Ladder Capital Corp Reports Results for the Quarter Ended March 31, 2022
Ladder Capital Corp (NYSE: LADR) reported a GAAP income before taxes of $17.8 million for Q1 2022, translating to diluted earnings per share (EPS) of $0.15. Distributable earnings reached $31.5 million, or $0.25 per share. The company anticipates benefiting from rising short-term interest rates due to its fixed-rate unsecured liabilities. Ladder's asset portfolio amounts to $6.0 billion, and it focuses on senior secured assets, offering flexible capital solutions. A conference call is scheduled for April 28, 2022, to discuss these results further.
- GAAP income before taxes of $17.8 million for Q1 2022
- Diluted earnings per share (EPS) of $0.15
- Distributable earnings of $31.5 million, or $0.25 per share
- Potential for higher earnings due to fixed-rate unsecured liabilities as interest rates rise
- Total assets valued at $6.0 billion
- None.
"Our first quarter results demonstrate continued momentum in both originations and earnings. With our large component of fixed-rate unsecured liabilities, we expect to enjoy higher earnings if short-term interest rates continue to rise," said
Supplemental
The Company issued a supplemental presentation detailing its first quarter 2022 operating results, which can be viewed at http://ir.laddercapital.com.
Conference Call and Webcast
We will host a conference call on
About Ladder
Ladder originates and invests in a diverse portfolio of commercial real estate and real estate-related assets, focusing on senior secured assets. Our investment activities include: (i) our primary business of originating senior first mortgage fixed and floating rate loans collateralized by commercial real estate with flexible loan structures; (ii) owning and operating commercial real estate, including net leased commercial properties; and (iii) investing in investment grade securities secured by first mortgage loans on commercial real estate.
Founded in 2008 and led by
Forward-Looking Statements & Coronavirus Risk
Certain statements in this release may constitute “forward-looking” statements. These statements are based on management’s current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. These forward-looking statements are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While Ladder believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results, including the impact and aftermath of the COVID-19 pandemic on the Company's business. There are a number of risks and uncertainties that could cause actual results to differ materially from forward-looking statements made herein including, most prominently, the risks discussed under the heading “Risk Factors” in each of the Company’s Annual Report on Form 10-K for the year ended
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2022(1) |
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2021(1) |
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(Unaudited) |
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Assets |
|
|
|
||||
Cash and cash equivalents |
$ |
431,762 |
|
|
$ |
548,744 |
|
Restricted cash |
|
63,462 |
|
|
|
72,802 |
|
Mortgage loan receivables held for investment, net, at amortized cost: |
|
|
|
||||
Mortgage loans receivable |
|
3,857,471 |
|
|
|
3,553,737 |
|
Allowance for credit losses |
|
(32,332 |
) |
|
|
(31,752 |
) |
Mortgage loan receivables held for sale |
|
53,901 |
|
|
|
— |
|
Real estate securities |
|
662,942 |
|
|
|
703,280 |
|
Real estate and related lease intangibles, net |
|
792,857 |
|
|
|
865,694 |
|
Real estate held for sale |
|
55,412 |
|
|
|
25,179 |
|
Investments in and advances to unconsolidated joint ventures |
|
5,243 |
|
|
|
23,154 |
|
Derivative instruments |
|
234 |
|
|
|
402 |
|
Accrued interest receivable |
|
14,450 |
|
|
|
13,645 |
|
Other assets |
|
68,795 |
|
|
|
76,367 |
|
Total assets |
$ |
5,974,197 |
|
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$ |
5,851,252 |
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Liabilities and Equity |
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Liabilities |
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Debt obligations, net |
$ |
4,343,311 |
|
|
$ |
4,219,703 |
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Dividends payable |
|
26,763 |
|
|
|
27,591 |
|
Accrued expenses |
|
42,028 |
|
|
|
40,249 |
|
Other liabilities |
|
52,938 |
|
|
|
50,090 |
|
Total liabilities |
|
4,465,040 |
|
|
|
4,337,633 |
|
Commitments and contingencies |
|
— |
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|
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— |
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Equity |
|
|
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Class A common stock, par value |
|
127 |
|
|
|
126 |
|
Additional paid-in capital |
|
1,815,661 |
|
|
|
1,795,249 |
|
|
|
(88,258 |
) |
|
|
(76,324 |
) |
Retained earnings (dividends in excess of earnings) |
|
(214,084 |
) |
|
|
(207,802 |
) |
Accumulated other comprehensive income (loss) |
|
(10,753 |
) |
|
|
(4,112 |
) |
Total shareholders’ equity |
|
1,502,693 |
|
|
|
1,507,137 |
|
Noncontrolling interests in consolidated joint ventures |
|
6,464 |
|
|
|
6,482 |
|
Total equity |
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1,509,157 |
|
|
|
1,513,619 |
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Total liabilities and equity |
$ |
5,974,197 |
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|
$ |
5,851,252 |
|
(1) Includes amounts relating to consolidated variable interest entities.
