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Fourth Quarter Company Highlights:
Agency Business
Structured Business
Full Year Highlights:
UNIONDALE, N.Y., Feb. 15, 2019 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the fourth quarter and year ended December 31, 2018. Arbor reported net income for the quarter of $37.2 million, or $0.47 per diluted common share, compared to $21.9 million, or $0.35 per diluted common share for the quarter ended December 31, 2017. Net income for the year was $108.3 million, or $1.50 per diluted common share, compared to $65.8 million, or $1.12 per diluted common share for the year ended December 31, 2017. Adjusted funds from operations ("AFFO") for the quarter was $28.9 million, or $0.29 per diluted common share, compared to $20.7 million, or $0.25 per diluted common share for the quarter ended December 31, 2017. AFFO for the year was $113.1 million, or $1.21 per diluted common share, compared to $83.9 million, or $1.04 per diluted common share for the year ended December 31, 2017.1
Agency Business
Loan Origination Platform
| Agency Loan Volume (in thousands) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Year Ended | |||||||||||
| December 31,2018 | September 30,2018 | December 31,2018 | December 31,2017 | |||||||||
| Fannie Mae | $ | 1,067,230 | $ | 995,662 | $ | 3,332,100 | $ | 2,929,481 | ||||
| Freddie Mac | 527,502 | 317,516 | 1,587,958 | 1,322,498 | ||||||||
| FHA | 15,549 | 77,236 | 153,523 | 189,087 | ||||||||
| CMBS/Conduit | 14,025 | 20,650 | 50,908 | 21,370 | ||||||||
| Total Originations | $ | 1,624,306 | $ | 1,411,064 | $ | 5,124,489 | $ | 4,462,436 | ||||
| Total Loan Sales | $ | 1,653,421 | $ | 1,190,004 | $ | 4,924,144 | $ | 4,814,906 | ||||
| Total Loan Commitments | $ | 1,604,502 | $ | 1,376,376 | $ | 5,104,072 | $ | 4,344,328 |
For the quarter ended December 31, 2018, the Agency Business generated revenues of $84.4 million, compared to $58.8 million for the third quarter of 2018. Gain on sales, including fee-based services, net was $18.7 million for the quarter, reflecting a margin of 1.13% on loan sales, compared to $17.5 million and 1.47% for the third quarter of 2018. Income from mortgage servicing rights was $36.1 million for the quarter, reflecting a rate of 2.25% as a percentage of loan commitments, compared to $25.2 million and 1.83% for the third quarter of 2018.
At December 31, 2018, loans held-for-sale was $481.7 million which was primarily comprised of unpaid principal balances totaling $473.0 million, with financing associated with these loans totaling $ 472.2 million.
Fee-Based Servicing Portfolio
Our fee-based servicing portfolio totaled $18.60 billion at December 31, 2018, an increase of 5% from September 30, 2018, primarily a result of $1.62 billion of new loan originations, net of $ 803.3 million in portfolio runoff during the quarter. Servicing revenue, net was $11.4 million for the quarter and consists of servicing revenue of $23.9 million, net of amortization of mortgage servicing rights totaling $12.5 million.
| Fee-Based Servicing Portfolio ($ in thousands) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of December 31, 2018 | As of September 30, 2018 | ||||||||||||
| UPB | Wtd. Avg. Fee | Wtd. Avg. Life (in years) | UPB | Wtd. Avg. Fee | Wtd. Avg. Life (in years) | ||||||||
| Fannie Mae | $ | 13,562,667 | 0.513 | % | 7.4 | $ | 13,195,643 | 0.523 | % | 7.7 | |||
| Freddie Mac | 4,394,287 | 0.308 | % | 10.8 | 3,977,619 | 0.308 | % | 11.0 | |||||
| FHA | 644,687 | 0.155 | % | 19.6 | 621,419 | 0.157 | % | 20.1 | |||||
| Total | $ | 18,601,641 | 0.452 | % | 8.6 | $ | 17,794,681 | 0.462 | % | 8.8 |
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan ("loss-sharing obligations"). At December 31, 2018, the Company's allowance for loss-sharing obligations was $34.3 million, representing 0.25% of the Fannie Mae servicing portfolio.
