Ladder Capital Corp (NYSE: LADR) (“we,” “our,” “Ladder,” or the
“Company”) today announced operating results for the quarter ended
June 30, 2024. GAAP income before taxes for the three months ended
June 30, 2024 was $31.0 million, and diluted earnings per share
(“EPS”) was $0.26. Distributable earnings was $40.4 million, or
$0.31 of distributable EPS.
“We are pleased with Ladder’s second quarter results, as we
generated strong returns with low leverage and a large cash
position. We were also pleased with the execution of our seventh
unsecured corporate bond issuance and the resulting positive
actions received from all three rating agencies, moving Ladder one
step closer to an investment grade credit rating. With our balance
sheet further strengthened, we are well-positioned to capitalize on
investment opportunities as they arise.” said Brian Harris,
Ladder’s Chief Executive Officer.
Supplemental
The Company issued a supplemental presentation detailing its
second quarter 2024 operating results, which can be viewed at
http://ir.laddercapital.com.
Conference Call and
Webcast
We will host a conference call on Thursday, July 25, 2024 at
10:00 a.m. Eastern Time to discuss second quarter 2024 results. The
conference call can be accessed by dialing (877) 407-4018 domestic
or (201) 689-8471 international. Individuals who dial in will be
asked to identify themselves and their affiliations. For those
unable to participate, an audio replay will be available until
midnight on Thursday, August 8, 2024. To access the replay, please
call (844) 512-2921 domestic or (412) 317-6671 international,
access code 13747656. The conference call will also be webcast
though a link on Ladder Capital Corp’s Investor Relations website
at ir.laddercapital.com/event. A web-based archive of the
conference call will also be available at the above website.
About Ladder
Ladder Capital Corp is an internally-managed commercial real
estate investment trust with $5.0 billion of assets as of June 30,
2024. Our investment objective is to preserve and protect
shareholder capital while producing attractive risk-adjusted
returns. As one of the nation’s leading commercial real estate
capital providers, we specialize in underwriting commercial real
estate and offering flexible capital solutions within a
sophisticated platform.
Ladder originates and invests 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) owning and operating commercial real
estate, including net leased commercial properties; and (iii)
investing in investment grade securities secured by first mortgage
loans on commercial real estate.
Founded in 2008, Ladder is run by a highly experienced
management team with extensive expertise in all aspects of the
commercial real estate industry, including origination, credit,
underwriting, structuring, capital markets and asset management.
Members of Ladder’s management and board of directors are highly
aligned with the Company’s investors, owning over 11% of the
Company’s equity. Ladder is headquartered in New York City with
regional offices in Miami, Florida and Los Angeles, California.
Forward-Looking
Statements
Certain statements in this release may constitute
“forward-looking” statements. These statements are based on
management’s current opinions, expectations, beliefs, plans,
objectives, assumptions or projections regarding future events or
future results. These forward-looking statements are only
predictions, not historical fact, and involve certain risks and
uncertainties, as well as assumptions. Actual results, levels of
activity, performance, achievements and events could differ
materially from those stated, anticipated or implied by such
forward-looking statements. While Ladder believes that its
assumptions are reasonable, it is very difficult to predict the
impact of known factors, and, of course, it is impossible to
anticipate all factors that could affect actual results on the
Company's business. There are a number of risks and uncertainties
that could cause actual results to differ materially from
forward-looking statements made herein including, most prominently,
the risks discussed under the heading “Risk Factors” in each of the
Company’s Annual Report on Form 10-K for the year ended December
31, 2023, as well as its consolidated financial statements, related
notes, and other financial information appearing therein, and its
other filings with the U.S. Securities and Exchange Commission.
Such forward-looking statements are made only as of the date of
this release. Ladder expressly disclaims any obligation or
undertaking to release any updates or revisions to any
forward-looking statements contained herein to reflect any change
in its expectations with regard thereto or changes in events,
conditions, or circumstances on which any such statement is
based.
