Arbor Realty Trust Reports Third Quarter 2016 Results And Declares Common Stock Dividend

Company Highlights:
  • Completed the acquisition of Arbor Commercial Mortgage's agency platform
  • Net income of $10.9 million, or $0.21 per diluted common share
  • AFFO of $15.0 million, or $0.21 per diluted common share 1
  • Declares a cash dividend on common stock of $0.16 per share

Segment Highlights:

 Structured Business
  • Segment net income of $7.8 million
  • Loan and investment portfolio growth of 10% from 2Q16 on new originations of $267 million
  • Earned $4.9 million of income from equity investments
  • Closed a sixth collateralized securitization vehicle totaling $325 million

 Agency Business
  • Segment net income of $14.0 million
  • Loan originations totaling $850 million
  • Servicing portfolio of $12.6 billion at September 30, 2016, up 5% from the acquisition date of July 14, 2016

Recent Developments:
  • Issued $86 million of Convertible Senior Notes due 2019

UNIONDALE, N.Y., Nov. 09, 2016 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the third quarter ended September 30, 2016.  Arbor reported net income for the quarter of $10.9 million, or $0.21 per diluted common share, compared to $15.3 million, or $0.30 per diluted common share for the quarter ended September 30, 2015. Adjusted funds from operations ("AFFO") for the quarter was $15.0 million, or $0.21 per diluted common share, compared to $18.3 million, or $0.36 per diluted common share for the quarter ended September 30, 2015. 1

Acquisition of Arbor Commercial Mortgage's Agency Platform

As previously announced, on July 14, 2016 the Company completed the acquisition of Arbor Commercial Mortgage's ("ACM") agency platform for $275.8 million. The purchase price was paid with $138.0 million in stock, $87.8 million in cash and with the issuance of a $50.0 million seller financing instrument. The stock component was paid with 21.23 million Operating Partnership Units, which was based on a stock price of $6.50 per share.

Based on the closing price of the Company's common stock on the day of the acquisition, the estimated fair value of the total consideration given was $292.5 million. The preliminary allocation of the purchase price to the net assets acquired resulted in the recognition of intangible assets of $73.3 million and goodwill of $27.8 million.

The acquisition includes a leading national multifamily agency loan origination and servicing platform with over 230 direct employees, including 20 originators in eight states. The agency business originated over $3 billion in loans in 2015, the vast majority of which were government sponsored loans through the Fannie Mae Delegated Underwriting and Servicing (DUS®) program, Federal Home Loan Mortgage Corporation (Freddie Mac) and Government National Mortgage Association (Ginnie Mae).

In addition, the Company obtained a two year option to purchase for $25.0 million the existing management contract and fully internalize the management structure. The exercise of this option is in the sole discretion of the special committee of the Company's Board of Directors, which has no obligation to exercise its option.

As a result of the acquisition, we currently evaluate our results from operations from two major business segments - our existing on-balance sheet structured loan origination and investment portfolio, the ("Structured Business"), and the newly acquired agency loan origination and servicing platform, the ("Agency Business").

Structured Business Segment

Portfolio and Investment Activity

Loan and investment portfolio activity consisted of:
  •   22 new loan originations totaling $266.6 million, of which 21 were bridge loans for $261.6 million
  •   Payoffs and pay downs on 14 loans totaling $118.3 million

At September 30, 2016, the loan and investment portfolio's unpaid principal balance, excluding loan loss reserves, was $1.76 billion, with a weighted average current interest pay rate of 5.47%, compared to $1.61 billion and 5.40% at June 30, 2016.  Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 6.14% at September 30, 2016, compared to 6.11% at June 30, 2016.

The average balance of the Company's loan and investment portfolio during the third quarter of 2016, excluding loan loss reserves, was $1.73 billion and the weighted average yield on these assets for the quarter was 6.15%, compared to $1.64 billion and 6.76% for the second quarter of 2016. The decrease in average yield was primarily due to an increase in income from fees associated with loan payoffs in the second quarter as compared to the third quarter.

