Ladder Capital Corp - Quarter Report: 2021 March (Form 10-Q)

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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, 2021

☐ 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 other jurisdiction of
incorporation or organization)

(IRS Employer
Identification No.)

345 Park Avenue,

New York,

10154

(Address of principal executive offices)

(Zip Code)

(212) 715-3170

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A common stock, $0.001 par value	LADR	New York Stock Exchange

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Class						Outstanding at April 30, 2021
Class A common stock, $0.001 par value						126,342,094
Class B common stock, $0.001 par value						—

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LADDER CAPITAL CORP

FORM 10-Q

March 31, 2021

Index

Page

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

PART II - OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” “likely,” “continue,” “design,” and other words and terms of similar expressions are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ from those expressed in our forward-looking statements. Our future financial position and results of operations, as well as any forward-looking statements are subject to change and inherent risks and uncertainties. You should consider our forward-looking statements in light of a number of factors that may cause actual results to vary from our forward-looking statements including, but not limited to:

•risks discussed under the heading “Risk Factors” herein and in our Annual Report on Form 10-K for the year ended December 31, 2020 (“Annual Report”), as well as our consolidated financial statements, related notes, and the other financial information appearing elsewhere in this Quarterly Report and our other filings with the United States Securities and Exchange Commission (“SEC”);

•the ongoing impact of the COVID-19 pandemic and of responsive measures implemented by various governmental authorities, businesses and other third parties;

•the impact of the new U.S. presidential administration and congressional majority on the regulatory landscape, capital markets, and the response to, and management of, the COVID-19 pandemic;

•changes in general economic conditions, in our industry and in the commercial finance and the real estate markets;

•changes to our business and investment strategy;

•our ability to obtain and maintain financing arrangements;

•the financing and advance rates for our assets, including the potential effects of LIBOR replacement rates;

•our actual and expected leverage and liquidity;

•the adequacy of collateral securing our loan portfolio and a decline in the fair value of our assets;

•interest rate mismatches between our assets and our borrowings used to fund such investments;

•changes in interest rates and the market value of our assets;

•changes in prepayment rates on our mortgages and the loans underlying our mortgage-backed and other asset-backed securities;

•the effects of hedging instruments and the degree to which our hedging strategies may or may not protect us from interest rate and credit risk volatility;

•the increased rate of default or decreased recovery rates on our assets;

•the adequacy of our policies, procedures and systems for managing risk effectively;

•a potential downgrade in the credit ratings assigned to Ladder or our investments;

•our compliance with, and the impact of and changes in laws, governmental regulations, accounting guidance and similar matters;

•our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and our ability and the ability of our subsidiaries to operate in compliance with REIT requirements;

•our ability and the ability of our subsidiaries to maintain our and their exemptions from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”);

•potential liability relating to environmental matters that impact the value of properties we may acquire or the properties underlying our investments;

•the inability of insurance covering real estate underlying our loans and investments to cover all losses;

•the availability of investment opportunities in mortgage-related and real estate-related instruments and other securities;

•fraud by potential borrowers;

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•the availability of qualified personnel;

•the impact of any tax legislation or IRS guidance;

•the degree and nature of our competition; and

•the market trends in our industry, interest rates, real estate values and the debt securities markets.

You should not rely upon forward-looking statements as predictions of future events. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements contained in this Quarterly Report are made as of the date hereof, and the Company assumes no obligation to update or supplement any forward-looking statements.

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REFERENCES TO LADDER CAPITAL CORP

Ladder Capital Corp is a holding company, and its primary assets are a controlling equity interest in Ladder Capital Finance Holdings LLLP (“LCFH” or the “Operating Partnership”) and in each series thereof, directly or indirectly. Unless the context suggests otherwise, references in this report to “Ladder,” “Ladder Capital,” the “Company,” “we,” “us” and “our” refer (1) prior to the February 2014 initial public offering (“IPO”) of the Class A common stock of Ladder Capital Corp and related transactions, to LCFH (“Predecessor”) and its consolidated subsidiaries and (2) after our IPO and related transactions, to Ladder Capital Corp and its consolidated subsidiaries.

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Part I - Financial Information

Item 1. Financial Statements (Unaudited)

The consolidated financial statements of Ladder Capital Corp and the notes related to the foregoing consolidated financial statements are included in this Item.

Index to Consolidated Financial Statements (Unaudited)


Consolidated Balance Sheets		6
Consolidated Statements of Income		7
Consolidated Statements of Comprehensive Income		9
Consolidated Statements of Changes in Equity		10
Consolidated Statements of Cash Flows		12
Notes to Consolidated Financial Statements		15
	Note 1. Organization and Operations	15
	Note 2. Significant Accounting Policies	16
	Note 3. Mortgage Loan Receivables	19
	Note 4. Real Estate Securities	24
	Note 5. Real Estate and Related Lease Intangibles, Net	27
	Note 6. Investment in Unconsolidated Joint Ventures	31
	Note 7. Debt Obligations, Net	33
	Note 8. Derivative Instruments	40
	Note 9. Offsetting Assets and Liabilities	42
	Note 10. Consolidated Variable Interest Entities	44
	Note 11. Equity Structure and Accounts	45
	Note 12. Noncontrolling Interests	46
	Note 13. Earnings Per Share	48
	Note 14. Stock Based and Other Compensation Plans	49
	Note 15. Fair Value of Financial Instruments	52
	Note 16. Income Taxes	57
	Note 17. Related Party Transactions	58
	Note 18. Commitments and Contingencies	58
	Note 19. Segment Reporting	60
	Note 20. Subsequent Events	61

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Ladder Capital Corp

Consolidated Balance Sheets

(Dollars in Thousands)


	March 31, 2021(1)		December 31, 2020(1)
	(Unaudited)
Assets
Cash and cash equivalents	$	1,305,686	$	1,254,432
Restricted cash	146,373		29,852
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loans receivable	2,007,730		2,354,059

Allowance for credit losses	(36,241)		(41,507)
Mortgage loan receivables held for sale	71,482		30,518
Real estate securities	764,083		1,058,298

Real estate and related lease intangibles, net	976,971		985,304
Investments in and advances to unconsolidated joint ventures	44,508		46,253

Derivative instruments	301		299

Accrued interest receivable	13,335		16,088
Other assets	111,583		147,633
Total assets	$	5,405,811	$	5,881,229
Liabilities and Equity
Liabilities

Debt obligations, net	$	3,767,819	$	4,209,864





Dividends payable	26,530		27,537
Accrued expenses	27,001		43,876
Other liabilities	53,622		51,527
Total liabilities	3,874,972		4,332,804
Commitments and contingencies (Note 18)	—		—
Equity



Class A common stock, par value $0.001 per share, 600,000,000 shares authorized; 126,852,765 and 126,852,765 shares issued and 126,342,094 and 126,378,715 shares outstanding	127		127

Additional paid-in capital	1,785,350		1,780,074
Treasury stock, 510,671 and 474,050 shares, at cost	(67,495)		(62,859)
Retained earnings (dividends in excess of earnings)	(188,763)		(163,717)
Accumulated other comprehensive income (loss)	(3,614)		(10,463)
Total shareholders’ equity	1,525,605		1,543,162

Noncontrolling interest in consolidated joint ventures	5,234		5,263
Total equity	1,530,839		1,548,425
Total liabilities and equity	$	5,405,811	$	5,881,229

(1)Includes amounts relating to consolidated variable interest entities. See Note 1 and Note 10.

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Income

(Dollars in Thousands, Except Per Share and Dividend Data)

(Unaudited)


	Three Months Ended March 31,
		2021		2020

Net interest income
Interest income		$	39,287	$	72,589
Interest expense		45,973		51,401
Net interest income		(6,686)		21,188
Provision for (release of) loan loss reserves		(4,251)		26,581
Net interest income (expense) after provision for (release of) loan losses		(2,435)		(5,393)
Other income (loss)
Operating lease income		24,159		26,328


Sale of loans, net		—		1,005
Realized gain (loss) on securities		579		3,011
Unrealized gain (loss) on equity securities		—		(533)
Unrealized gain (loss) on Agency interest-only securities		(20)		76
Realized gain (loss) on sale of real estate, net		—		10,529

Fee and other income		3,284		1,519
Net result from derivative transactions		4,771		(15,435)
Earnings (loss) from investment in unconsolidated joint ventures		436		441

Gain (loss) on extinguishment of debt		—		2,061
Total other income (loss)		33,209		29,002
Costs and expenses
Salaries and employee benefits		9,533		17,021
Operating expenses		4,241		5,794
Real estate operating expenses		6,211		7,948
Fee expense		1,599		1,439
Depreciation and amortization		9,536		10,009
Total costs and expenses		31,120		42,211
Income (loss) before taxes		(346)		(18,602)
Income tax expense (benefit)		(778)		(4,541)
Net income (loss)		432		(14,061)
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures		(240)		(1,519)

Net (income) loss attributable to noncontrolling interest in operating partnership		—		(148)
Net income (loss) attributable to Class A common shareholders		$	192	$	(15,728)

Refer to the accompanying notes to consolidated financial statements.

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	Three Months Ended March 31,
		2021		2020

Earnings per share:
Basic		$	—	$	(0.15)
Diluted		$	—	$	(0.15)

Weighted average shares outstanding:
Basic		123,974,970		106,329,796
Diluted		124,324,683		106,329,796

Dividends per share of Class A common stock		$	0.200	$	0.340

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Comprehensive Income

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31,
		2021		2020

Net income (loss)		$	432	$	(14,061)

Other comprehensive income (loss)
Unrealized gain (loss) on securities, net of tax:
Unrealized gain (loss) on real estate securities, available for sale		7,428		(76,252)
Reclassification adjustment for (gain) loss included in net income (loss)		(579)		(1,755)

Total other comprehensive income (loss)		6,849		(78,007)

Comprehensive income (loss)		7,281		(92,068)
Comprehensive (income) loss attributable to noncontrolling interest in consolidated joint ventures		(240)		(1,519)
Comprehensive income (loss) of combined Class A common shareholders and Operating Partnership unitholders		7,041		(93,587)

Comprehensive (income) loss attributable to noncontrolling interest in operating partnership		—		7,717
Comprehensive income (loss) attributable to Class A common shareholders		$	7,041	$	(85,870)

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Changes in Equity

(Dollars and Shares in Thousands)

(Unaudited)


	Shareholders’ Equity
	Class A Common Stock			Additional Paid- in-Capital	Treasury Stock		Retained Earnings (Dividends in Excess of Earnings)		Accumulated Other Comprehensive Income (Loss)				Noncontrolling Interests	Total Equity
	Shares	Par														Consolidated Joint Ventures

Balance, December 31, 2020	126,378	$	127		$	1,780,074	$	(62,859)	$	(163,717)	$	(10,463)		$	5,263		$	1,548,425

Distributions	—	—			—		—		—		—			(269)			(269)

Amortization of equity based compensation	—	—			5,276		—		—		—			—			5,276



Purchase of treasury stock	(20)	—			—		(214)		—		—			—			(214)
Re-issuance of treasury stock	748	—			—		(1)		—		—			—			(1)
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units	(437)	—			—		(4,421)		—		—			—			(4,421)
Forfeitures	(327)	—			—		—		—		—			—			—
Dividends declared	—	—			—		—		(25,238)		—			—			(25,238)





Net income (loss)	—	—			—		—		192		—			240			432
Other comprehensive income (loss)	—	—			—		—		—		6,849			—			6,849

Balance, March 31, 2021	126,342	$	127		$	1,785,350	$	(67,495)	$	(188,763)	$	(3,614)		$	5,234		$	1,530,839

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Changes in Equity

(Dollars and Shares in Thousands)

(Unaudited)


	Shareholders’ Equity
	Class A Common Stock			Class B Common Stock			Additional Paid- in-Capital		Treasury Stock		Retained Earnings (Dividends in Excess of Earnings)		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests				Total Equity
	Shares	Par		Shares	Par										Operating Partnership		Consolidated Joint Ventures

Balance, December 31, 2019	107,509	$	108	12,160	$	12	$	1,532,384	$	(42,699)	$	(35,746)	$	4,218	$	172,054	$	8,646	$	1,638,977
Contributions	—	—		—	—		—		—		—		—		—		302		302
Distributions	—	—		—	—		—		—		—		—		(4,133)		(3,296)		(7,429)

Amortization of equity based compensation	—	—		—	—		14,026		—		—		—		—		—		14,026


Purchase of treasury stock	(146)	—		—	—		—		(1,206)		—		—		—		—		(1,206)
Re-issuance of treasury stock	1,466	1		—	—		(1)		—		—		—		—		—		—
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock and units	(486)	—		—	—		—		(9,078)		—		—		—		—		(9,078)
Forfeitures	(6)	—		—	—		—		—		—		—		—		—		—
Dividends declared	—	—		—	—		—		—		(36,900)		—		—		—		(36,900)




CECL Adoption	—	—		—	—		—		—		(5,797)		—		—		—		(5,797)
Net income (loss)	—	—		—	—		—		—		(15,728)		—		148		1,519		(14,061)
Other comprehensive income (loss)	—	—		—	—		—		—		—		(70,142)		(7,865)		—		(78,007)
Rebalancing of ownership percentage between Company and Operating Partnership	—	—		—	—		(266)		—		—		4		262		—		—
Balance, March 31, 2020	108,337	$	109	12,160	$	12	$	1,546,143	$	(52,983)	$	(94,171)	$	(65,920)	$	160,466	$	7,171	$	1,500,827

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Consolidated Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)


	Three Months Ended March 31,
	2021		2020

Cash flows from operating activities:
Net income (loss)	$	432	$	(14,061)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
(Gain) loss on extinguishment of debt	—		(2,061)
Depreciation and amortization	9,536		10,009
Unrealized (gain) loss on derivative instruments	(2)		(383)
Unrealized (gain) loss on equity securities	—		533
Unrealized (gain) loss on Agency interest-only securities	20		(76)
Unrealized (gain) loss on investment in mutual fund	—		991
Provision for (release of) loan loss reserves	(4,251)		26,581

Amortization of equity based compensation	5,276		14,026
Amortization of deferred financing costs included in interest expense	4,892		2,568
Amortization of premium on mortgage loan financing	(273)		(309)
Amortization of above- and below-market lease intangibles	(478)		(660)

Amortization of premium/(accretion) of discount and other fees on loans	(3,408)		(3,924)
Amortization of premium/(accretion) of discount and other fees on securities	35		431
Realized (gain) loss on sale of mortgage loan receivables held for sale	—		(1,005)

Realized (gain) loss on disposition of loan	26		51
Realized (gain) loss on securities	(579)		(3,011)
Realized (gain) loss on sale of real estate, net	—		(10,529)

Realized gain on sale of derivative instruments	—		(125)
Origination of mortgage loan receivables held for sale	(41,000)		(212,805)

Repayment of mortgage loan receivables held for sale	36		64
Proceeds from sales of mortgage loan receivables held for sale	—		189,359
(Income) loss from investments in unconsolidated joint ventures in excess of distributions received	(436)		(441)

Deferred tax asset (liability)	1,219		12,037




Accrued interest receivable	2,580		(2,165)
Other assets	(1,565)		(13,731)
Accrued expenses and other liabilities	(15,650)		(32,456)
Net cash provided by (used in) operating activities	(43,590)		(41,092)

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	Three Months Ended March 31,
	2021		2020


Cash flows from investing activities:

Origination of mortgage loan receivables held for investment	(116,555)		(313,936)

Repayment of mortgage loan receivables held for investment	394,446		118,573
Proceeds from sale of mortgage loan receivables held for investment, at amortized cost	46,557		—
Purchases of real estate securities	(40,016)		(438,423)
Repayment of real estate securities	10,540		43,627
Basis recovery of Agency interest-only securities	2,002		1,880
Proceeds from sales of real estate securities	329,063		106,367
Purchases of real estate	—		(6,239)
Capital improvements of real estate	(1,269)		(940)
Proceeds from sale of real estate	43,750		11,160

Capital distribution from investment in unconsolidated joint ventures	2,181		215



Proceeds from sale of FHLB stock	18,040		—
Purchase of derivative instruments	—		(46)
Sale of derivative instruments	—		297


Net cash provided by (used in) investing activities	688,739		(477,465)
Cash flows from financing activities:
Deferred financing costs paid	(621)		(12,186)
Proceeds from borrowings under debt obligations	1,631,557		5,924,969
Repayment of borrowings under debt obligations	(2,077,161)		(5,073,000)
Cash dividends paid to Class A common shareholders	(26,245)		(37,340)




Capital distributed to noncontrolling interests in operating partnership	—		(4,134)
Capital contributed by noncontrolling interests in consolidated joint ventures	—		303
Capital distributed to noncontrolling interests in consolidated joint ventures	(269)		(3,296)
Reissuance of treasury stock	(1)		1
Payment of liability assumed in exchange for shares for the minimum withholding taxes on vesting restricted stock	(4,421)		(9,078)
Purchase of treasury stock	(214)		(1,206)
Issuance of common stock	1		(1)


Net cash provided by (used in) financing activities	(477,374)		785,032
Net increase (decrease) in cash, cash equivalents and restricted cash	167,775		266,475
Cash, cash equivalents and restricted cash at beginning of period	1,284,284		355,746
Cash, cash equivalents and restricted cash at end of period	$	1,452,059	$	622,221

Supplemental information:
Cash paid for interest, net of amounts capitalized	$	54,362	$	49,417
Cash paid (received) for income taxes	863		(194)

Non-cash investing and financing activities:



Repayment in transit of mortgage loans receivable held for investment (other assets)	50,832		551

Settlement of mortgage loan receivable held for investment by real estate, net	(43,129)		(21,586)







Real estate acquired in settlement of mortgage loan receivable held for investment, net	43,750		21,535
Net settlement of sale of real estate, subject to debt - real estate	—		(19,098)
Net settlement of sale of real estate, subject to debt - debt obligations	—		19,098











Dividends declared, not paid	26,530		38,256

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The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows ($ in thousands):


	March 31, 2021		March 31, 2020		December 31, 2020

Cash and cash equivalents	$	1,305,686	$	358,352	$	1,254,432
Restricted cash	146,373		263,869		29,852
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows	$	1,452,059	$	622,221	$	1,284,284

Refer to the accompanying notes to consolidated financial statements.

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Ladder Capital Corp

Notes to Consolidated Financial Statements

(Unaudited)

1. ORGANIZATION AND OPERATIONS

Ladder Capital is an internally-managed real estate investment trust (“REIT”) that is a leader in commercial real estate finance. We originate and invest in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Our 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) investing in investment grade securities secured by first mortgage loans on commercial real estate; and (iii) owning and operating commercial real estate, including net leased commercial properties. Ladder Capital Corp, as the general partner of Ladder Capital Finance Holdings LLLP (“LCFH” or the “Operating Partnership”), operates the Ladder Capital business through LCFH and its subsidiaries. As of March 31, 2021, Ladder Capital Corp has a 100.0% economic interest in LCFH and controls the management of LCFH as a result of its ability to appoint its board members. Accordingly, Ladder Capital Corp consolidates the financial results of LCFH and its subsidiaries. In addition, Ladder Capital Corp, through certain subsidiaries which are treated as taxable REIT subsidiaries (each a “TRS”), is indirectly subject to U.S. federal, state and local income taxes. Other than such indirect U.S. federal, state and local income taxes, there are no material differences between Ladder Capital Corp’s consolidated financial statements and LCFH’s consolidated financial statements.

Ladder Capital Corp was formed as a Delaware corporation on May 21, 2013. The Company conducted its initial public offering (“IPO”) which closed on February 11, 2014. The Company used the net proceeds from the IPO to purchase newly issued limited partnership units (“LP Units”) from LCFH. In connection with the IPO, Ladder Capital Corp also became a holding corporation and the general partner of, and obtained a controlling interest in, LCFH. Ladder Capital Corp’s only business is to act as the general partner of LCFH, and, as such, Ladder Capital Corp indirectly operates and controls all of the business and affairs of LCFH and its subsidiaries. The IPO transactions described herein are referred to as the “IPO Transactions.”

COVID-19 Impact on the Organization

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As of the date of this filing, the majority of our employees continue to work remotely. We continue to actively manage the liquidity and operations of the Company in light of the market conditions and the overall financial impact of COVID-19 across most industries in the United States. In view of the ongoing uncertainty related to the duration of the pandemic, its ultimate impact on our revenues, profitability and financial position remains difficult to assess at this time. Refer to the Notes to the Consolidated Financial Statements for further disclosure on the current and potential impact of COVID-19 on our business.

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2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting and Principles of Consolidation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented in this report reflects all normal and recurring adjustments necessary for a fair statement of results of operations, financial position and cash flows. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020, which are included in the Annual Report, as certain disclosures that would substantially duplicate those contained in the audited consolidated financial statements have not been included in this interim report. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The consolidated financial statements include the Company’s accounts and those of its subsidiaries which are majority-owned and/or controlled by the Company and variable interest entities for which the Company has determined itself to be the primary beneficiary, if any. All significant intercompany transactions and balances have been eliminated.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810 — Consolidation (“ASC 810”), provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is the entity that has both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. See Note 10, Consolidated Variable Interest Entities, for further information on the Company’s consolidated variable interest entities.

Provision for Loan Losses

The Company uses a current expected credit loss model (“CECL”) for estimating the provision for loan losses on its loan portfolio. The CECL model requires the consideration of possible credit losses over the life of an instrument and includes a portfolio-based component and an asset-specific component. In compliance with the CECL reporting requirements, the Company supplemented its existing credit monitoring and management processes with additional processes to support the calculation of the CECL reserves. As part of that effort, the Company has engaged a third-party service provider to provide market data and a credit loss model. The credit loss model is a forward-looking, econometric, commercial real estate (“CRE”) loss forecasting tool. It is comprised of a probability of default (“PD”) model and a loss given default (“LGD”) model that, layered together with user’s loan-level data, selected forward-looking macroeconomic variables, and pool-level mean loss rates, produces life of loan expected losses (“EL”) at the loan and portfolio level. Where management has determined that the credit loss model does not fully capture certain external factors, including portfolio trends or loan-specific factors, a qualitative adjustment to the reserve, is recorded. The CECL model was implemented in 2020.

The asset-specific reserve component relates to reserves for losses on individually impaired loans. The Company evaluates each loan for impairment at least quarterly. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. If the loan is considered to be impaired, an allowance is recorded to reduce the carrying value of the loan to the present value of the expected future cash flows discounted at the loan’s effective rate or the fair value of the collateral, less the estimated costs to sell, if recovery of the Company’s investment is expected solely from the collateral. The Company may use the direct capitalization rate valuation methodology or the sales comparison approach to estimate the fair value of the collateral for such loans and in certain cases will obtain external appraisals and take into account potential sale bids. Determining fair value of the collateral may take into account a number of assumptions including, but not limited to, cash flow projections, market capitalization rates, discount rates and data regarding recent comparable sales of similar properties. Such assumptions are generally based on current market conditions and are subject to economic and market uncertainties.

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The Company’s loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic submarket in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management and underwriting personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data and ultimately presented to management for approval.

A loan is also considered impaired if its terms are modified in a troubled debt restructuring (“TDR”). A TDR occurs when a concession is granted and the debtor is experiencing financial difficulties. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loans. Generally, when granting concessions, the Company will seek to protect its position by requiring incremental pay downs, additional collateral or guarantees and, in some cases, lookback features or equity interests to offset concessions granted should conditions impacting the loan improve. The Company’s determination of credit losses is impacted by TDRs whereby loans that have gone through TDRs are considered impaired and are assessed for specific reserves. Loans previously restructured under TDRs that subsequently default are reassessed to incorporate the Company’s current assumptions on expected cash flows and additional provision expense is recorded to the extent necessary.

The Company designates non-accrual loans generally when (i) the principal or coupon interest components of loan payments become 90-days past due or (ii) in the opinion of the Company, it is doubtful the Company will be able to collect all amounts due according to the contractual terms of the loan. Interest income on non-accrual loans in which the Company reasonably expects a full recovery of the loan’s outstanding principal balance is recognized when received in cash. Otherwise, income recognition will be suspended and any cash received will be applied as a reduction to the amortized cost. A non-accrual loan is returned to accrual status at such time as the loan becomes contractually current and future principal and coupon interest are reasonably assured to be received in accordance with the contractual loan terms. A loan will be written off when management has determined it is no longer realizable and deemed non-recoverable.

Reclassifications

The Company reclassified its FHLB stock into other assets as of January 1, 2021, as such, the amount of $31.0 million from December 31, 2020 was reclassified into other assets on the Consolidated Balance Sheet. As of March 31, 2021, the book value of our investment in FHLB Stock was $13.0 million.

Recently Adopted Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective upon issuance of ASU 2020-04 for contract modifications and hedging relationships on a prospective basis. While the Company is currently assessing the impact of ASU 2020-04, the Company does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 815), (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. ASU 2019-12 also improves the consistent application of, and simplifies, GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements.

