Company: ABR-PF
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0001628280-25-007183
Chunk: 94

Company: ARBOR REALTY TRUST INC
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7A
Chunk 94
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 is to minimize the impact of interest rate changes on our net interest income. We also have various fixed rate loans in our portfolio that are financed with variable rate borrowings. Additionally, loans are sometimes extended and, consequently, do not pay off on their original maturity dates. If a loan is extended, our exposure to interest rate risk may be increased. In these instances, we could have a fixed rate loan financed with variable debt with no corresponding hedge, which may result in debt which is unprotected from interest rate risk. Some of our loans and borrowings are subject to interest rate floors. As a result, the impact of a change in interest rates may be different on our interest income than on our interest expense. We have utilized treasury futures and interest rate and credit default swaps in the past to limit interest rate risk. Derivatives are used for hedging purposes rather than speculation. We do not enter into financial instruments for trading purposes.

Additionally, the interest rates on our cash, restricted cash and escrow balances are not indexed to a benchmark index rate and are negotiated periodically with each corresponding bank, therefore, the interest rates may change frequently and may not necessarily change in conjunction with changes in SOFR. As a result, the impact in the table below is for illustrative purposes only.

The following table projects the potential impact on interest (in thousands) for a 12-month period, assuming a hypothetical instantaneous increase or decrease of 50 basis points and a decrease of 100 basis points in corresponding interest rates. Since it is unlikely that interest rates will significantly increase in the near future as a result of the current high interest rate environment, we have excluded the impact of a 100 basis point increase in corresponding interest rates.

Assets (Liabilities)Subject to InterestRate Sensitivity (1)50 Basis PointIncrease50 Basis PointDecrease100 Basis PointDecreaseInterest income from loans and investments$11,304,956 $46,072 $(44,701)$(87,126)Interest expense from debt obligations(9,539,233)40,245 (40,198)(80,377)Impact to net interest income from loans and investments$5,827 $(4,503)$(6,749)Interest income from cash, restricted cash and escrow balances (2)$2,074,405 10,372 (10,372)(20,744)Total impact from hypothetical changes in interest rates$16,199 $(14,875)$(27,493)

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(1)Rep