LADR 10-K & 10-Q changes, risk factors and insider trading
Ladder Capital Corp · NYSE · Real Estate Investment Trusts · CIK 1577670 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our success depends upon hiring and retaining qualified personnel, including senior management and loan originators, and the loss of key personnel could materially harm our business.”
New heading “Inflation and increased operating costs have stressed and may continue to stress property performance and mortgage loan performance.”
New heading “Operating and disposing of properties acquired through foreclosures subject us to additional risks that could harm our results of operations.”
New heading “As a holding company, we depend on distributions from our subsidiaries to meet our obligations, and our obligations are structurally subordinated to the liabilities of our subsidiaries.”
New heading “The evolving and often conflicting political and regulatory landscape surrounding sustainability and climate change creates significant uncertainty and compliance challenges that could adversely affect our business, operations, and financial condition.”
New heading “Our business may be adversely affected if our reputation or the reputation of counterparties with whom we associate is harmed.”
New heading “Our use of artificial intelligence technologies may produce inaccurate or biased results and presents regulatory, legal, and reputational risks.”
Removed heading “We may not be able to hire and retain qualified loan originators or grow and maintain our relationships with key loan brokers, and if we are unable to do so, our ability to implement our business and growth strategies could be limited.”
Removed heading “Consumer demand, combined with tight labor markets, increased government spending, and supply chain imbalances have created inflationary pressure on the economy in recent years. Increased operating costs could stress property performance and thus mortgage loan performance.”
Removed heading “Our subsidiary that operates as a captive insurance company is subject to insurance laws.”
Removed heading “Risks associated with climate change may adversely affect our business, financial results, and reputation.”
Removed heading “Actual or perceived environmental, social and governance matters may cause us to incur additional costs or reputational harm or result in investors ceasing to allocate their capital to us, all of which could adversely affect our business and results of operations.”
Largest changes
We do not offer consumer products and therefore do not generally collect or maintain consumer personal data. We do, however, have access to financial and other potentially sensitive informationsee in full comparisonofabout our borrowers, guarantors and other counterparties, in addition to confidential employee information, which we store in our IT systems. Our information technology and infrastructurehashave been and likely will continue to be subject to security threats or breaches as a result of internalerror,errors, negligence or external misconduct.UseTheofevolving threat landscape now includes both traditional cyberattacks and increasingly sophisticated artificial intelligence (“AI”)-enabled threats. Use of AI technologies by bad actors to facilitate cyberattacks or commit fraudmayhasincreaseincreased the likelihoodorof such attacksorand the potential adverse impact of such attacks. For example, AI technologies may be used to create highly targeted and convincing phishing attacks, generate realisticdeepfakedeep-fakecontent,content for impersonation or fraud, automate andautomatescale social engineeringtechniques.techniques, and develop more sophisticated malware that can evade traditional detection methods. Furthermore, in the operation of our business we also use third-party vendors that store certain sensitive data, including confidential information about our business and employees, and while we conduct commercially reasonable due diligence on these vendors,thesesuch third parties are subject to their own cybersecurity threats.Incidents may include unauthorized access to our data assets, phishing attacks, account takeovers, business email compromise, social engineering, denial of service, malicious software, ransomware that encrypts critical data as part of a scheme to extort payment, and other electronic or cybersecurity breaches. The results of a significant security incident could include, but are not limited to, disrupted operations, misstated or misappropriated financial data, financial theft, theft of personal information, intellectual property or other sensitive or confidential data, increased cybersecurity protection costs, liability for notification of, and losses suffered by, individuals whose data is accessed or stolen as a result of a breach, regulatory fines and penalties, and reputational damage adversely affecting customer or investor confidence. Because the techniques used to obtain unauthorized access to networks, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures against all forms of attack. Any insurance we maintain against the risk of this type of loss may not be sufficient to cover actual losses or may not apply to the circumstances relating to any particular breach. Even if we or our vendors are not targeted directly, cyberattacks on U.S. federal, state and local governments, financial markets, financial institutions, supply chain vendors, or other businesses have occurred in the past and may occur in the future and could disrupt our normal business operations.
“Cyber incidents may include unauthorized access to our data assets, phishing attacks, account takeovers, business email compromise, social engineering, denial of service, malicious software, ransomware that encrypts critical data as part of a scheme to extort payment, and other electronic or cybersecurity breaches. …”see in full comparison
“Any further downgrade, or perceived potential downgrade, of the credit ratings of the U.S. and the failure to resolve issues related to U.S. fiscal and debt policies may materially adversely affect our business, liquidity, financial condition and results of operations. In August 2023, Fitch Ratings lowered its long-term sovereign credit rating of the U.S. from “AAA” to “AA+” due to concerns regarding the level and trajectory of federal debt and the erosion of governance, including on fiscal and debt matters and in November 2023, Moody’s Investors Service lowered its outlook on the U.S. …”see in full comparison
“Federal fiscal challenges pose additional risks. Extended government shutdowns, failure to raise the debt ceiling, or other budgetary decisions limiting federal spending may negatively impact economic conditions and capital markets liquidity. Credit rating downgrades of the U.S. government—such as Fitch's 2023 downgrade from "AAA" to "AA+" and Moody's shift to a "negative" outlook—reflect concerns about federal debt levels and governance. Further downgrades or the possibility of a U.S. …”see in full comparison
“Consumer demand, combined with tight labor markets, increased government spending and supply chain imbalances created significant inflationary pressure on the U.S. economy in 2022 and 2023. Inflation has since moderated substantially from those peaks, but remains present at levels above historical norms, and operating costs for commercial real estate remain somewhat elevated compared to pre-pandemic levels. …”see in full comparison
“Consumer demand, combined with tight labor markets, increased government spending, and supply chain imbalances have created inflationary pressure on the economy in recent years. Increased operating costs could stress property performance and thus mortgage loan performance.”see in full comparison
Full comparison: every changed paragraph (161)
•Our success depends upon hiring and retaining qualified loan originatorspersonnel and maintaining strategic business alliances.
•The allocation of capital among our business linessegments may vary,varies, which may adversely affect our financial performance.
•We operate using financial models and according to proprietary underwriting criteria in a highly competitive market for lending and other investment opportunities, which may limit our ability to originate or acquire desirable loans and other investments in our target assets and/or our ability to finance and yield a certain return on our investments.
•We cannot predict the effect thathow government policies, laws,Federal andReserve interventions adopted in response to an inflationary environmentactions, or the impact of changes in the U.S. political environment,environment includingwill as a result of the change in administration, onaffect our business and the markets in which we operate.
•We have a concentration of investments in the real estate sector, and may have further concentrations from time to time in certain property types, locations, tenants and borrowers, which may increaseincreases our exposure to the risks of certain economic downturns, and the value of which may be adversely affected by many factors beyond our control, including dislocations, illiquidity and volatilitymarket and sector volatility, shifts in the market for commercial real estate, commercial real estate financedemand and the broader financial markets, shifts in consumer patterns and advances in communication and information technology,patterns, fluctuations in prevailing interest rates and credit spreads, prepayment rates on mortgage loans, civilgeopolitical unrest, acts of waruncertainty, and terrorismother events or trends that may cause unanticipated and outbreaksuninsured ofperformance communicabledeclines diseases,or severe weather patterns and climate change.losses.
•The repayment of mortgage loans may beare limited by factors such as: federal, state and local laws, including bankruptcy, insolvency and other debtor and tenant relief laws; their non-recourse and potentially illiquid nature; our evaluation of the creditworthiness of borrowers and the underlying properties, including environmental issues and a property’s income potential; our ability to manage credit risk and modify or restructure non-performing loans; the sufficiency of reserves; subordination; the lack of full control as a participant or co-lender; and insurance coverage.
•CertainProperties balanceacquired sheetthrough investments, such asforeclosure, transitional loans, mezzanine loans, B-Notes and other subordinate positions, participations and preferred equity may beare more illiquid and involve a greater risk of loss.
•Our participation in the market for mortgage loan securitizations may exposeexposes us to risks that could result in losses to us and our access to the CMBS securitization marketmarket, and the timing of our securitization activities and real estate sales may greatly affectcauses our quarterly financial results.results to fluctuate.
•We may beare subject to risks associated with unfunded conditional loan commitments.
•The expense of operating and owning real property, including net leased real estate assets, may impactimpacts our cash flow and our investments in net leased properties could be adversely affected by our reliance on the net leased tenants.
•Any credit ratings assigned to the debt securities we issue or our investments could be downgraded, which could have a material impact on our financial condition, liquidity and results of operations.downgraded.
•If our registered investment adviser subsidiary is unable to meet SEC requirements or comply with certain federal and state securities laws and regulations, it maywill face termination of its registration, fines or other disciplinary action.
•Our captive insurance subsidiary is subject to insurance laws.
•The evolving and often conflicting political and regulatory landscape surrounding sustainability and climate change creates significant uncertainty and compliance challenges.
•Risks associated with climate change may adversely affect our business, financial results and reputation.
•Actual or perceived environmental, social and governance matters may cause additional costs, reputational harm or investors to cease allocating capital to us, all of which could adversely affect our business and results of operations.
•The price and trading volume of our Class A common stock maycan be volatile, which has and could in the future result in rapidshareholder and substantial losses for our shareholders.losses.
