Arbor Realty Trust (ABR) ($4.40 per share; MV $111 million; EV $1.4 billion), based in Uniondale, NY, is a REIT that 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.
To a lesser extent, the company also invests in mortgage-related securities and real estate property. Book value per share jumped 117% from $3.81 at the end of 2009 to $8.25 at year end 2010. Analysts expect Arbor to lose $1.07 per share in 2011. The company trades at 0.5x tangible book value of $218 million. As of March 31, Arbor's GAAP book value was $8.55 per share while adjusted book value was $12.54 per share (adjustments are comprised of deferred revenue minus the prepaid management fee on a transaction at 450 West 33rd Street, plus an unrealized loss on derivatives).
Arbor's loan portfolio consists of 33% fixed-rate and 67% variable-rate loans, suggesting that the REIT might benefit in a rising interest rate environment. The company authorized the repurchase of 1.5 million shares on June 14th following a sharp stock price drop on June 13th on no news. Also on June 13th, Leon Cooperman bought stock in Arbor, apparently for his personal account, bringing his stake to 5.2%. Clearly, those close to the company believe strongly that it is undervalued at recent trading levels.