Ladder Capital Corp
Consolidated Balance Sheets (Dollars in
Thousands)
June 30,
December 31,
2024(1)
2023(1)
(Unaudited)
Assets
Cash and cash equivalents
$
1,195,559
$
1,015,678
Restricted cash
11,921
15,450
Mortgage loan receivables held for
investment, net, at amortized cost:
Mortgage loans receivable
2,539,323
3,155,089
Allowance for credit losses
(54,107
)
(43,165
)
Mortgage loan receivables held for
sale
26,414
26,868
Securities
481,109
485,533
Real estate and related lease intangibles,
net
707,083
726,442
Real estate held for sale
11,455
—
Investments in and advances to
unconsolidated ventures
20,005
6,877
Derivative instruments
757
1,454
Accrued interest receivable
20,946
24,233
Other assets
87,722
98,218
Total assets
$
5,048,187
$
5,512,677
Liabilities and Equity
Liabilities
Debt obligations, net
$
3,378,099
$
3,783,946
Dividends payable
31,206
32,294
Accrued expenses
48,652
65,144
Other liabilities
61,735
99,095
Total liabilities
3,519,692
3,980,479
Commitments and contingencies
—
—
Equity
Class A common stock, par value $0.001 per
share, 600,000,000 shares authorized; 129,883,019 and 128,027,478
shares issued and 127,866,107 and 126,911,689 shares outstanding as
of June 30, 2024 and December 31, 2023, respectively.
128
127
Additional paid-in capital
1,770,275
1,756,750
Treasury stock, 2,016,912 and 1,115,789
shares, at cost
(21,852
)
(12,001
)
Retained earnings (dividends in excess of
earnings)
(207,728
)
(197,875
)
Accumulated other comprehensive income
(loss)
(10,752
)
(13,853
)
Total shareholders’ equity
1,530,071
1,533,148
Noncontrolling interests in consolidated
ventures
(1,576
)
(950
)
Total equity
1,528,495
1,532,198
Total liabilities and equity
$
5,048,187
$
5,512,677
_________________________ (1) Includes amounts relating to
consolidated variable interest entities.
Ladder Capital Corp
Consolidated Statements of Income (Dollars in Thousands,
Except Per Share and Dividend Data) (Unaudited)
Three Months Ended
June 30,
March 31,
2024
2024
Net interest income
Interest income
$
88,516
$
95,912
Interest expense
54,199
58,771
Net interest income (expense)
34,317
37,141
Provision for (release of) loan loss
reserves, net
5,055
5,768
Net interest income (expense) after
provision for (release of) loan loss reserves
29,262
31,373
Other income (loss)
Real estate operating income
26,133
23,887
Net result from mortgage loan receivables
held for sale
(541
)
87
Gain (loss) on real estate, net
12,543
—
Fee and other income
3,638
3,700
Net result from derivative
transactions
617
4,019
Earnings (loss) from investment in
unconsolidated ventures
18
(15
)
Gain on extinguishment of debt
—
177
Total other income (loss)
42,408
31,855
Costs and expenses
Compensation and employee benefits
13,721
20,789
Operating expenses
5,178
4,643
Real estate operating expenses
11,034
9,146
Investment related expenses
2,288
1,993
Depreciation and amortization
8,413
8,302
Total costs and expenses
40,634
44,873
Income (loss) before taxes
31,036
18,355
Income tax expense (benefit)
(1,089
)
1,925
Net income (loss)
32,125
16,430
Net (income) loss attributable to
noncontrolling interests in consolidated ventures
224
179
Net income (loss) attributable to Class
A common shareholders
$
32,349
$
16,609
Earnings per share:
Basic
$
0.26
$
0.13
Diluted
$
0.26
$
0.13
Weighted average shares
outstanding:
Basic
125,730,765
125,315,765
Diluted
125,839,500
125,520,373
Dividends per share of Class A common
stock
$
0.23
$
0.23
Non-GAAP Financial
Measures
During the first quarter of 2024, the Company refined its
definition of distributable earnings and its descriptions of the
adjustments to GAAP income. The refined definition and descriptions
do not change how distributable earnings or adjustments to GAAP
income are calculated for prior, current or future periods. The
Company utilizes distributable earnings, distributable EPS, and
after-tax distributable return on average equity (“ROAE”), non-GAAP
financial measures, as supplemental measures of our operating
performance. We believe distributable earnings, distributable EPS
and after-tax distributable ROAE assist investors in comparing our
operating performance and our ability to pay dividends across
reporting periods on a more relevant and consistent basis by
excluding from GAAP measures certain non-cash expenses and
unrealized results as well as eliminating timing differences
related to conduit securitization gains and changes in the values
of assets and derivatives. In addition, we use distributable
earnings, distributable EPS and after-tax distributable ROAE: (i)
to evaluate our earnings from operations because management
believes that they may be useful performance measures; and (ii)
because our board of directors considers distributable earnings in
determining the amount of quarterly dividends. Distributable EPS is
defined as after-tax distributable earnings divided by the weighted
average diluted shares outstanding during the period.
