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Arbor Realty Trust Closes Third Collateralized Loan Obligation

Stocks in this article: ABR

UNIONDALE, N.Y., April 28, 2014 (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 closing of a $375 million collateralized loan obligation (CLO) issued by two newly-formed subsidiaries of Arbor. An aggregate of approximately $281 million of investment grade-rated debt was issued and Arbor retained an equity interest in the portfolio of approximately $94 million. The $375 million of collateral includes approximately $68 million of additional capacity to finance future loans for a period of up to 120 days from the closing date of the CLO.

The notes have an initial weighted average spread of approximately 239 basis points over one-month LIBOR, excluding fees and transaction costs. The facility has a two and a half 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 offering of the notes evidencing the CLO was made pursuant to a private placement. The notes were issued under an indenture and are secured initially by a portfolio of real estate related assets and cash with a face value of approximately $375 million, with real estate related assets consisting primarily of first mortgage bridge loans.

Arbor intends to own the portfolio of real estate-related assets until its maturity and expects to 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.

Sandler O'Neill + Partners, L.P. acted as lead placement agent and Chalkhill Partners, L.L.P. acted as European co-placement agent for this transaction. The CLO notes were placed in the United States and in Europe. Certain of the CLO notes were rated by Moody's Investors Service, Inc. and the CLO notes were rated by DBRS, Inc.

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