<SUBMISSION>
<ACCESSION-NUMBER>0000950123-05-005016
<TYPE>DEF 14A
<PUBLIC-DOCUMENT-COUNT>5
<PERIOD>20050525
<FILING-DATE>20050426
<DATE-OF-FILING-DATE-CHANGE>20050426
<EFFECTIVENESS-DATE>20050426
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ARBOR REALTY TRUST INC
<CIK>0001253986
<ASSIGNED-SIC>6798
<IRS-NUMBER>200057959
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEF 14A
<ACT>34
<FILE-NUMBER>001-32136
<FILM-NUMBER>05773339
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>333 EARLE OVINGTON BOULEVARD
<STREET2>SUITE 900
<CITY>UNIONDALA
<STATE>NY
<ZIP>11553
<PHONE>5168328003
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>333 EARLE OVINGTON BLVD STE.900
<CITY>UNIONDALE
<STATE>NY
<ZIP>11553
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>y07963def14a.htm
<DESCRIPTION>NOTICE OF ANNUAL MEETING: ARBOR REALTY TRUST, INC.
<TEXT>
<HTML>
<HEAD>
<TITLE>NOTICE OF ANNUAL MEETING: ARBOR REALTY TRUST, INC.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 14pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SCHEDULE 14A</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROXY STATEMENT PURSUANT TO SECTION&nbsp;14(A) OF THE
SECURITIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>EXCHANGE ACT OF 1934</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Filed by the Registrant&nbsp;<FONT face="wingdings">&#254;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Filed by a Party other than the
Registrant&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Check the appropriate box:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Preliminary
    Proxy Statement</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Confidential,
    for Use of the Commission Only (as permitted by
    Rule&nbsp;14a-6(e)(2))</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;Definitive Proxy
    Statement</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Definitive
    Additional Materials</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <FONT face="wingdings">&#111;</FONT>&nbsp;&nbsp;Soliciting
    Material Pursuant to &#167;&nbsp;240.14a-12</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
ARBOR REALTY TRUST, INC.
</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 8pt;">
(Name of Registrant as Specified In Its Charter)
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">

</DIV>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 8pt;">
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Payment of Filing Fee (Check the appropriate box):
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#254;</FONT></TD>
    <TD align="left">
    No fee required.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#111;</FONT></TD>
    <TD align="left">
    Fee computed on table below per Exchange Act
    Rules&nbsp;14a-6(i)(4) and 0-11.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)</TD>
    <TD align="left">
    Title of each class of securities to which transaction applies:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)</TD>
    <TD align="left">
    Aggregate number of securities to which transaction applies:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)</TD>
    <TD align="left">
    Per unit price or other underlying value of transaction computed
    pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on
    which the filing fee is calculated and state how it was
    determined):</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)</TD>
    <TD align="left">
    Proposed maximum aggregate value of transaction:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5)</TD>
    <TD align="left">
    Total fee paid:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#111;</FONT></TD>
    <TD align="left">
    Fee paid previously with preliminary materials.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT face="wingdings">&#111;</FONT></TD>
    <TD align="left">
    Check box if any part of the fee is offset as provided by
    Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for
    which the offsetting fee was paid previously. Identify the
    previous filing by registration statement number, or the Form or
    Schedule and the date of its filing.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1)</TD>
    <TD align="left">
    Amount Previously Paid:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2)</TD>
    <TD align="left">
    Form, Schedule or Registration Statement No.:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3)</TD>
    <TD align="left">
    Filing Party:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4)</TD>
    <TD align="left">
    Date Filed:</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 87%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 14pt;">
<FONT style="font-size: 10pt">
<IMG src="y07963y0796301.gif" alt="(ARBOR REALTY TRUST LOGO)" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Arbor
Realty Trust, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Dear Fellow Stockholders:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On behalf of the Board of Directors, I cordially invite you to
attend the Annual Meeting of Stockholders of Arbor Realty Trust,
Inc. to be held at the Teleconference Center on the lower level
of 333&nbsp;Earle Ovington Boulevard, Uniondale, New York on
May&nbsp;25, 2005, at 1:00&nbsp;p.m., local time. The matters to
be considered by the stockholders at the annual meeting are
described in detail in the accompanying materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>It is important that you be represented at the annual meeting
regardless of the number of shares you own or whether you are
able to attend the annual meeting in person.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Let me urge you to mark, sign and date your proxy card today and
to return it in the envelope provided.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Sincerely,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="y07963y0796303.gif" alt="-s- Ivan Kaufman"></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT style="font-variant:SMALL-CAPS">Ivan Kaufman
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Chairman and Chief Executive Officer and President</I></TD>
</TR>

</TABLE>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 14pt;">
<FONT style="font-size: 10pt">
<IMG src="y07963y0796301.gif" alt="(ARBOR REALTY TRUST LOGO)" align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Arbor
Realty Trust, Inc.
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 17pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Notice of Annual Meeting of Stockholders</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>To Be Held on May&nbsp;25, 2005</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 17pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
To the Stockholders of Arbor Realty Trust, Inc.:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The annual meeting of stockholders of Arbor Realty Trust, Inc.,
a Maryland corporation (the &#147;Company&#148;), will be held
at the Teleconference Center on the lower level of 333 Earle
Ovington Boulevard, Uniondale, New York, on May&nbsp;25, 2005,
beginning at 1:00&nbsp;p.m., local time. The matters to be
considered by stockholders at the annual meeting, which are
described in detail in the accompanying materials, are:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;a proposal to elect three Class&nbsp;II directors, each
    to serve until the 2008 annual meeting of stockholders and until
    their respective successors are duly elected and qualify, and to
    elect Walter K. Horn, to serve until the 2006 annual meeting of
    stockholders and until his successor is duly elected and
    qualifies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;a proposal to ratify the appointment of
    Ernst&nbsp;&#38; Young LLP as the Company&#146;s independent
    registered public accounting firm for fiscal year 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;a proposal to amend the Company&#146;s 2003 Omnibus
    Stock Incentive Plan, as amended and restated on July&nbsp;29,
    2004, to authorize for issuance an additional
    250,000&nbsp;shares of the Company&#146;s common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;a proposal to amend the Company&#146;s Charter to lower
    each of the aggregate stock ownership limit and the common stock
    ownership limit from 9.6&nbsp;percent to
    8.3&nbsp;percent;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)&nbsp;any other business that may properly come before the
    annual meeting or any adjournment or postponement of the annual
    meeting.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stockholders of record at the close of business on
April&nbsp;12, 2005 will be entitled to notice of and to vote at
the annual meeting. <B>It is important that your shares be
represented at the annual meeting regardless of the size of your
securities holdings.</B> A proxy statement, proxy card,
self-addressed envelope and Annual Report to Stockholders for
the fiscal year ended December&nbsp;31, 2004 accompany this
notice. Whether or not you plan to attend the annual meeting in
person, please complete, date and sign the proxy card. Return it
promptly in the envelope provided, which requires no postage if
mailed in the United States. If you are the record holder of
your shares and you attend the annual meeting, you may withdraw
your proxy and vote in person, if you so choose.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="y07963y0796302.gif" alt="-s- Walter K. Horn"></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT style="font-variant:SMALL-CAPS">Walter K. Horn
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>General Counsel,</I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>Director of Compliance and Corporate Secretary</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
April&nbsp;22, 2005
</DIV>

<DIV align="left" style="font-size: 10pt;">
Uniondale, New York
</DIV>

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 <IMG src="y07963y0796301.gif" alt="(ARBOR REALTY TRUST LOGO)">
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Arbor Realty Trust, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>333 Earle Ovington Boulevard</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Suite&nbsp;900</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Uniondale, New York 11553</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(516)&nbsp;832-8002</B>
</DIV>

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</DIV>

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<B>PROXY STATEMENT</B>
</DIV>

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<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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<B>FOR THE ANNUAL MEETING OF STOCKHOLDERS</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>To Be Held on May&nbsp;25, 2005</B>
</DIV>

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<A name="tocpage"></A>
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<B>TABLE OF CONTENTS</B>
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<CENTER>
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<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
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<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#101'>General Information Concerning Solicitation
    and Voting</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#102'>Board of Directors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#103'>Audit Committee Report and Disclosures</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#104'>Executive Officers</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#105'>Executive Compensation</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#109'>Security Ownership of Certain Beneficial
    Owners and Management</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#110'>Certain Relationships and Related
    Transactions</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#112'>Proposal No. 1: Election of Directors</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#113'>Proposal No. 2: Ratification of Appointment
    of Ernst&nbsp;&#38; Young LLP as the Company&#146;s Independent
    Registered Public Accounting Firm for Fiscal Year 2005</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#114'>Proposal No. 3: Amendment to the
    Company&#146;s 2003 Omnibus Stock Incentive Plan, as Amended and
    Restated, to Authorize for Issuance an Additional 250,000 Shares
    of the Company&#146;s Common Stock</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#116'>Proposal No. 4: Approval of an Amendment to
    the Company&#146;s Charter to Lower Each of the Aggregate Stock
    Ownership Limit and the Common Stock Ownership Limit from
    9.6&nbsp;Percent to 8.3&nbsp;Percent</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#117'>Stockholder Proposals for 2006</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#118'>Other Matters</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
</TR>

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    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#120'>Appendix A&nbsp;&#151; Arbor Realty Trust,
    Inc. Articles of Amendment</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
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<A name='101'></A>
</DIV>

<!-- link1 "GENERAL INFORMATION CONCERNING SOLICITATION AND VOTING" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>GENERAL INFORMATION CONCERNING SOLICITATION AND VOTING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This proxy statement and the accompanying proxy card and notice
of annual meeting are provided in connection with the
solicitation of proxies by and on behalf of the board of
directors of Arbor Realty Trust, Inc., a Maryland corporation,
for use at the annual meeting of stockholders to be held on
May&nbsp;25, 2005, at 1:00&nbsp;p.m., local time, and any
adjournments or postponements thereof. &#147;We,&#148;
&#147;our,&#148; &#147;us,&#148; and &#147;the Company&#148;
each refers to Arbor Realty Trust, Inc. The Company conducts
substantially all of its operations through Arbor Realty Limited
Partnership which we refer to as our operating partnership.
References to operating partnership units refer to partnership
interests in Arbor Realty Limited Partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The mailing address of our executive office is 333 Earle
Ovington Boulevard, Uniondale, New York 11553. This proxy
statement, the accompanying proxy card and the notice of annual
meeting are first being mailed to holders of our common stock,
par value $0.01&nbsp;per share, and special voting preferred
stock, par value $0.01&nbsp;per share, on or about
April&nbsp;26, 2005. Our common stock and special voting
preferred voting stock are the only securities entitled to vote
at the annual meeting, and we refer to those securities together
as our voting securities. Along with this proxy statement, we
are also sending our Annual Report to Stockholders for fiscal
year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A proxy may confer discretionary authority to vote with respect
to any matter presented at the annual meeting. As of the date of
this proxy statement, management has no knowledge of any
business that will be presented for consideration at the annual
meeting and that would be required to be set forth in this proxy
statement or the related proxy card other than the matters set
forth in the Notice of Annual Meeting of Stockholders. If any
other matter is properly presented at the annual meeting for
consideration, it is intended that the persons named in the
enclosed proxy card and acting thereunder will vote in
accordance with their discretion on any such matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Matters to be Considered at the Annual Meeting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the annual meeting, our stockholders will act upon:
</DIV>

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    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;a proposal to elect three Class&nbsp;II directors, each
    to serve until the 2008 annual meeting of stockholders and until
    their respective successors are duly elected and qualify and to
    elect Walter K. Horn, to serve until the 2006 annual meeting of
    stockholders and until his successor is duly elected and
    qualifies;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;a proposal to ratify the appointment of
    Ernst&nbsp;&#38; Young LLP as the Company&#146;s independent
    registered public accounting firm for fiscal year 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;a proposal to amend the Company&#146;s 2003 Omnibus
    Stock Incentive Plan, as amended and restated on July&nbsp;29,
    2004 (the &#147;Stock Incentive Plan&#148;), to authorize for
    issuance an additional 250,000&nbsp;shares of the Company&#146;s
    common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;a proposal to amend the Company&#146;s Articles of
    Incorporation (together with the Articles Supplementary, the
    &#147;Charter&#148;) to lower each of the aggregate stock
    ownership limit and the common stock ownership limit from
    9.6&nbsp;percent to 8.3&nbsp;percent;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)&nbsp;any other business that may properly come before the
    annual meeting or any adjournment or postponement of the annual
    meeting.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This proxy statement, form of proxy and voting instructions are
being mailed starting on or about April&nbsp;26, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Solicitation of Proxies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The enclosed proxy is solicited by and on behalf of our board of
directors. The expense of preparing, printing and mailing this
proxy statement and the proxies solicited hereby will be borne
by the Company. In addition to the use of the mail, proxies may
be solicited by officers and directors, without additional
remuneration, by personal interview, telephone, telegraph or
otherwise. The Company will also request brokerage firms,
nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of voting securities held of record on
April&nbsp;12, 2005 and will provide reimbursement for the cost
of forwarding
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the material. In addition, we have engaged The Altman Group to
assist in soliciting proxies from brokers, banks and other
nominee holders of our common stock at a cost of approximately
$5,500, plus reasonable out-of-pocket expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Stockholders Entitled To Vote</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the close of business on April&nbsp;12, 2005, there were
16,741,122&nbsp;shares of our common stock and
3,776,069&nbsp;shares of our special voting preferred stock
outstanding and entitled to vote. Each share of our common stock
and special voting preferred stock entitles the holder to one
vote. Stockholders of record at the close of business on
April&nbsp;12, 2005 are entitled to vote at the annual meeting
or any adjournment or postponement thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Required Quorum/ Vote</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A quorum will be present if stockholders entitled to cast a
majority of all the votes entitled to be cast at the annual
meeting are present, in person or by proxy. If you have returned
a valid proxy or, if you hold your shares of our voting
securities in your own name as holder of record and you attend
the annual meeting in person, your shares will be counted for
the purpose of determining whether there is a quorum. If a
quorum is not present, the annual meeting may be adjourned by
the chairman of the meeting or the stockholders entitled to vote
at the annual meeting, present in person or by proxy, to a date
not more than 120&nbsp;days after the record date without notice
other than announcement at the meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Abstentions and broker non-votes will be counted in determining
the presence of a quorum. &#147;Broker non-votes&#148; occur
when a bank, broker or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because
it does not have discretionary voting power for that particular
item and has not received instructions from the beneficial
owner. Under the rules of the New York Stock Exchange, banks,
brokers and other nominees who hold shares in &#147;street
name&#148; may have the authority to vote on certain matters
when they do not receive instructions from beneficial owners.
Banks, brokers and other nominees that do not receive
instructions are entitled to vote on the election of directors
and the ratification of the appointment of the independent
registered public accounting firm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Election of the director nominees named in
Proposal&nbsp;No.&nbsp;1 requires the affirmative vote of a
plurality of the votes cast in the election of directors at the
annual meeting by holders of our voting securities. The
candidates receiving the highest number of affirmative votes of
the shares entitled to be voted will be elected directors.
Shares represented by executed proxies will be voted, if
authority to do so is not withheld, for the election of the
board of directors&#146; nominees named in
Proposal&nbsp;No.&nbsp;1. Votes may be cast in favor of or
withheld with respect to all of the director nominees, or any of
them. Broker non-votes, if any, will not be counted as having
been voted and will have no effect on the outcome of the vote on
the election of directors. Stockholders may not cumulate votes
in the election of directors. A vote &#147;withheld&#148; from a
director nominee will have no effect on the outcome of the vote
because a plurality of the votes cast at the annual meeting is
required for the election of each director.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Ratification of the appointment of Ernst&nbsp;&#38; Young LLP as
the Company&#146;s independent registered public accounting firm
for fiscal year 2005, as specified in Proposal&nbsp;No.&nbsp;2,
requires the affirmative vote of a majority of the votes cast on
the proposal at the annual meeting by holders of our voting
securities. If this selection is not ratified by holders of our
voting securities, the audit committee and board may reconsider
its appointment and endorsement, respectively. Abstentions and
broker non-votes, if any, will not be counted as having been
voted and will have no effect on the outcome of the vote for
this proposal. Even if the selection is ratified, the audit
committee of the Company&#146;s board of directors in its
discretion may direct the appointment of different independent
registered public accounting firm at any time during the year if
it determines that such a change would be in the best interests
of the Company and its stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approval of the amendment to the Stock Incentive Plan as
specified in Proposal&nbsp;No.&nbsp;3, requires the affirmative
vote of a majority of the votes cast on the proposal at the
annual meeting by holders of our voting securities; provided
that the total vote cast on the proposal represents over 50% in
interest of all securities entitled to vote on the proposal. For
purposes of the vote on the Stock Incentive Plan, abstentions
will have the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
same effect as votes against the proposal and broker non-votes
will have the same effect as votes against the proposal, unless
holders of more than 50% in interest of all securities entitled
to vote on the proposal cast votes, in which event broker
non-votes will not have any effect on the result of the vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approval of the amendment to the Company&#146;s Charter, as
specified in Proposal&nbsp;No.&nbsp;4, requires the affirmative
vote of a majority of the votes entitled to be cast on the
proposal at the annual meeting by holders of our voting
securities. For purposes of the vote on the Charter, abstentions
and broker non-votes will have the same effect as votes against
the proposal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the enclosed proxy is properly executed and returned to us in
time to be voted at the annual meeting, it will be voted as
specified on the proxy unless it is properly revoked prior
thereto. If no specification is made on the proxy as to any one
or more of the proposals, the shares of our voting securities
represented by the proxy will be voted as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;<B>FOR </B>the election of three Class&nbsp;II
    directors, each to serve until the 2008 annual meeting of
    stockholders and until their respective successors are duly
    elected and qualify and to elect Walter K. Horn, to serve until
    the 2006 annual meeting of stockholders and until his successor
    is duly elected and qualifies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;<B>FOR </B>the ratification of the appointment of
    Ernst&nbsp;&#38; Young LLP as the Company&#146;s independent
    registered public accounting firm for fiscal year 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;<B>FOR </B>the amendment to the Stock Incentive Plan to
    authorize for issuance an additional 250,000&nbsp;shares of the
    Company&#146;s common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;<B>FOR </B>the amendment to the Company&#146;s Charter
    to lower each of the aggregate stock ownership limit and the
    common stock ownership limit from 9.6&nbsp;percent to
    8.3&nbsp;percent;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)&nbsp;in the discretion of the proxy holder on any other
    business that properly comes before the annual meeting or any
    adjournment or postponement thereof.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the date of this proxy statement, we are not aware of any
other matter to be presented at the annual meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Voting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you hold your shares of our voting securities in your own
name as a holder of record, you may instruct the proxies to vote
your shares by signing, dating and mailing the proxy card in the
postage-paid envelope provided. In addition, you may vote your
shares of our voting securities in person at the annual meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If your shares are held on your behalf by a broker, bank or
other nominee, you will receive instructions from such
individual or entity that you must follow in order to have your
shares voted at the annual meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Right to Revoke Proxy</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you hold shares of our voting securities in your own name as
a holder of record, you may revoke your proxy instructions
through any of the following methods:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    send written notice of revocation, prior to the annual meeting,
    to our General Counsel and Corporate Secretary, at 333 Earle
    Ovington Boulevard, Suite&nbsp;900, Uniondale, New York 11553;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    sign and mail a new, later dated proxy card to our General
    Counsel and Corporate Secretary at the address specified
    above;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    attend the annual meeting and vote your shares in person.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If your shares are held on your behalf by a broker, bank or
other nominee, you must contact it to receive instructions as to
how you may revoke your proxy instructions.
</DIV>

