Arbor Realty Trust Inc. (ABR, Financial) filed Quarterly Report for the period ended 2010-06-30.
Arbor Realty Trust Inc. has a market cap of $147.2 million; its shares were traded at around $5.78 with and P/S ratio of 1.3. ABR is in the portfolios of Steven Cohen of SAC Capital Advisors.
During the six months ended June 30, 2010 we entered into two new interest rate swaps that qualify as cash flow hedges with a notional value of approximately $7.5 million. In addition, the notional value on one interest rate swap amortized down by approximately $17.1 million and two interest rate swaps matured with a combined notional of approximately $12.5 million. During the six months ended June 30, 2009 we entered into one new interest rate swap that qualifies as a cash flow hedge with a notional value of approximately $45.1 million and paid $1.7 million, which will be amortized into interest expense over the life of the swap, which is approximately 6.5 years. During the six months ended June 30, 2009, we terminated seven interest rate swaps related to our restructured trust preferred securities, with a combined notional value of $185.0 million, for a loss of $8.7 million recorded to loss on termination of swaps. Refer to the section titled Liquidity and Capital Resources Junior Subordinated Notes below. During the six months ended June 30, 2009, we also terminated an interest rate swap with a notional value of approximately $33.1 million and a $33.5 million portion of an interest rate swap with a total notional value of approximately $67.0 million. Additionally, during the six months ended June 30, 2009, the notional values on two basis swaps amortized down by approximately $95.5 million. The loss on termination will be amortized to expense over the original life of the hedging instrument if it is determined that the hedged item is still more likely than not to occur. The fair value of our qualifying hedge portfolio has decreased by approximately $12.0 million from December 31, 2009 as a result of the swaps terminated in 2009, combined with a change in the projected LIBOR rates and credit spreads of both parties.
During the quarter ended June 30, 2010, we originated two loans totaling $5.0 million, received full satisfaction of four loans totaling $91.1 million, which included a $35.4 million charge-off against loan loss reserves and $0.8 million of losses on restructuring. We also received partial repayment on three loans totaling $10.9 million, which included a $5.4 million charge-off against loan loss reserves. We also refinanced and/or modified three loans totaling $18.9 million and five loans totaling approximately $101.0 million were extended during the quarter, of which one loan of approximately $35.0 million was in accordance with the extension option of the corresponding loan agreement.
Securities available-for-sale increased $0.6 million, to $1.1 million at June 30, 2010 compared to $0.5 million at December 31, 2009. In March 2010 we sold two investment grade CMBS investments with a combined amortized cost of $11.1 million for approximately $14.4 million. Accordingly, because this is considered a change of intent to hold the securities, we reclassified all of our held-to-maturity securities to available-for-sale with a net unrealized loss of $18.6 million recorded to accumulated other comprehensive loss in the first quarter of 2010, which was later realized in the second quarter of 2010 as follows. See Securities Held-To-Maturity below. We also had purchased one investment grade CMBS investment with a face value of $4.5 million during the six months ended June 30, 2010. In June, 2010, we sold three investment grade CDO bonds, with an aggregate face value of $44.7 million and an amortized cost of $40.4 million, for $29.9 million, and two investment grade CMBS investments, with an aggregate face value of $6.5 million and an amortized cost of $6.3 million, for $6.5 million, and recorded a net realized loss on sale of securities of $10.3 million in our Consolidated Statement of Operations. In February, 2010, we also exchanged two investment grade CDO bonds with a total face value of $25.0 million and fair value of $0.4 million in retiring our own junior subordinated notes, which were reclassified from held-to-maturity to available-for-sale in December 2009. For the six months ended June 30, 2010, the change in fair value of our remaining CDO bond security of $7.0 million as well as the change in the fair market value of our equity securities of less than $0.1 million, were considered other-than-temporary impairments under accounting principles generally accepted in the United States (GAAP) and recorded as impairment charges to the Consolidated Statement of Operations. GAAP requires that all securities are evaluated periodically to determine whether a decline in their value is other-than-temporary, though it is not intended to indicate a permanent decline in value. An other-than-temporary impairment of $9.8 million was recognized upon the reclassification during the fourth quarter of 2009. During the fourth quarter of 2008, we determined that the B rated CDO bond, with an amortized cost of approximately $1.4 million, was other-than-temporarily impaired, resulting in a $1.4 million impairment charge to our 2008 Consolidated Financial Statements. This security had a fair value of $0.1 million at December 31, 2009. As of June 30, 2010, our remaining CDO bond investment available-for-sale has been in an unrealized loss position for more than twelve months. See Notes 4 and 5 of the Notes to the Consolidated Financial Statements set forth in Item 1 hereof for a further description of these transactions.
