Arbor Realty Trust plans to issue CLOs backed by commercial real estate on a regular basis, Gene Kilgore, executive vice president of structured securitization said today.
In September 2012, Arbor issued the first CRE CLO since the financial crisis and the deal was so successful that the firm did another one two months later. Both were collateralized entirely by bridge loans and have two-year reinvestment periods.
"Frankly it was with some trepidation that we went to market" with the initial, $125 million deal, said Kilgore, who was speaking on a panel at IMN's CLO conference in New York. "There had been no deal since 2007; but it made too much sense not to do it."
Arbor was "elated" with the reception to the deal, which it had marketed very narrowly, Kilgore said. The firm's second deal, twice as big at $260 million, was met with even greater demand, and spreads tightened significantly.
Going forward "we intend to be programmatic" with issuance "to the extent the market is there," he said.
Loans backing the first two deals were all multifamily, only because that is what Arbor had on its balance sheet at the time. Future deals could include some loans on commercial real estate.