<P align="center" style="font-size: 10pt;">3

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Copies of Annual Report to Stockholders</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A copy of our Annual Report to Stockholders for fiscal year
ended December&nbsp;31, 2004 will be mailed to stockholders
entitled to vote at the annual meeting with this proxy statement
and is also available without charge to stockholders upon
written request to: Arbor Realty Trust, Inc., 333 Earle Ovington
Boulevard, Suite&nbsp;900, Uniondale, New York, Attn:
<I>Investor Relations.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Voting Results</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
American Stock Transfer&nbsp;&#38; Trust Company, our
independent tabulating agent, will have a representative present
at the annual meeting and count the votes and act as the
Inspector of Election. We will publish the voting results in our
Quarterly Report on Form&nbsp;10-Q for fiscal quarter ending
June&nbsp;30, 2005, which we plan to file with the
U.S.&nbsp;Securities and Exchange Commission (the
&#147;SEC&#148;) in August 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Confidentiality of Voting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will keep all proxies, ballots and voting tabulations
confidential. We will permit only our Inspector of Election,
American Stock Transfer&nbsp;&#38; Trust Company, to examine
these documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Recommendations of the Board of Directors.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board of directors recommends a vote:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;<B>FOR </B>the election of three Class&nbsp;II
    directors, each to serve until the 2008 annual meeting of
    stockholders and until their respective successors are duly
    elected and qualify and to elect Walter K. Horn, to serve until
    the 2006 annual meeting of stockholders and until his successor
    is duly elected and qualifies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;<B>FOR </B>the ratification of the appointment of
    Ernst&nbsp;&#38; Young LLP as the Company&#146;s independent
    registered public accounting firm for fiscal year 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;<B>FOR </B>the amendment to the Stock Incentive Plan to
    authorize for issuance an additional 250,000&nbsp;shares of the
    Company&#146;s common stock;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;<B>FOR </B>the amendment to the Company&#146;s Charter
    to lower each of the aggregate stock ownership limit and the
    common stock ownership limit from 9.6&nbsp;percent to
    8.3&nbsp;percent.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">4

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='102'></A>
</DIV>

<!-- link1 "BOARD OF DIRECTORS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>BOARD OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>General</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors presently consists of seven members.
Pursuant to our charter, the board of directors is divided into
three classes of directors, each serving for three years after
election and until his or her successor is duly elected and
qualifies, with one class up for election at each annual
meeting. At this year&#146;s annual meeting, the term of our
three Class&nbsp;II directors will expire. In addition, because
Walter K. Horn was appointed to our board of directors in
November 2003 in order to fill a vacancy created when the size
of our board of directors was increased from five to seven,
Mr.&nbsp;Horn is also a nominee for election at the annual
meeting as a Class&nbsp;III director, to serve until the 2006
annual meeting of stockholders and until his successor is duly
elected and qualified. Our other directors will remain in office
for the remainder of their respective terms, as indicated below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the annual meeting, stockholders will vote on the election of
Messrs.&nbsp;Ivan Kaufman, C. Michael Kojaian and Melvin F.
Lazar as Class&nbsp;II directors for a three-year term ending at
the 2008 annual meeting of stockholders and until their
successors are duly elected and qualify and will vote on the
election of Mr.&nbsp;Horn as a Class&nbsp;III director for a
one-year term ending at the 2006 annual meeting of stockholders
and until his successor is duly elected and qualifies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth information concerning our
directors, including those who are nominees for reelection, as
of the date of this proxy statement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Current Directors Who are Nominees for Reelection</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>New Term to Expire at Annual Meeting in</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ivan Kaufman</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    C. Michael Kojaian</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Melvin F. Lazar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Walter K. Horn</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2006</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Current Directors Whose Terms are not Expiring</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Class</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Term Expires at Annual Meeting in</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William Helmreich</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>III</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2006</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jonathan A. Bernstein</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>I</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2007</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Joseph Martello</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>I</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2007</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Nominees</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Ivan Kaufman.</I> Mr.&nbsp;Kaufman has served as our chairman
of the board, chief executive officer and president since June
2003. Mr.&nbsp;Kaufman has been chief executive officer and
president of Arbor Commercial Mortgage, LLC, our manager, since
its inception in 1993. In 1983, he co-founded a predecessor of
Arbor National Holdings Inc. and its residential lending
subsidiary, Arbor National Mortgage Inc., which became a public
company in 1992 and was sold to BankAmerica in 1995. From
January 1998 to April 2000, Mr.&nbsp;Kaufman was also the
president of Massena Management, LLC, the general partner of
President R.C.-St.&nbsp;Regis Management Company, which entered
into a management agreement with the St. Regis Mohawk Tribe to
finance, construct and manage a casino on the tribe&#146;s
reservation in Hogansburg, New York. Mr.&nbsp;Kaufman was named
regional &#147;Entrepreneur of the Year&#148; by Inc. Magazine
for outstanding achievements in financial services in 1990. He
was appointed to the National Advisory Board of Fannie Mae in
1994. Mr.&nbsp;Kaufman has also served on Fannie Mae&#146;s
regional advisory and technology boards, as well as the board of
directors of the Empire State Mortgage Bankers Association.
</DIV>

<P align="center" style="font-size: 10pt;">5

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>C.&nbsp;Michael Kojaian.</I> Mr.&nbsp;Kojaian has served as
one of our directors since June 2003. Since 1998
Mr.&nbsp;Kojaian has been the chief operating officer of the
Kojaian group of companies, a national multi-faceted real estate
development, investment and asset management organization.
Mr.&nbsp;Kojaian is the chairman of the board of
Grubb&nbsp;&#38; Ellis, a commercial real estate advisory firm,
a member of the board of directors of Flagstar Bank and the
United States President&#146;s Export Council.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Melvin F. Lazar.</I> Mr.&nbsp;Lazar has served as one of our
directors since his appointment in November 2003. Mr.&nbsp;Lazar
is the founder of Lazar Levine&nbsp;&#38; Felix LLP, certified
public accountants, was its managing partner from 1969 until
September 2002, and is still an employee of the firm.
Mr.&nbsp;Lazar specializes in business valuations and merger and
acquisition activities. Mr.&nbsp;Lazar serves on the boards of
directors, and is a member of the audit committees, of Enzo
Biochem, Inc., a publicly-held biotechnology company, Active
Media Services, Inc., a privately-held corporate barter company,
and CECO Environmental Corp., a publicly-held provider of
innovative solutions to industrial ventilation and air quality
problems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Walter K. Horn.</I> Mr.&nbsp;Horn has served as our
secretary, director of compliance and general counsel, and as
one of our directors since his appointment in November 2003.
Mr.&nbsp;Horn is also a member of Arbor Commercial
Mortgage&#146;s executive committee. Previously, Mr.&nbsp;Horn
was general counsel with Arbor National Holdings from 1991 until
its sale in 1995 and was general counsel of Arbor Commercial
Mortgage until March 2005. From January 1998 to April 2000,
Mr.&nbsp;Horn was the general counsel and secretary of Massena
Management, LLC, the general partner of President R.C.-St. Regis
Management Company, which entered into a management agreement
with the St. Regis Mohawk Tribe to finance, construct and manage
a casino on the tribe&#146;s reservation in Hogansburg, New
York. Mr.&nbsp;Horn&#146;s experience also includes serving as
general counsel with Resource One, Inc. and Long Island Trust
Company.
</DIV>

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<TR>
    <TD width="3%"></TD>
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    <TD></TD>
    <TD>
    <B><I>Continuing Directors</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>William Helmreich.</I> Dr.&nbsp;Helmreich has served as one
of our directors since June 2003. Dr.&nbsp;Helmreich is the
founder, and since 1980, owner and president of Byron Research
and Consulting, a market research firm specializing in financial
research, political polling, legal consulting, and issues
relating to food products and real estate. He is a professor of
Sociology at City College of New York and the CUNY Graduate
Center, where he teaches sociology of marketing and consumer
behavior. Since 2000, Dr.&nbsp;Helmreich has also been retained
as chairman for Academic Affairs for North Shore Hebrew Academy.
He is a member of the board of Transaction Inc., North Shore
Hebrew Academy, North Shore Hebrew Academy High School and NSH
Affordable Housing of Indiana, Inc., as well as other
not-for-profit boards, and was, for many years, a senior vice
president of Good Earth Teas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Jonathan A. Bernstein.</I> Mr.&nbsp;Bernstein has served as
one of our directors since June 2003. Mr.&nbsp;Bernstein is of
counsel at Pryor Cashman Sherman&nbsp;&#38; Flynn LLP,
specializing in finance and focusing on REITs and structured
financing involving real estate. Mr.&nbsp;Bernstein joined Pryor
Cashman in 1993. He serves as an advisor to REITs and investment
banks in the real estate area. Mr.&nbsp;Bernstein is also a
director of TractManager LLC, an internet based software
company, with offices in Saddle Brook, New Jersey and
Chattanooga, Tennessee, specializing in contract management in
the health care area, a partner of the Shore Club Hotel in
Miami, Florida, Chairman of the Board of Managers of Blue
Marlin, LLC, a company manufacturing and selling hand-held
devices for locating golf balls, and Treasurer and Director of
Playa Palos Verdes, S.A., a company developing real estate in
Costa Rica.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Joseph Martello.</I> Mr.&nbsp;Martello has served as one of
our directors since June 2003. Mr.&nbsp;Martello is currently
chief operating officer of Arbor Management, LLC, the managing
member of Arbor Commercial Mortgage, and a member of the
executive committee of Arbor Commercial Mortgage where he is
responsible for management of the investment portfolio and
overseeing the day-to-day operations. From 1995 to 1999,
Mr.&nbsp;Martello was chief financial officer of Arbor
Commercial Mortgage. From 1990 to 1995, Mr.&nbsp;Martello was
the chief financial officer of Arbor National Holdings, Inc.
Prior to that, he was a senior manager with the international
accounting and consulting firm of Ernst&nbsp;&#38; Young for
eleven years. Mr.&nbsp;Martello is a member of the American
Institute of Certified Public Accountants and the New York State
Society of Certified Public Accountants, where he is a former
executive member of the board of directors of the Suffolk County
chapter.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Corporate Governance Profile</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are committed to good corporate governance practices and, as
such, we have adopted formal corporate governance guidelines to
enhance our effectiveness. The guidelines govern, among other
things, board member qualifications, responsibilities, education
and management succession. A copy of the corporate governance
guidelines may be found at the corporate website at
www.arborrealtytrust.com under the heading &#147;Investor
Relations&nbsp;&#151; Corporate Governance.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board of directors met on ten occasions and acted by written
consent on seven occasions during 2004.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Senior Officer Code of Ethics and Code of Business Conduct
    and Ethics</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have adopted a senior officer code of ethics applicable to
our Chief Executive Officer, Chief Financial Officer, Chief
Credit Officer and Controller (or persons performing similar
functions to the aforementioned officers regardless of whether
such persons (1)&nbsp;are employed directly by the Company or
(2)&nbsp;are employed by Arbor Commercial Mortgage, our manager
pursuant to a management agreement). We have also adopted a code
of business conduct and ethics applicable to all employees,
officers and directors. Both codes are available on our website
at www.arborrealtytrust.com under the heading &#147;Investor
Relations&nbsp;&#151; Corporate Governance.&#148; Amendments to,
and waivers from, the senior officer code of ethics and the code
of business conduct and ethics for a director or officer will be
disclosed at the same website address and heading provided above.
</DIV>

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    <TD>
    <B><I>Director Independence</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of our seven directors, four have been determined by our board
of directors to be independent for purposes of the New York
Stock Exchange listing standards. In determining director
independence, the board of directors reviewed, among other
things, whether any transactions or relationships exist
currently or, since our incorporation existed, between each
director and the Company and its subsidiaries, affiliates and
equity investors or independent registered public accounting
firm. In particular, the board reviewed current or recent
business transactions or relationships or other personal
relationships between each director and the Company, including
such director&#146;s immediate family and companies owned or
controlled by the director or with which the director was
affiliated. The purpose of this review was to determine whether
any such transactions or relationships failed to meet any of the
objective tests promulgated by the New York Stock Exchange for
determining independence or were otherwise sufficiently material
as to be inconsistent with a determination that the director is
independent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board also examined whether there were any transactions or
relationships between each director and members of the senior
management of the Company or their affiliates. In reviewing the
independence of Dr.&nbsp;Helmreich, the board carefully reviewed
whether (1)&nbsp;Mr.&nbsp;Kaufman&#146;s and
Dr.&nbsp;Helmreich&#146;s current and prior participation on the
boards of North Shore Hebrew Academy, North Shore Hebrew Academy
High School and NSH Affordable Housing of Indiana, Inc., a
not-for-profit organization, (2)&nbsp;Dr.&nbsp;Helmreich&#146;s
engagement since the summer of 2000 as an external consultant by
North Shore Hebrew Academy in the capacity of chairman of
Academic Affairs of North Shore Hebrew Academy and
(3)&nbsp;Dr.&nbsp;Helmreich&#146;s prior receipt of consulting
fees from Arbor Management, LLC should, based upon the totality
of the circumstances, be deemed to be material so as to preclude
a finding that Dr.&nbsp;Helmreich is independent. The board, in
particular, reviewed the materiality of the transactions to the
parties involved, the compensation and timing of
Dr.&nbsp;Helmreich&#146;s advisory role with North Shore Hebrew
Academy and Arbor Management, LLC and the absence of any
employment or compensatory capacity by Dr.&nbsp;Helmreich with
NSH Affordable Housing of Indiana, Inc. In reviewing the
independence of Mr.&nbsp;Kojaian, the board carefully reviewed
whether Mr.&nbsp;Kaufman and Mr.&nbsp;Kojaian&#146;s proposed
co-investment in a real estate venture and
Mr.&nbsp;Kojaian&#146;s investment in 500,000&nbsp;shares of
common stock of the Company through Kojaian Ventures, L.L.C.,
should, based upon the totality of the circumstances, be deemed
to be material so as to preclude a finding that Mr.&nbsp;Kojaian
is independent. In reviewing the independence of
Mr.&nbsp;Bernstein, the board carefully reviewed whether the
$150,000 investment by Mr.&nbsp;Kaufman and the $25,000
investment by Mr.&nbsp;Herbst in a private company of which
Mr.&nbsp;Bernstein is the chairman of the board should, based on
the totality of the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
circumstances, be deemed to be material so as to preclude a
finding that Mr.&nbsp;Bernstein is independent. The board, in
particular, reviewed the materiality of the transactions to the
parties involved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of its review, the board affirmatively determined at
a meeting held on April&nbsp;14, 2005, that
Messrs.&nbsp;Bernstein, Kojaian and Lazar and Dr.&nbsp;Helmreich
were independent under the New York Stock Exchange listing
standards.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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    <TD width="3%"></TD>
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    <TD></TD>
    <TD>
    <B><I>Director Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of our independent directors is paid a director&#146;s fee
of $25,000&nbsp;per year. Each independent director who serves
as chairman of the audit committee is paid an additional fee of
$10,000&nbsp;per year, each independent director who serves as
chairman of the compensation committee is paid an additional fee
of $5,000&nbsp;per year and each independent director who serves
as chairman of the nominating/corporate governance committee is
paid an additional fee of $3,000&nbsp;per year. Each independent
director is also paid a fee of $2,000 for each board or
committee meeting that he or she attends in person. Each
independent director is also paid a fee of $1,000 for each
telephone board or committee meeting that he attends. In
addition, we reimburse all directors for reasonable out of
pocket expenses incurred in connection with their services on
the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Grants of restricted stock and other equity based awards with
respect to our common stock are provided for under the Stock
Incentive Plan. On July&nbsp;1, 2003, Messrs.&nbsp;Bernstein,
Kojaian, Martello and Dr.&nbsp;Helmreich each received 1,000
restricted shares of our common stock. Upon their appointment to
the board in November 2003, Messrs.&nbsp;Horn and Lazar each
received 1,000 restricted shares of our common stock. Two-thirds
of the restricted stock granted to each of these directors
vested immediately upon the date of grant and the remaining
one-third will vest ratably over three years from the date of
grant at a rate of 33.33% on each of the subsequent three
anniversary dates of the date of grant. On February&nbsp;2,
2005, Messrs.&nbsp;Bernstein, Kojaian, Lazar and
Dr.&nbsp;Helmreich each received 1,000 restricted shares of our
common stock. One-third of the restricted stock granted to each
of these directors vested immediately upon the date of grant,
one-third will vest on January&nbsp;31, 2006 and the remaining
third will vest on January&nbsp;31, 2007.
</DIV>

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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Board Committees</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board has established four standing committees, the
principal functions of which are briefly described below.
Matters put to a vote at any one of our four committees must be
approved by a majority of the directors on the committee who are
present at a meeting at which there is a quorum or by unanimous
written consent of the directors on that committee. Our board of
directors may from time to time establish certain other
committees to facilitate the management of the Company.
</DIV>

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Audit Committee</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has established an audit committee, which
is composed of three of our independent directors,
Messrs.&nbsp;Bernstein, Lazar and Dr.&nbsp;Helmreich. During
2004, the audit committee met on five occasions. The audit
committee assists the board in overseeing (1)&nbsp;the integrity
of the Company&#146;s financial statements, (2)&nbsp;the
Company&#146;s independent registered public accounting
firm&#146; qualifications and independence, (3)&nbsp;the
performance of the Company&#146;s independent registered public
accounting firm and the Company&#146;s internal audit function
and (4)&nbsp;the Company&#146;s compliance with legal and
regulatory requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Lazar currently serves as chairman of the audit
committee. The board has determined that Mr.&nbsp;Lazar
qualifies as an &#147;audit committee financial expert&#148; as
defined by the rules of the SEC and that each member of the
audit committee is &#147;financially literate.&#148; The audit
committee is governed by a charter that has been adopted by the
board of directors. A copy of the audit committee charter is
available on our website, www.arborrealtytrust.com, under the
heading &#147;Investor Relations&nbsp;&#151; Corporate
Governance.&#148;
</DIV>