Other assets decreased approximately $6.1 million, or 11% to $51.5 million at June 30, 2010 compared to $57.5 million at December 31, 2009. The decrease was primarily due to a $8.5 million decrease in deferred financing fees related to the exchange and retirement of a portion of our junior subordinated notes and the discounted payoff of our Wachovia facilities, as well as amortization, a $2.6 million decrease in interest receivable as a result of non-performing loans, loan repayments and paydowns, lower rates on refinanced and modified loans and a $0.8 million decrease in exit fees receivable due to the determination that fees were not collectable, net of a $5.1 million increase due to the effect of LIBOR rates on a portion of our interest rate swaps and a $0.8 million increase in the fair value of our non-qualifying CDO basis swaps. See Item 3 Quantitative and Qualitative Disclosures About Market Risk for further information relating to our derivatives.
Other liabilities decreased $3.9 million, or 4%, to $93.1 million at June 30, 2010 compared to $97.0 million at December 31, 2009. The decrease was primarily due to the use of a $20.5 million deposit on the sale of a bridge loan and a $2.7 million decrease due to the reversal of accrued deferred financing fees upon the discounted payoff of our Wachovia facilities, net of an $11.3 million increase in accrued interest payable primarily due to the decrease in value of our interest rate swaps and the timing of reset dates, the receipt of $4.1 million in reserves on a loan, Read the The complete Report
Arbor Realty Trust Inc. has a market cap of $147.2 million; its shares were traded at around $5.78 with and P/S ratio of 1.3. ABR is in the portfolios of Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
This environment has undoubtedly had a significant impact on our business, our borrowers and real estate values throughout all asset classes and geographic locations. Declining real estate values will likely continue to minimize our level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase or investment in additional properties. Borrowers may also be less able to pay principal and interest on our loans if the real estate economy continues to weaken. Declining real estate values also significantly increase the likelihood that we will continue to incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our cost on the loan. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to originate, sell and securitize loans, which would significantly harm our revenues, results of operations, financial condition, business prospects and our ability to make distributions to our stockholders. In addition, our investments are also subject to the risks described above with respect to commercial real estate loans and mortgage-backed securities and similar risks, including risks of delinquency and foreclosure, the dependence upon the successful operation of, and net income from, real property, risks generally related to interests in real property, and risks that may be presented by the type and use of a particular commercial property. During the first and second quarters of fiscal year 2010 we recorded $25.0 million and $25.6 million, respectively, of new provisions for loan losses due to declining collateral values, a $0.8 million recovery from one fully reserved loan and $0.8 million of losses on restructured loans in the second quarter of 2010. During the first, second, third and fourth quarters of fiscal year 2009, respectively, we recorded $67.5 million, $23.0 million, $51.0 million and $99.8 million of new provisions for loan losses due to declining collateral values and $9.0 million, $23.8 million, $0.3 million and $24.5 million of losses on restructured loans. We have made, and continue to make modifications and extensions to loans when it is economically feasible to do so. In some cases, modification is a more viable alternative to foreclosure proceedings when a borrower can not comply with loan terms. In doing so, lower borrower interest rates, combined with non-performing loans, will lower our net interest margins when comparing interest income to our costs of financing. These trends may persist with a prolonged economic recession and we feel if they do, there will be continued modifications and delinquencies in the foreseeable future, which will result in reduced net interest margins and additional losses throughout our sector.During the six months ended June 30, 2010 we entered into two new interest rate swaps that qualify as cash flow hedges with a notional value of approximately $7.5 million. In addition, the notional value on one interest rate swap amortized down by approximately $17.1 million and two interest rate swaps matured with a combined notional of approximately $12.5 million. During the six months ended June 30, 2009 we entered into one new interest rate swap that qualifies as a cash flow hedge with a notional value of approximately $45.1 million and paid $1.7 million, which will be amortized into interest expense over the life of the swap, which is approximately 6.5 years. During the six months ended June 30, 2009, we terminated seven interest rate swaps related to our restructured trust preferred securities, with a combined notional value of $185.0 million, for a loss of $8.7 million recorded to loss on termination of swaps. Refer to the section titled Liquidity and Capital Resources Junior Subordinated Notes below. During the six months ended June 30, 2009, we also terminated an interest rate swap with a notional value of approximately $33.1 million and a $33.5 million portion of an interest rate swap with a total notional value of approximately $67.0 million. Additionally, during the six months ended June 30, 2009, the notional values on two basis swaps amortized down by approximately $95.5 million. The loss on termination will be amortized to expense over the original life of the hedging instrument if it is determined that the hedged item is still more likely than not to occur. The fair value of our qualifying hedge portfolio has decreased by approximately $12.0 million from December 31, 2009 as a result of the swaps terminated in 2009, combined with a change in the projected LIBOR rates and credit spreads of both parties.
