10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

Or

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to           

Commission file number: 001-32136

Arbor Realty Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	20-0057959
(State or other jurisdiction of	(I.R.S. Employer
incorporation)	Identification No.)

333 Earle Ovington Boulevard, Suite 900
Uniondale, NY	11553
(Address of principal executive offices)	(Zip Code)

(516) 506-4200

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer   o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o   No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  Common stock, $0.01 par value per share: 51,381,405 outstanding as of August 4, 2016.

ARBOR REALTY TRUST, INC.

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION	2
Item 1. Financial Statements	2
Consolidated Balance Sheets at June 30, 2016 (Unaudited) and December 31, 2015	2
Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2016 and 2015	3
Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2016 and 2015	4
Consolidated Statement of Changes in Equity (Unaudited) for the Six Months Ended June 30, 2016	5
Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2016 and 2015	6
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3. Quantitative and Qualitative Disclosures about Market Risk	51
Item 4. Controls and Procedures	51
PART II. OTHER INFORMATION	51
Item 1. Legal Proceedings	51
Item 1A. Risk Factors	52
Item 6. Exhibits	52
Signatures	53

Forward Looking Statements

The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in Arbor Realty Trust, Inc.  We urge you to carefully review and consider the various disclosures made by us in this report.

This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, the operating performance of our investments and financing needs. We use words such as “anticipates,” “expects,” “believes,” “intends,” “should,” “will,” “may” and similar expressions to identify forward-looking statements, although not all forward-looking statements include these words.  Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information.  Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results.  Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in economic conditions generally and the real estate market specifically; adverse changes in the financing markets we access affecting our ability to finance our loan and investment portfolio; changes in interest rates; the quality and size of the investment pipeline and the rate at which we can invest our cash; impairments in the value of the collateral underlying our loans and investments; legislative/regulatory changes; the availability and cost of capital for future investments; competition; and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission (“SEC”). Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect management’s views as of the date of this report.  The factors noted above could cause our actual results to differ significantly from those contained in any forward-looking statement.  For a discussion of our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Arbor Realty Trust, Inc. and Subsidiaries — Significant Accounting Estimates and Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”).

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  We are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.

i

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2016			2015
	(Unaudited)
Assets:
Cash and cash equivalents	$	160,177,704		$	188,708,687
Restricted cash	158,667,541			48,301,244
Loans and investments, net	1,511,596,691			1,450,334,341
Available-for-sale securities, at fair value	440,920			2,022,030
Investments in equity affiliates	38,649,254			30,870,235
Real estate owned, net	20,012,783			60,845,509
Real estate held-for-sale, net	—			8,669,203
Due from related party	781,782			8,082,265
Other assets	26,419,806			29,558,430
Total assets	$	1,916,746,481		$	1,827,391,944
Liabilities and Equity:
Credit facilities and repurchase agreements	$	259,171,941		$	136,252,135
Collateralized loan obligations	760,632,528			758,899,661
Senior unsecured notes	94,140,028			93,764,994
Junior subordinated notes to subsidiary trust issuing preferred securities	157,468,377			157,117,130
Mortgage note payable - real estate owned	—			27,155,000
Due to related party	2,166,790			3,428,333
Due to borrowers	32,561,558			34,629,595
Other liabilities	44,932,044			51,054,321
Total liabilities	1,351,073,266			1,262,301,169
Commitments and contingencies (Note 11)
Equity:
Arbor Realty Trust, Inc. stockholders’ equity:
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized; 8.25% Series A, $38,787,500 aggregate liquidation preference; 1,551,500 shares issued and outstanding; 7.75% Series B, $31,500,000 aggregate liquidation preference; 1,260,000 shares issued and outstanding; 8.50% Series C, $22,500,000 aggregate liquidation preference; 900,000 shares issued and outstanding	89,295,905			89,295,905
Common stock, $0.01 par value: 500,000,000 shares authorized; 51,381,405 and 50,962,516 shares issued and outstanding, respectively	513,814			509,625
Additional paid-in capital	618,403,101			616,244,196
Accumulated deficit	(140,103,326		)	(136,118,001		)
Accumulated other comprehensive loss	(2,436,279		)	(4,840,950		)
Total equity	565,673,215			565,090,775
Total liabilities and equity	$	1,916,746,481		$	1,827,391,944

See Notes to Consolidated Financial Statements.

2

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Interest income	$	27,969,498		$	26,340,585	$	53,787,963		$	53,549,980
Other interest income, net	2,539,274			7,884,344		2,539,274			7,884,344
Interest expense	13,243,488			11,592,762		25,992,101			25,520,129
Net interest income	17,265,284			22,632,167		30,335,136			35,914,195
Other revenue:
Property operating income	4,426,555			7,201,834		9,758,087			15,652,177
Other income, net	214,668			76,816		304,431			112,816
Total other revenue	4,641,223			7,278,650		10,062,518			15,764,993
Other expenses:
Employee compensation and benefits	4,311,412			4,966,138		8,639,754			9,256,344
Selling and administrative	1,719,337			2,623,750		4,374,813			5,521,560
Acquisition costs	745,734			284,054		3,855,644			284,054
Property operating expenses	3,856,264			5,967,644		8,172,819			12,352,732
Depreciation and amortization	443,112			1,447,642		1,320,645			2,886,319
Impairment loss on real estate owned	11,200,000			—		11,200,000			—
Provision for loan losses (net of recoveries)	44,005			1,093,544		29,005			2,076,224
Management fee - related party	2,850,000			2,675,000		5,550,000			5,350,000
Total other expenses	25,169,864			19,057,772		43,142,680			37,727,233
(Loss) income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate and income from equity affiliates	(3,263,357		)	10,853,045		(2,745,026		)	13,951,955
Gain on acceleration of deferred income	—			—		—			11,009,162
Loss on termination of swaps	—			—		—			(4,289,450		)
Gain on sale of real estate	11,023,134			—		11,630,687			3,984,364
Income from equity affiliates	4,367,101			1,534,025		6,264,543			4,629,938
Net income	12,126,878			12,387,070		15,150,204			29,285,969
Preferred stock dividends	1,888,430			1,888,430		3,776,860			3,776,860
Net income attributable to common stockholders	$	10,238,448		$	10,498,640	$	11,373,344		$	25,509,109
Basic earnings per common share	$	0.20		$	0.21	$	0.22		$	0.50
Diluted earnings per common share	$	0.20		$	0.21	$	0.22		$	0.50
Weighted average number of shares of common stock outstanding
Basic	51,381,405			50,955,648		51,213,312			50,751,247
Diluted	51,741,951			50,955,648		51,418,539			50,894,531
Dividends declared per common share	$	0.15		$	0.15	$	0.30		$	0.28

See Notes to Consolidated Financial Statements.

3

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net income	$	12,126,878		$	12,387,070		$	15,150,204		$	29,285,969
Unrealized gain (loss) on securities available-for-sale, at fair value	29,395			364,552			(29,395		)	423,341
Unrealized loss on derivative financial instruments, net	(52,445		)	(165,156		)	(262,234		)	(906,727		)
Reclassification of net realized loss on derivatives designated as cash flow hedges into loss on termination of swaps	—			—			—			4,285,995
Reclassification of net realized loss on derivatives designated as cash flow hedges into earnings	1,331,637			1,510,573			2,696,300			3,241,500
Comprehensive income	13,435,465			14,097,039			17,554,875			36,330,078
Less:
Preferred stock dividends	1,888,430			1,888,430			3,776,860			3,776,860
Comprehensive income attributable to common stockholders	$	11,547,035		$	12,208,609		$	13,778,015		$	32,553,218

See Notes to Consolidated Financial Statements.

4

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)

Six Months Ended June 30, 2016

	Preferred Stock Shares	Preferred Stock Value		Common Stock Shares		Common Stock Par Value			Additional Paid- in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total
Balance - January 1, 2016	3,711,500	$	89,295,905	50,962,516		$	509,625		$	616,244,196	$	(136,118,001	)	$	(4,840,950	)	$	565,090,775
Stock-based compensation				419,890		4,199			2,158,895								2,163,094
Forfeiture of unvested restricted stock				(1,001	)	(10		)	10								—
Distributions - common stock											(15,351,438		)				(15,351,438		)
Distributions - preferred stock											(3,776,860		)				(3,776,860		)
Distributions - preferred stock of private REIT											(7,231		)				(7,231		)
Net income											15,150,204						15,150,204
Unrealized loss on securities available-for-sale														(29,395		)	(29,395		)
Unrealized loss on derivative financial instruments, net														(262,234		)	(262,234		)
Reclassification of net realized loss on derivatives designated as cash flow hedges into earnings														2,696,300			2,696,300
Balance - June 30, 2016	3,711,500	$	89,295,905	51,381,405		$	513,814		$	618,403,101	$	(140,103,326	)	$	(2,436,279	)	$	565,673,215

See Notes to Consolidated Financial Statements.

5

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended June 30,
	2016			2015
Operating activities:
Net income	$	15,150,204		$	29,285,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,320,645			2,886,319
Stock-based compensation	2,163,094			2,427,268
Gain on acceleration of deferred income	—			(11,009,162		)
Loss on termination of swaps	—			4,289,450
Gain on sale of real estate	(11,630,687		)	(3,984,364		)
Impairment loss on real estate owned	11,200,000			—
Gain on sale of securities	(15,491		)	—
Provision for loan losses (net of recoveries)	29,005			2,076,224
Amortization and accretion of interest, fees and intangible assets, net	1,652,392			1,684,017
Income from equity affiliates	(6,264,543		)	(4,629,938		)
Changes in operating assets and liabilities	4,082,516			(3,505,259		)
Net cash provided by operating activities	17,687,135			19,520,524
Investing Activities:
Loans and investments funded, originated and purchased, net	(475,924,501		)	(557,256,118		)
Payoffs and paydowns of loans and investments	410,975,653			551,201,085
Deferred fees	4,568,476			2,482,316
Principle collection on securities, net	—			2,100,000
Investments in real estate, net	(417,809		)	(1,393,615		)
Contributions to equity affiliates	(4,187,582		)	(14,949,918		)
Distributions from equity affiliates	1,013,080			—
Proceeds from sale of real estate	49,029,780			18,482,352
Proceeds from sale of available-for-sale securities	1,567,207			—
Net cash (used in) provided by investing activities	(13,375,696		)	666,102
Financing activities:
Proceeds from repurchase agreements, credit facilities and notes payable	204,046,488			479,205,709
Paydowns and payoffs of repurchase agreements, loan participations and credit facilities	(81,620,294		)	(335,854,714		)
Proceeds from mortgage note payable - real estate owned	—			27,155,000
Paydowns and payoffs of mortgage note payable - real estate owned	(27,155,000		)	(30,984,357		)
Proceeds from collateralized loan obligations	—			219,000,000
Payoffs and paydowns of collateralized debt obligations	—			(240,971,174		)
Payoffs and paydowns of collateralized loan obligations	—			(177,000,000		)
Change in restricted cash	(111,072,901		)	141,293,748
Payments on swaps and margin calls to counterparties	—			(290,000		)
Receipts on swaps and returns of margin calls from counterparties	2,250,049			2,200,000
Distributions paid on common stock	(15,351,438		)	(14,206,565		)
Distributions paid on preferred stock	(3,776,860		)	(3,776,860		)
Distributions paid on preferred stock of private REIT	(7,231		)	(6,952		)
Payment of deferred financing costs	(155,235		)	(6,304,548		)
Net cash (used in) provided by financing activities	(32,842,422		)	59,459,287
Net (decrease) increase in cash and cash equivalents	(28,530,983		)	79,645,913
Cash and cash equivalents at beginning of period	188,708,687			50,417,745
Cash and cash equivalents at end of period	$	160,177,704		$	130,063,658

See Notes to Consolidated Financial Statements.

6

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

	Six Months Ended June 30,
	2016		2015
Supplemental cash flow information:
Cash used to pay interest	$	22,983,701	$	22,715,060
Cash used for taxes	$	112,799	$	345,259
Supplemental schedule of non-cash investing and financing activities:
Distributions accrued on 8.25% Series A preferred stock	$	266,664	$	266,664
Distributions accrued on 7.75% Series B preferred stock	$	203,438	$	203,438
Distributions accrued on 8.50% Series C preferred stock	$	159,375	$	159,375

See Notes to Consolidated Financial Statements.

7

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Note 1 —Description of Business

Arbor Realty Trust, Inc. is a Maryland corporation that was formed in 2003 to invest in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity.  We may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities.  We conduct substantially all of our operations through our operating partnership, Arbor Realty Limited Partnership (“ARLP”), and ARLP’s subsidiaries.  We are externally managed and advised by Arbor Commercial Mortgage, LLC (“ACM” or our “Manager”).  We organize and conduct our operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

Acquisition of our Manager’s Agency Platform

On July 14, 2016, we completed the previously announced acquisition of the agency platform (the “ACM Agency Business”) of our Manager (the “ACM Acquisition”) pursuant to an asset purchase agreement (“Purchase Agreement”) dated February 25, 2016. The aggregate purchase price was $276.0 million, which was paid with $138.0 million in stock, $88.0 million in cash and with the issuance of a $50.0 million seller financing instrument. The equity component of the purchase price was paid with 21.23 million of operating partnership units (“OP Units), which was based on a stock price of $6.50 per share. The closing price of our common stock on the day of the ACM Acquisition was $7.29 per share; therefore, the estimated fair value of the total consideration given to our Manager approximates $293.0 million. Each of the OP Units are paired with a share of our newly-designated special voting preferred stock, which provides ACM to one vote per share on any matter submitted to a vote of our stockholders. The OP Units are entitled to receive distributions if and when our Board of Directors authorizes and declares future common stock distributions. The OP Units are also redeemable for cash, or at our option, for shares of our common stock on a one-for-one basis.

The ACM Agency Business is comprised of its (i) underwriting, originating, selling and servicing multifamily mortgages under the Federal National Mortgage Association (“Fannie Mae”) delegated underwriting and servicing (“DUS”), U.S. Department of Housing and Urban Development (“HUD”)/Federal Housing Administration (“FHA”), Government National Mortgage Association (“GNMA”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) and conduit/commercial mortgage-backed securities (“CMBS”) programs, and (ii) certain assets and liabilities primarily consisting of the mortgage servicing rights related to the agency servicing portfolio, agency loans held for sale, warehouse financing of agency loans held for sale and other assets and liabilities directly related to the ACM Agency Business.

All ACM employees directly related to the ACM Agency Business (approximately 235 employees) have become our employees as of the acquisition completion date. In addition, pursuant to the Purchase Agreement, we have a two year option to purchase the existing management agreement and fully internalize our management structure for $25.0 million (increasing to $27.0 million in the second year). The exercise of this option is at the discretion of the special committee of our Board of Directors, which has no obligation to exercise its option.

In connection with the ACM Acquisition, we incurred advisory fees totaling $0.7 million and $3.9 million during the three and six months ended June 30, 2016, respectively, and fees totaling $8.3 million to date. We expect to recognize additional fees in the third quarter of 2016 as a result of completing the ACM Acquisition in July 2016.

Except where specifically indicated, the information contained in this report does not include information pertaining to the ACM Agency Business.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), for interim financial statements and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, certain information and footnote disclosures normally

8

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

included in the consolidated financial statements prepared under GAAP have been condensed or omitted.  In the opinion of management, all adjustments considered necessary for a fair presentation of our financial position, results of operations and cash flows have been included and are of a normal and recurring nature.  The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2015 Annual Report, which was filed with the SEC.

The accompanying unaudited consolidated financial statements include our financial statements, our wholly owned subsidiaries, and partnerships or other joint ventures in which we own a voting interest of greater than 50 percent, and variable interest entities (“VIEs”) of which we are the primary beneficiary.  VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  Current accounting guidance requires us to present a) assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE, and b) liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary.  Entities in which we have significant influence are accounted for primarily under the equity method.

As a REIT, we are generally not subject to federal income tax on our REIT—taxable income that we distribute to our stockholders, provided that we distribute at least 90% of our REIT—taxable income and meet certain other requirements.  As of June 30, 2016 and 2015, we were in compliance with all REIT requirements and, therefore, have not provided for income tax expense for the six months ended June 30, 2016 and 2015.  Certain of our assets that produce non-qualifying income are owned by our taxable REIT subsidiaries, the income of which is subject to federal and state income taxes.  During the six months ended June 30, 2016 and 2015, we did not record any provision for income taxes for these taxable REIT subsidiaries as we expect any income to be offset by available federal and state net operating loss carryforwards.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could materially affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

Significant Accounting Policies

As of June 30, 2016, our significant accounting policies, which are detailed in our 2015 Annual Report, have not changed materially.

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will be required to use forward-looking information to better form their credit loss estimates. This updated guidance also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. The guidance is effective for us beginning in the first quarter of 2020, and early adoption is permitted beginning in the first quarter of 2019. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In March 2016, the FASB amended its guidance on stock compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance

9

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

is effective for the first quarter of 2017 and we are currently evaluating the impact it may have on our consolidated financial statements.

In March 2016, the FASB amended its guidance on accounting for equity method investments. Among other things, the amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The guidance is effective for the first quarter of 2017 and we are currently evaluating the impact it may have on our consolidated financial statements.

In February 2016, the FASB amended its guidance on accounting for leases that requires an entity to recognize balance sheet assets and liabilities for leases with terms of more than 12 months and also requires disclosure of key information about an entity’s leasing arrangements. The guidance is effective for the first quarter of 2019 with early adoption permitted. A modified retrospective approach is required. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In January 2016, the FASB amended its guidance on the recognition and measurement of financial assets and liabilities.  The amended guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also, among other things, eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The guidance is effective for the first quarter of 2018 and we are currently evaluating the impact it may have on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In September 2015, the FASB amended its guidance on measurement-period adjustments arising from business combinations.  The guidance was effective for the first quarter of 2016 and it did not have an impact on our consolidated financial statements.

In February 2015, the FASB amended its guidance on the consolidation analysis of VIEs.  The guidance was effective for the first quarter of 2016 and it did not have a material impact on our consolidated financial statements. See Note 9 — “Variable Interest Entities” for further details.

Note 3 — Loans and Investments

The following table sets forth the composition of our loan and investment portfolio:

	June 30, 2016			Percent of Total		Loan Count	Wtd. Avg. Pay Rate (1)		Wtd. Avg. Remaining Months to Maturity	Wtd. Avg. First Dollar LTV Ratio (2)		Wtd. Avg. Last Dollar LTV Ratio (3)
Bridge loans	$	1,422,007,444		89	%	111	5.26	%	18.6	0	%	76	%
Mezzanine loans	54,115,825			3	%	12	8.99	%	21.3	37	%	79	%
Junior participation loans	62,256,582			4	%	2	4.50	%	5.2	83	%	84	%
Preferred equity investments	66,668,000			4	%	9	6.37	%	27.7	47	%	92	%
	1,605,047,851			100	%	134	5.40	%	18.6	6	%	77	%
Unearned revenue	(9,619,585		)
Allowance for loan losses	(83,831,575		)
Loans and investments, net	$	1,511,596,691

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

	December 31, 2015			Percent of Total		Loan Count	Wtd. Avg. Pay Rate (1)		Wtd. Avg. Remaining Months to Maturity	Wtd. Avg. First Dollar LTV Ratio (2)		Wtd. Avg. Last Dollar LTV Ratio (3)
Bridge loans	$	1,353,132,435		88	%	105	5.48	%	16.7	0	%	75	%
Mezzanine loans	40,390,905			3	%	11	8.19	%	32.9	35	%	83	%
Junior participation loans	62,256,582			4	%	2	4.50	%	11.2	85	%	87	%
Preferred equity investments	89,346,123			5	%	10	7.52	%	30.5	43	%	80	%
	1,545,126,045			100	%	128	5.63	%	17.7	7	%	76	%
Unearned revenue	(8,030,129		)
Allowance for loan losses	(86,761,575		)
Loans and investments, net	$	1,450,334,341

(1)    “Weighted Average Pay Rate” is a weighted average, based on the unpaid principal balances of each loan in our portfolio, of the interest rate that is required to be paid monthly as stated in the individual loan agreements.  Certain loans and investments that require an additional rate of interest “Accrual Rate” to be paid at the maturity are not included in the weighted average pay rate as shown in the table.

(2)    The “First Dollar LTV Ratio” is calculated by comparing the total of our senior most dollar and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will absorb a total loss of our position.

(3)    The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss.

During the first quarter of 2015, we acquired a $116.0 million defaulted first mortgage, at par, that paid off in the subsequent quarter resulting in the recognition of income totaling $6.7 million, net of fees and expenses. The $6.7 million of income consisted of other interest income totaling $7.9 million, partially offset by $1.2 million of expenses related to this transaction that were recorded in employee compensation and benefits. In April 2016, additional funds held in escrow from the note payoff were released following an arbitration proceeding and we recognized income totaling $1.9 million, net of fees and expenses. The $1.9 million of income consisted of other interest income totaling $2.5 million, partially offset by $0.6 million of expenses related to the transaction that were recorded in employee compensation and benefits.

Concentration of Credit Risk

We operate in one portfolio segment, commercial mortgage loans and investments.  Commercial mortgage loans and investments can potentially subject us to concentrations of credit risk.  We are subject to concentration risk in that, at June 30, 2016, the unpaid principal balance (“UPB”) related to 31 loans with five different borrowers represented 21% of total assets.  At December 31, 2015, the UPB related to 22 loans with five different borrowers represented 22% of total assets.  We measure our relative loss position for our mezzanine loans, junior participation loans, and preferred equity investments by determining the point where we will be exposed to losses based on our position in the capital stack as compared to the fair value of the underlying collateral.  We determine our loss position on both a first dollar loan-to-value (“LTV”) and a last dollar LTV basis.

We assign a credit risk rating to each loan and investment.  Individual ratings range from one to five, with one being the lowest risk and five being the highest.  Each credit risk rating has benchmark guidelines that pertain to debt-service coverage ratios, LTV ratios, borrower strength, asset quality, and funded cash reserves.  Other factors such as guarantees, market strength, remaining loan term, and borrower equity are also reviewed and factored into determining the credit risk rating assigned to each loan.  This metric provides a helpful snapshot of portfolio quality and credit risk.  Given our asset management approach, however, the risk rating process does not result in differing levels of diligence contingent upon credit rating.  That is because all portfolio assets are subject to the level of scrutiny and ongoing analysis consistent with that of a “high-risk” loan.  Assets are subject to, at minimum, a thorough quarterly financial evaluation in which historical operating performance and forward-looking projections are reviewed.  Generally speaking, given our typical loan and investment profile, a risk rating of three suggests that we expect the loan to make both principal and interest payments according to the contractual terms of the loan agreement, and is not considered impaired.  A risk rating of four indicates we anticipate that the loan will require a modification of some kind.  A risk rating of five indicates we expect the loan to underperform over its term, and there could be loss of interest and/or principal.  Ratings of 3.5 and 4.5 generally indicate loans that have characteristics of both the immediately higher and lower classifications.  Further, while the above are the primary

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

guidelines used in determining a certain risk rating, subjective items such as borrower strength, condition of the market of the underlying collateral, additional collateral or other credit enhancements, or loan terms, may result in a rating that is higher or lower than might be indicated by any risk rating matrix.

As a result of the loan review process at June 30, 2016 and December 31, 2015, we identified loans and investments that we consider higher-risk loans that had a carrying value, before loan loss reserves, of $152.2 million and $154.7 million, respectively, and a weighted average last dollar LTV ratio of 99% for each period.

A summary of the loan portfolio’s weighted average internal risk ratings and LTV ratios by asset class is as follows:

	June 30, 2016
Asset Class	Unpaid Principal Balance		Percentage of Portfolio		Wtd. Avg. Internal Risk Rating	Wtd. Avg. First Dollar LTV Ratio		Wtd. Avg. Last Dollar LTV Ratio
Multifamily	$	1,223,485,513	76	%	2.9	1	%	75	%
Office	165,703,185		10	%	3.3	36	%	73	%
Land	141,508,043		9	%	3.9	3	%	95	%
Hotel	55,587,776		4	%	3.8	38	%	80	%
Other	18,763,334		1	%	3.2	21	%	69	%
Total	$	1,605,047,851	100	%	3.0	6	%	77	%

	December 31, 2015
Asset Class	Unpaid Principal Balance		Percentage of Portfolio		Wtd. Avg. Internal Risk Rating	Wtd. Avg. First Dollar LTV Ratio		Wtd. Avg. Last Dollar LTV Ratio
Multifamily	$	1,083,822,788	70	%	3.0	2	%	75	%
Office	198,829,086		13	%	3.0	27	%	75	%
Land	164,410,838		11	%	3.8	5	%	90	%
Hotel	66,250,000		4	%	3.5	32	%	80	%
Other	31,813,333		2	%	3.1	13	%	67	%
Total	$	1,545,126,045	100	%	3.1	7	%	76	%

Geographic Concentration Risk

As of June 30, 2016, 26%, 16%, 14% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York, California, Florida and Texas, respectively.  As of December 31, 2015, 34%, 14%, 14% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York, Florida, California and Texas, respectively.

Impaired Loans and Allowance for Loan Losses

We perform an evaluation of the loan portfolio quarterly to assess the performance of our loans and whether a reserve for impairment should be recorded.  We consider a loan impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due for both principal and accrued interest according to the contractual terms of the loan agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

A summary of the changes in the allowance for loan losses is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Allowance at beginning of period	$	86,746,575		$	116,470,000		$	86,761,575		$	115,487,320
Provision for loan losses	59,005			1,110,629			59,005			2,110,629
Charge-offs	(2,959,005		)	—			(2,959,005		)	—
Recoveries of reserves	(15,000		)	(17,085		)	(30,000		)	(34,405		)
Allownace at end of period	$	83,831,575		$	117,563,544		$	83,831,575		$	117,563,544

During the three and six months ended June 30, 2016, we received a $1.8 million discounted payoff on an impaired bridge loan with an aggregate carrying value before reserves of $4.8 million, resulting in the recognition of an additional provision for loan losses of $0.1 million and a charge-off of $3.0 million.

The provision for loan losses recorded in the three and six months ended June 30, 2015 was comprised of one loan and three loans, respectively, with an aggregate carrying value before reserves of $114.8 million and $127.8 million, respectively.

A summary of charge-offs and recoveries by asset class are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Charge-offs:
Multifamily	$	2,959,005		$	—		$	2,959,005		$	—
Recoveries:
Multifamily	(15,000		)	(17,085		)	(30,000		)	(34,405		)
Net (Charge-offs) Recoveries	$	(2,944,005	)	$	17,085		$	(2,929,005	)	$	34,405
Ratio of net (charge-offs) recoveries during the period to average loans and investments outstanding during the period	(0.2		)%	0.0		%	(0.2		)%	0.0		%

There were no loans for which the fair value of the collateral securing the loan was less than the carrying value of the loan for which we had not recorded a provision for loan loss as of June 30, 2016 and 2015.

We have six loans with a carrying value totaling $120.4 million at June 30, 2016, which mature in September 2017, that are collateralized by a land development project.  The loans do not carry a current pay rate of interest, but five of the loans with a carrying value totaling $111.0 million entitle us to a weighted average accrual rate of interest of 8.15%.  We suspended the recording of the accrual rate of interest on these loans, as these loans were impaired and we deemed the collection of this interest to be doubtful.  We have recorded cumulative allowances for loan losses of $49.1 million related to these loans as of June 30, 2016.  The loans are subject to certain risks associated with a development project including, but not limited to, availability of construction financing, increases in projected construction costs, demand for the development’s outputs upon completion of the project, and litigation risk.  Additionally, these loans were not classified as non-performing as the borrower is in compliance with all of the terms and conditions of the loans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

A summary of our impaired loans by asset class is as follows:

	June 30, 2016						Three Months Ended June 30, 2016				Six Months Ended June 30, 2016
Asset Class	Unpaid Principal Balance		Carrying Value (1)		Allowance for Loan Losses		Average Recorded Investment (2)		Interest Income Recognized		Average Recorded Investment (2)		Interest Income Recognized
Multifamily	$	2,662,115	$	2,570,618	$	2,575,653	$	5,004,615	$	47,669	$	5,012,115	$	111,205
Office	27,571,582		22,787,444		21,972,444		27,573,832		23,115		27,576,082		46,162
Land	130,012,569		125,168,351		53,883,478		129,042,390		—		128,740,618		—
Hotel	34,750,000		34,496,568		3,700,000		34,750,000		283,768		34,750,000		565,917
Commercial	1,700,000		1,700,000		1,700,000		1,700,000		—		1,700,000		—
Total	$	196,696,266	$	186,722,981	$	83,831,575	$	198,070,837	$	354,552	$	197,778,815	$	723,284

	December 31, 2015						Three Months Ended June 30, 2015				Six Months Ended June 30, 2015
Asset Class	Unpaid Principal Balance		Carrying Value (1)		Allowance for Loan Losses		Average Recorded Investment (2)		Interest Income Recognized		Average Recorded Investment (2)		Interest Income Recognized
Multifamily	$	7,362,115	$	7,350,764	$	5,505,653	$	39,214,032	$	73,892	$	39,222,692	$	143,981
Office	27,580,582		22,796,444		21,972,444		36,086,582		282,192		36,086,582		557,045
Land	127,468,667		122,875,774		53,883,478		123,196,757		—		122,933,516		—
Hotel	34,750,000		34,486,433		3,700,000		34,750,000		260,898		34,750,000		518,028
Commercial	1,700,000		1,700,000		1,700,000		—		—		—		—
Total	$	198,861,364	$	189,209,415	$	86,761,575	$	233,247,371	$	616,982	$	232,992,790	$	1,219,054

(1) Represents the UPB of impaired loans less unearned revenue and other holdbacks and adjustments by asset class and was comprised of nine loans at both June 30, 2016 and December 31, 2015.

(2) Represents an average of the beginning and ending UPB of each asset class.

As of June 30, 2016, three fully reserved loans with loan loss reserves totaling $22.9 million were classified as non-performing.  As of December 31, 2015, three loans with an aggregate net carrying value of less than $0.1 million, net of related loan loss reserves on the loans of $22.9 million, were classified as non-performing. Income from non-performing loans is generally recognized on a cash basis only to the extent it is received.  Full income recognition will resume when the loan becomes contractually current and performance has recommenced.

A summary of our non-performing loans by asset class is as follows:

	June 30, 2016						December 31, 2015
Asset Class	Carrying Value		Less Than 90 Days Past Due		Greater Than 90 Days Past Due		Carrying Value		Less Than 90 Days Past Due		Greater Than 90 Days Past Due
Multifamily	$	770,653	$	—	$	770,653	$	765,799	$	—	$	765,799
Office	20,472,444		—		20,472,444		20,472,444		—		20,472,444
Commercial	1,700,000		—		1,700,000		1,700,000		—		1,700,000
Total	$	22,943,097	$	—	$	22,943,097	$	22,938,243	$	—	$	22,938,243

At June 30, 2016, we did not have any loans contractually past due 90 days or more that are still accruing interest.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

A summary of loan modifications, refinancings and/or extensions by asset class that we considered to be troubled debt restructurings were as follows:

	Number of Loans	Original Unpaid Principal Balance		Original Weighted Average Rate of Interest		Extended Unpaid Principal Balance		Extended Weighted Average Rate of Interest		Number of Loans	Original Unpaid Principal Balance		Original Weighted Average Rate of Interest		Extended Unpaid Principal Balance		Extended Weighted Average Rate of Interest
Asset Class	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
Multifamily	—	$	—	—		$	—	—		1	$	14,646,456	5.24	%	$	14,646,456	5.24	%
	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
Multifamily	4	$	29,416,456	4.95	%	$	29,416,456	4.95	%	5	$	35,609,122	5.12	%	$	35,609,122	5.12	%

There were no loans in which we considered the modifications to be troubled debt restructurings that were subsequently considered non-performing as of June 30, 2016 and 2015 and no additional loans were considered to be impaired due to our troubled debt restructuring analysis for the three and six months ended June 30, 2016 and 2015. These loans were modified to increase the total recovery of the combined principal and interest from the loan.

Given the transitional nature of some of our real estate loans, we may require funds to be placed into an interest reserve, based on contractual requirements, to cover debt service costs.  As of June 30, 2016, we had total interest reserves of $16.7 million on 65 loans with an aggregate UPB of $807.1 million.

Note 4 — Securities

Available-for-sale securities are carried at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive loss.

The following is a summary of our securities classified as available-for-sale at June 30, 2016:

	Amortized Cost		Cummulative Unrealized Gain		Carrying Value / Estimated Fair Value
2,939,465 common shares of CV Holdings, Inc.	$	58,789	$	382,131	$	440,920

The following is a summary of our securities classified as available-for-sale at December 31, 2015:

	Face Value		Amortized Cost		Cummulative Unrealized Gain		Carrying Value / Estimated Fair Value
Federal Home Loan Mortgage Corporation	$	1,500,000	$	1,551,716	$	—	$	1,551,716
2,939,465 common shares of CV Holdings, Inc.	—		58,789		411,525		470,314
Total available-for-sale securities	$	1,500,000	$	1,610,505	$	411,525	$	2,022,030

In the fourth quarter of 2015, we purchased a federal home loan mortgage corporation security at a premium for $1.6 million. This security bore interest at a fixed rate of 3.241% with a scheduled maturity in 2024. We sold this security in January 2016 for $1.6 million and recognized a gain of less than $0.1 million.

Note 5 — Investments in Equity Affiliates

We account for all investments in equity affiliates under the equity method.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

The following is a summary of our investments in equity affiliates:

	Investments in Equity Affiliates at				UPB of Loans to Equity Affiliates at
Equity Affiliates	June 30, 2016		December 31, 2015		June 30, 2016
Arbor Residential Investor LLC	$	33,668,202	$	25,923,679	$	—
West Shore Café	1,995,932		1,955,933		1,687,500
Lightstone Value Plus REIT L.P.	1,894,727		1,894,727		—
Issuers of Junior Subordinated Notes	578,000		578,000		—
JT Prime	425,000		425,000		—
East River Portfolio	87,293		92,796		4,994,166
Lexford Portfolio	100		100		—
Ritz-Carlton Club	—		—		—
Total	$	38,649,254	$	30,870,235	$	6,681,666

Arbor Residential Investor LLC (“ARI”) — In the first quarter of 2015, we invested $9.6 million for 50% of our Manager’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business.  As a result of this transaction, we had an initial indirect interest of 22.5% in the mortgage banking business, which is subject to dilution upon attaining certain profit hurdles of the business. During the three and six months ended June 30, 2016, we recorded $3.1 million and $4.6 million, respectively, and during the three and six months ended June 30, 2015, we recorded $1.5 million and $4.6 million, respectively, to income from equity affiliates in our consolidated statements of income related to this investment.

In 2015, through ARI, we invested $9.7 million for a 50% non-controlling interest in a joint venture that invests in non-qualified residential mortgages purchased from the mortgage banking business’s origination platform.  We also funded $4.2 million of additional mortgage purchases during the six months ended June 30, 2016, for a total investment of $13.9 million as of June 30, 2016. In the second quarter of 2016, we received our first cash distribution of $1.2 million, which was classified as a return of capital. During the three and six months ended June 30, 2016, we recorded income of  $0.1 million for both periods and, during the three and six months ended June 30, 2015, we recorded a loss of less than $0.1 million for both periods to income from equity affiliates in our consolidated statements of income related to this investment.

The summarized statements of operations for our individually significant investment in ARI are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Statements of Operations:	2016		2015		2016		2015
Revenue:
Total revenues	$	58,959,781	$	33,121,196	$	101,889,213	$	70,985,194
Total expenses	44,856,886		26,788,417		80,864,284		51,942,524
Net income	$	14,102,895	$	6,332,779	$	21,024,929	$	19,042,670
Arbor’s share of income	$	3,148,720	$	1,471,459	$	4,718,296	$	4,507,256

Lexford Portfolio — In the three and six months ended June 30, 2016, we received a distribution from this equity investment and recognized income of $1.2 million and $1.4 million, respectively. See Note 14 — “Agreements and Transactions with Related Parties” for further details.

Note 6 — Real Estate Owned and Held-For-Sale

Our real estate assets were comprised of one hotel property and an office building at June 30, 2016 and three multifamily properties, two hotel properties and an office building at December 31, 2015.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Real Estate Owned

	June 30, 2016									December 31, 2015
	Hotel Property			Office Building			Total			Multifamily Properties			Hotel Properties			Office Building			Total
Land	$	3,293,651		$	4,509,000		$	7,802,651		$	5,538,844		$	3,293,651		$	4,509,000		$	13,341,495
Building and intangible assets	30,475,872			1,391,000			31,866,872			32,643,889			30,338,882			1,391,000			64,373,771
Less: Impairment loss	(11,200,000		)	—			(11,200,000		)	—			—			—			—
Less: Accumulated depreciation and amortization	(8,146,318		)	(310,422		)	(8,456,740		)	(9,399,041		)	(7,329,615		)	(141,101		)	(16,869,757		)
Real estate owned, net	$	14,423,205		$	5,589,578		$	20,012,783		$	28,783,692		$	26,302,918		$	5,758,899		$	60,845,509

For the six months ended June 30, 2016 and 2015, our hotel properties had a weighted average occupancy rate of approximately 64% and 55%, respectively, a weighted average daily rate of approximately $99 and $96, respectively, and weighted average revenue per available room of approximately $63 and $53, respectively.  The operation of a hotel property is seasonal with the majority of revenues earned in the first two quarters of the calendar year. During the second quarter of 2016, through site visits and discussion with market participants, we determined that the hotel property owned exhibited indicators of impairment and performed an impairment analysis. As a result of this impairment analysis, we recorded an impairment loss of $11.2 million.

At both June 30, 2016 and December 31, 2015, our office building had an occupancy rate of 100%.

Our real estate assets had restricted cash balances totaling $0.9 million and $1.6 million as of June 30, 2016 and December 31, 2015, respectively, due to escrow requirements.

As of December 31, 2015, our multifamily properties had a weighted average occupancy rate of approximately 94%.

Real Estate Held-For-Sale

In the second quarter of 2016, we sold the three remaining multifamily properties for $41.0 million and recognized a gain of $11.0 million. A portion of the sales proceeds were used to payoff the outstanding debt on these properties of $27.1 million. See Note 7 — “Debt Obligations” for further details. In the first quarter of 2016, we sold one of our hotel properties for $9.7 million and recognized a gain of $0.6 million.

In the first quarter of 2015, we sold a multifamily property and a hotel property classified as held-for-sale for a total of $18.8 million and recognized a gain of $4.0 million.

The results of operations for properties sold or classified as held-for-sale are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Revenue:
Property operating income	$	1,149,883	$	1,367,641	$	2,845,231	$	3,349,979
Expenses:
Property operating expenses	932,518		1,016,112		1,994,346		2,323,404
Depreciation	—		212,020		334,631		436,326
Net income	$	217,365	$	139,509	$	516,254	$	590,249

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Note 7 — Debt Obligations

We utilize various forms of short-term and long-term financing agreements to finance certain of our loans and investments.  Borrowings underlying these arrangements are primarily secured by a significant amount of our loans and investments.

Credit Facilities and Repurchase Agreements

The following table outlines borrowings under our credit facilities and repurchase agreements:

	June 30, 2016								December 31, 2015
	Debt Principal Balance		Debt Carrying Value		Collateral Carrying Value		Weighted Average Note Rate		Debt Principal Balance		Debt Carrying Value		Collateral Carrying Value		Weighted Average Note Rate
$150 million repurchase facility	$	94,265,469	$	93,863,204	$	151,142,522	2.74	%	$	58,270,774	$	57,610,463	$	99,641,504	2.70	%
$100 million credit facility	21,837,200		21,674,670		31,400,000		2.65	%	24,582,200		24,328,863		38,000,000		2.62	%
$75 million credit facility	66,304,000		66,304,000		93,905,000		2.66	%	13,852,500		13,766,445		18,470,000		2.59	%
$75 million credit facility	31,025,000		31,025,000		44,500,000		2.50	%	—		—		—		—
$50 million credit facility	46,320,000		46,305,067		57,900,000		2.50	%	24,120,000		24,114,494		30,200,000		2.46	%
$16.5 million term credit facility	—		—		—		—		16,500,000		16,431,870		29,750,000		3.22	%
Total	$	259,751,669	$	259,171,941	$	378,847,522	2.64	%	$	137,325,474	$	136,252,135	$	216,061,504	2.69	%

At June 30, 2016 and December 31, 2015, the weighted average interest rate for our credit facilities and repurchase agreements was 2.64% and 2.69%, respectively.  Including certain fees and costs, such as structuring, commitment, non-use and warehousing fees, the weighted average interest rate was 2.99% and 3.42% at June 30, 2016 and December 31, 2015, respectively. There were no interest rate swaps on these facilities at June 30, 2016 and December 31, 2015.

