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Arbor Realty Trust Reports Fourth Quarter and Full Year 2023 Results and Declares Dividend of $0.43 per Share
Источник: Nasdaq GlobeNewswire / 16 фев 2024 07:15:42 America/Chicago
Fourth Quarter Highlights:
- GAAP net income of $0.48 per diluted common share
- Distributable earnings1 of $0.51, or $0.54 per diluted common share excluding a $7.0 million realized loss on an office property that was previously reserved for
- Declares cash dividend on common stock of $0.43 per share representing an annualized dividend of $1.72 per share
- Strong liquidity position with ~$1 billion in cash and liquidity and ~$600 million of restricted cash in replenishable CLO vehicles with a weighted average cost of 1.74% over SOFR2
- Agency loan originations of $1.44 billion and a servicing portfolio of ~$30.98 billion, up 3.5%
- Structured loan originations of $266.2 million, runoff of $817.4 million, and a portfolio of ~$12.62 billion
Full Year Highlights:
- GAAP net income of $1.75 per diluted common share representing an increase of 5% over last year, and distributable earnings of $2.25 per diluted common share1
- Raised dividend twice during 2023 to an annual run rate of $1.72 per share, representing a 7.5% increase over the prior year
- Best-in-class total stockholder return of 28%
- Agency servicing portfolio growth of 11% from loan originations of $5.11 billion, a 7% increase over the prior year
- Structured portfolio reduction of 13% with $3.02 billion of multifamily loan runoff, $1.69 billion of which was recaptured into new agency loan originations
UNIONDALE, N.Y., Feb. 16, 2024 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the fourth quarter ended December 31, 2023. Arbor reported net income for the quarter of $91.7 million, or $0.48 per diluted common share, compared to net income of $88.2 million, or $0.49 per diluted common share for the quarter ended December 31, 2022. Net income for the year was $330.1 million, or $1.75 per diluted common share, compared to $284.8 million, or $1.67 per diluted common share for the year ended December 31, 2022. Distributable earnings for the quarter was $104.1 million, or $0.51 per diluted common share, compared to $114.0 million, or $0.60 per diluted common share for the quarter ended December 31, 2022. Distributable earnings for the year was $452.5 million, or $2.25 per diluted common share, compared to $405.7 million, or $2.23 per diluted common share for the year ended December 31, 2022. 1
Agency Business
Loan Origination Platform
Agency Loan Volume (in thousands) Quarter Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022 Fannie Mae $ 1,177,203 $ 721,398 $ 3,773,532 $ 2,919,566 Freddie Mac 98,370 339,241 756,827 1,353,001 Private Label 140,606 67,965 299,934 217,542 FHA 26,493 19,215 257,199 188,394 SFR - Fixed Rate — 2,030 19,328 89,683 Total Originations $ 1,442,672 $ 1,149,849 $ 5,106,820 $ 4,768,186 Total Loan Sales $ 1,270,356 $ 1,275,420 $ 4,889,199 $ 5,438,623 Total Loan Commitments $ 1,362,379 $ 1,211,347 $ 5,207,148 $ 5,146,718 For the quarter ended December 31, 2023, the Agency Business generated revenues of $96.3 million, compared to $80.8 million for the third quarter of 2023. Gain on sales, including fee-based services, net on the GSE/Agency business (excluding private label and SFR) was $15.4 million for the quarter, reflecting a margin of 1.36%, compared to $17.7 million and 1.48% for the third quarter of 2023. Income from mortgage servicing rights was $21.1 million for the quarter, reflecting a rate of 1.55% as a percentage of loan commitments, compared to $14.1 million and 1.16% for the third quarter of 2023.
At December 31, 2023, loans held-for-sale was $551.7 million, with financing associated with these loans totaling $413.3 million.
Fee-Based Servicing Portfolio
The Company’s fee-based servicing portfolio totaled $30.98 billion at December 31, 2023. Servicing revenue, net was $33.1 million for the quarter and consisted of servicing revenue of $49.2 million, net of amortization of mortgage servicing rights totaling $16.2 million.
Fee-Based Servicing Portfolio ($ in thousands) December 31, 2023 September 30, 2023 December 31, 2022 UPB Wtd. Avg.
