What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-17 compared with 2022-02-18 · 583 added, 693 removed, 1570 unchanged (45% of the section changed)

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generally accepted accounting principles.

We did not audit the financial statements of Wakefield Investment Holdings LLC, a corporation in which the Company has a 12.3%.

In the consolidated financial statements, the Company’s investment in Wakefield Investment Holdings LLC is stated at $65.8 million and $59.2 million as of December 31, 2021 and 2020, respectively, and the Company’s equity in the net income of Wakefield Investment Holdings LLC is stated at $34.6 million in 2021, $75.7 million in 2020 and $7.2 million in 2019.

We did not audit the financial statements of Wakefield Investment Holdings LLC, a corporation in which the Company has a 25.0% interest.

In the consolidated financial statements, the Company’s investment in Wakefield Investment Holdings LLC is stated at $65.8 million as of December 31, 2021, and the Company’s equity in the net income of Wakefield Investment Holdings LLC is stated at $34.6 million in 2021 and $75.7 million in 2020.

Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Wakefield Investment Holdings LLC, is based solely on the report of the other auditors.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 17, 2023 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for credit losses for financial instruments carried at amortized cost in 2020 using the modified retrospective approach due to the adoption of Accounting Standard Update 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

See below for discussion of our related critical audit matter.

Basis for Opinion

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are

not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Mortgage Servicing Rights

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Description of the Matter

The Company’s allowance for credit losses related to structured loans totaled $113.2 million and $148.3 million, as of December 31, 2021 and 2020, respectively.

The Company’s allowance for credit losses related to structured loans and investments (including unfunded loan commitments) totaled $132.6 million and $113.2 million, as of December 31, 2022 and 2021, respectively.

The Company’s allowance for loss-sharing obligations related to the Fannie Mae DUS program totaled $22.7 million and $21.7 million as of December 31, 2022 and 2021, respectively.

As explained in Note 2 to the consolidated financial statements, management estimated the allowance for credit losses and allowance for loss-sharing obligations related to the Fannie Mae DUS program for the expected life of the loan using third party models, which consider loss factors determined through the generation of probability of defaults and loss given defaults for similar loans with similar credit, historical experience and current conditions for similar loans, reasonable and supportable forecasts about the future, and specific factors depending on the nature of the loans.

For loans experiencing credit deterioration, management may use cash flow models or third party appraisals to estimate the fair value of the underlying collateral securing the impaired loan to estimate the expected credit losses.

For loans experiencing credit deterioration, management may use cash flow models or third-party appraisals to estimate the fair value of the underlying collateral securing the loan and record a specific allowance for credit losses, if impaired.

Auditing management’s estimation of credit loss for structured loans and loss-sharing obligations related to the Fannie Mae DUS program was complex and involved a high degree of subjectivity due to the significant uncertainty associated with the assumptions used in the estimation.

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Credit and repurchase facilities

Collateralized loan obligations

Securitized debt

Senior unsecured notes

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Special voting preferred shares - 16,293,589 and 16,325,095 shares

8.25 % Series A, 0 and 1,551,500 shares

7.75 % Series B, 0 and 1,260,000 shares

8.50 % Series C, 0 and 900,000 shares

6.375 % Series D, 9,200,000 and 0 shares

6.25 % Series E, 5,750,000 and 0 shares

6.375 % Series D - 9,200,000 shares

6.25 % Series E - 5,750,000 shares

6.25 % Series F - 11,342,000 and 8,050,000 shares

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Additional paid-in capital

Retained earnings (accumulated deficit)

Retained earnings

Total Arbor Realty Trust, Inc.

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Our consolidated balance sheets include assets and liabilities of consolidated variable interest entities, or VIEs, as we are the primary beneficiary of these VIEs.

As of December 31, 2021 and 2020, assets of our consolidated VIEs totaled $ 7,144,806 and $ 3,134,447 , respectively, and the liabilities of our consolidated VIEs totaled $ 5,902,623 and $ 2,520,064 , respectively.

At December 31, 2022 and 2021, assets of our consolidated VIEs totaled $ 9,785,261 and $ 7,144,806 , respectively, and the liabilities of our consolidated VIEs totaled $ 7,876,024 and $ 5,902,623 , respectively.

See Note 15 for discussion of our VIEs.

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Property operating income

Loss on derivative instruments, net

Gain (loss) on derivative instruments, net

Other income, net

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Depreciation and amortization

Impairment loss on real estate owned

Provision for loss sharing (net of recoveries)

Provision for credit losses (net of recoveries)

Litigation settlement

Total other expenses

Income before extinguishment of debt, gain (loss) on real estate, income from equity affiliates and income taxes

Income before extinguishment of debt, sale of real estate, income from equity affiliates and income taxes

Loss on extinguishment of debt

Gain (loss) on real estate

Gain (loss) on sale of real estate

Income from equity affiliates

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Noncontrolling

Balance—December 31, 2018

Issuance of common stock

Repurchase of common stock

Issuance of common stock from convertible debt

Issuance of convertible senior unsecured notes, net

Extinguishment of convertible senior unsecured notes

Stock‑based compensation, net

Issuance of common stock from special dividend

Issuance of operating partnership units and special voting preferred stock from special dividend

Distributions—common stock

Distributions—preferred stock

Distributions—noncontrolling interest

Redemption of OP Units

Balance—December 31, 2019

Cummulative-effect adjustment (Note 2)

Balance - January 1, 2020 (as adjusted for the adoption of ASU 2016-13)

Balance — January 1, 2020

Issuance of common stock

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Balance—December 31, 2021

Cummulative-effect adjustment (Note 2)

Balance - January 1, 2022 (adjusted for adoption of ASU 2020-06)

Issuance of common stock

Issuance of Series F preferred stock

Stock-based compensation, net

Distributions - common stock

Distributions - preferred stock

Distributions - noncontrolling interest

Redemption of operating partnership units

Balance—December 31, 2022

See Notes to Consolidated Financial Statements.

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Operating activities:

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

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Amortization of capitalized mortgage servicing rights

Impairment loss on real estate owned

Originations of loans held-for-sale

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Proceeds from sales of loans held-for-sale, net of gain on sale

(Gain) loss on real estate

Mortgage servicing rights

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Net (charge-offs) recoveries for loss sharing obligations

Deferred tax provision

Deferred tax (benefit) provision

Income from equity affiliates

Distributions from equity affiliates

Distributions from operations of equity affiliates

Loss on extinguishment of debt

Payoffs and paydowns of loans held-for-sale

Loss on sale of loans

Change in fair value of held-for-sale loans

Litigation settlement

(Gain) loss on real estate

Changes in operating assets and liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing Activities:

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Deferred fees

Proceeds from sale of available-for-sale securities

Contributions to equity affiliates

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Due to borrowers and reserves

Proceeds from sale of available-for-sale securities

Investments in real estate, net

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( 6,750,254 )

( 1,156,624 )

Financing activities:

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( 12,428,681 )

Proceeds from issuance of collateralized loan obligations

Payoffs and paydowns of collateralized loan obligations

Payoff of debt fund

Proceeds from issuance of securitized debt

Payoffs and paydowns of securitized debt

Proceeds from issuance of common stock

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Proceeds from issuance of senior unsecured notes

Proceeds from issuance of convertible senior unsecured notes

Extinguishment of convertible senior unsecured notes

Settlements of convertible senior unsecured notes

Redemption of preferred stock

Payoffs and paydowns of senior unsecured notes

Redemption of OP Units

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Payment of deferred financing costs

Redemption of preferred stock

Extinguishment of convertible senior unsecured notes

Payoff of debt fund

Settlements of convertible senior unsecured notes

Net cash provided by financing activities

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Supplemental schedule of non-cash investing and financing activities:

Loans transferred from loans and investment, net to loans held-for-sale

Investment in real estate, net

Distributions accrued on preferred stock

Cummulative-effect adjustment (for adoption of credit loss standard)

Cummulative-effect adjustment (adoption of convertible debt standard)

Loans transferred from loans and investment, net to loans held-for-sale

Cummulative-effect adjustment (adoption of credit loss standard)

Settlements of convertible senior unsecured notes

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Issuance of common stock from convertible debt

Extinguishment of convertible senior unsecured notes

Special dividend - common stock issued

Redemption of OP Units for common stock

Special dividend - special voting preferred stock and OP Units issued

See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020

Note 1 — Description of Business

Arbor is a Maryland corporation formed in 2003.

We are a nationwide REIT and direct lender, providing loan origination and servicing for multifamily, seniors housing, healthcare and other diverse commercial real estate assets.

We are a nationwide REIT and direct lender, providing loan origination and servicing for commercial real estate assets.

We operate through two business segments:

our Structured Business and our Agency Business.

Through our Structured Business, we invest in a diversified portfolio of structured finance assets in the multifamily, SFR and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages and preferred and direct equity.

Through our Structured Business, we invest in a diversified portfolio of structured finance assets in the multifamily, SFR and commercial real estate markets, primarily consisting of bridge loans, in addition to mezzanine loans, junior participating interests in first mortgages and preferred and direct equity.

We also invest in real estate-related joint ventures and may directly acquire real property and invest in real estate-related notes and certain mortgage-related securities.

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We are an approved Fannie Mae DUS lender nationally, a Freddie Mac Multifamily Conventional Loan lender, seller/servicer, in New York, New Jersey and Connecticut, a Freddie Mac affordable, manufactured housing, senior housing and SBL lender, seller/servicer, nationally and a HUD MAP and LEAN senior housing/healthcare lender nationally.

We also originate and service permanent financing loans underwritten using the guidelines of our existing agency loans sold to the GSEs, which we refer to as "Private Label"

loans, and originate and sell finance products through CMBS programs.

We also originate and service permanent financing loans underwritten using the guidelines of our existing agency loans sold to the GSEs, which we refer to as “Private Label” loans and originate and sell finance products through CMBS programs.

We pool and securitize the Private Label loans and sell certificates in the securitizations to third-party investors, while retaining the servicing rights and the highest risk bottom tranche certificate of the securitization.

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federal income tax purposes.

A REIT is generally not subject to federal income tax on that portion of its REIT-taxable income that is distributed to its stockholders, provided that at least 90% of taxable income is distributed and provided that certain other requirements are met.

Certain of our assets that produce non-qualifying REIT income, primarily within the Agency Business, are operated through TRS entities, which are part of our TRS Consolidated Group and are subject to U.S.

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All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could materially affect the amounts reported in the consolidated financial statements and accompanying notes.

Actual results could differ from those estimates.

Beginning in early 2020, there has been a global outbreak of COVID-19, which had forced many countries, including the United States, to declare national emergencies, to institute “stay-at-home” orders, to close financial markets and to restrict operations of non-essential businesses.

Such actions have created significant disruptions in global supply chains, and adversely impacted many industries.

COVID-19 has had, and may continue to have, a continued and prolonged adverse impact on economic and market conditions, which could continue a period of global economic slowdown.

The impact of COVID-19 on companies continues to evolve, and the extent and duration of the economic fallout from this pandemic, both globally and to our business, remain unclear, making any estimate or assumption as of December 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

Our real estate owned assets previously recorded to real estate owned, net on our consolidated balance sheets is now recorded in other assets for all periods presented.

Use of Estimates

Actual results could differ from those estimates.

The ongoing effects of the COVID-19 pandemic have caused significant disruptions to the U.S.

and global economies.

Although vaccine availability and usage have continued to increase, which has led to less negative short-term effects, such as travel bans, quarantines, layoffs and shutdowns, the ongoing longer-term macroeconomic effects on inflation, interest rates, capital markets, labor shortages, property values and global supply chains continue to negatively impact many industries, including the U.S.

commercial real estate market.

In addition, new strains of COVID-19 continue to emerge, which may cause governments and businesses to re-impose aggressive measures to help slow its spread, making the future impact difficult to predict.

The ultimate impact of COVID-19 on the economy, including rising inflation, increasing interest rates, tightening of capital markets and reduced property values, both globally and to our business, makes any estimate or assumption at December 31, 2022 inherently less certain.

Significant Accounting Policies

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We place our cash and cash equivalents in high quality financial institutions.

The consolidated account balances at each institution periodically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage limits and we believe that this risk is not significant.

The consolidated account balances at each institution periodically exceed FDIC insurance coverage limits and we believe that this risk is not significant.

Loans, Investments and Securities.

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Allowance for Credit Losses.

We estimate allowances for credit losses on our structured loans and investments (including unfunded loan commitments), loss-sharing obligations related to the Fannie Mae DUS program and our held-to-maturity debt securities under CECL.

This method is based on expected credit losses for the life of the loan.

Our estimation of credit losses utilizes information obtained from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts about the future.

We have licensed a third-party model to assist with the measurement of expected credit losses, which utilizes incurred losses inherent in the portfolio.

The loss factors are determined through the generation of probability of defaults (PD) and loss given defaults (LGD) for similar loans with similar credit.

The loss factors are determined through the generation of probability of defaults and loss given defaults for similar loans with similar credit.

These results require a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses.

Changes in such estimates can significantly affect our expected credit losses.

Our method for calculating the estimate of expected credit loss considers historical experience and current conditions for similar loans and reasonable and supportable forecasts about the future.

The reasonable and supportable forecast period is determined based on our assessment of the most likely scenario of assumptions and plausible outcomes for the US economy, level of historical loss forecast estimates, material changes in growth and credit strategy and other factors that may affect our loss experience.

We regularly evaluate the reasonable and supportable forecast period to determine if a change is needed.

Beyond our reasonable and supportable forecast period, we generally revert to historical loss information over the remaining loan/asset period, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion.

We may adjust historical loss information for differences in risk that may not reflect the characteristics of our current

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors.

Our method for calculating the estimate of expected credit loss considers historical experience and current conditions for similar loans and reasonable and supportable forecasts about the future.

The reasonable and supportable forecast period is determined based on our assessment of the most likely scenario of assumptions and plausible outcomes for the U.S.

economy, level of historical loss forecast estimates, material changes in growth and credit strategy and other factors that may affect our loss experience.

We regularly evaluate the reasonable and supportable forecast period to determine if a change is needed.

We may adjust historical loss information for differences in risk that may not reflect the characteristics of our current portfolio, including, but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors.

The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period.

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If it is determined that a foreclosure is probable, or we expect repayment through the operation or sale of the collateral and the borrower is experiencing financial difficulty, we calculate expected credit losses based on the fair value of the collateral as of the reporting date.

During the loan review process, if we determine that it is probable that we will be unable to collect all amounts due for both principal and interest according to the contractual terms of a loan, we consider that loan impaired.

We evaluate the capitalization and market discount rates, as well as the borrower's operating income and cash flows, in estimating the value of the underlying collateral when determining if a loan is impaired.

We consider the capitalization and market discount rates, as well as the borrower’s operating income and cash flows, in estimating the value of the underlying collateral when determining if a loan is impaired.

We may also obtain a third-party appraisal, which may value the collateral through an “as-is” or “stabilized value” methodology.

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or when significant collection efforts have ceased and it is highly likely that a loss has been realized.

Loss on restructured loans is recorded when we have granted a concession to the borrower in the form of principal forgiveness related to the payoff or the substitution or addition of a new debtor for the original borrower or when we incur costs on behalf of the borrower related to the modification, payoff or the substitution or addition of a new debtor for the original borrower.

When a loan is restructured, we record our investment at net realizable value, taking into account the cost of all concessions at the date of restructuring.

In addition, a gain or loss may be recorded upon the sale of a loan to a third-party in the consolidated statements of income in the period in which the loan was sold.

We adopted ASU 2016-13, which utilizes the CECL methodology on January 1, 2020.

We adopted ASU 2016-13 using the modified retrospective method, therefore, the results for reporting periods prior to January 1, 2020 are unadjusted and reported in accordance with previously applicable GAAP.

In connection with the adoption of ASU 2016-13, we recorded a $ 28.6 million increase to accumulated deficit, which was net of a deferred tax asset of $ 3.6 million.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

When a loan is restructured, we record our investment at net realizable value, taking into account the cost of all concessions at the date of restructuring.

In addition, a gain or loss may be recorded upon the sale of a loan to a third-party in the consolidated statements of income in the period in which the loan was sold.

Loans Held-for-Sale, Net.

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We regularly monitor the specific reserves and update loss estimates as current information is received.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Capitalized Mortgage Servicing Rights.

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The following assumptions were used in calculating the fair value of our MSRs for the periods presented:

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We used discount rates ranging from 8 % to 13 %, representing a weighted average discount rate of 12 %, based on our best estimate of market discount rates to determine the present value of MSRs.

The inflation rate used for adequate compensation was 3 %.

Servicing Cost:

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The fair value estimates are based on available historical information and on future expectations and assumptions we deem reasonable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

We generally use an income-based valuation method to estimate the fair value of intangible assets, which discounts expected future cash flows to present value using estimates and assumptions we deem reasonable.

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Our assessment as to which intangible assets are deemed to have finite or indefinite lives is based on several factors including economic barriers of entry for the acquired product lines, scarcity of available GSE licenses, retention trends and our operating plans, among other factors.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Goodwill and indefinite-lived intangible assets are not amortized, while finite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis.

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A gain may be deferred in whole or in part until collectability of the sales price is reasonably assured and the earnings process is complete.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Hedging Activities and Derivatives .

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Fair values are estimated based on current market data from financial sources that trade such instruments and are based on prevailing market data and derived from third-party proprietary models based on well recognized financial principles and reasonable estimates about relevant future market conditions.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

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Realized and unrealized gains and losses related to our Swaps are recorded through earnings.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Revenue Recognition.

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This additional income, net of any direct loan origination costs incurred, is deferred and accreted into interest income on an effective yield or “interest” method adjusted for actual prepayment activity over the life of the related loan or security as a yield adjustment.

Income recognition is suspended for loans when, in our opinion, a full recovery of all contractual principal is not probable.

Income recognition is suspended for loans when, in our opinion, a full recovery of all contractual principal and/or interest is not probable.

Income recognition is resumed when the loan becomes contractually current, and performance is resumed.

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Given the transitional nature of some of our real estate loans, we may require funds to be placed into an interest reserve, based on contractual requirements, to cover debt service costs.

We will analyze these interest reserves on a periodic basis and determine if any

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

additional interest reserves are needed.

We will analyze these interest reserves on a periodic basis and determine if any additional interest reserves are needed.

Recognition of income on loans with funded interest reserves are accounted for in the same manner as loans without funded interest reserves.

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Leases with an initial term of twelve months or less are expensed as incurred.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Stock-Based Compensation.

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We organize and conduct our operations to qualify as a REIT and to comply with the provisions of the Internal Revenue Code with respect thereto.

A REIT is generally not subject to federal income tax on its REIT-taxable income that it distributes to its stockholders, provided that it distributes at least 90% of its REIT-taxable income and meets certain other requirements.

A REIT is generally not subject to federal income tax on its REIT-taxable income that is distributed to its stockholders, provided that at least 90% of its REIT-taxable income is distributed and provided that certain other requirements are met.

Certain REIT income may be subject to state and local income taxes.

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In general, our TRS entities may hold assets that the REIT cannot hold directly and may engage in real estate or non-real estate-related business.

Current and deferred taxes are recorded on the portion of earnings (losses) recognized

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

by us with respect to our interest in TRSs.

Current and deferred taxes are recorded on the portion of earnings (losses) recognized by us with respect to our interest in TRSs.

Deferred income tax assets and liabilities are calculated based on temporary differences between our GAAP consolidated financial statements and the federal, state, local tax basis of assets and liabilities as of the consolidated balance sheets.

