Financial Data and Key Metrics Changes - The company reported distributable earnings of $52.1 million or $0.25 per share, and $62.5 million or $0.30 per share excluding one-time realized losses of $10.5 million from the sale of two REO assets in the second quarter [18] - The total delinquencies decreased to $529 million as of June 30 from $654 million at March 31, with non-performing loans (NPLs) at approximately $472 million compared to $511 million last quarter [20][21] - The average yield on core investments decreased to 7.95% from 8.15% last quarter, primarily due to less back interest collected and additional delinquencies [25] Business Line Data and Key Metrics Changes - In the agency business, the company originated $850 million in loans during the second quarter and $1.5 billion for the first six months, with a strong July resulting in $1 billion in agency loans [12][24] - The single-family rental business saw approximately $230 million in new business during the second quarter, with a strong pipeline for future growth [13][14] - The construction lending business closed $265 million in the first six months and an additional $144 million in July, with a strong pipeline of applications [15] Market Data and Key Metrics Changes - The prolonged elevated rate environment has created challenges in the agency originations business, affecting borrowers' ability to transition to fixed-rate loans [8] - The company anticipates that if there is a sustained reduction in interest rates, it will positively impact origination volumes and earnings [10] Company Strategy and Development Direction - The company views 2025 as a transitional year focused on resolving REO assets and delinquencies, aiming to build a strong earnings foundation for 2026 [16][17] - The company is committed to being selective in its lending practices, closing $100 million in the second quarter and $215 million in July, with a target of $1.5 billion to $2 billion in bridge loan production for 2025 [11] - The company is expanding its securitization platform to increase leverage and efficiency in the single-family rental business, enhancing competitive advantage [6][14] Management's Comments on Operating Environment and Future Outlook - Management noted that the current market environment is characterized by volatility and uncertainty, particularly regarding interest rates, which complicates predictions for the remainder of the year [8] - The company is optimistic about future growth, especially if interest rates decrease, which would facilitate increased origination volumes and improved earnings [10][81] Other Important Information - The company successfully completed a high-yield unsecured debt offering, raising $500 million to pay off convertible debt and enhance liquidity [4][5] - The investment portfolio grew to $11.6 billion at June 30, with an all-in yield of 7.86% [24] Q&A Session Summary Question: Drop in net interest income from $75 million to $69 million - Management explained that the drop was due to increased delinquencies and less back interest collected on delinquent loans, along with reversals on certain loans [30][31] Question: Future peak of REO assets - Management indicated that they expect REO assets to peak around $400 million to $600 million, with a focus on accelerating the resolution of non-performing loans [33][34] Question: Interest from outside parties in REO and sub-performing loan books - Management confirmed that there is significant interest in distressed deals, with multiple bidders for such assets, particularly as interest rates decline [40][41] Question: Capital expenditures for repositioning assets - Management estimated that capital expenditures for repositioning assets would be between $25 million to $50 million over the next six to twelve months [70][72] Question: Agency originations dynamics between Fannie and Freddie - Management noted that both agencies have competitive advantages, with Fannie Mae traditionally being more active, but Freddie Mac has been stepping up recently [75][76]