At September 30, 2016, the Company's total loan loss reserves were $83.8 million relating to eight loans with an aggregate carrying value before loan loss reserves of $186.5 million. The Company also had four non-performing loans with a carrying value of $1.7 million, net of related loan loss reserves of $22.9 million.

The Company recorded $4.9 million of income from equity affiliates primarily consisting of $3.9 million of income from its joint venture investment in a residential mortgage banking business and $0.7 million of income from a distribution received from another one of its joint venture equity investments.

Financing Activity

During the third quarter, the Company completed its sixth collateralized securitization vehicle ("CLO VI") totaling $325.0 million of real estate related assets and cash. An aggregate of $250.3 million of investment grade-rated notes were issued, and the Company retained a $74.7 million equity interest in the portfolio. The notes have an initial weighted average spread of 248 basis points over LIBOR, excluding fees and transaction costs. The facility has a three year replenishment period that allows the principal proceeds from repayments of the collateral assets to be reinvested in qualifying replacement assets, subject to certain conditions.

The Company closed on a three year, $50.0 million warehouse facility to finance first mortgage loans on healthcare properties. The facility has an interest rate ranging from 250 to 325 basis points over LIBOR.

The balance of debt that finances the Company's loan and investment portfolio at September 30, 2016 was $1.42 billion with a weighted average interest rate including fees of 4.09%, as compared to $1.30 billion and a rate of 4.01% at June 30, 2016. The average balance of debt that finances the Company's loan and investment portfolio for the third quarter of 2016 was $1.37 billion, as compared to $1.25 billion for the second quarter of 2016. The average cost of borrowings for the third quarter was 4.19%, compared to 4.24% for the second quarter of 2016.

The Company is subject to various financial covenants and restrictions under the terms of its CLO vehicles and financing facilities, including financings assumed as part of the agency business acquisition. The Company believes it was in compliance with all financial covenants and restrictions as of September 30, 2016 and as of the most recent CLO determination dates in October 2016.

Agency Business Segment

Loan Origination Platform

Loan originations for the third quarter ended September 30, 2016 totaled $850.4 million and consisted of:
  • $668.6 million of Fannie Mae loans
  • $157.1 million of Freddie Mac loans
  • $24.6 million of FHA loans

Loan sales for the third quarter of 2016 totaled $970.0 million, of which $418.2 million were loans that were acquired on July 14, 2016 as part of the acquisition.

At September 30, 2016, loans held-for-sale was $310.3 million which was primarily comprised of unpaid principal balances totaling $302.1 million, with financing associated with these loans totaling $301.9 million.

For the quarter ended September 30, 2016, the Agency Business generated revenues of $34.5 million.  Fee-based services, including gain on sales, net was $9.7 million, reflecting a margin of 1.76% on third quarter loan sales of $551.8 million (loans originated and sold by the Company in the period subsequent to the acquisition date). Income from mortgage servicing rights was $16.0 million for the quarter, reflecting a rate of 2.23% as a percentage of third quarter loan commitments of $714.8 million.   

Servicing Portfolio

The servicing portfolio totaled $12.6 billion at September 30, 2016, an increase of 5% from the acquisition date, as a result of $850.4 million of new loan originations during the quarter. Servicing revenue, net was $5.9 million for the quarter, and consists of servicing revenue of $13.5 million net of amortization of mortgage servicing rights totaling $7.6 million.
    Servicing Portfolio ($ in 000s)
    As of September 30, 2016   As of July 14, 2016
    UPB Wtd. Avg. Fee Wtd. Avg. Life (in years)   UPB Wtd. Avg. Fee Wtd. Avg. Life (in years)
Fannie Mae   $   10,520,107     0.53 % 6.4   $   9,990,276     0.52 % 6.4
Freddie Mac       1,660,941     0.23 % 10.3       1,527,317     0.24 % 10.6
FHA       420,962     0.18 % 19.3       419,980     0.19 % 20.3
Total   $   12,602,010     0.48 % 7.3   $   11,937,573     0.47 % 7.4
                                 

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan ("loss-sharing obligations"). At September 30, 2016, the Company's allowance for loss-sharing obligations was $31.1 million which consists of general loss sharing guaranty obligations of $25.4 million, representing 0.24% of the Fannie Mae servicing portfolio, and $5.7 million of loss-sharing obligations on specifically identified loans with losses determined to be probable and estimable.

