Arbor Realty Trust Closes Landmark $802 Million Collateralized Loan Obligation Securitization

Rhea-AI Summary

Arbor Realty Trust (NYSE: ABR) has successfully closed an $802 million build-to-rent loan securitization on May 30, 2025. The securitization includes $683 million of investment grade-rated notes, with Arbor retaining $119 million in subordinate interests and $41 million of investment grade notes. The structure features a $200 million senior revolving note and a two-year replenishment period. The investment grade notes have an initial weighted average spread of 2.48% over Term SOFR. The securitization is secured by a $652 million portfolio of real estate assets, primarily first mortgage construction and bridge loans. Arbor will use the proceeds to repay existing credit facilities, cover transaction expenses, and fund future loans and investments.

Positive

• Significant securitization size of $802 million demonstrates strong market confidence
• Investment grade-rated notes with favorable 2.48% spread over Term SOFR indicates competitive pricing
• Two-year replenishment period provides flexibility for portfolio management
• $50 million capacity for additional loan acquisitions within 180 days offers growth potential

Negative

• Retention of $119 million subordinate interests ties up significant capital
• Complex structure with construction loan advances may increase operational risks
• Additional leverage through $200 million revolving note could increase financial risk

Insights

Fixed Income Analyst

ABR secured $802M build-to-rent securitization with favorable terms, enhancing liquidity while creating a unique construction-stage funding vehicle.

Arbor Realty Trust has closed an $802 million collateralized loan obligation (CLO) securitization specifically for build-to-rent properties—a noteworthy transaction with several innovative structural elements. The deal includes $683 million in investment grade-rated notes issued to investors while Arbor retained $119 million in subordinate interests plus $41 million of the investment grade notes, demonstrating significant skin in the game.

What makes this securitization particularly distinctive is its inclusion of properties in various construction stages, with a sophisticated funding mechanism where construction advances will be funded partially by the issuing entity and partially by Arbor-affiliated participation interests. The $200 million senior revolving note component ($50 million drawn at closing) provides flexibility to fund ongoing construction advances and acquire additional collateral.

The economics are favorable with investment grade notes placed at a weighted average spread of 2.48% over Term SOFR. The two-year replenishment period enables principal proceeds to be reinvested in qualifying replacement assets, creating a revolving funding structure rather than a static pool. This extends the effective financing duration and increases capital efficiency.

From a balance sheet perspective, Arbor will account for this as financing rather than a true sale, retaining the underlying assets on its books. The proceeds will repay existing credit facilities, potentially lowering the company's overall funding costs, while providing fresh capital for originating new loans. This transaction demonstrates Arbor's continued access to the securitization markets for its specialized lending products and enhances its liquidity position while diversifying funding sources.

UNIONDALE, N.Y., June 02, 2025 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE: ABR) today announced the closing of a unique build-to-rent loan securitization totaling approximately $802 million (the “Securitization”) on May 30, 2025. An aggregate of approximately $683 million of investment grade-rated notes were issued (the “Notes”) and Arbor retained subordinate interests in the issuing vehicle of approximately $119 million and approximately $41 million of the investment grade Notes. The funding structure includes approximately $50 million of capacity to acquire additional loans for a period of up to 180 days from the closing date of the Securitization.

The Securitization is unique in including loans secured by build-to-rent properties in various stages of horizontal and vertical construction. Construction loan advances will be funded, in part, by the issuing entity and, in part, by an Arbor affiliated holder of participation interests in the mortgage loans. The Securitization includes a $200 million senior revolving note, proceeds of which will be used by the issuer to fund construction and other loan advances, to acquire collateral interests on the closing date or to acquire replacement collateral assets during the replenishment period. Approximately $50 million was drawn on the revolving note at closing.

The investment grade Notes placed with investors have an initial weighted average spread of 2.48% over Term SOFR, excluding fees and transaction costs. The facility has a two year replenishment period that allows principal proceeds from repayments of the portfolio assets and the revolving note fundings to be reinvested in qualifying replacement assets, subject to certain conditions.

The offering of the investment grade-rated Notes was made pursuant to a private placement. The investment grade-rated Notes were issued under an indenture and secured initially by a portfolio of real estate related assets and cash with a face value of $652 million, with such real estate related assets consisting primarily of first mortgage construction and bridge loans.

Arbor intends to own the portfolio of real estate related assets through the vehicle until its maturity and expects to account for the Securitization on its balance sheet as a financing. Arbor will use the proceeds of this Securitization to repay borrowings under its current credit facilities, pay transaction expenses and fund future loans and investments.

Certain of the Notes were rated by Fitch Ratings, Inc. and all of the Notes were rated by DBRS, Inc.

The Notes are not registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.

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, 2024 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. Investor Relations 516-506-4200 InvestorRelations@arbor.com

FAQ

What is the size and structure of ABR's latest securitization deal?

Arbor Realty Trust's latest securitization totals $802 million, comprising $683 million of investment grade-rated notes and $119 million in retained subordinate interests.

What is the interest rate spread on ABR's new securitization notes?

The investment grade Notes have an initial weighted average spread of 2.48% over Term SOFR, excluding fees and transaction costs.

How will Arbor Realty Trust use the proceeds from this securitization?

Arbor will use the proceeds to repay borrowings under current credit facilities, pay transaction expenses, and fund future loans and investments.

What is the replenishment period for ABR's new securitization?

The securitization has a two-year replenishment period allowing principal proceeds to be reinvested in qualifying replacement assets.

How much additional loan capacity does ABR's new securitization provide?

The securitization includes approximately $50 million of capacity to acquire additional loans for up to 180 days from the closing date.