Exhibit 99.1
Contacts: Investors:
Arbor Realty Trust, Inc. Stephanie Carrington/ Denise Roche
Paul Elenio, Chief Financial Officer The Ruth Group
516-832-7422 646-536-7017 / 7008
paul.elenio@thearbornet.com scarrington@theruthgroup.com
droche@theruthgroup.com
Media:
Bonnie Habyan, SVP of Marketing
516-229-6615
bonnie.habyan@thearbornet.com
ARBOR REALTY TRUST REPORTS FOURTH QUARTER AND FULL YEAR 2005 RESULTS
FOURTH QUARTER HIGHLIGHTS:
- Net income increased 9% to $9.3 million from 4Q04
- Diluted earnings per share of $0.55
- New loans and investments of $235 million
- Declared quarterly dividend of $0.70 per share, an increase of 8%
from 3Q05
- Priced second CDO issuing $356 million of investment grade debt
- Completed $50 million private placement of trust preferred securities
YEAR END HIGHLIGHTS:
- Net income increased 101% to $50.4 million from 2004
- Diluted earnings per share of $2.98
- New loans and investments of $1.0 billion
- Portfolio balance increased 50% from 2004
- Issued $156 million of trust preferred securities
- Closed first CDO issuing $305 million of investment grade debt
Uniondale, NY, February 10, 2006 -- Arbor Realty Trust, Inc. (NYSE: ABR), a real
estate investment trust focused on the business of investing in real estate
related bridge and mezzanine loans, preferred and direct equity investments,
mortgage-related securities and other real estate related assets, today
announced financial results for the fourth quarter and year ended December 31,
2005. Arbor reported net income for the quarter of $9.3 million, or $0.55 per
diluted common share, compared to net income for the quarter ended December 31,
2004 of $8.6 million, or $0.52 per diluted common share. Net income for the full
year ended December 31, 2005 was $50.4 million, or $2.98 per diluted common
share, compared to net income for the year ended December 31, 2004 of $25.1
million, or $1.78 per diluted common share.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 2
"Our strong fourth quarter earnings results reflect the solid growth of our
portfolio and the quality of our new investments," said Ivan Kaufman, Chairman
and Chief Executive Officer. "Equally important, this quarter also marks the
significant progress we have made in solidifying one of the most critical
aspects of our business, our long-term funding sources. In creating a financing
platform that mirrors our business model, we are more confident than ever in our
ability to properly fund the future growth of our loans and investment
portfolio."
During the fourth quarter, Arbor originated 15 loans and investments totaling
$235 million. "The quarterly loan volume demonstrates the strength of our
origination platform despite an increasingly competitive market," commented Mr.
Kaufman. "As we have said before, we will not close transactions that do not
meet our portfolio objectives merely for the sake of growing our portfolio.
Mr. Kaufman continued, "With the growth of the Company and the changes in the
market and our funding sources, we continue to diversify our portfolio with
longer-term fixed rate product. Since completion of our first CDO in the first
quarter, we have closed $222 million of fixed rate loans, or 23% of the loan
volume this year. We are able to lock in attractive spreads for the duration of
these loans by swapping out the rates within our CDO. These long-term assets
generally include prepayment protection and provide more stable returns going
forward, especially in a rising interest rate environment."
Total revenues for the quarter ended December 31, 2005 were $31.7 million, an
increase of 53% from the same quarter of 2004.
At December 31, 2005, the net balance in the loan and investment portfolio was
$1.3 billion, an increase of 16% and 50% from September 30, 2005 and December
31, 2004, respectively. The average balance of the loan and investment portfolio
during the fourth quarter was $1.2 billion and the average yield on these assets
for the quarter was 10.40%, representing a 29 basis point increase over the
third quarter of 2005.
Interest expense for the quarter was $15.3 million, an increase of 102% from the
fourth quarter of 2004. This increase reflects increased average borrowings
during the quarter as well as increased interest rates. The average balance of
debt financing on the loan and investment portfolio during the quarter was $887
million and the average cost of these borrowings was 6.68%.