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    <TD width="3%"></TD>
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</TR>

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    <TD></TD>
    <TD>
    <I>Compensation Committee</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has established a compensation committee,
which is composed of all of our independent directors,
Messrs.&nbsp;Bernstein, Kojaian and Lazar and
Dr.&nbsp;Helmreich. During 2004, the compensa-
</DIV>

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<DIV align="left" style="font-size: 10pt;">
tion committee met on four occasions. Mr.&nbsp;Kojaian is
currently the chairman of the compensation committee. The
principal functions of the compensation committee are to
(1)&nbsp;evaluate the performance of our officers;
(2)&nbsp;review the compensation payable to our officers and
non-employee directors; (3)&nbsp;evaluate the performance of
Arbor Commercial Mortgage; (4)&nbsp;review the compensation and
fees payable to Arbor Commercial Mortgage under our management
agreement; and (5)&nbsp;administer the issuance of any stock to
our employees or the employees of Arbor Commercial Mortgage who
provide services to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The compensation committee is governed by a charter that has
been adopted by the board of directors. A copy of the
compensation committee charter is available on our website,
www.arborrealtytrust.com, under the heading &#147;Investor
Relations&nbsp;&#151; Corporate Governance.&#148;
</DIV>

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    <TD width="3%"></TD>
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</TR>

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    <TD></TD>
    <TD>
    <I>Nominating/ Corporate Governance Committee</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has established a nominating/corporate
governance committee, which is composed of three of our
independent directors, Messrs.&nbsp;Bernstein and Lazar and
Dr.&nbsp;Helmreich. During 2004, the nominating/corporate
governance committee met on two occasions. Dr.&nbsp;Helmreich
currently serves as chairman of the nominating/corporate
governance committee. The nominating/corporate governance
committee is responsible for seeking, considering and
recommending to the board qualified candidates for election as
directors and recommending a slate of nominees for election as
directors at each annual meeting of stockholders. The
nominating/corporate governance committee is also responsible
for (1)&nbsp;preparing and submitting to the board for adoption
the committee&#146;s selection criteria for director nominees;
(2)&nbsp;reviewing and making recommendations on matters
involving general operation of the board and our corporate
governance; and (3)&nbsp;annually recommending to the board
nominees for each committee of the board. In addition, the
committee annually facilitates the assessment of the board of
directors&#146; performance as a whole and of the individual
directors and reports thereon to the board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The nominating/corporate governance committee is governed by a
charter that has been adopted by the board of directors. A copy
of the nominating/corporate governance committee charter is
available on our website, www.arborrealtytrust.com, under the
heading &#147;Investor Relations&nbsp;&#151; Corporate
Governance.&#148;
</DIV>

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Independent Director Committee</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors has established an independent director
committee, which is composed of all of our independent
directors, Messrs.&nbsp;Bernstein, Kojaian and Lazar and
Dr.&nbsp;Helmreich. During 2004, the independent director
committee met on two occasions. The independent director
committee is responsible for, among other things, considering
and voting upon matters as to which the board of directors
determines Arbor Commercial Mortgage or its affiliates (other
than the Company or its subsidiaries) or any of our directors
(other than an independent director) or officers has a conflict
of interest, including the approval of transactions between the
Company and Arbor Commercial Mortgage. The individual who serves
as the chair of the independent director committee rotates each
year among the chairs (if such chair is not a member of
management) of the committees of the board of directors.
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stockholder Communications with Directors</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board of directors has established a process to receive
communications from stockholders. Stockholders may contact any
member (or all members) of the board by mail. To communicate
with the board of directors, any individual directors or any
group or committee of directors, correspondence should be
addressed to the board of directors or any such individual
directors or group or committee of directors by either name or
title. All such correspondence should be sent in care of General
Counsel and Corporate Secretary at Arbor Realty Trust, Inc., 333
Earle Ovington Boulevard, Suite&nbsp;900, Uniondale, New York,
11553.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All communications received as set forth in the preceding
paragraph will be opened by the office of our General Counsel
and Corporate Secretary for the sole purpose of determining
whether the contents represent a message to our directors. Any
contents that are not in the nature of advertising, promotions
of a product or service or patently offensive material will be
forwarded promptly to the addressee. In the case of communica-
</DIV>

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<DIV align="left" style="font-size: 10pt;">
tions to the board or any group or committee of directors, the
office of the General Counsel and Corporate Secretary will make
sufficient copies of the contents to send to each director who
is a member of the group or committee to which the envelope is
addressed.
</DIV>

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<TR>
    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Director Nomination Procedures</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The nominating/corporate governance committee generally believes
that, at a minimum, candidates for membership on the board of
directors should have demonstrated an ability to make a
meaningful contribution to the board of directors&#146;
oversight of our business and affairs and have a record and
reputation for honest and ethical conduct. The
nominating/corporate governance committee recommends director
nominees to the board of directors based on, among other things,
its evaluation of a candidate&#146;s experience, knowledge,
skills, expertise, integrity, ability to make independent
analytical inquiries, understanding of our business environment
and a willingness to devote adequate time and effort to board
responsibilities. In making its recommendations to the board of
directors, the nominating/corporate governance committee also
seeks to have the board nominate candidates who have diverse
backgrounds and areas of expertise so that each member can offer
a unique and valuable perspective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the future, the nominating/corporate governance committee
intends to identify potential nominees by asking current
directors and executive officers to notify the committee if they
become aware of persons who meet the criteria described above,
especially business and civic leaders in the communities in
which we operate. The nominating/corporate governance committee
also, from time to time, may engage firms, at our expense, that
specialize in identifying director candidates. As described
below, the nominating/corporate governance committee will also
consider candidates recommended by stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The nominating/corporate governance committee anticipates that
once a person has been identified by the committee as a
potential candidate, the committee will collect and review
publicly available information regarding the person to assess
whether the person should be considered further. If the
nominating/corporate governance committee determines that the
candidate warrants further consideration, the chairman or
another member of the committee will contact the person. If the
person expresses a willingness to be considered and to serve on
the board of directors, the nominating/corporate governance
committee will request information from the candidate, review
the person&#146;s accomplishments and qualifications, including
in light of any other candidates that the committee might be
considering and conduct one or more interviews with the
candidate. In certain instances, members of the
nominating/corporate governance committee may contact one or
more references provided by the candidate or may contact other
members of the business community or other persons that may have
greater first-hand knowledge of the candidate&#146;s
accomplishments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to stockholder proposals of director nominees
submitted in accordance with our bylaws, as summarized below
under &#147;Stockholder Proposals for 2006,&#148; the
nominating/corporate governance committee will consider written
recommendations from stockholders of potential director
candidates. Such recommendations should be submitted to the
nominating/corporate governance committee in care of General
Counsel and Corporate Secretary at Arbor Realty Trust, Inc., 333
Earle Ovington Boulevard, Suite&nbsp;900, Uniondale, New York,
11553. Director recommendations submitted by stockholders should
include the following:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the name, age, business address and residence address of the
    individual(s) recommended for nomination;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the class, series and number of any shares of our stock that are
    beneficially owned by the individual(s) recommended for
    nomination;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the date such shares of our stock were acquired by the
    individual(s) recommended for nomination and the investment
    intent of such acquisition;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    all other information relating to such candidate that would be
    required to be disclosed pursuant to Regulation&nbsp;14A under
    the Securities Exchange Act of 1934, as amended (the
    &#147;Exchange Act&#148;), including such person&#146;s written
    consent to being named in the proxy statement as a nominee and
    to serving as a director if elected.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The stockholder recommendation and information described above
must be delivered to the General Counsel and Corporate Secretary
not earlier than the 120th day and not later than the close of
business on the 90th day prior to the first anniversary of the
date of mailing of the notice for the preceding year&#146;s
annual meeting of stockholders; provided, however, that if the
date of mailing of the notice for the annual meeting is advanced
more than thirty days prior to or delayed by more than thirty
days after the anniversary of the mailing of the notice for the
preceding year&#146;s annual meeting, the stockholder
recommendation and information described above must be delivered
not earlier than the 120th day prior to the mailing of the
notice for the upcoming annual meeting and not later than the
close of business on the later of (1)&nbsp;the 90th day prior to
the mailing of the notice for the upcoming annual meeting of
stockholders and (2)&nbsp;the 10th day following the date on
which public announcement of the mailing of the notice for the
upcoming annual meeting is first made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The nominating/corporate governance committee expects to use a
similar process to evaluate candidates to the board of directors
recommended by stockholders as the one it uses to evaluate
candidates otherwise identified by the committee.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Director Attendance at Annual Meeting</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We do not currently maintain a policy requiring our directors to
attend the annual meeting; however, attendance by our directors
is encouraged. All of our directors attended the 2004 annual
meeting.
</DIV>

<P align="center" style="font-size: 10pt;">11

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<DIV align="left" style="font-size: 10pt;">
<A name='103'></A>
</DIV>

<!-- link1 "AUDIT COMMITTEE REPORT AND DISCLOSURES" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>AUDIT COMMITTEE REPORT AND DISCLOSURES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following report of the audit committee (the &#147;Audit
Committee&#148;) of the board of directors (the &#147;Board of
Directors&#148;) of Arbor Realty Trust, Inc., a Maryland
corporation (&#147;Arbor&#148; or the &#147;Company&#148;), does
not constitute soliciting material and should not be considered
filed or incorporated by reference into any other filing by the
Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the
extent the Company specifically incorporates this report by
reference therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee operates under a written charter adopted by
the Board of Directors. The Board of Directors has determined
that all members of the Audit Committee meet the independence
standards established by the New York Stock Exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee oversees the Company&#146;s financial
reporting process on behalf of the Board of Directors. The
Company&#146;s management has the primary responsibility for the
financial statements and the reporting process, including the
system of internal controls. The independent registered public
accounting firm is responsible for performing an audit of the
Company&#146;s consolidated financial statements in accordance
with generally accepted accounting principles and issuing a
report thereon. The Audit Committee reviews and oversees these
processes, including oversight of (1)&nbsp;the integrity of the
Company&#146;s financial statements, (2)&nbsp;the Company&#146;s
independent registered public accounting firm&#146;s
qualifications and independence, (3)&nbsp;the performance of the
Company&#146;s independent registered public accounting firm and
the Company&#146;s internal audit function and (4)&nbsp;the
Company&#146;s compliance with legal and regulatory requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In discharging its oversight role, the Audit Committee reviewed
and discussed the audited financial statements contained in
Arbor&#146;s Annual Report to Stockholders for fiscal year ended
December&nbsp;31, 2004 with Arbor&#146;s management and
independent registered public accounting firm. Management
represented to the Audit Committee that the Company&#146;s
consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United
States. The Audit Committee also discussed with the independent
registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No.&nbsp;61
(Codification of Statements on Auditing Standards, AU 380), as
amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the Audit Committee discussed with the independent
registered public accounting firm the registered public
accounting firm&#146;s independence from the Company and its
management, and the independent registered public accounting
firm provided to the Audit Committee the written disclosures and
letter required from the independent registered public
accounting firm by the Independence Standards Board Standard
No.&nbsp;1 <I>(Independence Discussions With Audit
Committees)</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Audit Committee discussed with the Company&#146;s internal
and independent registered public accounting firm the overall
scope and plans for their respective audits. The Audit Committee
met with the internal and independent registered public
accounting firm, with and without management present, to discuss
the results of their examinations, the evaluations of the
Company&#146;s internal controls, and the overall quality of the
Company&#146;s financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the
audited financial statements be included in Arbor&#146;s Annual
Report on Form&nbsp;10-K for the year ended December&nbsp;31,
2004 for filing with the SEC.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Audit Committee:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Melvin F. Lazar (Chairman)
</DIV>

<DIV align="center" style="font-size: 10pt;">
Jonathan A. Bernstein
</DIV>

<DIV align="center" style="font-size: 10pt;">
William Helmreich
</DIV>

<P align="center" style="font-size: 10pt;">12

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<DIV align="left" style="font-size: 10pt;">
<A name='104'></A>
</DIV>

<!-- link1 "EXECUTIVE OFFICERS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXECUTIVE OFFICERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our executive officers are appointed annually by our board of
directors and serve at the discretion of our board. Set forth
below is information regarding our executive officers, as of the
date of this proxy statement, unless otherwise indicated:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Age</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Position</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ivan Kaufman(*)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chairman of the Board of Directors, Chief Executive Officer and
    President</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Frederick C. Herbst</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Financial Officer and Treasurer</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gene Kilgore</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President&nbsp;&#151; Structured Securitization</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John C. Kovarik</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Credit Officer</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robyn Stern</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President&nbsp;&#151; Asset Management (effective
    April&nbsp;27, 2005)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fred Weber</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President&nbsp;&#151; Structured Finance</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Walter K. Horn(*)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    General Counsel, Director of Compliance, Secretary and Director</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
(*) Biographical information is provided above under &#147;Board
of Directors.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Frederick C. Herbst.</I> Mr.&nbsp;Herbst has served as our
chief financial officer and treasurer since June 2003.
Mr.&nbsp;Herbst has been chief financial officer of Arbor
Commercial Mortgage since joining the company in November 1999.
He is a member of Arbor Commercial Mortgage&#146;s executive
committee and is responsible for all aspects of Arbor Realty
Trust&#146;s and Arbor Commercial Mortgage&#146;s financial
operations, including financial reporting, tax planning,
budgeting and the appropriate utilization of capital. From
October 1998 until he joined Arbor Commercial Mortgage in
November 1999, Mr.&nbsp;Herbst was chief financial officer with
The Hurst Companies, Inc., where he was responsible for all
financial operations, including financial reporting, budgeting
and banking relationships. Previously, Mr.&nbsp;Herbst was
controller with The Long Island Savings Bank, FSB, vice
president finance with Eastern States Bankcard Association and a
senior manager with Ernst&nbsp;&#38; Young. Mr.&nbsp;Herbst
became a certified public accountant in 1983.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gene Kilgore.</I> Mr.&nbsp;Kilgore has served as our
executive vice president&nbsp;&#151; structured securitization
since October 2004. Mr.&nbsp;Kilgore also serves on Arbor
Commercial Mortgage&#146;s executive committee. From September
2001 to September 2004, Mr.&nbsp;Kilgore was a portfolio manager
for ZAIS group, LLC, a structured finance investment advisor.
From September&nbsp;2000 to August&nbsp;2001, Mr.&nbsp;Kilgore
was Director of Risk Finance at Barclays Capital. From September
1996 to September 2000, Mr.&nbsp;Kilgore worked at
Standard&nbsp;&#38; Poor&#146;s Ratings Service, where he was a
director in the collateralized debt obligations (CDO) group. He
has also served as Vice President of Corporate Lending and
Commercial Real Estate at Wachovia Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>John C. Kovarik.</I> Mr.&nbsp;Kovarik has served as our chief
credit officer since October 2003. From 1997 until October 2003,
Mr.&nbsp;Kovarik was Senior Vice President and Chief Credit
Officer of RER Resources, a commercial real estate consulting,
underwriting and asset management services provider based in
Virginia, where he was responsible for underwriting income
property secured loans and managing teams providing acquisition
underwriting. Mr.&nbsp;Kovarik has over twenty years of
experience in credit, financial analysis and commercial real
estate underwriting for various types of commercial properties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Robyn Stern:</I> Robyn Stern will become our executive vice
president&nbsp;&#151; asset management, effective April&nbsp;27,
2005. From 1999 to April&nbsp;12, 2005, Ms.&nbsp;Stern was at
Ernst&nbsp;&#38; Young LLP where she was the Regional Director
of Structured Finance. From 1994 to 1999, she was at CIBC
Oppenheimer where she was the Executive Director of Structured
Finance. From 1990 to 1994, she was at Chemical Bank (prior to
its merger with J.P. Morgan Chase) where she was the Vice
President and Regional Manager of Commercial Real Estate.
Ms.&nbsp;Stern also held real estate finance positions at
Financial Security Assurance, Inc. from 1987 to 1988 and at
Shearson Lehman Brothers, Inc. from 1983 to 1986. Ms.&nbsp;Stern
is a member of the Board of
</DIV>

<P align="center" style="font-size: 10pt;">13

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<DIV align="left" style="font-size: 10pt;">
Governors of the Commercial Mortgage Securities Association
(CMSA). She founded, and chaired for five years, the CMSA&#146;s
Regulatory Committee, is currently a Co-Chair of the CMSA&#146;s
REMIC Reform Task Force and a member of the CMSA&#146;s PAC Task
Force.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fred Weber.</I> Mr.&nbsp;Weber has served as our executive
vice president&nbsp;&#151; structured finance since June 2003.
He also continues to provide services to Arbor Commercial
Mortgage in his capacity as a continuing member of Arbor
Commercial Mortgage&#146;s executive committee. Mr.&nbsp;Weber
was employed by Arbor Commercial Mortgage from May 1999 until
July&nbsp;1, 2003. At Arbor Commercial Mortgage, Mr.&nbsp;Weber
oversaw Arbor Commercial Mortgage&#146;s structured finance and
principal transaction group, where he was responsible for
origination, underwriting and closing coordination of debt and
equity financing for various asset types and classes of
commercial real estate nationwide. He has been involved in the
mortgage banking industry for more than 16&nbsp;years and has
extensive real estate finance and acquisition experience.
Mr.&nbsp;Weber is a member of the real estate finance committee
of the Real Estate Board of New York. From July 1997 through
February 1999, Mr.&nbsp;Weber was a partner and co-head of the
real estate department with Kronish Lieb Weiner&nbsp;&#38;
Hellman LLP. Previously, Mr.&nbsp;Weber was a partner with the
law firm of Weil, Gotshal&nbsp;&#38; Manges LLP.
</DIV>

<P align="center" style="font-size: 10pt;">14

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<DIV align="left" style="font-size: 10pt;">
<A name='105'></A>
</DIV>

