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Arbor Realty Trust Inc.$11.62$.05.43%

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 Arbor Realty Trust Reports Fourth Quarter and Full Year 2017 Results and Increases Quarterly Dividend 11% to $0.21 per Share
   Friday, February 23, 2018 8:00:29 AM ET

Fourth Quarter Company Highlights:

- GAAP net income of $0.35 and AFFO of $0.25 per diluted common share

- Declares a cash dividend on common stock of $0.21 per share, a 24% increase in our dividend from a year ago and 11% higher than last quarter

Agency Business

- Segment income of $28.8 million

- Loan originations of $1.15 billion

- Servicing portfolio of $16.21 billion, up 4% from 3Q17 and 20% for 2017

Structured Business

- Segment income of $7.1 million (excluding a non-recurring charge)

- Portfolio growth of 27% on $786.0 million of loan originations, our strongest quarter of originations in over ten years

- Issued $143.8 million of 5.375% convertible senior notes with more than a 100 basis point rate reduction from our prior issuance less than a year ago

- Closed a ninth collateralized securitization vehicle totaling $480.0 million

Full Year Highlights:

- GAAP net income of $1.12 and AFFO of $1.04 per diluted common share

- Record loan originations of $6.31 billion, with $4.46 billion from the agency business, a 19% increase over 2016

- Significant structured portfolio growth of 48% on new originations of $1.84 billion

- Raised forward annualized common dividend rate to $0.84 per share, our third increase in the past four quarters

- Total return to shareholders of 25% for 2017

- Completed the full internalization of our management team

- Accessed accretive capital raising $157.5 million of convertible notes and $76.2 million of common equity with attractive terms

- Improved financing sources by adding three collateralized securitization vehicles totaling $1.21 billion with significantly reduced interest rates and increased financing capacity

- Generated a $7.1 million gain from the repurchase of TRUP debt

Arbor Realty Trust, Inc. (ABR ), today announced financial results for the fourth quarter and year ended December 31, 2017. Arbor reported net income for the quarter of $21.9 million, or $0.35 per diluted common share, compared to $20.5 million, or $0.40 per diluted common share for the quarter ended December 31, 2016. Net income for the year was $65.8 million, or $1.12 per diluted common share, compared to $42.8 million, or $0.83 per diluted common share for the year ended December 31, 2016. Adjusted funds from operations ("AFFO") for the quarter was $20.7 million, or $0.25 per diluted common share, compared to $15.1 million, or $0.21 per diluted common share for the quarter ended December 31, 2016. AFFO for the year was $83.9 million, or $1.04 per diluted common share, compared to $49.0 million, or $0.79 per diluted common share for the year ended December 31, 2016.

Agency Business

Loan Origination Platform

Agency Loan Volume ($ in thousands)
                        Quarter Ended                                                 Year Ended
                        December 31,                   September 30,                  December 31,                   December 31,
                        2017                           2017                           2017                           2016*
Fannie Mae              $              712,661         $              650,374         $              2,929,481       $              1,668,581
Freddie Mac                            441,901                        328,075                        1,322,498                      456,422
FHA                                    -                              18,273                         189,087                        24,630
CMBS/Conduit                           -                              -                              21,370                         -
Total Originations      $              1,154,562       $              996,722         $              4,462,436       $              2,149,633
Total Loan Sales        $              1,193,629       $              1,052,073       $              4,814,906       $              1,492,384
Total Loan Commitments  $              1,162,961       $              928,181         $              4,344,328       $              2,129,720
*Represents the period from the date of the Agency Business acquisition (July 14, 2016) through December 31, 2016. Loan sales exclude $418.2 million of loans that were acquired on July 14, 2016.

For the quarter ended December 31, 2017, the Agency Business generated revenues of $53.7 million, compared to $49.7 million for the third quarter of 2017. Gain on sales, including fee-based services, net was $17.7 million for the quarter, reflecting a margin of 1.48% on loan sales, compared to $17.1 million and 1.63% for the third quarter of 2017. Income from mortgage servicing rights was $20.6 million for the quarter, reflecting a rate of 1.77% as a percentage of loan commitments, compared to $18.9 million and 2.04% for the third quarter of 2017.

At December 31, 2017, loans held-for-sale was $297.4 million which was primarily comprised of unpaid principal balances totaling $292.2 million, with financing associated with these loans totaling $291.5 million.

