Arbor Realty Trust

Good morning, ladies and gentlemen, and welcome to the fourth quarter 2021 Arbor Realty Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that period, you will need to press star 1 on your telephone. If you want to remove yourself from the queue, please press the pound key. Please be advised that today's conference call is being recorded. If you should need operator assistance, please press star 0. I would now like to turn the call over to your speaker today, Paul Alenio, Chief Financial Officer. Please go ahead.

Okay, thank you, Ashley. Good morning, everyone, and welcome to the quarterly earnings call for Arbor Realty Trust. This morning, we'll discuss the results for the fourth quarter and year-end of December 31, 2021. 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 deemed forward-looking statements that are subject to risk 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 our beliefs, assumptions, and expectations of our future performance, taking into account the information currently available to us. Factors that could cause actual results to differ materially from our risk 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.

Thank you, Paul, and thanks to everyone for joining us on today's call. We are very excited today to discuss the significant success of We have been closing out what was an exceptional 2021, as well as our plans and outlook for 2022, which we are confident will be another outstanding year. As you can see from this morning's press release, we had another record quarter, and 2021's results reflect one of our best years as a public company. It is very important to continue to emphasize the value of having multiple products with diverse income streams. which has allowed us to consistently grow our earnings and dividends in all cycles while maintaining a very low dividend payout ratio. We strategically built an annuity-based business model, creating multiple income streams from a single investment. As a result, not only do we generate strong risk-adjusted returns on our capital, which positively affect our current earnings, more importantly, we are also building a much higher quality future earnings and dividend growth story by ensuring that our assets will provide us with multiple other products in the future. And this is one of the major differentiators of our business platform, which is why we strongly believe we should consistently trade at a substantial premium and much lower dividend yield than anyone in our peer group. In fact, with the recent pullback in the market, we are now trading at a dividend yield of approximately 8.8%, which is actually higher than the yield of our peer group for the first time in several years. This is despite the significant advantages of our business model and a long track record of consistent dividend increases compared to our peers, most of which have been unable to grow their dividends. We feel strongly that our current stock price in no way reflects the true value of our franchise, presenting investors with an unparalleled buying opportunity. As described in this morning's press release, our record fourth quarter results combined with a very positive outlook on the long-term growth of our platform has allowed us to once again increase our dividend to 37 cents a share. This is our seventh consecutive quarterly dividend increase and our tenth consecutive year with consistent dividend growth, putting us in a very elite class of companies, all while continuing to maintain the lowest dividend payout ratio in the industry. We built a premium operating platform that is focused on the right asset classes and a very stable liability structures. We have a thriving balance sheet, GSE agency, private label, single family rental, as well as an industry leader securitization platform that allowed us to produce a long track record of exceptional performance with consistent earnings and dividend growth. As a result, we've been the top performing REIT in our space for five consecutive years now in all the major performance metrics, including earnings and dividend growth, ROE, and total shareholder return. And again, we are very well positioned to succeed in every market cycle, which gives us great confidence in our ability to continue to have tremendous success going forward. Before we discuss the details of our quarterly results, I want to highlight some of our more notable 2021 accomplishments, which include generating substantial growth in our earnings, allowing us to increase our dividend four times, or 12%, to an annual run rate of $1.48 a share, delivering total shareholder return of 39% in 2021 and 221% cumulatively for the last five years, with an annualized return of 26%, achieving industry-leading ROEs of 90% for each of the last two years, producing record originations of 16 billion, a 76% increase over last year, originating 10 billion of new balance sheet business, increasing our portfolio 122% in 2021 to 12.2 billion, producing private label originations of 1.4 billion, a 276% increase over the last year, growing our servicing portfolio to $27 billion, a 10% increase from 2020, and a 34% increase over the last three years, closing four non-recourse CLO securitizations, totaling $5.2 billion, and two private label securitizations for $1 billion for our industry-leading securitization platform, and raising $1.7 billion of accretive capital to fund our balance sheet growth and increase our market cap to over $3 billion. Turning now to our fourth quarter performance, as Paul will discuss in more detail, our quarterly financial results were once again remarkable. We produced distributable earnings of $0.62 per share, which is well in excess of our current dividend, representing a payout ratio of around 60% for the fourth quarter and 70% for the full year 2021. In our balance sheet lending business, we have another outstanding quarter producing record volumes of $4.3 billion. We're a top balance sheet lender in the industry and are seeing tremendous growth and efficiencies as we continue to scale our platform. As a result, we grew our balance sheet book 122% in 2021, to $12.2 billion on record originations of $9.7 billion. And we have a very large pipeline, which gives us great confidence in our ability to continue to meaningfully grow our loan book in 2022. And again, these balance sheet loans create significant value for our platform. They're not only accretive to our current earnings and dividends, but also allow us to build a pipeline for two to three years of new GSE agency and private label loans that produce additional long-dated income streams, ensuring the long-term growth of our platform and creating high-quality earnings and dividends for the future. We have consistently been a leader in the CLO securitization market as financing our high-quality balance sheet portfolio with the appropriate liability structures continues to be one of our key business strategies. We are very successful in continuing to access the CLO securitization market in 2021 including closing our largest CLO to date, totaling $2.1 billion in the fourth quarter, as well as closing another $2 billion CLO just last week. The utilization of these vehicles has contributed greatly to our success by allowing us to appropriately match fund our assets with non-recourse, non-mark-to-market, long-dated debt, and generate attractive levered returns on our capital. We continue to experience strong growth in our GFC agency and private label business programs as well. We originated approximately $1.6 billion in agency loans in the fourth quarter and $1.9 billion including our private label business. Equally as important, we have a robust pipeline giving us confidence in our ability to continue to produce consistent agency volume in 2022. Our GFC agency platform continues to offer premium value as it requires limited capital and generates significant long-dated predictable income streams and produces significant annual cash flow. Additionally, our $27 billion GSE agency servicing portfolio, which has grown 10% in the last year, is mostly prepayment protected and generates approximately $121 million a year and growing in reoccurring cash flow, which is up 8%, from $112 million annually last year. This is in addition to the strong gain on sale margins we continue to generate from our originations platform, which combined with new and increasing servicing revenues will continue to contribute greatly to our earnings and dividends. And early this week, we were pleased to have closed our fourth private label securitization, totaling $490 million. which continues to demonstrate the strength and diversity of our versatile lending platform and tremendous securitization expertise. We also had a great year in our single-family rental platform. We produced approximately $900 million of volume in 2021, including approximately $400 million in the fourth quarter. Additionally, we currently have over $1 billion of additional deals in our pipeline making us optimistic about the growth opportunities in this segment of our business going forward. We are a leader in the built-to-rent space, which provides us with the opportunity to originate construction, bridge, and permanent loans on the same transactions. And again, similar to our balance sheet business, this platform provides us yet with a path to future transactions that will produce additional long-dated income streams. In reflecting on 2021, we had an exceptional year and clearly outperformed our peer group. We are the best performing REIT five years in a row, delivering a 26% annualized return over the same time period. We're also well positioned for continued success in 2022 through our unique multi-tiered annuity-based operating platform that provides us with a future annuity of high-quality, long-dated income streams, making us confident in our ability to continue to grow our earnings and dividends and significantly outperform our peers. I will now turn the call over to Paul to take you through the financial results.