Exhibit 99.1

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

Fourth Quarter Highlights:

 

-GAAP net income of $0.34 per diluted common share
-AFFO per diluted common share of $0.34, excluding a one-time loss from the early repayment of debt and gains from derivative instruments1
-Raised $250.7 million of accretive growth capital through the issuance of common stock and senior unsecured notes
-Issued $264.0 million of 4.75% convertible senior notes due 2022 to exchange our 5.25% convertible senior notes
-Declares a cash dividend on common stock of $0.30 per share, 11% higher than a year ago

 

Agency Business

 

-Segment income of $33.2 million
-Loan originations of $1.26 billion
-Servicing portfolio of $20.06 billion representing 8% growth for 2019
 

Structured Business

 

-Segment income of $9.5 million
-Portfolio growth of 8% on $831.4 million of loan originations
-Closed a $635.0 million collateralized securitization vehicle with improved terms

 

Full Year Highlights:

 

-GAAP net income of $1.27 and AFFO of $1.36 per diluted common share1
-Record loan originations of $7.61 billion, a 12% increase over 2018
-Structured portfolio growth of 30% from record loan originations of $2.80 billion
-Significant return to shareholders of 54% for 2019
-Raised common dividend three times in 2019 to a forward annual rate of $1.20 per share, up from $1.08 per share a year ago

 

 

 

 
Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 
February 14, 2020 Page 2

 

-Continued focus on improving our funding sources by increasing warehouse capacity by $1.00 billion, adding two collateralized securitization vehicles totaling $1.29 billion and issuing $264.0 million of convertible senior notes, replacing higher cost debt
-Raised $456.9 million of accretive growth capital through the issuance of common stock and senior unsecured notes at attractive terms
-Launched the single-family rental portfolio and private label programs, further diversifying our lending platform

 

Uniondale, NY, February 14, 2020 -- Arbor Realty Trust, Inc. (NYSE:ABR), today announced financial results for the fourth quarter and year ended December 31, 2019. Arbor reported net income for the quarter of $35.5 million, or $0.34 per diluted common share, compared to $37.2 million, or $0.47 per diluted common share for the quarter ended December 31, 2018. Net income for the year was $121.1 million, or $1.27 per diluted common share, compared to $108.3 million, or $1.50 per diluted common share for the year ended December 31, 2018. Adjusted funds from operations (“AFFO”) for the quarter was $42.1 million, or $0.34 per diluted common share, compared to $29.0 million, or $0.29 per diluted common share for the quarter ended December 31, 2018. AFFO for the year was $158.0 million, or $1.36 per diluted common share, compared to $118.1 million, or $1.26 per diluted common share for the year ended December 31, 2018.1

 

Agency Business

 

Loan Origination Platform

 

Agency Loan Volume  (in thousands) 
   Quarter Ended   Year Ended 
   December 31,
 2019
   September 30,
 2019
   December 31,
 2019
   December 31,
 2018
 
Fannie Mae  $764,314   $1,097,095   $3,346,272   $3,332,100 
Freddie Mac   96,993    203,981    728,317    1,587,958 
FHA   78,428    -    123,095    153,523 
CMBS/Conduit   -    34,000    211,325    50,908 
Private Label   320,476    80,740    401,216    - 
Total Originations  $1,260,211   $1,415,816   $4,810,225   $5,124,489 
                     
Total Loan Sales  $887,868   $1,488,430   $4,401,112   $4,924,144 
                     
Total Loan Commitments  $1,203,194   $1,477,436   $4,829,721   $5,104,072 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 3

 

For the quarter ended December 31, 2019, the Agency Business generated revenues of $68.5 million, compared to $67.0 million for the third quarter of 2019. Gain on sales, including fee-based services, net was $13.8 million for the quarter, reflecting a margin of 1.55% on loan sales, compared to $21.3 million and 1.43% for the third quarter of 2019. Income from mortgage servicing rights was $27.9 million for the quarter, reflecting a rate of 2.32% as a percentage of loan commitments, compared to $29.9 million and 2.02% for the third quarter of 2019.

 

At December 31, 2019, loans held-for-sale was $861.4 million which was primarily comprised of unpaid principal balances totaling $847.1 million, with financing associated with these loans totaling $743.6 million.

