ARBOR REALTY TRUST INC [ABR] Filings

10-Q 1 abr-20240930.htm 10-Q abr-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32136

Arbor Realty Trust, Inc.

(Exact name of registrant as specified in its charter)


Maryland			20-0057959
(State or other jurisdiction of incorporation)			(I.R.S. Employer Identification No.)

333 Earle Ovington Boulevard, Suite 900, Uniondale, NY (Address of principal executive offices)			11553 (Zip Code)

(Registrant’s telephone number, including area code): (516) 506-4200

Securities registered pursuant to Section 12(b) of the Act:

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
Redeemable, par value $0.01 per share

ABR-PD

New York Stock Exchange

Preferred Stock, 6.25% Series E Cumulative
Redeemable, par value $0.01 per share

ABR-PE

New York Stock Exchange

Preferred Stock, 6.25% Series F Fixed-to-Floating Rate Cumulative Redeemable, par value $0.01 per share

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

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

Issuer has 188,608,777 shares of common stock outstanding at October 25, 2024.

Table of Contents

INDEX


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			2
Consolidated Balance Sheets			2
Consolidated Statements of Income			3
Consolidated Statements of Changes in Equity			4
Consolidated Statements of Cash Flows			6
Notes to Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			52
Item 3. Quantitative and Qualitative Disclosures about Market Risk			65
Item 4. Controls and Procedures			66
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			66
Item 1A. Risk Factors			66
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 5. Other Information			67
Item 6. Exhibits			68
Signatures			69

Table of Contents

Forward-Looking Statements

The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in Arbor Realty Trust, Inc. We urge you to carefully review and consider the various disclosures in this report, as well as information in our annual report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) on February 20, 2024 and in our other reports and filings with the SEC.

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, the operating performance of our investments and financing needs. We use words such as “anticipate,” “expect,” “believe,” “intend,” “should,” “could,” “will,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in economic, macroeconomic and geopolitical conditions generally, and the real estate market specifically; adverse changes in our status with government-sponsored enterprises affecting our ability to originate loans through such programs; changes in interest rates; the quality and size of the investment pipeline and the rate at which we can invest our cash; impairments in the value of the collateral underlying our loans and investments; inflation; changes in federal and state laws and regulations, including changes in tax laws; the availability and cost of capital for future investments; and competition. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this report. The factors noted above could cause our actual results to differ significantly from those contained in any forward-looking statement.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

($ in thousands, except share and per share data)


	September 30, 2024
	(Unaudited)		December 31, 2023
Assets:
Cash and cash equivalents	$	687,540	$	928,974
Restricted cash	179,906		608,233
Loans and investments, net (allowance for credit losses of $243,588 and $195,664)	11,292,647		12,377,806
Loans held-for-sale, net	326,141		551,707
Capitalized mortgage servicing rights, net	376,403		391,254
Securities held-to-maturity, net (allowance for credit losses of $10,564 and $6,256)	156,027		155,279
Investments in equity affiliates	76,294		79,303
Real estate owned, net	127,926		86,991

Due from related party	96,823		64,421
Goodwill and other intangible assets	88,510		91,378
Other assets	473,241		403,290
Total assets	$	13,881,458	$	15,738,636

Liabilities and Equity:
Credit and repurchase facilities	$	3,257,719	$	3,237,827
Securitized debt	5,315,079		6,935,010
Senior unsecured notes	1,246,908		1,333,968
Convertible senior unsecured notes	285,170		283,118
Junior subordinated notes to subsidiary trust issuing preferred securities	144,480		143,896
Mortgage notes payable — real estate owned	35,350		44,339

Due to related party	25,474		13,799
Due to borrowers	56,975		121,707
Allowance for loss-sharing obligations	80,577		71,634
Other liabilities	270,349		298,733
Total liabilities	10,718,081		12,484,031

Commitments and contingencies (Note 14)

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 - 188,608,777 and 188,505,264 shares issued and outstanding	1,886		1,885
Additional paid-in capital	2,363,259		2,367,188
Retained earnings	34,816		115,216
Total Arbor Realty Trust, Inc. stockholders' equity	3,033,645		3,117,973
Noncontrolling interest	129,732		136,632
Total equity	3,163,377		3,254,605
Total liabilities and equity	$	13,881,458	$	15,738,636

Note: Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities, or VIEs, as we are the primary beneficiary of these VIEs. At September 30, 2024 and December 31, 2023, assets of our consolidated VIEs totaled $6,782,387 and $8,614,571, respectively, and the liabilities of our consolidated VIEs totaled $5,332,159 and $6,967,877, respectively. See Note 15 for discussion of our VIEs.

See Notes to Consolidated Financial Statements.