We have a $150.0 million repurchase facility with a financial institution initially used to finance the unwind of a significant portion of two collateralized debt obligation (“CDO”) vehicles in the first quarter of 2015. See “Collateralized Debt Obligations” below.  The facility bears interest at a rate of 212.5 basis points over LIBOR on senior mortgage loans, 350.0 basis points over LIBOR on junior mortgage loans, and matures in January 2017 with a one-year extension option.  If the estimated market value of the loans financed in this facility decrease, we may be required to pay down borrowings under this facility.  Debt carrying value is net of $0.4 million and $0.7 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

We have a $100.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties that bears interest at a rate of 215 basis points over LIBOR and matures in May 2017 with a one-year extension option, subject to certain conditions.  The facility has a maximum advance rate of 75% and also has a compensating balance requirement of $75.0 million to be maintained by us and our affiliates.  Debt carrying value is net of $0.2 million and $0.3 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

We have a $75.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties that bears interest at a rate of 212.5 basis points over LIBOR, includes a $25.0 million sublimit to finance healthcare related loans and was to mature in June 2016. The facility was temporarily extended to August 2016. The healthcare related loans will have an interest rate ranging from 225 basis points to 250 basis points over LIBOR depending on the type of healthcare facility financed.  The facility has a maximum advance rate of 75%.  Debt carrying value is net of $0.1 million of deferred financing fees at December 31, 2015.

We have another $75.0 million credit facility with a financial institution to finance first mortgage loans on multifamily and commercial properties that bears interest at a rate of 200 basis points over LIBOR and was to mature in June 2016.  The facility was extended to May 2017. The facility has a maximum advance rate of 70% or 75%, depending on the property type.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

We have a $50.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties.  The facility bears interest at a rate of 200 basis points over LIBOR and was to mature in February 2016. In February 2016, we amended the facility, increasing the committed amount by $25.0 million to $50.0 million and extending the maturity to February 2017 with two one-year extension options, subject to certain conditions. Debt carrying value is net of less than $0.1 million of deferred financing fees at both June 30, 2016 and December 31, 2015.

In September 2015, we entered into a $16.5 million term facility with a financial institution to finance a first mortgage loan.  The facility bore interest at a rate of 275 basis points over LIBOR, was scheduled to mature in December 2016 and had a compensating balance requirement of $3.0 million to be maintained by us and our affiliates.  In the second quarter of 2016, the loan paid off and we repaid this facility in full.

Our credit facilities generally allow for an original warehousing period of up to 24 months from the initial advance on an asset. In addition, our credit facilities and repurchase agreements contain several restrictions including full repayment of an advance if a loan becomes 60 days past due, is in default or is written down by us.  Our credit facilities and repurchase agreements also contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types.  See “Debt Covenants” below for details.

Collateralized Loan Obligations (CLOs)

In August 2015, we completed a collateralized securitization vehicle (“CLO V”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $267.8 million, of which we purchased $12.5 million of Class C notes that we subsequently sold at par for $12.5 million.  As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of approximately $302.6 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.  The financing has an approximate three year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.  Thereafter, the outstanding debt balance will be reduced as loans are repaid.  Initially, the proceeds of the issuance of the securities also included $47.4 million for the purpose of acquiring additional loan obligations for a period of up to 120 days from the closing date of the CLO.  In September 2015, the additional proceeds were fully utilized resulting in the issuer owning loan obligations with a face value of approximately $350.0 million.  We retained a residual interest in the portfolio with a notional amount of approximately $82.3 million.  The notes have an initial weighted average interest rate of approximately 2.44% plus one-month LIBOR and interest payments on the notes are payable monthly.  Including certain fees and costs, the initial weighted average note rate was 3.07%.

In March 2015, we completed the unwinding of CLO II, redeeming $177.0 million of our outstanding notes which were repaid primarily from the refinancing of the remaining assets within our new and existing financing facilities as well as with cash held by the CLO and expensed $1.5 million of deferred fees in the first quarter of 2015 into interest expense on the consolidated statements of income.

In February 2015, we completed a collateralized securitization vehicle (“CLO IV”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $219.0 million.  At closing, the notes were secured by a portfolio of loan obligations with a face value of $250.0 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio, as well as $50.0 million for the purpose of acquiring additional loan obligations.  The financing has an approximate 2.5 year replacement period from closing that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.  Thereafter, the outstanding debt balance will be reduced as loans are repaid.  We retained a residual interest in the portfolio with a notional amount of approximately $81.0 million.  The notes had an initial weighted average interest rate of approximately 2.24% plus one-month LIBOR and interest payments on the notes are payable monthly.  Including certain fees and costs, the initial weighted average note rate was 2.96%.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

The following table outlines borrowings and the corresponding collateral under our CLOs as of June 30, 2016:

	Debt				Collateral (1)
					Loans				Cash
	Face Value		Carrying Value		Unpaid Principal		Carrying Value		Restricted Cash (2)
CLO III	$	281,250,000	$	279,762,775	$	314,700,230	$	313,790,106	$	58,052,410
CLO IV	219,000,000		216,552,305		263,533,848		262,944,653		36,466,152
CLO V	267,750,000		264,317,448		289,782,336		289,065,380		60,217,664
Total CLOs	$	768,000,000	$	760,632,528	$	868,016,414	$	865,800,139	$	154,736,226

The following table outlines borrowings and the corresponding collateral under our CLOs as of December 31, 2015:

	Debt				Collateral (1)
					Loans				Cash
	Face Value		Carrying Value		Unpaid Principal		Carrying Value		Restricted Cash (2)
CLO III	$	281,250,000	$	279,129,518	$	339,019,221	$	338,034,689	$	25,135,492
CLO IV	219,000,000		215,985,420		288,581,773		287,946,641		11,418,227
CLO V	267,750,000		263,784,723		343,561,696		342,988,734		6,438,304
Total CLOs	$	768,000,000	$	758,899,661	$	971,162,690	$	968,970,064	$	42,992,023

(1)  As of June 30, 2016 and December 31, 2015, there was no collateral at risk of default or deemed to be a “credit risk” as defined by the CLO indenture.

(2) Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs.  Does not include restricted cash related to interest payments, delayed fundings and expenses.

CLO III — Issued three investment grade tranches in April 2014 with a replacement period through October 2016 and a stated maturity date in May 2024.  Interest is variable based on one-month LIBOR; the weighted average note rate was 2.90% and 2.86% at June 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $1.5 million and $2.1 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

CLO IV — Issued three investment grade tranches in February 2015 with a replacement period through September 2017 and a stated maturity date in March 2025.  Interest is variable based on one-month LIBOR; the weighted average note rate was 2.75% and 2.71% at June 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $2.4 million and $3.0 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

CLO V — Issued three investment grade tranches in August 2015 with a replacement period through September 2018 and a stated maturity date in September 2025.  Interest is variable based on one-month LIBOR; the weighted average note rate was 2.94% and 2.91% at June 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $3.3 million and $3.8 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

At June 30, 2016 and December 31, 2015, the aggregate weighted average note rate for our CLOs was 2.87% and 2.84%, respectively.  Including certain fees and costs, the weighted average note rate was 3.31% and 3.24% at June 30, 2016 and December 31, 2015, respectively.

We account for our CLO transactions on our consolidated balance sheet as financing facilities.  Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements accordingly.  The investment grade tranches are treated as secured financings, and are non-recourse to us.

Collateralized Debt Obligations (CDOs)

In July 2015, we completed the unwind of CDO III, our last remaining CDO vehicle, redeeming $71.1 million of our outstanding notes. The notes were repaid primarily from proceeds received from the refinancing of CDO III’s remaining assets within our existing financing facilities, as well as with cash held by the CDO.  We also terminated a related interest rate swap in the third quarter of 2015.  CDO III had a $100.0 million revolving note class that provided a revolving note facility, which was paid off in the first quarter of 2015.

In January 2015, we completed the unwind of CDO I and CDO II, redeeming $167.9 million of our outstanding notes. The notes were repaid primarily from proceeds received from the refinancing of CDO I and II’s remaining assets within a new $150.0 million warehouse repurchase facility and our existing financing facilities, as well as with cash held by each CDO.  As a result of this transaction, we generated approximately $30.0 million in cash equity and reduced the balance of estimated interest by $11.0 million, which resulted in recording a gain on acceleration of deferred income in the consolidated statements of income, in the first quarter of 2015. We also terminated the related basis and interest rate swaps, which resulted in a loss of $4.3 million, and expensed $0.5 million of deferred fees in the first quarter of 2015.  See Note 8 — “Derivative Financial Instruments” for additional details.

In 2010, we re-issued our own CDO bonds we had acquired throughout 2009 with an aggregate face amount of approximately $42.8 million as part of an exchange for the retirement of $114.1 million of our junior subordinated notes.  This transaction resulted in the recording of $65.2 million of additional CDO debt, of which $42.3 million represents the portion of our CDO bonds that were exchanged and $22.9 million represents the estimated interest due on the reissued bonds through their maturity.  In January 2015, we unwound our CDO I and CDO II vehicles and reduced the balance of estimated interest by $11.0 million and in July 2015, we unwound our CDO III vehicle and reduced the remaining balance of estimated interest by $8.2 million, recording a gain on acceleration of deferred income in the consolidated statements of income.

Senior Unsecured Notes

During 2014, we issued $90.0 million aggregate principal amount of 7.375% senior unsecured notes due in 2021 in an underwritten public offering for net proceeds of $85.4 million after deducting the issuance and underwriting discounts and offering expenses.  In connection with this offering, the underwriters exercised a portion of their overallotment option for a $7.8 million aggregate principal amount providing additional net proceeds of $7.4 million.  The notes can be redeemed by us after May 15, 2017.  The interest is paid quarterly in February, May, August and November.  Including certain fees and costs, the weighted average note rate was 8.15% and 8.12% at June 30, 2016 and December 31, 2015, respectively.  The debt carrying value of $94.1 million and $93.8 million at June 30, 2016 and December 31, 2015, respectively, is net of $3.7 million and $4.1 million, respectively, of deferred financing fees. We used the net proceeds to make investments, to repurchase or pay liabilities and for general corporate purposes.

Junior Subordinated Notes

The carrying value of borrowings under our junior subordinated notes was $157.5 million and $157.1 million at June 30, 2016 and December 31, 2015, respectively, which is net of a deferred amount of $15.2 million and $15.5 million, respectively, that is being amortized into interest expense over the life of the notes and $3.2 million and $3.3 million, respectively, of deferred financing fees.  These notes have maturities ranging from March 2034 through April 2037, pay interest quarterly at a fixed or floating rate of interest based on three-month LIBOR and

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

were not redeemable for the first two years.  The current weighted average note rate was 3.47% and 3.43% at June 30, 2016 and December 31, 2015, respectively.  Including certain fees and costs, the weighted average note rate was 3.58% and 3.55% at June 30, 2016 and December 31, 2015, respectively.  The entities that issued the junior subordinated notes have been deemed VIEs.  See Note 9 — “Variable Interest Entities” for further details.

Mortgage Note Payable — Real Estate Owned

In the first quarter of 2015, we made required paydowns of $10.3 million and repaid the $20.7 million mortgage related to our multifamily properties, replacing it with two new notes payable totaling $27.2 million. In the second quarter of 2016, we sold the remaining multifamily properties and these notes payable were paid in full.

Debt Covenants

Our debt facilities contain various financial covenants and restrictions, including a minimum liquidity requirement of $20.0 million, minimum net worth requirement of $100.0 million to $300.0 million depending on the debt facility and a maximum total liabilities less subordinated debt requirement of $2.0 billion, as well as certain other debt service coverage ratios and debt to equity ratios.  We were in compliance with all financial covenants and restrictions at June 30, 2016.

Our CLO vehicles contain interest coverage and asset overcollateralization covenants that must be met as of the waterfall distribution date in order for us to receive such payments.  If we fail these covenants in any of our CLOs, all cash flows from the applicable CLO would be diverted to repay principal and interest on the outstanding CLO bonds and we would not receive any residual payments until that CLO regained compliance with such tests.  Our CLOs were in compliance with all such covenants as of June 30, 2016, as well as on the most recent determination dates in July 2016.  In the event of a breach of the CLO covenants that could not be cured in the near-term, we would be required to fund our non-CLO expenses, including management fees and employee costs, distributions required to maintain our REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CLO not in breach of a covenant test, (iii) income from real property and loan assets, (iv) sale of assets, or (v) or accessing the equity or debt capital markets, if available.  We have the right to cure covenant breaches which would resume normal residual payments to us by purchasing non-performing loans out of the CLOs.  However, we may not have sufficient liquidity available to do so at such time.

The chart below is a summary of our CLO compliance tests as of the most recent determination dates in July 2016:

Cash Flow Triggers	CLO III		CLO IV		CLO V
Overcollateralization (1)
Current	133.33	%	136.99	%	130.72	%
Limit	132.33	%	135.99	%	129.72	%
Pass / Fail	Pass		Pass		Pass
Interest Coverage (2)
Current	221.94	%	320.98	%	244.46	%
Limit	120.00	%	120.00	%	120.00	%
Pass / Fail	Pass		Pass		Pass

(1) The overcollateralization ratio divides the total principal balance of all collateral in the CLO by the total principal balance of the bonds associated with the applicable ratio.  To the extent an asset is considered a defaulted security, the asset’s principal balance for purposes of the overcollateralization test is the lesser of the asset’s market value or the principal balance of the defaulted asset multiplied by the asset’s recovery rate which is determined by the rating agencies.  Rating downgrades of CLO collateral will generally not have a direct impact on the principal balance of a CLO asset for purposes of calculating the CLO overcollateralization test unless the rating downgrade is below a significantly low threshold (e.g. CCC-) as defined in each CLO vehicle.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

(2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us.

The chart below is a summary of our CLO overcollateralization ratios as of the determination dates subsequent to each quarter:

Determination (1)	CLO III		CLO IV		CLO V
July 2016	133.33	%	136.99	%	130.72	%
April 2016	133.33	%	136.99	%	130.72	%
January 2016	133.33	%	136.99	%	130.72	%
October 2015	133.33	%	136.99	%	130.72	%
July 2015	133.33	%	136.99	%	—

(1) The table above represents the quarterly trend of our overcollateralization ratio, however, the CLO determination dates are monthly and we were in compliance with this test for all periods presented.

The ratio will fluctuate based on the performance of the underlying assets, transfers of assets into the CLOs prior to the expiration of their respective replenishment dates, purchase or disposal of other investments, and loan payoffs.  No payment due under the junior subordinated indentures may be paid if there is a default under any senior debt and the senior lender has sent notice to the trustee.  The junior subordinated indentures are also cross-defaulted with each other.

Note 8 — Derivative Financial Instruments

The following is a summary of the derivative financial instruments held by us (dollars in thousands):

		Notional Value							Balance	Fair Value
Designation/ Cash Flow	Derivative	Count	June 30, 2016		Count	December 31, 2015		Expiration Date	Sheet Location	June 30, 2016			December 31, 2015
Qualifying	LIBOR Caps	2	$	84,100	2	$	84,100	2017	Other Assets	$	—		$	3
Qualifying	Interest Rate Swaps	4	$	106,141	5	$	107,821	2016 - 2017	Other Liabilities	$	(2,407	)	$	(4,669	)

The changes in the fair value of qualifying interest rate swap cash flow hedges are recorded in accumulated other comprehensive loss on the consolidated balance sheets.  These swap agreements must be effective in reducing the variability of cash flows of the hedged items in order to qualify for the aforementioned hedge accounting treatment.  These interest rate swaps are used to hedge the variable cash flows associated with existing variable-rate debt, and amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt.  During the six months ended June 30, 2016, one interest rate swap matured with a notional value of $1.7 million.  As of June 30, 2016, we expect to reclassify $(2.5) million of other comprehensive loss from qualifying cash flow hedges to interest expense over the next twelve months assuming interest rates on that date are held constant.  During the six months ended June 30, 2015, CDO I and CDO II were unwound and the related interest rate swaps with an aggregate notional value of $134.6 million and an aggregate fair value of $(4.3) million were terminated and recorded as a loss in the first quarter of 2015.  See Note 7 — “Debt Obligations — Collateralized Debt Obligations” for further details.  Also during the six months ended June 30, 2015, we entered into a qualifying LIBOR cap hedge due to a CLO agreement requiring a LIBOR cap of 2% with a notional value of $43.5 million.

Gains and losses on terminated swaps are being deferred and recognized in earnings over the original life of the hedged item.  As of June 30, 2016 and December 31, 2015, we had a net deferred loss of $0.3 million and $0.6 million, respectively, in accumulated other comprehensive loss related to these terminated swap agreements.  We

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

recorded $0.2 million as additional interest expense related to the amortization of the loss for both the three months ended June 30, 2016 and 2015, and less than $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the three months ended June 30, 2016 and 2015.  We recorded $0.3 million as additional interest expense related to the amortization of the loss for both the six months ended June 30, 2016 and 2015, and $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the six months ended June 30, 2016 and 2015. We expect to record approximately $0.4 million of net deferred loss to interest expense over the next twelve months.

Non-qualifying basis swap hedges were used to manage our exposure to interest rate movements and other identified risks but do not meet hedge accounting requirements.  During the six months ended June 30, 2015, our remaining basis swap with a notional value of $3.0 million and a fair value of less than $0.1 million was terminated as part of the CDO II unwind and a loss was recorded in the six months ended June 30, 2015.

The following table presents the effect of our derivative financial instruments on the statements of income (dollars in thousands):

Designation /		Amount of Loss Recognized In Other Comprehensive Loss (Effective Portion) For the Six Months Ended June 30,				Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Interest Expense (Effective Portion) For the Six Months Ended June 30,						Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Loss on Termination of Swaps (Ineffective Portion) For the Six Months Ended June 30,					Amount of Loss Recognized in Loss on Termination of Swaps (Ineffective Portion) For the Six Months Ended June 30,
Cash Flow	Derivative	2016		2015		2016			2015			2016		2015			2016		2015
Non-Qualifying	Basis Swaps	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	(3	)
Qualifying	Interest Rate Swaps/Cap	$	262	$	907	$	(2,696	)	$	(3,242	)	$	—	$	(4,286	)	$	—	$	—

The cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as qualifying hedges as of June 30, 2016 and December 31, 2015 of $(2.8) million and $(5.3) million, respectively, is a combination of the fair value of qualifying cash flow hedges of $(2.5) million and $(4.7) million, respectively, and net deferred losses on terminated interest rate swaps of $(0.3) million and $(0.6) million, respectively.

We have agreements with certain of our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.  As of June 30, 2016 and December 31, 2015, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, was $(2.4) million and $(4.6) million, respectively.  As of June 30, 2016 and December 31, 2015, we had minimum collateral posting thresholds with certain of our derivative counterparties and had posted collateral of $2.8 million and $5.0 million, respectively, which is recorded in other assets in our consolidated balance sheets.

Note 9 — Variable Interest Entities

We have evaluated our loans and investments, mortgage related securities, investments in equity affiliates, senior unsecured notes, junior subordinated notes, operating partnership and CLOs, in order to determine if they qualify as VIEs or as variable interests in VIEs.  This evaluation resulted in determining that our bridge loans, junior participation loans, mezzanine loans, preferred equity investments, investments in equity affiliates, junior subordinated notes, operating partnership, CLOs and investments in mortgage related securities are potential VIEs.

Our involvement with VIEs primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense,  provision for loan losses and through activity associated with our derivative instruments.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Consolidated VIEs

In the first quarter of 2016, we adopted the amended guidance on the consolidation of VIEs, modifying the analysis we must perform to determine whether we should consolidate certain types of legal entities.  Under the revised guidance, our operating partnership, ARLP, was determined to be a VIE.  As this operating partnership is already consolidated in our financial statements, the identification of this entity as a VIE has no impact on our consolidated financial statements, as all of our assets and liabilities are held in this consolidated VIE.

Our CLO subsidiaries, which we are the primary beneficiary and qualify as VIEs, are owned by our operating partnership ARLP, which is consolidated in our financial statements.  These CLOs invest in real estate and real estate-related securities and are financed by the issuance of CLO debt securities.  We, or one of our affiliates, are named collateral manager, servicer, and special servicer for all CLO collateral assets which we believe gives us the power to direct the most significant economic activities of the entity.  We also have exposure to CLO losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to CLO bond investors.  As a result of consolidation, equity interests in these CLOs have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued by the CLOs to third parties.  Our operating results and cash flows include the gross amounts related to CLO assets and liabilities as opposed to our net economic interests in the CLO entities.

The assets and liabilities related to these consolidated CLOs are as follows:

	June 30, 2016		December 31, 2015
Assets:
Restricted cash	$	156,656,516	$	46,695,819
Loans and investments, net	865,800,137		968,970,064
Due from related party	36,452		36,451
Other assets	6,023,276		6,969,201
Total assets	$	1,028,516,381	$	1,022,671,535
Liabilities:
Collateralized loan obligations	$	760,632,528	$	758,899,661
Other liabilities	1,215,022		1,224,193
Total liabilities	$	761,847,550	$	760,123,854

Assets held by the CLOs are restricted and can be used only to settle obligations of the CLOs.  The liabilities of the CLOs are non-recourse to us and can only be satisfied from each CLOs respective asset pool.  See Note 7 — “Debt Obligations” for further details.

We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs.

Unconsolidated VIEs

We determined that we are not the primary beneficiary of 19 VIEs in which we have a variable interest as of June 30, 2016 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance.  VIEs, of which we are not the primary beneficiary, have an aggregate carrying amount of $278.9 million and exposure to real estate debt of approximately $1.6 billion at June 30, 2016.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of June 30, 2016:

Type	Carrying Amount (1)		Maximum Exposure to Loss (2)
Loans	$	276,355,074	$	276,355,074
Equity investments	1,996,032		1,996,032
Junior subordinated notes (3)	578,000		578,000
Total	$	278,929,106	$	278,929,106

(1) Represents the carrying amount of loans and investments before reserves.  At June 30, 2016, $149.8 million of loans to VIEs had corresponding loan loss reserves of $77.7 million.  See Note 3 — “Loans and Investments” for further details.

(2) Our maximum exposure to loss as of June 30, 2016 would not exceed the carrying amount of its investment.

(3) It is not appropriate to consolidate these entities as equity interests are variable interests only to the extent that the investment is considered to be at risk.  Since our investments were funded by the entities that issued the junior subordinated notes, it is not considered to be at risk.

Note 10 — Fair Value

Fair Value of Financial Instruments

Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions.  The following table summarizes the principal amounts, carrying values and the estimated fair values of our financial instruments:

	June 30, 2016						December 31, 2015
	Principal / Notional Amount		Carrying Value		Estimated Fair Value		Principal / Notional Amount		Carrying Value		Estimated Fair Value
Financial assets:
Loans and investments	$	1,605,047,851	$	1,511,596,691	$	1,561,195,211	$	1,545,126,045	$	1,450,334,341	$	1,481,353,410
Available-for-sale securities	58,789		440,920		440,920		1,610,505		2,022,030		2,022,030
Derivative financial instuments	84,100,000		7		7		84,100,000		3,345		3,345
Financial liabilities:
Credit and repurchase facilities	$	259,751,669	$	259,171,941	$	259,281,660	$	137,325,474	$	136,252,135	$	137,072,691
Collateralized loan obligations	768,000,000		760,632,528		755,635,625		768,000,000		758,899,661		766,065,400
Senior unsecured notes	97,860,025		94,140,028		99,543,217		97,860,025		93,764,994		96,294,265
Junior subordinated notes	175,858,000		157,468,377		104,864,588		175,858,000		157,117,130		104,073,847
Mortgage note payable - real estate owned	—		—		—		27,155,000		27,155,000		27,111,231
Derivative financial instruments	106,141,799		2,407,140		2,407,140		107,820,995		4,669,273		4,669,273

Fair Value Measurement

Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties.  A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor.  Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters.  Where observable prices or inputs are not available, valuation models are applied.  These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Assets and liabilities disclosed at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value.  Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities are as follows:

Level 1 — Inputs are unadjusted and quoted prices exist in active markets for identical assets or liabilities at the measurement date.  The types of assets and liabilities carried at Level 1 fair value generally are government and agency securities, equities listed in active markets, investments in publicly traded mutual funds with quoted market prices and listed derivatives.

Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.  Level 2 inputs include quoted market prices in markets that are not active for an identical or similar asset or liability, and quoted market prices in active markets for a similar asset or liability.  Fair valued assets and liabilities that are generally included in this category are non-government securities, municipal bonds, certain hybrid financial instruments, certain mortgage and asset-backed securities, certain corporate debt, certain commitments and guarantees, certain private equity investments and certain derivatives.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.  These valuations are based on significant unobservable inputs that require a considerable amount of judgment and assumptions.  Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.  Generally, assets and liabilities carried at fair value and included in this category are certain mortgage and asset-backed securities, certain corporate debt, certain private equity investments, certain municipal bonds, certain commitments and guarantees and certain derivatives.

Determining which category an asset or liability falls within the hierarchy requires significant judgment and we evaluate our hierarchy disclosures each quarter.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

Loans and investments, net:  Fair values of loans and investments that are not impaired are estimated using Level 3 inputs based on discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates that would be offered for loans with similar characteristics and credit quality.  Fair values of loans and investments that are impaired are estimated using Level 3 inputs by us that require significant judgments, which include assumptions regarding discount rates, capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management.

Available-for-sale securities:  Fair values are approximated based on current market quotes received from active markets or financial sources that trade such securities.  The fair values of available-for-sale equity securities traded in active markets are approximated using Level 1 inputs, while the fair values of available-for-sale debt securities that are approximated using recent purchase price and subsequent sales price of the securities, were valued using Level 2 inputs.

Derivative financial instruments:  Fair values of interest rate and basis swap derivatives and LIBOR caps are approximated using Level 2 inputs based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles including counterparty risks, credit spreads and interest rate projections, as well as reasonable estimates about relevant future market conditions.  These items are included in other assets and other liabilities on the consolidated balance sheets.  We incorporate credit valuation adjustments in the fair values of our derivative financial instruments to reflect counterparty nonperformance risk.

Credit facilities, repurchase agreements and mortgage notes payable:  Fair values are estimated at Level 3 using discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates for financing with similar characteristics and credit quality.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Collateralized loan obligations:  Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads.

Senior unsecured notes:  Fair values are estimated at Level 1 based on current market quotes received from active markets.

Junior subordinated notes:  Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads.

We measure certain financial assets and financial liabilities at fair value on a recurring basis.  The fair value of these financial assets and liabilities was determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair
	Carrying				Value Hierarchy
	Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Available-for-sale securities	$	440,920	$	440,920	$	440,920	$	—	$	—
Derivative financial instruments	7		7		—		7		—
Financial liabilities:
Derivative financial instruments	$	2,407,140	$	2,407,140	$	—	$	2,407,140	$	—

We measure certain financial and non-financial assets at fair value on a nonrecurring basis.  The fair values of these financial and non-financial assets were determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair
	Net Carrying				Value Hierarchy
	Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Impaired loans, net (1)	$	102,891,406	$	102,891,406	$	—	$	—	$	102,891,406
Non-financial Assets:
Long-lived asset (2)	$	14,423,205	$	14,423,205	$	—	$	—	$	14,423,205

(1)We had an allowance for loan losses of $83.8 million relating to eight loans with an aggregate carrying value, before loan loss reserves, of $186.7 million at June 30, 2016.

(2)During the second quarter of 2016, we determined that a real estate owned hotel property exhibited indicators of impairment and an impairment analysis was performed. As a result of this impairment analysis, we recorded an impairment loss of $11.2 million.

Loan impairment assessments:  Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for loan losses, when such loan or investment is deemed to be impaired.  We consider a loan impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. We perform evaluations of our loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance and corresponding charge to the provision for loan losses. These valuations require significant judgments, which include assumptions regarding capitalization and discount rates, revenue growth rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management.  The table above includes all impaired loans, regardless of the period in which the impairment was recognized.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Long-lived assets:  We review our real estate owned assets when events or circumstances change indicating that the carrying amount of an asset may not be recoverable. We recognize impairment if the discounted estimated cash flows to be generated by the asset are less than the carrying amount of such asset. Measurement of impairment is based upon the estimated fair value of the asset. In the evaluation of a real estate owned asset for impairment, many factors are considered, including estimated current and expected operating cash flows from the asset during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates, projected stabilized net operating income, selling costs, and the ability to hold and dispose of the asset in the ordinary course of business.

Quantitative information about Level 3 fair value measurements on a non-recurring basis were as follows:

	June 30, 2016
	Fair Value		Valuation Techniques	Significant Unobservable Inputs
Financial assets:
Impaired loans (1):
				Discount rate	11.00	%
Office	$	815,000	Discounted cash flows	Capitalization rate	8.03	%
				Revenue growth rate	2.50	%
				Discount rate	15.00	%
Land	71,279,838		Discounted cash flows	Capitalization rate	7.25	%
				Revenue growth rate	3.00	%
				Discount rate	9.25	%
Hotel	30,796,568		Discounted cash flows	Capitalization rate	7.25	%
				Revenue growth rate	3.80	%
Non-financial assets:
Long-lived assets:
				Discount rate	11.00	%
Hotel	14,423,205		Discounted cash flows	Capitalization rate	9.00	%
				Revenue growth rate	6.20	%
				Hold period	3 years

(1)Includes all impaired loans regardless of the period in which a loan loss provision was recorded.

We measure certain assets and liabilities for which fair value is only disclosed.  The fair value of these assets and liabilities was determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair Value Hierarchy
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Loans and investments, net	$	1,511,596,691	$	1,561,195,211	$	—	$	—	$	1,561,195,211
Financial liabilities:
Credit facilities and repurchase agreements	$	259,171,941	$	259,281,660	$	—	$	—	$	259,281,660
Collateralized loan obligations	760,632,528		755,635,625		—		—		755,635,625
Senior unsecured notes	94,140,028		99,543,217		99,543,217		—		—
Junior subordinated notes	157,468,377		104,864,588		—		—		104,864,588

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Note 11 — Commitments and Contingencies

Contractual Commitments

Our debt obligations have approximate maturities of $146.2 million for the remainder of 2016, $320.9 million in 2017, $313.7 million in 2018, $171.1 million in 2019, $75.8 million in 2020 and $273.7 million thereafter.

In accordance with certain loans and investments, we have outstanding unfunded commitments of $36.8 million as of June 30, 2016 that we are obligated to fund as the borrowers meet certain requirements.  Of this total, we have $2.3 million in restricted cash which was available to fund all of the unfunded commitments for loans financed by our CLO vehicles.  Specific requirements include, but are not limited to, property renovations, building construction, and building conversions based on criteria met by the borrower in accordance with the loan agreements.

Litigation

We currently are neither subject to any material litigation nor, to our knowledge, are any material litigation currently threatened against us other than the following:

On June 15, 2011, three related lawsuits were filed by the Extended Stay Litigation Trust (the “Trust”), a post-bankruptcy litigation trust alleged to have standing to pursue claims that previously had been held by Extended Stay, Inc. and the Homestead Village L.L.C. family of companies (together “ESI”) (formerly Chapter 11 debtors, together the “Debtors”) that have emerged from bankruptcy.  Two of the lawsuits were filed in the U.S. Bankruptcy Court for the Southern District of New York, and the third in the Supreme Court of the State of New York, New York County.  There were 73 defendants in the three lawsuits, including 55 corporate and partnership entities and 18 individuals.  A subsidiary of ours and certain other entities that are affiliates of ours are included as defendants.  The New York State Court action has been removed to the Bankruptcy Court.  Our affiliates filed a motion to dismiss the three lawsuits.

The lawsuits all allege, as a factual basis and background certain facts surrounding the June 2007 leveraged buyout of ESI from affiliates of Blackstone Capital.  Our subsidiary, Arbor ESH II, LLC, had a $115.0 million investment in the Series A1 Preferred Units of a holding company of Extended Stay, Inc.  The New York State Court action and one of the two federal court actions name as defendants, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC and ABT-ESI LLC, an entity in which we have a membership interest, among the broad group of defendants.  These two actions were commenced by substantially identical complaints.  The defendants are alleged in these complaints, among other things, to have breached fiduciary and contractual duties by causing or allowing the Debtors to pay illegal dividends or other improper distributions of value at a time when the Debtors were insolvent.  These two complaints also allege that the defendants aided and abetted, induced, or participated in breaches of fiduciary duty, waste, and unjust enrichment (“Fiduciary Duty Claims”) and name a director of ours, and a former general counsel of Arbor Commercial Mortgage, LLC, each of whom had served on the Board of Directors of ESI for a period of time.  We are defending these two defendants and paying the costs of such defense.  On the basis of the foregoing allegations, the Trust has asserted claims under a number of common law theories, seeking the return of assets transferred by the Debtors prior to the Debtors’ bankruptcy filing.

In the third action, filed in Bankruptcy Court, the same plaintiff, the Trust, has named Arbor Commercial Mortgage, LLC and ABT-ESI LLC, together with a number of other defendants and asserts claims, including constructive and fraudulent conveyance claims under state and federal statutes, as well as a claim under the Federal Debt Collection Procedure Act.

On June 28, 2013, the Trust filed a motion to amend the lawsuits, to, among other things, (i) consolidate the lawsuits into one lawsuit, (ii) remove 47 defendants, none of whom are related to us, from the lawsuits so that there are 26 remaining defendants, including 16 corporate and partnership entities and 10 individuals, and (iii) reduce the counts within the lawsuits from over 100 down to 17.  The remaining counts in the amended complaint against our affiliates are principally state law claims for breach of fiduciary duties, waste, unlawful dividends and unjust enrichment, and claims under the Bankruptcy Code for avoidance and recovery actions, among others.  The bankruptcy court granted the motion and the amended complaint has been filed.  The amended complaint seeks approximately $139.0 million

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

in the aggregate from director designees, portions of which are also sought from our affiliates as well as from unaffiliated defendants.  We have moved to dismiss the referenced actions and intend to vigorously defend against the claims asserted therein.  During a status conference held on March 18, 2014, the Court heard oral argument on the motion to dismiss and adjourned the case pending a ruling.

We have not made a loss accrual for this litigation because we believe that it is not probable that a loss has been incurred and an amount cannot be reasonably estimated.

Note 12 — Equity

Preferred Stock

The Series A, B and C preferred stock may not be redeemed by us before February 2018, May 2018 and February 2019, respectively.

Common Stock

As of June 30, 2016, 6,500,000 common shares are available under an “At-The-Market” equity offering with JMP Securities LLC.

In July 2016, we filed, and the SEC declared effective, a new shelf registration statement for $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants.

Distributions

The following table presents dividends declared (on a per share basis) for the six months ended June 30, 2016:

Common Stock			Preferred Stock
				Dividend (1)
Declaration Date	Dividend		Declaration Date	Series A		Series B		Series C
February 24, 2016	$	0.15	February 1, 2016	$	0.515625	$	0.484375	$	0.53125
May 4, 2016	$	0.15	May 2, 2016	$	0.515625	$	0.484375	$	0.53125

(1)The dividend declared on February 1, 2016 for the Series A, B and C preferred stock was for the period December 1, 2015 through February 29, 2016. The dividend declared on May 2, 2016 for the Series A, B and C preferred stock was for the period March 1, 2016 through May 31, 2016.

Common Stock — On August 3, 2016, the Board of Directors declared a cash dividend of $0.16 per share of common stock.  The dividend is payable on August 31, 2016 to common stockholders of record as of the close of business on August 17, 2016.

Preferred Stock — On August 1, 2016, the Board of Directors declared a cash dividend of $0.515625 per share of 8.25% Series A preferred stock; a cash dividend of $0.484375 per share of 7.75% Series B preferred stock; and a cash dividend of $0.53125 per share of 8.50% Series C preferred stock.  These amounts reflect dividends from June 1, 2016 through August 31, 2016 and are payable on August 31, 2016 to preferred stockholders of record on August 15, 2016.

Deferred Compensation

In March 2016, we issued 282,405 shares of restricted common stock under the 2014 Omnibus Stock Incentive Plan (the “2014 Plan”) to certain employees of ours and our Manager with a total grant date fair value of $1.9 million and recorded $0.2 million to employee compensation and benefits and $0.5 million to selling and administrative expense in our consolidated statements of income.  One third of the shares vested as of the date of grant, one third will vest in March 2017, and the remaining third will vest in March 2018.  In March 2016, we also issued 67,260 shares of fully

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

vested common stock to the independent members of the Board of Directors under the 2014 Plan and recorded $0.4 million to selling and administrative expense in our consolidated statements of income.

During the first quarter of 2016, we issued 70,225 shares of restricted common stock to Mr. Ivan Kaufman, our chairman and chief executive officer, under his 2015 annual incentive agreement with a grant date fair value of $0.5 million and recorded $0.1 million to employee compensation and benefits in our consolidated statements of income.  One quarter of the shares vested as of the date of grant and one quarter will vest on each of the first, second and third anniversaries of the date of grant.  Mr. Kaufman was also granted up to 421,348 performance-based restricted stock units that vest at the end of a four-year performance period based on our achievement of certain total stockholder return objectives. The restricted stock units had a grant date fair value of $0.9 million and we recorded less than $0.1 million to employee compensation and benefits in our consolidated statements of income. To date under his 2015 annual incentive agreement, Mr. Kaufman was granted in the aggregate up to 867,113 performance-based restricted stock units.

As of June 30, 2016, unvested restricted stock consisted of 193,463 shares granted to our employees with a grant date fair value of $1.3 million and 193,759 shares granted to employees of our Manager with a grant date fair value of $1.3 million, which is subject to re-measurement each reporting period.  Expense is recognized ratably over the vesting period in our consolidated statements of income in employee compensation and benefits expense and selling and administrative expense, respectively.  During the three months ended June 30, 2016 and 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.2 million and $0.3 million, respectively, and for non-employees to selling and administrative expense for $0.3 million and $0.2 million, respectively. During the six months ended June 30, 2016 and 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.3 million and $0.4 million, respectively, and for non-employees to selling and administrative expense for $0.5 million and $0.2 million, respectively. During the first quarter of 2016, a total of 1,001 shares of unvested restricted stock with a grant date value of less than $0.1 million were forfeited.

Vesting of restricted shares is dependent on a service requirement.  Dividends paid on restricted shares are recorded as dividends on shares of our common stock whether or not they are vested.  For accounting purposes, we measure the compensation costs for these shares as of the date of the grant, with subsequent re-measurement for any unvested shares granted to non-employees of ours with such amounts expensed against earnings, at the grant date (for the portion that vest immediately) or ratably over the respective vesting periods.

Accumulated Other Comprehensive Loss

At June 30, 2016, accumulated other comprehensive loss was $2.4 million and consisted of $2.5 million of net unrealized losses on derivatives designated as cash flow hedges and $0.3 million of net deferred losses on terminated interest swaps, partially offset by a $0.4 million unrealized gain related to available-for-sale securities.  At December 31, 2015, accumulated other comprehensive loss was $4.8 million and consisted of $4.7 million of net unrealized losses on derivatives designated as cash flow hedges, and $0.6 million of net deferred losses on terminated interest swaps, less a $0.4 million unrealized gain related to available-for-sale securities.

Reclassifications out of accumulated other comprehensive loss is as follows:

	Six Months Ended June 30,
	2016			2015			Statement of Income Caption
Net realized losses on derivatives designated as cash flow hedges:
Interest rate swaps	$	(2,696,300	)	$	(3,241,500	)	Interest expense (1)
Termination of interest rate swaps	$	—		$	(4,285,995	)	Loss on termination of swaps (1)

(1) See Note 8 — “Derivative Financial Instruments” for additional details.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Note 13 — Earnings Per Share

Basic EPS is calculated by dividing net income attributable to Arbor Realty Trust, Inc. by the weighted average number of shares of common stock outstanding during each period inclusive of unvested restricted stock with full dividend participation rights.  Diluted EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period using the treasury stock method.  Our common stock equivalents are comprised of the weighted average dilutive effect of performance-based restricted stock units granted to our chief executive officer in the first quarter of 2016 and 2015.

The following is a reconciliation of the numerator and denominator of the basic and diluted EPS computations for the periods presented:

	Three Months Ended June 30, 2016				Three Months Ended June 30, 2015
	Basic		Diluted		Basic		Diluted
Net income attributable to common stockholders (1)	$	10,238,448	$	10,238,448	$	10,498,640	$	10,498,640
Weighted average number of common shares outstanding	51,381,405		51,381,405		50,955,648		50,955,648
Dilutive effect of restricted stock units (2)	—		360,546		—		—
Weighted average number of common shares outstanding	51,381,405		51,741,951		50,955,648		50,955,648
Net income per common share (1)	$	0.20	$	0.20	$	0.21	$	0.21

	Six Months Ended June 30, 2016				Six Months Ended June 30, 2015
	Basic		Diluted		Basic		Diluted
Net income attributable to common stockholders (1)	$	11,373,344	$	11,373,344	$	25,509,109	$	25,509,109
Weighted average number of common shares outstanding	51,213,312		51,213,312		50,751,247		50,751,247
Dilutive effect of restricted stock units (2)	—		205,227		—		143,284
Weighted average number of common shares outstanding	51,213,312		51,418,539		50,751,247		50,894,531
Net income per common share (1)	$	0.22	$	0.22	$	0.50	$	0.50

(1)Net of preferred stock dividends.

(2)Mr. Kaufman was granted restricted stock units in 2016 and 2015 which vest at the end of a four-year performance period based upon our achievement of total shareholder return objectives.  See Note 12 — “Equity” for further details.

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

Note 14 — Agreements and Transactions with Related Parties

Management Agreement

We, ARLP and Arbor Realty SR, Inc. have a management agreement with our Manager, pursuant to which our Manager provides certain services and we pay our Manager a base management fee and under certain circumstances, an annual incentive fee.

The base management fee is an arrangement whereby we reimburse our Manager for its actual costs incurred in managing our business based on the parties’ agreement in advance on an annual budget with subsequent quarterly true-ups to actual costs.  We retain all origination fees on investments.