Fee-Based Servicing Portfolio

The fee-based servicing portfolio totaled $16.21 billion at December 31, 2017, an increase of 4% from September 30, 2017, primarily as a result of $1.15 billion of new loan originations during the quarter. Servicing revenue, net was $9.3 million for the quarter, and consists of servicing revenue of $21.1 million net of amortization of mortgage servicing rights totaling $11.8 million.

             Fee-Based Servicing Portfolio ($ in thousands)
             As of December 31, 2017                   As of September 30, 2017
             UPB             Wtd. Avg. Wtd. Avg. Life  UPB             Wtd. Avg. Wtd. Avg. Life
                             Fee       (in years)                      Fee       (in years)
Fannie Mae   $    12,502,699 0.54 %    6.9             $    12,331,135 0.54 %    7.2
Freddie Mac       3,166,134  0.30 %    10.5                 2,732,537  0.29 %    10.9
FHA               537,482    0.17 %    19.6                 537,554    0.17 %    20.0
Total        $    16,206,315 0.48 %    8.1             $    15,601,226 0.48 %    8.3

Loans sold under the Fannie Mae program contain an obligation to partially guarantee the performance of the loan ("loss-sharing obligations"). At December 31, 2017, the Company’s allowance for loss-sharing obligations was $30.5 million which consists of general loss sharing guaranty obligations of $29.6 million, representing 0.24% of the Fannie Mae servicing portfolio, and $0.9 million of loss-sharing obligations on specifically identified loans with losses determined to be probable and estimable.

Structured Business

Portfolio and Investment Activity

Fourth quarter of 2017:

- 34 new loan originations totaling $786.0 million, of which 30 were bridge loans for $754.0 million

- Payoffs and pay downs on 12 loans totaling $200.1 million

- Portfolio growth of 27% from 3Q17

Year ended December 31, 2017:

- Loan origination volume increased 117% from 2016 and consists of 93 new loan originations totaling $1.84 billion, of which 84 were bridge loans for $1.68 billion

- Payoffs and pay downs on 64 loans totaling $924.1 million

- Portfolio growth of 48%

At December 31, 2017, the loan and investment portfolio’s unpaid principal balance, excluding loan loss reserves, was $2.66 billion, with a weighted average current interest pay rate of 6.28%, compared to $2.10 billion and 6.04% at September 30, 2017. Including certain fees earned and costs associated with the loan and investment portfolio, the weighted average current interest pay rate was 6.99% at December 31, 2017, compared to 6.84% at September 30, 2017.

The average balance of the Company’s loan and investment portfolio during the fourth quarter of 2017, excluding loan loss reserves, was $2.31 billion with a weighted average yield on these assets of 6.94%, compared to $2.00 billion and 7.34% for the third quarter of 2017. The decrease in average yield was primarily due to lower accelerated fees on early loan payoffs in the fourth quarter as compared to the third quarter, as well as lower rates on fourth quarter new originations, partially offset by an increase in LIBOR.

At December 31, 2017, the Company’s total loan loss reserves were $62.8 million on five loans with an aggregate carrying value before loan loss reserves of $163.5 million. The Company also had two non-performing loans with a carrying value of $29.1 million, net of related loan loss reserves of $7.4 million.

The Company recorded a loss from equity affiliates of $4.7 million consisting primarily of a $5.5 million non-recurring charge for our proportionate share of a litigation settlement related to our joint venture investment in a residential mortgage banking business partially offset by $0.6 million of income from a distribution received.

Financing Activity

The Company completed its ninth collateralized securitization vehicle ("CLO IX") totaling $480.0 million of real estate related assets and cash. Investment grade-rated notes totaling $356.4 million were issued, and the Company retained subordinate interests in the issuing vehicle of $123.6 million. The facility has a three-year asset replenishment period and an initial weighted average interest rate of 1.36% over LIBOR, excluding fees and transaction costs.

The balance of debt that finances the Company’s loan and investment portfolio at December 31, 2017 was $2.24 billion with a weighted average interest rate including fees of 4.83%, as compared to $1.67 billion and a rate of 4.48% at September 30, 2017. The average balance of debt that finances the Company’s loan and investment portfolio for the fourth quarter of 2017 was $1.90 billion, as compared to $1.62 billion for the third quarter of 2017. The average cost of borrowings for the fourth quarter was 4.66%, compared to 4.89% for the third quarter of 2017.

