ABR - Arbor Realty Trust Inc. (ABR) Q1 2024 Earnings Call Transcript

2024-05-03 14:43:10 ET

Arbor Realty Trust, Inc. (ABR)

Q1 2024 Earnings Conference Call

May 03, 2024 10:00 AM ET

Company Participants

Paul Elenio - Executive Vice President & Chief Financial Officer

Ivan Kaufman - President & Chief Executive Officer

Conference Call Participants

Steve DeLaney - Citizens JMP

Stephen Laws - Raymond James

Brian Violino - Wedbush Securities

Jade Rahmani - KBW

Lee Cooperman - Omega Family Office

Rick Shane - JPMorgan

Crispin Love - Piper Sandler

Presentation

Operator

Good morning, ladies and gentlemen and welcome to the First Quarter 2024 Arbor Realty Trust Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the call over to your speaker today Paul Elenio, Chief Financial Officer. Please go ahead.

Paul Elenio

Okay. Thank you, James and good morning, everyone and welcome to the quarterly earnings call for Arbor Realty Trust. This morning we'll discuss the results for the quarter ended March 31, 2024. With me on the call today is Ivan Kaufman, our President and Chief Executive Officer.

Before we begin, I need to inform you that statements made in this earnings call may be doing forward-looking statements that are subject to risks and uncertainties including information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. These statements are based on beliefs, assumptions and expectations of future performance taking into account information currently available to us. Factors that could cause actual results to differ materially from Arbor's expectations in these forward looking statements are detailed in our SEC reports. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Arbor undertakes no obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after today or the occurrences of unanticipated events. I'll now turn the call over to Arbor's President and CEO, Ivan Kaufman.

Ivan Kaufman

Thank you, Paul and thanks to everyone for joining us on today's call. As you can see from this morning's press release, we had another very strong quarter, despite extremely challenging environment. Through our diversified business model with many countercyclical income streams, we once again generated distributable earnings in excess of our dividend with a payout ratio of around 90% from first quarter. This is clearly well above the performance from our peers, most of which are paying dividends out of capital or being forced to cut their dividend substantially.

And just as importantly, in a time of tremendous stress, we've managed to maintain our book value of the last 15 months while recorded reserves for potential future losses, which clearly differentiates us from everyone else in our peer group, the vast majority of which have experienced significant book value erosion in this environment.

On the last call, we gave guidance that the first two quarters of this year would be the most challenging part of the cycle and we are a period of peak stress. We also mentioned that if rates stay higher for longer that dislocation could potentially leak into third and possibly even the fourth quarter as well. And given the recent backup in rates combined with the Fed somewhat more hawk at you on the timing of potential rate cuts in 2024, we believe this is a distinct possibility and is something we have been preparing for and reflected in a way we’re currently operating our business.

As a result, we have been extremely active over the last four months and working through our balance sheet notebook. We’ve demonstrated tremendous patience and poise in dealing with the most recent wave of delinquencies. Again, our goal is to maximize shareholder value and very often it's not just the value of the collateral but the recourse provisions that we evaluate and determine how to approach each individual circumstance....

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