Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Arbor Realty Trust, Inc. (NYSE:ABR)

Q2 2010 Earnings Call Transcript

August 6, 2010 10:00 am ET

Executives

Paul Elenio – CFO

Ivan Kaufman – CEO

Analysts

David Chiaverini – BMO Capital Markets

Steve DeLaney – JMP Securities

Lee Cooperman – Omega Advisors

Bruce Harting – Barclays Capital

Operator

Good day ladies and gentlemen, and welcome to the second quarter 2010 Arbor Realty Trust earnings conference call. My name is Chanole and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.

(Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Mr Paul Elenio, Chief Financial Officer. Please proceed.

Paul Elenio

Okay. Thank you, Chanole, good morning everyone, and welcome to the quarterly earnings call for Arbor Realty Trust. This morning, we will discuss the results for the quarter ended June 30, 2010. 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 risks 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 future performance, taking into account the information currently available to us.

Factors that could cause actual results to differ materially from Arbor’s 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.

Now that the safe harbor is behind us, I would like to turn the call over to Arbor’s President and CEO, Ivan Kaufman.

Ivan Kaufman

Thank you, Paul, and thanks to everyone for joining us on today’s call. Before Paul takes you through the second quarter results, I would like to talk about some of our significant accomplishments during the quarter, and how the successful execution of our strategy has positioned the company favorably for the future.

Throughout the past three years and especially over the last several quarters, we have worked diligently to execute our strategy of managing our portfolio, maximizing our liquidity, and repurchasing our debt at deep discounts when available. As announced last month and discussed in detail on our July 12 call, the completion of the retirement of our debt with Wachovia at a discount for a gain of $157 million was a critical component in completing our goal of restructuring a significant amount of our balance sheet.

This milestone transaction has eliminated nearly all of our short-term recourse debt and it generated a significant gain and increase in book value per share. It has also increased our core earnings substantially through a significant reduction in our interest expense, increased our operating flexibility and positioned the firm well to actively participate in the accretive opportunities that are becoming available on the market.

We are extremely pleased with the way we strategically manage the completion of the Wachovia debt retirement through a combination of corporate liquidity, and the utilization of other debt facilities. This eliminated the need to raise capital or paying significant additional long-term recourse debt in order to complete the transaction, and allowed us to retain a substantial amount of value in the form of unencumbered assets.

During the quarter, we also continued to selectively repurchase our CDO debt at discount purchasing approximately $19 million of bonds for a price of approximately $6 million resulting in a net gain on early extinguishment of this debt of nearly $13 million. This adds to the string of success on these transactions that we have had recording $54 million of gains from the debt repurchases in 2009, and another $47 million in the first quarter of 2010, including the gain from the retirement of our trust preferred debt. We believe that there may be some more opportunities for us to repurchase our debt at discounts going forward, and we will continue to evaluate these transactions based on availability, pricing and liquidity.

We continue to focus on maximizing liquidity and using that liquidity strategically to meet corporate objectives. As of today, we have approximately $40 million of cash on hand, around $25 million of cash collateral posted against our swaps, and approximately $195 million of unencumbered assets. We are also pleased with our ability to manage our CDO vehicles effectively receiving all of the cash distributions from these vehicles in 2009 and the first two quarters of 2010. And while there can be no assurances that our CDO vehicles will continue to cash flow in the future, we will remain focused on optimizing and utilizing these facilities by transferring assets, and originating new loans when available and appropriate.

As we have stated in the past several calls, the aim of our strategy culminating with Wachovia’s debt retirement has been to improve the right side of our balance sheet, and substantially reduce leverage and recourse debt, all to position ourselves to return to our core commercial lending business and take advantage of opportunities in the market. During the second quarter, we originated two loans totalling $5 million with a weighted average unleveraged yield of approximately 11%, have committed to fund approximately $10 million of additional loans with an average yield of around 10%, and continue to build our pipeline for new investments.

Clearly, the last three years have been extremely challenging and we are very happy to have made an entrance back into the core commercial lending business. Our experienced management team worked exceedingly hard in the phase of an unprecedented crisis, and we are extremely pleased with our ability to persevere.

