UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 8, 2008 (August 8, 2008)

Arbor Realty Trust, Inc.

(Exact name of registrant as specified in its charter)
 
Maryland	 	001-32136	 	20-0057959	
(State or other jurisdiction of incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	

333 Earle Ovington Boulevard, Suite 900 Uniondale, New York 11553

 (Address of principal executive offices) (Zip Code)

(516) 832-8002

 (Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
Arbor Realty Trust, Inc.
Current Report on Form 8-K

Item 2.02 Results of Operations and Financial Condition.

On August 8, 2008, Arbor Realty Trust, Inc. issued a press release announcing its earnings for the quarter ended June 30, 2008, a copy of which is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits	

Exhibit Number	 	Description	
 	 	 	
99.1	 	Press Release, dated August 8, 2008.	

 
SIGNATURE

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 hereunto duly authorized.
 
Dated: August 8, 2008	ARBOR REALTY TRUST, INC.	

 	By:	/s/ Paul Elenio	 	
 	Name:	Paul Elenio	 	
 	Title:	Chief Financial Officer	 	

 
EXHIBIT INDEX

Exhibit Number	 	 	
 	 	 	
99.1	 	Press Release, dated August 8, 2008.	

 
Contacts:
Arbor Realty Trust, Inc.
Paul Elenio, Chief Financial Officer
516-506-4422
pelenio@arbor.com	Investors:
Stephanie Carrington
The Ruth Group
646-536-7017
scarrington@theruthgroup.com	
 
Media:
Bonnie Habyan, SVP of Marketing
516-506-4615
bhabyan@arbor.com

Arbor Realty Trust Reports Second Quarter 2008 Results

Second Quarter Highlights:
 
 	-	Net income of $11.7 million, or $0.56 per diluted common share	

 	-	Monetized a portion of equity interest in Prime, receiving $33 million in cash, and generated approximately $250 million in cash from equity kickers in 14 of 17 quarters since becoming a public company	

 	-	Declared quarterly dividend of $0.62 per share	

 	-	Recorded $2.0 million in loan loss reserves	
 
Uniondale, NY, August 8, 2008 -- Arbor Realty Trust, Inc. (NYSE: ABR), a real estate investment trust focused on the business of investing in real estate related bridge and mezzanine loans, preferred and direct equity investments, mortgage-related securities and other real estate related assets, today announced financial results for the quarter ended June 30, 2008. Arbor reported net income for the quarter of $11.7 million, or $0.56 per diluted common share, compared to net income for the quarter ended June 30, 2007 of $31.7 million, or $1.75 per diluted common share. Excluding $0.4 million of net loss from Alpine Meadows, net income for the quarter ended June 30, 2008 was $12.1 million, or $0.58 per diluted common share. Excluding $19.7 million of net income from the 450 West 33rd Street, Toy building, and Prime transactions, net income for the quarter ended June 30, 2007 was $12.0 million, or $0.67 per diluted common share. 1  

Net income for the six months ended June 30, 2008 was $24.4 million, or $1.18 per diluted common share, compared to net income for the six months ended June 30, 2007 of $48.4 million, or $2.74 per diluted share. Excluding $0.4 million of net loss from Alpine Meadows  for the six months ended June 30, 2008 and $25.8 million of net income from the 450 West 33rd Street, Toy building, Prime and On the Avenue transactions for the six months ended June 30, 2007, net income for the six months ended June 30, 2008 was $24.8 million, or $1.19 per diluted common share, compared to net income for the six months ended June 30, 2007 of $22.7 million, or $1.29 per diluted common share. 1
______________________
1. See attached supplemental schedule of non-GAAP financial measures on page 8 & 9.