•If we fail to qualify as a REIT, we couldwill incur substantial tax liability. As a REIT, we and our investors may still face other tax liabilities.
•Our business may be adversely affected by reputational harm to us or the counterparties with whom we associate. Failure to maintain effective internal controls and the complexity of accounting and tax rules, characterized by significant judgment and assumptions, could materially affect the accuracy and timeliness of our financial statements.
•Cybersecurity threatsthreats, security breaches, and securityour breachesuse of artificial intelligence technologies could cause significant business disruption and possiblydisruption, compromise sensitive information, produce inaccurate or biased results, damage our reputation, and subject us to regulatory scrutiny.scrutiny and legal liability.
The allocation of capital among our business linessegments may vary,varies, which may adversely affect our financial performance and liquidity.
In executing our business plan, we regularly consider the allocation of capital to our various commercial real estate business lines,segments, including: (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. The allocation of capital among such business linessegments may varyvaries due to market conditions, the expected relative return on equity of each activity, the judgment of our management team, the demand in the marketplace for commercial real estate loans and securities and the availability of specific investment opportunities.opportunities, including shifts in capital allocation in response to sector-specific performance variations and to changes in interest rates. We also consider the availability and cost of our likely sources of capital. If we fail to appropriately allocate capital and resources across our business linessegments or fail to optimize our investment and capital raising opportunities, our liquidity and financial performance may be adversely affected.
Our success depends upon hiring and retaining qualified personnel, including senior management and loan originators, and the loss of key personnel could materially harm our business.
Our success depends heavily on our senior management team, who drive strategy and execution across all three of our business segments: loan originations, securities investments, and real estate investments. The loss of one or more of these key personnel could severely disrupt our operations and adversely affect our ability to execute our investment strategy. There is significant competition for talent in commercial real estate finance and investment management, and we may be unable to identify and attract suitable replacements in a timely manner if key personnel depart.
We may not be able to hire and retain qualified loan originators or grow and maintain our relationships with key loan brokers, and if we are unable to do so, our ability to implement our business and growth strategies could be limited.
We also depend on our loan originators to generate borrower clients by, among other things, developing relationships with commercial property owners, real estate agents and brokers, developers and others, which we believe leads to repeat and referral business. Accordingly, we must be able to attract, motivate and retain skilled loan originators. The market for loan originators is highly competitive and may lead to increased costs to hire and retain them. We cannot guarantee that we will be able to attract or retain qualified loan originators. If we cannot attract, motivate or retain a sufficient number of skilled loan originators, at a reasonable cost or at all, our business could be materially and adversely affected. We also depend on our network of loan brokers, who generate a significant portion of our loan originations. While we strive to cultivate long-standing relationships that generate repeat business for us, brokers are free to transact business with other lenders and have done so in the past and will do so in the future. Our competitors also have relationships with some of our brokers and actively compete with us in bidding on loans shopped by these brokers. We also cannot guarantee that we will be able to maintain or develop new relationships with additional brokers.
We often rely on other third-party companies for assistance in origination, warehousing, distribution, servicing, securitization and other finance-related and loan-related activities. Our achievement of investment grade status has expanded our capital markets relationships to include a broader range of bank counterparties and institutional investors. The strength and stability of these relationships are critical to our ability to access financing on favorable terms and execute our business strategy. There can be no assurance that any of these strategic partners will continue their relationships with us in the future. Our ability to influence our partners may be limited and non-alignment of interests on various strategic decisions may adversely impact our business. Furthermore, strategic alliance partners may: (i) have economic or business interests or goals that are inconsistent with ours; (ii) take actions contrary to our policies or objectives; (iii) undergo a change of control; (iv) experience financial and other difficulties; or (v) be unable or unwilling to fulfill their obligations, which may affect our financial conditions or results of operations.
To evaluate our target assets, our management team uses financial models and underwriting criteria, the effectiveness of which cannot be guaranteed. Our profitability depends, in large part, on our ability to originate loans or acquire target assets at attractive prices that, in our judgment, meet our criteria according to the results of our modeling. However, we operate in a highly competitive market for lending and other investment opportunities. In originating or acquiring target assets, we compete with a variety of institutional lenders and investors and many other market participants, including specialty finance companies, REITs, commercial banks and thrift institutions, investment banks, insurance companies, hedge funds and other financial institutions. Many competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. Unlike Ladder, certain of our competitors mayare not be subject to the operating constraints associated with REIT tax compliance or maintenance of an exemption from registration under the Investment Company Act. Some competitors may have a lower cost of funds and access to funding sources that mayare not be available to us. Under our credit facilities, the lenders have the right to review the assets which we are seeking to finance and approve the purchase and financing of such assets in their sole discretion. Our underwriting criteria and lender approvals may restrict us from being able to compete with others for commercial mortgage loan origination and acquisition opportunities and these criteria may be stricter than those employed by our competitors. In addition, these underwriting criteria and approvals impose conditions and limitations on our ability to originate certain of our target assets, including, in particular, restrictions on our ability to originate junior mortgage loans, mezzanine loans and preferred equity investments. Furthermore, competition for originations of, and investments in, our target assets may lead to the yield of such assets decreasing, which may further limit our ability to generate desired returns.
We cannot predict the effect thathow government policies, laws,Federal andReserve interventions adopted in response to an inflationary environmentactions, or the impact of changes in the U.S. political environment,environment includingwill as a result of the change in administration, onaffect our business and the markets in which we operate.
Monetary policy responses to inflation have created significant volatility in financial and mortgage markets, particularly when rapid interest rate increases led to reduced commercial real estate transaction volumes and increased economic distress for property owners. This volatility made real estate transactions more challenging for potential borrowers, directly affecting our commercial real estate financing opportunities.
The change in administration has introduced additional uncertainty regarding federal, state, and local legislation, regulation, and policy direction. This uncertainty extends to interest rates, tariffs, inflation, foreign exchange rates, trade policy, and fiscal and monetary policy, creating difficult-to-quantify macroeconomic and geopolitical risks. Inflation has also increased our operating costs, and new legislative, regulatory, or policy changes could significantly impact our business and the markets in which we operate. Changes in federal policy, including tax policies and regulatory oversight of financial services, occur through policy and personnel changes following elections. We cannot predict the ultimate impact of these changes on our business, investments, or the real estate industry generally, and prolonged uncertainty could adversely affect our investment objectives and operating environment.
Federal fiscal challenges pose additional risks. Extended government shutdowns, failure to raise the debt ceiling, or other budgetary decisions limiting federal spending may negatively impact economic conditions and capital markets liquidity. Credit rating downgrades of the U.S. government—such as Fitch's 2023 downgrade from "AAA" to "AA+" and Moody's shift to a "negative" outlook—reflect concerns about federal debt levels and governance. Further downgrades or the possibility of a U.S. debt default could create broader financial turmoil, increase borrowing costs, reduce credit availability, and negatively impact our portfolio asset values, net income, liquidity, and ability to finance assets on favorable terms.
The U.S. Government and the Federal Reserve took significant actions in response to the inflationary environment in the U.S. in recent years, creating a great deal of volatility in financial and mortgage markets. For example, the tightening of monetary policy to address inflationary concerns drove a rapid and significant increase in interest rates, which resulted in a decline in commercial real estate transactions and an increased risk of economic distress for commercial property owners. Volatility in interest rates and credit spreads made the purchase and sale of real estate by potential borrowers challenging, which in turn affects the frequency of commercial real estate financing opportunities. There can be no assurance as to how actions taken by the U.S. Government or the Federal Reserve will affect the short- or long-term efficiency, liquidity, and stability of the financial and mortgage markets.
Moreover, uncertainty with respect to the actions discussed above combined with uncertainty surrounding legislation, regulation and government policy at the federal, state and local levels, including as a result of the change in administration, have introduced new and difficult-to-quantify macroeconomic and geopolitical risks with potentially far-reaching implications. There has been a corresponding increase in uncertainty with respect to interest rates, tariffs, inflation, foreign exchange rates, trade volumes and trade, fiscal and monetary policy. Inflation has also increased our operating costs in recent years. New legislative, regulatory or policy changes could significantly impact our business and the markets in which we operate. To the extent changes in the political environment have a negative impact on the financial and mortgage markets, our business, results of operations, financial condition and ability to make distributions to our shareholders could be materially and adversely impacted.
Any further downgrade, or perceived potential downgrade, of the credit ratings of the U.S. and the failure to resolve issues related to U.S. fiscal and debt policies may materially adversely affect our business, liquidity, financial condition and results of operations. In August 2023, Fitch Ratings lowered its long-term sovereign credit rating of the U.S. from “AAA” to “AA+” due to concerns regarding the level and trajectory of federal debt and the erosion of governance, including on fiscal and debt matters and in November 2023, Moody’s Investors Service lowered its outlook on the U.S. government’s debt to “negative” from “stable” due to concerns regarding rising interest rates and political polarization in Congress. The impact of any further downgrades to the U.S. Government's sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions and would likely impact the credit risk associated with some of the assets in our portfolio or those we may seek to acquire, including U.S. Treasury securities. A downgrade of the U.S. Government's credit rating or a default by the U.S. Government to satisfy its debt obligations likely would create broader financial turmoil and uncertainty, which would weigh heavily on the global banking system and these developments could cause interest rates and borrowing costs to rise and a reduction in the availability of credit, which may negatively impact the value of the assets in our portfolio, our net income, liquidity and our ability to finance our assets on favorable terms.