Now, I would like to update you on our view of the market and the credit status of our portfolio. The environment over the last three years had cleared had an impact on every borrower and our portfolio as a commercial real estate fundamentals, the real estate values have remained weak for some time. We recorded $26 million of loan loss reserves during the quarter relating to 12 loans with an average outstanding balance of approximately $284 million. With that amount, $14 million were on loans, which we (inaudible) recorded reserves while $12 million were new reserves.

In addition, we recorded a recovery of approximately $1 million in full satisfaction of the loan that we have ignored. We now have $331 million in loan loss reserves at June 30 related to 33 loans with an outstanding balance of approximately $739 million. We also refinanced and modified $19 million of loans and extended $101 million of loans during the second quarter. At June 30, we had approximately $175 million of non-performing loans with a carrying value of approximately $75 million net of reserves down from $200 million at March 31 with a carrying value of around $80 million net of reserves. Of the $75 million net of non-performing loans on June 30, $6 million were sold in July and another $28 million of net assets are on the contract to be sold.

As you can see, the level of our loan reserves is down from last year’s pace for the second consecutive quarter primarily due to what we believe are some further signs that the market to commercial real estate is stabilizing. While we believe we are adequately reserved at this time, if real estate values of fundamentals decline for the remainder of 2010, this will likely result in additional delinquencies and losses. Accordingly, we will continue our strategy of focusing on strengthening our balance sheet, preserving liquidity, and aggressively managing our portfolio.

In summary, we are extremely pleased with our ability during this unprecedented crisis to restructure a significant amount of our balance sheet. This again includes maximizing our liquidity, restructuring a substantial amount of our portfolio, effectively managing our CDO vehicles, and retiring a significant amount of our debt at deep discounts. These significant accomplishments have produced large gains and increases in our equity value have nearly eliminated all of our short-term recourse debt and increased our core earnings going forward significantly.

We have also retained substantial value in the form of unencumbered assets and improved our operating flexibility greatly. This has positioned us well to return to our core lending business, which we have already started this quarter and to evaluate the opportunities that exist in the market, and explore potential new sources of capital to grow our business. Although this is still a difficult market, we are very excited about the challenges and opportunities that lie ahead for the company.

I would now turn the call over to Paul to take you through some of the financial results.

Paul Elenio

Thank you Ivan. As noted in the press release, we had net income from the second quarter of $129.1 million or $5.05 per share. As in previous quarters, we did have a few large items that affected the numbers, the most significant of which is the $157 million gain net of fees and certain expenses from the retirement of $336 million of debt with Wachovia for a discounted payoff amount of $176 million. As Ivan mentioned, we were also successful in purchasing some of our CDO debt at significant discounts during the second quarter recording a gain of approximately $13 million from these transactions as well.

In accordance with the management (inaudible) with our manager, these gains and all other gains recorded as a result of discounted debt repurchases during 2010 are included in the calculation of the incentive management fee. The calculation of the incentive management fee for 2010 will not be finalized until the end of the year, and as a result, no incentive fee was recorded in the second quarter.

During the quarter, we strategically sold approximately $47 million of our available to sell securities held in our balance sheet as of March 31 for $36 million of cash resulting in a loss of around $10 million. The cash generated from these sales was used as part of the amount needed to close on the debt repurchase for Wachovia on June 30. We also recorded an impairment charge during the quarter of approximately $7 million related to the one remaining available to sell security we did not sell during the quarter, which is now being carried on our balance sheet at June 30 at a value of $1 million.

As we disclosed previously in the first quarter, we reclassified these securities now for sale from health and maturity and recorded these market value changes as a reduction of our equity and other comprehensive loss. So although the sale and write-down of these securities in the second quarter resulted in a loss of approximately $17 million, this had no impact on our book value during the quarter and again generated a substantial amount of cash that was used to facilitate the Wachovia debt repurchase.

We also recorded $25 million of loan loss reserves net of $1 million recovery during the quarter, and we now have $331 million of loan loss reserves on 33 loans with a UPB of around $739 million at June 30. As Ivan mentioned, this environment has clearly had an impact on every borrower in our portfolio and we will continue to take a proactive approach in evaluating our portfolio, and actively managing and monetizing our assets.