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Three Months Ended |
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2022 |
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2021 |
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Net interest income |
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Interest income |
$ |
56,205 |
|
|
$ |
52,999 |
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Interest expense |
|
47,035 |
|
|
|
42,411 |
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Net interest income |
|
9,170 |
|
|
|
10,588 |
|
Provision for (release of) loan loss reserves |
|
874 |
|
|
|
(1,763 |
) |
Net interest income (expense) after provision for (release of) loan losses |
|
8,296 |
|
|
|
12,351 |
|
Other income (loss) |
|
|
|
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Real estate operating income |
|
26,354 |
|
|
|
24,244 |
|
Sale of loans, net |
|
(949 |
) |
|
|
1,713 |
|
Realized gain (loss) on securities |
|
(96 |
) |
|
|
716 |
|
Unrealized gain (loss) on equity securities |
|
14 |
|
|
|
— |
|
Unrealized gain (loss) on Agency interest-only securities |
|
3 |
|
|
|
(4 |
) |
Realized gain (loss) on sale of real estate, net |
|
29,154 |
|
|
|
18,611 |
|
Fee and other income |
|
7,194 |
|
|
|
2,767 |
|
Net result from derivative transactions |
|
3,135 |
|
|
|
747 |
|
Earnings (loss) from investment in unconsolidated joint ventures |
|
434 |
|
|
|
373 |
|
Total other income (loss) |
|
65,243 |
|
|
|
49,167 |
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Costs and expenses |
|
|
|
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Compensation and employee benefits |
|
29,864 |
|
|
|
10,911 |
|
Operating expenses |
|
5,508 |
|
|
|
4,797 |
|
Real estate operating expenses |
|
8,992 |
|
|
|
6,643 |
|
Fee expense |
|
1,988 |
|
|
|
379 |
|
Depreciation and amortization |
|
9,342 |
|
|
|
9,481 |
|
Total costs and expenses |
|
55,694 |
|
|
|
32,211 |
|
Income (loss) before taxes |
|
17,845 |
|
|
|
29,307 |
|
Income tax expense (benefit) |
|
(1,309 |
) |
|
|
2,236 |
|
Net income (loss) |
|
19,154 |
|
|
|
27,071 |
|
Net (income) loss attributable to noncontrolling interests in consolidated joint ventures |
|
(122 |
) |
|
|
37 |
|
Net income (loss) attributable to Class A common shareholders |
$ |
19,032 |
|
|
$ |
27,108 |
|
|
|
|
|
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Earnings per share: |
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|
|
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Basic |
$ |
0.15 |
|
|
$ |
0.22 |
|
Diluted |
$ |
0.15 |
|
|
$ |
0.22 |
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|
|
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|
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Weighted average shares outstanding: |
|
|
|
||||
Basic |
|
124,305,943 |
|
|
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123,519,546 |
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Diluted |
|
125,478,001 |
|
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124,573,705 |
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Dividends per share of Class A common stock |
$ |
0.20 |
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|
$ |
0.20 |
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Non-GAAP Financial Measures
The Company utilizes distributable earnings, distributable EPS, and after-tax distributable return on average equity (“ROAE”), non-GAAP financial measures, as supplemental measures of our operating performance. We believe distributable earnings, distributable EPS, and after-tax distributable ROAE assist investors in comparing our operating performance and our ability to pay dividends across reporting periods on a more relevant and consistent basis by excluding from GAAP measures certain non-cash expenses and unrealized results as well as eliminating timing differences related to securitization gains and changes in the values of assets and derivatives. In addition, we use distributable earnings, distributable EPS and distributable ROAE: (i) to evaluate our earnings from operations because management believes that it may be a useful performance measure for us and (ii) because our board of directors considers distributable earnings in determining the amount of quarterly dividends.
We define distributable earnings as income before taxes adjusted for: (i) real estate depreciation and amortization; (ii) the impact of derivative gains and losses related to the hedging of assets on our balance sheet as of the end of the specified accounting period; (iii) unrealized gains/(losses) related to our investments in fair value securities and passive interest in unconsolidated 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. Distributable EPS is defined as after-tax distributable earnings divided by the weighted average diluted shares outstanding during the period.