<!-- link1 "EXECUTIVE COMPENSATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXECUTIVE COMPENSATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because our management agreement provides that our manager,
Arbor Commercial Mortgage, assumes principal responsibility for
managing our affairs, certain of our executive officers, who are
employees of our manager, do not receive compensation from us
for serving as our executive officers. However, in their
capacities as officers or employees of our manager or its
affiliates, they devote such portion of their time to our
affairs as is required for the performance of the duties of our
manager under the management agreement. Mr.&nbsp;Ivan Kaufman,
our chairman of the board of directors, president and chief
executive officer, serves as the chief executive officer of
Arbor Commercial Mortgage. Mr.&nbsp;Frederick C. Herbst, our
chief financial officer, also serves as chief financial officer
of our manager. Walter K. Horn, our general counsel, director of
compliance and corporate secretary, also serves as secretary of
Arbor Commercial Mortgage and served as general counsel of Arbor
Commercial Mortgage until March 2005. Each of
Messrs.&nbsp;Kaufman, Herbst and Horn receives his compensation
from our manager. Our manager has informed us that, because the
services to be performed by its officers or employees in their
capacities as such is not performed exclusively for us, it
cannot segregate and identify that portion of the compensation
awarded to, earned by or paid to our executive officers by the
manager that relates solely to their services to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Management Agreement</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since we currently employ only three executive officers and 21
employees in total, we rely to a significant extent on the
facilities and resources of our manager to conduct our
operations. For performing services under the management
agreement, Arbor Commercial Mortgage receives a base management
fee and incentive compensation based on our performance. Our
manager uses the proceeds from its base management fee in part
to pay compensation to its officers and employees who,
notwithstanding that some of them are also our officers, receive
no direct compensation from us, other than restricted stock that
may be granted pursuant to our Stock Incentive Plan. Our
compensation committee will evaluate annually the fees paid to
our manager in light of its performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Base Management Fee</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our manager receives an annual base management fee based on the
equity (as defined in the management agreement) of our operating
partnership. The amount of the base management fee does not
depend on the performance of the services provided by our
manager or the types of assets its selects for our investment,
but the value of our operating partnership&#146;s equity will be
affected by the performance of these assets. The base management
fee is payable monthly in arrears in cash, calculated monthly as
a percentage of our equity and equal to 0.75%&nbsp;per annum of
the equity up to $400&nbsp;million, 0.625%&nbsp;per annum of the
equity between $400&nbsp;million and $800&nbsp;million and
0.50%&nbsp;per annum of the equity in excess of
$800&nbsp;million. We incurred $2.0&nbsp;million in base
management fees to Arbor Commercial Mortgage for management
services rendered for the year ended December&nbsp;31, 2004. All
amounts incurred have been paid to date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Incentive Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our manager is entitled to receive incentive compensation in
installments each fiscal quarter in an annual amount equal to
the product of:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;25% of the dollar amount by which:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="1%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the sum of: (i)&nbsp;our operating partnership&#146;s
    &#147;Funds From Operations&#148; (as determined in accordance
    with the management agreement) for such quarter and
    (ii)&nbsp;gains (or losses) from debt restructuring and sales of
    property per operating partnership unit (as determined in
    accordance with the management agreement) for such quarter;
    exceeds</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the product of (i)&nbsp;the weighted average (based on shares of
    our common stock and operating partnership units) of
    (a)&nbsp;the per operating partnership unit book value of the
    net assets contributed by Arbor Commercial Mortgage,
    (b)&nbsp;the $15.00 offering price per share of our common stock
    in our private placement of units in July 2003, (c)&nbsp;the
    offering price per share</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">15

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="1%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    (including shares of common stock issued upon exercise of
    warrants or options) of any subsequent offerings by us of our
    common stock (adjusted for any prior capital dividends or
    distributions), and (d)&nbsp;the issue price per operating
    partnership unit for subsequent contributions to our operating
    partnership,&nbsp;and</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    (ii)&nbsp;the greater of (x)&nbsp;9.50%&nbsp;per annum and
    (y)&nbsp;the Ten Year U.S.&nbsp;Treasury Rate plus
    3.50%&nbsp;per annum; multiplied by</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;the weighted average number of our operating
    partnership units outstanding, including operating partnership
    units issued to us equal to the number of shares of our common
    stock issued by us.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the ownership limitations in our charter, at least
25% of this incentive compensation is payable to our manager in
shares of our common stock having a value equal to the average
closing price per share for the last twenty days of the fiscal
quarter for which the incentive compensation is being paid. Our
manager earned $1.6&nbsp;million in incentive compensation for
the year ended December&nbsp;31, 2004, all of which was paid in
shares of our common stock per the election of Arbor Commercial
Mortgage. The incentive compensation is measured over a full
fiscal year, subject to recalculation and potential
reconciliation at the end of each fiscal year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Employee Executive Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the total compensation amounts
paid to our chief executive officer and each of our other
executive officers who were directly employed and compensated by
us for the years ending December&nbsp;31, 2004 and 2003.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Summary Compensation Table</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Annual Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Long-Term</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other Annual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Restricted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>All Other</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Salary</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Bonus</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock Awards</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Name and Principal Position</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>($)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>($)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>($)(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>($)(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>($)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ivan Kaufman</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    and President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John Kovarik</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,404</TD>
    <TD align="left" valign="bottom" nowrap>(3)</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Chief Credit Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,885</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Daniel Palmier</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>166,900</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>186</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>180,000</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,000</TD>
    <TD align="left" valign="bottom" nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,562</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Asset Management</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fred Weber</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,600</TD>
    <TD align="left" valign="bottom" nowrap>(8)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>180,000</TD>
    <TD align="left" valign="bottom" nowrap>(9)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,000</TD>
    <TD align="left" valign="bottom" nowrap>(10)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,603</TD>
    <TD align="left" valign="bottom" nowrap>(11)</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Structured Finance</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gene Kilgore</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>55,529</TD>
    <TD align="left" valign="bottom" nowrap>(12)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Executive Vice President&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Structured Securitization</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    On July&nbsp;1, 2003, we granted 120,000, 7,000 and
    7,000&nbsp;shares of restricted common stock to
    Messrs.&nbsp;Kaufman, Palmier and Weber, respectively, pursuant
    to our stock incentive plan. None of these executive officers
    paid any value for these shares. As of the date of grant and at
    December&nbsp;31, 2003, two-thirds of the shares of restricted
    common stock granted to each Messrs.&nbsp;Kaufman, Palmier and
    Weber were fully vested. The remaining one third of these shares
    vest ratably over the three year period beginning on the date of
    grant at a rate of 33.33% on each of the following three
    anniversaries of the date of grant. Since Mr.&nbsp;Palmier
    resigned on June&nbsp;11, 2004, he forfeited the unvested
    one-third of the 7,000&nbsp;shares of restricted common stock
    granted to him on July&nbsp;1, 2003. At December&nbsp;31, 2004,</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">16

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    seventh-ninths of the shares of restricted common stock granted
    to each Messrs.&nbsp;Kaufman and Weber were fully vested and
    two-thirds of the shares of restricted common stock granted to
    Mr.&nbsp;Palmier were fully vested. Dividends are paid on these
    restricted shares, whether or not vested, at the same rate and
    in the same manner as paid to our other common stockholders.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    The dollar amounts included in column titled &#147;Other Annual
    Compensation&#148; for 2003 represent the total fair market
    value as of the date of grant of the shares of restricted common
    stock that were fully vested as of the date of grant and at
    December&nbsp;31, 2003. The dollar amounts included in column
    titled &#147;Restricted Stock Awards&#148; for 2003 represent
    the value of the shares of restricted common stock that were not
    vested as of the date of grant and at December&nbsp;31, 2003 and
    that vest according to the aforementioned schedule.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    $600,000 represents the fair market value as of the date of
    grant and at December&nbsp;31, 2003 of the 40,000&nbsp;shares of
    restricted common stock granted to Mr.&nbsp;Kaufman that were
    not yet vested as of December&nbsp;31, 2003. 26,667 of these
    shares were not yet vested at December&nbsp;31, 2004 and the
    fair market value of these unvested shares at such date was
    $654,408.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Of the $3,404 total, $3,188 was granted to Mr.&nbsp;Kovarik as a
    match to money invested by him in his 401(k) plan, and $216 was
    granted in the form of basic term life insurance.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Kovarik was hired in October 2003 and has earned an
    annual salary of $150,000 since such time. The amount given is
    the salary he was paid for service during the period of 2003
    that he was employed by us.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Palmier began working for us when we commenced
    operations on July&nbsp;1, 2003 and earned an annual salary from
    such time until his resignation from his position at the Company
    on June&nbsp;11, 2004. The amounts given are the salary he was
    paid for service during the periods of 2003 and 2004 that he was
    employed by us.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Palmier was granted $186 in the form of basic term life
    insurance for the year ended December&nbsp;31, 2004. Of the
    $2,562 total for the year ended December&nbsp;31, 2003, $2,400
    was granted to Mr.&nbsp;Palmier as a match to money invested by
    him in his 401(k) plan, and $162 was granted in the form of
    basic term life insurance.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Upon Mr.&nbsp;Palmier&#146;s resignation from the Company on
    June&nbsp;11, 2004, the 2,333&nbsp;shares of restricted common
    stock granted to Mr.&nbsp;Palmier that were not yet vested at
    such date and at December&nbsp;31, 2003 were forfeited. The fair
    market value of such shares as of both dates was $35,000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    Of the $5,600 total, $5,228 was granted to Mr.&nbsp;Weber as a
    match to money invested by him in his 401(k)&nbsp;plan, and $372
    was granted in the form of basic term life insurance.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Weber began working for us when we commenced operations
    on July&nbsp;1, 2003 and has earned an annual salary of $360,000
    since such time. The amount given is the salary he was paid for
    service during the period of 2003 that he was employed by us.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    $35,000 represents the fair market value as of the date of grant
    and at December&nbsp;31, 2003 of the 2,333&nbsp;shares of
    restricted common stock granted to Mr.&nbsp;Weber that were not
    yet vested as of December&nbsp;31, 2003. 1,556 of these shares
    were not yet vested as of December&nbsp;31, 2004 and the fair
    market value of these unvested shares at December&nbsp;31, 2004
    was $38,135.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Of the $2,603 total, $2,400 was granted to Mr.&nbsp;Weber as a
    match to money invested by him in his 401(k)&nbsp;plan, and $203
    was granted in the form of basic term life insurance.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(12)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Kilgore was hired in October 2004 and has earned an
    annual salary of $225,000 since such time. The amount given is
    the salary he was paid for service during the period of 2004
    that he was employed by us.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">17

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equity Compensation to Our Non-employee Executive Officers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;1, 2003, we granted Mr.&nbsp;Kaufman and
Mr.&nbsp;Herbst 120,000&nbsp;shares and 4,000&nbsp;shares,
respectively, of restricted stock pursuant to the Stock
Incentive Plan, two-thirds of which vested immediately and the
remaining one-third of which vest ratably over the ensuing three
years at a rate of 33.33% on each of the subsequent three
anniversary dates of the date of grant. On November&nbsp;5,
2003, we granted Mr.&nbsp;Horn 1,000&nbsp;shares of restricted
stock pursuant to the Stock Incentive Plan with a similar
vesting schedule.
</DIV>

<P align="center" style="font-size: 10pt;">18

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Performance Graph</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below is a line graph comparing the cumulative total
stockholder return on shares of our common stock with the
cumulative total return of the S&#38;P 500 Index, the NAREIT All
REIT Index and the Russell 2000 Index. The periods shown
commence on April&nbsp;7, 2004, the date that our common stock
began trading on the New York Stock Exchange after our common
stock was first registered under Section&nbsp;12 of the Exchange
Act, and end on December&nbsp;31, 2004, the end of our most
recently completed fiscal year. The graph assumes an investment
of $100 on April&nbsp;7, 2004 and the reinvestment of any
dividends. This graph is not necessarily indicative of future
price performance. The information included in the graph and
table below was obtained from SNL Financial LC, Charlottesville,
Va.&#169; 2005.
</DIV>

<DIV align="center" style="font-size: 10pt;">
<IMG src="y07963y0796300.gif" alt="TOTAL RETURN PERFORMANCE GRAPH">
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 4pt; ">

<TR style="font-size: 1pt;">
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>April&nbsp;7, 2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31, 2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Arbor Realty Trust, Inc.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>124.28</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    S&#38;P 500 Index*</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107.56</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NAREIT All REIT Index</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>124.09</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Russell 2000 Index</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109.23</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 8pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<I>*Source:&nbsp;</I>CRSP, Center for Research in Security
Prices, Graduate School of Business, The University of Chicago
2005. Used with permission. All rights reserved. www.crsp.com
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with SEC rules, this section entitled
&#147;Performance Graph&#148; shall not be incorporated by
reference into any of our future filings under the Securities
Act or the Exchange Act, and shall not be deemed to be
soliciting material or to be filed under the Securities Act or
the Exchange Act.
</DIV>

<P align="center" style="font-size: 10pt;">19

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<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

<!-- link1 "Compensation Committee Report on Executive Compensation" -->

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation Committee Report on Executive Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following report of the compensation committee (the
&#147;Compensation Committee&#148;) of the board of directors
(the &#147;Board of Directors&#148;) of Arbor Realty Trust,
Inc., a Maryland corporation (&#147;Arbor&#148; or the
&#147;Company&#148;), does not constitute soliciting material
and should not be considered filed or incorporated by reference
into any other filing by the Company under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent the Company specifically
incorporates this report by reference therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following report describes Arbor&#146;s compensation policy,
practice and philosophy, specifically regarding Arbor&#146;s
chief executive officer and directly compensated executive
officers. We, the members of the Compensation Committee, are
presenting this report, which provides an overview of
compensation paid to executive officers for fiscal year ended
December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Committee Membership and Organization</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Compensation Committee currently consists of
Messrs.&nbsp;Kojaian (Chair), Bernstein and Lazar and
Dr.&nbsp;Helmreich. The Board of Directors has determined that
the members of the Compensation Committee meet (1)&nbsp;the
independence requirements of the New York Stock Exchange,
(2)&nbsp;the non-employee director definition of Rule&nbsp;16b-3
promulgated under Section&nbsp;16 of the Exchange Act and
(3)&nbsp;the outside director definition in Section&nbsp;162(m)
of the Internal Revenue Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Purpose</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal functions of the Compensation Committee are to:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    evaluate the performance of Arbor&#146;s officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    review the compensation payable to Arbor&#146;s officers and
    non-employee directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    evaluate the performance of Arbor Commercial Mortgage, LLC,
    Arbor&#146;s outside manager;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    review the compensation and fees payable to Arbor Commercial
    Mortgage under Arbor&#146;s management agreement;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    administer the issuance of any stock to Arbor&#146;s employees
    or the employees of Arbor Commercial Mortgage who provide
    services to Arbor.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Compensation Philosophy</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The key components of compensation for Arbor&#146;s directly
employed executive officers and chief executive officer are
salary, bonuses and restricted stock awards. Salary is generally
based on factors such as an individual officer&#146;s level of
responsibility, comparison to compensation of other officers in
the Company and compensation provided at competitive companies
and companies of similar size. Bonuses and restricted stock
awards are intended to reward exceptional performances.
Benchmarks for determining base salary and bonus levels include
targeted funds from operations levels, strength of the balance
sheet and creation of stockholder value. Restricted stock awards
are also intended to increase an officer&#146;s interest in the
Company&#146;s long-term success as measured by the market and
book value of Arbor&#146;s common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Arbor&#146;s chief executive officer makes recommendations to
the Compensation Committee with respect to the compensation of
all Arbor&#146;s directly-employed executive officers. In
addition, the Compensation Committee bases its decisions on the
most recent publicly available compensation data for senior
executive officers of comparable real estate investment trusts,
as well as various compensation studies and surveys, to ensure
that compensation packages are in line with the Company&#146;s
peer group and the real estate industry in general. While
benchmarks and comparative market data are valuable tools to
assist the Compensation Committee in setting reasonable and fair
compensation for its directly-employed executive officers, the
stated philosophy of the Company&#146;s executive compensation
program is to recognize individual contributions to the
performance of
</DIV>

<P align="center" style="font-size: 10pt;">20

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
the Company and to create a link between the performance of the
Company&#146;s stock and executive compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The base salary of Arbor&#146;s directly employed executive
officers was negotiated at the time each of those officers
joined the Company. The Compensation Committee approves changes
to those executive officer&#146;s base salary. The Compensation
Committee considers individual performance, scope of
responsibility, prior experience, breadth of knowledge and
competitive pay practices. The weight given to each of these
factors differs from individual to individual, as the
Compensation Committee deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to its charter, the Compensation Committee may retain,
at the Company&#146;s expense, a compensation consultant to
assist the committee in fulfilling its responsibilities. The
Compensation Committee is currently evaluating the merits of
engaging a third-party compensation consulting firm to study the
Company&#146;s executive compensation practices and to ensure
that overall compensation for officers, employees and
non-management directors is both competitive and designed to
suit Arbor&#146;s objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Chief Executive Officer Compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because Arbor&#146;s management agreement with Arbor Commercial
Mortgage provides that Arbor Commercial Mortgage assumes
principal responsibility for managing the Company&#146;s
affairs, certain of Arbor&#146;s executive officers, who are
employees of its manager, do not receive compensation from the
Company for serving as its executive officers. However, in their
capacities as officers or employees of Arbor&#146;s manager, or
its affiliates, they devote such portion of their time to
Arbor&#146;s affairs as is required for the performance of the
duties of the Company&#146;s manager under the management
agreement. Mr.&nbsp;Ivan Kaufman, Arbor&#146;s chairman of the
board of directors, president and chief executive officer serves
as the chief executive officer of Arbor Commercial Mortgage.
Accordingly, Mr.&nbsp;Kaufman receives his compensation from
Arbor&#146;s manager.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Compensation Committee:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
C. Michael Kojaian (Chair)
</DIV>

<DIV align="center" style="font-size: 10pt;">
Jonathan A. Bernstein
</DIV>

<DIV align="center" style="font-size: 10pt;">
William Helmreich
</DIV>

<DIV align="center" style="font-size: 10pt;">
Melvin F. Lazar
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
April&nbsp;14, 2005
</DIV>

<P align="center" style="font-size: 10pt;">21

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<DIV align="left" style="font-size: 10pt;">
<A name='107'></A>
</DIV>

