☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 Or Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36299 Ladder Capital Corp (Exact name of registrant as specified in its charter) Delaware 80-0925494 (State or ...

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Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-36299 Ladder Capital Corp (Exact name of registrant as specified in its charter) (State or other jurisdiction ...

[Part I](index=7&type=section&id=Part%20I) [Business](index=7&type=section&id=Item%201.%20Business) Ladder Capital Corp is an internally-managed REIT focused on commercial real estate finance, with **$6.7 billion** in diversified assets including loans, CMBS, and real estate equity as of December 31, 2019 [Overview](index=7&type=section&id=Overview) Ladder Capital, an internally-managed REIT, focuses on originating and investing in diverse senior secured commercial real estate assets, with **$6.7 billion** in total assets and **$1.6 billion** in equity as of December 31, 2019 - Ladder Capital focuses on three core investment activities: direct origination of commercial real estate first mortgage loans, investments in investment-grade securities secured by first mortgage loans, and investments in net leased and other commercial real estate equity[19](index=19&type=chunk) Key Financial Metrics as of December 31, 2019 | Metric | Value (USD) | | :--- | :--- | | Total Assets | $6.7 billion | | Total Equity | $1.6 billion | | Loan Portfolio | $3.4 billion | | Securities Portfolio | $1.7 billion | | Real Estate Portfolio | $1.0 billion | | Unsecured Debt | $1.2 billion | | Secured Debt | $3.7 billion | | Debt-to-Equity Ratio | 3.0:1.0 | - From its inception in 2008 through December 31, 2019, Ladder originated **$25.2 billion** of commercial real estate loans and was the second-largest non-bank contributor of loans to CMBS securitizations in the U.S[20](index=20&type=chunk)[21](index=21&type=chunk) [Our Businesses](index=9&type=section&id=Our%20Businesses) The company's investment portfolio, totaling **$6.7 billion** as of December 31, 2019, is primarily allocated across loans (**50.3%**), securities (**26.0%**), and real estate (**15.7%**), with a focus on diversified commercial properties Investment Portfolio Breakdown as of December 31, 2019 | Asset Category | Value (in thousands) | % of Total Assets | | :--- | :--- | :--- | | **Loans** | **$3,358,861** | **50.3%** | | Balance sheet first mortgage loans | $3,127,173 | 46.9% | | Other CRE-related loans | $129,863 | 1.9% | | Conduit first mortgage loans | $122,325 | 1.8% | | **Securities** | **$1,721,305** | **26.0%** | | CMBS investments | $1,673,468 | 25.3% | | U.S. Agency Securities | $34,857 | 0.5% | | Equity securities | $12,980 | 0.2% | | **Real Estate** | **$1,048,081** | **15.7%** | | **Other Investments** | **$110,052** | **1.6%** | - The balance sheet first mortgage loan portfolio totaled **$3.1 billion** across **149** loans, with a weighted average loan-to-value ratio of **70.0%** at origination[36](index=36&type=chunk) - The CMBS investment portfolio totaled **$1.7 billion**, with **100%** rated investment grade and **89.3%** rated AAA/Aaa. The portfolio had a weighted average duration of **2.4 years**[43](index=43&type=chunk) - The real estate portfolio includes **159** single-tenant net leased properties with a book value of **$670.9 million** and **70** diversified commercial properties valued at **$375.4 million**[48](index=48&type=chunk)[49](index=49&type=chunk) [Our Financing Strategies](index=14&type=section&id=Our%20Financing%20Strategies) Ladder Capital employs a multi-faceted financing strategy, including committed term facilities and unsecured debt, targeting a debt-to-equity ratio of approximately **3.0:1.0** as of December 31, 2019, while using hedging to mitigate interest rate risk - The company funds its investments through multiple sources, including committed term facilities (**$1.8 billion** total commitments), a revolving credit facility (**$266.4 million**), FHLB membership, securities repurchase agreements, non-recourse mortgage loans (**$812.6 million** outstanding), and senior unsecured notes (**$1.2 billion** outstanding)[60](index=60&type=chunk)[61](index=61&type=chunk) - The company targets a debt-to-equity ratio of approximately **3.0:1.0** or below. As of December 31, 2019, both the GAAP debt-to-equity ratio and the non-GAAP adjusted leverage ratio were **3.0:1.0**[64](index=64&type=chunk) - Interest rate risk is managed through derivative contracts, generally hedging assets with a duration longer than **five years**, such as newly-originated conduit loans and certain CMBS and U.S. Agency Securities[62](index=62&type=chunk) [Regulation](index=19&type=section&id=Regulation) The company's operations are subject to extensive state and federal regulation, including the Dodd-Frank Act and rules governing its broker-dealer, investment adviser, and captive insurance subsidiaries, while maintaining an exemption from the Investment Company Act of 1940 - The Dodd-Frank Act's Risk Retention Rule, effective December 2016, requires securitization sponsors to retain at least **5%** of the credit risk of the issued securities, which could impact the structure and profitability of future securitizations[98](index=98&type=chunk)[99](index=99&type=chunk) - The company operates subsidiaries regulated as a broker-dealer (LCS), a registered investment adviser (LCAM), and a captive insurance company (Tuebor), each subject to specific rules from the SEC, FINRA, and state authorities[103](index=103&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - The company conducts its operations to avoid registration as an investment company under the Investment Company Act of 1940. It relies on its subsidiaries qualifying for the Section 3(c)(5)(C) exclusion, which requires at least **55%** of assets to be in "qualifying real estate assets"[110](index=110&type=chunk)[117](index=117&type=chunk) [Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including operational challenges, market volatility in real estate and interest rates, portfolio-specific credit losses, financing risks from leverage, and significant regulatory compliance requirements, including maintaining REIT status - Operational risks include dependence on the CMBS securitization market, which can cause significant quarterly volatility in financial results, and cybersecurity threats that could compromise sensitive data[130](index=130&type=chunk)[143](index=143&type=chunk) - The portfolio is concentrated in the U.S. commercial real estate sector, making it vulnerable to economic downturns, changes in property values, and interest rate fluctuations. The transition away from LIBOR after **2021** presents uncertainty for its floating-rate assets and liabilities[146](index=146&type=chunk)[157](index=157&type=chunk)[251](index=251&type=chunk) - The company's leveraged business model and reliance on repurchase agreements create risks related to margin calls, counterparty defaults, and potential mismatches between asset and liability durations[232](index=232&type=chunk)[241](index=241&type=chunk)[249](index=249&type=chunk) - Maintaining its REIT qualification is critical; failure to do so would subject the company to corporate income tax, substantially reducing cash available for distributions. The company must also adhere to complex rules to maintain its exemption from the Investment Company Act[328](index=328&type=chunk)[280](index=280&type=chunk) [Unresolved Staff Comments](index=62&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[366](index=366&type=chunk) [Properties](index=62&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters in New York and regional offices, with detailed investment property listings in Schedule III of the Form 10-K - The company's principal executive offices are leased and located at **345 Park Avenue, 8th