Arbor Realty Trust Reports Third Quarter 2024 Results and Declares Dividend of $0.43 per Share
Company Highlights:
GAAP net income of $0.31 and distributable earnings of $0.43, per diluted common share1
Declares cash dividend on common stock of $0.43 per share
Successfully delevered the Company 25% from a peak debt to equity ratio of 4:1 in 2023, to 3:1 at 3Q242
Cash and liquidity of ~$600 million3
Agency loan originations of $1.10 billion; a servicing portfolio of ~$33.01 billion, up 2% from 2Q24 and 10% from a year ago
Structured loan originations of $258.5 million, runoff of $521.3 million and a portfolio of ~$11.57 billion
In October 2024, issued $100.0 million of 9.00% senior notes due 2027
UNIONDALE, N.Y., Nov. 01, 2024 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the third quarter ended September 30, 2024. Arbor reported net income for the quarter of $58.2 million, or $0.31 per diluted common share, compared to net income of $77.9 million, or $0.41 per diluted common share for the quarter ended September 30, 2023. Distributable earnings for the quarter was $88.2 million, or $0.43 per diluted common share, compared to $112.2 million, or $0.55 per diluted common share for the quarter ended September 30, 2023.
Agency Business
Loan Origination Platform
Agency Loan Volume (in thousands)
Quarter Ended
September 30, 2024
June 30, 2024
Fannie Mae
$
616,211
$
742,724
Freddie Mac
378,809
346,821
Private Label
74,162
34,714
FHA
27,457
—
SFR-Fixed Rate
—
24,996
Total Originations
$
1,096,639
$
1,149,255
Total Loan Sales
$
1,118,977
$
1,135,287
Total Loan Commitments
$
1,056,490
$
1,099,713
For the quarter ended September 30, 2024, the Agency Business generated revenues of $77.4 million, compared to $76.8 million for the second quarter of 2024. Gain on sales, including fee-based services, net was $18.6 million for the quarter, reflecting a margin of 1.67%, compared to $17.4 million and 1.54% for the second quarter of 2024. Income from mortgage servicing rights was $13.2 million for the quarter, reflecting a rate of 1.25% as a percentage of loan commitments, compared to $14.5 million and 1.32% for the second quarter of 2024.
At September 30, 2024, loans held-for-sale was $326.1 million, with financing associated with these loans totaling $319.4 million.
Fee-Based Servicing Portfolio
The Company's fee-based servicing portfolio totaled $33.01 billion at September 30, 2024. Servicing revenue, net was $31.1 million for the quarter and consisted of servicing revenue of $48.4 million, net of amortization of mortgage servicing rights totaling $17.3 million.
Fee-Based Servicing Portfolio ($ in thousands)
September 30, 2024
June 30, 2024
UPB
Wtd. Avg.Fee (bps)
Wtd. Avg.Life (years)
UPB
Wtd. Avg.Fee (bps)
Wtd. Avg.Life (years)
Fannie Mae
$22,526,022
46.6
6.6
$22,114,193
46.7
7.0
Freddie Mac
5,820,026
21.9
7.1
5,587,178
22.7
7.4
Private Label
2,619,485
18.7
5.8
2,547,308
18.9
6.0
FHA
1,390,766
14.2
18.9
1,369,507
14.4
18.9
Bridge
380,379
10.9
3.0
380,547
10.9
3.4
SFR-Fixed Rate
275,081
20.1
4.6
279,962
20.1
4.9
Total
$33,011,759
38.0
7.1
$32,278,695
38.4
7.5
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan ("loss-sharing obligations") and includes $34.8 million for the fair value of the guarantee obligation undertaken at September 30, 2024. The Company recorded a $3.2 million net provision for loss sharing associated with CECL for the third quarter of 2024. At September 30, 2024, the Company's total CECL allowance for loss-sharing obligations was $45.8 million, representing 0.20% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
Structured Portfolio Activity ($ in thousands)
Quarter Ended
September 30, 2024
June 30, 2024
UPB
%
UPB
%
Bridge:
Multifamily
$
14,500
6
%
$
19,650
9
%
SFR
239,064
92
%
185,500
82
%
Land
—
—
%
10,350
4
%
253,564
98
%
215,500
95
%
.
