þ |
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2024
o |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 20-0057959 | |||||
(State or other jurisdiction of |
| (I.R.S. Employer | ||||
| ||||||
|
|
|
(Registrant’s telephone number, including area code): (516) (516) 506-4200
Title of each class | Trading symbols | Name of each exchange on which registered | |||||||||||||
Common Stock, par value $0.01 per share | ABR | New York Stock Exchange | |||||||||||||
Preferred Stock, 6.375% Series D Cumulative | ABR-PD | New York Stock Exchange | |||||||||||||
Preferred Stock, 6.25% Series E Cumulative | ABR-PE | New York Stock Exchange | |||||||||||||
Preferred Stock, 6.25% Series F | ABR-PF | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑þ No ☐o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☑þ No ☐o
Large accelerated filer | þ | Accelerated filer | o | Non-accelerated filer | |||||||||||||
Smaller reporting company |
| Emerging growth company |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☑
þ
26, 2024.
i
| | | | | | |
|
| March 31, |
| December 31, | ||
| | 2023 | | 2022 | ||
| | (Unaudited) | | | | |
Assets: | | | | | | |
Cash and cash equivalents | | $ | 774,544 | | $ | 534,357 |
Restricted cash | |
| 704,844 | |
| 713,808 |
Loans and investments, net (allowance for credit losses of $153,077 and $132,559) | | | 13,430,985 | | | 14,254,674 |
Loans held-for-sale, net | | | 469,602 | | | 354,070 |
Capitalized mortgage servicing rights, net | | | 396,634 | | | 401,471 |
Securities held-to-maturity, net (allowance for credit losses of $5,025 and $3,153) | | | 153,888 | | | 156,547 |
Investments in equity affiliates | |
| 77,641 | |
| 79,130 |
Due from related party | |
| 113,105 | |
| 77,419 |
Goodwill and other intangible assets | | | 94,896 | | | 96,069 |
Other assets | |
| 372,085 | |
| 371,440 |
Total assets | | $ | 16,588,224 | | $ | 17,038,985 |
| | | | | | |
Liabilities and Equity: | | | | | | |
Credit and repurchase facilities | | $ | 3,650,876 | | $ | 3,841,814 |
Securitized debt | | | 7,508,472 | | | 7,849,270 |
Senior unsecured notes | |
| 1,409,899 | |
| 1,385,994 |
Convertible senior unsecured notes | | | 281,046 | | | 280,356 |
Junior subordinated notes to subsidiary trust issuing preferred securities | |
| 143,322 | |
| 143,128 |
Due to related party | |
| 12,481 | |
| 12,350 |
Due to borrowers | |
| 59,281 | |
| 61,237 |
Allowance for loss-sharing obligations | | | 59,757 | | | 57,168 |
Other liabilities | |
| 305,633 | |
| 335,789 |
Total liabilities | |
| 13,430,767 | |
| 13,967,106 |
| | | | | | |
Commitments and contingencies (Note 13) | |
| | |
| |
| | | | | | |
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 - 183,821,003 and 178,230,522 shares issued and outstanding | |
| 1,838 | |
| 1,782 |
Additional paid-in capital | |
| 2,278,287 | |
| 2,204,481 |
Retained earnings | |
| 107,697 | |
| 97,049 |
Total Arbor Realty Trust, Inc. stockholders' equity | | | 3,021,506 | | | 2,936,996 |
Noncontrolling interest | | | 135,951 | | | 134,883 |
Total equity | |
| 3,157,457 | |
| 3,071,879 |
Total liabilities and equity | | $ | 16,588,224 | | $ | 17,038,985 |
March 31, 2024 | December 31, 2023 | ||||||||||
(Unaudited) | |||||||||||
Assets: | |||||||||||
Cash and cash equivalents | $ | 908,049 | $ | 928,974 | |||||||
Restricted cash | 546,643 | 608,233 | |||||||||
Loans and investments, net (allowance for credit losses of $211,942 and $195,664) | 12,001,544 | 12,377,806 | |||||||||
Loans held-for-sale, net | 322,875 | 551,707 | |||||||||
Capitalized mortgage servicing rights, net | 385,520 | 391,254 | |||||||||
Securities held-to-maturity, net (allowance for credit losses of $7,597 and $6,256) | 155,413 | 155,279 | |||||||||
Investments in equity affiliates | 90,244 | 79,303 | |||||||||
Due from related party | 104,365 | 64,421 | |||||||||
Goodwill and other intangible assets | 90,205 | 91,378 | |||||||||
Other assets | 499,998 | 490,281 | |||||||||
Total assets | $ | 15,104,856 | $ | 15,738,636 | |||||||
Liabilities and Equity: | |||||||||||
Credit and repurchase facilities | $ | 2,913,483 | $ | 3,237,827 | |||||||
Securitized debt | 6,691,958 | 6,935,010 | |||||||||
Senior unsecured notes | 1,335,013 | 1,333,968 | |||||||||
Convertible senior unsecured notes | 283,776 | 283,118 | |||||||||
Junior subordinated notes to subsidiary trust issuing preferred securities | 144,096 | 143,896 | |||||||||
Due to related party | 14,159 | 13,799 | |||||||||
Due to borrowers | 95,807 | 121,707 | |||||||||
Allowance for loss-sharing obligations | 72,790 | 71,634 | |||||||||
Other liabilities | 319,466 | 343,072 | |||||||||
Total liabilities | 11,870,548 | 12,484,031 | |||||||||
Commitments and contingencies (Note 13) | |||||||||||
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 - 189,452,116 and 188,505,264 shares issued and outstanding | 1,895 | 1,885 | |||||||||
Additional paid-in capital | 2,372,336 | 2,367,188 | |||||||||
Retained earnings | 91,770 | 115,216 | |||||||||
Total Arbor Realty Trust, Inc. stockholders' equity | 3,099,685 | 3,117,973 | |||||||||
Noncontrolling interest | 134,623 | 136,632 | |||||||||
Total equity | 3,234,308 | 3,254,605 | |||||||||
Total liabilities and equity | $ | 15,104,856 | $ | 15,738,636 |
| | | | | | |
| | Three Months Ended March 31, | ||||
|
| 2023 |
| 2022 | ||
Interest income | | $ | 327,947 | | $ | 166,698 |
Interest expense | | | 219,373 | |
| 82,559 |
Net interest income | | | 108,574 | |
| 84,139 |
Other revenue: | | | | | | |
Gain on sales, including fee-based services, net | | | 14,589 | | | 1,656 |
Mortgage servicing rights | | | 18,458 | | | 15,312 |
Servicing revenue, net | | | 29,565 | | | 21,054 |
Property operating income | | | 1,381 | | | 295 |
Gain on derivative instruments, net | | | 4,223 | | | 17,386 |
Other income, net | | | 4,882 | |
| 3,200 |
Total other revenue | | | 73,098 | |
| 58,903 |
Other expenses: | | | | | | |
Employee compensation and benefits | | | 42,399 | | | 42,025 |
Selling and administrative | | | 13,623 | | | 14,548 |
Property operating expenses | | | 1,383 | | | 535 |
Depreciation and amortization | | | 2,624 | | | 1,983 |
Provision for loss sharing (net of recoveries) | | | 3,177 | | | (662) |
Provision for credit losses (net of recoveries) | | | 22,517 | | | 2,358 |
Total other expenses | |
| 85,723 | |
| 60,787 |
Income before extinguishment of debt, income from equity affiliates and income taxes | |
| 95,949 | |
| 82,255 |
Loss on extinguishment of debt | | | — | | | (1,350) |
Income from equity affiliates | | | 14,326 | | | 7,212 |
Provision for income taxes | | | (8,029) | | | (8,188) |
Net income | |
| 102,246 | |
| 79,929 |
Preferred stock dividends | |
| 10,342 | |
| 9,056 |
Net income attributable to noncontrolling interest | | | 7,585 | | | 6,816 |
Net income attributable to common stockholders | | $ | 84,319 | | $ | 64,057 |
| | | | | | |
Basic earnings per common share | | $ | 0.47 | | $ | 0.42 |
Diluted earnings per common share | | $ | 0.46 | | $ | 0.40 |
| | | | | | |
Weighted average shares outstanding: | | | | | | |
Basic | | | 181,116,674 | |
| 153,420,238 |
Diluted | | | 214,910,974 | | | 185,431,404 |
| | | | | | |
Dividends declared per common share | | $ | 0.40 | | $ | 0.37 |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||
Interest income | $ | 321,292 | $ | 327,947 | |||||||||||||||||||
Interest expense | 217,676 | 219,373 | |||||||||||||||||||||
Net interest income | 103,616 | 108,574 | |||||||||||||||||||||
Other revenue: | |||||||||||||||||||||||
Gain on sales, including fee-based services, net | 16,666 | 14,589 | |||||||||||||||||||||
Mortgage servicing rights | 10,199 | 18,458 | |||||||||||||||||||||
Servicing revenue, net | 31,526 | 29,565 | |||||||||||||||||||||
Property operating income | 1,570 | 1,381 | |||||||||||||||||||||
Gain (loss) on derivative instruments, net | (5,257) | 4,223 | |||||||||||||||||||||
Other income, net | 2,333 | 4,882 | |||||||||||||||||||||
Total other revenue | 57,037 | 73,098 | |||||||||||||||||||||
Other expenses: | |||||||||||||||||||||||
Employee compensation and benefits | 47,694 | 42,399 | |||||||||||||||||||||
Selling and administrative | 13,933 | 13,623 | |||||||||||||||||||||
Property operating expenses | 1,678 | 1,383 | |||||||||||||||||||||
Depreciation and amortization | 2,571 | 2,624 | |||||||||||||||||||||
Provision for loss sharing (net of recoveries) | 273 | 3,177 | |||||||||||||||||||||
Provision for credit losses (net of recoveries) | 19,118 | 22,517 | |||||||||||||||||||||
Total other expenses | 85,267 | 85,723 | |||||||||||||||||||||
Income before income from equity affiliates and income taxes | 75,386 | 95,949 | |||||||||||||||||||||
Income from equity affiliates | 1,418 | 14,326 | |||||||||||||||||||||
Provision for income taxes | (3,592) | (8,029) | |||||||||||||||||||||
Net income | 73,212 | 102,246 | |||||||||||||||||||||
Preferred stock dividends | 10,342 | 10,342 | |||||||||||||||||||||
Net income attributable to noncontrolling interest | 4,997 | 7,585 | |||||||||||||||||||||
Net income attributable to common stockholders | $ | 57,873 | $ | 84,319 | |||||||||||||||||||
Basic earnings per common share | $ | 0.31 | $ | 0.47 | |||||||||||||||||||
Diluted earnings per common share | $ | 0.31 | $ | 0.46 | |||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 188,710,390 | 181,116,674 | |||||||||||||||||||||
Diluted | 222,926,076 | 214,910,974 | |||||||||||||||||||||
Dividends declared per common share | $ | 0.43 | $ | 0.40 |
Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock Shares | Preferred Stock Value | Common Stock Shares | Common Stock Par Value | Additional Paid-in Capital | Retained Earnings | Total Arbor Realty Trust, Inc. Stockholders’ Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2024 | 42,585,589 | $ | 633,684 | 188,505,264 | $ | 1,885 | $ | 2,367,188 | $ | 115,216 | $ | 3,117,973 | $ | 136,632 | $ | 3,254,605 | |||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | — | — | 946,852 | 10 | 5,148 | — | 5,158 | — | 5,158 | ||||||||||||||||||||||||||||||||||||||||||||
Distributions - common stock | — | — | — | — | — | (81,314) | (81,314) | — | (81,314) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions - preferred stock | — | — | — | — | — | (10,347) | (10,347) | — | (10,347) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions - noncontrolling interest | — | — | — | — | — | — | — | (7,006) | (7,006) | ||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 68,215 | 68,215 | 4,997 | 73,212 | ||||||||||||||||||||||||||||||||||||||||||||
Balance – March 31, 2024 | 42,585,589 | $ | 633,684 | 189,452,116 | $ | 1,895 | $ | 2,372,336 | $ | 91,770 | $ | 3,099,685 | $ | 134,623 | $ | 3,234,308 | |||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance – January 1, 2023 | 42,585,589 | $ | 633,684 | 178,230,522 | $ | 1,782 | $ | 2,204,481 | $ | 97,049 | $ | 2,936,996 | $ | 134,883 | $ | 3,071,879 | |||||||||||||||||||||||||||||||||||||
Issuance - common stock | — | — | 5,635,800 | 56 | 82,688 | — | 82,744 | — | 82,744 | ||||||||||||||||||||||||||||||||||||||||||||
Repurchase - common stock | — | — | (886,432) | (9) | (9,662) | — | (9,671) | — | (9,671) | ||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation, net | — | — | 841,113 | 9 | 780 | — | 789 | — | 789 | ||||||||||||||||||||||||||||||||||||||||||||
Distributions - common stock | — | — | — | — | — | (73,666) | (73,666) | — | (73,666) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions - preferred stock | — | — | — | — | — | (10,347) | (10,347) | — | (10,347) | ||||||||||||||||||||||||||||||||||||||||||||
Distributions - noncontrolling interest | — | — | — | — | — | — | — | (6,517) | (6,517) | ||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | 94,661 | 94,661 | 7,585 | 102,246 | ||||||||||||||||||||||||||||||||||||||||||||
Balance – March 31, 2023 | 42,585,589 | $ | 633,684 | 183,821,003 | $ | 1,838 | $ | 2,278,287 | $ | 107,697 | $ | 3,021,506 | $ | 135,951 | $ | 3,157,457 | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | Total Arbor | | | | | | | ||
| | Preferred | | Preferred | | Common | | Common | | Additional | | | | Realty Trust, Inc. | | | | | | | |||||
| | Stock | | Stock | | Stock | | Stock | | Paid-in | | Retained | | Stockholders’ | | Noncontrolling | | | | ||||||
|
| Shares |
| Value |
| Shares |
| Par Value |
| Capital |
| Earnings |
| Equity |
| Interest |
| Total Equity | |||||||
Balance – January 1, 2023 |
| 42,585,589 | | $ | 633,684 |
| 178,230,522 | | $ | 1,782 | | $ | 2,204,481 | | $ | 97,049 | | $ | 2,936,996 | | $ | 134,883 | | $ | 3,071,879 |
Issuance of common stock |
| — | |
| — | | 5,635,800 | | | 56 | | | 82,688 | | | — | | | 82,744 | | | — | | | 82,744 |
Repurchase of common stock | | — | | | — | | (886,432) | | | (9) | | | (9,662) | | | — | | | (9,671) | | | — | | | (9,671) |
Stock-based compensation, net |
| — | |
| — |
| 841,113 | |
| 9 | |
| 780 | |
| — | |
| 789 | |
| — | |
| 789 |
Distributions - common stock |
| — | |
| — |
| — | |
| — | |
| — | |
| (73,666) | |
| (73,666) | |
| — | |
| (73,666) |
Distributions - preferred stock |
| — | |
| — |
| — | |
| — | |
| — | |
| (10,347) | |
| (10,347) | |
| — | |
| (10,347) |
Distributions - noncontrolling interest |
| — | |
| — |
| — | |
| — | |
| — | |
| — | |
| — | |
| (6,517) | |
| (6,517) |
Net income |
| — | |
| — |
| — | |
| — | |
| — | |
| 94,661 | |
| 94,661 | |
| 7,585 | |
| 102,246 |
Balance – March 31, 2023 |
| 42,585,589 | | $ | 633,684 |
| 183,821,003 | | $ | 1,838 | | $ | 2,278,287 | | $ | 107,697 | | $ | 3,021,506 | | $ | 135,951 | | $ | 3,157,457 |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended March 31, 2022 | |||||||||||||||||||||||||
Balance - January 1, 2022 |
| 39,325,095 |
| | 556,163 |
| 151,362,181 |
| | 1,514 |
| | 1,789,229 |
| | 68,144 |
| | 2,415,050 |
| | 132,487 |
| | 2,547,537 |
Issuance of common stock |
| — | |
| — | | 8,225,750 | | | 82 | | | 137,718 | | | — | | | 137,800 | | | — | | | 137,800 |
Issuance of Series F preferred stock | | 3,292,000 | | | 77,571 | | — | | | — | | | — | | | — | | | 77,571 | | | — | | | 77,571 |
Stock-based compensation, net |
| — | |
| — |
| 610,184 | |
| 6 | |
| 674 | |
| — | |
| 680 | |
| — | |
| 680 |
Distributions - common stock |
| — | |
| — |
| — | |
| — | |
| — | |
| (56,373) | |
| (56,373) | |
| — | |
| (56,373) |
Distributions - preferred stock |
| — | |
| — |
| — | |
| — | |
| — | |
| (9,056) | |
| (9,056) | |
| — | |
| (9,056) |
Distributions - noncontrolling interest |
| — | |
| — |
| — | |
| — | |
| — | |
| — | |
| — | |
| (6,040) | |
| (6,040) |
Net income |
| — | |
| — |
| — | |
| — | |
| — | |
| 73,113 | |
| 73,113 | |
| 6,816 | |
| 79,929 |
Balance – March 31, 2022 |
| 42,617,095 | | $ | 633,734 |
| 160,198,115 | | $ | 1,602 | | $ | 1,927,621 | | $ | 75,828 | | $ | 2,638,785 | | $ | 133,263 | | $ | 2,772,048 |
| | | | | | |
| | Three Months Ended March 31, | ||||
|
| 2023 |
| 2022 | ||
Operating activities: | | | | | | |
Net income | | $ | 102,246 | | $ | 79,929 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | | |
Depreciation and amortization | |
| 2,624 | |
| 1,983 |
Stock-based compensation | |
| 5,901 | |
| 6,095 |
Amortization and accretion of interest and fees, net | |
| (236) | |
| (2,840) |
Amortization of capitalized mortgage servicing rights | | | 15,416 | | | 14,972 |
Originations of loans held-for-sale | | | (1,033,384) | | | (845,620) |
Proceeds from sales of loans held-for-sale, net of gain on sale | | | 921,522 | | | 1,586,715 |
Mortgage servicing rights | | | (18,458) | | | (15,312) |
Write-off of capitalized mortgage servicing rights from payoffs | | | 3,307 | | | 12,697 |
Provision for loss sharing (net of recoveries) | | | 3,177 | | | (662) |
Provision for credit losses (net of recoveries) | | | 22,517 | | | 2,358 |
Net charge-offs for loss sharing obligations | | | (588) | | | (230) |
Deferred tax provision (benefit) | | | 3,164 | | | (1,720) |
Income from equity affiliates | |
| (14,326) | | | (7,212) |
Distributions from operations of equity affiliates | | | 4,748 | | | 12,859 |
Change in fair value of held-for-sale loans | | | (2,960) | | | — |
Loss on extinguishment of debt | | | — | | | 1,350 |
Payoffs and paydowns of loans held-for-sale | | | 13 | | | 3,258 |
Changes in operating assets and liabilities | | | (71,468) | | | (11,792) |
Net cash (used in) provided by operating activities | | | (56,785) | | | 836,828 |
| | | | | | |
Investing Activities: | | | | | | |
Loans and investments funded, originated and purchased, net | |
| (380,633) | | | (2,656,874) |
Payoffs and paydowns of loans and investments | | | 1,191,076 | | | 668,379 |
Deferred fees | |
| 3,953 | | | 20,767 |
Contributions to equity affiliates | |
| (500) | |
| (12,807) |
Distributions from equity affiliates | | | 11,567 | | | — |
Payoffs and paydowns of securities held-to-maturity | | | 2,580 | | | 2,647 |
Purchase of securities held-to-maturity, net | | | — | | | (27,598) |
Due to borrowers and reserves | | | — | | | (12,150) |
Net cash provided by (used in) investing activities | | | 828,043 | | | (2,017,636) |
| | | | | | |
Financing activities: | | | | | | |
Proceeds from credit and repurchase facilities | |
| 1,849,389 | | | 3,035,664 |
Paydowns and payoffs of credit and repurchase facilities | |
| (2,042,692) | | | (3,213,976) |
Payoffs and paydowns of securitized debt | | | (344,547) | | | (441,000) |
Proceeds from issuance of common stock | | | 82,744 | | | 137,800 |
Proceeds from issuance of senior unsecured notes | | | 95,000 | | | — |
Payoffs and paydowns of senior unsecured notes | | | (70,750) | | | — |
Payments of withholding taxes on net settlement of vested stock | | | (5,112) | | | (5,415) |
Repurchase of common stock | | | (9,671) | | | — |
Distributions to stockholders | | | (90,530) | | | (72,099) |
Payment of deferred financing costs | | | (3,866) | | | (13,915) |
Proceeds from issuance of securitized debt | | | — | | | 1,652,812 |
Proceeds from issuance of preferred stock | | | — | | | 77,571 |
Net cash (used in) provided by financing activities | | | (540,035) | | | 1,157,442 |
Net increase (decrease) in cash, cash equivalents and restricted cash | |
| 231,223 | | | (23,366) |
Cash, cash equivalents and restricted cash at beginning of period | | | 1,248,165 | | | 891,270 |
Cash, cash equivalents and restricted cash at end of period | | $ | 1,479,388 | | $ | 867,904 |
Three Months Ended March 31, 2024 2023 Operating activities: Net income $ 73,212 $ 102,246 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,571 2,624 Stock-based compensation 6,020 5,901 Amortization and accretion of interest and fees, net (46) (236) Amortization of capitalized mortgage servicing rights 16,631 15,416 Originations of loans held-for-sale (857,805) (1,033,384) Proceeds from sales of loans held-for-sale, net of gain on sale 1,085,374 921,522 Mortgage servicing rights (10,199) (18,458) Write-off of capitalized mortgage servicing rights from payoffs 1,787 3,307 Provision for loss sharing (net of recoveries) 273 3,177 Provision for credit losses (net of recoveries) 19,118 22,517 Net charge-offs for loss sharing obligations 883 (588) Deferred tax (benefit) provision (3,952) 3,164 Income from equity affiliates (1,418) (14,326) Distributions from operations of equity affiliates — 4,748 Change in fair value of held-for-sale loans (19) (2,960) Loss (gain) on derivative instruments, net 5,257 (4,223) Payoffs and paydowns of loans held-for-sale 14 13 Changes in operating assets and liabilities (77,745) (67,245) Net cash provided by (used in) operating activities 259,956 (56,785) Investing Activities: Loans and investments funded, originated and purchased (313,557) (380,633) Payoffs and paydowns of loans and investments 670,388 1,191,076 Deferred fees 3,464 3,953 Contributions to equity affiliates (9,593) (500) Distributions from equity affiliates 69 11,567 Payoffs and paydowns of securities held-to-maturity 47 2,580 Due to borrowers and reserves (19,234) — Net cash provided by investing activities 331,584 828,043 Financing activities: Proceeds from credit and repurchase facilities 1,865,362 1,849,389 Paydowns and payoffs of credit and repurchase facilities (2,187,147) (2,042,692) Payoffs and paydowns of securitized debt (246,165) (344,547) Proceeds from issuance of common stock — 82,744 Proceeds from issuance of senior unsecured notes — 95,000 Payoffs and paydowns of senior unsecured notes — (70,750) Payments of withholding taxes on net settlement of vested stock (862) (5,112) Repurchase of common stock — (9,671) Distributions to stockholders (98,667) (90,530) Payment of deferred financing costs (6,576) (3,866) Net cash used in financing activities (674,055) (540,035) Net (decrease) increase in cash, cash equivalents and restricted cash (82,515) 231,223 Cash, cash equivalents and restricted cash at beginning of period 1,537,207 1,248,165 Cash, cash equivalents and restricted cash at end of period $ 1,454,692 $ 1,479,388
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
| | | | | | |
| | Three Months Ended March 31, | ||||
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| 2023 |
| 2022 | ||
Reconciliation of cash, cash equivalents and restricted cash: | | | | | | |
Cash and cash equivalents at beginning of period | | $ | 534,357 | | $ | 404,580 |
Restricted cash at beginning of period | | | 713,808 | | | 486,690 |
Cash, cash equivalents and restricted cash at beginning of period | | $ | 1,248,165 | | $ | 891,270 |
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Cash and cash equivalents at end of period | | $ | 774,544 | | $ | 350,814 |
Restricted cash at end of period | | | 704,844 | | | 517,090 |
Cash, cash equivalents and restricted cash at end of period | | $ | 1,479,388 | | $ | 867,904 |
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Supplemental cash flow information: | | | | | | |
Cash used to pay interest | | $ | 213,849 | | $ | 70,069 |
Cash used to pay taxes | | | 1,032 | | | 741 |
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Supplemental schedule of non-cash investing and financing activities: | | | | | | |
Distributions accrued on preferred stock | | | 7,010 | | | 6,138 |
Cummulative-effect adjustment (adoption of convertible debt standard) | | | — | | | 2,447 |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||
Cash and cash equivalents at beginning of period | $ | 928,974 | $ | 534,357 | |||||||
Restricted cash at beginning of period | 608,233 | 713,808 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | $ | 1,537,207 | $ | 1,248,165 | |||||||
Cash and cash equivalents at end of period | $ | 908,049 | $ | 774,544 | |||||||
Restricted cash at end of period | 546,643 | 704,844 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,454,692 | $ | 1,479,388 | |||||||
Supplemental cash flow information: | |||||||||||
Cash used to pay interest | $ | 209,712 | $ | 213,849 | |||||||
Cash used to pay taxes | 567 | 1,032 | |||||||||
Supplemental schedule of non-cash investing and financing activities: | |||||||||||
Distributions accrued on preferred stock | 7,010 | 7,010 | |||||||||
securitization.
