Unpacking Arbor Realty Trust's CLOs and Risks in the Real Estate Industry

9min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

The chapter dives into Visory Research's analysis of Arbor Realty Trust's collateralized loan obligations (CLOs) in the multifamily residential real estate sector, discussing client base, lending practices, and risk factors. It explores the complexity of pooling assets into CLO tranches, the challenges of transparency, and the impact of interest rate fluctuations on loan performance. The conversation also evaluates Arbor's decision-making process, lender compensation dynamics, and the resilience of investments amidst tenant quality and profitability concerns.

For the last six months, Arbor Realty Trust has been the target of a prominent short seller, Viceroy Research, which claims that a huge chunk of its collateralized loan obligation, or CLO, portfolio is in trouble. Arbor, though it denies the short seller's numbers, said it is experiencing challenges and delinquencies are set to rise. And the company is not afraid to go after non-performing borrowers.

Deconstruct sat down with Gabriel Bernarde, one of the individuals behind Viceroy, to chat about the reports, and then dug into Arbor's fourth-quarter earnings.