Floor, New York, New York, 10154**[367](index=367&type=chunk) [Legal Proceedings](index=62&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, including enforcement actions or litigation related to regulatory compliance - The company is not presently a party to any material enforcement proceedings or litigation[368](index=368&type=chunk) [Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[369](index=369&type=chunk) [Part II](index=63&type=section&id=Part%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=63&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Ladder Capital's Class A common stock trades on the NYSE under "LADR", with a **$41.1 million** stock repurchase program remaining and a cumulative total return of **151.03%** since its February 2014 IPO - The company's Class A common stock is traded on the New York Stock Exchange under the ticker symbol "**LADR**"[372](index=372&type=chunk) - A stock repurchase program is in place, with **$41.1 million** available for repurchases as of year-end 2019. During the year, **40,065** shares were repurchased for **$0.6 million**[373](index=373&type=chunk) Cumulative Total Shareholder Return (Since IPO on Feb 6, 2014) | Period End | Ladder Capital Corp | Commercial Mortgage REIT Index | S&P 500 Index | | :--- | :--- | :--- | :--- | | Dec 31, 2018 | $127.90 | $120.88 | $141.36 | | Dec 31, 2019 | $151.03 | $152.08 | $182.18 | [Selected Financial Data](index=65&type=section&id=Item%206.%20Selected%20Financial%20Data) For FY2019, Ladder Capital reported net income of **$137.0 million**, down from **$221.7 million** in 2018, with diluted EPS of **$1.15** and total assets growing to **$6.67 billion** Selected Financial Data (in thousands, except per share data) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Operating Data** | | | | Net interest income | $125,882 | $150,525 | | Net income (loss) | $137,001 | $221,676 | | Diluted Earnings per share | $1.15 | $1.84 | | Dividends per share | $1.360 | $1.535 | | **Balance Sheet Data (End of Period)** | | | | Total assets | $6,669,152 | $6,272,872 | | Total debt outstanding | $4,859,873 | $4,452,574 | | Total equity (capital) | $1,638,977 | $1,643,635 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=67&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income decreased to **$137.0 million** in 2019, driven by lower real estate gains and derivative results, while total debt increased to **$4.86 billion**, and the company prepares for the new CECL standard in 2020 [Results of Operations](index=68&type=section&id=Results%20of%20Operations) Net income for 2019 significantly decreased to **$137.0 million** from **$221.7 million** in 2018, primarily due to lower gains on real estate sales and negative derivative results Consolidated Results of Operations (Year Ended Dec 31, in thousands) | Line Item | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net interest income | $125,882 | $150,525 | $(24,643) | | Total other income (loss) | $174,652 | $250,320 | $(75,668) | | Total costs and expenses | $158,287 | $158,626 | $(339) | | **Income (loss) before taxes** | **$139,647** | **$228,319** | **$(88,672)** | | **Net income (loss)** | **$137,001** | **$221,676** | **$(84,675)** | - The primary drivers for the decrease in net income were a **$94.5 million** decrease in profits on real estate sales and a **$45.9 million** decrease in net results from derivative transactions[399](index=399&type=chunk)[411](index=411&type=chunk)[417](index=417&type=chunk) - The decrease was partially offset by a **$38.2 million** increase in income from the sale of loans and a **$20.7 million** increase in realized gains on securities[399](index=399&type=chunk)[405](index=405&type=chunk)[408](index=408&type=chunk) [Liquidity and Capital Resources](index=73&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains diverse liquidity sources, with total debt obligations of **$4.86 billion** as of December 31, 2019, and is preparing for the termination of its FHLB membership by February 2021 Debt Obligations Breakdown (as of Dec 31, in thousands) | Debt Type | 2019 | 2018 | | :--- | :--- | :--- | | Repurchase facilities | $1,815,934 | $663,685 | | Mortgage loan financing | $812,606 | $743,902 | | CLO debt | $0 | $601,543 | | Borrowings from the FHLB | $1,073,500 | $1,286,000 | | Senior unsecured notes | $1,157,833 | $1,154,991 | | **Total debt obligations, net** | **$4,859,873** | **$4,452,574** | - The company's captive insurance subsidiary, Tuebor, will have its FHLB membership terminated by **February 19, 2021**, due to a new FHFA rule. While the company expects to manage this transition using alternative funding, it could result in higher funding costs[463](index=463&type=chunk)[464](index=464&type=chunk) - As of December 31, 2019, the company had **$58.2 million** in unrestricted cash and cash equivalents and significant unencumbered assets, including **$1.6 billion** in loans[437](index=437&type=chunk)[441](index=441&type=chunk) [Critical Accounting Policies](index=82&type=section&id=Critical%20Accounting%20Policies) Critical accounting policies involve significant estimates and judgments, including the provision for loan losses, the upcoming CECL standard, valuation of real estate and intangible assets, VIE determination, and fair value measurement of financial instruments - The provision for loan losses requires significant management judgment, combining a general, formula-based component for performing loans and an asset-specific component for impaired loans, which are often valued based on the fair value of the underlying collateral[487](index=487&type=chunk)[489](index=489&type=chunk)[490](index=490&type=chunk) - The company will adopt the CECL standard on **January 1, 2020**. The estimated impact upon adoption is an increase in the allowance for loan losses of approximately **$11.6 million**, which will reduce total shareholder's equity by approximately **$5.8 million**[493](index=493&type=chunk)[498](index=498&type=chunk) - Fair value measurement of assets and liabilities, especially for Level 3 instruments like CMBS and certain derivatives, involves considerable judgment and reliance on internal models, third-party pricing services, and unobservable inputs[505](index=505&type=chunk)[611](index=611&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=85&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like Core Earnings, which was **$190.6 million** in 2019, and Adjusted Leverage, which was **3.0x** at year-end 2019, to supplement its GAAP financial results Core Earnings Reconciliation (in thousands) | | 2019 | 2018 | | :--- | :--- | :--- | | Income (loss) before taxes | $139,647 | $228,319 | | Adjustments (Depreciation, derivatives, stock comp, etc.) | $50,912 | $1,789 | | **Core earnings** | **$190,559** | **$230,108** | Adjusted Leverage Reconciliation (in thousands) | | Dec 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Debt obligations, net | $4,859,873 | $4,452,574 | | Less: CLO debt | $0 | $(601,543) | | **Adjusted debt obligations** | **$4,859,873** | **$3,851,031** | | Total equity | $1,638,977 | $1,643,635 | | **Adjusted leverage** | **3.0x** | **2.3x** | [Quantitative and Qualitative Disclosures about Market Risk](index=90&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks including interest rate fluctuations, market value risk in its securities portfolio, and credit risk from its commercial real estate concentration, with a **100 basis point** LIBOR increase projected to raise net income by **$15.4 million** Interest Rate Sensitivity Analysis (12-month period) | Change in LIBOR | Projected Change in Net Income (in thousands) | Projected Change in Portfolio Value (in thousands) | | :--- | :--- | :--- | | Decrease by 1.00% | $(2,985) | $11,609 | | Increase by 1.00% | $15,397 | $(11,468) | - The company faces market value risk as the fair value of its securities portfolio fluctuates