Arbor Realty Trust Reports Third Quarter 2013 Results and Declares Common Stock Dividend Third Quarter Highlights: - Declares a common dividend of $0.13 per share - FFO of $5.6 million, or $0.13 per diluted common share^1 - Net income attributable to common stockholders of $3.7 million, or $0.08 per diluted common share - Raised $40.9 million of capital in a common stock offering - Originated 17 new loans totaling $147.9 million - Adjusted book value per common share of $9.26, GAAP book value per common share of $7.51^1 - Generated gains of $1.2 million from the retirement of CDO debt - Recorded $1.5 million in loan loss reserves - Recorded $0.7 million in cash recoveries of previously recorded reserves UNIONDALE, N.Y., Nov. 8, 2013 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), a real estate investment trust focused on the business of investing in real estate related bridge and mezzanine loans, preferred and direct equity investments, mortgage-related securities and other real estate related assets, today announced financial results for the third quarter ended September 30, 2013. Arbor reported net income attributable to common stockholders for the quarter of $3.7 million, or $0.08 per diluted common share, compared to $2.1 million, or $0.07 per diluted common share for the quarter ended September 30, 2012. Net income attributable to common stockholders for the nine months ended September 30, 2013 was $13.3 million, or $0.33 per diluted common share, compared to $21.8 million, or $0.84 per diluted common share for the nine months ended September 30, 2012. Funds from operations ("FFO") for the quarter ended September 30, 2013 was $5.6 million, or $0.13 per diluted common share, compared to $3.7 million, or $0.13 per diluted common share for the quarter ended September 30, 2012. ^ FFO for the nine months ended September 30, 2013 was $18.7 million, or $0.46 per diluted common share, compared to $22.7 million, or $0.87 per diluted common share for the nine months ended September 30, 2012.^1 Portfolio Activity The Company's loan and investment portfolio, excluding loan loss reserves, at September 30, 2013 remained relatively unchanged compared to June 30, 2013 at approximately $1.8 billion. The average balance of the Company's loan and investment portfolio during the third quarter of 2013, excluding loan loss reserves, was $1.8 billion and the average yield on these assets for the quarter was 5.62%, compared to $1.8 billion and 5.47% for the second quarter of 2013. During the third quarter of 2013, Arbor originated 13 bridge loans totaling approximately $125.1 million, three preferred equity investments totaling $19.8 million and one mezzanine loan for $3.0 million. In addition, 15 loans paid off with an unpaid principal balance of $110.3 million during the quarter, of which $4.3 million was charged off against loan loss reserves related to two of these loans. Furthermore, two loans had paydowns totaling $25.9 million. During the third quarter of 2013, two loans scheduled to repay during the quarter totaling $21.0 million were modified and extended. Additionally, eight loans totaling approximately $119.3 million were extended during the quarter. During the third quarter of 2013, the residential mortgage-backed securities portfolio had total paydowns of approximately $14.6 million of which $8.9 million were from residential mortgage-backed securities accounted for as derivatives. In addition, five residential mortgage-backed securities with an aggregate carrying value of $8.7 million were sold for approximately $8.7 million during the quarter. These five residential mortgage-backed securities were accounted for as derivatives net of financings of $8.0 million in other assets on the Consolidated Balance Sheets. At September 30, 2013, the loan and investment portfolio's unpaid principal balance, excluding loan loss reserves, was approximately $1.8 billion, with a weighted average current interest pay rate of 5.19%. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest rate was 5.59% at September 30, 2013. At the same date, advances on financing facilities pertaining to the loan and investment portfolio totaled approximately $1.3 billion, with a weighted average interest rate of 3.14%. As of September 30, 2013, Arbor's loan portfolio consisted of 30% fixed-rate and 70% variable-rate loans. During the third quarter of 2013, the Company recorded a $1.5 million loan loss reserve related to one loan with a carrying value of approximately $3.4 million, after loan loss reserves. The Company recorded $0.7 million of net recoveries of previously recorded loan loss reserves related to four of the Company's assets during the third quarter of 2013. These recoveries were recorded in provision for loan losses on the Consolidated Statement of Operations. In addition, the Company charged off $4.3 million of previously recorded loan loss reserves related to two loans during the quarter. At September 30, 2013, the Company's total loan loss reserves were approximately $143.0 million relating to 18 loans with an aggregate carrying value before loan loss reserves of approximately $239.3 million. The Company recognizes