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Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower EPS amount.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Recently Adopted Accounting Pronouncements

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Effect on Financial Statements

In December 2019, the FASB issued Accounting Standard Update (“ASU”) 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

In August 2020, the FASB issued Accounting Standards Updat (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

Upon adoption of this guidance, convertible debt proceeds will no longer be allocated between debt and equity components, reducing the unamortized debt discount and lowering interest expense.

This guidance also changes the method used to calculate diluted EPS when an instrument may be settled in cash or shares, if the effect is dilutive.

First quarter of 2022

The adoption of this guidance did not have a material impact on our consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We adopted this guidance on January 1, 2022 using the modified retrospective method of transition.

Upon adoption, we reclassified the remaining equity component from equity to our convertible senior unsecured notes liability and ceased amortization of the debt discount through interest expense.

Additionally, this guidance and the adoption method chosen requires the use of the if-converted method for the diluted net income per share calculation for our convertible instruments on a retrospective basis, regardless of our settlement intent.

The adoption of this guidance resulted in a $ 2.5 million increase to the carrying value of our convertible debt, an $ 8.7 million decrease to additional paid-in capital and a $ 5.6 million increase to retained earnings at January 1, 2022.

Additionally, the adoption of this guidance reduced our diluted EPS for the year ended December 31, 2022 by $ 0.05 per share, mainly due to the assumption that we will redeem the principal balance with common stock.

Recently Issued Accounting Pronouncements

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Effect on Financial Statements

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

This guidance reduces the number of accounting models for convertible debt instruments.

Upon adoption of this guidance, convertible debt proceeds will no longer be allocated between debt and equity components, reducing the unamortized debt discount and lowering interest expense.

This guidance also changes the method used to calculate diluted earnings per share when an instrument may be settled in cash or shares, if the effect is dilutive.

First quarter of 2022 with early adoption permitted beginning in the first quarter of 2021

We adopted this guidance on January 1, 2022 using the modified retrospective method of transition.

Upon adoption, we reclassified the remaining equity component from equity to our convertible senior unsecured notes liability and ceased the amortization of the debt discount through interest expense.

Additionally, this guidance will require us to use the if-converted method for the diluted net income per share calculation for our convertible instruments, regardless of our settlement intent.

The adoption of this guidance resulted in an aggregate decrease to our additional paid-in capital of approximately $ 8.7 million and an aggregate increase to our retained earnings of approximately $ 6.2 million at January 1, 2022.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

This guidance eliminates the accounting guidance on troubled debt restructurings and amends existing disclosures, including the requirment to disclose current period gross write-offs by year of origination.

The guidance also updates the requirements related to accounting for credit losses and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.

First quarter of 2023, with early adoption permitted

We have not early adopted this guidance and will make all the necessary additional disclosure requirements once adopted.

The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 3 — Loans and Investments

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Loans and investments, net

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2021

December 31, 2020

Bridge loans (4)

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The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss.

As of December 31, 2021 and 2020, bridge loans included 120 and 38 , respectively, of SFR loans with a total gross loan commitment amount of $ 804.6 million and $ 309.2 million, respectively, of which $ 408.2 million and $ 88.1 million, respectively, was funded.

As of December 31, 2021 and 2020, other loans included 2 variable rate SFR permanent loans and 22 SFR permanent loans, respectively.

During the first quarter of 2021, the Structured Business transferred 21 fixed rate SFR permanent loans with a UPB of $ 65.2 million to the Agency Business (all of which were outstanding as of December 31, 2020), which represented all fixed rate SFR permanent loans originated prior to such transfer.

Fixed rate SFR permanent loans are reported through the Agency Business beginning in 2021 and classified as held-for-sale.

See Note 4 for further details.

At December 31, 2022 and 2021, bridge loans included 241 and 120 , respectively, of SFR loans with a total gross loan commitment of $ 1.57 billion and $ 804.6 million, respectively, of which $ 927.4 million and $ 408.2 million, respectively, was funded.

At December 31, 2022 and 2021, other loans included 3 and 2 variable rate SFR permanent loans, respectively.

Concentration of Credit Risk

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See Note 18 for details on our concentration of related party loans and investments.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

We assign a credit risk rating of pass, pass/watch, special mention, substandard or doubtful to each loan and investment, with a pass rating being the lowest risk and a doubtful rating being the highest risk.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

A summary of the loan portfolio’s internal risk ratings and LTV ratios by asset class as of December 31, 2021 is as follows ($ in thousands):

A summary of the loan portfolio’s internal risk ratings and LTV ratios by asset class at December 31, 2022 is as follows ($ in thousands):

UPB by Origination Year

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Special Mention

Total Healthcare

Percentage of portfolio

Special Mention

Student Housing:

Total Healthcare

Percentage of portfolio

Special Mention

Total Student Housing

Percentage of portfolio

Special Mention

Student Housing:

Percentage of portfolio

Special Mention

Total Student Housing

Percentage of portfolio

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Geographic Concentration Risk

As of December 31, 2021, 19 % and 12 % of the outstanding balance of our loan and investment portfolio had underlying properties in Texas and Florida, respectively.

As of December 31, 2020, 19 % and 11 % of the outstanding balance of our loan and investment portfolio had underlying properties in New York and Texas, respectively.

No other states represented 10% or more of the total loan and investment portfolio.

At December 31, 2022, underlying properties in Texas and Florida represented 22 % and 14 %, respectively, of the outstanding balance of our loan and investment portfolio.

At December 31, 2021, underlying properties in Texas and Florida represented 19 % and 12 %, respectively, of the outstanding balance of our loan and investment portfolio.

No other state represented 10 % or more of the total loan and investment portfolio.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Allowance for Credit Losses

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Allowance for credit losses:

Beginning balance, prior to adoption of CECL

Impact of adopting CECL - January 1, 2020

Beginning balance

Provision for credit losses (net of recoveries)

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Allowance for credit losses:

Our estimate of allowance for credit losses on our structured loans and investments, including related unfunded loan commitments, was based on a reasonable and supportable forecast period that reflects an improving macroeconomic outlook based on recent observable data, including increasing property values, decreases in unemployment rates, low interest rates and other market factors, including continued optimism in the COVID-19 pandemic, partially offset by rising inflation.

Beginning balance, prior to adoption of CECL

Impact of adopting CECL - January 1, 2020

Provision for credit losses (net of recoveries)

Ending balance

During 2022, we recorded a $ 19.3 million provision for credit losses, which was net of a $ 1.5 million loan loss recovery for a loan that paid off during 2022.

The increase in the provision for credit losses during 2022 was primarily attributable to an increase in our loans and investments balance as a result of portfolio growth and the impact of rising interest rates, inflation and economic forecasts.

Our estimate of allowance for credit losses on our structured loans and investments, including related unfunded loan commitments, was based on a reasonable and supportable forecast period that reflects recent observable data, including an increase in interest rates, higher unemployment forecasts, and rising inflation, partially offset by increasing property values and other market factors, including continued optimism of COVID-19.

The expected credit losses over the contractual period of our loans also include the obligation to extend credit through our unfunded loan commitments.

Our current expected credit loss (“CECL”) allowance for unfunded loan commitments are adjusted quarterly and correspond with the associated outstanding loans.

As of December 31, 2021 and 2020, we had outstanding unfunded commitments of $ 975.2 million and $ 353.8 million, respectively, that we are obligated to fund as borrowers meet certain requirements.

As of December 31, 2021 and 2020, accrued interest receivable related to our loans totaling $ 58.3 million and $ 41.6 million, respectively, was excluded from the estimate of credit losses and is included in other assets on the consolidated balance sheets.

Our current expected credit loss (“CECL”) allowance for unfunded loan commitments is adjusted quarterly and corresponds with the associated outstanding loans.

At December 31, 2022 and 2021, we had outstanding unfunded commitments of $ 1.15 billion and $ 975.2 million, respectively, that we are obligated to fund as borrowers meet certain requirements.

At December 31, 2022 and 2021, accrued interest receivable related to our loans totaling $ 108.5 million and $ 58.3 million, respectively, was excluded from the estimate of credit losses and is included in other assets on the consolidated balance sheets.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

All of our structured loans and investments are secured by real estate assets or by interests in real estate assets, and, as such, the measurement of credit losses may be based on the difference between the fair value of the underlying collateral and the carrying value of the assets as of the period end.

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December 31, 2021

(1) Represents the UPB of eight and ten impaired loans (less unearned revenue and other holdbacks and adjustments) by asset class at December 31, 2021 and 2020, respectively.

There were no loans for which the fair value of the collateral securing the loan was less than the carrying value of the loan for which we had not recorded a provision for credit loss as of December 31, 2021, 2020 and 2019.

At December 31, 2021, three loans with an aggregate net carrying value of $ 20.1 million, net of related loan loss reserves of $ 2.6 million, were classified as non-performing and, at December 31, 2020, seven loans with an aggregate net carrying value of $ 53.8 million, net of related loan loss reserves of $ 6.5 million, were classified as non-performing.

(1) Represents the UPB of seven and eight impaired loans (less unearned revenue and other holdbacks and adjustments) by asset class at December 31, 2022 and 2021, respectively.

At December 31, 2022, four loans with an aggregate net carrying value of $ 2.6 million, net of related loan loss reserves of $ 5.1 million, were classified as non-performing and, at December 31, 2021, three loans with an aggregate net carrying value of $ 20.1 million, net of related loan loss reserves of $ 2.6 million, were classified as non-performing.

Income from non-performing loans is generally recognized on a cash basis when it is received.

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In 2008, we suspended the recording of the accrual rate of interest on these loans, as they were impaired and we deemed the collection of this interest to be doubtful.

At both December 31, 2022 and 2021, we had a cumulative allowance for credit losses of $ 71.4 million related to these loans.

The loans are subject to certain risks associated with a development project including, but not limited to, availability of construction financing, increases in projected construction costs, demand for the development’s outputs upon completion of the project, and litigation risk.

Additionally, these loans were not classified as non-performing as the borrower is compliant with all of the terms and conditions of the loans.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

December 31, 2021 and 2020, we had a cumulative allowance for credit losses of $ 71.4 million related to these loans.

The loans are subject to certain risks associated with a development project including, but not limited to, availability of construction financing, increases in projected construction costs, demand for the development's outputs upon completion of the project, and litigation risk.

Additionally, these loans were not classified as non-performing as the borrower is in compliance with all of the terms and conditions of the loans.

At both December 31, 2022 and 2021, we had no loans contractually past due 90 days or more that are still accruing interest.

During 2021, there was no interest income recognized on nonaccrual loans, and in 2020 the amount was de minimis.

During both 2022 and 2021, there was no interest income recognized on nonaccrual loans.

In 2022, we sold 4 bridge loans with an aggregate UPB of $ 296.9 million at par less shared loan origination fees and selling costs totaling $ 2.0 million and released $ 78.0 million of capital to be used for future investments.

The shared loan origination fees and selling costs were recorded as an unrealized impairment loss and included in other income, net on the consolidated statements of income.

We have retained the right to service these loans.

During 2022, we sold a bridge loan and mezzanine loans totaling $ 110.5 million, that were collateralized by a land development project, at a discount for $ 102.2 million.

In connection with this transaction, we released $ 66.3 million of capital to be used for future investments and recorded a $ 9.2 million loss (including fees and expenses), which was included in other income, net on the consolidated statements of income.

We have the potential to recover up to $ 2.8 million depending on the future performance of the loan.

In 2020, we entered into a loan modification agreement on a $ 26.5 million bridge loan with an interest rate of LIBOR plus 6.00 % with a 2.375 % LIBOR floor and a $ 6.1 million mezzanine loan with a fixed rate of 12 % collateralized by a retail property to:

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(i) LIBOR plus 5.50 % and (ii) 6.50 % , and (2) to extend the maturity three years to December 2024.

A portion of the foregoing interest equal to 2.00 % will be deferred to payoff and will be waived if the loan is paid off by December 31, 2022.

The loan modification agreement also included a $ 6.0 million required principal paydown, which occurred at the closing of the modification transaction, and an $ 8.0 million principal reduction once the borrower deposited an additional reserve of $ 4.6 million in December 31, 2021, which was charged-off against the previously recorded allowance for credit losses.

A portion of the foregoing interest equal to 2.00 % was deferred to payoff and would have been waived if the loan was paid off by December 31, 2022, which did not take place.

The loan modification agreement also included a $ 6.0 million required principal paydown, which occurred at the closing of the modification transaction, and an $ 8.0 million principal reduction once the borrower deposited an additional reserve of $ 4.6 million, which took place in 2021 and was charged-off against the previously recorded allowance for credit losses.

In 2019, we purchased $ 50.0 million of a $ 110.0 million bridge loan, which was collateralized by a hotel property and scheduled to mature in December 2022.

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Shortly after the purchase, we entered into a forbearance agreement with the borrower to temporarily reduce the interest rate from LIBOR plus 3.00 % with a 1.50 % LIBOR floor to a pay rate of 1.00 % and to include a $ 10.0 million principal reduction if the loan is paid off by March 2, 2021.

In January 2021, we entered into a second forbearance agreement which temporarily eliminated the pay rate, extended the principal reduction payoff deadline to June 30, 2021 and increased the interest rate to an unaccrued default rate of 9.50 %, which was deferred till payoff.

In 2021, we entered into a second forbearance agreement that temporarily eliminated the pay rate, extended the principal reduction payoff deadline to June 30, 2021 and increased the interest rate to an unaccrued default rate of 9.50 %, which was deferred until payoff.

In June 2021, we received $ 95.0 million for full satisfaction of these loans, reversed the $ 7.5 million allowance for credit losses and recorded interest income of $ 3.5 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Note 4 — Loans Held-for-Sale, Net

Our GSE loans held-for-sale are typically sold within 60 days of loan origination, while our Private Label loans are generally expected to be sold and securitized within 180 days of loan origination.

Our GSE loans held-for-sale are typically sold within 60 days of loan origination, while our non-GSE loans are generally expected to be sold and securitized within 180 days of loan origination.

Loans held-for-sale, net consists of the following (in thousands):

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Fair value of future MSR

Unrealized impairment loss

Unearned discount

Loans held-for-sale, net

During 2021, 2020 and 2019, we sold $ 6.42 billion, $ 6.59 billion and $ 4.40 billion, respectively, of loans held-for-sale and recorded gain on sales, including fees, of $ 123.0 million, $ 94.6 million and $ 65.7 million, respectively.

Included in the total loans sold during 2021 and 2020 were Private Label loans totaling $ 985.1 million and $ 727.2 million, respectively, which were sold to unconsolidated affiliates of ours who pooled and securitized the loans.

We retained the most subordinate class of certificates in the 2021 and 2020 securitizations totaling $ 85.7 million and $ 63.6 million, respectively, in satisfaction of credit risk retention requirements (see Note 7 for details), and we are also the primary servicer of the mortgage loans.

During 2022, 2021 and 2020, we sold $ 5.44 billion, $ 6.42 billion and $ 6.59 billion, respectively, of loans held-for-sale.Included in the total loans sold during 2022 and 2021 were Private Label loans totaling $ 489.3 million and $ 985.1 million, respectively, which were sold to unconsolidated affiliates of ours who securitized the loans.

We retained the most subordinate class of certificates in these securitizations totaling $ 43.4 million and $ 85.7 million, respectively, in satisfaction of credit risk retention requirements (see Note 7 for details), and we are also the primary servicer of the mortgage loans.

We determined that the fair value of certain loans held-for-sale were below their carrying values and, based on the fair value analysis performed, recorded unrealized impairment losses of $ 15.7 million during 2022 which was included in other income, net on the consolidated statements of income.

At December 31, 2022 and 2021, there were no loans held-for-sale that were 90 days or more past due, and there were no loans held-for-sale that were placed on a non-accrual status.

Subsequent Event.

In February 2022, we closed a Private Label securitization totaling $ 489.3 million and retained the most subordinate certificates totaling $ 43.4 million.

Note 5 — Capitalized Mortgage Servicing Rights

Our capitalized MSRs reflect commercial real estate MSRs derived from loans sold in our Agency Business or acquired MSRs.

Our capitalized MSRs reflect commercial real estate MSRs derived primarily from loans sold in our Agency Business or acquired MSRs.

The weighted average estimated life remaining of our MSRs was 8.6 years and 8.5 years at December 31, 2022 and 2021, respectively.

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We collected prepayment fees totaling $ 48.2 million and $ 38.2 million during 2022 and 2021, respectively, which are included as a component of servicing revenue, net on the consolidated statements of income.

As of December 31, 2021 and 2020, we had no valuation allowance recorded on any of our MSRs.

At December 31, 2022 and 2021, we had no valuation allowance recorded on any of our MSRs.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

The expected amortization of capitalized MSRs recorded as of December 31, 2021 is as follows (in thousands):

Actual amortization may vary from these estimates.

The expected amortization of capitalized MSRs recorded at December 31, 2022 is as follows (in thousands):

Based on scheduled maturities, actual amortization may vary from these estimates.

Note 6 – Mortgage Servicing

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December 31, 2021

North Carolina

Private Label

North Carolina

SFR - Fixed Rate

(1) Excludes loans which we are not collecting a servicing fee.

(2) Represents four bridge loans sold by our Structured Business that we are servicing, see Note 3 for details.

(3) No other individual state represented 4% or more of the total.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At December 31, 2022 and 2021, our weighted average servicing fee was 41.1 basis points and 44.9 basis points, respectively.

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These escrows are maintained in separate accounts at several federally insured depository institutions, which may exceed FDIC insured limits.

We earn interest income on the total

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

escrow deposits, generally based on a market rate of interest negotiated with the financial institutions that hold the escrow deposits.

We earn interest income on the total escrow deposits, generally based on a market rate of interest negotiated with the financial institutions that hold the escrow deposits.

Interest earned on total escrows, net of interest paid to the borrower, was $ 24.4 million, $ 4.2 million and $ 7.1 million during 2022, 2021 and 2020, respectively, and is a component of servicing revenue, net in the consolidated statements of income.

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In connection with our Private Label securitizations, we retain the most subordinate class of the APL certificates in satisfaction of credit risk retention requirements.

As of December 31, 2021, we retained APL certificates with an initial face value of $ 149.4 million, which were purchased at a discount for $ 91.4 million.

At December 31, 2022, we retained APL certificates with an initial face value of $ 192.8 million, which were purchased at a discount for $ 119.0 million.

These certificates are collateralized by 5-year to 10-year fixed rate first mortgage loans on multifamily properties, bear interest at an initial weighted average variable rate of 3.94 % and have an estimated weighted average remaining maturity of 7.5 years.

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As part of the securitizations under the SBL program, we have the ability to purchase the B Piece bond through a bidding process, which represents the bottom 10%, or highest risk, of the securitization.

As of December 31, 2021, we retained 49 % , or $ 106.2 million initial face value, of seven B Piece bonds, which were purchased at a discount for $ 74.7 million, and sold the remaining 51 % to a third-party at par.

At December 31, 2022, we retained 49 % , or $ 106.2 million initial face value, of seven B Piece bonds, which were purchased at a discount for $ 74.7 million, and sold the remaining 51 % to a third party.

These securities are collateralized by a pool of multifamily mortgage loans, bear interest at an initial weighted average variable rate of 3.74 % and have an estimated weighted average remaining maturity of 6.2 years.