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 2 
In the second quarter of 2008, the Company monetized a portion of its equity interest in Prime Outlets (“Prime”) and received approximately $33 million in cash. Under the terms of the agreement, the Company will transfer 16.67% of its 24.17% interest in Prime, at a value of approximately $37.0 million, in exchange for preferred and common operating partnership units of Lightstone Value Plus REIT L.P. Additionally, Arbor borrowed approximately $33 million from Lightstone Value Plus Real Estate Investment Trust, Inc., which is initially secured by its 16.67% interest in Prime, has an eight year term and bears interest at a fixed rate of 4.00%, with payment deferred until the closing of the transaction. Upon the closing of this transaction, which is expected to occur on or before June 26, 2009, the Company will exchange its 16.67% interest for the preferred and common operating partnership units, which will then collateralize the $33 million loan. The preferred units will pay a preferred return of 4.63% and after five years, the preferred units may be redeemed at par by Lightstone Value Plus REIT L.P. for cash and the loan would become due upon such redemption. The Company owns its 16.67% interest through a consolidated entity, which has a 25% interest in Prime, with a third party member owning the remaining 8.33%. In the second quarter of 2008, the Company recorded approximately $33 million of cash, $49.5 million of debt related to the proceeds received from the loan secured by the entity's 25% interest in Prime which was recorded in notes payable, a $16.5 million receivable from the third party member which was recorded in other assets and a deferred expense related to the incentive management fee of approximately $7.3 million. The transaction provides for a tax deferral for an estimated period of five years, subject to certain carve out provisions. In addition, Arbor retained a 7.5% ownership interest in Prime.

Additionally during the quarter, the Company recorded a $0.6 million loss from its $13.2 million equity investment in the Alpine Meadows unconsolidated joint venture. This amount reflects Arbor’s portion of the joint venture’s losses, including depreciation expense, and was recorded in loss from equity affiliates and as a reduction to the Company’s investment in equity affiliates on the balance sheet.

The net balance in the loan and investment portfolio was $2.5 billion at June 30, 2008, compared to $2.6 billion at March 31, 2008. The average balance of the loan and investment portfolio during the second quarter of 2008 was $2.6 billion and the average yield on these assets for the quarter was 7.91%, compared to $2.6 billion and 8.35% for the first quarter of 2008.

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 3

At June 30, 2008, the balance of debt financing on the loan and investment portfolio was $2.2 billion, mainly unchanged from March 31, 2008. The average balance of debt financing on the loan and investment portfolio during the second quarter of 2008 was $2.2 billion and the average cost of these borrowings was 5.06%, compared to $2.2 billion and 5.64% for the first quarter of 2008.

For the second quarter of 2008, Arbor’s manager, Arbor Commercial Mortgage, LLC, earned $8.5 million of incentive compensation, of which $1.2 million was recorded as management fee expense and $7.3 million was recorded as deferred management fee related to the Prime transaction. Arbor Commercial Mortgage, LLC intends to exercise its option to receive 50% of the incentive compensation in shares of Arbor Realty Trust’s common stock.
 
Financing Activity

As of June 30, 2008, Arbor’s financing facilities for its loan and investment portfolio totaled approximately $2.5 billion and borrowings outstanding under such facilities were $2.2 billion.

During the second quarter, the Company entered into an uncommitted master repurchase agreement with a financial institution for the purpose of financing the purchase of CRE CDO bond securities. The facility has a two-year term from the effective date of the agreement and bears interest at pricing over LIBOR.

In July 2008, a $60 million working capital facility was extended for one year to June 2009 and was amended to a $45 million facility. In addition, the amendment includes required paydowns of $3 million quarterly beginning October 1, 2008 and bears interest at a rate of approximately 500 basis points over Libor. At June 30, 2008, the facility had an aggregate outstanding balance of approximately $48 million.

Portfolio Activity

During the quarter, Arbor originated two new bridge loans totaling $6 million and purchased seven CRE CDO bonds at a discounted price of approximately $58 million with a face amount of approximately $83 million.

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 4
 
During the quarter, 11 loans paid off on properties that were either sold or refinanced outside of Arbor with an outstanding balance of $152 million. Three loans were either refinanced or modified with Arbor totaling $86 million, of which one loan totaling $15 million was scheduled to repay during the quarter and another loan totaling approximately $64 million had a $1.0 million loan loss reserve recorded in the first quarter of 2008.

In addition, three loans totaling approximately $95 million were extended during the quarter in accordance with the extension options of the corresponding loan agreements.

At June 30, 2008, the loan and investment portfolio unpaid principal balance was $2.5 billion, with a weighted average current interest pay rate of 7.07%. At the same date, advances on financing facilities pertaining to the loan and investment portfolio totaled $2.2 billion, with a weighted average interest rate of 4.85% excluding financing and interest rate swap costs.

