1253986--2/28/2007--ARBOR_REALTY_TRUST

related topics

{investment, property, distribution}

{tax, income, asset}

{provision, law, control}

{debt, indebtedness, cash}

{stock, price, operating}

{loan, real, estate}

{regulation, change, law}

Volatility of values of multi-family and commercial properties may adversely affect our loans and investments. We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay dividends to our stockholders. We may need to borrow funds under our credit facilities in order to satisfy our REIT distribution requirements, and a portion of our distributions may constitute a return of capital. Debt service on any borrowings for this purpose will reduce our cash available for distribution. Failure to maintain an exemption from the Investment Company Act would adversely affect our results of operations. We are substantially controlled by Arbor Commercial Mortgage and its controlling equity owner, Mr. Kaufman. Our charter as amended generally does not permit ownership in excess of 8.3% of our capital stock, and attempts to acquire our capital stock in excess of this limit are ineffective without prior approval from our board of directors. Risks Related to Conflicts of Interest We are dependent on our manager with whom we have conflicts of interest. Our directors have approved very broad investment guidelines for our manager and do not approve each investment decision made by our manager. Our manager has broad discretion to invest funds and may acquire structured finance assets where the investment returns are substantially below expectations or that result in net operating losses. Risk Related to Our Status as a REIT If we fail to remain qualified as a REIT, we will be subject to tax as a regular corporation and could face substantial tax liability. Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. Complying with REIT requirements may cause us to forego otherwise attractive opportunities. Complying with REIT requirements may force us to liquidate otherwise attractive investments. Liquidation of collateral may jeopardize our REIT status. Complying with REIT requirements may force us to borrow to make distributions to stockholders. We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock. Restrictions on share accumulation in REITs could discourage a change of control of us. Complying with REIT requirements may limit our ability to hedge effectively.

Full 10-K form ▸

1253986--2/28/2007--ARBOR_REALTY_TRUST_INC