Core Viewpoint - Arbor Realty Trust (ABR) reported quarterly earnings of $0.25 per share, missing the Zacks Consensus Estimate of $0.29 per share, and down from $0.45 per share a year ago, indicating an earnings surprise of -13.79% [1] Financial Performance - The company posted revenues of $240.3 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.29%, but down from $297.19 million year-over-year [2] - Over the last four quarters, Arbor Realty Trust has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $249.35 million, and for the current fiscal year, it is $1.18 on revenues of $976.07 million [7] Stock Performance - Arbor Realty Trust shares have declined approximately 19.4% since the beginning of the year, contrasting with the S&P 500's gain of 7.8% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Outlook - The REIT and Equity Trust industry is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited consolidated financial statements for Arbor Realty Trust, Inc. as of June 30, 2025, show a slight increase in total assets to **$13.56 billion** from **$13.49 billion** at year-end 2024, with net income for Q2 2025 at **$36.3 million**, a significant decrease from **$61.8 million** in Q2 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets slightly increased to **$13.56 billion** from **$13.49 billion** at year-end 2024, driven by growth in loans and real estate owned, while total liabilities rose to **$10.47 billion** and total equity saw a minor decline to **$3.09 billion** Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$13,563,039** | **$13,490,981** | | Cash and cash equivalents | $255,742 | $503,803 | | Loans and investments, net | $11,333,023 | $11,033,997 | | Real estate owned, net | $365,186 | $176,543 | | **Total Liabilities** | **$10,469,176** | **$10,339,011** | | Credit and repurchase facilities | $4,721,622 | $3,559,490 | | Securitized debt | $3,510,865 | $4,622,489 | | **Total Equity** | **$3,093,863** | **$3,151,970** | - Assets of consolidated Variable Interest Entities (VIEs) totaled **$4.85 billion** at June 30, 2025, down from **$6.12 billion** at December 31, 2024[14](index=14&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, net income was **$36.3 million**, a **41% decrease** from **$61.8 million** in Q2 2024, with diluted EPS at **$0.12**, primarily due to a **22% drop** in net interest income and lower other revenue Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $68,725 | $87,961 | $144,168 | $191,577 | | Total Other Revenue | $61,685 | $65,142 | $120,405 | $122,178 | | Provision for credit losses | $19,004 | $29,564 | $28,079 | $48,682 | | **Net Income** | **$36,309** | **$61,833** | **$79,690** | **$135,044** | | Net Income Attributable to Common Stockholders | $23,952 | $47,397 | $54,389 | $105,270 | | **Diluted EPS** | **$0.12** | **$0.25** | **$0.28** | **$0.56** | | Dividends declared per common share | $0.30 | $0.43 | $0.73 | $0.86 | [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased from **$3.15 billion** at the start of 2025 to **$3.09 billion** at June 30, 2025, primarily due to **$160.6 million** in distributions to stockholders exceeding **$79.7 million** in net income - For the six months ended June 30, 2025, total distributions to common and preferred stockholders amounted to **$139.9 million** and **$20.7 million**, respectively[19](index=19&type=chunk) - The company issued **2,508,750 shares** of common stock during the first six months of 2025, generating proceeds of **$30.8 million**[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, a net decrease in cash of **$313.5 million** resulted from **$210.6 million** in operating cash flow being offset by **$522.1 million** used in investing activities and **$2.0 million** in financing outflows Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $210,597 | $329,888 | | Net cash (used in) provided by investing activities | ($522,125) | $717,993 | | Net cash used in financing activities | ($1,965) | ($1,629,375) | | **Net decrease in cash, cash equivalents and restricted cash** | **($313,493)** | **($581,494)** | - The company acquired **$356.0 million** of real estate in settlement of loans during the first six months of 2025, a significant non-cash investing activity[27](index=27&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's business segments, accounting policies, and financial statement line items, including the **$11.6 billion** loan portfolio, increased non-performing loans, **$10.1 billion** in debt obligations, and various commitments and contingencies [Note 1 — Description of Business](index=11&type=section&id=Note%201%20%E2%80%94%20Description%20of%20Business) Arbor Realty Trust operates as a REIT through its Structured Business, investing in diversified structured finance assets, and its Agency Business, originating and servicing multifamily finance products through GSEs and HUD - The Structured Business focuses on investing in bridge loans, mezzanine loans, and preferred equity in the multifamily, single-family rental (SFR), and commercial real estate markets[30](index=30&type=chunk) - The Agency Business originates, sells, and services multifamily loans through government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, as well as HUD programs, retaining servicing rights on