<!-- link1 "Compensation Committee Interlocks and Insider Participation" -->

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Compensation Committee Interlocks and Insider
Participation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Messrs.&nbsp;Bernstein and Lazar and Dr.&nbsp;Helmreich served
as members of our compensation committee during 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dr.&nbsp;Helmreich has been retained as a part-time consultant
in the capacity of chairman for Academic Affairs by North Shore
Hebrew Academy since 2000. Prior to 2000, Dr.&nbsp;Helmreich was
the president of North Shore Hebrew Academy. Our chairman and
chief executive officer, Mr.&nbsp;Kaufman, and
Dr.&nbsp;Helmreich are both members of the board of trustees of
North Shore Hebrew Academy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, we had a $7.75&nbsp;million first
mortgage loan and a $1.2&nbsp;million second mortgage loan, each
of which bears interest at a variable rate of one month LIBOR
plus&nbsp;4.25% and matures in March 2006, outstanding to NSH
Affordable Housing of Indiana, a not-for-profit corporation that
holds and manages investment property from the endowment of
North Shore Hebrew Academy High School. Each of Mr.&nbsp;Kaufman
and Dr.&nbsp;Helmreich are members of the board of trustees of
North Shore Hebrew Academy High School and NSH Affordable
Housing of Indiana, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Bernstein serves as chairman of the board of directors
of a private company in which Mr.&nbsp;Kaufman and
Mr.&nbsp;Herbst made a $150,000 investment and a $25,000
investment, respectively, in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Concurrently with our initial public offering in April 2004, we
sold 500,000&nbsp;shares of our common stock to Kojaian
Ventures, L.L.C., of which the sole members are Mr.&nbsp;Kojaian
and Kojaian Ventures&nbsp;&#151; MM, Inc., of which
Mr.&nbsp;Kojaian is the sole stockholder, pursuant to a
subscription agreement with Kojaian Ventures, L.L.C. that
contained certain customary representations and warranties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='115'></A>
</DIV>

<!-- link1 "Equity Compensation Plan Information" -->

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equity Compensation Plan Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents information as of December&nbsp;31,
2004 regarding the Stock Incentive Plan and the incentive
compensation provisions of our management agreement with Arbor
Commercial Mortgage, which are our only equity compensation
plans:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Securities to be</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Issued Upon Exercise of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise Price of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Securities</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding Options,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding Options,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Remaining Available</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Plan Category</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Warrants and Rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Warrants and Rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>for Future Issuance</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity compensation plans approved by security holders:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2003 Omnibus Stock Incentive Plan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>283,901</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Incentive Compensation pursuant to Management Agreement(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity compensation plans not approved by security holders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>283,901</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Pursuant to the terms of our management agreement with Arbor
    Commercial Mortgage, at least 25% of the incentive compensation
    earned by our manager is payable in shares of our common stock
    having a value equal to the average closing price per share for
    the last twenty days of the fiscal quarter for which the
    incentive compensation is being paid. Arbor Commercial Mortgage
    has the right to elect to receive 100% of the incentive
    compensation in shares of our common stock. See &#147;Executive
    Compensation&nbsp;&#151; Management Agreement&#148; for
    information regarding the terms of our management agreement and
    the incentive compensation payable to Arbor Commercial Mortgage
    thereunder. Our sole stockholder immediately prior to the date
    we entered into the management agreement with Arbor Commercial
    Mortgage approved the issuance of shares of our common stock to
    Arbor Commercial Mortgage pursuant to the incentive compensation
    provisions of the management agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The number of securities remaining available for future issuance
    to Arbor Commercial Mortgage as incentive compensation pursuant
    to the management agreement depends on the amount of incentive
    compensation earned by Arbor Commercial Mortgage in the future
    and therefore is not yet determinable.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">22

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='109'></A>
</DIV>

<!-- link1 "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table indicates how many shares of our common
stock are beneficially owned by:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    each of our directors and each nominee for director;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    each of our executive officers;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    all of our directors and executive officers as a group.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table also indicates how many shares of our common
stock are beneficially owned by each person known to the Company
to be the beneficial owner of more than
five&nbsp;percent&nbsp;(5%) of the outstanding shares of our
common stock, in each case, based solely on, and as of the date
of, such person&#146;s filing of a Schedule&nbsp;13D or
Schedule&nbsp;13G with the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless otherwise indicated, the persons named in the following
table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table does not list the 3,776,069 outstanding
shares of our special voting preferred stock that are currently
held by Arbor Commercial Mortgage as a separate class of our
voting securities. These 3,776,069&nbsp;shares of special voting
preferred stock entitle the holder to one vote on all matters
submitted to a vote of our stockholders and are paired with an
equal number of operating partnership units, each of which is
currently redeemable for cash or, at our option, shares of our
common stock, generally on a one-for-one basis. Each share of
special voting preferred stock will be redeemed and cancelled by
us upon the redemption of its paired operating partnership unit
for cash or shares of our common stock. In accordance with SEC
beneficial ownership rules, the following table attributes to
Arbor Commercial Mortgage (and to Mr.&nbsp;Kaufman, as the
controlling owner of Arbor Commercial Mortgage) beneficial
ownership of the 3,776,069&nbsp;shares of common stock that may
be issued upon redemption of the 3,776,069 operating partnership
units currently held by Arbor Commercial Mortgage. Therefore,
the following table deems the 3,776,069&nbsp;shares of special
voting preferred stock currently held by Arbor Commercial
Mortgage to have been redeemed and cancelled by us. Based on
Arbor Commercial Mortgage&#146;s ownership of the
3,776,069&nbsp;shares of special voting preferred stock and its
ownership of 66,208&nbsp;shares of our common stock, it has
18.7% of the voting power of our currently outstanding voting
securities. If Arbor Commercial Mortgage redeemed the 3,776,069
operating partnership units and we issued an equivalent number
of shares of common stock to Arbor Commercial Mortgage upon such
redemption, Arbor Commercial Mortgage would also have
approximately 18.7% of our then outstanding voting securities.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Shares of Common Stock</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Beneficially Owned</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage(3)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Name and Address(1):</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Arbor Commercial Mortgage, LLC(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,842,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ivan Kaufman(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,964,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Wellington Management Company, L.L.P.(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,092,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Arthur Wrubel(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,555,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Farallon Partners, L.L.C.(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,192,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Systematic Financial Management, L.P.(8)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>937,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kensington Investment Group, Inc.(9)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>875,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Joseph Martello(10)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Jonathan A. Bernstein</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    William Helmreich</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    C. Michael Kojaian(11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>502,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Frederick C. Herbst(12)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fred Weber(13)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Walter K. Horn(14)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Melvin F. Lazar</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    John C. Kovarik</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Robyn Stern</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All directors and executive officers as a group (11&nbsp;persons)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,583,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">23

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="7%"></TD>
    <TD width="93%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp; &nbsp; *</TD>
    <TD align="left">
    Less than one percent.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Unless otherwise indicated in the following footnotes, the
    address for each person or entity listed in the table above is
    333&nbsp;Earle Ovington Boulevard, Uniondale, New&nbsp;York,
    11553.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Beneficial ownership is determined in accordance with the rules
    of the SEC and generally includes securities over which a person
    has voting or investment power and securities that a person has
    the right to acquire within 60&nbsp;days of the date hereof.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    The 16,741,122&nbsp;shares of our common stock outstanding at
    April&nbsp;22, 2005 and are considered the total number of
    shares of our common stock outstanding for the purpose of
    calculating each person&#146;s percentage of beneficial
    ownership of shares of our common stock. In accordance with SEC
    beneficial ownership rules, shares of common stock subject to
    options or warrants exercisable within 60&nbsp;days of the date
    hereof are deemed to be outstanding for computing the percentage
    of beneficial ownership of the person holding such options or
    warrants, but are not deemed outstanding for computing the
    percentage of beneficial ownership of any other person.
    Therefore, the 3,776,069&nbsp;shares of common stock that may be
    issued upon the redemption of the 3,776,069 operating
    partnership units currently held by Arbor Commercial Mortgage
    are deemed to be outstanding for computing the percentage of
    beneficial ownership of Arbor Commercial Mortgage and Ivan
    Kaufman, as the controlling owner of Arbor Commercial Mortgage,
    but are not deemed outstanding for computing the percentage of
    beneficial ownership of any other person listed in the table
    above.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Includes 3,776,069 operating partnership units currently held by
    Arbor Commercial Mortgage, each of which is currently redeemable
    for cash or, at our option, shares of our common stock,
    generally on a one-for-one basis. Mr.&nbsp;Kaufman, together
    with (i)&nbsp;the Ivan and Lisa Kaufman Family Trust,
    (ii)&nbsp;the Ivan Kaufman Grantor Retained Trust and
    (iii)&nbsp;Arbor Management, LLC, the managing member of Arbor
    Commercial Mortgage and an entity owned wholly by
    Mr.&nbsp;Kaufman and his wife, beneficially own approximately
    90% of the outstanding membership interests of Arbor Commercial
    Mortgage.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Based on information included in the Schedule&nbsp;13G filed by
    Wellington Management Company, LLP on February&nbsp;14, 2005.
    Wellington Management, in its capacity as investment advisor,
    may be deemed to beneficially own 2,092,790&nbsp;shares of our
    common stock, which are held of record by clients of Wellington
    Management. Wellington Management has shared voting authority
    over 1,372,500&nbsp;shares and shared dispositive power over
    2,080,790&nbsp;shares. Wellington Management is a registered
    investment adviser under the Investment Advisers Act of 1940, as
    amended. The address for Wellington Management Company, LLP is
    75&nbsp;State Street, Boston, MA 02109.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Based on information included in the Schedule&nbsp;13G jointly
    filed by AW&nbsp;Asset Management, L.L.C. and Arthur Wrubel on
    February&nbsp;9, 2005. AW&nbsp;Asset Management, L.L.C., a
    Delaware limited liability company (the &#147;Management
    Company&#148;), serves as investment manager or advisor to a
    number of hedge funds and managed accounts (such funds and
    accounts, collectively, the &#147;Funds&#148;) with respect to
    shares of common stock directly owned by the Funds and
    Mr.&nbsp;Arthur Wrubel is the Chief Executive Officer and
    President of the Management Company and controls its business
    activities and therefore indirectly beneficially owns the shares
    of our common stock disclosed above. The address for
    AW&nbsp;Asset Management, L.L.C. and Arthur Wrubel is
    535&nbsp;Madison Avenue, 26th&nbsp;Floor, New&nbsp;York, NY
    10022.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Based on information provided to us as of February&nbsp;7, 2005.
    Includes (i)&nbsp;535,600&nbsp;shares directly held by Farallon
    Capital Partners, L.P., (ii)&nbsp;510,400&nbsp;shares directly
    held by Farallon Capital Institutional Partners, L.P.,
    (iii)&nbsp;54,100&nbsp;shares directly held by Farallon Capital
    Institutional Partners&nbsp;II, L.P.,
    (iv)&nbsp;66,400&nbsp;shares directly held by Farallon Capital
    Institutional Partners&nbsp;III, L.P., and
    (v)&nbsp;26,300&nbsp;shares directly held by Tinicum Partners,
    L.P. (collectively, the &#147;Farallon Partnerships&#148;).
    Farallon Partners, L.L.C. (&#147;FP&#148;) is the general
    partner of the Farallon Partnerships. FP may, for purposes of
    Rule&nbsp;13d-3 under the Exchange Act, be deemed to own
    beneficially the shares held by the Farallon Partnerships. As
    managing members of FP, Chun R. Ding, Joseph F. Downes, William
    F. Duhamel, Charles E. Ellwein, Richard B. Fried, Monica R.
    Landry, William F. Mellin, Stephen L. Millham, Rajiv A. Patel,
    Derek C. Schrier and Mark C. Wehrly and, as senior managing
    member of FP,</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">24

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    Thomas F. Steyer, may each, for purposes of Rule&nbsp;13d-3
    under the Exchange Act, be deemed to own beneficially the shares
    held by the Farallon Partnerships. FP, each of its managing
    members and its senior managing member disclaim any beneficial
    ownership of such shares. All of the above-mentioned entities
    and persons disclaim group attribution. The address for all of
    the above-mentioned entities and persons is c/o&nbsp;Farallon
    Capital Management, L.L.C., One Maritime Plaza, Suite&nbsp;1325,
    San&nbsp;Francisco, CA 94111.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    Based on information included in the Schedule&nbsp;13G filed by
    Systematic Financial Management, L.P. on February&nbsp;14, 2005.
    The address for Systematic Financial Management, L.P. is
    300&nbsp;Frank W. Burr Blvd., Glenpointe East, 7th&nbsp;Floor,
    Teaneck, NJ 07666.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    Based on information included in the Schedule&nbsp;13G filed by
    Kensington Investment Group, Inc. on March&nbsp;31, 2005. The
    address for Kensington Investment Group, Inc. is 4&nbsp;Orinda
    Way, Suite&nbsp;200C, Orinda, CA 94563.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Martello holds a 1.3% Class&nbsp;B membership interest
    in Arbor Commercial Mortgage. For purposes of the SEC&#146;s
    beneficial ownership rules, the operating partnership units held
    by Arbor Commercial Mortgage are not deemed to be beneficially
    owned by Mr.&nbsp;Martello.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Includes 500,000&nbsp;shares of common stock purchased by
    Kojaian Ventures, L.L.C., of which the sole members are
    Mr.&nbsp;Kojaian and Kojaian Ventures&nbsp;&#151; MM, Inc., of
    which Mr.&nbsp;Kojaian is the sole stockholder.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(12)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Herbst holds a 0.5% Class&nbsp;B membership interest in
    Arbor Commercial Mortgage. For purposes of the SEC&#146;s
    beneficial ownership rules, the operating partnership units held
    by Arbor Commercial Mortgage are not deemed to be beneficially
    owned by Mr.&nbsp;Herbst.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(13)&nbsp;</TD>
    <TD align="left">
    Includes warrants to purchase 1,000 shares of common stock, each
    of which is currently exercisable. Mr.&nbsp;Weber holds a 0.9%
    Class&nbsp;B membership interest in Arbor Commercial Mortgage.
    For purposes of the SEC&#146;s beneficial ownership rules, the
    operating partnership units held by Arbor Commercial Mortgage
    are not deemed to be beneficially owned by Mr.&nbsp;Weber.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(14)&nbsp;</TD>
    <TD align="left">
    Mr.&nbsp;Horn holds a 2.0% Class&nbsp;B membership interest in
    Arbor Commercial Mortgage. For purposes of the SEC&#146;s
    beneficial ownership rules, the operating partnership units held
    by Arbor Commercial Mortgage are not deemed to be beneficially
    owned by Mr.&nbsp;Horn.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='108'></A>
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Section&nbsp;16(a) Beneficial Ownership Reporting
Compliance</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;16(a) of the Exchange Act, requires our executive
officers and directors, and persons who own more than 10% of a
class of our equity securities registered pursuant to
Section&nbsp;12 of the Exchange Act, to file reports of
ownership on Forms&nbsp;3, 4 and&nbsp;5 with the SEC. Officers,
directors and greater than&nbsp;10% stockholders are required to
furnish us with copies of all Forms&nbsp;3, 4 and&nbsp;5 they
file.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based solely on the Company&#146;s review of the copies of such
forms received by it, or written representations from certain
reporting persons that no filings were required for those
persons, the Company believes that during and with respect to
the fiscal year ended December&nbsp;31, 2004 all filings
required by Section&nbsp;16(a) of the Exchange Act were timely
made except for a late filing on Form&nbsp;3 by Gene Kilgore
with respect to his appointment to the position of executive
vice president&nbsp;&#151; structured securitization in October
2004 and a late filing on Form&nbsp;5 by Daniel Palmier, a
former executive vice president of the Company with respect to
2,334&nbsp;shares of restricted stock granted under the
Company&#146;s Stock Incentive Plan that were forfeited upon
Mr.&nbsp;Palmier&#146;s resignation on June&nbsp;11, 2004.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='110'></A>
</DIV>

<!-- link1 "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Conflicts of Interest with Our Manager</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the consummation of our private placement of units in July
2003, Arbor Commercial Mortgage contributed the majority of its
structured finance portfolio and related liabilities to our
operating partnership in exchange for 3,146,724 operating
partnership units and 629,345 warrants to purchase additional
operating partnership units for $15 per operating partnership
unit. Each of these warrants has since been exercised for an
equal number of operating partnership units. Arbor Commercial
Mortgage currently has an approximately 19% limited partnership
interest in our operating partnership.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Ivan Kaufman, our chairman and chief executive officer,
is also the chief executive officer of Arbor Commercial
Mortgage. Mr.&nbsp;Kaufman and entities controlled by
Mr.&nbsp;Kaufman collectively own 90% of the outstanding
membership interests in Arbor Commercial Mortgage.
Mr.&nbsp;Frederick C. Herbst, our chief financial officer, is
also the chief financial officer of Arbor Commercial Mortgage.
Mr.&nbsp;Herbst owns a 0.5% interest in Arbor Commercial
Mortgage. Mr.&nbsp;Joseph Martello, one of our directors,
currently serves as the chief operating officer of Arbor
Management, LLC, the managing member of Arbor Commercial
Mortgage. Mr.&nbsp;Martello owns a 1.3% interest in Arbor
Commercial Mortgage and is also the sole trustee of the Ivan and
Lisa Kaufman Family Trust for the benefit of
Mr.&nbsp;Kaufman&#146;s family, which owns a 59% interest in
Arbor Commercial Mortgage, and a co-trustee, along with
Mr.&nbsp;Kaufman, of the Ivan Kaufman Grantor Retained Annuity
Trust which also owns an equity interest in Arbor Commercial
Mortgage. Mr.&nbsp;Walter Horn, our general counsel, director of
compliance and corporate secretary and one of our directors,
currently serves as the secretary of Arbor Commercial Mortgage
and served as the general counsel of Arbor Commercial Mortgage
until March 2005. Mr.&nbsp;Horn owns a 2.0% interest in Arbor
Commercial Mortgage. Mr.&nbsp;Fred Weber, our executive vice
president of structured finance, was responsible for overseeing
Arbor Commercial Mortgage&#146;s structured finance and
principal transactions group from 1999 until July&nbsp;1, 2003.
Mr.&nbsp;Weber owns a 0.9% interest in Arbor Commercial
Mortgage. Mr.&nbsp;Gene Kilgore, our executive vice
president&nbsp;&#151; structured securitization, owns an
interest in Arbor Commercial Mortgage which represents less than
0.1% of the outstanding membership interests. Each of
Messrs.&nbsp;Kaufman, Herbst, Martello, Horn and Kilgore is a
member of Arbor Commercial Mortgage&#146;s executive committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Formation Transactions</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Asset Contribution and Guaranty</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Arbor Commercial Mortgage contributed the majority of its
structured finance portfolio to our operating partnership
pursuant to a contribution agreement. The contribution agreement
contains representations and warranties concerning the ownership
and terms of the structured finance assets it contributed and
other customary matters. Arbor Commercial Mortgage agreed to
indemnify us and our operating partnership against breaches of
those representations and warranties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the time of Arbor Commercial Mortgage&#146;s origination of
three investments that it contributed to us on July&nbsp;1,
2003, each of the property owners granted Arbor Commercial
Mortgage participating interests that share in a percentage of
the cash flows of the underlying properties. Arbor Commercial
Mortgage also made one of the contributed bridge loans to a
joint venture in which it had a 50% non-controlling interest.
Upon contribution of the structured finance assets, Arbor
Commercial Mortgage retained these participating and joint
venture interests. In connection with its asset contribution,
Arbor Commercial Mortgage agreed that if any portion of the
outstanding amount of any of these four contributed assets is
not paid at its maturity or repurchase date, Arbor Commercial
Mortgage will pay us, subject to the limitation described below,
the portion of the unpaid amount of the contributed asset up to
the total amount then received by Arbor Commercial Mortgage due
to the realization of any profits on its retained interests
associated with any other of the four contributed assets. Arbor
Commercial Mortgage will no longer be obligated to make such
payments to us when the remaining accumulated principal amount
of the four contributed assets, collectively, falls below
$5&nbsp;million and none of the four contributed assets is in
default.
</DIV>

