The Issuer entered into a Loan Obligation Management Agreement with Arbor Realty Collateral Management, LLC, a consolidated subsidiary of Arbor (the “Loan Obligation Manager”) to which the Loan Obligation Manager has agreed to advise the Issuer on certain matters regarding the loan obligations and other eligible investments securing the Notes. The Loan Obligation Manager has waived its right to receive a management fee for the services rendered under the Loan Obligation Management Agreement.

The Issuer, the Loan Obligation Manager and the trustee entered into a Servicing Agreement with Arbor Multifamily Lending, LLC, a wholly owned subsidiary of Arbor (the “Servicer”) to which the Servicer has agreed to act as the servicer and special servicer for the loan obligations. In connection with its duties under the Servicing Agreement, the Servicer has waived its right to servicing and special servicing fees but will be entitled to reimbursement of certain costs and expenses.

The Notes represent non-recourse obligations of the Issuer payable solely from the loan obligations and certain other assets pledged under the Indenture. To the extent the loan obligations and other pledged assets are insufficient to make payments in respect of the Notes, neither of the Issuers will have any obligation to pay any further amounts in respect of the Notes.

The Offered Notes have an initial weighted average interest rate of approximately 1.36% plus one-month LIBOR. Interest payments on the Notes are payable monthly, beginning on January15, 2018, to and including December15, 2027, the stated maturity date of the Notes. As advancing agent under the Indenture, Arbor Realty SR,Inc., a consolidated subsidiary of Arbor, may be required to advance interest payments due on the Notes on the terms and subject to the conditions set forth in the Indenture. Arbor Realty SR,Inc. is entitled to receive a fee, payable on a quarterly basis in accordance with the priority of payments set forth in the Indenture, equal to 0.07% per annum on the aggregate outstanding principal amount of the Notes.

Each Classof Notes will mature at par on December15, 2027, unless redeemed or repaid prior thereto. Principal payments on each Classof Notes will be paid at the stated maturity in accordance with the priority of payments set forth in the Indenture. However, it is anticipated that the Notes will be paid in advance of the stated maturity date in accordance with the priority of payments set forth in the Indenture. The weighted average life of the Notes is currently expected to be between 3.7 years and 5.6 years. The calculation of the weighted average lives of the Notes assumes certain collateral characteristics including that there are no prepayments, defaults, extensions or delinquencies. There is no assurance that such assumptions will be met.

In general, payments of principal and interest (including any defaulted interest amount) on the ClassA Notes will be senior to all payments of principal and interest on the ClassB, C, D and E Notes; payments of principal and interest (including any defaulted interest amount) on the ClassB Notes will be senior to all payments of principal and interest on the ClassC, D and E Notes; payments of principal and interest (including any defaulted interest amount) on the ClassC Notes will be senior to all payments of principal and interest on the ClassD and E Notes; and payments of principal and interest (including any defaulted interest amount) on the ClassD Notes will be senior to all payments of principal and interest on the ClassE Notes. Payments on the Notes will be senior to dividends and all other distributions in respect of the preferred shares.

The Notes are subject to a clean-up call redemption (at the option of and at the direction of the Loan Obligation Manager), in whole but not in part, on any interest payment date on which the aggregate outstanding principal amount of the Notes has been reduced to 10% or less of the aggregate outstanding principal amount of the Offered Notes outstanding on the issuance date.

Subject to certain conditions described in the Indenture, on July15, 2020, and on any interest payment date thereafter, the Issuer may redeem the Notes and the Preferred Shares at the direction of the holders of a majority of the Preferred Shareholders.

The Notes are also subject to a mandatory redemption on any interest payment date on which certain note protection tests set forth in the Indenture are not satisfied and following the end of the 120-day period for acquisition of additional assets if the ratings assigned to the Notes as of the Closing Date are downgraded or withdrawn. Any mandatory redemption of the Notes is to be paid from interest and principal proceeds of the loan obligations in accordance with the priority of payments set forth in the Indenture, until the applicable note protection tests are satisfied or the applicable ratings are reinstated.

If certain events occur that would make the Issuer subject to paying U.S. income taxes or would make certain payments to or from the Issuer subject to withholding tax, then the holders of a majority of the Preferred Shareholders may require that the Issuer prepay all of the Notes.

Arbor Realty SR,Inc. has agreed to comply with the retention requirements of Regulation RR under the Securities Exchange Act of 1934, as amended, by causing a “majority-owned affiliate” (as defined in Regulation RR) to retain Preferred Shares in an amount equal to not less than 5% of the fair value of the Notes and Preferred Shares as of the Closing Date. However, if Regulation RR is modified or repealed, Arbor Realty SR,Inc. may choose to comply with Regulation RR as is then in effect.

The redemption price for each Classof Notes is generally the aggregate outstanding principal amount of such Class, plus accrued and unpaid interest (including any defaulted interest amounts).

In addition to standard events of default, the Indenture also contains the following events of default: (1)the requirement of the Issuer, Co-Issuer or pool of assets securing the Notes to register as an investment company under the Investment Company Act of 1940, as amended, and (2)the loss of the Issuer’s status as a qualified REIT subsidiary or other disregarded entity of Arbor Realty SR,Inc.

Item 7.01 Regulation FD Disclosure.

On December20, 2017, the Company issued a press release announcing the closing of the commercial real estate mortgage securitization disclosed in Items 1.01 and 2.03 of this Form8-K, a copy of which is furnished as Exhibit99.1 hereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

ARBOR REALTY TRUST INC Exhibit
EX-99.1 2 a17-28773_1ex99d1.htm EX-99.1 Exhibit 99.1     Contacts: Arbor Realty Trust,…
To view the full exhibit click here

About Arbor Realty Trust,Inc. (NYSE:ABR)

Arbor Realty Trust, Inc. is a specialized real estate finance company that invests in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets. The Company operates in the portfolio segment of commercial mortgage loans and investments. The Company invests primarily in real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity. The Company may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities. Its principal business objective is to maximize the difference between the yield on its investments and the cost of financing these investments to generate cash available for distribution, facilitate capital appreciation and maximize total return to its stockholders. The Company is externally managed and advised by Arbor Commercial Mortgage, LLC (ACM or its Manager).