nearly all originated and sold loans[31](index=31&type=chunk) [Note 3 — Loans and Investments](index=13&type=section&id=Note%203%20%E2%80%94%20Loans%20and%20Investments) The loan and investment portfolio grew to **$11.61 billion** as of June 30, 2025, with bridge loans comprising **96%**, while the allowance for credit losses increased to **$243.3 million** and non-performing loans decreased to **$424.7 million** Loan & Investment Portfolio Composition (in thousands) | Loan Type | UPB at June 30, 2025 | Percent of Total | | :--- | :--- | :--- | | Bridge loans | $11,105,463 | 96% | | Mezzanine loans | $250,858 | 2% | | Preferred equity investments | $149,776 | 1% | | Other | $103,138 | <1% | | **Total UPB** | **$11,609,235** | **100%** | - The allowance for credit losses increased to **$243.3 million** at June 30, 2025, from **$239.0 million** at December 31, 2024, with a provision of **$23.5 million** and charge-offs of **$19.1 million** for the first six months of 2025[54](index=54&type=chunk)[56](index=56&type=chunk) - Non-performing loans (over 60 days past due) decreased to **19 loans** with a carrying value of **$424.7 million** at June 30, 2025, down from **26 loans** with a carrying value of **$598.9 million** at year-end 2024[62](index=62&type=chunk) - During the six months ended June 30, 2025, the company modified loans with a total UPB of **$1.20 billion** for borrowers experiencing financial difficulty, representing **10.6%** of the total Structured Business portfolio[75](index=75&type=chunk)[77](index=77&type=chunk) [Note 6 — Mortgage Servicing](index=26&type=section&id=Note%206%20%E2%80%94%20Mortgage%20Servicing) The total mortgage servicing portfolio slightly increased to **$33.76 billion** at June 30, 2025, primarily composed of Fannie Mae loans, while net servicing revenue for Q2 2025 decreased to **$27.4 million** due to lower interest earned on escrow balances Servicing Portfolio by Product (UPB in thousands) | Product | June 30, 2025 | % of Total | | :--- | :--- | :--- | | Fannie Mae | $22,999,772 | 68% | | Freddie Mac | $6,100,091 | 18% | | Private Label | $2,599,971 | 8% | | FHA | $1,497,551 | 4% | | Other | $565,181 | 2% | | **Total** | **$33,762,566** | **100%** | - The weighted average servicing fee for the portfolio was **37.4 basis points** at June 30, 2025[108](index=108&type=chunk) [Note 9 — Real Estate Owned](index=31&type=section&id=Note%209%20%E2%80%94%20Real%20Estate%20Owned) Real Estate Owned (REO) assets significantly increased to **$365.2 million** as of June 30, 2025, from **$176.5 million** at year-end 2024, primarily due to the foreclosure of ten multifamily bridge loans - During the first six months of 2025, the company foreclosed on **ten multifamily bridge loans** with an aggregate net carrying value of **$260.3 million**, receiving the underlying collateral as REO assets[126](index=126&type=chunk) - The company sold **three multifamily REO assets** for **$84.0 million** during the first half of 2025, recognizing a net loss of **$1.0 million** on the sales[127](index=127&type=chunk) [Note 10 — Debt Obligations](index=32&type=section&id=Note%2010%20%E2%80%94%20Debt%20Obligations) Total debt obligations were **$10.13 billion** at June 30, 2025, with credit and repurchase facilities increasing to **$4.72 billion** and securitized debt decreasing to **$3.51 billion** following CLO unwinds and a new BTR CLO issuance, while all CLOs remained covenant compliant Debt Obligations Summary (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Credit and repurchase facilities | $4,721,622 | $3,559,490 | | Securitized debt | $3,510,865 | $4,622,489 | | Senior unsecured notes | $1,238,174 | $1,236,147 | | Convertible senior unsecured notes | $287,258 | $285,853 | | Other Debt | $329,703 | $219,583 | | **Total** | **$10,087,622** | **$9,923,562** | - In May 2025, the company completed its first Build-to-Rent (BTR) CLO, issuing notes totaling **$801.9 million**[146](index=146&type=chunk) - In March 2025, the company unwound CLO 14 and 19, redeeming outstanding notes totaling **$1.08 billion**, which were repaid from a new **$1.15 billion** repurchase facility[150](index=150&type=chunk) - All CLO vehicles were in compliance with interest coverage and overcollateralization covenants as of the most recent determination dates in July 2025[163](index=163&type=chunk)[164](index=164&type=chunk) [Note 14 — Commitments and Contingencies](index=45&type=section&id=Note%2014%20%E2%80%94%20Commitments%20and%20Contingencies) The company faces significant commitments, including **$4.36 billion** in Fannie Mae DUS risk-sharing obligations and **$2.22 billion** in unfunded loan commitments, alongside