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Arbor Realty modified about $1.9B in loans in the first quarter, including extending maturity dates and offering “temporary rate relief” to multifamily borrowers trying not to buckle under interest rate pressure.
The multifamily lender and real estate investment trust has been hammering out loan modifications on delinquent loans and swapping troubled ones out of bundled loans sold to investors, The Real Deal reported.
Arbor had about $465M in nonperforming loans, or loans 60 days or more past due, in Q1. The total was up 70% from the end of 2023, according to TRD.
In some situations, Arbor required borrowers to bring their delinquent loans current. In other modifications, some borrowers ponied up cash, paying down principals, buying rate caps and loading up reserves, but the gap between what was owed and what was contributed by borrowers was still enormous.
On approximately $1.1B in loans, borrowers’ latest contributions amounted to just about 4% of what they owed, TRD reported.
Arbor also bought $223M in troubled loans from its collateralized loan obligations. Arbor said it had worked out most of the debt on those. It is unclear how much of the $1.9B in modified loans were in Arbor CLOs, but Arbor Chief Financial Officer Paul Elenio said on an earnings call last week that “the majority of those loans were probably in the CLOs because the bulk of our loans are financed in the CLOs.”
Arbor’s CLOs were the focus of a damning short seller report earlier this year in which Viceroy Research claimed that delinquent loans represented nearly $2B of Arbor's $7.6B CLO book.
Arbor was still profitable, with $57.9M in net income in the first three months of the year, down from $84M at the end of last year.
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