Fitch Affirms ARMSS 2006-1.

NEW YORK -- Fitch affirms all classes of Arbor Realty Mortgage Securities Series 2006-1 floating-rate notes (ARMSS 2006-1) as follows:

--$230,000,000 class A-1A at 'AAA';

--$100,000,000 class A-1AR at 'AAA';

--$72,900,000 class A-2 at 'AAA';

--$41,100,000 class B at 'AA';

--$31,200,000 class C at 'A+';

--$13,350,000 class D at 'A';

--$14,250,000 class E at 'A-';

--$13,650,000 class F at 'BBB+';

--$16,950,000 class G at 'BBB';

--$14,100,000 class H at 'BBB-'.

Deal Summary:

ARMSS 2006-1 is a $600,000,000 revolving commercial real estate (CRE) cash flow collateralized debt obligation (CDO) that closed on Dec. 14, 2006. As of the Sept. 10, 2007 trustee report and based on Fitch categorizations, the CDO was substantially invested as follows: commercial mortgage whole loans/A-notes (81.2%), B-notes (7.1%), commercial real estate mezzanine loans (1.0%) and cash (7.0%). The CDO is also permitted to invest in real estate bank loans, REIT debt, CMBS, and CRE CDOs.

The portfolio is selected and monitored by Arbor Realty Trust, Inc. (Arbor). ARMSS 2006-1 has a five-year reinvestment period during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends January 2012.

Asset Manager:

Arbor Realty Trust, Inc. is rated 'CAM2' by Fitch as a manager of commercial real estate CDOs. Arbor Realty Trust's CAM rating can be attributed to depth in underwriting and asset management staff, which is critical to their role in originating, underwriting, and servicing commercial real estate loans. They maintain a focused investment strategy and an emphasis on their relationship with borrowers. ARMSS 2006-1 is their third CRE CDO.

Arbor Realty Trust is a publicly traded REIT (NYSE: ABR) formed in July 2003 to invest in commercial real estate debt and securities, including CMBS, CRE CDOs, bridge loans, whole loans, B-notes, mezzanine loans, and preferred equity investments. Arbor Realty Trust is externally managed by Arbor Commercial Mortgage, LLC ("ACM"), which was founded in 1993 as a commercial real estate finance subsidiary of a residential mortgage bank.

For more details, refer to the Derivative Fitch CDO Asset Manager Report on Arbor Realty Trust, Inc., available on the Derivative Fitch web site at www.derivativefitch.com.

Performance Summary:

ARMSS 2006-1 became effective on Sept. 10, 2007. As of the effective date, the as-is poolwide expected loss (PEL) has increased to 26.00% from 21.125% at close. The CDO has average reinvestment flexibility with 9.875% of cushion based on its current weighted average spread (WAS) of 2.43%. The CDO's covenanted Fitch PEL varies depending on the in-place WAS. Based on this WAS matrix, the maximum allowable PEL is 35.875% and the minimum is 28.125% (the WAS/PEL matrix).

The higher PEL is attributed to an increase in the number of transitional assets and nontraditional property types, including loans secured by hotels and land. Generally, these asset types carry higher than average expected losses. However, it should be noted that the majority of these assets are in strong markets.

Since closing, 18 assets ($377.8 million) have been added to the pool while seven ($225.5 million) have been paid off, including a condominium conversion loan that was later re-apartmented and added back into the pool as a new loan. On average, the loans added to the pool had a higher expected loss than those that were paid off.

Collateral Analysis:

Per the Sept. 10, 2007 trustee report and based on Fitch categorizations, the CDO is within all property type covenants. Multifamily loans comprise the largest percentage of assets in the pool at 24.6%.

The CDO is also within all its geographic covenants. There is a high geographic concentration limit of 55% in New York, where Arbor has a strong origination business cultivated through repeat borrowers. Currently, 30.1% of the portfolio is located in New York with the next highest concentration in Florida at 28%.

The Fitch Loan Diversity Index is 444 compared to the covenant of 500, which represents below average diversity as compared to other CRE CDOs. Additionally, 10.7% of the portfolio amount remains uninvested, however, given that the revolving credit facility (AR class) is not fully drawn; only 7% of the CDO is invested in cash.

The overcollateralization (OC) and interest coverage (IC) ratios of all classes have remained above their covenants, as of the September 10, 2007 effective date trustee report.

Rating Definitions:

The ratings of the class A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, D, E, F, G and H notes address the likelihood that investors will receive ultimate interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date

Upgrades during the reinvestment period are unlikely given the pool could still migrate to the PEL covenant. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch.

For a summary of the Fitch Loans of Concern and the 10 largest loans, please refer to the ARMSS 2006-1 CREL Surveyor Snapshot, which will be available beginning October 22, 2007, on the Derivative Fitch web site www.derivativefitch.com.

Fitch will continue to monitor and review this transaction and will issue an updated Snapshot report after each committeed review. The surveillance team will conduct a review whenever there is approximately 15% change in the collateral composition, or semi-annually.

For more information on the Fitch Rating Methodology for CREL CDOs, see 'Rating Methodology for U.S. Commercial Real Estate Loan CDOs' dated Sept. 25, 2006, which is also available at www.derivativefitch.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. Fitch means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.