The incentive fee is measured on an annual basis and is calculated as (1) 25% of the amount by which (a) our funds from operations per share, adjusted for certain gains and losses including gains from the retirement and restructuring of debt and 60% of any loan loss reserve recoveries (spread over a three year period), exceeds (b) the product of (x) 9.5% per annum or the Ten Year U.S. Treasury Rate plus 3.5%, whichever is greater, and (y) the greater of $10.00 or the weighted average of book value of the net assets contributed by our Manager to ARLP per ARLP partnership unit, the offering price per share of our common equity in the private offering on July 1, 2003 and subsequent offerings and the issue price per ARLP partnership unit for subsequent contributions to ARLP, multiplied by (2) the weighted average of our outstanding shares.

The minimum return, or incentive fee hurdle to be reached before an incentive fee is earned, is a percentage applied on a per share basis to the greater of $10.00 or the average gross proceeds per share.  In addition, 60% of any loan loss and other reserve recoveries are eligible to be included in the incentive fee calculation, which recoveries are spread over a three year period.

The management agreement also allows us to consider, from time to time, the payment of additional “success-based” fees to our Manager for accomplishing certain specified corporate objectives; has a termination fee of $10.0 million; and is renewable automatically for successive one-year terms, unless terminated with six months prior written notice.  If we terminate or elect not to renew the management agreement without cause, we are required to pay the termination fee of $10.0 million. We have a two year option to purchase the existing management agreement and fully internalize our management structure for $25.0 million (increasing to $27.0 million in the second year). See Note 1 — “Description of Business” for further details.

The following table sets forth our base management fees and incentive fees for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Management Fees:	2016		2015		2016		2015
Base	$	2,850,000	$	2,675,000	$	5,550,000	$	5,350,000
Incentive	—		—		—		—
Total management fee	$	2,850,000	$	2,675,000	$	5,550,000	$	5,350,000

For the three and six months ended June 30, 2016 and 2015, no “success-based” payments were incurred.

Other Related Party Transactions

Due from related party was $0.8 million and $8.1 million at June 30, 2016 and December 31, 2015, respectively, and consisted primarily of paydowns to be remitted and escrows held by our Manager and its affiliates related to real estate transactions.

Due to related party was $2.2 million at June 30, 2016 and consisted primarily of $2.1 million of base management fees due to our Manager, of which $0.8 million will be remitted by us in the following quarter.  At December 31,

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

2015, due to related party was $3.4 million and consisted primarily of base management fees due to our Manager that we remitted in the following quarter.

In January 2016, we originated a $12.7 million bridge loan and a $5.2 million preferred equity investment on two multifamily properties owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 50% in the borrowing entity.  The bridge loan has an interest rate of one-month LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of January 2019.  The preferred equity investment has a fixed interest rate of 10% and a maturity date of April 2016, which was extended as of right to October 2016.  Interest income recorded from these loans totaled $0.3 million and $0.6 million for the three and six months ended June 30, 2016, respectively.

In January 2016, we originated a $19.0 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 7.5% in the borrowing entity.  The loan has an interest rate of one-month LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of January 2019.  Interest income recorded from this loan totaled $0.3 and $0.4 million for the three and six months ended June 30, 2016, respectively.

In November 2015, we originated a $7.1 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 7.5% in the borrowing entity.  The loan has an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of November 2018 with two one-year extension options.  Interest income recorded from this loan totaled $0.1 million and $0.2 million for the three and six months ended June 30, 2016, respectively.

In October 2015, we originated two bridge loans totaling $16.7 million secured by multifamily properties acquired by a third party investor.  The properties had been owned and were sold by a consortium of investors, consisting of certain of our officers, including Mr. Kaufman, certain other related parties and certain unaffiliated persons.  The loans have an interest rate of LIBOR plus 5.00% with a LIBOR floor of 0.25% and a maturity date of October 2017.  Interest income recorded from these loans totaled $0.2 million and $0.5 million for the three and six months ended June 30, 2016, respectively.

In April 2015, we originated a $6.3 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman and our Manager, who together own an interest of approximately 90% in the borrowing entity.  The loan has an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of April 2018.  Interest income recorded from this loan totaled $0.1 and $0.2 million for the three and six months ended June 30, 2016, respectively, and $0.1 million for both the three and six months ended June 30, 2015.

In February 2015, we modified an $18.0 million preferred equity investment, increasing our balance to $23.0 million with a fixed interest rate of 10% and a maturity date of February 2018.  In order to accomplish the modification, we formed a joint venture with a consortium of investors consisting of certain of our officers, including Mr. Kaufman, and other related parties, to invest in an additional $2.0 million preferred equity investment that is generally subordinate to ours.  During the second quarter of 2016, the preferred equity investment was repaid in full and we received proceeds of $1.0 million, which was allocated to the consortium of investors.  Interest income recorded from this loan was $0.4 million and $1.0 million for the three and six months ended June 30, 2016, respectively, and $0.6 million and $1.1 million for the three and six months ended June 30, 2015, respectively.

In the first quarter of 2015, we invested $9.6 million for 50% of our Manager’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business.  As a result of this transaction, we had an initial indirect interest of 22.5% in this entity.  In 2015, we also invested a total of $9.7 million through this joint venture in non-qualified residential mortgages purchased from the mortgage banking business’s origination platform. During the six months ended June 30, 2016, we funded an additional $3.0 million, net into these non-qualified residential mortgages.  We recorded income of $3.2 million and $4.7 million from these investments during the three and six months ended June 30, 2016, respectively, and $1.5 million and $4.5 million for the three and six months ended June 30, 2015, respectively.  See Note 5 — “Investment in Equity Affiliates” for further details.

35

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

In 2014, we invested $0.1 million for a 5% interest in a joint venture that owns two multifamily properties.  The joint venture consists of a consortium of investors consisting of certain of our officers, including Mr. Kaufman, and other related parties, who together own an interest of approximately 95%.  In 2014, we originated two bridge loans totaling $5.0 million to the joint venture with an interest rate of 5.5% over one-month LIBOR and a maturity date extended to March 2016.  The maturity date on both of these loans was extended as of right to September 2016. Interest income recorded from these loans was $0.1 million and $0.1 million for the three and six months ended June 30, 2016, respectively, and $0.1 million for both the three and six months ended June 30, 2015.

In 2014, we originated a $30.4 million bridge loan for an office property owned by a consortium of investors, including Mr. Kaufman and his affiliates, who together own an interest of approximately 24% in the borrowing entity.  The loan has an interest rate of LIBOR plus 7.90% with a LIBOR floor of 0.50% and a maturity date that was extended to July 2017.  In January 2016, we also originated a $4.6 million mezzanine loan to this entity that has a fixed interest rate of 12% and a maturity date that was extended to July 2017. Interest income recorded from these loans was $0.9 million and $1.7 million for the three and six months ended June 30, 2016, respectively, and $0.7 million and $1.4 million for the three and six months ended June 30, 2015, respectively.

In 2014, our Manager purchased a property subject to two loans originated by us, a first mortgage of $14.6 million and a second mortgage of $5.1 million, both with maturity dates of April 2016 and an interest rate of LIBOR plus 4.80%.  During the first quarter of 2016, the $5.1 million second mortgage was repaid in full by our Manager and the $14.6 million first mortgage was extended as of right to September 2016.  Interest income recorded from these loans totaled $0.2 million and $0.5 million for the three and six months ended June 30, 2016, respectively.

In June 2013, our Board of Directors formed a special committee consisting of independent directors in connection with the ACM Acquisition of our Manager’s Fannie Mae, DUS, FHA and CMBS platforms, as well as the option to internalize the management of our current business. In February 2016, we entered into a Purchase Agreement and on July 14, 2016 we completed the ACM Acquisition for $276.0 million. See Note 1 — “Description of Business” for further details.

In 2011, we restructured a preferred equity investment on the Lexford Portfolio (“Lexford”), which is a portfolio of multifamily assets. In connection with this restructuring, we, along with an executive officer of ours and a consortium of independent outside investors, made an additional preferred and direct equity investment. Both of our preferred equity investments were repaid in full by the third quarter of 2015. Interest income recorded from such preferred equity investments were $0.1 million and $0.2 million for the three and six months ended June 30, 2015, respectively. As a result of the direct equity investment, which was also repaid in the third quarter of 2015, we received distributions totaling $5.5 million during 2015 and additional distributions of $1.2 million and $1.4 million in the three and six months ended June 30, 2016, respectively, which were recorded as income from equity affiliates. In addition, under the terms of the restructuring, Lexford’s first mortgage lender required a change of property manager for the underlying assets.  The new management company is owned primarily by a consortium of affiliated investors including Mr. Kaufman and an executive officer of ours, and has a contract with the new entity for 7.5 years and is entitled to 4.75% of gross revenues of the underlying properties, along with the potential to share in the proceeds of a sale or refinancing of the debt should the management company remain engaged by the new entity at the time of such capital event.  We have provided limited (“bad boy”) guarantees for certain debt controlled by Lexford.  The bad boy guarantees may become a liability for us upon standard “bad” acts such as fraud or a material misrepresentation by Lexford or us.  At June 30, 2016, this debt had an aggregate outstanding balance of $848.5 million and is scheduled to mature between 2017 and 2025.

We are dependent upon our Manager with whom we have a conflict of interest, to provide services to us that are vital to our operations.  Our chairman, chief executive officer and president, Mr. Ivan Kaufman, is also the chief executive officer and president of our Manager, and, our chief financial officer and treasurer, Mr. Paul Elenio, is the chief financial officer of our Manager.  In addition, Mr. Kaufman and his affiliated entities (“the Kaufman Entities”) together beneficially own approximately 92% of the outstanding membership interests of our Manager and certain of our employees and directors also hold an ownership interest in our Manager.  Furthermore, one of our former directors is general counsel to our Manager and another of our directors also serves as the trustee of one of the Kaufman Entities that holds a majority of the outstanding membership interests in our Manager and co-trustee of

36

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

June 30, 2016

another Kaufman Entity that owns an equity interest in our Manager.  Our Manager currently holds approximately 5.3 million of our common shares, and upon the closing of the ACM Acquisition in July 2016, our Manager was issued 21.23 million OP Units, each paired with a special voting preferred stock which in total represents approximately 36.6% of the voting power of our outstanding stock.  Our Board of Directors approved a resolution under our charter allowing Mr. Kaufman and our Manager, (which Mr. Kaufman has a controlling equity interest in), to own more than the 5% ownership interest limit of our common stock as stated in our charter as amended.

Note 15 — Due to Borrowers

Due to borrowers represents borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans.  While retained, these balances earn interest in accordance with the specific loan terms they are associated with.

Note 16 — Subsequent Event

Pursuant to the Purchase Agreement dated February 25, 2016, on July 14, 2016 we completed the ACM Acquisition for an aggregate purchase price of $276.0 million. See Note 1 — “Description of Business” for additional details of the ACM Acquisition.

Except where specifically indicated, the information contained in this report does not include information pertaining to the ACM Agency Business.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with the unaudited consolidated interim financial statements, and related notes and the section entitled “Forward Looking Statements” included herein.

Overview

We invest in multifamily and commercial real estate-related bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity, and, in limited cases, discounted mortgage notes and other real estate-related assets, which we refer to collectively as structured finance investments.  We are organized and conduct our operations to qualify as a REIT and to comply with the provisions of the Internal Revenue Code with respect thereto.  A REIT is generally not subject to federal income tax on its REIT—taxable income that is distributed to its stockholders, provided that at least 90% of its REIT—taxable income is distributed and provided that certain other requirements are met.  We have also invested in mortgage-related securities.  We conduct substantially all of our operations through our operating partnership and its subsidiaries.

Our operating performance is primarily driven by the following factors:

·Net interest income earned on our investments — Net interest income represents the amount by which the interest income earned on our assets exceeds the interest expense incurred on our borrowings.  If the yield earned on our assets increases or the cost of borrowings decreases, this will have a positive impact on earnings.  However, if the yield earned on our assets decreases or the cost of borrowings increases, this will have a negative impact on earnings.  Net interest income is also directly impacted by the size and performance of our asset portfolio.

·Credit quality of our assets — Effective asset and portfolio management is essential to maximize the performance and value of a real estate/mortgage investment.  Maintaining the credit quality of our loans and investments is of critical importance.  Loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity.

·Cost control — We seek to minimize our operating costs, which consist primarily of employee compensation and related costs, management fees and other general and administrative expenses. If there are increases in foreclosures and non-performing loans and investments, certain of these expenses, particularly employee compensation expenses and asset management related expenses, may increase.

Recent Developments

Acquisition of the ACM Agency Business — On July 14, 2016, we completed the ACM Acquisition pursuant to the Purchase Agreement dated February 25, 2016. The aggregate purchase price was $276.0 million. The closing price of our common stock on the day of the ACM Acquisition was $7.29 per share; therefore, the estimated fair value of the total consideration given to our Manager approximates $293.0 million. In connection with the ACM Acquisition, we incurred advisory fees totaling $0.7 million and $3.9 million during the three and six months ended June 30, 2016 and fees totaling $8.3 million to date. We expect to recognize additional fees in the third quarter of 2016 as a result of completing the ACM Acquisition in July 2016. See Note 1 — “Description of Business” for additional details of the ACM Acquisition. Except where specifically indicated, the information contained in this report does not include information pertaining to the ACM Agency Business.

Dividend — In August 2016, our Board of Directors declared a quarterly dividend of $0.16 per share, representing a 7% increase over the prior quarter dividend.

Loan and Investment Activity — Loan originations totaled $170.1 million in the second quarter compared to partial and full loan payoffs which totaled $215.5 million.  See Changes in Financial Condition below for details of our loan activity.

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In April 2016, additional funds held in escrow from a defaulted first mortgage that paid off were released following an arbitration proceeding and we recognized income totaling $1.9 million, net of fees and expenses. We previously recognized income totaling $6.7 million, net of fees and expenses, at the time the loan paid off.

Equity Investment Activity — We recognized income of $3.2 million from our interest in a residential mortgage banking business and received a $1.2 million distribution from this equity investment, which was classified as a return of capital. In addition, we received a distribution from our Lexford equity investment and recognized income of $1.2 million.

Real Estate Owned Assets — We sold the three remaining multifamily properties for $41.0 million and recognized a gain of $11.0 million. A portion of the sales proceeds were used to payoff the outstanding debt on these properties of $27.1 million. In addition, we recorded an impairment loss of $11.2 million on the hotel property we own as a result of an impairment analysis performed.

Shelf Registration Statement — In July 2016, we filed, and the SEC declared effective, a new shelf registration statement for $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants.

Current Market Conditions, Risks and Recent Trends

Our ability to execute our business strategy, particularly the growth of our portfolio of loans and investments, is dependent on many factors, including our ability to access capital and financing on favorable terms.  The previous economic downturn had a significant negative impact on both us and our borrowers.  If similar economic conditions recur in the future, it may limit our options for raising capital and obtaining financing on favorable terms and may also adversely impact the creditworthiness of our borrowers which could result in their inability to repay their loans.

We rely on the capital markets to generate capital for financing the growth of our business.  We did not access the capital markets to finance our growth during the six months ended June 30, 2016; however, throughout 2015 we were very active in the debt capital markets. During 2015, we closed two new collateralized securitization offerings, whereby we issued $486.8 million of investment grade notes.  We also entered into four new financing facilities for total availability of $278.5 million, of which, one facility for $87.0 million was repaid upon the repayment of a defaulted first mortgage note in the second quarter of 2015.  While there can be no assurance that we will continue to have access to the equity and debt markets, we will continue to pursue these and other available market opportunities as a means to increase our liquidity and capital base.  If we were to experience another prolonged downturn in the stock or credit markets, it could cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly.

The commercial real estate markets continue to improve, but uncertainty remains as a result of global market instability, the current political climate and other matters and their potential impact on the U.S. economy and commercial real estate markets.  In addition, the growth in multifamily rental rates seen over the past few years are showing signs of stabilizing. If real estate values decline again and/or rent growth subsides, it may limit our new mortgage loan originations since borrowers often use increases in the value of, and revenues produced from, their existing properties to support the purchase or investment in additional properties.  Declining real estate values may also significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our cost on the loan.  Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans as well as our ability to originate, sell and securitize loans, which would significantly impact our revenues, results of operations, financial condition, business prospects and our ability to make distributions to our stockholders.

The economic environment over the past few years has seen continued improvement in commercial real estate values which has generally increased payoffs and reduced the credit exposure in our loan and investment portfolio.  We have made, and continue to make, modifications and extensions to loans when it is economically feasible to do so.  In some cases, a modification is a more viable alternative to foreclosure proceedings when a borrower cannot comply with loan terms.  In doing so, lower borrower interest rates, combined with non-performing loans, would lower our net interest margins when comparing interest income to our costs of financing.  However, since 2013, the levels of modifications and extensions have declined as borrowers’ access to financing has improved.  If the markets were to deteriorate and another prolonged economic downturn was to occur, we believe there could be additional

39

loan modifications and delinquencies, which may result in reduced net interest margins and additional losses throughout our sector.

Primary Sources of Operating Revenues

We derive our operating revenues primarily through interest received from making real estate-related bridge, mezzanine and junior participation loans and preferred equity investments.  Interest income earned on these loans and investments represented 87% and 85% of our total revenues for the three and six months ended June 30, 2016, respectively, and 83% and 80% of our total revenues for the three and six months ended June 30, 2015, respectively.

Property operating income is derived from our hotel and multifamily real estate owned assets. Property operating income represented 13% and 15% of our total revenues for the three and six months ended June 30, 2016, respectively, and 17% and 20% of our total revenues for the three and six months ended June 30, 2015, respectively.  The operation of a hotel property that we own is seasonal with the majority of revenues earned in the first two quarters of the calendar year.

Changes in Financial Condition

Assets — Comparison of balances at June 30, 2016 to December 31, 2015:

Cash and cash equivalents decreased $28.5 million primarily due to funding new loan originations and investments, along with payment of distributions to our stockholders, partially offset by loan payoffs, transferring loans into our CLO vehicles, property sales and interest from our investments.

Restricted cash increased $110.4 million primarily due to payoffs and paydowns on our CLO loans being in excess of the transfer of loans into our CLO vehicles. Restricted cash is kept on deposit with the trustees for our CLOs and primarily represents proceeds received from loan payoffs and paydowns that have not yet been disbursed to bondholders or redeployed into new assets, as well as unfunded loan commitments and interest payments received from loans.

Our loan and investment portfolio balance, including our available-for-sale securities, was $1.61 billion and $1.56 billion at June 30, 2016 and December 31, 2015, respectively.  The increase in our portfolio balance was primarily due to loan originations exceeding loan payoffs and other reductions by $88.3 million, see below for details.

Our portfolio had a weighted average current interest pay rate of 5.40% and 5.63% at June 30, 2016 and December 31, 2015, respectively.  Including certain fees and costs associated with the loan and investment portfolio, the weighted average current interest rate was 6.11% and 6.32% at June 30, 2016 and December 31, 2015, respectively.  Advances on our financing facilities totaled $1.30 billion and $1.18 billion at June 30, 2016 and December 31, 2015, respectively, with a weighted average funding cost of 3.62% and 3.70%, respectively, which excludes changes in the market value of certain interest rate swaps and financing costs.  Including the financing costs, the weighted average funding rate was 4.01% and 4.12% at June 30, 2016 and December 31, 2015, respectively.

Loan and investment activity during the three and six months ended June 30, 2016 was comprised of the following:

Three Months Ended June 30, 2016

·Originated 14 loans totaling $170.1 million with a weighted average interest rate of 7.27%.

·Received full satisfaction of thirteen loans totaling $206.0 million that had a weighted average interest rate of 7.73% and received partial paydowns on four loans totaling $9.5 million with a weighted average interest rate of 5.84%.

·Extended 10 loans totaling $68.4 million.

Six Months Ended June 30, 2016

·Originated 32 loans totaling $388.4 million with a weighted average interest rate of 6.94%.

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·Received full satisfaction of twenty loans totaling $267.3 million that had a weighted average interest rate of 7.75% and received partial paydowns on six loans totaling $32.8 million with a weighted average interest rate of 5.76%.

·Extended 23 loans totaling $257.2 million.

Investments in equity affiliates increased $7.8 million, primarily due to income of $4.7 million recognized from, and an additional contribution of $4.2 million made to, our investment in a residential mortgage banking business, which was partially offset by a $1.2 million cash distribution received from this investment. The distribution received was classified as a return of capital.

Real estate owned decreased $40.8 million, primarily from reclassifying the three remaining multifamily properties with an aggregate carrying value of $28.6 million as held-for-sale during the first quarter of 2016 and an $11.2 million impairment loss recorded on a hotel property as a result of an impairment analysis performed in the second quarter of 2016. The three remaining multifamily properties were sold during the three months ended June 30, 2016. The $8.7 million decrease in real estate held-for-sale is due to the sale of a hotel property for $9.7 million during the first quarter of 2016.

Liabilities — Comparison of balances at June 30, 2016 to December 31, 2015:

Credit facilities and repurchase agreements increased $122.9 million, primarily due to utilizing our financing facilities to fund new loan originations in the six months ended June 30, 2016.

Mortgage note payable — real estate owned decreased $27.2 million, due to the pay-off of these notes with the proceeds from the sale of the remaining multifamily properties in the second quarter of 2016.

Equity

Equity activity in the six months ended June 30, 2016 consisted of the issuance of 352,630 shares of restricted stock to employees of ours and our Manager, including our chief executive officer, and 67,260 shares to the independent members of the Board of Directors.  We also issued up to 421,348 performance-based restricted common stock units to our chief executive officer that vest at the end of a four-year performance period subject to meeting certain total stockholder return objectives.  See Note 12 — “Equity” of this report.

As of August 4, 2016, we have $500.0 million available under our shelf registration statement that was declared effective by the SEC in July 2016.

The following table presents dividends declared (on a per share basis) for the six months ended June 30, 2016:

Common Stock			Preferred Stock
				Dividend (1)
Declaration Date	Dividend		Declaration Date	Series A		Series B		Series C
February 24, 2016	$	0.15	February 1, 2016	$	0.515625	$	0.484375	$	0.53125
May 4, 2016	$	0.15	May 2, 2016	$	0.515625	$	0.484375	$	0.53125

(1)The dividend declared on February 1, 2016 for the Series A, B and C preferred stock was for the period December 1, 2015 through February 29, 2016. The dividend declared on May 2, 2016 for the Series A, B and C preferred stock was for the period March 1, 2016 through May 31, 2016.

Common Stock — On August 3, 2016, the Board of Directors declared a cash dividend of $0.16 per share of common stock.  The dividend is payable on August 31, 2016 to common stockholders of record as of the close of business on August 17, 2016.

Preferred Stock — On August 1, 2016, the Board of Directors declared a cash dividend of $0.515625 per share of 8.25% Series A preferred stock; a cash dividend of $0.484375 per share of 7.75% Series B preferred stock; and a cash dividend of $0.53125 per share of 8.50% Series C preferred stock.  These amounts reflect dividends from June

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1, 2016 through August 31, 2016 and are payable on August 31, 2016 to preferred stockholders of record on August 15, 2016.

Comparison of Results of Operations for the Three Months Ended June 30, 2016 and 2015

The following table sets forth our results of operations:

	Three Months Ended June 30,					Increase / (Decrease)
	2016			2015		Amount			Percent
	(Unaudited)
Interest income	$	27,969,498		$	26,340,585	$	1,628,913		6	%
Other interest income, net	2,539,274			7,884,344		(5,345,070		)	(68	)%
Interest expense	13,243,488			11,592,762		1,650,726			14	%
Net interest income	17,265,284			22,632,167		(5,366,883		)	(24	)%
Other revenue:
Property operating income	4,426,555			7,201,834		(2,775,279		)	(39	)%
Other income, net	214,668			76,816		137,852			179	%
Total other revenue	4,641,223			7,278,650		(2,637,427		)	(36	)%
Other expenses:
Employee compensation and benefits	4,311,412			4,966,138		(654,726		)	(13	)%
Selling and administrative	1,719,337			2,623,750		(904,413		)	(34	)%
Acquisition costs	745,734			284,054		461,680			163	%
Property operating expenses	3,856,264			5,967,644		(2,111,380		)	(35	)%
Depreciation and amortization	443,112			1,447,642		(1,004,530		)	(69	)%
Impairment loss on real estate owned	11,200,000			—		11,200,000			nm
Provision for loan losses (net of recoveries)	44,005			1,093,544		(1,049,539		)	(96	)%
Management fee - related party	2,850,000			2,675,000		175,000			7	%
Total other expenses	25,169,864			19,057,772		6,112,092			32	%
(Loss) income before gain on sale of real estate and income from equity affiliates	(3,263,357		)	10,853,045		(14,116,402		)	(130	)%
Gain on sale of real estate	11,023,134			—		11,023,134			nm
Income from equity affiliates	4,367,101			1,534,025		2,833,076			185	%
Net income	12,126,878			12,387,070		(260,192		)	(2	)%
Preferred stock dividends	1,888,430			1,888,430		—			—
Net income attributable to common stockholders	$	10,238,448		$	10,498,640	$	(260,192	)	(2	)%

nm — not meaningful

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The following table presents the average balance of interest-earning assets and related interest-bearing liabilities, associated interest income and expense and the corresponding weighted average yields (dollars in thousands):

	Three Months Ended June 30,
	2016						2015
	Average Carrying Value (1)		Interest Income / Expense		W/A Yield / Financing Cost (2)		Average Carrying Value (1)		Interest Income / Expense		W/A Yield / Financing Cost (2)
Interest-earning assets:
Bridge loans	$	1,425,799	$	23,897	6.72	%	$	1,356,819	$	21,682	6.41	%
Mezzanine / junior participation loans	108,766		1,860		6.86	%	162,824		2,783		6.86	%
Preferred equity investments	108,801		1,955		7.21	%	102,569		1,689		6.60	%
Securities	—		—		—		1,015		3		1.19	%
Core interest-earning assets	1,643,366		27,712		6.76	%	1,623,227		26,157		6.46	%
Cash equivalents	230,262		257		0.45	%	164,939		184		0.45	%
Total interest-earning assets	$	1,873,628	27,969		5.99	%	$	1,788,166	26,341		5.91	%
Interest-bearing liabilities:
Warehouse lines	$	211,686	1,798		3.41	%	$	301,549	2,244		2.98	%
CLO	767,888		6,694		3.50	%	500,250		3,974		3.19	%
CDO	—		—		—		73,477		141		0.77	%
Trust preferred	175,858		1,559		3.56	%	175,858		1,415		3.23	%
Unsecured debt	97,860		1,995		8.18	%	112,860		2,270		8.07	%
Other non-recourse	—		—		—		2,300		38		6.63	%
Interest rate swaps	—		1,197		—		—		1,511		—
Total interest-bearing liabilities	$	1,253,292	13,243		4.24	%	$	1,166,294	11,593		3.99	%
Net interest income			$	14,726					$	14,748

(1)Based on UPB for loans, amortized cost for securities and principle amount of debt.

(2)Weighted average yield calculated based on annualized interest income or expense divided by average carrying value.

Net Interest Income

Interest income increased $1.6 million, or 6%, for the three months ended June 30, 2016 as compared to the same period in 2015.  The increase was primarily due to a 5% increase in the average yield on core interest-earning assets from 6.46% for the three months ended June 30, 2015 to 6.76% for the same period in 2016, primarily due to $2.0 million of yield maintenance received on a loan payoff in the second quarter of 2016.

Other interest income, net was $2.5 million and $7.9 million for the three months ended June 30, 2016 and 2015, respectively. During the first quarter of 2015, we acquired a $116.0 million defaulted first mortgage, at par, that paid off in the subsequent quarter. In April 2016, additional funds held in escrow from the note payoff were released following an arbitration proceeding and we recognized net other interest income totaling $2.5 million. We initially recognized net other interest income of $7.9 million at the time the loan paid off during the second quarter of 2015.

Interest expense increased $1.7 million, or 14%, for the three months ended June 30, 2016 as compared to the same period in 2015.  This increase was primarily due to a 6% increase in the average cost of our interest-bearing liabilities from 3.99% for the three months ended June 30, 2015 to 4.24% for the same period in 2016, primarily due to a period-over-period increase in the average LIBOR rate. In addition, the average balance of our interest-bearing liabilities increased 7% from $1.17 billion for the three months ended June 30, 2015 to $1.25 billion for the same period in 2016.  The increase in the average balance was primarily due to increased leverage, as well as growth in our loan portfolio.

Other Revenue

Property operating results (income less expenses) are comprised of our multifamily and hotel properties as well as an office building.  Property operating results decreased $0.7 million, or 54%, for the three months ended June 30, 2016 as compared to the same period in 2015, primarily due to the sale of several properties during 2015 and 2016, partially offset by the addition of an office building in August 2015.

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Other Expenses

Employee compensation and benefits expense decreased $0.7 million, or 13%, for the three months ended June 30, 2016 as compared to the same period in 2015, primarily due to a decrease of $0.6 million of expenses related to income recognized on the $116.0 million defaulted first mortgage that was repaid in April 2015.

Selling and administrative expenses decreased $0.9 million, or 34%, for the three months ended June 30, 2016 as compared to the same period in 2015, primarily due to a $0.7 million decrease in general legal fees.

Acquisition costs of $0.7 million and $0.3 million for the three months ended June 30, 2016 and 2015, respectively, represent costs incurred related to the ACM Acquisition, which was completed in July 2016 (see Note 1 — “Description of Business” for further details).

Depreciation and amortization decreased $1.0 million, or 69%, for the three months ended June 30, 2016 as compared to the same period in 2015, primarily due to the sale of several multifamily and hotel properties during 2015 and 2016.

Impairment loss on real estate owned was $11.2 million for the three months ended June 30, 2016. During the second quarter of 2016, we determined that the hotel property owned exhibited indicators of impairment and, as a result, we recorded an impairment loss of $11.2 million.

Provision for loan losses (net of recoveries) totaled less than $0.1 million and $1.1 million for the three months ended June 30, 2016 and 2015, respectively. During the second quarter of 2015, we recognized a $1.1 million provision for loan losses related to one loan.

Gain on Sale of Real Estate

During the three months ended June 30, 2016, we sold the three remaining multifamily properties for $41.0 million and recognized a gain of $11.0 million.

Income from Equity Affiliates

Income from equity affiliates increased $2.8 million, or 185%, for the three months ended June 30, 2016 as compared to the same period in 2015.  In the second quarter of 2016, we recognized income of $3.2 million from our investment in a residential mortgage banking business, compared to income of $1.5 million in the second quarter of 2015. In addition, we received a distribution from our Lexford equity investment and recognized income of $1.2 million during the second quarter of 2016.

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Comparison of Results of Operations for the Six Months Ended June 30, 2016 and 2015

The following table sets forth our results of operations:

	Six Months Ended June 30,						Increase / (Decrease)
	2016			2015			Amount			Percent
	(Unaudited)
Interest income	$	53,787,963		$	53,549,980		$	237,983		0	%
Other interest income, net	2,539,274			7,884,344			(5,345,070		)	(68	)%
Interest expense	25,992,101			25,520,129			471,972			2	%
Net interest income	30,335,136			35,914,195			(5,579,059		)	(16	)%
Other revenue:
Property operating income	9,758,087			15,652,177			(5,894,090		)	(38	)%
Other income, net	304,431			112,816			191,615			170	%
Total other revenue	10,062,518			15,764,993			(5,702,475		)	(36	)%
Other expenses:
Employee compensation and benefits	8,639,754			9,256,344			(616,590		)	(7	)%
Selling and administrative	4,374,813			5,521,560			(1,146,747		)	(21	)%
Acquisition costs	3,855,644			284,054			3,571,590			nm
Property operating expenses	8,172,819			12,352,732			(4,179,913		)	(34	)%
Depreciation and amortization	1,320,645			2,886,319			(1,565,674		)	(54	)%
Impairment loss on real estate owned	11,200,000			—			11,200,000			nm
Provision for loan losses (net of recoveries)	29,005			2,076,224			(2,047,219		)	(99	)%
Management fee - related party	5,550,000			5,350,000			200,000			4	%
Total other expenses	43,142,680			37,727,233			5,415,447			14	%
(Loss) income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate and income from equity affiliates	(2,745,026		)	13,951,955			(16,696,981		)	(120	)%
Gain on acceleration of deferred income	—			11,009,162			(11,009,162		)	(100	)%
Loss on termination of swaps	—			(4,289,450		)	4,289,450			(100	)%
Gain on sale of real estate	11,630,687			3,984,364			7,646,323			192	%
Income from equity affiliates	6,264,543			4,629,938			1,634,605			35	%
Net income	15,150,204			29,285,969			(14,135,765		)	(48	)%
Preferred stock dividends	3,776,860			3,776,860			—			—
Net income attributable to common stockholders	$	11,373,344		$	25,509,109		$	(14,135,765	)	(55	)%

nm — not meaningful

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The following table presents the average balance of interest-earning assets and related interest-bearing liabilities, associated interest income and expense and the corresponding weighted average yields (dollars in thousands):

	Six Months Ended June 30,
	2016						2015
	Average Carrying Value (1)		Interest Income / Expense		W/A Yield / Financing Cost (2)		Average Carrying Value (1)		Interest Income / Expense		W/A Yield / Financing Cost (2)
Interest-earning assets:
Bridge loans	$	1,420,782	$	45,394	6.41	%	$	1,347,241	$	43,754	6.55	%
Mezzanine / junior participation loans	107,441		3,649		6.81	%	167,453		5,744		6.92	%
Preferred equity investments	114,806		4,250		7.42	%	115,359		3,784		6.61	%
Securities	—		—		—		1,555		8		1.04	%
Core interest-earning assets	1,643,029		53,293		6.51	%	1,631,608		53,290		6.59	%
Cash equivalents	211,282		495		0.47	%	175,340		260		0.30	%
Total interest-earning assets	$	1,854,311	53,788		5.82	%	$	1,806,948	53,550		5.98	%
Interest-bearing liabilities:
Warehouse lines	$	195,409	3,362		3.45	%	$	287,631	4,397		3.08	%
CLO	767,887		13,008		3.40	%	501,924		9,438		3.79	%
CDO	—		—		—		102,644		926		1.82	%
Trust preferred	175,858		3,072		3.50	%	175,858		2,835		3.25	%
Unsecured debt	97,860		3,990		8.18	%	112,860		4,512		8.06	%
Other non-recourse	—		—		—		2,151		64		5.91	%
Interest rate swaps	—		2,560		—		—		3,348		—
Total interest-bearing liabilities	$	1,237,014	25,992		4.21	%	$	1,183,068	25,520		4.35	%
Net interest income			$	27,796					$	28,030

(1)Based on UPB for loans, amortized cost for securities and principle amount of debt.

(2)Weighted average yield calculated based on annualized interest income or expense divided by average carrying value.

Net Interest Income

Interest income was relatively flat for the six months ended June 30, 2016 as compared to the same period in 2015.  The impact of our average core interest-earning assets increasing approximately 1% from $1.63 billion for the six months ended June 30, 2015 to $1.64 billion for the six months ended June 30, 2016 was substantially offset by a 1% decrease in the average yield on core interest-earning assets from 6.59% for the six months ended June 30, 2015 to 6.51% for the same period in 2016. The decrease in the average yield on core interest-earning assets was primarily due to a $2.9 million reduction in interest income and fee income from accelerated runoff in 2015, partially offset by $2.0 million of yield maintenance received on a loan payoff in the second quarter of 2016.

Other interest income, net was $2.5 million and $7.9 million for the six months ended June 30, 2016 and 2015, respectively. During the first quarter of 2015, we acquired a $116.0 million defaulted first mortgage, at par, that paid off in the subsequent quarter. In April 2016, additional funds held in escrow from the note payoff were released following an arbitration proceeding and we recognized net other interest income totaling $2.5 million. We initially recognized net other interest income of $7.9 million at the time the loan paid off during the second quarter of 2015.

Interest expense increased $0.5 million, or 2%, for the six months ended June 30, 2016 as compared to the same period in 2015.  The increase was primarily due to a 5% increase in the average balance of our interest-bearing liabilities from $1.18 billion for the six months ended June 30, 2015 to $1.24 billion for the same period in 2016. This increase was net of a 3% decrease in the average cost of our interest-bearing liabilities from 4.35% for the six months ended June 30, 2015 to 4.21% for the same period in 2016, primarily due to the termination of certain swaps in 2015, partially offset by a period-over-period increase in average LIBOR rates.

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Other Revenue

Property operating results (income less expenses) are comprised of our multifamily and hotel properties as well as an office building.  Property operating results decreased $1.7 million, or 52%, for the six months ended June 30, 2016 as compared to the same period in 2015, primarily due to the sale of several properties during 2015 and 2016, partially offset by the addition of an office building in August 2015.

Other Expenses

Employee compensation and benefits expense decreased $0.6 million, or 7%, for the six months ended June 30, 2016 as compared to the same period in 2015, primarily due to a decrease of $0.6 million of expenses related to income recognized on the $116.0 million defaulted first mortgage that was repaid in April 2015.

Selling and administrative expenses decreased $1.1 million, or 21%, for the six months ended June 30, 2016 as compared to the same period in 2015, primarily due to a $1.0 million decrease in general legal fees.

Acquisition costs of $3.9 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively, represent costs incurred related to the ACM Acquisition, which was completed in July 2016 (see Note 1 — “Description of Business” for further details).

Depreciation and amortization decreased $1.6 million, or 54%, for the six months ended June 30, 2016 as compared to the same period in 2015, primarily due to the sale of several multifamily and hotel properties during 2015 and 2016.

Impairment loss on real estate owned was $11.2 million for the six months ended June 30, 2016. During the second quarter of 2016, we determined that the hotel property owned exhibited indicators of impairment and, as a result, we recorded an impairment loss of $11.2 million.

Provision for loan losses (net of recoveries) totaled less than $0.1 million and $2.1 million for the six months ended June 30, 2016 and 2015, respectively. During the six months ended June 30, 2015, we recognized a $2.1 million provision for loan losses related to three loans.

Gain on Acceleration of Deferred Income / Loss on Termination of Swaps

In connection with the unwind of CDO I and II in the first quarter of 2015, we recorded an $11.0 million gain that was previously deferred due to the reissuance of CDO I and CDO II bonds in 2010 as a result of a deferral of the gain from the extinguishment of trust preferred debt.  See Note 7 — “Debt Obligations” for more details about this gain.  We also terminated the basis and interest rate swaps associated with these CDOs and recognized a loss of $4.3 million.  See Note 8 — “Derivative Financial Instruments” for more details about the swap termination.

Gain on Sale of Real Estate

During the six months ended June 30, 2016, we sold the three remaining multifamily properties for $41.0 million and recognized a gain of $11.0 million, and sold a hotel property for $9.7 million and recognized a gain of $0.6 million.

During the six months ended June 30, 2015, we sold a multifamily property for $12.4 million and recognized a gain of $3.0 million, and sold a hotel property for $6.4 million and recognized a gain of $1.0 million.

Income from Equity Affiliates

Income from equity affiliates increased $1.6 million, or 35%, for the six months ended June 30, 2016 as compared to the same period in 2015.  During the six months ended June 30, 2016, we received distributions from our Lexford equity investment and recognized income of $1.4 million.  In addition, we recognized income of $4.7 million from our investment in a residential mortgage banking business, compared to income of $4.5 million during the same period of 2015.

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Liquidity and Capital Resources

Sources of Liquidity

Liquidity is a measurement of the ability to meet potential cash requirements.  Our short-term and long-term liquidity needs include ongoing commitments to repay borrowings, fund future loans and investments, fund operating costs and distributions to our stockholders as well as other general business needs.  Our primary sources of funds for liquidity consist of proceeds from equity and debt offerings, debt facilities and cash flows from our operations.  Our equity sources, depending on market conditions, consist of proceeds from capital market transactions including the issuance of common, convertible and/or preferred equity securities.  Our debt facilities include the issuance of floating rate notes resulting from our CLOs, the issuance of senior unsecured notes and junior subordinated notes and borrowings under warehousing facilities.  Net cash flows from operations include interest income from our loan and investment portfolio reduced by interest expense on our debt facilities, cash generated from our real estate operations, cash from other investments reduced by expenses and repayments of outstanding loans and investments.

We believe our existing sources of funds will be adequate for meeting our short-term and long-term liquidity needs.  A majority of our loans and investments are financed under existing debt obligations and their credit status is continuously monitored; therefore, these loans and investments are expected to generate a generally stable return.  Our ability to meet our long-term liquidity and capital resource requirements is subject to obtaining additional debt and equity financing.  Any decision by our lenders and investors to enter into such transactions with us will depend upon a number of factors, such as our financial performance, compliance with the terms of our existing credit arrangements, industry or market trends, the general availability of and rates applicable to financing transactions, such lenders’ and investors’ resources and policies concerning the terms under which they make such capital commitments and the relative attractiveness of alternative investment or lending opportunities.

While we have been successful in obtaining proceeds from debt and equity offerings, CLOs and certain financing facilities, current conditions in the capital and credit markets have and may continue to make certain forms of financing less attractive and, in certain cases, less available.  Therefore we will continue to rely, in part, on cash flows provided by operating and investing activities for working capital.

To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT—taxable income.  These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for operations.  However, we believe that our capital resources and access to financing will provide us with financial flexibility and market responsiveness at levels sufficient to meet current and anticipated capital requirements.

Cash Flows

Cash flows provided by operating activities totaled $17.7 million during the six months ended June 30, 2016. Our operating activities consist primarily of net income, adjusted for noncash gains, losses and expenses, of $13.6 million and cash distributions received from our investments in equity affiliates of $1.7 million.

