Arbor Realty Trust, Inc. Q1 FY2026 earnings call

• Short seller attacks and related claims were baseless; pending investigations closed, class action lawsuit dismissed. • Progress in resolving non-performing and sub-performing loans, with $200 million new delinquencies and $300 million resolutions in Q1, expect ~$200 - $300 million more resolutions in Q2-Q3. • Focus on legacy portfolio, working on modifying ~$400 million of loans to receive back interest and improve terms. • Agency business had $708 million volume, seasonal slow start. • Balance sheet lending investment portfolio $12 billion, all-in yield 7.03%. • Single-family rental business impacted by housing bill uncertainty but expected uptick. • Construction lending closed $113 million in Q1 with $250 million expected in Q2.

In the agency platform, originated $708 million in volume with $671 million in loan sales, margins at 1.86% this quarter. Balance sheet lending business originated $400 million, bridge lending issued a CLO with attractive pricing. Single-family rental business had slow start but expected uptick. Construction lending closed $113 million in Q1 with more expected. Delinquencies ended Q1 at approx $500 million, REO assets around $500 million, total non-performing assets ~$1 billion, down $100 million from last quarter. Legacy portfolio ~$5 billion, $500 million delinquent, $1.5 billion performing, $3 billion modified. Dividend reset to $0.17 a share.

• Expect realized losses range of ~$15 - $25 million per quarter for remainder of year. • Second and third quarters likely low watermark, around 17 cents per share, with fourth quarter expected to grow. • Estimate second quarter around 15 cents per share due to unusual drag. • Expect REO assets between $250 - $300 million by end of 2026, with sales scheduled in Q2-Q4. • Agency business margins expected to fluctuate based on deal size and mix. • Dividend reset to $0.17 a share, expected to be covered from earnings with potential growth later.

• Geopolitical landscape leading to increase in 5 and 10-year rates, potentially pushing back timetable for resolving non-performing assets. • Uncertainty around housing legislation impacting single-family rental originations. • Competitive landscape in balance sheet lending business affecting returns. • Volatility in interest rates impacting the resolution timeline of non-performing assets and earnings.

Q: Comment on outlook for SFR originations picking up, types of borrowers, hold periods, financing terms.

A: Housing legislation consensus has changed, expecting uptick, dealing with institutional and some high net worth borrowers, typical 5-30 assets, hold periods, credit markets aggressive.

Q: How has 5- and 10-year move affected credit outlook?

A: Rate environment has slowed resolutions, adjusted dividend to reflect more difficult environment, expecting reserves in Q2-Q4.

Q: Bridge portfolio originations, loan size shift?

A: Moving to larger loan size, more selective with larger sponsors, market competitive.

Q: Gain on sale margin increase?

A: Due to product mix and deal size, first quarter had more Fannie Mae and smaller deals.

Q: REO CapEx, strategy?

A: $8 - $10 million CapEx in Q1, asset-specific, leaning towards accelerated disposals.

Q: REO resolution, financing for transactions?

A: Asset-specific, with capital commitments and guarantees.

Q: CECL reserve, normalized ratio?

A: CECL reserve $131 million, consider REO and delinquencies, range of reserves expected in next few quarters.

Q: Portfolio interest rate, cash pay rate?

A: 6.49% pay rate, ~25 basis points origination/exit fees, PIC interest on bridge loans has decreased.