The Company is subject to various financial covenants and restrictions under the terms of its collateralized securitization vehicles and financing facilities. The Company believes it was in compliance with all financial covenants and restrictions as of December 31, 2017 and as of the most recent collateralized securitization vehicle determination dates in February 2018.

In January 2018, we paid $50.0 million in full satisfaction of the seller financing related to the acquisition of the Agency Business.

Capital Markets

The Company issued $143.8 million of 5.375% convertible senior notes due 2020 (the "Notes"), including the underwriter’s $18.8 million over-allotment option. The conversion rate was initially equal to 107.7122 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $9.28 per share of common stock, representing an approximate 10% conversion premium based on the closing price of the Company’s common stock of $8.44 per share on November 7, 2017. The Company received proceeds totaling $139.2 million, net of the underwriter’s discount and fees, from these offerings which is intended to be used to make investments in our business and for general corporate purposes.

Dividends

The Company announced today that its Board of Directors has declared a quarterly cash dividend of $0.21 per share of common stock for the quarter ended December 31, 2017, representing an increase of 11% over the prior quarter dividend of $0.19 per share. The dividend is payable on March 21, 2018 to common stockholders of record on March 8, 2018. The ex-dividend date is March 7, 2018.

As previously announced, the Board of Directors has declared cash dividends on the Company’s Series A, Series B and Series C cumulative redeemable preferred stock reflecting accrued dividends from December 1, 2017 through February 28, 2018. The dividends are payable on February 28, 2018 to preferred stockholders of record on February 15, 2018. The Company will pay total dividends of $0.515625, $0.484375 and $0.53125 per share on the Series A, Series B and Series C preferred stock, respectively.

Earnings Conference Call

The Company will host a conference call today at 10:00 a.m. Eastern Time. A live webcast of the conference call will be available at www.arbor.com in the investor relations area of the website. Those without web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 516-5034 for domestic callers and (678) 509-7613 for international callers. Please use participant passcode 1786665.

After the live webcast, the call will remain available on the Company’s website through March 31, 2018. In addition, a telephonic replay of the call will be available until March 2, 2018. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use passcode 1786665.

About Arbor Realty Trust, Inc.

Arbor Realty Trust, Inc. (ABR ) is a real estate investment trust and national direct lender specializing in loan origination and servicing for multifamily, seniors housing, healthcare and other diverse commercial real estate assets. Arbor is a Top 10 Fannie Mae DUS Multifamily Lender by volume and a Top Fannie Mae Small Loan lender, a Freddie Mac Program Plus Seller/Servicer and the Top Freddie Mac Small Balance Loan Lender, a Fannie Mae and Freddie Mac Seniors Housing Lender, an FHA Multifamily Accelerated Processing (MAP)/LEAN Lender, a HUD-approved LIHTC Lender as well as a CMBS, bridge, mezzanine and preferred equity lender, consistently building on its reputation for service, quality and flexibility. With a fee-based servicing portfolio of over $16 billion, Arbor is a primary commercial loan servicer and special servicer rated by Standard & Poor’s with an Above Average rating. Arbor is also on the Standard & Poor’s Select Servicer List and is a primary commercial loan servicer and loan level special servicer rated by Fitch Ratings.

Safe Harbor Statement

Certain items in this press release may constitute forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor’s expectations include, but are not limited to, continued ability to source new investments, changes in interest rates and/or credit spreads, changes in the real estate markets, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2017 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor’s expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.

1. Non-GAAP Financial Measures

During the quarterly earnings conference call, the Company may discuss non-GAAP financial measures as defined by SEC Regulation G. In addition, the Company has used non-GAAP financial measures in this press release. A supplemental schedule of non-GAAP financial measures and the comparable GAAP financial measure can be found on page 12 of this release.