Structured Business
Portfolio and Investment Activity
Quarter ended December 31, 2018:
Year ended December 31, 2018:
At December 31, 2018, the loan and investment portfolio's unpaid principal balance, excluding loan loss reserves, was $3.28 billion, with a weighted average current interest pay rate of 7.02%, compared to $3.17 billion and 6.88% at September 30, 2018. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 7.66% at December 31, 2018, compared to 7.52% at September 30, 2018. The increase in average yield was primarily due to an increase in LIBOR.
The average balance of the Company's loan and investment portfolio during the fourth quarter of 2018, excluding loan loss reserves, was $3.23 billion with a weighted average yield on these assets of 7.76%, compared to $3.26 billion and 7.37% for the third quarter of 2018. The increase in average yield was primarily due to higher fees on loan payoffs in the fourth quarter as compared to the third quarter, as well as an increase in LIBOR.
The Company recorded $10.1 million in loan loss reserves related to a loan with a carrying value of approximately $121.4 million, before loan loss reserves. At December 31, 2018, the Company's total loan loss reserves were $71.1 million on five loans with an aggregate carrying value before loan loss reserves of $131.8 million. The Company also had two non-performing loans with a carrying value of $2.5 million, net of related loan loss reserves of $1.7 million.
Financing Activity
The balance of debt that finances the Company's loan and investment portfolio at December 31, 2018 was $2.89 billion with a weighted average interest rate including fees of 5.24% as compared to $2.92 billion and a rate of 5.03% at September 30, 2018. The average balance of debt that finances the Company's loan and investment portfolio for the fourth quarter of 2018 was $2.89 billion, as compared to $2.86 billion for the third quarter of 2018. The average cost of borrowings for the fourth quarter was 5.13%, compared to 4.93% for the third quarter of 2018. The increase in average costs was primarily due to an increase in LIBOR.
The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles and financing facilities. The Company believes it was in compliance with all financial covenants and restrictions as of December 31, 2018 and as of the most recent collateralized securitization vehicle determination dates in January 2019.
Capital Markets
The Company issued 8.7 million shares of common stock in a public offering receiving net proceeds of $100.5 million. The Company intends to use the net proceeds to make investments and for general corporate purposes.
Dividends
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.27 per share of common stock for the quarter ended December 31, 2018, representing an increase of 29% over the prior year dividend of $0.21 per share. The dividend is payable on March 20, 2019 to common stockholders of record on March 1, 2019. The ex-dividend date is February 28, 2019.
The Company also announced today that its Board of Directors has declared cash dividends on the Company's Series A, Series B and Series C cumulative redeemable preferred stock reflecting accrued dividends from December 1, 2018 through February 28, 2019. The dividends are payable on February 28, 2019 to preferred stockholders of record on February 15, 2019. The Company will pay total dividends of $0.515625, $0.484375 and $0.53125 per share on the Series A, Series B and Series C preferred stock, respectively.
In addition, the Board of Directors declared a special dividend of $0.15 per common share, which was paid in a combination of 80% common stock and 20% cash in January 2019.
Earnings Conference Call
The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast of the conference call will be available at www.arbor.com in the investor relations area of the website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 516-5034 for domestic callers and (678) 509-7613 for international callers. Please use participant passcode 6283438.
After the live webcast, the call will remain available on the Company's website through March 31, 2019. In addition, a telephonic replay of the call will be available until February 22, 2019. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 6283438.
About Arbor Realty Trust, Inc.
Arbor Realty Trust, Inc. (NYSE:ABR) is a nationwide real estate investment trust and direct lender, providing loan origination and servicing for multifamily, seniors housing, healthcare, and other diverse commercial real estate assets. Headquartered in Uniondale, New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in Fannie Mae, Freddie Mac, and other government-sponsored enterprises, as well as CMBS, bridge, mezzanine, and preferred equity lending. Rated by Standard and Poor's and Fitch Ratings, Arbor is committed to building on its reputation for service, quality, and flexibility, and dedicated to providing our clients excellence over the entire life of a loan.