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Ending balance

The allowance for credit losses on our held-to-maturity securities was estimated on a collective basis by major security type and was based on a reasonable and supportable forecast period and a historical loss reversion for similar securities.

The issuers continue to make timely principal and interest payments and we continue to accrue interest on all our securities.

As of December 31, 2021, no other-than-temporary impairment was recorded on our held-to-maturity securities.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

The issuers continue to make timely principal and interest payments and we continue to accrue interest on all our securities.

At December 31, 2022, no other-than-temporary impairment was recorded on our held-to-maturity securities.

We recorded interest income (including the amortization of discount) related to these investments of $ 18.6 million, $ 13.2 million and $ 9.7 million during 2022, 2021 and 2020, respectively.

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AMAC Holdings III LLC

Fifth Wall Ventures III

North Vermont Avenue

Fifth Wall Ventures

Lightstone Value Plus REIT L.P.

North Vermont Avenue

West Shore Café

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ARI has no other assets, liabilities or activity other than its investment in Wakefield.

In January 2021, an equity investor in the underlying residential mortgage banking business exercised their right to purchase an additional interest in this investment, which decreased our indirect interest from 16.3 % to 12.3 %.

The allocation of income is based on the underlying agreements, which may be different than our indirect interest, and was 9.2 % as of December 31, 2021.

At December 31, 2022, our indirect interest in this business was 12.3 %.

The allocation of income is based on the underlying agreements, which may be different than our indirect interest, and was 9.2 % at December 31, 2022.

We account for our ownership interest in ARI under the equity method of accounting and ARI accounts for its ownership interest in Wakefield under the equity method of accounting.

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We also received $ 23.8 million and $ 28.0 million in cash distributions from this investment during 2022 and 2021, respectively, which were classified as returns of capital.

We have included the audited financial statements of Wakefield in this report.

AMAC Holdings III LLC (“AMAC III”).

We committed to a $ 30.0 million investment (of which $ 20.3 million was funded as of December 31, 2021) for an 18 % interest in a multifamily-focused commercial real estate investment fund that is sponsored and managed by our chief executive officer and one of his immediate family members.

During 2021 and 2020, the loss recorded from this investment was $ 1.3 million and $ 0.9 million, respectively, and the operating results for 2019 were de minimus.

During 2021 and 2020, we received cash distributions from this investment totaling $ 3.8 million and $ 0.1 million, respectively, which were classified as returns of capital.

Fifth Wall Ventures III.

During the fourth quarter of 2021, we committed to a $ 25.0 million investment (of which $ 5.4 million was funded as of December 31, 2021) for a 7.6 % interest in two related private equity funds whose investment objective is to invest primarily in technology, technology-enabled or technology-related companies that are relevant or complementary to the build environment, including real estate or real estate related industries.

We have included the financial statements of Wakefield in this report.

We committed to a $ 30.0 million investment (of which $ 25.2 million was funded at December 31, 2022) for an 18 % interest in a multifamily-focused commercial real estate investment fund that is sponsored and managed by our chief executive officer and one of his immediate family members.

During 2022, 2021 and 2020, we recorded a loss associated with this investment of $ 2.4 million, $ 1.3 million and $ 0.9 million, respectively.

During 2022 and 2021, we made contributions of $ 4.9 million and $ 8.6 million, respectively, and received cash distributions totaling $ 0.5 million and $ 3.8 million, respectively, which were classified as returns of capital, related to this investment.

We committed to a $ 25.0 million investment (of which $ 15.2 million was funded at December 31, 2022) for a 7.6 % interest in two related private equity funds whose investment objective is to invest primarily in technology, technology-enabled or technology-related companies that are relevant or complementary to the build environment, including real estate or real estate related industries.

We have no role in the management of the investment funds.

Operating results from this investment were de minimis in 2021.

North Vermont Avenue.

We invested $ 2.4 million for an initial 85 % noncontrolling interest in a joint venture that acquired three parcels of land with multiple structures.

The joint venture intends to tear down the existing structures and construct a new 202-unit multifamily complex with ground floor retail.

During 2022 and 2021, we made contributions of $ 9.7 million and $ 5.4 million, respectively, and, during 2022 we received cash distributions totaling $ 1.6 million, which were classified as returns of capital, related to this investment.

Operating results from this investment were de minimis for all periods presented.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Lightstone Value Plus REIT L.P.

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Operating results from these investments were de minimis for all periods presented.

During 2022, we invested $ 0.5 million for a noncontrolling interest in Docsumo, a startup company that converts unstructured documents, such as bank statements and pay stubs, to accurate structured data and checks documents for fraud, such as photoshopped layers and font changes, using artificial intelligence.

Operating results from this investment were de minimis.

North Vermont Avenue.

We invested $ 2.4 million for an initial 85 % noncontrolling interest in a joint venture that acquired three parcels of land with multiple structures, with the intent to tear down the existing structures and construct a new 202-unit multifamily complex with ground floor retail.

Operating results from this investment were de minimis for all periods presented.

During 2022, we determined that this investment exhibited indicators of impairment and, as a result of an impairment analysis performed;

we recorded an other-than-temporary impairment of $ 2.4 million to income from equity affiliates in the consolidated statement of income for the full carrying amount of this investment.

West Shore Café.

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We provided a $ 1.7 million first mortgage loan to an affiliated entity to acquire property adjacent to the original property, which is scheduled to mature in September 2025 and bears interest at LIBOR plus 4.0 %.

During 2018, we determined that this investment exhibited indicators of impairment and recorded an other-than-temporary impairment of $ 2.2 million for the full carrying amount of this investment and fully reserved the $ 1.7 million first mortgage loan.

In 2018, we determined that this investment exhibited indicators of impairment and recorded an other-than-temporary impairment of $ 2.2 million for the full carrying amount of this investment and fully reserved the $ 1.7 million first mortgage loan.

Operating results from this investment were de minimis for all periods presented.

Lexford Portfolio.

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Operating results from this investment were de minimis for all periods presented.

Tapestry on the River.

During the third quarter of 2021, we invested $ 14.0 million for a 48.9 % equity interest in a joint venture with a third-party that was formed to invest in an apartment community.

During the fourth quarter of 2021, this joint venture was dissolved, and we received a $ 14.7 million distribution and recorded a $ 0.7 million gain.

Emerson at Forney.

During the third quarter of 2021, we invested $ 3.0 million for an 11.1 % equity interest in a joint venture with a third-party that was formed to invest in an apartment community.

During the fourth quarter of 2021, this joint venture was dissolved, and we received a $ 3.2 million distribution and recorded a $ 0.2 million gain.

Century Summerfield Apartments.

During the first quarter of 2021, we funded $ 17.0 million of a total committed investment of $ 20.0 million for a 50 % equity interest in a joint venture with a third-party that was formed to invest in an apartment community.

During the second quarter of 2021, this joint venture was dissolved, and we received a $ 17.2 million distribution and recorded a $ 0.2 million gain.

Equity Participation Interest.

During the first quarter of 2022, we received $ 2.6 million from an equity participation interest on a property that was sold and which we had a preferred equity loan that previously paid off.

See Note 18 for details of certain investments described above.

Note 9 — Goodwill and Other Intangible Assets

The goodwill balance at both December 31, 2021 and 2020 was $ 56.6 million.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Note 9 — Goodwill and Other Intangible Assets

The goodwill balance at both December 31, 2022 and 2021 was $ 56.6 million.

Other Intangible Assets.

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The amortization expense recorded for these intangible assets were $ 4.7 million, $ 4.7 million and $ 5.3 million during 2022, 2021 and 2020, respectively.

At December 31, 2021, the weighted average remaining lives of our amortizable finite-lived intangible assets and the estimated amortization expense for each of the succeeding five years are as follows ($ in thousands):

At December 31, 2022, the weighted average remaining lives of our amortizable finite-lived intangible assets and the estimated amortization expense for each of the next five years are as follows ($ in thousands):

Estimated Amortization Expense for the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Note 10 — Debt Obligations

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$ 450 M repurchase facility

$ 400 M credit facility

$ 225 M credit facility

$ 200 M repurchase facility

$ 156 M loan specific credit facilities

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Consolidated total

(1) The debt carrying value for the Structured Business at December 31, 2021 and 2020 was net of unamortized deferred finance costs of $ 7.7 million and $ 3.3 million, respectively.

The debt carrying value for the Agency Business at December 31, 2021 and 2020 was net of unamortized deferred finance costs of $ 4.4 million and $ 0.6 million, respectively.

(2) A portion of this repurchase facility was used to finance a $ 1.3 million fixed rate SFR permanent loan reported through our Agency Business.

These repurchase facilities are subject to margin call provisions associated with changes in interest spreads.

As of December 31, 2021 and 2020, these facilities were collateralized by B Piece bonds with a carrying value of $ 47.6 million and $ 57.8 million, respectively, and an SFR bond with a carrying value of $ 10.0 million at December 31, 2020, which are held by our Agency Business.

Effective January 1, 2022, several of our credit and repurchase facilities, in both our Structured Business and Agency Business, converted from a LIBOR-based interest rate to a SOFR-based interest rate for new financings.

Existing financings will continue to be at a LIBOR-based interest rate.

Generally, our credit and repurchase facilities have extension options that are at the discretion of the banking institutions in which we have long standing relationships with.

These facilities typically renew annually and also include a “wind-down” feature.

(1) At December 31, 2022 and 2021, debt carrying value for the Structured Business was net of unamortized deferred finance costs of $ 13.3 million and $ 7.7 million, respectively, and for the Agency Business was net of unamortized deferred finance costs of $ 0.9 million and $ 4.4 million, respectively.

(2) These facilities are subject to margin call provisions associated with changes in interest spreads.

(3) A portion of this facility was used to finance a fixed rate SFR permanent loan reported through our Agency Business.

(4) At December 31, 2022 and 2021, this facility was collateralized by B Piece bonds with a carrying value of $ 33.1 million and $ 47.6 million, respectively.

During 2022, several of our credit and repurchase facilities, in both our Structured Business and Agency Business, converted from a LIBOR-based interest rate to a SOFR-based interest rate for new financings.

Existing financings generally remain at a LIBOR-based interest rate.

Usually, our credit and repurchase facilities have extension options that are at the discretion of the banking institutions in which we have long standing relationships with.

These facilities typically renew annually and also include a "wind-down"

Joint Repurchase Facility.

We have a $ 3.00 billion joint repurchase facility, which is shared between the Structured Business and the Agency Business, which matures in March 2024 with a one-year extension option.

This facility is used to finance structured loans and Private Label loans.

This facility is used to finance both structured and Private Label loans.

The interest rate under the facility is determined on a loan-by-loan basis and may include a floor equal to a pro rata share of the floors included in our originated loans.

The facility has a maximum advance rate of 80 % on structured loans and 85 % on Private Label loans and has a $ 150.0 million over advance available that bears interest at a rate of the applicable benchmark plus 5.75 % .

The over advance is available through March 2022.

The facility has a maximum advance rate of 80 % on all loans and includes a $ 150.0 million over advance available that bears interest at a rate of the applicable benchmark plus 7.00 % .

The over advance is available through March 2023, was being amortized on a monthly basis and was paid off at December 31, 2022.

If the estimated market value of the loans financed in this facility decrease, we may be required to pay down borrowings under this facility.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Structured Business.

We utilize credit and repurchase facilities with various financial institutions to finance our Structured Business loans and investments as described below.

Many of these facilities have a maximum advance rate of between 75 % to 85 % depending on the asset type financed.

We utilize credit and repurchase facilities with various financial institutions to finance our loans and investments as described below.

Many of these facilities have a maximum advance rate between 75 % to 85 %, depending on the asset type financed.

At December 31, 2022 and 2021, the weighted average interest rate for the credit and repurchase facilities of our Structured Business, including certain fees and costs, such as structuring, commitment, non-use and warehousing fees, was 6.95 % and 2.51 %, respectively.

The leverage on our loan and investment portfolio financed through our credit and repurchase facilities, excluding the securities repurchase facilities, working capital facility and the master security agreement used to finance leasehold and capital expenditure improvements at our corporate office, was 77 % and 69 % at December 31, 2021 and 2020, respectively.

We have a $ 1.00 billion repurchase facility used to finance loans that matures in December 2022, with one quarterly extension option through March 2023.

The interest rate on loans funded after January 21, 2021 is LIBOR plus 1.75 % with a 0.35 % LIBOR floor if utilization is above $ 250.0 million and LIBOR plus 2.00 % with up to a 0.35 % LIBOR floor if utilization is below $ 250.0 million.

For existing loans, the interest rate range will remain at LIBOR plus 2.00 % to 2.20 % with a 0.35 % LIBOR floor.

The leverage on our loan and investment portfolio financed through our credit and repurchase facilities, excluding the securities repurchase facility, working capital facility and the $ 1.0 million master security agreement, was 73 % and 77 % at December 31, 2022 and 2021, respectively.

We have a $ 1.00 billion repurchase facility used to finance loans that matures in December 2023.

The interest rate on loans funded after August 30, 2022 is SOFR plus 2.25 % with a 0.15 % SOFR floor.

For existing loans, the interest rate will remain at SOFR plus 2.00 % with up to a 0.35 % SOFR floor.

The interest rate spread increases by 0.20 % if the advance rate on a loan exceeds 75 %.

We have a $ 450.0 million repurchase facility to finance bridge loans that bears an interest rate ranging from LIBOR plus 1.75 % to 2.25 % for multifamily and LIBOR plus 2.00 % to 2.75 % for non-multifamily.

The facility matures in March 2023, with three one-year extension options through March 2026.

We have a $ 400.0 million repurchase facility to finance SFR properties that bears interest at a rate ranging from SOFR plus 1.75 % to 2.25 % with a 0.25 % SOFR floor, depending on the loan performance, and matures in December 2022.

We have a $ 200.0 million repurchase facility to finance multifamily bridge loans that the interest rate is determined on a loan-by-loan basis and matures in October 2023, with a one-year extension option.

The facility was temporarily increased to $ 325.0 million, which expires in April 2022.

We have a $ 225.0 million credit facility to finance SFR properties that bears interest at a rate of LIBOR plus 2.50 %, with an all-in floor rate range of 2.75 % to 3.85 %, depending on our deposit balance.

The facility matures in October 2022, with a one-year extension option.

We have a $ 200.0 million credit facility to finance bridge loans that matures in July 2022 and bears interest at a rate of SOFR plus 1.61 % for multifamily, SOFR plus 2.31 % for independent living and SOFR plus 2.56 % for assisted living.

We have a $ 500.0 million repurchase facility to finance SFR loans that has an interest rate of SOFR plus 3.26 % on loans funded after October 13, 2022 and SOFR plus 2.76 % on existing loans.

The commitment amount under this facility expires six months after the lender provides written notice.

We then have an additional six months to repurchase the underlying loans.

We have a $ 500.0 million repurchase facility to finance SFR properties that bears interest at a rate of SOFR plus 2.36 % with a 0.25 % SOFR floor and matures in October 2023.

We have a $ 450.0 million repurchase facility to finance bridge loans that matures in March 2023, with three one-year extension options through March 2026.

The interest rate on loans funded in 2022 ranges from SOFR plus 1.75 % to 2.25 % for multifamily and SOFR plus 2.00 % to 2.75 % for non-multifamily.

For existing loans, the interest rates will remain at LIBOR.

We have a $ 450.0 million repurchase facility to finance multifamily bridge loans that matures in October 2023, with a one-year extension option.

The interest rate for new loans after April 29, 2022 is determined on a loan-by-loan basis based off SOFR.

We have a $ 400.0 million credit facility to finance bridge loans that matures in July 2023 and bears interest at a rate ranging from SOFR plus 1.86 % to 2.56 % depending on the type of loan financed.

This facility includes a $ 25.0 million sublimit to finance healthcare related loans.

We have a $ 225.0 million credit facility to finance SFR properties that bears interest at a rate of SOFR plus 2.55 %, with an all-in floor rate range of 3.00 % to 4.10 %, depending on our deposit balance.

The facility matures in October 2023, with a one-year extension option.

We have a $ 200.0 million repurchase facility that matures in March 2024, with a one-year extension option.

This facility has an interest rate of SOFR plus 2.55 % .

We have a $ 200.0 million repurchase facility to finance bridge and construction loans that matures in January 2024, with a one-year extension option.

This facility has interest rates of SOFR plus 1.75 % to 3.50 % depending on the type of loan financed with a SOFR floor determined on a loan-by-loan basis.

We have several loan specific credit facilities totaling $ 156.5 million used to finance individual bridge loans.

The facilities bear interest at rates ranging from LIBOR plus 2.20 % to 2.40 %, fixed rates ranging from 3.00 % to 4.00 %, and the greater of the prime rate or 3.25 % and mature between February 2022 and October 2024.

We have a $ 50.0 million credit facility to finance multifamily loans that bears interest at a rate of LIBOR plus 2.00 % and matures in April 2022.

We have a $ 30.0 million unsecured working capital line of credit that bears interest at a rate of LIBOR plus 3.25 % with a 0.25 % LIBOR floor.

This line matures in February 2022 and is typically renewed annually.

We have a $ 25.0 million credit facility to finance SFR properties that bears interest at a rate of LIBOR plus 2.50 %, with an all-in floor rate of 3.85 %, and which matures in October 2022.

We have a $ 25.0 million credit facility used to purchase loans that bears interest at a rate of SOFR plus 2.35 % and matures in June 2022, with a one-year extension option.

The facilities bear interest at rates ranging from LIBOR plus 2.20 % to 3.375 %, SOFR plus 2.20 %, a 3.00 % fixed rate, and the greater of the prime rate or 3.25 % and mature between May 2023 and August 2025.

We have a $ 50.0 million credit facility to finance multifamily loans that bears interest at a rate of SOFR plus 2.10 % and matures in April 2023, with two 1-year extension options.

We have a $ 35.0 million unsecured working capital line of credit that bears interest at a rate of SOFR plus 3.00 %.

This line matures in April 2023 and is typically renewed annually.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We have a note payable under a master security agreement that was used to finance capital expenditures.

The note bears interest at a fixed rate of 4.01 % and matures in December 2022.

We have a $ 25.0 million credit facility to finance SFR properties that bears interest at a rate of SOFR plus 2.60 %, with an all-in floor rate of 4.25 %, and which matures in October 2024.

We have a $ 25.0 million credit facility used to purchase loans that bears interest at a rate of SOFR plus 2.35 % and matures in February 2023, with a one-year extension option.

We have an uncommitted repurchase facility that is used to finance securities we retained in connection with our CLOs and our purchases of B Piece bonds from SBL program securitizations and SFR bonds.

This facility bears interest at rate of LIBOR plus 3.25 % with a 0.25 % LIBOR floor and has no stated maturity date.

This facility bears interest at rate of SOFR plus 2.60 % and has no stated maturity date.

Agency Business.

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We have a $ 500.0 million repurchase facility that bears interest at a rate of SOFR plus 1.375 % and matures in November 2023.

We have a $ 200.0 million credit facility that bears interest at a rate of LIBOR plus 1.35 % with a 0.25 % LIBOR floor and matures in March 2022.

We have a $ 200.0 million credit facility that bears interest at a rate of SOFR plus 1.46 % and matures in March 2023.

We have a $ 150.0 million credit facility that bears interest at a rate of SOFR plus 1.46 % and matures in July 2023.

This facility includes a $ 50.0 million sublimit for principal and interest advances we make as the primary servicer to Fannie Mae in connection with potential delinquent loans under the Fannie Mae forbearance program, which bears interest at a rate of SOFR plus 1.86 %.