As of June 30, 2008, Arbor's loan portfolio consisted of 33% fixed-rate and 67% variable rate loans.

As previously disclosed, the Company had a $5.0 million mezzanine loan for which a $1.5 million provision for loan loss was established during the first quarter of 2008. In April 2008, the Company foreclosed on the property, which was subject to a $41.4 million first mortgage. As of June 30, 2008, the Company recorded this investment on its balance sheet as real estate owned at fair value which included the $1.5 million provision previously established, recorded the $41.4 million first lien in mortgage notes payable and recorded a net loss for the quarter of approximately $19,000 in selling and administrative expenses.

In addition, as previously disclosed, the Company had a $13.8 million bridge loan, which the Company established a $1.5 million provision for loan loss during the fourth quarter of 2007. In May 2008, the Company received $0.3 million from the borrower plus a $0.3 million note from the borrower, reducing the carrying amount to $11.7 million. In May 2008, the property was sold for approximately $11.8 million and the Company provided the purchaser with a $12.8 million loan and investment, of which approximately $11.3 million was funded as of June 30, 2008. The Company also received a 25% equity participation interest in the property. As a result of this transaction, the Company recorded a loss of approximately $1.7 million, of which $1.5 million was charged-off against the allowance for loan losses and approximately $0.2 million was recorded in selling and administrative expenses in the second quarter of 2008 related to additional expenses incurred.

During the second quarter, the Company recorded a $2.0 million loan loss reserve related to a loan with an outstanding principal balance of approximately $9.9 million. The loan loss reserve was the result of the Company's regular quarterly risk rating review process, which is based on several factors including current market conditions, real estate values and the operating status of each property. As previously mentioned, the Company had a $1.5 million provision for loan loss on a $5.0 million mezzanine loan that was reclassified to real estate owned during the second quarter of 2008. At June 30, 2008, the Company’s total loan loss reserves were $3.5 million relating to three loans with an aggregate outstanding principal balance of approximately $75.2 million.

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 5
 
As of June 30, 2008, two loans with an outstanding principal balance of approximately $80.1 million were classified as non-performing. Income recognition has been suspended and will resume when the loans become contractually current and performance has recommenced. As previously disclosed, this amount included a $70.4 million bridge loan on a land development project in New York City which, effective April 1, 2008, income recognition had been suspended. During the second quarter of 2008, the Company received approximately $0.6 million, equal to approximately one month’s interest on the loan. In July 2008, the Company elected to begin the foreclosure process on the entity that owns the property. The principal amount of this loan is not deemed to be impaired at this time and no loan loss reserve has been recorded to date. In addition, as of June 30, 2008, one of the three loans reserved for, with an outstanding principal balance of approximately $9.9 million, had been classified as non-performing.

Operating Partnership Units Redemption

In June 2008, the Company’s external manager, Arbor Commercial Mortgage (“ACM”), exercised its right to redeem its approximate 3.8 million operating partnership units (“OP units”) in the Company’s operating partnership for shares of the Company’s common stock on a one-for-one basis.
 
Consequently, this resulted in the elimination of the accounting for minority interest as it relates to ACM’s operating partnership ownership interest in the Company. In addition, the special voting preferred shares paired with each OP unit, pursuant to a pairing agreement, were redeemed simultaneously and cancelled by the Company.

Dividend

As previously announced, the Board of Directors declared a dividend of $0.62 per share for the quarter ended June 30, 2008, to be paid on August 26, 2008 to shareholders of record on August 15, 2008.

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 6
 
Equity Participation Interests
 
Attached as an exhibit to this press release is a schedule of certain data pertaining to the Company's investments with equity participation interests.  As previously disclosed, the Company has entered into an agreement to transfer 16.67% of its 24.17% interest in Prime for preferred and common operating partnership units in another REIT. Upon the closing of this transaction, which is expected to occur prior to the third quarter of 2009, the Company expects to recognize approximately $26 million of net income. In addition during the second quarter, as previously disclosed, the Company refinanced a loan for $12.8 million and received a 25% equity participation interest in the property, and recorded a $0.6 million loss from its equity interest in the Alpine Meadows investment.