Cash flows used in investing activities totaled $13.4 million during the six months ended June 30, 2016.  Loan and investment activity (originations and payoffs/paydowns) comprise the bulk of our investing activities.  Loan originations totaling $475.9 million, including net amounts for additional funding on existing loans, holdbacks, etc., outpaced loan payoffs and paydowns of $411.0 million, resulting in net cash outflow of $64.9 million related to our loan and investment portfolio.  Other significant investing activity included the sale of a hotel property and the three remaining multifamily properties that generated gross proceeds of $49.0 million, cash distributions received from our investments in equity affiliates of $1.0 million and investing $4.2 million into an equity investment in a residential mortgage banking business.

Cash flows used in financing activities totaled $32.8 million during the six months ended June 30, 2016 and consisted primarily of $81.6 million in paydowns of our debt facilities, a $27.2 million payoff of the mortgage note payable as a result of the sale of our three remaining multifamily properties, $19.1 million in distributions to our common and preferred stockholders and a $111.1 million increase in restricted cash balances, primarily from the

48

payoff of loans in our CLO vehicles, which was primarily offset by $204.0 million of proceeds from the utilization of our debt facilities to fund new loan originations.

Debt Facilities

We maintain various forms of short-term and long-term financing arrangements.  Borrowings underlying these arrangements are primarily secured by a significant amount of our loans and investments.  The following is a summary of our debt facilities:

	June 30, 2016
Debt Facilities	Commitment		Principal Balance (1)		Available		Maturity Dates
Credit facilities and repurchase agreements	$	450,000,000	$	259,751,669	$	190,248,331	2016 - 2017
Collateralized loan obligations (2)	768,000,000		768,000,000		—		2017 - 2018
Senior unsecured notes	97,860,025		97,860,025		—		2021
Junior subordinated notes (3)	175,858,000		175,858,000		—		2034 - 2037
	$	1,491,718,025	$	1,301,469,694	$	190,248,331

(1) Principal balance excludes the impact of deferred financing costs.

(2) Maturity dates represent the weighted average maturity based on the underlying collateral as of June 30, 2016.

(3) Represents a total face amount of $175.9 million including a total deferred amount of $15.2 million.

These debt facilities, including their restrictive covenants, are described in further detail in Note 7 — “Debt Obligations.”

Contractual Commitments

For the six months ended June 30, 2016, we had all of the material contractual obligations referred to in our 2015 Annual Report, excluding the debt that was repaid as described in Note 7 — “Debt Obligations.” In addition, we amended an existing $25.0 million facility, increasing the committed amount to $50.0 million and extending the maturity to 2017 with two one-year extension options, subject to certain conditions, and extended a $75.0 million facility to May 2017.

All of the material contractual obligations identified above are described in more detail in Note 7 — “Debt Obligations.” Refer to Note 11 — “Commitments and Contingencies” for a description of our debt maturities by year and our unfunded commitments as of June 30, 2016.

Agreements and Transactions with Related Parties

We have a management agreement with our Manager, pursuant to which our Manager provides certain services and we pay our Manager a base management fee and under certain circumstances, an annual incentive fee.  We incurred $2.9 million and $5.6 million of base management fee for services rendered in the three and six months ended June 30, 2016, respectively, and $2.7 million and $5.4 million in the three and six months ended June 30, 2015, respectively.

The base management fee is an arrangement whereby we reimburse our Manager for its actual costs incurred in managing our business based on the parties’ agreement in advance on an annual budget with subsequent quarterly true-ups to actual costs.  All origination fees on investments are retained by us.

In addition, we have conducted many transactions with our Manager and other parties that are deemed related party transactions. The details of the management agreement and related party transactions are described in Note 14 — “Agreements and Transactions with Related Parties” of this report.

In June 2013, our Board of Directors formed a special committee consisting of independent directors in connection with the ACM Acquisition of our Manager’s Fannie Mae, DUS, FHA and CMBS platforms, as well as the option to internalize the management of our current business. In February 2016, we entered into a Purchase Agreement and on

49

July 14, 2016 we completed the ACM Acquisition for $276.0 million. See Note 1 — “Description of Business” for further details.

Critical Accounting Policies

Please refer to the section of our 2015 Annual Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Significant Accounting Estimates and Critical Accounting Policies” for a discussion of our critical accounting policies.  During the six months ended June 30, 2016, there were no material changes to these policies.

Non-GAAP Financial Measures

Funds from Operations and Adjusted Funds from Operations

We present funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) because we believe they are important supplemental measures of our operating performance in that they are frequently used by analysts, investors and other parties in the evaluation of REITs.  The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) attributable to common stockholders (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated real properties, plus impairments of depreciated properties and real estate related depreciation and amortization, and after adjustments for unconsolidated ventures.

We define AFFO as funds from operations adjusted for accounting items such as non-cash stock-based compensation expense, as well as the add-back of one-time charges such as acquisition costs. We also add back impairment losses on real estate and gains/losses on sales of real estate. We are generally not in the business of operating real estate owned property and have obtained real estate by foreclosure or through partial or full settlement of mortgage debt related to our loans to maximize the value of the collateral and minimize our exposure.  Therefore, we deem such impairment and gains/losses on real estate as an extension of the asset management of our loans, thus a recovery of principal or additional loss on our initial investment.

FFO and AFFO are not intended to be an indication of our cash flow from operating activities (determined in accordance with GAAP) or a measure of our liquidity, nor is it entirely indicative of funding our cash needs, including our ability to make cash distributions.  Our calculation of FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited.

FFO and AFFO are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Net income attributable to common stockholders	$	10,238,448		$	10,498,640	$	11,373,344		$	25,509,109
Subtract:
Gain on sale of real estate	(11,023,134		)	—		(11,630,687		)	(3,984,364		)
Add:
Impairment loss on real estate owned	11,200,000			—		11,200,000			—
Depreciation - real estate owned and held-for-sale	443,112			1,447,642		1,320,645			2,886,319
Depreciation - investments in equity affiliates	93,588			93,588		187,176			187,176
FFO attributable to common stockholders	$	10,952,014		$	12,039,870	$	12,450,478		$	24,598,240
Subtract:
Impairment loss on real estate owned	(11,200,000		)	—		(11,200,000		)	—
Add:
Gain on sale of real estate	11,023,134			—		11,630,687			3,984,364
Stock-based compensation	481,664			735,202		2,163,094			2,427,268
Acquisition costs	745,734			284,054		3,855,644			284,054
AFFO attributable to common stockholders	$	12,002,546		$	13,059,126	$	18,899,903		$	31,293,926
Diluted FFO per common share	$	0.21		$	0.24	$	0.24		$	0.48
Diluted AFFO per common share	$	0.23		$	0.26	$	0.37		$	0.61
Diluted weighted average shares outstanding	51,741,951			50,955,648		51,418,539			50,894,531

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Item 3.   Quantitative and Qualitative Disclosures About Market Risk

We disclosed a quantitative and qualitative analysis regarding market risk in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2015 Annual Report.  That information is supplemented by the information included above in Item 2 of this report. Other than the developments described thereunder, there have been no material changes in our quantitative and qualitative exposure to market risk since December 31, 2015.

The following table projects the potential impact on interest income and interest expense for a 12-month period, and the potential change in fair value of our derivative financial instruments as of June 30, 2016, assuming an instantaneous increase or decrease of both 25 and 50 basis points in LIBOR and forward interest rate curves, adjusted for the effects of our interest rate hedging activities.

	Assets (Liabilities) Subject to Interest Rate Sensitivity (1)			25 Basis Point Increase		25 Basis Point Decrease (2)			50 Basis Point Increase		50 Basis Point Decrease (2)
Interest income from loans and investments	$	1,605,047,851		$	3,123,198	$	(2,139,527	)	$	6,355,347	$	(2,555,251	)
Interest expense from debt obligations	$	(1,301,469,694	)	2,743,670		(2,743,670		)	5,487,339		(5,487,339		)
Total net interest income				$	379,528	$	604,143		$	868,008	$	2,932,088
Fair value of derivative financial instruments, net	$	(2,407,133	)	$	125,885	$	(125,997	)	$	252,482	$	(251,713	)

(1)Represents the UPB of our loan portfolio, principle balance of our debt and the net fair value of our derivative financial instruments, which includes interest rate swaps and LIBOR caps.

(2)Assumes the LIBOR rate will not decrease below zero. The quoted one-month LIBOR rate was 0.47% as of June 30, 2016.

A significant portion of our loans and borrowings are variable-rate instruments based on LIBOR.  However, a portion of our loan portfolio is fixed-rate or is subject to interest rate floors that limit the impact of a change in interest rates.  In addition, certain of our borrowings are also fixed rate or are subject to interest rate swaps that hedge our exposure to interest rate risk on fixed rate loans financed with variable rate debt.  As a result, the impact of a change in interest rates may be different on our interest income than it is on our interest expense.

Item 4.   Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures at June 30, 2016.  Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2016.

No change in internal control over financial reporting occurred during the quarter ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, internal controls over financial reporting.

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings

We are not involved in any material litigation nor, to our knowledge, is any material litigation threatened against us other than the litigation described in Note 11 — “Commitments and Contingencies.”  We have not made a loss accrual for this litigation because we believe that it is not probable that a loss has been incurred and an amount cannot be reasonably estimated.

51

Item 1A.  Risk Factors

There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, except that the information under the heading “Risk Factors” in the Definitive Proxy Statement on Schedule 14A we filed with the SEC on April 22, 2016 is hereby incorporated by reference.

Item 6.   Exhibits

Exhibit #	Description
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14.
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14.
32	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1	Financial statements from the Quarterly Report on Form 10-Q of Arbor Realty Trust, Inc. for the quarter ended June 30, 2016, filed on August 5, 2016, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

52

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:

ARBOR REALTY TRUST, INC.
By:	/s/ Ivan Kaufman
	Ivan Kaufman
	Chief Executive Officer
By:	/s/ Paul Elenio
	Paul Elenio
	Chief Financial Officer

Date: August 5, 2016

53

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

I, Ivan Kaufman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Arbor Realty Trust, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)             Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2016	By:	/s/ Ivan Kaufman
		Ivan Kaufman
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

I, Paul Elenio, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Arbor Realty Trust, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)            Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)             Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)            All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2016	By:	/s/ Paul Elenio
		Paul Elenio
		Chief Financial Officer

EX-32

EXHIBIT 32

Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Arbor Realty Trust, Inc. (the “Company”) for the quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Ivan Kaufman
	Ivan Kaufman
	Chief Executive Officer
By:	/s/ Paul Elenio
	Paul Elenio
	Chief Financial Officer

Date: August 5, 2016

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 04, 2016
Document and Entity Information
Entity Registrant Name	ARBOR REALTY TRUST INC
Entity Central Index Key	0001253986
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		51,381,405
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets:
Cash and cash equivalents	$ 160,177,704	$ 188,708,687
Restricted cash	158,667,541	48,301,244
Loans and investments, net	1,511,596,691	1,450,334,341
Available-for-sale securities, at fair value	440,920	2,022,030
Investments in equity affiliates	38,649,254	30,870,235
Real estate owned, net	20,012,783	60,845,509
Real estate held-for-sale, net		8,669,203
Due from related party	781,782	8,082,265
Other assets	26,419,806	29,558,430
Total assets	1,916,746,481	1,827,391,944
Liabilities and Equity:
Credit facilities and repurchase agreements	259,171,941	136,252,135
Collateralized loan obligations	760,632,528	758,899,661
Senior unsecured notes	94,140,028	93,764,994
Junior subordinated notes to subsidiary trust issuing preferred securities	157,468,377	157,117,130
Mortgage note payable - real estate owned		27,155,000
Due to related party	2,166,790	3,428,333
Due to borrowers	32,561,558	34,629,595
Other liabilities	44,932,044	51,054,321
Total liabilities	1,351,073,266	1,262,301,169
Commitments and contingencies (Note 11)
Equity:
Preferred stock, cumulative, redeemable, $0.01 par value: 100,000,000 shares authorized; 8.25% Series A, $38,787,500 aggregate liquidation preference; 1,551,500 shares issued and outstanding; 7.75% Series B, $31,500,000 aggregate liquidation preference; 1,260,000 shares issued and outstanding; 8.50% Series C, $22,500,000 aggregate liquidation preference; 900,000 shares issued and outstanding	89,295,905	89,295,905
Common stock, $0.01 par value: 500,000,000 shares authorized; 51,381,405 and 50,962,516 shares issued and outstanding, respectively	513,814	509,625
Additional paid-in capital	618,403,101	616,244,196
Accumulated deficit	(140,103,326)	(136,118,001)
Accumulated other comprehensive loss	(2,436,279)	(4,840,950)
Total equity	565,673,215	565,090,775
Total liabilities and equity	$ 1,916,746,481	$ 1,827,391,944

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	51,381,405	50,962,516
Common stock, shares outstanding (in shares)	51,381,405	50,962,516
8.25% Series A preferred stock
Preferred stock, dividend rate (as a percent)	8.25%	8.25%
Preferred stock, aggregate liquidation preference	$ 38,787,500	$ 38,787,500
Preferred stock, shares issued (in shares)	1,551,500	1,551,500
Preferred stock, shares outstanding (in shares)	1,551,500	1,551,500
7.75% Series B preferred stock
Preferred stock, dividend rate (as a percent)	7.75%	7.75%
Preferred stock, aggregate liquidation preference	$ 31,500,000	$ 31,500,000
Preferred stock, shares issued (in shares)	1,260,000	1,260,000
Preferred stock, shares outstanding (in shares)	1,260,000	1,260,000
8.50% Series C preferred stock
Preferred stock, dividend rate (as a percent)	8.50%	8.50%
Preferred stock, aggregate liquidation preference	$ 22,500,000	$ 22,500,000
Preferred stock, shares issued (in shares)	900,000	900,000
Preferred stock, shares outstanding (in shares)	900,000	900,000

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Interest income	$ 27,969,498	$ 26,340,585	$ 53,787,963	$ 53,549,980
Other interest income, net	2,539,274	7,884,344	2,539,274	7,884,344
Interest expense	13,243,488	11,592,762	25,992,101	25,520,129
Net interest income	17,265,284	22,632,167	30,335,136	35,914,195
Other revenue:
Property operating income	4,426,555	7,201,834	9,758,087	15,652,177
Other income, net	214,668	76,816	304,431	112,816
Total other revenue	4,641,223	7,278,650	10,062,518	15,764,993
Other expenses:
Employee compensation and benefits	4,311,412	4,966,138	8,639,754	9,256,344
Selling and administrative	1,719,337	2,623,750	4,374,813	5,521,560
Acquisition costs	745,734	284,054	3,855,644	284,054
Property operating expenses	3,856,264	5,967,644	8,172,819	12,352,732
Depreciation and amortization	443,112	1,447,642	1,320,645	2,886,319
Impairment loss on real estate owned	11,200,000		11,200,000
Provision for loan losses (net of recoveries)	44,005	1,093,544	29,005	2,076,224
Management fee - related party	2,850,000	2,675,000	5,550,000	5,350,000
Total other expenses	25,169,864	19,057,772	43,142,680	37,727,233
(Loss) income before gain on acceleration of deferred income, loss on termination of swaps, gain on sale of real estate and income from equity affiliates	(3,263,357)	10,853,045	(2,745,026)	13,951,955
Gain on acceleration of deferred income				11,009,162
Loss on termination of swaps				(4,289,450)
Gain on sale of real estate	11,023,134		11,630,687	3,984,364
Income (loss) from equity affiliates	4,367,101	1,534,025	6,264,543	4,629,938
Net income	12,126,878	12,387,070	15,150,204	29,285,969
Preferred stock dividends	1,888,430	1,888,430	3,776,860	3,776,860
Net income attributable to common stockholders	$ 10,238,448	$ 10,498,640	$ 11,373,344	$ 25,509,109
Basic earnings per common share (in dollars per share)	$ 0.20	$ 0.21	$ 0.22	$ 0.50
Diluted earnings per common share (in dollars per share)	$ 0.20	$ 0.21	$ 0.22	$ 0.50
Weighted average number of shares of common stock outstanding:
Basic (in shares)	51,381,405	50,955,648	51,213,312	50,751,247
Diluted (in shares)	51,741,951	50,955,648	51,418,539	50,894,531
Dividends declared per common share (in dollars per share)	$ 0.15	$ 0.15	$ 0.30	$ 0.28

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
Net income	$ 12,126,878	$ 12,387,070	$ 15,150,204	$ 29,285,969
Unrealized gain (loss) on securities available-for-sale, at fair value	29,395	364,552	(29,395)	423,341
Unrealized loss on derivative financial instruments, net	(52,445)	(165,156)	(262,234)	(906,727)
Reclassification of net realized loss on derivatives designated as cash flow hedges into loss on termination of swaps				4,285,995
Reclassification of net realized loss on derivatives designated as cash flow hedges into earnings	1,331,637	1,510,573	2,696,300	3,241,500
Comprehensive income	13,435,465	14,097,039	17,554,875	36,330,078
Less:
Preferred stock dividends	1,888,430	1,888,430	3,776,860	3,776,860
Comprehensive income attributable to common stockholders	$ 11,547,035	$ 12,208,609	$ 13,778,015	$ 32,553,218

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($)	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit Private REIT preferred stock	Accumulated Deficit	Accumulated Other Comprehensive Loss	Private REIT preferred stock	Total
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2015	$ 89,295,905	$ 509,625	$ 616,244,196		$ (136,118,001)	$ (4,840,950)		$ 565,090,775
Balance (in shares) at Dec. 31, 2015	3,711,500	50,962,516
Increase (Decrease) in Stockholders' Equity
Stock-based compensation		$ 4,199	2,158,895					2,163,094
Stock-based compensation (in shares)		419,890
Forfeiture of unvested restricted stock		$ (10)	10
Forfeiture of unvested restricted stock (in shares)		(1,001)
Distributions - common stock					(15,351,438)			(15,351,438)
Distributions - preferred stock				$ (7,231)	(3,776,860)		$ (7,231)	(3,776,860)
Net income					15,150,204			15,150,204
Unrealized loss on securities available-for-sale						(29,395)		(29,395)
Unrealized loss on derivative financial instruments, net						(262,234)		(262,234)
Reclassification of net realized loss on derivatives designated as cash flow hedges into earnings						2,696,300		2,696,300
Stockholders' Equity Attributable to Parent, Ending Balance at Jun. 30, 2016	$ 89,295,905	$ 513,814	$ 618,403,101		$ (140,103,326)	$ (2,436,279)		$ 565,673,215
Balance (in shares) at Jun. 30, 2016	3,711,500	51,381,405

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Operating activities:
Net income	$ 15,150,204	$ 29,285,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,320,645	2,886,319
Stock-based compensation	2,163,094	2,427,268
Gain on acceleration of deferred income		(11,009,162)
Loss on termination of swaps		4,289,450
Gain on sale of real estate	(11,630,687)	(3,984,364)
Impairment loss on real estate owned	11,200,000
Gain on sale of securities	(15,491)
Provision for loan losses (net of recoveries)	29,005	2,076,224
Amortization and accretion of interest, fees and intangible assets, net	1,652,392	1,684,017
Income from equity affiliates	(6,264,543)	(4,629,938)
Changes in operating assets and liabilities	4,082,516	(3,505,259)
Net cash provided by operating activities	17,687,135	19,520,524
Investing activities:
Loans and investments funded, originated and purchased, net	(475,924,501)	(557,256,118)
Payoffs and paydowns of loans and investments	410,975,653	551,201,085
Deferred fees	4,568,476	2,482,316
Principal collection on securities, net		2,100,000
Investment in real estate, net	(417,809)	(1,393,615)
Contributions to equity affiliates	(4,187,582)	(14,949,918)
Distributions from equity affiliates	1,013,080
Proceeds from sale of real estate	49,029,780	18,482,352
Proceeds from sale of available-for-sale securities	1,567,207
Net cash (used in) provided by investing activities	(13,375,696)	666,102
Financing activities:
Proceeds from repurchase agreements, credit facilities and notes payable	204,046,488	479,205,709
Paydowns and payoffs of repurchase agreements, loan participations and credit facilities	(81,620,294)	(335,854,714)
Proceeds from mortgage note payable - real estate owned		27,155,000
Paydowns and payoffs of mortgage note payable - real estate owned	(27,155,000)	(30,984,357)
Proceeds from collateralized debt obligations		219,000,000
Payoffs and paydowns of collateralized debt obligations		(240,971,174)
Payoffs and paydowns of collateralized loan obligations		(177,000,000)
Change in restricted cash	(111,072,901)	141,293,748
Payments on swaps and margin calls to counterparties		(290,000)
Receipts on swaps and returns of margin calls from counterparties	2,250,049	2,200,000
Distributions paid on common stock	(15,351,438)	(14,206,565)
Distributions paid on preferred stock	(3,776,860)	(3,776,860)
Distributions paid on preferred stock of private REIT	(7,231)	(6,952)
Payment of deferred financing costs	(155,235)	(6,304,548)
Net cash (used in) provided by financing activities	(32,842,422)	59,459,287
Net (decrease) increase in cash and cash equivalents	(28,530,983)	79,645,913
Cash and cash equivalents at beginning of period	188,708,687	50,417,745
Cash and cash equivalents at end of period	160,177,704	130,063,658
Supplemental cash flow information:
Cash used to pay interest	22,983,701	22,715,060
Cash used for taxes	112,799	345,259
8.25% Series A preferred stock
Supplemental schedule of non-cash investing and financing activities:
Distributions accrued on preferred stock	266,664	266,664
7.75% Series B preferred stock
Supplemental schedule of non-cash investing and financing activities:
Distributions accrued on preferred stock	203,438	203,438
8.50% Series C preferred stock
Supplemental schedule of non-cash investing and financing activities:
Distributions accrued on preferred stock	$ 159,375	$ 159,375

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical)	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
8.25% Series A preferred stock
Preferred stock, dividend rate (as a percent)	8.25%	8.25%	8.25%
7.75% Series B preferred stock
Preferred stock, dividend rate (as a percent)	7.75%	7.75%	7.75%
8.50% Series C preferred stock
Preferred stock, dividend rate (as a percent)	8.50%	8.50%	8.50%

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Description of Business

6 Months Ended

Jun. 30, 2016

Description of Business

Description of Business

Note 1 —Description of Business

Arbor Realty Trust, Inc. is a Maryland corporation that was formed in 2003 to invest in a diversified portfolio of structured finance assets in the multifamily and commercial real estate markets, primarily consisting of bridge and mezzanine loans, including junior participating interests in first mortgages, preferred and direct equity.  We may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities.  We conduct substantially all of our operations through our operating partnership, Arbor Realty Limited Partnership (“ARLP”), and ARLP’s subsidiaries.  We are externally managed and advised by Arbor Commercial Mortgage, LLC (“ACM” or our “Manager”).  We organize and conduct our operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes.

Acquisition of our Manager’s Agency Platform

On July 14, 2016, we completed the previously announced acquisition of the agency platform (the “ACM Agency Business”) of our Manager (the “ACM Acquisition”) pursuant to an asset purchase agreement (“Purchase Agreement”) dated February 25, 2016. The aggregate purchase price was $276.0 million, which was paid with $138.0 million in stock, $88.0 million in cash and with the issuance of a $50.0 million seller financing instrument. The equity component of the purchase price was paid with 21.23 million of operating partnership units (“OP Units), which was based on a stock price of $6.50 per share. The closing price of our common stock on the day of the ACM Acquisition was $7.29 per share; therefore, the estimated fair value of the total consideration given to our Manager approximates $293.0 million. Each of the OP Units are paired with a share of our newly-designated special voting preferred stock, which provides ACM to one vote per share on any matter submitted to a vote of our stockholders. The OP Units are entitled to receive distributions if and when our Board of Directors authorizes and declares future common stock distributions. The OP Units are also redeemable for cash, or at our option, for shares of our common stock on a one-for-one basis.

The ACM Agency Business is comprised of its (i) underwriting, originating, selling and servicing multifamily mortgages under the Federal National Mortgage Association (“Fannie Mae”) delegated underwriting and servicing (“DUS”), U.S. Department of Housing and Urban Development (“HUD”)/Federal Housing Administration (“FHA”), Government National Mortgage Association (“GNMA”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) and conduit/commercial mortgage-backed securities (“CMBS”) programs, and (ii) certain assets and liabilities primarily consisting of the mortgage servicing rights related to the agency servicing portfolio, agency loans held for sale, warehouse financing of agency loans held for sale and other assets and liabilities directly related to the ACM Agency Business.

All ACM employees directly related to the ACM Agency Business (approximately 235 employees) have become our employees as of the acquisition completion date. In addition, pursuant to the Purchase Agreement, we have a two year option to purchase the existing management agreement and fully internalize our management structure for $25.0 million (increasing to $27.0 million in the second year). The exercise of this option is at the discretion of the special committee of our Board of Directors, which has no obligation to exercise its option.

In connection with the ACM Acquisition, we incurred advisory fees totaling $0.7 million and $3.9 million during the three and six months ended June 30, 2016, respectively, and fees totaling $8.3 million to date. We expect to recognize additional fees in the third quarter of 2016 as a result of completing the ACM Acquisition in July 2016.

Except where specifically indicated, the information contained in this report does not include information pertaining to the ACM Agency Business.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), for interim financial statements and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements prepared under GAAP have been condensed or omitted.  In the opinion of management, all adjustments considered necessary for a fair presentation of our financial position, results of operations and cash flows have been included and are of a normal and recurring nature.  The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2015 Annual Report, which was filed with the SEC.

The accompanying unaudited consolidated financial statements include our financial statements, our wholly owned subsidiaries, and partnerships or other joint ventures in which we own a voting interest of greater than 50 percent, and variable interest entities (“VIEs”) of which we are the primary beneficiary.  VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  Current accounting guidance requires us to present a) assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE, and b) liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary.  Entities in which we have significant influence are accounted for primarily under the equity method.

As a REIT, we are generally not subject to federal income tax on our REIT—taxable income that we distribute to our stockholders, provided that we distribute at least 90% of our REIT—taxable income and meet certain other requirements.  As of June 30, 2016 and 2015, we were in compliance with all REIT requirements and, therefore, have not provided for income tax expense for the six months ended June 30, 2016 and 2015.  Certain of our assets that produce non-qualifying income are owned by our taxable REIT subsidiaries, the income of which is subject to federal and state income taxes.  During the six months ended June 30, 2016 and 2015, we did not record any provision for income taxes for these taxable REIT subsidiaries as we expect any income to be offset by available federal and state net operating loss carryforwards.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could materially affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

Significant Accounting Policies

As of June 30, 2016, our significant accounting policies, which are detailed in our 2015 Annual Report, have not changed materially.

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will be required to use forward-looking information to better form their credit loss estimates. This updated guidance also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. The guidance is effective for us beginning in the first quarter of 2020, and early adoption is permitted beginning in the first quarter of 2019. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In March 2016, the FASB amended its guidance on stock compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the first quarter of 2017 and we are currently evaluating the impact it may have on our consolidated financial statements.

In March 2016, the FASB amended its guidance on accounting for equity method investments. Among other things, the amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The guidance is effective for the first quarter of 2017 and we are currently evaluating the impact it may have on our consolidated financial statements.

In February 2016, the FASB amended its guidance on accounting for leases that requires an entity to recognize balance sheet assets and liabilities for leases with terms of more than 12 months and also requires disclosure of key information about an entity’s leasing arrangements. The guidance is effective for the first quarter of 2019 with early adoption permitted. A modified retrospective approach is required. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In January 2016, the FASB amended its guidance on the recognition and measurement of financial assets and liabilities.  The amended guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also, among other things, eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The guidance is effective for the first quarter of 2018 and we are currently evaluating the impact it may have on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In September 2015, the FASB amended its guidance on measurement-period adjustments arising from business combinations.  The guidance was effective for the first quarter of 2016 and it did not have an impact on our consolidated financial statements.

In February 2015, the FASB amended its guidance on the consolidation analysis of VIEs.  The guidance was effective for the first quarter of 2016 and it did not have a material impact on our consolidated financial statements. See Note 9 — “Variable Interest Entities” for further details.

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Loans and Investments

6 Months Ended

Jun. 30, 2016

Loans and Investments

Loans and Investments

Note 3 — Loans and Investments

The following table sets forth the composition of our loan and investment portfolio:

	June 30, 2016			Percent of Total		Loan Count	Wtd. Avg. Pay Rate (1)		Wtd. Avg. Remaining Months to Maturity	Wtd. Avg. First Dollar LTV Ratio (2)		Wtd. Avg. Last Dollar LTV Ratio (3)
Bridge loans	$	1,422,007,444		89	%	111	5.26	%	18.6	0	%	76	%
Mezzanine loans	54,115,825			3	%	12	8.99	%	21.3	37	%	79	%
Junior participation loans	62,256,582			4	%	2	4.50	%	5.2	83	%	84	%
Preferred equity investments	66,668,000			4	%	9	6.37	%	27.7	47	%	92	%
	1,605,047,851			100	%	134	5.40	%	18.6	6	%	77	%
Unearned revenue	(9,619,585		)
Allowance for loan losses	(83,831,575		)
Loans and investments, net	$	1,511,596,691

	December 31, 2015			Percent of Total		Loan Count	Wtd. Avg. Pay Rate (1)		Wtd. Avg. Remaining Months to Maturity	Wtd. Avg. First Dollar LTV Ratio (2)		Wtd. Avg. Last Dollar LTV Ratio (3)
Bridge loans	$	1,353,132,435		88	%	105	5.48	%	16.7	0	%	75	%
Mezzanine loans	40,390,905			3	%	11	8.19	%	32.9	35	%	83	%
Junior participation loans	62,256,582			4	%	2	4.50	%	11.2	85	%	87	%
Preferred equity investments	89,346,123			5	%	10	7.52	%	30.5	43	%	80	%
	1,545,126,045			100	%	128	5.63	%	17.7	7	%	76	%
Unearned revenue	(8,030,129		)
Allowance for loan losses	(86,761,575		)
Loans and investments, net	$	1,450,334,341

(1) “Weighted Average Pay Rate” is a weighted average, based on the unpaid principal balances of each loan in our portfolio, of the interest rate that is required to be paid monthly as stated in the individual loan agreements.  Certain loans and investments that require an additional rate of interest “Accrual Rate” to be paid at the maturity are not included in the weighted average pay rate as shown in the table.

(2) The “First Dollar LTV Ratio” is calculated by comparing the total of our senior most dollar and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will absorb a total loss of our position.

(3) The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss.

During the first quarter of 2015, we acquired a $116.0 million defaulted first mortgage, at par, that paid off in the subsequent quarter resulting in the recognition of income totaling $6.7 million, net of fees and expenses. The $6.7 million of income consisted of other interest income totaling $7.9 million, partially offset by $1.2 million of expenses related to this transaction that were recorded in employee compensation and benefits. In April 2016, additional funds held in escrow from the note payoff were released following an arbitration proceeding and we recognized income totaling $1.9 million, net of fees and expenses. The $1.9 million of income consisted of other interest income totaling $2.5 million, partially offset by $0.6 million of expenses related to the transaction that were recorded in employee compensation and benefits.

Concentration of Credit Risk

We operate in one portfolio segment, commercial mortgage loans and investments.  Commercial mortgage loans and investments can potentially subject us to concentrations of credit risk.  We are subject to concentration risk in that, at June 30, 2016, the unpaid principal balance (“UPB”) related to 31 loans with five different borrowers represented 21% of total assets.  At December 31, 2015, the UPB related to 22 loans with five different borrowers represented 22% of total assets.  We measure our relative loss position for our mezzanine loans, junior participation loans, and preferred equity investments by determining the point where we will be exposed to losses based on our position in the capital stack as compared to the fair value of the underlying collateral.  We determine our loss position on both a first dollar loan-to-value (“LTV”) and a last dollar LTV basis.

We assign a credit risk rating to each loan and investment.  Individual ratings range from one to five, with one being the lowest risk and five being the highest.  Each credit risk rating has benchmark guidelines that pertain to debt-service coverage ratios, LTV ratios, borrower strength, asset quality, and funded cash reserves.  Other factors such as guarantees, market strength, remaining loan term, and borrower equity are also reviewed and factored into determining the credit risk rating assigned to each loan.  This metric provides a helpful snapshot of portfolio quality and credit risk.  Given our asset management approach, however, the risk rating process does not result in differing levels of diligence contingent upon credit rating.  That is because all portfolio assets are subject to the level of scrutiny and ongoing analysis consistent with that of a “high-risk” loan.  Assets are subject to, at minimum, a thorough quarterly financial evaluation in which historical operating performance and forward-looking projections are reviewed.  Generally speaking, given our typical loan and investment profile, a risk rating of three suggests that we expect the loan to make both principal and interest payments according to the contractual terms of the loan agreement, and is not considered impaired.  A risk rating of four indicates we anticipate that the loan will require a modification of some kind.  A risk rating of five indicates we expect the loan to underperform over its term, and there could be loss of interest and/or principal.  Ratings of 3.5 and 4.5 generally indicate loans that have characteristics of both the immediately higher and lower classifications.  Further, while the above are the primary guidelines used in determining a certain risk rating, subjective items such as borrower strength, condition of the market of the underlying collateral, additional collateral or other credit enhancements, or loan terms, may result in a rating that is higher or lower than might be indicated by any risk rating matrix.

As a result of the loan review process at June 30, 2016 and December 31, 2015, we identified loans and investments that we consider higher-risk loans that had a carrying value, before loan loss reserves, of $152.2 million and $154.7 million, respectively, and a weighted average last dollar LTV ratio of 99% for each period.

A summary of the loan portfolio’s weighted average internal risk ratings and LTV ratios by asset class is as follows:

	June 30, 2016
Asset Class	Unpaid Principal Balance		Percentage of Portfolio		Wtd. Avg. Internal Risk Rating	Wtd. Avg. First Dollar LTV Ratio		Wtd. Avg. Last Dollar LTV Ratio
Multifamily	$	1,223,485,513	76	%	2.9	1	%	75	%
Office	165,703,185		10	%	3.3	36	%	73	%
Land	141,508,043		9	%	3.9	3	%	95	%
Hotel	55,587,776		4	%	3.8	38	%	80	%
Other	18,763,334		1	%	3.2	21	%	69	%
Total	$	1,605,047,851	100	%	3.0	6	%	77	%

	December 31, 2015
Asset Class	Unpaid Principal Balance		Percentage of Portfolio		Wtd. Avg. Internal Risk Rating	Wtd. Avg. First Dollar LTV Ratio		Wtd. Avg. Last Dollar LTV Ratio
Multifamily	$	1,083,822,788	70	%	3.0	2	%	75	%
Office	198,829,086		13	%	3.0	27	%	75	%
Land	164,410,838		11	%	3.8	5	%	90	%
Hotel	66,250,000		4	%	3.5	32	%	80	%
Other	31,813,333		2	%	3.1	13	%	67	%
Total	$	1,545,126,045	100	%	3.1	7	%	76	%

Geographic Concentration Risk

As of June 30, 2016, 26%, 16%, 14% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York, California, Florida and Texas, respectively.  As of December 31, 2015, 34%, 14%, 14% and 12% of the outstanding balance of our loan and investment portfolio had underlying properties in New York, Florida, California and Texas, respectively.

Impaired Loans and Allowance for Loan Losses

We perform an evaluation of the loan portfolio quarterly to assess the performance of our loans and whether a reserve for impairment should be recorded.  We consider a loan impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due for both principal and accrued interest according to the contractual terms of the loan agreement.

A summary of the changes in the allowance for loan losses is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Allowance at beginning of period	$	86,746,575		$	116,470,000		$	86,761,575		$	115,487,320
Provision for loan losses	59,005			1,110,629			59,005			2,110,629
Charge-offs	(2,959,005		)	—			(2,959,005		)	—
Recoveries of reserves	(15,000		)	(17,085		)	(30,000		)	(34,405		)
Allownace at end of period	$	83,831,575		$	117,563,544		$	83,831,575		$	117,563,544

During the three and six months ended June 30, 2016, we received a $1.8 million discounted payoff on an impaired bridge loan with an aggregate carrying value before reserves of $4.8 million, resulting in the recognition of an additional provision for loan losses of $0.1 million and a charge-off of $3.0 million.

The provision for loan losses recorded in the three and six months ended June 30, 2015 was comprised of one loan and three loans, respectively, with an aggregate carrying value before reserves of $114.8 million and $127.8 million, respectively.

A summary of charge-offs and recoveries by asset class are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Charge-offs:
Multifamily	$	2,959,005		$	—		$	2,959,005		$	—
Recoveries:
Multifamily	(15,000		)	(17,085		)	(30,000		)	(34,405		)
Net (Charge-offs) Recoveries	$	(2,944,005	)	$	17,085		$	(2,929,005	)	$	34,405
Ratio of net (charge-offs) recoveries during the period to average loans and investments outstanding during the period	(0.2		)%	0.0		%	(0.2		)%	0.0		%

There were no loans for which the fair value of the collateral securing the loan was less than the carrying value of the loan for which we had not recorded a provision for loan loss as of June 30, 2016 and 2015.

We have six loans with a carrying value totaling $120.4 million at June 30, 2016, which mature in September 2017, that are collateralized by a land development project.  The loans do not carry a current pay rate of interest, but five of the loans with a carrying value totaling $111.0 million entitle us to a weighted average accrual rate of interest of 8.15%.  We suspended the recording of the accrual rate of interest on these loans, as these loans were impaired and we deemed the collection of this interest to be doubtful.  We have recorded cumulative allowances for loan losses of $49.1 million related to these loans as of June 30, 2016.  The loans are subject to certain risks associated with a development project including, but not limited to, availability of construction financing, increases in projected construction costs, demand for the development’s outputs upon completion of the project, and litigation risk.  Additionally, these loans were not classified as non-performing as the borrower is in compliance with all of the terms and conditions of the loans.

A summary of our impaired loans by asset class is as follows:

	June 30, 2016						Three Months Ended June 30, 2016				Six Months Ended June 30, 2016
Asset Class	Unpaid Principal Balance		Carrying Value (1)		Allowance for Loan Losses		Average Recorded Investment (2)		Interest Income Recognized		Average Recorded Investment (2)		Interest Income Recognized
Multifamily	$	2,662,115	$	2,570,618	$	2,575,653	$	5,004,615	$	47,669	$	5,012,115	$	111,205
Office	27,571,582		22,787,444		21,972,444		27,573,832		23,115		27,576,082		46,162
Land	130,012,569		125,168,351		53,883,478		129,042,390		—		128,740,618		—
Hotel	34,750,000		34,496,568		3,700,000		34,750,000		283,768		34,750,000		565,917
Commercial	1,700,000		1,700,000		1,700,000		1,700,000		—		1,700,000		—
Total	$	196,696,266	$	186,722,981	$	83,831,575	$	198,070,837	$	354,552	$	197,778,815	$	723,284

	December 31, 2015						Three Months Ended June 30, 2015				Six Months Ended June 30, 2015
Asset Class	Unpaid Principal Balance		Carrying Value (1)		Allowance for Loan Losses		Average Recorded Investment (2)		Interest Income Recognized		Average Recorded Investment (2)		Interest Income Recognized
Multifamily	$	7,362,115	$	7,350,764	$	5,505,653	$	39,214,032	$	73,892	$	39,222,692	$	143,981
Office	27,580,582		22,796,444		21,972,444		36,086,582		282,192		36,086,582		557,045
Land	127,468,667		122,875,774		53,883,478		123,196,757		—		122,933,516		—
Hotel	34,750,000		34,486,433		3,700,000		34,750,000		260,898		34,750,000		518,028
Commercial	1,700,000		1,700,000		1,700,000		—		—		—		—
Total	$	198,861,364	$	189,209,415	$	86,761,575	$	233,247,371	$	616,982	$	232,992,790	$	1,219,054

(1) Represents the UPB of impaired loans less unearned revenue and other holdbacks and adjustments by asset class and was comprised of nine loans at both June 30, 2016 and December 31, 2015.

(2) Represents an average of the beginning and ending UPB of each asset class.

As of June 30, 2016, three fully reserved loans with loan loss reserves totaling $22.9 million were classified as non-performing.  As of December 31, 2015, three loans with an aggregate net carrying value of less than $0.1 million, net of related loan loss reserves on the loans of $22.9 million, were classified as non-performing. Income from non-performing loans is generally recognized on a cash basis only to the extent it is received.  Full income recognition will resume when the loan becomes contractually current and performance has recommenced.

A summary of our non-performing loans by asset class is as follows:

	June 30, 2016						December 31, 2015
Asset Class	Carrying Value		Less Than 90 Days Past Due		Greater Than 90 Days Past Due		Carrying Value		Less Than 90 Days Past Due		Greater Than 90 Days Past Due
Multifamily	$	770,653	$	—	$	770,653	$	765,799	$	—	$	765,799
Office	20,472,444		—		20,472,444		20,472,444		—		20,472,444
Commercial	1,700,000		—		1,700,000		1,700,000		—		1,700,000
Total	$	22,943,097	$	—	$	22,943,097	$	22,938,243	$	—	$	22,938,243

At June 30, 2016, we did not have any loans contractually past due 90 days or more that are still accruing interest.

