Let's turn now to the big tech story. We love the big tech stories that come out every day from Bloomberg News, deeply sourced, just great, fascinating stories. Really well done.This one goes to Wall Street's balance of power shifting. Big banks are roaring back as act As regulation eases, lending surges and private credit giants lose some of their luster there. Bloomberg's Catherine Chu Glinski helps lead our investing coverage.She is the pride of the blame Emory University, but she leads our coverage on a ...

Core Viewpoint - Arbor Realty Trust, Inc. has successfully closed a $1.05 billion commercial real estate mortgage loan securitization, issuing approximately $933 million in investment grade-rated notes and retaining subordinate interests of about $117 million [1][4]. Group 1: Securitization Details - The securitization includes collateral of $1.05 billion, which consists of approximately $123 million in capacity to acquire additional loans within 180 days from the closing date [1]. - The investment grade-rated notes have an initial weighted average spread of 1.82% over Term SOFR, excluding fees and transaction costs [2]. - The facility allows for a replenishment period of approximately two years and six months, enabling reinvestment of principal proceeds from repayments into qualifying replacement assets [2]. Group 2: Financial Strategy - Arbor intends to maintain ownership of the portfolio of real estate-related assets through the securitization vehicle until maturity and plans to account for it as a financing on its balance sheet [4]. - Proceeds from the securitization will be utilized to repay existing borrowings, cover transaction expenses, and fund future loans and investments [4]. Group 3: Company Overview - Arbor Realty Trust, Inc. is a nationwide real estate investment trust and direct lender, specializing in loan origination and servicing for various commercial real estate assets [6]. - The company manages a multibillion-dollar servicing portfolio and is recognized as a leading lender for government-sponsored enterprise products [6].

Core Viewpoint - Arbor Realty Trust reported mixed quarterly results for Q2 2025, with Non-GAAP distributable earnings per share exceeding analyst expectations, but significant declines in revenue and GAAP earnings per share [1][5][11] Financial Performance - Non-GAAP distributable earnings per share were $0.25, surpassing the estimate of $0.23, but down 44.4% from $0.45 in Q2 2024 [2] - GAAP diluted earnings per share fell to $0.12, a decrease of 52.0% from $0.25 in Q2 2024 [2] - Revenue (GAAP) was reported at $64.5 million, a substantial drop from $297.2 million in Q2 2024 [1][2] - The quarterly dividend was reset to $0.30 per share, down from $0.43 in Q2 2024, reflecting reduced earnings [1][12] Business Model and Focus Areas - Arbor Realty Trust operates a dual-segment business model, focusing on Structured Loan Origination and Investment, and Agency Loan Origination and Servicing [3] - The structured segment targets bridge loans, mezzanine lending, and preferred equity for various real estate types, while the agency segment partners with GSEs for agency-backed financing [3] Operational Highlights - Loan originations in the agency business rebounded to $857.1 million, with Fannie Mae originations nearly doubling from the previous quarter [6] - The structured lending platform originated $716.5 million, a slight decline from the previous quarter [7] - Non-performing loans (NPLs) decreased to $471.8 million, but asset quality metrics remain under pressure [7][8] Credit and Risk Management - The company booked an allowance for loan losses of $243.3 million and a provision for credit losses of $19.0 million [8] - Management modified eight loans totaling $251.9 million, with most now marked as current after borrower recapitalizations [8] Product and Segment Trends - Agency servicing revenue reached $27.4 million, with mortgage servicing rights income at $10.9 million [9] - The structured portfolio had a weighted average yield of 7.95%, though yields declined slightly due to stress from legacy non-performers [9] Liquidity and Financing - The company ended the quarter with $255.7 million in cash, down from $503.8 million at year-end 2024 [10] - New financing activities included an $801.9 million securitization deal and a $500.0 million issuance of senior unsecured notes, adding about $200 million of liquidity [10] Forward-Looking Statements - Management views 2025 as a transitional year with heightened credit costs and ongoing resolution of problem loans [11] - Distributable earnings are expected to remain at the lower end of the $0.30-$0.35 per share range for 2025 [11]

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]