ongoing securities class action and shareholder derivative lawsuits which the company believes are without merit - The company has unfunded commitments of **$2.22 billion** at June 30, 2025, that it is obligated to fund as borrowers meet certain requirements[217](index=217&type=chunk) - A securities class action lawsuit was filed against the company and certain officers in July 2024, alleging false and misleading statements regarding internal controls and lending practices, with the company's motion to dismiss pending[219](index=219&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk) - Several shareholder derivative lawsuits have been filed, asserting claims for breach of fiduciary duties and other violations, arising from substantially the same facts as the securities class action, and these cases are currently stayed[224](index=224&type=chunk)[225](index=225&type=chunk) [Note 16 — Equity](index=48&type=section&id=Note%2016%20%E2%80%94%20Equity) During the first six months of 2025, the company sold **2.5 million shares** of common stock for **$30.9 million** in net proceeds, declared common stock dividends of **$0.73 per share**, and has **$138.6 million** available under its share repurchase program - Sold **2,508,750 shares** of common stock at an average price of **$12.31 per share** for net proceeds of **$30.9 million** during the first six months of 2025[237](index=237&type=chunk) Dividends Declared per Common Share | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q1 | $0.43 | - | | Q2 | $0.30 | $0.43 | | **YTD** | **$0.73** | **$0.86** | - The share repurchase program had **$138.6 million** available for repurchase as of June 30, 2025[238](index=238&type=chunk) [Note 19 — Segment Information](index=56&type=section&id=Note%2019%20%E2%80%94%20Segment%20Information) For Q2 2025, the Structured Business generated **$19.6 million** in net income and holds the majority of assets and liabilities, while the Agency Business generated **$16.7 million** in net income, with its originations decreasing to **$857.1 million** Net Income by Segment - Q2 2025 (in thousands) | Segment | Net Income | | :--- | :--- | | Structured Business | $19,630 | | Agency Business | $16,679 | | Other (Noncontrolling Interest) | ($2,015) | | **Consolidated Net Income** | **$36,309** | Total Assets by Segment (in thousands) | Segment | June 30, 2025 | | :--- | :--- | | Structured Business | $12,323,428 | | Agency Business | $1,239,611 | | **Consolidated Total Assets** | **$13,563,039** | - Agency Business new loan originations decreased to **$857.1 million** in Q2 2025 from **$1.15 billion** in Q2 2024[296](index=296&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant decline in net income for Q2 and H1 2025 due to a challenging high-interest rate environment, which increased delinquencies and reduced origination volumes, while highlighting a new build-to-rent CLO issuance and the unpredictable impact of new legislation [Current Market Conditions, Risks and Recent Trends](index=65&type=section&id=Current%20Market%20Conditions%2C%20Risks%20and%20Recent%20Trends) Management highlights challenging market conditions with high interest rates leading to increased delinquencies, loan modifications, and declining real estate values, while the recently enacted One Big Beautiful Bill Act (OBBBA) introduces further uncertainty regarding tax policy and market dynamics - The high-interest rate environment has resulted in increased payment delinquencies, defaults, loan modifications, and foreclosures, which may continue to impact results[313](index=313&type=chunk) - Decreased origination volumes, especially in the GSE/Agency business, have negatively impacted the ability for borrowers to refinance balance sheet loans with fixed-rate agency products[313](index=313&type=chunk) - The enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, introduces wide-ranging changes to federal tax policy and fiscal priorities, the effects of which on the business and real estate markets are difficult to predict[320](index=320&type=chunk) [Comparison of Results of Operations](index=69&type=section&id=Comparison%20of%20Results%20of%20Operations) Net income attributable to common stockholders for Q2 2025 decreased by **49%** to **$24.0 million** from **$47.4 million** in Q2 2024, primarily due to a **$19.2 million** drop in net interest income and lower gains on sales, partially offset by a decrease in provision for credit losses Comparison of Results for Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $68,725 | $87,961 | (22)% | | Total Other Revenue | $61,685 | $65,142 | (5)% | | Provision for credit losses | $19,004 | $29,564 | (36)% | | **Net