UNIONDALE, N.Y., Aug. 7 /PRNewswire-FirstCall/ -- Second Quarter
Highlights: -- Net loss attributable to Arbor Realty Trust, Inc. of
$48.6 million, or $1.92 per diluted common share -- FFO loss of
$48.1 million, or $1.90 per diluted common share(1) -- Adjusted
book value per share $15.18, GAAP book value per share $10.64(1) --
Completed restructuring of $388.5 million of short-term debt and
remaining $18.7 million of trust preferred securities in July 2009
-- Generated gains on early extinguishment of debt of $21.5 million
-- Reduced short-term debt by $101.0 million -- Recorded $23
million in loan loss reserves and a $23.8 million loss on a
restructured loan -- Recorded impairments of $11.7 million on
equity investment and $0.4 million on available-for-sale securities
-- Amended management agreement with external manager in August
2009 Arbor Realty Trust, Inc. (NYSE:ABR), a real estate investment
trust focused on the business of investing in real estate related
bridge and mezzanine loans, preferred and direct equity
investments, mortgage-related securities and other real estate
related assets, today announced financial results for the second
quarter ended June 30, 2009. Arbor reported a net loss attributable
to Arbor Realty Trust, Inc. for the quarter of $48.6 million, or
$1.92 per diluted common share, compared to net income attributable
to Arbor Realty Trust, Inc. for the quarter ended June 30, 2008 of
$11.7 million, or $0.56 per diluted common share. Funds from
operations ("FFO") for the quarter was a loss of $48.1 million, or
$1.90 per diluted common share, compared to FFO income for the
quarter ended June 30, 2008 of $14.8 million, or $0.60 per diluted
common share.(1) Net loss attributable to Arbor Realty Trust, Inc.
for the six months ended June 30, 2009 was $52.8 million, or $2.09
per diluted common share, compared to net income attributable to
Arbor Realty Trust, Inc. for the six months ended June 30, 2008 of
$24.4 million, or $1.18 per diluted common share. FFO for the six
months ended June 30, 2009 was a loss of $51.8 million, or $2.05
per diluted common share, compared to FFO for the six months ended
June 30, 2008 of $29.8 million, or $1.21 per diluted common
share.(1) During the second quarter of 2009, the Company purchased,
at a discount, approximately $11.2 million of investment grade
rated bonds originally issued by two of the Company's three CDO
issuing entities from the Company's manager in a related party
transaction. The Company recorded a net gain on early
extinguishment of debt of $6.5 million related to this transaction.
In addition, the Company settled a $37.0 million repurchase
facility with a financial institution for a cash payment of
approximately $22.0 million, resulting in a gain on extinguishment
of approximately $15.0 million. In connection with this
transaction, the Company sold a loan financed in this facility with
a carrying value of $47.0 million, at a discount, for approximately
$23.2 million and recorded a loss of $23.8 million. The proceeds
were used to satisfy the $22.0 million cash payment. These debt
extinguishment transactions were reflected on the Company's balance
sheet as a $48.2 million reduction of the corresponding outstanding
debt. During the quarter, the Company recorded a $0.9 million loss
from its equity investment in the Alpine Meadows unconsolidated
joint venture, a seasonal ski resort operation. This amount
reflects Arbor's portion of the joint venture's losses, including
depreciation expense of approximately $0.2 million, and was
recorded in loss from equity affiliates and as a reduction to the
Company's investment in equity affiliates on the balance sheet.
