investment portfolio during the second 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 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 | 221.94 | % | 320.98 | % | 244.46 | % | ||||||
| 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 recorded income from a previously repaid defaulted first mortgage note totaling
The Company sold three multifamily real estate properties which were previously classified as held for sale for
The Company recorded an impairment loss of
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
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. 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 possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and (5) 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 of this release.
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME - (Unaudited) | ||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Interest income | $ | 27,969,498 | $ | 26,340,585 | $ | 53,787,963 | $ | 53,549,980 | ||||||||
| Other interest income, net | 2,539,274 | 7,884,344 | 2,539,274 | 7,884,344 | ||||||||||||
| Interest expense | 13,243,488 | 11,592,762 | 25,992,101 | 25,520,129 | ||||||||||||
| Net interest income | 17,265,284 | 22,632,167 | 30,335,136 | 35,914,195 | ||||||||||||
| Other revenue: | ||||||||||||||||
| Property operating income | 4,426,555 | 7,201,834 | 9,758,087 | 15,652,177 | ||||||||||||
| Other income, net | 214,668 | 76,816 | 304,431 | 112,816 | ||||||||||||
| Total other revenue | 4,641,223 | 7,278,650 | 10,062,518 | 15,764,993 | ||||||||||||
| Other expenses: | ||||||||||||||||
| Employee compensation and benefits | 4,311,412 | 4,966,138 | 8,639,754 | 9,256,344 | ||||||||||||
| Selling and administrative | 1,719,337 | 2,623,750 | 4,374,813 | 5,521,560 | ||||||||||||
| Acquisition costs | 745,734 | 284,054 | 3,855,644 | 284,054 | ||||||||||||
| Property operating expenses | 3,856,264 | 5,967,644 | 8,172,819 | 12,352,732 | ||||||||||||
| Depreciation and amortization | 443,112 | 1,447,642 | 1,320,645 | 2,886,319 | ||||||||||||
| Impairment loss on real estate owned | 11,200,000 | - | 11,200,000 | - | ||||||||||||
| Provision for loan losses (net of recoveries) | 44,005 | 1,093,544 | 29,005 | 2,076,224 | ||||||||||||
| Management fee - related party | 2,850,000 | 2,675,000 | 5,550,000 | 5,350,000 | ||||||||||||
| Total other expenses | 25,169,864 | 19,057,772 | 43,142,680 | 37,727,233 | ||||||||||||
| (Loss) income before gain on acceleration of deferred income, | ||||||||||||||||
| loss on termination of swaps, gain on sale of real estate | ||||||||||||||||
| and income from equity affiliates | (3,263,357 | ) | 10,853,045 | (2,745,026 | ) | 13,951,955 | ||||||||||
| Gain on acceleration of deferred income | - | - | - | 11,009,162 | ||||||||||||
| Loss on termination of swaps | - | - | - | (4,289,450 | ) | |||||||||||
| Gain on sale of real estate | 11,023,134 | - | 11,630,687 | 3,984,364 | ||||||||||||
| Income from equity affiliates | 4,367,101 | 1,534,025 | 6,264,543 | 4,629,938 | ||||||||||||
| Net income | 12,126,878 | 12,387,070 | 15,150,204 | 29,285,969 | ||||||||||||
| Preferred stock dividends | 1,888,430 | 1,888,430 | 3,776,860 | 3,776,860 | ||||||||||||
| Net income attributable to common stockholders | $ | 10,238,448 | $ | 10,498,640 | $ | 11,373,344 | $ | 25,509,109 | ||||||||
| Basic earnings per common share | $ | 0.20 | $ | 0.21 | $ | 0.22 | $ | 0.50 | ||||||||
| Diluted earnings per common share | $ | 0.20 | $ | 0.21 | $ | 0.22 | $ | 0.50 | ||||||||
| Weighted average number of shares of common stock outstanding: | ||||||||||||||||
| Basic | 51,381,405 | 50,955,648 | 51,213,312 | 50,751,247 | ||||||||||||