Earnings Conference Call
 
Management will host a conference call today at 10:00 a.m. EDT. A live webcast of the conference call will be available online at www.arborrealtytrust.com. www.arborrealtytrust.com . Web participants are encouraged to go to Arbor's Web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. Listening to the webcast requires speakers and RealPlayer(TM) software, downloadable without charge at www.real.com. www.real.com . Those without Web access should access the call telephonically at least ten minutes prior to the conference call. The dial-in numbers are (866) 202-0886 for domestic callers and (617) 213-8841 for international callers. The participant passcode for both is 21706816. 
 
After the live webcast, the call will remain available on Arbor's Web site, www.arborrealtytrust.comwww.arborrealtytrust.com through September 5, 2008. In addition, a telephonic replay of the call will be available until August 15, 2008. The replay dial-in number is (888) 286-8010 for domestic callers and 
(617) 801-6888 for international callers. Please use passcode: 46256143.
About Arbor Realty Trust, Inc.

Arbor Realty Trust, Inc. is a real estate investment trust, which invests in a diversified portfolio of multi-family and commercial real estate related bridge and mezzanine loans, preferred equity investments, mortgage related securities and other real estate related assets. Arbor commenced operations in July 2003 and conducts substantially all of its operations through its operating partnership, Arbor Realty Limited Partnership and its subsidiaries. Arbor is externally managed and advised by Arbor Commercial Mortgage, LLC, a national commercial real estate finance company operating through 11 offices in the US that specializes in debt and equity financing for multi-family and commercial real estate.
 
Safe Harbor Statement

Certain items in this press release may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Arbor can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Arbor’s expectations include, but are not limited to, continued ability to source new investments, changes in interest rates and/or credit spreads, changes in the real estate markets, and other risks detailed in Arbor’s Annual Report on Form 10-K for the year ended December 31, 2007 and its other reports filed with the SEC. Such forward-looking statements speak only as of the date of this press release. Arbor expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Arbor’s expectations with regard thereto or change in events, conditions, or circumstances on which any such statement is based.

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 7
 
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES	
 	 	 	 	 	 	 	 	
CONSOLIDATED INCOME STATEMENTS (Unaudited)	
 
 	 	Quarter Ended June 30,	 	Six Months Ended June 30,	 	
 	 	2008	 	2007	 	2008	 	2007	 	
 	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	
Interest income	 	$	51,869,164	 	$	74,800,274	 	$	107,285,494	 	$	141,260,927	 	
Other income	 	 	28,629	 	 	17,186	 	 	49,322	 	 	23,356	 	
Total revenue	 	 	51,897,793	 	 	74,817,460	 	 	107,334,816	 	 	141,284,283	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	27,857,322	 	 	38,527,983	 	 	59,161,421	 	 	70,640,502	 	
Employee compensation and benefits	 	 	2,686,002	 	 	2,753,662	 	 	4,663,345	 	 	4,484,017	 	
Selling and administrative	 	 	2,793,161	 	 	1,593,494	 	 	4,331,227	 	 	2,814,866	 	
Provision for loan losses	 	 	2,000,000	 	 	-	 	 	5,000,000	 	 	-	 	
Management fee - related party	 	 	2,153,838	 	 	10,645,065	 	 	4,733,272	 	 	15,518,747	 	
Total expenses	 	 	37,490,323	 	 	53,520,204	 	 	77,889,265	 	 	93,458,132	 	
Income before (loss) income from equity affiliates, minority interest and provision for income taxes	 	 	14,407,470	 	 	21,297,256	 	 	29,445,551	 	 	47,826,151	 	
(Loss) income from equity affiliates	 	 	(562,000	)	 	26,025,788	 	 	(562,000	)	 	26,025,788	 	
Income before minority interest and provision for income taxes	 	 	13,845,470	 	 	47,323,044	 	 	28,883,551	 	 	73,851,939	 	
Income allocated to minority interest	 	 	2,117,464	 	 	6,638,020	 	 	4,450,754	 	 	10,318,334	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before provision for income taxes	 	 	11,728,006	 	 	40,685,024	 	 	24,432,797	 	 	63,533,605	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for income taxes	 	 	-	 	 	9,000,000	 	 	-	 	 	15,085,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	11,728,006	 	$	31,685,024	 	$	24,432,797	 	$	48,448,605	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per common share	 	$	0.56	 	$	1.76	 	$	1.18	 	$	2.75	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per common share	 	$	0.56	 	$	1.75	 	$	1.18	 	$	2.74	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Dividends declared per common share	 	$	0.62	 	$	0.62	 	$	1.24	 	$	1.22	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of shares of common stock outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	20,906,383	 	 	17,993,924	 	 	20,739,081	 	 	17,590,860	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	24,721,660	 	 	21,873,322	 	 	24,562,520	 	 	21,453,969	 	

