Exhibit 99.1
ARBOR REALTY TRUST REPORTS FOURTH QUARTER AND FULL YEAR 2006 RESULTS
Fourth Quarter Highlights:
- Net income increased 54% to $14.4 million from 4Q05
- Diluted earnings per share of $0.84
- New loans and investments of $593 million
- Loan and investment portfolio increased 24% from 3Q06
- Declared quarterly dividend of $0.60 per share
- Closed third CDO issuing $548 million of investment grade debt
- Received $6.0 million distribution from investment in Prime
Year End Highlights:
- Diluted earnings per share of $2.93
- New loans and investments of $1.5 billion
- Portfolio balance increased 60% from 2005
- Issued $65 million of trust preferred securities
- Closed two CDOs issuing $904 million of investment grade debt
- Recorded $15.2 million of income from investment in Prime
UNIONDALE, N.Y., Feb. 9 /PRNewswire-FirstCall/ -- 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, 2006. Arbor reported net income for the quarter of $14.4 million, or $0.84
per diluted common share, compared to net income for the quarter ended December
31, 2005 of $9.3 million, or $0.55 per diluted common share. Excluding $3.7
million of income from the Prime transaction, net income for the quarter ended
December 31, 2006 was $10.7 million, or $0.62 per diluted common share.(1)
Net income for the full year ended December 31, 2006 was $50.4 million, or
$2.93 per diluted common share, compared to net income for the year ended
December 31, 2005 of $50.4 million, or $2.98 per diluted common share. Excluding
$9.3 million and $15.5 million of income from the Prime transaction for the
years ended December 31, 2006 and 2005, respectively, net income for the year
ended December 31, 2006 was $41.1 million, or $2.39 per diluted common share,
compared to net income for the year ended December 31, 2005 of $34.9 million, or
$2.07 per diluted share.(1)
"Our strong fourth quarter results reflect our commitment to enhance the
long-term value of our franchise," said Ivan Kaufman, Chairman and Chief
Executive Officer. "We achieved record growth in our portfolio during the
quarter which reflects the strength of our origination network. Additionally,
the significant progress we have made in improving our long-term funding sources
has enabled us to maximize the return on our investments. These improvements
have created a financing platform that mirrors our business model, enabling us
to properly fund the future growth of our loan and investment portfolio."
The results for the fourth quarter included a $6.0 million distribution from
Prime Outlets Acquisition Company LLC ("Prime"), an entity in which Arbor owns
an equity and profits interest. Prime refinanced the debt on a portion of the
assets in its portfolio, receiving proceeds in excess of the amount of the
previously existing debt. Of the distribution received by Arbor, $4.1 million
was recorded as interest income, representing the portion of the distribution
received from the profits interest, and $1.9 million of the distribution was
recorded as income from equity affiliates.
Mr. Kaufman stated, "During the quarter, we originated $123 million of
longer-term, fixed-rate product, which represented 21% of our quarterly volume.
Fixed-rate loans represent 25% of our portfolio as of December 31, 2006. These
loans generally include prepayment protection creating long-term stability in
our portfolio."
Total revenues for the quarter ended December 31, 2006 were $52.4 million,
an increase of 65% from the same quarter of 2005.
At December 31, 2006, the net balance in the loan and investment portfolio
was $2.0 billion, an increase of 24% and 60% from September 30, 2006 and
December 31, 2005, respectively. The average balance of the loan and investment
portfolio during the fourth quarter was $1.8 billion and the average yield on
these assets for the quarter was 10.15%, compared to an average yield of 10.63%
for the third quarter of 2006.
Interest expense for the fourth quarter 2006 was $29.4 million, an increase
of 92% from the fourth quarter of 2005. This increase reflects higher average
borrowings, as well as the rise in interest rates. The average balance of debt
financing on the loan and investment portfolio during the quarter was $1.6
billion and the average cost of these borrowings was 7.11%.
For the fourth quarter 2006, Arbor's manager, Arbor Commercial Mortgage,
LLC, earned $3.6 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. Arbor Commercial
Mortgage intends to exercise its option to receive all of its incentive
compensation in shares of Arbor Realty Trust's common stock.
Financing Activity
In December 2006, Arbor completed its third CDO issuing approximately $547.5
million of investment grade-rated floating rate debt, including a $100.0 million
revolving note class that provides a revolving credit facility. The notes have
an initial weighted average spread of approximately 44 basis points over
three-month LIBOR. Arbor retained an equity interest in the portfolio with a
notional amount of $52.5 million. "We are extremely pleased to have closed our
third CDO," said Kaufman. "This CDO significantly strengthens our long-term
financing sources and provides us with increased leverage, reduced borrowing
costs and allows us to fund the vast majority of our investments with CDO debt.
In addition, this CDO offers us greater flexibility in our product offerings and
features a $100.0 million revolving debt facility, which allows us to more
efficiently deploy the CDO cash resulting in increased returns on our equity."
As of December 31, 2006, Arbor's financing facilities for its loan and
investment portfolio totaled approximately $2.4 billion and borrowings
outstanding under such facilities were $1.8 billion.
