Arbor Realty Trust Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven DeLaney - JMP Securities LLC - Analyst : Thank you. Good morning, Ivan, Paul, good to be on with you. It sounds like -- I mean, gosh, you covered a lot there in three or four different business lines. But the thing that caught my year, it sounds like the CLO market is very attractive right now in terms of both structure and pricing. And a lot of folks have pulled back from bridge loans because of the credit problems that occurred on the earlier vintages. I'm just wondering when you look at the bridge portfolio, $11.5 billion, do you expect net growth there in 2025? And do you have a target level for where that portfolio might grow by the end of this year? Thank you.

Question: Steven DeLaney - JMP Securities LLC - Analyst : I mean just a quick follow-up. When you look at the loans that you're making today on the bridge loan side of the business. And clearly, you just said that you expect some growth, and you really found that attractive. Why did so many people -- just in a very simple term, what was the number one or number two, the primary weaknesses on why that 2022, 2023 vintages have performed so poorly? And you're going to obviously planning to correct that with your 2025 loans.

Question: Steven DeLaney - JMP Securities LLC - Analyst : Thank you very much. I appreciate it.

Question: Jade Rahmani - Keefe, Bruyette & Woods, Inc. - Analyst : Thank you very much. Wanted to start with a liquidity update. What are you expecting cash and liquidity to do? Just looking ahead at earnings, the reset dividend, your expectations regarding NPLs and REO?

Question: Jade Rahmani - Keefe, Bruyette & Woods, Inc. - Analyst : Thanks. You didn't mention NPLs and REO. Could you talk about where you expect each to go? And also proceeds, do you expect proceeds from either category?

Question: Jade Rahmani - Keefe, Bruyette & Woods, Inc. - Analyst : Thanks. If I could ask one more. It's just about the overall economic sensitivity of the portfolio. You mentioned the 36-month cycle, but that's really an interest rate cycle. We haven't even gone through an economic cycle in terms of unemployment spiking or a recession. So could you touch on your views there?

Question: Jade Rahmani - Keefe, Bruyette & Woods, Inc. - Analyst : Thank you very much.

Question: Rick Shane - JP Morgan - Analyst : Hey guys, thanks for taking my questions this morning. Look, interaction feedback we're getting, there's a lot of focus on liquidity, dividend, sustainability and noncash income. Cash is down 65% year over year, 38% quarter over quarter. And that I'm not including the restricted cash because of the paydown of the CLO. Repayments were at their lowest level back to the pandemic at $421 million, I think. Originations in the quarter were $747 million. So you consumed about $300 million on originations. I'm curious, how much of those originations really were on new projects as opposed to reinvesting in existing?

Question: Rick Shane - JP Morgan - Analyst : Great. That's -- I really appreciate the clarity there, Paul. Second question is you guys reported $57 million of distributable earnings. How much of the reported income was -- or interest was noncash?

Question: Rick Shane - JP Morgan - Analyst : Got it. And as we look through the year and look to your guidance both in terms of dividend outlook and expectations of an increase in PE in the back half of the year, is that $15 million run rate a good way to -- is that a good level of expectations?

Question: Rick Shane - JP Morgan - Analyst : Terrific. Thank you and thank you as always for taking my question.

Question: Leon Cooperman - Omega Family Office - Analyst : Thank you. So far, everything I've heard is in line with what you previously have indicated. I had this discussion in the past is why do you take interest rates are too high. I guess the I way I look at the macro economy, stock market's right near high. The speculation in the market is very rapid. And I see no indication interest rates are too high. Why do you feel the interest rates going to go down?

Question: Leon Cooperman - Omega Family Office - Analyst : Got you. Second question for Paul. I got to this call very late. I apologize because I had another call. What was the book value at the end of the quarter?

Question: Leon Cooperman - Omega Family Office - Analyst : Right. Okay, [11.98]. And in the past, you had an authorization to buy back stock. Is the current environment such that you would rather keep your liquidity and net by stock back below book value? (multiple speakers) I think the question is.

Question: Leon Cooperman - Omega Family Office - Analyst : Got you. So you would not -- you're not committed to do a buyback, but you're going to basically look at the various alternatives in the market environment?

Question: Leon Cooperman - Omega Family Office - Analyst : All right. Very good. Thank you.