Safe Harbor Statement
Certain items in this press release may constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor's expectations include, but are not limited to, 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, 2018 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor's expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.
1. Non-GAAP Financial Measures
During the quarterly earnings conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A supplemental schedule of non-GAAP financial measures and the comparable GAAP financial measure can be found on page 11 of this release.
| Contacts: | |
|---|---|
| Arbor Realty Trust, Inc.Paul Elenio, Chief Financial Officer516-506-4422pelenio@arbor.com | Investors:The Ruth GroupLee Roth646-536-7012lroth@theruthgroup.com |
| Media:Bonnie Habyan, EVP of Marketing516-506-4615bhabyan@arbor.com |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
| ($ in thousands—except share and per share data) | |||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||
| Interest income | $ | 73,360 | $ | 46,045 | $ | 251,768 | $ | 156,177 | |||||||||
| Interest expense | 42,999 | 26,374 | 153,818 | 90,072 | |||||||||||||
| Net interest income | 30,361 | 19,671 | 97,950 | 66,105 | |||||||||||||
| Other revenue: | |||||||||||||||||
| Gain on sales, including fee-based services, net | 18,735 | 17,672 | 70,002 | 72,799 | |||||||||||||
| Mortgage servicing rights | 36,052 | 20,638 | 98,839 | 76,820 | |||||||||||||
| Servicing revenue, net | 11,372 | 9,287 | 46,034 | 29,210 | |||||||||||||
| Property operating income | 1,569 | 2,219 | 10,095 | 10,973 | |||||||||||||
| Other income, net | 9,736 | 1,615 | 8,161 | 685 | |||||||||||||
| Total other revenue | 77,464 | 51,431 | 233,131 | 190,487 | |||||||||||||
| Other expenses: | |||||||||||||||||
| Employee compensation and benefits | 26,386 | 25,265 | 110,470 | 92,126 | |||||||||||||
| Selling and administrative | 9,291 | 7,605 | 37,074 | 30,738 | |||||||||||||
| Property operating expenses | 2,342 | 2,639 | 10,431 | 10,482 | |||||||||||||
| Depreciation and amortization | 1,914 | 1,843 | 7,453 | 7,385 | |||||||||||||
| Impairment loss on real estate owned | - | 500 | 2,000 | 3,200 | |||||||||||||
| Provision for loss sharing (net of recoveries) | 1,003 | 147 | 3,843 | (259 | ) | ||||||||||||
| Provision for loan losses (net of recoveries) | 9,319 | - | 8,353 | (456 | ) | ||||||||||||
| Litigation settlement gain | - | - | (10,170 | ) | - | ||||||||||||
| Management fee - related party | - | - | - | 6,673 | |||||||||||||
| Total other expenses | 50,255 | 37,999 | 169,454 | 149,889 | |||||||||||||
| Income before extinguishment of debt, income from | |||||||||||||||||
| equity affiliates and income taxes | 57,570 | 33,103 | 161,627 | 106,703 | |||||||||||||
| (Loss) gain on extinguishment of debt | (82 | ) | - | (5,041 | ) | 7,116 | |||||||||||
| Income (loss) from equity affiliates | 91 | (4,706 | ) | 1,196 | (2,951 | ) | |||||||||||
| (Provision for) benefit from income taxes | (8,635 | ) | 2,885 | (9,731 | ) | (13,359 | ) | ||||||||||
| Net income | 48,944 | 31,282 | 148,051 | 97,509 | |||||||||||||
| Preferred stock dividends | 1,888 | 1,888 | 7,554 | 7,554 | |||||||||||||
| Net income attributable to noncontrolling interest | 9,838 | 7,524 | 32,185 | 24,120 | |||||||||||||
| Net income attributable to common stockholders | 37,218 | $ | 21,870 | $ | 108,312 | $ | 65,835 | ||||||||||
| Basic earnings per common share | $ | 0.48 | $ | 0.35 | $ | 1.54 | $ | 1.14 | |||||||||
| Diluted earnings per common share | $ | 0.47 | $ | 0.35 | $ | 1.50 | $ | 1.12 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 78,273,633 | 61,712,782 | 70,208,165 | 57,890,574 | |||||||||||||