Fee (bps)Wtd. Avg.
Life (years)UPB Wtd. Avg.
Fee (bps)Wtd. Avg.
Life (years)UPB Wtd. Avg.
Fee (bps)Wtd. Avg.
Life (years)Fannie Mae $ 21,264,578 47.4 7.4 $ 20,463,620 48.3 7.7 $ 19,038,124 50.2 8.0 Freddie Mac 5,181,933 24.0 8.5 5,184,888 24.2 8.5 5,153,207 25.0 9.0 Private Label 2,510,449 19.5 6.7 2,371,475 19.2 7.3 2,074,859 18.5 7.6 FHA 1,359,624 14.4 19.2 1,322,832 14.5 19.9 1,155,893 14.9 19.5 Bridge 379,425 10.9 3.2 305,950 11.2 3.6 301,182 12.5 1.7 SFR-Fixed Rate 287,446 20.1 5.1 287,942 20.1 5.8 274,764 19.8 6.0 Total $ 30,983,455 39.1 8.0 $ 29,936,707 39.7 8.3 $ 27,998,029 41.1 8.6 Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.6 million for the fair value of the guarantee obligation undertaken at December 31, 2023. The Company recorded a $3.1 million net provision for loss sharing associated with CECL for the fourth quarter of 2023. At December 31, 2023, the Company’s total CECL allowance for loss-sharing obligations was $37.0 million, representing 0.17% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
Structured Portfolio Activity ($ in thousands) Quarter Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022 UPB % UPB % UPB % UPB % Bridge: Multifamily $ 38,700 14 % $ 92,000 38 % $ 415,330 42 % $ 5,468,222 89 % SFR 198,629 75 % 140,379 59 % 524,060 54 % 613,819 10 % 237,329 89 % 232,379 97 % 939,390 96 % 6,082,041 99 % Mezzanine/Preferred Equity 28,829 11 % 7,779 3 % 43,953 4 % 69,606 1 % Total Originations $ 266,158 100 % $ 240,158 100 % $ 983,343 100 % $ 6,151,647 100 % Number of Loans Originated 58 42 150 318 SFR Commitments $ 466,703 $ 429,452 $ 1,150,687 $ 1,086,833 Runoff $ 817,394 $ 664,792 $ 3,354,055 $ 3,818,554 Structured Portfolio ($ in thousands) December 31, 2023 September 30, 2023 December 31, 2022 UPB % UPB % UPB % Bridge: Multifamily $ 10,789,936 86 % $ 11,421,819 87 % $ 12,830,999 89 % SFR 1,316,803 10 % 1,163,648 9 % 927,373 6 % Other 166,505 1 % 205,505 2 % 337,682 2 % 12,273,244 97 % 12,790,972 98 % 14,096,054 97 % Mezzanine/Preferred Equity 334,198 3 % 321,729 2 % 324,224 2 % SFR Permanent 7,564 <1 % 9,694 <1 % 35,854 <1 % Total Portfolio $ 12,615,006 100 % $ 13,122,395 100 % $ 14,456,132 100 % At December 31, 2023, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $12.62 billion, with a weighted average current interest pay rate of 8.42%, compared to $13.12 billion and 8.80% at September 30, 2023. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 8.98% at December 31, 2023, compared to 9.12% at September 30, 2023. The decrease in pay rate was primarily due to an increase in non-performing loans in the fourth quarter of 2023.
The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2023, excluding loan loss reserves, was $12.96 billion with a weighted average yield of 9.31%, compared to $13.40 billion and 9.28% for the third quarter of 2023.
During the fourth quarter of 2023, the Company recorded a $17.3 million provision for loan losses associated with CECL, which was net of $4.8 million of loan loss recoveries. At December 31, 2023, the Company’s total allowance for loan losses was $195.7 million. The Company had sixteen non-performing loans with a carrying value of $262.7 million, before related loan loss reserves of $27.1 million, compared to twelve loans with a carrying value of $150.5 million, before loan loss reserves of $12.6 million at September 30, 2023.
Financing Activity
The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2023 was $11.57 billion with a weighted average interest rate including fees of 7.45% as compared to $11.86 billion and a rate of 7.41% at September 30, 2023.
