Arbor Realty Trust Inc. completed the issuance and sale of $100.0 million aggregate principal amount of its 5.25% convertible senior notes due July 1, 2021.
The notes were issued pursuant to a purchase agreement by and among the company, Arbor Realty LP, and J.P. Morgan Securities LLC, as representative of the initial purchasers.
The company granted the initial buyers the right to purchase up to an additional $15.0 million of notes solely to cover overallotments.
The notes will bear interest at a rate equal to 5.25% per year, payable semiannually in arrears on Jan. 1 and July 1 of each year, starting Jan. 1, 2019. They will be convertible prior to April 1, 2021, subject to certain conditions, into cash, shares of the company's common stock or a combination of cash and stock, at the company's sole election.
The conversion rate will initially equal 86.9943 common shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of about $11.50 per common share, representing an approximate 10% conversion premium based on the $10.45 per-share June 28 closing price of the company's common stock.
The net proceeds to Arbor Realty Trust from the sale of the notes will be about $96.8 million after deducting the initial buyers' discounts and commissions, and estimated offering expenses.
In addition to the notes offering, Arbor Realty Trust entered into separate privately negotiated exchange agreements with certain holders of its 6.50% convertible senior notes due 2019 to buy back about $87.9 million aggregate principal amount outstanding of its 6.50% convertible notes held by the holders for approximately $78.9 million in cash and approximately 3.4 million common shares of the company.
Arbor Realty Trust used the net proceeds of the offering to pay the cash consideration of such exchange agreements and plans to use any remaining proceeds from the offering for general corporate purposes.