Arbor Realty (NYSE: ARB) stock price has crawled back in the past few weeks even as concerns in the real estate industry continue. The shares jumped to a high of $13 on Friday, the highest point since March 13. At its peak on Friday, the stock was up by more than 31.34% from its lowest level this year.
Arbor is a Real Estate Investment Trust (REIT) that is significantly different than the conventional companies on the industry. It does not hold any physical real estate. Instead, the company provides financing to companies in the multifamily real estate industry, a low-margin sub-sector. In most cases, the company provides bridge and mezzanine loans in the industry.
Arbor Realty stock price has recovered recently after the company published strong results earlier this month. In a statement, the company said that its distributor earnings jumped to $122 million in Q1, better than what most analysts were expecting. The results were also better than what the company was projecting internally.
Arbor Realty’s GSE/Agency had originations worth over $1 billion and $800 million in loan sales, lower than what it made in Q4. Further, the company’s balance sheet of over $13.6 billion had a yield of 8.83% in the first quarter as LIBOR and SOFR rates jumped.
Despite the strong results, Arbor is facing significant challenges as the multifamily sector face two glaring challenges. First, there is the challenge of higher interest rates that has led to more financing costs. The Fed has already delivered several rate hikes this year, with the official cash rate being at the highest level in more than a decade.
There is also a reality that multifamily homes are going through an oversupply that is pushing prices low. As a result, cap rates have moved below the rate to finance these buildings. As a result, the company was recently forced to foreclose several multifamily properties in Houston valued at over $269 million.
Despite these challenges, Arbor Realty has a forward dividend yield of 13.66% and a payout ratio of 93%. I believe that the company can sustain its dividends in the near term.
The daily chart show that the ABR stock price has been in a strong bullish trend in the past few months. It has moved above the 61.8% Fibonacci Retracement level. The shares have jumped above the 25-day and 50-day exponential moving averages (EMA). Its volume has been at an elevated level.
Similarly, the MACD has moved above the neutral level. Therefore, there is a likelihood that the stock will continue rising in the coming days as buyers target the year-to-date high of $14.61, which is about 18.67% from the current level.
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