UNIONDALE, NY—Arbor Realty Trust, Inc. reports it has closed on a $375-millioin collateralized loan obligation (CLO) issued by two newly formed subsidiaries of the locally-based real estate investment trust.
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 company states.
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, Arbor Realty notes.
The notes offering 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 states it will use the proceeds of the offering to repay borrowings under its current credit facilities, as well as pay transaction expenses and 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.