We have a $ 50.0 million credit facility that bears interest at a rate of LIBOR plus 1.30 % and matures in September 2022.

We have a $ 50.0 million letter of credit facility with a financial institution to secure obligations under the Fannie Mae DUS program and the Freddie Mac SBL program.

We have a $ 50.0 million credit facility that bears interest at a rate of SOFR plus 1.35 % and matures in September 2023.

We have a letter of credit facility with a financial institution to secure obligations under the Fannie Mae DUS program and the Freddie Mac SBL program with a total committed amount of up to $ 75.0 million.

The facility bears interest at a fixed rate of 2.875 %, matures in September 2025 and is primarily collateralized by our servicing revenue as approved by Fannie Mae and Freddie Mac.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We account for CLO transactions on our consolidated balance sheet as financing facilities.

Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements.

The investment grade tranches are treated as secured financings, and are non-recourse to us.

Borrowings and the corresponding collateral under our CLOs are as follows ($ in thousands):

Securitized Debt

We account for securitized debt transactions on our consolidated balance sheet as financing facilities.

These transactions are considered VIEs for which we are the primary beneficiary and are consolidated in our financial statements.

The investment grade notes and guaranteed certificates issued to third parties are treated as secured financings and are non-recourse to us.

Borrowings and the corresponding collateral under our securitized debt transactions are as follows ($ in thousands):

Collateral (3)

December 31, 2022

Q Series securitization

Total securitized debt

December 31, 2021

Total securitized debt

(1) Debt carrying value is net of $ 36.8 million and $ 31.9 million of deferred financing fees at December 31, 2022 and 2021, respectively.

(2) At December 31, 2021 and 2020, the aggregate weighted average note rate for our CLOs, including certain fees and costs, was 1.86 % and 1.93 % , respectively.

(3) As of December 31, 2021 and 2020, there was no collateral deemed a “credit risk” as defined by the CLO indentures.

(2) At December 31, 2022 and 2021, the aggregate weighted average note rate for our CLOs, including certain fees and costs, was 6.32 % and 1.86 % , respectively , and the Q Series securitization was 6.66 % at December 31, 2022.

(3) At December 31, 2022 and 2021, there were no collateral deemed a “credit risk” as defined by the CLO indentures.

(4) Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs.

Does not include restricted cash related to interest payments, delayed fundings and expenses totaling $ 230.0 million and $ 133.7 million at December 31, 2022 and 2021, respectively.

In December 2021, we completed CLO 17, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 1.91 billion.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In May 2022, we completed CLO 19, issuing nine tranches of CLO notes through a wholly-owned subsidiary totaling $ 1.05 billion.

Of the total CLO notes issued, $ 872.8 million were investment grade notes issued to third-party investors and $ 177.2 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 976.9 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio, and cash.

The financing has an approximate two -year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.

Thereafter, the outstanding debt balance will be reduced as loans are repaid.

Initially, the proceeds of the issuance of the securities also included $ 73.1 million for the purpose of acquiring additional loan obligations for a period of up to 180 days from the CLO closing date, which we subsequently utilized, resulting in the issuer owning loan obligations with a face value of $ 1.05 billion, representing leverage of 83 % .

The notes sold to third parties had an initial weighted average interest rate of 2.36 % plus term SOFR and interest payments on the notes are payable monthly.

In February 2022, we completed CLO 18, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 1.86 billion.

Of the total CLO notes issued, $ 1.65 billion were investment grade notes issued to third-party investors and $ 210.1 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 1.79 billion, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 1.70 billion, consisting primarily of bridge loans that were contributed from our existing loan portfolio, and cash.

The financing has an approximate two -and-a-half-year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.

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We retained a residual interest in the portfolio with a notional amount of $ 397.2 million, including the $ 210.1 million below investment grade notes.

The notes sold to third parties had an initial weighted average interest rate of 1.68 % plus one-month LIBOR and interest payments on the notes are payable monthly.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In September 2021, we completed CLO 16, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 1.37 billion.

The notes sold to third parties had an initial weighted average interest rate of 1.81 % plus compounded SOFR and interest payments on the notes are payable monthly.

In 2021, we completed CLO 17, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 1.91 billion.

Of the total CLO notes issued, $ 1.71 billion were investment grade notes issued to third-party investors and $ 194.3 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 1.19 billion, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

3 unchanged sentences

The notes sold to third parties had an initial weighted average interest rate of 1.68 % plus one-month LIBOR and interest payments on the notes are payable monthly.

In June 2021, we completed CLO 15, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 747.8 million.

Of the total CLO notes issued, $ 674.4 million were investment grade notes issued to third-party investors and $ 73.4 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 653.0 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

In 2021, we completed CLO 16, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 1.37 billion.

Of the total CLO notes issued, $ 1.24 billion were investment grade notes issued to third-party investors and $ 135.0 million were below investment grade notes retained by us.

Thereafter, the outstanding debt balance will be reduced as loans are repaid.

Initially, the proceeds of the issuance of the securities also included $ 162.0 million for the purpose of acquiring additional loan obligations for a period of up to 180 days from the CLO closing date, which we subsequently utilized, resulting in the issuer owning loan obligations with a face value of $ 815.0 million, representing leverage of 83 % .

Initially, the proceeds of the issuance of the securities also included $ 313.0 million for the purpose of acquiring additional loan obligations for a period of up to 180 days from the CLO closing date, which we subsequently utilized, resulting in the issuer owning loan obligations with a face value of $ 1.50 billion, representing leverage of 83 % .

We retained a residual interest in the portfolio with a notional amount of $ 262.5 million, including the $ 135.0 million below investment grade notes.

The notes sold to third parties had an initial weighted average interest rate of 1.31 % plus one-month LIBOR and interest payments on the notes are payable monthly.

In March 2021, we completed CLO 14, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 724.2 million.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In 2021, we completed CLO 15, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 747.8 million.

Of the total CLO notes issued, $ 674.4 million were investment grade notes issued to third-party investors and $ 73.4 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 635.2 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

The financing has a two -and-a-half-year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.

Thereafter, the outstanding debt balance will be reduced as loans are repaid.

4 unchanged sentences

Of the total CLO notes issued, $ 655.5 million were investment grade notes issued to third-party investors and $ 68.7 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 640.5 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

The financing has a three -year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.

Thereafter, the outstanding debt balance will be reduced as loans are repaid.

2 unchanged sentences

The notes sold to third parties had an initial weighted average interest rate of 1.33 % plus one-month LIBOR and interest payments on the notes are payable monthly.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In 2020, we completed CLO 13, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 738.0 million.

Of the total CLO notes issued, $ 668.0 million were investment grade notes issued to third-party investors and $ 70.0 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 510.9 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

2 unchanged sentences

We retained a residual interest in the portfolio with a notional amount of $ 132.0 million, including the $ 70.0 million below investment grade notes.

The notes had an initial weighted average interest rate of 1.50 % plus one-month LIBOR and interest payments on the notes are payable monthly.

In 2018, we completed CLO 10, issuing seven tranches of CLO notes through two wholly-owned subsidiaries totaling $ 494.2 million.

The notes sold to third parties had an initial weighted average interest rate of 1.41 % plus one-month LIBOR and interest payments on the notes are payable monthly.

At December 31, 2022, $ 205.2 million has been repaid.

In 2019, we completed CLO 12, issuing eight tranches of CLO notes through two wholly-owned subsidiaries totaling $ 585.8 million.

Of the total CLO notes issued, $ 534.2 million were investment grade notes issued to third-party investors and $ 51.6 million were below investment grade notes retained by us.

As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of $ 501.9 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.

The financing has a stated maturity date in June 2028 and a four -year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.

Thereafter, the outstanding debt balance will be reduced as loans are repaid.

The financing had a three -year replacement period that allowed the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.

Thereafter, the outstanding debt balance is being reduced as loans are repaid.

Initially, the proceeds of the issuance of the securities also included $ 124.1 million for the purpose of acquiring additional loan obligations for a period of up to 180 days from the CLO closing date, which we subsequently utilized, resulting in the issuer owning loan obligations with a face value of $ 635.0 million, representing leverage of 84 % .

1 unchanged sentence

The notes had an initial weighted average interest rate of 1.50 % plus one-month LIBOR and interest payments on the notes are payable monthly.

CLO 11 and CLO 9.

In 2021, we unwound both CLO 11 and CLO 9, redeeming $ 889.2 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets within CLOs 17 and 14, as well as with cash held by CLOs 11 and 9, and expensed $ 3.4 million of deferred financing fees into loss on extinguishment of debt on the consolidated statements of income.

In 2020, we unwound CLO 8 redeeming $ 282.9 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets within CLO 13, as well as with cash held by CLO 8, and expensed $ 1.5 million of deferred financing fees into loss on extinguishment of debt on the consolidated statements of income.

CLO 7 and CLO 6.

In 2019, we unwound both CLO 7 and CLO 6 redeeming $ 529.3 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets within CLOs 12 and 11, as well as with cash held by CLOs 7 and 6, and expensed $ 2.6 million of deferred financing fees into interest expense on the consolidated statements of income.

Subsequent Event.

In February 2022, we completed CLO 18 totaling $ 2.05 billion, of which $ 1.65 billion were investment grade notes issued to third-party investors.

We retained a residual interest in the portfolio with a notional amount of $ 397.2 million, which includes $ 210.1 million of below investment grade notes.

Luxembourg Debt Fund

In 2020, we completed the unwind of the debt fund and redeemed all the outstanding notes with a portion of the proceeds from our senior unsecured notes issued in March 2020 described below and recorded a loss on extinguishment of debt of $ 1.6 million, which was primarily comprised of deferred financing fees.

The debt fund was a VIE for which we were the primary beneficiary and was consolidated in our financial statements.

The replacement period for CLO 12 ended in November 2022 and $ 154.9 million has been repaid at December 31, 2022.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In February 2022, we unwound CLO 10, redeeming $ 441.0 million of outstanding notes which were repaid primarily from the refinancing of the remaining assets within CLO 18, as well as with cash held by CLO 10, and expensed $ 1.4 million of deferred financing fees into loss on extinguishment of debt on the consolidated statements of income.

CLO 11 and CLO 9.

Freddie Mac Q Series Securitization.

In December 2022, we completed our first loan securitization through Freddie Mac’s Q Series securitization program (“Q Series Securitization”), by which we sold to Freddie Mac 11 floating rate loans totaling $ 315.8 million that are secured by first priority mortgage liens on 21 multifamily properties that qualify as mission-driven under the Federal Housing Finance Agency guidelines.

The Q Series Securitization is represented through a series of pass-through certificates (the “Certificates”) issued under a pooling and servicing agreement.

We retained certain subordinate and interest-only classes of the Certificates aggregating $ 79.0 million and the remaining Certificates totaling $ 236.9 million were purchased by third-party investors, representing leverage of 75 %.

The Certificates sold to third parties pays interest at a rate of 2.00 % plus one-month SOFR, excluding fees and transaction costs, and are payable monthly.

As part of the securitization transaction, we released all mortgage servicing obligations and rights to Freddie Mac who was designated as the master servicer.

As master servicer, Freddie Mac appointed us as its subservicer, which includes obligations to collect and remit payments and otherwise administer the underlying loans, and a third-party as the special servicer.

We may, subject to certain limitations, terminate the special servicer, with or without cause, and appoint a successor.

In addition, the special servicer must receive our consent prior to certain decisions with respect to a specially serviced mortgage loan.

Senior Unsecured Notes

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5.75 % Notes (4)

5.625 % Notes (4)

(1) At December 31, 2022 and 2021, the carrying value is net of deferred financing fees of $ 13.6 million and $ 15.2 million, respectively.

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We have the right to redeem the notes within three months prior to the maturity date at a redemption price equal to 100% of the aggregate principal amount, plus accrued and unpaid interest.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(4) These notes can be redeemed by us at any time prior to the maturity date, at a redemption price equal to 100 % of the aggregate principal amount, plus a “make-whole” premium and accrued and unpaid interest.

We have the right to redeem the notes on the maturity date at a redemption price equal to 100 % of the aggregate principal amount, plus accrued and unpaid interest.

In December 2021, we issued $ 180.0 million aggregate principal amount of 5.00 % senior unsecured notes due in 2028 in a private offering.

Except as noted below, we used the proceeds of our senior unsecured debt offerings to make investments and for general corporate purposes.

In October 2022, we issued $ 150.0 million aggregate principal amount of 8.50 % senior unsecured notes due in 2027 in a private offering.

We received net proceeds of $ 147.5 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used the net proceeds to make investments related to our business and for general corporate purposes.

In August 2021, we issued $ 270.0 million aggregate principal amount of 4.50 % senior unsecured notes due in 2026 in a private offering.

We used $ 47.5 million of the proceeds, which includes accrued interest and other fees, to repurchase a portion of our 5.625 % senior unsecured notes.

In 2021, we issued $ 180.0 million aggregate principal amount of 5.00 % senior unsecured notes due in 2028 in a private offering.

We received net proceeds of $ 177.2 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used the net proceeds to make investments related to our business and for general corporate purposes.

In April 2021, we issued $ 175.0 million aggregate principal amount of 5.00 % senior unsecured notes due in 2026 in a private offering.

In 2021, we issued $ 270.0 million aggregate principal amount of 4.50 % senior unsecured notes due in 2026 in a private offering.

We received net proceeds of $ 265.8 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used the net proceeds to make investments related to our business and for general corporate purposes.

In 2020, we issued $ 40.5 million aggregate principal amount of 8.00 % senior unsecured notes due in April 2023 (the “ 8.00% Initial Notes”) in a private placement, and, in June 2020, we issued an additional $ 30.3 million (the “8.00% Reopened Notes”) which brought the aggregate outstanding principal amount to $ 70.8 million.

The 8.00% Reopened Notes are fully fungible, and rank equally in right of payment, with the 8.00% Initial Notes.

We received total proceeds of $ 69.6 million from the issuances, after deducting the underwriting discount and other offering expenses.

We used the net proceeds from the issuances to repay secured indebtedness, make investments relating to our business and for general corporate purposes.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In 2020, we issued $ 275.0 million aggregate principal amount of 4.50 % senior unsecured notes due in March 2027 in a private placement.

In 2021, we issued $ 175.0 million aggregate principal amount of 5.00 % senior unsecured notes due in 2026 in a private offering.

We received net proceeds of $ 172.3 million from the issuance, after deducting the underwriting discount and other offering expenses.

In 2020, we issued $ 70.8 million aggregate principal amount of 8.00 % senior unsecured notes due in April 2023 in a private offering.

We received total proceeds of $ 69.6 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used a portion of the proceeds from the issuance to repay secured indebtedness.

In 2020, we issued $ 275.0 million aggregate principal amount of 4.50 % senior unsecured notes due in March 2027 in a private offering.

We received proceeds of $ 271.8 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used a significant portion of the net proceeds to repay secured indebtedness.

In 2019, we issued $ 110.0 million aggregate principal amount of 4.75 % senior unsecured notes due in October 2024 in a private placement.

We used a significant portion of the proceeds to repay secured indebtedness.

In 2019, we issued $ 110.0 million aggregate principal amount of 4.75 % senior unsecured notes due in October 2024 in a private offering.

We received proceeds of $ 108.2 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used the net proceeds to make investments and for general corporate purposes.

In 2019, we issued $ 90.0 million aggregate principal amount of 5.75 % senior unsecured notes due in April 2024 in a private placement.

In 2019, we issued $ 90.0 million aggregate principal amount of 5.75 % senior unsecured notes due in April 2024 in a private offering.

We received proceeds of $ 88.2 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used the net proceeds to make investments and for general corporate purposes.

In 2018, we issued $ 100.0 million aggregate principal amount of 5.625 % senior unsecured notes due in May 2023 (the “5.625% Initial Notes”) in a private placement, and, in May 2018, we issued an additional $ 25.0 million (the “5.625% Reopened Notes”) which brought the aggregate outstanding principal amount to $ 125.0 million.

The 5.625% Reopened Notes are fully fungible, and rank equally in right of payment, with the 5.625% Initial Notes.

We received total proceeds of $ 122.3 million from the issuances, after deducting the underwriting discount and other offering expenses.

We used the net proceeds from the 5.625% Initial Notes to fully redeem 7.375% senior unsecured notes totaling $97.9 million and the net proceeds from the 5.625% Reopened Notes to make investments and for general corporate purposes.

In 2018, we issued $ 125.0 million aggregate principal amount of 5.625 % senior unsecured notes due in May 2023 in a private offering.

We received total proceeds of $ 122.3 million from the issuance, after deducting the underwriting discount and other offering expenses.

We used a significant portion of the proceeds to fully redeem our 7.375 % senior unsecured notes.

In October 2022, we repaid $ 46.2 million of the outstanding principal balance as noted above.

Convertible Senior Unsecured Notes

In 2019, we issued $ 264.0 million in aggregate principal amount of 4.75 % convertible senior notes (the “4.75% Convertible Notes”) through a private placement offering, which includes the exercised purchaser’s total over-allotment option of $ 34.0 million.

The 4.75% Convertible Notes pay interest semiannually in arrears and are scheduled to mature in November 2022, unless earlier converted or repurchased by the holders pursuant to their terms.

In August 2022, we issued $ 287.5 million in aggregate principal amount of 7.50 % convertible senior notes (the “ 7.50 % Convertible Notes”) through a private placement offering.

The 7.50 % Convertible Notes pay interest semiannually in arrears and are scheduled to mature in August 2025, unless earlier converted or repurchased by the holders pursuant to their terms.

The initial conversion rate was 59.8480 shares of common stock per $ 1,000 of principal representing a conversion price of $ 16.71 per share of common stock.

We received proceeds totaling $ 256.5 million, net of the underwriter’s discount and fees, which is being amortized through interest expense over the life of such notes.

We used the net proceeds from the issuance primarily for the exchange of $ 228.7 million of our 5.25 % Convertible Notes for a combination of $ 233.1 million in cash (which included accrued interest) and 4,478,315 shares of our common stock.

The remaining net proceeds were used for general corporate purposes.

During 2019, we recorded a loss on extinguishment of debt of $ 7.3 million in connection with this exchange, which included an inducement charge of $ 1.1 million.

As of December 31, 2021, the 4.75% Convertible Notes had a conversion rate of 56.8560 shares, common stock per $ 1,000 of principal, which represented a conversion price of $ 17.59 per share of common stock.

In July 2021, the remaining $ 14.3 million principal amount of our 5.25 % Convertible Notes matured and were fully settled with $ 14.3 million of cash and 386,459 shares of common stock.

Our convertible senior unsecured notes are not redeemable by us prior to their maturities and are convertible by the holder into, at our election, cash, shares of our common stock or a combination of both, subject to the satisfaction of certain conditions and during specified periods.

The conversion rates are subject to adjustment upon the occurrence of certain specified events and the holders may require us to repurchase all, or any portion, of their notes for cash equal to 100 % of the principal amount, plus accrued and unpaid interest, if we undergo a fundamental change specified in the agreements.

We intend to settle the principal balance of our convertible debt in cash and have not assumed share settlement of the principal balance for purposes of computing EPS.

At the time of issuance, there was no precedent or policy that would indicate that we would settle the principal in shares, or the conversion spread in cash.

Accounting guidance effective on December 31, 2021 requires that convertible debt instruments with cash settlement features, including partial cash settlement, account for the liability component and equity component (conversion feature) of the instrument separately.

