Arbor Realty Trust is dipping its toes back in the securitization markets, returning with a collateralized loan obligation deal for the first time in three years.
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The multifamily real estate investment trust is close to finalizing a bond deal that would raise over $800M in a process being led by JPMorgan Chase, sources told Bloomberg. The deal packages together some of Arbor’s floating interest rate loans backed by mortgages on build-to-rent apartment communities in varying stages of completion.
The properties are largely in the later stages of development, with horizontal construction complete and vertical construction initiated or fully complete, according to Morningstar commentary. All of the loans in the pool have floating interest rates.
Arbor Realty's reentry into the space comes as CRE CLO issuance volume was $10.5B as of April, according to Green Street, already surpassing the total from 2024 by nearly $2B.
Initial collateral in this latest deal consists of 21 floating-rate mortgage loans totaling $551.9M. Arbor Realty has issued over $10B worth of CLO debt and is one of the largest firms to use the deals.
The build-to-rent loans in this latest CLO are slightly different than the loans Arbor has traditionally securitized — bridge loans commonly known as “fix and flips.” The company hasn’t sold any new CLO debt since 2022, when rising rates depressed the value of many of its floating-rate loans.
The commercial real estate lender has faced a dogged campaign from short sellers accusing it of covering up financial strain, and the Department of Justice launched an investigation into the company in July 2024 following a series of reports and accusations of wrongdoing.
Short seller Viceroy Research previously accused Arbor of fraud, claiming it hides losses by financing the purchase of assets from its own foreclosures in off-balance-sheet transactions. Arbor has denied those allegations.
“We routinely cooperate with regulatory inquiries and are very confident that we conduct ourselves properly,” Arbor told Bisnow in a statement last year.
