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What changed in Ladder Capital Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ladder Capital Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+514 added−517 removedSource: 10-K (2025-02-10) vs 10-K (2023-12-31)

Top changes in Ladder Capital Corp's 2024 10-K

514 paragraphs added · 517 removed · 432 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

78 edited+9 added−10 removed89 unchanged
Biggest changeWe offer competitive pay at all levels, including base salaries, annual incentive awards, and stock awards, and frequently evaluate industry pay practices, including through the use of the Board’s compensation consultant. We seek to promote from within, developing a deep bench of experienced professionals ready to grow into more senior roles.
Biggest changeTalent Recruitment, Development and Retention We believe our strong corporate culture, opportunities for advancement, and competitive compensation and benefits make Ladder a desirable place to work. We offer competitive pay at all levels, including base salaries, annual incentive awards, and stock awards, and frequently evaluate industry pay practices, including through the use of the Board’s compensation consultant.
In addition to cash flow from operations, we fund our operations and investment strategy through a diverse array of funding sources, including: • Unsecured corporate bonds • CLO transactions • Secured loan and securities repurchase facilities • Non-recourse mortgage debt • Revolving credit facility • Loan sales and securitizations • Unencumbered assets available for financing • Equity From time to time, we may add financing counterparties that we believe will complement our business, although the agreements governing our indebtedness may limit our ability and the ability of our present and future subsidiaries to incur additional indebtedness.
In addition to cash flow from operations, we fund our operations and investment strategy through a diverse array of funding sources, including: • Unsecured corporate bonds • Revolving credit facility • CLO transactions • Secured loan and securities repurchase facilities • Non-recourse mortgage debt • Loan sales and securitizations • Unencumbered assets available for financing • Equity From time to time, we may add financing counterparties that we believe will complement our business, although the agreements governing our indebtedness may limit our ability and the ability of our present and future subsidiaries to incur additional indebtedness.
We expect that certain of our subsidiaries (including any series thereof) may rely on the exclusion from the definition of an “investment company” under the Investment Company Act pursuant to Section 3(c)(5)(C) of the Investment Company Act, which is available for entities “primarily engaged” in the business of “purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exclusion, as interpreted by the staff of the SEC, requires that an entity invest at least 55% of its assets in “qualifying real estate assets” and at least 80% of its assets in qualifying real estate assets and “real estate-related assets.” Although we reserve the right to modify our business methods at any time, as of December 31, 2023, we expect each of our subsidiaries (including any series thereof) relying on Section 3(c)(5)(C) to primarily hold assets in one or more of the following categories, which are comprised primarily of “qualifying real estate assets”: commercial mortgage loans, investments in securities secured by first mortgage loans, and investments in selected net leased and other real estate assets.
We expect that certain of our subsidiaries (including any series thereof) may rely on the exclusion from the definition of an “investment company” under the Investment Company Act pursuant to Section 3(c)(5)(C) of the Investment Company Act, which is available for entities “primarily engaged” in the business of “purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exclusion, as interpreted by the staff of the SEC, requires that an entity invest at least 55% of its assets in “qualifying real estate assets” and at least 80% of its assets in qualifying real estate assets and “real estate-related assets.” Although we reserve the right to modify our business methods at any time, as of December 31, 2024, we expect each of our subsidiaries (including any series thereof) relying on Section 3(c)(5)(C) to primarily hold assets in one or more of the following categories, which are comprised primarily of “qualifying real estate assets”: commercial mortgage loans, investments in securities secured by first mortgage loans, and investments in selected net leased and other real estate assets.
We invest primarily in CMBS, including CLOs, secured by first mortgage loans on commercial real estate. These investments provide a stable and attractive base of net interest income and help us manage our liquidity and hyper-amortization features included in many of these securities positions help mitigate potential credit losses in the event of adverse market conditions.
We invest primarily in CMBS, including CRE CLOs, secured by first mortgage loans on commercial real estate. These investments provide a stable and attractive base of net interest income and help us manage our liquidity and hyper-amortization features included in many of these securities positions help mitigate potential credit losses in the event of adverse market conditions.
Item 1. Business Overview Ladder 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.
Item 1. Business 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 complementary business segments are designed to provide us with the flexibility to opportunistically allocate capital in order to generate attractive risk-adjusted returns under varying market conditions. The following chart summarizes our investment portfolio as of December 31, 2023 ($ in thousands): (1) CRE equity asset amounts represent undepreciated asset values.
Our complementary business segments are designed to provide us with the flexibility to opportunistically allocate capital in order to generate attractive risk-adjusted returns under varying market conditions. The following chart summarizes our investment portfolio as of December 31, 2024 ($ in thousands): (1) CRE equity asset amounts represent undepreciated asset values.
Our borrowings under certain financing agreements and our committed repurchase facilities are subject to maximum consolidated leverage ratio limits (either a fixed ratio ranging from 3.5:1.0 to 4.0:1.0, or a maximum ratio based on our asset composition at the time of determination), minimum net worth requirements (ranging from $400.0 million to $871.4 million), maximum reductions in net worth over stated time periods, minimum liquidity levels (typically $30.0 million of cash or a higher standard that often allows for the inclusion of different percentages of liquid securities in the determination of compliance with the requirement), and a fixed charge coverage ratio of 1.25x, and, in the instance of one lender, an interest coverage ratio of 1.50x, in each case, if certain liquidity thresholds are not satisfied.
Our borrowings under certain financing agreements and our committed repurchase facilities are subject to maximum consolidated leverage ratio limits (either a fixed ratio ranging from 3.5:1.0 to 4.0:1.0, or a maximum ratio based on our asset composition at the time of determination), minimum net worth requirements (ranging from $400.0 million to $871.4 million), minimum liquidity levels (typically $30.0 million of cash or a higher standard that often allows for the inclusion of different percentages of liquid securities in the determination of compliance with the requirement), and a fixed charge coverage ratio of 1.25x, and, in the instance of one lender, an interest coverage ratio of 1.50x, in each case, if certain liquidity thresholds are not satisfied.
Conduit first mortgage loans in excess of $50.0 million also require approval of our board of directors’ Risk and Underwriting Committee. We held one conduit loan with an aggregate carrying value of $26.9 million at December 31, 2023.
Conduit first mortgage loans in excess of $50.0 million also require approval of our board of directors’ Risk and Underwriting Committee. We held one conduit loan with an aggregate carrying value of $26.9 million at December 31, 2024.
Under the Indentures, we may not incur certain types of indebtedness unless our consolidated non-funding debt to equity ratio (as defined in the Indentures) is less than or equal to 1.75:1.00 or if the unencumbered assets of the Company and its 11 Table of Contents subsidiaries is less than 120% of their unsecured indebtedness, although our subsidiaries are permitted to incur indebtedness where recourse is limited to the assets and/or the general credit of such subsidiary.
Under the Indentures, we may not incur certain types of indebtedness unless our consolidated non-funding debt to equity ratio (as defined in the Indentures) is less than or equal to 1.75:1.00 or if the unencumbered assets of the Company and its subsidiaries is less than 120% of their unsecured indebtedness, although our subsidiaries are permitted to incur indebtedness where recourse is limited to the assets and/or the general credit of such subsidiary.
Agency securities investments in excess of $76.0 million and all other investment grade CMBS or U.S. Agency securities investments in excess of $51.0 million, each in any single class of any single issuance, require the approval of our board of directors’ Risk and Underwriting Committee.
AAA-rated CMBS or U.S. Agency securities investments in excess of $76.0 million and all other investment grade CMBS or U.S. Agency securities investments in excess of $51.0 million, each in any single class of any single issuance, require the approval of our board of directors’ Risk and Underwriting Committee.
The asset management team, together with our underwriting and transaction management teams, monitors the credit performance of our investment portfolio in concert with our third-party servicers and property managers, working closely with borrowers and/or joint-venture partners to manage all of our positions and monitor financial performance of our collateral assets, including execution of business plans and daily activities within our real estate portfolio.
The asset management team, 8 Table of Contents together with our underwriting and transaction management teams, monitors the credit performance of our investment portfolio in concert with our third-party servicers and property managers, working closely with borrowers and/or joint-venture partners to manage all of our positions and monitor financial performance of our collateral assets, including execution of business plans and daily activities within our real estate portfolio.
See “Risk factors—Risks related to our Investment Company Act exemption—Maintenance of our exemption from registration under the Investment Company Act imposes significant limits on our operations.” 14 Table of Contents Regulation as a Captive Insurance Company We maintain a captive insurance subsidiary to provide coverage previously self insured by us, including nuclear, biological or chemical coverage, excess property coverage and excess errors and omissions coverage.
See “Risk factors—Risks related to our Investment Company Act exemption—Maintenance of our exemption from registration under the Investment Company Act imposes significant limits on our operations.” Regulation as a Captive Insurance Company We maintain a captive insurance subsidiary to provide coverage previously self insured by us, including nuclear, biological or chemical coverage, excess property coverage and excess errors and omissions coverage.
LCAM is entitled to receive a management fee connection with the advisory, administrative and monitoring services it performs for the CLO Issuer as the collateral manager; however, LCAM has waived this fee for so long as it or any of its affiliates serves as collateral manager for the CLO Issuers.
LCAM is entitled to receive a management fee connection with the advisory, administrative and monitoring services it performs for the 12 Table of Contents CLO Issuer as the collateral manager; however, LCAM has waived this fee for so long as it or any of its affiliates serves as collateral manager for the CLO Issuers.
In addition, we believe that we will not be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because we will not engage primarily, hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in securities.
In addition, we believe that we will not be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because we 13 Table of Contents will not engage primarily, hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in securities.
Our in-house transaction management team includes experienced attorneys that manage, negotiate, structure and close all transactions and complete legal due diligence on each property, borrower, and sponsor, including evaluating documents such as leases, title, title insurance, opinion letters, tenant estoppels, organizational documents, and other agreements and documents related to the property or the loan. 7 Table of Contents Third-party Appraisal.
Our in-house transaction management team includes experienced attorneys that manage, negotiate, structure and close all transactions and complete legal due diligence on each property, borrower, and sponsor, including evaluating documents such as leases, title, title insurance, opinion letters, tenant estoppels, organizational documents, and other agreements and documents related to the property or the loan. Third-party Appraisal.
We are in compliance with all covenants as described in this Annual Report as of December 31, 2023. Competition The commercial real estate finance markets are highly competitive.
We are in compliance with all covenants as described in this Annual Report as of December 31, 2024. Competition The commercial real estate finance markets are highly competitive.
The subsidiary is also subject to insurance laws of states other than Michigan (i.e., states where the insureds are located). Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Liquidity and Capital Resources.” Employees As of December 31, 2023, we employed 59 full-time persons.
The subsidiary is also subject to insurance laws of states other than Michigan (i.e., states where the insureds are located). Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Liquidity and Capital Resources.” Employees As of December 31, 2024, we employed 54 full-time persons.
From time to time, certain of these financing arrangements and loans may prohibit certain of our subsidiaries from paying dividends to the Company, from making distributions on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or other assets to the Company or other subsidiaries of the Company.
From time to time, certain of these financing arrangements and loans may prohibit certain of our subsidiaries from paying dividends to the Company, from making distributions on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from 11 Table of Contents the Company or from transferring any of such subsidiary’s property or other assets to the Company or other subsidiaries of the Company.
In addition, certain of our subsidiaries’ businesses may rely on exemptions from various requirements of the Securities Act, the Exchange Act, the Investment Company Act, and the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
In addition, certain of our subsidiaries’ businesses may rely on exemptions from various requirements of the Securities Act, the Exchange Act, the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
The following charts set forth our total outstanding balance sheet first mortgage loans, other commercial real estate-related loans, and conduit first mortgage loans as of December 31, 2023, and a breakdown of our loan portfolio by loan size and geographic location and asset type of the underlying real estate by loan balance. 4 Table of Contents Real Estate Net Leased Commercial Real Estate Properties.
The following charts set forth our total outstanding balance sheet first mortgage loans, other commercial real estate-related loans, and conduit first mortgage loans as of December 31, 2024, and a breakdown of our loan portfolio by loan size and geographic location and asset type of the underlying real estate by loan balance. 3 Table of Contents Real Estate Net Leased Commercial Real Estate Properties.
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 $29.7 billion of commercial real estate loans from our inception in October 2008 through December 31, 2023.
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 $29.9 billion of commercial real estate loans from our inception in October 2008 through December 31, 2024.
As of December 31, 2023, our net leased properties comprised a total of 3.8 million square feet, 100% leased with an average age since construction of 18.6 years and a weighted average remaining lease term of 8.5 years. Commercial real estate investments in excess of $20.0 million require the approval of our board of directors’ Risk and Underwriting Committee.
As of December 31, 2024, our net leased properties comprised a total of 3.5 million square feet, 100% leased with an average age since construction of 20 years and a weighted average remaining lease term of 7.6 years. Commercial real estate investments in excess of $20.0 million require the approval of our board of directors’ Risk and Underwriting Committee.
The board maintains oversight of human capital management and corporate culture and gains insight at regular board and committee meetings about specific Company human resources initiatives, including talent engagement, attraction, and retention. Diversity, Equity and Inclusion With two female co-founders, gender diversity and equality have always been important to Ladder.
The board maintains oversight of human capital management and corporate culture and gains insight at regular board and committee meetings about specific Company human resources initiatives, including talent engagement, attraction, and retention. Workforce Composition and Cultivation With two female co-founders, gender diversity and equality have always been important to Ladder.
Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan-to-value ratio of the portfolio was 82.0% at December 31, 2023. Conduit First Mortgage Loans. We also originate conduit loans, which are first mortgage loans that are secured by cash-flowing commercial real estate and are available for sale to securitizations.
Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan-to-value ratio of the portfolio was 72.3% at December 31, 2024. Conduit First Mortgage Loans. We also originate conduit loans, which are first mortgage loans that are secured by cash-flowing commercial real estate and are available for sale to securitizations.
During this timeframe, we also acquired $13.2 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.0 billion of selected net leased and other real estate assets.
During this timeframe, we also acquired $14.1 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.1 billion of selected net leased and other real estate assets.
During the year ended December 31, 2023, we collected 99% of rent on these properties. 5 Table of Contents The following charts summarize the composition of our real estate investments as of December 31, 2023 ($ in millions): Securities The Company invests in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination.
During the year ended December 31, 2024, we collected 99% of rent on these properties. 4 Table of Contents The following charts summarize the composition of our real estate investments as of December 31, 2024 ($ in millions): 5 Table of Contents Securities We invest in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination.
We selectively invest in note purchase financings, subordinated debt, mezzanine debt and other structured finance products related to commercial real estate that are generally held for investment. As of December 31, 2023, we held a portfolio of 9 mezzanine loans with an aggregate book value of $32.4 million.
We selectively invest in note purchase financings, subordinated debt, mezzanine debt and other structured finance products related to commercial real estate that are generally held for investment. As of December 31, 2024, we held a portfolio of 4 mezzanine loans with an aggregate book value of $11.6 million.
The majority of the tenants in our net leased properties are necessity-based businesses. During the year ended December 31, 2023, we collected 100% of rent on these properties. Diversified Commercial Real Estate Properties. As of December 31, 2023, we owned 53 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $293.7 million.
The majority of the tenants in our net leased properties are necessity-based businesses. During the year ended December 31, 2024, we collected 100% of rent on these properties. Diversified Commercial Real Estate Properties. As of December 31, 2024, we owned 53 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $299.5 million.
Based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 65.5% at December 31, 2023. Other Commercial Real Estate-Related Loans.
Based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 66.6% at December 31, 2024. Other Commercial Real Estate-Related Loans.
As of December 31, 2023, we held one conduit first mortgage loan that was available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of this loan was 59.4% at December 31, 2023.
As of December 31, 2024, we held one conduit first mortgage loan that was available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, loan-to-value ratio of this loan was 58.9% at December 31, 2024.
All employees are employed by our operating subsidiary, Ladder Capital Finance LLC. None of our employees are represented by a union or subject to a collective bargaining agreement and we have never experienced a work stoppage. We believe that our employee relations are good.
All employees are employed by our operating subsidiary, Ladder Capital Finance LLC. None of our employees are represented by a union or subject to a collective bargaining agreement and we have never experienced a work stoppage.
The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations.
The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations.
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 December 31, 2023, our management team and directors held interests in our Company comprising over 11% of our total equity.