The initial value of the liability component reflects the present value of the discounted cash flows using the nonconvertible debt borrowing rate at the time of the issuance.

The debt discount represents the difference between the proceeds received from the issuance and the initial carrying value of the liability component, which is accreted back to the notes principal amount through interest expense over the term of the notes, which was 0.84 years and 1.77 years at December 31, 2021 and 2020, respectively, on a weighted

We received proceeds of $ 279.3 million, net of discounts and fees.

We used $ 203.1 million of the net proceeds to repurchase a portion of our 4.75 % convertible senior notes (the “ 4.75 % Convertible Notes”), which included $ 5.2 million of accrued interest and repurchase premiums, and expensed $ 3.3 million of deferred financing fees into loss on extinguishment of debt on the consolidated statements of income.

At December 31, 2022, the 7.50 % Convertible Notes had a conversion rate of 59.8892 shares of common stock per $ 1,000 of principal, which represented a conversion price of $ 16.70 per share of common stock.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

average basis.

Our adoption of ASU 2020-06 on January 1, 2022 changes the way in which we account for our convertible debt, see Note 2 for details.

In the fourth quarter of 2022, the remaining $ 66.1 million principal amount of our 4.75 % Convertible Notes matured and were fully settled with cash.

On January 1, 2022, we adopted ASU 2020-06, see Note 2 for details, which no longer allows for the allocation of proceeds between debt and equity components, eliminates the amortization of the debt discount and requires the if-converted method to calculate diluted EPS, regardless of the settlement intent.

The UPB, unamortized discount and net carrying amount of the liability and equity components of our convertible notes are as follows (in thousands):

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December 31, 2021

During 2021, we incurred total interest expense on the notes of $ 18.6 million, of which $ 12.8 million, $ 3.2 million and $ 2.6 million related to the cash coupon, amortization of the debt discount and of the deferred financing fees, respectively.

During 2022, we incurred interest expense on the notes totaling $ 19.8 million, of which $ 16.9 million and $ 2.9 million related to the cash coupon and deferred financing fees, respectively.

During 2021, we incurred interest expense on the notes totaling $ 18.6 million, of which $ 12.8 million, $ 3.2 million and $ 2.6 million related to the cash coupon, amortization of the debt discount and of the deferred financing fees, respectively.

During 2020, we incurred interest expense on the notes totaling $ 20.0 million, of which $ 13.4 million, $ 3.6 million and $ 3.0 million related to the cash coupon, amortization of the debt discount and of the deferred financing fees, respectively.

Including the amortization of the deferred financing fees and debt discount, our weighted average total cost of the notes was 6.71 % and 6.75 % at December 31, 2021 and 2020, respectively.

Including the amortization of the deferred financing fees and debt discount, our weighted average total cost of the notes was 8.42 % and 6.71 % at December 31, 2022 and 2021, respectively, or 5.73 % at December 31, 2021, excluding the amortization of the debt discount (which ceased on January 1, 2022 with the adoption of ASU 2020-06).

Junior Subordinated Notes

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We were in compliance with all financial covenants and restrictions at December 31, 2022.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Our CLO vehicles contain interest coverage and asset overcollateralization covenants that must be met as of the waterfall distribution date in order for us to receive such payments.

If we fail these covenants in any of our CLOs, all cash flows from the applicable CLO would be diverted to repay principal and interest on the outstanding CLO bonds and we would not receive any residual payments until that CLO regained compliance with such tests.

Our CLOs were in compliance with all such covenants as of December 31, 2021, as well as on the most recent determination dates in January 2022.

In the event of a breach of the CLO covenants that could not be cured in the near-term, we would be required to fund our non-CLO expenses, including employee costs, distributions required to maintain our REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CLO not in breach of a covenant test, (iii) income from real property and loan assets, (iv) sale of assets, or (v) accessing the equity or debt capital markets, if available.

Our CLOs were in compliance with all such covenants at December 31, 2022, as well as on the most recent determination dates in January 2023.

In the event of a breach of the CLO covenants that could not be cured in the near-term, we would be required to fund our non-CLO expenses, including employee costs, distributions required to maintain our REIT status, debt costs, and other expenses with (1) cash on hand, (2) income from any CLO not in breach of a covenant test, (i3) income from real property and loan assets, (4) sale of assets, or (5) accessing the equity or debt capital markets, if available.

We have the right to cure covenant breaches which would resume normal residual payments to us by purchasing non-performing loans out of the CLOs.

However, we may not have sufficient liquidity available to do so at such time.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Our CLO compliance tests as of the most recent determination dates in January 2023 are as follows:

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To the extent an asset is considered a defaulted security, the asset’s principal balance for purposes of the overcollateralization test is the lesser of the asset’s market value or the principal balance of the defaulted asset multiplied by the asset’s recovery rate which is determined by the rating agencies.

Rating downgrades of CLO collateral will generally not have a direct impact on the principal balance of a CLO asset for purposes of calculating the CLO overcollateralization test unless the rating downgrade is below a significantly low threshold (e.g.

CCC-) as defined in each CLO vehicle.

(2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us.

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The junior subordinated indentures are also cross-defaulted with each other.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 11 — Allowance for Loss-Sharing Obligations

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Beginning balance

Impact of adopting CECL - January 1, 2020

Provisions for loss sharing

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Ending balance

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

When a loan is sold under the Fannie Mae DUS program, we undertake an obligation to partially guarantee the performance of the loan.

A liability is recognized for the fair value of the guarantee obligation undertaken for the non-contingent aspect of the guarantee and is removed only upon either the expiration or settlement of the guarantee.

At December 31, 2021 and 2020, guarantee obligations of $ 34.4 million and $ 34.0 million, respectively, were included in the allowance for loss-sharing obligations.

At both December 31, 2022 and 2021, we had $ 34.4 million of guarantee obligations included in the allowance for loss-sharing obligations.

In addition to and separately from the fair value of the guarantee, we estimate our allowance for loss-sharing under CECL over the contractual period in which we are exposed to credit risk.

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The settled loss is often net of any previously advanced principal and interest payments in accordance with the DUS program, which are reflected as reductions to the proceeds needed to settle losses.

At December 31, 2021 and 2020, we had outstanding advances of less than $ 0.1 million and $ 0.1 million, respectively, which were netted against the allowance for loss-sharing obligations.

At December 31, 2021 and 2020, our allowance for loss-sharing obligations, associated with expected losses under CECL, was $ 21.7 million and $ 30.3 million, respectively, and represented 0.11 % and 0.17 %, respectively, of the Fannie Mae servicing portfolio.

At December 31, 2022 and 2021, we had outstanding advances of $ 0.8 million and less than $ 0.1 million, respectively, which were netted against the allowance for loss-sharing obligations.

At December 31, 2022 and 2021, our allowance for loss-sharing obligations, associated with expected losses under CECL, was $ 22.7 million and $ 21.7 million, respectively, and represented 0.12 % and 0.11 %, respectively, of our Fannie Mae servicing portfolio.

During 2022, we recorded a $ 1.1 million increase in CECL reserves, which included a $ 1.2 million recovery for a loan that paid off during the second quarter of 2022.

At December 31, 2022 and 2021, the maximum quantifiable liability associated with our guarantees under the Fannie Mae DUS agreement was $ 3.49 billion and $ 3.60 billion, respectively.

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We do not use these derivatives for speculative purposes, but are instead using them to manage our interest rate and credit risk exposure.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Agency Rate Lock and Forward Sale Commitments.

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Sale commitments with the investors have an expiration date that is longer than our related commitments to the borrower to allow, among other things, for closing of the loan and processing of paperwork to deliver the loan into the sale commitment.

These commitments meet the definition of a derivative and are recorded at fair value, including the effects of interest rate movements which are reflected as a component of loss on derivative instruments, net in the consolidated statements of income.

These commitments meet the definition of a derivative and are recorded at fair value, including the effects of interest rate movements which are reflected as a component of gain (loss) on derivative instruments, net in the consolidated statements of income.

The estimated fair value of rate lock commitments also includes the fair value of the expected net cash flows associated with the servicing of the loan which is recorded as income from MSRs in the consolidated statements of income.

During 2021, 2020 and 2019, we recorded net losses of $ 0.8 million, net gains of $ 3.4 million and net losses of $ 7.8 million, respectively, from changes in the fair value of these derivatives and $ 130.2 million, $ 165.5 million and $ 90.8 million, respectively, of income from MSRs.

During 2022, 2021 and 2020, we recorded net losses of $3.6 million, net losses of $ 0.8 million and net gains of $ 3.4 million, respectively, from changes in the fair value of these derivatives and $ 69.3 million, $ 130.2 million and $ 165.5 million, respectively, of income from MSRs.

See Note 13 for details.

Interest Rate and Credit Default Swaps.

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

securitization, and (2) our Agency Business SFR – fixed rate loans from the time the loans are originated until the time they can be financed with match term fixed rate securitized debt.

Interest Rate and Credit Default Swaps (“Swaps”).

We enter into over-the-counter swaps to hedge our interest rate and credit risk exposure inherent in (1) our held-for-sale Agency Business Private Label loans from the time the loans are rate locked until sale or securitization, and (2) our Agency Business SFR – fixed rate loans from the time the loans are originated until the time they can be financed with match term fixed rate securitized debt.

Our interest rate swaps typically have a three-month maturity and are tied to the five-year and ten-year swap rates.

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The Swaps do not meet the criteria for hedge accounting, are cleared by a central clearing house and variation margin payments, made in cash, are treated as a legal settlement of the derivative itself as opposed to a pledge of collateral.

During 2022, we recorded realized and unrealized gains of $ 26.9 million and $ 3.5 million, respectively, to our Agency Business related to our Swaps.

During 2021, we recorded realized and unrealized losses of less than $ 0.1 million and $ 1.5 million, respectively, to our Agency Business related to our Swaps.

During 2020, we recorded realized losses of $ 3.0 million and unrealized gains of $ 0.2 million to our Structured Business and realized losses of $ 57.1 million and unrealized losses of $ 1.7 million to our Agency Business related to our Swaps.

During 2019, we recorded realized losses of $ 0.4 million and unrealized gains of $ 0.2 million to our Structured Business and realized gains of $ 4.6 million and unrealized gains of $ 1.5 million to our Agency Business related to our Swaps.

The realized and unrealized gains and losses are recorded in loss on derivative instruments, net on our consolidated statements of income.

The realized and unrealized gains and losses are recorded in gain (loss) on derivative instruments, net.

A summary of our non-qualifying derivative financial instruments in our Agency Business is as follows ($ in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Note 13 — Fair Value

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Credit and repurchase facilities

Collateralized loan obligations

Securitized debt

Senior unsecured notes

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Fair values of impaired loans and investments are estimated using inputs that require significant judgments, which include assumptions regarding discount rates, capitalization rates, creditworthiness of major tenants, occupancy rates, availability of financing, exit plans and other factors (Level 3).

Loans held-for-sale, net.

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December 31, 2020

hypothetical securitization model utilizing observable market data from recent securitization spreads and observable pricing of loans with similar characteristics (Level 2).

Loans held-for-sale, net.

Consists of originated loans that are generally expected to be transferred or sold within 60 days to 180 days of loan funding, and are valued using pricing models that incorporate observable inputs from current market assumptions or a hypothetical securitization model utilizing observable market data from recent securitization spreads and observable pricing of loans with similar characteristics (Level 2).

Fair value includes the fair value allocated to the associated future MSRs and is calculated pursuant to the valuation techniques described below for capitalized mortgage servicing rights, net (Level 3).

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Fair values are estimated using inputs based on discounted future net cash flow methodology (Level 3).

The fair value of MSRs carried at amortized cost are estimated using a process that involves the use of independent third-party valuation experts, supported by commercially available discounted cash flow models and analysis of current market data.

The fair value of MSRs is estimated using a process that involves the use of independent third-party valuation experts, supported by commercially available discounted cash flow models and analysis of current market data.

The key inputs used in estimating fair value include the contractually specified servicing fees, prepayment speed of the underlying loans, discount rate, annual per loan cost to service loans, delinquency rates, late charges and other economic factors.

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For these facilities, the fair values approximate their carrying values.

Collateralized loan obligations and junior subordinated notes.

Securitized debt and junior subordinated notes.

Fair values are estimated based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads (Level 3).

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We measure certain financial assets and financial liabilities at fair value on a recurring basis.

The fair values of these financial assets and liabilities are determined using the following input levels as of December 31, 2021 (in thousands):

The fair values of these financial assets and liabilities are determined using the following input levels at December 31, 2022 (in thousands):

Fair Value Measurements Using Fair

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We measure certain financial and non-financial assets at fair value on a nonrecurring basis.

The fair values of these financial and non-financial assets, if applicable, were determined using the following input levels as of December 31, 2021 (in thousands):

The fair values of these financial and non-financial assets, if applicable, were determined using the following input levels at December 31, 2022 (in thousands):

Fair Value Measurements Using Fair

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Impaired loans, net

(1) We had an allowance for credit losses of $ 86.9 million relating to eight impaired loans with an aggregate carrying value, before loan loss reserves, of $ 148.8 million at December 31, 2021.

Loans held-for-investment (1)

Loans held-for-sale (2)

(1) We had an allowance for credit losses of $ 85.4 million relating to seven impaired loans with an aggregate carrying value, before loan loss reserves, of $ 147.1 million at December 31, 2022.

(2) We recorded an impairment loss of $ 15.7 million related to 13 loans held-for-sale with an aggregate carrying value, before unrealized impairment losses, of $ 150.0 million.

Loan impairment assessments.

Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for credit losses, when such loan or investment is deemed to be impaired.

We consider a loan impaired when, based upon current information, it is probable that we will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement.

We evaluate our loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance and corresponding charge to the provision for credit losses.

We consider a loan impaired when, based upon current information, it is probable that all amounts due for both principal and interest will not be collected according to the contractual terms of the loan agreement.

We evaluate our loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance, and corresponding charge to the provision for credit losses, or an impairment loss.

These valuations require significant judgments, which include assumptions regarding capitalization and discount rates, revenue growth rates, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan and other factors.

The table above and below includes all impaired loans, regardless of the period in which the impairment was recognized.

Loans held-for-sale are generally transferred and sold within 60 - 180 days of loan origination and are reported at lower of cost or market.

We consider a loan classified as held-for-sale impaired if, based on current information, it is probable that we will sell the loan below par, or not be able to collect all principal and interest in accordance with the contractual terms of the loan agreement.

These loans are valued using pricing models that incorporate observable inputs from current market assumptions or a hypothetical securitization model utilizing observable market data from recent securitization spreads and observable pricing of loans with similar characteristics.

The tables above and below include all impaired loans, regardless of the period in which the impairment was recognized.

Quantitative information about Level 3 fair value measurements at December 31, 2022 is as follows ($ in thousands):

Valuation Techniques

Significant Unobservable Inputs

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Revenue growth rate

Discount rate

Discounted cash flows

Capitalization rate

Revenue growth rate

Derivative financial instruments:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

The derivative financial instruments using Level 3 inputs are outstanding for short periods of time (generally less than 60 days).

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We measure certain assets and liabilities for which fair value is only disclosed.

The fair values of these assets and liabilities are determined using the following input levels as of December 31, 2021 (in thousands):

The fair values of these assets and liabilities are determined using the following input levels at December 31, 2022 (in thousands):

Fair Value Measurements Using Fair Value Hierarchy

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Credit and repurchase facilities

Collateralized loan obligations

Securitized debt

Senior unsecured notes

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Agency Business Commitments.

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Our adjusted net worth and liquidity required by the agencies for all periods presented exceeded these requirements.

As of December 31, 2021, we were required to maintain at least $ 18.8 million of liquid assets in one of our subsidiaries to meet our operational liquidity requirements for Fannie Mae and we had operational liquidity in excess of this requirement.

At December 31, 2022, we were required to maintain at least $ 18.5 million of liquid assets in one of our subsidiaries to meet our operational liquidity requirements for Fannie Mae and we had operational liquidity in excess of this requirement.

We are generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program and are required to secure this obligation by assigning restricted cash balances and/or a letter of credit to Fannie Mae.

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A significant portion of our Fannie Mae DUS serviced loans for which we have risk sharing are Tier 2 loans.

As of December 31, 2021, we met the restricted liquidity requirement with a $ 45.0 million letter of credit and $ 18.7 million of cash collateral.

As of December 31, 2021, reserve requirements for the Fannie Mae DUS loan portfolio will require us to fund $ 43.0 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio.

At December 31, 2022, the restricted liquidity requirement totaled $ 64.4 million and was satisfied with a $ 64.0 million letter of credit and cash issued to Fannie Mae.

At December 31, 2022, reserve requirements for the Fannie Mae DUS loan portfolio will require us to fund $ 37.0 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio.

Fannie Mae periodically reassesses these collateral requirements and may make changes to these requirements in the future.

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Failure to maintain minimum capital requirements could result in our inability to originate and service loans for the respective investor and, therefore, could have a direct material effect on our consolidated financial statements.

As of December 31, 2021, we met all of Fannie Mae’s quarterly capital requirements and our Fannie Mae adjusted net worth was in excess of the required net worth.

We are also subject to capital requirements on an annual basis for Ginnie Mae and FHA, and we believe we have met all requirements as of December 31, 2021.

At December 31, 2022, we met all of Fannie Mae’s quarterly capital requirements and our Fannie Mae adjusted net worth was in excess of the required net worth.

We are also subject to capital requirements on an annual basis for Ginnie Mae and FHA, and we believe we have met all requirements at December 31, 2022.

As an approved designated seller/servicer under Freddie Mac’s SBL program, we are required to post collateral to ensure that we are able to meet certain purchase and loss obligations required by this program.

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Debt Obligations and Operating Leases.

As of December 31, 2021, the maturities of our debt obligations and the minimum annual operating lease payments under leases with a term in excess of one year are as follows (in thousands):

At December 31, 2022, the maturities of our debt obligations and the minimum annual operating lease payments under leases with a term in excess of one year are as follows (in thousands):

Minimum Annual

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

As of December 31, 2021 and 2020, our leases had remaining lease terms of 0.1 – 9.0 years and 0.5 – 10.0 years, respectively, with a weighted average remaining lease term of 8.2 years and 9.0 years, respectively, and a weighted average discount rate of 4.0 % and 4.9 % , respectively.

At December 31, 2022 and 2021, our leases had remaining lease terms of 0.2 – 10.4 years and 0.1 – 9.0 years, respectively, with a weighted average remaining lease term of 8.2 years for both periods and a weighted average discount rate of 6.8 % and 4.0 % , respectively.

We recorded lease expense of $ 9.6 million, $ 9.3 million and $ 6.2 million during 2022, 2021 and 2020, respectively.

Unfunded Commitments.

In accordance with certain structured loans and investments, we have outstanding unfunded commitments of $ 975.2 million as of December 31, 2021 that we are obligated to fund as borrowers meet certain requirements.

In accordance with certain structured loans and investments, we have outstanding unfunded commitments of $ 1.15 billion at December 31, 2022 that we are obligated to fund as borrowers meet certain requirements.

Specific requirements include, but are not limited to, property renovations, building construction and conversions based on criteria met by the borrower in accordance with the loan agreements.

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In the third action, filed in Bankruptcy Court, the same plaintiff, the Trust, named ACM and ABT-ESI LLC, together with a number of other defendants, and asserts claims, including constructive and fraudulent conveyance claims, under state and federal statutes, as well as a claim under the Federal Debt Collection Procedure Act.