We have a concentration of investments in the real estate sector and may have further concentrations from time to time in certain property types, locations, tenants and borrowers, which may increaseincreases our exposure to the risks of certain economic downturns.
We and our borrowers operate in the commercial real estate sector. Such concentration in one economic sector may increaseincreases the volatility of our returns and may also exposeexposes us to the risk of economic downturns in this sector to a greater extent than if our portfolio also included other sectors of the economy. Declining real estate values may reduce the level of new mortgage and other real estate-related loan originations since borrowers often use appreciation in the value of their existing properties to support the purchase of or investment in additional properties. Borrowers may also be less able to pay principal and interest on our loans if the value of real estate weakens and/or the interest rates at which loans can be profitably made increases. Further, declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our basis in the related loan. Any sustained period of increased payment delinquencies, forbearance, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to originate/acquire/sell loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business. Additionally, market volatility can create compounding negative effects across our three business segments simultaneously. Distress in commercial real estate lending markets may cause borrower defaults, reduce the value of our loan portfolio, decrease the market value of our securities investments, and reduce the value of our owned real estate assets.
The value of our investments maycan be adversely affected by many factors that are beyond our control, including dislocations, illiquidity and volatility in the market for commercial real estate, commercial real estate finance and the broader financial markets.
Income from, and the value of, our investments maycan be adversely affected by many factors that are beyond our control, including, but not limited to:
•geopolitical uncertainty, including international conflicts, trade disputes, political instability, and tensions involving the U.S. or its allies; and
•acts of God such as hurricanes, earthquakes, droughts, wildfires and other natural disasters, pandemics or outbreaks of infectious disease, acts of war or terrorism, civil unrest, and other events or trends that may cause unanticipated and uninsured performance declines or losses to us or the owners and operators of the real estate securing our investments.
•the broader impacts of global tensions such as the Ukraine-Russia and Middle East conflicts; and
•civil unrest, terrorism, acts of war, outbreaks of communicable diseases, nuclear or radiological disasters, climate change and natural disasters.
Declining commercial real estate values, coupled with tighter underwriting standards for commercial real estate loans, may prevent commercial borrowers from refinancing their mortgages, which may result in increased delinquencies and defaults on commercial, multifamily and other mortgage loans. Declines in commercial real estate values also tend to result in reduced borrower equity, further hindering borrowers’ ability to refinance in an environment of increasingly restrictive lending standards and giving them less incentive to cure delinquencies and avoid foreclosure. The lack of refinancing opportunities has impacted and could impact in the future, in particular, mortgage loans that do not fully amortize and on which there is a substantial balloon payment due at maturity, because borrowers generally expect to refinance these types of loans on or prior to their maturity date. Finally, declining commercial real estate values would result in lower recoveries on foreclosure and an increase in losses above those that would have been realized had commercial property values remained the same or increased. Continuing defaults, delinquencies and losses would further decrease property values, thereby resulting in additional defaults by commercial mortgage borrowers, further credit constraints and further declines in property values.
Continuing defaults, delinquencies and losses would further decrease property values, thereby resulting in additional defaults by commercial mortgage borrowers, further credit constraints and further declines in property values.
ShiftsTechnology, ine-commerce, consumer patterns,and remote work policieshave fundamentally changed commercial real estate demand patterns, and advancesthese in communication and information technology that affect the use of traditional retail, hotel and office spaceshifts may have an adverse impact on the value of certain of our debt and equity investments.
The retail sector has evolved beyond traditional brick-and-mortar models, with consumer preferences shifting toward experiential retail, necessity-based retail, and service-oriented offerings. Grocery-anchored and service-oriented retail centers have demonstrated resilience, as consumers continue to value convenience and in-person services for essential needs. However, continued shifts in consumer behavior could cause certain tenants to reduce their physical footprint or experience financial stress, which could negatively impact our investments in those properties.
Hybrid work has become standard practice rather than an emerging trend, fundamentally altering demand for office space. As a direct result, the office sector faces structural challenges, including lower utilization rates and reduced space requirements per employee as companies adopt flexible work policies. Class B and Class C office properties, particularly those in secondary markets or those lacking modern amenities, face heightened pressure from these trends, while Class A office properties in strong primary markets with superior amenities and access to transportation have remained more competitive. These dynamics have led to increased vacancy rates in certain office submarkets and downward pressure on rents, particularly for older buildings with fewer amenities. Continued deterioration in office fundamentals, particularly in secondary markets, could negatively impact the value of our debt and equity investments in office properties and increase the risk of loan defaults or impairments.
The hospitality sector has experienced significant shifts in both leisure and business travel patterns. While leisure travel has rebounded strongly and business travel has substantially recovered from pandemic lows, the composition and patterns of business travel have shifted as companies continue to utilize virtual meeting technologies. Additionally, alternative lodging platforms have increased the supply of available accommodations in many markets, creating competitive pressure on traditional hotels. These changes in travel patterns and increased competition could negatively impact occupancy rates, average daily rates, and overall performance of hotel properties underlying our debt and equity investments.
These secular trends could continue to negatively impact certain property types in our portfolio, particularly office properties in secondary markets. These properties could also be adversely affected by shifting consumer behavior, economic downturns, tenant bankruptcies, increased competition, or other factors that could result in reduced occupancy, lower rental rates, and declining property values.
Sales by online retailers continue to increase, and many retailers operating brick and mortar stores have made online sales a vital piece of their business. Some of our debt and equity investments involve exposure to the ongoing operations of brick-and-mortar retailers. Although many of the retailers operating in the properties underlying our debt and/or equity investments include pharmacies and/or sell groceries and other necessity-based soft goods or provide services, including entertainment and dining options, the shift to online shopping and other forms of self-service may cause declines in brick-and-mortar sales generated by certain of tenants at these properties and/or may cause certain of our tenants to reduce the size or number of their retail locations in the future.
Technology and remote work policies, including hybrid schedules, have and will continue to impact the use of office space. The office market has seen a shift in the use of space due to the availability of practices such as telecommuting, videoconferencing and renting shared workspaces. These trends have led to more efficient workspace layouts and higher percentages of employees working remotely at least part of the week and, therefore, a decrease in leased office space. The continuing impact of technology and remote work policies could result in tenants utilizing less office space (including downsizing upon renewal), or in tenants seeking office space outside of the typical central business district. The increase in hybrid work schedules and the diminishing allure of urban living and socializing near workplaces also present a risk to adjacent retail and multifamily spaces. These trends could continue to cause an increase in vacancy rates and a decrease in demand for new supply, negatively impacting the value of our debt and equity investments.
Vacation rental platforms have provided leisure and business travelers with lodging options outside of the hotel industry. These services effectively have increased the supply of rooms available in many major markets. This additional supply could negatively impact the occupancy rates and pricing at more traditional hotels.
As a result of the foregoing, the value of certain of our debt and equity investments, and results of operations could be adversely affected.
The U.S. Federal Reserve reduced its benchmark interest rates multiple times during 2024 and 2025 following the rapid rate increases of 2022 and 2023. Interest rates may continue to decline or may reverse direction depending on economic conditions, inflation trends, and Federal Reserve policy decisions. We remain exposed to rate-related risks given that we originate both fixed and floating rate loans and maintain both fixed and floating rate liabilities. Our primary interest rate exposures relate to the yield on our floating rate assets, the financing cost of our floating rate debt, and the Treasury futures that we utilize for hedging purposes. Interest rates are highly sensitive to many factors beyond our control, including governmental monetary and tax policies and domestic and international economic and political considerations. Increased interest rates increase the credit risk of our assets by negatively impacting our borrowers’ ability to pay debt service on floating rate loans or our ability to refinance assets upon maturity, negatively impact the value of real estate supporting our investments through higher property valuation capitalization rates, and may cause assets originated prior to rate increases to experience fair value declines or provide yields below prevailing market rates. Conversely, decreased interest rates can compress our net interest margins by reducing yields on floating rate assets and may accelerate loan prepayments requiring capital redeployment; however, declining rates also reduce our floating rate borrowing costs, improve borrower credit quality by reducing debt service burdens, and can increase property values through lower capitalization rates. The net effect of interest rate changes on our business depends on the timing and magnitude of such changes, the composition of our loan and securities portfolio, the relative mix of fixed and floating rate assets and liabilities, and the effectiveness of our hedging strategies.
In addition to benchmark interest rate risk, changes in credit spreads materially affect our business. Credit spreads represent the premium above benchmark rates that lenders and investors demand for assuming credit risk. Widening credit spreads increase our borrowing costs on secured financing facilities, warehouse lines, and impact when we access capital markets, even when benchmark interest rates remain stable or decline. Spread widening can also decrease the fair value of our loan and securities portfolios and reduce liquidity in commercial real estate debt markets. Credit spreads are influenced by market perceptions of commercial real estate credit quality, general investor risk appetite, capital market liquidity conditions, and factors specific to our Company including our financial performance and credit ratings. While narrowing credit spreads can benefit us through reduced funding costs and increased portfolio valuations, tighter spreads may also compress our loan origination margins and reduce the relative attractiveness of our returns on new originations compared to alternative investments.