Portfolio Activity
During the quarter, Arbor originated 19 new loans and investments totaling
$593 million, the highest quarterly loan volume in Arbor's history. Of the new
loans and investments, 13 were bridge loans totaling $389 million, two were
junior participating interests totaling $146 million, two were mezzanine loans
totaling $54 million, and two were preferred equity investments totaling $4
million.
During the quarter, 11 loans paid off with an outstanding balance of
approximately $197 million. Of this amount, $183 million were loans on
properties that were either sold or refinanced outside of Arbor and $14 million
was concurrent with an Arbor refinance.
At December 31, 2006, the loan and investment portfolio unpaid principal
balance was $2.0 billion with a weighted average current interest pay rate of
9.06%. At the same date, advances on financing facilities pertaining to the loan
and investment portfolio totaled $1.8 billion, with a weighted average interest
rate of 6.70%.
Arbor has an $8.5 million loan in its portfolio that is non-performing and
income recognition has been suspended. The principal amount of the loan is not
deemed to be impaired and no loan loss reserve has been recorded at this time.
Income recognition will resume when the loan becomes contractually current and
performance has recommenced.
Dividend
As previously announced, the Board of Directors declared a dividend of $0.60
per share for the quarter ended December 31, 2006, to be paid on February 20,
2007 to shareholders of record on February 5, 2007.
Equity Participation Interests
Attached as an exhibit to this press release is a schedule of certain data
pertaining to the Company's investments with equity participation interests and
IRR lookbacks. The Company recorded $6.0 million of income from the Prime
transaction during the quarter as previously disclosed. There were no new loans
and investments originated during the quarter with equity participation
interests or IRR lookbacks. The Company recorded income during the quarter on
one of its IRR lookbacks, Waipouli Beach Resort, totaling approximately $0.7
million.
Earnings Conference Call
Management will host a conference call today at 10:00 a.m. EDT. A live
webcast of the conference call will be available online at
http://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
http://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 (866) 510-0676 for domestic callers and (617) 597-5361 for
international callers. The participant passcode for both is 71581707.
After the live webcast, the call will remain available on Arbor's Web site,
http://www.arborrealtytrust.com through February 16, 2007. In addition, a
telephonic replay of the call will be available until February 16, 2007. The
replay dial-in number is (888) 286-8010 for domestic callers and (617) 801-6888.
Please use passcode: 51460689.
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 11 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 Arbor's Annual Report on Form 10-K for the year ended December 31,
2005 and its other reports filed with the SEC. Such forward-looking statements
speak only as of the date of this press release. Arbor expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in Arbor's
expectations with regard thereto or change in events, conditions, or
circumstances on which any such statement is based.
(1) See attached schedule of non-GAAP financial measures on page 7.
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
Quarter Ended Year Ended
December 31, December 31,
----------------------------- -----------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Audited)
Revenue:
Interest income $ 52,399,216 $ 31,619,614 $ 172,833,401 $ 121,109,157
Income from swap
derivative - - 696,960 -
Other income 8,250 74,676 170,197 498,250
Total revenue 52,407,466 31,694,290 173,700,558 121,607,407
Expenses:
Interest expense 29,360,656 15,266,253 92,693,419 45,745,424
Employee compensation
and benefits 1,218,640 1,215,401 4,648,644 4,274,609
Stock based compensation 536,627 317,356 2,329,689 1,590,898
Selling and
administrative 1,275,518 1,363,703 4,463,019 4,351,366
Management fee -
related party 4,301,079 2,116,638 12,831,791 12,430,546
Total expenses 36,692,520 20,279,351 116,966,562 68,392,843
Income before minority
interest and income
from equity affiliates 15,714,946 11,414,939 56,733,996 53,214,564
Income from equity
affiliates 1,875,000 - 4,784,292 8,453,440
Income before minority
interest 17,589,946 11,414,939 61,518,288 61,668,004
Income allocated to
minority interest 3,182,794 2,071,691 11,104,481 11,280,981
Net income $ 14,407,152 $ 9,343,248 $ 50,413,807 $ 50,387,023
Basic earnings per
common share $ 0.84 $ 0.55 $ 2.94 $ 2.99
Diluted earnings per
common share $ 0.84 $ 0.55 $ 2.93 $ 2.98
Dividends declared per
common share $ 0.58 $ 0.65 $ 2.57 $ 2.24
Weighted average number of
shares of common stock
outstanding:
Basic 17,088,970 17,030,461 17,161,346 16,867,466
Diluted 20,944,194 20,863,900 21,001,804 20,672,502
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
------------------------------- -----------------------------
2006 2005 2006 2005
--------------- ------------- ------------- -------------
Total revenue, GAAP
basis $ 52,407,466 $ 31,694,290 $ 173,700,558 $ 121,607,407
Subtract: Prime
transaction 4,166,667 - 10,440,708 17,239,447
Total revenue, as
adjusted $ 48,240,799 $ 31,694,290 $ 163,259,850 $ 104,367,960
Net income, GAAP basis $ 14,407,152 $ 9,343,248 $ 50,413,807 $ 50,387,023
Subtract: Prime
transaction 3,712,000 - 9,350,218 15,454,536
Net income, as adjusted $ 10,695,152 $ 9,343,248 $ 41,063,589 $ 34,932,487
Diluted earnings per
common share, GAAP basis $ 0.84 $ 0.55 $ 2.93 $ 2.98
Diluted earnings per common
share, as adjusted $ 0.62 $ 0.55 $ 2.39 $ 2.07
Diluted weighted average
shares outstanding 20,944,194 20,863,900 21,001,804 20,672,502
a.) Given the magnitude of the Prime transaction, Arbor has elected to report
adjusted revenues, net income and earnings per share for the affected
periods to help ensure the comparability of the reporting periods.