| Diluted | 101,148,081 | 84,361,612 | 93,642,168 | 80,311,252 | |||||||||||||
| Dividends declared per common share | $ | 0.42 | $ | 0.19 | $ | 1.13 | $ | 0.72 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| ($ in thousands—except share and per share data) | |||||||||||
| December 31, | December 31, | ||||||||||
| 2018 | 2017 | ||||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 160,063 | $ | 104,374 | |||||||
| Restricted cash | 180,606 | 139,398 | |||||||||
| Loans and investments, net | 3,200,145 | 2,579,127 | |||||||||
| Loans held-for-sale, net | 481,664 | 297,443 | |||||||||
| Capitalized mortgage servicing rights, net | 273,770 | 252,608 | |||||||||
| Securities held to maturity, net | 76,363 | 27,837 | |||||||||
| Investments in equity affiliates | 21,580 | 23,653 | |||||||||
| Real estate owned, net | 14,446 | 16,787 | |||||||||
| Due from related party | 1,287 | 688 | |||||||||
| Goodwill and other intangible assets | 116,165 | 121,766 | |||||||||
| Other assets | 86,086 | 62,264 | |||||||||
| Total assets | $ | 4,612,175 | $ | 3,625,945 | |||||||
| Liabilities and Equity: | |||||||||||
| Credit facilities and repurchase agreements | 1,135,627 | 528,573 | |||||||||
| Collateralized loan obligations | 1,593,548 | 1,418,422 | |||||||||
| Debt fund | 68,183 | 68,084 | |||||||||
| Senior unsecured notes | 122,484 | 95,280 | |||||||||
| Convertible senior unsecured notes, net | 254,768 | 231,287 | |||||||||
| Junior subordinated notes to subsidiary trust issuing preferred securities | 140,259 | 139,590 | |||||||||
| Related party financing | - | 50,000 | |||||||||
| Due to borrowers | 78,662 | 99,829 | |||||||||
| Allowance for loss-sharing obligations | 34,298 | 30,511 | |||||||||
| Other liabilities | 118,780 | 99,813 | |||||||||
| Total liabilities | 3,546,609 | 2,761,389 | |||||||||
| Equity: | |||||||||||
| Arbor Realty Trust, Inc. stockholders' equity: | |||||||||||
| Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 | |||||||||||
| shares authorized; special voting preferred shares; 20,653,584 and 21,230,769 shares | |||||||||||
| issued and outstanding, respectively; 8.25% Series A, $38,787,500 aggregate | |||||||||||
| liquidation preference; 1,551,500 shares issued and outstanding; | |||||||||||
| 7.75% Series B, $31,500,000 aggregate liquidation preference; | |||||||||||
| 1,260,000 shares issued and outstanding; 8.50% Series C, $22,500,000 | |||||||||||
| aggregate liquidation preference; 900,000 shares issued and outstanding | 89,502 | 89,508 | |||||||||
| Common stock, $0.01 par value: 500,000,000 shares authorized; 83,987,707 | |||||||||||
| and 61,723,387 shares issued and outstanding, respectively | 840 | 617 | |||||||||
| Additional paid-in capital | 879,029 | 707,450 | |||||||||
| Accumulated deficit | (74,133 | ) | (101,926 | ) | |||||||
| Accumulated other comprehensive income | - | 176 | |||||||||
| Total Arbor Realty Trust, Inc. stockholders' equity | 895,238 | 695,825 | |||||||||
| Noncontrolling interest | 170,328 | 168,731 | |||||||||
| Total equity | 1,065,566 | 864,556 | |||||||||
| Total liabilities and equity | $ | 4,612,175 | $ | 3,625,945 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| STATEMENT OF INCOME SEGMENT INFORMATION - (Unaudited) | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| Quarter Ended December 31, 2018 | |||||||||||||||||
| Structured Business | Agency Business | Other / Eliminations (1) | Consolidated | ||||||||||||||
| Interest income | $ | 64,105 | $ | 9,255 | $ | - | $ | 73,360 | |||||||||
| Interest expense | 37,395 | 5,604 | - | 42,999 | |||||||||||||
| Net interest income | 26,710 | 3,651 | - | 30,361 | |||||||||||||
| Other revenue: | |||||||||||||||||
