ABR-PE — Arbor Realty Trust, Inc.

Summary of Arbor Realty Trust, Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics:

• Distributable Earnings: $46.3 million, or $0.22 per share, excluding one-time losses.
• Total Delinquencies: $570 million, down 11% from the previous quarter.
• OREO Assets: Approximately $500 million, contributing to total nonperforming assets of $1.1 billion.
• Annual Income Drag: Estimated at $80 million to $100 million, translating to $0.40 to $0.48 per share.
• Annual Earnings: Over $200 million for 2025, with a maintained book value despite market pressures.

2. Strategic Updates and Business Highlights:

• Focus on resolving nonperforming and subperforming loans to improve income streams, with a potential to add back $100 million to annual run rate.
• Strong performance in the agency platform with $1.6 billion in Q4 origination, totaling $5 billion for 2025, a 13.5% increase year-over-year.
• Growth in the servicing portfolio, now over $36 billion, generating predictable annual income of approximately $128 million.
• Active stock buyback program with $120 million remaining, purchasing $20 million at an average price of $7.40 (64% of book value).
• Continued focus on legacy assets, with a strategy to reset loan rates to current market conditions.

3. Forward Guidance and Outlook:

• Anticipation of resolving $100 million to $150 million in delinquencies by March 2026, with a similar amount expected in the following 90 days.
• Projected agency origination volumes for 2026 to match or exceed 2025 levels, depending on interest rates and market conditions.
• Expectation of a potential increase in earnings as resolutions progress, with Q1 2026 anticipated to be a low watermark due to seasonal factors.

4. Bad News, Challenges, or Points of Concern:

• Continued drag on earnings from nonperforming assets, with expectations of additional delinquencies as the company navigates through the bottom of the cycle.
• Competitive pressures in the lending market, particularly in balance sheet lending, which is leading to concessions on credit and structure.
• Geographic weaknesses noted in markets like Houston and Atlanta, with specific concerns about occupancy rates and economic conditions affecting properties.

5. Notable Q&A Insights:

• Management expressed confidence in the SFR (Single-Family Rental) business, noting no delinquent loans in this segment and strong institutional backing.
• Concerns about the impact of potential government regulations on institutional single-family home purchases were addressed, with management believing their build-to-rent focus would be unaffected.
• Discussion on servicing fee compression due to market dynamics, with expectations that this trend may stabilize by the end of 2026.
• Management reiterated a long-term perspective on dividends, emphasizing the importance of resolving delinquencies to restore earnings levels.

Overall, Arbor Realty Trust is navigating a challenging environment with a clear strategy to resolve nonperforming assets while maintaining strong origination volumes across its diversified business lines. The outlook remains cautiously optimistic, contingent on effective execution of their resolution strategies and market conditions.