 

Fee-Based Servicing Portfolio

 

Our fee-based servicing portfolio totaled $20.06 billion at December 31, 2019, an increase of 0.4% from September 30, 2019, primarily a result of $939.7 million of new loan originations (excluding $320.5 million of private label loans that are yet to be sold), net of $846.5 million in portfolio runoff during the quarter. Servicing revenue, net was $14.6 million for the quarter and consisted of servicing revenue of $26.5 million, net of amortization of mortgage servicing rights totaling $12.0 million.

 

   Fee-Based Servicing Portfolio ($ in thousands) 
   As of December 31, 2019   As of September 30, 2019 
   UPB   Wtd. Avg.
Fee
   Wtd. Avg.
Life (in years)
   UPB   Wtd. Avg.
Fee
   Wtd. Avg.
Life (in years)
 
Fannie Mae  $14,832,844    0.493%   7.8   $14,616,816    0.492%   8.1 
Freddie Mac   4,534,714    0.300%   10.6    4,664,750    0.300%   11.0 
FHA   691,519    0.154%   18.7    684,316    0.154%   19.2 
Total  $20,059,077    0.438%   8.8   $19,965,882    0.435%   9.2 

 

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan (“loss-sharing obligations”). At December 31, 2019, the Company’s allowance for loss-sharing obligations was $34.6 million, representing 0.23% of the Fannie Mae servicing portfolio.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 4

 

Structured Business

 

Portfolio and Investment Activity

 

Quarter ended December 31, 2019:

 

-Originated 66 loans totaling $831.4 million, of which $799.2 million was funded at December 31, 2019, and consisted primarily of 51 bridge loans totaling $765.0 million
-Payoffs and pay downs on 25 loans totaling $508.9 million
-Portfolio growth of $317.9 million, or 8%

 

Year ended December 31, 2019:

 

-Record origination volume of $2.80 billion, a 69% increase from 2018, and consists of 173 new loan originations, of which 140 were bridge loans for $2.60 billion
-Payoffs and pay downs on 137 loans totaling $1.75 billion
-Portfolio growth of $1.00 billion, or 30%

 

At December 31, 2019, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $4.29 billion, with a weighted average current interest pay rate of 5.98%, compared to $3.97 billion and 6.33% at September 30, 2019. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 6.68% at December 31, 2019, compared to 7.04% at September 30, 2019.

 

The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2019, excluding loan loss reserves, was $4.02 billion with a weighted average yield of 7.18%, compared to $3.94 billion and 7.31% for the third quarter of 2019. The decrease in average yield was primarily due to a decrease in LIBOR in the fourth quarter, partially offset by higher fees on loan payoffs in the fourth quarter as compared to the third quarter.

 

At December 31, 2019, the Company’s total loan loss reserves were $71.1 million on five loans with an aggregate carrying value before loan loss reserves of $130.7 million. The Company also had three non-performing loans with a carrying value of $3.5 million, net of related loan loss reserves of $1.7 million.

 

Financing Activity

 

The Company completed its twelfth collateralized securitization vehicle (“CLO XII”) totaling $635.0 million of real estate related assets and cash. Investment grade-rated notes totaling $534.2 million were issued, and the Company retained subordinate interests in the issuing vehicle of $100.8 million. The facility has a three-year asset replenishment period and an initial weighted average interest rate of 1.50% over LIBOR, excluding fees and transaction costs.

 

 

 

 
Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 5

 

The Company completed the unwind of CLO VII, redeeming $279.0 million of outstanding notes repaid with proceeds received from the refinancing of CLO VII’s outstanding assets primarily within CLO XII, which has an interest rate 49 basis points lower than CLO VII.

 

The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2019 was $3.93 billion with a weighted average interest rate including fees of 4.35% as compared to $3.52 billion and a rate of 4.65% at September 30, 2019. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2019 was $3.76 billion, as compared to $3.52 billion for the third quarter of 2019. The average cost of borrowings for the fourth quarter was 4.60%, compared to 4.87% for the third quarter of 2019. The decrease in average costs was primarily due to a decrease in LIBOR in the fourth quarter, partially offset by the acceleration of fees related to the early repayment of debt in the fourth quarter.

