One of my favorite mREITs Arbor Realty Trust (ABR) has posted earnings for the quarter ending 6/30/2022. With the release they also raised their common dividend.
Earnings were slightly soft, but all things considered they remain respectable.
ABR generally ‘plays’ in the apartment end of the market, which should continue to remain a fairly solid area of the residential marketplace.
The company has 3 perpetual preferreds outstanding which are all trading with current yields in the 7.7% area. You can see them here. All 3 issues have 1st call dates in 2026.
“Arbor Realty Trust (NYSE:ABR) has priced its upsized offering of $250M aggregate principal amount of its 7.50% convertible senior notes due 2025” per Seeking Alpha. That is higher yield than most of their preferreds.
https://seekingalpha.com/news/3865433-arbor-realty-trust-prices-upsized-250m-debt-offering
Definitely concerning – plus these are 3 year notes and convertible.
ARB is not the ordinary mREIT. Most importantly they originate all their loans and have exceptional management that knows how to make the most from it. The fact that they are mostly apartments makes it even better. It’s unfortunate that most investors only look at the mREIT label and that is as far as they go.
You must have very high expectations if you consider their earnings as being “slightly soft”. I personally find their results as outstanding as they are every quarter. One of my largest and best investments that I have owned for many years and only which all my holding would have done as well.
William E – I just quickly glanced at them. I guess reading mREIT financials leads to different conclusions.
Tim, William,
Thanks for this. I also hold ABR. As far as I can tell, most of the other mREITs lend long (either directly or indirectly), borrow short, and then do what they can to hedge away the interest rate risk. But ABR seems to match up their assets and liabilities pretty well. The vast majority of assets are short-term bridge loans on apartment buildings, and the liabilities (CLOs, etc).are of similar maturity, so there shouldn’t be much interest rate risk there. Further, ABR appears to take a relatively conservative approach to the book valuation of its mortgage servicing rights, which should provide reliable and stable future cash flows.
In addition, ABR weathered 2020 quite well, which wasn’t the case for many mREITs. I look at what they do and I try to figure out where it could go really wrong, and I can’t see where. Obviously, with the yield on the common at 9%+, most don’t share these views. My knowledge of these matters is quite limited, and if someone here could point what I am missing, it would be much appreciated