income on impaired loans on a cash basis to the extent it is received. The Company had five non-performing loans with a carrying value of approximately $16.1 million, net of related loan loss reserves of $28.6 million as of September 30, 2013. Income recognition on non-performing loans has been suspended and will resume if and when the loans become contractually current and performance has recommenced. Financing Activity The balance of debt that finances the Company's loan and investment portfolio at September 30, 2013 remained relatively unchanged compared to June 30, 2013 at approximately $1.3 billion. The average balance of debt that finances the Company's loan and investment portfolio for the third quarter of 2013 was approximately $1.4 billion, as compared to approximately $1.3 billion for the second quarter of 2013. The average cost of borrowings for the third quarter was 3.10%, compared to 3.15% for the second quarter of 2013. 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 believes that it was in compliance with all financial covenants and restrictions as of September 30, 2013. 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. If the Company fails these covenants in any of its CDOs or CLOs, all cash flows from the applicable vehicle would be diverted to repay principal and interest on the outstanding bonds and the Company would not receive any residual payments until that vehicle regained compliance with such covenants. As of the most recent determination dates in October 2013, the Company was in compliance with all CDO/CLO covenants. In the event of a breach of the covenants that could not be cured in the near-term, the Company would be required to fund its non CDO/CLO expenses, including management fees and employee costs, distributions required to maintain REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CDO/CLO not in breach of a covenant test, (iii) income from real property and loan assets, (iv) sale of assets, (v) or accessing the equity or debt capital markets, if available. The chart below is a summary of the Company's CDO/CLO compliance tests as of the most recent determination dates in October 2013: Cash Flow Triggers CDO I ^(3) CDO II ^ CDO III CLO I CLO II (3) ^(3) Overcollateralization ^(1) Current 166.88% 133.77% 106.64% 142.96% 146.89% Limit 145.00% 127.30% 105.60% 137.86% 144.25% Pass / Fail Pass Pass Pass Pass Pass Interest Coverage ^(2) Current 501.11% 473.84% 566.70% 224.40% 287.19% Limit 160.00% 147.30% 105.60% 120.00% 120.00% Pass / Fail 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 coverageratio divides interest income by interest expense for the classes senior to those retained bythe Company. (3) CDO I, CDO II, and CDO III have reached the end of their replenishment periods. As such, investor capital is repaid quarterly from proceeds received from loan repayments held as collateral in accordance with the terms of the respective CDO. Equity Offering In September 2013, Arbor issued 6.0 million shares of common stock in a public offering receiving net proceeds of approximately $40.9 million. The Company intends to use the net proceeds from the offering to make investments, to repurchase or pay liabilities and for general corporate purposes. Common Dividend The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.13 per share of common stock for the third quarter ended September 30, 2013. The dividend is payable on December 2, 2013 to common shareholders of record on November 20, 2013. The ex-dividend date is November 18, 2013. Preferred Dividends As previously announced, the Board of Directors declared a cash dividend of $0.515625 per share of 8.25% Series A cumulative redeemable preferred stock reflecting accrued dividends through November 30, 2013. The dividend is payable on December 2, 2013 to preferred shareholders of record on November 15, 2013. As previously announced, the Board of Directors also declared a cash dividend of $0.484375 per share of 7.75% Series B cumulative redeemable preferred stock reflecting accrued dividends through November 30, 2013. The dividend is payable on December 2, 2013 to preferred shareholders of record on November 15, 2013. Earnings Conference Call Management will host a conference call today at 10:00 a.m. ET. A live webcast of the conference call will be available online at http://www.arborrealtytrust.com/ in the investor relations area of the Website. Those without Web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (877) 415-3184 for domestic callers and (857) 244-7327 for international callers. Please use participant passcode 15903527. After the live webcast, the call will remain available on the Company's Website, www.arborrealtytrust.com, through December 8, 2013. In addition, a telephonic replay of the call will be available until November 15, 2013. The replay dial-in number is (888) 286-8010 for domestic callers and (617) 801-6888 for international callers. Please use passcode 60256320. About Arbor Realty Trust, Inc. Arbor Realty Trust, Inc. is a real estate investment trust, which invests in a diversified portfolio of multi-family and commercial real estate related bridge and mezzanine loans, preferred equity investments, mortgage related securities and other real estate related assets. Arbor commenced operations in July 2003 and conducts substantially all of its operations through its operating partnership, Arbor Realty Limited Partnership and its subsidiaries. Arbor is externally managed and advised by Arbor Commercial Mortgage, LLC, a national commercial real estate finance company operating through 14 offices in the US that specializes in debt and equity financing for multi-family and commercial real estate. 