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Arbor Realty Trust's CEO Discusses Q2 2012 Results - Earnings Call Transcript

In a moment, Paul will elaborate further on how this growth has translated into an increase in our projected core earnings run rate. Once again, we’re extremely pleased with the investment opportunities we’re seeing to grow our platform, diversify our revenue sources and produce significant core earnings and dividend growth going forward.

Additionally, our infrastructure is well positioned to manage this expected growth without significantly increasing our core structure, resulting in direct bottom line profitability. In the second quarter, we originated five loans totaling approximately $58 million with a weighted average unlevered yield of approximately 8% and a weighted average leverage yield of approximately 15%.

We also continue to grow our core residential investment platform purchasing 11 residential mortgage securities in the second quarter totaling $41 million with a weighted average yield of approximately 5% and expected levered returns in excess of 20%. At June 30, 2012, we had $88 million of residential securities outstanding with corresponding leverage of $75 million. These securities generally have an average expected life of 24 to 36 months and are expected to generate levered returns in excess of 20%.

In addition, in July, we originated three loans totaling $32 million with a weighted average yield of approximately 7% and an expected levered return of around 15% and purchased one residential security for $11 million with a weighted average yield of 5% and an expected levered return in excess of 20%.

As I mentioned earlier, our pipeline remains strong and our goal is to continue to deploy our capital into new investment opportunities with a targeted return of 50% on an unlevered or a levered basis. The continued growth and diversification in our investments has increased our core earnings run rate, and we believe we will be able to continue to increase our core earnings in the future.

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