with interest rates and credit spreads. A rising rate environment would generally decrease the value of these assets[527](index=527&type=chunk) - Credit risk is managed through deep credit analysis and ongoing asset management. The investment portfolio is concentrated in the commercial real estate sector, which exposes the company to sector-specific downturns[530](index=530&type=chunk)[535](index=535&type=chunk) [Financial Statements and Supplementary Data](index=93&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for FY2019, including balance sheets and income statements, with an unqualified opinion from PricewaterhouseCoopers LLP on both financial statements and internal controls - The Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP) provides an unqualified opinion, stating that the financial statements are presented fairly in all material respects and that the company maintained effective internal control over financial reporting as of **December 31, 2019**[542](index=542&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31, in thousands) | | 2019 | 2018 | | :--- | :--- | :--- | | **Assets** | | | | Mortgage loan receivables, net | $3,358,861 | $3,482,929 | | Real estate securities | $1,721,305 | $1,410,126 | | Real estate, net | $1,048,081 | $998,022 | | **Total Assets** | **$6,669,152** | **$6,272,872** | | **Liabilities & Equity** | | | | Debt obligations, net | $4,859,873 | $4,452,574 | | **Total Liabilities** | **$5,030,175** | **$4,629,237** | | **Total Equity** | **$1,638,977** | **$1,643,635** | Consolidated Income Statement Highlights (Year ended Dec 31, in thousands) | | 2019 | 2018 | | :--- | :--- | :--- | | Net interest income | $125,882 | $150,525 | | Total other income (loss) | $174,652 | $250,320 | | Total costs and expenses | $158,287 | $158,626 | | **Net income (loss)** | **$137,001** | **$221,676** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=201&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting principles, financial disclosure, or auditing scope - None[1029](index=1029&type=chunk) [Controls and Procedures](index=201&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2019, a conclusion affirmed by the independent auditor - Based on an evaluation as of **December 31, 2019**, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective at a reasonable assurance level[1032](index=1032&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2019**. This assessment was audited by PricewaterhouseCoopers LLP, which concurred[1034](index=1034&type=chunk)[1035](index=1035&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of **2019** that materially affected, or are reasonably likely to materially affect, the company's internal controls[1036](index=1036&type=chunk) [Other Information](index=202&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[1039](index=1039&type=chunk) [Part III](index=203&type=section&id=Part%20III) [Directors, Executive Officers and Corporate Governance](index=203&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2020 definitive proxy statement - Information is incorporated by reference from the Company's **2020** definitive proxy statement[1041](index=1041&type=chunk) [Executive Compensation](index=203&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2020 definitive proxy statement - Information is incorporated by reference from the Company's **2020** definitive proxy statement[1042](index=1042&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=203&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related stockholder matters is incorporated by reference from the company's 2020 definitive proxy statement and Item 5 of this report - Information is incorporated by reference from the Company's **2020** definitive proxy statement and Item 5 of this Form 10-K[1043](index=1043&type=chunk)[1044](index=1044&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=203&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's 2020 definitive proxy statement - Information is incorporated by reference from the Company's **2020** definitive proxy statement[1045](index=1045&type=chunk) [Principal Accounting Fees and Services](index=203&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2020 definitive proxy statement - Information is incorporated by reference from the Company's **2020** definitive proxy statement[1046](index=1046&type=chunk) [Part IV](index=204&type=section&id=Part%20IV) [Exhibits and Financial Statement Schedules](index=204&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, including Real Estate and Mortgage Loans, and other required exhibits filed as part of the Annual Report - This item lists all financial statements, schedules, and exhibits filed with the Form 10-K[1048](index=1048&type=chunk) [Form 10-K Summary](index=204&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[1051](index=1051&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (Address of principal executive offices) (IRS Employer Identification No.) Commission file number: 001-36299 Ladder Capital Corp http ...

Report Overview [Company Information](index=1&type=section&id=Company%20Information) Ladder Capital Corp filed its Form 10-Q for the quarterly period ended June 30, 2019 - Report Type: **Quarterly Report on Form 10-Q** for the period ended June 30, 2019[2](index=2&type=chunk) - Company Name: **Ladder Capital Corp** (Commission file number: 001-36299)[2](index=2&type=chunk) Shares Outstanding as of July 29, 2019 | Class | Outstanding Shares | | :--- | :--- | | Class A common stock, $0.001 par value | 107,574,439 | | Class B common stock, $0.001 par value | 12,158,933 | [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements subject to risks and uncertainties affecting future results - The report includes forward-looking statements concerning future results, strategy, and operations, identified by words like "anticipate," "expect," "believe," and "will"[10](index=10&type=chunk) - Key risks that could cause actual results to differ from forward-looking statements include general economic conditions, changes in the real estate market, interest rate volatility, financing availability, and the company's ability to maintain its REIT qualification[11](index=11&type=chunk) PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements show total assets of $6.41 billion and Q2 net income of $32.2 million [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $6.41 billion, driven by an increase in real estate securities Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$6,406,775** | **$6,272,872** | | Mortgage loan receivables held for investment, net | $3,101,357 | $3,300,490 | | Real estate securities | $1,788,415 | $1,410,126 | | Real estate and related lease intangibles, net | $984,377 | $998,022 | | **Total Liabilities** | **$4,758,701** | **$4,629,237** | | Debt obligations, net | $4,613,088 | $4,452,574 | | **Total Equity** | **$1,648,074** | **$1,643,635** | [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) Q2 net income attributable to Class A shareholders decreased to $32.2 million, or $0.30 per share Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $32,953 | $36,813 | $68,171 | $70,307 | | Total Other Income (Loss) | $43,708 | $46,381 | $76,856 | $130,714 | | Net Income (Loss) Attributable to Class A Shareholders | $32,244 | $38,406 | $54,419 | $89,281 | | Diluted EPS | $0.30 | $0.40 | $0.51 | $0.93 | [Consolidated Statements of Cash Flows](index=16&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $132.5 million for the first six months of 2019 Consolidated Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $132,545 | $173,606 | | Net cash used in investing activities | ($49,378) | ($480,471) | | Net cash provided by financing activities | $33,816 | $218,921 | | **Net increase (decrease) in cash** | **$116,983** | **($87,944)** | [Notes to Consolidated Financial Statements](index=19&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the