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 December 31, 2012 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. 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 OPERATIONS Quarter Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest income $25,742,973 $20,030,595 $73,060,911 $59,139,715 Interest expense 10,645,725 9,510,083 31,621,042 31,042,290 Net interest income 15,097,248 10,520,512 41,439,869 28,097,425 Other revenue: Property operating 6,939,947 7,142,993 22,920,902 22,985,629 income Other (loss) income, (251,424) 334,415 1,733,351 736,054 net Total other revenue 6,688,523 7,477,408 24,654,253 23,721,683 Other expenses: Employee compensation 2,995,322 2,301,442 9,047,639 7,168,037 and benefits Selling and 3,300,071 1,870,759 8,459,087 5,722,761 administrative Property operating 6,134,739 6,490,903 19,108,578 19,974,259 expenses Depreciation and 1,720,014 1,427,521 4,899,330 3,866,239 amortization Provision for loan losses (net of 750,231 4,849,330 4,072,108 20,584,191 recoveries) Management fee - 2,800,000 2,500,000 8,400,000 7,500,000 related party Total other expenses 17,700,377 19,439,955 53,986,742 64,815,487 Income (loss) from continuing operations before gain on extinguishment of 4,085,394 (1,442,035) 12,107,380 (12,996,379) debt, loss from equity affiliatesand (provision) benefit for income taxes Gain on extinguishment 1,167,772 4,144,688 4,930,772 30,459,023 of debt Loss from equity (81,723) (225,493) (245,412) (700,203) affiliates Income before (provision) benefit 5,171,443 2,477,160 16,792,740 16,762,441 for income taxes (Provision) benefit -- (275,000) -- 526,558 for income taxes Income from continuing 5,171,443 2,202,160 16,792,740 17,288,999 operations Gain on sale of real -- -- -- 3,487,145 estate held-for-sale (Loss) income from operations of real (79,716) (87,855) (271,479) 1,153,581 estate held-for-sale (Loss) income from discontinued (79,716) (87,855) (271,479) 4,640,726 operations Net income 5,091,727 2,114,305 16,521,261 21,929,725 Preferred stock 1,410,333 -- 3,096,278 -- dividends Net income attributable to 16,715 53,976 124,199 161,598 noncontrolling interest Net income attributable to Arbor Realty Trust, $3,664,679 $2,060,329 $13,300,784 $21,768,127 Inc.common stockholders Basic earnings per common share: Income from continuing operations, net of noncontrolling $0.08 $0.07 $0.34 $0.67 interest and preferred stock dividends (Loss) income from discontinued -- -- (0.01) 0.18 operations Net income attributable to Arbor $0.08 $0.07 $0.33 $0.85 Realty Trust, Inc. common stockholders Diluted earnings per common share: Income from continuing operations, net of noncontrolling $0.08 $0.07 $0.34 $0.66 interest and preferred stock dividends (Loss) income from discontinued -- -- (0.01) 0.18 operations Net income attributable to Arbor Realty Trust, $0.08 $0.07 $0.33 $0.84 Inc.common stockholders Dividends declared per $0.13 $0.10 $0.37 $0.175 common share Weighted average number of sharesof common stock outstanding: Basic 43,397,555 27,749,225 40,129,718 25,643,470 Diluted 43,832,271 28,038,044 40,576,633 25,891,083 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31, 2013 2012 (Unaudited) Assets: Cash and cash equivalents $64,658,561 $29,188,889 Restricted cash (includes $111,640,664 and $41,537,212 from consolidated VIEs, 113,002,790 42,535,514 respectively) Loans and investments, net (includes $1,238,973,709 and $1,113,745,356 from 1,546,107,405 1,325,667,053 consolidated VIEs, respectively) Available-for-sale securities, at fair value (includes $0 and $1,100,000 from 2,746,682 3,552,736 consolidated VIEs, respectively) Securities held-to-maturity, net 41,989,100 42,986,980 Investment in equity affiliates 5,690,169 59,581,242 Real estate owned, net (includes $80,787,215 and $80,787,215 from consolidated VIEs, 112,417,656 124,148,199 respectively) Real estate held-for-sale, net 11,540,649 -- Due from related party(includes $11,970 and 53,329 24,094 $0 from consolidated VIEs, respectively) Prepaid management fee - related party 19,047,949 19,047,949 Other assets (includes $14,329,327 and $11,709,103 from consolidated VIEs, 59,305,715 55,148,624 respectively) Total assets $1,976,560,005 $1,701,881,280 Liabilities and Equity: Repurchase agreements and credit facilities $158,582,338 $130,661,619 Collateralized debt obligations (includes $736,434,556 and $812,452,845 from 736,434,556 812,452,845 consolidated VIEs, respectively) Collateralized loan obligations (includes $264,500,000 and $87,500,000 from 264,500,000 87,500,000 consolidated VIEs, respectively) Junior subordinated notes to subsidiary 159,157,643 158,767,145 trust issuing preferred