Financial Data and Key Metrics Changes - FBRT reported GAAP earnings of $24.4 million or $0.21 per fully converted common share for Q2 2025, with distributable earnings of $29 million or $0.27 per fully converted share [16] - The average risk rating at quarter end was 2.3, with 137 of 145 positions rated two or three, and watch list loans represented only 5% of the total portfolio [9][12] - The company's liquidity position was $5.1 billion, including $77 million in unrestricted cash [11] Business Line Data and Key Metrics Changes - The company originated $61 million in new loan commitments, primarily in multifamily assets, which was a deliberate reduction to maintain a higher cash balance ahead of the NewPoint acquisition [6][7] - FBRT sold three multifamily assets totaling $56 million, which was above the principal basis at the time of foreclosure [10] - The core portfolio ended the quarter at $4.5 billion across 145 loans, with multifamily making up 74% of the portfolio [24] Market Data and Key Metrics Changes - The multifamily fundamentals are improving, with new supply slowing and rent growth reemerging in certain markets [28] - The company noted that credit markets are flush with liquidity, indicating a strong demand for shorter duration credit [26] - The average cost of debt on the core portfolio is SOFR plus 2.3%, with 77% of financing coming from CLOs [19][20] Company Strategy and Development Direction - The acquisition of NewPoint is seen as a significant milestone, expanding FBRT's platform within multifamily lending and enhancing income stability [12] - The company aims to grow distributable earnings through calling CLOs, reinvesting equity from the REO portfolio, and contributions from NewPoint [17][18] - FBRT's stock is trading at a discount to book value, attributed to concerns over dividend coverage and asset quality [13][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the legacy portfolio, stating that losses near the implied $450 million level are highly unlikely [38] - The company anticipates a period of acceptance in the market, where investors will recognize the need to mark loans appropriately [78] - Management expects NewPoint's earnings contribution to grow significantly over time, correlating with agency and FHA origination volume [22][23] Other Important Information - The company has made significant progress on its REO portfolio, with 10 out of 19 properties sold above the principal balance at the time of foreclosure [33] - The migration of servicing for FBRT's loans to NewPoint is expected to yield savings and additional servicing revenue [81] Q&A Session Summary Question: Have you resumed originations and at what pace since the closing of NewPoint? - Management confirmed that originations have resumed and are expected to grow quarter over quarter, targeting a portfolio size of around $5 billion to maximize dividend coverage [41][44] Question: What are you seeing in terms of spreads compared to a year ago? - Management noted that spreads are tighter by 100 to 125 basis points compared to a year ago and 25 to 50 basis points tighter than 60 to 90 days ago [46] Question: Do the CLOs need to be replaced with other debt? - Management indicated that calling the CLOs would allow for leveraging back up to optimal levels, freeing up cash for more originations [50][52] Question: What is needed for NewPoint to ramp origination activity? - Management stated that expanding the net spread across the country and increasing the origination staff would drive volume growth [75] Question: Is there a savings related to migrating FBRT's loans over to NewPoint's servicer? - Yes, management confirmed that there would be savings from cutting out markups and benefiting from float on cash reserves [81][84]

Financial Data and Key Metrics Changes - The company reported distributable earnings of $57.3 million or $0.28 per share, and $0.31 per share excluding one-time realized losses from the sale of two REO assets [19][12] - The return on equity (ROE) for the first quarter was approximately 10% [19] - The company anticipates distributable earnings guidance of $0.30 to $0.35 per quarter for 2025 [19][12] Business Line Data and Key Metrics Changes - The balance sheet lending platform originated $370 million in new bridge loans during the first quarter, with a target of $1.5 billion to $2 billion for 2025 [13][14] - The agency business had a slow first quarter, producing $6 million in originations and $731 million in loan sales, maintaining strong margins of 1.75% [25] - The investment portfolio grew to $11.5 billion at March 31, with an all-in yield of 7.85% [26] Market Data and Key Metrics Changes - The company experienced a significant backup in long-term rates, creating headwinds for originations [7][8] - The delinquency rate decreased by 20% to $654 million as of March 31, compared to $819 million at December 31 [22] - The average cost of debt decreased to approximately 6.82% at March 31 from 6.88% at December 31 [28] Company Strategy and Development Direction - The company is focused on resolving REO assets and delinquencies, viewing 2025 as a transitional year [18][12] - The strategy includes leveraging efficiencies in the securitization market and maintaining strong banking relationships to drive future earnings [5][7] - The company aims to reposition underperforming assets to increase occupancy and net operating income (NOI) over the next 12 to 24 months [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is characterized by volatility and uncertainty, particularly regarding interest rates [8][9] - There is optimism about potential rate reductions, which could positively impact agency volumes and earnings [9][12] - The management believes that the company is well-positioned to grow earnings and dividends again in 2026 if current challenges are addressed [12][18] Other Important Information - The company has successfully modified $38 million of loans and brought $39 million of loans back to performing status [10] - The company expects REO assets to increase to between $400 million and $500 million, with plans to aggressively manage and reposition these assets [52][54] - The book value at the end of the quarter was reported at $11.98 [77] Q&A Session Summary Question: What is the outlook for the Bridge portfolio growth in 2025? - Management expects net growth in the Bridge portfolio, targeting $1.5 billion to $2 billion in new business, with runoff projected between $1.5 billion to $3 billion depending on interest rates [32][33] Question: What were the primary weaknesses in the 2022 and 2023 vintages? - Management indicated that the multifamily sector experienced a long period of growth without corrections, leading to poor performance due to rising rates, economic vacancy issues, and increased competition from inexperienced entrants [39][41] Question: What is the current liquidity situation and expectations for NPLs and REO? - The company has $325 million in cash and liquidity, with expectations for REO to rise to between $400 million and $500 million, while NPLs are projected to decrease as assets are repositioned [48][54] Question: How much of the reported income was non-cash? - The company reported $15.3 million of PIK (payment-in-kind) interest during the quarter, which is a moving number based on loan modifications and performance [66] Question: What is the company's stance on stock buybacks? - Management emphasized the importance of liquidity and will evaluate stock buybacks based on market conditions and opportunities for capital growth [78]