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In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables–Nonrefundable Fees and Other Costs, (“ASU 2020-08”). This ASU clarifies that an entity should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. All entities should apply ASU 2020-08 on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. The adoption of ASU 2020-08 did not have a material impact on the consolidated financial statements.

Recent Accounting Pronouncements Pending Adoption

Any new accounting standards not disclosed above that have been issued or proposed by FASB and that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

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3. MORTGAGE LOAN RECEIVABLES

March 31, 2021 ($ in thousands)


	Outstanding Face Amount		Carrying Value		Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, net, at amortized cost:
First mortgage loans	$	1,896,330	$	1,886,661	5.80 %		1.29
Mezzanine loans	121,313		121,069		10.36 %		2.41
Total mortgage loans	2,017,643		2,007,730		6.08 %		1.36


Allowance for credit losses	N/A		(36,241)
Total mortgage loan receivables held for investment, net, at amortized cost	2,017,643		1,971,489
Mortgage loan receivables held for sale:
First mortgage loans	71,442		71,482		4.22 %		9.81
Total	$	2,089,085	$	2,042,971	6.01	%	1.65

(1)Includes the impact from interest rate floors. March 31, 2021 LIBOR rates are used to calculate weighted average yield for floating rate loans.

As of March 31, 2021, $1.6 billion, or 79.9%, of the outstanding face amount of our mortgage loan receivables held for investment, net, at amortized cost, were at variable interest rates, linked to LIBOR. Of this $1.6 billion, 100% of these variable interest rate mortgage loan receivables were subject to interest rate floors. As of March 31, 2021, $71.4 million, or 100%, of the outstanding face amount of our mortgage loan receivables held for sale were at fixed interest rates.

December 31, 2020 ($ in thousands)


	Outstanding Face Amount		Carrying Value		Weighted Average Yield (1)	Remaining Maturity (years)

Mortgage loan receivables held for investment, net, at amortized cost:
First mortgage loans	$	2,243,639	$	2,232,749	6.50 %	1.00
Mezzanine loans	121,565		121,310		10.83 %	2.42
Total mortgage loans	2,365,204		2,354,059		6.65 %	1.07


Allowance for credit losses	N/A		(41,507)
Total mortgage loan receivables held for investment, net, at amortized cost	2,365,204		2,312,552
Mortgage loan receivables held for sale:
First mortgage loans	30,478		30,518		4.05 %	9.18
Total	$	2,395,682	$	2,343,070	6.74 %	1.23

(1)Includes the impact from interest rate floors. December 31, 2020 LIBOR rates are used to calculate weighted average yield for floating rate loans.

As of December 31, 2020, $1.9 billion, or 82.0%, of the outstanding face amount of our mortgage loan receivables held for investment, net, at amortized cost, were at variable interest rates, linked to LIBOR. Of this $1.9 billion, 100% of these variable rate mortgage loan receivables were subject to interest rate floors. As of December 31, 2020, $30.5 million, or 100%, of the outstanding face amount of our mortgage loan receivables held for sale were at fixed interest rates.

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For the three months ended March 31, 2021 and 2020, the activity in our loan portfolio was as follows ($ in thousands):


	Mortgage loan receivables held for investment, net, at amortized cost:
	Mortgage loans receivable		Allowance for credit losses		Mortgage loan receivables held for sale

Balance, December 31, 2020	$	2,354,059	$	(41,507)	$	30,518
Origination of mortgage loan receivables	116,555		—		41,000

Repayment of mortgage loan receivables	(374,735)		—		(36)
Proceeds from sales of mortgage loan receivables	(46,557)		—		—
Non-cash disposition of loans via foreclosure(1)	(45,000)		—		—


Accretion/amortization of discount, premium and other fees	3,408		—		—


Release of asset-specific loan loss provision via foreclosure(1)	—		1,150		—
Provision for current expected credit loss, net (impact to earnings)	—		4,116		—

Balance, March 31, 2021	$	2,007,730	$	(36,241)	$	71,482

(1)Refer to Note 5 Real Estate and Related Lease Intangibles, Net for further detail on foreclosure of real estate.


	Mortgage loan receivables held for investment, net, at amortized cost:
	Mortgage loans receivable		Allowance for credit losses		Mortgage loan receivables held for sale

Balance, December 31, 2019	$	3,257,036	$	(20,500)	$	122,325
Origination of mortgage loan receivables	313,936		—		212,805

Repayment of mortgage loan receivables	(118,531)		—		(64)
Proceeds from sales of mortgage loan receivables	—		—		(189,358)
Non-cash disposition of loan via foreclosure(1)	(23,586)		—		—
Sale of loans, net	—		—		1,005

Accretion/amortization of discount, premium and other fees	3,924		—		—

Release of asset-specific loan loss provision via foreclosure(1)	—		2,000		—
Provision expense for current expected credit loss(implementation impact)(2)	—		(4,964)		—
Provision expense for current expected credit loss (impact to earnings)(2)	—		(17,993)		—
Additional asset-specific reserve	—		(8,000)		—
Balance, March 31, 2020	$	3,432,779	$	(49,457)	$	146,713

(1)Refer to Note 5, Real Estate and Related Lease Intangibles, Net for further detail on real estate acquired via foreclosure.

(2)During the three months ended March 31, 2020, the initial impact of the implementation of the CECL accounting standard as of January 1, 2020 is recorded against retained earnings. Subsequent remeasurement thereafter, including the period to date change for the three months ended March 31, 2020, is accounted for as provision expense for current expected credit loss in the consolidated statements of income.

As of March 31, 2021 and December 31, 2020, there was $0.5 million of unamortized discounts included in our mortgage loan receivables held for investment, net, at amortized cost, on our consolidated balance sheets.

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Allowance for Credit Losses and Non-Accrual Status ($ in thousands)


	Three Months Ended March 31,
		2021			2020

Allowance for credit losses at beginning of period		$	41,507		$	20,500
Provision for current expected credit loss (implementation impact)		—			4,964		(1)
Provision for current expected credit loss, net (impact to earnings)(2)		(4,116)			25,993


Foreclosure of loans subject to asset-specific reserve		(1,150)			(2,000)


Allowance for credit losses at end of period		$	36,241		$	49,457

		March 31, 2021			December 31, 2020
Carrying value of loans on non-accrual status, net of asset-specific reserve		$	130,574	(3)	$	175,022	(4)

(1)Additional provisions for current expected credit losses related to implementation of $0.8 million and $22.0 thousand related to unfunded commitments and held-to-maturity securities, respectively, were recorded on January 1, 2020 at implementation of CECL.

(2)For the three months ended March 31, 2021, the total provision release consisted of $4.1 million in general reserves and no asset-specific reserves. For the three months ended March 31, 2020, the total provision recorded included $18.0 million of general reserves and $8.0 million of asset-specific reserves.

(3)Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $24.2 million, two loans with a combined carrying value of $26.8 million, one loan with a carrying value of $36.4 million, one loan with a carrying value of $12.8 million, and one loan with a carrying value of $30.5 million.

(4)Represents two of the Company’s loans, which were originated simultaneously as part of a single transaction and had a combined carrying value of $24.2 million, two loans with a combined carrying value of $27.1 million, one loan with a carrying value of $36.4 million, one loan with a carrying value of $13.0 million, one loan with a carrying value of $30.6 million and one loan with a carrying value of $43.8 million which was foreclosed on and sold in 2021.

Current Expected Credit Loss (“CECL”)

On January 1, 2020, the Company recorded a CECL Reserve of $11.6 million, which equated to 0.36% of $3.2 billion carrying value of its held for investment loan portfolio. This reserve excluded three loans that previously had an aggregate of $14.7 million of asset-specific reserves and a carrying value of $39.8 million as of January 1, 2020. Upon adoption, the aggregated CECL Reserve reduced total shareholder’s equity by $5.8 million.

As of March 31, 2021, the Company has a $36.7 million allowance for current expected credit losses, of which $36.2 million pertains to mortgage loan receivables. This allowance includes three loans that have an aggregate of $20.2 million of asset-specific reserves against a carrying value of $71.1 million as of March 31, 2021.

The total change in reserve for provision for the three months ended March 31, 2021 was a release of $4.3 million. The release represents a decline in the general reserve of loans held for investment of $4.2 million and the release on unfunded loan commitments of $0.1 million. The release during the year is primarily due to an improvement in macro economic assumptions. For additional information, refer to “Allowance for Credit Losses and Non-Accrual Status” in Note 3, Mortgage Loan Receivables, to the consolidated financial statements.

The Company has concluded that none of its loans, other than the three loans discussed below, are individually impaired as of March 31, 2021.

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Loan Portfolio by Geographic Region, Property Type and Vintage ($ in thousands)


	Amortized Cost
Geographic Region

Northeast	$	647,583
Southwest	434,883
South	242,205
Midwest	328,919
West	283,036
Subtotal loans	1,936,626
Individually impaired loans(1)	71,104
Total loans	$	2,007,730

(1)Refer to “Individually Impaired Loans” below for further detail.

Management’s method for monitoring credit is the performance of a loan. A loan is impaired or not impaired based on the expectation that all amounts contractually due under a loan will be collected when due. The primary credit quality indicator management utilizes to assess its current expected credit loss reserve is by viewing Ladder’s loan portfolio by collateral type. The following table summarizes the amortized cost of the loan portfolio by property type ($ in thousands).


	Amortized Cost Basis by Origination Year
Property Type	2021		2020		2019		2018		2017 and Earlier		Total

Office	$	—	$	—	$	197,434	$	236,774	$	134,436	$	568,644
Multifamily	37,818		15,064		238,162		44,681		21,221		356,946
Hospitality	—		—		43,592		139,821		111,111		294,524
Other	—		—		111,704		30,436		—		142,140
Mixed Use	50,371		108,646		16,621		—		—		175,638
Retail	19,965		—		85,119		—		40,527		145,611
Industrial	—		—		117,806		—		6,458		124,264
Manufactured Housing	—		4,559		57,369		11,731		3,955		77,614
Self-Storage	—		—		36,026		15,219		—		51,245
Subtotal loans	108,154		128,269		903,833		478,662		317,708		1,936,626
Individually Impaired loans (1)	—		—				—		71,104		71,104
Total loans (2)	$	108,154	$	128,269	$	903,833	$	478,662	$	388,812	$	2,007,730

(1)Refer to “Individually Impaired Loans” below for further detail.

(2)Not included above is $11.8 million of accrued interest receivable on all loans at March 31, 2021.

Individually Impaired Loans

As of March 31, 2021, two loans with an amortized cost basis of $26.9 million and a combined carrying value of $24.2 million were impaired and on non-accrual status. The loans are collateralized by a mixed use property in the Northeast region, which were originated simultaneously as part of a single transaction and are directly and indirectly secured by the same property. In assessing these collateral-dependent loans for impairment, the most significant consideration is the fair value of the underlying real estate collateral, which includes an in-place long-dated retail lease. The value of such property is most significantly affected by the contractual lease terms and the appropriate market capitalization rates, which are driven by the property’s market strength, the general interest rate environment and the retail tenant’s creditworthiness. In view of these considerations, the Company uses a direct capitalization rate valuation methodology to calculate the fair value of the underlying real estate collateral. The Company previously recorded an asset-specific provision for loss in 2018 on one of these loans, with a carrying value of $5.9 million, of $2.7 million to reduce the carrying value of the two loans collectively to the fair value of the property less the cost to foreclose and sell the property utilizing direct capitalization rates of 4.70% to 5.00%. As of March 31, 2021, the Company believed no additional loss provision was necessary based on the application of direct capitalization rates of 4.60% to 4.90%.

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In 2018, a loan secured by a mixed-use property in the Northeast region, with a carrying value of $45.0 million, was determined to be impaired and a reserve of $10.0 million was recorded to reduce the carrying value of the loan to the estimated fair value of the collateral, less the estimated costs to sell. In 2018, the loan experienced a maturity default and its terms were modified in a troubled debt restructuring (“TDR”), which provided for, among other things, the restructuring of the Company’s existing $45.0 million first mortgage loan into a $35.0 million A-Note and a $10.0 million B-Note. The reserve of $10.0 million was applied to the B-Note and the B-Note was placed on non-accrual status. For the three months ended March 31, 2020, management determined that the A-Note was impaired, reflecting a decline in collateral value due to: (i) new information available during the three months ended March 31, 2020 regarding two recent comparable sales and (ii) a change in market conditions driven by COVID-19 as capital flow to the tertiary markets shifted. As a result, on March 31, 2020, the Company recorded an asset-specific provision for loss on the A-Note of $7.5 million to reduce the carrying value of this loan to the fair value of the property less the cost to foreclose and sell the property utilizing direct capitalization rates of 7.50% to 8.60%. The Company placed the A-Note on non-accrual status as of March 31, 2020. As of March 31, 2021, the amortized cost basis was $44.3 million, and after impairment of the A-Note and the B-Note of $17.5 million, the carrying value was $26.8 million.

As of March 31, 2021, there were no unfunded commitments associated with modified loans considered TDRs.

These non-recurring fair values are considered Level 3 measurements in the fair value hierarchy.

Other Loans on Non-Accrual Status

As of March 31, 2021, three other loans were on non-accrual status, with a combined carrying value of $79.7 million. The Company put such loans on non-accrual status in the fourth quarter of 2020 and performed a review of the collateral for the loans. The review consisted of conversations with market participants familiar with the property locations as well as reviewing market data and comparable properties.

There are no other loans on non-accrual status other than those discussed in Individually Impaired Loans and Other Loans on Non-Accrual Status above as of March 31, 2021.

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4. REAL ESTATE SECURITIES

The Company invests in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination. Commercial mortgage-backed securities (“CMBS”), CMBS interest-only securities, Agency securities, Government National Mortgage Association (“GNMA”) construction securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income. GNMA and Federal Home Loan Mortgage Corp (“FHLMC”) securities (collectively, “Agency interest-only securities”) are recorded at fair value with changes in fair value recorded in current period earnings. Equity securities are reported at fair value with changes in fair value recorded in current period earnings. The following is a summary of the Company’s securities at March 31, 2021 and 2020 ($ in thousands):

March 31, 2021


					Gross Unrealized								Weighted Average
Asset Type	Outstanding Face Amount		Amortized Cost Basis		Gains		Losses		Carrying Value			# of Securities	Rating (1)	Coupon %		Yield %		Remaining Duration (years)

CMBS(2)	$	722,489	$	722,238	$	1,063	$	(5,920)	$	717,381	(3)	77	AAA	1.62	%	1.62 %		1.87
CMBS interest-only(2)(4)	1,480,575		19,693		791		(25)		20,459		(5)	15	AAA	0.56	%	2.24 %		2.08
GNMA interest-only(4)(6)	68,478		690		203		(91)		802			14	AA+	0.40	%	5.10 %		3.46
Agency securities(2)	577		583		8		—		591			2	AA+	2.53	%	1.62 %		1.11
GNMA permanent securities(2)	24,239		24,402		468		—		24,870			3	AA+	4.12	%	3.54 %		1.41
Total debt securities	$	2,296,358	$	767,606	$	2,533	$	(6,036)	$	764,103		111		0.93	%	1.71	%	1.86

Provision for current expected credit losses	N/A		—		—		(20)		(20)
Total real estate securities	$	2,296,358	$	767,606	$	2,533	$	(6,056)	$	764,083		111

(1)Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the highest rating is used. Ratings provided were determined by third-party rating agencies as of a particular date, may not be current and are subject to change (including the assignment of a “negative outlook” or “credit watch”) at any time.

(2)CMBS, CMBS interest-only securities, Agency securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(3)Includes $11.1 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the “Dodd-Frank Act”) and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(4)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(5)Includes $0.6 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(6)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s Agency interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company has elected to account for them as hybrid instruments in their entirety at fair value with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income in accordance with ASC 815.

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December 31, 2020


					Gross Unrealized								Weighted Average
Asset Type	Outstanding Face Amount		Amortized Cost Basis		Gains		Losses		Carrying Value			# of Securities	Rating (1)	Coupon %		Yield %		Remaining Duration (years)

CMBS(2)	$	1,015,520	$	1,015,282	$	1,382	$	(13,363)	$	1,003,301	(3)	90	AAA	1.56	%	1.56 %		2.01
CMBS interest-only(2)(4)	1,498,181		21,567		672		(26)		22,213		(5)	15	AAA	0.44	%	3.53 %		2.19
GNMA interest-only(4)(6)	75,350		868		232		(100)		1,000			11	AA+	0.43	%	5.06 %		3.59
Agency securities(2)	586		593		12		—		605			2	AA+	2.55	%	1.64 %		1.26
GNMA permanent securities(2)	30,254		30,340		859		—		31,199			5	AA+	3.87	%	3.49 %		1.98

Total debt securities	$	2,619,891	$	1,068,650	$	3,157	$	(13,489)	$	1,058,318		123		0.91	%	1.66	%	2.01
Provision for current expected credit losses	N/A		—		—		(20)		(20)

Total real estate securities	$	2,619,891	$	1,068,650	$	3,157	$	(13,509)	$	1,058,298		123

(3)Includes $11.1 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(4)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(5)Includes $0.7 million of restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust and are classified as held-to-maturity and reported at amortized cost.

(6)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings. The Company’s Agency interest-only securities are considered to be hybrid financial instruments that contain embedded derivatives. As a result, the Company accounts for them as hybrid instruments in their entirety at fair value with changes in fair value recognized in unrealized gain (loss) on Agency interest-only securities in the consolidated statements of income in accordance with ASC 815.

The following is a breakdown of the carrying value of the Company’s debt securities by remaining maturity based upon expected cash flows at March 31, 2021 and December 31, 2020 ($ in thousands):

March 31, 2021


Asset Type	Within 1 year		1-5 years		5-10 years		After 10 years		Total

CMBS	$	238,289	$	444,688	$	34,404	$	—	$	717,381
CMBS interest-only	1,256		19,203		—		—		20,459
GNMA interest-only	86		463		253		—		802
Agency securities	509		82		—		—		591
GNMA permanent securities	—		24,870		—		—		24,870

Provision for current expected credit losses	—		—		—		—		(20)
Total debt securities	$	240,140	$	489,306	$	34,657	$	—	$	764,083

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December 31, 2020


Asset Type	Within 1 year		1-5 years		5-10 years		After 10 years		Total

CMBS	$	230,977	$	748,953	$	23,371	$	—	$	1,003,301
CMBS interest-only	1,572		20,641		—		—		22,213
GNMA interest-only	65		647		288		—		1,000
Agency securities	—		605		—		—		605
GNMA permanent securities	67		31,132		—		—		31,199
Provision for current expected credit losses	—		—		—		—		(20)
Total debt securities	$	232,681	$	801,978	$	23,659	$	—	$	1,058,298

During the three months ended March 31, 2021 and 2020, the Company realized losses on securities recorded as other than temporary impairments of $0.1 million and $0.2 million, respectively, which are included in realized gain (loss) on securities on the Company’s consolidated statements of income.

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5. REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

The market conditions due to the COVID-19 pandemic and the resulting economic disruption have broadly impacted the commercial real estate sector. As expected, the net leased commercial real estate properties, which comprise the majority of our portfolio, have remained minimally impacted as the majority of the net leased properties in our real estate portfolio are necessity-based businesses and have remained open and stable during the COVID-19 pandemic. We continue to actively monitor the diversified commercial real estate properties for both the immediate and long term impact of the pandemic on the buildings, the tenants, the business plans and the ability to execute those business plans.

The following tables present additional detail related to our real estate portfolio, net, including foreclosed properties ($ in thousands):


	March 31, 2021		December 31, 2020

Land	$	220,511	$	220,511
Building	839,811		838,542
In-place leases and other intangibles	157,176		157,176
Undepreciated real estate and related lease intangibles	1,217,498		1,216,229
Less: Accumulated depreciation and amortization	(240,527)		(230,925)

Real estate and related lease intangibles, net	$	976,971	$	985,304

Below market lease intangibles, net (other liabilities)	$	(36,383)	$	(36,952)

At March 31, 2021 and December 31, 2020, the Company held foreclosed properties included in real estate and related lease intangibles, net with a carrying value of $106.0 million and $106.8 million, respectively.

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):


	Three Months Ended March 31,
		2021		2020

Depreciation expense(1)		$	7,990	$	8,273
Amortization expense		1,546		1,711
Total real estate depreciation and amortization expense		$	9,536	$	9,984

(1)Depreciation expense on the consolidated statements of income also includes $25 thousand of depreciation on corporate fixed assets for the three months ended March 31, 2021 and 2020.

The Company’s intangible assets are comprised of in-place leases, above market leases and other intangibles. The following tables present additional detail related to our intangible assets ($ in thousands):


	March 31, 2021		December 31, 2020

Gross intangible assets(1)	$	157,176	$	157,176
Accumulated amortization	67,651		66,014
Net intangible assets	$	89,525	$	91,162

(1)Includes $4.1 million and $4.2 million of unamortized above market lease intangibles which are included in real estate and related lease intangibles, net on the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

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The following table presents increases/reductions in operating lease income recorded by the Company ($ in thousands):


	Three Months Ended March 31,
		2021		2020

Reduction in operating lease income for amortization of above market lease intangibles acquired		$	(92)	$	(92)
Increase in operating lease income for amortization of below market lease intangibles acquired		570		752

The following table presents expected adjustment to operating lease income and expected amortization expense during the next five years and thereafter related to the above and below market leases and acquired in-place lease and other intangibles for property owned as of March 31, 2021 ($ in thousands):


Period Ending December 31,	Adjustment to Operating Lease Income		Amortization Expense

2021 (last 9 months)	$	804	$	5,406
2022	1,071		5,406
2023	1,071		5,406
2024	1,071		5,406
2025	1,071		5,406
Thereafter	27,215		58,418
Total	$	32,303	$	85,448

Rent Receivables, Unencumbered Real Estate, and Operating Lease Income

There were $0.4 million and $0.5 million of rent receivables included in other assets on the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively.

There was unencumbered real estate of $75.3 million and $75.9 million as of March 31, 2021 and December 31, 2020, respectively.

During the three months ended March 31, 2021 and 2020, the Company recorded $1.0 million and $2.0 million, respectively, of real estate operating income, which is included in operating lease income in the consolidated statements of income.

The following is a schedule of non-cancellable, contractual, future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases) at March 31, 2021 ($ in thousands):


Period Ending December 31,	Amount

2021 (last 9 months)	$	57,458
2022	66,465
2023	64,746
2024	63,783
2025	62,506
Thereafter	471,453
Total	$	786,411

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Acquisitions

During the three months ended March 31, 2021, the Company acquired the following properties ($ in thousands):

Acquisition Date

Type

Primary Location(s)

Purchase Price/Fair Value on the Date of Foreclosure

Ownership Interest (1)

Real estate acquired via foreclosure

February 2021

Hotel

Miami, FL

43,750

100.0%

Total real estate acquired via foreclosure

43,750

Total real estate acquisitions

43,750

(1)Properties were consolidated as of acquisition date.

Acquisitions via Foreclosure

In February 2021, the Company acquired a hotel in Miami, FL via foreclosure recognizing a $26 thousand loss which is included in its consolidated statements of income. The property previously served as collateral for a mortgage loan receivable held for investment with a basis of $45.1 million, net of an asset-specific loan loss provision of $1.2 million recorded in the three months ended December 31, 2020. In February 2021, the foreclosed property was sold without any gain or loss. The Company recorded no revenues from its 2021 acquisitions for the three months ended March 31, 2021.

During the three months ended March 31, 2020, the Company acquired the following properties ($ in thousands):


Acquisition Date	Type	Primary Location(s)	Purchase Price/Fair Value on the Date of Foreclosure		Ownership Interest (1)





















Aggregate purchases of net leased real estate			$	6,239	100.0%

Real estate acquired via foreclosure





March 2020	Diversified	Los Angeles, CA	21,535		100.0%



Total real estate acquired via foreclosure			21,535

Total real estate acquisitions			$	27,774

(1)Properties were consolidated as of acquisition date.

The Company recorded $44 thousand in revenues from its 2020 acquisitions for the three months ended March 31, 2020, which is included in its consolidated statements of income. The Company recorded $0.1 million in earnings (losses) from its 2020 acquisitions for the three months ended March 31, 2020, which is included in its consolidated statements of income.

Sales

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The Company sold the following properties during the three months ended March 31, 2021 ($ in thousands):


Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining

February 2021	Hotel	Miami, FL	$	43,750	$	43,750	$	—	1	—	—






Totals			$	43,750	$	43,750	$	—

The Company sold the following properties during the three months ended March 31, 2020 ($ in thousands):


Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining


Various	Condominium	Miami, FL	665		658		7		—	2	4
March 2020	Diversified	Richmond, VA	22,527		14,829		7,698		7	—	—
March 2020	Diversified	Richmond, VA	6,932		4,109		2,823		1	—	—


Totals			$	30,124	$	19,596	$	10,528

(1)Realized gain (loss) on the sale of real estate, net on the consolidated statements of income also includes $10.5 million of realized loss on the disposal of fixed assets for the three months ended March 31, 2020.