7
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Use of Estimates
Reclassification
Certain amounts in the prior period financial statements have been reclassified to conform to the presentationTable of the current period financial statements.
Contents
Recently Adopted Accounting Pronouncements
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8
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
March 31, 2024 | Percent of Total | Loan Count | Wtd. Avg. Pay Rate (1) | Wtd. Avg. Remaining Months to Maturity (2) | Wtd. Avg. First Dollar LTV Ratio (3) | Wtd. Avg. Last Dollar LTV Ratio (4) | |||||||||||||||||||||||||||||||||||
Bridge loans (5) | $ | 11,866,289 | 97 | % | 698 | 8.11 | % | 11.4 | 0 | % | 81 | % | |||||||||||||||||||||||||||||
Mezzanine loans | 260,414 | 2 | % | 55 | 7.87 | % | 53.3 | 49 | % | 82 | % | ||||||||||||||||||||||||||||||
Preferred equity investments | 117,431 | 1 | % | 26 | 5.09 | % | 57.9 | 54 | % | 78 | % | ||||||||||||||||||||||||||||||
SFR permanent loans | 5,728 | <1% | 2 | 9.94 | % | 12.8 | 0 | % | 53 | % | |||||||||||||||||||||||||||||||
Total UPB | 12,249,862 | 100 | % | 781 | 8.07 | % | 12.8 | 2 | % | 81 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | (211,942) | ||||||||||||||||||||||||||||||||||||||||
Unearned revenue | (36,376) | ||||||||||||||||||||||||||||||||||||||||
Loans and investments, net | $ | 12,001,544 | |||||||||||||||||||||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Bridge loans (5) | $ | 12,273,244 | 97 | % | 679 | 8.45 | % | 12.0 | 0 | % | 78 | % | |||||||||||||||||||||||||||||
Mezzanine loans | 248,457 | 2 | % | 49 | 8.41 | % | 56.6 | 48 | % | 80 | % | ||||||||||||||||||||||||||||||
Preferred equity investments | 85,741 | 1 | % | 17 | 3.95 | % | 60.3 | 53 | % | 82 | % | ||||||||||||||||||||||||||||||
SFR permanent loans | 7,564 | <1% | 2 | 9.84 | % | 13.9 | 0 | % | 56 | % | |||||||||||||||||||||||||||||||
Total UPB | 12,615,006 | 100 | % | 747 | 8.42 | % | 13.2 | 1 | % | 78 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | (195,664) | ||||||||||||||||||||||||||||||||||||||||
Unearned revenue | (41,536) | ||||||||||||||||||||||||||||||||||||||||
Loans and investments, net | $ | 12,377,806 |
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| | | | | | | | | | | Remaining | | Wtd. Avg. | | Wtd. Avg. | |
| | | | Percent of | | Loan | | Wtd. Avg. | | Months to | | First Dollar | | Last Dollar | | |
| | March 31, 2023 | | Total | | Count | | Pay Rate (1) | | Maturity | | LTV Ratio (2) | | LTV Ratio (3) | | |
Bridge loans (4) | | $ | 13,298,939 | | 97 | % | 659 |
| 8.62 | % | 18.3 |
| 0 | % | 76 | % |
Mezzanine loans | |
| 222,094 |
| 2 | % | 46 |
| 8.15 | % | 60.7 |
| 44 | % | 80 | % |
Preferred equity investments | | | 89,725 | | 1 | % | 7 | | 6.56 | % | 45.3 | | 47 | % | 84 | % |
Other loans (5) | |
| 32,966 |
| <1 | % | 3 |
| 9.23 | % | 29.5 |
| 0 | % | 57 | % |
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| 13,643,724 |
| 100 | % | 715 |
| 8.60 | % | 19.2 |
| 1 | % | 76 | % |
Allowance for credit losses | | | (153,077) | | | | | | | | | | | | | |
Unearned revenue | |
| (59,662) | | | | | | | | | | | | | |
Loans and investments, net | | $ | 13,430,985 | | | | | | | | | | | | | |
“Weighted Average Pay Rate” is a weighted average, based on the unpaid principal balance (“UPB”) of each loan in our portfolio, of the interest rate required to be paid monthly as stated in the individual loan agreements. Certain loans and investments that require an accrual rate to be paid at maturity are not included in the weighted average pay rate as shown in the table.
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Bridge loans (4) | | $ | 14,096,054 |
| 98 | % | 692 |
| 8.17 | % | 19.8 |
| 0 | % | 76 | % |
Mezzanine loans | |
| 213,499 |
| 1 | % | 44 |
| 8.13 | % | 63.1 |
| 42 | % | 77 | % |
Preferred equity investments | | | 110,725 | | 1 | % | 8 | | 7.63 | % | 39.2 | | 46 | % | 79 | % |
Other loans (5) | | | 35,845 | | <1 | % | 3 | | 8.76 | % | 32.8 | | 0 | % | 58 | % |
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| 14,456,123 |
| 100 | % | 747 |
| 8.17 | % | 20.6 |
| 1 | % | 76 | % |
Allowance for credit losses | |
| (132,559) | | | | | | | | | | | | | |
Unearned revenue | |
| (68,890) | | | | | | | | | | | | | |
Loans and investments, net | | $ | 14,254,674 | | | | | | | | | | | | | |
9
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
We assign a credit risk rating of pass, pass/watch, special mention, substandard or doubtful to each loan and investment, with a pass rating being the lowest risk and a doubtful rating being the highest risk. Each credit risk rating has benchmark guidelines that pertain to debt-service coverage ratios, LTV ratios, borrower strength, asset quality, and funded cash reserves. Other factors such as guarantees, market strength, and remaining loan term and borrower equity are also reviewed and factored into determining the credit risk rating assigned to each loan. This metric provides a helpful snapshot of portfolio quality and credit risk. All portfolio assets are subject to, at a minimum, a thorough quarterly financial evaluation in which historical operating performance and forward-looking projections are reviewed, however, we maintain a higher level of scrutiny and focus on loans that we consider “high risk” and that possess deteriorating credit quality.
10
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A summary of the loan portfolio’s internal risk ratings and LTV ratios by asset class at March 31, 2024, and charge-offs recorded for the three months ended March 31, 2024 is as follows ($ in thousands):
UPB by Origination Year | Total | Wtd. Avg. First Dollar LTV Ratio | Wtd. Avg. Last Dollar LTV Ratio | ||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Class / Risk Rating | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | |||||||||||||||||||||||||||||||||||||||||||||||
Multifamily: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 36,060 | $ | 92,062 | $ | 52,027 | $ | 8,835 | $ | 2,010 | $ | 24,879 | $ | 215,873 | |||||||||||||||||||||||||||||||||||||||
Pass/Watch | 36,501 | 319,437 | 2,336,702 | 1,846,835 | 119,860 | 113,100 | 4,772,435 | ||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | 9,069 | 3,014 | 1,771,071 | 2,787,716 | 28,250 | 167,229 | 4,766,349 | ||||||||||||||||||||||||||||||||||||||||||||||
Substandard | — | 21,100 | 467,123 | 151,612 | 8,006 | 350 | 648,191 | ||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | 4,800 | 174,235 | 14,800 | 9,765 | 203,600 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Multifamily | $ | 81,630 | $ | 435,613 | $ | 4,631,723 | $ | 4,969,233 | $ | 172,926 | $ | 315,323 | $ | 10,606,448 | 2 | % | 84 | % | |||||||||||||||||||||||||||||||||||
Single-Family Rental: | Percentage of portfolio | 87 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | — | $ | — | $ | 9,476 | $ | 9,673 | $ | — | $ | — | $ | 19,149 | |||||||||||||||||||||||||||||||||||||||
Pass/Watch | 105,172 | 308,123 | 446,660 | 174,652 | 126,066 | — | 1,160,673 | ||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | 6,496 | 57,147 | 77,385 | 129,906 | — | — | 270,934 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Single-Family Rental | $ | 111,668 | $ | 365,270 | $ | 533,521 | $ | 314,231 | $ | 126,066 | $ | — | $ | 1,450,756 | 0 | % | 63 | % | |||||||||||||||||||||||||||||||||||
Land: | Percentage of portfolio | 12 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | — | $ | — | $ | — | $ | — | $ | 8,100 | $ | — | $ | 8,100 | |||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 127,928 | 127,928 | ||||||||||||||||||||||||||||||||||||||||||||||
Total Land | $ | — | $ | — | $ | — | $ | — | $ | 8,100 | $ | 127,928 | $ | 136,028 | 0 | % | 97 | % | |||||||||||||||||||||||||||||||||||
Office: | Percentage of portfolio | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | $ | — | $ | — | $ | — | $ | — | $ | 35,410 | $ | — | $ | 35,410 | |||||||||||||||||||||||||||||||||||||||
Total Office | $ | — | $ | — | $ | — | $ | — | $ | 35,410 | $ | — | $ | 35,410 | 0 | % | 80 | % | |||||||||||||||||||||||||||||||||||
Retail: | Percentage of portfolio | < 1% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,520 | $ | 19,520 | |||||||||||||||||||||||||||||||||||||||
Total Retail | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,520 | $ | 19,520 | 0 | % | 95 | % | |||||||||||||||||||||||||||||||||||
Commercial: | Percentage of portfolio | < 1% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,700 | $ | 1,700 | |||||||||||||||||||||||||||||||||||||||
Total Other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,700 | $ | 1,700 | 63 | % | 66 | % | |||||||||||||||||||||||||||||||||||
Percentage of portfolio | < 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Grand Total | $ | 193,298 | $ | 800,883 | $ | 5,165,244 | $ | 5,283,464 | $ | 342,502 | $ | 464,471 | $ | 12,249,862 | 2 | % | 81 | % | |||||||||||||||||||||||||||||||||||
Charge-offs | $ | — | $ | — | $ | — | $ | 1,500 | $ | — | $ | — | $ | 1,500 |
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| | UPB by Origination Year | | | | | First Dollar | | Last Dollar | | ||||||||||||||||
Asset Class / Risk Rating | | 2023 | | 2022 | | 2021 | | 2020 | | 2019 | | Prior | | Total | | LTV Ratio | | LTV Ratio | | |||||||
Multifamily: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pass | | $ | 22,360 | | $ | 549,835 | | $ | 268,328 | | $ | 3,155 | | $ | — | | $ | 20,300 | | $ | 863,978 |
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Pass/Watch | | | 160,465 | | | 2,781,244 | | | 3,236,800 | | | 303,109 | | | 203,354 | | | 22,050 | | | 6,707,022 |
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Special Mention | |
| — | | | 1,322,873 | | | 2,884,543 | | | 51,175 | | | 51,785 | | | 27,194 | | | 4,337,570 |
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Substandard | | | — | | | 97,218 | | | 259,302 | | | — | | | 10,565 | | | 32,500 | | | 399,585 | | | | | |
Total Multifamily | | $ | 182,825 | | $ | 4,751,170 | | $ | 6,648,973 | | $ | 357,439 | | $ | 265,704 | | $ | 102,044 | | $ | 12,308,155 | | 1 | % | 77 | % |
Single-Family Rental: | | | | | | | | | | | | | | Percentage of portfolio | | | 91 | % | | | | | ||||
Pass | | $ | — | | $ | — | | $ | 22,928 | | $ | 3,113 | | $ | — | | $ | — | | $ | 26,041 | | | | | |
Pass/Watch | | | 33,188 | | | 449,188 | | | 293,140 | | | 107,147 | | | 20,965 | | | — | | | 903,628 | | | | | |
Special Mention | | | — | | | 20,710 | | | 27,474 | | | 37,139 | | | — | | | — | | | 85,323 | | | | | |
Total Single-Family Rental | | $ | 33,188 | | $ | 469,898 | | $ | 343,542 | | $ | 147,399 | | $ | 20,965 | | $ | — | | $ | 1,014,992 | | 0 | % | 63 | % |
Land: | | | | | | | | | | | | | | Percentage of portfolio | | | 7 | % | | | | | ||||
Special Mention | | $ | — | | $ | — | | $ | — | | $ | 8,100 | | $ | — | | $ | — | | $ | 8,100 | | | | | |
Substandard | | | — | | | — | | | — | | | — | | | — | | | 127,928 | | | 127,928 | | | | | |
Total Land | | $ | — | | $ | — | | $ | — | | $ | 8,100 | | $ | — | | $ | 127,928 | | $ | 136,028 | | 0 | % | 98 | % |
Office: | | | | | | | | | | | | | | Percentage of portfolio | | | 1 | % | | | | | ||||
Pass/Watch | | $ | — | | $ | — | | $ | — | | $ | 35,410 | | $ | — | | $ | — | | $ | 35,410 | | | | | |
Substandard | | | — | | | — | | | — | | | — | | | — | | | 44,625 | | | 44,625 | | | | | |
Total Office | | $ | — | | $ | — | | $ | — | | $ | 35,410 | | $ | — | | $ | 44,625 | | $ | 80,035 | | 0 | % | 99 | % |
Healthcare: | | | | | | | | | | | | | | Percentage of portfolio | | | 1 | % | | | | �� | ||||
Pass/Watch | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 51,069 | | $ | — | | $ | 51,069 | | | | | |
Total Healthcare | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 51,069 | | $ | — | | $ | 51,069 | | 0 | % | 69 | % |
Retail: | | | | | | | | | | | | | | Percentage of portfolio | | | < 1 | % | | | | | ||||
Pass | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 4,000 | | $ | — | | $ | 4,000 |
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Special Mention | | | — | | | — | | | — | | | — | | | — | | | 3,445 | | | 3,445 | | | | | |
Substandard | | | — | | | — | | | — | | | — | | | — | | | 18,600 | | | 18,600 | | | | | |
Total Retail | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 4,000 | | $ | 22,045 | | $ | 26,045 | | 11 | % | 71 | % |
Student Housing: | | | | | | | | | | | | | | Percentage of portfolio | | | < 1 | % | | | | | ||||
Pass/Watch | | $ | — | | $ | — | | $ | 25,700 | | $ | — | | $ | — | | $ | — | | $ | 25,700 | | | | | |
Total Student Housing | | $ | — | | $ | — | | $ | 25,700 | | $ | — | | $ | — | | $ | — | | $ | 25,700 | | 0 | % | 67 | % |
Other: | | | | | | | | | | | | | | Percentage of portfolio | | | < 1 | % | | | | | ||||
Doubtful | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,700 | | $ | 1,700 | | | | | |
Total Other | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,700 | | $ | 1,700 | | 63 | % | 63 | % |
| | | | | | | | | | | | | | Percentage of portfolio | | | < 1 | % | | | | | ||||
Grand Total | | $ | 216,013 | | $ | 5,221,068 | | $ | 7,018,215 | | $ | 548,348 | | $ | 341,738 | | $ | 298,342 | | $ | 13,643,724 | | 1 | % | 76 | % |
UPB by Origination Year | Total | Wtd. Avg. First Dollar LTV Ratio | Wtd. Avg. Last Dollar LTV Ratio | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Class / Risk Rating | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Multifamily: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 80,814 | $ | 53,316 | $ | 26,185 | $ | 2,010 | $ | 4,598 | $ | 20,300 | $ | 187,223 | |||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | 317,358 | 2,561,938 | 2,223,155 | 119,860 | 84,600 | 58,044 | 5,364,955 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | 24,424 | 1,762,539 | 2,631,689 | 180,750 | 140,685 | 350 | 4,740,437 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | — | 435,878 | 322,987 | 8,006 | — | — | 766,871 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | — | — | 13,930 | 14,800 | 9,765 | — | 38,495 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Multifamily | $ | 422,596 | $ | 4,813,671 | $ | 5,217,946 | $ | 325,426 | $ | 239,648 | $ | 78,694 | $ | 11,097,981 | 1 | % | 80 | % | |||||||||||||||||||||||||||||||||||||||||
Single-Family Rental: | Percentage of portfolio | 88 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass | $ | 9,709 | $ | 608 | $ | — | $ | — | $ | — | $ | — | $ | 10,317 | |||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | 289,482 | 465,057 | 144,846 | 119,692 | — | — | 1,019,077 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | 31,131 | 45,145 | 218,697 | — | — | — | 294,973 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Single-Family Rental | $ | 330,322 | $ | 510,810 | $ | 363,543 | $ | 119,692 | $ | — | $ | — | $ | 1,324,367 | 0 | % | 62 | % | |||||||||||||||||||||||||||||||||||||||||
Land: | Percentage of portfolio | 10 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pass/Watch | $ | — | $ | — | $ | — | $ | 4,600 | $ | — | $ | — | $ | 4,600 | |||||||||||||||||||||||||||||||||||||||||||||
Special Mention | — | — | — | 3,500 | — | — | 3,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 127,928 | 127,928 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Land | $ | — | $ | — | $ | — | $ | 8,100 | $ | — | $ | 127,928 | $ | 136,028 | 0 | % | 97 | % | |||||||||||||||||||||||||||||||||||||||||
Office: | Percentage of portfolio | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Mention | — | — | — | 35,410 | — | — | 35,410 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Office | $ | — | $ | — | $ | — | $ | 35,410 | $ | — | $ | — | $ | 35,410 | 0 | % | 80 | % | |||||||||||||||||||||||||||||||||||||||||
Retail: | Percentage of portfolio | < 1% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Substandard | — | — | — | — | — | 19,520 | 19,520 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Retail | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 19,520 | $ | 19,520 | 0 | % | 88 | % | |||||||||||||||||||||||||||||||||||||||||
Commercial: | Percentage of portfolio | < 1% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Doubtful | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,700 | $ | 1,700 | |||||||||||||||||||||||||||||||||||||||||||||
Total Other | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,700 | $ | 1,700 | 63 | % | 66 | % | |||||||||||||||||||||||||||||||||||||||||
Percentage of portfolio | < 1% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Grand Total | $ | 752,918 | $ | 5,324,481 | $ | 5,581,489 | $ | 488,628 | $ | 239,648 | $ | 227,842 | $ | 12,615,006 | 1 | % | 78 | % | |||||||||||||||||||||||||||||||||||||||||
Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | 5,700 | $ | 5,700 |
11
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2023 | ||||||||||||||||||||||
|
| Land |
| Multifamily |
| Office |
| Retail |
| Commercial |
| Single-Family Rental |
| Other |
| Total | ||||||||
Allowance for credit losses: | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance | | $ | 78,068 | | $ | 37,961 | | $ | 8,162 | | $ | 5,819 | | $ | 1,700 | | $ | 781 | | $ | 68 | | $ | 132,559 |
Provision for credit losses (net of recoveries) | | | 18 | |
| 20,387 | |
| (56) | |
| — | | | — | |
| 192 | |
| (23) | |
| 20,518 |
Ending balance | | $ | 78,086 | | $ | 58,348 | | $ | 8,106 | | $ | 5,819 | | $ | 1,700 | | $ | 973 | | $ | 45 | | $ | 153,077 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2022 | ||||||||||||||||||||||
Allowance for credit losses: |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Beginning balance | | $ | 77,970 | | $ | 18,707 | | $ | 8,073 | | $ | 5,819 | | $ | 1,700 | | $ | 320 | | $ | 652 | | $ | 113,241 |
Provision for credit losses (net of recoveries) | | | (30) | |
| 3,377 | |
| 12 | |
| — | | | — | |
| 101 | |
| (319) | |
| 3,141 |
Ending balance | | $ | 77,940 | | $ | 22,084 | | $ | 8,085 | | $ | 5,819 | | $ | 1,700 | | $ | 421 | | $ | 333 | | $ | 116,382 |
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Multifamily | Land | Retail | Single-Family Rental | Commercial | Office | Other | Total | |||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 110,847 | $ | 78,058 | $ | 3,293 | $ | 1,624 | $ | 1,700 | $ | 142 | $ | — | $ | 195,664 | ||||||||||||||||||||||||||||||||||
Provision for credit losses (net of recoveries) | 16,652 | 62 | — | 1,113 | — | (49) | — | 17,778 | ||||||||||||||||||||||||||||||||||||||||||
Charge-offs | (1,500) | — | — | — | — | — | — | (1,500) | ||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 125,999 | $ | 78,120 | $ | 3,293 | $ | 2,737 | $ | 1,700 | $ | 93 | $ | — | $ | 211,942 | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance | $ | 37,961 | $ | 78,068 | $ | 5,819 | $ | 781 | $ | 1,700 | $ | 8,162 | $ | 68 | $ | 132,559 | ||||||||||||||||||||||||||||||||||
Provision for credit losses (net of recoveries) | 20,387 | 18 | — | 192 | — | (56) | (23) | 20,518 | ||||||||||||||||||||||||||||||||||||||||||
Ending balance | $ | 58,348 | $ | 78,086 | $ | 5,819 | $ | 973 | $ | 1,700 | $ | 8,106 | $ | 45 | $ | 153,077 | ||||||||||||||||||||||||||||||||||
12
All of our structured loans and investments are secured by real estate assets or by interests in real estate assets, and, as such, the measurement of credit losses may be based on the difference between the fair value of the underlying collateral and the carrying value of the assets as of the period end. A summary of our specific loans considered impaired by asset class is as follows (in($ in thousands):
March 31, 2024 | ||||||||||||||||||||||||||||||||
Asset Class | UPB | Carrying Value (1) | Allowance for Credit Losses | Wtd. Avg. First Dollar LTV Ratio | Wtd. Avg. Last Dollar LTV Ratio | |||||||||||||||||||||||||||
Multifamily | $ | 352,223 | $ | 338,772 | $ | 50,500 | 0 | % | 99 | % | ||||||||||||||||||||||
Land | 134,215 | 127,868 | 77,869 | 0 | % | 99 | % | |||||||||||||||||||||||||
Retail | 19,521 | 15,037 | 3,292 | 0 | % | 95 | % | |||||||||||||||||||||||||
Commercial | 1,700 | 1,700 | 1,700 | 0 | % | 100 | % | |||||||||||||||||||||||||
Total | $ | 507,659 | $ | 483,377 | $ | 133,361 | 0 | % | 99 | % | ||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||||||||
Multifamily | $ | 272,493 | $ | 260,291 | $ | 37,750 | 0 | % | 100 | % | ||||||||||||||||||||||
Land | 134,215 | 127,868 | 77,869 | 0 | % | 99 | % | |||||||||||||||||||||||||
Retail | 19,521 | 15,037 | 3,292 | 0 | % | 88 | % | |||||||||||||||||||||||||
Commercial | 1,700 | 1,700 | 1,700 | 0 | % | 100 | % | |||||||||||||||||||||||||
Total | $ | 427,929 | $ | 404,896 | $ | 120,611 | 0 | % | 99 | % |
| | | | | | | | | | | | | | |
| | March 31, 2023 | | |||||||||||
| | | | | | | | | | | Wtd. Avg. First | | Wtd. Avg. Last | |
| | | | Carrying | | Allowance for | | Dollar LTV | | Dollar LTV | | |||
Asset Class |
| UPB (1) |
| Value |
| Credit Losses |
| Ratio |
| Ratio | | |||
Land | | $ | 134,215 | | $ | 127,868 | | $ | 77,869 | | 0 | % | 99 | % |
Office | | | 44,625 | | | 44,625 | | | 7,951 | | 0 | % | 100 | % |
Retail | |
| 22,045 | |
| 17,563 | |
| 5,817 |
| 13 | % | 78 | % |
Commercial | |
| 1,700 | |
| 1,700 | |
| 1,700 |
| 63 | % | 63 | % |
Total | | $ | 202,585 | | $ | 191,756 | | $ | 93,337 | | 2 | % | 96 | % |
| | | | | | | | | | | | | | |
| | December 31, 2022 | | |||||||||||
Land |
| $ | 134,215 |
| $ | 127,868 |
| $ | 77,869 |
| 0 | % | 99 | % |
Retail | | | 22,045 | | | 17,563 | | | 5,817 | | 14 | % | 79 | % |
Commercial | | | 1,700 | | | 1,700 | | | 1,700 | | 63 | % | 63 | % |
Total | | $ | 157,960 | | $ | 147,131 | | $ | 85,386 | | 3 | % | 96 | % |
There were no loans for which the fair value of the collateral securing the loan was less than the carrying value of the loan for which we had not recorded a provision for credit loss at March 31, 20232024 and December 31, 2022.