Capital Markets

In October 2016, the Company issued $86.25 million of 6.50% Convertible Senior Notes due 2019 (the "Notes"), including the underwriter's $11.25 million over-allotment option.   The Notes pay interest semiannually in arrears and will mature on October 1, 2019, unless earlier converted or repurchased.  The Company does not have the right to redeem the Notes prior to maturity. The Notes are convertible, subject to certain conditions, into cash, shares of the Company's common stock or a combination thereof, at the Company's sole election. The conversion rate was initially equal to 119.3033 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $8.38 per share of common stock, representing an approximate 10% conversion premium based on the closing price of the Company's common stock of $7.62 per share on September 29, 2016. The Company received proceeds of $82.8 million, net of transaction fees, from the offering which is intended to be used to make investments in our business and for general corporate purposes.

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.16 per share of common stock for the quarter ended September 30, 2016. The dividend is payable on November 30, 2016 to common stockholders of record on November 21, 2016. The ex-dividend date is November 17, 2016.

As previously announced, the 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 September 1, 2016 through November 30, 2016. The dividends are payable on November 30, 2016 to preferred stockholders of record on November 15, 2016. 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.

Earnings Conference Call

The Company will host a conference call today at 10:00 a.m. ET. A live webcast of the conference call will be available at www.arborrealtytrust.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 87959729.

After the live webcast, the call will remain available on the Company's website, www.arborrealtytrust.com, through November 30, 2016.  In addition, a telephonic replay of the call will be available until November 16, 2016. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 87959729.

About Arbor Realty Trust, Inc.

Arbor Realty Trust, Inc. (NYSE:ABR) is a real estate investment trust and national direct lender specializing in loan origination and servicing for multifamily, seniors housing, healthcare and other diverse commercial real estate assets. Arbor is a Top 10 Fannie Mae DUS ® Multifamily Lender by volume and a Top Fannie Mae Small Loan lender, a Freddie Mac Program Plus ® Seller/Servicer and the Top Freddie Mac Small Balance Loan Lender, a Fannie Mae and Freddie Mac Seniors Housing Lender, an FHA Multifamily Accelerated Processing (MAP)/LEAN Lender, a HUD-approved LIHTC Lender as well as a CMBS, bridge, mezzanine and preferred equity lender, consistently building on its reputation for service, quality and flexibility. With a current servicing portfolio of approximately $12.6 billion, Arbor is a primary commercial loan servicer and special servicer rated by Standard & Poor's with an Above Average rating. Arbor is also on the Standard & Poor's Select Servicer List and is a primary commercial loan servicer and loan level special servicer rated by Fitch Ratings. Arbor is externally managed and advised by Arbor Commercial Mortgage, LLC.

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, 2015 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. Supplemental schedules of each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 12 of this release.
   
  ARBOR REALTY TRUST, INC. AND SUBSIDIARIES    
 CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)   
                     
      Quarter Ended   Nine Months Ended  
      September 30,   September 30,  
    2016       2015       2016       2015    
                                 
                     
Interest income   $   29,636,227     $   26,025,709     $   83,424,190     $   79,575,689    
Other interest income, net       -          -          2,539,274         7,884,344    
Interest expense       16,966,228         11,885,363         42,958,329         37,405,492    
  Net interest income       12,669,999         14,140,346         43,005,135         50,054,541    
                     
Other revenue:                  
Fee-based services, including gain on sales, net       9,693,822         -          9,693,822         -     
Mortgage servicing rights       15,968,067         -          15,968,067         -     
Servicing revenue, net       5,885,884         -          5,885,884         -     
Property operating income       2,960,940         7,202,851         12,719,027         22,855,028    
Other income, net       359,546         51,633         663,977         164,449    
  Total other revenue       34,868,259         7,254,484         44,930,777         23,019,477    
                     
