Exhibit 10.36

EXECUTION VERSION

EXCHANGE AGREEMENT

among

ARBOR REALTY TRUST, INC.,

ARBOR REALTY SR, INC.

and

TABERNA PREFERRED FUNDING I, LTD.,

TABERNA PREFERRED FUNDING II, LTD.,

TABERNA PREFERRED FUNDING III, LTD.,

TABERNA PREFERRED FUNDING IV, LTD.,

TABERNA PREFERRED FUNDING V, LTD.,

TABERNA PREFERRED FUNDING VII, LTD.,

and

TABERNA PREFERRED FUNDING VIII, LTD.

Dated as of May 6, 2009

EXECUTION COPY

EXCHANGE AGREEMENT

     THIS EXCHANGE AGREEMENT, dated as of May 6, 2009 (this “ Agreement ”), is entered into by and among ARBOR REALTY SR, INC., a Maryland corporation (the “ Company ”), ARBOR REALTY TRUST, INC., a Maryland corporation (the “ Guarantor ”), and TABERNA PREFERRED FUNDING I, LTD. (“ Taberna I ”), TABERNA PREFERRED FUNDING II, LTD. (“ Taberna II ”), TABERNA PREFERRED FUNDING III, LTD. (“ Taberna III ”), TABERNA PREFERRED FUNDING IV, LTD. (“ Taberna IV ”), TABERNA PREFERRED FUNDING V, LTD. (“ Taberna V ”), TABERNA PREFERRED FUNDING VII, LTD. (“ Taberna VII ”) and TABERNA PREFERRED FUNDING VIII, LTD. (“ Taberna VIII ”, together with Taberna I, Taberna II, Taberna III, Taberna IV, Taberna V and Taberna VII, collectively, “ Taberna ”)

RECITAL:

     A. Reference is made to (i) that certain Junior Subordinated Indenture dated as of March 15, 2005 (the “ March Indenture ”); (ii) that certain Junior Subordinated Indenture dated as of April 1, 2005 (as amended, the “ April Indenture ”); (iii) that certain Junior Subordinated Indenture dated as of December 8, 2005 (the “ December Indenture ”); (iv) that certain Junior Subordinated Indenture dated as of May 16, 2006 (the “ May Indenture ”); each by and between the Company and The Bank of New York Mellon Trust Company, National Association (“ BNYM ”) (as successor to JPMorgan Chase Bank, National Association,) as trustee and (v) that certain Junior Subordinated Indenture dated as of June 30, 2005 (the “ June Indenture ”) by and between the Company and Wells Fargo Bank, National Association, as trustee (“ Wells ”); together with BNYM, the “ Existing Indenture Trustee ”).

     B. Reference is made to (i) that certain Amended and Restated Trust Agreement dated as of March 15, 2005 (the “ March Trust Agreement ”); (ii) that certain Amended and Restated Trust Agreement dated as of April 1, 2005 (the “ April Trust Agreement ”); (iii) that certain Amended and Restated Trust Agreement dated as of December 8, 2005 (the “ December Trust Agreement ”); (iv) that certain Amended and Restated Trust Agreement dated as of May 16, 2006 (the “ May Trust Agreement ”); each by and among the Company, as depositor, BNYM (successor to JPMorgan Chase Bank, National Association, as property trustee) (the “ BNYM Property Trustee ”), BNY Mellon Trust of Delaware (as successor to Chase Bank USA, National Association, as Delaware trustee) (the “ BNYM Delaware Trustee ”), and the respective administrative trustees named therein; and (v) that certain Amended and Restated Trust Agreement dated as of June 30, 2005 (the “ June Trust Agreement ”) by and among the Company, as depositor, Wells Fargo Delaware Trust Company, as Delaware trustee (the “ Wells Property Trustee, ” together with the BNYM Property Trustee, the “ Property Trustees ”), Wells and the respective administrative trustees named therein.

