Ladder Capital Corp [LADR] Filings

10-Q 1 ladr-20220930.htm 10-Q ladr-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number:

001-36299

Ladder Capital Corp

(Exact name of registrant as specified in its charter)

Delaware

80-0925494

(State or other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)

345 Park Avenue,

New York,

10154

(Address of principal executive offices)

(Zip Code)

(212) 715-3170

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A common stock, $0.001 par value	LADR	New York Stock Exchange

Table of Contents

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Class						Outstanding at October 21, 2022
Class A common stock, $0.001 par value						126,564,349
Class B common stock, $0.001 par value						—

Table of Contents

LADDER CAPITAL CORP

FORM 10-Q

September 30, 2022

Index

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” “likely,” “continue,” “design,” and other words and terms of similar expressions are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:

•risks discussed under the heading “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2021 (“the Annual Report”), as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Quarterly Report and our other filings with the United States Securities and Exchange Commission (“SEC”);

•the persistence of the COVID-19 pandemic, labor shortages, supply chain imbalances, continuing military actions between Russia and Ukraine, inflation, and the potential for a global economic recession;

•changes in general economic conditions in our industry and in the commercial finance and the real estate markets;

•changes to our business and investment strategy;

•our ability to obtain and maintain financing arrangements;

•the financing and advance rates for our assets, including the potential effects of the transition to Secured Overnight Financing Rate (“SOFR”) rates from London Interbank Offered Rate (“LIBOR”);

•our actual and expected leverage and liquidity;

•the adequacy of collateral securing our loan portfolio and a decline in the fair value of our assets;

•interest rate mismatches between our assets and our borrowings used to fund such investments;

•changes in interest rates and the market value of our assets and the related impacts on our borrowers;

•changes in prepayment rates on our mortgages and the loans underlying our commercial mortgage-backed and other asset-backed securities;

•the effects of hedging instruments and the degree to which our hedging strategies may or may not protect us from interest rate and credit risk volatility;

•the increased rate of default or decreased recovery rates on our assets;

•the adequacy of our policies, procedures and systems for managing risk effectively;

•a potential downgrade in the credit ratings assigned to Ladder or our investments;

•our compliance with and the impact of and changes in laws, governmental regulations, tax laws and rates, accounting guidance and similar matters;

•our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and our ability and the ability of our subsidiaries to operate in compliance with REIT requirements;

•our ability and the ability of our subsidiaries to maintain our and their exemptions from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

•the effects of climate change or the potential liability relating to environmental matters that impact the value of properties we may acquire or the properties underlying our investments;

•the inability of insurance covering real estate underlying our loans and investments to cover all losses;

•the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities;

•fraud by potential borrowers;

•the availability of qualified personnel;

Table of Contents

•the impact of any tax legislation or IRS guidance;

•the degree and nature of our competition; and

•the market trends in our industry, interest rates, real estate values and the debt securities markets.

You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements contained in this Quarterly Report are made as of the date hereof, and the Company assumes no obligation to update or supplement any forward-looking statements.

Table of Contents

REFERENCES TO LADDER CAPITAL CORP

Ladder Capital Corp is a holding company, and its primary assets are a controlling equity interest in Ladder Capital Finance Holdings LLLP (“LCFH” or the “Operating Partnership”) and in each series thereof, directly or indirectly. Unless the context suggests otherwise, references in this report to “Ladder,” “Ladder Capital,” the “Company,” “we,” “us” and “our” refer (1) prior to the February 2014 initial public offering (“IPO”) of the Class A common stock of Ladder Capital Corp and related transactions, to LCFH (“Predecessor”) and its consolidated subsidiaries and (2) after our IPO and related transactions, to Ladder Capital Corp and its consolidated subsidiaries.

Table of Contents

Part I - Financial Information

Item 1. Financial Statements (Unaudited)

The consolidated financial statements of Ladder Capital Corp and the notes related to the foregoing consolidated financial statements are included in this Item.

