The notes issued are secured by a portfolio of real estate-related assets and cash, with a face value of $762.6 million. This portfolio primarily consists of first mortgage bridge loans, which are crucial for financing real estate projects. The initial weighted average spread on the notes is approximately 1.73% over Term SOFR, excluding fees and transaction costs. Notably, the facility includes a reinvestment period of around two years and six months, allowing for the reinvestment of principal proceeds from repayments of the portfolio assets into qualifying replacement assets, subject to specific conditions.
Arbor intends to maintain ownership of the portfolio of real estate-related assets through the securitization vehicle until maturity, which is anticipated to be in September 2043. The proceeds from this securitization will be utilized to repay existing borrowings under Arbor's current credit facilities, cover transaction expenses, and fund future loans and investments. This strategic move is expected to bolster Arbor's financial flexibility and support its growth initiatives in the competitive real estate market.
The investment grade-rated notes were issued under an indenture and have not been registered under the Securities Act of 1933, meaning they cannot be offered or sold in the United States without an applicable exemption from registration requirements. Arbor's management expressed confidence in the transaction, highlighting its potential to strengthen the company's capital structure and enhance shareholder value.
