swanlinbar
6 years ago
ARLP i think you are right but i did sell half my position & doubled down on ARB Arbor Realty Trust Reports First Quarter Results and Increases Quarterly Dividend 19% to $0.25 per Share
8:00 am ET May 4, 2018 (Globe Newswire) Print
Company Highlights:
-- GAAP net income of $0.42 per diluted common share; AFFO of $0.25, or $0.28 per diluted common share excluding a one-time, non-cash expense from the early repayment of debt
-- Declares a cash dividend on common stock of $0.25 per share, 19% higher than last quarter and our sixth increase in the past eight quarters
Agency Business
-- Segment income of $31.2 million
-- Loan originations of $1.05 billion
-- Servicing portfolio of $16.69 billion, up 3% from 4Q17
Structured Business
-- Segment income of $4.3 million
-- Portfolio growth of 5% on $314.2 million of loan originations
-- Issued $100.0 million of 5.625% senior notes due in 2023, a 175 basis point rate reduction from our 7.375% senior notes redeemed in April 2018
Arbor Realty Trust, Inc. (NYSE:ABR) today announced financial results for the first quarter ended March 31, 2018. Arbor reported net income for the quarter of $26.2 million, or $0.42 per diluted common share, compared to $15.6 million, or $0.30 per diluted common share for the quarter ended March 31, 2017. Adjusted funds from operations ("AFFO") for the quarter was $21.4 million, or $0.25 per diluted common share, compared to $24.7 million, or $0.33 per diluted common share for the quarter ended March 31, 2017.
Agency Business
Loan Origination Platform
Agency Loan Volume (in thousands)
Quarter Ended
March 31, December 31,
2018 2017
Fannie Mae $ 662,921 $ 712,661
Freddie Mac 308,151 441,901
FHA 60,738 -
CMBS/Conduit 16,233 -
Total Originations $ 1,048,043 $ 1,154,562
Total Loan Sales $ 1,062,437 $ 1,193,629
Total Loan Commitments $ 1,043,715 $ 1,162,961
For the quarter ended March 31, 2018, the Agency Business generated revenues of $54.4 million, compared to $53.7 million for the fourth quarter of 2017. Gain on sales, including fee-based services, net was $18.2 million for the quarter, reflecting a margin of 1.71% on loan sales, compared to $17.7 million and 1.48% for the fourth quarter of 2017. Income from mortgage servicing rights was $19.6 million for the quarter, reflecting a rate of 1.88% as a percentage of loan commitments, compared to $20.6 million and 1.77% for the fourth quarter of 2017.
At March 31, 2018, loans held-for-sale was $286.3 million which was primarily comprised of unpaid principal balances totaling $281.8 million, with financing associated with these loans totaling $281.3 million.
Fee-Based Servicing Portfolio
Our fee-based servicing portfolio totaled $16.69 billion at March 31, 2018, an increase of 3% from December 31, 2017, primarily a result of $1.05 billion of new loan originations, net of $548.1 million in portfolio runoff during the quarter. Servicing revenue, net was $9.5 million for the quarter and consists of servicing revenue of $21.4 million, net of amortization of mortgage servicing rights totaling $11.9 million.
Fee-Based Servicing Portfolio ($ in thousands)
As of March 31, 2018 As of December 31, 2017
UPB Wtd. Avg. Fee Wtd. Avg. Life (in years) UPB Wtd. Avg. Fee Wtd. Avg. Life (in years)
Fannie Mae $ 12,700,635 0.535% 7.2 $ 12,502,699 0.536% 6.9
Freddie Mac 3,397,535 0.304% 10.7 3,166,134 0.295% 10.5
FHA 591,836 0.162% 20.0 537,482 0.165% 19.6
Total $ 16,690,006 0.475% 8.4 $ 16,206,315 0.477% 8.1
Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan ("loss-sharing obligations"). At March 31, 2018, the Company's allowance for loss-sharing obligations was $31.1 million which consists of general loss sharing guaranty obligations of $30.3 million, representing 0.24% of the Fannie Mae servicing portfolio, and $0.8 million of loss-sharing obligations on specifically identified loans with losses determined to be probable and estimable.
Structured Business
Portfolio and Investment Activity
First quarter of 2018:
-- 19 new loan originations totaling $314.2 million, of which 18 were bridge loans for $271.7 million
-- Payoffs and pay downs on 20 loans totaling $190.6 million
-- Portfolio growth of 5% from 4Q17
At March 31, 2018, the loan and investment portfolio's unpaid principal balance, excluding loan loss reserves, was $2.78 billion, with a weighted average current interest pay rate of 6.57%, compared to $2.66 billion and 6.28% at December 31, 2017. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 7.28% at March 31, 2018, compared to 6.99% at December 31, 2017. The increase in the average current interest pay rate was primarily due to an increase in LIBOR.