 

The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles, financing facilities and unsecured debt. The Company believes it was in compliance with all financial covenants and restrictions as of December 31, 2019 and as of the most recent collateralized securitization vehicle determination dates in January 2020.

 

Capital Markets

 

The Company issued 7.5 million shares of common stock in a public offering receiving net proceeds of $104.0 million. The proceeds are primarily to be used to make investments and for general corporate purposes.

 

The Company issued $264.0 million in aggregate principal amount of 4.75% convertible senior notes due 2022 in a private placement, including the exercised initial purchaser’s over-allotment option of $34.0 million. The Company received proceeds totaling $256.5 million, net of the underwriter’s discount and fees from this offering. The Company used the net proceeds to exchange $103.5 million of its 5.25% convertible senior notes due 2021 that were issued on July 3, 2018 and $125.2 million of 5.25% convertible senior notes due 2021 that were issued on July 20, 2018 for a combination of $233.1 million in cash and 4.5 million shares of the Company’s common stock to settle such exchanges. The remaining net proceeds are to be used for general corporate purposes.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 6

 

The Company issued $110.0 million in aggregate principal amount of 4.75% senior unsecured notes due 2024 in a private placement, generating net proceeds of $108.2 million after deducting offering expenses. This offering reflects a 100 basis point reduction in rate as compared to our previous senior unsecured notes offering in March 2019. The proceeds were used 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 $0.30 per share of common stock for the quarter ended December 31, 2019. The dividend is payable on March 17, 2020 to common stockholders of record on February 28, 2020. The ex-dividend date is February 27, 2020.

 

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 December 1, 2019 through February 29, 2020. The dividends are payable on March 2, 2020 to preferred stockholders of record on February 15, 2020. 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. Eastern Time. A live webcast and replay of the conference call will be available at http://www.arbor.com in the investor relations section of the Company’s 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 4199042.

 

A telephonic replay of the call will be available until February 21, 2020. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 4199042.

 

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 New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. Arbor is a Fannie Mae DUS® lender and Freddie Mac Optigo Seller/Servicer. Arbor’s product platform also includes 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 customized solutions with an unparalleled dedication to providing our clients excellence over the entire life of a loan.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 7

 

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 12 of this release.

 

Contacts:

Arbor Realty Trust, Inc.

Paul Elenio, Chief Financial Officer

516-506-4422

pelenio@arbor.com

 

Investors:

The Ruth Group

Alexander Lobo

646-536-7037

alobo@theruthgroup.com

Media:

Bonnie Habyan, Chief Marketing Officer

516-506-4615

bhabyan@arbor.com

 

 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 8

 

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, 
   2019   2018   2019   2018 
   (Unaudited)   (Unaudited)         
Interest income  $81,983   $73,360   $315,940   $251,768 
Interest expense   48,186    42,999    186,399    153,818 
Net interest income   33,797    30,361    129,541    97,950 
                     
Other revenue:                    
Gain on sales, including fee-based services, net   13,755    18,735    65,652    70,002 
Mortgage servicing rights   27,909    36,052    90,761    98,839 
Servicing revenue, net   14,587    11,372    54,542    46,034 
Property operating income   1,487    1,569    9,674    10,095 
Other income, net   4,627    9,736    (784)   8,161 
Total other revenue   62,365    77,464    219,845    233,131 
                     
Other expenses:                    
Employee compensation and benefits   28,456    26,386    122,102    110,470 
Selling and administrative   9,205    9,291    40,329    37,074 
Property operating expenses   2,571    2,342    10,220    10,431 
Depreciation and amortization   1,847    1,914    7,510    7,453 
Impairment loss on real estate owned   -    -    1,000    2,000 
Provision for loss sharing  (net of recoveries)   (409)   1,003    1,147    3,843 
Provision for loan losses (net of recoveries)   -    9,319    -    8,353 
Litigation settlement gain   -    -    -    (10,170)
Total other expenses   41,670    50,255    182,308    169,454 
                     
Income before extinguishment of debt, income from equity affiliates and income taxes   54,492    57,570    167,078    161,627 
Loss on extinguishment of debt   (7,311)   (82)   (7,439)   (5,041)
Income from equity affiliates   1,502    91    10,635    1,196 
Provision for income taxes   (4,072)   (8,635)   (15,036)   (9,731)
                     