While the U.S. Federal Reserve recently cut its benchmark interest rates, it raised rates during 2022 and 2023 at the fastest pace since the 1980s. Although current rates remain below 1980s levels, they are considered significantly elevated by recent standards.
Our primary interest rate exposures relate to the yield on our floating rate assets and the financing cost of our floating rate debt, as well as the Treasury futures that we utilize for hedging purposes. Interest rates are highly sensitive to many factors beyond our control, including but not limited to, governmental monetary and tax policies, and domestic and international economic and political considerations. Interest rate fluctuations present a variety of risks and may adversely affect our income or generate losses. Such risks include a mismatch between asset yields and borrowing rates and variances in the yield curve and prepayment rates. Increased interest rates also impact borrowers’ ability to refinance their loans at maturity and while the interest payable on the existing fixed rate debt on our real estate portfolio and corporate bonds becomes relatively cheaper with higher market interest rates, we may have to refinance this debt at higher rates at maturity.
Demand for mortgages has been negatively impacted by rising interest rates and increases in the level of interest rates: (i) increase the credit risk of our assets by negatively impacting the ability of our borrowers to pay debt service on our floating rate loan assets or our ability to refinance our assets upon maturity; (ii) negatively impact the value of the real estate supporting our investments (or that we own directly) through the impact such increases can have on property valuation capitalization rates; and/or (iii) cause our targeted assets that were issued, originated or acquired prior to an interest rate increase to experience a decline in their fair value or provide yields that are below prevailing market interest rates.
Prepayment rates on mortgage loans may be affected by a number of factors including, but not limited to, the then-current level of interest rates and credit spreads, fluctuations in asset values, the availability of mortgage credit, the relative economic vitality of the area in which the related properties are located, possible changes in tax laws, other opportunities for investment, and other economic, social, geographic, demographic, legal and other factors beyond our control. The frequency at which prepayments (including voluntary prepayments by the borrowers and liquidations due to defaults and foreclosures) occur on our investments can adversely impact our business, and prepayment rates cannot be predicted with certainty, making it impossible to completely insulate us from prepayment or other such risks. Any adverse effects of prepayments may impact our portfolio in those particular investments, which may experience outright losses in an environment of faster actual or anticipated prepayments, may underperform relative to hedges that the management team may have constructed for such investments (resulting in a loss to our overall portfolio). Additionally, inIn the event of declining interest rates, borrowers are more likely to prepay, thereby exposing us to the risk that the prepayment proceeds may be reinvested only at a lower interest rate than that borne by the prepaid obligation. In periods of increasing interest rates and/or credit spreads, prepayment rates on loans will generally decrease, which could impact our liquidity, or increase our potential exposure to loan non-performance.
Management's Discussion & Analysis (MD&A)
New heading “Supplemental Guarantor Disclosures”
New heading “Loss from Investment in Unconsolidated Ventures”
New heading “Year ended December 31, 2025”
New heading “Committed Loan Financing Facilities”
New heading “Securities Repurchase Financing”
Removed heading “LCFH, and each Series thereof, and consolidates the financial results of LCFH, and each Series thereof, into Ladder Capital”
Removed heading “Corp’s consolidated financial statements.”
Removed heading “Gain on Extinguishment of Debt”
Removed heading “Operating Expenses”
Removed heading “Income Tax (Benefit) Expense”
Removed heading “Year ended December 31, 2023”
Removed heading “Committed Loan Facilities”
Removed heading “Uncommitted Securities Facilities”
Removed heading “Borrowings from the Federal Home Loan Bank (“FHLB”)”
Largest changes
“We are a party to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity as of December 31, 2024. As of December 31, 2024, the Company had $62.7 million of borrowings outstanding, with an additional $1.1 billion of committed financing available. As of December 31, 2023, the Company had $605.0 million of borrowings outstanding, with an additional $637.0 million of committed financing available. …”see in full comparison
The Company’s repurchasesee in full comparisonfacilitiesagreements includecovenantsfinancialcoveringcovenants, including minimum net worthrequirements (ranging from $400.0 million to $871.4 million), maximum reductions in net worth over stated time periods,requirements, minimum liquiditylevels (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),levels, maximum leverage ratios(calculated in various ways based on specified definitions of indebtednessandnet worth) and aminimum fixed chargecoverage ratio of 1.25x, and, in the instance of one lender, anor interest coverageratioratios.ofThe1.50x,Companyin each case, if certain liquidity thresholds are not satisfied. We werewas in compliancewithin all material respects with the covenants under the Company’s financing arrangements as of December 31,20242025 and December 31,2023.2024. Further, certain of our financing arrangements and loans on our real property are secured by the assets of the Company, includingpledges of the equity of certain subsidiaries orthe 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.
“LCFH, and each Series thereof, and consolidates the financial results of LCFH, and each Series thereof, into Ladder Capital”see in full comparison
Full comparison: every changed paragraph (104)
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.
LCFH, and each Series thereof, and consolidates the financial results of LCFH, and each Series thereof, into Ladder Capital
Corp’s consolidated financial statements.
Ladder Capital is an investment grade-rated, 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) 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. We believe that our in-house origination platform, ability to flexibly allocate capital among complementary product lines, credit-centric underwriting approach, access to diversified financing sources, and experienced management team position us well to deliver attractive returns on equity to our shareholders through economic and credit cycles.
Supplemental Guarantor Disclosures
In June 2025, we filed a registration statement on Form S-3 with the SEC registering, among other securities, debt securities of LCFH and Ladder Capital Finance Corporation (“Co-Issuer” and, together with LCFH, the “Issuers”), which will be fully and unconditionally guaranteed by us. We own substantially all of our assets and conduct all of our operations through LCFH, and the Co-Issuer is a wholly-owned subsidiary of LCFH. The Issuers are consolidated into our financial statements.
Pursuant to Rule 3-10 of Regulation S-X and Rule 12h-5 of the Exchange Act, subsidiary issuers of obligations guaranteed by their parent company and subsidiary guarantors of securities are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into such parent company’s consolidated financial statements, such related guarantee is “full and unconditional” and, subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Issuers have not been presented.
Furthermore, as permitted under Rule 13-01(a)(4) of Regulation S-X, summarized financial information for the Issuers has been excluded because the combined assets, liabilities and results of operations of the Issuers and us are not materially different than the corresponding amounts in our consolidated financial statements incorporated by reference herein, and because management believes such summarized financial information would not be material for investors.
Activity for the year ended December 31, 20242025 included fundings of $195.2$1.4 millionbillion and paydowns of $1.7$609.2 billion,million, which contributed to a $1.6$627.1 billionmillion decreaseincrease in commercial mortgage loans. Activity for the year ended December 31, 20242025 included securities purchases of $898.0$1.9 million,billion, sales of $32.2 million and $276.8$534.8 million of amortization and paydowns, and sales of $411.8 million, which contributed to a net increase in our securities portfolio of $595.3$1.0 million.billion. Activity for the year ended December 31, 20242025 included real estate investment sales of $102.3$13.1 million and acquisitions inof real estate via foreclosure of $48.8$65.1 million. In addition, we purchased $10.0$1.6 billion of short-term U.S. Treasury securities during the year ended December 31, 2024,2025. ofThe whichentire $10.0short-term billionU.S. Treasury securities portfolio, or $2.7 billion, matured or was sold during the year ended December 31, 2024.2025.
Activity for the year ended December 31, 20232024 included fundings of $68.4$195.2 million and paydowns of $726.7$1.7 million,billion, which contributed to a $0.8$1.6 billion decrease in commercial mortgage loans. Activity for the year ended December 31, 20232024 included securities purchases of $144.0$898.0 million, sales of $17.8$32.2 million and $232.1$276.8 million of amortization and paydowns, which contributed to a net decreaseincrease in our securities portfolio of $102.0$595.3 million. WeActivity acquiredfor $87.6the year ended December 31, 2024 included real estate investment sales of $102.3 million inand acquisitions of real estate via foreclosure and received proceeds from the sale of real$48.8 estate of $43.3 million as a result of the sale of one investment.million. In addition, we purchased $5.2$10.0 billion of short-term U.S. Treasury securities during the year ended December 31, 2023,2024, of which $4.3$10.0 billion matured during the year ended December 31, 2023.2024.
The $48.7$91.7 million decrease in interest income was primarily attributable to net payoffs within our loan portfolio, partially offset by an increase in income from collection of deferred interest from the resolution of a previously modified loan, and an increase in interest earned on real estate securitiesCMBS and short-term U.S. TreasuryCLO securities due to net purchases. There was a $1.1$0.7 billion decrease in average loan investments from $3.6 billion for the year ended December 31, 2023 to $2.5 billion for the year ended December 31, 2024.2024 to $1.8 billion for the year ended December 31, 2025. There was a $151.9$1.1 millionbillion increase in average securities investments from $495.5$0.6 millionbillion for the year ended December 31, 20232024 to $647.4$1.7 millionbillion for the year ended December 31, 2024.2025.
The $23.6$46.6 million decrease in interest expense is primarily related to the redemption of all outstanding obligations of LCCM 2021-FL2 and LCCM 2021-FL3, lower outstanding balances on our securities and loan repurchase facilities andfacilities, the payoff of ourmortgage FHLBloan borrowingsdebt, as well as a reduction in expense as a result of redemptions of our Notes, partially offset by the issuance of our 2031 Notes.