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 8

ARBOR REALTY TRUST, INC. AND SUBSIDIARIES	
 	 	 	 	 	 	 	 	 	
SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES	
(Unaudited)	

 	 	Quarter Ended June 30,	 	Six Months Ended June 30, 	 	
 	 	2008	 	2007	 	2008	 	2007	 	
 	 	 	 	 	 	 	 	 	 	
Total revenue, GAAP basis	 	$	51,897,793	 	$	74,817,460	 	$	107,334,816	 	$	141,284,283	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Subtract: Prime transaction	 	 	-	 	 	(4,166,666	)	 	-	 	 	(4,166,666	)	
On the Avenue transaction	 	 	-	 	 	-	 	 	-	 	 	(15,997,843	)	
450 West 33rd Street transaction	 	 	-	 	 	(10,425,579	)	 	-	 	 	(10,425,579	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue, as adjusted	 	$	51,897,793	 	$	60,225,215	 	$	107,334,816	 	$	110,694,195	 	

Net income, GAAP basis	 	$	11,728,006	 	$	31,685,024	 	$	24,432,797	 	$	48,448,605	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Subtract: Prime transaction	 	 	-	 	 	(3,783,988	)	 	-	 	 	(3,783,988	)	
On the Avenue transaction	 	 	-	 	 	-	 	 	-	 	 	(6,099,372	)	
Toy transaction	 	 	-	 	 	(9,342,631	)	 	-	 	 	(9,342,631	)	
450 West 33rd Street transaction	 	 	-	 	 	(6,529,699	)	 	-	 	 	(6,529,699	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Add: Alpine Meadows	 	 	372,229	 	 	-	 	 	372,229	 	 	-	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income, as adjusted	 	$	12,100,235	 	$	12,028,706	 	$	24,805,026	 	$	22,692,915	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per common share, GAAP basis	 	$	0.56	 	$	1.75	 	$	1.18	 	$	2.74	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per common share, as adjusted	 	$	0.58	 	$	0.67	 	$	1.19	 	$	1.29	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted weighted average shares outstanding	 	 	24,721,660	 	 	21,873,322	 	 	24,562,520	 	 	21,453,969	 	
 
a.) Given the magnitude of the Prime, On the Avenue, Toy and 450 West 33rd Street transactions and the nature of the Alpine Meadows operation, Arbor has elected to report adjusted revenues, net income and earnings per share for the affected periods to help ensure the comparability of the reporting periods. Management considers these non-GAAP financial measures to be effective indicators, for both management and investors, of Arbor’s financial performance. Arbor’s management does not advocate that investors consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.	

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 9
 
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES	
 	 	 	 	
SUPPLEMENTAL SCHEDULE OF NON-GAAP FINANCIAL MEASURES - Continued	
(Unaudited)	
 
 	 	June 30, 2008 	 	
 	 	 	 	
GAAP Stockholders' Equity	 	$	469,178,986	 	
 	 	 	 	 	
Add: 450 West 33rd Street transaction - deferred revenue	 	 	77,123,133	 	
Unrealized loss on derivative instruments	 	 	26,121,426	 	
 	 	 	 	 	
Subtract: 450 West 33rd Street transaction - prepaid management fee	 	 	(19,047,949	)	
 	 	 	 	 	
Adjusted Stockholders' Equity	 	$	553,375,596	 	
 	 	 	 	 	
Adjusted book value per share	 	$	22.37	 	
 	 	 	 	 	
GAAP book value per share	 	$	18.97	 	
 	 	 	 	 	
Common shares outstanding	 	 	24,737,696	 	
 
b.) Given the magnitude and the deferral structure of the 450 West 33rd Street transaction combined with the change in the fair value of certain derivative instruments, Arbor has elected to report adjusted book value per share for the affected period to currently reflect the future impact of the 450 West 33rd Street transaction on the company's financial condition as well as the evaluation of Arbor without the effects of unrealized losses from certain of the Company's derivative instruments. Management considers this non-GAAP financial measure to be an effective indicator, for both management and investors, of Arbor’s financial performance. Arbor’s management does not advocate that investors consider this non-GAAP financial measure in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.	