Income** | **$36,309** | **$61,833** | **(41)%** | - The decrease in net interest income was driven by a lower average yield on assets due to falling SOFR rates and an increase in loan delinquencies, as well as lower interest earned on reduced cash balances[338](index=338&type=chunk) - Agency Business revenue declined due to a **29% decrease** in loan sales volume and lower earnings on escrow balances[340](index=340&type=chunk)[341](index=341&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources include equity and debt offerings, CLOs, and debt facilities, with approximately **$600 million** in cash and liquidity as of July 29, 2025, and **54%** of its **$9.61 billion** structured debt being non-mark-to-market - As of July 29, 2025, the company had approximately **$600 million** in cash and liquidity[372](index=372&type=chunk) - Of the **$9.61 billion** in total structured debt, **$5.21 billion (54%)** does not contain mark-to-market provisions[371](index=371&type=chunk) - The company has a **$33.76 billion** agency servicing portfolio that generates approximately **$126 million** per year in recurring gross cash flow[372](index=372&type=chunk) [Non-GAAP Financial Measures](index=79&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Distributable Earnings as a non-GAAP measure, which for Q2 2025 was **$52.1 million**, or **$0.25 per diluted share**, a significant decrease from **$91.6 million**, or **$0.45 per diluted share**, in Q2 2024, after adjusting GAAP net income for non-cash items Distributable Earnings Reconciliation (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income attributable to common stockholders | $23,952 | $47,397 | | Adjustments (Net) | $28,117 | $44,168 | | **Distributable earnings** | **$52,069** | **$91,565** | | **Diluted distributable earnings per share** | **$0.25** | **$0.45** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=80&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, where a hypothetical **50 basis point** increase would raise net interest income by **$7.6 million** over 12 months, and a **100 basis point** increase in discount rates would decrease MSR fair value by **$13.7 million** Hypothetical 12-Month Impact of Interest Rate Changes on Net Interest Income (in thousands) | Rate Change | Impact on Net Interest Income | | :--- | :--- | | +50 Basis Points | $7,606 | | -50 Basis Points | ($5,731) | | -100 Basis Points | ($8,213) | - A **100 basis point** increase in the weighted average discount rate would decrease the fair value of MSRs by **$13.7 million**, while a **100 basis point** decrease would increase the fair value by **$14.4 million**[404](index=404&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[405](index=405&type=chunk) [PART II. OTHER INFORMATION](index=81&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=81&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a securities class action lawsuit and several shareholder derivative actions, as detailed in Note 14 of the financial statements, which the company believes are without merit and intends to vigorously defend against - The company is currently defending against a securities class action lawsuit and multiple shareholder derivative suits, with further details provided in Note 14[407](index=407&type=chunk)[218](index=218&type=chunk) [Item 1A. Risk Factors](index=81&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors from the 2024 Annual Report were reported[408](index=408&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a share repurchase program with **$138.6 million** remaining available as of June 30, 2025, though affiliated purchasers, not the company, bought **233,821 shares** during Q2 2025 - As of June 30, 2025, **$138.6 million** remained available under the company's share repurchase program[410](index=410&type=chunk) - Affiliated purchasers, not the company itself, bought **233,821 shares** during the three months ended June 30, 2025[411](index=411&type=chunk) [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information) During the reporting period, no director or officer of Arbor adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement during the quarter[412](index=412&type=chunk) [Item 6. Exhibits](index=83&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, debt indentures, and officer certifications