Index to Consolidated Financial Statements (Unaudited)



Consolidated Balance Sheets		6
Consolidated Statements of Income		7
Consolidated Statements of Comprehensive Income		8
Consolidated Statements of Changes in Equity		11
Consolidated Statements of Cash Flows		13
Notes to Consolidated Financial Statements		15
	Note 1. Organization and Operations	15
	Note 2. Significant Accounting Policies	16
	Note 3. Mortgage Loan Receivables	18
	Note 4. Securities	23
	Note 5. Real Estate and Related Lease Intangibles, Net	25
	Note 6. Investment in Unconsolidated Ventures	28
	Note 7. Debt Obligations, Net	30
	Note 8. Derivative Instruments	36
	Note 9. Offsetting Assets and Liabilities	38
	Note 10. Consolidated Variable Interest Entities	39
	Note 11. Equity Structure and Accounts	40
	Note 12. Noncontrolling Interests	43
	Note 13. Earnings Per Share	44
	Note 14. Stock Based and Other Compensation Plans	45
	Note 15. Fair Value of Financial Instruments	48
	Note 16. Income Taxes	53
	Note 17. Related Party Transactions	54
	Note 18. Commitments and Contingencies	54
	Note 19. Segment Reporting	55

	Note 20. Subsequent Events	58

Table of Contents

Ladder Capital Corp

Consolidated Balance Sheets

(Dollars in Thousands)


	September 30, 2022(1)		December 31, 2021(1)
	(Unaudited)
Assets
Cash and cash equivalents	$	328,440	$	548,744
Restricted cash	28,739		72,802
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivable	4,019,297		3,553,737

Allowance for credit losses	(18,474)		(31,752)
Mortgage loan receivables held for sale	27,818		—
Securities	610,545		703,280

Real estate and related lease intangibles, net	769,935		865,694
Real estate held for sale	7,402		25,179
Investments in and advances to unconsolidated ventures	6,006		23,154

Derivative instruments	2,075		402

Accrued interest receivable	20,344		13,645
Other assets	67,845		76,367
Total assets	$	5,869,972	$	5,851,252
Liabilities and Equity
Liabilities

Debt obligations, net	$	4,237,886	$	4,219,703






Dividends payable	31,432		27,591
Accrued expenses	50,003		40,249
Other liabilities	47,032		50,090
Total liabilities	4,366,353		4,337,633
Commitments and contingencies (Note 18)	—		—
Equity



Class A common stock, par value $0.001 per share, 600,000,000 shares authorized; 128,027,478 and 126,852,765 shares issued and 126,564,349 and 125,452,568 shares outstanding	127		126

Additional paid-in capital	1,823,036		1,795,249
Treasury stock, 1,463,129 and 1,400,197 shares, at cost, respectively	(94,960)		(76,324)
Retained earnings (dividends in excess of earnings)	(207,434)		(207,802)
Accumulated other comprehensive income (loss)	(18,811)		(4,112)
Total shareholders’ equity	1,501,958		1,507,137

Noncontrolling interests in consolidated ventures	1,661		6,482
Total equity	1,503,619		1,513,619
Total liabilities and equity	$	5,869,972	$	5,851,252

(1)Includes amounts relating to consolidated variable interest entities. Refer to Note 2 and Note 10.

Refer to the accompanying notes to consolidated financial statements.

Table of Contents

Ladder Capital Corp

Consolidated Statements of Income

(Dollars in Thousands, Except Per Share Data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021			2022		2021

Net interest income
Interest income	$	77,359	$	46,235		$	198,832	$	123,099
Interest expense	48,471		49,339			138,212		140,538
Net interest income (expense)	28,888		(3,104)			60,620		(17,439)
Provision for (release of) loan loss reserves, net	1,501		(2,364)			1,373		(6,950)
Net interest income (expense) after provision for (release of) loan losses	27,387		(740)			59,247		(10,489)
Other income (loss)
Real estate operating income	27,679		26,603			82,678		77,320


Sale of loans, net	796		3,293			(2,083)		6,685
Realized gain (loss) on securities	9		285			(75)		879
Unrealized gain (loss) on equity securities	(61)		—			(77)		—
Unrealized gain (loss) on Agency interest-only securities	(5)		(19)			(21)		(87)
Realized gain (loss) on sale of real estate, net	4,393		17,766			62,101		37,155

Fee and other income	2,697		2,687			12,238		8,422
Net result from derivative transactions	6,567		75			12,381		1,002
Earnings (loss) from investment in unconsolidated ventures	407		533			1,197		1,206

Gain (loss) on extinguishment of debt	—		—			685		—
Total other income (loss)	42,482		51,223			169,024		132,582
Costs and expenses
Compensation and employee benefits	13,806		9,425			59,165		27,436
Operating expenses	5,143		4,418			15,303		12,875
Real estate operating expenses	10,069		6,962			28,928		19,518
Fee expense	1,689		1,638			5,163		5,431
Depreciation and amortization	7,864		9,320			24,764		28,320
Total costs and expenses	38,571		31,763			133,323		93,580
Income (loss) before taxes	31,298		18,720			94,948		28,513
Income tax expense (benefit)	2,613		(212)			3,897		(1,308)
Net income (loss)	28,685		18,932			91,051		29,821
Net (income) loss attributable to noncontrolling interests in consolidated ventures	(102)		(5)			(8,388)		(408)


Net income (loss) attributable to Class A common shareholders	$	28,583	$	18,927		$	82,663	$	29,413





Earnings per share:
Basic	$	0.23	$	0.15		$	0.66	$	0.24
Diluted	$	0.23	$	0.15		$	0.66	$	0.24

Weighted average shares outstanding:
Basic	124,278,732		123,729,867			124,393,861		123,917,047
Diluted	125,172,180		124,499,675			125,813,280		124,354,190

Refer to the accompanying notes to consolidated financial statements.

