Ladder Capital Corp (NYSE: LADR) (“we,” “our,” “Ladder,” or the
“Company”) today announced operating results for the quarter ended
December 31, 2022. GAAP income before taxes for the three months
ended December 31, 2022 was $75.3 million, and diluted earnings per
share (“EPS”) was $0.48. Distributable earnings was $38.9 million,
or $0.31 of distributable EPS. GAAP income before taxes for the
twelve months ended December 31, 2022 was $170.2 million, and
diluted earnings per share was $1.13. Distributable earnings was
$148.4 million or $1.16 of distributable EPS.
“2022 was a very positive year for Ladder. Both our earnings and
dividend reflected double-digit annual growth. At the same time, we
generated an attractive ROE with strong credit performance across
the board. We are well positioned to capitalize on the
opportunities we expect to see in 2023 with significant liquidity,
low leverage, an attractive overall cost of capital, and no
material near-term debt maturities,” said Brian Harris, Ladder’s
Chief Executive Officer.
Supplemental
The Company issued a supplemental presentation detailing its
fourth quarter 2022 operating results, which can be viewed at
http://ir.laddercapital.com.
Conference Call and
Webcast
We will host a conference call on Thursday, February 9, 2023 at
5:00 p.m. Eastern Time to discuss fourth quarter 2022 results. The
conference call can be accessed by dialing (877) 407-4018 domestic
or (201) 689-8471 international. Individuals who dial in will be
asked to identify themselves and their affiliations. For those
unable to participate, an audio replay will be available from 8:00
p.m. Eastern Time on Thursday, February 9, 2023 through midnight on
Thursday, February 23, 2023. To access the replay, please call
(844) 512-2921 domestic or (412) 317-6671 international, access
code 13735271. The conference call will also be webcast though a
link on Ladder Capital Corp’s Investor Relations website at
ir.laddercapital.com/event. A web-based archive of the conference
call will also be available at the above website.
About Ladder
Ladder Capital Corp is an internally-managed commercial real
estate investment trust with $6.0 billion of assets as of December
31, 2022. Our investment objective is to preserve and protect
shareholder capital while producing attractive risk-adjusted
returns. As one of the nation’s leading commercial real estate
capital providers, we specialize in underwriting commercial real
estate and offering flexible capital solutions within a
sophisticated platform.
Ladder originates and invests in a diverse portfolio of
commercial real estate and real estate-related assets, focusing on
senior secured assets. Our investment activities include: (i) our
primary business of originating senior first mortgage fixed and
floating rate loans collateralized by commercial real estate with
flexible loan structures; (ii) owning and operating commercial real
estate, including net leased commercial properties; and (iii)
investing in investment grade securities secured by first mortgage
loans on commercial real estate.
Founded in 2008 and led by Brian Harris, the Company’s Chief
Executive Officer, Ladder is run by a highly experienced management
team with extensive expertise in all aspects of the commercial real
estate industry, including origination, credit, underwriting,
structuring, capital markets and asset management. Members of
Ladder’s management and board of directors are highly aligned with
the Company’s investors, owning over 10% of the Company’s equity.
Ladder is headquartered in New York City with regional offices in
Miami, Florida and Santa Monica, California.
Forward-Looking Statements &
Coronavirus Risk
Certain statements in this release may constitute
“forward-looking” statements. These statements are based on
management’s current opinions, expectations, beliefs, plans,
objectives, assumptions or projections regarding future events or
future results. These forward-looking statements are only
predictions, not historical fact, and involve certain risks and
uncertainties, as well as assumptions. Actual results, levels of
activity, performance, achievements and events could differ
materially from those stated, anticipated or implied by such
forward-looking statements. While Ladder believes that its
assumptions are reasonable, it is very difficult to predict the
impact of known factors, and, of course, it is impossible to
anticipate all factors that could affect actual results, including
the impact and aftermath of the COVID-19 pandemic on the Company's
business. There are a number of risks and uncertainties that could
cause actual results to differ materially from forward-looking
statements made herein including, most prominently, the risks
discussed under the heading “Risk Factors” in each of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2021, as
well as its consolidated financial statements, related notes, and
other financial information appearing therein, and its other
filings with the U.S. Securities and Exchange Commission. Such
forward-looking statements are made only as of the date of this
release. Ladder expressly disclaims any obligation or undertaking
to release any updates or revisions to any forward-looking
statements contained herein to reflect any change in its
expectations with regard thereto or changes in events, conditions,
or circumstances on which any such statement is based.