Ladder was founded in October 2008 and we completed our initial public offering in February 2014. We are led by a disciplined and highly aligned management team. As of December 31, 2024, our management team and directors held interests in our Company comprising over 11% of our total equity.
Included in the $431.5 million of CMBS securities are $9.3 million of CMBS securities designated as risk retention securities under the Dodd-Frank Act, which are subject to transfer restrictions over the term of the securitization trust.
Included in the $1.1 billion of CMBS securities are $9.1 million of CMBS securities designated as risk retention securities under the Dodd-Frank Act, which are subject to transfer restrictions over the term of the securitization trust.
As of December 31, 2023, we owned 156 single tenant net leased properties with an undepreciated book value of $653.5 million. These properties are fully leased on a net basis where the tenant is generally responsible for payment of real estate taxes, property, building and general liability insurance and property and building maintenance expenses.
As of December 31, 2024, we owned 151 single tenant net leased properties with an undepreciated book value of $604.9 million. These properties are fully leased on a net basis where the tenant is generally responsible for payment of real estate taxes, property, building and general liability insurance and property and building maintenance expenses.
On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans (“Contributed July 2021 Loans”) at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis.
On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO.
Our balance sheet first mortgage loans may be refinanced by us into a new conduit first 3 Table of Contents mortgage loan upon property stabilization. As of December 31, 2023, we held a portfolio of 107 balance sheet first mortgage loans with an aggregate book value of $3.1 billion.
Our balance sheet first mortgage loans may be refinanced by us into a new conduit first mortgage loan upon property stabilization. As of December 31, 2024, we held a portfolio of 53 balance sheet first mortgage 2 Table of Contents loans with an aggregate book value of $1.6 billion.
We generally seek to hedge the interest rate risk on the financing of assets that have a duration longer than five years, including newly-originated conduit first mortgage loans, securities in our CMBS portfolio if long enough in duration, and most of our U.S. Agency securities portfolio.
We generally seek to hedge the interest rate risk on the financing of assets that have a duration longer than five years, including newly-originated conduit first mortgage loans and securities if long enough in duration.
On average, our management team members have 28 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. Anthony V. Esposito, Chief Accounting Officer, is an additional officer of Ladder.
On average, our management team members have 29 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. Anthony V.
Treasury securities classified as cash and cash equivalents and held $53.7 million of U.S. Treasury securities classified as securities on our consolidated balance sheet. Investment Process Origination Our team of originators is responsible for sourcing and directly originating new commercial first mortgage loans from the brokerage community and directly from real estate owners, operators, developers and investors.
As of December 31, 2024, we held $1.1 billion of U.S. Treasury securities classified as cash and cash equivalents on our consolidated balance sheet. Investment Process Origination Our team of originators is responsible for sourcing and directly originating new commercial first mortgage loans from the brokerage community and directly from real estate owners, operators, developers and investors.
We have significant in-house expertise in the evaluation and trading of these securities, due in part to our experience in originating and underwriting mortgage loans that comprise assets within CMBS trusts, as well as our experience in structuring CMBS transactions.
We have significant in-house expertise in the evaluation and trading of these securities, due in part to our experience in originating and underwriting mortgage loans that comprise assets within CMBS trusts, as well as our experience in structuring CMBS transactions. In the future, we may invest in CMBS securities or other securities that are unrated.
On December 2, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans (“Contributed December 2021 Loans”) at a 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis.
On December 2, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans at a 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO.
We maintain a website on the Internet at http://www.laddercapital.com. The information contained in our website is not incorporated by reference into this Annual Report. We make available on or through our website certain reports and amendments to those reports that we file with, or furnish to the SEC, in accordance with the Exchange Act.
The information contained in our website is not incorporated by reference into this Annual Report. We make available on or through our website certain reports and amendments to those reports that we file with, or furnish to the SEC, in accordance with the Exchange Act.
From our inception in October 2008 through December 31, 2023, we originated $16.9 billion of conduit loans, of which $16.8 billion were sold into 71 CMBS securitizations, making us, by volume, the second largest non-bank contributor of loans to CMBS securitizations in the United States in such period.
From our inception in October 2008 through December 31, 2024, we originated $16.9 billion of conduit loans, of which $16.9 billion were sold into 74 CMBS securitizations, making us, by volume, one of the largest non-bank contributors of loans to CMBS securitizations in the United States in such period.
Our mortgage loan financings have primarily fixed rates ranging from 4.39% to 9.03%, mature between 2024 - 2031 and total $437.8 million as of December 31, 2023. These long-term non-recourse mortgages include net unamortized premiums of $1.8 million at December 31, 2023, representing proceeds received upon financing greater than the contractual amounts due under the agreements.
Our mortgage loan financings have primarily fixed rates ranging from 4.39% to 8.09%, mature between 2025 and 2034 and total $446.4 million as of December 31, 2024. These long-term non-recourse mortgages include net unamortized premiums of $3.7 million at December 31, 2024, representing proceeds received upon financing greater than the contractual amounts due under the agreements.
Agency securities in any single class of any single issuance in excess of the lesser of (x) $21.0 million and (y) 10% of the total net asset value of the respective Ladder subsidiary or other entity for which Ladder has authority to make investment decisions. Other Investments Unconsolidated Venture. From time to time we invest in real estate related ventures.
Agency securities in any single class of any single issuance in excess of the lesser of (x) $21.0 million and (y) 10% of the total net asset value of the respective Ladder subsidiary or other entity for which Ladder has authority to make investment decisions. 6 Table of Contents Other Investments Unconsolidated Ventures.
We also support our employees’ wellness and aim to create an environment that provides for work-life balance, including opportunities for a hybrid work schedule. 15 Table of Contents Our Corporate Information Our principal executive offices are located at 320 Park Avenue, 15th Floor, New York, New York 10022, and our telephone number is (212) 715-3170.
We also support our employees’ wellness and aim to create an environment that provides for work-life balance, including opportunities for a hybrid work schedule. Our Corporate Information Our principal executive offices are located at 320 Park Avenue, 15th Floor, New York, New York 10022, and our telephone number is (212) 715-3170. We maintain a website on the Internet at http://www.laddercapital.com.
These unsecured financings were comprised of $327.8 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $635.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).
These unsecured financings were comprised of $295.7 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes,” and collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”).
As of December 31, 2023, by property count and market value, respectively, 65.2% and 66.3% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 7.9% and 20.2%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.1% to 7.6% by property count and 0.1% to 8.5% by market value. 6 Table of Contents AAA-rated CMBS or U.S.
As of December 31, 2024, by property count and market value, respectively, 60.5% and 68.6% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 4.8% and 12.4%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.2% to 5.6% by property count and 0.1% to 8.3% by market value.
Refer to our discussion below and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Liquidity and Capital Resources” and Note 6, Debt Obligations, Net, to our consolidated financial statements included elsewhere in this Annual Report, for additional information about our financing arrangements. 9 Table of Contents Unsecured Corporate Bonds As of December 31, 2023, we had $1.6 billion of unsecured corporate bonds outstanding.
Refer to our discussion below and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Liquidity and Capital Resources” and Note 6, Debt Obligations, Net, to our consolidated financial statements included elsewhere in this Annual Report, for additional information about our financing arrangements.
A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed July 2021 Loans, including broad discretion in managing these loans, and has the ability to appoint the special servicer under the CLO.
The Company retained control over major decisions made with respect to the administration of the loans in the CLO, including broad discretion in managing these loans, and has the ability to appoint the special servicer under the CLO.
As of December 31, 2023, the carrying value of our unconsolidated ventures was $6.9 million. United States Treasury Securities. We invest in short-term and long-term U.S. Treasury securities. Short-term U.S. Treasury securities are classified as cash and cash equivalents on our consolidated balance sheet. As of December 31, 2023, we held $1.0 billion of U.S.
From time to time we invest in real estate related ventures. As of December 31, 2024, the carrying value of our unconsolidated ventures was $19.9 million. United States Treasury Securities. We invest in short-term and long-term U.S. Treasury securities. Short-term U.S. Treasury securities are classified as cash and cash equivalents on our consolidated balance sheet.
CLO Debt As of December 31, 2023, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets.
CLO Debt As of December 31, 2024, we had $601.4 million of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets.
Due in large part to devoting such a large portion of the Company’s capital structure to equity and unsecured corporate bond debt, Ladder maintains a $3.0 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of December 31, 2023.
The 2031 Notes were issued during the year ended December 31, 2024 with an aggregate principal balance of $500.0 million. 9 Table of Contents Due in large part to devoting such a large portion of the Company’s capital structure to equity and unsecured corporate bond debt, Ladder maintains a $3.8 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of December 31, 2024.
We typically use the independent appraiser’s valuation to calculate ratios such as loan-to-value and loan-to-stabilized-value ratio, as well as to serve as an independent source to which the in-house cash flow and valuation model can be compared. Third-party Engineering Report. We generally engage an approved licensed engineer to complete property condition/engineering reports and a seismic report for applicable properties.
We typically use the independent appraiser’s valuation to calculate ratios such as loan-to-value and loan-to-stabilized-value ratio, as well as to serve as an independent source to which the in-house cash flow and valuation model can be compared. 7 Table of Contents Third-party Engineering Report.
Refer to “Our Financing Strategies” for further information. Asset Management Our in-house asset management team pro-actively manages the Company’s loan and real estate portfolios, demonstrating our Company-wide focus and emphasis on principal preservation and maximizing asset performance.
Additionally, we supplement our financing approaches with hedging, primarily through standard derivative instruments, to prudently manage our interest rate and credit spread exposures. Refer to “Our Financing Strategies” for further information. Asset Management Our in-house asset management team pro-actively manages the Company’s loan and real estate portfolios, demonstrating our Company-wide focus and emphasis on principal preservation and maximizing asset performance.
As of December 31, 2023, the estimated fair value of our portfolio of CMBS investments totaled $431.5 million in 73 CUSIPs ($5.9 million average investment per CUSIP).
As of December 31, 2024, the estimated fair value of our portfolio of CMBS investments totaled $1.1 billion in 99 CUSIPs ($10.7 million average investment per CUSIP).
These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third-parties who we do not control. 12 Table of Contents Regulation of Commercial Real Estate Lending Activities Although most states do not regulate commercial finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies, and require licensing of lenders and financiers and adequate disclosure of certain contract terms.
Regulation of Commercial Real Estate Lending Activities Although most states do not regulate commercial finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies, and require licensing of lenders and financiers and adequate disclosure of certain contract terms.
Human Capital Management and Corporate Culture Ladder is a dynamic company that is distinguished by the talent and dedication of our team and is committed to building and developing a diverse, interconnected and engaged workforce who work collaboratively to advance the Company’s goals. Our tone at the top promotes a culture of transparency, accountability, and ethical behavior.
We believe that our employee relations are good. 14 Table of Contents Human Capital Management and Corporate Culture Ladder is a dynamic company that is distinguished by the talent and dedication of our team and is committed to building and developing diverse, interconnected and engaged employees who work collaboratively to advance the Company’s goals.
As a firm with just 59 employees as of December 31, 2023, Ladder’s flat management structure and open-door policy provide all employees with daily access to our senior management.
Our “tone at the top” promotes a culture of transparency, accountability, and ethical behavior. As a firm with just 54 employees as of December 31, 2024, Ladder’s flat management structure and open-door policy provide all employees with daily access to our senior management.
We are committed to creating a diverse and inclusive workspace that ensures that all individuals are treated with mutual respect and dignity. We maintain an anti-discrimination, harassment, and retaliation policy that is reviewed and updated at least annually, along with required annual employee training.
We are committed to cultivating an environment where every individual’s contributions are valued, and where mutual respect and dignity are foundational principles. We maintain an anti-discrimination, harassment, and retaliation policy that is reviewed and updated at least annually, along with required annual employee training.
In addition, our contracts would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business. 13 Table of Contents Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities.
Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities.
The following chart summarizes our securities investments by market value, 98.9% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of December 31, 2023: In the future, we may invest in CMBS securities or other securities that are unrated.
The following chart summarizes our securities investments by market value, 97.6% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of December 31, 2024: As of December 31, 2024, our CMBS investments had a weighted average duration of 2.4 years.
As of December 31, 2023, our CMBS investments had a weighted average duration of 2.0 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States.
The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States.
Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios. We have the option to extend some of our existing facilities subject to a number of customary conditions.
We have the option to extend some of our existing facilities subject to a number of customary conditions.
The securities that serve as collateral for these borrowings are typically 10 Table of Contents AAA-rated CMBS with relatively short duration and significant subordination.
Securities Repurchase Facilities We are a party to multiple uncommitted master repurchase agreements with several counterparties to finance our investments in securities. The securities that serve as collateral for these borrowings are typically AAA-rated CMBS with relatively short duration and significant subordination.
The Company retained control over major decisions made with respect to the administration of the Contributed December 2021 Loans, including broad discretion in managing these loans, and has the ability to appoint the special servicer under the CLO. Committed Loan Financing Facilities We are parties to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity.
The Company also held two additional tranches as investments totaling 6.8% interest in the CLO. The Company retained control over major decisions made with respect to the administration of the loans in the CLO, including broad discretion in managing these loans, and has the ability to appoint the special servicer under the CLO.
Mortgage Loan Financing We generally finance our real estate using long-term non-recourse mortgage financing. During the year ended December 31, 2023, we did not execute any long term debt agreement to finance real estate.
Mortgage Loan Financing We generally finance our real estate using long-term non-recourse mortgage financing. During the year ended December 31, 2024, we executed 16 new term debt agreements to finance properties in our real estate portfolio with a carrying amount of $81.9 million.
We reimburse employees for professional licenses, memberships, and subscriptions, as well as training programs, conferences, and classes. Employees are encouraged to participate in cross-functional team projects to develop comprehensive business knowledge. Our “Ladder Climbers” program enables our junior staff to bond together and develop leadership skills.
We seek to promote from within, developing a deep bench of experienced professionals ready to grow into more senior roles. We reimburse employees for professional licenses, memberships, and subscriptions, as well as training programs, conferences, and classes. Employees are encouraged to participate in cross-functional team projects to develop comprehensive business knowledge.
The Company has disclosed the impact of current market conditions on our business throughout this Annual Report. 2 Table of Contents Our Businesses We invest primarily in loans, securities and other interests in U.S. commercial real estate, with a focus on senior secured assets.
Esposito, Chief Accounting Officer, and Stephanie Lin, Assistant Secretary, are additional officers of Ladder. 1 Table of Contents Our Businesses We invest primarily in loans, securities and other interests in U.S. commercial real estate, with a focus on senior secured assets.
Our finance team endeavors to match the characteristics and expected holding periods of the assets being financed with the characteristics of the financing options available and our short and long term cash needs in determining the appropriate financing approaches to be applied.
We endeavor to match the characteristics and expected holding periods of our assets with available financing options, as well as our short- and long-term cash needs, to determine the appropriate financing approaches. These financing strategies are vital to managing our asset/liability risk and liquidity risk.
We use anonymous employee experience surveys to solicit feedback on topics such as job satisfaction and employee activities. We use the information from these surveys to guide management engagement, decision-making, and strategy. Health, Safety and Wellness The Company offers comprehensive healthcare benefits, paid time off, and a business continuity plan that places our employees’ health and safety at its core.
Our “Ladder Climbers” program enables our junior staff to bond together and develop leadership skills. We use employee experience surveys to solicit feedback on topics such as job satisfaction and employee activities. We use the information from these surveys to guide management engagement, decision-making, and strategy.
Our benefits program include, among other programs, mental health, fertility services, and family leave.
Health, Safety and Wellness The Company offers comprehensive healthcare benefits, paid time off, and a business continuity plan that places our employees’ health and safety at its core. Our benefits program include, among other programs, mental health, fertility services, and family leave.
Revolving Credit Facility The Company’s revolving credit facility (the “Revolving Credit Facility”) provides for an aggregate maximum borrowing amount of $323.9 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes.
The loans are collateralized by real estate and related lease intangibles, net, of $451.9 million as of December 31, 2024. 10 Table of Contents Revolving Credit Facility The Company’s Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes.
In addition, under the Revolving Credit Facility, LCFH is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities. Hedging Strategies We may enter into interest rate and credit spread derivative contracts to mitigate our exposure to changes in interest rates and credit spreads.
There is no guarantee that the Company will achieve or maintain an investment grade rating. Hedging Strategies We may enter into interest rate and credit spread derivative contracts to mitigate our exposure to changes in interest rates and credit spreads.
