Arbor Realty Trust, Inc. NYSE:ABR, Anworth Mortgage Asset Corp NYSE:ANH, Archer Entertainment Media Communications Inc OTC:AEMC
Arbor Realty Trust, Inc. NYSE:ABR
Arbor Realty Trust, Inc., incorporated in June 2003, is a specialized real estate finance company. The Company invests in a diversified portfolio of structured finance assets in the multi-family and commercial real estate markets. It invests primarily in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity, and in limited cases, discounted mortgage notes and other real estate-related assets (collectively, structured finance investments). The Company also invests in mortgage-related securities and real estate property. It conducts all of its operations and investing activities through its operating partnership, Arbor Realty Limited Partnership, and its wholly owned subsidiaries. The Company serves as the general partner of its operating partnership, and owns a 100% partnership interest in its operating partnership as of December 31, 2009.
Targeted Investments
The Company offers bridge financing products to borrowers who are seeking short-term capital to be used in an acquisition of property. The bridge loans the Company makes range in size from $1 million to $75 million and are predominantly secured by first mortgage liens on the property. The Company offers junior participation financing in the form of junior participating interest in the senior debt. Junior participation financings have the same obligations, collateral and borrower as the senior debt. Its junior participation loans range in size from $1 million to $60 million and have terms of up to 10 years. The Company offers mezzanine financing in the form of loans that are subordinate to a conventional first mortgage loan and senior to the borrower’s equity in a transaction. Mezzanine financing may take the form of loans secured by pledges of ownership interests in entities that directly or indirectly control the real property or subordinated loans secured by second mortgage liens on the property. It may also require additional security, such as personal guarantees, letters of credit and/or additional collateral unrelated to the property. The Company holds a majority of its mezzanine loans through subsidiaries of its operating partnership that are pass-through entities for tax purposes or taxable subsidiary corporations.
The Company provides financing by making preferred equity investments in entities that directly or indirectly own real property. Its preferred equity investments typically range in size from $0.3 million to $100 million, and have terms up to 10 years The Company has and may, invest in certificates issued by the Government National Mortgage Association (Ginnie Mae), Fannie Mae, or the Federal Home Loan Mortgage Association (Freddie Mac), that are collateralized by whole pools of residential or commercial, fixed or adjustable rate mortgage loans. It may acquire real estate notes from lenders in situations where the borrower wishes to restructure and reposition its short-term debt and the lender wishes, for a variety of reasons (such as risk mitigation, portfolio diversification or other strategic reasons), to divest certain assets from its portfolio. These notes may be acquired at a discount.
The Company has and may, in the future, invest in securities, such as the common stock of a commercial real estate specialty finance company. The Company has and may, in the future, invest in securities, such as investment grade commercial real estate collateralized debt obligation bonds. These securities have underlying credit ratings assigned by three rating agencies, including Moody’s Investor Service, Standard & Poor’s and Fitch Ratings, and are generally not insured or otherwise guaranteed. The Company has, and may, in the future, invest in investment grade commercial mortgage-backed securities. These securities have underlying credit ratings assigned by three rating agencies, including Moody’s Investor Service, Standard & Poor’s and Fitch Ratings, and are generally not insured or otherwise guaranteed.
Structured Finance Investments
The Company owns a diversified portfolio of structured finance investments consisting primarily of real estate-related bridge, junior participation interests in first mortgages, and mezzanine loans, as well as preferred equity investments and mortgage-related securities. At December 31, 2009, it had 126 loans and investments in its portfolio, totaling $2 billion. These loans and investments were for 69 multi-family properties, 27 office properties, 11 hotel properties, 11 land properties, six commercial properties, and one condominium property, and two retail properties. At December 31, 2009, the Company had seven commercial real estate collateralized debt obligation bond investments and three commercial mortgage-backed security investments.
Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 1.31 12.76 19.07 18.20
P/E High – Last 5 Yrs. 10.27 20.09 140.81 89.49
P/E Low – Last 5 Yrs. 1.37 8.00 105.93 12.28
Beta 4.00 1.15 1.21 1.31
Price to Sales (TTM) 1.42 2.93 10.90 2.23
Price to Book (MRQ) 0.69 0.25 1.19 3.09
Price to Tangible Book (MRQ) 0.69 0.28 1.44 5.55
Price to Cash Flow (TTM) 1.25 11.27 16.35 65.14
Price to Free Cash Flow (TTM) 6.74 2.39 4.17 60.25
% Owned Institutions – – – –
Dividends
Company Industry Sector S&P 500
Dividend Yield – 1.77 1.84 1.67
Dividend Yield – 5 Year Avg. 12.49 0.70 1.63 2.48
Dividend 5 Year Growth Rate – 8.90 8.33 -4.94
Payout Ratio(TTM) 0.00 13.34 20.70 43.04
Growth Rates
Company Industry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago -14.35 20.87 17.72 10.11
Sales (TTM) vs TTM 1 Yr. Ago -16.51 17.99 12.56 10.41
Sales – 5 Yr. Growth Rate -4.01 19.82 19.41 7.41
EPS (MRQ) vs Qtr. 1 Yr. Ago 68.18 31.22 83.06 77.65
EPS (TTM) vs TTM 1 Yr. Ago 148.84 – – –
EPS – 5 Yr. Growth Rate 7.82 10.74 10.48 4.59
Capital Spending – 5 Yr. Growth Rate – 36.29 10.45 3.56
Anworth Mortgage Asset Corp NYSE:ANH
Anworth Mortgage Asset Corporation (Anworth), incorporated on October 20, 1997, is in the business of investing primarily in United States agency mortgage-backed securities (MBS), which are obligations guaranteed by the United States government, such as Government National Mortgage Association (Ginnie Mae), or federally sponsored enterprises, such as Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac). At December 31, 2009, Anworth had total assets of $6.53 billion. The Agency MBS portfolio, consisting of $6.49 billion, was distributed as 25% adjustable-rate Agency MBS, 62% hybrid adjustable-rate Agency MBS, 13% fixed-rate Agency MBS and less than 1% agency floating-rate collateralized mortgage obligations (CMO). The Non-Agency MBS portfolio consisted of approximately $4.7 million of floating-rate CMOs.