As of December 31, 2024, the weighted average yield on our mortgage loan receivables was 9.3%, compared to 9.6% as of December 31, 2023. As of December 31, 2024, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.4%, compared to 7.5% as of December 31, 2023. The decrease in the rate on borrowings against our mortgage loan receivables from December 31, 2023 to December 31, 2024 was primarily due to decreases in prevailing interest rates. As of December 31, 2024, we had outstanding borrowings secured by our mortgage loan receivables equal to 42.4% of the carrying value of our mortgage loan receivables, compared to 53.1% as of December 31, 2023.
As of December 31, 20242025, the weighted average yield on our securitiesmortgage loan receivables was 6.0%,7.7%, compared to 6.1%9.3% as of December 31, 2023.2024. As of December 31, 2024,2025, we did not have any borrowings against our securities.mortgage loan receivables. As of December 31, 2023,2024, the weighted average interest rate on borrowings against our securitiesmortgage loan receivables was 5.8%.6.4%. As of December 31, 2023,2024, we had outstanding borrowings secured by our securitiesmortgage loan receivables equal to 24.0%42.4% of the carrying value of our realmortgage estateloan securities.receivables.
Our real estate is comprisedAs of non-interestDecember bearing31, assets;2025, however,the interestweighted incurredaverage yield on mortgageour financingsecurities collateralizedwas by5.3%, suchcompared realto estate6.0% isas includedof inDecember interest31, expense.2024. As of December 31, 2024,2025, the weighted average interest rate on mortgage borrowings against our real estate assetssecurities was 6.0%, compared to 5.9% as of December 31, 2023.4.3%. As of December 31, 2024, we did not have any borrowings against our securities. As of December 31, 2025, we had outstanding borrowings secured by our real estatesecurities equal to 66.6%30.0% of the carrying value of our real estate,estate compared to 60.3% as of December 31, 2023.securities.
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 December 31, 2025, the weighted average interest rate on mortgage borrowings against our real estate assets was 5.9%, compared to 6.0% as of December 31, 2024. As of December 31, 2025, we had outstanding borrowings secured by our real estate equal to 55.2% of the carrying value of our real estate, compared to 66.6% as of December 31, 2024.
The provisionrelease of loan loss reserves for the year ended December 31, 20242025 of $13.9$(0.2) million wasreflects primarily due to continued uncertainty inimproved macroeconomic market conditions affecting commercial real estate, partially offset by a decrease in the size of our balance sheet first mortgage loans as a result of repayments.estate. During the year ended December 31, 2024,2025, we charged-off $5.0 million of an existing allowance related to an office property in Oakland,Portland, California. For additional information, refer to Note 3, Mortgage Loan Receivables, in the consolidated financial statements.Oregon.
The provision for loan loss reserves for the year ended December 31, 20232024 was $25.1$13.9 million. The increase in provision associated with the general reserve during the year ended December 31, 20232024 was primarily due to adverse changes in macroeconomic market conditions affecting commercial real estateestate, partially offset by a decrease in the size of our balance sheet first mortgage loan portfolio as a result of repayments. During the year ended December 31, 2024, we charged-off $5.0 million of an existing allowance related to an office property in Oakland, California.
The increase of $1.7$0.6 million in real estate operating income was primarily attributable to operatingreal incomeestate earnedforeclosures onthat propertiesoccurred acquiredsubsequent via foreclosure during the years endedto December 31, 2023 andthrough December 31, 2024,2025, partially offset by sales that occurred during the same periods.period. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the year ended December 31, 2024,2025, we recorded $29.8$3.6 thousandmillion of realized gains on the sale of one conduit loan and $1.1 million of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the year ended December 31, 2023,2024, we recorded $0.5$30 millionthousand of unrealized lossesgains on loans related to lower of cost or market adjustments on our conduit loans. 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.
The increasedecrease of $16.5$21.5 million of gain on real estate, net during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 was the result of one property salessale for a gain of $3.8 million during the year ended December 31, 20242025 compared to 14 property sales for a gain of $25.3 million during the year ended December 31, 2023.2024. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.
We generate fee income on the loans we originate and in which we invest.invest Theand $9.8also millioninclude increaseunrealized inand realized gains and losses on securities within fee and other incomeincome. The $3.7 million decrease was primarily duedriven toby morelower payoffs of loans forduring the year ended December 31, 20242025, partially offset by an increase in realized and unrealized gains on securities as compared to the year ended December 31, 2023.2024.
Net result from derivative transactions of $1.8 million was comprised of a realized gain of $2.0 million and an unrealized loss of $(0.2) million for the year ended December 31, 2025. Net result from derivative transactions of $5.4 million was comprised of a realized gain of $7.3 million and an unrealized loss of $1.9 million for the year ended December 31, 2024. Net result from derivative transactions of $1.5 million was comprised of a realized gain of $1.9 million and an unrealized loss of $0.4 million for the year ended December 31, 2023. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five andprimarily ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The net gain in 20242025 was primarily related to changes in interest rates during the year ended December 31, 2024.2025.
Loss from Investment in Unconsolidated Ventures
Loss from our investment in unconsolidated ventures totaled $1.4 million and $0.1 million for the year ended December 31, 2025 and 2024, respectively. The $1.4 million loss from investment in unconsolidated ventures is primarily attributable to a venture acquisition in June 2024.
Gain on Extinguishment of Debt
Gain on extinguishment of debt totaled $0.2 million for the year ended December 31, 2024. During the year ended December 31, 2024, the Company retired: (1) $32.1 million of principal of the 2025 Notes for a repurchase price of $32.0 million, recognizing an $11 thousand net gain on extinguishment of debt after recognizing $51 thousand of unamortized debt issuance costs associated with the retired debt; and (2) $2.0 million of principal of the 2029 Notes for a repurchase price of $1.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $21 thousand of unamortized debt issuance costs associated with the retired debt.
Gain on extinguishment of debt totaled $10.7 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company retired: (1) $16.2 million of principal of the 2025 Notes for a repurchase price of $14.8 million, recognizing a $1.3 million net gain on extinguishment of debt after recognizing $(72) thousand of unamortized debt issuance costs associated with the retired debt; (2) $38.9 million of principal of the 2027 Notes for a repurchase price of $31.8 million, recognizing a $6.8 million net gain on extinguishment of debt after recognizing $0.3 million of unamortized debt issuance costs associated with the retired debt; and (3) $13.1 million of principal of the 2029 Notes for a repurchase price of $10.3 million, recognizing a $2.6 million net gain on extinguishment of debt after recognizing $0.2 million of unamortized debt issuance costs associated with the retired debt.
Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The decrease of $2.9$7.9 million in compensation expense is primarily due to a decrease in bonus compensation expense for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024.
Operating Expenses
Operating expenses are primarily comprised of professional fees, lease expense and technology expenses. The decrease during the year ended December 31, 2024 as compared to December 31, 2023 of $0.3 million was primarily related to a decrease in professional fees.
The increasedecrease of $3.0$0.1 million fromin thereal yearestate endedoperating expenses was primarily attributable to real estate sales that occurred subsequent to December 31, 2023 tothrough December 31, 2024 was primarily due to operating expenses from properties that were acquired via foreclosure during the years ended December 31, 2023 and December 31, 2024,2025, partially offset by theforeclosures salesthat occurred during the same periods.period. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.details.
Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans and other loan related expenses. The decrease during the year ended December 31, 20242025 as compared to December 31, 20232024 of $1.1$4.0 million was primarily attributable to a decrease in loan related expenses as a result of a smaller average loan portfolio.
The decrease of $0.3 million in depreciation and amortization was primarily attributable to real estate sales that occurred subsequent to December 31, 2023 through December 31, 2025, partially offset by foreclosures that occurred during the same period. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
The $2.4 million increase in depreciation and amortization during the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily attributable to the timing of acquisitions of property via foreclosure that occurred after December 31, 2023, partially offset by the sale of one hotel property during the year ended December 31, 2023.
Income Tax (Benefit) Expense
Most of our consolidated income tax provision related to the business units held in our TRSs. The decrease in expense of $0.8 million during the year ended December 31, 2024 as compared to December 31, 2023 is primarily a result of changes in income generated by our TRSs.
Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) an unsecuredUnsecured Revolving Credit Facility; (3) CLO issuances; (4) committed and uncommitted secured funding provided by banks and other lenders; and (54) long term non-recourse mortgage financing.financing; and (5) CLO issuances.
We held cash and cash equivalents of $38.0 million and restricted cash of $14.9 million as of December 31, 2025. We held cash and cash equivalents of $1.3 billion and restricted cash of $12.6 million as of December 31, 2024.
We held cash and cash equivalents of $1.3 billion and restricted cash of $12.6 million as of December 31, 2024. We held cash and cash equivalents of $1.0 billion and restricted cash of $15.4 million as of December 31, 2023.
Year ended December 31, 2025
We experienced a net decrease in cash, cash equivalents and restricted cash of $(1.3) billion for the year ended December 31, 2025, reflecting cash provided by operating activities of $87.0 million, cash used in investing activities of $(1.6) billion and cash provided by financing activities of $227.0 million.