As of December 31, 2023, the Company had $605.0 million of borrowings outstanding, with an additional $637.0 million of committed financing available. Assets pledged as collateral under these facilities are generally limited to first mortgage whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans.
Assets pledged as collateral under these facilities are generally limited to first mortgage whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans. Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios.
The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. We recorded $0.6 million of premium amortization, which decreased interest expense, for the year ended December 31, 2023. The loans are collateralized by real estate and related lease intangibles, net, of $474.7 million as of December 31, 2023.
The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method.
Financing Prior to securitization or other disposition, or in the case of balance sheet loans, maturity, we evaluate most of the loans we originate for secured financing via the CLO market or our multiple committed term facilities from leading financial institutions.
Financing Our finance team evaluates each new loan origination for secured financing in the CLO market or via committed loan repurchase facilities from leading financial institutions. We also maintain a significant pool of unencumbered assets and evaluate the benefits of financing any loan against the advantages of keeping the loan unencumbered.
Removed
We continue to actively manage the liquidity and operations of the Company in light of market conditions, including the current interest rate environment, and potential recessionary conditions.
Added
We generally engage an approved licensed engineer to complete property condition/engineering reports and a seismic report for applicable properties.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIncome from, and the value of, our investments may be adversely affected by many factors that are beyond our control, including: • volatility and adverse changes in international, national and local economic and market conditions, including contractions in market liquidity for mortgage loans and mortgage-related assets and tenant bankruptcies; • changes in interest rates, inflation, credit spreads, prepayment rates and in the availability, costs and terms of financing; • changes in rates of default or recovery rates; • changes in generally accepted accounting principles; • changes in governmental laws and regulations, fiscal policies and zoning and other ordinances and costs of compliance with laws and regulations; • downturns in the markets for mortgage-backed securities and other asset-backed and structured products, and commercial real estate; • the broader impacts of the Ukraine-Russia and Hamas-Israel conflicts; • civil unrest, terrorism, acts of war, outbreaks of communicable diseases, nuclear or radiological disasters and natural disasters, including earthquakes, hurricanes, tornadoes, tsunamis, floods, and other extreme weather and permanent climate changes, which may result in uninsured and underinsured losses; and • in addition to the physical risks of climate change, transition risks such as changes in consumer preferences or additional legislative or regulatory requirements, including those associated with the transition to a low-carbon economy.
Biggest changeIncome from, and the value of, our investments may be adversely affected by many factors that are beyond our control, including, but not limited to: • volatility and adverse changes in international, national and local economic and market conditions, including contractions in market liquidity for mortgage loans and mortgage-related assets and tenant bankruptcies; • changes in interest rates, inflation, credit spreads, prepayment rates and in the availability, costs and terms of financing; • changes in rates of default or recovery rates; • changes in generally accepted accounting principles in the United States (“GAAP”); • changes in governmental laws and regulations, fiscal policies and zoning and other ordinances and costs of compliance with laws and regulations; • downturns in the markets for mortgage-backed securities and other asset-backed and structured products, and commercial real estate; • the broader impacts of global tensions such as the Ukraine-Russia and Middle East conflicts; and • civil unrest, terrorism, acts of war, outbreaks of communicable diseases, nuclear or radiological disasters, climate change and natural disasters.
The leases at the properties underlying commercial real estate loans or securities or the properties held by us may not be relet or renewed on favorable terms, or at all, which may result in a reduction in our net income, and as a result we may be required to reduce or eliminate cash distributions to shareholders.
The leases at the properties underlying commercial real estate loans, securities or properties held by us may not be relet or renewed on favorable terms, or at all, which may result in a reduction in our net income, and as a result we may be required to reduce or eliminate cash distributions to shareholders.
Such venture investments may involve risks not otherwise present when we originate or acquire investments without partners, including the following: • we may not have exclusive control over the investment or the venture, which may prevent us from taking actions that are in our best interest; • fraud or other misconduct by our venture partners; • venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • we may rely upon our venture partners to manage the day-to-day operations of the venture and underlying loans or assets, as well as to prepare financial information for the venture and any failure to perform these obligations may have a negative impact our performance and results of operations; • our venture partner may experience a change of control, which could result in new management of our venture partner with less experience or conflicting interests to ours and be disruptive to our business; • venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • any future venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner; • we may not be in a position to exercise sole decision-making authority regarding the investment or venture, which could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions; • a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals; • a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT and our exemption from registration under the Investment Company Act; • a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the venture’s liabilities; • our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable venture agreements and, in such event, we may not continue to own or operate the interests or investments 30 Table of Contents underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; • disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the venture to additional risk; or • we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our ability to continue to qualify as a REIT or maintain our exemption from registration under the Investment Company Act, even though we do not control the venture.
Such venture investments may involve risks not otherwise present when we originate or acquire investments without partners, including the following: • we may not have exclusive control over the investment or the venture, which may prevent us from taking actions that are in our best interest; • fraud or other misconduct by our partners; • venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • we may rely upon our venture partners to manage the day-to-day operations of the venture and underlying loans or assets, as well as to prepare financial information for the venture and any failure to perform these obligations may have a negative impact our performance and results of operations; • our partner may experience a change of control, which could result in new management of our partner with less experience or conflicting interests to ours and be disruptive to our business; • venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • any future venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner; • we may not be in a position to exercise sole decision-making authority regarding the investment or venture, which could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions; • a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals; • a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT and our exemption from registration under the Investment Company Act; • a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the venture’s liabilities; • our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; 30 Table of Contents • disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the venture to additional risk; or • we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our ability to continue to qualify as a REIT or maintain our exemption from registration under the Investment Company Act, even though we do not control the venture.
Any credit ratings assigned to our debt securities could be downgraded, which could have a material impact on our financial condition, liquidity and results of operations. We may issue more unsecured corporate bonds in the future depending on the financing requirements of our business and market conditions.
Any credit ratings assigned to debt securities we issue could be downgraded, which could have a material impact on our financial condition, liquidity and results of operations. We may issue more unsecured corporate bonds in the future depending on the financing requirements of our business and market conditions.
We generally intend to structure our leverage such that we minimize the differences between the term of our investments and the leverage we use to finance such investments. However, under certain circumstances, we may determine not to do so or we may be unable to do so.
We generally intend to structure our leverage such that we minimize the differences between the term of our investments and the term of the leverage we use to finance such investments. However, under certain circumstances, we may determine not to do so or we may be unable to do so.
Market demand may limit our ability to issue CLOs and access their associated financing capacity. In addition, CLOs may not be actively traded, are relatively illiquid investments, and volatility in CLO trading market may cause the value of these investments to decline.
Market demand may limit our ability to issue CLOs and access their associated financing capacity. In addition, CLOs may not be actively traded and are relatively illiquid investments, and volatility in CLO trading market may cause the value of these investments to decline.
Our compliance with the annual REIT income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis.
Our compliance with the annual REIT income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis.
If we were to make a taxable distribution of shares of our stock, shareholders may be required to sell such shares or sell other assets owned by them in order to pay any tax imposed on such distribution. We may distribute taxable dividends that are payable in cash and shares of our Class A common stock.
If we were to make a taxable distribution of shares of our Class A common stock, shareholders may be required to sell such shares or sell other assets owned by them in order to pay any tax imposed on such distribution. We may distribute taxable dividends that are payable in cash and shares of our Class A common stock.
In addition, our subsidiary REIT is required to satisfy, on a stand-alone basis, the REIT asset, income, organizational, distribution, shareholder ownership and other requirements described above, and if it were to fail to qualify as a REIT, then (i) our subsidiary REIT would face adverse tax consequences similar to those described above with respect to our qualification as a REIT and (ii) such failure could have an adverse effect on our ability to comply with the REIT income and asset tests and thus could impair our ability to qualify as a REIT unless we could avail ourselves of certain relief provisions.
In addition, such subsidiary REIT is required to satisfy, on a stand-alone basis, the REIT asset, income, organizational, distribution, shareholder ownership and other requirements described above, and if it were to fail to qualify as a REIT, then: (i) our subsidiary REIT would face adverse tax consequences similar to those described above with respect to our qualification as a REIT; and (ii) such failure could have an adverse effect on our ability to comply with the REIT income and asset tests and thus could impair our ability to qualify as a REIT unless we could avail ourselves of certain relief provisions.
Our taxable income is calculated differently than net income based on U.S. GAAP. Our taxable income may substantially differ from our net income based on U.S. GAAP. For example, interest income on our mortgage-related securities does not necessarily accrue under an identical schedule for U.S. federal income tax purposes as for accounting purposes.
Our taxable income is calculated differently than net income based on GAAP. Our taxable income may substantially differ from our net income based on GAAP. For example, interest income on our mortgage-related securities does not necessarily accrue under an identical schedule for U.S. federal income tax purposes as for accounting purposes.
Those investment guidelines, as well as our financing strategy, asset allocation or hedging policies with respect to hedging, investments, originations, acquisitions, growth, operations, indebtedness, capitalization and distributions, may be changed at any time without the consent of our shareholders.
Those investment guidelines, as well as our financing strategy, asset allocation or policies with respect to hedging, investments, originations, acquisitions, growth, operations, indebtedness, capitalization and distributions, may be changed at any time without the consent of our shareholders.
Some of the factors that could negatively affect the price of our Class A common stock or result in fluctuations in the price or trading volume of our Class A common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; • variations in our quarterly operating results; • a compression of the yield on our investments and an increase in the cost of our liabilities; • changes in the value of our portfolio; • failure to meet our earnings estimates; • publication of research reports about us or the commercial real estate industry or the failure of securities analysts to cover our Class A common stock; • additions or departures of our executive officers and other key management personnel; • adverse market reaction to any indebtedness we may incur or loss of a major funding source or securities we may issue in the future; • dilutive equity issuances by us, including additional shares of Class A common stock and options, rights, warrants and appreciation rights relating to Class A common stock or securities convertible into Class A common stock, as authorized by our board of directors or pursuant to an equity incentive plan, or significant share resales by our shareholders, or the perception that such issuances or resales may occur; • issuance of securities at a price less than our then-current book value per share; • the timing, amount, pricing and any potential discontinuance of Class A common stock repurchases by the Company; • the issuance of any debt or equity securities that rank senior to our Class A common stock or which may have rights, preferences and privileges more favorable than those of our Class A common stock; • actions by shareholders; • changes in market valuations or operating performance of similar companies; • speculation in the press or investment community; 41 Table of Contents • changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; • adverse publicity; • actual or anticipated changes in our current or future dividend yield, including as a result of increases in market interest rates, which may lead investors to demand a higher dividend yield for our Class A common stock and would result in increased interest expenses on our debt that lowers our income available for distribution; • failure to maintain our REIT qualification or exemption from registration under the Investment Company Act; • a credit rating downgrade; • significant volatility in the market price and trading volume of securities of publicly traded REITs or other companies in our sector, including us, which is not necessarily related to the operating performance of these companies; • short-selling pressure with respect to shares of our Class A common stock or REITs generally; • price and volume fluctuations in the overall stock market from time to time; and • general market, economic, geopolitical and world health conditions or events, and trends including inflationary concerns.
Some of the factors that could negatively affect the price of our Class A common stock or result in fluctuations in the price or trading volume of our Class A common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; • variations in our quarterly operating results; • a compression of the yield on our investments and an increase in the cost of our liabilities; 41 Table of Contents • changes in the value of our portfolio; • failure to meet our earnings estimates; • publication of research reports, including by short sellers, or speculation in the press or the investment community, about us or the commercial real estate industry or the failure of securities analysts to cover our Class A common stock; • additions or departures of our executive officers and other key management personnel; • adverse market reaction to any indebtedness we may incur or loss of a major funding source or securities we may issue in the future; • dilutive equity issuances by us, including additional shares of Class A common stock and options, rights, warrants and appreciation rights relating to Class A common stock or securities convertible into Class A common stock, as authorized by our board of directors or pursuant to an equity incentive plan, or significant share resales by our shareholders, or the perception that such issuances or resales may occur; • issuance of securities at a price less than our then-current book value per share; • the timing, amount, pricing and any potential discontinuance of Class A common stock repurchases by the Company; • the issuance of any debt or equity securities that rank senior to our Class A common stock or which may have rights, preferences and privileges more favorable than those of our Class A common stock; • actions by shareholders; • changes in market valuations or operating performance of similar companies; • changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters; • adverse publicity; • actual or anticipated changes in our current or future dividend yield, including as a result of increases in market interest rates, which may lead investors to demand a higher dividend yield for our Class A common stock and would result in increased interest expenses on our debt that lowers our income available for distribution; • failure to maintain our REIT qualification or exemption from registration under the Investment Company Act; • a credit rating downgrade; • significant volatility in the market price and trading volume of securities of publicly traded REITs or other companies in our sector, including us, which is not necessarily related to the operating performance of these companies; • short-selling pressure with respect to shares of our Class A common stock or REITs generally; • price and volume fluctuations in the overall stock market from time to time; and • general market, economic, geopolitical and world health conditions or events, and trends including inflationary concerns.
Hedging against interest rate, credit and market value changes may fail to protect or could adversely affect our business because, among other things: • hedging can be expensive, particularly during periods of rising and volatile interest rates; • available hedges may not correspond directly with the risk for which protection is sought; • due to a credit loss or other factors, the duration of the hedge may not match the duration of the related liability; • applicable law may require mandatory margining or clearing of certain hedges we may wish to use, which may raise costs; • the counterparties with which we engage in hedging transactions may cease making markets and quoting prices in such instruments, which may render us unable to enter into an offsetting transaction with respect to an open position; • the credit quality of the hedging counterparty owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign the hedging transaction; • the hedging counterparty may default on its obligations to us (including payment or delivery obligations); • we may have to limit our use of hedging techniques that might otherwise be advantageous or to implement those hedges through a TRS to comply with REIT requirements, increasing the cost of our hedging activities because our TRSs would be subject to tax on gains and hedging-related losses in our TRSs will generally not provide any tax benefit, except for losses carried forward against future taxable income in the TRSs; and • we may purchase a hedge that turns out not to be necessary (i.e., a hedge that is out of the money).
Hedging against interest rate, credit and market value changes may fail to protect or could adversely affect our business because, among other things: • hedging can be expensive, particularly during periods of rising and volatile interest rates; • available hedges may not correspond directly with the risk for which protection is sought; • due to a credit loss or other factors, the duration of the hedge may not match the duration of the related liability; • applicable law may require mandatory margining or clearing of certain hedges we may wish to use, which may raise costs; • the counterparties with which we engage in hedging transactions may cease making markets and quoting prices in such instruments, which may render us unable to enter into an offsetting transaction with respect to an open position; • the credit quality of the hedging counterparty owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign the hedging transaction; • the hedging counterparty may default on its obligations to us (including payment or delivery obligations); • we may have to limit our use of hedging techniques that might otherwise be advantageous or to implement those hedges through a taxable REIT subsidiary (“TRS”) to comply with REIT requirements, increasing the cost of our hedging activities because our TRSs would be subject to tax on gains and hedging-related losses in our TRSs will generally not provide any tax benefit, except for losses carried forward against future taxable income in the TRSs; and • we may purchase a hedge that turns out not to be necessary (i.e., a hedge that is out of the money).
In that case, we may reduce the amount of our distributions to pay the tax on any “excess inclusion income” ourselves. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions. Our subsidiary REIT currently owns 100% of the equity interests in each taxable mortgage pool created by our securitizations.
In that case, we may reduce the amount of our distributions to pay the tax on any “excess inclusion income” ourselves. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions. A subsidiary REIT currently owns 100% of the equity interests in each taxable mortgage pool created by our securitizations.
CMBS, including CLOs, are securities backed by obligations (including certificates of participation in obligations) that are principally secured by commercial mortgage loans or interests therein having a multi-family or commercial use, such as retail space, office buildings, industrial or warehouse properties, hotels, nursing homes and senior living centers.
CMBS, including CRE CLOs, are securities backed by obligations (including certificates of participation in obligations) that are principally secured by commercial mortgage loans or interests therein having a multi-family or commercial use, such as retail space, office buildings, industrial or warehouse properties, hotels, nursing homes and senior living centers.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, taxes on income from some activities conducted as a result of a foreclosure, excise taxes, state or local income, property and transfer taxes, mortgage recording taxes, and other taxes.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, taxes on income from some activities conducted as a result of a foreclosure, excise taxes, state or local income, franchise, property and transfer taxes, mortgage recording taxes, and other taxes.