Additionally, we continued to effectively execute our strategy of retaining equity value due to the retirement of our debt instruments at deep discounts. We are very pleased with our success in retiring the Wachovia debt and more CDO debt this quarter on the heels of retiring $114 million of trust preferred debt, and repurchasing $28 million of CDO debt at significant discounts in the first quarter. Further, we were able to complete the Wachovia transaction with a combination of corporate liquidity and utilization of other debt facilities. As a result, our current cash position is approximately $40 million and we now have approximately $195 million of unencumbered assets net of loan loss reserves recorded as of June 30. We did obtain $26 million of new term debt with a rate of 500 basis points of LIBOR for a term of six months, which is secured by two of our loans.

We do expect the two loans securing this facility to payoff prior to the maturity of the facility, and such proceeds will be used to repay the debt. We believe there may be similar opportunities for us to repurchase our debt at discounts going forward, and we will continue to evaluate these transactions based on availability, pricing, and liquidity. The completion of these transactions have significantly improved our balance sheet and increased book value per share. As a result, the second quarter debt retirements our book value per share increased to $9.46 at June 30 from $4 at March 31, 2010.

Adjusted book value per share also increased to $14.08 at June 30, up from $8.28 at March 31, 2010 adding back deferred gains and temporary losses on our swaps. These book value numbers do not take into account any dilution from the potential exercise of the warrants issued to Wachovia as part of the 2009 debt restructuring. Additionally, we have between cash on hand, cash posted against our swaps, and our unencumbered assets net of reserves as of June 30 approximately $260 million of equity and in our CDOs as of June 30 of approximately $250 million net of loan loss reserves.

Looking at the rest of the results for the quarter, the average balance in our core investments declined by about $103 million from last quarter to around $2 billion mainly due to payoffs, paydowns, and the sale of some of our bonds during the first and second quarter. The yield for the quarter on these core investments is around 5.20% compared to 4.67% for the prior quarter. Without some non-recurring items such as additional interests received in the second quarter on a loan that exceeded our investment basis in the assets, and reductions in interest income related to the uncollectibility of interest on impaired, non-performing and restructured loans in the first quarter, the yield on these core assets was flat at around 4.90% for both the first and second quarters.

Additionally the weighted all-in yield on our portfolio was around 4.81% at June 30, 2010 compared to 4.75% at March 31, 2010. This increase was mainly due to the payoff of a non-performing loan in the second quarter with a UPB of approximately $70 million, which had a net carrying value of approximately $35 million. The average balance in our debt facilities decreased by around $105 million from last quarter to around $1.6 billion, which was mainly due to the completion of the retirement of our trust preferred debt in the first quarter combined with additional payoffs and paydowns in the second quarter.

The average cost of funds in our debt facilities was approximately 4.04% for the second quarter compared to 4.28% for the first quarter. Excluding the unusual impact on interest expense from our swaps, our average cost of funds remained relatively flat from quarter to quarter at approximately 4.29% for the second quarter compared to around 4.23% for the first quarter. In addition, our estimated all-in debt cost was around 4.17 at June 30 compared to around 4.25 at March 31. This decrease in debt cost is mainly due to the reduction in interest expense going forward from the retirement of the Wachovia debt facility on June 30.

So overall normalized net interest spreads in our core assets decreased to approximately 0.60% this quarter from 0.65% last quarter primarily due to the full impact of reduced interest rates and refinanced modified loans in the first quarter, partially offset by higher rates on second quarter originations, and a decrease in our non-performing loans. As we mentioned several times, the retirement of the Wachovia debt at a significant discount will have a substantial effect on our net interest income going forward, and we estimate a reduction in interest expense of around $7 million to $8 million annually from this transaction.

Next, our overall leverage ratios were around 72% on our core assets and around 81% including the trust preferred’s debt for the second quarter compared to 70% and 82% respectively in the first quarter, and our overall leverage ratios on a swap basis were 3.121 at June 30 compared to 5.821 at March 31. This significant decrease is due to the reduction in debt from the successful retirement of the Wachovia facilities.

Other expenses were up from last quarter primarily due to increased professional fees and stock-based compensation from the issuance of 90,000 fully vested shares to our independent directors in April. Looking at the balance sheet, there were no significant changes compared to last quarter other than as we mentioned earlier, the reduction in cash available to sell securities and notes payable, all of which are largely due to successful retirement of the Wachovia debt.