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 10
 
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES	 	
 	 	 	 	 	 	
CONSOLIDATED BALANCE SHEETS	 	
 	 	 	 	 	 	
 	 	June 30, 2008	 	December 31, 2007	 	
 	 	(Unaudited)	 	(Audited)	 	
Assets:	 	 	 	 	 	
Cash and cash equivalents	 	$	46,195,338	 	$	22,219,541	 	
Restricted cash	 	 	144,099,637	 	 	139,136,105	 	
Loans and investments, net	 	 	2,444,641,847	 	 	2,592,093,930	 	
Available-for-sale securities, at fair value	 	 	10,111,759	 	 	15,696,743	 	
Securities held to maturity, net	 	 	58,498,406	 	 	-	 	
Investment in equity affiliates	 	 	28,850,691	 	 	29,590,190	 	
Real estate owned, net	 	 	46,891,971	 	 	-	 	
Deferred management fee - related party	 	 	7,292,448	 	 	-	 	
Prepaid management fee - related party	 	 	19,047,949	 	 	19,047,949	 	
Other assets	 	 	96,439,720	 	 	83,709,076	 	
Total assets	 	$	2,902,069,766	 	$	2,901,493,534	 	
 	 	 	 	 	 	 	 	
Liabilities and Stockholders’ Equity:	 	 	 	 	 	 	 	
Repurchase agreements	 	$	198,755,637	 	$	244,937,929	 	
Collateralized debt obligations	 	 	1,129,649,000	 	 	1,151,009,000	 	
Junior subordinated notes to subsidiary trust issuing preferred securities	 	 	276,055,000	 	 	276,055,000	 	
Notes payable	 	 	635,388,432	 	 	596,160,338	 	
Mortgage note payable	 	 	41,440,000	 	 	-	 	
Due to related party	 	 	7,914,458	 	 	2,429,109	 	
Due to borrowers	 	 	8,392,612	 	 	18,265,906	 	
Deferred revenue	 	 	77,123,133	 	 	77,123,133	 	
Other liabilities	 	 	58,172,508	 	 	67,395,776	 	
Total liabilities	 	 	2,432,890,780	 	 	2,433,376,191	 	
 	 	 	 	 	 	 	 	
Minority interest	 	 	-	 	 	72,854,258	 	
 	 	 	 	 	 	 	 	
Stockholders’ equity:	 	 	 	 	 	 	 	
Preferred stock, $0.01 par value: 100,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2008 and 3,776,069 shares issued and outstanding at December 31, 2007	 	 	-	 	 	37,761	 	
Common stock, $0.01 par value: 500,000,000 shares authorized; 25,017,096 shares issued, 24,737,696 shares outstanding at June 30, 2008 and 20,798,735 shares issued, 20,519,335 shares outstanding at December 31, 2007	 	 	250,171	 	 	207,987	 	
Additional paid-in capital	 	 	442,592,734	 	 	365,376,136	 	
Treasury stock, at cost - 279,400 shares	 	 	(7,023,361	)	 	(7,023,361	)	
Retained earnings	 	 	64,362,458	 	 	65,665,951	 	
Accumulated other comprehensive loss	 	 	(31,003,016	)	 	(29,001,389	)	
Total stockholders’equity	 	 	469,178,986	 	 	395,263,085	 	
Total liabilities and stockholders’ equity	 	$	2,902,069,766	 	$	2,901,493,534	 	

Arbor Realty Trust Reports Second Quarter 2008 Results
August 8, 2008
Page 11
 
Arbor Realty Trust, Inc.	
Summary of Equity and Profit Interests	
(all dollar amounts in thousands)	
Unaudited	
 