For distributable earnings, we include adjustments for economic gains on loan sales not recognized under GAAP accounting for which risk has substantially transferred during the period and exclude the resultant GAAP recognition of the related economics during the subsequent periods. This adjustment is reflected in distributable earnings when there is a true risk transfer on the mortgage loan transfer and settlement. Historically, this adjustment has represented the impact of economic gains/(discounts) on intercompany loans secured by our own real estate which we had not previously recognized because such gains were eliminated in consolidation. Conversely, if the economic risk was not substantially transferred, no adjustments to net income would be made relating to those transactions for distributable earnings purposes. Management believes recognizing these amounts for distributable earnings purposes in the period of transfer of economic risk is a reasonable supplemental measure of our performance.
We do not designate derivatives as hedges to qualify for hedge accounting and therefore any net payments under, or fluctuations in the fair value of, our derivatives are recognized currently in our GAAP income statement. However, fluctuations in the fair value of the related assets are not included in our income statement. We consider the gain or loss on our hedging positions related to assets that we still own as of the reporting date to be “open hedging positions.” While recognized for GAAP purposes, we exclude the results on the hedges from distributable earnings until the related asset is sold and the hedge position is considered “closed,” whereupon they would then be included in distributable earnings in that period. These are reflected as “Adjustments for unrecognized derivative results” for purposes of computing distributable earnings for the period. We believe that excluding these specifically identified gains and losses associated with the open hedging positions adjusts for timing differences between when we recognize changes in the fair values of our assets and changes in the fair value of the derivatives used to hedge such assets.
Our investments in Agency interest-only securities and equity securities are recorded at fair value with changes in fair value recorded in current period earnings. We believe that excluding these specifically-identified gains and losses associated with the fair value securities adjusts for timing differences between when we recognize changes in the fair values of our assets. With regard to securities valuation, distributable earnings includes a decline in fair value deemed to be an impairment for GAAP purposes only if the decline is determined to be nearly certain to be eventually realized. In those cases, an impairment is included in distributable earnings for the period in which such determination was made.
Set forth below is an unaudited reconciliation of net income (loss) to after-tax distributable earnings, and an unaudited computation of distributable EPS ($ in thousands, except per share data):
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Three Months Ended |
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2022 |
|
|
|
2021 |
|
Net income (loss) |
$ |
19,154 |
|
|
$ |
27,071 |
|
Income tax expense (benefit) |
|
(1,309 |
) |
|
|
2,236 |
|
Income (loss) before taxes |
|
17,845 |
|
|
|
29,307 |
|
Net (income) loss attributable to noncontrolling interests in consolidated joint ventures (GAAP) |
|
(122 |
) |
|
|
37 |
|
Our share of real estate depreciation, amortization and gain adjustments (1) |
|
(6,447 |
) |
|
|
(3,493 |
) |
Adjustments for unrecognized derivative results (2) |
|
(2,453 |
) |
|
|
(811 |
) |
Unrealized (gain) loss on fair value securities |
|
(17 |
) |
|
|
4 |
|
Adjustment for economic gain on loan sales not recognized under GAAP for which risk has been
|
|
1,434 |
|
|
|
1,003 |
|
Adjustment for impairment (3) |
|
874 |
|
|
|
(1,763 |
) |
Non-cash stock-based compensation |
|
20,412 |
|
|
|
3,427 |
|
Distributable earnings |
|
31,526 |
|
|
|
27,711 |
|
Estimated corporate tax benefit (expense)(4) |
|
59 |
|
|
|
(1,522 |
) |
After-tax distributable earnings |
$ |
31,585 |
|
|
$ |
26,189 |
|
Weighted average diluted shares outstanding |
|
125,478 |
|
|
|
124,574 |
|
Distributable EPS |
$ |
0.25 |
|
|
$ |
0.21 |
|
(1) |
The following is a reconciliation of GAAP depreciation and amortization to our share of real estate depreciation, amortization and gain adjustments presented in the computation of distributable earnings in the preceding table ($ in thousands): |
|
|
Three Months Ended |
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|
|
|
|
||||
|
|
|
2022 |
|
|
|
2021 |
|
|
Total GAAP depreciation and amortization |
$ |
9,342 |
|
|
$ |
9,481 |
|
|
Less: Depreciation and amortization related to non-rental property fixed assets |
|
(8 |
) |
|
|
(25 |
) |
|
Less: Non-controlling interests in consolidated joint ventures’ share of accumulated depreciation and amortization and unrecognized passive interest in unconsolidated joint ventures |