At both March 31, 2023 and December 31, 2022, four loans with an aggregate net carrying value of $2.6 million, net of related loan loss reserves of $5.1 million, were2023.
At March 31, 2024, twenty-one loans with an aggregate net carrying value of $406.1 million, net of loan loss reserves of $32.9 million, were classified as non-performing and, at December 31, 2023, sixteen loans with an aggregate net carrying value of $235.6 million, net of related loan loss reserves of $27.1 million, were classified as non-performing.
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
UPB | 61 - 90 Days Past Due | Greater Than 90 Days Past Due | UPB | 61 - 90 Days Past Due | Greater Than 90 Days Past Due | ||||||||||||||||||||||||||||||
Multifamily | $ | 462,207 | $ | — | $ | 462,207 | $ | 271,532 | $ | — | $ | 271,532 | |||||||||||||||||||||||
Commercial | 1,700 | — | 1,700 | 1,700 | — | 1,700 | |||||||||||||||||||||||||||||
Retail | 920 | — | 920 | 920 | — | 920 | |||||||||||||||||||||||||||||
Total | $ | 464,827 | $ | — | $ | 464,827 | $ | 274,152 | $ | — | $ | 274,152 |
| | | | | | | | | | | | | | | | | | |
| | March 31, 2023 | | December 31, 2022 | ||||||||||||||
| | | | | Less Than | | Greater Than | | | | | Less Than | | Greater Than | ||||
| | | | 90 Days | | 90 Days | | | | 90 Days | | 90 Days | ||||||
|
| UPB |
| Past Due |
| Past Due |
| UPB |
| Past Due |
| Past Due | ||||||
Multifamily | | $ | 2,605 | | $ | — | | $ | 2,605 | | $ | 2,605 | | $ | — | | $ | 2,605 |
Retail | | | 3,445 | | | — | | | 3,445 | | | 3,445 | | | — | | | 3,445 |
Commercial | | | 1,700 | | | — | | | 1,700 | | | 1,700 | | | — | | | 1,700 |
Total | | $ | 7,750 | | $ | — | | $ | 7,750 | | $ | 7,750 | | $ | — | | $ | 7,750 |
13
At both March 31, 2023a fixed pay rate of 3.00% and December 31, 2022, we had no loans contractually past due 90 days or more that are still accruing interest. Duringan accrual rate of 3.00% for a total fixed rate of 6.00% for a period of eighteen months, after which the three months ended March 31, 2023interest rate resumes to the original rate for the duration of the loan. The new borrower was also required to fund $10.5 million over time: $2.5 million in interest reserves, which was funded at the closing of the loan assumption, and 2022, we received $0.6$8.0 million in capital improvements within fifteen months. If the new borrower fails to timely complete the required capital improvements, it will be required to fund a renovation reserve at the lesser of (1) $2.5 million and zero, respectively, of interest income on nonaccrual loans.
(2) the difference between the $8.0 million capital commitment and the costs actually incurred for such capital improvements. The key principal is also personally guaranteeing the $8.0 million capital improvement.
Given the transitional nature of some of our real estate loans, we may require funds to be placed into an interest reserve, based on contractual requirements, to cover debt service costs. At March 31, 2023 and December 31, 2022, we had total interest reserves of $118.0 million and $123.7 million, respectively, on 479 loans and 480 loans, respectively, with an aggregate UPB of $7.48 billion and $7.70 billion, respectively.
Subsequent Event
| | | | | | |
|
| March 31, 2023 |
| December 31, 2022 | ||
Fannie Mae | | $ | 316,283 | | $ | 173,020 |
FHA | | | 68,008 | | | 21,021 |
Freddie Mac | |
| 41,813 | | | 8,938 |
Private Label | | | 33,897 | | | 152,735 |
SFR - Fixed Rate | | | 8,737 | | | 12,352 |
| |
| 468,738 | | | 368,066 |
Fair value of future MSR | | | 7,387 | | | 5,557 |
Unrealized impairment loss | | | (1,565) | | | (15,703) |
Unearned discount | |
| (4,958) | | | (3,850) |
Loans held-for-sale, net | | $ | 469,602 | | $ | 354,070 |
March 31, 2024 | December 31, 2023 | ||||||||||
Fannie Mae | $ | 209,743 | $ | 477,212 | |||||||
Freddie Mac | 90,658 | 50,235 | |||||||||
Private Label | 11,350 | 11,350 | |||||||||
SFR - Fixed Rate | 8,683 | 8,696 | |||||||||
FHA | 4,309 | 4,832 | |||||||||
324,743 | 552,325 | ||||||||||
Fair value of future MSR | 4,656 | 7,784 | |||||||||
Unrealized impairment loss | (1,971) | (1,989) | |||||||||
Unearned discount | (4,553) | (6,413) | |||||||||
Loans held-for-sale, net | $ | 322,875 | $ | 551,707 |
14
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2023, respectively.
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, 2023 | | Three Months Ended March 31, 2022 | ||||||||||||||
|
| Originated |
| Acquired |
| Total |
| Originated |
| Acquired |
| Total | ||||||
Beginning balance | | $ | 386,878 | | $ | 14,593 | | $ | 401,471 | | $ | 395,573 | | $ | 27,161 | | $ | 422,734 |
Additions | | | 13,886 | | | — | | | 13,886 | | | 26,971 | | | — | | | 26,971 |
Amortization | | | (14,287) | | | (1,129) | | | (15,416) | | | (12,927) | | | (2,045) | | | (14,972) |
Write-downs and payoffs | | | (2,841) | | | (466) | | | (3,307) | | | (11,556) | | | (1,141) | | | (12,697) |
Ending balance | | $ | 383,636 | | $ | 12,998 | | $ | 396,634 | | $ | 398,061 | | $ | 23,975 | | $ | 422,036 |
Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||
Originated | Acquired | Total | |||||||||||||||||||||||||||||||||
Beginning balance | $ | 382,582 | $ | 8,672 | $ | 391,254 | |||||||||||||||||||||||||||||
Additions | 12,684 | — | 12,684 | ||||||||||||||||||||||||||||||||
Amortization | (15,821) | (810) | (16,631) | ||||||||||||||||||||||||||||||||
Write-downs and payoffs | (1,698) | (89) | (1,787) | ||||||||||||||||||||||||||||||||
Ending balance | $ | 377,747 | $ | 7,773 | $ | 385,520 | |||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
Beginning balance | $ | 386,878 | $ | 14,593 | $ | 401,471 | |||||||||||||||||||||||||||||
Additions | 13,886 | — | 13,886 | ||||||||||||||||||||||||||||||||
Amortization | (14,287) | (1,129) | (15,416) | ||||||||||||||||||||||||||||||||
Write-downs and payoffs | (2,841) | (466) | (3,307) | ||||||||||||||||||||||||||||||||
Ending balance | $ | 383,636 | $ | 12,998 | $ | 396,634 |
| | | |
Year |
| Amortization | |
2023 (nine months ending 12/31/2023) |
| $ | 46,546 |
2024 |
| | 60,349 |
2025 |
| | 56,515 |
2026 |
| | 50,349 |
2027 | | | 45,525 |
Thereafter |
| | 137,350 |
Total | | $ | 396,634 |
Year | Amortization | |||||||
2024 (nine months ending 12/31/2024) | $ | 50,032 | ||||||
2025 | 63,963 | |||||||
2026 | 58,488 | |||||||
2027 | 53,971 | |||||||
2028 | 46,721 | |||||||
Thereafter | 112,345 | |||||||
Total | $ | 385,520 |
March 31, 2024 | ||||||||||||||||||||||||||
Product Concentrations | Geographic Concentrations | |||||||||||||||||||||||||
Product | UPB (1) | % of Total | State | UPB % of Total | ||||||||||||||||||||||
Fannie Mae | $ | 21,548,221 | 69 | % | New York | 11 | % | |||||||||||||||||||
Freddie Mac | 5,301,291 | 17 | % | Texas | 11 | % | ||||||||||||||||||||
Private Label | 2,524,013 | 8 | % | North Carolina | 8 | % | ||||||||||||||||||||
FHA | 1,365,329 | 4 | % | California | 7 | % | ||||||||||||||||||||
Bridge (2) | 380,712 | 1 | % | Georgia | 6 | % | ||||||||||||||||||||
SFR - Fixed Rate | 265,429 | 1 | % | Florida | 6 | % | ||||||||||||||||||||
Total | $ | 31,384,995 | 100 | % | New Jersey | 5 | % | |||||||||||||||||||
Illinois | 4 | % | ||||||||||||||||||||||||
Other (3) | 42 | % | ||||||||||||||||||||||||
Total | 100 | % | ||||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||
Fannie Mae | $ | 21,264,578 | 69 | % | Texas | 11 | % | |||||||||||||||||||
Freddie Mac | 5,181,933 | 17 | % | New York | 11 | % | ||||||||||||||||||||
Private Label | 2,510,449 | 8 | % | California | 8 | % | ||||||||||||||||||||
FHA | 1,359,624 | 4 | % | North Carolina | 8 | % | ||||||||||||||||||||
Bridge (2) | 379,425 | 1 | % | Georgia | 6 | % | ||||||||||||||||||||
SFR - Fixed Rate | 287,446 | 1 | % | Florida | 6 | % | ||||||||||||||||||||
Total | $ | 30,983,455 | 100 | % | New Jersey | 5 | % | |||||||||||||||||||
Illinois | 4 | % | ||||||||||||||||||||||||
Other (3) | 41 | % | ||||||||||||||||||||||||
Total | 100 | % |
| | | | | | | | | | |
March 31, 2023 | | |||||||||
Product Concentrations | | Geographic Concentrations | | |||||||
| | | | | | | | | UPB | |
Product |
| UPB (1) |
| % of Total |
| State |
| % of Total | | |
Fannie Mae | | $ | 19,508,256 | | 67 | % | Texas | | 12 | % |
Freddie Mac | | | 5,180,607 |
| 18 | % | New York | | 11 | % |
Private Label | | | 2,233,500 |
| 8 | % | California | | 8 | % |
FHA | | | 1,242,669 | | 4 | % | North Carolina | | 8 | % |
Bridge (2) | | | 467,881 | | 2 | % | Georgia | | 6 | % |
SFR - Fixed Rate | | | 279,712 | | 1 | % | Florida | | 5 | % |
Total | | $ | 28,912,625 | | 100 | % | New Jersey | | 5 | % |
| | | | | | | Illinois | | 4 | % |
| | | | | | | Other (3) | | 41 | % |
| | | | | | | Total | | 100 | % |
| | | | | | | | | | |
December 31, 2022 | | |||||||||
Fannie Mae |
| $ | 19,038,124 |
| 68 | % | Texas |
| 11 | % |
Freddie Mac | | | 5,153,207 | | 18 | % | New York | | 11 | % |
Private Label | | | 2,074,859 | | 8 | % | California | | 8 | % |
FHA | | | 1,155,893 | | 4 | % | North Carolina | | 8 | % |
Bridge (2) | | | 301,182 | | 1 | % | Georgia | | 6 | % |
SFR - Fixed Rate | | | 274,764 | | 1 | % | Florida | | 5 | % |
Total | | $ | 27,998,029 | | 100 | % | New Jersey | | 5 | % |
| | | | | | | Illinois | | 4 | % |
| | | | | | | Other (3) | | 42 | % |
| | | | | | | Total | | 100 | % |
16
The components of servicing revenue, net are as follows (in thousands):
| | | | | | |
|
| Three Months Ended March 31, | ||||
| | 2023 |
| 2022 | ||
Servicing fees | | $ | 29,210 | | $ | 31,748 |
Interest earned on escrows | |
| 17,003 | |
| 837 |
Prepayment fees | | | 2,075 | | | 16,138 |
Write-offs of MSRs | | | (3,307) | | | (12,697) |
Amortization of MSRs | |
| (15,416) | |
| (14,972) |
Servicing revenue, net | | $ | 29,565 | | $ | 21,054 |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||
Servicing fees | $ | 31,780 | $ | 29,210 | |||||||||||||||||||
Interest earned on escrows | 17,754 | 17,003 | |||||||||||||||||||||
Prepayment fees | 410 | 2,075 | |||||||||||||||||||||
Write-offs of MSRs | (1,787) | (3,307) | |||||||||||||||||||||
Amortization of MSRs | (16,631) | (15,416) | |||||||||||||||||||||
Servicing revenue, net | $ | 31,526 | $ | 29,565 |
| | | | | | | | | | | | | | | |
| | | | Net Carrying | | Unrealized | | Estimated | | Allowance for | |||||
|
| Face Value |
| Value |
| Gain (Loss) |
| Fair Value |
| Credit Losses | |||||
March 31, 2023 | | | | | | | | | | | | | | | |
APL certificates | | $ | 192,791 | | $ | 124,118 | | $ | (16,178) | | $ | 107,940 | | $ | 3,330 |
B Piece bonds | | | 39,750 | | | 29,770 | | | 3,253 | | | 33,023 | | | 1,695 |
Total | | $ | 232,541 | | $ | 153,888 | | $ | (12,925) | | $ | 140,963 | | $ | 5,025 |
December 31, 2022 | | | | | | | | | | | | | | | |
APL certificates | | $ | 192,791 | | $ | 123,475 | | $ | (13,348) | | $ | 110,127 | | $ | 2,783 |
B Piece bonds | | | 41,464 | | | 33,072 | | | 1,372 | | | 34,444 | | | 370 |
Total | | $ | 234,255 | | $ | 156,547 | | $ | (11,976) | | $ | 144,571 | | $ | 3,153 |
17
Face Value | Net Carrying Value | Unrealized Gain (Loss) | Estimated Fair Value | Allowance for Credit Losses | |||||||||||||||||||||||||
March 31, 2024 | |||||||||||||||||||||||||||||
APL certificates | $ | 192,791 | $ | 130,280 | $ | (28,703) | $ | 101,577 | $ | 2,157 | |||||||||||||||||||
B Piece bonds | 37,657 | 25,133 | 7,090 | 32,223 | 5,440 | ||||||||||||||||||||||||
Total | $ | 230,448 | $ | 155,413 | $ | (21,613) | $ | 133,800 | $ | 7,597 | |||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||
APL certificates | $ | 192,791 | $ | 128,865 | $ | (31,331) | $ | 97,534 | $ | 2,272 | |||||||||||||||||||
B Piece bonds | 37,704 | 26,414 | 5,442 | 31,856 | 3,984 | ||||||||||||||||||||||||
Total | $ | 230,495 | $ | 155,279 | $ | (25,889) | $ | 129,390 | $ | 6,256 |
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A summary of the changes in the allowance for credit losses for our securities held-to-maturity is as follows (in thousands):
| | | | | | | | | |
| | Three Months Ended March 31, 2023 | |||||||
| | APL | | B Piece | | | | ||
|
| Certificates |
| Bonds |
| Total | |||
Beginning balance | | $ | 2,783 | | $ | 370 | | $ | 3,153 |
Provision for credit loss expense/(reversal) | |
| 547 | |
| 1,325 | |
| 1,872 |
Ending balance | | $ | 3,330 | | $ | 1,695 | | $ | 5,025 |
Three Months Ended March 31, 2024 | |||||||||||||||||
APL Certificates | B Piece Bonds | Total | |||||||||||||||
Beginning balance | $ | 2,272 | $ | 3,984 | $ | 6,256 | |||||||||||
Provision for credit loss expense/(reversal) | (115) | 1,456 | 1,341 | ||||||||||||||
Ending balance | $ | 2,157 | $ | 5,440 | $ | 7,597 | |||||||||||
Investments in Equity Affiliates at | UPB of Loans to Equity Affiliates at March 31, 2024 | |||||||||||||||||||
Equity Affiliates | March 31, 2024 | December 31, 2023 | ||||||||||||||||||
Arbor Residential Investor LLC | $ | 34,459 | $ | 32,743 | $ | — | ||||||||||||||
AWC Real Estate Opportunity Partners I LP | 20,064 | 11,671 | — | |||||||||||||||||
Fifth Wall Ventures | 14,184 | 13,365 | — | |||||||||||||||||
AMAC Holdings III LLC | 13,047 | 13,591 | — | |||||||||||||||||
ARSR DPREF I LLC | 5,100 | 5,163 | — | |||||||||||||||||
Lightstone Value Plus REIT L.P. | 1,895 | 1,895 | — | |||||||||||||||||
The Park at Via Terrossa | 620 | — | — | |||||||||||||||||
Docsumo Pte. Ltd. | 450 | 450 | — | |||||||||||||||||
JT Prime | 425 | 425 | — | |||||||||||||||||
West Shore Café | — | — | 1,688 | |||||||||||||||||
Lexford Portfolio | — | — | — | |||||||||||||||||
East River Portfolio | — | — | — | |||||||||||||||||
Total | $ | 90,244 | $ | 79,303 | $ | 1,688 |
| | | | | | | | | |
| | | | | | | | UPB of Loans to | |
| | Investments in Equity Affiliates at | | Equity Affiliates at | |||||
Equity Affiliates |
| March 31, 2023 |
| December 31, 2022 |
| March 31, 2023 | |||
Arbor Residential Investor LLC | | $ | 46,141 | | $ | 46,951 | | $ | — |
AMAC Holdings III LLC | | | 14,791 | | | 15,825 | | | — |
Fifth Wall Ventures | | | 13,939 | | | 13,584 | | | — |
Lightstone Value Plus REIT L.P. | | | 1,895 | | | 1,895 | | | — |
Docsumo Pte. Ltd. | | | 450 | | | 450 | | | — |
JT Prime | |
| 425 | |
| 425 | |
| — |
North Vermont Avenue | | | — | | | — | | | — |
West Shore Café | | | — | | | — | | | 1,688 |
Lexford Portfolio | | | — | | | — | | | — |
East River Portfolio | |
| — | |
| — | |
| — |
Total | | $ | 77,641 | | $ | 79,130 | | $ | 1,688 |
Fifth Wall Ventures (“Fifth Wall”). We funded an additional $0.4 million and $4.8 million during the first quarters of 2023 and 2022, respectively.
Docsumo Pte. Ltd. (“Docsumo”). In the first quarter of 2022, we invested $0.5contributed $0.6 million for a noncontrolling4.96% interest in Docsumo, a startup company that converts unstructured documents, such as bank statements and pay stubs, to accurate structured data and checks documents for fraud, such as photoshopped layers and font changes, using artificial intelligence.
multifamily property.
18
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Lexford Portfolio. During the three months ended March 31, 2023, we received distributions of $4.7 million, which were classified as returns on capital and recognized as income from equity affiliates.
paid-off, which was recognized as income from equity affiliates.