     C. Arbor Capital Trust I (“ Trust I ”) is the holder of the Junior Subordinated Note due 2034 in the original principal amount of $27,070,000 issued by the Company pursuant to the March Indenture (“ Subordinated Note I ”).

     D. Arbor Capital Trust II (“ Trust II ”) is the holder of the Junior Subordinated Note due 2034 in the original principal amount of $25,780,000 issued by the Company pursuant to the April Indenture (“ Subordinated Note II ”).

     E. Arbor Capital Trust IV (“ Trust IV ”) is the holder of the Junior Subordinated Note due 2035 in the original principal amount of $25,774,000 issued by the Company pursuant to the June Indenture (“ Subordinated Note IV ”).

     F. Arbor Capital Trust V (“ Trust V ”) is the holder of the Junior Subordinated Note due 2036 in the original principal amount of $51,550,000 issued by the Company pursuant to the December Indenture (“ Subordinated Note V ”).

     G. Arbor Capital Trust VI (“ Trust VI ”) is the holder of the Junior Subordinated Note due 2036 in the original principal amount of $51,550,000 issued by the Company pursuant to the January Indenture (“ Subordinated Note VI, ” together with Subordinated Note I, Subordinated Note II, Subordinated Note IV, and Subordinated Note V, the “ Existing Subordinated Notes ”).

     F. Taberna I is the holder of Preferred Securities in the original aggregate principal amount of $26,250,000 issued by Trust I pursuant to the March Trust Agreement, copies of which are attached hereto as Exhibit A-1 (the “ Trust I Preferred Securities ”).

     G. Taberna II is the holder of Preferred Securities in the original aggregate principal amount of $25,000,000 issued by Trust II pursuant to the April Trust Agreement, copies of which are attached hereto as Exhibit A-2 (the “ Trust II Preferred Securities ”).

     H. Taberna III, Taberna IV and Taberna VIII are the holders of Preferred Securities in the original aggregate principal amount of $50,000,000 issued by Trust V pursuant to the December Trust Agreement, copies of which are attached hereto as Exhibit A-4 (the “ Trust V Preferred Securities ;” together with the Trust I Preferred Securities and Trust II Preferred Securities, the “ Original Preferred Securities ”).

     I. Pursuant to the June Trust Agreement, Trust IV issued a certain Preferred Security Certificate (as such term is defined in the June Trust Agreement) in the amount of $25,000,000 (the “ Original Security IV ”), which Original Security IV is a global security.

     J. Taberna V is the holder of $25,000,000 in principal amount of a beneficial interest in Original Security IV (the “ Taberna V Holding ”).

     K. Pursuant to the May Trust Agreement, Trust VI issued a certain Preferred Security Certificate (as such term is defined in the May Trust Agreement) in the amount of $50,000,000 (the “ Original Security VI ”), which Original Security VI is a global security.

     L. Taberna VII is the holder of $25,000,000 in principal amount of a beneficial interest in Original Security VI (the “ Taberna VII Holding ”), and Taberna VIII is the holder of $25,000,000 in principal amount of a beneficial interest in Original Security VI (the “ Taberna VIII Holding; ” together with the Taberna V Holding and the Taberna VII Holding, the “ Taberna Holdings ”).

     M. Simultaneously herewith, the Company and BNYM, as trustee (the “ New Indenture Trustee ”) have entered into (a) that certain Junior Subordinated Indenture I (“ New Indenture I ”) pursuant to which Company proposes to issue Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) in original aggregate principal amount of the Junior Subordinated Notes; and (b) that certain Junior Subordinated Indenture II (“ New Indenture II ”, and together with New Indenture I, the “New Indentures" ) pursuant to which Company proposes to issue One Hundred Sixty-Eight Million Dollars ($168,000,000) in original aggregate principal amount of the Junior Subordinated Notes. Pursuant to the New Indentures, the Company proposes to issue such Junior Subordinated Notes as follows (collectively, the “ Securities ”):