REIT structure, accounting policies, and segment assets for loans, securities, and real estate - The company operates as an internally-managed REIT and conducts its business through Ladder Capital Finance Holdings LLLP (LCFH), in which it holds an **89.8% economic interest** as of June 30, 2019[44](index=44&type=chunk) - The company adopted ASC Topic 842 (Leases) on January 1, 2019, resulting in the initial recognition of a **$3.5 million lease liability** and a **$3.3 million right-of-use asset**[59](index=59&type=chunk)[67](index=67&type=chunk) - The company has three reportable segments: loans, securities, and real estate, which held total assets of **$3.2 billion**, **$1.8 billion**, and **$1.0 billion**, respectively, as of June 30, 2019[371](index=371&type=chunk)[372](index=372&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses performance across its three business lines, noting a decrease in Q2 net income [Overview](index=87&type=section&id=Overview) The company is an internally-managed REIT with $6.4 billion in assets across three business segments - The company operates through three business lines: **loans, securities, and real estate investments**[385](index=385&type=chunk) - The company has a diversified financing strategy, including **$1.2 billion of unsecured debt** and **$3.5 billion of secured debt** as of June 30, 2019[389](index=389&type=chunk)[391](index=391&type=chunk) Key Financial Metrics as of June 30, 2019 | Metric | Value | | :--- | :--- | | Total Assets | $6.4 billion | | Total Equity | $1.6 billion | | Loan Portfolio | $3.2 billion | | Securities Portfolio | $1.8 billion | | Real Estate Portfolio | $1.0 billion | [Our Businesses](index=89&type=section&id=Our%20Businesses) The investment portfolio is diversified across loans (50.0%), securities (28.0%), and real estate (15.4%) - The balance sheet loan portfolio consists of 147 first mortgage loans with an aggregate book value of **$3.0 billion** and a weighted average LTV of **70.1%** at origination[399](index=399&type=chunk) - The CMBS investment portfolio totaled **$1.7 billion**, with **100% rated investment grade** and **86.7% rated AAA/Aaa**[406](index=406&type=chunk) Investment Portfolio Composition (June 30, 2019) | Segment | Carrying Value (in thousands) | % of Total Assets | | :--- | :--- | :--- | | Total Loans | $3,213,334 | 50.0% | | Total Securities | $1,788,415 | 28.0% | | Total Real Estate | $984,377 | 15.4% | | Other Investments | $119,370 | 1.9% | [Results of Operations](index=100&type=section&id=Results%20of%20Operations) Q2 2019 net income decreased by $6.2 million year-over-year, driven by lower interest income and derivative losses - Q2 2019 net income attributable to Class A shareholders fell to **$32.2 million** from $38.4 million in Q2 2018[438](index=438&type=chunk) - Key drivers for the Q2 2019 decline were a **$3.9 million decrease in net interest income** and a **$22.5 million negative change in net results from derivative transactions**[440](index=440&type=chunk) - H1 2019 net income attributable to Class A shareholders decreased to **$54.4 million** from $89.3 million in H1 2018, primarily due to a **$53.9 million decrease in total other income**[475](index=475&type=chunk)[481](index=481&type=chunk) [Liquidity and Capital Resources](index=109&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains diverse liquidity sources to manage its $4.6 billion in total debt obligations - Primary liquidity sources include cash, operating cash flow, repurchase agreements, CLOs, revolving credit facilities, and proceeds from asset sales and capital issuance[514](index=514&type=chunk) - As of June 30, 2019, the company had **unrestricted cash of $126.5 million** and unencumbered assets including **$1.1 billion in loans** and **$301.6 million in securities**[521](index=521&type=chunk) Debt Obligations Summary (in thousands) | Debt Type | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total repurchase facilities | $1,267,371 | $663,685 | | Mortgage loan financing | $734,652 | $743,902 | | CLO debt | $263,216 | $601,543 | | Borrowings from the FHLB | $1,191,449 | $1,286,000 | | Senior unsecured notes | $1,156,400 | $1,154,991 | | **Total debt obligations, net** | **$4,613,088** | **$4,452,574** | [Reconciliation of Non-GAAP Financial Measures](index=123&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) Non-GAAP measures show Q2 2019 Core Earnings of $51.0 million and an Adjusted Leverage ratio of 2.6x - Adjusted leverage was **2.6x** at June 30, 2019, compared to 2.3x at December 31, 2018, a metric that excludes non-recourse CLO debt from total debt obligations[605](index=605&type=chunk) Core Earnings Reconciliation (in thousands) | Metric | Q2 2019 | Q2 2018 | H1 2019 | H1 2018 | | :--- | :--- | :--- | :--- | :--- | | Income (loss) before taxes | $38,292 | $44,140 | $59,970 | $115,841 | | Adjustments (net) | $12,663 | $6,292 | $37,887 | ($1,603) | | **Core earnings** | **$50,955** | **$50,432** | **$97,857** | **$114,238** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=127&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is primarily exposed to interest rate, market value, liquidity, and credit risks - The company's primary market risk is **interest rate risk**, which it manages through hedging instruments like interest rate swaps and futures[610](index=610&type=chunk) - Other significant risks include market value risk on securities, liquidity risk from market disruptions, credit risk on investments, and risks related to the real estate sector[612](index=612&type=chunk)[614](index=614&type=chunk)[615](index=615&type=chunk)[617](index=617&type=chunk) Interest Rate Sensitivity Analysis (as of June 30, 2019) | Change in Interest Rate | Projected Change in Net Income (12-months) | Projected Change in Portfolio Value | | :--- | :--- | :--- | | Decrease by 1.00% | ($10,127 thousand) | $15,077 thousand | | Increase by 1.00% | $19,045 thousand | ($14,523 thousand) | [Item 4. Controls and Procedures](index=130&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2019 - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the period[624](index=624&type=chunk) - **No material changes** to internal control over financial reporting occurred during the quarter ended June 30, 2019[625](index=625&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=130&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company states it is **not presently a party to any material litigation matters**[627](index=627&type=chunk) [Item 1A. Risk Factors](index=130&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the last Annual Report on Form 10-K - **No material changes** to the risk factors from the Annual Report were reported for the three months ended June 30, 2019[628](index=628&type=chunk) [Item 2. Unregistered Sales of Securities and Use of Proceeds](index=130&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Securities%20and%20Use%20of%20Proceeds) The company exchanged LP units for common stock and repurchased shares under its buyback program - In H1 2019, **1,139,411 Series REIT and TRS LP Units were exchanged** for 1,139,411 shares of Class A common stock[629](index=629&type=chunk) - In Q2 2019, the company repurchased **40,065 shares** of Class A common stock for an aggregate price of **$0.6 million**[630](index=630&type=chunk) - As of June 30, 2019, **$41.1 million remained available** for repurchase under the authorized stock repurchase program[633](index=633&type=chunk) [Item 3. Defaults Upon Senior Securities](index=131&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - **No defaults upon senior securities** were reported[634](index=634&type=chunk) [Item 6. Exhibits](index=132&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including required certifications - Exhibits filed include **Sarbanes-Oxley Section 302 and 906 certifications** from the CEO and CFO, and XBRL interactive data files[639](index=639&type=chunk)

