Ladder Capital(LADR) - 2019 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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] Consolidated Statements of Cash Flows 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 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][364] - 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][64] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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][434] - Core Earnings, a non-GAAP measure, were $46.9 million for Q1 2019, down from $63.8 million in Q1 2018[433][551] 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 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] 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 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] - No material changes were made to internal control over financial reporting during Q1 2019[584] PART II - OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - There were no defaults upon senior securities[590] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[591] Item 5. Other Information The company reports no other information for this item - None[592] Item 6. Exhibits 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]