Ladder Capital Corp [LADR] Filings

10-Q 1 ladr-20220331.htm 10-Q ladr-20220331

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 March 31, 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

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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 April 22, 2022
Class A common stock, $0.001 par value						127,221,540
Class B common stock, $0.001 par value						—

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LADDER CAPITAL CORP

FORM 10-Q

March 31, 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 (“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, Russia’s invasion of Ukraine and inflation;

•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;

•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;

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•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.

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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.

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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		9
Consolidated Statements of Cash Flows		11
Notes to Consolidated Financial Statements		13
	Note 1. Organization and Operations	13
	Note 2. Significant Accounting Policies	14
	Note 3. Mortgage Loan Receivables	16
	Note 4. Real Estate Securities	21
	Note 5. Real Estate and Related Lease Intangibles, Net	23
	Note 6. Investment in Unconsolidated Joint Ventures	26
	Note 7. Debt Obligations, Net	28
	Note 8. Derivative Instruments	35
	Note 9. Offsetting Assets and Liabilities	37
	Note 10. Consolidated Variable Interest Entities	38
	Note 11. Equity Structure and Accounts	39
	Note 12. Noncontrolling Interests	40
	Note 13. Earnings Per Share	41
	Note 14. Stock Based and Other Compensation Plans	41
	Note 15. Fair Value of Financial Instruments	45
	Note 16. Income Taxes	50
	Note 17. Related Party Transactions	51
	Note 18. Commitments and Contingencies	51
	Note 19. Segment Reporting	52

	Note 20. Subsequent Events	53

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Ladder Capital Corp

Consolidated Balance Sheets

(Dollars in Thousands)


	March 31, 2022(1)		December 31, 2021(1)
	(Unaudited)
Assets
Cash and cash equivalents	$	431,762	$	548,744
Restricted cash	63,462		72,802
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivable	3,857,471		3,553,737

Allowance for credit losses	(32,332)		(31,752)
Mortgage loan receivables held for sale	53,901		—
Real estate securities	662,942		703,280

Real estate and related lease intangibles, net	792,857		865,694
Real estate held for sale	55,412		25,179
Investments in and advances to unconsolidated joint ventures	5,243		23,154

Derivative instruments	234		402

Accrued interest receivable	14,450		13,645
Other assets	68,795		76,367
Total assets	$	5,974,197	$	5,851,252
Liabilities and Equity
Liabilities

Debt obligations, net	$	4,343,311	$	4,219,703






Dividends payable	26,763		27,591
Accrued expenses	42,028		40,249
Other liabilities	52,938		50,090
Total liabilities	4,465,040		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 127,222,831 and 125,452,568 shares outstanding	127		126

Additional paid-in capital	1,815,661		1,795,249
Treasury stock, 804,647 and 1,400,197 shares, at cost	(88,258)		(76,324)
Retained earnings (dividends in excess of earnings)	(214,084)		(207,802)
Accumulated other comprehensive income (loss)	(10,753)		(4,112)
Total shareholders’ equity	1,502,693		1,507,137

Noncontrolling interests in consolidated joint ventures	6,464		6,482
Total equity	1,509,157		1,513,619
Total liabilities and equity	$	5,974,197	$	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.

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Ladder Capital Corp

Consolidated Statements of Income

(Dollars in Thousands, Except Per Share Data)

(Unaudited)


	Three Months Ended March 31,
		2022		2021

Net interest income
Interest income		$	56,205	$	39,287
Interest expense		47,035		45,973
Net interest income		9,170		(6,686)
Provision for (release of) loan loss reserves		874		(4,251)
Net interest income (expense) after provision for (release of) loan losses		8,296		(2,435)
Other income (loss)
Real estate operating income		26,354		24,159


Sale of loans, net		(949)		—
Realized gain (loss) on securities		(96)		579
Unrealized gain (loss) on equity securities		14		—
Unrealized gain (loss) on Agency interest-only securities		3		(20)
Realized gain (loss) on sale of real estate, net		29,154		—

Fee and other income		7,194		3,284
Net result from derivative transactions		3,135		4,771
Earnings (loss) from investment in unconsolidated joint ventures		434		436