[PART I - FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Ladder Capital Corp's unaudited consolidated financial statements for Q1 2019, detailing balance sheets, income, equity, and cash flows with explanatory notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$6.53 billion** by March 31, 2019, driven by real estate securities, with liabilities rising to **$4.88 billion** and equity stable at **$1.64 billion** Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $45,158 | $67,878 | | Mortgage loan receivables, net | $3,300,057 | $3,300,490 | | Real estate securities | $1,619,128 | $1,410,126 | | Real estate and related lease intangibles, net | $1,005,997 | $998,022 | | **Total Assets** | **$6,525,419** | **$6,272,872** | | **Liabilities & Equity** | | | | Debt obligations, net | $4,732,290 | $4,452,574 | | **Total Liabilities** | **$4,881,176** | **$4,629,237** | | **Total Equity** | **$1,644,243** | **$1,643,635** | | **Total Liabilities and Equity** | **$6,525,419** | **$6,272,872** | [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) Net income attributable to Class A common shareholders significantly decreased to **$22.2 million** in Q1 2019 from **$50.9 million** in Q1 2018, primarily due to lower real estate gains and derivative losses Consolidated Statement of Income Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net interest income | $35,218 | $33,493 | | Total other income (loss) | $33,148 | $84,334 | | Total costs and expenses | $46,390 | $43,127 | | Income before taxes | $21,676 | $71,700 | | Net income (loss) | $24,530 | $67,798 | | **Net income (loss) attributable to Class A common shareholders** | **$22,175** | **$50,875** | | **Diluted EPS** | **$0.21** | **$0.53** | - The significant year-over-year decrease in net income was largely due to a **$31.0 million** realized gain on real estate sales in Q1 2018 not recurring and a **$26.0 million** negative swing in derivative results[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=14&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2019 saw a net cash increase of **$26.8 million**, driven by **$189.0 million** from financing activities, offsetting **$22.0 million** operating and **$140.1 million** investing outflows Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(22,034) | $(65,118) | | Net cash provided by (used in) investing activities | $(140,139) | $(182,106) | | Net cash provided by (used in) financing activities | $188,956 | $177,700 | | **Net increase (decrease) in cash** | **$26,783** | **$(69,524)** | [Notes to Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's organization, accounting policies, and specifics on financial statement line items, including portfolios, debt, fair value, derivatives, segments, and related party transactions - The company operates as an internally-managed Real Estate Investment Trust (REIT) across three segments: loans, securities, and real estate[41](index=41&type=chunk)[364](index=364&type=chunk) - Adoption of ASC Topic 842 on January 1, 2019, led to initial recognition of a **$3.5 million** lease liability and a **$3.3 million** right-of-use asset[56](index=56&type=chunk)[64](index=64&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=83&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2019 financial performance across loans, securities, and real estate segments, highlighting decreased net income, stable loan portfolio, increased securities, diversified financing, liquidity, and non-GAAP reconciliations - Net income attributable to Class A common shareholders significantly decreased to **$22.2 million** in Q1 2019 from **$50.9 million** in Q1 2018, primarily due to a **$31.0 million** decrease in real estate gains and a **$26.0 million** negative swing in derivative results[433](index=433&type=chunk)[434](index=434&type=chunk) - Core Earnings, a non-GAAP measure, were **$46.9 million** for Q1 2019, down from **$63.8 million** in Q1 2018[433](index=433&type=chunk)[551](index=551&type=chunk) Total Assets Breakdown (as of March 31, 2019) | Asset Category | Value (in billions) | | :--- | :--- | | Loans | $3.5 | | Securities | $1.6 | | Real Estate | $1.0 | | **Total Assets** | **$6.5** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=118&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces interest rate, market value, liquidity, and credit risks, mitigating interest rate exposure with derivatives, with a 100 basis point LIBOR increase projected to raise net income by **$20.0 million** - Primary market risks include interest rate, market value, liquidity, and credit risk, with derivatives used to hedge longer-duration interest rate exposure[569](index=569&type=chunk) Interest Rate Sensitivity Analysis (as of March 31, 2019) | Change in Interest Rate | Projected Change in Net Income (12-months) | Projected Change in Portfolio Value | | :--- | :--- | :--- | | Decrease by 1.00% | $(14,273,000) | $15,215,000 | | Increase by 1.00% | $20,002,000 | $(16,608,000) | [Item 4. Controls and Procedures](index=121&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of the reporting period end[583](index=583&type=chunk) - No material changes were made to internal control over financial reporting during Q1 2019[584](index=584&type=chunk) [PART II - OTHER INFORMATION](index=121&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=121&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings outside the ordinary course of business - The company is not presently a party to any material enforcement or litigation matters[586](index=586&type=chunk) [Item 1A. Risk Factors](index=121&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K were reported - No material changes to risk factors from the Annual Report were reported for the quarter[587](index=587&type=chunk) [Item 2. Unregistered Sales of Securities and Use of Proceeds](index=121&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of securities and no Class A common stock repurchases, with **$41.8 million** remaining under authorization - The company did not repurchase any Class A common stock shares during Q1 2019[589](index=589&type=chunk) [Item 3. Defaults Upon Senior Securities](index=121&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - There were no defaults upon senior securities[590](index=590&type=chunk) [Item 4. Mine Safety Disclosures](index=122&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[591](index=591&type=chunk) [Item 5. Other Information](index=122&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[592](index=592&type=chunk) [Item 6. Exhibits](index=123&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including management agreements, CEO and CFO certifications, and interactive data files - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[594](index=594&type=chunk)