For the fourth quarter, Arbor's manager, Arbor Commercial Mortgage, LLC, earned
$1.5 million of incentive compensation, representing 25% of the amount by which
earnings for the four most recent quarters exceeded a 9.5% return on equity, as
described in the management agreement with Arbor's manager. Arbor Commercial
Mortgage intends to exercise its option to receive all of its incentive
compensation in shares of Arbor's common stock.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 3
Financing Activity
- ------------------
"The milestone we achieved by significantly strengthening our funding sources
over the course of the year has both enhanced the long-term value of our
franchise and well positioned us to finance the future growth of our portfolio,"
said Kaufman. "During the quarter, we issued an additional $50 million of
long-term junior subordinated notes at historically low spreads. These trust
preferred securities strengthen our balance sheet by offering lower-cost,
longer-term financing. We continue to view the issuance of these notes as a
favorable alternative to raising capital, which would be dilutive to our
shareholders. And, as we continue to state, maximizing shareholder value has,
and always will be, our primary goal."
In January 2006, Arbor completed its second CDO issuing approximately $356
million of investment grade-rated floating rate notes. The notes have an initial
weighted average spread of approximately 73 basis points over three-month LIBOR.
Arbor retained an equity interest of approximately $119 million in the
portfolio. Mr. Kaufman commented, "The closing of this transaction was a
significant accomplishment especially given the current market conditions. This
was an important step in the development of our franchise. It offers us greater
flexibility in financing the growth of our portfolio and further solidifies our
borrowing capabilities with lower-cost long-term debt."
During the quarter, Arbor closed two additional warehouse facilities totaling
$150 million and elected not to renew a $50 million unsecured facility.
As of December 31, 2005, Arbor's financing facilities for the loan and
investment portfolio totaled approximately $1.3 billion and borrowings
outstanding under such facilities were $1.0 billion.
Portfolio Activity
- ------------------
During the fourth quarter of 2005, Arbor originated 15 new loans and investments
totaling $235 million, net of a $59 million participation in one of its loans.
Of the new loans and investments, three were bridge loans totaling $56 million,
eight were mezzanine loans totaling $101 million, three were junior
participating interests totaling $67 million, and one was a preferred equity
investment totaling $11 million.
During the quarter, 12 loans paid off with an outstanding balance of
approximately $93 million. Of this amount, $75 million were loans on properties
that were either sold or refinanced outside of Arbor and $18 million was
concurrent with an Arbor refinance.
At December 31, 2005, the loan and investment portfolio unpaid principal balance
was $1.3 billion with a weighted average current interest pay rate of 9.24%. At
the same date, advances on financing facilities pertaining to the loan and
investment portfolio totaled $1.0 billion, with a weighted average interest rate
of 6.57% and 6.36% excluding a $59 million participation in one of Arbor's
loans.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 4
The loan and investment portfolio continues to perform according to terms and
there have been no defaults. Arbor continues to seek loans and investments that
will generate superior risk-adjusted returns with a long-term objective of
capital preservation and earnings stability in varying interest rate and credit
cycles.
Dividend
- --------
As previously announced, the Board of Directors declared a dividend of $0.70 per
share for the quarter ended December 31, 2005, which was paid on February 6,
2006 to shareholders of record on January 23, 2006. This dividend represents an
8% increase over the previous quarter and reflects management's understanding of
the importance to investors of a stable and growing dividend.
Equity Participation Interests
- ------------------------------
"The value of our equity participation interests has always been a topic of
interest," commented Mr. Kaufman. "Consistent with our previously adopted policy
of offering additional data on our equity participation interests and IRR
lookbacks, we have attached, as an exhibit, an updated schedule of certain data
pertaining to these investments to this press release. There are no assurances
that these equity participation interests and IRR lookbacks will ultimately
realize any significant value. We hope this will give potential and existing
investors additional information to assist them in making an informed investment
decision."
Earnings Conference Call
- ------------------------
Management will host a conference call today at 10:00 a.m. EST. A live webcast
of the conference call will be available online at www.arborrealtytrust.com. Web
participants are encouraged to go to Arbor's Web site at least 15 minutes prior
to the start of the call to register, download and install any necessary audio
software. Listening to the webcast requires speakers and RealPlayer(TM)
software, downloadable without charge at www.real.com. Those without Web access
should access the call telephonically at least ten minutes prior to the
conference call. The dial-in numbers are (800) 510-9661 for domestic callers and
(617) 614-3452 for international callers. The participant passcode for both is
32237701.
After the live webcast, the call will remain available on Arbor's Web site,
www.arborrealtytrust.com through February 19, 2006. In addition, a telephonic
replay of the call will be available until February 17, 2006. The replay dial-in
number is (888) 286-8010 for domestic callers and (617) 801-6888. Please use
passcode: 48735472.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 5
About Arbor Realty Trust, Inc.