[Financial Highlights and Key Developments](index=1&type=section&id=Financial%20Highlights%20and%20Key%20Developments) Arbor Realty Trust reported a significant year-over-year decline in Q2 2025 net income and distributable earnings, alongside key financing activities Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net Income** | $24.0 million | $47.4 million | | **Net Income per Diluted Share** | $0.12 | $0.25 | | **Distributable Earnings** | $52.1 million | $91.6 million | | **Distributable Earnings per Diluted Share** | $0.25 | $0.45 | | **Dividend Declared per Share** | $0.30 | $0.43 | - The company strengthened its balance sheet through two major financing activities: closing its first build-to-rent collateralized securitization vehicle for **$801.9 million** and issuing **$500.0 million** of 7.875% senior unsecured notes due 2030[3](index=3&type=chunk) - Key portfolio metrics for Q2 2025 include a servicing portfolio of approximately **$33.76 billion** and a structured loan portfolio of about **$11.61 billion**, with originations of **$857.1 million** in agency loans and **$716.5 million** in structured loans[3](index=3&type=chunk) - During the quarter, the company foreclosed on six loans totaling **$188.2 million** and sold four real estate owned (REO) properties for **$114.5 million**[3](index=3&type=chunk) [Business Segment Performance](index=2&type=section&id=Business%20Segment%20Performance) The company's Agency and Structured segments showed varied performance in loan origination, portfolio growth, and net income contributions Net Income by Business Segment (Q2 2025) | Segment (Q2 2025) | Net Income Attributable to Common Stockholders | | :--- | :--- | | Agency Business | $16.7 million | | Structured Business | $9.3 million | [Agency Business](index=2&type=section&id=Agency%20Business) The Agency Business experienced significant loan origination growth, primarily from Fannie Mae, expanding its servicing portfolio and increasing CECL allowance Agency Loan Origination Volume (in thousands) | Agency Loan Volume (in thousands) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Fannie Mae | $683,206 | $357,811 | | Freddie Mac | $150,339 | $178,020 | | **Total Originations** | **$857,097** | **$605,908** | Fee-Based Servicing Portfolio Metrics | Fee-Based Servicing Portfolio | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Total UPB** | $33.76 billion | $33.48 billion | | **Weighted Avg. Fee (bps)** | 37.4 | 37.5 | | **Weighted Avg. Life (years)** | 6.5 | 6.7 | - The total CECL allowance for loss-sharing obligations related to the Fannie Mae portfolio was **$54.8 million**, representing **0.24%** of the Fannie Mae servicing portfolio as of June 30, 2025[7](index=7&type=chunk) [Structured Business](index=4&type=section&id=Structured%20Business) The Structured Business portfolio grew to $11.61 billion with new originations, but faced credit quality stress from non-performing loans and a significant CECL provision Structured Portfolio Metrics (UPB in thousands) | Structured Portfolio (UPB in thousands) | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | **Total Portfolio** | **$11,609,235** | **$11,489,393** | | Q2 Originations | $716,544 | $747,121 | | Q2 Loan Runoff | $519,709 | $421,941 | - The weighted average yield on the loan portfolio decreased from **8.15%** in Q1 2025 to **7.95%** in Q2 2025, primarily due to an increase in non-performing and foreclosed loans[10](index=10&type=chunk) - As of June 30, 2025, the company had nineteen non-performing loans with a UPB of **$471.8 million**, a decrease from twenty-three loans with a UPB of **$511.1 million** at the end of Q1 2025, with a total allowance for loan losses of **$243.3 million**[11](index=11&type=chunk) - During Q2, eight loans with a total UPB of **$251.9 million** were modified for borrowers experiencing financial difficulty, primarily involving additional capital investment from the borrowers and temporary rate relief[13](index=13&type=chunk) [Financing Activities and Dividend](index=6&type=section&id=Financing%20Activities%20and%20Dividend) The company actively managed its capital structure in Q2 2025, completing a significant securitization, issuing senior unsecured notes, and declaring a dividend - In May 2025, the company closed its first build-to-rent collateralized securitization vehicle, totaling **$801.9 million**, with investment-grade notes placed at an initial weighted average spread of **2.48%** over SOFR[16](index=16&type=chunk)[17](index=17&type=chunk) - In July 2025, the company issued **$500.0 million** of **7.875%** senior unsecured notes due 2030, using the proceeds to pay down debt and for general corporate purposes[18](index=18&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.30 per share** of common stock, payable on August 29, 2025, to stockholders of record on August 15, 2025[19](index=19&type=chunk) [Consolidated Financial Statements](index=9&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements reflect a