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6. INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED JOINT VENTURES

The following is a summary of the Company’s investments in and advances to unconsolidated joint ventures, which we account for using the equity method, as of March 31, 2021 and December 31, 2020 ($ in thousands):


Entity	March 31, 2021		December 31, 2020


Grace Lake JV, LLC	$	4,320	$	4,023
24 Second Avenue Holdings LLC	40,188		42,230
Investment in unconsolidated joint ventures	$	44,508	$	46,253

The following is a summary of the Company’s allocated earnings (losses) based on its ownership interests from investment in unconsolidated joint ventures for the three months ended March 31, 2021 and 2020 ($ in thousands):


	Three Months Ended March 31,
Entity		2021		2020


Grace Lake JV, LLC		$	297	$	186
24 Second Avenue Holdings LLC		139		255
Earnings (loss) from investment in unconsolidated joint ventures		$	436	$	441

Grace Lake JV, LLC

In connection with the origination of a loan in April 2012, the Company received a 25% equity interest with the right to convert upon a capital event. On March 22, 2013, the loan was refinanced, and the Company converted its interest into a 19% limited liability company membership interest in Grace Lake JV, LLC (“Grace Lake LLC”), which holds an investment in an office building complex. After taking into account the preferred return of 8.25% and the return of all equity remaining in the property to the Company’s operating partner, the Company is entitled to 25% of the distribution of all excess cash flows and all disposition proceeds upon any sale. The Company is not legally required to provide any future funding to Grace Lake LLC. The Company accounts for its interest in Grace Lake LLC using the equity method of accounting, as it has a 19% investment, compared to the 81% investment of its operating partner and does not control the entity.

The Company’s investment in Grace Lake LLC is an unconsolidated joint venture, which is a variable interest entity (“VIE”) for which the Company is not the primary beneficiary. This joint venture was deemed to be a VIE primarily based on the fact there are disproportionate voting and economic rights within the joint venture. The Company determined that it was not the primary beneficiary of this VIE based on the fact that the Company has a passive investment and no control of this entity and therefore does not have controlling financial interests in this VIE. The Company’s maximum exposure to loss is limited to its investment in the VIE. The Company has not provided financial support to this VIE that it was not previously contractually required to provide.

During the three months ended March 31, 2021, and March 31, 2020, the Company received no distributions from its investment in Grace Lake LLC.

The Company holds its investment in Grace Lake LLC in a TRS.

24 Second Avenue Holdings LLC

On August 7, 2015, the Company entered into a joint venture, 24 Second Avenue Holdings LLC (“24 Second Avenue”), with an operating partner (the “Operating Partner”) to invest in a ground-up residential/retail condominium development and construction project located at 24 Second Avenue, New York, NY. The Company accounted for its interest in 24 Second Avenue using the equity method of accounting as its joint venture partner was the managing member of 24 Second Avenue and had substantive management rights.

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During the three months ended March 31, 2019, the Company converted its existing $35.0 million common equity interest into a $35.0 million priority preferred equity position. The Company also provided $50.4 million in first mortgage financing in order to refinance the existing $48.1 million first mortgage construction loan which was made by another lending institution. In addition to the new $50.4 million first mortgage loan, the Company also funded a $6.5 million mezzanine loan for use in completing the project. The Operating Partner must fully fund any and all additional capital for necessary expenses.

Due to the Company’s non-controlling equity interest in 24 Second Avenue, the Company accounts for the new loans as additional investments in the joint venture.

During the three months ended March 31, 2021 and 2020 the Company recorded $0.1 million and $0.3 million, respectively, in income (expenses), each of which is recorded in earnings (loss) from investment in unconsolidated joint ventures in the consolidated statements of income. The Company received $2.2 million of distributions during the three months ended March 31, 2021.

The 24 Second Avenue investment consists of residential condominium units and one commercial condominium unit. 24 Second Avenue started closing on the existing sales contracts during the quarter ended March 31, 2019, upon receipt of New York City Building Department approvals and a temporary certificate of occupancy for a portion of the project. As of March 31, 2021, 24 Second Avenue sold 21 residential condominium units for $55.2 million in total gross sale proceeds, and two residential condominium units were under contract for sale for $6.3 million in gross sales proceeds with a 10% deposit down on the sales contracts. As of March 31, 2021, the Company had no additional remaining capital commitment to 24 Second Avenue.

The Company’s non-controlling investment in 24 Second Avenue is an unconsolidated joint venture, which is a VIE for which the Company is not the primary beneficiary. This joint venture was deemed to be a VIE primarily based on (i) the fact that the total equity investment at risk (inclusive of the additional financing the Company provided through the first mortgage and mezzanine loans) is sufficient to permit the entities to finance activities without additional subordinated financial support provided by any parties, including equity holders; and (ii) the voting and economic rights are not disproportionate within the joint venture. The Company determined that it was not the primary beneficiary of this VIE because it does not have a controlling financial interest.

The Company holds its investment in 24 Second Avenue in a TRS.

Combined Summary Financial Information for Unconsolidated Joint Ventures

The following is a summary of the combined financial position of the unconsolidated joint ventures in which the Company had investment interests as of March 31, 2021 and December 31, 2020 ($ in thousands):


	March 31, 2021		December 31, 2020

Total assets	$	117,794	$	114,916
Total liabilities	70,972		75,775
Partners’/members’ capital	$	46,822	$	39,141

The following is a summary of the combined results from operations of the unconsolidated joint ventures for the period in which the Company had investment interests during the three months ended March 31, 2021 and 2020 ($ in thousands):


	Three Months Ended March 31,
		2021		2020

Total revenues		$	4,514	$	4,476
Total expenses		3,323		3,974
Net income (loss)		$	1,191	$	502

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7. DEBT OBLIGATIONS, NET

The details of the Company’s debt obligations at March 31, 2021 and December 31, 2020 are as follows ($ in thousands):

March 31, 2021


Debt Obligations	Committed Financing		Debt Obligations Outstanding			Committed but Unfunded		Interest Rate at March 31, 2021(1)			Current Term Maturity	Remaining Extension Options	Eligible Collateral	Carrying Amount of Collateral		Fair Value of Collateral

Committed Loan Repurchase Facility(2)	$	500,000	$	110,887		$	389,113	1.86%	—	2.11%	12/19/2022	(3)	(4)	$	179,497	$	179,497
Committed Loan Repurchase Facility	250,000		—			250,000		—%	—	—%	2/26/2022	(5)	(6)	—		—
Committed Loan Repurchase Facility	300,000		90,176			209,824		1.86%	—	2.86%	12/16/2021	(7)	(8)	155,288		155,288
Committed Loan Repurchase Facility	300,000		11,312			288,688		2.13%	—	2.13%	11/6/2022	(9)	(4)	28,312		28,312
Committed Loan Repurchase Facility	100,000		26,183			73,817		2.23%	—	2.23%	12/31/2022	(3)	(4)	44,961		44,961
Committed Loan Repurchase Facility	100,000		—			100,000		—%	—	—%	10/24/2021	(10)	(11)	—		—
Total Committed Loan Repurchase Facilities	1,550,000		238,558			1,311,442								408,058		408,058
Committed Securities Repurchase Facility(2)	789,114		63,125			725,989		0.81%	—	1.06%	12/23/2021	N/A	(12)	76,846		76,846
Uncommitted Securities Repurchase Facility	N/A (14)		275,014			N/A (14)		0.57%	—	2.11%	4/2021-5/2021	N/A	(12)	321,247		321,247		(14)
Total Repurchase Facilities	1,950,000		576,697			1,648,317								806,151		806,151
Revolving Credit Facility	266,430		256,430			10,000		3.11%	—	5.25%	2/11/2022	(15)	N/A (16)	N/A (16)		N/A (16)
Mortgage Loan Financing	765,096		765,096			—		3.75%	—	6.16%	2021 - 2030(17)	N/A	(18)	901,633		1,134,898		(19)
Secured Financing Facility	206,350		194,662		(20)	—		10.75%	—	10.75%	5/6/2023	N/A	(21)	274,806		275,081
CLO Debt	234,968		233,195		(22)	—		5.5%	—	5.5%	5/16/2024	N/A	(4)	358,834		358,834

Borrowings from the FHLB	288,000		288,000			—		0.37%	—	2.74%	2021 - 2024	N/A	(23)	317,448		317,448		(24)
Senior Unsecured Notes	1,465,644		1,453,739		(25)	—		4.25%	—	5.25%	2021 - 2027	N/A	N/A (26)	N/A (26)		N/A (26)


Total Debt Obligations, Net	$	5,176,488	$	3,767,819		$	1,658,317							$	2,658,872	$	2,892,412

(1)March 2021 LIBOR rates are used to calculate interest rates for floating rate debt.

(2)The combined committed amounts for the loan repurchase facility and the securities repurchase facility total $900.0 million, with maximum capacity on the loan repurchase facility of $500.0 million, and maximum capacity on the securities repurchase facility of $900.0 million less outstanding commitments on the loan repurchase facility.

(3)Two 12-month extension periods at Company’s option. No new advances are permitted after the initial maturity date.

(4)First mortgage commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(5)Two additional 12-month periods at Company’s option.

(6)First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans.

(7)Two additional 364-day periods at Company’s option.

(8)First mortgage and mezzanine commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(9)One additional 12-month extension period and two additional 6-month extension periods at Company’s option.

(10)The Company may extend periodically with lender’s consent. At no time can the maturity of the facility exceed 364 days from the date of determination.

(11)First mortgage, junior and mezzanine commercial real estate loans, and certain senior and/or pari passu interests therein.

(12)Commercial real estate securities. It does not include the first mortgage commercial real estate loans collateralizing such securities.

(13)Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances.

(14)Includes $2.1 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(15)Three additional 12-month periods at Company’s option.

(16)The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries.

(17)Anticipated repayment dates.

(18)Certain of our real estate investments serve as collateral for our mortgage loan financing.

(19)Using undepreciated carrying value of commercial real estate to approximate fair value.

(20)Presented net of unamortized debt issuance costs of $5.8 million and an unamortized discount of $5.9 million related to the Purchase Right (described in detail under Secured Financing Facility below) at March 31, 2021.

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(21)First mortgage commercial real estate loans. Substitution of collateral and conversion of loan collateral to mortgage collateral are permitted with Lender’s approval. Pending substitution of acceptable collateral, $20.3 million of the obligations are unsecured and guaranteed by the Company.

(22)Presented net of unamortized debt issuance costs of $1.8 million at March 31, 2021.

(23)Investment grade commercial real estate securities and cash It does not include the first mortgage commercial real estate loans collateralizing such securities.

(24)Includes $8.8 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(25)Presented net of unamortized debt issuance costs of $11.9 million at March 31, 2021.

(26)The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries.

December 31, 2020


Debt Obligations	Committed Financing		Debt Obligations Outstanding			Committed but Unfunded		Interest Rate at December 31, 2020(1)			Current Term Maturity	Remaining Extension Options	Eligible Collateral	Carrying Amount of Collateral		Fair Value of Collateral

Committed Loan Repurchase Facility(2)	$	500,000	$	112,004		$	387,996	1.91%	—	2.16%	12/19/2022	(3)	(4)	$	180,416	$	180,416
Committed Loan Repurchase Facility	250,000		—			250,000		—%	—	—%	2/26/2021	(5)	(6)	—		—
Committed Loan Repurchase Facility	300,000		90,197			209,803		1.91%	—	2.91%	12/16/2021	(7)	(8)	154,850		154,850
Committed Loan Repurchase Facility	300,000		11,312			288,688		2.19%	—	2.19%	11/6/2022	(9)	(4)	28,285		28,285
Committed Loan Repurchase Facility	100,000		26,183			73,817		2.28%	—	2.28%	12/31/2022	(10)	(4)	45,235		45,235
Committed Loan Repurchase Facility	100,000		15,672			84,328		2.66%	—	3.50%	10/24/2021	(11)	(12)	30,600		30,600
Total Committed Loan Repurchase Facilities	1,550,000		255,368			1,294,632								439,386		439,386
Committed Securities Repurchase Facility(2)	787,996		149,633			638,363		0.86%	—	1.11%	12/23/2021	N/A	(13)	226,008		226,008
Uncommitted Securities Repurchase Facility	N/A (14)		415,836			N/A (14)		0.73%	—	2.84%	1/2021-3/2021	N/A	(13)	502,476		502,476		(15)
Total Repurchase Facilities	1,950,000		820,837			1,544,999								1,167,870		1,167,870
Revolving Credit Facility	266,430		266,430			—		3.15%			2/11/2022	(16)	N/A (17)	N/A (17)		N/A (17)
Mortgage Loan Financing	766,064		766,064			—		3.75%	—	6.16%	2021 - 2030(18)	N/A	(19)	909,406		1,133,703		(20)
Secured Financing Facility	206,350		192,646		(21)	—		10.75%	—	10.75%	5/6/2023	N/A	(22)	327,769		328,097
CLO Debt	279,156		276,516		(23)	—		5.50%	—	5.50%	5/16/2024	N/A	(4)	362,600		362,600

Borrowings from the FHLB	1,500,000		288,000			1,212,000		0.41%	—	2.74%	2021 - 2024	N/A	(24)	388,400		392,212		(25)
Senior Unsecured Notes	1,612,299		1,599,371		(26)	—		4.25%	—	5.88%	2021 - 2027	N/A	N/A (27)	N/A (27)		N/A (27)


Total Debt Obligations	$	6,580,299	$	4,209,864		$	2,756,999							$	3,156,045	$	3,384,482

(1)December 31, 2020 LIBOR rates are used to calculate interest rates for floating rate debt.

(3)Two additional 12-month periods at Company’s option. No new advances are permitted after the initial maturity date.

(4)First mortgage commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(5)Three additional 12-month periods at Company’s option.

(6)First mortgage commercial real estate loans. It does not include the real estate collateralizing such loans

(7)Two additional 364-day periods at Company’s option.

(8)First mortgage and mezzanine commercial real estate loans and senior and pari passu interests therein. It does not include the real estate collateralizing such loans.

(9)One additional 12-month extension period and two additional 6-month extension periods at Company’s option.

(10)Two additional 12-month extension periods at Company’s option. No new advances are permitted after the initial maturity date.

(11)The Company may extend periodically with lender’s consent. At no time can the maturity of the facility exceed 364 days from the date of determination.

(12)First mortgage, junior and mezzanine commercial real estate loans, and certain senior and/or pari passu interests therein.

(13)Commercial real estate securities. It does not include the first mortgage commercial real estate loans collateralizing such securities.

(14)Represents uncommitted securities repurchase facilities for which there is no committed amount subject to future advances.

(15)Includes $2.1 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

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(16)Three additional 12-month periods at Company’s option.

(17)The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries and secured by equity pledges in certain Company subsidiaries.

(18)Anticipated repayment dates.

(19)Certain of our real estate investments serve as collateral for our mortgage loan financing.

(20)Using undepreciated carrying value of commercial real estate to approximate fair value.

(21)Presented net of unamortized debt issuance costs of $7.2 million and an unamortized discount of $6.6 million related to the Purchase Right (described in detail under Secured Financing Facility below) at December 31, 2020.

(22)First mortgage commercial real estate loans. Substitution of collateral and conversion of loan collateral to mortgage collateral are permitted with Lender’s approval.

(23)Presented net of unamortized debt issuance costs of $2.6 million at December 31, 2020.

(24)First mortgage commercial real estate loans and investment grade commercial real estate securities. It does not include the real estate collateralizing such loans and securities.

(25)Includes $9.4 million of restricted securities under the risk retention rules of the Dodd-Frank Act. These securities are accounted for as held-to-maturity and recorded at amortized cost basis.

(26)Presented net of unamortized debt issuance costs of $12.9 million at December 31, 2020.

(27)The obligations under the senior unsecured notes are guaranteed by the Company and certain of its subsidiaries.

Combined Maturity of Debt Obligations

The following schedule reflects the Company’s contractual payments under all borrowings by maturity ($ in thousands):


Period ending December 31,	Borrowings by Maturity(1)

2021	$	819,268
2022	733,163
2023	351,992
2024	531,283
2025	468,876
Thereafter	884,678
Subtotal	3,789,260
Debt issuance costs included in senior unsecured notes	(11,905)

Debt issuance costs included in secured financing facility	(5,827)
Discount on secured financing facility related to Purchase Right	(5,861)
Debt issuance costs included in CLO debt	(1,773)
Debt issuance costs included in mortgage loan financing	(354)
Premiums included in mortgage loan financing(2)	4,279
Total	$	3,767,819

(1)Contractual payments under current maturities, some of which are subject to extensions. The maturities listed above for 2021 relate to debt obligations that are subject to existing Company controlled extension options for one or more additional one-year periods or could be refinanced by other existing facilities as of March 31, 2021.

(2)Deferred gains on intercompany loans, secured by our own real estate, sold into securitizations. These premiums are amortized as a reduction to interest expense.

The Company’s debt facilities are subject to covenants which require the Company to maintain a minimum level of total equity. Largely as a result of this restriction, approximately $871.4 million of the total equity is restricted from payment as a dividend by the Company at March 31, 2021.

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Revolving Credit Facility

During the three months ended March 31, 2021, the Company paid down $10.0 million of the revolving credit facility (the “Revolving Credit Facility”). As of March 31, 2021, the Company had $256.4 million borrowings outstanding.

Debt Issuance Costs

As discussed in Note 2, Significant Accounting Policies in the Annual Report, the Company considers its committed loan master repurchase facilities and Revolving Credit Facility to be revolving debt arrangements. As such, the Company continues to defer and present costs associated with these facilities as an asset, subsequently amortizing those costs ratably over the term of each revolving debt arrangement. As of March 31, 2021 and 2020, the amount of unamortized costs relating to such facilities are $5.4 million and $8.0 million, respectively, and are included in other assets in the consolidated balance sheets.

Mortgage Loan Financing

These non-recourse debt agreements provide for fixed rate financing at rates ranging from 3.75% to 6.16%, with anticipated maturity dates between 2021-2030 as of March 31, 2021. These loans have carrying amounts of $765.1 million and $766.1 million, net of unamortized premiums of $4.3 million and $4.6 million as of March 31, 2021 and December 31, 2020, respectively, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. The Company recorded $0.3 million and $0.3 million of premium amortization, which decreased interest expense, for the three months ended March 31, 2021 and 2020, respectively. The loans are collateralized by real estate and related lease intangibles, net, of $901.6 million and $909.4 million as of March 31, 2021 and December 31, 2020, respectively.

Secured Financing Facility

On April 30, 2020, the Company entered into a strategic financing arrangement with an American multinational corporation (the “Lender”), under which the Lender provided the Company with approximately $206.4 million in senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility is secured on a first lien basis on a portfolio of certain of the Company’s loans and will mature on May 6, 2023, and borrowings thereunder bear interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium of approximately $39.2 million minus the aggregate sum of all interest payments made under the Secured Financing Facility prior to the date of payment of the minimum interest premium, which is payable upon the earlier of maturity or repayment in full of the loan. The Senior Financing Facility is non-recourse, subject to limited exceptions, and does not contain mark-to-market provisions. Additionally, the Senior Financing Facility provides the Company optionality to modify or restructure loans or forbear in exercising remedies, which maximizes the Company’s financial flexibility.

As part of the strategic financing, the Lender also had the ability to make an equity investment in the Company of up to 4.0 million Class A common shares at $8.00 per share, subject to certain adjustments (the “Purchase Right”). The Purchase Right was exercised in full at $8.00 per share on December 29, 2020. In addition, the Lender has agreed not to sell, transfer, assign, pledge, hypothecate, mortgage, dispose of or in any way encumber the shares acquired as a result of exercising the Purchase Right for a period of time following the exercise date. In connection with the issuance of the Purchase Right, the Company and the Lender entered into a registration rights agreement, pursuant to which the Company has agreed to provide customary demand and piggyback registration rights to the Lender.

The Purchase Right was classified as equity and the $200.9 million of net proceeds from the original issuance were allocated $192.5 million to the originally issued debt obligation and $8.4 million to the Purchase Right using the relative fair value method. The commitment to issue shares will not be subsequently remeasured. The $8.4 million allocated to the Purchase Right is being treated as a discount to the debt and amortized over the life of the Purchase Right to interest expense.

As of March 31, 2021, the Company had $194.7 million of borrowings outstanding under the secured financing facility included in debt obligations on its consolidated balance sheets, net of unamortized debt issuance costs of $5.8 million and a $5.9 million unamortized discount related to the Purchase Right.

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Collateralized Loan Obligation (“CLO”) Debt

On April 27, 2020, a consolidated subsidiary of the Company completed a private CLO transaction with a major U.S. bank which generated $310.2 million of gross proceeds to Ladder, financing $481.3 million of loans (“Contributed Loans”) at a 64.5% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained a 35.5% subordinate and controlling interest in the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed Loans, including broad discretion in managing these loans in light of the COVID-19 pandemic, and has the ability to appoint the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE - See Note 10, Consolidated Variable Interest Entities. Proceeds from the transaction were used to pay off other secured debt including bank and FHLB financing that was subject to mark-to-market provisions.

As of March 31, 2021, the Company had $233.2 million of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $1.8 million were included in CLO debt as of March 31, 2021.

Borrowings from the Federal Home Loan Bank (“FHLB”)

On July 11, 2012, Tuebor, a consolidated subsidiary of the Company, became a member of the FHLB and subsequently drew its first secured funding advances from the FHLB. As of February 19, 2021, pursuant to a final rule adopted by the Federal Housing Finance Agency (the “FHFA”) regarding the eligibility of captive insurance companies, Tuebor’s membership in the FHLB has been terminated, although outstanding advances may remain outstanding until their scheduled maturity dates. Funding for future advance paydowns is expected to be obtained from the natural amortization and/or sales of securities collateral, or from other financing sources. There is no assurance that the FHFA or the FHLB will not take actions that could adversely impact Tuebor’s existing advances.

As of March 31, 2021, Tuebor had $288.0 million of borrowings outstanding, with terms of overnight to 3.75 years (with a weighted average of 2.8 years), interest rates of 0.37% to 2.74% (with a weighted average of 1.09%), and advance rates of 71.7% to 95.7% on eligible collateral. As of March 31, 2021, collateral for the borrowings was comprised of $215.3 million of CMBS and U.S. Agency Securities and $102.1 million of cash. FHLB advances amounted to 7.6% of the Company’s outstanding debt obligations as of March 31, 2021.

As of December 31, 2020, Tuebor had $288.0 million of borrowings outstanding with terms of overnight to 3.75 years (with a weighted average of 2.8 years), interest rates of 0.41% to 2.74% (with a weighted average of 1.12%), and advance rates of 45.0% to 95.7% on eligible collateral. As of December 31, 2020, collateral for the borrowings was comprised of $280.1 million of CMBS and U.S. Agency Securities and $108.3 million of first mortgage commercial real estate loans.

Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought. Largely as a result of this restriction, approximately $2.1 billion of the member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at March 31, 2021. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.

Senior Unsecured Notes

As of March 31, 2021, the Company had $1.5 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $465.9 million in aggregate principal amount of 5.25% senior notes due 2022 (the “2022 Notes”), $348.0 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”) and $651.8 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes,” collectively with the 2022 Notes and the 2025 Notes, the “Notes”).

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On January 27, 2021, the Company redeemed in full its 5.875% Senior Notes due 2021 (the “2021 Notes”) for $150.9 million. The 2021 Notes were redeemed at par, plus accrued and unpaid interest to the redemption date, pursuant to the optional redemption provisions of the indenture governing the 2021 Notes. The redemption of a portion of the 2021 Notes that were redeemed was subject to the condition that the Company’s subsidiary issuers of the 2021 Notes complete a notes offering of not less than $400 million. The issuers waived the condition prior to redeeming the 2021 Notes in full.

LCFH issued the Notes with Ladder Capital Finance Corporation (“LCFC”), as co-issuers on a joint and several basis. LCFC is a 100% owned finance subsidiary of Series TRS of LCFH with no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Notes. The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company is the general partner of LCFH and, through LCFH and its subsidiaries, operates the Ladder Capital business. As of March 31, 2021, the Company has a 100% economic and voting interest in LCFH and controls the management of LCFH as a result of its ability to appoint board members. Accordingly, the Company consolidates the financial results of LCFH. In addition, the Company, through certain subsidiaries which are treated as TRSs, is indirectly subject to U.S. federal, state and local income taxes. Other than federal, state and local income taxes, there are no material differences between the Company’s consolidated financial statements and LCFH’s consolidated financial statements. The Company believes it was in compliance with all covenants of the Notes as of March 31, 2021 and 2020.

