Arbor Realty Trust chief financial officer Paul Elenio, 45, says he just survived the most challenging business cycle of his 22-year career at the public real estate investment trust. Elenio, responsible for overseeing the financial operations of Arbor's private and public companies, including Arbor Commercial Mortgage and Arbor Realty Trust, said the company negotiated the overheated market and the crash by backing away from aggressive lending, preserving its capital, aggressively managing its portfolio, repaying all of its short-term debt, and sticking to solid real estate fundamentals.
You've doubled your employees in the past three years?
We've branched out into several different lines of business. As Arbor Commercial Mortgage has grown, we have significantly staffed up, and as the public company has started to grow, we've definitely added staff in the origination and underwriting and asset management side to prepare us for the future growth. Additionally, a few years ago, we started a residential servicing and residential originations company. The market is recovering slowly and we think that things are definitely progressing nicely, especially multifamily housing which has continued to remain strong as vacancies have fallen and rents have increased.
Where do you see most of the growth in the multifamily housing market?
We see it throughout all sectors. Clearly the stronger markets are your New York and D.C. markets and those types of markets that always seem to be very stable and always have significant growth.
How can you tell when the market is getting overheated?
Markets tend to get overheated when you start to see signs of more liberal lending standards, and when real estate assets are trading at lofty values that are not reflective of traditional fundamental real estate values. This tends to occur when significant capital is injected into the lending arena. The capital can cause increased competition. Unfortunately, at times, the result can be that lenders move away from lending based on quality real estate criteria.
What other things are you keeping your eye on that influence your industry?
Housing, jobs, consumer spending, overall economic conditions. Europe has affected the stock market lately and we want to see how things go there. It's also very important for us to stay close to our borrowers and our customers and see what it is they need and see how we can continue to provide the solutions they need on a creative, customized basis despite where the market may be.
How has reinstating your quarterly cash dividend changed things for your company?
We're lending. We're transacting, and we're back on the offense. People look at the dividend and say, "This company reinstated their dividend . . . the earnings are getting stronger . . . it's a sign of growth to come" -- and we feel that's correct.