Additionally, during the quarter, the Company recorded an $11.7
million other-than-temporary impairment, in accordance with GAAP,
for the remaining amount of this investment which was reflected on
the Company's statement of operations as a loss from equity
affiliates. GAAP accounting standards require that these
investments are evaluated periodically to determine whether a
decline in their value is other-than-temporary. In the second
quarter of 2009, the Company recorded $0.4 million of
other-than-temporary impairment, in accordance with GAAP,
associated with the Company's available-for-sale securities. These
securities represent the Company' s investment in common stock of
Realty Finance Corporation (formerly CBRE Realty Finance, Inc.), a
commercial real estate specialty finance company. At June 30, 2009,
the carrying value of these available-for-sale securities was
approximately $0.1 million. The net balance in the loan and
investment portfolio, excluding loan loss reserves, was $2.2
billion at June 30, 2009, compared to $2.3 billion at March 31,
2009. The average balance of the loan and investment portfolio,
excluding loan loss reserves, during the second quarter of 2009 was
$2.3 billion and the average yield on these assets for the quarter
was 5.41%, compared to $2.4 billion and 5.12% for the first quarter
of 2009. At June 30, 2009, the balance of debt financing on the
loan and investment portfolio was $1.8 billion, as compared to $1.9
billion at March 31, 2009. The average balance of debt financing on
the loan and investment portfolio during the second quarter of 2009
was $1.9 billion and the average cost of these borrowings was
4.45%, compared to $2.0 billion and 3.94% for the first quarter of
2009. In addition, the second quarter of 2009 included a $2.6
million increase in interest expense for a change in the market
value of certain interest rate swaps in accordance with GAAP, as
compared to a $0.7 million increase in interest expense in the
first quarter of 2009. Excluding the effect of these swaps, the
average cost of borrowings for the second quarter of 2009 was
3.90%, as compared to 3.78% for the first quarter of 2009. On
August 6, 2009, the Company amended its management agreement with
Arbor Commercial Mortgage, LLC, the Company's external manager. The
amendment was negotiated by a special committee of the Company's
Board of Directors, consisting solely of independent directors, and
was approved by all of the independent directors. JMP Securities
LLC served as financial advisor to the special committee and
Skadden, Arps, Slate, Meagher & Flom LLP served as its special
counsel. The significant amendments are as follows: -- The existing
base management fee structure, which is calculated as a percentage
of the Company's equity, will be replaced with an arrangement
whereby the Company will reimburse the manager for its actual costs
incurred in managing the Company's business based on the parties'
agreement in advance on an annual budget with subsequent quarterly
true-ups to actual costs. This change will be adopted retroactively
to January 1, 2009 and the Company estimates the 2009 base
management fee will be in the range of $8 million to $9 million.
Concurrent with this change, all future origination fees on
investments will be retained by the Company as opposed to the
manager earning up to the first one percent of all origination fees
in the existing agreement. In addition, the Company will make a $3
million payment to the manager in consideration of expenses
incurred by the manager in 2008 in managing the Company's business
and certain other services. -- The percentage hurdle for the
incentive fee will be applied on a per share basis to the greater
of $10.00 and the average gross proceeds per share, whereas the
existing management agreement provides for such percentage hurdle
to be applied only to the average gross proceeds per share. In
addition, only 60% of any loan loss and other reserve recoveries
will be eligible to be included in the incentive fee calculation,
which will be spread over a three year period, whereas the existing
management agreement does not limit the inclusion of such
recoveries in the incentive fee calculation. -- The amended
management agreement will allow the Company to consider, from time
to time, the payment of additional incentive fees to the manager
for accomplishing certain specified corporate objectives. -- The
amended management agreement will modify and simplify the
provisions related to the termination of the agreement and any
related fees payable in such instances, including for
internalization, with a termination fee of $10 million, rather than
a multiple of base and incentive fees as currently exists. -- The
amended management agreement will remain in effect until December
31, 2010, and will be renewed automatically for successive one-year
terms thereafter. As a result, for the second quarter 2009, the
Company recorded management fee expense of $6.3 million. Debt
Restructurings Since May 2009, the Company has completed the
restructuring of approximately $388.5 million of short-term
financing facilities, resulting in longer term financing and
reduced or eliminated financial covenants and mark-to-market
provisions. In addition, the Company restructured all of its trust
preferred securities reducing the Company's cash requirements over
the next three years. Lastly, during the quarter, warehouse and
term debt was reduced by approximately $101.0 million, including
settlement of a $37.0 million facility. These restructurings are
described below: In July 2009, the Company announced the
restructuring of its three financing facilities with Wachovia Bank,
National Association ("Wachovia") totaling $373.9 million. The
amendments included a three year extension, the virtual elimination
of all margin call provisions relating to collateral value as long
as required term loan reductions are met, significantly reduced
covenants, quarter and semi-annual paydown requirements subject to
certain conditions and an overall average increase in interest rate
spread over LIBOR of approximately 180 basis points. In addition,
the Company's CEO and Chairman, Ivan Kaufman, is required to remain
an officer or director of the Company for the term of the
facilities. Annual dividends are limited to 100% of taxable income
to common shareholders and are required to be paid in the form of
the Company's stock to the maximum extent permissible (currently
90%) unless the term loan facility balance is reduced to $210
million, the working capital facility is reduced to $30 million and
the Company maintains $35 million of minimum liquidity. Lastly, the
Company agreed to pay a 1% commitment fee and issue 1.0 million
warrants at an average strike price of $4.00 which expire in July
2015. At June 30, 2009, these facilities had an outstanding balance
of $373.9 million. As previously disclosed, in May 2009, the
Company exchanged $247.1 million of its outstanding trust preferred
securities, consisting of $239.7 million of junior subordinated
notes issued to third party investors and $7.4 million of common
equity issued to the Company, in exchange for $268.4 million of
newly issued unsecured junior subordinated notes, representing 112%
of the original face amount. The new notes bear a fixed interest
rate of 0.50% per annum for a period of approximately three years.
