Arbor Realty Trust’s subsidiary, Arbor Realty SR, Inc., priced a $400 million private offering of 8.50% senior notes due 2028. The notes were sold under Rule 144A to qualified institutional buyers and under Regulation S to non‑U.S. persons, and are fully guaranteed by Arbor. The offering is expected to close on December 16, 2025.
The proceeds will be used to refinance and redeem Arbor’s outstanding 7.75% senior notes due 2026 and 5.00% senior notes due 2026. Any remaining funds will support general corporate purposes, providing the company with additional liquidity and a longer‑term debt structure.
Arbor’s debt profile is heavily leveraged, with a debt‑to‑equity ratio of 2.23, higher than the industry average. While the new notes carry a higher coupon of 8.50% than the 7.75% and 5.00% notes being retired, the refinancing replaces higher‑cost short‑term debt and aligns the company’s maturity profile with its long‑term strategy in a rising‑rate environment. Management views the transaction as part of an ongoing effort to shift to longer‑term financing and reduce refinancing risk.
In the third quarter of 2025, Arbor reported revenue of $112.4 million, a 25.8% shortfall versus analyst estimates of $151.4 million. Net interest income was $38.3 million, down 47% from the $72.26 million expected. GAAP earnings per share were $0.20, beating the consensus of $0.19 by 6.7%. Dividends per share were $0.30, down from $0.43 in the same quarter of 2024. Net profit margin narrowed to 28.7% from 42.5% YoY, reflecting higher interest costs and increased loan delinquencies.
Arbor operates through two main segments: the Structured Business, which includes bridge loans, mezzanine, and preferred equity, and the Agency Business, which provides a steady income stream through Fannie Mae and Freddie Mac. The refinancing supports both segments by reducing short‑term funding needs and improving liquidity for future growth initiatives.
CEO Ivan Kaufman described the refinancing as “incredibly innovative” and said it creates “tremendous efficiencies” and reinforces the quality of the loan book. Market reaction has been tempered by concerns about the high coupon rate and leverage, but the company maintains its dividend policy and liquidity position.
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