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Arbor Realty Trust Inc. Message Board

  • lightforth lightforth May 16, 2011 10:53 AM Flag

    Ivan Answers Question about deployment of cash

    Bruce Harting – Barclays Capital

    Good morning, if you had to prioritize the, you know, the opportunities right now, you are seeing in the lending side, relative to available capital or cash flow versus having to raise any capital, how would you sort of prioritize that or rank that?

    And in terms of the opportunities, I mean, is there enough flow that you are seeing that the prioritizing that would allow you to sort of grow into higher earnings faster, just trying to get a sense of the urgency right now in terms of working with what you have on the balance sheet versus new opportunities out there? Thanks.

    Ivan Kaufman

    Bruce, it’s Ivan. That’s a great question and clearly that is a little bit of a moving target. Unfortunately it has been a positive moving target for us. We’ve had certain payoffs and certain monetization of a lot of our unencumbered assets which have allowed us to redeploy that capital.

    In addition, we’ve a pipeline that is building at a very healthy pace. I think we closed at about 30 million bucks last quarter and that should be increasing and our pipeline is growing very significantly. We’ve about 20 million of room in our CDOs and we have some other expected payoffs as well as significant cash as well as our leverage we’re working on as well.

    So and we are looking at monetizing some of our unencumbered assets. So, I think we have significant enough dry powder to handle that growing pipeline and really begin to return to core earnings. We did have some payoffs that were a little ahead of time, so we were a little surprised that some of those loans paid off so we are actively looking to re-invest that capital at higher rates.

    As I mentioned on our last call, we’re seeing bridge loans kind of priced in the LIBOR 5 and 6 range and we’re seeing mezzanine loans kind of in the mid-teens range as I thought our pipeline looks like. So what I would expect to see is a growing pipeline. Clearly, adequate cash to fund in the next couple of quarters and really work on getting those core earnings up and I think we’re really focusing on those core earnings for 2012.

    We would like to gets them a little bit earlier, but I think a lot has to do with where the loans pay off and how quickly we can redeploy that capital, but we do have significant cash capital capacity to handle the next couple of quarters based on growing pipeline.

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