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
Current Maturity | Extended Maturity | Note Rate Type | Debt Carrying Value (1) | Collateral Carrying Value | Wtd. Avg. Note Rate | Debt Carrying Value (1) | Collateral Carrying Value | ||||||||||||||||||||||||||||||||||||||||
Structured Business | |||||||||||||||||||||||||||||||||||||||||||||||
$1.9B joint repurchase facility (2)(3) | Jul. 2025 | Jul. 2026 | V | $ | 783,102 | $ | 1,268,862 | 7.79 | % | $ | 868,077 | $ | 1,371,436 | ||||||||||||||||||||||||||||||||||
$1B repurchase facility (2) | Aug. 2025 | Aug. 2026 | V | 346,099 | 537,148 | 7.85 | % | 385,779 | 589,533 | ||||||||||||||||||||||||||||||||||||||
$1B repurchase facility | (6) | N/A | V | 440,959 | 588,623 | 8.39 | % | 447,490 | 597,205 | ||||||||||||||||||||||||||||||||||||||
$499M repurchase facility (2)(4) | Oct. 2024 | N/A | V | 396,650 | 565,610 | 7.81 | % | 355,328 | 506,753 | ||||||||||||||||||||||||||||||||||||||
$350M repurchase facility | Mar. 2025 | Mar. 2026 | V | 151,448 | 228,535 | 7.54 | % | 262,820 | 362,465 | ||||||||||||||||||||||||||||||||||||||
$250M credit facility | Mar. 2026 | (7) | V | 18,166 | 36,470 | 8.71 | % | — | — | ||||||||||||||||||||||||||||||||||||||
$250M repurchase facility | Jul. 2024 | N/A | V | 13,903 | 23,088 | 7.29 | % | 17,964 | 23,088 | ||||||||||||||||||||||||||||||||||||||
$250M credit facility | Oct. 2025 | Oct. 2026 | V | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
$200M credit facility | Oct. 2024 | N/A | V | 8,818 | 13,692 | 7.13 | % | 32,579 | 41,522 | ||||||||||||||||||||||||||||||||||||||
$200M repurchase facility | Mar. 2025 | Mar. 2026 | V | 58,464 | 92,615 | 8.00 | % | 45,969 | 68,762 | ||||||||||||||||||||||||||||||||||||||
$200M repurchase facility | Jan. 2025 | N/A | V | 106,950 | 141,130 | 7.40 | % | 107,324 | 141,130 | ||||||||||||||||||||||||||||||||||||||
$150M repurchase facility | Oct. 2025 | Oct. 2026 | V | 91,858 | 124,003 | 8.46 | % | 120,610 | 162,068 | ||||||||||||||||||||||||||||||||||||||
$126M loan specific credit facilities | May 2024 to Sept. 2025 | Aug. 2025 to Aug. 2027 | V/F | 125,819 | 170,237 | 6.77 | % | 120,328 | 161,700 | ||||||||||||||||||||||||||||||||||||||
$50M credit facility | Apr. 2025 | N/A | V | 29,200 | 36,500 | 7.54 | % | 29,200 | 36,500 | ||||||||||||||||||||||||||||||||||||||
$40M credit facility | Apr. 2026 | Apr. 2027 | V | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
$35M working capital facility | Jul. 2024 | N/A | V | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Repurchase facility - securities (2)(5) | N/A | N/A | V | 30,084 | — | 7.12 | % | 31,033 | — | ||||||||||||||||||||||||||||||||||||||
Structured Business total | $ | 2,601,520 | $ | 3,826,513 | 7.84 | % | $ | 2,824,501 | $ | 4,062,162 | |||||||||||||||||||||||||||||||||||||
Agency Business | |||||||||||||||||||||||||||||||||||||||||||||||
$750M ASAP agreement | N/A | N/A | V | $ | 83,866 | $ | 83,961 | 6.47 | % | $ | 73,011 | $ | 73,781 | ||||||||||||||||||||||||||||||||||
$500M repurchase facility | Nov. 2024 | N/A | V | 64,632 | 65,065 | 6.81 | % | 115,730 | 241,895 | ||||||||||||||||||||||||||||||||||||||
$200M credit facility | Mar. 2025 | N/A | V | 129,967 | 130,604 | 6.74 | % | 187,138 | 187,185 | ||||||||||||||||||||||||||||||||||||||
$100M joint repurchase facility (2)(3) | Jul. 2025 | Jul. 2026 | V | 7,912 | 11,350 | 7.74 | % | 7,833 | 11,350 | ||||||||||||||||||||||||||||||||||||||
$100M credit facility | Jul. 2024 | N/A | V | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
$50M credit facility | Sept. 2024 | N/A | V | 25,055 | 25,080 | 6.69 | % | 29,083 | 29,418 | ||||||||||||||||||||||||||||||||||||||
$1M repurchase facility (2)(4) | Oct. 2024 | N/A | V | 531 | 853 | 7.79 | % | 531 | 866 | ||||||||||||||||||||||||||||||||||||||
Agency Business total | $ | 311,963 | $ | 316,913 | 6.71 | % | $ | 413,326 | $ | 544,495 | |||||||||||||||||||||||||||||||||||||
Consolidated total | $ | 2,913,483 | $ | 4,143,426 | 7.72 | % | $ | 3,237,827 | $ | 4,606,657 |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | March 31, 2023 | | December 31, 2022 | ||||||||||
| | | | | | Note | | Debt | | Collateral | | | | Debt | | Collateral | ||||
| | Current | | Extended | | Rate | | Carrying | | Carrying | | Wtd. Avg. | | Carrying | | Carrying | ||||
|
| Maturity |
| Maturity |
| Type |
| Value (1) |
| Value |
| Note Rate |
| Value (1) |
| Value | ||||
Structured Business | | | | | | | | | | | | | | | | | | | | |
$2.5B joint repurchase facility (2) | | Mar. 2024 | | Mar. 2025 | | V | | $ | 1,336,305 | | $ | 1,876,423 | | 7.26 | % | $ | 1,516,657 | | $ | 2,099,447 |
$1B repurchase facility (2) | | Dec. 2023 | | N/A | | V | |
| 391,056 | |
| 559,341 | | 6.97 | % |
| 498,666 | | | 703,740 |
$500M repurchase facility | | (3) | | N/A | | V | | | 198,152 | | | 240,799 | | 7.89 | % | | 154,653 | | | 188,563 |
$499M repurchase facility (2)(4) | | Oct. 2023 | | N/A | | V | | | 339,819 | | | 487,321 | | 7.22 | % | | 351,056 | | | 504,506 |
$450M repurchase facility | | Mar. 2024 | | Mar. 2026 | | V | | | 319,106 | | | 419,485 | | 7.03 | % | | 344,237 | | | 450,736 |
$450M repurchase facility | | Oct. 2023 | | Oct. 2024 | | V | | | 102,470 | | | 131,924 | | 6.57 | % | | 186,639 | | | 239,678 |
$400M credit facility | | July 2023 | | N/A | | V | | | 33,232 | | | 43,383 | | 6.83 | % | | 33,221 | | | 43,238 |
$225M credit facility | | Oct. 2023 | | Oct. 2024 | | V | |
| 64,877 | | | 116,288 | | 7.52 | % | | 47,398 | | | 81,119 |
$200M repurchase facility | | Mar. 2024 | | Mar. 2025 | | V | | | 45,769 | |
| 65,401 | | 7.52 | % |
| 32,494 | | | 47,750 |
$200M repurchase facility | | Jan. 2024 | | Jan. 2025 | | V | |
| 147,948 | | | 187,508 | | 6.92 | % | | 154,516 | | | 200,099 |
$169M loan specific credit facilities | | May 2023 to Aug. 2025 | | May 2023 to Aug. 2027 | | V/F | | | 169,111 | |
| 238,458 | | 6.97 | % |
| 156,107 | | | 225,805 |
$50M credit facility | | Apr. 2024 | | Apr. 2025 | | V | |
| 29,199 | | | 36,500 | | 7.07 | % | | 29,194 | | | 36,500 |
$35M working capital facility | | Apr. 2024 | | N/A | | V | | | — | | | — | | — | | | — | | | — |
$25M credit facility | | Oct. 2024 | | N/A | | V | | | 18,747 | | | 24,475 | | 7.57 | % | | 18,701 | | | 24,572 |
$25M credit facility | | Apr. 2026 | | Apr. 2027 | | V | | | — | | | — | | — | | | — | | | — |
Repurchase facility - securities (2)(5) | | N/A | | N/A | | V | | | 33,100 | | | — | | 6.59 | % | | 12,832 | | | — |
Structured Business total | | | | | | | | $ | 3,228,891 | | $ | 4,427,306 | | 7.18 | % | $ | 3,536,371 | | $ | 4,845,753 |
| | | | | | | | | | | | | | | | | | | | |
Agency Business | | | | | | | | | | | | | | | | | | | | |
$750M ASAP agreement | | N/A | | N/A | | V | | $ | 82,581 | | $ | 82,679 | | 5.78 | % | $ | 29,476 | | $ | 30,291 |
$500M joint repurchase facility (2) | | Mar. 2024 | | Mar. 2025 | | V | | | 8,047 | | | 11,350 | | 7.03 | % | | 104,629 | | | 135,641 |
$500M repurchase facility | | Nov. 2023 | | N/A | | V | | | 112,978 | | | 125,336 | | 6.18 | % | | 66,778 | | | 66,866 |
$200M credit facility | | Mar. 2024 | | N/A | | V | | | 167,480 | | | 167,681 | | 6.27 | % | | 31,475 | | | 33,177 |
$150M credit facility | | July 2023 | | N/A | | V | | | 50,365 | | | 50,408 | | 6.33 | % | | 57,887 | | | 57,974 |
$50M credit facility | | Sept. 2023 | | N/A | | V | | | — | | | — | | — | | | 14,664 | | | 14,671 |
$1M repurchase facility (2)(4) | | Oct. 2023 | | N/A | | V | | | 534 | | | 907 | | 7.18 | % | | 534 | | | 920 |
Agency Business total | | | | | | | | $ | 421,985 | | $ | 438,361 | | 6.17 | % | $ | 305,443 | | $ | 339,540 |
Consolidated total | | | | | | | | $ | 3,650,876 | | $ | 4,865,667 | | 7.06 | % | $ | 3,841,814 | | $ | 5,185,293 |
V = 2025. Borrowings and the corresponding collateral under our securitized debt transactions are as follows ($ in thousands): Debt Collateral (3) Loans Cash Carrying Wtd. Avg. Carrying Restricted March 31, 2023 Face Value Value (1) Rate (2) UPB Value Cash (4) CLO 19 $ 872,812 $ 867,037 7.33 % $ 985,430 $ 980,805 $ 34,882 CLO 18 1,652,812 1,646,248 6.77 % 1,970,977 1,963,706 — CLO 17 1,714,125 1,708,200 6.63 % 1,939,977 1,933,198 129,142 CLO 16 1,237,500 1,232,352 6.26 % 1,411,145 1,405,680 55,931 CLO 15 674,412 671,983 6.32 % 607,100 604,704 186,520 CLO 14 655,475 653,034 6.27 % 673,732 671,839 73,802 CLO 13 294,477 293,022 6.76 % 400,617 399,695 24,175 CLO 12 203,027 202,375 6.93 % 257,714 256,655 27,900 Total CLOs 7,304,640 7,274,251 6.63 % 8,246,692 8,216,282 532,352 Q Series securitization 236,878 234,221 6.87 % 315,837 314,166 — Total securitized debt $ 7,541,518 $ 7,508,472 6.64 % $ 8,562,529 $ 8,530,448 $ 532,352 December 31, 2022 CLO 19 $ 872,812 $ 866,605 6.75 % $ 952,268 $ 947,336 $ 64,300 CLO 18 1,652,812 1,645,711 6.19 % 1,899,174 1,891,215 85,970 CLO 17 1,714,125 1,707,676 6.16 % 1,911,866 1,904,732 145,726 CLO 16 1,237,500 1,231,887 5.79 % 1,307,244 1,301,794 106,495 CLO 15 674,412 671,532 5.84 % 797,755 795,078 2,861 CLO 14 655,475 652,617 5.80 % 732,247 730,057 37,090 CLO 13 462,769 461,005 6.03 % 552,182 550,924 37,875 CLO 12 379,283 378,331 6.09 % 466,474 465,003 500 Total CLOs 7,649,188 7,615,364 6.10 % 8,619,210 8,586,139 480,817 Q Series securitization 236,878 233,906 6.30 % 315,837 313,965 — Total securitized debt $ 7,886,066 $ 7,849,270 6.11 % $ 8,935,047 $ 8,900,104 $ 480,817 CLO down Senior March 31, 2023 December 31, 2022 Unsecured Issuance Carrying Wtd. Avg. Carrying Wtd. Avg. Notes Date Maturity UPB Value (1) Rate (2) UPB Value (1) Rate (2) 7.75% Notes (3) Mar. 2023 Mar. 2026 $ 95,000 $ 93,518 7.75 % $ — $ — — 8.50% Notes (3) Oct. 2022 Oct. 2027 150,000 147,647 8.50 % 150,000 147,519 8.50 % 5.00% Notes (3) Dec. 2021 Dec. 2028 180,000 177,557 5.00 % 180,000 177,450 5.00 % 4.50% Notes (3) Aug. 2021 Sept. 2026 270,000 267,136 4.50 % 270,000 266,926 4.50 % 5.00% Notes (3) Apr. 2021 Apr. 2026 175,000 173,073 5.00 % 175,000 172,917 5.00 % 8.00% Notes (3) Apr. 2020 Apr. 2023 — — — 70,750 70,613 8.00 % 4.50% Notes (3) Mar. 2020 Mar. 2027 275,000 273,081 4.50 % 275,000 272,960 4.50 % 4.75% Notes (4) Oct. 2019 Oct. 2024 110,000 109,457 4.75 % 110,000 109,369 4.75 % 5.75% Notes (4) Mar. 2019 Apr. 2024 90,000 89,611 5.75 % 90,000 89,514 5.75 % 5.625% Notes (4) Mar. 2018 May 2023 78,850 78,819 5.63 % 78,850 78,726 5.63 % $ 1,423,850 $ 1,409,899 5.42 % $ 1,399,600 $ 1,385,994 5.40 % Variable Note Rate;variable note rate; F = Fixed Note Ratefixed note rateAt March 31, 2024 and December 31, 2023, debt carrying value for the Structured Business was net of unamortized deferred finance costs of $7.4 million and $4.8 million, respectively, and for the Agency Business was net of unamortized deferred finance costs of $0.3 million and $0.3 million, respectively.(1)At March 31, 2023 and December 31, 2022, debt carrying value for the Structured Business was net of unamortized deferred finance costs of $11.1 million and $13.3 million, respectively, and for the Agency Business was net of unamortized deferred finance costs of $0.8 million and $0.9(2)These facilities are subject to margin call provisions associated with changes in interest spreads.(3)The commitment amount under this repurchase facility expires six months after the lender provides written notice. We then have an additional six months to repurchase the underlying loans.(4)A portion of this facility was used to finance a fixed rate SFR permanent loan reported through our Agency Business.(5)At March 31, 2023 , this facility was collateralized by certificates retained by us from our Freddie Mac Q Series securitization (“Q Series securitization”) with a principal balance of $47.4 million. At December 31, 2022, this facility was collateralized by B Piece bonds with a carrying value of $33.1 million.19During 2022 and 2023, several(6)The commitment amount under this repurchase facility expires six months after the lender provides written notice. We then have an additional six months to repurchase the underlying loans.ourthis credit and repurchase facilities,facility in both our one-year increments, subject to lender approval. and Agency Business, converted from a LIBOR-based interest rate to a SOFR-based interest rate for new financings. Existing financings generally remain at a LIBOR-based interest rate.Structured Business20232024 and December 31, 2022,2023, the weighted average interest rate for the credit and repurchase facilities of our Structured Business, including certain fees and costs, such as structuring, commitment, non-use and warehousing fees, was 7.57%8.33% and 6.95%8.26%, respectively. The leverage on our loan and investment portfolio financed through our credit and repurchase facilities, excluding the securities repurchase facility and the working capital facility, was 72%67% and 73%69% at March 31, 20232024 and December 31, 2022,2023, respectively.2023,2024, we amended a $500.0 million repurchase facility to increase the facility size to $1.0 billion.exercise adecrease the facility size to $350.0 million and exercised one of two remaining one-year extension optionoptions to extend maturity to March 2024 and amend the interest rate to a minimum of SOFR plus 2.00%.Agency Business2023,2024, we amendedentered into a $200.0$250.0 million creditrepurchase facility to finance non-performing loans that matures in March 2026, with the ability to extend the maturity in one-year increments, subject to March 2024 and amend thelender approval. The facility has an interest rate toof SOFR plus 1.40%3.25%, with a SOFR floor of 2.50%.20ARBOR REALTY TRUST, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)Debt Collateral (3) Loans Cash March 31, 2024 Face Value Carrying
Value (1)Wtd. Avg.
Rate (2)UPB Carrying
ValueRestricted
Cash (4)CLO 19 $ 872,812 $ 868,814 7.80 % $ 999,513 $ 997,140 $ 25,097 CLO 18 1,652,812 1,648,440 7.25 % 1,751,575 1,748,518 280,922 CLO 17 1,714,125 1,710,343 7.11 % 1,931,235 1,927,741 121,339 CLO 16 (5) 1,237,500 1,234,248 6.74 % 1,432,124 1,429,369 21,800 CLO 15 (5) 582,218 581,595 6.84 % 720,663 719,523 — CLO 14 (5) 467,204 466,385 6.90 % 571,929 570,921 20,164 Total CLOs 6,526,671 6,509,825 7.13 % 7,407,039 7,393,212 469,322 Q Series securitization 183,448 182,133 7.34 % 244,598 243,927 — Total securitized debt $ 6,710,119 $ 6,691,958 7.14 % $ 7,651,637 $ 7,637,139 $ 469,322 December 31, 2023 CLO 19 $ 872,812 $ 868,359 7.84 % $ 1,031,772 $ 1,028,669 $ 4,527 CLO 18 1,652,812 1,647,885 7.29 % 1,784,921 1,780,930 244,629 CLO 17 1,714,125 1,709,800 7.14 % 1,870,388 1,865,878 203,938 CLO 16 1,237,500 1,233,769 6.76 % 1,456,872 1,453,297 847 CLO 15 (5) 674,412 673,367 6.82 % 734,120 732,498 42,600 CLO 14 (5) 589,345 588,176 6.82 % 680,814 679,469 33,271 Total CLOs 6,741,006 6,721,356 7.14 % 7,558,887 7,540,741 529,812 Q Series securitization 215,278 213,654 7.38 % 287,038 286,053 — Total securitized debt $ 6,956,284 $ 6,935,010 7.15 % $ 7,845,925 $ 7,826,794 $ 529,812 (1)Debt carrying value is net of $33.0 million and $36.8 million of deferred financing fees at March 31, 2023 and December 31, 2022, respectively.(2)At March 31, 2023 and December 31, 2022, the aggregate weighted average note rate for our collateralized loan obligations (“CLOs”), including certain fees and costs, was 6.86% and 6.32%, respectively.(3)At March 31, 2023, five loans with an aggregate UPB of $121.4CLO indentures. At December 31, 2022, there were no collateral deemed a “credit risk” as defined by the CLO indentures. Credit risk assets are generally defined as one that, in the CLO collateral manager's reasonable business judgment, has a significant risk of becoming a defaulted asset.(4)Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs. Does not include restricted cash related to interest payments, delayed fundings and expenses totaling $167.5 million and $230.0 million at March 31, 2023 and December 31, 2022, respectively.13indentures. A credit risk asset is generally defined as one that, in the CLO collateral manager's reasonable business judgment, has a significant risk of becoming a defaulted asset.12.16 ended in September 2023, December 2023 and March 2024, respectively.2023, $168.32024, outstanding notes totaling $122.1 million on CLO 14, $92.2 million on CLO 15, and $176.3$31.8 million of CLO 13 and CLO 12, respectively,on the Q Series securitization have been paid down..21ARBOR REALTY TRUST, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(in($ in thousands):Senior
Unsecured NotesIssuance
DateMarch 31, 2024 December 31, 2023 Maturity UPB Carrying
Value (1)Wtd. Avg.
Rate (2)UPB Carrying
Value (1)Wtd. Avg.
Rate (2) 7.75% Notes (3) Mar. 2023 Mar. 2026 $ 95,000 $ 93,840 7.75 % $ 95,000 $ 93,697 7.75 % 8.50% Notes (3) Oct. 2022 Oct. 2027 150,000 148,153 8.50 % 150,000 $ 148,023 8.50 % 5.00% Notes (3) Dec. 2021 Dec. 2028 180,000 177,981 5.00 % 180,000 $ 177,875 5.00 % 4.50% Notes (3) Aug. 2021 Sept. 2026 270,000 267,973 4.50 % 270,000 $ 267,763 4.50 % 5.00% Notes (3) Apr. 2021 Apr. 2026 175,000 173,698 5.00 % 175,000 $ 173,542 5.00 % 4.50% Notes (3) Mar. 2020 Mar. 2027 275,000 273,563 4.50 % 275,000 $ 273,444 4.50 % 4.75% Notes (4) Oct. 2019 Oct. 2024 110,000 109,805 4.75 % 110,000 $ 109,721 4.75 % 5.75% Notes (4) Mar. 2019 Apr. 2024 (5) 90,000 90,000 5.75 % 90,000 $ 89,903 5.75 % $ 1,345,000 $ 1,335,013 5.41 % $ 1,345,000 $ 1,333,968 5.41 % (1)At March 31, 2024 and December 31, 2023, the carrying value is net of deferred financing fees of $10.0 million and $11.0 million, respectively.(1)At March 31, 2023 and December 31, 2022, the carrying value is net of deferred financing fees of $14.0 million and $13.6 million, respectively.(2)At March 31, 2023 and December 31, 2022, the aggregate weighted average note rate, including certain fees and costs, was 5.72% and 5.69%, respectively.(3) These notes can be redeemed by us prior to three months before the maturity date, at a redemption price equal to 100% of the aggregate principal amount, plus a “make-whole” premium and accrued and unpaid interest. We have the right to redeem the notes within three months prior to the maturity date at a redemption price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest.(4)These notes can be redeemed by us at any time prior to the maturity date, at a redemption price equal to 100% of the aggregate principal amount, plus a “make-whole” premium and accrued and unpaid interest. We have the right to redeem the notes on the maturity date at a redemption price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest.In March 2023, we issued $95.0 million aggregate principal amount, of 7.75% senior unsecuredplus a “make-whole” premium and accrued and unpaid interest. We have the right to redeem the notes due in 2026 inwithin three months prior to the maturity date at a private offering. We received net proceeds of $93.4 million from the issuance, after deducting the placement agent commission and other offering expenses. We used $70.8 millionredemption price equal to 100% of the proceeds, which includesaggregate principal amount, plus accrued interest and other fees,unpaid interest.
on the maturity date at a redemption price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest.
Subsequent Event.In May 2023, our 5.625% senior unsecuredApril 2024, these notes matured and were redeemed for cash.
| | | | | | | | | |
| | | | Unamortized Deferred | | Net Carrying | |||
Period |
| UPB |
| Financing Fees |
| Value | |||
March 31, 2023 | | $ | 287,500 | | $ | 6,454 | | $ | 281,046 |
| | | | | | | | | |
December 31, 2022 | | $ | 287,500 | | $ | 7,144 | | $ | 280,356 |
22
Period | UPB | Unamortized Deferred Financing Fees | Net Carrying Value | |||||||||||||||||
March 31, 2024 | $ | 287,500 | $ | 3,724 | $ | 283,776 | ||||||||||||||
December 31, 2023 | $ | 287,500 | $ | 4,382 | $ | 283,118 |
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
During both the three months ended March 31, 2024 and 2023, we incurred interest expense on the notes totaling $6.1 million, of which $5.4 million and $0.7 million related to the cash coupon and deferred financing fees, respectively. During the three months ended March 31, 2022, we incurred interest expense on the notes totaling $3.8 million, of which $3.1 million and $0.7 million related to the cash coupon and deferred financing fees, respectively. Including the amortization of the deferred financing fees, our weighted average total cost of the notes was 8.43% and 8.42% at both March 31, 20232024 and December 31, 2022.2023, respectively. At March 31, 2023,2024, the 7.50% convertible senior notes had a conversion rate of 59.931760.5723 shares of common stock per $1,000 of principal, which represented a conversion price of $16.69$16.51 per share of common stock.
2023.
2024.
| | | | | | | | | | | | | | | | | |
Cash Flow Triggers |
| CLO 12 |
| CLO 13 |
| CLO 14 |
| CLO 15 |
| CLO 16 |
| CLO 17 |
| CLO 18 |
| CLO 19 | |
Overcollateralization (1) | | | | | | | | | | | | | | | | | |
Current |
| 149.65 | % | 144.83 | % | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % |
Limit |
| 117.87 | % | 118.76 | % | 118.76 | % | 119.85 | % | 120.21 | % | 121.51 | % | 123.03 | % | 119.30 | % |
Pass / Fail |
| Pass | | Pass | | Pass | | Pass | | Pass | | Pass | | Pass |
| Pass | |
| | | | | | | | | | | | | | | | | |
Interest Coverage (2) | | | | | | | | | | | | | | | | | |
Current |
| 181.78 | % | 157.94 | % | 181.82 | % | 169.24 | % | 159.94 | % | 145.12 | % | 150.89 | % | 124.34 | % |
Limit |
| 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % |
Pass / Fail |
| Pass | | Pass | | Pass | | Pass | | Pass | | Pass | | Pass |
| Pass | |
23
Cash Flow Triggers | CLO 14 | CLO 15 | CLO 16 | CLO 17 | CLO 18 | CLO 19 | ||||||||||||||||||||||||||||||||
Overcollateralization (1) | ||||||||||||||||||||||||||||||||||||||
Current | 125.22 | % | 124.15 | % | 120.81 | % | 121.71 | % | 123.87 | % | 119.30 | % | ||||||||||||||||||||||||||
Limit | 118.76 | % | 119.85 | % | 120.21 | % | 121.51 | % | 123.03 | % | 119.30 | % | ||||||||||||||||||||||||||
Pass / Fail | Pass | Pass | Pass | Pass | Pass | Pass | ||||||||||||||||||||||||||||||||
Interest Coverage (2) | ||||||||||||||||||||||||||||||||||||||
Current | 158.39 | % | 167.06 | % | 147.54 | % | 142.84 | % | 138.90 | % | 128.48 | % | ||||||||||||||||||||||||||
Limit | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | 120.00 | % | ||||||||||||||||||||||||||
Pass / Fail | Pass | Pass | Pass | Pass | Pass | Pass |
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(2)
The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us.
Determination (1) | CLO 14 | CLO 15 | CLO 16 | CLO 17 | CLO 18 | CLO 19 | ||||||||||||||||||||||||||||||||
April 2024 | 125.22 | % | 124.15 | % | 120.81 | % | 121.71 | % | 123.87 | % | 119.30 | % | ||||||||||||||||||||||||||
January 2024 | 120.00 | % | 120.85 | % | 120.81 | % | 121.71 | % | 123.87 | % | 120.30 | % | ||||||||||||||||||||||||||
October 2023 | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % | ||||||||||||||||||||||||||
July 2023 | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % | ||||||||||||||||||||||||||
April 2023 | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % |
| | | | | | | | | | | | | | | | | |
Determination (1) |
| CLO 12 |
| CLO 13 |
| CLO 14 |
| CLO 15 |
| CLO 16 |
| CLO 17 |
| CLO 18 |
| CLO 19 | |
April 2023 | | 149.65 | % | 144.83 | % | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % |
January 2023 | | 126.58 | % | 128.52 | % | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % |
October 2022 | | 118.87 | % | 119.76 | % | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % |
July 2022 | | 118.87 | % | 119.76 | % | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | 120.30 | % |
April 2022 | | 118.87 | % | 119.76 | % | 119.76 | % | 120.85 | % | 121.21 | % | 122.51 | % | 124.03 | % | — | |
The ratio will fluctuate based on the performance of the underlying assets, transfers of assets into the CLOs prior to the expiration of their respective replenishment dates, purchase or disposal of other investments, and loan payoffs. No payment due under the junior subordinated indentures may be paid if there is a default under any senior debt and the senior lender has sent notice to the trustee. The junior subordinated indentures are also cross-defaulted with each other.
| | | | | | |
| | Three Months Ended March 31, | ||||
|
| 2023 |
| 2022 | ||
Beginning balance | | $ | 57,168 | | $ | 56,064 |
Provisions for loss sharing | | | 4,567 | | | 133 |
Provisions reversal for loan repayments | | | (1,390) | | | (795) |
Recoveries (charge-offs), net | |
| (588) | | | (230) |
Ending balance | | $ | 59,757 | | $ | 55,172 |
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||
Beginning balance | $ | 71,634 | $ | 57,168 | |||||||||||||||||||
Provisions for loss sharing | 1,059 | 4,567 | |||||||||||||||||||||
Provisions reversal for loan repayments | (13) | (1,390) | |||||||||||||||||||||
Recoveries (charge-offs), net | 110 | (588) | |||||||||||||||||||||
Ending balance | $ | 72,790 | $ | 59,757 |
24
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
At March 31, 20232024 and December 31, 2022,2023, the maximum quantifiable liability associated with our guarantees under the Fannie Mae DUS agreement was $3.58$4.02 billion and $3.49$3.95 billion, respectively. The maximum quantifiable liability is not representative of the actual loss we would incur. We would be liable for this amount only if all of the loans we service for Fannie Mae, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.