In June 2013, the Trust filed a motion to amend the lawsuits, to, among other things, (i) consolidate the lawsuits into one lawsuit, (ii) remove 47 defendants from the lawsuits, none of whom are related to us, so that there are 26 remaining defendants, including 16 corporate and partnership entities and 10 individuals, and (iii) reduce the counts within the lawsuits from over 100 down to 17 .

In June 2013, the Trust filed a motion to amend the lawsuits, to, among other things, (1) consolidate the lawsuits into one lawsuit, (2) remove 47 defendants from the lawsuits, none of whom are related to us, so that there are 26 remaining defendants, including 16 corporate and partnership entities and 10 individuals, and (3) reduce the counts within the lawsuits from over 100 down to 17 .

The remaining counts in the Trust’s amended complaint against our affiliates are principally state law claims for breach of fiduciary duties, waste, unlawful dividends and unjust enrichment, and claims under the Bankruptcy Code for avoidance and recovery actions, among others.

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We moved to dismiss the referenced remaining actions in December 2013.

After supplemental briefing and multiple adjourned conferences, in August 2020, the Court issued a decision granting our motion to dismiss in part, dismissing 9 of the 17 counts.

The Court permitted claims against director designees to proceed on theories of

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

authorization of illegal dividends and breach of fiduciary duty.

After supplemental briefing and multiple adjourned conferences, in August 2020, the Court issued a decision granting our motion to dismiss in part, dismissing 9 of the 17 counts.

The Court permitted claims against director designees to proceed on theories of authorization of illegal dividends and breach of fiduciary duty.

The Court permitted claims against the defendant entities, including our affiliated entities, to proceed on theories of constructive fraudulent transfer and fraudulent transfer under state and federal law.

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As a result, with what remains of the amended complaint, total possible liability against the affiliated entities has correspondingly fallen, whereas total possible liability against the director designees remains at approximately $ 139.0 million.

The parties have stipulated to a schedule for discovery and we intend to vigorously defend against the remaining claims.

We have not made a loss accrual for this litigation because we believe that it is not probable that a loss has been incurred and an amount cannot be reasonably estimated.

Since the Court’s decision in August 2020, the parties have engaged in extensive discovery.

In early December 2022, the plaintiff and certain co-defendants, including our affiliates, commenced discussions regarding a possible settlement of the litigation and in late December 2022, those parties reached an agreement in principal to settle the litigation.

As part of the agreement, we agreed to pay $ 7.4 million to the plaintiff, and we have accrued that amount in our December 31, 2022 financial statements.

As of the date of this report, the parties are negotiating the settlement documents and the settlement will be subject to the approval of the United States Bankruptcy Court of the Southern District of New York.

As part of the settlement, we expect to secure certain rights against those co-defendants who have not agreed to participate in the settlement, however, we can give no assurances that will we be successful in our efforts to recover any part of the amount we have accrued.

Due to Borrowers.

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Consolidated VIEs.

We have determined that our operating partnership, ARLP, and our CLO entities, which we consolidate, are VIEs.

ARLP is already consolidated in our financial statements, therefore, the identification of this entity as a VIE had no impact on our consolidated financial statements.

Our CLO consolidated entities invest in real estate and real estate-related securities and are financed by the issuance of debt securities.

We, or one of our affiliates, are named collateral manager, servicer, and special servicer for all collateral assets held in CLOs, which we believe gives us the power to direct the most significant economic activities of those entities.

We also have exposure to losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to bond investors.

As a result of consolidation, equity interests have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued to third parties by the CLOs, prior to the unwind.

Our operating results and cash flows include the gross asset and liability amounts related to the CLOs as opposed to our net economic interests in those entities.

The assets and liabilities related to these consolidated CLOs are as follows (in thousands):

We have determined that our operating partnership, ARLP, and our CLO and Q Series securitization entities(“Securitization Entities”) are VIEs, which we consolidate.

ARLP was already consolidated in our financial statements, therefore, the identification of this entity as a VIE had no impact on our consolidated financial statements.

Our Securitization Entities invest in real estate and real estate-related securities and are financed by the issuance of debt securities.

We believe we hold the power necessary to direct the most significant economic activities of those entities.

We also have exposure to losses to the extent of our equity interests, and rights to waterfall payments in excess of required payments to bond investors.

As a result of consolidation, equity interests have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued to third parties by the Securitization Entities, prior to the unwind.

Our operating results and cash flows include the gross asset and liability amounts related to the Securitization Entities as opposed to our net economic interests in those entities.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The assets and liabilities related to these consolidated Securitization Entities are as follows (in thousands):

December 31, 2022

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Loans and investments, net

Collateralized loan obligations

Securitized debt

Other liabilities

Total liabilities

Assets held by the CLOs are restricted and can only be used to settle obligations of the CLOs.

The liabilities of the CLOs are non-recourse to us and can only be satisfied from each respective asset pool.

Assets held by the Securitization Entities are restricted and can only be used to settle obligations of those entities.

The liabilities of the Securitization Entities are non-recourse to us and can only be satisfied from each respective asset pool.

See Note 10 for details.

We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the Securitization Entities.

Unconsolidated VIEs .

We determined that we are not the primary beneficiary of 30 VIEs in which we have a variable interest as of December 31, 2021 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance.

A summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of December 31, 2021 is as follows (in thousands):

We determined that we are not the primary beneficiary of 29 VIEs in which we have a variable interest at December 31, 2022 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance.

A summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, at December 31, 2022 is as follows (in thousands):

Carrying Amount (1)

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(1) Represents the carrying amount of loans and investments before reserves.

At December 31, 2021, $ 129.8 million of loans to VIEs had corresponding loan loss reserves of $ 79.4 million.

The maximum loss exposure as of December 31, 2021 would not exceed the carrying amount of our investment.

At December 31, 2022, $ 127.9 million of loans to VIEs had corresponding specific loan loss reserves of $ 77.9 million.

The maximum loss exposure at December 31, 2022 would not exceed the carrying amount of our investment.

These unconsolidated VIEs have exposure to real estate debt of approximately $ 4.01 billion at December 31, 2022.

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Preferred Stock.

In October 2021, we completed a public offering of 8,050,000 shares of 6.25 % Series F fixed-to-floating rate cumulative redeemable preferred stock with a liquidation preference of $ 25.00 per share, generating net proceeds of $ 194.8 million after deducting the underwriting discount and other offering expenses.

Holders of the Series F preferred stock will be entitled to receive cumulative dividends at a fixed rate equal to 6.25 % from the date of issuance through October 29, 2026 and at a floating rate equal to a benchmark rate (which is expected to be the three-month SOFR) plus a spread of 5.442 % per annum beginning October 30, 2026, provided that in no event should the rate be lower than 6.125 %.

The proceeds were used to make investments related to our business and for general corporate purposes.

The Series F preferred stock is not redeemable by us prior to October 12, 2026 except under circumstances intended to preserve our qualification as a REIT and except upon the occurrence of a change of control.

In August 2021, we completed a public offering of 5,750,000 shares of 6.25 % Series E cumulative redeemable preferred stock with a liquidation preference of $ 25.00 per share, generating net proceeds of $ 139.1 million after deducting the underwriting discount and other offering expenses.

The proceeds were used to make investments related to our business and for general corporate purposes.

The Series E preferred stock is not redeemable by us prior to August 11, 2026 except under circumstances intended to preserve our qualification as a REIT and except upon the occurrence of a change of control.

In June 2021, we completed a public offering of 9,200,000 shares of 6.375 % Series D cumulative redeemable preferred stock with a liquidation preference of $ 25.00 per share, generating net proceeds of $ 222.6 million after deducting the underwriting discount and other offering expenses.

We used $ 93.3 million of the proceeds to fully redeem our Series A, B and C preferred stock.

The Series D preferred stock is not redeemable by us prior to June 2, 2026 except under circumstances intended to preserve our qualification as a REIT and except upon the occurrence of a change of control.

Subsequent Event.

In February 2022, we completed the public offering of an additional 3,100,000 shares of 6.25 % Series F preferred stock, generating net proceeds of $ 72.6 million after deducting the underwriting discount and other offering expenses.

The additional shares issued have the same terms as the original issuance completed in October 2021.

Common Stock.

In November 2021, we completed a public offering in which we sold 7,910,000 shares of our common stock for $ 19.48 per share and received net proceeds of $ 153.9 million after deducting the underwriter's discount and other offering expenses.

The proceeds were used to make investments related to our business and for general corporate purposes.

We also used $ 10.9 million of the net proceeds from this offering to purchase 562,500 shares of our common stock from our chief executive officer, ACM and certain other executive officers of ours at a weighted average price of $ 19.46 .

In the first quarter of 2022, we completed a public offering of an additional 3,292,000 shares of 6.25 % Series F fixed-to-floating rate cumulative redeemable preferred stock, generating net proceeds of $ 77.1 million after deducting the underwriting discount and other offering expenses.

The additional shares issued have the same terms as the original issuance.

During 2021, we completed the public offerings of 8,050,000 shares of 6.25 % Series F fixed-to-floating rate cumulative redeemable preferred stock, 5,750,000 shares of 6.25 % Series E cumulative redeemable preferred stock, and 9,200,000 shares of 6.375 % Series D cumulative redeemable preferred stock.

The Series F, Series E and Series D preferred stock are not redeemable by us prior to October 12, 2026, August 11, 2026 and June 2, 2026, respectively.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In August 2021, we amended the equity distribution agreement with JMP Securities LLC (“JMP”).

In accordance with the terms of the amendment, we may offer and sell up to 20,000,000 shares of our common stock in “At-The-Market” equity offerings through JMP by means of ordinary brokers’ transactions or otherwise at market prices prevailing at the time of sale, or at negotiated prices.

Common Stock.

In November 2022, we amended the equity distribution agreement with JMP Securities LLC ("JMP").

In accordance with the terms of the amendment, we may offer and sell up to 25,000,000 shares of our common stock in "At-The-Market"

equity offerings through JMP by means of ordinary brokers' transactions or otherwise at market prices prevailing at the time of sale, or at negotiated prices.

During 2022, we sold 18,860,788 shares of our common stock for net proceeds of $ 285.0 million.

We used $ 21.1 million of the net proceeds to redeem OP Units from two ACM members.

As of December 31, 2021, we had 18,192,510 shares available under the amended agreement.

In June 2021, we completed a public offering in which we sold 6,000,000 shares of our common stock for $ 18.46 per share and received net proceeds of $ 110.6 million after deducting the underwriter's discount and other offering expenses.

The proceeds were used to make investments related to our business and for general corporate purposes.

We also used $ 11.1 million of the net proceeds from this offering to purchase 600,000 shares of our common stock from ACM at the same price the underwriters paid to purchase the shares.

In March 2021, we completed a public offering in which we sold 7,000,000 shares of our common stock for $ 15.48 per share and received net proceeds of $ 108.2 million after deducting the underwriter's discount and other offering expenses.

The proceeds were used to make investments related to our business and for general corporate purposes.

We also used $ 12.4 million of the net proceeds from this offering to purchase 800,000 shares of our common stock from our chief executive officer, ACM and certain other executive officers of ours at the same price the underwriters paid to purchase the shares.

During 2021, we issued 386,459 shares in connection with the settlements of our 5.25 % Convertible Notes.

At December 31, 2022, we had 18,290,000 shares available under the amended agreement.

In the first quarter of 2022, we completed a public offering of 7,475,000 shares of our common stock (including the full exercise of the overallotment) for $ 16.57 per share and received net proceeds of $ 123.7 million after deducting the underwriter’s discount and other offering expenses.

The proceeds from this offering were used to make investments related to our business and for general corporate purposes.

We maintain a share repurchase program providing for the repurchase of up to $ 100.0 million of our outstanding common stock.

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We did not repurchase shares of our common stock under this program during 2022.

As of December 31, 2021, there was $ 96.1 million available for repurchase under this program.

At December 31, 2022, there was $ 96.1 million available for repurchase under this program.

Noncontrolling Interest.

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February 16, 2022

February 1, 2021

January 3, 2022

April 1, 2022

July 27, 2022

October 27, 2021

October 1, 2021

(1) The dividend declared on October 1, 2021 for Series D and E were for July 30, 2021 through October 29, 2021 and August 11, 2021 (the date of issuance) through October 29, 2021, respectively.

The dividend declared on July 2, 2021 was for June 2, 2021 through July 29, 2021, the dividend declared on April 30, 2021 was for March 1, 2021 through May 31, 2021 and the dividend declared on February 1, 2021 was for December 1, 2020 through February 28, 2021.

As mentioned above, we fully redeemed our Series A, B and C preferred stock in June 2021.

November 2, 2022

September 30, 2022

Common Stock – On February 15, 2023, the Board of Directors declared a cash dividend of $ 0.40 per share of common stock.

The dividend is payable on March 17, 2023 to common stockholders of record as of the close of business on March 3, 2023.

Preferred Stock – On January 3, 2022, the Board of Directors declared cash dividends of $ 0.3984375 per share of Series D preferred stock, $ 0.390625 per share of Series E preferred stock and $ 0.46875 per share of Series F preferred stock.

The Series D and

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

E dividends reflect accrued dividends from October 30, 2021 through January 29, 2022.

The Series F dividend reflects accrued dividends from October 12, 2021 (the date of issuance) through January 29, 2022.

The dividends are payable on January 31, 2022 to preferred stockholders of record on January 15, 2022.

Preferred Stock – On January 3, 2023, the Board of Directors declared cash dividends of $ 0.3984375 per share of Series D preferred stock and $ 0.390625 per share of both Series E and Series F preferred stock.

These amounts reflect dividends from October 30, 2022 through January 29, 2023 and are payable on January 31, 2023 to preferred stockholders of record on January 15, 2023.

We have determined that 100 % of the common stock and preferred stock dividends paid during 2022, 2021 and 2020 represented ordinary income to our stockholders for income tax purposes.

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We have a stock incentive plan under which the Board of Directors has the authority to issue shares of stock to certain employees, officers and directors.

In 2021, we issued 356,377 shares of restricted common stock to certain employees under the 2020 Amended Omnibus Stock Incentive Plan (the “2020 Plan”) with a total grant date fair value of $ 5.9 million, of which:

(1) 116,570 shares with a grant date fair value of $ 1.9 million were fully vested on the grant date;

(2) 101,475 shares with a grant date fair value of $ 1.7 million will vest on the first anniversary of the grant date;

(3) 88,788 shares with a grant date fair value of $ 1.5 million will vest on the second anniversary of the grant date;

(4) 25,479 shares with a grant date fair value of $ 0.4 million will vest on the third anniversary of the grant date;

and (5) 24,065 shares with a grant date fair value of $ 0.4 million will vest on the fourth anniversary of the grant date.

We also issued 28,381 shares of fully vested common stock to the independent members of the Board of Directors under the 2020 Plan with a grant date fair value of $ 0.5 million.

In 2020 and 2019, we granted 314,957 shares and 333,884 shares, respectively, of restricted common stock with a total grant date fair value of $ 3.4 million and $ 4.2 million, respectively, to certain employees.

One third of the shares vested as of the grant date and one third will vest on each of the first and second anniversaries of the grant date.

In 2020 and 2019, we granted 52,735 shares and 55,244 shares, respectively, of fully vested common stock with a grant date fair value of $ 0.5 million and $ 0.7 million, respectively, to the independent members of our Board of Directors.

In April 2021, we entered into a second amended and restated annual incentive agreement (the “2021 annual incentive agreement”) with our chief executive officer, effective January 1, 2021.

The terms of the 2021 annual incentive agreement provide for:

(1) an annual base salary of $ 1.2 million;

(2) an annual cash payment of $ 0.8 million;

and (3) annual performance cash bonus target opportunities of $ 2.9 million at target performance, $ 1.5 million at threshold performance and $ 4.4 million at maximum performance, with the opportunity to earn an additional $ 0.7 million annually in the event of extraordinary performance with respect to corporate capital growth goals.

The 2021 annual incentive agreement also provides for:

(1) a grant with a value of $ 3.0 million to be made in July 2021, dependent on reaching certain goals relating to the integration of the Acquisition (“Acquisition Related Grant”), which represents the last Acquisition Related Grant;

and (2) at our chief executive officer’s option, to be exercised annually for the remainder of the term of the 2021 annual incentive agreement, either (i) a grant with a value of $ 3.0 million, which will vest in full three years from the date of the grant (“Time Based Vesting Equity Award”) or (ii) a performance based award of restricted stock (“Performance-Based TSR Equity Award”) with an annual value at grant of $ 12.0 million, relating to our total stockholder return objectives.

The Acquisition Related Grant will vest in full on the third anniversary of the grant date.

The Performance-Based TSR Equity Award will vest, in whole or in part, based on the attainment of total stockholder return goals over a five-year period.

In April 2021, our chief executive officer elected to receive the Time Based Vesting Equity Award option for 2021;

therefore, we granted our chief executive officer 184,729 shares of restricted common stock with a grant date fair value of $ 3.1 million that vest in full in April 2024.

In July 2021, we granted our chief executive officer 165,746 shares of performance based restricted stock with a grant date fair value of $ 3.0 million in connection with the Acquisition Related Grant, which vest in full in July 2024.

In addition, 294,985 shares of performance-based restricted stock granted in 2018 vested in the third quarter of 2021, which were net settled for 150,530 common shares.

In November 2021, in accordance with the terms of the 2021 annual incentive agreement, our chief executive officer elected to receive the Time Based Vesting Equity Award option for 2022, which he also elected to defer until March 2027, subject to section 409(a) of the Internal Revenue Code.

The deferred Time Based Vesting Equity Award will be granted in the form of restricted stock units, will have no voting rights and is eligible to receive dividend equivalents equal to the dividends on our common stock as, and when, declared by our Board of Directors.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In 2020 and 2019, we granted our chief executive officer 45,928 shares and 58,738 shares, respectively, of restricted common stock with a grant date fair value of $ 0.5 million and $ 0.7 million, respectively, and 275,569 and 352,427 , respectively, of performance-based restricted stock units with a grant date fair value of $ 0.1 million and $ 1.7 million, respectively.

During 2022, we issued 652,596 shares of restricted common stock to our employees and members of our Board of Directors under the 2020 Amended Omnibus Stock Incentive Plan (the “2020 Plan”) with a total grant date fair value of $ 11.1 million, of which:

(1) 232,899 shares with a grant date fair value of $ 4.0 million were fully vested on the grant date;

(2) 217,840 shares with a grant date fair value of $ 3.7 million will vest in 2023;

(3) 181,968 shares with a grant date fair value of $ 3.1 million will vest in 2024;

(4) 9,951 shares with a grant date fair value of $ 0.2 million will vest in 2025;

and (5) 9,938 shares with a grant date fair value of $ 0.2 million will vest in 2026.

We issued 25,012 fully vested restricted stock units (“RSUs”) with a grant date fair value of $ 0.4 million to certain members of our Board of Directors and 189,873 RSUs with a grant date fair value of $ 3.3 million that vest in full in the first quarter of 2025 to our chief executive officer.

The individuals decided to defer the receipt of the common stock, to which the RSUs are converted into, to a future date.

The deferred awards have no voting rights and are eligible to receive dividend equivalents equal to the dividends on our common stock as, and when, declared by our Board of Directors.