The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2023 was $11.77 billion, as compared to $12.00 billion for the third quarter of 2023. The average cost of borrowings for the fourth quarter of 2023 was 7.48%, compared to 7.37% for the third quarter of 2023. The increase in average cost was primarily due to an increase in the SOFR rate in the fourth quarter of 2023.
Dividend
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.43 per share of common stock for the quarter ended December 31, 2023. The dividend is payable on March 15, 2024 to common stockholders of record on March 4, 2024. The ex-dividend date is March 1, 2024.
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 www.arbor.com in the investor relations section of the Company’s website, or you can access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (800) 245-3047 for domestic callers and (203) 518-9765 for international callers. Please use participant passcode ABRQ423 when prompted by the operator.
A telephonic replay of the call will be available until February 23, 2024. The replay dial-in numbers are (800) 934-8221 for domestic callers and (402) 220-6990 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, single-family rental (SFR) portfolios, 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 leading Fannie Mae DUS® lender and Freddie Mac Optigo® Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender. Arbor’s product platform also includes bridge, CMBS, mezzanine and preferred equity loans. 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.
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, 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, 2023 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.
Notes
- 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 the last page of this release.
- Amounts reflect approximate balances as of February 14, 2024.
Contact: Arbor Realty Trust, Inc.
Paul Elenio, Chief Financial Officer
516-506-4422
pelenio@arbor.comARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands—except share and per share data)Quarter Ended December 31, Year Ended December 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) Interest income $ 331,060 $ 320,597 $ 1,331,219 $ 948,401 Interest expense 227,479 207,538 903,228 557,617 Net interest income 103,581 113,059 427,991 390,784 Other revenue: Gain on sales, including fee-based services, net 16,727 23,290 72,522 55,816 Mortgage servicing rights 21,144 17,059 69,912 69,346 Servicing revenue, net 33,073 27,679 130,449 92,192 Property operating income 1,447 846 5,708 1,877 Gain on derivative instruments, net 10,345 16,526 6,763 26,609 Other income (loss), net 2,571 (1,500 ) 7,667 (17,563 ) Total other revenue 85,307 83,900 293,021 228,277 Other expenses: Employee compensation and benefits 36,270 42,089 159,788 161,825 Selling and administrative 12,686 13,030 51,260 53,990 Property operating expenses 1,670 694 5,897 2,136 Depreciation and amortization 2,446 2,640 9,743 8,732 Provision for loss sharing (net of recoveries) 3,168 4,061 15,695 1,862 Provision for credit losses (net of recoveries) 18,399 11,469 73,446 21,169 Litigation settlement — 7,350 — 7,350 Total other expenses 74,639 81,333 315,829 257,064 Income before extinguishment of debt, income from equity affiliates, and income taxes 114,249 115,626 405,183 361,997 Loss on extinguishment of debt — (320 ) (1,561 ) (4,933 ) Income (loss) from equity affiliates 3,586 (4,260 ) 24,281 14,247 Provision for income taxes (7,911 ) (4,318 ) (27,347 ) (17,484 ) Net income 109,924 106,728 400,556 353,827 Preferred stock dividends 10,342 10,342 41,369 40,954 Net income attributable to noncontrolling interest 7,923 8,234 29,122 28,044 Net income attributable to common stockholders $ 91,659 $ 88,152 $ 330,065 $ 284,829 Basic earnings per common share $ 0.49 $ 0.51 $ 1.79 $ 1.72 Diluted earnings per common share $ 0.48 $ 0.49 $ 1.75 $ 1.67 Weighted average shares outstanding: Basic 188,503,682 174,444,084 184,641,642 165,355,167 Diluted 222,861,214 209,743,771 218,843,613 199,112,630 Dividends declared per common share $ 0.43 $ 0.40 $ 1.68 $ 1.54 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands—except share and per share data)December 31, 2023 December 31, 2022 Assets: Cash and cash equivalents $ 928,974 $ 534,357 Restricted cash 608,233 713,808 Loans and investments, net (allowance for credit losses of $195,664 and $132,559) 12,377,806 14,254,674 Loans held-for-sale, net 551,707 354,070 Capitalized mortgage servicing rights, net 391,254 401,471 Securities held-to-maturity, net (allowance for credit losses of $6,256 and $3,153) 155,279 156,547 Investments in equity affiliates 79,303 79,130 Due from related party 64,421 77,419 Goodwill and other intangible assets 91,378 96,069 Other assets 490,281 371,440 Total assets $ 15,738,636 $ 17,038,985 Liabilities and Equity: Credit and repurchase facilities $ 3,237,827 $ 3,841,814 Securitized debt 6,935,010 7,849,270 Senior unsecured notes 1,333,968 1,385,994 Convertible senior unsecured notes 283,118 280,356 Junior subordinated notes to subsidiary trust issuing preferred securities 143,896 143,128 Due to related party 13,799 12,350 Due to borrowers 121,707 61,237 Allowance for loss-sharing obligations 71,634 57,168 Other liabilities 343,072 335,789 Total liabilities 12,484,031 13,967,106 Equity: Arbor Realty Trust, Inc. stockholders' equity: Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized, shares issued and outstanding by period: 633,684 633,684 Special voting preferred shares - 16,293,589 shares 6.375% Series D - 9,200,000 shares 6.25% Series E - 5,750,000 shares 6.25% Series F - 11,342,000 shares Common stock, $0.01 par value: 500,000,000 shares authorized - 188,505,264 and 178,230,522 shares issued and outstanding 1,885 1,782 Additional paid-in capital 2,367,188 2,204,481 Retained earnings 115,216 97,049 Total Arbor Realty Trust, Inc. stockholders’ equity 3,117,973 2,936,996 Noncontrolling interest 136,632 134,883 Total equity 3,254,605 3,071,879 Total liabilities and equity $ 15,738,636 $ 17,038,985 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Statement of Income Segment Information - (Unaudited)
(in thousands)Quarter Ended December 31, 2023 Structured
BusinessAgency
BusinessOther(1) Consolidated Interest income $ 317,132 $ 13,928 $ - $ 331,060 Interest expense 221,747 5,732 - 227,479 Net interest income 95,385 8,196 - 103,581 Other revenue: Gain on sales, including fee-based services, net - 16,727 - 16,727 Mortgage servicing rights - 21,144 - 21,144 Servicing revenue - 49,246 - 49,246 Amortization of MSRs - (16,173 ) - (16,173 ) Property operating income 1,447 - - 1,447 Gain on derivative instruments, net - 10,345 - 10,345 Other income 1,448 1,123 - 2,571 Total other revenue 2,895 82,412 - 85,307 Other expenses: Employee compensation and benefits 11,516 24,754 - 36,270 Selling and administrative 5,399 7,287 - 12,686 Property operating expenses 1,670 - - 1,670 Depreciation and amortization 1,273 1,173 - 2,446 Provision for loss sharing (net of recoveries) - 3,168 - 3,168 Provision for credit losses (net of recoveries) 18,086 313 - 18,399 Total other expenses 37,944 36,695 - 74,639 Income before income from equity affiliates and income taxes 60,336 53,913 - 114,249 Income from equity affiliates 3,586 - - 3,586 Benefit from (provision for) income taxes 497 (8,408 ) - (7,911 ) Net income 64,419 45,505 - 109,924 Preferred stock dividends 10,342 - - 10,342 Net income attributable to noncontrolling interest - - 7,923 7,923 Net income attributable to common stockholders $ 54,077 $ 45,505 $ (7,923 ) $ 91,659 (1) Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments.
