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UNIONDALE, N.Y., Jan. 16, 2013 (GLOBE NEWSWIRE) -- Arbor Realty Trust, Inc. (NYSE:ABR), a real estate investment trust focused on the business of investing in real estate related bridge and mezzanine loans, preferred and direct equity investments, mortgage-related securities and other real estate related assets, today announced the pricing of a collateralized loan obligation (CLO) to be issued by two newly-formed subsidiaries of Arbor. Based on current balances within the collateral portfolio, Arbor expects the facility to issue approximately $177 million of investment grade-rated debt. Arbor expects to retain an equity interest in the portfolio of approximately $83 million. The transaction is expected to close by the end of January 2013, subject to satisfaction of customary closing conditions.
The notes will be issued on a floating rate basis at an initial weighted average spread of approximately 235 basis points over one-month LIBOR, excluding fees and transaction costs. The facility has a two-year replenishment period that allows the principal proceeds from repayments of the collateral assets to be reinvested in qualifying replacement assets, subject to certain conditions.
The face value of the collateral in the initial portfolio is expected to be approximately $260 million and will consist primarily of first mortgage bridge loans and cash. The $260 million includes $50 million of additional capacity to finance future loans for a period of up to 90 days from the closing date of the CLO. Arbor intends to own the portfolio until its maturity and will account for this transaction on its balance sheet as a financing. Arbor will use the proceeds of this offering to repay borrowings under its current credit facilities, pay transaction expenses and to fund future loans and investments.
"We are extremely pleased to have accessed the securitization market again with the successful pricing of our second CLO in the last four months," said Ivan Kaufman, Chairman and Chief Executive Officer. "This transaction clearly demonstrates significant improvements in pricing and terms, which is reflective of the current market conditions and in our ability to execute our business strategy. Our focus continues to be to originate attractive investment opportunities and appropriately lever them, allowing us to match the term of our assets with the term of our liabilities, through these non recourse debt vehicles with replenishments rights. These vehicles will also increase the returns on our investments and further strengthen our funding sources, allowing us to fund future growth through capacity both in our short-term finance facilities and CLO vehicles."