year-over-year decrease in net interest income and net income, with slight asset and liability growth, and decreased equity [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) Net interest income and net income attributable to common stockholders significantly decreased in Q2 2025, driven by lower interest income and higher credit loss provisions Consolidated Statements of Income (in thousands) | ($ in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $68,725 | $87,961 | | Total Other Revenue | $61,685 | $65,142 | | Total Other Expenses | $91,909 | $93,563 | | **Net Income Attributable to Common Stockholders** | **$23,952** | **$47,397** | | **Diluted EPS** | **$0.12** | **$0.25** | [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets were $13.56 billion, total liabilities $10.47 billion, and total equity decreased to $3.09 billion from year-end 2024 Consolidated Balance Sheets (in thousands) | ($ in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$13,563,039** | **$13,490,981** | | Loans and investments, net | $11,333,023 | $11,033,997 | | Real estate owned, net | $365,186 | $176,543 | | **Total Liabilities** | **$10,469,176** | **$10,339,011** | | Securitized debt | $3,510,865 | $4,622,489 | | **Total Equity** | **$3,093,863** | **$3,151,970** | [Non-GAAP Financial Measures](index=15&type=section&id=Non-GAAP%20Financial%20Measures) The company provides distributable earnings as a non-GAAP measure to evaluate operating performance and dividend capacity, adjusting GAAP net income for specific non-cash items - Management defines **distributable earnings** as **GAAP net income** adjusted for items such as depreciation, non-cash stock-based compensation, MSR income and amortization, unrealized derivative gains/losses, deferred taxes, and CECL provisions (adjusted for realized losses)[38](index=38&type=chunk) [Reconciliation of Distributable Earnings](index=15&type=section&id=Reconciliation%20of%20Distributable%20Earnings) Q2 2025 distributable earnings were $52.1 million ($0.25/share), significantly lower than Q2 2024, reflecting adjustments for non-cash items Reconciliation of Distributable Earnings (in thousands) | Reconciliation ($ in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Net income attributable to common stockholders** | **$23,952** | **$47,397** | | Income from mortgage servicing rights | ($10,930) | ($14,534) | | Amortization and write-offs of MSRs | $19,825 | $19,518 | | Depreciation and amortization | $6,582 | $3,044 | | Provision for credit losses, net | $8,435 | $31,457 | | **Distributable earnings** | **$52,069** | **$91,565** | | **Diluted distributable earnings per share** | **$0.25** | **$0.45** |

Company Highlights - Arbor Realty Trust, Inc. reported a net income of $24.0 million, or $0.12 per diluted common share for Q2 2025, a decrease from $47.4 million, or $0.25 per diluted common share in Q2 2024 [2] - Distributable earnings for the quarter were $52.1 million, or $0.25 per diluted common share, down from $91.6 million, or $0.45 per diluted common share in the same quarter last year [2][6] - The company declared a cash dividend of $0.30 per share for the quarter ended June 30, 2025, payable on August 29, 2025 [20] Agency Business - Total agency loan originations reached $857.1 million in Q2 2025, up from $605.9 million in Q1 2025 [3] - Revenues from the Agency Business were $64.5 million, compared to $62.9 million in Q1 2025 [3] - The gain on sales, including fee-based services, net was $13.7 million, reflecting a margin of 1.69% [3] Structured Business - The structured loan portfolio had an unpaid principal balance (UPB) of $11.61 billion as of June 30, 2025, with a weighted average interest rate of 7.03% [10] - Total originations for the structured business were $716.5 million in Q2 2025, with a loan runoff of $519.7 million [9] - The average balance of the loan and investment portfolio during Q2 2025 was $11.53 billion, with a weighted average yield of 7.95% [11] Financing Activity - The balance of debt financing the loan and investment portfolio was $9.61 billion at June 30, 2025, with a weighted average interest rate of 6.88% [15] - In July 2025, the company issued $500.0 million of 7.875% senior unsecured notes due 2030 to repay $287.5 million of convertible senior notes [19] Loan Losses and Provisions - The company recorded a $16.1 million net provision for loan losses associated with CECL in Q2 2025, with a total allowance for loan losses of $243.3 million [12] - Nineteen non-performing loans had a UPB of $471.8 million as of June 30, 2025, down from twenty-three loans with a UPB of $511.1 million at the end of Q1 2025 [12][13] Servicing Portfolio - The fee-based servicing portfolio totaled $33.76 billion at June 30, 2025, with servicing revenue, net of $27.4 million for the quarter [7] - The weighted average life of the servicing portfolio was 6.5 years, with a fee of 37.4 basis points [8]

