Arbor Realty Trust (ABR) released its fourth-quarter 2024 earnings before the market opened, and the news sent the stock tumbling over 13%. The company reported distributable earnings of $0.40 per share, which fell short of the $0.41 analysts expected and, more critically, didn’t cover its current quarterly dividend of $0.43 per share. Revenue also dropped 20.6% year-over-year to $262.87 million, reflecting challenges in the real estate market, including a $900.6 million loan portfolio runoff.

Alongside the earnings, ABR declared its Q4 dividend of $0.43 per share, payable on March 17, 2025, to shareholders of record by March 3, 2025. However, the bigger story came from CEO Ivan Kaufman’s outlook. He projected 2025 earnings at $0.30 to $0.35 per share per quarter and said the company will “likely reset our dividends starting in the first quarter of this year.” This signals a dividend cut of about 19% to 30%, as the current $0.43 payout exceeds the forecasted earnings range.

The market didn’t take this well, and it’s easy to see why. ABR has built a reputation for steady dividends, raising them over the years to the current level, but today’s announcement suggests tougher times ahead. With earnings weakening and a cut looming, the stock’s high yield—around 14% as of this writing—may not hold up.

I’ve been holding ABR for a while, drawn by its income potential, but this news has me rethinking my position. The combination of lower earnings, an unsustainable dividend, and a battered multifamily real estate market makes me lean toward selling. I’ll be watching closely over the next few days to decide, but right now, the risk feels like it outweighs the reward.

Arbor Realty Trust Press Release