A summary of loan modifications, refinancings and/or extensions by asset class that we considered to be troubled debt restructurings were as follows:

	Number of Loans	Original Unpaid Principal Balance		Original Weighted Average Rate of Interest		Extended Unpaid Principal Balance		Extended Weighted Average Rate of Interest		Number of Loans	Original Unpaid Principal Balance		Original Weighted Average Rate of Interest		Extended Unpaid Principal Balance		Extended Weighted Average Rate of Interest
Asset Class	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
Multifamily	—	$	—	—		$	—	—		1	$	14,646,456	5.24	%	$	14,646,456	5.24	%
	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
Multifamily	4	$	29,416,456	4.95	%	$	29,416,456	4.95	%	5	$	35,609,122	5.12	%	$	35,609,122	5.12	%

There were no loans in which we considered the modifications to be troubled debt restructurings that were subsequently considered non-performing as of June 30, 2016 and 2015 and no additional loans were considered to be impaired due to our troubled debt restructuring analysis for the three and six months ended June 30, 2016 and 2015. These loans were modified to increase the total recovery of the combined principal and interest from the loan.

Given the transitional nature of some of our real estate loans, we may require funds to be placed into an interest reserve, based on contractual requirements, to cover debt service costs.  As of June 30, 2016, we had total interest reserves of $16.7 million on 65 loans with an aggregate UPB of $807.1 million.

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Securities

6 Months Ended

Jun. 30, 2016

Securities

Securities

Note 4 — Securities

Available-for-sale securities are carried at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive loss.

The following is a summary of our securities classified as available-for-sale at June 30, 2016:

	Amortized Cost		Cummulative Unrealized Gain		Carrying Value / Estimated Fair Value
2,939,465 common shares of CV Holdings, Inc.	$	58,789	$	382,131	$	440,920

The following is a summary of our securities classified as available-for-sale at December 31, 2015:

	Face Value		Amortized Cost		Cummulative Unrealized Gain		Carrying Value / Estimated Fair Value
Federal Home Loan Mortgage Corporation	$	1,500,000	$	1,551,716	$	—	$	1,551,716
2,939,465 common shares of CV Holdings, Inc.	—		58,789		411,525		470,314
Total available-for-sale securities	$	1,500,000	$	1,610,505	$	411,525	$	2,022,030

In the fourth quarter of 2015, we purchased a federal home loan mortgage corporation security at a premium for $1.6 million. This security bore interest at a fixed rate of 3.241% with a scheduled maturity in 2024. We sold this security in January 2016 for $1.6 million and recognized a gain of less than $0.1 million.

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Investments in Equity Affiliates

6 Months Ended

Jun. 30, 2016

Investments in Equity Affiliates

Investments in Equity Affiliates

Note 5 — Investments in Equity Affiliates

We account for all investments in equity affiliates under the equity method.

The following is a summary of our investments in equity affiliates:

	Investments in Equity Affiliates at				UPB of Loans to Equity Affiliates at
Equity Affiliates	June 30, 2016		December 31, 2015		June 30, 2016
Arbor Residential Investor LLC	$	33,668,202	$	25,923,679	$	—
West Shore Café	1,995,932		1,955,933		1,687,500
Lightstone Value Plus REIT L.P.	1,894,727		1,894,727		—
Issuers of Junior Subordinated Notes	578,000		578,000		—
JT Prime	425,000		425,000		—
East River Portfolio	87,293		92,796		4,994,166
Lexford Portfolio	100		100		—
Ritz-Carlton Club	—		—		—
Total	$	38,649,254	$	30,870,235	$	6,681,666

Arbor Residential Investor LLC (“ARI”) — In the first quarter of 2015, we invested $9.6 million for 50% of our Manager’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business.  As a result of this transaction, we had an initial indirect interest of 22.5% in the mortgage banking business, which is subject to dilution upon attaining certain profit hurdles of the business. During the three and six months ended June 30, 2016, we recorded $3.1 million and $4.6 million, respectively, and during the three and six months ended June 30, 2015, we recorded $1.5 million and $4.6 million, respectively, to income from equity affiliates in our consolidated statements of income related to this investment.

In 2015, through ARI, we invested $9.7 million for a 50% non-controlling interest in a joint venture that invests in non-qualified residential mortgages purchased from the mortgage banking business’s origination platform.  We also funded $4.2 million of additional mortgage purchases during the six months ended June 30, 2016, for a total investment of $13.9 million as of June 30, 2016. In the second quarter of 2016, we received our first cash distribution of $1.2 million, which was classified as a return of capital. During the three and six months ended June 30, 2016, we recorded income of  $0.1 million for both periods and, during the three and six months ended June 30, 2015, we recorded a loss of less than $0.1 million for both periods to income from equity affiliates in our consolidated statements of income related to this investment.

The summarized statements of operations for our individually significant investment in ARI are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Statements of Operations:	2016		2015		2016		2015
Revenue:
Total revenues	$	58,959,781	$	33,121,196	$	101,889,213	$	70,985,194
Total expenses	44,856,886		26,788,417		80,864,284		51,942,524
Net income	$	14,102,895	$	6,332,779	$	21,024,929	$	19,042,670
Arbor’s share of income	$	3,148,720	$	1,471,459	$	4,718,296	$	4,507,256

Lexford Portfolio — In the three and six months ended June 30, 2016, we received a distribution from this equity investment and recognized income of $1.2 million and $1.4 million, respectively. See Note 14 — “Agreements and Transactions with Related Parties” for further details.

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Real Estate Owned and Held-For-Sale

6 Months Ended

Jun. 30, 2016

Real Estate Owned and Held-For-Sale

Real Estate Owned and Held-For-Sale

Note 6 — Real Estate Owned and Held-For-Sale

Our real estate assets were comprised of one hotel property and an office building at June 30, 2016 and three multifamily properties, two hotel properties and an office building at December 31, 2015.

Real Estate Owned

	June 30, 2016									December 31, 2015
	Hotel Property			Office Building			Total			Multifamily Properties			Hotel Properties			Office Building			Total
Land	$	3,293,651		$	4,509,000		$	7,802,651		$	5,538,844		$	3,293,651		$	4,509,000		$	13,341,495
Building and intangible assets	30,475,872			1,391,000			31,866,872			32,643,889			30,338,882			1,391,000			64,373,771
Less: Impairment loss	(11,200,000		)	—			(11,200,000		)	—			—			—			—
Less: Accumulated depreciation and amortization	(8,146,318		)	(310,422		)	(8,456,740		)	(9,399,041		)	(7,329,615		)	(141,101		)	(16,869,757		)
Real estate owned, net	$	14,423,205		$	5,589,578		$	20,012,783		$	28,783,692		$	26,302,918		$	5,758,899		$	60,845,509

For the six months ended June 30, 2016 and 2015, our hotel properties had a weighted average occupancy rate of approximately 64% and 55%, respectively, a weighted average daily rate of approximately $99 and $96, respectively, and weighted average revenue per available room of approximately $63 and $53, respectively.  The operation of a hotel property is seasonal with the majority of revenues earned in the first two quarters of the calendar year. During the second quarter of 2016, through site visits and discussion with market participants, we determined that the hotel property owned exhibited indicators of impairment and performed an impairment analysis. As a result of this impairment analysis, we recorded an impairment loss of $11.2 million.

At both June 30, 2016 and December 31, 2015, our office building had an occupancy rate of 100%.

Our real estate assets had restricted cash balances totaling $0.9 million and $1.6 million as of June 30, 2016 and December 31, 2015, respectively, due to escrow requirements.

As of December 31, 2015, our multifamily properties had a weighted average occupancy rate of approximately 94%.

Real Estate Held-For-Sale

In the second quarter of 2016, we sold the three remaining multifamily properties for $41.0 million and recognized a gain of $11.0 million. A portion of the sales proceeds were used to payoff the outstanding debt on these properties of $27.1 million. See Note 7 — “Debt Obligations” for further details. In the first quarter of 2016, we sold one of our hotel properties for $9.7 million and recognized a gain of $0.6 million.

In the first quarter of 2015, we sold a multifamily property and a hotel property classified as held-for-sale for a total of $18.8 million and recognized a gain of $4.0 million.

The results of operations for properties sold or classified as held-for-sale are summarized as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Revenue:
Property operating income	$	1,149,883	$	1,367,641	$	2,845,231	$	3,349,979
Expenses:
Property operating expenses	932,518		1,016,112		1,994,346		2,323,404
Depreciation	—		212,020		334,631		436,326
Net income	$	217,365	$	139,509	$	516,254	$	590,249

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Debt Obligations

6 Months Ended

Jun. 30, 2016

Debt Obligations

Debt Obligations

Note 7 — Debt Obligations

We utilize various forms of short-term and long-term financing agreements to finance certain of our loans and investments.  Borrowings underlying these arrangements are primarily secured by a significant amount of our loans and investments.

Credit Facilities and Repurchase Agreements

The following table outlines borrowings under our credit facilities and repurchase agreements:

	June 30, 2016								December 31, 2015
	Debt Principal Balance		Debt Carrying Value		Collateral Carrying Value		Weighted Average Note Rate		Debt Principal Balance		Debt Carrying Value		Collateral Carrying Value		Weighted Average Note Rate
$150 million repurchase facility	$	94,265,469	$	93,863,204	$	151,142,522	2.74	%	$	58,270,774	$	57,610,463	$	99,641,504	2.70	%
$100 million credit facility	21,837,200		21,674,670		31,400,000		2.65	%	24,582,200		24,328,863		38,000,000		2.62	%
$75 million credit facility	66,304,000		66,304,000		93,905,000		2.66	%	13,852,500		13,766,445		18,470,000		2.59	%
$75 million credit facility	31,025,000		31,025,000		44,500,000		2.50	%	—		—		—		—
$50 million credit facility	46,320,000		46,305,067		57,900,000		2.50	%	24,120,000		24,114,494		30,200,000		2.46	%
$16.5 million term credit facility	—		—		—		—		16,500,000		16,431,870		29,750,000		3.22	%
Total	$	259,751,669	$	259,171,941	$	378,847,522	2.64	%	$	137,325,474	$	136,252,135	$	216,061,504	2.69	%

At June 30, 2016 and December 31, 2015, the weighted average interest rate for our credit facilities and repurchase agreements was 2.64% and 2.69%, respectively.  Including certain fees and costs, such as structuring, commitment, non-use and warehousing fees, the weighted average interest rate was 2.99% and 3.42% at June 30, 2016 and December 31, 2015, respectively. There were no interest rate swaps on these facilities at June 30, 2016 and December 31, 2015.

We have a $150.0 million repurchase facility with a financial institution initially used to finance the unwind of a significant portion of two collateralized debt obligation (“CDO”) vehicles in the first quarter of 2015. See “Collateralized Debt Obligations” below.  The facility bears interest at a rate of 212.5 basis points over LIBOR on senior mortgage loans, 350.0 basis points over LIBOR on junior mortgage loans, and matures in January 2017 with aone-year extension option.  If the estimated market value of the loans financed in this facility decrease, we may be required to pay down borrowings under this facility.  Debt carrying value is net of $0.4 million and $0.7 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

We have a $100.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties that bears interest at a rate of 215 basis points over LIBOR and matures in May 2017 with a one-year extension option, subject to certain conditions.  The facility has a maximum advance rate of 75% and also has a compensating balance requirement of $75.0 million to be maintained by us and our affiliates.  Debt carrying value is net of $0.2 million and $0.3 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

We have a $75.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties that bears interest at a rate of 212.5 basis points over LIBOR, includes a $25.0 million sublimit to finance healthcare related loans and was to mature in June 2016. The facility was temporarily extended to August 2016. The healthcare related loans will have an interest rate ranging from 225 basis points to 250 basis points over LIBOR depending on the type of healthcare facility financed.  The facility has a maximum advance rate of 75%.  Debt carrying value is net of $0.1 million of deferred financing fees at December 31, 2015.

We have another $75.0 million credit facility with a financial institution to finance first mortgage loans on multifamily and commercial properties that bears interest at a rate of 200 basis points over LIBOR and was to mature in June 2016.  The facility was extended to May 2017. The facility has a maximum advance rate of 70% or 75%, depending on the property type.

We have a $50.0 million credit facility with a financial institution to finance first mortgage loans on multifamily properties.  The facility bears interest at a rate of 200 basis points over LIBOR and was to mature in February 2016. In February 2016, we amended the facility, increasing the committed amount by $25.0 million to $50.0 million and extending the maturity to February 2017 with two one-year extension options, subject to certain conditions. Debt carrying value is net of less than $0.1 million of deferred financing fees at both June 30, 2016 and December 31, 2015.

In September 2015, we entered into a $16.5 million term facility with a financial institution to finance a first mortgage loan.  The facility bore interest at a rate of 275 basis points over LIBOR, was scheduled to mature in December 2016 and had a compensating balance requirement of $3.0 million to be maintained by us and our affiliates.  In the second quarter of 2016, the loan paid off and we repaid this facility in full.

Our credit facilities generally allow for an original warehousing period of up to 24 months from the initial advance on an asset. In addition, our credit facilities and repurchase agreements contain several restrictions including full repayment of an advance if a loan becomes 60 days past due, is in default or is written down by us.  Our credit facilities and repurchase agreements also contain representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types.  See “Debt Covenants” below for details.

Collateralized Loan Obligations (CLOs)

In August 2015, we completed a collateralized securitization vehicle (“CLO V”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $267.8 million, of which we purchased $12.5 million of Class C notes that we subsequently sold at par for $12.5 million.  As of the CLO closing date, the notes were secured by a portfolio of loan obligations with a face value of approximately $302.6 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio.  The financing has an approximate three year replacement period that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.  Thereafter, the outstanding debt balance will be reduced as loans are repaid.  Initially, the proceeds of the issuance of the securities also included $47.4 million for the purpose of acquiring additional loan obligations for a period of up to 120 days from the closing date of the CLO.  In September 2015, the additional proceeds were fully utilized resulting in the issuer owning loan obligations with a face value of approximately $350.0 million.  We retained a residual interest in the portfolio with a notional amount of approximately $82.3 million.  The notes have an initial weighted average interest rate of approximately 2.44% plus one-month LIBOR and interest payments on the notes are payable monthly.  Including certain fees and costs, the initial weighted average note rate was 3.07%.

In March 2015, we completed the unwinding of CLO II, redeeming $177.0 million of our outstanding notes which were repaid primarily from the refinancing of the remaining assets within our new and existing financing facilities as well as with cash held by the CLO and expensed $1.5 million of deferred fees in the first quarter of 2015 into interest expense on the consolidated statements of income.

In February 2015, we completed a collateralized securitization vehicle (“CLO IV”), issuing to third party investors three tranches of investment grade CLOs through two newly-formed wholly-owned subsidiaries totaling $219.0 million.  At closing, the notes were secured by a portfolio of loan obligations with a face value of $250.0 million, consisting primarily of bridge loans that were contributed from our existing loan portfolio, as well as $50.0 million for the purpose of acquiring additional loan obligations.  The financing has an approximate 2.5 year replacement period from closing that allows the principal proceeds and sale proceeds (if any) of the loan obligations to be reinvested in qualifying replacement loan obligations, subject to the satisfaction of certain conditions set forth in the indenture.  Thereafter, the outstanding debt balance will be reduced as loans are repaid.  We retained a residual interest in the portfolio with a notional amount of approximately $81.0 million.  The notes had an initial weighted average interest rate of approximately 2.24% plus one-month LIBOR and interest payments on the notes are payable monthly.  Including certain fees and costs, the initial weighted average note rate was 2.96%.

The following table outlines borrowings and the corresponding collateral under our CLOs as of June 30, 2016:

	Debt				Collateral (1)
					Loans				Cash
	Face Value		Carrying Value		Unpaid Principal		Carrying Value		Restricted Cash (2)
CLO III	$	281,250,000	$	279,762,775	$	314,700,230	$	313,790,106	$	58,052,410
CLO IV	219,000,000		216,552,305		263,533,848		262,944,653		36,466,152
CLO V	267,750,000		264,317,448		289,782,336		289,065,380		60,217,664
Total CLOs	$	768,000,000	$	760,632,528	$	868,016,414	$	865,800,139	$	154,736,226

The following table outlines borrowings and the corresponding collateral under our CLOs as of December 31, 2015:

	Debt				Collateral (1)
					Loans				Cash
	Face Value		Carrying Value		Unpaid Principal		Carrying Value		Restricted Cash (2)
CLO III	$	281,250,000	$	279,129,518	$	339,019,221	$	338,034,689	$	25,135,492
CLO IV	219,000,000		215,985,420		288,581,773		287,946,641		11,418,227
CLO V	267,750,000		263,784,723		343,561,696		342,988,734		6,438,304
Total CLOs	$	768,000,000	$	758,899,661	$	971,162,690	$	968,970,064	$	42,992,023

(1)  As of June 30, 2016 and December 31, 2015, there was no collateral at risk of default or deemed to be a “credit risk” as defined by the CLO indenture.

(2) Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs.  Does not include restricted cash related to interest payments, delayed fundings and expenses.

CLO III — Issued three investment grade tranches in April 2014 with a replacement period through October 2016 and a stated maturity date in May 2024.  Interest is variable based on one-month LIBOR; the weighted average note rate was 2.90% and 2.86% at June 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $1.5 million and $2.1 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

CLO IV — Issued three investment grade tranches in February 2015 with a replacement period through September 2017 and a stated maturity date in March 2025.  Interest is variable based on one-month LIBOR; the weighted average note rate was 2.75% and 2.71% at June 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $2.4 million and $3.0 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

CLO V — Issued three investment grade tranches in August 2015 with a replacement period through September 2018 and a stated maturity date in September 2025.  Interest is variable based on one-month LIBOR; the weighted average note rate was 2.94% and 2.91% at June 30, 2016 and December 31, 2015, respectively. Debt carrying value is net of $3.3 million and $3.8 million of deferred financing fees at June 30, 2016 and December 31, 2015, respectively.

At June 30, 2016 and December 31, 2015, the aggregate weighted average note rate for our CLOs was 2.87% and 2.84%, respectively.  Including certain fees and costs, the weighted average note rate was 3.31% and 3.24% at June 30, 2016 and December 31, 2015, respectively.

We account for our CLO transactions on our consolidated balance sheet as financing facilities.  Our CLOs are VIEs for which we are the primary beneficiary and are consolidated in our financial statements accordingly.  The investment grade tranches are treated as secured financings, and are non-recourse to us.

Collateralized Debt Obligations (CDOs)

In July 2015, we completed the unwind of CDO III, our last remaining CDO vehicle, redeeming $71.1 million of our outstanding notes. The notes were repaid primarily from proceeds received from the refinancing of CDO III’s remaining assets within our existing financing facilities, as well as with cash held by the CDO.  We also terminated a related interest rate swap in the third quarter of 2015.  CDO III had a $100.0 million revolving note class that provided a revolving note facility, which was paid off in the first quarter of 2015.

In January 2015, we completed the unwind of CDO I and CDO II, redeeming $167.9 million of our outstanding notes. The notes were repaid primarily from proceeds received from the refinancing of CDO I and II’s remaining assets within a new $150.0 million warehouse repurchase facility and our existing financing facilities, as well as with cash held by each CDO.  As a result of this transaction, we generated approximately $30.0 million in cash equity and reduced the balance of estimated interest by $11.0 million, which resulted in recording a gain on acceleration of deferred income in the consolidated statements of income, in the first quarter of 2015. We also terminated the related basis and interest rate swaps, which resulted in a loss of $4.3 million, and expensed $0.5 million of deferred fees in the first quarter of 2015.  See Note 8 — “Derivative Financial Instruments” for additional details.

In 2010, we re-issued our own CDO bonds we had acquired throughout 2009 with an aggregate face amount of approximately $42.8 million as part of an exchange for the retirement of $114.1 million of our junior subordinated notes.  This transaction resulted in the recording of $65.2 million of additional CDO debt, of which $42.3 million represents the portion of our CDO bonds that were exchanged and $22.9 million represents the estimated interest due on the reissued bonds through their maturity.  In January 2015, we unwound our CDO I and CDO II vehicles and reduced the balance of estimated interest by $11.0 million and in July 2015, we unwound our CDO III vehicle and reduced the remaining balance of estimated interest by $8.2 million, recording a gain on acceleration of deferred income in the consolidated statements of income.

Senior Unsecured Notes

During 2014, we issued $90.0 million aggregate principal amount of 7.375% senior unsecured notes due in 2021 in an underwritten public offering for net proceeds of $85.4 million after deducting the issuance and underwriting discounts and offering expenses.  In connection with this offering, the underwriters exercised a portion of their overallotment option for a $7.8 million aggregate principal amount providing additional net proceeds of $7.4 million.  The notes can be redeemed by us after May 15, 2017.  The interest is paid quarterly in February, May, August and November.  Including certain fees and costs, the weighted average note rate was 8.15% and 8.12% at June 30, 2016 and December 31, 2015, respectively.  The debt carrying value of $94.1 million and $93.8 million at June 30, 2016 and December 31, 2015, respectively, is net of $3.7 million and $4.1 million, respectively, of deferred financing fees. We used the net proceeds to make investments, to repurchase or pay liabilities and for general corporate purposes.

Junior Subordinated Notes

The carrying value of borrowings under our junior subordinated notes was $157.5 million and $157.1 million at June 30, 2016 and December 31, 2015, respectively, which is net of a deferred amount of $15.2 million and $15.5 million, respectively, that is being amortized into interest expense over the life of the notes and $3.2 million and $3.3 million, respectively, of deferred financing fees.  These notes have maturities ranging from March 2034 through April 2037, pay interest quarterly at a fixed or floating rate of interest based on three-month LIBOR and were not redeemable for the first two years.  The current weighted average note rate was 3.47% and 3.43% at June 30, 2016 and December 31, 2015, respectively.  Including certain fees and costs, the weighted average note rate was 3.58% and 3.55% at June 30, 2016 and December 31, 2015, respectively.  The entities that issued the junior subordinated notes have been deemed VIEs.  See Note 9 — “Variable Interest Entities” for further details.

Mortgage Note Payable — Real Estate Owned

In the first quarter of 2015, we made required paydowns of $10.3 million and repaid the $20.7 million mortgage related to our multifamily properties, replacing it with two new notes payable totaling $27.2 million. In the second quarter of 2016, we sold the remaining multifamily properties and these notes payable were paid in full.

Debt Covenants

Our debt facilities contain various financial covenants and restrictions, including a minimum liquidity requirement of $20.0 million, minimum net worth requirement of $100.0 million to $300.0 million depending on the debt facility and a maximum total liabilities less subordinated debt requirement of $2.0 billion, as well as certain other debt service coverage ratios and debt to equity ratios.  We were in compliance with all financial covenants and restrictions at June 30, 2016.

Our CLO vehicles contain interest coverage and asset overcollateralization covenants that must be met as of the waterfall distribution date in order for us to receive such payments.  If we fail these covenants in any of our CLOs, all cash flows from the applicable CLO would be diverted to repay principal and interest on the outstanding CLO bonds and we would not receive any residual payments until that CLO regained compliance with such tests.  Our CLOs were in compliance with all such covenants as of June 30, 2016, as well as on the most recent determination dates in July 2016.  In the event of a breach of the CLO covenants that could not be cured in the near-term, we would be required to fund our non-CLO expenses, including management fees and employee costs, distributions required to maintain our REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CLO not in breach of a covenant test, (iii) income from real property and loan assets, (iv) sale of assets, or (v) or accessing the equity or debt capital markets, if available.  We have the right to cure covenant breaches which would resume normal residual payments to us by purchasing non-performing loans out of the CLOs.  However, we may not have sufficient liquidity available to do so at such time.

The chart below is a summary of our CLO compliance tests as of the most recent determination dates in July 2016:

Cash Flow Triggers	CLO III		CLO IV		CLO V
Overcollateralization (1)
Current	133.33	%	136.99	%	130.72	%
Limit	132.33	%	135.99	%	129.72	%
Pass / Fail	Pass		Pass		Pass
Interest Coverage (2)
Current	221.94	%	320.98	%	244.46	%
Limit	120.00	%	120.00	%	120.00	%
Pass / Fail	Pass		Pass		Pass

(1) The overcollateralization ratio divides the total principal balance of all collateral in the CLO by the total principal balance of the bonds associated with the applicable ratio.  To the extent an asset is considered a defaulted security, the asset’s principal balance for purposes of the overcollateralization test is the lesser of the asset’s market value or the principal balance of the defaulted asset multiplied by the asset’s recovery rate which is determined by the rating agencies.  Rating downgrades of CLO collateral will generally not have a direct impact on the principal balance of a CLO asset for purposes of calculating the CLO overcollateralization test unless the rating downgrade is below a significantly low threshold (e.g. CCC-) as defined in each CLO vehicle.

(2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us.

The chart below is a summary of our CLO overcollateralization ratios as of the determination dates subsequent to each quarter:

Determination (1)	CLO III		CLO IV		CLO V
July 2016	133.33	%	136.99	%	130.72	%
April 2016	133.33	%	136.99	%	130.72	%
January 2016	133.33	%	136.99	%	130.72	%
October 2015	133.33	%	136.99	%	130.72	%
July 2015	133.33	%	136.99	%	—

(1) The table above represents the quarterly trend of our overcollateralization ratio, however, the CLO determination dates are monthly and we were in compliance with this test for all periods presented.

The ratio will fluctuate based on the performance of the underlying assets, transfers of assets into the CLOs prior to the expiration of their respective replenishment dates, purchase or disposal of other investments, and loan payoffs.  No payment due under the junior subordinated indentures may be paid if there is a default under any senior debt and the senior lender has sent notice to the trustee.  The junior subordinated indentures are also cross-defaulted with each other.

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2016

Derivative Financial Instruments

Derivative Financial Instruments

Note 8 — Derivative Financial Instruments

The following is a summary of the derivative financial instruments held by us (dollars in thousands):

		Notional Value							Balance	Fair Value
Designation/ Cash Flow	Derivative	Count	June 30, 2016		Count	December 31, 2015		Expiration Date	Sheet Location	June 30, 2016			December 31, 2015
Qualifying	LIBOR Caps	2	$	84,100	2	$	84,100	2017	Other Assets	$	—		$	3
Qualifying	Interest Rate Swaps	4	$	106,141	5	$	107,821	2016 - 2017	Other Liabilities	$	(2,407	)	$	(4,669	)

The changes in the fair value of qualifying interest rate swap cash flow hedges are recorded in accumulated other comprehensive loss on the consolidated balance sheets.  These swap agreements must be effective in reducing the variability of cash flows of the hedged items in order to qualify for the aforementioned hedge accounting treatment.  These interest rate swaps are used to hedge the variable cash flows associated with existing variable-rate debt, and amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt.  During the six months ended June 30, 2016, one interest rate swap matured with a notional value of $1.7 million.  As of June 30, 2016, we expect to reclassify $(2.5) million of other comprehensive loss from qualifying cash flow hedges to interest expense over the next twelve months assuming interest rates on that date are held constant.  During the six months ended June 30, 2015, CDO I and CDO II were unwound and the related interest rate swaps with an aggregate notional value of $134.6 million and an aggregate fair value of $(4.3) million were terminated and recorded as a loss in the first quarter of 2015.  See Note 7 — “Debt Obligations — Collateralized Debt Obligations” for further details.  Also during the six months ended June 30, 2015, we entered into a qualifying LIBOR cap hedge due to a CLO agreement requiring a LIBOR cap of 2% with a notional value of $43.5 million.

Gains and losses on terminated swaps are being deferred and recognized in earnings over the original life of the hedged item.  As of June 30, 2016 and December 31, 2015, we had a net deferred loss of $0.3 million and $0.6 million, respectively, in accumulated other comprehensive loss related to these terminated swap agreements.  We recorded $0.2 million as additional interest expense related to the amortization of the loss for both the three months ended June 30, 2016 and 2015, and less than $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the three months ended June 30, 2016 and 2015.  We recorded $0.3 million as additional interest expense related to the amortization of the loss for both the six months ended June 30, 2016 and 2015, and $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the six months ended June 30, 2016 and 2015. We expect to record approximately $0.4 million of net deferred loss to interest expense over the next twelve months.

Non-qualifying basis swap hedges were used to manage our exposure to interest rate movements and other identified risks but do not meet hedge accounting requirements.  During the six months ended June 30, 2015, our remaining basis swap with a notional value of $3.0 million and a fair value of less than $0.1 million was terminated as part of the CDO II unwind and a loss was recorded in the six months ended June 30, 2015.

The following table presents the effect of our derivative financial instruments on the statements of income (dollars in thousands):

Designation /		Amount of Loss Recognized In Other Comprehensive Loss (Effective Portion) For the Six Months Ended June 30,				Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Interest Expense (Effective Portion) For the Six Months Ended June 30,						Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Loss on Termination of Swaps (Ineffective Portion) For the Six Months Ended June 30,					Amount of Loss Recognized in Loss on Termination of Swaps (Ineffective Portion) For the Six Months Ended June 30,
Cash Flow	Derivative	2016		2015		2016			2015			2016		2015			2016		2015
Non-Qualifying	Basis Swaps	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	(3	)
Qualifying	Interest Rate Swaps/Cap	$	262	$	907	$	(2,696	)	$	(3,242	)	$	—	$	(4,286	)	$	—	$	—

The cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as qualifying hedges as of June 30, 2016 and December 31, 2015 of $(2.8) million and $(5.3) million, respectively, is a combination of the fair value of qualifying cash flow hedges of $(2.5) million and $(4.7) million, respectively, and net deferred losses on terminated interest rate swaps of $(0.3) million and $(0.6) million, respectively.

We have agreements with certain of our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.  As of June 30, 2016 and December 31, 2015, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk related to these agreements, was $(2.4) million and $(4.6) million, respectively.  As of June 30, 2016 and December 31, 2015, we had minimum collateral posting thresholds with certain of our derivative counterparties and had posted collateral of $2.8 million and $5.0 million, respectively, which is recorded in other assets in our consolidated balance sheets.

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Variable Interest Entities

6 Months Ended

Jun. 30, 2016

Variable Interest Entities

Variable Interest Entities

Note 9 — Variable Interest Entities

We have evaluated our loans and investments, mortgage related securities, investments in equity affiliates, senior unsecured notes, junior subordinated notes, operating partnership and CLOs, in order to determine if they qualify as VIEs or as variable interests in VIEs.  This evaluation resulted in determining that our bridge loans, junior participation loans, mezzanine loans, preferred equity investments, investments in equity affiliates, junior subordinated notes, operating partnership, CLOs and investments in mortgage related securities are potential VIEs.

Our involvement with VIEs primarily affects our financial performance and cash flows through amounts recorded in interest income, interest expense,  provision for loan losses and through activity associated with our derivative instruments.

Consolidated VIEs

In the first quarter of 2016, we adopted the amended guidance on the consolidation of VIEs, modifying the analysis we must perform to determine whether we should consolidate certain types of legal entities.  Under the revised guidance, our operating partnership, ARLP, was determined to be a VIE.  As this operating partnership is already consolidated in our financial statements, the identification of this entity as a VIE has no impact on our consolidated financial statements, as all of our assets and liabilities are held in this consolidated VIE.

Our CLO subsidiaries, which we are the primary beneficiary and qualify as VIEs, are owned by our operating partnership ARLP, which is consolidated in our financial statements.  These CLOs invest in real estate and real estate-related securities and are financed by the issuance of CLO debt securities.  We, or one of our affiliates, are named collateral manager, servicer, and special servicer for all CLO collateral assets which we believe gives us the power to direct the most significant economic activities of the entity.  We also have exposure to CLO losses to the extent of our equity interests and also have rights to waterfall payments in excess of required payments to CLO bond investors.  As a result of consolidation, equity interests in these CLOs have been eliminated, and the consolidated balance sheets reflect both the assets held and debt issued by the CLOs to third parties.  Our operating results and cash flows include the gross amounts related to CLO assets and liabilities as opposed to our net economic interests in the CLO entities.

The assets and liabilities related to these consolidated CLOs are as follows:

	June 30, 2016		December 31, 2015
Assets:
Restricted cash	$	156,656,516	$	46,695,819
Loans and investments, net	865,800,137		968,970,064
Due from related party	36,452		36,451
Other assets	6,023,276		6,969,201
Total assets	$	1,028,516,381	$	1,022,671,535
Liabilities:
Collateralized loan obligations	$	760,632,528	$	758,899,661
Other liabilities	1,215,022		1,224,193
Total liabilities	$	761,847,550	$	760,123,854

Assets held by the CLOs are restricted and can be used only to settle obligations of the CLOs.  The liabilities of the CLOs are non-recourse to us and can only be satisfied from each CLOs respective asset pool.  See Note 7 — “Debt Obligations” for further details.

We are not obligated to provide, have not provided, and do not intend to provide financial support to any of the consolidated CLOs.

Unconsolidated VIEs

We determined that we are not the primary beneficiary of 19 VIEs in which we have a variable interest as of June 30, 2016 because we do not have the ability to direct the activities of the VIEs that most significantly impact each entity’s economic performance.  VIEs, of which we are not the primary beneficiary, have an aggregate carrying amount of $278.9 million and exposure to real estate debt of approximately $1.6 billion at June 30, 2016.

The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of June 30, 2016:

Type	Carrying Amount (1)		Maximum Exposure to Loss (2)
Loans	$	276,355,074	$	276,355,074
Equity investments	1,996,032		1,996,032
Junior subordinated notes (3)	578,000		578,000
Total	$	278,929,106	$	278,929,106

(1) Represents the carrying amount of loans and investments before reserves.  At June 30, 2016, $149.8 million of loans to VIEs had corresponding loan loss reserves of $77.7 million.  See Note 3 — “Loans and Investments” for further details.

(2) Our maximum exposure to loss as of June 30, 2016 would not exceed the carrying amount of its investment.

(3) It is not appropriate to consolidate these entities as equity interests are variable interests only to the extent that the investment is considered to be at risk.  Since our investments were funded by the entities that issued the junior subordinated notes, it is not considered to be at risk.

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Fair Value

6 Months Ended

Jun. 30, 2016

Fair Value.

Fair Value

Note 10 — Fair Value

Fair Value of Financial Instruments

Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions.  The following table summarizes the principal amounts, carrying values and the estimated fair values of our financial instruments:

	June 30, 2016						December 31, 2015
	Principal / Notional Amount		Carrying Value		Estimated Fair Value		Principal / Notional Amount		Carrying Value		Estimated Fair Value
Financial assets:
Loans and investments	$	1,605,047,851	$	1,511,596,691	$	1,561,195,211	$	1,545,126,045	$	1,450,334,341	$	1,481,353,410
Available-for-sale securities	58,789		440,920		440,920		1,610,505		2,022,030		2,022,030
Derivative financial instuments	84,100,000		7		7		84,100,000		3,345		3,345
Financial liabilities:
Credit and repurchase facilities	$	259,751,669	$	259,171,941	$	259,281,660	$	137,325,474	$	136,252,135	$	137,072,691
Collateralized loan obligations	768,000,000		760,632,528		755,635,625		768,000,000		758,899,661		766,065,400
Senior unsecured notes	97,860,025		94,140,028		99,543,217		97,860,025		93,764,994		96,294,265
Junior subordinated notes	175,858,000		157,468,377		104,864,588		175,858,000		157,117,130		104,073,847
Mortgage note payable - real estate owned	—		—		—		27,155,000		27,155,000		27,111,231
Derivative financial instruments	106,141,799		2,407,140		2,407,140		107,820,995		4,669,273		4,669,273

Fair Value Measurement

Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties.  A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor.  Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters.  Where observable prices or inputs are not available, valuation models are applied.  These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

Assets and liabilities disclosed at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value.  Hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities are as follows:

Level 1 — Inputs are unadjusted and quoted prices exist in active markets for identical assets or liabilities at the measurement date.  The types of assets and liabilities carried at Level 1 fair value generally are government and agency securities, equities listed in active markets, investments in publicly traded mutual funds with quoted market prices and listed derivatives.

Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.  Level 2 inputs include quoted market prices in markets that are not active for an identical or similar asset or liability, and quoted market prices in active markets for a similar asset or liability.  Fair valued assets and liabilities that are generally included in this category are non-government securities, municipal bonds, certain hybrid financial instruments, certain mortgage and asset-backed securities, certain corporate debt, certain commitments and guarantees, certain private equity investments and certain derivatives.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.  These valuations are based on significant unobservable inputs that require a considerable amount of judgment and assumptions.  Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.  Generally, assets and liabilities carried at fair value and included in this category are certain mortgage and asset-backed securities, certain corporate debt, certain private equity investments, certain municipal bonds, certain commitments and guarantees and certain derivatives.

Determining which category an asset or liability falls within the hierarchy requires significant judgment and we evaluate our hierarchy disclosures each quarter.

The following is a description of the valuation techniques used to measure fair value and the general classification of these instruments pursuant to the fair value hierarchy.

Loans and investments, net:  Fair values of loans and investments that are not impaired are estimated using Level 3 inputs based on discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates that would be offered for loans with similar characteristics and credit quality.  Fair values of loans and investments that are impaired are estimated using Level 3 inputs by us that require significant judgments, which include assumptions regarding discount rates, capitalization rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management.

Available-for-sale securities:  Fair values are approximated based on current market quotes received from active markets or financial sources that trade such securities.  The fair values of available-for-sale equity securities traded in active markets are approximated using Level 1 inputs, while the fair values of available-for-sale debt securities that are approximated using recent purchase price and subsequent sales price of the securities, were valued using Level 2 inputs.

Derivative financial instruments:  Fair values of interest rate and basis swap derivatives and LIBOR caps are approximated using Level 2 inputs based on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles including counterparty risks, credit spreads and interest rate projections, as well as reasonable estimates about relevant future market conditions.  These items are included in other assets and other liabilities on the consolidated balance sheets.  We incorporate credit valuation adjustments in the fair values of our derivative financial instruments to reflect counterparty nonperformance risk.

Credit facilities, repurchase agreements and mortgage notes payable:  Fair values are estimated at Level 3 using discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates for financing with similar characteristics and credit quality.

Collateralized loan obligations:  Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads.

Senior unsecured notes:  Fair values are estimated at Level 1 based on current market quotes received from active markets.

Junior subordinated notes:  Fair values are estimated at Level 3 based on broker quotations, representing the discounted expected future cash flows at a yield that reflects current market interest rates and credit spreads.

We measure certain financial assets and financial liabilities at fair value on a recurring basis.  The fair value of these financial assets and liabilities was determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair
	Carrying				Value Hierarchy
	Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Available-for-sale securities	$	440,920	$	440,920	$	440,920	$	—	$	—
Derivative financial instruments	7		7		—		7		—
Financial liabilities:
Derivative financial instruments	$	2,407,140	$	2,407,140	$	—	$	2,407,140	$	—

We measure certain financial and non-financial assets at fair value on a nonrecurring basis.  The fair values of these financial and non-financial assets were determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair
	Net Carrying				Value Hierarchy
	Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Impaired loans, net (1)	$	102,891,406	$	102,891,406	$	—	$	—	$	102,891,406
Non-financial Assets:
Long-lived asset (2)	$	14,423,205	$	14,423,205	$	—	$	—	$	14,423,205

(1) We had an allowance for loan losses of $83.8 million relating to eight loans with an aggregate carrying value, before loan loss reserves, of $186.7 million at June 30, 2016.

(2) During the second quarter of 2016, we determined that a real estate owned hotel property exhibited indicators of impairment and an impairment analysis was performed. As a result of this impairment analysis, we recorded an impairment loss of $11.2 million.

Loan impairment assessments:  Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for loan losses, when such loan or investment is deemed to be impaired.  We consider a loan impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. We perform evaluations of our loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance and corresponding charge to the provision for loan losses. These valuations require significant judgments, which include assumptions regarding capitalization and discount rates, revenue growth rates, leasing, creditworthiness of major tenants, occupancy rates, availability of financing, exit plan, loan sponsorship, actions of other lenders and other factors deemed necessary by management.  The table above includes all impaired loans, regardless of the period in which the impairment was recognized.

Long-lived assets:  We review our real estate owned assets when events or circumstances change indicating that the carrying amount of an asset may not be recoverable. We recognize impairment if the discounted estimated cash flows to be generated by the asset are less than the carrying amount of such asset. Measurement of impairment is based upon the estimated fair value of the asset. In the evaluation of a real estate owned asset for impairment, many factors are considered, including estimated current and expected operating cash flows from the asset during the projected holding period, costs necessary to extend the life or improve the asset, expected capitalization rates,projected stabilized net operating income, selling costs, and the ability to hold and dispose of the asset in the ordinary course of business.

Quantitative information about Level 3 fair value measurements on a non-recurring basis were as follows:

	June 30, 2016
	Fair Value		Valuation Techniques	Significant Unobservable Inputs
Financial assets:
Impaired loans (1):
				Discount rate	11.00	%
Office	$	815,000	Discounted cash flows	Capitalization rate	8.03	%
				Revenue growth rate	2.50	%
				Discount rate	15.00	%
Land	71,279,838		Discounted cash flows	Capitalization rate	7.25	%
				Revenue growth rate	3.00	%
				Discount rate	9.25	%
Hotel	30,796,568		Discounted cash flows	Capitalization rate	7.25	%
				Revenue growth rate	3.80	%
Non-financial assets:
Long-lived assets:
				Discount rate	11.00	%
Hotel	14,423,205		Discounted cash flows	Capitalization rate	9.00	%
				Revenue growth rate	6.20	%
				Hold period	3 years

(1) Includes all impaired loans regardless of the period in which a loan loss provision was recorded.