In 2021, we issued 384,758 shares of restricted common stock to our employees and members of our Board of Directors under the 2020 Plan with a total grant date fair value of $ 6.4 million, of which:

(1) 144,951 shares with a grant date fair value of $ 2.4 million vested on the grant date;

(2) 101,475 shares with a grant date fair value of $ 1.7 million vested in 2022;

(3) 88,788 shares with a grant date fair value of $ 1.5 million will vest in 2023;

(4) 25,479 shares with a grant date fair value of $ 0.4 million will vest in 2024;

and (5) 24,065 shares with a grant date fair value of $ 0.4 million will vest in 2025.

In April 2021, we granted our chief executive officer 184,729 shares of restricted common stock with a grant date fair value of $ 3.1 million that vest in full in April 2024.

In July 2021, we granted our chief executive officer 165,746 shares of performance based restricted stock with a grant date fair value of $ 3.0 million, which vest in full in July 2024.

In 2020, we granted 314,957 shares of restricted common stock with a total grant date fair value of $ 3.4 million to our employees.

One third of the shares vested as of the grant date and one third vested on each of the first and second anniversaries of the grant date.

In 2020, we granted 52,735 shares of fully vested common stock with a grant date fair value of $ 0.5 million to members of our Board of Directors.

In 2020, we granted our chief executive officer 45,928 shares of restricted common stock with a grant date fair value of $ 0.5 million and 275,569 of performance-based restricted stock units with a grant date fair value of $ 0.1 million.

One quarter of the restricted common stock vest on the grant date and one quarter vest on each of the first, second and third anniversaries of the grant date.

The performance-based restricted stock units vest at the end of a four-year performance period based on our achievement of certain total stockholder return objectives.

In 2021 and 2020, previously granted performance-based restricted stock units of 448,980 and 421,348 units, respectively, fully vested based on achieving the performance objectives for the four-year periods ended December 31, 2020 and 2019, respectively.

The 448,980 and 421,348 fully vested units were net settled for 229,083 and 215,014 , respectively, of common shares in 2021 and 2020, respectively.

In 2020 and 2019, we also granted our chief executive officer 313,152 shares and 246,508 shares, respectively, of performance-based restricted stock with a grant date fair value of $ 2.9 million and $ 3.0 million, respectively, as a result of achieving goals related to the integration of the Acquisition.

In 2020, we also granted our chief executive officer 313,152 shares of performance-based restricted stock with a grant date fair value of $ 2.9 million as a result of achieving goals related to the integration of the Acquisition.

The performance-based restricted stock vest in full three years after the grant date.

In 2020, we withheld 175,102 shares from the net settlement of previously granted performance-based restricted stock that vested in 2020 for payment of withholding taxes.

In 2022, 2021 and 2020, previously granted performance-based restricted stock units of 381,503 units, 448,980 units and 421,348 units, respectively, fully vested based on achieving the performance objectives for the four-year periods ended December 31, 2021, 2020 and 2019, respectively.

The 381,503 units, 448,980 units and 421,348 units vested in full and were net settled for 186,772 shares, 229,083 shares and 215,014 shares, respectively, of common stock in 2022, 2021 and 2020.

respectively.

In addition, 246,508 shares, 294,985 shares and 357,569 shares of performance-based restricted stock granted in 2019, 2018 and 2017, respectively, vested in 2022, 2021 and 2020, respectively, which were net settled for 120,665 shares, 150,530 shares and 182,467 shares, respectively, of common stock.

During 2022, 2021 and 2020, we recorded total stock-based compensation expense of $ 14.2 million, $ 9.3 million and $ 8.6 million, respectively, to employee compensation and benefits and $ 0.8 million, $ 0.6 million and $ 0.5 million, respectively, to selling and administrative expense.

During 2022, a total of 1,070,248 shares of restricted stock and restricted stock units vested with a grant date fair value of $ 12.0 million.

As of December 31, 2021 and 2020, there were 1,257,199 shares and 1,300,568 shares, respectively, of unvested restricted common stock with a grant date fair value of $ 17.1 million and $ 14.4 million, respectively.

At December 31, 2022 and 2021, there were 1,389,427 shares and 1,257,199 shares, respectively, of unvested restricted common stock with a grant date fair value of $ 21.3 million and $ 17.1 million, respectively.

At December 31, 2022, total unrecognized compensation cost related to unvested restricted common stock was $ 9.0 million, which is expected to be recognized ratably over the remaining weighted-average vesting period of 1.9 years.

Earnings Per Share.

Basic EPS is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period inclusive of unvested restricted stock with full dividend participation rights.

Diluted EPS is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding, plus the additional dilutive effect of common stock equivalents during each period using the treasury stock method.

Our common stock equivalents include the weighted average dilutive effect of performance-based restricted stock units granted to our chief executive officer, OP Units and convertible senior unsecured notes.

ARBOR REALTY TRUST, INC.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Earnings Per Share.

Our common stock equivalents include the weighted average dilutive effect of restricted stock units granted to our chief executive officer, OP Units and convertible senior unsecured notes.

A reconciliation of the numerator and denominator of our basic and diluted EPS computations ($ in thousands, except share and per share data) is as follows:

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Net income attributable to noncontrolling interest (2)

Interest expense on convertible notes (3)

Net income attributable to common stockholders and noncontrolling interest

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Dilutive effect of OP Units (2)

Dilutive effect of restricted stock units (3)

Dilutive effect of convertible notes (3)

Dilutive effect of restricted stock units (4)

Weighted average shares outstanding

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(2) We consider OP Units to be common stock equivalents as the holders have voting rights, the right to distributions and the right to redeem the OP Units for the cash value of a corresponding number of shares of common stock or a corresponding number of shares of common stock, at our election.

(3) Beginning January 1, 2022, the effective date we adopted ASU 2020-06, we started utilizing the if-converted method of calculating EPS to reflect the impact of our convertible senior notes.

For 2021 and 2020, the convertible senior notes impacted diluted EPS if the average price of our common stock exceeded the conversion price, as calculated in accordance with the terms of the indenture.

See Note 2 for details.

(4) Our chief executive officer was granted restricted stock units, which vest at the end of a four-year performance period based upon our achievement of total stockholder return objectives.

(4) The convertible senior unsecured notes impact diluted earnings per share if the average price of our common stock exceeds the conversion price, as calculated in accordance with the terms of the indenture.

Our adoption of ASU 2020-06 on January 1, 2022 changes the way in which we account for our convertible debt, see Note 2 for details.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 17 — Income Taxes

We are organized and conduct our operations to qualify as a REIT and to comply with the provisions of the Internal Revenue Code.

A REIT is generally not subject to federal income tax on taxable income which it distributes to its stockholders, provided that it distributes at least 90% of its REIT–taxable income and meets certain other requirements.

A REIT is generally not subject to federal income tax on its REIT-taxable income that is distributed to its stockholders, provided that at least 90 % of its REIT–taxable income is distributed and provided that certain other requirements are met.

Certain REIT income may be subject to state and local income taxes.

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We have elected to retain excess inclusion income rather than passing it through to our stockholders.

Consequently, we had REIT-federal taxable income, net of dividends paid deduction, for 2019, and therefore, have provided for REIT federal income tax expense of $ 0.6 million attributable to excess inclusion income.

In 2021 and 2020, the REIT incurred no state income tax expense, while in 2019, the REIT incurred state income tax expense of $ 0.1 million.

Certain of our assets and operations that would not otherwise comply with the REIT requirements, such as the Agency Business and our residential mortgage banking joint venture, are owned or conducted through our taxable REIT subsidiaries (the “TRS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Consolidated Group”), the majority of the income of which is subject to U.S.

In 2022, 2021 and 2020, the REIT incurred no state income tax expense.

federal, state and local income taxes.

The TRS Consolidated Group had federal net operating losses from prior years which has been used against the income from the Agency Business subject to loss limitation rules.

For 2021, 2020 and 2019, we recorded a provision for income taxes related to the assets held in the TRS Consolidated Group and the REIT in the amount of $ 46.3 million, $ 40.4 million and $ 15.0 million, respectively.In 2021, a $ 0.1 million valuation allowance previously recorded at the TRS Consolidated Group on the deferred tax assets subject to loss limitation rules was released.

In 2020, the change in valuation allowance was due to the impact of state tax rate changes.

The TRS Consolidated Group had no federal net operating losses remaining from prior years.

For 2022, 2021 and 2020, we recorded a provision for income taxes related to the assets held in the TRS Consolidated Group and the REIT in the amount of $ 17.5 million, $ 46.3 million and $ 40.4 million, respectively.

In 2022, the change in the valuation allowance previously recorded at the TRS Consolidated Group on the deferred tax assets was due to the impact of state tax rate changes.

In 2021, a $ 0.1 million valuation allowance previously recorded at the TRS Consolidated Group on the deferred tax assets subject to loss limitation rules was released.

In 2020, the change in valuation allowance was due to the impact of state tax rate changes.

A summary of our pre-tax GAAP income is as follows (in thousands):

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Current tax provision:

Deferred tax provision :

Deferred tax (benefit) provision :

Valuation allowance

Total income tax expense

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AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

A reconciliation of our effective income tax rate as a percentage of pre-tax income to the U.S.

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State and local income taxes, net of federal tax benefit

Change in valuation allowance

Effective income tax rate

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

The significant components of our deferred tax assets and liabilities of our TRS Consolidated Group are as follows (in thousands):

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Deferred tax liabilities, net

At December 31, 2021, our TRS Consolidated Group, had $ 33.2 million of deferred tax assets, net of a $ 0.3 million valuation allowance.

The deferred tax assets consist of expenses not currently deductible, loan loss reserves and net operating loss and capital loss carryforwards.

Our TRS Consolidated Group’s deferred tax assets are offset by $ 44.1 million in deferred tax liabilities consisting of timing differences from mortgage servicing rights, investments in equity affiliates and intangibles.

At December 31, 2022, our TRS Consolidated Group, had approximately $ 30.5 million of deferred tax assets, net of a $ 0.3 million valuation allowance.

The deferred tax assets consist of expenses not currently deductible, loan loss reserves, net operating loss and capital loss carryforwards.

Our TRS Consolidated Group's deferred tax assets are offset by approximately $ 39.7 million in deferred tax liabilities consisting of timing differences from mortgage servicing rights, intangibles and investments in equity affiliates.

At December 31, 2021, our TRS Consolidated Group, had $ 33.2 million of deferred tax assets, net of a $ 0.3 million valuation allowance.

The deferred tax assets consist of expenses not currently deductible, loan loss reserves and net operating loss and capital loss carryforwards.

Our TRS Consolidated Group’s deferred tax assets are offset by $ 32.2 million in deferred tax liabilities consisting of timing differences from mortgage servicing rights, investments in equity affiliates and intangibles.

As of both December 31, 2021 and 2020, the REIT (excluding the TRS Consolidated Group) had no federal net operating loss carryforwards and no capital loss carryforwards.

At December 31, 2021, the TRS Consolidated Group had no federal net operating loss carryforwards remaining and capital loss carryforwards of $ 1.1 million, which will expire through 2023.

At December 31, 2020, the TRS Consolidated Group had federal net operating loss carryforwards of $ 0.5 million and capital loss carryforwards of $ 1.1 million expiring through 2023.

At December 31, 2021 and 2020, the TRS Consolidated Group had state net operating loss carryforwards of $ 0.2 million and $ 0.3 million, respectively, which will begin to expire in 2036.

Our TRS Consolidated Group's deferred tax assets are offset by $ 44.1 million in deferred tax liabilities consisting of timing differences from mortgage servicing rights, intangibles and investments in equity affiliates.

At both December 31, 2022 and 2021, the REIT (excluding the TRS Consolidated Group) had no federal net operating loss carryforwards and no capital loss carryforwards.

At both December 31, 2022 and 2021, the TRS Consolidated Group had no federal net operating loss carryforwards remaining and capital loss carryforwards of $ 1.1 million, which will expire through 2023.

At both December 31, 2022 and 2021, the TRS Consolidated Group had state net operating loss carryforwards of $ 0.2 million, which will begin to expire in 2036.

The TRS Consolidated Group is currently under audit in certain state and local jurisdictions for tax years 2017-2020.

2 unchanged sentences

We have not recognized any interest and penalties related to tax uncertainties for the years ended 2017 through 2022.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 18 — Agreements and Transactions with Related Parties

2 unchanged sentences

The Service Recipients reimburse us for the costs of performing such services and the cost of the seconded employees.

During 2021, 2020 and 2019, we incurred $ 3.2 million, $ 2.4 million

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

and $ 2.7 million, respectively, of costs for services provided and employees seconded to the Service Recipients, all of which were reimbursed to us and included in due from related party on the consolidated balance sheets.

During 2022, 2021 and 2020, we incurred $ 3.3 million, $ 3.2 million and $ 2.4 million, respectively, of costs for services provided and employees seconded to the Service Recipients, all of which are reimbursable to us and included in due from related party on the consolidated balance sheets.

Other Related Party Transactions.

1 unchanged sentence

Due to related party was $ 12.4 million and $ 26.6 million at December 31, 2022 and 2021, respectively, and consisted of loan payoffs, holdbacks and escrows to be remitted to our affiliated servicing operations related to real estate transactions.

In December 2021, we invested $ 4.2 million for 49.3 % interest in a limited liability company (“LLC”) which purchased a retail property for $ 32.5 million and assumed an existing $ 26.0 million CMBS loan.

In July 2022, we purchased a $ 46.2 million bridge loan originated by ACM at par (none of which was funded at December 31, 2022) for an SFR build-to-rent construction project.

A consortium of investors (which includes, among other unaffiliated investors, certain of our officers with a minority ownership interest) owns 70 % of the borrowing entity and an entity indirectly owned and controlled by an immediate family member of our chief executive officer owns 10 % of the borrowing entity.

The loan has an interest rate of SOFR plus 5.50 % and is scheduled to mature in March 2025.

In April 2022, we committed to fund a $ 67.1 million bridge loan (none of which was funded at December 31, 2022) in an SFR build-to-rent construction project.

An entity owned by an immediate family member of our chief executive officer also made an equity investment in the project and owns a 2.25 % equity interest in the borrowing entity.

The bridge loan has an interest rate of SOFR plus 4.625 % with a SOFR floor of 0.25 % and matures in May 2025.

Interest income recorded from this loan was $ 0.1 million for 2022.

In February 2022, we committed to fund a $ 39.4 million bridge loan (none of which was funded at December 31, 2022) in an SFR build-to-rent construction project.

An entity owned by an immediate family member of our chief executive officer also made an equity investment in the project and owns a 2.25 % equity interest in the borrowing entity.

The bridge loan has an interest rate of LIBOR plus 4.00 % with a LIBOR floor of 0.25 % and matures in March 2025.

Interest income recorded from this loan was $ 0.1 million for 2022.

In 2021, we invested $ 4.2 million for 49.3 % interest in a limited liability company (“LLC”) which purchased a retail property for $ 32.5 million and assumed an existing $ 26.0 million CMBS loan.

A portion of the property can potentially be converted to office space, of which we obtain the right to occupy, in part.

An entity owned by an immediate family member of our chief executive officer also made an investment in the LLC for a 10.0 % ownership, is the managing member and holds the right to purchase our interest in the LLC.

In October 2021, we entered into a $ 40.0 million promissory note with ACM to fund a portion of a $ 67.0 million bridge loan we originated to a third-party to purchase a multifamily property.

The promissory note has an interest rate of LIBOR plus 3.0 % and was scheduled to mature in April 2022.

In December 2021, the borrower repaid the bridge loan in full and we repaid the promissory note.

In December 2021, the promissory note was amended to include the funding of an additional asset and the maturity date was extended to May 2022.

As of December 31, 2021, we have no outstanding borrowings under the promissory note.

Interest expense recorded from this promissory note was $ 0.2 million for 2021.

In March 2021, we originated a $ 63.4 million bridge loan to a third-party to purchase a multifamily property from a multifamily-focused commercial real estate investment fund sponsored and managed by our chief executive officer and one of his immediate family members, which fund has no continued involvement with the property following the purchase.

In 2021, we originated a $ 63.4 million bridge loan to a third-party to purchase a multifamily property from a multifamily-focused commercial real estate investment fund sponsored and managed by our chief executive officer and one of his immediate family members, which fund has no continued involvement with the property following the purchase.

The loan has an interest rate of LIBOR plus 3.75 % with a LIBOR floor of 0.25 % and matures in March 2024.

Interest income recorded from this loan was $ 2.1 million for 2021.

In 2020, we committed to fund a $ 32.5 million bridge loan (of which $ 3.2 million was funded as of December 31, 2021) and made a $ 3.5 million preferred equity investment in an SFR build-to-rent construction project.

Interest income recorded from this loan was $ 3.7 million and $ 2.1 million for 2022 and 2021, respectively.

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

In 2020, we committed to fund a $ 32.5 million bridge loan which was upsized to $ 41.5 million in September 2022, ($ 12.3 million was funded at December 31, 2022) and made a $ 3.5 million preferred equity investment in an SFR build-to-rent construction project.

An entity owned by an immediate family member of our chief executive officer also made an equity investment in the project and owns a 21.8 % equity interest in the borrowing entity.

The bridge loan has an interest rate of LIBOR plus 5.5 % with a LIBOR floor of 0.75 % and matures in October 2023 and the preferred equity investment has a fixed rate of 12.0 % and matures in October 2023.

Interest income recorded from these loans was $ 0.5 million and less than $ 0.1 million for 2021 and 2020, respectively.

In 2020, we committed to fund a $ 30.5 million bridge loan and we made a $ 4.6 million preferred equity investment in a SFR build-to-rent construction project.

The bridge loan has an interest rate of LIBOR plus 5.5 % with a LIBOR floor of 0.75 %, the preferred equity investment has a 12.0 % fixed rate and both loans mature in October 2023.

Interest income recorded from these loans was $ 1.3 million, $ 0.5 million and less than $ 0.1 million for 2022, 2021 and 2020, respectively.

In 2020, we committed to fund a $ 30.5 million bridge loan , which was upsized to $ 38.8 million in September 2022, and we made a $ 4.6 million preferred equity investment in a SFR build-to-rent construction project.

ACM and an entity owned by an immediate family member of our chief executive officer also made equity investments in the project and own an 18.9 % equity interest in the borrowing entity.

The bridge loan (of which $ 3.5 million was funded as of December 31, 2021) has an interest rate of LIBOR plus 5.5 % with a LIBOR floor of 0.75 % and matures in May 2023 and the preferred equity investment has a fixed rate of 12.0 % and matures in April 2023.

Interest income recorded from these loans was $ 0.6 million and $ 0.1 million for 2021 and 2020, respectively.

The bridge loan ($ 17.6 million was funded at December 31, 2022) has an interest rate of LIBOR plus 5.5 % with a LIBOR floor of 0.75 % and matures in May 2023 and the preferred equity investment has a 12.0 % fixed rate and matures in April 2023.

Interest income recorded from these loans was $ 1.6 million, $ 0.6 million and $ 0.1 million for 2022, 2021 and 2020, respectively.

In 2020, we originated a $ 14.8 million Private Label loan and a $ 3.4 million mezzanine loan on two multifamily properties owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns a 50 % interest in the borrowing entity.

The Private Label loan bears interest at a 3.1 % fixed rate and the mezzanine loan bears interest at a 9.0 % fixed rate and both loans mature in April 2030.

In 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.

Interest income recorded from the mezzanine loan was $ 0.3 million for all periods presented.

We have a $ 35.0 million bridge loan and a $ 9.6 million preferred equity interest on an office building.

The property is controlled by a third party.

The day-to-day operations were previously managed by an entity owned by an immediate family member of our chief executive officer.