Other expenses:                  
Employee compensation and benefits       14,216,679         4,877,059         22,856,433         14,133,403    
Selling and administrative       5,903,031         2,063,408         10,277,844         7,442,979    
Acquisition costs       6,406,258         1,116,126         10,261,902         1,542,169    
Property operating expenses       2,819,004         6,028,585         10,991,823         18,381,317    
Depreciation and amortization       1,808,765         1,250,761         3,129,410         4,137,080    
Impairment loss on real estate owned       -          -          11,200,000         -     
Provision for loss sharing       1,316,862         -          1,316,862         -     
Provision for loan losses (net of recoveries)       (54,000 )       277,464         (24,995 )       2,353,688    
Management fee - related party       3,325,000         2,725,000         8,875,000         8,075,000    
  Total other expenses       35,741,599         18,338,403         78,884,279         56,065,636    
                     
Income before gain on acceleration of deferred income, loss                  
  on termination of swaps, gain on sale of real estate, income                
   from equity affiliates and provision for income taxes       11,796,659         3,056,427         9,051,633         17,008,382    
Gain on acceleration of deferred income       -          8,162,720         -          19,171,882    
Loss on termination of swaps       -          (340,197 )       -          (4,629,647 )  
Gain on sale of real estate       -          -          11,630,687         3,984,364    
Income from equity affiliates       4,929,375         6,353,239         11,193,918         10,983,177    
Provision for income taxes       (300,000 )       -          (300,000 )       -     
                     
Net income       16,426,034         17,232,189         31,576,238         46,518,158    
                     
Preferred stock dividends       1,888,430         1,888,430         5,665,290         5,665,290    
Net income attributable to noncontrolling interest       3,649,432         -          3,649,432         -     
Net income attributable to common stockholders   $   10,888,172     $   15,343,759     $   22,261,516     $   40,852,868    
                     
Basic earnings per common share   $   0.21     $   0.30     $   0.43     $   0.80    
Diluted earnings per common share   $   0.21     $   0.30     $   0.43     $   0.80    
                     
                     
Weighted average shares outstanding:                  
  Basic       51,390,467         50,962,516         51,272,795         50,822,444    
  Diluted       70,271,796         50,962,516         51,627,550         50,917,442    
                     
Dividends declared per common share   $   0.16     $   0.15     $   0.46     $   0.43    
                     

 
  ARBOR REALTY TRUST, INC. AND SUBSIDIARIES    
 CONSOLIDATED BALANCE SHEETS   
                 
          September 30,   December 31,  
            2016       2015    
          (Unaudited)      
Assets:            
Cash and cash equivalents   $   71,613,974     $   188,708,687    
Restricted cash       176,615,179         48,301,244    
Loans and investments, net       1,656,748,937         1,450,334,341    
Loans held-for-sale, net       310,252,600         -     
Capitalized mortgage servicing rights, net       224,297,210         -     
Available-for-sale securities, at fair value       5,214,998         2,022,030    
Investments in equity affiliates       41,962,338         30,870,235    
Real estate owned, net       19,762,787         60,845,509    
Real estate held-for-sale, net       -          8,669,203    
Due from related party       493,412         8,082,265    
Goodwill and other intangible assets       99,932,986         -     
Other assets       43,326,307         29,558,430    
Total assets   $   2,650,220,728     $   1,827,391,944    
                 
Liabilities and Equity:          
Credit facilities and repurchase agreements       431,060,399         136,252,135    
Collateralized loan obligations       1,007,736,720         758,899,661    
Senior unsecured notes       94,330,797         93,764,994    
Junior subordinated notes to subsidiary trust issuing preferred securities       157,662,855         157,117,130    
Mortgage note payable - real estate owned       -          27,155,000    
Related party financing       50,000,000         -     
Due to related party       18,583,192         3,428,333    
Due to borrowers       50,823,894         34,629,595    
Allowance for loss-sharing obligations       31,113,413         -     
Other liabilities       83,477,916         51,054,321    
Total liabilities       1,924,789,186         1,262,301,169    
                 