Net cash provided by operating activities of $87.0 million was primarily driven by net interest income and net operating income on our real estate portfolio.
Net cash used in investing activities of $(1.6) billion was driven by $(1.9) billion in purchases of securities and $(1.3) billion of origination of mortgage loans held for investment, partially offset by $711.0 million of repayments from mortgage loan receivables, $534.0 million in repayments on securities, $411.8 million of proceeds from sale of securities and $13.1 million in proceeds from sale of real estate.
Net cash provided by financing activities of $227.0 million was primarily as a result of net repayments of borrowings of $376.9 million, $(117.4) million of dividend payments, $(8.7) million payment to satisfy minimum federal and state tax withholdings on restricted stock, $(11.8) million purchase of treasury stock, and $(12.0) million in deferred financing cost.
Net cash provided by investing activities of $932.8 million was driven by $1.6 billion of repaymentrepayments from mortgage loan receivables, $276.6 million in repayments on securities, $102.3 million in proceeds from sale of real estate and $32.2 million of proceeds from sale of securities, partially offset by $(898.0) million in purchases of securities and $(195.2) million of origination of mortgage loans held for investment.
Year ended December 31, 2023
We experienced a net increase in cash, cash equivalents and restricted cash of $416.3 million for the year ended December 31, 2023, reflecting cash provided by operating activities of $180.6 million, cash provided by investing activities of $793.5 million and cash used in financing activities of $(557.8) million.
Net cash provided by operating activities of $180.6 million was primarily driven by net interest income and net increases in operating income on our real estate portfolio.
Net cash provided by investing activities of $793.5 million was driven by $738.5 million of repayment from mortgage loan receivables, $232.1 million in repayments on securities, and $17.8 million of proceeds from sale of securities, partially offset by $(144.0) million in purchases of securities and $(68.4) million of origination of mortgage loans held for investment.
Net cash used in financing activities of $(557.8) million was primarily as a result of net repayments of borrowings of $(427.1) million, $(116.4) million of dividend payments, $(7.9) million of shares acquired to satisfy minimum federal and state tax withholdings on restricted stock, $(2.5) million purchase of treasury stock, and $(3.4) million in deferred financing cost.
As of December 31, 2025, we held unencumbered cash and cash equivalents of $38.0 million, unencumbered loans of $2.2 billion, unencumbered securities of $1.4 billion, unencumbered real estate of $320.4 million and $109.7 million of other assets not encumbered by any portion of secured indebtedness. As of December 31, 2024, we held unencumbered cash and cash equivalents of $1.3 billion, unencumbered loans of $689.7 million, unencumbered securities of $1.1 billion, unencumbered real estate of $213.4 million and $409.1 million of other assets not encumbered by any portion of secured indebtedness.
As of December 31, 2024, we held unencumbered cash of $1.3 billion, unencumbered loans of $689.7 million, unencumbered securities of $1.1 billion, unencumbered real estate of $213.4 million and $409.1 million of other assets not encumbered by any portion of secured indebtedness. As of December 31, 2023, we held unencumbered cash and cash equivalents of $1.0 billion, unencumbered loans of $1.1 billion, unencumbered securities of $342.8 million, unencumbered real estate of $160.8 million and $394.2 million of other assets not encumbered by any portion of secured indebtedness.
(1)Presented net of unamortized debt issuance costs of $1.1 million and net of premiums of $3.7 million as of December 31, 2024.
(2)Presented net of unamortized debt issuance costs of $0.1 million as of December 31, 2024.
(2)Presented net of unamortized debt issuance costs of $1.4 million and net of premiums of $3.1 million as of December 31, 2025.
The Company’s repurchase facilitiesagreements include covenantsfinancial coveringcovenants, including minimum net worth requirements (ranging from $400.0 million to $871.4 million), maximum reductions in net worth over stated time periods,requirements, 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),levels, maximum leverage ratios (calculated in various ways based on specified definitions of indebtedness and net worth) and aminimum fixed charge coverage ratio of 1.25x, and, in the instance of one lender, anor interest coverage ratioratios. ofThe 1.50x,Company in each case, if certain liquidity thresholds are not satisfied. We werewas in compliance within all material respects with the covenants under the Company’s financing arrangements as of December 31, 20242025 and December 31, 2023.2024. 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.
As of December 31, 2025, the Company had $2.2 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $599.5 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”), $500.0 million in aggregate principal amount of 5.50% senior notes due 2030 (the “2030 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes,” collectively with the 2027 Notes, the 2029 Notes, and the 2030 Notes, the “Notes”).
As of December 31, 2024, the Company had $2.0 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $295.7 million in aggregate principal amount of the 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of the 2027 Notes, $633.9 million in aggregate principal amount of the 2029 Notes and $500.0 million in aggregate principal amount of the 2031 Notes.
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 LCFH with no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Notes. The Company guarantees the obligations under the Notes and the indenture. The Company was in compliance in all material respects with the covenants of the Notes as of December 31, 2025 and 2024. The Notes are presented net of unamortized debt issuance costs of $18.2 million and $16.5 million as of December 31, 2025 and December 31, 2024, respectively.
What changed in the latest 10-Q
Risk Factors
There have been no material changes during the three months ended June 30, 2026 to the risk factors in Item 1A in our Annual Report.
Full comparison: every changed paragraph (1)
There have been no material changes during the three months ended MarchJune 31,30, 2026 to the risk factors in Item 1A in our Annual Report.
Management's Discussion & Analysis (MD&A)
New heading “Income (Loss) from Investment in Unconsolidated Ventures”
New heading “Compensation and Employee Benefits”
New heading “Investment Related Expenses”
New heading “Depreciation and Amortization”
New heading “Net Result from Derivative Transactions”
New heading “Investment Related Expenses”
Removed heading “Operating Expenses”
Largest changes
Full comparison: every changed paragraph (112)
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 $31.9$32.4 billion of commercial real estate loans from our inception in October 2008 through MarchJune 31,30, 2026. During this timeframe, we also acquired $16.3$16.6 billion of predominantly investment grade-rated securities secured by first mortgage loans on commercial real estate and $2.2 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 MarchJune 31,30, 2026, we originated $17.0 billion of conduit loans, of which $16.9$17.0 billion were sold into 7576 CMBS securitizations. Our sales of loans into securitizations are generally accounted for as true sales, not financings, and we generally retain no ongoing interest in loans which we securitize unless we are required to do so as issuer pursuant to the risk retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended, (the “Dodd-Frank Act”). The securitization of conduit loans enables us to reinvest our equity capital into new loan originations or allocate it to other investments.
Ladder was founded in October 2008 and we completed our initial public offering in February 2014. We are led by a disciplined and highly aligned management team. As of MarchJune 31,30, 2026, our management team and directors held interests in our Company comprising over 12%13% of our total equity. On average, our management team members have over 2930 years of experience in the industry. Our management team includes Brian Harris, Chief Executive Officer; Pamela McCormack, President; Paul J. Miceli, Chief Financial Officer; Robert Perelman, Head of Asset Management; and Kelly Porcella, Chief Administrative Officer & General Counsel. Anthony V. Esposito, Chief Accounting Officer, and Stephanie Lin, Assistant Secretary, are additional officers of Ladder.
We invest primarily in loans, securities and other interests in U.S. commercial real estate, with a focus on senior secured assets. Our complementary business segments are designed to provide us with the flexibility to opportunistically allocate capital in order to generate attractive risk-adjusted returns under varying market conditions. The following chart summarizes our investment portfolio as of MarchJune 31,30, 2026 ($ in thousands):
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 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 may be refinanced by us into a new conduit first mortgage loan upon property stabilization. As of MarchJune 31,30, 2026, we held a portfolio of 8488 balance sheet first mortgage loans with an aggregate book value of $2.6$2.8 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 67.8%68.1% at MarchJune 31,30, 2026.
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. We held one conduit loan with an aggregate carrying value of $27.6$27.2 million at MarchJune 31,30, 2026.
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. The Company holds these conduit loans in its taxable REIT subsidiary (“TRS”) upon origination. As of MarchJune 31,30, 2026, we held one conduit first mortgage loan that was available for contribution into securitizations. Based on the loan balance and the “as-is” third-party FIRREA appraised value at origination, the loan-to-value ratio of the loan was 58.9% at MarchJune 31,30, 2026.
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 MarchJune 31,30, 2026, and a breakdown of our loan portfolio by loan size and geographic location and asset type of the underlying real estate by loan balance.
Net Leased Commercial Real Estate Properties. As of MarchJune 31,30, 2026, we owned 149 single tenant net leased properties with an undepreciated book value of $596.1$596.9 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 MarchJune 31,30, 2026, our net leased properties comprised a total of 3.4 million square feet, 100% leased with an average age since construction of 13.113 years and a weighted average remaining lease term of 3.83.6 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 tenants in our net leased properties are necessity-based businesses. During the three months ended MarchJune 31,30, 2026, we collected 100%99% of rent on these properties.
Diversified Commercial Real Estate Properties. As of MarchJune 31,30, 2026, we owned 6162 diversified commercial real estate properties throughout the U.S with an undepreciated book value of $451.3$460.8 million. During the three months ended MarchJune 31,30, 2026, we collected 96%98% of rent on these properties.