Net income   44,611    48,944    155,238    148,051 
                     
Preferred stock dividends   1,888    1,888    7,554    7,554 
Net income attributable to noncontrolling interest   7,181    9,838    26,610    32,185 
Net income attributable to common stockholders  $35,542   $37,218   $121,074   $108,312 
                     
Basic earnings per common share  $0.35   $0.48   $1.30   $1.54 
Diluted earnings per common share  $0.34   $0.47   $1.27   $1.50 
                     
Weighted average shares outstanding:                    
Basic   101,611,818    78,273,633    92,851,327    70,208,165 
Diluted   125,498,359    101,148,081    116,192,951    93,642,168 
                     
Dividends declared per common share  $0.30   $0.42(1)  $1.14   $1.13(1)

 

(1) Includes a special dividend of $0.15 per share of common stock declared in December 2018.

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020Page 9

 

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

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

 

    December 31,     December 31,  
    2019     2018  
Assets:                
Cash and cash equivalents   $ 299,687     $ 160,063  
Restricted cash     210,875       180,606  
Loans and investments, net     4,189,960       3,200,145  
Loans held-for-sale, net     861,360       481,664  
Capitalized mortgage servicing rights, net     286,420       273,770  
Securities held to maturity, net     88,699       76,363  
Investments in equity affiliates     41,800       21,580  
Real estate owned, net     13,220       14,446  
Due from related party     10,651       1,287  
Goodwill and other intangible assets     110,700       116,165  
Other assets     125,788       86,086  
Total assets   $ 6,239,160     $ 4,612,175  
                 
Liabilities and Equity:                
Credit facilities and repurchase agreements   $ 1,678,288     $ 1,135,627  
Collateralized loan obligations     2,130,121       1,593,548  
Debt fund     68,629       68,183  
Senior unsecured notes     319,799       122,484  
Convertible senior unsecured notes, net     284,152       254,768  
Junior subordinated notes to subsidiary trust issuing preferred securities     140,949       140,259  
Due to related party     13,100       -  
Due to borrowers     79,148       78,662  
Allowance for loss-sharing obligations     34,648       34,298  
Other liabilities     134,299       118,780  
Total liabilities     4,883,133       3,546,609  
                 
Equity:                
Arbor Realty Trust, Inc. stockholders' equity:                
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized; special voting preferred shares; 20,484,094 and 20,653,584 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     89,501       89,502  
Common stock, $0.01 par value: 500,000,000 shares authorized; 109,706,214 and 83,987,707 shares issued and outstanding, respectively     1,097       840  
Additional paid-in capital     1,154,932       879,029  
Accumulated deficit     (60,920 )     (74,133 )
Total Arbor Realty Trust, Inc. stockholders’ equity     1,184,610       895,238  
                 
Noncontrolling interest     171,417       170,328  
Total equity     1,356,027       1,065,566  
                 
Total liabilities and equity   $ 6,239,160     $ 4,612,175  

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020   Page 10 

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

STATEMENT OF INCOME SEGMENT INFORMATION - (Unaudited)

(in thousands)

 

   Quarter Ended December 31, 2019 
   Structured
Business
   Agency Business   Other /
Eliminations (1)
   Consolidated 
Interest income  $74,060   $7,923   $    -   $81,983 
Interest expense   43,620    4,566    -    48,186 
Net interest income   30,440    3,357    -    33,797 
                     
Other revenue:                    
Gain on sales, including fee-based services, net   -    13,755    -    13,755 
Mortgage servicing rights   -    27,909    -    27,909 
Servicing revenue   -    26,538    -    26,538 
Amortization of MSRs   -    (11,951)   -    (11,951)
Property operating income   1,487    -    -    1,487 
Other income, net   256    4,371    -    4,627 
Total other revenue   1,743    60,622    -    62,365 
                     
Other expenses:                    
Employee compensation and benefits   8,217    20,239    -    28,456 
Selling and administrative   2,998    6,207    -    9,205 
Property operating expenses   2,571    -    -    2,571 
Depreciation and amortization   523    1,324    -    1,847 
Provision for loss sharing (net of recoveries)   -    (409)   -    (409)
Total other expenses   14,309    27,361    -    41,670 
                     