We measure certain assets and liabilities for which fair value is only disclosed.  The fair value of these assets and liabilities was determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair Value Hierarchy
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Loans and investments, net	$	1,511,596,691	$	1,561,195,211	$	—	$	—	$	1,561,195,211
Financial liabilities:
Credit facilities and repurchase agreements	$	259,171,941	$	259,281,660	$	—	$	—	$	259,281,660
Collateralized loan obligations	760,632,528		755,635,625		—		—		755,635,625
Senior unsecured notes	94,140,028		99,543,217		99,543,217		—		—
Junior subordinated notes	157,468,377		104,864,588		—		—		104,864,588

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies

Commitments and Contingencies

Note 11 — Commitments and Contingencies

Contractual Commitments

Our debt obligations have approximate maturities of $146.2 million for the remainder of 2016, $320.9 million in 2017, $313.7 million in 2018, $171.1 million in 2019, $75.8 million in 2020 and $273.7 million thereafter.

In accordance with certain loans and investments, we have outstanding unfunded commitments of $36.8 million as of June 30, 2016 that we are obligated to fund as the borrowers meet certain requirements.  Of this total, we have $2.3 million in restricted cash which was available to fund all of the unfunded commitments for loans financed by our CLO vehicles.  Specific requirements include, but are not limited to, property renovations, building construction, and building conversions based on criteria met by the borrower in accordance with the loan agreements.

Litigation

We currently are neither subject to any material litigation nor, to our knowledge, are any material litigation currently threatened against us other than the following:

On June 15, 2011, three related lawsuits were filed by the Extended Stay Litigation Trust (the “Trust”), a post-bankruptcy litigation trust alleged to have standing to pursue claims that previously had been held by Extended Stay, Inc. and the Homestead Village L.L.C. family of companies (together “ESI”) (formerly Chapter 11 debtors, together the “Debtors”) that have emerged from bankruptcy.  Two of the lawsuits were filed in the U.S. Bankruptcy Court for the Southern District of New York, and the third in the Supreme Court of the State of New York, New York County.  There were 73 defendants in the three lawsuits, including 55 corporate and partnership entities and 18 individuals.  A subsidiary of ours and certain other entities that are affiliates of ours are included as defendants.  The New York State Court action has been removed to the Bankruptcy Court.  Our affiliates filed a motion to dismiss the three lawsuits.

The lawsuits all allege, as a factual basis and background certain facts surrounding the June 2007 leveraged buyout of ESI from affiliates of Blackstone Capital.  Our subsidiary, Arbor ESH II, LLC, had a $115.0 million investment in the Series A1 Preferred Units of a holding company of Extended Stay, Inc.  The New York State Court action and one of the two federal court actions name as defendants, Arbor ESH II, LLC, Arbor Commercial Mortgage, LLC and ABT-ESI LLC, an entity in which we have a membership interest, among the broad group of defendants.  These two actions were commenced by substantially identical complaints.  The defendants are alleged in these complaints, among other things, to have breached fiduciary and contractual duties by causing or allowing the Debtors to pay illegal dividends or other improper distributions of value at a time when the Debtors were insolvent.  These two complaints also allege that the defendants aided and abetted, induced, or participated in breaches of fiduciary duty, waste, and unjust enrichment (“Fiduciary Duty Claims”) and name a director of ours, and a former general counsel of Arbor Commercial Mortgage, LLC, each of whom had served on the Board of Directors of ESI for a period of time.  We are defending these two defendants and paying the costs of such defense.  On the basis of the foregoing allegations, the Trust has asserted claims under a number of common law theories, seeking the return of assets transferred by the Debtors prior to the Debtors’ bankruptcy filing.

In the third action, filed in Bankruptcy Court, the same plaintiff, the Trust, has named Arbor Commercial Mortgage, LLC and ABT-ESI LLC, together with a number of other defendants and asserts claims, including constructive and fraudulent conveyance claims under state and federal statutes, as well as a claim under the Federal Debt Collection Procedure Act.

On June 28, 2013, the Trust filed a motion to amend the lawsuits, to, among other things, (i) consolidate the lawsuits into one lawsuit, (ii) remove 47 defendants, none of whom are related to us, from the lawsuits so that there are 26 remaining defendants, including 16 corporate and partnership entities and 10 individuals, and (iii) reduce the counts within the lawsuits from over 100 down to 17.  The remaining counts in the amended complaint against our affiliates are principally state law claims for breach of fiduciary duties, waste, unlawful dividends and unjust enrichment, and claims under the Bankruptcy Code for avoidance and recovery actions, among others.  The bankruptcy court granted the motion and the amended complaint has been filed.  The amended complaint seeks approximately $139.0 million in the aggregate from director designees, portions of which are also sought from our affiliates as well as from unaffiliated defendants.  We have moved to dismiss the referenced actions and intend to vigorously defend against the claims asserted therein.  During a status conference held on March 18, 2014, the Court heard oral argument on the motion to dismiss and adjourned the case pending a ruling.

We have not made a loss accrual for this litigation because we believe that it is not probable that a loss has been incurred and an amount cannot be reasonably estimated.

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Equity

6 Months Ended

Jun. 30, 2016

Equity

Equity

Note 12 — Equity

Preferred Stock

The Series A, B and C preferred stock may not be redeemed by us before February 2018, May 2018 and February 2019, respectively.

Common Stock

As of June 30, 2016, 6,500,000 common shares are available under an “At-The-Market” equity offering with JMP Securities LLC.

In July 2016, we filed, and the SEC declared effective, a new shelf registration statement for $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants.

Distributions

The following table presents dividends declared (on a per share basis) for the six months ended June 30, 2016:

Common Stock			Preferred Stock
				Dividend (1)
Declaration Date	Dividend		Declaration Date	Series A		Series B		Series C
February 24, 2016	$	0.15	February 1, 2016	$	0.515625	$	0.484375	$	0.53125
May 4, 2016	$	0.15	May 2, 2016	$	0.515625	$	0.484375	$	0.53125

(1) The dividend declared on February 1, 2016 for the Series A, B and C preferred stock was for the period December 1, 2015 through February 29, 2016. The dividend declared on May 2, 2016 for the Series A, B and C preferred stock was for the period March 1, 2016 through May 31, 2016.

Common Stock — On August 3, 2016, the Board of Directors declared a cash dividend of $0.16 per share of common stock.  The dividend is payable on August 31, 2016 to common stockholders of record as of the close of business on August 17, 2016.

Preferred Stock — On August 1, 2016, the Board of Directors declared a cash dividend of $0.515625 per share of 8.25% Series A preferred stock; a cash dividend of $0.484375 per share of 7.75% Series B preferred stock; and a cash dividend of $0.53125 per share of 8.50% Series C preferred stock.  These amounts reflect dividends from June1, 2016 through August 31, 2016 and are payable on August 31, 2016 to preferred stockholders of record on August 15, 2016.

Deferred Compensation

In March 2016, we issued 282,405 shares of restricted common stock under the 2014 Omnibus Stock Incentive Plan (the “2014 Plan”) to certain employees of ours and our Manager with a total grant date fair value of $1.9 million and recorded $0.2 million to employee compensation and benefits and $0.5 million to selling and administrative expense in our consolidated statements of income.  One third of the shares vested as of the date of grant, one third will vest in March 2017, and the remaining third will vest in March 2018.  In March 2016, we also issued 67,260 shares of fully vested common stock to the independent members of the Board of Directors under the 2014 Plan and recorded $0.4 million to selling and administrative expense in our consolidated statements of income.

During the first quarter of 2016, we issued 70,225 shares of restricted common stock to Mr. Ivan Kaufman, our chairman and chief executive officer, under his 2015 annual incentive agreement with a grant date fair value of $0.5 million and recorded $0.1 million to employee compensation and benefits in our consolidated statements of income.  One quarter of the shares vested as of the date of grant and one quarter will vest on each of the first, second and third anniversaries of the date of grant.  Mr. Kaufman was also granted up to 421,348 performance-based restricted stock units that vest at the end of a four-year performance period based on our achievement of certain total stockholder return objectives. The restricted stock units had a grant date fair value of $0.9 million and we recorded less than $0.1 million to employee compensation and benefits in our consolidated statements of income. To date under his 2015 annual incentive agreement, Mr. Kaufman was granted in the aggregate up to 867,113 performance-based restricted stock units.

As of June 30, 2016, unvested restricted stock consisted of 193,463 shares granted to our employees with a grant date fair value of $1.3 million and 193,759 shares granted to employees of our Manager with a grant date fair value of $1.3 million, which is subject to re-measurement each reporting period.  Expense is recognized ratably over the vesting period in our consolidated statements of income in employee compensation and benefits expense and selling and administrative expense, respectively.  During the three months ended June 30, 2016 and 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.2 million and $0.3 million, respectively, and for non-employees to selling and administrative expense for $0.3 million and $0.2 million, respectively. During the six months ended June 30, 2016 and 2015, we recorded the ratable portion of the unvested restricted stock to employees as employee compensation and benefits for $0.3 million and $0.4 million, respectively, and for non-employees to selling and administrative expense for $0.5 million and $0.2 million, respectively. During the first quarter of 2016, a total of 1,001 shares of unvested restricted stock with a grant date value of less than $0.1 million were forfeited.

Vesting of restricted shares is dependent on a service requirement.  Dividends paid on restricted shares are recorded as dividends on shares of our common stock whether or not they are vested.  For accounting purposes, we measure the compensation costs for these shares as of the date of the grant, with subsequent re-measurement for any unvested shares granted to non-employees of ours with such amounts expensed against earnings, at the grant date (for the portion that vest immediately) or ratably over the respective vesting periods.

Accumulated Other Comprehensive Loss

At June 30, 2016, accumulated other comprehensive loss was $2.4 million and consisted of $2.5 million of net unrealized losses on derivatives designated as cash flow hedges and $0.3 million of net deferred losses on terminated interest swaps, partially offset by a $0.4 million unrealized gain related to available-for-sale securities.  At December 31, 2015, accumulated other comprehensive loss was $4.8 million and consisted of $4.7 million of net unrealized losses on derivatives designated as cash flow hedges, and $0.6 million of net deferred losses on terminated interest swaps, less a $0.4 million unrealized gain related to available-for-sale securities.

Reclassifications out of accumulated other comprehensive loss is as follows:

	Six Months Ended June 30,
	2016			2015			Statement of Income Caption
Net realized losses on derivatives designated as cash flow hedges:
Interest rate swaps	$	(2,696,300	)	$	(3,241,500	)	Interest expense (1)
Termination of interest rate swaps	$	—		$	(4,285,995	)	Loss on termination of swaps (1)

(1) See Note 8 — “Derivative Financial Instruments” for additional details.

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Earnings Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share

Earnings Per Share

Note 13 — Earnings Per Share

Basic EPS is calculated by dividing net income attributable to Arbor Realty Trust, Inc. by the weighted average number of shares of common stock outstanding during each period inclusive of unvested restricted stock with full dividend participation rights.  Diluted EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period using the treasury stock method.  Our common stock equivalents are comprised of the weighted average dilutive effect of performance-based restricted stock units granted to our chief executive officer in the first quarter of 2016 and 2015.

The following is a reconciliation of the numerator and denominator of the basic and diluted EPS computations for the periods presented:

	Three Months Ended June 30, 2016				Three Months Ended June 30, 2015
	Basic		Diluted		Basic		Diluted
Net income attributable to common stockholders (1)	$	10,238,448	$	10,238,448	$	10,498,640	$	10,498,640
Weighted average number of common shares outstanding	51,381,405		51,381,405		50,955,648		50,955,648
Dilutive effect of restricted stock units (2)	—		360,546		—		—
Weighted average number of common shares outstanding	51,381,405		51,741,951		50,955,648		50,955,648
Net income per common share (1)	$	0.20	$	0.20	$	0.21	$	0.21

	Six Months Ended June 30, 2016				Six Months Ended June 30, 2015
	Basic		Diluted		Basic		Diluted
Net income attributable to common stockholders (1)	$	11,373,344	$	11,373,344	$	25,509,109	$	25,509,109
Weighted average number of common shares outstanding	51,213,312		51,213,312		50,751,247		50,751,247
Dilutive effect of restricted stock units (2)	—		205,227		—		143,284
Weighted average number of common shares outstanding	51,213,312		51,418,539		50,751,247		50,894,531
Net income per common share (1)	$	0.22	$	0.22	$	0.50	$	0.50

(1) Net of preferred stock dividends.

(2) Mr. Kaufman was granted restricted stock units in 2016 and 2015 which vest at the end of a four-year performance period based upon our achievement of total shareholder return objectives.  See Note 12 — “Equity” for further details.

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Agreements and Tansactions with Related Parties

6 Months Ended

Jun. 30, 2016

Agreements and Transactions with Related Parties

Agreements and Transactions with Related Parties

Note 14 — Agreements and Transactions with Related Parties

Management Agreement

We, ARLP and Arbor Realty SR, Inc. have a management agreement with our Manager, pursuant to which our Manager provides certain services and we pay our Manager a base management fee and under certain circumstances, an annual incentive fee.

The base management fee is an arrangement whereby we reimburse our Manager for its actual costs incurred in managing our business based on the parties’ agreement in advance on an annual budget with subsequent quarterly true-ups to actual costs.  We retain all origination fees on investments.

The incentive fee is measured on an annual basis and is calculated as (1) 25% of the amount by which (a) our funds from operations per share, adjusted for certain gains and losses including gains from the retirement and restructuring of debt and 60% of any loan loss reserve recoveries (spread over a three year period), exceeds (b) the product of (x) 9.5% per annum or the Ten Year U.S. Treasury Rate plus 3.5%, whichever is greater, and (y) the greater of $10.00 or the weighted average of book value of the net assets contributed by our Manager to ARLP per ARLP partnership unit, the offering price per share of our common equity in the private offering on July 1, 2003 and subsequent offerings and the issue price per ARLP partnership unit for subsequent contributions to ARLP, multiplied by (2) the weighted average of our outstanding shares.

The minimum return, or incentive fee hurdle to be reached before an incentive fee is earned, is a percentage applied on a per share basis to the greater of $10.00 or the average gross proceeds per share.  In addition, 60% of any loan loss and other reserve recoveries are eligible to be included in the incentive fee calculation, which recoveries are spread over a three year period.

The management agreement also allows us to consider, from time to time, the payment of additional “success-based” fees to our Manager for accomplishing certain specified corporate objectives; has a termination fee of $10.0 million; and is renewable automatically for successive one-year terms, unless terminated with six months prior written notice.  If we terminate or elect not to renew the management agreement without cause, we are required to pay the termination fee of $10.0 million. We have a two year option to purchase the existing management agreement and fully internalize our management structure for $25.0 million (increasing to $27.0 million in the second year). See Note 1 — “Description of Business” for further details.

The following table sets forth our base management fees and incentive fees for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Management Fees:	2016		2015		2016		2015
Base	$	2,850,000	$	2,675,000	$	5,550,000	$	5,350,000
Incentive	—		—		—		—
Total management fee	$	2,850,000	$	2,675,000	$	5,550,000	$	5,350,000

For the three and six months ended June 30, 2016 and 2015, no “success-based” payments were incurred.

Other Related Party Transactions

Due from related party was $0.8 million and $8.1 million at June 30, 2016 and December 31, 2015, respectively, and consisted primarily of paydowns to be remitted and escrows held by our Manager and its affiliates related to real estate transactions.

Due to related party was $2.2 million at June 30, 2016 and consisted primarily of $2.1 million of base management fees due to our Manager, of which $0.8 million will be remitted by us in the following quarter.  At December 31, 2015, due to related party was $3.4 million and consisted primarily of base management fees due to our Manager that we remitted in the following quarter.

In January 2016, we originated a $12.7 million bridge loan and a $5.2 million preferred equity investment on two multifamily properties owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 50% in the borrowing entity.  The bridge loan has an interest rate of one-month LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of January 2019.  The preferred equity investment has a fixed interest rate of 10% and a maturity date of April 2016, which was extended as of right to October 2016.  Interest income recorded from these loans totaled $0.3 million and $0.6 million for the three and six months ended June 30, 2016, respectively.

In January 2016, we originated a $19.0 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 7.5% in the borrowing entity.  The loan has an interest rate of one-month LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of January 2019.  Interest income recorded from this loan totaled $0.3 and $0.4 million for the three and six months ended June 30, 2016, respectively.

In November 2015, we originated a $7.1 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman, who together own an interest of approximately 7.5% in the borrowing entity.  The loan has an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of November 2018 with two one-year extension options.  Interest income recorded from this loan totaled $0.1 million and $0.2 million for the three and six months ended June 30, 2016, respectively.

In October 2015, we originated two bridge loans totaling $16.7 million secured by multifamily properties acquired by a third party investor.  The properties had been owned and were sold by a consortium of investors, consisting of certain of our officers, including Mr. Kaufman, certain other related parties and certain unaffiliated persons.  The loans have an interest rate of LIBOR plus 5.00% with a LIBOR floor of 0.25% and a maturity date of October 2017.  Interest income recorded from these loans totaled $0.2 million and $0.5 million for the three and six months ended June 30, 2016, respectively.

In April 2015, we originated a $6.3 million bridge loan on a multifamily property owned by a consortium of investors consisting of certain of our officers, including Mr. Kaufman and our Manager, who together own an interest of approximately 90% in the borrowing entity.  The loan has an interest rate of LIBOR plus 4.50% with a LIBOR floor of 0.25% and a maturity date of April 2018.  Interest income recorded from this loan totaled $0.1 and $0.2 million for the three and six months ended June 30, 2016, respectively, and $0.1 million for both the three and six months ended June 30, 2015.

In February 2015, we modified an $18.0 million preferred equity investment, increasing our balance to $23.0 million with a fixed interest rate of 10% and a maturity date of February 2018.  In order to accomplish the modification, we formed a joint venture with a consortium of investors consisting of certain of our officers, including Mr. Kaufman, and other related parties, to invest in an additional $2.0 million preferred equity investment that is generally subordinate to ours.  During the second quarter of 2016, the preferred equity investment was repaid in full and we received proceeds of $1.0 million, which was allocated to the consortium of investors.  Interest income recorded from this loan was $0.4 million and $1.0 million for the three and six months ended June 30, 2016, respectively, and $0.6 million and $1.1 million for the three and six months ended June 30, 2015, respectively.

In the first quarter of 2015, we invested $9.6 million for 50% of our Manager’s indirect interest in a joint venture with a third party that was formed to invest in a residential mortgage banking business.  As a result of this transaction, we had an initial indirect interest of 22.5% in this entity.  In 2015, we also invested a total of $9.7 million through this joint venture in non-qualified residential mortgages purchased from the mortgage banking business’s origination platform. During the six months ended June 30, 2016, we funded an additional $3.0 million, net into these non-qualified residential mortgages.  We recorded income of $3.2 million and $4.7 million from these investments during the three and six months ended June 30, 2016, respectively, and $1.5 million and $4.5 million for the three and six months ended June 30, 2015, respectively.  See Note 5 — “Investment in Equity Affiliates” for further details.

In 2014, we invested $0.1 million for a 5% interest in a joint venture that owns two multifamily properties.  The joint venture consists of a consortium of investors consisting of certain of our officers, including Mr. Kaufman, and other related parties, who together own an interest of approximately 95%.  In 2014, we originated two bridge loans totaling $5.0 million to the joint venture with an interest rate of 5.5% over one-month LIBOR and a maturity date extended to March 2016.  The maturity date on both of these loans was extended as of right to September 2016. Interest income recorded from these loans was $0.1 million and $0.1 million for the three and six months ended June 30, 2016, respectively, and $0.1 million for both the three and six months ended June 30, 2015.

In 2014, we originated a $30.4 million bridge loan for an office property owned by a consortium of investors, including Mr. Kaufman and his affiliates, who together own an interest of approximately 24% in the borrowing entity.  The loan has an interest rate of LIBOR plus 7.90% with a LIBOR floor of 0.50% and a maturity date that was extended to July 2017.  In January 2016, we also originated a $4.6 million mezzanine loan to this entity that has a fixed interest rate of 12% and a maturity date that was extended to July 2017. Interest income recorded from these loans was $0.9 million and $1.7 million for the three and six months ended June 30, 2016, respectively, and $0.7 million and $1.4 million for the three and six months ended June 30, 2015, respectively.

In 2014, our Manager purchased a property subject to two loans originated by us, a first mortgage of $14.6 million and a second mortgage of $5.1 million, both with maturity dates of April 2016 and an interest rate of LIBOR plus 4.80%.  During the first quarter of 2016, the $5.1 million second mortgage was repaid in full by our Manager and the $14.6 million first mortgage was extended as of right to September 2016.  Interest income recorded from these loans totaled $0.2 million and $0.5 million for the three and six months ended June 30, 2016, respectively.

In June 2013, our Board of Directors formed a special committee consisting of independent directors in connection with the ACM Acquisition of our Manager’s Fannie Mae, DUS, FHA and CMBS platforms, as well as the option to internalize the management of our current business. In February 2016, we entered into a Purchase Agreement and on July 14, 2016 we completed the ACM Acquisition for $276.0 million. See Note 1 — “Description of Business” for further details.

In 2011, we restructured a preferred equity investment on the Lexford Portfolio (“Lexford”), which is a portfolio of multifamily assets. In connection with this restructuring, we, along with an executive officer of ours and a consortium of independent outside investors, made an additional preferred and direct equity investment. Both of our preferred equity investments were repaid in full by the third quarter of 2015. Interest income recorded from such preferred equity investments were $0.1 million and $0.2 million for the three and six months ended June 30, 2015, respectively. As a result of the direct equity investment, which was also repaid in the third quarter of 2015, we received distributions totaling $5.5 million during 2015 and additional distributions of $1.2 million and $1.4 million in the three and six months ended June 30, 2016, respectively, which were recorded as income from equity affiliates. In addition, under the terms of the restructuring, Lexford’s first mortgage lender required a change of property manager for the underlying assets.  The new management company is owned primarily by a consortium of affiliated investors including Mr. Kaufman and an executive officer of ours, and has a contract with the new entity for 7.5 years and is entitled to 4.75% of gross revenues of the underlying properties, along with the potential to share in the proceeds of a sale or refinancing of the debt should the management company remain engaged by the new entity at the time of such capital event.  We have provided limited (“bad boy”) guarantees for certain debt controlled by Lexford.  The bad boy guarantees may become a liability for us upon standard “bad” acts such as fraud or a material misrepresentation by Lexford or us.  At June 30, 2016, this debt had an aggregate outstanding balance of $848.5 million and is scheduled to mature between 2017 and 2025.

We are dependent upon our Manager with whom we have a conflict of interest, to provide services to us that are vital to our operations.  Our chairman, chief executive officer and president, Mr. Ivan Kaufman, is also the chief executive officer and president of our Manager, and, our chief financial officer and treasurer, Mr. Paul Elenio, is the chief financial officer of our Manager.  In addition, Mr. Kaufman and his affiliated entities (“the Kaufman Entities”) together beneficially own approximately 92% of the outstanding membership interests of our Manager and certain of our employees and directors also hold an ownership interest in our Manager.  Furthermore, one of our former directors is general counsel to our Manager and another of our directors also serves as the trustee of one of the Kaufman Entities that holds a majority of the outstanding membership interests in our Manager and co-trustee of another Kaufman Entity that owns an equity interest in our Manager.  Our Manager currently holds approximately 5.3 million of our common shares, and upon the closing of the ACM Acquisition in July 2016, our Manager was issued 21.23 million OP Units, each paired with a special voting preferred stock which in total represents approximately 36.6% of the voting power of our outstanding stock.  Our Board of Directors approved a resolution under our charter allowing Mr. Kaufman and our Manager, (which Mr. Kaufman has a controlling equity interest in), to own more than the 5% ownership interest limit of our common stock as stated in our charter as amended.

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Due to Borrowers

6 Months Ended

Jun. 30, 2016

Due to Borrowers

Due to Borrowers

Note 15 — Due to Borrowers

Due to borrowers represents borrowers’ funds held by us to fund certain expenditures or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans.  While retained, these balances earn interest in accordance with the specific loan terms they are associated with.

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Subsequent Event

6 Months Ended

Jun. 30, 2016

Subsequent Event

Subsequent Event

Note 16 — Subsequent Event

Pursuant to the Purchase Agreement dated February 25, 2016, on July 14, 2016 we completed the ACM Acquisition for an aggregate purchase price of $276.0 million. See Note 1 — “Description of Business” for additional details of the ACM Acquisition.

Except where specifically indicated, the information contained in this report does not include information pertaining to the ACM Agency Business.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), for interim financial statements and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements prepared under GAAP have been condensed or omitted.  In the opinion of management, all adjustments considered necessary for a fair presentation of our financial position, results of operations and cash flows have been included and are of a normal and recurring nature.  The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our 2015 Annual Report, which was filed with the SEC.

The accompanying unaudited consolidated financial statements include our financial statements, our wholly owned subsidiaries, and partnerships or other joint ventures in which we own a voting interest of greater than 50 percent, and variable interest entities (“VIEs”) of which we are the primary beneficiary.  VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance and (ii) has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.  Current accounting guidance requires us to present a) assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE, and b) liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary.  Entities in which we have significant influence are accounted for primarily under the equity method.

As a REIT, we are generally not subject to federal income tax on our REIT—taxable income that we distribute to our stockholders, provided that we distribute at least 90% of our REIT—taxable income and meet certain other requirements.  As of June 30, 2016 and 2015, we were in compliance with all REIT requirements and, therefore, have not provided for income tax expense for the six months ended June 30, 2016 and 2015.  Certain of our assets that produce non-qualifying income are owned by our taxable REIT subsidiaries, the income of which is subject to federal and state income taxes.  During the six months ended June 30, 2016 and 2015, we did not record any provision for income taxes for these taxable REIT subsidiaries as we expect any income to be offset by available federal and state net operating loss carryforwards.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that could materially affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Companies will be required to use forward-looking information to better form their credit loss estimates. This updated guidance also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. The guidance is effective for us beginning in the first quarter of 2020, and early adoption is permitted beginning in the first quarter of 2019. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In March 2016, the FASB amended its guidance on stock compensation, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The guidance is effective for the first quarter of 2017 and we are currently evaluating the impact it may have on our consolidated financial statements.

In March 2016, the FASB amended its guidance on accounting for equity method investments. Among other things, the amended guidance eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The guidance is effective for the first quarter of 2017 and we are currently evaluating the impact it may have on our consolidated financial statements.

In February 2016, the FASB amended its guidance on accounting for leases that requires an entity to recognize balance sheet assets and liabilities for leases with terms of more than 12 months and also requires disclosure of key information about an entity’s leasing arrangements. The guidance is effective for the first quarter of 2019 with early adoption permitted. A modified retrospective approach is required. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In January 2016, the FASB amended its guidance on the recognition and measurement of financial assets and liabilities.  The amended guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. This update also, among other things, eliminates the requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost. The guidance is effective for the first quarter of 2018 and we are currently evaluating the impact it may have on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In September 2015, the FASB amended its guidance on measurement-period adjustments arising from business combinations.  The guidance was effective for the first quarter of 2016 and it did not have an impact on our consolidated financial statements.

In February 2015, the FASB amended its guidance on the consolidation analysis of VIEs.  The guidance was effective for the first quarter of 2016 and it did not have a material impact on our consolidated financial statements. See Note 9 — “Variable Interest Entities” for further details.

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Loans and Investments (Tables)

6 Months Ended

Jun. 30, 2016

Loans and Investments

Schedule of composition of loan and investment portfolio

	June 30, 2016			Percent of Total		Loan Count	Wtd. Avg. Pay Rate (1)		Wtd. Avg. Remaining Months to Maturity	Wtd. Avg. First Dollar LTV Ratio (2)		Wtd. Avg. Last Dollar LTV Ratio (3)
Bridge loans	$	1,422,007,444		89	%	111	5.26	%	18.6	0	%	76	%
Mezzanine loans	54,115,825			3	%	12	8.99	%	21.3	37	%	79	%
Junior participation loans	62,256,582			4	%	2	4.50	%	5.2	83	%	84	%
Preferred equity investments	66,668,000			4	%	9	6.37	%	27.7	47	%	92	%
	1,605,047,851			100	%	134	5.40	%	18.6	6	%	77	%
Unearned revenue	(9,619,585		)
Allowance for loan losses	(83,831,575		)
Loans and investments, net	$	1,511,596,691

	December 31, 2015			Percent of Total		Loan Count	Wtd. Avg. Pay Rate (1)		Wtd. Avg. Remaining Months to Maturity	Wtd. Avg. First Dollar LTV Ratio (2)		Wtd. Avg. Last Dollar LTV Ratio (3)
Bridge loans	$	1,353,132,435		88	%	105	5.48	%	16.7	0	%	75	%
Mezzanine loans	40,390,905			3	%	11	8.19	%	32.9	35	%	83	%
Junior participation loans	62,256,582			4	%	2	4.50	%	11.2	85	%	87	%
Preferred equity investments	89,346,123			5	%	10	7.52	%	30.5	43	%	80	%
	1,545,126,045			100	%	128	5.63	%	17.7	7	%	76	%
Unearned revenue	(8,030,129		)
Allowance for loan losses	(86,761,575		)
Loans and investments, net	$	1,450,334,341

(1) “Weighted Average Pay Rate” is a weighted average, based on the unpaid principal balances of each loan in our portfolio, of the interest rate that is required to be paid monthly as stated in the individual loan agreements.  Certain loans and investments that require an additional rate of interest “Accrual Rate” to be paid at the maturity are not included in the weighted average pay rate as shown in the table.

(2) The “First Dollar LTV Ratio” is calculated by comparing the total of our senior most dollar and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will absorb a total loss of our position.

(3) The “Last Dollar LTV Ratio” is calculated by comparing the total of the carrying value of our loan and all senior lien positions within the capital stack to the fair value of the underlying collateral to determine the point at which we will initially absorb a loss.

Summary of the loan and investment portfolio's weighted average internal risk ratings and LTV ratios by asset class

	June 30, 2016
Asset Class	Unpaid Principal Balance		Percentage of Portfolio		Wtd. Avg. Internal Risk Rating	Wtd. Avg. First Dollar LTV Ratio		Wtd. Avg. Last Dollar LTV Ratio
Multifamily	$	1,223,485,513	76	%	2.9	1	%	75	%
Office	165,703,185		10	%	3.3	36	%	73	%
Land	141,508,043		9	%	3.9	3	%	95	%
Hotel	55,587,776		4	%	3.8	38	%	80	%
Other	18,763,334		1	%	3.2	21	%	69	%
Total	$	1,605,047,851	100	%	3.0	6	%	77	%

	December 31, 2015
Asset Class	Unpaid Principal Balance		Percentage of Portfolio		Wtd. Avg. Internal Risk Rating	Wtd. Avg. First Dollar LTV Ratio		Wtd. Avg. Last Dollar LTV Ratio
Multifamily	$	1,083,822,788	70	%	3.0	2	%	75	%
Office	198,829,086		13	%	3.0	27	%	75	%
Land	164,410,838		11	%	3.8	5	%	90	%
Hotel	66,250,000		4	%	3.5	32	%	80	%
Other	31,813,333		2	%	3.1	13	%	67	%
Total	$	1,545,126,045	100	%	3.1	7	%	76	%

Summary of the changes in the allowance for loan losses

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Allowance at beginning of period	$	86,746,575		$	116,470,000		$	86,761,575		$	115,487,320
Provision for loan losses	59,005			1,110,629			59,005			2,110,629
Charge-offs	(2,959,005		)	—			(2,959,005		)	—
Recoveries of reserves	(15,000		)	(17,085		)	(30,000		)	(34,405		)
Allownace at end of period	$	83,831,575		$	117,563,544		$	83,831,575		$	117,563,544

Summary of charge-offs and recoveries

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Charge-offs:
Multifamily	$	2,959,005		$	—		$	2,959,005		$	—
Recoveries:
Multifamily	(15,000		)	(17,085		)	(30,000		)	(34,405		)
Net (Charge-offs) Recoveries	$	(2,944,005	)	$	17,085		$	(2,929,005	)	$	34,405
Ratio of net (charge-offs) recoveries during the period to average loans and investments outstanding during the period	(0.2		)%	0.0		%	(0.2		)%	0.0		%

Summary of the company's impaired loans by asset class

	June 30, 2016						Three Months Ended June 30, 2016				Six Months Ended June 30, 2016
Asset Class	Unpaid Principal Balance		Carrying Value (1)		Allowance for Loan Losses		Average Recorded Investment (2)		Interest Income Recognized		Average Recorded Investment (2)		Interest Income Recognized
Multifamily	$	2,662,115	$	2,570,618	$	2,575,653	$	5,004,615	$	47,669	$	5,012,115	$	111,205
Office	27,571,582		22,787,444		21,972,444		27,573,832		23,115		27,576,082		46,162
Land	130,012,569		125,168,351		53,883,478		129,042,390		—		128,740,618		—
Hotel	34,750,000		34,496,568		3,700,000		34,750,000		283,768		34,750,000		565,917
Commercial	1,700,000		1,700,000		1,700,000		1,700,000		—		1,700,000		—
Total	$	196,696,266	$	186,722,981	$	83,831,575	$	198,070,837	$	354,552	$	197,778,815	$	723,284

	December 31, 2015						Three Months Ended June 30, 2015				Six Months Ended June 30, 2015
Asset Class	Unpaid Principal Balance		Carrying Value (1)		Allowance for Loan Losses		Average Recorded Investment (2)		Interest Income Recognized		Average Recorded Investment (2)		Interest Income Recognized
Multifamily	$	7,362,115	$	7,350,764	$	5,505,653	$	39,214,032	$	73,892	$	39,222,692	$	143,981
Office	27,580,582		22,796,444		21,972,444		36,086,582		282,192		36,086,582		557,045
Land	127,468,667		122,875,774		53,883,478		123,196,757		—		122,933,516		—
Hotel	34,750,000		34,486,433		3,700,000		34,750,000		260,898		34,750,000		518,028
Commercial	1,700,000		1,700,000		1,700,000		—		—		—		—
Total	$	198,861,364	$	189,209,415	$	86,761,575	$	233,247,371	$	616,982	$	232,992,790	$	1,219,054

(1) Represents the UPB of impaired loans less unearned revenue and other holdbacks and adjustments by asset class and was comprised of nine loans at both June 30, 2016 and December 31, 2015.

(2) Represents an average of the beginning and ending UPB of each asset class.

Summary of the company's non-performing loans by asset class

	June 30, 2016						December 31, 2015
Asset Class	Carrying Value		Less Than 90 Days Past Due		Greater Than 90 Days Past Due		Carrying Value		Less Than 90 Days Past Due		Greater Than 90 Days Past Due
Multifamily	$	770,653	$	—	$	770,653	$	765,799	$	—	$	765,799
Office	20,472,444		—		20,472,444		20,472,444		—		20,472,444
Commercial	1,700,000		—		1,700,000		1,700,000		—		1,700,000
Total	$	22,943,097	$	—	$	22,943,097	$	22,938,243	$	—	$	22,938,243

Summary of loan modifications, refinancings and/or extensions by asset class that the entity considered to be troubled debt restructurings by asset class

	Number of Loans	Original Unpaid Principal Balance		Original Weighted Average Rate of Interest		Extended Unpaid Principal Balance		Extended Weighted Average Rate of Interest		Number of Loans	Original Unpaid Principal Balance		Original Weighted Average Rate of Interest		Extended Unpaid Principal Balance		Extended Weighted Average Rate of Interest
Asset Class	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
Multifamily	—	$	—	—		$	—	—		1	$	14,646,456	5.24	%	$	14,646,456	5.24	%
	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
Multifamily	4	$	29,416,456	4.95	%	$	29,416,456	4.95	%	5	$	35,609,122	5.12	%	$	35,609,122	5.12	%

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Securities (Tables)

6 Months Ended

Jun. 30, 2016

Securities

Summary of the company's securities classified as available-for-sale

The following is a summary of our securities classified as available-for-sale at June 30, 2016:

	Amortized Cost		Cummulative Unrealized Gain		Carrying Value / Estimated Fair Value
2,939,465 common shares of CV Holdings, Inc.	$	58,789	$	382,131	$	440,920

The following is a summary of our securities classified as available-for-sale at December 31, 2015:

	Face Value		Amortized Cost		Cummulative Unrealized Gain		Carrying Value / Estimated Fair Value
Federal Home Loan Mortgage Corporation	$	1,500,000	$	1,551,716	$	—	$	1,551,716
2,939,465 common shares of CV Holdings, Inc.	—		58,789		411,525		470,314
Total available-for-sale securities	$	1,500,000	$	1,610,505	$	411,525	$	2,022,030

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Investments in Equity Affiliates (Tables)

6 Months Ended

Jun. 30, 2016

Investments in Equity Affiliates

Summary of the company's investments in equity affiliates

	Investments in Equity Affiliates at				UPB of Loans to Equity Affiliates at
Equity Affiliates	June 30, 2016		December 31, 2015		June 30, 2016
Arbor Residential Investor LLC	$	33,668,202	$	25,923,679	$	—
West Shore Café	1,995,932		1,955,933		1,687,500
Lightstone Value Plus REIT L.P.	1,894,727		1,894,727		—
Issuers of Junior Subordinated Notes	578,000		578,000		—
JT Prime	425,000		425,000		—
East River Portfolio	87,293		92,796		4,994,166
Lexford Portfolio	100		100		—
Ritz-Carlton Club	—		—		—
Total	$	38,649,254	$	30,870,235	$	6,681,666

Summary of statements of operations for the Company's individually significant investments in ARI

	Three Months Ended June 30,				Six Months Ended June 30,
Statements of Operations:	2016		2015		2016		2015
Revenue:
Total revenues	$	58,959,781	$	33,121,196	$	101,889,213	$	70,985,194
Total expenses	44,856,886		26,788,417		80,864,284		51,942,524
Net income	$	14,102,895	$	6,332,779	$	21,024,929	$	19,042,670
Arbor’s share of income	$	3,148,720	$	1,471,459	$	4,718,296	$	4,507,256

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Real Estate Owned and Held-For-Sale (Tables)

6 Months Ended

Jun. 30, 2016

Real Estate Owned and Held-For-Sale

Schedule of real estate owned

	June 30, 2016									December 31, 2015
	Hotel Property			Office Building			Total			Multifamily Properties			Hotel Properties			Office Building			Total
Land	$	3,293,651		$	4,509,000		$	7,802,651		$	5,538,844		$	3,293,651		$	4,509,000		$	13,341,495
Building and intangible assets	30,475,872			1,391,000			31,866,872			32,643,889			30,338,882			1,391,000			64,373,771
Less: Impairment loss	(11,200,000		)	—			(11,200,000		)	—			—			—			—
Less: Accumulated depreciation and amortization	(8,146,318		)	(310,422		)	(8,456,740		)	(9,399,041		)	(7,329,615		)	(141,101		)	(16,869,757		)
Real estate owned, net	$	14,423,205		$	5,589,578		$	20,012,783		$	28,783,692		$	26,302,918		$	5,758,899		$	60,845,509

Schedule of results of operations for properties sold or classified as held-for-sale

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Revenue:
Property operating income	$	1,149,883	$	1,367,641	$	2,845,231	$	3,349,979
Expenses:
Property operating expenses	932,518		1,016,112		1,994,346		2,323,404
Depreciation	—		212,020		334,631		436,326
Net income	$	217,365	$	139,509	$	516,254	$	590,249

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Debt Obligations (Tables)

6 Months Ended

Jun. 30, 2016

Credit facilities and repurchase agreements

Debt Obligations

Schedule of borrowings

	June 30, 2016								December 31, 2015
	Debt Principal Balance		Debt Carrying Value		Collateral Carrying Value		Weighted Average Note Rate		Debt Principal Balance		Debt Carrying Value		Collateral Carrying Value		Weighted Average Note Rate
$150 million repurchase facility	$	94,265,469	$	93,863,204	$	151,142,522	2.74	%	$	58,270,774	$	57,610,463	$	99,641,504	2.70	%
$100 million credit facility	21,837,200		21,674,670		31,400,000		2.65	%	24,582,200		24,328,863		38,000,000		2.62	%
$75 million credit facility	66,304,000		66,304,000		93,905,000		2.66	%	13,852,500		13,766,445		18,470,000		2.59	%
$75 million credit facility	31,025,000		31,025,000		44,500,000		2.50	%	—		—		—		—
$50 million credit facility	46,320,000		46,305,067		57,900,000		2.50	%	24,120,000		24,114,494		30,200,000		2.46	%
$16.5 million term credit facility	—		—		—		—		16,500,000		16,431,870		29,750,000		3.22	%
Total	$	259,751,669	$	259,171,941	$	378,847,522	2.64	%	$	137,325,474	$	136,252,135	$	216,061,504	2.69	%

CLOs

Debt Obligations

Schedule of borrowings

The following table outlines borrowings and the corresponding collateral under our CLOs as of June 30, 2016:

	Debt				Collateral (1)
					Loans				Cash
	Face Value		Carrying Value		Unpaid Principal		Carrying Value		Restricted Cash (2)
CLO III	$	281,250,000	$	279,762,775	$	314,700,230	$	313,790,106	$	58,052,410
CLO IV	219,000,000		216,552,305		263,533,848		262,944,653		36,466,152
CLO V	267,750,000		264,317,448		289,782,336		289,065,380		60,217,664
Total CLOs	$	768,000,000	$	760,632,528	$	868,016,414	$	865,800,139	$	154,736,226

The following table outlines borrowings and the corresponding collateral under our CLOs as of December 31, 2015:

	Debt				Collateral (1)
					Loans				Cash
	Face Value		Carrying Value		Unpaid Principal		Carrying Value		Restricted Cash (2)
CLO III	$	281,250,000	$	279,129,518	$	339,019,221	$	338,034,689	$	25,135,492
CLO IV	219,000,000		215,985,420		288,581,773		287,946,641		11,418,227
CLO V	267,750,000		263,784,723		343,561,696		342,988,734		6,438,304
Total CLOs	$	768,000,000	$	758,899,661	$	971,162,690	$	968,970,064	$	42,992,023

(1)  As of June 30, 2016 and December 31, 2015, there was no collateral at risk of default or deemed to be a “credit risk” as defined by the CLO indenture.