Financial Data and Key Metrics Changes - The company reported distributable earnings of $57.3 million or $0.28 per share, and $0.31 per share excluding one-time realized losses from the sale of two REO assets [19] - The return on equity (ROE) for the first quarter was approximately 10% [19] - The company anticipates a quarterly distributable earnings guidance of $0.30 to $0.35 for 2025 [19] Business Line Data and Key Metrics Changes - The balance sheet lending platform originated $370 million in new bridge loans during the first quarter, with a full-year guidance of $1.5 billion to $2 billion [12][13] - The agency business had a slow first quarter, producing $6 million in originations and $731 million in loan sales, maintaining strong margins of 1.75% [25] - The investment portfolio grew to $11.5 billion at March 31, with an all-in yield of 7.85% [26] Market Data and Key Metrics Changes - The company experienced a reduction in delinquencies, down 20% to $654 million at March 31 compared to $819 million at December 31 [22] - The average yield on core investments decreased to 8.15% from 8.52% due to a reduction in the average SOFR rate [26] - The overall net interest spread in core assets decreased to 1.26% from 1.44% [28] Company Strategy and Development Direction - The company is focused on resolving REO assets and delinquencies, viewing 2025 as a transitional year to set up for growth in 2026 [18] - The company plans to leverage efficiencies in the securitization market to drive higher returns on capital [6][18] - The strategy includes repositioning underperforming assets to improve occupancy and net operating income (NOI) [11] Management's Comments on Operating Environment and Future Outlook - Management noted significant uncertainty and volatility in the interest rate environment, impacting the ability to predict future performance [8] - The company expects continued challenges in the short term due to the drag on earnings from REO assets and delinquencies [12] - If interest rates decrease, it could positively impact the company's ability to convert non-interest earning assets into income-producing investments [11] Other Important Information - The company has successfully modified $38 million of loans and brought $39 million of loans back to full performance [10] - The company took back $197 million of REO assets in the first quarter, with expectations to increase REO assets to between $400 million and $500 million [52] - The company has managed to deleverage its business by 30%, reducing the leverage ratio to 2.8:1 [29] Q&A Session Summary Question: Outlook for the Bridge Loan Portfolio - Management expects net growth in the bridge loan portfolio in 2025, targeting $1.5 billion to $2 billion in new business [32][34] Question: Reasons for Poor Performance in Previous Vintages - Management attributed poor performance to a combination of market corrections, economic factors, and inexperienced management in the multifamily sector [40][42] Question: Liquidity and NPLs Expectations - The company currently has $325 million in cash and liquidity, with expectations for NPLs to decrease as they work through the REO assets [48][54] Question: Non-Cash Income and Interest - The company reported $15.3 million of non-cash interest during the quarter, which is a moving number based on loan modifications [65][66] Question: Interest Rate Environment - Management discussed the impact of interest rates on business performance, noting that lower rates could enhance earnings potential [72][74]