Arbor Realty Trust Reports Fourth Quarter and Full Year 2021 Results and Increases Dividend for Seventh Consecutive Quarter to $0.37 per Share

Fourth Quarter Highlights:

• Diversified, annuity-based operating platform with a multifamily focus that generates strong distributable earnings and dividends in all cycles
  
  
  • GAAP net income of $0.71 and distributable earnings of $0.57 per diluted common share1
  • Raised cash dividend on common stock to $0.37 per share, our seventh consecutive quarterly increase
  • Successfully raised $533 million of accretive capital to fund the significant growth of our structured portfolio
    

Structured Business:

• Record loan originations of $4.32 billion, a 75% increase over last quarter and our third consecutive quarter of record originations
• Structured loan portfolio of over $12 billion on substantial growth of 33%
• Closed a $2.10 billion collateralized securitization vehicle, our largest to date
  

Agency Business:

• Loan originations of $1.89 billion and a servicing portfolio of $27 billion
• Closed our 3rd private label securitization totaling $535 million

Full Year Highlights:

• GAAP net income of $2.28 per diluted common share; distributable earnings of $2.01 per diluted common share1, representing a 15% increase over last year
• Raised annual dividend run rate to $1.48 per share, a 12% increase from a year ago, and our 10th straight year of dividend growth
• Leading shareholder return in the commercial mortgage REIT space of 39%
• Generated industry leading ROE of over 19%
• Record originations of $16.13 billion, a 76% increase over last year
• Structured portfolio growth of 122% from record loan originations of $9.72 billion
• Agency servicing portfolio growth of 9.5% from loan originations of $6.41 billion
• Raised $1.63 billion of accretive growth capital through several equity and debt offerings
• Continued success from our industry leading securitization platform closing six new securitizations (4 CLOs, 2 private label) totaling $6.20 billion
  

Recent Developments:

• Closed two securitizations totaling $2.54 billion and raised $75 million of preferred stock
  

UNIONDALE, N.Y., Feb. 18, 2022 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR), today announced financial results for the fourth quarter and year ended December 31, 2021. Arbor reported net income for the quarter of $106.0 million, or $0.71 per diluted common share, compared to net income of $96.6 million, or $0.80 per diluted common share for the quarter ended December 31, 2020. Net income for the year was $317.4 million, or $2.28 per diluted common share, compared to $163.4 million, or $1.41 per diluted common share for the year ended December 31, 2020. Distributable earnings for the quarter was $94.2 million, or $0.57 per diluted common share, compared to $67.4 million, or $0.49 per diluted common share for the quarter ended December 31, 2020. Distributable earnings for the year was $313.7 million, or $2.01 per diluted common share, compared to $234.9 million, or $1.75 per diluted common share for the year ended December 31, 2020.1

Agency Business

Loan Origination Platform

For the quarter ended December 31, 2021, the Agency Business generated revenues (excluding gains and losses on derivative instruments) of $107.1 million, compared to $79.7 million for the third quarter of 2021. Gain on sales, including fee-based services, net was $36.9 million for the quarter, reflecting a margin of 1.77%, compared to $16.3 million and 1.62% for the third quarter of 2021. Income from mortgage servicing rights was $34.5 million for the quarter, reflecting a rate of 1.88% as a percentage of loan commitments, compared to $32.5 million and 1.75% for the third quarter of 2021.

At December 31, 2021, loans held-for-sale was $1.09 billion which was primarily comprised of unpaid principal balances totaling $1.08 billion, with financing associated with these loans totaling $956.3 million.

The Company closed its third private label securitization totaling $535.0 million. The Company originated and sold multifamily mortgage loans to the securitization and is the primary servicer. The Company retained subordinate certificate interests in the securitization of $47.5 million, in satisfaction of credit risk retention requirements.

Fee-Based Servicing Portfolio

The Company’s fee-based servicing portfolio totaled $26.96 billion at December 31, 2021 and excludes $507.9 million of private label loans originated that were not yet securitized. Servicing revenue, net was $23.9 million for the quarter and consisted of servicing revenue of $38.8 million, net of amortization of mortgage servicing rights totaling $14.9 million.

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”) and includes $34.4 million for the fair value of the guarantee obligation undertaken at December 31, 2021. The Company recorded a $5.1 million reversal of provision for loss sharing associated with CECL for the fourth quarter of 2021. At December 31, 2021, the Company’s total CECL allowance for loss-sharing obligations was $21.7 million, representing 0.11% of the Fannie Mae servicing portfolio.