Unamortized debt issuance costs of $11.9 million and $12.9 million are included in senior unsecured notes as of March 31, 2021 and December 31, 2020, respectively, in accordance with GAAP.

2022 Notes

On March 16, 2017, LCFH issued $500.0 million in aggregate principal amount of 5.250% senior notes due March 15, 2022 (the “2022 Notes”). The 2022 Notes require interest payments semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on September 15, 2017. The 2022 Notes will mature on March 15, 2022. The 2022 Notes are unsecured and are subject to an unencumbered assets to unsecured debt covenant. At any time on or after September 15, 2021, the 2022 Notes are redeemable at the option of the Company, in whole or in part, upon not less than 15 nor more than 60 days’ notice, without penalty. On May 2, 2018, the board of the directors authorized the Company to repurchase any or all of the 2022 Notes from time to time without further approval. As of March 31, 2021, the remaining $465.9 million in aggregate principal amount of the 2022 Notes is due March 15, 2022.

2025 Notes

On September 25, 2017, LCFH issued $400.0 million in aggregate principal amount of 5.250% senior notes due October 1, 2025 (the “2025 Notes”). The 2025 Notes require interest payments semi-annually in cash in arrears on April 1 and October 1 of each year, beginning on April 1, 2018. The 2025 Notes will mature on October 1, 2025. The 2025 Notes are unsecured and are subject to an unencumbered assets to unsecured debt covenant. The Company may redeem the 2025 Notes, in whole or in part, at any time, or from time to time, prior to their stated maturity upon not less than 15 nor more than 60 days’ notice, at a redemption price as specified in the indenture governing the 2025 Notes, plus accrued and unpaid interest, if any, to the redemption date. On May 2, 2018, the board of the directors authorized the Company to repurchase any or all of the 2025 Notes from time to time without further approval. As of March 31, 2021, the remaining $348.0 million in aggregate principal amount of the 2025 Notes is due October 1, 2025.

2027 Notes

On January 30, 2020, LCFH issued $750.0 million in aggregate principal amount of 4.25% senior notes due February 1, 2027. The 2027 Notes require interest payments semi-annually in cash in arrears on August 1 and February 1 of each year, beginning on August 1, 2020. The 2027 Notes will mature on February 1, 2027. The 2027 Notes are unsecured and are subject to an unencumbered assets to unsecured debt covenant. The Company may redeem the 2027 Notes, in whole, at any time, or from time to time, prior to their stated maturity. At any time on or after February 1, 2023, the Company may redeem the 2027 Notes in whole or in part, upon not less than 15 nor more than 60 days’ notice, at a redemption price defined in the indenture governing the 2027 Notes, plus accrued and unpaid interest, if any, to the redemption date. Net proceeds of the offering were used to repay secured indebtedness. As of March 31, 2021, the remaining $651.8 million in aggregate principal amount of the 2027 Notes is due February 1, 2027.

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Financing Strategy in Current Market Conditions

Securities Repurchase Facilities: The Company invests in AAA-rated CRE CLO securities, typically front pay securities, with relatively short duration and significant subordination. These securities have historically been financed with short-term maturity repurchase agreements with various bank counterparties. The Company has been able to continue to access securities repurchase funding and the pricing of such borrowings has continued to improve during the three months ended March 31, 2021 as liquidity continued to return to the market and pricing for the securities that serve as collateral improved. Furthermore, during the three months ended March 31, 2021, the Company paid down $227.3 million of securities repurchase financing, primarily through sales of securities.

Federal Home Loan Bank (“FHLB”) Financing: In 2016, the FHFA adopted a final rule that limited our captive insurance subsidiary’s membership in the FHLB, requiring us to significantly reduce the amounts of FHLB borrowings outstanding by February of 2021.

During the three months ended March 31, 2021, the Company maintained $288.0 million in borrowings from the FHLB. The remaining maturities are staggered out through 2024. Funding for future advance paydowns would be obtained from the natural amortization of securities over time or sales of securities collateral.

Loan Repurchase Financing: The Company utilizes committed loan repurchase financing from six bank providers as part of a diverse loan financing strategy that includes a secured financing facility and CLO financing. During the three months ended March 31, 2021, the Company paid down $16.8 million of such loan repurchase financing.

Secured Financing Facility: On April 30, 2020, the Company entered into a strategic financing arrangement with an American multinational corporation, under which the Lender will provide the Company with approximately $206.4 million in senior secured financing to fund transitional and land loans.

CLO Debt: On April 27, 2020, the Company completed a private CLO financing transaction with a major U.S. bank which generated $310.2 million of gross proceeds, financing $481.3 million of loans at a 64.5% advance rate on a matched term, non-mark-to-market and non-recourse basis.

Based on the financing actions described above, the Company has significantly decreased its exposure to mark-to-market financing.

Financial Covenants

We were in compliance with all covenants described in the Company’s Annual Report, as of March 31, 2021.

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8. DERIVATIVE INSTRUMENTS

The Company uses derivative instruments primarily to economically manage the fair value variability of fixed rate assets caused by interest rate fluctuations and overall portfolio market risk. The following is a breakdown of the derivatives outstanding as of March 31, 2021 and December 31, 2020 ($ in thousands):

March 31, 2021


			Fair Value				Remaining Maturity (years)
Contract Type	Notional		Asset(1)		Liability(1)

Caps
1 Month LIBOR	$	69,571	$	—	$	—	0.11
Futures
5-year Swap	25,300		76		—		0.25
10-year Swap	75,100		225		—		0.25


Total futures	100,400		301		—







Total derivatives	$	169,971	$	301	$	—

(1)Shown as derivative instruments, at fair value, in the accompanying consolidated balance sheets.

December 31, 2020


			Fair Value				Remaining Maturity (years)
Contract Type	Notional		Asset(1)		Liability(1)

Caps
1Month LIBOR	$	69,571	$	—	$	—	0.35
Futures
5-year Swap	23,800		108		—		0.25
10-year Swap	41,800		191		—		0.25


Total futures	65,600		299		—







Total derivatives	$	135,171	$	299	$	—

(1)Shown as derivative instruments, at fair value, in the accompanying consolidated balance sheets.

The following table indicates the net realized gains (losses) and unrealized appreciation (depreciation) on derivatives, by primary underlying risk exposure, as included in net result from derivatives transactions in the consolidated statements of operations for the three months ended March 31, 2021 and 2020 ($ in thousands):


	Three Months Ended March 31, 2021
Contract Type		Unrealized Gain/(Loss)		Realized Gain/(Loss)		Net Result from Derivative Transactions


Futures		$	2	$	4,769	$	4,771


Total		$	2	$	4,769	$	4,771


	Three Months Ended March 31, 2020
Contract Type		Unrealized Gain/(Loss)		Realized Gain/(Loss)		Net Result from Derivative Transactions


Futures		$	272	$	(15,946)	$	(15,674)

Credit Derivatives		111		128		239
Total		$	383	$	(15,818)	$	(15,435)

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The Company’s counterparties held $1.6 million and $0.8 million of cash margin as collateral for derivatives as of March 31, 2021 and December 31, 2020, respectively, which is included in restricted cash in the consolidated balance sheets.

Futures

Collateral posted with our futures counterparties is segregated in the Company’s books and records. Interest rate futures are centrally cleared by the Chicago Mercantile Exchange (“CME”) through a futures commission merchant. Interest rate futures that are governed by an ISDA agreement provide for bilateral collateral pledging based on the counterparties’ market value. The counterparties have the right to re-pledge the collateral posted but have the obligation to return the pledged collateral, or substantially the same collateral, if agreed to by us, as the market value of the interest rate futures change.

The Company is required to post initial margin and daily variation margin for our interest rate futures that are centrally cleared by CME. CME determines the fair value of our centrally cleared futures, including daily variation margin. Effective January 3, 2017, CME amended their rulebooks to legally characterize daily variation margin payments for centrally cleared interest rate futures as settlement rather than collateral. As a result of this rule change, variation margin pledged on the Company’s centrally cleared interest rate futures is settled against the realized results of these futures.

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9. OFFSETTING ASSETS AND LIABILITIES

The following tables present both gross information and net information about derivatives and other instruments eligible for offset in the statement of financial position as of March 31, 2021 and December 31, 2020. The Company’s accounting policy is to record derivative asset and liability positions on a gross basis; therefore, the following tables present the gross derivative asset and liability positions recorded on the balance sheets, while also disclosing the eligible amounts of financial instruments and cash collateral to the extent those amounts could offset the gross amount of derivative asset and liability positions. The actual amounts of collateral posted by or received from counterparties may be in excess of the amounts disclosed in the following tables as the following only disclose amounts eligible to be offset to the extent of the recorded gross derivative positions.

As of March 31, 2021

Offsetting of Financial Assets and Derivative Assets

($ in thousands)


Description	Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Gross amounts not offset in the balance sheet				Net amount
							Financial instruments		Cash collateral received/(posted)(1)

Derivatives	$	301	$	—	$	301	$	—	$	—	$	301
Total	$	301	$	—	$	301	$	—	$	—	$	301

(1)Included in restricted cash on consolidated balance sheets.

As of March 31, 2021

Offsetting of Financial Liabilities and Derivative Liabilities

($ in thousands)


Description	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Gross amounts not offset in the balance sheet				Net amount
							Financial instruments collateral		Cash collateral posted/(received)(1)


Repurchase agreements	$	576,698	$	—	$	576,698	$	576,698	$	—	$	—
Total	$	576,698	$	—	$	576,698	$	576,698	$	—	$	—

(1)Included in restricted cash on consolidated balance sheets.

As of December 31, 2020

Offsetting of Financial Assets and Derivative Assets

($ in thousands)


Description	Gross amounts of recognized assets		Gross amounts offset in the balance sheet		Net amounts of assets presented in the balance sheet		Gross amounts not offset in the balance sheet				Net amount
							Financial instruments		Cash collateral received/(posted)(1)

Derivatives	$	299	$	—	$	299	$	—	$	—	$	299
Total	$	299	$	—	$	299	$	—	$	—	$	299

(1)Included in restricted cash on consolidated balance sheets.

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As of December 31, 2020

Offsetting of Financial Liabilities and Derivative Liabilities

($ in thousands)


Description	Gross amounts of recognized liabilities		Gross amounts offset in the balance sheet		Net amounts of liabilities presented in the balance sheet		Gross amounts not offset in the balance sheet				Net amount
							Financial instruments collateral		Cash collateral posted/(received)(1)


Repurchase agreements	$	820,837	$	—	$	820,837	$	820,837	$	—	$	—
Total	$	820,837	$	—	$	820,837	$	820,837	$	—	$	—

(1)Included in restricted cash on consolidated balance sheets.

Master netting agreements that the Company has entered into with its derivative and repurchase agreement counterparties allow for netting of the same transaction, in the same currency, on the same date. Assets, liabilities, and collateral subject to master netting agreements as of March 31, 2021 and December 31, 2020 are disclosed in the tables above. The Company does not present its derivative and repurchase agreements net on the consolidated financial statements as it has elected gross presentation.

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10. CONSOLIDATED VARIABLE INTEREST ENTITIES

FASB ASC Topic 810 — Consolidation (“ASC 810”), provides guidance on the identification of entities for which control is achieved through means other than voting rights (“variable interest entities” or “VIEs”) and the determination of which business enterprise, if any, should consolidate the VIEs. Generally, the consideration of whether an entity is a VIE applies when either: (1) the equity investors (if any) lack one or more of the essential characteristics of a controlling financial interest; (2) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support; or (3) the equity investors have voting rights that are not proportionate to their economic interests and the activities of the entity involve or are conducted on behalf of an investor with a disproportionately small voting interest. The Company consolidates VIEs in which it is considered to be the primary beneficiary. The primary beneficiary is the entity that has both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance; and (2) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE. The Company consolidates one collateralized loan obligation (“CLO”) VIE with the following balance sheet ($ in thousands):


	March 31, 2021		December 31, 2020
	Notes 3 & 7		Notes 3 & 7


Restricted cash	$	3,925	$	3,925
Mortgage loan receivables held for investment, net, at amortized cost	358,834		362,600

Accrued interest receivable	1,364		1,382
Other assets	4,197		69,649
Total assets	$	368,320	$	437,556
Debt obligations, net	$	233,195	$	276,516

Accrued expenses	574		682

Total liabilities	233,769		277,198
Net equity in VIEs (eliminated in consolidation)	134,551		160,358

Total equity	134,551		160,358
Total liabilities and equity	$	368,320	$	437,556

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11. EQUITY STRUCTURE AND ACCOUNTS

Exchange for Class A Common Stock

We are a holding company and have no material assets other than our direct and indirect ownership of Series REIT limited partnership units (“Series REIT LP Units”) and Series TRS limited partnership units (“Series TRS LP Units,” and, collectively with Series REIT LP Units, “Series Units”) of LCFH. Series TRS LP Units are exchangeable for the same number of limited liability company interests of LC TRS I LLC (“LC TRS I Shares”), which is a limited liability company that is a TRS as well as a general partner of Series TRS. Pursuant to the Third Amended and Restated LLLP Agreement of LCFH, the Continuing LCFH Limited Partners may from time to time, subject to certain conditions, receive one share of the Company’s Class A common stock in exchange for (i) one share of the Company’s Class B common stock, (ii) one Series REIT LP Unit and (iii) either one Series TRS LP Unit or one TRS I LLC Share, subject to equitable adjustments for stock splits, stock dividends and reclassifications. As of September 30, 2020, all shares of Class B common stock, Series REIT LP Units and Series TRS LP Units have been exchanged for shares of Class A common stock and no Class B common stock is outstanding as of March 31, 2021. As of March 31, 2021, the Company held a 100% interest in LCFH.

Stock Repurchases

On October 30, 2014, the board of directors authorized the Company to repurchase up to $50.0 million of the Company’s Class A common stock from time to time without further approval. Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. As of March 31, 2021, the Company has a remaining amount available for repurchase of $37.9 million, which represents 2.5% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.80 per share on such date.

The following table is a summary of the Company’s repurchase activity of its Class A common stock during the three months ended March 31, 2021 and 2020 ($ in thousands):


	Shares	Amount(1)

Authorizations remaining as of December 31, 2020		$	38,102
Additional authorizations		—
Repurchases paid	20,000	(214)
Repurchases unsettled		—
Authorizations remaining as of March 31, 2021		$	37,888

(1)Amount excludes commissions paid associated with share repurchases.


	Shares	Amount(1)

Authorizations remaining as of December 31, 2019		$	41,132
Additional authorizations		—
Repurchases paid	146,153	(1,201)
Repurchases unsettled		—
Authorizations remaining as of March 31, 2020		$	39,931

(1)Amount excludes commissions paid associated with share repurchases.

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The following table presents dividends declared (on a per share basis) of Class A common stock for the three months ended March 31, 2021 and 2020:


Declaration Date	Dividend per Share


March 15, 2021	$	0.200



Total	$	0.200

February 27, 2020	$	0.340



Total	$	0.340

Changes in Accumulated Other Comprehensive Income

The following table presents changes in accumulated other comprehensive income related to the cumulative difference between the fair market value and the amortized cost basis of securities classified as available for sale for the three months ended March 31, 2021 and 2020 ($ in thousands):


	Accumulated Other Comprehensive Income (Loss)		Accumulated Other Comprehensive Income (Loss) of Noncontrolling Interests		Total Accumulated Other Comprehensive Income (Loss)

December 31, 2020	$	(10,463)	$	(2)	$	(10,465)
Other comprehensive income (loss)	6,849		—		6,849


March 31, 2021	$	(3,614)	$	(2)	$	(3,616)


	Accumulated Other Comprehensive Income (Loss)		Accumulated Other Comprehensive Income (Loss) of Noncontrolling Interests		Total Accumulated Other Comprehensive Income (Loss)

December 31, 2019	$	4,218	$	477	$	4,695
Other comprehensive income (loss)	(70,142)		(7,865)		(78,007)

Rebalancing of ownership percentage between Company and Operating Partnership	4		(4)		—
March 31, 2020	$	(65,920)	$	(7,392)	$	(73,312)

12. NONCONTROLLING INTERESTS

There are two main types of noncontrolling interest reflected in the Company’s consolidated financial statements (i) noncontrolling interest in the operating partnership and (ii) noncontrolling interest in consolidated joint ventures.

Noncontrolling Interest in the Operating Partnership

As more fully described in Note 1, certain of the predecessor equity owners held interests in the Operating Partnership as modified by the IPO Transactions. These interests were subsequently further modified by the REIT Structuring Transactions (also described in Note 1). These interests, along with the Class B common stock held by these investors, were exchangeable for Class A shares of the Company. The roll-forward of the Operating Partnership’s LP Units followed the Class B common stock of the Company as disclosed in the consolidated statements of changes in equity. As of September 30, 2020, all shares of Class B common stock have been exchanged for shares of Class A common stock, and the Company held a 100% interest in LCFH.

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Pursuant to ASC 810, Consolidation, on the accounting and reporting for noncontrolling interests and changes in ownership interests of a subsidiary, changes in a parent’s ownership interest (and transactions with noncontrolling interest unitholders in the subsidiary), while the parent retains its controlling interest in its subsidiary, should be accounted for as equity transactions. The carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary, with the offset to equity attributable to the parent. There were no changes in ownership interest for the three months ended March 31, 2021.

Noncontrolling Interest in Consolidated Joint Ventures

As of March 31, 2021, the Company consolidates four ventures in which there are other noncontrolling investors, which own between 10.0% - 25.0% of such ventures. These ventures hold investments in a 40-building student housing portfolio in Isla Vista, CA with a book value of $81.5 million, 11 office buildings in Richmond, VA with a book value of $71.9 million, a single-tenant office building in Oakland County, MI with a book value of $8.9 million and an apartment complex in Miami, FL with a book value of $37.0 million. The Company makes distributions and allocates income from these ventures to the noncontrolling interests in accordance with the terms of the respective governing agreements.

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13. EARNINGS PER SHARE

The Company’s net income (loss) and weighted average shares outstanding for the three months ended March 31, 2021 and 2020 consist of the following:


	Three Months Ended March 31,
($ in thousands except share amounts)		2021		2020

Basic Net income (loss) available for Class A common shareholders		$	192	$	(15,728)
Diluted Net income (loss) available for Class A common shareholders		$	192	$	(15,728)
Weighted average shares outstanding
Basic		123,974,970		106,329,796
Diluted		124,324,683		106,329,796

The calculation of basic and diluted net income (loss) per share amounts for the three months ended March 31, 2021 and 2020 consist of the following:


	Three Months Ended March 31,
(In thousands except share and per share amounts)		2021(1)		2020(1)

Basic Net Income (Loss) Per Share of Class A Common Stock
Numerator:
Net income (loss) attributable to Class A common shareholders		$	192	$	(15,728)
Denominator:
Weighted average number of shares of Class A common stock outstanding		123,974,970		106,329,796
Basic net income (loss) per share of Class A common stock		$	—	$	(0.15)

Diluted Net Income (Loss) Per Share of Class A Common Stock
Numerator:
Net income (loss) attributable to Class A common shareholders		$	192	$	(15,728)



Diluted net income (loss) attributable to Class A common shareholders		192		(15,728)
Denominator:
Basic weighted average number of shares of Class A common stock outstanding		123,974,970		106,329,796




Diluted weighted average number of shares of Class A common stock outstanding		124,324,683		106,329,796
Diluted net income (loss) per share of Class A common stock		$	—	$	(0.15)

(1)For the three months ended March 31, 2020, shares issuable relating to converted Class B common shareholders are excluded from the calculation of diluted EPS as the inclusion of such potential common shares in the calculation would be anti-dilutive.

(2)The Company is using the as-if converted method for the Class B common shareholders while adjusting for additional corporate income tax expense (benefit) for the described net income (loss) add-back for periods prior to September 30, 2020. There are no Class B common stock outstanding as of March 31, 2021.

(3)The Company is using the treasury stock method.

The shares of Class B common stock do not share in the earnings of Ladder Capital Corp and are, therefore, not participating securities. Accordingly, basic and diluted net income (loss) per share of Class B common stock has not been presented, although the assumed conversion of Class B common stock has been included in the presented diluted net income (loss) per share of Class A common stock for the period of time that Class B common stock was outstanding.

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14. STOCK BASED AND OTHER COMPENSATION PLANS

The following table summarizes the impact on the consolidated statement of operations of the various stock based and other compensation plans ($ in thousands):


	Three Months Ended March 31,
		2021		2020














Stock Based Compensation Expense		$	5,276	$	14,026

Phantom Equity Investment Plan		22		(2,138)
Stock Options Exercised		—		270

Bonus Expense		450		(30)
Total		$	5,748	$	12,128

Summary of Stock and Shares Nonvested/Outstanding

A summary of the grants is presented below:


	Three Months Ended March 31,
		2021	2020
			Number of Shares	Weighted Average Fair Value Per Share		Number of Shares	Weighted Average Fair Value Per Share

Grants - Class A Common Stock			747,713	$	9.81	1,466,337	$	18.72

The table below presents the number of unvested shares and outstanding stock options at March 31, 2021 and changes during 2021 of the Class A Common stock and Stock Options of Ladder Capital Corp granted under the 2014 Omnibus Incentive Plan:


	Restricted Stock	Stock Options

Nonvested/Outstanding at December 31, 2020	2,800,824	681,102
Granted	747,713	—
Exercised	—	—
Vested	(981,475)	—
Forfeited	(326,966)	—
Expired	—	—
Nonvested/Outstanding at March 31, 2021	2,240,096	681,102

Exercisable at March 31, 2021		681,102

At March 31, 2021 there was $22.1 million of total unrecognized compensation cost related to certain share-based compensation awards that is expected to be recognized over a period of up to 27.2 months, with a weighted-average remaining vesting period of 34 months.

2014 Omnibus Incentive Plan

In connection with the IPO Transactions, the 2014 Ladder Capital Corp Omnibus Incentive Equity Plan (the “2014 Omnibus Incentive Plan”) was adopted by the board of directors on February 11, 2014, and provides certain members of management, employees and directors of the Company or its affiliates with additional incentives including grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards.

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Annual Incentive Awards Granted in 2021 with respect to 2020 Performance

On January 1, 2021, in connection with 2020 compensation, annual stock awards were granted to non-management employees (“Non-Management Grantees”) with an aggregate fair value of $7.0 million, which represents 711,653 shares of Class A common stock. Approximately one-third of the awards to Non-Management Grantees were unrestricted, with another one-third of the awards subject to time-based vesting criteria, and the remaining one-third subject to attainment of the Performance Target for the applicable years. The one-third of awards subject to attainment of the Performance Target is also subject to the Performance Waiver and Catch-Up Provision, each described below. The time-vesting restricted stock will vest in three installments on February 18 of each of 2022, 2023 and 2024, subject to continued employment on the applicable vesting dates.

Fair value for all restricted and unrestricted stock grants was calculated using the most recent closing stock price prior to the grant date (due to markets being closed on the grant date). Compensation expense for unrestricted stock grants was expensed immediately. The Company has elected to recognize the compensation expense related to the time-based vesting of the annual restricted stock awards for the entire award on a straight-line basis over the requisite service period for the entire award. Restricted stock subject to performance criteria is eligible to vest in three equal installments upon the compensation committee’s confirmation that the Company achieves a return on equity, based on distributable earnings divided by the Company’s average book value of equity, equal to or greater than 8% for such year (the “Performance Target”) for the years ended December 31, 2021, 2022 and 2023, respectively. If the Company misses the Performance Target during either the first or second calendar year but meets the Performance Target for a subsequent year during the three year performance period and the Company’s return on equity for such subsequent year and any years for which it missed its Performance Target equals or exceeds the compounded return on equity of 8% based on distributable earnings divided by the Company’s average book value of equity, the performance-vesting restricted stock which failed to vest because the Company previously missed its Performance Target will vest subject to continued employment on the applicable vesting date (the “Catch-Up Provision”). Accruals of compensation cost for an award with a performance condition shall be based on the probable outcome of that performance condition. Therefore, compensation cost shall be accrued if it is probable that the performance condition will be achieved and shall not be accrued if it is not probable that the performance condition will be achieved. On May 27, 2020, the compensation committee of the board of directors used its discretion to waive the Performance Target for shares eligible to vest based on the Company’s performance in 2020 and 2021, subject to continued employment on the applicable vesting dates (the “Performance Waiver”). The Performance Waiver was made in recognition of the actions taken by Ladder’s employees in response to COVID-19 that, while in the best interests of the Company and its shareholders, would not produce earnings consistent with the Performance Target in their deferred compensation arrangements. Such actions included maintaining high levels of unrestricted cash liquidity and refinancing debt with more expensive non-mark-to-market funding sources. As of March 31, 2021, there were 44 Ladder employees and one consultant eligible for the 2021 Performance Waiver.