Part I [Business](index=7&type=section&id=Item%201.%20Business) Ladder Capital Corp is an internally-managed REIT focused on commercial real estate finance through loans, securities, and real estate investments - Ladder Capital operates as an internally-managed REIT with three core business segments: **loans, securities, and real estate investments**[19](index=19&type=chunk) - Since inception through December 31, 2018, the company originated **$22.8 billion** in commercial real estate loans and acquired **$10.6 billion** in securities and **$1.7 billion** in real estate assets[20](index=20&type=chunk) - The company maintains a diversified financing strategy with **$1.2 billion** in unsecured debt and **$3.3 billion** in secured debt, with **$2.6 billion** in total committed, undrawn funding capacity as of year-end 2018[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The company's REIT election requires it to distribute at least **90%** of its taxable income to shareholders[28](index=28&type=chunk)[96](index=96&type=chunk) [Overview](index=7&type=section&id=Item%201.%20Business%23Overview) The company's overview highlights key financial metrics as of December 31, 2018, and significant management equity interest Key Financial Metrics as of December 31, 2018 | Metric | Value (in billions) | | :--- | :--- | | Total Assets | $6.3 | | Total Equity | $1.6 | | Debt-to-Equity Ratio | 2.7:1.0 | | Adjusted Leverage (Non-GAAP) | 2.3:1.0 | - The company is a significant non-bank contributor to CMBS, having sold **$15.4 billion** of **$15.5 billion** in originated conduit loans into **59** securitizations since inception[21](index=21&type=chunk) - As of year-end 2018, management and directors held a significant equity interest, comprising **11.5%** of the company's total equity[26](index=26&type=chunk) [Our Businesses](index=9&type=section&id=Item%201.%20Business%23Our%20Businesses) The company's investment portfolio is primarily composed of loans, securities, and real estate, with specific characteristics for each asset class Investment Portfolio Breakdown ($ in thousands) | Category | Dec 31, 2018 | % of Total | Dec 31, 2017 | % of Total | | :--- | :--- | :--- | :--- | :--- | | **Total Loans** | **$3,482,929** | **55.5%** | **$3,508,642** | **58.2%** | | Balance sheet loans | $3,300,490 | 52.6% | $3,278,462 | 54.4% | | Conduit first mortgage loans | $182,439 | 2.9% | $230,180 | 3.8% | | **Total Securities** | **$1,410,126** | **22.5%** | **$1,106,517** | **18.4%** | | CMBS investments | $1,308,331 | 20.8% | $1,066,570 | 17.7% | | **Total Real Estate** | **$998,022** | **15.9%** | **$1,032,041** | **17.1%** | | **Total Investments** | **$5,989,346** | **95.4%** | **$5,760,556** | **95.6%** | - The balance sheet first mortgage loan portfolio comprised **157** loans with an aggregate book value of **$3.2 billion** and a weighted average loan-to-value ratio of **68.2%** at origination[35](index=35&type=chunk) - The CMBS investment portfolio totaled **$1.3 billion**, with **100%** of investments rated investment grade, of which **84.4%** were AAA/Aaa-rated[42](index=42&type=chunk) - The real estate portfolio included **143** single-tenant net leased properties with a book value of **$673.4 million**, **100%** leased with a weighted average remaining lease term of **13.3 years**[46](index=46&type=chunk) [Our Financing Strategies](index=14&type=section&id=Item%201.%20Business%23Our%20Financing%20Strategies) The company employs diverse financing strategies, including committed facilities, CLOs, and unsecured notes, while maintaining a targeted debt-to-equity ratio - The company funds investments through multiple sources, including **$1.8 billion** in committed term facilities, a **$266.4 million** revolving credit facility, CLO transactions, FHLB membership, and **$1.2 billion** in unsecured notes[58](index=58&type=chunk)[59](index=59&type=chunk) - The company generally seeks to maintain a debt-to-equity ratio of approximately **3.0:1.0** or below, which was **2.7:1.0** as of December 31, 2018[62](index=62&type=chunk) - Interest rate and credit spread derivative contracts are utilized to mitigate exposure, particularly for assets with durations exceeding **five years**[61](index=61&type=chunk) [Regulation](index=19&type=section&id=Item%201.%20Business%23Regulation) The company is subject to various state and federal regulations, including the Dodd-Frank Act, and maintains specific exemptions for its REIT status and subsidiaries - The company's operations are subject to state and federal regulation, with the Dodd-Frank Act's Risk Retention Rule impacting securitization activities since December 2016[99](index=99&type=chunk)[100](index=100&type=chunk) - Subsidiaries are regulated as a registered investment adviser (LCAM), a registered broker-dealer (LCS), and a captive insurance company (Tuebor), each under specific regulatory frameworks[104](index=104&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) - The company maintains an exemption from Investment Company Act of 1940 registration, primarily via Section 3(c)(5)(C) for real estate-focused subsidiaries, which limits investment activities[111](index=111&type=chunk)[118](index=118&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including operational, market, portfolio, financing, and regulatory challenges that could impact its financial performance [Risks Related to Our Operations](index=24&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Operations) Operational risks include potential changes to investment strategy, volatility in financial results, dependence on key personnel, and cybersecurity threats - The company's business model and investment strategy may change without stockholder consent, with no guarantee of success[127](index=127&type=chunk) - Quarterly financial results are subject to significant volatility due to the timing, volume, and pricing of CMBS securitizations[131](index=131&type=chunk) - Dependence on attracting and retaining skilled loan originators and maintaining relationships with key loan brokers is critical for business generation[128](index=128&type=chunk) - Cybersecurity threats and security breaches pose significant risks, potentially compromising sensitive information and harming reputation and business operations[147](index=147&type=chunk)[148](index=148&type=chunk) [Market Risks Related to Real Estate Loans and Securities](index=28&type=section&id=Item%201A.%20Risk%20Factors%23Market%20Risks%20Related%20to%20Real%20Estate%20Loans%20and%20Securities) Market risks include high concentration in commercial real estate, intense competition, interest rate fluctuations, and shifts in consumer patterns - The company's high concentration in the commercial real estate sector increases exposure to economic downturns in this specific area[150](index=150&type=chunk) - The highly competitive lending and investment market may limit desirable asset acquisition at attractive prices and could decrease yields[153](index=153&type=chunk) - Changes in prevailing interest rates can negatively impact earnings due to misalignment of asset yields and borrowing costs, with **four** Federal Reserve rate hikes in 2018 potentially reducing mortgage demand[160](index=160&type=chunk)[161](index=161&type=chunk) - Shifts in consumer patterns and technology, such as online retail and remote work, may adversely affect the value of underlying retail and office properties[154](index=154&type=chunk)[155](index=155&type=chunk) [Risks Related to Our Portfolio](index=31&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Portfolio) Portfolio risks include the non-recourse nature of loans, illiquidity of balance sheet assets, subordinate debt exposure, and securitization-related obligations - The vast majority of mortgage loans are non-recourse, limiting recovery in default to underlying collateral, which may be insufficient to cover the full loan amount[170](index=170&type=chunk) - Balance sheet loans for transitional properties are often more illiquid and carry a greater risk of loss than long-term mortgages on stabilized properties[176](index=176&type=chunk) - Investments in subordinate loans and CMBS tranches rank junior to senior debt, increasing loss risk in borrower default or bankruptcy[183](index=183&type=chunk)[184](index=184&type=chunk) - Participation in CMBS and CLO securitizations exposes the company to risks including repurchase obligations for breached representations and warranties, and potential losses on retained junior securities[199](index=199&type=chunk)[207](index=207&type=chunk) [Risks Related to Our Indebtedness](index=44&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Indebtedness) Indebtedness risks include high leverage, subordination of unsecured notes, and uncertainty from the transition away from LIBOR - The highly leveraged business can magnify losses, with repurchase agreements and other financing facilities requiring additional collateral if pledged