Federal immigration enforcement is weighing on the performance of one of the nation’s largest multifamily bridge lenders.

Arbor Realty Trust has been dealing with rising distress since interest rates spiked, and troubled loans are having a “tremendous drag” on its earnings. That is further compounded by a 45% average occupancy rate on the apartment buildings it has taken over via foreclosure, partially due to ICE raids, CEO Ivan Kaufman said.

Immigration activity is impacting occupancy rates primarily in Houston but also in San Antonio, Dallas, Atlanta and pockets of Florida, he said.

“You're seeing a lot of ICE raids in those areas,” Kaufman said. “Even in Dallas, which is shocking. You're seeing properties that were 90% occupied. The next day, they're back down to 65 or 70.”

Kaufman claims Houston has been “very adversely” affected by immigration issues from both ends of the political spectrum.

“Under the prior administration, you had a significant number of immigration centers next to a lot of properties. [They] took over the properties and damaged those properties severely,” Kaufman said during an earnings call Friday.

The 45% average occupancy rate excludes two properties vacant due to renovations, according to the earnings report.

The multifamily lender REIT had 15 multifamily REO assets at the end of 2025, meaning properties that were repossessed by the lender after failing to sell in a foreclosure auction. The number of loans Arbor foreclosed on soared from six in 2024 to 21 in 2025, according to its earnings reports.

Arbor ended the year with $570M in loan delinquencies and $500M of REO assets, up from $525M in delinquencies and $177M of REO assets at the end of 2024.

“These assets are not producing income, and some of the REO assets are actually generating negative NOI as we work through the process of stabilizing these assets and improving occupancy,” Chief Financial Officer Paul Elenio said.

The REIT's leadership expressed optimism about a clear path to resolve its nonperforming assets.

Arbor sold five REO assets in 2025 and expects to reduce its REO asset balance to $250M to $300M by the end of 2026, despite adding another $100M to $200M in REO assets along the way.

“As we work to the bottom of the cycle, we are working very hard to continue to resolve more delinquencies than new ones that come on,” Elenio said. “This process takes time.”

But the REIT is making meaningful progress, he said.

“[We] have a clear line of sight to resolving the bulk of these assets over the next few quarters, which will increase our run rate of income for the future,” Elenio said.

Arbor’s net interest income was $55.7M for the fourth quarter, down from $82.9M from the quarter a year earlier. Yet the REIT beat analyst expectations for the quarter and saw its stock rise more than 9% Friday.

Bloomberg reported in July 2024 that U.S. Department of Justice prosecutors and the FBI launched an investigation into Arbor’s lending practices and loan books.