Table of Contents

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

($ in thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Interest income	$	286,522	$	336,474	$	905,002	$	1,000,159
Interest expense	197,710		229,180		624,613		675,749
Net interest income	88,812		107,294		280,389		324,410
Other revenue:
Gain on sales, including fee-based services, net	18,638		18,619		52,752		55,795
Mortgage servicing rights	13,195		14,109		37,928		48,769
Servicing revenue, net	31,142		35,463		92,577		97,376
Property operating income	1,507		1,450		4,521		4,261
Gain (loss) on derivative instruments, net	822		(421)		(4,711)		(3,582)
Other income, net	2,537		173		6,955		5,099
Total other revenue	67,841		69,393		190,022		207,718
Other expenses:
Employee compensation and benefits	44,881		39,810		135,411		123,518
Selling and administrative	13,141		12,367		39,897		38,574
Property operating expenses	1,686		1,479		4,948		4,227
Depreciation and amortization	1,944		2,286		6,937		7,297
Provision for loss sharing (net of recoveries)	3,180		1,679		7,787		12,528
Provision for credit losses (net of recoveries)	16,220		18,652		64,903		55,047
Total other expenses	81,052		76,273		259,883		241,191
Income before extinguishment of debt, sale of real estate, income from equity affiliates and income taxes	75,601		100,414		210,528		290,937
Loss on extinguishment of debt	—		(314)		(412)		(1,561)
Gain on sale of real estate	—		—		3,813		—
Income from equity affiliates	3,177		809		7,388		20,694
Provision for income taxes	(5,233)		(5,854)		(12,726)		(19,436)
Net income	73,545		95,055		208,591		290,634
Preferred stock dividends	10,342		10,342		31,027		31,027
Net income attributable to noncontrolling interest	5,028		6,789		14,119		21,200
Net income attributable to common stockholders	$	58,175	$	77,924	$	163,445	$	238,407

Basic earnings per common share	$	0.31	$	0.42	$	0.87	$	1.30
Diluted earnings per common share	$	0.31	$	0.41	$	0.86	$	1.28

Weighted average shares outstanding:
Basic	188,513,832		187,023,395		188,626,263		183,340,149
Diluted	205,347,309		221,328,818		205,448,479		217,457,399

Dividends declared per common share	$	0.43	$	0.43	$	1.29	$	1.25

See Notes to Consolidated Financial Statements.

Table of Contents

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

($ in thousands, except shares)


Three Months Ended September 30, 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 – July 1, 2024	42,585,589	$	633,684	188,548,879	$	1,885	$	2,361,466	$	57,894	$	3,054,929	$	131,710	$	3,186,639


Stock-based compensation, net	—	—		59,898	1		1,793		—		1,794		—		1,794
Distributions - common stock	—	—		—	—		—		(81,249)		(81,249)		—		(81,249)
Distributions - preferred stock	—	—		—	—		—		(10,346)		(10,346)		—		(10,346)
Distributions - noncontrolling interest	—	—		—	—		—		—		—		(7,006)		(7,006)
Net income	—	—		—	—		—		68,517		68,517		5,028		73,545
Balance – September 30, 2024	42,585,589	$	633,684	188,608,777	$	1,886	$	2,363,259	$	34,816	$	3,033,645	$	129,732	$	3,163,377


Nine Months Ended September 30, 2024

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

Repurchase - common stock	—	—		(935,739)	(9)		(11,399)		—		(11,408)		—		(11,408)
Stock-based compensation, net	—	—		1,039,252	10		7,470		—		7,480		—		7,480
Distributions - common stock	—	—		—	—		—		(243,834)		(243,834)		—		(243,834)
Distributions - preferred stock	—	—		—	—		—		(31,038)		(31,038)		—		(31,038)
Distributions - noncontrolling interest	—	—		—	—		—		—		—		(21,019)		(21,019)
Net income	—	—		—	—		—		194,472		194,472		14,119		208,591
Balance – September 30, 2024	42,585,589	$	633,684	188,608,777	$	1,886	$	2,363,259	$	34,816	$	3,033,645	$	129,732	$	3,163,377

See Notes to Consolidated Financial Statements.

Table of Contents

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Continued)

($ in thousands, except shares)


Three Months Ended September 30, 2023
	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 – July 1, 2023	42,585,589	$	633,684	183,067,388	$	1,831	$	2,280,632	$	107,561	$	3,023,708	$	135,933	$	3,159,641
Issuance - common stock	—	—		5,576,496	55		83,937		—		83,992		—		83,992

Stock-based compensation, net	—	—		(142,242)	(1)		(174)		—		(175)		—		(175)
Distributions - common stock	—	—		—	—		—		(80,660)		(80,660)		—		(80,660)
Distributions - preferred stock	—	—		—	—		—		(10,346)		(10,346)		—		(10,346)
Distributions - noncontrolling interest	—	—		—	—		—		—		—		(7,006)		(7,006)
Net income	—	—		—	—		—		88,266		88,266		6,789		95,055
Balance – September 30, 2023	42,585,589	$	633,684	188,501,642	$	1,885	$	2,364,395	$	104,821	$	3,104,785	$	135,716	$	3,240,501