Mortgage-Backed Securities
The Company principally invests in pass-through certificates, which are securities representing interests in pools of mortgage loans secured by residential real property in which payments of both interest and principal on the securities are generally made monthly, in effect, passing through monthly payments made by the individual borrowers on the mortgage loans which underlie the securities, net of fees paid to the issuer or guarantor of the securities. MBS created by non-governmental issuers, including commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers, may be supported by various forms of insurance or guarantees including individual loan, title, pool and hazard insurance and letters of credit which may be issued by governmental entities, private insurers or the mortgage poolers. Approximately 99.9% of the Company’s portfolio is Agency MBS.
CMOs are MBS. Interest and principal on CMOs are paid, in most cases, on a monthly basis. CMOs may be collateralized by whole mortgage loans, but are collateralized by portfolios of mortgage pass-through securities. CMOs are structured into multiple classes with each class bearing a different stated maturity. Monthly payments of principal, including prepayments, are first returned to investors holding the shortest maturity class; investors holding the longer maturity classes receive principal only after the first class has been retired. Anworth consider investments in CMOs, which are issued or guaranteed by the federal government, or by any of its agencies or instrumentalities, to be the United States government securities.
Other Types of MBS
The Company could acquire mortgage derivative securities in an amount not to exceed 10% of the total assets. Mortgage derivative securities provide for the holder to receive interest-only, principal-only or interest and principal in amounts that are disproportionate to those payable on the underlying mortgage loans. Payments on mortgage derivative securities are sensitive to the rate of prepayments on the underlying mortgage loans. In the event of faster or slower than anticipated prepayments on these mortgage loans, the rates of return on interests in mortgage derivative securities, representing the right to receive interest-only or a disproportionately large amount of interest or interest-only derivatives.
Anworth may invests in inverse floaters, a class of CMOs with a coupon rate that resets in the opposite direction from the market rate of interest to which it is indexed, including London Inter-Bank Offer Rate (LIBOR) or the 11th District Cost of Funds Index (COFI). It may invest in other mortgage derivative securities that may be developed in the future. It may acquire mortgage warehouse participations as an additional means of diversifying the sources of income.
Other Mortgage-Related Investments
The Company acquire other investments, which include equity and debt securities issued by other primarily mortgage-related finance companies, interests in mortgage-related collateralized bond obligations, other subordinated interests in pools of mortgage-related assets. It can also acquire other investments that include equity and debt securities issued by residential mortgage loans other than high-credit quality mortgage loans.
Valuation Ratios
Company Industry Sector S&P 500
P/E Ratio (TTM) 8.20 23.65 19.07 18.20
P/E High – Last 5 Yrs. 10.75 103.68 140.81 89.49
P/E Low – Last 5 Yrs. 6.04 39.92 105.93 12.28
Beta 0.26 0.94 1.21 1.31
Price to Sales (TTM) 3.94 7.46 10.90 2.23
Price to Book (MRQ) 1.04 1.13 1.19 3.09
Price to Tangible Book (MRQ) 0.97 1.17 1.44 5.55
Price to Cash Flow (TTM) – 13.84 16.35 65.14
Price to Free Cash Flow (TTM) – 11.97 4.17 60.25
% Owned Institutions – – – –
Dividends
Company Industry Sector S&P 500
Dividend Yield 12.41 5.47 1.84 1.67
Dividend Yield – 5 Year Avg. 9.16 3.61 1.63 2.48
Dividend 5 Year Growth Rate 12.02 0.29 8.33 -4.94
Payout Ratio(TTM) 109.93 112.91 20.70 43.04
Growth Rates
Company Industry Sector S&P 500
Sales (MRQ) vs Qtr. 1 Yr. Ago -16.43 4.59 17.72 10.11
Sales (TTM) vs TTM 1 Yr. Ago -16.12 7.49 12.56 10.41
Sales – 5 Yr. Growth Rate 6.66 8.60 19.41 7.41
EPS (MRQ) vs Qtr. 1 Yr. Ago -24.90 43.20 83.06 77.65
EPS (TTM) vs TTM 1 Yr. Ago -24.79 – – –
EPS – 5 Yr. Growth Rate 17.50 1.60 10.48 4.59
Capital Spending – 5 Yr. Growth Rate – -18.14 10.45 3.56
Archer Entertainment Media Communications Inc OTC:AEMC
Archer was sold not long ago and the buyers are in the process of turning the company in to a REIT focused on USA Real Estate.
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Chutinush Taksinapinunt (ANISTA)
Business Development Director
Heffernan Capital Management
Info@Heffcap.com
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