Contacts:                            Investors:
Arbor Realty Trust, Inc.             The Ruth Group
Paul Elenio, Chief Financial Officer Lee Roth
516-506-4422                         646-536-7012
pelenio@arbor.com                    lroth@theruthgroup.com
Media:
Bonnie Habyan, EVP of Marketing
516-506-4615
bhabyan@arbor.com
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands--except share and per share data)
                                                                                   Quarter Ended                           Year Ended
                                                                                   December 31,                            December 31,
                                                                                       2017                2016               2017              2016
                                                                                   (Unaudited)         (Unaudited)
Interest income                                                                    $   46,045          $   32,748          $  156,177        $  116,173
Other interest income, net                                                             -                   -                  -                 2,539
Interest expense                                                                       26,374              20,664             90,072            63,623
                          Net interest income                                          19,671              12,084             66,105            55,089
Other revenue:
Gain on sales, including fee-based services, net                                       17,672              14,900             72,799            24,594
Mortgage servicing rights                                                              20,638              28,973             76,820            44,941
Servicing revenue, net                                                                 9,287               3,168              29,210            9,054
Property operating income                                                              2,219               2,162              10,973            14,881
Other income, net                                                                      1,615               377                685               1,041
                          Total other revenue                                          51,431              49,580             190,487           94,511
Other expenses:
Employee compensation and benefits                                                     25,265              15,791             92,126            38,647
Selling and administrative                                                             7,605               7,309              30,738            17,587
Acquisition costs                                                                      -                   -                  -                 10,262
Property operating expenses                                                            2,639               2,509              10,482            13,501
Depreciation and amortization                                                          1,843               1,892              7,385             5,022
Impairment loss on real estate owned                                                   500                 -                  3,200             11,200
Provision for loss sharing                                                             147                 918                (259       )      2,235
Provision for loan losses (net of recoveries)                                          -                   (109       )       (456       )      (134       )
Management fee - related party                                                         -                   3,725              6,673             12,600
                          Total other expenses                                         37,999              32,035             149,889           110,920
Income before gain on extinguishment of debt, gain on sale
                          of real estate, (loss) income from equity affiliates and
                          benefit from (provision for) income taxes                    33,103              29,629             106,703           38,680
Gain on extinguishment of debt                                                         -                   -                  7,116             -
Gain on sale of real estate                                                            -                   -                  -                 11,631
(Loss) income from equity affiliates                                                   (4,706     )        1,801              (2,951     )      12,995
Benefit from (provision for) income taxes                                              2,885               (525       )       (13,359    )      (825       )
Net income                                                                             31,282              30,905             97,509            62,481
Preferred stock dividends                                                              1,888               1,888              7,554             7,554
Net income attributable to noncontrolling interest                                     7,524               8,482              24,120            12,131
Net income attributable to common stockholders                                     $   21,870          $   20,535          $  65,835         $  42,796
Basic earnings per common share                                                    $   0.35            $   0.40            $  1.14           $  0.83
Diluted earnings per common share                                                  $   0.35            $   0.40            $  1.12           $  0.83
Weighted average shares outstanding:
                          Basic                                                        61,712,782          51,401,295         57,890,574        51,305,095
                          Diluted                                                      84,361,612          73,268,095         80,311,252        51,730,553
Dividends declared per common share                                                $   0.19            $   0.16            $  0.72           $  0.62
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ in thousands--except share and per share data)
                                                                                                                                                           December 31,         December 31,
                                                                                                                                                                2017                 2016
Assets:
Cash and cash equivalents                                                                                                                                  $    104,374         $    138,645
Restricted cash                                                                                                                                                 139,398              29,315
Loans and investments, net                                                                                                                                      2,579,127            1,695,732
Loans held-for-sale, net                                                                                                                                        297,443              673,367
Capitalized mortgage servicing rights, net                                                                                                                      252,608              227,743
Securities held to maturity                                                                                                                                     27,837               -
Investments in equity affiliates                                                                                                                                23,653               33,949
Real estate owned, net                                                                                                                                          16,787               19,492
Due from related party                                                                                                                                          688                  1,465
Goodwill and other intangible assets                                                                                                                            121,766              97,490
Other assets                                                                                                                                                    62,264               53,588
Total assets                                                                                                                                               $    3,625,945       $    2,970,786
Liabilities and Equity:
