I have been seeing a lot of negative news surrounding their name recently. Does anyone have any insight on some of their properties and what their future looks like? The overall short position on their stock is relatively high, beyond macro things like interest rates, is there any justification for this?
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Well their stock was over valued as were many companies in Real Estate prior to Rate hikes, those coincided with the brokered business news and I believe their SBL had some decent exposure to it not just their larger MF portfolio. So news on news and then they did a decent amount of the Agency lending, which is one of the brokered businesses that was crushed. So it all came together. I heard Fannie Mae and Freddie Mac are making lenders that did some of these deals from different brokers, buy those loans back. It's a mess. But Arbor is big they'll come out on the other end at some point, just negative news stacking on top of more negative news, on top of poor economy, and add in bad press, creates what you have now.
There are prominent names such as Viceroy who are shorting the stock: https://viceroyresearch.org/arbor-realty-research/
I don't believe that much of this has to do with their Agency DUS operations. Per conversations with DUS shops, brokered business ultimately wasn't significantly hampered. The largest change was the flow of information processes whereby borrowers had to submit DD directly into the DUS shop's upload portal and no information coming from the brokerage would be accepted. Although I'm sure in some markets where fraud was prevalent, volumes might be impaired I suppose.
The biggest issue with their stock is their CLO operations. Basically their MREIT is heavily leveraged into bridge loans that they've originated. If those loans were to ever default, losses could be huge for Arbor. Given that many of these loans were originated in 2020 and 2021 where stabilized debt yields into the 6s were commonplace, there are virtually no takeout options for these loans in the present environment and there is virtually no way that they are debt servicing (given current rates in the 8s). The only solution for arbor to liquidate their assets is to either sell them on the marketplace for a discount which could wipe out a large chunk of their equity since they're so heavily leveraged via their CLOs or to force borrowers to either paydown the loan or sell the property. Either way, they are one big shock away from bankruptcy and are only buoyed by the fact that cap rates haven't pushed into the 6s yet on the vast majority of the assets that they have loans on. But if there is an exogenous shock that prevents many of their borrowers from hitting their proformas, there is very little margin for Arbor.
Is NYMT fucked? I own their stock lol.
We'll see how things shake out given ~$11BB of multifamily is due this year before extension options, and their last dollar LTV is creeping. If you dig into their financials, they jumped up from $7.7MM non-accrual to $274MM year over year.
I think Ladder Capital (comparable company but no GSE business) is pretty cheap right now. Less than 1% of their portfolio is non-accrual. And when they've taken keys back in the past, they've done a good job.
April CLO data at Arbor looks really ugly. At least 200MM in additional credit problems just month on month,
where can i see this?
Should be seeing a viceroy report any day now.
The new viceroy report is out for April. What is going to force these companies to properly value their books? I have talked to several lenders lately and they are capitalizing interest. On paper this looks great, but in reality it is creating bigger losses for their investors. It seems like the market is playing dumb but this is a major problem. It doesn’t look like anyone is accountable to the investors.
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