Thereafter, the interest rate will revert back to the original
floating pay rate over LIBOR in effect prior to the exchange
through the maturity of the notes. During this three year period,
the Company will be permitted to make distributions of up to 100%
of taxable income to common shareholders. The Company has agreed
that such distributions will be paid in the form of the Company's
stock to the maximum extent permissible under the Internal Revenue
Service rules and regulations in effect at the time of such
distribution, with the balance payable in cash. This requirement
regarding distributions in stock can be terminated by the Company
at any time, provided that the Company pays the note holders the
original rate of interest from the time of such termination. In
conjunction with this transaction, during the quarter the Company
terminated six interest rate swaps with a total notional value of
$140.0 million that effectively swapped the variable LIBOR based
trust preferred debt for a fixed pay rate. As a result, during the
second quarter of 2009, the Company recognized an $8.7 million loss
on the termination of these swaps previously recorded in
accumulated other comprehensive loss representing a cumulative
decrease in the market value of these swaps. Additionally, in July
2009, the Company restructured its remaining $18.7 million of trust
preferred securities that were not exchanged as part of the May
2009 restructuring transaction. The Company amended the $18.7
million of junior subordinated notes to $20.9 million of unsecured
junior subordinated notes, representing 112% of the original face
amount. The terms of this transaction were similar to the May 2009
exchange. In June 2009, the Company amended a repurchase agreement
extending the maturity for one year to June 2010, with a one-year
extension option, included the removal of all financial covenants
and there was no change to the interest pay rate. At June 30, 2009,
the facility had an outstanding balance of $2.8 million. In June
2009, a repurchase facility with approximately $37.0 million
outstanding, was satisfied at a discount for $22.0 million
resulting in a $15.0 million gain on extinguishment of debt. The
facility was scheduled to mature in October 2009. As previously
described, the Company sold a loan financed in this facility at a
discount for approximately $23.2 million and used the proceeds to
satisfy this facility. In May 2009, the Company amended a bridge
loan warehouse agreement extending the maturity for one year to May
2010, with a one-year extension option. In addition, the amendment
includes the removal of all financial covenants and bears interest
at a rate of 3.50% over LIBOR representing a 25 basis point
increase. At June 30, 2009, the facility had an outstanding balance
of $11.8 million. In July 2009, this facility was repaid in full.
Other Financing Activity As of June 30, 2009, Arbor's financing
facilities for its loan and investment portfolio totaled
approximately $1.9 billion and borrowings outstanding under such
facilities were $1.8 billion. During the quarter, the Company
reduced its outstanding warehouse and term debt outstanding
balances by approximately $101.0 million through a combination of
loan payoffs, assets being moved into the Company's CDO vehicles
and settlement of debt obligations at a discount. The Company is
subject to various financial covenants and restrictions by each of
the Company's CDO and credit facilities. Based on the unaudited
financial statements in this release, the Company believes that it
was in compliance with all credit facility financial covenants and
restrictions as of June 30, 2009 with the exception of one
financial covenant with Wachovia. The Company has obtained a waiver
of this covenant for June 30, 2009 and the covenant was
subsequently amended in conjunction with the debt restructuring
with this financial institution in July as previously disclosed.