Equity:            
  Arbor Realty Trust, Inc. stockholders' equity:          
    Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares          
      authorized; special voting preferred shares; 21,230,769 shares issued and          
      outstanding, no 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     89,508,213         89,295,905    
    Common stock, $0.01 par value: 500,000,000 shares authorized; 51,401,295          
      and 50,962,516 shares issued and outstanding, respectively     514,013         509,625    
    Additional paid-in capital     619,179,982         616,244,196    
    Accumulated deficit     (137,441,120 )       (136,118,001 )  
    Accumulated other comprehensive loss     (1,142,053 )       (4,840,950 )  
Total Arbor Realty Trust, Inc. stockholders' equity     570,619,035         565,090,775    
                 
Noncontrolling interest       154,812,507         -     
Total equity       725,431,542         565,090,775    
                 
Total liabilities and equity   $   2,650,220,728     $   1,827,391,944    
                 

 
  ARBOR REALTY TRUST, INC. AND SUBSIDIARIES    
 STATEMENT OF INCOME SEGMENT INFORMATION- (Unaudited)   
                     
      Quarter Ended September 30, 2016  
      Structured Business   Agency Business   Other / Eliminations (1)   Consolidated  
                     
Interest income   $   26,893,151     $   2,743,076     $   -      $   29,636,227    
Interest expense       14,455,058         1,680,561         830,609         16,966,228    
  Net interest income       12,438,093         1,062,515         (830,609 )       12,669,999    
                     
Other revenue:                  
Fee-based services, including gain on sales, net       -          9,693,822         -          9,693,822    
Mortgage servicing rights       -          15,968,067         -          15,968,067    
Servicing revenue, net       -          5,885,884         -          5,885,884    
Property operating income       2,960,940         -          -          2,960,940    
Other income, net       111,036         248,510         -          359,546    
  Total other revenue       3,071,976         31,796,283         -          34,868,259    
                     
Other expenses:                  
Employee compensation and benefits       3,460,745         10,755,934         -          14,216,679    
Selling and administrative       2,182,406         3,720,625         -          5,903,031    
Acquisition costs       -          -          6,406,258         6,406,258    
Property operating expenses       2,819,004         -          -          2,819,004    
Depreciation and amortization       641,721         1,167,044         -          1,808,765    
Provision for loss sharing       -          1,316,862         -          1,316,862    
Provision for loan losses (net of recoveries)       (54,000 )       -          -          (54,000 )  
Management fee - related party       1,712,307         1,612,693         -          3,325,000    
  Total other expenses       10,762,183         18,573,158         6,406,258         35,741,599    
                     
Income before income from equity affiliates and provision                  
  for income taxes       4,747,886         14,285,640         (7,236,867 )       11,796,659    
Income from equity affiliates       4,929,375         -          -          4,929,375    
Provision for income taxes       -          (300,000 )       -          (300,000 )  
                     
Net income   $   9,677,261     $   13,985,640     $   (7,236,867 )   $   16,426,034    
                     
Preferred stock dividends       1,888,430         -          -          1,888,430    
Net income attributable to noncontrolling interest       -          -          3,649,432         3,649,432    
Net income attributable to common stockholders   $   7,788,831     $   13,985,640     $   (10,886,299 )   $   10,888,172    
                     
(1) Includes certain corporate expenses not allocated to the two reportable segments, such as costs associated with the acquisition of the  
 Agency Business as well as income allocated to the noncontrolling interest holder.            
                     