securities Notes payable 1,750,000 51,457,708 Mortgage notes payable – real estate owned 42,745,650 53,751,004 Mortgage note payable– real estate 11,005,354 -- held-for-sale Due to related party 3,349,516 3,084,627 Due to borrowers (includes $0 and $1,320,943 19,561,570 23,056,640 from consolidated VIEs, respectively) Deferred revenue 77,123,133 77,123,133 Other liabilities (includes $16,302,638 and $22,013,896 from consolidated VIEs, 64,598,525 72,765,437 respectively) Total liabilities 1,538,808,285 1,470,620,158 Commitments and contingencies -- -- 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 September 30, 2013, no shares issued and 67,654,655 -- outstanding at December 31, 2012; 7.75% Series B cumulative redeemable preferred stock, $31,500,000 aggregate liquidation preference; 1,260,000 issued and outstanding at September 30, 2013, no shares issued and outstanding at December 31, 2012 Common stock, $0.01 par value: 500,000,000 shares authorized; 51,787,075 shares issued, 49,136,308 shares outstanding at September 517,870 339,000 30, 2013 and 33,899,992 shares issued, 31,249,225 shares outstanding at December 31, 2012 Additional paid-in capital 623,825,310 493,211,222 Treasury stock, at cost - 2,650,767 shares (17,100,916) (17,100,916) at September 30, 2013 and December 31, 2012 Accumulated deficit (209,207,115) (207,558,257) Accumulated other comprehensive loss (28,902,162) (39,561,700) Total Arbor Realty Trust, Inc. stockholders' 436,787,642 229,329,349 equity Noncontrolling interest in consolidated 964,078 1,931,773 entity Total equity 437,751,720 231,261,122 Total liabilities and equity $1,976,560,005 $1,701,881,280 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES (Unaudited) September 30, 2013 GAAP Arbor Realty Trust, Inc. Stockholders' Equity $436,787,642 Subtract: 8.25% Series A and 7.75% Series B cumulative (67,654,655) redeemable preferred stock GAAP Arbor Realty Trust, Inc. Common Stockholders' Equity $369,132,987 Add: 450 West 33rd Street transaction - deferred revenue 77,123,133 Unrealized loss on derivative instruments 27,776,770 Subtract: 450 West 33rd Street transaction - prepaid management (19,047,949) fee Adjusted Arbor Realty Trust, Inc. Common Stockholders' Equity $454,984,941 Adjusted book value per common share $9.26 GAAP book value per common share $7.51 Common shares outstanding 49,136,308 Given the magnitude and the deferral structure of the 450 West 33rd Street transaction combined with the change in the fair value of certain derivative instruments, Arbor has elected to report adjusted book value per share for the affected period to currently reflect the future impact of the 450 West 33rd Street transaction on the Company's financial condition as well as the evaluation of Arbor without the effects of unrealized losses from certain of the Company's derivative instruments. Management considers this non-GAAP financial measure to be an effective indicator, for both management and investors, of Arbor's financial performance. 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. GAAP book value per share and adjusted book value per share calculations do not take into account any dilution from the potential exercise of the warrants issued to Wachovia as part of the 2009 debt restructuring. ARBOR REALTY TRUST, INC. AND SUBSIDIARIES SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES - Continued (Unaudited) Quarter Ended Nine Months Ended September 30, September 30, 2013 2012 2013 2012 Net income attributable to Arbor Realty Trust, Inc. common $3,664,679 $2,060,329 $13,300,784 $21,768,127 stockholders, GAAP basis Subtract: Gain on sale of real -- -- -- (3,487,145) estate-held-for-sale Add: Depreciation - real estate owned and 1,868,670 1,574,512 5,328,396 4,291,484 held-for-sale (1) Depreciation - investment in equity 22,599 26,936 67,797 80,807 affiliate Funds from operations $5,555,948 $3,661,777 $18,696,977 $22,653,273 ("FFO") Diluted FFO per common $0.13 $0.13 $0.46 $0.87 share Diluted weighted average shares 43,832,271 28,038,044 40,576,633 25,891,083 outstanding (1) Includes discontinued operations 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 real estate investment trusts (REITs).The revised White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in April 2002 defines FFO as net income (loss) attributable tocommon stockholders(computed in accordance with generally accepted accounting principles (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 partnerships and joint ventures. The Company considers gains and losses on the sales of undepreciated real estate investments to be a normal part of its recurring operating activities in accordance with GAAP and should not be excluded when calculating FFO. Losses from discontinued operations are not excluded when calculating FFO. 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 email@example.com Investors: Stephanie Carrington The Ruth Group 646-536-7017 firstname.lastname@example.org Media: Bonnie Habyan, EVP of Marketing 516-506-4615 email@example.com
Arbor Realty Trust Reports Third Quarter 2013 Results and Declares Common Stock Dividend
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