Item 1.01 Entry into a Material Definitive Agreement.
On October 13, 2021 (the "Closing Date"), Arbor Realty Trust, Inc. ("Arbor")
announced the closing of a multifamily mortgage securitization (the
"Securitization") for which Arbor Private Label, LLC (the "Mortgage Loan
Seller"), a consolidated affiliate of Arbor, was the loan seller and sponsor. In
connection with such closing, Arbor Private Label Depositor, LLC (the
"Depositor"), a wholly-owned affiliate of the Mortgage Loan Seller, caused the
issuance of the Arbor Multifamily Mortgage Securities Trust 2021-MF3,
Multifamily Mortgage Pass-Through Certificates, Series 2021-MF3 (the
"Certificates") pursuant to the Pooling and Servicing Agreement, dated as of
October 1, 2021, by and among the Depositor, as depositor, Midland Loan
Services, a Division of PNC Bank, National Association, as Master Servicer (in
such capacity, the "Master Servicer"), Midland Loan Services, a Division of PNC
Bank, National Association, as special servicer (in such capacity, the "Special
Servicer"), Wells Fargo Bank, National Association, as certificate
administrator, and Wells Fargo Bank, National Association, as trustee (the
"Pooling and Servicing Agreement").
The Certificates have an aggregate initial outstanding principal balance of
approximately $535,204,267. The Certificates represent, in the aggregate, the
entire beneficial ownership in the Arbor Multifamily Mortgage Securities Trust
2021-MF3 (the "Issuing Entity"), a common law trust fund formed on October 13,
2021 under the laws of the State of New York pursuant to the Pooling and
Servicing Agreement. The Issuing Entity's primary assets are 30 mortgage loans
secured by first liens on 48 multifamily properties (the "Mortgage Loans").
The Certificates were issued pursuant to the Pooling and Servicing Agreement.
The information contained in Item 2.03 of this Form 8-K regarding the terms of
the Pooling and Servicing Agreement and the Certificates are incorporated by
reference into this Item 1.01.
The Certificates have not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or any state securities laws, and unless so
registered, 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.
The net proceeds of the sale of the Certificates were applied to the purchase of
the Mortgage Loans by the Depositor from the Mortgage Loan Seller on the Closing
Date, and will in turn be used to repay borrowings under Arbor's current credit
facilities, pay transaction expenses and fund future loans and investments.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The Certificates were issued pursuant to the Pooling and Servicing Agreement.
The Certificates consist of classes (each, a "Class") designated as the
Class A-1, Class A-2, Class A-3, Class A-5, Class A-SB, Class X-A, Class X-B,
Class X-D, Class A-S, Class B, Class C, Class D, Class E, Class F-RR and Class R
Certificates.
The Certificates represent, in the aggregate, the entire beneficial ownership
interest in the Issuing Entity. The primary assets of the Issuing Entity are the
Mortgage Loans, which have an aggregate outstanding principal balance as of the
cut-off date for the Securitization of approximately $535,204,267. The assets of
the Issuing Entity are the sole source of distributions on the Certificates. The
Certificates do not represent obligations of Arbor, the Depositor, the Mortgage
Loan Seller or any other affiliate of Arbor.
The Mortgage Loans acquired on the Closing Date were purchased by the Depositor
from the Mortgage Loan Seller. Each of the Mortgage Loan Seller and the
Depositor is a consolidated affiliate of Arbor. The Mortgage Loan Seller made
certain representations and warranties to the Depositor with respect to the
Mortgage Loans. If any such representations or warranties are materially
inaccurate, or if any document required to be a part of the mortgage file is
missing or defective in a material way, the Depositor or another party to the
Pooling and Servicing Agreement may compel the Mortgage Loan Seller to
repurchase the affected Mortgage Loans from it for an amount not exceeding par
plus accrued interest and certain additional charges, if then applicable. As
Arbor intends that its only remaining interest in the Mortgage Loans will
consist of the rights and obligations of the Primary Servicer, the ownership of
the Class F-RR Certificates by the Retaining Party (as defined below), and
certain non-binding consultation rights of the Risk Retention Consultation Party
(as defined below), each as described below, Arbor intends to account for the
Securitization as a sale of the Mortgage Loans.
Arbor Multifamily Lending, LLC, a wholly owned subsidiary of Arbor (the "Primary
Servicer") will act as a subservicer of the Mortgage Loans for the Master
Servicer pursuant to a primary servicing agreement between the Primary Servicer
and the Master Servicer. The Primary Servicer will be entitled to a primary
servicing fee and a portion of certain other fees payable, or permitted to be
collected from borrowers under the Mortgage Loans, pursuant to the Pooling and
Servicing Agreement.
