Arbor Realty Trust Reports Fourth Quarter and Full Year 2023 Results and Declares Dividend of $0.43 per Share

Arbor Realty Trust

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

1. 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.

2. Amounts reflect approximate balances as of February 14, 2024.

Contact:

Arbor Realty Trust, Inc. Paul Elenio, Chief Financial Officer 516-506-4422 pelenio@arbor.com

ARBOR 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 Business				Agency Business				Other(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 Business				Agency Business				Consolidated
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.