(2) Represents restricted cash held for principal repayments as well as for reinvestment in the CLOs.  Does not include restricted cash related to interest payments, delayed fundings and expenses.

Collateralized debt obligations and collateralized loan obligations

Debt Obligations

Summary of the company's CLO compliance tests as of the most recent determination dates

The chart below is a summary of our CLO compliance tests as of the most recent determination dates in July 2016:

Cash Flow Triggers	CLO III		CLO IV		CLO V
Overcollateralization (1)
Current	133.33	%	136.99	%	130.72	%
Limit	132.33	%	135.99	%	129.72	%
Pass / Fail	Pass		Pass		Pass
Interest Coverage (2)
Current	221.94	%	320.98	%	244.46	%
Limit	120.00	%	120.00	%	120.00	%
Pass / Fail	Pass		Pass		Pass

(1) The overcollateralization ratio divides the total principal balance of all collateral in the CLO by the total principal balance of the bonds associated with the applicable ratio.  To the extent an asset is considered a defaulted security, the asset’s principal balance for purposes of the overcollateralization test is the lesser of the asset’s market value or the principal balance of the defaulted asset multiplied by the asset’s recovery rate which is determined by the rating agencies.  Rating downgrades of CLO collateral will generally not have a direct impact on the principal balance of a CLO asset for purposes of calculating the CLO overcollateralization test unless the rating downgrade is below a significantly low threshold (e.g. CCC-) as defined in each CLO vehicle.

(2) The interest coverage ratio divides interest income by interest expense for the classes senior to those retained by us.

Summary of the Company's CLO overcollateralization ratios

The chart below is a summary of our CLO overcollateralization ratios as of the determination dates subsequent to each quarter:

Determination (1)	CLO III		CLO IV		CLO V
July 2016	133.33	%	136.99	%	130.72	%
April 2016	133.33	%	136.99	%	130.72	%
January 2016	133.33	%	136.99	%	130.72	%
October 2015	133.33	%	136.99	%	130.72	%
July 2015	133.33	%	136.99	%	—

(1) The table above represents the quarterly trend of our overcollateralization ratio, however, the CLO determination dates are monthly and we were in compliance with this test for all periods presented.

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Financial Instruments

Schedule of derivative financial instruments held by the company

The following is a summary of the derivative financial instruments held by us (dollars in thousands):

		Notional Value							Balance	Fair Value
Designation/ Cash Flow	Derivative	Count	June 30, 2016		Count	December 31, 2015		Expiration Date	Sheet Location	June 30, 2016			December 31, 2015
Qualifying	LIBOR Caps	2	$	84,100	2	$	84,100	2017	Other Assets	$	—		$	3
Qualifying	Interest Rate Swaps	4	$	106,141	5	$	107,821	2016 - 2017	Other Liabilities	$	(2,407	)	$	(4,669	)

Schedule of the effect of the company's derivative financial instruments on the statements of income

The following table presents the effect of our derivative financial instruments on the statements of income (dollars in thousands):

Designation /		Amount of Loss Recognized In Other Comprehensive Loss (Effective Portion) For the Six Months Ended June 30,				Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Interest Expense (Effective Portion) For the Six Months Ended June 30,						Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Loss on Termination of Swaps (Ineffective Portion) For the Six Months Ended June 30,					Amount of Loss Recognized in Loss on Termination of Swaps (Ineffective Portion) For the Six Months Ended June 30,
Cash Flow	Derivative	2016		2015		2016			2015			2016		2015			2016		2015
Non-Qualifying	Basis Swaps	$	—	$	—	$	—		$	—		$	—	$	—		$	—	$	(3	)
Qualifying	Interest Rate Swaps/Cap	$	262	$	907	$	(2,696	)	$	(3,242	)	$	—	$	(4,286	)	$	—	$	—

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Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2016

Variable Interest Entities

Schedule of the assets and liabilities related to the consolidate CLOs

	June 30, 2016		December 31, 2015
Assets:
Restricted cash	$	156,656,516	$	46,695,819
Loans and investments, net	865,800,137		968,970,064
Due from related party	36,452		36,451
Other assets	6,023,276		6,969,201
Total assets	$	1,028,516,381	$	1,022,671,535
Liabilities:
Collateralized loan obligations	$	760,632,528	$	758,899,661
Other liabilities	1,215,022		1,224,193
Total liabilities	$	761,847,550	$	760,123,854

Summary of the company's variable interests in identified VIEs, of which the company is not the primary beneficiary

The following is a summary of our variable interests in identified VIEs, of which we are not the primary beneficiary, as of June 30, 2016:

Type	Carrying Amount (1)		Maximum Exposure to Loss (2)
Loans	$	276,355,074	$	276,355,074
Equity investments	1,996,032		1,996,032
Junior subordinated notes (3)	578,000		578,000
Total	$	278,929,106	$	278,929,106

(1) Represents the carrying amount of loans and investments before reserves.  At June 30, 2016, $149.8 million of loans to VIEs had corresponding loan loss reserves of $77.7 million.  See Note 3 — “Loans and Investments” for further details.

(2) Our maximum exposure to loss as of June 30, 2016 would not exceed the carrying amount of its investment.

(3) It is not appropriate to consolidate these entities as equity interests are variable interests only to the extent that the investment is considered to be at risk.  Since our investments were funded by the entities that issued the junior subordinated notes, it is not considered to be at risk.

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value.

Summary of the principal amounts, carrying values and the estimated fair values of the Company's financial instruments

	June 30, 2016						December 31, 2015
	Principal / Notional Amount		Carrying Value		Estimated Fair Value		Principal / Notional Amount		Carrying Value		Estimated Fair Value
Financial assets:
Loans and investments	$	1,605,047,851	$	1,511,596,691	$	1,561,195,211	$	1,545,126,045	$	1,450,334,341	$	1,481,353,410
Available-for-sale securities	58,789		440,920		440,920		1,610,505		2,022,030		2,022,030
Derivative financial instuments	84,100,000		7		7		84,100,000		3,345		3,345
Financial liabilities:
Credit and repurchase facilities	$	259,751,669	$	259,171,941	$	259,281,660	$	137,325,474	$	136,252,135	$	137,072,691
Collateralized loan obligations	768,000,000		760,632,528		755,635,625		768,000,000		758,899,661		766,065,400
Senior unsecured notes	97,860,025		94,140,028		99,543,217		97,860,025		93,764,994		96,294,265
Junior subordinated notes	175,858,000		157,468,377		104,864,588		175,858,000		157,117,130		104,073,847
Mortgage note payable - real estate owned	—		—		—		27,155,000		27,155,000		27,111,231
Derivative financial instruments	106,141,799		2,407,140		2,407,140		107,820,995		4,669,273		4,669,273

Schedule of certain financial assets and financial liabilities measured at fair value on a recurring basis

The fair value of these financial assets and liabilities was determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair
	Carrying				Value Hierarchy
	Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Available-for-sale securities	$	440,920	$	440,920	$	440,920	$	—	$	—
Derivative financial instruments	7		7		—		7		—
Financial liabilities:
Derivative financial instruments	$	2,407,140	$	2,407,140	$	—	$	2,407,140	$	—

Schedule of certain financial and non-financial assets measured at fair value on a nonrecurring basis

The fair values of these financial and non-financial assets were determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair
	Net Carrying				Value Hierarchy
	Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Impaired loans, net (1)	$	102,891,406	$	102,891,406	$	—	$	—	$	102,891,406
Non-financial Assets:
Long-lived asset (2)	$	14,423,205	$	14,423,205	$	—	$	—	$	14,423,205

(1) We had an allowance for loan losses of $83.8 million relating to eight loans with an aggregate carrying value, before loan loss reserves, of $186.7 million at June 30, 2016.

(2) During the second quarter of 2016, we determined that a real estate owned hotel property exhibited indicators of impairment and an impairment analysis was performed. As a result of this impairment analysis, we recorded an impairment loss of $11.2 million.

Schedule of quantitative information about Level 3 fair value measurements on a non-recurring basis

	June 30, 2016
	Fair Value		Valuation Techniques	Significant Unobservable Inputs
Financial assets:
Impaired loans (1):
				Discount rate	11.00	%
Office	$	815,000	Discounted cash flows	Capitalization rate	8.03	%
				Revenue growth rate	2.50	%
				Discount rate	15.00	%
Land	71,279,838		Discounted cash flows	Capitalization rate	7.25	%
				Revenue growth rate	3.00	%
				Discount rate	9.25	%
Hotel	30,796,568		Discounted cash flows	Capitalization rate	7.25	%
				Revenue growth rate	3.80	%
Non-financial assets:
Long-lived assets:
				Discount rate	11.00	%
Hotel	14,423,205		Discounted cash flows	Capitalization rate	9.00	%
				Revenue growth rate	6.20	%
				Hold period	3 years

(1) Includes all impaired loans regardless of the period in which a loan loss provision was recorded.

Schedule of fair value of assets and liabilities

The fair value of these assets and liabilities was determined using the following input levels as of June 30, 2016:

					Fair Value Measurements Using Fair Value Hierarchy
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Loans and investments, net	$	1,511,596,691	$	1,561,195,211	$	—	$	—	$	1,561,195,211
Financial liabilities:
Credit facilities and repurchase agreements	$	259,171,941	$	259,281,660	$	—	$	—	$	259,281,660
Collateralized loan obligations	760,632,528		755,635,625		—		—		755,635,625
Senior unsecured notes	94,140,028		99,543,217		99,543,217		—		—
Junior subordinated notes	157,468,377		104,864,588		—		—		104,864,588

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Equity (Tables)

6 Months Ended

Jun. 30, 2016

Equity

Schedule of dividends declared by the Company (on a per share basis)

The following table presents dividends declared (on a per share basis) for the six months ended June 30, 2016:

Common Stock			Preferred Stock
				Dividend (1)
Declaration Date	Dividend		Declaration Date	Series A		Series B		Series C
February 24, 2016	$	0.15	February 1, 2016	$	0.515625	$	0.484375	$	0.53125
May 4, 2016	$	0.15	May 2, 2016	$	0.515625	$	0.484375	$	0.53125

(1) The dividend declared on February 1, 2016 for the Series A, B and C preferred stock was for the period December 1, 2015 through February 29, 2016. The dividend declared on May 2, 2016 for the Series A, B and C preferred stock was for the period March 1, 2016 through May 31, 2016.

Schedule of reclassifications out of accumulated other comprehensive loss

	Six Months Ended June 30,
	2016			2015			Statement of Income Caption
Net realized losses on derivatives designated as cash flow hedges:
Interest rate swaps	$	(2,696,300	)	$	(3,241,500	)	Interest expense (1)
Termination of interest rate swaps	$	—		$	(4,285,995	)	Loss on termination of swaps (1)

(1) See Note 8 — “Derivative Financial Instruments” for additional details.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share

Reconciliation of the numerator and denominator of the basic and diluted EPS computations

	Three Months Ended June 30, 2016				Three Months Ended June 30, 2015
	Basic		Diluted		Basic		Diluted
Net income attributable to common stockholders (1)	$	10,238,448	$	10,238,448	$	10,498,640	$	10,498,640
Weighted average number of common shares outstanding	51,381,405		51,381,405		50,955,648		50,955,648
Dilutive effect of restricted stock units (2)	—		360,546		—		—
Weighted average number of common shares outstanding	51,381,405		51,741,951		50,955,648		50,955,648
Net income per common share (1)	$	0.20	$	0.20	$	0.21	$	0.21

	Six Months Ended June 30, 2016				Six Months Ended June 30, 2015
	Basic		Diluted		Basic		Diluted
Net income attributable to common stockholders (1)	$	11,373,344	$	11,373,344	$	25,509,109	$	25,509,109
Weighted average number of common shares outstanding	51,213,312		51,213,312		50,751,247		50,751,247
Dilutive effect of restricted stock units (2)	—		205,227		—		143,284
Weighted average number of common shares outstanding	51,213,312		51,418,539		50,751,247		50,894,531
Net income per common share (1)	$	0.22	$	0.22	$	0.50	$	0.50

(1) Net of preferred stock dividends.

(2) Mr. Kaufman was granted restricted stock units in 2016 and 2015 which vest at the end of a four-year performance period based upon our achievement of total shareholder return objectives.  See Note 12 — “Equity” for further details.

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Agreements and Transactions with Related Parties (Tables)

6 Months Ended

Jun. 30, 2016

Agreements and Transactions with Related Parties

Schedule of Company's base management fees and incentive fees

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Management Fees:	2016		2015		2016		2015
Base	$	2,850,000	$	2,675,000	$	5,550,000	$	5,350,000
Incentive	—		—		—		—
Total management fee	$	2,850,000	$	2,675,000	$	5,550,000	$	5,350,000

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Description of Business (Detail) - ACM Acquisition $ / shares in Units, shares in Thousands			3 Months Ended	6 Months Ended	34 Months Ended
	Jul. 14, 2016 USD ($) Vote item $ / shares shares	Feb. 25, 2016 USD ($) employee	Jun. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)
Description of Business
Advisory fees			$ 700,000	$ 3,900,000	$ 8,300,000
ACM / Our "Manager"
Description of Business
Acquisition purchase price	$ 276,000,000
Consideration in stock	138,000,000.00000
Consideration in cash	88,000,000.00000
Seller financing used to satisfy the cash portion of the consideration	$ 50,000,000
Consideration in stock to be paid with operating partnership units (in shares) | shares	21,230
Stock consideration paid in the form of operating partnership units (USD per partnership unit) | $ / shares	$ 6.50
Acquisition share price per common share based on closing price on the day of the ACM Acquisition | $ / shares	$ 7.29
Estimated fair value of the total consideration given	$ 293,000,000
Number of vote per OP Unit | Vote	1
OP Unit, redemption ratio for common share | item	1
Number of employees | employee		235
Period to exercise the option to purchase the existing management contract		2 years
Consideration to purchase the existing management contract		$ 25,000,000
Consideration to purchase the existing management contract second year		$ 27,000,000

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Loans and Investments (Details)	1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 30, 2016 USD ($)	Apr. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) item	Mar. 31, 2016 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Loans and Investments
Loans and investments, gross			$ 1,605,047,851		$ 1,605,047,851		$ 1,545,126,045
Unearned revenue			(9,619,585)		(9,619,585)		(8,030,129)
Allowance for loan losses			(83,831,575)	$ (117,563,544)	(83,831,575)	$ (117,563,544)	(86,761,575)	$ (86,746,575)	$ (116,470,000)	$ (115,487,320)
Loans and investments, net			$ 1,511,596,691		$ 1,511,596,691		$ 1,450,334,341
Percent of Total			100.00%		100.00%		100.00%
Loan Count | item					134		128
Wtd. Avg. Pay Rate (as a percent)					5.40%		5.63%
Wtd. Avg. Remaining Months to Maturity					18 months 18 days		17 months 21 days
Wtd. Avg. First Dollar LTV Ratio (as percent)			6.00%		6.00%		7.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)			77.00%		77.00%		76.00%
Employee compensation and benefits			$ 4,311,412	4,966,138	$ 8,639,754	9,256,344
Number of portfolio segments | item					1
Other interest income			2,539,274	$ 7,884,344	$ 2,539,274	$ 7,884,344
First mortgage
Loans and Investments
Gain on extinguishment of debt, net of fees and expenses	$ 1,900,000	$ 6,700,000
Employee compensation and benefits	600,000	1,200,000
Defaulted mortgage acquired									$ 116,000,000
Other interest income	$ 2,500,000	$ 7,900,000
Higher credit risk
Loans and Investments
Loans and investments, gross			$ 152,200,000		$ 152,200,000		$ 154,700,000
Wtd. Avg. Last Dollar LTV Ratio (as percent)			99.00%		99.00%		99.00%
Credit risk concentration
Loans and Investments
Loans and investments, gross			$ 1,605,047,851		$ 1,605,047,851		$ 1,545,126,045
Percent of Total			100.00%		100.00%		100.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)			6.00%		6.00%		7.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)			77.00%		77.00%		76.00%
Credit risk concentration | Minimum
Loans and Investments
Credit risk individual ratings | item					1
Credit risk concentration | Maximum
Loans and Investments
Credit risk individual ratings | item					5
Credit risk concentration | Risk rating, three
Loans and Investments
Credit risk individual ratings | item					3
Credit risk concentration | Risk rating, four
Loans and Investments
Credit risk individual ratings | item					4
Credit risk concentration | Risk rating, five
Loans and Investments
Credit risk individual ratings | item					5
Credit risk concentration | Risk rating, 3.5
Loans and Investments
Credit risk individual ratings | item					3.5
Credit risk concentration | Risk rating, 4.5
Loans and Investments
Credit risk individual ratings | item					4.5
Total assets | Credit risk concentration
Loans and Investments
Loan Count | item					31		22
Number of different borrowers | item					5		5
Concentration risk, percentage					21.00%		22.00%
Bridge Loans
Loans and Investments
Loans and investments, gross			$ 1,422,007,444		$ 1,422,007,444		$ 1,353,132,435
Percent of Total			89.00%		89.00%		88.00%
Loan Count | item					111		105
Wtd. Avg. Pay Rate (as a percent)					5.26%		5.48%
Wtd. Avg. Remaining Months to Maturity					18 months 18 days		16 months 21 days
Wtd. Avg. First Dollar LTV Ratio (as percent)			0.00%		0.00%		0.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)			76.00%		76.00%		75.00%
Mezzanine Loans
Loans and Investments
Loans and investments, gross			$ 54,115,825		$ 54,115,825		$ 40,390,905
Percent of Total			3.00%		3.00%		3.00%
Loan Count | item					12		11
Wtd. Avg. Pay Rate (as a percent)					8.99%		8.19%
Wtd. Avg. Remaining Months to Maturity					21 months 9 days		32 months 27 days
Wtd. Avg. First Dollar LTV Ratio (as percent)			37.00%		37.00%		35.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)			79.00%		79.00%		83.00%
Junior participation loans
Loans and Investments
Loans and investments, gross			$ 62,256,582		$ 62,256,582		$ 62,256,582
Percent of Total			4.00%		4.00%		4.00%
Loan Count | item					2		2
Wtd. Avg. Pay Rate (as a percent)					4.50%		4.50%
Wtd. Avg. Remaining Months to Maturity					5 months 6 days		11 months 6 days
Wtd. Avg. First Dollar LTV Ratio (as percent)			83.00%		83.00%		85.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)			84.00%		84.00%		87.00%
Preferred equity investments
Loans and Investments
Loans and investments, gross			$ 66,668,000		$ 66,668,000		$ 89,346,123
Percent of Total			4.00%		4.00%		5.00%
Loan Count | item					9		10
Wtd. Avg. Pay Rate (as a percent)					6.37%		7.52%
Wtd. Avg. Remaining Months to Maturity					27 months 21 days		30 months 15 days
Wtd. Avg. First Dollar LTV Ratio (as percent)			47.00%		47.00%		43.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)			92.00%		92.00%		80.00%

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Loans and Investments, Risk Ratings and LTV Ratios (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($) item	Dec. 31, 2015 USD ($) item
Loans and Investments
Unpaid Principal Balance	$ 1,605,047,851	$ 1,545,126,045
Percentage of Portfolio	100.00%	100.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	6.00%	7.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	77.00%	76.00%
Loans and investments portfolio | New York
Loans and Investments
Concentration risk, percentage	26.00%	34.00%
Loans and investments portfolio | Florida
Loans and Investments
Concentration risk, percentage	16.00%	14.00%
Loans and investments portfolio | California
Loans and Investments
Concentration risk, percentage	14.00%	14.00%
Loans and investments portfolio | Texas
Loans and Investments
Concentration risk, percentage	12.00%	12.00%
Credit risk concentration
Loans and Investments
Unpaid Principal Balance	$ 1,605,047,851	$ 1,545,126,045
Percentage of Portfolio	100.00%	100.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	6.00%	7.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	77.00%	76.00%
Credit risk concentration | Weighted average
Loans and Investments
Wtd. Avg. Internal Risk Rating | item	3.0	3.1
Credit risk concentration | Multifamily Properties
Loans and Investments
Unpaid Principal Balance	$ 1,223,485,513	$ 1,083,822,788
Percentage of Portfolio	76.00%	70.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	1.00%	2.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	75.00%	75.00%
Credit risk concentration | Multifamily Properties | Weighted average
Loans and Investments
Wtd. Avg. Internal Risk Rating | item	2.9	3.0
Credit risk concentration | Office Building
Loans and Investments
Unpaid Principal Balance	$ 165,703,185	$ 198,829,086
Percentage of Portfolio	10.00%	13.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	36.00%	27.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	73.00%	75.00%
Credit risk concentration | Office Building | Weighted average
Loans and Investments
Wtd. Avg. Internal Risk Rating | item	3.3	3.0
Credit risk concentration | Land
Loans and Investments
Unpaid Principal Balance	$ 141,508,043	$ 164,410,838
Percentage of Portfolio	9.00%	11.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	3.00%	5.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	95.00%	90.00%
Credit risk concentration | Land | Weighted average
Loans and Investments
Wtd. Avg. Internal Risk Rating | item	3.9	3.8
Credit risk concentration | Hotel Properties
Loans and Investments
Unpaid Principal Balance	$ 55,587,776	$ 66,250,000
Percentage of Portfolio	4.00%	4.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	38.00%	32.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	80.00%	80.00%
Credit risk concentration | Hotel Properties | Weighted average
Loans and Investments
Wtd. Avg. Internal Risk Rating | item	3.8	3.5
Credit risk concentration | Other
Loans and Investments
Unpaid Principal Balance	$ 18,763,334	$ 31,813,333
Percentage of Portfolio	1.00%	2.00%
Wtd. Avg. First Dollar LTV Ratio (as percent)	21.00%	13.00%
Wtd. Avg. Last Dollar LTV Ratio (as percent)	69.00%	67.00%
Credit risk concentration | Other | Weighted average
Loans and Investments
Wtd. Avg. Internal Risk Rating | item	3.2	3.1

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Loans and Investments, Impaired Loans (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($) item	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($) item
Loans and Investments
Number of impaired loans | item		1		3
Carrying value of impaired loan	$ 4,800,000	$ 114,800,000	$ 4,800,000	$ 127,800,000
Number of loans for which no provision for loan loss made | item	0	0	0	0
Changes in allowance for loan losses
Allowance at beginning of the period	$ 86,746,575	$ 116,470,000	$ 86,761,575	$ 115,487,320
Provision for loan losses	59,005	1,110,629	59,005	2,110,629
Charge-offs	(2,959,005)		(2,959,005)
Recoveries of reserves	(15,000)	(17,085)	(30,000)	(34,405)
Allowance at end of the period	83,831,575	$ 117,563,544	83,831,575	$ 117,563,544
Impaired bridge loans, paid off	1,800,000		1,800,000
Additional provision for loan losses recognized	100,000		100,000
Maturity date of September 2017
Changes in allowance for loan losses
Allowance at end of the period	$ 49,100,000		49,100,000
Six loans collateralized by a land development project | Maturity date of September 2017
Loans and Investments
Carrying value of impaired loan			$ 120,400,000
Number of loans with unpaid principal balance | item			6
Four loans collateralized by a land development project | Maturity date of September 2017
Loans and Investments
Carrying value of impaired loan			$ 111,000,000
Number of loans with unpaid principal balance | item			5
Weighted average accrual rate of interest (as a percent)			8.15%

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Loans and Investments, Charge-offs and Recoveries (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) item
Loans and Investments
Net (Charge-offs) Recoveries	$ (2,944,005)	$ 17,085	$ (2,929,005)	$ 34,405
Ratio of net (charge-offs) recoveries during the period to average loans and investments outstanding during the period	(0.20%)	0.00%	(0.20%)	0.00%
Unpaid Principal Balance	$ 196,696,266		$ 196,696,266		$ 198,861,364
Carrying value	186,722,981		186,722,981		189,209,415
Allowance for Loan losses	83,831,575		83,831,575		$ 86,761,575
Average Recorded Investment	198,070,837	$ 233,247,371	197,778,815	$ 232,992,790
Interest Income Recognized	$ 354,552	616,982	$ 723,284	1,219,054
Number of impaired loans | item	9		9		9
Multifamily Properties
Loans and Investments
Charge-offs	$ 2,959,005		$ 2,959,005
Recoveries of reserves	(15,000)	(17,085)	(30,000)	(34,405)
Unpaid Principal Balance	2,662,115		2,662,115		$ 7,362,115
Carrying value	2,570,618		2,570,618		7,350,764
Allowance for Loan losses	2,575,653		2,575,653		5,505,653
Average Recorded Investment	5,004,615	39,214,032	5,012,115	39,222,692
Interest Income Recognized	47,669	73,892	111,205	143,981
Office Building
Loans and Investments
Unpaid Principal Balance	27,571,582		27,571,582		27,580,582
Carrying value	22,787,444		22,787,444		22,796,444
Allowance for Loan losses	21,972,444		21,972,444		21,972,444
Average Recorded Investment	27,573,832	36,086,582	27,576,082	36,086,582
Interest Income Recognized	23,115	282,192	46,162	557,045
Land
Loans and Investments
Unpaid Principal Balance	130,012,569		130,012,569		127,468,667
Carrying value	125,168,351		125,168,351		122,875,774
Allowance for Loan losses	53,883,478		53,883,478		53,883,478
Average Recorded Investment	129,042,390	123,196,757	128,740,618	122,933,516
Hotel Properties
Loans and Investments
Unpaid Principal Balance	34,750,000		34,750,000		34,750,000
Carrying value	34,496,568		34,496,568		34,486,433
Allowance for Loan losses	3,700,000		3,700,000		3,700,000
Average Recorded Investment	34,750,000	34,750,000	34,750,000	34,750,000
Interest Income Recognized	283,768	$ 260,898	565,917	$ 518,028
Commercial
Loans and Investments
Unpaid Principal Balance	1,700,000		1,700,000		1,700,000
Carrying value	1,700,000		1,700,000		1,700,000
Allowance for Loan losses	1,700,000		1,700,000		$ 1,700,000
Average Recorded Investment	$ 1,700,000		$ 1,700,000

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Loans and Investments, Non-performing Loans (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($) loan item	Dec. 31, 2015 USD ($) item
Non-performing loans by asset class
Number of loans | item	134	128
Carrying value of loans before loan loss reserves	$ 1,605,047,851	$ 1,545,126,045
Non-performing loans
Non-performing loans by asset class
Number of loans | item	3	3
Carrying value of loans before loan loss reserves		$ 100,000
Number of loans classified as non-performing which have loan loss reserve | loan	3
Loan loss reserves	$ 22,900,000	22,900,000
Carrying Value	22,943,097	22,938,243
Greater Than 90 Days Past Due | Non-performing loans
Non-performing loans by asset class
Past Due, Non-performing Loans	22,943,097	22,938,243
Multifamily Properties | Non-performing loans
Non-performing loans by asset class
Carrying Value	770,653	765,799
Multifamily Properties | Greater Than 90 Days Past Due | Non-performing loans
Non-performing loans by asset class
Past Due, Non-performing Loans	770,653	765,799
Office Building | Non-performing loans
Non-performing loans by asset class
Carrying Value	20,472,444	20,472,444
Office Building | Greater Than 90 Days Past Due | Non-performing loans
Non-performing loans by asset class
Past Due, Non-performing Loans	20,472,444	20,472,444
Commercial | Non-performing loans
Non-performing loans by asset class
Carrying Value	1,700,000	1,700,000
Commercial | Greater Than 90 Days Past Due | Non-performing loans
Non-performing loans by asset class
Past Due, Non-performing Loans	$ 1,700,000	$ 1,700,000

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Loans and Investments, Loan Modifications, Refinancings and/or Extensions (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 item	Jun. 30, 2015 USD ($) item	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($) item
Troubled debt restructurings by asset class
Number of loans considered to be troubled debt restructurings that subsequently considered non-performing	0	0	0	0
Number of additional loans considered to be troubled debt restructurings	0	0	0	0
Multifamily Properties
Troubled debt restructurings by asset class
Number of loans considered to be troubled debt restructurings		4	1	5
Original Unpaid Principal Balance | $		$ 29,416,456	$ 14,646,456	$ 35,609,122
Original Weighted Average Rate of Interest (as a percent)		4.95%	5.24%	5.12%
Extended Unpaid Principal Balance | $		$ 29,416,456	$ 14,646,456	$ 35,609,122
Extended Weighted Average Rate of Interest (as a percent)		4.95%	5.24%	5.12%

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Loans and Investments, Interest Reserves (Details) $ in Millions	Jun. 30, 2016 USD ($) item
Loans and Investments
Total interest reserves	$ 16.7
Number of loans | item	65
Aggregate unpaid principal balance	$ 807.1

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Securities (Details) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended
	Jan. 31, 2016	Dec. 31, 2015	Jun. 30, 2016
Available-for-sale securities
Carrying Value / Estimated Fair Value		$ 2,022,030	$ 440,920
Proceeds from sale of securities			1,567,207
Gain on sale of securities			15,491
Available-for-sale Securities
Available-for-sale securities
Fair Value		1,500,000
Amortized Cost		1,610,505
Cumulative Unrealized Gain		411,525
Carrying Value / Estimated Fair Value		2,022,030
Available-for-sale Securities | Federal Home Loan Mortgage Corporation
Available-for-sale securities
Fair Value		1,500,000
Amortized Cost		1,551,716
Carrying Value / Estimated Fair Value		$ 1,551,716
Fixed interest rate (as a percent)		3.241%
Proceeds from sale of securities	$ 1,600,000
Gain on sale of securities	$ 100,000
Available-for-sale Securities | Common Shares of CV Holdings, Inc.
Available-for-sale securities
Amortized Cost		$ 58,789	58,789
Cumulative Unrealized Gain		411,525	382,131
Carrying Value / Estimated Fair Value		$ 470,314	$ 440,920
Number of shares of common stock purchased		2,939,465	2,939,465

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Investments in Equity Affiliates, Summary (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Investment in Equity Affiliates
Investment in Equity Affiliates	$ 38,649,254	$ 30,870,235
Unpaid Principal Balance of Loans to Equity Affiliates	6,681,666
Arbor Residential Investor LLC
Investment in Equity Affiliates
Investment in Equity Affiliates	33,668,202	25,923,679
West Shore Cafe
Investment in Equity Affiliates
Investment in Equity Affiliates	1,995,932	1,955,933
Unpaid Principal Balance of Loans to Equity Affiliates	1,687,500
Lightstone Value Plus REIT L.P
Investment in Equity Affiliates
Investment in Equity Affiliates	1,894,727	1,894,727
Issuers of Junior Subordinated Notes
Investment in Equity Affiliates
Investment in Equity Affiliates	578,000	578,000
JT Prime
Investment in Equity Affiliates
Investment in Equity Affiliates	425,000	425,000
East River Portfolio
Investment in Equity Affiliates
Investment in Equity Affiliates	87,293	92,796
Unpaid Principal Balance of Loans to Equity Affiliates	4,994,166
Lexford Portfolio
Investment in Equity Affiliates
Investment in Equity Affiliates	$ 100	$ 100

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Investments in Equity Affiliates, Additional Information (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Investment in Equity Affiliates
Income (loss) from equity affiliates	$ 4,367,101	$ 1,534,025		$ 6,264,543	$ 4,629,938
Residential Mortgage Banking Company
Investment in Equity Affiliates
Income (loss) from equity affiliates	3,200,000	1,500,000		4,700,000	4,500,000
Arbor Residential Investor LLC | Non-qualified Residential Mortgages
Investment in Equity Affiliates
Equity Investment						$ 9,700,000
Ownership percentage						50.00%
Income (loss) from equity affiliates	100,000			100,000
Proceeds from equity affiliates	1,200,000
Arbor Residential Investor LLC | Additional mortgage purchases
Investment in Equity Affiliates
Equity Investment	4,200,000			4,200,000
Arbor Residential Investor LLC | Non Qualified and Additional Residential Mortgages
Investment in Equity Affiliates
Equity Investment	13,900,000			13,900,000
Arbor Residential Investor LLC | Non Qualified and Additional Residential Mortgages | Maximum
Investment in Equity Affiliates
Income (loss) from equity affiliates		(100,000)			(100,000)
Arbor Residential Investor LLC | Residential Mortgage Banking Company
Investment in Equity Affiliates
Equity Investment			$ 9,600,000
Percentage of ownership interest of related party in the entity			50.00%
Ownership percentage			22.50%
Income (loss) from equity affiliates	3,100,000	$ 1,500,000		4,600,000	$ 4,600,000
Lexford Portfolio
Investment in Equity Affiliates
Income (loss) from equity affiliates	$ 1,200,000			$ 1,400,000

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Investments in Equity Affiliates, Statements of Operations (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue:
Total revenues	$ 58,959,781	$ 33,121,196	$ 101,889,213	$ 70,985,194
Total expenses	44,856,886	26,788,417	80,864,284	51,942,524
Net income	14,102,895	6,332,779	21,024,929	19,042,670
Arbor's share of income	$ 3,148,720	$ 1,471,459	$ 4,718,296	$ 4,507,256

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Real Estate Owned and Held-For-Sale, Portfolio (Details)	3 Months Ended			6 Months Ended
	Jun. 30, 2016 USD ($) property item	Mar. 31, 2016 USD ($) property	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) property item	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) item
Real Estate owned
Less: Impairment loss	$ (11,200,000)			$ (11,200,000)
Real estate owned, net	20,012,783			20,012,783		$ 60,845,509
Restricted cash due to escrow requirement	$ 158,667,541			158,667,541		48,301,244
Real Estate Held-For-Sale
Pay off outstanding debt				$ 27,155,000	$ 30,984,357
Multifamily and Hotel | Disposed of by sale
Real Estate Held-For-Sale
Proceeds from sale of properties			$ 18,800,000
Gain on sale of property			$ 4,000,000
Multifamily Properties | Disposed of by sale
Real Estate Held-For-Sale
Number of properties reclassified from real estate owned to real estate held-for-sale | property	3			3
Proceeds from sale of properties	$ 41,000,000
Gain on sale of property	11,000,000
Pay off outstanding debt	27,100,000
Hotel Properties
Real Estate owned
Less: Impairment loss				$ (11,200,000)
Hotel Properties | Disposed of by sale
Real Estate Held-For-Sale
Number of properties reclassified from real estate owned to real estate held-for-sale | property		1
Proceeds from sale of properties		$ 9,700,000
Gain on sale of property		$ 600,000
Real Estate owned
Real Estate owned
Less: Accumulated depreciation and amortization	(8,456,740)			(8,456,740)		(16,869,757)
Real estate owned, net	20,012,783			20,012,783		60,845,509
Restricted cash due to escrow requirement	$ 900,000			$ 900,000		$ 1,600,000
Real Estate owned | Multifamily Properties
Real Estate owned
Number of properties | item						3
Less: Accumulated depreciation and amortization						$ (9,399,041)
Real estate owned, net						$ 28,783,692
Real Estate owned | Hotel Properties
Real Estate owned
Number of properties | item	1			1		2
Less: Accumulated depreciation and amortization	$ (8,146,318)			$ (8,146,318)		$ (7,329,615)
Real estate owned, net	$ 14,423,205			$ 14,423,205		$ 26,302,918
Weighted average occupancy rate of properties (as a percent)	64.00%		55.00%	64.00%	55.00%	94.00%
Amount of weighted average daily rate of properties				$ 99	$ 96
Amount of weighted average daily revenue of properties				63	$ 53
Real Estate owned | Office Building
Real Estate owned
Less: Accumulated depreciation and amortization	$ (310,422)			(310,422)		$ (141,101)
Real estate owned, net	$ 5,589,578			$ 5,589,578		$ 5,758,899
Weighted average occupancy rate of properties (as a percent)	100.00%			100.00%		100.00%
Real Estate owned | Land
Real Estate owned
Real estate owned, gross	$ 7,802,651			$ 7,802,651		$ 13,341,495
Real Estate owned | Land | Multifamily Properties
Real Estate owned
Real estate owned, gross						5,538,844
Real Estate owned | Land | Hotel Properties
Real Estate owned
Real estate owned, gross	3,293,651			3,293,651		3,293,651
Real Estate owned | Land | Office Building
Real Estate owned
Real estate owned, gross	4,509,000			4,509,000		4,509,000
Real Estate owned | Building and intangible assets
Real Estate owned
Real estate owned, gross	31,866,872			31,866,872		64,373,771
Real Estate owned | Building and intangible assets | Multifamily Properties
Real Estate owned
Real estate owned, gross						32,643,889
Real Estate owned | Building and intangible assets | Hotel Properties
Real Estate owned
Real estate owned, gross	30,475,872			30,475,872		30,338,882
Real Estate owned | Building and intangible assets | Office Building
Real Estate owned
Real estate owned, gross	$ 1,391,000			$ 1,391,000		$ 1,391,000

XML

Real Estate Owned and Held-For-Sale, Results for Held-For-Sale (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue:
Property operating income			$ 2,845,231	$ 3,349,979
Expenses:
Property operating expense			1,994,346	2,323,404
Depreciation			334,631	436,326
Net income			$ 516,254	$ 590,249
Held-For-Sale
Revenue:
Property operating income	$ 1,149,883	$ 1,367,641
Expenses:
Property operating expense	932,518	1,016,112
Depreciation		212,020
Net income	$ 217,365	$ 139,509

XML

Debt Obligations, Credit Facilities and Repurchase Agreements (Details)	1 Months Ended		3 Months Ended	6 Months Ended
	Feb. 29, 2016 USD ($)	Sep. 30, 2015 USD ($)	Mar. 31, 2015 USD ($) item	Jun. 30, 2016 USD ($) item	Dec. 31, 2015 USD ($) item
Debt Obligations
Debt Carrying Value, Total credit facilities and repurchase agreements				$ 259,171,941	$ 136,252,135
Collateral Cash, Restricted Cash				$ 158,667,541	48,301,244
Past due days, full repayment of a advance required				60 days
Maximum
Debt Obligations
Warehousing period				24 months
Healthcare related loans | Minimum | LIBOR
Debt Obligations
Variable rate, spread (as a percent)				2.25%
Healthcare related loans | Maximum | LIBOR
Debt Obligations
Variable rate, spread (as a percent)				2.50%
Credit facilities and repurchase agreements
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements				$ 259,751,669	137,325,474
Debt Carrying Value, Total credit facilities and repurchase agreements				259,171,941	136,252,135
Collateral Carrying Value, Total credit facilities and repurchase agreements				$ 378,847,522	$ 216,061,504
Weighted Average Note Rate (as a percent)				2.64%	2.69%
Weighted average note rate including certain fees and costs (as a percent)				2.99%	3.42%
Number of interest rate swaps | item				0	0
$150 million repurchase facility
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements				$ 94,265,469	$ 58,270,774
Debt Carrying Value, Total credit facilities and repurchase agreements				93,863,204	57,610,463
Collateral Carrying Value, Total credit facilities and repurchase agreements				$ 151,142,522	$ 99,641,504
Weighted Average Note Rate (as a percent)				2.74%	2.70%
Committed line			$ 150,000,000	$ 150,000,000	$ 150,000,000
Extension of maturity date (in years)				1 year
Deferred financing fees				$ 400,000	700,000
$150 million repurchase facility | Senior mortgage loans
Debt Obligations
Variable rate, spread (as a percent)				2.125%
Variable interest rate, description				LIBOR
$150 million repurchase facility | Junior participation loans
Debt Obligations
Variable rate, spread (as a percent)				3.50%
Variable interest rate, description				LIBOR
$100 million credit facility
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements				$ 21,837,200	24,582,200
Debt Carrying Value, Total credit facilities and repurchase agreements				21,674,670	24,328,863
Collateral Carrying Value, Total credit facilities and repurchase agreements				$ 31,400,000	$ 38,000,000
Weighted Average Note Rate (as a percent)				2.65%	2.62%
Committed line				$ 100,000,000	$ 100,000,000
Variable rate, spread (as a percent)				2.15%
Variable interest rate, description				LIBOR
Extension of maturity date (in years)				1 year
Collateral Cash, Restricted Cash				$ 75,000,000
Deferred financing fees				$ 200,000	300,000
$100 million credit facility | Maximum
Debt Obligations
Advance rate (as a percent)				75.00%
$75 million credit facility - one
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements				$ 66,304,000	13,852,500
Debt Carrying Value, Total credit facilities and repurchase agreements				66,304,000	13,766,445
Collateral Carrying Value, Total credit facilities and repurchase agreements				$ 93,905,000	$ 18,470,000
Weighted Average Note Rate (as a percent)				2.66%	2.59%
Committed line				$ 75,000,000	$ 75,000,000
Variable rate, spread (as a percent)				2.125%
Variable interest rate, description				LIBOR
Credit facility, sublimit to finance healthcare related loans				$ 25,000,000
Deferred financing fees					100,000
$75 million credit facility - one | Maximum
Debt Obligations
Advance rate (as a percent)				75.00%
$75 million credit facility - two
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements				$ 31,025,000
Debt Carrying Value, Total credit facilities and repurchase agreements				31,025,000
Collateral Carrying Value, Total credit facilities and repurchase agreements				$ 44,500,000
Weighted Average Note Rate (as a percent)				2.50%
Committed line				$ 75,000,000
Variable rate, spread (as a percent)				2.00%
Variable interest rate, description				LIBOR
$75 million credit facility - two | Minimum
Debt Obligations
Advance rate (as a percent)				70.00%
$75 million credit facility - two | Maximum
Debt Obligations
Advance rate (as a percent)				75.00%
$50 million credit facility
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements				$ 46,320,000	24,120,000
Debt Carrying Value, Total credit facilities and repurchase agreements				46,305,067	24,114,494
Collateral Carrying Value, Total credit facilities and repurchase agreements				$ 57,900,000	$ 30,200,000
Weighted Average Note Rate (as a percent)				2.50%	2.46%
Committed line	$ 50,000,000			$ 50,000,000
Line of credit, additional borrowing capacity	$ 25,000,000
Variable rate, spread (as a percent)				2.00%
Variable interest rate, description				LIBOR
Number of one-year extension option | item				2
Extension of maturity date (in years)				1 year
$50 million credit facility | Maximum
Debt Obligations
Deferred financing fees				$ 100,000	$ 100,000
$16.5 million term credit facility
Debt Obligations
Debt Principal Balance, Total credit facilities and repurchase agreements					16,500,000
Debt Carrying Value, Total credit facilities and repurchase agreements					16,431,870
Collateral Carrying Value, Total credit facilities and repurchase agreements					$ 29,750,000
Weighted Average Note Rate (as a percent)					3.22%
Committed line		$ 16,500,000			$ 16,500,000
Variable rate, spread (as a percent)		2.75%
Variable interest rate, description		LIBOR
Collateral Cash, Restricted Cash		$ 3,000,000
Collateralized debt obligations
Debt Obligations
Number of collateral debt obligation | item			2