Name	 	Initial ART
Investment
Amount	 	Investment
Date	 	Current
Cash Equity
Investment	 	Profit %	 	Approximate
Square
Footage	 	Property
Type	 	Location	 	Current
Debt Balance
on Property	 	Comments	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
80 Evergreen	 	$	384	 	 	3Q03	 	$	201	 	 	12.50%	 	 	77,680	 	 	Warehouse	 	 	Brooklyn, NY	 	$	5,000	 	 	Property refinanced June 2008	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
930 Flushing	 	 	1,126	 	 	3Q03	 	 	322	 	 	12.50%	 	 	304,080	 	 	Warehouse	 	 	Brooklyn, NY	 	 	24,789	 	 	Property refinanced July 2005	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Prime Portfolio	 	 	2,100	 	 	4Q03	 	 	-	 	 	7.50%	 	 	6,700,000	 	 	Retail Outlets	 	 	Multi-state	 	 	1,200,700	 	 	Properties refinanced	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Prime Portfolio	 	 	 	 	 	 	 	 	-	 	 	16.67%	 (5)	 	6,700,000	 	 	Retail Outlets	 	 	Multi-state	 	 	-	 	 	All equity returned to investors	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
450 W. 33rd St	 	 	1,500	 	 	4Q03	 	 	1,137	 	 	0.58%	 (1)	 	1,746,734	 	 	Office	 	 	New York City	 	 	517,000	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
823 Park Avenue	 	 	-	 	 	3Q04	 	 	-	 	 	20.00%	 	 	52,374	 	 	Conversion	 	 	New York City	 	 	5,169	 	 	Condo conversion - investment held in Taxable REIT Subsidiary ("TRS")	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
York Avenue	 	 	540	 	 	3Q04	 	 	-	 	 	8.70%	 	 	45,200	 	 	Conversion	 	 	New York City	 	 	32,000	 	 	Property refinanced Dec 2005	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Toy Building	 	 	10,000	 	 	2Q05	 	 	5,720	 	 	10.00%	 	 	320,000	 	 	Conversion	 	 	New York City	 	 	343,400	 (2)	 	Condo conversion - investment held in Taxable REIT Subsidiary ("TRS")	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Homewood Mtn Resort	 	 	-	 	 	2Q06	 	 	-	 	 	25.60%	 	 	1,224	 
 (3)	 	Land	 	 	Homewood, CA	 	 	114,157	 	 	Profits interest held in TRS	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Richland Terrace Apartments	 	 	-	 	 	3Q06	 	 	-	 	 	25.00%	 	 	342,152	 	 	Multi Family	 	 	Columbia, SC	 	 	9,094	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ashley Court Apartments	 	 	-	 	 	3Q06	 	 	-	 	 	25.00%	 	 	177,892	 	 	Multi Family	 	 	Fort Wayne, IN	 	 	5,452	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nottingham Village	 	 	-	 	 	1Q07	 	 	-	 	 	25.00	 	 	285,900	 	 	Multi Family	 	 	Indianapolis, IN	 	 	6,626	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Extended Stay Hotel Portfolio	 	 	115,000	 	 	2Q07	 	 	115,000	 	 	16.17%	 	 	684	 (4)	 	Hotel	 	 	Multistate	 	 	7,400,000	 	 	Preferred return of 12% on equity	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Alpine Meadows	 	 	13,220	 	 	3Q07	 	 	13,220	 	 	39.00%	 	 	2,163	 
 (3)	 	Land	 	 	Alpine Meadows, CA	 	 	30,500	 	 	Preferred return of 18% on equity	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
St. John's Development	 	 	500	 	 	4Q07	 	 	500	 	 	50.00%	 	 	23	 (3)	 	Land	 	 	Jacksonville, FL	 	 	25,000	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Windrush Village Apartments	 	 	-	 	 	2Q08	 	 	445	 	 	25.00%	 	 	221,726	 	 	Multi Family	 	 	Tallahassee, FL	 	 	12,800	 	 	 	 	
 
(1) Represents approximately 29% of the 2% retained interest in the property. In addition, Arbor has approximately 29% of a 50% interest in the property's air rights.	
(2) Debt balance represents anticipated debt financing required to complete condominium conversion project.	
(3) Amount represents approximate acreage of property.	
(4) Amount represents approximately 684 properties in 44 states and Canada with approximately 76,000 rooms.	
(5) The Company has agreed to transfer its 16.67% interest for preferred and common operating partnership units of another REIT, which is expected to occur on or prior to June 26, 2009. The Company currently has $33 million in debt related to this transaction that is collateralized by the Company's 16.67% interest in Prime.