Portfolio Activity During the quarter, Arbor purchased two
AAA-rated commercial mortgage-backed securities at a discounted
price of approximately $11 million with a face amount of $15
million. No loans were originated during the quarter. During the
quarter, two loans paid off with an outstanding balance of
approximately $84 million, including a $23.8 million loss on the
payoff of one loan and five loans had significant paydowns totaling
approximately $33 million. In addition, 12 loans were either
refinanced or modified with Arbor totaling $375 million, of which
five loans totaling approximately $189 million were scheduled to
repay during the quarter. Additionally, four loans totaling
approximately $182 million were extended during the quarter in
accordance with the extension options of the corresponding loan
agreements. At June 30, 2009, the loan and investment portfolio
unpaid principal balance, excluding loan loss reserves, was $2.2
billion, with a weighted average current interest pay rate of
5.17%. At the same date, advances on financing facilities
pertaining to the loan and investment portfolio totaled
approximately $1.8 billion, with a weighted average interest rate
of 3.45% excluding financing costs, interest rate swap costs and
changes in the market value of certain interest rate swaps. As of
June 30, 2009, Arbor's loan portfolio consisted of 35% fixed-rate
and 65% variable rate loans. In April 2009, the Company foreclosed
on a property in which the Company has a $4.0 million bridge loan
with a carrying value of $2.9 million. As of June 30, 2009, the
Company recorded this investment on its balance sheet as real
estate owned at fair value and recorded a $0.1 million net loss
from operations for the quarter. During the second quarter of 2009,
the Company recorded $23.0 million in loan loss reserves related to
12 loans with a carrying value of approximately $199.8 million,
before loan loss reserves. The loan loss reserves were the result
of the Company's regular quarterly risk rating review process,
which is based on several factors including current market
conditions, real estate values and the operating status of each
property. At June 30, 2009, the Company's total loan loss reserves
were $221.0 million relating to 22 loans with an aggregate carrying
value before reserves of approximately $605.7 million. The Company
had nine non-performing loans with a carrying value of
approximately $188.4 million, net of related loan loss reserves of
$97.2 million as of June 30, 2009, compared to nine non-performing
loans with a carrying value of approximately $198.4 million, net of
related loan loss reserves of $86.0 million as of March 31, 2009.
Income recognition on these loans has been suspended and will
resume when the loans become contractually current and performance
has recommenced. Dividend The Board of Directors and the Company
have elected not to pay a common stock dividend for the quarter
ended June 30, 2009. The Company decided, based on the continued
difficult economic environment, to retain capital for working
capital purposes. Equity Participation Interests Attached as an
exhibit to this press release is a schedule of certain data
pertaining to the Company's investments with equity participation
interests. There were no new loans and investments originated
during the quarter with equity participation interests. Earnings
Conference Call Management will host a conference call today at
10:00 a.m. ET. A live webcast of the conference call will be
available online at http://www.arborrealtytrust.com/. Web
participants are encouraged to go to Arbor's Web site at least 15
minutes prior to the start of the call to register, download and
install any necessary audio software. Listening to the webcast
requires speakers and RealPlayer(TM) software, downloadable without
charge at http://www.real.com/. Those without Web access should
access the call telephonically at least ten minutes prior to the
conference call. The dial-in numbers are (866) 543-6407 for
domestic callers and (617) 213-8898 for international callers. The
participant passcode for both is 41004565. After the live webcast,
the call will remain available on Arbor's Web site,
http://www.arborrealtytrust.com/ through September 7, 2009. In
addition, a telephonic replay of the call will be available until
August 14, 2009. The replay dial-in number is (888) 286-8010 for
domestic callers and (617) 801-6888 for international callers.
Please use passcode: 82605211. About Arbor Realty Trust, Inc. Arbor
Realty Trust, Inc. is a real estate investment trust, which invests
in a diversified portfolio of multi-family and commercial real
estate related bridge and mezzanine loans, preferred equity
investments, mortgage related securities and other real estate
related assets. Arbor commenced operations in July 2003 and
conducts substantially all of its operations through its operating
partnership, Arbor Realty Limited Partnership and its subsidiaries.
Arbor is externally managed and advised by Arbor Commercial
Mortgage, LLC, a national commercial real estate finance company
operating through 11 offices in the US that specializes in debt and
equity financing for multi-family and commercial real estate. 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, 2008 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. 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 each non-GAAP financial measure and the comparable GAAP
financial measure can be found at the end of this release. (1) See
attached supplemental schedule of non-GAAP financial measures.
