- Arbor Realty Trust secured $1.15B in refinancing from JPMorgan to redeem its CLO bondholders.
- The refinancing, structured as a repo line, provides Arbor with an additional $80M in liquidity.
- Arbor has faced many challenges with delinquencies and loan modifications due to rising interest rates and a probe from the FBI and DOJ.
- The deal allows Arbor to refinance its CLO debt at a lower rate, creating efficiencies and reinforcing banking relationships.
Arbor Realty Trust (ABR) secured $1.1B in refinancing from JPMorgan (JPM) to pay off CLO bondholders, gaining a liquidity boost amid delinquency struggles.
Major Refinancing
The massive, billion-dollar refi will be used to pay off Arbor’s Collateralized Loan Obligation bondholders. The deal, structured as a repurchase line, gives Arbor another $80M in liquidity, offering much-needed relief as the company navigates delinquency challenges.
The funds will also be used to redeem two large CLOs in full, which have been under scrutiny due to Arbor’s struggles with growing delinquencies and shrinking dividend payouts.
In a positive sign for the lender, JPMorgan agreed to extend the repo line despite concerns over Arbor’s loan book, which has been hit hard by the Federal Reserve’s rate hikes.
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A Difficult Year
The refinancing deal comes after a difficult year for Arbor. The company primarily originates loans to multifamily owners, which are then securitized into CLOs.
The rise in interest rates caused distress for many of Arbor’s borrowers left with floating-rate loans, pushing delinquencies higher.
In response, Arbor had to restructure many loans, extending maturity dates and offering temporary rate relief to distressed borrowers.
Despite challenges, Arbor continued to maintain strong banking relationships, and the new refi deal reflects the confidence JPMorgan has in the lender’s ability to manage its loan book.
Refi Deal Details
In exchange for the refinancing, Arbor transferred $1.4B in assets into a repurchase facility, with $1.3B of this total tied to its two CLOs.
The new repo facility offers 80% leverage, which is higher than the leverage point of approximately 77% on the existing CLOs, and comes at a lower rate.
Arbor’s CEO, Ivan Kaufman, called the refi deal “incredibly innovative,” noting it would create new efficiencies and bolster the quality of the company’s loan book.