Conversely, if we purchase assets at a discount to par value, when borrowers prepay their loans slower than expected, the decrease in corresponding prepayments on the mortgage-related securities may reduce the expected yield on such securities because we will not be able to accrete the related discount as quickly as originally anticipated.
Conversely, if we purchase securities at a discount to par value, when borrowers prepay their loans slower than expected, the decrease in corresponding prepayments on the mortgage-related securities may reduce the expected yield on such securities because we will not be able to accrete the related discount as quickly as originally anticipated.
While a reduced tax rate of up to 20% currently applies to “qualified dividend income” paid by non-REIT “C” corporations to domestic shareholders that are individuals, trusts and estates. Distributions of ordinary income payable by REITs, however, generally are not eligible for these reduced rates.
While a reduced tax rate of up to 20% currently applies to “qualified dividend income” paid by non-REIT “C” corporations to domestic shareholders that are individuals, trusts and estates, distributions of ordinary income payable by REITs are generally not eligible for these reduced rates.
Such incidents may include unauthorized access to our data assets, phishing attacks, account takeovers, business email compromise, social engineering, denial of service, malicious software, ransomware that encrypts critical data as part of a scheme to extort payment, and other electronic or cybersecurity breaches.
Incidents may include unauthorized access to our data assets, phishing attacks, account takeovers, business email compromise, social engineering, denial of service, malicious software, ransomware that encrypts critical data as part of a scheme to extort payment, and other electronic or cybersecurity breaches.
We operate using financial models and according to proprietary underwriting criteria in a highly competitive market for lending and other investment opportunities, which may limit our ability to originate or acquire desirable loans and other investments in our target assets and/or our ability to yield a certain return on our investments.
We operate using financial models and according to proprietary underwriting criteria in a highly competitive market for lending and other investment opportunities, which may limit our ability to originate or acquire desirable loans and other investments in our target assets and/or our ability to finance and yield a certain return on our investments.
In each case, while we would in general ultimately have an offsetting loss deduction available to us when such interest was determined to be uncollectible, the utility of that deduction could depend on our having taxable income in that later year or thereafter.
In each case, while we would in general have an offsetting loss deduction available to us when such interest was determined to be uncollectible, the utility of that deduction could depend on our having taxable income in that later year or thereafter.
Risks Related to Hedging • We may choose to hedge our risks or not, and both choices could expose us to potential losses. • Hedging transactions may be subject to mandatory clearing and/or margin requirements and not have a liquid secondary market.
Risks Related to Hedging • We may choose to hedge our risks or not, and both choices could expose us to potential losses. • Hedging transactions may be subject to clearing and/or margin requirements and not have a liquid secondary market.
NOI of an income-producing property can be affected by many factors, including, but not limited to: • the ongoing need for capital improvements, particularly in older structures; • changes in operating expenses; • changes in general or local market conditions; • changes in tenant mix and performance, the occupancy or rental rates of the property or, for a property that requires new leasing activity, a failure to lease the property in accordance with the projected leasing schedule; • competition from comparable property types or properties; • unskilled or inexperienced property management; • limited availability of mortgage funds or fluctuations in interest rates which may render the sale and refinancing of a property difficult; • development projects that experience cost overruns or otherwise fail to perform as projected including, without limitation, failure to complete planned renovations, repairs, or construction; • unanticipated increases in real estate taxes and other operating expenses; • challenges to the borrower’s claim of title to the real property; • environmental considerations, including liability for testing, monitoring and remediation; • changes in zoning laws, rent control laws and other similar legal restrictions on property ownership and operation; • other governmental rules and policies including those associated with a transition to a low-carbon economy; • community health issues, including, without limitation, epidemics and pandemics; • unanticipated structural defects or costliness of maintaining the property; • uninsured or underinsured losses, such as possible acts of theft, terrorism, social unrest or civil disturbances; • a decline in the operational performance of a facility on the real property (such facilities may include multifamily rental facilities, office properties, retail facilities, hospitality facilities, healthcare-related facilities, industrial facilities, warehouse facilities, restaurants, mobile home facilities, recreational or resort facilities, arenas or stadiums, religious facilities, parking lot facilities or other facilities); and • large-scale fire, earthquake or severe weather-related damage to, or the effect of climate change on, the property and/or its operations.
NOI of an income-producing property can be affected by many factors, including, but not limited to: • the ongoing need for capital improvements, particularly in older structures; • changes in general or local market conditions; • increases in property taxes and other operating expenses; • changes in tenant mix and performance, the occupancy or rental rates of the property or, for a property that requires new leasing activity, a failure to lease the property in accordance with the projected leasing schedule; • competition from comparable property types or properties; • unskilled or inexperienced property management; • limited availability of mortgage funds or fluctuations in interest rates which may render the sale and refinancing of a property difficult; • development projects that experience cost overruns or otherwise fail to perform as projected including, without limitation, failure to complete planned renovations, repairs, or construction; • unanticipated increases in real estate taxes and other operating expenses; • challenges to the owner’s claim of title to the real property; • environmental considerations, including liability for testing, monitoring and remediation; • changes in zoning laws, rent control laws and other similar legal restrictions on property ownership and operation; • other governmental rules and policies including those associated with a transition to a low-carbon economy; • community health issues, including, without limitation, epidemics and pandemics; • unanticipated structural defects or costliness of maintaining the property; • casualty and condemnation; • uninsured or underinsured losses, such as possible acts of theft, terrorism, social unrest or civil disturbances; • a decline in the operational performance of a facility on the real property (such facilities may include multifamily rental facilities, office properties, retail facilities, hospitality facilities, healthcare-related facilities, industrial facilities, warehouse facilities, restaurants, mobile home facilities, recreational or resort facilities, parking lot facilities or other facilities); and • large-scale fire, earthquake or severe weather-related damage to, or the effect of climate change on, the property and/or its operations.
Our master repurchase agreements with various counterparties, our FHLB debt, and any other financing we may enter into in the future, involve the risk that the market value of the assets pledged or sold by us to the provider of the financing may decline in value, in which case the lender or counterparty may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced.
Our master repurchase agreements with various counterparties and any other financing we may enter into in the future, involve the risk that the market value of the assets pledged or sold by us to the provider of the financing may decline in value, in which case the lender or counterparty may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced.
If we are unable to relet or renew leases for all or substantially all of the space at these properties, if the rental rates upon such renewal or reletting are significantly lower than expected, or if our reserves for these purposes prove inadequate, we may experience a reduction in net income and may be required to reduce or eliminate cash distributions to shareholders.
If we or the borrower are unable to relet or renew leases for all or substantially all of the space at these properties, if the rental rates upon such renewal or reletting are significantly lower than expected, or if reserves for these purposes prove inadequate, we may experience a reduction in net income and may be required to reduce or eliminate cash distributions to shareholders.
In periods of increasing interest rates and/or credit spreads, prepayment rates on loans will generally decrease, which could impact our liquidity, or increase our potential exposure to loan non-performance. We are exposed to the risk of increased prepayments or defaults by any mortgage or security that we own at a premium.
In periods of increasing interest rates and/or credit spreads, prepayment rates on loans will generally decrease, which could impact our liquidity, or increase our potential exposure to loan non-performance. We are also exposed to the risk of increased prepayments or defaults by any mortgage underlying a security that we own at a premium.
However, under Section 3(a)(1)(C) of the Investment Company Act, because we 37 Table of Contents are a holding company that will conduct its businesses primarily through majority-owned subsidiaries (including any series thereof), the securities issued by these subsidiaries (including any series thereof) that are excepted from the definition of “investment company” under Section 3(c)(1) or 3(c)(7) of the Investment Company Act, together with any other investment securities we may own, may not have a combined value in excess of 40% of the value of adjusted total assets (exclusive of government securities and cash items) on an unconsolidated basis (the “40% test”).
However, under Section 3(a)(1)(C) of the Investment Company Act, because we are a holding company that will conduct its businesses primarily through majority-owned subsidiaries (including any series thereof), the securities issued by these subsidiaries (including any series thereof) that are excepted from the definition of “investment company” under Section 3(c)(1) or 3(c)(7) of the Investment Company Act, together with any other investment securities we may own, may not have a combined value in excess of 40% of the value of adjusted total assets (exclusive of government securities and cash items) on an unconsolidated basis (the “40% test”).
The type and percentage of leverage we employ varies depending on our available capital, our ability to obtain and access financing arrangements with lenders, the type of asset we are funding, whether the financing is recourse or non-recourse, debt restrictions contained in those financing arrangements and the lenders’ and rating agencies’ estimates of the stability of our investment portfolio’s cash flow.
The type and percentage of leverage we employ varies depending on our available capital, our ability to obtain and access financing arrangements with lenders, credit ratings, the type of asset we are funding, whether the financing is recourse or non-recourse, debt restrictions contained in those financing arrangements and the lenders’ and rating agencies’ estimates of the stability of our investment portfolio’s cash flow.
Further, the transaction documents relating to the issuance of CLO securities may impose eligibility criteria on the assets of the CLO, restrict the ability of the CLO’s sponsor to trade investments and impose certain portfolio-wide asset quality requirements. For example, reinvestment of loans into a CLO is subject to pre-approval by certain rating agencies.
Further, the transaction documents relating to the issuance of CLO securities may impose eligibility criteria on the assets of the CLO, restrict the ability of the CLO’s sponsor to trade investments and impose certain portfolio-wide asset quality requirements. For example, reinvestment or exchange of loans into a CLO is subject to pre-approval by certain rating agencies.
A domestic TRS will pay U.S. federal, state and local income tax at regular corporate rates on any income that it earns and the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.
A domestic TRS will pay U.S. federal, state and local income tax at regular corporate rates on any income that it earns and the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to ensure that the TRS is subject to an appropriate level of corporate taxation.
Thus, compliance with the REIT requirements may hinder our ability to make and, in certain cases, to maintain ownership of, certain attractive investments. Further, to qualify as REITs, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities and qualified real estate assets.
Thus, compliance with the REIT requirements may hinder our ability to make and, in certain cases, to maintain ownership of, certain attractive investments. Further, to qualify as a REIT, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash, cash items, government securities and qualified real estate assets.
However, future funding obligations subject us to significant risks, such as a decline in value of the property, cost overruns and required reserve re-balancings and the borrower or tenant being unable to generate enough cash flow and execute its business plan, or sell or refinance the property, in order to repay its obligations to us.
However, future funding obligations subject us to significant risks, such as a decline in value of the property, cost overruns and required reserve re-balancings and the borrower or tenant being unable to generate enough cash flow and execute its business plan, or sell or refinance the property, in order to pay its obligations to us.
In addition, if we or any of our subsidiaries were required to register as an investment company under the Investment Company Act, the registered entity would become subject to substantial regulation with respect to capital structure (including the ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company 38 Table of Contents Act), portfolio composition, including restrictions with respect to diversification and industry concentration, compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.
In addition, if we or any of our subsidiaries were required to register as an investment company under the Investment Company Act, the registered entity would become subject to substantial regulation with respect to capital structure (including the ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.
Appraisals and engineering and environmental reports, as well as a variety of other third-party reports, are generally obtained with respect to each of the properties we acquire and the mortgaged properties underlying our investments at or about the time of origination. These reports are not guarantees of present or future value.
Appraisals and engineering and environmental reports, as well as a variety of other third-party reports, are generally obtained with respect to each of the properties we acquire and the mortgaged properties underlying our investments at or about the time of origination. These reports are not guarantees of present or future value or property condition.
Furthermore, in the operation of our business we also use third-party vendors that store certain sensitive data, including confidential information about our employees, and while we conduct due diligence on these vendors, these third parties are subject to their own cybersecurity threats.
Furthermore, in the operation of our business we also use third-party vendors that store certain sensitive data, including confidential information about our business and employees, and while we conduct commercially reasonable due diligence on these vendors, these third parties are subject to their own cybersecurity threats.
Although many of the retailers operating in the properties underlying our debt and/or equity investments include pharmacies and/or sell groceries and other necessity-based soft goods or provide services, including entertainment and dining options, the shift to online shopping may cause declines in brick-and-mortar sales generated by certain of tenants at these properties and/or may cause certain of our tenants to reduce the size or number of their retail locations in the future.
Although many of the retailers operating in the properties underlying our debt and/or equity investments include pharmacies and/or sell groceries and other necessity-based soft goods or provide services, including entertainment and dining options, the shift to online shopping and other forms of self-service may cause declines in brick-and-mortar sales generated by certain of tenants at these properties and/or may cause certain of our tenants to reduce the size or number of their retail locations in the future.
These investments involve special risks relating to the particular company, including its financial condition, liquidity, results of operations, financial obligations, business and prospects. Any credit ratings assigned to our investments could be downgraded, which could have a material impact on our financial condition, liquidity and results of operations.
These investments involve special risks relating to the particular issuer, including its financial condition, liquidity, results of operations, financial obligations, business and prospects. Any credit ratings assigned to our investments could be downgraded, which could have a material impact on our financial condition, liquidity and results of operations.
Market Risks Related to Our Investments • We cannot predict the effect that government policies, laws, and interventions adopted in response to the current inflationary environment or the impact of future changes in the U.S. political environment, including as a result of 2024 elections, on our business and the markets in which we operate. • We have a concentration of investments in the real estate sector, and may have further concentrations from time to time in certain property types, locations, tenants and borrowers, which may increase our exposure to the risks of certain economic downturns, and the value of which may be adversely affected by many factors beyond our control, including dislocations, illiquidity and volatility in the market for commercial real estate, commercial real estate finance and the broader financial markets, shifts in consumer patterns and advances in communication and information technology, fluctuations in prevailing interest rates and credit spreads, prepayment rates on mortgage loans, civil unrest, acts of war and terrorism and outbreaks of communicable diseases, severe weather patterns and climate change.
Market Risks Related to Our Investments • We cannot predict the effect that government policies, laws, and interventions adopted in response to an inflationary environment or the impact of changes in the U.S. political environment, including as a result of the change in administration, on our business and the markets in which we operate. • We have a concentration of investments in the real estate sector, and may have further concentrations from time to time in certain property types, locations, tenants and borrowers, which may increase our exposure to the risks of certain economic downturns, and the value of which may be adversely affected by many factors beyond our control, including dislocations, illiquidity and volatility in the market for commercial real estate, commercial real estate finance and the broader financial markets, shifts in consumer patterns and advances in communication and information technology, fluctuations in prevailing interest rates and credit spreads, prepayment rates on mortgage loans, civil unrest, acts of war and terrorism and outbreaks of communicable diseases, severe weather patterns and climate change.
The commercial real estate mortgage loans and other commercial real estate-related loans we provide, the commercial mortgage loans underlying the securities in which we may invest, and the real estate that we own are subject to the ability of the commercial property to generate net income (and not the independent income or assets of the borrower in the case of mortgage loans).
The commercial real estate mortgage loans and other commercial real estate-related loans we provide, the commercial mortgage loans underlying the securities in which we may invest, and the real estate that we own are subject to the ability of the commercial property to generate NOI (and not the independent income or assets of the borrower in the case of mortgage loans).
There is also a growing regulatory interest across jurisdictions in improving transparency regarding the definition, measurement and disclosure of ESG factors. Any new rules or regulations may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.
There is also a growing regulatory interest across jurisdictions in improving transparency regarding the definition, measurement and disclosure of ESG factors. Any new rules or regulations may result in increased legal, accounting and financial compliance 39 Table of Contents costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.
As a result of the requirements of the Risk Retention Rule, if we purchase a horizontal subordinate strip of a CLO to satisfy the Risk Retention Rule, we would not be able to dispose of those subordinate interests during the required risk retention period, which may increase our risk of loss.
As a result of the requirements of the risk retention rules, if we purchase a horizontal subordinate strip of a CLO to satisfy the risk retention rules, we would not be able to dispose of those subordinate interests during the required risk retention period, which may increase our risk of loss.
Part of our strategy involves entering into hedging transactions that could require us to fund cash payments in certain circumstances (such as the early termination of the hedging instrument caused by an event of default or other early termination 39 Table of Contents event, or the decision by a counterparty to request margin transfers it is contractually owed under the terms of the hedging agreement).
Part of our strategy involves entering into hedging transactions that could require us to fund cash payments in certain circumstances (such as the early termination of the hedging instrument caused by an event of default or other early termination event, or the decision by a counterparty to request margin transfers it is contractually owed under the terms of the hedging agreement).
