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Arbor Realty reports flat net income, $250M acquisition

Arbor Realty Trust, a Uniondale-based real estate investment trust, reported flat net income for the quarter ended Dec. 31 and disclosed a $250 million deal to expand its lending business.

The company, which specializes in making short-term loans for commercial properties, reported Friday fourth-quarter net income attributable to common stockholders was $5 million, or 10 cents per share, unchanged from the same quarter last year.

Arbor Realty announced plans after the market closed Thursday to acquire Arbor Commercial Mortgage LLC, a private originator of government-sponsored loans for multi-family real estate projects. The deal is designed to broaden Arbor Realty’s lending beyond its existing business of bridge and mezzanine loans.

Bridge loans are short-term financing for borrowers before permanent financing can be secured. Mezzanine loans function as a hybrid of debt and equity financing.

Arbor Commercial Mortgage is a separate company from Arbor Realty, but the two companies have some shared ownership, a company official said.

The acquisition would provide a more consistent revenue stream from long-term loan servicing, said the company official. Arbor Realty will pay for the business with equal shares of cash and stock.

Funds from operations, an industry measure of earnings that does not include the sale of properties, fell to $2.6 million for the fourth quarter, or 5 cents per share, from $4.9 million, or 10 cents per share, during the year-earlier period.

For the full year, net income was $45.9 million, down sharply from $85.8 million in 2014. The decrease was due in part to a $58.1 million noncash net gain related to the sale of equity interest in a Manhattan property recorded in 2014.

Real estate investment trusts, or REITs, must return a majority of profits to investors. Some REITs, such as Arbor Realty, are publicly traded.

Shares of Arbor Realty rose 20 cents to close at $6.61 in Friday trading on the New York Stock Exchange.

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