We define distributable earnings as income before taxes adjusted
for: (i) net (income) loss attributable to noncontrolling interests
in consolidated ventures; (ii) our share of real estate
depreciation, amortization and gain adjustments and (earnings) loss
from investments in unconsolidated ventures in excess of
distributions received; (iii) the impact of derivative gains and
losses related to hedging fair value variability of fixed rate
assets caused by interest rate fluctuations and overall portfolio
market risk as of the end of the specified accounting period; (iv)
economic gains or losses on loan sales, certain of which may not be
recognized under GAAP accounting in consolidation for which risk
has substantially transferred during the period, as well as the
exclusion of the related GAAP economics in subsequent periods; (v)
unrealized gains or losses related to our investments in securities
recorded at fair value in current period earnings; (vi) unrealized
and realized provision for loan losses and real estate impairment;
(vii) non-cash stock-based compensation; and (viii) certain
non-recurring transactional items.
We exclude the effects of our share of real estate depreciation
and amortization. Given GAAP gains and losses on sales of real
estate include the effects of previously-recognized real estate
depreciation and amortization, our adjustment eliminates the
portion of the GAAP gain or loss that is derived from depreciation
and amortization.
Our derivative instruments do not qualify for hedge accounting
under GAAP and, therefore, any net payments under, or fluctuations
in the fair value of derivatives are recognized currently in our
income statement. The Company utilizes derivative instruments to
hedge exposure to interest rate risk associated with fixed rate
mortgage loans, fixed rate securities, and/or overall portfolio
market risks. Distributable earnings excludes the GAAP results from
derivative activity until the associated mortgage loan or security
for which the derivative position is hedging is sold or paid off,
or the hedge position for overall portfolio market risk is closed,
at which point any gain or loss is recognized in distributable
earnings in that period. For derivative activity associated with
securities or mortgage loans held for investment, any hedging gain
or loss is amortized over the expected life of the underlying asset
for distributable earnings. We believe that adjusting for these
specifically identified gains and losses associated with hedging
positions adjusts for timing differences between when we recognize
the gains or losses associated with our assets and the gains and
losses associated with derivatives used to hedge such assets.
We originate conduit loans, which are first mortgage loans on
stabilized, income producing commercial real estate properties that
we intend to sell into third-party CMBS securitizations. Mortgage
loans receivable held for sale are recorded at the lower of cost or
market under GAAP. For purposes of distributable earnings, we
exclude the impact of unrealized lower of cost or market
adjustments on conduit loans held for sale and include the realized
gains or losses in distributable earnings in the period when the
loan is sold. Our conduit business includes mortgage loans made to
third parties and may also include mortgage loans secured by real
estate owned in our real estate segment. Such mortgage loans
receivable secured by real estate owned in our real estate segment
are eliminated in consolidation within our GAAP financial
statements until the loans are sold in a third-party
securitization. Upon the sale of a loan to a third-party
securitization trust (for cash), the related mortgage note payable
is recognized on our GAAP financial statements. For purposes of
distributable earnings, we include adjustments for economic gains
and losses related to the sale of these inter-segment loans for
which risk has substantially transferred during the period and
exclude the resultant GAAP recognition of amortization of any
related premium/discount on such mortgage loans payable recognized
in interest expense during the subsequent periods. This adjustment
is reflected in distributable earnings when there is a true risk
transfer on the mortgage loan sale and settlement. Conversely, if
the economic risk was not substantially transferred, no adjustments
to net income would be made relating to those transactions for
distributable earnings purposes. Management believes recognizing
these amounts for distributable earnings purposes in the period of
transfer of economic risk is a useful supplemental measure of our
performance.