Management considers these non-GAAP financial measures to be effective
indicators, for both management and investors, of Arbor's financial
performance. Arbor's management does not advocate that investors consider
such non-GAAP financial measures in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2006 2005
---------------- ----------------
(Unaudited) (Audited)
Assets:
Cash and cash equivalents $ 7,756,857 $ 19,427,309
Restricted cash 84,772,062 35,496,276
Loans and investments, net 1,993,525,064 1,246,825,906
Related party loans, net 7,752,038 7,749,538
Available-for-sale securities, at fair value 22,100,176 29,615,420
Investment in equity affiliates 25,376,949 18,094,242
Other assets 63,062,065 38,866,666
Total assets $ 2,204,345,211 $ 1,396,075,357
Liabilities and Stockholders' Equity:
Repurchase agreements $ 395,847,359 $ 413,624,385
Collateralized debt obligations 1,091,529,000 299,319,000
Junior subordinated notes to subsidiary
trust issuing preferred securities 222,962,000 155,948,000
Notes payable 94,574,240 115,400,377
Notes payable - related party - 30,000,000
Due to related party 3,983,647 1,777,412
Due to borrowers 16,067,295 10,691,355
Other liabilities 17,802,341 18,014,755
Total liabilities 1,842,765,882 1,044,775,284
Minority interest 65,468,252 63,691,556
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; 17,388,770 shares
issued, 17,109,370 shares outstanding
at December 31, 2006 and 17,051,391
shares issued and outstanding
at December 31, 2005 173,888 170,514
Additional paid-in capital 273,037,744 264,691,931
Treasury stock, at cost - 279,400 shares (7,023,361) -
Retained earnings 27,732,489 21,452,789
Accumulated other comprehensive income 2,152,556 1,255,522
Total stockholders' equity 296,111,077 287,608,517
Total liabilities and stockholders' equity $ 2,204,345,211 $ 1,396,075,357
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 12/31/06 Rate
- ---------------- ----------- ---------- ------------ ----------- ------
135 Greenwich St. 1Q05 11,815 LIBOR + 5.00% 10.35% 12.00% Year 1
LIBOR + 5.00% 13.50% Year 2
LIBOR + 5.00% 15.00% Year 3
Total $ 11,815 10.35% 13.50%
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, 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 125 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% 52,374
York Avenue 540 3Q04 - 8.70% 45,200
Toy Building 10,000 2Q05 16,140 20.00% 958,000
On The Ave 2,000 2Q05 2,000 33.33% 170,000
Homewood Mtn Resort - 2Q06 - 25.60% ** 769
Richland Terrace
Apartments - 3Q06 - 25.00% 342,152
Ashley Court Apartments - 3Q06 - 25.00% 177,892
Current
Property Debt Balance
Name Type Location on Property Comments
- ---------------------- --------------- --------------- ------------ ------------------
80 Evergreen Warehouse Brooklyn, NY $ 4,800
930 Flushing Warehouse Brooklyn, NY 25,000 Property
refinanced July
2005
Prime Portfolio Retail Outlets Multi-state 1,275,678 Properties
refinanced
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 120,500 *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 65,926 Condo/hotel
conversion - TRS
Asset
Homewood Mtn Resort Commercial Homewood, CA 63,962 Profits interest
held in TRS
Richland Terrace
Apartments Multi Family Columbia, SC 7,460
Ashley Court
Apartments Multi Family Fort Wayne, IN 5,452
* - debt balance represents anticipated debt financing required to complete
condominium conversion project.
** - amount represents approximate acreage of property.
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
pelenio@arbor.com scarrington@theruthgroup.com
droche@theruthgroup.com
Media:
Bonnie Habyan, SVP of Marketing
516-229-6615
bhabyan@arbor.com
SOURCE Arbor Realty Trust, Inc.
-0- 02/09/2007
/CONTACT: Paul Elenio, Chief Financial Officer, +1-516-229-6615,
pelenio@arbor.com, or Media: Bonnie Habyan, SVP of Marketing, +1-516-832-7422,
bhabyan@arbor.com, both of Arbor Realty Trust, Inc.; or Investors: Stephanie
Carrington, +1-646-536-7017, scarrington@theruthgroup.com, or Denise Roche,
+1-646-536-7008, droche@theruthgroup.com, both of The Ruth Group, for Arbor
Realty Trust, Inc./
/Web site: http://www.arborrealtytrust.com /
(ABR)