     N. The Securities will be guaranteed by the Guarantor, as to the payment of the Parent Guarantee Payments, as defined in and in accordance with those certain Parent Guarantee Agreements, dated as of the date hereof, each by and between the Guarantor and the BNYM Indenture Trustee, with respect to New Indenture I (the “ Parent Guarantee I ”) and New Indenture II (the “ Parent Guarantee II ”, and together with Parent Guarantee I, the “ Parent Guarantees ”)

     N. On the terms and subject to the conditions set forth in this Agreement, the Company and Taberna have agreed to exchange the Original Preferred Securities and the Taberna Holdings for the Securities.

     NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:

     1.  Definitions . This Agreement, the New Indentures, the Parent Guarantees and the Securities are collectively referred to herein as the “ Operative Documents .” All other capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed thereto in the New Indentures.

     “ April Trust Agreement ” has the meaning set forth in the Recitals.

     “ April Indenture ” has the meaning set forth in the Recitals.

     “ Bankruptcy Code ” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.

     “ Benefit Plan ” means an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Code or any entity whose assets include (for purposes of U.S. Department of Labor Regulations Section 2510.3-101 or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”

     “ BNYM ” has the meaning set forth in the Recitals.

     “ CDO Trustee ” has the meaning set forth in Section 2(b)(i) .

     “ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated under it.

     “ Closing Date ” has the meaning set forth in Section 2(b).

     “ Closing Room ” has the meaning set forth in Section 2(b).

     “ Company ” has the meaning set forth in the introductory paragraph hereof.

     “ Company Counsel ” has the meaning set forth in Section 3(b).

     “ Commission ” has the meaning set forth in Section 4(v)

     “ December Trust Agreement ” has the meaning set forth in the Recitals.

     “ December Indenture ” has the meaning set forth in the Recitals.

     “ Delaware Trustee ” has the meaning set forth in the Recitals.

     “ Environmental Law ” has the meaning set forth in Section 4(jj).

     “ Environmental Laws ” shall have the correlative meaning.

     “ Equity Interests ” means with respect to any Person (a) if such a Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stick interests (both common stock and preferred stock) in a corporation.

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated under it.

     “ Exchange ” has the meaning set forth in Section 2(b).

     “ Exchange Act ” has the meaning set forth in Section 4(j).

     “ Existing Indentures ” has the meaning set forth in the Recitals.

     “ Existing Subordinated Notes ” has the meaning set forth in the Recitals.

     “ Financial Statements ” has the meaning set forth in Section 4(w).

     “ GAAP ” has the meaning set forth in Section 4(w).

     “ Governmental Entities ” has the meaning set forth in Section 4(o).

     “ Governmental Licenses ” has the meaning set forth in Section 4(r).

     “ Hazardous Materials ” has the meaning set forth in Section 4(jj).

     “ Holder ” has the meaning set forth in the New Indentures.

     “ Impairment ” means any claim, counterclaim, setoff, defense, action, demand, litigation (including administrative proceedings or derivative actions), encumbrance, right (including expungement, avoidance, reduction, contractual or equitable subordination, or otherwise) or defect.

     “ Indemnified Party ” has the meaning set forth in Section 8(a). “ Indemnified Parties ” shall have the correlative meaning.

     “ Investment Company Act ” has the meaning set forth in Section 4(j).

     “ June Indenture ” has the meaning set forth in the Recitals.

     “ June Trust Agreement ” has the meaning set forth in the Recitals.

     “ Kodiak Exchange Agreement” means that certain Exchange Agreement, dated the date hereof by and among Arbor Realty Trust, Inc., Arbor Realty SR, Inc. and Kodiak CDO II, Ltd., Attentus CDO I, Ltd. and Attentus CDO III, Ltd.

     “ Lien ” has the meaning set forth in Section 4(o).

     “ March Indenture ” has the meaning set forth in the Recitals.

     “ March Trust Agreement ” has the meaning set forth in the Recitals.