Ladder Capital Corp
Consolidated Balance
Sheets
(Dollars in Thousands)
December 31,
December 31,
2022(1)
2021(1)
(Unaudited)
Assets
Cash and cash equivalents
$
609,078
$
548,744
Restricted cash
50,524
72,802
Mortgage loan receivables held for
investment, net, at amortized cost:
Mortgage loans receivable
3,885,746
3,553,737
Allowance for credit losses
(20,755
)
(31,752
)
Mortgage loan receivables held for
sale
27,391
—
Securities
587,519
703,280
Real estate and related lease intangibles,
net
700,136
865,694
Real estate held for sale
—
25,179
Investments in and advances to
unconsolidated ventures
6,219
23,154
Derivative instruments
2,038
402
Accrued interest receivable
24,938
13,645
Other assets
78,339
76,367
Total assets
$
5,951,173
$
5,851,252
Liabilities and Equity
Liabilities
Debt obligations, net
$
4,245,697
$
4,219,703
Dividends payable
32,000
27,591
Accrued expenses
68,227
40,249
Other liabilities
71,688
50,090
Total liabilities
4,417,612
4,337,633
Commitments and contingencies
—
—
Equity
Class A common stock, par value $0.001 per
share, 600,000,000 shares authorized; 128,027,478 and 126,852,765
shares issued and 126,502,049 and 125,452,568 shares
outstanding
127
126
Additional paid-in capital
1,826,833
1,795,249
Treasury stock, 1,525,429 and 1,400,197
shares, at cost
(95,600
)
(76,324
)
Retained earnings (dividends in excess of
earnings)
(177,005
)
(207,802
)
Accumulated other comprehensive income
(loss)
(21,009
)
(4,112
)
Total shareholders’ equity
1,533,346
1,507,137
Noncontrolling interests in consolidated
ventures
215
6,482
Total equity
1,533,561
1,513,619
Total liabilities and equity
$
5,951,173
$
5,851,252
__________________________
(1) Includes amounts relating to consolidated variable
interest entities.
Ladder Capital Corp
Consolidated Statements of
Income
(Dollars in Thousands, Except
Per Share and Dividend Data)
(Unaudited)
Three Months Ended
Year Ended December
31,
December 31,
September 30,
2022
2022
2022
2021
Net interest income
Interest income
$
94,688
$
77,359
$
293,520
$
176,099
Interest expense
57,390
48,471
195,602
182,949
Net interest income (expense)
37,298
28,888
97,918
(6,850
)
Provision for (release of) loan loss
reserves, net
2,338
1,501
3,711
(8,713
)
Net interest income (expense) after
provision for (release of) loan losses
34,960
27,387
94,207
1,863
Other income (loss)
Real estate operating income
25,590
27,679
108,269
101,564
Sale of loans, net
(428
)
796
(2,511
)
8,398
Realized gain (loss) on securities
2
9
(73
)
1,594
Unrealized gain (loss) on equity
securities
36
(61
)
(41
)
—
Unrealized gain (loss) on Agency
interest-only securities
(24
)
(5
)
(45
)
(91
)
Realized gain (loss) on sale of real
estate, net
53,897
4,393
115,998
55,766
Fee and other income
2,785
2,697
15,020
11,190
Net result from derivative
transactions
(21
)
6,567
12,360
1,749
Earnings (loss) from investment in
unconsolidated ventures
213
407
1,410
1,579
Gain (loss) on extinguishment of debt
—
—
685
—
Total other income (loss)
82,050
42,482
251,072
181,749
Costs and expenses
Compensation and employee benefits
16,671
13,806
75,836
38,347
Operating expenses
5,414
5,143
20,716
17,672
Real estate operating expenses
9,678
10,069
38,605
26,161
Fee expense
2,073
1,689
7,235
5,810
Depreciation and amortization
7,909
7,864
32,673
37,801
Total costs and expenses
41,745
38,571
175,065
125,791
Income (loss) before taxes
75,265
31,298
170,214
57,821
Income tax expense (benefit)
1,012
2,613
4,909
928
Net income (loss)
74,253
28,685
165,305
56,893
Net (income) loss attributable to
noncontrolling interests in consolidated ventures