<P align="center" style="font-size: 10pt;">26

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Arbor Commercial Mortgage Registration Rights</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have granted Arbor Commercial Mortgage shelf registration
rights, or, if such rights are not available, demand
registration rights with respect to shares of our common stock
that may be issued upon redemption of operating partnership
units. Holders of our operating partnership units are entitled
to participate in primary or secondary offerings of our common
stock with respect to such shares. We have also agreed to
certain restrictions on the registration rights that we may
grant to any other holder or prospective holder of our
securities without the prior written consent of the holders of
the majority of the shares of common stock and common stock
equivalents representing or underlying the then outstanding
securities that are registrable under the registration rights
agreements.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Special Voting Preferred Stock</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each of the 3,776,069 operating partnership units currently held
by Arbor Commercial Mortgage are paired with one share of our
special voting preferred stock, each of which entitles the
holder to one vote on all matters submitted to a vote of our
stockholders. Combined with its ownership of shares of our
common stock, Arbor Commercial Mortgage is currently entitled to
a number of votes representing approximately 18.7% of the voting
power of our outstanding voting securities.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Management and Services Agreements</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We and our operating partnership have entered into a management
agreement with Arbor Commercial Mortgage, pursuant to which
Arbor Commercial Mortgage provides for the day to day management
of our operations. Arbor Commercial Mortgage is also required to
provide us with a right of first refusal with respect to all
structured finance investment opportunities identified by Arbor
Commercial Mortgage or its affiliates. We have agreed not to
pursue, and to allow Arbor Commercial Mortgage to pursue, any
real estate opportunities other than structured finance
transactions. We are required to pay Arbor Commercial Mortgage a
base management fee and an incentive management fee, as well as
reimburse Arbor Commercial Mortgage for certain of its expenses.
We incurred $2.0&nbsp;million in base management fees to Arbor
Commercial Mortgage for management services rendered for the
year ended December&nbsp;31, 2004. All amounts incurred have
been paid to date. Our manager earned $1.6&nbsp;million in
incentive compensation for the year December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We and our operating partnership have also entered into a
services agreement with Arbor Commercial Mortgage pursuant to
which our asset management group provides asset management
services to Arbor Commercial Mortgage. In the event that the
services provided by our asset management group pursuant to the
agreement exceed by more than 15%&nbsp;per quarter the level of
activity anticipated by our board of directors, we will
negotiate in good faith with our manager an adjustment to our
manager&#146;s base management fee under the management
agreement, to reflect the scope of the services, the quantity of
serviced assets or the time required to be devoted to the
services by our asset management group. As of December&nbsp;31,
2004, there have been no such adjustments pursuant to the
services agreement.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Non-Competition Agreement</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have entered into a non-competition agreement with
Mr.&nbsp;Kaufman pursuant to which he has agreed not to pursue
any structured finance opportunities, unless our independent
board members affirmatively approve the pursuit by Arbor
Commercial Mortgage or one of its affiliates of such
opportunities that they have rejected on our behalf.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to his non-competition agreement with us,
Mr.&nbsp;Kaufman has also agreed:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    not to pursue any structured finance investment opportunities,
    except if our independent board members affirmatively approve
    the pursuit by Arbor Commercial Mortgage or one of its
    affiliates of structured finance opportunities that they have
    rejected on our behalf;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if he is no longer an affiliate of Arbor Commercial Mortgage
    and, within the first five years of the term of the management
    agreement, he is no longer our chief executive officer other
    than by certain reasons,</TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    he will not engage in the structured finance lending business
    for a period of one year after the earlier of his departure from
    us or the regular expiration of the one year origination
    period;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    if there is a change of control of Arbor Commercial Mortgage
    within the first three years of the term of the management
    agreement, and he is no longer an affiliate of Arbor Commercial
    Mortgage and leaves us without good reason during that three
    year period, he will not engage in the structured finance
    lending business for one year after the date of his departure
    from us.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Kaufman&#146;s non-competition agreement also prohibits
Mr.&nbsp;Kaufman from soliciting our customers or employees
during its term.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Benefits Participation Agreement</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have also entered into a benefits participation agreement
with Arbor Commercial Mortgage, pursuant to which our employees
are able to participate in any employee benefit plans maintained
by Arbor Management for the benefit of Arbor Commercial Mortgage
employees. Arbor Management charges us an amount equal to its
cost of providing benefits to each of our employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Related Party Loans and Investments</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Arbor Commercial Mortgage has a 50% non-controlling interest in
a joint venture, which was formed to acquire, develop and/or
sell real estate assets. At December&nbsp;31, 2004, Arbor
Commercial Mortgage&#146;s investment in this joint venture was
approximately $2.6&nbsp;million. All loans outstanding to this
joint venture were repaid in full in 2004. At December&nbsp;31,
2003, we had a $16&nbsp;million bridge loan outstanding to the
joint venture, which was collateralized by a first lien position
on a commercial real estate property. This loan was funded by
Arbor Commercial Mortgage in June 2003 and was purchased by us
in July 2003. The loan required monthly interest payments based
on one month London Inter-Bank Offered Rate (&#147;LIBOR&#148;)
and was repaid in full in 2004. We had agreed to provide the
borrower with additional mezzanine financing in the amount of up
to $8.0&nbsp;million. The mezzanine financing required interest
payments based on one month LIBOR and was repaid in full in
2004. Interest income recorded from these loans for the period
ended December&nbsp;31, 2004 was approximately $0.8&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the time of Arbor Commercial Mortgage&#146;s origination of
three of the structured finance assets that it contributed to us
on July&nbsp;1, 2003 at book value, which approximates fair
value, each of the property owners related to these contributed
assets granted Arbor Commercial Mortgage participating interests
that share in a percentage of the cash flows of the underlying
properties. Upon contribution of the structured finance assets,
Arbor Commercial Mortgage retained these participating interests
and its 50% non-controlling interest in the joint venture to
which it had made the $16.0&nbsp;million bridge loan. Arbor
Commercial Mortgage agreed that if any portion of the
outstanding amount of any of these four contributed assets is
not paid at its maturity or repurchase date, Arbor Commercial
Mortgage will pay to us, subject to the limitation described
below, the portion of the unpaid amount of the contributed asset
up to the total amount then received by Arbor Commercial
Mortgage due to the realization of any profits on its retained
interests associated with any other of the four contributed
assets (which had an aggregate balance of $48.3&nbsp;million as
of December&nbsp;31, 2003). However, Arbor Commercial Mortgage
will no longer be obligated to make such payments to us when the
remaining accumulated principal amount of the four contributed
assets, collectively, falls below $5&nbsp;million and none of
the four contributed assets are in default. In 2004, two of
these investments matured and the borrowers paid the amount due
in full. The remaining two investments have an aggregate balance
of $22.3&nbsp;million as of December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, approximately $0.3&nbsp;million of
interest payments from borrowers due from Arbor Commercial
Mortgage was included in other assets. These payments were
remitted in January 2005. As of December&nbsp;31, 2004,
approximately $0.6&nbsp;million of interest reserve payments due
to Arbor Commercial Mortgage was included in other liabilities.
These payments were remitted in January 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003, Arbor Commercial Mortgage received a brokerage fee for
services rendered in arranging a loan facility for a borrower. A
portion of the loan facility was provided by us. We were
credited $0.1&nbsp;million of this
</DIV>

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<DIV align="left" style="font-size: 10pt;">
brokerage fee which represented our proportionate share of the
loan facility provided to the borrower and was included in other
assets at December&nbsp;31, 2003, which was received in January
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Every transaction entered into between us and an entity in which
Arbor Commercial Mortgage holds equity interests raises a
potential conflict of interest. Conflicts of interest with
respect to these investments include, among others, decisions
regarding (1)&nbsp;whether to waive defaults of such borrower,
(2)&nbsp;whether to foreclose on the investment and
(3)&nbsp;whether to permit additional financing on the
properties securing our investments other than financing
provided by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, we had a $7.75&nbsp;million first
mortgage loan and a $1.2&nbsp;million second mortgage loan, each
of which bears interest at a variable rate of one month LIBOR
plus 4.25% and matures in March 2006, outstanding to NSH
Affordable Housing of Indiana, a not-for-profit corporation that
holds and manages investment property from the endowment of
North Shore Hebrew Academy High School. Two of our directors,
Mr.&nbsp;Kaufman and Dr.&nbsp;Helmreich, are members of the
board of trustees of North Shore Hebrew Academy High School and
NSH Affordable Housing of Indiana, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Arbor Commercial Mortgage may from time to time provide
permanent mortgage loan financing to clients of ours, which will
be used to refinance bridge financing provided by us. We and
Arbor Commercial Mortgage may also make loans to the same
borrower or to borrowers that are under common control.
Additionally, our policies and those of Arbor Commercial
Mortgage may require us to enter into intercreditor agreements
in situations where loans are made by us and Arbor Commercial
Mortgage to the same borrower.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, we may enter into future transactions with Arbor
Commercial Mortgage with the approval of our independent
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equity Investments in Our Borrowers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2003, we originated a $30&nbsp;million mezzanine
loan to 450 Partners Mezz&nbsp;III LLC and a $15&nbsp;million
mezzanine loan to 450 Partners Mezz&nbsp;II LLC. The
$30&nbsp;million loan bears interest at a fixed rate and the
$15&nbsp;million loan requires monthly interest payments based
on one month LIBOR. Both loans mature in January 2006. At the
closing of the loans, we made a $3&nbsp;million investment in
the entity that controls the borrowers and arranged for an
additional $12&nbsp;million of equity to be invested by third
parties. In exchange for making the loans and arranging the
equity investments, we received an approximately 24% profits
participation in the property and we were designated the
co-managing member of the entity that controls the property. We
sold our $3&nbsp;million equity investment in January 2004 and
retained our profits participation and position as co-managing
member.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2003, we originated a $35&nbsp;million mezzanine
loan to Prime Outlets Member LLC (&#147;POM&#148;). The loan
requires monthly interest payments based on one month LIBOR and
matures in January 2006. We also acquired, for a total
consideration of $2.1&nbsp;million, indirect equity interests in
Prime Outlets Acquisition Company LLC, the indirect parent of
POM, consisting of (1)&nbsp;8.3% capital interest, (2)&nbsp;25%
carried profits interest after specified returns are achieved,
and (3)&nbsp;a preferred distribution that when added to the
interest paid by POM on the mezzanine loan, results in a
combined return of 12.5%. The interests described in
(2)&nbsp;and (3)&nbsp;are held through AR Prime Holdings LLC, in
which we hold two-thirds of the ownership interests. Third
parties own the remaining one-third.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2003, Arbor Commercial Mortgage invested approximately
$818,000 in exchange for a 12.5% preferred interest in a joint
venture which owns and operates the properties located at 80
Evergreen and 930 Flushing Avenue in New York City. We purchased
this investment from Arbor Commercial Mortgage in August 2003.
The Company contributed an additional $297,000 to the investment
in 2004. As of December&nbsp;31, 2004, we held the
$4.7&nbsp;million 80 Evergreen bridge loan, maturing in November
2006, and the $3.5&nbsp;million 930 Flushing Avenue mezzanine
loan, maturing in June 2006, outstanding to affiliates of these
joint ventures.
</DIV>

<P align="center" style="font-size: 10pt;">29

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Other Relationships and Related Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Fred Weber, our executive vice president of structured
finance, continues to serve on Arbor Commercial Mortgage&#146;s
executive committee and provide services to Arbor Commercial
Mortgage. Mr.&nbsp;Weber does not receive a salary from Arbor
Commercial Mortgage but may receive production payments from
Arbor Commercial Mortgage for originating loans on its behalf.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Arbor Management, LLC, the managing member of Arbor Commercial
Mortgage, loaned Mr.&nbsp;Herbst and Mr.&nbsp;Palmier $225,000
and $800,000, respectively for the purpose of financing a
portion of each of their investments in our private placement of
units in July 2003. Arbor Management&#146;s loan to
Mr.&nbsp;Herbst is secured by a pledge of his 0.5% membership
interest in Arbor Commercial Mortgage. Arbor Management&#146;s
loan to Mr.&nbsp;Palmier was secured by a pledge of the
13,350&nbsp;units, each consisting of five shares of our common
stock and one warrant to purchase an additional share of our
common stock, he purchased in the private placement in July
2003. Mr.&nbsp;Palmier repaid this loan after he resigned in
2004. Arbor Management has also made additional loans to
Mr.&nbsp;Herbst and Mr.&nbsp;Palmier in the amounts of $100,000
and $25,000, respectively, prior to the private placement. The
current outstanding balance of the loan to Mr.&nbsp;Herbst is
$28,571. Mr.&nbsp;Palmier paid the remaining balance of his loan
after his resignation in 2004. In addition, Arbor Management
loaned Walter Horn, our general counsel, director of compliance
and corporate secretary and one of our directors, and
Mr.&nbsp;Weber, $50,000 and $250,000, respectively, prior to the
private placement. The outstanding balance of the loans to
Messrs.&nbsp;Horn and Weber are $14,571 and $100,000,
respectively. In January 2005, Arbor Management made a $25,000
loan to Mr.&nbsp;Kilgore in order to finance his investment in
Class&nbsp;B membership interests of Arbor Commercial Mortgage.
Mr.&nbsp;Kilgore currently has less than a 0.1% membership
interest in Arbor Commercial Mortgage. Our current policies and
procedures, as well as those of Arbor Commercial Mortgage, do
not allow for the lending of funds to any of our directors,
officers or employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
One of our directors, Dr.&nbsp;Helmreich, has been retained as a
part-time consultant in the capacity of chairman for Academic
Affairs by North Shore Hebrew Academy since 2000. Prior to 2000,
Dr.&nbsp;Helmreich was the president of North Shore Hebrew
Academy. Our chairman and chief executive officer,
Mr.&nbsp;Kaufman, and Dr.&nbsp;Helmreich are both members of the
board of trustees of North Shore Hebrew Academy High School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Bernstein, one of our directors, is chairman of the
board of directors of a private company in which Mr. Kaufman and
Mr. Herbst made a $150,000 investment and a $25,000 investment,
respectively, in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;31, 2005 the Company entered into a
$50&nbsp;million credit facility with Garden Funding, LLC, an
affiliate of Farallon Partners, L.L.C. who beneficially owned
1,192,800&nbsp;shares as of February&nbsp;25, 2005, which equals
approximately 7.2% of our outstanding common stock as of
April&nbsp;22, 2005. The facility includes a $30&nbsp;million
term loan, a $10&nbsp;million term loan and a $10&nbsp;million
revolving facility. The facility is secured by loans and
investments in the Company&#146;s portfolio. The facility has a
term of one year with two six-month renewal options and bears
interest at a spread over LIBOR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Concurrently with our initial public offering, we sold
500,000&nbsp;shares of our common stock to Kojaian Ventures,
L.L.C., of which the sole members are Mr.&nbsp;Kojaian, one of
our directors, and Kojaian Ventures&nbsp;&#151; MM, Inc., of
which Mr.&nbsp;Kojaian is the sole stockholder, pursuant to a
subscription agreement with Kojaian Ventures, L.L.C. that
contained certain customary representations and warranties.
</DIV>

<P align="center" style="font-size: 10pt;">30

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<DIV align="left" style="font-size: 10pt;">
<A name='112'></A>
</DIV>

<!-- link1 "PROPOSAL NO. 1: ELECTION OF DIRECTORS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;NO. 1: ELECTION OF DIRECTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The board of directors, following the recommendation of the
nominating/ corporate governance committee, has recommended that
Messrs.&nbsp;Kaufman, Kojaian and Lazar be elected to serve on
the board of directors, each until the annual meeting of
stockholders for 2008 and until their respective successors are
duly elected and qualify, and has recommended that Mr.&nbsp;Horn
be elected to serve on the board of directors until the annual
meeting for stockholders for 2006 and until his successor is
duly elected and qualifies. For certain information regarding
each nominee, see &#147;Board of Directors&#148; above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each nominee has consented to being named in this proxy
statement and to serve if elected. If, prior to the annual
meeting, either nominee should become unavailable to serve, the
shares of voting securities represented by a properly executed
and returned proxy will be voted for such additional person as
shall be designated by the board of directors, unless the board
of directors determines to reduce the number of directors in
accordance with the Company&#146;s charter and bylaws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Election of the director nominees named in this proposal
requires the affirmative vote of a plurality of the shares of
our voting securities cast in the election of directors at the
annual meeting. Shares represented by executed proxies will be
voted, if authority to do so is not withheld, for the election
of the board of directors&#146; nominees. Votes may be cast in
favor of or withheld with respect to all of the director
nominees, or any of them. Broker non-votes, if any, will not be
counted as having been voted and will have no effect on the
outcome of the vote on the election of directors. Stockholders
may not cumulate votes in the election of directors.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
&#147;FOR&#148; THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>ELECTION OF THE NOMINEES FOR DIRECTORS IDENTIFIED ABOVE.</B>
</DIV>

<P align="center" style="font-size: 10pt;">31

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<DIV align="left" style="font-size: 10pt;">
<A name='113'></A>
</DIV>