Credit facilities and repurchase agreements                                                                                                                     528,573              906,637
Collateralized loan obligations and debt fund                                                                                                                   1,486,506            728,441
Senior unsecured notes                                                                                                                                          95,280               94,522
Convertible senior unsecured notes, net                                                                                                                         231,287              80,660
Junior subordinated notes to subsidiary trust issuing preferred securities                                                                                      139,590              157,859
Related party financing                                                                                                                                         50,000               50,000
Due to related party                                                                                                                                            -                    6,039
Due to borrowers                                                                                                                                                99,829               81,019
Allowance for loss-sharing obligations                                                                                                                          30,511               32,408
Other liabilities                                                                                                                                               99,813               86,163
Total liabilities                                                                                                                                               2,761,389            2,223,748
Equity:
                   Arbor Realty Trust, Inc. stockholders’ equity:
                                      Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares
                                                                             authorized; special voting preferred shares; 21,230,769 shares issued and
                                                                             outstanding; 8.25% Series A, $38,787,500 aggregate liquidation preference;
                                                                             1,551,500 shares issued and outstanding; 7.75% Series B, $31,500,000
                                                                             aggregate liquidation preference;1,260,000 shares issued and outstanding;
                                                                             8.50% Series C, $22,500,000 aggregate liquidation preference; 900,000 shares
                                                                             issued and outstanding                                                             89,508               89,508
                                      Common stock, $0.01 par value: 500,000,000 shares authorized; 61,723,387
                                                                             and 51,401,295 shares issued and outstanding, respectively                         617                  514
                                      Additional paid-in capital                                                                                                707,450              621,932
                                      Accumulated deficit                                                                                                       (101,926  )          (125,134  )
                                      Accumulated other comprehensive income                                                                                    176                  321
Total Arbor Realty Trust, Inc. stockholders’ equity                                                                                                             695,825              587,141
Noncontrolling interest                                                                                                                                         168,731              159,897
Total equity                                                                                                                                                    864,556              747,038
Total liabilities and equity                                                                                                                               $    3,625,945       $    2,970,786
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
STATEMENT OF INCOME SEGMENT INFORMATION - (Unaudited)
(in thousands)
                                                                    Quarter Ended December 31, 2017
                                                                    Structured                     Agency                         Other /                        Consolidated
                                                                    Business                       Business                       Eliminations
Interest income                                                     $             40,841           $             5,204            $             -                $             46,045
Interest expense                                                                  22,269                         3,143                          962                            26,374
                         Net interest income                                      18,572                         2,061                          (962          )                19,671
Other revenue:
Gain on sales, including fee-based services, net                                  -                              17,672                         -                              17,672
Mortgage servicing rights                                                         -                              20,638                         -                              20,638
Servicing revenue                                                                 -                              21,062                         -                              21,062
Amortization of MSRs                                                              -                              (11,775       )                -                              (11,775       )
Property operating income                                                         2,219                          -                              -                              2,219
Other income, net                                                                 701                            914                            -                              1,615
                         Total other revenue                                      2,920                          48,511                         -                              51,431
Other expenses:
Employee compensation and benefits                                                5,985                          19,280                         -                              25,265
Selling and administrative                                                        2,773                          4,832                          -                              7,605
Property operating expenses                                                       2,639                          -                              -                              2,639
Depreciation and amortization                                                     443                            1,400                          -                              1,843
Impairment loss on real estate owned                                              500                            -                              -                              500
Provision for loss sharing                                                        -                              147                            -                              147
                         Total other expenses                                     12,340                         25,659                         -                              37,999
Income before loss from equity affiliates and
                         (provision for) benefit from income taxes                9,152                          24,913                         (962          )                33,103
Loss from equity affiliates                                                       (4,706        )                -                              -                              (4,706        )
(Provision for) benefit from income taxes                                         (957          )                3,842                          -                              2,885
Net income                                                          $             3,489            $             28,755           $             (962          )  $             31,282