Lastly, our portfolio statistics as of June 30 showed about 63% of the portfolio was variable rate loans and 37% of fixed. Our product type about 59% of bridge loans, 13% junior participations, and 28% of the portfolio is made up of mezzanine and preferred equity. By asset class, 37% is multi-family, 30% is office, 18% hotel, 9% land, and 1% condo, all of which are relatively unchanged from the prior quarter. Our loan to value was around 92%, our weighted average median dollars outstanding was 65%, and geographically we have around 35% of our portfolio concentrated in New York City.

That completes our prepared remarks for this morning. I will now turn it back to the operator to answer any questions you may have at this time. Operator?

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Your first question comes from the line of David Chiaverini of BMO Capital Markets.

David Chiaverini – BMO Capital Markets

Good morning. Well done with the debt payoff, that was very accretive to book values (inaudible), related to that, how much will incentive fee be at the end of the year, I assume that is going to be recorded in the quarter?

Paul Elenio

Hi David, this is Paul. As we said earlier and we stated in our press release this morning, the incentive fee if any is calculated on the basis of a full year’s earnings for 2010. So, until we get to the end of the year, any consideration of the amount of the incentive fee or for that matter whether incentive fee will be earned is somewhat speculative. What we told people though and what you will see in our Q that will be filed today, it is obviously the gaining of the Wachovia transaction is an important part of that calculation. We believe the hurdle rate on the incentive fee to be around $40 million as of today to place out that way for the rest of the year.

So it is hard for us to speculate on what the incentive fee could be if any because a lot depends on what the remaining results will be for the rest of the year, and some of the things that obviously factor into that are whether there will be any or how much in loan loss reserves we have and what effect the market we have with continuing decline in real estate on our performance of our assets as well.

David Chiaverini – BMO Capital Markets

So its formula base – and you mentioned the hurdle rate is $40 million, now is that $40 million of earnings any amount of earnings above $40 million will then be object to – could you just remind me what that formula is?

Paul Elenio

Sure. The formula is the manager earns an incentive fee equal to 25% of every dollar over the hurdle rate. So if the hurdle rate is $40 million at the end of the year, we are saying that is what it is as of June 30, if it stays at $40 million till the end of the year. Adjusted FFO that is calculated in management agreement, which is really your net income just adding up some depreciation, to the extent that that number for the year exceeds the $40 million, then the difference between those two numbers at 25% would be what the manager would earn in incentive fee.

David Chiaverini – BMO Capital Markets

Got you, got you and it is based on net income – in fact when you say over $40 million we are talking about net income to come in?

Ivan Kaufman

Yes it is really adjusted FFO but the only adjustment really is depreciation. So you can look at net income, add back depreciation, and that will be close to your number.

David Chiaverini – BMO Capital Markets

Got you, yes the depreciation is below, okay and how much recourse debt remains and when does it mature?

Paul Elenio

Sure. The short-term recourse debt, all we have left in short-term recourse debt is the $26 million of new term debt facility we put on as part of the completion of the Wachovia facility. That expires at the end of the year, was temporary debt that was used to finance a few assets that we believe we have a government take out lined up for, so we expect that those assets will repay from now until the end of the year hopefully in the September, October range and that there will be more than enough cash from those refinances to pay off that line. So we expect that we will not have any short-term recourse debt left on our balance sheet by the end of the year once we are able to pay off those lines.

Additionally, those two loans have an equity value of somewhere between $10 million to $15 million above the hair cut that we have got on the debt. So if we are successful in getting the take out at the proceed level, we think we can, we could also not only pay off the $26 million of debt but recover somewhere of $10 million to $15 million of equity value from those assets.

David Chiaverini – BMO Capital Markets

Okay, what recourse debt aside from the $26 million recourse debt –

Paul Elenio

The only other recourse debt on the balance sheet, which we view as equity capital are the trust-preferred securities, which as of the balance sheet are about $157 million. But again those are 30-year instruments with really no covenants and really we view it and I think most of the investment community views it as equity like capital.

David Chiaverini – BMO Capital Markets

Okay and then on the new originations, the two loans with the 11% yield and the one loan with the 10% yield, are those bridge loans?

Ivan Kaufman

Yes, a few of them are bridge loans and a couple of them are mezzanine loans.

David Chiaverini – BMO Capital Markets

What is the average term length of –

Ivan Kaufman

I believe they are between two and three years.

