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Arbor Realty – Northbrooke Foreclosure

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

June 18, 2024 – Arbor has foreclosed on another delinquent property in Houston: Northbooke apartments.

Northbrooke Apartments has $32.5m of debt against an independent valuation of $38.3m: an implied cap rate of 2.26%. A blue-sky model suggests that the LTV is, at best, ~127%, and the shortfall to the debt amount is $7m.

There is no rate cut large enough, no rate caps cheap enough, and no investors dumb enough to save Arbor.

Northbrooke Apartments is due to appear at auction on July 2, 2024, however we note that foreclosed Arbor properties rarely make it to auction. Instead, Arbor find predictable, costly ways to kick the can.

We believe Arbor management have known about the immediate and extreme risk of delinquencies and impairments since early 2023, if not prior. It has not communicated any audited, auditable, or verifiable impairment figures to investors to this effect.

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