Total other income (loss)		65,243		33,209
Costs and expenses
Compensation and employee benefits		29,864		9,533
Operating expenses		5,508		4,241
Real estate operating expenses		8,992		6,211
Fee expense		1,988		1,599
Depreciation and amortization		9,342		9,536
Total costs and expenses		55,694		31,120
Income (loss) before taxes		17,845		(346)
Income tax expense (benefit)		(1,309)		(778)
Net income (loss)		19,154		432
Net (income) loss attributable to noncontrolling interests in consolidated joint ventures		(122)		(240)


Net income (loss) attributable to Class A common shareholders		$	19,032	$	192





Earnings per share:
Basic		$	0.15	$	—
Diluted		$	0.15	$	—

Weighted average shares outstanding:
Basic		124,305,943		123,974,970
Diluted		125,478,001		124,324,683

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Comprehensive Income

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31,
		2022		2021

Net income (loss)		$	19,154	$	432

Other comprehensive income (loss)
Unrealized gain (loss) on securities, net of tax:
Unrealized gain (loss) on real estate securities, available for sale		(6,737)		7,428
Reclassification adjustment for (gain) loss included in net income (loss)		96		(579)

Total other comprehensive income (loss)		(6,641)		6,849

Comprehensive income (loss)		12,513		7,281
Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures		(122)		(240)



Comprehensive income (loss) attributable to Class A common shareholders		$	12,391	$	7,041

Refer to the accompanying notes to consolidated financial statements.

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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 Joint Ventures

Balance, December 31, 2021	125,453	$	126		$	1,795,249	$	(76,324)	$	(207,802)	$	(4,112)		$	6,482		$	1,513,619

Distributions	—	—			—		—		—		—			(140)			(140)

Amortization of equity based compensation	—	—			20,412		—		—		—			—			20,412

Grants of restricted stock	2,248	2			—		(3)		—		—			—			(1)

Purchase of treasury stock	(55)	—			—		(611)		—		—			—			(611)
Re-issuance of treasury stock	596	—			—		—		—		—			—			—
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units	(952)	(1)			—		(11,320)		—		—			—			(11,321)
Forfeitures	(66)	—			—		—		—		—			—			—
Dividends declared	—	—			—		—		(25,314)		—			—			(25,314)





Net income (loss)	—	—			—		—		19,032		—			122			19,154
Other comprehensive income (loss)	—	—			—		—		—		(6,641)			—			(6,641)

Balance, March 31, 2022	127,224	$	127		$	1,815,661	$	(88,258)	$	(214,084)	$	(10,753)		$	6,464		$	1,509,157

Refer to the accompanying notes to consolidated financial statements.

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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 Joint Ventures

Balance, December 31, 2020	126,378	$	127		$	1,780,074	$	(62,859)	$	(163,717)	$	(10,463)		$	5,263		$	1,548,425

Distributions	—	—			—		—		—		—			(269)			(269)

Amortization of equity based compensation	—	—			5,276		—		—		—			—			5,276



Purchase of treasury stock	(20)	—			—		(214)		—		—			—			(214)
Re-issuance of treasury stock	748	—			—		(1)		—		—			—			(1)
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units	(437)	—			—		(4,421)		—		—			—			(4,421)
Forfeitures	(327)	—			—		—		—		—			—			—
Dividends declared	—	—			—		—		(25,238)		—			—			(25,238)





Net income (loss)	—	—			—		—		192		—			240			432
Other comprehensive income (loss)	—	—			—		—		—		6,849			—			6,849

Balance, March 31, 2021	126,342	$	127		$	1,785,350	$	(67,495)	$	(188,763)	$	(3,614)		$	5,234		$	1,530,839

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	19,154	$	432
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization	9,342		9,536
Unrealized (gain) loss on derivative instruments	162		(2)
Unrealized (gain) loss on equity securities	(14)		—
Unrealized (gain) loss on Agency interest-only securities	(3)		20

Provision for (release of) loan loss reserves	874		(4,251)

Amortization of equity based compensation	20,412		5,276
Amortization of deferred financing costs included in interest expense	5,857		4,892
Amortization of premium/discount on mortgage loan financing included in interest expense	(330)		(273)
Amortization of above- and below-market lease intangibles	(444)

Ladder Capital Corp [LADR] Filings
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]