- ------------------------------
Arbor Realty Trust, Inc. is a real estate investment trust which invests in a
diversified portfolio of multi-family and commercial real estate related bridge
and mezzanine loans, preferred equity investments, mortgage related securities
and other real estate related assets. Arbor commenced operations in July 2003
and conducts substantially all of its operations through its operating
partnership, Arbor Realty Limited Partnership and its subsidiaries. Arbor is
externally managed and advised by Arbor Commercial Mortgage, LLC, a national
commercial real estate finance company operating through 15 offices in the US
that specializes in debt and equity financing for multi-family and commercial
real estate.
Safe Harbor Statement
- ---------------------
Certain items in this press release may constitute forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on management's
current expectations and beliefs and are subject to a number of trends and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. Arbor can give no assurance that
its expectations will be attained. Factors that could cause actual results to
differ materially from Arbor's expectations include, but are not limited to,
continued ability to source new investments, changes in interest rates and/or
credit spreads, changes in the real estate markets, and other risks detailed in
the Arbor's Annual Report on Form 10-K for the year ended December 31, 2004 and
its other reports filed with the SEC. Such forward-looking statements speak only
as of the date of this press release. Arbor expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in Arbor's
expectations with regard thereto or change in events, conditions, or
circumstances on which any such statement is based.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 6
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
Quarter Ended Year Ended
December 31, December 31,
------------------------------- -------------------------------
2005 2004 2005 2004
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited)
REVENUE:
Interest income $ 31,619,614 $ 20,674,843 $ 121,109,157 $ 57,927,230
Other income 74,676 6,636 498,250 42,265
-------------- -------------- -------------- --------------
Total revenue 31,694,290 20,681,479 121,607,407 57,969,495
-------------- -------------- -------------- --------------
EXPENSES:
Interest expense 15,266,253 7,539,501 45,745,424 19,372,575
Employee compensation and benefits 1,215,401 646,720 4,274,609 2,325,727
Stock based compensation 317,356 67,544 1,590,898 324,343
Selling and administrative 1,363,703 752,793 4,351,366 1,908,522
Management fee - related party 2,116,638 1,721,928 12,430,546 3,614,830
-------------- -------------- -------------- --------------
Total expenses 20,279,351 10,728,486 68,392,843 27,545,997
-------------- -------------- -------------- --------------
Income before minority interest
and income from equity affiliates 11,414,939 9,952,993 53,214,564 30,423,498
Income from equity affiliates - 525,000 8,453,440 525,000
-------------- -------------- -------------- --------------
Income before minority interest 11,414,939 10,477,993 61,668,004 30,948,498
Income allocated to minority interest 2,071,691 1,923,558 11,280,981 5,875,816
-------------- -------------- -------------- --------------
Net income $ 9,343,248 $ 8,554,435 $ 50,387,023 $ 25,072,682
============== ============== ============== ==============
Basic earnings per common share $ 0.55 $ 0.52 $ 2.99 $ 1.81
============== ============== ============== ==============
Diluted earnings per common share $ 0.55 $ 0.52 $ 2.98 $ 1.78
============== ============== ============== ==============
Dividends declared per common share $ 0.65 $ 0.47 $ 2.24 $ 1.16
============== ============== ============== ==============
Weighted average number of shares
of common stock outstanding:
Basic 17,030,461 16,373,053 16,867,466 13,814,199
============== ============== ============== ==============
Diluted 20,806,530 20,217,751 20,661,568 17,366,015
============== ============== ============== ==============
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 7
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2005 2004
---------------- ----------------
(Unaudited)
ASSETS:
Cash $ 19,427,309 $ 6,401,701
Restricted cash 38,522,126 -
Loans and investments, net 1,246,825,906 831,783,364
Related party loans, net 7,749,538 7,749,538
Available-for-sale securities, at fair value 29,615,420 46,582,592
Investment in equity affiliates 18,094,242 5,254,733
Other assets 35,959,653 14,523,249
---------------- ----------------
Total assets $ 1,396,194,194 $ 912,295,177
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Repurchase agreements $ 413,624,385 $ 409,109,372
Collateralized debt obligations 299,319,000 -
Junior subordinated notes to subsidiary trust issuing preferred
securities 155,948,000 -
Notes payable 115,400,377 165,771,447
Notes payable - related party 30,000,000 -
Due to related party 1,777,412 1,484,485
Due to borrowers 10,691,355 8,587,070
Other Liabilities 18,133,592 4,339,899
---------------- ----------------
Total liabilities 1,044,894,121 589,292,273
---------------- ----------------
Minority interest 63,691,556 60,249,731
Stockholders' equity:
Preferred stock, $0.01 par value: 100,000,000 shares authorized;
3,776,069 shares issued and outstanding 37,761 37,761
Common stock, $0.01 par value: 500,000,000 shares authorized;
17,051,391 and 16,467,218 shares issued and outstanding at
December 31, 2005 and December 31, 2004, respectively 170,514 164,672
Additional paid-in capital 266,386,267 254,427,982
Retained earnings 21,452,789 8,813,138
Deferred compensation (1,694,336) (160,780)
Accumulated other comprehensive income (loss) 1,255,522 (529,600)
---------------- ----------------
Total stockholders' equity 287,608,517 262,753,173
---------------- ----------------
Total liabilities and stockholders' equity $ 1,396,194,194 $ 912,295,177
================ ================
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 8
Arbor Realty Trust, Inc.