Many competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Unlike Ladder, certain of our competitors may not be subject to the operating constraints associated with REIT tax compliance or maintenance of an exemption from registration under the Investment Company Act.
Many competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Unlike Ladder, certain of our competitors may not be subject to the operating constraints associated with 18 Table of Contents REIT tax compliance or maintenance of an exemption from registration under the Investment Company Act.
If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset or fails to execute its business plan, the borrower may not receive a sufficient return on the asset to satisfy the interim loan, and we bear the risk that we may not recover some or all of our investment.
If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset or fails to execute its business plan, the borrower may not receive a sufficient return 26 Table of Contents on the asset to satisfy the interim loan, and we bear the risk that we may not recover some or all of our investment.
If we do not adapt to or comply with ESG rating agency, investor or other stakeholder expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, we may suffer from reputational damage and our business, financial condition, and/or stock price could be materially and adversely affected.
If we do not adapt to or comply with ESG ratings, investor or other stakeholder expectations and standards, which are evolving, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, we may suffer from reputational damage and our business, financial condition, and/or stock price could be materially and adversely affected.
We have historically expected to distribute certain of the first mortgage loans that we originate through securitizations and, in many circumstances, upon completion of a securitization, we recognize certain non-interest revenues which is included in total 28 Table of Contents other income (loss) on our consolidated statements of income and cease to earn net interest income on the securitized loans.
We have historically expected to distribute certain of the first mortgage loans that we originate through securitizations and, in many circumstances, upon completion of a securitization, we recognize certain non-interest revenues which is included in total other income (loss) on our consolidated statements of income and cease to earn net interest income on the securitized loans.
In addition, if a significant number of our shareholders determine to sell shares of our Class A common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our Class A common stock. Distributions payable by REITs do not qualify for the reduced tax rates available for some dividends.
In addition, if a significant number of our shareholders determine to sell shares of our Class A common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our Class A common stock. 47 Table of Contents Distributions payable by REITs do not qualify for the reduced tax rates available for some dividends.
Our reserves for loan losses may prove inadequate. • Inflation has and may continue to stress property performance and value and thus mortgage loan performance. 16 Table of Contents • Our participation in the market for mortgage loan securitizations may expose us to risks that could result in losses to us and our access to the CMBS securitization market and the timing of our securitization activities and real estate sales may greatly affect our quarterly financial results. • We may be subject to risks associated with unfunded conditional loan commitments. • Mortgages on facilities that are subject to ground leases risk the collateral reverting to the ground lessor unexpectedly during the term of the loan due to such borrower’s default under, and the resulting termination of, the ground lease. • The expense of operating and owning real property, including net leased real estate assets, may impact our cash flow and our investments in net leased properties could be adversely affected by our reliance on the net leased tenants. • The leases at the properties underlying commercial real estate loans or securities or the properties held by us may not be relet or renewed on favorable terms, or at all. • Current and future venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on venture partners’ financial condition and liquidity and disputes between us and our venture partners. • Our investments in CMBS and other real estate-related securities are generally subject to losses. • Any credit ratings assigned to our investments could be downgraded, which could have a material impact on our financial condition, liquidity and results of operations. • Our determinations of fair value may have a material impact on our financial condition and results of operations.
Our reserves for loan losses may prove inadequate. • Inflation has and may continue to stress property performance and value and thus mortgage loan performance. • Our participation in the market for mortgage loan securitizations may expose us to risks that could result in losses to us and our access to the CMBS securitization market and the timing of our securitization activities and real estate sales may greatly affect our quarterly financial results. • We may be subject to risks associated with unfunded conditional loan commitments. • Mortgages on facilities that are subject to ground leases risk the collateral reverting to the ground lessor unexpectedly during the term of the loan due to such borrower’s default under, and the resulting termination of, the ground lease. • The expense of operating and owning real property, including net leased real estate assets, may impact our cash flow and our investments in net leased properties could be adversely affected by our reliance on the net leased tenants. • The leases at the properties underlying commercial real estate loans or securities or the properties held by us may not be relet or renewed on favorable terms, or at all. • Current and future venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on venture partners’ financial condition and liquidity and disputes between us and our partners. • Our investments in CMBS and other real estate-related securities are generally subject to losses. • Our determinations of fair value may have a material impact on our financial condition and results of operations.
The 100% tax does not apply to gains from the sale of foreclosure property or property that is held through a TRS or other taxable corporation, as is the case with our securitization business, although such income will be subject to tax in the hands of the corporation at regular corporate rates.
The 100% tax does not apply to gains from the sale of foreclosure property or property that is held 45 Table of Contents through a TRS or other taxable corporation, as is the case with our securitization business, although such income will be subject to tax in the hands of the corporation at regular corporate rates.
Foreclosure may create a negative public perception of the related property, resulting in a diminution of its value, and also may subject us to environmental and other liabilities associated with owning real estate, adversely affecting our ability to sell the property and potentially causing us to incur substantial remediation costs.
Foreclosure may create a negative public perception of the related property, resulting in a diminution of its value, and also may subject us to environmental and other 24 Table of Contents liabilities associated with owning real estate, adversely affecting our ability to sell the property and potentially causing us to incur substantial remediation costs.
Our securitization activities are affected by a number of factors, including our loan origination volumes, changes in loan values, quality and performance during the period such loans are on our books and conditions in the securitization and credit markets generally and at the time we seek to launch and complete our securitizations.
Our securitization activities are affected by a number of factors, including our loan origination volumes, changes in loan values, quality and performance during 28 Table of Contents the period such loans are on our books and conditions in the securitization and credit markets generally and at the time we seek to launch and complete our securitizations.
If any of our counterparties were to limit or cease operation or fail to perform under our agreements, it could lead to financial losses for us. 34 Table of Contents For example, when we finance assets in a repurchase transaction, we sell securities and/or loans to a lender in return for a cash advance.
If any of our counterparties were to limit or cease operation or fail to perform under our agreements, it could lead to financial losses for us. For example, when we finance assets in a repurchase transaction, we sell securities and/or loans to a lender in return for a cash advance.
In addition, if the underlying mortgage portfolio has been overvalued by the originating lender, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related mortgage-backed securities, the securities in which we may invest may effectively become the “first loss” position behind the more senior securities, which may result in significant 27 Table of Contents losses to us.
In addition, if the underlying mortgage portfolio has been overvalued by the originating lender, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related mortgage-backed securities, the securities in which we may invest may effectively become the “first loss” position behind the more senior securities, which may result in significant losses to us.
We rely on the efficacy of our cybersecurity policies, systems and processes developed and managed by our Cybersecurity Team in order to protect our technology assets from cybersecurity incidents and intrusions. The secure operation of our information technology (“IT”) networks and systems and the proper processing and maintenance of this information are critical to our business operations.
We rely on the efficacy of our cybersecurity/IT policies, systems and processes developed and managed by our Cybersecurity Team in order to protect our technology assets from IT outages, cybersecurity incidents and intrusions. The secure operation of our IT networks and systems and the proper processing and maintenance of this information are critical to our business operations.
Additionally, for tax years beginning after December 31, 2022, we would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including a corporate alternative minimum tax.
Additionally, for tax years beginning after December 43 Table of Contents 31, 2022, we would possibly also be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including a corporate alternative minimum tax.
Certain statements in “Risk Factors” are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this Annual Report. Summary of Principal Risk Factors Our business is subject to change, risks, and uncertainties, as described herein.
Certain statements in “Risk Factors” are forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” included elsewhere in this Annual Report. 15 Table of Contents Summary of Principal Risk Factors Our business is subject to change, risks, and uncertainties, as described herein.
Such loans may require anything from minor modifications to a substantial amount of workout negotiations and/or restructuring, which may divert attention from other activities and may entail, among other things, a substantial reduction in the interest rate and a substantial write-down of the principal of the loan.
Such loans may require anything from minor modifications to a substantial amount of workout negotiations and/or restructuring, which may divert attention from other activities and may entail, among other things, a substantial reduction in the interest rate, a substantial write-down of the principal of the loan and significant legal costs.
The market value of CLO securities may be affected by, among other things, changes in the market value of the underlying loans held by the CLO, changes in the distributions on the underlying loans, defaults and recoveries on the underlying loans, capital gains and losses on the underlying losses (or foreclosure assets), prepayments on underlying loan and the availability, prices and interest rate of underlying loans.
The market value of CLO securities may be affected by, among other things, changes in the market value of the underlying loans held by the CLO, changes in the distributions on the underlying loans, defaults and recoveries on the underlying loans, capital gains and losses on the underlying loans (or foreclosure assets), prepayments on underlying loan 35 Table of Contents and the availability, prices and interest rate of underlying loans.
Part of our strategy will involve entering into hedging transactions that may be required to be cleared under relevant Commodity Futures Trading Commission (“CFTC”) regulations and therefore subject to associated margin requirements 40 Table of Contents imposed by the applicable clearinghouse.
Part of our strategy will involve entering into hedging transactions that may be required to be cleared under relevant Commodity Futures Trading Commission (“CFTC”) regulations and therefore subject to associated margin requirements imposed by the applicable clearinghouse.
Risks Related to Our Portfolio The vast majority of the mortgage loans that we originate or purchase, and those underlying the CMBS in which we invest, are non-recourse loans and our credit management and the assets securing the loans may not be sufficient to protect us from a partial or complete loss if the borrower defaults on the loan.
Risks Related to Our Portfolio The vast majority of the mortgage loans that we originate or purchase, and those underlying the CMBS and other real estate-related securities in which we invest, are non-recourse loans and our credit management and the assets securing the loans may not be sufficient to protect us from a partial or complete loss if the borrower defaults on the loan.
The ability of a property owner, whether one of our borrowers or ourselves with respect to commercial properties we own, and our own financial performance with respect to commercial properties we own, will depend on the performance and financial 23 Table of Contents health of the underlying tenants, which may be difficult to assess or predict.
The ability of a property owner, whether one of our borrowers or ourselves with respect to commercial properties we own, and our own financial performance with respect to commercial properties we own, will depend on the performance and financial health of the underlying tenants, which may be difficult to assess or predict.
A projection of an economic downturn, for example, could cause a decline in the price of lower credit quality securities because the ability of obligors of mortgage loans underlying the mortgage-backed securities to make principal and interest payments may be impaired.
A projection of an economic downturn, for example, could cause a decline in the price of lower credit quality securities because the ability of obligors of mortgage loans underlying the mortgage-backed securities to make principal and interest payments may be 27 Table of Contents impaired.
If we, as the owner, or the borrower, were to fail to meet these obligations, the applicable tenant could abate rent or terminate the applicable lease, which may result in a loss of capital invested in, and anticipated profits from, the property.
If we, as the owner, or the borrower, were to fail to meet these obligations, the applicable tenant could abate rent or terminate the applicable lease, which may result in a loss of capital 29 Table of Contents invested in, and anticipated profits from, the property.
Under many net leases the owner of the property retains certain obligations with respect to the property, including, among other things, the responsibility for maintenance and repair of the property, to provide adequate parking, maintenance of common 29 Table of Contents areas and compliance with other affirmative covenants in the lease.
Under many net leases the owner of the property retains certain obligations with respect to the property, including, among other things, the responsibility for maintenance and repair of the property, to provide adequate parking, maintenance of common areas and compliance with other affirmative covenants in the lease.
We may also be subject to cross-default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral and foreclosure rights upon default.
We may also be subject to cross-default, set-off and acceleration rights and, with respect to collateralized debt, the posting of additional collateral and foreclosure rights upon default.
Such requirements relate to, among other things, fiduciary duties to advisory clients, maintaining an effective compliance program, conflicts of interest, recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions between an advisor and advisory clients and general anti-fraud prohibitions. LCAM currently provides investment advisory services solely to Ladder-sponsored CLO Issuers.
Such requirements relate to, among other things, assets under management, fiduciary duties to advisory clients, an effective compliance program, conflicts of interest, recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions between an advisor and advisory clients and general anti-fraud prohibitions. LCAM currently provides investment advisory services solely to Ladder-sponsored CLO Issuers.
To the extent that the SEC staff publishes new or different guidance or disagrees with our analysis with respect to any assets of our subsidiaries we have determined to be qualifying real estate assets or real estate-related assets, we may be required to adjust our strategy accordingly.
To the extent that the SEC staff publishes new or different guidance or disagrees with our analysis with respect to any assets of our 37 Table of Contents subsidiaries we have determined to be qualifying real estate assets or real estate-related assets, we may be required to adjust our strategy accordingly.
Risks Related to Our Operations We may not be able to hire and retain qualified loan originators or grow and maintain our relationships with key loan brokers, and if we are unable to do so, our ability to implement our business and growth strategies could be limited.
We may not be able to hire and retain qualified loan originators or grow and maintain our relationships with key loan brokers, and if we are unable to do so, our ability to implement our business and growth strategies could be limited.
Further, declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our basis in the related loan.
Further, 19 Table of Contents declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our basis in the related loan.
Insurance on the real estate underlying our loans and investments may not cover all losses, and this shortfall could result in both loss of cash flow from and a decrease in the asset value of the affected property.
Insurance on the real estate underlying our loans and investments may not be available or cover all losses, and this shortfall could result in both loss of cash flow from and a decrease in the asset value of the affected property.
Such a borrower under an 26 Table of Contents interim loan often has identified a transitional asset that has been under-managed, is located in a recovering market and/or requires rehabilitation or capital improvements in order to improve the value of the asset.
Such a borrower under an interim loan often has identified a transitional asset that has been under-managed, is located in a recovering market and/or requires rehabilitation or capital improvements in order to improve the value of the asset.
Except for customary non-recourse carve-outs for certain actions and environmental liability, most commercial mortgage loans, including those underlying the CMBS in which we invest, are effectively non-recourse obligations of the sponsor and borrower, meaning that there is no recourse against the assets of the borrower or sponsor other than the underlying collateral.
Except for customary non-recourse carve-outs for certain actions and environmental liability, most commercial mortgage loans, including those underlying the CMBS and other real estate-related securities in which we invest, are effectively non-recourse obligations of the sponsor and borrower, meaning that there is no recourse against the assets of the borrower or sponsor other than the underlying collateral.
The Code also places limits on our ability as a REIT to sell certain properties held for fewer than two years. Our investments in subordinate loans, subordinate participation interests in loans, preferred equity and subordinate CMBS rank junior to other senior debt and we may be unable to recover our investment in these interests.
The Code also places limits on our ability as a REIT to sell certain properties held for fewer than two years. Our investments in subordinate loans, subordinate participation interests in loans, preferred equity and subordinate and/or unrated securities rank junior to other senior debt and we may be unable to recover our investment in these interests.
We may be required to report taxable income for certain investments in excess of the economic income we ultimately realize from them. 46 Table of Contents We may acquire mortgage-backed securities in the secondary market for less than their face amount.
We may be required to report taxable income for certain investments in excess of the economic income we ultimately realize from them. We may acquire mortgage-backed securities in the secondary market for less than their face amount.
The commercial real estate mortgages and other commercial real estate-related loans we provide, the commercial mortgage loans underlying the CMBS in which we may invest, and the real estate that we own are subject to the ability of the commercial property to generate net income.
The commercial real estate mortgages and other commercial real estate-related loans we provide, the commercial mortgage loans underlying the CMBS and other real estate-related securities in which we may invest, and the real estate that we own are subject to the ability of the commercial property to generate net operating income (“NOI”).
These laws and regulations are complex, compliance with them may be costly and time consuming, and our failure to comply with any of these laws and regulations could subject us to lawsuits or government actions and damage our reputation.
These laws and regulations are complex, compliance with them may be costly and 40 Table of Contents time consuming, and our failure to comply with any of these laws and regulations could subject us to lawsuits or government actions and damage our reputation.
Increased interest rates also impact borrowers’ ability to refinance their loans at maturity and while the interest payable on 21 Table of Contents the existing fixed rate debt on our real estate portfolio and corporate bonds becomes relatively cheaper with higher market interest rates, we may have to refinance this debt at higher rates at maturity.
Increased interest rates also impact borrowers’ ability to refinance their loans at maturity and while the interest payable on the existing fixed rate debt on our real estate portfolio and corporate bonds becomes relatively cheaper with higher market interest rates, we may have to refinance this debt at higher rates at maturity.
Service providers to securitizations, such as trustees, loan servicers, bond insurance providers, and custodians, as well as our operating partners and 22 Table of Contents their property managers, may not perform in a manner that promotes our interests. Delay of foreclosures could delay resolution and increase ultimate loss severities, as a result.