Other 2021 Restricted Stock Awards

On February 18, 2021, certain members of the board of directors each received annual restricted stock awards with a grant date fair value of $0.4 million, representing 36,060 shares of restricted Class A common stock, which will vest in full on the first anniversary of the date of grant, subject to continued service on the board of directors. Compensation expense related to the time-based vesting criteria of the award shall be recognized on a straight-line basis over the one-year vesting period.

Change in Control

In the event a Non-Management Grantee is terminated by the Company without cause within six months of certain changes in control (as defined in the respective award agreements), all unvested time shares shall vest on the termination date and all unvested performance shares shall remain outstanding and be eligible to vest (or be forfeited) in accordance with the performance conditions. The compensation committee retains the right, in its sole discretion, to provide for the accelerated vesting (in whole or in part) of the restricted stock awards granted.

Ladder Capital Corp Deferred Compensation Plan

As of December 31, 2020, there were 165,735 phantom units outstanding in the 2014 Deferred Compensation Plan, of which zero were unvested, resulting in a liability of $1.6 million, which is included in accrued expenses on the consolidated balance sheets. As of March 31, 2021, the deferred compensation plan ended as the liability had been fully paid.

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Bonus Payments

On December 16, 2020, the board of directors of Ladder Capital Corp approved the 2020 bonus payments to employees, including officers, totaling $36.8 million of which $35.7 million consisted of equity based compensation. Of the total approved amount, there was $29.4 million of equity based compensation granted in 2020. During the three months ended March 31, 2021, the Company recorded $0.5 million of compensation expense related to bonuses. For the three months ended March 31, 2020, the Company did not record any bonus expense. For the three months ended March 31, 2021, the Company paid $1.1 million compensation expense related to bonuses accrued for during the year ended December 31, 2020.

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15. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is based upon internal models, using market quotations, broker quotations, counterparty quotations or pricing services quotations, which provide valuation estimates based upon reasonable market order indications and are subject to significant variability based on market conditions, such as interest rates, credit spreads and market liquidity. The fair value of the mortgage loan receivables held for sale is based upon a securitization model utilizing market data from recent securitization spreads and pricing.

Fair Value Summary Table

The carrying values and estimated fair values of the Company’s financial instruments, which are both reported at fair value on a recurring basis (as indicated) or amortized cost/par, at March 31, 2021 and December 31, 2020 are as follows ($ in thousands):

March 31, 2021


									Weighted Average
	Outstanding Face Amount			Amortized Cost Basis/Purchase Price		Fair Value		Fair Value Method	Yield %		Remaining Maturity/Duration (years)
Assets:
CMBS(1)	$	722,489		$	722,238	$	717,381	Internal model, third-party inputs	1.62 %		1.87
CMBS interest-only(1)	1,480,575		(2)	19,693		20,459		Internal model, third-party inputs	2.24 %		2.08
GNMA interest-only(3)	68,478		(2)	690		802		Internal model, third-party inputs	5.10 %		3.46
Agency securities(1)	577			583		591		Internal model, third-party inputs	1.62 %		1.11
GNMA permanent securities(1)	24,239			24,402		24,870		Internal model, third-party inputs	3.54 %		1.41


Provision for current expected credit reserves	N/A			(20)		(20)		(5)	N/A		N/A
Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost	2,017,643			2,007,730		1,901,459		Discounted Cash Flow(4)	6.08 %		1.36

Allowance for current expected credit reserves	N/A			(36,241)		(36,241)		(5)	N/A		N/A
Mortgage loan receivables held for sale	71,442			71,482		73,479		Internal model, third-party inputs(6)	4.22 %		9.81
FHLB stock(7)	12,960			12,960		12,960		(7)	3.00 %		N/A
Nonhedge derivatives(1)(8)	169,971			N/A		301		Counterparty quotations	N/A		0.25

Liabilities:
Repurchase agreements - short-term	465,811			465,811		465,811		Discounted Cash Flow(9)	1.09 %		0.52
Repurchase agreements - long-term	110,886			110,886		110,886		Discounted Cash Flow(10)	1.79 %		1.97
Revolving credit facility	256,430			256,430		256,430		Discounted Cash Flow(9)	3.11 %		0.32
Mortgage loan financing	761,172			765,096		784,455		Discounted Cash Flow(10)	4.84	%	3.79
Secured financing facility	194,662			194,662		194,662		Discounted Cash Flow(9)	10.75 %		2.35
CLO debt	233,195			233,195		233,195		Discounted Cash Flow(10)	5.50 %		3.38

Borrowings from the FHLB	288,000			288,000		288,896		Discounted Cash Flow	1.09	%	2.76
Senior unsecured notes	1,465,644			1,453,739		1,464,796		Internal model, third-party inputs	4.81 %		4.22

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(4)Fair value for floating rate mortgage loan receivables, held for investment is estimated to approximate the outstanding face amount given the short interest rate reset risk (30 days) and no significant change in credit risk. Fair value for fixed rate mortgage loan receivables, held for investment is measured using a discounted cash flow model.

(5)Fair value is estimated to equal par value.

(6)Fair value for mortgage loan receivables, held for sale is measured using a hypothetical securitization model utilizing market data from recent securitization spreads and pricing.

(7)Fair value of the FHLB stock approximates outstanding face amount as the Company’s captive insurance subsidiary is restricted from trading the stock and can only put the stock back to the FHLB, at the FHLB’s discretion, at par.

(8)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(9)Fair value for repurchase agreement liabilities - short term borrowings under the secured financing facility and borrowings under the revolving credit facility is estimated to approximate carrying amount primarily due to the short interest rate reset risk (30 days) of the financings and the high credit quality of the assets collateralizing these positions. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

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(10)For repurchase agreements - long term, mortgage loan financing, and CLO debt the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

December 31, 2020


									Weighted Average
	Outstanding Face Amount			Amortized Cost Basis		Fair Value		Fair Value Method	Yield %		Remaining Maturity/Duration (years)
Assets:
CMBS(1)	$	1,015,520		$	1,015,282	$	1,003,301	Internal model, third-party inputs	1.56 %		2.01
CMBS interest-only(1)	1,498,181		(2)	21,567		22,213		Internal model, third-party inputs	3.53 %		2.19
GNMA interest-only(3)	75,350		(2)	868		1,001		Internal model, third-party inputs	5.06 %		3.59
Agency securities(1)	586			593		605		Internal model, third-party inputs	1.64 %		1.26
GNMA permanent securities(1)	30,254			30,340		31,199		Internal model, third-party inputs	3.49 %		1.98
Provision for current expected credit losses	N/A			(20)		(20)		(5)	N/A		N/A


Mortgage loan receivables held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost	2,365,204			2,354,059		2,328,441		Discounted Cash Flow(4)	6.67 %		1.07

Allowance for current expected credit losses	N/A			(41,507)		(41,507)		(5)	N/A		N/A
Mortgage loan receivables held for sale	30,478			30,518		32,082		Internal model, third-party inputs(6)	4.05 %		9.18
FHLB stock(7)	31,000			31,000		31,000		(7)	3.00 %		N/A
Nonhedge derivatives(1)(8)	65,600			N/A		299		Counterparty quotations	N/A		0.25

Liabilities:
Repurchase agreements - short-term	708,833			708,833		708,833		Discounted Cash Flow(9)	1.16 %		0.34
Repurchase agreements - long-term	112,004			112,004		112,004		Discounted Cash Flow(10)	9.47 %		2.21
Revolving credit facility	266,430			266,430		266,430		Discounted Cash Flow(9)	3.15 %		0.07
Mortgage loan financing	761,793			766,064		786,405		Discounted Cash Flow(10)	4.84	%	4.04
Secured financing facility	192,646			192,646		192,646		Discounted Cash Flow(9)	10.75 %		2.35
CLO debt	276,516			276,516		276,516		Discounted Cash Flow(10)	5.50 %		3.38

Borrowings from the FHLB	288,000			288,000		289,091		Discounted Cash Flow	1.12	%	2.76
Senior unsecured notes	1,612,299			1,599,371		1,607,930		Internal model, third-party inputs	4.90 %		3.89

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(5)Fair value is estimated to equal par value.

(6)Fair value for mortgage loan receivables, held for sale is measured using a hypothetical securitization model utilizing market data from recent securitization spreads and pricing.

(8)The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(9)Fair value for repurchase agreement liabilities is estimated to approximate carrying amount primarily due to the short interest rate reset risk (30 days) of the financings and the high credit quality of the assets collateralizing these positions. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

(10)For repurchase agreements - long term and mortgage loan financing, the carrying value approximates the fair value discounting the expected cash flows at current market rates. If the collateral is determined to be impaired, the related financing would be revalued accordingly. There are no impairments on any positions.

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The following table summarizes the Company’s financial assets and liabilities, which are both reported at fair value on a recurring basis (as indicated) or amortized cost/par, at March 31, 2021 and December 31, 2020 ($ in thousands):

March 31, 2021


Financial Instruments Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
				Level 1		Level 2		Level 3		Total

Assets:
CMBS(1)	$	710,995		$	—	$	—	$	706,326	$	706,326
CMBS interest-only(1)	1,470,038		(2)	—		—		19,817		19,817
GNMA interest-only(3)	68,478		(2)	—		—		802		802
Agency securities(1)	577			—		—		591		591
GNMA permanent securities(1)	24,239			—		—		24,870		24,870


Nonhedge derivatives(4)	370,771			—		301		—		301
				$	—	$	301	$	752,406	$	752,707



Financial Instruments Not Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
				Level 1		Level 2		Level 3		Total

Assets:
Mortgage loan receivable held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost	$	2,017,643		$	—	$	—	$	1,901,459	$	1,901,459

Allowance for current expected credit losses	N/A			—		—		(36,241)		(36,241)
Mortgage loan receivable held for sale	71,442			—		—		73,479		73,479
CMBS(5)	11,494			—		—		11,055		11,055
CMBS interest-only(5)	10,537			—		—		642		642
Allowance for current expected credit losses	N/A			—		—		(20)		(20)

FHLB stock	12,960			—		—		12,960		12,960
				$	—	$	—	$	1,963,334	$	1,963,334
Liabilities:
Repurchase agreements - short-term	465,811			$	—	$	—	$	465,811	$	465,811
Repurchase agreements - long-term	110,886			—		—		110,886		110,886
Revolving credit facility	256,430			—		—		256,430		256,430
Mortgage loan financing	761,172			—		—		784,455		784,455
Secured financing facility	194,662			—		—		194,662		194,662
CLO debt	233,195			—		—		233,195		233,195

Borrowings from the FHLB	288,000			—		—		288,896		288,896
Senior unsecured notes	1,465,644			—		—		1,464,796		1,464,796

				$	—	$	—	$	3,799,131	$	3,799,131

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

(4)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. The outstanding face amount of the nonhedge derivatives represents the notional amount of the underlying contracts.

(5)Restricted securities which are designated as risk retention securities under the Dodd-Frank Act and are therefore subject to transfer restrictions over the term of the securitization trust, which are classified as held-to-maturity and reported at amortized cost.

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December 31, 2020


Financial Instruments Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
				Level 1		Level 2		Level 3		Total

Assets:
CMBS(1)	$	1,003,998		$	—	$	—	$	992,227	$	992,227
CMBS interest-only(1)	1,487,616		(2)	—		—		21,538		21,538
GNMA interest-only(3)	75,350		(2)	—		—		1,001		1,001
Agency securities(1)	586			—		—		605		605
GNMA permanent securities(1)	30,254			—		—		31,199		31,199

Equity securities	N/A			—		—		—		—
Nonhedge derivatives(4)	65,600			—		299		—		299
				$	—	$	299	$	1,046,570	$	1,046,869




Financial Instruments Not Reported at Fair Value on Consolidated Statements of Financial Condition	Outstanding Face Amount			Fair Value
				Level 1		Level 2		Level 3		Total

Assets:
Mortgage loan receivable held for investment, net, at amortized cost:
Mortgage loan receivables held for investment, net, at amortized cost	$	2,365,204		$	—	$	—	$	2,328,441	$	2,328,441

Allowance for loan losses	N/A			—		—		(41,507)		(41,507)
Mortgage loan receivables held for sale	30,478			—		—		32,082		32,082
CMBS(5)	11,523			—		—		11,074		11,074
CMBS interest-only(5)	10,566		(2)	—		—		675		675
Allowance for current expected credit losses	N/A			—		—		(20)		(20)
FHLB stock	31,000			—		—		31,000		31,000
				$	—	$	—	$	2,361,745	$	2,361,745
Liabilities:
Repurchase agreements - short-term	708,833			$	—	$	—	$	708,833	$	708,833
Repurchase agreements - long-term	112,004			—		—		112,004		112,004
Revolving credit facility	266,430			—		—		266,430		266,430
Mortgage loan financing	761,793			—		—		786,405		786,405
Secured financing facility	192,646			—		—		192,646		192,646
CLO debt	276,516			—		—		276,516		276,516

Borrowings from the FHLB	288,000			—		—		289,091		289,091
Senior unsecured notes	1,612,299			—		—		1,607,930		1,607,930

				$	—	$	—	$	4,239,855	$	4,239,855

(1)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded as a component of other comprehensive income (loss) in equity.

(2)Represents notional outstanding balance of underlying collateral.

(3)Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

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The following table summarizes changes in Level 3 financial instruments reported at fair value on the consolidated statements of financial condition for the three months ended March 31, 2021 and March 31, 2020 ($ in thousands):


	Three Months Ended March 31,
Level 3	2021		2020

Balance at January 1,	$	1,046,569	$	1,695,913
Transfer from level 2	—		—
Purchases	40,016		437,519
Sales	(329,062)		(93,301)
Paydowns/maturities	(10,512)		(43,603)
Amortization of premium/discount	(2,013)		(2,284)
Unrealized gain/(loss)	6,829		(77,931)
Realized gain/(loss) on sale(1)	579		1,755
Balance at March 31,	$	752,406	$	1,918,068

(1)Includes realized losses on securities recorded as other than temporary impairments.

The following is quantitative information about significant unobservable inputs in our Level 3 measurements for those assets and liabilities measured at fair value on a recurring basis ($ in thousands):

March 31, 2021


Financial Instrument	Carrying Value			Valuation Technique	Unobservable Input	Minimum		Weighted Average		Maximum

CMBS(1)	$	706,326		Discounted cash flow	Yield (4)	(0.64)	%	1.87	%	10.99	%
					Duration (years)(5)	0.00		1.71		5.61
CMBS interest-only(1)	19,817		(2)	Discounted cash flow	Yield (4)	—	%	2.81	%	4.50	%
					Duration (years)(5)	0.00		2.00		2.92
					Prepayment speed (CPY)(5)	100.00		100.00		100.00
GNMA interest-only(3)	802		(2)	Discounted cash flow	Yield (4)	(3.50)	%	7.89	%	40.65	%
					Duration (years)(5)	0.00		2.75		6.60
					Prepayment speed (CPJ)(5)	5.00		18.07		35.00
Agency securities(1)	591			Discounted cash flow	Yield (4)	0.73	%	0.80	%	1.26	%
					Duration (years)(5)	0.00		1.03		1.20
GNMA permanent securities(1)	24,870			Discounted cash flow	Yield (4)	2.54	%	3.38	%	3.73	%
					Duration (years)(5)	8.40		8.51		13.41


Total	$	752,406

(1)CMBS, CMBS interest-only securities, Agency securities, GNMA construction securities, GNMA permanent securities and corporate bonds are classified as available-for-sale and reported at fair value with changes in fair value recorded in the current period in other comprehensive income.

(2)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(3)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(4)Significant increase (decrease) in the unobservable input in isolation would result in significantly lower (higher) fair value measurement.

(5)Significant increase (decrease) in the unobservable input in isolation would result in either a significantly lower or higher (lower or higher) fair value measurement depending on the structural features of the security in question.

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December 31, 2020


Financial Instrument	Carrying Value			Valuation Technique	Unobservable Input	Minimum		Weighted Average		Maximum

CMBS(1)	$	992,226		Discounted cash flow	Yield (3)	—	%	2.09	%	23.85	%
					Duration (years)(4)	0.00		2.68		5.82
CMBS interest-only(1)	21,537		(2)	Discounted cash flow	Yield (3)	0.56	%	2.51	%	9.94	%
					Duration (years)(4)	0.12		2.23		3.15
					Prepayment speed (CPY)(4)	100.00		100.00		100.00
GNMA interest-only(3)	1,001		(2)	Discounted cash flow	Yield (4)	—	%	7.93	%	35.82	%
					Duration (years)(5)	0.00		2.80		6.79
					Prepayment speed (CPJ)(5)	5.00		17.78		35.00
Agency securities(1)	605			Discounted cash flow	Yield (4)	0.44	%	11.31	%	72.00	%
					Duration (years)(5)	0.00		1.23		1.44
GNMA permanent securities(1)	31,199			Discounted cash flow	Yield (4)	—	%	2.99	%	3.47	%
					Duration (years)(5)	1.57		9.74		14.57


Total	$	1,046,568

(2)The amounts presented represent the principal amount of the mortgage loans outstanding in the pool in which the interest-only securities participate.

(3)Agency interest-only securities are recorded at fair value with changes in fair value recorded in current period earnings.

Sensitivity of the Fair Value to Changes in the Unobservable Inputs

(4)Significant increase (decrease) in the unobservable input in isolation would result in significantly lower (higher) fair value measurement.

Nonrecurring Fair Values

The Company measures fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying value of the assets may be impaired. Adjustments to fair value generally result from the application of lower of amortized cost or fair value accounting for assets held for sale or write-down of assets value due to impairment. Refer to Note 3, Mortgage Loan Receivables and Note 5, Real Estate and Related Lease Intangibles, Net for disclosure of level 3 inputs.

16. INCOME TAXES

The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the taxable year ended December 31, 2015 (the REIT Election”). As such, the Company’s income is generally not subject to U.S. federal, state and local corporate income taxes other than as described below.

Certain of the Company’s subsidiaries have elected to be treated as TRSs. TRSs permit the Company to participate in certain activities from which REITs are generally precluded, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Code. To the extent these criteria are met, the Company will continue to maintain its qualification as a REIT. The Company’s TRSs are not consolidated for U.S. federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred taxes is established for the portion of earnings recognized by the Company with respect to its interest in TRSs. Current income tax expense (benefit) was $(2.0) million for the three months ended March 31, 2021. Current income tax expense (benefit) was $(16.6) million for the three months ended March 31, 2020.

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As of March 31, 2021 and December 31, 2020, the Company’s net deferred tax assets (liabilities) were $(3.2) million and $(2.0) million, respectively, and are included in other assets (other liabilities) in the Company’s consolidated balance sheets. Deferred income tax expense (benefit) included within the provision for income taxes was $1.2 million and $12.0 million for the three months ended March 31, 2021, and March 31, 2020 respectively. The Company’s net deferred tax liability is comprised of deferred tax assets and deferred tax liabilities. The Company believes it is more likely than not that the deferred tax assets (aside from the exception noted below) will be realized in the future. Realization of the deferred tax assets is dependent upon our generation of sufficient taxable income in future years in appropriate tax jurisdictions to obtain benefit from the reversal of temporary differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

As of March 31, 2021, the Company has a deferred tax asset of $5.7 million relating to capital losses which it may only use to offset capital gains. These tax attributes will begin to expire if unused in 2022. As the realization of these assets are not more likely than not before their expiration, the Company provided a full valuation allowance against this deferred tax asset. Additionally, as of March 31, 2021, the Company had $1.4 million of deferred tax asset related to Code Section 163(j) interest expense limitation. As the Company is uncertain if this asset will be realized in the future, the Company provided a full valuation allowance against this deferred tax asset.

The Company has historically calculated its tax provision during quarterly reporting periods by applying an annual effective tax rate (“AETR”) for the full year to the income for the reporting period; however, for the three months ended March 31, 2020 and the three and six months ended June 30, 2020, the Company used a discrete effective tax rate method to calculate taxes, given that, based on the projections of income at the time, the Company was unable to determine a reliable AETR. The Company has returned to using an AETR for the full year to income for the current reporting period.

The Company’s tax returns are subject to audit by taxing authorities. Generally, as of March 31, 2021, the tax years 2017-2020 remain open to examination by the major taxing jurisdictions in which the Company is subject to taxes. The Company is currently under New York City audit for tax years 2012-2013. Several of the Company’s subsidiary entities are under New York State audit for tax years 2015-2018. The Company does not expect these audits to result in any material changes to the Company’s financial position. The Company does not expect tax expense to have an impact on either short, or long-term liquidity or capital needs.

Under U.S. GAAP, a tax benefit related to an income tax position may be recognized when it is more likely than not that the position will be sustained upon examination by the tax authorities based on the technical merits of the position. In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.

17. RELATED PARTY TRANSACTIONS

The Company has no material related party relationships to disclose.

18. COMMITMENTS AND CONTINGENCIES

Leases

The Company adopted ASC Topic 842 on January 1, 2019. The primary impact of applying ASC Topic 842 was the initial recognition of a $3.5 million lease liability and a $3.3 million right of use asset (including previously accrued straight line rent) on the Company’s consolidated financial statements, for leases classified as operating leases under ASC Topic 840, primarily for the Company’s corporate headquarters and other identified leases. As of March 31, 2021, the Company had a $1.0 million lease liability and a $1.1 million right-of-use asset on its consolidated balance sheets found within other liabilities and other assets, respectively. Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by us which were reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $1.1 million and $1.2 million for the three months ended March 31, 2021 and 2020 respectively, and are included in operating lease income on the Company’s consolidated statements of income.

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Investments in Unconsolidated Joint Ventures

We have made investments in various unconsolidated joint ventures. See Note 6, Investment in and Advances to Unconsolidated Joint Ventures, for further details of our unconsolidated investments. Our maximum exposure to loss from these investments is limited to the carrying value of our investments.

Unfunded Loan Commitments

As of March 31, 2021, the Company’s off-balance sheet arrangements consisted of $140.1 million of unfunded commitments on mortgage loan receivables held for investment to provide additional first mortgage loan financing over the next three years at rates to be determined at the time of funding, 66% of which additional funds relate to the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income. As of December 31, 2020, the Company’s off-balance sheet arrangements consisted of $148.8 million of unfunded commitments on mortgage loan receivables held for investment to provide additional first mortgage loan financing. Commitments are subject to our loan borrowers’ satisfaction of certain financial and nonfinancial covenants and may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring. The COVID-19 pandemic has impacted the progress of work generally and, depending on specific property locations, the progress of capital expenditures, construction, and leasing, which have been delayed and/or slower paced than originally anticipated. The progress of those particular projects located in states or local municipalities with continuing restrictions on such activities is anticipated to remain slower to complete than otherwise expected, and the pace of future funding relating to these capital needs has been, and may continue to be, commensurately slower. These commitments are not reflected on the consolidated balance sheets.

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19. SEGMENT REPORTING

The Company has determined that it has three reportable segments based on how the chief operating decision maker reviews and manages the business. These reportable segments include loans, securities, and real estate. The loans segment includes mortgage loan receivables held for investment (balance sheet loans) and mortgage loan receivables held for sale (conduit loans). The securities segment is composed of all of the Company’s activities related to commercial real estate securities, which include investments in CMBS, U.S. Agency Securities, corporate bonds and equity securities. The real estate segment includes net leased properties, office buildings, student housing portfolios, hotels, industrial buildings, a shopping center and condominium units. Corporate/other includes the Company’s investments in joint ventures, other asset management activities and operating expenses.