| Diluted | 51,741,951 | 50,955,648 | 51,418,539 | 50,894,531 | ||||||||||||
| Dividends declared per common share | $ | 0.15 | $ | 0.15 | $ | 0.30 | $ | 0.28 | ||||||||
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| June 30, | December 31, | |||||||||
| 2016 | 2015 | |||||||||
| (Unaudited) | ||||||||||
| Assets: | ||||||||||
| Cash and cash equivalents | $ | 160,177,704 | $ | 188,708,687 | ||||||
| Restricted cash | 158,667,541 | 48,301,244 | ||||||||
| Loans and investments, net | 1,511,596,691 | 1,450,334,341 | ||||||||
| Available-for-sale securities, at fair value | 440,920 | 2,022,030 | ||||||||
| Investments in equity affiliates | 38,649,254 | 30,870,235 | ||||||||
| Real estate owned, net | 20,012,783 | 60,845,509 | ||||||||
| Real estate held-for-sale, net | - | 8,669,203 | ||||||||
| Due from related party | 781,782 | 8,082,265 | ||||||||
| Other assets | 26,419,806 | 29,558,430 | ||||||||
| Total assets | $ | 1,916,746,481 | $ | 1,827,391,944 | ||||||
| Liabilities and Equity: | ||||||||||
| Credit facilities and repurchase agreements | $ | 259,171,941 | $ | 136,252,135 | ||||||
| Collateralized loan obligations | 760,632,528 | 758,899,661 | ||||||||
| Senior unsecured notes | 94,140,028 | 93,764,994 | ||||||||
| Junior subordinated notes to subsidiary trust issuing preferred securities | 157,468,377 | 157,117,130 | ||||||||
| Mortgage note payable – real estate owned | - | 27,155,000 | ||||||||
| Due to related party | 2,166,790 | 3,428,333 | ||||||||
| Due to borrowers | 32,561,558 | 34,629,595 | ||||||||
| Other liabilities | 44,932,044 | 51,054,321 | ||||||||
| Total liabilities | 1,351,073,266 | 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 | 618,403,101 | 616,244,196 | ||||||||
| Accumulated deficit | (140,103,326 | ) | (136,118,001 | ) | ||||||
| Accumulated other comprehensive loss | (2,436,279 | ) | (4,840,950 | ) | ||||||
| Total equity | 565,673,215 | 565,090,775 | ||||||||
| Total liabilities and equity | $ | 1,916,746,481 | $ | 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 | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Net income attributable to common stockholders | $ | 10,238,448 | $ | 10,498,640 | $ | 11,373,344 | $ | 25,509,109 | |||||||||
| Subtract: | |||||||||||||||||
| Gain on sale of real estate | (11,023,134 | ) | - | (11,630,687 | ) | (3,984,364 | ) | ||||||||||
| Add: | |||||||||||||||||
| Impairment loss on real estate owned | 11,200,000 | - | 11,200,000 | - | |||||||||||||
| Depreciation - real estate owned and held-for-sale | 443,112 | 1,447,642 | 1,320,645 | 2,886,319 | |||||||||||||
| Depreciation - investments in equity affiliates | 93,588 | 93,588 | 187,176 | 187,176 | |||||||||||||
| FFO attributable to common stockholders | $ | 10,952,014 | $ | 12,039,870 | $ | 12,450,478 | $ | 24,598,240 | |||||||||
| Subtract: | |||||||||||||||||
| Impairment loss on real estate owned | (11,200,000 | ) | - | (11,200,000 | ) | - | |||||||||||
| Add: | |||||||||||||||||
| Gain on sale of real estate | 11,023,134 | - | 11,630,687 | 3,984,364 | |||||||||||||
| Stock-based compensation | 481,664 | 735,202 | 2,163,094 | 2,427,268 | |||||||||||||
| Acquisition costs | 745,734 | 284,054 | 3,855,644 | 284,054 | |||||||||||||
| AFFO attributable to common stockholders | $ | 12,002,546 | $ | 13,059,126 | $ | 18,899,903 | $ | 31,293,926 | |||||||||
| Diluted FFO per common share | $ | 0.21 | $ | 0.24 | $ | 0.24 | $ | 0.48 | |||||||||
| Diluted AFFO per common share | $ | 0.23 | $ | 0.26 | $ | 0.37 | $ | 0.61 | |||||||||
| Diluted weighted average shares outstanding | 51,741,951 | 50,955,648 | 51,418,539 | 50,894,531 | |||||||||||||
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