Interest RateTreasury Futures and Credit Default Swaps (“Swaps”).Swaps. We enter into over-the-counter treasury futures and credit default swaps to hedge our interest rate and credit risk exposure inherent in (1) our held-for-sale Agency Business Private Label loans from the time the loans are rate locked until sale or securitization, and (2) our Agency Business SFR – fixed rate loans from the time the loans are originated until the time they can be financed with match term fixed rate securitized debt. Our interest rate swapstreasury futures typically have a three-month maturity and are tied to the five-year and ten-year swaptreasury rates. Our credit default swaps typically have a five-year maturity, are tied to the credit spreads of the underlying bond issuers and we typically hold our position until we price our Private Label loan securitizations. The SwapsThese instruments do not meet the criteria for hedge accounting, are cleared by a central clearing house and variation margin payments made in cash are treated as a legal settlement of the derivative itselfitself. Our agreements with the counterparties provide for bilateral collateral pledging based on the counterparties' market value. The counterparties have the right to re-pledge the collateral posted, but have the obligation to return the pledged collateral as opposedthe market value of the treasury futures change. Our policy is to record the asset and liability positions on a pledgenet basis. At March 31, 2024 and December 31, 2023, we had $1.8 million and $1.5 million, respectively included in others assets, which was
25
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A summary of our non-qualifying derivative financial instruments in our Agency Business is as follows ($ in thousands):
| | | | | | | | | | | | | |
| | March 31, 2023 | |||||||||||
| | | | | | | | | Fair Value | ||||
| | | | Notional | | Balance Sheet | | Derivative | | Derivative | |||
Derivative |
| Count |
| Value |
| Location |
| Assets |
| Liabilities | |||
Rate lock commitments | | 9 | | $ | 334,722 | | Other assets/other liabilities | | $ | 3,097 | | $ | (2,352) |
Forward sale commitments | | 48 | | | 760,826 | | Other assets/other liabilities | | | 6,679 | | | (1,022) |
Swaps | | 250 | | | 25,000 | | | | | — | | | — |
| | | | $ | 1,120,548 | | | | $ | 9,776 | | $ | (3,374) |
| | | | | | | | | | | | | |
|
| December 31, 2022 | |||||||||||
Rate lock commitments |
| 6 |
| $ | 91,472 |
| Other assets/other liabilities |
| $ | 354 |
| $ | (1,070) |
Forward sale commitments | | 27 | | | 294,451 | | Other assets/other liabilities | | | 1,151 | | | (3,827) |
Swaps | | 1,298 | | | 129,800 | | | | | — | | | — |
| | | | $ | 515,723 | | | | $ | 1,505 | | $ | (4,897) |
March 31, 2024 | ||||||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||||
Derivative | Count | Notional Value | Balance Sheet Location | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||
Rate lock commitments | 3 | $ | 114,784 | Other assets/other liabilities | $ | 1,071 | $ | (293) | ||||||||||||||||||||||||
Forward sale commitments | 23 | 419,494 | Other assets/other liabilities | 607 | (739) | |||||||||||||||||||||||||||
Treasury futures | 82 | 8,200 | — | — | ||||||||||||||||||||||||||||
$ | 542,478 | $ | 1,678 | $ | (1,032) | |||||||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||||||||
Rate lock commitments | 3 | $ | 26,800 | Other assets/other liabilities | $ | 428 | $ | (759) | ||||||||||||||||||||||||
Forward sale commitments | 33 | 559,079 | Other assets/other liabilities | 6,119 | (262) | |||||||||||||||||||||||||||
Treasury futures | 82 | 8,200 | — | — | ||||||||||||||||||||||||||||
$ | 594,079 | $ | 6,547 | $ | (1,021) |
| | | | | | | | | | | | | | | | | | |
| | March 31, 2023 | | December 31, 2022 | ||||||||||||||
| | Principal / | | Carrying | | Estimated | | Principal / | | Carrying | | Estimated | ||||||
|
| Notional Amount |
| Value |
| Fair Value |
| Notional Amount |
| Value |
| Fair Value | ||||||
Financial assets: | | | | | | | | | | | | | | | | | | |
Loans and investments, net | | $ | 13,643,724 | | $ | 13,430,985 | | $ | 13,634,147 | | $ | 14,456,123 | | $ | 14,254,674 | | $ | 14,468,418 |
Loans held-for-sale, net | | | 468,738 | | | 469,602 | | | 483,727 | | | 368,066 | | | 354,070 | | | 362,054 |
Capitalized mortgage servicing rights, net | | | n/a | | | 396,634 | | | 502,282 | | | n/a | | | 401,471 | | | 530,913 |
Securities held-to-maturity, net | | | 232,541 | | | 153,888 | | | 140,963 | | | 234,255 | | | 156,547 | | | 144,571 |
Derivative financial instruments | | | 591,688 | |
| 9,776 | |
| 9,776 | | | 111,950 | |
| 1,505 | |
| 1,505 |
| | | | | | | | | | | | | | | | | | |
Financial liabilities: | | | | | | | | | | | | | | | | | | |
Credit and repurchase facilities | | $ | 3,662,756 | | $ | 3,650,876 | | $ | 3,610,881 | | $ | 3,856,009 | | $ | 3,841,814 | | $ | 3,828,192 |
Securitized debt | | | 7,541,518 | |
| 7,508,472 | |
| 7,326,912 | | | 7,886,066 | |
| 7,849,270 | |
| 7,560,541 |
Senior unsecured notes | | | 1,423,850 | |
| 1,409,899 | |
| 1,257,377 | | | 1,399,600 | |
| 1,385,994 | |
| 1,262,560 |
Convertible senior unsecured notes | | | 287,500 | | | 281,046 | | | 264,141 | | | 287,500 | | | 280,356 | | | 287,834 |
Junior subordinated notes | | | 154,336 | |
| 143,322 | |
| 104,595 | | | 154,336 | |
| 143,128 | |
| 103,977 |
Derivative financial instruments | | | 503,860 | |
| 3,374 | |
| 3,374 | | | 273,973 | |
| 4,897 | |
| 4,897 |
March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
Principal / Notional Amount | Carrying Value | Estimated Fair Value | Principal / Notional Amount | Carrying Value | Estimated Fair Value | ||||||||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||||||||
Loans and investments, net | $ | 12,249,862 | $ | 12,001,544 | $ | 12,158,245 | $ | 12,615,006 | $ | 12,377,806 | $ | 12,452,563 | |||||||||||||||||||||||
Loans held-for-sale, net | 324,743 | 322,875 | 327,487 | 552,325 | 551,707 | 566,451 | |||||||||||||||||||||||||||||
Capitalized mortgage servicing rights, net | n/a | 385,520 | 518,391 | n/a | 391,254 | 510,472 | |||||||||||||||||||||||||||||
Securities held-to-maturity, net | 230,448 | 155,413 | 133,800 | 230,495 | 155,279 | 129,390 | |||||||||||||||||||||||||||||
Derivative financial instruments | 241,538 | 1,678 | 1,678 | 447,609 | 6,547 | 6,547 | |||||||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||||||||
Credit and repurchase facilities | $ | 2,921,206 | $ | 2,913,483 | $ | 2,908,678 | $ | 3,242,939 | $ | 3,237,827 | $ | 3,228,324 | |||||||||||||||||||||||
Securitized debt | 6,710,119 | 6,691,958 | 6,620,181 | 6,956,284 | 6,935,010 | 6,864,557 | |||||||||||||||||||||||||||||
Senior unsecured notes | 1,345,000 | 1,335,013 | 1,216,241 | 1,345,000 | 1,333,968 | 1,214,331 | |||||||||||||||||||||||||||||
Convertible senior unsecured notes | 287,500 | 283,776 | 287,500 | 287,500 | 283,118 | 301,156 | |||||||||||||||||||||||||||||
Junior subordinated notes | 154,336 | 144,096 | 107,096 | 154,336 | 143,896 | 106,444 | |||||||||||||||||||||||||||||
Derivative financial instruments | 292,740 | 1,032 | 1,032 | 138,270 | 1,021 | 1,021 |
26
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Level 3—Inputs reflect our best estimate of what market participants would use in pricing the asset or liability and are based on significant unobservable inputs that require a considerable amount of judgment and assumptions. Examples include certain mortgage and asset-backed securities, certain corporate debt and certain derivative instruments.
27
We measure certain financial assets and financial liabilities at fair value on a recurring basis. The fair values of these financial assets and liabilities are determined using the following input levels at March 31, 20232024 (in thousands):
| | | | | | | | | | | | | | | |
| | | | | | | | Fair Value Measurements Using Fair | |||||||
| | Carrying | | | | | Value Hierarchy | ||||||||
|
| Value |
| Fair Value |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Financial assets: | | | | | | | | | | | | | | | |
Derivative financial instruments | | $ | 9,776 | | $ | 9,776 | | $ | — | | $ | 6,679 | | $ | 3,097 |
| | | | | | | | | | | | | | | |
Financial liabilities: | | | | | | | | | | | | | | | |
Derivative financial instruments | | $ | 3,374 | | $ | 3,374 | | $ | — | | $ | 3,374 | | $ | — |
Carrying Value | Fair Value | Fair Value Measurements Using Fair Value Hierarchy | |||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||
Derivative financial instruments | $ | 1,678 | $ | 1,678 | $ | — | $ | 607 | $ | 1,071 | |||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||
Derivative financial instruments | $ | 1,032 | $ | 1,032 | $ | — | $ | 1,032 | $ | — |
Net Carrying Value | Fair Value | Fair Value Measurements Using Fair Value Hierarchy | |||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||
Impaired loans, net | |||||||||||||||||||||||||||||
Loans held-for-investment (1) | $ | 350,016 | $ | 350,016 | $ | — | $ | — | $ | 350,016 | |||||||||||||||||||
Loans held-for-sale (2) | 18,062 | 18,062 | — | 18,062 | — | ||||||||||||||||||||||||
$ | 368,078 | $ | 368,078 | $ | — | $ | 18,062 | $ | 350,016 |
| | | | | | | | | | | | | | | |
| | | | | | | Fair Value Measurements Using Fair | ||||||||
| | Net Carrying | | | | Value Hierarchy | |||||||||
|
| Value |
| Fair Value |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Financial assets: | | | | | | | | | | | | | | | |
Impaired loans, net | | | | | | | | | | | | | | | |
Loans held-for-investment (1) | | $ | 98,419 | | $ | 98,419 | | $ | — | | $ | — | | $ | 98,419 |
Loans held-for-sale (2) | | | 41,068 | | | 41,068 | | | — | | | 41,068 | | | — |
| | $ | 139,487 | | $ | 139,487 | | $ | — | | $ | 41,068 | | $ | 98,419 |
Loan impairment assessments. Loans held-for-investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for credit losses, when such loan or investment is deemed to be impaired. We consider a loan impaired when, based upon current information, it is probable that all amounts due for both principal and interest will not be collected according to the contractual terms of the loan agreement. We evaluate our loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance, and corresponding charge to the provision for credit losses, or an impairment loss. These valuations require significant judgments, which include assumptions regarding capitalization and discount rates, revenue growth rates, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan and other factors.
28
Quantitative information about Level 3 fair value measurements at March 31, 20232024 is as follows ($ in thousands):
| | | | | | | | | | |
|
| Fair Value |
| Valuation Techniques |
| Significant Unobservable Inputs |
| |||
Financial assets: | | | | | | | | | | |
Impaired loans: | | | | | | | | | | |
Land | | $ | 50,000 |
| Discounted cash flows |
| Discount rate | | 21.50 | % |
| | | | | |
| Revenue growth rate | | 3.00 | % |
| | | | | | | | | | |
| | | | | | | Discount rate | | 7.50 | % |
Office | | | 36,674 | | Discounted cash flows | | Capitalization rate | | 5.25 | % |
| | | | | | | Revenue growth rate | | 3.00 | % |
| | | | | | | | | | |
| | | | | | | Discount rate | | 11.25 | % |
Retail | | | 11,745 | | Discounted cash flows | | Capitalization rate | | 9.25 | % |
| | | | | | | Revenue growth rate | | 3.00 | % |
| | | | | | | | | | |
Derivative financial instruments: | | | | | | | | | | |
Rate lock commitments | | | 3,097 | | Discounted cash flows | | W/A discount rate | | 13.27 | % |
Fair Value | Valuation Techniques | Significant Unobservable Inputs | |||||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||
Impaired loans: | Weighted Average | Minimum / Maximum | |||||||||||||||||||||||||||
Multifamily | $ | 288,272 | Discounted cash flows | Capitalization rate | 6.31% | 6.00% - 7.00% | |||||||||||||||||||||||
Land | 49,999 | Discounted cash flows | Discount rate | 21.50% | 21.50% | ||||||||||||||||||||||||
Revenue growth rate | 3.00% | 3.00% | |||||||||||||||||||||||||||
Retail | 11,745 | Sales comparative | Price per acre | $165,128 | $165,128 | ||||||||||||||||||||||||
Derivative financial instruments: | |||||||||||||||||||||||||||||
Rate lock commitments | 1,071 | Discounted cash flows | W/A discount rate | 13.60% | 13.60% |
| | | | | | |
| | Fair Value Measurements Using | ||||
| | Significant Unobservable Inputs | ||||
| | Three Months Ended March 31, | ||||
|
| 2023 |
| 2022 | ||
Derivative assets and liabilities, net | | | | | | |
Beginning balance | | $ | 354 | | $ | 295 |
Settlements | | | (15,066) | | | (13,683) |
Realized gains recorded in earnings | | | 14,712 | | | 13,388 |
Unrealized gains recorded in earnings | | | 3,097 | | | 1,355 |
Ending balance | | $ | 3,097 | | $ | 1,355 |
Fair Value Measurements Using Significant Unobservable Inputs | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||
Derivative assets and liabilities, net | |||||||||||||||||||||||
Beginning balance | $ | 428 | $ | 354 | |||||||||||||||||||
Settlements | (9,436) | (15,066) | |||||||||||||||||||||
Realized gains recorded in earnings | 9,008 | 14,712 | |||||||||||||||||||||
Unrealized gains recorded in earnings | 1,071 | 3,097 | |||||||||||||||||||||
Ending balance | $ | 1,071 | $ | 3,097 |
March 31, 2024 | Notional/ Principal Amount | Fair Value of Servicing Rights | Interest Rate Movement Effect | Unrealized Impairment Loss | Total Fair Value Adjustment | |||||||||||||||||||||||||||
Rate lock commitments | $ | 114,784 | $ | 1,071 | $ | 84 | $ | — | $ | 1,155 | ||||||||||||||||||||||
Forward sale commitments | 419,494 | — | (84) | — | (84) | |||||||||||||||||||||||||||
Loans held-for-sale, net (1) | 324,743 | 4,656 | — | (1,971) | 2,685 | |||||||||||||||||||||||||||
Total | $ | 5,727 | $ | — | $ | (1,971) | $ | 3,756 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | Unrealized | | | | |
| | Notional/ | | Fair Value of | | Interest Rate | | Impairement | | Total Fair Value | |||||
March 31, 2023 |
| Principal Amount |
| Servicing Rights |
| Movement Effect |
| Loss |
| Adjustment | |||||
Rate lock commitments | | $ | 334,722 | | $ | 3,097 | | $ | 1,185 | | $ | — | | $ | 4,282 |
Forward sale commitments | | | 760,826 | | | — | | | (1,185) | | | — | | | (1,185) |
Loans held-for-sale, net (1) | | | 468,738 | | | 7,388 | | | — | | | (1,565) | | | 5,823 |
Total | | | | | $ | 10,485 | | $ | — | | $ | (1,565) | | $ | 8,920 |
Loans held-for-sale, net are recorded at the lower of cost or market on an aggregate basis and includes fair value adjustments related to estimated cash flows from MSRs. |
29
We measure certain assets and liabilities for which fair value is only disclosed. The fair value of these assets and liabilities are determined using the following input levels at March 31, 20232024 (in thousands):
| | | | | | | | | | | | | | | |
| | | | | | Fair Value Measurements Using Fair Value Hierarchy | |||||||||
|
| Carrying Value |
| Fair Value |
| Level 1 |
| Level 2 |
| Level 3 | |||||
Financial assets: | | | | | | | | | | | | | | | |
Loans and investments, net | | $ | 13,430,985 | | $ | 13,634,147 | | $ | — | | $ | — | | $ | 13,634,147 |
Loans held-for-sale, net | | | 469,602 | | | 483,727 | | | — | | | 476,339 | | | 7,388 |
Capitalized mortgage servicing rights, net | | | 396,634 | | | 502,282 | | | — | | | — | | | 502,282 |
Securities held-to-maturity, net | | | 153,888 | | | 140,963 | | | — | | | — | | | 140,963 |
| | | | | | | | | | | | | | | |
Financial liabilities: | | | | | | | | | | | | | | | |
Credit and repurchase facilities | | $ | 3,650,876 | | $ | 3,610,881 | | $ | — | | $ | 421,985 | | $ | 3,188,896 |
Securitized debt | |
| 7,508,472 | |
| 7,326,912 | |
| — | |
| — | |
| 7,326,912 |
Senior unsecured notes | |
| 1,409,899 | |
| 1,257,377 | |
| 1,257,377 | |
| — | |
| — |
Convertible senior unsecured notes | | | 281,046 | | | 264,141 | | | — | | | 264,141 | | | — |
Junior subordinated notes | |
| 143,322 | |
| 104,595 | |
| — | |
| — | |
| 104,595 |
Fair Value Measurements Using Fair Value Hierarchy | |||||||||||||||||||||||||||||
Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Financial assets: | |||||||||||||||||||||||||||||
Loans and investments, net | $ | 12,001,544 | $ | 12,158,245 | $ | — | $ | — | $ | 12,158,245 | |||||||||||||||||||
Loans held-for-sale, net | 322,875 | 327,487 | — | 322,831 | 4,656 | ||||||||||||||||||||||||
Capitalized mortgage servicing rights, net | 385,520 | 518,391 | — | — | 518,391 | ||||||||||||||||||||||||
Securities held-to-maturity, net | 155,413 | 133,800 | — | — | 133,800 | ||||||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||||||
Credit and repurchase facilities | $ | 2,913,483 | $ | 2,908,678 | $ | — | $ | 311,963 | $ | 2,596,715 | |||||||||||||||||||
Securitized debt | 6,691,958 | 6,620,181 | — | — | 6,620,181 | ||||||||||||||||||||||||
Senior unsecured notes | 1,335,013 | 1,216,241 | 1,216,241 | — | — | ||||||||||||||||||||||||
Convertible senior unsecured notes | 283,776 | 287,500 | — | 287,500 | — | ||||||||||||||||||||||||
Junior subordinated notes | 144,096 | 107,096 | — | — | 107,096 |
30
We enter into contractual commitments with borrowers providing rate lock commitments while simultaneously entering into forward sale commitments with investors. These commitments are outstanding for short periods of time (generally less than 60 days) and are described in more detail in Note 11 and Note 12.
| | | | | | | | | |
| | | | | Minimum Annual | | | | |
| | Debt | | Operating Lease | | | | ||
Year |
| Obligations |
| Payments |
| Total | |||
2023 (nine months ending December 31, 2023) | | $ | 1,944,655 | | $ | 7,076 | | $ | 1,951,731 |
2024 | |
| 2,997,340 | |
| 9,180 | |
| 3,006,520 |
2025 | |
| 1,902,049 | |
| 9,318 | |
| 1,911,367 |
2026 | |
| 4,905,927 | |
| 9,363 | |
| 4,915,290 |
2027 | |
| 985,653 | |
| 7,929 | |
| 993,582 |
2028 | | | 180,000 | | | 7,301 | | | 187,301 |
Thereafter | |
| 154,336 | |
| 20,491 | |
| 174,827 |
Total | | $ | 13,069,960 | | $ | 70,658 | | $ | 13,140,618 |
Year | Debt Obligations | Minimum Annual Operating Lease Payments | Total | |||||||||||||||||
2024 (nine months ending December 31, 2024) | $ | 1,891,132 | $ | 8,295 | $ | 1,899,427 | ||||||||||||||
2025 | 3,407,613 | 11,206 | 3,418,819 | |||||||||||||||||
2026 | 4,547,643 | 11,297 | 4,558,940 | |||||||||||||||||
2027 | 1,237,437 | 9,782 | 1,247,219 | |||||||||||||||||
2028 | 180,000 | 9,093 | 189,093 | |||||||||||||||||
2029 | — | 8,576 | 8,576 | |||||||||||||||||
Thereafter | 154,336 | 19,308 | 173,644 | |||||||||||||||||
Total | $ | 11,418,161 | $ | 77,557 | $ | 11,495,718 |
million.
In June 2011, three related lawsuits were filed by the Extended Stay Litigation Trust (the “Trust”), a post-bankruptcy litigation trust allegedadverse impact in our consolidated financial statements, these matters are subject to have standing to pursue claims that previously had been held by Extended Stay, Inc.inherent uncertainties and the Homestead Village L.L.C. familymanagement’s view of companies that had emerged from bankruptcy. There were 73 defendantsthese matters may change in the three lawsuits, including 55 corporate and partnership entities and 18 individuals. A subsidiary of ours and certain individuals and other entities that are affiliates of ours were included as defendants.
future.
In June 2013, the Trust amended the lawsuits, to, among other things, (1) consolidate the lawsuits into one lawsuit, (2) remove 47 defendants from the lawsuits, none of whom were related to us, so that there were 26 remaining defendants, including 16 corporate and partnership entities and 10 individuals, and (3) reduce the counts within the lawsuits from over 100 down to 17 (as consolidated, the "Action"). For more detailed information regarding the Action, please refer to Note 14 of our 2022 Annual Report filed with the SEC on February 17, 2023.
After extensive motion practice and discovery, in early December 2022, the plaintiff and certain co-defendants, including our affiliates, commenced discussions regarding a possible settlement of the Action, and in late December 2022, those parties reached an agreement in principle to settle the Action for a total of $38 million. We agreed to pay up to $7.4 million of the settlement amount, which amount was accrued in our December 31, 2022 financial statements. We maintain certain claims against a co-defendant on which we may recover amounts in the future, reducing our contribution to the settlement, but we can give no assurances that we will be successful in any such recovery.
In early March 2023, the parties to the settlement finalized the settlement documents and on April 25, 2023, the Bankruptcy Court approved the settlement in open court. Pursuant to the settlement agreement, the parties to the settlement are expected to make the agreed upon payments and the broad mutual releases will become effective during the second quarter, upon which the Action will be discontinued, with prejudice.
31
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Due to Borrowers. Due to borrowers represents borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans. While retained, these balances earn interest in accordance with the specific loan terms they are associated with.
| | | | | | | |
|
| March 31, 2023 |
| December 31, 2022 | | ||
Assets: | | | | | | | |
Restricted cash | | $ | 699,892 | | $ | 710,775 | |
Loans and investments, net | | | 8,530,448 | | | 8,900,104 | |
Other assets | | | 123,696 | | | 174,382 | |
Total assets | | $ | 9,354,036 | | $ | 9,785,261 | |
| |
| | |
| | |
Liabilities: | | | | | | | |
Securitized debt | | $ | 7,508,472 | | $ | 7,849,270 | |
Other liabilities | |
| 23,863 | |
| 26,754 | |
Total liabilities | | $ | 7,532,335 | | $ | 7,876,024 | |
March 31, 2024 | December 31, 2023 | ||||||||||
Assets: | |||||||||||
Restricted cash | $ | 528,658 | $ | 593,956 | |||||||
Loans and investments, net | 7,637,138 | 7,826,793 | |||||||||
Other assets | 123,866 | 193,822 | |||||||||
Total assets | $ | 8,289,662 | $ | 8,614,571 | |||||||
Liabilities: | |||||||||||
Securitized debt | $ | 6,691,958 | $ | 6,935,010 | |||||||
Other liabilities | 23,792 | 32,867 | |||||||||
Total liabilities | $ | 6,715,750 | $ | 6,967,877 |
32
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, at March 31, 20232024 is as follows (in thousands):
| | | |
Type |
| Carrying Amount (1) | |
Loans | | $ | 437,448 |
APL certificates | | | 127,448 |
B Piece bonds | | | 31,465 |
Equity investments | | | 19,160 |
Agency interest only strips | | | 214 |
Total | | $ | 615,735 |
Type | Carrying Amount (1) | |||||||
Loans | $ | |||||||
APL certificates | 132,437 | |||||||
Equity investments | 37,726 | |||||||
B Piece bonds | 30,573 | |||||||
Agency interest only strips | 134 | |||||||
Total | $ | 837,167 |
Represents the carrying amount of loans and investments before reserves. At March 31, 2024, $128.2 million of loans to VIEs had corresponding specific loan loss reserves of $80.9 million. The maximum loss exposure at March 31, 2024 would not exceed the carrying amount of our investment.