|
(301 |
) |
|
|
(947 |
) |
|
Our share of real estate depreciation and amortization |
|
9,033 |
|
|
|
8,509 |
|
|
Realized gain from accumulated depreciation and amortization on real estate sold (refer to below) |
|
(15,036 |
) |
|
|
(11,554 |
) |
|
Our share of accumulated depreciation and amortization on real estate sold (a) |
|
(15,036 |
) |
|
|
(11,554 |
) |
|
Less: Operating lease income on above/below market lease intangible amortization |
|
(444 |
) |
|
|
(448 |
) |
|
Our share of real estate depreciation, amortization and gain adjustments |
$ |
(6,447 |
) |
|
$ |
(3,493 |
) |
(a) |
GAAP gains/losses on sales of real estate include the effects of previously-recognized real estate depreciation and amortization. For purposes of distributable earnings, our share of real estate depreciation and amortization is eliminated and, accordingly, the resultant gains/losses also must be adjusted. Following is a reconciliation of the related consolidated GAAP amounts to the amounts reflected in distributable earnings ($ in thousands): |
|
Three Months Ended |
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|
|
|
|
||||
|
|
2022 |
|
|
|
2021 |
|
GAAP realized gain (loss) on sale of real estate, net |
$ |
29,154 |
|
|
$ |
18,611 |
|
Adjusted gain/loss on sale of real estate for purposes of distributable earnings |
|
(14,118 |
) |
|
|
(7,057 |
) |
Our share of accumulated depreciation and amortization on real estate sold |
$ |
15,036 |
|
|
$ |
11,554 |
|
| (2) | 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 |
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|
|
|
|
|
||||
|
|
|
2022 |
|
|
|
2021 |
|
|
Net results from derivative transactions |
$ |
3,135 |
|
|
$ |
747 |
|
|
Hedging interest expense |
|
336 |
|
|
|
1,107 |
|
|
Hedging realized result |
|
(1,018 |
) |
|
|
(1,043 |
) |
|
Adjustments for unrecognized derivative results |
$ |
2,453 |
|
|
$ |
811 |
|
(3)
|
The adjustment reflects the portion of the loan loss provision that management determined to be recoverable. Additional provisions and releases of those provisions are excluded from distributable earnings as a result. |
|
(4) |
Estimated corporate tax benefit (expense) is based on an effective tax rate applied to distributable earnings generated by the activity within our taxable REIT subsidiaries. |
After-tax distributable ROAE is presented on an annualized basis and is defined as after-tax distributable earnings divided by the average total shareholders’ equity and noncontrolling interest in
|
Three Months Ended |
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|
|
|
||||
|
|
2022 |
|
|
|
2021 |
|
After-tax distributable earnings |
$ |
31,585 |
|
|
$ |
26,189 |
|
Average shareholders’ equity and NCI in |
|
1,504,915 |
|
|
|
1,505,039 |
|
After-tax distributable ROAE |
|
8.4 |
% |
|
|
7.0 |
% |
Non-GAAP Measures - Limitations
Our non-GAAP financial measures have limitations as analytical tools. Some of these limitations are:
- distributable earnings, distributable EPS and after-tax distributable ROAE do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations and are not necessarily indicative of cash necessary to fund cash needs;
-
distributable EPS and after-tax distributable ROAE are based on a non-GAAP estimate of our effective tax rate, including the impact of Unincorporated Business Tax and the impact of our election to be taxed as a REIT effective
January 1, 2015 , assuming the conversion of all shares of Class B common stock into shares of Class A common stock. Our actual tax rate may differ materially from this estimate; and
- other companies in our industry may calculate non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, our non-GAAP financial measures should not be considered in isolation or as a substitute for net income (loss) attributable to shareholders, earnings per share or book value per share, or any other performance measures calculated in accordance with GAAP. Our non-GAAP financial measures should not be considered an alternative to cash flows from operations as a measure of our liquidity.
In addition, distributable earnings should not be considered to be the equivalent to REIT taxable income calculated to determine the minimum amount of dividends the Company is required to distribute to shareholders to maintain REIT status. In order for the Company to maintain its qualification as a REIT under the Internal Revenue Code, we must annually distribute at least
In the future, we may incur gains and losses that are the same as or similar to some of the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220428005736/en/
Investors
Ladder Capital Corp Investor Relations
(917) 369-3207
investor.relations@laddercapital.com
Source:
FAQ
What were Ladder Capital's earnings for Q1 2022?
What is the total asset value of Ladder Capital as of March 31, 2022?
When is Ladder Capital's conference call to discuss Q1 2022 results?
What are the distributable earnings for Ladder Capital in Q1 2022?
How could rising interest rates affect Ladder Capital’s earnings?