During the quarter ended June 30, 2010, we originated two loans totaling $5.0 million, received full satisfaction of four loans totaling $91.1 million, which included a $35.4 million charge-off against loan loss reserves and $0.8 million of losses on restructuring. We also received partial repayment on three loans totaling $10.9 million, which included a $5.4 million charge-off against loan loss reserves. We also refinanced and/or modified three loans totaling $18.9 million and five loans totaling approximately $101.0 million were extended during the quarter, of which one loan of approximately $35.0 million was in accordance with the extension option of the corresponding loan agreement.
Securities available-for-sale increased $0.6 million, to $1.1 million at June 30, 2010 compared to $0.5 million at December 31, 2009. In March 2010 we sold two investment grade CMBS investments with a combined amortized cost of $11.1 million for approximately $14.4 million. Accordingly, because this is considered a change of intent to hold the securities, we reclassified all of our held-to-maturity securities to available-for-sale with a net unrealized loss of $18.6 million recorded to accumulated other comprehensive loss in the first quarter of 2010, which was later realized in the second quarter of 2010 as follows. See Securities Held-To-Maturity below. We also had purchased one investment grade CMBS investment with a face value of $4.5 million during the six months ended June 30, 2010. In June, 2010, we sold three investment grade CDO bonds, with an aggregate face value of $44.7 million and an amortized cost of $40.4 million, for $29.9 million, and two investment grade CMBS investments, with an aggregate face value of $6.5 million and an amortized cost of $6.3 million, for $6.5 million, and recorded a net realized loss on sale of securities of $10.3 million in our Consolidated Statement of Operations. In February, 2010, we also exchanged two investment grade CDO bonds with a total face value of $25.0 million and fair value of $0.4 million in retiring our own junior subordinated notes, which were reclassified from held-to-maturity to available-for-sale in December 2009. For the six months ended June 30, 2010, the change in fair value of our remaining CDO bond security of $7.0 million as well as the change in the fair market value of our equity securities of less than $0.1 million, were considered other-than-temporary impairments under accounting principles generally accepted in the United States (GAAP) and recorded as impairment charges to the Consolidated Statement of Operations. GAAP requires that all securities are evaluated periodically to determine whether a decline in their value is other-than-temporary, though it is not intended to indicate a permanent decline in value. An other-than-temporary impairment of $9.8 million was recognized upon the reclassification during the fourth quarter of 2009. During the fourth quarter of 2008, we determined that the B rated CDO bond, with an amortized cost of approximately $1.4 million, was other-than-temporarily impaired, resulting in a $1.4 million impairment charge to our 2008 Consolidated Financial Statements. This security had a fair value of $0.1 million at December 31, 2009. As of June 30, 2010, our remaining CDO bond investment available-for-sale has been in an unrealized loss position for more than twelve months. See Notes 4 and 5 of the Notes to the Consolidated Financial Statements set forth in Item 1 hereof for a further description of these transactions.
Other assets decreased approximately $6.1 million, or 11% to $51.5 million at June 30, 2010 compared to $57.5 million at December 31, 2009. The decrease was primarily due to a $8.5 million decrease in deferred financing fees related to the exchange and retirement of a portion of our junior subordinated notes and the discounted payoff of our Wachovia facilities, as well as amortization, a $2.6 million decrease in interest receivable as a result of non-performing loans, loan repayments and paydowns, lower rates on refinanced and modified loans and a $0.8 million decrease in exit fees receivable due to the determination that fees were not collectable, net of a $5.1 million increase due to the effect of LIBOR rates on a portion of our interest rate swaps and a $0.8 million increase in the fair value of our non-qualifying CDO basis swaps. See Item 3 Quantitative and Qualitative Disclosures About Market Risk for further information relating to our derivatives.
Other liabilities decreased $3.9 million, or 4%, to $93.1 million at June 30, 2010 compared to $97.0 million at December 31, 2009. The decrease was primarily due to the use of a $20.5 million deposit on the sale of a bridge loan and a $2.7 million decrease due to the reversal of accrued deferred financing fees upon the discounted payoff of our Wachovia facilities, net of an $11.3 million increase in accrued interest payable primarily due to the decrease in value of our interest rate swaps and the timing of reset dates, the receipt of $4.1 million in reserves on a loan, Read the The complete Report