2024.
In March 2023, the Board of Directors authorized a share repurchase program providing for the repurchase of up to $50.0$150.0 million of our outstanding common stock. The repurchase of our common stock may be made from time to time in the open market, through privately negotiated transactions, or otherwise in compliance with Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act, of 1934, based on our stock price, general market conditions, applicable legal requirements and other factors. The program may be discontinued or modified at any time. As ofAt March 31, 2024, there was $150.0 million available for repurchase under this program.
Common Stock | Preferred Stock | |||||||||||||||||||||||||||||||
Dividend | ||||||||||||||||||||||||||||||||
Declaration Date | Dividend | Declaration Date | Series D | Series E | Series F | |||||||||||||||||||||||||||
February 14, 2024 | $ | 0.43 | March 29, 2024 | $ | 0.3984375 | $ | 0.390625 | $ | 0.390625 | |||||||||||||||||||||||
| | | | | | | | | | | | | | |
Common Stock | | Preferred Stock | ||||||||||||
| | | | | | | Dividend | |||||||
Declaration Date |
| Dividend |
| Declaration Date |
| Series D |
| Series E |
| Series F | ||||
February 15, 2023 | | $ | 0.40 | | January 3, 2023 | | $ | 0.3984375 | | $ | 0.390625 | | $ | 0.390625 |
| | | | | March 31, 2023 | | $ | 0.3984375 | | $ | 0.390625 | | $ | 0.390625 |
Common Stock – On May 3, 2023,1, 2024, the Board of Directors declared a cash dividend of $0.42$0.43 per share of common stock. The dividend is payable on May 31, 20232024 to common stockholders of record as of the close of business on May 19, 2023.
17, 2024.
33
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
vested.
| | | | | | | | | | | | |
| | Three Months Ended March 31, | ||||||||||
| | 2023 | | 2022 | ||||||||
|
| Basic |
| Diluted |
| Basic |
| Diluted | ||||
Net income attributable to common stockholders (1) | | $ | 84,319 | | $ | 84,319 | | $ | 64,057 | | $ | 64,057 |
Net income attributable to noncontrolling interest (2) | | | — | | | 7,585 | | | — | | | 6,816 |
Interest expense on convertible notes | | | — | | | 6,081 | | | — | | | 3,995 |
Net income attributable to common stockholders and noncontrolling interest | | $ | 84,319 | | $ | 97,985 | | $ | 64,057 | | $ | 74,868 |
Weighted average shares outstanding | | | 181,116,674 | |
| 181,116,674 | |
| 153,420,238 | |
| 153,420,238 |
Dilutive effect of OP Units (2) | |
| — | | | 16,293,589 | | | — | | | 16,325,095 |
Dilutive effect of convertible notes | | | — | | | 17,230,358 | | | — | | | 15,111,154 |
Dilutive effect of restricted stock units (3) | | | — | |
| 270,353 | |
| — | |
| 574,917 |
Weighted average shares outstanding | |
| 181,116,674 | |
| 214,910,974 | |
| 153,420,238 | |
| 185,431,404 |
Net income per common share (1) | | $ | 0.47 | | $ | 0.46 | | $ | 0.42 | | $ | 0.40 |
34
Three Months Ended March 31, | ||||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||||||||||||
Net income attributable to common stockholders (1) | $ | 57,873 | $ | 57,873 | $ | 84,319 | $ | 84,319 | ||||||||||||||||||
Net income attributable to noncontrolling interest (2) | — | 4,997 | — | 7,585 | ||||||||||||||||||||||
Interest expense on convertible notes | — | 6,084 | — | 6,081 | ||||||||||||||||||||||
Net income attributable to common stockholders and noncontrolling interest | $ | 57,873 | $ | 68,954 | $ | 84,319 | $ | 97,985 | ||||||||||||||||||
Weighted average shares outstanding | 188,710,390 | 188,710,390 | 181,116,674 | 181,116,674 | ||||||||||||||||||||||
Dilutive effect of OP Units (2) | — | 16,293,589 | — | 16,293,589 | ||||||||||||||||||||||
Dilutive effect of convertible notes | — | 17,414,547 | — | 17,230,358 | ||||||||||||||||||||||
Dilutive effect of restricted stock units (3) | — | 507,550 | — | 270,353 | ||||||||||||||||||||||
Weighted average shares outstanding | 188,710,390 | 222,926,076 | 181,116,674 | 214,910,974 | ||||||||||||||||||||||
Net income per common share (1) | $ | 0.31 | $ | 0.31 | $ | 0.47 | $ | 0.46 | ||||||||||||||||||
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Interest income recorded from this loan was $0.2 million for the three months ended March 31, 2024. No interest was received during the three months ended March 31, 2023 since there were no amounts funded as of March 31, 2023.
35
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
In February 2022, we committed to fund a $39.4 million bridge loan (none of which($12.7 million was funded at March 31, 2023)2024) in an SFR build-to-rent construction project. An entity owned by an immediate family member of our chief executive officer also made an equity investment in the project and owns a 2.25% equity interest in the borrowing entity. The bridge loan has an interest rate of LIBORSOFR plus 4.00% with a LIBORSOFR floor of 0.25% and matures in March 2025. Interest income recorded from this loan was $0.3 million and less than $0.1 million for the three months ended March 31, 2023.
2024 and 2023, respectively.
2023.
2023.
In certain instances, our business requires our executivesin the building to charter privately owned aircraft in furtherance of our business. We have an aircraft time-sharing agreement with an entity controlled by our chief executive officer that owns a private aircraft. Pursuant to the agreement, we reimburse the aircraft owner for the required costs under Federal Aviation Administration regulations for the flights our executives’ charter. During both the three months ended March 31, 2023 and 2022, we reimbursed the aircraft owner $0.2 million for the flights chartered by our executives pursuant the agreement.
36
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
In 2019, we, along with ACM, certain executives of ours and a consortium of independent outside investors, formed AMAC III, a multifamily-focused commercial real estate investment fund sponsored and managed by our chief executive officer and one of his immediate family members. We committed to a $30.0 million investment ($25.225.9 million was funded at March 31, 2023)2024) for an 18% interest in AMAC III. During the three months ended March 31, 20232024 and 2022,2023, we recorded a losslosses associated with this investment of $0.4$0.5 million and $0.5$0.4 million, respectively, and received cash distributions of $0.6 million during the three months ended March 31, 2023, we received a cash distribution of $0.6 million.2023. In 2019, AMAC III originated a $7.0 million mezzanine loan to a borrower with which we have an outstanding $34.0 million bridge loan. In 2020, for full satisfaction of the mezzanine loan, AMAC III became the owner of the property. Also in 2020, for full satisfaction of the mezzanine loan, AMAC III became the owner of the property. Also in 2020, the $34.0 million bridge loan was refinanced with a $35.4 million bridge loan, which bears interest at a rate of LIBORSOFR plus 3.5%3.50%, and matures in August 2023. We also originated a $15.6 million Private Label loan in 2019 to a borrower which is 100% owned by AMAC III, which bears interest at a 3.735% fixed rate and matures in January 2030. In 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.2024. Interest income recorded from the bridge loan was $0.7$0.8 million and $0.3$0.7 million for the three months ended March 31, 2024 and 2023, and 2022, respectively.
In 2017, we originated two bridge loans totaling $28.0 million on two multifamily properties owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns 45% of the borrowing entity. The loans had an interest rate of LIBOR plus 5.25% with LIBOR floors ranging from 1.24% to 1.54% and were scheduled to mature in 2020. The borrower refinanced these loans with a $31.1 million bridge loan we originated in 2019 with an interest rate of LIBOR plus 4.0%, a LIBOR floor of 1.8%,which was scheduled to mature in October 2022. In May 2022, this loan paid off in full. Interest income recorded from this loan was $0.5 million for the three months ended March 31, 2022.
2024 and 2023, respectively.
the three months ended March 31, 2023.
In 2016,2019, we originated $48.0converted an existing bridge loan into a $2.0 million mezzanine loan with a fixed interest rate of bridge loans on six10.00% and a January 2024 maturity. In January 2024, the maturity was extended to January 2025. Interest income recorded from this loan was $0.1 million for both the three months ended March 31, 2024 and 2023. The underlying multifamily propertiesproperty is owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns interests ranging from 10.5% to 12.0% in the borrowing entities. The loans had an interest rate of LIBOR plus 4.5% with a LIBOR floor of 0.25% and were scheduled to mature in 2019. In 2017, a $6.8 million loan on one property paid off in full and in 2018 four additional loans totaling $28.3 million paid off in full. In 2019, $10.9 million of the $12.9 million remaining bridge loan paid off, with the $2.0 million remaining UPB converting to a mezzanine loan with a fixed interest rate of 10.0% and a January 2024 maturity. Interest income recorded from the mezzanine loan was $0.1 million for all periods presented.
entities.
37
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
We, along with an executive officer of ours and a consortium of independent outside investors, hold equity investments in a portfolio of multifamily properties referred to as the “Lexford” portfolio, which is managed by an entity owned primarily by a consortium of affiliated investors, including our chief executive officer and an executive officer of ours. Based on the terms of the management contract, the management company is entitled to 4.75% of gross revenues of the underlying properties, along with the potential to share in the proceeds
38
| | | | | | | | | | | | |
| | Three Months Ended March 31, 2023 | ||||||||||
| | Structured | | Agency | | Other / | | | | |||
|
| Business |
| Business |
| Eliminations (1) |
| Consolidated | ||||
Interest income | | $ | 317,376 | | $ | 10,571 | | $ | — | | $ | 327,947 |
Interest expense |
| | 214,894 | | | 4,479 | | | — | | | 219,373 |
Net interest income |
| | 102,482 | | | 6,092 | | | — | | | 108,574 |
Other revenue: |
| | | | | | | | | | | |
Gain on sales, including fee-based services, net |
| | — | | | 14,589 | | | — | | | 14,589 |
Mortgage servicing rights |
| | — | | | 18,458 | | | — | | | 18,458 |
Servicing revenue | | | — | | | 44,981 | | | — | | | 44,981 |
Amortization of MSRs |
| | — | | | (15,416) | | | — | | | (15,416) |
Property operating income |
| | 1,381 | | | — | | | — | | | 1,381 |
Gain on derivative instruments, net |
| | — | | | 4,223 | | | — | | | 4,223 |
Other income, net |
| | 1,908 | | | 2,974 | | | — | | | 4,882 |
Total other revenue |
| | 3,289 | | | 69,809 | | | — | | | 73,098 |
Other expenses: |
| | | | | | | | | | | |
Employee compensation and benefits |
| | 15,641 | | | 26,758 | | | — | | | 42,399 |
Selling and administrative |
| | 6,711 | | | 6,912 | | | — | | | 13,623 |
Property operating expenses |
| | 1,383 | | | — | | | — | | | 1,383 |
Depreciation and amortization | | | 1,451 | | | 1,173 | | | — | | | 2,624 |
Provision for loss sharing (net of recoveries) |
| | — | | | 3,177 | | | — | | | 3,177 |
Provision for credit losses (net of recoveries) |
| | 20,645 | | | 1,872 | | | — | | | 22,517 |
Total other expenses |
| | 45,831 | | | 39,892 | | | — | | | 85,723 |
Income before income from equity affiliates and income taxes | | | 59,940 | | | 36,009 | | | — | | | 95,949 |
Income from equity affiliates |
| | 14,326 | | | — | | | — | | | 14,326 |
Benefit from (provision for) income taxes |
| | 429 | | | (8,458) | | | — | | | (8,029) |
Net income |
| | 74,695 | | | 27,551 | | | — | | | 102,246 |
Preferred stock dividends |
| | 10,342 | | | — | | | — | | | 10,342 |
Net income attributable to noncontrolling interest |
| | — | | | — | | | 7,585 | | | 7,585 |
Net income attributable to common stockholders | | $ | 64,353 | | $ | 27,551 | | $ | (7,585) | | $ | 84,319 |
39
Three Months Ended March 31, 2024 | |||||||||||||||||||||||
Structured Business | Agency Business | Other (1) | Consolidated | ||||||||||||||||||||
Interest income | $ | 307,888 | $ | 13,404 | $ | — | $ | 321,292 | |||||||||||||||
Interest expense | 212,600 | 5,076 | — | 217,676 | |||||||||||||||||||
Net interest income | 95,288 | 8,328 | — | 103,616 | |||||||||||||||||||
Other revenue: | |||||||||||||||||||||||
Gain on sales, including fee-based services, net | — | 16,666 | — | 16,666 | |||||||||||||||||||
Mortgage servicing rights | — | 10,199 | — | 10,199 | |||||||||||||||||||
Servicing revenue | — | 48,157 | — | 48,157 | |||||||||||||||||||
Amortization of MSRs | — | (16,631) | — | (16,631) | |||||||||||||||||||
Property operating income | 1,570 | — | — | 1,570 | |||||||||||||||||||
Loss on derivative instruments, net | — | (5,257) | — | (5,257) | |||||||||||||||||||
Other income, net | 2,300 | 33 | — | 2,333 | |||||||||||||||||||
Total other revenue | 3,870 | 53,167 | — | 57,037 | |||||||||||||||||||
Other expenses: | |||||||||||||||||||||||
Employee compensation and benefits | 18,547 | 29,147 | — | 47,694 | |||||||||||||||||||
Selling and administrative | 6,796 | 7,137 | — | 13,933 | |||||||||||||||||||
Property operating expenses | 1,678 | — | — | 1,678 | |||||||||||||||||||
Depreciation and amortization | 1,398 | 1,173 | — | 2,571 | |||||||||||||||||||
Provision for loss sharing (net of recoveries) | — | 273 | — | 273 | |||||||||||||||||||
Provision for credit losses (net of recoveries) | 17,777 | 1,341 | — | 19,118 | |||||||||||||||||||
Total other expenses | 46,196 | 39,071 | — | 85,267 | |||||||||||||||||||
Income before income from equity affiliates and income taxes | 52,962 | 22,424 | — | 75,386 | |||||||||||||||||||
Income from equity affiliates | 1,418 | — | — | 1,418 | |||||||||||||||||||
Provision for income taxes | (81) | (3,511) | — | (3,592) | |||||||||||||||||||
Net income | 54,299 | 18,913 | — | 73,212 | |||||||||||||||||||
Preferred stock dividends | 10,342 | — | — | 10,342 | |||||||||||||||||||
Net income attributable to noncontrolling interest | — | — | 4,997 | 4,997 | |||||||||||||||||||
Net income attributable to common stockholders | $ | 43,957 | $ | 18,913 | $ | (4,997) | $ | 57,873 |
| | | | | | | | | | | | |
| | Three Months Ended March 31, 2022 | ||||||||||
| | Structured | | Agency | | Other / | | |
| |||
|
| Business |
| Business |
| Eliminations (1) |
| Consolidated | ||||
Interest income |
| $ | 156,260 |
| $ | 10,438 |
| $ | — |
| $ | 166,698 |
Interest expense | | | 78,202 | | | 4,357 | | | — | | | 82,559 |
Net interest income | | | 78,058 | | | 6,081 | | | — | | | 84,139 |
Other revenue: | | | | | | | | | | | | |
Gain on sales, including fee-based services, net | | | — | | | 1,656 | | | — | | | 1,656 |
Mortgage servicing rights | | | — | | | 15,312 | | | — | | | 15,312 |
Servicing revenue | | | — | | | 36,026 | | | — | | | 36,026 |
Amortization of MSRs | | | — | | | (14,972) | | | — | | | (14,972) |
Property operating income | | | 295 | | | — | | | — | | | 295 |
Gain on derivative instruments, net | | | — | | | 17,386 | | | — | | | 17,386 |
Other income, net | | | 3,196 | | | 4 | | | — | | | 3,200 |
Total other revenue | | | 3,491 | | | 55,412 | | | — | | | 58,903 |
Other expenses: | | | | | | | | | | | | |
Employee compensation and benefits | | | 15,487 | | | 26,538 | | | — | | | 42,025 |
Selling and administrative | | | 7,409 | | | 7,139 | | | — | |
| 14,548 |
Property operating expenses | | | 535 | | | — | | | — | | | 535 |
Depreciation and amortization | | | 810 | | | 1,173 | | | — | | | 1,983 |
Provision for loss sharing (net of recoveries) | | | — | | | (662) | | | — | | | (662) |
Provision for credit losses (net of recoveries) | | | 2,069 | | | 289 | | | — | | | 2,358 |
Total other expenses | | | 26,310 | | | 34,477 | | | — | | | 60,787 |
Income before extinguishment of debt, income from equity affiliates and income taxes | | | 55,239 | | | 27,016 | | | — | | | 82,255 |
Loss on extinguishment of debt | | | (1,350) | | | — | | | — | | | (1,350) |
Income from equity affiliates | | | 7,212 | | | — | | | — | | | 7,212 |
Provision for income taxes | | | (1,432) | | | (6,756) | | | — | | | (8,188) |
Net income | | | 59,669 | | | 20,260 | | | — | | | 79,929 |
Preferred stock dividends | | | 9,056 | | | — | | | — | | | 9,056 |
Net income attributable to noncontrolling interest | | | — | | | — | | | 6,816 | | | 6,816 |
Net income attributable to common stockholders |
| $ | 50,613 |
| $ | 20,260 |
| $ | (6,816) |
| $ | 64,057 |
40
Three Months Ended March 31, 2023 | |||||||||||||||||||||||
Structured Business | Agency Business | Other (1) | Consolidated | ||||||||||||||||||||
Interest income | $ | 317,376 | $ | 10,571 | $ | — | $ | 327,947 | |||||||||||||||
Interest expense | 214,894 | 4,479 | — | 219,373 | |||||||||||||||||||
Net interest income | 102,482 | 6,092 | — | 108,574 | |||||||||||||||||||
Other revenue: | |||||||||||||||||||||||
Gain on sales, including fee-based services, net | — | 14,589 | — | 14,589 | |||||||||||||||||||
Mortgage servicing rights | — | 18,458 | — | 18,458 | |||||||||||||||||||
Servicing revenue | — | 44,981 | — | 44,981 | |||||||||||||||||||
Amortization of MSRs | — | (15,416) | — | (15,416) | |||||||||||||||||||
Property operating income | 1,381 | — | — | 1,381 | |||||||||||||||||||
Gain on derivative instruments, net | — | 4,223 | — | 4,223 | |||||||||||||||||||
Other income, net | 1,908 | 2,974 | — | 4,882 | |||||||||||||||||||
Total other revenue | 3,289 | 69,809 | — | 73,098 | |||||||||||||||||||
Other expenses: | |||||||||||||||||||||||
Employee compensation and benefits | 15,641 | 26,758 | — | 42,399 | |||||||||||||||||||
Selling and administrative | 6,711 | 6,912 | — | 13,623 | |||||||||||||||||||
Property operating expenses | 1,383 | — | — | 1,383 | |||||||||||||||||||
Depreciation and amortization | 1,451 | 1,173 | — | 2,624 | |||||||||||||||||||
Provision for loss sharing (net of recoveries) | — | 3,177 | — | 3,177 | |||||||||||||||||||
Provision for credit losses (net of recoveries) | 20,645 | 1,872 | — | 22,517 | |||||||||||||||||||
Total other expenses | 45,831 | 39,892 | — | 85,723 | |||||||||||||||||||
Income before income from equity affiliates and income taxes | 59,940 | 36,009 | — | 95,949 | |||||||||||||||||||
Income from equity affiliates | 14,326 | — | — | 14,326 | |||||||||||||||||||
Benefit from (provision for) for income taxes | 429 | (8,458) | — | (8,029) | |||||||||||||||||||
Net income | 74,695 | 27,551 | — | 102,246 | |||||||||||||||||||
Preferred stock dividends | 10,342 | — | — | 10,342 | |||||||||||||||||||
Net income attributable to noncontrolling interest | — | — | 7,585 | 7,585 | |||||||||||||||||||
Net income attributable to common stockholders | $ | 64,353 | $ | 27,551 | $ | (7,585) | $ | 84,319 |
| | | | | | | | | |
| | March 31, 2023 | |||||||
|
| Structured Business |
| Agency Business |
| Consolidated | |||
Assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 405,596 | | $ | 368,948 | | $ | 774,544 |