The average balance of the Company's loan and investment portfolio during the first quarter of 2018, excluding loan loss reserves, was $2.68 billion with a weighted average yield on these assets of 7.08%, compared to $2.31 billion and 6.94% for the fourth quarter of 2017.
At March 31, 2018, the Company's total loan loss reserves were $63.1 million on five loans with an aggregate carrying value before loan loss reserves of $163.9 million. The Company also had two non-performing loans with a carrying value of $29.1 million, net of related loan loss reserves of $7.4 million.
Financing Activity
The balance of debt that finances the Company's loan and investment portfolio at March 31, 2018 was $2.45 billion with a weighted average interest rate including fees of 5.09% as compared to $2.24 billion and a rate of 4.83% at December 31, 2017. The average balance of debt that finances the Company's loan and investment portfolio for the first quarter of 2018 was $2.30 billion, as compared to $1.90 billion for the fourth quarter of 2017. The average cost of borrowings for the first quarter was 5.33%, compared to 4.66% for the fourth quarter of 2017. The increase in average costs was primarily due to an increase in LIBOR as well as the acceleration of fees related to the early repayment of debt.
The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles and financing facilities. The Company believes it was in compliance with all financial covenants and restrictions as of March 31, 2018 and as of the most recent collateralized securitization vehicle determination dates in April 2018.
The Company paid $50.0 million in full satisfaction of the seller financing related to the acquisition of the Agency Business.
Capital Markets
The Company issued $100.0 million aggregate principal amount of 5.625% senior unsecured notes in a private placement, generating net proceeds of $97.8 million after deducting the underwriting discount and other offering expenses. The notes are due in May 2023 and can be redeemed by the Company at any time prior to April 1, 2023. The proceeds were used to fund the redemption in April 2018 of $97.9 million aggregate principal amount of the Company's 7.375% senior notes due in 2021.
Dividends
The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.25 per share of common stock for the quarter ended March 31, 2018, representing an increase of 19% over the prior quarter dividend of $0.21 per share. The dividend is payable on May 31, 2018 to common stockholders of record on May 15, 2018. The ex-dividend date is May 14, 2018.
The Company also announced today that its 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 March 1, 2018 through May 31, 2018. The dividends are payable on May 31, 2018 to preferred stockholders of record on May 15, 2018. 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 of the conference call will be available at www.arbor.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 6184718.
After the live webcast, the call will remain available on the Company's website through May 31, 2018. In addition, a telephonic replay of the call will be available until May 11, 2018. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 6184718.
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 a 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 fee-based servicing portfolio of over $16 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.
Safe Harbor Statement
swanlinbar
6 years ago
ARLP-Are These 11% Dividend Yields for Real? Some high-yielding dividend stocks are legit, while others are veritable wolves in sheep's clothing.
Sean Williams
( TMFUltraLong)
May 3, 2018 at 6:36AM
More often than not, dividend-paying stocks form the foundation of any successful long-term investment portfolio. They also, coincidentally, tend to handily outperform their non-dividend-paying peers over time.
But aside from sheer outperformance, dividend stocks bring three benefits to the table that investors seem to appreciate. First, dividend stocks usually have time-tested business models and relatively clear long-term outlooks -- otherwise they wouldn't be sharing a percentage of their profits with shareholders. Second, dividend payouts act as a means to partially hedge against the inevitable "hiccups" the stock market undergoes. Finally, dividends can be reinvested back into more shares of dividend-paying stock, supercharging your ability to build wealth.
Image source: Getty Images.
The great dividend conundrum However, dividends also offer investors quite the conundrum: We want the highest yield possible, but we also want the payout to be sustainable over a long period of time. Though each case varies, the higher the yield, the more unsustainable the payout. Remember, dividend yield is a function of the total payout and a stock's share price. As an example, if a company's underlying business model is in trouble, and its share price loses 50%, its dividend yield will double, providing a dangerous lure for unsuspecting investors.
This battle between our better judgment and our desire for the highest yield imaginable is often waged most fiercely among dividend stocks with double-digit yields. Right now, there are around 100 publicly traded stocks paying out in excess of 10% annually, albeit this figure may include one-time special dividends paid out over the past year.
Are these high-yielding dividends sustainable? Three high-yielding stocks among this group of roughly 100 publicly traded companies caught my attention: Alliance Resource Partners ( NASDAQ:ARLP), Annaly Capital Management ( NYSE:NLY), and GameStop ( NYSE:GME). The big question is: Are their 11% dividend yields for real?
Let's have a closer look.
Image source: Getty Images.
Alliance Resource Partners: 11.9% yield Before you run for the hills, let me come clean: Yes, Alliance Resource Partners is a coal producer. And yes, coal producers aren't exactly thriving at the moment. But make no mistake about it, Alliance Resource isn't anything like its peers.