(14,700
)
(102
)
(23,088
)
(371
)
Net income (loss) attributable to Class
A common shareholders
$
59,553
$
28,583
$
142,217
$
56,522
Earnings per share:
Basic
$
0.48
$
0.23
$
1.14
$
0.46
Diluted
$
0.48
$
0.23
$
1.13
$
0.45
Weighted average shares
outstanding:
Basic
124,027,116
124,278,732
124,301,421
123,763,843
Diluted
125,180,214
125,172,180
125,823,671
124,563,051
Dividends per share of Class A common
stock
$
0.23
$
0.23
$
0.88
$
0.80
Non-GAAP Financial
Measures
The Company utilizes distributable earnings, distributable EPS,
and after-tax distributable return on average equity (“ROAE”),
non-GAAP financial measures, as supplemental measures of our
operating performance. We believe distributable earnings,
distributable EPS, and after-tax distributable ROAE assist
investors in comparing our operating performance and our ability to
pay dividends across reporting periods on a more relevant and
consistent basis by excluding from GAAP measures certain non-cash
expenses and unrealized results as well as eliminating timing
differences related to securitization gains and changes in the
values of assets and derivatives. In addition, we use distributable
earnings, distributable EPS and distributable ROAE: (i) to evaluate
our earnings from operations because management believes that it
may be a useful performance measure for us and (ii) because our
board of directors considers distributable earnings in determining
the amount of quarterly dividends.
We define distributable earnings as income before taxes adjusted
for: (i) real estate depreciation and amortization; (ii) the impact
of derivative gains and losses related to the hedging of assets on
our balance sheet as of the end of the specified accounting period;
(iii) unrealized gains/(losses) related to our investments in fair
value securities and passive interest in unconsolidated ventures;
(iv) economic gains on loan sales not recognized under GAAP
accounting for which risk has substantially transferred during the
period and the exclusion of resultant GAAP recognition of the
related economics during the subsequent periods; (v) unrealized
provision for loan losses and unrealized real estate impairment;
(vi) realized provisions for loan losses and realized real estate
impairment; (vii) non-cash stock-based compensation; and (viii)
certain transactional items. For the purpose of computing
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. Distributable
EPS is defined as after-tax distributable earnings divided by the
weighted average diluted shares outstanding during the period.
For distributable earnings, we include adjustments for economic
gains on loan sales not recognized under GAAP accounting for which
risk has substantially transferred during the period and exclude
the resultant GAAP recognition of the related economics during the
subsequent periods. This adjustment is reflected in distributable
earnings when there is a true risk transfer on the mortgage loan
transfer and settlement. Historically, this adjustment has
represented the impact of economic gains/(discounts) on
intercompany loans secured by our own real estate which we had not
previously recognized because such gains were eliminated in
consolidation. Conversely, if the economic risk was not
substantially transferred, no adjustments to net income would be
made relating to those transactions for distributable earnings
purposes. Management believes recognizing these amounts for
distributable earnings purposes in the period of transfer of
economic risk is a reasonable supplemental measure of our
performance.
