UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the quarterly period ended March 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-32136

Arbor Realty Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	20-0057959
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
333 Earle Ovington Boulevard, Suite 900 Uniondale, NY (Address of principal executive offices)	11553 (Zip Code)

(Registrant’s telephone number, including area code): (516) 506-4200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbols	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ABR	New York Stock Exchange
Preferred Stock, 6.375% Series D Cumulative Redeemable, par value $0.01 per share	ABR-PD	New York Stock Exchange
Preferred Stock, 6.25% Series E Cumulative Redeemable, par value $0.01 per share	ABR-PE	New York Stock Exchange
Preferred Stock, 6.25% Series F Fixed-to- Floating Rate Cumulative Redeemable, par value $0.01 per share	ABR-PF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☑	Accelerated filer  ☐	Non-accelerated filer  ☐
Smaller reporting company  ☐	Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Issuer has 160,202,358 shares of common stock outstanding at April 29, 2022.

INDEX

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	2
Consolidated Balance Sheets	2
Consolidated Statements of Income	3
Consolidated Statements of Changes in Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3. Quantitative and Qualitative Disclosures about Market Risk	54
Item 4. Controls and Procedures	55
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	55
Item 1A. Risk Factors	55
Item 6. Exhibits	56
Signatures	57

Forward-Looking Statements

The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in Arbor Realty Trust, Inc.  We urge you to carefully review and consider the various disclosures in this report, as well as information in our annual report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”) filed with the SEC on February 18, 2022 and in our other reports and filings with the SEC.

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, the operating performance of our investments and financing needs. We use words such as “anticipate,” “expect,” “believe,” “intend,” “should,” “could,” “will,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words.  Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information.  Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results.  Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in economic conditions generally, and the real estate market specifically, in particular, due to the uncertainties created by the novel coronavirus (“COVID-19”) pandemic; the potential impact of the COVID-19 pandemic on our business, results of operations and financial condition; adverse changes in our status with government-sponsored enterprises affecting our ability to originate loans through such programs; changes in interest rates; the quality and size of the investment pipeline and the rate at which we can invest our cash; impairments in the value of the collateral underlying our loans and investments; changes in federal and state laws and regulations, including changes in tax laws; the availability and cost of capital for future investments; and competition. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this report.  The factors noted above could cause our actual results to differ significantly from those contained in any forward-looking statement.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  We are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

	March 31,		December 31,
	2022		2021
	(Unaudited)
Assets:
Cash and cash equivalents	$	350,814	$	404,580
Restricted cash		517,090		486,690
Loans and investments, net (allowance for credit losses of $116,382 and $113,241)		13,978,283		11,981,048
Loans held-for-sale, net		336,959		1,093,609
Capitalized mortgage servicing rights, net		422,036		422,734
Securities held-to-maturity, net (allowance for credit losses of $2,043 and $1,753)		161,696		140,484
Investments in equity affiliates		96,836		89,676
Due from related party		53,744		84,318
Goodwill and other intangible assets		99,587		100,760
Other assets		291,861		269,946
Total assets	$	16,308,906	$	15,073,845
Liabilities and Equity:
Credit and repurchase facilities	$	4,302,819	$	4,481,579
Collateralized loan obligations		7,099,770		5,892,810
Senior unsecured notes		1,281,489		1,280,545
Convertible senior unsecured notes, net		262,483		259,385
Junior subordinated notes to subsidiary trust issuing preferred securities		142,570		142,382
Due to related party		12,812		26,570
Due to borrowers		106,796		96,641
Allowance for loss-sharing obligations		55,172		56,064
Other liabilities		272,947		287,885
Total liabilities		13,536,858		12,523,861
Commitments and contingencies (Note 13)
Equity:
Arbor Realty Trust, Inc. stockholders' equity:
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized, shares issued and outstanding by period:		633,734		556,163
Special voting preferred shares - 16,325,095 shares
6.375% Series D - 9,200,000 shares
6.25% Series E - 5,750,000 shares
6.25% Series F - 11,342,000 and 8,050,000 shares
Common stock, $0.01 par value: 500,000,000 shares authorized - 160,198,115 and 151,362,181 shares issued and outstanding		1,602		1,514
Additional paid-in capital		1,927,621		1,797,913
Retained earnings		75,828		62,532
Total Arbor Realty Trust, Inc. stockholders' equity		2,638,785		2,418,122
Noncontrolling interest		133,263		131,862
Total equity		2,772,048		2,549,984
Total liabilities and equity	$	16,308,906	$	15,073,845

Note: Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities, or VIEs, as we are the primary beneficiary of these VIEs. As of March 31, 2022 and December 31, 2021, assets of our consolidated VIEs totaled $8,679,272 and $7,144,806, respectively, and the liabilities of our consolidated VIEs totaled $7,107,860 and $5,902,623, respectively. See Note 14 for discussion of our VIEs.

See Notes to Consolidated Financial Statements.