The following charts summarize the composition of our real estate investments as of MarchJune 31,30, 2026 ($ in millions):
As of MarchJune 31,30, 2026, the estimated fair value of our portfolio of CMBS investments totaled $2.1$1.9 billion in 118112 CUSIPs ($17.4$16.5 million average investment per CUSIP). Included in the $2.1$1.9 billion of CMBS securities are $8.8 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 by market value, 98.7%98.5% of which were rated investment grade by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or Fitch Ratings Inc. as of MarchJune 31,30, 2026:
As of MarchJune 31,30, 2026, our CMBS investments had a weighted average duration of 3.0 years. The commercial real estate collateral underlying our CMBS investment portfolio is located throughout the United States. As of MarchJune 31,30, 2026, by property count and market value, respectively, 59.7%60.9% and 65.9%66.4% of the collateral underlying our CMBS investment portfolio was distributed throughout the top 25 metropolitan statistical areas (“MSAs”) in the United States, with 4.9%6.5% and 11.2%,12.5%, by property count and market value, respectively, of the collateral located in the New York-Newark-Jersey City MSA, and the concentrations in each of the remaining top 24 MSAs ranging from 0.6% to 6.3%6.1% by property count and 0.1% to 6.7%6.1% by market value.
Unconsolidated Ventures. From time to time we invest in real estate related ventures. As of MarchJune 31,30, 2026, the carrying value of our unconsolidated ventures was $44.2$41.5 million.
As of MarchJune 31,30, 2026, we had $2.2 billion of senior unsecured notes outstanding. These unsecured financings were comprised of $599.5$589.1 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”), $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 (the “2029 Notes”), $500.0 million in aggregate principal amount of 5.50% senior notes due 2030 (the “2030 Notes”) and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes,” collectively with the 2027 Notes, the 2029 Notes, and the 2030 Notes, the “Notes”). The Company currently guarantees the obligations under the Notes and the indenture. During the six months ended June 30, 2026, the Company repurchased $10.4 million of the 2027 Notes, recognizing gain on bond repurchase of $0.1 million.
Due in large part to devoting such a large portion of our capital structure to equity and unsecured corporate bond debt, we maintain a $4.2 billion pool of unencumbered assets, comprised primarily of first mortgage loans and unrestricted cash as of MarchJune 31,30, 2026.
Our Unsecured Revolving Credit Facility is available on a revolving basis to finance our working capital needs and for general corporate purposes. On February 20, 2026, the Company increased the aggregate maximum borrowing amount of the Unsecured Revolving Credit Facility to $1.25 billion. Borrowings under the Unsecured Revolving Credit Facility bear interest at a rate equal to term SOFR plus a margin of 125 basis points as of MarchJune 31,30, 2026. The margin for borrowings is subject to adjustment based on the Company's credit rating and may range between 77.5 and 170 basis points. As of MarchJune 31,30, 2026, we had $492.0$202.0 million in outstanding borrowings on the Unsecured Revolving Credit Facility.
In September 2025, the Company entered into an unsecured Money Market Borrowing Arrangement to provide short-term financing up to $100 million. The arrangement has a five-year term. No borrowing on this facility is permitted over a quarter end date, and as such, no balance was utilized under this arrangement as of MarchJune 31,30, 2026.
On February 20, 2026, the Company entered into an amendment to its existing Unsecured Revolving Credit Facility agreement, which, among other things, established a new unsecured delayed draw term loan facility (the “Term Loan Facility”) that permits borrowings of up to $275.0 million. The amended credit agreement permits additional issuances of term loans of up to an aggregate of $500.0 million under a new accordion feature for term loan facilities. Borrowings under the Term Loan Facility bear interest at a rate equal to term SOFR plus a margin of 140 basis points as of MarchJune 31,30, 2026. The margin for borrowings is subject to adjustment based on the Company's credit rating. The Term Loan Facility has a draw period through February 20, 2027 and a fully extended maturity date of February 20, 2030. As of MarchJune 31,30, 2026, the Company had no$275 million in outstanding borrowings on the Term Loan Facility.
We are a party to multiple committed loan repurchase agreement facilities, totaling $576.0$570.0 million of credit capacity. As of MarchJune 31,30, 2026, we had no$107.2 million of borrowings outstanding. Assets pledged as collateral under these facilities are generally limited to first lien whole mortgage loans, mezzanine loans and certain interests in such first mortgage and mezzanine loans.
We are a party to master repurchase agreements with several counterparties to finance our investments in securities. As of MarchJune 31,30, 2026, the Company had $934.9$825.9 million of securities repurchase debt outstanding. The securities that serve as collateral for these borrowings are typically highly liquid 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 collateral. If the estimated market value of the collateral subsequently increases, we have the right to call back excess collateral.
We typically finance our real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $384.2$387.5 million, netincluding premiums and deferred financing costs of unamortized premiums of $2.9$1.5 million as of MarchJune 31,30, 2026, 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. We recorded $0.2$0.3 million of premium amortization, which decreased interest expense for the threesix months ended MarchJune 31,30, 2026. During the threesix months ended MarchJune 31,30, 2026, we executed one new term debt agreement to finance properties in our real estate portfolio with a carrying amount of $8.1 million. During the six months ended June 30, 2025, the Company executed no new term debt agreements.
We were in compliance in all material respects with the covenants under our financing arrangements as described in this Quarterly Report as of MarchJune 31,30, 2026.
A discussion regarding our results of operations for the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 20252026 is presented below.
Three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 20252026
Activity for the three months ended MarchJune 31,30, 2026 included fundings of $567.8$491.7 million andmillion, paydowns of $91.1$290.5 million and the salesecuritization of $13.0 million of a conduit loan, which contributed to a $388.6$183.3 million increase in commercial mortgage loans. Activity for the three months ended MarchJune 31,30, 2026 included securities purchases of $274.9$333.3 million, amortization and paydowns of $124.7$68.9 million and sales of $162.0$468.5 million, which contributed to a net decrease in our securities portfolio of $14.6$201.2 million. Activity for three months ended MarchJune 31,30, 2026 included $79.7$8.3 million of real estate acquired via foreclosure.
Activity for the three months ended DecemberMarch 31, 20252026 included fundings of $406.3$567.8 million, paydowns of $91.1 million and paydownsthe sale of $106.9$13.0 million,million of a conduit loan, which contributed to a $301.8$388.6 million increase ofin commercial mortgage loans. Activity for the three months ended DecemberMarch 31, 20252026 included securities purchases of $412.6$274.9 million, amortization and paydowns of $169.3$124.7 million and sales of $95.1$162.0 million, which contributed to a net increasedecrease in our securities portfolio of $147.7$14.6 million. Activity for three months ended March 31, 2026 included $79.7 million of real estate acquired via foreclosure.
The $6.2$4.0 million increase in interest income was primarily attributable to net originations within our loan portfolio, partially offset by a decrease in interest earned from CMBS securities due to a net decrease in the portfolio as a result of amortization and sales activity.portfolio. There was a $0.1$24.3 billionmillion increase in average securities investments from $2.0 billion for the three months ended DecemberMarch 31, 20252026 to three months ended June 30, 2026. The average balance was $2.1 billion for the three months ended June 30, 2026 and March 31, 2026. There was a $0.5$0.2 billion increase in average loan investments from $2.0 billion for the three months ended December 31, 2025 to $2.5 billion for the three months ended March 31, 2026 to $2.7 billion for the three months ended June 30, 2026.
The $5.5$4.4 million increase in interest expense was primarily attributable to an increase in usage of our Unsecured Corporate RevolverRevolver, our Term Loan Facility and our securities and loan repurchase facilities.
The increasedecrease in net interest income before provision for loan losses of $0.7$0.4 million is primarily driven by increased income on loans, partially offset by a net increase in borrowings.borrowings, partially offset by increased income on loans.
As of March 31, 2026 and December 31, 2025, the weighted average yield on our mortgage loan receivables was 8.0% and 7.7%, respectively. As of March 31, 2026 and December 31, 2025, we did not have any borrowings against our mortgage loan receivables.
As of June 30, 2026 and March 31, 2026 and December 31, 2025,2026, the weighted average yield on our securitiesmortgage loan receivables was 5.3%.7.2% and 8.0%, respectively. As of MarchJune 31,30, 2026 and December 31, 2025,2026, the weighted average interest rate on borrowings against our securitiesmortgage loan receivables was 4.2% and 4.3%, respectively.5.1%. As of MarchJune 31,30, 2026, we had outstanding borrowings secured by our securitiesmortgage loan receivables equal to 45.1%3.8% of the carrying value of our securities,mortgage comparedloan toreceivables. 30.0% asAs of DecemberMarch 31, 2025.2026, we did not have any borrowings against our mortgage loan receivables.
Our real estate portfolio is comprisedAs of non-interestJune bearing30, assets;2026 however,and interestMarch incurred31, 2026, the weighted average yield on mortgageour financingsecurities collateralizedwas by5.2% suchand real5.3%, estate is included in interest expense.respectively. As of MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, the weighted average interest rate on mortgage borrowings against our real estatesecurities was 5.9%.4.1% and 4.2%, respectively. As of MarchJune 31,30, 2026, we had outstanding borrowings secured by our real estatesecurities equal to 49.5%44.4% of the carrying value of our real estate,securities, compared to 55.2%45.1% as of DecemberMarch 31, 2025.2026.