 
  ARBOR REALTY TRUST, INC. AND SUBSIDIARIES  
 BALANCE SHEET SEGMENT INFORMATION - (Unaudited) 
                       
          September 30, 2016
          Structured Business   Agency Business   Other / Eliminations (1)   Consolidated
Assets:                  
Cash and cash equivalents   $   41,562,243     $   30,051,731     $   -      $   71,613,974  
Restricted cash       174,583,396         2,031,783         -          176,615,179  
Loans and investments, net       1,656,748,937         -          -          1,656,748,937  
Loans held-for-sale, net       -          310,252,600         -          310,252,600  
Capitalized mortgage servicing rights, net       -          224,297,210         -          224,297,210  
Investments in equity affiliates       41,962,338         -          -          41,962,338  
Goodwill and other intangible assets       -          99,932,986         -          99,932,986  
Other assets        53,677,419         15,120,085         -          68,797,504  
  Total assets   $   1,968,534,333     $   681,686,395     $   -      $   2,650,220,728  
                       
Liabilities:                
Debt obligations       1,388,916,564         301,874,207         50,000,000         1,740,790,771  
Allowance for loss-sharing obligations       -          31,113,413         -          31,113,413  
Other liabilities       114,779,654         36,396,692         1,708,656         152,885,002  
  Total liabilities   $   1,503,696,218     $   369,384,312     $   51,708,656     $   1,924,789,186  
                       
(1) Includes assets and liabilities not allocated to the two reportable segments, such as financings and accrued acquisition costs
  associated with the acquisition of the Agency Business.            
                       

 
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES  
Supplemental Schedule of Non-GAAP Financial Measures -  
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")  
 (Unaudited)   
                 
  Quarter Ended   Nine Months Ended  
September 30, September 30,
    2016       2015       2016       2015    
                 
Net income attributable to common stockholders $   10,888,172     $   15,343,759     $   22,261,516     $   40,852,868    
                 
Subtract:                
Gain on sale of real estate     -          -          (11,630,687 )       (3,984,364 )  
Add:                
Net income attributable to noncontrolling interest     3,649,432         -          3,649,432         -     
Impairment loss on real estate owned     -          -          11,200,000         -     
Depreciation - real estate owned and held-for-sale     443,684         1,250,761         1,764,329         4,137,080    
Depreciation - investments in equity affiliates     93,588         93,588         280,764         280,764    
                 
Funds from operations  (1) $   15,074,876     $   16,688,108     $   27,525,354     $   41,286,348    
                 
Subtract:                
Income from mortgage servicing rights     (15,968,067 )       -          (15,968,067 )       -     
Impairment loss on real estate owned     -          -          (11,200,000 )       -     
Net gain on changes in fair value of derivatives     (248,510 )       -          (248,510 )       -     
Add:                
Amortization of MSRs     7,586,524         -          7,586,524         -     
Depreciation and amortization     1,365,081         -          1,365,081         -     
Gain on sale of real estate     -          -          11,630,687         3,984,364    
Stock-based compensation     777,080         463,313         2,940,174         2,890,582    
Acquisition costs     6,406,258         1,116,126         10,261,902         1,542,169    
                 
Adjusted funds from operations  (1) $   14,993,242     $   18,267,547     $   33,893,145     $   49,703,463    
                 
Diluted FFO per share  (1) $   0.21     $   0.33     $   0.48     $   0.81    
                 
Diluted AFFO per share  (1) $   0.21     $   0.36     $   0.59     $   0.98    
                 
                 
Diluted weighted average shares outstanding  (1)     70,271,796         50,962,516         57,748,830         50,917,442    
                 
(1) Amounts are attributable to common stockholders and OP Unit holder. 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.   
                 
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"), amortization of MSRs, changes in fair value of certain derivatives that temporarily flow through earnings as well as the add-back of one-time charges such as acquisition costs. The Company also adds back 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 owned 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.   

Contacts:Arbor Realty Trust, Inc.Paul Elenio, Chief Financial Officer 516-506-4422pelenio@arbor.comMedia:Bonnie Habyan, EVP of Marketing516-506-4615bhabyan@arbor.comInvestors:The Ruth GroupJoseph Green646-536-7013jgreen@theruthgroup.com

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