asset market value declines[239](index=239&type=chunk) - The company's unsecured notes are effectively subordinated to its **$3.3 billion** of secured indebtedness, granting secured debt holders priority claims on collateral in bankruptcy[243](index=243&type=chunk) - The transition away from LIBOR after **2021** creates uncertainty, potentially increasing financing costs or causing asset-liability interest rate mismatches[257](index=257&type=chunk)[259](index=259&type=chunk)[261](index=261&type=chunk) [Risks Related to Our Taxation as a REIT](index=61&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Related%20to%20Our%20Taxation%20as%20a%20REIT) REIT taxation risks include loss of REIT status, distribution requirements, limitations on Taxable REIT Subsidiaries, and built-in gains tax - Failure to qualify as a REIT would subject the company to corporate income tax, substantially reducing cash available for shareholder distribution[349](index=349&type=chunk)[350](index=350&type=chunk) - REIT distribution requirements, mandating at least **90%** of taxable income distribution, could adversely affect business plan execution by limiting retained earnings for growth[355](index=355&type=chunk) - The company's ownership of Taxable REIT Subsidiaries (TRSs) is limited to **20%** of total assets, requiring arm's-length transactions to avoid a **100%** excise tax[353](index=353&type=chunk) - The company is subject to a built-in gains tax on appreciated assets held before its REIT election (January 1, 2015) if sold within a **five-year** period[365](index=365&type=chunk) [Unresolved Staff Comments](index=68&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - The company reports no unresolved staff comments[388](index=388&type=chunk) [Properties](index=68&type=section&id=Item%202.%20Properties) As of December 31, 2018, the company's real estate portfolio comprised commercial properties, including single-tenant net leased and diversified assets, and residential condominium units Owned Property Summary as of December 31, 2018 | Property Type | Number of Properties/Units | Aggregate Book Value ($M) | Key Metrics | | :--- | :--- | :--- | :--- | | **Commercial Real Estate** | | | | | Single Tenant Net Leased | 143 | $673.4 | 100% leased, 13.3-year avg. remaining lease term | | Diversified Commercial | 69 | $318.1 | Includes student housing, office, industrial | | **Residential Real Estate** | | | | | Veer Towers, Las Vegas | 1 unit | $0.4 | Held through a joint venture | | Terrazas, Miami | 22 units | $6.1 | 62.5% rented and occupied | - The company leases its corporate headquarters in New York, NY, and maintains month-to-month regional offices in California and South Carolina[389](index=389&type=chunk) [Legal Proceedings](index=73&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The company reports that it is not presently a party to any material litigation or enforcement proceedings[402](index=402&type=chunk) [Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[403](index=403&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=74&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Ladder Capital's Class A common stock trades on the NYSE, with a stock repurchase program in place and a cumulative total return of **27.9%** since its **2014** IPO - The company's Class A common stock trades on the New York Stock Exchange under the ticker symbol **"LADR"**[406](index=406&type=chunk) - A stock repurchase program is in place, with **$41.8 million** available for repurchases as of year-end 2018, and no shares were repurchased during the year[407](index=407&type=chunk) - During 2018, **4,549,832** partnership units and Class B shares were exchanged for an equal number of Class A shares in a non-cash transaction[408](index=408&type=chunk) Cumulative Total Shareholder Return (IPO through 12/31/2018) | Index | 12/31/2018 Value of $100 Invested at IPO | | :--- | :--- | | **Ladder Capital Corp (LADR)** | **$127.90** | | Commercial Mortgage REIT Index | $120.33 | | S&P 500 Index | $141.36 | [Selected Financial Data](index=77&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data for **2014-2018** shows significant growth, with **net income** increasing to **$180.0 million** in **2018** and consistent dividends since **2015** Selected Financial Data (2014-2018, $ in thousands) | Metric | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | $150,525 | $117,549 | $115,545 | $128,236 | $109,751 | | **Net Income (to Class A shareholders)** | $180,015 | $95,276 | $66,727 | $73,821 | $44,187 | | **Diluted EPS** | $1.84 | $1.13 | $1.06 | $1.42 | $0.86 | | **Total Assets** | $6,272,872 | $6,025,615 | $5,578,337 | $5,895,212 | $5,814,235 | | **Total Debt Outstanding** | $4,452,574 | $4,379,826 | $3,942,138 | $4,274,723 | $4,182,954 | | **Total Equity** | $1,643,635 | $1,488,146 | $1,509,554 | $1,491,408 | $1,505,207 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=79&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights significant **net income** growth in **2018** driven by increased net interest income and real estate sales, supported by strong liquidity and risk management [Results of Operations](index=79&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results%20of%20Operations) Results of operations show a significant increase in net income for **2018**, primarily driven by higher net interest income and gains from real estate sales Comparison of Results of Operations (Years ended Dec 31, $ in millions) | Metric | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | Net Income (to Class A shareholders) | $180.0 | $95.3 | +$84.7 | | Net Interest Income | $150.5 | $117.5 | +$33.0 | | Total Other Income | $250.3 | $186.5 | +$63.8 | | Total Costs and Expenses | $158.6 | $170.4 | -$11.8 | | Core Earnings (Non-GAAP) | $230.1 | $178.8 | +$51.3 | - The **$84.7 million** increase in net income for **2018** was primarily driven by a **$33.0 million** increase in net interest income and a **$63.8 million** increase in total other income, including an **$84.5 million** increase in real estate sales profits[429](index=429&type=chunk) - Loan origination activity remained robust, with **$2.8 billion** in new loans funded in **2018**, compared to **$2.9 billion** in **2017**[427](index=427&type=chunk)[428](index=428&type=chunk) - Income from loan sales decreased by **$37.5 million** in **2018** compared to **2017**, primarily due to lower securitization volume and credit spreads[446](index=446&type=chunk) [Liquidity and Capital Resources](index=90&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity through diverse funding sources and a significant portfolio of unencumbered assets, though FHLB access will change - The company maintains diverse liquidity sources including cash from operations, repurchase agreements, CLOs, a revolving credit facility, unsecured notes, and FHLB borrowings[505](index=505&type=chunk) Debt Obligations Summary ($ in thousands) | Debt Type | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | Repurchase facilities | $663,685 | $473,410 | | Mortgage loan financing | $743,902 | $692,696 | | CLO debt | $601,543 | $688,479 | | Borrowings from the FHLB | $1,286,000 | $1,370,000 | | Senior unsecured notes | $1,154,991 | $1,152,134 | | **Total Debt Obligations, Net** | **$4,452,574** | **$4,379,826** | - As of December 31, 2018, the company had **$1.4 billion** of unencumbered loans, **$212.6 million** of unencumbered securities, and **$58.6 million** of unencumbered real estate[513](index=513&type=chunk) - The FHFA's revised FHLB membership regulation will prevent the company's captive insurance subsidiary from obtaining new advances after February 19, 2021[277](index=277&type=chunk)[546](index=546&type=chunk) [Critical Accounting Policies](index=101&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Critical%20Accounting%20Policies) Critical accounting policies involve significant