<!-- link1 "PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF ERNST &#38; YOUNG LLP AS THE COMPANY&#146;S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2005" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;NO. 2: RATIFICATION OF APPOINTMENT OF
ERNST&nbsp;&#38; YOUNG LLP</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AS THE COMPANY&#146;S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FOR FISCAL YEAR 2005</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The audit committee of our board of directors has appointed
Ernst&nbsp;&#38; Young LLP as the Company&#146;s independent
registered public accounting firm for fiscal year ending
December&nbsp;31, 2005. The board has endorsed this appointment.
Ernst&nbsp;&#38; Young audited our consolidated financial
statements for fiscal years ended December&nbsp;31, 2004 and
December&nbsp;31, 2003. A representative of Ernst&nbsp;&#38;
Young is expected to be present at the annual meeting and will
be available to respond to appropriate questions from our
stockholders and will be given an opportunity to make a
statement if he or she desires to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Stockholder ratification of the appointment of Ernst&nbsp;&#38;
Young LLP as our independent registered public accounting firm
is not required by our bylaws or otherwise. However, the board
is submitting the appointment of Ernst&nbsp;&#38; Young to the
stockholders for ratification as a matter of good corporate
governance. Ratification of the selection of Ernst&nbsp;&#38;
Young as our independent registered public accounting firm for
fiscal year 2005 requires the affirmative vote of a majority of
the shares of our voting securities cast on the proposal at the
annual meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If this selection is not ratified by our stockholders, the audit
committee and the board may reconsider its recommendation and
endorsement, respectively. Abstentions and broker non-votes, if
any, will not be counted as having been voted and will have no
effect on the outcome of the vote for this proposal. Even if the
selection is ratified, the audit committee in its discretion may
direct the appointment of different independent registered
public accounting firm at any time during the year if it
determines that such a change would be in the best interests of
Arbor and its stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Independent Accountants&#146; Fees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Aggregate fees for professional services rendered for us by
Ernst&nbsp;&#38; Young and its affiliates for fiscal years ended
December&nbsp;31, 2004 and December&nbsp;31, 2003 were as
follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>377,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>387,289</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Audit-Related Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="white">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All Other Fees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="white">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>384,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>390,289</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The <I>Audit Fees </I>billed were for professional services
rendered for the audit of our consolidated financial statements
for fiscal years ended December&nbsp;31, 2004 and
December&nbsp;31, 2003 and for other attest services, including
issuance of consents and review of the Company&#146;s
registration statements under the Securities Act that were filed
with the SEC in those fiscal years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There were no <I>Audit-Related Fees </I>incurred for the fiscal
years ended December&nbsp;31, 2004 and December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The <I>Tax Fees </I>billed were for professional services
rendered for tax consulting services rendered for the fiscal
years ended December&nbsp;31, 2004 and December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There were no <I>All Other Fees </I>incurred for the fiscal
years ended December&nbsp;31, 2004 and December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Audit Committee Pre-Approval Policy</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with applicable laws and regulations, the audit
committee reviews and pre-approves any non-audit services to be
performed by Ernst&nbsp;&#38; Young to ensure that the work does
not compromise its independence in performing audit services.
The audit committee also reviews and pre-approves all audit
</DIV>

<P align="center" style="font-size: 10pt;">32

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<DIV align="left" style="font-size: 10pt;">
services. In some cases, pre-approval of a particular category
or group of services, such as tax consulting services and audit
services, is provided by the full audit committee for up to a
year and is subject to a specific budget. In other cases, the
chairman of the audit committee has the delegated authority from
the full audit committee to pre-approve additional services, and
such pre-approvals are then communicated to the full audit
committee. The tax fees included in the table entitled
&#147;Independent Accountants&#146; Fees&#148; on the preceding
page were pre-approved by our audit committee in accordance with
its policies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The policy contains a de minimis provision that operates to
provide retroactive approval for permissible non-audit services
under certain circumstances. No services were provided by
Ernst&nbsp;&#38; Young during 2003 and 2004 under such provision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Change in Accountants</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Grant Thornton LLP was previously the independent accounting
firm engaged as the principal accountant to audit the
consolidated financial statements of the structured finance
business of Arbor Commercial Mortgage and its subsidiaries. On
December&nbsp;15, 2003, we dismissed Grant Thornton. The
decision to change accountants was recommended by the audit
committee of our board of directors and approved by our board of
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We were formed on June&nbsp;24, 2003. From our formation until
December&nbsp;15, 2003, the date of Grant Thornton&#146;s
dismissal, and in connection with the audit of the consolidated
financial statements of the structured finance business of Arbor
Commercial Mortgage and its subsidiaries as of December&nbsp;31,
2002 and for the year ended December&nbsp;31, 2002, there were
no disagreements with Grant Thornton on any matter of accounting
principles or practices, consolidated financial statement
disclosure or auditing scope or procedures, which disagreements
if not resolved to their satisfaction would have caused them to
make reference in connection with their opinion to the subject
matter of the disagreement. Also, during such periods there were
no reportable events as set forth in Item&nbsp;304(a)(1)(v) of
Regulation&nbsp;S-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The audit report of Grant Thornton on the consolidated financial
statements of the structured finance business of Arbor
Commercial Mortgage and its subsidiaries as of December&nbsp;31,
2002 and for the year ended December&nbsp;31, 2002 did not
contain any adverse opinion or disclaimer of opinion, nor were
they qualified or modified as to uncertainty, audit scope or
accounting principles.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>&#147;FOR&#148; RATIFICATION OF THE APPOINTMENT OF</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>ERNST&nbsp;&#38; YOUNG LLP AS THE COMPANY&#146;S</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>FOR FISCAL YEAR 2005.</B>
</DIV>

<P align="center" style="font-size: 10pt;">33

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<DIV align="left" style="font-size: 10pt;">
<A name='114'></A>
</DIV>

<!-- link1 "PROPOSAL NO. 3: AMENDMENT TO THE COMPANY&#146;S 2003 OMNIBUS STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED, TO AUTHORIZE FOR ISSUANCE AN ADDITIONAL 250,000 SHARES OF OUR COMMON STOCK" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;NO. 3: AMENDMENT TO THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>COMPANY&#146;S 2003 OMNIBUS STOCK INCENTIVE PLAN,</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AS AMENDED AND RESTATED, TO AUTHORIZE FOR ISSUANCE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AN ADDITIONAL 250,000 SHARES OF OUR COMMON STOCK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are asking the Company&#146;s stockholders to approve an
amendment to the Company&#146;s 2003 Omnibus Stock Incentive
Plan, as amended and restated on July&nbsp;29, 2004 (the
&#147;Stock Incentive Plan&#148;), to increase the total number
of shares of our common stock authorized and reserved for
issuance under the Stock Incentive Plan by 250,000&nbsp;shares.
Following approval of the amendment to the Stock Incentive Plan,
the total number of shares authorized and reserved for future
issuance under the Stock Incentive Plan will not exceed
533,901&nbsp;shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of April&nbsp;22, 2005, 151,099&nbsp;shares of our common
stock subject to restricted stock awards were outstanding and
283,901&nbsp;shares remained available for future grants. The
board of directors believes that the Company&#146;s stock
incentive program is an important factor in attracting and
retaining the high caliber employees and other service providers
essential to the Company&#146;s success and in aligning those
individuals&#146; long-term interests with those of our
stockholders. Therefore, the board of directors has approved an
amendment to the Stock Incentive Plan, subject to the approval
of the Company&#146;s stockholders, to increase the maximum
aggregate number of shares of our common stock with respect to
which awards may be granted under the Stock Incentive Plan by
250,000&nbsp;shares. The amendment is intended to ensure that
the Stock Incentive Plan will have available the number of
shares necessary to meet these needs, and the board of directors
believes that approval of the amendment to the Stock Incentive
Plan is in the best interests of the Company and its
stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The material features of the Stock Incentive Plan are summarized
below. The following summary does not purport to be complete,
and is subject to and qualified in its entirety by reference to
the complete text of the Stock Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>General</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restricted stock awards may be granted under the Stock Incentive
Plan. A total of 185,000&nbsp;shares of the Company&#146;s
common stock were originally reserved for issuance pursuant to
awards under the Stock Incentive Plan, subject to adjustment
upon certain corporate transactions. At the annual meeting of
stockholders held on July&nbsp;29, 2004, the stockholders
approved an amendment to increase the total number of shares of
our common stock authorized and reserved for issuance under the
Stock Incentive Plan by 250,000&nbsp;shares, bringing the total
number of shares authorized and reserved for issuance under the
Stock Incentive Plan to 287,834 (after giving effect to the
147,166&nbsp;shares of restricted stock granted pursuant to the
Stock Incentive Plan and outstanding as of July&nbsp;29, 2004).
Upon stockholder approval of the Stock Incentive Plan, the total
number of shares reserved for issuance will be 533,901 (after
giving effect to the 151,099&nbsp;shares of restricted stock
granted pursuant to the Stock Incentive Plan and outstanding as
of April&nbsp;22, 2005). If any shares subject to an award are
forfeited, the forfeited shares that were subject to the award
will become available for future grants under the Stock
Incentive Plan. In June 2004, 2,334&nbsp;shares of restricted
stock were forfeited and became available for future grants. In
September 2004, 67&nbsp;shares of restricted stock were
forfeited and became available for future grants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of April&nbsp;22, 2005, the closing price of the
Company&#146;s common stock was $26 as reported on the New York
Stock Exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Purpose</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purpose of the Stock Incentive Plan is to enable the Company
to attract and retain highly qualified personnel who will
contribute to the Company&#146;s success and to provide
incentives to employees and other service providers that are
linked directly to increases in stockholder value, and will
therefore inure to the benefit of all of the Company&#146;s
stockholders.
</DIV>

<P align="center" style="font-size: 10pt;">34

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Administration</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Stock Incentive Plan is administered by the Company&#146;s
board of directors or, at the board&#146;s discretion, by a
committee appointed by the board (each, the &#147;plan
administrator&#148;). The board of directors has designated its
compensation committee as the plan administrator. The plan
administrator has the authority to grant awards and otherwise
administer the Stock Incentive Plan. All decisions made by the
plan administrator pursuant to the provisions of the Stock
Incentive Plan are final, conclusive and binding upon all
persons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Eligibility</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Officers, directors, employees, consultants (including employees
of Arbor Commercial Mortgage who provide services to the
Company) and advisors of the Company, its parent or subsidiaries
are eligible to receive awards under the Stock Incentive Plan.
As of March&nbsp;31, 2005, there were approximately 30
individuals eligible to receive awards under the Stock Incentive
Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Restricted Stock</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A restricted stock award is an award of shares of common stock
that is subject to restrictions on transferability and such
other restrictions, if any, as the plan administrator may
determine in its sole discretion. The restrictions may lapse
separately or in combination at such times, under such
circumstances, including, without limitation, a specified period
of employment or the satisfaction of pre-established criteria,
in such installments or otherwise, as the plan administrator may
determine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Restricted stock awards may be issued either alone or in
addition to other awards granted under the Stock Incentive Plan.
The recipient of a restricted stock award does not have any
rights with respect to any such award until he or she has
executed an award agreement evidencing the award and delivered
an executed copy to the Company generally within a period of
60&nbsp;days after the grant date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except to the extent restricted under the award agreement
relating to the restricted stock, the recipient of a restricted
stock award generally has all of the rights of a stockholder.
The rights of a restricted stock award recipient upon
termination of employment or service is as set forth in the
award agreement governing such award and the terms of the award
agreement may differ from award to award. The Company&#146;s
restricted stock awards generally provide that upon cessation of
employment with or service to the Company, shares of restricted
stock and any and all accrued but unpaid dividends that at the
time have not been released from restrictions will be forfeited.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Adjustments Upon Certain Corporate Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate
structure affecting the Company&#146;s common stock, the plan
administrator shall determine to what extent an equitable
substitution or proportionate adjustment shall be made in
(1)&nbsp;the aggregate number of shares of the common stock
reserved for issuance under the Stock Incentive Plan, and
(2)&nbsp;the kind, number and purchase price of shares of the
common stock subject to outstanding awards of restricted stock
granted under the plan. Other substitutions or adjustments shall
be made as determined in the plan administrator&#146;s
discretion, including the cancellation of any outstanding awards
in exchange for payment in cash or other property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Effect of a Change in Control</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The treatment of restricted stock awards in the event of a
change in control of the Company is as set forth in the award
agreement governing such award, which treatment may vary from
award to award. The Company&#146;s restricted stock agreements
generally provide that all restrictions lapse as of the date of
the change in control. The definition of a &#147;change in
control&#148; is provided in the restricted stock agreement and
may vary
</DIV>

<P align="center" style="font-size: 10pt;">35

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<DIV align="left" style="font-size: 10pt;">
from award to award. Generally a &#147;change in control&#148;
will occur upon the occurrence of one of the following events:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a person is or becomes the owner of 25% or more of the voting
    stock of the Company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    directors serving on the board on the date of the award
    agreement and any new directors whose election or nomination is
    approved or recommended by at least a two-thirds vote of the
    directors then still in office who either were directors on the
    date of the award agreement or whose election or nomination was
    previously so approved or recommended, cease to constitute a
    majority of directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    consummation of a merger or consolidation of the Company or any
    subsidiary with any other corporation;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    approval by the Company&#146;s stockholders of a plan of
    complete liquidation or dissolution of the Company or there is
    consummated an agreement for the sale or disposition of all or
    substantially all of the Company&#146;s assets.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Amendment and Termination</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s board of directors may amend, alter or
discontinue the Stock Incentive Plan but cannot take any action
that would impair the rights of an award recipient without such
recipient&#146;s consent. To the extent necessary and desirable,
the board of directors must obtain approval of the stockholders
for any amendment that would:&nbsp;(a)&nbsp;other than through
adjustment as provided in the Stock Incentive Plan, increase the
total number of shares of our common stock reserved for issuance
under the Stock Incentive Plan; or (b)&nbsp;change the class of
officers, directors, employees, consultants and advisors
eligible to participate in the Stock Incentive Plan. The plan
administrator may amend the terms of any award granted under the
Stock Incentive Plan, prospectively or retroactively but
generally may not impair the rights of any award recipient
without his or her consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Stock Incentive Plan will terminate on June&nbsp;25, 2013,
provided that any awards then outstanding under the Stock
Incentive Plan may extend beyond that date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>New Plan Benefits</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company cannot determine the number of restricted stock
awards under the Stock Incentive Plan, if approved, that will be
granted in 2005 because these grants will be made at the
discretion of the plan administrator and, accordingly, are not
yet determinable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Vote Required for Approval of the Amendment to the Stock
Incentive Plan</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approval of the amendment to the Stock Incentive Plan requires
the affirmative vote of a majority of the votes cast on the
proposal at the annual meeting by holders of our voting
securities; provided that the total vote cast on the proposal
represents over 50% in interest of all securities entitled to
vote on the proposal. For purposes of the vote on the Stock
Incentive Plan, abstentions will have the same effect as votes
against the proposal and broker non-votes will have the same
effect as votes against the proposal, unless holders of more
than 50% in interest of all securities entitled to vote on the
proposal cast votes, in which event broker non-votes will not
have any effect on the result of the vote. If stockholder
approval of the amendment to the Stock Incentive Plan is not
obtained, then no issuances pursuant to the Stock Incentive Plan
will be made that, when combined with the number of shares
previously issued pursuant to the Stock Incentive Plan and not
otherwise forfeited, exceeds in the aggregate
435,000&nbsp;shares of our common stock.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148;
APPROVAL OF THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AMENDMENT TO THE COMPANY&#146;S 2003 OMNIBUS STOCK INCENTIVE
PLAN,</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AS AMENDED AND RESTATED, TO AUTHORIZE FOR ISSUANCE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AN ADDITIONAL 250,000 SHARES OF THE COMPANY&#146;S COMMON
STOCK</B>
</DIV>

<P align="center" style="font-size: 10pt;">36

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<DIV align="left" style="font-size: 10pt;">
<A name='116'></A>
</DIV>

<!-- link1 "PROPOSAL NO. 4: APPROVAL OF AN AMENDMENT TO THE COMPANY&#146;S CHARTER TO LOWER EACH OF THE AGGREGATE STOCK OWNERSHIP LIMIT AND THE COMMON STOCK OWNERSHIP LIMIT FROM 9.6 PERCENT TO 8.3 PERCENT" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSAL&nbsp;NO. 4: APPROVAL OF AN AMENDMENT TO THE
COMPANY&#146;S CHARTER</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>TO LOWER EACH OF THE AGGREGATE STOCK OWNERSHIP LIMIT AND
THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>COMMON STOCK OWNERSHIP LIMIT FROM 9.6&nbsp;PERCENT TO
8.3&nbsp;PERCENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s Board of Directors has determined that the
proposal to amend the Articles of Incorporation of the Company
(together with the Articles&nbsp;Supplementary of the Company,
the &#147;Charter&#148;) to lower each of the aggregate stock
ownership limit and the common stock ownership limit contained
in the Charter from 9.6&nbsp;percent to 8.3&nbsp;percent is
advisable and in the best interests of the Company and its
stockholders and has directed that the proposed Articles of
Amendment to lower such limits, the form of which is attached
hereto as Appendix&nbsp;A (the &#147;Charter Amendment&#148;) be
submitted for consideration and approval by the Company&#146;s
stockholders. The relevant provisions of, and the proposed
amendments to, the Charter are summarized below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Current REIT Stock Ownership Limitations in the Charter</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The current Charter provides for limitations on the transfer and
ownership of the Company&#146;s capital stock. Such restrictions
are intended to assist the Company in maintaining and monitoring
its qualification as a real estate investment trust (a
&#147;REIT&#148;) for federal income tax purposes. The
requirements under the Internal Revenue Code of 1986, as amended
(the &#147;Code&#148;) for qualification as a REIT include
certain rules relating to the ownership of the REIT&#146;s
capital stock. One such requirement is that, in general, no five
or fewer &#147;individuals,&#148; which term includes certain
types of entities, may directly or constructively own more than
50% of the value of a REIT&#146;s capital stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to ensure compliance with the foregoing tax law
requirement, the Charter currently includes an aggregate stock
ownership limit, which generally restricts any individual,
corporation or any other entities and includes a
&#147;group&#148; as such term is defined under the SEC&#146;s
beneficial ownership rules (each, a &#147;Person&#148;) from
&#147;beneficially owning&#148; or, &#147;constructively
owning&#148;, as each term is defined in the Charter more than
9.6% of the aggregate value of the Company&#146;s capital stock.
The Charter also contains a common stock ownership limit, which
generally restricts a Person from &#147;beneficially
owning&#148; or, &#147;constructively owning&#148;, as each term
is defined in the Charter more than 9.6% of either the number or
value of shares of the Company&#146;s common stock. Purported
transfers or ownership of stock in violation of these limits are
void, and may result in the affected shares being transferred by
operation of law to a trust for a charitable beneficiary and not
to the intended transferee or owner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The REIT stock ownership limitations under the Code and in the
Charter involve technical and complex attribution rules,
pursuant to which shares of capital stock may be treated as
owned by persons having specified relationships to the
stockholder of record. In addition, shares of capital stock
underlying outstanding options and warrants may, in certain
circumstances, be treated for purposes of these rules as owned
by the holder of the option or warrant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s Board of Directors is vested with broad
discretion to interpret and apply the ownership limitations
contained in the Charter, including the application of the
attribution rules and the determination of values, and to
resolve any ambiguities. In addition, the Board of Directors has
authority to grant, and has granted, exemptions for certain of
the Company&#146;s stockholders from the ownership limitations
contained in the Charter, upon determining that granting such
exemption will not adversely affect the Company&#146;s ability
to maintain its qualification as a REIT, and subject to such
terms and conditions as prescribed by Charter and such other
terms and conditions that the Board of Directors has deemed
appropriate. Such terms and conditions may include establishing
a special &#147;excepted holder limit&#148; that applies to the
recipient of the exemption.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Effect of Recent CDO Transaction on Company&#146;s REIT
Compliance</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As the Company has previously disclosed, Arbor Realty Mortgage
Securities Series&nbsp;2004-1, Ltd. (the &#147;CDO
Issuer&#148;), an indirect subsidiary of the Company issued and
sold approximately $305.3&nbsp;million principal amount of notes
evidencing a collateralized debt obligation (the &#147;CDO
Notes&#148;) on January&nbsp;19, 2005. The CDO Notes are secured
by a portfolio of collateral debt securities, consisting
primarily of real estate-related
</DIV>

