• Distributable Earnings: $57.3 million or $0.28 per share; $0.31 per share excluding $7 million of onetime realized losses.
• Return on Equity (ROE): Approximately 10% for the first quarter.
• Quarterly Dividend: Reset to $0.30 per share.
• Bridge Loan Originations: $370 million in new bridge loans for the first quarter.
• Agency Loan Originations: $606 million in originations and $731 million in loan sales.
• Agency Loan Margins: 1.75% for the first quarter.
• Mortgage Servicing Rights (MSR) Income: $8.1 million related to $645 million of committed loans.
• Fee-Based Servicing Portfolio: Approximately $33.5 billion with a weighted average servicing fee of 37.5 basis points.
• Investment Portfolio: Grew to $11.5 billion at March 31.
• All-In Yield on Investment Portfolio: 7.85% at March 31.
• Total Debt on Core Assets: Approximately $9.5 billion at March 31.
• All-In Cost of Debt: Approximately 6.82% at March 31.
• Net Interest Spread on Core Assets: 1.26% for the first quarter.
• Spot Net Interest Spread: 1.03% at March 31.
• Leverage Ratio: Delevered to 2.8:1 from a peak of around 4.0:1 over two years ago.

• Warning! GuruFocus has detected 3 Warning Signs with ABR.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Arbor Realty Trust Inc (NYSE:ABR) entered into a $1.1 billion repurchase facility with JPMorgan, enhancing liquidity by approximately $80 million.
• The company successfully modified $38 million of loans, with $39 million becoming fully performing again.
• Arbor Realty Trust Inc (NYSE:ABR) originated $370 million in new bridge loans in the first quarter, aligning with their annual target of $1.5 billion to $2 billion.
• The company reported strong demand in the CLO securitization market, which is expected to drive future earnings.
• Arbor Realty Trust Inc (NYSE:ABR) has a robust pipeline of approximately $2 billion, indicating confidence in meeting 2025 guidance despite a slower start.

Negative Points

• The company experienced additional delinquencies of approximately $109 million, bringing total delinquencies to $654 million as of March 31.
• Arbor Realty Trust Inc (NYSE:ABR) anticipates a challenging 2025 due to the drag on earnings from REO assets and delinquencies.
• The higher interest rate environment has negatively impacted the origination business, contributing to a slower first quarter.
• The company recorded an additional $16 million in specific reserves in the first quarter due to the current economic environment.
• Arbor Realty Trust Inc (NYSE:ABR) reset its quarterly dividend to $0.30 per share, reflecting the challenging environment and revised guidance.

Q & A Highlights

Q: Do you expect net growth in the bridge loan portfolio in 2025, and what is your target level for the portfolio by the end of the year? A: Ivan Kaufman, CEO, explained that they anticipate net growth in the bridge loan portfolio, targeting $1.5 billion to $2 billion in new bridge business. They expect runoff to be between $1.5 billion to $3 billion, depending on interest rates. The goal is to transform the balance sheet so that new production becomes the majority, supported by a robust securitization market.

Q: What are your expectations for cash and liquidity, considering earnings, the reset dividend, and NPLs and REO? A: Paul Elenio, CFO, stated that Arbor Realty Trust has $325 million in cash and liquidity. They have deleveraged the business by 30% to a leverage ratio of 2.8:1. They plan to enhance leverage and grow liquidity through the securitization market and banking system. Runoff could provide $1.5 billion to $3 billion in liquidity, depending on interest rates.

Q: What are your expectations for NPLs and REO, and do you expect proceeds from either category? A: Ivan Kaufman, CEO, expects REO to increase to between $400 million and $500 million. They plan to aggressively reposition these assets to generate liquidity. Paul Elenio, CFO, added that they have $511 million in NPLs and expect to take back 35% as REO, which will temporarily impact earnings.

Q: How do you view the economic sensitivity of the portfolio, considering the interest rate cycle and potential economic downturns? A: Ivan Kaufman, CEO, noted that they are seeing occupancy firm up and better performance in many markets. They believe they have hit bottom in many areas, with improvements in management and asset performance. They are optimistic about the economic side of the portfolio.

Q: How much of the reported income was noncash, and is the $15 million run rate a good expectation for the future? A: Paul Elenio, CFO, reported $15.3 million of PIK interest in the quarter. He believes this is a good run rate going forward, although it is subject to change based on loan modifications and interest rate movements.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.