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. However, fluctuations in the fair value of
the related assets are not included in our income statement. We
consider the gain or loss on our hedging positions related to
assets that we still own as of the reporting date to be “open
hedging positions.” While recognized for GAAP purposes, we exclude
the results on the hedges from distributable earnings until the
related asset is sold and/or the hedge position is considered
“closed,” whereupon they would then be included in distributable
earnings in that period. These are reflected as “Adjustments for
unrecognized derivative results” for purposes of computing
distributable earnings for the period. 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.
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. We believe that excluding
these specifically-identified gains and losses associated with the
fair value securities adjusts for timing differences between when
we recognize changes in the fair values of our assets. 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.
Set forth below is an unaudited reconciliation of income (loss)
before taxes to after-tax distributable earnings, and an unaudited
computation of distributable EPS ($ in thousands, except per share
data):
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2022
2021
Income (loss) before taxes
$
75,265
$
31,298
170,214
57,821
Net (income) loss attributable to
noncontrolling interests in consolidated ventures (GAAP)
(14,700
)
(102
)
(23,088
)
(371
)
Our share of real estate depreciation,
amortization and gain adjustments (1)
(28,253
)
4,414
(29,188
)
1,662
Adjustments for unrecognized derivative
results (2)
505
(6,454
)
(9,381
)
(7,534
)
Unrealized (gain) loss on fair value
securities
(12
)
66
86
91
Adjustment for economic gain on loan sales
not recognized under GAAP for which risk has been substantially
transferred, net of reversal/amortization
(81
)
(149
)
1,356
3,063
Adjustment for impairment (3)
2,338
1,501
6,816
(8,713
)
Non-cash stock-based compensation
3,798
3,738
31,584
15,321
Distributable earnings
38,860
34,312
148,399
61,340
(6
)
Estimated corporate tax (expense) benefit
(4)
(237
)
(325
)
(2,002
)
(740
)
After-tax distributable earnings
$
38,623
$
33,987
$
146,397
$
60,600
Weighted average diluted shares
outstanding
125,180
125,266
125,824
124,563
Distributable EPS
$
0.31
$
0.27
$
1.16
$
0.49
__________________________
(1) The following is a reconciliation of GAAP
depreciation and amortization to our share of real estate
depreciation, amortization and gain adjustments presented in the
computation of distributable earnings in the preceding table ($ in
thousands):
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2022
2021
Total GAAP depreciation and
amortization
$
7,909
$
7,864
$
32,673
$
37,801
Less: Depreciation and amortization
related to non-rental property fixed assets
(32
)
—
(42
)
(99
)
Less: Non-controlling interests in
consolidated ventures’ share of accumulated depreciation and
amortization and unrecognized passive interest in unconsolidated
ventures
(406
)
(644
)
(1,943
)
(2,933
)
Our share of real estate depreciation and
amortization
7,471
7,220
30,688
34,769
Realized gain from accumulated
depreciation and amortization on real estate sold (refer to
below)
(44,570
)
(2,369
)
(68,992
)
(31,219
)
Less: Non-controlling interests in
consolidated ventures’ share of accumulated depreciation and
amortization on real estate sold
9,292
—
10,879
—
Our share of accumulated depreciation and
amortization on real estate sold (a)
(35,278
)
(2,369
)
(58,113
)
(31,219
)
Less: Our share of operating lease income
on above/below market lease intangible amortization
(446
)
(437
)
(1,763
)
(1,888
)
Our share of real estate depreciation,
amortization and gain adjustments
$
(28,253
)
$
4,414
$
(29,188
)
$
1,662
(a)
GAAP gains/losses on sales of real estate
include the effects of previously-recognized real estate
depreciation and amortization. For purposes of distributable
earnings, our share of real estate depreciation and amortization is
eliminated and, accordingly, the resultant gains/losses also must
be adjusted. Following is a reconciliation of the related
consolidated GAAP amounts to the amounts reflected in distributable
earnings ($ in thousands):
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2022
2021
GAAP realized gain (loss) on sale of real
estate, net
$
53,897
$
4,393
$
115,998
$
55,766
Adjusted gain/loss on sale of real estate
for purposes of distributable earnings
(18,619
)
(2,024
)
(57,885
)
(24,547
)
Accumulated depreciation and
amortization on real estate sold
$
35,278
$
2,369
$
58,113
$
31,219
(2)
The following is a reconciliation of GAAP
net results from derivative transactions to our unrecognized
derivative results presented in the computation of distributable
earnings in the preceding table ($ in thousands):
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2022
2021
Net results from derivative
transactions
$
21
$
(6,567
)
$
(12,360
)
$
(1,749
)
Hedging interest expense
(215
)
(579
)
(1,652
)
(4,534
)
Hedging realized result
699
692
4,631
(1,251
)
Adjustments for unrecognized derivative
results
$
505
$
(6,454
)
$
(9,381
)
$
(7,534
)
(3)
The adjustment reflects the portion of the
loan loss provision that management determined to be recoverable.