Nine Months Ended September 30, 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	—	—		13,113,296	130		193,530		—		193,660		—		193,660
Repurchase - common stock	—	—		(3,545,604)	(36)		(37,396)		—		(37,432)		—		(37,432)
Stock-based compensation, net	—	—		703,428	9		3,780		—		3,789		—		3,789
Distributions - common stock	—	—		—	—		—		(230,632)		(230,632)		—		(230,632)
Distributions - preferred stock	—	—		—	—		—		(31,030)		(31,030)		—		(31,030)
Distributions - noncontrolling interest	—	—		—	—		—		—		—		(20,367)		(20,367)
Net income	—	—		—	—		—		269,434		269,434		21,200		290,634
Balance – September 30, 2023	42,585,589	$	633,684	188,501,642	$	1,885	$	2,364,395	$	104,821	$	3,104,785	$	135,716	$	3,240,501

See Notes to Consolidated Financial Statements.

Table of Contents

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)


	Nine Months Ended September 30,
	2024		2023
Operating activities:
Net income	$	208,591	$	290,634
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,937		7,297
Stock-based compensation	11,749		12,141
Amortization and accretion of interest and fees, net	(2,186)		(3,084)
Amortization of capitalized mortgage servicing rights	50,817		46,920
Originations of loans held-for-sale	(3,119,339)		(3,619,570)
Proceeds from sales of loans held-for-sale, net of gain on sale	3,339,638		3,607,665
Mortgage servicing rights	(37,928)		(48,769)
Write-off of capitalized mortgage servicing rights from payoffs	5,911		11,764
Provision for loss sharing (net of recoveries)	7,787		12,528
Provision for credit losses (net of recoveries)	64,903		55,047
Net (charge-offs) and recoveries for loss sharing obligations	1,156		(434)
Deferred tax benefit	(8,922)		(6,630)
Income from equity affiliates	(7,388)		(20,694)
Distributions from operations of equity affiliates	17,017		22,507
Change in fair value of held-for-sale loans	(1,113)		(1,634)
Loss on derivative instruments, net	4,711		—
Loss on extinguishment of debt	412		1,561
Payoffs and paydowns of loans held-for-sale	5,116		463

Gain on sale of real estate	(3,813)		—
Changes in operating assets and liabilities	(129,211)		(209,008)
Net cash provided by operating activities	414,845		158,704

Investing Activities:
Loans and investments funded, originated and purchased, net	(912,530)		(1,061,865)
Payoffs and paydowns of loans and investments	1,873,927		2,541,373

Deferred fees	16,176		13,624
Proceeds from sale of real estate, net	14,103		—
Contributions to equity affiliates	(17,845)		(1,029)
Distributions from equity affiliates	11,224		15,552

Payoffs and paydowns of securities held-to-maturity	305		3,544
Investment in real estate, net	(2,526)		—
Due to borrowers and reserves	(36,692)		(92,358)
Net cash provided by investing activities	946,142		1,418,841

Financing activities:
Proceeds from credit and repurchase facilities	6,702,905

ARBOR REALTY TRUST INC [ABR] Filings
ARBOR REALTY TRUST INC [ABR-PD] Filings
ARBOR REALTY TRUST INC [ABR-PE] Filings
ARBOR REALTY TRUST INC [ABR-PF] Filings
10-Q	[2024-11-01]
10-Q	[2024-08-06]
10-Q	[2024-05-03]
10-K	[2024-02-20]
10-Q	[2023-10-27]
10-Q	[2023-07-28]
10-Q	[2023-05-05]
10-K	[2023-02-17]
10-Q	[2022-11-04]
10-Q	[2022-07-29]
10-Q	[2022-05-06]
10-K	[2022-02-18]
10-Q	[2021-10-29]
10-Q	[2021-07-30]
10-Q	[2021-05-07]
10-K	[2021-02-19]
10-Q	[2020-10-30]
10-Q	[2020-07-31]
10-Q	[2020-05-08]
10-K	[2020-02-14]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-10]
10-K	[2019-02-15]
10-Q	[2018-11-02]
10-Q	[2018-08-03]
10-Q	[2018-05-04]
10-K	[2018-02-23]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-05]
10-K	[2017-03-03]
10-Q	[2016-11-09]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-02-26]
10-Q	[2015-11-06]
10-Q	[2015-07-31]
10-Q	[2015-05-01]
10-K	[2015-02-13]
10-Q	[2014-11-07]
10-Q	[2014-08-01]
10-Q	[2014-05-01]
10-K	[2014-02-14]
10-Q	[2013-11-08]
10-Q	[2013-08-02]
10-Q	[2013-05-03]
10-K	[2013-02-15]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
10-Q	[2012-05-04]
10-K	[2012-03-02]

ARBOR REALTY TRUST INC [ABR] Filings

ARBOR REALTY TRUST INC [ABR-PD] Filings

ARBOR REALTY TRUST INC [ABR-PE] Filings

ARBOR REALTY TRUST INC [ABR-PF] Filings