     “ Material Adverse Effect ” means a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities or assets of the Company and its Significant Subsidiaries taken as a whole.

     “ Material Adverse Change ” has the meaning set forth in Section 3(e)(ii).

     “ May Indenture ” has the meaning set forth in the Recitals.

     “ May Trust Agreement ” has the meaning set forth in the Recitals.

     “ New Indenture I ” has the meaning set forth in the Recitals.

     “ New Indenture II ” has the meaning set forth in the Recitals.

     “ New Indentures ” has the meaning set forth in the Recitals.

     “ New Indenture Trustee ” has the meaning set forth in the Recitals..

     “ Note 1 ” has the meaning set forth in the Recitals.

     “ Note 2 ” has the meaning set forth in the Recitals.

     “ Note 3 ” has the meaning set forth in the Recitals.

     “ Note 4 ” has the meaning set forth in the Recitals.

     “ Note 5 ” has the meaning set forth in the Recitals.

     “ Note 6 ” has the meaning set forth in the Recitals.

     “ Note 7 ” has the meaning set forth in the Recitals.

     “ Original Kodiak Indentures ” has the meaning set forth in the New Indentures.

     “ Original Parent Guarantees ” means (i) that certain Parent Guarantee Agreement, dated March 15, 2005; (ii) that certain Parent Guarantee Agreement, dated April 1, 2005; (iii) that certain Parent Guarantee Agreement, dated December 8, 2005; (iv) that certain Parent Guarantee Agreement, dated May 16, 2006; each by and between Arbor Realty Trust, Inc., as Parent Guarantor, and JPMorgan Chase Bank, National Association, as Guarantee Trustee and (v) that certain Parent Guarantee Agreement, dated June 30, 2005, between Arbor Realty Trust, Inc., as Parent Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee, in each case as the same may be amended from time to time.

     “ Original Preferred Securities ” has the meaning set forth in the Recitals.

     “ Original Security IV ” has the meaning set forth in the Recitals.

     “ Original Security VI ” has the meaning set forth in the Recitals.

     “ Parent Guarantee I ” has the meaning set forth in the Recitals.

     “ Parent Guarantee II ” has the meaning set forth in the Recitals.

     “ Parent Guarantees ” means, collectively, Parent Guarantee I and Parent Guarantee II.

     “ Properties ” has the meaning set forth in Section 4(kk).

     “ Property Trustees ” means, collectively, the BNYM Property Trustee and the Wells Property Trustee.

     “ Regulation D ” has the meaning set forth in Section 4(h).

     “ Repayment Event ” has the meaning set forth in Section 4(o).

     “ Rule 144A(d)(3) ” has the meaning set forth in Section 4(j).

     “ Securities ” has the meaning set forth in the Recitals.

     “ Securities Act ” means the Securities Act of 1933, 15 U.S.C. §§77a et seq. , as amended, and the rules and regulations promulgated under it.

     “ Significant Subsidiary ” has the meaning set forth in Section 4(q).

     “ Subordinated Note I ” has the meaning set forth in the Recitals.

     “ Subordinated Note II ” has the meaning set forth in the Recitals.

     “ Subordinated Note IV ” has the meaning set forth in the Recitals.

     “ Subordinated Note V ” has the meaning set forth in the Recitals.

     “ Subordinated Note VI ” has the meaning set forth in the Recitals.

     “ Taberna ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna Holdings ” shall mean the Taberna V Holding, the Taberna VII Holding, and the Taberna VIII Holding.

     “ Taberna I ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna II ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna III ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna IV ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna V ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna VII ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna VIII ” has the meaning set forth in the introductory paragraph hereof.

     “ Taberna V Holding ” has the meaning set forth in the Recitals.

     “ Taberna VII Holding ” has the meaning set forth in the Recitals.

     “ Taberna VIII Holding ” has the meaning set forth in the Recitals.