XML

Debt Obligations, Collateralized Loan Obligations (Details)	1 Months Ended			3 Months Ended	6 Months Ended
	Aug. 31, 2015 USD ($) item	Feb. 28, 2015 USD ($) item	Apr. 30, 2014 item	Mar. 31, 2015 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)
Debt Obligations
Debt, Carrying Value					$ 760,632,528	$ 758,899,661
Collateral Cash, Restricted Cash					158,667,541	48,301,244
CLOs
Debt Obligations
Debt, Face Value					768,000,000	768,000,000
Debt, Carrying Value					760,632,528	758,899,661
Collateral Loans, Unpaid Principal					868,016,414	971,162,690
Collateral Loans, Carrying Value					865,800,139	968,970,064
Collateral Cash, Restricted Cash					154,736,226	42,992,023
Collateral-At-Risk					$ 0	$ 0
Weighted average note rate (as a percent)					2.87%	2.84%
Weighted average note rate including certain fees and costs (as a percent)					3.31%	3.24%
CLO II
Debt Obligations
Debt instrument redemption value				$ 177,000,000
Deferred fees expensed as interest expense				$ 1,500,000
CLO III
Debt Obligations
Debt, Face Value					$ 281,250,000	$ 281,250,000
Debt, Carrying Value					279,762,775	279,129,518
Collateral Loans, Unpaid Principal					314,700,230	339,019,221
Collateral Loans, Carrying Value					313,790,106	338,034,689
Collateral Cash, Restricted Cash					$ 58,052,410	$ 25,135,492
Number of investment grade tranches issued | item			3
Weighted average note rate (as a percent)					2.90%	2.86%
Variable interest rate, description					one-month LIBOR
Deferred financing fees					$ 1,500,000	$ 2,100,000
CLO IV
Debt Obligations
Debt, Face Value					219,000,000	219,000,000
Debt, Carrying Value		$ 219,000,000			216,552,305	215,985,420
Collateral Loans, Unpaid Principal					263,533,848	288,581,773
Collateral Loans, Carrying Value		$ 250,000,000			262,944,653	287,946,641
Collateral Cash, Restricted Cash					$ 36,466,152	$ 11,418,227
Number of investment grade tranches issued | item		3
Number of newly-formed wholly-owned subsidiaries | item		2
Replacement period		2 years 6 months
Proceeds from additional loan obligations		$ 50,000,000
Notional amount of equity interest retained		$ 81,000,000
Weighted average note rate (as a percent)		2.24%			2.75%	2.71%
Variable interest rate, description		one-month LIBOR			one-month LIBOR
Weighted average note rate including certain fees and costs (as a percent)		2.96%
Deferred financing fees					$ 2,400,000	$ 3,000,000
CLO V
Debt Obligations
Debt, Face Value	$ 302,600,000				267,750,000	267,750,000	$ 350,000,000
Debt, Carrying Value	$ 267,800,000				264,317,448	263,784,723
Collateral Loans, Unpaid Principal					289,782,336	343,561,696
Collateral Loans, Carrying Value					289,065,380	342,988,734
Collateral Cash, Restricted Cash					$ 60,217,664	$ 6,438,304
Number of investment grade tranches issued | item	3
Number of newly-formed wholly-owned subsidiaries | item	2
Replacement period	3 years
Proceeds from additional loan obligations	$ 47,400,000
Maximum period of additional loan obligations	120 days
Notional amount of equity interest retained	$ 82,300,000
Weighted average note rate (as a percent)	2.44%				2.94%	2.91%
Variable interest rate, description	one-month LIBOR				one-month LIBOR
Weighted average note rate including certain fees and costs (as a percent)	3.07%
Deferred financing fees					$ 3,300,000	$ 3,800,000
Class C secured floating rate notes
Debt Obligations
Notes acquired	$ 12,500,000
Net proceeds	$ 12,500,000

XML

Debt Obligations, Collateralized Debt Obligations (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended
	Jul. 31, 2015	Mar. 31, 2015	Jun. 30, 2016	Dec. 31, 2015	Dec. 31, 2010	Jan. 31, 2015
Collateralized debt obligations
Debt Obligations
Debt instrument redemption value	$ 71.1					$ 167.9
Face amount of debt instrument re-issued					$ 42.8
Additional debt					65.2
Portion of the entity's bonds that were exchanged					42.3
Estimated interest due on reissued bonds					22.9	11.0
Gain on extinguishment of debt	$ 8.2
Revolving note class
Debt Obligations
Revolving note amount		$ 100.0
$150 million warehouse repurchase facility
Debt Obligations
Cash equity generated		30.0
Deferred fees expensed as interest expense		0.5
Estimated interest due on reissued bonds		11.0
Loss on terminated derivative		$ 4.3
Revolving note amount						$ 150.0
Junior subordinated notes
Debt Obligations
Amount of debt extinguished					$ 114.1
Deferred fees expensed as interest expense			$ 3.2	$ 3.3

XML

Debt Obligations, Senior Unsecured Notes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2014	Jun. 30, 2016	Dec. 31, 2015
Debt Obligations
Debt, Carrying Value		$ 760,632,528	$ 758,899,661
Senior Unsecured Notes
Debt Obligations
Face amount	$ 90,000,000
Interest rate (as a percent)	7.375%
Net proceeds	$ 85,400,000
Weighted average note rate including certain fees and costs (as a percent)		8.15%	8.12%
Debt, Carrying Value		$ 94,100,000	$ 93,800,000
Deferred financing fees		$ 3,700,000	$ 4,100,000
Senior Unsecured Notes | Over-Allotment Option
Debt Obligations
Face amount	7,800,000
Net proceeds	$ 7,400,000

XML

Debt Obligations, Junior Subordinated Notes (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Debt Obligations
Debt Carrying Value	$ 157,468,377	$ 157,117,130
Junior subordinated notes
Debt Obligations
Debt Carrying Value	157,500,000	157,100,000
Deferred amount Due at maturity	15,200,000	15,500,000
Deferred fees expensed as interest expense	$ 3,200,000	$ 3,300,000
Variable interest rate, description	three-month LIBOR
Nonredeemable period from issue date (in years)	2 years
Weighted average note rate (as a percent)	3.47%	3.43%
Weighted average note rate including certain fees and costs (as a percent)	3.58%	3.55%

XML

Debt Obligations, Mortgage Note Payable, Real Estate Owned and Held-For-Sale (Details)	3 Months Ended	6 Months Ended		12 Months Ended
	Mar. 31, 2015 USD ($) item	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Dec. 31, 2015 item
Debt Obligations
Reduction in mortgage note payable		$ 27,155,000	$ 30,984,357
Number of loans | item		134		128
Mortgage Notes Payable - Real Estate Owned and Held-For-Sale | First mortgage | Multifamily Properties
Debt Obligations
Reduction in mortgage note payable	$ 10,300,000
Mortgage note paid - real estate held-for-sale	$ 20,700,000
Number of loans | item	2
Debt, Face Value	$ 27,200,000

XML

Debt Obligations, Debt Covenants (Details) - USD ($)	1 Months Ended					6 Months Ended
	Jul. 31, 2016	Apr. 30, 2016	Jan. 31, 2016	Oct. 31, 2015	Jul. 31, 2015	Jun. 30, 2016
Debt Covenants
Minimum liquidity requirement						$ 20,000,000
Minimum net worth requirement one						100,000,000
Minimum net worth requirement two						300,000,000
Maximum total liabilities less subordinated debt requirement						2,000,000,000
CLO III
Debt Covenants
Current overcollateralization ratio for cash flow triggers (as a percent)	133.33%	133.33%	133.33%	133.33%	133.33%
Limit overcollateralization ratio for cash flow triggers (as a percent)	132.33%
Current interest coverage ratio for cash flow triggers (as a percent)	221.94%
Limit interest coverage ratio for cash flow triggers (as a percent)	120.00%
CLO IV
Debt Covenants
Current overcollateralization ratio for cash flow triggers (as a percent)	136.99%	136.99%	136.99%	136.99%	136.99%
Limit overcollateralization ratio for cash flow triggers (as a percent)	135.99%
Current interest coverage ratio for cash flow triggers (as a percent)	320.98%
Limit interest coverage ratio for cash flow triggers (as a percent)	120.00%
CLO V
Debt Covenants
Current overcollateralization ratio for cash flow triggers (as a percent)	130.72%	130.72%	130.72%	130.72%
Limit overcollateralization ratio for cash flow triggers (as a percent)	129.72%
Current interest coverage ratio for cash flow triggers (as a percent)	244.46%
Limit interest coverage ratio for cash flow triggers (as a percent)	120.00%
Junior subordinated notes
Debt Covenants
Amount payable on default of senior debt						$ 0

XML

Derivative Financial Instruments, Summary (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) item	Dec. 31, 2015 USD ($) item	Jun. 30, 2015 USD ($)
Interest Rate Swaps
Derivative Financial Instruments
Notional value of matured instruments	$ 1,700
Qualifying | LIBOR Caps
Derivative Financial Instruments
Count | item	2	2
Notional Value, classified in Other Assets	$ 84,100	$ 84,100	$ 43,500
Fair Value, classified in Other Assets		$ 3
Cap rate (as a percent)			2.00%
Qualifying | Interest Rate Swaps
Derivative Financial Instruments
Count | item	4	5
Notional Value, classified in Other Liabilities	$ 106,141	$ 107,821
Fair Value, classified in Other Liabilities	$ (2,407)	$ (4,669)

XML

Derivative Financial Instruments, Statements of Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Derivative Financial Instruments
Cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as qualifying hedges	$ (2,800)		$ (2,800)		$ (5,300)
Cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as cash flow hedges attributable to fair value of qualifying cash flow hedges	(2,500)		(2,500)		(4,700)
Cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as cash flow hedges attributable to deferred losses terminated interest swaps	(300)		(300)		(600)
Fair value of derivatives in a net liability position	(2,400)		(2,400)		(4,600)
Collateral posted	2,800		2,800		5,000
Non-Qualifying | Basis Swaps
Derivative Financial Instruments
Notional Value, classified in Other Assets		$ 3,000		$ 3,000
Non-Qualifying | Basis Swaps | Interest expense
Derivative Financial Instruments
Change in fair value				(3)
Non-Qualifying | Basis Swaps | Maximum
Derivative Financial Instruments
Fair Value, classified in Other Assets		100		100
Qualifying | Interest Rate Swaps
Derivative Financial Instruments
Amount of Loss Recognized in Other Comprehensive Loss (Effective Portion)			262	907
Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Interest Expense (Effective Portion)			(2,696)	(3,242)
Interest expense expected to be reclassified from qualifying cash flow hedges over the next twelve months	(2,500)		(2,500)
Qualifying | Interest Rate Swaps | Interest expense
Derivative Financial Instruments
Amount of Loss Reclassified in Loss into Loss on Termination of Swaps (Ineffective Portion)				(4,286)
Qualifying | LIBOR Caps
Derivative Financial Instruments
Notional Value, classified in Other Assets	84,100	43,500	84,100	43,500	84,100
Fair Value, classified in Other Assets					3
Terminated hedges | Interest Rate Swaps
Derivative Financial Instruments
Net deferred loss in accumulated other comprehensive loss	300		300		$ 600
Additional interest expense related to the amortization of the loss	200	200	300	300
Reduction to interest expense related to the accretion of the net gains			100	$ 100
Amount of net deferred loss expected to be recorded to interest expense over the next twelve months	400		400
Terminated hedges | Interest Rate Swaps | Maximum
Derivative Financial Instruments
Reduction to interest expense related to the accretion of the net gains	100	$ 100
Terminated hedges | Interest Rate Swaps | CDO I and II debt
Derivative Financial Instruments
Aggregate notional value	134,600		134,600
Aggregate fair value	$ (4,300)		$ (4,300)

XML

Variable Interest Entities (Details)	6 Months Ended
	Jun. 30, 2016 USD ($) item	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Variable Interest Entities
Loans to VIEs	$ 1,605,047,851		$ 1,545,126,045
Loan loss reserves related to VIEs	83,831,575	$ 86,746,575	86,761,575	$ 117,563,544	$ 116,470,000	$ 115,487,320
Assets:
Restricted cash	158,667,541		48,301,244
Loans and investments, net	1,511,596,691		1,450,334,341
Due from related party	781,782		8,082,265
Other assets	26,419,806		29,558,430
Total assets	1,916,746,481		1,827,391,944
Liabilities:
Collateralized loan obligations	760,632,528		758,899,661
Other liabilities	44,932,044		51,054,321
Total liabilities	1,351,073,266		1,262,301,169
Consolidated VIEs | CLOs
Assets:
Restricted cash	156,656,516		46,695,819
Loans and investments, net	865,800,137		968,970,064
Due from related party	36,452		36,451
Other assets	6,023,276		6,969,201
Total assets	1,028,516,381		1,022,671,535
Liabilities:
Collateralized loan obligations	760,632,528		758,899,661
Other liabilities	1,215,022		1,224,193
Total liabilities	$ 761,847,550		$ 760,123,854
Unconsolidated VIEs
Variable Interest Entities
Number of VIEs where the reporting entity is not VIE's primary beneficiary | item	19
Carrying Amount	$ 278,929,106
Exposure to real estate debt	1,600,000,000
Loans to VIEs	149,800,000
Loan loss reserves related to VIEs	77,700,000
Unconsolidated VIEs | Maximum
Variable Interest Entities
Exposure to loss	278,929,106
Unconsolidated VIEs | Loans
Variable Interest Entities
Carrying Amount	276,355,074
Unconsolidated VIEs | Loans | Maximum
Variable Interest Entities
Exposure to loss	276,355,074
Unconsolidated VIEs | Equity investments
Variable Interest Entities
Carrying Amount	1,996,032
Unconsolidated VIEs | Equity investments | Maximum
Variable Interest Entities
Exposure to loss	1,996,032
Unconsolidated VIEs | Junior subordinated notes
Variable Interest Entities
Carrying Amount	578,000
Unconsolidated VIEs | Junior subordinated notes | Maximum
Variable Interest Entities
Exposure to loss	$ 578,000

XML

Fair Value, Carrying Value and Estimated Fair Value (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Financial assets:
Loans and investments, net	$ 1,511,596,691	$ 1,450,334,341
Available-for-sale securities, at fair value	440,920	2,022,030
Financial liabilities:
Credit and repurchase facilities	259,171,941	136,252,135
Collateralized loan obligations	760,632,528	758,899,661
Senior unsecured notes	94,140,028	93,764,994
Junior subordinated notes	157,468,377	157,117,130
Mortgage note payable - real estate owned		27,155,000
Principal / Notional Amount
Financial assets:
Loans and investments, net	1,605,047,851	1,545,126,045
Available-for-sale securities, at fair value	58,789	1,610,505
Derivative financial instruments	84,100,000	84,100,000
Financial liabilities:
Credit and repurchase facilities	259,751,669	137,325,474
Collateralized loan obligations	768,000,000	768,000,000
Senior unsecured notes	97,860,025	97,860,025
Junior subordinated notes	175,858,000	175,858,000
Mortgage note payable - real estate owned		27,155,000
Derivative financial instruments	106,141,799	107,820,995
Carrying Value
Financial assets:
Loans and investments, net	1,511,596,691	1,450,334,341
Available-for-sale securities, at fair value	440,920	2,022,030
Derivative financial instruments	7	3,345
Financial liabilities:
Credit and repurchase facilities	259,171,941	136,252,135
Collateralized loan obligations	760,632,528	758,899,661
Senior unsecured notes	94,140,028	93,764,994
Junior subordinated notes	157,468,377	157,117,130
Mortgage note payable - real estate owned		27,155,000
Derivative financial instruments	2,407,140	4,669,273
Fair Value
Financial assets:
Loans and investments, net	1,561,195,211	1,481,353,410
Available-for-sale securities, at fair value	440,920	2,022,030
Derivative financial instruments	7	3,345
Financial liabilities:
Credit and repurchase facilities	259,281,660	137,072,691
Collateralized loan obligations	755,635,625	766,065,400
Senior unsecured notes	99,543,217	96,294,265
Junior subordinated notes	104,864,588	104,073,847
Mortgage note payable - real estate owned		27,111,231
Derivative financial instruments	$ 2,407,140	$ 4,669,273

XML

Fair Value, Measurement on Recurring Basis (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2016 USD ($) item	Jun. 30, 2016 USD ($) item	Dec. 31, 2015 USD ($)
Financial assets:
Available-for-sale securities, at fair value	$ 440,920	$ 440,920	$ 2,022,030
Allowance for Loan losses	$ 83,831,575	$ 83,831,575	86,761,575
Number of impaired loans | item	8	8
Aggregate carrying value, before reserves	$ 186,722,981	$ 186,722,981	189,209,415
Non-financial assets:
Long-lived asset	20,012,783	20,012,783	60,845,509
Impairment loss on real estate owned	11,200,000	11,200,000
Carrying Value
Financial assets:
Available-for-sale securities, at fair value	440,920	440,920	2,022,030
Derivative financial instruments	7	7	3,345
Financial liabilities:
Derivative financial instruments	2,407,140	2,407,140	4,669,273
Fair Value
Financial assets:
Available-for-sale securities, at fair value	440,920	440,920	2,022,030
Derivative financial instruments	7	7	3,345
Financial liabilities:
Derivative financial instruments	2,407,140	2,407,140	$ 4,669,273
Recurring basis | Carrying Value
Financial assets:
Available-for-sale securities, at fair value	440,920	440,920
Derivative financial instruments	7	7
Financial liabilities:
Derivative financial instruments	2,407,140	2,407,140
Recurring basis | Fair Value
Financial assets:
Available-for-sale securities, at fair value	440,920	440,920
Derivative financial instruments	7	7
Financial liabilities:
Derivative financial instruments	2,407,140	2,407,140
Nonrecurring basis | Carrying Value
Financial assets:
Impaired loans, net	102,891,406	102,891,406
Non-financial assets:
Long-lived asset	14,423,205	14,423,205
Nonrecurring basis | Fair Value
Financial assets:
Impaired loans, net	102,891,406	102,891,406
Non-financial assets:
Long-lived asset	14,423,205	14,423,205
Level 1 | Recurring basis
Financial assets:
Available-for-sale securities, at fair value	440,920	440,920
Level 2 | Recurring basis
Financial assets:
Derivative financial instruments	7	7
Financial liabilities:
Derivative financial instruments	2,407,140	2,407,140
Level 3 | Nonrecurring basis
Financial assets:
Impaired loans, net	102,891,406	102,891,406
Non-financial assets:
Long-lived asset	$ 14,423,205	$ 14,423,205

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Fair Value, Measurement on Nonrecurring Basis (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Long-lived asset	$ 20,012,783	$ 60,845,509
Level 3 | Nonrecurring basis
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Impaired loans	102,891,406
Long-lived asset	14,423,205
Level 3 | Office Building | Discounted cash flows
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Impaired loans	$ 815,000
Discount rate (as a percent)	11.00%
Capitalization rate (as a percent)	8.03%
Revenue growth rate (as a percent)	2.50%
Level 3 | Office Building | Nonrecurring basis | Discounted cash flows
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Discount rate (as a percent)	11.00%
Capitalization rate (as a percent)	8.03%
Revenue growth rate (as a percent)	2.50%
Level 3 | Land | Discounted cash flows
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Impaired loans	$ 71,279,838
Level 3 | Land | Nonrecurring basis | Discounted cash flows
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Discount rate (as a percent)	15.00%
Capitalization rate (as a percent)	7.25%
Revenue growth rate (as a percent)	3.00%
Level 3 | Hotel Properties | Discounted cash flows
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Impaired loans	$ 30,796,568
Long-lived asset	$ 14,423,205
Level 3 | Hotel Properties | Nonrecurring basis | Discounted cash flows
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Discount rate (as a percent)	9.25%
Capitalization rate (as a percent)	7.25%
Revenue growth rate (as a percent)	3.80%
Non-financial asset discount rate (as a percent)	11.00%
Non-financial asset capitalization rate (as a percent)	9.00%
Non-financial asset revenue growth rate (as a percent)	6.20%
Non-financial assets hold period	3 years

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Fair Value, Financial Assets and Liabilities (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Financial assets:
Loans and investments, net	$ 1,511,596,691	$ 1,450,334,341
Financial liabilities:
Credit facilities and repurchase agreements	259,171,941	136,252,135
Collateralized loan obligations	760,632,528	758,899,661
Senior unsecured notes	94,140,028	93,764,994
Junior subordinated notes	157,468,377	157,117,130
Level 1
Financial liabilities:
Senior unsecured notes	99,543,217
Level 3
Financial assets:
Loans and investments, net	1,561,195,211
Financial liabilities:
Credit facilities and repurchase agreements	259,281,660
Collateralized loan obligations	755,635,625
Junior subordinated notes	104,864,588
Carrying Value
Financial assets:
Loans and investments, net	1,511,596,691	1,450,334,341
Financial liabilities:
Credit facilities and repurchase agreements	259,171,941	136,252,135
Collateralized loan obligations	760,632,528	758,899,661
Senior unsecured notes	94,140,028	93,764,994
Junior subordinated notes	157,468,377	157,117,130
Fair Value
Financial assets:
Loans and investments, net	1,561,195,211	1,481,353,410
Financial liabilities:
Credit facilities and repurchase agreements	259,281,660	137,072,691
Collateralized loan obligations	755,635,625	766,065,400
Senior unsecured notes	99,543,217	96,294,265
Junior subordinated notes	$ 104,864,588	$ 104,073,847

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Commitments and Contingencies, Contractual Commitments (Details) $ in Millions	Jun. 30, 2016 USD ($)
Contractual Obligations, Payments Due by Period
2016	$ 146.2
2017	320.9
2018	313.7
2019	171.1
2020	75.8
Thereafter	273.7
Unfunded commitments related to loans and investments	36.8
Available amount to fund unfunded commitments	$ 2.3

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Commitments and Contingencies, Litigation (Details) $ in Millions	Jun. 28, 2013 USD ($) lawsuit defendant	Jun. 15, 2011 USD ($) lawsuit defendant
Arbor ESH II, LLC
Litigation
Investments in the Series A1 Preferred Units of a holding company of Extended Stay, Inc. | $		$ 115.0
Lawsuits filed by Extended Stay Litigation Trust (the Trust)
Litigation
Number of lawsuits or complaints filed | lawsuit		3
Number of lawsuits filed in United States Bankruptcy Court | lawsuit		2
Number of defendants		73
Number of defendants who are corporate and partnership entities		55
Number of defendants named in a legal action who are individuals		18
Lawsuits filed by Extended Stay Litigation Trust (the Trust) | Fiduciary Duty Claims
Litigation
Number of lawsuits or complaints filed | lawsuit		2
Number of defendants		2
Lawsuits filed by Extended Stay Litigation Trust (the Trust) | Motion to amend the lawsuits
Litigation
Number of lawsuits consolidated | lawsuit	1
Number of defendants removed due to consolidation of lawsuits	47
Number of defendants related to the entity	0
Number of defendants remaining due to consolidation of lawsuits	26
Number of defendants who are corporate and partnership entities	16
Number of defendants named in a legal action who are individuals	10
Number of lawsuits before amendment | lawsuit	100
Number of lawsuits after amendment | lawsuit	17
Aggregate amount which the Trust would be seeking from the affiliates of the entity | $	$ 139.0

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Equity, Disclosures (Details) - USD ($)						1 Months Ended		3 Months Ended			6 Months Ended		12 Months Ended	15 Months Ended
	Aug. 31, 2016	May 04, 2016	May 02, 2016	Feb. 24, 2016	Feb. 01, 2016	Mar. 31, 2016	Mar. 31, 2015	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Mar. 31, 2016	Jul. 31, 2016
Common stock
Aggregate amount of securities for which the entity filed shelf registration statement															$ 500,000,000
Distributions
Cash dividend declared (in dollars per share)								$ 0.15		$ 0.15	$ 0.30	$ 0.28
Preferred distributions declared and paid											$ 3,776,860
Restricted common stock
Deferred Compensation
Forfeited (in shares)								1,001
Restricted common stock | Maximum
Deferred Compensation
Total grant date fair value								$ 100,000
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock
Deferred Compensation
Number of fully vested shares issued									70,225
Total grant date fair value									$ 500,000
Vesting percentage									25.00%
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | March, 2016
Deferred Compensation
Vesting percentage									25.00%
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | March, 2017
Deferred Compensation
Vesting percentage									25.00%
Mr. Ivan Kaufman, chairman and chief executive officer | Restricted common stock | March, 2018
Deferred Compensation
Vesting percentage									25.00%
Mr. Ivan Kaufman, chairman and chief executive officer | Performance
Deferred Compensation
Granted (in shares)									421,348					867,113
Total grant date fair value									$ 900,000
Vesting period									4 years		4 years		4 years
Mr. Ivan Kaufman, chairman and chief executive officer | Employee compensation and benefits | Restricted common stock
Deferred Compensation
Share-based compensation expense									$ 100,000
Mr. Ivan Kaufman, chairman and chief executive officer | Employee compensation and benefits | Performance | Maximum
Deferred Compensation
Share-based compensation expense									$ 100,000
Employees of the company and a related party | Restricted common stock
Deferred Compensation
Number of fully vested shares issued						282,405
Total grant date fair value							$ 1,900,000
Vesting percentage							33.00%
Employees of the company and a related party | Restricted common stock | March, 2017
Deferred Compensation
Vesting percentage											33.00%
Employees of the company and a related party | Restricted common stock | March, 2018
Deferred Compensation
Vesting percentage											33.00%
Employees of the company and a related party | Employee compensation and benefits | Restricted common stock
Deferred Compensation
Share-based compensation expense							$ 200,000
Employees of the company and a related party | Selling and administrative expense | Restricted common stock
Deferred Compensation
Share-based compensation expense							$ 500,000
Non-employees | Selling and administrative expense | Restricted common stock
Deferred Compensation
Share-based compensation expense								300,000		$ 200,000	$ 500,000	$ 200,000
Non-employees | ACM / Our "Manager" | Restricted common stock
Deferred Compensation
Granted (in shares)											193,759
Total grant date fair value											$ 1,300,000
Employees | Restricted common stock
Deferred Compensation
Granted (in shares)											193,463
Total grant date fair value											$ 1,300,000
Employees | Employee compensation and benefits | Restricted common stock
Deferred Compensation
Share-based compensation expense								$ 200,000		$ 300,000	$ 300,000	$ 400,000
8.25% Series A preferred stock
Preferred Stock
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent)											8.25%	8.25%	8.25%
7.75% Series B preferred stock
Preferred Stock
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent)											7.75%	7.75%	7.75%
8.50% Series C preferred stock
Preferred Stock
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent)											8.50%	8.50%	8.50%
Preferred Stock | 8.25% Series A preferred stock
Preferred Stock
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent)	8.25%
Distributions
Cash dividend declared on redeemable preferred stock (in dollars per share)	$ 0.515625		$ 0.515625		$ 0.515625
Preferred Stock | 7.75% Series B preferred stock
Preferred Stock
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent)	7.75%
Distributions
Cash dividend declared on redeemable preferred stock (in dollars per share)	$ 0.484375		0.484375		0.484375
Preferred Stock | 8.50% Series C preferred stock
Preferred Stock
Return on the preferred shares issued to third parties by its subsidiary REIT (as a percent)	8.50%
Distributions
Cash dividend declared on redeemable preferred stock (in dollars per share)	$ 0.53125		$ 0.53125		$ 0.53125
Common Stock
Common stock
Number of shares available for sale through JMP								6,500,000			6,500,000
Distributions
Cash dividend declared (in dollars per share)	$ 0.16
Common Stock | Common Stock
Distributions
Cash dividend declared (in dollars per share)		$ 0.15		$ 0.15
Common Stock | Non-management members of the Board of Directors
Deferred Compensation
Number of fully vested shares issued						67,260
Common Stock | Non-management members of the Board of Directors | Selling and administrative expense
Deferred Compensation
Share-based compensation expense						$ 400,000

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Equity, AOCI (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss	$ 2,436,279		$ 4,840,950
Net unrealized losses on derivatives designated as cash flow hedges, net of deferred losses on terminated interest swaps	2,500,000		4,700,000
Deferred losses on terminated interest swaps	300,000		600,000
Unrealized gain related to available-for-sale securities	400,000		$ 400,000
Interest expense
Accumulated Other Comprehensive Loss
Net realized losses on derivatives designated as cash flow hedges	$ (2,696,300)	$ (3,241,500)
Loss on termination of swaps
Accumulated Other Comprehensive Loss
Net realized losses on derivatives designated as cash flow hedges		$ (4,285,995)

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Earnings Per Share (Details) - USD ($)	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Basic
Net income attributable to common stockholders	$ 10,238,448		$ 10,498,640	$ 11,373,344	$ 25,509,109
Weighted average number of common shares outstanding	51,381,405		50,955,648	51,213,312	50,751,247
Net income per common share (in dollars per share)	$ 0.20		$ 0.21	$ 0.22	$ 0.50
Diluted
Net income attributable to common stockholders	$ 10,238,448		$ 10,498,640	$ 11,373,344	$ 25,509,109
Weighted average number of common shares outstanding	51,381,405		50,955,648	51,213,312	50,751,247
Dilutive effect of of restricted stock units (in shares)	360,546			205,227	143,284
Weighted average number of common shares outstanding	51,741,951		50,955,648	51,418,539	50,894,531
Net income per common share (in dollars per share)	$ 0.20		$ 0.21	$ 0.22	$ 0.50
Mr. Ivan Kaufman, chairman and chief executive officer | Performance
Diluted
Vesting period		4 years		4 years		4 years

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Agreements and Transactions with Related Parties, Management Agreement (Details) - USD ($)		3 Months Ended		6 Months Ended
	Feb. 25, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Management Fees:
Base		$ 2,850,000	$ 2,675,000	$ 5,550,000	$ 5,350,000
Total management fee		2,850,000	2,675,000	5,550,000	5,350,000
Success-based payment		$ 0	$ 0	$ 0	$ 0
ACM / Our "Manager"
Agreements and transactions with related parties
Incentive fee calculation percentage				25.00%
Percentage of loan loss reserve recoveries used in calculation of incentive fee				60.00%
Period during which the loan loss reserve recoveries are to be taken into consideration for calculation of incentive fee				3 years
Term of U.S. Treasury Rate used in computation of incentive fee				10 years
Annual interest rate used in computation of incentive fee (as a percent)				9.50%
Basis spread added to the U.S. Treasury Rate for computation of incentive fee (as a percent)				3.50%
Multiplier used in computation of incentive fee				$ 10.00
Automatically renewal period for management agreement				1 year
Prior written notice period for termination				6 months
Termination fee				$ 10,000,000
ACM / Our "Manager" | ACM Acquisition
Agreements and transactions with related parties
Period to exercise the option to purchase the existing management contract	2 years
Consideration to purchase the existing management contract	$ 25,000,000
Consideration to purchase the existing management contract second year	$ 27,000,000

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Agreements and Transactions with Related Parties, Other (Details) shares in Thousands		1 Months Ended					3 Months Ended			6 Months Ended		12 Months Ended		34 Months Ended
	Jul. 14, 2016 USD ($) shares	Jan. 31, 2016 USD ($) property	Nov. 30, 2015 USD ($) item	Oct. 31, 2015 USD ($) loan	Apr. 30, 2015 USD ($)	Feb. 28, 2015 USD ($)	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Jun. 30, 2016 USD ($) shares	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($) loan item	Mar. 31, 2016 USD ($)
Agreements and transactions with related parties
Due from related party							$ 781,782			$ 781,782		$ 8,082,265
Due to related party							2,166,790			2,166,790		3,428,333
Income from equity affiliates							4,367,101	$ 1,534,025		6,264,543	$ 4,629,938
Investments in equity affiliates							38,649,254			38,649,254		30,870,235
Residential Mortgage Banking Company
Agreements and transactions with related parties
Indirect ownership percentage									22.50%
Income from equity affiliates							3,200,000	1,500,000		4,700,000	4,500,000
ACM Acquisition
Agreements and transactions with related parties
Advisory fees							700,000			3,900,000				$ 8,300,000
Maturity date of April 2016 | Preferred equity investments | Multifamily Properties
Agreements and transactions with related parties
Fixed rate of interest (as a percent)		10.00%
Maturity date of April 2016 | Mortgage loans
Agreements and transactions with related parties
Base spread (as a percent)													4.80%
Maturity date of October 2017 | Bridge Loans
Agreements and transactions with related parties
Base spread (as a percent)				5.00%
LIBOR floor (as a percentage)				0.25%
Interest income recorded							200,000			500,000
Amount of bridge loan purchased from related party				$ 16,700,000
Number of mortgage loans secured by property purchased from related party | loan				2
Maturity date of November 2018 | Bridge Loans
Agreements and transactions with related parties
Extension period			1 year
Maturity date of January 2019 | Bridge loan, two multifamily properties | Multifamily Properties
Agreements and transactions with related parties
Variable interest rate, description		one-month LIBOR
Base spread (as a percent)		4.50%
LIBOR floor (as a percentage)		0.25%
Interest income recorded							300,000			600,000
Maturity date of January 2019 | Bridge loan, one multifamily property
Agreements and transactions with related parties
Principal loan amount		$ 19,000,000
Variable interest rate, description		one-month LIBOR
Base spread (as a percent)		4.50%
LIBOR floor (as a percentage)		0.25%
Interest income recorded							300,000			400,000
Certain Officers | Bridge loan, one multifamily property | Multifamily Properties
Agreements and transactions with related parties
Percentage of ownership interest of related party in the entity		7.50%
Certain Officers | Maturity date of April 2016 | Preferred equity investments | Multifamily Properties
Agreements and transactions with related parties
Equity investment		$ 5,200,000
Certain Officers | Maturity date of November 2018 | Bridge Loans
Agreements and transactions with related parties
Percentage of ownership interest of related party in the entity			7.50%
Base spread (as a percent)			4.50%
LIBOR floor (as a percentage)			0.25%
Interest income recorded							100,000			200,000
Amount of bridge loan purchased from related party			$ 7,100,000
Number of one-year extension options | item			2
Certain Officers | Maturity date of January 2019 | Bridge loan, two multifamily properties | Multifamily Properties
Agreements and transactions with related parties
Principal loan amount		$ 12,700,000
Number of properties owned | property		2
Percentage of ownership interest of related party in the entity		50.00%
ACM / Our "Manager"
Agreements and transactions with related parties
Due from related party							800,000			800,000		8,100,000
Due to related party							2,200,000			2,200,000		3,400,000
Base management fees due to related party							$ 2,100,000			2,100,000
Management fees to be remitted										$ 800,000
Number of shares held by related party | shares							5,300			5,300
ACM / Our "Manager" | Residential Mortgage Banking Company
Agreements and transactions with related parties
Noncontrolling interest in equity method investment acquired (as a percent)									50.00%
Acquisition purchase price									$ 9,600,000
ACM / Our "Manager" | ACM Acquisition
Agreements and transactions with related parties
Acquisition purchase price	$ 276,000,000
OP units issued as part of acquisition | shares	21,230
Percentage of voting power held by related party	36.60%
ACM / Our "Manager" | Non-qualified Residential Mortgages | Residential Mortgage Banking Company
Agreements and transactions with related parties
Equity investment made												9,700,000
Additional investment made by the company along with a consortium of independent outside investors										$ 3,000,000
ACM / Our "Manager" | Maturity date of April 2016 | First mortgage
Agreements and transactions with related parties
Amount of mortgage loan secured by property purchased from related party													$ 14,600,000
ACM / Our "Manager" | Maturity date of April 2016 | Second mortgage
Agreements and transactions with related parties
Amount of mortgage loan secured by property purchased from related party													$ 5,100,000
ACM / Our "Manager" | Maturity date of April 2016 | Mortgage loans
Agreements and transactions with related parties
Interest income recorded							$ 200,000			$ 500,000
Number of mortgage loans secured by property purchased from related party | loan													2
Mr. Ivan Kaufman, chairman and chief executive officer | Minimum
Agreements and transactions with related parties
Ownership interest allowed under company charter (as a percent)							5.00%			5.00%
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of February 2018 | Preferred equity investments
Agreements and transactions with related parties
Principal loan amount						$ 23,000,000							$ 18,000,000
Fixed rate of interest (as a percent)						10.00%
Interest income recorded							$ 400,000			$ 1,000,000
Proceeds from repayment of preferred equity investment							1,000,000
Amount of ownership interest of related party in the entity						$ 2,000,000
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of July 2017 | Bridge Loans
Agreements and transactions with related parties
Percentage of ownership interest of related party in the entity													24.00%
Base spread (as a percent)													7.90%
LIBOR floor (as a percentage)													0.50%
Amount of mortgage loan secured by property purchased from related party													$ 30,400,000
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of March 2016
Agreements and transactions with related parties
Base spread (as a percent)													5.50%
Number of bridge loans originated | item													2
Amount of mortgage loan secured by property purchased from related party													$ 5,000,000
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of March 2016 | Bridge Loans
Agreements and transactions with related parties
Interest income recorded							100,000	100,000		100,000	100,000
Mr. Ivan Kaufman, chairman and chief executive officer | Maturity date of March 2016 | Bridge Loans | Multifamily Properties
Agreements and transactions with related parties
Number of properties owned | item													2
Percentage of ownership interest of related party in the entity													95.00%
Investments in equity affiliates													$ 100,000
Ownership interest (as a percent)													5.00%
Lexford Portfolio
Agreements and transactions with related parties
Aggregate outstanding balance of related party debt							848,500,000			848,500,000
Lexford Portfolio | Preferred equity investments
Agreements and transactions with related parties
Interest income recorded									$ 100,000		200,000
Income from equity affiliates							1,200,000			$ 1,400,000		$ 5,500,000
Affiliate of Mr. Ivan Kaufman
Agreements and transactions with related parties
Contract period with the new entity										7 years 6 months
Fees as a percentage of gross revenues of the underlying properties										4.75%
Mr. Ivan Kaufman and his affiliates | Preferred equity investments
Agreements and transactions with related parties
Interest income recorded								600,000
Mr. Ivan Kaufman and his affiliates | Maturity date of February 2018 | Preferred equity investments
Agreements and transactions with related parties
Interest income recorded											1,100,000
Mr. Ivan Kaufman and his affiliates | Maturity date of July 2017 | Mezzanine Loans
Agreements and transactions with related parties
Fixed rate of interest (as a percent)		12.00%
Interest income recorded							900,000	700,000		$ 1,700,000	1,400,000
Amount of mortgage loan secured by property purchased from related party		$ 4,600,000
Certain officers and our Manager | Maturity date of April 2018 | Bridge Loans
Agreements and transactions with related parties
Percentage of ownership interest of related party in the entity					90.00%
Base spread (as a percent)					4.50%
Interest income recorded							$ 100,000	$ 100,000		$ 200,000	$ 100,000
Amount of mortgage loan secured by property purchased from related party					$ 6,300,000
Certain officers and our Manager | Maturity date of April 2018 | Bridge Loans | Minimum
Agreements and transactions with related parties
Interest rate (as a percent)					0.25%
ACM / Our "Manager" | Kaufman Entities
Agreements and transactions with related parties
Percentage of outstanding membership interest of related party in another related party							92.00%			92.00%

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Subsequent Event (Details) - ACM / Our "Manager" - ACM Acquisition $ in Millions	Jul. 14, 2016 USD ($)
Subsequent Event
Acquisition purchase price	$ 276.0
Subsequent Event.
Subsequent Event
Acquisition purchase price	$ 276.0