The first difference to be found can be seen in the company's balance sheet. The company's latest quarterly results, reported on Monday, showed $28.8 million in cash and cash equivalents, and a subsequent $29.2 million reduction in long-term debt. Whereas most of its peers are lugging around $1 billion or more in long-term debt, Alliance Resource Partners has well below this amount, giving it the financial flexibility to make deals and adjust production as demand calls for. Many of its competitors simply don't have that luxury.
It's also done a remarkably good job of minimizing its exposure to wholesale coal prices by locking in production well in advance. According to CEO Joseph Craft III, "During the 2018 Quarter, ARLP reached agreement to deliver up to 19.7 million tons in 2018 through 2022, including an additional 4.8 million tons for delivery this year." This added booking in 2018 actually caused the company to up its full-year production guidance to a new range of 40 million to 41 million tons of coal, representing 8% year-on-year growth at the midpoint. More than 17 million tons are booked for 2019, with nearly 12 million committed for 2020.
Though coal has certainly faced no shortage of headwinds, it still accounts for around 30% of all electricity generation in the U.S., which means it's not going away anytime soon. Even then, Alliance Resource has the option to export its thermal and metallurgical coal to emerging markets with growing energy needs.
The final verdict: I'm calling this dividend legit and sustainable.
Image source: Getty Images.
Annaly Capital Management: 11.6% yield Another high-yield stock that's been making income investors drool with delight for years now is Annaly Capital Management. On a trailing 12-month basis, Annaly's yield has ranged between 9% and 16% since 2009. But what really matters is whether or not this high level of payout remains sustainable.
Annaly is part of a group of high-yielding companies in the mortgage real estate investment trust (REIT) industry, also known as mortgage REITs. Mortgage REITs make their money by using leverage and interest rates to their advantage. A company like Annaly purchases debt securities (e.g., mortgage-backed securities) and collects interest on that debt. Meanwhile, it borrows money at a short-term lending rate, allowing it to lever up and acquire more debt securities. The difference between the rate at which it borrows and the rate at which it collects on its owned debt securities is known as its net interest margin. The greater this spread, the more profitable the company.
The issue with Annaly often boils down to interest rates, since it essentially invests in agency-only loans -- this is a fancy of way of saying that it buys mortgage-backed securities that are protected by the federal government in case of default. If interest rates are falling, short-term borrowing costs decline, allowing for its net interest margin to increase. But when interest rates rise, short-term borrowing costs increase, squeezing this spread. In 2017, Annaly's net interest margin shrunk to 1.47% from 2.49% at the end of 2016.
To some extent, net interest margin also depends on Annaly's ability to adjust its leverage and portfolio holdings to a changing interest rate environment. The slower and more predictable these interest rate changes are, the better Annaly can prepare by adjusting its portfolio. Conversely, a rapidly rising rate environment can prove devastating to its margin spread.
The final verdict: I don't believe Annaly's $1.20 per share annual payout ($0.30 per quarter) is sustainable given the rising rate environment we're currently in. Then again, no senior management team is more skilled with managing mortgage-backed securities than Annaly's. I'd expect this dividend yield to remain high, but a sustainable 11% yield probably isn't in the cards.
Image source: Getty Images.
GameStop: 11% yield Brick-and-mortar gaming and accessory giant GameStop is another high-yield stock that'll turn heads. It's currently sporting an 11% yield ($1.52 per share a year), which works out to a payout ratio of less than 50% based on the consensus of $3.10 in EPS expected in the current fiscal year.
On the surface, it probably looks as if this dividend is safe, but GameStop is that stereotypical struggling business model described earlier that can lure in unsuspecting income seekers.
The issue here is that GameStop is primarily reliant on its legacy business model of selling physical games and accessories out of its brick-and-mortar locations. However, the gaming community has been transitioning for years to digital gaming, which can bypass physical stores altogether. In effect, GameStop is losing its niche as the gaming industry middleman.
This isn't to say that GameStop isn't focused on growing its digital sales, which increased by almost 14% in 2017 to $189.2 million. It's to point out that this $189.2 million pales in comparison to the $3.5 billion in total full-year sales in 2017. GameStop is essentially reliant on partnerships, mobile devices, and new consoles to drive its business. But even then, the sales pops have been few and far between, and its pre-owned sales segment, which typically generates its juiciest margins, shrunk by 4.6% in 2017.
Recently, GameStop's CEO laid out a five-point strategy to right the ship, so to speak. This strategy predominantly focuses on expanding its presence with hardcore gamers and casual consumers, cutting back on expenses and physical store expansion, and improving average transaction value. Of course these ideas sound great on paper, but with the industry moving steadily away from physical hardware, it's going to make GameStop's life more difficult with each passing year.
The final verdict: While GameStop's dividend might be safe for a few years, its weakening sales and declining EPS, even amid cost cutting, cannot be ignored. Over the long run, I do believe GameStop will have no choice but to reduce its annual payout.
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