     “ Taberna Capital Management, LLC” means Taberna Capital Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.

     “ Taberna Transferred Rights ” means any and all of each Taberna entity’s right, title, and interest in, to and under the Original Preferred Securities, Original Security IV and Original Security VI, together with its rights with respect to the following:

          (i) the applicable Existing Indentures, Trust Agreements, and the Original Parent Guarantees;

          (ii) all amounts payable to such Taberna entity under the applicable Original Preferred Securities, Original Security IV, Original Security VI, the applicable Existing Indentures and/or the applicable Trust Agreements;

          (iii) all claims (including “claims” as defined in Bankruptcy Code §101(5)), suits, causes of action, and any other right of such Taberna entity, whether known or unknown, against the Company or any of its affiliates (including the applicable Trusts), agents, representatives, contractors, advisors, or any other entity that in any way is based upon, arises out of or is related to any of the foregoing, including all claims (including contract claims, tort claims, malpractice claims, and claims under any law governing the exchange of, purchase and sale of, or indentures for, securities), suits, causes of action, and any other right of Taberna against any attorney, accountant, financial advisor, or other entity arising under or in connection with the applicable Original Preferred Securities, the applicable Existing Indentures, the applicable Trust Agreements, the applicable Original Parent Guarantees or the transactions related thereto;

          (iv) all guarantees and all collateral and security of any kind for or in respect of the foregoing;

          (v) all cash, securities, or other property, and all setoffs and recoupments, to be received, applied, or effected by or for the account of such Taberna entity under the applicable Original Preferred Securities, Original Security IV, and

Original Security VI other than fees, costs and expenses payable to such Taberna entity hereunder and all cash, securities, interest, dividends, and other property that may be exchanged for, or distributed or collected with respect to, any of the foregoing; and

          (vi) all proceeds of the foregoing.

     “ Trust I ” has the meaning set forth in the Recitals.

     “ Trust II ” has the meaning set forth in the Recitals.

     “ Trust IV ” has the meaning set forth in the Recitals.

     “ Trust V ” has the meaning set forth in the Recitals.

     “ Trust VI ” has the meaning set forth in the Recitals.

     “ Trust I Preferred Securities ” has the meaning set forth in the Recitals.

     “ Trust II Preferred Securities ” has the meaning set forth in the Recitals.

     “ Trust V Preferred Securities ” has the meaning set forth in the Recitals.

     “ Trust Agreements ” has the meaning set forth in the Recitals.

      “Wells” has the meaning set forth in the Recitals.

      “Wells Property Trustee” has the meaning set forth in the Recitals.

     2.  Exchange of Original Preferred Securities for Securities .

          (a) The Company agrees to issue the Securities in accordance with the New Indentures and has requested that the Taberna entities accept such Securities in exchange for the applicable Original Preferred Securities and the applicable Taberna Holdings, and each of the Taberna entities hereby accepts the applicable Securities in exchange for the applicable Original Preferred Securities and the applicable Taberna Holdings upon the terms and conditions set forth herein.

          (b) The closing of the exchange contemplated herein shall occur at the offices of Nixon Peabody, LLP in New York, New York (the “ Closing Room ”), or such other place as the parties hereto and BNYM shall agree, at 11:00 a.m. New York time, on May 6, 2009 or such later date as the parties may agree (such date and time of delivery the “ Closing Date ”). The Company and Taberna hereby agree that the exchange (the “ Exchange ”) will occur in accordance with the following requirements:

          (i) Taberna Capital Management, LLC (as collateral manager for each of the Taberna entities) shall have delivered an issuer order instructing each trustee (in each such capacity, a “ CDO Trustee ”) under the applicable indenture pursuant to which such CDO Trustee serves as trustee for the holders of the Original Preferred Securities, Original Security IV and Original Security VI to (A) exchange the Original Preferred

Securities for the Securities and to deliver the Original Preferred Securities to the applicable Property Trustee for cancellation and reissuance in the name of the Comp