DBRS Confirms Ratings on Arbor Realty Collateralized Loan Obligation 2014-1, Ltd.

DBRS, Inc. (DBRS) has today confirmed the ratings on the following classes of secured floating-rate notes (the Notes) issued by Arbor Realty Collateralized Loan Obligation 2014-1, Ltd. (ARCLO 2014-1).

-- Class A at AAA (sf)
-- Class B at BBB (sf)
-- Class C at BBB (low) (sf)

All trends are Stable. DBRS does not rate the first loss piece, Class D.

The rating confirmations reflect that the performance of the transaction remains in line with DBRS’s expectations at issuance. The pool currently consists of 32 interest only floating-rate loans totaling $375.0 million secured by 31 multifamily properties and one hotel property. At issuance in May 2014, the pool consisted of 19 loans totaling $307.3 million secured by 19 commercial properties. In the 90 days post-closing, the issuer contributed additional loans to the transaction funding the remaining trust balance obligation. The transaction also features an initial 30-month replacement period whereby the issuer can substitute collateral in the pool, subject to certain Eligibility Criteria, including Rating Agency Condition by DBRS. After the remaining 18 months of the replacement period, the transaction pays sequentially.

As of the May 2014 remittance, eight of the original 19 loans, representing 42.6% of the original pool balance have paid out of the pool. To date, 21 loans representing 53.7% of the current pool balance have been added to the transaction during the 90-day ramp period and the replacement period.

The loans are secured predominantly by multifamily properties, located primarily in core (urban and suburban) markets, which benefit from greater liquidity, or are affordable offerings in stable communities. Most of the properties are current cash flowing assets in a period of transition, with viable plans and loan structure to stabilize and improve the asset value. All of the loans are structured with cash management in place from origination and are structured with reserves, including several with an initial debt service reserve.

The Issuer, Servicer, Mortgage Loan Seller and Advancing Agent are related parties, a non-rated entity. In addition to recently issued transactions (one in 2012, one in 2013 and one in 2015) Arbor Realty SR, Inc. (Arbor) has a proven track record with several collateralized loan obligation platforms that performed well in 2004, 2005 and 2006. Arbor initially holds the 25% equity of the Preferred Shares in the transaction.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are CMBS Rating Methodology and CMBS North American Surveillance, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.