In general, distributions of principal and interest and distributions in
reimbursement of realized losses on the Class A-1, Class A-2, Class A-3,
Class A-5, Class A-SB, Class X-A, Class X-B and Class X-D Certificates (except
that the Class X-A, Class X-B and Class X-D Certificates are only entitled to
distributions of interest) will be senior to all distributions of principal and
interest and distributions in reimbursement of realized losses on the Class A-S,
B, C, D, E and F-RR Certificates; distributions of principal and interest and
distributions in reimbursement of realized losses on the Class A-S Certificates
will be senior to all distributions of principal and interest and distributions
in reimbursement of realized losses on the Class B, C, D, E and F-RR
Certificates; distributions of principal and interest and distributions in
reimbursement of realized losses on the Class B Certificates will be senior to
all distributions of principal and interest and distributions in reimbursement
of realized losses on the Class C, D, E and F-RR Certificates; distributions of
principal and interest and distributions in reimbursement of realized losses on
the Class C Certificates will be senior to all distributions of principal and
interest and distributions in reimbursement of realized losses on the Class D, E
and F-RR Certificates; distributions of principal and interest and distributions
in reimbursement of realized losses on the Class D Certificates will be senior
to all distributions of principal and interest and distributions in
reimbursement of realized losses on the Class E and F-RR Certificates;
distributions of principal and interest and distributions in reimbursement of
realized losses on the Class E Certificates will be senior to all distributions
of principal and interest and distributions in reimbursement of realized losses
on the Class F-RR Certificates. The Class R Certificates represent the "residual
interest" under real estate mortgage investment conduit tax regulations and are
generally entitled to any amounts remaining on any distribution date after
distributions to the other Classes of Certificates. No distributions are
expected to be made on the Class R Certificates.
As among the Class A-1, Class A-2, Class A-3, Class A-5, Class A-SB, Class X-A,
Class X-B and Class X-D Certificates, such Classes will, first, be entitled to
distributions of interest pro rata (based on their respective interest
entitlements), second, (a) prior to a defined cross-over date, to the Class A-SB
Certificates to reduce the Class A-SB Certificates to a scheduled principal
balance, then, sequentially to the Class A-1, Class A-2, Class A-3, Class A-5
and Class A-SB Certificates, in that order, in each case until the principal
balance of such Class is reduced to zero and (b) after such cross-over date, to
the Class A-1, Class A-2, Class A-3, Class A-5 and Class A-SB Certificates, pro
rata (based on their respective principal balances), until the principal balance
of each such Class is reduced to zero and, third, to the Class A-1, Class A-2,
Class A-3, Class A-5 and Class A-SB Certificates, pro rata (based on the amount
of realized losses allocated to such Class), in reimbursement of realized losses
previously allocated to such Class and interest thereon.
In general, realized losses on the Mortgage Loans will be applied to reduce the
outstanding principal balances of the Classes of Certificates as follows: first,
to the Class F-RR Certificates, second, to the Class E Certificates, third, to
the Class D Certificates, fourth, to the Class C Certificates, fifth, to the
Class B Certificates and sixth, to the Class A-S Certificates, in that order, in
each case until the principal balance of such Class has been reduced to zero.
Thereafter, any realized losses will be allocated pro rata (based on their
respective principal balances) to the Class A-1, Class A-2, Class A-3, Class A-5
and Class A-SB Certificates until the principal balance of each such Class has
been reduced to zero.
At such time as the aggregate principal balance of the Mortgage Loans is less
than 1% of the aggregate principal balance of the Mortgage Loans on the cut-off
date, the Special Servicer, the Master Servicer or holder of the Class R
Certificates (in that order) have the option to terminate the Issuing Entity
(and retire the then-outstanding Certificates) by purchasing all of the assets
of the Issuing Entity.
The Mortgage Loan Seller, in its capacity as the "retaining sponsor" for
purposes of Regulation RR under the Securities Exchange Act of 1934, as amended
(the Mortgage Loan Seller in such capacity, the "Retaining Sponsor"), has agreed
to comply with the risk retention requirements of Regulation RR with respect to
the Securitization by causing Arbor Realty SR, Inc. (the "Retaining Party"), to
retain the Class F-RR Certificates, with an initial principal balance of
$47,500,266. The Class F-RR Certificates represented not less than 5% of the
fair value of the Certificates (excluding the Class R Certificates) as of the
Closing Date. However, if Regulation RR is modified or repealed, the Retaining
Sponsor may choose to comply (or to cause the Retaining Party or another
"majority owned affiliate" (as defined in Regulation RR) of the Retaining
Sponsor to comply) with Regulation RR as then in effect. The Retaining Party is
a wholly-owned subsidiary of Arbor and a "majority-owned affiliate" of the
Retaining Sponsor. The Retaining Party has appointed the Retaining Sponsor as
the initial risk retention consultation party under the Pooling and Servicing
Agreement (in such capacity, the "Risk Retention Consultation Party"). The Risk
Retention Consultation Party has certain non-binding consultation rights with
respect to servicing "major decisions" (as defined in the Pooling and Servicing
Agreement) that may arise with respect to a Mortgage Loan.
Item 7.01 Regulation FD Disclosure.
On October 13, 2021, the Company issued a press release announcing the closing
of the multifamily real estate mortgage securitization disclosed in Items 1.01
and 2.03 of this Form 8-K, a copy of which is furnished as Exhibit 99.1 hereto.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Exhibit
99.1 Press release, dated October 13, 2021.
104 The cover page of this Current Report on Form 8-K, formatted in
Inline XBRL
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