<P align="center" style="font-size: 10pt;">37

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<DIV align="left" style="font-size: 10pt;">
bridge loans, mezzanine loans and junior participating interests
in first mortgage loans that the CDO Issuer acquired from other
indirect subsidiaries of the Company as described below (the
&#147;Collateral Debt Securities&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The CDO Issuer is a direct, wholly-owned subsidiary of Arbor
Realty SR, Inc., a Maryland corporation (&#147;SR Inc.&#148;).
Shortly before issuance of the CDO Notes, the Company formed SR
Inc. as a direct, wholly-owned subsidiary of the Company&#146;s
operating partnership, Arbor Realty Limited Partnership (the
&#147;OP&#148;) and intends to cause SR Inc. to elect to be
taxed as a REIT, beginning with the year ending
December&nbsp;31, 2005. In connection with the issuance of CDO
Notes, the OP transferred all of its assets to SR Inc. which in
turn transferred a substantial majority of such assets to the
CDO Issuer to serve as the Collateral Debt Securities for the
CDO Notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The nature of the Collateral Debt Securities and the liabilities
of the CDO Issuer cause it to be classified as a taxable
mortgage pool (a &#147;TMP&#148;) under the Code. In general,
TMPs are treated as separate taxable corporations. However, the
Code exempts a TMP from this treatment if it is comprised of all
or a portion of the assets of a REIT (or of a wholly-owned
subsidiary of a REIT, the separate existence of which is
disregarded for tax purposes). Since the Company conducts its
operations and holds its assets through the OP and the OP&#146;s
lower tier subsidiaries, and not through wholly-owned
subsidiaries, the Company formed SR&nbsp;Inc. as a subsidiary of
the OP, will cause it to elect to be taxed as a REIT and formed
the CDO Issuer as a wholly-owned subsidiary of SR Inc. in order
to avert the adverse tax consequences that the Company would
have otherwise suffered if, as a TMP, the CDO&nbsp;Issuer were
treated as a separate taxable corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Effect of SR Inc.&#146;s REIT Compliance on the
Company&#146;s REIT Stock Ownership Limitations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of the REIT stock ownership limitations under the
Code, ownership of SR Inc.&#146;s capital stock is treated as
more heavily concentrated than that of the Company. In order to
determine ownership of SR Inc.&#146;s capital stock for purposes
of the REIT stock ownership limitations in the Code, the holders
of the SR Inc.&#146;s capital stock are looked through until
&#147;individuals&#148; are identified. Since SR Inc. is
currently a wholly-owned subsidiary of the OP, the ownership of
partnership interests in the OP (the &#147;OP&nbsp;Units&#148;)
represent indirect ownership interests in SR Inc.&#146;s capital
stock. Therefore, Arbor Commercial Mortgage, primarily through
its ownership of approximately 19% of the outstanding
OP&nbsp;Units, and Ivan Kaufman, as the controlling owner of
Arbor Commercial Mortgage, are deemed to own approximately 19%
of the outstanding capital stock of SR Inc. for purposes of the
REIT stock ownership limitations in the Code. Conversely, such
OP&nbsp;Units are generally not taken into account for purposes
of determining the Company&#146;s compliance with the REIT stock
ownership limitations. The remaining 81% of the OP&nbsp;Units
owned by the Company represent an indirect ownership interest in
approximately 81% of the outstanding capital stock of SR Inc.
Therefore, Persons who have &#147;beneficial ownership&#148; or
&#147;constructive ownership&#148; of the Company&#146;s capital
stock are deemed to own that percentage of SR&nbsp;Inc.&#146;s
capital stock equal to their percentage ownership in the
Company&#146;s capital stock multiplied by 81% for purposes of
the REIT stock ownership limitations in the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since Arbor Commercial Mortgage, and Ivan Kaufman, as its
controlling owner, are deemed to own approximately 19% of the
SR&nbsp;Inc.&#146;s capital stock, if Persons were to continue
to be able to have or acquire &#147;beneficial ownership&#148;
or &#147;constructive ownership&#148; of up to 9.6% of the
Company&#146;s capital stock under the Charter, SR&nbsp;Inc.
might not be able to comply with the Code&#146;s requirement
that no five or fewer &#147;individuals&#148; may directly or
constructively own more than 50% of the value of a REIT&#146;s
capital stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to ensure that the deemed ownership of SR Inc.&#146;s
capital stock, including through the Company&#146;s capital
stock, does not adversely affect SR&nbsp;Inc.&#146;s compliance
with the REIT stock ownership limitations, the Company&#146;s
stockholders are asked to consider an amendment to the
Company&#146;s Charter that would reduce the aggregate stock
ownership limit from 9.6% to 8.3% of the aggregate value of the
Company&#146;s stock, and the common stock ownership limit from
9.6% to 8.3% of the number or value of the Company&#146;s common
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors has determined that ensuring SR
Inc.&#146;s qualification as a REIT is desirable, not only in
minimizing SR&nbsp;Inc.&#146;s tax burdens, but also in
maintaining the Company&#146;s qualification as a REIT
</DIV>

<P align="center" style="font-size: 10pt;">38

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<DIV align="left" style="font-size: 10pt;">
because of the effect that the Company&#146;s indirect interest
in SR&nbsp;Inc.&#146;s capital stock has on the Company&#146;s
compliance with the income and asset requirements to which REITs
are subject under the Code.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The REIT stock ownership limitations under the Code do not apply
until the second year that an entity operates as a REIT. In the
case of SR Inc., which commenced operations in 2005, these
limitations will not take effect until 2006. Accordingly, the
Charter Amendment, if approved, would become effective on
January&nbsp;1, 2006 (the &#147;Amendment Effective Date&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To the extent that any Person&#146;s current &#147;beneficial
ownership&#148; or &#147;constructive ownership&#148; of the
Company&#146;s capital stock exceeds the new aggregate or common
stock ownership limits that would apply if the Charter Amendment
is approved by the Company&#146;s stockholders, the Company
expects to work with such persons to determine if granting any
such Persons an exemption from the new limitations would not
adversely affect the Company&#146;s or SR&nbsp;Inc.&#146;s
qualification as a REIT and, if the Board of Directors makes a
favorable determination in that regard, to grant exemptions to
such Persons from the new limitations prior to the Amendment
Effective Date, subject to such terms and conditions prescribed
by the Charter and such terms and conditions that the Board of
Directors deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the REIT stock ownership limitations contained in the Charter
are reduced in the manner described above following approval of
the Charter Amendment, this may make it more difficult for a
stockholder to accumulate substantial stock holdings of the
Company, and thereby may delay, defer or prevent a change in
control of the Company or other transactions by a third party
without the consent of our Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Board of Directors has determined that the proposed
reduction of the Charter&#146;s aggregate stock ownership limit
and the Charter&#146;s common stock ownership limit pursuant to
the Charter Amendment are advisable and in the best interests of
the Company and its stockholders in light of the desire to
continue to maintain the Company&#146;s and SR Inc.&#146;s
qualification as a REIT.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Vote Required for Approval of the Charter Amendment</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approval of the Charter Amendment requires the affirmative vote
of a majority of the votes entitled to be cast on the proposal
at the annual meeting by holders of our voting securities. For
purposes of the vote or the Charter Amendment, abstentions and
broker non-votes will have the same effect as votes against the
proposal.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>THE BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148;
APPROVAL OF THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AMENDMENT TO THE COMPANY&#146;S CHARTER TO LOWER EACH OF
THE</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>AGGREGATE STOCK OWNERSHIP LIMIT AND THE COMMON STOCK</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OWNERSHIP LIMIT FROM 9.6&nbsp;PERCENT TO 8.3&nbsp;PERCENT.</B>
</DIV>

<P align="center" style="font-size: 10pt;">39

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<DIV align="left" style="font-size: 10pt;">
<A name='117'></A>
</DIV>

<!-- link1 "STOCKHOLDER PROPOSALS FOR 2006" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>STOCKHOLDER PROPOSALS FOR 2006</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proposals received from stockholders in accordance with
Rule&nbsp;14a-8 under the Exchange Act are given careful
consideration by our nominating/corporate governance committee
and our board of directors. Stockholder proposals are eligible
for consideration for inclusion in the proxy statement for the
2006 annual meeting of stockholders if they are received by the
Company on or before December&nbsp;27, 2005. Stockholder
proposals must be directed to the General Counsel and Corporate
Secretary, Arbor Realty Trust, Inc., at 333&nbsp;Earle Ovington
Boulevard, Suite&nbsp;900, Uniondale, New York 11553. In order
for a stockholder proposal submitted outside of Rule&nbsp;14a-8
to be considered &#147;timely&#148; within the meaning of
Rule&nbsp;14a-4(c) under the Exchange Act, such proposal must be
received by the Company not later than the last date for
submission of stockholder proposals under our current bylaws. In
order for a proposal to be &#147;timely&#148; under our current
bylaws, proposals of stockholders made outside of
Rule&nbsp;14a-8 under the Exchange Act must be submitted, in
accordance with the requirements of our bylaws, not later than
January&nbsp;25, 2006 and not earlier than December&nbsp;27,
2005; provided, however, in the event that mailing of the notice
for the 2006 annual meeting of stockholders is advanced more
than 30&nbsp;days prior to or delayed more than 30&nbsp;days
after April&nbsp;26, 2006, a proposal by a stockholder to be
timely must be delivered not earlier than the 120th day prior to
the date that mailing of the notice for such meeting is first
made and not later than the close of business on the later of
(1)&nbsp;the 90th&nbsp;day prior to the date that mailing of the
notice for such meeting is first made and (2)&nbsp;the tenth day
following the date on which public announcement of the date of
the 2006 annual meeting of stockholders is first made.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='118'></A>
</DIV>

<!-- link1 "OTHER MATTERS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OTHER MATTERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our board of directors knows of no other matters that have been
submitted for consideration at this annual meeting. If any other
matters properly come before our stockholders at this annual
meeting, the persons named on the enclosed proxy card intend to
vote the shares they represent in accordance with their
discretion.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    By Order of the Board of Directors,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="y07963y0796302.gif" alt="-s- Walter K. Horn"></TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Walter K. Horn</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>General Counsel, Director of Compliance</I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I>and Corporate Secretary</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
April&nbsp;22, 2005
</DIV>

<DIV align="left" style="font-size: 10pt;">
Uniondale, New York
</DIV>

<P align="center" style="font-size: 10pt;">40

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<DIV align="right" style="font-size: 10pt;">
<B>APPENDIX&nbsp;A</B>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='120'></A>
</DIV>

<!-- link1 "PROPOSED AMENDMENT TO THE ARTICLES OF INCORPORATION OF ARBOR REALTY TRUST, INC." -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PROPOSED AMENDMENT TO</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>THE ARTICLES OF INCORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>OF ARBOR REALTY TRUST, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><U>ARBOR REALTY TRUST, INC.</U></B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ARTICLES OF AMENDMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Arbor Realty Trust, Inc., a Maryland corporation (the
&#147;Corporation&#148;), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><U>FIRST</U>:</I> The charter of the Corporation is hereby
amended by deleting the definition of &#147;Aggregate Stock
Ownership Limit&#148; in Section&nbsp;7.1 of
Article&nbsp;Seventh in its entirety and inserting the following
in lieu thereof:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><U>Aggregate Stock Ownership Limit</U>.</I> The term
    &#147;Aggregate Stock Ownership Limit&#148; shall mean not more
    than 8.3&nbsp;percent in value of the aggregate of the
    outstanding shares of Capital Stock. The value of the
    outstanding shares of Capital Stock shall be determined by the
    Board of Directors of the Corporation in good faith, which
    determination shall be conclusive for all purposes hereof.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><U>SECOND</U>:</I> The charter of the Corporation is hereby
further amended by deleting the definition of &#147;Common Stock
Ownership Limit&#148; in Section&nbsp;7.1 of
Article&nbsp;Seventh in its entirety and inserting the following
in lieu thereof:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><U>Common Stock Ownership Limit</U>.</I> The term
    &#147;Common Stock Ownership Limit&#148; shall mean not more
    than 8.3&nbsp;percent (in value or in number of shares,
    whichever is more restrictive) of the aggregate of the
    outstanding shares of Common Stock of the Corporation. The
    number and value of outstanding shares of Common Stock of the
    Corporation shall be determined by the Board of Directors of the
    Corporation in good faith, which determination shall be
    conclusive for all purposes hereof.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><U>THIRD</U>:</I> The amendments to the charter of the
Corporation as set forth above have been duly advised by the
Board of Directors and approved by the stockholders of the
Corporation as required by law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><U>FOURTH</U>:</I> There has been no change in the authorized
stock of the Corporation effected by the amendments to the
charter of the Corporation as set forth above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><U>FIFTH</U>:</I> These Articles of Amendment shall become
effective at 12:01&nbsp;a.m. on January&nbsp;1, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><U>SIXTH</U>:</I> The undersigned officer acknowledges these
Articles of Amendment to be the corporate act of the Corporation
and as to all matters of facts required to be verified under
oath, the undersigned officer acknowledges that to the best of
his knowledge, information and belief, these matters and facts
are true in all material respects and that this statement is
made under the penalties of perjury.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed under seal in its name and on its
behalf by the undersigned officer, and attested to by its
Secretary, on
this &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;day
of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 24pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    ATTEST:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    ARBOR REALTY TRUST, INC.</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    (SEAL)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    Walter K. Horn</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Name:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <I>Secretary</I></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Title:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>FORM OF PROXY CARD</B>



<P align="center" style="font-size: 10pt"><B>ARBOR REALTY TRUST, INC.</B>



<P align="center" style="font-size: 10pt"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS</B>



<P align="center" style="font-size: 10pt"><B>FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 25, 2005</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned stockholder of Arbor Realty Trust, Inc., a Maryland corporation (the
&#147;Company&#148;), hereby appoints Frederick C. Herbst and Walter K. Horn, and each of them, the proxy or
proxies of the undersigned, with full power of substitution, to attend the Annual Meeting of
Stockholders of the Company to be held on May&nbsp;25, 2005 at 1:00 p.m., local time, at The
Teleconference Center on the lower level of 333 Earle Ovington Boulevard, Uniondale, New York and
any postponements or adjournments thereof, and to vote all shares of voting securities of the
Company which the undersigned would be entitled to vote if personally present thereat, with all
powers that the undersigned would have if personally present thereat.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>This proxy, when properly executed, will be voted in the manner directed on the reverse side.
If this proxy is executed but no instruction is given, this proxy will be voted &#147;FOR&#148; all nominees
listed in Proposal 1 and &#147;FOR&#148; Proposals 2, 3 and 4. The proxies are hereby authorized to vote in
their discretion upon such other matters as may properly come before the meeting or any adjournment
or postponement thereof.</B>


<P align="center" style="font-size: 10pt">(Continued and to be signed on the reverse side)



<P align="center" style="font-size: 10pt">*************



<P align="center" style="font-size: 10pt">ANNUAL MEETING OF STOCKHOLDERS OF



<P align="center" style="font-size: 10pt"><B>ARBOR REALTY TRUST, INC.</B>



<P align="left" style="font-size: 10pt">Please date, sign and mail your proxy card in the envelope provided as soon as possible


<P align="left" style="font-size: 10pt">THE BOARD OF DIRECTORS RECOMMENDS A VOTE &#147;FOR&#148; ALL NOMINEES LISTED IN PROPOSAL 1, AND &#147;FOR&#148;
PROPOSALS 2, 3 AND 4. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE <FONT style="font-family: Wingdings 2">&#084;</FONT>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Proposal 1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Election of directors to serve on the Board of Directors or
Arbor Realty Trust, Inc. (the &#147;Company&#148;).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nominees:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ivan Kaufman
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">o</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">C. Michael Kojaian
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">o</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Melvin F. Lazar
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">o</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Walter K. Horn
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">o</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="bottom">FOR ALL NOMINEES
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">WITHHOLD AUTHORITY FOR ALL<BR>
NOMINEES
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">FOR ALL EXCEPT<BR>
(See instructions below)</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt"><U>INSTRUCTION</U>: To withhold authority to vote for any individual nominee(s), mark &#147;FOR ALL
EXCEPT&#148; and fill in the circle next to each nominee you wish to withhold, as shown here



<P align="left" style="font-size: 10pt">___________________________________________________________



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Proposal 2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ratification of the appointment of Ernst &#038; Young LLP as the Company&#146;s independent
registered public accounting firm for fiscal year 2005.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Proposal 3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Approval of an amendment to the Company&#146;s 2003 Omnibus Stock Incentive Plan, as amended
and restated, to authorize for issuance an additional 250,000 shares of the Company&#146;s common stock.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Proposal 4.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Approval of an amendment to the Company&#146;s Charter to lower each of the aggregate stock
ownership limit and the common stock ownership limit from 9.6&nbsp;percent to 8.3&nbsp;percent.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">FOR
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">AGAINST
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">ABSTAIN</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="font-family: Wingdings 2">&#163;</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Proposal 5.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To vote and otherwise represent the undersigned on any other matter that properly comes
before the meeting or any adjournment or postponement thereof in the discretion of the proxy holder.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt"><B>This proxy, when properly executed, will be voted in the manner directed below. If this proxy is
executed but no instruction is given, this proxy will be voted &#147;FOR&#148; all nominees listed in
Proposal 1 and &#147;FOR&#148; Proposals 2, 3, and 4. The proxies are hereby authorized to vote in their
discretion upon such other matters as may properly come before the meeting or any postponements or
adjournments thereof.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby acknowledges receipt of the Company&#146;s Annual Report to Stockholders for
fiscal year ended December&nbsp;31, 2004 and the accompanying Notice of Annual Meeting and Proxy
Statement and hereby revokes any proxy or proxies heretofore given with respect to the matters set
forth above.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature of Stockholder
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature of Stockholder
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<P align="left" style="font-size: 10pt">Note: Please sign exactly as your name or name(s) appear on this Proxy. When shares are held
jointly, each holders should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If signer is a partnership,
please sign in authorization name by authorized person.




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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