Our real estate portfolio 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 June 30, 2026 and March 31, 2026, the weighted average interest rate on mortgage borrowings against our real estate was 5.9%. As of June 30, 2026, we had outstanding borrowings secured by our real estate equal to 49.9% of the carrying value of our real estate, compared to 49.5% as of March 31, 2026.
The increase of $2.2$3.6 million in real estate operating income during the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 20252026 was primarily attributable to an increase in operations at our properties and the acquisition of real estate that occurred duringsince theJanuary quarter,1, 2026, for which there was not a full quarter of operating income during the three months ended DecemberMarch 31, 2025.2026. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the three months ended MarchJune 31,30, 2026, we recorded $0.4$0.6 million of realized gains on the salesecuritization of one conduit loan and $0.4 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. During the three months ended DecemberMarch 31, 2025,2026, we recorded $16$0.4 thousandmillion related to lower of cost or market adjustments on our conduit loans. 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.
We generate fee income on the loans we originate and in which we invest and also include unrealized and realized gains and losses on securities within fee and other income. The $1.6$2.2 million decreaseincrease in fee and other income was primarily due to an increase inlower unrealized losses on securities for the three months ended MarchJune 31,30, 2026 as compared to the three months ended DecemberMarch 31, 2025.2026.
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. Net result from derivative transactions of $0.2 million was comprised of a realized gain of $0.5 million and an unrealized loss of $0.3 million for the three months ended June 30, 2026. Net result from derivative transactions of $0.3 million was comprised of a realized gain of $0.2 million and an unrealized gain of $0.1 million for the three months ended March 31, 2026. Net result from derivative transactions of $34 thousand was comprised of a realized loss of $8 thousand and an unrealized loss of $26 thousand for the three months ended December 31, 2025. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily 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 during the three months ended MarchJune 31,30, 2026 was primarily related to movement in interest rates during the three months ended MarchJune 31,30, 2026.
Income (Loss) from Investment in Unconsolidated Ventures
Income (loss) from our investment in unconsolidated ventures totaled $0.3 million and $(0.3) million for the three months ended June 30, 2026 and March 31, 2026, respectively. The increase in income from investment in unconsolidated ventures is primarily attributable to an increase in property operations.
Compensation and Employee Benefits
Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The decrease of $10.1 million in compensation expense was primarily attributable to the immediate vesting of shares that were granted during the three months ended March 31, 2026, partially offset by an increase in bonus accrual for the three months ended June 30, 2026 as compared to the three months ended March 31, 2026.
Operating Expenses
Operating expenses are primarily comprised of professional fees, and lease, technology and administrative expenses. The increase of $0.2 million during the three months ended March 31, 2026 compared to the three months ended December 31, 2025 was primarily related to an increase in administrative expenses and professional fees.
The increase of $1.2$1.7 million in real estate operating expenses during the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 20252026 was primarily attributable to an increase in operations at our properties and the acquisition of real estate.estate that occurred since January 1, 2026. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
Investment Related Expenses
Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans and other loan-related expenses. The increase during the three months ended June 30, 2026 as compared to March 31, 2026 of $0.6 million was primarily attributable to an increase in loan-related expenses.
Depreciation and Amortization
The $0.4 million increase during the three months ended June 30, 2026 compared to the three months ended March 31, 2026 in depreciation and amortization is primarily attributable to the acquisition of real estate. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
Most of our consolidated income tax provision relates to business units held in our TRSs. The increase in expense during the three months ended MarchJune 31,30, 2026 compared to the three months ended DecemberMarch 31, 20252026 is primarily a result of changes in our income in our TRSs.
A discussion regarding our results of operations for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025 is presented below.
ThreeSix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025
Activity for the threesix months ended MarchJune 31,30, 2026 included fundings of $567.8$1.1 million,billion, paydowns of $91.1$381.6 million, and the sale of $13.0$26.0 million of atwo conduit loan,loans, which contributed to a $388.6$572.0 million increase in commercial mortgage loans. Activity for the threesix months ended MarchJune 31,30, 2026 included securities purchases of $274.9$608.3 million, amortization and paydowns of $124.7$193.5 million and sales of $162.0$630.5 million, which contributed to a net decrease in our securities portfolio of $14.6$215.8 million. Activity for the threesix months ended MarchJune 31,30, 2026 included $79.7$88.0 million of real estate acquired via foreclosure.
Activity for the threesix months ended MarchJune 31,30, 2025 included fundings of $316.4$476.0 million and paydowns of $181.9$373.3 million, which contributed to a $137.6$3.8 million increase in commercial mortgage loans. Activity for the threesix months ended MarchJune 31,30, 2025 included securities purchases of $521.8$1.1 million,billion, amortization and paydowns of $85.2$201.3 million and sales of $39.9$59.4 million, which contributed to a net increase in our securities portfolio of $395.5$885.6 million. In addition, we purchased $1.4$1.6 billion of short-term U.S. Treasury securities during the threesix months ended MarchJune 31,30, 2025,2025. ofNearly whichthe $1.8entire billionshort-term U.S. Treasury securities portfolio, or $2.7 billion, matured or was sold during the threesix months ended MarchJune 31,30, 2025.
The $9.9$25.4 million increase in interest income was primarily attributable to net originations within our loan portfolio and an increase in interest earned from CMBS securities due to net purchases, partially offset by lower interest income on short‑term U.S. Treasury securities, resulting from the sale and maturity of the full portfolio. There was a $0.9 billion increase in average loan investments from $1.6$1.7 billion for the threesix months ended MarchJune 31,30, 2025 to $2.5$2.6 billion for the threesix months ended MarchJune 31,30, 2026. There was a $0.8$0.6 billion increase in average securities investments from $1.3$1.5 billion for the threesix months ended MarchJune 31,30, 2025 to $2.1 billion for the threesix months ended MarchJune 31,30, 2026.
The $7.2$21.6 million increase in interest expense is primarily related to an increase in borrowings on our securities repurchase facilities and our Unsecured Corporate Revolver, and the issuance of our 2030 Notes,Notes and utilization of our Term Loan Facility, partially offset by the redemption of all outstanding obligations of LCCM 2021-FL2 and LCCM 2021-FL3, lower outstanding balances on our loan repurchase facilities and the payoff of mortgage loan debt.
As of MarchJune 31,30, 2026, the weighted average yield on our mortgage loan receivables was 8.0%,7.2%, compared to 8.6%8.9% as of MarchJune 31,30, 2025. As of MarchJune 31,30, 2026, wethe didweighted notaverage haveinterest anyrate on borrowings against our mortgage loan receivables.receivables was 5.1%. As of MarchJune 31,30, 2025, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.3%.6.5%. As of MarchJune 31,30, 2025,2026 we had outstanding borrowings secured by our mortgage loan receivables equal to 19.9%3.8%, compared to 4.0% of the carrying value of our mortgage loan receivables.receivables as of June 30, 2025.
As of MarchJune 31,30, 2026, the weighted average yield on our securities was 5.3%,5.2%, compared to 5.7%5.9% as of MarchJune 31,30, 2025. As of MarchJune 31,30, 2026, the weighted average interest rate on borrowings against our securities was 4.2%.4.1%, compared to 4.9% as of June 30, 2025. As of MarchJune 31, 2025, we did not have any borrowings against our securities. As of March 31,30, 2026, we had outstanding borrowings secured by our securities equal to 45.1%44.4% of the carrying value of our real estate securities.securities, compared to 15.0% as of June 30, 2025.
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 MarchJune 31,30, 2026, the weighted average interest rate on mortgage borrowings against our real estate assets was 5.9%, compared to 6.1% as of MarchJune 31,30, 2025. As of MarchJune 31,30, 2026, we had outstanding borrowings secured by our real estate equal to 49.5%49.9% of the carrying value of our real estate, compared to 65.0%61.1% as of MarchJune 31,30, 2025.
The increase of $5.5$10.6 million in real estate operating income was primarily attributable to real estate foreclosuresacquisitions that occurred subsequent to MarchJune 31,30, 2025 through MarchJune 31,30, 2026, partially offset by sales that occurred during the same period. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
LADR insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 1 filing (1 insider, 2 trade dates, 35,000 shares, about $358.9K). Net open-market shares: -35,000 (purchases minus sales); net value about -$358.9K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-06-02 | Perelman Robert |
Open-market sale | 17,505 | $10.25 | $179.4K |
| 2026-05-29 | Perelman Robert |
Open-market sale | 17,495 | $10.26 | $179.5K |
| 2026-05-06 | Mccormack Pamela |
Gift | 123,793 | — | — |
Well-known investors holding LADR (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 3,096,940 | $30.8M | 0.02% | Added 10% |
| Renaissance Technologies | 2026-06-30 | 423,459 | $4.2M | 0.01% | Added 489% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 339,984 | $3.4M | 0.0% | Added 27% |
| D. E. Shaw & Co. | 2026-06-30 | 117,348 | $1.2M | 0.0% | Added 129% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 112,935 | $1.1M | 0.0% | Added 105% |
| Millennium Management (Israel Englander) | 2026-06-30 | 25,801 | $256.7K | 0.0% | Reduced 84% |