The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the consolidated financial
statements and the related notes of Ladder Capital Corp included within this
report and the Annual Report. This Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements. See "Cautionary Statement Regarding Forward-Looking Statements"
within this Quarterly Report and "Risk Factors" within the Annual Report for a
discussion of the uncertainties, risks and assumptions associated with these
statements. Actual results may differ materially from those contained in any
forward-looking statements as a result of various factors, including but not
limited to, those in "Risk Factors" set forth within the Annual Report.
References to "Ladder," the "Company," and "we," "our" and "us" refer to Ladder
Capital Corp, a Delaware corporation incorporated in 2013, and its consolidated
subsidiaries.
Ladder Capital Corp is the sole general partner of Ladder Capital Finance
Holdings LLLP ("LCFH") and, as a result of the serialization of LCFH on December
31, 2014, became the sole general partner of Series REIT of LCFH. LC TRS I LLC,
a wholly-owned subsidiary of Series REIT of LCFH, is the general partner of
Series TRS of LCFH. Ladder Capital Corp has a controlling interest in Series
REIT of LCFH, and through such controlling interest, also has a controlling
interest in Series TRS of LCFH. Ladder Capital Corp's only business is to act as
the sole general partner of LCFH and Series REIT of LCFH, and, as a result of
the foregoing, Ladder Capital Corp directly and indirectly operates and controls
all of the business and affairs of LCFH, and each Series thereof, and
consolidates the financial results of LCFH, and each Series thereof, into Ladder
Capital Corp's consolidated financial statements.
Overview
We are an internally-managed real estate investment trust ("REIT") that is a
leader in commercial real estate finance. We originate and invest in a diverse
portfolio of commercial real estate and real estate-related assets, focusing on
senior secured assets. Our investment activities include: (i) our primary
business of originating senior first mortgage fixed and floating rate loans
collateralized by commercial real estate with flexible loan structures; (ii)
investing in investment grade securities secured by first mortgage loans on
commercial real estate; and (iii) owning and operating commercial real estate,
including net leased commercial properties. We believe that our in-house
origination platform, ability to flexibly allocate capital among complementary
product lines, credit-centric underwriting approach, access to diversified
financing sources, and experienced management team position us well to deliver
attractive returns on equity to our shareholders through economic and credit
cycles.
Our businesses, including balance sheet lending, conduit lending, securities
investments, and real estate investments, provide for a stable base of net
interest and rental income. We have originated $25.8 billion of commercial real
estate loans from our inception through September 30, 2020. During this
timeframe, we also acquired $12.7 billion of predominantly investment
grade-rated securities secured by first mortgage loans on commercial real estate
and $1.8 billion of selected net leased and other real estate assets.
As part of our commercial mortgage lending operations, we originate conduit
loans, which are first mortgage loans on stabilized, income producing commercial
real estate properties that we intend to make available for sale in commercial
mortgage-backed securities ("CMBS") securitizations. From our inception in
October 2008 through September 30, 2020, we originated $16.6 billion of conduit
loans, which were sold into 69 CMBS securitizations, making us, by volume, the
second largest non-bank contributor of loans to CMBS securitizations in the
United States in such period. Our sales of loans into securitizations are
generally accounted for as true sales, not financings, and we generally retain
no ongoing interest in loans which we securitize unless we are required to do so
as issuer pursuant to the risk retention requirements of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010, (the "Dodd-Frank Act"). The
securitization of conduit loans enables us to reinvest our equity capital into
new loan originations or allocate it to other investments.
As of September 30, 2020, we had $6.4 billion in total assets and $1.5 billion
of total equity. Our assets included $2.7 billion of loans, $1.4 billion of
securities, $1.0 billion of real estate, and $875.8 million of unrestricted
cash.
We maintain a diversified and flexible financing strategy supporting our
investment strategy and overall business operations, including unsecured debt
and significant committed term financing from leading financial institutions.
Refer to "Our Financing Strategies" and "Liquidity and Capital Resources" for
further information.
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Ladder was founded in October 2008 and we completed our IPO in February 2014. We
are led by a disciplined and highly aligned management team. As of September 30,
2020, our management team and directors held interests in our Company comprising
10.7% of our total equity. On average, our management team members have 27 years
of experience in the industry. Our management team includes Brian Harris, Chief
Executive Officer; Pamela McCormack, President; Marc Fox, Chief Financial
Officer; Robert Perelman, Head of Asset Management; and Kelly Porcella, Chief
Administrative Officer & General Counsel. Kevin Moclair, Chief Accounting
Officer, is an additional officer of Ladder. As of September 30, 2020, we
employed 60 full-time industry professionals.
COVID-19 Impact on the Organization
On March 11, 2020, the World Health Organization declared the novel strain of
coronavirus ("COVID-19") a global pandemic and recommended containment and
mitigation measures worldwide. As of the date of this filing, the majority of
our employees continue to work remotely in compliance with state guidelines. We
continue to actively manage the liquidity and operations of the Company in light
of the market disruption and overall financial impact caused by the COVID-19
pandemic across most industries in the United States. In view of the uncertainty
related to the severity and duration of the pandemic, its ultimate impact on our
revenues, profitability and financial position is difficult to assess at this
time. The Company has disclosed the impact of the COVID-19 global pandemic on
our business throughout this Quarterly Report.
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