Item 1.01 Entry into a Material Definitive Agreement.
On August 5, 2022, Arbor Realty Trust, Inc.,
a Maryland corporation (the “Company”), completed the issuance and sale of $287.5 million aggregate principal amount, including
the Option (as defined below), of its 7.50% Convertible Senior Notes due 2025 (the “Notes”) pursuant to a purchase agreement
(the “Purchase Agreement”), by and among the Company, Arbor Realty Limited Partnership, a Delaware limited partnership, and
J.P. Morgan Securities LLC, as representative of the initial purchasers named therein (the “Initial Purchasers”), whereby
the Company agreed to sell to the Initial Purchasers and the Initial Purchasers agreed to purchase from the Company, subject to and upon
the terms and conditions set forth in the Purchase Agreement, the Notes (“the Offering”). In addition, the Company granted
the Initial Purchasers the right to purchase, exercisable within a 13-day period, up to an additional $37.5 million aggregate principal
amount of the Notes (the “Option”). The Initial Purchasers exercised the Option in full on August 3, 2022.
The Notes will be senior unsecured obligations
of the Company, bear interest at a rate equal to 7.50% per year, payable semiannually in arrears on February 1 and August 1 of each year,
beginning on February 1, 2023 and will mature on August 1, 2025 (the “Maturity Date”), unless earlier converted or repurchased.
The Company will not have the right to redeem the Notes prior to maturity and no sinking fund is provided for the Notes. The
Notes will be convertible prior to May 1, 2025 upon the satisfaction of certain conditions and at any time on or after May 1, 2025 until
the close of business on the business day immediately preceding the Maturity Date. The Company may settle conversions in cash, shares
of the Company’s common stock or a combination thereof, at the Company’s election.
The conversion rate will initially equal 59.8480
shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $16.71
per share of common stock, representing an approximate 10.00% conversion premium above the last reported sale price of the Company’s
common stock on the New York Stock Exchange on August 2, 2022. The conversion rate will be subject to adjustment upon the occurrence
of certain specified events. In addition, following certain corporate events that occur prior to the Maturity Date, the Company will increase
the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event in certain circumstances.
If the Company undergoes a fundamental change (as
defined in the Indenture (as defined below)), holders may require the Company to repurchase for cash all or any portion of their Notes
at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and
unpaid interest to, but excluding, the fundamental change repurchase date.
The net proceeds to the Company from the sale of
the Notes, including the exercise of the Option, was approximately $279.3 million, after deducting the Initial Purchasers’ discounts
and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds of the Offering to
repurchase for cash a portion of the outstanding $264.0 million aggregate principal amount of 4.75% Convertible Senior Notes due 2022
in privately negotiated transactions, which may be effected through one of the initial purchasers or its affiliate, as the Company’s
agent, and use any remaining proceeds from the Offering for general corporate purposes.
The Notes were issued under an indenture, dated
as of August 5, 2022, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Indenture”).
The Notes and the common stock issuable upon conversion
of the Notes, if any, were offered and sold in a private offering that was exempt from the registration requirements of the Securities
Act of 1933, as amended (the “Securities Act”). The offering was made only to persons reasonably believed to be “qualified
institutional buyers” under Rule 144A. The Notes and the common stock issuable upon conversion of the Notes, if any, have not
been registered under the Securities Act or the securities laws of any other jurisdiction. Unless so registered, the Notes and the common
stock issuable upon conversion of the Notes, if any, may not be offered or sold in the United States except pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
Copies of the Indenture and the form of the Notes
are attached hereto as Exhibit 4.1 and Exhibit 4.2, respectively, and are incorporated herein by reference. The foregoing
summaries do not purport to be complete and are qualified in their entirety by reference to the Indenture and the form of the Notes.