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Arbor – The Cream of the Flop

Author: Published on: Published in: Arbor Realty Trust (NYSE:ABR)

March 26, 2024 – We think it’s time for a change of pace: this report will highlight the best of the worst properties on Arbor’s CLO books. Viceroy have selected a sample of recently constructed properties in Arbor’s CLO portfolio, of which there are about a dozen, to showcase another financial conundrum Arbor faces:

  • Arbor have provided hundreds of millions of dollars in loans to finance syndicate purchases of newly-built units and, on some occasions, what appears to be construction financing disguised as a bridge loan.
  • Substantially all these new-built underlying properties were purchased with high tenancy rates, limiting possible NOI uplift.
  • There is little/no room for renovation of new build apartments, thus little ability to build NOI.
  • Every single one of these underlying assets is underwater, and rate caps have/will expire.
  • None of these loans qualify for refinancing or for agency loans, as they are underwater.
  • Many borrowers appear to have concentrated exposure to Arbor.
  • The only guarantees from these borrowers appears to be “equity” in other MF residential investments which are also likely underwater.

 

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