Service providers to securitizations, such as trustees, loan servicers, bond insurance providers, and custodians, as well as operating partners and property managers, may not perform in a manner that promotes our interests. As a result, delay of foreclosures could delay resolution and increase ultimate loss severities.
Additionally, higher insurance costs will reduce the net operating income of the properties underling our debt and equity investments, increasing the risks of delinquency, foreclosure and default, which could adversely affect our return on investment and result in losses to us. Provisions for loan losses are difficult to estimate.
Additionally, higher insurance costs will reduce the NOI of the properties underling our debt and equity investments, increasing the risks of delinquency, foreclosure and default, which could adversely affect our return on investment and result in losses to us. Provisions for loan losses are difficult to estimate.
Although we have not requested and we do not intend to request a ruling from the IRS as to our REIT qualification, in connection with various corporate initiatives we have received opinions from Skadden, Arps, Slate, Meagher & Flom LLP 42 Table of Contents (“Skadden”) and Kirkland & Ellis LLP (“Kirkland”) with respect to our qualification as a REIT.
Although we have not requested and we do not intend to request a ruling from the IRS as to our REIT qualification, in connection with various corporate initiatives we have received opinions from Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) and Kirkland & Ellis LLP (“Kirkland”) with respect to our qualification as a REIT.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeLadder regularly updates the risk assessment in order to inform Ladder’s cybersecurity program and controls and to prioritize risk mitigation and remediation in an evolving threat landscape. Ladder maintains cybersecurity policies and procedures designed to manage these risks and ensure that the Cybersecurity Team and other relevant employees are informed of cybersecurity incidents in a timely manner.
Biggest changeLadder maintains cybersecurity policies and procedures designed to manage these risks and ensure that the Cybersecurity Team and other relevant employees are informed of cybersecurity incidents in a timely manner. These policies include incident response, data classification, physical and network security polices, remote access, record retention and secure destruction policies.
“Risk Factors” for additional information. Ladder leverages a senior cybersecurity team (the “Cybersecurity Team”) comprised of the Chief Technology Officer (“CTO”), Chief Administrative Officer and General Counsel, Chief Compliance Officer and Senior Regulatory Counsel, as well as senior representatives from Ladder’s outsourced technology firm.
“Risk Factors” for additional information. Ladder leverages a senior cybersecurity team (the “Cybersecurity Team”) comprised of the Chief Technology Officer (“CTO”), Chief Administrative Officer and General Counsel (the “GC”), Chief Compliance Officer (the “CCO”) and Senior Regulatory Counsel, as well as senior representatives from Ladder’s outsourced technology firm.
Refer to the risk factor captioned “Cybersecurity threats or other security breaches could cause significant business disruption and could possibly compromise sensitive information belonging to us or our employees, borrowers, clients and other counterparties, and along with the emerging use of artificial intelligence (“AI”), could harm our business and our reputation and subject us to regulatory scrutiny” in Part I, Item 1A.
Refer to the risk factor captioned “Cybersecurity threats or other security breaches could cause significant business disruption and could possibly compromise sensitive information belonging to us or our employees, borrowers, clients and other counterparties, along with the emerging use of AI, could harm our business and our reputation and subject us to regulatory scrutiny” in Part I, Item 1A.
These policies include incident response, data classification, physical and network security polices, remote access, record retention and secure destruction policies. The Cybersecurity Team conducts a formal evaluation of Ladder’s applicable policies and cyber risks and mitigants on at least an annual basis. Ladder’s outsourced technology firm, as well as internal auditors, participate in this evaluation.
The Cybersecurity Team conducts a formal evaluation of Ladder’s applicable policies and cyber risks and mitigants on at least an annual basis. Ladder’s outsourced technology firm, as well as internal auditors, participate in this evaluation.
Ladder’s CTO has over 20 years of experience in the design, engineering, implementation, and management of information technology, including as the founder of an IT managed servicer provider for professional and financial services companies. 50 Table of Contents Ladder conducts routine risk assessments to identify cyber threats and vulnerabilities and assess the likelihood of occurrence and severity of the impact of such threats and vulnerabilities on the Company.
Ladder’s CTO has over 20 years of experience in the design, 51 Table of Contents engineering, implementation, and management of information technology, including as the founder of an IT managed servicer provider for professional and financial services companies.
Added
The GC helped establish and continues to oversee the Company’s cybersecurity risk management framework, including a best practice approach to cybersecurity governance, testing and diligence. The CCO helps ensure adherence to regulatory standards and helps refine our cybersecurity policies and training initiatives.
Added
Ladder conducts routine risk assessments to identify cyber threats and vulnerabilities and assess the likelihood of occurrence and severity of the impact of such threats and vulnerabilities on the Company. Ladder regularly updates the risk assessment in order to inform Ladder’s cybersecurity program and controls and to prioritize risk mitigation and remediation in an evolving threat landscape.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease our corporate headquarters office at 320 Park Avenue, 15th Floor, New York, New York, 10022. The Company also leases regional offices in Los Angeles, California and Miami, Florida. Refer to Schedule III included in Item 8 of this Annual Report on Form 10-K for a listing of investment properties owned as of December 31, 2023.
Biggest changeItem 2. Properties We lease our corporate headquarters office at 320 Park Avenue, 15th Floor, New York, New York, 10022. The Company also leases a regional office in Miami, Florida. Refer to Schedule III included in Item 8 of this Annual Report on Form 10-K for a listing of investment properties owned as of December 31, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards. Item 4. Mine Safety Disclosures Not applicable. 51 Table of Contents Part II
Biggest changeWe maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards. 52 Table of Contents Item 4. Mine Safety Disclosures Not applicable. 53 Table of Contents Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table presents information with respect to repurchases of Class A common stock of the Company made during the three months ended December 31, 2023 ($ in thousands, except per share data and average price paid per share): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2) October 1, 2023 - October 31, 2023 — $ — — $ 44,255,768 November 1, 2023 - November 30, 2023 — — — 44,255,768 December 1, 2023 - December 31, 2023 — — — 44,255,768 Total — $ — — $ 44,255,768 (1) In July 2022, our board of directors renewed the Company’s ability to repurchase up to $50.0 million of the Company’s Class A common stock from time to time.
Biggest changeThe following table presents information with respect to repurchases of Class A common stock of the Company made during the three months ended December 31, 2024 ($ in thousands, except average price paid per share): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2) October 1, 2024 - October 31, 2024 14,131 $ 11.23 14,131 $ 73,439 November 1, 2024 - November 30, 2024 69,000 11.43 69,000 72,651 December 1, 2024 - December 31, 2024 448,369 11.26 448,369 67,604 Total 531,500 $ 11.28 531,500 $ 67,604 (1) On April 24, 2024, the board of directors authorized the repurchase of $75.0 million of the Company’s Class A common stock from time to time without further approval.
Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.
(2) Amount excludes commissions paid associated with share repurchases. 52 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans The following table summarizes information, as of December 31, 2023, relating to the 2014 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2014 Omnibus Incentive Plan”) pursuant to which equity securities of the Company were authorized for issuance.
(2) Amount excludes commissions paid associated with share repurchases. 54 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans The following table summarizes information, as of December 31, 2024, relating to the 2014 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2014 Omnibus Incentive Plan”) and 2023 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2023 Omnibus Incentive Plan”) pursuant to which equity securities of the Company were authorized for issuance.
Prior to that time, there was no public market for our Class A common stock. The following graph compares total shareholder returns, assuming reinvestment of dividends, for the period December 31, 2018 through December 31, 2023 to the Bloomberg REIT Mortgage Index and the Standard & Poor’s Index (“S&P 500 Index”).
Prior to that time, there was no public market for our Class A common stock. The following graph compares total shareholder returns, assuming reinvestment of dividends, for the period December 31, 2019 through December 31, 2024 to the FTSE NAREIT Mortgage REIT Index, the Standard & Poor’s Index (“S&P 500 Index”) and the Bloomberg REIT Mortgage Index.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock trades on the NYSE under the symbol “LADR.” Holders On February 2, 2024, the Company had 25 Class A common shareholders of record. This does not include the beneficial ownership of shares held in nominee name.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock trades on the NYSE under the symbol “LADR.” Holders On January 31, 2025, the Company had 20 Class A common shareholders of record. This does not include the beneficial ownership of shares held in nominee name.
As of December 31, 2023, the Company has a remaining amount available for repurchase of $44.3 million, which represents 3.0% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.51 per share on such date.
As of December 31, 2024, the Company has a remaining amount available for repurchase of $67.6 million, which represents 4.8% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.19 per share on such date.
The closing price per share of Class A common stock on February 2, 2024 was $10.79. On February 2, 2024, the Company had no Class B common shareholders of record and no Class B common stock outstanding.
The closing price per share of Class A common stock on January 31, 2025 was $11.21. On January 31, 2025, the Company had no Class B common shareholders of record and no Class B common stock outstanding.
During the year ended December 31, 2023, the Company repurchased 269,000 shares of Class A common stock at an average of $9.22 per share for a total aggregate purchase price of $2.5 million.
During the year ended December 31, 2024, the Company repurchased 711,191 shares of Class A common stock at an average of $11.31 per share for a total aggregate purchase price of $8.0 million.
Stock Repurchases On July 27, 2022, the board of directors authorized the repurchase of $50.0 million of the Company’s Class A common stock from time to time without further approval. This authorization voided the remaining unused buyback capacity per the August 4, 2021 authorization, and increased the remaining authorization at the time from $39.5 million to $50.0 million.
Stock Repurchases On April 24, 2024, the board of directors authorized the repurchase of $75.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the July 27, 2022 authorization from $43.6 million to $75.0 million.
The past shareholder return shown on the following graph is not necessarily indicative of future performance. 53 Table of Contents Total Shareholder Returns Based upon initial investment of $100 on December 31, 2018 (1) Ladder Capital Corp Bloomberg REIT Mortgage Index S&P 500 Index December 31, 2018 $ 100.00 $ 100.00 $ 100.00 December 31, 2019 $ 125.40 $ 122.05 $ 128.88 December 31, 2020 $ 78.09 $ 96.09 $ 149.83 December 31, 2021 $ 97.54 $ 109.48 $ 190.13 December 31, 2022 $ 90.63 $ 90.04 $ 153.16 December 31, 2023 $ 106.08 $ 97.32 $ 190.27 (1) Dividend reinvestment is assumed at quarter end.
The past shareholder return shown on the following graph is not necessarily indicative of future performance. 55 Table of Contents Total Shareholder Returns Based upon initial investment of $100 on December 31, 2019 (1) Ladder Capital Corp FTSE NAREIT Mortgage REIT Index S&P 500 Index Bloomberg REIT Mortgage Index (2) December 31, 2019 $ 100.00 $ 100.00 $ 100.00 $ 100.00 December 31, 2020 $ 59.42 $ 79.57 $ 116.26 $ 76.65 December 31, 2021 $ 76.11 $ 91.00 $ 147.52 $ 88.69 December 31, 2022 $ 70.18 $ 69.23 $ 118.84 $ 71.20 December 31, 2023 $ 83.43 $ 80.07 $ 147.64 $ 77.75 December 31, 2024 $ 86.75 $ 78.16 $ 182.05 $ 74.59 (1) Dividend reinvestment is assumed at quarter end.
The closing price of the Company’s Class A common stock on December 31, 2018 (on which the graph is based) was $15.47.
We retained the Bloomberg REIT Mortgage Index for this year for comparison purposes until the index was no longer available, but will not include that index in our stock performance graph going forward. The closing price of the Company’s Class A common stock on December 31, 2019 (on which the graph is based) was $18.04.
Removed
New awards will be issued under the 2023 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2023 Omnibus Incentive Plan”).
Added
For this Annual Report, the Company has changed its comparable REIT Index from the Bloomberg REIT Mortgage Index to the FTSE NAREIT Mortgage REIT Index, given the Bloomberg REIT Mortgage Index was discontinued in 2024.
Added
(2) Bloomberg REIT Mortgage Index was discontinued on February 29, 2024. Returns are shown until its discontinuation. Item 6. [Reserved] 56 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSet forth below is an unaudited reconciliation of income (loss) before taxes to distributable earnings (in thousands): 71 Table of Contents Year Ended December 31 December 31 2023 2022 Income (loss) before taxes $ 104,745 $ 170,214 Net (income) loss attributable to noncontrolling interests in consolidated ventures (GAAP) 624 (23,088) Our share of real estate depreciation, amortization and gain adjustments (1) 18,602 (29,188) Adjustments for derivative results (2) 716 (9,381) Unrealized (gain) loss on fair value securities (29) 86 Adjustment for economic gain on loan sales not recognized under GAAP for which risk has been substantially transferred, net of reversal/amortization (604) 1,356 Adjustment for impairment (3) 25,096 6,816 Non-cash stock-based compensation 18,577 31,584 Distributable earnings $ 167,727 $ 148,399 (1) The following is a reconciliation of GAAP depreciation and amortization to our share of real estate depreciation, amortization and gain adjustments ($ in thousands): Year Ended December 31, December 31, 2023 2022 Total GAAP depreciation and amortization $ 29,914 $ 32,673 Less: Depreciation and amortization related to non-rental property fixed assets (431) (42) Less: Non-controlling interests in consolidated ventures’ share of depreciation and amortization and adjustment for passive interest in unconsolidated ventures (1,068) (1,943) Our share of real estate depreciation and amortization 28,415 30,688 Realized gain from accumulated depreciation and amortization on real estate sold (8,016) (68,992) Less: Non-controlling interests in consolidated ventures’ share of accumulated depreciation and amortization on real estate sold — 10,879 Accumulated depreciation and amortization on real estate sold (a) (8,016) (58,113) Less: Our share of operating lease income on above/below market lease intangible amortization (1,797) (1,763) Our share of real estate depreciation, amortization and gain adjustments $ 18,602 $ (29,188) (a) GAAP gains/losses on sales of real estate include the effects of previously recognized real estate depreciation and amortization.
Biggest changeFor 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. 72 Table of Contents Set forth below is an unaudited reconciliation of income (loss) before taxes to distributable earnings (in thousands): Year Ended December 31 December 31 2024 2023 Income (loss) before taxes $ 110,895 $ 104,745 Net (income) loss attributable to noncontrolling interests in consolidated ventures 808 624 Our share of real estate depreciation, amortization and gain adjustments (1) 11,558 18,602 Adjustments for derivative results and loan sale activity (2) 2,005 112 Unrealized (gain) loss on fair value securities 925 (29) Adjustment for impairment (3) 13,933 25,096 Non-cash stock-based compensation 18,829 18,577 Distributable earnings prior to charge-off of allowance for credit losses $ 158,953 $ 167,727 Charge-off of allowance for credit losses (3) (5,023) — Distributable earnings $ 153,930 $ 167,727 (1) The following is an unaudited 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): Year Ended December 31, December 31, 2024 2023 Total GAAP depreciation and amortization $ 32,327 $ 29,914 Depreciation and amortization related to non-rental property fixed assets (440) (431) Non-controlling interests in consolidated ventures’ share of depreciation and amortization (441) (410) Our share of operating lease income from above/below market lease intangible amortization (1,700) (1,797) Our share of real estate depreciation and amortization 29,746 27,276 Accumulated depreciation and amortization on real estate sold (a) (18,267) (8,016) Adjustment for (earnings) loss from investments in unconsolidated ventures in excess of distributions received 79 (658) Our share of real estate depreciation, amortization and gain adjustments $ 11,558 $ 18,602 (a) GAAP gains/losses on sales of real estate include the effects of previously-recognized real estate depreciation and amortization.
We believe distributable earnings assists 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 securitization gains and changes in the values of assets and derivatives.
We believe distributable earnings assists 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.
The Company’s critical accounting policies are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Company’s financial results. For all of these estimates, we caution that future events rarely develop exactly as forecasted and, therefore, routinely require adjustment.
The Company’s critical accounting estimates are those which require assumptions to be made about matters that are highly uncertain. Different estimates could have a material effect on the Company’s financial results. For all of these estimates, we caution that future events rarely develop exactly as forecasted and, therefore, routinely require adjustment.
Interest income on non-accrual loans in which the Company reasonably expects a full recovery of the loan’s outstanding principal balance is recognized when received in cash. Otherwise, income recognition will be suspended and any cash received will be applied as a reduction to the amortized cost basis.
Interest income on non-accrual loans in which the Company reasonably expects a recovery of the loan’s outstanding principal balance is recognized when received in cash. Otherwise, income recognition will be suspended and any cash received will be applied as a reduction to the amortized cost basis.