management estimates and judgments, particularly for loan loss reserves, financial instrument valuation, and VIE consolidation - Significant management estimates and judgments are required for several accounting policies, including the reserve for loan losses, valuation of financial instruments, and impairment of long-lived assets[579](index=579&type=chunk)[581](index=581&type=chunk) - The reserve for loan losses includes general and asset-specific components; for **2018**, the provision was **$13.9 million**, with **$12.7 million** in asset-specific reserves[580](index=580&type=chunk)[586](index=586&type=chunk) - The company evaluates investments for Variable Interest Entity (VIE) status and consolidation requirements, involving significant judgment regarding control and economic performance[593](index=593&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=110&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks, primarily interest rate, market value, and credit risks, which are managed through hedging and asset management strategies - The company's primary market risk is interest rate risk, impacting floating-rate debt and fixed-rate asset market value, managed through hedging instruments like interest rate swaps and futures[616](index=616&type=chunk) Interest Rate Sensitivity Analysis (as of Dec 31, 2018) | Change in LIBOR | Projected Change in Net Income (12-months) | Projected Change in Portfolio Value | | :--- | :--- | :--- | | +1.00% | +$19,014 thousand | -$20,512 thousand | | -1.00% | -$15,932 thousand | +$18,935 thousand | - The company is subject to credit risk, managed through deep credit analysis and ongoing asset management, and credit spread risk, impacting fixed-rate commercial mortgages and CMBS value[621](index=621&type=chunk)[622](index=622&type=chunk) - The portfolio's concentration in the real estate sector subjects it to more rapid value changes than a diversified portfolio[626](index=626&type=chunk) [Financial Statements and Supplementary Data](index=113&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for **2016-2018**, including balance sheets, income statements, and comprehensive notes, with an unqualified audit opinion [Consolidated Balance Sheets](index=116&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Consolidated%20Balance%20Sheets) The consolidated balance sheets provide a snapshot of the company's assets, liabilities, and equity as of December 31, 2018 and 2017 Consolidated Balance Sheet Summary ($ in thousands) | Account | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | **Total Assets** | **$6,272,872** | **$6,025,615** | | Cash, cash equivalents and restricted cash | $98,450 | $182,683 | | Mortgage loan receivables (net) | $3,482,929 | $3,508,642 | | Real estate securities | $1,410,126 | $1,106,517 | | Real estate and related lease intangibles, net | $998,022 | $1,032,041 | | **Total Liabilities** | **$4,629,237** | **$4,537,469** | | Debt obligations, net | $4,452,574 | $4,379,826 | | **Total Equity** | **$1,643,635** | **$1,488,146** | [Consolidated Statements of Income](index=117&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Consolidated%20Statements%20of%20Income) The consolidated statements of income detail the company's financial performance, including net interest income and net income, for **2016-2018** Consolidated Income Statement Summary ($ in thousands) | Account | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Net interest income after provision | $136,625 | $117,549 | $115,245 | | Total other income | $250,320 | $186,470 | $163,312 | | Total costs and expenses | $158,626 | $170,428 | $158,517 | | **Net income (loss)** | **$221,676** | **$125,879** | **$113,720** | | **Net income (loss) attributable to Class A common shareholders** | **$180,015** | **$95,276** | **$66,727** | [Notes to Consolidated Financial Statements](index=126&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Notes%20to%20Consolidated%20Financial%20Statements) Notes to financial statements detail accounting policies, REIT election, VIE consolidation, off-balance sheet arrangements, and segment reporting - The company elected REIT taxation effective January 1, 2015, operating through LCFH and subsidiaries segregated into Series REIT and Series TRS for asset and income management[672](index=672&type=chunk)[673](index=673&type=chunk) - The company consolidates Variable Interest Entities (VIEs) where it is the primary beneficiary, including the Operating Partnership and two CLO VIEs[681](index=681&type=chunk)[789](index=789&type=chunk) - As of December 31, 2018, the company had **$379.8 million** in unfunded loan commitments, representing off-balance sheet arrangements[1104](index=1104&type=chunk) - The company has three reportable segments: loans, securities, and real estate; for **2018**, profits were **$273.1 million** for loans, **$27.8 million** for securities, and **$94.9 million** for real estate[1106](index=1106&type=chunk)[1107](index=1107&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=228&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - The company reports no changes in or disagreements with its accountants on accounting and financial disclosure[1140](index=1140&type=chunk) [Controls and Procedures](index=228&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2018, with no material changes during the fourth quarter - As of December 31, 2018, the CEO and CFO concluded the company's disclosure controls and procedures are effective at a reasonable assurance level[1143](index=1143&type=chunk) - Management concluded the company's internal control over financial reporting was effective as of December 31, 2018, based on the COSO framework[1145](index=1145&type=chunk) - No material changes occurred in internal control over financial reporting during the fourth quarter of 2018[1147](index=1147&type=chunk) [Other Information](index=229&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - The company reports no other information for this item[1150](index=1150&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=230&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the **2019** proxy statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming **2019** proxy statement[1152](index=1152&type=chunk) [Executive Compensation](index=230&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the **2019** proxy statement - Information regarding executive compensation is incorporated by reference from the forthcoming **2019** proxy statement[1153](index=1153&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=230&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and related stockholder matters is incorporated by reference from the **2019** proxy statement - Information regarding security ownership is incorporated by reference from the forthcoming **2019** proxy statement[1154](index=1154&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=230&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the **2019** proxy statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the forthcoming **2019** proxy statement[1156](index=1156&type=chunk) [Principal Accounting Fees and Services](index=230&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the **2019** proxy statement - Information regarding principal accounting fees and services is incorporated by reference from the forthcoming **2019** proxy statement[1157](index=1157&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=231&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements, financial statement schedules, and exhibits filed as part of the Annual Report - This section lists the consolidated financial statements, financial statement schedules, and exhibits filed with the Form 10-K[1159](index=1159&type=chunk) [Form 10-K Summary](index=231&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - The company has not provided a summary for this item[1162](index=1162&type=chunk)