The Company evaluates performance based on the following financial measures for each segment ($ in thousands):










































































Three months ended March 31, 2021	Loans		Securities		Real Estate (1)		Corporate/Other(2)		Company Total
Interest income	$	35,892	$	3,234	$	—	$	161	39,287
Interest expense	(14,075)		(832)		(8,785)		(22,281)		(45,973)
Net interest income (expense)	21,817		2,402		(8,785)		(22,120)		(6,686)
Provision for (release of) loan loss reserves	4,251		—		—		—		4,251
Net interest income (expense) after provision for (release of) loan reserves	26,068		2,402		(8,785)		(22,120)		(2,435)

Operating lease income	—		—		24,159		—		24,159



Realized gain (loss) on securities	—		579		—		—		579

Unrealized gain (loss) on Agency interest-only securities	—		(20)		—		—		(20)


Fee and other income	2,969		—		32		283		3,284
Net result from derivative transactions	3,043		1,728		—		—		4,771
Earnings (loss) from investment in unconsolidated joint ventures	—		—		436		—		436

Gain (loss) on extinguishment of debt	—		—		—		—		—
Total other income (loss)	6,012		2,287		24,627		283		33,209

Salaries and employee benefits	—		—		—		(9,533)		(9,533)
Operating expenses(3)	9		—		—		(4,250)		(4,241)
Real estate operating expenses	—		—		(6,211)		—		(6,211)

Fee expense	(1,426)		(50)		(123)		—		(1,599)
Depreciation and amortization	—		—		(9,511)		(25)		(9,536)
Total costs and expenses	(1,417)		(50)		(15,845)		(13,808)		(31,120)

Income tax (expense) benefit	—		—		—		778		778
Segment profit (loss)	$	30,663	$	4,639	$	(3)	$	(34,867)	$	432

Total assets as of March 31, 2021	$	2,042,971	$	764,083	$	1,021,479	$	1,577,278	$	5,405,811

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Three months ended March 31, 2020	Loans		Securities		Real Estate (1)		Corporate/Other(2)		Company Total
Interest income	$	58,905	$	12,863	$	8	$	813	$	72,589
Interest expense	(4,870)		(6,759)		(10,234)		(29,538)		(51,401)
Net interest income (expense)	54,035		6,104		(10,226)		(28,725)		21,188
Provision for (release of) loan loss reserves	(26,581)		—		—		—		(26,581)
Net interest income (expense) after provision for (release of) loan reserves	27,454		6,104		(10,226)		(28,725)		(5,393)

Operating lease income	—		—		26,328		—		26,328


Sale of loans, net	1,005		—		—		—		1,005
Realized gain (loss) on securities	—		3,011		—		—		3,011
Unrealized gain (loss) on equity securities	—		(533)		—		—		(533)
Unrealized gain (loss) on Agency interest-only securities	—		76		—		—		76
Realized gain on sale of real estate, net	—		—		10,529		—		10,529
Impairment of real estate	—		—		—		—		—
Fee and other income	1,424		401		25		(331)		1,519
Net result from derivative transactions	(11,351)		(4,084)		—		—		(15,435)
Earnings (loss) from investment in unconsolidated joint ventures	—		—		441		—		441

Gain (loss) on extinguishment of debt	—		—		—		2,061		2,061
Total other income (loss)	(8,922)		(1,129)		37,323		1,730		29,002

Salaries and employee benefits	—		—		—		(17,021)		(17,021)
Operating expenses(3)	—		—		—		(5,794)		(5,794)
Real estate operating expenses	—		—		(7,948)		—		(7,948)

Fee expense	(1,190)		(72)		(177)		—		(1,439)
Depreciation and amortization	—		—		(9,984)		(25)		(10,009)
Total costs and expenses	(1,190)		(72)		(18,109)		(22,840)		(42,211)

Income tax (expense) benefit	—		—		—		4,541		4,541
Segment profit (loss)	$	17,342	$	4,903	$	8,988	$	(45,294)	$	(14,061)

Total assets as of December 31, 2020	$	2,343,070	$	1,058,298	$	1,031,557	$	1,448,303	$	5,881,229

(1)Includes the Company’s investment in unconsolidated joint ventures that held real estate of $44.5 million and $46.3 million as of March 31, 2021 and December 31, 2020, respectively.

(2)Corporate/Other represents all corporate level and unallocated items including any intercompany eliminations necessary to reconcile to consolidated Company totals. This segment also includes the Company’s investment in unconsolidated joint ventures and strategic investments that are not related to the other reportable segments above, including the Company’s investment in FHLB stock of $13.0 million and $31.0 million as of March 31, 2021 and December 31, 2020, respectively, and the Company’s senior unsecured notes of $1.5 billion and $1.6 billion as of March 31, 2021 and December 31, 2020, respectively.

20. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the issuance date of the financial statements and determined that no additional disclosure is necessary.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes of Ladder Capital Corp included within this report and the Annual Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” within this Quarterly Report and “Risk Factors” within the Annual Report for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements as a result of various factors, including but not limited to, those in “Risk Factors” set forth within the Annual Report.

References to “Ladder,” the “Company,” and “we,” “our” and “us” refer to Ladder Capital Corp, a Delaware corporation incorporated in 2013, and its consolidated subsidiaries.

Ladder Capital Corp is the sole general partner of Ladder Capital Finance Holdings LLLP (“LCFH”) and, as a result of the serialization of LCFH on December 31, 2014, became the sole general partner of Series REIT of LCFH. LC TRS I LLC, a wholly-owned subsidiary of Series REIT of LCFH, is the general partner of Series TRS of LCFH. Ladder Capital Corp has a controlling interest in Series REIT of LCFH, and through such controlling interest, also has a controlling interest in Series TRS of LCFH. Ladder Capital Corp’s only business is to act as the sole general partner of LCFH and Series REIT of LCFH, and, as a result of the foregoing, Ladder Capital Corp directly and indirectly operates and controls all of the business and affairs of LCFH, and each Series thereof, and consolidates the financial results of LCFH, and each Series thereof, into Ladder Capital Corp’s consolidated financial statements.

Overview

Our businesses, including balance sheet lending, conduit lending, securities investments, and real estate investments, provide for a stable base of net interest and rental income. We have originated $25.9 billion of commercial real estate loans from our inception through March 31, 2021. During this timeframe, we also acquired $12.7 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $1.8 billion of selected net leased and other real estate assets.

As part of our commercial mortgage lending operations, we originate conduit loans, which are first mortgage loans on stabilized, income producing commercial real estate properties that we intend to make available for sale in commercial mortgage-backed securities (“CMBS”) securitizations. From our inception in October 2008 through March 31, 2021, we originated $16.7 billion of conduit loans, of which $16.6 billion was sold into 69 CMBS securitizations, making us, by volume, the second largest non-bank contributor of loans to CMBS securitizations in the United States in such period. Our sales of loans into securitizations are generally accounted for as true sales, not financings, and we generally retain no ongoing interest in loans which we securitize unless we are required to do so as issuer pursuant to the risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, (the “Dodd-Frank Act”). The securitization of conduit loans enables us to reinvest our equity capital into new loan originations or allocate it to other investments.

As of March 31, 2021, we had $5.4 billion in total assets and $1.5 billion of total equity. Our assets primarily included $2.0 billion of loans, $0.8 billion of securities, $1.0 billion of real estate, and $1.3 billion of unrestricted cash.

We maintain a diversified and flexible financing strategy supporting our investment strategy and overall business operations, including unsecured debt and significant committed term financing from leading financial institutions. Refer to “Our Financing Strategies” and “Liquidity and Capital Resources” for further information.

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Ladder was founded in October 2008 and we completed our IPO in February 2014. We are led by a disciplined and highly aligned management team. As of March 31, 2021, our management team and directors held interests in our Company comprising 10.4% of our total equity. On average, our management team members have 25 years of experience in the industry. Our management team includes Brian Harris, Chief Executive Officer; Pamela McCormack, President; Paul J. Miceli, Chief Financial Officer; Robert Perelman, Head of Asset Management; and Kelly Porcella, Chief Administrative Officer & General Counsel. Kevin Moclair, Chief Accounting Officer, is an additional officer of Ladder. As of March 31, 2021, we employed 54 full-time industry professionals.

COVID-19 Impact on the Organization

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As of the date of this filing, the majority of our employees continue to work remotely in compliance with state guidelines. We continue to actively manage the liquidity and operations of the Company in light of the market disruption and overall financial impact caused by the COVID-19 pandemic across most industries in the United States. In view of the ongoing uncertainty related to the duration of the pandemic, its ultimate impact on our revenues, profitability and financial position is difficult to assess at this time. The Company has disclosed the impact of the COVID-19 global pandemic on our business throughout this Quarterly Report.

Since the onset of COVID-19 in March 2020, for the 12 months ended March 31, 2021:

•The amount of investment assets monetized (paid off or sold) was approximately $3.0 billion.

•We have received approximately $1.3 billion from securities sales and amortization and have reduced our securities portfolio by over 60%. In addition, we have received payoffs on over one-third of our balance sheet loans, or approximately $1.2 billion, and executed over $300 million of loan sales. The weighted-average price on the approximately $1.5 billion of loans and securities sold was approximately 99% of par.

•The Company significantly reduced mark-to-market financing by over $1.9 billion.

•The Company supported Ladder credit by repurchasing approximately $180 million of corporate bonds and redeemed approximately $247 million of corporate bonds.

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Our Businesses

We invest primarily in loans, securities and other interests in U.S. commercial real estate, with a focus on senior secured assets. Our complementary business segments are designed to provide us with the flexibility to opportunistically allocate capital in order to generate attractive risk-adjusted returns under varying market conditions. The following table summarizes the carrying value of our investment portfolio as reported in our consolidated financial statements as of the dates indicated below ($ in thousands):


	March 31, 2021				December 31, 2020
Loans
Balance sheet loans:
Balance sheet first mortgage loans	$	1,886,661	34.9	%	$	2,232,749	37.9	%
Other commercial real estate-related loans	121,069		2.2	%	121,310		2.1	%

Allowance for credit losses	(36,241)		(0.7)	%	(41,507)		(0.7)	%
Total balance sheet loans	1,971,489		36.4	%	2,312,552		39.3	%
Conduit first mortgage loans	71,482		1.3	%	30,518		0.5	%
Total loans	2,042,971		37.7	%	2,343,070		39.8	%
Securities
CMBS investments	737,840		13.6	%	1,025,514		17.4	%
U.S. Agency Securities investments	26,263		0.5	%	32,804		0.6	%


Allowance for current expected credit losses	(20)		—	%	(20)		—	%
Total securities	764,083		14.1	%	1,058,298		18.0	%
Real Estate
Real estate and related lease intangibles, net	976,971		18.1	%	985,304		16.8	%

Total real estate	976,971		18.1	%	985,304		16.8	%
Other Investments
Investments in and advances to unconsolidated joint ventures	44,508		0.8	%	46,253		0.8	%

Total other investments	44,508		0.8	%	46,253		0.8	%
Total investments	3,828,533		70.8	%	4,432,925		75.9	%
Cash, cash equivalents and restricted cash	1,452,059		26.9	%	1,284,284		21.8	%
Other assets	125,219		2.3	%	164,020		2.8	%
Total assets	$	5,405,811	100	%	$	5,881,229	100	%

The unique nature of COVID-19 has had a broad impact on commercial real estate, specifically the hotel and retail sectors. Loans on hotel and retail properties comprised approximately 14.2% and 11.3%, respectively, of our loan portfolio at March 31, 2021. Hotel and retail properties comprised approximately 6.0% and 47.0%, respectively, of our real estate portfolio at March 31, 2020; however, the majority of our retail properties are necessity-based businesses and have remained open and stable during the COVID-19 pandemic. We are in regular communication with our borrowers and tenants and are closely monitoring property performance.

Loans

Balance Sheet First Mortgage Loans. We originate and invest in balance sheet first mortgage loans secured by commercial real estate properties that are typically undergoing transition, including lease-up, sell-out, and renovation or repositioning. These mortgage loans are structured to fit the needs and business plans of the property owners, and generally have LIBOR based floating rates and terms (including extension options) ranging from one to five years. Our loans are directly originated by an internal team that has longstanding and strong relationships with borrowers and mortgage brokers throughout the United States. We follow a rigorous investment process, which begins with an initial due diligence review; continues through a comprehensive legal and underwriting process incorporating multiple internal and external checks and balances; and culminates in approval or disapproval of each prospective investment by our Investment Committee. Balance sheet first mortgage loans in excess of $50.0 million also require the approval of our board of directors’ Risk and Underwriting Committee.

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We generally seek to hold our balance sheet first mortgage loans for investment although we also maintain the flexibility to contribute such loans into a collateralized loan obligation (“CLO”) or similar structure, sell participation interests or “b-notes” in our mortgage loans or sell such mortgage loans as whole loans. Our balance sheet first mortgage loans have been typically repaid at or prior to maturity (including by being refinanced by us into a new conduit first mortgage loan upon property stabilization). As of March 31, 2021, we held a portfolio of 83 balance sheet first mortgage loans with an aggregate book value of $1.9 billion. Based on the loan balances and the “as-is” third-party Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) appraised values at origination, the weighted average loan-to-value ratio of this portfolio was 69.2% at March 31, 2021.

We continue to actively manage and monitor the credit and liquidity risk associated with the balance sheet first mortgage loan portfolio. Due to the nationwide limitations placed on many businesses in response to the COVID-19 pandemic, significant cash flow disruptions have occurred across the economy, which have impacted and likely will continue to impact certain of our borrowers. We have used, and continue to use, a variety of legal and structural options to manage that risk effectively, including forbearance and default provisions, as is generally being utilized throughout the credit lending industries.

Other Commercial Real Estate-Related Loans. We selectively invest in note purchase financings, subordinated debt, mezzanine debt and other structured finance products related to commercial real estate that are generally held for investment. As of March 31, 2021, we held a portfolio of 23 other commercial real estate-related loans with an aggregate book value of $121.1 million. Based on the loan balance and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan-to-value ratio of the portfolio was 67.2% at March 31, 2021.

Conduit First Mortgage Loans. We also originate conduit loans, which are first mortgage loans that are secured by cash-flowing commercial real estate and are available for sale to securitizations. These first mortgage loans are typically structured with fixed interest rates and generally have five- to ten-year terms. Conduit first mortgage loans are originated, underwritten, approved and funded using the same comprehensive legal and underwriting approach, process and personnel used to originate our balance sheet first mortgage loans. Conduit first mortgage loans in excess of $50.0 million also require approval of our board of directors’ Risk and Underwriting Committee.

Although our primary intent is to sell our conduit first mortgage loans to CMBS trusts, we generally seek to maintain the flexibility to keep them on our balance sheet, sell participation interests or “b-notes” in such loans or sell the loans as whole loans. As of March 31, 2021, we held five first mortgage loans that were available for contribution into a securitization with an aggregate book value of $71.5 million. Based on the loan balances and the “as-is” third-party FIRREA appraised values at origination, the weighted average loan- to-value ratio of this portfolio was 60.8% at March 31, 2021. The Company holds these conduit loans in its taxable REIT subsidiary (“TRS”).

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The following charts set forth our total outstanding balance sheet first mortgage loans, other commercial real estate-related loans, and conduit first mortgage loans as of March 31, 2021 and a breakdown of our loan portfolio by loan size and geographic location and asset type of the underlying real estate.

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Securities

CMBS Investments. We invest in CMBS, including CRE CLOs, secured by first mortgage loans on commercial real estate and own predominantly AAA-rated securities. These investments provide a stable and attractive base of net interest income and help us manage our liquidity. We have significant in-house expertise in the evaluation and trading of these securities, due in part to our experience in originating and underwriting mortgage loans that comprise assets within CMBS trusts, as well as our experience in structuring CMBS transactions. AAA-rated CMBS or U.S. Agency securities investments in excess of $76.0 million and all other investment grade CMBS or U.S. Agency securities investments in excess of $51.0 million, each in any single class of any single issuance, require the approval of our board of directors’ Risk and Underwriting Committee. The Risk and Underwriting Committee also must approve any investments in non-rated or sub-investment grade CMBS or U.S. Agency Securities in any single class of any single issuance in excess of the lesser of (x) $21.0 million and (y) 10% of the total net asset value of the respective Ladder investment company.

The Company invests in primarily AAA-rated real estate securities, typically front pay securities, with relatively short duration and significant subordination. The hyperamortization features included in many of the securities positions we own help mitigate potential credit losses even in the current market conditions. At the onset of the COVID-19 pandemic in March 2020, there was a significant decrease in liquidity and trading activity for the real estate securities we own. During the three months ended March 31, 2021, liquidity and trading activity continued to return to the market and the value of our securities portfolio as of March 31, 2021 had an unrealized mark-to-market gain of $6.8 million.

As of March 31, 2021, the estimated fair value of our portfolio of CMBS investments totaled $737.8 million in 92 CUSIPs ($8.0 million average investment per CUSIP). As of March 31, 2021, included in the $737.8 million of CMBS securities are $11.7 million of CMBS securities designated as risk retention securities under the Dodd-Frank Act which are subject to transfer restrictions over the term of the securitization trust. The following chart summarizes our securities investments, 99.5% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of March 31, 2021:

In the future, we may invest in CMBS securities or other securities that are unrated. As of March 31, 2021, our CMBS investments had a weighted average duration of 1.9 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of March 31, 2021, by property count and market value, respectively, 57.3% and 76.1% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 10.2% and 41.3%, by property count and market value, respectively, of the collateral located in the New York-Newark-Edison MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.2% to 5.5% by property count and 0.1% to 11.6% by market value.

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Real Estate

Net Leased Commercial Real Estate Properties. As of March 31, 2021, we owned 164 single tenant net leased properties with an aggregate book value of $633.8 million. These properties are fully leased on a net basis where the tenant is generally responsible for payment of real estate taxes, property, building and general liability insurance and property and building maintenance expenses. As of March 31, 2021, our net leased properties comprised a total of 5.3 million square feet, 100% leased with an average age since construction of 15.7 years and a weighted average remaining lease term of 11.1 years. Commercial real estate investments in excess of $20.0 million require the approval of our board of directors’ Risk and Underwriting Committee. The majority of the net leased properties in our real estate portfolio are necessity-based businesses and have remained open and stable during the COVID-19 pandemic. During the three months ended March 31, 2021, we collected 100% of rent on these properties.

Diversified Commercial Real Estate Properties. As of March 31, 2021, we owned 62 diversified commercial real estate properties throughout the U.S. During the three months ended March 31, 2021, we collected approximately 97.7% of rent on these properties.

The following charts summarize the composition of our real estate investments as of March 31, 2021:

The market conditions due to the COVID-19 pandemic and the resulting economic disruption have broadly impacted the commercial real estate sector. As expected, the net leased commercial real estate properties, which comprise the majority of our portfolio, have remained minimally impacted as the majority of the net leased properties in our real estate portfolio are necessity-based businesses and have remained open and stable during the COVID-19 pandemic. We continue to actively monitor our diversified commercial real estate properties as well to determine the immediate and long term impacts on the buildings, tenants, business plans and the ability to execute those business plans.

Other Investments

Unconsolidated Joint Venture. In connection with the origination of a loan in April 2012, we received a 25% equity interest with the right to convert upon a capital event. On March 22, 2013, we refinanced the loan, and we converted our equity interest into a 19% limited liability company membership interest in Grace Lake JV, LLC (“Grace Lake LLC”). As of March 31, 2021, Grace Lake LLC owned an office building campus with a carrying value of $50.9 million, which is net of accumulated depreciation of $37.7 million, that is financed by $60.9 million of long-term debt. Debt of Grace Lake LLC is non-recourse to the limited liability company members, except for customary non-recourse carve-outs for certain actions and environmental liability. As of March 31, 2021, the book value of our investment in Grace Lake LLC was $4.3 million.

Unconsolidated Joint Venture. On August 7, 2015, the Company entered into a joint venture, 24 Second Avenue Holdings LLC (“24 Second Avenue”), with an operating partner (the “Operating Partner”) to invest in a ground-up residential/retail condominium development and construction project located at 24 Second Avenue, New York, NY. 24 Second Avenue consists of residential condominium units and one commercial condominium unit. As of March 31, 2021, 24 Second Avenue had sold 21 residential condominium units for $55.2 million in sales proceeds. As of March 31, 2021, the Company had no remaining additional capital commitment to 24 Second Avenue and the book value of the Company’s investment in 24 Second Avenue was $40.2 million.

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Our Financing Strategies

Our financing strategies are critical to the success and growth of our business. We manage our financing to complement our asset composition and to diversify our exposure across multiple capital markets and counterparties. In addition to cash flow from operations, we fund our operations and investment strategy through a diverse array of funding sources, including:

•Unsecured corporate bonds

•Secured loan and securities repurchase facilities

•CLO transactions

•Non-recourse mortgage debt

•Revolving credit facility

•FHLB financing

•Loan sales and securitizations

•Unencumbered assets available for financing

•Equity

From time to time, we may add financing counterparties that we believe will complement our business, although the agreements governing our indebtedness may limit our ability and the ability of our present and future subsidiaries to incur additional indebtedness. Our amended and restated charter and by-laws do not impose any threshold limits on our ability to use leverage. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 7 Debt Obligations, Net in our consolidated financial statements included elsewhere in this Quarterly Report for more information about our financing arrangements.

Unsecured Corporate Bonds

As of March 31, 2021, we had $1.5 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $465.9 million in aggregate principal amount of 5.25% senior notes due 2022 (the “2022 Notes”), $348.0 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”) and $651.8 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes,” collectively with the 2021 Notes, the 2022 Notes and the 2025 Notes, the “Notes”). During the three months ended March 31, 2021, the Company redeemed in full its remaining $146.7 million 5.875% Senior Notes due 2021.

Due in large part to devoting such a large portion of the Company’s capital structure to equity and unsecured corporate bond debt, Ladder maintains a $2.8 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of March 31, 2021.

Committed Loan Financing Facilities

We are parties to multiple committed loan repurchase agreement facilities, totaling $1.6 billion of credit capacity. As of March 31, 2021, the Company had $238.6 million of borrowings outstanding, with an additional $1.3 billion of committed financing available. Assets pledged as collateral under these facilities are generally limited to first mortgage whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans. Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios.

We have the option to extend some of our existing facilities subject to a number of customary conditions. The lenders have sole discretion to include collateral in these facilities and to determine the market value of the collateral on a daily basis, and, if the estimated market value of the included collateral declines, the lenders have the right to require additional collateral or a full and/or partial repayment of the facilities (margin call) sufficient to rebalance the facilities. Typically, the lender establishes a maximum percentage of the collateral asset’s market value that can be borrowed. We often borrow at a lower percentage of the collateral asset’s value than the maximum, leaving us with excess borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis.

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Securities Repurchase Facilities

We are a party to a committed term master repurchase agreement with a major U.S. banking institution for CMBS, totaling $400.0 million of credit capacity, or more depending on our utilization of a loan repurchase facility with the same lender. As we do in the case of borrowings under committed loan facilities, we often borrow at a lower percentage of the collateral asset’s value than the maximum, leaving us with excess borrowing capacity that can be drawn upon at a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis. As of March 31, 2021, the Company had $63.1 million borrowings outstanding, with an additional $726.0 million of committed financing available.

Additionally, we are a party to multiple uncommitted master repurchase agreements with several counterparties to finance our investments in CMBS and U.S. Agency Securities. The securities that served as collateral for these borrowings are typically AAA-rated CMBS with relatively short duration and significant subordination. The lenders have sole discretion to determine the market value of the collateral on a daily basis, and, if the estimated market value of the collateral declines, the lenders have the right to require additional cash collateral. If the estimated market value of the collateral subsequently increases, we have the right to call back excess cash collateral.

Revolving Credit Facility

The Company’s revolving credit facility (the “Revolving Credit Facility”) provides for an aggregate maximum borrowing amount of $266.4 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. The Revolving Credit Facility has a final maturity date, assuming all extension options are exercised, of February 2025. The amendment also provided for a reduction in the interest rate to one-month LIBOR plus 3.00% on Eurodollar advances upon the upgrade of the Company’s credit ratings, which occurred in January 2020.

The obligations under the Revolving Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Revolving Credit Facility is secured by a pledge of the shares of (or other ownership or equity interests in) certain subsidiaries to the extent the pledge is not restricted under existing regulations, law or contractual obligations.

LCFH is subject to customary affirmative covenants and negative covenants, including limitations on the incurrence of additional debt, liens, restricted payments, sales of assets and affiliate transactions under the Revolving Credit Facility. In addition, under the Revolving Credit Facility, LCFH is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities.

FHLB Financing

We have maintained membership in the FHLB since 2012 through our subsidiary, Tuebor Captive Insurance Company LLC (“Tuebor”). As of March 31, 2021, Tuebor had $288.0 million of borrowings outstanding from the FHLB, with terms of overnight to 3.75 years, interest rates of 0.37% to 2.74%, and advance rates of 71.7% to 95.7% on eligible collateral, including cash collateral. As of March 31, 2021, collateral for the borrowings was comprised of $215.3 million of CMBS and U.S. Agency Securities, and $102.1 million of cash collateral. The weighted-average borrowings outstanding were $288.0 million for the three months ended March 31, 2021. FHLB advances amounted to 7.6% of the Company’s outstanding debt obligations as of March 31, 2021.

Mortgage Loan Financing

We generally finance our real estate using long-term non-recourse mortgage financing. During the three months ended March 31, 2021, we did not execute any term debt agreements to finance real estate. All of our mortgage loan financings have fixed rates ranging from 3.75% to 6.16%, mature between 2021-2030 and total $765.1 million at March 31, 2021. These long-term non-recourse mortgages include net unamortized premiums of $4.3 million at March 31, 2021, representing proceeds received upon financing greater than the contractual amounts due under the agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. We recorded $0.3 million of premium amortization, which decreased interest expense, for the three months ended March 31, 2021. The loans are collateralized by real estate and related lease intangibles, net, of $901.6 million as of March 31, 2021.