| Gain on sales, including fee-based services, net | - | 18,735 | - | 18,735 | |||||||||||||
| Mortgage servicing rights | - | 36,052 | - | 36,052 | |||||||||||||
| Servicing revenue | - | 23,857 | - | 23,857 | |||||||||||||
| Amortization of MSRs | - | (12,485 | ) | - | (12,485 | ) | |||||||||||
| Property operating income | 1,569 | - | - | 1,569 | |||||||||||||
| Other income, net | 734 | 9,002 | - | 9,736 | |||||||||||||
| Total other revenue | 2,303 | 75,161 | - | 77,464 | |||||||||||||
| Other expenses: | |||||||||||||||||
| Employee compensation and benefits | 6,437 | 19,949 | - | 26,386 | |||||||||||||
| Selling and administrative | 4,142 | 5,149 | - | 9,291 | |||||||||||||
| Property operating expenses | 2,342 | - | - | 2,342 | |||||||||||||
| Depreciation and amortization | 514 | 1,400 | - | 1,914 | |||||||||||||
| Provision for loss sharing (net of recoveries) | - | 1,003 | - | 1,003 | |||||||||||||
| Provision for loan losses (net of recoveries) | 9,319 | - | - | 9,319 | |||||||||||||
| Total other expenses | 22,754 | 27,501 | - | 50,255 | |||||||||||||
| Income before extinguishment of debt, income from | |||||||||||||||||
| equity affiliates and income taxes | 6,259 | 51,311 | - | 57,570 | |||||||||||||
| Loss on extinguishment of debt | (82 | ) | - | - | (82 | ) | |||||||||||
| Income from equity affiliates | 91 | - | - | 91 | |||||||||||||
| Benefit from (provision for) income taxes | 273 | (8,908 | ) | - | (8,635 | ) | |||||||||||
| Net income | 6,541 | 42,403 | - | 48,944 | |||||||||||||
| Preferred stock dividends | 1,888 | - | - | 1,888 | |||||||||||||
| Net income attributable to noncontrolling interest | - | - | 9,838 | 9,838 | |||||||||||||
| Net income attributable to common stockholders | $ | 4,653 | $ | 42,403 | $ | (9,838 | ) | $ | 37,218 | ||||||||
| (1) Includes certain income or expenses not allocated to the two reportable segments. Amount reflects income attributable to the noncontrolling interest holders. |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| BALANCE SHEET SEGMENT INFORMATION - (Unaudited) | ||||||||||||
| (in thousands) | ||||||||||||
| December 31, 2018 | ||||||||||||
| Structured Business | Agency Business | Consolidated | ||||||||||
| Assets: | ||||||||||||
| Cash and cash equivalents | $ | 89,457 | $ | 70,606 | $ | 160,063 | ||||||
| Restricted cash | 180,606 | - | 180,606 | |||||||||
| Loans and investments, net | 3,200,145 | - | 3,200,145 | |||||||||
| Loans held-for-sale, net | - | 481,664 | 481,664 | |||||||||
| Capitalized mortgage servicing rights, net | - | 273,770 | 273,770 | |||||||||
| Securities held to maturity, net | - | 76,363 | 76,363 | |||||||||
| Investments in equity affiliates | 21,580 | - | 21,580 | |||||||||
| Goodwill and other intangible assets | 12,500 | 103,665 | 116,165 | |||||||||
| Other assets | 81,494 | 20,325 | 101,819 | |||||||||
| Total assets | $ | 3,585,782 | $ | 1,026,393 | $ | 4,612,175 | ||||||
| Liabilities: | ||||||||||||
| Debt obligations | 2,842,688 | 472,181 | 3,314,869 | |||||||||
| Allowance for loss-sharing obligations | - | 34,298 | 34,298 | |||||||||
| Other liabilities | 159,413 | 38,029 | 197,442 | |||||||||
| Total liabilities | $ | 3,002,101 | $ | 544,508 | $ | 3,546,609 |
| ARBOR REALTY TRUST, INC. AND SUBSIDIARIES | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Supplemental Schedule of Non-GAAP Financial Measures - (Unaudited) | |||||||||||||||
| Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO") | |||||||||||||||
| ($ in thousands—except share and per share data) | |||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income attributable to common stockholders | $ | 37,218 | $ | 21,870 | $ | 108,312 | $ | 65,835 | |||||||
| Adjustments: | |||||||||||||||