Structured Business

Portfolio and Investment Activity

Quarter ended December 31, 2021:

• Substantial growth in the portfolio of $2.99 billion, or 32.6%
• Originated 156 loans totaling $4.32 billion, consisted primarily of multifamily bridge loans totaling $4.13 billion
• Payoffs and pay downs on 60 loans totaling $1.05 billion
• Committed to fund $321.2 million single-family rental loans

Year ended December 31, 2021:

• Record portfolio growth of $6.68 billion, or 122.1%
• Originated 422 loans totaling $9.72 billion, consisted primarily of multifamily bridge loans totaling $9.10 billion
• Payoffs and pay downs totaling $2.52 billion
• Committed to fund $729.5 million single-family rental loans
• $34.6 million of income generated by our residential mortgage banking joint venture
  

At December 31, 2021, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $12.16 billion, with a weighted average current interest pay rate of 4.26%, compared to $9.17 billion and 4.56% at September 30, 2021. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 4.62% at December 31, 2021, compared to 4.97% at September 30, 2021.

The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2021, excluding loan loss reserves, was $10.46 billion with a weighted average yield of 5.03%, compared to $8.18 billion and 5.55% for the third quarter of 2021. The decrease in average yield was primarily due to lower rates on originations when compared to runoff.

During the fourth quarter of 2021, the Company recorded a $10.3 million reversal of provision for loan losses associated with CECL on the Company’s loan and investment portfolio. At December 31, 2021, the Company’s total allowance for loan losses was $113.2 million. The Company had three non-performing loans with a carrying value of $22.7 million, before related loan loss reserves of $2.6 million, compared to six loans with a carrying value of $55.6 million, before related loan loss reserves of $2.6 million as of September 30, 2021.

Financing Activity

The Company completed its largest collateralized securitization vehicle to date totaling $2.10 billion of real estate related assets and cash. Investment grade-rated notes totaling $1.71 billion were issued, and the Company retained subordinate interests in the issuing vehicle of $385.9 million. The facility has a two-and-a-half-year asset replenishment period and an initial weighted average interest rate of 1.68% over LIBOR, excluding fees and transaction costs.

The Company completed the unwind of a previously issued CLO, redeeming $533.0 million of outstanding notes, which were repaid primarily from the refinancing of the remaining assets primarily within the $2.10 billion CLO described above, as well as with cash held by this CLO, and expensed $2.0 million of deferred financing fees into loss on extinguishment of debt on the consolidated statements of income.

The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2021 was $11.17 billion with a weighted average interest rate including fees of 2.61% as compared to $8.58 billion and a rate of 2.64% at September 30, 2021. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2021 was $9.38 billion, as compared to $7.31 billion for the third quarter of 2021. The average cost of borrowings for the fourth quarter of 2021 was 2.65%, compared to 2.76% for the third quarter of 2021.

Capital Markets

The Company raised a substantial amount of accretive capital to fund its significant growth primarily through the following transactions:

• A public offering of 8.05 million shares of 6.25% Series F fixed-to-floating cumulative redeemable preferred stock, including the underwriters’ exercise of their over-allotment option, generating net proceeds of $194.8 million
  
  
• Issuance of $180.0 million of 5.00% senior unsecured notes due in 2028 in a private placement, generating net proceeds of $177.2 million
  
  
• Issuance of 7.91 million shares of common stock in a public offering receiving net proceeds of $153.9 million
  

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.37 per share of common stock for the quarter ended December 31, 2021, the Company’s seventh consecutive quarterly increase, representing a 23% increase over that time span. The dividend is payable on March 18, 2022 to common stockholders of record on March 4, 2022. The ex-dividend date is March 3, 2022.

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 http://www.arbor.com in the investor relations section of the Company’s website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 518-6930 for domestic callers and (203) 518-9797 for international callers. Please use participant passcode ABRQ421 when prompted by the operator.

A telephonic replay of the call will be available until February 25, 2022. The replay dial-in numbers are (800) 753-9146 for domestic callers and (402) 220-2705 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, in particular, due to the uncertainties created by the COVID-19 pandemic, 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, 2021 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.

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 non-GAAP financial measures and the comparable GAAP financial measure can be found on the last page of this release.