David Chiaverini – BMO Capital Markets

Okay, thanks a lot.

Ivan Kaufman

Thanks David.

Operator

Your next question comes from the line of Steve DeLaney of JMP Securities.

Steve DeLaney – JMP Securities

Thank you and good morning, and Ivan and Paul congrats on what looks to be like a transformational type of quarter for Arbor.

Ivan Kaufman

Thank you Steve.

Steve DeLaney – JMP Securities

Back on David’s question of the two new CRE loans, were those made within the CDOs you think restricted cash or were they outside of the CDOs?

Ivan Kaufman

One of the loans was actually managed in the manager when we were not in a position in the REIT to make the loan a couple of months ago. We had an opportunity to acquire it. When the REIT acquired it, it acquired it I believe directly into the CDO. So the manager owned it for probably 60 days and then the REIT bought it and the vehicle it used to buy was right into the CDO.

Steve DeLaney – JMP Securities

Okay.

Ivan Kaufman

I believe some of the other loans, the other loans that we originated are unlevered, it may be moved into the CDOs, we (inaudible) in the CDO. So clearly it is our strategy to originate loans and need to get leverage outside the CDOs when available and also to use our cash as a warehouse facility until there is room in the CDOs, which we are anticipating some payoffs when there are payoffs to slide these into the CDOs.

Steve DeLaney – JMP Securities

Okay great, that should segue into the unencumbered assets, I mean you mentioned Ivan $195 million, and I think $22 million of that in June was cash. So should we assume the other $170 million are basically commercial real estate loans rather than I think Paul said you pretty much cleaned up your free securities.

Ivan Kaufman

Yes, they are all real estate loans, and as Paul has mentioned somewhere on the contract to be sold and liquidated and as we do have availability in our CDOs, we will look to move some of those into CDOs where it is applicable as well.

Paul Elenio

And Steve, just to clear up, the whole $195 million are commercial real estate loans.

Steve DeLaney – JMP Securities

So they are, so that is – you have your cash plus you have your unencumbered loan, so am I reading that right?

Ivan Kaufman

That is correct.

Paul Elenio

Absolutely correct. So what we are saying is cash today is $40 million, and we have a $195 million of unencumbered assets net of the reserves we quoted on those assets as of June 30 and we have got $28 million of those assets already under contract to be sold.

Ivan Kaufman

And turned into converted into cash.

Steve DeLaney – JMP Securities

Great. And then looking at the test, the CDO cash flow test, I mean you are blowing out the interest coverage that is [inaubible] but the OC test, on a percentage basis looked to be rather tight and just mechanically the way these CDOs work, you obviously have collateral you could contribute, but is it basically your policy or the terms of the CDOs that until you fall below the test, you prefer to just keep the collateral, the excess collateral that gives you the flexibility, you keep that outside of the trust rather than sort of putting it in there earlier to boost up those percentages?

Ivan Kaufman

Well, managing the CDOs is a real complicated task and depending on the collateral we have available also depending on the loans that are in the CDOs, if they were defaulted, if they get cured, they get re-contributed as a whole, there is a whole myriad of techniques that we use in order to effectively manage those, and we do have collateral that we can contribute from time to time and rebuild some of those cushions. We can buy securities from time to time to rebuild some of those cushions, and we can cure some of our loans from time to time, and we have done a pretty good job at it. It is not easy but it is something that we will continue to work on.

Steve DeLaney – JMP Securities

Okay, and just the final thing, I appreciate the time you have given me, Paul, could you remind us on what the remaining reinvestment periods are for the three CDOs?

Paul Elenio

Sure. On CDO 1, the reinvestment period had ended last April. CDO 2, the reinvestment period goes until April 2011, and on CDO 3 the reinvestment period goes until January of 2012.

Steve DeLaney – JMP Securities

Okay, thanks a lot.

Paul Elenio; Thanks Steve.

Operator

Your next question comes from the line of Lee Cooperman of Omega Advisors.

Lee Cooperman – Omega Advisors

Yes, couple of my questions have been answered but just on this issues of unencumbered assets and cash, I think you said $90 million in cash, $195 million unencumbered assets, I am curious as to what you see in the way of new investment opportunities we could recycle that capital, and secondly, the book value of $9.46 adjusted book $14.08, I am curious if you guys ever view which number or what number you would like to focus on as might be the true underlying value of the business assuming you execute your business plan?

