Arbor Realty Trust Announces Closing of \$762.6 Million Commercial Real Estate CLO Securitization

Key Highlights for Investors

• Transaction Size: Arbor Realty Trust, Inc. (NYSE: ABR) has successfully closed a \$762.6 million commercial real estate mortgage loan securitization (the “Securitization”).
• Notes Issuance: Approximately \$674.0 million of investment grade-rated notes were issued to investors, while Arbor retained about \$88.6 million in subordinate interests within the issuing vehicle.
• Future Growth Capacity: The securitization includes a \$100 million “revolving” component, allowing Arbor to acquire additional loans for up to 180 days following the closing date. This provides flexibility to increase the underlying collateral and potentially enhance returns.
• Attractive Funding Terms: The issued notes have an initial weighted average spread of just 1.73% over Term SOFR (excluding fees and transaction costs), reflecting favorable credit pricing and lower cost of capital for Arbor.
• Reinvestment Period: The facility features a reinvestment period of approximately two years and six months. During this time, principal proceeds from repaid portfolio assets can be reinvested in qualifying replacement assets, subject to certain conditions. This structure optimizes capital usage and supports ongoing loan origination growth.
• Collateral Profile: The securitization is backed primarily by first mortgage bridge loans and other real estate-related assets and cash with a face value of \$762.6 million.
• Balance Sheet Treatment: Arbor intends to retain ownership of the securitized portfolio through the maturity of the vehicle and expects to account for the securitization as a financing on its balance sheet, rather than a sale. This means the company will continue to benefit from the interest spread between the assets and the lower-cost liabilities.
• Use of Proceeds: The funds raised will be used to repay outstanding borrowings under Arbor’s existing credit facilities, pay for transaction-related expenses, and fund future loan originations and investments.
• Ratings: The notes achieved investment grade ratings from Fitch Ratings, Inc. and Kroll Bond Rating Agency, LLC (all except the most subordinate class). This underscores the quality and creditworthiness of the underlying collateral.
• Private Placement: The notes were sold through a private placement and are not registered under the Securities Act of 1933. They are not available for public sale in the United States without proper registration or exemption.

Strategic and Shareholder Implications

• Balance Sheet Strengthening: By refinancing higher-cost credit facilities with lower-cost CLO financing, Arbor will likely improve its net interest margin and overall financial flexibility.
• Growth Platform Expansion: The reinvestment period and \$100 million additional loan acquisition capacity position Arbor to grow its loan book and enhance earnings visibility over the next several years.
• Earnings Impact: If Arbor is able to reinvest at attractive yields while keeping funding costs low, this transaction could be accretive to earnings and book value.
• Credit Quality: The investment grade ratings and the nature of the underlying assets (primarily first mortgage bridge loans) reduce credit risk, which is important for shareholder confidence.
• Potential Share Price Sensitivity: The successful execution of a large securitization at attractive terms, combined with the reinvestment option and lower funding costs, is a positive development that could support Arbor’s share price. However, investors should monitor any changes in the credit environment, real estate market conditions, and the company’s ability to source new qualifying loans for reinvestment.

About Arbor Realty Trust

Arbor Realty Trust, Inc. is a publicly traded real estate investment trust (REIT) specializing in loan origination and servicing for multifamily, single-family rental portfolios, and diverse commercial real estate assets. The company is a leading Fannie Mae DUS® lender, Freddie Mac Optigo® Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender. Arbor also offers bridge, CMBS, mezzanine, and preferred equity loans. The company is rated by both Standard & Poor’s and Fitch Ratings.

Forward-Looking Statements

Certain statements in this report are forward-looking, reflecting Arbor’s management expectations and beliefs. Actual results may differ due to changes in economic conditions, real estate markets, interest rates, credit spreads, or other risk factors as detailed in Arbor’s filings with the SEC. Arbor disclaims any obligation to update forward-looking statements.

Disclaimer: This article is for informational purposes only and does not constitute an offer to sell or an invitation or solicitation to buy any securities. Investors should conduct their own due diligence and consult with their financial advisors before making any investment decisions. Arbor Realty Trust’s notes are not registered under the Securities Act and are only available to qualified investors. Past performance is not indicative of future results.

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