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Balance Sheet Segment Information - (Unaudited)
(in thousands)December 31, 2023 Structured
BusinessAgency
BusinessConsolidated Assets: Cash and cash equivalents $ 619,487 $ 309,487 $ 928,974 Restricted cash 595,342 12,891 608,233 Loans and investments, net 12,377,806 - 12,377,806 Loans held-for-sale, net - 551,707 551,707 Capitalized mortgage servicing rights, net - 391,254 391,254 Securities held-to-maturity, net - 155,279 155,279 Investments in equity affiliates 79,303 - 79,303 Goodwill and other intangible assets 12,500 78,878 91,378 Other assets and due from related party 453,073 101,629 554,702 Total assets $ 14,137,511 $ 1,601,125 $ 15,738,636 Liabilities: Debt obligations $ 11,520,492 $ 413,327 $ 11,933,819 Allowance for loss-sharing obligations - 71,634 71,634 Other liabilities and due to related party 369,588 108,990 478,578 Total liabilities $ 11,890,080 $ 593,951 $ 12,484,031 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Reconciliation of Distributable Earnings to GAAP Net Income - (Unaudited)
($ in thousands—except share and per share data)Quarter Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income attributable to common stockholders $ 91,659 $ 88,152 $ 330,065 $ 284,829 Adjustments: Net income attributable to noncontrolling interest 7,923 8,234 29,122 28,044 Income from mortgage servicing rights (21,144 ) (17,059 ) (69,912 ) (69,346 ) Deferred tax (benefit) provision (719 ) 6,092 (7,349 ) (1,741 ) Amortization and write-offs of MSRs 19,145 22,528 77,829 104,378 Depreciation and amortization 4,115 3,225 16,425 11,069 Loss on extinguishment of debt - 320 1,561 4,933 Provision for credit losses, net 11,206 14,823 68,642 25,077 (Gain) loss on derivative instruments, net (10,880 ) (14,992 ) (8,844 ) 3,480 Stock-based compensation 2,799 2,643 14,940 14,973 Distributable earnings (1) $ 104,104 $ 113,966 $ 452,479 $ 405,696 Diluted distributable earnings per share (1) $ 0.51 $ 0.60 $ 2.25 $ 2.23 Diluted weighted average shares outstanding (1) (2) 205,498,651 191,273,691 201,549,221 182,224,404 (1) Amounts are attributable to common stockholders and OP Unit holders. The OP Units are redeemable for cash, or at the Company's option for shares of the Company's common stock on a one-for-one basis.
(2) The diluted weighted average shares outstanding were adjusted to exclude the potential shares issuable upon conversion and settlement of the Company's convertible senior notes principal balance. For the quarters ended December 31, 2023 and December 31, 2022, the diluted weighted average shares outstanding excluded 17,362,563 and 18,470,080 of these potentially issuable shares, respectively. For the years ended December 31, 2023 and December 31, 2022, the diluted weighted average shares outstanding excluded 17,294,392 and 16,888,226 of these potentially issuable shares, respectively.
The Company is presenting distributable earnings because management believes it is an important supplemental measure of the Company's operating performance and is useful to investors, analysts and other parties in the evaluation of REITs and their ability to provide dividends to stockholders. Dividends are one of the principal reasons investors invest in REITs. To maintain REIT status, REITs are required to distribute at least 90% of their REIT-taxable income. The Company considers distributable earnings in determining its quarterly dividend and believes that, over time, distributable earnings is a useful indicator of the Company's dividends per share.
The Company defines distributable earnings as net income (loss) attributable to common stockholders computed in accordance with GAAP, adjusted for accounting items such as depreciation and amortization (adjusted for unconsolidated joint ventures), non-cash stock-based compensation expense, income from MSRs, amortization and write-offs of MSRs, gains/losses on derivative instruments primarily associated with Private Label loans not yet sold and securitized, changes in fair value of GSE-related derivatives that temporarily flow through earnings (net of any tax impact), deferred tax provision (benefit), CECL provisions for credit losses (adjusted for realized losses as described below) and gains/losses on the receipt of real estate from the settlement of loans (prior to the sale of the real estate). The Company also adds back one-time charges such as acquisition costs and one-time gains/losses on the early extinguishment of debt and redemption of preferred stock.
The Company reduces distributable earnings for realized losses in the period management determines that a loan is deemed nonrecoverable in whole or in part. Loans are deemed nonrecoverable upon the earlier of: (1) when the loan receivable is settled (i.e., when the loan is repaid, or in the case of foreclosure, when the underlying asset is sold); or (2) when management determines that it is nearly certain that all amounts due will not be collected. The realized loss amount is equal to the difference between the cash received, or expected to be received, and the book value of the asset.
Distributable earnings is not intended to be an indication of the Company's cash flows 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 distributable earnings may be different from the calculations used by other companies and, therefore, comparability may be limited.