Contacts: Investors: Arbor Realty Trust, Inc. Stephanie Carrington
/ Amy Glynn Paul Elenio, Chief Financial Officer The Ruth Group
516-506-4422 646-536-7023 Media: Bonnie Habyan, SVP of Marketing
516-506-4615 ARBOR REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) Quarter Ended Six Months Ended
June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ----
---- ---- Revenue: Interest income $31,687,984 $51,869,164
$62,188,007 $107,285,494 Property operating income 1,587,692 -
3,058,488 - Other income 782,410 28,629 798,660 49,322 -------
------ ------- ------ Total revenue 34,058,086 51,897,793
66,045,155 107,334,816 ---------- ---------- ---------- -----------
Expenses: Interest expense 21,091,121 27,857,322 40,241,937
59,161,421 Employee compensation and benefits 3,509,911 2,686,002
5,901,895 4,663,345 Selling and administrative 2,681,579 2,793,161
4,763,921 4,331,227 Property operating expenses 1,612,965 -
2,944,110 - Depreciation and amortization 283,022 - 566,044 -
Other-than- temporary impairment 382,130 - 382,130 - Provision for
loan losses 23,000,000 2,000,000 90,500,000 5,000,000 Loss on
restructured loans 23,790,835 - 32,827,749 - Management fee -
related party 6,277,623 2,153,838 7,000,000 4,733,272 ---------
--------- --------- --------- Total expenses 82,629,186 37,490,323
185,127,786 77,889,265 ---------- ---------- ----------- ----------
(Loss) income before gain on exchange of profits interest, gain on
extinguishment of debt, loss on termination of swaps and loss from
equity affiliates (48,571,100) 14,407,470 (119,082,631) 29,445,551
Gain on exchange of profits interest - - 55,988,411 - Gain on
extinguishment of debt 21,464,957 - 47,731,990 - Loss on
termination of swaps (8,729,408) - (8,729,408) - Loss from equity
affiliates (12,664,152) (562,000) (10,157,018) (562,000)
----------- -------- ----------- -------- Net (loss) income
(48,499,703) 13,845,470 (34,248,656) 28,883,551 Net income
attributable to noncontrolling interest 57,292 2,117,464 18,562,077
4,450,754 ------ --------- ---------- --------- Net (loss) income
attributable to Arbor Realty Trust, Inc. $(48,556,995) $11,728,006
$(52,810,733) $24,432,797 ============ =========== ============
=========== Basic (loss) earnings per common share $(1.92) $0.56
$(2.09) $1.18 ====== ===== ====== ===== Diluted (loss) earnings per
common share $(1.92) $0.56 $(2.09) $1.18 ====== ===== ====== =====
Dividends declared per common share $- $0.62 $- $1.24 == ===== ==
===== Weighted average number of shares of common stock
outstanding: Basic 25,333,564 20,906,383 25,238,515 20,739,081
========== ========== ========== ========== Diluted 25,333,564
24,721,660 25,238,515 24,562,520 ========== ========== ==========
========== ARBOR REALTY TRUST, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS June 30, December 31, 2009 2008 ---- ----
(Unaudited) (Audited) Assets: Cash and cash equivalents $29,517,467
$832,041 Restricted cash 66,605,006 93,219,133 Loans and
investments, net 1,925,689,370 2,181,683,619 Available-for-sale
securities, at fair value 146,973 529,104 Securities
held-to-maturity, net 68,884,086 58,244,348 Investment in equity
affiliates 66,264,744 29,310,953 Real estate owned, net 48,267,318
46,478,994 Due from related party - 2,933,344 Prepaid management
fee - related party 26,340,397 26,340,397 Other assets 71,054,687
139,664,556 ---------- ----------- Total assets $2,302,770,048
$2,579,236,489 ============== ============== Liabilities and
Equity: Repurchase agreements $4,388,250 $60,727,789 Collateralized
debt obligations 1,113,600,316 1,152,289,000 Junior subordinated
notes to subsidiary trust issuing preferred securities 259,173,610
276,055,000 Notes payable 442,186,353 518,435,437 Notes
payable-related party - 4,200,000 Mortgage note payable 41,440,000
41,440,000 Due to related party 4,745,351 993,192 Due to borrowers
5,983,548 32,330,603 Deferred revenue 77,123,133 77,123,133 Other
liabilities 82,187,665 134,647,667 ---------- ----------- Total
liabilities 2,030,828,226 2,298,241,821 ------------- -------------
Commitments and contingencies - - Equity: Arbor Realty Trust, Inc.