Paul Elenio

Sure Lee, this is Paul. First of all, the cash position as of today is $40 million. So $40 million, we have $25 million of cash as collateral posted against our swaps, so that is about $65 million in total and then $195 million of fee unencumbered assets. I would Ivan just speak quickly to your question about being able to convert some of them into cash and new originations, and then I will talk about the intrinsic value I think you asked about.

Ivan Kaufman

I mean, clearly it is our strategy to take on non-performing loans, which do not contribute any interest income to us to convert them into cash and then to redeploy the cash into interest earning loans. We began to get active in the market again to start originating. Lee as you know, we have been a very active originator in the marketplace for the last several years. We were the manager, we were one of the leading multi-family originators in this country originating over $1 billion of business.

So we still have a very active sales force, see a lot of opportunities, and we are very fortunate to have a good portfolio throwing off good yield, and we do not need to originate that much. So what we would like to do is be able to originate between $5 million and $20 million per month depending on the runoff and what we are very fortunate here to have is the ability to do smaller loans where it is not as competitive. So, if we do $2 million, $3 million, $4 million, $5 million, $6 million, and $7 million loans and do a couple of them a month, which we have a great infrastructure for, we think we can convert a lot of that non-interest earning assets and interest earning assets in very favorable yields.

So we are thinking between, somewhere between 8% and 15% depending on whether it is bridge or mezzanine, and then on top of that as we free up some capacity in our CDOs, we will move those loans into our CDOs and even get higher leverage yield. So that is clearly what our strategy is and you know it is good to be back to our core business to be able to produce those kinds of increased core earnings.

And Lee clearly we give both numbers the book value, the adjusted book value, we believe the adjusted book value is a real number, it will take some time to, as you said, execute the business plan and get that value in because a big part of the number are the decline in the value of our swaps. We believe we have the ability to wait to maturity of those slots and get that number to come back to zero taking up that book value as well as one of our equity kickers that was monetized on a cash differed basis, we need some time to bring that back into income. So we believe it is obviously much closer to the adjusted book value, will take time to get up to that number for the items we just mentioned.

Another way you could look at this is between cash on hand, cash posted against our swaps and the unencumbered assets as of June 30 as we said in our prepared remarks, we have about $260 million of value. Additionally, we have another right now as of June 30 about $215 million of value or equity in our CDOs with the reserves through June 30. Those numbers do not take into consideration our trust preferred debt securities but that is just another way to look at the value.

Lee Cooperman – Omega Advisors

Good, very helpful, thank you very much.

Ivan Kaufman

Thank you Lee.

Operator

And your final question comes from the line of Bruce Harting of Barclays Capital.

Bruce Harting – Barclays Capital

Summing that all up, are you prepared to give any guidance for next year on helping us model growth overall size yield or operating earnings, anything along those lines?

Paul Elenio

Bruce, hi it is Paul. I think it is a little early yet. We want to see where the balance of the reminder of the year comes out obviously in so difficult a market. We have made a re-entrance into the market as we mentioned and we will be selective. I think one of the things we can do is you can look at the balance sheet as of June 30, we have about $1.9 billion of assets, interest earning assets at a rate of about 4.81% which is what Paul dictated in the call, and then you have a debt of $1.3 billion at a rate of 4.17% that factors in the $7 million to $8 million of savings we believe we will have from Wachovia debt repurchases.

If you model that out and you layer in what our expense rolls down, what you think it will be, you will come out with a pretty good quarter earnings, what we can guide to is whether there will be any further deterioration in the market in our portfolio and what those originations will be going forward, but I think we will be in a better position to do that over the next couple of quarters.

Operator

Ladies and gentlemen, that concludes the Q&A session. I would now like to turn the call back over to your Chief Financial Officer, Mr Paul Elenio.

Ivan Kaufman

Thank you for participating on today’s call. We are very pleased to be able to return to our core lending business and look forward to our next quarterly call. Thank you.

Operator

Ladies and gentlemen, that concludes our presentation. Thank you for your participating. You may now disconnect. Have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Arbor Realty Trust, Inc. Q2 2010 Earnings Call Transcript
This Transcript
All Transcripts