Restricted cash | | | 702,360 | | | 2,484 | | | 704,844 |
Loans and investments, net | | | 13,430,985 | | | — | | | 13,430,985 |
Loans held-for-sale, net | | | — | | | 469,602 | | | 469,602 |
Capitalized mortgage servicing rights, net | | | — | | | 396,634 | | | 396,634 |
Securities held-to-maturity, net | | | — | | | 153,888 | | | 153,888 |
Investments in equity affiliates | | | 77,641 | | | — | | | 77,641 |
Goodwill and other intangible assets | | | 12,500 | | | 82,396 | | | 94,896 |
Other assets and due from related party | | | 413,846 | | | 71,344 | | | 485,190 |
Total assets | | $ | 15,042,928 | | $ | 1,545,296 | | $ | 16,588,224 |
| | | | | | | | | |
Liabilities: | | | | | | | | | |
Debt obligations | | $ | 12,571,630 | | $ | 421,985 | | $ | 12,993,615 |
Allowance for loss-sharing obligations | | | — | | | 59,757 | | | 59,757 |
Other liabilities and due to related parties | | | 268,048 | | | 109,347 | | | 377,395 |
Total liabilities | | $ | 12,839,678 | | $ | 591,089 | | $ | 13,430,767 |
| | | | | | | | | |
| | December 31, 2022 | |||||||
Assets: |
| | |
| | |
| | |
Cash and cash equivalents | | $ | 200,514 | | $ | 333,843 | | $ | 534,357 |
Restricted cash | |
| 713,615 | | | 193 | |
| 713,808 |
Loans and investments, net | |
| 14,254,674 | | | — | |
| 14,254,674 |
Loans held-for-sale, net | | | — | | | 354,070 | | | 354,070 |
Capitalized mortgage servicing rights, net | | | — | | | 401,471 | | | 401,471 |
Securities held-to-maturity, net | | | — | | | 156,547 | | | 156,547 |
Investments in equity affiliates | |
| 79,130 | | | — | |
| 79,130 |
Goodwill and other intangible assets | | | 12,500 | | | 83,569 | | | 96,069 |
Other assets and due from related party | |
| 367,837 | | | 81,022 | |
| 448,859 |
Total assets | | $ | 15,628,270 | | $ | 1,410,715 | | $ | 17,038,985 |
| |
| | |
| | |
| |
Liabilities: | |
| | |
| | |
| |
Debt obligations | | $ | 13,195,120 | | $ | 305,442 | | $ | 13,500,562 |
Allowance for loss-sharing obligations | | | — | | | 57,168 | | | 57,168 |
Other liabilities and due to related parties | |
| 299,559 | | | 109,817 | |
| 409,376 |
Total liabilities | | $ | 13,494,679 | | $ | 472,427 | | $ | 13,967,106 |
41
March 31, 2024 | |||||||||||||||||
Structured Business | Agency Business | Consolidated | |||||||||||||||
Assets: | |||||||||||||||||
Cash and cash equivalents | $ | 453,316 | $ | 454,733 | $ | 908,049 | |||||||||||
Restricted cash | 530,099 | 16,544 | 546,643 | ||||||||||||||
Loans and investments, net | 12,001,544 | — | 12,001,544 | ||||||||||||||
Loans held-for-sale, net | — | 322,875 | 322,875 | ||||||||||||||
Capitalized mortgage servicing rights, net | — | 385,520 | 385,520 | ||||||||||||||
Securities held-to-maturity, net | — | 155,413 | 155,413 | ||||||||||||||
Investments in equity affiliates | 90,244 | — | 90,244 | ||||||||||||||
Goodwill and other intangible assets | 12,500 | 77,705 | 90,205 | ||||||||||||||
Other assets and due from related party | 532,385 | 71,978 | 604,363 | ||||||||||||||
Total assets | $ | 13,620,088 | $ | 1,484,768 | $ | 15,104,856 | |||||||||||
Liabilities: | |||||||||||||||||
Debt obligations | $ | 11,056,363 | $ | 311,963 | $ | 11,368,326 | |||||||||||
Allowance for loss-sharing obligations | — | 72,790 | 72,790 | ||||||||||||||
Other liabilities and due to related parties | 343,557 | 85,875 | 429,432 | ||||||||||||||
Total liabilities | $ | 11,399,920 | $ | 470,628 | $ | 11,870,548 | |||||||||||
December 31, 2023 | |||||||||||||||||
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 parties | 369,588 | 108,990 | 478,578 | ||||||||||||||
Total liabilities | $ | 11,890,080 | $ | 593,951 | $ | 12,484,031 |
| | | | | | | |
| | Three Months Ended March 31, | | ||||
|
| 2023 |
| 2022 |
| ||
Origination Data: | | | | | | | |
Structured Business | | | | | | | |
Bridge loans (1) | | $ | 262,189 | | $ | 2,820,716 | |
Mezzanine / Preferred Equity | | | 5,845 | | | 8,139 | |
Total new loan originations | | $ | 268,034 | | $ | 2,828,855 | |
| | | | | | | |
Loan runoff | | $ | 1,186,649 | | $ | 666,551 | |
| | | | | | | |
Agency Business | | | | | | | |
Origination Volumes by Investor: | | | | | | | |
Fannie Mae | | $ | 795,021 | | $ | 449,680 | |
FHA | | | 148,940 | | | 11,990 | |
Freddie Mac | | | 101,332 | | | 299,072 | |
Private Label | | | 41,107 | | | 72,896 | |
SFR - Fixed Rate | | | 5,461 | | | 4,871 | |
Total | | $ | 1,091,861 | | $ | 838,509 | |
Total loan commitment volume | | $ | 1,500,110 | | $ | 975,132 | |
| | | | | | | |
Agency Business Loan Sales Data: | | | | | | | |
Fannie Mae | | $ | 651,758 | | $ | 666,544 | |
Private Label | | | 159,945 | | | 489,269 | |
Freddie Mac | | | 68,457 | | | 359,086 | |
FHA | | | 43,475 | | | 71,816 | |
SFR - Fixed Rate | | | 9,064 | | | — | |
Total | | $ | 932,699 | | $ | 1,586,715 | |
Sales margin (fee-based services as a % of loan sales) (2) | | | 1.56 | % | | 1.18 | % |
MSR rate (MSR income as a % of loan commitments) | | | 1.23 | % | | 1.57 | % |
42
Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
2024 | 2023 | |||||||||||||||||||||||||||||||
Origination Data: | ||||||||||||||||||||||||||||||||
Structured Business | ||||||||||||||||||||||||||||||||
Bridge: | ||||||||||||||||||||||||||||||||
Multifamily | $ | 39,235 | $ | 186,100 | ||||||||||||||||||||||||||||
SFR | 171,490 | 76,089 | ||||||||||||||||||||||||||||||
210,725 | 262,189 | |||||||||||||||||||||||||||||||
Mezzanine / Preferred Equity | 45,129 | 5,845 | ||||||||||||||||||||||||||||||
Total New Loan Originations | $ | 255,854 | $ | 268,034 | ||||||||||||||||||||||||||||
Number of Loans Originated | 59 | 24 | ||||||||||||||||||||||||||||||
SFR Commitments | $ | 411,617 | $ | 54,350 | ||||||||||||||||||||||||||||
Loan Runoff | $ | 640,018 | $ | 1,186,649 | ||||||||||||||||||||||||||||
Agency Business | ||||||||||||||||||||||||||||||||
Origination Volumes by Investor: | ||||||||||||||||||||||||||||||||
Fannie Mae | $ | 458,429 | $ | 795,021 | ||||||||||||||||||||||||||||
Freddie Mac | 370,102 | 101,332 | ||||||||||||||||||||||||||||||
Private Label | 15,410 | 41,107 | ||||||||||||||||||||||||||||||
SFR - Fixed Rate | 2,318 | 5,461 | ||||||||||||||||||||||||||||||
FHA | — | 148,940 | ||||||||||||||||||||||||||||||
Total | $ | 846,259 | $ | 1,091,861 | ||||||||||||||||||||||||||||
Total Loan Commitment Volume | $ | 934,243 | $ | 1,500,110 | ||||||||||||||||||||||||||||
Agency Business Loan Sales Data: | ||||||||||||||||||||||||||||||||
Fannie Mae | $ | 725,898 | $ | 651,758 | ||||||||||||||||||||||||||||
Freddie Mac | 329,679 | 68,457 | ||||||||||||||||||||||||||||||
Private Label | 15,410 | 159,945 | ||||||||||||||||||||||||||||||
FHA | 12,069 | 43,475 | ||||||||||||||||||||||||||||||
SFR - Fixed Rate | 2,318 | 9,064 | ||||||||||||||||||||||||||||||
Total | $ | 1,085,374 | $ | 932,699 | ||||||||||||||||||||||||||||
Sales Margin (fee-based services as a % of loan sales) | 1.54 | % | 1.56 | % | ||||||||||||||||||||||||||||
MSR Rate (MSR income as a % of loan commitments) (1) | 1.09 | % | 1.23 | % |
| | | | | | | |
| | March 31, 2023 | |||||
| | | | | Wtd. Avg. Servicing | | Wtd. Avg. Life of |
| | Servicing | | Fee Rate | | Servicing Portfolio | |
Key Servicing Metrics for Agency Business: |
| Portfolio UPB |
| (basis points) |
| (years) | |
Fannie Mae | | $ | 19,508,256 | | 49.5 | | 8.0 |
Freddie Mac | | | 5,180,607 | | 24.7 | | 9.1 |
Private Label | | | 2,233,500 | | 19.6 | | 7.7 |
FHA | | | 1,242,669 | | 14.7 | | 19.8 |
Bridge | | | 467,881 | | 11.6 | | 2.9 |
SFR - Fixed Rate | | | 279,712 | | 20.0 | | 5.9 |
Total | | $ | 28,912,625 | | 40.3 | | 8.6 |
| | | | | | | |
|
| December 31, 2022 | |||||
Fannie Mae |
| $ | 19,038,124 |
| 50.2 |
| 8.0 |
Freddie Mac | | | 5,153,207 | | 25.0 | | 9.0 |
Private Label | | | 2,074,859 | | 18.5 | | 7.6 |
FHA | | | 1,155,893 | | 14.9 | | 19.5 |
Bridge | | | 301,182 | | 12.5 | | 1.7 |
SFR - Fixed Rate | | | 274,764 | | 19.8 | | 6.0 |
Total | | $ | 27,998,029 | | 41.1 | | 8.6 |
March 31, 2024 | ||||||||||||||||||||
Key Servicing Metrics for Agency Business: | Servicing Portfolio UPB | Wtd. Avg. Servicing Fee Rate (basis points) | Wtd. Avg. Life of Portfolio (years) | |||||||||||||||||
Fannie Mae | $ | 21,548,221 | 47.1 | 7.2 | ||||||||||||||||
Freddie Mac | 5,301,291 | 23.4 | 7.7 | |||||||||||||||||
Private Label | 2,524,013 | 18.9 | 6.3 | |||||||||||||||||
FHA | 1,365,329 | 14.4 | 19.0 | |||||||||||||||||
Bridge | 380,712 | 10.9 | 3.6 | |||||||||||||||||
SFR - Fixed Rate | 265,429 | 20.1 | 5.0 | |||||||||||||||||
Total | $ | 31,384,995 | 38.8 | 7.7 | ||||||||||||||||
December 31, 2023 | ||||||||||||||||||||
Fannie Mae | $ | 21,264,578 | 47.4 | 7.4 | ||||||||||||||||
Freddie Mac | 5,181,933 | 24.0 | 8.5 | |||||||||||||||||
Private Label | 2,510,449 | 19.5 | 6.7 | |||||||||||||||||
FHA | 1,359,624 | 14.4 | 19.2 | |||||||||||||||||
Bridge | 379,425 | 10.9 | 3.2 | |||||||||||||||||
SFR - Fixed Rate | 287,446 | 20.1 | 5.1 | |||||||||||||||||
Total | $ | 30,983,455 | 39.1 | 8.0 |
43
44
Credit quality of our loans and investments, including our servicing portfolio.Effective portfolio management is essential to maximize the performance and value of our loan and investment and servicing portfolios. Maintaining the credit quality of the loans in our portfolios is of critical importance. Loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity.
2024
Share Repurchase Program. In March, we implementedModified existing debt facilities, resulting in a share repurchase program authorizingnet $700.0 million decrease in the repurchasecommitted amounts of upthese facilities and entered into a new $250.0 million debt facility; and
Structured Business Activity.
Agency Business Activity.
Dividend. We raised our quarterly common dividend $0.02 to $0.42 per share, representing an annual run rate of $1.68 per share.
As discussed throughout this report,
45
The Federal Reserve has raisedwork very closely with borrowers to mitigate potential losses while safeguarding the integrity of our portfolio. Given the current elevated interest rates throughout 2022 to combat inflation and restore price stability and it is expectedrate environment, we cannot guarantee that ratesour loan portfolio will continue to rise throughoutperform under the first half of 2023, potentially even longer. terms originally established.
We have recently witnessed significant volatility in the banking sector as a result of disruptions to the banking system and financial markets resulting from multiple bank failures. Although the majority of our cash is currently on deposit with major financial institutions, our balances often exceed insured limits. We limit the exposure relating to these balances by diversifying them among various counterparties. Generally, deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore we believe bear minimal credit risk.
We have been very successful in raising capital through various vehicles to grow our businesses. The anticipated continual rise in interest rates, inflation, recent bank failures and unpredictable geopolitical landscape have caused a dislocation and additional volatility in the capital markets, which may result in a continual reduction of available liquidity. Instability in the banking sector, such as the recent bank failures and consolidations, have further contributed to the tightening liquidity conditions in equity and capital markets and has affected the availability and cost of capital. The increased cost of credit, or degradation in debt financing terms, may impact our ability to identify and execute investments on attractive terms, or at all. Periods of volatility and dislocation in the capital markets, as observed recently, could limit our ability to grow our Structured Business since this business is more reliant on the capital markets to grow, but can also present us with unique avenues to participate in other lower cost financing options and build on existing relationships, or, create new relationships with lenders. Since our Agency Business requires limited capital to grow, as originations are financed through warehouse facilities for generally up to 60 days before the loans are sold, tightening liquidity conditions in equity and capital markets should not have a substantial impact on our ability to grow this business.
46
2023:
Three Months Ended March 31, 2024 | ||||||||||||||
Loans originated | $ | 255,854 | ||||||||||||
Number of loans | 59 | |||||||||||||
Weighted average interest rate | 7.14 | % | ||||||||||||
Loan runoff | $ | 640,018 | ||||||||||||
Number of loans | 41 | |||||||||||||
Weighted average interest rate | 9.19 | % |
| | | | |
| | Three Months Ended | | |
|
| March 31, 2023 |
| |
Loans originated | | $ | 268,034 | |
Number of loans | |
| 24 | |
Weighted average interest rate | |
| 9.62 | % |
| | | | |
Loan runoff | | $ | 1,186,649 | |
Number of loans | |
| 65 | |
Weighted average interest rate | |
| 8.86 | % |
| | | | |
Loans extended | | $ | 360,613 | |
Number of loans | |
| 14 | |
Three Months Ended March 31, 2024 | |||||||||||||||||||||||
Loan Originations | Loan Sales | ||||||||||||||||||||||
Fannie Mae | $ | 458,429 | $ | 725,898 | |||||||||||||||||||
Freddie Mac | 370,102 | 329,679 | |||||||||||||||||||||
Private Label | 15,410 | 15,410 | |||||||||||||||||||||
SFR - Fixed Rate | 2,318 | 2,318 | |||||||||||||||||||||
FHA | — | 12,069 | |||||||||||||||||||||
Total | $ | 846,259 | $ | 1,085,374 |
| | | | | | |
| | Three Months Ended | ||||
| | March 31, 2023 | ||||
| | Loan | | | | |
|
| Originations |
| Loan Sales | ||
Fannie Mae | | $ | 795,021 | | $ | 651,758 |
FHA | | | 148,940 | | | 43,475 |
Freddie Mac | |
| 101,332 | |
| 68,457 |
Private Label | |
| 41,107 | |
| 159,945 |
SFR - Fixed Rate | |
| 5,461 | |
| 9,064 |
Total | | $ | 1,091,861 | | $ | 932,699 |
nvestments in equity affiliates increased $10.9 million, primarily due to additional investments made in an existing joint venture.
2023:
47
Securitized debt decreased $340.8$243.1 million, primarily due to repayments of debtpaydowns on CLO 12 and CLO 13 as the replacement period has ended for both CLOs.
Senior unsecured notes increased $23.9existing securitizations.
Structured Business.
Equity
During the first quarter of 2023 we sold 5,635,800 shares of our common stock through our “At-The-Market” equity agreement. In addition, through April 30, 2023, we repurchased 3,545,604 shares of our common stock under our share repurchase program.
performance.
March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product | Portfolio UPB | Loan Count | Wtd. Avg. Age of Portfolio (years) | Wtd. Avg. Life of Portfolio (years) | Interest Rate Type | Wtd. Avg. Note Rate | Annualized Prepayments as a % of Portfolio (1) | Delinquencies as a % of Portfolio (2) | ||||||||||||||||||||||||||||||||||||||||||||||||
Fixed | Adjustable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fannie Mae | $ | 21,548,221 | 2,575 | 3.5 | 7.2 | 96 | % | 4 | % | 4.52 | % | 1.35 | % | 0.88 | % | |||||||||||||||||||||||||||||||||||||||||
Freddie Mac | 5,301,291 | 1,138 | 3.3 | 7.7 | 84 | % | 16 | % | 4.76 | % | 7.92 | % | 3.77 | % | ||||||||||||||||||||||||||||||||||||||||||
Private Label | 2,524,013 | 161 | 2.7 | 6.3 | 100 | % | — | 4.02 | % | — | 0.18 | % | ||||||||||||||||||||||||||||||||||||||||||||
FHA | 1,365,329 | 105 | 3.2 | 19.0 | 100 | % | — | 3.54 | % | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Bridge | 380,712 | 4 | 1.5 | 3.6 | 62 | % | 38 | % | 7.14 | % | — | — | ||||||||||||||||||||||||||||||||||||||||||||
SFR - Fixed Rate | 265,429 | 56 | 2.3 | 5.0 | 100 | % | — | 5.27 | % | 24.51 | % | 1.70 | % | |||||||||||||||||||||||||||||||||||||||||||
Total | $ | 31,384,995 | 4,039 | 3.4 | 7.7 | 94 | % | 6 | % | 4.52 | % | 2.47 | % | 1.27 | % | |||||||||||||||||||||||||||||||||||||||||
December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fannie Mae | $ | 21,264,578 | 2,559 | 3.4 | 7.4 | 96 | % | 4 | % | 4.50 | % | 5.09 | % | 0.86 | % | |||||||||||||||||||||||||||||||||||||||||
Freddie Mac | 5,181,933 | 1,148 | 3.2 | 8.5 | 83 | % | 17 | % | 4.72 | % | 7.92 | % | 4.39 | % | ||||||||||||||||||||||||||||||||||||||||||
Private Label | 2,510,449 | 160 | 2.5 | 6.7 | 100 | % | — | 4.02 | % | — | — | |||||||||||||||||||||||||||||||||||||||||||||
FHA | 1,359,624 | 105 | 3.0 | 19.2 | 100 | % | — | 3.52 | % | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Bridge | 379,425 | 4 | 1.2 | 3.2 | 63 | % | 37 | % | 7.14 | % | — | — | ||||||||||||||||||||||||||||||||||||||||||||
SFR - Fixed Rate | 287,446 | 59 | 2.3 | 5.1 | 100 | % | — | 5.20 | % | 1.18 | % | — | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 30,983,455 | 4,035 | 3.2 | 8.0 | 94 | % | 6 | % | 4.49 | % | 4.83 | % | 1.33 | % |
| | | | | | | | | | | | | | | | | | | | |
|
| March 31, 2023 |
| |||||||||||||||||
| | | | | | | Wtd. Avg. | | Wtd. Avg. | | | | | | | | Annualized | | |
|
| | Servicing | | | | Age of | | Portfolio | | | | | | | | Prepayments | | Delinquencies |
| |
| | Portfolio | | Loan | | Portfolio | | Maturity | | Interest Rate Type | | Wtd. Avg. | | as a % | | as a % |
| |||
Product |
| UPB |
| Count |
| (years) |
| (years) |
| Fixed |
| Adjustable |
| Note Rate |
| of Portfolio (1) |
| of Portfolio (2) |
| |
Fannie Mae |
| $ | 19,508,256 |
| 2,487 |
| 3.2 |
| 8.3 |
| 94 | % | 6 | % | 4.30 | % | 4.64 | % | 0.43 | % |
Freddie Mac | |
| 5,180,607 |
| 1,201 |
| 3.0 |
| 10.0 |
| 80 | % | 20 | % | 4.47 | % | 4.64 | % | 2.86 | % |
Private Label | | | 2,233,500 | | 139 | | 2.1 | | 7.6 | | 100 | % | — | | 3.71 | % | — | | — | |
FHA | |
| 1,242,669 |
| 101 |
| 2.5 |
| 33.4 |
| 100 | % | — | | 3.31 | % | — | | — | |
Bridge | | | 467,881 | | 5 | | 0.9 | | 2.6 | | 35 | % | 65 | % | 7.42 | % | — | | — | |
SFR - Fixed Rate | | | 279,712 | | 56 | | 1.6 | | 6.1 | | 100 | % | — | | 5.09 | % | — | | — | |
Total | | $ | 28,912,625 |
| 3,989 |
| 3.0 |
| 9.5 |
| 91 | % | 9 | % | 4.30 | % | 3.97 | % | 0.80 | % |
| | | | | | | | | | | | | | | | | | | | |
|
| December 31, 2022 |
| |||||||||||||||||
Fannie Mae |
| $ | 19,038,124 |
| 2,460 |
| 3.1 |
| 8.5 |
| 96 | % | 4 | % | 4.20 | % | 12.71 | % | 0.13 | % |
Freddie Mac | |
| 5,153,207 |
| 1,214 |
| 2.8 |
| 10.2 |
| 84 | % | 16 | % | 4.26 | % | 19.78 | % | 0.27 | % |
Private Label | | | 2,074,859 | | 130 | | 1.9 | | 7.8 | | 100 | % | — | | 3.60 | % | — | | — | |
FHA | | | 1,155,893 |
| 96 |
| 2.5 |
| 33.5 |
| 100 | % | — | | 3.17 | % | 1.59 | % | — | |
Bridge | | | 301,182 | | 4 | | 0.9 | | 1.6 | | — | | 100 | % | 7.68 | % | — | | — | |
SFR - Fixed Rate | |
| 274,764 | | 53 | | 1.4 | | 6.3 | | 100 | % | — | | 5.04 | % | 0.30 | % | — | |
Total | | $ | 27,998,029 |
| 3,957 |
| 2.9 |
| 9.7 |
| 93 | % | 7 | % | 4.17 | % | 12.35 | % | 0.14 | % |
Our Agency Business servicing portfolio represents commercial real estate loans, which are generally transferred or sold within 60 days from the date the loan is funded. Primarily all loans in our servicing portfolio are collateralized by multifamily properties. In addition, we are generally required to share in the risk of any losses associated with loans sold under the Fannie Mae DUS program, see Note 10.