Unencumbered Assets As of December 31, 2023, we held unencumbered cash of $1.0 billion, unencumbered loans of $1.1 billion, unencumbered securities of $342.8 million, unencumbered real estate of $160.8 million and $394.2 million of other assets not encumbered by any portion of secured indebtedness.
As of December 31, 2023, we held unencumbered cash and cash equivalents of $1.0 billion, unencumbered loans of $1.1 billion, unencumbered securities of $342.8 million, unencumbered real estate of $160.8 million and $394.2 million of other assets not encumbered by any portion of secured indebtedness.
Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios. We believe we were in compliance with all covenants as of December 31, 2023. We have the option to extend some of our existing facilities subject to a number of customary conditions.
Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios. We believe we were in compliance with all covenants as of December 31, 2024. We have the option to extend some of our existing facilities subject to a number of customary conditions.
Because of these limitations, distributable earnings should not be considered in isolation or as a substitute for net income (loss) attributable to shareholders or any other performance measures calculated in accordance with GAAP, or as an alternative to cash flows from operations as a measure of our liquidity.
Because of these limitations, distributable earnings should not be considered in isolation or as a substitute for net income (loss) attributable to shareholders 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 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 distributable earnings should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. 73 Table of Contents
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 distributable earnings should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. 74 Table of Contents
A discussion regarding our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
A discussion regarding our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Acquisition of Real Estate We generally acquire real estate assets or land and development assets through purchases and may also acquire such assets through foreclosure or deed-in-lieu of foreclosure in full or partial satisfaction of defaulted loans. Purchased properties are classified as real estate, net or land and development, net on our consolidated balance sheets.
Acquisition of Real Estate We generally acquire real estate assets or land and development assets through purchases and may also acquire such assets through foreclosure or deed-in-lieu of foreclosure (collectively, “foreclosure”) in full or partial satisfaction of defaulted loans. Purchased properties are classified as real estate, net or land and development, net on our consolidated balance sheets.
For borrowings with variable interest rates, we used the rates in effect as of December 31, 2023 to determine the future interest payment obligations. (4) Comprised primarily of our off-balance sheet unfunded commitment to provide additional first mortgage loan financing as of December 31, 2023.
For borrowings with variable interest rates, we used the rates in effect as of December 31, 2024 to determine the future interest payment obligations. (4) Comprised primarily of our off-balance sheet unfunded commitment to provide additional first mortgage loan financing as of December 31, 2024.
We were in compliance with all covenants as of December 31, 2023 and December 31, 2022. Further, certain of our financing arrangements and loans on our real property are secured by the assets of the Company, including pledges of the equity of certain subsidiaries or the assets of certain subsidiaries.
We were in compliance with all covenants as of December 31, 2024 and December 31, 2023. Further, certain of our financing arrangements and loans on our real property are secured by the assets of the Company, including pledges of the equity of certain subsidiaries or the assets of certain subsidiaries.
For collateral dependent loans, the Company may elect a practical expedient which allows the Company to measure expected losses based on the difference between the collateral’s fair value and the amortized cost basis of the loan.
For collateral dependent loans, the Company may elect a practical expedient that allows the Company to measure expected losses based on the difference between the collateral’s fair value and the amortized cost basis of the loan.
Impairments of intangibles are recorded in impairment of assets in our consolidated statements of income. Impairment or Disposal of Long-lived Assets Real estate assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less costs to sell and are included in real estate held for sale on our consolidated balance sheets.
Impairments of intangibles are recorded in impairment of assets in our consolidated statements of income. 70 Table of Contents Impairment or Disposal of Long-lived Assets Real estate assets to be disposed of are reported at the lower of their carrying amount or estimated fair value less costs to sell and are included in real estate held for sale on our consolidated balance sheets.
We often borrow at a lower percentage of the collateral asset’s value than the maximum leaving us with excess 62 Table of Contents borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis.
We often borrow at a lower percentage of the collateral asset’s value than the maximum leaving us with excess borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis.
The CECL accounting estimate is subject to uncertainty as a result of changing macroeconomic market conditions, as well as the vintage and location of the underlying assets as disclosed in Note 3, Mortgage Loan Receivables, to our consolidated financial statements included elsewhere in this Annual Report.
The CECL accounting estimate is subject to uncertainty as a result of changing macro-economic market conditions, as well as the vintage and location of the underlying assets as disclosed in Note 3, Mortgage Loan Receivables, to our consolidated financial statements included elsewhere in this Annual Report.
Generally, when granting concessions, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessions granted should conditions impacting the loan improve.
Generally, when modifying loans, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessions granted should conditions impacting the loan improve.
Activity for the year ended December 31, 2023 included securities purchases of $144.0 million, sales of $17.8 million and $232.1 million of amortization and paydowns, which contributed to a net decrease in our securities portfolio of $102.0 million.
Activity for the year ended December 31, 2023 included securities purchases of $144.0 million, sales of $17.8 million and $232.1 million of amortization and paydowns, which 58 Table of Contents contributed to a net decrease in our securities portfolio of $102.0 million.
As of December 31, 2023, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $2.1 million were included in CLO debt as of December 31, 2023.
Unamortized debt issuance costs of $0.1 million were included in CLO debt as of December 31, 2024. As of December 31, 2023, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets.
For purposes of distributable earnings, our share of real estate depreciation and amortization is eliminated and, accordingly, the resultant gain/losses also must be adjusted.
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.
A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed July 2021 Loans, including the right to appoint and replace the special servicer under the CLO.
A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the loans in the CLO, including the right to appoint and replace the special servicer under the CLO.
The increase in the provision associated with the general reserve during the year ended December 31, 2023 was primarily due to adverse changes in macroeconomic conditions affecting commercial real estate, partially offset by a decrease in the size of our balance sheet first mortgage loans as a result of repayments.
The increase in provision associated with the general reserve during the year ended December 31, 2023 was primarily due to adverse changes in macroeconomic market conditions affecting commercial real estate partially offset by a decrease in the size of our balance sheet first mortgage loan portfolio as a result of repayments.
This amount excludes $128.6 million of future funding commitments that require the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching a pre-determined net operating income which may or may not be achieved.
This amount excludes $30.9 million of future funding commitments that require the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching a pre-determined net operating income which may or may not be achieved.
In order for the Company to maintain its qualification as a REIT under the 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 order for the Company to maintain its qualification as a REIT under the Internal Revenue Code of 1986, as amended, 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.
Uncommitted Securities Facilities We are a party to multiple master repurchase agreements with several counterparties to finance our investments in CMBS and U.S. Agency securities. The securities that served as collateral for these borrowings are highly liquid and marketable assets that are typically of relatively short duration.
Uncommitted Securities Facilities We are a party to multiple master repurchase agreements with several counterparties to finance our investments in securities. The securities that served as collateral for these borrowings are highly liquid and marketable assets that are typically of relatively short duration.
(2) Total does not include $1.1 billion of consolidated CLO debt obligations and the related debt issuance costs of $2.1 million, as the satisfaction of these liabilities will not require cash outlays from us. (3) Comprised of interest on secured financings and on senior unsecured notes.
(2) Total does not include $601.5 million of consolidated CLO debt obligations and the related debt issuance costs of $0.1 million, as the satisfaction of these liabilities will not require cash outlays from us. (3) Comprised of interest on secured financings and on senior unsecured notes.
As discussed in Note 2, Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report, we do not designate derivatives as hedges to qualify for hedge accounting and, therefore, any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement.
As discussed in Note 2, Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report, 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.
There were no properties classified as held for sale as of December 31, 2023 and December 31, 2022. We did not record any impairments of real estate for the years ended December 31, 2023 or December 31, 2022.
There were no properties classified as held for sale as of December 31, 2024 or December 31, 2023. We did not record any impairments of real estate for the years ended December 31, 2024 or December 31, 2023.
Reconciliation of Non-GAAP Financial Measures Distributable Earnings The Company utilizes distributable earnings, a non-GAAP financial measure, as a supplemental measure of our operating performance.
The Company utilizes distributable earnings, a non-GAAP financial measure, as a supplemental measure of our operating performance.
As of December 31, 2022, collateral for the borrowings was comprised primarily of $248.8 million of CMBS. Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought.
As of December 31, 2023, collateral for the borrowings was comprised primarily of $140.3 million of CMBS. Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought.
Refer to Note 10, Equity Structure and Accounts, to our consolidated financial statements included elsewhere in this Annual Report, for disclosure of the Company’s repurchase activity.
Refer to Note 10, Equity, to our consolidated financial statements included elsewhere in this Annual Report, for disclosure of the Company’s repurchase activity.
Refer to Note 10, Equity Structure and Accounts, to our consolidated financial statements included elsewhere in this Annual Report, for disclosure of dividends declared. Principal Repayments on Investments We receive principal amortization on our loans and securities as part of the normal course of our business.
Refer to Note 10, Equity, to our consolidated financial statements included elsewhere in this Annual Report, for disclosure of dividends declared. 66 Table of Contents Principal Repayments on Investments We receive principal amortization on our loans and securities as part of the normal course of our business.
The Notes are presented net of unamortized debt issuance costs of $11.8 million and $15.4 million as of December 31, 2023 and December 31, 2022, respectively. The Notes require interest payments semi-annually in cash in arrears, are unsecured, and are subject to an unencumbered assets to unsecured debt covenant.
The Notes are presented net of unamortized debt issuance costs of $16.5 million and $11.8 million as of December 31, 2024 and December 31, 2023, respectively. The Notes require interest payments semi-annually in cash in arrears, are unsecured, and are subject to an unencumbered assets to unsecured debt covenant.
Largely as a result of this restriction, approximately $0.8 billion of Tuebor’s member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at December 31, 2023. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.
Largely as a result of this restriction, approximately $931.5 million of Tuebor’s member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at December 31, 2024. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.
A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and future principal and coupon interest are reasonably assured to be received in accordance with the contractual loan terms. A loan will be written off when management has determined principal and coupon interest is no longer realizable and deemed non-recoverable.
A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and future principal and coupon interest are reasonably assured to be received. A loan will be charged-off when management has determined principal and coupon interest is no longer realizable and deemed non-recoverable.
Net cash provided by operating activities of $180.6 million was primarily driven by net interest income and increases in net operating income on our real estate portfolio.
Net cash provided by operating activities of $133.9 million was primarily driven by net interest income and net increases in operating income on our real estate portfolio.
When we intend to hold, operate or develop the property for a period of at least 12 months, the asset is classified as real estate, net, and if the asset meets the held-for-sale criteria, the asset is classified as real estate held for sale.
When we intend to hold, operate or develop the property for a period of at least 12 months, the asset is classified as real estate, net, and if the asset meets the held-for-sale criteria, the asset is classified as real estate held for sale. Upon purchase, the properties are recorded at cost.
The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company believes it was in compliance with all covenants of the Notes as of December 31, 2023 and 2022.
The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company believes it was in compliance with all covenants of the Notes as of 65 Table of Contents December 31, 2024 and 2023.
The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. The Company recorded $0.6 million and $0.7 million and $1.4 million of premium amortization, which decreased interest expense for the years ended December 31, 2023, 2022, and 2021 respectively.
The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. The Company recorded $0.8 million and $0.6 million of premium amortization, which decreased interest expense for the years ended December 31, 2024 and 2023, respectively.
Committed Loan Facilities We are a party to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity as of December 31, 2023. As of December 31, 2023, the Company had $605.0 million of borrowings outstanding, with an additional $637.0 million of committed financing available.
Committed Loan Facilities We are a party to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity as of December 31, 2024. As of December 31, 2024, the Company had $62.7 million of borrowings outstanding, with an additional $1.1 billion of committed financing available.
On December 2, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans (“Contributed December 2021 Loans”) at a maximum 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis.
On December 2, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans at a maximum 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO.
As of December 31, 2023, we had outstanding borrowings secured by our mortgage loan receivables equal to 53.1% of the carrying value of our mortgage loan receivables, compared to 43.0% as of December 31, 2022. As of December 31, 2023, the weighted average yield on our securities was 6.1%, compared to 5.2% as of December 31, 2022.
As of December 31, 2024, we had outstanding borrowings secured by our mortgage loan receivables equal to 42.4% of the carrying value of our mortgage loan receivables, compared to 53.1% as of December 31, 2023. As of December 31, 2024 the weighted average yield on our securities was 6.0%, compared to 6.1% as of December 31, 2023.
These mortgage loans have carrying amounts of $437.8 million and $498.0 million, net of unamortized premiums of $1.8 million and $2.4 million as of December 31, 2023 and December 31, 2022, respectively, representing proceeds received upon financing greater than the contractual amounts due under these agreements.
These mortgage loans have carrying amounts of $446.4 million and $437.8 million, net of unamortized premiums of $3.7 million and $1.8 million as of December 31, 2024 and December 31, 2023, respectively, representing proceeds received upon financing greater than the contractual amounts due under these agreements.
As of December 31, 2022, our off-balance sheet arrangements consisted of $321.8 million of unfunded commitments of mortgage loan receivables held for investment to provide additional first mortgage loan financing.
As of December 31, 2023, our off-balance sheet arrangements consisted of $204.0 million of unfunded commitments of mortgage loan receivables held for investment to provide additional first mortgage loan financing.
As of December 31, 2023, we had outstanding borrowings secured by our real estate equal to 60.3% of the carrying value of our real estate, compared to 71.1% as of December 31, 2022.
As of December 31, 2024, we had outstanding borrowings secured by our real estate equal to 66.6% of the carrying value of our real estate, compared to 60.3% as of December 31, 2023.
These non-recourse debt agreements provide for secured financing at rates ranging from 4.39% to 9.03%, and, as of December 31, 2023, have anticipated maturity dates between 2024 - 2031, with an average term of 3.1 years.
These non-recourse debt agreements provide for secured financing at rates ranging from 4.39% to 8.09%, and, as of December 31, 2024, have anticipated maturity dates between 2025 and 2034, with an average term of 3.8 years.
The allowance for loan losses at December 31, 2023 and December 31, 2022 was $43.9 million and $21.5 million, respectively. The allowance includes $0.7 million of reserves for unfunded commitments at December 31, 2023 and December 31, 2022. The estimate is sensitive to the assumptions used to represent future expected economic conditions.
The allowance includes $0.5 million and $0.7 million of reserves for unfunded commitments at December 31, 2024 and December 31, 2023, respectively. The estimate is sensitive to the assumptions used to represent future expected economic conditions.
The Company’s loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis.
As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis.
Gain on extinguishment of debt totaled $0.7 million for the year ended December 31, 2022.
Gain on extinguishment of debt totaled $10.7 million for the year ended December 31, 2023.
Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.
Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties.
As more fully discussed in Note 2, Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report, our investments in Agency interest-only securities and equity securities are recorded at fair value with changes in fair value recorded in current period earnings.
As more fully discussed in Note 2, Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report, we invest in certain securities that are recorded at fair value with changes in fair value recorded in current period earnings.
We acquired $87.6 million in real estate via foreclosure and received proceeds from the sale of real estate of $43.3 million as a result of the sale of one investment. In addition, we purchased $5.2 billion of short-term U.S.
We acquired $87.6 million in real estate via foreclosure and received proceeds from the sale of real estate of $43.3 million as a result of the sale of one investment. In addition, we purchased $5.2 billion of short-term U.S. Treasury securities during the year ended December 31, 2023, of which $4.3 billion matured during the year ended December 31, 2023.
Repayment of mortgage loan receivables provided net cash of $738.5 million for the year ended December 31, 2023 and $909.8 million for the year ended December 31, 2022. Repayment of real estate securities provided net cash of $232.1 million for the year ended December 31, 2023, and $184.8 million for the year ended December 31, 2022.
Repayment of mortgage loan receivables provided net cash of $1.6 billion for the year ended December 31, 2024 and $738.5 million for the year ended December 31, 2023. Repayment of real estate securities provided net cash of $276.6 million for the year ended December 31, 2024, and $232.1 million for the year ended December 31, 2023.
As of December 31, 2023, our off-balance sheet arrangements consisted of $204.0 million of unfunded commitments of mortgage loan receivables held for investment, 63% of which additional funds relate to the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income.
As of December 31, 2024, our off-balance sheet arrangements consisted of $34.6 million of unfunded commitments of mortgage loan receivables held for investment. 89% of these unfunded commitments require the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income.
