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. (the Issuer).

-- 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 in May 2014. The pool currently consists of 38 interest-only floating-rate loans secured by 38 multifamily properties totaling $366.3 million. The Issuer maintains the remaining $8.7 million in the transaction as equity, which can be used to fund additional loan(s) into the transaction. The transaction 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 replacement period expires on November 15, 2016, the transaction pays sequentially.

As of the April 2016 remittance, 22 loans, representing 52.4% of the current pool balance, have been added to the transaction during the replacement period over the past 12 months. Only four loans, representing 15.7% of the current pool balance, remain in the transaction since issuance.

The loans are secured 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 most 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 two 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 North American CMBS Rating Methodology (March 2016) and CMBS North American Surveillance (December 2015), 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.