48
| | | | | | | | | | | | |
|
| Three Months Ended March 31, |
| Increase / (Decrease) |
| |||||||
| | 2023 |
| 2022 | | Amount |
| Percent |
| |||
| | | | | | | | | | | | |
Interest income | | $ | 327,947 | | $ | 166,698 | | $ | 161,249 |
| 97 | % |
Interest expense | |
| 219,373 | |
| 82,559 | |
| 136,814 |
| 166 | % |
Net interest income | |
| 108,574 | |
| 84,139 | |
| 24,435 |
| 29 | % |
Other revenue: | |
| | |
| | |
| |
| | |
Gain on sales, including fee-based services, net | |
| 14,589 | |
| 1,656 | |
| 12,933 |
| nm | |
Mortgage servicing rights | |
| 18,458 | |
| 15,312 | |
| 3,146 |
| 21 | % |
Servicing revenue, net | |
| 29,565 | |
| 21,054 | |
| 8,511 |
| 40 | % |
Property operating income | |
| 1,381 | |
| 295 | |
| 1,086 |
| nm | |
Gain on derivative instruments, net | |
| 4,223 | |
| 17,386 | |
| (13,163) |
| (76) | % |
Other income, net | |
| 4,882 | |
| 3,200 | |
| 1,682 |
| 53 | % |
Total other revenue | |
| 73,098 | |
| 58,903 | |
| 14,195 |
| 24 | % |
Other expenses: | |
| | |
| | |
| |
| | |
Employee compensation and benefits | |
| 42,399 | |
| 42,025 | |
| 374 |
| 1 | % |
Selling and administrative | |
| 13,623 | |
| 14,548 | |
| (925) |
| (6) | % |
Property operating expenses | |
| 1,383 | |
| 535 | |
| 848 |
| 159 | % |
Depreciation and amortization | |
| 2,624 | |
| 1,983 | |
| 641 |
| 32 | % |
Provision for loss sharing (net of recoveries) | |
| 3,177 | |
| (662) | |
| 3,839 |
| nm | |
Provision for credit losses (net of recoveries) | |
| 22,517 | |
| 2,358 | |
| 20,159 |
| nm | |
Total other expenses | |
| 85,723 | |
| 60,787 | |
| 24,936 |
| 41 | % |
Income before extinguishment of debt, income from equity affiliates and income taxes | |
| 95,949 | |
| 82,255 | |
| 13,694 |
| 17 | % |
Loss on extinguishment of debt | | | — | | | (1,350) | | | 1,350 | | nm | |
Income from equity affiliates | |
| 14,326 | |
| 7,212 | |
| 7,114 |
| 99 | % |
Provision for income taxes | |
| (8,029) | |
| (8,188) | |
| 159 |
| (2) | |
Net income | |
| 102,246 | |
| 79,929 | |
| 22,317 |
| 28 | % |
Preferred stock dividends | |
| 10,342 | |
| 9,056 | |
| 1,286 |
| 14 | % |
Net income attributable to noncontrolling interest | |
| 7,585 | |
| 6,816 | |
| 769 |
| 11 | % |
Net income attributable to common stockholders | | $ | 84,319 | | $ | 64,057 | | $ | 20,262 |
| 32 | % |
Three Months Ended March 31, | Increase / (Decrease) | |||||||||||||||||||||||||
2024 | 2023 | Amount | Percent | |||||||||||||||||||||||
Interest income | $ | 321,292 | $ | 327,947 | $ | (6,655) | (2) | % | ||||||||||||||||||
Interest expense | 217,676 | 219,373 | (1,697) | (1) | % | |||||||||||||||||||||
Net interest income | 103,616 | 108,574 | (4,958) | (5) | % | |||||||||||||||||||||
Other revenue: | ||||||||||||||||||||||||||
Gain on sales, including fee-based services, net | 16,666 | 14,589 | 2,077 | 14 | % | |||||||||||||||||||||
Mortgage servicing rights | 10,199 | 18,458 | (8,259) | (45) | % | |||||||||||||||||||||
Servicing revenue, net | 31,526 | 29,565 | 1,961 | 7 | % | |||||||||||||||||||||
Property operating income | 1,570 | 1,381 | 189 | 14 | ||||||||||||||||||||||
Gain (loss) on derivative instruments, net | (5,257) | 4,223 | (9,480) | nm | % | |||||||||||||||||||||
Other income, net | 2,333 | 4,882 | (2,549) | (52) | ||||||||||||||||||||||
Total other revenue | 57,037 | 73,098 | (16,061) | (22) | % | |||||||||||||||||||||
Other expenses: | ||||||||||||||||||||||||||
Employee compensation and benefits | 47,694 | 42,399 | 5,295 | 12 | % | |||||||||||||||||||||
Selling and administrative | 13,933 | 13,623 | 310 | 2 | % | |||||||||||||||||||||
Property operating expenses | 1,678 | 1,383 | 295 | 21 | ||||||||||||||||||||||
Depreciation and amortization | 2,571 | 2,624 | (53) | (2) | % | |||||||||||||||||||||
Provision for loss sharing (net of recoveries) | 273 | 3,177 | (2,904) | (91) | ||||||||||||||||||||||
Provision for credit losses (net of recoveries) | 19,118 | 22,517 | (3,399) | (15) | ||||||||||||||||||||||
Total other expenses | 85,267 | 85,723 | (456) | (1) | % | |||||||||||||||||||||
Income before income from equity affiliates and income taxes | 75,386 | 95,949 | (20,563) | (21) | % | |||||||||||||||||||||
Income from equity affiliates | 1,418 | 14,326 | (12,908) | (90) | % | |||||||||||||||||||||
Provision for income taxes | (3,592) | (8,029) | 4,437 | (55) | ||||||||||||||||||||||
Net income | 73,212 | 102,246 | (29,034) | (28) | % | |||||||||||||||||||||
Preferred stock dividends | 10,342 | 10,342 | — | — | ||||||||||||||||||||||
Net income attributable to noncontrolling interest | 4,997 | 7,585 | (2,588) | (34) | % | |||||||||||||||||||||
Net income attributable to common stockholders | $ | 57,873 | $ | 84,319 | $ | (26,446) | (31) | % |
49
The following table presents the average balance of our Structured Business interest-earning assets and interest-bearing liabilities, associated interest income (expense) and the corresponding weighted average yields ($ in thousands):
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||||||||||||||
Average Carrying Value (1) | Interest Income / Expense | W/A Yield / Financing Cost (2) | Average Carrying Value (1) | Interest Income / Expense | W/A Yield / Financing Cost (2) | ||||||||||||||||||||||||||||||
Structured Business interest-earning assets: | |||||||||||||||||||||||||||||||||||
Bridge loans | $ | 12,164,713 | $ | 286,117 | 9.43 | % | $ | 13,799,379 | $ | 303,019 | 8.91 | % | |||||||||||||||||||||||
Mezzanine / junior participation loans | 249,983 | 6,877 | 11.03 | % | 214,971 | 5,884 | 11.10 | % | |||||||||||||||||||||||||||
Preferred equity investments | 96,908 | 1,600 | 6.62 | % | 97,192 | 1,998 | 8.34 | % | |||||||||||||||||||||||||||
Other | 6,511 | 166 | 10.23 | % | 34,152 | 833 | 9.89 | % | |||||||||||||||||||||||||||
Core interest-earning assets | 12,518,115 | 294,760 | 9.44 | % | 14,145,694 | 311,734 | 8.94 | % | |||||||||||||||||||||||||||
Cash equivalents | 1,024,655 | 13,128 | 5.14 | % | 871,105 | 5,642 | 2.63 | % | |||||||||||||||||||||||||||
Total interest-earning assets | $ | 13,542,770 | $ | 307,888 | 9.12 | % | $ | 15,016,799 | $ | 317,376 | 8.57 | % | |||||||||||||||||||||||
Structured Business interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||
CLO | $ | 6,619,361 | $ | 121,861 | 7.38 | % | $ | 7,480,943 | $ | 119,051 | 6.45 | % | |||||||||||||||||||||||
Credit and repurchase facilities | 2,764,919 | 57,974 | 8.41 | % | 3,438,091 | 62,730 | 7.40 | % | |||||||||||||||||||||||||||
Unsecured debt | 1,632,500 | 25,330 | 6.22 | % | 1,713,633 | 26,289 | 6.22 | % | |||||||||||||||||||||||||||
Q Series securitization | 202,744 | 4,091 | 8.09 | % | 236,878 | 3,906 | 6.69 | % | |||||||||||||||||||||||||||
Trust preferred | 154,336 | 3,344 | 8.69 | % | 154,336 | 2,918 | 7.67 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 11,373,860 | 212,600 | 7.50 | % | $ | 13,023,881 | 214,894 | 6.69 | % | |||||||||||||||||||||||||
Net interest income | $ | 95,288 | $ | 102,482 |
| | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | ||||||||||||||
| | 2023 | | 2022 | | ||||||||||||
| | Average | | Interest | | W/A Yield / | | Average | | Interest | | W/A Yield / |
| ||||
| | Carrying | | Income / | | Financing | | Carrying | | Income / | | Financing |
| ||||
|
| Value (1) |
| Expense |
| Cost (2) |
| Value (1) |
| Expense |
| Cost (2) |
| ||||
Structured Business interest-earning assets: |
| |
|
| |
|
|
|
| |
|
| |
|
|
| |
| | | | | | | | | | | | | | | | | |
Bridge loans | | $ | 13,799,379 | | $ | 303,019 |
| 8.91 | % | $ | 12,506,401 | | $ | 143,483 |
| 4.65 | % |
Mezzanine / junior participation loans | |
| 214,971 | |
| 5,884 |
| 11.10 | % |
| 222,758 | |
| 5,078 |
| 9.25 | % |
Preferred equity investments | |
| 97,192 | |
| 1,998 |
| 8.34 | % |
| 152,761 | |
| 2,660 |
| 7.06 | % |
Other | | | 34,152 | | | 833 | | 9.89 | % | | 140,666 | | | 4,926 | | 14.20 | % |
Core interest-earning assets | |
| 14,145,694 | |
| 311,734 |
| 8.94 | % |
| 13,022,586 | |
| 156,147 |
| 4.86 | % |
Cash equivalents | |
| 871,105 | |
| 5,642 |
| 2.63 | % |
| 758,362 | |
| 113 |
| 0.06 | % |
Total interest-earning assets | | $ | 15,016,799 | | $ | 317,376 |
| 8.57 | % | $ | 13,780,948 | | $ | 156,260 |
| 4.60 | % |
Based on UPB for loans, amortized cost for securities and principal amount of debt.
| | | | | | | | | | | | | | | | | |
Structured Business interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| | | | | | | | | | | | | | | | | |
CLO | | $ | 7,480,943 | | $ | 119,051 |
| 6.45 | % | $ | 6,604,069 | | $ | 31,723 |
| 1.95 | % |
Credit and repurchase facilities | |
| 3,438,091 | |
| 62,730 |
| 7.40 | % |
| 3,668,456 | |
| 24,121 |
| 2.67 | % |
Unsecured debt | |
| 1,713,633 | |
| 26,289 |
| 6.22 | % |
| 1,559,751 | |
| 21,153 |
| 5.50 | % |
Q Series securitization | | | 236,878 | | | 3,906 | | 6.69 | % | | — | | | — | | — | |
Trust preferred | |
| 154,336 | |
| 2,918 |
| 7.67 | % |
| 154,336 | |
| 1,205 |
| 3.17 | % |
Total interest-bearing liabilities | | $ | 13,023,881 | |
| 214,894 |
| 6.69 | % | $ | 11,986,612 | |
| 78,202 |
| 2.65 | % |
Net interest income | | | | | $ | 102,482 |
|
| |
|
| | $ | 78,058 |
|
| |
Net Interest Income
originations, partially offset by an increase in the average yield on core interest-earning assets, mainly from increases in SOFR. The increase from the Agency Business was primarily due to increases in both the average loans held-for-sale balance and SOFR.
interest-bearing liabilities, mainly from increases in SOFR.
The increasedecrease in income from MSRs was primarily due to a 54% increase ($525.0 million)38% decrease in loan commitment volume partially offset by a 22%($565.9 million) and an 11% decrease in the MSR rate from 1.57%1.23% to 1.23%1.09%. The decrease in the MSR rate was primarily due to a reductionhigher percentage of Fannie Mae loan commitments in the prior year period, which contain higher servicing rates on newer loans.
50
The increase in servicing revenue, net was primarily due to an increase in earnings on escrow balances as a result of increases in benchmark index rates and higher escrow balances,SOFR, partially offset by less prepayment penalties received.
(Loss)
increases in incentive compensation, including commissions, from increases in headcount, annual merit increases and higher GSE/Agency loan sales volume.
Loss on Extinguishment of Debt
The loss on extinguishment of debt in 2022 represents deferred financing fees recognized in connection with the unwind of CLOs.
market conditions at that time, and to a lesser extent, specific reserves.
Provision for Income Taxes
deferred tax benefit of $4.0 million. In the three months ended March 31, 2023, we recorded a tax provision of $8.0 million, which consisted of a current and deferred tax provision of $4.8 million and $3.2 million, respectively. In the three months ended March 31, 2022, we recorded a tax provision of $8.2 million, which consisted of a current tax provision of $9.9 million and a deferred tax benefit of $1.7 million. The decrease in the tax provision was primarily due to lower income generated from our investment in a residential banking business.
Preferred Stock Dividends
The increase in preferred stock dividends was due to the issuance of an additional 3,292,000 shares of our Series F preferred stock during the first quarter of 2022.
51
The ongoing COVID-19 pandemic has contributed to adverse economic and market conditions, causingincluding inflation, rising interest rates, bank failures and geopolitical uncertainty, continues to cause significant disruptions and liquidity constraints in many market segments, including the financial services, real estate and credit markets. These conditions have created, and may continue to create, a dislocation in capital markets while adding to ongoing longer-term macroeconomic effects on inflation, interest rates and capital markets. In addition,a continual reduction of available liquidity. Instability in the banking sector, such as the recent bank failures and consolidations, have further contributed to a dislocation in capital markets and tightening liquidity conditions affecting the availability and cost of capital. We are monitoring its impact on our financing sources, borrowers and their tenants, as well as the economy as a whole, including the tightening liquidity conditions in the equity and capital markets. Tomarkets and has affected the extent thatavailability and increased the cost of capital. The increased cost of credit, or degradation in debt financing terms, may impact our ability to identify and execute investments on attractive terms, or at all. If our financing sources, borrowers and their tenants continue to be impacted by the pandemic,these adverse economic and market conditions, or by the other risks disclosed in our filings with the SEC, it would have a material adverse effect on our liquidity and capital resources.
We had $12.65 billion in total structured debt outstanding at March 31, 2023. Of this total, $9.41 billion, or 74%, does not contain mark-to-market provisions and is comprised of non-recourse securitized debt, senior unsecured debt and junior subordinated notes, the majority of which have maturity dates in 2024, or later. The remaining $3.24 billion of debt is in credit and repurchase facilities with several different banks that we have long-standing relationships with. At March 31, 2023, we had $2.12 billion of debt from credit and repurchase facilities that were subject to margin calls related to changes in interest spreads. While we expect to extend or renew all of our facilities as they mature, we cannot provide assurance that they will be extended or renewed on as favorable terms.
our affiliated servicing operations
holders.
52
We also enter into contractual commitments with borrowers providing rate lock commitments while simultaneously entering into forward sale commitments with investors. These commitments are outstanding for short periods of time (generally less than 60 days) and are described in Note 11.
Debt Instruments | March 31, 2024 | |||||||||||||||||||||||||
Commitment | UPB (1) | Available | Maturity Dates (2) | |||||||||||||||||||||||
Structured Business | ||||||||||||||||||||||||||
Credit and repurchase facilities | $ | 6,530,603 | $ | 2,608,942 | $ | 3,921,661 | 2024 - 2027 | |||||||||||||||||||
Securitized debt (3) | 6,710,119 | 6,710,119 | — | 2024 - 2027 | ||||||||||||||||||||||
Senior unsecured notes | 1,345,000 | 1,345,000 | — | 2024 - 2028 | ||||||||||||||||||||||
Convertible senior unsecured notes | 287,500 | 287,500 | — | 2025 | ||||||||||||||||||||||
Junior subordinated notes | 154,336 | 154,336 | — | 2034 - 2037 | ||||||||||||||||||||||
Structured Business total | 15,027,558 | 11,105,897 | 3,921,661 | |||||||||||||||||||||||
Agency Business | ||||||||||||||||||||||||||
Credit and repurchase facilities (4) | 1,700,531 | 312,264 | 1,388,267 | 2024 - 2026 | ||||||||||||||||||||||
Consolidated total | $ | 16,728,089 | $ | 11,418,161 | $ | 5,309,928 |
| | | | | | | | | | | |
| | March 31, 2023 | |||||||||
| | | | | | | | | | | Maturity |
Debt Instruments |
| Commitment |
| UPB (1) |
| | Available |
| Dates (2) | ||
Structured Business |
| |
|
| | |
| |
|
|
|
Credit and repurchase facilities | | $ | 6,762,047 | | $ | 3,239,951 | | $ | 3,522,096 |
| 2023 - 2026 |
Securitized debt (3) | |
| 7,541,518 | |
| 7,541,518 | |
| — |
| 2023 - 2027 |
Senior unsecured notes | |
| 1,423,850 | |
| 1,423,850 | |
| — |
| 2023 - 2028 |
Convertible senior unsecured notes | |
| 287,500 | |
| 287,500 | |
| — |
| 2025 |
Junior subordinated notes | |
| 154,336 | |
| 154,336 | |
| — |
| 2034 - 2037 |
Structured Business total | |
| 16,169,251 | |
| 12,647,155 | |
| 3,522,096 |
|
|
| | | | | | | | | | | |
Agency Business | |
| | |
| | |
| |
|
|
Credit and repurchase facilities (4) | |
| 2,150,534 | |
| 422,805 | |
| 1,727,729 |
| 2023 - 2024 |
Consolidated total | | $ | 18,319,785 | | $ | 13,069,960 | | $ | 5,249,825 |
|
|
| | | | | | | | | |
|
| Quarterly Average |
| End of Period |
| Maximum UPB at | |||
Quarter Ended | | UPB | | UPB | | Any Month-End | |||
March 31, 2023 | | $ | 3,691,191 | | $ | 3,662,756 | | $ | 3,696,760 |
December 31, 2022 | | | 4,441,774 | | | 3,856,009 | | | 4,403,368 |
September 30, 2022 | | | 4,534,744 | | | 4,642,911 | | | 4,642,911 |
June 30, 2022 | |
| 4,581,226 | |
| 4,561,393 | |
| 4,926,070 |
March 31, 2022 | |
| 4,224,503 | |
| 4,315,388 | |
| 4,842,785 |
Quarter Ended | Quarterly Average UPB | End of Period UPB | Maximum UPB at Any Month End | |||||||||||||||||
March 31, 2024 | $ | 3,010,216 | $ | 2,921,206 | $ | 3,132,279 | ||||||||||||||
December 31, 2023 | 3,274,139 | 3,242,938 | 3,251,330 | |||||||||||||||||
September 30, 2023 | 3,432,725 | 3,398,451 | 3,463,825 | |||||||||||||||||
June 30, 2023 | 3,565,377 | 3,588,538 | 3,677,755 | |||||||||||||||||
March 31, 2023 | 3,691,191 | 3,662,756 | 3,696,760 |
Conversely, such rising interest rates have negatively impacted real estate values and have limited certain borrowers abilities to make debt service payments, which may limit new mortgage loan originations and increase the likelihood of additional delinquencies and losses incurred on defaulted loans if the reduction in the collateral value is insufficient to repay their loans in full.
53
Contractual Obligations. During the three months ended March 31, 2023,2024, the following significant changes were made to our contractual obligations disclosed in our 20222023 Annual Report:
Modified existing debt facilities, resulting in a net $700.0 million decrease in the committed amount of these facilities;
2024.
54
Distributable earnings are as follows ($ in thousands, except share and per share data):
Three Months Ended March 31, | |||||||||||||||||||||||
2024 | 2023 | ||||||||||||||||||||||
Net income attributable to common stockholders | $ | 57,873 | $ | 84,319 | |||||||||||||||||||
Adjustments: | |||||||||||||||||||||||
Net income attributable to noncontrolling interest | 4,997 | 7,585 | |||||||||||||||||||||
Income from mortgage servicing rights | (10,199) | (18,458) | |||||||||||||||||||||
Deferred tax (benefit) provision | (3,952) | 3,164 | |||||||||||||||||||||
Amortization and write-offs of MSRs | 18,418 | 18,723 | |||||||||||||||||||||
Depreciation and amortization | 3,193 | 4,295 | |||||||||||||||||||||
Provision for credit losses, net | 14,804 | 23,704 | |||||||||||||||||||||
Loss (gain) on derivative instruments, net | 5,523 | (7,051) | |||||||||||||||||||||
Stock-based compensation | 6,020 | 5,901 | |||||||||||||||||||||
Distributable earnings (1) | $ | 96,677 | $ | 122,182 | |||||||||||||||||||
Diluted weighted average shares outstanding - GAAP (1) | 222,926,076 | 214,910,974 | |||||||||||||||||||||
Less: Convertible notes dilution | (17,414,547) | (17,230,358) | |||||||||||||||||||||
Diluted weighted average shares outstanding - distributable earnings (1) | 205,511,529 | 197,680,616 | |||||||||||||||||||||
Diluted distributable earnings per share (1) | $ | 0.47 | $ | 0.62 |
| | | | | | |
| | Three Months Ended March 31, | ||||
|
| 2023 |
| 2022 | ||
| | | | | | |
Net income attributable to common stockholders | | $ | 84,319 | | $ | 64,057 |
Adjustments: | |
| | |
| |
Net income attributable to noncontrolling interest | |
| 7,585 | |
| 6,816 |
Income from mortgage servicing rights | |
| (18,458) | |
| (15,312) |
Deferred tax provision (benefit) | |
| 3,164 | |
| (1,720) |
Amortization and write-offs of MSRs | |
| 18,723 | |
| 27,669 |
Depreciation and amortization | |
| 4,295 | |
| 2,569 |
Loss on extinguishment of debt | | | — | | | 1,350 |
Provision for credit losses, net | | | 23,704 | | | 1,696 |
Gain on derivative instruments, net | | | (7,051) | | | (298) |
Stock-based compensation | | | 5,901 | |
| 6,092 |
Distributable earnings (1) | | $ | 122,182 | | $ | 92,919 |
| | | | | | |
Diluted weighted average shares outstanding - GAAP (1) | | | 214,910,974 | | | 185,431,404 |
Less: Convertible notes dilution | | | (17,230,358) | | | (15,068,383) |
Diluted weighted average shares outstanding - distributable earnings (1) | | | 197,680,616 | | | 170,363,021 |
| | | | | | |
Diluted distributable earnings per share (1) | | $ | 0.62 | | $ | 0.55 |
2023. Assets (Liabilities) Subject to Interest 50 Basis Point 100 Basis Point 50 Basis Point 100 Basis Point Rate Sensitivity (1) Increase Increase Decrease Decrease Interest income from loans and investments $ 13,643,724 $ 65,843 $ 131,687 $ (65,360) $ (129,746) Interest expense from debt obligations (12,647,155) 54,713 109,408 (54,676) (109,371) Impact to net interest income (2) $ 11,130 $ 22,279 $ (10,684) $ (20,375)20222023 Annual Report. That information is supplemented by the information included above in Item 2 of this report. Other than the developments described thereunder, there have been no material changes in our exposure to market risk since December 31, 2022.both 50 basis points and a decrease of 100 basis points in LIBOR, SOFR, or other applicable index rate (collectively referred to as the “Index Rates” below).(1)Represents the UPB of our loan portfolio and the principal balance of our debt.(2)The impact of hypothetical rate changes to netcorresponding interest rates. Since it is unlikely that interest income are further benefited by interest income earned on our cash, restricted cash and escrow balances. At March 31, 2023, we had approximately $2.8 billion of cash, restricted cash and escrows, which is earning interest at a weighted average blended rate of approximately 4%, or approximately $100 million annually. Interest income earned on escrows is included as a component of servicing revenue, net and interest income earned on our cash and restricted cash is included as a component of interest income in the consolidated statements of income. The interest earned on our cash, restricted cash and escrows is based on an average daily balance and may be different from the end of period balance. Additionally, the interest rates on these balances are not indexed to an Index Rate and are negotiated periodically with each55
We enter intorates will significantly increase in the near future as a result of the current high interest rate swapsenvironment, we have excluded the impact of a 100 basis point increase in corresponding interest rates.
Assets (Liabilities) Subject to Interest Rate Sensitivity (1) | 50 Basis Point Increase | 50 Basis Point Decrease | 100 Basis Point Decrease | ||||||||||||||||||||
Interest income from loans and investments | $ | 12,249,862 | $ | 52,702 | $ | (51,525) | $ | (102,244) | |||||||||||||||
Interest expense from debt obligations | (11,105,897) | 47,437 | (47,437) | (94,873) | |||||||||||||||||||
Impact to net interest income from loans and investments | 5,265 | (4,088) | (7,371) | ||||||||||||||||||||
Interest income from cash, restricted cash and escrow balances (2) | 2,758,799 | 13,794 | (13,794) | (27,890) | |||||||||||||||||||
Total impact from hypothetical changes in interest rates | $ | 19,059 | $ | (17,882) | $ | (35,261) |
2024.
us.
56
The following table includes
| | | | | | | | | | |
|
| |
|
| |
|
|
| Approximate Dollar | |
| | | | | | | Total Number of | | Value of Shares That | |
| | | | | | | Shares Purchased as | | May Yet Be | |
| | Total Number of | | Average Price Paid | | Part of a Publicly | | Purchased Under the | ||
Period |
| Shares Purchased |
| per Share |
| Announced Program |
| Program | ||
January 1 - 31, 2023 |
| — |
| | — |
| — |
| | — |
February 1 - 28, 2023 |
| — |
| | — |
| — |
| | — |
March 1 - 31, 2023 |
| 886,432 | | $ | 10.91 |
| 886,432 | | $ | 40,329 |
Total |
| 886,432 | | $ | 10.91 |
| 886,432 | |
|
|
Subsequent to March 31, 2023, we repurchased additional shares under this share repurchase program. Through April 30, 2023, we repurchased a total of 3,545,604 shares of our common stock under this program at a total cost of $37.4 million and an average cost of $10.56 per share.
57
Item 6.Exhibits
| | | | | | | | |
Exhibit # |
| Description |
| Form |
| Exhibit # |
| Filing Date |
3.1 | | | S-11 | | 3.1 | | 11/13/03 | |
| | | | | | | | |
3.2 | | Articles of Amendment to Articles of Incorporation of Arbor Realty Trust, Inc. | | 10-Q | | 3.2 | | 08/07/07 |
| | | | | | | | |
3.3 | | | 8-K | | 3.1 | | 12/01/20 | |
| | | | | | | | |
31.1 | | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14, filed herewith | | | | | | |
| | | | | | | | |
31.2 | | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14, filed herewith | | | | | | |
| | | | | | | | |
32 | | | | | | | | |
| | | | | | | | |
101.1 | | Financial statements from the Quarterly Report on Form 10-Q of Arbor Realty Trust, Inc. for the quarter ended March 31, 2023, filed on May 5, 2023, formatted in Inline Extensible Business Reporting Language (“XBRL”): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Changes in Equity, (4) the Consolidated Statements of Cash Flows and (5) the Notes to Consolidated Financial Statements. | | | | | | |
| | | | | | | | |
104 | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | | | | | | |
58
Incorporated by Reference | ||||||||||||||||||||||||||
Exhibit # | Description | Form | Exhibit # | Filing Date | ||||||||||||||||||||||
3.1 | S-11 | 3.1 | 11/13/03 | |||||||||||||||||||||||
3.2 | 10-Q | 3.2 | 08/07/07 | |||||||||||||||||||||||
3.3 | 8-K | 3.1 | 12/01/20 | |||||||||||||||||||||||
10.1 | ||||||||||||||||||||||||||
31.1 | ||||||||||||||||||||||||||
31.2 | ||||||||||||||||||||||||||
32 | ||||||||||||||||||||||||||
101 | Financial statements from the Quarterly Report on Form 10-Q of Arbor Realty Trust, Inc. for the quarter ended March 31, 2024, filed on May 3, 2024, formatted in Inline Extensible Business Reporting Language (“XBRL”): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Income, (3) the Consolidated Statements of Changes in Equity, (4) the Consolidated Statements of Cash Flows and (5) the Notes to Consolidated Financial Statements. | |||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| ||||||||
|
|
| ||||||
Date: May | By: | /s/ Ivan Kaufman | ||||||
Ivan Kaufman | ||||||||
Chief Executive Officer | ||||||||
|
|
| ||||||
|
|
| ||||||
Date: May | By: | /s/ Paul Elenio | ||||||
Paul Elenio | ||||||||
Chief Financial Officer |
59