Mezzanine/Preferred Equity
4,900
2
%
11,684
5
%
Total Originations
$
258,464
100
%
$
227,184
100
%
Number of Loans Originated
38
45
Commitments:
SFR
$
374,070
$
277,260
Construction - Multifamily
47,000
—
Total Commitments
$
421,070
$
277,260
Loan Runoff
$
521,341
$
629,641
Structured Portfolio ($ in thousands)
September 30, 2024
June 30, 2024
UPB
%
UPB
%
Bridge:
Multifamily
$
9,208,954
80
%
$
9,679,128
82
%
SFR
1,783,475
15
%
1,622,269
14
%
Other
176,855
2
%
176,855
1
%
11,169,284
97
%
11,478,252
97
%
Mezzanine/Preferred Equity
393,168
3
%
389,981
3
%
SFR Permanent
3,086
<1
%
4,975
<1
%
Total Portfolio
$
11,565,538
100
%
$
11,873,208
100
%
At September 30, 2024, the loan and investment portfolio's unpaid principal balance ("UPB"), excluding loan loss reserves, was $11.57 billion, with a weighted average interest rate of 7.25%, compared to $11.87 billion and 7.79% at June 30, 2024. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average interest rate was 8.16% at September 30, 2024, compared to 8.60% at June 30, 2024. The decrease in rate was primarily due to a decrease in the SOFR rate in the third quarter of 2024.
The average balance of the Company's loan and investment portfolio during the third quarter of 2024, excluding loan loss reserves, was $11.80 billion with a weighted average yield of 9.04%, compared to $12.15 billion and 8.99% for the second quarter of 2024.
During the third quarter of 2024, the Company recorded a $14.8 million net provision for loan losses associated with CECL. At September 30, 2024, the Company's total allowance for loan losses was $243.6 million. The Company had twenty-six non-performing loans with a UPB of $625.4 million, before related loan loss reserves of $37.3 million, compared to twenty-four loans with a UPB of $676.2 million, before loan loss reserves of $28.1 million at June 30, 2024.
In addition, at September 30, 2024, the Company had ten loans with a total UPB of $319.2 million (before related loan loss reserves of $1.0 million) that were less than 60 days past due, compared to fourteen loans with a total UPB of $367.9 million at June 30, 2024. Interest income on these loans is only being recorded to the extent cash is received.
During the third quarter of 2024, the Company modified twenty-four loans with a total UPB of $1.15 billion. Eighteen of these loans with a total UPB of $710.7 million, contained interest rates based on pricing over SOFR ranging from 3.25% to 4.85%, and one loan with a 7.00% fixed rate. Under the loan modification terms, borrowers invested additional capital to recapitalize their deals in exchange for temporary rate relief, which we provided through a pay and accrual feature. At September 30, 2024, these modified loans had a weighted average pay rate of 5.91% and a weighted average accrual rate of 2.50%. A portion of these loans totaling $87.5 million were less than 60 days past due and $151.8 million were non-performing at June 30, 2024, and are now current in accordance with their modified terms.
Financing Activity
The balance of debt that finances the Company's loan and investment portfolio at September 30, 2024 was $9.97 billion with a weighted average interest rate including fees of 7.18%, as compared to $10.26 billion and a rate of 7.53% at June 30, 2024.
The average balance of debt that finances the Company's loan and investment portfolio for the third quarter of 2024 was $10.09 billion, as compared to $10.81 billion for the second quarter of 2024. The average cost of borrowings for the third quarter of 2024 was 7.58%, compared to 7.54% for the second quarter of 2024.
In October 2024, the Company issued $100.0 million of its 9.00% senior unsecured notes due October 2027 through a private offering. The Company expects that the net proceeds of this offering will be used to pay down debt and for general corporate purposes.
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 September 30, 2024. The dividend is payable on November 27, 2024 to common stockholders of record on November 15, 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) 579-2543 for domestic callers and (785) 424-1699 for international callers. Please use participant passcode ABRQ324 when prompted by the operator.
A telephonic replay of the call will be available until November 8, 2024. The replay dial-in numbers are (800) 839-5493 for domestic callers and (402) 220-2552 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.
Debt to equity ratio reflects junior subordinated notes as equity.
Amounts reflect approximate balances as of October 30, 2024.
Contact:
Arbor Realty Trust, Inc.Paul Elenio, Chief Financial
ARBOR REALTY TRUST, INC. AND SUBSIDIARIESConsolidated Statements of Income - (Unaudited)($ in thousands—except share and per share data)
Quarter Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Interest income
$
286,522
$
336,474
$
905,002
$
1,000,159
Interest expense
197,710
229,180
624,613
675,749
Net interest income
88,812
107,294
280,389
324,410
Other revenue:
Gain on sales, including fee-based services, net
18,638
18,619
52,752
55,795