Additional provisions and releases of those provisions are excluded
from distributable earnings as a result.
(4)
Estimated corporate tax benefit (expense)
is based on an effective tax rate applied to distributable earnings
generated by the activity within our taxable REIT subsidiaries.
After-tax distributable ROAE is presented on an annualized basis
and is defined as after-tax distributable earnings divided by the
average total shareholders’ equity during the period. Set forth
below is an unaudited computation of after-tax distributable ROAE
($ in thousands):
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2022
2022
2022
2021
After-tax distributable earnings
$
38,623
$
33,987
$
146,397
$
60,600
Average shareholders’ equity
1,517,652
1,502,153
1,506,810
1,517,044
After-tax distributable ROAE
10.2
%
9.1
%
9.7
%
4.0
%
Non-GAAP Measures -
Limitations
Our non-GAAP financial measures have limitations as analytical
tools. Some of these limitations are:
- distributable earnings, distributable EPS and after-tax
distributable ROAE do not reflect the impact of certain cash
charges resulting from matters we consider not to be indicative of
our ongoing operations and are not necessarily indicative of cash
necessary to fund cash needs;
- distributable EPS and after-tax distributable ROAE are based on
a non-GAAP estimate of our effective tax rate, including the impact
of Unincorporated Business Tax and the impact of our election to be
taxed as a REIT effective January 1, 2015. Our actual tax rate may
differ materially from this estimate; and
- other companies in our industry may calculate non-GAAP
financial measures differently than we do, limiting their
usefulness as comparative measures.
Because of these limitations, our non-GAAP financial measures
should not be considered in isolation or as a substitute for net
income (loss) attributable to shareholders, earnings per share or
book value per share, or any other performance measures calculated
in accordance with GAAP. Our non-GAAP financial measures should not
be considered an alternative to cash flows from operations as a
measure of our liquidity.
In addition, distributable earnings should not be considered to
be the equivalent to REIT taxable income calculated to determine
the minimum amount of dividends the Company is required to
distribute to shareholders to maintain REIT status. In order for
the Company to maintain its qualification as a REIT under the
Internal Revenue Code, we must annually distribute at least 90% of
our REIT taxable income. The Company has declared, and intends to
continue declaring, regular quarterly distributions to its
shareholders in an amount approximating the REIT’s net taxable
income.
In the future, we may incur gains and losses that are the same
as or similar to some of the adjustments in this presentation. Our
presentation of non-GAAP financial measures should not be construed
as an inference that our future results will be unaffected by
unusual or non-recurring items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230209005535/en/
Investor Contact
Ladder Capital Corp Investor Relations (917) 369-3207
investor.relations@laddercapital.com
Ladder Capital (NYSE:LADR)
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Ladder Capital (NYSE:LADR)
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