2

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

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

	Three Months Ended March 31,
	2022		2021
Interest income	$	166,698	$	91,144
Interest expense		82,559		42,184
Net interest income		84,139		48,960
Other revenue:
Gain on sales, including fee-based services, net		1,656		28,867
Mortgage servicing rights		15,312		36,936
Servicing revenue, net		21,054		15,536
Property operating income		295		—
Gain (loss) on derivative instruments, net		17,386		(3,220)
Other income, net		3,200		681
Total other revenue		58,903		78,800
Other expenses:
Employee compensation and benefits		42,025		42,974
Selling and administrative		14,548		10,818
Property operating expenses		535		143
Depreciation and amortization		1,983		1,755
Provision for loss sharing (net of recoveries)		(662)		1,652
Provision for credit losses (net of recoveries)		2,358		(1,075)
Total other expenses		60,787		56,267
Income before extinguishment of debt, gain on real estate, income from equity affiliates and income taxes		82,255		71,493
Loss on extinguishment of debt		(1,350)		(1,370)
Gain on real estate		—		1,228
Income from equity affiliates		7,212		22,251
Provision for income taxes		(8,188)		(12,492)
Net income		79,929		81,110
Preferred stock dividends		9,056		1,888
Net income attributable to noncontrolling interest		6,816		9,743
Net income attributable to common stockholders	$	64,057	$	69,479
Basic earnings per common share	$	0.42	$	0.55
Diluted earnings per common share	$	0.40	$	0.55
Weighted average shares outstanding:
Basic		153,420,238		125,235,405
Diluted		185,431,404		143,958,433
Dividends declared per common share	$	0.37	$	0.33

See Notes to Consolidated Financial Statements.

3

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

($ in thousands, except shares)

Three Months Ended March 31, 2022
									Retained		Total Arbor
	Preferred	Preferred		Common	Common		Additional		Earnings /		Realty Trust, Inc.
	Stock	Stock		Stock	Stock		Paid-in		(Accumulated		Stockholders’		Noncontrolling
	Shares	Value		Shares	Par Value		Capital		Deficit)		Equity		Interest		Total Equity
Balance – January 1, 2022	39,325,095	$	556,163	151,362,181	$	1,514	$	1,797,913	$	62,532	$	2,418,122	$	131,862	$	2,549,984
Cummulative-effect adjustment (Note 2)	—		—	—		—		(8,684)		5,612		(3,072)		625		(2,447)
Balance - January 1, 2022 (as adjusted for the adoption of ASU 2020-06)	39,325,095		556,163	151,362,181		1,514		1,789,229		68,144		2,415,050		132,487		2,547,537
Issuance of common stock	—		—	8,225,750		82		137,718		—		137,800		—		137,800
Issuance of Series F preferred stock	3,292,000		77,571	—		—		—		—		77,571		—		77,571
Stock-based compensation, net	—		—	610,184		6		674		—		680		—		680
Distributions - common stock	—		—	—		—		—		(56,373)		(56,373)		—		(56,373)
Distributions - preferred stock	—		—	—		—		—		(9,056)		(9,056)		—		(9,056)
Distributions - noncontrolling interest	—		—	—		—		—		—		—		(6,040)		(6,040)
Net income	—		—	—		—		—		73,113		73,113		6,816		79,929
Balance – March 31, 2022	42,617,095	$	633,734	160,198,115	$	1,602	$	1,927,621	$	75,828	$	2,638,785	$	133,263	$	2,772,048

Three Months Ended March 31, 2021
Balance - January 1, 2021	21,272,133	$	89,472	123,181,173	$	1,232	$	1,317,109	$	(63,442)	$	1,344,371	$	138,314	$	1,482,685
Issuance of common stock	—		—	10,140,400		101		158,332		—		158,433		—		158,433
Stock-based compensation, net	—		—	368,487		4		(2,321)		—		(2,317)		—		(2,317)
Distributions - common stock	—		—	—		—		—		(41,530)		(41,530)		—		(41,530)
Distributions - preferred stock	—		—	—		—		—		(1,893)		(1,893)		—		(1,893)
Distributions - noncontrolling interest	—		—	—		—		—		—		—		(5,796)		(5,796)
Net income	—		—	—		—		—		71,367		71,367		9,743		81,110
Balance – March 31, 2021	21,272,133	$	89,472	133,690,060	$	1,337	$	1,473,120	$	(35,498)	$	1,528,431	$	142,261	$	1,670,692

See Notes to Consolidated Financial Statements.

4

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2022		2021
Operating activities:
Net income	$	79,929	$	81,110
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,983		1,755
Stock-based compensation		6,095		3,330
Amortization and accretion of interest and fees, net		(2,840)		(72)
Amortization of capitalized mortgage servicing rights		14,972		14,204
Originations of loans held-for-sale		(845,620)		(1,412,722)
Proceeds from sales of loans held-for-sale, net of gain on sale		1,586,715		1,841,891
Mortgage servicing rights		(15,312)		(36,936)
Write-off of capitalized mortgage servicing rights from payoffs		12,697		3,828
Provision for loss sharing (net of recoveries)		(662)		1,652
Provision for credit losses (net of recoveries)		2,358		(1,075)
Net (charge-offs) recoveries for loss sharing obligations