Internal Rate of Return ("IRR") Lookbacks
(all dollar amounts in thousands)
Unaudited
LOAN
ORIGINATION COMMITMENT PAY RATE @ IRR
LOAN NAME DATE AMOUNT INDEX 12/31/05 RATE
- --------------------- ----------- ---------- ------------- ---------- --------
James Hotel 2Q05 $ 14,500 LIBOR + 5.00% 9.31% 16.25%
135 Greenwich St. 1Q05 11,815 LIBOR + 5.00% 9.31% 12.00% Year 1
LIBOR + 5.00% 13.00% Year 2
LIBOR + 5.00% 15.00% Year 3
The Pointe Lakeview 1Q05 5,750 LIBOR + 5.00% 9.31% 16.00%
Waipouli Beach Resort 1Q05 14,300 LIBOR + 5.00% 9.31% 12.50%
Harbor Island 3Q05 8,260 FIXED 9.00% 9.00% 12.50%
TOTAL $ 54,625 9.26% 13.76%
These loans contain a provision whereby upon repayment of the loan, the borrower
must make an additional payment in an amount sufficient to give Arbor Realty
Trust, Inc. the yield noted in the "IRR Rate" column. Management has not yet
determined that these amounts are collectable and, therefore, has not accrued
the difference between the current pay rate and the IRR rate.
Arbor Realty Trust Reports Fourth Quarter and Full Year 2005 Results
February 10, 2006 Page 9
Arbor Realty Trust, Inc.
Summary of Equity Participation Interests
(all dollar amounts in thousands)
Unaudited
INITIAL ART CURRENT APPROXIMATE
INVESTMENT INVESTMENT INVESTMENT SQUARE
NAME AMOUNT DATE AMOUNT PROFIT % FOOTAGE
- --------------- ----------- ------------ ---------- -------- -----------
80 Evergreen $ 384 3Q03 $ 201 12.50% 77,680
930 Flushing 1,126 3Q03 - 12.50% 304,080
Prime Portfolio 2,100 4Q03 - 7.50% 6,700,000
Prime Portfolio - 16.67% 6,700,000
450 W. 33rd St 1,500 4Q03 2,711 28.00% 1,746,734
823 Park Avenue - 3Q04 - 20.00% 50,000
York Avenue 540 3Q04 8 8.70% 45,200
Toy Building 10,000 2Q05 10,477 20.00% 958,000
On The Ave 2,000 2Q05 2,000 33.33% 170,000
CURRENT
PROPERTY DEBT BALANCE
NAME TYPE LOCATION ON PROPERTY COMMENTS
- --------------- -------------- --------------- ------------ ------------
80 Evergreen Warehouse Brooklyn, NY $ 4,664
930 Flushing Warehouse Brooklyn, NY 25,000 Property refinanced July 2005
Prime Portfolio Retail Outlets Multi-state 827,000 Property refinanced June 2005
Prime Portfolio Retail Outlets Multi-state All equity returned to investors
450 W. 33rd St Office New York City 350,000 Preferred return of 12.5%
823 Park Avenue Conversion New York City 97,500 *Condo conversion - investment held in
Taxable REIT Subsidiary ("TRS")
York Avenue Conversion New York City 32,000 Property refinanced Dec 2005
Toy Building Conversion New York City 640,000 *Condo conversion - TRS asset
On The Ave Hotel New York City 67,000 Condo/hotel conversion - TRS asset
* - debt balance represents anticipated debt financing required to complete
condominium conversion project.