Secured Financing Facility

On April 30, 2020, the Company entered into a strategic financing arrangement (the “Agreement”) with an American multinational corporation (the “Lender”), under which the Lender provided the Company with approximately $206.4 million in

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senior secured financing (the “Secured Financing Facility”) to fund transitional and land loans. The Secured Financing Facility is secured on a first lien basis on a portfolio of certain of the Company’s loans and will mature on May 6, 2023, and borrowings thereunder bear interest at LIBOR (or a minimum of 0.75% if greater) plus 10.0%, with a minimum interest premium of approximately $39.2 million minus the aggregate sum of all interest payments made under the Secured Financing Facility prior to the date of payment of the minimum interest premium, which is payable upon the earlier of maturity or repayment in full of the loan. The Senior Financing Facility is non-recourse, subject to limited exceptions, and does not contain mark-to-market provisions. Additionally, the Senior Financing Facility provides the Company optionality to modify or restructure loans or forbear in exercising remedies, which maximizes the Company’s financial flexibility.

The Lender has agreed not to sell, transfer, assign, pledge, hypothecate, mortgage, dispose of or in any way encumber the shares acquired as a result of exercising the Purchase Right for a period of time following the exercise date. In connection with the issuance of the Purchase Right, the Company and the Lender entered into a registration rights agreement, pursuant to which the Company has agreed to provide customary demand and piggyback registration rights to the Lender.

As of March 31, 2021, the Company had $194.7 million of borrowings outstanding under the Secured Financing Facility included in debt obligations on its consolidated balance sheets, net unamortized debt issuance costs of $5.8 million and a $5.9 million unamortized discount related to the Purchase Right.

Collateralized Loan Obligation (“CLO”) Debt

On April 27, 2020, a consolidated subsidiary of the Company completed a private CLO transaction with a major U.S. bank which generated $310.2 million of gross proceeds to Ladder, financing $481.3 million of loans (“Contributed Loans”) at a 64.5% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company will retained a 35.5% subordinate and controlling interest in the CLO. The Company retained control over major decisions made with respect to the administration of the Contributed Loans, including broad discretion in managing these loans in light of the COVID-19 pandemic, and has the ability to appoint the special servicer under the CLO. The CLO is a Variable Interest Entity (“VIE”) and the Company was the primary beneficiary and, therefore, consolidated the VIE - See Note 10, Consolidated Variable Interest Entities. Proceeds from the transaction were used to pay off other secured debt including bank and FHLB financing that was subject to mark-to-market provisions.

As of March 31, 2021, the Company had $233.2 million of matched term, non-mark-to-market and non-recourse basis CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $1.8 million were included in CLO debt as of March 31, 2021.

Hedging Strategies

We enter into interest rate and credit spread derivative contracts to mitigate our exposure to changes in interest rates and credit spreads. We generally seek to hedge the interest rate risk on the financing of assets that have a duration longer than five years, including newly-originated conduit first mortgage loans, securities in our CMBS portfolio if long enough in duration, and most of our U.S. Agency Securities portfolio. We monitor our asset profile and our hedge positions to manage our interest rate and credit spread exposures, and we seek to match fund our assets according to the liquidity characteristics and expected holding periods of our assets.

Financing Strategy in Current Market Conditions

Securities Repurchase Facilities: The Company invests in AAA-rated CRE CLO securities, typically front pay securities, with relatively short duration and significant subordination. These securities have historically been financed with short-term maturity, repurchase agreements with various bank counterparties. The Company has been able to continue to access securities repurchase funding and the pricing of such borrowings has improved during the three months ended March 31, 2021 as liquidity continued to return to the market and pricing for the securities that serve as collateral improved. Furthermore, during the three months ended March 31, 2021, the Company paid down $227.3 million of securities repurchase financing, primarily through sales of securities.

FHLB Financing: In 2016, the FHFA adopted a final rule that limited our captive insurance subsidiary’s membership in the FHLB, requiring us to significantly reduce the amounts of FHLB borrowings outstanding by February of 2021. The Company

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has complied with such targeted paydowns. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - FHLB financing” for further information.

The Company had no paydowns on FHLB financing for the three months ended March 31, 2021. The remaining FHLB debt maturities are staggered out through 2024. Funding for future advance paydowns is expected be obtained from the natural amortization of securities over time and/or sales of securities collateral.

Loan Repurchase Financing: For the three months ended March 31, 2021, the Company paid down over $16.8 million on loan repurchase financing through loan collateral pay offs and loans securitized through a CLO financing transaction (refer to below). Loan repurchase debt outstanding as of March 31, 2021 was $238.6 million. The Company continues to maintain an active dialogue with its bank counterparties as it expects loan collateral on each of their lines to experience some measure of forbearance.

Secured Financing Facility: On April 30, 2020, the Company entered into a strategic financing arrangement with an American multinational corporation, under which the lender will provide the Company with approximately $206.4 million in senior secured financing to fund transitional and land loans (refer to above).

Completion of Private CLO: On April 27, 2020, the Company completed a private CLO financing transaction with a major U.S. bank which generated $310.2 million of gross proceeds, financing $481.3 million of loans at a 64.5% advance rate on a matched term, non-mark-to-market and non-recourse basis.

Based on the financing actions described above, the Company has significantly decreased its exposure to mark-to-market financing in 2020. As of April 30, 2021, the Company is holding over $1.3 billion of unrestricted cash.

Financial Covenants

We generally seek to maintain a debt-to-equity ratio of approximately 3.0:1.0 or below. We expect this ratio to fluctuate during the course of a fiscal year due to the normal course of business in our conduit lending operations, in which we generally securitize our inventory of conduit loans at intervals, and also because of changes in our asset mix, due in part to such securitizations. We generally seek to match fund our assets according to their liquidity characteristics and expected hold period. We believe that the defensive positioning of our predominantly senior secured assets and our financing strategy has allowed us to maintain financial flexibility to capitalize on an attractive range of market opportunities as they have arisen.

We and our subsidiaries may incur substantial additional debt in the future. However, we are subject to certain restrictions on our ability to incur additional debt in the indentures governing the Notes (the “Indentures”) and our other debt agreements. Under the Indentures, we may not incur certain types of indebtedness unless our consolidated non-funding debt to equity ratio (as defined in the Indentures) is less than or equal to 1.75 to 1.00 or if the unencumbered assets of the Company and its subsidiaries is less than 120% of their unsecured indebtedness, although our subsidiaries are permitted to incur indebtedness where recourse is limited to the assets and/or the general credit of such subsidiary.

Our borrowings under certain financing agreements and our committed repurchase facilities are subject to maximum consolidated leverage ratio limits (either a fixed ratio ranging from 3.50 to 1.00 to 4.00 to 1.00, or a maximum ratio based on our asset composition at the time of determination), minimum net worth requirements (ranging from $400.0 million to $871.4 million), maximum reductions in net worth over stated time periods, minimum liquidity levels (typically $30.0 million of cash or a higher standard that often allows for the inclusion of different percentages of liquid securities in the determination of compliance with the requirement), and a fixed charge coverage ratio of 1.25x, and, in the instance of one lender, an interest coverage ratio of 1.50x, in each case, if certain liquidity thresholds are not satisfied. These restrictions, which would permit us to incur substantial additional debt, are subject to significant qualifications and exceptions.

Further, certain of our financing arrangements and loans on our real property are secured by the assets of the Company, including pledges of the equity of certain subsidiaries or the assets of certain subsidiaries. From time to time, certain of these financing arrangements and loans may prohibit certain of our subsidiaries from paying dividends to the Company, from making distributions on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or other assets to the Company or other subsidiaries of the Company.

We are in compliance with all covenants as described in the Company’s Annual Report as of December 31, 2020 and as of March 31, 2021.

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Net of the $1.3 billion of unrestricted cash held as of March 31, 2021, our adjusted leverage ratio would be significantly below 3.0x. In late March 2020, as the COVID-19 crisis evolved, management began executing on a plan to mitigate uncertainty in financial markets by increasing liquidity and obtaining additional non-recourse and non-mark-to-market financing. Refer to “Financing Strategy in Current Market Conditions” for further disclosures surrounding deleveraging actions completed during 2020 and 2021.

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Results of Operations

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

The following table sets forth information regarding our consolidated results of operations ($ in thousands):


	Three Months Ended March 31,			2021 vs
		2021		2020		2020

Net interest income
Interest income		$	39,287	$	72,589	$	(33,302)
Interest expense		45,973		51,401		(5,428)
Net interest income		(6,686)		21,188		(27,874)
Provision for (release of) loan loss reserves		(4,251)		26,581		(30,832)
Net interest income (expense) after provision for (release of) loan losses		(2,435)		(5,393)		2,958
Other income (loss)
Operating lease income		24,159		26,328		(2,169)


Sale of loans, net		—		1,005		(1,005)
Realized gain (loss) on securities		579		3,011		(2,432)
Unrealized gain (loss) on equity securities		—		(533)		533
Unrealized gain (loss) on Agency interest-only securities		(20)		76		(96)
Realized gain (loss) on sale of real estate, net		—		10,529		(10,529)

Fee and other income		3,284		1,519		1,765
Net result from derivative transactions		4,771		(15,435)		20,206
Earnings (loss) from investment in unconsolidated joint ventures		436		441		(5)

Gain (loss) on extinguishment of debt		—		2,061		(2,061)
Total other income (loss)		33,209		29,002		4,207
Costs and expenses
Salaries and employee benefits		9,533		17,021		(7,488)
Operating expenses		4,241		5,794		(1,553)
Real estate operating expenses		6,211		7,948		(1,737)
Fee expense		1,599		1,439		160
Depreciation and amortization		9,536		10,009		(473)
Total costs and expenses		31,120		42,211		(11,091)
Income (loss) before taxes		(346)		(18,602)		18,256
Income tax expense (benefit)		(778)		(4,541)		3,763
Net income (loss)		$	432	$	(14,061)	$	14,493

Investment Overview

Activity for the three months ended March 31, 2021 included originating and funding $157.6 million in principal value of commercial mortgage loans, which was offset by $46.6 million of sales and $374.8 million of principal repayments in the three months ended March 31, 2021. We acquired $40.0 million of new securities, which was offset by $329.1 million of sales and $10.5 million of amortization in the portfolio, which partially contributed to a net decrease in our securities portfolio of $294.2 million during the three months ended March 31, 2021. We also invested $43.8 million in real estate, which included $43.8 million of real estate acquired via foreclosure, and received proceeds from the sale of real estate of $43.8 million.

Activity for the three months ended March 31, 2020 included originating and funding $526.7 million in principal value of commercial mortgage loans, which was offset by $189.4 million of sales and $118.6 million of principal repayments in the three months ended March 31, 2020. We acquired $438.2 million of new securities, which was partially offset by $107.5 million of sales and $43.6 million of amortization in the portfolio, which partially contributed to a net increase in our securities portfolio of $209.0 million during the three months ended March 31, 2020. We also invested $27.8 million in real estate, which included $21.5 million of real estate acquired via foreclosure, and received proceeds from the sale of real estate of $30.1 million.

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Operating Overview

Net income (loss) totaled $0.4 million for the three months ended March 31, 2021, compared to $(14.1) million for the three months ended March 31, 2020. The most significant drivers of the $14.5 million increase are as follows:

•an increase in net interest income after provision for loan losses of $3.0 million, as a result of the $33.3 million decrease in interest income and a $5.4 million decrease in interest expense. Also contributing was a $30.8 million decrease in provision for loan loss reserves as a result of a release of provision as compared to the initial adoption of and recording of provision in connection with CECL during the three months ended March 31, 2020;

•an increase in total other income (loss) of $4.2 million, primarily as a result of a $20.2 million increase in net results from derivative transactions and an increase of $1.8 million on fee and other income, partially offset by a decrease of $1.0 million in sales of loans, a decrease of $2.4 million in realized gains (losses) on securities, a decrease of $2.2 million on operating lease income and a $10.5 million decrease in profits on sales of real estate;

•a decrease in total costs and expenses of $11.1 million compared to the prior year, primarily attributable to a $7.5 million decrease in salaries and employee benefit, a $1.7 million decrease in real estate operating expenses, and a $1.6 million decrease in operating expenses; and

•a ($3.8 million) decrease in income tax expense (benefit) compared to the prior year, primarily attributable to a decrease in forecasted GAAP income in our TRSs.

Income (Loss) Before Taxes

Income (loss) before taxes totaled $(0.3) million for the three months ended March 31, 2021, compared to $(18.6) million for the three months ended March 31, 2020. The significant components of the $18.3 million decrease in (loss) before taxes are described in the first three bullet points under operating overview above.

Distributable Earnings

Distributable earnings, a non-GAAP financial measure, totaled $3.2 million for the three months ended March 31, 2021, compared to $30.9 million for the three months ended March 31, 2020. The significant components of the $27.7 million decrease in distributable earnings are a decrease of $19.9 million in net interest income after provision for loan losses, a decrease in total other income (loss) of $13.3 million, primarily as a result of a decrease of $0.4 million in sale of loans, net, an increase of $1.8 million in fee and other income, a decrease of $2.2 million in operating lease income and a decrease of $2.4 million in gain (loss) on securities, a decrease of $3.5 million in sale of real estate, net, a decrease of $3.5 million in net results from derivative transactions, a decrease of $2.1 million in gain (loss) on extinguishment of debt and a decrease of $0.6 million in salaries and employee benefits.

See “—Reconciliation of Non-GAAP Financial Measures” for our definition of distributable earnings and a reconciliation to income (loss) before taxes.

Net Interest Income

The $33.3 million decrease in interest income was primarily attributable to a decrease in our security and loan portfolio due to paydowns and sales with lower prevailing LIBOR rates. For the three months ended March 31, 2021, securities investments averaged $0.8 billion and loan investments averaged $2.2 billion. For the three months ended March 31, 2020, securities investments averaged $1.9 billion and loan investments averaged $3.4 billion. There was a $1.2 billion decrease in average loan investments, and a $1.1 billion decrease in average securities investments.

The $5.4 million decrease in interest expense is due to the decrease in repurchase facility financing, a decrease in interest expense on the unsecured corporate bonds as a result of the redemption of the 2021 Notes, and a reduction in CLO interest expense due to paydowns

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The decrease in net interest income before provision for loan losses of $27.9 million is explained in the paragraphs above.

As of March 31, 2021, the weighted average yield on our mortgage loan receivables was 6.0%, compared to 6.7% as of March 31, 2020 as the weighted average yield on new loans originated was lower than the weighted average yield on loans that were securitized or paid off. As of March 31, 2021, the weighted average interest rate on borrowings against our mortgage loan receivables was 5.9%, compared to 2.6% as of March 31, 2020. The increase in the rate on borrowings against our mortgage loan receivables from March 31, 2020 to March 31, 2021 was primarily due to higher borrowing rates on new sources of financing obtained subsequent to March 31, 2020 and held during the three months ended March 31, 2021. As of March 31, 2021, we had outstanding borrowings secured by our mortgage loan receivables equal to 32.6% of the carrying value of our mortgage loan receivables, compared to 31.9% as of March 31, 2020.

As of March 31, 2021, the weighted average yield on our real estate securities was 1.7%, compared to 2.3% as of March 31, 2020, primarily due to lower prevailing market rates as of March 31, 2021 compared to March 31, 2020. As of March 31, 2021, the weighted average interest rate on borrowings against our real estate securities was 0.9%, compared to 2.8% as of March 31, 2020. The decrease in the rate on borrowings against our real estate securities from March 31, 2020 to March 31, 2021 was primarily due to lower prevailing market borrowing rates as of March 31, 2021 compared to March 31, 2020. As of March 31, 2021, we had outstanding borrowings secured by our real estate securities equal to 81.9% of the carrying value of our real estate securities, compared to 83.3% as of March 31, 2020.

Our real estate is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of March 31, 2021, the weighted average interest rate on mortgage borrowings against our real estate was 4.8%, compared to 4.9% as of March 31, 2020. As of March 31, 2021, we had outstanding borrowings secured by our real estate equal to 78.3% of the carrying value of our real estate, compared to 77.0% as of March 31, 2020.

Provision for (release of) Loan Loss Reserves

Operating Lease Income

The decrease of $2.2 million in operating lease income, which includes tenant recoveries, was primarily attributable to sales of real estate and a decline in operations as a result of factors caused by COVID-19.

Sale of Loans, Net

Income (loss) from sale of loans, net, includes all loan sales, whether by securitization, whole loan sales or other means. Income (loss) from sale of loans, net also includes realized losses on loans related to lower of cost or market adjustments. During the three months ended March 31, 2021, we sold/transferred one loan with an aggregate outstanding principal balance of $46.6 million at par. During the three months ended March 31, 2021, we recorded no realized losses on loans related to lower of cost or market adjustments. During the three months ended March 31, 2020, we sold/transferred 20 loans with an aggregate outstanding principal balance of $185.3 million. During the three months ended March 31, 2020, we recorded no realized losses on loans related to lower of cost or market adjustments. Income from sales of loans, net is subject to market conditions impacting timing, size and pricing and as such may vary significantly quarter to quarter.

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Realized Gain (Loss) on Securities

The change in realized gain (loss) for the three months ended March 31, 2021 compared to March 31, 2020 resulted in a decrease of $2.4 million. For the three months ended March 31, 2021, we sold $329.1 million of securities, comprised of $323.1 million of CMBS, $6.0 million of Agency securities. For the three months ended March 31, 2020, we sold $107.5 million of securities, comprised of $89.3 million of CMBS, $4.0 million of corporate bonds and $14.2 million of equity securities. Other than temporary impairments on securities of $(0.1) million are included in realized gain (loss) on securities for the three months ended March 31, 2021, compared to $(0.2) million for the three months ended March 31, 2020, an increase of $(0.1) million.

Unrealized Gain (Loss) on Equity Securities

The Company had no equity security activity during the three months ended March 31, 2021, compared to unrealized gain (loss) of $(0.5) million for the three months ended March 31, 2020. The Company has elected the fair market value option for accounting for these equity securities and changes in fair value are recorded in current period earnings.

Realized Gain (Loss) on Sale of Real Estate, Net

We had one hotel property sale which resulted in no gain (loss) for the three months ended March 31, 2021. The decrease of $10.5 million in realized gain (loss) on the sale of real estate, net was primarily a result of the sale of eight diversified commercial real estate properties resulting in a net gain (loss) on sale of $10.5 million for the three months ended March 31, 2020

Fee and Other Income

We generated fee income from origination fees, exit fees and other fees on the loans we originate and in which we invest, and dividend income on our equity securities. The $1.8 million increase in fee and other income year-over-year was primarily due to a decrease in exit fees, origination fees and dividend income.

Net Result from Derivative Transactions

Net result from derivative transactions represented a realized gain of $4.8 million and an unrealized gain of $2 thousand for the three months ended March 31, 2021, compared to a loss of $15.4 million, for the three months ended March 31, 2020, which was comprised of an unrealized gain of $0.4 million and a realized loss of $15.8 million, resulting in a positive change of $20.2 million. The hedge positions were related to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of interest rate futures that we employed in an effort to hedge the interest rate risk on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The gain in 2021 was primarily related to movement in interest rates during the three months ended March 31, 2021. The total net result from derivative transactions is comprised of hedging interest expense, realized gains/losses related to hedge terminations and unrealized gains/losses related to changes in the fair value of asset hedges.

Earnings (Loss) from Investment in Unconsolidated Joint Ventures

Earnings from our investment in Grace Lake LLC totaled $0.3 million, and $0.2 million for the three months ended March 31, 2021 and 2020, respectively. Earnings (loss) from our investment in 24 Second Avenue totaled $0.1 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively. See Note 6, Investment in and Advances to Unconsolidated Joint Ventures, for further detail.

Gain (Loss) on Extinguishment

We had no gain (loss) on extinguishment/defeasance of debt for the three months ended March 31, 2021. During the three months ended March 31, 2021, the Company redeemed $146.7 million of principal of the 2021 Notes at par.

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Gain (loss) on extinguishment/defeasance of debt totaled $2.1 million for the three months ended March 31, 2020. During the three months ended March 31, 2020, the Company retired $19.2 million of principal of the 2027 Notes for a repurchase price of $17.2 million, recognizing a $1.7 million net gain on extinguishment of debt after recognizing $(0.3) million of unamortized debt issuance costs associated with the retired debt; the Company retired $4.1 million of principal of the 2025 Notes for a repurchase price of $4.0 million, recognizing a $5.8 thousand net gain on extinguishment of debt after recognizing $(39.9) thousand of unamortized debt issuance costs associated with the retired debt; and the Company retired $1.0 million of principal of the 2021 Notes for a repurchase price of $1.0 million, recognizing a $1.8 thousand net gain on extinguishment of debt after recognizing $(3.2) thousand of unamortized debt issuance costs associated with the retired debt.

Salaries and Employee Benefits

Salaries and employee benefits are comprised primarily of salaries, bonuses, equity based compensation and other employee benefits. The decrease of $7.5 million in compensation expense was primarily attributable to a reduction in compensation expense resulting from the timing of the payment of equity based compensation for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Operating Expenses

Operating expenses are primarily composed of professional fees, lease expense and technology expenses. The decrease of $1.6 million was primarily related to a decrease in professional fees.

Real Estate Operating Expenses

The decrease of $1.7 million is primarily the result of real estate sales throughout 2020.

Fee Expense

Fee expense is comprised primarily of custodian fees, financing costs and servicing fees related to loans. The increase of $0.2 million in fee expense was primarily attributable to an increase in legal fees, partially offset by a decrease in loan servicer costs.

Depreciation and Amortization

The $0.5 million decrease in depreciation and amortization is primarily attributable to the timing of the real estate sales or acquisitions during each quarter.

Income Tax (Benefit) Expense

Most of our consolidated income tax provision relates to the business units held in our TRSs. The decrease in benefit of $3.8 million is primarily a result of reduced operating losses in our TRSs.

Liquidity and Capital Resources

The management of our liquidity and capital diversity and allocation strategies is critical to the success and growth of our business. We manage our sources of liquidity to complement our asset composition and to diversify our exposure across multiple capital markets and counterparties.

We require substantial amounts of capital to support our business. The management team, in consultation with our board of directors, establishes our overall liquidity and capital allocation strategies. A key objective of those strategies is to support the execution of our business strategy while maintaining sufficient ongoing liquidity throughout the business cycle to service our financial obligations as they become due. When making funding and capital allocation decisions, members of our senior management consider business performance; the availability of, and costs and benefits associated with, different funding sources; current and expected capital markets and general economic conditions; our asset composition and capital structure; and our targeted liquidity profile and risks relating to our funding needs.

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To ensure that Ladder Capital can effectively address the funding needs of the Company on a timely basis, we maintain a diverse array of liquidity sources including (1) cash and cash equivalents; (2) cash generated from operations; (3) proceeds from the issuance of the unsecured bonds; (4) borrowings under repurchase agreements; (5) principal repayments on investments including mortgage loans and securities; (6) borrowings under our revolving credit facility; (7) proceeds from securitizations and sales of loans; (8) proceeds from the sale of securities; (9) proceeds from the sale of real estate; (10) proceeds from the issuance of CLO debt and other non-mark-to-market loan financing; (11) a significant and financeable unencumbered asset base; and (12) proceeds from the issuance of equity capital. We use these funding sources to meet our obligations on a timely basis.

Our primary uses of liquidity are for (1) the funding of loan and real estate-related investments; (2) the repayment of short-term and long-term borrowings and related interest; (3) the funding of our operating expenses; and (4) distributions to our equity investors to comply with the REIT distribution requirements. We require short-term liquidity to fund loans that we originate and hold on our consolidated balance sheet pending sale, including through whole loan sale, participation, or securitization. We generally require longer-term funding to finance the loans and real estate-related investments that we hold for investment. We have historically used the aforementioned funding sources to meet the operating and investment needs as they have arisen and have been able to do so by applying a rigorous approach to long and short-term cash and debt forecasting.

In addition, as a REIT, we are also required to make sufficient dividend payments to our shareholders in amounts at least sufficient to maintain our REIT status. Under IRS guidance, we may elect to pay a portion of our dividends in stock, subject to a cash/stock election by our shareholders, to optimize our level of capital retention. Accordingly, our cash requirement to pay dividends to maintain REIT status could be substantially reduced at the discretion of the board.

Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) borrowings on both a short- and long-term committed basis, made by Tuebor from the FHLB; (3) long term non-recourse mortgage financing; (4) committed secured funding provided by banks and other lenders; and (5) uncommitted secured funding sources, including asset repurchase agreements with a number of banks.

In the future, we may also use other sources of financing to fund the acquisition of our assets, including credit facilities, warehouse facilities, repurchase facilities and other secured and unsecured forms of borrowing. These financings may be collateralized or non-collateralized, may involve one or more lenders and may accrue interest at either fixed or floating rates. We may also seek to raise further equity capital or issue debt securities in order to fund our future investments.

Refer to our “Financing Strategy in the Current Market Conditions” and “Financial Covenants” for further disclosure surrounding management’s actions under the current market conditions related to the COVID-19 pandemic. Refer to “Our Financing Strategies” for further disclosure of our diverse financing sources and, for a summary of our financial obligations, refer to the Contractual Obligations table below. All of our existing financial obligations due within the following year can be extended for one or more additional years at our discretion, refinanced or repaid at maturity or incurred in the normal course of business (i.e., interest payments/loan funding obligations).

