Can This REIT Maintain Its 15% Yield?

Company Overview - Arbor Realty Trust is a sophisticated mortgage REIT (mREIT) with two key operating segments: direct lending and an agency platform for refinancing bridge loans into long-term mortgages [3][4] - The direct lending segment primarily generates revenue from net interest income, focusing on multifamily bridge loans [3] - The agency platform allows for the refinancing of loans into securities backed by Fannie Mae or Freddie Mac, providing Arbor with additional revenue from loan sales and servicing fees [4] Share Price Decline - Arbor Realty Trust's share price has declined approximately 40% since the beginning of 2025, trading near early COVID-era lows with a double-digit yield [1] - The decline is attributed to a strained relationship between its two operating segments, exacerbated by rising interest rates and a slowdown in loan originations [5][9] - As of the latest quarter, 51.4% of Arbor's $11.7 billion loan portfolio consists of loans originated during the peak market conditions of 2021 and 2022, which are now facing refinancing challenges due to lower property valuations [6][7] Borrower Challenges - Many borrowers from the 2021 and 2022 vintages are struggling to refinance their loans due to increased borrowing costs and lower property valuations [7][8] - Arbor's bridge loans typically have three-year terms with one-year extensions, and many borrowers are unable to refinance with the same principal between 2024 and 2025 [8] Financial Performance - The company has historically been known for paying and increasing its dividend; however, as borrower delinquencies rose, net interest income weakened, leading to a dividend cut from $0.43 to $0.30 per quarter [11] - The announcement of a new issue of senior notes with higher interest expenses contributed to a further decline in share prices, reaching a recent low of $8 [11][10]