Core Viewpoint - Arbor Realty Trust (NYSE: ABR) has faced challenges indicated by a dividend cut in Q1, suggesting ongoing financial pressure for the company [1] Group 1: Company Analysis - The recent analysis of Arbor Realty Trust highlighted a Q1 earnings report that triggered concerns regarding the company's financial stability [1] - The company's investment style focuses on providing actionable insights derived from independent research, which may appeal to investors seeking clarity in volatile markets [1] Group 2: Market Context - The broader market context includes extreme volatility in both equity and bond markets, which has impacted investment strategies and performance [2] - The company claims to have assisted its members in outperforming the S&P 500 while avoiding significant losses during market fluctuations [2]

Group 1 - The company emphasizes a cautious approach towards leverage in real estate development, highlighting the potential dangers of debt [1] - iREIT® offers comprehensive research services covering various investment vehicles including REITs, mREITs, Preferreds, BDCs, MLPs, ETFs, Builders, and Asset Managers [2] - The iREIT® Tracker provides data on over 250 tickers, including quality scores, buy targets, and trim targets, enhancing investment decision-making [2] Group 2 - A new Ratings Tracker called iREIT Buy Zone has been introduced to assist members in screening for value [2] - The company is promoting a 2-Week FREE TRIAL along with a complimentary book to attract new members [4]

Company Overview - Arbor Realty Trust, Inc. (NYSE: ABR) is a nationwide real estate investment trust and direct lender, focusing on loan origination and servicing for multifamily, single-family rental portfolios, and other commercial real estate assets [4] - The company manages a multibillion-dollar servicing portfolio and specializes in government-sponsored enterprise products [4] - Arbor is recognized as a leading Fannie Mae DUS® lender, Freddie Mac Optigo® Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender [4] Upcoming Financial Results - Arbor Realty Trust is scheduled to release its second quarter 2025 financial results before the market opens on August 1, 2025 [1] - A conference call to review the results will take place at 10:00 a.m. Eastern Time on the same day [1] Conference Call Details - A live webcast and replay of the conference call will be available on the company's investor relations website [2] - For those without web access, a telephonic option is available, with specific dial-in numbers provided for domestic and international callers [2] - A telephonic replay of the call will be accessible until August 8, 2025, with dedicated numbers for domestic and international callers [3]

Core Viewpoint - Arbor Realty Trust (ABR) is characterized as a successful and diversified Real Estate Investment Trust (REIT) but has faced challenges from short reports that have negatively impacted its reputation [1]. Company Performance - ABR has encountered objective performance difficulties recently, which have contributed to a tarnished image [1]. Market Dynamics - The interplay between company dynamics and adjustments to market conditions is highlighted as an interesting aspect of investment research [1].

Core Insights - Arbor Realty Trust (ABR) is expected to report quarterly earnings of $0.29 per share, reflecting a decline of 35.6% year over year [1] - Analysts forecast revenues of $237.24 million, indicating a decrease of 20.2% compared to the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the past 30 days, suggesting a reassessment of projections by covering analysts [1] Revenue Estimates - Interest income is projected to reach $237.24 million, down 20.2% from the prior-year quarter [4] - Other revenue from gains on sales, including fee-based services, is estimated at $13.77 million, reflecting a decline of 21.1% year over year [4] - Servicing revenue is expected to be $26.77 million, indicating a decrease of 10.5% from the previous year [4] Additional Revenue Metrics - Analysts estimate 'Other revenue- Mortgage servicing rights' at $10.47 million, suggesting a year-over-year decline of 28% [5] - Over the past month, Arbor Realty Trust shares have gained 11%, outperforming the Zacks S&P 500 composite, which increased by 5.4% [5] - Arbor Realty Trust holds a Zacks Rank 3 (Hold), indicating expected performance in line with the overall market [5]