Arbor Realty Trust axed its dividend by 30 percent after reporting a plunge in first-quarter profits and projecting the distress hurting earnings was far from over.

The REIT posted diluted earnings of 16 cents per common share, down nearly 50 percent from a year ago. It cut its dividend to 30 cents a share from 43 cents in the fourth quarter of 2024.

Arbor forewarned shareholders in February that smaller payouts were coming.

Its stock slipped just a few percentage points as it put a number to the news Friday morning, then advised analysts and investors to brace for a rocky 2025.

“We anticipate that the next nine months will continue to be very challenging,” CEO Ivan Kaufman said.

Arbor, a prolific bridge lender to value-add multifamily, has been wedged between a rock and a hard place for over a year.

Its floating-rate borrowers — many of them Sun Belt syndicators caught by the run-up in interest rates — fell delinquent on billions of dollars in debt as mortgage payments soared, rate caps expired, occupancy rates plummeted and renovations stalled.

At first, Arbor launched a herculean effort to modify those loans, many of them held in securitized pools known as commercial real estate collateralized loan obligations. As defaults mounted, it moved to take back assets as real estate-owned or REO on the thesis it could shore up operations and eventually, liquidate deals.

But the distress has yet to ebb, and Arbor’s earnings have suffered.

The REIT reported $654 million in delinquent debt in the first quarter, a 20 percent dip from the end of 2024, according to CFO Paul Elenio.

But overwhelmingly, the reduction isn’t the result of borrowers becoming current, it’s a byproduct of Arbor foreclosing.

For instance, Arbor reported $511 million in loans marked 60 or more days past due in the first quarter — an improvement from $652 million in the fourth.

But it took back $197 million of those 60-plus day delinquencies as REO, meaning it still has the bad debt on its books — just in another category.

The lender did modify a separate $38 million in delinquent loans. The improvements were offset by an additional $95 million that tripped into the 60-plus-day delinquency pot in the period.

All told, Arbor’s REO assets, most of them multifamily, topped $302 million in the quarter, marking a 76 percent increase from the end of 2024.

“We have continued to take back assets as REO and we expect to take back more over the next few quarters,” Elenio said, ballparking the number could hit $500 million.

“A lot of them are a heavy lift,” Kaufman said. “They are tying up liquidity.”

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The executives underscored that the $1.1 billion refinancing it recently scored from JPMorgan generated about $80 million of additional liquidity and that the firm feels “comfortable that we’ll have adequate liquidity.”

The kicker for Arbor is interest rates. Kaufman said the REIT would need to see rates come down before it could monetize distress assets. He said “Trumps tariffs” and the resulting uncertainty hasn’t helped.

The 10-year treasury yield, which drives commercial real estate borrowing rates, has whipsawed in the month since Trump’s tariffs took effect, and the Federal Reserve, which meets later this month, has signaled it will hold rates as is until the outlook around inflation clears.

“We expect, at least in the short term, for there to be a tremendous amount of volatility,” the CEO said.

Read more

Arbor secures $1.1B refi from JPMorgan to pay off CLO bondholders Arbor to cut dividend, projects more pain as syndicator crisis rocks earnings The business of multifamily lending: Inside Arbor Realty Trust’s books

This article originally appeared on The Real Deal. Click here to read the full story.

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