Table of Contents

Ladder Capital Corp

Consolidated Statements of Comprehensive Income

(Dollars in Thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021			2022		2021

Net income (loss)	$	28,685	$	18,932		$	91,051	$	29,821

Other comprehensive income (loss)
Unrealized gain (loss) on securities, net of tax:
Unrealized gain (loss) on real estate securities, available for sale	(947)		(588)			(14,749)		8,258
Reclassification adjustment for (gain) loss included in net income (loss)	(9)		(285)			50		(879)

Total other comprehensive income (loss)	(956)		(873)			(14,699)		7,379

Comprehensive income (loss)	27,729		18,059			76,352		37,200
Comprehensive (income) loss attributable to noncontrolling interest in consolidated ventures	(102)		(5)			(8,388)		(408)



Comprehensive income (loss) attributable to Class A common shareholders	$	27,627	$	18,054		$	67,964	$	36,792

Refer to the accompanying notes to consolidated financial statements.

Table of Contents

Ladder Capital Corp

Consolidated Statements of Changes in Equity

(Dollars and Shares in Thousands)

(Unaudited)


	Shareholders’ Equity
	Class A Common Stock			Additional Paid- in-Capital		Treasury Stock		Retained Earnings (Dividends in Excess of Earnings)		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity
	Shares	Par										Consolidated Ventures
Balance, June 30, 2022	126,834	$	127	$	1,819,298	$	(92,302)	$	(206,922)	$	(17,855)	$	7,363	$	1,509,709

Distributions	—	—		—		—		—		—		(5,804)		(5,804)

Amortization of equity based compensation	—	—		3,738		—		—		—		—		3,738

Grants of restricted stock	7	—		—		—		—		—		—		—
Purchase of treasury stock	(266)	—		—		(2,623)		—		—		—		(2,623)

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units	(3)	—		—		(35)		—		—		—		(35)
Forfeitures	(6)	—		—		—		—		—		—		—
Dividends declared	—	—		—		—		(29,095)		—		—		(29,095)




Net income (loss)	—	—		—		—		28,583		—		102		28,685
Other comprehensive income (loss)	—	—		—		—		—		(956)		—		(956)

Balance, September 30, 2022	126,566	$	127	$	1,823,036	$	(94,960)	$	(207,434)	$	(18,811)	$	1,661	$	1,503,619

Refer to the accompanying notes to consolidated financial statements.

Table of Contents

Ladder Capital Corp

Consolidated Statements of Changes in Equity

(Dollars and Shares in Thousands)

(Unaudited)

Shareholders’ Equity

Class A Common Stock

Additional Paid-

in-Capital

Treasury Stock

Retained Earnings (Dividends in Excess of Earnings)

Accumulated

Other

Comprehensive

Income (Loss)

Noncontrolling Interests

Total Equity

Par

Consolidated

Joint

Ladder Capital Corp [LADR] Filings
10-Q	[2022-10-31]
10-Q	[2022-08-01]
10-Q	[2022-05-02]
10-K	[2022-02-14]
10-Q	[2021-10-29]
10-Q	[2021-07-30]
10-Q	[2021-05-07]
10-K	[2021-02-26]
10-Q	[2020-10-30]
10-Q	[2020-07-31]
10-Q	[2020-05-06]
10-K	[2020-02-28]
10-Q	[2019-11-08]
10-Q	[2019-08-01]
10-Q	[2019-05-09]
10-K	[2019-02-28]
10-Q	[2018-11-02]
10-Q	[2018-08-02]
10-Q	[2018-05-04]
10-K	[2018-02-28]
10-Q	[2017-11-03]
10-Q	[2017-08-03]
10-Q	[2017-05-10]
10-K	[2017-02-24]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-03-07]
10-Q	[2015-11-06]
10-Q	[2015-08-06]
10-Q	[2015-05-08]
10-K	[2015-03-06]
10-Q	[2014-11-07]
10-Q	[2014-08-06]
10-Q	[2014-05-12]
10-K	[2014-03-28]
S-1	[2013-12-24]