Preferred stock dividends                                                         1,888                          -                              -                              1,888
Net income attributable to noncontrolling interest                                -                              -                              7,524                          7,524
Net income attributable to common stockholders                      $             1,601            $             28,755           $             (8,486        )  $             21,870
Includes certain corporate expenses not allocated to the two reportable segments. Amounts primarily reflect debt costs associated with the acquisition of the Agency Business as well as income allocated to the noncontrolling interest holder.
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
BALANCE SHEET SEGMENT INFORMATION - (Unaudited)
(in thousands)
                                                      December 31, 2017
                                                      Structured           Agency               Other /              Consolidated
                                                      Business             Business             Eliminations
Assets:
Cash and cash equivalents                             $         37,056     $         67,318     $         -          $         104,374
Restricted cash                                                 139,398              -                    -                    139,398
Loans and investments, net                                      2,579,127            -                    -                    2,579,127
Loans held-for-sale, net                                        -                    297,443              -                    297,443
Capitalized mortgage servicing rights, net                      -                    252,608              -                    252,608
Securities held to maturity                                     -                    27,837               -                    27,837
Investments in equity affiliates                                23,653               -                    -                    23,653
Goodwill and other intangible assets                            12,500               109,266              -                    121,766
Other assets                                                    66,227               13,512               -                    79,739
Total assets                                          $         2,857,961  $         767,984    $         -          $         3,625,945
Liabilities:
Debt obligations                                                2,189,700            291,536              50,000               2,531,236
Allowance for loss-sharing obligations                          -                    30,511               -                    30,511
Other liabilities                                               155,814              42,819               1,009                199,642
Total liabilities                                     $         2,345,514  $         364,866    $         51,009     $         2,761,389
Includes assets and liabilities not allocated to the two reportable segments. Amounts primarily reflect financing associated with the acquisition of the Agency Business.
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
Supplemental Schedule of Non-GAAP Financial Measures - (Unaudited)
Funds from Operations ("FFO") and Adjusted Funds from Operations ("AFFO")
($ in thousands--except share and per share data)
                                                                   Quarter Ended                               Year Ended
                                                                   December 31,                                December 31,
                                                                                 2017            2016                       2017            2016
Net income attributable to common stockholders                     $             21,870        $ 20,535        $            65,835        $ 42,796
Adjustments:
Gain on sale of real estate                                                      -               -                          -               (11,631    )
Net income attributable to noncontrolling interest                               7,524           8,482                      24,120          12,131
Impairment loss on real estate owned                                             500             -                          3,200           11,200
Depreciation - real estate owned                                                 177             247                        769             2,012
Depreciation - investments in equity affiliates                                  102             93                         406             375
Funds from operations  (1)                                         $             30,173        $ 29,357        $            94,330        $ 56,883
Adjustments:
Income from mortgage servicing rights                                            (20,638    )    (28,973    )               (76,820    )    (44,941    )
Impairment loss on real estate owned                                             (500       )    -                          (3,200     )    (11,200    )
Deferred tax benefit                                                             (7,414     )    (1,532     )               (7,399     )    (1,532     )
Amortization and write-offs of MSRs                                              16,894          14,118                     63,034          21,705
Depreciation and amortization                                                    2,073           1,807                      7,697           3,169
Net (gain) loss on changes in fair value of derivatives                          (914       )    (251       )               1,398           (499       )
Gain on sale of real estate                                                      -               -                          -               11,631
Stock-based compensation                                                         1,007           573                        4,840           3,514
Acquisition costs                                                                -               -                          -               10,262
Adjusted funds from operations  (1)                                $             20,681        $ 15,099        $            83,880        $ 48,992
Diluted FFO per share  (1)                                         $             0.36          $ 0.40          $            1.17          $ 0.92
Diluted AFFO per share  (1)                                        $             0.25          $ 0.21          $            1.04          $ 0.79
Diluted weighted average shares outstanding  (1)                                 84,361,612      73,268,095                 80,311,252      61,649,847
(1) Amounts are attributable to common stockholders and OP Unit holder. The OP Units are redeemable for cash, or at the Company’s option for shares of the Company’s common stock on a one-for-one basis.
The Company is presenting FFO and AFFO because management believes they are important supplemental measures of the Company’s operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs.  The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated real properties, plus impairments of depreciated real properties and real estate related depreciation and amortization, and after adjustments for unconsolidated ventures.
The Company defines AFFO as funds from operations adjusted for accounting items such as non-cash stock-based compensation expense, income from mortgage servicing rights ("MSRs"), changes in fair value of certain derivatives that temporarily flow through earnings, amortization and write-offs of MSRs, deferred tax (benefit) provision and the amortization of the convertible senior notes conversion option. The Company also adds back one-time charges such as acquisition costs and impairment losses on real estate and gains (losses) on sales of real estate. The Company is generally not in the business of operating real estate property and has obtained real estate by foreclosure or through partial or full settlement of mortgage debt related to the Company’s loans to maximize the value of the collateral and minimize the Company’s exposure.  Therefore, the Company deems such impairment and gains (losses) on real estate as an extension of the asset management of its loans, thus a recovery of principal or additional loss on the Company’s initial investment.
FFO and AFFO are not intended to be an indication of the Company’s cash flow from operating activities (determined in accordance with GAAP) or a measure of its liquidity, nor is it entirely indicative of funding the Company’s cash needs, including its ability to make cash distributions.  The Company’s calculation of FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited.

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