stockholders' equity: Preferred stock, $0.01 par value: 100,000,000
shares authorized; no shares issued or outstanding - - Common
stock, $0.01 par value: 500,000,000 shares authorized; 25,666,810
shares issued, 25,387,410 shares outstanding at June 30, 2009 and
25,421,810 shares issued, 25,142,410 shares outstanding at December
31, 2008 256,668 254,218 Additional paid-in capital 449,733,531
447,321,186 Treasury stock, at cost - 279,400 shares (7,023,361)
(7,023,361) Accumulated deficit (115,754,033) (62,939,722)
Accumulated other comprehensive loss (57,210,449) (96,606,672)
----------- ----------- Total Arbor Realty Trust, Inc.
stockholders' equity 270,002,356 281,005,649 -----------
----------- Noncontrolling interest in consolidated entity
1,939,466 (10,981) --------- ------- Total equity 271,941,822
280,994,668 ----------- ----------- Total liabilities and equity
$2,302,770,048 $2,579,236,489 ============== ============== ARBOR
REALTY TRUST, INC. AND SUBSIDIARIES SUPPLEMENTAL SCHEDULE OF
NON-GAAP FINANCIAL MEASURES - Continued (Unaudited) June 30, 2009
------------- GAAP Arbor Realty Trust, Inc. Stockholders' Equity
$270,002,356 Add: 450 West 33rd Street transaction - deferred
revenue 77,123,133 Unrealized loss on derivative instruments
57,210,449 Subtract: 450 West 33rd Street transaction - prepaid
management fee (19,047,949) ----------- Adjusted Arbor Realty
Trust, Inc. Stockholders' Equity $385,287,989 ============ Adjusted
book value per share $15.18 ====== GAAP book value per share $10.64
====== Common shares outstanding 25,387,410 ========== b.) Given
the magnitude and the deferral structure of the 450 West 33rd
Street transaction combined with the change in the fair value of
certain derivative instruments, Arbor has elected to report
adjusted book value per share for the affected period to currently
reflect the future impact of the 450 West 33rd Street transaction
on the company's financial condition as well as the evaluation of
Arbor without the effects of unrealized losses from certain of the
Company's derivative instruments. Management considers this
non-GAAP financial measure to be an effective indicator, for both
management and investors, of Arbor's financial performance. Arbor's
management does not advocate that investors consider this non-GAAP
financial measure in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP. ARBOR
REALTY TRUST, INC. AND SUBSIDIARIES SUPPLEMENTAL SCHEDULE OF
NON-GAAP FINANCIAL MEASURES - Continued (Unaudited) Quarter Ended
Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009
2008 ---- ---- ---- ---- Net (loss) income attributable to Arbor
Realty Trust, Inc., GAAP basis $(48,556,995) $11,728,006
$(52,810,733) $24,432,797 Add: Noncontrolling interest in operating
partnership - 2,117,464 - 4,450,754 Depreciation - real estate
owned 283,022 170,913 566,044 170,913 Depreciation - investment in
equity affiliates 214,599 750,532 419,923 750,532 ------- -------
------- ------- Funds from operations ("FFO") $(48,059,374)
$14,766,915 $(51,824,766) $29,804,996 ============ ===========
============ =========== Diluted FFO per common share $(1.90) $0.60
$(2.05) $1.21 ====== ===== ====== ===== Diluted weighted average
shares outstanding 25,333,564 24,721,660 25,238,515 24,562,520
========== ========== ========== ========== c.) Arbor is presenting
funds from operations, or FFO, because management believes it to be
an important supplemental measure of the Company's operating
performance in that it is frequently used by analysts, investors
and other parties in the evaluation of real estate investment
trusts (REITs). The Company also uses FFO for the calculation of
the incentive management fee payable to the Company's manager,
Arbor Commercial Mortgage, LLC. The revised White Paper on FFO
approved by the Board of Governors of the National Association of
Real Estate Investment Trusts, or NAREIT, in April 2002 defines FFO
as net income (loss) attributable to Arbor Realty Trust, Inc.