Cash, Cash Equivalents and Restricted Cash

We held cash, cash equivalents and restricted cash of $1.5 billion at March 31, 2021, of which $1.3 billion was unrestricted cash and cash equivalents and $146.4 million was restricted cash. We held cash and cash equivalents of $1.3 billion and restricted cash of $29.9 million as of December 31, 2020. As the COVID-19 crisis evolved, management implemented a plan to mitigate the uncertainty in financial markets by increasing liquidity and obtaining additional non-recourse and non-mark-to-market financing.

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Cash Flows

The following table provides a breakdown of the net change in our cash, cash equivalents, and restricted cash ($ in thousands):


	Three Months Ended March 31,
	2021		2020
Net cash provided by (used in) operating activities	$	(43,590)	$	(41,092)
Net cash provided by (used in) investing activities	688,739		(477,465)
Net cash provided by (used in) financing activities	(477,374)		785,032
Net increase (decrease) in cash, cash equivalents and restricted cash	$	167,775	$	266,475

We experienced a net increase in cash, cash equivalents and restricted cash of $167.8 million for the three months ended March 31, 2021 reflecting cash used in operating activities of $(43.6) million, cash provided by investing activities of $688.7 million and cash used in finance activities of $(477.4) million.

Net cash used in operating activities of $(43.6) million was primarily driven by $(41.0) million of originations of mortgage loans held for sale and a decrease in other assets of $(1.6) million, partially offset by depreciation $9.5 million.

Net cash provided by investing activities of $688.7 million was driven by $394.4 million of repayment from mortgage loan receivables, $329.1 million of proceeds from sale of real estate securities, $46.6 million of proceeds from the sale of mortgage loan receivables held for investment and $43.8 million proceeds from the sale of real estate, partially offset by $(40.0) million in purchases of real estate securities and $(116.6) million of origination of mortgage loans held for investment.

Net cash used in financing activities of $(477.4) million was primarily as a result of net borrowings of $(445.6) million, $(26.2) million of dividends payments, $(4.4) million of shares acquired to satisfy minimum federal and state tax withholdings on restricted stock and $(0.6) million in deferred financing costs.

We experienced a net increase in cash, cash equivalents and restricted cash of $266.5 million for the three months ended March 31, 2020. During the three months ended March 31, 2020, we received (i) $118.6 million of proceeds from repayment of mortgage loans receivable, (ii) $189.4 million of proceeds from the sales of loans, (iii) $106.4 million of proceeds from the sales of real estate securities, (iv) $43.6 million of repayment of real estate securities and (v) $852.0 million net borrowings under debt obligations.

Unencumbered Assets

As of March 31, 2021, we held unencumbered cash of $1.3 billion, unencumbered loans of $1.0 billion, unencumbered securities of $150.7 million, unencumbered real estate of $75.3 million and $277.5 million of other assets not secured by any portion of secured indebtedness.

Stock Repurchases

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The following table is a summary of the Company’s repurchase activity of its Class A common stock during the three months ended March 31, 2021 ($ in thousands):


	Shares	Amount(1)
Authorizations remaining as of December 31, 2020		$	38,102
Additional authorizations		—
Repurchases paid	20,000	(214)
Repurchases unsettled		—
Authorizations remaining as of March 31, 2021		$	37,888

(1)Amount excludes commissions paid associated with share repurchases.

Dividends

In order for the Company to maintain its qualification as a REIT under the Code, it must annually distribute at least 90% of its taxable income. The Company has paid and in the future intends to declare regular quarterly distributions to its shareholders in aggregating to an amount approximating at least 90% of the REIT’s annual net taxable income. Refer to Item 1—”Financial Statements and Supplemental Data—Note 11, Equity Structure and Accounts” for disclosure of dividends declared.

Principal repayments on investments

We receive principal amortization on our loans and securities as part of the normal course of our business. Repayment of mortgage loan receivables provided net cash of $394.5 million for the three months ended March 31, 2021 and $118.6 million for the three months ended March 31, 2020. Repayment of real estate securities provided net cash of $10.5 million for the three months ended March 31, 2021 and $43.6 million for the three months ended March 31, 2020.

Proceeds from securitizations and sales of loans

We sell our conduit mortgage loans to securitization trusts and to other third parties as part of our normal course of business. There were $46.6 million of proceeds from sales of mortgage loans for the three months ended March 31, 2021 and $189.4 million of sales of mortgage loans for the three months ended March 31, 2020.

Proceeds from the sale of securities

We sell our investments in CMBS, U.S. Agency Securities, corporate bonds and equity securities as a part of our normal course of business. Proceeds from sales of securities provided net cash of $329.1 million for the three months ended March 31, 2021 and $106.4 million for the three months ended March 31, 2020.

Proceeds from the sale of real estate

Proceeds from sales of real estate provided net cash of $43.8 million for the three months ended March 31, 2021 and $11.2 million for the three months ended March 31, 2020.

Other potential sources of financing

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Contractual obligations

Contractual obligations as of March 31, 2021 were as follows ($ in thousands):


	Contractual Obligations
	Less than 1 Year			1-3 Years		3-5 Years		More than 5 Years		Total
Secured financings	$	562,838	(1)	$	619,306	$	652,203	$	232,840	$	2,067,187
Unsecured revolving credit facility	256,430		(1)	—		—		—		256,430
Senior unsecured notes	—			465,850		347,956		651,838		1,465,644
Interest payable(2)	105,259			160,947		127,371		61,209		454,786
Other funding obligations(3)	8,416			—		—		—		8,416

Operating lease obligations	885			98		—		—		983
Total	$	933,828		$	1,246,201	$	1,127,530	$	945,887	$	4,253,446

(1) As more fully disclosed in Note 7, Debt Obligations, Net, these obligations are subject to existing Company controlled extension options for one or more additional one-year periods or could be refinanced by other existing facilities.

(2) Composed of interest on secured financings and on senior unsecured notes. For borrowings with variable interest rates, we used the rates in effect as of March 31, 2021 to determine the future interest payment obligations.

(3) Comprised primarily of our off-balance sheet unfunded commitment to provide additional first mortgage loan financing as of March 31, 2021.

The table above does not include amounts due under our derivative agreements as those contracts do not have fixed and determinable payments. Our contractual obligations will be refinanced and/or repaid from earnings as well as amortization and sales of our liquid collateral.

Off-Balance Sheet Arrangements

Unfunded Loan Commitments

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our borrowers. These commitments are not reflected on the consolidated balance sheets. As of March 31, 2021, our off-balance sheet arrangements consisted of $140.1 million of unfunded commitments of mortgage loan receivables held for investment, 66% of which additional funds relate to the occurrence of certain “good news” events, such as the owner concluding a lease agreement with a major tenant in the building or reaching some pre-determined net operating income. As of December 31, 2020, our off-balance sheet arrangements consisted of $148.8 million of unfunded commitments of mortgage loan receivables held for investment to provide additional first mortgage loan financing. Such commitments are subject to our borrowers’ satisfaction of certain financial and nonfinancial covenants and involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. Commitments are subject to our loan borrowers’ satisfaction of certain financial and nonfinancial covenants and may or may not be funded depending on a variety of circumstances including timing, credit metric hurdles, and other nonfinancial events occurring. The COVID-19 pandemic has impacted the progress of work generally and, depending on specific property locations, the progress of capital expenditures, construction, and leasing, which have been delayed and/or slower paced than originally anticipated. The progress of those particular projects located in states or local municipalities with continuing restrictions on such activities is anticipated to remain slower to complete than otherwise expected, and the pace of future funding relating to these capital needs has been, and may continue to be, commensurately slower.

Critical Accounting Policies

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” within the Annual Report for a full discussion of our critical accounting policies. Other than disclosed in Note 2, Significant Accounting Policies, our critical accounting policies have not materially changed since December 31, 2020.

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Recently Adopted Accounting Pronouncements and Recent Accounting Pronouncements Pending Adoption

Our recently adopted accounting pronouncements and recent accounting pronouncements pending adoption are described in Item 1—“Financial Statements and Supplemental Data—Note 2. Significant Accounting Policies.”

Reconciliation of Non-GAAP Financial Measures

Distributable earnings

For the fourth quarter of 2020, the Company began utilizing distributable earnings, a non-GAAP financial measure, as a supplemental measure of our operating performance. We believe distributable earnings assists investors in comparing our operating performance and our ability to pay dividends across reporting periods on a more relevant and consistent basis by excluding from GAAP earnings 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: (i) to evaluate our earnings from operations, (ii) because management believes that it may be a useful performance measure for us and (iii) our board of directors considers distributable earnings in determining the amount of quarterly dividends. Distributable earnings replaced our prior presentation of core earnings, and core earnings presentations from prior reporting periods have been recast as distributable earnings.

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 joint 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.

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 exclusion of 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.

As discussed in Note 2 to the consolidated financial statements included elsewhere in this Quarterly Report, we do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our 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 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.

As more fully discussed in Note 2 to the consolidated financial statements included elsewhere in this Quarterly Report, our investments in Agency interest-only securities and equity securities are recorded at fair value with changes in fair value recorded in current period earnings. 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 other-than-temporary 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.

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Set forth below is an unaudited reconciliation of income (loss) before taxes to distributable earnings ($ in thousands):


	Three Months Ended March 31,
		2021		2020
Income (loss) before taxes		$	(346)	$	(18,602)
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures (GAAP)(1)		(240)		(1,523)
Our share of real estate depreciation, amortization and gain adjustments (2)		8,424		1,373
Adjustments for unrecognized derivative results (3)		(6,096)		17,590
Unrealized (gain) loss on fair value securities		20		1,512
Adjustment for economic gain on loan sales not recognized under GAAP for which risk has been substantially transferred, net of reversal/amortization		415		(233)
Adjustment for impairment (4)		(4,251)		18,581
Non-cash stock-based compensation		5,298		12,158

Distributable earnings		$	3,224	$	30,856

(1) Prior to the final exchanges of the Continuing LCFH Limited Partners into Class A shares in the third quarter of 2020, we considered the Class A common shareholders of the Company and Continuing LCFH Limited Partners to have had fundamentally equivalent interests in our pre-tax earnings. Accordingly, for purposes of computing distributable earnings we start with pre-tax earnings and adjust for other noncontrolling interest in consolidated joint ventures, but we did not adjust for amounts attributable to noncontrolling interest held by Continuing LCFH Limited Partners. As of March 31, 2021, there are no remaining Continuing LCFH Limited Partners. For the three months ended March 31, 2021, $4 thousand was included within net (income) loss attributable to noncontrolling interest in consolidated joint ventures on the consolidated statements of income. For the three months ended March 31, 2020, $4 thousand of net income was included within net (income) loss attributable to noncontrolling interest in operating partnership on the consolidated statements of income.

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(2)	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 March 31,
			2021		2020
	Total GAAP depreciation and amortization		$	9,536	$	10,009
	Less: Depreciation and amortization related to non-rental property fixed assets		(25)		(25)
	Less: Non-controlling interest in consolidated joint ventures’ share of accumulated depreciation and amortization and unrecognized passive interest in unconsolidated joint ventures		(609)		(592)
	Our share of real estate depreciation and amortization		8,902		9,392
	Realized gain from accumulated depreciation and amortization on real estate sold (refer to below)		—		(9,639)
	Less: Non-controlling interest in consolidated joint ventures’ share of accumulated depreciation and amortization on real estate sold		—		2,146
	Our share of accumulated depreciation and amortization on real estate sold		—		(7,493)
	Less: Operating lease income on above/below market lease intangible amortization		(478)		(526)
	Our share of real estate depreciation, amortization and gain adjustments		$	8,424	$	1,373

	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 gain/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 March 31,
			2021		2020
	GAAP realized gain (loss) on sale of real estate, net		$	—	$	10,529
	Adjusted gain/loss on sale of real estate for purposes of distributable earnings		—		(3,036)
	Our share of accumulated depreciation and amortization on real estate sold		$	—	$	7,493



(3)	The following is a reconciliation of GAAP net results from derivative transactions to our unrecognized derivative result presented in the computation of distributable earnings in the preceding table ($ in thousands):

		Three Months Ended March 31,
			2021		2020
	Net results from derivative transactions		$	4,771	$	(15,435)
	Hedging interest expense		998		532
	Hedging realized result		327		(2,687)
	Adjustments for unrecognized derivative results		$	6,096	$	(17,590)

(4)	For the three months ended March 31, 2021, the Company recorded a release of CECL provision for loan loss of $4.3 million. For the three months ended March 31, 2020, the Company recorded a total CECL provision for loan loss of $26.6 million, of which $8.0 million was determined to be non-recoverable. The adjustments reflect the portion of such loan loss provision that management has determined to be recoverable, and therefore both additional provisions and releases of those provisions are excluded from distributable earnings.

Distributable earnings has limitations as an analytical tool. Some of these limitations are:

•Distributable earnings does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations and is not necessarily indicative of cash necessary to fund cash needs; and

•Other companies in our industry may calculate distributable earnings differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, distributable earnings should not be considered in isolation or as a substitute for net income (loss) attributable to shareholders or any other performance measures calculated in accordance with GAAP, or as an alternative to cash flows from operations as a measure of our liquidity.

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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 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 distributable earnings should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Adjusted Leverage

We present adjusted leverage, which is a non-GAAP financial measure, as a supplemental measure of our performance. We define adjusted leverage as the ratio of (i) debt obligations, net of deferred financing costs, adjusted for non-recourse indebtedness related to securitizations that is consolidated on our GAAP balance sheet and liability for transfers not considered sales to (ii) GAAP total equity. We believe adjusted leverage assists investors in comparing our leverage across reporting periods on a consistent basis by excluding non-recourse debt related to securitized loans. In addition, adjusted leverage is used to determine compliance with financial covenants. (Refer to “Financing Strategy in Current Market Conditions” and “Financial Covenants” for further discussion about our compliance with covenants.)

Set forth below is an unaudited computation of adjusted leverage ($ in thousands):


	March 31, 2021		December 31, 2020

Debt obligations, net	$	3,767,819	$	4,209,864

Less: CLO debt(1)	(233,195)		(276,516)


Adjusted debt obligations	3,534,624		3,933,348
Total equity	1,530,839		1,548,425
Adjusted leverage	2.3		2.5

(1)As more fully discussed in Note 7 to our consolidated financial statements, we contributed $481.3 million of balance sheet loans into one CLO securitization that remains on our balance sheet for accounting purposes but should be excluded from debt obligations for adjusted leverage calculation purposes.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

For a discussion of current market conditions resulting from the COVID-19 pandemic, refer to Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to Part II, Item 1A. “Risk Factors”.

Interest Rate Risk

The nature of the Company’s business exposes it to market risk arising from changes in interest rates. Changes, both increases and decreases, in the rates the Company is able to charge its borrowers, the yields the Company is able to achieve in its securities investments, and the Company’s cost of borrowing directly impacts its net income. The Company’s net interest income includes interest from both fixed and floating-rate debt. The percentage of the Company’s assets and liabilities bearing interest at fixed and floating rates may change over time, and asset composition may differ materially from debt composition. Another component of interest rate risk is the effect changes in interest rates will have on the market value of the assets the Company acquires. The Company faces the risk that the market value of its assets will increase or decrease at different rates than that of its liabilities, including its hedging instruments. The Company mitigates interest rate risk through utilization of hedging instruments, primarily interest rate swap and futures agreements. Interest rate swap and futures agreements are utilized to hedge against future interest rate increases on the Company’s borrowings and potential adverse changes in the value of certain assets that result from interest rate changes. The Company generally seeks to hedge assets that have a duration longer than five years, including newly originated conduit first mortgage loans, securities in the Company’s CMBS portfolio if long enough in duration, and most of its U.S. Agency Securities portfolio.

The following table summarizes the change in net income for a 12-month period commencing March 31, 2021 and the change in fair value of our investments and indebtedness assuming an increase or decrease of 100 basis points in the LIBOR interest rate on March 31, 2021, both adjusted for the effects of our interest rate hedging activities ($ in thousands):


	Projected change in net income(1)		Projected change in portfolio value

Change in interest rate:
Decrease by 1.00%	$	(3,056)	$	4,703
Increase by 1.00%	15,232		(4,798)

(1) Subject to limits for floors on our floating rate investments and indebtedness.

Market Value Risk

The Company’s securities investments are reflected at their estimated fair value. The change in estimated fair value of securities available-for-sale is reflected in accumulated other comprehensive income. The change in estimated fair value of Agency interest-only securities is recorded in current period earnings. The estimated fair value of these securities fluctuates primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of these securities would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of these securities would be expected to increase. As market volatility increases or liquidity decreases, the market value of the Company’s assets may be adversely impacted. The Company’s fixed rate mortgage loan portfolio is subject to the same risks. However, to the extent those loans are classified as held for sale, they are reflected at the lower of cost or market. Otherwise, held for investment mortgage loans are reflected at values equal to the unpaid principal balances net of certain fees, costs and loan loss allowances.

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Liquidity Risk

Market disruptions may lead to a significant decline in transaction activity in all or a significant portion of the asset classes in which the Company invests and may at the same time lead to a significant contraction in short-term and long-term debt and equity funding sources. A decline in liquidity of real estate and real estate-related investments, as well as a lack of availability of observable transaction data and inputs, may make it more difficult to sell the Company’s investments or determine their fair values. As a result, the Company may be unable to sell its investments, or only be able to sell its investments at a price that may be materially different from the fair values presented. Also, in such conditions, there is no guarantee that the Company’s borrowing arrangements or other arrangements for obtaining leverage will continue to be available or, if available, will be available on terms and conditions acceptable to the Company. In addition, a decline in market value of the Company’s assets may have particular adverse consequences in instances where it borrowed money based on the fair value of its assets. A decrease in the market value of the Company’s assets may result in the lender requiring it to post additional collateral or otherwise sell assets at a time when it may not be in the Company’s best interest to do so. The Company’s captive insurance company subsidiary, Tuebor, is subject to state regulations which require that dividends may only be made with regulatory approval.

Credit Risk

The COVID-19 pandemic has significantly impacted the commercial real estate markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in property renovations currently planned or underway. These negative conditions may persist into the future and impair borrowers’ ability to pay principal and interest due under our loan agreements. We maintain robust asset management relationships with our borrowers and have utilized these relationships to address the impacts of the COVID-19 pandemic on our loans secured by properties experiencing cash flow pressure, most significantly hospitality assets. Some of our borrowers have indicated that due to the impact of the COVID-19 pandemic, they will be unable to timely execute their business plans, have had to temporarily close their businesses, or have experienced other negative business consequences and have requested temporary interest deferral or forbearance, or other modifications of their loans. Accordingly, we have discussed with our borrowers potential near-term defensive loan modifications, which could include repurposing of reserves, temporary deferrals of interest, or performance test or covenant waivers on loans collateralized by assets directly impacted by the COVID-19 pandemic, and which would typically be coupled with an additional equity commitment and/or guaranty from sponsors.

Based on the limited loan modifications completed to date, we are encouraged by the tone of these conversations and our borrowers’ response to the COVID-19 pandemic’s impacts on their properties. We believe our loan sponsors are generally committed to supporting assets collateralizing our loans through additional equity investments. Our portfolio’s low weighted-average LTV of 68.8% as of March 31, 2021 reflects significant equity value that our sponsors are motivated to protect through periods of cyclical disruption. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.

Credit Spread Risk

Credit spread risk is the risk that interest rate spreads between two different financial instruments will change. In general, fixed-rate commercial mortgages and CMBS are priced based on a spread to Treasury or interest rate swaps. The Company generally benefits if credit spreads narrow during the time that it holds a portfolio of mortgage loans or CMBS investments, and the Company may experience losses if credit spreads widen during the time that it holds a portfolio of mortgage loans or CMBS investments. The Company actively monitors its exposure to changes in credit spreads and the Company may enter into credit total return swaps or take positions in other credit related derivative instruments to moderate its exposure against losses associated with a widening of credit spreads.

Risks Related to Real Estate

Real estate and real estate-related assets, including loans and commercial real estate-related securities, are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; environmental conditions; competition from comparable property types or properties; changes in tenant mix or performance and retroactive changes to building or similar codes and rent regulations. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause the Company to suffer losses.

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Covenant Risk

In the normal course of business, the Company enters into loan and securities repurchase agreements and credit facilities with certain lenders to finance its real estate investment transactions. These agreements contain, among other conditions, events of default and various covenants and representations. If such events are not cured by the Company or waived by the lenders, the lenders may decide to curtail or limit extension of credit, and the Company may be forced to repay its advances or loans. In addition, the Company’s Notes are subject to covenants, including maintenance of unencumbered assets, limitations on the incurrence of additional debt, restricted payments, liens, sales of assets, affiliate transactions and other covenants typical for financings of this type. The Company’s failure to comply with these covenants could result in an event of default, which could result in the Company being required to repay these borrowings before their due date.

We were in compliance with all covenants as described in this Quarterly Report, as of March 31, 2021.

Net of the $1.3 billion of unrestricted cash held as of March 31, 2021, our adjusted leverage ratio would be below 2.0x. In late March 2020, as the COVID-19 crisis evolved, management began executing on a plan to mitigate uncertainty in financial markets by increasing liquidity and obtaining additional non-recourse and non-mark-to-market financing. Partly as a result of maintaining conservative cash levels as of March 31, 2020, the Company was not in compliance with its 3.5x maximum leverage covenant with certain of its lenders but had the benefit of a contractually provided 30-day cure period during which the Company cured such non-compliance by paying down debt (as defined in the relevant borrowing agreements). Refer to “Financing Strategy in Current Market Conditions” for further disclosures surrounding deleveraging actions completed during 2020.

Diversification Risk

The assets of the Company are concentrated in the commercial real estate sector. Accordingly, the investment portfolio of the Company may be subject to more rapid change in value than would be the case if the Company were to maintain a wide diversification among investments or industry sectors. Furthermore, even within the commercial real estate sector, the investment portfolio may be relatively concentrated in terms of geography and type of real estate investment. This lack of diversification may subject the investments of the Company to more rapid change in value than would be the case if the assets of the Company were more widely diversified.

Concentrations of Market Risk

Concentrations of market risk may exist with respect to the Company’s investments. Market risk is a potential loss the Company may incur as a result of change in the fair values of its investments. The Company may also be subject to risk associated with concentrations of investments in geographic regions and industries.

Regulatory Risk

Tuebor is subject to state regulation as a captive insurance company. If Tuebor fails to comply with regulatory requirements, they could be subject to loss of their licenses and registration and/or economic penalties.

Capital Market Risks

The COVID-19 pandemic resulted in extreme volatility in a variety of global markets, including the real estate-related debt markets. At the onset of the pandemic, U.S. financial markets, in particular, experienced limited liquidity, and forced selling by certain market participants to meet current obligations, which put further downward pressure on asset prices. In reaction to these volatile and unpredictable market conditions, banks and other lenders restricted lending activity and requested margin posting or repayments where applicable for secured loans collateralized by assets with depressed valuations. Refer to “Financing Strategy in Current Market Conditions” for further disclosures surrounding liquidity and deleveraging actions completed during 2020.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act as of March 31, 2021. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective, as of March 31, 2021, to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

From time to time, we may be involved in litigation and claims incidental to the conduct of our business in the ordinary course. Further, certain of our subsidiaries, such as our captive insurance company, are subject to scrutiny by government regulators, which could result in enforcement proceedings or litigation related to regulatory compliance matters. We are not presently a party to any material enforcement proceedings, litigation related to regulatory compliance matters or any other type of material litigation matters. We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.

Item 1A. Risk Factors

There have been no material changes during the three months ended March 31, 2021 to the risk factors in Item 1A. in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


EXHIBIT INDEX

EXHIBIT NO.						DESCRIPTION





10.1 #						Miceli Employment Agreement, dated February 9, 2021 between Ladder Capital Finance LLC and Paul J. Miceli (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 9, 2021)
31.1						Certification of Brian Harris pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2						Certification of Paul J. Miceli pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*						Certification of Brian Harris pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*						Certification of Paul J. Miceli pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101						Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020; (ii) the Consolidated Statements of Income for the three months ended March 31, 2021 and 2020; (iii) the Consolidated Statements of Comprehensive Income for the months ended March 31, 2021 and 2020; (iv) the Consolidated Statement of Changes in Equity for the three months ended March 31, 2021 and 2020; (v) the Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020; and (vi) the Notes to the Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted in inline XBRL and contained in Exhibit 101)

* The certifications attached hereto as Exhibits 32.1 and 32.2 are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, nor shall they be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.

# Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	LADDER CAPITAL CORP
	(Registrant)


Date: May 6, 2021	By:	/s/ BRIAN HARRIS
		Brian Harris
		Chief Executive Officer

Date: May 6, 2021	By:	/s/ PAUL J. MICELI
		Paul J. Miceli
		Chief Financial Officer