In September 2021, we entered into a forbearance agreement with the borrower on the outstanding bridge loan to defer all interest owed to payoff.

The day-to-day operations are currently being managed by an immediate family member, or one of his affiliated entities, of our chief executive officer.

In September 2021, we entered into a forbearance agreement with the borrower on the outstanding bridge loan to defer all interest owed until maturity or early payoff.

Interest income recorded from these loans was $ 1.3 million and $ 1.6 million for 2021 and 2020, respectively.

In certain instances, our business requires our executives to charter privately owned aircraft in furtherance of our business.

In 2019, we entered into an aircraft time-sharing agreement with an entity controlled by our chief executive officer that owns a private

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We have an aircraft time-sharing agreement with an entity controlled by our chief executive officer that owns a private aircraft.

Pursuant to the agreement, we reimburse the aircraft owner for the required costs under Federal Aviation Administration regulations for the flights our executives’ charter.

1 unchanged sentence

In 2019, we, along with ACM, certain executives of ours and a consortium of independent outside investors, formed AMAC III, a multifamily-focused commercial real estate investment fund sponsored and managed by our chief executive officer and one of his immediate family members.

We committed to a $ 30.0 million investment (of which $ 20.3 million was funded as of December 31, 2021) for an 18 % interest in AMAC III.

During 2021 and 2020, we received cash distributions totaling $ 3.8 million and $ 0.1 million, respectively, and recorded a loss of $ 1.3 million and $ 0.9 million, respectively, related to this investment.

In July 2019, AMAC III originated a $ 7.0 million mezzanine loan to a borrower with which we have an outstanding $ 34.0 million bridge loan.

In June 2020, for full satisfaction of the mezzanine loan, AMAC III became the owner of the property.

In August 2020, the $ 34.0 million bridge loan was refinanced with a $ 35.4 million bridge loan, which bears interest at a rate of LIBOR plus 3.5 % and matures in August 2022.

We also originated a $ 15.6 million Private Label loan in December 2019 to a borrower which is 100 % owned by AMAC III, which bears interest at a fixed rate of 3.735 % and matures in January 2030.

In May 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.

Interest income recorded from these loans was $ 1.3 million, $ 1.9 million and $ 3.3 million for 2021, 2020 and 2019, respectively.

In 2018, we originated a $ 61.2 million bridge loan on a multifamily property owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns 10 % of the borrowing entity.

The loan had an interest rate of LIBOR plus 4.5 % with a LIBOR floor of 2.0 % and was scheduled to mature in October 2021.

In 2019, the related party investors liquidated their equity investment.

Interest income recorded from this loan was $ 1.3 million for 2019.

In 2018, we originated a $ 37.5 million bridge loan, which was used to purchase several multifamily properties.

In 2019, an entity owned, in part, by an immediate family member of our chief executive officer, purchased a 23.9 % interest in the borrowing entity.

The loan had an interest rate of LIBOR plus 4.25 % with a LIBOR floor of 2.375 % and was scheduled to mature in October 2020.

In May 2020, the borrower repaid this loan in full.

Interest income recorded from this loan was $ 1.4 million and $ 2.7 million for 2020 and 2019, respectively.

In 2018, we acquired a $ 19.5 million bridge loan originated by ACM.

The loan was used to purchase several multifamily properties by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns 85 % of the borrowing entity.

The loan has an interest rate of LIBOR plus 4.0 % with a LIBOR floor of 2.125 % and was scheduled to mature in July 2021.

In January 2021, the borrower repaid this loan in full.

Interest income recorded from this loan was less than $ 0.1 million and $ 1.3 million for 2021 and 2020, respectively.

In 2018, we originated a $ 17.7 million bridge loan to an entity owned, in part, by an immediate family member of our chief executive officer, who owns a 10.8 % interest in the borrowing entity.

The loan was used to purchase several undeveloped parcels of land.

The loan has a fixed interest rate of 10.0 % and was scheduled to mature in February 2020.

In 2019, the borrower made a partial paydown of principal totaling $ 4.7 million and the remaining balance was paid off in January 2020.

Interest income recorded from this loan was $ 0.1 million and $ 1.8 million for 2020 and 2019, respectively.

We committed to a $ 30.0 million investment ($ 25.2 million was funded at December 31, 2022) for an 18 % interest in AMAC III.

During 2022, 2021 and 2020, we received cash distributions totaling $ 0.5 million, $ 3.8 million and $ 0.1 million, respectively, and recorded a loss of $ 2.4 million, $ 1.3 million and $ 0.9 million, respectively, associated with this investment.

In 2019, AMAC III originated a $ 7.0 million mezzanine loan to a borrower with which we have an outstanding $ 34.0 million bridge loan.

In 2020, for full satisfaction of the mezzanine loan, AMAC III became the owner of the property.

Also in 2020, the $ 34.0 million bridge loan was refinanced with a $ 35.4 million bridge loan, which bears interest at a rate of LIBOR plus 3.5 % and matures in August 2023.

We also originated a $ 15.6 million Private Label loan in 2019 to a borrower which is 100 % owned by AMAC III, which bears interest at a 3.735 % fixed rate and matures in January 2030.

In 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.

Interest income recorded from the bridge loan was $ 1.9 million, $ 1.3 million and $ 1.9 million for 2022, 2021 and 2020, respectively.

In 2018, we originated a $ 21.7 million bridge loan on a multifamily property owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns 75 % in the borrowing entity.

The loan has an interest rate of LIBOR plus 4.75 % with a LIBOR floor of 1.25 % and was scheduled to mature in June 2021, which was extended to August 2023.

Interest income recorded from this loan was $ 1.3 million for 2021, and $ 1.4 million for both 2020 and 2019.

In 2018, we acquired a $ 9.4 million bridge loan originated by ACM.

The loan has an interest rate of LIBOR plus 5.0 % with a LIBOR floor of 1.25 % and was scheduled to mature in January 2021, which was extended to January 2022 and, in September 2021, this loan paid off in full.

Interest income recorded from this loan was $ 0.4 million for 2021, and $ 0.6 million for both 2020 and 2019.

The loan has an interest rate of LIBOR plus 4.75 % with a LIBOR floor of 0.25 % and matures in August 2023.

Interest income recorded from this loan was $ 1.4 million, $ 1.3 million and $ 1.4 million for 2022, 2021 and 2020, respectively.

ARBOR REALTY TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

In 2017, we acquired a $ 32.8 million bridge loan originated by ACM.

The loan had an interest rate of LIBOR plus 5.0 % with a LIBOR floor of 1.13 % and was scheduled to mature in June 2020.

In 2019, the borrower repaid this loan in full.

Interest income recorded from this loan was $ 1.7 million for 2019.

In 2017, we originated two bridge loans totaling $ 28.0 million on two multifamily properties owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns 45 % of the borrowing entity.

The loans had an interest rate of LIBOR plus 5.25 % with LIBOR floors ranging from 1.24 % to 1.54 % and were scheduled to mature in the fourth quarter of 2020.

The borrower refinanced these loans with a $ 31.1 million bridge loan we originated in 2019 with an interest rate of LIBOR plus 4.0 %, a LIBOR floor of 1.8 % and a maturity date in October 2021, which was extended to October 2022.

Interest income recorded from these loans was $ 1.9 million for both 2021 and 2020, and $ 2.2 million for 2019.

The loans had an interest rate of LIBOR plus 5.25 % with LIBOR floors ranging from 1.24 % to 1.54 % and were scheduled to mature in 2020.

The borrower refinanced these loans with a $ 31.1 million bridge loan we originated in 2019 with an interest rate of LIBOR plus 4.0 %, a LIBOR floor of 1.8 %, which was scheduled to mature in October 2022.

In May 2022, these loans paid off in full.

Interest income recorded from this loan was $ 0.8 million for 2022 and $ 1.9 million for both 2021 and 2020.

In 2017, we originated a $ 46.9 million Fannie Mae loan on a multifamily property owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers) which owns a 17.6 % interest in the borrowing entity.

7 unchanged sentences

In 2016, we originated $ 48.0 million of bridge loans on six multifamily properties owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns interests ranging from 10.5 % to 12.0 % in the borrowing entities.

The loans had an interest rate of LIBOR plus 4.5 % with a LIBOR floor of 0.25 % and were scheduled to mature in September 2019.

The loans had an interest rate of LIBOR plus 4.5 % with a LIBOR floor of 0.25 % and were scheduled to mature in 2019.

In 2017, a $ 6.8 million loan on one property paid off in full and in 2018 four additional loans totaling $ 28.3 million paid off in full.

In January 2019, $ 10.9 million of the $ 12.9 million remaining bridge loan paid off, with the $ 2.0 million remaining UPB converting to a mezzanine loan with a fixed interest rate of 10.0 % and a January 2024 maturity.

Interest income recorded from the remaining mezzanine loan was $ 0.2 million for both 2021 and 2020, and $ 0.3 million for 2019.

In 2016, we originated a $ 12.7 million bridge loan and a $ 5.2 million preferred equity investment on two multifamily properties owned in part by a consortium of investors (which includes, among other unaffiliated investors, certain of our officers and our chief executive officer) which owns a 50 % interest in the borrowing entity.

The bridge loan had an interest rate of LIBOR plus 4.5 % with a LIBOR floor of 0.25 % and the preferred equity investment had a fixed interest rate of 10.0 %.

The bridge loan and the preferred equity investment paid off in full in May 2019.

The Private Label loan bears interest at a fixed rate of 3.1 % and the mezzanine loan bears interest at a fixed rate of 9.0 % and both loans mature in April 2030.

In 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.

Interest income recorded from these loans was $ 0.3 million for both 2021 and 2020, and $ 0.6 million for 2019.

In 2019, $ 10.9 million of the $ 12.9 million remaining bridge loan paid off, with the $ 2.0 million remaining UPB converting to a mezzanine loan with a fixed interest rate of 10.0 % and a January 2024 maturity.

Interest income recorded from the mezzanine loan was $ 0.2 million for all period presented.

In 2015, we invested $ 9.6 million for 50 % of ACM’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business.

As a result of this transaction, we had an initial indirect interest of 22.5 % in this entity.

We recorded income from these investments of $ 34.6 million, $ 75.7 million and $ 7.2 million for 2021, 2020 and 2019, respectively.

At December 31, 2022, we had an indirect interest of 12.3 % in this entity.

We recorded income from equity affiliates related to this investment of $ 4.9 million, $ 34.6 million and $ 75.7 million for 2022, 2021 and 2020, respectively.

During 2022 and 2021, we also received cash distributions totaling $ 23.8 million and $ 28.0 million, respectively, from this investment, which were classified as returns of capital.

Interest income recorded from loans that were paid off prior to 2022 totaled $ 0.5 million and $ 3.4 million for 2021 and 2020, respectively.

ARBOR REALTY TRUST, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

We, along with an executive officer of ours and a consortium of independent outside investors, hold equity investments in a portfolio of multifamily properties referred to as the “Lexford” portfolio, which is managed by an entity owned primarily by a consortium of affiliated investors, including our chief executive officer and an executive officer of ours.

2 unchanged sentences

The loans were originated in 2018, had interest rates of LIBOR plus 4.0 % and were scheduled to mature in June 2021.

During 2019, the borrower made payoffs and partial paydowns of principal totaling $ 250.0 million and in March 2020, the remaining balance of the loans were refinanced with a $ 34.6 million Private Label loan, which bears interest at a fixed rate of 3.3 % and matures in March 2030.

In May 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.

Interest income recorded from these loans totaled $ 0.5 million and $ 9.6 million during 2020 and 2019, respectively.

During 2019, the borrower made payoffs and partial paydowns of principal totaling $ 250.0 million and in 2020, the remaining balance of the loans were refinanced with a $ 34.6 million Private Label loan, which bears interest at a fixed rate of 3.3 % and matures in March 2030.

In 2020, we sold the Private Label loan to an unconsolidated affiliate of ours.

Interest income recorded from these loans totaled $ 0.5 million during 2020.

Further, as part of this 2018 restructuring, $ 50.0 million in unsecured financing was provided by an unsecured lender to certain parent entities of the property owners.

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The bad boy guarantees may become a liability for us upon standard “bad” acts such as fraud or a material misrepresentation by Lexford or us.

At December 31, 2021, this debt had an aggregate outstanding balance of $ 612.9 million and is scheduled to mature between through 2029.

At December 31, 2022, this debt had an aggregate outstanding balance of $ 582.8 million and is scheduled to mature through 2029.

Several of our executives, including our chief financial officer, senior counsel and our chairman, chief executive officer and president, hold similar positions for ACM.

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We have the option to increase the employer match based on our operating results.

In 2021, 2020 and 2019, we recorded $ 0.8 million, $ 0.8 million and $ 0.7 million, respectively, of expenses associated with the 401(k) Plan, which is included in employee compensation and benefits in our consolidated statements of income .

In 2022, we recorded $ 1.6 million and, in both 2021 and 2020, we recorded $ 0.8 million of expenses associated with the 401(k) Plan, which is included in employee compensation and benefits in our consolidated statements of income .

Deferred Compensation.

We have a non-qualified deferred compensation plan (the “Deferred Comp Plan") which is offered to certain full-time employees and is subject to the rules of section 409(a) of the Internal Revenue Code.

We have a non-qualified deferred compensation plan (the “Deferred Comp Plan”) which is offered to certain full-time employees and is subject to the rules of section 409(a) of the Internal Revenue Code.

The Deferred Comp Plan can be modified or discontinued at any time.

All eligible participating employees may defer a portion of their compensation and, depending on the participant eligibility requirements met, we are contractually obligated to:

(i) match the contribution, as specified in the Deferred Comp Plan, and fund such amounts upon vesting and an election by participants to redeem their interests;

and/or (ii) supply additional life insurance benefits.

(1) match the contribution, as specified in the Deferred Comp Plan, and fund such amounts upon vesting and an election by participants to redeem their interests;

and/or (2) supply additional life insurance benefits.

All employee deferrals vest immediately and the matching contributions, where applicable, vest over a nine-year period beginning after year five.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Note 20 — Segment Information

14 unchanged sentences

Property operating income

Loss on derivative instruments, net

Gain on derivative instruments, net

Other income, net

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Provision for credit losses (net of recoveries)

Litigation settlement

Total other expenses

Income before extinguishment of debt, gain on real estate, income from equity affiliates and income taxes

Income before extinguishment of debt, income from equity affiliates and income taxes

Loss on extinguishment of debt

Gain on real estate

Income from equity affiliates

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Year Ended December 31, 2021

20 unchanged sentences

Total other expenses

Income before extinguishment of debt, (loss) gain on real estate, income from equity affiliates and income taxes

Income before extinguishment of debt, sale of real estate, income from equity affiliates and income taxes

Loss on extinguishment of debt

(Loss) gain on real estate

Sale of real estate

Income from equity affiliates

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Year Ended December 31, 2020

17 unchanged sentences

Depreciation and amortization

Impairment loss on real estate owned

Provision for loss sharing (net of recoveries)

Provision for credit losses (net of recoveries)

Total other expenses

Income before extinguishment of debt, income from equity affiliates and income taxes

Income before extinguishment of debt, sale of real estate, income from equity affiliates and income taxes

Loss on extinguishment of debt

(Loss) gain on sale of real estate

Income from equity affiliates

8 unchanged sentences

December 31, 2022

December 31, 2021

Structured Business

22 unchanged sentences

Goodwill and other intangible assets

Other assets and due from related party

Debt obligations

Allowance for loss-sharing obligations

Other liabilities

Other liabilities and due to related parties

Total liabilities

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

December 31, 2020

Year Ended December 31,

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Bridge loans (1)

Mezzanine loans

Preferred equity investments

Other loans (2)

Mezzanine / Preferred Equity

SFR - Permanent loans

Total new loan originations

(1) Bridge loans in 2021 includes 103 SFR loans with a UPB of $ 389.2 million.

During 2021, 2020 and 2019, we committed to fund SFR loans totaling $ 729.5 million, $ 261.5 million and $ 63.2 million, respectively.

(2) Other loans in 2021 and 2020 includes 1 and 9 SFR permanent loans with a UPB of $ 26.2 million and $ 37.2 million, respectively.

Loan payoffs / paydowns

(1) 2022 and 2021 includes 132 and 103 SFR loans, respectively, with a UPB of $ 613.8 million and $ 389.2 million, respectively.

During 2022, 2021 and 2020, we committed to fund SFR loans totaling $ 1.08 billion, $ 729.5 million and $ 261.5 million, respectively.

Agency Business

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Total loan commitment volume

Loan Sales Data:

Agency Business

Agency Business Loan Sales Data:

Private Label

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MSR rate (MSR income as a % of loan commitments)

(1) 2022 includes $ 17.1 million of gains recognized on Swaps related to the Private Label loans sold in the three months ended March 31, 2022, which is included in gain (loss) on derivative instruments, net in the consolidated statements of income.

December 31, 2022

UPB of Servicing

Servicing Portfolio

Key Servicing Metrics for Agency Business:

Portfolio UPB

(basis points)

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Private Label

l ARBOR REALTY TRUST, INC.

SFR - Fixed Rate

ARBOR REALTY TRUST, INC.

AND SUBSIDIARIES

schedule iv — Loans and other Lending Investments

DECEMBER 31, 2021

($ in thousands)

3 unchanged sentences

L Floor 0.10 % to 2.50 %

SOFR+ 2.65 % to 5.00 %

SOFR Floor 0.10 % to 4.32 %

Fixed 3.83 % to 12.00 %

2 unchanged sentences

L Floor 0.25 % to 2.25 %

Fixed 4.23 % to 10.00

L+ 4.00 % to 6.00

L Floor 0.15 % to 1.66

SOFR+ 2.65 % to 6.25 %

SOFR Floor 0.10 % to 4.33 %

L Floor 0.15 %

L Floor 0.29 %

L+ 5.00 % to 5.35 %

1 unchanged sentence

Student Housing

L+ 4.00 % to 4.50

L Floor 0.25 % to 2.25 %

L+ 3.50 % to 4.00 %

L+ 3.50 % to 4.00

L Floor 1.00 % to 2.50 %

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Schedule IV — Loans and other Lending Investments ( Continued )

DECEMBER 31, 2021

($ in thousands)

2 unchanged sentences

Fixed 3.50 % to 13.00 %

L Floor 1.00 %

Fixed 12.00 %

Total Mezzanine Loans

2 unchanged sentences

Fixed 4.00 % to 13.00 %

Student Housing

Fixed 12.00 %

Total Preferred Equity Investments

2 unchanged sentences

L + 3.98 % to 4.90 %

L Floor 0.25 %

(1) IO = Interest Only, PI = Principal and Interest, L = LIBOR.

7 unchanged sentences

SCHEDULE IV – LOANS AND OTHER LENDING INVESTMENTS (Continued)

DECEMBER 31, 2021

The following table reconciles our loans and investments carrying amounts for the periods indicated (in thousands):

3 unchanged sentences

New loan originations

Loan charge‑offs

Funding of unfunded loan commitments (1)

1 unchanged sentence

Recoveries of reserves

Loan charge‑offs

Deductions during period:

3 unchanged sentences

( 1,243,694 )

Reclassification to held-for-sale loans

Unfunded loan commitments (1)

Use of loan charge‑offs

Provision for loan losses

Unearned revenue and costs

Reclassification to real estate owned

Provision for loan losses

Reclassification to held-for-sale loans

Use of loan charge‑offs

Balance at end of year

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data