We invest in certain securities that are recorded at fair value
with changes in fair value recorded in current period earnings. For
purposes of distributable earnings, we exclude the impact of
unrealized gains and losses associated with these securities and
include realized gains or losses in connection with any disposition
of securities. Distributable earnings includes declines in fair
value deemed to be an impairment for GAAP purposes if the decline
is determined to be non-recoverable and the loss to be nearly
certain to be eventually realized. In those cases, an impairment is
included in distributable earnings for the period in which such
determination was made.
We include adjustments for unrealized and realized provision for
loan losses and real estate impairment. For purposes of
distributable earnings, management recognizes loan and real estate
losses as being realized generally in the period in which the asset
is sold or the Company determines a decline in value to be
non-recoverable and the loss to be nearly certain.
Set forth below is an unaudited reconciliation of income (loss)
before taxes to distributable earnings, and an unaudited
computation of distributable EPS (in thousands, except per share
data):
Three Months Ended
June 30,
March 31,
2024
2024
Income (loss) before taxes
$
31,036
$
18,355
Net (income) loss attributable to
noncontrolling interests in consolidated ventures
224
179
Our share of real estate depreciation,
amortization and gain adjustments (1)
(1,398
)
7,668
Adjustments for derivative results and
loan sale activity (2)
2,345
8
Unrealized (gain) loss on fair value
securities
19
7
Adjustment for impairment (3)
5,055
5,768
Non-cash stock-based compensation
3,117
10,298
Distributable earnings
40,398
42,283
Estimated corporate tax (expense) benefit
(4)
(1,307
)
(1,162
)
After-tax distributable earnings
$
39,091
$
41,121
Weighted average diluted shares
outstanding
125,840
125,520
Distributable EPS
$
0.31
$
0.33
_________________
(1)
The following is a reconciliation of GAAP depreciation and
amortization to our share of real estate depreciation, amortization
and gain adjustments and (earnings) loss from investment in
unconsolidated ventures in excess of distributions received ($ in
thousands):
Three Months Ended
June 30,
March 31,
2024
2024
Total GAAP depreciation and
amortization
$
8,413
$
8,302
Depreciation and amortization related to
non-rental property fixed assets
(109
)
(110
)
Non-controlling interests in consolidated
ventures’ share of depreciation and amortization
(108
)
(107
)
Our share of operating lease income from
above/below market lease intangible amortization
(430
)
(432
)
Our share of real estate depreciation and
amortization
7,766
7,653
Accumulated depreciation and amortization
on real estate sold (a)
(9,146
)
—
Adjustment for (earnings) loss from
investments in unconsolidated ventures in excess of distributions
received
(18
)
15
Our share of real estate depreciation,
amortization and gain adjustments
$
(1,398
)
$
7,668
(a)
GAAP gains/losses on sales of real estate
include the effects of previously-recognized real estate
depreciation and amortization. For purposes of distributable
earnings, our share of real estate depreciation and amortization is
eliminated and, accordingly, the resultant gains/losses also must
be adjusted. The following is a reconciliation of the related
consolidated GAAP amounts to the amounts reflected in distributable
earnings ($ in thousands):
Three Months Ended
June 30,
March 31,
2024
2024
GAAP realized gain/loss on sale of real
estate, net
$
12,543
$
—
Adjusted gain/loss on sale of real estate
for purposes of distributable earnings
(3,397
)
—
Accumulated depreciation and
amortization on real estate sold
$
9,146
$
—
(2)
The following is a reconciliation of GAAP
net results from derivative transactions to our adjustments for
derivative results and loan sale activity within distributable
earnings ($ in thousands):
Three Months Ended
June 30,
March 31,
2024
2024
GAAP net results from derivative
transactions
$
(617
)
$
(4,019
)
Realized results of loan sales, net (a)
(b)
1,558
1,496
Unrealized lower of cost or market
adjustments related to loans held for sale
541
(87
)
Amortization of premium on mortgage loan
financing included in interest expense (b)
(190
)
(151
)
Recognized derivative results
1,053
2,769
Adjustments for derivative results and
loan sale activity
$
2,345
$
8
__________________ (a)
Includes realized gains from sales of
conduit mortgage loans collateralized by net lease properties in
our real estate segment of $1.8 million and $0.9 million and net
hedge related gain (loss) on such mortgage loan sales of $(0.2)
million and $0.6 million, for the three months ended June 30, 2024
and March 31, 2024, respectively.