| Net income attributable to noncontrolling interest | 9,838 | 7,524 | 32,185 | 24,120 | |||||||||||
| Impairment loss on real estate owned | - | 500 | 2,000 | 3,200 | |||||||||||
| Depreciation - real estate owned | 176 | 177 | 708 | 769 | |||||||||||
| Depreciation - investments in equity affiliates | 125 | 102 | 499 | 406 | |||||||||||
| Funds from operations (1) | $ | 47,357 | $ | 30,173 | $ | 143,704 | $ | 94,330 | |||||||
| Adjustments: | |||||||||||||||
| Income from mortgage servicing rights | (36,052 | ) | (20,638 | ) | (98,839 | ) | (76,820 | ) | |||||||
| Impairment loss on real estate owned | - | (500 | ) | (2,000 | ) | (3,200 | ) | ||||||||
| Deferred tax provision (benefit) | 2,421 | (7,414 | ) | (12,033 | ) | (7,399 | ) | ||||||||
| Amortization and write-offs of MSRs | 20,314 | 16,894 | 73,182 | 63,034 | |||||||||||
| Depreciation and amortization | 2,582 | 2,073 | 9,618 | 7,697 | |||||||||||
| Net (gain) loss on changes in fair value of derivatives | (9,002 | ) | (914 | ) | (6,672 | ) | 1,398 | ||||||||
| Stock-based compensation | 1,257 | 1,007 | 6,095 | 4,840 | |||||||||||
| Adjusted funds from operations (1) (2) | $ | 28,877 | $ | 20,681 | $ | 113,055 | $ | 83,880 | |||||||
| Diluted FFO per share (1) | $ | 0.47 | $ | 0.36 | $ | 1.53 | $ | 1.17 | |||||||
| Diluted AFFO per share (1) (2) | $ | 0.29 | $ | 0.25 | $ | 1.21 | $ | 1.04 | |||||||
| Diluted weighted average shares outstanding (1) | 101,148,081 | 84,361,612 | 93,642,168 | 80,311,252 | |||||||||||
| (1) Amounts are attributable to common stockholders and OP Unit holders. The OP Units are redeemable for cash, or at the Company's option for shares of the Company's common stock on a one-for-one basis. | |||||||||||||||
| (2) Excluding the impact of a non-cash $10.1 million loan loss reserve related to a legacy pre-crisis asset, AFFO for the quarter ended December 31, 2018 was $39.0 million, or $0.39 per diluted common share.The Company is presenting FFO and AFFO because management believes they are important supplemental measures of the Company's operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated real properties, plus impairments of depreciated real properties and real estate related depreciation and amortization, and after adjustments for unconsolidated ventures.The Company defines AFFO as funds from operations adjusted for accounting items such as non-cash stock-based compensation expense, income from mortgage servicing rights ("MSRs"), changes in fair value of certain derivatives that temporarily flow through earnings, amortization and write-offs of MSRs, deferred tax (benefit) provision and the amortization of the convertible senior notes conversion option. The Company also adds back one-time charges such as acquisition costs and impairment losses on real estate and gains (losses) on sales of real estate. The Company is generally not in the business of operating real estate property and has obtained real estate by foreclosure or through partial or full settlement of mortgage debt related to the Company's loans to maximize the value of the collateral and minimize the Company's exposure. Therefore, the Company deems such impairment and gains (losses) on real estate as an extension of the asset management of its loans, thus a recovery of principal or additional loss on the Company's initial investment.FFO and AFFO are not intended to be an indication of the Company's cash flow from operating activities (determined in accordance with GAAP) or a measure of its liquidity, nor is it entirely indicative of funding the Company's cash needs, including its ability to make cash distributions. The Company's calculation of FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited. |
Source: Arbor Realty Trust
