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
Ladder Capital is 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 $26.7 billion of commercial real
estate loans from our inception through June 30, 2021. During this timeframe, we
also acquired $12.8 billion of predominantly investment grade-rated securities
secured by first mortgage loans on commercial real estate and $1.9 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 June 30, 2021, we originated $16.7 billion of conduit
loans, of which $16.6 billion was 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 June 30, 2021, we had $5.6 billion in total assets and $1.5 billion of
total equity. Our assets primarily included $2.6 billion of loans, $0.7 billion
of securities, $0.9 billion of real estate, and $1.2 billion of unrestricted
cash.
We maintain a diversified and flexible financing strategy supporting our
investment strategy and overall business operations, including the use of
unsecured debt, non-recourse, non-mark-to-market securitizations and 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 initial public offering
("IPO") in February 2014. We are led by a disciplined and highly aligned
management team. As of June 30, 2021, our management team and directors held
interests in our Company comprising 10.3% of our total equity. On average, our
management team members have 25 years of experience in the industry. Our
management team includes Brian Harris, Chief Executive Officer; Pamela
McCormack, President; Paul J. Miceli, 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 June 30, 2021, we employed 59 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. 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 ongoing uncertainty related to the 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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