Arbor Realty SR, Inc. Closes Offering of $100 Million of Senior Notes due 2027

Rhea-AI Summary

Arbor Realty Trust, Inc. (NYSE:ABR) announced that its subsidiary, Arbor Realty SR, Inc., has closed a private placement of $100 million aggregate principal amount of 9.00% senior notes due October 15, 2027. The notes will be fully guaranteed by Arbor Realty Trust on a senior unsecured basis. The company plans to use the net proceeds to pay down debt and for general corporate purposes.

Piper Sandler & Co. acted as the sole placement agent for this offering. The notes have not been registered under the Securities Act of 1933 and are being offered and sold under an exemption from registration. Arbor Realty Trust is a nationwide real estate investment trust and direct lender, specializing in loan origination and servicing for multifamily, single-family rental portfolios, and other diverse commercial real estate assets.

Positive

• Raised $100 million through senior notes offering
• Plans to use proceeds to pay down debt, potentially improving financial position
• 9.00% interest rate on senior notes, providing fixed-rate financing

Negative

• Increased debt obligation with new $100 million senior notes
• Higher interest expense due to 9.00% rate on new notes

Insights

Financial Analyst

Arbor Realty Trust's subsidiary's successful placement of $100 million in senior notes is a significant financial move. The 9.00% interest rate on these notes, maturing in 2027, reflects current market conditions and Arbor's credit profile. This debt issuance provides the company with additional liquidity, which is important in the real estate investment sector.

The stated use of proceeds to "pay down debt and for general corporate purposes" suggests a strategic refinancing effort. This could potentially lead to improved financial flexibility and a more optimized capital structure. However, investors should note that while this may extend debt maturities, it also increases the company's interest expenses given the relatively high yield.

Arbor's diverse portfolio and its status as a leading lender in government-sponsored enterprise products provide a solid backdrop for this debt issuance. The private placement nature of the offering allows for quicker execution but limits the investor base. Overall, this move demonstrates Arbor's continued access to capital markets, which is important for a REIT's growth and operations.

Real Estate Investment Expert

This debt issuance by Arbor Realty Trust's subsidiary is indicative of the current state of the real estate finance market. The 9.00% yield on these notes is notably high, reflecting both the broader interest rate environment and possibly the market's assessment of risks associated with commercial real estate lending.

Arbor's focus on multifamily, single-family rental portfolios and diverse commercial real estate assets positions it well in the current market. The company's role as a leading Fannie Mae DUS® lender and Freddie Mac Optigo® Seller/Servicer provides a stable business foundation. However, the high-yield debt issuance suggests that the company may be facing some pressure in its operating environment or seeing opportunities that require additional capital.

Investors should monitor how effectively Arbor deploys this capital, particularly if it's used for new loan originations. The success of this strategy will depend on Arbor's ability to generate returns that exceed the 9.00% cost of this new debt, which could be challenging in the current real estate market.

UNIONDALE, N.Y., Oct. 10, 2024 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (the “Parent” or “Arbor”) (NYSE:ABR) announced today that its subsidiary, Arbor Realty SR, Inc. (the “Company”), has closed the private placement of $100 million aggregate principal amount of 9.00% senior notes due October 15, 2027 (the “Notes”). The Notes will be fully and unconditionally guaranteed on a senior unsecured basis by the Parent.

The Company expects that the net proceeds of this offering will be used to pay down debt and for general corporate purposes.

Piper Sandler & Co. acted as sole placement agent for this offering.

The Notes have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered and sold in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act. The Notes may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Arbor Realty Trust, Inc.

Arbor Realty Trust, Inc. (NYSE: ABR) is a nationwide real estate investment trust and direct lender, providing loan origination and servicing for multifamily, single-family rental (SFR) portfolios, and other diverse commercial real estate assets. Headquartered in New York, Arbor manages a multibillion-dollar servicing portfolio, specializing in government-sponsored enterprise products. Arbor is a leading Fannie Mae DUS® lender and Freddie Mac Optigo® Seller/Servicer, and an approved FHA Multifamily Accelerated Processing (MAP) lender. Arbor’s product platform also includes bridge, CMBS, mezzanine, and preferred equity loans. Rated by Standard and Poor’s and Fitch Ratings, Arbor is committed to building on its reputation for service, quality and customized solutions with an unparalleled dedication to providing our clients excellence over the entire life of a loan.

Safe Harbor Statement

Certain items in this press release may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor’s expectations include, but are not limited to, changes in economic conditions generally, and the real estate markets specifically, continued ability to source new investments, changes in interest rates and/or credit spreads, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2023 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor’s expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.

Contact:
Arbor Realty Trust, Inc.
Paul Elenio, Chief Financial Officer
516-506-4422
pelenio@arbor.com

FAQ

What is the interest rate and maturity date of Arbor Realty Trust's (ABR) new senior notes?

Arbor Realty Trust's (ABR) new senior notes have an interest rate of 9.00% and are due on October 15, 2027.

How much did Arbor Realty Trust (ABR) raise in its recent senior notes offering?

Arbor Realty Trust (ABR) raised $100 million in aggregate principal amount through its recent senior notes offering.

What will Arbor Realty Trust (ABR) use the proceeds from the senior notes offering for?

Arbor Realty Trust (ABR) plans to use the net proceeds from the senior notes offering to pay down debt and for general corporate purposes.

Who acted as the placement agent for Arbor Realty Trust's (ABR) senior notes offering?

Piper Sandler & Co. acted as the sole placement agent for Arbor Realty Trust's (ABR) senior notes offering.