Income before extinguishment of debt, income from equity affiliates and income taxes   17,874    36,618    -    54,492 
Loss on extinguishment of debt   (7,311)   -    -    (7,311)
Income from equity affiliates   1,502    -    -    1,502 
Provision for income taxes   (667)   (3,405)   -    (4,072)
                     
Net income   11,398    33,213    -    44,611 
                     
Preferred stock dividends   1,888    -    -    1,888 
Net income attributable to noncontrolling interest   -    -    7,181    7,181 
Net income attributable to common stockholders  $9,510   $33,213   $(7,181)  $35,542 

 

(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 Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020   Page 11 

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

BALANCE SHEET SEGMENT INFORMATION - (Unaudited)

(in thousands)

 

   December 31, 2019 
   Structured
Business
   Agency
Business
   Consolidated 
Assets:               
Cash and cash equivalents  $264,468   $35,219   $299,687 
Restricted cash   208,926    1,949    210,875 
Loans and investments, net   4,189,960    -    4,189,960 
Loans held-for-sale, net   -    861,360    861,360 
Capitalized mortgage servicing rights, net   -    286,420    286,420 
Securities held to maturity, net   20,000    68,699    88,699 
Investments in equity affiliates   41,800    -    41,800 
Goodwill and other intangible assets   12,500    98,200    110,700 
Other assets   118,175    31,484    149,659 
   Total assets  $4,855,829   $1,383,331   $6,239,160 
                
Liabilities:               
Debt obligations  $3,878,343   $743,595   $4,621,938 
Allowance for loss-sharing obligations   -    34,648    34,648 
Other liabilities   171,004    55,543    226,547 
   Total liabilities  $4,049,347   $833,786   $4,883,133 

 

 

 

 

Arbor Realty Trust Reports Fourth Quarter and Full Year 2019 Results and Declares Common Stock Dividend

 

February 14, 2020   Page 12 

 

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, 
   2019   2018   2019   2018 
Net income attributable to common stockholders  $35,542   $37,218   $121,074   $108,312 
                     
Adjustments:                    
Net income attributable to noncontrolling interest   7,181    9,838    26,610    32,185 
Impairment loss on real estate owned   -    -    1,000    2,000 
Depreciation - real estate owned   177    176    701    708 
Depreciation - investments in equity affiliates   124    125    510    499 
                     
Funds from operations(1)  $43,024   $47,357   $149,895   $143,704 
                     
Adjustments:                    
Income from mortgage servicing rights   (27,909)   (36,052)   (90,761)   (98,839)
Impairment loss on real estate owned   -    -    (1,000)   (2,000)
Deferred tax provision (benefit)   1,176    2,421    150    (12,033)
Amortization and write-offs of MSRs   18,547    20,314    71,105    73,182 
Depreciation and amortization   2,389    2,582    9,983    9,618 
Loss on extinguishment of debt   7,311    82    7,439    5,041 
Net gain on Private Label-related derivatives prior to sale   (6,050)   -    (6,098)   - 
Net loss (gain) on changes in fair value of GSE-related derivatives   1,678    (9,002)   7,785    (6,672)
Stock-based compensation   1,941    1,257    9,515    6,095 
                     
Adjusted funds from operations (1) (2)  $42,107   $28,959   $158,013   $118,096 
                     
Diluted FFO per share(1)  $0.34   $0.47   $1.29   $1.53 
                     
Diluted AFFO per share(1) (2)  $0.34   $0.29   $1.36   $1.26 
                     
Diluted weighted average shares outstanding(1)   125,498,359    101,148,081    116,192,951    93,642,168 

 

 

(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) During the fourth quarter of 2019, the Company updated its definition of AFFO to (i)  exclude one-time gains or losses on the early extinguishment of debt, (ii) exclude gains and losses on derivative instruments associated with Private Label loans that have not yet been sold and securitized and (iii) include the cumulative gains or losses on derivative instruments associated with Private Label loans that were sold during the periods presented.  Prior period amounts presented above have been conformed to reflect this change.

 

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"), gains or losses on Private Label-related derivative instruments until the loans are sold, changes in fair value of GSE-related 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, gains and losses on the extinguishment of debt, 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.

 

 

 

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