(b)
Prior to the first quarter of 2024, the
Company presented these adjustments within “Adjustment for economic
gain on loan sales not recognized under GAAP for which risk has
been substantially transferred, net of reversal/amortization.”
(3)
The adjustment reflects the portion of the
loan loss provision that management determined to be recoverable.
Additional provisions and releases of those provisions are excluded
from distributable earnings as a result.
(4)
Estimated corporate tax benefit (expense)
is based on an effective tax rate applied to distributable earnings
generated by the activity within our taxable REIT subsidiaries.
After-tax distributable ROAE is presented on an annualized basis
and is defined as after-tax distributable earnings divided by the
average total shareholders’ equity during the period. Set forth
below is an unaudited computation of after-tax distributable ROAE
($ in thousands):
Three Months Ended
June 30,
March 31,
2024
2024
After-tax distributable earnings
$
39,091
$
41,121
Average shareholders’ equity
1,527,643
1,529,181
After-tax distributable ROAE
10.2
%
10.8
%
Non-GAAP Measures -
Limitations
Our non-GAAP financial measures have limitations as analytical
tools. Some of these limitations are:
- distributable earnings, distributable EPS and after-tax
distributable ROAE do not reflect the impact of certain cash
charges resulting from matters we consider not to be indicative of
our ongoing operations and are not necessarily indicative of cash
necessary to fund cash needs;
- distributable EPS and after-tax distributable ROAE are based on
a non-GAAP estimate of our effective tax rate, including the impact
of Unincorporated Business Tax and the impact of our election to be
taxed as a REIT effective January 1, 2015. Our actual tax rate may
differ materially from this estimate; and
- other companies in our industry may calculate non-GAAP
financial measures differently than we do, limiting their
usefulness as comparative measures.
Because of these limitations, our non-GAAP financial measures
should not be considered in isolation or as a substitute for net
income (loss) attributable to shareholders, earnings per share or
book value per share, or any other performance measures calculated
in accordance with GAAP. Our non-GAAP financial measures should not
be considered an alternative to cash flows from operations as a
measure of our liquidity.
In addition, distributable earnings should not be considered to
be the equivalent to REIT taxable income calculated to determine
the minimum amount of dividends the Company is required to
distribute to shareholders to maintain REIT status. In order for
the Company to maintain its qualification as a REIT under the
Internal Revenue Code, we must annually distribute at least 90% of
our REIT taxable income. The Company has declared, and intends to
continue declaring, regular quarterly distributions to its
shareholders in an amount approximating the REIT’s net taxable
income.
In the future, we may incur gains and losses that are the same
as or similar to some of the adjustments in this presentation. Our
presentation of non-GAAP financial measures should not be construed
as an inference that our future results will be unaffected by
unusual or non-recurring items.
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version on businesswire.com: https://www.businesswire.com/news/home/20240725826410/en/
Investor Contact Ladder
Capital Corp Investor Relations (917) 369-3207
investor.relations@laddercapital.com
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