As of December 31, 2023, the Company has a remaining amount available for repurchase of $44.3 million, which represents 3.0% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.51 per share on such date.
As of December 31, 2024, the Company has a remaining amount available for repurchase of $67.6 million, which represents 4.8% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.19 per share on such date.
With regard to securities valuation, distributable earnings includes a decline in fair value deemed to be an impairment for GAAP purposes only if the decline is determined 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.
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.
To ensure that Ladder can effectively address the funding needs of the Company on a timely basis, we maintain a diverse array of liquidity sources including: (1) cash and cash equivalents; (2) cash generated from operations; (3) proceeds from the issuance of the unsecured bonds; (4) borrowings under repurchase agreements; (5) principal repayments on investments including mortgage loans and securities; (6) borrowings under our Revolving Credit Facility; (7) proceeds from securitizations and sales of loans; (8) proceeds from the sale of securities; (9) proceeds from the sale of real estate; (10) proceeds from the issuance of CLO debt and other non-mark-to-market loan financing; and (11) proceeds from the issuance of equity capital.
To ensure that Ladder can effectively address the funding needs of the Company on a timely basis, we maintain a diverse array of liquidity sources including: (1) cash and cash equivalents; (2) cash generated from operations; (3) proceeds from debt financing; (4) principal repayments on investments including mortgage loans and securities; (5) proceeds from securitizations and sales of loans; (6) proceeds from the sale of securities; (7) proceeds from the sale of real estate; and (8) proceeds from the issuance of equity capital.
We believe that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.
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.
The Company designates a loan as a non-accrual loan generally when: (i) the principal or coupon interest components of loan payments become 90-days past due; or (ii) in the opinion of the Company, it is doubtful the Company will be able to collect all principal and coupon interest due according to the contractual terms of the loan.
The Company designates a loan as a non-accrual loan generally when: (i) the principal or coupon interest components of loan payments become 90-days past due; or (ii) in the opinion of the Company, recovery of principal and coupon interest is doubtful.
There was a $(0.3) billion decrease in average loan investments from $3.9 billion for the year ended December 31, 2022 to $3.6 billion for the year ended December 31, 2023. There was a $(152.6) million decrease in average securities investments from $648.1 million for the year ended December 31, 2022 to $495.5 million for the year ended December 31, 2023.
There was a $1.1 billion decrease in average loan investments from $3.6 billion for the year ended December 31, 2023 to $2.5 billion for the year ended December 31, 2024. There was a $151.9 million increase in average securities investments from $495.5 million for the year ended December 31, 2023 to $647.4 million for the year ended December 31, 2024.
During the year ended December 31, 2023, we did not sell any conduit loans and recorded $0.5 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans.
During the year ended December 31, 2024, we recorded $29.8 thousand of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the year ended December 31, 2023, we recorded $0.5 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans.
During the year ended December 31, 2022, the Company retired: (1) $4.0 million of principal of the 2025 Notes for a repurchase price of $3.7 million, recognizing a $0.3 million net gain on extinguishment of debt after recognizing $(23) thousand of unamortized debt issuance costs associated with the retired debt; (2) $1.0 million of principal of the 2027 Notes for a repurchase price of $0.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $(9) thousand of unamortized debt issuance costs associated with the retired debt; and (3) $1.0 million of principal of the 2029 Notes for a repurchase price of $0.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $(14) thousand of unamortized debt issuance costs associated with the retired debt.
During the year ended December 31, 2024, the Company retired: (1) $32.1 million of principal of the 2025 Notes for a repurchase price of $32.0 million, recognizing an $11 thousand net gain on extinguishment of debt after recognizing $51 thousand of unamortized debt issuance costs associated with the retired debt; and (2) $2.0 million of principal of the 2029 Notes for a repurchase price of $1.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $21 thousand of unamortized debt issuance costs associated with the retired debt.
Stock Repurchases On July 27, 2022, the board of directors authorized the repurchase of $50.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the August 4, 2021 authorization from $39.5 million to $50.0 million.
Stock Repurchases On April 24, 2024, the board of directors authorized the repurchase of $75.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the July 27, 2022 authorization from $43.6 million to $75.0 million.
Interest Rate Environment The nature of the Company’s business exposes it to market risk arising from changes in interest rates. Changes, both increases and decreases, in the rates the Company is able to charge its borrowers, the yields the Company is able to achieve in its securities investments, and the Company’s cost of borrowing directly impacts its net income.
Changes, both increases and decreases, in the rates the Company is able to charge its borrowers, the yields the Company is able to achieve in its securities investments, and the Company’s cost of borrowing directly impacts its net income. The Company’s net interest income includes interest from both fixed and floating rate debt.
Net cash provided by investing activities of $81.6 million was driven by $909.8 million of repayment from mortgage loan receivables, $310.5 million proceeds from the sale of real estate, $184.8 million in repayments on securities, and $5.8 million of proceeds from sale of securities, partially offset by $(1.2) billion of origination of mortgage loans held for investment and $(96.2) million in purchases of securities.
Net cash provided by investing activities of $932.8 million was driven by $1.6 billion of repayment from mortgage loan receivables, $276.6 million in repayments on securities, $102.3 million in proceeds from sale of real estate and $32.2 million of proceeds from sale of securities, partially offset by $(898.0) million in purchases of securities and $(195.2) million of origination of mortgage loans held for investment.
The mortgage loans are collateralized by real estate and related lease intangibles, net, of $474.7 million and $559.9 million as of December 31, 2023 and December 31, 2022, respectively. During the year ended December 31, 2023 the Company did not execute any new term debt agreements to finance properties in its real estate portfolio.
The mortgage loans are collateralized by real estate and related lease intangibles, net, of $451.9 million and $474.7 million as of December 31, 2024 and December 31, 2023, respectively. During the year ended December 31, 2024, the Company executed 16 new term debt agreements to finance properties in its real estate portfolio with a carrying amount of $81.9 million.
During the year ended December 31, 2022, the Company executed one new term debt agreement to finance properties in its real estate portfolio. 63 Table of Contents Collateralized Loan Obligations (“CLO”) Debt On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans (“Contributed July 2021 Loans”) at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis.
During the year ended December 31, 2023, the Company did not execute any term debt agreements. 64 Table of Contents Collateralized Loan Obligations (“CLO”) Debt On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis.
Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) CLO issuances; (3) committed secured funding provided by banks and other lenders; (4) long term non-recourse mortgage financing; (5) uncommitted secured funding sources, including asset repurchase agreements with a number of banks; (6) unsecured Revolving Credit Facility and (7) secured advances from the FHLB through our captive insurance company.
Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) an unsecured Revolving Credit Facility; (3) CLO issuances; (4) committed and uncommitted secured funding provided by banks and other lenders; and (5) long term non-recourse mortgage financing.
A key objective of those strategies is to support the execution of our business strategy while maintaining sufficient ongoing liquidity throughout the business cycle to service our financial obligations as they become due.
The management team, in consultation with our board of directors, establishes our overall liquidity and capital allocation strategies. A key objective of those strategies is to support the execution of our business strategy while maintaining sufficient ongoing liquidity throughout the business cycle to service our financial obligations as they become due.
Senior Unsecured Notes As of December 31, 2023, the Company had $1.6 billion of unsecured corporate bonds outstanding.
Senior Unsecured Notes As of December 31, 2024, the Company had $2.0 billion of unsecured corporate bonds outstanding.
Net Result from Mortgage Loan Receivables Held for Sale Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans.
Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details. 59 Table of Contents Net Result from Mortgage Loan Receivables Held for Sale Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans.
(2) Presented net of unamortized debt issuance costs of $2.1 million as of December 31, 2023. (3) Presented net of unamortized debt issuance costs of $11.8 million as of December 31, 2023.
(2) Presented net of unamortized debt issuance costs of $0.1 million as of December 31, 2024. (3) Presented net of unamortized debt issuance costs of $16.5 million as of December 31, 2024.
These unsecured financings were comprised of $344.0 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $650.8 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $649.0 million in aggregate principal of 4.75% senior notes due 2029 (the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).
These unsecured financings were comprised of $295.7 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes”, collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”).
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.
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. 57 Table of Contents Results of Operations A discussion regarding our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
We manage our sources of liquidity to complement our asset composition and to diversify our exposure across multiple capital markets and counterparties. We require substantial amounts of capital to support our business. The management team, in consultation with our board of directors, establishes our overall liquidity and capital allocation strategies.
Liquidity and Capital Resources The management of our liquidity and capital diversity and allocation strategies is critical to the success and growth of our business. We manage our sources of liquidity to complement our asset composition and to diversify our exposure across multiple capital markets and counterparties. We require substantial amounts of capital to support our business.
Operating Expenses Operating expenses are primarily comprised of professional fees, lease expense and technology expenses. The decrease during the year ended December 31, 2023 as compared to December 31, 2022 of $1.2 million was primarily related to a decrease in professional and technology expenses.
The decrease of $2.9 million in compensation expense is primarily due to a decrease in bonus compensation expense for the year ended December 31, 2024 as compared year ended December 31, 2023. 60 Table of Contents Operating Expenses Operating expenses are primarily comprised of professional fees, lease expense and technology expenses.
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 has a controlling interest in Series REIT of LCFH, and through such controlling interest, also has a controlling interest in Series TRS of LCFH.
As of December 31, 2023, the weighted average interest rate on mortgage borrowings against our real estate assets was 5.9%, compared to 5.5% as of December 31, 2022.
As of December 31, 2024, the weighted average yield on our mortgage loan receivables was 9.3%, compared to 9.6% as of December 31, 2023. As of December 31, 2024, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.4%, compared to 7.5% as of December 31, 2023.
We held cash and cash equivalents of $609.1 million and restricted cash of $50.5 million as of December 31, 2022. 60 Table of Contents Cash Flows The following table provides a breakdown of the net change in our cash, cash equivalents, and restricted cash ($ in thousands): Year Ended December 31, 2023 2022 Net cash provided by (used in) operating activities $ 180,604 $ 106,710 Net cash provided by (used in) investing activities 793,503 81,590 Net cash provided by (used in) financing activities (557,766) (150,244) Net increase (decrease) in cash, cash equivalents and restricted cash $ 416,341 $ 38,056 Year ended December 31, 2023 We experienced a net increase in cash, cash equivalents and restricted cash of $416.3 million for the year ended December 31, 2023, reflecting cash provided by operating activities of $180.6 million, cash provided by investing activities of $793.5 million and cash used in financing activities of $(557.8) million.
The following table provides a breakdown of the net change in our cash, cash equivalents, and restricted cash ($ in thousands): Year Ended December 31, 2024 2023 Net cash provided by (used in) operating activities $ 133,921 $ 180,604 Net cash provided by (used in) investing activities 932,761 793,503 Net cash provided by (used in) financing activities (796,586) (557,766) Net increase (decrease) in cash, cash equivalents and restricted cash $ 270,096 $ 416,341 Year ended December 31, 2024 We experienced a net increase in cash, cash equivalents and restricted cash of $270.1 million for the year ended December 31, 2024, reflecting cash provided by operating activities of $133.9 million, cash provided by investing activities of $932.8 million and cash used in financing activities of $(796.6) million.
As of December 31, 2023, we had outstanding borrowings secured by our securities equal to 24.0% of the carrying value of our real estate securities, compared to 75.6% as of December 31, 2022. Our real estate is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense.
Our real estate is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of December 31, 2024, the weighted average interest rate on mortgage borrowings against our real estate assets was 6.0%, compared to 5.9% as of December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAccordingly, the investment portfolio of the Company may be subject to more rapid change in value than would be the case if the Company were to maintain a wide diversification among investments or industry sectors. Furthermore, even within the commercial real estate sector, the investment portfolio may be relatively concentrated in terms of geography and type of real estate investment.
Biggest changeThe primary assets of the Company are therefore concentrated in the commercial real estate sector, and accordingly, the investment portfolio of the Company may be subject to more rapid change in value than would be the case if the Company were to maintain a wide diversification among investments or industry sectors.
A decline in liquidity of real estate and real estate-related investments, as well as a lack of availability 74 Table of Contents of observable transaction data and inputs, may make it more difficult to sell the Company’s investments or determine their fair values.
A decline in liquidity of real estate and real estate-related investments, as well as a lack of availability 75 Table of Contents of observable transaction data and inputs, may make it more difficult to sell the Company’s investments or determine their fair values.
We may become subject to additional regulatory and compliance burdens if our investment adviser subsidiary expands its product offerings and investment platform. 76 Table of Contents
We may become subject to additional regulatory and compliance burdens if our investment adviser subsidiary expands its product offerings and investment platform. 77 Table of Contents
Our portfolio’s low weighted average loan-to-value, based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, of 65.6% as of December 31, 2023 reflects significant equity value that our sponsors are motivated to protect through periods of cyclical disruption.
Our portfolio’s low weighted average loan-to-value, based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, of 66.5% as of December 31, 2024 reflects significant equity value that our sponsors are motivated to protect through periods of cyclical disruption.
The following table summarizes the change in net income for a 12-month period commencing December 31, 2023 and the change in fair value of our investments and indebtedness assuming an increase or decrease of 100 basis points in the relevant benchmark interest rates on December 31, 2023, both adjusted for the effects of our interest rate hedging activities ($ in thousands): Projected change in net income(1) Projected change in portfolio value Change in interest rate: Decrease by 1.00% $ (25,760) $ (1,073) Increase by 1.00% 26,261 1,106 (1) Subject to limits for floors on our floating rate investments and indebtedness.
The following table summarizes the change in net income for a 12-month period commencing December 31, 2024 and the change in fair value of our investments and indebtedness assuming an increase or decrease of 100 basis points in the relevant benchmark interest rates on December 31, 2024, both adjusted for the effects of our interest rate hedging activities ($ in thousands): Projected change in net income(1) Projected change in portfolio value Change in interest rate: Decrease by 1.00% $ (28,146) $ 8,130 Increase by 1.00% 28,576 (7,960) (1) Subject to limits for floors on our floating rate investments and indebtedness.
If Tuebor fails to comply with regulatory requirements, it could be subject to loss of its licenses and registration and/or economic penalties. Effective as of July 16, 2021, LCAM is a registered investment adviser under the Investment Advisors Act of 1940, as amended and currently provides investment advisory services solely to Ladder-sponsored collateralized loan obligation trusts (“CLO Issuers”).
Effective as of July 16, 2021, LCAM is a registered investment adviser under the Investment Advisors Act of 1940, as amended and currently provides investment advisory services solely to Ladder-sponsored collateralized loan obligation trusts (“CLO Issuers”).
Interest rate futures agreements are utilized to hedge against future interest rate increases on the Company’s borrowings and potential adverse changes in the value of certain assets that result from interest rate changes.
Interest rate futures agreements are utilized to hedge against future interest rate increases on the Company’s borrowings and potential adverse changes in the value of certain assets that result from interest rate changes. The Company generally seeks to hedge assets that have a duration longer than five years, including newly originated conduit first mortgage loans, most of its U.S.
We were in compliance with all covenants as described in this Annual Report as of December 31, 2023. 75 Table of Contents Diversification Risk The assets of the Company are concentrated in the commercial real estate sector.
We were in compliance with all covenants as described in this Annual Report as of December 31, 2024. 76 Table of Contents Diversification Risk The Company’s investments include mortgage loan receivables collateralized by commercial real estate, owned real estate and real estate backed securities.
This lack of diversification may subject the investments of the Company to more rapid change in value than would be the case if the assets of the Company were more widely diversified. Regulatory Risk Tuebor is subject to state regulation as a captive insurance company.
Furthermore, even within the commercial real estate sector, the investment portfolio may be relatively concentrated in terms of geography and type of real estate investment. This lack of diversification may subject the investments of the Company to more rapid change in value than would be the case if the assets of the Company were more widely diversified.
Removed
The Company generally seeks to hedge assets that have a duration longer than five years, including newly originated conduit first mortgage loans, securities in the Company’s CMBS portfolio if long enough in duration, and most of its U.S. Agency securities portfolio.
Added
Agency securities portfolio, and other securities if long enough in duration.
Added
The Company’s mortgage loan investments are primarily middle market focused, spread across geographically diverse regions within the United States, and granular in nature with an average loan balance of approximately $25 million to $30 million.
Added
Regulatory Risk Tuebor is subject to state regulation as a captive insurance company. If Tuebor fails to comply with regulatory requirements, it could be subject to loss of its licenses and registration and/or economic penalties.

Other LADR 10-K year-over-year comparisons