Arbor Realty Trust closes $785M commercial real estate mortgage securitization

Arbor Realty Trust Inc. closed a $785 million commercial real estate mortgage securitization, the firm's 14th collateralized securitization vehicle.

An aggregate of about $655 million of investment grade-rated notes were issued, and Arbor retained subordinate interests in the issuing vehicle of about $130 million. The $785 million of collateral includes approximately $150 million of capacity to acquire additional loans for a period of up to 180 days from the securitization's closing date.

The notes are secured initially by a portfolio of real estate-related assets — mainly first mortgage bridge loans — and cash with a face value of $785 million. The notes have an initial weighted average spread of approximately 133 basis points over the one-month Libor, excluding fees and transaction costs.

The facility has a 2.5-year replenishment period, which allows for the principal proceeds from repayments of the portfolio assets to be reinvested in qualifying replacement assets.

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.

Proceeds of the securitization will be used to repay borrowings under Arbor's current credit facilities, to pay transaction expenses, and fund future loans and investments.