Arbor Realty Trust Restructures Debt

Arbor Realty Trust Inc., Uniondale, N.Y., has completed a restructuring of its financing facilities, totaling $374 million, with Wachovia Bank NA (now part of Wells Fargo). It also agreed to amend its management agreement with Arbor Commercial Mortgage LLC. The $374 million of restructured indebtedness with Wachovia was comprised of two term loan facilities with an aggregate outstanding balance of $332 million and a working capital facility with an outstanding balance of $42 million. This debt restructuring resulted in the consolidation of the three facilities into one term debt facility with an outstanding balance of $317 million and one working capital facility with an outstanding balance of $57 million. The maturity dates of the facilities were extended for three years. The term loan facility requires a $48 million reduction over the three-year term, with approximately $8 million in reductions due every six months beginning in December 2009. Arbor was able to eliminate most margin call provisions. However, the term loan had a rate increase to Libor plus 350 basis points compared with Libor plus approximately 200 BPs; the working capital facility saw a 300 BP increase in rate to Libor plus 800 BPs. Arbor also gave Wachovia 1.0 million warrants at an average strike price of $4.00; half are exercisable immediately at a price of $3.50, 250,000 warrants are exercisable after July 23, 2010 at a price of $4.00 and 250,000 warrants are exercisable after July 23, 2011 at a price of $5.00. The deal also required Arbor's CEO and chairman, Ivan Kaufman to remain an officer or director for the term of the facilities.