(computed in accordance with generally accepted accounting
principles (GAAP)), excluding gains (losses) from sales of
depreciated real properties, plus real estate related depreciation
and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Arbor considers gains and losses
on the sales of real estate investments to be a normal part of our
recurring operating activities in accordance with GAAP and should
not be excluded when calculating FFO. FFO is not intended to be an
indication of our cash flow from operating activities (determined
in accordance with GAAP) or a measure of our liquidity, nor is it
entirely indicative of funding our cash needs, including our
ability to make cash distributions. Arbor's calculation of FFO may
be different from the calculation used by other companies and,
therefore, comparability may be limited. Arbor Realty Trust, Inc.
Summary of Equity and Profit Interests (all dollar amounts in
thousands) Unaudited Initial ART Current Approximate Investment
Investment Cash Equity Square Name Amount Date Investment Profit %
Footage ---- ------ ---- ---------- -------- ------- 80 Evergreen
$384 3Q03 $201 12.50% 77,680 930 Flushing 1,126 3Q03 291 12.50%
304,080 Prime Portfolio 2,100 4Q03 - 7.50% 6,700,000 450 W. 33rd St
1,500 4Q03 1,137 0.58%(1) 1,746,734 Toy Building 10,000 2Q05 5,720
10.00% 320,000 Homewood Mtn Resort - 2Q06 - 25.60% 1,224(3)
Richland Terrace Apartments - 3Q06 - 25.00% 342,152 Ashley Court
Apartments - 3Q06 - 25.00% 177,892 Nottingham Village - 1Q07 -
25.00% 285,900 Extended Stay Hotel Portfolio 115,000(5) 2Q07
115,000 16.17% 684(4) Alpine Meadows 13,220 3Q07 13,220 39.00%
2,163(3) St. John's Development 500 4Q07 3,500 50.00% 23(3)
Windrush Village Apartments - 2Q08 445 25.00% 221,726 Current
Property Debt Balance Name Type Location on Property Comments ----
---- -------- ----------- -------- 80 Evergreen Warehouse Brooklyn,
NY $5,000 Property refinanced June 2008 930 Flushing Warehouse
Brooklyn, NY 24,516 Property refinanced July 2005 Prime Portfolio
Retail Outlets Multi-state 1,194,874 Properties refinanced 450 W.
33rd St Office New York City 517,000 Toy Building Conversion New
York City 343,400(2) Condo conversion - investment held in Taxable
REIT Subsidiary ("TRS") Homewood Mtn Resort Land Homewood, CA
114,157 Profits interest held in TRS Richland Terrace Apartments
Multi Family Columbia, SC 9,019 Ashley Court Apartments Multi
Family Fort Wayne, IN 5,452 Nottingham Village Multi Family
Indianapolis, IN 6,626 Extended Stay Hotel Portfolio Hotel
Multi-state 7,400,000 Preferred return of 12% on equity Alpine
Meadows Land Alpine Preferred Meadows, CA 30,500 return of 18% on
equity St. John's Development Land Jacksonville, FL 25,000 Windrush
Village Apartments Multi Family Tallahassee, FL 12,800 (1)
Represents approximately 29% of the 2% retained interest in the
property. In addition, Arbor has approximately 29% of a 50%
interest in the property's air rights. (2) Debt balance represents
anticipated debt financing required to complete condominium
conversion project. (3) Amount represents approximate acreage of
property. (4) Amount represents approximately 684 properties in 44
states and Canada with approximately 76,000 rooms. (5) As of June
30, 2009, the Company had loan loss reserves associated with this
investment of $83.9 million reducing the outstanding balance to
$16.3 million. DATASOURCE: Arbor Realty Trust, Inc. CONTACT: Paul
Elenio, Chief Financial Officer, Arbor Realty Trust, Inc.,
+1-516-506-4422, , or Media: Bonnie Habyan, SVP of Marketing, Arbor
Realty Trust, Inc., +1-516-506-4615, ; or Investors: Stephanie
Carrington, , or Amy Glynn, , both of The Ruth Group,
+1-646-536-7023 Web Site: http://www.arborrealtytrust.com/
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